Versus (Aus) Pty Ltd v Collins

[2011] VCC 631

IN THE COUNTY COURT OF VICTORIA Revised

(Not) Restricted

AT MELBOURNE
COMMERCIAL LIST

GENERAL DIVISION

Case No. CI-11-00981

VERSUS (AUS) PTY LTD	Plaintiff
v.
KEN COLLINS (WHO IS SUED AS THE	Defendant
ADMINISTRATOR OF THE WILL, CODICIL AND ESTATE OF ERNEST VOJTEK, DECEASED)

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	26 May 2011
DATE OF JUDGMENT:	26 May 2011 (Revised 27 May 2011)
CASE MAY BE CITED AS:	Versus (Aus) Pty Ltd v. Collins
MEDIUM NEUTRAL CITATION:	[2011] VCC 631

REASONS FOR JUDGMENT

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Catchwords:  Practice and Procedure – Security for costs application – Whether the
plaintiff’s action would be “stultified” by an order for security –
Assessment of the affidavit material filed on behalf of the plaintiff.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr V. Ryan	Vincent J. Ryan
For the Defendant	Mr R. Moore	McNab McNab & Starke
HIS HONOUR:

1           The defendant by summons seeks an order that the plaintiff provide security for his costs of the proceeding. The application was part heard on 5 May 2011 and adjourned until today to allow the plaintiff the opportunity to file further material.

2           The plaintiff is a company. It is clear from the material that it would not have the capacity to pay the defendant’s costs if it were unsuccessful in the litigation. The sole director and shareholder of the plaintiff is Irena Spaleta. The plaintiff’s claim is based upon agreements entered into between, initially Mrs Spaleta and later the plaintiff, with Ernest Vojtek. It is alleged that Mr Vojtek requested Mrs Spaleta to provide care and companionship to him in return for a scale of fees according to the services provided. The plaintiff alleges that accounts for services were delivered on a regular basis over a number of years and remained unpaid at the date of the deceased’s death in 2009. The plaintiff’s claim is in excess of $1 million which includes a substantial claim for interest pursuant to the agreements at a rate in excess of 18 per cent per annum.

3           Mrs Spaleta and her husband have filed affidavits following the hearing on 5 May 2011. They are subject to a confidentiality condition that they only be shown to the defendant and his legal advisors. Those affidavits set out the financial position of both the plaintiff and Mr and Mrs Spaleta personally. The company has operated a fashion shop in Middle Brighton since January 2007. It is apparent from the material in the affidavits that the business has been unprofitable and generally sales have been considerably less than the cost of purchases and the revenue of the business has been substantially less than the expenditure. The income of Mr and Mrs Spaleta, apart from the business, is largely derived from social security benefits. It is apparent also that significant sums have been provided by way of loan from family members. Notwithstanding the other sources of income and capital injection, the affidavit material does not full explain how the plaintiff has continued to carry on business over the last four years. There is a substantial shortfall in the figures which have been provided in the affidavit material which is presently unexplained.

4           The application for security for costs is opposed on three bases:

a.	If the plaintiff is required to provide security in a significant amount, the plaintiff would not be able to continue with the proceeding and it will be denied the opportunity of pursing what it says is a substantial and genuine claim;
b.	The plaintiff says that it is effectively in the position of a defendant as it was required to bring the action by the administrator of the deceased’s estate, failing which the debt it had claimed from the estate could not have been pursued;
c.	The poverty of the plaintiff’s position and that of Mr and Mrs Spaleta was due, in part, to the fact that since 2007, they were required to give priority to looking after the deceased to the detriment of the conduct of the plaintiff’s business.

5     The latter two points were discussed at the hearing on 5 May and I consider that there is little substance in them and little support in the affidavit material. In relation to the assertion that the plaintiff’s claim will be stultified by an order for the provision of security, I consider that the affidavit material does not support that conclusion or is not sufficiently compelling of me to act upon it in the circumstances of this case.

6 for a number of years from income derived outside the business and from funds provided
by family members. It is clear that, apart from these sources of funds, there must be

It is apparent that Mr and Mrs Spaleta have been able to fund an unprofitable business previously referred to. It is likely, in the circumstances of this case, that there will either be other persons or other sources of funds which will enable the plaintiff to pursue the present litigation, and associated litigation in relation to the estate in the Supreme Court and, therefore, that funds are likely to be found to provide the security that I have indicated should be ordered in this case.

7 defendant currently seeks relates to the interlocutory steps up to and including mediation.

The defendant has filed comprehensive defence. The security for costs which the from the plaintiff’s perspective as the defendant wishes to explore the purported execution of a number of documents by the deceased through forensic handwriting analysis and an examination of the hard drives of computers from which various documents were produced by Mrs Spaleta. These “out of the ordinary” requests for discovery have not been included in the cost consultant’s calculation of the likely party/party costs of the defendant and, indeed, between the parties in their submissions the defendant claimed that the security to the completion of mediation should be in the sum of $28,289 whereas the plaintiff submitted that, if security were ordered, a figure of $16,000 would be more appropriate.

8     I consider that I should be conservative at this stage of the proceeding in ordering security and I have fixed the sum of $20,000 as the appropriate sum but have provided for part of that sum to be drawn down to pay the modest order of costs I have allowed to the defendant on the present application.

9 discovery of original documents for the purposes of forensic examination and

I have made an order which would give the defendant the opportunity of pursuing will or will not provide the security ordered. I have allowed 30 days for the plaintiff to provide security. It seems appropriate, in the meantime, to allow the parties to pursue discussions between themselves in relation to these limited issues. I would hope that this could be done without incurring significant costs. If the defendant wishes to pursue those matters, it will need to do so initially at its own costs and I think, in those circumstances, it is appropriate that the plaintiff should respond although the proceeding might ultimately be stayed if security for costs is not provided by the plaintiff.

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Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 26 May 2011 and revised on 27 May 2011.

Dated: 27 May 2011

Hannah Christensen

Associate to His Honour Judge Anderson