Federal Court of Australia

Chapel of Angels Pty Ltd v Hennessy [2021] FCA 875

ORDERS

THE COURT ORDERS THAT:

1.    In action QUD 214 of 2021:

(a)    the application filed on 1 July 2021 to set aside the statutory demand is dismissed.

(b)    the plaintiff is to pay the defendant’s costs of and incidental to the application on an indemnity basis.

(c)    the defendant has leave to make any application as he sees fit for any further order for costs against any person who is not otherwise a party to these proceedings.

2.    In action QUD 215 of 2021:

(a)    the application filed on 1 July 2021 to set aside the statutory demand is dismissed.

(b)    the plaintiff is to pay the defendant’s costs of and incidental to the application on an indemnity basis.

(c)    the defendant has leave to make any application as it sees fit for any further order for costs against any person who is not otherwise a party to these proceedings.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    By two separate applications filed on 1 July 2021, the plaintiff in each action, Chapel of Angels Pty Ltd (Chapel of Angels), seeks orders setting aside two statutory demands served on it in accordance with s 459E of the Corporations Act 2001 (Cth) (the Act). In the first action (QUD 214 of 2021: Chapel of Angels Pty Ltd v John Paul Hennessy), it seeks an order setting aside a statutory demand issued by the defendant, Mr John Paul Hennessy. That demand was dated 7 June 2021 and was for the amount of $148,038.48. In the second action (QUD 215 of 2021: Chapel of Angels Pty Ltd v Hennessy Builders Pty Ltd), the statutory demand was issued by Hennessy Building Pty Ltd (Hennessy Building) for the amount of $185,865.02. (There was an error in identifying the defendant in the title of the second proceeding).

2    The foundation of the debts which are the subject of the statutory demands are judgments of the District Court of Queensland in proceeding number BD4124/14 (the District Court Proceeding) in which Chapel of Angels was plaintiff and Hennessy Building and Mr Hennessy were first and second defendants respectively: Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 218 (Chapel of Angels (No 1)); Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 248 (Chapel of Angels (No 2)). The Court’s orders in that matter included costs orders in favour of the defendants. Each defendant had its costs assessed and orders were made in the District Court requiring the plaintiff to pay the amounts so assessed. Those amounts constitute the whole of the debts claimed in the demands.

3    The grounds on which Chapel of Angels sought to have the statutory demands set aside were somewhat obscure and their elucidation was not aided by the submissions made by the plaintiff’s solicitor, Mr Ohlson, who appeared at the hearing. Its principal argument was that there were errors in the judgments of the District Court on which the debts claimed in the statutory demands were based. For the reasons explained below, it is not open to this Court to review those decisions and thus this argument must fail. It was also argued that Chapel of Angels had an offsetting claim against Hennessy Building, that there were defects in the its statutory demand, or that there were other reasons why both statutory demands ought to be set aside. These arguments must also be rejected for the reasons set out below.

4    As a result of the substantially overlapping submissions made in each matter, the two applications were heard together and these reasons are applicable to both.

Background

5    Though the facts of this matter might be stated relatively briefly, it is necessary to set out the history of the litigation between the parties in some detail in order to properly address some of the more ambitious submissions made by Mr Ohlson on behalf of the plaintiff.

6    On 12 November 2018, Judge Porter QC DCJ delivered judgment in the District Court Proceeding and directed the parties to make submissions as to appropriate orders to reflect his Honour’s findings: Chapel of Angels (No 1). On 11 December 2018, his Honour made orders, inter alia, requiring Chapel of Angels to pay Mr Hennessy’s costs of the proceeding and on an indemnity basis. That order arose as a result of the applicant abandoning its claim against Mr Hennessy on the eve of the trial. A further costs order was made in favour of Hennessy Building, albeit on a different basis.

The decisions at first instance

7    The District Court Proceeding was commenced by Chapel of Angels on or about 23 October 2014 and arose out of a building dispute concerning the construction of a building by Hennessy Building for Chapel of Angels. Mr Hennessy is the director and guiding mind of Hennessy Building. The plaintiff’s claim at trial was, first, that Hennessy Building was obliged to return all of the progress payments made to it because some of the work which it had undertaken was beyond the scope of its building licence and, second, that the manner in which certain variations were effected in the course of the construction did not comply with the contractual requirements such that no amounts were payable in respect of them. Judge Porter QC DCJ concluded that Hennessy Building was unlicensed in respect of some of the work required for the construction of the building, with the consequence that Chapel of Angels was entitled to the return of the payments which it had made: Chapel of Angels (No 1) [111]. However, his Honour also found that Hennessy Building was entitled to recover reasonable remuneration for the work which it had undertaken and that amount exceeded the amount which it was required to repay to Chapel of Angels: at [166]. As determined in Chapel of Angels (No 2), the appropriate order reflecting those conclusions was that Chapel of Angels pay to Hennessy Building the sum of $85,989.86: at [6]. The plaintiff was also ordered to pay part of Hennessy Building’s costs as assessed, in part on a standard basis and in part on an indemnity basis.

Appeals pursued by the plaintiff

8    On or about 3 May 2019, Chapel of Angels commenced proceedings in the Queensland Court of Appeal seeking an extension of time in which to seek leave to appeal from the decision of Judge Porter QC DCJ. It appears that leave to appeal was required as the amount of the judgment did not exceed the jurisdictional limit of the Magistrates Court of Queensland: District Court of Queensland Act 1967 (Qld), s 118; Magistrates Court Act 1921, s 4(a); Magistrates Court Regulation 2007 (Qld), reg 3. Furthermore, an extension of time was required as the time limited for seeking leave had lapsed. Chapel of Angels also applied for a stay of the District Court judgment although that application was refused: Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor [2019] QCA 229.

9    On 7 October 2020, the Court of Appeal refused Chapel of Angels’ application for an extension of time and ordered it to pay the defendants’ costs of the proceeding before it: Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor [2020] QCA 219. As might be expected, in determining the question of whether an extension of time should be granted, Fraser JA, in his Honour’s usual precise and erudite manner, carefully considered the issues which Chapel of Angels wished to agitate had the appeal been permitted to proceed. In doing so, his Honour concluded that the trial judge had not misconstrued the Queensland Building Services Authority Act 1991 (Qld) (the QBSA Act) when allowing Hennessy Building to recover reasonable remuneration for its work: at [57]. (The QBSA Act has since been renamed the Queensland Building and Construction Commission Act 1991 (Qld)). Otherwise, his Honour held that the arguments sought to be agitated on appeal had not been advanced to the primary judge and could not support the application for an extension of time: at [65].

10    On or about 30 October 2020, Chapel of Angels applied to the High Court for special leave to appeal from the judgment of the Court of Appeal. That application was dismissed on 4 March 2021, with Gordon and Edelman JJ finding that, “The proposed grounds of appeal do not identify any reason to doubt the correctness of the decision of the Court”: [2021] HCASL 40 [1]. Chapel of Angels was again ordered to pay the costs of the respondents to that application.

11    Before this Court, Mr Ohlson for the plaintiff made the following submission as to the manner in which their Honours had dealt with the plaintiff’s application for special leave:

But I should say in relation to that, your Honour, there was 28 – I don’t know exactly how many matters. I do have the list. There was about 25 matters on the morning of the special leave, and I know the procedure there. They lay all the matters out on a table and the two justices walk in and go through them. And they completed those 28 matters by lunch time. I just don’t believe that they’ve – they had the opportunity to really get into the issues of the matter and determine – they probably, because they weren’t looking at the legal issues as such…

12    That submission is scandalous and tends to bring the Court system into disrepute. It is patently incorrect and should not have been made. Anyone with the slightest knowledge of the operation of the High Court understands that, prior to the hearing of special leave applications, an enormous amount of work is undertaken by the judges hearing the matters. Their Honours read and analyse the decisions in respect of which special leave to appeal is sought as well as the submissions and authorities cited in support. All of this consumes considerable time and effort. To suggest that the in-court hearing of an application is the sum total of the consideration given to a matter is both ignorant and disrespectful.

13    It is relevant to note here that, having failed to obtain special leave to appeal, Chapel of Angels has exhausted all avenues of appeal in relation to the judgments of the District Court in respect of which the costs orders were made. However, that is not to say that its attempts to otherwise challenge those decisions were at an end.

Other proceedings pursued by the plaintiff

14    Unperturbed by the failure of its application for special leave, Chapel of Angels apparently attempted to make a further application to the High Court on 17 May 2021. Although the details of that application are somewhat unclear, it appears that the plaintiff sought the issuing of a writ of certiorari against all of the judicial officers who had found against it from the District Court to the High Court. The apparent grounds were that the decisions of the several courts were in error because they did not correct an alleged error made by the District Court in its judgment. In effect, it was sought to re-open the previously finalised decisions on the basis that the judgments of the District Court involved a misapplication of the QBSA Act.

15    Material before this Court indicates that Gageler J made an order on or about 26 May 2021 directing the Registrar of the High Court to refuse to issue or file Chapel of Angels’ application for certiorari without it first obtaining the leave of a Justice of the High Court. It would seem that his Honour had formed the view that the plaintiff’s application was, on its face, an abuse of process of the Court, or frivolous or vexatious or fell outside the Court’s jurisdiction: see r 6.07 of the High Court Rules 2004 (Cth).

16    Again, unperturbed by this further setback, Chapel of Angels applied ex parte for the necessary leave to file its application for certiorari on 10 June 2021. On 12 July 2021, Gleeson J dismissed that application without listing it for a hearing. Her Honour concluded that it was well established that a writ of certiorari could not issue to a superior court of record and, to that extent, the proposed application would fail. In relation to the attempt to seek certiorari against the District Court, it was held that the application amounted to an abuse of process as Chapel of Angels was attempting to re-litigate an issue which had been disposed of in earlier proceedings between the same parties. As her Honour observed, despite the previous hearings and appeals, Chapel of Angels was again seeking to re-litigate questions of whether Hennessy Building was prevented by the QBSA Act from recovering on a quantum meruit basis in respect of the building work undertaken by it. As to the argument raised in these proceedings based on cl 5 and s 118 of the Constitution, it was observed that to the extent to which the plaintiff had not earlier raised that argument it was too late to seek to do so now.

17    In a continuation of a now familiar theme, the Court was informed by Mr Ohlson at the hearing of these applications that the plaintiff intended to seek to appeal from Gleeson J’s decision, although it had not apparently done so at that point in time.

The assessment of costs in the District Court Proceeding

18    On or about 17 December 2020, Mr Stewart Naylor was appointed to assess the costs payable to Mr Hennessy and to Hennessy Building pursuant to the orders of Judge Porter QC DCJ.

19    On 4 February 2021, Mr Naylor issued costs assessor’s certificates assessing the costs payable by Chapel of Angels to Mr Hennessy and to Hennessy Building in the sums of $168,960.74 and $216,787.28 respectively. He later issued written reasons for his determinations on 16 February 2021.

20    On 17 February 2021, the Registrar of the District Court made orders upon the cost assessor’s certificates requiring Chapel of Angels to pay the amounts assessed to Mr Hennessy and Hennessy Building. The effect of those orders was that the assessed costs became owing as judgment debts: see Uniform Civil Procedure Rules 1999 (Qld) (UCPR), r 740.

21    On or about 2 March 2021, Chapel of Angels applied to the District Court for orders setting aside the cost assessor’s certificates. That application was dismissed on 18 March 2021 by Judge Muir DCJ.

consideration

The absence of a “genuine dispute” for the purposes of s 459H(1)(a) of the Act

22    The principal ground relied upon by Chapel of Angels in seeking to have the statutory demands set aside was an alleged dispute about the existence of the whole of the debts claimed by Mr Hennessy and Hennessy Building pursuant to their respective demands. This ground rested upon the plaintiff’s submission that, in these proceedings, it was entitled to challenge the validity of the judgments and orders of the District Court on which the amounts claimed in the statutory demands were based. In particular, it was submitted that it was open to this Court to consider, first, whether Judge Porter DCJ had erred in his Honour’s decisions and, second, whether there were errors in the costs assessor’s certificates upon which the District Court orders of 17 February 2021 were made.

23    It was submitted on behalf of Mr Hennessy and Hennessy Building that neither the application nor the supporting affidavits gave rise to a genuine dispute as to the existence or amount of the debts to which the statutory demands related for the purposes of s 459H(1)(a) of the Act.

24    It is well established that in order to establish a “genuine dispute” it must be shown that a bona fide dispute in fact exists, as opposed to one which is merely alleged on spurious, hypothetical or misconceived grounds: Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 (Spencer Constructions) at 464. Here, the defendant in each action submitted that, as the statutory demands are founded upon judgment debts, there was no scope for the plaintiff to raise any dispute as to their existence. That submission should be accepted.

25    The effect of the judgments of the District Court is that, as between the plaintiff and the defendant in each action, there exists a judicial determination following a contested hearing as to the former’s liability to the latter. As between those parties, the respective liabilities and obligations arising from the issues between them have been settled by a final and binding decision. Questions about which party is liable to whom and in what amount are no longer open. They have been resolved. Such reasoning underpins the now well settled principle that, on an application to set aside a statutory demand founded upon a judgment debt, it is not open to the debtor to raise any genuine dispute as to the existence or amount of the debt. This was clearly articulated by Brereton J in Re Douglas Aerospace Pty Ltd [2015] NSWSC 167 (Douglas Aerospace), where his Honour stated (at [52] – [53]):

52    At the outset, it is as well to note certain principles relevant to whether a debt can be the subject of a genuine dispute or offsetting claim that are of more general application – that is to say, their application is not confined to debts arising under BACISOPA and similar legislation.

53    First, it is well-established that a judgment debt is beyond dispute, while it stands [Barclays Australia (Finance) Ltd v Mike Gaffikin Marine Pty Ltd (1996) 21 ACSR 235; Eumina Investments Pty Ltd v Westpac Banking Corporation (1998) 84 FCR 454; Midas Management Pty Ltd v Equator Communications Pty Ltd [2007] NSWSC 759; (2007) 25 ACLC 1038; Joadja Whiskey v Abraham [2007] NSWSC 860, [14] (Hammerschlag J)]. This applies even in the case of a default judgment [Diddy Boy v Design [2009] NSWSC 14, [40]; Virtual Technologies International Ltd v Gye [2010] NSWSC 399, [11]-[13]; Timberland Property Holdings Pty Ltd v Schindler Lifts Australia Pty Ltd [2011] NSWSC 466, [9]-[11]]. It applies also to an arbitration award [Quadwest Development Pty Ltd v Thi [2009] WASC 54]. And it applies notwithstanding that the judgment is subject to an appeal or an application to set it aside, although the pendency of an arguable appeal may provide “some other reason” for setting aside the demand – at least if the judgment is the subject of a stay pending the appeal, or security is given [Wilden Pty Ltd v Greenco Pty Ltd (1995) 13 ACLC 1039; Barclays Australia v Mike Gaffikin Marine; Eumina Investments v Westpac, 457-8; Eagle Homes Pty Ltd v LED Builders Pty Ltd [1999] NSWSC 1049, [20]; Scope Data Systems Pty Ltd v BDO Nelson Parkhill (2003) 199 ALR 6; [2003] NSWSC 137, [17]-[20]; Midas Management v Equator Communications Pty Ltd, [12], [24]; ACN 001 891 103 Pty Ltd v Reiby Street Apartments Pty Ltd [2007] NSWSC 1345, [8], [10]; Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd (2007) 61 ACSR 441, [26]-[41]; Cranney Farm Pty Ltd v Corowa Fertilizers Pty Ltd [2011] NSWSC 9, [57]]. Essentially, that is so because the judgment, so long as it stands, binds the parties and concludes any dispute as to the existence or amount of the debt.

26    See also In the matter of Fewin Pty Ltd [2016] NSWSC 1945 [6] where his Honour reiterated those views. Later, in In the matter of Wyse Accounting Pty Ltd [2016] NSWSC 1772, his Honour said (at [2]):

… Because each of the debts claimed is a judgment debt, it is not open to the plaintiff to mount a case of “genuine dispute” within (CTH) Corporations Act 2001, s 459H. That is because it is well-established that a judgment debt – even one given by default, and even one subject to appeal – is not capable of genuine dispute, but so long as it stands, binds the parties and concludes any dispute as to the existence or amount of the debt [see Douglas Aerospace Pty Ltd v Industri Engineering Albury Pty Ltd [2015] NSWSC 167 at [53] and the cases there cited].

27    The observations in Douglas Aerospace were later referred to with apparent approval by the New South Wales Court of Appeal in Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (2019) 99 NSWLR 397. Although such approval is not strictly binding on this Court, it confirms that there is no reason to doubt the correctness of the trio of decisions by Brereton J. They are correct in principle and supported by the finality attaching to curial decisions and the principles of res judicata. The effect of those matters was made clear by the majority’s decision in Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 (Tomlinson) (at 516 – 517 [20] – [21] per French CJ, Bell, Gageler and Keane JJ):

20    An exercise of judicial power, it has been held, involves “as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons”. The rendering of a final judgment in that way “quells” the controversy between those persons. The rights and obligations in controversy, as between those persons, cease to have an independent existence: they “merge” in that final judgment. That merger has long been treated in Australia as equating to “res judicata” in the strict sense.

21    Estoppel in relation to judicial determinations is of a different nature. It is a common law doctrine informed, in its relevant application, by similar considerations of finality and fairness. Yet its operation is not confined to an exercise of judicial power; it also operates in the context of a final judgment having been rendered in other adversarial proceedings. It operates in such a context as estoppel operates in other contexts: as a rule of law, to preclude the assertion of a right or obligation or the raising of an issue of fact or law.

(Footnotes omitted)

28    In the present matter, the issue of the plaintiff’s indebtedness to the defendants arising from the building project which was the subject of the dispute in the District Court has been finally determined by the decisions of that Court and of the Court of Appeal. It is no longer possible for Chapel of Angels to raise in any proceedings concerning the defendants that its rights and obligations are other than have been decided. In particular, it cannot assert that it is not indebted to the defendants. That prohibition extends to any issue concerning the question of costs which was also determined by the District Court in the amounts which the plaintiff has been ordered to pay. All issues pertaining to those claims have been resolved and it is estopped from asserting to the contrary. As was further said by the majority in Tomlinson (at 517 – 518 [22]):

Three forms of estoppel have now been recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding. The first is sometimes referred to as “cause of action estoppel”. Estoppel in that form operates to preclude assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment. It is largely redundant where the final judgment was rendered in the exercise of judicial power, and where res judicata in the strict sense therefore applies to result in the merger of the right or obligation in the judgment. The second form of estoppel is almost always now referred to as “issue estoppel”. Estoppel in that form operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment. The classic expression of the primary consequence of its operation is that a “judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies.”

29    There is nothing in the scheme of Pt 5.4 of the Act which suggests that on an application under s 459G to set aside a statutory demand, the Court can ignore the rights of the parties as settled by prior litigation. Where the debt underpinning the statutory demand is a judgment debt, there can be no question about its existence: see also s 459E of the Act.

30    In the course of submissions, Mr Ohlson acknowledged that the essence of the plaintiff’s case was that the decisions of the District Court and the Queensland Court of Appeal were in error. Such arguments are not available and it is apparent that the applications are misguided in this respect. For this reason, any claim that there exists a genuine dispute in relation to the judgment debts on which the statutory demands are based must fail.

The alleged Constitutional issue

31    The foregoing is settled law. That, however, was insufficient to dissuade Mr Ohlson from submitting that this Court should ignore the determinations in the previous litigation between the plaintiff, Mr Hennessy and Hennessy Building. He submitted that cl 5 and s 118 of the Constitution required this Court to consider whether the judgments of the District Court accurately assessed the liability as between the parties in relation to the building contract and the question of costs. The plaintiff’s submissions that this Court could consider whether there were errors in the cost assessor’s certificates upon which the District Court orders of 17 February 2021 were made rested upon the same construction of the Constitution.

32    As best as can be ascertained, it seems to be submitted that the obligation of courts to give full faith and credit to the laws of the Commonwealth requires that, on the application to set aside the statutory demand, this Court must re-examine for itself the issues between the parties and re-apply the provisions of the QBSA Act. That, so the submission went, is despite the earlier findings in the District Court and the Queensland Court of Appeal as to the parties’ rights. Just how that might occur given the final determination of rights between the parties was not addressed by the plaintiff. Mr Ohlson did not provide any explanation as to how a cause of action which has been finally determined between the parties and merged in a judgment might be resurrected for reconsideration on an application under s 459G of the Act. This seemingly insurmountable obstacle was not addressed so much as ignored.

33    It should be observed that the plaintiff filed in this Court a notice under s 78B of the Judiciary Act 1901 (Cth) (the Judiciary Act) for the apparent purpose of giving notice of a matter arising under the Constitution or involving its interpretation. It is in rambling and vague terms and the alleged Constitutional issue is expressed in several different ways. The following is asserted at paragraph 9 of the notice filed in each action:

The effect of the mandate of the Constitutional rights expressed in clause 5 and s 118 of the Constitution is that a Judge or Court has no power to make any decision (regardless of whether that decision contains errors within jurisdiction or was jurisdictional in nature) which is contrary to the ordinary clear plain ordinary meaning of a Rule of law expressed by Parliament in any (statute [sic] where that meaning leads to a sensible result as opposed to an absurd or unreasonable result.

34    At the commencement of the hearing, Mr Ohlson informed the Court that he had not served the notices on the Commonwealth and State Attorneys-General. This gave rise to a question of whether the Court should adjourn the applications to allow such service. Ultimately, no adjournment was required as I accepted the defendants’ submission that there was no real matter arising under the Constitution or involving its interpretation, and that the plaintiff’s filing of the notice was frivolous or vexatious, or an attempt to further delay the payment of the debts owed to the defendants and, therefore, constituted an abuse of process. The mere fact that the plaintiff filed a notice purporting to raise a matter under the Constitution does not require this Court to bring a halt to the current proceedings: Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd (No 3) (2010) 184 FCR 516 at 520. As was said by French J in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (1999) 95 FCR 292 at 297 [14]:

Section 78B does not impose on the Court a duty not to proceed pending the issue of a notice no matter how trivial, unarguable or concluded the constitutional point may be. If the asserted constitutional point is frivolous or vexatious or raised as an abuse of process, it will not attach to the matter in which it is raised the character of a matter arising under the Constitution or involving its interpretation — Nikolic v MGIC Ltd [1999] FCA 849: cf Australian Securities and Investments Commission v White (unreported, Federal Court, Drummond J, No QG 40 of 1998, 16 July 1998).

35    Here, Mr Ohlson did not, or was unable to, explain how it was that cl 5 or s 118 of the Constitution impacted upon the matters in issue before the Court, save to assert that they had the effect that the judgment debts were invalid insofar as the decisions of the District Court involved what he asserted to be a misapplication of the QBSA Act. He acknowledged that this argument, “has never been raised before. Anywhere”, and that when he raises it before a court, it is thought to be obnoxious to everybody that he is attempting to do so. I can accept those propositions to be correct. However, his fundamental misconception is that the QBSA Act is at all relevant to the issues now before the Court. The rights between the plaintiff and the defendants in relation to the claim arising out of the matter involving the building contract have crystallised and, indeed, merged in the judgments of the District Court and the Court of Appeal. A new charter of rights exists as between Chapel of Angels on the one hand and Hennessy Building and Mr Hennessy on the other and their rights inter se are regulated by it. In ascertaining those rights, there is no scope for recourse to questions of whether or how the QBSA Act applies. That being so, there is nothing in respect of which the operation of cl 5 or s 118 of the Constitution might attach.

36    As an aside, it can be observed that Mr Ohlson misunderstood the nature of s 118 and the obligation to give “full faith and credit” to the laws of the States. The Constitutional imperative is the recognition in the State and Federal Courts of the laws of other States and Territories, thereby avoiding the necessity for them to be formally proved. It is not the obligation to apply them correctly. That latter duty arises from the obligations of Courts generally.

37    When the circumstances of this case are considered and the authorities which bind this Court are taken into account, it is clear that no question under the Constitution or its interpretation exists. That ought to have been apparent to the legal representatives of Chapel of Angels. It is noted that in the course of the hearing Mr Ohlson informed the Court that he did not serve the s 78B notice on the Attorneys-General because he questioned whether the Court would accept that any Constitutional matter was raised.

38    Mr Travis for the defendants submitted that any purported Constitutional issue on which the plaintiff relied was trivial, unarguable and an abuse of process. He further submitted that it was being used to needlessly delay the defendants from enforcing their judgments. Those submissions should be accepted. At its most favourable, the claimed Constitutional point sought to be advanced is the product of a lack of understanding of fundamental basic legal principles or any consideration of the established authorities on the issue of res judicata. However, that benign interpretation of the current circumstances is far too generous. The point about cl 5 and s 118 was sought to be agitated before Gleeson J who unequivocally rejected it. It seems that Mr Ohlson had some insight into the point’s lack of merit when he observed that it has been regularly rejected by the Courts. He said:

Yes, but what happens in a situation like this case where the Chapel maintains that the law wasn’t applied – what rights have you got unless you’ve got clause 5 and section 118? And that’s what they’re there for. But the courts – the courts, I don’t know whether they don’t want to know about it or they just – they just don’t realise the effect of it. How serious the effect of it is, really. It’s phenomenal.

39    I reach no conclusion whether the inability of courts to accept Mr Ohlson’s point is phenomenal or whether he truly believed that to be so. Nevertheless, I accept that he was unable to articulate it in any sensible manner to this Court and that it is likely that he and his client appreciates that it is farfetched. This supports the conclusion that the agitation of the point was frivolous and vexatious and amounted to an abuse of process.

40    It follows that it is axiomatic that Chapel of Angels is unable to advance submissions on the present applications that the prior determinations of the District Court and the Queensland Court of Appeal are in error or that the conclusions reached therein are not binding on the parties. This has the consequence that the orders for the payment of sums of money in respect of the cost orders obtained in the District Court Proceeding and on which the statutory demands are founded cannot be disputed.

41    The plaintiff also sought to argue that it was entitled to re-litigate the correctness of the manner in which the assessment of costs had occurred. For the reasons identified above, those issues have been quelled and cannot be reopened. The statutory demands cannot be set aside on the ground that there exists a genuine dispute as to the existence of the debts.

Other matters

42    The plaintiff does not assert that it has an offsetting claim against Mr Hennessy and, in light of the decisions in the District Court Proceeding, that is not surprising. Further, it does not assert that there is any defect in the demand issued by Mr Hennessy that will cause substantial injustice if it is not set aside. Consequently, there is no basis for setting aside Mr Hennessy’s statutory demand on either of those grounds.

43    However, it was submitted by Chapel of Angels that it had an offsetting claim for the purposes of s 459H(1)(b) in relation to the statutory demand issued by Hennessy Building. So the submission went, the District Court had held that Hennessy Building was required to repay the sum of $632,615 which it had paid under the building contract to Hennessy Building and, as such, this constituted an offsetting claim. The difficulty is that the Court had also ordered that the plaintiff pay Hennessy Building the sum of $700,108, with the net obligation being on the plaintiff to pay $67,492 and judgment was given in that amount plus interest. There was, therefore, no offsetting claim on which the plaintiff might rely. It could only have a claim for the amount of $632,615 if it were accepted that the District Court was in error in making the findings it did in relation to Hennessy Building’s claim. For the reasons referred to above, that cannot be considered on this application.

44    In the plaintiff’s written submissions, a suggestion was also made to the effect that the statutory demand issued by Hennessy Building should be set aside due to inaccuracies in the manner in which that company had been described. In particular, the statutory demand describes the creditor as being “Hennessy Builders Pty Ltd ABN 45 515 151 376”. It was common ground before this Court that the defendant in action QUD 215 of 2021 was “Hennessy Building Pty Ltd ACN 117 587 998”. The company “Hennessy Builders Pty Ltd” apparently does exist, but is unrelated to Hennessy Building and the various proceedings. As Mr Travis submitted, this error appears to have ultimately originated from the plaintiff’s incorrect description of Hennessy Building in the title of the District Court Proceedings (which it commenced). This lead to Hennessy Building being described in several different ways in the proceedings in the Queensland courts: “Hennessy Building Pty Ltd”, “Hennessy Builder Pty Ltd” and “Hennessy Builders Pty Ltd”, or with “Hennessy” spelt as “Hennessey”.

45    It is apparent on the material before the Court that there has been a misidentification of Hennessy Building in a number of the documents in the proceedings in the Queensland Courts and in documents which are the subject of the present application. In particular, it is misidentified in the statutory demand. However, the question is whether the defect in the demand has caused any prejudice or “substantial injustice”: Act, s 459J. See also Spencer Constructions at 458 – 459.

46    Here, no substantial injustice was caused in this case. In the course of submissions on behalf of the plaintiff, Mr Ohlson said in relation to the misnaming of Hennessy Building:

Everyone knows that Hennessy Builders – Hennessy Building is the name of the – the proper name of the respondent for everything. Really, you know, the contract is signed in Hennessy Building, and there is different names on all of the court proceedings.

47    It can therefore be concluded that the defect in the statutory demand from the creditor’s mis-description did not cause any confusion in the plaintiff nor did it result in substantial injustice: Oakland Property Holdings Pty Ltd v JP Morgan Trust Australia Ltd [2008] NSWCA 360; In the matter of World Marketing Pty Limited [2014] NSWSC 981.

48    The plaintiff also identified that the Australian Business Number used to describe Hennessy Building in its statutory demand, being ABN 45 515 151 376, actually relates to the “Hennessy Family Trust”, a trust of which the company is the trustee. It further noted that Hennessy Building was occasionally identified as a party to the litigation on its own behalf and/or as trustee for the Hennessy Family Trust. These matters were said to give rise to some confusion, although precisely how that confusion might have caused injustice was not articulated. Mr Ohlson submitted that the actual creditor needed to be named in the statutory demand and that it was “either the trust or the company”. That submission exhibited a fundamental lack of understanding of the law of trusts. In this matter, it was common ground that Hennessy Building was the creditor, albeit that it was misnamed by the plaintiff in the District Court Proceeding and in these proceedings. The plaintiff was indebted to Hennessy Building as a result of the judgments of the District Court. It matters not to the efficacy of the statutory demand whether it is issued by Hennessy Building on its own behalf or as trustee or, if the latter, whether its status as trustee is identified or not. That makes no difference to the plaintiff’s indebtedness or obligation to pay. Its submissions to the contrary were frivolous. It follows that the statutory demand was not defective as a result of it not referring to Hennessy Building in its capacity as a trustee or referring to the trust ABN.

Is there any “other reason” to set aside the statutory demands?

49    The Court may set aside a statutory demand pursuant to s 459J(1)(b) of the Act if it is satisfied that there is some other reason why the demand should be set aside. It is well established that in order for that ground to be made out it must be shown that there is some sound or positive ground or good reason for doing so which is consistent with the legislative intent of Pt 5.4 of the Act: Meehan v Glazier Holdings Pty Ltd [2005] NSWCA 24.

50    There is nothing in the plaintiff’s application nor in the supporting affidavit which identifies any “other reason” as to why the statutory demand should be set aside and none was advanced on behalf of it by Mr Ohlson. A substantial part of the plaintiff’s affidavits attempt to raise questions and complaints about the cost statement prepared by Mr Hennessy and assessed by the costs assessor. Whatever complaints the plaintiff had, they were the subject of its application pursuant to r 742 of the UCPR to set aside the cost assessor’s decision. That application was dismissed and the decision not now open to collateral attack.

51    There is nothing else advanced in the material which suggests there exists some “other reason” for setting aside the statutory demand. Rather, the material discloses that the plaintiff has taken a rather obtuse approach to its obligations flowing from the litigation which it initiated. It does not appear to accept its failure in those proceedings despite its lack of success in its subsequent attempts to overturn the verdict. There is nothing unconscionable or unfair in the defendants’ actions in seeking to recover the debt owed to them or, failing that, to put the plaintiff into liquidation.

Conclusion

52    It follows that Chapel of Angels has failed to establish any ground on which the statutory demands issued by Mr Hennessy and Hennessy Building ought to be set aside. Its applications should therefore be dismissed.

Costs

53    Mr Hennessy and Hennessy Building each seek their costs of the applications and on an indemnity basis.

54    It is true that none of the grounds relied upon by the plaintiff have succeeded. That, however, does not necessarily warrant the making an order for indemnity costs. Perhaps the real issue is that, at the directions hearing on 9 July 2021, the plaintiff, by its solicitors, was informed of the hurdles which confronted it in relation to the fact that the statutory demands were based upon judgment debts. Those difficulties are set out with clarity in the written submissions filed by Mr Hennessy and Hennessy Building. Despite the plaintiff’s knowledge of them, it pursued this application. This prompted Mr Travis for the defendants to submit that the proceedings were commenced and continued in disregard of known facts and clearly established law, and that they have been prolonged by groundless contentions on which no reasonably advised litigant would have persisted. There is substantial force in these submissions.

55    On the basis of the above discussion and, in the light of the history of the litigation between the parties, it is open to draw the inference that, at best, the plaintiff has acted in a high-handed manner by bringing these applications or, at worst, sought to use them to vex and harass Mr Hennessy and Hennessy Building. On either basis, justification is shown to support the making of an order for indemnity costs and that order ought to be made.

56    The history of the proceedings discloses that the defendants have obtained numerous costs orders against Chapel of Angels whose financial status is not clear. It follows that any additional costs order may be a Pyrrhic victory for the defendants. Nevertheless, there are obviously persons who stand behind Chapel of Angels who direct and support the litigation. For that reason and given the conclusions reached above, it is appropriate to grant leave to the defendants to make any application they see fit for additional cost orders against persons who are not parties to the proceedings.

Orders

57    The orders which should be made on the applications are set out at the commencement of these reasons.

Associate:

Dated:    2 August 2021