Buckglen Pty Ltd v McDonal Family Holdings Pty Ltd & Ors [1999] QSC 409

State Reporting Bureau TRANSCRIPT OF PROCEEDINGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau . ..~. ; REViSED COp;;::r.: l~(~UC / 1 State Reporti~f;"'B'~r~a/"; D?t~ SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION DERRINGTON J No 8585 of 1998 BUCKGLEN PTY LTD (ACN 070 442 661) and McDONALD FAMILY HOLDINGS PTY LTD (ACN 056 205 648) and MALCOLM NEIL McDONALD and ANTHONY G BRADLEY and LEIGH A STEINDL trading as STEINDL BRADLEY & ASSOCIATES BRISBANE .. DATE 11/10/99 JUDGMENT ·\111 nlllJl". The Law Courts. George Stn:ct. Brishallc. Q. .tOO(} 1 Plaintiff First Defendant Second Defendant Third Defendant Telcpllonl': (07) JZ-t7 4J()O F:lx: (07) JZ-t7 55.12 -- 1 of 5 -- 111099 T2/SE25 M/T 6255/99 (Derrington J) HIS HONOUR: This is an application by a defendant for an order that the plaintiff give security for costs of the action. The, plaintiff is a company and further is a trustee company. The trust is a family trust. The directors of the company are Mr and Mrs Ballinger and the beneficiaries of 10 the trust are their two children and another family trust company which, however, it is said, has not traded for some time and has no assets. The children are still minors. The action may be described fairly briefly. The first defendant, of whom the second defendant was at all relevant times the agent, sold an auction business to the plaintiff. The third defendants were the solicitors for the plaintiff. The auction business as it turns out was at the relevant premises which were the subject of a lease to the business . 'and was in breach of the town planning regulations in respect of the type of material that was auctioned. There were some areas of the business which were not contrary to the town planning scheme but they are minor and of little relevance here. The action is based upon a claim for misleading and deceptive representations under the Trade Practices Act. The contract contains a clause to the following effect. "34. No Warranty on Present Use The vendor does not give any warranty that the type of business stated in item J(a) is a permissible use under any town planning scheme and no compensation is payable if the particulars in item J(a) are not correct.1I 2 JUDGMENT 20 30 40 50 60 C) C~) -- 2 of 5 -- 111099 T2/SE25 M/T 6255/99 (Derrington J) It is plainly arguable that the claim for breaches of the Trade Practices Act are not excluded from the transaction by the term of _the contract quoted. The allegations of misrepresentation relate simply to the 10 legitimacy of carrying on the business at that place. The first and second defendants deny that any such representations were made. The result is that on the face of the material before this Court there is a reasonable indication that a cause of action exists but that there will be conflict in that respect as to which the result cannot be predicted. Nevertheless it is quite plain that the plaintiff has suffered considerable loss because it would appear to be uncontradicted that the Council has required the business - -that was contrary to the town plan to cease and that the business that was purchased has lost virtually all its value. The basis for the application is that the plaintiff company has no assets and that is true. The evidence before this Court based on information and belief is to the effect that the beneficiaries of the trust who would benefit as the result of the action are also without assets as indeed are the directors, Mr and Mrs Ballinger, who seem to be the active parties behind the plaintiff,although they have no beneficial interest in it. 3 JUDGMENT 20 30 40 50 60 -- 3 of 5 -- 111099 T2/SE25 M/T 6255/99 (Derrington J) It is therefore plain on the face of the material that all the relevant parties on that side claim to be impecunious and that if ,an order is made requiring the provision of security which cannot be provided, the action will be stifled for the simple impecuniosity. 10 That is undesirable and is to be avoided if possible particularly since the financial material placed before the Court would seem to indicate that the impecuniosity arises out of the unfortunate failure of the business that was the 20(', subject of the transaction, a failure which might well be attributed to the alleged misrepresentation. The resolution might reasonably be achieved in conformity 30 with the authorities which have been helpfully provided by both sides by ordering the provision of personal guarantees 'by Mr and Mrs Ballinger, that is Allan Ballinger and Laurelle Ballinger, the directors of the company. If, as they say, they are without assets then the guarantees would 40 not greatly disadvantage them and certainly would not do so C) if, as they say, the action is meritorious. Conversely, if they do have assets then it is only fair that the first and second defendants and particularly the second 50 defendant, who will be personally liable for his own costs, will fail to recover anything if they are successful and can obtain only an order for costs against the plaintiff. If that position arises it would be only fair that they should have the opportunity to seek recovery from some persons in 60 4 JUDGMENT -- 4 of 5 -- 111099 T2/SE25 M/T 6255/99 (Derrington J) the plaintiff's camp, particularly those who might be regarded as the driving force in this action. Accordingly, security for costs will be made against the plaintiff but it should be limited to the provision of only 10 a deed of guarantee by Allan Ballinger and Laurelle Ballinger in their personal capacity, in the absence of which the plaintiff's action will be stayed. A similar guarantee is to be provided by the A M Ballinger Family Trust referred to in the material and the orders that I make 20 are to be contingent on the provision of that guarantee as well. The amount of the guarantee should not be prescribed in 30 specific or detailed terms. It is enough to order that the guarantee should cover the payment of costs from and ihcluding this day forward, that is including this application today. The actual costs of the application should be reserved. 40 HIS HONOUR: In respect of the consent referral to mediation, I will also make an order in terms of the draft so initialled by me. HIS HONOUR: Orders as per draft. 60 5 JUDGMENT -- 5 of 5 --