Fresh Express Australia Pty Ltd v MP (NT) Pty Ltd [2009] NSWSC 277

New South Wales Supreme Court

CITATION : Fresh Express Australia Pty Ltd v MP (NT) Pty Ltd [2009] NSWSC 277

HEARING DATE(S) : 14/04/09

JUDGMENT DATE : 14 April 2009

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : Barrett J

DECISION : Originating process dismissed. Plaintiff to pay defendant's costs.

CATCHWORDS : PROCEDURE - costs - where no determination on the merits - plaintiff accepts that proceedings must be dismissed - service not effected within necessary period - competing submissions as to costs

LEGISLATION CITED : Corporations Act 2001 (Cth), s 459G Service and Execution of Process Act 1992 (Cth)

CATEGORY : Principal judgment

David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) HCA 43; (1995) 184 CLR 265 CASES CITED : Energy Conservation Systems Pty Ltd v Downer EDI Engineering Electrical Pty Ltd [2008] NSWSC 1139; (2008) 221 FLR 393 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622

PARTIES : Fresh Express Australia Pty Limited - Plaintiff MP (NT) Pty Ltd - Defendant

FILE NUMBER(S) : SC 6296/08

COUNSEL : Mr R K Newton - Plaintiff Mr S J Walsh - Defendant

SOLICITORS : David Legal - Plaintiff De Silva Hebron - Defendant

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

BARRETT J

TUESDAY 14 APRIL 2009

6296/08 FRESH EXPRESS AUSTRALIA PTY LIMITED v MP (NT) PTY LTD JUDGMENT 1 By originating process filed on 19 December 2008, the plaintiff made application under s 459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand served on it by the defendant. 2 On or soon after 27 March 2009, it became common ground that the plaintiff could not succeed in that application. 3 By letter of that date, the defendant's solicitors pointed out to the plaintiff's solicitors that purported service of the originating process occurred in circumstances requiring compliance with the Service and Execution of Process Act 1992 (Cth) but the steps made necessary by that Act were not taken, with the result that the purported service was not service at all and an ingredient made essential by s 459G(3) within the particular period of 21 days referred to in s 459G(2) was missing: see Energy Conservation Systems Pty Ltd v Downer EDI Engineering Electrical Pty Ltd [2008] NSWSC 1139; (2008) 221 FLR 393. 4 Recognising that it cannot succeed, the plaintiff now accepts that its originating process must be dismissed. 5 There is, however, a dispute about costs. The plaintiff says that there should be no order as to costs, so that each party bears its own costs. The defendant's position is that the plaintiff should pay the defendant's costs as a whole or, at least, from 27 March 2009, when it alerted the plaintiff to the insuperable problem the plaintiff faced. 6 An appropriate starting point in cases where there is no determination on the merits is often that each party should bear its own costs: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622. But that presupposes, in the words of McHugh J in that case, that "both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile". 7 That is not the case here. Failure to effect valid service within the 21-day period referred to in s 459G(2) meant that, at and at all times after the end of that period, the proceedings were doomed to fail: David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) HCA 43; (1995) 184 CLR 265. Although it now says that the appropriate outcome is that the proceedings should be dismissed, what the plaintiff is, in substance, seeking to do is to discontinue. And it is doing so because it accepts that it cannot succeed. There is a clear capitulation by the plaintiff; and the capitulation is because of a defect that has existed from the very outset. 8 That being so, the court is not deprived of a basis on which to make an informed decision on the matter of costs. On the contrary, the court can see that the defendant has been needlessly carried along to the present point when it should not have been troubled by these proceedings at all – or, at least, from the expiration of the 21-day period mentioned in s 459G(2). The court can also see that the situation is, in substance, one of discontinuance where, absent some special factor, the discontinuing plaintiff should pay the defendant's costs. It is not to the point that it was not until 27 March 2009 that the plaintiff recognised the existence of the defect that now causes it to abandon its claim. Nor is it to the point that the defendant alerted the plaintiff to the defect. 9 In the particular circumstances of this case, it is appropriate that the plaintiff be ordered to pay the defendant's costs. 10 The orders of the court are: 1. Order that the originating process be dismissed. 2. Order that the plaintiff pay the defendant's costs of the proceedings. **********