Rosecharm Pty Ltd v Atanaskovic Hartnell [2006] FCA 329 (17 March 2006)

Last Updated: 31 March 2006

FEDERAL COURT OF AUSTRALIA

Rosecharm Pty Ltd v Atanaskovic Hartnell [2006] FCA 329

ROSECHARM PTY LTD v ATANASKOVIC HARTNELL

NSD2180 OF 2005




EMMETT J
17 MARCH 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD2180 OF 2005

BETWEEN:	ROSECHARM PTY LIMITED PLAINTIFF
AND:	ATANASKOVIC HARTNELL DEFENDANT
JUDGE:	EMMETT J
DATE OF ORDER:	17 MARCH 2006
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The application be dismissed with costs.






















Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD2180 OF 2005

BETWEEN:	ROSECHARM PTY LIMITED PLAINTIFF
AND:	ATANASKOVIC HARTNELL DEFENDANT

JUDGE:	EMMETT J
DATE:	17 MARCH 2006
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 The plaintiff seeks an order under s 459G of the Corporations Act 2001 (Cth) (‘the Act’) that a statutory demand served on it by the defendant be set aside.

2 Section 459G of the Act provides as follows:

‘(1) A company may apply to the Court for an order setting aside a statutory demand served on the company.
(2) An application may only be made within 21 days after the demand is so served.
(3) An application is made in accordance with the section only if, within those 21 days

(a) an affidavit supporting the application is filed with the Court; and
(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.’

3 Section 459J(1) of the Act provides as follows:

‘On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:

(a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside, or
(b) there is some other reason why the demand should be set aside.’

4 The originating process filed on 11 November 2005 contains a claim by the plaintiff that:

•	a genuine dispute exists between the plaintiff and the defendant about the existence of a debt;
•	a genuine dispute exists between the parties about the amount of the debt, if any; and
•	the plaintiff and another company have a genuine claim for loss and damage against the defendant arising from negligence and delay on their part.

5 The only affidavit filed in support of the application was an affidavit by Mr Archer Field sworn on 11 November 2005. He relevantly says as follows:

‘1. I am the director of [the plaintiff].
2. On 24 October 2005 I was served at the registered office of [the plaintiff] a statutory demand for payment to [the defendant] allegedly pursuant to a judgment debt entered in the District Court at Sydney on 13 September 2005. [a copy of the statutory demand was annexed]

3. I have not seen the judgment debt referred to above.

4. At no time did [the plaintiff] retain [the defendant] to act for them. I deny the alleged debt to [the defendant] by [the plaintiff] is owed.’

6 Mr Field then goes on to say that he is also a director of Jenolan Caves Resort Pty Limited (‘Jenolan Caves Resort’) and that that company retained the defendant to act in the dispute with Jenolan Caves Reserve Trust. The defendant is a well-known firm of solicitors. The affidavit then goes on to assert that Jenolan Caves Resort and the plaintiff have suffered loss and damage due to some delay or negligence on the part of the defendant. No further particulars are furnished with that assertion and no reliance is placed upon those assertions for the purposes of this application.

7 The matter came before Deputy Registrar Hedge on 1 March 2006. Deputy Registrar Hedge acceded to a request by the respondent to hear argument on whether the Court had jurisdiction to make an order under s 459G of the Act. Deputy Registrar Hedge concluded that there was no jurisdiction and ordered that the application be dismissed and that the plaintiff pay the defendant’s costs as agreed or taxed.

8 The plaintiff then moved the Court for review of Deputy Registrar Hedge’s order. The time for compliance with the demand has been extended up to and including today. I have now heard argument on the question of whether or not the affidavit to which I have referred satisfies the requirement of section 459G(3). If it does not, there was a failure to satisfy a jurisdictional prerequisite.

9 The force of the term ‘may only’ in the section is to define the jurisdiction of the Court by imposing a requirement as to time as an essential condition of the right conferred by s 459G (see David Grant & Co Pty Limited v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265 at 276 and 277). The question is whether the affidavit of Mr Field can fairly be regarded as an affidavit supporting the application filed with the Court. Such an affidavit must, in order to satisfy the requirements of s 459G(3), as a minimum, contain a statement of the material facts on which the plaintiff intends to rely to show a genuine dispute. That is to say, it might read more like a pleading than a story (see Greywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 at 459).

10 There is nothing in the affidavit to explain the circumstances in which a judgment debt was entered against the plaintiff in favour of the defendant, other than as appears in the copy of the statutory demand that is annexed to the affidavit. The statutory demand begins by saying:

‘The company owes ATANASKOVIC HARTNELL of 75-85 Elizabeth Street, Sydney, NSW 2000 ("the creditor") the amount of $72,270.20 being the amount of the debt described in the Schedule.’

The schedule then contains a description of the debt as follows:

‘Pursuant to a Judgment entered in the District Court at Sydney on 13 September 2005 in Proceedings No. 3928 of 2005 in that Court...’

Interest accrued since the date of judgment of orders leads to a total debt of $72,270.20.

11 An inference may possibly be drawn that the judgment debt was for unpaid solicitors fees. The reference in the affidavit to the plaintiff not having retained them to act for it, that there was a relationship of solicitor and client alleged by the solicitors. However, there is nothing that says so. It could equally be for any other matter that one could imagine.

12 I do not know what led to the judgment. No doubt I can take cognisance of the fact that there is a procedure whereby solicitors can recover fees due from a client after service and taxation of a bill of costs. Such a process affords ample opportunity to the client to dispute the bill of costs and would certainly afford ample opportunity to raise a question as to whether the person asserted to be the client was in fact the person who had retained the solicitors.

13 It is all very well to make the assertion that at no time did the plaintiff retain the solicitors to act for them, but there is nothing to link that assertion with the judgment debt. There is no basis in the affidavit for establishing any dispute as to the specialty debt that arose from the judgment. Merely to deny the alleged debt is owed takes the matter no further. It is not an alleged debt. There is a judgment debt of a Court of New South Wales. There is no suggestion there has been any stay of that judgment. Nothing is alleged in the affidavit to indicate any circumstances that could give rise to any doubt as to whether that judgment should stand.

14 I am not persuaded that the affidavit satisfies the prerequisite of s 459G(3) asserting at least the material facts on which the plaintiff intends to demonstrate that there is a genuine dispute between it and the solicitors as to whether a debt is owing. In those circumstances, I consider the appropriate course is to affirm the decision of the Deputy Registrar.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated: 30 March 2006

Counsel for the Plaintiff:	Mr C Stomo
Solicitors for the Plaintiff:	Wright Stell
Solicitors for the Defendant:	Purcell Lawyers
Date of Hearing:	17 March 2006
Date of Judgment:	17 March 2006