Connors & Kent v Acheron Pty Ltd [1993] QSC 238

a-.? ~,7r. State RepOrting Bureau --·~_'\t..'!f!;U._ TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) REVISED COPIES ISSUED State Reporting Bureau Date ;.2d I.OJ 9 ~ ' SUPREME COURT OF QUEENSLAND ! 'I! CIVIL JURISDICTION MOYNIHAN J No 909 of 1993 RICHARD KINGSLEY CONNORS AND ROSEMARY ANN KENT and ACHERON PTY LTD BRISBANE .. DATE 25/08/93 JUDGMENT Plaintiffs Defendant 1 -- 1 of 12 -- 250893 mlp (Moynihan J) HIS HONOUR: In this matter for the reasons which I now publish I think that what should happen is this: the judgment against the applicants should be set aside. The respondent should have judgment for $31,394.41 together with interest thereon at the rate of 10 per cent as and from 31 May to judgment and that, of course, is the amount of the stock. Now, there should be leave to defend in respect of the plant and equipment subject to some conditions. I think subject to what I will say in a minute that there should be paid into Court the disputed amount or security given to the satisfaction of the Registrar by way of equivalent. The qualification to that is that I do not think that the respondent should have the benefit of both a security of that kind and the execution which they presently hold, as I understand it, and, of course, the proceedings before me did not deal with the question of the execution, so I have provided for liberty to apply in respect of the security and the goods taken in execution. In other words, what I am saying is that I do not think that the respondent should have both what has been seized by way of execution and the benefit of security in respect of the ·disputed amounts. I think that the respondent is entitled to the benefit of the costs orders that they have obtained to date. I am not sure frankly where the evidence stands. It is deposed to that there is an amount of $25,000, but I think JUDGMENT 2 10 20 ( 30 40 50 60 -- 2 of 12 -- 250893 mlp (Moynihan J) that should be a matter for taxation. No doubt depending on what happens to the execution the costs thrown away by the execution, which at the moment seem to be $9,700, should be paid to the respondent as a condition to leave to defend, but again if the respondent retains the benefit of the execution then those costs will not be thrown away. The applicants should pay the respondent costs of and incidental to the application to be taxed. So that the formal orders will be: (1) That the judgment in the amount of $276,534.41 together with interest should be set aside. (2) The respondent should have judgment in the amount of $31,394.41 together with interest at the rate of 10 per cent on and from 31 May to the date of judgment. (3) I give the applicants leave to defend the respondent's claim in respect of the plant and equipment located in 10 20 the Metropolitan Hotel at Mackay. 30 (4) I give liberty to apply in respect of security in the amount of $245, 140, flie g66ds taken in execution and generally and (5) In respect of the question of execution, and generally, the applicants should pay the respondent costs of and incidental to the application to be taxed. I refuse the application for security for costs and adjourn the summons to a date to be fixed to be brought on by either party in two days notice to the other. JUDGMENT 3 40 50 60 -- 3 of 12 -- ""~-; ()..'0' 0 0 0 IN THE SUPREME COURT OF QUEENSLAND No. 909 of 1993 BETWEEN RICHARD KINGSLEY CONNORS and ROSEMARY ANNE KENT CATCHWORDS: COUNSEL: SOLICITORS: Plaintiff ACHERON PTY LTD Defendant JUDGMENT- MOYNIHAN J Delivered the 25th day of August, 1993 Mr C Hampson QC and Mr P Bickford for the Plaintiff Mr Dutney QC and Mr Burns for the Defendant Goss Downey Carne as town agents for Short Punch & Greatorix for the Plaintiff Nicol Robinson & Kidd for the Defendant HEARING DATE: 16 August, 1993 -- 4 of 12 -- 0 0 0 0 IN THE SUPREME COURT OF QUEENSLAND No. 909 of 1993 BETWEEN RICHARD KINGSLEY CONNORS and ROSEMARY ANNE KENT Plaintiff ACHERON PTY LTD Defendant JUDGMENT- MOYNIHAN J Delivered the day of 199 This is an application to set aside a judgment. The respondents issued a specially endorsed writ pursuant to Order 6 Rule 7, and applied for judgment pursuant to Order 18. The applicant, although properly served, did not appear on the return of the judgment summons. The respondents thereupon obtained judgment for $276,534.41, together with interest at the rate of 10% on and from 31 May to the date of judgment. They were also granted an injunction restraining the defendant by itself, its servants or agents from disposing or otherwise dealing with any of its assets within the jurisdiction including particularly trading stock plant and equipment in relation to the Metropolitan Hotel at Mackay save to the extent that the net value of the assets or undertaking exceeded the judgment sum -- 5 of 12 -- 2 and subject to disposition in the ordinary course of business. That order was essentially one in aid of the judgment. As I understand it, the plant and equipment the subject of the injunction were seized in execution subsequent to the judgment. The respondents also obtained an order for costs. The material established that the fact that judgment was obtained in default of any appearance on the applicant's behalf is explicable in terms of a series of errors and misunderstandings on the part of the applicants' then solicitors, and the· town agents of those solicitors, for which the applicant cannot be held responsible. lt seems that the applicants found out that the judgment had been obtained in their absence when the respondents set about enforcing it by execution. Indeed, C) the sheriff had seized such of the applicant's goods as were available for execution before the applicants were able to move to deal with the situation. I am satisfied that there is a satisfactory explanation for the applicants' non- appearance and that the applicant moved expeditiously to have the judgment set aside once it became aware that it had been obtained. The considerations material () to the exercise of the discretion to set aside the judgment therefore are whether any useful purpose might be served by setting aside the judgment; Evans -v- () Bartlam 1936 AC 473. In the present case that requires a consideration of, but is not restricted to, whether the applicant would have been granted leave to defend on the application for summary judgment. Whether the respondent may be prejudiced in any respect which could not be adequately compensated by suitable orders for costs and the giving of security may also arise on an application such as this; Rosing -v- Ben Sheinesh 1960 V.R. 173, Aboyne Pty Ltd -v- Dixon Homes -- 6 of 12 -- 3 Pty Ltd 1980 Od. R. 142, Surfers Paradise International Convention Centre Pty Ltd -v- National Mutual Life Association of Australasia Ltd 1984 2 Qd R 447. The respondent's statement of claim endorsed on the writ pleaded two oral agreements. Each was said to have been made between the female respondent and the man named O'Donnell on behalf of the applicant. The first was an agreement to purchase the trading stock, established by a stocktake, of the · Metropolitan Hotel at Mackay at a reasonable price. lt is pleaded that the Q stocktake occurred and that a reasonable price for the stock was $31,394.41 . There is, as I understand it, no dispute as to the reasonableness of this price or Q with respect to the subject matter of the stocktake. 0 The second agreement alleged was to the effect that the respondents agreed to sell to the applicants, plant and equipment located at the Metropolitan Hotel at Mackay and more particularly set out in a valuation certificate dated 8 February, 1993 "for fair market value in accordance with a valuation to be carried out by an independent valuer retained by the defendant". The statement of claim went on to plead that no valuation had been made and that the plant and equipment had 0 been delivered to and appropriated by the defendant. lt was then pleaded that pursuant to S. 14 of the Sale of Goods Act the applicant was obliged to pay a reasonable price for the goods. lt seems that a mortgagee, one Silverstein, had entered into possession of the hotel on account of the default of the mortgagor, a company called Jalwick Pty Ltd. The respondents were associated with the operation of the hotel and with Jalwick. The applicant, an entity controlled by O'Donnell, claims to have acquired the hotel from Silverstein as mortgagee in possession. -- 7 of 12 -- 4 I should mention that a number of issues arose with respect to a copy of a purported contract between Silverstein as the mortgagee in possess'ion, and one or other of identities ·apparently controlled by O'Donnell (including the applicant) by which the applicant claimed to have acquired the Metropolitan Hotel. Ultimately the applicant did not contest an objection based on the Stamp Act and the document was not received in evidence. As a consequence, the applicant did not rely on the document. Reference was made to the document or its terms in a number of affidavits, but for the purposes of the outcome of these proceedings, () those references are to be ignored. The respondents claim, and for present purposes may be accepted to have, () a charge over Jalwick's assets. Jalwick's assets include plant and equipment at the Metropolitan Hotel. The ·female plaintiff swore an affidavit in support of the application for summary judgment deposing among other things that the particulars of claim appearing by endorsement on the writ were true and correct to her knowledge. () The applicant submits to the effect that it would have been able to show cause against the respondents, obtaining summary judgment pursuant to order 18 (J essentially on account of two considerations. First that there was at least a triable issue that there was no contract to the effect sued on. Secondly that if there was, it was conditioned on the plant and equipment being acquired from Jalwick. Relevantly to the first point O'Donnell swore as to the events of the alleged oral agreement of 4 May. He swore that he told the female plaintiff in the course of a telephone conversation between him in Canberra and her in Mackay that he was not happy with the valuation of the plant and equipment which the ~~~~- ------ -- 8 of 12 -- 5 respondents had provided because it was prepared on the basis of a going concern. He swore he told the female respondent that he would arrange a valuation of the plant and equipment himself on the basis of auction price, and if the valuation was acceptable to Jalwick, purchase the plant and equipment at valuation. O'Donnell swears that Kent agreed to this. He swears further that he would get the valuation as soon as reasonably possible. There was further conversation, according to O'Donnell, concerning 0 Jalwick's indebtedness to the applicant in an amount of $106,000. Kent, again according to O'Donnell, admitted that Jalwick owed Silverstein that amount. C) O'Donnell claimed that the debt had been assigned to the respondent, Silverstein by the mortgagee in possession. O'Donnell swears that in the same conversation he emphasised to Kent that the applicant would deal only with Jalwick, that any monies paid for plant and equipment would be paid only to Jalwick which would be required to prove that it had good title. There was a further conversation about c) the charge the respondent's claim over Jalwick's assets. O'Donnell and the applicants' agent, one Buggy, were cross-examined. The Q cross-examination was designed, among other things, to show that the applicant, through 0' Donnell and Buggy, contrived to put pressure on the respondents to part with the plant and equipment at the hotel on terms favourable to the applicant and to impeach the arrangements with Silverstein or at least aspects of them. lt is, I think, fair to say that virtually every factual issue which arises on the material in relation to the arrangements involving the applicant, Silverstein or O'Donnell and Buggy and relating to the applicant successfully resisting summary judgment is in contention. -- 9 of 12 -- 6 If O'Donnell's version of the agreement between him and the female respondent is accepted, it seems to me that S. 14 of the Sale of Goods Act would not operate to oblige the applicant to pay a reasonable price for the goods. Moreover, a valuation on the basis that O'Donnell claims was agreed would be different from the valuation ·evidenced by the judgment obtained against the applicant. There is also the issue of whether the applicant's acquisition was conditioned on its being from Jalwick rather than the respondents. lt may be that (') for the purposes of these proceedings the respondents are to be taken as having a valid charge, 6ut that does not preclude the respondents' ultimately being party c) to an arrangement whereby Jalwick passed the property and the goods and received money on the basis that it proved good title to the applicants' satisfaction. I do not propose canvassing the issues which arose in the context of the cross-examination of O'Donnell and Buggy. To deal with those issues seems to (~) me essentially to involve forming a view as to their credibility. lt is inappropriate and indeed impossible to form any conclusion as to that, given the limited extent (~) to which the issues were canvassed. lt is particularly impossible to form any conclusion as to the credibility of O'Donnell and the female respondent in respect of the crucial conversations. There is then a triable issue as to whether there was an agreement of the kind necessary to sustain the plaintiff's judgment in so far as it relates to plant and equipment. I am not persuaded that I should take a view of the evidence of O'Donnell and Buggy such as would render setting the judgment aside "devoid of useful -- 10 of 12 -- --- -------- ·~ \ 7 purpose". This is essentially on account of the creditability and evidentary issues mentioned. The issue of prejudice to the respondents and of conditions upon which the judgment might be set aside now arises. The respondents seek an order that the applicant bring the judgment sum into court, a requirement which I imagine would be satisfied by an order for the provision of an appropriate security. They also seek other conditions which I will deal with later. 0 If the judgment is set aside, then obviously the respondents lose the benefit of the judgment. I say potentially at least, because I am not dealing with any such Q application. In the present case they are, however, additionally prejudiced in that potentially at least they will lose the benefit of the execution founded on the judgment. This is in circumstances where apparently the applicants' only assets are the rights it may have acquired pursuant to the contract with Silverstein as mortgagee in possession of the Metropolitan Hotel. For reasons which I canvassed () earlier, there is no evidence as to the terms of that contract. There is evidence of further potential prejudice to the respondents in that they have dealt with creditors C: on the basis of the judgment leading to funds becoming available in a relatively short time to meet their obligations to creditors. In the whole of the circumstances it seems to me that, if the respondents have the benefit of the execution founded on the judgment, it is not appropriate to order that the judgment sum be paid into court or otherwise secured. On the other hand, if the respondents are to lose the benefit of the execution, they should have security either in terms of the judgment sum being paid into court or otherwise secured to the satisfaction of the Registrar. -- 11 of 12 -- \ ___ ------ - --~---------- ---- 8 There is, as I have previously indicated, no dispute concerning the $31 ,394.41 attributable to stock. The respondents seem to me to be entitled to retain the benefit of the judgment and of the execution in respect of that amount. The injunction seems to be founded on the judgment and in any event rendered irrelevant by events subsequent to judgment. The respondents are entitled to the benefits of the costs orders to date. The respondents' solicitor deposes that party and party costs to date are $25,000 approximately. It seems to me, however, a matter of taxation of the costs in (' i terms of the orders made. They are also entitled to the costs of the execution as are thrown away, $9,700, in the event that they are thrown away as a condition Q of leave to defend. As things presently stand, I am not prepared to order security for costs. I therefore order that the judgment of the respondents in the amount of $276,534.41, together with interest at the rate of 10% on and from 31 May to the date of judgment, be set aside. I order that the respondents have judgment for (') $31 ,394.41, together with interest thereon at the rate of 1 0% on and from 31 May to judgment. (J I give the applicant leave to defend the respondent's claim in respect of the plant and equipment located at the Metropolitan Hotel at Mackay. I give liberty to apply in respect of security for $245,140, the goods taken in execution and generally. The applicant should pay the respondent's costs of and incidental to this application to be taxed and I adjourn the summons to a date to be fixed to be brought on by either party on two days' notice to the other. ----------------------------~---- - -- 12 of 12 --