Four Vanguard Servicos E Navagacao Lda v ENI Australia Ltd
[2014] WASC 473
•12 DECEMBER 2014
FOUR VANGUARD SERVICOS E NAVAGACAO LDA -v- ENI AUSTRALIA LTD [2014] WASC 473
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 473 | |
| Case No: | ARB:11/2014 | ON THE PAPERS | |
| Coram: | MARTIN CJ | 12/12/14 | |
| 5 | Judgment Part: | 1 of 1 | |
| Result: | Security for costs in the sum of $150,000 to be provided | ||
| B | |||
| PDF Version |
| Parties: | FOUR VANGUARD SERVICOS E NAVAGACAO LDA ENI AUSTRALIA LTD MOBIL AUSTRALIA RESOURCES CO PTY LTD TAP WEST PTY LTD |
Catchwords: | Practice and procedure Application for security for costs Appropriate amount to be provided by way of security |
Legislation: | Commercial Arbitration Act 1974 (Cth), s 16, s 19 |
Case References: | Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [2011] WASCA 118 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
ENI AUSTRALIA LTD
MOBIL AUSTRALIA RESOURCES CO PTY LTD
TAP WEST PTY LTD
Defendants
Catchwords:
Practice and procedure - Application for security for costs - Appropriate amount to be provided by way of security
Legislation:
Commercial Arbitration Act 1974 (Cth), s 16, s 19
Result:
Security for costs in the sum of $150,000 to be provided
Category: B
Representation:
Counsel:
Plaintiff : No appearance (on the papers)
Defendants : No appearance (on the papers)
Solicitors:
Plaintiff : Jackson McDonald
Defendants : Clayton Utz
Case(s) referred to in judgment(s):
Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [2011] WASCA 118
1 MARTIN CJ: In these proceedings the plaintiff seeks orders setting aside an award made in an arbitration governed by the provisions of the International Arbitration Act 1974 (Cth) pursuant to s 16 and s 19 of that Act, and certain articles of the UNCITRAL Model Law. Directions have been made setting a timetable of procedural steps which will enable the substantive application to be heard in March 2015.
2 The defendants have applied for an order that the plaintiff pay funds into court as security for their costs of defending the application. Despite some initial opposition to that application, the plaintiff now concedes that it is appropriate for the court to order it to pay an amount into court as security for the defendants' costs of these proceedings. The only issues remaining in relation to the defendants' application for security for costs concern the determination of the amount to be paid into court, and the appropriate order made in respect of the costs of the application for security. As those are the only issues which remain alive, it is unnecessary to refer to the circumstances which enliven the court's jurisdiction to order the provision of security for the defendants' costs, or to the reasons why it is appropriate for that jurisdiction to be exercised in this case.
The amount of the security to be posted
3 The principles governing the exercise of the discretion with respect to the determination of the appropriate amount to be provided by way of security for costs were conveniently summarised by Newnes JA in Field Camp Services Pty Ltd v Site Accommodation Pty Ltd:1
There are no hard and fast principles to be applied in determining the appropriate amount to be provided by way of security for costs. While it is clear that the amount of the security to be provided must be related to the costs likely to be incurred by the respondent on the appeal, in ordering security for costs the court does not endeavour to give a complete and certain indemnity to the respondent: Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171, 175. The amount of security involves an exercise of discretion and is to be determined by what the court considers just in the circumstances. The factors to be taken into account in the exercise of the discretion will depend upon the particular circumstances of the case and, whilst the amount of the respondent's likely taxed costs is ordinarily a primary consideration, in exercising its discretion the court is not confined to the question of the amount of those costs.2
4 Put another way, the determination of the appropriate amount to be provided by way of security involves the exercise of the discretion by reference to matters of impression rather than mathematics.
5 The parties have each engaged cost consultants who have provided reports of their estimate of the amount of the costs likely to be awarded in favour of the defendant in the event that the plaintiff's application to set aside the award is dismissed and the defendants are awarded the costs of the proceedings. Those reports are annexed to affidavits which have been filed by the parties. The report commissioned by the defendants estimates the costs that might be successfully claimed by the defendants in the amount of $247,860. In light of that report, the defendants claim that the plaintiff should pay the amount of $200,000 into court by way of security for its costs. On the other hand, the report commissioned by the plaintiff estimates the costs likely to be recovered by the defendants in the amount of $89,980, and the plaintiff contends that it should not be ordered to pay more than $90,000 into court by way of security for the defendants' costs.
6 The amount allowable under the applicable item of the relevant scale of costs is $35,200, or $39,050 if the hearing takes two days. Both cost experts have prepared their estimates on the basis of an assumption that an order will be made entitling the defendants to recover costs above the applicable limit imposed by the scale. Without in any way prejudging the exercise of the court's discretion with respect to the costs of the proceedings, that assumption appears to me to be reasonable.
7 The explanation for the differing estimates of the cost experts engaged by the parties lies in the assumptions they have made with respect to such things as the amount of time properly allowed to prepare the defendants' case for hearing, the extent to which allowance will be made for two counsel to represent the defendants at the hearing, and the likely length of the hearing. It is unnecessary to relate the details of the differing assumptions made by the experts in respect of these matters. It is sufficient to observe that, perhaps predictably, in my view the assumptions made by the cost experts engaged by the defendants have the tendency to over-estimate the amount of costs likely to be recovered, whereas the assumptions made by the experts engaged by the plaintiff have the tendency to under-estimate the costs likely to be recovered.
8 Having reviewed the draft bills of costs prepared by each of the experts, made my own estimates of the likely course of the hearing and the time required for its preparation, and the costs likely to be recovered after taxation, in my view, it is appropriate for the plaintiff to provide security for the defendants' costs of these proceedings by paying $150,000 into court.
The costs of the application
9 The defendants submit that the plaintiff should be ordered to pay the costs of the application for security forthwith because the plaintiff initially opposed the application and because the plaintiff failed to comply with a direction requiring the filing and service of written submissions, which failure resulted in costs being unnecessarily incurred by the defendants. However, the second proposition appears to me to go only to the quantum of the costs properly recovered, if the defendants are awarded the costs of the application, and not to the substantive question of whether an order should be made at this stage of the proceedings.
10 The plaintiff on the other hand asserts that the costs of the application should be ordered to be in the cause of the proceedings.
11 In my view there are aspects of the way in which the plaintiff has responded to the defendants' application for security of costs which are capable of sustaining an argument that the defendants should have at least some of their costs of the application irrespective of the outcome of the substantive proceedings. However, the proper exercise of the discretion with respect to the costs of the application for security as a whole may well turn upon the outcome of the substantive proceedings. For that reason, the appropriate order is to reserve the costs of the defendants' application for security for costs.
12 For these reasons, the court will order:
(1) the plaintiff do pay into court $150,000 as security for the defendants' costs of these proceedings not later than 5 January 2015;
(2) in the event that the plaintiff does not pay $150,000 into court as security for the defendants' costs by 5 January 2015, these proceedings will be stayed until further order and the hearing dates will be vacated;
(3) the costs of the defendants' application for security for costs will be reserved; and
(4) any party has liberty to apply in respect of these orders.
1 [2011] WASCA 118
2 At [27].
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