Billinudgel Pastoral Company P/L v Westpac Banking Corporation - [1993] FCA 1037

1037 1 4 3

JUDGMENT NO. ....... . . .a . . .e * . . . . .

IN THE FEDERAL COURT OF AUSTRALIA

L 1

QUEENSLAND DISTRICT REGISTRY	) No. QG 543 of 1992
GENERAL DIVISION	)

BETWEEN: BILLINUDGEL PASTORAL COMPANY PTY LTD
AND ORS

Applicants

AND WESTPAC BANKING CORPORATION AND ORS

Respondents

Coram: Whitlam J
Date: 12 May 1993

Place: Brisbane

REASONS FOR JUDGMENT
(EX TEMPORE)

The respondents apply for security for costs pursuant to liberty granted by Cooper J on 16 March 1993. On that day his Honour dismissed the claim for interlocutory relief by the applicants. Upon hearing of this notice of motion the parties have again formally read the affidavits used in the proceedings before Cooper J. I gratefully adopt his Honour's description of the nature of the applicants' claims and respectfully agree with his findings of fact. It is not necessary that I restate the matters dealt with in his Honour's judgment. Neither counsel has argued that I should

in any way depart from what Cooper J found and held.

Upon hearing of this motion the parties adduced further evidence. The respondents read the affidavits of M r Gaven sworn 30 March 1993, Mr Searle sworn 30 March 1993 and Mr Sullivan sworn 27 and 28 April 1993. The applicants read the affidavit of Mr Teixeira sworn 27 April 1993.
This further evidence established that (l) all of the shares in the first and second applicants are beneficially owned by the sixth applicant; (2) the shares in the third applicant are beneficially owned by the fourth and sixth applicants; (3) the sixth applicant is a director of each of the corporate applicants; (4) one Suzanne Pearl Sorelle- Uebergang is a director of the second applicant; (5) that each of the applicants was impecunious; (6) that the first respondent intends to counter-claim against all the applicants in respect of debt outstanding to it; and (7) that the value of the security held by the first respondent is substantially less than the amount owed to it by the applicants.

The evidence also dealt with the assets and certain member of the fourth applicant partnership, purchased a

activities of the applicants. Mr Colin Robert Uebergang, a

property at Carrara for $50,000 on 25 January 1991 which was the subject of a mortgage to Australian Guarantee Corporation Ltd registered 17 December 1991. A transfer of that property was lodged for registration on 1 April 1993. Persons called Donald G. and Suzanne P. Uebergang also own another property at Carrara.

Following the refusal by Cooper J to restrain the first respondent's sale of property at Mt Camel, the fourth applicants lodged a caveat in respect of that property on Friday, 16 April 1993. On the same day the fifth applicants delivered a series of bizarre documents to the respondents' solicitors which purported to rescind the powers of the mortgagee, the appointment of the receivers and the debits raised by first respondent, to "rescind" cheques drawn by the applicants and to revoke the agency of the fourth respondents. The caveat claimed an interest by virtue of these very proceedings in respect of which relief had been denied by Cooper J. The caveat came to the attention of the fourth and first respondents on Saturday. On Monday, L9 April 1993 application was made to the Supreme Court of Queensland to remove the caveat and the fourth applicants consented to such an order.

M r Gaven, the solicitor for the respondents, deposed

that he estimated the respondents' costs of these proceedings as being slightly in excess of $300,000. On that basis he had

requested security for costs from applicants in the sum of

$200,000 being the amount of the bank guarantee that the

applicants undertook to procure, had they been granted the
interlocutory relief sought from Cooper J.

When this matter came on for hearing before me on 28 April 1993, counsel for the applicants noted that a late request for cross-examination had been made in respect of Mr Gaven. Accordingly, I permitted counsel to canvass the amount

of costs estimated by Mr Gaven, notwithstanding that he had not been cross-examined. Unfortunately hearing time was exhausted before counsel for the applicants could make his submissions. Accordingly, I directed that written submissions should be lodged and indicated that I would re-list the matter if necessary. The matter was then stood over generally. Written submissions were exchanged between the parties and filed by the next day. In his written submissions counsel for the applicants sought leave to file a further affidavit as to the circumstances of the sale of the Carrara property by Colin Robert Uebergang.

Last Thursday my Associate inquired of applicants' counsel about this proposed affidavit. The next day, 7 May 7993, the applicants filed an affidavit by Christopher Lewin Uebergang sworn 29 April 1993 and an affidavit by Mr Milani sworn 7 May 1993. On 10 May 1993 the applicants requested that the matter be re-listed for hearing after 24 May 1993 at a date convenient to counsel. As I am sitting in Brisbane

only until the end of this week, I have re-listed this matter

this morning at the earliest opportunity. I should say that

the respondents' solicitors indicated that they did not
consider such re-listing as necessary.

Counsel for the respondents objected to the
applicants being allowed to read the affidavits filed 7 May
1993. However, I can perceive no real prejudice to the
respondents and propose to allow them to be read for the
purpose of this notice of motion. It appears from Mr
Uebergang's affidavit that Donald G. and Suzanne P. Uebergang
are distant cousins of the applicants and that the applicants
have no interest in their cousins' property at Carrara.
Further, it appears that Colin Robert Uebergang's property had
bee'l listed at least one year prior to sale. So far as Mr
Milani's affidavit is concerned, he evidently made inquiries
on 4 May 1993 of a Mr Fred Monsour, a costs consultant, about
the costs estimated by Mr Gaven, but Mr Monsour concluded that

he was unable to advise on the quantum claimed.

There is no doubt that the power of the Court under s 1335 of the Corporations Law has been enlivened. The first, second and third applicants will be unable to pay the costs of the respondents if they are successful in their defence. Counsel for the applicants did not dispute this proposition. However, the discretion of the Court under S 1335 or s 56 of the Federal Court Act is entirely unfettered. Each case must depend on it own circumstances.

The first three applicants are corporations. The remaining three applicants are natural persons. All the applicants appear to be impecunious. That is, of course, not by itself a ground for ordering security for costs against a natural person. Counsel for the applicants submits that this is not a case where there is any possibility of an order for the entire costs not being made against the natural person applicants, if the respondents successfully defend the proceedings. However, counsel for the respondents submits (correctly, I think) that it is by no means easy to discern that all the causes of action claimed by the corporate applicants against each of the respondents are also claimed by the natural person applicants. Indeed, it seems to me fairly plain that not every such claim is also made by everv applicant who is a natural person.

The authorities dealing with the relationship between impecunious corporate applicants and the liability for costs of natural persons interested in such corporations are conveniently collected and explained by Cooper J in Gentry Bros P t v L t d v . Wilson Brown & Associates Ptv L t d (1992) 8 ACSR 405. His Honour there dealt with an undertaking offered by individual shareholders to pay any taxed costs awarded against the corporate applicant. Counsel for the applicants submit that no more should be required in the instant case.

Counsel for the respondents drew attention to a case, identified by Cooper J. By itself this could not

number of factors, such as the weakness of the applicants'

justify an order for security for costs. The suggested lack of bona fides on the part of the applicants is, however, more significant. The action of the fourth applicants' in placing a caveat on the Mt Carmel property borders on the outrageous. The apparent unexplained termination of the retainer of the applicants' solicitors on the record (which I will also deal with), taken together with the action of the fifth respondents in asserting extra-curially a series of bizarre propositions in the notices delivered to the respondents solicitors, points to prospective difficulties in the future conduct of this litigation. However, they can be controlled by other applications, if need be, and, notwithstanding their troubling nature, would not justify requiring security for costs from the corporate applicants, so long as the natural persons interested are exposed to an order for costs. Counsel for the applicants has today informed me that he is instructed to offer such an undertaking on behalf of his individual clients.

I do not consider that the authorities suggest that the Court is confined to dealing with the liability for costs of the shareholders of the corporate applicants. The Court can have regard to the individuals responsible for the litigation. Plainly here that involves all the individual applicants whose interests are intertwined with those of the corporate applicants. But it extends to MS Sorelle-Uebergang, who is a director of the second applicant. She must be a

directing mind of that corporation and be taken to have

instituted these proceedings, being one of only two directors.

The fact that she is not a beneficial owner of shares in the company does not matter. Nor do her means matter, but she ought also to be exposed to any liability for costs as a result of her actions. MS Sorelle-Uebergang has not been heard, of course, on this notice of motion and she should have liberty to apply in respect of the order I propose to make.

Accordingly, I make the following orders:
1.    Security be given by Colin Uebergang, Colin Robert Uebergang, Christopher Lewin Uebergang and Susan Pearl Sorelle-Uebergang by deed of a guarantee executed by them in a form satisfactory to the Registrar for the joint and several payment by them of any order for costs made against the first. second or third applicants in favour of the respondents or any of them.
2.   Security deed of guarantee be provided within 14 days.
3.    The applicantsf proceedings be stayed until such a deed is filed and a duly executed copy is served on the solicitors for the respondents.
4.    Liberty be given to Susan Pearl Sorelle-Uebergang to apply in respect of this order.
5.   The applicants are to file and serve a notice of change of solicitor.
6.    The costs of the notice of motion and hearing on 28 April 1993 will be the respondents' costs in the proceedings.
7.    The applicants are to pay the respondents' costs of the hearing today, which may be taxed forthwith.

I certify that this and the preceding eight (8) pages are a true copy of the Ex tempore Reasons for Judgement herein of the Honourable M r Justice A.P. Whitlam.

, '
C

Associate:

Date: 12% 1993

Counsel for the applicants:	Lister Harrison QC (28 April 1993)
Martin Daubney (12 May 1993)

instructed by Deacon & Milani

Counsel for the respondents:

R. M. Derrington

instructed by Feez Ruthning

Dates of hearing:	28 April 1993 & 12 May 1993
Date judgment delivered:	12 May 1993

The evidence also dealt with the assets and certain member of the fourth applicant partnership, purchased a	activities of the applicants. Mr Colin Robert Uebergang, a
property at Carrara for $50,000 on 25 January 1991 which was the subject of a mortgage to Australian Guarantee Corporation Ltd registered 17 December 1991. A transfer of that property was lodged for registration on 1 April 1993. Persons called Donald G. and Suzanne P. Uebergang also own another property at Carrara.