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  4. Dromahair Pty Ltd v K J and GL Schamburg Pty Ltd - [2014] QDC 87

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Dromahair Pty Ltd v K J and GL Schamburg Pty Ltd[2014] QDC 87

Dromahair Pty Ltd v K J and GL Schamburg Pty Ltd[2014] QDC 87

DISTRICT COURT OF QUEENSLAND

CITATION:

Dromahair Pty Ltd  v K J and GL Schamburg Pty Ltd (as trustee of the Schamburg Property Trust [2014] QDC 87

PARTIES:

DROMAHAIR PTY LTD

(plaintiff)

v

K J AND GL SCHAMBURG PTY LTD (AS TRUSTEE OF THE SCHAMBURG PROPERTY TRUST)

(defendant)

FILE NO/S:

119/13

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

Rockhampton

DELIVERED ON:

17 April 2014

DELIVERED AT:

Brisbane

HEARING DATE:

7th April 2014

JUDGE:

Smith DCJ

ORDER:

  1. The Application by the Defendant for summary judgment is dismissed except to the extent that it is declared that the Defendant was entitled to be reimbursed the sum of $8800 held in the trust account of Messrs Grant and Simpson on account of the parties.
  2. The application by the Defendant for an order striking out the statement of claim is granted and the statement of claim is struck out.
  3. The Plaintiff is allowed until 30 May 2014 in which to re-plead its case.
  4. The Plaintiff is to provide security for defendant’s costs in the sum of $25,000.
  5. Pursuant to order number 4 the court directs that the sum of $25,000 (presently held in the trust account of Messrs Grant and Simpson on account of the parties) be paid into the court which sum shall be the Plaintiff’s provision as to security for costs.
  6. There be liberty to apply on the giving of 2 days written notice.
  7. The matter be listed for trial in the sittings commencing 8 September 2014.
  8. The costs of and incidental to the making of the declaration referred to in order 1 will be reserved.
  9. I will otherwise hear the parties on the question of costs. For this purpose the defendant may file and serve written submissions on the question of costs not exceeding 3 pages by 5pm on 2 May 2014 and the plaintiff may file and serve written submissions in reply by 5pm on 9 May 2014 not exceeding 3 pages. 

CATCHWORDS:

PRACTICE AND PROCEDURE – Application for summary judgment – whether question to be tried – whether statement of claim should be struck out – whether order for security for costs should be made 

CONTRACT – whether there was an implied term of good faith 

Uniform Civil Procedure Rules 1999 (Q) Rr 171, 292, 293, 670, 671, 672

Agar v Hyde (2000) 201 CLR 552

Alcatel Australia v Scarcella (1998) 44 NSWLR 349

Beach Petroleum NL v Johnson (1992) 7 ACSR 203

Far Horizons Pty Ltd v McDonald’s Australia Ltd [2000] VSC 310

Gary Rogers Motors Australia Pty Ltd v Subaru (Australia) Pty Ltd (1999) 21 ATPR 41-703

Kakavas v Crown  Melbourne Limited [2013] HCA 25

Kendell v Sweeney and Ors  [2005] QSC 64

National Mutual Life Association of Australia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441

Projects Company No.2 Pty Ltd v Cushway and Associates Pty Ltd & Anor [2011] QCA 102

Southern Cross Exploration NL v Fire and All Risks Insurance Co Lt [1985] 1 NSWLR 114

Spencer v The Commonwealth [2010] HCA 28

Taylor v Johnson (1983) 151 CLR 422

Contract Law in Australia Carter JW, Peden, E & Tolhurst GJ 5th Edition.

COUNSEL:

Mr. G. Byrne for the Plaintiff

Mr. S. Deaves for the Defendant

SOLICITORS:

McNamara and Associates for the Plaintiff

Grant and Simpson for the Defendant 

Introduction

  1. [1]
    This is an application by the defendant for judgment on both the claim and counterclaim as against the plaintiff under rules 292 and 293 of the UCPR. Alternatively the defendant seeks to strike out the statement of claim under r 171 UCPR or alternatively seeks an order that further and better particulars be provided.
  1. [2]
    There is a further application by the defendant that the plaintiff pay the sum of $62,000 by way of security for costs.
  1. [3]
    The Plaintiff opposes these applications.

The pleadings

  1. [4]
    The plaintiff sues the defendant for $80,000 for money owing or $80,000 damages for breach of contract. Alternatively it seeks a declaration that the plaintiff is entitled to $80,000 by way of equitable compensation.
  1. [5]
    In the statement of claim, the plaintiff alleges that on 11 December 2012, the plaintiff as vendor and the defendant as purchaser entered into a contract for the sale of a property at 128 East Street Rockhampton.  The purchase price was $1,380,000 with settlement due to occur on 3 April 2013.
  1. [6]
    On the evening of 24/25 January 2013, the property was damaged by a storm. Prior to settlement Mr O'Rourke (on behalf of the plaintiff) and Mr Schamburg (on behalf of the defendant) agreed that the plaintiff would make an insurance claim. Further in paragraph 10 it is alleged that the contract was varied to the extent that:
  1. (a)
    The vendor would use all endeavours to ensure insurance claims were lodged and processed as soon as possible with its insurer;
  1. (b)
    $80,000 of the purchase price would be retained in the trust account of the defendant’s solicitors Grant & Simpson;
  1. (c)
    In the event the repairs were not completed within two calendar months after settlement the purchaser (the defendant) would be at liberty to access the funds to arrange for the repairs to be completed; and
  1. (d)
    The defendant would be at liberty to access the retention money to subsidise the shortfall in rent which the defendant would have received from Pimp My Party Pty Ltd if not for the repair work. 
  1. [7]
    It is alleged that Mr O'Rourke on behalf of the plaintiff lodged an insurance claim (paragraph 11).
  1. [8]
    In paragraph 13 it is alleged “in making the contract, John O'Rourke, who as director was the decision maker for and representative of the plaintiff with respect of the contract, was not aware of or did not turn his mind to clause 17 of the contract, whereby risk passed to the defendant on 12 December 2013 and he assumed that since the plaintiff had insurance, that the insurance would pay for the repairs.”
  1. [9]
    It is then alleged that on 4 April 2013 the plaintiff made the insurance claim (paragraph 15).
  1. [10]
    The plaintiff pressed for an urgent resolution of the insurance claim and at the request of the insurer it requested information of insurance details regarding the property from the defendant via its solicitors (paragraph 19).
  1. [11]
    It is then alleged there were two relevant implied terms in the contract namely:
  1. (a)
    That each party had agreed to do all such things as were necessary on its part to enable the other party to have the benefit of the contract (paragraph 22).  It is alleged that there was an agreement the plaintiff would use all endeavours to ensure the insurance claims were lodged and processed and this could not effectually be done unless the defendant cooperated and supplied information required by the plaintiff’s insurer.
  1. (b)
    The second implied term is that each party would act with good faith in respect to the contract with respect to the duties of the other party to the contract (paragraph 24).  It is alleged that since the plaintiff’s insurer did not receive information from the defendant it did not process the plaintiff’s insurance claim (paragraph 28).  It is further alleged that prior to 19 June 2013 (two months after settlement) the defendant’s solicitors made many attempts to obtain the information required by the plaintiff’s insurer but this was not forthcoming from the defendant (paragraph 29). 

The plaintiff claims the relief I have mentioned earlier.

The defence and counterclaim

  1. [12]
    In the defence and counter claim the defendant admits a number of the allegations contained in the statement of claim.
  1. [13]
    However the defendant denies:
  1. (a)
    There was an implied term that each party would act in good faith to each other (paragraph 7);
  1. (b)
    That no invoices or quotes were supplied by the defendant to the plaintiff.  Indeed in this regarding [9] of the defence, the defendant alleges that a number of relevant documents were provided.
  1. [14]
    Further the defendant alleges the property was subject to a number of registered easements which were not disclosed in the contract and constituted a material miss-description (paragraph 10).
  1. [15]
    Further it is alleged that without notice the plaintiff in or about February 2013 agreed with the lessee Pimp My Party to reduce lease B payments from $4,000 per week to $2,200 per week until the storm damage was repaired (paragraph 15). No notification of this was given to the defendant.
  1. [16]
    It is therefore alleged that the defendant was entitled to terminate the contract (paragraph 18).
  1. [17]
    It is alleged the defendant’s solicitor advised the plaintiff’s solicitors of the above circumstances and provided the plaintiff agreed to (a) repair the damage, (b) reimburse any shortfall in rent and (c) to a retention, the contract would be affirmed (paragraph 19).
  1. [18]
    It then alleges that the agreement in paragraph 10 of the statement of claim was reached and $80,000 was retained (paragraphs 20, 21).
  1. [19]
    In the counterclaim it is alleged the plaintiff failed to cause the damage to be repaired by 3 June 2013 (paragraph 23).
  1. [20]
    It is then alleged the defendant repaired the damage by October 2013 for the following costs:
  1. (a)
    Day to Day Construction $1,295;
  1. (b)
    Day to Day Construction $27,325.10;
  1. (c)
    Goode Air Refrigeration and Air Conditioning $16,187.33

Total: $44,807.43.

  1. [21]
    It is further alleged the rental shortfall was $8,800 (paragraph 27).
  1. [22]
    In the premises declarations are sought that the defendant is entitled to $44,807.43 plus $8,800 or alternatively damages in the sum of $53,607.43.

Reply and answer

  1. [23]
    The plaintiff admits the allegations that the easements were not disclosed in the contract (although in paragraph 4 it alleges they were disclosed in correspondence on 18 January 2013); the allegations concerning the rent reduction; and agrees there was an election by the defendant to affirm on the basis alleged by the defendant in paragraph 19 (see paragraph 2 of the reply).
  1. [24]
    In answer to the counterclaim it alleges that the repairs were not done as the defendant refused to provide details of its insurance (see paragraph 7). It cannot admit that the repairs were done or the cost of them (see paragraphs 8,9 and 10).
  1. [25]
    It admits the defendant is entitled to a shortfall in rent but cannot admit the quantum (see paragraph 12).
  1. [26]
    It further says that the GoodeAir Refrigeration and Conditioning account of $16,187.33 does not relate to the storm (see paragraph 10).

The affidavit material

Defendant’s material

  1. [27]
    Bianca White in an affidavit filed on behalf of the defendant on 19 March 2014 states that on 29 January 2014 a rule 444 letter was sent by the defendants to the plaintiff (BRW5) which required particulars of the statement of claim. These do not appear to have been provided.
  1. [28]
    Georgina Schamburg, the sole director of the defendant has sworn an affidavit which was filed on 26 March 2014.
  1. [29]
    In this affidavit she produces the contract (GLS02) and also produces the lease to Pimp My Party Pty Ltd (GLS03).
  1. [30]
    She alleges that on or about 22 February 2013 she became aware of the reduced rental agreement to the lessee and that no consent had been obtained from the defendant regarding this (paragraphs 5-6).
  1. [31]
    Further, in paragraph 7, she alleges she instructed the defendant’s solicitors to advise the plaintiff’s solicitors that she was willing to affirm the contract on the condition that the plaintiff agreed to be responsible for repairing the damage, the plaintiff would reimburse any rental shortfall and there would be a retention amount. Ultimately it was agreed the retention amount would be $80,000.
  1. [32]
    She alleges in paragraph 11 that the plaintiff failed to cause the repairs to the damage to be completed by 3 June 2013 and indeed had not caused the repairs to be completed by the end of September 2013 (paragraph 11).
  1. [33]
    The defendant thereby caused the repairs to the damage to be completed and the following costs were incurred:
  1. (a)
    Day to Day Construction $1,295;
  1. (b)
    Day to Day Construction $27,325.10 and
  1. (c)
    Goode Air Refrigeration and Air conditioning $16,187.33.
  1. [34]
    She confirms that these amounts had been paid. She also confirms that the sum of $8,800 was received on or about 23 April 2013.
  1. [35]
    On or about 1 July 2013 the defendant’s solicitors wrote to the plaintiff’s insurer’s solicitors indicating the defendant did not have insurance over the property following the signing of the contract.
  1. [36]
    Turning to the exhibits contained in Ms Schamburg’s affidavit, GLS04 sets out relevant correspondence. I have had regard to this. There is a letter from Goode Air dated 21 February 2013 which indicates that the sum of $14,715.75 excluding GST did relate to the storm damage. Additionally the letters from Day to Day Constructions prove, in my opinion, that the amounts relate to repairs caused by the storm.

Plaintiff’s material

  1. [37]
    Mr O'Rourke a director of Dromahair, the plaintiff, has provided an affidavit. He says in this affidavit that the delay in this matter has been caused by a lack of cash flow within Dromahair.
  1. [38]
    In relation to the affidavit of Ms Schamburg sworn 26 March 2014 he says “it was my expectation that the repairs would be covered by the insurance policy which Dromahair Pty Ltd had on the property. Once the insurance claim was approved the repairs would have been completed. The insurance company sought to clarify if the defendant had insurance as the insurance risk passed to the defendant under the terms of the contract, the day after the contract was signed. The defendant would not provide any response to the plaintiff for its insurer. The defendant’s solicitors could not give any instructions from the defendant for months.”
  1. [39]
    He attaches as JP01 correspondence in this regard.
  1. [40]
    On 19 June 2014 CLS Lawyers on behalf of SRS Underwriting wrote to Grant & Simpson noting that that they had spoken to Mr Schamburg who advised he had contacted his insurance broker and requested a response as a matter of urgency.
  1. [41]
    There is also a letter dated 17 May 2013 requesting notification as to whether the defendant had insurance covering the property. There is further a letter from McNamara Associates to Grant & Simpson alleging “your clients’ action or omission in failing to provide to provide details of its insurance and tenancy frustrates the agreement you allege in the 15 May letter to us. The correspondence and discussions demonstrate that your client has not answered this simple query, that you cannot get instructions regarding it and that my client’s insurance claim will not be processed until such information is supplied.”
  1. [42]
    It is alleged in paragraph 17(c) “the repairs were not completed because of the defendant’s delay as the insurance company would not approve the claim until it knew if they were the insurance company liable or whether the defendant should make a claim under their own insurance policy.”
  1. [43]
    Exhibit JP02 is a letter from Dromahair’s insurer which indicates it was prepared to accept the claim arising in the sum of $28,433.27 (the excess was $20,000).

Submissions

Defendant’s submissions

  1. [44]
    The defendant submitted that summary judgment should be given in favour of the defendant in respect of both the claim and counter claim. It is submitted that the plaintiff appears to be relying on the doctrine of mistake and upon breach of implied terms. The only type of mistake alleged appears to be a unilateral one. In this regard the defendant relies on [20] – [38] of Contract Law in Australia Carter JW, Peden, E & Tolhurst GJ 5th Edition and Taylor v Johnson (1983) 151 CLR 422 at 432. It is submitted there is no pleading that the defendant knew or ought to have known of the plaintiff’s mistake nor is there any pleading that the defendant in any way contributed to the mistake. 
  1. [45]
    Turning then to the implied terms it is submitted that the first implied term namely “each party agree to do all such things as were necessary to enable the other to have the benefit of the contract” is admitted but there is no pleading to explain how this term was breached. The plaintiff does not explain on its pleading how any benefit is being lost.
  1. [46]
    With respect to the alleged implied term of good faith the defendant denies the existence of such an implied term. It is submitted by reference to Kendell v Sweeney and Ors  [2005] QSC 64 that such a term is not implied into commercial contracts in Queensland.  In any event the plaintiff pleads no facts which would lead to a conclusion that such a term should be implied as a matter of fact. 
  1. [47]
    Finally it is submitted that the pleading does not explain how the plaintiff suffered any loss. There is no pleading the plaintiff lost any right to claim an indemnity under its insurance policy for the cost of repairs. The claim is the $80,000 is owed by way of a “debt” which is simply not explained.
  1. [48]
    In terms of the claim for judgment on the counterclaim it is submitted that when one considers the affidavit of Ms Schamburg, the plaintiff’s claim cannot succeed because the amendments to the existing contract were agreed to in circumstances where the defendant had an entitlement to terminate the existing contract and agreed to a varied contract in consideration of the amendment. The plaintiff was represented by lawyers in connection with the existing contract and the agreement to amend.
  1. [49]
    The terms of the amending contract were clear and despite the fact there was some delay in confirming that it did not have insurance in place, the defendant waited a further four months after the agreed two month period had expired before undertaking the repairs itself.

Plaintiff’s submissions

  1. [50]
    On the other hand the plaintiff submits that the defendant in the face of multiple requests failed to answer a simple question “do you have insurance on the building the subject of the contract?” It is submitted that the primary consideration is that the court would be exceedingly reluctant to deny a defendant [to a counter-claim] an opportunity to present a valid defence to a counterclaim regardless of the amount of time that has elapsed (see National Mutual Life Association of Australia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd.R.441 at 449).
  1. [51]
    It is further submitted that it is open to the court to imply a term for the parties to act in good faith into the contract. There is no decision in Queensland which would prevent such an implication and indeed the law in New South Wales is clear as there have been a number of pronouncements that such a term can be implied into commercial contracts (See Alcatel Australia v Scarcella (1998) 44 NSWR 349).  In addition in both the Supreme Court of Victoria (see Far Horizons Pty Ltd v McDonald’s Australia Ltd [2000] VSC 310) and the Federal Court of Australia (see Gary Rogers Motors Australia Pty Ltd v Subaru (Australia) Pty Ltd (1999) 21 ATPR 41-703 it has been held that a term of good faith can be implied into a commercial contract.

Principles to be applied

  1. [52]
    The application here is one of summary judgment in favour of the defendant both in respect of the claim and counter-claim. The relevant rules are rules 292 (for a plaintiff) and 293 of the UCPR (for a defendant). The court is empowered to give summary judgment where:
  1. (a)
    The plaintiff has no real prospect of succeeding on all or part of the plaintiff’s claim; and
  1. (b)
    There is no need for a trial of the claim or part of the claim.
  1. [53]
    The tests for both 292 and 293 are the same i.e. what is required is there is a high degree of certainty about the ultimate outcome of the proceeding – if it were allowed to proceed in the ordinary way (see Agar v Hyde (2000) 201 CLR 552). 
  1. [54]
    As French CJ and Gummow J in Spencer v The Commonwealth [2010] HCA 28 said at [24]:

“The exercise of powers to summarily terminate proceedings must always be attended with caution.  That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process.  The same applies where such a disposition is sought in a summary judgment application supported by evidence.  As to the latter, this court Fancourt v Mercantile Credits Ltd said:

‘The power to order summary or final judgment is one that should be exercised with great care that there is no real question to be tried’.”

More recently, in Batistatos v Roads and Traffic Authority (NSW) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde which included the following:

"Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.’”

  1. [55]
    Further in Projects Company No.2 Pty Ltd v Cushway and Associates Pty Ltd & Anor [2011] QCA 102 at [27] the court noted that where the law is uncertain especially in a state of development, it is inappropriate to strike out a claim.

Conclusions as to the summary judgment application

  1. [56]
    In reaching my decision I have had regard to the material filed, the submissions of the parties and the legal principles applicable. I also consider the onus is on the defendant.
  1. [57]
    As noted above it seems clear from the correspondence attached to Mr. O'Rourke’s affidavit that requests were made to the Defendant as to its insurance position as early as 15 May 2013. On 15 May 2013 Grant and Simpson was advised that the insurance claim would not be processed until the defendant provided details of its insurance. In addition CLS lawyers on behalf of the Plaintiff’s insurer wrote to Grant and Simpson on 17 May 2013 and 19 June 2013 in this regard. It seems that a reply was only given on 1 July 2013, after the 2 month period. It may be relevant why there was such a delay.
  1. [58]
    That is of course not the end of the matter because none of the above matters if this was irrelevant to an insurance payout to the Plaintiff. I was told from the bar table that it was, but there is no pleading as to this nor is there evidence in the form of the insurance contract.
  1. [59]
    It may be there is an argument on the part of the plaintiff that a term of good faith may be implied.
  1. [60]
    In Kendell (supra) Muir J at [59] noted there is to be caution applicable to this are but it was not necessary for his Honour to express a concluded view as to which line of authority should be followed (see [60]). I certainly do not think it appropriate for a District Court judge to strike out a claim where there is some uncertainty as to the state of the law.
  1. [61]
    In this case it may be if the plaintiff properly pleads his claim there is a case arguable concerning the breach of such an implied condition and further an arguable case on mistake engendered by unconscionable conduct.
  1. [62]
    In all of the circumstances having considered the affidavit material and the correspondence it might be argued that the plaintiff was shut out of his insurance claim and thus his contractual position by reason of the defendant’s conduct.
  1. [63]
    I obviously enough do not express any concluded view as to this because for reasons I am about to express the statement of claim is presently defective.
  1. [64]
    In the circumstances I am prepared to make a declaration in terms of paragraph (a) of the counterclaim (which was conceded) and reserve the costs relating to such declaration but am not prepared presently to enter judgment for the defendant either relating to the plaintiff’s claim or to the counterclaim. I will give the plaintiff a chance to properly plead its case.
  1. [65]
    I note that on 18 September 2013 CLS approved an insurance payment of $28,433.27 ($20,000 was the excess payable by the Plaintiff). At the least it would seem the quantum of the Plaintiff’s claim may be reduced. It may be that this is relevant to the central issue in dispute as well.

Strike out application

  1. [66]
    Rule 171 of UCPR permits a court to strike out all or part of a pleading if inter alia it discloses no reasonable cause of action
  1. [67]
    It is my respectful opinion the statement of claim is defective and presently does not disclose a reasonable cause of action.
  1. [68]
    There are a number of problems with the pleading as follows:
  1. (a)
    No factual basis is alleged for the implication of the terms here;
  1. (b)
    No factual basis is alleged as to how the money is due and owing;
  1. (c)
    There is no factual basis linking any condition with the claim for damages;
  1. (d)
    There is no factual basis sufficiently alleged proving unconscionable conduct. At the moment the alleged mistake appears to be unilateral only;
  1. (e)
    It is alleged that the plaintiff was denied from pursuing its insurance claim because the defendant failed to advise as to whether it was insured.  This is not pleaded.  One would have thought that this was a central matter upon which the plaintiff’s case entirely rests.
  1. [69]
    It may well be that the action is a difficult one for the plaintiff. The fact is unless there was some positive misrepresentation or misleading or other unconscionable conduct on the part of the Defendant it would appear to be Mr O'Rourke’s fault that he did not turn his mind to clause 17 and it was his decision to enter into the varied contract which does appear clear in its terms.
  1. [70]
    In Kakavas v Crown  Melbourne Limited [2013] HCA 25 at [18] it was said:

The invocation of the conscience of equity requires "a scrutiny of the exact relations established between the parties" to determine "the real justice of the case". Where an appeal is made by a plaintiff to the standards of equity embodied in the Amadio principle, the task of the courts is to determine whether the whole course of dealing between the parties has been such that, as between the parties, responsibility for the plaintiff's loss should be ascribed to unconscientious conduct on the part of the defendant. In Louth v Diprose, Deane J explained the basis on which the conscience of equity is engaged to apply the Amadio principle:

"The intervention of equity is not merely to relieve the plaintiff from the consequences of his own foolishness. It is to prevent his victimization."

  1. [71]
    I do not express any concluded view on the matter as I have not heard all of the evidence on the matter.
  1. [72]
    Given the state of the matter I consider it appropriate to give the Plaintiff another chance to repair its pleading.
  1. [73]
    In those circumstances I propose to strike out the statement of claim. I do not strike out the action or the claim itself. I will permit the plaintiff to re-plead its case bearing in mind the reasons I have given. I propose to allow the plaintiff 28 days in which to re-plead its case.
  1. [74]
    I note that a party may plead a conclusion of law if the supporting facts are pleaded (see Rule 149(2) UCPR). This would be desirable in the instant case.

Security for costs

  1. [75]
    The defendant submitted that if the plaintiff was permitted to re-plead its case an order for security for costs should be made pursuant to r 670.
  1. [76]
    Rule 670 is subject to rules 671 and 672. I have regard to the matters listed in 671 and 672.
  1. [77]
    A corporation will be considered unable to pay the costs of a successful defendant if the circumstances are that it can only do so if given extended time to realise assets which it might be difficult to realise (see Southern Cross Exploration NL v Fire and All Risks Insurance Co Lt (1985) 1 NSWLR 114 of 121 and Beach Petroleum NL v Johnson (1992) 7 ACSR 203 at 205). 
  1. [78]
    I take into account Mr O'Rourke’s affidavit. It would seem a fair conclusion that the plaintiff might be regarded as “asset rich” but “cash poor” with significant liabilities. Indeed it is clear he had difficulties funding his present solicitors which led to a delay of this action (see paragraph 11).
  1. [79]
    The affidavit indicates the assets are worth $12.7m and liabilities are $5.85m. There are presently refinancing negotiations. No valuations are produced. Mr. O'Rourke was hoping to access the $80,000 to improve the Plaintiff’s cash flow position.
  1. [80]
    He states in [10] the fact the company did not received the $80,000 or $200,000 from Pimp My party “had an enormous impact on the cash flow of [the Plaintiff].”
  1. [81]
    I find that without security, there is a real possibility the Plaintiff will be unable to pay the Defendant’s costs if ordered to pay them. Further the justice of the case requires the making of the order because as I have indicated I find the Plaintiff may have difficulties proving its case. In light of the fact there is a retention fund I consider it not oppressive to make the order as the funds from that fund may be paid into court.
  1. [82]
    I have had regard to the amounts sought as specified in the affidavit of Bianca White.
  1. [83]
    In all of the circumstances in the exercise of my discretion I find this is an appropriate case for the plaintiff to provide security for costs of the defendant of and incidental to the proceeding.
  1. [84]
    In all of the circumstances I am prepared to make an order for security for costs in the sum of $25,000. It seems to me $62,000 is excessive in terms of standard costs up to and including the first day of the trial. Such an order should be made up to and including day 1 of the trial. A further application for security can be made at the conclusion of the first day of the trial and can be considered on the merits at that stage.

Orders

  1. [85]
    The orders will be as follows:
  1. (a)
    The Application by the Defendant for summary judgment is dismissed except to the extent that it is declared that the Defendant was entitled to be reimbursed the sum of $8800 held in the trust account of Messrs Grant and Simpson on account of the parties.
  1. (b)
    The application by the Defendant for an order striking out the statement of claim is granted and the statement of claim is struck out.
  1. (c)
    The Plaintiff is allowed until 30 May 2014 in which to re-plead its case.
  1. (d)
    The Plaintiff is to provide security for the defendant’s costs in the sum of $25,000.
  1. (e)
    Pursuant to order number 4 the court directs that the sum of $25,000 (presently held in the trust account of Messrs Grant and Simpson on account of the parties) be paid into the court which sum shall be the Plaintiff’s provision as to security for costs.
  1. (f)
    There be liberty to apply on the giving of 2 days written notice.
  1. (g)
    The matter be listed for trial in the sittings commencing on 8 September 2014.
  1. (h)
    The costs of and incidental to the making of the declaration referred to in order 1 will be reserved.
  1. (i)
    I will otherwise hear the parties on the question of costs. For this purpose the defendant may file and serve written submissions on the question costs not exceeding 3 pages by 5pm on 2 May 2014 and the plaintiff may file and serve written submissions in reply by 5pm on 9 May 2014 not exceeding 3 pages.     
Close

Editorial Notes

  • Published Case Name:

    Dromahair Pty Ltd v K J and GL Schamburg Pty Ltd (as trustee of the Schamburg Property Trust)

  • Shortened Case Name:

    Dromahair Pty Ltd v K J and GL Schamburg Pty Ltd

  • MNC:

    [2014] QDC 87

  • Court:

    QDC

  • Judge(s):

    Smith DCJ

  • Date:

    17 Apr 2014

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Agar v Hyde (2000) 201 CLR 552
2 citations
Jump To
Cite 1 - (2000) 201 CLR 552
Cite 2 - (2000) 201 CLR 552
Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349
1 citation
Jump To
Cite 1 - (1998) 44 NSWLR 349
Alcatel Australia v Scarcella (1998) 44 NSWR 349
1 citation
Jump To
Cite 1 - (1998) 44 NSWR 349
Beach Petroleum NL v Johnson (1992) 7 ACSR 203
2 citations
Jump To
Cite 1 - (1992) 7 ACSR 203
Cite 2 - (1992) 7 ACSR 203
Far Horizons Pty Ltd v McDonald's Australia Ltd [2000] VSC 310
2 citations
Jump To
Cite 1 - [2000] VSC 310
Cite 2 - [2000] VSC 310
Garry Rogers Motors (Aust.) Pty Ltd v Subaru (Aust) Pty Ltd (1999) 21 ATPR 41-703
2 citations
Jump To
Cite 1 - (1999) 21 ATPR 41-703
Cite 2 - (1999) 21 ATPR 41-703
Kakavas v Crown Melbourne Ltd [2013] HCA 25
2 citations
Jump To
Cite 1 - [2013] HCA 25
Cite 2 - [2013] HCA 25
Kendell v Sweeney [2005] QSC 64
2 citations
Jump To
Cite 1 - [2005] QSC 64
Cite 2 - [2005] QSC 64
National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441
2 citations
Jump To
Cite 1 - [1983] 2 Qd R 441
Cite 2 - [1983] 2 Qd R 441
Project Company No 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd [2011] QCA 102
2 citations
Jump To
Cite 1 - [2011] QCA 102
Cite 2 - [2011] QCA 102
Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114
2 citations
Jump To
Cite 1 - (1985) 1 NSWLR 114
Cite 2 - (1985) 1 NSWLR 114
Spencer v Commonwealth of Australia [2010] HCA 28
2 citations
Jump To
Cite 1 - [2010] HCA 28
Cite 2 - [2010] HCA 28
Taylor v Johnson (1983) 151 CLR 422
2 citations
Jump To
Cite 1 - (1983) 151 CLR 422
Cite 2 - (1983) 151 CLR 422

Cases Citing

Case NameFull CitationFrequency
Dromahair Pty Ltd v K J and G L Schamburg Pty Ltd (as trustee of the Schamburg Property Trust) (No 2) [2014] QDC 1392 citations
1

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