Deepsilver Pty Ltd v Aquatherm Australia Pty Ltd - [2007] WASCA 171

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: DEEPSILVER PTY LTD -v- AQUATHERM AUSTRALIA PTY LTD [2007] WASCA 171

CORAM: BUSS JA

HEARD: 30 JULY 2007

DELIVERED : 17 AUGUST 2007

FILE NO/S: CACV 40 of 2007

BETWEEN: DEEPSILVER PTY LTD
Appellant
AND
AQUATHERM AUSTRALIA PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :COMMISSIONER SCHOOMBEE
Citation  :DEEPSILVER PTY LTD -v- AQUATHERM AUSTRALIA PTY LTD [2007] WADC 13
File No  :CIV 2415 of 2003

Catchwords:

Security for costs - Respondent's application for security for costs of the appeal - Corporate appellant - Section 1335(1) of the Corporations Act 2001 (Cth) - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 1335(1)
Rules of the Supreme Court 1971 (WA), O 63 r 10(5) (repealed)
Supreme Court (Court of Appeal) Rules 2005 (WA), r 3(1), r 44(1)

Result:

Application for security granted

Category: B

Representation:

Counsel:

Appellant: Mr D J Marsh
Respondent: Mr P Redding

Solicitors:

Appellant: Hotchkin Hanly
Respondent: Redding & Associates

Case(s) referred to in judgment(s):

Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485
Brundza v Robbie & Co (No 2) (1952) 88 CLR 171
Deepsilver Pty Ltd v Aquatherm Australia Pty Ltd [2007] WADC 13
FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 147
Harrington Services Pty Ltd (in liq) v Harrington [2003] NSWCA 89
Joseph v Joseph [2007] WASCA 27
Mann v Dabelstein [2006] WASCA 176
Strata Consolidated (Australia) Pty Ltd v Bradshaw [2000] NSWCA 114
Strata Consolidated (Australia) Pty Ltd v Bradshaw [2000] NSWCA 225
Uptown Sydney Development Corporation Pty Ltd v Bank of New Zealand (No 1) (1993) 11 ACSR 300
Winnote Pty Ltd (in liq) v Page (2005) 64 NSWLR 244

BUSS JA: The appellant has appealed to this Court against a judgment of Commissioner Schoombee in the District Court: Deepsilver Pty Ltd v Aquatherm Australia Pty Ltd [2007] WADC 13. After a trial, the learned Commissioner dismissed the appellant's claim against the respondent and allowed the respondent's counterclaim.
By an application in the appeal, the respondent has applied for an order that the appellant provide security for the respondent's costs of the appeal. The respondent relies upon the power to order security which is conferred by s 1335(1) of the Corporations Act2001 (Cth) and also upon the power contained in r 44(1) of the Supreme Court (Court of Appeal) Rules 2005 read with par (f) of the definition of "interim order" in r 3(1) of those Rules.

Section 1335(1) of the Corporations Act

Section 1335(1) of the Corporations Act 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 costs of the defendant if successful in his, her or its defence,…

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: [2007] WASCA 171
Decision Date: 17 AUGUST 2007

CaseChat Overview and Summary

The case of Deepsilver Pty Ltd v Aquatherm Australia Pty Ltd involved a dispute between the parties over an application for security for costs of an appeal. The matter was heard in the Supreme Court of Victoria. The primary issue before the court was whether section 1335(1) of the Corporations Act 2001 applied to corporate appellants in the context of an appeal. This legal question was pivotal because it determined whether Aquatherm, the respondent, could be required to provide security for the costs of the appeal by Deepsilver, the appellant. The court's decision hinged on interpreting the statute and understanding the historical application of similar provisions in both Australian and UK law.

The court examined the language of section 1335(1) and the historical context of its predecessor provisions. The court noted the differing views on whether such sections applied to appeals, with Kirby P expressing doubt in Uptown Sydney Development Corporation Pty Ltd v Bank of New Zealand (No 1). However, subsequent New South Wales cases had held that these provisions did apply to corporate appellants, as Mason P explained in Winnote Pty Ltd v Page. The court found Mason P's reasoning persuasive, particularly given the purposive approach to interpreting the legislation and its historical application. The court concluded that the language of the statute, when interpreted broadly, could indeed apply to corporate appellants, aligning with the consistent approach taken by courts in the UK and Australia over many years.

In reaching its decision, the court followed the New South Wales authorities that had consistently held section 1335(1) applied to corporate appellants. The reasoning in Winnote, along with other cited cases, provided a strong basis for interpreting the statute to include corporate appellants in appeals. The court acknowledged the persuasiveness of the purposive and expansive interpretation of the term 'plaintiff' as it applied to the context of appeals. Therefore, the court granted the application for security for costs, allowing Aquatherm to be required to provide such security to Deepsilver.

Orders

Orders of the court

Application for security granted

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

In Uptown Sydney Development Corporation Pty Ltd v Bank of New Zealand (No 1) (1993) 11 ACSR 300, Kirby P doubted that s 1335(1) of the Corporations Law (which is identical to s 1335(1) of the Corporations Act) was applicable to appeals. His Honour said, at 302:"The difficulty for the application of the section is presented by the use in it of the words 'plaintiff' and 'defendant' and the words 'action or other legal proceedings' and 'defence'. Those are words which, on their face, appear appropriate only to proceedings at first instance and not on appeal. A 'plaintiff' is a person who brings a plaint or action. On appeal, parties are normally described in this country as 'appellant' and 'respondent'. That would have been known to the legislature when it enacted s 1335(1) of the Corporations Law."Kirby P did not express a concluded view on the point. Subsequent decisions in New South Wales have held, however, that s 1335(1) of the Corporations Act, and its predecessor under the Corporations Law, apply to corporate appellants. See Strata Consolidated (Australia) Pty Ltd v Bradshaw [2000] NSWCA 114 and, on appeal, Strata Consolidated (Australia) Pty Ltd v Bradshaw [2000] NSWCA 225; Harrington Services Pty Ltd (in liq) v Harrington [2003] NSWCA 89; FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 147; Winnote Pty Ltd (in liq) v Page (2005) 64 NSWLR 244. In Winnote, Mason P said, at 248 [17] ‑ [18], in relation to the doubts expressed by Kirby P in Uptown Sydney Development:"With respect to [Kirby P], this view does did [sic] not accord with the liberal, purposive approach consistently taken over many years to a provision that can be traced back as far as s 69 of the Companies Act 1862 (UK). With only one exception of which I am aware, courts in the United Kingdom and Australia have seen no difficulty in ordering security for costs against appellant companies for well over a century, usually invoking the provision explicitly (see Re Diamond Fuel Co (1879) 13 Ch D 400; Re Photographic Artists' Co‑Operative Supply Association (1883) 23 Ch D 370; Re Consolidated South Rand Mines Deep Ltd [1909] 1 Ch 491, Gemelle Investments Pty Ltd v Commissioner of Taxation (1982) 7 ACLR 3; 1 ACLC 470 and J & M O'Brien Enterprises Pty Ltd v Shell Co of Australia Ltd (1983) 70 FLR 261 (Bowen CJ)). The exception to the last line of cases is Sinclair v Glasgow & London Contract Corporation Ltd (1904) 6F (Ct of Sess) 818, a case in which the reasoning is not reported. This Court has given the word 'plaintiff' in the provision an expansive meaning that extends to a defendant who has filed a crossclaim (Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301)." In my opinion, the reasoning of Mason P in Winnote is, with respect, persuasive, and the New South Wales authorities I have cited at [5] above should be followed in this State, especially as the issue concerns the proper construction and application of uniform national legislation. See Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492.