Webprint Concepts Ltd -v- Thomas Crosbie Printers Ltd & Ors

Factual and Procedural Background

The Plaintiff, a printing company established in 2006, entered into a print contract in 2005 with the first Defendant, a printing company, to print publications for a corporate group led by the second Defendant. A secured lender, the fourth Defendant, appointed the fifth Defendant as receiver to certain companies within the corporate group in 2013. Subsequently, the print titles were sold to the third Defendant and/or its subsidiaries. The sixth Defendant commenced printing the publications formerly printed by the Plaintiff under the original contract. The seventh and eighth Defendants are directors of various companies involved and are sued in their capacities as such.

The Plaintiff alleges that the transactions conducted on 6th March 2013, described as a 'pre-pack' receivership, constituted a deliberate scheme to evade obligations under the print contract. The Plaintiff brings multiple claims including breach of contract, breach of fiduciary duty, procurement of breach of contract, intentional interference with business relations, conspiracy, and seeks to pierce the corporate veil of several Defendants.

All Defendants have applied for security for costs pursuant to section 390 of the Companies Act 1963. The Defendants are represented separately or jointly depending on their roles. The Court is tasked with determining whether the Defendants have established prima facie defences and whether security for costs should be ordered.

Legal Issues Presented

1. Whether the Defendants have established prima facie defences to the claims brought by the Plaintiff.
2. Whether the Plaintiff has demonstrated special circumstances to justify the Court exercising its discretion against ordering security for costs.
3. The application and interpretation of section 390 of the Companies Act 1963 regarding security for costs.
4. The extent to which the Plaintiff’s inability to pay costs is caused by the Defendants’ alleged wrongdoing.
5. Whether the claims raise points of law of public importance sufficient to affect the exercise of discretion on security for costs.

Arguments of the Parties

Plaintiff's Arguments

• The transactions on 6th March 2013 were a premeditated scheme to evade contractual obligations.
• The Plaintiff contends it is owed substantial arrears under the print contract and damages for breaches.
• The Plaintiff claims the Defendants procured breaches of contract and engaged in conspiracy and breaches of fiduciary duty.
• Special circumstances exist justifying refusal of security for costs, including that the Plaintiff’s inability to pay is caused by the Defendants’ wrongs.
• The claims raise points of public importance relating to insolvency procedures and protections for creditors in pre-pack receiverships.
• The Plaintiff submits that damages for procuring breach of contract may be assessed as “damages at large” without precise proof of loss.
• The Plaintiff asserts that ordering security for costs would likely end the proceedings and thus the Court should consider the interests of justice.

Defendants' Arguments

• The first Defendant (the printing company) conceded no prima facie defence to the arrears claim but contended a prima facie defence to breach of contract claims relying on force majeure and contractual clauses.
• The other Defendants (including the corporate group, purchasers, and directors) have established prima facie defences to the claims against them, supported by evidence showing distinct corporate entities and lack of contractual nexus.
• The Defendants submit the Plaintiff has not established a prima facie case as to the quantum of damages sufficient to reverse its financial position.
• The Defendants deny that the Plaintiff’s inability to pay costs is caused by their alleged wrongdoing.
• The Defendants argue the points of law raised are not of such public importance as to justify refusal of security for costs.
• The Defendants contend their conduct in proceedings has been proper and does not justify refusal of security for costs.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began by outlining the statutory framework under section 390 of the Companies Act 1963, requiring a moving party to establish a prima facie defence and that the Plaintiff is unable to pay costs if unsuccessful. The Plaintiff accepted inability to pay costs, shifting focus to whether Defendants had prima facie defences.

The Court applied established jurisprudence requiring objective evidence for prima facie defences and rejected the notion of weighing the strength of the cases at this stage.

Regarding the first Defendant (the printer with contractual obligations), the Court found no prima facie defence to the claim for arrears or breaches of notice and best endeavours provisions under the print contract, including the force majeure defence which lacked evidential support.

For the other Defendants, including the corporate group, purchasers, and directors, the Court found evidence supporting arguable defences that they were not contractually bound or liable for breaches, and that the tort claims of procuring breach of contract had arguable defences based on their cooperation with the secured lender’s enforcement plan.

The Court considered the Plaintiff’s claim that its inability to pay costs arose from the Defendants’ wrongdoing. Applying established principles, the Court required the Plaintiff to show a prima facie case that the quantum of damages would be sufficient to reverse its financial position. The Plaintiff failed to provide adequate evidence quantifying losses from lost opportunities or damages beyond the arrears claim against the insolvent Defendant.

The Court rejected the Plaintiff’s contention that points of law raised were of such public importance to justify refusal of security for costs, finding that the issues were fact-specific and did not transcend the parties’ interests.

The Court also found no special circumstances in the Defendants’ conduct to justify refusing security for costs. The Plaintiff’s inability to continue litigation if security were ordered was acknowledged but not considered a special circumstance.

Holding and Implications

The Court’s final decisions are as follows:

• The application for security for costs by the first Defendant is dismissed.
• The other Defendants (second to eighth named) have established prima facie defences to the claims against them.
• The Plaintiff has not demonstrated special circumstances to justify refusal of security for costs.
• Orders for security for costs are granted in favour of the second to eighth named Defendants.

The Court will hear submissions on the precise form of the security orders, with separate orders likely reflecting the separate representation and cost estimates for the Defendants.

The effect of this decision is that the Plaintiff must provide security for costs to proceed against the second to eighth Defendants, which may impact its ability to maintain the action. No new precedent is established beyond the application of settled principles to the facts of this case.