Legal Research
Cases
Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd

Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd

Link copied

Case Copied 22 October 2019 22 min read

Contents

On this page

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   PHOENIX EAGLE COMPANY PTY LTD -v- TOM McARTHUR PTY LTD [No 2] [2019] WASC 378
CORAM:   ALLANSON J
HEARD:   10 OCTOBER 2019
DELIVERED          :   22 OCTOBER 2019
FILE NO/S:   CIV 1746 of 2016
BETWEEN:   PHOENIX EAGLE COMPANY PTY LTD
Plaintiff
AND
TOM McARTHUR PTY LTD
First Defendant
TREVOR HOWARD BRICKHILL
Second Defendant
LAURA COSTANTINA BRICKHILL
Third Defendant
LAURA COSTANTINA BRICKHILL ATF THE TLAJ TRUST
Fourth Defendant

Catchwords:

Practice and procedure - Security for costs - Where defendants seek further security to trial - Where not disputed that corporate plaintiff would be unable to pay costs of defendants - Where plaintiff made litigation funding agreement with some shareholders - Where shareholders unwilling or unable to further fund litigation - Whether order for security would stultify action - Whether defendants contributed to plaintiff's impecuniosity - Proper exercise of discretion - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 1335

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	L A Warnick
First Defendant	:	G D Cobby
Second Defendant	:	G D Cobby
Third Defendant	:	G D Cobby
Fourth Defendant	:	G D Cobby

Solicitors:

Plaintiff	:	KD Legal
First Defendant	:	Roe Legal Services
Second Defendant	:	Roe Legal Services
Third Defendant	:	Roe Legal Services
Fourth Defendant	:	Roe Legal Services

Case(s) referred to in decision(s):

Australian Equity Investors v Colliers International (NSW) Pty Ltd [2012] FCAFC 57
Ballard v Brookfield Australia Investments Ltd [2012] NSWCA 434
BPM Pty Ltd v HPM Pty Ltd (1996) 131 FLR 339; (1996) 14 ACLC 857
Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497
Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301
Epping Plaza Fresh Fruit & Vegetables Pty Ltd v Bevendale Pty Ltd [1999] VSCA 43; [1999] 2 VR 191
Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40‑972
Fat-sel Pty Ltd v Brambles Holdings Ltd (1985) 3 ACLC 312; ATPR 40‑544
Harpur v Ariadne Australia Ltd (No 2) (1984) 2 ACLC 356
Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621
Jazabas Pty Ltd v Haddad [2007] NSWCA 291; (2007) 65 ACSR 276
KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189
Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302
Longjing Pty Ltd v Perpetual Nominees Ltd [2017] NSWSC 1690
LRSM Enterprise Pty Ltd v Zurich Australian Insurance Ltd [2014] NSWCA 88
Newtrend Pty Ltd v Oceanic Life Ltd [1990] WAR 1
Pearson v Naydler (1977) 1 WLR 899
PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 65 ALJR 642
Sent v Jet Corporation of Australia Pty Ltd [1984] FCA 185; (1984) 2 FCR 201
Spiel v Commodity Brokers Australia Pty Ltd (in liq) (1983) 35 SASR 294
Tirops Safety Technology Pty Ltd v Lazer Safe Pty Ltd [2005] WASC 164
Tyneside Property Management Pty Ltd v…

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.

Keep reading for free

Create a free CaseChat account to read Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2019] WASC 378
Decision Date: 22 OCTOBER 2019

CaseChat Overview and Summary

The matter between Phoenix Eagle Co Pty Ltd and Tom McArthur Pty Ltd involved a dispute where the defendants sought additional security for costs up to trial. The case was heard in the Supreme Court of Western Australia. The defendants argued that the corporate plaintiff would be unable to pay their costs if they were to succeed, and they sought further security beyond what had already been provided. The plaintiff, on the other hand, contended that it could not reasonably be expected to marshal further financial resources given the circumstances of its shareholders and creditors, who had already entered into litigation funding agreements with the plaintiff.

The central legal issues before the court were whether the order for further security would stultify the plaintiff's action and whether the defendants had contributed to the plaintiff's impecuniosity. The court needed to consider the extent of the defendants' potential loss, the plaintiff's ability to provide further security, and the overall fairness and justness of granting the defendants' application for further security. Additionally, the court had to assess whether the application for security was being used oppressively to deny the plaintiff its right to litigate.

In its reasoning, the court gave significant weight to the defendants' potential loss, which was estimated to exceed $500,000. The court found that the defendants' costs estimate was reasonable and that the risk of stultifying the plaintiff's action did not outweigh the need for further security. The plaintiff had not provided a full and frank disclosure of its shareholders' and creditors' assets and liabilities, which was crucial for the court's assessment. Although the plaintiff had a potential compensation claim exceeding $7.5 million, the court found that this factor was neutral between the parties. The court also noted that the plaintiff had not demonstrated that its impecuniosity was caused by the defendants' conduct. Ultimately, the court concluded that it was just to order further security, balancing the risk of stultifying the plaintiff's action against the defendants' need for protection.

The court's final order was that it was just to provide for further security for costs, and the defendants were required to provide additional security as requested.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

First, the court may give weight to the amount of the defendant's loss if the risk materialises: Sent v Jet Corporation of Australia Pty Ltd [1984] FCA 185; (1984) 2 FCR 201, 217. The defendants (from the first application for security) have estimated their costs through to completion as exceeding $500,000. The trial is anticipated to take 10 days and the estimate is reasonable. Second, the plaintiff asks the court to find that it is not reasonable to expect its shareholders and creditors to offer further support. As a result, the plaintiff submits, it is not reasonably able to marshal the necessary financial resources to give security. The plaintiff has not, however, put before the court a full and frank statement of the assets and liabilities of its shareholders and those creditors who are party to the litigation funding agreements: see Newtrend Pty Ltd v Oceanic Life Ltd [1990] WAR 1, 3; Tirops Safety Technology Pty Ltd v Lazer Safe Pty Ltd [2005] WASC 164 [47]. Third, the plaintiff has estimated the compensation to which it is entitled as more than $7.5 million, before interest. The litigation is complex and the trial is likely to be long. This factor is essentially neutral between the parties. Fourth, the defendants include two individuals. Some corporations, such as insurers, are capable of absorbing the costs of litigation as part of their business activities. Although it is not the subject of evidence, even if the defendants are wealthy there is a significant potential cost. Fifth, the plaintiff alleges that the individual defendants engaged in a fraudulent and dishonest design. Unless further security is given, they will each be forced to defend serious allegations as to their honesty without any real prospect of recovering more than a small portion of their costs, from the security already given, should they succeed. Sixth, I am not satisfied that the plaintiff has shown its impecuniosity was caused by the defendants' conduct. Seventh, although the plaintiff did not rely on delay, I have taken into account that the application has been brought after the plaintiff filed its witness statements and has already incurred significant costs of its own. On the other hand, the first application for security was for payment in tranches, and was brought on the basis that costs could exceed $500,000. The more recent delay in this matter was the result of the plaintiff's efforts to secure its own funding. Finally, I have considered whether the application for security is oppressive, whether it is being used merely to deny an impecunious plaintiff its right to litigate a just claim. The fact that an order for security may frustrate the plaintiff's claim is a strong factor to take into consideration, but is not decisive. The plaintiff has been able to make arrangements for payment of its own legal fees, should it succeed, but that offers no comfort to the defendants. I do not regard their attempt to protect their own positon as oppressive. Taking those matters into account, I am satisfied that it is just that there should be an order for further security. The risk of stultifying the proceedings does not outweigh the factors favouring an order for further security.