His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated
[2007] WASC 19
•5 FEBRUARY 2007
HIS GRACE METROPOLITAN PETAR & ORS -v- MACEDONIAN UNITED SOCIETY OF WESTERN AUSTRALIA INCORPORATED & ORS [2007] WASC 19
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WASC 19 | |
| Case No: | CIV:2179/1999 | 30 NOVEMBER 2006 | |
| Coram: | MASTER NEWNES | 4/02/07 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Application for security for costs refused | ||
| B | |||
| PDF Version |
| Parties: | HIS GRACE METROPOLITAN PETAR REVEREND VESKO KARANFILOVSKI THE MACEDONIAN ORTHODOX CHURCH COMMUNITY "ST NIKOLA" PERTH WESTERN AUSTRALIA INCORPORATED MACEDONIAN UNITED SOCIETY OF WESTERN AUSTRALIA INCORPORATED CANE RAZMOVSKI NEDELKO PETKOVSKI CEVETAN RISTEVSKI BONE GAGORSKI LAZO ASLIMOVSKI ZIVKO NAUMCEVSKI PANDO BALTOVICH STEVEN DOJKOVSKI KIRO NIKOLOVSKI PECO RAZMOVSKI GEORGE PARGOVSKI CANE GLIGUROVSKI BORIS TANASOSKI SASCHA CVETKOSKI ST GEORGE BANK LTD THE HON RICHARD FAIRFAX COURT, MLA THE REGISTRAR OF TITLES, WESTERN AUSTRALIA ZORAN COSESKI LUJUBE VELJANOSKI |
Catchwords: | Practice and procedure Security for costs Plaintiff trustee of property Whether order for security would stultify action Delay by defendant in making application Turns on own facts |
Legislation: | Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
REVEREND VESKO KARANFILOVSKI
Second Plaintiff
THE MACEDONIAN ORTHODOX CHURCH COMMUNITY "ST NIKOLA" PERTH WESTERN AUSTRALIA INCORPORATED
Third Plaintiff
AND
MACEDONIAN UNITED SOCIETY OF WESTERN AUSTRALIA INCORPORATED
First Defendant
CANE RAZMOVSKI
Second Defendant
NEDELKO PETKOVSKI
Third Defendant
CEVETAN RISTEVSKI
Fourth Defendant
BONE GAGORSKI
Fifth Defendant
LAZO ASLIMOVSKI
Sixth Defendant
ZIVKO NAUMCEVSKI
Seventh Defendant
PANDO BALTOVICH
Eighth Defendant
STEVEN DOJKOVSKI
Ninth Defendant
KIRO NIKOLOVSKI
Tenth Defendant
PECO RAZMOVSKI
Eleventh Defendant
GEORGE PARGOVSKI
Twelfth Defendant
CANE GLIGUROVSKI
Thirteenth Defendant
BORIS TANASOSKI
Fourteenth Defendant
SASCHA CVETKOSKI
Fifteenth Defendant
ST GEORGE BANK LTD
Sixteenth Defendant
THE HON RICHARD FAIRFAX COURT, MLA
Seventeenth Defendant
- THE REGISTRAR OF TITLES, WESTERN AUSTRALIA
Eighteenth Defendant
ZORAN COSESKI
Nineteenth Defendant
LUJUBE VELJANOSKI
Twentieth Defendant
Catchwords:
Practice and procedure - Security for costs - Plaintiff trustee of property - Whether order for security would stultify action - Delay by defendant in making application - Turns on own facts
Legislation:
Nil
Result:
Application for security for costs refused
Category: B
Representation:
Counsel:
First Plaintiff : Dr P R MacMillan
Second Plaintiff : Dr P R MacMillan
Third Plaintiff : Dr P R MacMillan
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
- Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : No appearance
Tenth Defendant : No appearance
Eleventh Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Fourteenth Defendant : No appearance
Fifteenth Defendant : No appearance
Sixteenth Defendant : Mr P S Bates
Seventeenth Defendant : No appearance
Eighteenth Defendant : No appearance
Nineteenth Defendant : No appearance
Twentieth Defendant : No appearance
Solicitors:
First Plaintiff : S S Ludher
Second Plaintiff : S S Ludher
Third Plaintiff : S S Ludher
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : No appearance
Tenth Defendant : No appearance
Eleventh Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Fourteenth Defendant : No appearance
Fifteenth Defendant : No appearance
Sixteenth Defendant : Gadens Lawyers
Seventeenth Defendant : No appearance
Eighteenth Defendant : No appearance
Nineteenth Defendant : No appearance
Twentieth Defendant : No appearance
(Page 5)
Case(s) referred to in judgment(s):
Ariss v Express Interiors Pty Ltd (In Liq) (1995) 13 ACLC 1,585
Bell Wholesale Co Pty Ltd v Gates Export Corporation (No 2) (1984) 2 FCR 1
Blackbird Entertainment Pty Ltd v IO Research Pty Ltd, unreported; SCt of WA (White J); Library No 980297; 2 June 1998
BPM Pty Ltd v HPM Pty Ltd, unreported; FCt SCt of WA; Library No 960206; 17 April 1996
Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497
Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301
Engel Pty Ltd (In Liq) v Leeds, unreported; FCt SCt of WA (Malcolm CJ); Library No 940403; 20 July 1994
Foss Export Agency Pty Ltd v Trotman (1949) 67 WN (NSW) 1
Gentry Bros Pty Ltd v Wilson Brown and Associates Pty Ltd (1992) 8 ACSR 405
McLaughlin v Daily Telegraph Newspaper Co Ltd (1904) 1 CLR 143
Metropolitan Petar v Mitreski [2001] NSWSC 414
Tradestock Pty Ltd v TNT (Management) Pty Ltd (1977) 14 ALR 52
(Page 6)
1 MASTER NEWNES: This is an application by the sixteenth defendant (the "Bank") for an order that the plaintiffs provide security for costs in the sum of $175,000.
2 In the action, the plaintiffs plead that the first plaintiff is and was at all material times the Metropolitan of the Australian and New Zealand Diocese of the Macedonian Orthodox Church. The second plaintiff is and was a priest of the Macedonian Orthodox parish in Perth. The parish is incorporated under the Associations Incorporation Act 1987 (WA) under the name "The Macedonian Orthodox Church Community 'St Nikola' Perth Western Australia Inc" and is the third plaintiff (the "Parish").
3 The plaintiffs plead that the Parish is part of the Australian and New Zealand Diocese of the Macedonian Orthodox Church and is established under and governed by the Apostolic Rules and Cannons of the Macedonian Orthodox Church, the Constitution of the Macedonian Orthodox Church, the Statutes of the Diocese and the Constitution, alternatively the by-laws, of the Parish (together the "governing rules and documents"). The members of the Parish consist of those people who are members of it for the time being in accordance with the governing rules and documents.
4 It is alleged that each of the second to fifteenth defendants wrongfully claims to be a member of the Administrative Council of the Parish. Various claims are made against those defendants that are not relevant to this application.
5 So far as relevant to the claim against the Bank, the plaintiffs plead that, until 16 April 1999, the Parish was the registered proprietor of a property at 3 Victoria Road, Westminster ("the Westminster property") and another property at 69 Angove Street, North Perth ("the Church property"). The duplicate certificate of title to the Church property is being held by BankWest pending the resolution of this action.
6 It is common ground that the Westminster property was subject to a mortgage to the Bank registered in March 1997 to secure a loan of $1,185,000 to the first defendant (the "Society").
7 It is alleged that the second, third and fourth defendants, purporting to act on behalf of the Parish, and the nineteenth and twentieth defendants, on behalf of the Society, applied for the Westminster property to be transferred from the Parish to the Society. The transfer of the Westminster property to the Society was registered on or about 16 April 1999, subject to the Bank's mortgage. The plaintiffs allege that
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- the second, third and fourth defendants were not authorised to act on behalf of the Parish.
8 Subsequently, the payments due by the Society under the mortgage to the Bank fell into arrears and ultimately the property was sold by the Bank as mortgagee.
9 As against the Bank, the plaintiffs allege that the transaction occurred due to the negligence or breach of fiduciary duty of the Bank. They plead that, by letter dated 13 July 1998, the Parish informed the Bank that the only persons authorised to sign any document on behalf of the Parish with regard to the Westminster property were the President of the Administrative Council, a Mr Mauovski, and the second plaintiff, and that no transfer of the Westminster property was to take place without their consent.
10 The plaintiffs plead that, by letter of 15 July 1998, the first plaintiff informed the Bank that the only persons authorised to sign any documents on behalf of the Parish in relation to dealings with the Westminster property were Mr Mauovski and the second plaintiff.
11 It is pleaded that, by letter dated 10 August 1998, the first plaintiff informed the Bank that any transfer of the Westminster property required the authorisation or consent of Mr Mauovski and the first and second plaintiffs, and requested the Bank to inform the first plaintiff if any attempt was made to transfer the Westminster property out of the name of the Parish.
12 It is alleged that subsequently the Bank, as mortgagee, produced the duplicate certificate of title to the Westminster property to enable the transfer from the Parish to the Society to occur (subject to the mortgage) and did not inform any of the plaintiffs of the proposed transfer. As mortgagee, the Bank thereby consented to, or acquiesced in, the transfer of the property.
13 It is also alleged that the Bank provided the Society with a further loan facility in the sum of $110,000 to enable it to pay the stamp duty on the transfer, although it was aware that the Society had previously had difficulty in meeting the repayments on the mortgage.
14 The plaintiffs plead that the Bank thereby failed to act in good faith with respect to the Parish as mortgagor and deprived the Parish of the equity of redemption in the Westminster property.
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15 It is pleaded, further and in the alternative, that at the time of the transfer the Bank owed to the Parish a duty of care and that, by permitting the transfer of the property to the Society, the Bank was in breach of that duty, causing loss or damage to the Parish.
16 It is further pleaded that as the Bank was the mortgagee of the property and in possession of the duplicate certificate of title to it, it owed to the Parish a fiduciary duty not to permit a transfer of the property to take place without the knowledge and consent of the Parish. It is pleaded that the Bank was in breach of that duty also.
17 It is also alleged that the Bank represented to the Parish that it would not, as mortgagee, participate in the transfer of the Westminster property unless satisfied that the Parish had consented to the transaction. By reason of the Bank's conduct, that representation was misleading or deceptive contrary to s 52 of the Trade Practices Act 1974 (Cth), and the Parish claims damages under that Act.
18 The Bank, by its defence, says that the amount of the original loan facility was $1,300,000 but otherwise admits the substantive allegations as to the original mortgage transaction. The Bank says that the Parish also executed a deed of guarantee of the Society's obligations under the loan agreement.
19 The Bank denies that it received the letters of 13 July 1998 and 15 July 1998, but says it did receive a letter on 17 July 1998 from the Parish informing it that at that time the persons entitled to act on behalf of the Parish were Mr Mauovski and the second plaintiff. The Bank denies receiving the letter of 10 August 1998 and says that a search of its records has failed to receive any such letter.
20 The Bank admits that it produced the duplicate certificate of title to enable the transfer of the Westminster property to the Society to occur, and that the transfer was subject to the mortgage, but says that it was advised by the Parish, as then constituted, or as the Bank reasonably believed it to be constituted, that the Westminster property was to be transferred to the Society, subject to the mortgage. It says it had no obligation or authority to communicate information to the first and second plaintiffs, who were not parties to the loan, mortgage or guarantee and were not clients of the Bank.
21 The Bank says that at all times it acted on the instructions of the Parish as then constituted, or as the Bank reasonably believed it to be constituted, and on the basis of the various documents received by the
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- Bank it reasonably believed there had been a change in the membership and composition of the Parish.
22 The Bank also pleads that the transfer of the title from the Parish to the Society was executed before the Bank produced the duplicate certificate of title, so that the beneficial interest in the Westminster property had passed to the Society prior to anything done by the Bank in connection with the transfer, with the result that the Parish suffered no loss or damage by reason of anything subsequently done by the Bank.
23 The Bank also pleads that the transfer of the property from the Parish to the Society did not affect the Parish's liability under the guarantee or the Society's inability to meet its loan obligations, and therefore did not give rise to any loss or damage on the part of the Parish.
The Bank's submissions
24 In support of this application, it was submitted on behalf of the Bank that it was clear that if the Parish was unsuccessful in the action its only asset available for the satisfaction of a costs order in favour of the Bank was the Church property. The registered proprietor of that property, the Parish, is an incorporated association which holds the property on trust. It is difficult to ascertain who the members of the Parish are. Counsel referred to the Constitution of the Parish, as it was until 31 March 1999, which, so far as relevant, was as follows:
"The Macedonian Orthodox Church St Nikola at 69 Angove Street, North Perth with all its appurtenances, real and personal, is exclusive property of the general meeting - the members of the church. For no reason can the same be transferred/appropriated to a group of person, company or institution."
25 The new Constitution which came into effect from 31 March 1999 provides, so far as relevant:
"The [Parish] with the church and all its properties, both real and personal, is an integral part of the Macedonian Orthodox Diocese of Australia and New Zealand and through it - an integral part of the mother Macedonian Church. It cannot be appropriated by individuals, a group of people, a company or institution."
(Page 10)
26 It also provides that:
"The conduct of disputes in relation to the real estates of the church community is within the sphere of authority of the Diocese Ruling Committee which is the legal representative of the church community before the church, cultural and educational organisations, civil courts and other institutions and bodies in Australia and New Zealand."
27 It was submitted that the new Constitution appears to have removed control of the Church from the members and placed it in the hands of the Macedonian Church authorities, in particular the first plaintiff and the second plaintiff. The Church is therefore under the control of either the Administrative Council, or the first plaintiff and the second plaintiff, or the Macedonian Church itself. In any event, the Church property is undoubtedly held on trust by the Parish for someone.
28 Counsel for the Bank argued that the person actually standing behind the litigation is the first plaintiff, who has the authority to bring the litigation to an end if he wished to do so. If the litigation is successful a sum of money would be paid to the Parish by way of damages and the first plaintiff would have a power of disposition over those funds. As neither the first plaintiff nor the second plaintiff is seeking relief against the Bank, they are not exposed to a costs order and can control the litigation without that risk.
29 It was submitted that no purpose would be served by an undertaking from the first plaintiff in respect of the Bank's costs as such an undertaking would be of dubious value and, in any event, the first plaintiff is not ordinarily resident in Australia. Security for costs should therefore be provided by provision of the necessary funds to be held in court and the litigation should be stayed until that is done.
30 On the question of delay, counsel for the Bank said that as, first, three of the defendants had brought an application to strike out the statement of claim in May 2005 and, secondly, in April 2006 the Bank had brought an application for the trial of a separate issue, there was no point in bringing an application for security for costs before those matters had been resolved. Counsel also said that in about mid-1996 the Bank had heard through the nineteenth defendant that the Parish was trying to obtain the duplicate certificate of title from BankWest and that if the Parish was successful it would further complicate the Bank's difficulties in recovering costs from the Parish if the action was unsuccessful.
(Page 11)
31 It was also suggested that the Parish's claim against the Bank lacked any merit.
The plaintiffs' submissions
32 The plaintiffs relied on three principal grounds in resisting the application for security for costs, namely, delay, the conduct of the Bank and that an order for security would frustrate the litigation.
33 It was submitted that the Bank has not offered any satisfactory explanation for the delay in bringing the application. The plaintiffs' pleadings were amended on 24 June 2004 to bring the present claim against the Bank, but no application for security for costs was brought until 30 August 2006. The Parish had incurred substantial costs in prosecuting the matter since 24 June 2004 without any suggestion by the Bank that an application would be made for security for costs, until about the time the current application was made. There had been no relevant adverse change in the Parish's financial position between June 2004 and the time this application was made which would justify the belated application.
34 It was also submitted that there is no evidence that the first and second plaintiffs are orchestrating the Parish's claim against the Bank or that the first plaintiff is the prime mover behind the litigation.
35 It was further submitted that, on the plaintiffs' case, the Bank's wrongdoing resulted in the loss to the Parish of the Westminster property and has thereby deprived it of assets which it would otherwise have had available. The Parish is the registered proprietor of the Church property but, pending resolution of the action, the title of the property is held by BankWest. The Parish is not in a financial position to give security for costs and if security were ordered it would necessarily frustrate the action at a point when it is nearly ready to be entered for trial.
36 It was also submitted that as the Parish is simply a trustee of all property which it holds, security should not be ordered against it.
The relevant principles
37 It is trite law that the discretion to order security for costs is unfettered and depends upon an examination of all of the circumstances of the case. The circumstances in which the discretion should be exercised cannot be stated exhaustively. In Gentry Bros Pty Ltd v Wilson Brown and Associates Pty Ltd (1992) 8 ACSR 405, Cooper J said (at 415):
(Page 12)
- "[i]t is not possible or appropriate to list all of the matters relevant to the exercise of the discretion. The factors will vary from case to case. The weight to be given to any circumstance depends upon its own intrinsic persuasiveness and its impact on other circumstances which have to be weighed."
38 It is, however, accepted that some of the relevant factors are:
(1) whether the plaintiff's claim is bona fide and has reasonable prospects of success;
(2) whether the defendant has contributed to the plaintiff's likely inability to pay costs;
(3) whether an order for security for costs may have the effect of stultifying the action;
(4) whether it appears the applicant is seeking to stifle a legitimate claim;
(5) whether there are others behind the corporate plaintiff who might reasonably be expected to contribute to the satisfaction of an order for security.
39 See Engel Pty Ltd (In Liq) v Leeds, unreported; FCt SCt of WA (Malcolm CJ); Library No 940403; 20 July 1994 at 4 - 5 and Blackbird Entertainment Pty Ltd v IO Research Pty Ltd, unreported; SCt of WA (White J); Library No 980297; 2 June 1998.
40 The fact that the plaintiff will be unable to pay the defendant's costs if the defendant is successful is a factor of great weight in the exercise of the discretion, but it is not necessarily decisive and regard must be had to all of the circumstances of the case.
41 In the exercise of its discretion the Court will be concerned to achieve a balance between ensuring the defendant is adequately and fairly protected, and avoiding injustice to an impecunious plaintiff company by unnecessarily shutting it out or prejudicing it in the conduct of the litigation: Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301 at 304; Tradestock Pty Ltd v TNT (Management) Pty Ltd (1977) 14 ALR 52 at 56.
42 If a plaintiff seeks to resist an order for security on the ground of stultification, then it must establish the necessary factual basis before the argument can be weighed in the exercise of the discretion.
(Page 13)
43 Generally, a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless the plaintiff establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or beneficiaries under a trust) are also without means. It is not for the party seeking security to raise the matter; it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts: Bell Wholesale Co Pty Ltd v Gates Export Corporation (No 2) (1984) 2 FCR 1.
44 Accordingly, unless a plaintiff establishes that those who stand behind it and who will benefit from the litigation if it is successful are also without means, no conclusion can properly be reached that the effect of an order for security will be to frustrate the plaintiff's claim: BPM Pty Ltd v HPM Pty Ltd, unreported; FCt SCt of WA; Library No 960206; 17 April 1996.
45 Different considerations may, however, arise where the plaintiff does not rely upon want of means but upon "commercial impracticability", meaning the practical difficulty facing the plaintiff in gaining any advantage from such means as may exist in others. There is no reason why that should not be a relevant circumstance when the plaintiff seeks to demonstrate that any order for security cannot be met. The onus is on the plaintiff to establish that fact. See Ariss v Express Interiors Pty Ltd (In Liq) (1995) 13 ACLC 1,585 per Phillips JA at 1,592 - 1,593.
46 An application for security for costs must be made promptly: McLaughlin v Daily Telegraph Newspaper Co Ltd (1904) 1 CLR 143; Foss Export Agency Pty Ltd v Trotman (1949) 67 WN (NSW) 1. The further a plaintiff has proceeded in an action and the greater the costs the plaintiff has been allowed to incur without steps being taken to apply for an order for security for costs, the more difficult it will be for the defendant to persuade the court that such an order is not, in the circumstances, unfair or oppressive: Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 514.
47 In Buckley v Bennell Design & Construction Pty Ltd (supra) at 309, Moffitt P expressed it in this way:
"The right to seek security for costs and to stay proceedings, with the possible result that a claim … is frustrated, is a
(Page 14)
- powerful weapon. Therefore, the litigant who seeks to use it against his opponent is at risk of not having it available unless the application is made and persevered with in circumstances involving the least oppression of his opponent. The primary reason why the application should be brought promptly and pressed to determination promptly is that the company, which by assumption has financial problems, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it is allowed to or commits substantial sums of money towards litigating its claim."
Should security be ordered?
48 In Metropolitan Petar v Mitreski [2001] NSWSC 414, Young CJ said at [12]:
"Now, one does not have to be involved in many ecclesiastical law cases to realise that churches are very strange bodies. It is often said that churches are asset rich and income poor. Hidden behind this statement, however, is the fact that not only do they have relatively little income, but most of their assets are in the form of churches or other buildings which are subject to trusts. It is thus a matter of speculation as to whether any of the assets are able to be taken in execution for the payment of any costs. Indeed, it is quite an unsatisfactory state of affairs in many ways that because of the way all church assets are held on trust, they are protected, to a great degree, from any litigation."
49 I have earlier referred to some parts of the Constitution of the Parish. I should also refer to part of Article 3 of the current Constitution which provides:
"The [Parish] represents a unit of the Macedonian Orthodox Diocese of Australia and New Zealand and is a constituent and inalienable part of the Macedonian Orthodox Diocese of Australia and New Zealand, and through it an [sic] its Diocesan Bishop - of the Mother-Macedonian Orthodox Church with its seat in Macedonia. It is under its canonical and spiritual jurisdiction and is governed by the responsible Diocesan Bishop."
50 In the present case it was accepted on both sides and it is, I think, clear that the property of the Parish is held on trust. The current
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- Constitution of the Parish, by Article 5, provides that the Parish "with the church and all its properties, both personal and real estate, is an integral part of the Macedonian Orthodox Diocese of Australia and New Zealand and through it, - an integral part of the Mother Macedonian Orthodox Church. It cannot be appropriated by individuals, a group of people, a Company or institution".
51 The effect of that provision was the subject of some consideration at the hearing, with it finally being common ground, as I understood it, that the Church property is held on trust for the Parish or the Australian and New Zealand diocese, and probably ultimately for the Macedonian Orthodox Church. The status or nature of the latter two bodies at law is not apparent.
52 It was likely, however, that the people who would immediately benefit from any funds recovered by the Parish in this action would be the members of the Parish. Those members would appear to be, pursuant to Article 18 of the Constitution, "all adult Orthodox Christians - Macedonians and of Macedonian origin from the area of the Parish Church, the Parish/parishes who fill their religious, moral and material obligations to the Church and its institution and who are recorded into the home-register of the Parish Priest".
53 There is no evidence as to how many members there are or their financial resources. However, in circumstances where the direct benefit to each member of the Parish, if the litigation were successful, may appear to at least some of those individuals to be of a somewhat nebulous nature, and where (unlike the usual case concerning shareholders and creditors of trading companies) it appears that no one member has a greater interest than any other member (and none has a direct financial interest), it may well be that there would be considerable practical difficulty in raising any significant amount, and certainly an amount in the order of $175,000 or any similar sum, from the members of the Parish for the purpose of providing funds to meet an order for security for costs.
54 There is, however, no evidence as to the capacity of the Parish to raise any money to meet any order for costs that might be made against it, nor any evidence that it would involve such practical difficulties as to make it unrealistic or unreasonable to expect the Parish to do so.
55 On the evidence I do not consider it can be concluded that the first plaintiff or second plaintiff is standing behind the litigation in any relevant sense. What, if any, role they have in respect of the litigation does not
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- emerge with any clarity from the evidence. Nor is it evident that either of them would stand to derive any individual benefit from a successful outcome to the Parish's claim.
56 I should add that, whatever the precise role or capacity (if any)of the first plaintiff, as Metropolitan, in respect of the litigation, on the evidence adduced by the Bank it appears that the first plaintiff has no financial capacity to meet an order for costs, nor any capacity to provide the funds necessary to satisfy any order for security for costs if one were made.
57 There is nothing to indicate whether or not the Australian and New Zealand diocese, or the Macedonian Orthodox Church, whatever their true legal nature may be, have the capacity, and might reasonably be expected, to satisfy any order for security for costs that might be made against the Parish.
58 The Parish has, however, embarked upon the litigation with an apparent expectation that it would be able to meet its own legal costs, although it has no obvious, accessible assets or income from which to do so. I do not consider that, in the absence of evidence, it can be assumed that it has no capacity to obtain any other funds that may become necessary to enable it to continue the action.
59 Accordingly, I do not consider that the Parish has established that an order for security would stultify its claim.
60 In my view, the question of the merits of the claim does not advance the Bank's application. I do not accept the Bank's contention that it can be concluded at this stage that the Parish's claim is without merit. On the necessarily limited material before me, I consider the only finding that is reasonably open is that the claim is bona fide and has reasonable prospects of success.
61 A factor which, in my view, weighs heavily against an order for security for costs, however, is the delay in bringing the application.
62 The application was brought more than two years after the Parish first made its substantive claim against the Bank, by an amendment to the statement of claim in the action on 24 June 2004. Since then a number of steps have been taken in the prosecution of the claim. Following the filing of the Bank's defence, a directions hearing took place on 7 February 2005 at which, among others, directions were made for the filing of any reply by the Parish and a time limit set for the Parish to request particulars of the Bank's defence. The Parish filed its reply on
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- 18 May 2005 and a request for particulars of the Bank's defence was made on 19 May 2005. The particulars were provided by the Bank on 7 July 2005.
63 On 16 March 2006, the Bank applied for an order that the Parish's claim against it be tried separately from the plaintiffs' claim against the other defendants. On 6 April 2006, that application was adjourned to a special appointment, with directions for the filing of outlines of submissions, and it was argued, and dismissed, on 13 June 2006. There have, in addition, been several status conferences before a case management registrar, involving these parties, since the Parish brought its substantive claim against the Bank. As I understand it, discovery was effectively given earlier in the action and no further discovery is currently sought.
64 No satisfactory explanation has been offered for the delay in making the application. It was not clear how an attack by other defendants on the Parish's pleading could affect the Parish's claim against the Bank nor why an application for security for costs should have awaited the making and outcome of the application for the trial of a separate issue in April 2006. Having regard to the matters relied upon by the Bank in support of the present application, there appears to be no reason why the application could not reasonably have been made promptly after the Parish first asserted a substantive claim against the Bank in 2004.
65 The evidence as to the amount of the costs incurred by the Parish in its claim against the Bank is not clear but, having regard to the interlocutory steps taken and the stage the action has reached, I do not think there is any doubt that the costs are relatively substantial. It was not in dispute that the action is approaching the point at which it may be entered for trial.
66 As Moffitt P observed in Buckley v Bennell Design & Construction Pty Ltd (supra), the primary reason why an application of this nature should be brought promptly is that the plaintiff, which by assumption has financial problems, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it is allowed to or commits substantial sums of money towards litigating its claim. I would add that that consideration may have even greater force where, as here, the plaintiff is a non-profit organisation.
67 In my view, the present application has been brought too late. There is clearly prejudice to the Parish by reason of the delay, in circumstances
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- where significant costs have obviously been incurred in the prosecution of the action after the point at which such an application should reasonably have been forewarned, if not made, and where the action has since been pursued to the stage where it is now almost ready to be entered for trial.
68 In the circumstances, I would decline to make an order for security for costs.
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