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[2017] FCA 1226
Federal Court of Australia
2017-10-17
White J
Original judgment source is linked above.
Background to the dispute 10 In order to provide the setting to this decision, it is necessary to set out some further background. 11 In about April 2016, Climate and Golden Cowrie entered into an oral contract for the rendering of research and development services by a Mr Condren to Climate. An affidavit from Mr Warburton, a director of Climate, which the DDR had accepted, indicated that the oral contract included terms that Golden Cowrie would: (1) supply the services of Mr Condren to Climate; (2) charge Climate an hourly rate of $69.27 plus GST in respect of the services performed by Mr Condren; (3) invoice Climate based on a 38 hour week commitment; (4) issue invoices to Climate on a monthly basis in respect of the services of Mr Condren provided during that month, and those invoices would become due and payable by Climate within seven days of issue. 12 The contract between Climate and Golden Cowrie had continued until terminated by Golden Cowrie on 14 October 2016. Golden Cowrie had issued invoices to Climate in respect of the months of June, July, August and September 2016 and Climate paid those invoices (totalling $48,644.20) in the manner contemplated by the oral contract. 13 Following the termination of the contract, Golden Cowrie issued a series of invoices to Climate, as follows: (1) on 15 October 2016, Invoice No 65 (dated 15 October 2016) in the sum of $9,143.64 (GST inclusive) for "R&D Labour September 120 hours @ $69.27/Hr"; (2) on 20 October 2016, an amended Invoice No 65 (dated 15 October 2016) to change the month to which the invoice referred from September to October 2016. The amount claimed remained at $9,143.64 (GST inclusive); (3) on 20 October 2016, Invoice No 66 (dated 20 October 2016) in the sum of $110,000 (GST inclusive) for "R&D contractor payment"; and (4) on 15 November 2016, a further version of Invoice No 65 (dated 15 October 2016) in the sum of $11,734.37 (GST inclusive) for: (a) "R&D Labour October 120 hours @ $69.27/Hr"; (b) "R&D Labour August 14 hours @ $69.27/Hr (as yet uncharged)"; and (c) "R&D Labour September 20 hours @ $69.27/Hr (as yet uncharged)". 14 For present purposes, the invoice for the amount $110,000 can be put to one side. It did not form any part of the debt which was the subject of the Statutory Demand. 15 During November 2016, the solicitors for Climate exchanged correspondence with Mr Condren regarding Golden Cowrie's claims. These included the following: by letter dated 2 November 2016, Climate's solicitors pointed out that Golden Cowrie's termination of the contract on 14 October 2016 meant that it had no entitlement to payment after that date and invited the submission of a revised invoice for the nine business days during October prior to Golden Cowrie's termination of services. The solicitors also foreshadowed a claim by Climate against Golden Cowrie by reason of the latter's termination of the contract without notice; on 13 November 2016, Mr Condren sent to Climate directly further copies of the invoices of 15 October 2016 ($9,143.64) and of 20 October 2016 ($110,000); Climate's lawyers responded to Mr Condren on 14 November 2016 referring him (relevantly) to their letter to him of 14 November 2016; by letter dated 15 November 2016, Mr Condren foreshadowed revising the 15 October 2016 invoice "to reflect the unpaid hours that were worked and not yet charged" and said that he would be pursuing Invoice No 66 (for $110,000). Mr Condren attached to that email a tax invoice dated 15 October 2016 showing that a total of $11,734.37 was due; by letter dated 21 November 2016, Climate's solicitors informed Mr Condren that it did not accept that he had worked 120 hours in October 2016 before the termination of the agreement on 14 October. The solicitors also noted that "the hours claimed contradict the agreed arrangement … that [Golden Cowrie] would invoice [Climate] a maximum of 38 hours per week". They invited Golden Cowrie to issue a revised invoice for work performed in October 2016, and questioned why the additional hours now claimed by Golden Cowrie for August and September 2016 had not been included in the previous invoices issued for those months. The solicitors requested timesheets or other evidence to support the claim for the additional hours. Climate's solicitors concluded their letter by saying: Our client wishes to resolve this matter amicably to the extent possible and is disappointed with the uncooperative approach you have taken to date. If it becomes necessary for our client to incur further legal costs in defending unsubstantiated claims it will seek to recover these costs from you and/or [Golden Cowrie]. 16 It seems there was no further communication between the parties until Golden Cowrie served the Statutory Demand on 4 May 2017. The debts which were the subject of the Statutory Demand are those set out in the version of Invoice No 65 provided to Climate on 15 November 2016. 17 Climate's solicitors sent a letter to Golden Cowrie's solicitors on 17 May 2017 containing an offer with the following elements: (1) Climate to pay Golden Cowrie, within seven days of acceptance of the proposal and delivery of a revised tax invoice reflecting these terms, the sum of $5,211.88 (inclusive of GST); (2) Golden Cowrie and Mr Condren to release Climate and its officers, agents and employees from any and all claims relating to the amounts claimed in the Statutory Demand; (3) Golden Cowrie to withdraw the demand immediately. Climate also made an alternative proposal but it was not suggested that it was material for present purposes. 18 Climate's offer of 17 May 2017 was open for acceptance to close of business on 19 May 2017. Golden Cowrie did not accept the offer and it thereby lapsed. As already noted, Climate then commenced the setting aside proceedings of the Statutory Demand on 25 May 2017. 19 In the affidavit supporting that application, Mr Warburton deposed to matters indicating the existence of a genuine dispute as to $6,522.49 of the amount demanded by Golden Cowrie. In relation to the balance, Mr Warburton deposed: [33] [Climate] is prepared to concede that a portion of the alleged debt comprising the Statutory Demand is undisputed, based upon 9 business days worked during the month of October, being the sum of $5,211.88 and, as it has previously advised [Golden Cowrie] and Mr Condren, is prepared to pay [the] same upon receipt of a revised tax invoice in that sum. 20 By letter dated 29 May 2017, Golden Cowrie's solicitors informed Climate's solicitors that they regarded the application to set aside the Statutory Demand as "an abuse of the Corporations Act 2001's (Act) and the Honourable Court's process". The solicitors accused Climate's solicitors of arranging for the application to be heard more than one month after the filing of the setting aside application and noted that the application itself had not been filed until the last of the 21 day fixed by the Corporations Act s 459(2)-(3). They suggested that Climate was engaging in "delaying tactics" due to it being insolvent and that Climate's directors were continuing to trade unlawfully. Neither the letter of 29 May 2017, nor any of the subsequent material, provided any particulars by way of justification of these assertions. Golden Cowrie's solicitors' letter concluded with a demand: (1) for payment of $5,211.88; (2) that Climate file and serve an amended originating process; (3) Climate provide evidence to Golden Cowrie of its solvency. 21 The solicitors required that these demands be complied with by 2 June 2017 "failing which we hold instructions to immediately bring winding up proceedings". 22 By letter dated 30 May 2017, Climate's solicitors refuted with accompanying detail the allegations made by the solicitors for Golden Cowrie and maintained that Climate was prepared to pay the sum of $5,211.88 "subject to our client first receiving a revised tax invoice for the correct amount". The solicitors continued: For reasons only known to your client, your client has chosen not to submit a revised tax invoice in respect of those 9 days of work. Unless and until that occurs there remains a dispute. In those circumstances it is appropriate for the application to seek an order setting aside the Statutory Demand in its entirety. 23 On 19 June 2017, Golden Cowrie's solicitors wrote again to Climate's solicitors, informing them that if Climate paid $5,211.88 by 12 noon on 23 June 2017, Golden Cowrie would consent to the setting aside application being dismissed with no order as to costs. They also said that Golden Cowrie would issue Climate with a revised invoice for $5,211.88 on payment of that amount, noting that the offer was made on the basis that Golden Cowrie did not waive its right to payment of the balance of the amount referred to in the Statutory Demand. 24 By letter dated 23 June 2017, Climate's solicitors rejected the offer of Golden Cowrie, principally because the Statutory Demand would still remain extant. Climate then made a counter proposal that it pay Golden Cowrie $5,211,88 subject to Golden Cowrie: (1) consenting to an order setting aside the statutory demand; (2) consenting to an order that it pay the costs of Climate on the application to set aside the Statutory Demand, as agreed or taxed; (3) providing Climate with a "valid" tax invoice. It said that this was required so as to allow Climate to claim an input tax credit. 25 Golden Cowrie rejected that offer with its solicitors saying in the letter of 26 June 2017: We note your comment in respect of your client still being "completely exposed" should it have accepted our client's offer. It is very clear from our letters dated 29 May 2017 and 19 June 2017 that the Defendant will not pursue the Plaintiff for the balance of the debt pursuant to its Statutory Demand and will withdraw it. To be clear, our client still maintains that the Plaintiff is liable to pay the balance, but will not seek to recover it by the statutory demand. Given you deliberately chose to serve the application on the very last day of the 21-day compliance period, the parties were prevented from reaching a sensible agreement whereby the Plaintiff would pay the undisputed amount and the Defendant would withdraw the demand upon receipt, avoiding the need to use the Court's time. We confirm that upon payment to the Defendant … of the sum of $5,211.88 by 4:00 pm on 27 June 2017, our instructions are to consent to an order to set aside the Statutory Demand with no order as to costs. 26 The assertion as to the effect of the letter dated 29 May 2017 made in the first of these paragraphs is not correct. No such proposal was made in that letter. The contention in the second paragraph as to the effect of the application having been filed on the 21st day is difficult to follow, all the more so by reason of Golden Cowrie's omission to respond to Climate's offer of 17 May 2017. I observe that this contention was repeated in the outline of submissions of Golden Cowrie filed on 27 June 2017. 27 In the hearing before the DDR, it was common ground that there was a "genuine dispute" for the purposes of s 459H of the Corporations Act in relation to the amount of $6,522.49 in the Statutory Demand. Climate contended that there was also a genuine dispute for the purposes of s 459H with respect to the balance of $5,211.88. This was so, Climate contended, because its agreement with Golden Cowrie was such that it had no liability to pay the amount of $5,211.88 unless and until Golden Cowrie issued it with an invoice for that sum. With no such invoice having been issued, there was accordingly a genuine dispute about whether it had a present liability to pay the sum of $5,211.88. 28 The DDR rejected that contention. He noted that there was no genuine dispute that Golden Cowrie had rendered services to Climate during the nine business days before the termination of the contact of 14 October 2016 and no dispute that the value of those services was at least $5,211.88. The DDR considered that Mr Warburton's evidence did not establish that the terms of the oral contact required Golden Cowrie to issue a further invoice for precisely $5,211.88 in order for that amount to become due. The DDR then concluded: I do not therefore consider that there is a genuine dispute about whether $5,211.88 is owed to Golden Cowrie. It is therefore appropriate for the Statutory Demand to be revised. The DDR then rejected a submission from Climate that any revision to the Statutory Demand should be on condition that an invoice for that amount be issued first.
The present application 29 This is the setting in which the wide discretion with respect to costs vested in the Court by s 43 of the FCA Act is to be exercised. It is well established that, ordinarily, costs should follow the event so that a successful litigant receives its costs in the absence of special circumstances justifying some other order and that it may be reasonable that a litigant who succeeds only upon a portion of the claim bears the expense of litigating that portion upon which it failed: see Hughes v Western Australian Cricket Association (Inc) [1986] ATPR 40-748 at 48,136. Costs are compensatory in nature and not punitive so that they are usually awarded on a party-party basis. However, in cases involving "some relevant delinquency" on the part of the unsuccessful party in which it may be appropriate to award costs on a solicitor-client basis or on an indemnity basis: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [44]. 30 Indemnity costs have been awarded in the statutory demand context. In Professional Advantage Pty Ltd v Australian Broadcasting Commission [2007] NSWSC 607, White J made an order for indemnity costs in proceedings to set aside a statutory demand because of the defendant's improper use of the statutory demand procedure and its persistence in the claim even when it should have been apparent to it that there was a genuine dispute as to the debts claimed. See also R2M Ltd v Gourlay [2011] FCA 168; In the matter of Suters Holdings Pty Ltd [2012] NSWSC 1051; Tekno Autosports Pty Ltd v Jenkins (No 2) [2014] FCA 809. 31 Counsel for Golden Cowrie placed particular emphasis on the following passages of the judgment of Barrett J in CGI Information Systems and Management Consultants Pty Ltd v Apra Consultant Pty Ltd [2003] NSWSC 728; (2003) 47 ACSR 100: [19] In the s 459G field, Santow J warned in a number of judgments that, with the hurdle to be cleared by companies seeking to have statutory demands set aside being so low, creditors persisting with the defence of such applications need to consider carefully, against the possibility of an order for indemnity costs, whether there are valid grounds for their taking up court time and putting the company to expense by doing so … … [21] … [I]t is important to remember that the party by whom a statutory demand is served is entitled not only to test the recipient company's claim that the alleged debt is genuinely disputed but also to see the evidence the plaintiff is able to marshal in support of the claim of genuine dispute. That principle has been stated on several occasions by Palmer J in sounding a note of caution about the award of indemnity costs in this type of case … [22] I accept that the possibility of an order for indemnity costs should not be allowed to deter a party by whom a statutory demand has been served from putting the company to appropriate proof of the genuine dispute it asserts. But that principle has a limit to it. … [T]here are cases in which attempts to resist the setting aside of the demand are, even on the interpretation of the facts most favourable to the defendant, so devoid of prospects of success as to be perverse. The opportunity to put the company to proof of the asserted genuine dispute is something to which the defendant should not be regarded as entitled in such obvious cases. A defendant, on having an obvious and irremediable weakness in its position pointed out, ought to withdraw the statutory demand. If, in such circumstances, such a defendant does not do so, it may well be appropriate for the court to award costs to the plaintiff on the indemnity basis. 32 In the present case, identifying the "event" which the costs should follow is not straightforward. Climate had some success because the Statutory Demand was, in effect, set aside to the extent of $6,522.49. It failed, however, in having the Statutory Demand set aside altogether because the DDR rejected its contention that it did not have any liability to pay the sum of $5,211.88 did not arise until it received an invoice for that amount was rejected. I observe in this respect that the relief sought by Climate had been the setting aside of the Statutory Demand in its entirety. This was confirmed by the affidavit of 25 May 2017 made by Mr Warburton at [4], by the outline of submissions it filed on 20 July 2017 at [3] and by the oral submissions before the DDR. In these circumstances, despite the revision of the amount in the Statutory Demand, I do not consider that it should be held that Climate was the successful party. It failed to obtain the relief it sought and which it persisted in pursuing after it was apparent that Golden Cowrie conceded that there was a genuine dispute with respect to $6,522.49. Accordingly, Golden Cowrie is, prima facie, entitled to an order of costs in its favour. 33 The offer which Golden Cowrie made on 26 June 2017 is also pertinent in this respect. As already noted, Golden Cowrie said in that letter that, upon payment of $5,211.88 by 4 pm on 27 June 2017, it would consent to an order setting aside the Statutory Demand with no order as to costs. Counsel submitted that, putting aside the issue of costs, Golden Cowrie had, in effect, achieved the same result. Counsel also contended that the proposal with respect to costs was appropriate because it reflected that each had had some success. I agree with that submission and consider that Climate should have accepted that offer. Instead it persisted with its erroneous assertion that no liability would arise until it received an amended invoice. 34 However, Climate submitted that a number of matters should be held to disentitle Golden Cowrie to its costs. 35 First, it contended that it had practical success in the litigation. This submission cannot be accepted, for the reasons already given. 36 Secondly, Climate referred to the offer contained in the letter from its solicitors to Golden Cowrie's solicitors on 17 May 2017, set out earlier in the reasons. Counsel characterised this offer as a Calderbank offer - see Calderbank v Calderbank [1975] 3 All ER 333. 37 The difficulty for Climate with this contention is that, while it did offer to pay Golden Cowrie the sum of $5,211.88, it imposed an additional term, namely, that acceptance of the offer required both Golden Cowrie and Mr Condren to release it and its officers, agents and employees "from any and all claims relating to the amounts claimed in the Statutory Demand". That is to say, Golden Cowrie could accept the offer only by giving up its claim to the balance of the amount claimed in the Statutory Demand. Climate did not achieve that position in the litigation because Golden Cowrie remains able to sue for the balance of the sum demanded. That being so, the offer of 17 May 2017 does not avail Climate presently. 38 Climate also referred to the offer it made on 23 June 2017 and submitted that it had been unreasonable of Golden Cowrie not to have accepted that offer. I observe, however, that acceptance of the offer required Golden Cowrie to pay Climate's costs of the application to set aside the Statutory Demand, as agreed or taxed even though Climate was recognising that $5,211.88 was the subject of a proper demand. On my assessment, it was unreasonable for Climate to adopt that position. The situation called for some sensible compromise on the question of costs. 39 Thirdly, Climate criticised Golden Cowrie's issuance of a statutory demand for the full amount of $11,734.37. It should have known, Climate submitted, that there was a genuine dispute for all but the amount of $5,211.88. The fact that it had issued, and for a time pursued, the demand for the full amount altered the course of the subsequent litigation and to costs being incurred unnecessarily. There is greater force in this submission. 40 Climate's solicitors had told Mr Condren by the letter of 21 November 2016 that it did not accept that he had performed 120 hours of work in the nine business days before 14 October 2016; that the hours claimed contradicted the agreed arrangement that Golden Cowrie would invoice Climate on the basis of 38 hours per week; and that, despite their requests, Mr Condren had not provided any evidence corroborating the amounts claimed or that the hours claimed to have been worked had been approved by it. It should have been obvious to Mr Condren that his claim to have worked 120 hours in only nine business days (or 14 days overall) gave rise to a real question about the reliability of the claim. In these circumstances and having regard to the relatively low threshold for the existence of a genuine dispute (see for example, Polaroid Australia Pty Ltd v Minicomp Pty Ltd (1997) 16 ACLC 529), Golden Cowrie should have known that there was a genuine dispute with respect to at least this part of his claim. It is unsurprising that, later, Golden Cowrie conceded that a genuine dispute existed in relation to that part of its claim. 41 I accept that the sum of $5,211.88 had not been quantified at the time the Statutory Demand was issued. This figure was first identified in the letter from Climate's solicitors of 17 May 2017 being the pro-rata hours based on a 38 hour week at $69.27 (ex GST) per hour. Nevertheless, Golden Cowrie could have made the same calculation itself before issuing the Statutory Demand. 42 I am satisfied therefore that it was inappropriate for Golden Cowrie to have issued a statutory demand for the full sum of $11.734.37. It did not need to see Climate's evidence to know that there was a genuine dispute as to $6,522.49. 43 There is a question as to whether the subsequent course of events would have been any different had Golden Cowrie confined the Statutory Demand to a claim for $5,211.88. One would like to think that the parties, acting sensibly, would not have wished to engage in the litigation they did had, from the outset, the dispute involved only $5,211.88. Golden Cowrie could have resolved the impasse by providing a revised invoice without prejudice to its ability to claim later the increased amount. That it could have done so is evidenced by the draft of the invoice attached to the letter of Golden Cowrie's solicitors of 19 June 2017 which they said Golden Cowrie was prepared to deliver upon payment of the sum of $5,211.88. On the other hand, Climate could have modified its position if the dispute had concerned only $5,211.88 and not been so obdurate in insisting upon the provision of a revised invoice. It is difficult to think that parties acting sensibly and with regard to the overarching purpose stated in ss 37M and 37N of the FCA Act would not have been able to resolve the dispute readily in the context now being discussed. 44 However, it is the fact that Climate maintained its position that Golden Cowrie should provide an invoice in the sum of $5,211.88 before that amount became due, and it did so even after Golden Cowrie had conceded a genuine dispute in relation to $6,522.49. This suggests that Climate's conduct may well have been the same even had the Statutory Demand been confined to $5,211.88. 45 In these circumstances, I consider that while Golden Cowrie should bear some responsibility for the legal costs which have been incurred in relation to these proceedings, that responsibility should be confined to the work relating to its inappropriate claim for $6,522.49. I will take into account that, although making offers to compromise, Golden Cowrie did not concede the genuine dispute with respect to the $6,522.49 until its solicitors' letter of 26 June 2017. 46 Fourthly, Climate relied on aspects of the conduct of Golden Cowrie in the litigation which had caused the incurring of costs unnecessarily. In particular, counsel referred to the allegations by Golden Cowrie's solicitors that Climate's application to set aside the Statutory Demand was an abuse of process and that Climate's solicitors had been party to that abuse by engaging in certain conduct for an ulterior (and improper) purpose. Counsel referred in this respect to the assertions of Golden Cowrie's solicitors in the letter of 29 May 2017 as follows: (c) your client has listed the Application for hearing on 28 June 2017, more than one month after the filing of your client's Application, which Application was also filed exactly 21 days after service of the Demand. Our inquiries have revealed that the courts have available hearing dates for your client's Application well before 28 June 2017; and (d) our client has reason to believe that your client's delaying tactics are due to it being insolvent, and that your client's directors continue to trade your client unlawfully despite its obvious insolvency. Serious penalties apply for such conduct under the Act. 47 Unsurprisingly, Climate's solicitors wished to respond to these imputations. They pointed out that the hearing date had been determined by the Court and not by themselves, that the Corporations Act allows 21 days for the filing of an application to set aside a statutory demand, and refuted the suggestion that Climate was engaging in "delaying tactics". It was also reasonable for Climate, during the 21 day period, to have endeavoured to resolve the dispute consensually, as its solicitors did by the letter of 17 May 2017. With the exception of one request for clarification of terms of the offer, Golden Cowrie did not respond to that attempt at all. It is unfortunate that the solicitor for Golden Cowrie repeated the imputations in the Outline of Submissions filed on 27 June 2017. 48 I also observe that, contrary to the assertions from the bar table by Golden Cowrie's counsel, the Adelaide Registry of this Court does not publish in advance times at which applications for the setting aside of statutory demands may be heard, leaving it to the plaintiff to select a time of its choice. Instead the listing date of an application to set aside a statutory demand is fixed by the Court, although the Court does endeavour to take account of any request by a plaintiff. The position is described in paragraphs 5 and 20 of the Court's Guide for Practitioners and Parties in Corporations Matters Listed Before a Registrar: 5. First Court date and time standards 5.1 Parties can generally expect a first hearing date to be listed within 2-6 weeks of filing an application, depending on the nature of the application. 5.2 Parties may request a hearing on a particular date on which a List is conducted. This request can be made via eLodgment. The Registry will endeavour to accommodate the request depending on the number of matters already listed on the date requested. Arrangements for hearing corporations matters by Registrars and relevant listing information for Registrar Court Lists in each registry is available online (see paragraph [20] of this Guide). 5.3 The Court aims to have all Registrar matters that are appropriately dealt with to conclusion within 3 months of the first return date. Practitioners are expected to assist the Court to meet this standard. … 20. Publication of the Registrar Court List 20. 1 Listing information for a Registrars' corporations list is available online at Daily Court Lists. 20.2 The Registry aims to publish the Registrars' List for the following day by 4pm. 49 The inflammatory and provocative tone of some of the correspondence from Golden Cowrie's solicitors is also unfortunate, as was the assertion that Climate's application was an abuse of process. This is especially so given Golden Cowrie's later concession that there was a genuine dispute in respect of more than half of the amount it had claimed in the Statutory Demand. 50 Having regard to the third and fourth matters, I consider that, despite its success, Golden Cowrie should be found to have unreasonably caused some costs to be incurred. It should not recover those costs and should pay the costs which it caused Climate to incur unnecessarily. There is a question as to the way in which effect is to be given to this conclusion. In my opinion, justice will be done by an order that Golden Cowrie recovers only some of its costs. On my assessment, an appropriate order is that Golden Cowrie recovers 60% of its costs. The matters to which I have referred also indicate that an order for costs on an indemnity basis is inappropriate.
Conclusion 51 For the reasons given above, Order 4 made by the Deputy District Registrar on 9 August 2017 is set aside. In its place there will be an order that the Plaintiff pay 60% of the Defendant's party-party costs to be taxed in the absence of agreement. I will hear from the parties on the costs of the review hearing. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.
Climate Change Technologies Pty Ltd
Golden Cowrie Holdings Pty Ltd
3 On 25 May 2017, Climate commenced proceedings seeking the setting aside of the Statutory Demand. The proceedings were heard by a Deputy District Registrar (DDR). On 9 August 2017, the DDR published his decision. The orders made by the DDR were as follows: 1. The statutory demand issued by the defendant to the plaintiff dated 3 May 2017 (the Demand) be varied so that the amount in paragraph 1 of the Demand of $11,734.37 be deleted and replaced with the amount $5,211.88. 2. The Demand is to have effect as varied by order 1 above from 4 May 2017, being the date upon which it was served on the plaintiff. 3. The time for compliance with the Demand be extended to 5 pm on 16 August 2017. 4. The defendant pay the plaintiff's costs of the proceedings on an indemnity basis, such costs to be taxed if not agreed. 4 In effect, the DDR found that there was genuine dispute with respect to the sum of $6,522.49 (this had been conceded by Golden Cowrie), rejected Climate's contention concerning the balance, and rejected Climate's application for the whole of the Statutory Demand to be set aside, and not revised. The DDR went on to order that Golden Cowrie pay Climate's costs of the application on an indemnity basis. 5 Section 35A of the FCA Act authorises specified powers of the Court to be exercised by a Registrar if the Court or a Judge so directs. These powers include the Court's power with respect to costs (subs (1)(f)) and any power prescribed by the Court's Rules (subs (1)(h)). Sections 35A(5) and (6) of the FCA Act provide for a review of the exercise by a Registrar of these powers: (5) A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power. (6) The Court may, on application under subsection (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised. 6 On 28 August 2017, Golden Cowrie lodged an application seeking review of the "Order" of the DDR. The application indicated that it sought only variation of the DDR's costs order. In particular, the application made it apparent that Golden Cowrie sought an order that Climate should pay its costs on an indemnity basis or, in the alternative, on a party-party basis, rather than it having to pay Climate's costs on an indemnity basis. 7 However, at the hearing, counsel for Golden Cowrie (who is also its solicitor) said, initially, that it sought review of the exercise of the DDR's powers with respect to the whole of the application to set aside, and not just the exercise of the costs power. In support of this submission, counsel referred to West International Pty Ltd v Ultradrilling Pty Ltd [2008] FCA 1443; (2008) 68 ACSR 108 in which Gordon J at [6] noted that a review under s 35A(5) is to be "a complete rehearing" in which the Court is to exercise the discretion unfettered by the decision of the Registrar. 8 I ruled that the application raised only the DDR's exercise of the power concerning costs. As indicated, that was the effect of Golden Cowrie's application and it had not given forewarning that its application was to be more broad-ranging. Furthermore, it was not practically possible for the Court to hear de novo the setting aside application because the extended time for compliance with the Statutory Demand has already expired and Golden Cowrie had received (and was retaining) the payment of $5,211.88 from Climate. I did not regard this position as inconsistent with West International because the parties would have a complete rehearing of the issue concerning the costs, but on the basis of the outcome of Climate's application to set aside the Statutory Demand, as determined by the DDR. 9 It is regrettable that the parties have not been able to resolve the dispute considering costs by sensible negotiation. The amounts expended on the review of the DDR's decision concerning costs must be out of proportion to the amounts actually in dispute.
(1998) 193 CLR 72
[1998] HCA 11