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  4. Ella Enterprises Pty Ltd (in liq) v Maller Holdings Pty Ltd - [2014] QDC 236

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Ella Enterprises Pty Ltd (in liq) v Maller Holdings Pty Ltd[2014] QDC 236

Ella Enterprises Pty Ltd (in liq) v Maller Holdings Pty Ltd[2014] QDC 236

DISTRICT COURT OF QUEENSLAND

CITATION:

Ella Enterprises Pty Ltd (in liquidation) v Maller Holdings Pty Ltd [2014] QDC 236

PARTIES:

ELLA ENTERPRISES PTY LTD (in liquidation)

(Plaintiff)

and

MALLER HOLDINGS PTY LTD

(Defendant)

FILE NO/S:

3706/2013 Brisbane

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

District Court, Brisbane

DELIVERED ON:

16 October 2014

DELIVERED AT:

Townsville

HEARING DATE:

10 April 2014

JUDGE:

Durward SC DCJ

ORDERS:

  1. Application for summary judgment by plaintiff granted for part of the claim.
  2. Judgment for the plaintiff in the sum of $554,024.39, with interest and costs.
  3. Application for judgment on breach of disclosure obligation refused.
  4. Application by defendant for security for costs refused.
  5. The defendant to pay to the plaintiff its costs of the three applications, on the standard basis.
  6. The parties have liberty to apply on seven (7) days notice.

CATCHWORDS:

PRACTICE & PROCEDURE – SUMMARY JUDGMENT – whether defendant has no real prospect of successfully defending all or any part of the plaintiff’s claim – where plaintiff’s case made on documents sourced from third parties – where defendant does not plead directly to plaintiff’s case but primarily to non-disclosure and peripheral matters – whether any defence in fact raised – whether summary judgment should be granted.

PLEADINGS – ADMISSIONS – LEAVE TO WITHDRAW – defendant foreshadows in draft pleading and allegation contrary to a previous admitted allegation – leave to withdraw not sought – admission remains extent.

EVIDENCE – BOOKS OF ACCOUNT – DOCUMENTS – ADMISSIBILITY – where financial and other records of  the plaintiff and defendant companies said to have been lost or destroyed – where liquidator of plaintiff company reconstituted the relevant documents from third party sources – where the documents are relied on to prove the claim – where defendant does not plead to the plaintiff’s allegations made on reliance on the documents – where documents explained by an auditor of the liquidator – where some documents require reconstruction and opinion evidence to support allegations and claim – whether documents admissible in support of plaintiff’s claim.

PRACTICE & PROCEDURE – DISCLOSURE – CONTINUING DUTY – where financial and other records of the plaintiff and defendant companies said to have been lost or destroyed – where defendant asserts inability to plead in absence of company documents being disclosed by plaintiff – where plaintiff relies on documents provided from third party sources – where original documents of each of the plaintiff and defendant company is lost – whether further disclosure is impossible.

LEGISLATION:

Rules 5, 188, 211, 225, 292 and 295 Uniform Civil Procedure Rules 1999; section 36 and Schedule 1 Acts Interpretation Act 1954; ss 83, 85 and 86 Evidence Act 1977 (Qld); s 1305 Corporations Act 2001.

CASES:

Maller Holdings Pty Ltd v Gold Coast City Council [2013] QPEC 51;

Maley v ASIC [2013] AATA 924;

Hanson Construction Materials Pty Ltd v Davey & Anor [2010] QCA 246;

Potts v Miller (1940) 64 CLR 282;

Bolton Properties Pty Ltd v JK Investments (Australia) Pty Ltd (2009) 2 Qd R 202;

General Steel Industries Inc v Commisioner for Railways (NSW) (1964) 112 CLR 125;

Chidgey v Wellner & Anor [2006] QDC 400;

Bernstrom v National Australia Bank Ltd [2002] QCA 231.

COUNSEL:

L. Copley for the Plaintiff

G.J. Radcliff for the Defendant

SOLICITORS:

Results Legal for the Plaintiff

Paramount Legal (at the hearing) and Cronin Litigation Lawyers (at judgment delivery) for the Defendant

  1. [1]
    There are three applications: by the plaintiff for summary judgment or alternatively for judgment for breach of disclosure obligations by the defendant; and by the defendant for, inter alia, security for costs.

The proceedings

  1. [2]
    The plaintiff company was placed in liquidation by Order of the Supreme Court on 17 July 2009 on the application of WorkCover Queensland.
  1. [3]
    The liquidators (“the plaintiff”) filed a Claim and Statement of Claim on 27 September 2013 for monies due and owing in the sum of $711,845.56. The defendant filed a Notice of Intention to Defend and Defence on 28 October 2013 and an Amended Defence on 11 December 2013. The plaintiff filed an Amended Claim and Statement of Claim on 11 March 2014. A draft Further Amended Defence was produced at the hearing of the applications (Exhibit 3).
  1. [4]
    In an application filed on 04 February 2014, the plaintiff had sought an order pursuant to r211 UCPR for the delivery by the defendant of a supplementary list of those categories of documents referred to in a letter from its solicitors dated 28 January 2014, written pursuant to r444 UCPR. The order was not complied with. The defendant claims that records of the plaintiff and of the defendant had been lost in a localised flood in Brisbane in 2009.

The applications dealt with at the hearing

  1. [5]
    In an application filed on 04 February 2014 the defendant had sought from the plaintiff orders for security for costs, further disclosure and further particulars.
  1. [6]
    In an application filed on 12 February 2014, the plaintiff sought an order for summary judgment pursuant to r292 of the Uniform Civil Procedure Rules 1999 (“UCPR”) against the defendant in respect of a claim for labour hire and employment expenses, in the sum of $544,024.39; and alternatively, it sought judgment against the defendant for failure to disclose documents, pursuant to r225 (2) UCPR.
  1. [7]
    Consent directions orders were made on 25 February 2014 by Judge Noud that, inter alia, the two applications be adjourned for hearing to 10 April 2014. I heard the applications together on that date.

Corporate connection: summary

  1. [8]
    There is a corporate connection between the plaintiff and the defendant. The plaintiff has alleged that it was a service company, providing services to the defendant; that the defendant conducts a horse transport business; and that the defendant is a ‘related entity’ for the plaintiff.
  1. [9]
    The plaintiff company’s director/secretary was Mr L Waller (“Waller”) and the registered office and principal place of business were 5 Village High Road, Benowa, Queensland; the defendant company’s director/secretary was Mr A C Maley (“Maley”) and the registered office and principal place of business was the same address as that for the plaintiff company; and the business of Sydney Horse Transport, a registered business name, had the same principal place of business as the two companies and the defendant was the owner of that business name.
  1. [10]
    The plaintiff allegedly engaged employees to the defendant at the request of the defendant and for the sole benefit of the defendant. It alleges that it is owed by the defendant (excluding proofs of debt lodged with WorkCover New South Wales and WorkCover Queensland) monies comprising costs associated with the engagement of employees, including superannuation and tax. It paid the employee wages and associated payments, amounting to $2,290,144.46 (including GST); and the defendant paid to the plaintiff amounts totalling $1,864,283.30 (including GST), on a monthly basis between 31 August 2008 and 26 September 2008. Hence there is a shortfall between the amounts expended by the plaintiff and the amount paid to it by the defendant. The material supports the following bases of calculation of the amount owing.
  • As at 26 September 2008 the defendant owed to the plaintiff the sum of $471,739.85. That figure is based on the defendant’s MYOB records.
  • The amount due for the period 27 September, 2008 to 14 November, 2008 is unknown.
  • The amount owed for the period 15 November 2008 to 08 May 2009, based on the banking records of the plaintiff, is $544,439.54.
  • The difference between the two figures is a consequence of the respective records – the defendants or the plaintiffs - used by the liquidator in calculating the amount due.
  • There were payments received by the plaintiff from the defendant after 14 November 2008 of $422,155.00 and two payments made to the Australian Taxation Office, amounting to $40,000.00.
  1. [11]
    The plaintiff calculates an amount due and owing of at least $508,145.70; or alternatively, $554,024.39.
  1. [12]
    Maley was disqualified by the Australian Securities and Investment Commission (“ASIC”) from managing a corporation, in 2013. In Maley v ASIC [2013] AATA 924, a Senior member of the Administrative Appeals Tribunal (“AAT”) affirmed the ASIC decision, which had effect from 28 days after the date of the decision (20 December 2013) for a period of two years.
  1. [13]
    Maley was an officer of five different companies, each being part of the ASIC decision, that had been wound up on grounds of insolvency (including the plaintiff in this case). The AAT in its judgment recorded the following:

“In each case [of insolvency], the liquidators reported possible offences, including a failure to maintain adequate books and records …” (page 3 of 9).

  1. [14]
    Maley and Waller had not attended nor given evidence at the ASIC hearing and had not been summonsed by any liquidator to appear as a witness. The Senior Member in the course of the AAT decision observed:

“I would add [to his decision to disregard the written statements of Maley and Waller] I am entitled to assume the applicants’ failure to give evidence or summons Mr Waller means Mr Maley believed the evidence would not assist his case” (page 5 – 6 of 9).

  1. [15]
    Maley gave evidence in a Queensland Planning and Environment Court case in 2009, where the defendant had sought approval to build a horse stable and horse transport facility on the Gold Coast: Maller Holdings Pty Ltd v Gold Coast City Council [2013] QPEC 51. Searles DCJ observed the following:

“[12] Maller, trading as Sydney Horse Transport, conducts the largest horse transport business in Australia stretching along the east coast of Australia and within south-east Queensland. It presently transports between 800 to 1,000 horses each week within Victoria and New South Wales and Queensland. Mr Maley, a director of Maller, gave evidence that, of all horses transported, between 50% (400 to 500) and 70% (560 to 700) were current racehorses, and, of that number, some 70% (between 280-350 and 390-490) were involved in racing in Queensland metropolitan racetracks, namely Gold Coast, Eagle Farm and Doomben in Brisbane and Caloundra on the Sunshine Coast.  The balance included horses to be taken to equestrian farms and standard breed horses for the trotting industry.”

  1. [16]
    That description of the business of the defendant was reflected in the decision of the AAT, in the following words:

“Mr Radcliff, for Mr Maley, pointed out his client played a pivotal role in the horse transport business”;

and

“Mr Maley currently runs the largest transporter of racehorses on the east coast of Australia” (both at page 7 of 9).

  1. [17]
    Hence the commercial and trading significance of the parties was clearly identified.

The pleadings and the further and better particulars

  1. 1.
    Statement of claim – filed 27 September 2013; and defence – filed 28 October 2013
  1. [18]
    The material allegations are:
  • the plaintiff provided labour hire services to the defendant’s business “Sydney Horse Transport” in Queensland and New South Wales;
  • the director of the defendant was a former director of the plaintiff; and
  • the plaintiff and the defendant had the same registered office and principal place of business, namely the residence of the director of the plaintiff and defendant.
  1. [19]
    Those allegations were admitted by the defendant. It also admitted that two repayment demands were made but said that it did not owe the amount so demanded. The further material allegations are:
  • the plaintiff’s books and records showed that between August 2006 and May 2009 the plaintiff provided labour hire services to the defendant;
  • the cost of such labour and hire services was $3,192,903.86;
  • payments of $2,481,058.30 were made by the defendant to the plaintiff or its nominee;
  • the plaintiff claimed the amount outstanding of $711,845.56 as monies due or owing;
  • in the alternative, the plaintiff incurred liability in that sum on behalf of and for the sole benefit of the defendant.
  1. [20]
    The defendant did not admit those allegations and otherwise asserted that it required further and better particulars, pleaded a limitation defence and pleaded an equitable defence.
  1. 2.
    Plaintiffs further and better particulars – filed 25 November 2013
  1. [21]
    The material further and better particulars were that:
  • the plaintiff (through either Maley or Waller) engaged various employees in Queensland and New South Wales to perform work solely for the benefit of the defendant’s horse transport business;
  • the plaintiff incurred the customary expenditure associated with the engagement of employees;
  • the defendant received the benefit of the use of the employees;
  • the plaintiff invoiced the costs to the defendant;
  • the defendant generally transferred monies by way of part payment to the plaintiff’s bank accounts to meet the net payments due to the employees;
  • the plaintiff received no benefit or profit from the provision of the services;
  • the arrangements were agreed between the plaintiff and the defendant;
  1. 3.
    Amended defence – 11 December 2013
  1. [22]
    So far as is material, the defendant by way of amendments to it’s Defence, admitted that:
  • the plaintiff engaged employees in Queensland and New South Wales to perform work solely for the benefit of the defendant’s business;
  • the defendant was to pay the plaintiff the net cost of labour it had incurred excluding the customary expenditure associated with the engagement of employees;
  • the defendant generally transferred monies to the bank accounts of the plaintiff to meet the net payments due to employees;
  • the defendant therefore did not incur liabilities on behalf of and for the sole benefit the defendant.
  1. [23]
    The defendant denied there were any monies due and owing to the plaintiff for labour hire services and said that any monies owing to the plaintiff are not the responsibility of the defendant; and alleged that the plaintiff had failed to provide all the further and better particulars requested and that the defendant could not plead further to the plaintiffs allegations.
  1. 4.
    Amended Statement of Claim – 11 March 2014
  1. [24]
    The material amendments were (my underlining):
  • provision of labour and hire services by the plaintiff to the defendant was made at the request of the defendant and for the sole benefit of the defendant;
  • the value of the services was $3,219,904.47;
  • payments made were in the sum of $2,462,338.30;
  • the MYOB records of  both the plaintiff and the defendant showed that the payments made by the defendant to the plaintiff were applied towards the oldest debts first;
  • as at 14 November 2008 the oldest unpaid invoice issued to the defendant was 31 May 2008;
  • as at 26 September 2008 the oldest unpaid invoice issued by the plaintiff was 30 April 2008;
  • the amount outstanding to the plaintiff by the defendant is $757,566.17;
  • the sum of $7,566.17 is abandoned by the plaintiff such that the sum sought falls within the jurisdiction of the District Court of Queensland;
  • the defendant is liable to the plaintiff for the amount outstanding for monies due and owing for labour hire services provided at the request of the defendant; and
  • the District Court of Queensland has jurisdiction to hear the matter.
  1. 5.
    Plaintiff’s further and better particulars – filed 31 march 2014
  1. [25]
    The plaintiff maintained that the request for further and better particulars had been met; referred to the defendant’s admission that “the Plaintiff engaged employees in Queensland and New South Wales to perfom work solely for the benefit of the defendant’s business”; and directed the defendant to consider information sworn in affidavits filed in the proceeding.
  1. 6.
    Draft further amended defence – not filed as at date of hearing
  1. [26]
    So far as is material, the defendant admitted that the plaintiff provided labour hire services to the defendant for and on behalf of the defendant; denied that the provision of such services was solely at the request of the plaintiff because the defendant was to pay to the plaintiff only the net cost of labour; and that the amounts paid varied from week to week and further particulars were therefore required.
  1. [27]
    It is readily apparent that the draft further amended defence includes a denial of a factual allegation previously admitted that was not the subject of any grant of leave to withdraw it.

The hearing

  1. [28]
    At the hearing it was agreed that the application should be argued in the following sequence: the summary judgment application, the application for judgment for non-disclosure and then the application for security for costs. I heard submissions on all three applications in the sequence agreed. If the application for summary judgment was granted, the other two applications would of course fall away. The evidence was not complex (even though Mr Radcliff for the defendant submitted to the contrary), but the issues were of sufficient difficulty and the evidence relied on by the plaintiff of some uniqueness, such that I reserved judgment and orders. Nevertheless, for reasons that will be apparent, I will dispose of the application for judgment for non-disclosure first, because it deserves some brief discussion. I will then deal with each of the other applications.

The documentary evidence

  1. [29]
    The plaintiff’s case relies largely on an analysis of business and financial records of the plaintiff and the defendant, provided by third parties to the liquidator of the plaintiff, and on admissions in the pleadings and in other documents by directors of the plaintiff and the defendant.
  1. [30]
    Maley had been the sole director of the plaintiff prior to the relevant date of commencement of the period the subject of the claim. He was replaced by Waller, who was sole director of the plaintiff immediately before and during the material times in the pleadings. Maley was and continued to be sole director of the defendant until 29 December 2013 (that is, during the material times in the pleadings). He was banned from holding directorships from that date by ASIC, a matter that I have already referred to in this judgment.
  1. [31]
    Waller completed a liquidators questionnaire on 19 August 2009 stating that the plaintiff provided “labour hire” services; and in a Report as to Affairs dated 10 September 2009 stated that there were no company assets and that the plaintiff’s unsecured creditors were the Australian Taxation Office, WorkCover New South Wales and WorkCover Queensland. In a statutory declaration dated 26 February 2010, he claimed that the defendant’s records were destroyed by floods between 24 December 2009 and 30 December 2009.
  1. [32]
    The plaintiff had also been audited by a contractor appointed by WorkCover New South Wales. Books and records of the plaintiff were obtained from the Australian Taxation Office (“ATO”) – activity statements and running balance account statements - bank statements, and a report of the WorkCover New South Wales audit contractor. The plaintiff’s MYOB file was obtained from the audit contractor as were court documents, filed in a proceeding brought against the plaintiff, in the Federal Magistrates Court.
  1. [33]
    An investigation of those documents was completed by auditor Mr Beck (affidavit filed 12 February 2014, Court File Document 18), on behalf of the liquidator of the plaintiff. He formed the following opinion from that investigation:
  • The plaintiff had not lodged any Activity Statement with the ATO in the period March 2008 – June 2009.
  • The plaintiff had two bank accounts: CBA account number 10122903 and BOQ Account number 20514309;
  • The plaintiff was a service company and related entity of the defendant;
  • The plaintiff engaged employees directly who performed work for the sole benefit of the defendant;
  • The plaintiff’s sole source of income was from the defendant;
  • The only customer of the plaintiff was the defendant, trading as Sydney Horse Transport;
  • The plaintiff invoiced the defendant at the end of each month for its monthly payroll expenses;
  • The plaintiff’s monthly payroll summaries showed the sums invoiced (including GST and superannuation) to the defendant;
  • The plaintiff invoiced the defendant for amounts payable by the plaintiff to WorkCover New South Wales and WorkCover Queensland;
  • The plaintiff received no profit or benefit for the provision of such services;
  • The plaintiff’s banks statements showed each of the relevant transactions;
  • Each month the plaintiff would receive just enough funds into its bank accounts to allow it to meet the net monthly amount due to its employees;
  • As at 14 November 2008 the defendant owed the plaintiff the sum of $471,739.85.

The evidentiary basis of the plaintiff’s claim: discussion of two specific matters

  1. 1.
    Withdrawal of admissions
  1. [34]
    The defendant admitted that the plaintiff engaged employees in Queensland and New South Wales to perform work solely for the benefit of the defendant’s business; and that the plaintiff provided labour hire services to the defendant for and on behalf of the defendant. It subsequently resiled from this admission in it’s draft Further Amended Defence by denying that the provision of such services was solely at the request of the plaintiff, because the defendant was to pay to the plaintiff only the net cost of labour.
  1. [35]
    No application had been made by the defendant pursuant to r188 UCPR for leave to withdraw the admission. In the absence of leave the admissions remain extant and the plaintiff is entitled to rely on them. That was the position at the hearing and remains so.
  1. 2.
    Admissibility of documentary evidence as prima facie proof
  1. [36]
    There are a number of questions, rhetorical perhaps, that need to be addressed in this judgment about the ‘books of account’ relied on by the plaintiff:
  1. 1.
    Are the books of the plaintiff and the defendant admissible in evidence?
  2. 2.
    What do the books prove?
  3. 3.
    Does it matter from what source the books are obtained?
  4. 4.
    Is the form in which the books are kept relevant to admissibility?
  5. 5.
    Do the books provide proof of the plaintiff’s claim?
  6. 6.
    Are books that are “reconstructions” by the liquidator (which necessarily involves a degree of assumption and the forming of opinion) admissible in evidence to provide proof of the plaintiff’s claim?
  1. [37]
    The word ‘document’ is broadly defined in s 36 and Schedule 1 of the Acts interpretation Act 1954 (Qld) and encompasses all of the documentary materials referred to by the liquidator.
  1. [38]
    Section 83 of the Evidence Act 1977 (the “Act”) defines book of account to:              

“include any document used in the ordinary course of any undertaking to record the financial transactions of the undertaking or to record anything acquired or otherwise dealt with by, produced in, held for or on behalf of, or taken a loss from the undertaking and any particulars relating to any such thing.” 

  1. [39]
    Section 85 of the Act provides that in all proceedings:

“(a) an entry in a book of account shall be evidence of the matters, transactions and accounts therein recorded; and

(b) a copy of an entry in a book of account shall be evidence of the entry and of the matters, transactions and accounts therein recorded.”

  1. [40]
    Proof that a book is a book of account is facilitated in section 85:

“(1) An entry or a copy of an entry in a book of account shall not be admissible in evidence under this division unless it first proved that the book was at the time of the making of the entry 1 of the ordinary books of account of the undertaking to which it purports to relate and that the entry was made in the usual and ordinary course of that undertaking”,

and

“(2) Such proof may be given by a responsible person familiar with the books of account of the undertaking and may be given orally or by affidavit, sworn or by declaration made before a commissioner or person authorised to take affidavits or statutory declarations”.

  1. [41]
    Section 86 of the Act provides for verification of a copy of an entry in a book of account, in the following terms:

“(1) A copy of an entry in a book of account shall not be admissible in evidence under this division unless it is further proved that the copy has been examined with the original entry and is correct”,

and

“(2) Such proof may be given by some person who has examined the copy with the original entry and may be given orally or by an affidavit sworn or by a declaration made before a commissioner or person authorised to take affidavits or statutory declarations”. 

  1. [42]
    The Corporations Act 2001 in section 1305 refers to admissibility of books of account in evidence: 

“(1) A book kept by a body corporate under a requirement of this Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book”,

and

“(2) A document purporting to be a book kept by body corporate is, unless the contrary is proved, taken to be a book kept as mentioned in subsection (1)”. 

  1. [43]
    Hence the legislation refers to relevant expressions such as “entry in”, “… kept by”, “any matter stated in” and “usual and ordinary course of the undertaking ….”
  1. [44]
    In Hanson Construction Materials Pty Ltd v Davey & Anor [2010] QCA 246, Chesterman JA considered an issue of summary judgment where the plaintiff’s claim depended upon books of account of a defendant company. His Honour referred to the expression of opinion about the books by the deponent of an affidavit and said in respect to objections to the admissibility of those opinions that he did not understand them and wrote:

“[28] … the invoices, copies of which were exhibited to the affidavit, were business records of the respondent. They are “books of account” as defined by s 83 of the Evidence Act 1977 and were, by s 84, admissible evidence of the matters, transactions and accounts therein recorded. 

[29] As well the invoices and books, as defined by s 9 of the Corporations Act 2001, and by s 1305 were admissible in evidence in any proceedings as prima facie evidence of any matter stated or recorded in them”

[30] Paragraphs 12 and 13 state a conclusion which comes from the contents of the invoices which were exhibited. That course is admissible where the deponent is competent to give an opinion as to the effect of the document. See R v Hally [1962] Qd R 214, at 228, 230..

  1. [45]
    His Honour at [33] drew attention “to the need for a proper evidentiary basis when summary judgment is sought on a debt”. His Honour also referred to the principle described by Dixon J in Potts v Miller (1940) 64 CLR 282 at 304-5, which required that the documents thus relied upon to be put into evidence, as a necessary first step to admissibility.
  1. [46]
    Further, rule 295(2) UCPR refers to affidavits and statements of information and belief being admissible in an affidavit, if the deponent states the sources of information and reasons for the belief.
  1. [47]
    The documents are clearly admissible in my view. The documents to whish I have been referred are exhibited to affidavit material files in the application and hence have been put into evidence. Further, insofar as the reconstructed documents are concerned, opinions have been expressed about them and the information relied on in them and in my view the opinions expressed ought to be accepted in the absence of any challenge to them by way of pleadings or evidence. These documents are admissible to prove that which is asserted by the auditor in his affidavit and hence support the balance of the plaintiff’s claim based on the documents for the periods covered by them.

Discussion

The plaintiff’s applications:

  1. 1.
    The non-disclosure ground for judgment
  1. [48]
    In a letter by the plaintiff’s solicitors dated 28 January 2014 to the defendant’s solicitors, the plaintiff alleged failure on the part of the defendant to disclose documents relevant to the dispute in the proceeding. The issues said to be in dispute are:
  • The terms of any agreement(s) between the plaintiff and defendant;
  • The cost of labour incurred by the plaintiff for the benefit of the defendant’s business;
  • What the defendant agreed to pay the plaintiff in respect of the “cost of labour” it had incurred;
  • The amount invoiced by the plaintiff to the defendant;
  • The payments made by the defendant to the plaintiff.
  1. [49]
    The duty of disclosure is ongoing and the rules provide for it as follows:

“[r 211] Duty of disclosure

211 (1) A party to a proceeding has a duty to disclose to each other party each document –

  1. (a)
    in the possession or under the control of the first party; and
  2. (b)
    directly relevant to an allegation in issue in the pleadings; and
  3. (c)
    if there are no pleadings – directly relevant to a matter in issue in the proceeding.
  1. (2)
    The duty of disclosure continues until the proceeding is decided.
  2. (3)
    An allegation remains in issue until it is admitted, withdrawn, struck out or otherwise disposed of.”
  1. [50]
    The plaintiff submitted that the failure enlivened the provisions of rule 225(2) (b) of the UCPR and entitled it to judgment against the plaintiff. The rule provides as follows:

“[r 225] Consequences of non disclosure

225 (1) If a party does not disclose a document under this part, the party –

  1. (a)
    must not tender the document, or adduce evidence of its contents at the trial without the court’s leave; and
  2. (b)
    is liable to contempt for not disclosing the document; and
  3. (c)
    may be ordered to pay the costs or a part of the costs of the proceeding.
  1. (2)
    If a document is not disclosed to a party under this part, the party may apply on notice to the court for –
  1. (a)
    an order staying or dismissing all or part of the proceeding; or
  2. (b)
    a judgment or other order against the party required to disclose the document; or
  3. (c)
    an order that the document be disclosed in the way within the time stated in the order.
  1. (3)
    The court may, in an order under sub-rule (2)(c), specify consequences for failing to comply with the order.”
  1. [51]
    The word “document” is defined in section 36 of the Acts Interpretation Act 1954.

Discussion

  1. [52]
    On behalf of the defendant it is said that any documents it may have had in its possession or control have been lost or destroyed in a flood in December 2009. Hence the defendant alleges that it is unable to disclose documents or any more documents in the proceeding.
  1. [53]
    The plaintiff, in the alternative ground of its application, sought judgment against the defendant on the basis of its failure to make disclosure in terms of the disclosure obligations in the UCPR. Disclosure is a continuing obligation, but it is highly unlikely that the failure in this case will be capable of remedy.
  1. [54]
    Accepting, for the narrow purpose of my consideration of this ground of the application, that the are no – or no further - material documents that are in the possession or control of or otherwise able to be disclosed by the defendant, it is not appropriate to award judgment on this ground, pursuant to r225 (2) (b), because it is not a failure to disclose per se but an impossibility so to do.
  1. 2.
    The summary judgment ground
  1. [55]
    Should there be summary judgment at this stage of the proceeding? 
  1. [56]
    Rule 292 Uniform Civil Procedure Rules 1999 (“UCPR”) provides:

“[r 292]  Summary judgment for plaintiff

292 (1)  A plaintiff, may, at any time after a defendant files a Notice of Intention to Defend, apply to the Court under this part for judgment against the defendant.

  1. (2)
    If the court is satisfied that –
  1. (a)
    the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and
  2. (b)
    there is no need for a trial of the claim or the part of the claim;

The court may give judgment for the plaintiff against the defendant for all or part of the plaintiff’s claim and may make any other order the court considers appropriate.”

Discussion

  1. [57]
    In Bolton Properties Pty Ltd v JK Investments (Australia) Pty Ltd (2009) 2 Qd R 202, Chesterman JA wrote, at [24]:

“In practical terms I suspect the rule means that summary judgment should not be given where the facts upon which the parties’ respective rights depend are disputed, or where the respondent to the application for summary judgment adduces evidence as to the existence of fact which, if proved, would establish a defence or a right to relief. In other words, it is only where all the facts are known and/or are established beyond controversy that the court should embark upon determining whether to give summary judgment. Where relevant facts are controverted, or where it appears that facts may exist which would affect a right of action or defence, there should be a trial to determine the facts.”

  1. [58]
    Holmes JA wrote of the “finer shades of meaning”, in discussing the difference of view from his Honour that she held about the test and wrote at [1] that:

“… a claim (or defence) which has ‘no real prospect of succeeding’ … implies, to me at least, a conclusion reached after a hard-headed assessment, rejecting spurious arguments…”

  1. [59]
    In General Steel Industries Inc v Commisioner for Railways (NSW) (1964) 112 CLR 125, Barwick CJ wrote, at page 130:

“… once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.  Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings … in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal.  On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim.  Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.”

  1. [60]
    In Chidgey v Wellner & Anor [2006] QDC 400, the court wrote:

“[19] On an application under r 292, the plaintiff carries the onus of showing that the requirements of the rule have been met.  Commonly, a defendant seeking to resist an application for summary judgment will file affidavit material on the basis of which it is sought to show that the requirement of the rules are not met, but it is not necessary to do so. In principle, a defendant may be able to show that the requirements of the rule are not met, or simply that the plaintiff has failed to discharge the onus under r 292 by reference to the pleadings and the material filed in support of the application on behalf of the plaintiff.  The fact that there is no affidavit on behalf of the appellant was not necessarily fatal to success before the magistrate, or on appeal from the magistrate’s order.

[20] Furthermore on an application under r 292 a defendant is not confined to defences arising on the existing pleading.  That rule is directed to the apparent outcome at any future trial, and in its application must bear in mind that under the rules pleadings can be amended prior to, and indeed in some cases even during, a trial.  Accordingly, what is important for that rule is not whether the defendant has pleaded any ground which has a real prospect of succeeding, but whether a defendant really has no real prospect of successfully defending the claim.” 

  1. [61]
    See also Bernstrom v National Australia Bank Ltd [2002] QCA 231.
  1. [62]
    The question is whether there is there in this case a realistic, as opposed to a fanciful, prospect of the defendant successfully defending the claim, in the circumstances such as I have described?
  1. [63]
    The defendant says it cannot plead to the plaintiff’s case, in effect, beyond the current state of the pleadings. It has no documentary material upon which it can rely to resolve that issue. Waller and Maley appear not to be able to say, or perhaps are unwilling to say, anything useful or relevant about the claim, or otherwise to explain the financial circumstances of the plaintiff or the defendant, despite their respective directorships and governance responsibilities for the companies.
  1. [64]
    The question that has taxed me in considering this matter comes down to this, in simple terms: If one assumes (such an assumption that would not be unreasonable in the circumstances) the plaintiff’s case is at it’s highest point of proof now and the defendant’s case is at it’s highest point of rebuttal of the plaintiffs allegations now, is the plaintiff able to prove its claim? Is there a real prospect of the defendant successfully defending all or part of the plaintiff’s claim? Is a trial realistically likely to uncover some further evidence that breaks what seems now to be an impasse in the proceedings?
  1. [65]
    In my view the defendant, through the conduct of Waller and Maley, are relying on the loss of company financial and other records to defeat the plaintiff’s claim. They make no substantive or responsive allegations in the several defence pleadings to the allegations made in the plaintiffs several pleadings, save for an admission that it now seeks informally and without leave to withdraw. That admission is central to the plaintiff’s case.
  1. [66]
    The plaintiff has been able to reconstruct the financial records of the plaintiff and of the defendant, to the extent that the relationship between the two entities is prima facie proved. The defendant has made no attempt to respond to the allegation made on the documents upon which the plaintiff relies, despite Waller and Maley being the sole directors, in succession, of the plaintiff and Maley being the sole director of the defendant, at all material times.
  1. [67]
    It is said that they are unable to respond on behalf of the defendant because they do not have the company documents. Those documents according to them no longer exist. However, they should be able to respond to the documents in the form produced by the plaintiff from reputable third party sources. They do not do so and appear to be content to hide behind the loss of the documents that were in the possession of the respective companies but are now lost. To suggest that the defendant, through the directors or other persons who may have had even a modest familiarity with the financial affairs of the defendant, cannot respond to the plaintiff’s allegations is, in all the circumstances, risible.
  1. [68]
    Mr Copley for the plaintiff submitted in summary a number of contentions to support there being no need for a trial in this matter. I agree with his summary, for the reasons referred to in the course of this judgment. Those contentions were as follows:
  1. “(a)
    The records of both companies show a course of dealing between the two companies consistent with the claims made by the liquidator;
  2. (b)
    The defence of Malor Holdings admits that there was a course of dealing largely consistent with the course of events as alleged by the liquidator;
  3. (c)
    Malor Holdings’ own records evidence and support that no such agreement was entered into to avoid payment of superannuation and other amounts agreed from time to time;
  4. (d)
    Malor Holdings has provided no documentation in support of the asserted agreement;
  5. (e)
    There is no defence offered [or in fact pleaded] by Malor Holdings; and
  6. (f)
    The evidence of Mr Maley consists of bare assertions what may occur when further discovery is provided – although no complaint has been raised about the state of the plaintiff’s discovery nor are the type of documents identified which might assist Mr Maley to adequately explain the relationship between his company and the plaintiff (which shared the same registered office and principal place of business as the defendant).”
  1. [69]
    In my view there is no real - or indeed any – prospect of the defendant successfully defending the claim. Hence it is a matter whether summary judgment for the plaintiff is the appropriate means to take the proceeding towards a final resolution.             
  1. [70]
    Rule 5 UCPR provides the philosophy inherent in the application of the UCPR:

“[r 5]  Philosophy – overriding obligations of parties and court.

5 (1)  The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.

  1. (2)
    Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules.
  2. (3)
    In a proceeding in a court, a party impliedly undertakes to the court and to the other parties to proceed in an expeditious way.
  3. (4)
    The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court.”
  1. [71]
    In my view an order for summary judgment against the defendant reflects that philosophy and is appropriate in this case. As I have observed, the proceeding would all but stall if the defendant’s position was maintained and there seems to me to be no prospect of the defendant changing his stance with respect to the claim of the plaintiff.

The application for security for costs

  1. [72]
    It is not necessary for me to consider this application by the defendant in the circumstance where I have ordered summary judgment for the plaintiff. The application is refused.

Conclusion

  1. [73]
    As I have observed this is not a case where judgment for non-disclosure is appropriate. However, I am persuaded upon a careful consideration of the whole of the material, relied on by and referred to in submissions, by both counsel, that this is a case, as exceptional as it may be, that is fairly and justly amenable to resolution – at least in part – by an order for summary judgment for the plaintiff.
  1. [74]
    Summary judgment should be made for that part of the plaintiff’s case that covers the period where the documentation considered by Mr Beck can be analysed objectively, namely the period 26 September 2008 to 14 November 2008; and the balance period from 15 November 2008 to 08 May 2009, as re-constructed by Mr Beck. Whilst it is a matter of opinion by Mr Beck I consider that opinion to be persuasive in all the circumstances and I am prepared to order summary judgment for the whole period. Hence I will order summary judgment for the plaintiff on part of its claim (the expression “part” reflecting the fact that the current claim is for the sum of $750,000.00) in the sum of $554,024.39.

Costs

  1. [75]
    I do not consider that this is a case for costs to be awarded on any basis other than standard costs. I will therefore apply the general rule in favour of the plaintiff and award costs on the standard basis for the application.

Orders

  1. 1.
    Application for summary judgment by plaintiff granted for part of the claim.
  2. 2.
    Judgment for the plaintiff in the sum of $554,024.39, with interest and costs.
  3. 3.
    Application for judgment on breach of disclosure obligation refused.
  4. 4.
    Application by defendant for security for costs refused.
  5. 5.
    The defendant to pay to the plaintiff its costs of the three applications, on the standard basis.
  6. 6.
    The parties have liberty to apply on seven 7. days notice.
Close

Editorial Notes

  • Published Case Name:

    Ella Enterprises Pty Ltd (in liq) v Maller Holdings Pty Ltd

  • Shortened Case Name:

    Ella Enterprises Pty Ltd (in liq) v Maller Holdings Pty Ltd

  • MNC:

    [2014] QDC 236

  • Court:

    QDC

  • Judge(s):

    Durward DCJ

  • Date:

    16 Oct 2014

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Bernstrom v National Australia Bank Ltd[2003] 1 Qd R 469; [2002] QCA 231
2 citations
Jump To
Cite 1 - [2002] QCA 231
Cite 2 - [2002] QCA 231
Bolton Properties Pty Ltd v J K Investments (Australia) Pty Ltd[2009] 2 Qd R 202; [2009] QCA 135
3 citations
Jump To
Cite 1 - [2009] 2 Qd R 202
Cite 2 - [2009] 2 Qd R 202
Cite 3 - [2009] 2 Qd R 202
Chidgey v Wellner [2006] QDC 400
2 citations
Jump To
Cite 1 - [2006] QDC 400
Cite 2 - [2006] QDC 400
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
2 citations
Jump To
Cite 1 - (1964) 112 CLR 125
Cite 2 - (1964) 112 CLR 125
Hanson Construction Materials Pty Ltd v Davey [2010] QCA 246
2 citations
Jump To
Cite 1 - [2010] QCA 246
Cite 2 - [2010] QCA 246
Maley v ASIC [2013] AATA 924
2 citations
Jump To
Cite 1 - [2013] AATA 924
Cite 2 - [2013] AATA 924
Maller Holdings Pty Ltd v Gold Coast City Council [2013] QPEC 51
2 citations
Jump To
Cite 1 - [2013] QPEC 51
Cite 2 - [2013] QPEC 51
Potts v Miller (1940) 64 CLR 282
2 citations
Jump To
Cite 1 - (1940) 64 CLR 282
Cite 2 - (1940) 64 CLR 282
R v Hally [1962] Qd R 214
1 citation
Jump To
Cite 1 - [1962] Qd R 214

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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