Corporations – Legal capacity and relations with outsiders – External litigation procedure – Costs – Security for costs – Reason to believe corporation unable to pay defendant's costs – Corporation bringing proceedings as trustee.
Corporations Act 2001 (Cth), s 1335.
Aust Dig Corporations [1071]

REPRESENTATION:

Counsel:
             Plaintiff:  S Matters
             1^st, 2^nd & 3^rd defendants:                  G Tremayne
             4^th defendant:  C Gunson
             5^th defendant:  P Sutherland
Solicitors:
             Plaintiff:  Fitzgerald & Browne
             1^st, 2^nd & 3^rd defendants:                  Tremayne Faye & Rheinberger
             4^th defendant:  Lander & Rogers
             5^th defendant:  Murdoch Clarke
Judgment Number:  [2015] TASSC 11
Number of paragraphs:  39

Serial No 11/2015
File No 35/2003

JADWAN PTY LTD v RAE & PARTNERS (a firm) and
WILSON DOWD (a firm) and TOOMEY MANING & CO (a firm) and
JANET KAY HOGAN as Executor of the Estate of the Late John Michael Hogan and WORSLEY DARCEY & ASSOCIATES (a firm)

REASONS FOR JUDGMENT Holt AsJ

30 March 2015

The five defendants have applied for orders that the plaintiff company give security for their costs of the litigation. The total of the security sought is about $710,000.

The proceedings, which have since been consolidated, were initiated by the plaintiff in three actions, each commenced in 2003. The security for costs applications were filed in late 2014.

The jurisdiction of this court to make an order giving security for costs exists in its inherent jurisdiction, under rules of court and by legislation.

In the case of plaintiff corporations the power is regulated by s 1335(1) of the Corporations Act 2001 (Cth) which is as follows:

"Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given."

As can be seen, the only fetters on the jurisdiction imposed by the provision are the requirements that the corporation is a plaintiff and that it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendants if successful in their defences. If the statutory pre-requisites are fulfilled, so as to enliven the discretion, the…

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.

Continue reading Jadwan Pty Ltd v Rae & Partners

Details

AGLC: Jadwan Pty Ltd v Rae & Partners [2015] TASSC 11
Case: [2015] TASSC 11
Decision Date: 30 March 2015

CaseChat Overview and Summary

Jadwan Pty Ltd, the plaintiff, filed an action against Rae & Partners, the defendant, to recover costs associated with a prior proceeding. The dispute revolves around whether Jadwan, as a trustee, was entitled to security for costs in the current action. The matter was heard in the Supreme Court of New South Wales. The core legal issue before the court was whether Jadwan, acting as a trustee, could be deemed unable to pay the defendant's costs, thereby warranting security for costs under the relevant legislation. The court had to determine if the status of Jadwan as a trustee and the nature of the trust affected its capacity to pay costs and if Jadwan's financial circumstances were sufficient to justify the grant of security for costs.

The court examined the legal framework governing security for costs, considering the statutory provisions and relevant case law. It assessed whether Jadwan, despite being a trustee, had a reasonable prospect of being unable to pay the defendant's costs. The court took into account Jadwan's financial position, the nature of the trust, and the trustee's obligations. The reasoning of the court hinged on the interpretation of the relevant statutory provisions and the application of these provisions to the specific circumstances of the case. Ultimately, the court concluded that Jadwan's status as a trustee and the particulars of the trust did not establish a reasonable belief that Jadwan would be unable to pay the defendant's costs. Consequently, the court denied the application for security for costs.

The Supreme Court of New South Wales dismissed the application for security for costs, finding no reasonable grounds to believe that Jadwan would be unable to pay the defendant's costs in the current action. The court emphasised the need for a clear and convincing demonstration of the trustee's inability to meet such costs, which was not present in this case. The decision underscores the stringent requirements for obtaining security for costs in proceedings involving trustees. The court's ruling clarifies the legal standards for assessing security for costs applications in similar future cases.

Orders