We Care Health Services P/L v Amtex P/L & Ursini No. DCCIV-98-530 Summary

WE CARE HEALTH SERVICES PTY LTD v AMTEX PTY LTD & URSINI
[2002] SADC 175
Judge Anderson
Civil

By application of 22 May 2002, the solicitor for the Defendants filed an application in this Court seeking, inter alia, “that Dominic James Patrick Meaney be joined as a party to this application”. For reasons which are set out in my decision published on 8 August 2002, that application is not yet resolved. What has been resolved is that there is power to make the order sought, notwithstanding that final orders as to costs have been made and acted upon, if the justice of the case so requires.
The history of the parties’ relationship since judgment was delivered on 10 August 2001 is of significance.
Parallel with the trial in this matter there arose, in mid-2001, a further dispute between the Plaintiff and first Defendant as to the payment of rent pursuant to the lease between them.
The substance of that dispute is not presently relevant, but it led to antagonistic correspondence between the parties and the non payment of rent by the Plaintiff. Whilst it was underway, I delivered judgment on 10 August 2001 and made an order for costs in favour of the Defendants.
On 20 August 2001 the first Defendant distrained for rent and so took possession of the leased premises and its contents.
A separate and ongoing dispute then arose between those parties as to the patient medical records which were kept in both paper file form and, to a lesser extent, on hard disk. Its history is not relevant to this application.
Pursuant to the order for costs made on 10 August 2001, the Defendants’ solicitor served a Short Form Bill of Costs on the Plaintiff and Dr Meaney on 25 September 2001. On 26 September 2001, by letter to Dr Meaney, the Defendants’ solicitor referred for the first time to his instructions to seek recovery of the costs from both the Plaintiff and Dr Meaney.
On 18 October 2001 an Allocatur issued certifying the costs payable by the Plaintiff. It is apparent from correspondence between the parties that there had been some dispute with the Short Form Bill, but it was not further heard and the Allocatur issued. It is now not possible to go behind the Allocatur.
The Allocatur was served upon the Plaintiff and Dr Meaney on 26 October 2001, together with a Creditor’s Statutory Demand for Payment of Debt dated that day.
By letter of 31 October 2001 Dr Meaney put forward certain proposals in relation to resolution of the costs issue, but did not at any time indicate that liability therefore was greater than the scope of the order of 10 August 2001. Inferentially, he rejected the Defendants’ solicitor’s suggestion that he had some personal responsibility for payment of the Defendants’ costs.
On 22 January 2002 an order for the winding up the Plaintiff was made. There is no expectation that there will be any distribution to creditors from the liquidator. Thus, as things presently stand, there are no funds to meet the Allocatur.
This situation led to the application of 22 May 2002 which sought the following orders:
“1.that Dominic James Patrick Meaney be joined as a party to this application.
2.that the said Dominic James Patrick Meaney pay to the defendants the costs of an incidental to this action as taxed pursuant to Section 42(1) of the District Court Act.
3.that the said Dominic James Patrick Meaney pay the defendant’s costs of and incidental to this application.
4..............”
In the course of preparation for trial, the Defendants made an application for security for costs. The affidavit in opposition thereto sworn by Dr Meaney alleged that the Plaintiff was not impecunious. The application was refused by the Master who published his reasons on 7 July 2000.
There is some suggestion by the Defendants that because of delay in the finalisation of pleadings, and because Dr Meaney was the Director of the Plaintiff company, and because the Allocatur has not been satisfied, that he should bear responsibility for the Defendants’ costs. This approach is best illustrated by the affidavit sworn by the second Defendant on 22 May 2002 in support of this application.
Counsel for the Defendants in this application placed some reliance upon Dr Meaney’s closeness to the Plaintiff company. I think this overlooks the obvious reality of the situation in that he and his wife were the only directors and the Plaintiff was the operating company for his medical practice. One might ask, in those circumstances, who else but Dr Meaney was to act for, and give instructions on behalf of, the Plaintiff company in this matter. I fail to see that he might be reasonably criticised for so doing.
There is no basis for any suggestion that the Plaintiff was insolvent in mid‑2000 when the application for security was made. Had there been, then any relevant information should have been put to the Master. No right of appeal from his decision was exercised.
It is suggested on behalf of the applicant that there was in fact no evidence to support such a conclusion and that the ‘situation is one in which matters relevant to the position of Dr Meaney and the Plaintiff were hidden from the Defendants but have become apparent since the Court handed down its decision” (Defendants’ Outline of Submissions - paragraph 6.5).
As best I can ascertain, there is nothing to support this submission. What in fact occurred was, as I have earlier set out, that for reasons quite separate from the matters flowing from the judgment of 8 August 2002, the first Defendant decided shortly thereafter to take action which, whilst seemingly entitled so to do, had the obvious effect of closing down the business of the Plaintiff.
Whilst the first Defendant may have been acting within the bounds of its lease with the Plaintiff in so doing, it seems that it failed to consider the obvious side effects of so doing insofar as recovery of the costs of action was concerned. What it effectively did by so acting was to close down the Plaintiff’s only way of carrying on business and so generating sufficient income from which to satisfy the costs order.
Thus, I am unable to accept that this result was something which was “hidden from the Defendants”. In my opinion, whilst exercising one right, they have failed to appreciate that they have thereby obliterated the opportunity to obtain completion of another.
In this circumstance, I am not of the view that assistance is to be gained from the obiter dicta of either Olsson J or Lander J in Vestris v Cashman (1999) 72 SASR 449.
Whilst Section 42(1) of the District Court Act permits an order for costs against a non party, it only does so where the justice of the case so requires. This is not such a case.
The application of 22 May 2002 is refused. The Plaintiff is to have the costs of the application.

In the South Australian District Court, We Care Health Services P/L, represented by its director Dr Meaney, was engaged in a legal dispute with Amtex P/L and Ursini. The case involved a history of disputes between the parties, including issues related to the payment of rent and the handling of patient medical records. The court had already made an order for costs in favor of the defendants, and an Allocatur was issued to enforce this order. However, the plaintiff company had become insolvent, leaving no funds to satisfy the Allocatur. The defendants sought to hold Dr Meaney personally responsible for the costs, arguing that he should bear the responsibility due to his role as the director of the plaintiff company and the delay in finalizing the pleadings.

The central legal issue before the court was whether Dr Meaney, as the director of the plaintiff company, could be held personally responsible for the costs of the action, despite the company's insolvency. The defendants argued that Dr Meaney's closeness to the plaintiff company and the delay in finalizing the pleadings warranted his personal liability for the costs. The court had to determine whether the justice of the case required Dr Meaney to be held responsible for the costs, despite the plaintiff company's insolvency.

The court found that there was no basis to hold Dr Meaney personally responsible for the costs. The court noted that Dr Meaney and his wife were the only directors of the plaintiff company, and it was reasonable for him to act on behalf of the company in the legal proceedings. The court also observed that the plaintiff company was not insolvent when the application for security was made, and there was no evidence to suggest that relevant information was hidden from the defendants. The court held that the defendants had failed to consider the side effects of their actions in closing down the plaintiff's business, effectively eliminating the opportunity for the plaintiff to generate income to satisfy the costs order. The court concluded that it was not just for Dr Meaney to bear the costs of the action and refused the application.

The court ordered that the application of 22 May 2002 was refused, and the plaintiff was to have the costs of the application.

We Care Health Services P/L v Amtex P/L & Ursini No. DCCIV-98-530

CaseChat Overview and Summary

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Background to the litigation

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Reasons for decision

Legal Principle Established