Hinchinbrook Boating Pty Ltd v Bale
[2010] QSC 285
•5 August 2010
SUPREME COURT OF QUEENSLAND
CITATION:
Hinchinbrook Boating Pty Ltd & Anor v Bale & Ors [2010] QSC 285
PARTIES:
Hinchinbrook Boating Pty Ltd
(ACN 113 631 646)
AND
Hunter Fishing Co. Pty Ltd
(ACN 010 479 697)
(Plaintiffs)
Gregory Robert Bale, Steven Daniel, James Daniel, Kurt Lunch and Russel McDonald
(Defendants)
FILE NO/S:
658 of 2009
DIVISION:
Trial Division
PROCEEDING:
Applications
ORIGINATING COURT:
Supreme Court at Townsville
DELIVERED ON:
5 August 2010
DELIVERED AT:
Townsville
HEARING DATE:
30 July 2010
JUDGE:
Cullinane J
ORDER:
(a) That the plaintiff give security for costs in the sum of $20,000 by deposit with the Registrar or otherwise as the Registrar thinks fit or alternatively;
(b) by providing an unconditional and irrevocable bank guarantee to the Defendants in the amount of $20,000.
(c) The action be stayed while such security is provided.
(d) The Plaintiffs pay the Defendants costs of and incidental to the application to be assessed.
CATCHWORDS:
COSTS – SECURITY FOR COSTS – where the defendants have applied for the plaintiffs to give security for costs of and incidental to the proceeding – where the plaintiffs claim damages relating to the sinking of a vessel owned by the first plaintiff and used by the second plaintiff – where the plaintiffs have fixed and floating charges over their assets – where the plaintiffs hold no real property in Queensland – whether the plaintiffs will be able to pay costs – whether delays are sufficient to warrant the dismissal of the application – whether the proceedings are primarily concerned with the disposition of the defendant’s counterclaim rather than the plaintiff’s claim
COUNSEL:
Mr Fleming QC for the Plaintiffs
Mr Wesling-Smith for the Defendants
SOLICITORS:
Connolly Suthers for the Plaintiffs
Schultz Toomey O’Brien Lawyers for the Defendants
The defendants have applied in this matter for an order that the plaintiffs give security for costs of and incidental to the proceeding.
The plaintiffs have instituted proceedings against the defendants, claiming damages relating to the sinking of a vessel owned by the first plaintiff and used by the second plaintiff in the business of a boat and ship hirer at Hinchinbrook Island.
It is common ground that in October 2006 a contract was entered into for the charter of the vessel between the defendants and the second plaintiff in respect of the first plaintiff's vessel, "Sheeba". The contract is alleged to be partly oral and partly in writing.
The plaintiffs allege that it was a term of the contract that the vessel would not be sailed or operated by the defendants north of the Point Hinchinbrook Marina and in particular, would not be operated in Missionary Bay.
It is common ground that the vessel sank whilst in Missionary Bay. It is alleged that the vessel was operated and sailed negligently in breach of the contract. The plaintiffs have suffered loss including the cost of salvage of the vessel and a reduction in its value.
The defendants deny liability and allege that the plaintiffs claim that they made false and misleading representations to them that the vessel was insured. A statement which is said to be to this effect appears in the written contract.
A claim is made under the Trade Practices Act in this regard and part of the loss claimed is based upon any sum in which the defendants are held liable t the plaintiffs.
There is an issue as to the suitability of the vessel for charter.
The defendants by application filed on 24 June 2010, applied for judgment on the pleadings. This was unsuccessful.
There is an affidavit by Michael William Keller, the solicitor for the defendants in support of the application.
Mr Keller deposes to the fact that he conducted a company search in relation to the two plaintiff companies. These reveal that a bank holds fixed and floating charges over the assets of both plaintiffs. Property searches disclose that neither plaintiff owned any property in Queensland. The paid up capital of each plaintiff company is nominal.
Mr Muller wrote to the solicitors for the plaintiffs by letter dated 19 May 2010. The purpose of the letter was to make demand upon the plaintiffs to provide security for costs. He set out in that letter his estimate of the costs and expenses associated with the trial of the matter. The total of these sums is some $42,000. He asked the solicitors for the plaintiffs to provide security within the following seven days.
The letter was not replied to and a further letter dated 1 June 2010, in which he informed the solicitors for the plaintiffs that he was seeking instructions to make an order for security for costs was also not replied to.
No material was filed on the application by the plaintiffs or by any director of the plaintiffs.
As will be seen Rule 671(a) provides that it is a prerequisite to the making of an order for security for costs that a Court be satisfied in the case of a corporation that there is reason to be believe that the plaintiff would not be able to pay the defendants' costs if ordered to pay them.
The relevant discretionary factor under Rule 672 is (d).
For the respondent it is contended that there are three grounds upon which the application should fail. These are the issues which arise on the application.
Firstly it is contended that there is no reason to believe that the plaintiff will not be able to pay the defendant's costs if ordered to pay them.
Whilst the fact that the paid up capital of each of the plaintiffs is a nominal sum it is not of itself sufficient to reach a conclusion adverse to the plaintiffs (see Marrick Productions Pty Ltd v Traders of Australia Pty Ltd (1959) QWN 11 it is not irrelevant.
Here the only evidence before the court is that there are fixed and floating charges over the assets, of both plaintiffs and neither holds any real property in Queensland. It is not readily apparent what other steps are open to the Defendants to establish the financial position of the Plaintiffs,
The plaintiffs as respondents to the application have chosen not to place before the Court any evidence as to the financial position of the plaintiffs or those who stand behind them and I think that the Court is entitled more readily in those circumstances to draw the conclusion that there is a real chance that the plaintiff company will be unable to pay. I am satisfied this is the case.
The second ground upon which it is said that the application should fail is delay.
The action was started on 29 September 2009. A defence was filed on 10 November 2009 and a reply on 4 December 2009.
As has already been said application for judgment on the pleadings was made in late March 2010 and an order dismissing this application made on 24 June 2010. Disclosure occurred in June 2010 and an amended reply and answer was filed in the last week.
I am not persuaded that in these circumstances there have been delays sufficient to warrant the dismissal of the application. No prejudice is alleged.
Finally, the plaintiffs contend that this is a case in which the court should regard the proceedings as primarily concerned with the disposition of the defendant's counterclaim rather than the plaintiff's claim. I cannot accept this submission. The counterclaim is substantially dependent upon the plaintiff's succeeding in the action.
I am satisfied then that the defendants have made out their claim for an order that security of the costs be provided. I think in the circumstances it would be appropriate to make an order in the sum of $20,000.
The formal orders of the Court are:
(a) That the plaintiffs give security for costs in the sum of $20,000 by deposit with the Registrar or otherwise as the Registrar thinks fit or alternatively;
(b) by providing an unconditional and irrevocable bank guarantee to the Defendants in the amount of $20,000.
(c) The action be stayed while such security is provided.
(d) The Plaintiffs pay the Defendants costs of and incidental to the application to be assessed.
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