Dubow v Fitness First Australia Pty Ltd

Judgment 1THE COURT : This judgment relates to an application for leave to appeal from two decisions of Ward J. The first was given on 3 June 2011. In it her Honour granted an application made by the Respondent under s 459G Corporations Act 2001 (Cth) to set aside a statutory demand served on it by the Applicant : Fitness First Australia Pty Ltd v Dubow [2011] NSWSC 531 (" the Primary Judgment "). The second was a consequential decision in which her Honour ordered the Applicant to pay the costs on an indemnity basis ( Fitness First (Australia) Pty Ltd v Dubow [2011] NSWSC 605). Section 101(2)(p) Supreme Court Act 1970 provides that an appeal from a judgment or order on an application under s 459G Corporations Act lies only with leave. 2In earlier proceedings in the Supreme Court, Hulme J had made an order for costs against the Respondent, and in the Applicant's favour, on 5 December 2007. The Applicant's submissions state, correctly: "The entered orders also contained an ambiguous 'stay until further order'." 3After a protracted assessment process, the Applicant obtained two costs assessment certificates in November 2010. One certificate was for $28,127.48, while the other was for $3,398.16 ([45] of the Primary Judgment). The first certificate related to the amount due under the 2007 costs order, while the second certificate related to the costs of the costs assessment. 4The costs order that Hulme J had made related to just one of several pieces of litigation that there have been between the Applicant and the Respondent. 5One of the other pieces of litigation between the Applicant and the Respondent was listed for hearing on 8 November 2010. On 5 November 2010 there were some discussions between legal representatives of the Applicant and the Respondent concerning a proposed deed of settlement. The Applicant signed a form of that deed on the afternoon of Friday, 5 November 2010 ([43] of the Primary Judgment). Communications between the respective parties on 5 November 2010 might arguably lead to the conclusion that there was, then and there, a binding agreement that the litigation would be settled on the terms of the deed. The judge set out relevant parts of the deed of settlement at [35]-[37] of the Primary Judgment. The judge did not purport, and I do not purport, to decide the proper construction of the deed. However, it is arguable that it involves a release by the Applicant of all claims that she had, of any kind, against the Respondent. 6A counterpart of the deed executed by the Respondent was emailed to the Applicant on 16 November 2010. 7Between those two dates, the costs assessment certificates that we have earlier mentioned were issued. The Applicant took some steps to have those certificates filed in the Local Court. Ward J was satisfied that the costs certificates had been filed by 16 December 2010, and thereby had effect as a judgment. She thought it was likely that the judgment was in existence earlier than 16 December 2010 ([85]). However, she was not satisfied that the Applicant had established that the costs certificates were filed at any time prior to the issue of the statutory demand to which this litigation relates. 8That statutory demand was served by letter dated 10 December 2010. The case below seems to have been conducted on the basis that the date the letter bore was the date of actual service of the statutory demand. However, the actual date of service is not critical for the fate of this present application. 9The demand was for the sum of $31,603.64. It identified the debt as follows: "$28,127.48 being an Assessment of Party and Party Costs as certified by the Costs Assessor Certificate of Determination of Costs issued on 9 November 2010. $3,398.16 being costs of the Costs Assessment as certified by the Costs Assessor Certification of Determination of Costs of Costs Assessment issued on 9 November 2010. $78.00 being the Costs of Registration of Certificates in the Local Court situated at Downing Centre Sydney on 7 December 2010." 10The Respondent served and filed an originating process seeking to set aside the statutory demand. The originating process was supported by an accompanying affidavit. One controversy before Ward J concerned whether that affidavit filed by the Respondent adequately identified the case it proposed to make, in accordance with the principles in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452. The judge held the affidavit accorded with those principles. There is no application for leave to appeal from that aspect of the decision below. 11The judge gave multiple reasons for setting aside the statutory demand, any one of which would have been sufficient. 12One group of proposed grounds of appeal challenges the judge's decision that she was not satisfied that the two costs certificates had become judgment debts before the statutory demand was issued. Her Honour reached that conclusion on the basis that a particular chain of emails relating to the filing of the costs certificates did not constitute admissible evidence of the Local Court having actually filed the costs certificates on a particular date. 13Whether or not her Honour was correct in that evidentiary ruling was not essential to one of the bases upon which her Honour set aside the statutory demand. That basis was that s 459E(3) requires that a statutory demand be accompanied by an affidavit in a particular form, unless the debt or each of the debts is a judgment debt. One of the matters required to be deposed to in such an affidavit is that the deponent believes that there is no genuine dispute about the existence or amount of the debt. The statutory demand in the present case was not accompanied by an affidavit. Even if the judge had been wrong about whether the two costs certificates had given rise to judgment debts by the time of service of the statutory demand, the statutory demand would still fail to comply with s 459E(3) because one of the debts it claimed, namely the filing fee, was not a judgment debt. 14The primary judge quoted, at [98] of the Primary Judgment, authority to the effect that failure to provide an affidavit is not a defect in a demand, but rather renders the demand a non-compliant demand and constitutes "some other reason" why the demand should be set aside under s 459J(1)(b). Because total absence of an affidavit is not a defect in a demand, her Honour took the view that it was unnecessary to consider whether the absence of the affidavit has caused substantial injustice (as the court is required to do, in relation to defects in the demand, by s 459J(1)(a)). 15This aspect of her Honour's decision is not challenged in the grounds of appeal in the Applicant's draft notice of appeal. The finding provides an independent reason for setting aside the statutory demand. The absence of an appeal against this finding is a sufficient reason why any appeal would be bound to result in no alteration to her Honour's order. 16In addition, the judge held that there was a genuine dispute about the debt claimed. That dispute manifested itself in two different ways. The first was that there was a dispute concerning the effect of the stay that Hulme J had ordered. The second related to whether the deed of release had the effect that the Applicant was no longer entitled to be paid the costs that Hulme J had ordered. Since there was a genuine dispute about whether the Applicant continued to be entitled to be paid those amounts, the judge held that was "some other reason" , within the meaning of s 459J Corporations Act , why the demand should be set aside. 17Ward J relied upon the test for existence of a "genuine dispute" that McLelland CJ in Eq had stated in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785; (1994) 12 ACLC 669 that in essence requires there to be a "plausible contention requiring investigation" . The draft notice of appeal does not challenge the applicability of that test. 18The grounds relied upon in the draft notice of appeal challenge various aspects of detail of the judge's decision, and the overall justice of the conclusion at which she arrived. However, they do not grapple with the judge's finding that there was a genuine dispute. Even giving the Applicant some leeway on the basis that she is a litigant in person (though also a legal practitioner), unless the judge's finding that there was a genuine dispute could be overcome, success on the aspects of detail of the judge's decision would not result in the appeal succeeding. We see no realistic prospect of the judge's finding that there is a genuine dispute being overturned. In any event, many of the grounds relied upon in the draft notice of appeal are ones that relate to the resolving of the dispute that there is about the existence of the debt, not about whether there was a dispute at all. They are not appropriate matters to be gone into concerning an application to set aside a statutory demand. 19The Applicant registered the costs certificates in the Supreme Court in February 2011. By the time of the hearing before Ward J that action had itself been challenged. It provides no basis for doubting the conclusion of the Primary Judge that there was a genuine dispute about the debt claimed. 20The indemnity costs order was made on, broadly, two bases: (1) there was obviously a bona fide dispute and it was manifestly hopeless on the part of the Applicant to resist the application; and (2) the Respondent made a Calderbank offer at an early stage of the proceedings offering to compromise its claim to have the demand set aside on more favourable terms than achieved in the proceedings. We see no realistic prospect of the judge's finding concerning costs being overturned on appeal. 21We order that the application for leave to appeal be dismissed with costs.