I and J Formwork Pty Ltd v Donya Constructions Pty Ltd

[2021] NSWSC 940

Supreme Court

New South Wales

Medium Neutral Citation:

I and J Formwork Pty Ltd v Donya Constructions Pty Ltd [2021] NSWSC 940

Hearing dates:

On the papers

Decision date:

30 July 2021

Jurisdiction:

Equity - Technology and Construction List

Before:

Stevenson J

Decision:

Security for costs ordered

Catchwords:

COSTS – security for costs – where sole director and shareholder of corporate plaintiff offered undertaking to meet any costs order – where liabilities of director exceeded assets of director – where assets unlikely to be easily realised

Cases Cited:

Aquatic Air Pty Ltd v Siewert [2016] NSWCA 130

Bright Ceiling Systems Pty Ltd v Merhis Contracting Pty Ltd [2016] NSWSC 631

Vintage Marine Art Pty Ltd v Henderson & Cremer (No 2) (2019) 101 NSWLR 77; [2019] NSWCA 252

Category:

Consequential orders

Parties:

I and J Formwork Pty Ltd (Plaintiff/Respondent)
Donya Constructions Pty Ltd (First Defendant/Applicant)
Sam Ebadeh Ahvasi (Second Defendant/Applicant)

Representation:

Counsel:
B Oliak (Defendants/Applicants)

Solicitors:
Brown Wright Stein (Plaintiff/Respondent)
Galluzzo Lawyers (Defendants)

File Number(s):

2021/140847

Judgment

1. The plaintiff, I and J Formwork Pty Ltd, seeks damages and other relief against the first defendant, Donya Constructions Pty Ltd, arising out of a contract pursuant to which the defendant, as subcontractor to the plaintiff, was engaged to perform formworks at a building site in Edmondson Park.

2. The defendants seek security for costs in the sum of $116,358.00.

3. The plaintiff does not dispute that the jurisdiction to order security has been enlivened.

4. The plaintiff answers the defendants’ application for security by offering a personal undertaking by the plaintiff’s sole director and shareholder, Mr Sarkis Boudaher, to be responsible for any costs order made in favour of the defendants against the plaintiff.

5. The parties agree that the Court may deal with this matter on the papers.

6. My Associate wrote to the parties to say that I would be assisted to receive a statement by Mr Boudaher of his assets and liabilities.

7. On 20 July 2021, Mr Boudaher swore an affidavit deposing that his assets and liabilities are as follows:

“Asset	Value
Hino 300 Tabletop Truck	$15,000.00
Kia Rio Car	$4,000.00
Nissan Navara Ute	$20,000.00
Power tools	$5,000.00
Building materials (Scaffold and Metal Frames)	$80,000.00
Extended size box trailer, enclosed	$2,500.00
Extended height horse float	$6,000.00
Household furniture	$10,000.00
Whitegoods/electrical	$10,000.00
Jewellery	$15,000.00
Recreational equipment	$3,000.00
Superannuation	$8,760.00
Savings	$6,200.00
100% Shareholding in I and J Formwork Pty Ltd	Unknown at this time
100% Shareholding in Pareli Pty Ltd	$100.00
Total Assets	$185,560.00
Liability	Owed
Nissan Navata Ute	$14,370.00
Shareholder Loan from I and J Formwork Pty Ltd (as at 31 May 2021)	$245,311.00
Legal fees	$11,256.00
Total Liabilities	$270,937.00”

8. Leaving aside the value of his shareholding in the plaintiff (which he deposes is “[u]nknown at this time”), Mr Boudaher’s liabilities exceed his assets by some $85,000.00.

9. Mr Boudaher’s undertaking to be personally liable for the plaintiff’s costs does not conclusively determine the question of whether the plaintiff should be ordered to provide security but is “a very powerful consideration which may, in a particular case, be determinative, and that is so whether or not the undertaking or guarantee is supported by any assets”. [1]

   1. Vintage Marine Art Pty Ltd v Henderson & Cremer (No 2) (2019) 101 NSWLR 77; [2019] NSWCA 252 at [28] (Bell P, Brereton and Macfarlan JJA agreeing).

10. However, the weight to be given to a personal undertaking as to damages must be considered in light of the nature of the assets of the person proffering the undertaking. [2]

    2. For example, Aquatic Air Pty Ltd v Siewert [2016] NSWCA 130 at [24] and [25] (Macfarlan JA) and Bright Ceiling Systems Pty Ltd v Merhis Contracting Pty Ltd [2016] NSWSC 631 at [57] (Button J).

11. Mr Boudaher’s only liquid asset is an amount of $6,200.00 in “[s]avings”.

12. Mr Boudaher’s superannuation of $8,760.00 is not likely to be available to the defendants were a costs order made in his favour. Some $39,000 of Mr Boudaher’s assets are three vehicles and the remaining assets appear to be tools of trade, household effects and other matters unlikely to be realised for any significant value. On the other hand, due to the nature of Mr Boudaher’s liabilities, they are likely to be called for in payment in full (in the case of the loan from the plaintiff, by any liquidator appointed).

13. Further, Mr Boudaher has not offered any evidence as to his income, nor as to what his personal expenses are and how he meets them.

14. Nor is it suggested on behalf of the plaintiff that the giving of security will stultify the proceedings.

15. In these circumstances, I am not persuaded that Mr Boudaher’s undertaking is a sufficient reason to decline to order security.

16. The amount sought represents ultimately 75% of the defendants’ solicitors estimate of the actual costs the defendants will incur and appears to be in the range of what is reasonable.

17. Overall, my conclusion is that the plaintiff should provide security for costs and that the amount of this security should be for $100,000.00.

18. I make the following orders:

1. The plaintiff is to provide security for the costs of the defendants in the sum of $100,000.00 by payment into Court within 28 days of the date of these orders.

2. The proceedings be stayed until such security is provided.

3. The plaintiff is to pay the defendants’ costs of this application.

4. I stand the matter over for directions before the Technology & Construction List Judge on 3 September 2021.

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Endnotes

Decision last updated: 30 July 2021