Loumbos v Ward
[2014] NSWSC 94
•19 February 2014
Supreme Court
New South Wales
Medium Neutral Citation: Loumbos v Ward [2014] NSWSC 94 Hearing dates: On the papers Decision date: 19 February 2014 Jurisdiction: Equity Division - Expedition List Before: Stevenson J Decision: Application for security refused
Catchwords: PRACTICE AND PROCEDURE - civil - interlocutory application - security for costs -corporate plaintiffs' claims overlap with those of individual plaintiff - whether corporate plaintiffs should provide security Legislation Cited: Uniform Civil Procedure Rules 2005 Cases Cited: Prynew Pty Ltd v Nemeth [2010] NSWCA 94
Street v Luna Park Sydney Pty Ltd [2006] NSWSC 1317Category: Interlocutory applications Parties: Valentine John Loumbos (First Plaintiff)
Sydney Nightclubs Pty Ltd (Second Plaintiff)
Yeser Pty Ltd (Third Plaintiff)
Deborah Jane Ward (First Defendant)
Loumbos Pty Ltd (Receivers and Managers Appointed) (Second Defendant)
Loumbos Wastepaper Sales and Service Pty Ltd (Receivers and Managers Appointed) (Third Defendant)
Active Waste Management Pty Ltd (Receivers and Managers Appointed) (Fourth Defendant)
Couric Corporation Pty Ltd (Receivers and Managers Appointed) (Fifth Defendant)Representation: Counsel:
T M Lynch SC with A Vernier (Plaintiffs)
A E Munro (First Defendant)
Solicitors:
Adams & Partners Lawyers (Plaintiffs)
Marque Lawyers (First Defendant)
McCabes Lawyers (Second to Fifth Defendants)
File Number(s): SC 2014/20554 Publication restriction: Nil
Judgment
These proceedings were commenced on 22 January 2014. There are three plaintiffs; Mr Loumbos and two corporations.
The first defendant is the owner of a property at Lilyfield. Mr Loumbos claims that he provided the funds for the first defendant's acquisition of the Lilyfield property, which presently stands as security for certain debts owed to JWH Nominees Pty Ltd by the "Loumbos Group" (which comprises, at least, the two corporate plaintiffs and the corporate defendants).
Each of the corporate defendants is in receivership. The receivers appeared on 29 January 2014 but have not participated in the proceedings since then.
The plaintiffs seek orders to the effect that the first defendant provide security over the Lilyfield property to enable the plaintiffs to refinance their indebtedness to JWH from finance that the plaintiffs claim they have arranged with Delphi Bank.
The plaintiffs seek, but have not yet been granted, expedition on the basis that they are in default under their facilities with JWH, those facilities attract an extremely high interest rate, and that refinancing from Delphi Bank will not be available after 10 March 2014.
The plaintiffs allege that the first defendant represented that if the plaintiffs refinanced their indebtedness to JWH, she would provide security, including over the Lilyfield property to facilitate that refinancing.
By notice of motion filed in Court before me as Expedition Judge on 7 February 2014, the first defendant seeks summary dismissal of the proceedings and (I take it alternatively) an order that the corporate plaintiffs provide security for the first defendant's costs in the sum of $104,000.
I am now dealing with the question of security for costs.
On 7 February 2014 the parties informed me that they were content for me to decide the security for costs application on the papers. The parties have now exchanged submissions on that question.
The second and third defendants admit that they have no capacity to provide any security for the costs of these proceedings. I take that admission to carry with it an admission that the corporate plaintiffs have no capacity to meet any adverse costs order that might be made in the proceedings.
Mr Loumbos is, of course, an individual.
In that regard, the plaintiffs submit:
"In this case:
(1) the cases and interests of the plaintiffs wholly overlap;
(2) no part of any claim made by one of them is distinguishable from any part of the claims made by the other;
(a) they rely on a common pleading alleging a common set of facts;
(b) the remedies sought by each are the same and are sought against the same Defendants;
(3) as between the Plaintiffs, the First Defendant will not incur different costs...
Where the cases of a corporate plaintiff and an individual plaintiff against the same defendant completely overlap, security will not ordinarily be ordered against any one of them." (citing Street v Luna Park Sydney Pty Ltd [2006] NSWSC 1317)
In the case cited by the plaintiffs, Brereton J said at [28]:
"Where there is a complete identity between the corporate plaintiff and the individual plaintiff, so that all plaintiffs are suing in relation to one and the same defendant, and all plaintiffs must succeed or fail together, security will not ordinarily be ordered against only one of them."
In Prynew Pty Limited v Nemeth [2010] NSWCA 94 Beazley JA said at [56]:
"...in a particular case, it may be relevant to have regard to the extent to which the claims made by [individual and corporate plaintiffs] are co-extensive. If the claims of each are co-extensive, that may provide a strong basis for not ordering security."
I accept the plaintiffs' submission that the interests of the individual and corporate plaintiffs overlap. According to the allegations in the Statement of Claim, each of Mr Loumbos and the corporate plaintiffs are indebted to JWH, each has sought to refinance their indebtedness through Delphi Bank and the first defendant's representations were made to each of them.
Thus, on the face of it, security should not be ordered.
There is no evidence before me as to Mr Loumbos' financial position. However, even if it is the case that Mr Loumbos is impecunious, that fact alone cannot provide a basis for an order that he provide security (Uniform Civil Procedure Rules 2005, r 42.21(1B)).
The co-extensive nature of the claims made by the corporate plaintiffs has the result, in my opinion, that they cannot be in a worse position.
On behalf of the first defendant it was submitted that a factor in favour of granting security was the asserted weakness of the plaintiffs' case.
In my opinion that matter is more appropriately dealt with in the context of the first defendant's application for summary dismissal, if that application is to be pursued.
For those reasons, I order that the first defendant's application for security for costs be dismissed with costs.
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Decision last updated: 19 February 2014
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