Construction Management Associates Pty Ltd v Crawford-Fish & Ors [1990] QSC 334

IN THE SUPREME COURT OF QUEENSLAND No. 1041 of 1990 BETWEEN: CONSTRUCTION MANAGEMENT ASSOCIATES PTY. LTD. Plaintiff GEOFFREY NOEL CRAWFORD-FISH First Defendant PAC PROP DEVELOPMENTS LIMITED Second Defendant KABASKEL PTY. LIMITED Third Defendant EXTEMPORE REASONS - SENIOR MASTER HORTON O.C. Delivered the nineteenth day of September, 1990 This is an application for security for costs by the defendant against the plaintiff who is a subcontractor with respect to a large building project on the North Coast. There has been a number of re-structurings in the organizations which stand behind the present defendants and these all go back as far as indeed Tricontinental and the State Bank of Victoria. Everyone in this action therefore seems to have had some degree of financial problems in recent months and the present state of the litigation with which I am concerned is litigation in which the plaintiff seeks to claim as against the receiver of the present project manager/builder and one of the original owners of the subject lands, monies due and owing to the subcontractor pursuant to certain subcontracts for the'supply of carpentry work. -- 1 of 3 -- ~ The receiver/manager Mr. Crawford-Fish had a meeting with the subcontractors on site in January this year and a transcript of that meeting is annexed to the material. It may well be that the respondent/plaintiff has been somewhat selective in the passages which have been drawn from that transcript but it seems to me arguable, at the very least, that the receiver adopted a somewhat unusual course of conduct in order to induce subcontractors (then on site and then unpaid) to continue performance of their contractual obligations viz a viz Project 1 Pty. Ltd. which was then of course the project manager and builder. In February 1990 the receiver used his powers to terminate the retainer of Project 1 and hence very correctly points out that the receiver has no contractual obligations with the present plaintiff or indeed in the other subcontractors. The applicant has demonstrated that the present plaintiff corporation is in a very delicate financial state. True it is, that in recent months, the company has traded more successfully than the previous twelve months, but I cannot close my eyes to the fact that it is arguable that the plaintiff has acted to its substantial detriment by completing its contractual obligations viz a viz Project 1 as a result of the overtures made by the receiver at the meeting in January 1990. Hence, as I find the applicant has discharged the initial obligation cast upon him to demonstrate that there is an apprehension that in the event of a successful defence to this action the plaintiff will be unable to pay the costs awarded against it. However, when it comes to the further exercise of the discretion I am satisfied that it is strongly arguable that the respondents impecuniosity has arisen from the losses sustained as result of the carrying out of its contractual -- 2 of 3 -- l obligations, the fruits of which the present applicant now enjoys. That impecuniosi ty of course would be relieved by satisfaction of the debts alleged to be owed to it with respect to the construction work on the subject project and in my view the justice would not be served in the circumstances of the present case by shutting out the plaintiff from the prosecution of its action and accordingly I decline to make an order for security. The application is dismissed with costs to be taxed. -- 3 of 3 --