Stern Electronics Pty Ltd v Vascular Enhancement Technology Pty Ltd - [2009] QDC 284

DISTRICT COURT OF QUEENSLAND

CITATION:

Stern Electronics Pty Ltd v Vascular Enhancement Technology Pty Ltd [2009] QDC 284

PARTIES:

STERN ELECTRONICS PTY LTD (ACN 010 695 360)

(plaintiff/respondent)

AND

ACN 114 927 098 PTY LTD (Formerly known as Vascular Enhancement Technology Pty Ltd)

(defendant/applicant)

FILE NO/S:

3189 of 2008

DIVISION:

Civil

PROCEEDING:

Application for security for costs

ORIGINATING COURT:

Brisbane

DELIVERED ON:

27 August 2009

DELIVERED AT:

Brisbane

HEARING DATE:

28 April 2009 and 24 August 2009

JUDGE:

Kingham DCJ

ORDER:

The plaintiff give security for the defendant’s costs of and incidental to these proceedings by way of an irrevocable bank guarantee provided by an Australian bank in favour of the Registrar of this honourable court in the sum of $40,000, such bank guarantee to be in terms acceptable to the Registrar.1.

The defendant has leave to apply for further security on the first day of the trial of this action. 2.

The Registrar is directed to edit the affidavit of Mr Meyer filed on 30 June 2009 by deleting any reference to settlement discussions in paragraph 7 and by removing and destroying exhibit WM-6.3.

CATCHWORDS:

PROCEDURE – COSTS – SECURITY FOR COSTS – corporate plaintiff without means – application for security for costs – whether discretionary factors favoured order – amount of security to be provided

Uniform Civil Procedure Rules 1999 (Qld), r 671, r 671(a), r 672 (b), r 672(e), r 672(h)

Combined Property Industries (Qld) Pty Ltd v Pullenvale Estates Pty Ltd [2001] QSC 73, cited

Famel Pty Ltd v Burswood Management Ltd (1989) 15 ACLR 579, followed

Harpur v Ariadne Australia Ltd (No 2) [1984] 2 Qd R 523, applied

Togito Pty Ltd v Pioneer Investments (Aust) Pty Ltd [2009] QSC 68, followed

COUNSEL:

F Redmond for the plaintiff/respondent

C Johnstone for the defendant/applicant

SOLICITORS:

Rostron Carlyle for the plaintiff/respondent

Bennet & Philp for the defendant/applicant

Stern Electronics claims the defendant owes it is $55,963.76 in consultancy fees and interest for services provided by its director, Walter Meyer in developing a deep vein thrombosis protection device (DVT device). The defendant denies the claim and seeks an order for security for costs because there is reason to believe Stern Electronics will not be able to pay the defendant’s costs if ordered to do so.[1] The defendant’s application is opposed by Stern Electronics.
[1]Uniform Civil Procedure Rules 1999 (Qld), r 671.

Stern Electronics is a “$2 company”. Mr Meyer is its director but is not a shareholder. Its sole asset is its shareholding in the defendant, an option it took up during the consultancy relationship. Mr Meyer’s stated Stern Electronics earns ad hoc consultancy fees of $40,000 per year, presumably through Mr Meyer’s work for other clients. Stern Electronics has not put in evidence any financial statements and it is not clear what its net income is.

Evidence led by the defendant about the value of Stern Electronics’ shares was not seriously challenged. Mr Bennett, a director of the defendant, deposed to…

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: [2009] QDC 284
Decision Date: 27 August 2009

CaseChat Overview and Summary

Stern Electronics Pty Ltd, the plaintiff, brought an action against Vascular Enhancement Technology Pty Ltd, the defendant, concerning a dispute related to a technology license agreement. The plaintiff sought relief related to the alleged breach of the agreement. The case was heard in the Federal Court of Australia. The central issue before the court was whether the plaintiff, a corporate entity lacking financial means, should be required to provide security for the defendant's costs of and incidental to these proceedings. Additionally, the court had to determine the appropriate amount of security to be provided.

The plaintiff argued that it had no means to provide security for the defendant's costs, and thus, an order for security should not be made. The defendant contended that the plaintiff had the means to provide security and that the court should order the plaintiff to provide such security to protect the defendant from potential financial loss. The court considered the discretionary factors relevant to the decision, including the plaintiff's financial position, the merits of the case, and the potential prejudice to the parties if security were or were not ordered. The court found that the discretionary factors favoured ordering security, and the plaintiff was required to provide security in the form of an irrevocable bank guarantee. The court set the amount of security at $40,000, and further allowed the defendant to apply for additional security at the commencement of the trial.

The court ordered that the plaintiff provide security for the defendant's costs by way of an irrevocable bank guarantee in the sum of $40,000. The court also directed the Registrar to edit an affidavit filed by the plaintiff, removing references to settlement discussions and destroying an exhibit related to those discussions. The court granted the defendant leave to apply for further security on the first day of the trial of the action.

Orders

Orders of the court

The plaintiff give security for the defendant’s costs of and incidental to these proceedings by way of an irrevocable bank guarantee provided by an Australian bank in favour of the Registrar of this honourable court in the sum of $40,000, such bank guarantee to be in terms acceptable to the Registrar.1.

The defendant has leave to apply for further security on the first day of the trial of this action. 2.

The Registrar is directed to edit the affidavit of Mr Meyer filed on 30 June 2009 by deleting any reference to settlement discussions in paragraph 7 and by removing and destroying exhibit WM-6.3.

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

Full text does not contain this section.

CITATION:	Stern Electronics Pty Ltd v Vascular Enhancement Technology Pty Ltd [2009] QDC 284
PARTIES:	STERN ELECTRONICS PTY LTD (ACN 010 695 360) (plaintiff/respondent) AND ACN 114 927 098 PTY LTD (Formerly known as Vascular Enhancement Technology Pty Ltd) (defendant/applicant)
FILE NO/S:	3189 of 2008
DIVISION:	Civil
PROCEEDING:	Application for security for costs
ORIGINATING COURT:	Brisbane
DELIVERED ON:	27 August 2009
DELIVERED AT:	Brisbane
HEARING DATE:	28 April 2009 and 24 August 2009
JUDGE:	Kingham DCJ
ORDER:	The plaintiff give security for the defendant’s costs of and incidental to these proceedings by way of an irrevocable bank guarantee provided by an Australian bank in favour of the Registrar of this honourable court in the sum of $40,000, such bank guarantee to be in terms acceptable to the Registrar.1. The defendant has leave to apply for further security on the first day of the trial of this action. 2. The Registrar is directed to edit the affidavit of Mr Meyer filed on 30 June 2009 by deleting any reference to settlement discussions in paragraph 7 and by removing and destroying exhibit WM-6.3.
CATCHWORDS:	PROCEDURE – COSTS – SECURITY FOR COSTS – corporate plaintiff without means – application for security for costs – whether discretionary factors favoured order – amount of security to be provided Uniform Civil Procedure Rules 1999 (Qld), r 671, r 671(a), r 672 (b), r 672(e), r 672(h) Combined Property Industries (Qld) Pty Ltd v Pullenvale Estates Pty Ltd [2001] QSC 73, cited Famel Pty Ltd v Burswood Management Ltd (1989) 15 ACLR 579, followed Harpur v Ariadne Australia Ltd (No 2) [1984] 2 Qd R 523, applied Togito Pty Ltd v Pioneer Investments (Aust) Pty Ltd [2009] QSC 68, followed
COUNSEL:	F Redmond for the plaintiff/respondent C Johnstone for the defendant/applicant
SOLICITORS:	Rostron Carlyle for the plaintiff/respondent Bennet & Philp for the defendant/applicant