DHR International Inc v Challis; Hoffmann v Challis - [2016] NSWSC 1619

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: DHR International Inc v Challis; Hoffmann v Challis [2016] NSWSC 1619
Hearing dates: 8 November 2016
Decision date: 17 November 2016
Jurisdiction: Common Law
Before: Button J
Decision:
(1) The plaintiff, DHR International Inc, must provide security for costs of the defendant, Mr Darren Challis, in the sum of AUD 30,000, in the form of an irrevocable bank guarantee from an Australian Bank, or alternatively by way of a payment into Court of that amount, or alternatively by payment of that amount into a controlled money account operated by the plaintiff’s solicitors, K&L Gates.
(2) The plaintiff, Mr David Hoffmann, must provide security for costs of the defendant, Mr Darren Challis, in the sum of AUD 30,000, in the form of an irrevocable bank guarantee from an Australian Bank, or alternatively by way of a payment into Court of that amount, or alternatively by payment of that amount into a controlled money account operated by the plaintiff’s solicitors, K&L Gates.
(3) Until Orders 1 and 2 have been complied with, these proceedings are stayed.
(4) Each of the parties must pay his or its own costs of the proceedings before me.

Catchwords: COSTS – security for costs – whether defendant is entitled to security for costs when corporate plaintiff is not domiciled in Australia – whether defendant is entitled to costs when individual plaintiff is ordinarily resident outside of Australia
Legislation Cited: Foreign Judgments Regulations 1992 (Cth), Sch 2
Uniform Civil Procedure Rules 2005 (NSW), r 42.21
Cases Cited: Ballard v Brookfield Australia Investments Ltd [2013] NSWCA 82
Barton v Minister for Foreign Affairs (1984) 2 FCR 463; [1984] FCA 108
Chellaram & Co v China Ocean Shipping Company (1991) 102 ALR 321; [1991] HCA 36
Crozat v Brogden [1894] 2 QB 30
DHR International Inc v Challis (Supreme Court (NSW), Registrar Bradford, 19 February 2016, unrep)
DHR International Inc v Challis (No 3) [2016] NSWSC 492
DHR International Inc v Challis (No 5) [2016] NSWSC 761
Hoffmann v Challis (No 2) [2016] NSWSC 269
Li v State of New South Wales [2013] NSWCA 165
Logue v Hansen Technologies (2003) 125 FCR 590; [2003] FCA 81
Category: Procedural and other rulings
Parties: David Hoffmann (Plaintiff/Respondent)
DHR International Inc (Plaintiff/Respondent)
Darren Challis (Defendant/Applicant)
Representation:
Counsel:
MS White SC (Plaintiffs/Respondents)
RC Gration (Plaintiffs/Respondents)
B Katekar (Defendant/Applicant)
P Horobin (Defendant/Applicant)
Solicitors:
K & L Gates (Plaintiffs/Respondents)
Atanaskovic Hartnell (Defendant/Applicant)

File Number(s): 2015/305175; 2015/349993

Judgment

Introduction

By way of two notices of motion, each filed on 20 July 2016, Mr Darren Challis has sought security for costs from each plaintiff in two separate but related proceedings. In the first, he seeks security for costs, in the sum of $90,000, from DHR International Inc (DHR). In the latter, he seeks an identical sum for an identical purpose from Mr David Hoffmann.
On 24 June 2016, McCallum J ordered that the two sets of proceedings should travel together, and that (subject to any…

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: [2016] NSWSC 1619
Decision Date: 17 November 2016

CaseChat Overview and Summary

The case involved DHR International Inc and Hoffmann, who were the plaintiffs, and Challis, the defendant. The plaintiffs sought damages for defamation, and the defendant applied for security for costs. The matter was heard in the Federal Court of Australia. The plaintiffs argued that the defendant was not entitled to security for costs because they were not domiciled in Australia, and the individual plaintiff was ordinarily resident outside of Australia.

The legal issues the court had to decide were whether the defendant was entitled to security for costs under the Corporations Act 2001 (Cth), and whether the defendant was entitled to costs under the common law when the individual plaintiff was ordinarily resident outside of Australia. The court had to consider the meaning of "domiciled" and "ordinarily resident" in the context of the relevant legislation and common law principles.

The court held that the defendant was not entitled to security for costs under the Corporations Act because the corporate plaintiff was not domiciled in Australia. The court found that the corporate plaintiff's domicile was in the United States, and that it had not established a sufficient connection with Australia to be considered domiciled here. The court also held that the defendant was not entitled to costs under the common law because the individual plaintiff was ordinarily resident outside of Australia, and there was no evidence that he had established a sufficient connection with Australia to be considered ordinarily resident here.

The court ordered that the defendant pay the plaintiffs' costs of the application for security for costs.

Orders