Paidonexhange.com.au v Transact Enterprises Pty Ltd
[2010] QDC 421
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- Paidonexhange.com.au v Transact Enterprises Pty Ltd[2010] QDC 421
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Paidonexhange.com.au v Transact Enterprises Pty Ltd[2010] QDC 421
Paidonexhange.com.au v Transact Enterprises Pty Ltd[2010] QDC 421
[2010] QDC 421 | |
DISTRICT COURT | |
CIVIL JURISDICTION | |
JUDGE R JONES | |
No 1912 of 2008 | |
PAIDONEXCHANGE.COM.AU | Applicant |
and | |
TRANSACT ENTERPRISES PTY LTD | Respondent |
and | |
TRANSACT PROPERTY GROUP PTY LTD | Respondent |
and | |
MATTHEW ROBERT FISHER | Respondent |
BRISBANE | |
DATE 22/10/2010 | |
ORDER |
HIS HONOUR: In this application the following relief is sought: First, the amount of $50,600 pursuant to an agreement entered into between the plaintiff and the first, second and third defendants. The date of that agreement is 20 August, 2007. Further, a sum of $13,609 being default interest at the rate of 0.249 percent. For reasons I will come to in a moment, the amount claimed for interest is now significantly in excess of that amount.
In paragraphs 4 and 5 of the application certain declarations are sought concerning the third defendant's interest in property.
The plaintiff now seeks to discontinue or abandon that relief as that property was the subject to proceedings involving Suncorp, and it would seem that it would be fruitless for the plaintiff to pursue that relief.
The application concerns a claim against three defendants. The plaintiff only now seeks relief against the third defendant, Matthew Robert Fisher. The two other defendants are Transact Enterprises and Transact Property Group Pty Ltd. Those two companies have now been de-registered and, for obvious reasons, there would be no benefit in the plaintiff pursuing relief against those companies. The third defendant, Matthew Fisher, was the sole director of both companies.
As I have said, the sum of $50,600 is pleaded as being owed pursuant to an agreement dated 20 August, 2007. The interest rate of 0.249 percent per day, is the interest rate prescribed in the draw down notice also dated 20 August, 2007.
The agreement referred to in the claim and statement of claim is a factoring agreement. The amount of $50,600 is made up of two debts having a face value of $23,100 and $27,500 respectively. In the agreement the purchase price or the amount of funding required in respect of each of those factored debts was $23,100 and $27,500 respectively.
As the sole director of the first and second defendants, the third defendant also agreed to act as guarantor. Clauses 8.1 and 8.2 of the agreement deals with the obligations of the guarantor.
On 15 July, 2008, the claim and statement of claim were filed in the Registry of this Court. Those documents were served on the defendant. Notwithstanding that, no defence or notice to defend has been filed by the defendant.
No steps in the action have been taken since 15 July, 2008. Accordingly, leave of this Court is required, pursuant to Rule 389 of the Uniform Civil Procedures Rules to allow the plaintiff to proceed with this application.
Reasons for the delay are set out in the affidavit of MrSmith filed 13 October, 2010. That affidavit refers to and describes certain settlement negotiations involving Mr Smith and the third defendant. As I understand the affidavit, those negotiations continued through to at about December, 2008.
Those negotiations appear to have failed in December 2008, or perhaps very early in 2009. As I have said, nothing further was done to advance the proceedings. The apparent reason for delay between July, 2008, and up to perhaps early 2009, would appear to be the settlement negotiations to which Mr Smith referred to.
One would wonder though, once those settlement negotiations proved fruitless, why no further steps were taken to progress the matter.
However, Mr Smith also deposes to the fact that in November, 2009, I note the passing of nearly 11 months of inaction, he received advice from Suncorp to the effect that that entity was involved in substantive proceedings against the third defendant resulting in Suncorp taking possession of the real property of the third defendant. That property being the subject of the declaratory relief to which I have already referred.
As a consequence of this, it would appear that the plaintiff went into a period of inactivity while he assessed the commercial advantages or disadvantages of pursuing the action. That state of affairs continued up until about August, 2010, when he gave instructions to bring these proceedings.
By reference to cases such as Tyler v. Custom Credit [2000] QCA 178, and Lilyvale Pty Ltd v. Colonial Mutual Life [1999] QSC 372, it is clear that a number of factors are relevant in cases such as this. They include the length of the delay. Here, a delay of over two years.
The second matter is the prospects of success. Here, it must be acknowledged, that the prospects of success for the plaintiff are enhanced by the terms and conditions contained in the written agreement.
Also, the existence of that written agreement between the parties is also relevant in my view because it tends to limit the potential for prejudice to the third defendant through the passing of time. That is, in circumstances where the substance of the action is in written form, those prejudices often associated with the passing of time, for example, lapses in memory, loss of documents, etcetera, are diminished.
Another matter to take into account is whether or not the delay has resulted in a material prejudice to the defendant. As I have said, because of the agreement underlying the action that has been reduced to such an extent, in my view, to allow the conclusion to be drawn that if the matter were to go to trial, the trial would not be materially affected. Although I must say in circumstances of an application for judgment in default one wonders just how significant this particular matter is.
Of course, another relevant factor is whether or not there has been satisfactory explanation for the delay. And it is also relevant here that if this application were to succeed, it has the potential to bring to an end the proceedings between the parties.
In my view, the explanation for the delay provided by Mr Smith is not in itself entirely satisfactory, but it does explain at least to some extent the reasons for at least part of the delay. However, that explanation, when coupled with the general likelihood or the real likelihood of the success in the proceedings, and the lack of any apparent prejudice on the part of the third defendant, leads me to conclude that this application ought to be allowed to proceed or to be prosecuted.
The application for default judgment, together with other relief, was filed on 20 August, 2010. By reference to an affidavit of a Mr Bensemann, it is apparent that this application and supporting material was served on the third defendant on 21 August, 2010. Despite being served with this material, the third defendant has taken no steps to respond in any way to the application or the supporting material.
If I failed to mention it, I should also mention that, perhaps somewhat consistent with the third defendant's response to being served with the application material, no notice of intention to defend was filed in respect of the claim filed in July 2008.
For the reasons given, it is appropriate to allow the plaintiff to abandon the relief sought in paragraphs 4 and 5 of the claim, and leave is granted to abandon those claims.
In circumstances here where the defendant has failed to file a notice of intention to defend, and has failed to respond in any way to this application despite him being served with the application and associated material, I can see no reason why judgment in the amount of $50,600 should not be entered.
However, an amount of $102,811.10 is now being sought as interest pursuant to the agreement. That this amount has grown from the sum of $13,609.10, the amount claimed in the statement of claim and in the original application, is due to the delay in the prosecution of this matter, coupled with the higher than usual interest rate prescribed for under the agreement between the parties, namely, 0.249 percent per day.
In my opinion, the delay of the plaintiff has caused considerable prejudice to the defendant concerning interest, and I do not propose to order the defendant to pay such an amount by way of interest.
Two alternate submissions were articulated on behalf of the plaintiff. The first of these was that an order interest be paid for the period 15 July, 2008, through to 8 October, 2010 at the prescribed rate or alternatively, that interest be allowed at the rate of 0.249 percent per day up to the 18th of September, 2008, and thereafter at the usual rate. The date 18 September, 2008, being the earliest date upon which the plaintiff could have brought the application for default judgment.
In the circumstances of this case, as I have said, by virtue of the delay of the plaintiff, I do not consider it appropriate to award interest in the amount sought. However, it does seem reasonable to at least allow interest on the amount agreed to by the parties, up until the earliest date that an application for default judgment could be filed.
Accordingly, I order that interest on the amount of $50,600 be allowed for the period 15 July, 2008, to 18 September, 2008, at the rate of 0.249 percent per day, and thereafter at the current rate of 10 percent.
The final matter that needs to be addressed then is the question of costs. The applicant seeks the amount of $7,313.05 in costs, made up of $4,782.05 and $2,531. Just why that amount is considered due and how it is calculated is referred to in the affidavit of MrRafiei filed today in paragraph 9.
The amount of $7,313.05 is as I understand it, costs on a solicitor/client basis. The applicant/plaintiff says it is entitled to costs on that basis pursuant to Clause 11.6 of the agreement between the parties.
That clause provides as follows: "The trader and/or the guarantor agree that any costs and expenses (including but not limited) to any costs incurred by the factor in stamping and the registration of this agreement. Any charge or mortgage, as well as, any costs incurred by the factor to enforce its security on a full basis, including legal costs on a solicitor/client basis, (incurred by the factor under this clause 11) shall be immediately recoverable from the trader or guarantor, as the case may be upon demand, and failing such demand, recoverable from the proceeds of the realisation of any security provided by either of them."
Clause 11.6 seems to me to be primarily concerned with matters such as the costs and expenses associated with the stamping of the registration of the agreement, and/or in respect of any charge including costs incurred in enforcing security in respect of any such charge. That construction seems quite consistent with the reference in clause 11.6 to "under this clause 11".
Claus 11.5 deals with the guarantor consenting to the registration of a charge, the lodgement of caveat and the registration of a mortgage.
In circumstances where clauses 4 and 5 have been abandoned, it seems to me that clause 11.6 is simply not applicable.
Accordingly, I do not consider it appropriate to order costs on the solicitor/client basis. There being no estimate as to what the costs would be on a standard basis, I order that the third defendant be ordered to pay the applicant's cost of and incidental to this application on a standard basis.
Now, the orders - you might want to listen carefully to this to make sure I cover all the bases. The orders of the Court, therefore, are: (1) That the applicant plaintiff be given leave to prosecute this application. (2) That the plaintiff/applicant be given leave to abandon paragraphs 4 and 5 of its claim against the defendants. (3) That the plaintiff/applicant be given leave to abandon its action against the first and second defendants. I do not know whether that is really required, but I will make it in any event. (4) That judgment be entered in the plaintiff's favour against the third defendant in the sum of $50,600. (5) That the plaintiff be entitled to interest on the amount of $50,600 at the rate of 0.249 percent per day from 15 July, 2008, to 18September, 2008, and thereafter at the rate of 10 percent to 22 October, 2010. (6) That the third respondent pay the applicant/plaintiff's costs of and incidental to this application on a standard basis.
Now, does that cover everything?
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Then the costs will be that the defendant to pay the plaintiff's costs of and incidental to -
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Pay the costs of and incidental to of the proceedings on a standard basis.
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On that basis then, the judgment should also be entered in the amount of $13,609.10.
Solicitiors for the plaintiff to provide a draft of set orders.