Iddles v Fonterra Australia Pty Ltd - [2021] VSC 609

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

GROUP PROCEEDINGS LIST

S ECI 2020 02588

LYNDEN IDDLES & ANOR (according to the attached Schedule)	Plaintiffs
v
FONTERRA AUSTRALIA PTY LTD (ACN 006 483 665) & ORS (according to the attached Schedule)	Defendants

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JUDGE:	Efthim AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	16 and 17 June 2021
DATE OF JUDGMENT:	29 July 2021
CASE MAY BE CITED AS:	Iddles & Anor v Fonterra Australia Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2021] VSC 609

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SECURITY FOR COSTS – Group proceeding – Form and quantum of security – Litigation funder – Proposed form of security as undertaking or deed of indemnity plus cash bond – Risk that litigation funder or insurer affected by COVID-19 and Brexit – Whether risk necessitates alternative form of security – Whether form of security adequate, imposes unacceptable disadvantage upon defendants – Undertaking and payment into Court held to be adequate – Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293 – DIF III Global Co-Investment Fund, L.P. v BBLP LLC [2016] VSC 401 – Roo Roofing Pty Ltd & Anor v Commonwealth of Australia [2017] VSC 694.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr LWL Armstrong QC, with Ms LJ Keily	Adley Burstyner
For the Defendants	Mr PG Liondas with Ms L Dawson	Arnold Bloch Leibler

HIS HONOUR:

The defendants seek orders for security for costs up to the completion of discovery by the defendants in the sum of $1,240,430. They also seek that the amount of $200,000, ordered as security up to the completion of pleadings, be paid into an interest-bearing account controlled by each party’s solicitors, secured by way of bank guarantee, or provided in such other form as the Court considers appropriate. This order is sought in place of an undertaking given to Court that the plaintiffs will satisfy an order for costs up to the amount of $200,000.

The plaintiffs do not oppose an order that security be given. There are two issues before the Court – the quantum and the form of security.

Quantum

The defendants apply for an order seeking security in the sum of $1,240,430. In their summons and in their written submissions the amount sought was $1,159,145. However on 21 May 2021 their solicitor, Matthew David Lees, revised the estimate to $1,240,430.

The plaintiffs’ solicitor, David Sandor Burstyner, in an affidavit sworn 6 June 2021, estimated security at $668,438. In a further affidavit on 15 June 2021, he considered three items again (known as D1, D2 and D3 of the estimate provided by Mr Lees). Senior counsel informed the Court that the plaintiffs’ reassessment of those items, and if the defendants’ weighted average of $417.00 per hour for work done used by Mr Lees was adopted, would result in an estimate of costs for discovery in the sum of approximately $800,000.

The range of security that should be awarded according to the parties is…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] VSC 609
Decision Date: 29 July 2021

CaseChat Overview and Summary

Iddles v Fonterra Australia Pty Ltd [2021] VSC 295 was a case in which the plaintiff sought security for costs in a group proceeding. The plaintiff sought an order that the defendants provide security for their costs in the form of an undertaking by the litigation funder, an indemnity deed, and a cash bond. The defendants argued that the proposed form of security was inadequate and would impose an unacceptable disadvantage upon them due to the risks of the litigation funder or insurer being affected by COVID-19 and Brexit. The court was required to decide whether the risk of the funder or insurer being affected by COVID-19 and Brexit necessitated an alternative form of security and whether the proposed form of security was adequate and did not impose an unacceptable disadvantage upon the defendants.

The court found that the risk of the funder or insurer being affected by COVID-19 and Brexit did not necessitate an alternative form of security. The court held that an undertaking and payment into Court was an adequate form of security. The court also held that the proposed form of security did not impose an unacceptable disadvantage upon the defendants. The court found that the risk of the funder or insurer being affected by COVID-19 and Brexit was a commercial risk that the parties had assumed when they engaged in the litigation. The court held that the proposed form of security was adequate and did not impose an unacceptable disadvantage upon the defendants.

The court's decision was based on several precedent cases, including Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293, DIF III Global Co-Investment Fund, L.P. v BBLP LLC [2016] VSC 401, and Roo Roofing Pty Ltd & Anor v Commonwealth of Australia [2017] VSC 694. The court found that these cases supported its decision that an undertaking and payment into Court was an adequate form of security and that the proposed form of security did not impose an unacceptable disadvantage upon the defendants.

The court made an order that the defendants provide security for their costs in the form of an undertaking by the litigation funder, an indemnity deed, and a cash bond. The court held that this form of security was adequate and did not impose an unacceptable disadvantage upon the defendants. The court also held that the defendants were required to provide the security within 14 days of the order.

Orders