EWC Payments Pty Ltd v Commonwealth Bank of Australia
[2015] VSC 53
•3 March 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2010 00683
| EWC PAYMENTS PTY LTD AND OTHERS (according to the attached schedule) | Plaintiffs |
| v | |
| COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) | Defendant |
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JUDGE: | Cameron J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 29 January 2015 |
DATE OF JUDGMENT: | 3 March 2015 |
CASE MAY BE CITED AS: | EWC Payments Pty Ltd v Commonwealth Bank of Australia |
MEDIUM NEUTRAL CITATION: | [2015] VSC 53 |
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SECURITY FOR COSTS — Corporations Act 2001 (Cth) s 1335(1) — Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 62.02 — Security for costs already awarded — Revisit and increase previous order for costs — Overlap between the current application for security for costs and the previous order — Overlap between the plaintiff’s claim and defendant’s counterclaim — Plaintiff’s prospects of success — Voluntary commercial relationship — Application for security for costs granted.
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APPEARANCES: | Counsel | Solicitors |
| For the First and Third Plaintiffs | Mr P Nugent | Madgwicks |
| For the Defendant | Mr A Bell SC with Mr C Archibald | Gilbert + Tobin |
HER HONOUR:
This application
By summons dated 10 October 2015 the defendant, the Commonwealth Bank of Australia (‘CBA’), seeks further security for its costs in relation to proceedings brought by the first plaintiff, EWC Payments Pty Ltd (‘EWC’), pursuant to rule 62.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) and section 1335 of the Corporations Act 2001 (Cth).
Whilst CBA’s summons sought security totalling $1,812,885 up to and including trial, at the hearing of their application, counsel for CBA indicated that it would no longer be pressing a claim for security for costs for trial.
Given that CBA no longer presses for security for its costs of the trial, CBA seeks a grant of further security in the sum of $1,386,667 up to the first day of trial.[1]
[1]This amount is 60 per cent of past costs (less $11,490 referable to a statutory demand); plus 60 per cent of estimated future costs; and less $750,000 for the existing security granted.
CBA relied on affidavits of Rani Sara John dated 10 October 2014 and 15 January 2015, and the report of Debra Michelle Paver dated 15 January 2015.
EWC relied on affidavits of Debra Anne Dunn dated 19 and 27 November 2014 and 8 December 2014, and Paul Grant Linsdell dated 25 November 2014 and 1 December 2014.
Summary of conclusion
Taking into consideration:
(a) the degree of overlap between the claims of EWC and CBA;
(b) that there does not appear to be any special circumstances warranting revisiting the order for costs up to and including the mediation; and
(c) the fact that the court’s previous order of $750,000 in favour of the CBA for security for costs overlaps in some respects with the present application,
in the exercise of my discretion, and for the following reasons, I order that EWC provide the sum of $271,600 by way of security for CBA’s costs of the proceeding.
Procedural history
This matter has been the subject of a successful application for security for costs in the amount of $750,000 up to the conclusion of mediation pursuant to orders made by Gardiner AsJ on 19 August 2011. An unsuccessful mediation was held on 20 September 2014. Accordingly, pursuant to liberty to apply, CBA now applies for a further order for security for costs.
Facts
In the course of his judgment, Gardiner AsJ summarised the nature of this case and the factual background at paragraphs 4 to 15, and I am indebted to him.[2] In summary, the second plaintiff, Eworld Account Management SA (‘Eworld’), is the holding company of EWC, which carried on a business of processing internet credit card payment transactions. The third plaintiff, Dr Matthew Starr (‘Dr Starr’), is a former director and secretary of EWC. EWC’s business consisted of entering into arrangements with merchants (for example, online retail stores) to process merchants’ credit card transactions with customers over the internet.
[2]EWC Payments Pty Ltd v Commonwealth Bank of Australia [2011] VSC 389 [4]–[5].
To process these transactions, EWC entered into an agreement with CBA in 2006. The system was that when a merchant’s customer placed an order using their credit card, the merchant would direct the transaction through CBA for processing. CBA and EWC would charge the merchant a commission for this service. CBA also charged EWC a fee for each transaction.
Under the agreement between CBA and EWC, CBA was allegedly required to set up various facilities and codes associated with this processing service. This included CBA establishing a facility to enable EWC to be recognised as a separate master merchant processor or payment services provider. It is also alleged that CBA agreed to provide EWC with a unique merchant identity number, merchant classification code, and a 15–20 character name known as a merchant descriptor.
EWC was required to maintain accounts with CBA, into which all proceeds of sales received from customers of the merchants were placed before either being passed onto the merchant or refunded to the customer in the event that the customer disputed the transaction or sought a refund. This latter process was known as a chargeback.
EWC was also required to maintain a trading account with CBA into which funds were deposited to meet all of CBA’s ongoing charges.
In 2008, CBA changed EWC’s merchant classification code, allegedly without notifying or seeking the consent of EWC. The plaintiffs allege that this caused other banks to decline or reject the transactions and resulted in an increased number of chargebacks. It is further said that there were problems with the transaction completion process used by CBA which also caused an increased number of customers to claim a chargeback. This, it is said, resulted in loss of fees that would have been earned by EWC, fees charged by CBA for chargebacks and termination of the agreement with CBA, which in turn resulted in the loss of EWC’s business.
The plaintiffs allege that CBA breached the agreement by, amongst other things without the knowledge or consent of EWC, changing EWC’s merchant classification code (and failing to ensure the code was not changed). It is alleged that this caused a high number of chargebacks and cancellations. It is also alleged that CBA wrongfully gave notice of termination of its relationship with EWC.
Further, the plaintiffs allege that CBA has engaged in misleading and deceptive conduct, or unconscionable conduct.
CBA’s defence and counterclaim, in summary, is that EWC owes CBA unpaid chargebacks and associated fees, as there were terms of the agreement that CBA would be entitled to reverse any credit to EWC’s account where there was a chargeback and that CBA was entitled to charge a fee for a chargeback.
Application for security for costs
As previously stated, CBA estimates its costs of the proceeding up to the first day of trial to be $1,386,667. The key issues it raises in support of its application that further security ought be ordered include:
(1) Preparation of evidence of witnesses
CBA contends that the preparation of evidence, whilst assumed in the calculation of costs on its first security for costs application, has not been undertaken. This includes lay and expert evidence.
It is beyond doubt that costs referable to the preparation of witness statements (with the possible exception of an expert on Swiss law) was a matter that was taken into account in preparing the first estimate forming the foundation of the original security for costs application. It is CBA’s contention that the court ought not regard the decision of Gardiner AsJ as being referable to any discrete activities and, accordingly there should be no impediment on the court now granting further security in relation to preparation of witness statements. It is said that this remains a substantial future cost and that, at this stage, no orders for evidence have been made and no work performed.[3]
[3]Commonwealth Bank of Australia, ‘Defendant’s outline of submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 22 January 2015, [4.2].
CBA contends that the preparation of evidence will involve substantial costs, and it is estimated that 30 people will be required to be interviewed and an estimated 15 have statements prepared for them. There remains a difference of opinion between the parties as to the costs that may be incurred in connection with the engagement of an expert on Swiss law.
(2) Discovery and subpoenas
It is said that further costs will be incurred in relation to discovery and subpoena issues. By way of example, concerns with the adequacy of discovery, the non‑conformity with electronic discovery protocol and issues concerning confidentiality.[4] It is said that, as a consequence of the events in the proceeding, ‘certain previously anticipated costs have not yet been incurred, further costs will be incurred, or costs have been incurred that were not previously anticipated’.[5]
[4]Affidavit of Rani Sara John dated 10 October 2014 [32]–[40].
[5]Commonwealth Bank of Australia, ‘Defendant’s outline of submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 22 January 2015, [4.12].
(3) Further directions hearings
CBA’s estimate allows for four further directions hearings in comparison with EWC’s estimate of three. No allowance is made by CBA for a further mediation (in contrast to the position adopted by EWC) and no such further mediation has been ordered by the court or apparently agreed between the parties.
(4) Costs of the trial
The question of the length of the trial is live between the parties, with CBA contending that a reasonable estimate of trial is in the range of five weeks.[6]
[6]Affidavit of Rani Sara John dated 10 October 2014 [93].
Although CBA’s written submissions dealt with the costs of trial, given the fact that it no longer presses this, I will not deal further with this matter.
(5) Composition of the legal team
Finally, the question of the appropriateness of the composition of the legal team is in issue and whether the legal team engaged by CBA has resulted in any unreasonable overlap or duplication of work.
It is to be noted that, consistent with the approach adopted by Gardiner AsJ, CBA has applied a 40 per cent discount to its estimated costs. This is to reflect the amount likely to be recoverable on a taxation, were the matter to proceed down this route.
Costs not included in previous estimate
CBA contends that certain costs, for example, costs consequent on further amendments to the statement of claim and the imposition of a confidentiality regime, were not included in the estimate of costs which formed the foundation of the order of Gardiner AsJ.
Threshold issue
It is to be noted that EWC has not disclosed the manner in which it is funding the conduct of these large and complex proceedings.[7] The court accepts that in circumstances such as these, a defendant may have legitimate concern that any costs orders made in its favour could be met.
[7]Commonwealth Bank of Australia, ‘Defendant’s outline of submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 22 January 2015, [2.2]; Affidavit of Rani Sara John dated 15 January 2015 [3].
In addition, it is common ground between the parties that EWC has no assets from which it could satisfy an order for costs in the event that such an order was made in CBA’s favour,[8] and accordingly that the court’s discretion is enlivened.[9]
[8]Commonwealth Bank of Australia, ‘Defendant’s outline of submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 22 January 2015, [2.1]; EWC Payments Pty Ltd, ‘Outline of EWC’s Submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 23 January 2015, [6].
[9]Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377, 381.
EWC’s submissions
By the affidavits of Ms Dunn and Mr Linsdell, EWC takes issue with CBA in relation to the quantum of certain items the subject of the application for further security. I will return to those matters, but first propose to deal with the more general bases upon which EWC takes objection to CBA’s application.
EWC raises four issues which it describes as the principal discretionary factors to which the court ought to have regard and these form the foundation of its objection to CBA’s application, as follows:
(a) Dr Starr is a natural person and is a plaintiff in the proceeding along with EWC and that, as is contended by EWC, there is almost complete overlap in the claims brought by EWC and Dr Starr, both arising out of the agreement between EWC and CBA;
(b) the counterclaim of CBA raises the same issues that are required to be determined in relation to the claims brought by EWC and Dr Starr;
(c) regard should be had to EWC’s prospects of success, acknowledging that it will not ordinarily be practical to reach a clear view about the merits of the case;[10] and
(d) the court should consider, as a matter of discretion, whether the party seeking security voluntarily entered into a commercial relationship with the other party and the dispute arose out of that commercial relationship.[11]
[10]EWC Payments Pty Ltd, ‘Outline of EWC’s Submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 23 January 2015, [26]; Epping Plaza Fresh Fruit & Vegetables Pty Ltd v Bevendale Pty Ltd [1999] 2 VR 191,199; Opes Prime Group Ltd (in liq) v Niako Investments Pty Ltd [2014] VSC 414 [28].
[11]EWC Payments Pty Ltd, ‘Outline of EWC’s Submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 23 January 2015, [24]; Tenth Anewmot Pty Ltd v Colonial Mutual General Insurance Co. Ltd [1993] 2 VR 48, 56–7; Letore Pty Ltd v Associated International Finance Pty Ltd (Unreported, Supreme Court of Victoria, McDonald J, 28 May 1993) 15; New Zealand Pelt Export Co. Ltd v Trade Indemnity New Zealand Ltd [2001] VSC 46 [8].
(1) Presence of a natural person
First, in relation to the fact that Dr Starr, as a natural person is also a plaintiff to this proceeding, the degree of overlap between the claims of Dr Starr and EWC needs to be considered. In cases such as this where the plaintiffs include both natural persons and corporate plaintiffs, courts have considered the ‘inter-dependence … of the plaintiffs’ claims’[12] and held that it is relevant to consider whether the ‘plaintiff’s claims largely coincide with those of the corporate plaintiff’.[13] In Opes Prime Group Ltd v Niako Investments Pty Ltd, Derham AsJ summarised the relevant principles. These include that a court should consider the ‘degree of overlap between the claim of the corporation and that of the individual’ as, if there is a substantial overlap, generally a court would not order security for costs. However, if there is limited overlap, generally security would be required.[14]
[12]Interwest Ltd (receivers and managers appointed) v Tricontinental Corporation Ltd (1991) 5 ACSR 621, 622.
[13]Opes Prime Group Ltd v Niako Investments Pty Ltd [2014] VSC 414 [34].
[14]Ibid [33(c)].
In the submission of EWC, Dr Starr’s claim is principally concerned with his alleged loss of commission on the turnover that CBA was to process in accordance with the arrangements between EWC and CBA. As submitted, Dr Starr was to, in effect, receive a turnover commission or a certain fee for every transaction that CBA processed. On this basis, EWC contends that, although the bases of the claims of EWC and Dr Starr differ, the ‘identical contract which gives rise to the two separate categories of damages’ is at the heart of each of the respective claims.
In EWC’s submission, even if the action of the corporate plaintiff was stayed, Dr Starr would simply continue with his claim. This, it is said, would require agitation of many of the same issues because, when it comes to assessing damages of Dr Starr, the nature and effect of the agreement will be in issue. It was submitted by CBA that this was not apposite as there was no suggestion that the grant of security would stultify the proceeding. EWC has conceded that there are clearly issues which are not common as between the plaintiffs, such as unconscionable conduct and the issue of assignability of the negligence action.
CBA points to the differences in the respective claims of EWC and Dr Starr. CBA contends that the loss that Dr Starr claims as a result of misleading and deceptive conduct is different from the loss claimed by EWC in respect of that conduct. It is also said by CBA that the question of the assignability of Australian causes of action in negligence is an issue that does not involve Dr Starr.
The parties are at odds as to the degree of overlap between the respective claims of EWC and Dr Starr. Both EWC and CBA prepared tables to assist the court in identifying the degree of overlap between their respective claims. The approaches adopted by each party differed significantly. EWC submits, in general, that the material facts and conduct upon which the claim of Dr Starr is based comprise the same conduct and material facts relied upon by EWC, namely breaches of the pleaded agreement and the breach of good faith. It is said by EWC that, because both its and Dr Starr’s claim rely on the same alleged facts, the claims cannot be separated.
By contrast, CBA points to the pleading to demonstrate that, on its face, the claims of Dr Starr (by contrast to the claims of EWC) are narrow in compass and, in relation to the misleading and deceptive conduct claim and alleged negligent termination of the agreement by CBA, Dr Starr’s claims are limited to, in effect, loss of opportunity to work in the industry. CBA points to the contract claim and the breach of the term of good faith as involving EWC only.
It is submitted by CBA that chargebacks, the alleged negligent performance of the agreement, the assignability of the Australian cause of action and the allegation of unconscionable conduct in respect of imposing fines are all issues involving EWC only. For the purposes of this application, I do not propose to further detail each of the matters upon which CBA relied in arguing that the claims of EWC are different from those of Dr Starr. It is enough to say that it is clear that there is not complete overlap in the claims of EWC and Dr Starr on the face of the pleading. Nor is there required to be for that matter to be a relevant consideration.
There is merit in EWC’s contention that I should adopt a more general approach and consider that both EWC’s and Dr Starr’s claims start from and grow out of the contract. Although Dr Starr’s claims are derivative of the claims of EWC, they rely on EWC’s claims as the foundation for his claims.
In support of its submissions, EWC relied on authorities, including Harpur v Ariadne Ltd (No 2), where it was held that: ‘the cases show that, unless there is ground for making an order for security against all the plaintiffs, it cannot be made against any’.[15] Counsel for EWC conceded, however, that that did not represent the complete position because there is a discretion. EWC also referred to Interwest Ltd (receivers and managers appointed) v Tricontinental Corporation Ltd, where Ormiston J considered an application for security for costs in circumstances where there were both natural persons and corporate plaintiffs suing. In that case, the court considered the ‘coincidence of issues, both factual and legal, raised by the individual plaintiffs and by the counterclaim and the defence’[16] in reaching its decision that ‘the presence of the individual plaintiffs’ claims and their relevant significance should be seen as a factor diminishing the defendants’ claim to security’.[17] In that case, his Honour severely discounted the amount of security sought.
[15]Harpur v Ariadne Ltd (No 2) [1984] 2 Qd R 523, 531.
[16]Interwest Ltd (receivers and managers appointed) v Tricontinental Corporation Ltd (1991) 5 ACSR 621.
[17]Ibid 625.
I accept that the pleadings on their face do not show such a commonality as should shut out CBA from obtaining further security for its costs. However, taking a broader view, Dr Starr’s claims do rely on EWC establishing the material facts and conduct which it alleges. I will take this into account in the exercise of my discretion.
(2) Overlap with counterclaim
The second issue the subject of EWC’s submissions is the degree of overlap between its claim and the counterclaim of CBA. In EWC’s submission, the counterclaim of CBA raises the same issues for consideration. It is said that the claims brought by EWC and Dr Starr both rest on the fact that there was an agreement between EWC and CBA and the real issue to be determined is ‘whether the written document was the sole repository of the agreement between the parties’.[18] By contrast, CBA submits that its counterclaim merely proceeds on the basis of a singular written merchant agreement between the parties and does not require any determination of the issue of the cause of chargebacks. CBA submits the cause of the chargebacks is a central issue to EWC’s claim which is factually dense and voluminous.[19]
[18]EWC Payments Pty Ltd, ‘Outline of EWC’s Submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 23 January 2015, [19].
[19]Commonwealth Bank of Australia, ‘Defendant’s outline of submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 22 January 2015, [3.4].
CBA relied on the decision of the High Court of Australia in Smith v Madden,[20] where Dixon J set out the principles of taxation in cases where there is a counterclaim. Dixon J distinguished between ‘common items’ which are ‘items that serve as much the purpose of the claim as the counterclaim’ and ‘mixed items’ which is work referable to the main claim but that has parts which are ‘severable’ from the counterclaim.[21] Relying on this authority, CBA contends that there will be very little work in this proceeding that is not common to the claim and the counterclaim and that this means that the majority of the costs of the counterclaim are ‘claimable in full’ when calculating the costs of the counterclaim.[22] This may be so if and when a taxation of costs of CBA on its counterclaim occurs.
[20]Smith v Madden (1946) 73 CLR 129.
[21]Ibid 136–7.
[22]Exhibit “DMP-1” to the Affidavit of Debra Michelle Paver dated 15 January 2015 [71].
I accept the submission of CBA that it ought not, in substance, be treated as the plaintiff in this case so as to deny it an order for security for costs.[23] This is in contrast to the case of Sydmar Pty Ltd v Statewise Developments Pty Ltd, [24] where it was held that because the defence was essentially a separate claim and formed a substantial part of the counterclaim, ‘the defendant is, in substance, the plaintiff’.[25] I agree that its action on the singular merchant agreement in the amount of $2.8 million should not properly be regarded as placing CBA in the substantive position of a plaintiff.
[23]Transcript of Proceedings, EWC Payments Pty Ltd v Commonwealth Bank of Australia (Supreme Court of Victoria S CI 2010 00683, Justice Cameron, 29 January 2015) 119.
[24]Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 73 ALR 289.
[25]Ibid 302.
The question of the overlap between the claim and counterclaim was the subject of submission before Gardiner AsJ. His Honour stated the following (noting that his Honour was considering an earlier version of the pleading, which I consider is not materially different for present purposes):
Whereas CBA deals with a singular written merchant agreement, the plaintiff’s case relies on a complex series of emails, discussions and implications arising from conduct.[26]
[26]EWC Payments Pty Ltd v Commonwealth Bank of Australia [2011] VSC 389 [57].
At the time of the initial application before Gardiner AsJ, no material was filed on behalf of EWC and general statements were made before his Honour by EWC’s solicitor.[27] The court now has the advantage of additional evidence and submissions in relation to this matter. For example, EWC contends that documents discovered by CBA contradict the position that there is a single merchant agreement. It is unnecessary and indeed impossible for the court to reach a concluded view about this matter at this stage.
[27]Affidavit of Debra Ann Dunn dated 19 November 2014 [14].
EWC relies on a number of authorities to make good the proposition that the claim and the counterclaim raise similar issues for determination and that, as a discretionary issue, this should weigh against any further grant of security. These authorities include the decision of Smart J in Sydmar Pty Ltd v Statewise Developments Pty Ltd,[28] where it was held that it is relevant to consider ‘[w]hether substantially the same facts are likely to be canvassed in determining the action and the cross‑action’, and that a court would be slow to award security for costs where there is a counterclaim ‘covering substantially the same factual area’ as the main claim.[29]
[28]Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 73 ALR 289.
[29]Ibid 300.
Rolfe J went further in Dalma Formwork Pty Ltd (Administrator Appointed) v Concrete Constructions Group Limited, finding that where there is a:
dependency of claims and counterclaims arising out of the same or essentially the same factual matrix, the proper exercise of discretion dictates that this is not an appropriate case in which to order security.[30]
[30]Dalma Formwork Pty Ltd (Administrator Appointed) v Concrete Constructions Group Limited [1998] NSWSC 472 (19 June 1998).
Similarly, in CV Joint Pty Ltd v Drivetex Pty Ltd, Beach J held that the fact that the counterclaims were ‘inextricably wound up with those of the plaintiff against the defendant’ led to the conclusion that ‘it would be inappropriate to require the plaintiff to give security for costs’.[31]
[31]CV Joint Pty Ltd v Drivetex Pty Ltd (Unreported, Supreme Court of Victoria, Beach J[1997] VSC 6 (5 February 1997) 2.
EWC’s submissions on this matter are persuasive. The fact that of the $2,217,350.99 charged to CBA by its solicitors, only $38,169.99 is said to be referrable to the counterclaim,[32] is a matter which weighs heavily in favour of EWC’s submission. I agree with counsel for EWC that this at least appears to suggest that CBA’s own expert considers that there is a high degree of overlap at least in the work that CBA will be required to undertake in respect of both the claim and the counterclaim. As Ms Paver puts it:[33]
‘Having regard to the nature of the allegations raised in the claim proceeding and defences raised in the counterclaim, it is my opinion the the bulk of the work relating to the counterclaim proceeding will be work that will also need to be done in relation to the claim proceeding.’
[32]Exhibit “DMP 1” to the affidavit of Debra Michelle Paver dated 15 January 2015 [71].
[33]Ibid [68].
It is to be noted that in its amended defence to amended counterclaim, EWC variously pleads that the agreement which CBA relies on is subject to the further terms alleged in its further amended statement of claim.
I do not consider that the overlap in this case between the claim and the counterclaim, on the pleadings, should militate against any further award of security. However, the matters to which I have referred will weigh significantly in the determination of the quantum of any security ordered.
(3) EWC’s prospects of success
Thirdly, EWC contends that the court should take into account EWC’s prospects of success, whilst acknowledging that it will not ordinarily be practical to reach a clear view about the merits of a plaintiff’s claim.[34] It was conceded by counsel for CBA before Gardiner AsJ that the plaintiffs’ claims were made bona fide, and I did not take the parties to be making any submissions to the contrary before me. Accordingly, consistently with the previous concession made by counsel for CBA, I regard the issue of merits as a neutral factor in exercising my discretion.[35]
[34]EWC Payments Pty Ltd, ‘Outline of EWC’s Submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 23 January 2015, [26].
[35]EWC Payments Pty Ltd v Commonwealth Bank of Australia [2011] VSC 389 [59].
(4) Voluntary commercial relationship
Finally, EWC contends that the court should consider, as a matter of discretion, that CBA voluntarily entered into a commercial relationship with EWC and the dispute arose out of that relationship. This is because the party seeking security could have assessed the financial standing of the other party and either could have commercially protected itself or decided not to take the risk of contracting with an impecunious party.[36]
[36]Denward Lane Pre Cast Panels Pty Ltd v Cornerstone Constructions Australia Pty Ltd [2008] VSC 144 [26].
In support of its submissions in relation to the importance of the voluntary nature of the contractual relationship between the parties, EWC relied on Letore Pty Ltd v Associated International Finance Pty Ltd. In this case, the court considered the nature of the relationship between the parties and whether the defendant could have protected itself against the risk of being sued. It was held that:
‘it is a relevant consideration in such a case as this that the defendant has been engaged in a voluntary contractual relationship with the plaintiff company and it is that contract which gives rise to the proceedings’.[37]
In Tenth Anemot Pty Ltd v Colonial Mutual General Insurance Co. Ltd, McDonald J held that:
‘the fact that the party seeking an order for security for costs is an insurer and that such a party is resisting a claim under a contract of insurance voluntarily entered into by it with a proprietary company are matters relevant for the court to have regard to in the exercise of its discretion on an application for security for costs’.[38]
[37]Letore Pty Ltd v Associated International Finance Pty Ltd (Unreported, Supreme Court of Victoria, McDonald J, 28 May 1993).
[38]Tenth Anemot Pty Ltd v Colonial Mutual General Insurance Co Ltd [1993] 2 VR 48, 54.
In that case, McDonald J also discussed the relevance of the defendant having had the ability to protect itself against the risk of being sued finding that:
‘[w]here such a voluntary commercial or contractual relationship exists, it is open to a person such as the defendant to provide protection for itself against the risk of being sued as part of its enterprise’.[39]
[39]Ibid 56–7. This passage was cited with approval in New Zealand Pelt Export Co Ltd v Trade Indemnity New Zealand Ltd [2001] VSC 46 [10].
It is common ground between the parties that CBA had withdrawn funds from certain foreign currency accounts held by it in the name of EWC in part satisfaction of EWC’s alleged indebtedness to it in relation to chargebacks and that those funds were applied against that indebtedness.
EWC contends that CBA could have protected itself more in this case by insisting on a greater amount of money to be held in the accounts and that is a factor to which the court ought to have regard.
There is no question that a sophisticated party such as CBA could have, in the course of commercial negotiations, sought to extract more concessions from EWC with a view to protecting itself in the event that the current circumstances arose. Of course, it may not have received them. It is unusual for commercial parties, in the throes of negotiating and documenting a substantial commercial arrangement, to ‘assume the worst’ or to conduct investigations of the other contracting party beyond that required to satisfy itself that the other party can meet its contractual obligations. It may be better in some circumstances if they did. However, in the absence of any other evidence, I consider that this factor, although to be considered with the other discretionary matters, would not, of itself, shut out CBA from an order for further security. It is most common where parties are in a contractual relationship with each other that a defendant is awarded security for costs by this court.
Conclusion on threshold discretionary matters
Taking into account all of these factors, and in circumstances where there is no suggestion that a further grant of security will stultify the litigation, it is appropriate to exercise my discretion in favour of a further grant of security. However, the matters to which I have referred will go to the quantum of that security.
The approach to be taken by the court
In considering an appropriate quantum of security to be ordered, the court is not conducting a taxation ‘but rather seeks to adopt a broad brush approach’.[40] Further, security for costs is not intended to operate as a complete indemnity of a defendant’s costs.[41] Finally, the applicant for security bears the burden of proof from beginning to end.[42] Accordingly I do not propose to embark on a detailed analysis of the respective claims of security of CBA.
[40]Commonwealth Bank of Australia, ‘Defendant’s outline of submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 22 January 2015, [2.4]; Harmonious Blend Building Corporation v Keene [2014] VSC 649 [61]; Pathway Investments Pty Ltd v National Australia Bank Limited [2012] VSC 97 [25]; Allstate Life Insurance Co v Australian and New Zealand Banking Group Ltd (1995) 134 ALR 187, 201; Reinsurance Australia Corp Ltd v HIH Casualty and General Insurance Ltd (in liq) [2003] FCA 803 [112].
[41]Brundza v Robbie & Co (No 2) (1952) 88 CLR 171, 175.
[42]Idoport Pty Limited v National Australia Bank Limited [2001] NSWSC 744 [60].
Comprehensive affidavits were filed by both parties by experienced practitioners. I will now turn to consider, in general, the items identified by CBA as forming the basis of a further order.
CBA’s contentions
CBA’s application is based on two primary limbs. First, that the costs to date actually incurred by it have been greater than estimated at the time of its first application for security for costs. Secondly, CBA estimated the amount of future costs likely to be incurred by it up to and including (as it is now put) the first day of trial. I will consider firstly CBA’s submissions in relation to past costs, that is costs incurred prior to the unsuccessful mediation, being the period covered by the order of Gardiner AsJ.
In relation to costs incurred to date, CBA estimated the costs up to mediation (and including the preparation of witness statements) to be $1,391,628. However, CBA has actually incurred costs in the order of $2,179,181 up to and including 30 September 2014, excluding certain costs (for example costs referable to CBA’s counterclaim against EWC). These costs do not include the preparation of witness statements and expert reports for trial.[43]
[43]Commonwealth Bank of Australia, ‘Defendant’s outline of submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 22 January 2015, [3.1].
CBA submits that the additional costs are due to a number of factors, namely:
(a) there have been substantial amendments to EWC’s case resulting in the filing of a third further amended statement of claim, a proposition with which Elliott J appears to have agreed.[44] In her affidavit of 10 October 2014, Ms John deposes that the scope and complexity of the matter has exceeded what she had assumed for the purpose of the original estimate which has formed the basis of the initial application for security for costs;
(b) the matter has expanded in scope and is of a more complex nature than was understood at the time of CBA preparing its first estimate in February 2011. Given the issues set out in paragraph 28 of Ms John’s affidavit, I accept that this matter is complex and that the issues will require a significant amount of time to investigate and prepare for trial. Consequently, significant future costs will be likely be incurred; and
(c) CBA submits that various issues relating to discovery, including the imposition of a confidentiality regime in respect of certain of CBA’s documents, has led to increased costs which were not anticipated at the time of the original estimate.[45]
[44]EWC Payments Pty Ltd v Commonwealth Bank of Australia [2014] VSC 207 [7].
[45]Affidavit of Rani Sara John dated 10 October 2014 [23].
Allowance for past costs
The question then arises as to whether the court ought award further or ‘top up costs’ in relation to the period covered by the order of Gardiner AsJ, that is, up to and including the mediation. An order for security is also sought in relation to certain pre‑litigation costs in the order of $96,162.81.
In relation to past costs, it appears that CBA has, quite properly, excluded certain amounts in the preparation of its estimate; for example, costs referable only to its counterclaim and its cross‑vesting application.[46]
[46]Affidavit of Rani Sara John dated 15 January 2015 [6]–[7].
In relation to CBA’s counterclaim, it is submitted that it does not attract significant costs or involve substantial overlap with EWC’s claims particularly in relation to the cause of the chargebacks and CBA’s contractual right to debit EWC for those chargebacks. The evidence is that, in Ms Paver’s opinion, the exclusion of the amount of $38,169.99 representing past costs attributable solely to the counterclaim, appears reasonable.[47]
[47]Exhibit “DMP-1” to the affidavit of Debra Michelle Paver dated 15 January 2015 [71].
Further submissions were made by the parties as to whether there have been any specific changes in circumstances in respect of any particular items of work, since the orders of Gardiner AsJ were made.
In EWC’s submission, which I accept, further security in respect of matters already the subject of a security for costs order, ought not be granted in the absence of special circumstances.[48]
[48]Smith v National Bank of New Zealand Ltd (1907) 27 NZLR 212, 219; Quad Consulting Pty Ltd v David R Bleakley and Associates Pty Ltd (Unreported, Federal Court of Australia, Burchett J, 28 June 1991)[14]–[16].
CBA contends that it does not seek to revisit the previous order for security, but that it would not be just or adequate if the additional costs actually incurred were ignored ‘when assessing the appropriate level of security for the balance of the proceeding’.[49]
[49]Commonwealth Bank of Australia, ‘Defendant’s outline of submissions’, Submission in EWC Payments Pty Ltd v Commonwealth Bank of Australia, S CI 2010 00683, 22 January 2015, [3.2].
It is frequently the case that estimates of costs prepared by even the most experienced practitioners or specialist costs consultants ultimately turn out to be inadequate. This is so even where the scope of the litigation has not materially changed. The estimation of costs actually to be incurred is an inexact science. Much could depend on the attitude of a party to the litigation and their objectives. Well resourced parties may demand more of their legal team (thus increasing costs) whilst other parties may, whether they can afford it or not, prefer a more streamlined approach to the management of litigation. However, it is not the function of the court to indemnify parties for their choice of the level of engagement by their legal team, but only to determine what is just and reasonable in the circumstances.
CBA is a sophisticated, well resourced party with an experienced legal team. The material on which the first application for security for costs proceeded was detailed and comprehensive and based on the best assumptions able to be made at the time.
Having said that, I do not consider that the matters relied on by CBA are of the nature or character to justify taking into account costs incurred prior to the mediation (including any pre‑litigation costs) in any future order for security for costs. That is not to suggest in any way that the costs referred to were inappropriately incurred or that the original estimates were wanting.
It is almost often the case in large scale and factually complex litigation that pleadings will be refined, discovery issues will be the subject of dispute and unanticipated interlocutory applications will be necessary. However, consistently with the objectives of the Civil Procedure Act2010 (Vic), I do not consider that it is in the interests of the ‘just, efficient, timely and cost‑effective resolution of the real issues in dispute’[50] that the court revisit (in the absence of some exceptional circumstance) some nearly four years down the track, orders for security for costs. Those orders were made by this court on responsible estimates by experienced practitioners and based on the best available information at the time (necessarily with the limitations of trying to predict the future). This is not to say that there may conceivably be instances where it is appropriate to revisit previous orders for security for costs in the absence of an appeal of such orders. Ordinarily the court would not allow a party to revisit past orders for costs (absent an appeal), and I do not see any sound reason for departing from that approach in this case.
[50]Civil Procedure Act 2010 (Vic) s 7.
Accordingly, and in the exercise of my discretion, I do not propose to make allowance for any further amount by way of security for costs in respect of work done in the period up to and including the unsuccessful mediation in this proceeding; however, I will bear these costs in mind in the exercise of my discretion.
CBA’s estimate of costs
Whilst it is not the function of this court to conduct a taxation of CBA’s estimated costs, in considering an appropriate total amount of security to be ordered, I make the following observations in relation to the various items making up CBA’s estimate. I note that CBA seeks 60 per cent of its estimated costs to reflect the discount that may apply on a taxation.
Discovery and interlocutory issues
First, CBA seeks costs in the order of $56,130 (which is 60 per cent of the estimated costs which are $93,550) this is in relation to discovery and documentary issues. There have been issues between the parties in relation to each other’s discovery, not all of which have been resolved. CBA anticipates that further costs will be incurred in relation to ascertaining the whereabouts of certain documents, perhaps requiring the issue of a subpoena and a further application.[51] CBA also contends that the alleged failure of the plaintiffs to observe the electronic protocol ordered by the court for discovery will result in further costs being incurred. It is also said that there will likely be further correspondence between the parties and possibly a further application in relation to CBA’s confidentiality claim over certain documents.
[51]Affidavit of Rani Sara John dated 10 October 2014 [36].
In response, EWC contends that the court should have little confidence in CBA’s estimate in relation to discovery and documentary matters given that CBA’s original estimate of discovery was some 220,000 documents and only 48,000 documents have so far been discovered (of which it says, nearly half were marked ‘Wholly Irrelevant’ and many of which were duplicates). In relation to discovery, EWC says that CBA’s complaints are essentially ones of form over substance (for example, documents were produced in bundles) and, in any event, it says that it has complied with the practice note in relation to electronic discovery.
The estimated costs of $93,550 in relation to these issues appears to be excessive. It is uncertain whether any of the applications referred to in Ms John’s affidavit will in fact be made. It remains to be seen what the scope and form of any dialogue between the parties will take. Ms John deposes that she has assumed for the purposes of her affidavit that there will be at least one application (not including a subpoena application), but no substantial further discovery from CBA.[52]
[52]Ibid [41].
In these circumstances, the hours estimated by Ms John for the legal team to deal with these matters need, in my view, to be reduced. I do not intend to dissect the estimated hours and charge out rates referred to in Ms John’s affidavit. Suffice to say I agree that the resourcing of the matter, involving an experienced partner, senior lawyer and lawyer of a commercial firm along with senior and junior counsel is reasonable and appears to me to be quite appropriate.
It is not appropriate to order that EWC provide security for essentially speculative matters — applications and correspondence that may in fact never occur. Based on the assumptions that Ms John has made in her affidavit, I consider that a reasonable allowance for security for costs in relation to this item is $25,000.
Further and better particulars
CBA contends that costs of $6,900 will be incurred in relation to further and better particulars of EWC’s and Dr Starr’s pleading which have been ordered but not provided (and that security of $4140 that is, 60 per cent of this amount, ought to be provided). Those costs essentially relate to further correspondence between the parties, a potential application requiring EWC and Dr Starr to provide particulars and the reviewing of the particulars themselves.[53]
[53]Ibid [45].
In response, EWC says that the further and better particulars will be provided after a report from a forensic accountant (Mr Sincock) is completed (which appears now to have happened). EWC estimates the costs associated with this item to be $3,620.
CBA’s estimate does not appear to be excessive or obviously inaccurate. However, consistent with the proportionality requirements in the Civil Procedure Act 2010 (Vic) s 24, it is incumbent upon the parties to conduct the matter in the most efficient manner possible. I propose to order that security be provided in relation to this item in the amount of $3,600.
Estimated costs — subpoenas
CBA estimates that its costs associated with subpoenas (both those issued by it and EWC total $162,690 (60 per cent of which is $97,614)). It is contended by CBA that, in light of correspondence from EWC indicating that further subpoenas may be issued ‘shortly’,[54] further security ought be ordered in the amount of $31,872 (being 60 per cent of the estimated costs which are $53,120). It is said that this estimate is based on the likely number of documents to be produced in answer to any subpoena given the ‘complex, factually dense and technical nature of the allegations made’, the number of chargebacks (estimated in excess of 62,000) and the number of potential witnesses for each of the parties.[55]
[54]Ibid [49].
[55]Ibid [52].
In her affidavit dated 18 February 2011, Ms John stated that there would be costs associated with the issue of subpoenas to Visa International, MasterCard and Travelex. In Ms John’s affidavit dated 10 October 2014, Ms John deposed to matters (and likely costs to be incurred) in relation to subpoenas to be served upon VISA (sic), MasterCard, Travelex and the liquidator or Eworld.
It is clear that costs associated with at least three of the parties that CBA identifies as likely recipients of subpoenas (but not a potential subpoena to be served on Eworld) were matters before Gardiner AsJ.[56] In particular, drafting subpoenas, inspecting and analysing documents, photocopying and costs of third parties incurred in complying with subpoenas were matters before Gardiner AsJ.[57]
[56]EWC Payments Pty Ltd v Commonwealth Bank of Australia [2011] VSC 389 [64].
[57]See paragraph 65 of the affidavit of Ms John dated 18 February 2011; compared with paragraph 58 of the affidavit of Ms John dated 10 October 2014.
EWC takes issue with Ms John’s estimate of 8000 documents which she says will be produced in answer to subpoenas. EWC says that Visa and MasterCard (to whom the subpoenas would be directed) would be able to produce reports about chargebacks and, in that case, it is likely that only three documents would be produced. In these circumstances EWC submits that security in respect of this item should only be ordered in the amount of $3,760.
Without the benefit of seeing the form of any intended subpoenas, and in the absence of any other reliable submissions or evidence as the number of documents that would be produced in response, only the most general estimate is able to be made.
CBA also submits that it will likely issue four further subpoenas to a number of third parties. I accept on the evidence of Ms John that those parties would likely possess documents relevant to the issues in dispute in this proceeding.[58]
[58]Affidavit of Rani Sara John dated 10 October 2014 [54]–[57].
I accept that costs will be incurred by CBA in relation to these subpoenas, including drafting the subpoenas, reviewing documents and the administrative tasks attending the like.[59]
[59]Ibid [58].
CBA submits that security for costs in the amount of $48,702 (being 60 per cent of the estimated costs of $81,170) ought be ordered in respect of this item. This submission is based on CBA’s estimate of 20,000 documents being produced in response to the subpoenas, photocopying expenses, one interlocutory application in relation to the subpoena to the liquidator of Eworld and the amount payable to third parties in respect of their reasonable costs incurred in complying with the subpoenas.[60]
[60]Ibid [59].
CBA also estimates $28,400 (60 per cent of which is $17,040) of disbursements in relation to the subpoenas (photocopying and compensation to third parties).
EWC has claimed that CBA’s costs in relation to these four potential subpoenas is a duplication of matters raised and security sought before Gardiner AsJ.
It was submitted on behalf of EWC that, in these circumstances, no further security ought be granted.
There is force in the submissions of EWC in relation to this item. Consistently with my view in relation to an order for security for costs prior to mediation (which has already been the subject of Gardiner AsJ’s orders), I do not consider it is reasonable or appropriate to allow what I do consider to be a ‘second bite of the cherry’ in relation to this item (except in so far as Eworld is concerned).
The costs associated with CBA’s subpoenas on my reading of his Honour’s judgment were matters to which Gardiner AsJ had regard in formulating the award of $750,000 by way of security for costs.
Evidence from experienced practitioners was put before his Honour and argument heard. As I have said, in the exercise of my discretion, I do not find any reason to revisit those arguments or allow CBA to re‑agitate its application in relation to such matters, except in relation to Eworld. I will allow the sum of $12,000 in relation to this item.
Witness statements and expert evidence
There is substantial difference between the parties in relation to the number of witnesses that would be required to give evidence in the proceeding and, at least insofar as EWC is concerned, whether any provision at all should be made in relation to them given that witness statements were apparently part of the consideration of Gardiner AsJ in ordering security.
CBA submits that there will be 24 lay witnesses and 3 expert witnesses for EWC, including an expert witness in relation to Swiss law.[61] It is also estimated by CBA that there will be 30 potential lay witnesses for the Bank, including from Travelex, MasterCard, Visa and CBA itself.[62]
[61]Ibid [62]–[64].
[62]Ibid[72].
Based on these estimates, CBA estimates its costs will be $829,190 and seeks security in the amount of $497,514 (being 60 per cent of the estimated costs).
EWC contends that no further security should be granted as these costs have already been taken into account by Gardiner AsJ.[63]
[63]Exhibit “PGL-2” to the affidavit of Paul Grant Linsdell dated 25 November 2014 [104].
EWC also says that it is not appropriate to order security for the preparation of evidence by way of witness statements where lay evidence is to be provided orally.[64] This is to be contrasted with CBA’s views that it will incur costs in relation to witness statements.[65] EWC also takes issue with the estimate of costs of the Swiss law expert (estimated at $75,000) to be excessive.
[64]Ibid [105].
[65]Affidavit of Rani Sara John dated 10 October 2014 [76].
Finally, EWC estimates that only two to four witnesses are likely to be called by EWC and that CBA’s estimate is excessive, as the issues in dispute are largely legal, not factual, and the factual issues, it is said, are largely evidenced by emails not conversations.[66]
[66]Affidavit of Debra Anne Dunn dated 19 November 2014 [62]–[63].
I accept that Gardiner AsJ had regard to costs of preparing witness statements and preparing expert evidence in ordering security. Accordingly it would be inappropriate to award the security in the amount sought by CBA.
Having said that, the security for costs awarded by Gardiner AsJ was only up to and including mediation which has now occurred. I accept that further possibly substantial costs will be incurred by CBA up until the first day of trial. In a case as large and complex such as this, that is to be expected.
It is difficult to reconcile the parties’ positions in relation to witness statements and the preparation of evidence. In large scale litigation it is my view that the estimates of EWC of $28,290 for the preparation of witness statements and evidence appear to be extremely and unrealistically low. Simply reading the pleadings and considering the submissions demonstrates this. It is common ground that this is a factually dense and complex matter. Further, it is current practice in many cases for witness statements not to be ordered at all, and I am not satisfied that any such order would be made in this case; it may be that the parties are only ordered to file lists of agreed facts and evidence is given orally.
It is unclear what proportion of the security for costs of $750,000 awarded by Gardiner AsJ is referable to the preparation of witness statements and evidence, so a precise calculation of how much CBA’s claim should be discounted is not readily apparent. In any event the court’s ‘broad brush’ approach in these matters does not require such precision.
I am mindful that substantial security has already been awarded (and in respect of these items) notwithstanding that no or little work appears to have been completed.
Finally, it is clear that any work undertaken by CBA on witness statements or evidence in defence of EWC’s claim will also be required in relation to its counterclaim.
Taking these factors into account, I award the sum of $125,000 in relation to this item. As commercial litigation goes, I consider this a reasonable sum particularly given the present uncertainty about the number of witnesses who may be called to give evidence. In this regard, whilst I am not prepared to accept CBA’s substantial estimate at face value, I do not consider that their claim for security should be denied completely.
Further mediation
At present no further mediation has been ordered and no party indicated at the hearing before me that orders would be sought for a further mediation or indeed whether the parties might voluntarily submit to one.
EWC estimated that the costs of a further mediation would be in the sum of $14,700. CBA has not pressed for costs in relation to a further mediation.
In these circumstances I do not propose to make any provision for a further mediation in ordering security as EWC could be put in the position of providing security for a step that never occurs.
Further directions hearing
CBA submits that there will be four further directions hearings in this matter prior to trial which will, it is said, also involve correspondence with EWC and the court, obtaining instructions, liaising with counsel and attendance at court. It is estimated that this will involve costs of $28,600, and 60 per cent of this amount, $17,160, ought to be awarded as security for costs.
EWC contends that only one further directions hearing may be required and estimates the costs of that hearing to be $12,140.
In a matter of this scale and complexity it is likely more than one directions hearing will be required prior to trial. Whether four directions hearings will be necessary, however, is a matter for speculation at this point. Even if they were required, in my opinion, CBA’s estimate of $28,600 is generous, and ought to be discounted.
Given the uncertainty as to the path this matter will take leading up to trial, I consider it reasonable to discount the amount sought by CBA and order security in the amount of $14,000 in respect of any further directions hearings.
Liaising with counsel
CBA seeks security in the amount of $13,722, being 60 per cent of the $22,870 estimate of costs that may be incurred in liaising with counsel leading up to trial, in addition to the range of matters previously canvassed (including interlocutory applications, witness statements, expert reports and directions hearings). No particular issues upon which counsel’s further ‘input and advice’ may be sought have been identified.
EWC says, quite rightly, that the court ought not allow conversational attendances with counsel or duplicate attendances of lawyers. Nevertheless, EWC contends that a more appropriate allowance for these attendances is $10,330.
Whilst it is said by CBA that this item is in addition to the other matters referred to above, I consider there is some risk of duplication. I accept that unpredictable issues do arise in the course of litigation such as this which require liaison with counsel. However, the temptation ought to be avoided to call unnecessarily on counsel when such matters could be adequately dealt with by instructing solicitors on behalf of the parties. This is consistent with the objectives of the Civil Procedure Act.
There is uncertainty as to what issues will arise. Further, I do not consider that EWC should be placed in the position of potentially having to provide security for what could be irrelevant to the issues between the parties and solely for the benefit of CBA.
There has been appropriate provision for counsel’s fees in relation to matters referred to above. I have taken into account the need to engage with counsel in relation to the matters that require attendance leading up to trial.
For these reasons I do not propose to order any further security in relation to this item.
Trial preparation
CBA estimates trial preparation (which includes the traditional tasks of preparing court books and submissions and the like) to be in the amount of $220,500 and therefore seeks security of 60 per cent of this amount, being $132,300.
In turn, EWC says that an appropriate amount of security in relation to the trial preparation phase is in the amount of $50,800. The primary difference between the parties is in the estimate of time each party says will be required.
I consider that the estimate of EWC in relation to trial preparation is unrealistically low. In EWC’s estimate only 5 hours would be spent by the responsible partner on the file, 10 hours of senior lawyer’s time and 15 hours of a lawyer’s time. This would suggest, at least as far as the lawyers were concerned, the total time required for trial preparation would be less than a week. Having said that, I note that EWC has taken into account some 20 hours of paralegal time.
Preparing a matter of this nature for trial is a time‑consuming and detailed process, even when sophisticated parties are the litigants. It is a substantial claim that is made, and CBA is entitled to security to reflect that. Having said that, it is not to expect a full indemnity for these costs. I would order security in the amount of $75,000.
Day 1 of trial
CBA estimates that the first day of trial will involve costs of $29,119 and therefore claims 60 per cent of this amount, being $17,471.40, EWC’s estimate is $20,870. These estimates broadly appear reasonable.
I consider a reasonable estimate to be $17,000, and I will order security in that amount.
Conclusion
Following from what I have said, I do not consider that the discretionary factors to which EWC points shut out CBA from a further order for security for its costs in relation to EWC’s principal claim.
However, I have considered that the sum for an order for security for costs in favour of CBA ought to be very significantly reduced, including, by way of summary, for the following reasons:
(i) CBA’s counterclaim will largely (but not entirely) require the same work to be undertaken as its defence to EWC’s claim, on its own evidence;
(ii) in respect of past costs (up to and including the mediation and including pre‑litigation costs), the circumstances of this case do not warrant revisiting those costs, nor are they sufficient to justify providing further security in relation to those matters; and
(iii) the court’s previous award of security for costs in CBA’s favour in 2011 in the sum of $750,000 overlapped in some respects with matters the subject of this application for security for costs.
Based on these considerations, I order that EWC provide further security for costs in the amount of $271,600.
I will hear the parties on the appropriate form of orders, including orders as to costs.
SCHEDULE OF PARTIES
EWC PAYMENTS PTY LTD (ACN 122 161 737)
First Plaintiff EWORLD ACCOUNT MANAGEMENT SA
Second Plaintiff MATTHEW THOMAS STARR
Third Plaintiff COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) Defendant COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) Plaintiff by Counterclaim EWC PAYMENTS PTY LTD (ACN 122 161 737) Defendant by Counterclaim
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