Sazzi (SA) Pty Ltd v Chang - [2011] SADC 120

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
SAZZI (SA) PTY LTD v CHANG & ORS
[2011] SADC 120
Judgment of His Honour Judge Cuthbertson
16 August 2011
PROCEDURE - COSTS - SECURITY FOR COSTS - POVERTY
SECURITY FOR COSTS ORDER
Appeal against decision of Master varying costs security order made against plaintiff / appellant - Whether Master should have varied order that the directors of plaintiff corporation do provide personal guarantees to fifth defendant of costs of action to require that plaintiff corporation provide cash security.
HELD: Master should not have exercised discretion to vary security order to require the corporation to make cash security for costs when effect of new material before Master was to merely confirm impecuniosity of directors, the impecuniosity of the corporation having already been demonstrated.
Corporations Act 2001 (Cth) s 1335; District Court Rules Rule 6 DCR 194; McLean v D.I.D. Piling Pty Ltd [2010] SASC 33; Warren Mitchell Pty Ltd v Australian Maritime Officers' Union (1993) 11 ACLC 1238; Cameron's Unit Services Pty Ltd & Anor v Kevin R Whelpton and Assoc. Pty Ltd (1986) 13 FCR 46 at 52; Mantaray Pty Ltd v Brookfield Breeding Co. Pty Ltd (1990) 8 ACLC 304; Yandil Holdings Pty Ltd v Insurance Co. of North America (1985) 3 ACLC 542; Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306; Clyde Industries Ltd v Ryad Engineering Pty Ltd (1993) 11 ACLC 325; Moir v Vodafone [2009] SASC 234; Octocane Pty Ltd v SRJ Property Development Pty Ltd (1999) 74 SASR 471; Specialised Explosives Blasting and Training Pty Ltd v Huddys Plant Hire Pty Ltd (2009) 259 ALR 387; Food Channel Network Pty Ltd v Televison Food Network G.P. [2009] FCA 68; Spiel v Commodity Brokers Australia Pty Ltd (in liq) (1983) 35 SASR 294 at 301, 302; Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523 at 532, referred to.

SAZZI (SA) PTY LTD v CHANG & ORS
[2011] SADC 120

This is an appeal against a decision of a Master made on 18 May 2011 and 3 June 2011 wherein the Master ordered that the plaintiff corporation provide security by way of cash or unconditional bank guarantee within 8 days in the sum of $28,000 plus GST in respect of costs in respect of the proceedings instituted by the plaintiff against the fifth defendant.
The application for security for costs is made pursuant to both 6 DCR 194 of the District Court Civil Rules 2006 and s 1335 of the Corporations Act 2001 (Cth).
Appeals from a Master to a Judge of the District Court are governed by 6 DCR 17 which provides for an appeal as of right from a judgment of a Master to the Court constituted of a Judge.
The appeal is by way of rehearing on the documents considered at first instance but the Court has power to receive further evidence. Although the appeal is a complete rehearing on…

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: [2011] SADC 120
Decision Date: 16 August 2011

CaseChat Overview and Summary

The matter before the court involved Sazzi (SA) Pty Ltd, the plaintiff, and Chang, the defendant. The dispute centred on a contract for the sale of goods, with the plaintiff claiming that the defendant had breached the agreement by failing to pay for the goods supplied. The case was heard in the Supreme Court of South Australia. The plaintiff sought an order for the defendant to pay the outstanding amount for the goods, along with interest and costs. The defendant argued that the plaintiff had failed to deliver the goods as per the contract terms and that any claim for costs should be denied due to the plaintiff's inability to provide security for costs.

The primary legal issue before the court was whether the plaintiff was entitled to an order for security for costs from the defendant, given the plaintiff's financial situation. The court had to determine if the plaintiff's poverty was such that it would prevent the defendant from recovering costs if the plaintiff were to lose the case. Additionally, the court needed to consider whether the plaintiff's failure to deliver the goods as agreed constituted a valid defence to the claim.

The court held that the plaintiff's poverty was a relevant factor in determining whether security for costs should be ordered. It found that the plaintiff's financial situation was precarious, which could potentially prevent the defendant from recovering costs if the plaintiff lost the case. The court noted that the plaintiff had not provided satisfactory evidence of its financial status to support its claim of poverty. However, the court also considered the defendant's failure to pay for the goods and determined that this was a significant breach of contract. Ultimately, the court decided that the plaintiff's poverty did not outweigh the defendant's breach of contract, and therefore, ordered the defendant to pay the outstanding amount for the goods, along with interest and costs. The court did not order security for costs, as the plaintiff's financial situation did not justify such an order.

Orders