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Impex Pty Ltd v Crowner Products Ltd

Impex Pty Ltd v Crowner Products Ltd

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Case Copied 13 May 1994 17 min read

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IN THE COURT OF APPEAL	[1994] QCA 149
SUPREME COURT OF
QUEENSLAND
Brisbane	Appeal No. 212 of 1993
Before The Chief Justice

Mr Justice Pincus
Mr Justice McPherson

[Impex v Crowner]

BETWEEN:

IMPEX PTY LTD

(Plaintiff) Respondent

AND

CROWNER PRODUCTS LTD

(First Defendant) Appellant

AND

JEYES OVERSEAS LIMITED

(Second Defendant)

AND

JEYES GROUP PLC

(Third Defendant)

REASONS FOR JUDGMENT - THE CHIEF JUSTICE

Judgment delivered 13.05.94

This appeal is against the refusal of a chamber judge to order that the respondent company, the plaintiff in a suit, provide security for the defendant's costs. The application for security was brought under s.1335 of the Corporations Law.

The primary claim of the plaintiff in the action was based on an alleged breach of a contract for the defendant, as supplier, to supply product to the plaintiff as a distributor of its products. The plaintiff alleged that there was in place a distribution arrangement for a term of five years but an anticipatory breach occurred when the defendant gave notice in July 1991 that it would continue to supply for only two more years, that being a period substantially less than the term which, on the plaintiff's contention, was still to run.

There appears to be no doubt that the respondent company, the plaintiff, was impecunious at relevant times and that if the appellant should succeed in obtaining an order for costs on a resolution of the litigation in its favour, it would have great difficulty in recovering those costs if security were not ordered.

The respondent's financial position was not exactly established but the material was sufficient to demonstrate the gravity of its situation. In the 1990 financial year, the year when the contract sued upon was said to have been entered into, the respondent had a large trading loss and in the next year an even greater one. A substantial deficiency in assets as compared with liabilities continued as part of its financial picture over this period. The success of the respondent in the pending litigation appears to be far from assured. The very existence of the contract on which the respondent sued was disputed by the appellant claiming that no final agreement in the terms alleged had been concluded. Although the likelihood of success in the action was not a matter for final resolution on the application for security (c.f. the observations of Rogers J. in Memutu Pty Ltd v. Lissenden (1983) 8 A.C.L.R. 364 at 365) the existence of substantial obstacles to be overcome by the plaintiff in proving its claim and in establishing its damage was one of the matters for consideration.

The judge below had a discretionary judgment to exercise and he was obliged to take into account all of the relevant circumstances: see Bell Wholesale Pty Ltd v. Gates Export (1984) 52 A.L.R. 176 at 180 and P.S. Chellaram & Co v. China Ocean Shipping Co. (1991) 65 A.L.J.R. 642 at 643.

In the present case it sufficiently clearly appeared that the judge's…

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: [1994] QCA 149
Decision Date: 13/05/1994

CaseChat Overview and Summary

Impex Pty Ltd sought security for costs from Crowner Products Ltd, claiming that the latter was in a bad financial position. The matter was heard in the Supreme Court of Victoria. The primary issue before the court was whether the respondent's financial difficulties were caused by the appellant's actions, which could justify the grant of security for costs. Additionally, the court needed to determine whether there was an arguable basis for the existence of a contract between the parties, which could influence the decision on security for costs.

The court considered the financial circumstances of Crowner Products Ltd and whether these were a direct result of the appellant's conduct. The respondent argued that Impex Pty Ltd had contributed to its financial difficulties by not fulfilling its contractual obligations, but the court found insufficient evidence to support this claim. The court also examined the merits of the case, focusing on the existence of a contract between the parties. The evidence presented did not establish a clear basis for the existence of such a contract, which impacted the likelihood of success in the proceedings.

Based on the analysis, the court decided that there was no arguable basis for the existence of a contract, and the respondent's financial situation was not attributable to the appellant's actions. Consequently, the application for security for costs was refused. The court held that the respondent's financial difficulties did not stem from the appellant's conduct, and there was no strong case for the existence of a contract that could justify the imposition of security for costs. The court's decision was grounded in the lack of a clear contractual relationship and the absence of evidence linking the respondent's financial woes to the appellant's actions.

Orders