Century Insurance Ltd (in provisional liq) & Ors v The New Zealand Guardian Trust Ltd & Ors The New Zealand Guardian Trust Ltd & Anor v Gunson, David
[1997] FCA 1044
•27 Jun 1997
FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE - security for costs - company resident out of the jurisdiction - assets in the jurisdiction by way of shares - reciprocal enforcement of judgments legislation available in home country - potential for inconvenience and delay to Cross-Respondent in recovery of costs order - order for security of costs in part made.
Federal Court of Australia Act 1976
Reciprocal Enforcement of Judgments Act 1934 (NZ)
CBS Records Australia Ltd v. Telmark Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270
CENTURY INSURANCE LIMITED (IN PROVISIONAL LIQUIDATION) and EDWARD JOHN BEBBINGTON and DELORES EDNA BEBBINGTON v THE NEW ZEALAND GUARDIAN TRUST LIMITED, NZI INTERNATIONAL TRUSTEE COMPANY LIMITED, DONALD ANDREW DAVIES
THE NEW ZEALAND GUARDIAN TRUST LIMITED and NZI INTERNATIONAL TRUSTEE COMPANY LIMITED v DAVID GUNSON
WG 81 of 1995
FRENCH J
PERTH
27 JUNE 1997
| IN THE FEDERAL COURT OF AUSTRALIA | ) |
| WESTERN AUSTRALIA DISTRICT REGISTRY | ) |
| GENERAL DIVISION | ) WG 81 of 1995 |
| ) |
BETWEEN: CENTURY INSURANCE LIMITED (IN PROVISIONAL LIQUIDATION)
First Applicant
and
EDWARD JOHN BEBBINGTON and DELORES EDNA BEBBINGTON
Second Applicants
and
THE NEW ZEALAND GUARDIAN TRUST LIMITED
First Respondent
NZI INTERNATIONAL TRUSTEE COMPANY LIMITED
Second Respondent
DONALD ANDREW DAVIES
Third Respondent
and
THE NEW ZEALAND GUARDIAN TRUST LIMITED
First Cross-Claimant
and
NZI INTERNATIONAL TRUSTEE COMPANY LIMITED
Second Cross-Claimant
and
DAVID GUNSON
Cross-Respondent
| JUDGE: | FRENCH J |
| PLACE: | PERTH |
| DATED: | 27 JUNE 1997 |
MINUTES OF ORDER
THE COURT ORDERS THAT:
The Cross-Claimants do within twenty one days provide security for costs of the Cross-Respondent in the sum of $50,000 by way of bank guarantee to the satisfaction of the Registrar or as otherwise agreed between the Cross-Claimants and the Cross-Respondent.
The proceedings in the cross-claim be stayed if the security has not been provided at the expiry of twenty one days.
Liberty to apply to vary the terms of the order.
The costs of the motion will be in the cross-claim.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
| IN THE FEDERAL COURT OF AUSTRALIA | ) |
| WESTERN AUSTRALIA DISTRICT REGISTRY | ) |
| GENERAL DIVISION | ) WG 81 of 1995 |
| ) |
BETWEEN: CENTURY INSURANCE LIMITED (IN PROVISIONAL LIQUIDATION)
First Applicant
and
EDWARD JOHN BEBBINGTON and DELORES EDNA BEBBINGTON
Second Applicants
and
THE NEW ZEALAND GUARDIAN TRUST LIMITED
First Respondent
NZI INTERNATIONAL TRUSTEE COMPANY LIMITED
Second Respondent
DONALD ANDREW DAVIES
Third Respondent
and
THE NEW ZEALAND GUARDIAN TRUST LIMITED
First Cross-Claimant
and
NZI INTERNATIONAL TRUSTEE COMPANY LIMITED
Second Cross-Claimant
and
DAVID GUNSON
Cross-Respondent
| JUDGE: | FRENCH J |
| PLACE: | PERTH |
| DATED: | 27 JUNE 1997 |
REASONS FOR JUDGMENT ON MOTION FOR SECURITY OF COSTS
ON THE CROSS CLAIM
The substance of the primary action and the cross-claim in these proceedings was set out in Reasons for Judgment on a motion to strike out the cross-claim which were published on 13 June 1997. A re-amended cross claim has been filed as a result. In the meantime, the cross-respondent has filed a motion for security of costs pursuant to s 56(1) of the Federal Court of Australia Act 1976 and O 28 r 3 of the Federal Court Rules.
In support of the motion, there is an affidavit sworn by Mr E.W. Nielsen, the cross-respondent’s solicitor. There is exhibited to the affidavit a number of letters between Mr Nielsen and the solicitors for the cross-claimants, Mallesons Stephen Jaques. In that correspondence the cross-respondent had sought provision of security for costs on a consensual basis in the amount of $143,075. The cross-claimants had offered, on a without prejudice basis, to provide security in the sum of $45,000. The parties were unable to reach agreement.
The cross-claimants are companies which are incorporated in New Zealand. In an affidavit of Anthony David Morgan, the Deputy Managing Director of New Zealand Guardian Trust Limited it is said that the company has a share capital of $NZ5 million and shareholders’ funds amounting to $NZ12,419,357. The other cross-claimant, NZI International Trustee Company Limited is owned by New Zealand Guardian Trust Limited. The latter company is ultimately owned by Tyndall Australia Limited. That is a publicly listed Australian company, incorporated in New South Wales. New Zealand Guardian Trust Limited owns an Australia company called Guardian Trust Australia Limited. It has a share capital of $A3,000,210 and shareholders’ funds of $A5,900,621 as at 30 December 1996. Copies of the financial statements of the company were attached to Mr Morgan’s affidavit. He confirmed that an offer of $45,000 by way of security had been made.
The assets of the cross-claimants within the jurisdiction appear in substance to comprise the shares in Guardian Trust Australia Limited held by New Zealand Guardian Trust Limited. Those shares would be amenable to process of execution by way of a charging order in the event that New Zealand Guardian Trust Limited failed to satisfy a costs order in favour of the cross-respondent. I am prepared to assume that that asset is unlikely to be disposed of in the lifetime of this litigation. In addition, the cross-claimants appear to have, in the words of Mr Morgan, substantial assets in New Zealand. A judgment in Australia can be enforced in New Zealand under the Reciprocal Enforcement of Judgments Act 1934 (NZ).
cross-claim. It does not appear to be frivolous. On the other hand the question whether its prospects are great or small is one on which the material does not allow me to draw any conclusion.
Section 56 of the Federal Court of Australia Act provides, inter alia:
“56(1) The Court or a Judge may order an applicant in a proceeding in the Court or an appellant in an appeal to the Court to give security for the payment of costs that may be awarded against him.
(2) The security shall be of such amount and given at such time and in such manner and form, as the Court or Judge directs.
(3) The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given.
(4) If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed.
(5) This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the furnishing of security.”
Order 28 r 3 of the Federal Court Rules provides:
“3(1) Where, in any proceeding, it appears to the Court on the application of a respondent -
(a)that an applicant is ordinarily resident outside Australia;
.
.
.the Court may order that applicant to give such security as the Court thinks fit for the costs of the respondent of and incidental to the proceeding.”
The essential ground for the application in this case is that the cross-claimants are resident outside the jurisdiction. In that respect I adopt the statement of Gummow J in Energy Drilling Inc v Petroz NL & Ors (1989) ATPR 40-954 at 50,422:
“The purpose of ordering security for costs against an applicant ordinarily resident outside the jurisdiction is to ensure that a successful respondent will have a fund available within the jurisdiction of this Court against which it can enforce the judgment for costs, so that the respondent does not bear the risk as to the certainty of enforcement in the foreign country and as to the time and complexity of the action there which might be necessary to effect enforcement: Kent Heating Ltd v. Cook-On Gas Products Pty Ltd (1984) 59 ALR 277 at p.279. On the other hand, the mere circumstance that an applicant is resident outside the jurisdiction does not necessarily invite an exercise of discretion in favour of ordering security, the question being how justice will best be served in the particular case: Barton v Minister for Foreign Affairs (1984) 2 FCR 463; CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 at pp.284-285.”
In the circumstances I propose to order that the cross-claimants provide security for costs in the sum of $50,000 by way of bank guarantee or as otherwise agreed with the cross-respondent. The parties can bring in a minute of proposed orders in that respect within the next seven days. The costs of the motion will be in the cross-claim.
| I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice French |
Associate:
Dated: 27 June 1997
| Counsel for the Cross-Claimant: | Mr M. Corboy |
| Solicitor for the Cross-Claimant: | Mallesons Stephen Jaques |
| Counsel for the Cross-Respondent: | Mr I. Viner QC with Mr E.W. Nielsen |
| Solicitor for the Cross-Respondent: | E.W. Nielsen & Co. |
| Date of Hearing: | 23 June 1997 |
Date of Judgment: 27 June 1997
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