Brooklyn Landfill and Waste Recycling Pty Ltd v Commonwealth Golf Club Inc
[2019] VSC 52
•6 February 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S CI 2018 01427
| BROOKLYN LANDFILL & WASTE RECYCLING PTY LTD (ACN 070 752 500) | Plaintiff |
| v | |
| COMMONWEALTH GOLF CLUB INC (ABN 59 450 802 609) | Defendant |
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JUDICIAL REGISTRAR: | Hetyey JR |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 February 2019 |
DATE OF JUDGMENT: | 6 February 2019 |
CASE MAY BE CITED AS: | Brooklyn Landfill & Waste Recycling Pty Ltd v Commonwealth Golf Club Inc |
MEDIUM NEUTRAL CITATION: | [2019] VSC 52 |
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PRACTICE AND PROCEDURE – Security for costs – Jurisdiction enlivened – Impecunious plaintiff company - Whether delay in making application – Whether Court should exercise discretion to award past costs – Quantum of security – Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 62.02 – Corporations Act 2001 (Cth) s 1335(1).
PRACTICE AND PROCEDURE – Security for costs – Form of security – Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 62.03 - Whether undertaking from plaintiff company’s director and consent to lodge caveat against director’s property affords adequate security.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | D Ratnam | Hopkins Lawyers |
| For the Defendant | T P Warner | Strongman & Crouch |
JUDICIAL REGISTRAR:
Background
Set out below are ex tempore reasons for decision delivered on 6 February 2019 which have been the subject of minor revision.[1] The substance of the reasons remains the same.
[1]The revisions include minor editing, correction and re-ordering of some sections of the reasons.
This proceeding was commenced by writ filed on 18 April 2018. By its amended statement of claim dated 22 November 2018, the plaintiff alleges it has rights to purchase certain parcels of land from the defendant. In particular, the plaintiff claims to have exercised, in March 2007, options contained in a lease agreement for the purchase of the relevant land. The defendant principally alleges that the plaintiff had only six years to enforce its rights from the date the options were exercised and that the plaintiff’s claim is now statute-barred. In the alternative, it is said that by reason of the plaintiff’s delay, it should be prevented in equity from seeking the relief sought, including specific performance.
On 8 November 2018, the defendant filed a summons seeking an order for security for costs either pursuant to rule 62.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (“the Rules”), s 1335(1) of the Corporations Act 2001 (Cth) (“the Corporations Act”) and/or the inherent jurisdiction of the Court. The total quantum of security sought by the defendant is $96,082.68. That amount comprises the sum of $46,984.72 in respect of costs which have been already incurred by the defendant (“past costs”) along with $49,097.96 in respect of likely future costs (“future costs”).
On 8 November 2018, Croft J made orders referring the hearing and determination of the defendant’s summons to a Judicial Registrar pursuant to rule 84.03 of the Rules.
By its submissions dated 31 January 2019, the plaintiff has belatedly confirmed that it does not oppose the making of an order for security for costs per se. However, there remains a dispute as to whether security should extend to past costs, the quantum of security and the form of security.
Relevant provisions and principles
6 Rule 62.02 of the Rules relevantly provides that:
(1) Where—
(b)the Plaintiff is a corporation ... and there is reason to believe that the Plaintiff has insufficient assets in Victoria to pay the costs of the defendant if ordered to do so;
...
(f) under any Act the Court may require security for costs—
the Court may, on the application of a defendant, order that the Plaintiff give security for the costs of the defendant of the proceeding and that the proceeding as against that defendant be stayed until the security is given.
7 Section 1335 of the Corporations Act 2001 states that:
(1)Where a corporation is Plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.
In Epping Plaza Fresh Fruit & Vegetables Pty Ltd v Bevendale Pty Ltd,[2] Winneke P and Phillips JA said the following in relation to the operation of s 1335:[3]
The evident purpose behind statutory provisions such as s 1335 is to draw a distinction between corporate plaintiffs and individual plaintiffs. Thus, whilst it may be said that "[t]the basic rule that a natural person who sues will not be ordered to give security for costs, however poor he is, is ancient and well established" (Pearson at W.L.R. 902; All E.R. 533), it is also true that "the whole concept of the general practice with regard to companies is just the opposite. It is the poverty of the company that attracts the power": Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443 at 449, per Holland J.
…
… the justification for the statutory rule is that the defendant, not being a voluntary litigant, deserves to be protected from the consequences of limited liability. Those who seek to conduct their businesses through limited liability companies expect to receive the benefits which such liability attracts. It seems to us a necessary corollary that they should be prepared to accept the strictures imposed by the section if the company embarks upon litigation: Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301 at 304 (N.S.W. Court of Appeal).
[2] [1999] 2 VR 191.
[3]Ibid 195 [13].
The principles concerning the exercise of the Court’s discretion to order security for costs are well-established by the authorities, including US Realty Investments LLC No.1 & Ors v Need.[4] Whilst the wording of rule 62.02 differs from s 1335, the principles established in relation to both the rule and statutory provision apply equally.[5]
[4][2013] VSC 590, [18]-[38] (“US Realty”).
[5]Australian Institute (Vic & Tas) Pty Ltd v Australian Institute of Fitness (NSW) Pty Ltd & Ors [No 2] [2016] VSC 625 [5]; More Group Pty Ltd v Czesler & Ors [2017] VSC 638 (“More Group”) [6].
In Hera Project Pty Ltd v Gino Bisognin & Ors,[6] Matthews JR conveniently distilled the applicable principles as follows (citations omitted):
[6][2017] VSC 112.
(a)for the jurisdiction to be enlivened, one of the grounds set out in r 62.02 or in section 1335 of the Corporations Act 2001 (Cth) must apply. Here, the relevant ground is the plaintiff’s financial position: if it appears by credible testimony that there is reason to believe that the plaintiff will be unable to pay the defendants’ costs if the defendants are successful, then the Court may order that security for those costs be given;
(b)once the jurisdiction is enlivened, it is then a matter for the Court’s discretion as to whether security ought be awarded. That discretion is unfettered, although it must be exercised judicially;
(c)the defendants bear the burden of proof in persuading the Court to order security for costs, however if the plaintiff asserts … that an order for security would stultify the litigation, then the plaintiff bears the onus of proof in that regard;
(d)whether the plaintiff’s lack of funds has been caused or contributed to by the conduct of the defendants in relation to the transaction the subject of the claim is a factor to be taken into account;
(e)relevant to the exercise of the Court’s discretion is whether the plaintiff’s claim is made bona fide and has reasonable prospects of success;
(f)delay in applying for security may be a factor against granting security: it is incumbent on a defendant who wishes to obtain security once it is (or ought reasonably be) aware that the plaintiff company would be unable to meet an order for costs to apply promptly for that relief. The plaintiff company is entitled to know its position in relation to security at the outset, before it embarks to any real extent on its litigation and before it makes a substantial financial commitment to litigating its claim;
(g)where the defendants make a counterclaim which is likely to canvass substantially the same facts as that required for the plaintiff’s claim, or where the relationship between the parties and the subject matter of the dispute is one where the plaintiff’s claim can be seen as defensive in character, the Court may see it as inappropriate to order security for costs; and
(h)as noted in US Realty, exercising its discretion involves the Court in carrying out a balancing exercise between the injustice to the plaintiff if the grant of security prevents it from pursuing a proper claim against the injustice to the defendants if no security is ordered and they are ultimately successful but unable to recover their costs from the plaintiff.[7]
[7]Ibid at [6].
Threshold jurisdiction question
Having regard to the material filed in relation to the defendant’s summons, in particular the affidavits of Mr Andrew Joseph sworn 2 November 2018 and 17 December 2018 and their accompanying exhibits, I am satisfied there is reason to believe that the plaintiff corporation will be unable to pay the costs of the defendant in the event it is successful in its defence of the proceeding. I have arrived at that conclusion in light of the following facts:
(a) the plaintiff has share capital of only four dollars;
(b) the plaintiff is not the registered proprietor of any real estate in Victoria; and
(c) the plaintiff has otherwise failed to adduce any evidence to suggest that it has sufficient resources available to it to satisfy any costs order made against it in the proceeding.
Given the Court’s jurisdiction is enlivened, the question then turns to whether security for costs should be granted and, if so, to what extent and in what form.
Past costs
As previously mentioned, the defendant claims the sum of $46,984.72 in respect of past costs. These costs are said to have been incurred from the commencement of the proceeding on 18 April 2018 to 31 October 2018 (immediately prior to the issue of the defendant’s summons).
An order for past costs incurred in a proceeding is, as a general proposition, entirely within the Court’s discretion.[8]
[8]Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd (1985) 1 NSWLR 114 (Waddell J); More Group at [27] (Vickery J).
Effect of delay
The plaintiff resists the past costs on the basis that there has been an “inordinate delay” by the defendant in bringing its application for security.
On the question of delay, Sifris J in Oswal v Australia and New Zealand Banking Group Ltd (“Oswal”),[9] reviewed the relevant authorities and set out the following useful propositions:
(a)Delay in making an application for security for costs, or further security for costs, is a most important and often a critical factor, essentially because it unfairly allows a plaintiff to proceed and incur costs on the assumption that no application is to be made.
(b)Delay is more significant, and often critical, in relation to security for past costs although it may also be a relevant factor in relation to security for future costs.
(c)Prejudice to a plaintiff is assumed and presumed because of the delay. However, each side may adduce evidence in support of, or against, such prejudice.
(d)Despite delay, security may be granted for past costs (in whole or in part) where it is established that there is some conduct that negates the prejudice, harshness, or oppression, that is otherwise apparent when there is a delay and substantial costs have been incurred. The Court retains a broad discretion which requires all relevant facts and circumstances to be taken into account. Each case must be decided in accordance with its own peculiar facts and circumstances.[10]
[9] [2016] VSC 52.
[10]Ibid [44].
For its part, the defendant says there has been no material delay in the bringing of its application for security for costs. In particular, it is submitted that the application was first foreshadowed in a letter dated 27 September 2018. By that letter, the defendant put the plaintiff squarely on notice that it was concerned about the ability of the plaintiff to meet any costs order that may be made against it in the proceeding. The letter also invited the plaintiff to provide detailed information in support of any contention that it had sufficient available assets to satisfy any adverse costs order. Finally, the letter concluded by stating that in the absence of any such evidence, the defendant may apply to the Court for security for costs.
The timing of that correspondence is also said to be significant. It occurred within 10 days of the conclusion of without prejudice discussions between the parties. Those negotiations arose from an early order for mediation made by the Court on 29 May 2018. The defendant’s solicitor, Mr Andrew Joseph, has given evidence that whilst the formal mediation was unsuccessful, the negotiations remained alive until around 19 September 2018. Discussions were said to have taken place between Mr Maxwell Twigg of the plaintiff and Mr Paul Rainey of the defendant. In the event, Mr Twigg ceased to be a director of the plaintiff on or about 5 September 2018 with the result that he could no longer speak for the plaintiff. The plaintiff’s former solicitors ceased to act on or about 19 September 2018. Two new directors of the plaintiff company were appointed in October 2018. In addition, on 11 October 2018, the plaintiff’s current solicitors filed a notice of change of solicitor.
Against this background, I am satisfied there has not been a significant delay on the part of the defendant in bringing its application for security. It seems that both parties have applied themselves to settlement negotiations in the early stages of the litigation. Further, the change in both the plaintiff’s directors and lawyers marks a natural juncture in the proceeding and may well justify the defendant’s decision to suspend those negotiations and to seek to advance the issue of security for costs at that time. Further, the time between the defendant sending its letter of 27 September 2018 and the filing of its summons for security for costs on 8 November 2018 is not long. Moreover, there is evidence that the parties’ lawyers exchanged correspondence within this period on the question of security for costs. The application was made after such time as it became apparent that the plaintiff would not consent to an order granting security for costs for any sum.
Even if there has been some delay on the part of the defendant and working on the basis that the plaintiff’s prejudice should be assumed and presumed, it is noted that:
(a) the plaintiff has not put forward any actual evidence of prejudice;
(b) a trial date has not yet been allocated for the matter; and
(c) the defendant gave proper written notice of the application on 27 September 2018.
Having regard to these factors, and in the exercise of the Court’s discretion, I am satisfied that the defendant should not be precluded from claiming an amount in respect of costs previously incurred. The quantum of the past costs is, however, a distinct question.
Quantum of past costs
In resisting the past costs sought by the defendant, the plaintiff also submits that it is not known precisely what costs were incurred prior to 31 October 2018 and for what purpose.
The past costs claimed by the defendant are principally referred to in two documents. One is a certificate dated 1 November 2018 from Mr Raymond De La Rue, legal costs consultant. The certificate comprises one short paragraph in which Mr De La Rue certifies that the file of the defendant’s solicitor “has been examined and carefully considered” with the result that the defendant’s standard costs up to 31 October 2018 have been assessed under the Supreme Court Scale of Costs at $26,752.19 (exclusive of all disbursements and exclusive of GST). The other document is a schedule of disbursements totalling $20,232.53 (excluding GST).
As Vickery J explained in More Group, the quantification of costs on an application for security does not involve the Court conducting a taxation.[11]
[11]More Group at [21].
The Court of Appeal provided further guidance on the Court’s function in Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd (citations omitted):[12]
In determining a sufficient amount for security for costs, the court does not undertake precise mathematical calculations. Rather, it adopts a ‘broad brush’ approach involving ‘guesstimates as much as estimates’. However, the broad brush approach does not involve an abstract process. It must have an evidentiary basis. The court must have regard to the evidence adduced by the parties as to quantum — whether in the form of an affidavit by an experienced litigation lawyer or an expert report by a costs consultant — although it is not bound by the parties’ estimates. The court may scrutinise the individual items in the parties’ estimates, but not to the extent of minute examination akin to a taxation.
The amount ultimately fixed by the court must not be so low that it fails to provide any real protection to the party seeking security, or so high that it is oppressive to the party required to provide the security. The amount must be ‘just and reasonable’ in all the circumstances of the particular case.[13]
[12][2017] VSCA 293 (“Trailer Trash”).
[13]Ibid at [64]-[65].
In Carey-Hazell v Getz Bros & Co (Aust) Pty Ltd,[14] French J (as he then was) said that:
As to the quantum of security, a conservative approach should be taken while having regard to the estimate of the respondents. It is not required that an order for security provide a complete indemnity. In a sense it is a balancing of risks and burdens between the parties.[15]
[14][2004] FCA 1334.
[15]Ibid at [36].
Here, whilst the plaintiff is correct that the defendant has not fully itemised or described its past costs, a large percentage of those costs are in the nature of disbursements (comprising counsel fees, mediation fees and ancillary costs). I am also prepared to infer that a portion of the past costs relate to the initial pleadings filed by the parties, at least one appearance before the Judge and the preparation of various consent orders. It is also apparent that significant and appropriate time was devoted to the without prejudice discussions between the parties. That said, there is also a likelihood that the amount of past costs may ultimately be discounted by a taxing officer in any event.[16]
[16]In Farmitalia Carlo Erba v Delta West (1994) 28 IPR 336.
Notwithstanding the plaintiff has not adduced any direct evidence of prejudice resulting from the delay, given prejudice must be assumed and presumed, it seems just and reasonable that some account should also be made for the fact that the plaintiff was not squarely on notice of the application for security for costs until 27 September 2018. No doubt that by engaging in protracted settlement discussions with the plaintiff, the defendant was endeavouring to act consistently with its obligations under the Civil Procedure Act 2010 (Vic).[17] However, it may nevertheless have been open to the defendant to have written to the plaintiff earlier to at least foreshadow the possible need for a security for costs application in the event that negotiations did not prove successful.
[17]In particular, see s 22.
Taking all relevant matters into consideration and doing the best I can, without engaging in a precise mathematical exercise, I consider that the past costs claimed by the defendant should be discounted by 25% with the result that security for past costs be fixed in the sum of $35,238.54.
Future costs
Whilst the plaintiff has now conceded that future costs should be the subject of an order for security, there is a small disagreement as to quantum. The defendant’s cost consultant, Mr De La Rue, has prepared a schedule of estimated future costs and disbursements which would be incurred by the defendant up to and including the first day of trial. As previously mentioned, those future costs total $49,097.96 (exclusive of GST).
The plaintiff accepts each of the items set out in Mr De La Rue’s schedule with the exception of costs relating to the engagement of an expert witness. Those costs total $7,318.50. The plaintiff’s solicitor, Mr Christiaan Roberts has sworn an affidavit in which he sets out his belief that expert evidence will not be required in the matter. The defendant maintains that such expert evidence will be necessary. The basis for that position was somewhat opaque but was teased out during the course of submissions. In short, counsel for the defendant submits that in the event the defendant’s arguments as to limitation of actions and laches ultimately prove unsuccessful and the plaintiff is entitled to enforce any contractual rights arising from the exercise of the options under the lease, there would be a need for expert evidence to confirm whether:
(a) a parcel of land nominated in the alternative by the defendant in its pleading[18] corresponds with the land covered by the relevant option and is capable of being used for a commercial garden centre; and
(b) the plaintiff may become liable for any pollution emerging from that parcel of land for the purposes of the Environmental Protection Act 1970 (Vic) (“EPA”).
[18]See para 19(b)(i) of the Amended Defence dated 7 December 2018.
Counsel for the plaintiff pointed out that by letter dated 14 November 2018, the plaintiff made an open offer to resolve the proceeding in which it confirmed that the land identified by the defendant in the alternative as being subject to the relevant option is correct. It is true that this confirmation has not found its way into any pleading. However, counsel for the plaintiff also confirmed his present instructions were that the open offer remained and would form part of a reply to be filed in the near future. Even if there is now clarity about the identity of the relevant parcel of land, the defendant’s counsel maintained that an expert opinion may still be required regarding the extent of the plaintiff’s obligations under the EPA.
On balance, I consider that there is some doubt about whether and, if so, to what extent, expert evidence might ultimately be required in this case. For that reason it is appropriate to slightly discount the amount sought in respect of this category of future costs. A sum of $4,000 will be allowed, resulting in a revised figure for future costs of $45,779.46.
Global adjustment
As detailed above, I have awarded security for past costs in the amount of $35,238.54 and security for future costs in the amount of $45,779.46. Together, these amounts total the sum of $81,018.
The parties are in agreement that in fixing the amount of security for costs, it is appropriate to also have regard to some of the variables and uncertainties of litigation recognised by Mukhtar AsJ in Beluga Developments Pty Ltd v Sobel Investments & Anor.[19] Relevantly, for present purposes, some of the variables include the possibility the case may resolve without the need for a trial and the real prospect that the amount of security may ultimately be reduced on taxation. In addition, it is important that an order for security should not effectively deny the plaintiff the right to pursue its claim.
[19][2010] VSC 303 at [24].
In the circumstances of the case and balancing the risks and burdens of the parties, a further adjustment of 20% is appropriate. Security will therefore be ordered in the amount of $64,814.40.
Form of security
The last issue in dispute relates to the form of security which should be granted by the Court.
Order 62.03 of the Rules provides that “where an order is made requiring the plaintiff to give security for costs, security shall be given in the manner and at the time the Court directs”.
In DIF III Global Co-Investment Fund LP v BBLP LLC,[20] Hargrave J (as he then was) summarised the authorities relating to the exercise of the Court’s broad discretion as to the form of security for costs, noting that the Court will usually apply the following principles:
(1)the plaintiff is entitled to propose security in a form least disadvantageous to it;
(2)the plaintiff bears a ‘practical onus’ of establishing that the proposed security is adequate and does not impose an ‘unacceptable disadvantage’ on the defendant;
(3)in order to be adequate, the proposed security must satisfy the protective object of a security for costs order, namely, to provide a fund or asset against which a successful defendant can readily enforce an order for costs against the plaintiff; and
(4)based on these and any other relevant considerations, the Court will determine how justice is best served in the particular circumstances of the case.[21]
[20][2016] VSC 401.
[21]Ibid at [40].
At the hearing, a form of security was put forward by the plaintiff with the following elements:
(a) an undertaking by Mrs Dianne Twigg, a current director of the plaintiff, to meet and pay any adverse costs order against the plaintiff up to the amount of $34,000, or such other sum as is ultimately fixed by the Court in respect of security;
(b) a consent by Mrs Twigg to lodgement of a caveat against a property owned by her and located in East Malvern, Victoria (“the property”); and
(c) a further undertaking by Mrs Twigg not to mortgage, charge or otherwise encumber the property so that her net equity in it would be less than the amount the subject of her undertaking.
The evidence of Mrs Twigg’s personal financial position can be found in the affidavit of Mr Christiaan Roberts sworn 31 January 2019. Relevantly:
(a) Mrs Twigg is retired and her only source of income is derived from her superannuation fund; and
(b) The property owned by her is unencumbered and may be worth approximately $1.4 million.
Mrs Twigg’s offer to consent to the lodgement of a caveat is problematic for a couple of reasons. Firstly, in order to lodge a caveat in Victoria, a person must have what is known as a “caveatable interest” in land. Section 89 of the Transfer of Land Act1958 (Vic) notes that a person may lodge a caveat where they claim “any estate or interest in land under any unregistered instrument or dealing or by devolution in law or otherwise”. It is apparent that the defendant does not have an interest in Mrs Twigg’s land that could properly be the subject of a caveat. Secondly, pursuant to s 118 of the legislation, a person who lodges a caveat “without reasonable cause” may be liable for damages.
I turn to the remaining aspects of Mrs Twigg’s proposed form of security, namely her undertaking to meet any adverse costs order up to $34,000 or such other sum as is ordered by the Court in respect of security, and her further undertaking to not mortgage, charge or otherwise encumber the property in a way which would affect the amount covered by her initial undertaking.
In Trailer Trash, the Court of Appeal made the following salient observations in relation to the adequacy of a personal undertaking as a form of security for costs:
The authorities do not preclude an order that security for costs be in the form of a personal undertaking by a third party other than a financial institution. However, where the court has a choice between security in that form and security in a liquid form that enables funds to be accessed with minimum risk that litigation may be required to enforce the security, ordinarily the court should prefer the liquid form. The need to prefer the liquid form where a choice is available has become more acute since the commencement of the CPA because:
(a)section 8(1) requires a court to seek to give effect to the overarching purpose in the exercise of any of its powers;
(b)section 7(1) provides that the overarching purpose is ‘to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute’;
(c)section 9(1) provides that in making an order in a civil proceeding, a court must further the overarching purpose by having regard to a number of objects, including: the efficient conduct of the business of the court (s 9(1)(c)); the efficient use of judicial resources (s 9(1)(d)); and the timely determination of the civil proceeding (s 9(1)(f)); and
(d)a form of security for costs which does not provide a fund which can be accessed without the cooperation of the opposing party or a person who is connected to that party — and may require the commencement of proceedings to enforce it — has the potential to undermine the overarching purpose. This is because that form of security can give rise to satellite proceedings and additional delay and costs. Such satellite proceedings are contrary to the principle of finality in litigation.
In Cleal Holdings Pty Ltd v JG King Developments,[22] Ierodiaconou AsJ accepted a form of security which comprised both a bank guarantee for a fixed amount and an undertaking from the plaintiff company’s director for the balance of the amount of security for costs ultimately ordered. Critically, her Honour found that:
There was no evidence that the director who offered the personal undertaking [was] impecunious. The plaintiff is entitled to offer security in the manner least disadvantageous to it, so long as the defendant is adequately protected. The defendant will be adequately protected by $50,000 in the form of a bank guarantee and security above that amount provided by way of a personal undertaking from the director.[23]
[22][2015] VSC 414.
[23]Ibid at [29].
Conversely, in Bodycorp Repairers Pty Ltd v GDG Legal Pty Ltd,[24] Matthews JR, adopting the approach of McLeish JA in the Court of Appeal in Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd (No 3),[25] held that an undertaking was not adequate security for the defendant’s costs where there was an absence of evidence as to the financial circumstances of the individual giving that undertaking.[26]
[24][2017] VSC 200 (“Bodycorp v GDG”).
[25][2016] VSCA 185.
[26]Bodycorp v GDG at [92]-[93].
In this case, whilst there is evidence that Mrs Twigg owns a valuable and unencumbered property and derives income from her superannuation fund, there is an absence of evidence of her expenses and liabilities. The picture of her financial circumstances is therefore incomplete.
More importantly, the undertakings proffered do not provide a fund or asset against which the defendant, if successful, could readily enforce an order for costs against the plaintiff. For example, should the plaintiff be met with an adverse costs order, the defendant may be required to seek orders from the Court requiring Mrs Twigg to sell her property in order to meet her undertaking. This would take some time and may place the defendant at an unacceptable disadvantage.
In the event, I am not satisfied that the plaintiff has discharged its practical onus of establishing that the proposed form of security it puts forward is adequate. In my view, it is unclear why, having regard to Mrs Twigg’s ownership of the property, she is unable to use her asset to obtain a loan or a bank guarantee to put forward a more conventional form of security. I will therefore order that security take the form of cash or bank guarantee.
Conclusion
It follows that security for costs will be ordered in favour of the defendant in the sum and form referred to above.
I will hear the parties as to the appropriate form of order and on the question of costs of this application.
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