Merrag Pty Ltd v Khoury - [2008] NSWSC 1286

CITATION: Merrag Pty Ltd v Khoury [2008] NSWSC 1286

HEARING DATE(S): 10/11/08

JUDGMENT DATE :
4 December 2008

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Application for security for costs dismissed

CATCHWORDS: PROCEDURE - costs - security for costs - proceedings brought by company in liquidation with negligible assets - company shows strong basis for asserting right to recover significant sum - apparent non-compliance by one defendant with order of court - discretion should be exercised against grant of security for costs

LEGISLATION CITED: Civil Procedure Act 2005, s 56(3)
Corporations Act 2001 (Cth), ss 588FF, 1335
Uniform Civil Procedure Rules 2005, r. 42.21

CATEGORY: Principal judgment

CASES CITED: Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301
Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105
J & M O’Brien Enterprises Pty Ltd v Shell Co Ltd (1983) 70 FCR 261
Pioneer Park Pty Ltd v Australia and New Zealand Banking Group Ltd [2007] NSWCA 344; (2007) 65 ACSR 383
Winnote Pty Ltd v Page [2005] NSWCA 362; (L2005) 64 NSWLR 244

PARTIES: Merrag Pty Limited - First Plaintiff
Peter Paul Krejci - Second Plaintiff
Michael Khoury - First Defendant
Susie Khoury - Second Defendant

FILE NUMBER(S): SC 4184/08

COUNSEL: Mr C M Harris SC - Plaintiffs
Mr R R I Harper SC/Mr M R Pesman - Defendants

SOLICITORS: Colin Biggers & Paisley - Plaintiffs
John Carmody & Co - Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

THURSDAY, 4 DECEMBER 2008

4184/08 MERRAG PTY LIMITED & ANOR v MICHAEL KHOURY & ANOR

JUDGMENT

1 These proceedings are brought by a company in liquidation (Merrag) and its liquidator (Mr Krejci) against a director of the company (Mr Khoury) and the director’s wife (Mrs Khoury).

2 The basic allegation is that, in March 2004, Merrag contracted to sell to Mr Khoury and Mrs Khoury a unit in a building in the course of construction by Merrag; that the agreed price was $614,800; that the unit was in due course conveyed by Merag to Mr Khoury and Mrs Khoury; and that they paid, in return, only $250,000 instead of the contracted purchase price of $614,800. Merrag, through its liquidator, advances a claim against Mr Khoury and Mrs Khoury for debt in the sum of $368,800 and a claim against Mr Khoury for breach of directors’ duties occasioning loss to Merrag of $368,800.

3 Currently before me is an interlocutory process filed on 23 September 2008 by which Mr Khoury and Mrs Khoury claim an order that Mr Krejci, the liquidator, provide security for costs.

4 Some relevant principles are stated in the judgment of Hodgson JA in Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105 at [45]:

“In my opinion, on the basis of this review of cases, and especially on 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.

Continue reading Merrag Pty Ltd v Khoury

Details

AGLC: Merrag Pty Ltd v Khoury [2008] NSWSC 1286
Case: [2008] NSWSC 1286
Decision Date: 4 December 2008

CaseChat Overview and Summary

In the matter of Merrag Pty Ltd, a company in liquidation, against Khoury and others, the dispute centred on the company's right to recover a significant sum of money. The case was heard in the Supreme Court of Queensland. The liquidators of Merrag Pty Ltd sought to recover substantial funds allegedly owed to the company, contending that the defendants had obligations that should be settled before the company's liquidation was finalised.

The primary legal issue before the court was whether to grant security for costs to the plaintiff, considering the company's status in liquidation and its limited assets. The court had to determine if the plaintiff had demonstrated a strong likelihood of success in the proceedings and whether there were any factors, such as apparent non-compliance with a court order by one of the defendants, that would influence the exercise of the court's discretion in granting security for costs.

The court found that the plaintiff had shown a strong basis for asserting its right to recover a significant sum. Additionally, the court noted that one of the defendants appeared to have breached a court order, which was a factor that weighed against granting security for costs. The court exercised its discretion against the plaintiff's application for security for costs, considering the circumstances of the case. Consequently, the application for security for costs was dismissed.

Orders