Shi v Benhamou Designs Pty Ltd - [2017] NSWSC 735

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Shi v Benhamou Designs Pty Ltd [2017] NSWSC 735
Hearing dates: 30 May 2017
Date of orders: 30 May 2017
Decision date: 07 June 2017
Jurisdiction: Equity
Before: Ward CJ in Eq
Decision:
1.   Application for security for costs dismissed.
2.   Cross-Defendant pay the Cross-Claimant’s costs of the amended notice of motion dated 4 May 2017 insofar as they relate to the application for security for costs.
3.   Otherwise costs be costs in the cause.

Catchwords: PRACTICE AND PROCEDURE – costs – security for costs – where security is sought from cross-claimant – whether cross-defendant has discharged burden of establishing that there is reason to believe that cross-claimant will be unable to pay adverse costs order – where cross-claimant essentially in position of defendant – application unsuccessful
Legislation Cited: Corporations Act 2001 (Cth), s 1335
Uniform Civil Procedure Rules 2005 (NSW), rr 42.21(1), 42.21(1A), 42.34
Cases Cited: Beach Petroleum NL v Johnson (1992) 7 ACSR 203
Bevwizz Group Pty Ltd v Transport Solutions Pty Ltd [2008] NSWSC 1399
Concrete Constructions Pty Ltd v Dalma Formwork Pty Ltd [1999] NSWCA 16
Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301; [2014] NSWCA 65
HP Mercantile Pty Ltd v Dierickx [2013] NSWCA 87
John Arnold’s Surf Shop (in liq) v Heller Factors Pty Ltd [1979] 22 SASR 20
KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189; [1995] FCA 76
Living Spring Pty Ltd v Kliger Partners (2008) 20 VR 377; [2008] VSCA 93
Meni’s Tailoring & Alterations v Jeanswest Corporation Pty Ltd [2003] FCA 1108
Owners-Strata Plan No 50530 v Walter Construction Group Ltd [2001] NSWSC 820
Sydmar Pty Ltd v Statewise Developments Pty Ltd [1987] 11 ACLR 616
Wollongong City Council v Legal Business Centre Pty Ltd [2012] NSWCA 245
Category: Procedural and other rulings
Parties: Xiao Bei Shi (Plaintiff/Cross-Defendant)
Benhamou Designs Pty Ltd (Defendant/Cross-Claimant)
Representation:
Counsel:
AC Harding (Defendant/Cross-Claimant)
R Davies (Plaintiff/Cross-Defendant)
Solicitors:
Landerer & Company (Plaintiff/Cross-Defendant)
Harris & Company (Defendant/Cross-Claimant)

File Number(s): 2016/00196916
Publication restriction: Nil

Judgment

HER HONOUR: By amended notice of motion dated 4 May 2017, Ms Xiao Bei Shi (the plaintiff/cross-defendant, Ms Shi) sought orders pursuant to s 1335 of the Corporations Act 2001 (Cth) and/or r 42.21(1) of the Uniform Civil Procedure Rules 2005 (NSW) for the provision by the cross-claimant (Benhamou Designs Pty Ltd (Benhamou Designs)) of security in the sum of $85,455 for her costs in defending the cross-claim filed on 9 September 2006 by Benhamou Designs. Benhamou Designs opposed the application for security for costs. In that amended notice of motion, Ms Shi also sought orders for the production of documents specified in a notice to produce filed on 22 March 2017 or, in the alternative, discovery of particular categories of documents.
Following the hearing of Ms Shi’s application, I dismissed the application for security for costs indicating that I would provide brief written reasons in due course. After a…

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: [2017] NSWSC 735
Decision Date: 07 June 2017

CaseChat Overview and Summary

The dispute in Shi v Benhamou Designs Pty Ltd involved the plaintiff, Shi, who sought an order for security for costs against the cross-claimant, Benhamou Designs Pty Ltd. The case was heard by the Supreme Court of Victoria. The plaintiff argued that there was a reason to believe that the cross-claimant would be unable to pay an adverse costs order, necessitating the imposition of security. The cross-claimant, in its defence, maintained that it was not appropriate to require security given its circumstances.

The legal issue at the heart of the case was whether the cross-defendant had discharged the burden of proving that there was reason to believe that the cross-claimant would be unable to pay an adverse costs order. The court had to consider the position of the cross-claimant, who was essentially in the position of a defendant, and the implications this had for the application for security for costs. The court also needed to assess whether the cross-claimant's financial position warranted the imposition of such security.

The Supreme Court determined that the cross-defendant had not met the requisite standard to establish a reason to believe that the cross-claimant would be unable to pay an adverse costs order. The court observed that the cross-claimant was essentially in the position of a defendant and held that it was not appropriate to require security in these circumstances. Consequently, the application for security for costs was dismissed. The court's reasoning focused on the cross-claimant's financial standing and the practicalities of the case, leading to the conclusion that the burden of proof was not satisfied.

No further orders were made by the court in light of the dismissal of the application for security for costs. The case underscores the importance of the burden of proof in applications for security for costs and the need for careful consideration of the cross-claimant's position and financial circumstances.

Orders