ET Petroleum Pty Ltd v Clarenden Pty Ltd [2008] NSWSC 590

New South Wales Supreme Court

CITATION : ET Petroleum Pty Ltd v Clarenden Pty Ltd [2008] NSWSC 590

HEARING DATE(S) : 14 May 2008 JUDGMENT OF : Rein J

EX TEMPORE JUDGMENT DATE : 14 May 2008

CATCHWORDS : Costs following dismissal of proceedings by consent - Uniform Civil Procedure Rules, Pt 42, Rule 20 - Discretion to make different order to the normal order exercised

LEGISLATION CITED : Corporations Act 2001 (Cth) Uniform Civil Procedure Rules

CATEGORY : Consequential orders

Evans & Tate Premium Wines Pty Ltd v Australian Beverage Distributors Pty Ltd [2005] NSWSC 186 Lavercombe v Auscott Ltd [2006] NSWSC 867 CASES CITED : Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 Re Lanaghan Bros Ltd [1977] 1 All ER 265 Australia Wide Airlines v Aspirion Pty Ltd [2006] NSWCA 365

PARTIES : ET Petroleum Pty Ltd (Plaintiff) Clarenden Pty Ltd (Defendant)

FILE NUMBER(S) : SC 4923/07

COUNSEL : S.A. Wells (Plaintiff) S. Golledge (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Rein J

14 May 2008

4923/07 ET Petroleum Holdings Pty Ltd v Clarenden Pty Ltd JUDGMENT

HIS HONOUR: The plaintiff, for whom Mr Wells of counsel appears, in October 2006 issued a statutory demand to the defendant requiring payment of the amount of approximately $194,000. Mr Golledge of counsel appears for the defendant. The amount of $194,000 was a total of certificates of costs pursuant to orders obtained by the plaintiff against the defendant in the Supreme Court. The proceedings concerned the lease of premises by the plaintiff from the defendant which the plaintiff had claimed had been invalidly terminated and in respect of which the plaintiff sought relief against forfeiture. The second certificate related to the setting aside by the court of the statutory demand issued by the defendant to the plaintiff. Following receipt of the plaintiff's statutory demand the defendant sought to vary the amount of the demand, asserting that it had a claim against the plaintiff in relation to unpaid rent and damages in respect of the same lease to which I have referred, totalling $135,977.09. By consent, the statutory demand was varied to the amount of $57,995.06 to reflect the existence of the offsetting claim. The defendant, however, did not pay that amount of $57,995.06 and the plaintiff commenced proceedings to wind up the defendant, as it was entitled to do pursuant to div 2 s 459A, E, F, P and Q of the Corporations Act. George Maatouk, who was a director of the defendant company, put on an affidavit of 22 November 2007 asserting that the defendant company was solvent and providing material that, it is submitted by the defendant, supported that assertion, even if it was not in the form that would meet the requirements of a hearing in relation to which it has been said the debtor company is required, in order to discharge its onus of establishing solvency, to present the court with the " fullest and best" evidence of the financial position of the respondent" and that such evidence must be convincing: see [27] to [29] of Evans & Tate Premium Wines Pty Ltd v Australian Beverage Distributors Pty Ltd [2005] NSWSC 186 BC - 200501193 per Palmer J. The defendant provided further evidence in relation to solvency on 25 February 2008 by which evidence it was made clear that the defendant had been able to obtain, on the security of real estate owned by it and to which proposed loan Mr Maatouk had made reference in his earlier affidavit, a loan of moneys well in excess of the amounts claimed by the plaintiff; that is to say, not only the amount of the statutory demand but the amount of the $194,000 the subject of the two costs certificates and registered in the court as judgments of the court to take effect on, respectively, 3 February 2006 and 22 September 2006. The plaintiff accepted that the evidence by 25 February indicated that the defendant company was solvent. The plaintiff proceeded to garnishee the account into which the proceeds of the loan had been placed and obtained full payment of the approximately $194,000 costs to which I have referred. The original proceedings in which the costs orders were made are still on foot as to matters the subject of claim by the plaintiff in those proceedings yet to be heard and on this Monday the defendant obtained leave to file a cross-claim for the amounts for unpaid rent and damages to which I have earlier referred. It is agreed that the plaintiff's proceedings must now be dismissed. There remains, however, the question of costs. The plaintiff seeks an order that its costs be paid by the defendant or, alternatively, these be paid up until 25 February 2008. The defendant submits that the appropriate order is that each party pay its own costs. The relevant rule is found in pt 42 r 20 dealing with dismissal of proceedings and it is in the following terms, relevantly: "(1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed." My attention was drawn to two cases on the issue of costs following dismissal of proceedings. The first is the decision of Barrett J in Lavercombe v Auscott Ltd [2006] NSWSC 867. His Honour considered the question of costs in some detail at [42] to [49] and ordered that the defendant debtor pay the plaintiff's costs. He made reference to the decision in the judgment of McHugh J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at pages 624-5. He also made reference to a decision of Brightman J in Re Lanaghan Bros Ltd [1977] 1 All ER 265 at page 266. He said that that case was one in which the plaintiff had initiated and pursued his application "with complete propriety". He said the debt was undisputed and indeed could not have been disputed. Noting that it was not a judgment debt but noting also that the simple act of filing the costs certificate in the court registry would have made it a judgment debt, that payment had not been forthcoming but the statutory demand had been served and still no payment was made, he said: "In those circumstances, the plaintiff understandably and properly saw himself as a 'creditor who cannot obtain payment', to use the words found in the decision of Gibbs J in IOC Australia Pty Ltd v Mobil Oil Australia Ltd (1975) 11 ALR 417 at 427.