Connectland Pty Ltd v Porthaven Pty Ltd

Judgment 1HIS HONOUR : These proceedings were commenced by an originating process filed on 27 April 2011. 2The plaintiff applied under s 459G of the Corporations Act 2001 (Cth) for an order to have a statutory demand served on it by the defendant set aside. 3The statutory demand is dated 6 April 2011 and demands payment of a debt of $67,189.85. This debt is described as a judgment debt entered in the Local Court at Bankstown on 25 March 2011. 4The originating process was accompanied by an affidavit sworn on 25 April 2011 by Ms Rosa Caporale. She deposes that she is a director of the plaintiff. It is clear from a comparison of signatures that the originating process filed for the plaintiff was signed by her. No solicitor is named as acting for the plaintiff. 5The originating process was first returnable before the Registrar on 9 June 2011. 6Ms Caporale sent an email to the Registrar on 8 June 2011 advising that she was unable to attend on the following day as she had another urgent court matter to attend to. She asked that the matter be adjourned and relisted on 30 June 2011 or another date after that. 7A copy of that email was sent to the solicitor for the defendant who responded on the same day, that is 8 June 2011, by advising that whilst the defendant did not object to an adjournment of the proceedings on the following day, he considered that an adjournment until 30 June 2011 was too long, and advised that on the next day he would seek an adjournment to 14, 20 or 27 June 2011 to the Corporations List Judge. 8On 9 June 2011 there was no appearance for the plaintiff. The Registrar stood the proceedings over to 20 June 2011 before the Corporations List judge. On 9 June 2011 the solicitors for the defendant advised Ms Caporale that on that day the Registrar made an order for the matter to be listed before the Corporations List Judge on 20 June 2011 to take a hearing date. 9On 16 June 2011 Ms Caporale forwarded another email to the Registrar in which she stated (incorrectly) that in her email of 8 June 2011 requesting deferment of the matter, she had advised that she was unavailable until 30 June 2011 due to other court commitments. 10Ms Caporale advised that she was unable to appear on 20 June 2011 and proposed a timetable for the plaintiff to file and serve further evidence by 18 July 2011; the defendant to file and serve evidence by 15 August 2011; and she requested that the matter be set down for hearing some time after 26 September 2011, and stated that she might be overseas before that time. 11On 17 June the solicitors for the defendant advised Ms Caporale that they did not agree with that proposal, and stated that they were in a position to proceed on Monday and that if there was no appearance on that day, an application would be made to strike out the originating process. 12When the matter came before me in the Corporations List on 20 June 2011, there was again no appearance for the plaintiff. Counsel for the defendant asked that the matter proceed. Having regard to the advice given to Ms Caporale that the matter would be listed before the Corporations List Judge on 20 June 2011 to take a hearing date, I declined to take that course. However, I listed the matter for hearing at 2pm today and directed that notice of that hearing date be given to Ms Caporale. That has been done. 13Today Ms Caporale has forwarded another email to the Registrar in which she says that she has another court matter today and that she had emailed to the court some dates on 16 June 2011 which might be suitable to both parties. She stated that she did not believe that this would prejudice any party and said " I would appreciate confirmation of this matter ". 14When the matter was called on this afternoon, there was again no appearance for the plaintiff. 15It is unacceptable that on now three occasions the plaintiff should not have appeared. The period for compliance with the statutory demand is currently being extended whilst the plaintiff's application to set the demand aside remains undetermined ( Corporations Act , s 459F). It is unacceptable that the plaintiff should seek to obtain a lengthy extension of time for compliance with the demand whilst it remains undetermined. 16There is no material before the court to corroborate the assertion that Ms Caporale has been in another court on each of 9, 20 and 21 June 2011. Nor is there any material before the court to explain why the plaintiff does not have other representation if she unavailable to appear for it. 17Rule 7.1 of the Uniform Civil Procedure Rules 2005 provides that a natural person may commence and carry on proceedings in any court either by a solicitor or in person. 18Sub-rule 7.1(2) provides that a company may commence and carry on proceeding in any court by a solicitor, or by a director of the company. However, sub-rule 7.1(3) provides that in the case of proceedings in the Supreme Court, sub-rule (2)(a) authorises a company to commence proceedings by a director only if the director is also a plaintiff in the proceedings. 19Ms Caporale is not a plaintiff in the proceedings and she would not be a proper party had she so named herself. Accordingly, these proceedings have not been properly commenced. The court could dispense with these requirements of the rules pursuant to s 14 of the Civil Procedure Act 2005 (see Access Services Group Pty Ltd v McLoughlin [2006] NSWSC 532; (2006) 57 ACSR 725). The failure to commence the proceedings by a solicitor is an irregularity that does not invalidate the proceedings (see Corporations Act , ss 467A and 1322; JSBG Developments Pty Ltd v Kozlowski [2009] NSWSC 1128; and In the matter of TQC International Pty Ltd [2010] NSWSC 1260). 20Nonetheless, it is relevant to deciding whether to proceed with the present application in the absence of an appearance for the plaintiff, that the stated ground on which the plaintiff's director seeks an adjournment is that she is unavailable to appear due to other court commitments, but she has no entitlement to represent the plaintiff. That is to say whilst the requirements of r 7.1(2) and (3) could be dispensed with and Ms Caporale could be given leave to appear in the proceedings for the plaintiff, the plaintiff is not entitled to such an order as of right. In the absence of a dispensing order, the plaintiff's obligation was that it retain a solicitor to act for it. 21In considering whether I should proceed to deal with the application in the absence of any appearance for the plaintiff, I have considered whether there is any prima facie merit to the application. There is not. 22The supporting affidavit of Ms Caporale annexes terms of settlement of proceedings between the parties in 2009. Those proceedings arose from the service of a prior statutory demand by the defendant on the plaintiff. The terms of settlement of the 2009 proceedings provided that the originating process in those proceedings be dismissed, and that the plaintiff pay the defendant's costs. The terms of settlement contained an acknowledgement by the plaintiff that it was indebted to the defendant in the sum of $77,000 as alleged in the earlier statutory demand. 23Clause 4 of the terms of settlement contained an agreement by the plaintiff to pay the debt in weekly instalments of $500 and then $1,000, with the remaining unpaid portion of the debt to be paid by 1 August 2010. 24Clause 6 of the terms of settlement provided that upon the plaintiff making a payment of $14,000, in addition to the payments provided for in clause 4, then the defendant agreed that within seven days of the payment being cleared it would release to the plaintiff all plans held by it in relation to a particular project, and further agreed that the plans would contain identified detail and information. 25In her affidavit of 25 April 2011 in support of the originating process in this case, Ms Caporale deposes that on 30 March 2011, $14,000 was deposited into the defendant's account to satisfy clause 6 of the terms of settlement. She does not depose that the plaintiff made the other payments required by the terms of settlement. 26Evidence from the defendant establishes that $55,000 of the agreed $77,000 was not paid. It was this debt that gave rise to the judgment on which the statutory demand is based. 27In her supporting affidavit, Ms Caporale deposes that clause 6 of the terms of settlement was not met by the defendant by the time stated and therefore the plaintiff terminated and cancelled the agreement and terms of settlement. 28Ms Caporale did not depose to any primary facts which might support this conclusion. It is clear from clause 6 of the terms of settlement that the defendant's obligation to release plans was dependant upon the plaintiff both making the payment of $14,000 and the payments provided for by clause 4. In any event, it appears from the defendant's evidence that on 7 October 2010, the defendant rescinded the terms of settlement for the plaintiff's failure to pay the moneys due. 29The affidavit of Ms Caporale does not indicate any grounds on which there might be a genuine dispute as to the debt the subject of the statutory demand, nor any grounds upon which the defendant might have an offsetting claim. Nor is there any evidence by which any offsetting claim, if there were one, could be quantified. 30The originating process also makes reference to s 459J. Ms Caporale deposes that an application has been made in the Local Court to have the judgment of 25 March 2011 set aside and for its enforcement to be stayed whilst an application to set aside the judgment is heard and determined. However, her affidavit provides no grounds upon which therein might be even an arguable case for the setting aside of the judgment. The judgment was given after a contested hearing in the Local Court. There has been no appeal. 31In my view it is not in the interests of justice to further adjourn the hearing of this application. The plaintiff has had the opportunity to appear. Even if Ms Caporale is unable to appear personally, no reason has been provided as to why the plaintiff should not have appeared through a solicitor as the Rules require. 32For the reasons I have given, on the basis of the supporting affidavit, the claim is, in any event, without merit. For these reasons, I order that the originating process be dismissed. I will hear counsel for the defendant on costs. [Counsel addressed on costs.] 33The defendant seeks its costs of the proceeding on the indemnity basis. 34In my view there has been a degree of delinquency in the conduct of the proceeding that justifies an indemnity costs order. For the reasons I have given, the proceedings were not properly commenced, although they are not on that account a nullity. 35The affidavit in support of the originating process fails to set out facts which would give rise to an arguable dispute or offsetting claim, and fails to set out any facts that would show that there is an arguable claim that the judgment debt on which the statutory demand is founded is liable to be set aside. 36Moreover, the affidavit conceals facts that would be relevant to an offsetting claim for alleged breach of the terms of settlement. Ms Caporale did not refer in her affidavit to the letter from the defendant's solicitor of 7 October 2010 rescinding the terms of settlement. An affidavit should tell the whole truth. Insofar as the affidavit suggested that there may be an offsetting claim for a breach of the terms of settlement arising after 30 March 2011, Ms Caporale's failure to depose to those facts is plainly material. 37Moreover, the plaintiff has repeatedly failed to appear on the application. 38In my view the proper inference is that the application was brought merely for the purpose of obtaining an extension of time for compliance with the statutory demand. 39For these reasons I order that the plaintiff pay the defendant's costs of the proceedings on the indemnity basis. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 June 2011