Green Enterprises (Aust) Pty Ltd v QC Bricks Pty Ltd

[2003] QDC 432

DISTRICT COURT OF QUEENSLAND

CITATION:	Green Enterprises (Aust) Pty Ltd v QC Bricks Pty Ltd [2003] QDC 432
PARTIES:	GREEN ENTERPRISES (AUST) PTY LTD (ACN 057 125 925)

Appellant

and

QC BRICKS PTY LTD

(ACN 091 895 724)

Respondent

FILE NO:	D105/2001
DIVISION:	District Court
PROCEEDING:	Application
ORIGINATING  COURT:	District Court Southport
DELIVERED ON:	November 2003
DELIVERED AT:	Bundaberg
HEARING DATE:	14 October, 2003
JUDGE:	R D Hall DCJ
ORDER:	(1) Order that the application for review of the Registrar’s reconsideration be dismissed; (2) Further order that the applicant pay the respondent’s costs of and incidental to this application for review to be assessed.
CATCHWORDS:	COSTS-Assessment of Costs-Review by District Court of a Registrar’s Reconsideration-Principles to apply-Review disallowed.
Costs –Security for costs-Directors “guarantee” worthless without evidence of financial means- Form of Security.
Cases cited: Australian Coal & Shale Employees Federation v The

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Commonwealth (1953) 94 CLR 621
Epping Plaza Fresh Fruit and Vegetables Proprietary Limited
v Bevendale Proprietary Limited (1999) 2 VR 191
re O’Sullivan, Wilson v Bedford (1937) ST R Qd 50
Smith v Buller (1875) LR 19Eq 473
W and A Gilbey Limited v Continental Liqueurs Proprietary

Limited (1964) NSWR 527

COUNSEL:	G. O’Driscoll for Applicant
Solicitor for Respondent
SOLICITORS:	McCullough Robertson Hancock for Applicant Bedford & Associates for Respondent

[1] This is an application pursuant to r 742 of the Uniform Civil Procedure Rules 1999 seeking the review of a reconsideration by the Registrar of the District Court, Bundaberg, of his decision on an assessment of costs in this action. The Registrar had disallowed a claim for counsel’s fees incurred in respect of an application for security for costs made by the defendant. I believe it is appropriate to restate the principles to be applied on a review such as that before me. In Australian Coal & Shale Employees Federation v Commonwealth (1953) 94 CLR 621 Kitto J said:

“(The) true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the Court of Appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving way to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be

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discoverable but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate Court may infer that there has been a failure properly to exercise discretion which the law reposes in the Court of first instance: House v The King. So, too, in my opinion in the exercise of the discretion to review a taxation of costs is subject to no narrower limitation than that which was stated by Bovill CJ and Brett J in Hill v Peel: -

‘A very wide discretion must necessarily be left to the taxing officer, which must be exercised by him after a careful consideration of the particular circumstances of each case; and where, after properly considering the matter, the master has arrived at a decision, it lies upon those who impeach his decision to satisfy the Court he is wrong. …; but, where it is a question of whether the master has exercised his discretion properly, or it is only a question as to the amount to be allowed, the Court is generally unwilling to interfere with the judgment of its officer, whose peculiar problems it is to investigate and to judge of such matters, unless there are very strong grounds to shew that the officer is wrong in a judgment which he has formed.’”

1. It is quite clear from the words of r 742 that the review thereby permitted was intended generally to be based solely upon material upon which the Registrar’s decision or reconsideration was based. Subrule 4 provides that unless the Court otherwise directs, the Court on review may not receive further evidence and a party may not raise any ground of objection not stated in a statement or objection or raised before the Registrar. In this case a number of affidavits had been filed by practicing solicitors experienced in costs assessment. No application has been made for leave to adduce that evidence (three affidavits on behalf of the applicant

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for review and one on behalf of the respondent). I believe that the wording of r
742(4) requires me to reject that material.

1. The decision of the Full Court of Queensland in re O’Sullivan, Wilson v Bedford (1937) ST R Qd 50 has long been regarded as the established authority for the use of fresh evidence on appeal and in particular, on an appeal such as that before me. At p 62 of the report Henchman J said:

   “Order XCI rule 120 gives the Judge a discretion to allow on review evidence that was not before the taxing officer. That discretion must, of course, be exercised judicially, i.e. in accordance with legal principles. One of these is that, in general, evidence which was available to a party before a hearing should not be allowed to be adduced by him on a re- hearing, but that is not to say that the reviewing tribunal may not allow such evidence when it is informed by the original tribunal that a party, who was known to have available and was in the act of adducing material evidence, was stopped by it from producing such material by a ruling that other matters must decide the case, unless at any rate it clearly appears that the party in question acquiesced in that ruling and agreed to proceed on that basis without his additional evidence.”

2. While his Honour was clearly not suggesting that it was only in the circumstances he postulated that leave might be granted to adduce additional evidence on appeal or review, the circumstances he referred to give an indication of the type of circumstances which might call for an exercise of discretion in favour of the party seeking to tender additional evidence. It seems likely to me that the legal representatives of the parties before me simply omitted to seek leave but in those

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circumstances and considering the unhelpful nature of the proposed evidence
contained in those four affidavits I have decided they are not admissible.

1. The decision of the Registrar as to the recovery of counsel’s fees on a party and party assessment is clearly a discretionary matter. The essence of his decision was that the application for which counsel was briefed was one for security for costs pursuant to the Corporations Act and was little more than a formality. He considered that the parties through their solicitors had agreed that security of costs “would be provided” and they had also agreed on the quantum of costs to be secured. He went on to say:

   “The practical purpose of the application was to ask the Court to formalise the order for security, and to resolve the dispute over what form that security should take.”

[6]   The application was unusual in that the directors of the plaintiff company had offered to the defendant documents described as “guarantees” whereby the directors “consented” that if the plaintiff failed to pay the costs which it was ordered to pay to the defendant, “Judgment may be signed against me or my

executors and administrators, and execution may be issued against our lands

goods and chattels for a sum not exceeding 30,000”. On the hearing of the application I acceded to a suggestion that those documents were valueless in the absence of evidence of the financial condition of the directors. The directors had refused to comply with requests by the defendant to supply particulars of their financial condition and I considered that the “guarantees” offered by the directors

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of the plaintiff company were valueless and ordered that security be given by payment to the Court of the sum of $30,000 or by provision of a banker’s guarantee or bond.

[7]   It was not entirely correct to say, as the Registrar did, that “The parties have agreed that security for costs would be provided”. But I am not satisfied that that error had a significant effect upon the Registrar’s decision. The plaintiff had clearly established the insolvency of the plaintiff company for the purposes of the application and the evidence pointed to by the plaintiff to rebut that claim was clearly lacking in cogency.

[8]   The appellants further allege that counsel’s involvement in the application was necessary because the order which I made was without precedent in Queensland, although there was a decision of the Victorian Full Court which supported it. (See

Epping Plaza Fresh Fruit and Vegetables Proprietary Limited v Bevendale

Proprietary Limited (1999) 2 VR 191). As the Registrar has pointed out in his Reasons, that authority and Queensland decisions of the Supreme and District Courts exhibited reasoning similar to that on which my decision was based. In fact, I determined the question from the standpoint of common sense rather than legal principle that a person offering to be responsible for a limited liability corporation’s debts and purporting to expose his own assets to execution on failing to do so risks nothing at all if he is not possessed of assets and a Court asked to accept such an offer in lieu of an order that a company give security of

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costs could not sensibly do so without satisfying itself that there were assets
behind the offer.

1. The applicant argued that the Registrar erred in relying upon dicta of Malins VC in Smith v Buller (1875) LR 19Eq 473 at 475 as supplying a definition of the words “necessary or proper” used in r 703(2) of the UCPR. The error of the Registrar is said to be that Smith v Buller (supra) relates to the old English rules where only “necessary costs” were allowed under taxation. I am not satisfied, however, that the Magistrate did misdirect himself. He clearly relies upon the decision of Asprey J in W and A Gilbey Limited v Continental Liqueurs Proprietary Limited (1964) NSWR 527 in which the term “necessary and proper” was defined. Asprey J is said to have come to the conclusion that it is not necessary or proper to include expenses which are luxuries, extravagant or over- cautious. The Registrar subsequently concluded that “The retention of counsel

was more than was necessary and proper to conduct litigation and therefore its over-cautiousness, or convenience to the defendant, should be considered a

luxury.”

[10]  Accordingly I am not satisfied that the Registrar acted on any wrong principle or made any fundamental error of law. None of the criteria expressed by Kitto J in

Australian Coal & Shale Employees Federation v The Commonwealth (supra)

have been satisfied and I order that the application for review of the Registrar’s
reconsideration be dismissed.

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[11]  I further order that the applicant pay the respondent’s costs of and incidental to this application for review to be assessed.

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