Anderson v Patersons Securities Ltd

[2019] NSWSC 852

Supreme Court

New South Wales

Medium Neutral Citation:	Anderson v Patersons Securities Ltd [2019] NSWSC 852
Hearing dates:	20 June 2019
Date of orders:	11 July 2019
Decision date:	11 July 2019
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	1. Pursuant to r 42.21(1)(a) and/or (e) of the Uniform Civil Procedure Rules 2005 (NSW), order the plaintiff, Mrs Daniela Anderson, to provide security in the following tranches and in accordance with the schedule to these reasons: •   in relation to the first tranche: within 28 days of these reasons for the respective defendants’ costs of the proceedings up to the commencement of the trial in the amounts, and at the times, set out in the schedule to these reasons; •   in relation to the second tranche: within 28 days from the conclusion of a mediation of the disputes or no later than six weeks from commencement of the hearing in the amounts, and at the times, set out in the schedule to these reasons;  such security to be provided by way of an unconditional bank guarantee from an Australian bank in a form acceptable to the defendants or payment into Court. 2.   In the event that the respective tranches of security ordered in Order 1 above are not provided in respect of any one or more of the defendants within the time(s) specified, order that the proceedings be stayed until further order. 3.   Grant the defendants liberty to apply on three days’ notice for further security to be provided for the period from commencement of the hearing or to increase the amount of security ordered in Order 1 if the security provided in a particular tranche proves insufficient to cover the party/party costs thereby incurred, or in the event that there is disagreement as to the acceptability of the unconditional bank guarantee provided pursuant to Order 1. 4.   Grant the plaintiff liberty to apply to vary the orders made for security for costs in the event that there is a material change in circumstances in the period prior to commencement of the hearing. 5.   Order the plaintiff to pay the defendants’ costs of and incidental to the respective notices of motion.
Catchwords:	COSTS — Security for costs — Relevant factors – whether the jurisdiction to make an order for security for costs pursuant to r 42.21(1)(a) of the UCPR is enlivened –whether as a matter of fact the plaintiff is not ordinarily resident in Australia COSTS — Security for costs — Relevant factors – whether in the exercise of the Court’s inherent jurisdiction or pursuant to r 42.21(1)(e) of the UCPR the discretion to award security of costs should be exercised in favour of the defendants – consideration of the plaintiff’s impecuniosity, delay and costs
Legislation Cited:	Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth), ss 477, 1335 Foreign Judgments Act 1991 (Cth), Pt 2 Foreign Judgments Regulations 1992 (Cth), Sch Uniform Civil Procedure Rules 2005 (NSW), rr 6.24, 42.21
Cases Cited:	Acohs Pty Ltd v Ucorp Pty Ltd (2006) 155 FCR 181; [2006] FCA 1279 Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited [1995] FCA 1778; (1995) 134 ALR 187; Australian Building Construction Employees’ & Builders’ Labourers’ Federation v Commonwealth Trading Bank [1976] 2 NSWLR 371 Ballard v Brookfield Australia Investments Ltd [2012] NSWCA 434 Bellgrove v Marine & General Insurance Services Pty Ltd (1996) 5 Tas R 409 Brundza v Robbie & Co (No 2) (1952) 88 CLR 171; [1952] HCA 49 Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301 Byrnes v John Fairfax Publications Pty Ltd [2006] NSWSC 251 Corby v Channel Seven Sydney Pty Ltd [2008] NSWSC 245 Dalma Formwork Pty Ltd (Administrator Appointed) v Concrete Constructions Group Ltd [1998] NSWSC 472 Dense Medium Separation Powders Pty Ltd v Gondwana Chemicals Pty Ltd [2011] NSWCA 84 Energy Drilling Inc v Petroz NL (1989) ATPR 40-954 Epping Plaza Fresh Fruit and Vegetables Pty Ltd v Bevendale Pty Ltd [1999] 2 VR 191; [1999] VSCA 43 Estates Property Investment Corporate Ltd v Pooley (1975) 3 ACLR 256 Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 2) [2012] FCA 23 Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664 Green (as liquidator of Armico Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148 Hannaford v Commonwealth Bank of Australia [2013] NSWCA 472 Hession v Century 21 South Pacific Ltd (In Liq) (1992) 28 NSWLR 120 Idoport Pty Ltd v National Australia Bank Limited [2002] NSWCA 271 Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 In the matter of GAP Constructions Pty Ltd [2013] NSWSC 822 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2002] NSWSC 609 Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43 KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 Li v State of New South Wales [2013] NSWCA 165 Litmus Australia Pty Ltd (in liq) v Canty [2007] NSWSC 670 Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 LK v Director General, Department of Community Services (2009) 237 CLR 582; [2009] HCA 9 Logue v Hansen Technologies Ltd (2003) 125 FCR 590; [2003] FCA 81 Min Kyu Kim v Byung Sun (Eric) Song [2012] NSWSC 103 Mothership Music Pty Ltd v Flo Rida (aka Tramar Dillard) [2012] NSWCA 344 Ninan v St George Bank Ltd [2012] FCA 905; (2012) 294 ALR 190 Norcast S.ár.L v Bradken Limited [2012] FCA 765 Ollerenshaw v The Uniting Church in Australia Property Trust (NSW) [2017] NSWSC 1637 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 Owners of Strata Plan No 5290 v CGS & Co Pty Ltd (2011) 81 NSWLR 285; [2011] NSWCA 168 Pacific Acceptance Corporation Ltd v Forsyth (No 2) (1967) 85 WN Pt 1 (NSW) 715 Pearson v Naydler [1977] 1 WLR 899 Porter v Gordian Runoff Limited [2004] NSWCA 171 PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321 R v Barnet London Borough Council, Ex parte Nilish Shah (1983) 2 AC 309; [1983] 1 All ER 226 Re Colorado Products Pty Ltd (in prov liq) [2013] NSWSC 611 Re Judiciary Act 1903-1920; Re Navigation Act 1912-1920 (1921) 29 CLR 257; [1921] HCA 20 Re Taylor; ex parte Natwest Australia Bank Ltd (1992) 37 FCR 194 Riot Nominees Pty Ltd v Suzuld Australia Pty Ltd (1981) 52 FLR 25 Robertson v Knott Investments Pty Ltd (No 2) [2010] FCA 796 Rugby Union Players Association Inc v Australian Rugby Union Ltd (NSWSC, unreported, 30/7/1997) Rusiti v Alkhoshaibi [2007] NSWSC 1374 Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2 Thalanga Copper Mines Pty Ltd v Brandrill Ltd [2004] NSWSC 349 The Owners – Strata Plan 87265 v Saaib [2019] NSWSC 289 Tyneside Property Management Pty Limited v Hammersmith Management Pty Ltd [2013] NSWCA 404 Western Export Services Inc v Jireh International Pty Limited [2008] NSWSC 601 White v Butt [1909] 1 KB 50 Wollongong Coal Limited v Gujarat NRE Properties Pty Ltd [2019] NSWSC 187 Wu v Avin Operations Pty Ltd (No 3) [2006] FCA 1321
Texts Cited:	Davies, Bell and Brereton, Nygh’s Conflict of Laws in Australia (8th ed, 2010, Lexis Nexis)
Category:	Procedural and other rulings
Parties:	Daniela Alejandra Anderson (Plaintiff) Patersons Securities Ltd (First Defendant) Nicola Lesleigh Garrett (Second Defendant) Samuel Mark Renauf (Third Defendant) PPB Pty Ltd (Falcon Prime Pty Ltd) (Fourth Defendant) Acorn Capital Ltd (Fifth Defendant) Albany Capital Investors Pty Ltd (Sixth Defendant)
Representation:	Counsel: Mr P Braham SC with Mr S Keizer (Plaintiff) Mr JA Redwood and Ms E Bathurst (First Defendant) Ms M Painter SC with T Bagley (Second and Third Defendants) Mr G Ng (Fourth Defendant) Ms ND Oreb (Fifth Defendant) Ms V Chapman (Sixth Defendant)   Solicitors: McLaren Thorpe Partners (Plaintiff) Clayton Utz (First Defendant) Piper Alderman (Second and Third Defendants) Corrs Chambers Westgarth (Fourth Defendant) Moray & Agnew (Fifth Defendant) Kennedys Law (Sixth Defendant)
File Number(s):	2015/00285816
Publication restriction:	Nil

Judgment

1. HER HONOUR: Before me for hearing on 20 June 2019 were various applications for security for costs brought by notices of motion filed 7 June 2019 by the respective defendants in proceedings commenced by the plaintiff (Mrs Daniela Anderson) in 2015.

Background

2. Before turning to the various applications and the procedural history of this matter it is helpful to set out briefly the parties to the proceedings and the underlying dispute the subject of these proceedings.

The parties

3. Mrs Anderson, the plaintiff, is the wife of Mr Craig Anderson (a discharged bankrupt). Her role, in the scheme of things, is as assignee (or, in the defendants’ submission, purported assignee) of a chose in action comprised of claims by a number of entities of which her husband, Mr Anderson, is a former director and shareholder (the Ashington group of companies: Ashington Group Pty Ltd (Ashington), Ashington Capital Pty Ltd (ACPL), Ashington Management Pty Ltd (AMPL) and Ashington Real Estate Pty Ltd (ARE) (together, the Ashington group)). As I understand it, it is not suggested that the plaintiff had any direct role or interest in the Ashington group or involvement in the matters the subject of the proceedings. The Ashington group (or at least Ashington, ACPL and AMPL) is now in liquidation.

4. The first defendant, Patersons Securities Ltd (Patersons), is a stockbroking and financial services firm.

5. The second defendant, Ms Nicola Garrett (Ms Garrett) held a role within the Ashington group (whether as a consultant or employee being in dispute in the proceedings) in the second half of 2009 until 16 November 2009. The third defendant Mr Samuel Renauf (Mr Renauf) also held a role within the Ashington group in the second half of 2009 until on or about 22 December 2009 (and again the nature of his position, whether as an employee or consultant, is in dispute).

6. The fourth defendant, PPB Pty Ltd, is an insolvency firm.

7. The fifth defendant, Acorn Capital Limited (Acorn), is a company engaged in investment activities.

8. The sixth defendant, Albany Capital Investors Pty Ltd (Albany), is a company engaged in funds management.

9. Each of the defendants, other than Ms Garrett and Mr Renauf who are jointly represented, is separately represented in the proceedings.

The underlying dispute

10. The underlying dispute relates to events which took place in 2009.

11. In summary, Ashington carried on a property development business through two principal head trusts (ACPL and AMPL), under which were two separate sub-trusts (unit trusts referred to as the ADF and the ADF2). Mr Anderson was a director of each of ACPL and AMPL and beneficially owned the majority of the shares in those companies.

12. ACPL and AMPL were trustee and manager, respectively, of the two unit trusts (the ADF and the ADF2).

13. The manner in which Ashington undertook its property development business is described by the plaintiff as follows. It had created two funds, the Ashington Development Fund (the ADF) and the Ashington Development Fund No 2 (the ADF2), each of which was a unit trust. ACPL was the trustee of the ADF and the ADF2. A series of superannuation funds, as well as Ashington itself, invested in the ADF and the ADF2 and, in return, obtained units in the ADF and the ADF2. The various property development projects formed part of the assets of either the ADF or the ADF2. A separate unit trust was created for each development, with the units in that trust being 100% owned by ACPL in its capacity as trustee of the ADF or the ADF2 (as the case may be). ACPL appointed AMPL as manager of each of the development projects. AMPL, in turn, undertook and managed the development of each of these projects. Ashington earned its income through: trustee fees that were paid to ACPL; development management fees that were paid to AMPL; and sales commissions that were paid to ARE.

14. The claim essentially concerns an alleged “conspiracy” between the defendants to acquire and divert to themselves Ashington’s business, a conspiracy which the plaintiff alleges resulted in a new business known as Parissen (Parissen Capital Pty Ltd) taking over from Ashington as the trustee and development manager for the ADF and the ADF2 from about December 2009.

15. The primary claim is one of breach of fiduciary duty by Ms Garrett and Mr Renauf, and knowing assistance in those breaches by each of Patersons, PPB, Acorn and Albany.

16. Briefly stated, the breach of fiduciary duty and knowing assistance claims are as follows. It is alleged that Ms Garrett and Mr Renauf had each been recruited to Ashington as senior employees during the course of 2009; Ms Garrett took on the role of Head of Funds Management and Mr Renauf took on the role of Head of Acquisitions and Planning. In about September 2009, Ms Garrett and Mr Renauf had been tasked by Ashington with arranging a capital raising in order to take out an existing mezzanine finance facility for one of the ADF2 projects, the Stonington development in Melbourne. Further to that task, Ashington had engaged Patersons to be the lead manager for the capital raising. Ms Garrett’s then husband, Mr Carolan, was one of the Patersons employees working on this capital raising. According to the plaintiff, by early October 2009, Ms Garrett had identified that the nature of Ashington’s existing mezzanine finance facility for Stonington (in particular, the security arrangements for that facility, which arguably gave the lender security over not just the Stonington property but over the rest of the fund’s assets) was a “weakness” for Ashington that she could exploit for her own benefit.

17. It is alleged that, in conjunction with Mr Carolan and Mr Renauf, Ms Garrett started to formulate a plan by which she would become the new fund manager for the ADF and the ADF2. This plan involved a “Newco” entity (with which Ms Garrett would be involved) convincing the superannuation fund investors in the ADF and the ADF2 that Ashington should be replaced as trustee and manager of the property developments by the “Newco”. It is alleged that Ms Garrett and Mr Carolan communicated this plan to one of Mr Carolan’s colleagues at Patersons, Mr Doherty; that Ms Garrett and Mr Doherty then proceeded to meet with certain of Mr Doherty’s contacts, including Acorn, to seek their interest in investing in “Newco”; and that Acorn in turn put Ms Garrett and Mr Doherty in contact with Albany.

18. It is alleged that Acorn and Albany agreed to pursue this opportunity, which eventually led to the creation of Parissen as “Newco” proposed by Ms Garrett. It is contended that, from October to early December 2009, Ms Garrett, Mr Renauf, Mr Carolan, PPB, Acorn and Albany developed and pursued the plan, relying on Ms Garrett and Mr Renauf (at Ashington) and PPB (in its capacity as advisor to the superannuation funds) to obtain the information about Ashington necessary for putting the plan into action, including the information necessary for Parissen to obtain the confidence of the superannuation funds. It is alleged that, at the same time, Ms Garrett, Mr Renauf and PPB concealed what was happening from Ashington itself and that Ms Garrett and Mr Renauf dishonestly caused Mr Anderson to believe that, together with Patersons, they were actively pursuing the capital raising for Stonington (which they were not doing).

19. The plaintiff says that, by about mid-December 2009, the plan had come to fruition and Ms Garrett, Mr Renauf, Acorn, Albany and PPB, working together, had convinced the superannuation funds that Ashington should be replaced by Parissen as trustee and manager of the ADF and the ADF2. The superannuation funds informed Ashington that it would be replaced and, on 23 December 2009, deeds were entered into pursuant to which Ashington was replaced by Parissen as trustee of the ADF and the ADF2.

20. Separately, the plaintiff brings discrete claims against each of Patersons, PPB, Acorn and Albany for breach of obligations allegedly owed by them with respect to Ashington’s confidential information; the claims against Acorn and Albany allegedly arising under the general law and the claims against Patersons and PPB allegedly arising in both contract and at general law.

21. The nub of the plaintiff’s complaint, as outlined on the present applications, is that a “consortium” was formed between the defendants, with the objective of obtaining access to ACPL’s and AMPL’s confidential information in order to misappropriate Ashington’s business for the defendants’ own benefit (and Ms Garrett and Mr Renauf were the architects of that plan).

22. Patersons was appointed by ACPL pursuant to a conditional mandate to raise funds for a mezzanine facility, the purpose of which was primarily to refinance an existing debt facility provided by Investec (the Patersons Mandate). It is alleged that Patersons owed a fiduciary duty, through that contractual mandate, to the trustees (ACPL and AMPL) not to engage in certain conduct incompatible with its fiduciary duty, as well as certain contractual obligations implied under the mandate. Patersons is alleged to have sent certain “high-level information” concerning the investment opportunity to various potential investors, including Acorn. It is also alleged that Patersons subsequently facilitated contact being made between Ms Garrett and Acorn.

23. As adverted to above, Ms Garrett and Mr Renauf (described in oral submissions before me as the “primary wrongdoers”) are alleged to have been the architects of the plan to misappropriate Ashington’s business. It is alleged that, together with PPB, they supplied information with respect to Ashington’s business to Acorn and Albany and facilitated contact between Acorn and Albany and the members of the ADF and the ADF2 unit trusts. It is alleged that both Ms Garrett and Mr Renauf were to benefit from the “taking” of Ashington’s business, as it was proposed that they would be employed by the new entity taking control of the business.

24. Acorn was initially approached by Patersons with respect to it participating in the mezzanine facility. It is alleged that Acorn and Albany regularly cooperated on investments and that, once contact between Ms Garrett and Acorn had been established, the only interest of Acorn and Albany was the taking of Ashington’s business (rather than their participation in the mezzanine facility).

25. The plaintiff asserts that the actions of the consortium caused ACPL and AMPL (and through them Ashington) to lose their respective businesses. On the plaintiff’s case, all of the defendants acted in concert to “do the damage ultimately done” to those businesses. By deed dated 29 September 2015, the liquidator assigned the causes of action of ACPL and AMPL to the plaintiff (the Deed of Option). The assignment was to the plaintiff, rather than to Mr Carolan, because at the time Mr Anderson had been placed into bankruptcy, again as a result of Ashington’s loss of its business. Mr Anderson had given personal guarantees for liabilities of the Ashington business. The plaintiff brings the current proceeding pursuant to the causes of action that have been assigned to her by the liquidator of ACPL and AMPL. The plaintiff now claims very substantial damages.

Present applications

26. As adverted to above, each of the defendants, by notices of motion filed 7 June 2019, now seeks orders for security for costs principally invoking the jurisdiction of the Court under r 42.21(1)(a) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). I say “principally” because Patersons also argues that such relief is available in the exercise of the Court’s inherent jurisdiction. PPB further argues that, having regard to: Mr Anderson’s evidence that the plaintiff took an assignment of the relevant causes only because he was an undischarged bankrupt at the time of the assignment and that he would otherwise have been the nominated assignee; and the plaintiff’s evidence of her own impecuniosity, there is at the very least a question as to whether r 42.21(1)(e) of the UCPR (which empowers the Court to make an order for security if it appears to the Court that “a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so”) provides a separate basis for making an order for security in the present case.

26. The amounts sought (and the basis on which the amounts have been calculated) vary, not surprisingly, as between the respective defendants, but overall there is consistency in the tasks contemplated that will be required in preparation of the case for hearing. The total amounts sought by way of security (on a party/party basis) up to the commencement of the hearing are: by Patersons ($240,808); by Ms Garrett and Mr Renauf ($215,000); by PPB ($200,000); by Acorn ($147,000) and by Albany ($120,000); thus, totalling security in the amount of some $922,808.

Procedural history

28. The procedural history of the present proceedings relevantly commences, as adverted to above, with the assignment to the plaintiff by the liquidator of ACPL and AMPL of the causes of action contained in the amended statement of claim.

29. As pleaded from [182]ff of the amended statement of claim, the circumstances of that assignment are as follows. It is alleged (at [182]) that the causes of action identified at [182A] of the amended statement of claim were the property of ACPL and AMPL and that, by the Deed of Option, the liquidator of ACPL and AMPL, pursuant to his power under s 477(2)(c) of the Corporations Act 2001 (Cth) (Corporations Act), granted to the plaintiff an option to purchase all the rights, title and interests of ACPL and AMPL in the causes of action set out at [182A].

30. At [182A] it is pleaded that the Deed of Option defined “Conspiracy Claim” as any and all choses in action, suits, causes of action, debts costs, claims, demands, verdicts and judgments (either at law or in equity or arising under a statute) of one or more of ACPL and AMPL against any or all of Ms Garrett, Mr Renauf, Patersons, PPB, Albany and Acorn in relation to, or in connection with their acts, conduct, silence or omissions occurring, in the period from 1 January 2009 to 14 April 2011, in relation to or in connection with: (i) the replacement of ACPL as trustee of the ADF and/or the ADF2 and their sub-trusts; and (ii) the replacement of AMPL as development manager of the “Projects”. It is alleged that the Deed of Option allowed the plaintiff to exercise the option by forwarding a notice in writing to the liquidator within six months of the date of the Deed of Option stating that she exercised the option; and that the exercise of the option was subject to the conditions identified at [182A(c)], namely the payment of $250,000 to the liquidator.

31. At [182B] of the amended statement of claim, it is alleged that, on 29 September 2015, the plaintiff exercised the option; and, at [182C], that she fulfilled the conditions by making the requisite payment to the liquidator.

32. At [182E] of the amended statement of claim it is alleged that, in the premises, on and from 29 September 2015, the liquidator assigned to the plaintiff all of ACPL’s and AMPL’s rights, title and interest in the causes of action pleaded against the defendants in the amended statement of claim.

33. The plaintiff commenced these proceedings by filing a statement of claim on 29 September 2015. However, the defendants were not served with the originating process until shortly before the originating process was due to become stale in March 2016.

34. Following the service of the statement of claim and an amended statement of claim, filed on 26 May 2017, defences were filed by the defendants in July 2017. I note that there is also an amended statement of claim filed 2 November 2017 on the court file (which appears to be the same as the amended statement of claim filed in May 2017) and an amended statement of claim filed 21 June 2019. In the Court Book on the present applications there is also a proposed further amended statement of claim and a proposed amended defence for Patersons. The plaintiff has served her lay and expert evidence-in-chief and the defendants have served their lay and expert evidence-in-chief.

Relevant principles

35. Rule 42.21(1) of the UCPR, relevantly provides that:

(1)   If, in any proceedings, it appears to the court on the application of a defendant:

(a)   that a plaintiff is ordinarily resident outside Australia …

…

(e)   that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so

…

the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant’s costs of the proceedings and that the proceedings be stayed until the security is given.

36. The jurisdiction under r 42.21 of the UCPR is enlivened if the Court is satisfied that the plaintiff, being a natural person, is “ordinarily resident outside Australia”. This is a threshold question that must be satisfied before the discretionary considerations arise, the question being one of fact and degree (though I interpose here to note the High Court’s statement in LK v Director General, Department of Community Services (2009) 237 CLR 582; [2009] HCA 9 (LK) at [22] that “to approach the term from a standpoint which describes it as presenting a question of fact has evident limitations”) (see Ollerenshaw v The Uniting Church in Australia Property Trust (NSW) [2017] NSWSC 1637 (Ollerenshaw), at [9] (Walton J)). The evidentiary burden on that issue lies with the party seeking security (here, the defendants).

37. Residence, as noted above, is a question of fact (see, for example, the observations as to residence in Davies, Bell and Brereton, Nygh’sConflict of Laws in Australia (8th ed, 2010, Lexis Nexis) at [13.34]). In Logue v Hansen Technologies Ltd (2003) 125 FCR 590; [2003] FCA 81 (Logue v Hansen Technologies), Weinberg J reviewed the authorities on the meaning of the expression “ordinarily resident” for the purposes of the corresponding provision in the Victorian rules, concluding (at [26]) that the test for ordinary residence depends to a significant degree upon the state of mind of the person whose residence is in question; and that the issue is “whether the person habitually and normally resides in the jurisdiction, and does so for a settled purpose”. While it is not necessary to show settled purpose for an indefinite period, there must be a sufficient degree of continuity of residence in order that it may properly be described as “settled”.

38. In Re Taylor; ex parte Natwest Australia Bank Ltd (1992) 37 FCR 194 (Re Taylor), Lockhart J, in the context of whether a person was ordinarily resident in Australia at the time of an act of bankruptcy said (at 198):

To say that a person is ordinarily resident in Australia must mean something more than that he is resident in Australia. The word “ordinarily” connotes a comparison, a measure of degree. A person may have more than one residence, but he is not necessarily ordinarily resident in each of them. The question must be determined for the purposes of s 43 of the [Bankruptcy Act 1996 (Cth)] at a particular time. One must ask the question whether at that time the person was ordinarily resident in Australia. The concept of “ordinary residence” for the purposes of the Act, in my opinion, connotes a place where in the ordinary course of a person’s life he regularly or customarily lives. There must be some element of permanence, to be contrasted with a place where he stays only casually or intermittently.

39. In the High Court, “habitual” residence was treated as synonymous with “ordinary” residence” in LK (at [22]-[25]), where the Court identified the search as one for the place where a person resided and whether residence at a place can be described as habitual and to that end identifying the centre of the person’s personal and family life as disclosed by the facts of the person’s activities. See also Ollerenshaw, where it was said that “ordinarily” here signifies that the plaintiff has spent most of their time within the jurisdiction over the course of a considerable period (at [11] - Walton J, there referring to Logue v Hansen Technologies at [21] (per Weinberg J)). See also what was said by Kenny J in Wu v Avin Operations Pty Ltd (No 3) [2006] FCA 1321 (at [27] and [31]) in this regard.

40. The purpose of an order for security for costs is to ensure justice between the parties and, in particular, to ensure that unsuccessful proceedings do not disadvantage defendants; and that the exercise of the power involves the exercise of a discretionary judgment (see McHugh J in PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321).

41. The purpose of an order for security for costs against a plaintiff who is “ordinarily resident outside Australia” is to create a fund within the jurisdiction against which a successful defendant may enforce a judgment for costs, without having to bear the risk as to the (un)certainty of enforcement in a foreign country and as to the time and complexity of action which might be necessary to effect enforcement (see Hannaford v Commonwealth Bank of Australia [2013] NSWCA 472 at [54] (Gleeson JA), citing Energy Drilling Inc v Petroz NL (1989) ATPR 40-954 at 50,422 (Gummow J); Mothership Music Pty Ltd v Flo Rida (aka Tramar Dillard) [2012] NSWCA 344 at [12] (Meagher JA); Logue v Hansen Technologies at [18] (Weinberg J)).

42. Reference is also made by the defendants to my observations made in the Court of Appeal (with which Macfarlan and Gleeson JJA agreed) as to the discretion to order security even if it is established that the plaintiff is not ordinarily resident outside of Australia in Li v State of New South Wales [2013] NSWCA 165 (Li v NSW) at [21]-[23]:

Dal Pont, Law of Costs, 2nd edn, at [29.63], considering the historical background to the jurisdiction to order security for costs, notes that by 1894 an order for security where the plaintiff was resident out of the jurisdiction had become an inflexible rule such that the extent of the plaintiff’s means or assets out of the jurisdiction assumed no relevance and nor did the strength or weakness of the plaintiff’s case (referring to Crozat v Brogden [1894] 2 QB 30 at 35 per Lopes LJ). Dal Pont goes on to note:

To this end, it has been said that the real origin of the jurisdiction to order security for costs was to cater for the case of a non-resident plaintiff who, in seeking to take advantage of the jurisdiction of domestic courts, should be required to provide security for the payment of the costs of the party within the jurisdiction who is sued, in case the action should fail. The apparent concern was that a non-resident, particularly one without assets in the jurisdiction, could avoid liability for an adverse costs order precisely because his or her non-residency would make it difficult if not impossible to enforce the order.

It is noted by Dal Pont that the object of such an order is to have a fund available within the jurisdiction against which a judgment for costs can be enforced if the plaintiff is ultimately unsuccessful in the proceedings...

…

While there remains a discretion to be exercised having regard to all the circumstances of the particular case, Dal Pont comments (at [29.69]) that the trend of the cases (referring there to Jalfox Pty Ltd v Motel Association of New Zealand Inc [1984] 2 NZLR 647 at 649; Nasser v United Bank of Kuwait [2001] EWCA Civ 556; [2002] 1 All ER 401 at 419-420) is that the ease and convenience of enforcement procedures in the plaintiff’s country of residence will ordinarily be a primary consideration and that, conversely, the fact that a judgment would be simple to enforce is a powerful factor against the making of such an order (there referring to Knott v Signature Security Group Pty Ltd [2001] NSWIR Comm 12; (2001) 104IR 84 at 94-5).

43. Some of the factors which have been taken into account in determining the question of ordinary residence include the plaintiff’s citizenship, country of birth, education and family connections. Other factors include the citizenship of the plaintiff’s children, the school which the plaintiff’s children attend and whether the plaintiff has within the jurisdiction an established home, place of work and assets. In considering these factors, the relevant time period to make an assessment as to the plaintiff’s ordinary residence is at the time any application is brought, and not the plaintiff’s circumstances at the beginning of proceedings or at some indeterminate future time.

44. It has been recognised that it is possible for a plaintiff to have two ordinary residences (in which case an order for security for costs may still be made if “discretionary considerations” warrant it) (see, for example, Corby v Channel Seven Sydney Pty Ltd [2008] NSWSC 245 (Corby)).

45. Finally, I note that in Logue v Hansen Technologies (where (at [34]) it was held that the plaintiff was not “ordinarily resident” in Australia for the purpose of a security for costs application), Weinberg J observed (at [38]) that the practice is that a party who is not ordinarily resident in this country, and has no assets within the jurisdiction, is normally ordered in the exercise of the Court’s discretion to give security for costs.

46. The discretion to award security for costs is to be exercised judicially (see Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22] (Gaudron and Gummow JJ); and, as noted above, such an order will not be automatic, even if the jurisdiction is engaged (see Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 (Idoport) at [20], [56]-[57] and [60]-[62] (Einstein J)).

47. Rule 42.21(1A) of the UCPR sets out a list of (non-exhaustive factors) that may be considered when determining applications for security for costs. The weight to be given to any circumstance depends upon its own intrinsic persuasiveness and its impact on other circumstances which have to be weighed (see Acohs Pty Ltd v Ucorp Pty Ltd (2006) 155 FCR 181; [2006] FCA 1279 at [11] (Jessup J)).

Issues raised by the present applications

48. There are, in substance, two issues raised by the present applications: first, whether the jurisdiction to make an order for security for costs pursuant to r 42.21(1)(a) is enlivened – i.e., whether, as a matter of fact, the plaintiff is not (presently) ordinarily resident in Australia; and, second, whether (assuming the plaintiff is not ordinarily resident in Australia) in the exercise of the Court’s inherent jurisdiction to award security for costs or pursuant to r 42.21(1)(e), the discretion to grant security should be exercised in favour of the defendants. The further issue that then arises, if security is to be ordered, is as to how and when that security should be provided.

49. To a large extent there was uniformity in the submissions made by the defendants on the present applications (the remaining of the defendants expressly adopting the submissions of Patersons and/or Ms Garrett and Mr Renauf) and I will deal with those submissions collectively.

Issue 1: Is the plaintiff ordinarily resident outside Australia?

50. Before turning to the competing submissions on this issue, it is relevant to summarise the evidence put forward by the plaintiff as to the plaintiff’s residence. There is no dispute that (as at the time of the hearing and for the bulk of the time from the commencement of the proceedings) the plaintiff was living in Mendoza, Argentina with her son. The dispute is as to whether she habitually and normally resides there “for a settled purpose”, such that she is “ordinarily resident outside Australia”.

51. The plaintiff was born in Argentina; she lived there until she was 16 years old, then moved with her family to Canada (the plaintiff’s affidavit at [3]). The plaintiff lived in Canada until the age of 28, during which time she obtained Canadian citizenship and undertook tertiary study in Canada (the plaintiff’s affidavit at [6]). Her brother (her only sibling) remains in Canada.

52. The plaintiff moved to Australia in 2000, when she was 28 (the plaintiff’s affidavit at [4]). She has undertaken tertiary studies in Australia (at the University of Western Sydney) in order to become a professional interpreter (the plaintiff’s affidavit at [4]). Once qualified, she obtained accreditation with the National Accreditation Authority for Translators and Interpreters in Australia and worked professionally as an interpreter, including in the New South Wales court system.

53. The plaintiff met Mr Anderson in August 2002; they moved in together in 2004 and married in 2008 (see the plaintiff’s affidavit at [4]). They have a son who was born in 2009 (see the plaintiff’s affidavit at [8]). The plaintiff also helped Mr Anderson to bring up his two children from his previous marriage, for whom Mr Anderson was the primary caregiver.

54. The plaintiff became a permanent resident of Australia in 2008, after having held a series of temporary visas, and an Australian citizen in 2013 (the plaintiff’s affidavit at [7]).

55. Meanwhile, the plaintiff’s parents had moved from Canada back to Argentina. The plaintiff’s mother became ill with cancer in 2011 and died in Argentina a few months later. The plaintiff travelled to Argentina before her mother’s death and spent approximately three months there, caring for her mother, before returning to Australia (the plaintiff’s affidavit at [10]).

56. In July 2015, the plaintiff’s father suffered a stroke. The plaintiff travelled to Argentina in order to care for her father and was there until 26 August 2015 when she returned to Australia. On 2 December 2015, the plaintiff returned to Argentina to care for her father (the plaintiff’s affidavit at [11]). The plaintiff’s father died on 7 February 2016, at which time Mr Anderson and her son joined her in Argentina (the plaintiff’s affidavit at [11]).

57. After her father’s death, the plaintiff decided to stay in Argentina to deal with issues arising out of her father’s estate (the plaintiff’s affidavit at [12]). At that time the plaintiff and Mr Anderson decided that their son should attend school in Argentina (the plaintiff’s affidavit at [13]). In the words of her submissions (see at [56]), since the death of her father, the plaintiff has “largely remained” in Argentina with her son. The plaintiff has deposed that her initial intention was that they would remain there for about a year, to allow the plaintiff to attend to administration of her father’s estate and to give her son an opportunity, while still young, to attend school in Argentina and, thus, experience and understand that part of his heritage (the plaintiff’s affidavit at [13], [15]).

58. Mr Anderson remained in Australia and could only travel to Argentina intermittently, as he was at the time an undischarged bankrupt and required permission from his trustee in bankruptcy to travel overseas.

59. It is said that, in early 2017, the plaintiff and her husband decided to extend this arrangement for another year, as the plaintiff was still attending to matters relating to her father’s estate and it would give their son the opportunity to spend another year at school in Argentina (the plaintiff’s affidavit at [15]).

60. The plaintiff and her son, thus, remained in Argentina throughout 2016 and 2017, with the plaintiff’s son attending school in Mendoza (the plaintiff’s affidavit at [14]-[16]).

61. The plaintiff says that her intention to return to Australia to live with Mr Anderson at the beginning of 2018 was “put on hold” when she developed health problems. In August 2017, the plaintiff began experiencing pain and in December 2017 the plaintiff was diagnosed with a non-cancerous cyst on or inside the hip joint. In January 2018, the plaintiff underwent surgery in Argentina to have the cyst removed. The plaintiff was referred to a specialist (Dr Munafo), who advised her that there was a real risk that she would need a hip replacement, but recommended that she have a particular surgical procedure (under general anaesthetic) every 12 weeks in the hope that this might avoid the need for a hip replacement. The plaintiff has deposed that her primary concern was to do whatever was reasonably possible to avoid a hip replacement at her age; and that she has great faith in Dr Munafo (the plaintiff’s affidavit at [29]). From May 2018, the plaintiff has been undertaking that treatment, travelling from Mendoza to Buenos Aires to receive the treatment (the plaintiff’s affidavit at [18]-[26]).

50. In March 2019, the plaintiff’s sister-in-law was diagnosed with a brain tumour. The plaintiff and her son travelled to Australia on 16 April 2019. After the plaintiff’s sister-in-law recovered, the plaintiff and her son returned to Argentina on 17 May 2019 (the plaintiff’s affidavit at [27]).

51. As noted above, the plaintiff is continuing to receive surgical treatment with Dr Munafo. The plaintiff has deposed that she wants to return to Australia but has chosen to continue with this treatment in Argentina (the plaintiff’s affidavit at [28]-[29]). The plaintiff says that Mr Anderson travels to Argentina each time the plaintiff has the procedure, in order to look after their son.

52. The plaintiff has deposed to her wish that her son (who is an Australian citizen) attend high school in Australia (the plaintiff’s affidavit at [33]-[34]) and says that she has discussed with her husband their desire to send their son to secondary school in Sydney (the plaintiff’s affidavit at [41]).

53. The plaintiff has further deposed that she has no safety concerns about living in Australia, in contrast to some such concerns she has in Argentina (the plaintiff’s affidavit at [35]).

54. The plaintiff has not worked in Argentina but, if she were to return to Australia, intends to resume working as an interpreter (the plaintiff’s affidavit at [36]). The plaintiff has an Australian tax file number (the plaintiff’s affidavit at [37]) and maintains private health insurance in Australia with HCF (the plaintiff’s affidavit at [38]).

55. The plaintiff is enrolled to vote in Australia and has voted in most Australian Federal elections (the plaintiff’s affidavit at [39]).

56. The plaintiff has deposed that she has no material assets in Australia (the plaintiff’s affidavit at [44]-[45]) and that she is the owner of an investment property on the outskirts of Mendoza (the plaintiff’s affidavit at [46]), acquired with her inheritance from her late father’s estate.

57. At the time of the hearing before me, the plaintiff was due to have an appointment with Dr Munafo on 25 June 2019 in order to assess the efficacy of the treatment. Her evidence is that she does not know what the likely prognosis for future treatment will be.

58. In her affidavit, under the heading “[m]y recent travels to Argentina”, the plaintiff deposes that she has lived full time in Argentina with her son since at least February 2016. She has deposed to her travels outside of Argentina: short trips to Buenos Aires to visit a doctor; and three trips (of approximately one month’s duration each) to visit Australia between 11 April 2017 to 12 May 2017, 20 September 2017 to 18 October 2017 and 16 April to 17 May 2019.

59. The plaintiff’s son (by now aged about 9 or 10) is enrolled in school in Argentina. As noted, the plaintiff has deposed to an intention to enrol her son in an Australian school for his secondary education. However, she does not depose to the taking of any steps yet to enable that to happen (the plaintiff’s affidavit at [41]).

60. As noted above, the plaintiff admits that she has no assets of any substance in Australia. It is noted by the defendants that the plaintiff’s only ties to real property seem to be that various utilities connected to the rental property currently occupied by Mr Anderson are under her name (the defendants argue that this is presumably because at the time the contracts were signed her husband was an undischarged bankrupt) (the plaintiff’s affidavit at [42]).

61. Relevantly (particularly on the question of delay in the bringing of the present applications) when the issue as to whether the plaintiff resided in Australia was raised with her legal representatives in 2017, the defendants were told that the plaintiff “visits Argentina from time to time”, had spent time in Argentina since 2015 because of her father’s medical condition, but that she intended to return to Australia in 2018 in order that her son might start school that year (see the letter which is Annexure A to the affidavit affirmed 8 June 2019 of the plaintiff’s solicitor, Ms Juliana Ng). It is apparent from the evidence, and is not disputed by the plaintiff, that (whatever the accuracy of the statements of intention at the time they were made) any intention she then had to return to Australia in 2018 was not fulfilled.

Defendants’ submissions as to ordinary residence of the plaintiff

74. All of the defendants argue that the plaintiff is not “ordinarily resident” in Australia, having been ordinarily resident since December 2015 (and therefore for the duration of the proceedings to date) in Argentina, where she was born and grew up. They point in this regard to the following matters.

75. First, that, since 2 December 2015 to date the plaintiff has lived with her son in her “home” in Mendoza (referring to the plaintiff’s affidavit at [24]), at all times save for two occasions (totalling about seven weeks) in 2017 and on one occasion for four weeks from April-May 2019 (Mrs Anderson’s affidavit at [17] and [27]). It is noted that the purpose of her most recent visit to Australia was to visit her ill sister-in-law (not, it is said, to resume any habitual living arrangements here) and that, upon her sister-in-law’s condition improving, the plaintiff returned home to Argentina after only around four weeks.

76. It is submitted that in those circumstances, it could not be said that, if the plaintiff were able to be asked the question “where do you ordinarily live?”, she could sensibly respond “Australia”, in circumstances where she has been continuously resident in Argentina for a period of over three years (referring to what was said in Min Kyu Kim v Byung Sun (Eric) Song [2012] NSWSC 103 (Min Kyu Kim) at [6] by Black J). It is submitted that the situation is quite unlike that in Ollerenshaw in which, at the time of the filing of the notice of motion, the plaintiff had been residing continuously in Australia for some considerable time, his previous overseas trips being symptomatic of his “transient lifestyle” (see Ollerenshaw, at [35(3)]-[35(4)] (Walton J)).

77. Second, the plaintiff’s son’s attendance at school in Mendoza since the beginning of 2016. It is submitted that, in assessing the plaintiff’s residency, what is significant is that her son is at school in Argentina and that there are no definitive plans for that to change in the foreseeable future (in that regard, while there was some suggestion in oral submissions that there might be a change of position at the end of this year there was no evidence of this and one could speculate as to how reliable any such statement of intention is, given the fact that the last stated intention of this kind was not fulfilled). It is submitted that the plaintiff’s plans for her son to attend secondary school in Australia are of little probative value given that it appears that no action has been taken by Mr Anderson to enrol their son in the two choices of school the plaintiff deposed that she and Mr Anderson had decided upon (see the plaintiff’s affidavit at [41]).

78. Third, as to the plaintiff’s health issues, it is submitted that it is significant for present purposes that the plaintiff has chosen to receive treatment for her condition in Argentina even though: her condition would not appear life-threatening; she has private health cover in Australia; and she recognises that Australia is a safer place to live than Argentina with a better quality of life. It is submitted that this supports a conclusion that the plaintiff is ordinarily resident in that country. In particular, it is said that the “great faith and confidence” the plaintiff has in her specialist in Buenos Aires (in circumstances where there is no suggestion that the plaintiff cannot receive treatment for her condition in Australia or that there are no doctors in Australia that have equivalent qualifications to Dr Munafo) makes it reasonable to infer that the plaintiff feels more comfortable receiving medical treatment in Argentina and is indicative that she has chosen to habitually reside in Argentina (which is incompatible with the proposition that she ordinarily resides in Australia - see the plaintiff’s affidavit at [29]).

79. In particular, PPB notes that there is nothing in the evidence filed on behalf of the plaintiff to suggest that the treatment that she is receiving from Dr Munafo is either not available, or cannot be provided with an equivalent level of care and competence, in Australia. Accordingly, PPB submits that there is a basis for thinking that the plaintiff’s explanation for her currently residing in Argentina might be incomplete but in any event submits that, even accepting that explanation, the evidence suffices to support the conclusion that the plaintiff is ordinarily resident outside Australia (referring in this regard to what was said in R v Barnet London Borough Council, Ex parte Nilish Shah (1983) 2 AC 309 at 344; [1983] 1 All ER 226 by Lord Scarman).

80. It is submitted that matters such as the plaintiff’s Australian citizenship, Australian passport, and enrolment to vote in Australia say little as to the level of permanence of the plaintiff’s residence in Australia or her current strength of connection to the jurisdiction (particularly having regard to the fact that the plaintiff has multiple citizenships); nor is it relevant to the question of the plaintiff’s ordinary residence that her son is an Australian citizen and, according to the plaintiff, is required to travel with the plaintiff to Chile every three months to renew his visa.

81. It is submitted that the two addresses in Australia advanced by the plaintiff since the commencement of these proceedings (as to which see further below), being an address at Bellevue Hill and an address at Bondi Beach, tend to confirm that the plaintiff does not reside here. It is noted that the plaintiff has not resided at the address in Bellevue Hill for some time (and no longer maintains any lease or ownership in respect of that property) and it is argued that the one bedroom apartment at Bondi Beach “could hardly be characterised as a permanent home for herself, her husband and her son” and is to be seen as nothing more than a temporary living arrangement for Mr Anderson. It is said that, beyond a bare assertion from the plaintiff in her affidavit at [42], there is no evidence of any lease or utility documentation in the plaintiff’s name that links the plaintiff to the Bondi Beach apartment. (In any event, it is submitted that even if the plaintiff’s name appeared on certain utility bills in respect of a property at which she has only stayed for a handful of weeks in the last three and a half years, that would do little to sustain a conclusion that she lives her everyday life in Australia.)

82. Thus, it is submitted that there is no evidence pointing towards the plaintiff having any permanent address in Australia where it could sensibly be said she would live if circumstances allowed her to return to Australia in the future.

83. It is noted that the plaintiff does not own any property in Australia; whereas she does own an investment property in Argentina (something which of itself is said to be in tension with an enduring commitment to live her everyday life in Australia).

84. As to the plaintiff’s evidence (which Patersons notes was unable to be tested by cross-examination) as to her “plans to return to Sydney”, it is said that this is unhelpful to the question where she is ordinarily resident for the purpose of r 42.21(1)(a) of the UCPR (noting that the wording of the rule points to the relevant time for assessment of the plaintiff’s residence as being the time of the application for security for costs, having regard to the recent history, (not some indeterminate future time). Reference is made to the observations of Lockhart J in Re Taylor; McCallum J, as her Honour then was, in Corby at [24]; and Black J in Min Kyu Kim at [6] in this regard.

85. It is submitted that, on the plaintiff’s own evidence, her plans are contingent on whether “circumstances permit” her returning to Australia (given the uncertainties associated with her health issues and her preference to receive treatment in Argentina). Further, it is submitted that, while a person’s intentions will usually be relevant in determination of ordinary or habitual residence, they are not to be given any controlling weight (referring to the recognition by the High Court in LK (at [29]) that “individuals do not always act with a clearly formed and singular view of what is intended (or hoped) that the future will hold. Their intentions may be ambiguous”). It is submitted that the facts of the present case provide an example of such circumstances.

86. PPB argues that the fact that the plaintiff intends ultimately to resume residence in Australia may suffice to negate any suggestion that she has acquired a domicile of choice in Argentina but that it does not mean that her continuing presence in Argentina should not be characterised as one of ordinary residence. PPB submits that on no view can it be said that Mendoza is a place where the plaintiff “stays casually or intermittently”; and, hence, that the discretion to make an order for security under r 42.21(1)(a) of the UCPR has, thus ,been enlivened.

87. It is, thus, submitted by the defendants that, when assessed against: the nature and duration of the plaintiff’s connections to Argentina; the previous indications that she would return to Australia (which has not occurred); the personal choices she has made to send her son to school in Argentina and to receive medical treatment in Argentina; and the contingent nature of her apparent intentions to return to Australia, the plaintiff’s intentions should be given little weight here in resolving the question of her ordinary residence.

88. Ms Garrett and Mr Renauf submit that the plaintiff’s connection to Australia is too tenuous for a finding that the plaintiff is ordinarily resident in Australia. They say that it is accurate to describe the plaintiff as an Argentinian resident who occasionally visits Australia. It is submitted that the three trips of a month or so duration that she has taken to Australia since 2015 and the unsupported assertion that she now intends to have her son attend school in Australia some 18 months distant in 2021 are to be weighed against the objective fact that the plaintiff, and her son, have lived in Argentina for the last three and a half years. It is submitted that matters such as that the plaintiff has remained on the Australian electoral roll, and that the plaintiff has friends, family and a spouse resident in Australia, do no more than demonstrate a connection to the country by a non-resident. Ms Garrett and Mr Renauf, thus, argue that it cannot be said that the plaintiff habitually and normally resides in the jurisdiction and does so for a settled purpose.

Plaintiff’s submissions as to issue 1

89. The plaintiff submits that the jurisdiction to order security for costs has not been enlivened, arguing that she is not at present ordinarily resident in Argentina.

90. In essence, the nub of the plaintiff’s argument on this issue is that her ordinary place of residence prior to December 2015 was Australia (where she lived with her husband and family, visiting Argentina only on annual holidays, usually over the Christmas period). It is submitted that her stay in Argentina since December 2015 (“due to various matters that were unexpected and not foreseen”), in circumstances where the plaintiff has no intention to reside permanently in that other country, does not mean that her ordinary place of residence has shifted from Australia to Argentina.

91. It is submitted that significant weight must be attached to the plaintiff’s state of mind and that at no point has she intended to reside in Argentina “habitually and normally”. It is submitted: that the plaintiff initially went to Argentina temporarily to care for her ill father; that once he passed away, she decided to remain in Argentina temporarily to allow her to attend to administering his estate and to give her son the opportunity to improve his Spanish and attend school in Argentina for a time; that she intended to return to Australia at the end of 2017, but that intention was overtaken by her medical problems; and that, since then she has been living in Argentina temporarily in order to give herself what she regards as the best chance of avoiding a hip replacement at a relatively young age. The plaintiff says that she has no intention of residing in Argentina habitually, both for her own sake and that of her son, particularly having regard to issues of education, employment opportunity and safety.

92. It is submitted that the objective facts support a finding that the plaintiff has only been living in Argentina temporarily, not on an ordinary, habitual or normal basis. In this regard, the plaintiff points to the facts that: her son, with whom she lives, is not an Argentinian citizen and she must take him out of the country every three months to renew his visa; she lives in rented accommodation in Argentina; although she was left with a relatively small legacy from her father’s estate, she used those funds to buy an empty block of land as an investment, rather than a residence for herself; apart from this block of land, the plaintiff has no assets in Argentina; the plaintiff does not work in Argentina and has taken no steps to become professionally accredited there; the plaintiff does not pay any income taxes in Argentina and has taken no steps to regularise her tax status in Argentina; and the plaintiff has taken no steps to enrol to vote in Argentina.

93. It is submitted that the real connections in the plaintiff’s life are all with Australia: her husband lives and works here; her closest family, apart from her brother in Canada (and, I would add, also apart from her son) are all in Australia; she is enrolled to vote in Australia and has recently voted here; she maintains private health insurance in Australia; although their apartment in Sydney is rented in her husband’s name, many of the utilities for that apartment are in the plaintiff’s name; and she is actively seeking an appropriate school for their son in Sydney upon their return to Australia.

Determination of issue 1

94. In my opinion, having regard to the evidence referred to above as to the plaintiff’s residence, it must be concluded that, at the present time, the plaintiff is ordinarily resident outside Australia and, hence, the jurisdiction under r 42.21(1)(a) of the UCPR is enlivened.

95. Apart from the length of time during which the plaintiff has not (other than very brief visits) been in Australia, the factors of most significance to my mind are that: her son is presently enrolled in school in Argentina (and has been attending school there for at least the last couple of years); and that the plaintiff wishes to remain in Argentina for the continuation of her current medical treatment.

96. I accept that the plaintiff has very real connections with Australia – her husband is here; she is an Australian citizen enrolled to vote here; she has health insurance here; and she has professional qualifications as an interpreter that would enable her to work here. I also accept that the plaintiff has an intention to return to Australia at some time in the future (whether that be 2021, for the purpose of her son commencing secondary school, or at some earlier time is unclear, but to my mind that ultimately does not matter; what is relevant is that she is in Argentina for an indefinite time with no concrete plans to return to this country). On any common sense view if one asked where the plaintiff has been ordinarily and habitually resident over the last three years, the answer must be Argentina where she is currently living. That may well not have been her intention at the time she went back to Argentina in late 2015 (and her evidence is that it is not) but it has ended up being the case that the plaintiff has only visited Australia very occasionally over the last three years and has largely resided in Argentina.

94. I do not accept that the plaintiff’s intention to return to Australia and resume her life here (at some indeterminate point in the future) warrants a different conclusion. She is living in Argentina and has been for quite some time. She is “ordinarily” and “habitually” resident there on any sensible meaning of those adjectives. She is also there for a “settled purpose”, albeit that it seems that her purpose has varied from time to time. Initially, she stayed in Argentina to administer her late father’s estate and to enable her son to go to school there; later she continued to reside there in order to finalise outstanding matters in relation to her late father’s estate, to permit her son to continue in school there, and to seek medical treatment from a specialist in whom she has great faith; currently, it seems her settled purpose remains linked to her continued medical treatment and her son’s schooling in Argentina. Insofar as her state of mind is concerned, it cannot be concluded other than that her current intention is to remain in Argentina at least until the conclusion of her medical treatment. Thus, adopting the language of McCallum J in Corby, I consider that it is more accurate to say that the plaintiff ordinarily lives in Argentina and occasionally (and, indeed, only very occasionally over the last three years) has visited Australia.

95. At what point the plaintiff’s ordinary place of residence (for the purposes of the jurisdiction to award security for costs) changed is not to the point; by the time of the present applications, it had, in my view, very clearly changed to Argentina.

96. At best, the evidence might have supported a conclusion that the plaintiff has two places where she is ordinarily resident (Argentina, where she has physically lived over the past three years; and Australia, where she intends in the future to live). However, that would be sufficient to enliven the jurisdiction in any event.

97. Accordingly, on the threshold question, I find that the plaintiff is ordinarily resident outside Australia.

98. It is, therefore, not necessary to determine the applications for security for costs in the exercise of the inherent jurisdiction of the Court, although I accept that such jurisdiction would have been able to be invoked by the defendants in the present case. In that regard, the difficulties of enforcement of any costs order in the plaintiff’s current country of residence would be a very powerful factor to point to the exercise of discretion (see Li v NSW at [21]-[23]). Difficulty in enforcing an order for costs overseas against a non-resident plaintiff will usually be sufficient to ground an order, especially where there is no reciprocal right of enforcement in the relevant foreign jurisdiction or legislation which may make recovery difficult (see Dense Medium Separation Powders Pty Ltd v Gondwana Chemicals Pty Ltd [2011] NSWCA 84 at [32]-[39] per Young JA). The defendants point in this regard to the fact that Argentina is not listed as a foreign jurisdiction where there is a reciprocal right of enforcement in Part 2 of the Foreign Judgments Act 1991 (Cth) and column 2 to the Schedule to the Foreign Judgments Regulations 1992 (Cth) (see the affidavit dated 7 June 2019 of David Benson, the solicitor on the record for Patersons (the first Benson affidavit) at [59]-[60]) and it is submitted, though there is no evidence of foreign law on this point, that Argentina’s legal system is quite different to that of Australia.

99. Nor is it necessary to determine whether the jurisdiction under r 42.21(1)(e) has been engaged. Had it been, I would have concluded, in light of the evidence and submissions put forward for the plaintiff on the present applications, that it has been enlivened.

Issue 2: Discretionary matters

103. I turn then to the discretionary considerations.

104. Patersons points to the following matters in support of its application for security – that the plaintiff: has no assets within the jurisdiction capable of meeting an adverse costs order; is (in effect) in the position of a “nominal” plaintiff suing on behalf of others; and discontinued related proceedings in this Court on the eve of the hearing (for which she is subject to a substantial adverse costs order); that the efficacy of the plaintiff’s action depends upon an assignment of causes of action “of questionable validity” and “it may otherwise be doubted whether her claims enjoy reasonable prospects of success”; and that the plaintiff has brought complicated, expensive and multi-party proceedings making allegations of the most serious kind against those parties and seeks to set aside up to eight weeks of the Court’s resources to prosecute those claims at great expense to the defendants. The remaining defendants largely adopt or make similar submissions to Patersons as to the exercise of discretion in the present matter.

105. Patersons argues that, in the present case, a plaintiff resident outside of the jurisdiction and without any substantial assets within the jurisdiction has commenced and maintained complex and costly litigation against several defendants, apparently for the benefit of her husband who is not a proper party to the proceedings and who himself is without the means to satisfy an adverse costs order (and where the plaintiff “also has a history of discontinuing related litigation on the eve of trial”). It is submitted that, in the circumstances, it would be unfair to the defendants, and inimical to the protective purposes of costs orders and security for costs, for the plaintiff to continue this litigation without appropriate provision of security.

106. The plaintiff, on the other hand, submits that the discretionary considerations are powerfully against an order for security for costs being made for the following reasons (each of which is said to be sufficient to dispose of the present applications in the plaintiff’s favour): first, that the applications for security for costs are brought more than three years after service of the originating process on the defendants and the plaintiff has incurred significant costs to get the matter ready for hearing which would be wasted if the proceedings are now stayed; second, that Mr Anderson, who is resident in Australia, has agreed to make himself available for any adverse costs order that may be made in favour of the defendants in this proceeding; and third that the plaintiff and Mr Anderson are effectively impecunious “largely as a consequence of the collapse of their business, the cause of which is the subject matter of the proceedings, and any order for security for costs will stultify the proceedings”.

Determination

107. As noted above, there is a list of non-exhaustive considerations set out in r 42.21(1A) of the UCPR. These largely reflect the discretionary considerations that were identified as relevant in this context by Beazley JA (as Her Excellency then was) in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 (KP Cable) (at 196-198). Of those, emphasis was placed in the course of submissions by the plaintiff on delay; impecuniosity of the plaintiff; and stultification of the proceedings. I consider the various factors (and the submissions made in relation to those factors) in turn, before addressing the remaining discretionary considerations to which the parties have pointed in their submissions.

• Prospects of success/genuineness of proceedings

108. First, as to the prospects of success or merits and the genuineness of the proceedings (r 42.21(1A)(a)-(b)), as a general rule, where a claim is prima facie regular on its face and discloses a cause of action then, in the absence of evidence to the contrary, it has been said that the court should proceed on the basis that the claim is bona fide and has reasonable prospects of success (KP Cable at [197]).

109. Patersons, though acknowledging that there cannot at this stage be a detailed analysis of the merits of the plaintiff’s case based on contested evidence, nevertheless submits that there are doubtful prospects of success having regard to the difficulties outlined in a letter dated 8 June 2017 from Patersons’ solicitors to the plaintiff’s solicitors (Exhibit 1), those being as to: the effectiveness of the assigned causes of action and the question whether any of the claims sought to be made against Patersons by the plaintiff which arose out of the Patersons Mandate were causes of action that belonged to ACPL at all.

110. In that regard, Patersons points to its amended defence at [182(e)], which alleges that any cause of action which arose with respect to the Patersons Mandate constitutes an “Asset” (as that term is defined in cl 23.1 of the ADF2 Constitution and so was held on trust by ACPL for the benefit of ADF2). Noting that the ADF Constitution contains the identical definition of “Assets” and that, on or about 23 December 2009, ACPL retired as trustee of the ADF and the ADF2 and agreed to transfer all assets of the ADF and the ADF2 to Parissen (and was discharged, released and retired from all rights and powers reposed in or conferred on it as trustee of the ADF and the ADF2). Patersons argues that ACPL ceased to have standing to pursue any causes of action against Patersons which arose out of the Patersons Mandate.

111. Thus, it is submitted that, as at 29 September 2015 when the Deed of Option was entered into, any chose of action of the kind alleged in the amended statement of claim could not have been assigned by ACPL to the plaintiff pursuant to the Deed of Option. Patersons points to the decision of the Court of Appeal in Owners of Strata Plan No 5290 v CGS & Co Pty Ltd (2011) 81 NSWLR 285; [2011] NSWCA 168 where it was concluded by Sackville AJA (at [58]), Giles and Campbell JJA agreeing, that there was nothing in the language of s 477(2)(c) of the Corporations Act (or the earlier legislation) to suggest that the power to sell or dispose of a chose in action could be exercised so as to defeat a limitation on assignability resulting from the express agreement entered into by the company and the obligor.

112. It is submitted that, on the above reasoning, the effect of ACPL’s retirement as trustee of the ADF and the ADF2 and its agreement to transfer all assets of those trusts to Parissen was that the causes of action against Patersons (to the extent they were “Assets” under the ADF2 Constitution) were no longer causes of action that could be brought by ACPL (and could only be brought by Parissen). Thus, it is said that there is at least a reasonable argument that the liquidator did not have the power to assign (to the plaintiff) that which was not assignable, particularly when ACPL’s retirement as trustee was voluntary (see Patersons’ amended defence at [160(g)] and [168]).

113. Second, Patersons argues that the causes of action which are said to have belonged to AMPL and to have been assigned by the liquidator to the plaintiff comprise allegations of breach of fiduciary duty and an equitable breach of confidence. It is submitted that neither of those causes of action can be said to have reasonable prospects of success in circumstances in which the breach of fiduciary duty is tied to the duty allegedly owed to ACPL (which is a cause of action which, on the above reasoning, cannot be assigned). Complaint is further made that the equitable breach of confidence claim “is almost entirely unparticularised” (Patersons there noting the observations of the Court of Appeal in Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2 at [159] as to the need specifically to identify the confidential information it is alleged was disclosed).

114. Third, Patersons says that, to the extent that the allegations made against Patersons relate to the ADF, the veracity of those allegations “must be viewed as highly questionable” in circumstances in which it is said that Patersons never (on any view) assumed any sort of role for the ADF.

115. Fourth, insofar as the plaintiff’s case hinges on the allegation that the defendants were part of a “consortium”, it is submitted that, in relation to Patersons, the allegation is “logically unsound” (in circumstances where the allegation is that the consortium was formed before the Patersons Mandate entitling Patersons access to information about ACPL and AMPL and offered Patersons no benefit over and above that to which it was entitled under the Patersons Mandate). It is said that the actions of the alleged consortium stood to deprive Patersons of the opportunity to complete the Patersons Mandate and to obtain fees to which it would have been entitled.

116. Fifth, Patersons also argues that there are fundamental difficulties in the plaintiff’s case on loss and damage, having regard to the expert evidence that has been served by the defendants, including the report of Mr Jeffrey Hall who has concluded that as at both 30 June 2009 and 30 September 2009 (both dates before the alleged “consortium” between the defendants was formed), AMPL and ACPL were not operating as going concerns and the fair market value of those companies (as well as the Ashington group as a whole) was nil. It is said that the plaintiff’s case depends on the proposition that ACPL and AMPL would have retained the property development basis but for the defendants’ conduct and, necessarily, that this was a highly valuable business. It is submitted that, on any view of the underlying facts, ACPL and AMPL were experiencing significant financial difficulties, thus making this an unstable premise.

117. Other difficulties have been identified with the plaintiff’s claims but Patersons emphasises the above as the five critical issues (standing to sue; the poor prospects of any causes of action said to have been owned by AMPL; the lack of any link to the ADF; the central factual allegation in the proceedings; and whether any loss was suffered) as giving rise to significant challenges for the plaintiff such that it is submitted that the plaintiff’s prospects could not be characterised as strong.

118. Acorn similarly submits that the plaintiff faces significant hurdles in proving her case against it. In particular, Acorn has further pleaded, in answer to the whole of the plaintiff’s claim, that: ACPL and AMPL have not suffered any loss, having elected voluntarily to retire as trustee and manager; and that ACPL, AMPL and the plaintiff do not have clean hands ([303]-[304] of Acorn’s defence).

• Conclusion as to prospects of success/genuineness of the proceedings

119. I accept that a number of difficulties have been identified with the plaintiff’s case (not least being the validity or efficacy of the assignment of the choses of action on the basis of which she has brought these proceedings). However, I cannot conclude that the proceedings have not been brought in good faith and I do not consider it appropriate to enter into an analysis of the strength of the plaintiff’s claim at this stage of the proceedings. It is not one that is obviously untenable or liable to be struck out as disclosing no reasonable cause of action. I proceed on the basis that on its face the plaintiff’s claim is bona fide. This is, therefore, a neutral factor on the question as to whether security should be ordered.

• Impecuniosity of the plaintiff

120. The next factor listed in r 42.21(1A) is impecuniosity (r 42.21(1A)(c)). This has been recognised as a substantial factor favouring the exercise of the discretion to order security (see Idoport Pty Ltd v National Australia Bank Limited [2002] NSWCA 271 at [40] (Mason P); Tyneside Property Management Pty Limited v Hammersmith Management Pty Ltd [2013] NSWCA 404 at [18] (Sackville AJA)).

121. As adverted to above, this was the subject of understandable focus in the plaintiff’s submissions on the security for costs applications.

122. The plaintiff notes that it is well established that security for costs will generally not be ordered where doing so will stifle non-frivolous proceedings; and that the discretion to order security for costs should not be used as an instrument of oppression, shutting out genuine claims by plaintiffs who are otherwise impecunious (citing Idoport at [59], which in turn cited Pearson v Naydler [1977] 1 WLR 899; and KP Cable at 197). The plaintiff points to the observation in Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664 at [72], by Austin J that:

It is thought to be oppressive to the plaintiff to do so, because the order would stifle a claim that may prove to be genuine, and unjust, because the effect of the order would be that the defendants would achieve a “victory” without any contest. [citations omitted]

123. It is submitted that this is a powerful factor against an order for security for costs. Although the plaintiff accepts that it will not create an automatic bar to such an order in all cases (Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 at [92]-[93]), it is submitted that there is nothing unusual about the present case that would warrant any result other than the applications being refused.

124. It is said that the plaintiff and her husband are funding the case themselves; that in doing so, they are entirely reliant on Mr Anderson’s income derived from the consultancy services he provides to Princeton Mortgages (Princeton); and that that income needs to fund both the family’s living costs and the costs of running the present proceedings. It is said that, at present, the couple has a monthly liability of $21,965 to repay a loan from QuickFee that was used to fund past legal costs in this proceeding but that the couple have no financial capacity to meet any greater liability and still have sufficient funds to live from on a day to day basis. In particular, it is said that while the QuickFee loan is being repaid, they do not have the capacity to borrow further to meet new expenses incurred in relation to the present proceedings. In addition, they also have unpaid fees of some $500,000 which will eventually need to be paid to their instructing solicitors.

125. It is candidly acknowledged that the plaintiff and Mr Anderson have almost no assets of any real worth; the only asset of any significance being the block of undeveloped land in Argentina, which the plaintiff is said to have purchased, using the funds left to her in her father’s Will, “due to the difficulties that Argentinian capital control laws otherwise created for bringing those funds back to Australia”. That land is said to be worth approximately US$100,000 (approximately A$146,000 on present exchange rates).

126. Otherwise, the plaintiff and her husband do not own any land, either in Australia or elsewhere. Mr Anderson lives in a rented apartment in Sydney and the plaintiff currently lives in a rented apartment in Argentina. Nor do they have any shares or other investments, other than the units in Princeton (and associated shareholdings) and the shares in Mendoza Holdings Pty Ltd (Mendoza Holdings) through which Mr Anderson provides his consulting services. Mr Anderson’s evidence is that these are of negligible value.

127. Both Mr Anderson and the plaintiff have deposed that, should security for costs be ordered, they would have no financial capacity to provide such security. It is, thus, submitted that it is inevitable that, should there be an order for security for costs, the proceedings will be stayed and, therefore, stifled.

128. Emphasis is placed on the fact that Mr Anderson has agreed to make himself fully liable for any adverse costs orders. Reference is made to Hession v Century 21 South Pacific Ltd (In Liq) (1992) 28 NSWLR 120 at 123, where Meagher JA stated (Kirby P, as his Honour then was, and Cripps JA agreeing) that:

whilst it is both true and important that poverty must not be a bar to litigation, what that means is that the courts must be astute to see that no person pursuing a claim which is not frivolous is precluded from doing so by the erection of obstacles which poverty is unable to surmount ...

129. It is said that, by his undertakings, Mr Anderson has ensured that any such obstacles as might exist have been removed.

189. Some complaint, or at least implicit criticism, was made by the plaintiff in oral submissions as to what had led the defendants to raise the question of residency again earlier this year. However, whatever may have excited their suspicions, the fact remains that the issue was raised in 2017 (albeit only by Patersons and Acorn); an explanation was given that was apparently sufficient for them not to press the issue of security for costs (something seemingly to the plaintiff’s advantage), and that explanation proved ultimately to be without foundation (because the plaintiff did not in fact return as it had been said she would) but the position was not clarified at that stage. In my opinion, no real prejudice has been established as flowing from the delay on the part of the other defendants in raising that issue, in circumstances where it might be inferred that the same response would have been provided by the plaintiff.

190. I accept that the rationale for refusing to make orders for security for costs where the matter has proceeded for some time is that those costs might be wasted, however, it can hardly be said that the plaintiff was not aware that there had been an issue as to the need for security for costs, and she should, through her legal representatives, thus have been on notice that if the position as to her residence were not to be as she had advised it would be (i.e., that she was returning in late 2017 for her son to start school the following year) then there was a prospect that the issue would be reactivated.

191. For these reasons, I have concluded that the delay is not a factor against the grant of security.

• Costs

193. The fact that a party is likely to incur significant legal costs in defending the claim, and will be unprotected if no order for security is made, is a consideration for the making of an order for security (see r 42.21(1A)(j); Porter v Gordian Runoff Limited [2004] NSWCA 171 at [13ff).

194. Patersons also refers to what was said in Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43, where Heydon J (at [110]) articulated the rationale for the courts’ inherent and statutory power to award costs as being “one of the mechanisms for alleviating (though only partially) the harm which the plaintiff has caused the defendant by bringing litigation based on unfounded allegations” and described that potential costs liability as “one of the legitimate pressures generating a measure of discrimination in conducting that litigation”.

195. Patersons submits that the fact that the defendants will incur substantial legal costs should be taken into account (see Western Export Services Inc v Jireh International Pty Limited [2008] NSWSC 601 at [82] per Jagot AJ, as her Honour then was) and that the costs of the proceedings are likely to be high – the matter being factually dense, involving a significant number of documents, multiple defendants with five sets of solicitors, significant and complex expert evidence and serious allegations which are likely to be hard fought over at least a four to six week trial (the plaintiff’s estimate being up to eight weeks). The defendants argue that they ought not be so exposed, particularly when this factor is weighed together with the evidence that the plaintiff has no assets in the jurisdiction which could be used to satisfy any costs order made against her and, even if she could, she is ordinarily resident in a jurisdiction where the ease of enforcement is in no way straightforward.

196. Patersons also argues that the plaintiff has a history of running litigation in this Court to the “steps of the courthouse” before abandoning her claims (referring to the Mapeline Proceeding). The Mapeline Proceeding (which Patersons maintains is relevant to take into account in the context of this application for security for costs) as adverted to above is a matter where the plaintiff brought proceedings based on causes of action assigned (or purportedly assigned) to her by the liquidator of ACPL and AMPL and discontinued those proceedings on the eve of the trial (see the first Benson affidavit at [45]-[56]). Patersons notes that the second further amended statement of claim in the Mapeline Proceeding reveals that the dispute the subject of that proceeding had its genesis in the facts and matters pleaded at [157]-[179] of the amended statement of claim in the present proceedings, relating to an agreement entered into between the defendants (being investors in the ADF and the ADF2) and ACPL and AMPL as to the terms and conditions upon which ACPL and AMPL would retire as trustee and manager, respectively, of the ADF and the ADF2; and the claim in those proceedings that ACPL and AMPL were not remunerated for work carried out and expenses they incurred in retiring.

197. Paterson’s solicitor (Mr Benson) has deposed (see the first Benson affidavit at [50]-[53]), that the plaintiff and Mr Anderson acquired the right to bring the Mapeline Proceeding from the liquidator of ACPL and AMPL (the relevant causes of action having first been assigned to Mapeline Pty Ltd, of which the plaintiff and Mr Anderson were directors, and then, following the deregistration of Mapeline Pty Ltd, being the subject of subsequent purported assignments to the plaintiff, at first together with Mr Anderson and subsequently alone after Mr Anderson was declared bankrupt). Mr Benson has further deposed that although the discontinuance was on the basis that the plaintiff pay the defendants’ costs, none of those costs have been agreed, assessed or paid (see the first Benson affidavit at [55]).

Conclusion as to costs

198. This is a factor that weighs strongly in favour of the grant of security in the present case.

• Other discretionary considerations

199. Patersons notes that, by letter dated 11 June 2019, following the service of the notices of motion seeking security and supporting evidence on 8 June 2019, the plaintiff’s solicitors stated that they were instructed by the plaintiff that Mr Anderson (now a discharged bankrupt) has agreed to be joined as a plaintiff to the proceedings and to be “equally liable with [the Plaintiff] for any adverse costs order that may be made in the proceedings”. The defendants rejected a request that they withdraw their motions for security for costs on that basis (see the letter of 12 June 2019).

200. In Mr Anderson’s affidavit he deposes that he is “willing to be joined as a plaintiff to the proceedings in order to ensure that the Court is able to make adverse costs orders against me should my wife’s claim not be successful. Alternatively, I am prepared to offer an undertaking to similar effect to the Court, namely that I will abide by and make any assets I may then have, available in respect of any adverse costs orders against the plaintiff” (see Mr Anderson’s affidavit at [4]); and the plaintiff gives evidence that she and Mr Anderson have decided that he “can be joined as a co-plaintiff so that he will be subject to any adverse costs orders that may arise from litigation from which he stands to benefit” (see the plaintiff’s affidavit at [2]).

201. This is the second of the matters emphasised by the plaintiff as being sufficient in itself to dispose of the application in her favour. It is noted that security for costs is not ordinarily ordered against an individual plaintiff (pointing to the fact that security for costs cannot be ordered against an individual plaintiff who is a natural person merely on the grounds of impecuniosity – see r 42.21(1B) of the UCPR). It is noted that the purpose of ordering security for costs against an individual plaintiff when he or she is ordinarily resident outside Australia is to create a fund within Australia against which a successful defendant may enforce any judgment for costs, thereby avoiding the risks, uncertainties and delays of attempting to enforce the costs judgment outside Australia (see Logue v Hansen Technologies at [18]).

202. In the present case, it is said that the only reason that the plaintiff is the assignee (and, thus, the plaintiff), as opposed to Mr Anderson, is that Mr Anderson was an undischarged bankrupt at the time of the assignment by the liquidator. It is asserted that that bankruptcy itself arose from the matters complained of in the present litigation, as Mr Anderson personally guaranteed some of the liabilities of Ashington. Therefore, it is said that the plaintiff is “in effect bringing the claim for the benefit of both herself and her husband”.

203. The plaintiff’s submissions note in this regard that:

Given that he will be a significant beneficiary should Mrs Anderson otherwise be successful on the present claims, Mr Anderson is prepared to make himself amenable to any costs orders that may be made in favour of the defendants in this proceeding. Mr and Mrs Anderson propose that this be done by joining Mr Anderson as a plaintiff to the proceeding, so that the Court can make adverse costs orders against him should Mrs Anderson’s claim be unsuccessful. However, the defendants are presently opposed to such joinder. In the alternative, Mr Anderson offers an undertaking to the Court to similar effect.

204. It is said that Mr Anderson is the primary witness in the plaintiff’s case, and has a real and direct connection to the causes of action pursued in the proceeding and he is, in one sense, the “real plaintiff standing behind Mrs Anderson”.

205. Reference is made to Rugby Union Players Association Inc v Australian Rugby Union Ltd (NSWSC, unreported, 30/7/1997), cited at Idoport at [54], where Giles CJ in Comm D stated:

... the rationale is that those who will benefit from success in the proceedings, as shareholders in or creditors of a corporation or as third parties for whose benefit the plaintiff (whether a natural person or a corporation) sues, should not be able to litigate and expose the defendant to the risk of irrecoverable costs while themselves shielded, by reason of the interposition of the impecunious plaintiff, from the burden of an adverse order for costs.

206. It is submitted that:

The reason Mrs Anderson is the plaintiff is because of Mr Anderson’s bankruptcy at the time of the assignment, not because Mr Anderson was seeking to use his wife as a means to hide his own assets from potential costs orders. Nonetheless, Mr Anderson could be expected to and has come out from behind his wife. It is entirely appropriate and sufficient that Mr Anderson should make himself available for adverse costs orders.

207. The plaintiff, thus, submits that the difficulties associated with enforcing a costs order against a plaintiff ordinarily resident outside Australia fall away. It is said that Mr Anderson, who is and has always been resident in Australia, will be available to have any such costs orders enforced against him; and that this, in itself, is sufficient reason not to exercise its discretion to order security for costs against the plaintiff.

208. Insofar as it is suggested that Mr Anderson, be joined as a plaintiff to the proceedings, Patersons maintains that this is procedurally flawed and says that it tends to magnify the need for an appropriate order of security. Patersons says that Mr Anderson has no standing to sue and that the Court would not accede to a joinder application advanced for the purpose of defeating the necessity of an order for security against the plaintiff. Further, Patersons argues that, insofar as the plaintiff has proffered a “solution” to the difficulty confronting her having regard to her overseas residency, this reinforces the appropriateness of an order for security so as to do justice between the parties in this case. It is noted that no application to join Mr Anderson has been made to the Court.

209. Patersons submits that there are powerful reasons to refuse leave to join Mr Anderson to the proceedings: first, that he has no standing (as a former director and shareholder) to sue (even leaving aside the validity of that original assignment, which is denied by Patersons); second, that the plaintiff has led no evidence that she has or intends to assign the causes of action she brings in these proceedings to her husband (Patersons pointing to the express prohibition on such further assignment by the terms of the Option Deed and arguing that an assignment of bare causes of action would very likely be void on the grounds of it savouring champerty and maintenance); third, that the joinder of Mr Anderson as a plaintiff to the proceedings is not necessary to the determination of all the matters in dispute in the proceedings (see r 6.24(1) of the UCPR), nor is it appropriate when its evident purpose is to enable the plaintiff to escape the provision of appropriate security (see Australian Building Construction Employees’ & Builders’ Labourers’ Federation v Commonwealth Trading Bank [1976] 2 NSWLR 371 at 373 (Helsham J)). Even if those hurdles could be overcome, it is submitted that there would be no utility in Mr Anderson’s joinder given his admission that he has “no assets of any material value” capable of meeting an adverse order as to costs (see Mr Anderson’s affidavit at [13]). It is submitted that his statement that he is willing to be joined as a plaintiff to the proceedings in order to ensure that the Court is able to make adverse costs orders against him, is an empty undertaking.

210. As to the standing issue, PPB points out that Mr Anderson advances no claim for relief (and says nor could he, given that the relevant causes of action were not assigned to him). It is submitted that Mr Anderson’s lack of standing to sue is all the more acute in light of the circumstance that this proceeding engaged federal jurisdiction (the statement of claim initially pleaded various statutory causes of action arising under Commonwealth law, which causes of action have since been abandoned). The abandonment of those causes of action does not produce the result that federal jurisdiction has ceased to be engaged. PPB submits that, crucially, the exercise of federal jurisdiction requires that there be a “matter”, in the sense of “some immediate right, duty or liability to be established by the determination of the Court” (citing Re Judiciary Act 1903-1920; Re Navigation Act 1912-1920 (1921) 29 CLR 257 at 265; [1921] HCA 20). It is submitted that there is, as between Mr Anderson and the defendants, no question or contest involving any such right, duty or liability and it would, thus, be beyond the Commonwealth judicial power that the plaintiff invoked in the first iteration of her pleading to entertain a proceeding without a claim of the sort now proposed with the mooted joinder of Mr Anderson.

211. Ms Garrett and Mr Renauf further note that Mr Anderson’s affidavit sworn 14 June 2019 sets out that he stands to benefit from the litigation; and that he has offered to stand behind the plaintiff and the proceedings which she brings, but has no assets of any material value. It is noted that Mr Anderson does not depose to the existence or otherwise of a family trust; and that he gives evidence about loan transactions with QuickFee, but provides no documents in support of his hearsay assertions.

212. PPB says that the plaintiff’s position would not be improved if Mr Anderson were to proffer an undertaking of the sort foreshadowed in his affidavit, namely, that he will make his assets available to meet any adverse costs order at the conclusion of this proceeding, noting that in Epping Plaza Fresh Fruit and Vegetables Pty Ltd v Bevendale Pty Ltd [1999] 2 VR 191; [1999] VSCA 43 at [24] the Victorian Court of Appeal remarked that “the court should not readily accept an undertaking to pay costs from impecunious individuals who, at least at the time when such an undertaking is given, have no chance of making it good”; and that Mr Anderson has himself deposed that he has “no assets of any material value”.

Conclusion as to other discretionary considerations

213. There is no extant application for Mr Anderson to be joined as a plaintiff, so it is unnecessary to delve into the complexities as to whether he would have standing.

214. As to Mr Anderson’s undertaking to stand behind the plaintiff, it is accepted to be worthless. It is of little comfort to the defendants to be told (as was the submission) that his lack of financial worth is no different than if there had been an impecunious plaintiff in the jurisdiction. It seems difficult to avoid the conclusion that it is proffered at this stage solely to resist an order for security as to costs.

Determination

215. Balancing all of the above, I am of the view that the discretionary matters referred to above point in favour of security for costs orders being made in this case. This is complex litigation that will be costly to run and the plaintiff is ordinarily resident outside the litigation and impecunious. Her husband (who professes his willingness to stand behind the plaintiff in the litigation, has no material assets, although seemingly a source of income from management or consulting fees). Insofar as they have contemplated litigation funding (but would wish to consider that after a mediation), the prospect of external funding cannot be excluded. I am not persuaded that the requirement for security will inevitably stultify the proceedings (notwithstanding the plaintiff’s belief in that regard) though I accept that as a practical matter it may cause some delay.

216. The quantum and manner of provision of security must, thus, be considered. In the present case no claim has been made for past costs. The Court may fix the amount of security based on a general estimate (see Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited [1995] FCA 1778; (1995) 134 ALR 187). However, in general, one is more assisted by the kind of detailed estimates and costings provided by the solicitors for the respective defendants. I consider that those estimates in the present case are not unreasonable.

217. I consider that it would be appropriate that security be ordered in tranches and, in particular, that security be provided in the first instance to the close of the proposed mediation and then in relation to the pre-trial component (having regard to the possibility that the matter might resolve either at mediation or before trial) (see Pacific Acceptance Corporation Ltd v Forsyth (No 2) (1967) 85 WN Pt 1 (NSW) 715 (Moffitt J)).

218. In oral argument, Senior Counsel for the plaintiff accepted that security in tranches would be his client’s fall-back position (but urged me to defer the making of orders in relation to the pre-trial preparation component). I was informed that costs of pre-trial preparation, assuming a trial of, say, six to eight weeks in the first half of next year, would principally be incurred in 2020 by which time “the position in relation to security might look very different”, in that the plaintiff might have obtained funding and the plaintiff might be living in Australia with a child attending school in Australia. With all due respect, those possibilities (canvassed in oral submissions) go little further than the proposition put to the defendants’ solicitors in 2017 as to the plaintiff’s proposed return to Australia (which did not then eventuate). Moreover, the argument has been heard on the security issue now (and any complaints as to the quantification of the amount sought have been articulated).

219. In my opinion, the appropriate way to deal with these applications, consonant with the overriding purpose mandated by the Civil Procedure Act 2005 (NSW), is to make orders as to quantum of security including up to the end of pre-trial preparation but to make the trial preparation security only payable after the conclusion of the proposed mediation. That removes the prospect of duplication of argument over matters already canvassed in the present application. It would of course be open to the plaintiff, if and when her now stated intention to return to Australia at the end of this year eventuates (or if litigation funding is obtained) to make an application to vary the orders made in relation to security, just as it would be open to the defendants, if the amount ordered as security proves insufficient, to make an application for further security to be provided based on the circumstances at that time. However, the most efficient way to deal with the present applications is to make orders now to deal with the provision of security through to the commencement of the hearing.

215. Finally, security may take such form as the Court considers will provide adequate protection to the defendant (see Estates Property Investment Corporate Ltd v Pooley (1975) 3 ACLR 256). I see no reason not to adopt the conventional basis of ordering security by payment into Court or by provision of an unconditional bank guarantee in a form acceptable to the defendants (as contemplated, for example, in prayer 2 of the Patersons’ notice of motion (by the payment of moneys into Court or an unconditional bank guarantee from an Australian owned bank)). It was not suggested that there would be any difficulty with that method of provision of security (as opposed to the making of an order for security per se).

Quantum

• Patersons

221. The matters justifying the quantum of security sought by Patersons are set out in Mr Benson’s first affidavit (at [67]-[93]). Mr Benson has deposed to the likely cost of: providing discovery and inspection; inspecting other parties’ discovered documents; preparing for and participating in a mediation; further directions hearings; and preparing for trial. Mr Benson estimates that that would amount to solicitor/client costs in the order of approximately $390,896 and estimates that the total amount of recoverable costs of Patersons (up to trial) is $240,808 (that being the amount sought in the notice of motion).

222. It is submitted that those estimates are conservative and reasonable. It is noted that Patersons does not seek security for its likely disbursements in participating in a mediation or the future directions hearings (first Benson affidavit at [80], [83]); and Mr Benson has not included other tasks such as reviewing the plaintiff’s expert evidence in reply, the inspection of further documents produced on subpoena or the engagement of an e-Court provider (see the first Benson affidavit at [88]).

223. It is submitted that the conservative and reasonable nature of Mr Benson’s estimates are apparent when one has regard to the fact that the plaintiff has apparently incurred costs of approximately $250,000 since February 2019, a period in which the defendants have been preparing their expert evidence (i.e., there have been no orders of the Court requiring the plaintiff to do anything substantive in this period) (see Ms Ng’s affidavit at [38(d)]).

224. Patersons says that the quantum of security sought is not disproportionate to the amount claimed in the proceedings against Patersons and the other defendants (a factor to which I had regard in Wollongong Coal Limited v Gujarat NRE Properties Pty Ltd [2019] NSWSC 187 at [68]), noting that the plaintiff has served expert evidence which asserts that the value of the Ashington business at the time of the alleged “consortium” was in the order of $140,000,000.

225. Pausing here, the plaintiff argues that the amount estimated by Mr Benson in relation to mediation costs ($45,000) is out of proportion to the amounts estimated by other defendants (which range from $14,825 to $29,075). The explanation for this appears to be that Mr Benson has allowed for a two day mediation, whereas the other defendants have proceeded on the basis that there will be a one day mediation. I will allow for one day (say $30,000 for that purpose).

• Ms Garrett and Mr Renauf

226. Ms Garrett and Mr Renauf have sought security in the amount of $215,000 for their prospective costs up to the commencement of the hearing. Again, they do not seek security for past costs.

227. The affidavit sworn 7 June 2019 of Mr Thomas Russell, the solicitor on the record for Ms Garrett and Mr Renauf, sets out an estimate of the costs likely to be incurred by Ms Garrett and Mr Renauf in the lead up to any hearing. Those costs on a solicitor/client basis are estimated to be at least $307,385. The work primarily relates to: the plaintiff’s evidence in reply; discovery; mediation; further directions hearings; and preparation for hearing. It is submitted that those costs are reasonable, conservative, and primarily related to the costs of preparing for a hearing and that the evidence provided by Ms Garrett and Mr Renauf provides an appropriate basis for the Court to be satisfied that their costs from the date of the motion until the start of the trial will be in the order of $300,000. In those circumstances, and in particular taking into account the substantial amount of the claim which relates to Counsels’ costs of preparing for a trial, it is submitted that security for 70% of those costs is reasonable.

• PPB

228. PPB seeks an order that the plaintiff provide security for its costs in an amount sufficient to cover the conduct of the proceeding up to the commencement of trial, which it estimates at $200,000.

229. The principal point of difference between the plaintiff and PPB in this regard in oral submissions was as to the costs estimated for disclosure of $117,870 and Counsel for PPB accepted that an appropriate discount would be 50% of the amount sought for that item.

• Acorn

230. Acorn seeks security for costs in the amount of $147,000 or such other amount as the Court considers appropriate. Acorn relies upon the affidavit of its solicitor, Mr Michael Polorotoff, sworn 7 June 2019 in this regard.

231. As to the question of quantum of security, Acorn notes that the task of ordering security for costs does not need to be determined with mathematical precision; a “broad brush” approach is sufficient (referring to Idoport at [11] (Einstein J)).

232. It is submitted that Mr Polorotoff’s estimate as to future costs yet to be incurred up to the trial is based upon a careful consideration of multiple different categories of work plus disbursements, and the conventional integers outlined by Edmonds J in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 2) [2012] FCA 23 at [89] (see Mr Polorotoff’s affidavit at [24]-[25]). Mr Polorotoff’s estimate is also informed by his experience of the conduct of this specific matter, including the actual costs incurred by Acorn, since March 2016 (see Mr Polorotoff’s affidavit at [9], [19]). It is submitted that the amount sought is not unreasonable and is on the conservative side.

233. It is noted that: first, Acorn only seeks security in respect of future costs up to trial, and not its past costs; second, that the hourly rates of Acorn’s instructing solicitors are not high (and are lower than those of the other defendants) (comparing the rates set out in Mr Polorotoff’s affidavit at [20] with those of others of the defendants’ legal representatives – see the affidavit of Mr Wilks (the solicitor on the record for PPB) at [15]; Mr Russell’s affidavit at [6]; Mr Benson’s affidavit at [69]); third, that there is additional immediate work that was not accounted for in Mr Polorotoff’s breakdown of costs (such as, preparing a defence to the plaintiff’s proposed further amended statement of claim and finalising the outstanding expert report); fourth, that Mr Polorotoff has applied a discount for costs recoverable on a party/party basis, not just for estimated solicitors’ professional costs but also for Counsels’ fees (see Mr Polorotoff’s affidavit at [27]) (in which regard it is noted that a costs assessor may well exercise his or her discretion to award a high proportion if not all of counsels’ fees, based on the complexity and scope of the issues at large, as recognised in Ballard v Brookfield Australia Investments Ltd [2012] NSWCA 434 at [52]); fifth, that Mr Polorotoff applied a discount of 70%, even though in his experience that is likely to be the minimum percentage recoverable on taxation (see Mr Polorotoff’s affidavit at [27]); and sixth, that the amount of $147,000 is not disproportionate to the amount claimed in the proceeding against the defendants, which appears to be some $140,000,000 (see Mr Benson’s affidavit at [22], Mr Polorotoff’s affidavit at [21(a)]).

• Albany

234. Albany seeks security for costs from the plaintiff in the amount of $120,000 for its costs from now up to the commencement of the hearing (and an order that the plaintiff pay its costs of the Notice of Motion filed on 7 June 2019). Albany refers to, and relies upon, the affidavit affirmed 7 June 2019 of its solicitor, Ms Veronica Chapman.

235. As to the costs that will likely be incurred by Albany in this matter from now until the commencement of the hearing, those costs are estimated on a solicitor/client basis to be in the order of $160,000.

236. Albany’s position is that an appropriate quantum for security is $120,000 which represents 75% of the estimated costs from now until the commencement of the hearing. Albany’s position is that recovery of costs in the event of a successful defence of proceedings is in the order of 70% to 75% on a party/party basis.

Conclusion as to quantum

237. I consider that the estimates are reasonable and that I should adopt the percentage discount rates estimated by the respective solicitors.

Determination

238. For the reasons set out above, I am persuaded that the jurisdiction to grant security for costs has been enlivened and that the discretionary considerations weigh in favour of an order for security. I consider that security should be ordered in tranches up to commencement of the hearing (with leave for defendants to seek more if the security is exhausted and for the plaintiff to move to vary the orders if, for example, a litigation funder were to become involved in the matter) but that, to avoid re-hearing matters now heard in relation to the applications, those orders should not be deferred.

239. Accordingly, I order as follows:

1. Pursuant to r 42.21(1)(a) and/or (e) of the Uniform Civil Procedure Rules 2005 (NSW), order the plaintiff, Mrs Daniela Anderson, to provide security in the following tranches and in accordance with the schedule to these reasons:

•   in relation to the first tranche: within 28 days of these reasons for the respective defendants’ costs of the proceedings up to the commencement of the trial in the amounts, and at the times, set out in the schedule to these reasons;

•   in relation to the second tranche: within 28 days from the conclusion of a mediation of the disputes or no later than six weeks from commencement of the hearing in the amounts, and at the times, set out in the schedule to these reasons;

such security to be provided by way of an unconditional bank guarantee from an Australian bank in a form acceptable to the defendants or payment into Court.

2. In the event that the respective tranches of security ordered in Order 1 above are not provided in respect of any one or more of the defendants within the time(s) specified, order that the proceedings be stayed until further order.

3. Grant the defendants liberty to apply on three days’ notice for further security to be provided for the period from commencement of the hearing or to increase the amount of security ordered in Order 1 if the security provided in a particular tranche proves insufficient to cover the party/party costs thereby incurred, or in the event that there is disagreement as to the acceptability of the unconditional bank guarantee provided pursuant to Order 1.

4. Grant the plaintiff liberty to apply to vary the orders made for security for costs in the event that there is a material change in circumstances in the period prior to commencement of the hearing.

5. Order the plaintiff to pay the defendants’ costs of and incidental to the respective notices of motion.

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Schedule of amounts to be paid as security for costs of the respective defendants

1.   Security to be provided for Patersons’ costs, as follows:

• first, within 28 days, the sum of $60,260.20, being 70% of $86,086 (comprised of $5,123.50 plus $50,962.50 plus $30,000) to cover costs to the end of mediation;

• second, within 28 days from the conclusion of a mediation of the disputes or no later than six weeks from the commencement of the hearing, whichever is the earlier, the sum of $229,617 (being 70% of solicitors’ costs of $156,060 and 90% of Counsels’ fees of $133,750) to cover costs from the end of mediation or otherwise for preparation of the hearing up to the commencement of the hearing.

2.   Security to be provided for Ms Garrett and Mr Renauf’s costs, as follows:

• first, within 28 days, the sum of $59,615.50, being 70% of $85,165 (comprised of $20,930 plus $35,885 plus $28,350) to cover costs to the end of mediation;

• second, within 28 days from the conclusion of a mediation of the disputes or no later than six weeks from the commencement of the hearing, whichever is the earlier, the sum of $155,554 being 70% of $222,220 to cover costs from the end of mediation or otherwise for preparation of the hearing up to the commencement of the hearing.

3.   Security to be provided for PPB’s costs, as follows:

• first, within 28 days, the sum of $97,604.50 being 70% of $139,435 (comprised of $51,425 plus $58,935 (half of $117,870) plus $29,075) to cover costs to the end of mediation;

• second, within 28 days from the conclusion of a mediation of the disputes or no later than six weeks from the commencement of the hearing, whichever is the earlier, the sum of $58,870 being 70% of $84,100 to cover costs from the end of mediation or otherwise for preparation of the hearing up to the commencement of the hearing.

4.   Security to be provided for Acorn’s costs, as follows:

• first, within 28 days, the sum of $66,298.40, being 70% of $94,712 (comprised of $55,542 plus $24,345 plus $14,825) to cover costs to the end of mediation;

• second, within 28 days from the conclusion of a mediation of the disputes or no later than six weeks from the commencement of the hearing, whichever is the earlier, the sum of $80,850 being 70% of $115,500 to cover costs from the end of mediation or otherwise for preparation of the hearing up to the commencement of the hearing.

5.   Security to be provided for Albany’s costs, as follows:

• first, within 28 days, the sum of $75,000, being 75% of $100,000 (comprised of $55,000 plus $30,000 plus $15,000) to cover costs to the end of mediation;

• second, within 28 days from the conclusion of a mediation of the disputes or no later than six weeks from the commencement of the hearing, whichever is the earlier, the sum of $45,000, being 75% of $60,000, to cover costs from the end of mediation or otherwise for preparation of the hearing up to the commencement of the hearing.