Dominion Capital Pty Ltd v Pico Holdings Inc [2001] VSC 458

"This proceeding was intended to be an application under section 459G of the Corporations Act for an order setting aside the statutory demand dated 4 September 2001 served on the plaintiff by the defendant. There was a defect in the demand, however, in that it gave as the address for service of the defendant for the purposes of such an application not an address in Victoria where the registered office of the plaintiff is and where the demand was served on it (and as provided for in Form 509H, the form of statutory demand - see section 459E(2)(e)), but the address of the defendant's solicitors in New South Wales. Service of the defendant at that address could not validly be effected save in compliance with the Service and Execution of Process Act 1992; but that Act could not be complied with because the defendant's registered office is not at the solicitors' address and, indeed, the defendant, a company incorporated in the United States of America, has no registered office in Australia: see Service and Execution of Process Act, section 9, 15(1) and (3), and 16. Accordingly, the plaintiff, despite attempts to effect service at the office of the solicitor's Victorian agents and at their office did not, and could not effect valid service of this proceeding. Since service within 21 days after service of the statutory demand is a jurisdictional requirement, this proceeding must be dismissed. In the circumstances, the plaintiff is presently taken to have failed to comply with the demand through being deprived of the opportunity validly to apply for an order setting it aside solely through the fault of the defendant by its solicitors in Sydney who drew and served the demand. The defendant has not undertaken that it will not seek the winding up of the plaintiff based on its non-compliance with the demand and the Court requires that it inform any court to which it makes an application for the winding up of the plaintiff based on such non-compliance that in this proceeding it has been held that: (a) the statutory demand was defective in that it did not specify an address of the defendant for service in Victoria; (b) the plaintiff had not made an application under section 459G of the Corporations Act 2001 but that this was due to the defect and was not the fault of the plaintiff; and (c) if there were a winding up application based on the defective statutory demand the defendant could expect to be required to show cause why section 467A(b) of the Corporations Act 2001 should not apply so as to require that the application be dismissed."

"1. The proceeding is dismissed. 2. The defendant attach to any winding up application based on the defective statutory demand a copy of this order as authenticated. 3. The defendant pay the plaintiff's costs of this proceeding including costs reserved on 17 October 2001 as between solicitor and own client."

Pico submitted on the appeal that both orders 2 and 3 should not have been made.

13. On 9 July 2001 Pico, a company incorporated pursuant to the laws of the State of California in the United States of America, commenced a proceeding against Dominion seeking repayment of two secured loans made by Pico to Dominion ("the primary litigation"). In relation to the first loan for US$1,000,000 with interest at 8% per annum, Dominion was alleged to have executed a Non-Negotiable Secured Promissory Note dated 8 September 2000 in favour of Pico. In relation to the second loan for US$1,200,000 with interest at 12% per annum, Dominion was alleged to have executed a Non-Negotiable Secured Promissory Note dated 22 December 2000 in favour of Pico.

16. On 20 August 2001 Bongiorno, J. ordered in the primary litigation that until 4.30 p.m. on 29 August 2001 Dominion, whether by itself or by its servants or agents, be restrained from selling, assigning, transferring or disposing of any of its assets other than for the bona fide payment of its arms length creditors or for the payment of legal costs to a maximum total of $75,000 per week. The injunction was later extended "until further order". On 30 August 2001 his Honour ordered that there be judgment for Pico in the sum of US$1,200,000 with interest at 12% from 22 December 2000 to the date of payment and that Dominion have unconditional leave to defend in relation to the balance of the proceeding.

19. On 4 September 2001 Pico's solicitors in New South Wales, Gilbert & Tobin, issued a s.459E statutory demand. The statutory demand, accompanied by a letter from Arnold Bloch Leibler, indicating that they were the Victorian agents for Gilbert & Tobin, was served on Dominion on the following day. The debt was said to be US$1,301,391.78 and was apparently based on the order of Bongiorno, J. made on 30 August 2001 referred to in the previous paragraph. The statutory demand purported to be in the prescribed form (Form 509H), but the address of Pico for service of any application and supporting affidavit under s.459G was stated as:

"c/- Gilbert & Tobin Attention: Georgina Hayden/Simone Baumgarten 2 Park Street Sydney, N.S.W. 2000."

23. The form prescribed under s.459E(2)(e) by reg. 1.0.03(1) is Form 509H of the Corporations Regulations. Paragraph 6 of the prescribed form is in these terms:

"The address of the creditor for service of copies of any application and affidavit is (insert the address for service of the documents in the State or Territory in which the demand is served on the company, being, if solicitors are acting for the creditor, the address of the solicitors)."

"A form must be completed in accordance with the directions and instructions specified in the form."

As no address for service in Victoria was set out in the statutory demand, there was non-compliance with the prescribed form. (Although neither party referred to the point, it would appear that the statement of the debt in US dollars and not in Australian currency was a further deficiency: see Vehicle Wash Systems Pty. Ltd. v. Mark VII Equipment Inc.[1])

31. Dominion commenced a s.459G application on 26 September 2001, the last day of the 21 day period permitted by s.459G(2). It was supported by an affidavit sworn by a director of Dominion, Peter David Voss. That affidavit raised two grounds in support of an order setting aside the statutory demand. The first ground was that Dominion would be "in breach" of the injunction made by Bongiorno, J. "if it were to pay the amount claimed by Pico in the statutory demand". The second ground was that Pico had failed in the statutory demand to specify an address for service within Victoria.

34. In an affidavit sworn 17 October 2001, Jeremy John Whelen, a solicitor employed by Mallesons Stephen Jaques ("Mallesons"), the solicitors for Dominion, deposed that it became apparent to him on or about 24 September 2001 that Pico's specification of an address for service in New South Wales created a difficulty for Dominion. Mr. Whelen said that service at the address specified in the statutory demand would not constitute service in accordance with s.9(1) of the Service and Execution of Process Act 1992 (Cth.) ("SEPA") because it was not the registered office of Pico. Indeed, Pico did not have a registered office anywhere in Australia and there was no suggestion that there was a director of Pico residing in Australia (see s.9(2) of SEPA). Mr. Whelen also said that at that time O.7 of the Supreme Court Rules did not appear to him to be applicable so as to enable service of the proposed application on Pico in the United States of America.

37. On 26 September 2001 Mr. Whelen arranged for the s.459G application and Mr. Voss' affidavit and a notice required by SEPA and a covering letter to be sent by facsimile to Gilbert & Tobin in Sydney and to Arnold Bloch Leibler in Melbourne. He also arranged for the s.459G application and Mr. Voss' affidavit and a covering letter to be delivered by hand to Arnold Bloch Leibler. However, that firm said that it had no instructions to accept service. Mr. Whelen also arranged for all of the documents previously faxed to Gilbert & Tobin to be delivered by hand to that firm in Sydney. Service was attempted on Ms. Georgina Hayden, the solicitor handling the matter, on 27 September 2001 but she refused to accept service pointing out that "these documents were due yesterday ..."

40. On 27 September 2001 Gilbert & Tobin wrote to Mallesons a letter which relevantly read:

"We note that your facsimile purported to 'serve' a faxed copy of an originating process filed by Dominion Capital Pty. Ltd. to set aside Pico's statutory demand dated 4 September 2001. Pursuant to the Corporations Law, 2001 [sic], Dominion Capital was required to file and serve any section 459G application to set aside the statutory demand by no later than 26 September 2001. In order to do so, service of such application had to be effected on the address for service stated in the 4 September 2001 statutory demand - ie Gilbert & Tobin, 2 Park Street, Sydney, NSW 2000 - in accordance with the relevant service provisions for an originating process of that type. Your reliance on Rule 6.07(1)(e) of the Supreme Court of Victoria Rules is misplaced as that section has no application to a Corporations Law [sic], section 459G application. You have failed to effect service of Dominion Capital's section 459G application in accordance with the provisions of the Service and Execution of Process Act, 1992, the Corporations Law [sic], and the rules of the Supreme Court of Victoria. Pico does not, nor can it, waive your failure to effect service of the section 459G application within the required 21 day period. Accordingly, Dominion Capital's section 459G application must be dismissed. We invite Dominion Capital to voluntarily dismiss that application. If your client fails to do so by Tuesday, 3 October 2001, our client reserves its rights, including, without further notice to you, making an application to set aside the section 459G application, and will seek costs on an indemnity basis."

44. On 11 October 2001, Pico filed a conditional appearance to Dominion's application.

48. The s.459G application was returnable before the Senior Master on 17 October 2001, but was adjourned to the following day. Apparently following an enquiry by the Senior Master, Mr. Whelen filed a second affidavit sworn 17 October 2001, in which he deposed to the fact that in the primary litigation, Bongiorno, J. had made five sets of orders on 20, 29 and 30 August 2001, that on 6 September 2001 Mallesons had made five separate requests for authentication of his Honour's orders and that Mallesons had received the authenticated orders on 20 September 2001. Mr. Whelen's affidavit concluded that as at 4 September 2001, the date of the statutory demand, no order had been authenticated and filed.

51. Following another adjournment, the matter was heard and determined by the Senior Master on 19 October 2001. He made the order set out in paragraph 2 above.

55. The appeal came on for hearing before me on 2 November 2001. The day before, my Associate had contacted the parties seeking outlines of submissions. I received Pico's outline of submissions which I assumed had been made available at the same time to Dominion. I subsequently found out that this was not the case. Instead, there was discussion between the solicitors about an exchange of submissions between counsel, but this did not occur until the hearing commenced. As I said at that time, it is quite inappropriate for material to be submitted to the Judge without it being made available to the other side either before or at the same time. Failure to follow this practice seems to occur more and more nowadays and as far as I am concerned it must cease immediately.

58. An appeal from a Master is a rehearing de novo (r.77.05(7) of the Supreme Court Rules). Relying on this, Pico had changed its position in one significant respect. As stated in its submissions, Pico was now "willing on the appeal to concede valid service within s.459G of the Corporations Act 2001 of the debtor's application to set aside the statutory demand". Pico submitted that the Court could act on this concession and therefore that it had jurisdiction to consider the merits of the application to set aside the statutory demand. Alternatively, Pico submitted that if the Court did not act on the concession, the application had to be dismissed because there was no evidence that it had been validly served in accordance with s.459G. Pico conceded that the failure to nominate an address for service in Victoria was a defect in the statutory demand. Nevertheless, Pico argued that it could have been served in accordance with O.7 of the Supreme Court Rules. Paragraphs (f), (g), (h) and (k) of r.7.01(1) were suggested to be relevant. Alternatively, Pico submitted that Dominion could have obtained the leave of the Court to serve a foreign company, in accordance with r.7.06(b). A final submission by Pico on this aspect was that in the circumstances, given Dominion's unsuccessful attempts to serve Pico within the required period, Pico was arguably estopped from submitting that service had been invalid.

61. This was an entirely new way of dealing with the question of the validity of the service of the application to set aside the statutory demand. The fact that Pico was intending to concede that Dominion had served its s.459G application within time was stated in a letter from Gilbert & Tobin to Mallesons, which was faxed at approximately 12.56 p.m. on 1 November 2001. However, as a result of Pico's failure to serve its submissions at the same time as it made them available to me, Dominion had had no real explanation of the way in which Pico was now approaching this question of service. I therefore adjourned the hearing of the appeal for a week, despite Pico's submission that Dominion should have been prepared to meet all of the arguments relevant to what was, after all, Dominion's own application.

64. I was subsequently informed that, later on 2 November 2001, Pico filed a winding up application against Dominion under s.459G of the Corporations Act 2001 in the Victorian Registry of the Federal Court of Australia. In accordance with the order of Senior Master Mahony made on 19 October 2001, a copy of that order was attached to the winding up application. When the appeal came on for hearing on 9 November 2001 I raised with the parties what, if any, consequence this further step by Pico had on the continuation of the hearing of the appeal. Eventually, after a short argument, I decided that the hearing should continue.

67. Mr. Pearce of counsel who appeared for Pico again submitted that as the creditor was offering to concede such facts as would allow Dominion's application to be treated as being on foot, that is, that valid service was made on Pico under s.459G(3), the Court had jurisdiction to hear the application on its merits. In addition to the submissions referred to in paragraph 15 above, Mr. Pearce also submitted that there had been informal service under r.6.11 of the Supreme Court Rules by sending the documents by facsimile to the office of Pico's New South Wales solicitors within the required 21 day period.

70. Mr. Gardiner of counsel who appeared for Dominion submitted that Pico could not "concede" that an application was on foot. He argued that Dominion had not made an application within the time prescribed by s.459G(2) for the simple reason that in the circumstances of the case it was impossible to do so. He therefore submitted that the Senior Master's order dismissing his client's application was correct.

73. The Court is, therefore, faced with the unusual situation of an applicant, Dominion, arguing that its application is without jurisdiction and should be dismissed, and a respondent, Pico, arguing that there was jurisdiction to hear the application, or that it should be estopped from submitting that service had been invalid, or conceding such facts as would allow the application to be treated as being within jurisdiction. The statement of this point serves to underline the artificiality of the particular dispute.

76. In my opinion, the Court has no jurisdiction to hear the application when it and the supporting affidavit have not been effectively served "in accordance with" the requirements of s.459G(2) and (3): David Grant & Co. Pty. Ltd. (Receiver Appointed) v. Westpac Banking Corporation[2]. Here, there was no effective service because the address for service in the statutory demand was in New South Wales and not Victoria where the demand had been served on Dominion, and that address was not the registered office of the corporate creditor as required by s.9(1) of SEPA. Therefore, there had been no application "under" s.459G.

79. Mr. Pearce conceded that the Court could not act on Pico's "concessions" where there were no agreed facts. He also accepted that as Dominion refused to argue estoppel or informal service, despite Pico's invitation to do so, the Court could not consider those arguments. I therefore conclude that the application by Dominion should be dismissed.

83. Mr. Pearce submitted that the Senior Master should not have made what he called "the inhibiting orders", that is order 2 of the order made on 19 October 2001 and all of the matters set out in Other Matters in that order (see paragraph 2 above). In making those orders the Senior Master followed what he had done in Ultimate Manufacturing Pty. Ltd. v. Lyell Morris Pty. Ltd.[3] and Highfield Woods Pty. Ltd. v. Bayview Crane Hire Pty. Ltd.[4] Mr. Pearce submitted that "the effect" of such orders "would be to inhibit the creditor from acting on the statutory demand". Clearly this was the intention of the Senior Master, for, as he said in Highfield Woods, he made the orders because:

"... justice required that appropriate steps be taken to dissuade the creditor from taking advantage of its having deprived the applicant of a remedy intended to be available under s.459G."[5]

87. Pico correctly conceded that the Court has power to make orders of the kind made by the Senior Master. What the creditor submitted was that no such orders should be made by me because there was no formal application for them and no proper material supporting such an application (see Re Commercial Trade Finance Pty Ltd.[6]) Alternatively, it was submitted that I should refuse such relief in the exercise of my discretion.

90. Mr. Pearce referred me to the decision of Byrne, J. in Marlan Financial Services Pty. Ltd. v. New England Agricultural Traders Pty. Ltd.[7] In that case his Honour refused to make an order of the kind mentioned in Ultimate Manufacturing. His Honour continued:

"I am not at all persuaded of its utility for the debtor, from a commercial point of view or, for the reasons set out in the preceding paragraph, from a legal point of view. In any event, if a non-compliance as an irregularity in the demand is a point worth taking in order to resist the wind up application, I am confident that those representing the debtor will take it without the assistance of any order or reminder from me. Furthermore, if the order be intended as a statement or advice from me about how the wind up application should be dealt with by a Master or another judge or, as may be in the case here, by another court, I should be reluctant to make such a statement or to proffer such advice. I do not think it appropriate to involve myself in this way in a judicial proceeding which is not my responsibility."[8]

94. I respectfully agree with the reasoning of Byrne, J. I too doubt the utility, in many if not most cases, of making inhibiting orders. Certainly, in this case, the making of the inhibiting orders has not dissuaded Pico from proceeding to apply to wind up the company based on the defective demand. I am also conscious of the danger of trespassing into issues which will have to be decided by another judicial officer.

97. Nevertheless, there may be cases where the making of the inhibiting orders, what Helman, J. in Commercial Trade Finance described as a "drastic step"[9], may be justified. Mr. Pearce submitted that such orders should only be made to prevent some abuse of process by the creditor or hardship or injustice to the debtor and referred to Re J & E. Holdings Pty. Ltd.[10] It may be that the failure to nominate in the statutory demand an address for service within Victoria coupled with the fact that the corporate creditor had no registered office in Australia (thereby rendering any reliance by the debtor on SEPA practically impossible) and the initial aggressive reliance by the creditor's solicitors on the failure to serve the application to set aside the statutory demand at their office in New South Wales, means that this is a case where the making of the inhibiting orders is justified.

100. In suggesting this possibility I am largely discounting Pico's reliance on the argument that it was open to Dominion to serve the application on Pico "in accordance with the law" of the United States of America (r.7.03). Whilst it is possible that Pico was correct in its submission that Dominion could have relied on one of the nominated paragraphs of r.7.01(1), namely (f), (g), (h) and (k), (a question which I do not need to decide), alternatively that Dominion could have sought leave to serve Pico in the United States of America under s.7.06(b), this seems to me to rather defeat the purpose of including in the prescribed form a requirement that there be an address for service "in the State or Territory in which the demand is served on the company". In my opinion, a party should not have to resort to a consideration of whether or not O.7 applies, given the limited time within which the application and supporting affidavit must be filed and served. The prescribed form should be followed.

104. Pico further submitted that in considering whether or not to make the inhibiting orders the Court should assess the merits of the application to set aside the statutory demand. The parties agreed that in this case the Senior Master had refused to do so, despite attempts by counsel for Pico to make submissions concerning the lack of merits in Dominion's application.

107. In my opinion, if the Court is considering whether or not to make the inhibiting orders it should assess the merits of the application. Section 459J(2) of the Corporations Act 2001 provides that:

"Except as provided in sub-section (1), the court must not set aside a statutory demand merely because of a defect".

The Court may set aside a statutory demand under s.459J(1), if it is satisfied that:

"(a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or (b) there is some other reason why the demand should be set aside."

(See in respect of s.459J: Spencer Constructions Pty. Ltd. v. G. & M. Aldridge Pty. Ltd.[11])

116. Dominion submitted that by reason of the defect in the statutory demand, it had suffered substantial injustice by not being able to bring its application to set aside the statutory demand. Pico submitted that if the application was hopeless then Dominion would not have suffered a substantial injustice by being prevented, by Pico's error, from pursuing the application to set aside. I accept the submission that a party cannot be said to have suffered a substantial injustice if it has wrongly been prevented from pursuing a hopeless application. Therefore, it seems to me that the merits of the application should be considered before deciding whether or not to make the inhibiting orders.

The Merits of the s.459G Application

120. As set out in paragraph 7 above, the affidavit in support of the application to set aside the statutory demand raised two grounds. The first ground was that Dominion would be "in breach" of the injunction made by Bongiorno, J. "if it were to pay the amount claimed by Pico in the statutory demand". Sensibly, in my opinion, Mr. Gardiner did not seek to rely on this ground before me. It is perhaps a measure of the desperation of Dominion to resist payment to Pico and of the length to which it was prepared to go that Mr. Voss could have been permitted to swear an affidavit alleging this ground. In my opinion, payment of the debt would clearly have been a "bona fide" payment of one of Dominion's "arms length creditors" within the meaning of the qualification to his Honour's injunction. On no view could payment of Pico's debt have been seen as a breach of the injunction.

123. The second ground was that Pico had failed in the statutory demand to specify an address for service within Victoria. As I pointed out to counsel during the argument, this ground seemed to me to involve circular reasoning. One is looking at the merits of Dominion's application to see whether it had suffered substantial injustice by being prevented from validly serving the application to set aside the statutory demand as a result of a defect in the demand. It does not advance Dominion's position on that question to refer again to the defect in the statutory demand. That does not establish that the application to set aside the statutory demand had merit. After all, this was a statutory demand apparently based on a judgment debt and there was no suggestion that the defect in the demand had prevented or hindered Dominion from paying the amount of the judgment debt to Pico. It had not paid presumably because it was not in a position to do so.

126. I have therefore concluded that neither of the grounds raised in the affidavit in support of the application to set aside the statutory ground had any merit. What was lacking was any attempt to dispute that the debt of $1,301,391.78 was owing. This was hardly surprising given that it was apparently based on a judgment debt.

130. However, on the hearing of the appeal, Dominion sought to rely on a further ground, namely, that the statutory demand was invalid because it was based on a court order which had not been authenticated at the time the demand was issued and served. This was said to be contrary to r.60.01(2), which provides as follows:

(a) no judgment shall be entered or other step taken; and

(b) no judgment shall be given -

pursuant to an order or in consequence of the failure of a party to comply with an order unless beforehand the order is authenticated in accordance with this Order and filed."

Although neither party referred to it, I also set out the terms of r.60.01(1):

"Unless the Court otherwise orders, a judgment or an order shall not be enforced under any of these Rules and an appeal which has been instituted from a judgment or an order shall not be heard until the judgment or order has been authenticated in accordance with this Order and filed."

138. Mr. Pearce submitted on behalf of Pico that a party could not rely on a ground not raised in the affidavit supporting the application within the 21 days allowed by s.459G(3). He referred to the decision of Sundberg, J. in Graywinter Properties Pty. Ltd. v. Gas & Fuel Corporation Superannuation Fund[12]. In that case, his Honour held, following David Grant[13], that the failure of an affidavit to satisfy the minimum requirements for an affidavit to be a "supporting affidavit" was a jurisdictional impediment to the application and that the Court could not entertain as an application under s.459G a case in which an affidavit containing the minimum requirements had not been served within time. In those circumstances, there was no application under s.459G[14]. However, his Honour did accept that an applicant "whose initial affidavit has satisfied the threshold test must be able to supplement the material ..."[15] Here, the authentication of the order point was first raised in one of Mr. Whelen's affidavits sworn on 17 October 2001. Clearly, it was an entirely new ground that was not mentioned in Mr. Voss' supporting affidavit. Therefore, it is not simply a matter of supplementing the existing material. In my opinion, in accordance with Sundberg, J.'s decision, Dominion is not able to rely on this ground.

141. Even if I am wrong in excluding Dominion's reliance on the authentication of the order point, I am satisfied that Dominion's submission is in any event not correct. Mr. Gardiner submitted that the service of the statutory demand was a "step taken" within the meaning of r.60.01(2)(a) and that this step could not be taken until the order had been authenticated. Mr. Pearce submitted that r.60.01(2)(a) only contemplated the taking of some procedural step in Court under the Rules of the Supreme Court and that the service of a statutory demand was a "step taken" pursuant to the Corporations Act 2001 and not under the Rules. In my opinion, r.60.01 only applies to events governed by the Rules. See, for example, the specific reference in r.60.01(1) to the enforcing of a judgment or order "under any of these Rules". There are a number of means of enforcing a judgment. Some are set out in r.66.02(1) and certain restrictions are imposed on those means by provisions such as r.60.01 and r.68.02.[16] One method of enforcement not covered by the Rules and, therefore, not caught by r.60.01(1) or (2)(a) or (b), is the service of a statutory demand under s.459E of the Corporations Act 2001.

144. Further, when one examines the statutory demand it is not at all clear to me that Pico was in fact relying on the order of Bongiorno, J. as a judgment debt. Despite such words being used in the statutory demand, it was accompanied by an affidavit of Georgina Elspeth Hayden sworn 4 September 2001 verifying that the amount was due and payable by Dominion. This affidavit was not required if the relevant debt was "a judgment debt" (see s.459E(3)). Even if judgment had not been formally entered and the order in question not authenticated, Dominion still owed Pico at least US$1,200,000. Pico was entitled to serve a statutory demand based on that alleged debt at any time. It did not have to wait for judgment.

147. Finally, r.60.01(2) is expressed to operate "except where the Court otherwise orders". If it were necessary, I would be prepared to make such an order nunc pro tunc, that is, to allow Pico to rely on the service of the statutory demand based on a judgment debt even though the order in question had not been authenticted before the taking of that step. I would do so because, in my opinion, the point which Dominion is seeking to rely on is technical in the extreme and has absolutely nothing to do with the question of whether or not Dominion is insolvent because it is not able to pay Pico's claim of US$1,301,391.78.

151. As I am of the view that there is no substance in any of the grounds which Dominion would have sought to rely on in support of its application to set aside the statutory demand, if it had been able to serve the relevant papers in time, I do not consider that Dominion has suffered substantial injustice because of the defect in Pico's demand. Accordingly, I do not propose to accede to Dominion's submission that it is appropriate to make the inhibiting orders.

155. There remains the question of costs. First, there is the question of the appropriate order for costs on the hearing before the Senior Master. Mr. Gardiner submitted that I should not disturb the Senior Master's order, which obliged Pico to pay Dominion's costs "as between solicitor and own client". Given that this dispute was brought about by the failure by Pico to nominate in the statutory demand an address for service in Victoria, and given the initial aggressive attitude of Pico's solicitors in respect of the failure to serve the statutory demand in time, I consider that the Court should not allow Pico its costs at first instance. In saying that, I am not ignoring the fact that it was common ground that Pico's counsel was not permitted to make submissions concerning the lack of merits in Dominion's application, which I have held was a relevant consideration in my determination of the appeal. Nevertheless, it seems to me to be just that, in the circumstances, Pico is penalised to some extent on costs. I do not consider that it would be appropriate to order Pico to pay any of Dominion's costs, particularly not on a solicitor and own client basis. I will therefore order that there be no order for costs in respect of the hearings before the Senior Master.

158. The second question is the costs of the appeal. As previously stated, Pico had changed its position in respect of the service of the s.459G application. It now suggested ways to overcome the problem it had caused Dominion by its defect in the statutory demand. Thus, it is no longer appropriate, in my opinion, to penalise Pico on costs. It has won its appeal and costs should follow the normal course. However, I am not prepared to allow Pico its costs of the appearance on 2 November 2001, for the reasons given in paragraphs 14 to 16 above.

161. Subject to hearing further from the parties, the orders I would propose making are as follows:

2. The order of Senior Master Mahony made on 19 October 2001 set aside and in lieu thereof order that the proceeding be dismissed with no order as to costs.

3. The plaintiff to pay the defendant's costs of the appeal, other than the costs reserved on 2 November 2001.

4. Grant the plaintiff an indemnity certificate in respect of the costs of the appeal, pursuant to s.4(1) of the Appeal Costs Act 1998.

[1] (1997) 80 FCR 571

[2] [1995] HCA 43; (1995) 184 C.L.R. 265 at 276-7

[3] (1995) 13 ACLC 1268

[4] (1996) 19 ACSR 429

[5] (1996) 19 ACSR 429 at 431

[6] (1995) 19 ACSR 188

[7] [1999] VSC 435; (1999) 33 ACSR 259

[8] [1999] VSC 435; (1999) 33 ACSR 259 at 269

[9] (1995) 19 ACSR 188 at 190

[10] (1995) 36 NSWLR 541 at 548

[11] [1997] FCA 681; (1997) 76 FCR 452

[12] [1996] FCA 822; (1996) 70 FCR 452

[13] [1995] HCA 43; (1995) 184 CLR 265

[14] [1996] FCA 822; (1996) 70 FCR 452 at 459

[15] [1996] FCA 822; (1996) 70 FCR 452 at 460

[16] See MEC Import Sales Pty. Ltd. v. Iozzelli SRL (1998) 29 ACSR 229.