Re: DRUMDURNO PTY. LIMITED and RODONO PTY. LIMITED And: MELVYN MARTIN BRAHAM; ADELE CLAIRE BRAHAM; DANIEL SLATER and JOSEPH KNOWL (1982) 64 FLR 227 No. VG37 of 1982 Practice and Procedure - Practice 7 ACLR 131
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY GENERAL DIVISION Sweeney J.(1)
CATCHWORDS
Practice and Procedure: -application by first and second named respondents for an order that the applicants provide security for costs - discretion of the court to make such an order - whether applicants had a reasonably good prospect of success - whether applicants want of means had been brought about by the wrongful conduct of the respondents - whether applicants' claim was bona fide and not a sham - whether the proceedings involved matters of public importance - whether the respondents were using the application oppressively - whether the making of such an order would mean that the applicants' claim would be at an end - no evidence of willingness and means of the shareholders of the applicant companies to assist - exercise of discretion.
Federal Court of Australia Act (C'th): S56
Companies Act (Vic): S363
Practice - Security for costs - Action by impecunious companies - Merits of applicants' cases - Whether respondents had contributed to applicants' impecuniosity - Whether application oppressive - Federal Court of Australia Act 1976 (Cth), s. 56(1) - Companies Act 1961 (Vic.), s. 363.
HEADNOTE
The applicants had brought proceedings against the respondents alleging breaches of Pt V of the Trade Practices Act 1974 in connexion with the creation of a franchise agreement between the applicants as franchisee and a company, of which the respondents were directors, as franchisor. The applicants were corporations with small paid-up capitals. The second respondent by affidavit denied the allegations of the applicants, while the first respondent indirectly, by his solicitor's affidavit, denied those allegations. The first applicant amended its application to delete any claim against the second respondent. The respondents brought an application seeking security for costs.
Held: (1) It had not been shown that any conduct of the respondents had led to the impecuniosity of the applicants.
(2) (a) The second applicant had not established a reasonable prospect of succeeding in its action against the second respondent. (b) The applicants' claim against the first respondent appeared to be bona fide.
[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.
The case of Drumdurno Pty Ltd v Braham involved a legal dispute before the court, with Drumdurno Pty Ltd and its director, as well as two other companies, bringing claims against the respondents. The respondents sought an order for security for costs, arguing that the applicants lacked the financial means to cover potential costs and that their claims were not particularly strong. The court was tasked with determining whether the applicants had a reasonable prospect of success, if their financial situation was due to wrongful conduct by the respondents, whether the claims were genuine, and if the proceedings involved matters of public importance.
The court considered several factors in exercising its discretion regarding security for costs. It examined the applicants' prospects of success, noting that there was no strong evidence of a reasonable chance of prevailing. Additionally, the court found that the applicants' financial difficulties were not due to any wrongdoing by the respondents. The claims were also deemed not to be of public importance, and there was no indication that the respondents were using the application oppressively. The court concluded that an order for security for costs would not necessarily prevent the applicants from continuing with their claims.
Following this analysis, the court ruled that the applicants must provide security for costs to the respondents. Specific amounts for this security were to be determined later. The court also granted the respondents the right to apply for further orders if necessary and reserved questions regarding costs for future determination. This decision ensured that the respondents would not be unduly burdened by the costs of the proceedings, while still allowing the applicants to pursue their claims.
Orders
Orders of the court
1. that the applicants provide security for the costs of the first named respondent in respect of the period up to the point where all interlocutory steps in the application have been completed, in an amount to be decided hereafter.
2. that the first named applicant provide security for the costs of the second named respondent in respect of the period up to 15 June 1982 when the first named applicant obtained leave to amend the application so as to delete any claim by it against the second named respondent, in an amount to be decided hereafter.
3. that the second named applicant provide security for the costs of the second named respondent in respect of the period up to the point where all interlocutory steps in the application have been completed, in an amount to be decided hereafter.
4. that liberty be reserved to any party to apply generally, upon seven days notice to the other parties.
5. that all questions of costs be reserved. Orders accordingly.