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Morris v State of Queensland[2004] QSC 316

Morris v State of Queensland[2004] QSC 316

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

JONES J

Application No 510 of 2003

PETER JOHN MORRIS and TODD WILLIAM KELLY

Respondents (Applicants)

and

 

STATE OF QUEENSLAND

Applicant (Respondent)

CAIRNS

DATE 03/08/2004

JUDGMENT

HIS HONOUR: This is an application on behalf of the defendant, State of Queensland, to be relieved of the effect of the operation of rule 189 of the Uniform Civil Procedure Rules relating to its failure to respond to a notice to admit facts and the deemed admission that flows from that failure.

The notice to admit facts was dated the 28th of May 2004. It was required therefore that there be a response to the notice by the 7th of June 2004 if the applicant here was to avoid the consequences of that failure. In fact the response to the notice was not filed until the 9th of June 2004 and served at about the same time. The response was intended to be sent by facsimile on the 7th of June 2004 so that it would be within time. There was an error or misdirection which resulted in that not happening but the applicant finds itself in a position that there is confronting it a deemed admission of the facts set out in the notice. The applicant seeks now to have those withdrawn but has done little more than explain what its intentions were and how the failure to comply arose.

I am referred to a passage from the judgment of Williams J in Ridolfi versus Rigato Farms Pty Ltd, 2001, 2 Queensland Reports 455, particularly at paragraph 32 where the following remarks appear:

“Certainly an admission flowing from the operation of rule 189 should not be withdrawn merely for the asking. In my view a clear explanation on oath should be given as to how and why the admission came to be made and then detailed particulars given of the issue or issues which the party would raise if the admission was withdrawn. Such a requirement is generally in accordance with the reasons of Rogers CJ in Coopers and of McKenzie J in Equis Corp Pty Ltd versus Horjarto (unreported S9208/96 judgment 30 November 1999). That ought not to be taken as an exhaustive statement of what is required. Each case should be considered in the light of its own facts and the circumstances may well require even more extensive material in order to obtain leave to withdraw the admission”.

What appears from the material and what has been canvassed in argument before me is that the response to paragraphs 1 and 2 of the notice could not be made in detail because the applicant here did not have the opportunity to consider the relevant documents. The documents are going to the question of the insolvency of the company, AET Operations Pty Ltd, of which the respondents in this application are the liquidators.

The complaint made by the applicant is that the disclosure was inadequate because the documents which they would seek to inspect were not properly identified. They were referred to as simply a line item identifying company documents contained in 46 archive boxes.

Whilst one appreciates the difficulty in dealing with a large volume of documents so described, the previous history of this case included the making of an order for directions in November 2003 which provided for the disclosure of documents, the inspection of the documents, and particularly, the preparation and exchange of expert reports. No expert report was obtained, or certainly none has been disclosed or exchanged by the applicant here. That would result in the applicant now having lost the opportunity to use any expert report in evidence except by leave.

The question of insolvency in those circumstances where the Court might have access only to the report of the liquidators which deals with this issue would be rather predictable. So the basis upon which the applicant can dispute the allegations in paragraphs 14 and 15 of the statement of the claim as to insolvency seem rather narrow and rather dependent upon leave being granted to adduce expert reports.

In relation to paragraph 3 of the notice to admit facts (which relates to paragraph 2 of the Reply dealing with the manner in which arrears of payroll tax were to be paid) the response by the applicant was simply that the payments made were in part pursuant to a pre-existing agreement about the payment of arrears as well as for the payment of ongoing payroll tax obligations. Mr Philp, senior counsel on behalf of the respondent liquidators argued that response cannot stand with the allegations in paragraph 6 of the statement of claim, which had been admitted by the applicant, and which referred only to payment of arrears.

A similar argument is raised in respect of paragraphs 4 and 5 of the notice to admit facts where the applicant's response cannot stand with paragraph 5 of the statement of claim, which also had been admitted by the applicant. The admissions sought in paragraph 5 of the notice related to information conveyed by Mr Paul Atkins, accountant, acting on behalf of the company to the effect that the company could not pay the payroll tax then outstanding. That conversation was alleged to have occurred in January 2000. The response by the applicant was that the information received from Mr Atkins was not couched in the terms set out in paragraph 5. Whilst that might have been an adequate response had the notice been in time, in circumstances where relief is sought from the deemed admission more detail was certainly required as to that conversation. Its relevance is not easy to gauge. The relevant period for the relation back with which the liquidators' claim is concerned is the period from October 2000 to May 2001 but at least the information in January 2000 would form the factual matrix which may, in the outcome, be significant.

The admissions sought by paragraph 6 of the notice were admitted as to subparagraphs (a), (b), (c) and (d). As to the admissions specified in subparagraph (e), the applicant responded by simply disputing the accuracy of an allegation that it did not make any inquiries as to how the company was going to be able to pay arrears of its payroll tax liability and continue to meet its ongoing payroll tax.

The question of whether the applicant here did make any such inquiries could well have been answered either with a “yes” or a “no”. In argument before me Mr Redmond of counsel indicated that the applicant may well have answered “yes” but with some qualifications and explanation. However, there is no sworn evidence before me as to how the respondent would deal with that particular notice to admit.

In those circumstances, I am not satisfied on the material that the applicant has shown proper grounds why it should be relieved from the effect of rule 189. True it is that the failure to respond was of short duration and that is explained but that failure has put the applicant in the position of having to go further and to identify the particulars that it would raise at trial and to do so on sworn evidence before me. The applicant has failed to do that and I would therefore refuse, in the exercise of my discretion, to set aside the deemed admission made as a consequence of the operation of rule 189.

HIS HONOUR: The applicant (respondent in the action) seeks the striking out of subparagraph, 3(c)(I) which contains the allegation, “The respondent did not become a party to the transactions in good faith”. The words adopted to raise this issue are really determined by the provisions of section 588FG(2) of the Corporations Law which requires the applicant here to prove that it received the payments in good faith. In other words, the applicant here bears the onus of proving that fact. The applicant here in its defence did raise the issue by asserting that its receipt of the payments was done in good faith.

The liquidators wish to challenge that assertion and have done so in paragraph 3 of the reply by making a number of factual assertions upon which it will argue that the applicant did not receive the payments in good faith. No allegation is made of ill will on the part of any of the officers of the applicant but reference is simply made to various inquiries, statements or information which came into the hands of the applicant's officers.

The purpose of raising this matter in the reply is simply to indicate that the allegation made by the applicant in the defence is challenged and to put the applicant on notice that it bears the onus of proof of good faith rather than leave the applicant to be surprised by such an issue arising at trial.

I regard the pleadings as properly raising an issue. It is raising it by way of response to the applicant's own assertion in the defence, and it is not a situation therefore where particulars have to be made in circumstances envisaged in rule 150 of the Uniform Civil Procedure Rules. What is required now that the liquidators have put in issue the question of good faith is for the applicant here to satisfy the onus required by the provisions of the Corporations Act. I will refuse the application.

HIS HONOUR: On the issue of costs, counsel for the applicant, who has essentially been unsuccessful in two of the applications and in only a minor way successful in the third application, raises that point to anticipate the question of costs following the event. He also argues that the genesis of these two applications stem from what he suggests is inadequate disclosure, and raises the point that the applicant did offer to have the matter heard in Brisbane, where the liquidators have an office.

The latter point I can deal with quickly. This is a matter which is instituted in the registry in Cairns and prima facie Cairns is the appropriate place for applications of this kind to be heard. As to the other question, the disclosure point is a relatively minor one. Although there are large numbers of unidentified documents referred to, I do not feel that the liquidators have in any way breached their obligation in not identifying every document or classes of documents in 46 archive boxes. More particularly, if there was a need to have documents identified to make clear the issues that were to be litigated this should have been done at an earlier date than now. The disclosure was ordered in November of 2003. Expert reports obtained by the liquidator have been exchanged. In my view the stimulant for this series of applications was the failure on the part of the applicant to respond to a notice to admit facts in the time required.

The appropriate order in my view is for the applicant to pay the respondent's costs in respect of the two applications in which the respondent has been successful, and to make no order for costs in respect of the matter of disclosure.

Close

Editorial Notes

  • Published Case Name:

    Peter John Morris and Todd William Kelly v State of Queensland

  • Shortened Case Name:

    Morris v State of Queensland

  • MNC:

    [2004] QSC 316

  • Court:

    QSC

  • Judge(s):

    Jones J

  • Date:

    03 Aug 2004

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
Ridolfi v Rigato Farms Pty Ltd[2001] 2 Qd R 455; [2000] QCA 292
1 citation

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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