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- Unreported Judgment
Park v Lanray Industries Pty Ltd QCA 114
COURT OF APPEAL
Appeal No 3613 of 2010
SC No 5675 of 2006
JOHN RICHARD PARK and Plaintiffs/
LACHLAN STUART McINTOSHRespondents
LANRAY INDUSTRIES PTY LTDFirst Defendant/
ACN 010 737 946First Appellant
SUNSHINE IMPORTS PTY LTDSecond Defendant/
ROUGHEND PINEAPPLE PTY LTDThird Defendant/
ACN 074 982 558Third Appellant
SUNSHINE LAND NOMINEES PTY LTDFourth Defendant/
ACN 010 050 567Fourth Appellant
THE KING OF NUTS PTY LTDFifth Defendant/
ACN 085 903 895Fifth Appellant
ROOFHILL PTY LTDSixth Defendant/
ACN 078 777 867Sixth Appellant
SUNFARM PTY LTDSeventh Defendant/
ACN 091 286 967Seventh Appellant
HIS HONOUR: The respondents to this application for security for costs have appealed against the primary Judge's decision giving leave to the applicants for security for costs (the respondents to the appeal) to file a further amended statement of claim and refusing to strike out the proceedings.
In the proceedings the respondent liquidators brought the claims in their own name without identifying their capacity as liquidators or, where appropriate, that the claim was brought on the behalf of the company. The causes of action relied on by the respondents in the proceedings are:
(b)under s 588FF of the Corporations Act 2001 (Cth) (voidable transactions); and
(c)under s 588FH of the Corporations Act 2001 (Cth) (uncommercial transactions).
The appellants contend that the proper plaintiff for the unjust enrichment claim is the company, not the respondents. In that regard, they relied on s 477(2)(a) of the Corporations Act 2001 (Cth) which relevantly provides:
"Subject to this section, a liquidator of a company may ... bring or defend any legal proceeding in the name and on behalf of the company."
Her Honour held, at least implicitly, that although it was necessary for the company itself to be the plaintiff in respect of the unjust enrichment claim that could be achieved by identifying the respondents as liquidators of the company. It is contended by Mr Rangiah, on behalf of the appellants, that this does not satisfy the requirements of s 477(2) and he cites authority for his submissions.
He submits that consequently the exercise of the discretion miscarried. It is not contended, however, that the claim is statute barred and consequently the pleading point raised is not fatal to the respondent's ultimate pursuit of the unjust enrichment claim.
In respect of the ss 588FF and 588FH claims, the contention is that the respondents were not identified as liquidators in the claim and amended statement of claim, and as the limitation period in s 588FF(3) has expired, there is no discretion to extend the period. Nevertheless, the primary Judge gave leave to amend the statement of claim to change the capacity in which the respondents could bring the proceeding.
It is argued that the primary Judge erred in holding that s 79 of the Judiciary Act 1903 (Cth) operated to pick up s 81 of the Supreme Court of Queensland Act 1991 (Qld) and the provisions of the Uniform Civil Procedural Rules as the Corporations Act did not contain any particular rule about the amendment or substitution of parties.
It is submitted that the primary Judge's decision is inconsistent with authorities including Greig v Stramit Corporation Pty Ltd  2 Qd R 17 and Sibroll Pty Ltd (in liq) v Mitch Properties Pty Ltd (2007) 212 FLR 1.
Counsel for the appellants submits that the appellants' prospects of success on the appeal are good and that this is a relevant consideration. The latter part of the proposition is certainly correct. I confess some scepticism about the inability of the Court in relation to the s 588FF and s 588FH causes of action to permit an amendment to make plain that which, arguably, at least, was always perfectly well understood and plain enough on the pleadings, namely, that the respondents were serving in their capacities as liquidators. In other words, the amendment, arguably, is not one which alters the capacity in which the respondents sued, but one which rectifies a failure to comply with the Uniform Civil Procedure Rules 1999 (Qld).
However, I am not prepared to conclude that the point is completely unarguable. Counsel for the respondents submits also that the orders appealed against involve the exercise of discretions in relation to matters of practice and procedure, placing a further barrier in the way of the appellants' success. Reliance was placed on Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 at 176-178.
In that regard, counsel for the appellants refer to Christianos v Aldridge (1995) 59 FCR 273. It supported the proposition that, arguably at least, the decision appealed against affected substantive rights.
Counsel for the respondents contended in reliance on the affidavit of Ms Markula, that the appellants are shown to be impecunious and that they do not appear to have moneys or other assets sufficient to satisfy a costs order. The affidavit discloses that the real property assets currently held by companies associated with the Big Pineapple near Nambour, including the fourth and sixth appellants, are currently under the control of a receiver and manager.
The receiver appears to provide information to enable the respondents to determine whether there will be a surplus remaining from the sale of these assets. It is said that Mr Hayes has deposed that he and other unnamed third parties have provided funding for the appellants' defence and that appears to be non-contentious.
Mr Hayes, on behalf of the respondents, swore an affidavit to the following effect. He is the father of the sole director of each of the respondent companies and he provides "strategic management and consultancy services" to the companies. The value of the land relating to The Big Pineapple owned by the fourth and sixth appellants and other entities in the Hayes’ Family Group of companies is approximately $28 million and there is an equity in the Land of approximately $10 million. The Land is being actively marketed by the receivers. There are other parcels of land surrounding the Land which are in the process of being sold and that the sale of all of the land should realise a gross price of at least $45 million which would realise "net proceeds of at least $27 million". At least $1 million "but probably significantly more, of the net proceeds of sale" will be received by the fourth and sixth appellants.
According to Mr Hayes any security for costs order would put at risk the sale process "as it would result in the imposition of a deadline for the sale to be completed and funds to be available."
There are obvious difficulties with Mr Hayes' evidence. It is inconsistent with the receiver's views about the timing of any likely sale. It is short on specifics and offers opinions without establishing any relevant expertise on the part of Mr Hayes. It also discloses little of the bases for the opinions expressed. The affidavit needs to be treated with considerable caution.
In my view, looking at the evidence overall the respondents have established an inability on the part of the appellants to satisfy a costs order.
The primary Judge ordered that the respondents pay the appellants' costs of the application at first instance on the standard basis. An estimate provided by the appellants' solicitor of those costs is between $30,000 and $35,000. It is submitted that those costs could be offset against any costs of the appeal that may be awarded in favour of the respondents. It is also the opinion of the appellants' solicitor that the costs of the appeal are likely to be less than the costs at first instance.
The respondents in their affidavit material seek security for costs in the amount of $70,000. Mr Kimball, solicitor for the respondents, estimates the likely solicitor/client costs at approximately $100,000 based on solicitors' costs of $40,000; senior counsel's costs of preparation for the appeal and hearing of the appeal at $30,000; junior counsel's costs of preparation and of the appeal at approximately $15,000 and senior and junior counsels' costs in relation to the outline of submissions of approximately $15,000. In my view, there is considerable merit in the contention that the respondents' estimate is excessive, having regard to the narrow issues for determination: issues which were ventilated before the primary Judge.
Counsel for the respondents argues in this regard that the complexity of the matter has been increased as a result of the challenge by the appellants to the authority of Re Jackaroo Agencies Pty Ltd  1 Qd R 332.
I do not know that there is a great deal in that point as the debate in relation to that matter would not appear to be extended, particularly beyond that advanced at first instance.
He submits also that it would be inappropriate to allow a set-off of the costs at first instance against the costs of the appeal on the basis that other costs will be accrued in the course of the trial and that the appropriate course to follow would be that any set-off take place against costs incurred on the trial. There are difficulties with the submission.
Counsel for the appellants pointed out that there was nothing to stop the appellants from having those costs assessed and enforcing the costs order.
The submission also, to a degree at least, begs the question of which party will succeed on the trial of the proceeding.
A troubling feature of this application is that there is no undertaking by those standing behind the appellant, and presumably his stand to benefit from the litigation, to meet the respondent's costs of the appeal should the appeal be successful. I have already expressed views on the merits of the appeal.
Another matter I should mention is the point raised by counsel for the appellants that the costs at first instance included costs which will not need to be borne on appeal, including the costs of a wider range of issues and the preparation of affidavit material.
Having regard to all of these matters it seems to me that in the exercise of my discretion the best course to follow is to decline to make an order for security for costs, the most significant point to my mind being the existence of the present costs order.
I note the undertaking of the solicitors on behalf of the appellants not to seek payment of the costs order at first instance until such time as the Court has determined the issue of costs in the appeal from that decision and to offset the relevant liabilities in the event that a costs order is made in favour of the respondents on the hearing of the appeal.
There is then a question of the costs of the application for security for costs. Counsel for the respondents points to the offer and the undertaking having been made only last Friday, and submits that the appropriate course to follow is that the costs of the application be the parties' costs in the appeal.
Counsel for the appellants referred to the chronology of events, and in particular, to dates on which the notice of appeal was filed, and material provided on either side. It does not seem to me, however, that any offer, such as that made, need have awaited the exchange of affidavits. It was an obvious course to follow if the appellants wished to obtain full protection in relation to costs orders.
The matter is a fairly finely balanced one, and in those circumstances it seems to me to be appropriate that the costs abide the event.
Accordingly, the orders I make are that the application for security for costs be dismissed, and that the parties' costs of the application be their respective costs in the appeal.
- Published Case Name:
Park & Anor v Lanray Industries Pty Ltd & Ors
- Shortened Case Name:
Park v Lanray Industries Pty Ltd
 QCA 114
18 May 2010