Robson v McLaren
[2012] QDC 37
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- Unreported Judgment
- Robson v McLaren[2012] QDC 37
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Robson v McLaren[2012] QDC 37
Robson v McLaren[2012] QDC 37
DISTRICT COURT OF QUEENSLAND
CITATION: | Robson & Anor v McLaren [2012] QDC 37 |
PARTIES: | W. ROLAND ROBSON (First plaintiff) AND ANN KAYELEIGH PTY LTD (IN LIQ) ACN 108 608 304 (Second plaintiff) AND MICHAEL MARK MCLAREN TRADING AS MM AND LP MCLAREN (Defendant) |
FILE NO/S: | 4465/11 |
DIVISION: | Civil |
PROCEEDING: | Hearing of an application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 13 March 2012 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 12 March 2012 |
JUDGE: | RS Jones DCJ |
ORDERS: | (1) Application dismissed. (2) The parties’ costs of and incidental to the application are reserved. |
CATCHWORDS: | |
COUNSEL: | Mr N. Ferrett for the applicant/defendant Ms D. Skennar for the respondents/first and second plaintiffs |
SOLICITORS: | Hall Lawyers for the defendant/applicant Forbes Dowling Lawyers for the respondent/first and second plaintiffs |
- [1]This proceeding was concerned with an application brought yesterday, 12 March 2012, for summary judgment. The application was brought by the defendant against the first and second plaintiffs. On 12 March 2012 I dismissed the application as I did not consider that it could be said that the plaintiffs had no real prospect of succeeding on all or part of their claims. Upon dismissing the application I advised counsel for the respective parties that I would give short written reasons as to why the application was refused as soon as possible. These are those reasons.
Background
- [2]The defendant was at all material times a builder who was engaged by Kayeleigh pursuant to a written contract under which the defendant was to carry out certain building works on land situated at Paddington. Pursuant to that contact, Kayeleigh granted an equitable mortgage over the land to a secure performance of the contract. Kayeleigh also granted the defendant the right to lodge a caveat to protect that interest. On or about 11 July 2007, the defendant lodged a caveat over the land.
- [3]The commercial relationship between the defendant and Kayeleigh fell into dispute. On 14 September 2007 the defendant commenced proceedings in the then Commercial and Consumer Tribunal (CCT) against Kayeleigh to recover amounts he alleged were owed under the building contract. On the same day he commenced proceedings in the Supreme Court to enforce his rights under the caveat.
- [4]Subsequently, because Kayeleigh wanted to sell the land, on 1 October it agreed to pay $210,550.50 into the trust account of the CCT in exchange for the defendant agreeing to the removal of the caveat. On 1 October 2007, with the consent of the defendant, Kayeleigh and Gregory Kelly (as I understand it, a director of Kayeleigh and the second respondent in the CCT proceeding), the CCT made the following orders:
“1. Without any admission of liability, the first respondent will pay the amount of $210,500.50 (the amount) being part of the applicant’s claim in application no. BD416017 (the application) associated with the building contract between the parties … into the trust account of the Commercial and Consumer Tribunal.
- The tribunal will distribute moneys from the trust account in the following manner:
2.1 Upon final determination of the application:
- (a)the amount, if any, awarded to the applicant in the application is to be released to the applicant, together with any further interest determined by the tribunal;
- (b)any balance of the amount then remaining is to be repaid to the first respondent.
2.2 Upon agreement of the parties, the amounts agreed by the parties to be paid to the applicant and first respondent.
2.3 Otherwise than in the circumstances in paragraphs 2.1 and 2.2, the tribunal will immediately release the amount to the first respondent if the application is discontinued or dismissed.
- The record is noted that the application will discontinue Supreme Court proceedings no. 8118/07 within five business days of the payment of the amount into the trust account of the tribunal.
- The record is noted that the applicant will lodge a request … to withdraw caveat no. 710696599 with the registrar of Queensland Land Registry by no later than close of business on the day the applicant’s solicitors are provided with a copy of the receipt of payment of the amount into the trust account of the tribunal.
- The record is noted that the applicant’s costs associated with Supreme Court proceedings … will be included as costs in the cause of the application in the tribunal.”
- [5]On or about 12 July 2010 the defendant, Kayeleigh, and Mr Kelly entered into an agreement recorded in a deed which contained an express term providing for the payment of the full amount out of the trust account to the defendant. As a consequence, and pursuant to the deed, on or about 22 July 2010 QCAT (the successor to the CCT) made orders dismissing the CCT proceedings and ordering that the full amount in the trust account “be paid and released” to the defendant.
- [6]On or about 27 July 2010, pursuant to the orders made by QCAT, a cheque was drawn on its trust account and posted to the defendant’s lawyers.
- [7]The first plaintiff, Mr Robson, is the liquidator of the second plaintiff, Kayeleigh Pty Ltd. It was initially alleged against the defendant that when Kayeleigh agreed to money being paid out of the trust account of the Queensland Civil and Administrative Tribunal (QCAT) to the defendant (Mr McLaren), Kayeleigh was insolvent and the defendant knew that the company was insolvent and that therefore the payment was an unfair preference under s 588FA of the Corporations Act 2001. It is also now alleged against the defendant that the payment as an uncommercial transaction for the purposes of ss 588FB and 588FE of the Corporations Act 2001.
The pleadings
- [8]On 4 November 2011 the plaintiffs filed in the registry of this court a claim seeking the return of the full amount of $210,500.50 as “moneys paid by the second plaintiff to the defendant in circumstances where the entirety of that amount is an unfair preference”. It was alleged against the defendant that at all material times Kayeleigh was insolvent and the defendant was aware that it was insolvent or had reasonable grounds for suspecting that the company was insolvent. Particulars of that allegation were given:
“(i) The second plaintiff was not trading at the time that the preferred payment was made and the defendant was aware that the second plaintiff was no longer trading.
- (ii)During the course of negotiations for the settlement of the defendant’s application lodged with the Commercial and Consumer Tribunal, the defendant was notified, through his legal representatives, that the second plaintiff had no funds other than those held on trust by the Commercial and Consumer Tribunal.
- (iii)The defendant accepted an offer of the preferred amount … in full and final settlement of the application as the defendant knew that the second plaintiff had no further funds to contribute to a settlement.”
- [9]In paragraphs 10, 11 and 12 of the then statement of claim, it was pleaded:
“10. If the defendant is allowed to retain the preferred payment, the defendant will receive from the second plaintiff an amount greater than that which it would receive if the preferred payment was set aside and the defendant required to prove it the winding up of the second plaintiff.
- In the above premises, the preferred payment is an unfair preference given by the second plaintiff to the defendant in accordance with s 588FA of the Corporations Act 2001.
- As the preferred payment:
- (a)is an insolvent transaction of the second plaintiff;
- (b)was entered into during the six month period ending on the relation back day;
the preferred payment is a voidable transaction pursuant to s 588AE of the Corporations Act 2001.”
- [10]In his defence the defendant denied the allegations concerning the knowledge of insolvency and, in particular, pleaded that “the mere fact that a company is neither trading nor possessed of funds is not a reasonable basis for suspecting insolvency.”
- [11]The defence also pleaded the consent orders made by the CCT on 1 October 2007, the deed entered into between the defendant, Kayeleigh, and Kelly, and the subsequent payment of the funds to the defendant, and pleaded that:
“14(a) The effect of the QCAT payment was to pay out to Mr McLaren the trust payment by way of realisation of the security for which the security agreement provided:
- (b)In the alternative, the effect of the QCAT payment was to pay out to Mr McLaren the amount held on trust pursuant to the security agreement in circumstances where he had become entitled to the amount pursuant to the terms of the trust.”
- [12]Following the filing of that defence, the plaintiffs have filed an amended statement of claim, a reply, an amended reply, and a further amended statement of claim. The defendant has not pleaded against the further amended statement of claim.
- [13]In the further amended statement of claim the allegations concerning the defendant’s knowledge about the insolvency of Kayeleigh and that the payment was a preferred payment for the purposes of the Corporations Act were maintained. However, it is now also pleaded (among other things) in the alternative that the deed and the “preferred payment” were uncommercial transactions as defined by s 588FB of the Corporations Act 2001.
- [14]On behalf of the defendant it was submitted that it is too late for the plaintiffs to now attack the compromise agreement.
- [15]On behalf of the defendant it is asserted that:
“(21) Even more fundamentally, the plaintiffs’ prospects of rebutting the defence under s 588FG is negligible. The parties’ contest on that point is whether Mr McLaren had reasonable grounds to suspect that Kayeleigh was insolvent. The only fact upon which the plaintiffs rely in that regard is set out in paragraph 9(c)(ii) of the statement of claim:
‘During the course of the negotiations for the settlement of the defendant’s application lodged with the Commercial and Consumer Tribunal, the defendant was notified, through his legal representatives, that the second plaintiff had no funds other than those held on trust by the Commercial and Consumer Tribunal.’
- (22)It is a matter of record the DLA Phillips Fox conducted the negotiations on behalf of Kayeleigh. No particularisation of the communication is given. It is safe to assume that it came from DLA. DLA was obviously in a better position to know Kayeleigh’s affairs and, given the information it is said to have communicated, was obviously on notice as to whether that was a risk. It facilitated the transaction, notwithstanding.
- (23)So on the plaintiffs’ case, Mr McLaren and his lawyer were supposed to infer that a top tier law firm was prepared to assist Mr Kelly to commit an offence under s 588G to compromise the case.
- (24)It is respectfully submitted that there is nothing more than a fanciful prospect of the court reaching that conclusion.”
- [16]There is some real force in these submissions. It is highly improbable that DLA Phillips Fox would behave other than in full accord with its professional obligation responsibilities. However, on balance, notwithstanding the strength of Mr Ferrett’s submissions, I am not sufficiently satisfied that I am able to “infer” that DLA Phillips Fox would have necessarily had sufficient detailed knowledge of Kayeleigh’s financial affairs at the time. It is not, as I understand it, disputed that, as the plaintiffs now plead, at the relevant times the second plaintiff was no longer trading. This observation should in no way be construed as any criticism, either express of implied, of that firm.
The appropriate test
- [17]In Newman Contractors Pty Ltd v Traspunt No. 5 Pty Ltd [2010] QCA 119 Muir JA (with Holmes JA agreeing) relevantly said:
“(80) The utilisation of rules such as r 292 is to be encouraged, but the replication must conform with ‘… the general principle … that issues raised in proceedings are to be determined in a summary way only in the clearest of cases’.
- (81)In Rich v CGU Insurance Ltd Gleeson CJ, McHugh and Gummow CJ cited with approval the following passage form the reasons of Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde:
‘Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formula which have been used are intended to subscribe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.’”
- [18]Chesterman JA agreed with the orders proposed by Muir JA and with his reasons. At paragraph 88 his Honour went on to say:
“(88) The case was unsuitable for any summary assessment of whether there were real, as opposed to fanciful, prospects of a successful defence. I maintain the opinion that ‘the only safe principle to apply when dealing with applications … for summary judgment is that … a claim which has “no real prospects of succeeding” is one which is “hopeless” or one which is “bound to fail”.”
- [19]More recently in Hughes v Westpac Banking Corporation [2010] QSC 274 P Lyons J referred to Newman:
“(38) In … Salcedo it was held that rr 292 and 293 ‘brought about significant changes in the law and procedure relating to summary judgment’. More recently, the approach to be taken to an application for summary judgment under the UCPR was considered by the Court of Appeal in Newman … . Although reference was made to Salcedo, the court nevertheless applied principles derived from Dey v Victorian Railways Commissioners and General Steel Industries Inc v Commissioner for Railways (NSW). Those principles are that issues raised in proceedings are to be determined in a summary way in only the clearest of cases; and that summary judgment is to be granted only when a high degree of certainty is achieved about the ultimate outcome of the proceeding, if it were allowed to go to trial in the ordinary way.”
- [20]In JM Kelly (Project Builders) Pty Ltd v Toga Development No. 31 Pty Ltd & Anor [2008] QSC 312 Daubney J also referred to cases being determined summarily in only the clearest of cases. His Honour said (in paragraph 12):
“… it remains a tenant of the court’s approach to summary judgment applications that issues raised in proceedings will be determined summarily only in the clearest of cases.”
Conclusions
- [21]As I have already indicated, I consider there to be considerable force in the arguments raised on behalf of the defendant. However, in my view, the pleadings filed on behalf of the plaintiffs raise both contested matters of law and facts. On the material to which I was taken during the hearing of the application, I am not sufficiently satisfied that the plaintiffs have no real prospects of succeeding on all or part of the plaintiffs’ claim concerning the allegations of a preferred payment and that there is no need for a trial. To put it another way, I am not sufficiently satisfied that this case is so clear as to justify summary determination. By way of observation, I have real reservations about whether the plaintiff’s case concerning an alleged uncommercial transaction and/or the construction contract point would have been sufficient to defeat the application. But my findings concerning the preferred payment point are, in my view, and it is not necessary for me to express a final view about these matters.
- [22]For the reasons given, the application is dismissed.
Costs
- [23]The defendant/applicant still seeks his costs, notwithstanding being defeated on the application. One of the reasons underlying the defendant’s application is the very late filing and serving of the further statement of claim.
- [24]On behalf of the plaintiffs, they seek their costs essentially on the basis that costs should follow the event.
- [25]On balance, given:
- (i)the lateness of the filing and serving of the further amended statement of claim; and
- (ii)my reservations about the plaintiff’s case,