A & D Taouill v CMC [2006] NSWSC 274

New South Wales Supreme Court

CITATION : A & D Taouill v CMC [2006] NSWSC 274

HEARING DATE(S) : 31 March 2006

JUDGMENT DATE : 31 March 2006

JURISDICTION : Equity Division

JUDGMENT OF : Associate Justice Macready

EX TEMPORE JUDGMENT DATE : 03/31/2006

CATCHWORDS : Corporations. Application to set aside statutory demand under s45G of the Corporations Act. No matters of principle.

PARTIES : A & D Taouill Pty Limited T/As TCR Automotive Centre v CMC (Aust) Pty Limited

FILE NUMBER(S) : SC 1669 of 2006

COUNSEL : Mr J. Raine for plaintiff Mr Maltz for defendant

SOLICITORS : George Khoury & Co for plaintiff Tress Cox for defendant

- 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

ASSOCIATE JUSTICE MACREADY

FRIDAY 31 MARCH 2006

1669/06 - A AND D TAOUILL PTY LIMITED T/AS TCR AUTOMOTIVE CENTRE v CMC (AUST) PTY LIMITED

JUDGMENT

1 HIS HONOUR: This is an application to set aside a statutory demand. The demand is dated 8 February 2006. It is in respect of the sum of $60,391.26 being a judgment debt recovered by the creditor in the Local Court on 16 December 2005. 2 The history of the matter is that the invoice that gives rise to the relevant debt in this matter first appears to have been issued in October 2004. Over a period various instalments were paid in respect of that debt reducing it by something in excess of $20,000. In due course a statement of claim was filed in the Local Court on 28 August 2005. 3 The solicitors for the plaintiff asked for an extension of time within which to file a defence and that was refused by a letter of 27 September 2005. The letter carefully pointed out the need to file a defence by 4 October, some five days away, and gave notice that default judgment would be sought. 4 The time for filing expired on 4 October 2005 and eventually a notice of motion for default judgment was filed on 5 December 2005. On 6 December 2005 default judgment was ordered in the District Court. 5 Thereafter there was a statutory demand, to which I have referred, of 8 February 2006 which was served on that day. The application in this court was lodged on 1 March 2006. 6 There was prior to the judgment in the District Court extensive correspondence between the solicitors for the parties in which allegations of claims and counterclaims were made on both sides. These did not resolve the matter. 7 The question is whether or not there is a genuine dispute in respect of the subject debt, which is a judgment debt. It is clear, and conceded, that there has been no application for a stay of that debt. 8 These matters frequently arise. It also arises in the context of the situation where there is an appeal from a judgment where no stay has been dealt with. That was dealt with in Barclays Australia (Finance) Pty Limited v Gaffikin Marine Pty Limited 21 ACSR 235. At p 238 McLelland CJ in Eq had this to say: "The assertion that there is a genuine dispute about the existence of the debt is in turn based on two grounds. The first relies on the existence of the undetermined appeal, in which orders are sought by Dan (inter alia) that the proceedings brought by Gaffikin Marine be dismissed and that Gaffikin Marine pay the costs of those proceedings. If the appeal succeeds, it is possible that the costs orders of 1995 (including the order against Barclays, although it is not an appellant) may be set aside. The answer to this submission is that the possibility that a presently existing and enforceable debt may be set aside in the future pursuant to a subsisting appeal does not give rise to a genuine dispute about the existence of the debt within the meaning of s 459H; see eg Hoare Bros Pty Limited v DCT 1995) 16 ACSR 213; 13 ACLC 358; Wilden Pty Limited v Greenco Pty Limited (1995) 13 ACLC 1039. The position would of course be different if there were a stay of proceedings under, or stay of execution of, the costs order against Barclays, but there is not, and in the absence of any such stay and notwithstanding the pendency of the appeal, the costs orders of 16 July 1995 against Barclays (together with the judgment of 16 May 1996), unless and until set aside on appeal, operate as res judicata determining the matter of Barclays' costs liability to Gaffikin Marine; see Spencer-Bower & Turner Res Judicata 2nd ed p 144; Lahoud v B & M Quality Constructions (22 July 1994, SC(NSW) McLelland CJ in Eq, unreported)." 9 That decision has been followed in a number of judgments in this court, including a decision of Barrett J. 10 The matter in that case was the appeal. In the present case the evidence discloses that the plaintiff has filed an application to set aside the judgment debt in the Local Court. That application has not yet come on for hearing. This matter therefore is in the same situation. 11 The principles his Honour has referred to are the effect of res judicata on the judgment and the only way in which it may not be relied upon is if there was a stay either by the court below pending a re-hearing or a court hearing the appeal. 12 It was initially submitted that judgment by default would not give rise to res judicata. That, however, is not the case (see para 46 of Spencer-Bower & Turner Res Judicata 2nd ed where the authors refer to the fact that a default judgment until set aside is conclusive. Reference was made to Linprint Pty Ltd v Hexham Textiles Pty Ltd 23 NSWLR 508 at 517 and 518. 13 I was also referred by counsel for the plaintiff to the case of Ridge v Baldwin, a well known decision [1963] AC at 40. That case, like others, points out that the question of issue estoppel arising by a judgment by default often causes problems to a party in determining the issue in question. In this case the default judgment is clear and it results in the amount being due and owing. 14 There was also an alternative submission that the correspondence demonstrated a to-ing and fro-ing of different positions showing claims either way in respect of this dispute. That may be so but that correspondence was prior to the default judgment and those matters have passed into history and are subsumed by the default judgment. These matters gave rise to the opportunity to commence the cross-claim and that has not occurred, although there was adequate notice. 15 In those circumstances I am satisfied there is no genuine dispute in the matter. Accordingly, I set aside the statutory demand served by the defendant on the plaintiff dated 8 February 2006. I order the plaintiff to pay the defendant's costs. The exhibits may be returned.