Amber Downs Pty Ltd v Angela Judith Burbury as trustee of the R.I. Burbury Family Trust - [2019] WASC 123

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   AMBER DOWNS PTY LTD -v- ANGELA JUDITH BURBURY as trustee of the R.I. BURBURY FAMILY TRUST [2019] WASC 123
CORAM:   MASTER SANDERSON
HEARD:   12 FEBRUARY 2019
DELIVERED          :   18 APRIL 2019
FILE NO/S:   CIV 2895 of 2017
BETWEEN:   AMBER DOWNS PTY LTD
Plaintiff

AND

ANGELA JUDITH BURBURY as trustee of the R.I. BURBURY FAMILY TRUST
Defendant

Catchwords:

Practice and procedure - Application for security for costs - Application for further and better discovery - Turns on own facts

Legislation:

Limitation Act 1935 (WA)
Limitation Act 2005 (WA)

Result:

Security for costs ordered
Further and better discovery ordered

Category: B

Representation:

Counsel:

Plaintiff	:	Mr J G M Fiocco
Defendant	:	Mr C Slater

Solicitors:

Plaintiff	:	Richard Rowick Barrister & Solicitor
Defendant	:	Jackson McDonald

Case(s) referred to in decision(s):

Crosswest Corporation Pty Ltd v Allstrike Enterprises Pty Ltd [2014] WASC 27
McMurray v AIG Insurance Australia Ltd [No 2] [2018] WASC 391
Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57

MASTER SANDERSON:

This is the return of two chamber summonses. The first in time is the defendant's chamber summons filed 17 December 2018 seeking security for costs. There then followed the plaintiff's chamber summons filed 18 January 2019 seeking further and better discovery. These reasons deal with both applications.
Turning first to the application for security for costs it is necessary to summarise briefly the relevant facts. What follows is taken largely from the plaintiff's outline of submissions.[1] By setting out the relevant facts – or the facts the plaintiff says are relevant – I am not in any way purporting to determine any issue. The aim is to give an overview in determining the question of whether or not security for costs ought be ordered.
[1] Plaintiff's submissions filed 18 January 2019.
The plaintiff was incorporated in Western Australia on 30 November 1965 and has at all times since then been connected with the Burbury family. The original directors and shareholders of the plaintiff were Roger Ingliss Burbury (Roger) and Caroline Hannah Burbury (Hannah) who were farmers in the Kojonup area. The current directors are Nicholas David Burbury (Nick) and his wife Amanda Burbury (Amanda). Nick is Roger's nephew. Roger and Nick's father were brothers.
Roger died on 12 August 1990 and Hannah became the sole shareholder of the plaintiff. She remained a director until her death on 13 June 2013. Following Roger's death, the family solicitor, Brien Taylor, acted as co‑director with Hannah. Brien Taylor resigned as a director of the plaintiff after Nick and Amanda were appointed as directors on 8 October 2013.
On 28 January 1992 Richard John Leslie Hudson created the N D Burbury Family Trust of which Hannah became the trustee, guardian, appointor and one of the second beneficiaries. The plaintiff is another second beneficiary. The primary beneficiaries of this trust were named children of Christopher Anthony Manton Burbury being Amanda Burbury, Nova Joan Burbury, Fleta Manton Burbury and Angela Judith Burbury (the defendant). On her death on 13 June 2013 Hannah gave her shares in the plaintiff under Hannah's will to the N D Burbury Family Trust which is the family trust of the directors of the plaintiff.
Between at least 30 June 2007 and 30 June 2012 Hannah caused financial statements to be prepared for the R I Burbury Family Trust. These statements appear as attachments NDB 1 to NDB 5 of the affidavit of Nick sworn 14 January 2019.[2] As at 30 June 2012 the financial statements of the R I Burbury Family Trust recorded a loan from the plaintiff to the R I Burbury Family Trust of $84,256 and that the plaintiff had unpaid beneficiary entitlements of $741,079. The plaintiff says on the face of the financial statements it is owed an amount of $825,335 as at 30 June 2012.[3] On 21 May 2015 the plaintiff's lawyers demanded payment of $850,264 from the defendant. (The reasons for the discrepancy between the accounts and the demand is not material for present purposes).
[2] Affidavit of Nicholas David Burbury sworn 14 January 2019, pages 14 – 47.
[3] Plaintiff's submissions filed 18 January 2019, page 3.
The defendant says there are two issues for trial.[4] First, it says there are questions as to whether or not there have been declarations which amount to a distribution to the plaintiff in the periods from before 2006 and up to 2012 and whether any distributions are unpaid. Second, the defendant says that any claims the plaintiff may have were extinguished by the relevant Limitation Act – either the 1935 Act or the 2005 Act of Western Australia.
[4] Defendant's submissions filed 17 December 2018, page 2.
The applicable principles governing the court's discretion to order security for costs were not in dispute between the parties. Both parties relied upon what was said by Edelman J in Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57 [5] and also on the decision in Crosswest Corporation Pty Ltd v Allstrike Enterprises Pty Ltd [2014] WASC 27. The defendant's submissions highlighted four factors which it said were relevant to this application.[5] First, whether the application for security has been brought promptly. Second, the strength and bona fide of the plaintiff's case. Third, the inability of the plaintiff to pay the defendant's costs. In this regard the defendant accepted that the fact the court had reason to believe the plaintiff could not pay the defendant's costs was the starting point of the exercise of discretion. Finally, whether it is in the public interest that security be provided.
[5] Defendant's submissions filed 17 December 2018, page 3.
The defendant submitted there were three reasons why the court should exercise its discretion and order that security be provided.[6] First, the plaintiff's then solicitors indicated that the plaintiff agreed it would provide $50,000 by way of security. The plaintiff has not provided that security. Second, that the plaintiff's claim is 'opaque'. Finally, the plaintiff has provided no current information as to available assets to meet a judgment for costs and the historical information does not provide a foundation to believe that there are sufficient assets.
[6] Defendant's submissions filed 17 December 2018, page 1.
The plaintiff submitted that the evidence establishes the plaintiff would be able to meet any costs order should one be made. In other words, the plaintiff submitted the jurisdiction to order security was not enlivened. If that argument was not accepted, the plaintiff submitted the strength of its case was such that no order for security was warranted. In making this submission, counsel relied in particular on the decision of Smith J in McMurray v AIG Insurance Australia Ltd [No 2] [2018] WASC 391.
There can be no doubt that the plaintiff's former solicitors did agree with the defendant's solicitors that security for costs in the sum of $50,000 would be provided. The relevant correspondence appears in attachments to an affidavit of Colette Davies sworn 22 November 2018.[7] While the relevant letter is unqualified it must be assumed the offer of security – which was an open offer - was based upon legal advice. It is then reasonable to assume the plaintiff's former solicitors concluded the defendant would be able to establish the jurisdictional basis for ordering security. Presumably the plaintiff's present solicitors reconsidered its position and determined the plaintiff would be able to meet any costs order which might be made against it. That was certainly the way counsel for the plaintiff argued the case.
[7] Affidavit of Colette Davies sworn 22 November 2018, attachment CZD‑1, pages 4 – 8.
To my mind, it would be both inappropriate and unfair to the defendant to allow the plaintiff to resile from the agreement to provide $50,000 by way of security for costs. That conclusion has two consequences. First, the jurisdiction to order security must be seen as having been conceded. Second, the amount of security ordered ought be at least $50,000. The defendant seeks security in the sum of $100,000. The only live issue then is whether or not an extra $50,000 above and beyond what the plaintiff offered ought be ordered.
Resultantly, of the four criteria highlighted by the defendant as the basis for ordering security, only one remains relevant. That is, the strength and bone fide of the plaintiff's case. The defendant says any delay in bringing the application for security is explained by the fact that the defendant believed, based upon what it was told by the plaintiff's former solicitors, security would be provided. I accept that argument. It is supported by my previous indication that the agreement acts as an admission of the inability of the plaintiff to pay the defendant's costs. Further, there is no public interest in this litigation which would count against the provision of security. Some provisional assessment of the plaintiff's chances of success in the action is therefore required.
The amended statement of claim sets out a very simple case.[8] By par 7 the plaintiff says the defendant, according to the accounts, made distributions prior to July 2006 and up to June 2010 of $116,905 to the plaintiff. By par 8 it is said that in the financial year ended 30 June 2012 the accounts showed the plaintiff being entitled to $558,142 described as 'unpaid beneficiary entitlements'. Based upon the accounts the plaintiff says it is entitled to $741,079.[9] (Once again there is a discrepancy between the amount claimed and the amount of the demand but that discrepancy can be put to one side for present purposes).
[8] Amended statement of claim filed 26 July 2018.
[9] Amended statement of claim filed 26 July 2018, par 10.
The defence was lodged on 3 April 2018 and has not been amended despite the plaintiff's amendment of the statement of claim. As it stands the defence is a series of denials and a plea of the Limitation Act 1935 (WA) and the Limitation Act 2005 (WA). Leaving to one side the Limitation Act questions, it is not entirely clear why accounts which seem relatively straight forward should be called into question.
In an application such as this it is not for me to examine in any detail the merits of the plaintiff's claim. It is clearly bona fide – the plaintiff is a beneficiary and seeks to have a trustee account to it for amounts which are set out in the trust accounts. Further, on the information available and subject to the limitation defence, the plaintiff's claim would appear to be sound. It certainly could not be said to be wholly lacking in merit. Nor on the face of it is it 'opaque'. As I have indicated the claim as set out in the amended statement of claim is quite straight forward.
On balance I am satisfied I should order the plaintiff to provide security for costs in an amount of $50,000. This is based on the agreement that was reached to that effect. I am not satisfied in the present circumstances any further security is required. This is based largely on the merits of the plaintiff's claim. It seems to me, on the material presently available, the plaintiff's claim has merit and is bona fide. Moreover, while the agreement to provide security anticipated an amount of $50,000, there was no concession that any further sum should be provided. In all the circumstances I am not satisfied an order for any greater amount would be appropriate.
Turning then to the application for further and better discovery. The plaintiff seeks the financial statements for the R I Burbury Family Trust for the years ended 30 June 2013 to 30 June 2018. In an affidavit sworn 14 January 2019 in support of the plaintiff's application for further and better discovery, Nick sets out (in par 28) his reasons why the documents are directly relevant to matters in issue.[10] Essentially he says if the financial statements continue to refer to unpaid beneficiary entitlements and loans from the plaintiff, the financial statements of the R I Burbury Family Trust may constitute admissions by the trustee of amounts being owed to the plaintiff. In my view, that is correct. It was the defendant's position the accounts were irrelevant. But these accounts are clearly directly relevant, particularly when set against the claim they may be admissions in the plaintiff's favour. They ought be discovered.
[10] Affidavit of Nicholas David Burbury sworn 14 January 2019, page 7.
As a general rule, once an order for security for costs is made, an action is stayed pending provision of that security. However, in this case I am prepared to order that the further and better discovery of documents be provided by the defendant on affidavit within 21 days of the publication of these reasons. The plaintiff is to provide security for costs in an amount of $50,000 within 28 days of the publication of these reasons. If the security is not provided then the action will be stayed. The form of security should, if possible, be agreed between the parties. Deposit of funds in a joint account held in the name of the respective parties' solicitors would probably be the preferred outcome. If no agreement can be reached within 14 days of the publication of these reasons then the parties should refer the matter for further orders.
On publication of these orders I will hear the parties as to the form of orders and as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson
17 APRIL 2019