John Botchit and Paul Scamm
You are in-house counsel for a construction company, Wecanfixit Pty Ltd (“Wecanfixit”) which has its registered office in Lismore, NSW and which has two directors, John Botchit and Paul Scamm.
One of the directors, Botchit, has come to see you and briefed you on a problem relating to one of the employees. James Slipped, who was working overseas for the company in Malaysia on a large construction project. While working on the project. Slipped fell from some scaffolding and broke his leg in several places (there are no allegations of negligence or fault against Wecanfixit in respect of the accident). He was rushed to a local private hospital. The King Plaza hospital, where he underwent surgery for his serious but non life threatening injuries. He was required to stay in hospital for a few days until he was fit enough to be moved and travel back to Australia. While staying in hospital, he unfortunately caught a post operative wound infection and which resulted in him having to have his leg amputated below the knee.
He is now unable to ever work again in his specialist field and is entitled to an award of worker’s compensation under Australian law. Wecanfixit’s insurers have reached a settlement with Slipped and he has been paid an agreed amount of statutory compensation. Slipped has now filed proceedings against Wecanfixit in the NSW Supreme Court seeking additional damages (not covered by worker’s statutory compensation)
under the common law in negligence – specifically damages for his pain and suffering as well as for loss of future earnings Botchit informs you that Wecanfixit don’t believe it is responsible for any of these damages and that it is the Malyasian hospital. The King Plaza, who were negligent. Wecanfixit therefore want to defend the claim on the basis it was the King Plaza who were negligent and caused Slipped his injuries resulting in the damages he now seeks. You are told damages claimed total $5M. Botchit also tells you that the directors don’t want to have to travel to Malaysia to deal with the matter.
They want any claim against the King Plaza to be heard here in Australia, where Slipped, the company and all of Slipped’s doctors are based – they think they shouldn’t have to travel to Malaysia to give evidence and incur all that additional time and cost. Also, Slipped remains in significant pain and travel is very difficult for him. Botchit tells you that the hospital is owned by a Malaysian company – he can give you the hospital’s address but he doesn’t have the company’s name. He asks whether Wecanfixit can join the King Plaza to the proceedings brought against Wecanfixit by Slipped and whether any claim against the King Plaza can be served by letter, by registered mail addressed to the CEO?
memo of advice to Botchit
QUESTION 1. Prepare a memo of advice to Botchit based on the above instructions to deal with: (a) What immediate steps Wecanfixit need to take to ensure it protects its position with respect to the claim made by Slipped. What further information do you need from Botchit? (b) How would you recommend (from a procedural perspective) Wecanfixit should pursue the King Plaza hospital? Advise on all procedural issues and in particular deal with the service requirements of any claim on the King Plaza. (c) Any additional matters that Botchit and Scamm as directors of Wecanfixit need to be aware of regarding the Court’s requirements of the directors on the commencement of any claim against the King Plaza hospital given that Wecanfixit is a company.
(d) Now assume that the King Plaza hotel objects to the claim against it being brought in Sydney, and wishes to have the claim heard in Kuala Lumpur under Malaysian law. What steps will it need to take and what documents will it need to prepare and file and where? Detail the procedure it will need to follow. (e) Advise as to the likely outcome of this preliminary dispute over jurisdiction. Give reasons.When advising on each issue, cite any relevant rules, legislation and cases.
King Plaza hospital
QUESTION 2 Assume for the purposes of this question and the next question only that Wecanfixit successfully defeated the defendant’s challenge to jurisdiction and the case has been progressing in Sydney, Australia. The case has been ongoing for the last 12 months and you have briefed an external firm of lawyers, Wright Hassell, to run the litigation but with your assistance. The litigation has not moved as quickly as it should due to the deliberate delaying tactics of the King Plaza hospital. Pleadings have only just closed. Litigation costs incurred by Wecanfixit already total $300,000. In the last 12 months, Wecanfixit’s financial position has changed significantly due to problems with two major projects. The last set of company accounts filed show that the business has been run at a loss for the last financial year.
The King Plaza hospital has recently made a request for security for costs. They estimate their total costs of defending the matter will be $1M and are seeking security for that amount. They have not yet filed an application but have indicated their intention to do so. You are called to a meeting with directors, Botchit and Scamm who wish to discuss the request for security for costs. They want to know what it means and what happens if they don’t pay it. If theKing Plaza make an application, how will they do that, what happens then and what is the likely outcome? You are instructed to prepare a memo after your meeting detailing your advice. Cite all relevant rules, legislation and cases when advising.
Wecanfixit’s financial issues
QUESTION 3 Wecanfixit’s financial issues have gone from bad to worse. An order was made for the provision of $800,000 for security for costs in the Slipped/King Plaza litigation. Wecanfixit couldn’t pay it, as a result of which the proceedings are now stayed. Wecanfixit has been running at a loss and income has dried up. Botchit and Scamm have continued to operate the company in the hope that things will improve. The company continues to incur substabtial debts
. Botchit and Scamm come to you and tell you that the company has just received a statutory demand from a creditor of the company. Easybricks Pty Ltd, which supplies Wecanfixit with building materials. Wecanfixit owes Easybricks $250,000 with part of the debt dating as far back as 6 months ago. The stautory demand claims the full sum outstanding. Botchit and Scamm confirm that there is no dispute over the debt. But Wecanfixit cannot pay it and has no hope of paying it in the near future. In the circumstances described. Advise Botchit and Scamm with respect to: (a) the statutory demand and the potential consequences for the company, Wecanfixit; and (b) their potential personal liability for their conduct.Cite all relevant legislation, rules and cases when advising. Read less