Bonnyview Pty Ltd v David Deane and Associates Pty Ltd; Ravensview P/L v David Deane & Associates P/L; Donnyview P/L v David Deane & Associates P/L [2007] QSC 223

SUPREME COURT OF QUEENSLAND CITATION: Bonnyview Pty Ltd v David Deane and Associates Pty Ltd Ravensview Pty Ltd v David Deane and Associates Pty Ltd Donnyview Pty Ltd v David Deane and Associates Pty Ltd [2007] QSC 223 PARTIES: BONNYVIEW PTY LTD (ACN 087 181 575) (applicant) v DAVID DEANE AND ASSOCIATES PTY LTD (ACN 010 105 549) (respondent) RAVENSVIEW PTY LTD (ACN 087 181 548) (applicant) v DAVID DEANE AND ASSOCIATES PTY LTD (ACN 010 105 549) (respondent) DONNYVIEW PTY LTD (ACN 087 181 557) (applicant) v DAVID DEANE AND ASSOCIATES PTY LTD (ACN 010 105 549) (respondent) FILE NO/S: BS6460 of 2007 BS6461 of 2007 BS6462 of 2007 DIVISION: Trial Division PROCEEDING: Application to set aside statutory demand DELIVERED ON: 29 August 2007 DELIVERED AT: Brisbane HEARING DATE: 7 August 2007 JUDGE: Mullins J ORDER: In each application, it is ordered that the respondent’s statutory demand for payment of debt served on 9 July 2007 be set aside CATCHWORDS: CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – FOR DEFECT OR SOME OTHER REASON – SOME OTHER REASON – where statutory demand served on company for payment of debt arising from costs order in favour of creditor -- 1 of 7 -- 2 against company – where registrar assessed costs ordered to be paid under the costs order – where no order in form 63B, to comply with r 736 of the Uniform Civil Procedure Rules 1999 (Q), was signed and filed by the registrar in respect of the costs assessment – where costs in the amount assessed by the registrar were not due and payable until an order fixing the amount of the costs was signed and filed by the registrar– where debts were not due and payable when statutory demand was served – whether statutory demand should have been accompanied by an affidavit verifying the debt – whether statutory demand should be set aside Corporations Act 2001 (Cth), s 459E, s 459G, s 459J Supreme Court Act 1995, s 48 UCPR, r 660, r 661, r 736, r 741 Anderson Formrite Pty Ltd v CASC Hire Pty Ltd (2005) 147 FCR 379, considered NT Resorts Pty Ltd v Deputy Commissioner of Taxation (1998) 153 ALR 359, considered Rothwells Ltd v Nommack (No 100) Pty Ltd (1988) 13 ACLR 421, considered Topfelt Pty Ltd v State Bank of New South Wales Ltd (1993) 47 FCR 226, considered Victor Tunevitsch Pty Ltd v Farrow Mortgage Services Pty Ltd (in liq) (1994) 14 ACSR 565, considered COUNSEL: PG Lynch (sol) for the applicant in each matter SC Russell (sol) for the respondent in each matter SOLICITORS: Lynch & Company for the applicant in each matter Russell and Company for the respondent in each matter [1] MULLINS J: On 9 July 2007 the respondent served on the applicant in each matter a creditor’s statutory demand for payment of debt in Form 509H. In each case the demand was for the amount of $35,267.80 and was described as “the amount of the debts described in the Schedule”. The schedule contained the following details: Description of the Debt Amount of the Debt 1. The sum assessed by the Registrar of the Supreme Court of Queensland on 16 April, 2007 pursuant to an order of the District Court of Queensland for costs dated 13 December, 2004. $24,009.76 2. The sum assessed by the Registrar of the Supreme Court of Queensland on 20 December, 2006 pursuant to $3,739.46 -- 2 of 7 -- 3 orders of the District Court of Queensland for costs dated 25 May, 2003, 6 June, 2003, and 4 August, 2003. 3. The sum assessed by the Registrar of the Supreme Court of Queensland on 20 December, 2006 pursuant to an order of the Supreme Court of Queensland for costs dated 30 January, 2006. $7,518.58 Total $35,267.80 [2] In each matter no affidavit verifying the debt claimed in the statutory demand was served upon the applicant with the statutory demand. [3] The ground on which each applicant relies to set aside the statutory demand under s 459G of the Corporations Act 2001 (Cth) (“the Act”) is that the debt the subject of the demand was not a judgment debt and failure to serve an affidavit verifying the statutory demand for a non-judgment debt requires the demand to be set aside. Background [4] In Brisbane District Court proceeding number 4797 of 2002 (“the action”) the respondent was the plaintiff and each of the applicants was a defendant. The sum of $24,009.76 relates to an order made after the trial of the action that the defendants pay the plaintiff’s costs of the action (including reserved costs) to be assessed on the indemnity basis. The sum of $3,739.46 in the schedule arises from three separate orders made in the District Court in the action on 25 May, 6 June and 4 August 2003 that the defendants pay the plaintiff’s costs of interlocutory applications. [5] The respondent filed applications to wind up each of the applicants in Brisbane Supreme Court proceeding numbers 9974, 9975 and 9976 of 2005 that were dismissed by consent on 30 January 2006. In each application the respondent obtained an order that its costs be paid by the applicant that was the subject of that winding up application limited to costs incurred up to and including 14 December 2005. The respondent delivered a costs statement which covered the fees and outlays claimed pursuant to the orders in all three winding up proceedings. The costs statement appears to have been assessed in proceeding number 9976 of 2005. The respondent claims the sum assessed by the registrar in respect of this costs statement of $7,518.58 against each applicant. [6] The assessment of the costs payable under all the orders that are relied on for the statutory demands proceeded before Senior Deputy Registrar Houghton on various dates in 2006 and 2007. According to the records of the firm of solicitors which then acted for the respondent in these assessment of costs the applicants’ solicitor, Mr Lynch, and a solicitor from the firm then acting for the respondent appeared before the registrar on the hearings for the assessments. According to the -- 3 of 7 -- 4 respondent’s solicitors (and this was not disputed on behalf of the applicant), the registrar at the conclusion of the assessment of costs in respect of the order made on 13 December 2004 said words to the effect that he assessed the costs payable under the order in the sum of $24,009.76; that he said at the conclusion of the assessment of costs in respect of the orders made on 25 May, 6 June and 4 August 2003 words to the effect that he assessed the costs payable under the orders in the sum of $3,739.46; and that at the conclusion of the assessment of costs in respect of the orders made on 30 January 2006 he said words to the effect that he assessed the costs payable under the orders in the sum of $7,518.58. [7] The applicants did not apply to the registrar for reconsideration of the registrar’s assessments pursuant to r 741 of the UCPR. The applicants did, however, apply for reconsideration of the assessment of other costs statements in proceedings between the same parties that had also been assessed by the registrar. In respect of Court of Appeal proceeding number 11345 of 2004 the applicants applied on 3 January 2007 for reconsideration of three items in the relevant costs statement. In Supreme Court proceeding number 7259 of 2005 between Bonnyview Pty Ltd and the respondent, that applicant applied on 3 January 2007 for reconsideration of one item in the costs statement. Senior Deputy Registrar Houghton retired before he made a decision on the applications for reconsideration. It appears that, even though there were no applications for reconsideration in respect of the assessments that are the subject of the debts claimed in the statutory demands, Senior Deputy Registrar Houghton did not before his retirement state in the form of an order that was signed and filed by him the respective amounts at which he had assessed the relevant cost statements, as required by r 736(1) of the UCPR. [8] At the date on which the statutory demands for payment of debt were served, no order in form 63B (which is the form approved for the purpose of r 736(1) of the UCPR) had been filed on the relevant file in respect of any of the assessments of costs referred to in the statutory demands. Applicants’ submissions [9] The applicants submit that the sums claimed in the statutory demands have not been “assessed” on the basis that the assessment is not complete unless the registrar has signed and filed an order in form 63B pursuant to r 736 of the UCPR specifying the sums that he has assessed as payable pursuant to the costs statement. The applicants rely on r 661(4)(a) of the UCPR as providing a statutory bar to the recovery of sums for which no order has been filed. The applicants therefore submit that, until an order is signed by the registrar and filed, the moneys claimed cannot be “due and payable” within the meaning of the Act. An alternative submission made by the applicants is that the statutory bar to recovery means the sums claimed cannot constitute a judgment debt. [10] The applicants rely on a number of authorities starting with Victor Tunevitsch Pty Ltd v Farrow Mortgage Services Pty Ltd (in liq) (1994) 14 ACSR 565 for the proposition that the failure to serve an accompanying affidavit for a non-judgment -- 4 of 7 -- 5 debt constitutes “some other reason why the demand should be set aside” within the meaning of s 459J(1)(b) of the Act. Respondent’s submissions [11] The respondent submits that the pronouncement of each order for costs that is the source of the debts claimed in the statutory demand created the obligation to pay money. The respondent refers to rr 660(1) and (2) of the UCPR. The respondent accepts that the assessment provisions of the UCPR supply the procedure for ascertaining the amount of money that was the subject of the obligation to pay money under the orders for costs, but submits it is the obligation that is the debt for the purposes of s 459E(1) of the Act. [12] The respondent submits that the signing and filing of an order in form 63B by the registrar was necessary only for the commencement of enforcement proceedings, but was not necessary to complete the obligation to pay under the orders that were the source of the debts claimed in the schedule. It is therefore submitted that upon completion of the assessments by the registrar, there was a debt “due and payable” within the meaning of s 459E(1)(a) of the Act which was properly the subject of the respondent’s demand for payment. The respondent also submits that each order for costs was a judgment within the meaning of s 459E(3) of the Act on the basis of the definition of “judgment” in s 9 of the Act which is stated to mean “a judgment, decree or order, whether final or interlocutory”. Whether debts were due and payable [13] The form 63B provides for the registrar to make an order in the following terms: “The (Defendant’s/Plaintiff’s) costs against the (Plaintiff/Defendant) to be paid pursuant to an order dated (date of court order) are assessed at $ … .” [14] The debt which is the subject of a statutory demand must be “due and payable”: s 459E(1) of the Act. As was stated by Lockhart J in Topfelt Pty Ltd v State Bank of New South Wales Ltd (1993) 47 FCR 226, 234, “… the amount for which demand is made must be the amount that is in fact due by the company to the creditor at the date of the demand”. That reflects the character of a debt as “a liquidated sum in money presently due, owing and payable by one person, called the debtor, to another person called the creditor”: Rothwells Ltd v Nommack (No 100) Pty Ltd (1988) 13 ACLR 421, 422. [15] Although an obligation to pay costs arose on the making of the relevant orders in favour of the respondent against the applicants for the payment of costs, each of those orders was for an amount of costs that had to be assessed. Quantification of the costs was therefore required, so that the applicants would know the amount of costs they were obliged to pay the respondent. Although the parties were given notice by the registrar of the assessed costs at the completion of the assessments, it is the order which the registrar is obliged to make after the expiry of 14 days after -- 5 of 7 -- 6 the date of the assessment (r 736(2)) or otherwise after the reconsideration procedure ends (r 736(3)) that is the official and verifiable record of the amount of the assessed costs. [16] Until the amount of the assessed costs was ascertainable by reference to an order signed and filed by the registrar r 736 of the UCPR, it could not be said that costs in that amount were due and payable under the orders to which the assessments related. This is consistent with the treatment of the entitlement of a person who has the benefit of an order for costs to interest on the amount of the costs as from the date of the order for costs, but which is not able to be calculated until after the costs have been ascertained: s 48 Supreme Court Act 1995. As the debt that arises from the order for costs is not due and payable until after the costs have been ascertained, there is no debt in the sense in which that expression is used in s 459E(1) of the Act (and therefore no judgment debt) until that ascertainment. Upon that ascertainment in accordance with the UCPR, the judgment debt will date back to the relevant order for costs. [17] The reliance of the applicants on r 661(4)(a) of the UCPR is misplaced. The order in form 63B is concerned with the quantum of the costs assessed by the registrar in respect of other orders made by the court. It is not the order in form 63B that is enforced, but rather the earlier order for the payment of costs for the amount for which the costs are assessed that is recorded in the order in form 63B. Whether the statutory demands should be set aside [18] As the debts were not due and payable when the statutory demands were served and therefore could not be characterised at that stage as judgment debts, that is a sufficient reason why the demands should be set aside under s 459J(1)(b) of the Act: NT Resorts Pty Ltd v Deputy Commissioner of Taxation (1998) 153 ALR 359, 366- 367. [19] Even if the debts the subject of the demands could be characterised as judgment debts when the demands were served, there was no order of the court that set out the amounts that are relied on in the statutory demands. They would therefore not be judgment debts in the narrow sense in which that expression should be interpreted in s 459E(3) of the Act, as explained by Siopis J in Anderson Formrite Pty Ltd v CASC Hire Pty Ltd (2005) 147 FCR 379, 391-392[62]-[63]. In those circumstances the respondent was required by s 459E(3) of the Act to accompany the statutory demand with the verifying affidavit explaining the basis on which the amounts of the assessed costs were incorporated in the demands. The omission of such an affidavit would also justify setting aside the demands under s 459J(1)(b) of the Act: Victor Tunevitsch Pty Ltd v Farrow Mortgage Services Pty Ltd (in liq) (1994) 14 ACSR 565, 568. Orders -- 6 of 7 -- 7 [20] It follows that in each application it must be ordered that the respondent’s statutory demand for payment of debt served on 9 July 2007 be set aside. [21] The respondent was precipitate in seeking to rely on the statutory demand procedure, before the assessments of the costs had been completed in accordance with the UCPR. The respondent’s impatience is understandable in the light of the fact that it was the retirement of Senior Deputy Registrar Houghton that intervened before the relevant orders had been signed and filed by the registrar to reflect the assessments that he had completed otherwise and which were not the subject of any application for reconsideration within the period of 14 days allowed for that purpose. The applicants are obliged to pay the respondent the costs assessed pursuant to the relevant orders when the assessments have been formalised in accordance with r 736 of the UCPR. The applicants have had technical success in their applications, but are effectively without merits. In those circumstances I am inclined to make no orders as to the costs of each of these applications, but that is subject to any submissions that the parties wish to make on the issue of costs. -- 7 of 7 --