Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd
[1999] WASCA 312
•23 NOVEMBER 1999
EASTERN METROPOLITAN REGIONAL COUNCIL -v- FOUR SEASONS CONSTRUCTION PTY LTD [1999] WASCA 312
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASCA 312 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:70/1999 | 23 NOVEMBER 1999 | |
| Coram: | TEMPLEMAN J MILLER J McKECHNIE J | 23/11/99 | |
| 6 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| PDF Version |
| Parties: | EASTERN METROPOLITAN REGIONAL COUNCIL FOUR SEASONS CONSTRUCTION PTY LTD |
Catchwords: | Application for leave to appeal against decision of Master to make a staging order for security for costs Whether Master's discretion miscarried Turns on own facts |
Legislation: | Corporations Law, s 1335 |
Case References: | Pacific Acceptance Corporation v Forsyth (1967) 2 NSWR 402 APEP Pty Ltd v Smalley (1983) 8 ACLR 260 Beach Petroleum NL v Johnson [1992] 7 ACSR 203 Brimoud v Honeysett Instant Print Pty Ltd, unreported; SCt of NSW; 19 September 1988 Darling Harbourside (Sydney) Pty Ltd v Sanirise Pty Ltd, unreported; FCt FCA; 17 May 1996 DJKM Developments Pty Ltd v Northern Territory of Australia (1992) 110 FLR 269 Dominion Brewery Limited v Foster (1897) 77 LT 507 Famel Pty Ltd v Burswood Management Limited [1989] ATPR 40-962 Gordano Building Contractors Limited v Burgess [1988] 1 WLR 890 T Sloyan & Sons (Builders) Limited v Brothers of Christian Instruction [1974] 3 All ER 715 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : EASTERN METROPOLITAN REGIONAL COUNCIL -v- FOUR SEASONS CONSTRUCTION PTY LTD [1999] WASCA 312 CORAM : TEMPLEMAN J
- MILLER J
McKECHNIE J
- Applicant
AND
FOUR SEASONS CONSTRUCTION PTY LTD
Respondent
Catchwords:
Application for leave to appeal against decision of Master to make a staging order for security for costs - Whether Master's discretion miscarried - Turns on own facts
Legislation:
Corporations Law, s 1335
(Page 2)
Result:
Application dismissed
Representation:
Counsel:
Applicant : Mr A N Siopis
Respondent : Mr S H Baird
Solicitors:
Applicant : Haydn Robinson
Respondent : Summers Partners
Case(s) referred to in judgment(s):
Pacific Acceptance Corporation v Forsyth (1967) 2 NSWR 402
Case(s) also cited:
APEP Pty Ltd v Smalley (1983) 8 ACLR 260
Beach Petroleum NL v Johnson [1992] 7 ACSR 203
Brimoud v Honeysett Instant Print Pty Ltd, unreported; SCt of NSW; 19 September 1988
Darling Harbourside (Sydney) Pty Ltd v Sanirise Pty Ltd, unreported; FCt FCA; 17 May 1996
DJKM Developments Pty Ltd v Northern Territory of Australia (1992) 110 FLR 269
Dominion Brewery Limited v Foster (1897) 77 LT 507
Famel Pty Ltd v Burswood Management Limited [1989] ATPR 40-962
Gordano Building Contractors Limited v Burgess [1988] 1 WLR 890
T Sloyan & Sons (Builders) Limited v Brothers of Christian Instruction [1974] 3 All ER 715
(Page 3)
1 TEMPLEMAN J : This is an application for leave to appeal from a decision of Master Sanderson given on 21 May of this year in relation to an application for security for costs. The applicant is the Eastern Metropolitan Regional Council which is the respondent in an arbitration commenced against it by Four Seasons Construction Pty Ltd. There is also on foot litigation between those parties in which the council, as I will call it, is the plaintiff.
2 The learned Master decided that it was appropriate in all the circumstances to award security for costs. There is no complaint about the Master reaching that conclusion. The applicant, however, contends that the order made by the learned Master was inappropriate, it being the primary contention that the learned Master's discretion miscarried because he made a fundamental error.
3 It is not necessary to go into the reasons on which the Master decided that it was appropriate to order security except to mention one matter. That is, that Four Seasons, as I will call it, was prima facie an insolvent company, there being evidence that it had not complied with a statutory demand.
4 The application for security for costs was brought pursuant to s 1335 of the Corporations Law which is in these terms:
"Where a corporation is a 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."
5 Against that background the Master said this in his judgment:
"The amount of the security for costs is not really of great significance. Four Seasons has made it plain that it is in no position to meet any order for security, nor is its sole director, Amavlian. EMRC" -
- that is the council -
"seeks just over $40,000 to secure its position. Given the delay in making the application it is not appropriate that I order security for work that has been undertaken to date. What is more, it always seems to me that staging security for costs is a
(Page 4)
- fairer way to deal with such an application than requiring the full costs to be deposited early in the proceedings. On that basis I would order that within 14 days Four Seasons provide $10,000 by way of security. The form the security should take I will leave for discussion between the parties. If agreement cannot be reached there will be liberty to apply. I will also allow the council to make application for further security once a date for the arbitration is fixed. If the security is not provided within 14 days the action will be stayed until further order of the Court".
6 A number of points arise from that passage of the learned Master's reasons. First, the reference to just over $40,000 being sought by the council to secure its position is a reference to the draft bill of costs which was before the Master in which a total of $47,880 had been claimed. That related in part to work which had apparently been carried out already and hence the Master's reference to the amount sought being just over $40,000.
7 Secondly, the Master, as I have said, referred to staging security being a fairer way to deal with an application than requiring the full costs to be deposited early in the proceedings. Pausing there, it is not suggested on behalf of the applicant that there is any error in the Master proposing a staging order. As Mr Siopis who appears for the applicant this morning rightly said in the course of his argument, that happens all the time.
8 The reference in the learned Master's judgment to staging security rather than requiring the full costs to be deposited early in the proceedings seems to me to bear this interpretation: that the amount of $40,000 which was the full amount required to secure the applicant's position, appears not to have been in dispute. There is no suggestion in the Master's reasons that there is any quibble with that amount and that is therefore the "full costs" to which the learned Master referred.
9 It seems to me that the learned Master envisaged that the staging order would be made, rather than requiring $40,000 to be deposited early in the proceedings, as he put it: and one can see the reason for that. It is that the proceedings, particularly in the arbitration, were of some complexity which made it difficult for the Master to form any view as to the likely outcome. There was also of course the fact that Four Seasons was insolvent, so that it would appear that if any money was to be found to fund the arbitration, then it would have to be third party money.
(Page 5)
10 It is submitted on behalf of the applicant that if the Master was to take the view that a staging order should be made, then he should have followed the course adopted by Moffitt J in the Supreme Court of New South Wales in Pacific Acceptance Corporation v Forsyth (1967) 2 NSWR 402. There, a staging order was made which set out the amounts required to be paid in the various stages, with liberty to apply if the circumstances changed.
11 The applicant contends that that is the appropriate course because that is what the statute requires: namely that the Court should assess the amount of the security, which is to be lodged in full ultimately, before deciding how that should be apportioned through the appropriate stages.
12 What is said here is that the Master did not make any such assessment. I do not accept that submission because it seems to me, for the reasons I have given, that the Master was envisaging that ultimately the amount of security which would be required would be likely to be $40,000. The reason he selected a somewhat arbitrary figure of $10,000 at the outset was that he did not know whether Four Seasons would in fact come up with the money. The effect of his order was therefore to give it an opportunity to investigate its position, to find some third party money and proceed with the arbitration if that was available.
13 The liberty to apply would ensure that as the arbitration unfolded, appropriate orders could be made to deal with security on that basis.
14 It is accepted by Mr Siopis that the order made by Moffitt J in the Pacific Acceptance case is not the only form of order that a Court may make if it decides to require security for costs to be given in stages. That concession is clearly right because the court obviously has a very wide discretion in applications of this kind.
15 The point that the learned Master made a fundamental error is, I think, wrongly taken, because it is based on the proposition that the learned Master did not make any assessment of the ultimate amount of security which was likely to be ordered, whereas I think that he did, namely $40,000, given the circumstances which I have described. I am not therefore persuaded for myself that the learned Master was wrong in exercising his discretion as he did.
16 This leads to the second point. Because this is an application for leave to appeal from an interlocutory judgment it is for the applicant to show not only that the Master was wrong but also that if the judgment were left unreversed the applicant would suffer a substantial injustice.
(Page 6)
17 In the present case it is said that a substantial injustice would be suffered by the applicant for two reasons. First it is said that the inevitable result of the Master's decision if the arbitration proceeds is that there will be repeated applications for security, resulting in what Mr Siopis referred to as stop-start litigation. In my view that will not necessarily happen. I would accept that there will be at least one further application for security and I would expect that at that stage, if it becomes apparent that Four Seasons is to provide or to find third party money to fund the arbitration, that a more structured form of staging order could be made. It seems to me therefore that although there may be some inconvenience to the applicant in having to make a further application, that does not qualify as substantial injustice.
18 The second point Mr Siopis makes under the same heading is really a similar one: that his client having succeeded in the application for security has not received the full benefit of that order, again because the council will have to come back to Court for further application. Mr Siopis says that that in effect penalises his client even though it is the winner.
19 But for the reasons set out above, I do not accept that that such inconvenience would result in a substantial injustice.
20 It seems to me that what the learned Master was doing here was balancing the interests of Four Seasons and the council in making the order that he did and in so balancing those interests the learned Master exercised his discretion. I am not persuaded that as a result of the exercise of his discretion in that way there has been any substantial injustice.
21 For those reasons I would dismiss the application.
22 MILLER J : For the reasons given by Templeman J I agree that the application for leave should be dismissed.
23 McKECHNIE J : I also agree, for the reasons given by Templeman J.
0
1
1