Supreme Court New South Wales

• Medium Neutral Citation: In the matter of Statewide Developments Pty Limited [2011] NSWSC 1538
• Hearing dates: Written submissions
• Decision date: 14 December 2011
• Jurisdiction: Equity Division - Corporations List
• Before: Barrett J

Decision

Order that Statewide Developments Pty Ltd pay the costs of Damien Paul Higgins of the winding up proceedings.

• Catchwords: PROCEDURE - costs - creditor with judgment debt and unquantified costs orders issues statutory demand for judgment debt - company does not pay - creditor commences winding up proceedings - company eventually pays judgment debt - another creditor seeks substitution as plaintiff - original plaintiff does not press winding up application - how costs should fall as between original plaintiff and defendant company
• Cases Cited: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin 1997 HCA 6; (1997) 186 CLR 622
• Category: Costs
• Parties: Damian Paul Higgins - Plaintiff; Statewide Developments Pty Limited - Defendant
• Representation: Mr P M Barham - Plaintiff; Mr M J Cohen/Mr J J Hyde - Defendant; Paladin Law Pty Limited - Plaintiff; Mills Oakley Lawyers - Defendant
• File Number(s): 2011/00148654

Judgment

1 I am dealing with the question of costs as between the plaintiff (Mr Higgins) and the defendant (Statewide) in these winding up proceedings brought by Mr Higgins against Statewide on the basis of an unsatisfied statutory demand. The originating process filed by Mr Higgins is dated 5 May 2011.

2 Mr Higgins was obviously and indisputably a creditor of Statewide. He had a judgment against it rendered in proceedings in which an appeal to the Court of Appeal prosecuted by Statewide was dismissed. The Court of Appeal's decision was given on 7 March 2011. There was then a clear and unimpeachable judgment debt.

3 It was on the basis of this judgment debt that Mr Higgins served the statutory demand. The demand was not complied with; nor did Statewide make any application to have it set aside.

4 It was only after Mr Higgins had commenced the winding up proceedings that Statewide paid the judgment debt. Even then, Statewide did not pay for a month or thereabouts (payment was on 8 June 2011). It says that the delay occurred because of attempts to negotiate a settlement of an issue outstanding between the parties, namely, the quantification of costs awarded to Mr Higgins against Statewide both at first instance and on appeal in the earlier proceedings in which judgment was ordered against Statewide.

5 The costs orders were such that quantification was to be by agreement or assessment. There has, at this point, been neither; and the fact that there has been no agreement no doubt means that the assessment process will have to be undertaken.

6 But the fact that these costs were unquantified provided no basis whatsoever for Statewide's failure to pay the judgment debt. Mr Higgins should never have been put to the expense and inconvenience of serving a statutory demand for the judgment debt. He should never have been forced to commence the winding up proceedings on the basis of Statewide's failure to comply with a statutory demand for the judgment debt.

7 It was entirely proper for Mr Higgins to reject suggestions by Statewide that there should be payment by instalments. There could have been no legitimate expectation that he would negotiate over indebtedness that had been established by the judgment at first instance and confirmed on appeal.

8 Furthermore, whatever negotiation there might have been over quantification of costs under the costs orders in Mr Higgins' favour did not impinge on the simple reality of the existence of the judgment debt. There was - and could not have been - any allegation that Mr Higgins was indebted to Statewide so that some question of set-off might have arisen. The liabilities were all on one side, partly quantified and immediately due and payable (the judgment debt) and partly unquantified but owing (the costs).

9 The judgment debt was paid by Statewide on 8 June 2011. Statewide criticises Mr Higgins for maintaining the winding up proceedings thereafter. That criticism loses sight of the fact that, when the matter came before the court on 20 June 2011, Statewide itself consented (as did Mr Higgins) to an order that it be listed for further directions on 11 July 2011 and that, on the lastmentioned date, there was a direction regarding the filing and service by a non-party of an application to be substituted as plaintiff. That application was filed on 19 July 2011.

10 All that Mr Higgins did after the judgment debt was paid on 8 June 2011 was to join with Statewide on 20 June 2011 in a request that the court list the matter for further directions on 11 July 2011, at which point directions were made regarding the possible introduction of a new plaintiff; and thereafter that potential new plaintiff pursued the matter.

11 The criticism levelled at Mr Higgins is misguided. Even if the applicant for substitution had not emerged, Mr Higgins, as the person owed costs ordered but not quantified would have been quite entitled to maintain the winding up proceedings with the benefit of the existing presumption of insolvency, thereby putting Statewide to proof of its solvency.

12 Mr Higgins seeks an order that Statewide pay his costs of the proceedings. He is entitled to that on the footing that, although there was no determination on the merits between him and Statewide, this is a case in which the court can conclude that "one of the parties has acted so unreasonably that the other party should obtain the costs of the action": Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin 1997 HCA 6; (1997) 186 CLR 622 at 624.

13 The following order is made:

Order that Statewide Developments Pty Ltd pay the costs of Damien Paul Higgins of the winding up proceedings.

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Decision last updated: 14 December 2011