Australian Property Custodian Holdings Ltd (in liq) (rec and mgr apptd) v Pitcher Partners
[2016] VSC 399
•19 July 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2013 5042
| AUSTRALIAN PROPERTY CUSTODIAN HOLDINGS LTD (ACN 095 474 436) (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (CONTROLLERS APPOINTED) | Plaintiff |
| v | |
| PITCHER PARTNERS (A FIRM) | Defendant |
| and | |
| MICHAEL RICHARD LEWIS WOOLRIDGE and OTHERS | Third parties |
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JUDGE: | HARGRAVE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 March 2016 |
DATE OF JUDGMENT: | 19 July 2016 |
CASE MAY BE CITED AS: | Australian Property Custodian Holdings Ltd (in liq) (rec and mgr apptd) v Pitcher Partners |
MEDIUM NEUTRAL CITATION: | [2016] VSC 399 |
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SECURITY FOR COSTS – Form of security – Insolvent plaintiff – Plaintiff proposed security in the form of a deed of indemnity from United Kingdom insurer with no presence in Australia – Defendant sought security by payment into Court or bank guarantee – DIF III Global Co-Investment Fund, L.P. & Anor v BBLP LLC & Ors [2016] VSC 401 applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L W L Armstrong QC with Mr N Kaskani | Johnson Winter & Slattery |
| For the Defendant | Mr N De Young | Arnold Bloch Leibler |
HIS HONOUR:
The plaintiff is an Australian company in liquidation. The defendant sought security for its costs of the proceeding. The parties agreed that the plaintiff would provide security in tranches and the amount of the first tranche. They could not agree as to the form of the security to be provided.
The plaintiff offered to provide security by two means:
(1) a deed of indemnity from AmTrust Europe Limited (‘AmTrust’), an insurer based in the United Kingdom, in favour of the defendant (the ‘AmTrust indemnity’); and
(2) payment of $20,000 into court or by bank guarantee, as security for any costs the defendant might incur in enforcing the AmTrust indemnity in the United Kingdom,
collectively the ‘proposed security’.
In the event that the Court ordered security in terms of the proposed security, the parties were in agreement about the terms and form of the AmTrust indemnity itself. The defendant, however, sought security by way of bank guarantee or payment into court.
The issue was argued before an associate justice on 20 July 2015. Her Honour reserved her decision. Before delivery of her decision, another associate justice gave judgment in a similar dispute involving an offer by the plaintiff to provide security in the form of an AmTrust indemnity: DIF III Global Co-Investment LP & Anor v BBLP LLC & Ors (‘DIF III Global’).[1] The associate justice in this proceeding invited further submissions on the relevance of the DIF III Global decision before publishing her reasons.
[1][2015] VSC 484.
The associate justice reached a contrary conclusion to the decision in DIF III Global.[2] In her reasons, the associate justice described the decision in DIF III Global as involving a finding that the proposed AmTrust indemnity in that case ‘would not be adequate security’,[3] and noted that the defendant submitted that the case before her was ‘on all fours’ with the decision in DIF III Global.[4] The associate justice rejected the defendant’s submission. Her Honour determined that the case before her was distinguishable from DIF III Global because:
[2]Australian Property Custodian Holdings Ltd (in liq) v Pitcher Partners [2015] VSC 513.
[3]Ibid [21].
[4]Ibid.
(1) the plaintiff was in this jurisdiction;[5]
(2) the evidence before the Court in this proceeding was direct evidence from an AmTrust representative, and not hearsay on information and belief as in the DIF III Global case; [6] and
(3) the parties in this case were in agreement as to the terms of the AmTrust indemnity in the event that the Court determined it was an adequate form of security.[7]
[5]Ibid 51.
[6]Ibid [50].
[7]Ibid [52].
The associate justice reviewed the authorities and the evidence, and reached the following relevant conclusions:[8]
[8]Ibid [54]–[58], [60].
54Although the plaintiff is not outside the jurisdiction, the proposed security will be, and accordingly, analogously with cases concerning foreign plaintiffs resident outside of Victoria and with no assets in Victoria, great weight should be given to this factor. The question then is whether there are any countervailing circumstances.
55The countervailing factors in this proceeding that, in my view, make the proposed security appropriate are as follows:
(a)The deed is to be construed and is governed by the laws of Victoria and is subject to the exclusive jurisdiction of the Supreme Court of Victoria. That is, it is directly enforceable in Victoria.
(b) The deed is directly enforceable against AmTrust.
(c)The evidence that AmTrust had sufficient assets in its resident jurisdiction to satisfy a costs order is accepted. This evidence on AmTrust’s financial standing was not challenged by the defendant.
(d) The deed of indemnity is irrevocable and unconditional.
(e)The plaintiff offered to pay the enforcement costs of the deed in the United Kingdom into Court.
(f)AmTrust is based in the United Kingdom, a jurisdiction with which there are arrangements for the enforcement of Australian judgments.
(g)The evidence that it is unlikely that AmTrust would default on the deed is accepted. It is an insurer with very substantial assets and is in the business of underwriting legal expense risks.
(h)The terms and form of the deed of indemnity are acceptable to the defendant.
56The form of the security is immaterial, so long as it can achieve its object as security. Courts have long recognised, for example, that insurance may be adequate security. In weighing up all the circumstances in this case, justice is served by the proposed security. The defendant will not be ‘unreasonably disadvantaged’ by the proposed security. The proposed security is disadvantageous in comparison to payment into Court or an Australian bank guarantee, however it is not unreasonably so given the countervailing factors above. Crucially, the proposed security will adequately protect the defendant.
57Given that the defendant will be adequately protected by the proposed security, it is right and proper that it be given in a way which is least disadvantageous to the plaintiff. Clearly, by offering security in the manner it has, the defendant has identified that the proposed security is the manner of security least disadvantageous to it. …
58The defendant has not provided any evidence regarding the amount of enforcement costs in the United Kingdom, and no evidence to contradict the amount of $20,000 offered by the plaintiff. Accordingly, the amount of $20,000 stands as an appropriate amount for enforcement costs. The plaintiff offered to deposit the $20,000. Given that the security will be by way of deed of indemnity and that AmTrust is based overseas, it is appropriate that the enforcement costs of $20,000 be paid into Court.
…
Conclusion
60It is appropriate that security for costs be given in the form proposed by the plaintiff, namely the deed of indemnity from AmTrust, plus $20,000 paid into Court (or by bank guarantee) for any potential enforcement costs in the United Kingdom.
The defendant appealed against the associate justice’s reasons and orders. The appeal was heard together with the appeal in the DIF III Global proceeding against the orders to contrary effect of the associate justice in that case. For the reasons given today in allowing that appeal,[9] the appeal in this proceeding must fail. The defendant has failed to demonstrate that the associate justice in this proceeding was relevantly in error and, accordingly, the discretion is not reopened on appeal. If it were reopened for some reason relating to the associate justice’s reasons in this proceeding, I would re-exercise the discretion in the same way — for the reasons given in allowing the appeal in DIF III Global.
[9]DIF III Global Co-Investment Fund, L.P. & Anor v BBLP LLC & Ors [2016] VSC 401.
The appeal will be dismissed.
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