Moir v Vodafone - [2009] SASC 234

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
MOIR v VODAFONE
[2009] SASC 234
Judgment of The Honourable Justice Anderson
14 August 2009
PROCEDURE - COSTS - SECURITY FOR COSTS - POVERTY - LACK OF MEANS
SECURITY FOR COSTS - INTERESTS OF JUSTICE
Application by defendant for security for costs - plaintiff sues in personal capacity and pursuant to deed of assignment from company in liquidation - plaintiff impecunious - whether impecuniosity caused by defendant - whether action brought by plaintiff in a representative capacity - whether another solvent party stands behind the plaintiff in the action and stands to benefit by a successful action - whether security for costs should be ordered in the interests of justice.
Held: Plaintiff impecunious - uncertainty as to cause of plaintiff's impecuniosity - no need to determine if plaintiff acting in a representative capacity - plaintiff's wife stands behind the plaintiff in the action, stands to benefit from a successful action and is solvent - security for costs ordered in the interests of justice, subject to a mediation taking place.
Supreme Court Civil Rules 2006 r 194, referred to.
Bond v Trustee of the property of Alan Bond; a bankrupt (1994) 20 AAR 1; Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1, discussed.

MOIR v VODAFONE
[2009] SASC 234
ANDERSON J.
Introduction

In this matter the defendant Vodafone has applied pursuant to r 194 of the Supreme Court Civil Rules 2006 for an order for security for costs. Mr Moir is representing himself in this matter, although on earlier occasions he was represented by solicitors.
Rule 194 states:
194—Security for costs
(1)The Court may order a plaintiff to provide security for costs if—
(a)     the action is brought in a representative capacity and the plaintiff is insolvent or would have insufficient resources to meet an order for costs if the action were to prove to be unsuccessful; or
(b)     the plaintiff is ordinarily resident outside Australia; or
(c)     there are reasonable grounds to suspect that the action may have been brought for an ulterior purpose; or
(d)     the order is authorised by statute; or
(e)     the order is necessary in the interests of justice.
(2)Security for costs is to be given in the form and manner directed by the Court.
(3)If the Court orders security for costs, the action may be stayed until the security is given.
(4)The Court may, at any time, vary or revoke an order for security for costs and make consequential directions.
(5)An amount paid into the Court by way of security for costs may be paid out by consent of the interested parties.
Vodafone relies on both r 194(1)(a) and r 194(1)(e).
Mr Blight, counsel for Vodafone, argued that the action was brought by Mr Moir in a representative capacity. He argued that the scope of the present rule is wider than the former rule in two important respects, namely, the inclusion of the words “representative capacity” in r 194(1)(a) replacing the words “mere…

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 Moir v Vodafone

Details

AGLC: Moir v Vodafone [2009] SASC 234
Case: [2009] SASC 234
Decision Date: 14 August 2009

CaseChat Overview and Summary

The case of Moir v Vodafone involved Mr Moir suing Vodafone in both his personal capacity and pursuant to a deed of assignment from HTi Communications Pty Ltd, a company in liquidation. Mr Moir, who is the sole director of HTi, claims that Vodafone breached an agreement to compensate HTi for lost revenue and commissions after terminating their agreement. Vodafone denies the formation of any binding contract and disputes the allegations of misleading and deceptive conduct. The defendant sought an order for security for costs due to Mr Moir's impecuniosity and the involvement of his wife, who stands to benefit from a successful action but is not at risk for costs.

The legal issues before the court included whether Mr Moir was acting in a representative capacity, whether Vodafone was responsible for Mr Moir's impecuniosity, and whether ordering security for costs was in the interests of justice. The court considered the plaintiff's impecuniosity and the potential benefit to Mrs Moir, who is solvent and actively involved in the litigation, as key factors. The court also noted the large amount of costs incurred thus far and the uncertainty surrounding the merits of the plaintiff's case.

The court found that it was in the interests of justice to order security for costs, considering Mr Moir's lack of resources, the significant costs incurred, and the potential benefit to Mrs Moir. The court ordered a mediation to take place before proceeding with the security for costs, and set an initial amount of $40,000, subject to review as the case progresses. The court did not find it necessary to determine whether Mr Moir was acting in a representative capacity, as the other factors were sufficient to warrant the order. The court also noted that Vodafone's argument that it was not responsible for Mr Moir's impecuniosity did not affect the decision on security for costs.

Orders

Orders of the court

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Background

Background to the litigation

Mr Moir brings the action not only in his personal capacity but in addition, pursuant to a Deed of Assignment, he is obliged to pay 50% of any net proceeds of the action to HTi Communications Pty Ltd (in liq) (“HTi”). Mr Moir is the sole director of HTi and he and his wife Kristina own one $1 share each. They are the sole shareholders.Background The action by Mr Moir against Vodafone can be summarised as follows. Mr Moir, through the company HTi, sold mobile telephone equipment and was involved in the resale of mobile telephone services. Until late 2000, the company had an agreement with Telstra. It is alleged that Vodafone sought out Mr Moir and HTi, with a view to convince them to change allegiance to that company. Certain discussions took place and several meetings were held. These culminated in Vodafone making an offer. There were then negotiations, including a counter offer from HTi, and then what is alleged by Mr Moir to be a binding agreement was reached in November 2000. The agreement is alleged to be partly oral, partly written and partly implied. Training of HTI staff by Vodafone then took place, and new fixtures and fittings were delivered by Vodafone to HTi’s various premises. After the alleged agreement in November 2000, Mr Moir received a letter from Vodafone which required a charge to be “put in place for Vodafone’s protection”. Mr Moir alleges that a conversation then followed in which he said he was told by an officer of Vodafone that the mention of the charge in the letter was merely to appease the legal department and would have no effect. Mr Moir alleges that he relied on that assurance. Vodafone alleges that no formal agreement was entered into until April 2001. Later, Vodafone terminated the agreement. Mr Moir says that contrary to its obligation under what he alleges was the agreement, Vodafone failed to pay him amounts due under the contract. He alleges misleading and deceptive conduct in breach of the Trade Practices Act. HTi eventually became insolvent and liquidators were appointed. Under the agreement that Mr Moir claims was reached in November 2000, he alleges that Vodafone should have paid to HTi, at the time they entered into a formal agreement, the equivalent of six months existing revenue that HTi should have obtained had it continued its existing agreement with Telstra. For a six-month period after this Mr Moir claims that Vodafone would have had to make monthly payments to HTi of the equivalent of one month’s revenue under the existing Telstra agreement. Finally, Mr Moir alleges that Vodafone would have had to pay HTi various fees and commissions relating to the connection and airtime usage of customers to the Vodafone network. Although the defendant has not yet filed its defence, it has attached to the outline of argument accompanying this application a “draft points of defence” document which clearly places many, if not most, of the plaintiff’s contentions in issue. In particular, in the draft points of defence Vodafone denies the formation of any contract as alleged by Mr Moir. Vodafone asserts that any agreement at the stage alleged by Mr Moir was merely an agreement to enter into a later formal agreement, that is, it was subject to a formal contract.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

ANDERSON J

I do not consider that mediation needs to await discovery. Both parties know their cases and their strengths and weaknesses. It is important, in my view, that a mediation take place as soon as possible. Therefore I will order a mediation as part of the final orders.Conclusion For the reasons I have given, it is in the interests of justice to order security for costs in this matter. I consider that the combination of Mr Moir’s impecuniosity, the fact that his wife stands to benefit but is not at risk on costs, and the very large amount of costs which have already been incurred are all persuasive factors for the making of an order for security for costs. In the circumstances, it seems to me that an appropriate initial amount is $40,000. This can be reviewed, if necessary, as the matter progresses towards trial. Because I have reached the view that security is required in the interests of justice, I do not intend dealing with Mr Blight’s carefully researched argument on whether Mr Moir is acting in a representative capacity. Despite the changes to the rules that I referred to earlier, I still have considerable doubt that this ground has been made out under r 194(1)(a). I will order a mediation, and order that if the mediation is unsuccessful then within 21 days of the conclusion of the mediation the plaintiff is to provide security by way of the payment of $40,000 into court. I will hear the parties as to how they now wish to proceed.

Ratio Decidendi

Legal Principle Established

Established by: ANDERSON J

There is also an assertion that a substantial amount of the payments claimed by Mr Moir are statute barred. The alleged misrepresentations are disputed by Vodafone. Finally, it is alleged that HTi acted at all relevant times with formal advice from a solicitor.Security for costs consideration It is not in dispute that Mr Moir is insolvent and that he has insufficient resources to meet a costs order if he is unsuccessful in the action. He has no assets of any value and he is currently unemployed. He brings the action for his own benefit and for the benefit of HTi. As I have indicated, he has entered into a deed of assignment which obliges him, in the event that he is successful in the action, to pay 50% of the net proceeds to HTi. Mr Moir’s wife, Kristina, is a 50% shareholder and an unsecured creditor of HTi. She is not a co-assignee with Mr Moir, nor is she a plaintiff in her own right. She does have assets and Vodafone suggests that she has been actively involved in the litigation, both in relation to providing instructions to the former solicitors and also in seeking external funding for the litigation through Messrs Sheahan Lock who arrange for such funds to be provided. Vodafone suggests that because she is so involved in the litigation and because she stands to benefit from any successful action by Mr Moir, it is unfair and not in the interests of justice that Vodafone has no recourse to her for costs in the event of an unsuccessful action.Applicant’s submissions Mr Blight put six propositions which he submitted supported the application for security for costs. His propositions are as follows:1.The action is brought in a representative capacity within the meaning of r 194(1)(a). He submits that Mr Moir is in an analogous position to a plaintiff in a representative proceeding, or alternatively as a trustee, so that if he receives any damages he would then hold those damages on trust for the benefit of the company. That is as to 50% of those damages.2.In the alternative, even if it is not found that he is acting in a representative capacity, it is in the interests of justice to make an order.The aspect emphasised by Mr Blight, and relevant to the interests of justice, is that by virtue of the assignment, others, including Mrs Moir, stand to benefit but are at no risk for an order for costs. Whilst the court can look behind a corporate plaintiff and make an order for security, there is no means available under the rules to do that other than pursuant to r 194(1)(e) in the interests of justice.Mrs Moir is protected from any order for costs because of the assignment, even though she may ultimately benefit. I deal with this aspect later when I consider Mr Moir’s submission that the action will be stifled if an order is made.3.The plaintiff is insolvent and has insufficient resources to meet an adverse costs order. An assessment has been made by a specialist in taxation of costs that up to and including the first day of trial the costs would be in the order of $300,000.4.Vodafone submits that the case which Mr Moir proposes to run is open to serious doubt and has insufficient prospects of success. It relates essentially to a claim for payments alleged to be owed by Vodafone to Mr Moir and the allegation that because those payments were not made HTi became insolvent. There are clearly serious issues as to causation in relation to that contention. Mr Moir suggests that Vodafone was in fact the cause of the impecuniosity of the company. Mr Blight outlined various other difficulties which he says Mr Moir faces, not the least of which is the doubt surrounding the ability to prove his allegations of misrepresentation by Vodafone.5.Vodafone submits that an order for security for costs will not stifle the action. That proposition is directly linked with the financial capacity of Mrs Moir and the suggestion that she stands behind the plaintiff.6.As a separate proposition, Vodafone contends that there is no case, or at least it is open to very serious doubt, as to whether Vodafone is the cause of the plaintiff’s impecuniosity, as Mr Moir suggests. This involves in turn a detailed examination of the matters which led to the insolvency of the company and the situation between Mr Moir and Telstra, with whom Mr Moir previously had a contract.HTi’s financial problems