Limberis v N Limberis & Sons Pty Ltd - [2004] SASC 186

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
LIMBERIS v N LIMBERIS & SONS PTY LTD AND ORS
Judgment of The Honourable Justice Gray
25 June 2004
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - JURISDICTION AND GENERALLY
PROCEDURE - COSTS - SECURITY FOR COSTS - RESIDENCE OUT OF JURISDICTION
Appeal against decision of a Master ordering that the plaintiff provide security for the defendant's costs - action related to corporations dispute - plaintiff claimed share distributions improperly made, false annual return lodged, directors in breach of fiduciary duties - application for security for costs made pursuant to Supreme Court Rule 100.01(b) - plaintiff resides out of jurisdiction in Greece - no assets in jurisdiction - consideration of Greek Civil Procedure Code - Master not in error - appeal dismissed.
Corporations Act 2001 (Cth); Supreme Court Rules 1987 (SA) R 97.17, R 100.01(b), referred to.
Singer v Berghouse (1963) 114 ALR 521; Troisi Steel Fabrications Pty Ltd v Johns Perry Industries Pty Ltd (1992) 165 LSJS 333; Mullett v Gabriel (1989) 52 SASR 330; P S Chellaram & Co Ltd v China Ocean Shipping Co and Anor (1991) 102 ALR 321; House v The King (1936) 55 CLR 499; Connop v Verena Pty Ltd (1984) 1 NSWLR 71; Thune v London Properties [1990] 1 WLR 562; Aopi v Rapke (Sup Ct NSW, Levine J, 15 August 2002, unreported), considered.

LIMBERIS v N LIMBERIS & SONS PTY LTD AND ORS
[2004] SASC 186
Civil

GRAY J This is an appeal against the decision of a master of this court ordering that the plaintiff provide security for the defendant’s costs in the sum of $35,000.00.
The Proceedings
The action relates to the affairs of N Limberis & Sons Pty Ltd (the company). The plaintiff claims to be a director and shareholder of the company. The defendants are sued in their respective capacities as directors, secretary and shareholders of the company. All the personal parties are siblings.
The plaintiff claims:
- that he was wrongly excluded from distributions made to shareholders;
- that a false annual return was lodged with the Australian Security and Investments Commission;
- that a purported invalid share reduction was made contrary to the provisions of the Corporations Act 2001 (Cth);
-that the company has been the subject of an unauthorised application to deregister;
-that the director defendants have acted in breach of their duties of care and of good faith and have acted to prevent the plaintiff from exercising his rights as a director and shareholder;
- that the shareholder defendants have acted to deprive the plaintiff of his rights, and have behaved contrary to the constitution of the company.
Relief is sought pursuant to the Corporations Act including a declaration that the share reduction is invalid, an order that the plaintiff be reimbursed for his proportion of the shares involved in the invalid reduction, an order that 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.

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Details

Case: [2004] SASC 186
Decision Date: 25 June 2004

CaseChat Overview and Summary

In the case of Limberis v N Limberis & Sons Pty Ltd, the plaintiff, Limberis, appealed a decision of a Master of the Supreme Court of South Australia, who ordered Limberis to provide security for the defendant's costs. The plaintiff's action concerned a dispute related to corporations, alleging improper share distributions, false annual returns, and breaches of fiduciary duties by the directors. The defendant applied for security for costs under Supreme Court Rule 100.01(b), and given that Limberis resided in Greece and had no assets in South Australia, the Master considered this fact to be of significant weight in favour of granting the order. The appeal was brought on the basis that the Master had made an error in his discretion to order security for costs.

The legal issues the court needed to decide included whether the Master had exercised his discretion properly and whether there were any grounds to suggest that the Master had failed to consider relevant factors, had regard to irrelevant material, or made a decision that was manifestly unreasonable. The appeal hinged on whether the Master had correctly weighed the relevant factors, including the ease of enforcing a costs order in Greece, and whether the order for security would stifle the litigation.

The court found that the Master had exercised his discretion correctly and had not erred in principle or failed to consider relevant factors. The court held that the fact that the plaintiff resided out of the jurisdiction and had no assets within it was a circumstance of great weight in determining whether an order for security for costs should be made. The court considered the translated articles of the Greek Civil Procedure Code, which set out the conditions for the enforceability of foreign judgments and deeds in Greece. The court concluded that the Master had considered the ease of enforcement of the costs order in Greece and had reached a conclusion that was reasonable and would not stifle the litigation. The appeal was dismissed.

The court's final orders included dismissing the appeal and affirming the Master's decision that the plaintiff must provide security for the defendant's costs. The court determined that the order for security was reasonable and would not hinder the progress of the litigation.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

GRAY J

In any event, even if the enforcement of a costs order was a matter that could be attended to with relative ease, it still remains but one factor to be weighed by the court in the exercise of the statutory discretion. There is no basis to conclude that the master did not have proper regard to this consideration. To the contrary, the master expressly considered the enforcement question in his reasons earlier referred to.Conclusion No basis has been identified to suggest that the master made any error of principle, failed to have regard to any material fact or had regard to irrelevant material. His decision cannot be said to be manifestly unreasonable. The master has exercised a broad discretion and reached the conclusion that security should be granted in an amount that is accepted as being reasonable as to quantum. The order will not stifle this litigation. The application has also been considered afresh. The order made was the appropriate order This appeal should be dismissed.

Ratio Decidendi

Legal Principle Established

Established by: GRAY J

It was acknowledged that one factor relevant to the exercise of discretion was the ease of enforcement of the local judgment in the foreign jurisdiction. However it was contended that the material before the master did not establish that a costs order would necessarily be enforceable or that any enforcement process would be straightforward and without complication. It was said that at the very least there were risks associated with the enforcement process.Consideration of the Issues In P S Chellaram & Co Ltd v China Ocean Shipping Co[7] McHugh J observed:To make or refuse to make an order for security for costs involves the exercise of a discretionary judgment. That means that the court exercising the discretion must weigh all the circumstances of the case. The weight to be given to any circumstance depends not only upon its own intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed. A circumstance which may have very great weight when only two or three circumstances have to be weighed may be of minor significance when many circumstances have to be weighed. However, for over 200 years, the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets in the jurisdiction has been seen as a circumstance of great weight in determining whether an order for security for costs should be made. Indeed, for many years the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction.Prima facie this statement suggests that the order made by the master in the present case could not be said to be manifestly unreasonable. As earlier observed in the present case the plaintiff has resided in Greece for more than 20 years, has not assets within the jurisdiction, but has substantial assets in Greece. The order for security will not stifle the litigation. It appears that the claim will raised disputed factual issues. Issues of credibility and reliability are likely to be important at trial. It would appear that the plaintiff may not have been entirely frank with the court about his financial position.[7] (1991) 102 ALR 321 at 323 It is to be accepted that the ease of enforcement of any costs order in the jurisdiction in which the plaintiff is resident is a relevant consideration. In some circumstances it may warrant a limitation of an order for security to the additional costs that a defendant might incur in enforcing a costs order in the foreign jurisdiction.[8][8] Connop v Verena Pty Ltd (1984) 1 NSWLR 71; Thune v London Properties [1990[ 1 WLR 562 and Aopi v Rapke (Unreported, Sup Ct NSW Levine J 15 August 2002) Counsel for the appellant referred to articles of the Greek Civil Procedure Code. The translated articles provide:Article 323 – Presumption of a precedent from a foreign decisionWithout prejudice to those that determine international treaties, a decision of a foreign civil court applies and constitutes a decision in Greece without further process, provided that1. it constitutes a decision in accordance with the law of the place where it was issued,2. the matter, according to the provisions of Greek law, was subject to the jurisdiction of the courts of the state to which the court that made the decision belongs,3. the litigant who lost was not denied the right of defence and, generally, participation in the trial, except if the denial was made in accordance with a provision that applies to the citizens of the country to which the court that made the ruling belongs,4. it does not contradict the judgment of a Greek court, which was issued for the same case, and constitutes a final judgment for the litigants between which the foreign court’s decision was issued, and5. it is not contrary to public morals and public order.Article 904 – Enforceable deeds1. A compulsory execution can happen only on the basis of an enforceable deed2. Enforceable deeds are :a) final judgments as well as the judgments of every Greek court that have been declared temporarily enforceable,b) arbitral judgmentsc) the minutes of Greek courts that contain settlement or allocation of legal costsd) notarial documentse) orders of payment and returns from the use of leased property issued by Greek judgesf) foreign deeds that have been declared enforceableg) orders and deeds that are recognised by law as enforceable deedsArticle 905 – Declaration of enforceable foreign deeds1. Without prejudice to those that determine international treaties, an enforceable deed can be carried out in Greece based on a foreign deed from the time that it is declared enforceable by a judgment of the district court of the are of the debtor’s domicile, and, if there is no domicile, the debtor’s place of abode, and, if there is no place of abode, of the district court of the state’s capital. The district court judges according to the procedures of articles 740 to 781.2. The district court declares the foreign deed enforceable if it is enforceable under the law of the place where it was issued, and it is not contrary to public morals and public order.3. If the foreign deed is a court judgment, the provisos numbers 2 to 5 of article 323 must also coincide for it to be declared enforceable.