CTI Resort Holdings Group Pty Ltd v Jingquan Chen [2015] NSWSC 2090

CTI Resort Holdings Group Pty Ltd v Jingquan Chen [2015] NSWSC 2090

Although the plaintiff had a strongly arguable case, it was an impecunious company with no assets other than its cause of action and no capacity to meet an adverse costs order. The claim was not defensive, the special relationship point was not material, and stultification was not established because those standing behind the company appeared unwilling rather than unable to provide support. It would be unjust to allow the company to prosecute proceedings for shareholders' benefit while shielding them from adverse costs risk. Security was therefore ordered, with an alternative that the identified shareholders acknowledge joint and several liability as if bound by any costs order against...

Jurisdiction
Australia
Judgment Date
07 August 2015
Procedural Posture
Security for Costs Application in Equity Corporations List Proceedings / Notice of Motion Filed 16 July 2015 Seeking Security for Costs; Application to Vary Costs Order
Outcome
Security for costs ordered in the sum of $50,000 unless identified persons acknowledge joint and several liability for any costs order against the plaintiff; proceedings stayed until security is given or the condition is satisfied; plaintiff ordered to pay defendants' costs of the motion; application to vary costs...
Legal Topics
['security for Costs' 'corporate Impecuniosity' 'discretionary Factors Against Security' 'stultification of Proceedings' 'shareholders Standing Behind Company' 'costs of Motion']
['procedure' 'costs' 'corporations'] ['security for Costs' 'corporate Impecuniosity' 'discretionary Factors Against Security' 'stultification of Proceedings' 'shareholders Standing Behind Company' 'costs of Motion']

Case Brief

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Procedural Posture

Security for Costs Application in Equity Corporations List Proceedings / Notice of Motion Filed 16 July 2015 Seeking Security for Costs; Application to Vary Costs Order

Legal Issues

  1. 1 ["Whether the plaintiff corporation's impecuniosity justified an order for security for costs under (NSW) Uniform Civil Procedure Rules 2005, r 42.41(1)(d), and/or (CTH) Corporations Act 2001, s 1335." "Whether discretionary factors, including the strength of the plaintiff's case, alleged defensive character of the claim, special relationship, and claimed stultification, weighed against ordering security." 'Whether security should be satisfied by shareholders acknowledging personal liability for any adverse costs order.' 'Whether the costs order on the motion should be varied.']

Ratio Decidendi

Although the plaintiff had a strongly arguable case, it was an impecunious company with no assets other than its cause of action and no capacity to meet an adverse costs order. The claim was not defensive, the special relationship point was not material, and stultification was not established because those standing behind the company appeared unwilling rather than unable to provide support. It would be unjust to allow the company to prosecute proceedings for shareholders' benefit while shielding them from adverse costs risk. Security was therefore ordered, with an alternative that the identified shareholders acknowledge joint and several liability as if bound by any costs order against...

Court Disposition

Security for costs ordered in the sum of $50,000 unless identified persons acknowledge joint and several liability for any costs order against the plaintiff; proceedings stayed until security is given or the condition is satisfied; plaintiff ordered to pay defendants' costs of the motion; application to vary costs...

Orders

  • ["Unless by 4 September, 2015 each of Daniel Michael Isaac Wakim, Zhaojian (Owen) Zhang and Xio Hui (Susan) Zhao has filed an acknowledgment that he or she is jointly and severally with the others liable to the defendant as if bound by any costs order made against the plaintiff in these proceedings, the plaintiff...