GP Phillips & Co Pty Ltd v Stantec Pty Ltd
[2005] QDC 223
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- Unreported Judgment
- GP Phillips & Co Pty Ltd v Stantec Pty Ltd[2005] QDC 223
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GP Phillips & Co Pty Ltd v Stantec Pty Ltd[2005] QDC 223
GP Phillips & Co Pty Ltd v Stantec Pty Ltd[2005] QDC 223
DISTRICT COURT OF QUEENSLAND
CITATION: | GP Phillips & Co Pty Ltd v Stantec Pty Ltd [2005] QDC 223 |
PARTIES: | GP PHILLIPS & CO PTY LTD (Plaintiff/Respondent) v STANTEC PTY LTD AS TRUSTEE FOR THE HUNTINGTON HOLDINGS UNIT TRUST (ACN 068 896 051) (Defendant/Applicant) |
FILE NO/S: | BD2672/04 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 21st of July 2005 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 19th of July 2005 |
JUDGE: | FORDE DCJ |
ORDER: |
|
CATCHWORDS: | SECURITY FOR COSTS – QUANTUM OF SECURITY – Nature of security – Costs assessment – personal guarantees by directors Corporations Act 2001 (Cth) s 1335 Uniform Civil Procedure Rules rr 179, 670 Gallus Properties Pty Ltd and Ors. v Richardson and Ors [2004] QSC 415 Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306 at 314 Maggbury Pty Ltd and Anor. v. Hafele Australia and Anor [2000] QSC 220 Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 |
COUNSEL: | Mr D Tucker for the Plaintiff/Respondent Mr R Jackson for the Defendant/Applicant |
SOLICITORS: | Tucker & Cowen Corrs Chambers Westgarth |
Introduction
- [1]The defendant, Stantec Pty Ltd, was the owner of some lots of land. The defendant agreed with the plaintiff, G P Phillips & Co Pty Ltd, that the latter would sell the land for the defendant. The plaintiff was a licensed real estate agent. The plaintiff sues for the commission payable on the sale of the said land. The general thrust of the defence is that the sales took place after the termination of the plaintiff’s appointment as agent or that other agents were involved.
- [2]The present application by the defendant is for security for costs pursuant to Rule 670 of the UCPR or s 1335 of the Corporations Act 2001 (Cth). The defendant seeks the sum of $57,000.00 as security. The plaintiff contends that as the plaintiff’s directors and the majority shareholder Mr. Phillips have offered personal guarantees in the sum claimed by the defendant for security, that the application should be dismissed. It further contends at the hearing that as that offer was rejected, that the quantum of the amount sought is excessive. The plaintiff accepts that $13,000 would be acceptable.
- [3]The defendant accepts that the case for the plaintiff is not “hopeless”. The plaintiff accepts that the jurisdiction to hear the application is enlivened, as apart from the potential proceeds of the action, the plaintiff is impecunious. It is not suggested that an order for security for costs would stifle or frustrate the litigation.[1]
Quantum of the security
- [4]The defendant relies on the affidavit evidence of Mr Abernethy, a partner in the firm acting for the defendant. Mr Abernethy is an experienced litigation solicitor. The method which he uses is to look at the indemnity costs of the action of $81,000 and to take say 75% to reflect the standard costs of $57,000. He explains the reasons for the delay in making the application in paragraph 7 of his affidavit sworn on 19 July 2005.
- [5]The defendant is involved in litigation in the Supreme Court with Ridgecliffe Pty Ltd. Mr Gordon Phillips and Ms Catherine Palmer are the sole directors and shareholders of Ridgecliffe. In that action Mr Philips and Ms Palmer have offered to the defendant personal guarantees on behalf of Ridgecliffe as plaintiff to the defendant. Justice Muir accepted unlimited guarantees in that action as sufficient security for the costs. The costs were limited to costs to the first day of the trial.
- [6]In explaining the delay, Mr. Abernethy states that the present application had to await the finalisation of the June 2004 accounts of the defendant which is the trustee in respect of the project the subject of these proceedings. These were not available until 12 April. These accounts showed that neither Mr Phillips nor Ms Palmer as directors and shareholders of Ridgecliffe would receive any distributions from the property development project. This explanation does not adequately explain why the application for security could not have been made earlier say in January 2005 after discovery in the proceedings. The lack of final accounts would be one factor in determining the financial position of the guarantors only as the plaintiff is a separate company to Ridgecliffe. The defendant raised the issue of security for costs for the first time on 16 May 2005.
- [7]The plaintiff has evidence from a costs assessor, Mr. Graham that the future costs up to the first day of trial would be $11,550.00-$13,166.00. No allowance was made for the costs to date because of the delay in making the application. The application, I find, could have been made earlier. In that event, it is open to the court to limit costs as from the date of the application: per White J. in Maggbury Pty Ltd and Anor. v. Hafele Australia and Anor.[2] Also, Her Honour stated that it is not unusual to allow security for costs only up to and including the first day of the trial.[3] I adopt that approach here. Taking a global approach to costs, I allow the sum of $15,000.00 by way of security for costs. I accept the evidence of Mr. Graham only on the basis that it is more detailed and probably he is more familiar with the costs being allowed on assessment in the District Court.
The nature of the security
- [8]The guarantors, Mr. Phillips and Ms. Palmer have offered personal guarantees. The Supreme Court has accepted unlimited guarantees from them in the other action. Mr. Abernethy deposes to the costs which they may be facing in the event that the guarantors are called on. At this point it is not clear which action would be heard in the first instance. However, if the Supreme Court action were to be heard in the first instance, it is problematical if any money would be left to meet any amount ordered by way of security in the present case.
- [9]The defendant argues that the guarantors are selling up their only asset and are going their separate ways, ending a personal relationship. Ms. Palmer is presently unemployed. The net asset position of Ms Palmer is $33,000-$42,000 and that of Mr Phillips some $51,000-$60,000. Mr Phillips is earning $25,000 per annum. They have offered personal guarantees up to $57,000. They have to pay their own costs of the action but that has been considered in determining their net asset position.
- [10]In determining whether personal guarantees are acceptable in the present case, the plaintiff relies upon the principle that such guarantees by persons standing behind the company is an important factor against a further order for security for costs and that such an order would not be made when those behind a corporation bring their assets into play.[4]
- [11]The defendant contends that one of the beneficiaries of the action would be David Edington. Edington Enterprises is a shareholder in the plaintiff company but Mr. Edington resigned as a director effective on 31 May 2005. This was after the question of security for costs was raised by the defendant’s solicitors. This is one factor to consider but in view of the personal guarantees of the existing directors, it cannot be decisive. The same may be said about the fact that the directors as guarantors are exposed to personal liability.[5]
Conclusions
- [12]Having considered all of the issues, it seems appropriate that the order for security for costs be limited to $15,000.00 and that the personal guarantees are sufficient security for such an amount. This is not a case where both guarantors have no chance of paying the amount of the security. The parties have also agreed that there be further orders for direction.
Orders
- That the plaintiff do provide security for the defendant’s costs in the sum of $15,000.00 by way of personal guarantees from Mr Gordon Phillips and Ms Catherine Mary Palmer.
- That the proceedings be stayed until such time as the said security be given to the solicitors for the defendant.
- That the time for service of a Counterclaim by the defendant provided for in rule 179 of the Uniform Civil Procedure Rules 1999 (Qld) be extended to 10 May 2005.
- That the plaintiff be granted leave pursuant to rule 188 of the Uniform Civil Procedure Rules to withdraw the admission contained in paragraph 2(c) of its Reply filed on 20 December 2004 in the terms of paragraph 2(c) of its Amended Reply and Answer filed on 2 June 2005; and
- Costs are to be costs in the cause.
Footnotes
[1] Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304.
[2] [2000] QSC 220 para. 29.
[3] ibid para. 39.
[4] Maggbury Pty Ltd op.cit. para 22; Gallus Properties Pty Ltd and Ors. v Richardson and Ors [2004] QSC 415 at para. 19; Mantaray Pty Ltd op.cit.
[5] Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306 at 314.