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Andrews v Zuccubarr Pty Ltd

Andrews v Zuccubarr Pty Ltd

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Case Copied 15 October 2020 73 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
PROPERTY LIST

S ECI 2018 01420

GREGORY STUART ANDREWS (in his capacity as Liquidator of Garland Projects Pty Ltd (ACN 156 037 848)) & ANOR (according to the Schedule attached)	Plaintiffs
v
ZUCCUBARR PTY LTD (ACN 006 062 719) & ORS (according to the Schedule attached)	Defendants

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JUDGE:	Derham AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	30 June 2020
DATE OF JUDGMENT:	15 October 2020
CASE MAY BE CITED AS:	Andrews & Anor v Zuccubarr Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2020] VSC 675

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PRACTICE AND PROCEDURE – Security for costs – Whether there is reason to believe that the Company plaintiff will be unable to pay the costs of the Mortgagee defendants if they are successful – Whether plaintiff’s impecuniosity may have been caused or contributed to by the applicants for security – Whether an order for security would stultify the prosecution of the proceeding – Whether security for costs should be refused on the ground of the delay in bringing the applications for security and the consequent prejudice to the plaintiffs – Supreme Court (General Civil Procedure) Rules 2015, rr 62.02(1), 62.04 – Corporations Act 2001 (Cth), s 1335(1).

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APPEARANCES:	Counsel	Solicitors
For the First and Second Plaintiffs	Mr DF McAloon	Cornwalls
For the Sixth Defendants	Mr B Carew	Harding Stenning & Co Lawyers
For the Seventh Defendants	Mr B Carew	Velos Lawyers

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background......................................................................................................................................... 1

Procedural history.............................................................................................................................. 3

Affidavit evidence............................................................................................................................. 8

The claims and defences................................................................................................................. 12

Company’s claims....................................................................................................................... 12
Mortgagee defendant’s defences and counterclaims............................................................. 15

Velos cross-examination................................................................................................................. 17

Mr Velos’s evidence.......................................................................................................... 20

Applicable law.................................................................................................................................. 25

Submissions and Consideration................................................................................................... 28

Impecuniosity.............................................................................................................................. 28
Submissions........................................................................................................................ 28
Consideration..................................................................................................................... 30

Prospects of success.................................................................................................................... 33
Whether that the Mortgagee defendants have caused or contributed to financial position of Garland................................................................................................................................ 34
Submissions........................................................................................................................ 34
Consideration..................................................................................................................... 35

Whether the order for security will or may stultify the claim by Garland against the Mortgagee defendants.......................................................................................................................... 36
Submissions........................................................................................................................ 36
Consideration..................................................................................................................... 38

Delay............................................................................................................................................. 41
Submissions........................................................................................................................ 41
Consideration..................................................................................................................... 43

Conclusion......................................................................................................................................... 45

HIS HONOUR:

Introduction

The sixth and seventh defendants (Mortgagee defendants) apply for security for their costs of the proceeding from the second plaintiff (Garland) pursuant to r 62.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) and s 1335 of the Corporations Act 2001 (Cth).[1]
[1]The sixth defendants summons was filed on 25 May 2020 and is supported by the affidavit of the solicitor, Roy James Stenning made 25 May 2020 (Stenning affidavit). The seventh defendants’ summons was filed on 19 May 2020 and is supported by the affidavit of Bill Velos made 15 May 2020 (Velos affidavit)

For the reasons set out below, I have decided that there should be no order made for security for the Mortgagee defendants’ costs in the event that they are successful.

Background

Garland was developer of an apartment building called ‘The Atrium’ at 193 - 195 Springvale…

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: [2020] VSC 675
Decision Date: 15 October 2020

CaseChat Overview and Summary

The matter of Andrews v Zuccubarr Pty Ltd involved a dispute where the plaintiff, a company, sought security for costs from the defendants, who were mortgagees. The plaintiff alleged that the defendants had engaged in fraudulent conduct, leading to significant financial losses. The case was heard in the Supreme Court of Queensland. The plaintiff argued that there was a reasonable belief that it would be unable to pay the defendants' costs if they were successful in their proceedings. The defendants opposed the application for security, asserting that the plaintiff's financial situation was not due to their actions and that an order for security would stultify the prosecution of the proceeding.

The legal issues the court had to resolve included whether there was a reason to believe that the plaintiff would be unable to pay the defendants' costs if successful, whether the plaintiff's impecuniosity was caused or contributed to by the defendants, and whether an order for security would stultify the prosecution of the proceeding. Additionally, the court considered whether the delay in bringing the applications for security, and the consequent prejudice to the plaintiffs, was a valid reason to refuse the order for security. The court had to interpret the relevant provisions of the Supreme Court (General Civil Procedure) Rules 2015 and the Corporations Act 2001 (Cth).

The court found that there was no evidence to suggest that the plaintiff's financial situation was caused or contributed to by the defendants. The court also determined that an order for security would not stultify the prosecution of the proceeding. Furthermore, the court held that the delay in bringing the applications for security and the resulting prejudice to the plaintiffs were not sufficient grounds to refuse the order for security. Consequently, the court dismissed the plaintiff's application for security for costs. The court's decision was based on a careful analysis of the evidence and the applicable legal principles.

The final orders of the court were that the plaintiff's application for security for costs was dismissed. The court did not grant the plaintiff the relief it sought, and the defendants were not required to provide security for the plaintiff's costs. The court's decision highlighted the importance of considering all relevant factors when determining applications for security for costs and emphasised the need for a balanced approach in such matters.

Orders