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Devine v Liu; Devine v Ho

Devine v Liu; Devine v Ho

Case [2018] NSWSC 1453 28 September 2018

Corporate Law & Governance

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Devine v Liu; Devine v Ho [2018] NSWSC 1453
Hearing dates: 7 September 2018
Date of orders: 28 September 2018
Decision date: 28 September 2018
Jurisdiction: Equity - Corporations List
Before: Parker J
Decision:
The orders of the Court are:

1. Direct that within 21 days the defendants bring in Short Minutes of Order:
a) giving effect to this judgment; and
b) providing, in the event of any disagreement as to the form of those orders, for directions for the filing of any necessary evidence and submissions with a view to a hearing to be fixed by arrangement with my Associate.
Catchwords:
PRACTICE AND PROCEDURE – applications – pleadings and particulars – application to amend statement of claim – strike out and summary judgment application – statement of claim pleaded claim concerning a director’s duty to prevent insolvent trading by company under Corporations Act 2001 (Cth), s 588G – where statement of claim did not plead how and when company incurred relevant debts – where statement of claim did not particularise the nature of reliance on the presumption of insolvency under Corporations Act 2001 (Cth), s 588E(4)

PRACTICE AND PROCEDURE – applications – security for costs order – general principles as to ordering security for costs against plaintiff liquidator – litigation funding – solicitors for the liquidator conducting proceedings on a “no win, no fee” basis

PRACTICE AND PROCEDURE – applications – security for costs order – general principles as to ordering security for costs against plaintiff liquidator – liquidator and company as co-plaintiffs – whether the company is a necessary party to voidable transaction and insolvent trading claims under the Corporations Act 2001 (Cth) – discussion of whether the joinder of a liquidator as co-plaintiff prevents the Court from ordering security even if co-plaintiff company is insolvent
PRACTICE AND PROCEDURE – costs – costs payable forthwith – difficulty in assessing costs in circumstances where statement of claim struck out but with leave for the plaintiff to re-plead claim
Legislation Cited: Civil Procedure Act 2005 (NSW), s 58
Companies Act 1862 (UK), s 69
Companies Act 1981 (Cth), s 451
Companies (Winding Up) Act 1890 (UK), s 10
Corporations Act 2001 (Cth), ss 9, 95A, 286, 565, 588C, 588E, 588FA, 588FB, 588FE, 588FF, 588G, 588J, 588M, 1335
Supreme Court Act 1970 (NSW), s 23
Uniform Civil Procedure Rules 2005 (NSW), r 42.21
Winding Up Act, RSC 1886 (Can), c 129, s 31
Cases Cited: Ariss v Express Interiors Pty Ltd (in liq) [1996] 2 VR 507
Australian Securities & Investments Commission v Plymin (2003) 175 FLR 124; [2003] VSC 123
Bell Wholesale Co Pty Ltd v Gates Export Corporation (1984) 2 FCR 1
Bibra Lake Holdings Pty Ltd v Firmadoor Australia Pty Ltd (1992) 7 WAR 1
Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460; [1967] HCA 3
Cowell v Taylor (1885) 31 Ch D 34
Green v CGU Insurance Ltd (2008) 3 BFRA…

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 Devine v Liu; Devine v Ho

Details

AGLC: Devine v Liu; Devine v Ho [2018] NSWSC 1453
Case: [2018] NSWSC 1453
Decision Date: 28 September 2018

CaseChat Overview and Summary

The defendants, Liu and Ho, applied to strike out the plaintiff Devine's statement of claim and for summary judgment, arguing that the statement of claim was deficient. Devine, as liquidator, sought to hold Liu and Ho liable for the company's debts, including claims for insolvent trading and voidable transactions under the Corporations Act 2001 (Cth). The Federal Court was asked to determine whether the deficiencies in the statement of claim were such that they warranted a strike out and summary judgment in favour of the defendants. Additionally, the defendants sought an order for security of costs against the plaintiff, arguing that the liquidator and the company, as co-plaintiffs, should provide security for costs. The liquidator contended that the company was not a necessary party to the claims and that the joinder of the liquidator as co-plaintiff should not prevent the court from ordering security of costs.

The court considered the legal principles governing the striking out of pleadings, the requirements for pleading insolvent trading claims, and the circumstances under which security for costs may be ordered. The court noted that the statement of claim did not adequately plead how and when the company incurred the relevant debts, nor did it sufficiently particularise the reliance on the presumption of insolvency. However, the court granted leave to amend the statement of claim to address these deficiencies. In relation to the security for costs, the court found that the liquidator, as a plaintiff, was required to provide security for costs. The court held that the joinder of the company as a co-plaintiff did not prevent the court from ordering security of costs against the liquidator. The court also considered the liquidator's funding arrangement and found that it did not affect the requirement for security of costs.

The court ordered that the statement of claim be struck out but granted leave for the plaintiff to amend it within 28 days. The court also ordered that security for costs be provided by the liquidator. The court further held that the liquidator and the company were jointly and severally liable for the defendants' costs of the application and any further costs incurred if the claim was re-issued and ultimately unsuccessful. Finally, the court ordered that the defendants pay the plaintiff's costs of the application forthwith, recognising the difficulties in assessing costs given the outcome of the strike out application.

Orders