Genman P/L & Ors Beneficial Finance Corp Ltd

[1993] FCA 342

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342, t q q 3

JUDGMENT NO. ........ .aoam~sam~ ~ B ~ ~ I B B B I ~ ~ \

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IN THE FEDERAL COURT OF AUSTRALIA

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NEW SOUTH WALES DISTRICT REGISTRY

) No NG 213 of 1990 i i

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GENERAL DMSION

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BETWEEN:  GENMAN PTY LIMITED

First Applicant

JACQUES BONNET

Second Applicant

JEANNE EDELWEISS ALAINE

NEWINGTON

31 MAY 1993 Third Applicant

AND:  BENEFICIAL FINANCE
CORPORATION LTD

Respondent

m:	Davies J.
Date:	23 April 1993
Place:	Sydney
NOTE:	Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.                   The motion brought on behalf of the applicants be dismissed.

2.                    The motion brought on behalf of the respondent be granted and that the costs taxed at $27,350 are to be paid to the respondents out of the moneys held in court by way of security of costs.

3.                    The costs of both motions be awarded to the respondent and that leave be granted to the respondent to have these costs taxed and paid out forthwith.

IN THE FEDERAL COURT OF AUSTRALIA 1

l NEW SOUTH WALES DISTRICT REGISTRY

1

GENERAL DMSION

BETWEEN:  GENMAN PTY LIMITED

First Applicant

JACOUES BONNET

Second Applicant

JEANNE EDELWEISS ALAINE

NEWINGTON

Third Applicant

AND:	B E N E F I C I A L	F I N A N C E
CORPORATION LTD

Respondent

Coram.	Davies J.
Date:	23 April 1993

Place. . Sydney

REASONS FOR JUDGMENT

EX TEMPORE

There has been a long running dispute between Mrs Newington, her husband, Mr Bonnet, their company Genman Pty Limited ("Genman") and Beneficial Finance Corporation Ltd ("'Beneficial"), which arose out of the development of certain properties of which Mrs Newington, Mr Bonnet and Genman were registered

!	proprietors. Earlier proceedings in the Supreme Court of New South Wales and in
this Court were resolved by consent and the order of this court contained certain
provis~ons as to steps to be taken by Beneficial.

Mrs Newington was subsequently made bankrupt and she was still a

bankrupt when these present proceedings were commenced in Aprll 1990. The first

issue for consideration was whether Mrs New~ngton was entitled to be a party to the

proceedings in view of her status as a bankrupt and an order was made strlking out

her name as applicant. Beneficial next sought an order for security for costs and that

order was made by myself on 17 August 1990, when the applicants were Genman Pty

Linuted, then an impecunious company, and Mr Bonnet, who was also impecunious.

Such orders are ordlnar~ly made in two circumstances, first where an

applicant is an impecunious company and there is a person standing behind the company who can provide security and, secondly, where the applicant is trustee for or bringing the proceedings on behalf of or in the interests of another. Beneficial relied

upon both grounds when a sought orders requiring Genman and Mr Bonnet to

provide security. In the course of my reasons I said:-

"l an1 left w~th the lmpressiun that the procccd~ngs are being carried

on by an undischarged bankrupl in the name of two partles who have

little or no personal Interest in tlie proceedings."

That was not a ruling that Mr Bonnet did not have any interest in the proceedings or

that he acted solely as a trustee. It merely indicated that, in the circun~stances, the driving force behind the litigation appeared to be Mrs Newington. As she was an undischarged bankrupt at that tlme and was not entitled to brlng the proceedings, I made an order that security to the extent of $15,000 be provided.

An application was subsequently made to strike out the statement of claim. That application was successful as the rnajonty of the matters wh~ch were sought to be litigated had been raised and dealt with by orders of the Supreme Court of New

South Wales and of the Federal Court, several years previously.

Whilst leave was glven to re-plead certain matters arising out of orders of the

Federal Court, the matter has not been re-pleaded, so that the current position is that

there is no effectlve statement of claim in these proceedings.

The matter came before me subsequently on a number of occasions and, on 23

November 1992, I made orders that Beneficial be allowed to tax the costs which had

been incurred in various applications up to that time and which the applicants had

been ordered to pay. I also ordered that further security in the sum of $15,000 be

provided by the applicants. At the time those orders were made, the applicants were

still only Gen~nan and Mr Bonnet. Prior to that, Mrs Newington had made one

application to me seeking to be joined as an applicant, but the assignment to her of the chose-in-action from the trustee in her bankruptcy was not, in nly opinion, a proper assignrner~t and so the application was unsuccessful. Another ass~gnment to

Mrs Newington in proper form was subsequently effected with the approval of

creditors and Mrs Newingto~~ was joined in the proceedings.

The costs awarded were taxed and thc amount certified was $27,350. There is

$30,000 in court by way of security [or costs.

Today's hearing involves a number of outstanding motions, including an application to file an amended statement of claim brought on behalf of the applicants. Secondly, the respondent seeks an order that the costs the subject of the taxing certif~cates hould be p a ~ d forthwith out of the sums standing in court and, thirdly, the applicant seeks an order that the sums in court be paid out to the applicants.

The motion to file an amended statement of clam has not been pursued as other substantially similar proceedings have now been instituted m this Court, seeking to have the consent orders in the Federal Court set aside and seeking an order con~pelling Beneficial to consent to the orders in the Supreme Court being set aside. It seems that such orders are essential to obtaining any substantial relief against

Beneficial, for whllst those orders stand, the princ~ples	of estoppel will apply.
Mr D.B. Milne QC, senior counscl for the applicants, has submitted that the orders for security were made on a false basis and that those orders ought therefore
to be vacated or terminated or, in the alternat~ve,	that in the present exercise of

discretion the moneys should be paid out to the applicants.

Mr Milne has relied upon an alfidavit of Mr Bonnet to the effect that he had an interest in the land which was the subject of the development. He also relied upon an aflidavit of a solicitor stating that he had prepared a deed of trust as between Mrs

Newington and Mr Bonnet which concerned the properties. These affidavits

represent new material which was not before me at the time of the original order for

the provision of security or at the time of the further order of 23 April.

It does not seem to me that these matters affect the valid~ty or appropriateness

of those orders. The cruc~al aspect remains that the proceedings seem to have been instigated by Mrs Newington, who was not at first properly a party to them, and that

the two named applicants were not the persons who had the real concern to continue
the litigation.

Accordingly, it does not seem to me that any ground has been shown either for setting aside the orders for security or for making a contrary order. This litigation has proceeded upon the basis of those orders. The respondent should have the benefit of

them as they seem to me to have been properly made on mater~al which was before

the court.

Mr Mllne has put a further submission which has arisen out of the new claim substance of the claim is that, in the course of informal discovery in these	which seeks to set aside the consent orders in this court and the Supreme Court. The	proceedings, Mrs Newington sighted documents which show that her course of action
was influenced by misrepresentations made by Beneficial in the 1980's and that that course of actlon ~ncluded her agreement to the disposition of the proceedings in the Supreme Court and in the Federal Court.
It is also alleged that those documents just@ the applicants' claims that they were not in deiault at the tlme when Beneiicial said that they were and therefore that the resultant losses should fall upon Beneficial and that the applicants should be recompensed.
However, these claims are not raised in the present proceedings, indeed they are the subject of the new proceedings before this Court. It seems to me that it would be wrong at this interlocutory stage to reach any conclusion with respect to matters which are a long way removed from questlolls of security for costs and from orders as to costs. For these reasons I have not formed any prima facie view about the matter.
I have taken into account the allegat~ons made by Mrs Newngton and the fact that counsel thinks that they are sufficient to just@ the new proceedings, but it does not seem to me that I ought to make an order that the moneys in court should be p a d out to the applicants so as to fund those proceedings. Those moneys were pald
into court as securlty for the costs of the present proceedlngs and the respondent has
already taxed costs incurred up to 23 Aprll 1992.

Two other matters Influence this conclusion. The first is that the order made

for the taxation of costs was an unusual one resulting from the history of the

proceedings and of motlons brought during 1990, 1991 and 1992, at which time the

proceedlngs were not well founded. Indeed, they are still not well founded. In the

l~ght of the lit~gation and of the order for taxation, and it would be inappropriate to

make an order for payment out.

Another matter that I take into account is that the parties have moved to a new and distinct aspect of the htigation. Mr Milne has not sought to continue the present proceedings by amending the statement of claim. What is sought in the new

proceedings 1s the setting aside of the consent orders of the Supreme Court and of

this Court. That constitutes a new proceed~ng, in which the applicants are Mrs Newington, Mr Bonnet and Mr Gennian and it is of a different character to these

present proceedings.

Therefore, I w~ll dismiss the motion brought on behalf of the applicants and

will uphold the motion brought on behalf of Beneficial seeking an order for the payment out of the moneys to the respondents. I shall make the order sought by

Beneficial, that the costs taxed at $27,350 are to be p a ~ d to the respondents out of the

moneys held in court by way of securlty of costs. 1 shall order that the costs of both motions be awarded to the respondent and I grant leave to the respondent to have these costs taxed and p a ~ d out forthwith.

I cer11fy that th~s and 111e precdlng 6 pages

are a true copy or the Reasons for Judgme~it

of the Honourable Mr Jus11ce Dav~es.

Date 23 April 1993

Counsel for tlic appl~ant :  D.B M~lne QC

with P.H. Blackburn-Hart

Sol~citor	Tor thc applicant:	Michacl Roberts 6: Company
Counsel for thc respondcnl:	M.LD.	E~nfcld QC

with M. Dempscy

Solicltor for ihc respondent:	Bruce Stewart Turton
Date of hmnng:
Dam of judgment:	23 Aprll 15-93
Date of ordcr:	27 May 1993