Dae Bo Corporation v Xypteras
[1990] TASSC 106
•19 June 1990
Serial No B29/1990
List “B”
COURT: SUPREME COURT OF TASMANIA
CITATION: Dae Bo Corporation v Xypteras [1990] TASSC 106; B29/1990
PARTIES: DAE BO CORPORATION
FLINDERS SEAFOOD PTY LTD
v
ZYPTERAS, Jan Demetrius
ZYPTERAS, Penelope
FILE NO/S: 1259/1988
DELIVERED ON: 19 June 1990
JUDGMENT OF: Master Southee
Judgment Number: B29/1990
Number of paragraphs: 17
Serial No B29/1990
List "B"
File No 1259/1990
DAE BO CORPORATION and FLINDERS SEAFOOD PTY LTD
v JAN DEMETRIUS ZYPTERAS and PENELOPE XYPTERAS
REASONS FOR JUDGMENT MASTER SOUTEE
19 June 1990
The second and third defendants (hereinafter called "the defendants") have filed an interlocutory application seeking an order that the plaintiff provide security for costs pursuant to the provisions of s533(1) of the Companies (Tas) Code and that all proceedings in respect of the plaintiff's claim be stayed until such security is given.
Section 533(1) is as follows:
"Where a corporation is plaintiff in any action or other legal proceedings, 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 costs of the defendant if successful in his defence, require sufficient security to be given for those costs and stay all proceedings until the security is given."
The plaintiff pleads in paragraph 1 of the statement of claim that it is a corporation incorporated under the laws of the Republic of South Korea and having its registered office in that country.
It appears that the plaintiff has no assets in Australia. On 14 February 1990 the solicitors for the defendants wrote to the plaintiff's solicitors, inter alia, in the following terms:
"We note that your client is a foreign trading corporation. Would you please advise us of your client's asset position in this country for if it has no assets in this country it is reasonable to assume that it will not be able to meet any costs that our clients will incur in the successful defence of this action. Unless we receive a response to this aspect of the matter within fourteen (14) days we will apply to the Court for an order for security for costs."
The plaintiff's solicitors replied on 12 March 1990 to the defendants' solicitor's letter, but did not advise whether the plaintiff had any assets in this country. A search made by a clerk of the defendants' solicitors discloses that the plaintiff does not hold any land in Tasmania.
Upon this evidence the defendants have, in my view, satisfied the "threshold question" as Nettlefold J called it in Heritage Boats Pty Ltd v GRE Insurance Ltd Tas. Unreported Judgment, Serial No. B51986. That is, "does it appear by credible testimony that there is reason to believe that the Corporation will be unable to pay the costs of the defendant if successful in his defence."
The plaintiff, in a writ and statement of claim filed on 4 November 1988, sues the defendants for the sum of $13,000 and damages for moneys had and received by the defendants to the use of the plaintiff, breach of contract and misrepresentation. The claim arises out of an alleged agreement wherein the plaintiff agreed to purchase abalone shell from the first defendant and in respect of which moneys were paid in advance for such purchases. The statement of claim alleges that the defendants applied the balance of the plaintiff's moneys to their own use, thereby wrongfully denying the plaintiff of the benefit of same.
In Heritage Boats Pty Ltd v GRE Insurance Ltd (supra) Nettlefold J set out some of the considerations which it is relevant to consider upon an application for security for costs, (see pages 2 and 3). One of these is:
"(e) Whether the defendant was using the application for an order for security for costs oppressively so as to try to stifle the genuine claim of the applicant."
Mr Young of counsel for the plaintiff referred to an alleged "Acknowledgement" of debt by the second defendant (see Annexure "A" to the answers to interrogatories administered by the plaintiff and referred to in his affidavit filed on 3 April 1990). But, Mr Gunson of counsel for the defendants submitted that the legal effect of this document, which only refers to the second defendant, is a matter which can only be determined at trial and, as the pleadings presently stand, is not a cause of action upon which the plaintiff relies. An affidavit was also filed on 4 April 1990 by Song Kang who deposes that the second defendant signed the acknowledgement in his presence and later offered to pay to the plaintiff the sum of $8,000, by instalments, but that the offer was refused. Mr Song Kang also deposes that he was acting as the plaintiff's agent at the time the offer was made.
The defendants' defence contains a mere denial of the material allegations pleaded in the statement of claim. Nor do the affidavits filed on behalf of the defendants indicate the nature of its defence to enable me to determine whether the defendants appear to be using this application for security for costs oppressively or in an endeavour to stifle the genuine claim of the applicant. As the High Court said in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at p98:
"They must, as was said by Lord Blackburn in Wallingford v Mutual Society (25) condescend upon particulars ...".
That case was concerned with a defendant's resistance to a summary judgment application, but, in my view, the same principle is relevant to the matters before me on this application. A mere denial does no more than put the other party to proof of the allegations denied (see Warner v Sampson [1959] 1 QB 297).
Counsel for the plaintiff also raised the question of delay by the defendants in making this application and their failure to provide an explanation for such delay. Where the delay has been long and the plaintiff has prior to the application incurred substantial costs then such delay may lead to the refusal to make an order for security for costs. In other cases a court may decide to make an order only as to future costs. (See Electrona Carbide Industries Pty Ltd & Anor v The Tasmanian Government Insurance Board & Others [1985] Tas R 68 at p73). I do not consider that the delay in this matter has been such as to deprive the defendants of a security for future costs of the action if, on other grounds, the discretion should be exercised to grant the application.
Mr Young further submitted that I should refuse to order security for costs on the ground of the defendants' contempt in failing to pay the sum of $407.95 being the taxed costs of an interlocutory order made on 14 December 1989 and in respect of which Certificate of Taxation was served on 3 April 1990. He referred to Burnett v Burnett & Taylor (1903) 20 NSW (WN) 168 in support of this submission.
Apart from any question of contempt it would not in my view be just to make an order for security for costs unless the existing order for costs against the defendants was paid prior to the granting of the defendants' present application.
Even though the threshold test under s533(1) of the Companies (Tas) Code has been satisfied the court still has a discretion whether or not to order security for costs against the plaintiff having regard to all the circumstances of the particular case. (See Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] 1 QB 609). As Bowen LJ said in Gardner v Jay (1885) 29 Ch D 50 at p58:
"That discretion, like other judicial discretions, must be exercised according to common sense and according to justice, and if there is a miscarriage in the exercise of it it will be reviewed, but still it is a discretion and for my own part I think that when a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?"
The defendants have not satisfied me, as the pleadings now stand and upon the evidence before me upon this application, that they have a defence on the merits or that they are not using the application for an order for security for costs oppressively so as to try to stifle the genuine claim of the plaintiff.
The application is therefore refused.
0
1
0