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 plaintiff be entitled to a one sixth share of the distributions made and an injunction restraining the defendants from taking any further steps to deregister the company. Declarations are also sought that breaches of duty or care and good faith have occurred. Incidental orders are sought including the taking of an account and for the compulsory purchase of the plaintiff’s shares.
The defence pleads that at all times the defendants have acted properly and with the agreement of the plaintiff. It is said that an agreement was reached whereby the plaintiff abandoned his interest in the company in exchange for other considerations.
Issues Arising on the Application
Jurisdiction of the Court
The application for security is made pursuant to Rule 100.01(b) of the Supreme Court Rules which relevantly provides:
The Court may order security for costs to be furnished:
…
(b) where the plaintiff is ordinarily resident out of the jurisdiction.
It is not disputed in the present case that the condition specified in Rule 100.01(b) is satisfied and that the court’s discretion is enlivened. Once enlivened it is accepted that the discretion is unfettered. It is also agreed that the exercise of the discretion is to be made having regard to well accepted principles.
Master’s Reasons
The master gave reasons to support his orders. He concluded that the evidence before him established that the plaintiff did not have any assets in Australia and noted:
The affidavit goes on to give details of assets of the plaintiff elsewhere than in Australia. Based on that material and other affidavits, which were subsequently filed in this matter, it is clear that the plaintiff has substantial assets elsewhere than in Australia.
The master continued:
It was conceded by Mr Ross-Smith, on behalf of the plaintiff, that if an order for security for costs were made, it would not stifle the litigation.
The main basis for the plaintiff’s opposition to the order was that Article 323 of the Greek Code of Civil Procedure provides a means whereby a foreign judgment can be registered in Greece and enforced in relation to assets within the jurisdiction of the Greek Courts.
There has been a trend in circumstances where there is some form or reciprocal enforcement legislation in place for the Courts, if they are inclined to make an order for security, to limit the amount of that security to any additional costs which will be incurred in invoking the reciprocal enforcement legislation.
In my view, it is appropriate in the present case that an order for security for costs should be made. I am further of the opinion that the order should be an order for the appropriate total amount and not just the additional amount to enforce any order under the Greek Code.
The defendants’ solicitor has estimated the potential costs at $44,500.00. This amount includes the costs of a four-day trial. I note, however, that it is suggested that a solicitor who is currently resident in Greece will be required to give evidence at the trial and that other witnesses will have to travel from Greece. There is no provision in the estimate of the costs to cover the expenses of travel and witness fees in respect of such persons.
The defendants’ solicitor’s estimates are not challenged by the plaintiff’s solicitors.
It is common in this jurisdiction to make an order for security for costs up to the first day of trial and when the trial is fixed for hearing, then to consider some further amount of security. I consider that this would be the appropriate course to adopt in this case. In making my decision as to quantum, I have not considered travelling and witnesses expenses, which I have previously referred to. I consider that the appropriate amount to be fixed for the quantum of the security is $35,000.00.
Stifling of Proceedings
Initially the plaintiff opposed the application for security on a number of grounds. His opposition included an assertion that any order for security would stifle the proceedings. Information was put before the master by the plaintiff in which he claimed that his assets comprised a freehold property in Greece valued at AUD$400,000.00 and two bank accounts, one containing €170 and the other containing AUD$200,000. It was claimed that it was not possible for the plaintiff to raise money on the freehold property and that he needed the investment income from the monies to meet his everyday living expenses.
An affidavit filed by the defendants disclosed a different position. The plaintiff’s assets were described as being extensive. It was suggested that the plaintiff had real estate interests with a value of more than AUD$1,000,000 and at least one bank account with a credit of more than €1,600.000 (more than AUD$2,000,000).
The master was informed by counsel for the plaintiff following receipt of the defendant’s affidavit that it was no longer asserted that an order for security would stifle the proceedings.
Counsel’s Submissions
On appeal it was accepted by both parties that the court had a broad discretion. Reference was made to Singer v Berghouse[1] where Gaudron J observed that in the case of a plaintiff resident overseas the court exercises a broad discretionary judgment made by reference to the circumstances of the particular case and not by reference to a rule or rules which direct a decision one way or another.
[1] (1993) 114 ALR 521
The plaintiff’s counsel complained that the master did not adequately disclose his reasons on the issues argued. It was said that in this circumstance although no error was to be assumed, the appeal court would exercise the statutory discretion afresh.[2]
[2] Troisi Steel Fabrications Pty Ltd v Johns Perry Industries Pty Ltd (1992) 165 LSJS 333
It was further argued that the order was unreasonable, that a substantial wrong had occurred, and that this court should interfere.[3]
[3] Mullett v Gabriel (1989) 52 SASR 330
It was submitted that recent authority treated the fact that there would be no difficulty in the judgment being registered in the foreign jurisdiction as a significant factor against the making of an order for security (save for a limited order). It was argued that this in this circumstance, with the existence of substantial assets in the foreign jurisdiction, that only a limited order for security should be made. The order should be limited to the amount necessary to secure the expense involved in the enforcement of a costs order in the foreign jurisdiction. It was asserted that as there was a recognised procedure for enforcement in Greece the defendants were not disadvantaged as a result of the plaintiff being resident in a foreign country. It was said that the affidavit material established that the costs order if made would be easily and conveniently enforced in Greece.
The defendants opposed the appeal. It was accepted that the appeal proceeded by way of rehearing.[4] It was pointed out by counsel that the master’s decision was a discretionary decision.[5] It was contended that any basis of a challenge was circumscribed by the principles enunciated in House v The King.[6] An appellate court will not interfere with a discretionary decision unless it was demonstrated that there was an error of principle, or that the decision rests on a significant error of fact or that the decision is manifestly unreasonable.
[4] Rule 97.17 of the Supreme Court Rules
[5] P S Chellaram & Co Ltd v China Ocean Shipping Coand Anor (1991) 102 ALR 321 at 323, Remm Construction v Wallbridge & Gilbert (1991) 162 LSJS 99 at 105
[6] (1936) 55 CLR 499 at 505
Counsel submitted that there was ample material to justify the master’s exercise of discretion to grant an order for security. It was said that the order was entirely appropriate in the circumstances. It was pointed out that the appellant had resided in Greece for more than 20 years, had no assets in Australia, and had substantial assets elsewhere. It was emphasised that it was now conceded that an order for security for costs would not stifle the litigation.
Counsel submitted that the master’s reasons were adequate. The relevant considerations were referred to and relied on by the master. These considerations justified the order made.
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 decision
Without 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 that
1. 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, and
5. it is not contrary to public morals and public order.
Article 904 – Enforceable deeds
1. A compulsory execution can happen only on the basis of an enforceable deed
2. Enforceable deeds are :
a) final judgments as well as the judgments of every Greek court that have been declared temporarily enforceable,
b) arbitral judgments
c) the minutes of Greek courts that contain settlement or allocation of legal costs
d) notarial documents
e) orders of payment and returns from the use of leased property issued by Greek judges
f) foreign deeds that have been declared enforceable
g) orders and deeds that are recognised by law as enforceable deeds
Article 905 – Declaration of enforceable foreign deeds
1. 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.
Counsel for the plaintiff put before the court an affidavit of Theodoris Papageorgiou, a Greek legal practitioner. The affidavit sought to explain the Greek Civil Procedure Code and the processes and procedures of the Greek Court in the recognition and enforcement of foreign judgments. The affidavit was not received by the master. The affidavit was received on appeal over the objection of counsel. No prejudice could be identified that could not be addressed by appropriate terms.
The affidavit of Mr Papageorgiou included the following statement:
The scope of these articles includes costs orders made in foreign courts. Article 905, paragraph 3, says if a foreign judgment is a Court judgment “the costs order is a Court judgment”, then these costs orders are enforceable in Greece, provided the conditions prescribed in article 323 have been satisfied.
An analysis of the wording of Article 905(3) of the Code does not support Mr Papageorgiou’s assertion. The quoted words “the costs order is a Court judgment” do not appear in the translation of the article.
It is to be observed that Mr Papageorgiou made no attempt to explain the approach of Greek Courts to orders made by Australian courts. He did not address the approach of the Greek courts to provisos 2 to 5 of article 323. These provisos must be satisfied before a decision of a foreign civil court will be enforced.
The affidavit does little more than recite the articles of the Greek Code already before the court. The affidavit expands material already before the court in a limited respect. Mr Papageorgiou addresses in a general way the enforcement of foreign costs orders in Greece and provides an estimate of the cost of enforcing a foreign judgment in a Greek court.
A reading of the articles suggests that to be capable of compulsory execution, a foreign judgment must be an enforceable deed within the meaning of Article 904. Before an enforceable deed can be enforced it must be declared enforceable by a judgment of the District Court of the area where the debtor is domiciled, and if there is no domicile, the debtors place of abode, and if there is no place of abode, the District court of the state’s capital. The District Court judges enforceability according to the procedures of Articles 740-781. A copy of those articles has not been provided.
The articles also provide that if a foreign deed is a court judgment that the provisos 2-5 of article 323 must also “coincide”. Proviso 2 requires that “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”. Article 323(3) provides that the decision of the foreign tribunal must not be contrary to public morals and public order.
This brief reference to the provisions of the Greek code demonstrates that there may be debate about its application to a costs order made in this litigation. This court is not in a position to say in the present case that the enforcement process would not be without risk.

There is no evidence as to the plaintiff’s domicile as distinct to his place of abode. It may be arguable whether Article 323 applies to a costs order. What attitude a Greek court may take to an application to enforce a costs order attended upon a dismissal of the whole or part of the plaintiff’s claim is not entirely clear. It is unclear whether the matter is subject to the jurisdiction of the South Australian court according to the provisions of Greek law. The plaintiff’s disclosed position concerning his financial affairs and the abandonment of his opposition to the application on the ground that an order for security would stifle the proceedings, are relevant considerations in assessing the risk that the enforcement of a successful costs order may be delayed or frustrated.
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.