Aus Asia Minerals Ltd v Ball
[2015] WASCA 251
•8 DECEMBER 2015
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: AUS ASIA MINERALS LTD -v- BALL [2015] WASCA 251
CORAM: MURPHY JA
HEARD: 7 DECEMBER 2015
DELIVERED : 8 DECEMBER 2015
FILE NO/S: CACV 159 of 2015
BETWEEN: AUS ASIA MINERALS LTD
Appellant
AND
EVAN WILLIAM BALL
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :ACTING MASTER GETHING
Citation :AUS ASIA MINERALS LTD -v- BALL [2015] WASC 399
File No :COR 157 of 2015
Catchwords:
Application for extension of time for compliance with creditor's statutory demand - Extension pending determination of the appeal - Appeal from acting master's decision to dismiss application to set aside statutory demand
Legislation:
Corporations Act 2001 (Cth), s 459A, s 459C(2),s 459C(3), s 459F(1), s 459F(2), s 459G, s 459P
Result:
Application granted
Category: B
Representation:
Counsel:
Appellant: Ms K J Levy
Respondent: Mr P D C Robinson
Solicitors:
Appellant: Gadens Lawyers
Respondent: Williams & Hughes
Case(s) referred to in judgment(s):
Aus Asia Minerals Ltd v Ball [2015] WASC 399
Australian Beverage Distributors Pty Ltd v Cranswick Premium Wines Pty Ltd [2004] NSWSC 877; (2004) 50 ACSR 544
Buckland Products Pty Ltd v Deputy Commissioner of Taxation of the Commonwealth of Australia [2003] VSCA 85
Graywinter Management Pty Ltd v Deputy Commissioner of Taxation (1996) 22 ACSR 636
In the matter of Britten‑Norman Pty Ltd [2013] NSWSC 424
Jem Developments Pty Ltd v Hansen Yuncken Pty Ltd [2006] NSWSC 1378; (2006) 60 ACSR 393
NA Investment Holdings Pty Ltd v Perpetual Nominees Ltd [2010] NSWSC 373
Scolaro's Concrete Construction Pty Ltd v Schiavello Commercial Interiors (Vic) Pty Ltd (1996) 62 FCR 319
MURPHY JA:
Introduction
This matter came before the court by way of a registrar's notice to attend dated 18 November 2015 to consider the appellant's application dated 11 November 2015. The application seeks, in effect, an extension of time for complying with a creditor's statutory demand pending the determination of the appellant's appeal.
The appeal is against Acting Master Gething's decision on 26 October 2015 to dismiss an application by the appellant to set aside a statutory demand served on it by the respondent: Aus Asia Minerals Ltd v Ball.[1]
[1] Aus Asia Minerals Ltd v Ball [2015] WASC 399.
The statutory demand was in the sum of $160,045. It was served on the appellant by the respondent on 22 June 2015.
Prior to this application, the appellant had sought an order in the General Division under s 459F(2)(a) of the Corporations Act 2001 (Cth) to extend the time for compliance with the statutory demand. That application was heard by Corboy J, who made orders to the effect that the application be reserved to the Court of Appeal and that the time for compliance be extended until further orders were made by the Court of Appeal.
The statutory demand and the primary court's decision
The respondent's statutory demand related to a claim in debt due under an alleged contract. The affidavit in support of the statutory demand referred to a 'Consultancy Agreement that commenced on 5 January 2015'. It did not say when the agreement was entered into, whether it was express or inferred, written or oral.
The evidence in support of the application to set aside the demand was principally given by a Mr Swarbrick.[2] He deposed to a meeting in October 2014 and a meeting on or before 11 December 2014, in which he and the respondent discussed the prospect of the respondent becoming an executive director of the appellant. The evidence was to the effect that he advised the respondent that until the appellant had raised funds, the outcome of which he was confident, the respondent could not be engaged as a full time director, but he could be engaged as a non‑executive director on a salary of $5,000 per month in the interim. He deposed that the respondent agreed to that. Mr Swarbrick also deposed that during his discussions with the respondent, he advised the respondent that any agreement would be subject to the approval of the board of directors and any other requirements or approvals. He annexed a copy of the appellant's announcement to the Australian Securities Exchange on 13 December 2014 to the effect that the respondent was appointed as a 'non‑executive director effective January 1, 2015'. He also annexed an email from the respondent to the appellant dated 22 April 2015 in which the respondent informed the appellant:
[2] See Mr Swarbrick's affidavits of 7 July 2015 and 7 September 2015.
Given the current situation with funding and how things have not progressed as planned, please find attached my letter of resignation, effective today.
The letter of resignation by the respondent, dated 22 April 2015, said:
As the SOLOK project has not progressed as quickly as planned and my transition to a role as an executive director has yet to occur, I need to progress other opportunities outside of this company.
Please accept this letter of resignation from the position of Non‑Executive Director of [the appellant].
The respondent's evidence in response to Mr Swarbrick's evidence was principally contained in the respondent's affidavit sworn 17 August 2015. He deposed to meetings with Mr Swarbrick in September, October and November 2014, and to a further meeting over lunch in Singapore on 10 December 2014. The respondent deposed that at that meeting:[3]
[3] Affidavit of Evan Ball, 17 August 2015, par 7.
Mr Swarbrick said he wanted me to take on a permanent position with [the appellant] from 5 January 2015 and that he wanted to announce my appointment as a Non‑Executive Director of [the appellant] within a few days.
I said to Mr Swarbrick I was content with that but that I required confirmation that my package would be:
(a)$35,000 a month;
(b)$5,000 for accommodation.
Mr Swarbrick replied that this was not a problem and he would send through to me some documents to sign the next day.
The respondent also annexed to his affidavit certain emails exchanged with Mr Swarbrick on 11 December 2014. The emails referred to the terms of an 'executive agreement', in relation to the payment of $35,000 per month, $5,000 for accommodation and $2,000 for a car or driver. Annexed to the respondent's affidavit of 12 October 2015 are also, inter alia, invoices sent to the appellant in the period February 2015 to May 2015, referred to in the schedule to the statutory demand. The invoices claimed, in effect, fees for service and expenses in the sum of $42,000 per month. Annexed to the respondent's affidavit of 17 August 2015 is also an email from Mr Swarbrick dated 6 April 2015 in which Mr Swarbrick referred to the respondent's invoices and said that '[I] have not forgotten them. I think we owe you around $130k'. The respondent emphasised that this email may be regarded as an admission by Mr Swarbrick on behalf of the appellant.
The primary court said that the respondent's contention at the hearing of the application to set aside the statutory demand was that, 'at the meeting in Singapore and in subsequent emails [the respondent] reached a binding agreement with [the appellant] by which he was to be paid a monthly package of approximately $42,000'.[4] The reference to the 'meeting in Singapore' is, on the respondent's evidence, a reference to the meeting on 10 December 2014.
[4] Aus Asia [2].
The master found, inter alia:[5]
[5] Aus Asia [37].
[In] determining whether parties intended to make a concluded agreement, the intention of the parties is to be ascertained objectively by reference to what a reasonable observer would have concluded. Looking at the email exchange on 11 December 2014 between Mr Swarbrick and Mr Ball … it is difficult to see any basis upon which a reasonable observer could conclude that there was no concluded agreement between AAM and Mr Ball on the terms asserted by Mr Ball. In particular, the unequivocal way in which Mr Swarbrick answered Mr Ball's query of whether 'the executive agreement of $35,000 monthly or annual amount' undermines his oral evidence to the contrary. (emphasis added)
Counsel for the respondent accepted in this application that the master appears to have found that the consultancy agreement was partly oral and partly written, with the oral part having been made on 10 December 2015 at the meeting in Singapore.
The statutory scheme and principles
In broad terms, the statutory scheme for present purposes may be described as follows.
Section 459P of the Corporations Act provides that certain persons, including a creditor, may apply to the court to wind up a company in insolvency.
Section 459A provides that on an application under s 459P, the court may order that an insolvent company be wound up in insolvency.
By s 459C(2)(a), the court must presume that the company is insolvent in an application under s 459P, if, within the preceding three months, the company has failed to comply with a statutory demand. The presumption operates except so far as the contrary is proved for the purposes of the application: s 459C(3).
A company fails to comply with the statutory demand if the demand is still in effect at the end of the period of compliance, and the company has failed to comply with it by the end of that period: s 459F(1).
The period for compliance with the statutory demand is 21 days if there has been no application to set aside the statutory demand: s 459F(2)(b).
If there has been an application in accordance with s 459G to set aside the statutory demand, the court may, on the hearing of that application or on an application by the company under s 459F(2)(a)(i), make an order extending the time for compliance, and the period for compliance is that which is ordered: s 459F(2)(a)(i). Otherwise, where an application to set aside the demand has been made, the period for compliance ends seven days after the application under s 459G is 'finally determined or otherwise disposed of': s 459F(2)(a)(ii).
The courts have proceeded on the basis that an application to extend time for compliance may be made under s 459F(2)(a)(i) after determination of the s 459G application itself, providing the application for an extension is made before the effluxion of the time fixed for compliance.[6] A number of cases have ordered extensions of time pending the determination of an appeal by the company following an adverse determination of the company's application to set aside the statutory demand.[7]
[6] Graywinter Management Pty Ltd v Deputy Commissioner of Taxation (1996) 22 ACSR 636; Buckland Products Pty Ltd v Deputy Commissioner of Taxation of the Commonwealth of Australia [2003] VSCA 85 [4], [9].
[7] Australian Beverage Distributors Pty Ltd v Cranswick Premium Wines Pty Ltd [2004] NSWSC 877; (2004) 50 ACSR 544; Jem Developments Pty Ltd v HansenYuncken Pty Ltd [2006] NSWSC 1378; (2006) 60 ACSR 393; In the matter of Britten‑Norman Pty Ltd [2013] NSWSC 424.
Ordinarily in an application of the present kind, the factors which may be taken into account include, first, the general question of the prospects of success in the appeal and whether an arguable case has been shown; secondly, whether the appeal will be rendered nugatory unless the extension is granted; and thirdly, the prejudice the respective parties will suffer in the alternative eventualities.[8]
[8] Australian Beverage Distributors [5]; Jem Developments [3] - [4].
Disposition
In relation to the prospects of the appeal, the appellant contends inter alia, in effect, that the sworn testimony disclosed that there was a dispute as to the nature and effect of the arrangement insofar as it was agreed on 10 December 2014, and that the learned acting master erred in resolving the conflict of testimony summarily in the context of the application to set aside the statutory demand. The respondent, on the other hand, contends that the appeal has no merit. Having considered the parties' arguments, my necessarily preliminary impression is that the appeal is reasonably arguable.
On the question of whether the appeal would be rendered nugatory if an extension of time were not granted, the following observations are relevant. Counsel for the respondent accepted that ordinarily, if an extension is not granted, and the appellant company paid the claimed debt in the interim, the appeal would serve no purpose. If an extension is not granted and the demand were not paid, the period for compliance will have expired and, again, the appeal would serve no purpose.[9]
[9] Jem Developments [14] ‑ [22]; NA Investment Holdings Pty Ltd v Perpetual Nominees Ltd [2010] NSWSC 373; In the matter of Britten‑Norman Pty Ltd [7]; Australian Beverage Distributors Pty Ltd [12].
On the question of prejudice, the respondent contended that the appellant had accepted before Corboy J that it was solvent and that he should not be kept out of his remuneration as an employee of a solvent, listed company and that the amount in question was relatively modest. However, it is important to recall that the respondent does not have a judgment debt in his favour. If an extension is granted but the appeal fails, the result of the extension will merely be to delay the benefit of the presumption of insolvency in any subsequent winding up process, assuming the demand is not paid in the interim.[10] There is no evidence that the delay would produce any particular hardship to the respondent, and the more general prejudice associated with delay may be ameliorated by the appeal proceeding expeditiously.
[10] Jem Developments [25].
Further on the question of prejudice, the respondent has offered to provide an undertaking to repay the money if an extension is not granted and the appellant pays the claimed debt. However, the respondent is a resident in Indonesia, and questions might arise as to the admissibility of the evidence as to his ability to meet the undertaking. More fundamentally, the corollary of the undertaking is that if the appeal failed, the respondent would keep the money even though the appellant would then be presumed to be insolvent. This result would not seem to me to be conducive to the intended operation of pt 5.4 of the Corporations Act, as outlined by Sheppard J in Scolaro's Concrete Construction Pty Ltd v Schiavello Commercial Interiors (Vic) Pty Ltd:[11]
[11] Scolaro's Concrete Construction Pty Ltd v Schiavello Commercial Interiors (Vic) Pty Ltd (1996) 62 FCR 319, 323.
Obviously enough, the policy of the legislature was to bring about a situation in which a company owing money to creditors could not unduly delay matters by putting on colourable defences to liquidated claims in courts of ordinary jurisdiction. Unless the debtor demonstrated that there was a genuine dispute about the claim, the inevitable result would be a prima facie conclusion of insolvency if the amount of the demand were not paid. The public interest is served by these provisions because they tend to bring about a situation in which insolvent companies are either discouraged from or prevented from continuing to trade.
Accordingly, if the appeal failed, and the respondent retained the money, the risk would be that the appellant would continue to trade and not be subjected to a winding up application in insolvency, despite the prima facie conclusion of insolvency.
In all the circumstances of this case, I am satisfied that it is appropriate to extend the time for compliance with the statutory demand pending the determination of the appeal.
Conclusion
Subject to the appellant undertaking that it will do everything necessary and reasonable to prosecute the appeal expeditiously, I would be prepared to make the following order:
1.Under s 459F(2)(a) of the Corporations Law, the time to comply with the creditor's statutory demand for payment of debt in this matter be extended to seven days after the date of determination in this appeal.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: AUS ASIA MINERALS LTD -v- BALL [2015] WASCA 251 (S)
CORAM: MURPHY JA
HEARD: 19 FEBRUARY 2016
DELIVERED : 26 FEBRUARY 2016
FILE NO/S: CACV 159 of 2015
BETWEEN: AUS ASIA MINERALS LTD
Appellant
AND
EVAN WILLIAM BALL
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :ACTING MASTER GETHING
Citation :AUS ASIA MINERALS LTD -v- BALL [2015] WASC 399
File No :COR 157 of 2015
Catchwords:
Practice and procedure - Security for costs - Appeal by company against dismissal of application to set aside statutory demand - Whether company is the 'defender' of the 'litigation' - Whether the 'litigation' for this purpose is the proceedings commenced by the institution of the appeal
Legislation:
Corporations Act 2001 (Cth), s 1335(1)
Result:
Application for security allowed
Category: B
Representation:
Counsel:
Appellant: Ms K J Levy
Respondent: Mr C R Bailey
Solicitors:
Appellant: Gadens Lawyers
Respondent: Williams & Hughes
Case(s) referred to in judgment(s):
Aquatown Pty Ltd v Holder Stroud Pty Ltd (1995) 18 ACSR 622
Aurora Networks Pty Ltd v Halbedi; In the Matter of Aurora Networks Pty Ltd [2013] FCA 632
Classic Ceramic Importers Pty Ltd v Ceramica Antiga SA (1994) 13 ACSR 263
Dagenham Nominees Pty Ltd trading as Banwell Marine Service v Gary Shanks [2011] SASC 163; (2011) 110 SASR 577
Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [No 2] [2014] WASCA 106
Sagacious Procurement Pty Ltd v Symbion Health Ltd [2007] NSWCA 205
Wise Energy Group Company Ltd v Rocke [2015] WASCA 192
MURPHY JA: This is an application by the respondent for security for costs dated 2 February 2016. The application is brought on various bases, including under s 1335(1) of the Corporations Act 2001 (Cth) (the Act). It is sufficient for present purposes to address the application insofar as it is made under s 1335(1) of the Act. The principles applicable to s 1335(1) are well known. See, for example, Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [No 2][12] and Wise Energy Group Company Ltd v Rocke.[13]
[12] Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [No 2] [2014] WASCA 106 [16] ‑ [21].
[13] Wise Energy Group Company Ltd v Rocke [2015] WASCA 192.
The appellant resists the application on two principal bases. One is that the statutory threshold under s 1335(1) has not been met. The other is that the court should, in any event, dismiss the application as a matter of discretion as it is inappropriate to order a party to pay security for costs when that party is, in effect, defending an action.
The respondent relies on an affidavit sworn by Ms C Hagan on 1 February 2016. The affidavit annexes a number of financial documents in relation to the appellant.
The documents annexed to the affidavit include the appellant's audited accounts for the financial year ended 30 June 2015. The accounts indicate that:
(a)the appellant made a net loss of over $13 million in that financial year;
(b)the appellant had current liabilities exceeding current assets by approximately $4.6 million as at 30 June 2015;
(c)the appellant's total liabilities exceeded its total assets by approximately $2.7 million as at 30 June 2015;
(d)the appellant's assets principally comprise royalty and exploration assets in Indonesia;
(e)the appellant had deferred creditor payments until such time as the appellant had sufficient cash to make payments, and the appellant had also received a letter of support from a director;
(f)post‑balance date events included payment of a sum of $434,800 in part payment of an overdue loan of $2,312,514 that had fallen due for payment by 30 June 2015, and the receipt of funds of $365,000 intended to be converted into convertible notes subject to shareholder approval; and
(g)the appellant's ability to continue as a going concern was dependent, inter alia, upon it obtaining capital raising; negotiating a payment schedule for overdue debt; and generating positive cashflow from the operation of a mining project in Solok, West Sumatra.
The auditors in their report stated, in effect, that the accounts gave a true and fair view of the company's position, but added:
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 1 in the financial report which indicates that the Consolidated Entity incurred a loss of $13,158,516 during the year ended 30 June 2015. This condition, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty which may cast significant doubt about the ability of the Consolidated Entity to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.
Ms Hagan's affidavit also indicates that on 18 January 2016, the appellant made an announcement to ASX Ltd, including a statement to the effect that the appellant had 'suspended operations under the Solok project until there is a market for its iron ore resources'. The announcement also stated that due to trading difficulties, the appellant had 'stopped all expenditure, including salaries' and all creditors were being contacted to 'seek their support and to seek agreements regarding the outstanding amounts'.
The appellant's evidence principally comprised an affidavit sworn by Mr Swarbrick, a director of the appellant, dated 17 February 2016. Mr Swarbrick annexed a copy of a convertible note agreement under which a lender could advance up to $500,000 'at its sole discretion' for the purpose of the appellant's working capital requirements for certain Indonesian projects. The evidence indicates that the lender has advanced $280,000 and that a variation to the agreement involved the payment of a corporate access fee by the appellant of $100,000. The appellant also tendered a 'letter of support' from Mr Swarbrick dated 15 March 2015 by which he informed the directors of the appellant that he would 'continue to provide financial support … if required over a period of at least 12 months from the date of signing the 31 December 2014 half‑year financial report, as and when required in order for the company to continue as a going concern and pay its debts as and when they fall due'. The letter also stated, in effect, that he would not call on any interest, consulting fees or loan repayments within 12 months of signing the financial report or until sufficient funding had been obtained.
Mr Swarbrick, in his affidavit of 17 February 2016, said, in effect, that this 'statement of support … remains in place'.
The duration of the support referred to by Mr Swarbrick in his letter dated 15 March 2015 is difficult to discern as there was no evidence of when the 31 December 2014 half‑year financial report of the appellant was signed. Further, in this regard, the terms of the letter dated 15 March 2015 are at variance with the notes to the accounts for the year ended 30 June 2015, which refer to a letter of support for 12 months from the date of signing 'this report', ie, the report to the 30 June 2015 accounts. That report was signed on 30 September 2015. The evidence, in the end, is unsatisfactory as to the duration of any letter of support. Moreover, in any event, there is no evidence from Mr Swarbrick as to his assets and liabilities and thereby as to the value of the 'letter of support'.
Having regard to the evidence as a whole, there is good justification to conclude that it appears by credible testimony that there is a reason to believe that the appellant will be unable to pay the costs of the respondent. The statutory threshold under s 1335(1) of the Act has been met. That in itself also provides a significant discretionary factor in favour of an order for security.
The appellant contended that it has an arguable case on appeal, which I accept. The principal discretionary issue on which the appellant contested the application is that there is a line of authority said to support the view that orders for security for costs will not be made where the party against whom the order is sought is genuinely defending the primary action, and that only in the rarest of cases would a court order that an applicant seeking to set aside a creditor's statutory demand give security for the other party's costs. Reference was made to cases including Aquatown Pty Ltd v Holder Stroud Pty Ltd;[14] Aurora Networks Pty Ltd v Halbedi; In the Matter of Aurora Networks Pty Ltd;[15] and Classic Ceramic Importers Pty Ltd v Ceramica Antiga SA.[16] The appellant contends that non‑compliance with the statutory demand gives rise to a ground upon which the company can be wound‑up and that in a practical sense, the appellant in those circumstances is forced by the respondent to take legal action.
[14] Aquatown Pty Ltd v Holder Stroud Pty Ltd (1995) 18 ACSR 622.
[15] Aurora Networks Pty Ltd v Halbedi; In the Matter of Aurora Networks Pty Ltd [2013] FCA 632
[16] Classic Ceramic Importers Pty Ltd v Ceramica Antiga SA (1994) 13 ACSR 263.
The appellant has been unable to refer to any cases in the appellate area where those principles have been applied in relation to security for costs in relation to an appeal commenced by a company.
The respondent relied upon the decision of Dagenham Nominees Pty Ltd trading as Banwell Marine Service v Gary Shanks[17] for the proposition that, in essence, the position of the parties at first instance is irrelevant and a respondent to an appeal may still be granted security for costs even though they were originally the aggressor.[18] Dagenham Nominees was a case in which a corporate trustee (the plaintiff at first instance) brought a claim for the recovery of money and the respondent (the defendant at first instance) counterclaimed for a significantly larger sum for breach of contract. The court at first instance found in favour of the respondent and the corporate trustee filed a notice of appeal. The respondent applied for security for costs, arguing that the corporate trustee was a 'plaintiff' within the meaning of and for the purposes of s 1335(1) of the Act in respect of the appeal proceeding. The corporate trustee argued that an appellant is only a 'plaintiff' within the meaning of s 1335 when it was the plaintiff at first instance and that, in substance, the corporate trustee was the defendant in the primary proceedings, because there was no real dispute about its modest claim and the trial was devoted to the counterclaim. Blue J found that the corporate trustee was a 'plaintiff' for the purposes of the appeal. His Honour observed that:
the purpose of s 1335 appears to encompass a situation in which the applicant for security is the respondent to an appeal, regardless of the position of the parties at first instance.[19]
[17] Dagenham Nominees Pty Ltd trading as Banwell Marine Service v Gary Shanks [2011] SASC 163; (2011) 110 SASR 577.
[18] ts 55.
[19] Dagenham Nominees [25].
Accepting for present purposes that a company seeking to set aside a statutory demand would generally not be ordered to give security at first instance, that approach appears, at least ordinarily, inapplicable where the issue has been resolved at first instance against the company. In the present context, it seems to me that the company which is instituting the appeal against the first instance decision is not, in any sense, properly characterised as the defender of the litigation constituted by the appeal proceedings.
In all the circumstances of this case, I am satisfied that it is appropriate to make an order for security for costs.
The respondent seeks security in the sum of $20,000, or such other amount as the court considers appropriate. Annexed to Ms Hagan's affidavit is a draft bill of costs in the sum of $37,542.20. The appellant had made no written submissions directed to quantum in the event that security were ordered. However, in oral submissions, the appellant contended, in effect, that any security ordered should not cover past costs given that the respondent had, it said, delayed in making the application. The respondent, however, said that the application was made as soon as it became clear from the announcement to the stock exchange on 18 January 2016 that the matters upon which the appellant relied to continue trading as a going concern were put in significant doubt. The respondent also referred to the observations in Sagacious Procurement Pty Ltd v Symbion Health Ltd.[20]
[20] Sagacious Procurement Pty Ltd v Symbion Health Ltd [2007] NSWCA 205 [52].
The appellant in oral submissions also indicated that there were aspects of the respondent's draft bill of costs which appeared to overstate the quantum claimed and that a more appropriate sum would be in the sum of $10,000. The appellant also submitted, as is the case, that security for costs is not intended to provide a complete indemnity to the applicant seeking security.
Although the application for security might arguably have been brought earlier, following the publication of the appellant's accounts for the year ended 30 June 2015, I accept that it was not unreasonable for the respondent to have made the application for security when it did, following the appellant's announcement to the stock exchange on 18 January 2016. It was that announcement, read in the context of the 30 June 2015 accounts, which provided compelling evidence that there was then reason to believe that the appellant would be unable to pay the costs of the respondent. Further, having considered the scope and content of the issues in the appeal, and taking everything into account, it appears to me that a sum of $18,000 is reasonable in the circumstances.
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