Aerospace Aviation v Deshmukh & Ors [2009] NSWSC 659

New South Wales Supreme Court

CITATION : Aerospace Aviation v Deshmukh & Ors [2009] NSWSC 659

HEARING DATE(S) : 8 July 2009

JUDGMENT DATE : 8 July 2009

JURISDICTION : Equity

JUDGMENT OF : White J

EX TEMPORE JUDGMENT DATE : 8 July 2009

DECISION : Order that the defendants pay the plaintiff's costs.

CATCHWORDS : CORPORATIONS - application to set aside a statutory demand - at hearing defendants consent to orders - costs

LEGISLATION CITED : Corporations Act 2001 (Cth) Civil Procedure Act 2005 (NSW)

CASES CITED : First Line Distribution Pty Ltd v Whiley (1995) 18 ACSR 185

TEXTS CITED : Assaf, Statutory Demands Law in Practice

Aerospace Aviation PARTIES : v Vinesh Deshmukh & 8 Ors

FILE NUMBER(S) : SC 2094/09

COUNSEL : Plaintiff: E Peden Defendants: Gnanakaran

SOLICITORS : Plaintiff: Lloyd & Lloyd Defendants: n/a

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

WHITE J

Wednesday, 8 July 2009

2094/09 Aerospace Aviation v Vinesh Deshmukh & 8 Ors JUDGMENT 1 HIS HONOUR: The plaintiff seeks an order that the defendants pay its costs. It does not seek costs on the indemnity basis. Pursuant to rule 42.1, unless the Court orders otherwise, costs follow the event. Although there has not been a contested hearing on the merits, the defendants at the last moment have capitulated to the plaintiff's application. That capitulation was inevitable. 2 The defendants' service of a statutory demand entirely misconceived the requirements of Div 2 of Pt 5.4 of the Corporations Act 2001 (Cth). Section 459E provides for service on a company of a demand for a debt which is due and payable. In all cases the defendants' claim was for damages for an alleged breach of contract. It would not have been seriously arguable that moneys were payable as a debt on the basis that there had been a complete failure of consideration. It is possible that in one or two cases there may have been an entitlement to claim some moneys by way of refund, although even that appears to me to be doubtful. 3 The second problem with the defendants' service of the statutory demand is that a statutory demand will be set aside if there is a genuine dispute as to the existence of the debt. It was plain, and plain even from the defendants' affidavits, that there was a genuine dispute about the alleged debts. The function of the Court on an application to set aside a statutory demand is not to resolve the merits of the dispute, but to determine whether there is a dispute which is genuine. 4 Finally, there was a significant problem that multiple several alleged debts claimed to be owed to nine different persons were joined in the one demand. On the face of it that is contrary to the decision of Cohen J in First Line Distribution Pty Ltd v Whiley (1995) 18 ACSR 185 (see Assaf, Statutory Demands Law in Practice at [2.15]). 5 In my view there is no reason that costs should not follow the event. The fact that some of the defendants reside in India that they claim to have a genuine grievance about their position, and they claim to have suffered financial difficulties as a result of the conduct of the plaintiff, are not reasons for departing from the usual position. They find themselves in the position of being liable to pay costs because they embarked on a misconceived procedure. I am told that the legal practitioners who have appeared for the defendants in this hearing were not responsible for the defendants' decision to serve the statutory demand. Had the position been otherwise, I would have given serious consideration to making an order under s 99 of the Civil Procedure Act 2005 (NSW) to require the legal practitioners to indemnify the clients in respect of the costs they will be liable to pay and the costs that they have incurred. But as I am told that is not the position, and as I do not know who is responsible for the defendants' plight, I am not making an order under that section. 6 For these reasons I order that the defendants pay the plaintiff's costs.