Lottah Mining Pty Ltd (in liq) v Summers - [2024] VSC 47

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2021 01447

BETWEEN:

LOTTAH MINING PTY LTD (ACN 168 344 581) (IN LIQUIDATION)	Plaintiff
v
GEOFFREY DOUGLAS SUMMERS	Defendant

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JUDGE:	Goulden AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	28 November 2023
DATE OF RULING:	21 February 2024
CASE MAY BE CITED AS:	Lottah Mining Pty Ltd (in liq) v Summers
MEDIUM NEUTRAL CITATION:	[2024] VSC 47

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PRACTICE AND PROCEDURE — Substitution of a party — Assignment of causes of action — Claim for breach of statutory duty under Corporations Act 2001 (Cth) — Whether assignable — Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 9.09(2).

CORPORATIONS — Plaintiff in liquidation — Liquidators assignment of rights to sue former director to non-party — Non-party applies to be substituted as plaintiff under rule 9.09(2) — Whether statutory claims under s 181 and s 182 of the Corporations Act 2001 (Cth) capable of assignment by the liquidator— Corporations Act 2001 (Cth) Sch 2 Pt 4 div 100 s 100-5.

PRACTICE AND PROCEDURE — Security for Costs — Defendant’s cross application for security for costs against party on substitution — Claim for past costs prior to substitution and prospective costs — Supreme Court (General Civil Procedure) Rules 2015 (Vic) O62 —Corporations Act 2001 (Cth) s 1335.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Porteous of counsel	Johnson Winter Slattery
For the Defendant	Mr G Bigmore KC and Mr B Murphy of counsel	Cornwalls
For Rogetta Resources Pty Ltd	Mr N Kaskani of counsel	Aitken Partners

TABLE OF CONTENTS

Background to the Applications..................................................................................................... 1

Evidence and Submissions.............................................................................................................. 3

The Assignment of Claims by the Liquidators of the Plaintiff to Rogetta Resources......... 4

Submissions of Rogetta Resources and the Defendant in Relation to the Substitution Application.......................................................................................................................................................... 6

Rule 9.09(2)(a) — Assignment as a Threshold Condition to Enliven Jurisdiction.............. 9

Assignability of the Plaintiff’s Tortious and Equitable Claims............................................. 10

Assignment of the Statutory Duty Claims.................................................................................. 11

Role of s 100-5 of the IPS............................................................................................................ 14

Conclusion in Respect of the Substitution Application.......................................................... 21

Additional Facts Relevant to the Security for Costs Application........................................... 22

Quantum of Security Sought......................................................................................................... 24

Exercise of the Discretion to Order Security.............................................................................. 26

The likelihood that Rogetta Resources will be unable to pay the defendant’s costs........ 26
The prospects of success of Rogetta Resources’s claims....................................................... 27
Delay in applying for security................................................................................................... 28

Quantum of Security....................................................................................................................... 30

Costs of the Substitution and Security for Costs Application................................................ 33

HER HONOUR:

Background to the Applications

The plaintiff in this proceeding, Lottah Mining Pty Ltd (ACN 168 344 581) (in liquidation), sues its former CEO and director Mr Geoffrey Douglas Summers, the defendant. The proceeding was commenced by Writ and Statement of Claim (the ‘SOC’) filed on 5 May 2021.

By the SOC, the plaintiff alleges that:

(a) the defendant was the CEO of the plaintiff at all material times and in that capacity owed fiduciary duties to the plaintiff (defined in the SOC as…

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: [2024] VSC 47
Decision Date: 21 February 2024

CaseChat Overview and Summary

Lottah Mining Pty Ltd, a company in liquidation, sued a former director for breach of statutory duties under the Corporations Act 2001 (Cth). The liquidators assigned their rights to a non-party, who applied to be substituted as the plaintiff. The former director sought security for costs. The court had to determine whether statutory claims under the Corporations Act were assignable and whether the non-party could be substituted as the plaintiff. The court also needed to consider the former director's application for security for costs against the non-party.

The court examined the relevant statutory provisions and case law to determine whether the statutory claims were assignable. The court concluded that the statutory claims were not assignable, as they were personal to the company and could not be transferred to a non-party. However, the court found that the non-party could be substituted as the plaintiff under Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 9.09(2). The court noted that the substitution would not prejudice the former director, as they had notice of the assignment and had not opposed the substitution. The court also considered the former director's application for security for costs. The court found that the non-party was not liable for past costs incurred before the substitution, but the former director was entitled to security for prospective costs from the date of substitution.

The court ruled that the statutory claims under the Corporations Act were not assignable, but the non-party could be substituted as the plaintiff. The court granted the former director's application for security for costs from the date of substitution. The court ordered Lottah Mining Pty Ltd to pay the former director's costs of the application for substitution and security for costs.

Orders