Avspares Pty Ltd v Skywest Aviation Pty Ltd & Ors [1997] FCA 645

Avspares Pty Ltd v Skywest Aviation Pty Ltd & Ors [1997] FCA 645

Although the applicant corporation could not meet an adverse costs order and the amount sought was not disputed, the applicant had a reasonably arguable case and would probably be unable to continue if cash security were required. The directors and shareholders offered to assume personal liability and to charge personal assets that appeared sufficient to secure the amount sought, and the evidence did not justify an adverse inference that company assets had been moved to frustrate the application. The proper exercise of discretion was therefore to permit the proceedings to continue on those conditions rather than require cash security.

Jurisdiction
Australia
Judgment Date
21 July 1997
Procedural Posture
Security for Costs Application / Interlocutory Application by the Respondent
Outcome
Proceedings permitted to continue on conditions requiring Mr and Mrs Cheer to accept personal responsibility for costs and secure the amount sought by a charge over their personal assets.
Legal Topics
['security for Costs' 'impecunious Corporate Applicant' 'personal Liability of Directors and Shareholders' 'charge Over Personal Assets']
['civil Procedure' 'costs' 'corporations'] ['security for Costs' 'impecunious Corporate Applicant' 'personal Liability of Directors and Shareholders' 'charge Over Personal Assets']

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Procedural Posture

Security for Costs Application / Interlocutory Application by the Respondent

Legal Issues

  1. 1 ['Whether security for costs should be ordered where the applicant corporation would be unable to meet an adverse costs order.' "Whether the willingness of the applicant's directors and shareholders to assume personal liability for costs and charge personal assets should affect the exercise of the discretion." 'Whether payments made out of the applicant since an earlier hearing justified an inference that assets were moved to frustrate the security for costs application.']

Ratio Decidendi

Although the applicant corporation could not meet an adverse costs order and the amount sought was not disputed, the applicant had a reasonably arguable case and would probably be unable to continue if cash security were required. The directors and shareholders offered to assume personal liability and to charge personal assets that appeared sufficient to secure the amount sought, and the evidence did not justify an adverse inference that company assets had been moved to frustrate the application. The proper exercise of discretion was therefore to permit the proceedings to continue on those conditions rather than require cash security.

Court Disposition

Proceedings permitted to continue on conditions requiring Mr and Mrs Cheer to accept personal responsibility for costs and secure the amount sought by a charge over their personal assets.

Orders

  • ['The proceedings should be permitted to continue provided that Mr and Mrs Cheer accept personal responsibility for costs in the proceedings and secure the amount in the application sought by a charge over their personal assets.' 'The respondent was directed to bring in suitable Short Minutes of Order to give effect...