AHRKalimpa Pty Ltd v Schmidt (No 2) - [2018] VSC 68

IN THE SUPREME COURT OF VICTORIA	Not Restricted
AT MELBOURNE COMMERCIAL COURT

S ECI 2015 00459

AHRKALIMPA PTY LTD (ACN 164 529 533) & ANOTHER	Plaintiffs
v
ALAN HESSEL SCHMIDT & ANOTHER	Defendants

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JUDGE:	ELLIOTT J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	16 FEBRUARY 2018
DATE OF RULING:	16 FEBRUARY 2018
CASE MAY BE CITED AS:	AHRKALIMPA PTY LTD v SCHMIDT (No 2)
MEDIUM NEUTRAL CITATION:	[2018] VSC 68

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SECURITY FOR COSTS – Liability and quantum issues heard separately – Plaintiffs paid substantial security for costs – Plaintiffs successful in liability trial – Quantum issues not yet heard or determined – Plaintiffs seek release of security – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 62.05 – Application refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Ms K Brazenor	Holding Redlich
For the Defendants	Mr S Anderson QC and Mr C Northrop	Harwood Andrews Lawyers

HIS HONOUR:

A. Introduction

This proceeding concerns a joint venture for the export of cattle to Israel by 3 individuals, Haim Bzezinski (“Bzezinski”), Danny Ruschin (“Ruschin”) (who were both associated with the plaintiffs) and Alan Schmidt (“Schmidt”), and their related entities. The plaintiffs, AHRKalimpa Pty Ltd (“AHRKalimpa”) and Kalimpa Pty Ltd (“Kalimpa”), allege that following the collapse of the joint venture relationship, the defendants, Schmidt and his company Otway Livestock Pty Ltd (“Otway Livestock”), appropriated the business of the joint venture to themselves.[1]
[1]The relevant facts and background are set out in AHRKalimpa Pty Ltd v Schmidt [2017] VSC 701 (“Liability Judgment”).

The trial was listed for hearing in early August 2017. Owing to a delay by the plaintiffs, expert evidence concerning quantum was not filed in time for trial. In order to the preserve the trial date, the court ordered that issues of liability be determined separately from issues of quantum in the proceeding.

All issues concerning liability were heard in the first half of August 2017 (“the Liability Trial”).[2] Judgment was delivered on 22 November 2017, substantially in favour of the plaintiffs. The plaintiffs have since reviewed the relevant business records and elected to seek equitable compensation, rather than an account of profits. The trial of the quantum issues is set down in April 2018 (“the Quantum Trial”).
[2]Some minor matters that also related to quantum were ultimately deferred.

Pursuant to orders made on 21 March 2016, 16 December 2016 and 7 July 2017, the plaintiffs provided security for the defendants’ costs totalling $405,000.

The plaintiffs now seek the release of their security, on the basis that they have been substantially successful in the Liability Trial and that the purpose of the security for costs “has now been exhausted”.

For the reasons set out below, the purpose of the security has not been exhausted. Accordingly, no orders as sought by the plaintiffs will be made at this point in time.

B. Background

B.1 Facts as determined

In brief, AHRKalimpa and Kalimpa were involved in a joint venture for the export of cattle, together with Schmidt and Otway Livestock. The joint…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] VSC 68
Decision Date: 16 FEBRUARY 2018

CaseChat Overview and Summary

AHRKalimpa Pty Ltd was involved in a legal dispute with Schmidt. The matter was before the Supreme Court of Victoria and pertained to the security for costs. The plaintiffs had been required to pay a substantial sum as security for costs, and they subsequently succeeded in the liability trial. However, the issues regarding the quantum of the costs had not yet been heard or determined at the time of the application for the release of the security. The plaintiffs sought an order for the release of the security they had paid. The relevant legal framework for this application was Rule 62.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).

The court had to determine whether it was appropriate to release the security in light of the plaintiffs' success at the liability stage but with the quantum issues still pending. This involved a consideration of the relevant statutory provisions and the principles of justice and fairness. The court's reasoning centred on the separation of liability and quantum issues and the discretion afforded to the court under the relevant rule. It was noted that the security remained in place until the quantum of the costs was finally determined, and there were no exceptional circumstances that warranted an earlier release.

The court declined to make an order for the release of the security, as the quantum issues were yet to be resolved. The plaintiffs' success in the liability trial was not considered sufficient grounds to release the security before the final determination of the costs. Consequently, the application was refused. This decision underscored the importance of the separation of liability and quantum issues in the context of security for costs applications.

Orders