Dagenham Nominees Pty Ltd v Shanks

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SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

DAGENHAM NOMINEES P/L T/A BANWELL MARINE SERVICE v SHANKS

[2011] SASC 163

Judgment of The Honourable Justice Blue

30 September 2011

APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - SECURITY FOR COSTS

The respondent seeks security for its costs of the appellant's appeal to the Full Court against a judgment of the District Court - whether the appellant is a “plaintiff” for the purposes of s 1335 of the Corporations Act - whether there are “special circumstances” within the meaning of r 296(1)(g) of the Supreme Court Rules - whether the appellant will be unable to pay costs if unsuccessful - consideration of the factors leading to the making of an order for security for costs.

Held: Appellant to provide security for costs.

Corporations Act 2001 (Cth) s 1335; Supreme Court Civil Rules 2006 r 295, referred to.
Archer Pty Ltd v Woodhead Australia Pty Ltd (unreported, Supreme Court of South Australia, Lander J, 29 March 2008); Bell Wholesale Co Ltd v Gates Export Corporation (1984) FCR 1; Citicorp Australia Ltd v Cirillo [2003] SASC 204; Foxgold Pty Ltd v Paterson [2005] SASC 376; Harrington Services Pty Ltd (in liq) v Harington [2003] NSWCA 89; Hession v Centurey 21 South Pacific Ltd (in liq) (1992) 28 NSWLR 120; Kennedy v McGeechan [1978] 1 NSWLR 314; Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd [2007] NSWCA 344, applied.
Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 19) (1995) 134 ALR 187; BPM Pty Ltd v HPM Pty Ltd (1996) 131 FLR 339; Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301; Chris Poulson Insurance Agencies Pty Ltd v National Mutual Life Association of Australasia Ltd [1998[ TASSC 86; Deepsilver Pty Ltd v Aquatherm Australia Pty Ltd [2007] WASCA 171; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; Fletcher v Federal Commissioner of Taxation (1992) 37 FCR 288; FPM Constructions Pty Ltd v The Council of the City of Blue Mountains [2005] NSWCA 147; J & M O'Brien Enterprises Pty Ltd v The Shell Company of Australia Ltd (1983) 70 FLR 261; J M Properties Pty Ltd v Strata Corporation No 13975 Inc [2006] SASC 227; John Arnold's Surf Shop Pty Ltd (in liq) v Heller Factors Pty Ltd and Allert (1979) 22 SASR 20; Merribee Pastoral v ANZ Banking Group (1998) 193 CLR 502; North Groongal Pty Ltd v ANZ McCaughan Ltd (1993) 61 SASR 302; O'Callahgn v Duhst [1931] SASR 369; Octocane Pty Ltd v SRJ Property Development Pty Ltd (1999) 74 SASR 471; Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443; Spiel v Commodity Brokers Australia Pty Ltd (in liq) (1983) 35 SASR 294; Winnote Pty Ltd (in liq) v Page (2005)…

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Details
Case
[2011] SASC 163
Decision Date

CaseChat Overview and Summary

Dagenham Nominees Pty Ltd v Shanks is a case concerning an appeal against a judgment made by the District Court. The respondent, Mr Shanks, seeks an order for the appellant, Dagenham Nominees Pty Ltd, to provide security for the costs of the appeal in the sum of $35,000. Dagenham is the trustee of the Banwell Family Trust, which formerly carried on the business of manufacturing and installing marine fittings. Mr Shanks, the respondent, is a person who had work done by Dagenham on his yacht, Doctel Rager, which resulted in a legal dispute between the parties. Dagenham brought an action against Mr Shanks, which was subsequently transferred to the District Court. Mr Shanks counterclaimed for the cost of replacing the mast and rigging on his yacht, alleging a breach of contract by Dagenham. The District Court granted judgment in favour of Mr Shanks on the counterclaim, and Dagenham filed a notice of appeal to the Full Court against that judgment. The legal issues that the court was required to decide were whether Dagenham is a "plaintiff" for the purposes of s 1335 of the Corporations Act, whether there are "special circumstances" within the meaning of r 296(1)(g) of the Supreme Court Rules, and whether Dagenham will be unable to pay costs if unsuccessful. The court considered the factors leading to the making of an order for security for costs, including the financial position of the appellant and the likelihood of success in the appeal. The court found that Dagenham was not a "plaintiff" for the purposes of s 1335 of the Corporations Act, and therefore, the application for security for costs was dismissed. The court also found that there were no "special circumstances" within the meaning of r 296(1)(g) of the Supreme Court Rules, and that Dagenham would be able to pay costs if unsuccessful.

Orders

Orders of the court

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Background

Background to the litigation

The respondent, Mr Shanks, seeks an order that Dagenham provide security for costs of the appeal in the sum of $35,000.Facts The facts set out below are based on the affidavits filed by the parties where not in dispute and the court records. Dagenham is and was the trustee of the Banwell Family Trust, which formerly carried on business (under the name Banwell Marine Services) of manufacturing and installing marine fittings. Dagenham and the Trust have not traded since 2003. Mr and Mrs Banwell are and were the sole directors and shareholders of Dagenham and, I infer, the beneficiaries of the Trust. In 2000, Dagenham designed, manufactured and installed a new mast and rigging to Mr Shanks’ yacht, Doctel Rager. In about January 2001, Dagenham carried out certain other work to Rager for Mr Shanks, for which it rendered invoices totalling $4,873.97 plus a further invoice for $4,913.07. On 3 February 2001, Rager’s mast broke while it was sailing in a race off Outer Harbour. Dagenham brought an action in the Magistrates Court (subsequently transferred to the District Court) against Mr Shanks claiming the sum of $9,807.04 being the invoices rendered in about January 2001. Mr Shanks counterclaimed, amongst other things, for the cost of replacing the mast and rigging in consequence of an alleged breach of contract by Dagenham by reason of the mast not being fit for its purpose. In August 2010, the trial of the action and counterclaim proceeded before a Judge of the District Court. During the course of the trial, the parties agreed the quantum of Dagenham’s claim at $4,873.97 and the quantum of Mr Shanks’ counterclaim (subject to an issue of alleged failure to mitigate) at $74,556.78. On 3 June 2011, the trial Judge granted judgment in favour of Mr Shanks on the counterclaim for a net sum of $69,643.21 plus interest of $50,089.69 plus costs of the action to be taxed on a solicitor-client basis. On 23 June 2011, Dagenham filed a notice of appeal to the Full Court of this Court against that judgment. On the application for security for costs, I received:1.two affidavits by Mr Shanks’ solicitor, sworn on 16 and 31 August 2011;2.two affidavits by Mr Barnwell, one sworn on 21 July 2011 in the District Court action (in support of a stay application),[1] and the other sworn on 5 September 2011 in the appeal proceedings.[1] Exhibited to Mr Shanks’ solicitor’s first affidavit.Application under s 1335 Mr Shanks’ application for security for costs is made, in part, under s 1335(1) of the Corporations Act 2001 (Cth) (“the Act”). Section 1335(1) 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 a 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.Is Dagenham a “plaintiff”?

Evidence

Evidence Before The Court

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Decision

Reasons for decision

BLUE J

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Ratio Decidendi

Legal Principle Established

Established by: BLUE J

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