Irving & Anor v Starmaker (No 51) Pty Ltd - [2005] SASC 162

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
IRVING & ANOR v STARMAKER (NO 51) PTY LTD
Reasons of Judge Lunn a Master of the Supreme Court
3 May 2005
PROCEDURE
Security for costs - both natural and corporate plaintiffs - held no order to be made against corporate plaintiff under s 1335 of Corporations Act or R101 as if defendant successful it would be adequately protected by an order for costs against the natural plaintiff.

IRVING & ANOR v STARMAKER (NO 51) PTY LTD
[2005] SASC 162
Reasons of Judge Lunn on the Defendant’s Application for Security for Costs.

JUDGE LUNN By an application issued on 1 March 2005 the defendant sought an order for security for costs against the plaintiffs. However on the hearing of the application counsel for the defendant limited her application to one for security against only the second corporate defendant. The plaintiffs did not file any affidavits in answer and accordingly the application is to be determined on the affidavit evidence put forward by the defendant.
The application can be disposed of on a single ground which was only mentioned in passing during the course of the argument. As the plaintiffs are pressing to have this action set down for trial, I am not delaying my ruling by dealing with the many other arguments canvassed by counsel.
Of prime importance on this application are the respective roles in the action of the two plaintiffs, John Irving and Mawson KLM Holdings Pty Ltd (in liquidation). The first plaintiff is a natural person, who is the liquidator of the second plaintiff by virtue of an order of this Court.
The nature of the respective claims made by the two plaintiffs are set out in the Application and the statement of claim. (Because the action was commenced under the Corporations Law Rules 2000 (South Australia) the originating process was described as an Application.) I am referring to the amended third Application and the third amended statement of claim which were both filed on 7 April 2005. (The defendant has appealed against some aspects of the order under which this third amended Application and statement of claim was filed, but for my present purposes there is no material difference between that third amended Application and statement of claim and the prior second amended Application and second amended statement of claim filed on 5 March 2003).
The action is concerned with three transactions entered into between the second plaintiff and the defendant in 1995 and 1996 which are respectively referred to as the loan transaction, the option agreement and the joint venture agreement. The first plaintiff as liquidator of the second plaintiff seeks orders under Division 2 of Part 5.7B of the then Corporations Law to avoid each of these three transactions and for consequential repayments flowing from such avoidances. Under s588F(1) of the Corporations Law it is the liquidator personally who is the proper plaintiff for such applications under Division 2 and not the company in liquidation: Horn…

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: [2005] SASC 162
Decision Date: 3 May 2005

CaseChat Overview and Summary

In the matter of Irving & Anor v Starmaker (No 51) Pty Ltd, the defendant, Starmaker (No 51) Pty Ltd, sought an order for security for costs against the plaintiffs, John Irving and Mawson KLM Holdings Pty Ltd (in liquidation). John Irving, a natural person, is the liquidator of Mawson KLM Holdings Pty Ltd. The application was limited to the corporate plaintiff, Mawson KLM Holdings Pty Ltd. The plaintiffs did not file any affidavits in response, and the application was determined based on the defendant's affidavit evidence.

The legal issue before the court was whether the defendant was entitled to an order for security for costs against the corporate plaintiff. The court considered whether there was a high degree of overlapping between the claims of the natural and corporate plaintiffs such that if the defendant was successful, it would obtain an order for its costs against the natural plaintiff. The court noted that if the first plaintiff failed to have the joint venture agreement avoided, he would likely be ordered to pay the defendant’s costs, providing sufficient protection for the defendant.

The court exercised its discretion to refuse security for costs against the second plaintiff, Mawson KLM Holdings Pty Ltd, based on the high degree of likelihood that the defendant would obtain an order for its costs against the natural plaintiff. The court found that there was no evidence to suggest that the first plaintiff could not satisfy any adverse order for costs made against him. Therefore, the court dismissed the defendant's application for security for costs.

The final order was that the defendant’s application for security for costs was dismissed. The costs of the application were to be the plaintiffs’ costs. The time for any appeal against this order was extended to 10 days after receipt of the posted reasons by the defendant’s solicitors. The action was adjourned to a Further Directions Hearing on 9 June 2005 to await the outcome of the defendant’s appeal against the order of 23 March 2005.

Orders