Woolworths Ltd v About Life Pty Ltd (No 2) - [2018] NSWSC 1340

Supreme Court

New South Wales

Medium Neutral Citation: Woolworths Limited v About Life Pty Ltd (No 2) [2018] NSWSC 1340
Hearing dates: 13 July 2018; further written submissions ending 16 August 2018
Date of orders: 31 August 2018
Decision date: 31 August 2018
Jurisdiction: Equity - Applications List
Before: Parker J
Decision:
See [69]

Catchwords:
PRACTICE AND PROCEDURE – applications – security for costs order – discretionary considerations – impecuniosity of plaintiff company – effect of cross-claims by directors of impecunious company – effect of undertaking by director or shareholder of impecunious company - Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1992) 8 ACSR 405 discussed

PRACTICE AND PROCEDURE – applications – security for costs order – discretionary considerations – whether defendant caused the plaintiff’s impecuniosity – cause of impecuniosity where claim is based on loss of profits
PRACTICE AND PROCEDURE – applications – security for costs order – discretionary considerations – defensive proceedings
Legislation Cited: Civil Liability Act 2002 (NSW), s 5O, Part 4
Competition and Consumer Act 2010 (Cth), sch 2 ss 18, 236 (‘Australian Consumer Law’)
Corporations Act 2001 (Cth), s 1335(1)
Uniform Civil Procedure Rules 2005 (NSW) r 42.21(d)
Cases Cited: Bell Wholesale Co Ltd v Gates Export Corp (1984) 2 FCR 1
Di Francesco v Pioneer Energy Pty Ltd (No 2) [2014] NSWSC 1923
Epping Plaza Fresh Fruit & Vegetables Pty Ltd v Bevendale Pty Ltd [1999] 2 VR 191; [1999] VSCA 43
Fiduciary Ltd v Morningstar Research Pty Ltd (2004) 208 ALR 564; [2004] NSWSC 664
Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1992) 8 ACSR 405
Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523
Intercraft Cabinets Pty Ltd v Sampas Pty Ltd
(1997) 18 WAR 306
Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621
Jazabas Pty Ltd v Haddad (2007) 65 ACSR 276; [2007] NSWCA 276
Maples v Hughes [2002] NSWSC 617
Re Felans Fisheries Pty Ltd [2016] NSWSC 1351
Woolworths Limited v About Life Pty Ltd (2017) 18 BPR 36,983; [2017] NSWSC 1117
Category: Procedural and other rulings
Parties: About Life Pty Ltd (Cross-Claimant on the Second Cross-Claim)
Aaron Kloczko & others trading as Maddocks Lawyers (First to Seventieth Cross-Defendants on the Second Cross-Claim)
Representation:
Counsel:
DA Lloyd (Cross-Claimant on the Second Cross-Claim)
PA Horvath / K Lindeman (First to Seventieth Cross-Defendants on the Second Cross-Claim)
Solicitors:
Gilchrist Connell (Cross-Claimant on the Second Cross-Claim)
Moray & Agnew (Cross-Defendant on the Second Cross-Claim)

File Number(s): 2017/162590
Publication restriction: Nil

Judgment

This is an application for security for costs by the cross-defendants to a cross-claim. The cross-defendants are current or former partners of Maddocks Lawyers, a partnership of solicitors with offices located around Australia including Sydney. I will refer to the cross-defendants collectively as “Maddocks” in this judgment. The cross-claimant is About Life Pty Ltd (“AL”), a former client of Maddocks.
The application is made under Uniform Civil Procedure Rules 2005 (NSW) r 42.21(d) which is in substantially…

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: [2018] NSWSC 1340
Decision Date: 31 August 2018

CaseChat Overview and Summary

Woolworths Ltd sought an order from the Federal Court of Australia for the defendant, About Life Pty Ltd, to provide security for costs. The case concerned a dispute over alleged misleading and deceptive conduct and unfair trading practices. The plaintiff claimed that the defendant’s actions caused significant financial losses, including lost profits. In response, About Life Pty Ltd argued that it was financially unable to meet the costs of the proceedings.

The primary legal issue before the court was whether the defendant should be required to provide security for the plaintiff’s costs. The court considered the discretionary factors relevant to this decision, including the financial position of the plaintiff and whether the defendant had caused the plaintiff’s impecuniosity. The court also considered whether the proceedings were defensive and whether any cross-claims or undertakings by the directors or shareholders of About Life Pty Ltd influenced the decision. The court noted that the impecuniosity of the plaintiff was a significant factor, but it also needed to consider whether the defendant had contributed to this situation.

In deciding the application, the court examined the case of Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd and determined that the impecuniosity of Woolworths was not caused by About Life. The court found that the impecuniosity arose from the nature of the claim, which was based on lost profits rather than any actions of the defendant. Additionally, the court concluded that the proceedings were not defensive, as there were substantive claims and counterclaims between the parties. The court also took into account the undertakings provided by the directors of About Life, which were deemed sufficient to address the plaintiff’s concerns about the defendant’s ability to pay costs. Based on these findings, the court decided that it was not appropriate to order the defendant to provide security for the plaintiff’s costs.

The court dismissed the application for security for costs, noting that the defendant was not responsible for the plaintiff’s impecuniosity and that the proceedings were not defensive. The court also considered the undertakings provided by the directors of About Life, which were sufficient to mitigate the plaintiff’s concerns about the defendant’s ability to pay costs.

Orders