QTM Enterprises (Qld) Pty Ltd v Palmgrove Holdings Pty Ltd [No 2]
[2023] QSC 110
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- Unreported Judgment
- QTM Enterprises (Qld) Pty Ltd v Palmgrove Holdings Pty Ltd [No 2][2023] QSC 110
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QTM Enterprises (Qld) Pty Ltd v Palmgrove Holdings Pty Ltd [No 2][2023] QSC 110
QTM Enterprises (Qld) Pty Ltd v Palmgrove Holdings Pty Ltd [No 2][2023] QSC 110
SUPREME COURT OF QUEENSLAND
CITATION: | QTM Enterprises (Qld) Pty Ltd v Palmgrove Holdings Pty Ltd trading as Carruthers Contracting (No 2) [2023] QSC 110 |
PARTIES: | QTM ENTERPRISES (QLD) PTY LTD ACN 114 040 774 (Applicant) v PALMGROVE HOLDINGS PTY LTD TRADING AS CARRUTHERS CONTRACTING ACN 010 575 578 (Respondent) |
FILE NO/S: | BS 3215 of 2023 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
DELIVERED ON: | 18 May 2023 |
DELIVERED AT: | Townsville |
HEARING DATE: | Heard on the papers, on the basis of written submissions. |
JUDGE: | Bowskill CJ |
ORDERS: | 1. The respondent pay the applicant’s costs of the application, to be assessed on the standard basis up to and including 26 April 2023 and on the indemnity basis from and including 27 April 2023. |
CATCHWORDS: | CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – where the applicant succeeded in its application to set aside the statutory demanded issued by the respondent – basis on which costs to be paid by the respondent should be assessed |
COUNSEL: | C Coulsen, for the applicant M White, for the respondent |
SOLICITORS: | Romans & Romans Lawyers, for the applicant Butler McDermott Lawyers, for the respondent |
- [1]On 2 May 2023, I gave judgment for the applicant on its application to set aside the statutory demand issued by the respondent and made orders (1) that the statutory demand be set aside and (2) that the respondent pay the applicant’s costs of the application: QTM Enterprises (Qld) Pty Ltd v Palmgrove Holdings Pty Ltd trading as Carruthers Contracting [2023] QSC 85. I indicated that I would hear the parties as to the basis on which costs should be assessed – in circumstances where the application sought costs on the indemnity basis, but this had not been addressed at the hearing. Both parties have subsequently filed affidavit material and submissions. It was agreed the matter would be determined by me on the basis of that written material.
- [2]For the following reasons, the appropriate basis for assessment of the costs is on the standard basis up to and including 26 April 2023 and then on the indemnity basis from and including 27 April 2023.
- [3]The respondent’s solicitor was aware from 7 March 2023 that the applicant had not received the statutory demand, and for that matter was not aware of the Magistrates Court proceedings, in respect of which the default judgment had been entered which was the basis for the statutory demand.
- [4]The application to set aside the statutory demand was filed on 14 March 2023. On that same date, the applicant also applied to set aside the default judgment. Despite those things, and the correspondence between the parties, the respondent proceeded, on 16 March 2023, to file the application to wind up the applicant in the Federal Court – relying on the presumption of insolvency arising from failure to comply with the statutory demand.
- [5]The default judgment was set aside on 24 April 2023. This removed the foundation of the statutory demand and, in turn, the winding up application.
- [6]The applicant had made an offer, on 19 April 2023, to resolve the Federal Court proceedings (by the parties consenting to the application being dismissed, with the respondent (plaintiff in the Federal Court) paying the applicant’s costs); the Supreme Court proceedings (by the parties consenting to an order that the statutory demand be set aside, with no order as to costs) and the application to set aside the default judgment in the Magistrates Court (by the parties consenting to the setting aside of the judgment, agreeing to directions for the progress of the substantive dispute, and for the applicant (defendant in those proceedings) to pay the respondent’s costs).
- [7]That offer was not accepted.
- [8]The day after the default judgment was in fact set aside, on 25 April 2023, the applicant made a further offer to the respondent, proposing that the respondent withdraw its statutory demand and, upon receipt of confirmation of that, the applicant would discontinue the application in this court, with no order as to costs.
- [9]That offer was rejected by the respondent, which proposed instead that (without the respondent withdrawing the statutory demand), the applicant should “withdraw” its application in this Court, with no order as to costs; and that the Federal Court application be “withdrawn” by the respondent with no order as to costs; following which the respondent would withdraw the statutory demand.
- [10]The applicant’s offer made on 19 April 2023 was eminently reasonable in the circumstances. But arguably because the default judgment had not yet been set aside, it could not be said at that point that it was unreasonable for the respondent not to accept the offer.
- [11]The offer made on 25 April 2023, the day after the default judgment was set aside, was one that, in my view, it was unreasonable for the respondent not to accept. Even putting the technical issues of service, and timing of the application to one side, the foundation for the statutory demand (the default judgment) had been removed, and the respondent was well aware there was a genuine dispute about the claimed debt. Even if the respondent thought it could technically succeed in the Supreme Court application, that would in reality have been a pyrrhic victory because the matters agitated could have been capable of being relied on in opposing the winding up application.[1] And in any event, the respondent did not succeed; the statutory demand was set aside.
- [12]It is unsurprising that the applicant was not attracted to the respondent’s counteroffer (which would see the Federal Court proceedings resolved with no order as to costs), because of the circumstances in which the winding up application was made – relying solely on the presumption of insolvency arising from non-payment in response to a statutory demand, the basis for which had been removed – and the costs the applicant had already incurred (including, it seems, in obtaining a solvency report[2]).
- [13]The offer made on 25 April 2023 was left open until 12 pm on 27 April 2023. But the respondent’s solicitor responded, by letter sent at 4.34 pm on 26 April 2023, rejecting the offer. Although the respondent submits that the offer did not flag an application for indemnity costs, the application in this Court sought indemnity costs, so the respondent was on notice of that from the outset.
- [14]In my view, it is appropriate that the respondent pay the applicant’s costs on the standard basis up to and including 26 April 2023 and on the indemnity basis from and including 27 April 2023, on the basis that it was unreasonable for the respondent not to have accepted the applicant’s offer made on 25 April 2023, which would have seen these proceedings resolved at that time, with no order as to costs.