Supreme Court New South Wales Medium Neutral Citation: BLAZAI PTY LTD v PALASTY [2011] NSWSC 225 Hearing dates: 8 March 2011 Decision date: 30 March 2011 Before: Barrett J Decision: No order as to costs to the intent that each party should bear its own costs. Catchwords: PROCEDURE - costs - defendant does not resist application for order setting aside statutory demand - whether defendant should have withdrawn demand before proceedings commenced - what costs order appropriate Legislation Cited: Corporations Act 2001 (Cth), ss 459G, 459H(1)(a), 459J(2)(b) Cases Cited: Scope Data Systems Pty Ltd v BDO Nelson Parkhill [2003] NSWSC 137; (2003) 199 ALR 56 Category: Costs Parties: Blazai Pty Ltd - Plaintiff Justin Palasty - Defendant Representation: Counsel: A D Justice - Plaintiff D A Allen - Defendant Counsel: R J Thomas Solicitor - Plaintiff Proctor & Associates - Defendant File Number(s): 2010/217114 Judgment 1When this application under s 459G of the Corporations Act 2001 (Cth) came before the court on 8 March 2011, the defendant did not seek to resist the making of an order that the statutory demand be set aside. That order was made. 2In the circumstances existing at the time of the hearing, the defendant regarded it as inevitable that the court would make the order. 3The debt in question is a judgment debt under a Local Court judgment. Shortly before the s 459G application came before the court for hearing, the Local Court confirmed an order for payment of the debt by instalments. This happened on 4 March 2011. The instalment order caused execution of the judgment to be stayed, thus providing "some other reason" under s 459J(2)(b) for the setting aside of the statutory demand: Scope Data Systems Pty Ltd v BDO Nelson Parkhill [2003] NSWSC 137; (2003) 199 ALR 56. 4There was, however, argument on the question of costs. 5The defendant says that there should be no order as to costs so that each party bears its own costs. The plaintiff's position is that the defendant should be ordered to pay the plaintiff's costs. 6Central to the issue about costs is a question whether, when the plaintiff filed the originating process on 2 November 2010, it was aware that, by virtue of an earlier instalment order made on 29 October 2010 on the defendant's ex parte application, execution of the judgment was stayed. The plaintiff says that, on 1 November 2010, it informed the defendant (by means of a fax from its solicitor to the defendant's solicitor) because of the existence of an instalment order and that the proper course for the defendant to take at that point was to withdraw the statutory demand; yet the defendant did not do so, with the result that the plaintiff was forced by the impending end of the s 459G(3) period to file its originating process on 2 November 2010. 7It may be accepted that, if to the defendant's knowledge, execution of the judgment was stayed, it should not have persisted with the demand and should not have put the plaintiff to the trouble and expenses of seeking to have it set aside. 8The evidence shows that, at 4.50pm on 1 November 2010, the plaintiff's solicitor faxed to the defendant's solicitor a letter stating that an instalment order had been made (a copy accompanied the fax). The letter pointed out that the judgment debt was accordingly no longer due and payable and requested withdrawal of the statutory demand, failing which the plaintiff would rely on that request in relation to the question of costs in s 459G proceedings which the letter also foreshadowed. Nothing was said about execution of the judgment being stayed. 9The defendant's solicitor deposes that he did not himself see any such fax on 1 November 2010. He was out of the office with counsel in another matter on the morning of 2 November 2010 and, upon speaking to a staff member during the morning, was told that a letter had been received concerning the present matter. He saw the letter at about 12.45pm. 10The defendant's solicitor says in his affidavit that he noticed that the letter dated 1 November 2010 stated that the debt was not due and payable. He considered this to be an erroneous view of the law. He did not consider any other argument, such as the one based on s 459J(2)(b). No such argument was raised in the letter of 1 November 2010. 11The correspondence shows that the plaintiff's solicitor did not put it squarely to the defendant's solicitor that the stay of execution represented "some other reason" within s 459J(2)(b) and that the plaintiff would rely on that ground. The letter of 1 November 2010 merely said that, because of the instalment order, the debt was no longer due and payable. That, of course, reflected a misapprehension of the true position. It also implied an intention of arguing the "genuine dispute" ground under s 459H(1)(a), not the "some other reason" ground under s 459J(2)(b). 12It was therefore not unreasonable for the defendant to persist with the statutory demand. 13In those circumstances, there is no basis on which the defendant should be ordered to pay the plaintiff's costs. 14I make no order as to costs to the intent that each party should bear its own costs. ********** 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. Decision last updated: 30 March 2011