NELSON CAPITAL PTY LTD -v- SHORT & ORS [2003] WASC 152

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2003] WASC 152
Case No:	CIV:2736/2002	Heard:	29 JULY 2003
Coram:	MASTER NEWNES	Delivered:	15/08/03
No of pages:	12	Judgment Part:	1 of 1
Result:	Security for costs ordered
Category:	B
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Parties:	NELSON CAPITAL PTY LTD (ACN 081 483 730) ANTHONY NELSON SHORT HALLCREST INVESTMENTS PTY LTD (ACN 064 752 361) AMADEUS ENERGY LTD (ACN 058 714 408)
Catchwords:	Practice and procedure Application for security for costs Section 1335 Turns on own facts
Legislation:	Corporations Act 2001 (Cth), s 1335 Rules of the Supreme Court, O 25
Case References:	Blackbird Entertainment Pty Ltd v IO Research Pty Ltd, unreported; SCt of WA (White J); Library No 980297; 2 June 1998 BPM Pty Ltd v HPM Pty Ltd, unreported; FCt SCt of WA; Library No 960206; 17 April 1996 Engel Pty Ltd (In Liq) v Leeds, unreported; FCt SCt of WA (Malcolm CJ); Library No 940403; 20 July 1994 Beach Petroleum NL v Johnson (1992) 7 ACSR 203 Bell Wholesale Co Pty Ltd v Gates Export Corp (No 2) (1984) 8 ACLR 588 Dallas Development Corporation Pty Ltd v Western Australian Land Authority [2000] WASCA 49 Dalrymple Park Pty Ltd v Tabe & Lees Pty Ltd (1996) 22 ACSR 71 FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd (2000) 22 WAR 241 Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523 MA Productions Pty Ltd v Austarama Television Pty Ltd (1982) 7 ACLR 97 Pegasus Gold Australia Pty Ltd v Bateman Project Engineering Pty Ltd [2001] FCA 377 Prime Holdings Pty Ltd v Shigeyuki Kanemaru (1992) 7 WAR 308 Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd & Ors [1985] 1 NSWLR 114 Tipperary Developments Pty Ltd v State of Western Australia (1996) 22 ACSR 241 Zortec Australia Pty Ltd v R & I Bank of WA, unreported; FCt SCt of WA; Library No 920609; 13 August 1992

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : NELSON CAPITAL PTY LTD -v- SHORT & ORS [2003] WASC 152 CORAM : MASTER NEWNES HEARD : 29 JULY 2003 DELIVERED : 15 AUGUST 2003 FILE NO/S : CIV 2736 of 2002 BETWEEN : NELSON CAPITAL PTY LTD (ACN 081 483 730)

Plaintiff

AND

ANTHONY NELSON SHORT

First Defendant

HALLCREST INVESTMENTS PTY LTD (ACN 064 752 361)

Second Defendant

AMADEUS ENERGY LTD (ACN 058 714 408)

Third Defendant

Catchwords:

Practice and procedure - Application for security for costs - Section 1335 - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 1335

Rules of the Supreme Court, O 25

(Page 2)

Result:

Security for costs ordered

Category: B

Representation:

Counsel:

Plaintiff : Mr R W Richardson

First Defendant : Mr M S Van Brakel

Second Defendant : Mr M S Van Brakel

Third Defendant : Mr M C Hotchkin

Solicitors:

Plaintiff : Bennett & Co

First Defendant : Clayton Utz

Second Defendant…

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: [2003] WASC 152
Decision Date

CaseChat Overview and Summary

Nelson Capital Pty Ltd (the plaintiff) brought proceedings against Anthony Nelson Short (the first defendant), Hallcrest Investments Pty Ltd (the second defendant) and Amadeus Energy Ltd (the third defendant) seeking damages for breach of fiduciary duty and an accounting of profits. The defendants applied for an order for security for costs under section 1335 of the Corporations Act 2001 (Cth) and, in the alternative, under Order 25 of the Rules of the Supreme Court. The defendants submitted that the plaintiff was unable to pay their costs if they were successful in their defences and that, in the exercise of the Court's discretion, an order should be made for security for costs. The plaintiff opposed the application. The Court found that the plaintiff's financial position was precarious, and there was credible evidence that the plaintiff would be unable to meet the defendants' costs if the defendants were successful at trial. The Court also found that the defendants' applications were not an attempt to stifle the plaintiff's claim and that the plaintiff's claim was bona fide and had reasonable prospects of success. Accordingly, the Court ordered that the plaintiff provide security for costs in the total amount of $150,000, to be provided in stages, with liberty to any party to apply to vary the amount of the security if circumstances materially change.

The Court's decision in this case highlights the importance of considering the financial position of a corporate plaintiff when deciding whether to grant an application for security for costs. The Court found that the plaintiff's precarious financial position was a factor of great weight in the exercise of its discretion, but it was not necessarily decisive, and regard must be had to all the circumstances of the case. The Court also noted that the fact that the plaintiff's claim was bona fide and had reasonable prospects of success was another important factor to consider. The Court's decision underscores the need for parties to carefully consider the merits of a claim and the likelihood of success when deciding whether to bring proceedings. It also highlights the importance of providing accurate and reliable financial information when applying for security for costs.

Orders