Barron River Foods Pty Ltd v Hall & Hedge [2005] QSC 182

State Reporting Bureau [z.oos] QSC l Queensland Government Department of justice and Attorney-General Transcript of Proceedings opyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority f the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION MUIR J REVISED COPIES ISSUED State Reporting Bureau Date: 6 June, 2005 ^ Claim No 211 of 2004 BARRON RIVER FOODS PTY LTD Plaintiff and IAN RICHARD HALL and Defendants PETER JAMES HEDGE CAIRNS ..DATE 03/06/2005 JUDGMENT ARNING : The publication of information or details likely to lead to the identification of persons in some proceedings is a criminal fence. This is so particularly in relation to the identification of children who are involved in criminal proceedings or proceedings for air protection under the Child Protection Act 1999, and complainants in criminal sexual offences, but is not limited to those tegories. You may wish to seek legal advice before giving others access to the details of any person named in these proceedings. 1 Floor, The Law Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 3247 4360 Fax: (07) 3247 5532 -- 1 of 4 -- 03062005 D.l T30/MKB M/T CNS3/2005 (Muir J) HIS HONOUR: The claim by the plaintiff against the defendants is in broad terms one against them as receivers for the sale of assets of the company at under value. The defendants bring this application for security for costs. There is no contest about the impecuniosity of the company and there is reason to believe that the plaintiff will not be able to pay the defendants' costs if ordered to pay them at the conclusion of the action. See sections 1335(1) of the Corporations Act and rule 671 of the Uniform Civil Procedure Rules. The plaintiff seeks to avoid an order on two bases. One is that the plaintiff's impecuniosity has been caused by the defendants' conduct, the subject of the claim, and allied with that an assertion that the claim has good prospects of success. Th'e other ground put forward is that any order for security would stifle the proceedings. The material reveals that there are 400 issued shares in the capital of the company. They are divided into 300 A class and 100 B class shares. A gentleman who is bankrupt holds a hundred A class and 80 B class shares. A company which has been deregistered holds a hundred A class and a hundred B class shares. A number of individuals hold the balance of the shares. One of those offers to provide a guarantee limited to the sum of $15,000. There is no evidence as to his financial worth and thus of his ability to support the guarantee, but that does not really matter. 1 10 20 30 40 50 2 JUDGMENT 60 -- 2 of 4 -- 03062005 D.l T30/MKB M/T CNS3/2005 (Muir J) Mr Ryall who appears for the respondent/plaintiff conceded 1 that there were other creditors of the company. I infer that the company may well have substantial creditors. In my view it is appropriate in the circumstances of this case 10 that security be provided unless those who stand to take the benefit of the action provide security for its conduct. I note also that there is no offer of any undertaking by any director of the company. 20 30 40 50 3 JUDGMENT 60 -- 3 of 4 -- 03062005 D.l T31/AS M/T CNS3/2005 (Muir J) The approach which I propose to follow is consistent with that taken for example, in Bell Wholesale Co Ltd and Gates Export Corporations, 1994(2 of CRl). As for the merits of the plaintiff's case it may be that it may turn out if the action is prosecuted that the plaintiff succeeds, but it can hardly be said from the little available to me, that its prospects are conspicuously good. If the defendants make out their contentions of properly advertising and marketing the subject property, then the failure to follow up a highly conditional, not to mention tentative, "offer" is unlikely to result in a finding of any breach by the receivers of their duties, statutory or otherwise. For these reasons, I order in terms of the draft initialled by me. I have changed paragraph 1 to 130,000 - I accept that there is some validity in the challenge to the quantum which of course does not necessarily amount to a full indemnity, even when used in the sense of obtaining all of that which would be obtained by a successful party on a taxation. I have struck out paragraph 3 and renumbered the other paragraphs. HIS HONOUR: I order that if security in accordance with the above parts of this order is provided, the following directions take effect; those directions are in accordance with paragraphs 1 to 6 inclusive of Exhibit 3 which is the letter of 2G in 2005. 1 10 20 30 40 50 4 JUDGMENT 60 -- 4 of 4 --