Concrete Logistics Pty Ltd v KBC Pty Ltd - [2015] WASC 284

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: CONCRETE LOGISTICS PTY LTD -v- KBC PTY LTD [2015] WASC 284

CORAM: MARTINO J

HEARD: ON THE PAPERS

DELIVERED : 12 AUGUST 2015

FILE NO/S: CIV 1512 of 2015

BETWEEN: CONCRETE LOGISTICS PTY LTD (ACN 103 913 551)
Plaintiff
AND
KBC PTY LTD (ACN 008 886 806)
Defendant

Catchwords:

Practice and procedure - Security for costs - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA)

Result:

Security for costs ordered

Category: B

Representation:

Counsel:

Plaintiff: No appearance
Defendant: No appearance

Solicitors:

Plaintiff: Jackson McDonald
Defendant: Mendelawitz Morton

Cases referred to in judgment:

Crosswest Corporation Pty Ltd v Allstrike Enterprises Pty Ltd [2014] WASC 27
FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 22 WAR 241
Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129
Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57

MARTINO J: The defendant applies for an order that the plaintiff provide security for defendant's costs in the sum of $40,000 by payment of that amount into court. The application is made pursuant to s 1335 of the Corporations Act 2001 (Cth), O 25 r 1 of the Rules of the Supreme Court 1971 (WA) and the inherent jurisdiction of the court.
The plaintiff is a company in liquidation. It was placed in liquidation on 1 December 2014. The defendant company owns land in Karratha. The plaintiff carried on business manufacturing and supplying concrete products from that land until a date in 2014 when it vacated possession of the land. The terms upon which the plaintiff occupied the land and the circumstances by which it ceased to do so are not agreed by the parties. It is common ground that no lease was ever executed by the parties. By this action the plaintiff claims the return of a concrete batching plant and other items that it left on the land. The defendant denies that the plaintiff is entitled to possession of the property on its land. It contends that the items of property left on the land are either fixtures which have become the property of the defendant or that the plaintiff can only enter the land to retake possession of the property if it makes good waste it has committed on the land. The major item of value in dispute is the concrete batching plant, which the defendant contends has become part of its land and are now its property.

The principles which apply to security for costs applications

Section 1335(1) of the Corporations Act 2001 provides:
Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the…

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.

Continue reading Concrete Logistics Pty Ltd v KBC Pty Ltd

Details

AGLC: Concrete Logistics Pty Ltd v KBC Pty Ltd [2015] WASC 284
Case: [2015] WASC 284
Decision Date: 12 AUGUST 2015

CaseChat Overview and Summary

The dispute in Concrete Logistics Pty Ltd v KBC Pty Ltd involves the plaintiff, Concrete Logistics Pty Ltd, suing the defendant, KBC Pty Ltd, over issues related to a lease agreement. The case was heard in the Supreme Court of Western Australia. The primary issue before the court was whether the defendant should be required to provide security for the costs of the litigation, given the financial circumstances of the plaintiff, which had recently entered into liquidation.

The court had to consider whether the financial state of the plaintiff, including its recent liquidation and the potential for minimal returns to unsecured creditors, justified the imposition of a security for costs order on the defendant. The court had to balance the principle that security for costs should not be imposed lightly against the need to protect the defendant from the risk of unrecoverable costs in the event of an unsuccessful litigation. The court also needed to assess the credibility and weight of the evidence presented by both parties regarding the financial situation of the plaintiff and the implications for the litigation.

In its reasoning, the court acknowledged the general principle that security for costs should not be imposed without good reason, but also recognised the specific circumstances of this case, including the plaintiff’s liquidation and the low likelihood of any return to unsecured creditors. The court found that the financial evidence provided by the defendant, including the liquidators' assessment of the plaintiff's financial situation and the proposed litigation funding agreement, was compelling. Consequently, the court decided that it was appropriate to impose security for costs on the defendant to protect against the risk of unrecoverable costs. This decision was based on the specific facts of the case and the financial realities faced by the plaintiff.

The court's final order required the defendant to provide security for costs in the amount specified in the court's judgment. This decision underscores the importance of considering the unique circumstances of each case when deciding on the imposition of security for costs, particularly in cases involving financially distressed plaintiffs.

Orders

Orders of the court

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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

In addition to what is said in O 25 r 3, those factors are also relevant to the consideration of an application under O 25.[5][5] Crosswest Corporation Pty Ltd v Allstrike Enterprises Pty Ltd [2014] WASC 27 [14]. In support of the application the defendant filed an affidavit of Jonathon Peter Cook, the solicitor with the day to day conduct of the matter on behalf of the defendant, sworn 20 May 2015. Annexed to that affidavit is a copy of an extract of information from the Australian Securities and Investment Commission database, a copy of a circular to creditors of the plaintiff dated 23 October 2014 and a copy of the minutes of a meeting of creditors of the plaintiff held on 12 February 2015. On 1 December 2014 the creditors of the plaintiff resolved to wind up the plaintiff. George Aubrey Lopez and Evan Robert Verge were appointed as liquidators. On 23 October 2014, when Mr Lopez and Mr Verge were administrators of the plaintiff under a deed of company arrangement, Mr Lopez issued a circular to creditors of the plaintiff recommending that the deed of company arrangement be terminated. In that circular Mr Lopez provided information as to the plaintiff's financial performance and said that if the plaintiff were to be wound up it was highly unlikely that there would be any surplus to creditors after meeting secured creditors' claims and liquidators' remuneration and disbursements. The purpose of the creditors' meeting held on 12 February 2015 was to obtain the approval of the creditors for a litigation funding agreement. Mr Lopez informed the meeting that there were a number of unresolved matters relating to the lease of the land at Karratha. Any action by the liquidators would involve significant legal costs with uncertain outcome of recovery. The secured creditors Primero Investments Pty Ltd and Alis Nominees Pty Ltd had given their consent to provide financial support and an indemnity, including any adverse costs order, to the liquidator in respect to pursuing such action. The liquidators recommended that creditors resolve that the litigation funding agreement be ratified on the basis that the risks of the action would be with Primero Investments and/or Alis Nominees. Primero Investments and Alis Nominees were priority secured creditors who had advanced funds for wages and other costs. The entitlement to reimbursement for those advances and securities were with those companies and other creditors were no worse off if the action were successful or unsuccessful. The meeting ratified the litigation funding agreement. In opposition to the application the plaintiff has filed an affidavit of Ryan Allan McFarlane sworn 9 June 2015, an affidavit of Andrea Joan Jennings sworn 9 June 2015, an affidavit of Evan Robert Verge sworn 10 June 2015, a copy of an undertaking by the liquidators of the plaintiff made 21 May 2015 and an affidavit of Matthew David Reid made 25 June 2015. Mr McFarlane is a director of the plaintiff, the chief financial officer of the Primero Group Pty Ltd, the secretary of Primero Group, a director and secretary of Primero Investments and a shareholder of Primero Investments.