D B Mahaffy & Associates Pty Ltd v Mahaffy

Corporations Act 2001 (Cth) LEGISLATION CITED : Civil Procedure Act 2005 (NSW) Acts Interpretation Act 1901 (Cth) Legal Professional Act 2004 (NSW)

Eumina Investments Pty Ltd v Westpac Banking Corporation (1998) 84 FCR 454 Midas Management Pty Ltd v Equator Communications Pty Ltd [2007] NSWSC 759; (2007) 25 ACLC 1038 D B Mahaffy & Associates Pty Ltd v Mahaffy [2010] NSWSC 609 Five G Pty Ltd v Pinacle Funding Group Pty Ltd [2008] NSWSC 228 Derma Pharmaceuticals Pty Ltd v HBSC Bank Australia Ltd [2005] SASC 48; (2005) 188 FLR 373 CASES CITED : Rochester Communications Group Pty Ltd v Lader Pty Ltd (1997) 143 ALR 648 Telstra Corporation Ltd v Ivory; Telstra Corporation Ltd v Solar-Mesh (Australia) [2008] QSC 123 Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743 Elm Financial Services v MacDougal [2004] NSWSC 560 Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 Country Law Services v Duff [2007] NSWSC 1509

PARTIES : Plaintiff: D B Mahaffy & Associates Pty Ltd Defendant: Jeffrey Mahaffy

COUNSEL : Plaintiff: D Mahaffy (director of plaintiff) Defendant: In person

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

2010/92009 D B Mahaffy & Associates Pty Ltd v Jeffrey Mahaffy JUDGMENT 1 HIS HONOUR: This is an application to set aside a statutory demand. The statutory demand was served by the defendant and claimed a debt of $125,264.61 as the balance due and payable by the plaintiff company under a costs order made in the District Court on 4 September 2009.

2 The debt was described as follows: " The amount payable under the Judgment (excluding interest after judgment under section 101 of the Civil Procedures Act 2005 [sic] ) as at the date of this Demand is $119,349.46, which represents original judgment amount of $136,679.46 less payment received on 25 September 2009 for $2,330 and payment received on 2 March 2010 for $15,000. The Debt now also includes interest payable under section 101 of the Civil Procedure Act of $5915.15. The amount still due and payable by the company for the Judgment Debt is now $125,264.61. "

3 The issues on the present application are first, whether the originating process and supporting affidavit were served on the defendant within the required period of 21 days after service of the statutory demand.

4 The second question is whether the plaintiff company has an offsetting claim, being a claim for damages it has brought against the defendant in District Court proceeding number 2007/295752. 5 The plaintiff says that the amount of its claim for damages in the District Court against the defendant exceeds the judgment debt the subject of the statutory demand. 6 The third question arises under s 459J(1)(b) of the Corporations Act 2001 (Cth). It is whether there is "some other reason" to set aside the demand. 7 The plaintiff contends that the judgment the defendant has obtained for a lump sum amount of costs in the District Court ought not to have been given. 8 The plaintiff contends that the judgment ought to be set aside. 9 In a number of cases it has been held that even though there can be no dispute that a debt is owed under a judgment whilst the judgment is in force, nonetheless if an application has been made to have the judgment set aside and there are seriously arguable grounds for such an application, then that may constitute "some other reason" why the demand should be set aside under s 459J(1)(b). (See, for example, Eumina Investments Pty Ltd v Westpac Banking Corporation (1998) 84 FCR 454 and Midas Management Pty Ltd v Equator Communications Pty Ltd [2007] NSWSC 759; (2007) 25 ACLC 1038.) 10 Sometimes orders made on this basis setting aside a statutory demand are made on terms that the judgment debt, which is sought to be disputed on appeal, be paid into Court. 11 The background for the service of the statutory demand is the District Court proceeding between the parties to which I earlier referred. 12 The defendant's evidence is that those proceedings were commenced by the plaintiff and its sole director, Mr David Mahaffy, on 3 May 2006 in the District Court in Tamworth. 13 The defendant says, and this is corroborated by the subsequent orders to which I will shortly refer, that the plaintiffs failed to comply with the Court's orders for the progress of the claim and filed no evidence in support of it. The claim was twice amended. The proceedings were transferred from Tamworth to Sydney. A cross-claim was filed by the defendant against the plaintiff. 14 The matter came before her Honour Judge Gibb in the District Court on 12 February 2009. Her Honour granted leave to the plaintiffs to file and serve a second further amended statement of claim. Her Honour ordered that the plaintiff's claim be stayed in the event of non-compliance with costs orders against the plaintiff without prejudice to the defendant's right to proceed with his cross-claim. 15 Her Honour vacated previous costs orders against the defendant on the plaintiff's claim and ordered the plaintiff to pay all of the defendant's costs thus far on the plaintiff's claim (but not on the cross-claim) on the indemnity basis, including all costs incurred and thrown away by reason of the second further amended statement of claim, up to and including 12 February 2009. 16 By a Notice of Motion filed by the defendant on 26 August 2009 in the District Court, the defendant sought orders that the second further amended statement of claim be stayed and: " 2. That the Cost orders made in favour of the Defendant on 12 February 2009 by SJ Gibb DCG [sic] be upheld and enforced.

3. That a Cost order is made for the immediate payment by the Plaintiff for all of the Defendants [sic] costs up to and including 12 February 2009 on the Plaintiff's claim. "

17 That application came before his Honour Judge McLoughlin on 4 September 2009. 18 There was no appearance for the plaintiff. 19 His Honour ultimately proceeded under s 98(4) of the Civil Procedure Act 2005 (NSW) in making an order for a specified gross sum instead of assessed costs. His Honour said in the course of his reasons: " The difficulty for the defendant is that he has spent a considerable amount of money in the defence of these proceedings and has in place an order that entitles him to indemnity costs up until the date of that order and that is 12 February, with the result [that] the defendant has suffered significant economic hardship ...

This will continue with perhaps insolvency or bankruptcy should this court not decide to quantify such costs. There is no doubt that her Honour Judge Gibb had in mind that the defendant would be entitled to indemnity costs for all moneys expended by him in the defence of the proceedings up until that date. I accept his evidence that the bills that have been annexed to his affidavit, properly reflect the amount spent. He has spent of [sic] his own professional time, he being an accountant, in the attendance on solicitors and the like.

The defendant seeks payment of the costs and disbursements which he has expended of $65,296.65 and $59,382.81. In addition, he seeks an allowance for costs for the time he has expended himself. The amount he claims for this, the latter portion is well over $100,000, I do not propose to accede to that. However I do think your [sic] figure should be allowed and I would allow $10,000 for that amount.

I am therefore of the view, in the quantification of the amount, an order pursuant to s 98 subs (4) of the Civil Procedure Act , [should be made] that the plaintiff pay to the defendant the sum of $134,679.46, being the total cost [sic] payable pursuant to the order of her Honour Judge Gibb of this court on 12 February 2009. I confirm the order that the plaintiff's proceedings are stayed until such sum is paid. I order the plaintiff to pay the defendant's costs of this motion, which I assess in the sum of $2,000. "

20 On 23 September 2009 the plaintiff filed a notice of motion (amended on 28 September 2009) seeking orders that the orders made by his Honour Judge McLoughlin on 4 September 2009 be vacated or, alternatively, be stayed. 21 There appears then from the record of the orders made in the District Court to have been numerous further appearances, some of which at least related to the plaintiff's amended notice of motion of 28 September. 22 On 7 December 2009 His Honour made an order as follows: " 1. Approve cost assessor nominee Ms Geraldine Daly [sic] ... Leave to plaintiff's solicitor to uplift the file from Levitt Robinson and Everingham Solomons to convey them urgently to Ms Daly [sic] for her costs assessment.

2. Note that he [scil. the defendant] will advise Ms Daly [sic] that many or all of the documents will be privileged and she should treat them in this way. ... "

23 I infer, and I did not understand this to be a matter of real dispute, that the plaintiff sought to have the defendant's costs up to 12 February 2009 assessed on the basis that if the costs assessment was for a materially lower sum than the lump sum ordered by McLoughlin DCJ on 4 September 2009 the plaintiff would seek to rely upon that as a ground supporting its application to vacate the orders made on 4 September 2009, or to stay those orders. 24 In submissions before me, the plaintiff says that the costs assessment has not been able to be progressed through the default of the defendant. In submissions the defendant contests this. I will return to this question in due course when dealing with the third issue. 25 The plaintiff's amended notice of motion of 28 September 2009 came before McLoughlin DCJ on a number of further occasions. 26 On 14 May 2010 his Honour stood over the notice of motion to 18 June pending receipt of the cost assessor's report. On 18 June, it and other notices of motion were fixed for hearing on 16 July 2010. 27 The record of his Honour's order of 16 July 2010 reads in respect of the plaintiff's notice of motion of 28 September 2009: " I do not make the orders sought but stay until further order conditional upon $25,000 being paid within 7 days (as above) by D B Mahaffy.

I grant leave to D Mahaffy to seek similar relief as to stays and/or variation of my original order when and if Ms Daley's evidence is to hand.

Plaintiff's Amended [Notice of Motion] of 28/9/10 [sic] [stood over for further directions] before me on 10/9/10 ...

I grant leave to D Mahaffy to file [Notice of Motion] seeking relief on that date. "

28 The reference to the earlier order requiring payment of $25,000 within seven days concerned orders as to costs made against Mr David Mahaffy. It appears that on 5 March 2010 McLoughlin DCJ ordered that he be jointly liable with the plaintiff under the costs order made by her Honour Judge Gibb on 12 February 2009. 29 On 16 July 2010 McLoughlin DCJ quantified the costs order against Mr Mahaffy in the same sum as the sum quantified against the company, but stayed that order on conditions, including the payment of $25,000 within seven days. 30 His Honour ordered the parties to proceed with diligence in compliance with the requests of Ms Daley.

Service within 21 days 31 With that background I turn to the three questions for decision on the application. I will deal first with whether the proceeding is brought within time. 32 Mr David Mahaffy deposed that the plaintiff was served with the statutory demand on 29 March 2010. The originating process and an affidavit of a Mr Walter John Mungo MacCallum were filed on 15 April 2010. It is the plaintiff's case that that affidavit is a supporting affidavit within the meaning of s 459G of the Corporations Act and that the originating process and the affidavit were served on the defendant on 16 April 2010, well within the prescribed period of 21 days. 33 There is no real issue as to the time of service of the statutory demand. The defendant deposes that it was mailed to the plaintiff by registered post and awaited collection at the Narrabri Post Office and was collected by the plaintiff on 29 March 2010. On that basis it seems to me that the demand was served on 29 March. 34 However, it is not necessary to pursue this question because the plaintiff does not suggest that the defendant was served with the application and supporting affidavit on any day within the prescribed period of 21 days other than on 16 April. 35 Service is said to have been effected in two ways. First, it is said that the defendant was personally served by a process server, a Ms Brown, outside the District Court in the afternoon of 16 April 2010. 36 The defendant denied being served with any documents at that time. His evidence was that he was in the company of another brother, Mr Peter Mahaffy. Mr Peter Mahaffy gave evidence corroborative of the defendant's evidence that he was not served. 37 The question of service came before Barrett J on the defendant's interlocutory process seeking summary dismissal of the claim (D B Mahaffy & Associates Pty Ltd v Mahaffy [2010] NSWSC 609).

38 His Honour found that there was a live factual issue to be explored in full at the trial as to whether a copy of the originating process and supporting affidavit of Mr MacCallum were served on the defendant on 16 April or at all. 39 When the matter came for hearing before me, as was the case before Barrett J, neither party had legal representation. None of the relevant deponents on the question of personal service had been required to attend for cross-examination. There was no cross-examination. Hence the question of personal service is to be decided from the affidavits alone. The onus is on the plaintiff to establish that service was effected within the prescribed period, as the court's jurisdiction to entertain the application depends upon timely service (Five G Pty Ltd v Pinacle Funding Group Pty Ltd [2008] NSWSC 228 at [10]; Derma Pharmaceuticals Pty Ltd v HBSC Bank Australia Ltd [2005] SASC 48; (2005) 188 FLR 373 at [28]). 40 Ms Brown deposed that she met the plaintiff's solicitor, Mr MacCallum, on the afternoon of 16 April and that Mr MacCallum identified the defendant to her by pointing him out through the glass in the court door. She said she then waited outside the courtroom until she observed him and another unidentified male leaving the courtroom. She says she followed both men out of the District Court to Goulburn Street. She then handed the originating process and Mr MacCallum's affidavit to the person who had been pointed out to her as the defendant. She asked that person whether he was Jeffrey Mahaffy. The person replied, "My name is Stephen". She asked if he had identification to prove he was not Jeffrey Mahaffy. He replied no. She said that she had been told that he was Jeffrey Mahaffy and left the documents with him. She observed the person throwing the documents on the ground and his companion picking them up. 41 Mr Peter Mahaffy says that he was in the defendant's presence all that afternoon and that no such incident occurred between the defendant and a process server. That is also the defendant's evidence. 42 There was no affidavit from Mr MacCallum to establish that the person Ms Brown said he had identified as the defendant was in fact the defendant. As I have said, Ms Brown was not required for cross-examination. She was cross-examined before Barrett J, but neither party tendered the transcript of that cross-examination. I express no view as to whether it would have been admissible had it been tendered. 43 In the face of the defendant's denial, corroborated by the evidence of Mr Peter Mahaffy, and in the absence of evidence from Mr MacCallum on the question of identification, I am not satisfied that the plaintiff has discharged the onus of establishing personal service on the defendant on 16 April 2010. 44 However, that is not the end of the question. There was also evidence from another process server, a Mr Lloyd, in an affidavit sworn on 19 April 2010 that he served a copy of the originating process and an affidavit of "Walter John Mungo" (which is clearly a reference to the affidavit of Walter John Mungo MacCallum) at premises at 99 Rose Street, Wee Waa. He deposes that he found the premises closed with a sign on the door stating that the office was temporarily closed for medical issues. He placed the documents in a sealed addressed envelope and left the envelope in the mailbox at the address to which he said the only access was from inside the building. It appears that the mailbox is part of the premises at 99 Rose Street, Wee Waa. 45 A statutory demand is required to specify the address for service of copies of any application and supporting affidavit under s 459G. In this case the statutory demand states that the address of the creditor for service of copies of any application and affidavit is 99 Rose Street, Wee Waa. There is no evidence to contradict Mr Lloyd's evidence that he did leave the documents at that address on 16 April. 46 On Mr Peter Mahaffy's return on 26 April 2010 he found a large yellow envelope with the name "Jeffrey Mahaffy" hand written on its outside, slipped under the door to the office building, as well as having found another envelope addressed to the defendant in the wall mounted mailbox to the premises. The defendant deposes that the address at 99 Rose Street, Wee Waa is his office at which he carries on his profession as an accountant. 47 Section 28A of the Acts Interpretation Act 1901 (Cth) provides that: " 28A Service of documents (1) For the purposes of any Act that requires or permits a document to be served on a person, whether the expression 'serve', 'give' or 'send' or any other expression is used, then, unless the contrary intention appears, the document may be served: (a) on a natural person: (i) by delivering it to the person personally; or (ii) by leaving it at, or by sending it by pre paid post to, the address of the place of residence or business of the person last known to the person serving the document. ... " 48 Service by Mr Lloyd was effective service on the defendant both because service is permitted at the address stated in the statutory demand (Rochester Communications Group Pty Ltd v Lader Pty Ltd (1997) 143 ALR 648 at 679-680), and because service is effective under s 28A (Telstra Corporation Ltd v Ivory; Telstra Corporation Ltd v Solar-Mesh (Australia) [2008] QSC 123 at [60]-[61]). 49 The application is therefore brought within time. 50 I understood in final submissions the defendant to have disputed that the affidavit of Mr MacCallum, which I have found was served on 16 April, is a supporting affidavit within the meaning of s 459G. That was a question adverted to by Barrett J. Mr MacCallum relevantly annexed a faxed copy of Mr Mahaffy's affidavit of 14 April. Mr MacCallum said that Mr Mahaffy was located in Narrabri and, because of time constraints, it had not been possible for the plaintiff's lawyers to obtain the original of Mr Mahaffy's affidavit for filing. 51 Accordingly Mr MacCallum swore and filed an original affidavit to which the facsimile copy of Mr Mahaffy's affidavit of 14 April was attached. It is clear that Mr Mahaffy's affidavit would qualify as an affidavit supporting the application within the meaning of s 459G. As an annexure it formed part of Mr MacCallum's affidavit. In my view, Mr MacCallum's affidavit was an affidavit supporting the application within the meaning of s 459G.

Offsetting claim 52 I turn to the second question, whether the plaintiff has identified an offsetting claim within the meaning of s 459H, that is, a genuine claim that the company has against the defendant by way of counter-claim, set-off or cross-demand. In Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743 Palmer J said (at [18]) that for an offsetting claim to be genuine, it must be advanced in good faith, and in this context good faith means being arguable on the basis of facts asserted with sufficient particularity to enable the court to determine that the claim is not fanciful. 53 To establish a genuine claim for unliquidated damages it is incumbent on the plaintiff to adduce evidence to show the basis upon which the loss is said to arise and how the loss is calculated. If such evidence is lacking the court cannot find that there is a genuine offsetting claim for the purpose of s 459H (Macleay Nominees Pty Ltd v Belle Property East Pty Ltd at [18]). It is not necessary that the parties seeking to have the statutory demand set aside be able to particularise the amount of the offsetting claim to the last dollar and cent. It would be sufficient if there were a plausible and coherent basis for asserting the claim to a sum which, despite elements of uncertainty, can be seen to be greater than the amount of the debt the subject of the statutory demand (Elm Financial Services v MacDougal [2004] NSWSC 560 at [19]). 54 In this case the only evidence of an off-setting claim was the identification of the ground of such a claim in Mr David Mahaffy's affidavit of 14 April 2010. In that affidavit he said that for some years before July 2005 the defendant was employed by the plaintiff in its accounting practice at Wee Waa. He said that the defendant and his employer fell into dispute on various matters including the defendant's performance as an accountant in that practice. The defendant's employment was terminated on 11 July 2005. Mr David Mahaffy then deposed: " At the time of termination of his employment, the Defendant converted and/or detained to his own use, various goods and chattels used in the conduct of the Wee Waa practice and files relating to clients of the Wee Waa practice. Notwithstanding demands for the return of these goods, chattels and files, the Defendant refused to do so. "

He also said: " I refer to Annexure 'C' hereto and say that the Plaintiff seeks damages, alternatively an account of profits, for an amount in excess of the amount claimed in the Statutory Demand. The general basis of the Plaintiff's claim is for damages suffered by reason of converted goods and chattels and further, the loss of income and goodwill as a consequence of the Defendant's conversion/detention of the Plaintiff's client files, and receipts of monies from clients in respect of work in progress which is the property of the Plaintiff. The claim also seeks damages in the alternative, for the Defendant's misuse of confidential information belonging to the Plaintiff ".

55 The annexure C referred to is not of any assistance. It was the cross-claim brought by the defendant against the plaintiff in the District Court. It was not the statement of claim or the second further amended statement of claim brought by the plaintiff against the defendant. 56 I allowed the paragraphs quoted above as evidence identifying grounds upon which the plaintiff contends that it has an offsetting claim, but limited the use to which the evidence could be put to the identification of such grounds. It is established in this area that a supporting affidavit may take the form of a pleading which identifies the grounds of dispute of a claim for debt or the grounds of an offsetting claim, even though the evidence is not admissible to establish such grounds of genuine dispute or claim. Unless there is such an identification in the supporting affidavit filed and served within the prescribed period, the applicant is not entitled to rely upon such grounds at the hearing. If such grounds are raised in the supporting affidavit, later evidence can be adduced to establish them. However, there was no other evidence of the facts said to give rise to those claims. There was no attempt to quantify with any particularity, or at all, the amount of the asserted offsetting claim. No facts were asserted with sufficient particularity to enable the court to determine that the claim was genuine and not fanciful. 57 The defendant's evidence is that, notwithstanding that the proceedings were commenced more than four years ago, the plaintiff has not served any evidence in support of its claim as amended, and despite requests for a break down of particulars of claimed damages of $750,000 no breakdown, calculation or particulars have been provided. That claim is presently stayed in the District Court for non-compliance with costs orders. 58 In all of these circumstances I am not satisfied that the claims identified in Mr David Mahaffy's affidavit as giving rise to an offsetting claim are genuine and, in any event, they have not been raised for any quantifiable amount. Some other reason to set aside the demand 59 I turn then to the third issue, that is whether there is some other reason within the meaning of s 459J(1)(b) why the demand should be set aside. It is clear that some amount was owing pursuant to her Honour Judge Gibbs' orders of 12 February 2009 and would be owing even if McLoughlin DCJ's orders of 4 September 2009 were set aside. 60 In those circumstances, for the plaintiff to establish that there is some other reason why the demand should be set aside, it is incumbent on it to show both that it is seriously arguable that it is entitled to have the judgment of 4 September 2009 set aside, and also to show the quantifiable amount of the debt for costs which is genuinely in dispute. 61 As to the first matter, there were two bases upon which the plaintiff could have the order of McLoughlin DCJ of 4 September 2009 set aside. One is pursuant to r 36.16 of the Uniform Civil Procedure Rules on the basis that the judgment was a default judgment given in the absence of the plaintiff. That is the course the defendant pursued by its amended notice of motion of 28 September 2009. 62 The second course would be by seeking leave to appeal to the Court of Appeal from that judgment. 63 The first avenue has been pursued in the District Court. It was open to the plaintiff to put to McLoughlin DCJ all of the arguments which were put at length before me as to why the judgment ought be set aside. I have no reason to doubt that such arguments were put. The upshot has been that the judgment has not been set aside. 64 A stay was granted on condition. The defendant contends that the condition was not satisfied and that the sum of $25,000 was not paid. The plaintiff gave no evidence that the condition had been satisfied and did not assert that the money had been paid. Therefore, it is not, I think, seriously arguable that, as matters presently stand, the plaintiff is entitled on an application under r 36.16 to have the judgment set aside. That application has been considered and dealt with. 65 So far as the second avenue is concerned, I was informed by the defendant that an application for leave to appeal to the Court of Appeal from McLoughlin DCJ's orders of 4 September 2009 has been filed. This was confirmed by Mr David Mahaffy for the plaintiff. It also appears from orders made by McLoughlin DCJ on 16 July 2010. That application to the Court of Appeal has not been tendered. There is no material before me which sets out any evidence or submissions advanced in the Court of Appeal in support of the application. It is not possible for me to form a view that that application has merit. (Compare Eumina Investments Pty Ltd v Westpac Banking Corporation at 460-461.) 66 Nor is there evidence before me from which the plaintiff can identify a particular amount of the debt for costs which is genuinely in dispute. The plaintiff sought to tender certain documents including what was said to be the document in the nature of a bill of costs tendered before McLoughlin DCJ on 4 September 2009. The plaintiff also sought to tender a letter from Ms Daley as to the progress, or lack of progress, of the costs assessment. Neither document had been included in any affidavit served by the plaintiff. The plaintiff had been given a number of extensions of time in which to file and serve its evidence. On 19 July 2010 Barrett J had directed that no further evidence be filed and served by the plaintiff. I rejected the tender, having regard inter alia to that order. 67 In submissions, the plaintiff, through Mr David Mahaffy, said that it would contend that various expenses submitted by the defendant to McLoughlin DCJ on 4 September, which formed the basis of the lump sum costs order of that date, should not have been allowed because the defendant had not paid for the expenses claimed. 68 Mr David Mahaffy also contended, as I understood it, that the defendant had claimed amounts for travel which were in excess of his actual expenses. The first difficulty with these contentions is that they are not raised in Mr Mahaffy's affidavit of 14 April as a ground for disputing the judgment of 4 September 2009. In that affidavit Mr David Mahaffy did say (in a paragraph I rejected) that directions had been made for a costs assessment to be carried out by Ms Daley, and that he believed once she had reviewed the costs claim by the defendant, the outcome of that review would be a figure significantly less than the amount in his Honour's costs order. But he did not identify any ground upon which he said that the costs claimed by the defendant were excessive. He did not, for example, say in that affidavit that the defendant had claimed for expenses which he had not incurred, or which he had not paid. 69 It follows on the principles in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 that it is not open to the plaintiff to rely upon such grounds on this application. 70 I should add that even had the evidence I rejected been allowed, it would not have established the non-payment of expenses. Moreover, contrary to the submissions of Mr David Mahaffy, it is not the case that before persons entitled to the benefit of a cost order can recover disbursements, that the disbursements must have been paid, as distinct from the person entitled to the benefit of the order being under a liability to pay the disbursements. (See Country Law Services v Duff [2007] NSWSC 1509 at [51] and cases there cited.) It is sufficient that disbursements have been incurred. It is my recollection that it was formerly the practice of a taxing officer to require proof of payment (for example counsel's fees), but my attention has not been drawn to anything in the Legal Professional Act 2004 (NSW) or regulations which would require proof of payment, as distinct from proof of liability. 71 For these reasons, the plaintiff has not demonstrated any quantifiable amount for which the amount of costs ordered by McLoughlin DCJ is genuinely disputed. 72 I do not consider that there is some other reason why the demand should be set aside. 73 For these reasons I order the originating process be dismissed.

[The parties addressed on costs.] 74 Mr David Mahaffy says, as I understand his submission, that I should not make any order for costs because the defendant is self-represented. However, the defendant will have incurred expenses in defending the application including travel expenses and photocopying costs. There may be other expenses he has incurred which will be recoverable under a costs order. I order the plaintiff pay the defendant's costs of the application. The exhibits may be returned after 28 days.

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