Willaire Pty Ltd v Equititrust Ltd
[2012] QSC 3
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- Unreported Judgment
- Appeal Determined (QCA)
- Willaire Pty Ltd v Equititrust Ltd[2012] QSC 3
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Willaire Pty Ltd v Equititrust Ltd[2012] QSC 3
Willaire Pty Ltd v Equititrust Ltd[2012] QSC 3
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Trial | |
PROCEEDING: | Application |
DELIVERED ON: | 31 January 2012 |
DELIVERED AT: | Supreme Court, Brisbane |
HEARING DATE: | 25 October 2011 |
JUDGE: | Douglas J |
ORDER: |
|
CATCHWORDS: | CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENERALLY – where application to set aside statutory demand relating to costs order – where costs assessed in amount of $68,621.52 – where appearance entered on behalf of a shareholder of applicant – where appearance also entered on behalf of sole director of applicant – whether applicant had standing to bring application – where statutory demand posted to applicant’s registered address on 16 August 2011 – where evidence that applicant’s director received statutory demand on 19 August 2011 – where application and supporting affidavit filed on 9 September 2011 – whether originating process and supporting affidavit filed and served within time – whether applicant had an offsetting claim – whether some other reason why demand should be set aside Acts Interpretation Act 1901 (Cth), s 29 Corporations Act 2001 (Cth), ss 459G(2), 459G(3)(a) Uniform Civil Procedure Rules 1999 (Qld), r 394 ASIC v Lanepoint Enterprises Pty Ltd [2006] FCA 1163 cited Capital Globe Investments Pty Ltd v Parker Investments Australia Pty Ltd [2011] QSC 31 cited Elphick v Elliot [2003] 1 Qd R 362 cited Graywynter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund (1996) 70 FCR 452 cited Scope Data Systems Pty Ltd v Goman (2007) 70 NSWLR 176 cited The Charan Group Pty Ltd v Kaur [2011] QSC 71 cited Virgtel Ltd v Zabusky (No 2) [2009] QCA 349 cited Willaire Pty Ltd v Equitirust Ltd [2010] QCA 350 referred |
COUNSEL: | J B Sweeney for the applicants G Handran for the respondent |
SOLICITORS: | QBM Lawyers for the applicants Tucker and Cowan Solicitors for the respondent |
[1] Douglas J: The applicant, Suzanne Spottiswood, holds 80 percent of the shares of Willaire Pty Ltd, a company now in receivership. The other applicant, Ailsa Nilson, is the sole director of Willaire. Willaire owes $68,621.52 to the respondent, Equititrust Ltd, pursuant to a costs order made in litigation conducted in this court. Equititrust has issued a statutory demand based on the costs order that the applicants, acting on behalf of Willaire, have applied to set aside. Their standing to bring the application, Willaire being in receivership, was not accepted by the respondent.
[2] That issue and a number of other issues need to be determined. The other issues include whether the originating application and affidavit were filed and served within 21 days of the service of the statutory demand, whether evidence relied on by the respondent is admissible in respect of that issue, whether Willaire has an offsetting claim and whether there is some other reason to set aside the demand.
Standing to bring the application
[3] Mr Sweeney announced his appearance on behalf of Ms Spottiswood as a shareholder of Willaire and Ms Nilson as its director. The evidence establishes that Ms Nilson is the company’s sole director. There is no evidence that she has authorised the application other than the appearance by Mr Sweeney and his solicitors on her behalf. Nor is there evidence from the company that Ms Spottiswood was authorised to bring the application. She has sworn that she is a shareholder of Willaire and authorised to swear her affidavit filed 9 September 2011 on the company’s behalf but she does not buttress that, for example, by evidence of any director’s resolution to that effect. In my view, however, I am entitled to assume that, when solicitors and counsel announce their appearance on behalf of an individual, that they are actually authorised to appear for that person, in this case Ms Nilson.
[4] In those circumstances the issue is whether Ms Nilson at least has a right to apply to seek to set aside the statutory demand independently of Willaire’s receivers. The authorities indicate that she does where the exercise of her residual power to bring this application on behalf of the company does not interfere with the legitimate exercise by the receivers of their powers or prejudice the legitimate interests of the receivers and secured creditors in respect of the company’s secured assets.[1]
[5] This can be achieved by her assuming the liability for the costs of the application and, if necessary, providing security for those costs. The respondent did not ask for the provision of any security from Ms Nilson or Ms Spottiswood nor did the receivers take part in the application. In those circumstances I am prepared to proceed on the basis that Ms Nilson has a right to be heard in support of the application.
Service in time of the application
[6] Willaire’s registered office was at a firm of accountants in Ayr. The conclusion to be drawn from an email from that firm exhibited to an affidavit of Ms Spottiswood filed 25 October 2011 is that the statutory demand was received at that office on 19 August 2011. That is because the email says that the demand was sent to Willaire’s director on that date and that the firm always forwarded documents received by them directly on the same day they were received. I regard the email as admissible as evidence of the truth of its contents in reliance on the discretion given to me by r 394 of the Uniform Civil Procedure Rules (Qld) 1999.
[7] The respondent argued that the application should be treated as having been delivered for the purposes of s 29 of the Acts Interpretation Act 1901 (Cth) in the ordinary course of the post on 18 August 2011, two days after it was posted on 16 August. The respondent also sought to rely on evidence of the performance standards achieved by Australia Post to buttress that conclusion.
[8] If the statutory demand was received on 19 August 2011 then this application and the supporting affidavit of Ms Spottiswood, both filed 9 September 2011, would have been filed within the 21 days allowed under the Corporations Act 2001 (Cth) s 459G(2).
[9] On the assumption, which I make for the purposes of this argument, that the evidence of Australia Post meeting its performance standards is admissible and that it establishes that they were met during this period,[2] it still seems to me to be more probable than not, based on the accountants’ email, that the statutory demand was served, not in the ordinary course of the post, but on 19 August 2011. Accordingly, I shall treat the application as having been made in time.
Adequacy of the supporting affidavit
[10] Ms Spottiswood’s affidavit was criticised as not “supporting the application” as required by s 459G(3)(a) of the Act because she was not a director and does not depose to having undertaken any investigation or inspection of the applicants business records. Her evidence was also criticised as being based entirely on information and belief where the source of her knowledge is not identified.
[11] The effect of her affidavit was to detail the litigation that was on foot between Willaire and Equitirust, including the costs order made in favour of Equitirust and in favour of Willaire which is, no doubt, a matter of public record. A copy of the order made in favour of Equitirust was attached as was correspondence from her solicitors setting out the reasons why they argued the demand should be withdrawn. It does not seem to me to be a necessary conclusion from the form of the affidavit that the relevant information was not within Ms Spottiswood’s possession. I would treat it as a supporting affidavit sufficient for the purposes of the section to alert Equitirust to the nature of Willaire’s case in resisting the demands.[3]
Offsetting claim
[12] The original application leading to the costs order against Willaire in favour of Equitirust was brought by Willaire to try to prevent Equitirust appointing receivers over Willaire and to set aside a statutory demand for $3,000,000. Willaire was unsuccessful in those applications before Applegarth J. That was in Equititrust Ltd v Gamp Development Pty Ltd [4] where the costs order was made by his Honour on 17 September 2010.
[13] The statutory demand was, however, set aside in the Court of Appeal in an appeal in a separate action,[5] on the basis that the debt on which the statutory demand was based may have arisen out of a “limited recourse” form of security where the claimed debt was only able to be satisfied out of the net proceeds of sale of particular secured property.[6] Willaire received an order for costs in its favour on that appeal. It had also received a costs order in its favour from Applegarth J in September 2010 in respect of a separate application for indemnity costs. Those costs orders in its favour have been estimated to amount to $40,000 or, on perhaps a more reliable assessment having regard to the material available to the costs assessor, $24,779.20.
[14] It has been difficult for Willaire to estimate its costs reliably or to have them assessed as the relevant files are held by its former solicitors. It is in dispute with those solicitors and it appears that the file is being held in the exercise of a lien for those solicitors’ costs. On the estimates, therefore, Willaire has an offsetting claim of something in the region of $24,779.20.[7]
Some other reason
[15] The issue whether the obligation said to bind Willaire is a limited recourse security is to be litigated at a trial where, I understand, rectification is also to be sought in respect of the relevant security documents and the action is being heard at the same time as an application to wind up Willaire. The argument for Willaire is that, to force it to pay the costs order outstanding against it, will “stymie” its ability to prosecute that further litigation. There is no evidence, however, of what Willaire’s assets are otherwise or of how the enforcement of the costs order will prevent it from defending itself against the winding up application.
[16] Some hearsay evidence was led to the effect that Equititrust’s accounts were in arrears.[8] There was no evidence from which I could conclude that it was insolvent. The argument was that Willaire had expended a large amount as costs which it may not recover if it receives orders in its favour eventually. More particularly it was said that, if it pays the demand, it may never recover that sum, presumably on the assumption that Equititrust may encounter financial difficulties in the near future.
[17] As against that pure speculation, Equititrust has the benefit of an order in its favour for costs which has not been stayed pending the determination of the other proceedings to which it is a party.
[18] The onus lies on the applicants to show why Equititrust should not be entitled to the enforcement of that order.[9] It does not seem to me that they have discharged that onus. In the circumstances I am willing to vary the demand by deducting the offsetting claim of $24,779.20 so that the amount payable will now be $43,842.32. Otherwise, however, it is my view that the applicants have not established some other reason for setting aside the demand. There is no evidence of the likely effect on the remaining litigation if this demand is required to be paid and nothing from which I could conclude properly that the demand is being pursued for the ulterior purpose of preventing that litigation from proceeding.
Order
[19] Accordingly, I vary the amount payable pursuant to the statutory demand to $43,842.32. I declare the demand to have had effect, as so varied, as from when the demand was served on the company.
[20] Otherwise I dismiss the application. I shall hear the parties as to costs.
Footnotes
[1] See ASIC v Lanepoint Enterprises Pty Ltd [2006] FCA 1163 at [24]; (2006) 60 ACSR 217. See also Capital Globe Investments Pty Ltd v Parker Investments Australia Pty Ltd [2011] QSC 31 at [5]-10].
[2] Compare Scope Data Systems Pty Ltd v Goman (2007) 70 NSWLR 176, 182 at [21] and The Charan Group Pty Ltd v Kaur [2011] QSC 71 at [13].
[3] See Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452.
[4] Matter number 6057 of 2008.
[5] Willaire Pty Ltd v Equitirust Ltd [2010] QCA 350, number 8485 of 2010.
[6] [2010] QCA 350 at [39].
[7] See, for example, Elphick v Elliot [2003] 1 Qd R 362, 363-365 at [11]-[16].
[8] The better view appears to be that hearsay evidence is admissible on applications of this nature; see Farid Assaf, Statutory Demands: Law and Practice (LexisNexis Butterworths Australia, 2008) at par4.42.
[9] Virgtel Ltd v Zabusky (No 2) [2009] QCA 349 at [19].