FEDERAL COURT OF AUSTRALIA

ALF Property 2 Pty Ltd v Tucker [2011] FCA 380

IN THE MATTER OF ALF PROPERTY 2 PTY LTD (ACN 141 873 976)

THE COURT ORDERS THAT:

1.    The Application be dismissed.

2.    The plaintiff pay the defendants’ costs of and incidental to the Application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website

IN THE MATTER OF ALF PROPERTY 2 PTY LTD (ACN 141 873 976)

REASONS FOR JUDGMENT

1    This proceeding was heard at the same time as proceeding NSD 1844 of 2010 (ALF Group Pty Ltd v Tucker [2011] FCA 379). The plaintiff in NSD 1844 of 2010 (ALF Group Pty Ltd (ACN 140 744 225) (Group) is the owner of all of the shares in the plaintiff in this proceeding. The defendants in proceeding NSD 1844 of 2010 are the same persons as are defendants in this proceeding.

2    The defendants are the partners of a firm of solicitors based in Brisbane, Qld, which practises under the name “Tucker & Cowen Solicitors” (the solicitors). On 23 June 2010, the solicitors were instructed by James Warren Byrnes (Mr Byrnes) to act for the plaintiff in respect of a conveyance of a property at Hope Island, Runaway Bay, Qld (the property). The Contract for Sale in respect of the property was exchanged on 11 June 2010, approximately two weeks before the solicitors were first instructed. On 26 June 2010, the solicitors received a copy of the signed contract from Michael Pakula, who is one of the directors of Group. That contract had by then been signed by both the vendor and by the purchaser (the plaintiff). The solicitors and the plaintiff proceeded at all times thereafter upon the basis that, subject to the plaintiff’s rights afforded by the Property Agents and Motor Dealers Act 2000 (Qld) (PAMDA), the contract was binding.

3    Pursuant to instructions given by Mr Pakula to the solicitors, on 13 July 2010, the solicitors lodged a caveat against the title to the property. The interest claimed in that caveat was the plaintiff’s interest pursuant to the executed Contract for Sale dated 11 June 2010.

4    On 2 July 2010, Ms Sylvia Lopez, a solicitor employed by the solicitors, advised Mr Pakula that the Contract for Sale was liable to be terminated by the plaintiff at its election pursuant to rights afforded to it by PAMDA. That advice, of course, was given upon the basis that the Contract was otherwise binding. Ms Lopez advised Mr Pakula that, should the plaintiff choose to exercise that right, it would then be in a position to renegotiate the terms of the Contract in such manner as it thought fit. Ms Lopez also told Mr Pakula that the PAMDA rights which the plaintiff then had would soon be extinguished by reason of amending legislation which was to take effect on 30 September 2010. Later that same day, Mr Pakula instructed Ms Lopez that the plaintiff did not wish to avail itself of its PAMDA rights at that time. He said that he had discussed the matter with Mr Byrnes and that that was the decision which had been made.

5    Thereafter, from 2 July 2010 until 29 September 2010, the solicitors carried out work in respect of the purchase, mostly on the instructions of Mr Pakula.

6    The solicitors rendered Memoranda of Fees to the plaintiff from time to time in the period between early July and late September 2010 for the work which they performed in relation to the purchase of the property.

7    By the end of September 2010, the solicitors had rendered fees and disbursements totalling $7,977.33 incl GST to the plaintiff. The amount of $7,977.33 was the total of the amounts rendered in the following Tax Invoices:

8    On 14 July 2010, the solicitors received $204.30 from the plaintiff on account of the fees for the lodgement of the caveat referred to at [3] above.

9    Each Tax Invoice was accompanied by a detailed breakdown of the fees charged. That breakdown listed the date when work was done, gave a brief description of the work that was done on each day, specified the identity of the person who did the work, specified the hours worked and specified the hourly rate of each of the persons who did the work described in the breakdown for which a charge was made.

10    The solicitors requested Group to pay the outstanding amount of $7,773.03 on several occasions. No payment was made.

11    On 6 December 2010, the solicitors served upon the plaintiff a Creditor’s Statutory Demand for Payment of Debt dated 2 December 2010 (the Statutory Demand) which they served pursuant to s 459E of the Corporations Act 2001 (Cth) (the Act). In that Statutory Demand, the solicitors claimed payment of the sum of $7,773.03 as a debt due to them. That debt was described as a debt for:

Outstanding legal services provided by the Creditor to the Company between the period 2 July 2010 to 29 September 2010 at the Company’s request.

12    On 24 December 2010, the plaintiff commenced the present proceeding. In this proceeding, the plaintiff claims an order setting aside the Statutory Demand. It relies upon s 459H and s 459J of the Act. No point was taken by the solicitors that the proceeding was not commenced within the time limited by s 459G(2) of the Act nor was any point taken that the Application and affidavit in support were not served within the time limited by s 459G(3) of the Act.

The Grounds Relied Upon by the Plaintiff

13    In support of the relief which the plaintiff seeks, Mr Byrnes swore, filed and served an affidavit on 24 December 2010.

14    In that affidavit, Mr Byrnes asserted that the signed Contract for Sale had been provided by him to the solicitors … “to review and advise if there were any omissions or contentious conditions and if not to then deliver the signed Contract to the vendors solicitors”. The gravamen of this assertion by Mr Byrnes was that, as at 26 June 2010, the date when the signed Contract for Sale was forwarded to the solicitors by Mr Pakula, there was no binding Contract for Sale in place. Mr Byrnes’ contention was that, as at that date, it was open to the plaintiff to decline to enter into any binding agreement because no binding agreement had yet been formed.

15    In his first affidavit, Mr Byrnes also asserted that the solicitors had been negligent in failing to advise the plaintiff that it should have attempted to have inserted into the Contract for Sale in respect of the property “… a condition regarding FIRB …” which I take to be a reference to the Foreign Investment Review Board. He did not explain what he meant by this remark.

16    The third matter which Mr Byrnes raised in his first affidavit was that the solicitors were not entitled to the fees which they had rendered because, for the most part, those fees had been rendered for providing advice on how to resolve an issue which had been created by their own negligence.

17    Mr Byrnes suggested that the loss and damage suffered by the plaintiff at the hands of the solicitors was $20,000 comprising the amount of the deposit which he suggested had been forfeited when the Contract for Sale was terminated ($10,000) and a further $10,000 in legal fees.

18    Mr Byrnes also raised in his first affidavit the proposition that the solicitors were not entitled to recover their fees and disbursements because they had failed to provide to the plaintiff the necessary disclosures required by the Legal Profession Act 2007 (Qld).

19    The plaintiff is a wholly owned subsidiary of Group, which itself is a wholly-owned subsidiary of ALF Group Holdings AG, a Swiss corporation.

20    For reasons which I have explained in ALF Group Pty Ltd v Tucker [2011] FCA 379 at [22]–[26], this point was abandoned.

21    The evidence before me makes clear that, as at 26 June 2010, the plaintiff was already bound to the Contract for Sale which had been exchanged on 11 June 2010, subject to its right to terminate that Contract pursuant to the provisions of PAMDA. For this reason, the solicitors were not asked to advise the plaintiff on the implications of its ultimately being owned by a Swiss corporation nor were they instructed to address that matter in the Contract for Sale. Had they been asked to do either of those things, they would not have been able to comply with the request because the Contract had already been entered into.

22    The fees which were rendered by the solicitors were rendered in respect of work done by them directed to the completion of the conveyance. The suggestion made by Mr Byrnes and Mr Pakula that the work done by the solicitors for which they have rendered fees was work done to address their own negligence is nothing more than a bare assertion. It is inconsistent with the detail provided by the solicitors in the backup materials sent with the Tax Invoices pursuant to which the fees and disbursements were rendered and inconsistent with the correspondence and other evidence tendered before me showing the progress of the conveyance. This contention on the part of the plaintiff must also be rejected.

23    Finally, the evidence given by Mr Byrnes and by Mr Pakula concerning the losses allegedly suffered by the plaintiff as a result of the solicitors’ negligence also does not rise above mere assertion. There was uncontradicted evidence led before me which suggested that the original deposit of $10,000 was repaid to Mr Byrnes when the Contract for Sale dated 11 June 2010 was terminated pursuant to the plaintiff’s right to do so under PAMDA. There was also uncontradicted evidence led before me which suggested that a second contract was entered into which itself was ultimately terminated resulting in the refund of the deposit paid in respect of that contract. The bare assertion of loss made by Mr Byrnes does not create or evidence a genuine dispute.

24    The plaintiff never complained about the work done by the solicitors or about the charges which they made. The complaints which have now surfaced only arose when the solicitors pressed the plaintiff to pay the outstanding fees and disbursements.

25    For these reasons, I do not think that there is any genuine dispute about the fees and disbursements which the solicitors have rendered to the plaintiff nor do I consider that there is an offsetting claim available to the plaintiff which I am obliged to take into account pursuant to s 459H of the Act. I can see no other reason to set aside the Statutory Demand.

26    The Application must therefore be dismissed with costs. There will be orders accordingly.

Associate:

Dated:    14 April 2011