FEDERAL COURT OF AUSTRALIA
Credit Suisse AG v Gu [2022] FCA 1220
File number: NSD 211 of 2022 Judgment of: CHEESEMAN J Date of judgment: 21 October 2022 Catchwords: PRACTICE AND PROCEDURE – where referee appointed pursuant to s 54A(1) of the Federal Court of Australia Act 1976 (Cth) to prepare a report on applications for security for costs – where no party moves the Court to reject the referee’s report – whether the report should be adopted, varied or rejected – Held: referee’s report adopted in the whole. Legislation: Corporations Act 2001 (Cth), s 1335(1)
Federal Court of Australia Act 1976 (Cth), ss 54A(1), 54A(3), 56
Federal Court Rules 2011 (Cth), rr 19.01, 28.67
Cases cited: Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301
Commissioner of Taxation v Vasiliades [2016] FCAFC 170; 344 ALR 558
Mecrus Pty Ltd v Industrial Energy Pty Ltd [2015] FCA 103
Nine Films and Television Pty Ltd v Ninox Television Ltd [2005] FCA 735; 146 FCR 144
Pegasus Gold Inc v Bateman Project Engineering Pty Ltd [1999] FCA 1734
Quach v MLC Limited [2022] FCA 586
Winnote Pty Ltd (in liq) v Page [2005] NSWCA 362; 64 NSWLR 244
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 40 Date of hearing: Determined on the papers. Solicitors for the Third to Sixth Respondents: MJF Law Pty Ltd Solicitors for the Ninth Respondent and Eighth Cross-Respondent to the First Cross-Claim: Hall & Wilcox ORDERS
NSD 211 of 2022 BETWEEN: CREDIT SUISSE AG ABN 17 061 700 712
Applicant
AND: MENGHONG (MICHAEL) GU
First Respondent
GREAT LANDS INVESTMENT PTY LTD
Second Respondent
ZHI HUANG (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
CHEESEMAN J
DATE OF ORDER:
21 OCTOBER 2022
THE COURT ORDERS THAT:
1.Pursuant to s 54A(3) of the Federal Court of Australia Act 1976 (Cth), the Report of the Referee, Senior National Judicial Registrar Farrell, dated 16 September 2022, be adopted in the whole.
2.Pursuant to s 56 of the Act, the cross-claimants to the first cross-claim (the Hu Parties) provide security for costs of the fifth and eighth cross-respondents’ (Jing Spring Hill Pty Ltd (JSH) and Chunshan Jing) costs of the first cross-claim.
3.The amount of security to be paid pursuant to order 2 above is $180,000, either by way of:
(a)money paid into court; or
(b)an unconditional bank guarantee issued by an Australian bank.
4.Pursuant to s 56 of the Act, s 1335(1) of the Corporations Act 2001 (Cth) and r 19.01 of the Federal Court Rules 2011 (Cth), the cross-claimant to the fourth cross-claim (JSH) provide security for costs of the Hu Parties’ costs of the fourth cross-claim.
5.The amount of security to be paid pursuant to order 4 above is $97,000 (excluding GST) either by way of:
(a)money paid into court; or
(b)an unconditional bank guarantee issued by an Australian bank.
6.In the security for…
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- Case
- [2022] FCA 1220
- Decision Date
CaseChat Overview and Summary
The court found that the referee had acted within the scope of the matters referred to him and had extended procedural fairness to the parties. The referee had arrived at his determinations through a holistic assessment of the material presented. The court was satisfied that the referee's report should be adopted in its entirety. The reasoning included the referee's careful analysis of the evidence and submissions, and the general principles applicable to exercising the discretion to grant security for costs. The court noted that both parties had partially succeeded in their applications, justifying the usual course of awarding party-party costs.
The final orders included the adoption of the referee's report, the requirement for cross-claimants to provide security for costs, and specific amounts to be paid either by way of money paid into court or an unconditional bank guarantee. Additionally, the court ordered that the parties confer to agree on a lump sum for costs, with a fallback to a Registrar if no agreement was reached. The parties were also granted leave to approach the Registrar for a listing to determine the costs.
Orders
Orders of the court
1. Pursuant to s 54A(3) of the Federal Court of Australia Act 1976 (Cth), the Report of the Referee, Senior National Judicial Registrar Farrell, dated 16 September 2022, be adopted in the whole.
2. Pursuant to s 56 of the Act, the cross-claimants to the first cross-claim (the Hu Parties) provide security for costs of the fifth and eighth cross-respondents’ (Jing Spring Hill Pty Ltd (JSH) and Chunshan Jing) costs of the first cross-claim.
3. The amount of security to be paid pursuant to order 2 above is $180,000, either by way of:
(a) money paid into court; or
(b) an unconditional bank guarantee issued by an Australian bank.
4. Pursuant to s 56 of the Act, s 1335(1) of the Corporations Act 2001 (Cth) and r 19.01 of the Federal Court Rules 2011 (Cth), the cross-claimant to the fourth cross-claim (JSH) provide security for costs of the Hu Parties’ costs of the fourth cross-claim.
5. The amount of security to be paid pursuant to order 4 above is $97,000 (excluding GST) either by way of:
(a) money paid into court; or
(b) an unconditional bank guarantee issued by an Australian bank.
6. In the security for costs application of JSH and Chunshan Jing filed on 4 August 2022, the Hu Parties pay the costs of JSH and Chunshan Jing as agreed or assessed.
7. In the security for costs application of the Hu Parties dated 4 August 2022, JSH pays the costs of the Hu Parties as agreed or assessed.
8. The parties are to confer within 14 days for the purpose of agreeing a lump sum in respect of the costs payable under orders 6 and 7, and if agreement is reached to submit agreed short minutes of order to the Associate to Justice Cheeseman for consideration in chambers.
9. In the absence of agreement being reached in respect of the costs payable under orders 6 and 7 within 14 days, the costs payable under orders 6 and 7 are to be determined by a Registrar on a lump sum basis.
10. The parties have leave to approach the Registrar for a listing in respect of the determination of costs in accordance with order 9.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
In r 19.01, an applicant is defined to include a cross-claimant: r 19.01(4).CONSIDERATION OF THE REFEREE’S REASONS In preparing the Report, the Referee has carefully analysed the evidence filed and the submissions made by the parties. JSH Application On the JSH Application, in summary the JSH Parties submitted that: (1)On the basis of the available evidence it appears that only one of the Hu Parties (being Po Hu) ordinarily reside in Australia.(2)Even in relation to Mr Hu, there is no evidence that would satisfy the Court that he is ordinarily resident in Australia.(3)The only evidence of any ownership of assets in the jurisdiction is that Mr Hu owns a residential property at Zetland in Sydney which is claimed to be valued at approximately $630,000 and another residential property at Pyrmont.(4)The Hu Parties have failed to respond to requests for information from the solicitors for the JSH Parties in relation to their ability to meet any adverse costs order.(5)The relevant case law establishes that the residence of a party outside the jurisdiction is a powerful factor in favour of ordering security for costs. (6)The assets identified by the Hu Parties should not satisfy the Court as being sufficient to remove the need for security. The assets are unencumbered residential properties, one of which is claimed to have a value of $650,000, but there is no evidence of value of the Pyrmont property. The potential exposure of the Hu Parties to adverse costs orders in the proceedings may well exceed the amount of any equity which exists in the Zetland property.(7)The JSH Application was made promptly and it is not oppressive, in that it is not being used to deny an impecunious applicant a right to litigate. On the contrary, the JSH Parties say that the Hu Parties are attempting to resist the JSH Application on the basis that Mr Hu has sufficient assets and is not impecunious. In summary, the Hu Parties submitted that: (1)The onus of establishing that the Hu Parties ordinarily reside outside the jurisdiction rests with the JSH Parties, and in relation to Mr Hu, Ms Qin and Mr Huang, they have failed to do so.(2)Security for costs is not ordinarily ordered where a case for security is made out against one or some of multiple plaintiffs.(3)The claims by each of the Hu Parties are identical and as such, there is no prospect that adverse costs orders will be made against only one or some of the Hu Parties.(4)Mr Hu has established that he has substantial assets in the jurisdiction which demonstrate that any potential liability in respect of adverse costs orders will be able to be satisfied.(5)If security for costs is ordered by the Court, an appropriate amount would be $150,000. In support of the JSH Application, the JSH Parties relied on the affidavits of Jacob Uljans dated 3 August 2022 and 8 September 2022. In opposition, the Hu Parties relied on the affidavit of Mark Joel Fester dated 25 August 2022. In determining the JSH Application, the Referee correctly summarised the general principles applicable to exercising the discretion to grant security for costs (R[20] – [21]). The Referee then moved to consider the application of the general principles to the particular circumstances of the proceedings.