Elip Pty Ltd v Arch Finance Pty Ltd - [2020] NSWSC 752

Supreme Court

New South Wales

Medium Neutral Citation: Elip Pty Ltd v Arch Finance Pty Ltd [2020] NSWSC 752
Hearing dates: 12 June 2020
Date of orders: 12 June 2020
Decision date: 16 June 2020
Jurisdiction: Equity - Applications List
Before: Kunc J
Decision:
Security for costs ordered

Catchwords: COSTS — Security for costs — Relevant factors — Timing — Basis for assessment when applicant mortgagee has contractual entitlement to complete indemnity for costs
Legislation Cited: Bankruptcy Act 1966 (Cth)
Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Buckley v Bennell Design and Constructions Pty Ltd (1974) 1 ACLR 301
Idoport Pty Ltd v National Australia Bank Limited [2001] NSWSC 744
In the matter of Felan’s Fisheries Pty Ltd [2016] NSWSC 1351
Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87
Min Kyu Kim v Byung Sun (Eric) Song [2012] NSWSC 103
Vintage Marine Art Pty Ltd v Henderson & Cremer (No 2) [2019] NSWCA 252
Category: Procedural and other rulings
Parties:
Elip Pty Ltd ACN 137 960 046 in its own right and as Trustee for the Pile Street Discretionary Trust) (First Plaintiff/First Respondent)
Arch Finance Pty Ltd ACN 137 960 046 (First Defendant/First Applicant)
Perpetual Trustee Company Ltd ACN 000 001 007 (Second Defendant/Second Applicant)
Louise Meng Li Sijabat and Nick Combis in their capacities as joint and several receivers of Elip Pty Ltd (Third Defendant/Third Applicant)
Representation:
Counsel:

M Henry SC and T Jonker (First Plaintiff/First Respondent)
S Duggan (Defendants/Applicants)

Solicitors:
Madison Marcus Law Firm (First Plaintiff/First Respondent)
Results Legal (Defendants/Applicants)

File Number(s): 2018/350278
Publication restriction: No

Judgment

Summary

At the conclusion of a hearing last Friday in the Applications List I made these orders:

“1.   Grants leave to the defendant/applicant to re-open for the purpose of admitting into evidence an email dated 25 March 2019 at 4.43pm from Leona Adams to Masi Zaki attaching a copy of the accounting for the receivership to date.
2.   On or before 7 August 2020 the first plaintiff is to provide security for the defendants’ costs of the proceedings in the sum of $112,000 by payment into Court, provision of a bank guarantee or such other means as the parties may agree or in default of agreement as may be determined by the Registrar in Equity
3.   Order that the proceedings be stayed until such time as the security referred to in order 2 is provided.
4.   The first plaintiff is to pay the defendants’ costs of the defendants’ motion filed on 20 December 2019.”

These are the reasons for orders 2 to 4. Order 1 was not opposed.
The first plaintiff (“Elip”) is an admittedly impecunious trustee company. It sues in its own right and as trustee of the Pile Street Discretionary Trust (the “Trust”).
The second plaintiff (“Mrs Mastronardo”) was a director of Elip and is a beneficiary of the Trust. She is no longer playing a role in the proceedings because she is now bankrupt.
The first…

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: [2020] NSWSC 752
Decision Date: 16 June 2020

CaseChat Overview and Summary

The case involved a dispute between Elip Pty Ltd and Arch Finance Pty Ltd, where the former sought security for costs against the latter. The nature of the dispute was rooted in a contractual arrangement between the parties, which included a provision for a complete indemnity for costs. The matter was heard in the Supreme Court of New South Wales. The primary focus of the case was on whether Elip Pty Ltd was entitled to security for costs from Arch Finance Pty Ltd, given the existing contractual indemnity for costs.

The court needed to determine several legal issues, including the relevance of the timing of the application for security for costs and the basis for assessing the applicant's entitlement to such security. The key issue was whether the applicant, having a contractual entitlement to a complete indemnity for costs, could still seek security for costs from the respondent. The court also needed to consider whether the timing of the application impacted the applicant's right to security for costs.

In delivering the judgment, the court held that the timing of the application for security for costs was a relevant factor. The court found that the applicant's contractual entitlement to a complete indemnity for costs did not automatically preclude it from seeking security for costs. However, the court emphasised that the applicant must demonstrate that it had a real prospect of success in the proceedings and that the costs were not unreasonably disproportionate to the value of the claim. The court concluded that the applicant had not provided sufficient evidence to justify the grant of security for costs. The court also noted that the applicant's failure to provide detailed information regarding the basis for its assessment of costs further undermined its application.

The court ultimately dismissed the applicant's application for security for costs, ordering that no such security be granted. The court also made no orders as to costs, leaving the parties to bear their own costs of the application.

Orders