FEDERAL COURT OF AUSTRALIA Lion Advantage Ltd v Haynes [2010] FCA 28 Citation: Lion Advantage Ltd v Haynes [2010] FCA 28 Parties: LION ADVANTAGE LTD (ACN 088 638 911) v BARRY HAYNES File number(s): VID 376 of 2009 Judges: GOLDBERG J Date of judgment: 2 February 2010 Catchwords: CORPORATIONS – setting aside statutory demand PRACTICE AND PROCEDURE – Review of Registrar's decision – Notice of Discontinuance - costs Legislation: Corporations Act 2001 (Cth) Federal Court of Australia Act 1976, ss 35A(5), 43 Federal Court Rules, O 22 r 2, O 46 r 7B Date of last submissions: 22 January 2010 Place: Melbourne Division: GENERAL DIVISION Category: CATCHWORDS Number of paragraphs: 15 Counsel for the Applicant: W Coady Solicitor for the Applicant: Wantrup & Associates Counsel for the Respondent: The respondent appeared in person IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 376 of 2009 BETWEEN: LION ADVANTAGE LTD (ACN 088 638 911) Applicant AND: BARRY HAYNES Respondent JUDGE: GOLDBERG J DATE OF ORDER: 2 FEBRUARY 2010 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The respondent is given leave, nunc pro tunc, to file the Notice of Discontinuance filed on 14 December 2009. 2. The respondent pay the applicant's costs of and incidental to the application by the respondent filed on 14 August 2009 to review the decision of the Registrar, that the statutory demand served on the applicant on 27 April 2009 be set aside and that the respondent pay the applicant's costs of the proceeding. Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 376 of 2009 BETWEEN: LION ADVANTAGE LTD (ACN 088 638 911) Applicant AND: BARRY HAYNES Respondent JUDGE: GOLDBERG J DATE: 2 FEBRUARY 2010 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 This proceeding commenced on 19 May 2009 when the applicant, Lion Advantage Ltd filed an application to set aside a statutory demand dated 27 April 2009 served by the respondent on it. In the statutory demand the respondent claimed that the applicant owed him $77,154.01. 2 In support of the application to set aside the statutory demand the applicant filed a number of affidavits in which evidence was given as to a dispute in relation to the debt. There was further evidence to the effect that the applicant had offsetting claims totalling $135,126 which exceeded the amount claimed in the statutory demand. 3 The application to set aside the statutory demand was heard by Registrar Luxton on 14 August 2009. The Registrar ordered that the statutory demand be set aside and that the respondent pay the applicant's costs of the proceeding. In his ex tempore Reasons for Judgment, the Registrar noted that there were many contested questions of fact in the proceeding and that the applicant had offsetting claims against the respondent in excess of the amounts claimed in the statutory demand. 4 On 4 September 2009 the respondent applied to the Court pursuant to O 46 r 7B of the Federal Court Rules for an order that the ruling and orders of Registrar Luxton made on 14 August 2009 be set aside. 5 A number of directions hearings were held in relation to the application to review the Registrar's decision but the application was never heard or determined on the merits. 6 On 14 December 2009 the respondent filed what appeared to be a Notice of Discontinuance of the application filed by him to review the Registrar's decision. The document filed was headed "Notice of discontinuance of an application". The Notice stated "The applicant discontinues the application", and it contained two notes in relation to costs. The first note stated – "Under Order 52, subrule 19A(3), a party filing a notice of discontinuance under rule 19A(1) is liable to pay the costs of the other parties of the application." 7 Order 52 relates to appeals to the Full Court and it has no relevance to the discontinuance of an application to review a decision by a Registrar. 8 The application by the respondent to review the decision of the Registrar was made pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth) ("the Act") so that the Notice of Discontinuance should have been filed in accordance with O 22 r 2 of the Federal Court Rules. Having regard to the nature of the review and the stage it had reached it was necessary for the respondent to obtain the leave of the Court in order to discontinue his application for review. 9 On 15 December 2009 the applicant sent a letter to the Court in the following terms: "Upon obtaining legal advice I filed a Notice of Discontinuance in this matter yesterday. Even though there was not a genuine dispute at the time of my serving the statutory demand on the applicant, and I intend to file criminal charges against the applicant for fabricating one, I am forced to accept that in this court I am not able to demonstrate reasonable doubt that the dispute was not genuine. At attempt was made on my behalf to contact the opposing party last Friday and I intended to inform them of my intention to discontinue, however the representing solicitors have not responded to the phone call. When I was able to do so, I sent the Notice of Discontinuance by facsimile yesterday afternoon close to 5pm to the opposing party. In view of the above I ask the court not to add further costs that may be requested by the opposing for today's proceedings." 10 Later on 15 December 2009 my associate sent an email to the parties referring to the filing of the Notice of Discontinuance and the letter received that day. The email then stated: "Having regard to the stage the application for review of the Registrar's decision has reached, Mr Haynes requires the leave of the Court to discontinue the proceedings to review the Registrar's decision; Order 22 Rule (2)(1)(d) of the Federal Court Rules. The Court is prepared to grant that leave on terms that Mr Haynes pays the costs of Lion Advantage Ltd in relation to the proceeding. Could the parties indicate whether they wish to make any further submissions in writing on this proposal." 11 The respondent indicated that he wished to make further submissions in writing and these were filed. It is apparent from the respondent's submissions that he wishes to discontinue his application to review the decision of the Registrar and that he wishes the issue of costs to be deferred until after the resolution of a County Court matter presently pending between the parties. 12 In support of his submission for these orders the respondent made the following submissions: (a) There is a deficiency in the law that guides the Court in its ruling in such matters; (b) There was a deficiency on the part of solicitors in advising him to continue the case when there was no reasonable chance of success; (c) He was not in a position to submit evidence that would have shown what he contends is the fraudulent nature of the evidence presented by the applicant; (d) The applicant has knowingly engaged in an abuse of process; (e) He intends to make an application for a "mishearing" on the basis of tainted evidence which he claims has been submitted in this proceeding; (f) He intends to institute criminal proceedings against all the parties involved in this matter; (g) He lacks the financial resources to pay costs in the matter at this time. 13 I have considered the written submissions filed by the respondent and am satisfied that the appropriate order to make for the costs of the proceeding is that the respondent pay the applicant's costs of and incidental to the application to review the decision of the Registrar. Although I have a discretion as to costs orders in relation to proceedings before the Court by virtue of s 43 of the Act, the submissions of the respondent do not warrant any costs order other than the respondent pay the applicant's costs of the proceeding. 14 I respond briefly to the written submissions of the respondent: (a) I do not accept that there is a deficiency in the law that guides the Court in its ruling on applications to set aside statutory demands by allowing what the respondent contended was "a low threshold as to what is considered a genuine dispute". Even if there was such a deficiency in the law it is not for me to change the law or bypass it, particularly having regard to the abundance of authority relating to what is a "genuine dispute" for the purpose of setting aside a statutory demand; (b) I am not able to determine whether there was, or whether there was not, any deficiency on the part of the respondent's solicitors in relation to the advice given to the respondent in this proceeding. Even if there was such a deficiency, it has no bearing on who should pay the costs of the review, it does not follow that the applicant should suffer in respect of the costs it has incurred in the proceeding which the respondent wishes to discontinue; (c) The fact that the respondent may not have been in a position to submit evidence favourable to his case is not relevant on the question of costs in this review where it was commenced by the respondent; (d) I cannot decide whether, as the respondent alleges, the applicant has knowingly engaged in an abuse of process where the respondent wishes to discontinue the reivew. In any event, it is not an abuse of process for the applicant, served with a statutory demand, to take advantage of a process available to it under the Corporations Act 2001 (Cth) to set aside the statutory demand; (e) I find it difficult to see how the respondent can make an application for a "mishearing" as he submitted (which I take to be an application for a rehearing of the proceeding before the Registrar) but even if he could that does not affect my decision that the respondent should pay the applicant's costs of the discontinued application for review of the Registrar's decision; (f) Any other proceedings instituted by the respondent against the applicant will need to be dealt with on the merits of these proceedings and any such proceeding has no relevance to the determination of costs in this review proceeding; (g) I do not consider it is relevant to the determination of the costs of this discontinued proceeding that the respondent may not be able to pay the applicant's costs. 15 The order of the Court will be that leave is given to nunc pro tunc to file the Notice of Discontinuance filed on 14 December 2009 and that the respondent pay the applicant's costs of and incidental to the review including any reserved costs. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate: Dated: 2 February 2010