Asia Strategic Investment Alliances Pty Ltd v HIH Casualty & General Insurance Ltd
[1999] NSWSC 601
•31 May 1999
CITATION: Asia Strategic Investment Alliances Pty Ltd v HIH Casualty & General Insurance Ltd & Ors [1999] NSWSC 601 CURRENT JURISDICTION: Commercial FILE NUMBER(S): 50024/98 HEARING DATE(S): 28/05/99 JUDGMENT DATE:
31 May 1999PARTIES :
HIH Casualty & General Insurance Ltd (ACN 008 482 291) (1st Defendant/ Cross-claimant)
Asia Strategic Investment Alliances Ltd (ACN 063 507 139) (Plaintiff/ Cross-defendant)
Raymond Reginald Williams (2nd Defendant)
Terence Kevin Cassidy (3rd Defendant)JUDGMENT OF: Bergin J
COUNSEL : Mr M. Dempsey (Plaintiff)
Mr C. Curtis (Defendant)SOLICITORS: Peter Kemp (Plaintiff)
Clayton Utz (Defendant)CATCHWORDS: Application by defendant for security for costs: Part 53 Rule 2(e) Supreme Court Rules; s1335 Corporations Law: Court considered reasonableness of quantum for security. ACTS CITED: Corporations Law - s1335
Supreme Court Rules - Part 53 Rule 2(e); Practice Note 105CASES CITED: Investment Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621
KP Cable Investments v Meltglo Pty Ltd (1995) 56 FCR 189DECISION: Security for costs ordered.
THE SUPREME COURT
OF NEW SOUTH WALES
COMMERCIAL DIVISIONBERGIN J
MONDAY 31 MAY 1999
50024/98 - ASIA STRATEGIC INVESTMENT ALLIANCES PTY LIMITED v HIH CASUALTY & GENERAL INSURANCE LIMITED & ORS
JUDGMENT
EX TEMPORE
1 This is a Notice of Motion brought by the defendants for security for costs pursuant to pt 53 r 2 (e) of the Supreme Court Rules and s 1335 of the Corporations Law that the plaintiff give security in the sum of $516,424 additional to a previous amount to which I will refer in due course.2 The Notice of Motion has had a history commencing, it appears, on 7 May before Einstein J when the plaintiff, the respondent to the motion, apparently sought an adjournment for two weeks which was granted by his Honour. On 20 May 1999 the matter was fixed for hearing on 28 May 1999, although a judge was not designated to hear it at that time.
3 It is necessary to detail a little history in this matter because it came before me on 28 May 1999 for hearing of the motion but also in respect of what could be described as the finalisation of an argument in respect of the Notice to Produce that had been served by the defendants, the applicants to the motion, for various documents relating to a legal opinion. It sought to challenge the then claimed loan arrangement and an insurance policy backing for costs of these proceedings that the plaintiff had suggested was in place.
4 The proceedings themselves, that is the main proceedings, were commenced in March 1998. The summons sets out in detail the plaintiff's claim against the defendants. Although it has been variously described throughout the hearing of this application as a straight-forward or simple matter, a reading of the summons lends the reader to the conclusion that it is perhaps not as simple as has been suggested.
5 The plaintiff makes a number of claims including that the defendants are liable to pay the plaintiff certain amounts of money totalling, as it then was, approximately $US8.4 million. The claims include a breach of contract and breach of implied terms of contract. There are claims of misleading and deceptive conduct with allegations that the alleged representations made by the defendants were false and that the defendant did not have reasonable grounds for making the representations.
6 There is an additional claim that the second and third defendants aided, abetted, counselled and procured the contravention of the section of the Trade Practices Act, essentially a claim under s 75B of the Trade Practices Act.
7 There is also a claim of breach of fiduciary duty with a number of paragraphs setting out the purported basis of the way in which that fiduciary duty arises. Additionally, there are claims for the construing of a trust, unjust enrichment, a breach of implied term and misleading and deceptive conduct in respect of future and further negotiations. Albeit claims of that nature can be straight-forward, the parties are at issue as to whether it is a simple claim. That has some bearing on this application for a rather large amount of security for costs.
8 The Defence which was filed on 15 April 1998 puts the contentions of the plaintiff in issue. It is a detailed and apparently careful Defence which runs to some twenty-one pages and there is a reply to it. The reply deals with the $2 million payment which was to be paid on the signing of the joint venture.
9 The defendants put on a cross-claim of which paragraph 7 pleads:Paragraph 10 pleads:
"By the summons filed in the proceedings ASIA asserts, inter alia, that it was a term of the agreement that HIH agreed to pay ASIA the sum of $US5 million for the right to acquire the 27% interest or alternatively, for the 27% interest."
" For the purpose of this cross-claim only , HIH says that if in the proceedings it is found that the agreement included the term (a reference to paragraph 7) HIH is entitled to recover the part payment by way of restitution consequent upon ASIA's failure to transfer the 27% interest,"
10 The matter came before Rolfe J on 26 May 1999 and as I have indicated, that was in relation to a Notice to Produce that was served by the defendants. That Notice to Produce sought copies of the advice of Mr Martin Einfeld QC and various other documents relating to the arrangements that had been put in place by the plaintiff.
11 To comprehend the manner in which this case has been conducted, it is appropriate to refer to some communications between the plaintiff and the defendants which occurred in 1998. The defendants are represented by Messrs Clayton Utz, Solicitors, and the plaintiff is represented by Peter Kemp, Solicitors.
12 The solicitors for the defendants wrote to the plaintiff’s solicitors in March 1998 and raised the question of security for costs. From correspondence that is annexed to an affidavit of Mr Matthew Kaley, it appears that there had been some initial agreement for the provision of some security but the amount was unacceptable to the defendants' solicitors by reason of a number of matters that came to their notice. Those matters included the material gleaned from Australian Securities Commission records in relation to the plaintiff which evidenced trading losses of the plaintiff for 1994 of $173,537; at the end of 1995 approximately $1.4 million and at the end of 1996, $1.7 million. Those records also demonstrated deficiencies in shareholders' funds during that period.
13 The solicitors for the defendants in asking for security for costs were met with the suggestion by the plaintiff's solicitors that the defendants' solicitors should be mindful that the impoverishment of the plaintiff was a direct result of the conduct of the defendants. In response to that suggestion, the defendants, understandably, pointed to the material to which I have just referred and suggested to the plaintiff's solicitors that their client was impoverished prior to any approach to the defendants and so it was that the parties were locked into a battle in respect of whether security should be supplied and how much. That battle continued from March 1998 through to 12 June 1998 when an agreement was reached between the parties which was recorded in some short minutes filed in this Court on 12 June. Those short minutes read as follows:
"By consent and without admissions:
1. The plaintiff within 21 days give security for the defendants' costs up to and including filing and service of their witness statements. Such security to be in the form of a bank guarantee in the sum of $250,000 in terms to be agreed between the solicitors for the parties.14 Importantly in November 1998 the plaintiff was placed into voluntary liquidation and on 23 December 1998 the defendants' solicitors wrote to the plaintiff's solicitors, once again indicating that they wished to increase the security as had been impliedly anticipated in the short minutes of order dated 12 June 1998. Messrs Clayton Utz requested a bank bond to be increased to $669,332. In response Peter Kemp, indicated that the application was rejected and said:
2. Costs of the defendants' Notice of Motion for security for costs to be costs in the cause.
3. Liberty to apply on three days' notice (including liberty to the defendants to apply to increase the security referred to in 1 above after the said filing and service of the said defendants' statements.)"15 The solicitor for the plaintiff then provided some detail in relation to that funding arrangement. Not surprisingly, Messrs Clayton Utz wrote back on 13 January as follows:
"Indeed, in circumstances where funding in the sum of $1.2 million has been obtained from GIO Finance (which includes any costs of the defendant incurred after filing and serving witness statements) the need for security for costs is obviated entirely."
"If your client intends to maintain that the funding arrangement obviates the need for further security, we ask you to provide us with a copy of all agreements and other documents that set out or affect those terms."
16 On 27 January 1999 Peter Kemp wrote to Messrs Clayton Utz and informed them that he was instructed not to provide the various documents associated with the funding of the proceedings. On 2 February 1999 Messrs Clayton Utz gave notice that the security for costs application would be pressed and the notice came before the Court on 7 May,1999.
17 The Notice to Produce to which I have earlier referred related to some documents that had been served upon the defendants' solicitors as exhibits to the affidavit of Mr Peter Kemp of 7 May 1999. Those exhibits were entitled PK1 to PK7. In PK7 there is a reference to a copy of the advice from Mr Martin Einfeld QC dated 16 September 1998, being annexed to PK7 and which became exhibit B before me. That document was not annexed to that exhibit, and the matter was agitated before Rolfe J to obtain copies of it, together with other relevant documents.
18 It is apparent from the records on the file, and in particular Rolfe J's judgment of 26 May 1999, that the parties, represented by Mr Curtis of counsel for the defendants/applicants in the motion, and Mr Dempsey of counsel for the plaintiff/respondent in the motion, argued for some three hours before his Honour on that day. His Honour reached the conclusion on page 5 of his judgment that he was:
"expressing a prima facie view, that once the plaintiff either seeks to assert that it has a loan agreement and an insurance policy without more, it must be open to the defendants to go behind those documents to see other constituent documents and the circumstances in which the loan agreement and the insurance policy may be applicable."
19 His Honour directed the plaintiff to serve on the solicitors for the defendants by 1 o'clock on 27 May an outline of all statements upon which it relied in opposition to the application for security for costs, together with all affidavits upon which it proposed to rely and his Honour stood the motion over to Friday 28 May, at which time it came before me.
20 At the commencement of the hearing before me the defendants relied upon the affidavits of Mr Matthew Kaley of 11 May 1998 and 31 March 1999, together with the affidavits of Ms Vine-Hall of 12 May 1998 and 30 March 1999.
21 The respondent to the motion, the plaintiff, relied upon the affidavits of Scott Cameron of 27 May 1999 (two in number), two affidavits of Mr John Evans of 27 May 1999 and an affidavit of Mr Allan Robinson of 27 May 1999, and the affidavit of Mr Peter Kemp of 7 May 1999, and tendered the exhibits to that affidavit PK1 to 6 which became respectively exhibits 1.1 through to 1.6(PK7 was not tendered by the plaintiff).
22 It was necessary to hear some argument in respect of the calls for documents made orally by Mr Curtis, as well as the Notice to Produce that had been before Rolfe J on 26 May. That included reading Ms Vine-Hall's affidavit in reply to Mr Robinson's affidavit dated 28 May 1999 and also the tendering of what was formerly known as PK7 which then became exhibit B before me.
23 After some further submissions and at about quarter to one, the case having commenced at approximately 10.20am, Mr Dempsey for the plaintiff took a forensic decision which was to withdraw any reliance upon the affidavits of the plaintiff other than the affidavit of Allan Robinson of 27 May 1999. Quantum seemed to be the only issue. It was therefore a matter of Ms Vine-Hall's and Mr Robinson's evidence being tested. The matter concluded at approximately 3.50pm when I stood the matter over to 9.30 this morning for further submissions which concluded at approximately 11.30am, at which time I stood the matter over until 2pm today for judgment.
24 The plaintiff has submitted that in the circumstances this is an oppressive application brought by the defendants. Indeed, it couches those submissions in terms which suggest that if I were to follow the applicants' approach I may be penalising the plaintiff in these proceedings. The first position adopted by Mr Dempsey deals with the strength of the plaintiff's case. In support of that submission he tendered some documentary material which became exhibit 2 before me which consists of a number of letters between the plaintiff and the defendants. The first is the letter of 20 October 1995 from the chairman of the plaintiff to the managing director of the first defendant. In that letter there is reference to a discussion which apparently occurred the day before and then proceeds:25 The letter then purports to set out the agreement as to terms of remuneration and a price for the option of the plaintiff for the acquisition of twenty-seven per cent in a joint venture of $US5 million which was detailed to be as follows:
"This letter confirms your agreement to the terms of remuneration payable to Asia Strategic Investment Alliance Limited (or its nominee) in respect of the insurance joint venture in The People's Republic of China with Mr Wang Jian Cai and Yong An Insurance Co."
"1. Upon signing Letter of intent $USD1 million
2. Upon assignment of option or
3. Upon signing Joint Venture
preliminary agreement with
consortium $USD3 million
Agreement $USD1 million"27 On 23 October 1995 the managing director of the first defendant sent a letter to the chairman of the plaintiff in which he referred to the option fee of $US5 million being made up as follows:
26 There is then a reference to the $US4.4 million cash payment arrangement and alternative arrangements subject to Mr Wang's approval.28 The plaintiff also relied upon a media release to demonstrate the strength of its case. On 19 September 1996 the first defendant announced that it had been involved in a massive venture in the Asian insurance market and that it had unveiled a strategy initiative to enter the general insurance market in The People's Republic of China through a joint venture involving a newly financed domestic insurance company. It is suggested that the chief executive, Mr Williams, who is the second defendant in these proceedings, said:
"1. Upon signing Letter of Intent $US1 million
2. Upon signing Joint Venture
3. Upon the gross earned
Agreement with Mr Wang Jian
Cai $US2 million
premiums of Yong An Insurance
Co or its subsidiary reaching
$US60 million $US2 million "
"The joint venture initiative signalled a substantial long-term commitment to the world's most important emerging insurance market."
29 On 27 May 1999 the plaintiff abandoned the third limb of its case, that is, the $US2 million payment in respect of the earnings of $US60 million of the Yong An Insurance Company to which I made reference earlier. That is seized upon by the defendants as a significant matter to this aspect of the matter, and perhaps rightly so. The documentation in respect of that abandonment has not been filed and is to await the outcome of further discussion between counsel.
30 The main evidence before me is the evidence of the two expert legal costs consultants, Ms Vine-Hall for the defendants and Mr Robinson for the plaintiff.
31 Ms Vine-Hall attended the premises of the defendants' solicitors and swore affidavits in respect of the previous application for costs in 1998, which was ultimately settled on 12 June, and also in relation to this application. Ms Vine-Hall is clearly a person of appropriate background to be assisting the Court in relation to this type of case. She has been the director of DSA Legal Costs Consultants Pty Limited since July 1993, but having worked in that business which she established since July 1990. Ms Vine-Hall was assisted by Mr Kaley in assessing the nature of the issues between the parties to which she refers in paragraph 7 of her affidavit of 12 May 1998.
32 She was asked to provide an opinion on the probable party/party costs which would be awarded to the defendants and has done so in respect of various time frames; firstly, up to and including the preparation of the witness statements upon which the defendants intended to rely, which matter is covered by her affidavit of 12 May 1998, and thereafter on work done from 8 May 1998 and work to be undertaken in the further preparation of the matter up to the hearing.
33 Ms Vine-Hall has set out what Mr Curtis points to as an important feature of her work and her assessment in this matter in paras 16 and 17. It is appropriate that I refer to those paragraphs:
"16. In determining the probable party/party recoverability of the costs incurred by the defendants to date, it is necessary to take into account, in accordance with section 208F(1) of the Act, how the work has been delegated and what rates have been charged for particular types of work. In view of the speed of the preparation of this matter, I consider that it is reasonable for a solicitor of the experience of Mr Lees to have been substantially involved in the preparation of the defence and discovery. In my opinion, there might be an argument that there has been some work undertaken by Mr Lees which might have been undertaken by a solicitor of lesser experience, which could be addressed by an adjustment to the number of hours 'allowed' to Mr Lees at his rate. I have made such an adjustment in forming my opinion expressed at paragraph 18.
17. In my experience of the rates usually charged by large CBD firms such as Allen Allen & Hemsley, Blake Dawson Waldron, Baker & McKenzie, Minter Ellison, Malleson Stephen Jaques, Phillips Fox and Abbot Tout, which are firms of the size which regularly undertake litigation of the size and complexity of the present litigation, the rates charged by Clayton Utz are at the higher end of the range for solicitors of the experience of Mr Lees, Mr Kaley and Mr Anderson. In order to estimate the probable recovery of costs on a party and party basis, I would make an allowance for the fact that an assessor might reduce the rates to the mid range of the firms I have described in this paragraph. "34 Ms Vine-Hall goes on to make an assessment in 1998 of the costs likely to be recoverable, taking into account those matters to which she referred. I shall return to the matter of Mr Lees in due course, but it is clear that the litigation was brought on promptly with an apparent speed which Ms Vine-Hall took into account in making an assessment of the involvement of a partner at the same time as a senior associate. She said in her affidavit that the matter was in the Commercial Division and it was already proceeding fairly swiftly. She also made reference to a tight time-table which had been fixed and the fact it was planned to adhere to that tight time-table.
35 The observation made by Ms Vine-Hall in respect of the involvement of the senior partner or a partner in the firm is one that was not challenged in cross-examination. Indeed, one only has to comprehend the importance of the aspects of this case to the individual defendants to understand that when matters are proceeding swiftly it would not be unreasonable to have a person such as a partner involved, at least for a proportion of the time initially, to assist and/or guide the senior associate if that was thought to be necessary and appropriate.
36 The second affidavit, which is the affidavit of 30 March 1999, as I say deals with the later work done by the defendants' solicitors and specifically refers to the fact that Mr Kaley informed Ms Vine-Hall that in making her assessment she was not to take into account any work undertaken in relation to the voluntary liquidation of the plaintiff or the work relating to the cross-claim to which I have referred earlier.
37 The assessments made by Ms Vine-Hall are attacked in the affidavit of Mr Robinson who also gave evidence and was also cross-examined. Mr Robinson has also had quite a deal of experience as a legal costs consultant. I should say that both the expert witnesses are graduate lawyers and have practised as such prior to moving into the field of legal costs consulting. Mr Robinson has offered an opinion in respect of what may be recoverable by way of party/party costs on the basis of what assessors do under the present costs regime. He said specifically that those assessors "have difficulty in allowing hourly rates for solicitors in excess of $300 per hour".
38 On this point Mr Robinson was cross-examined by Mr Curtis to the point where he had to admit that there was room to move in respect of the $300. When I asked him if he could assist me on how much room there was, he informed me that he could not.
39 The second aspect of his opinion expressed in relation to the assessors not allowing anything more than $300, was that they also had difficulty in allowing hourly rates for solicitors in excess of the hourly rate charged by or allowed to counsel. He was once again effectively cross-examined on that statement and admitted his statement was "too broad" and that he had not put "enough detail" in it, but accepted when Mr Curtis pressed him, and pressed him appropriately, that the statement was meaningless.
40 Mr Robinson then expressed what he described as “concerns” in respect of the defendants' estimates of party/party costs and one of the things that he did was to take the data from the time of initial instructions, or thereabouts, to a particular date, which it was apparent was the date upon which the statements were filed. He then calculated how many hours had been spent by the various legal representatives of the defendants over that period and those were simple mathematical approaches from the provision of the time costing and various other records of the defendants' solicitors. He then said, "Averaging the hours worked between the working days, legally qualified professional staff were engaged on the matter an average of 8.05 hours per working day."
41 He made a similar assessment in respect of Mr Kaley's involvement showing that he had been involved on average 3.65 hours per day or 5.24 hours per working day. He was pressed on this analysis because Mr Curtis, no doubt, was clearly concerned to establish whether he, Mr Robinson, had formed any view of the reasonableness or otherwise of those hours having been incurred by the defendants' solicitors.
42 The course of that evidence troubled me because I was not confident by the end of it that Mr Robinson had stated his propositions clearly enough for me to understand what he meant. It is clear that he did not intend to convey ultimately that the hours had not been worked. That much I thought was clear, but it seems to me that there was a residuum of concern, notwithstanding the once again very careful cross-examination by Mr Curtis. Ultimately it does not matter because Mr Robinson was not able to tell me whether it was or it was not reasonable. He just said it was something that gave him some concern.
43 Additionally, Mr Robinson was taken to two conclusions which he reached the first contained in paras 17 and 18 of his affidavit, and the second contained in paras 19 and 20 of his affidavit. They respectively relate to the annexures marked A and B. It is clear from Mr Robinson's evidence that the weight that I can give to those annexures is not great. Indeed, Mr Curtis was able to obtain admissions from Mr Robinson which leave me in the position of having little assistance from Mr Robinson in respect of this matter. Just looking at one aspect to test that conclusion that I have reached, for instance annexure A refers to item I, the second application for security for costs. It allows approximately thirty-one and a half hours.
44 The second application for security for costs, on the history that I have given, has been contemplated and agitated since 28 December 1998. It has been the subject of that correspondence to which I have referred; it has been the subject of the preparation of the affidavits to which I have referred; the perusing of what seem to be numerous affidavits of the plaintiff and the necessity to peruse the material now contained in exhibits 1.1 to 1.6 and exhibit B, and the decision to seek the production of documents in relation to the funding arrangements as referred to in exhibit B and ultimately in Rolfe J's judgment of 26 May 1999. It seems to me that 31.65 hours on a party/party basis may be somewhat unrealistic.
45 In any event, what I am left with is, therefore, the affidavits of Ms Vine-Hall. In my view the evidence of Ms Vine-Hall is preferable to the evidence of Mr Robinson.
46 Mr Dempsey submits that the plaintiff, as an impecunious party, would be placed in a very difficult position should I order the security sought by the defendants, because effectively it would be prevented from proving its claim unless security was provided, whereas the defendants would be able to prosecute the cross-claim. In this regard Mr Curtis submits the defendants' position clearly stated is that it has no entitlement to sue upon the claims in its cross-claim without the plaintiff first establishing its claims, or part of them, in the summons.
47 Mr Curtis makes this submission to defeat the claim made by Mr Dempsey that the line of authorities to which he referred me, in particular to Ormiston J's judgment in Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621 disentitle the defendants to this order because of the cross-claim.
48 It seems if Mr Curtis' analysis of his cross-claim is correct, Ormiston J's statements on 621 and 622 have little bearing on this matter. Mr Curtis submits his cross-claim is truly defensive and relies upon paras 7 to 10 referred to earlier.
49 The plaintiff claims that the defendants' application is extravagant and oppressive and the quantum of costs is, prima facie, exorbitant. The quantum of costs may present as high, but Ms Vine-Hall has dealt with that aspect of the matter in her affidavit of 12 May 1998 to which I have referred earlier. Much of the opposition of the plaintiff is reliant upon Mr Robinson and it seems to me that that opposition is somewhat diminished by the findings I have made in respect of the evidence of Mr Robinson.
50 Ms Vine-Hall, in her affidavit of 30 March 1999, in particular in para 28, sets out an estimate of the defendants' likely recoverable costs in a total amount of $713,528.
51 In addition, there is one aspect of the matter to which I have not referred but I shall do so now and that is contempt proceedings which have been instigated by the defendants. Those proceedings apparently relate to conduct of the plaintiff in these proceedings. The position of the plaintiff is that the security for costs should not include an amount of costs pertaining to the contempt proceedings.
52 Mr Curtis submits that where a defendant is sued by an impecunious plaintiff, they should not be put in a position of disadvantage if, prior to the final hearing, the plaintiff fails to do something that makes it necessary for the defendant to incur further costs. An important aspect of that submission is the word "necessary". The Statement of Charge and the details of the hearing are not before me. Indeed, there is no evidence before me in respect of that set of proceedings other than Ms Vine-Hall's evidence relating to the costs incurred and the reasonableness or otherwise of them.
53 It seems to me that the defendants are not entitled to have the costs of the contempt proceedings included in this application because there is no evidence that it was necessary for them to bring the proceedings and without that evidence it seems to me their application must fail in that regard.
54 Mr Curtis had submitted there was some evidence of the necessity of the proceedings because the plaintiff has included a reference to the possibility of a fine having to be included in the funding arrangements which are referred to in exhibit 1.1. I am not persuaded by that submission and I therefore do not consider the costs of the contempt proceedings to be appropriately included in this application.
55 The circumstances of this case which have led me to the conclusion I have reached include the apparent difference in approach between the letters of 20 October 1995 and 23 October 1995 in exhibit 2; the abandonment of an apparently very important aspect of this case the night before this application came on; the conduct of the plaintiff in pursuing this application and defending it in the way it has since 28 December 1998; and the initial reliance upon evidence which the defendants had to deal with up until at least halfway through the hearing with the consequent abandonment of it. Although I am not sure that I agree with Mr Curtis' submission, that the plaintiff was playing possum with this Court, it does seem to me that it was a very large waste of the Court's time.
56 On the matters to which I must have regard, as referred to by Beazley J in KP Cable Investments v Meltglo Pty Ltd (1995) 56 FCR 189, I am satisfied that there are some real issues for trial.
57 Secondly, having regard to the abandonment of the
claim on the Thursday night, and although I am not satisfied that the plaintiff is not bona fide, it does bring into question some aspects of the alleged strength of the plaintiff's claim that perhaps need to be reassessed.
58 Thirdly, I am not satisfied that the plaintiff's impecuniosity was caused by the defendant's conduct, in particular having regard to the material in Mr Kaley's affidavit which demonstrates the developing impecuniosity of the plaintiff prior to the time it commenced dealing with the defendants.
59 In all the circumstances, I intend to order further security for costs but not in the amount in the notice of motion.
60 Doing the best I can on the state of the evidence before me, I should return to a matter to which I said I would return, and that is the involvement of Mr Lees in the litigation.
61 It is not clear whether it was Mr Lees or Mr Kaley who was involved during the earlier period because of a statement made by Mr Kaley that Mr Lees was on some leave. In any event the amounts of time referred to in paragraph 15 of the affidavit of 12 May 1999 are the ones to which Mr Robinson made reference in his affidavit and, although Ms Vine-Hall has taken the matter into account and reduced what might be called the large amount of time to a minimum amount, I am still of the view that it is appropriate to discount Mr Lees’ time. Therefore the costs of Mr Lees and Mr Kaley in that period of the work done to 8 May 1998 should be reduced by $30,000.
62 Returning then to paragraph 28 of Ms Vine-Hall's affidavit and the costs of $425,778 for the period 8 May 1998 to 15 January 1999, which includes a figure for litigation support which is referred to in practice note 105 of the Supreme Court Rules. There has been no direction in respect of that matter in this case. It seems, however, from the material before me, that to allow the whole amount of $34,900, and to allow the work of Senior Associates, Solicitors and Counsel in respect of the same work, ie the data base, the collection of documents and the collating of documents for discovery, is an estimate which requires adjustment. I intend to reduce the figure of $425,778 to $390,000. That then reaches a figure in paragraph 28 of $677,950 and there should then be a reduction of $250,000 from that which reaches a figure of $427,750. I have to take into account the figure of $30,000 which I have reduced the other figures by, which gives a figure of $397,750.
63 In those circumstances I make an order that the plaintiff give further security in the sum of $397,750 for the defendant's costs incurred up to the date of making this order and to be incurred up to but not including the hearing of the matter. I make an order that until the security referred to in that order is given the claims by the plaintiff are stayed.
64 I make an order that the defendants have liberty to apply: (a) to increase the amount of security referred to in my first order should that amount prove inadequate; (b) for security for their costs to be incurred on the commencement of the hearing of this matter.
(Mr Curtis sought costs of today on an indemnity basis
and handed her Honour written submissions in that regard. Counsel addressed on the question of costs).65 This is an application for indemnity costs followingthe orders I have just made in favour of the applicant in the motion on the basis that the plaintiff was aware as at 5 January 1999, when its solicitors indicated to the defendant's solicitors that the need for security for costs was obviated, that it was embarking upon a case in which it was of the opinion that it was likely that security for costs would be ordered in the amount of $250,000.
66 That submission is made in the light of a number of documents, including Mr Kemp's letter of 5 January 1999 which is annexure E to the affidavit of Matthew Kaley, and exhibit B, which is the liquidators document entitled "Liquidators Expense Insurance Proposal Form". On page 16 of that document there is a heading "Estimated Exposure" under which there appears the following "We estimate that the exposure of ASIA for each of the following is as follows" and then relevantly paragraph 4 in particular "Further likely bank guarantee for further security for costs for the Respondent: $250,000.00".
67 That document is signed by P M Walker, Liquidator, and is dated 29 January 1999.
68 It is not clear whether that document was prepared or seen at the time Mr Kemp wrote his letter on 5 January but, in any event, Mr Curtis submits Mr Kemp conducted himself in a way which, entitles the defendants to have their costs paid on an indemnity basis. Those grounds include the fact that the plaintiff persisted, until last Friday 28 May 1999, with a case it knew was hopeless and bound to fail.
69 A letter written on 14 May 1999 which was exhibited before Rolfe J on 26 May 1999 has been handed to me. It is submitted that the plaintiff has proceeded knowing that it was bound to fail in its resistance to the application.
70 The last matter to which Mr Curtis refers is troubling because he submitted that the plaintiff's solicitor, Mr Kemp, is “not to be believed”. He submitted that Mr Kemp knew that there was a likelihood of an order for security being made and yet he had suggested in his letter of 5 January 1999 that the need for security had been obviated.
71 It seems to me that Mr Kemp had a view that the further security was obviated which resulted from an analysis of the funding arrangements that had been apparently secured by 5 January.
72 There is nothing before me other than the statement in the liquidator’s document signed some weeks after Mr Kemp’s letter that could have any bearing on Mr Kemp's truthfulness. Indeed it seems to me that the submission is without foundation because Mr Kemp may have honestly believed that the need had been obviated. As it turned out five months down the track that view was not able to be supported.
73 I am not of the view that Mr Kemp is to be disbelieved when he says something to his opponents and, in the circumstances, I need not consider that aspect of the defendant's submissions any further.
74 Further, the conduct of this litigation to date has been a little unsatisfactory. It seems to me there could have been much more economy taken on board by the plaintiffs if they had addressed their minds to the issues which led to the withdrawal of all their evidence except for that of Mr Robinson. Mr Dempsey's approach to that course of conduct is that it was really a matter that needed to be looked at very carefully because it was a matter of some sensitivity that Mr Enfield's legal opinion needed to be precluded from the gaze of the defendant's solicitors. Be that as it may, the conduct that Mr Kemp had engaged in by disclosing those documents on 7 May must have alerted the plaintiffs to the fact that a waiver argument was in the wings as was referred to on 26 May 1999 before Rolfe J.
75 It seems to me that Rolfe J gave the clearest of indications that the plaintiff would have some difficulty in securing the secrecy to Mr Einfeld's opinion had it proceeded with its application.
76 I am of the view that that much of the hearing before me was unnecessary particularly having regard to the assistance that the plaintiff could have gleaned from Rolfe J's opinion expressed prima facie at page 5 of his judgment.
77 I am minded then to award the costs on an indemnity basis only insofar as they relate to the costs incurred on 26 May 1999, and for fifty percent of the costs incurred on 28 May 1999. I do so award costs on that basis. The balance of the costs of this application are to be paid by the plaintiff on an ordinary basis.
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