Drummond - v - Yungur Six Pty Ltd

[2013] VCC 983

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

CIVIL DIVISION

Revised
Not Restricted

COMMERCIAL LIST
GENERAL CASES DIVISION

Case No. CI-13-00958

JAMIE DRUMMOND	Plaintiff
- v -
YUNGUR SIX PTY LTD (ACN 006 350 134) (trading as YUNGUR AVIATION SERVICES)	First Defendant
- v -
BRETT FOGGO	Second Defendant

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JUDGE:	HER HONOUR JUDGE KENNEDY
WHERE HELD:	Melbourne
DATE OF HEARING:	7 August 2013
DATE OF RULING:	16 August 2013
CASE MAY BE CITED AS:	Drummond – v – Yungur Six Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2013] VCC 983

REASONS FOR RULING
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Catchwords: Practice and Procedure – Security for costs application under rule 62.02(1)(a) of the County Court Civil Procedure Rules 2008 (Vic) on basis plaintiff ordinarily resident out of Victoria (in Queensland) – impecuniosity of a natural person– whether security appropriate on basis that no reasonable prospects of success – security refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Ribbands	Maitland Lawyers
For the Defendants	Mr R. Craig	Norton Gledhill

HER HONOUR:

1      This is the return of the defendants’ summons dated 8 July 2013 seeking orders that the plaintiff provide security for the defendants’ costs of the proceeding. 

2 The plaintiff accepted that the threshold requirement necessary to enliven a discretion to order security existed pursuant to rule 62.02(1)(a) of the County Court Civil Procedure Rules 2008 (Vic), namely, that the plaintiff is ordinarily resident out of Victoria in Queensland.

3      The evidence also suggested that the plaintiff had no real estate in Queensland or Victoria, nor did he adduce any evidence to suggest that he would be able to satisfy an order for costs.  In particular, no evidence was adduced as to his income.  Further, although there was a suggestion that he was “a Commercial helicopter pilot”, it was unclear whether he was permanently employed (he appeared to be currently “mustering” in the Northern Territory).[1]

[1]See Affidavit of Edward John Maitland of 7 August 2013 [3] and [11]. 

4 Although it therefore appears that the plaintiff is impecunious, the rationale for rule 62.02(1)(a) does not otherwise appear applicable. That rationale is the avoidance of costs and difficulties associated with enforcing a judgment of a Victorian Court in a foreign jurisdiction. [2]  No such difficulties were suggested in the current case wherein the provisions of the Service and Execution of Process Act 1901(Cth) would apply.[3]

[2]Nord v Truitt [1987] VicSC 530 (25 November 1987) [3] (Ormiston J).

[3]See s105(1) and (2).

5      The basic rule is also that a natural person who sues will not be ordered to give security however poor he is.[4] Instead, there is usually some other or additional factor present in order for an individual plaintiff to be ordered to provide security for costs.[5]

[4]Pearson v Naydler [1977] 3 ALL ER 531, 533 (Megarry VC).

[5]Knight v Beyond Properties Pty Ltd [2005] FCA 764 [33].

6      The defendants submitted that the additional factor in this case was the lack of the plaintiff’s prospects of success (and conceded that they needed to demonstrate there were no reasonable prospects of success in order to succeed).

7      A fundamental issue in the case was, therefore, whether the plaintiff had any reasonable prospects of success.

Nature of the case

8      The plaintiff is the owner of a helicopter purchased in December 2011. The first defendant is a corporation alleged to be the holder of a CASA approval as a delegate for issuing Certificates of Airworthiness. The second defendant is also said to be the holder of a CASA authority as a licensed maintenance engineer.

9      The proceeding centres on an allegation that in March 2007, the first and second defendants certified that they had inspected the helicopter and that the first defendant caused a Certificate of Airworthiness and a Maintenance Release to be issued in respect of that helicopter (para 4 Statement of Claim dated 28 February 2013).

10     The plaintiff alleges that the defendants owed a duty of care to the owner and subsequent owners of the helicopter in “carrying out the inspection and certifying…” (para 5). Further, that this duty was breached in failing to carrying out the inspection properly and incorrectly certifying (para 6), leading to loss and damage following the grounding of the helicopter in February 2012 and its disposal as scrap. 

11     In the alternative, the plaintiff alleges a claim for misleading and deceptive conduct arising from the false certification (para 7) and further alleges that the second defendant is a person “knowingly concerned” in that misleading conduct (para 9).  

Prospects of success

12     The defendants submitted that no negligence could be established in this case.  Firstly, they submitted that no duty of care existed. In so saying, they referred to a passage in Woolcock Street Investments Pty Ltd v CDG Pty Ltd & Anor,[6] which explained an earlier decision of Bryan v Maloney.[7] They also submitted that the plaintiff could not show the requisite degree of vulnerability such as to establish a duty of care.

[6](2004) 216 CLR 515 [14] (Gleeson CJ, Gummow, Hayne and Heydon JJ).

[7](1995) 182 CLR 609.

13     Secondly, the defendants submitted that no causation could be demonstrated.  Thus they highlighted the helicopter had flown some 500 hours between 2007 and 2012; that it had been the subject of multiple, positive maintenance releases; and that two further visual inspections had not revealed the damage allegedly in existence in 2007.

14     In terms of duty of care, the decision in Bryan arose wherein a builder was held to owe a duty of care to avoid economic loss which a  subsequent purchaser suffered as a result of the diminution in value of a house when the building cracked because of inadequate footings. In the relevant passage in Woolcock, the High Court said that the case was dependent on a finding that the builder owed the first owner a duty of care. The defendants thereby submitted that, given the economic loss now sought was already suffered at the relevant time (ie the damage, on the plaintiff’s own case, must already have been present), then no duty of care to avoid such loss would have been in existence to the original owner of the helicopter in 2007.     

15     However, the decision in Bryan is not exhaustive of circumstances in which a duty of care in relation to economic loss may exist. In Woolcock, itself, the court acknowledges that the principles “applicable in cases of negligently inflicted pure economic loss have evolved since Bryan v Maloney”.[8]   

[8]Woolcock Street Investments Pty Ltd v CDG Pty Ltd & Anor (2004) 216 CLR 515 [35].

16     In any event, the present case is distinguishable from both Woolcock and Bryan since this is not a case concerning domestic (or commercial) premises; rather this proceeding relates to a delegate of an authority carrying out an inspection and issuing a certificate in relation to a helicopter. 

17     I do not consider that this is the appropriate application to fully investigate all relevant authorities that may determine the issue of the duty of care in such a case. However, even on a preliminary examination, there appear to be decisions in Australia which have extended the range of persons to whom a defendant may owe a duty of care to include those whom it can readily be contemplated will rely on a certificate.[9] Such decisions appear to be based on a negligent misrepresentation. However, although clarification is warranted, the plaintiff’s case potentially encompasses such a claim (e.g. the duty is said to be owed both to carrying out the inspection and “certifying” in para 5).  

[9]See, for example, Pisano v Fairfield City Council (1991) 73 LGRA 184; Woollahra Municipal Council v Sved (1996) 40 NSWLR 101.

18      This is not to say that the plaintiff will be ultimately successful, particularly since the issues as to duty of care were not fully argued and potentially raise difficult issues of fact and law.  However, this is an application for security for costs rather than a strike out application.  In such circumstances, the   court is not obliged to consider the merits of a claim in detail which would be a waste of valuable court resources.[10]

[10]See cases cited in Civil Procedure Victoria (Williams) at 62.02.90; and see generally Civil Procedure Act 2010 (Vic) ss 7–8.

19     Such considerations are also important in relation to matters such as “vulnerability” and causation which present issues of factual complexity and which are not appropriate for a resolution on this type of application.[11]

[11]And note that there was evidence even at this stage that there might have been some pre-existing damage before certification in 2007 from when the helicopter had been in the USA: see exhibit AJG5 to the Affidavit of Andrew John Green of 6 August 2013 at page 25; and see also exhibit EJM2 to the affidavit of Edward John Maitland of 7 August 2013, being a report of Mr Punshon, which states that, although the helicopter had likely suffered roll over damage, there had not been a recent heavy landing.

20      It is also significant that, even apart from the negligence action, there appears to be a bona fide misleading and deceptive case which is regular on its fact and discloses a cause of action.

21      Counsel for the defendants did not challenge this claim insofar as it is made against the first defendant. However, they submitted that the second defendant would not have had the requisite knowledge to be liable as an accessory to the misleading and deceptive conduct.[12]

[12]Citing, inter alia, Yorke v Lucas (1985) 158 CLR 661.

22      However, the second defendant appears to be sued as a principal and not just as accessory. This is apparent from the terms of paragraph 4 of the Statement of Claim (which alleges that both defendants “certified”) and also from paragraph 1 of the Further and Better Particulars dated 27 May 2013 wherein the plaintiff alleges that the certifications are signed “by the Second Defendant in his own right and for and on behalf of the First Defendant (emphasis added).”

23      Additionally, in the case of Compaq Computer Australia Pty Ltd v Merry &Ors,[13] (also cited by the defendants) although Finkelstein J did state that actual knowledge was necessary, he also said that “where there is a combination of suspicious circumstances and a failure to make an enquiry it may be possible to infer knowledge of the relevant essential matters (emphasis added).”[14] These will be matters for the trial judge to consider, particularly in a case concerning omissions.

[13](1998) 157 ALR 1.

[14]Compaq Computer Australia Pty Ltd v Merry &Ors (1998) 157 ALR 1, 4.

24     Overall, then, although there may be difficulties faced by the plaintiff in maintaining this case, I am unable to be satisfied that the case is hopeless with no reasonable prospects of success. Consistent with the concession of the defendant it thereby follows that the application for security should fail. 

25     It is unnecessary, in such circumstances, for me to consider the question of delay, which would also potentially weigh against the grant of the application in any event.   

Conclusion

26     The defendants’ Summons dated 8 July 2013 should be dismissed. 

27     I will hear from the parties on the question of costs.