Avian Pty Ltd (in liq) v Ernst & Whinney

[1990] FCA 835

NOT SUITABLE FOR DISTRIBUTION JUDQMENI' No.

IN THE FEDERAL COURT OF AUSTRALIA	) )
NORTHERN TERRITORY DISTRICT	) No. DG 28 of 1989
)
REGISTRY GENERAL DIVISION	)

BETWEEN:	AVIAN PTY LIMITED (IN
LIQUIDATION)

Applicant

AND: ERNST AND WHINNEY

Respondent

CORAM: Burchett J.

PLACE: Darwin

k DATE : 23 May 1990

EX TEMPORE REASONS FOR JUDGMENT

BURCHETT J.

In this matter the company which is suing is a company in liquidation, and it is plain on the evidence that if it loses the case the respondent, Ernst and Whinney, will be unable to recover under any costs order which may be made. The principal beneficiary, if on the other hand the company in liquidation succeeds, will be the Commonwealth Bank which is owed some

the quantum of any judgment which the company in liquidation may receive. In my opinion, it is plain that the bank should not be

There is a suggestion raised on behalf of the company in liquidation, but no supporting details whatever, of some benefit to the principal shareholder by way of avoidance of some possible liability under guarantees which he may have given. He has expressly given evidence that he stands to gain nothing out of

able, in effect, to litigate at no risk to itself with a view to
the recovery of a very substantial sum of money.

There is a principle that an action should not be stifled where the impecuniosity of the plaintiff has been produced by the very breach for which the plaintiff is seeking to sue. That is here the allegation which is made, but the principle was not formulated by the courts in order to relieve a creditor, such as the bank, but in order to avoid the injustice of the plaintiff himself being prevented from pursuing his remedy as an indirect consequence of the very wrong for which he is

L suing. That would be indeed to add insult to injury, or more accurately further injury to the injury already sustained.

For these reasons, I think I ought to exercise my discretion in favour of making an order for security for costs. There have been conflicting estimates put before me of the costs to be incurred by the respondent, ranging between some $70 ,000 odd, which is the figure suggested by the solicitor for the company in liquidation, and in excess of $160,000, which is suggested by the respondent to the proceeding, the applicant in

i / the motion for security. I have come to the conclusion, having

on both sides as to the considerations which might bear on the	regard to some fairly detailed arguments that have been put to me
quantum of an order, that I should order security in the sum of $90,000, and I order that security in this sum be furnished. I
think the costs of the motion should be the respondent's, that is Ernst and Whinney's, costs in the action.
I order that the security be furnished within 28 days. I direct that the security be furnished in the form of a banker's guarantee or in such other form as may be approved by the court, and in this regard I grant liberty to apply. I further order that in default of provision within the period of 28 days, the matter be stayed under further order.
If and to the extent that there are any costs incurred in relation to this motion, which are additional to the costs of the motion for security, and which were incurred in relation to that part of the motion which sought an order for particulars, to

L that extent I order that the applicant company in liquidation pay the costs of the respondent, Ernst and whinney, of that part of the application, but that such costs not be taxed under the conclusion of the action.

I certify that this and the preceding two (2)
pages are a true copy of the Reasons for

Judgment herein of his Honour Mr Justice