Banda Group Pty Ltd v Rosswell Holdings Pty Ltd & Anor [2004] QCA 49

1 SUPREME COURT OF QUEENSLAND CITATION: Banda Group P/L v Rosswell Holdings P/L & Ors [2004] QCA 49 PARTIES: BANDA GROUP PTY LTD ACN 097 563 543 AS TRUSTEE FOR THE BANDA FAMILY TRUST (applicant/appellant) v ROSSWELL HOLDINGS PTY LTD ACN 077 428 801 (first respondent/first respondent) DANIEL GEOFFREY ROSS (second respondent/second respondent) MICHAEL ERIC ATTEWELL (third respondent/third respondent) FILE NO/S: Appeal No 8787 of 2003 SC No 5976 of 2003 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Brisbane DELIVERED EX TEMPORE ON: 26 February 2004 DELIVERED AT: Brisbane HEARING DATE: 26 February 2004 JUDGES: McMurdo P, Davies JA and White J Separate reasons for judgment of each member of the Court, each concurring as to the order made ORDER: Appeal dismissed with costs to be assessed CATCHWORDS: PROCEDURE - COSTS - APPEALS AS TO COSTS - DISCRETION - where appeal from orders made in relation to costs during interlocutory applications by the respondents - where one of the orders was by consent - where there was a debt due and owing - where appellants claimed s 459J Corporations Act 2001 (Cth) applied - whether the learned primary judge erred in the exercise of his discretion Corporations Act 2001 (Cth), s 459J COUNSEL: J F Curran for the appellant N H Ferrett for the respondents SOLICITORS: Wellners for the appellant Jones & Company for the respondents -- 1 of 7 -- 2 THE PRESIDENT: The application to amend the grounds of appeal is refused, because the matters raised in those grounds were specifically abandoned before the primary Judge. ... THE PRESIDENT: Justice Davies will deliver his reasons first. DAVIES JA: This is an appeal from an order made on 16 December 2003, dismissing an application that either a statutory demand under the Corporations Act 2001 (Cth) for orders for costs on which the statutory demand was based, be stayed until the conclusion of the action for which the costs orders were made. Alternatively, in the course of his oral submissions this morning, Mr Curran submitted in the alternative, for an injunction restraining the respondent from commencing or continuing proceedings for winding up of the appellant, presumably until then. Because the order the subject of this appeal, was made by the learned primary judge in the exercise of his discretion, the appellant must show that his Honour erred in a way which demonstrated that he failed properly to exercise that discretion. The costs orders were made in interlocutory applications by the respondents in an action by the appellant against the respondents for relief pursuant to s.87 of the Trade Practices Act 1974 (Cth) with respect to the contract for the purchase -- 2 of 7 -- 3 of a business by the appellant from the respondents; the claim, so far as it is a money claim, being for over $400,000. The orders were made respectively on 2 July 2002 and 17 December 2002. The second of the orders was by consent and the total of the amounts, it is now common ground, is $10,500. The statutory demand by the respondents against the appellant, the subject of a stay application and now the injunction, was in respect to that sum. There was uncontradicted evidence before his Honour that the appellant was insolvent. Nevertheless, it appears from a letter dated 22 September 2003, which was after the date of the order the subject of this appeal, that the appellant purported to assign to Karolina Banda its rights in the action in which the costs orders were made and from an affidavit filed this morning, that it was purportedly reassigned to the appellant. It is unnecessary and it would be impossible in these proceedings to arrive at any view as to the prospects of success of the appellant in the proceedings to which I have referred. It is also unnecessary to consider the validity of either of the purported assignments. -- 3 of 7 -- 4 Before turning specifically to the matters which Mr Curran raised this morning, I should deal with the grounds of appeal as they appear in the notice of appeal. The appellant's first ground of appeal is that the learned trial judge failed to take into account the hardship occasioned to the appellant arising out of its unchallenged impecuniosity caused by the respondents. But of course we cannot determine whether or not the impecuniosity was caused by the respondents. And impecuniosity alone is not a sufficient reason to grant a stay. It is not suggested, for example, that there is any other fund to which the respondents could resort for payment of the debt acknowledged to be due and owing. Moreover the learned primary judge pointed to the facts that no indulgence had been sought when either costs order had been made, no timely application for a stay had been brought and that one of the costs orders had been made by consent. It was not, in my opinion, an error by the learned primary judge to conclude that the appellant's mere impecuniosity did not outweigh the respondents' right to enforce their debt. The second ground of appeal was that the learned trial judge failed to consider whether there was an appropriate reason to grant the stay. But that was, it seems to me, because in the end there was none, other than the appellant's insolvency and the fact that its insolvency might take out of the control of -- 4 of 7 -- 5 the persons presently controlling it the continuation of the action in which the costs orders were made. As I have already mentioned, his Honour was entitled to conclude that that was not a sufficient reason to grant a stay. The third ground of appeal was that the learned trial judge failed to stay the operation of the costs orders the subject of the statutory demand in proceedings instituted by the respondents. That does not appear to indicate any ground and it is not necessary to deal with it further. The fourth ground of appeal was that despite the application pursuant to s.459J of the Corporations Act not having been expressly pressed, at it was put the learned trial judge found that the impecuniosity of the appellant was not "any other reason" sufficient to set aside the demand within the meaning of s.459J and thereby erred in so finding. The Court has already held that this cannot be raised in this Court in an appeal against the exercise of his Honour's discretion in refusing to make the orders which he in fact made - application for those orders, in that respect, having been abandoned before his Honour. Mr Curran's principal argument before us this morning, which does not seem perhaps to touch on any of those grounds of appeal, is that if a statutory demand is allowed to proceed it -- 5 of 7 -- 6 would give the respondents security for costs and that that would be an abuse of process. In fact it may give the respondents security for costs, but only for the costs which are a debt which is due and owing and that is the point of the process of enforcing judgment of a debt. He submitted that this was an abuse of process, primarily because the statutory demand was used for the predominant purpose of stifling the appellant's action. The difficulty which he has in that respect is that there is no evidence to support this submission. On the contrary, the affidavit of Mr Haas the solicitor for the respondent, specifically denied such assertion and referred to correspondence from the appellant's solicitors which said that the success of the application for winding up would not prevent the continuance of the action. It follows, in my opinion, that there is no error by which the learned primary judge failed to properly exercise his discretion in refusing to make either of the orders sought and the appeal must therefore be dismissed. THE PRESIDENT: I agree. The allegation made by the appellant, that the respondents have acted in an abuse of process, has not been made out and I agree that the appeal should be dismissed for the reasons given by Justice Davies. -- 6 of 7 -- 7 WHITE J: I agree with the reasons given by Justice Davies that the appeal should be dismissed. THE PRESIDENT: That is the order of the Court. The order will be for the standard costs order - costs be assessed. ----- -- 7 of 7 --