Devine v Liu; Devine v Ho

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.