Equuscorp Pty Ltd v Orazio [1999] QSC 354

SUPREME COURT OF QUEENSLAND CITATION: PARTIES: Equuscorp Pty Ltd (ACN 006 102 344) EQUUSCORP PTY LTD (ACN 006 102 344) (plaintiff) and ANTHONY RINO ORAZIO (defendant) FILE NO/S: S9208/96 DIVISION: Trial Division DELIVERED ON: 30 November 1999 DELIVERED AT: Brisbane HEARING DATE: 9 November 1999 JUDGE: Mackenzie J ORDER: CATCHWORDS: PRACTICE & PROCEDURE- Notice to Admit Facts- COUNSEL: SOLICITORS: · Failure to respond to notice within the prescribed time limit Uniform Civil Procedure Rules 189-190 Coopers Brewery Ltd v Penfida Foods Ltd (1992) 26 NSWLR 738 Mr Heyworth-Smith for the applicant/defendant Mr Wilson for the respondent/plaintiff George Conomos Solicitors for the applicant/defendant Thomson Redhead Solicitors for the respondent/plaintiff [I] MACKENZIE J: The defendant applies for judgment pursuant to UCPR 190 which provides that if an admission is made by a party the court may make an order to which a party applying for it is entitled on the admission. Other orders are sought in the alternative. I will leave those aside for the moment. [2] The basis of the application was that on or about 23 July 1999 the applicant defendant served a notice to admit facts pursuant to UCPR 189. The facts required to be admitted were the following: 1. That Berrema Finance Pty Ltd did not at any time pay or transfer any sum of money to the defendant. -- 1 of 5 -- 2 2. That Berrema Finance Pty Ltd did not at any time pay or transfer any sum of money to any third party at the direction of the defendant. 3. "That the defendant did not at any time pay or transfer any sum of money to National Mutual Trustees Ltd on account of or for the benefit of the plaintiff Anthony Rino Orazio". 4. It is obvious that, due to error, the defendant has been described as plaintiff and that the term "defendant" is intended to refer to Berrema Finance Pty Ltd. This was the assumption upon which the respondent plaintiff presented its argument. No argument was presented against this construction of the paragraph. I will therefore proceed on the basis that it is common ground that it should be so construed. (3] The effect ofUCPR 189(1) and (2) is that if a notice to admit facts is served and the party served does not within 14 days dispute the fact or dispute the authenticity of a document specified in the notice the party is taken, for the proceedings only, to admit the fact or authenticity of the document. There is evidence from a solicitor at the firm at which service of the notice was effected that he sent a fax on 23 July 1999 to the plaintiff with a marking "ATTENTION: Phillip Kotsanis" who is a solicitor employed by the respondent plaintiff. The covering sheet with which the notice was faxed contains the following express statement: "Under the court rules Equuscorp must now reply to these notices within 14 days (by Monday, 9 August) otherwise Equuscorp will be taken to have admitted the allegations set out therein." [4] The notice to admit facts was never responded to. No explanation was offered in evidence until, following discussion of the absence of such material during the hearing, an affidavit by Mr Kotsanis was subsequently filed by leave to the effect that he recalled receiving the notice to admit facts and that he had intended to respond in accordance with the rules but had not done so. He also said that he had recently reviewed the file to ascertain why the plaintiff did not respond to the notice to admit. He said that neither the notice nor the letter from the plaintiffs solicitors enclosing the notice were on his file. Accordingly it appeared to him that those documents were misplaced. He deposed to being involved in 19 related proceedings in the period during which the notice could have been responded to. He said that the loss of the notice combined with the court work that he was involved in constituted the reason that the plaintiff did not respond to the notice to admit. He also deposed that the plaintiff wished to withdraw the deemed admissions arising from the failure to respond to the notice and intended to dispute each of the facts specified in that notice. [5) The scheme underlying the transaction which gives rise to the proceedings involved a softwood plantation, investment in which offered immediate tax advantages and some long term prospect of timber being harvested and sold. The operative steps in making the investment were that the defendant responded to a prospectus and entered into contracts with Seymour Softwoods Limited (Seymour) and a related company Sintoff Pty Ltd (Sintoff). In order to obtain funds to pay these liabilities the defendant entered into a Deed of Loan with Berrema Finance Pty Ltd (Berrema). Under the terms of the deed Berrema was to advance the total amount -- 2 of 5 -- 3 of $28,500 to the defendant which he undertook to pay by instalments over a period of years. The deed provided for Berrema to disburse most of the loan proceeds to National Mutual Trustees Limited (the Trustee under the scheme), and the rest to Sintoff in respect of the cost of leasing plantation land. Under the prospectus National Mutual Trustees was to act as trustee for the investors. Recital D of the Trust Deed stipulated that all moneys received from investors in relation to the works and services contract were to be initially paid into a trust fund to be administered by the trustee. (6] There is evidence from National Mutual Trustees that no money in respect of the defendant's contract was paid to it by Berrema. However, according to the affidavit of Mr Kotsanis, sworn 8 June 1999 and served on 10 June 1999, the respondent plaintiff intended to adduce evidence that National Mutual Trustees had agreed with Berrema and Seymour that Berrema would advance moneys under the loan direct to Seymour and that those advances would be reflected in accounting records of Berrema and Seymour. In evidence there are extracts of company records suggesting that book entries were made in that regard. This preceded service of the notice to admit facts. (7] According to Mr Kotsanis's affidavit paragraph 9.5 .1 of the Trust Deed is relevant to this collateral agreement. Paragraph 9.5.1 is one of the joint and several covenants between National Mutual Trustees and Seymour and is to the effect that they covenant to perform their functions and exercise their powers under the deed in the best interests of all the growers and not in the interests of the contractor or the trustee if those interests are not the same as those of the growers generally. It is not immediately clear, nor was it elaborated in submissions, how the agreement to bypass the trustee is authorised by or would conform to that covenant especially since there was an express recital in the Trust Deed that Seymour intended all moneys received pursuant to the application form attached to the prospectus to be initially paid into the trust fund to be administered and disbursed in compliance with the deed, and since there are detailed provisions in the deed concerning circumstances in which payments to Seymour could be made. [8] It was conceded on behalf of the respondent plaintiff that because of the effect of UCPR 189(1) and (2) the relief sought by the applicant defendant would follow from the deemed admissions if the admissions were not allowed to be withdrawn. UCPR 189(3) gives the court a discretion to allow withdrawal of a deemed admission and the plaintiff respondent applied for such relief. [9] No principles for exercising the discretion are prescribed in the rules. One of the purposes of admissions is to ensure that the court is required to determine only matters that are genuinely in dispute (Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738, 742). In the same case (746) Rodgers CJ posed the question whether justice required leave to be given to withdraw the admissions. He also thought it legitimate to consider whether the admissions were made in error in a case where the admissions were express, not deemed. In a case of deemed admissions the reason for the failure to dispute matters in the notice to admit facts would be one relevant factor but not necessarily decisive. [!OJ In the present case the reason advanced is that the company's employed solicitor concedes that he was aware of the notice of admission and formed an intention to -- 3 of 5 -- 4 respond in accordance with the rules but mislaid the document and did not therefore comply with the rules. This is not a particularly meritorious explanation. Further, the facts outlined above disclose at best a case that the applicant is bound by the collateral agreement under which the trustee abdicated any control over the flow of money from Berrema to Seymour, entered into without his knowledge by National Mutual Trustees and the other companies. No documentary evidence concerning this agreement is before me. . [11] The facts deemed to be admitted for the purpose of these proceedings by reason of failure to respond to the notice to admit facts are the following: 1. That Berrema did not at any time pay or transfer any sum of money to the defendant; 2. That Berrema did not at any time pay or transfer any sum of money to any third party at the direction of the defendant; and 3. That the "defendant" did not at any time pay or transfer any sum of money to National Mutual Trustees on account of or for the benefit of the "plaintiff' [which has been assumed to mean that Berrema did not pay moneys on account of or for the benefit of the defendant]. [12] On the evidence before me there is no evidence that Berrema paid or transferred any sum of money to the defendant. On the evidence before me there is no evidence that Berrema paid or transferred any sum of money to any third party at the direction of the defendant. There is evidence from National Mutual Trustees that Berrema did not at any time pay or transfer money to National Mutual Trustees on account of or for the benefit of the defendant. The effect is that, having regard to the admissions deemed to have been made for the proceedings only, there is no evidence before me that Barrema carried out its obligations under the contract with the applicant. [13] Taking the explanation for failing to respond to the notice in conjunction with the case that the respondent seeks to raise, I am satisfied that I should not give leave to withdraw the deemed admission. I am not satisfied that the interests of justice require such a course. There is a concession that if leave were not given to withdraw the admissions the orders sought by the applicant defendant would follow. The consequence of that is that the plaintiffs action should be dismissed and the caveat removed. As the basis relied on for the equitable mortgage fails also, there remains no basis for it to be available to the plaintiff. [14] The applicant defendant also asks for assessment of damages in the District Court pursuant to s 130 of the Land Title Act, 1994. In the absence of specific submissions in oral argument, I will invite written submissions whether it is appropriate to make an order for assessment of compensation by a District Court or whether a separate proceeding should be commenced in that regard. Such submissions must be delivered to my Associate no later than 12 noon on Friday 3 December 1999. Upon consideration of any further submissions, I will make orders in accordance with my findings. -- 4 of 5 -- 4 respond in accordance with the rules but mislaid the document and did not therefore comply with the rules. This is not a particularly meritorious explanation. Further, the facts outlined above disclose at best a case that the applicant is bound by the collateral agreement under which the trustee abdicated any control over the flow of money from Berrema to Seymour, entered into without his knowledge by National Mutual Trustees and the other companies. No documentary evidence concerning this agreement is before me. . [II) The facts deemed to be admitted for the purpose of these proceedings by reason of failure to respond to the notice to admit facts are the following: 1. That Berrema did not at any time pay or transfer any sum of money to the defendant; 2. That Berrema did not at any time pay or transfer any sum of money to any third party at the direction of the defendant; and 3. That the "defendant" did not at any time pay or transfer any sum of money to National Mutual Trustees on account of or for the benefit of the "plaintiff" [which has been assumed to mean that Berrema did not pay moneys on account of or for the benefit of the defendant]. [12) On the evidence before me there is no evidence that Berrema paid or transferred any sum of money to the defendant. On the evidence before me there is no evidence that Berrema paid or transferred any sum of money to any third party at the direction of the defendant. There is evidence from National Mutual Trustees that Berrema did not at any time pay or transfer money to National Mutual Trustees on account of or for the benefit of the defendant. The effect is that, having regard to the admissions deemed to have been made for the proceedings only, there is no evidence before me that Barrema carried out its obligations under the contract with the applicant. [13) Taking the explanation for failing to respond to the notice in conjunction with the case that the respondent seeks to raise, I am satisfied that I should not give leave to withdraw the deemed admission. I am not satisfied that the interests of justice require such a course. There is a concession that if leave were not given to withdraw the admissions the orders sought by the applicant defendant would follow. The consequence of that is that the plaintiffs action should be dismissed and the caveat removed. As the basis relied on for the equitable mortgage fails also, there remains no basis for it to be available to the plaintiff. [14) The applicant defendant also asks for assessment of damages in the District Court pursuant to s 130 of the Land Title Act, 1994. In the absence of specific submissions in oral argument, I will invite written submissions whether it is appropriate to make an order for assessment of compensation by a District Court or whether a separate proceeding should be commenced in that regard. Such submissions must be delivered to my Associate no later than 12 noon on Friday 3 December 1999. Upon consideration of any further submissions, I will make orders in accordance with my findings. -- 5 of 5 --