Deltrend Pty Ltd (Trading as Computable Technology) v AST Australia Pty Ltd (Trading as AST Computers)

[1995] FCA 172

LIMITED DISTRIBUTION ONLY

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    NG 888 of 1994
  )
GENERAL DIVISION                 )

BETWEEN:DELTREND PTY LIMITED (Trading as Computable Technology)

Applicant

AND:AST AUSTRALIA PTY LIMITED (Trading as AST Computers)

Respondent

CORAM: Burchett J.
PLACE: Sydney
DATE : 15 March 1995

REASONS FOR JUDGMENT

BURCHETT J.:

In this case an application has been made for security for costs.  The litigation was initiated late last year when an application was made for an interlocutory injunction.  I heard that application on the very last day of term, reaching a decision, I have been reminded, at about 5 o'clock that day.  At that time, I granted an interlocutory injunction and reserved my reasons, but I was subsequently informed that reasons were not required.  In fact, the whole question of injunctive relief has disappeared, as a live issue from the case by reason of the actions of a third party to the litigation.  The case is now continuing as a claim for damages, but arising out of the same alleged breach or breaches which founded the application for an injunction.
The evidence placed before me does, I think, raise, within the meaning of s. 1335 of the Corporations Law, a probability that the applicant would have difficulty in meeting a costs order if ultimately, at the hearing, it failed.  The applicant for security has put on evidence estimating costs, to be incurred up until the first day of hearing, at a total sum of almost $42,000.  This estimate does, however, include the costs of the contested interlocutory injunction hearing which it lost, and having regard to the circumstances of that injunction hearing it by no means follows that, even if the applicant for security succeeded at the final hearing, it would receive an order for those costs.  Counsel for the applicant for security argued the case on the basis that the final hearing could be estimated at a three days hearing.  Of course, it might, in fact, prove somewhat longer, or even somewhat shorter. 

In opposition to the application for security for costs, Ms Simons put to me that I could have regard, as indeed I did in Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates (Australia) Pty Ltd (1986) 13 FCR 46, to the strength of the case sought to be made by the applicant in the action, and I was referred in support of that view to what was said in Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133, a decision of Meares J, and MA Productions Pty Ltd v Austarama Television Pty Ltd (1982) 7 ACLR 97, a decision of Needham J. I was also referred to the statement made by Bowen CJ in J & M O'Brien Enterprises Pty Ltd v The Shell Company of Australia Ltd (1983) 7 ACLR 790 at 793, where he said:

"One matter which is generally considered in relation to applications for security for costs in relation to proceedings at first instance is what prospects of success the plaintiff has in the proceedings. If the plaintiff has a strong and apparently meritorious case the court is reluctant to make an order which may have the effect of shutting the plaintiff out."

That is certainly the view that I took in Cameron's Unit Services. 

However, counsel for the respondent in the action drew attention to a recent decision of the Court of Appeal of Queensland in Impex Pty Ltd v Crowner Products Ltd (1994) 13 ACSR 440 at 441, where Pincus J expressed the view that a judge was not obliged at length to consider the merits of a case, and that to do so would ordinarily be a waste of resources. He gave as an exception the case where it might be thought the impecuniosity of the plaintiff was contributed to by the very dispute which founded the litigation.

In my view, there is something to be said, in the present case, for the proposition that what the applicant for security has shown is that the applicant in the action may have been a company without substantial assets at the time the dispute arose, but nevertheless it was a company which appears to have been doing significant business, from which significant profits could have been derived, and, in particular, the business transaction which led to the dispute was a very substantial one.  Therefore, at least to some extent, any inability of the company to meet the costs which might be ordered in this action could be said to be an inability to which the very actions of the respondent in the case which are called in question may well have contributed.

Both sides argued the matter on the footing that the making of an order for security is very much a matter of the discretion of the Court, and I was referred to a passage from a judgment of Rich J which is cited in Barton v Minister for Foreign Affairs (1984) 2 FCR 463 at 470, a passage which strongly emphasised this proposition. On a more recent occasion that view has again been emphasised by Gaudron J in Dillon v Baltic Shipping Co (1991) 102 ALR 482 at 486.

I have come to the conclusion that in this case some order for security ought to be made, but it ought not to be in the amount sought, nor in an amount close to that.  I think that I should not make a precisely calculated order which might call for reconsideration if the hearing appears, when the parties are closer to it, to be likely to take a day or two longer or a day or two less.  I think I should rather order one lump sum now.  The order that I make is that the applicant in the action provide security for costs in the sum of $30,000.

I will stand the matter over to 9.30 am on 3 April to enable the details to be discussed between the parties, rather than make a detailed order now, and give Ms Simons the opportunity to obtain instructions on how long it will take to provide.  I order that the applicant in the action pay half the costs of this application for security, but I make no special order about the taxation.  The taxation rules provide that taxation takes place at the end of the case.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

Associate:

Date: 29 March 1995

Counsel for the Applicant:       Ms L Simons

Solicitors for the Applicant:        Stewart Levitt & Company

Counsel for the Respondent:      Mr R Cobden

Solicitors for the Respondent:    Mallesons Stephen Jaques

Date of hearing:                 15 March 1995