Gypter Pty Ltd as trustee for Gypter Trust T/A Abila Marketing v Defence Housing Australia - [2018] WASC 298

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   GYPTER PTY LTD as trustee for GYPTER TRUST T/A ABILA MARKETING -v- DEFENCE HOUSING AUSTRALIA [2018] WASC 298
CORAM:   MASTER SANDERSON
HEARD:   22 AUGUST 2018, 11 SEPTEMBER 2018
DELIVERED          :   27 SEPTEMBER 2018
FILE NO/S:   CIV 2122 of 2017
BETWEEN:   GYPTER PTY LTD as trustee for GYPTER TRUST T/A ABILA MARKETING
First Plaintiff
MG PROPERTY MANAGEMENT PTY LTD as trustee for BELMONDE TRUST T/A MLG REALTY
Second Plaintiff
AND
DEFENCE HOUSING AUSTRALIA
Defendant

Catchwords:

Corporations Law - Application for security for costs - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)

Result:

Security ordered

Category: B

Representation:

Counsel:

First Plaintiff	:	Mr B D Campbell
Second Plaintiff	:	Mr B D Campbell
Defendant	:	Mr E M Heenan

Solicitors:

First Plaintiff	:	Hale Legal
Second Plaintiff	:	Hale Legal
Defendant	:	Clayton Utz

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

Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306
Jazabas Pty Ltd v Haddad [2007] NSWCA 291
Mecrus Pty Ltd v Industrial Energy Pty Ltd [2015] FCA 103
Prime Forme Cutting Pty Ltd v Baltica General Insurance Co (1990) 8 ACLC 29
Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57

MASTER SANDERSON:

This was the defendant's application for security for costs. The amount sought by way of security was just over $47,000 with an amount of $17,000 representing a first tranche of the security to be paid within 21 days. The defendant sought to have the remainder of the security paid in further tranches after mediation had taken place. In the context of litigation in this court, the amount sought as security is modest. Counsel for the plaintiffs recognised that was the case and indicated if an order for security were to be made then the amount sought was appropriate and the provision of the security in tranches was reasonable.
The application was brought under s 1335 of the Corporations Act 2001 (Cth). That section requires a defendant to establish if an award of costs was made against the plaintiff, the plaintiff would be unable to meet those costs. Once that jurisdictional threshold is crossed then whether or not to make an order for security is a matter of discretion. In his written submissions filed in opposition to the application, counsel for the plaintiffs conceded the jurisdiction issue. The issue between the parties then was whether, as a matter of discretion, I should order the plaintiffs to provide the requested security.
There was no dispute between the parties as to factors to be taken into account in the exercise of discretion. A non‑exhaustive list of these factors was set out by Edelman J in Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57 [6]. It was the plaintiffs' submission that in this case the relevant factors to be considered were as follows:
(a)whether the application for security for costs was made promptly;
(b)the merits of the plaintiffs case;
(c)the likelihood of the plaintiffs being able to pay the defendant's costs if successful;
(d)whether the plaintiffs impecuniosity was caused by the defendant;
(e)whether an order for security for costs would impede the plaintiffs ability to bring their claim; and
(f)the form of any security or undertaking offered.
Before dealing with these matters, I should say something about the nature of the dispute between the parties. In opposition to this application, the plaintiffs filed an affidavit of Marcus Leigh Gilmore sworn 14 March 2018. The following summary of the facts is taken from Mr Gilmore's evidence and from the statement of claim. The first plaintiff is a company which provides real estate consultancy services. The second plaintiff provides real estate marketing services. The defendant provides housing and related services to members of the Australian Defence Force and their families. The defendant was developing a property in Queen Victoria Street, Fremantle. It entered into a marketing and consultancy agreement with the first plaintiff and an agency agreement with the second plaintiff.
As the deal was structured, the first plaintiff would receive a fee for each unconditional sale it secured within 28 days of the date upon which the defendant received payment of the buyer's deposit for a lot. The second plaintiff would then receive 1.125% of the purchase price payable for each lot within 14 days of settlement of the lot. The arrangement seems unusual but the defendant did not suggest it was in any way improper. The matter proceeded upon the basis that there were two valid and enforceable agreements.
By par 6(a) of the statement of claim, the first plaintiff pleads what it says were the relevant terms of the consultancy agreement. Without going through these terms in detail, the first plaintiff says it was in effect charged with developing a marketing campaign for the defendant's units. By par 7(a) of the statement of claim, the second plaintiff says it was to market the units. To that end it was to maintain a sales office in the development and it was responsible for all contract administration. Paragraph 8 of the statement of claim is of particular relevance. It is in the following terms:
In addition and separately to paragraphs 6 and 7 above, the Consultancy Contract and the Agency Agreement contained the following implied terms:
(a)the Defendant would give due regard to the expert advice given by the Plaintiffs to market and sell the lots; and
(b)the Defendant would price and sell the lots at an appropriate sum based on the expert advice given by the Plaintiffs to market and sell the lots.
Particulars of that paragraph are provided but it is not necessary to repeat those particulars here. Suffice it to say that reference is made to the standard requirements for implying terms in contracts.
The plaintiffs say that on or about 23 May 2017, the defendant repudiated both contracts. It was not in dispute in this application that such a repudiation occurred nor was it in dispute that the plaintiffs accepted the repudiation on 24 May 2017. The plaintiffs allege as a result of the repudiation, they suffered loss and damage. Although there is clearly a difference in the way damages would be calculated with respect to the first and second plaintiffs, essentially what both are claiming are the costs of complying with the agreement up until the date of repudiation of the contract and thereafter damages for loss of bargain to market and sell all the lots.
Against that factual background, it is now necessary to consider the discretionary factors to which I referred earlier. Although it was the plaintiffs' position this application had not been brought promptly, that point was not vigorously pursued. The relevant facts are set out in pars 4 ‑ 24 of Mr Gilmore's affidavit. The plaintiffs issued the writ indorsed with a statement of claim on 6 July 2017. The defendant entered an appearance on 12 July 2017. On or about 31 July 2017, the defendant's solicitors wrote to the plaintiffs' solicitors raising concerns about the statement of claim. On 3 August 2017, the plaintiffs responded. That same day the defendant filed its defence. This was really a 'holding' defence. That much was acknowledged by counsel for the defendant during the course of his submissions.
The first case management conference was listed for 21 September 2017. Just prior to that conference, the defendant's solicitors indicated they intended to seek security for costs. At the case management conference consent orders were lodged and the first of those orders required the defendant to file and serve any application for security for costs by 12 October 2017. The defendant complied with that order.
Both before the chamber summons was filed by the defendant and thereafter, the parties conferred in relation to the provision of security. Eventually they agreed that they would attend an informal mediation to try and resolve the dispute. The agreement was reached on the basis the plaintiffs would pay an amount of $10,000 into their solicitor's trust account as security for the defendant's costs up to and including the first informal conference 'in the event that a costs order was made in favour of the defendant in the proceedings'. That payment was made and an informal conference took place on 21 November 2017. Regrettably, no settlement was reached. Thereafter the matter was programed through to a hearing, albeit at a leisurely pace. Both parties were at various times in default in relation to the programing orders. But these defaults were rectified by consent orders.
In my view it could not be said that there has been unreasonable delay on the part of the defendant in seeking the order for security for costs. The parties were negotiating in an attempt to resolve their differences, not just in relation to the provision of security but in relation to the action as a whole. In the circumstances the application for security for costs could not reasonably have been pursued with any greater despatch than it was. That being so, there is no basis as a matter of discretion for refusing the order sought by the defendant due to delay.
There was considerable discussion during the course of submissions as to the merits of the plaintiffs' claim. Both parties agreed that it was not appropriate in a case such as this to undertake any detailed analysis of the cause of action and the potential defence. But two points raised by counsel for the defendant should be mentioned. First, the plaintiffs' claims appear to rely entirely upon terms to be implied into both contracts. In cl 1.1 of each contract the term 'scope of works' is said to mean matters set out in schedule 1 to the contract. In each case, schedule 1 is quite comprehensive. By way of example schedule 1 to the consultancy contract requires the first plaintiff to advise in relation to market research, strategic market planning, communications planning and collateral preparation, managing of marketing budgets, preparation development and upkeep of sales strategy and customer relationship management strategies. Clause 3 of the consultancy agreement sets out the duties of the consultant and really requires the consultant to offer advice in relation to all matters set out in schedule 1. There is nothing in that clause which requires the defendant to accept the advice of the first plaintiff. It is therefore somewhat difficult to see how a term as pleaded in par 8 can be implied into the contract.
The second point raised by counsel had to do with termination of the contract. By cl 8.2 of each agreement, either party could terminate the agreement by giving 21 days written notice to the other party. It was not suggested by counsel for the defendant that such notice had been given. His point was even if the defendant had repudiated the agreement, any damage would be limited to a 21 day period because a termination for convenience was always possible.
It was counsel for the defendant's submission that the plaintiffs' case was weak.
As I indicated above, it is not appropriate for me to make any detailed assessment of the strength or otherwise of the plaintiffs' case. I am prepared to proceed on the basis that the plaintiffs have an arguable case. If that were not the case, the defendant may have brought a summary judgment application rather than an application for security for costs. But what I would accept is that the plaintiffs' case cannot be characterised as strong. That said, and accepting the plaintiffs' case is arguable, the strength of the plaintiffs' cases is not a factor one way or the other in the exercise of my discretion.
In pars 25 ‑ 27 of his affidavit, Mr Gilmore states quite frankly that not only are the plaintiffs not in any position to meet an adverse costs order, he personally would not be in a position to do so. He says he is prepared to offer a personal undertaking but that undertaking would be of little value. He says he owns no real property. He does not set out a statement of his personal assets and liabilities and his failure to do so was the subject of adverse comment by counsel for the defendant. In any event determination of this application must proceed on the basis that neither the plaintiffs nor Mr Gilmore could provide worthwhile security for costs.
Counsel for the defendant pointed out that the second plaintiff was in liquidation. Therefore any award of damages in favour of the second plaintiff would benefit not only Mr Gilmore as a shareholder but the creditors, secured and unsecured, of the second plaintiff. Counsel pointed to the fact there was no evidence any of these creditors had been approached with a view to providing security.
In considering this issue, I have adopted the following approach. Mr Gilmore is prepared to offer a personal undertaking to be responsible for any adverse costs order against the plaintiffs. It is relevant to consider the undertaking may be worthless. The fact the undertaking is proffered is not of critical importance. As Malcolm CJ said in Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18WAR 306 [316]:
… the availability of an undertaking of personal liability by the persons who stand behind the company is no more than a factor, albeit an important factor, to be taken into account in the exercise of discretion.
It was the plaintiffs' position that their impecuniosity was caused by the actions of the defendant. Specifically it was said the defendant was aware that both plaintiffs were in effect special purpose vehicles. So the termination of the contracts would necessarily lead to the plaintiffs being impecunious and that could be sheeted home to the defendant.
That submission of course calls into question whether or not the defendant was justified in repudiating the agreement - assuming that it was repudiated. So really the issue is inextricably linked to the merits of the plaintiffs' claims. In my view I could not conclude the impecuniosity of the plaintiffs is a direct consequence of the defendant's actions. It is not a factor which is relevant to the exercise of my discretion.
In written and oral submissions, counsel for the plaintiffs submitted as the defendant was aware each of the plaintiffs was effectively a special purpose vehicle with no income available beyond their entitlement under the contract, the defendant was precluded from arguing that the plaintiffs' impecuniosity justified an order for security for costs. The evidentiary basis for this submission is found in pars 32 and 79 of Mr Gilmore's affidavit. Those paragraphs read as follows:
32.During the tender process I had discussions with Mr Cade Taylor on behalf of the Defendant ('Mr Taylor') in which I informed him that the Plaintiffs required a remuneration package of 2.25% - of which fifty percent would need to be paid either upfront or in advance as a marketing fee to the First Plaintiff for its work, and the balance to the paid the Second Plaintiff on settlement for the real estate agent work. I informed the Defendant that this was necessary for the Plaintiffs to be able to financially carry the project based on the proposed timeframes outlined in the Defendant's tender.
…
79.The Defendant knew we were financially completely reliant on the project succeeding as I had told them from the outset that the Plaintiffs were working exclusively on the project (save for the management of the Second Plaintiff's existing rent roll). The Defendant, however, had no regard for the Plaintiffs' financial circumstances. The only way the Plaintiffs were to be paid was after the sales had been made and settlement occurred. Despite this, the sales marketing campaign and the project was continually getting pushed back which was significant. Further, it became harder to sell the apartments because they were, in my opinion, and based on the valuations, grossly overpriced. This made it hard to make sales, not to mention the struggle it was to get adequate information and materials from the Defendant. The Defendant's conduct has therefore caused or, at the very least, substantially contributed to the Plaintiffs impecuniosity.
Although the defendant filed two affidavits of Yvette Louise Fenton in support of this application, neither of these affidavits addressed this aspect of the evidence of Mr Gilmore. On that basis, it has to be accepted what Mr Gilmore has to say is accurate.
The submission that the fact a defendant contracted with a plaintiff it knew or suspected was in a shaky financial position is based upon a line of cases decided in Victoria. The latest of these appears to be the judgment of Murphy J in Mecrus Pty Ltd v Industrial Energy Pty Ltd [2015] FCA 103. Under the sub‑heading 'Whether IEPL assumed the risk of Mecrus' poor financial position', his Honour said:
68.Where it may be said that a defendant voluntarily assumed the risk of a corporate plaintiff’s financial position it may be unfair to order security for costs: see Letore Pty Ltd v Associated International Finance Pty Ltd (Unreported, Supreme Court of Victoria, McDonald J, 28 May 1993, BC9303883); Denward Lane Pre-Cast Panels Pty Ltd v Cornerstone Constructions Australia Pty Ltd [2008] VSC 144 at [26] per Hansen J; Industrial Conveying (Aust) Pty Ltd v SKM Recycling Pty Ltd [2012] VSC 588 at [140] ‑ [145] per Robson J; Coca-Cola Amatil Victoria Ltd v PAA Enterprises Pty Ltd [2003] VSCA 135 at [6] - [9] per Buchanan JA; Harrop Engineering at [11] ‑ [16], [22] per Derham AsJ.
69.In Harrop Engineering at [12] - [16] Derham AsJ reviewed the authorities and explained:
[12]In Letore, McDonald J considered it a relevant consideration that the defendant had engaged in a voluntary contractual relationship with the plaintiff and that it was that contract which gave rise to the proceedings. His Honour considered it reasonable to assume that at the time the defendant entered into the contract it considered it was financially prudent and worthwhile to do business with the plaintiff. This factor weighed against an order for security for costs.
[13]In Denward Lane, Hansen J identified this factor in the following terms (although it appears not to have been given much weight in the circumstances of that case):
It may be assumed that the defendant considered the plaintiff to be an appropriate company to engage for these purposes, which must have included an assessment of the plaintiff’s financial and managerial ability to perform the agreement. Having done so it is relevant that it is under the very agreement thus entered into that this litigation arises.
[14]In Industrial Conveying Robson J took this factor into account in refusing to grant security for costs.
[15]In Coca-Cola Amatil, the plaintiff (below) had submitted that as Coca-Cola Amatil had chosen to deal with a company, it should be limited to the resources of the company to satisfy any order for costs it might obtain. The judge who heard the application accepted this ground, saying:
Now, that falls fairly and squarely within the principle of what Justice McDonald was talking about in the Letore case. It seems to me that the defendant voluntarily entered into a commercial arrangement with a corporation. Well, here even more so. Not only did they enter into this arrangement, they induced this arrangement. But for this arrangement they would have been dealing with a natural person because the exact same services were being provided as I understand it by Mr Andrew through the corporate structure. And if it weren’t for that and there had been a similar contractual arrangement for these sorts of services and there had been an alleged breach, it would be Mr Andrew alone who would now be the plaintiff and there wouldn’t be an opportunity for the defendant to seek security for costs.
[16]The Court of Appeal (Callaway, Buchanan and Eames JJA) concluded that a refusal by the primary judge to order security for the defendant’s costs on the basis that included this factor did not disclose any error of principle in the exercise of the judge’s discretion. (Citations omitted.)
70Derham AsJ concluded at [22]:
On the other hand, the assumption of risk factor weighs against the ordering of security, and weighs, in my view, heavily. It weighs heavily because when the defendants entered into the Sale and Purchase Agreements they knew of the impecuniosity of the plaintiffs and should be taken to have assumed the risk that if proceedings were commenced by the plaintiffs to enforce the Agreements, the defendants would be sued by impecunious plaintiffs. It is also relevant because it is out of the very Agreements under which the businesses were acquired that the plaintiffs sue the defendants, and do so in circumstances where they, the defendants, have effectively restrained the principal of the plaintiffs from conducting business through the plaintiffs.
71.The respondents did not argue against the principle underpinning this line of authority only that arguing it does not apply on the facts of the present case. I accept that the facts in Harrop Engineering (and those of the cases referred to) are different to the facts in the present case. In Harrop Engineering the defendant was aware of the plaintiff’s financial difficulties prior to entry into the relevant contract, and the defendant’s conduct and the nature of the transaction meant that the plaintiff was completely unable to continue its business as a going concern. In comparison, as the respondents contend, Mecrus was established in or around 1999 and until 2004 it operated a steam plant and bottling operation. Mecrus does not suggest that it was in financial difficulty at the commencement of the Agreement, and in 2004 it had other business interests which were not related to or dependent on the IEPL parties. Mecrus still has other business interests and Mr Richards deposes that it continues to be profitable, although its revenue is only 30% of what it was when the Agreement was on foot.
72.Against this, I note that the IEPL parties are substantial and Mecrus is a much smaller company. The Agreement, which has some features of a joint-venture, involved Mecrus taking a sub‑lease of the Briquette Plant for the limited term of the Agreement, rebuilding the Plant at a cost of $3 million to the ultimate benefit of the IEPL parties, and then manufacturing briquettes for IEPL for the fixed term of the Agreement. It is significant that throughout the relevant period, including at the time of negotiation of the Agreement, Gordon Carter was a director of Mecrus and each of the IEPL parties.
73.I infer that the IEPL parties knew Mecrus’ financial position, including that it was required to borrow approximately $3 million to rebuild the Briquette Plant and that 60 to 70% of Mecrus’ revenue and profit would come from its operation of the plant. They must have known that once the Agreement came to an end Mecrus would be unable to manufacture briquettes, and that it would lose in the order of 70% of its revenue at the same time as it would be forced to pay substantial redundancy payments. The respondents submit that they had good grounds to believe that Mecrus was a diversified and financially stable corporation with substantial financial backing, but in my view they sought to overstate Mecrus’ financial position at the time. It is likely that they understood some of the difficulties that Mecrus would face at the end of the Agreement.
74.I assume that when the respondents entered into the Agreement with Mecrus they considered it was financially prudent and worthwhile to do so. The claims in the proceeding arise directly out of the Agreement and a relevant factor to be taken into account is the IEPL parties’ assumption of a risk that if Mecrus commenced proceedings to enforce the Agreement it might have difficulties in meeting an adverse costs order. While in all the circumstances I do not see this as a strong factor, it points away from an order for security for costs.

It is worthy of note this factor was not mentioned by Edelman J in the Westonia decision. However, the Mercrus decision was a decision of a Federal Court judge and as the court was applying federal legislation, there is no reason to suggest this factor which might be referred to as 'the assumption of trading risk factor' would not apply nationally. That said, it never seems to have been applied in this State. No doubt the proper approach is to regard it as one factor to be taken into account in the overall determination of whether or not security ought be ordered. In this case, it must be taken to be a factor which weighs in the balance against the ordering of security.
Further, during the course of his submissions, counsel for the plaintiff suggested the defendant as an agency of the Commonwealth was in a position to absorb any costs of litigation and this was a factor against the grant of security. Brooking J in Prime Forme Cutting Pty Ltd v Baltica General Insurance Co (1990) 8 ACLC 29 dealt with a similar argument in relation to insurance companies. His Honour said at pages 32 - 33:
These large corporations stand in no special need of care and protection. Suing and being sued is for them a normal part of this imperfect world. They can afford to pay the piper, just as they will expect to call the tune. But if one of these wealthy, powerful institutions is sued by an insolvent company, why should it be viewed as outside the policy of the security for costs provisions?
In my view it is of no relevance at all that the defendant is an agency of the Commonwealth and has for all practical purposes unlimited means.
That then leads to the question of whether or not if an order for security is made it will stultify the proceedings. Paragraph 89 of Mr Gilmore's affidavit puts the position as follows:
If an order is made that the Plaintiffs have to pay security for the Defendant's costs it will prevent the Plaintiffs from continuing with the proceedings. I have no assets to pay such an amount as well as fund the cost of the litigation. The Trustee of the Second Plaintiff is in liquidation and the First Plaintiff is also in a precarious financial position chiefly as a result of the Defendant's conduct. Neither I nor the First Plaintiff can get a loan to cover the cost of any security as well as pay legal costs moving forward to continue with the proceedings.
(No objection was taken by counsel for the defendant to the inclusion of the phrase 'chiefly as a result of the Defendant's conduct' in this paragraph. As I have indicated above, I am not satisfied the 'precarious' financial position of the plaintiffs is due to the conduct of the defendant. The purpose of quoting this paragraph is to show the evidence upon which the plaintiffs rely).
In Jazabas Pty Ltd v Haddad [2007] NSWCA 291 Basten JA when dealing with this question of impecuniosity and stultification had this to say [32]:
In the course of argument, there was some confusion as to whether it was necessary for the plaintiffs to demonstrate impecuniosity on the part of the shareholders who stood behind the plaintiff companies. If all the shareholders had come forward and offered undertakings, on the basis of the Gentry Bros principle, their financial positions would not have been relevant. However, there was a separate argument that the order for security would stultify the proceedings, because none of those standing behind the companies was in a position to meet the terms of the order. In that respect, failure to prove the financial resources available to each of the shareholders was significant and precluded a challenge to her Honour's order on the basis of a failure to consider that a bona fide claim with reasonable prospects of success would be stifled: see Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 at 4.
In my view the plaintiffs have not demonstrated that an order for security will stultify the proceedings. There is the bare statement by Mr Gilmore that he is not in a position to fund the proceedings but there is no evidence to support that statement. In any interlocutory proceeding care must be taken to ensure demands are not put upon litigants which are out of proportion to the matters in issue. Here the plaintiffs are seeking to have a discretion exercised based squarely on an argument that an order for security will stultify the proceedings because of the impecuniosity of the plaintiffs and those that stand behind the plaintiffs. That being the case, it was incumbent upon the plaintiffs to provide the necessary evidence. I am not satisfied that has been done.
To further illustrate the point, Mr Gilmore says that it was a condition of the parties going to an informal mediation that the plaintiffs - or more particularly Mr Gilmore - provide $10,000 by way of security. Mr Gilmore was apparently able to find those funds. He does not explain where the funds came from and the circumstances in which he had access to those funds. That adds to the concern about the failure to provide any more than a statement that no funds are available to provide security.
Subsequent to the hearing of this matter, the plaintiffs applied by letter dated 4 September 2018 to re‑open this matter. The application was supported by an affidavit of Travis Wayne Preece affirmed 4 September 2018. Accordingly, I listed the matter for further argument. After hearing submissions from the parties, I declined to re‑open the matter. I indicated I would include in these reasons an explanation why leave was refused.
By way of general comment, in interlocutory matters it is important all issues are canvassed at the one hearing. Otherwise there is potential for such matters to become a moveable feast delaying the resolution of issues and increasing the costs. Of course in appropriate circumstances, a matter can be re‑opened. That statement of principle was not contested by counsel for the defendant. He maintained that this was not an appropriate case to allow re‑opening.
Essentially, the evidence of Mr Preece was to the effect that a number of lots had been sold and the plaintiffs would be entitled to receive payment of commission on settlement of those lots. It was estimated ‑ and Mr Preece could only provide an estimate ‑ the amount to be paid would be between $60,000 and $100,000 and that was a factor that ought be taken into account in determining whether security for costs ought be ordered.
For its part, the defendant was only prepared to concede that commission might become payable in the future. The entitlement of the plaintiffs was entirely dependent upon settlement going ahead. So any entitlement of the plaintiffs was contingent ‑ there was certainly no present entitlement to any ascertainable sum.
During the course of argument, I asked counsel for the plaintiffs whether his clients would be prepared to have any sum paid by way of commissions, standard security for the defendant's costs. Counsel said he had no instructions to that effect. Rather, the submission was put on the basis that because some future entitlement of the plaintiffs to funds from the defendant might result in an unspecified amount being paid to the plaintiffs, no order for security for costs should be made.
Reference was made by counsel for the plaintiffs to the facts in the Westonia Earthmoving decision. But that case was entirely different from this one. Without going to the facts in any detail, the funds held by the defendant in the Westonia Earthmoving case provided more than adequate comfort for any costs which might be awarded against the plaintiff. Here, there is no suggestion the defendant will retain any of the commissions which might become due and payable to the plaintiffs. Those commissions will simply be paid onto the plaintiffs in due course. There is then no guarantee that the plaintiffs will retain any amount paid by way of commission to provide security for the defendant's costs. The Westonia Earthmoving decision does not assist the plaintiffs at all.
On balance, I was not satisfied the matters the plaintiffs sought to raise could not have been raised in the original hearing. To an extent, they may have been implicit in the way the case was argued. If that view is taken, then the payment of commissions by the defendant to the plaintiffs would allow the plaintiffs to meet any order for security for costs. In other words, the matters raised by the plaintiffs may in fact have undermined their opposition to the application.
For these reasons I determined that the plaintiffs application to re‑open should be dismissed. I ordered that the plaintiffs pay the defendant's costs of the application.
I am satisfied that an order for security for costs should be made. I am satisfied the application was made promptly and that any delay is adequately explained. I am satisfied the plaintiffs' case is arguable and is bona fide, although I have not attempted to make any assessment of the merits of the case. The evidence suggests the plaintiffs will not be able to pay the defendant's costs if the defendant is successful. I am not satisfied the plaintiffs' impecuniosity was occasioned by the actions of the defendant. I am not satisfied that the evidence establishes if an order for security is made, the action will be stultified.
In summary, I am not satisfied that the factors I have considered warrant a refusal of an order for security in circumstances where the plaintiffs are impecunious. Accordingly, I propose to make an order that the plaintiffs provide security for costs in an amount of $17,000. This amount of security is intended to cover costs incurred by the defendant up to and including mediation. If the matter is not settled at mediation, the defendant should have liberty to apply for further security. However, at this point I will not make an order for the full amount of security nor will I provide a timetable for the delivery of that security. Such orders can be made at a later date if the matter does not settle at mediation. The orders made should anticipate a further application for 'top‑up security' at a later date.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
ASSOCIATE TO MASTER SANDERSON
27 SEPTEMBER 2018