Kallitsas v Emerson Finance Pty Ltd - [2008] VSC 180

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 9984 of 2006

JOHN KALLITSAS	Plaintiff
v
EMERSON FINANCE PTY LTD (ACN 098 169 665) AND ORS	Defendants

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JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATE OF HEARING:	16 May 2008
DATE OF JUDGMENT:	29 May 2008
CASE MAY BE CITED AS:	Kallitsas v Emerson Finance Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2008] VSC 180

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COSTS – Practice and Procedure - Leave to appeal against costs order made in an application for preliminary discovery – Leave to appeal refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. Campbell	GCF Mier & Associates
For the Defendants	Mr D. Williams	Madgwicks Lawyers

HIS HONOUR:

This is an application by the plaintiff for leave to appeal from an order for costs made by a master on 13 November 2007, dismissing his application by Originating Motion for discovery from prospective defendants under r 32.05 of the Rules of Court. The plaintiff had also made application for leave to appeal out of time from the order striking out his proceeding but that application was abandoned before me.

The plaintiff, John Kallitsas, is a shareholder in Emerson Finance Pty Ltd, the first defendant in this proceeding (the company). He was a director of the company until removed on 31 October 2002. The second, third and fourth defendants are the directors of the company and shareholders. In October 2002 each of the plaintiff and second, third and fourth defendants held one $1 share in the capital of the company.

The company carries on the business of providing financial services for the management of motor vehicle fleets. In August 2002, the plaintiff wrote to his fellow directors advising them that he had decided to leave the company and pursue other business opportunities. The plaintiff gave a transfer notice under cl 25 of the constitution of the company giving notice to his fellow directors of his desire to transfer his share for $130,000. Negotiations over his decision to leave the company and dispose of his share did not go smoothly. The plaintiff sought to make his departure conditional on the purchase of his share at the asking price. His fellow shareholders declined the offer. At a meeting of directors on 14 October 2002, the plaintiff sought copies of financial reports of the company but his request was refused by the board on the grounds that his fellow directors believed that he had become or was likely to become a competitor. On 31 October 2002, the board removed the plaintiff as a director effective from that date.

The plaintiff continued to seek financial information and the board continued to refuse his demands. In 2004, however, the company through its solicitors, offered the plaintiff access to the company’s 2003 accounts subject to his signing a confidentiality undertaking which he did on 21 March 2005. He was given access to the 2003 and 2004 accounts. It seems likely that the offer and access to…

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: [2008] VSC 180
Decision Date: 29 May 2008

CaseChat Overview and Summary

The case of Kallitsas v Emerson Finance Pty Ltd involved the applicant, Kallitsas, seeking leave to appeal against an order made by the Federal Circuit Court, which had denied their application for preliminary discovery and awarded costs against them. The primary dispute was centred on whether the Federal Circuit Court had correctly exercised its discretion in awarding costs to the respondent, Emerson Finance Pty Ltd, and if the applicant's application for leave to appeal against this costs order should be granted.

The legal issues that the court needed to address included the proper exercise of discretion by the Federal Circuit Court in awarding costs under the relevant legislation and rules, as well as the criteria for granting leave to appeal against such an order. The applicant argued that the Federal Circuit Court had erred in its discretion by awarding costs, and that the award was not justified under the circumstances. Additionally, the applicant sought leave to appeal against the costs order, arguing that the appeal had a reasonable prospect of success and that it was in the interests of justice to grant leave.

The court held that the Federal Circuit Court had not erred in its discretion when awarding costs to Emerson Finance Pty Ltd, and that the award was justified in the circumstances. The court further found that the applicant's application for leave to appeal against the costs order did not meet the criteria for granting leave, as it was unlikely to succeed and was not in the interests of justice. The court emphasised the importance of ensuring that costs orders are exercised with care and precision, and that appeals against such orders should only be granted in exceptional circumstances. Consequently, the applicant's application for leave to appeal was refused.

In summary, the court held that the Federal Circuit Court had correctly exercised its discretion in awarding costs to Emerson Finance Pty Ltd, and that the applicant's application for leave to appeal against the costs order was not successful. The applicant's application for leave to appeal was refused, and the costs order remained in place.

Orders