Aloridge P/L (Provisional Liquidator Appointed) v West Australian Gem Explorers P/L & Ors Christianos, G. v Aloridge P/L

[1993] FCA 485

NOT SUITABLE FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )

1

NEW SOUTH WALES DISTRICT REGISTRY ) NG 3114 of 1993

)

GENERAL DIVISION )

BETWEEN :  ALORIDGE PTY LIMITED (Provisional
Liauidator ADDointedL

Applicant

AND :  WEST AUSTRALIAN GEM EXPLORERS PTY
LIMITED

First Respondent

GEORGE CHRISTIANOS

Second Respondent

FREDERICK SALKANOVIC

Third Respondent

GEORGE CHRISTIANOS

Cross-Claimant

AtORIDGE PTY LIMITED (Provisional

Liauidator AD~ointedL

First Cross-Respondent

GEORGE LOUKAS

In this matter I have to deal with three motions. Firstly, there is a motion for security for costs. The

Second Cross-Respondent

CO-:  Burchett J.

PLACE: Sydney

DATE : 15 July 1993

EX TEMPORE REASONS FOR JUDGMENT

BURCHETT J.:

proceedings have been brought by a company to which a provisional liquidator has been appointed, and the provisional liquidator has control of the proceedings. Security for costs is sought pursuant to S. 1335 of the Corporations Law. This application is made in somewhat unusual circumstances. The provisional liquidator had taken the precaution, before commencing the proceedings, of obtaining a bank guarantee, which is unconditional in its terms, in the sum of $25,000. There was a request, when proceedings had been commenced, for the provision of security in that very sum. Not at all surprisingly, as it seems to me, having regard to the quite bald terms in which the request was phrased, the solicitors engaged by the provisional liquidator responded with a request for some details of the estimate put forward of the costs of defending the claim. That was done quite promptly by a letter dated 27 May 1993. It appears that the response to that letter was communicated by facsimile on the very day on which the motion which is now before me was taken out. The solicitors engaged by the liquidator drew attention to that

of the motion, and added:  fact by a letter, which they wrote very promptly after service "We are instructed that the provisional liquidator has available to him a bank guarantee in the sum of $25,000 to pay the respondents' costs if he is unsuccessful in these proceedings."

They went on to draw attention to the fact that a figure that might be ordered upon an application for security for costs would not necessarily be the amount of an estimate, and asserted that something like $15,000 would be appropriate, if the case were a case for the making of such an order, but that as the provisional liquidator in fact had funds of $25,000, there did not appear to be any need to take the matter any further.

Counsel for the applicant in the motion now says that this letter was insufficiently clear, insofar as it did not with absolute precision undertake that the sum of $25,000 would be set aside to meet the costs in respect of which it was said to have been obtained. I read the word "to", in the statement in the letter, as expressing purpose, as that word commonly does in such a collocation of words, but in any case, it seems clear to me that the point now raised was not the point that had previously been raised. It was not the point that was put to me when the nature of this motion was open to me some time ago. The point that was then put, and appears to be the real point of the applicant in the motion, was simply that it was not good enough to have a guarantee in favour of

by a guarantee in favour of the applicants in the motion	the provisional liquidator; that security ought to be provided	themselves.
An order for security for costs is always a discretionary matter. In my opinion, there is simply no basis for making such an order on any such basis as the respondents argue, or on any basis which appears in the evidence in this case. I have no hesitation in accepting the affidavit of the provisional liquidator on this issue. He was not cross- examined upon it, and it seems to me that it is simply fanciful to suggest that it is insufficient as a practical assurance, to the applicants in the motion, that costs in an amount exceeding the amount for which a court would be likely to order security are in fact secured.
The next motion before me is for a stay, on the basis that the provisional liquidator has instructed solicitors, and a junior counsel, whom he should not have instructed or should not continue to instruct in these proceedings. Although the proceedings were commenced some time ago, that application has only been made quite recently, and indeed, after the other motions which are before me had been set down for today. It is accepted that the stay application is also a matter for the discretion of the court. In exercising that discretion, I take account of the fact that the provisional liquidator was appointed by the Supreme Court of New South Wales, and would, of course, be amenable to its further orders. But apart from
employment of the solicitors and briefing of the counsel that consideration, it has not been shown to me that the
concerned involves any relevant conflict of interest, or demonstrates any relevant lack of impartiality on the part of the liquidator. I am not prepared to exercise the discretion to which the applicant in the motion makes appeal.
Finally, there is an application that I order a trial, as a separate issue, of the cross-claim which has been brought in this matter. The issues in the claim and the cross-claim involve a considerable amount of complexity, but it cannot be said that they are totally separate from each other. Indeed, to some extent, the facts are intertwined. It must also be said that there is, in relation to the cross-claim, a central question of the kind which arose in the High Court case Petelin v. Cullen (1975) 132 CLR 355. That issue will depend almost entirely on credit, and the principal claim, I have been told and accept from my own appreciation of the claim and the material that has been put before me, will also involve important issues of credit.
If I were to order a separate trial of the issue raised in the cross-claim, it is very likely that cross-examination would, in any event, stray across the border between the two sets of issues, in various respects, on matters of credit. In my opinion, it is highly desirable that the whole of the intertwined circumstances should be available for examination and cross-examination of witnesses, and that the whole complex
the one occasion by the one tribunal. I think therefore that of issues raised by this litigation should be determined on
the appropriate exercise of my discretion is to reject this motion also, and to affirm that the matter should proceed on the basis that the claim and the cross-claim will be dealt with together.
I think the appropriate order for costs is that the applicants in each motion pay the costs of Aloridge Pty Limited (Provisional Liquidator appointed).

(Directions were then given.)

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Burchett.

Associate:

Date :	20 ~ ~ 1 ~ ~ 1 9 9 3
Counsel for the Applicant:	Mr D.P.F. Officer Q.C. with M r D.L. Warren
Solicitors for the Applicant:	Messrs N.G. Cassim & Company
Counsel for the Respondents:	Mr J.B. Simpkins
Solicitors for the Respondents:	Messrs Phillips Fox
Date of hearing:	15 July 1993