FEDERAL COURT OF AUSTRALIA
Asden Developments Pty Ltd (in liquidation) v Dinoris [2017] FCA 37
Appeal from: Asden Developments Pty Ltd (in liq) v Dinoris (No 4) [2016] FCA 1001 File number: QUD 704 of 2016 Judge: MARKOVIC J Date of judgment: 30 January 2017 Legislation: Corporations Act 2001 (Cth) s 180(1)
Federal Court of Australia Act 1976 (Cth) s 56
Federal Court Rules 2011 (Cth) r 36.09
Cases cited: Dye v Commonwealth Securities Limited [2012] FCA 992 Date of hearing: 30 January 2017 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: No Catchwords Number of paragraphs: 22 Counsel for the Appellant: Mr M Martin QC Solicitor for the Appellant: Mills Oakley Lawyers Counsel for the Respondents: Mr I Erskine Solicitor for the Respondents: HBM Lawyers ORDERS
QUD 704 of 2016 BETWEEN: ASDEN DEVELOPMENTS PTY LTD (IN LIQUIDATION) ACN 115 851 833
Appellant
AND: PETER DINORIS
First Respondent
NICK COMBIS
Second Respondent
JUDGE:
MARKOVIC J
DATE OF ORDER:
30 JANUARY 2017
THE COURT ORDERS THAT:
1.Within 14 days of the date of these orders the appellant give security for the respondents’ costs of the appeal in the sum of $80,000 by:
(a)paying the money into Court; or
(b)providing to the Queensland District Registrar of this Court (Registrar) an unconditional bank guarantee from an Australian owned bank (as recognised by the Australian Prudential Regulation Authority) in a form acceptable to the Registrar.
2.In the event that security is not provided in accordance with the terms of Order 1, the appeal be stayed.
3.The costs of the interlocutory application filed on 20 December 2016, insofar as it seeks orders for security for costs, shall be the respondents’ costs in the appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)MARKOVIC J:
Before the Court is an application for security for costs of an appeal brought by Asden Developments Pty Ltd (in liquidation) (Asden) from orders made by the Court on 19 August 2016. The primary judge found that the first respondent, Mr Dinoris, who together with Mr Combis was a joint and several liquidator of Asden, breached his duty owed to Asden pursuant to s 180(1) of the Corporations Act 2001 (Cth) (the Corporations Act), but dismissed Asden’s application. His Honour found that Asden had not established that any damage resulted to it from Mr Dinoris’ conduct as required by s 1317H(1) of the Corporations Act: Asden Developments Pty Ltd (in liq) v Dinoris(No. 3) [2016] FCA 788.
The respondents to the appeal, Messrs Dinoris and Combis, by their interlocutory application filed on 20 December 2016 relevantly seek orders that:
(1)Asden give security in a form acceptable to the Deputy Registrar of this honourable Court for their costs of defending the appeal in the sum of $155,000 pursuant to r 36.09 of the Federal Court Rules 2011 (Cth)…
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- Asden Developments Pty Ltd (in liquidation) v Dinoris [2017] FCA 37
- Case
- [2017] FCA 37
- Decision Date
CaseChat Overview and Summary
The court held that it should exercise its discretion in favour of making an order for security for costs. The court found that Asden was impecunious and that no factors relevant to a refusal to make an order for security were evident. The court treated the prospects of success of the appeal as neutral. The real issue was the quantum of security that should be ordered. The court considered the reports of the parties’ costs consultants and found that the principal areas of difference were the amounts claimed, whether senior counsel was required, and the appropriate rate for senior counsel. The court ordered security for costs in the sum of $80,000, noting that the amount should provide a substantial capacity to meet an order for costs for an appeal that fails. The court ordered that if security was not provided within 14 days, the appeal would be stayed. The costs of the interlocutory application were to be the respondents’ costs in the appeal.
The court ordered that within 14 days of the date of these orders the appellant give security for the respondents’ costs of the appeal in the sum of $80,000. The security could be given by paying the money into Court or by providing an unconditional bank guarantee from an Australian owned bank in a form acceptable to the Queensland District Registrar of this Court. In the event that security was not provided in accordance with the terms of Order 1, the appeal would be stayed. The costs of the interlocutory application filed on 20 December 2016, insofar as it sought orders for security for costs, would be the respondents’ costs in the appeal.
Orders
Orders of the court
1. Within 14 days of the date of these orders the appellant give security for the respondents’ costs of the appeal in the sum of $80,000 by:
(a) paying the money into Court; or
(b) providing to the Queensland District Registrar of this Court (Registrar) an unconditional bank guarantee from an Australian owned bank (as recognised by the Australian Prudential Regulation Authority) in a form acceptable to the Registrar.
2. In the event that security is not provided in accordance with the terms of Order 1, the appeal be stayed.
3. The costs of the interlocutory application filed on 20 December 2016, insofar as it seeks orders for security for costs, shall be the respondents’ costs in the appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
If the Court decides to exercise its discretion to order security then it has a wide discretion in relation to quantum but, as Emmett J noted at [104] of Dye, the purpose of security is not necessarily to provide a full indemnity. Rather, an order for security “should provide a substantial capacity to meet an order for costs for an appeal that fails.” CONSIDERATION As noted above, Asden accepts that this is a case in which security would be ordered. Even if that were not so, I am satisfied that I should exercise my discretion in favour of making an order for security. Asden is in liquidation. The evidence before me is that as at August 2015 it held approximately $450 in a bank account; it holds no real property; its liabilities significantly outstrip its assets in value; and as at March 2014 the liquidator reported that the likelihood of a return to creditors was dependent on the success of future recovery actions. Asden is clearly impecunious. The evidence is also that Mr George Nichols funded the proceeding before the primary judge and, it seems, continues to fund this appeal. In the proceeding before the primary judge, Mr Nichols provided a statement disclosing his net asset position and an undertaking to pay Messrs Dinoris and Combis’ costs in the event that a costs order was made against Asden. I note that no such undertaking is before the Court in the appeal. Subject to the issue of prospects of success of the appeal, none of the factors that are relevant to and might tend towards a refusal to make an order for security for costs are evident here. As to prospects of success, no evidence was tendered or submissions made on that issue and I would treat that factor as neutral. That then leaves the issue of the quantum of security that should be ordered, the real issue between the parties. Messrs Dinoris and Combis seek security in the sum of $155,000. They rely on a report prepared by Mr Adam Bloom, a specialist costs consultant, who has calculated that amount. Asden contends that the amount sought as security is too high. It relies on a report prepared by Mr Paul Garrett, who is also a specialist cost consultant. Mr Garrett’s opinion is that the likely costs to be incurred by Messrs Dinoris and Combis in defending the appeal are approximately $51,000. In reaching that opinion Mr Garrett has had regard to Mr Bloom’s report. The principal areas of difference between Messrs Bloom and Garrett are:(1)in relation to the amounts claimed. Mr Garrett is of the view that in many cases the amounts estimated by Mr Bloom for particular items are too high, and opines that the estimates include amounts for the preparation of the cross-appeal;(2)whether senior counsel is required on the appeal. Mr Garrett is of the opinion that there is complexity in the cross appeal but not the appeal and that, for the purposes of the security for costs application, allowance should only be made for junior counsel; and(3)the appropriate rate for senior counsel, if allowed. Mr Bloom includes senior counsel at $7,400 per day, while Mr Garrett says the appropriate rate for senior counsel is $6,400 per day.