New South Wales Supreme Court CITATION : Australian Native Landscapes Pty Limited -v- Pigment Dispersions Pty Limited [2009] NSWSC 1217 HEARING DATE(S) : 28 October 2009 JUDGMENT OF : Hammerschlag J EX TEMPORE JUDGMENT DATE : 28 October 2009 DECISION : The parties' costs of these proceedings in relation to the issue whether the parties reached an agreement on or about 16 March 2009 to resolve the defendant's claims against the plaintiff, will be costs in the Local Court proceedings. CATCHWORDS : CORPORATIONS – other matters – defendant obtains default judgment in Local Court proceedings – defendant serves statutory demand – settlement agreement reached between the parties – payment by plaintiff in accordance with settlement agreement – plaintiff commences proceedings in this Court seeking to set aside statutory demand and a declaration in relation to settlement agreement – whether these proceedings constitute an abuse of process – parties agree to setting aside of statutory demand and abandonment of relief in connection with agreement – COSTS – issue whether statutory demand had been withdrawn – held plaintiff only entitled to its costs up to and including 22 October 2009 – held costs of proceedings relating to issues of enforcement of settlement agreement will be the costs in the Local Court proceedings CATEGORY : Principal judgment PARTIES : Australian Native Landscapes Pty Limited ACN 001 749 980 - Plaintiff Pigment Dispersions Pty Limited ACN 075 493 444 FILE NUMBER(S) : SC 2103/2009 COUNSEL : M.P.Cleary [Plaintiff] P.G.W. Stitz [Defendant] SOLICITORS : Berry Buddle Wilkins Lawyers [Plaintiff] Remington & Co Solicitors [Defendant] - 6 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST HAMMERSCHLAG J 28 OCTOBER 2009 2103/2009 AUSTRALIAN NATIVE LANDSCAPES PTY LIMITED -V- PIGMENT DISPERSIONS PTY LIMITED EX TEMPORE JUDGMENT 1 HIS HONOUR: In three sets of proceedings the defendant sued the plaintiff in the Local Court for money in respect of goods sold and delivered. The defendant obtained default judgment in each. Shortly thereafter it served a statutory demand dated 12 March 2009. 2 After the service of the statutory demand the plaintiff says that following negotiations a settlement agreement was reached on 16 March 2009 under which, amongst others: a the plaintiff would pay to the defendant $72,500 inclusive of interest; b the statutory demand would be withdrawn on 20 March 2009; c the defendant would consent to and render all assistance necessary to set aside the default judgment which it had obtained; d the parties would execute a deed of release; and e each would bear its own costs. 3 The plaintiff, purportedly in performance of this agreement, electronically transferred funds into the defendant's former solicitors' account. It is said that those former solicitors sent a letter confirming acceptance of the offer. However, there is now a dispute as to whether an agreement was concluded. 4 In these proceedings by Originating Process the plaintiff moves not only to set aside the statutory demand but also for a declaration that an agreement was made on or about 16 March 2009 together with an order that it be specifically performed and carried into execution. 5 When the matter was called on today I was informed that there was no opposition to an order setting aside the statutory demand, and that the only contest was the plaintiff's asserted entitlement to a declaration and specific performance. 6 Having been informed that the default judgments in the Local Court have been set aside, I raised (mero motu) with counsel for the plaintiff, Mr Cleary, the difficulty that the declaratory relief sought was intended to obtain a finding of the existence of an agreement which was being pleaded in that Court as a defence to the defendant's claim, and that in those circumstances these proceedings might be an abuse of process of this Court. 7 Mr Stitz for the defendant candidly informed me that he had come to argue the merits of the contractual case but would now take the abuse point, it having been raised. 8 I stood the matter down to allow the parties to discuss the position. They have sensibly reached an accord, the consequence of which is that I have set aside the statutory demand, and the plaintiff will not move for relief in connection with the alleged agreement. 9 The only outstanding issue is costs. 10 With respect to the costs relating to the statutory demand issues (which can be separated from the costs relating to enforcement of agreement issues) there is the following complication. 11 The Originating Process was issued on 27 March 2009. There were appearances before a Registrar of the Court on 29 April, 15 June, 6 July and 11 August 2009. 12 On the last mentioned date the proceedings were stood over to 24 August 2009 before the Chief Judge in Equity, who was then sitting in the Corporations List. Her Honour listed the matter for hearing, on an estimate of one day, for today. Her Honour directed the preparation of a Court Book and, amongst others, the provision by 23 October 2009 of a short outline of submissions by each party. 13 Mr Stitz informed me from the bar table that his instructing solicitor, Mr Simons, has a clear recollection of having informed the Registrar on 6 July 2009 that the defendant was withdrawing the statutory demand, and was under the impression that the Registrar had so noted. 14 Mr Cleary informed me from the bar table that his recollection was that Mr Simons indeed informed him that it was the defendant's intention to withdraw the demand but that he responded that he had no instructions in relation to that matter and requested that the defendant's intention be confirmed in writing. 15 Neither party went into evidence and I have no reason not to accept that each practitioner has conveyed to me his genuine understanding of what occurred. 16 On 3 August 2009 the plaintiff's solicitors wrote to the defendant's solicitors referring to a discussion on 3 August 2009 during which Mr Simons had indicated that the defendant had formally withdrawn the statutory demand. The letter went on to say that the plaintiff's solicitors had checked their notes from the Court attendance on 6 July 2009 and that the Registrar had noted on the file the defendant's intention to set aside the statutory demand but no formal order was entered. The letter took the position that should the defendant now withdraw the statutory demand, without prejudice to any other rights which the plaintiff may have, the plaintiff would seek an order not only that the defendant pay the plaintiff's costs of the proceedings to date but to pay those amounts on an indemnity basis. It is not suggested that there was any response made to that letter. 17 In paragraph 13 of the brief outline of submissions which counsel for the defendant provided to her Honour on about 22 October 2009 the following appears: "Subsequent events included the default judgments being set aside at the motion of the plaintiff and the statutory demand withdrawn by the defendant's current solicitor. Even if the Order sought by the plaintiff were granted, the parties are still left with the potential disagreement over the Deed of Release, which deals with subject matter that has been overtaken by events." 18 At the least - and Mr Cleary fairly so conceded - the defendant's position as at 22 October 2009 was that the statutory demand had been withdrawn. The defendant's written submissions did not otherwise deal with the statutory demand but restrict themselves to the contest on the agreement issue. 19 I have come to the conclusion in all the circumstances that with respect to the issues relating exclusively to the statutory demand, the plaintiff is entitled to its costs only up to and including 22 October 2009, that is, it is not entitled to any costs with respect to today's appearance or any preparation for today's appearance which occurred after 22 October 2009. 20 I have taken into account the fact that until submissions were served there was no formal acknowledgement in writing by the defendant that the statutory demand had formally been withdrawn, notwithstanding the letter of 3 August 2009. 21 The costs of the proceedings relating to the issues of enforcement of the agreement are in a different category. The parties have come to an accord. Whilst I consider on a preliminary basis that the proceedings could not have been maintained because the same issue is to be tried in the Local Court, and that it could not have been a legitimate purpose of these proceedings to obtain a final order which would have as its effect preclusion of the issue to be tried in that Court, I am not convinced, having not heard from the parties on the matter, that either party has acted so unreasonably that I should make an order as to costs based on a hypothetical result. I do not think that the plaintiff acted unreasonably in bringing the proceedings, especially having regard to the fact that for a fair period of time the issue of the efficacy of the statutory demand was in play. 22 The usual order in such circumstances would be that each party pay its own costs in relation to the existence and enforcement of the alleged agreement. 23 Neither party wished to be heard against those costs being made costs in the Local Court proceedings. I will, accordingly, order that the parties' costs of these proceedings in relation to the issue whether the parties reached an agreement on or about 16 March 2009 to resolve the defendant's claims against the plaintiff, will be costs in the Local Court proceedings. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.