Our plaintiff, P, is an irrigation company. It owns pipes.  

One pipe is on D’s property. P is the beneficiary of an easement for it.  

D wanted to develop the site, including putting a driveway over the pipe. P’s engineer assessed the risk of the driveway damaging the pipe to be high: [14].  P demanded that all works cease and received no substantive reply.  

P sought an interlocutory injunction to prevent D performing works on the land. D, essentially, consented.  

The outstanding issue? Costs.  UCPR 42.19 says, usually, a plaintiff who discontinues must pay the defendant’s costs.  

P sought its costs arguing (i) it had no choice but to commence proceedings, (ii) D had acted unreasonably, and (iii) P had been substantially successful: [26].  The Court found it was unreasonable for D not to respond to P’s demand: [58]. 

If D had said it was prepared to change the DA then the costs would have been avoided: [59].  This was so unreasonable as to merit a costs order in P’s favour.

What if a party needs more documents to decide whether to kick off litigation? 

UCPR 5.3 can assist.  

Here, we have a sale of a restaurant and grocery business to the plaintiff.  Prior to the sale the plaintiff was given payroll reports, staff rosters, and P&Ls. 

Each defendant gave representations about the accuracy of that info: [4].  The plaintiff said turnover following the sale was substantially less, and payroll was substantially more, than the info suggested. 

The plaintiff said it might be inferred that revenue was overstated and staff underpaid: [5]  So the plaintiff sought material to help it decide whether to commence proceedings.  

The Court worked through the UCPR 5.3 issues to determine the documents sought were “reasonably necessary” to decide whether to commence proceedings.  

The plaintiff sought discovery of documents including documents relating to a food truck business not subject to the sale. This part of the application was rejected. 

The balance, regarding employee and financial data, was allowed leaving the plaintiff in a position to consider where it should commence its claim.  

Costs followed the event.

With thanks to the Television Education Network's Sound Education in Law project, I'm delighted to share this discussion with Susanna Lobez first published in April 2019.

If you're interested in this content, TEN's website is here:  www.tved.net.au

I am really happy with how this discussion turned out with thanks to the guiding hands and minds at TEN. Hopefully there's some real value in this CLE for anyone looking to come to grips with ss232 and 233 of the Corporations Act 2001 or - basically - anyone who advises corporate clients.

Enjoy!

“With $1 mill, we can make $5 mill a year easy and safely.”  

___ 

Easy, safe ways to generate a 500% p.a. ROI? Sign me up!  

This representation, and other similar ones, recently came before the Court.   The plaintiffs – a natural person resident in the US, two impecunious Australian corporations, and two Canadian companies – pursued the defendant, a natural person.  

The plaintiffs transferred USD$2.24M to the defendant for him to invest. The defendant returned USD$1.33M. In the difference lies the claim.  Our defendant wanted the plaintiffs to provide more security (having already provided $60K) for his costs if he won and obtained a costs order.  

The defendant already had enough to pay the costs of enforcing his costs order (if he got one) in the foreign jurisdictions: [22]. That of itself was reason to refuse the application.  

The application was made “late in the day” and after working through the various limbs of the claim the court concluded at [82]: the defendant’s prospects of getting a costs order are so low that they do not justify an order for security.  

___  

“We won’t lose it,” the defendant advised: “we are totally risk free.”: [46]   Not true, at least for this application.

Here, a liquidator chased directors for debts incurred by a company. 

The liquidator said the debts were incurred while the company was insolvent. The Court accepted that: [64].  

The directors were a father and son. Dad retired as a director more or less simultaneously with son’s appointment.  The debts were incurred while Dad was a director, and before the son’s appointment. 

The quantum of the debts increased over time as interest accrued on both.  This gave rise to the question: should Dad be liable for interest accrued after his retirement?: [68].  While there was a suggestion that Dad should be liable for post-retirement interest because the ‘die was cast’ when he incurred the debts ([70]) the Court took the alternative approach.  

First, it found the continuing day-to-day failure to pay the debt rather than the debt itself gave rise to the accruing interest: [71]. Second, holding the son solely liable was consistent with an incoming director’s duty to immediately familiarise themselves with the company’s position and act to stop insolvent trading: [72] and [73].  

Good fun!

[Forgive the audio - this one recorded in the bad old days before Rode came along]

A plaintiff brought a defamation suit. 

The defendants succeeded in having it summarily dismissed at first instance and the Court ordered that no further claim be made on the basis of the publications complained of without leave.  The plaintiff sought leave to appeal (leave being necessary if you’re appealing an interlocutary decision) and got it. The defendants/respondents then sought security for their costs of the appeal.  

Please join me to discuss whether the facts in this case (including the appellant’s/plaintiff’s bankruptcy and a number of outstanding costs orders!) met the “special circumstances” test for granting security for costs on appeal.  

This might all sound a little dense, but we’ll get there I’m sure!

Hello there!

This episode is a little different. Today I'm making use of the Gary Vaynerchuck metaphor of "Jab, Jab, Jab, Right Hook" that I am so fond of and am having a chat about a blog post.

It's something I put up on Linkedin earlier in the year that I know a few people have got some value from.

The post is here:  https://www.linkedin.com/pulse/jabs-right-hooks-james-d-apice/ 

Hopefully - whether in writing or on the podcast - it brings you some value too. Cheers!

Does an expert have to make her or his determination “according to law”?  

Not as silly a question as you might think.  A landowner and builder entered into a contract.   

The contract included a dispute resolution clause. The effect was that any dispute about the contract must be referred to an expert for determination “according to law”.  A dispute arose and an expert was appointed. The expert made a determination in favour of the builder.  

The landowner commenced Court proceedings disputing the determination.   It said the expert goofed in finding there was an implied term: [30]. It also said that when an expert makes a determination where a question of law becomes material, the Court can intervene if the expert makes a mistake of law: [31].  

The Court disagreed about the implied term. It then found the landowner’s submission works commercial inconvenience: if the landowner was right, then every expert determination would be open to appeal on every legal question determined if the question could be seen differently: [50].  

Expert determination is a contractual mechanism, not a judicial process; it is not subject to judicial correction if it includes a mistake of law as long as the determination was made in accordance with the contract: [60].

[Please forgive the audio quality - this one was recorded before I got my microphone house in order]

This is the first Coffee and a Case Note I ever recorded.

Rather than give you a summary I thought I would let you know how strange it is that a legal decision about Canberran eye doctors I've never met, represented by lawyers I've never worked with, came to be important to me.

The journey has been, and continues to be, wonderful and important to me.

Thank you so much for being a part of it.

P.S. If you're in the mood for a summary I have a blog post about the decision here: https://www.makdap.com.au/publications/corporate-oppression-pox-both-houses

[Forgive the poor audio on this one - I was yet to invest in my current microphone!]

“I’m not being oppressive. You are!”  

A and B were directors and shareholders in a company that owned an orthotics business.  

A brought a claim against B in oppression. A succeeded on bases including: B was paid as a consultant but caused the company to record a debt to him for unpaid annual leave: [116], B raised invoices without a proper basis: [139], B recording poorly debts owed by the company to entities associated with him under the description “sundry creditors”: [161]; all of which had the reduced the value of the company.  

B brought a counter claim against A and was partially successful on bases including: A ran his own business, using similar techniques to the company, which competed with the company: [180].   (This is, of course, also a breach of his directors duties.)  

So! 2 bad guys. A was oppressive and B was oppressive. What’s the Court to do? At [224] the relief ordered was for B buy out A’s shares, following an exchange of valuation evidence.  

A share purchase is seen by some as the Court’s preferred outcome to an oppression suit. It allows the company to keep trading. Here the Court anticipated a valuation dispute and set up an architecture to deal with it.  What do you think happened with costs? (Trick question FYI.)