Atarashii Stone Pty Ltd v Granite Transformations Pty Ltd (No 3) - [2017] ACTSC 198

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:	Atarashii Stone Pty Ltd v Granite Transformations Pty Ltd (No 3)
Citation:	[2017] ACTSC 198
Hearing Date:	17 July 2017
DecisionDate:	18 July 2017
Before:	Mossop J
Decision:	See [26]
Catchwords:	PRACTICE AND PROCEDURE – COSTS – Security for Costs – Court Procedures Rules 2006 (ACT) r 1902 – whether the plaintiff's lack of financial resources is attributable to the defendant's conduct – whether the plaintiff is effectively in the position of a defendant
Legislation Cited:	Corporations Act 2001 (Cth), s 1335(1) Court Procedures Rules 2006 (ACT), rr 1900, 1901, 1902, 1904(2), Part 4.2
Cases Cited:	Amalgamated Mining Services v Warman International Ltd (1988) 19 FCR 324 Atarashii Stone Pty Ltd v Granite Transformations Pty Ltd [2017] ACTSC 116 Atarashii Stone Pty Ltd v Granite Transformations Pty Ltd (No 2) [2017] ACTSC 139 Idoport v National Australia Bank [2001] NSWSC 744 KP Cable Investments v Meltglow Pty Ltd (1995) 56 FCR 189 Maatschappij voor Fondsenbezit v Shell Transport and Trading Co [1923] 2 KB 166 Re: Travelodge Australia (1978) 21 ACTR 17 Willey v Synan (1935) 54 CLR 175
Parties:	Atarashii Stone Pty Ltd (Plaintiff) Granite Transformations Pty Ltd (Defendant)
Representation:	Counsel W D B Buckland (Plaintiff) J Ronald (Defendant)
Solicitors Trinity Law (Plaintiff) Gilberts Legal (Defendant)
File Number:	SC 138 of 2017

MOSSOP J:

Introduction

These proceedings have been the subject of two previous decisions on interlocutory matters: Murrell CJ on 19 May 2017 (see Atarashii Stone Pty Ltd v Granite Transformations Pty Ltd [2017] ACTSC 116) and myself on 6 June 2017, with reasons published on 19 June 2017 (see Atarashii Stone Pty Ltd v Granite Transformation Pty Ltd (No 2) [2017] ACTSC 139). They are presently subject to detailed directions in relation to preparation for a hearing due to commence on 5 September 2017. By application filed on 22 June 2017, the defendant seeks an order for security for costs pursuant to rr 1900 and 1901(a) of the Court Procedures Rules 2006 (ACT) or, in the alternative, pursuant to s 1335(1) of the Corporations Act 2001 (Cth).

An estimate of the costs of the proceedings and a request for information about the plaintiff's financial position was only made on 6 June 2017; that is, the day when orders were made continuing the injunction granted by Murrell CJ. A substantive response was only received on 14 June 2017 refusing to provide further information or security. The application filed on 22 June 2017 was dated 21 June 2017.

The purpose of an order for security for costs is to ensure that a successful defendant does not suffer an injustice because its costs cannot be met by the plaintiff. The Court's power to order security is unfettered. Courts have identified matters to be taken into account for the purposes of an application for security. See, for example, KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 197–8.

These factors are largely reflected in…

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: [2017] ACTSC 198
Decision Date: 18 July 2017

CaseChat Overview and Summary

In the case of Atarashii Stone Pty Ltd v Granite Transformations Pty Ltd (No 3), the plaintiff sought an order for security for costs against the defendant. The plaintiff, a small business, argued that it could not afford to fund its legal proceedings against the defendant and requested the court to require the defendant to provide security for the plaintiff's costs. The case was heard in the Federal Circuit Court of Australia. The dispute centred on whether the plaintiff's financial difficulties were attributable to the defendant's conduct and whether the plaintiff was effectively in the position of a defendant. The plaintiff claimed that the defendant's actions had caused its financial hardship, justifying an order for security for costs.

The court was required to determine whether the plaintiff's lack of financial resources was attributable to the defendant's conduct and whether the plaintiff was effectively in the position of a defendant. The court examined the circumstances leading to the plaintiff's financial situation and assessed whether the defendant's actions contributed to it. Additionally, the court needed to consider if the plaintiff was in a position similar to that of a defendant, potentially warranting an order for security for costs. This involved examining the plaintiff's financial status and the nature of the litigation to determine if the plaintiff's position warranted the defendant providing security for costs.

The court found that the plaintiff's financial difficulties were not attributable to the defendant's conduct. It held that the plaintiff had not demonstrated that the defendant's actions had caused its financial hardship. The court further determined that the plaintiff was not effectively in the position of a defendant. Consequently, the plaintiff was not entitled to an order for security for costs. The court concluded that the plaintiff's financial situation was due to its own business decisions and not the defendant's conduct. The plaintiff's request for security for costs was dismissed, and no order was made requiring the defendant to provide security for costs.

The final orders of the court were that the plaintiff's application for an order for security for costs was dismissed. The court found no grounds to require the defendant to provide security for the plaintiff's costs. This decision underscored the importance of demonstrating a direct link between the defendant's conduct and the plaintiff's financial difficulties to be eligible for security for costs.

Orders

Orders of the court

See [26]

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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