Peck v SCHOEN
[2008] WASC 180 (S)
PECK -v- SCHOEN [2008] WASC 180 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASC 180 (S) | |
| Case No: | COR:55/2008 | 12 AUGUST 2008 & 23 OCTOBER 2008 | |
| Coram: | MASTER SANDERSON | 21/08/08 | |
| 5/11/08 | |||
| 5 | Judgment Part: | 1 of 1 | |
| Result: | Costs order against plaintiff in main action Order for indemnity costs refused | ||
| B | |||
| PDF Version |
| Parties: | PETER LEONARD PECK ANDRE SCHOEN DATELINE (WA) PTY LTD (ACN 099 950 115) |
Catchwords: | Costs Turns on own facts |
Legislation: | Nil |
Case References: | Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
DECISION : 6 NOVEMBER 2008 FILE NO/S : COR 55 of 2008 BETWEEN : PETER LEONARD PECK
- Plaintiff
AND
ANDRE SCHOEN
First Defendant
DATELINE (WA) PTY LTD (ACN 099 950 115)
Second Defendant
- Plaintiff
AND
PETER LEONARD PECK
First Defendant
DATELINE (WA) PTY LTD (ACN 099 950 115)
Second Defendant
Catchwords:
Costs - Turns on own facts
Legislation:
Nil
Result:
Costs order against plaintiff in main action
Order for indemnity costs refused
Category: B
Representation:
COR 55 of 2008
Counsel:
Plaintiff : Mr R E Lindsay
First Defendant : Mr J D Steedman
Second Defendant : No appearance
Solicitors:
Plaintiff : Friedman Lurie Singh & D'Angelo
First Defendant : Karp Steedman Ross-Adjie
Second Defendant : No appearance
COR 111 of 2008
Counsel:
Plaintiff : Mr J D Steedman
First Defendant : Mr R E Lindsay
Second Defendant : No appearance
(Page 3)
Solicitors:
Plaintiff : Karp Steedman Ross-Adjie
First Defendant : Friedman Lurie Singh & D'Angelo
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Nil
(Page 4)
1 MASTER SANDERSON: When I published my reasons in this matter, I gave the parties the opportunity to make submissions in relation to costs. In relation to COR 55 of 2008, both parties have now made submissions. In addition, the solicitor for the first defendant filed an affidavit setting out, in some detail, the costs incurred by his client in defending the application.
2 On behalf of the plaintiff, it was submitted there should be no order as to costs. It was the plaintiff's submission that the first defendant had been guilty of misconduct and had invited the litigation. It was said that the first defendant failed to account for the assets of the company and had made use of those assets to earn a profit. In the circumstances, the plaintiff says that it was proper and appropriate that he should have brought this action. This point is developed at some length in the submissions, but essentially the plaintiff's position is straightforward.
3 For his part, the first defendant says that the plaintiff ought pay his costs on a full indemnity basis. As a starting point, the first defendant says that the plaintiff, properly advised, should not have brought this application. Essentially, what is submitted on behalf of the second defendant is that both parties (that is to say, the first and second defendants) had agreed that the second defendant ought cease trading. It was said that this was a classic case where there was an irreconcilable deadlock between the only two directors of the company, the plaintiff and the first defendant, and that the substratum of the company had failed. For these reasons it was said it was apparent that the proper course was that the company be wound up on the just and equitable ground. If, in the course of the winding up the liquidator took the view that there was some misconduct on the part of the first defendant, then the plaintiff could fund an action by the liquidator.
4 These submissions were developed in some detail. In particular, it was argued that the first defendant was not guilty of misconduct. The submissions pointed out that the first defendant had always acknowledged that he held property of the second defendant and that he was liable to account for the use of the second defendant's assets. There being no dispute on that question, there really was no basis upon which an action by the plaintiff in the name of the company could be authorised.
5 Furthermore, the first defendant says that he did not invite litigation. It was submitted that he had done everything necessary to properly manage the financial affairs of the second defendant. In particular, he had appointed a registered liquidator to investigate the second defendant's
(Page 5)
- finances with a view towards winding up. Given that the second defendant had no assets and was arguably insolvent, there was no further steps he could reasonably have taken to protect the company's position.
6 Having considered both sets of submissions, and with reference to the ultimate outcome of the application, I am satisfied that the proper order is that the plaintiff should pay the first defendant's costs of the application to be taxed. I am not satisfied that the costs should be paid on an indemnity basis. Despite the fact that the application was unsuccessful, it was by no means hopeless. The plaintiff was clearly concerned that the first defendant was using the second defendant's assets for his personal benefit. Armed with that fact - a fact which was not denied - it could not be suggested that the plaintiff had no grounds for taking the action that he did. As I have concluded, it would seem to me that there is a better way to deal with the obvious insolvency of the second defendant, but it is by no means the case that I concluded a person in the position of the plaintiff, properly advised, would not have initiated these proceedings.
7 Nor do I accept that it is appropriate there be no order as to costs. For his part, the first defendant acknowledged his liability to account to the second defendant for the use of its assets to produce income. Once that acknowledgment was made, the plaintiff was always at risk that if an action such as he took was unsuccessful, he would be responsible for the costs. That is why I think it is appropriate that the plaintiff should pay the first defendant's costs.
8 In proceedings COR 111 of 2008 the first defendant has applied to wind up the second defendant on the just and equitable grounds. The plaintiff has no objection to such an order being made. The question here again is who should pay the costs. In a minute of proposed orders, the first defendant proposes those costs should be paid by the plaintiff. The plaintiff says that the usual order should be made and the costs should be paid out of the assets of the company.
9 I am satisfied the proper order is that the costs be paid out of the assets of the company. The argument in this matter effectively took place in this action. Once I had determined that leave should not be granted to the plaintiff, then the winding up order was inevitable. I see no reason why these costs should be borne by the plaintiff.
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