J B Building Services Pty Ltd (in liq) v Multiplex Constructions Pty Ltd
[2000] QSC 73
•3 April 2000
SUPREME COURT OF QUEENSLAND
CITATION: J B Building Services Pty Ltd (in liq) v Multiplex Constructions Pty Ltd & Anor [2000] QSC 073 PARTIES: JB BUILDING SERVICES Pty Ltd (In Liquidation) ACN 070 681 006 (Plaintiff)
and
MULTIPLEX CONSTRUCTIONS PTY LTD ACN 008 687 063 (First Defendant)
PERPETUAL TRUSTEES VICTORIA LIMITED ACN 004 027 258 (Second Defendant)FILE NO/S: S5809 of 1997 DIVISION: Trial Division PROCEEDING: Application DELIVERED ON: 3 April 2000 DELIVERED AT: Brisbane HEARING DATE: 27 March 2000 JUDGE: Wilson J ORDER: Security for costs ordered CATCHWORDS: CIVIL PROCEDURE – COSTS – INTERLOCUTORY PROCEEDINGS – SECURITY FOR COSTS – application by first defendant against plaintiff – plaintiff in liquidation – present claim only real potential asset in the liquidation COUNSEL: Ms A I Philippides SC for the applicant first defendant
Mr J B Sweeney for the respondent plaintiffSOLICITORS: Clayton Utz for the applicant first defendant
Bennett & Philp for the respondent plaintiff
WILSON J: This is an application by the first defendant against the plaintiff for security for costs.
The first defendant was the principal contractor in the construction of the Cairns Central Shopping Centre. The plaintiff was the subcontractor responsible for the fixing of mesh and reinforcing steel. The proceeding is concerned with claims and counterclaims arising out of events in late 1996 – mid February 1997.
The claim (as amended) is for:-
(a) $370,268-84 moneys payable by the first defendant to the plaintiff pursuant to the subcontract (previously the claim was for $199,989-59);
(b) alternatively, that amount on a quantum meruit;
(c) additionally, $76,917-83 damages for breach of the subcontract.
The counterclaim is for:-
(a) damages for delay (para 31) $ 2,000-00
(b) rectification costs (para 33; schedule C) $ 45,340-00
(c) clean up costs (para 35; schedule D) $ 1,202-00
(d) costs to complete the subcontract work (para 26; schedule B) $505,484-00
$554,026-00
The plaintiff is in liquidation. This claim is the only real potential asset in the liquidation.
The application for security for costs is made pursuant to s1335 of the Corporations Law and rule 671(a) of the Uniform Civil Procedure Rules. The court’s jurisdiction is clearly enlivened in the circumstances of this case, and the question is whether in the exercise of my discretion I ought to order security, and if so, how much.
The litigation commenced with the issue of the writ on 1 July 1997. It was placed on the supervised case list in August 1999. There have been various interlocutory applications about the pleadings and particulars and about disclosure. The plaintiff has obtained a preliminary report from a quantity surveyor.
In September 1997 Mr Park, of the liquidator’s office, swore that the plaintiff was seeking funding for the litigation from an insurance/litigation lending source. Ultimately the liquidator obtained a loan from a bank to a limit of $150,000-00 to fund the costs of the litigation including any costs ordered to be paid by the plaintiff or the liquidator to the first defendant. An insurance company guaranteed the repayment of the loan by the liquidator. Interlocutory costs orders in favour of the first defendant have been paid from that source, albeit after considerable delays. According to a facsimile from Mr Park to Mr Sawyer dated 20 March 2000, the balance of funds presently available is $30,567-35.
Copies of the loan facility agreement and the insurance policy are exhibited to the affidavit of Mr Park filed on 24 March 2000. They were placed in a sealed envelope to preserve their commercial confidentiality. I was given copies of them for use in the application and they were fairly extensively referred to in oral submissions by counsel for the plaintiff. I shall have the copies forming the exhibit returned to the envelope, which I shall direct to be sealed and marked “Not to be opened without an order of the Court”. I shall return the other copies to counsel for the plaintiff.
It is of concern that the facility was expressed to expire on 30 June 1999. There was no evidence before me that the expiry date had been postponed, although counsel for the plaintiff asked me to assume that it had been. Mr Park’s statement as to the present balance is some evidence that it is continuing. He deposed that he is in the process of applying for an increase in funding by a further $80,000-00. If that application is successful, there will be a total of about $110,000-00 available.
The application is for security for the costs which may be awarded against the plaintiff in relation to the claim. The first defendant estimated that the trial would take 4 weeks, but of course a considerable portion of that time, if not the majority, would be taken by the counterclaim. However, it must be observed that by paragraph 19 of the Amended Defence and Counterclaim the first defendant seeks to set off the counterclaim in diminution or extinction of the claim.
The first defendant has provided the following estimates of the costs and disbursements it would be entitled to recover against the plaintiff:
Pre-trial incurred to date $ 62,815-50
Pre-trial not yet incurred $ 96,726-50
Trial costs (4 week hearing) $107,958-20
$267,500-20
The present balance in the fund is clearly insufficient to meet either the plaintiff’s own costs of trial, or the costs which might be awarded against it if it lost, let alone both. It seems unlikely that the $110,000-00 which will be available if the application for an increase is successful would be sufficient. The liquidator has not given any undertaking to “quarantine” any of the fund to meet costs orders against the plaintiff or him.
In all the circumstances I consider that this is an appropriate case in which to make an order for security for costs. The first defendant seeks security in the full amount of $267,500-20.
I have a discretion whether to order security with respect to costs already incurred and or with respect to all or some of the costs expected to be incurred in the future. I consider that to order the provision of security at this stage in the full amount claimed would be likely to stifle the litigation.
Bearing in mind that the first defendant has complied with costs orders already made, I have decided to order security for costs to be incurred from now until the first day of the trial in the sum of $45,000-00, and to give liberty to apply for further security thereafter.
I will hear counsel on the form of the order and costs.
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