Pacific Islands Gold NL v Minproc Engineers Ltd In the Matter of Minproc Engineers Ltd [1996] FCA 1151

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No NG 3541 of 1996 ) GENERAL DIVISION ) BETWEEN: PACIFIC ISLANDS GOLD NL Applicant AND: MINPROC ENGINEERS LIMITED Respondent IN THE MATTER OF: MINPROC ENGINEERS LIMITED (ACN 008 992 694) CORAM: HILL J PLACE: SYDNEY DATED: 17 OCTOBER 1996 REASONS FOR JUDGMENT In the present application Pacific Islands Gold NL ("Pacific Islands Gold") seeks to have set aside a statutory demand. Three bases were put in support of the application. First, it was suggested that the demand itself, alone, or alternatively read together with the affidavit, were bad because the amount shown in the demand and, for that matter, the affidavit in support of it, was not the amount in fact owed by the applicant to the respondent, Minproc Engineers Limited ("Minproc"). The second basis of the application was whether there was a genuine dispute between the companies as to the existence and amount of the debt owing to Minproc. The third basis was that the company had an offsetting claim of some $5 million in comparison to the amount claimed of some $3.2 million. The matter came before me for directions on 27 September 1996. Minproc at that stage made an application for expedition and was prepared to have the matter heard by reference to the evidence as it stood at that date. That course was opposed by Pacific Islands Gold and, in the result, a timetable was set for filing of evidence, which timetable contemplated that the applicant should file and serve any additional evidence-in-chief on which it proposed to rely on or before 9 October; that the respondent should file and serve any affidavits in reply by the 13 October; and that the affidavits of the applicant in reply, if any, should be filed by 17 October. An affidavit of Mr Adsett sworn on 15 October was sought to be read in Court. A copy of that affidavit (in draft form before signing) was conveyed to the solicitors for Minproc in a fax of 15 October. For reasons which I have already given, I permitted the affidavit of Mr Adsett to be read in evidence. Senior counsel for Minproc presumably formed the view that his client's case was such that the applicant was likely to succeed unless an adjournment was obtained and additional evidence adduced. For whatever reason, after the luncheon adjournment senior counsel announced to the Court that the respondent proposed to consent to an order that the statutory demand be set aside. There remained, however, the question of costs to be determined. Senior counsel for the respondent submitted that his client should be entitled to the costs up to today on the basis that his clients would have been entitled to succeed, but for the evidence of Mr Adsett, and that the question of costs should be decided in accordance with or at least on the same lines as suggested by Lockhart J in Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37. Alternatively, it was submitted that the proper order for costs should be that there be no order as to costs, presumably for the reason that there was a genuine dispute between the parties until the evidence of Mr Adsett was adduced this morning. Counsel for Pacific Islands Gold referred me to a body of evidence which in his submission supported the proposition that from the outset no real debt as stated in the statutory demand had arisen because there had been no invoice submitted. He referred to the fact that the books and records of Minproc showed no such debt for the simple reason that there had been no invoice or payment. This, on the other hand, was inconsistent with the affidavit evidence in support of the statutory demand, which had said that the books and records of Minproc showed an amount of $3.2 million owing.