Axiom Plant Hire Pty Ltd v Austral Noyes Pty Ltd

[1992] FCA 817

IN THE FEDERAL COURT OF AUSTRALIA	!
VICTORIA DISTRICT REGISTRY	No VG 65 of 1991
GENERAL DIVISION

BETWEEN:  AXIOM PLANT HIRE PTY LTD

(Applicant)

AND:  AUSTRAL NOYES PTY LTD

Judee:	Ryan J
Date:
-	13 February 1992
m:	Melbourne  r E O E R ~ ~ COURT oF

EX TEMPORE JUDGMENT

W: By motion on notice dated 5 February 1992 the

applicant provide further security for thc respondent's costs of these proceedings in the sum

of $160,000. On 6 September 1991 it was ordered by consent that the applicant provide

security for costs in the sum of $10,000 by way of bank guarantee on or before 13 September 1991 and that the proceedings be stayed pending the provision of that security. A t the same

time it was ordered, again by consent, that the application be placed in the list of cases to be

fixed for trial, the estimated duration of the trial being noted as five days.

ordered the filing by both parties of further affidavits of documents.

The action was duly listed for trial before Heerey J on 16 December 1991 when i t became

apparent to the learned trial judge and senior counsel then retained on each side that the

estimate of five days was grossly inadequate and that the trial would occupy a period of up to

15 sitting days. Accordingly, Heerey J, after giving leave to the respondent to amend its

defence, dirccted the respondent to give further and better particulars of its amended defence

and gave directions for the delivery of a reply to the amended defence.	Hi Honour also
The applicant is the trustee of a family trust and has a paid up capital of $2.	The evidence

as to the financial state of the trust includes accounts for the year ended 30 June 1991

prepared by KPMG Peat Marwick disclosing an operating loss for the year of $382,853 and a

deficiency of net assets, after taking into account liabilities of $348,706 by way of loans from

the numerous beneficiaries of the trust of $348,706. The respondent has estimated its costs,

after conducting a 15 day trial, as being of the order of $160,000. I t has been asserted on

behalf of the applicant that, being recorded a t book values, the true values of the trust assets,

namely real estate and plant and equipment, are not reflected in the accounts prepared by

KPMG Peat Marwick.

However, I consider i t appropriate to take the approach Indicated by Jenkinson J in Chester

and Fein Pronertv Developments Ptv Limited v Candam Investments Ptv Limited (1985) 9

FCR 419 where his Honour, in effect, concluded that where considerations tend both ways in

an evaluation of the ability of an applicant to satisfy an order for costs against him the

respondent should not be required to take the risk and should be protected by an appropriate

order for security.	Nevertheless, that approach does not entail that the court must exercise its
discretion in favour of the respondent.	Two related factors stand out in the present case as
militating against that conclusion.	The first is that the initial application for security was not
made until the end of August 1991, almost five months after the application was instituted

and after the great bulk of interlocutory work had been concluded. Had that factor alone existed I would have been content to adopt the approach taken by the Court of Appeal in& Smith: Bain v (1896) 75 L.T. 46. That was an action for an account and administration

of a deceased estate and the appointment of a receiver. The action was commenced in March

1892 and in June 1892 application was made by the defendant for security for costs, alleging

that there was no residuary estate. Because difficulties were encountered in proving the will,

a statement of claim was not delivered until 31 December 1895. A defence was delivered on

11 March 1896; and on 12 March 1896 the defendant took out a summons renewing the

application for security for costs.	Allowing an appeal from Kekewich J, the Court of Appeal
held that the defendant was entitled to an order for security.	Lindley L.J. observed a t 48:

'When I look, however, at Order LXV, 1.6, and the two caws whtch MI Butcher rcferred to of-	v
Mann (42 LT. Rep. 890, 14 Ch. Dlv 419) and the Lvdncv and Wteoool Iron Om Comoanv Limtted v&

(48 LT. Rep 893, 23 Ch. Drv. 358) rt wems to me that the court is not bound by any hard and fast line a s

to when an order for wcunty for costs can be made I am of the opinion, therefore, that the appsllant ts

-

entrtled to the ordrnary order for wcurity for costs

That passage I consider indicates that an application for security such as the present should be

examined in the exercise of the court's unfettered discret~on without regarding delay as

necessarily fatal. That is not to say, of course, that delay may not be a factor influencing a

refusal of the application, or that it may not be relevant to the period in relation to which the

amount of the security might be fixed.

However, the related factor which I regard as critical in the present case is that although

made, as I said, almost five months after the application was instituted, the first motion for

security for costs was compromised by an agreement to provide security in the sum of

$10,000. That agreement was reached at a time when the application was substantially ready	-
for trial.	The applicant was entitled to assume that the amount of 510,000 was then
acceptable to the respondent as security for its costs up to and including judgment.	All that
appears to have changed since then is that the estimate of the duration of the trial has

increased from 5 to 15 sitting days, and the respondents have elected to retain two counsel

instead of "one experienced junior counsel" as foreshadowed when the application for security

was first made in September last year.

I do not regard those matters as amounting to a sufficient change of circumstances to justify

the court in re-opening the question of security for costs. A t this stage both parties have

invested considerable time, money and effort in preparation for a trial which is imminent and

has now been set down, as I understand it, for the beginning of March this year. To

introduce thc complication of a further order for security against that background would

involve the risk of an injustice to the applicant.

Reliance has bccn placed by the applicant on the fact that a payment into court in the sum of

$70,000 has been made. I regard that as a neutral factor in thc determination of whether or

not to order security. It is true that a payment Into court of that magnitude raises the

inference that thc respondent regards the applicant's claim as having more than mere nuisance

value. On the other hand it could be said that, if the estimate of the amount likely to be

recovered by the applicant is accurate or gencrous, that payment in, if not accepted, increascs

the possibility or the l~kelihood of the respondent's recovering a substantial order for costs.

For these reasons the motion for further security is refused.

After hearing argument on the question of costs, his Honour continued:

An application has been made for a dircct~on in effect deferring the liability of the

respondcnt to pay any costs which I might be disposed to order. I considcr that there is some justification for taking that course although it is not one that relates in any sense to the merit

of this application.

In my view it would be unduly wasteful of the time and resources of the partics and the court

to have thc costs referable to the motion on notice datcd 5 February, 1992 taxed prior to and

separately from the costs which may be ordered at the conclusion of the trial in this matter.

However, I am not persuaded that I should depart from the ordinary rule that costs should

follow the event. Accordingly, I order that the respondent pay the applicant's costs of and

incidental to the motion on notice dated 5 February, 1992, such costs to be taxed at the same

time as any costs ordered in the substantive proceedings hcrein.

I certify that this and the preceding four (4)
pages are a true copy of the Reasons for

Judgment of His Honour Mr Justice Ryan

Counsel for the Applicant:	Mr R J Spicer
Solicitor for the Applicant:	G\VP Aarons & CO
Counsel for the Respondent:	Mr P Cawthorn
Solicitor for the Respondent:	Clayton Utz