Janus, W.C.C.M v A.G.C. (Advances) Ltd

[1988] FCA 642

C A T C H W O R D S

COSTS - security for costs - principles as to delay in applying -
application 16 months after proceedings commenced - 2 months

before trial - reason for delay - statement of claim never satisfactory - prima facie rule.

Walter Corneille Clement Marie Janus h Ors

v. A.G.C. (Advances) Limited h Anor

Qld G96 of 1987

PINCUS J.
BR1 SBANE

g . ? OCTOBER 1988

.

IN THE FEDERAL COURT	OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QLD G96 Of 1987
GENERAL DIVISION

BETWEEN:  WALTER CORNEILLE CLEMENT MARIE JANUS

First Applicant

AND :  WINJAN PASTORAL COMPANY PTY LTD

Second Applicant

AND :  TWEED CANAL ESTATES PTY LTD

Third Applicant

AND :  WINGARA ENTERPRISES PTY LTD

Fourth Applicant

AND :  A.G.C. (ADVANCES) LIMITED

First Respondent

AND :  MACDONALD WAGNER PTY LTD

Second Respondent

AND :  A.G.C. (ADVANCES) LIMITED

Cross-Clalmant

AND :  WALTER CORNEILLE CLEMENT MARIE JANUS

First Cross-Respondent

AND :  WINJAN PASTORAL COMPANY PTY LTD

Second Cross-Respondent

AND :  TWEED CANAL ESTATES PTY LTD

Third Cross-Respondent

AND :  WINGARA ENTERPRISES PTY LTD

Fourth Cross-Respondent

AND :  ANGELA JANUS

Fifth Cross-Respondent

.

MINUTES OF ORDER

PINCUS ORDER: MAKIN JUDGE J.

DATE OF ORDER:  1988 OCTOBER 19

BRISBANE WHERE MADE:
THE COURT ORDERS THAT:

1. the applications for security for costs be

dismissed;

2 .     insofar as the proceedings today related to the

matter of the motions for security for costs, the

applicants' costs of and incidental to those

motions be taxed and paid by the respondents;

3 .     insofar as the proceedings today related to the

question the statement of claim, of the

respondents' costs of and incidental to that matter

be taxed and paid by the applicants;

4 .     as to the costs of the fifth cross-respondent,

which costs relate only to the matters of

directions, those costs be taxed and paid by the
applicants.

NOTE :  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY	QLD G96 of 1987
GENERAL DIVISION

BETWEEN:  WALTER CORNEILLE CLEMENT MARIE JANUS

First Applicant

AND :  WINJAN PASTORAL COMPANY PTY LTD

Second Applicant

AND :  TWEED CANAL ESTATES PTY LTD

Third Applicant

AND :  WINGARA ENTERPRISES PTY LTD

Fourth Applicant

AND :  A.G.C. (ADVANCES) LIMITED

First Respondent

AND :  MACDONALD WAGNER PTY LTD

Second Respondent

AND :  A.G.C. (ADVANCES) LIMITED

Cross-Claimant

AND :  WALTER CORNEILLE CLEMENT MARIE JANUS

First Cross-Respondent

AND :  WINJAN PASTORAL COMPANY PTY LTD

Second Cross-Respondent

AND :  TWEED CANAL ESTATES PTY LTD

Third Cross-Respondent

AND :  WINGARA ENTERPRISES PTY LTD

Fourth Cross-Respondent

AND :  ANGELA JANUS

Fifth Cross-Respondent

PINCUS J. 19 OCTOBER 1988

EX TEMPORE REASONS FOR JUDGMENT

These are applications for security for costs. The

applicants claim, in the principal proceedings, relief against a

finance company and consulting a engineer, concerning a

sub-divisional project with which all were concerned in different

capacities. The case has been set down for hearing for two weeks

beginning on 5 December next. The question whether or not

security should be ordered is finely balanced, in my opinion, and

I have received much assistance from the arguments advanced.

Although I had originally intended to consider the matter further,

I have now come to a firm conclusion, and I will express it.

There is an issue, or rather an open question, as to

whether the applicants would be able to pay the costs of	the
proceedings if unsuccessful.	Mr Jensen, a member of the firm

acting for the second respondent, has made an affidavit, saying

that its party and party costs to date exceed $25,000. Mr Jensen

estimates the costs to the conclusion of the proceedings to be

about $60,000 more, making atotal of $85,000. The first

respondent's estimate of costs is a little higher than	that,
namely, $95,000.	Thus, the total costs on the respondents' side
are estimated to be about	$180,000, on a party and party basis.

It is my opinion that the estimates of costs made by the

respondents are, assuming the case goes for two weeks, in

3.

accordance with what experience would suggest must be expected, as

to litigation in this Court. The question which has troubled me,

however, and which has been dealt with by counsel for the

respondents, is whether or not I should make an order for security

so	close to trial in respect of proceedings which have been
pending, as these have, for some considerable	time.

The suit commenced about 16 months ago and there have

been numerous interlocutory hearings, in particular concerning

injunctions ought by the applicants and attacks on the

applicants' case by the respondents. As to the latter, it has to

be said in favour of the respondents that the statement of claim resistance to the applicants' claim has, in my opinion, been made
rather more difficult for them by the applicants' failure to
define, in a reasonably precise way, the unlawful conduct alleged
against the respondents. In my opinion that circumstance works in
favour of the respondents, when considerlng the matter of delay. has never been in satisfactory form and the respondents'

What might be described as the principal directions

hearing at which orders were made prescribing the times for

pleadings, discovery and inspection, and so forth, took place late

last year and an order was then made that any motion for security
for costs be brought on promptly. It appears from the transcript
that MC Eliadis has been good enough to show me that that order

was made at the suggestion of counsel for the second respondent.

In fact, the applications for security were not made

until 12 and 13 October 1988.	MC Eliadis has argued, and it is
supported by an affidavit by	Mr R.V.M. Byrne, that the first

respondent has delayed because of difficulty with pleadings. That

there has been such difficulty, I have no doubt.

A similar assertion, however, was made to Toohey J. in

- James v. Australia and New Zealand Banking Group Ltd (1985) 9

F.C.R. 442. His Honour remarked:

' l . . . the aring is to begin o 4 November, a

hearing date that was fixed in August his year.

The substantive application lodged was on 13

November 1984 yet this motion for security for

costs was not filed until 2 October 1985. The

second and third respondents have sought o justify

ground	have	the	that	delay	this	on	y
concentrated	on	trying	to	have	the	case	against

them struck out and that i t was not until the Full

Court delivered judgment on 20 September 1985 that

they knew they must go to trial. But the actions

of the second and third respondents in seeking to

have the claim against hem struck out in o way

precluded an application	for	security	at a much
earlier stage."

The dates which Toohey J. mentlons, although not strictly

comparable with those in the present case, are not far different.

For example, here the trial was also set down in August. It is

true that in that case, as his Honour held, the "precarious

financial position of the applicants" had been known from the

outset, whereas here it is still not clear whether the applicants

can or cannot meet such an order	for costs as may be made against
them if they fail.

The principle applied in James' case, that it is "well

established that an application for security for costs should be
made promptly" would not be fully respected if at this stage such

applications were entertained. The authority Toohey J.

particularly applied was - Smail v. Burton; Re: Insurance

Associates Pty Ltd (In Liquidation) [l9751 V.R. 776, a decision of the Full Court of the Supreme Court of Victoria, in which some of

the numerous authorities as to the relevance of delay are

collected. That Court, dealing with an application for security for costs said that, "if there are reasonable causes for delay,

... then different considerations might well apply."

Here, the conduct of the case on behalf of the

applicants is open to criticism in the respects mentioned above,
that is, persistence in failing or refusing to produce a statement

of claim making a reasonably coherent set of allegations, and also

in other respects; the applicants have, on occasions, as Mr

Eliadis says, failed to comply with interlocutory orders without reasonable excuse.

I notice, since my attention has been drawn to it, that

French J. says in Bryan E. Fencott and Associates Pty Ltd v.

Eretta Pty Ltd (1987) 16 F.C.R. 497 at p.515 that delay is "best

regarded simply as a factor whose consequences are to be weighed

in the balance in determining what is lust between the parties".

That does not seem to be the view which appealed to the

Full Court of the Supreme Court of Victoria or Toohey J. They

tended to apply a prima facie rule that delay	is a reason for
refusing security.

In some of the cases which I have looked at,

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6 .

explanations are given as to the reason for the prima facie rule,

which I believe exists, that applications for security should be made promptly. A simple one is convenience. Orders for security

quite often, in my experience, put an end to the litigation in

which they are made. If an applicant is to be allowed to pursue a

claim here only on the basis that he underwrites the other side's

costs, it is convenient, particularly if he is simply unable to do

so, that that position be established early in the course of the

suit; otherwise both sides are likely to waste effort on

proceedings which can never come to anything.

Here, against what seems to me to be the important

factor of the delay must be weighed the matters referred to above

and relied on by counsel for the respondents and, in particular

and importantly, the great difficulty which has been created by

what can only be described as vague pleading on behalf of the

applicants.

On the other hand, it is a matter of considerable

importance that last year the respondents plainly directed their

minds specifically to the question of security and on the

invitation of the respondents I made an order designed to ensure

that if that problem was to be raised, it would be done before th

end of 1987. That did not occur. It seems to me in the

circumstances that proper exercise	of discretion is to refuse the
applications for security.

Insofar as the proceedings today related to the matter

of the motions for security for costs, the order will be that the

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applicants' costs of and incidental to those motions be taxed and

paid by the respondents. Insofar as the proceedings today related

to the question of the statement of claim (and it has to be said

that has been a much lesser issue), it seems to me that the costs

should go the other way; that is the respondents should have their

costs on that question against the applicants, and I so order.

AS to the costs of the fifth cross-respondent, which

costs relate only to the matters of directions, those costs will

also have to be taxed and paid by the applicants.

f certify that this and the preceding

pages are a true copy of the reasons for

judgment herein of His Honour

Mr. Justice Pincus

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Dated ~ ~ O C ; C O & 1 5 3 ~