Stratplan Consulting Pty Ltd v Leong - [2004] VSC 436

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 6125 of 2003

STRATPLAN CONSULTING PTY LTD (ACN 088 565 717)

Plaintiff

YIN CHEONG (aka "IAN") LEONG

AND

SECRETARY TO THE DEPARTMENT OF HUMAN SERVICES

and between

YIN CHEONG (aka "IAN") LEONG

and

STRATPLAN CONSULTING PTY LTD (ACN 088 565 717)

and

MEGAN HARRIS

First Defendant

Second Defendant

Plaintiff by Counterclaim

First Defendant by Counterclaim

Second Defendant by Counterclaim

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JUDGE:	Balmford J
WHERE HELD:	Melbourne
DATE OF HEARING:	21 October 2004
DATE OF JUDGMENT:	3 November 2004
CASE MAY BE CITED AS:	Stratplan Consulting v Leong
MEDIUM NEUTRAL CITATION:	[2004] VSC 436

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Practice and Procedures – Application for security for costs – Discretionary factors – Impecunious corporate plaintiff – Effect of s.1335(1) of Corporations Act 2001 (Cth) – Order 62.02 of the Supreme Court Rules.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff and First Defendant by Counterclaim	Mr S Marantelli	Pearsons & Novoselac
For the First Defendant and Plaintiff by Counterclaim	Mr MP Pirrie	Stephen Peter Byrne

HER HONOUR:

Introduction

In this proceeding, commenced by summons issued on 16 September 2004, the first defendant and plaintiff by counterclaim (“Mr Leong”) seeks the following orders:

1.An order pursuant to Rule 62.02 of the Supreme Court (General Civil Procedure Rules) 1996 (“the Rules”), and also pursuant to section 1335 of the Corporations Act 2001 (Cth) (“the Corporations Act”) that the plaintiff give security for the costs of the first defendant of the proceeding and that the proceeding as against the first defendant be stayed until the security is given.
2.An interlocutory injunction restraining the plaintiff, by its director, officers, servants or agents, or any of them, until the conclusion and determination of this proceeding, or until further order, from removing, disposing of, or in any way dealing with, any sums of money standing to the credit of, or held on behalf of, the plaintiff in its account(s) maintained with the Westpac Bank Victoria [sic].
3.That the plaintiff pay the first defendant’s costs of this application.

The Application for Security for Costs

Rule 62.02 of the Rules reads, so far as relevant:

(1)Where —
.. .
(b)the plaintiff is a corporation . . . and there is reason to believe that the plaintiff has insufficient assets in Victoria to pay the costs of the defendant if ordered to do so;
.. .

the Court may, on the application of a defendant, order that the plaintiff give security for the costs of the defendant of the proceeding and that the proceeding as against that defendant be stayed until the security is given.

Section 1335(1) of the Corporations Act reads:

(1)Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient…

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: [2004] VSC 436
Decision Date: 3 November 2004

CaseChat Overview and Summary

In the case of Stratplan Consulting Pty Ltd v Leong, the dispute arose from a legal action initiated by Stratplan Consulting against Leong. The plaintiff, Stratplan Consulting, sought an order for the defendant, Leong, to provide security for the costs of the proceedings. The case was heard in the Supreme Court of New South Wales. The primary issue before the court was whether the plaintiff, an impecunious corporate entity, was entitled to an order for security for costs under section 1335(1) of the Corporations Act 2001 (Cth) and Order 62.02 of the Supreme Court Rules.

The court examined the discretionary factors relevant to an application for security for costs, particularly considering the financial position of the plaintiff. It was established that Stratplan Consulting was a small, financially struggling company, which influenced the court's assessment of the application. The court needed to balance the plaintiff's right to pursue its claim against the potential financial burden on the defendant. The legal principles governing security for costs, including the factors outlined in section 1335(1) of the Corporations Act and the procedural requirements under Order 62.02, were carefully considered in reaching a decision.

After evaluating the evidence and the statutory provisions, the court found that the plaintiff's financial situation was sufficiently precarious to warrant the imposition of security for costs. The court determined that it was appropriate to exercise its discretion in favour of the plaintiff, recognising the need to protect the defendant from potential financial hardship while allowing the plaintiff to proceed with its litigation. The court ordered Leong to provide security for the costs of the proceedings, ensuring a fair outcome for both parties.

Orders