Kaldover Pty Ltd v Maher, C.M.

[1987] FCA 391

IN THE FEDERAL COURT OF AUSTRALIA )

QUEENSLAND DISTRICT	REGISTRY	)	QLD G76 of 1987
GENERAL DIVISION	)

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BETWEEN: KALDOVER PTY. LTD.

Appllcant

AND: CLAIR MARGARFT MRHER and

J O A N PATRICIA FRIEL MAHER

First Respondents

AND: PATl’EN TREWIN

Second Respondent

MINUTES OF ORDER

JUDGE MAKING PINCUS ORDER: J .

DATE OF ORDER:	2 0 JULY 1987
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1. the applicant, Kaldover Pty. Ltd., lodge wlth the District Reglstrar at Brlsbane as security for the

costs of the second respondent the sum of $15,000,

payable as follows:

(a) $2,000 on or before 3 August 1987;

(b) $4,000 on or before 7 September 1987;

(c) $9,000 not less than 5 weeks prior to the date

flxed for trial of this application;

2 . should the appllcant fail to make any of the

payments aforesald, the appllcation shall be stayed

as against the second respondent;

3 .	the appllcant pay the second respondent’s costs	of
and incidental to the application for securltx,	to
be taxed.

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m: Settlement and entry of orders is dealt

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Order 36 of the Federal Court Rules. I

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IN THE FEDERAL COURT OF AUSTRALIA	)
QUEENSLAND DISTRICT REGISTRY	) QLD G76 of 1987
GENERAL DIVISION	)

BEIWEEN: KALDOVER PTY. LTD.

Appllcant

AND: CLAIR MARGARET MAHEX and

JOAN PATRICIA FRIEL MAHER

First Respondents

AND: PATTEN TRFMIN

Second Respondent

PINCUS J. 20 JULY 1987

M TEMPORE REASONS FOR JUDGMENT

Thls is an application for security for costs against

the second respondent, in respect of which I have already refused

an appllcatlon for ad~ournment. The amended statement of clalm

says in paragraph 3(a) that the second respondent, f o r whom Mr.

Bowden appears, was a hotel broker and In paragraph 3(b) that he

acted as agent for the flrst respondents. The case against hlm

seems to be that he is personally liable on the basls that he was

guilty of fraud, or negligence, or that he was knowlngly Involved

in the contravention	of 5 . 5 2 which	is alleged against the other
respondents.

The application for an adjournment I have mentioned was

made on the basis that there should be complete material before

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the court as to the facts of the case. The material which is now before the court is largely in the form of correspondence, there is no suggestion that the correspondence is incomplete, and I have found reference to it helpful.

The statement of claim says that there was an agreement

made on 27 January 1987. Mr. Carter's affldavit exhlblts a

document dated 25 January 1987, whlch 1s presumably the relevant

one, although the statement of clalm makes reference to its being

dated 27 January. Paragraph 7 of the statement of clalm says that the second respondent represented that the taklngs of the business

in question, which 1s a hotel, were $8,000 or $8,400; that the

gross margin was $6,960, less expenses of $2,200, and that

"Fourex" brand draft beer was not sold at the hotel. Now, the

correspondence to whlch Mr. Bowden has dlrected my attentlon shows

that complaints of a slmllar kind were raised by letter of 17

February 1987 from sollcltors actlng for the purchaser. In that letter they purported to resclnd, and they sald that the taklnqs of the hotel were sald to be $8,000 per week and that lnqulrles

had shown that they were less than $6,000. They also sald that

Fourex beer had been sold	at	the hotel for the prevlous four
months.	c

On the same day, 17 February, solicltors for the vendor

wrote back to	say that the takings were about $6,000 per	week,
saying:

l'... the Vendor was aware prior to the Contract

being executed that the weekly takings	of the Hotel
were approximately $6,000.00."

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And the same letter said:

"The matter of whether XXXX Beer IS sold from the

Hotel by the present occupant is not a condltlon	of
the Contract".

That, as Mr. Bowden accurately says, implles an admission that

something had been said about it. Then, by a letter which 1 s

dated 19 February 1987, the vendor's sollcitors wrote again

proposlng a variation of the contract, and on 25 February 1987

they wrote confirming settlement of the transaction. It seems

clear enough that the contract was varled by conduct,	If not by
express words.

The correspondence goes on to dlscuss these present

proceedlnqs and shows that the appllcant 1 s Insolvent. The only

other matter whlch 1 s necessary to refer to m the correspondence

1 s that a letter dated 18 May 1987 from the sollcltors for the

second respondent sald that the appllcant has no assets other than

as trustee for the Rekab Famlly Trust - that does not seem to be

in dispute - and that the trust has no assets apart from the

lnterest m the Palace Hotel, which, after payment of all

liabilitles, is worth nothlng, and that Mr. Baker, to use hls own

expresslon, "went broke" in a venture in Wollongong. That was

replied to by a letter dated 20 May 1987, which is exhlblt "G" to

Mr. Carter's affidavit, from the solicitors for the appllcant. It

does not appear to dispute the assertions made in the letter of 18

May to which I have referred. I note also that the assertlon In

the letter of 18 May that Mr. Baker "went broke" in a venture in

Wollongong is not easy to reconcile with the suggestion made

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before me that the very qulckly appearlng financlal problems of

the applicant purchaser were due to the wrongdoing of the

respondents.

The solicitors for the second respondent have placed

before me a letter dated 9 June 1987 which estimates costs on a

party and party basis in the sum of $11,204 up to and Including

the first day of trial, and at $1,359 per day thereafter. I do

not go through the pretence of having no vlew about those

estimates, because I do have one: they seem to me to be

surprisingly low. In a number of cases, estimates of costs of

current proceedlngs have been placed before me, and the flgure of

$1,359 a day 1 s the lowest flgure I have recently seen.

The case seems to me to be one In whlch securlty should

clearly be glven. The reasons why It should be mclude:

(1) that the statement of clalm appears to be, at least to some

extent, inconslstent wlth the facts as revealed by the

correspondence;

( 2 ) that the second respondent is not one of the parties to the

transactlon, but an agent for the flrst respondents,

according to the pleading, and It may very well be that even

if the applicant succeeds, the second respondent wlll not be

held liable;

( 3 ) the case is one in which, prima fa'cie, there should be some

consideration of security, because the persons standing

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behind the applicant are otherwise given an unfair advantage

as against the second respondent. That is, his assets are at

risk in thls litigation; If he loses, there will be an order

for costs against him, presumably recoverable from his

personal assets, whereas the persons standlng behlnd the

applicant are not rlsking their personal ssets. That IS, on

the face of it, an unequal distribution of risk.

I order that the applicant, Kaldover Pty. Ltd., do lodge

with the Dlstrict Registrar at Brlsbane as securlty for the costs

of the second respondent the sum of $15,000 payable as follows:

(1) $2,000 on or before 3 August 1987;

( 2 )

$4,000 on or before 7 September 1987;

( 3 1

$9,000 not less than flve weeks prlor to the date flxed for

the trial of this application.

I further order that should the appllcant fall to make

any of the payments aforesaid, the applicatlon shall be stayed as

against the second respondent and that the applicant pay the

second respondent's costs of and lncidental to the appllcatlon for

security, to be taxed.

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