Copson, M v DCM Coffee & Donuts Pty Ltd - [1996] FCA 489

IN THE FEDERAL COURT OF AUSTRALIA    )
QUEENSLAND DISTRICT REGISTRY        )    No. QG 175 of 1995
GENERAL DIVISION  )

BETWEEN: MARK COPSON and ROSLYN CORAL COPSON

Applicants

AND: DCM COFFEE AND DONUTS PTY LTD and IAN NORRISS

Respondents

CORAM: Spender J
PLACE: Brisbane
DATE: 4 June 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

(1)the cross-claim of DCM Coffee and Donuts Pty Ltd be stayed, unless within sixty days of today it provides security in the sum of $10,000.00 to the satisfaction of the Registrar for the prosecution of its cross-claim;

(2)the costs of the applicants on the application for security for costs should be their costs on the cross-claim.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA    )
QUEENSLAND DISTRICT REGISTRY        )    No. QG 175 of 1995
GENERAL DIVISION  )

BETWEEN: MARK COPSON and Roslyn Coral COPSON

Applicants

AND: DCM COFFEE AND DONUTS PTY LTD and IAN NORRISS

Respondents

CORAM: Spender J
PLACE: Brisbane
DATE: 4 June 1996

REASONS FOR JUDGMENT

This is an application for security for costs filed on 17 May this year in which applicants, Mark William Copson and Roslyn Coral Copson, seek an order that the first respondent, DCM Coffee and Donuts Pty Ltd, provide security for costs in relation to its cross-claim against the applicants. The principal proceedings involve allegations of misleading and deceptive conduct against the respondents in respect of profitability forecasts for a coffee and donut shop to be conducted at Capalaba. The essence of the allegation is that there was no sufficient basis for those forecasts.

By a cross-claim the first respondent seeks to recover lost franchise fees, loss of the use of money, and damages from the entry into the Capalaba lease. The circumstance is the usual one where the franchisor has a lease in respect of the premises and a sub-lease or licence was to be granted to the applicants for the conduct of the franchised business.

The test on an application for security for costs is not in dispute; it is whether the court is satisfied that there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if the defendant is successful in its defence.

On a preliminary question, it was argued on behalf of DCM Coffee and Donuts Pty Ltd ('DCM'), that DCM was a cross-claimant whose claim, in reality, was a defence as opposed to a distinct and separate claim, and therefore there was no basis for the granting an order for security for costs. The observations of the Court of Appeal in Buckley v Bennell Design and Constructions Pty Limited (1974) 1 ACLR 301 were relied on. In that case, the Court concluded that where an impecunious company is a defendant in an action and seeks to put forward a cross-claim which amounts in reality to a defence of the action, there is…

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 Copson, M v DCM Coffee & Donuts Pty Ltd

Details

AGLC: Copson, M v DCM Coffee & Donuts Pty Ltd [1996] FCA 489
Case: [1996] FCA 489
Decision Date: 4 Jun 1996

CaseChat Overview and Summary

In this case, the applicants Mark William Copson and Roslyn Coral Copson filed an application for security for costs against DCM Coffee and Donuts Pty Ltd, the first respondent, regarding its cross-claim. The principal matter involves allegations of misleading and deceptive conduct in relation to profitability forecasts for a coffee and donut shop at Capalaba. DCM seeks to recover lost franchise fees, loss of the use of money, and damages from the entry into the Capalaba lease. The court was required to decide whether DCM should provide security for costs in relation to its cross-claim against the applicants. The court considered the nature of the cross-claim, the financial status of DCM, and the potential impact of an order for security on the litigation process.

The court found that DCM's cross-claim was properly characterised as a separate and distinct claim. It was satisfied that there was reason to believe that DCM would be unable to pay the costs of the applicants if they were successful in defending the cross-claim. The court also considered factors such as laches, the potential stifling of litigation, and the impecuniosity of DCM. In light of these considerations, the court ordered that DCM's cross-claim be stayed unless it provided security in the sum of $10,000 within sixty days. The court further ordered that the costs of the applicants on the application for security for costs should be their costs on the cross-claim. This decision aimed to balance the applicants' right to protection against excessive costs with the need to ensure that the litigation process is not unduly hindered.

Orders