Fodare Pty Ltd v Shearn [2009] NSWSC 1140

Fodare Pty Ltd v Shearn [2009] NSWSC 1140

Security for costs was ordered because the plaintiff was a company in liquidation, Mr Dennis was the only established creditor and a person standing behind the plaintiff who would benefit from successful litigation, and the plaintiff failed to prove that he was unable, rather than merely unwilling, to provide financial assistance. Although the claim was arguable and the defendants' alleged conduct may have contributed to the plaintiff's lack of resources, the absence of proof of Mr Dennis's inability to fund security made it inappropriate to refuse security. The appropriate quantum was fixed at $40,000 after rejecting the need for expert evidence and adopting an estimated final hearing...

Jurisdiction
Australia
Judgment Date
27 October 2009
Procedural Posture
Application for Security for Costs in Proceedings by a Company in Liquidation / Interlocutory Application
Outcome
Security for costs ordered; proceedings stayed until security is provided.
Legal Topics
['security for Costs' 'company in Liquidation' 'liquidator Commencing Proceedings' 'persons Standing Behind a Company' 'director Duties' 'quantum of Security']
['civil Procedure' 'corporations' 'equity'] ['security for Costs' 'company in Liquidation' 'liquidator Commencing Proceedings' 'persons Standing Behind a Company' 'director Duties' 'quantum of Security']

Case Brief

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Procedural Posture

Application for Security for Costs in Proceedings by a Company in Liquidation / Interlocutory Application

Legal Issues

  1. 1 ["Whether the plaintiff company in liquidation should be ordered to provide security for the defendants' costs." "Whether security should be refused on the basis that it would frustrate arguable litigation where the defendants' alleged conduct may have caused the plaintiff's lack of resources." 'Whether Mr Dennis, a significant creditor who stood to benefit from the litigation, was unable to provide financial assistance for security for costs.' 'What amount of security for costs should be ordered.']

Ratio Decidendi

Security for costs was ordered because the plaintiff was a company in liquidation, Mr Dennis was the only established creditor and a person standing behind the plaintiff who would benefit from successful litigation, and the plaintiff failed to prove that he was unable, rather than merely unwilling, to provide financial assistance. Although the claim was arguable and the defendants' alleged conduct may have contributed to the plaintiff's lack of resources, the absence of proof of Mr Dennis's inability to fund security made it inappropriate to refuse security. The appropriate quantum was fixed at $40,000 after rejecting the need for expert evidence and adopting an estimated final hearing...

Court Disposition

Security for costs ordered; proceedings stayed until security is provided.

Orders

  • ['Order that the plaintiff do give security in the sum of $40,000 for the costs of the defendants.' 'Order that the security be in such form as the Registrar determines.' 'Order that the proceedings be stayed until such security is provided.']