Glenariff Holdings Pty Ltd v Delta Bay Holdings Pty Ltd - [2019] WADC 33

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   GLENARIFF HOLDINGS PTY LTD -v- DELTA BAY HOLDINGS PTY LTD [2019] WADC 33
CORAM:   DEPUTY REGISTRAR HEWITT
HEARD:   13 MARCH 2019
DELIVERED          :   28 MARCH 2019
FILE NO/S:   CIV 2319 of 2016
BETWEEN:   GLENARIFF HOLDINGS PTY LTD
Plaintiff

AND

DELTA BAY HOLDINGS PTY LTD
Defendant

Catchwords:

Practice and procedure - Application for security for costs - Turns on its own facts

Legislation:

Corporation Act 2001 (Cth), s 1335

Result:

Security ordered

Representation:

Counsel:

Plaintiff	:	Mr C S Williams
Defendant	:	Mr T J Palmer

Solicitors:

Plaintiff	:	Solomon Brothers
Defendant	:	Hotchkin Hanly

Case(s) referred to in decision(s):

Nil

DEPUTY REGISTRAR HEWITT:

In this case the plaintiff subdivided land in the Canning Vale area in 2006 and 2007. In doing so it created certain infrastructure, in particular the creation of roadways to service the land so subdivided. Subsequently, the defendant subdivided land which allegedly has a common boundary with roads created by the plaintiff and as a consequence the plaintiff has brought an action pursuant to s 159 of the Planning and Development Act 2005 to recover an amount representing one half of the reasonable costs borne by the plaintiff in providing or upgrading the relevant roads.
The matter was listed for trial in 2018 and as part of its preparation for trial the plaintiff subpoenaed one Bradley Ian Harris to give evidence in support of the plaintiff's case. Mr Harris is an expert who was commissioned by the plaintiff to provide and did provide reports to assist the plaintiff in prosecuting its claim. Mr Harris rendered invoices for the work which he undertook in preparing the report but the account was not fully paid. Efforts were made to obtain payment of the balance but they were unsuccessful. When he received the subpoena Mr Harris instructed solicitors to apply to set it aside. That application came before Judge Troy on 7 November 2018. His Honour set aside the subpoenas and further, as a consequence of that decision, vacated the trial date.
That series of events prompted the defendant to seek an order for security for costs. Such an application is based on the provisions of s 1335 of the Corporations Act 2001 (Commonwealth) which relevantly provides
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 of proceedings until the security is given.
The information available to the applicant concerning the financial circumstances of the plaintiff is scant and boils down to two matters:
1.there is no land registered in the name of the plaintiff; and
2.the circumstances leading to the adjournment of the trial suggest that the plaintiff is impecunious to the extent that it imperilled the trial of its action by failing to properly remunerate an expert whom it intended to call to support its case.
In my view the circumstances of the vacation of the trial date and the reasons for it are eloquent evidence of the fact that the plaintiff company is in straightened financial circumstances and there is reason to believe that it will be unable to pay the costs of the defendant in the event that the defendant prevails at trial. That is a sufficient trigger to enliven the discretion to require security for costs to be given and the issue is now whether or not security should be ordered in the circumstances prevailing in this matter.
Relevant to the exercise of that discretion is the length of time in which this action has been proceeding in the court and the very obvious and substantial monies which have been paid to progress the action to the state it is at the moment. The ability of the plaintiff to sustain the action since 2016 and take it to the stage it has now reached, and pay hearing fees for the trial which suggest to me that the plaintiff has access to monetary resources. No precise information is available to me because the plaintiff has not filed any affidavit in opposition to the application.
It is argued by the plaintiff that the case is not one as to whether the plaintiff wins or loses but one in which the appropriate determination will be what amount is properly payable by the defendant to the plaintiff and as a consequence it is argued that security for costs is not required. The logic being that although quantum might be in some doubt, the eventual outcome should be regarded as clear cut.
The defendant however argues, in my view convincingly, that what I am invited to do by way of such an argument is to opine on the very question which is the basis upon which the action is proceeding. I agree. It seems to me that I can properly conclude and I do conclude that there is a balance between the arguments advanced by the plaintiff and the defendant, such that it is not possible to accept, as I am invited to do, that the outcome of the case will in all probability be a requirement that the defendant pay a sum of money to the plaintiff.
The other matter which weighs on the decision is the fact that were I to order security for costs to be given it may frustrate the plaintiff's opportunity to take this matter to a conclusion and since the application comes so late, that would work an injustice on the plaintiff.
The plaintiff has had an opportunity to present evidence that the making of a security for costs order might frustrate the action and work an injustice to it. It has not done so. It is difficult to discern the reason the plaintiff allowed the situation to develop as it has.
Whilst in many circumstances it might be unfair on a plaintiff to impose a security for costs order at the eleventh hour which may prevent its action being heard, in my view, the circumstances in this case are unique. The information available to the plaintiff as to the financial buoyancy or otherwise of the defendant, is scanty. The circumstances which led to the loss of the trial, and consequential costs orders against the plaintiff, are most unusual. The circumstances are such to cause some level of concern to the defendant which would not have existed prior to these events taking place. I am unable to see any proper basis upon which the defendant could have applied for security for costs at an earlier stage. Certainly none is evident on the materials before me.
The plaintiff has had an opportunity to explain the situation, and has chosen not to adduce any evidence. In those circumstances, I am of the view that an order for security for costs should be made and I propose to make such an order.
The amount sought by the defendant is, in my view, excessive. The trial will not involve a great amount of testimony and much of the material will be in the form of documentary evidence. I think that a proper allowance should be for counsel fee for a three day trial together with some level of support by a restricted practitioner. There should be some additional allowance for the prospect of the defendant having to engage the services of an expert to counter any fresh evidence which the plaintiff might seek to adduce in lieu of that originally intended to be provided by Mr Harris.
Weighing up all these matters I consider that the sum of $30,000 would be an appropriate amount to be paid in as security for costs. That security is purely for the trial of the action and to the extent that the defendant has incurred costs up to the date of the application. I do not consider a security order to be appropriate. Accordingly, the order I propose, subject to the comments of counsel, is that the plaintiff do pay into court to the credit of this action the sum of $30,000 as security for the defendant's costs and that until that paid the action be stayed. There should be a further order enabling the plaintiff to apply for security to be provided in some other form, such as the bank guarantee, in lieu of a cash payment.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
ET
Court Officer
28 MARCH 2019