Keifill Pty Limited v Salamander Projects Pty Limited and the Retail Leasing Company Pty Limited

[1988] FCA 849

NOT FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA 1 1

NEW SOUTH WALES	DISTRICT	REGISTRY	1	No. G 124 of 1988
1

DIVISION GENERAL )

BETWEEN : XEIFILL PTY LIMITED

Appl X cant

AND :

SALAHANDER PROJECTS

PTY.LIMITED

First Respondent

AND : THE RETAIL LEASING COMPANY

PTY. LIMITED

Second Respondent

CORAM:	Davies J.
DATE :	13 December 1988
PLACE :	SYDNEY

REASONS FOR JUDGMENT

EX TEMPORE

This is an application f o r security for costs in

proceedings based on alleged breaches of s.52 of the Trade Practices Act 1974 (Cth). I need not go i n t o the matter in any detail for it seems to me that it 1s relatively clear

that the security ought to be granted.

2 .

The applicant 1s a private company, whlch was formed by four persons, Mr and Mrs Sanderson and M r and Mrs

Meehan. The applicant was formed f o r the purpose of the transaction which ultimately failed and led to the current

litigation which seeks substantial damages. It is

impractical to form any vlew as to the prospects of success,

that is a matter which will have to be deterrnlned at the

trial. In a matter such as thls, where the result of the

trial will depend upon the credit of the witnesses and oral

evidence gxven at the hearlng, one cannot really determine

in advance that the probablllties lie one way or the other.

But if the matter goes on and if the applicant is

successful, it is clear enough that the damages will enure

f o r the benefit of Mr and MrS Sanderson and Mr and Mrs

Meehan. They will get the benefit from it. It appears to

me to be u n ~ u s t from the respondents' polnt of view that

they should have to meet litigation brought by an

impecunious company and are at the risk of costs whereas the

persons who will benefit from any success in t h e litigatlon

on the applicant's part presently do not stand liable to

meet the costs of the respondents.

I need not go into all the matters that are said

about security for this is not a case in which I t h i n k t h a t

an order, such as I have in mind, will frustrate the

litigation. I intend simply to make an order which will

3 .

provide adequate security for the respondents in respect of

future costs. I wlll so order in a way that the security

can be given, if Mr and MrS Sanderson and M r and firs Meehan

are prepared to take that course. And, as I say, it is

their decision in the matter for they will be the people who

will beneflt from the litigation I f it goes on.

I have given consrderatlon to the cases mentioned

by Mr Lloyd. I have looked at a decision of my own, David

Securities Pty Limited v. Commonwealth Bank of Australia

( 1 9 8 8 ) (unreported) whlch referred to the general cases on

the point in this Court. In that decislon I said at page 3

that the f i r s t guide that stands out is t h a t , if there 1s

simply a claim by an insolvent company in respect of which

security can be provided, the Court will, in the absence of any reason to the contrary, ordinarily order that security

be given. In my opinion, in the present case we have an

insolvent company, proper security can be glven and it does not appear that there is any real reason why it should not.

Now in these circumstances, which are somewhat

similar to the circumstances which were considered by Mr

Justice Rogers in Mumuto Pty Lltmlted v. Listenden (1983) 8

ACLR 364, I will make an order f o r costs. The security I have in mind is a security lLmited to the costs of each

respondent in the sum of $8000, that will be a total of

$16,000. It should be given, I think, by way of personal

4 .

guarantee by each of M C and Mrs Sanderson and M C and M C S

Meehan, t he gua ran tee to be i n a fo rm approved by t h e

R e g i s t r a r .

I have been asked by Mr Macready and Mr Marshal1 to

make some f u r t h e r o r d e r by way of s e c u r l t y and i t has been

sugges t ed to me by M r Marshal l tha t Mr and Mrs Sanderson

should lodge wi th the Cour t t i t l e deeds of t h e i r home

proper ty . I t seems t o me, however, t h a t i t is no t necessa ry

t o go t o t h a t s t e p . The ev idence p resent ly before the Cour t

i n d i c a t e s t h a t a l l four persons a re so lvent and t h a t Mr and

Mrs Sander son in pa r t i cu la r have an unencumbered property

worth $75,000 p l u s o t h e r a s s e t s . So, on t h e p r e s e n t s t a t e

of the ev idence before the cour t , these four persons have

adequa te a s se t s	t o meet	any	clalm	made	unde r the i r
guarantees .

I have present ly put on one s ide the idea of a bank

guarantee or t he p rov l s ion of funds because nei ther Mr and

Mrs Sanderson nor M1: and M r s Meehan have any excess funds,

t h a t i s funds fo r which they cannot f l n d a use. I th ink i t

would be putting an unnecessary burden on them at t h i s s t a g e

t o e i t h e r borrow funds t o pay I n t o c o u r t or put ou t funds t o

purchase a bank or bui ld ing soc ie ty guarantee .

I w i l l o r d e r t h a t t h e gua ran tees wl th r e spec t t o

t h e c o s t s which may be awarded in favour of the respondents

5 .

in these proceedings be limited so far as the first

respondent LS concerned to the sum of $8000 and so f a r as

the second respondent is concerned to a like sum, that

security be given by way o f personal guarantees joint and

several by Roger John Sanderson, Jennifer Lenore Sanderson,

Robert Wllliarn Meehan and Jennifer Maureen Meehan,	the form
of the guarantees to be in the form approved by the

Registrar. I reserve liberty to apply should there be any

problems arising out of the form or nature of the guarantee.

I think the costs of the motion should be treated as costs

in the cause. The	respondent's	costs are costs in the
proceedings'

I will now refer the matter to the Registrar for

settlement conference and I will advise him to glve any further direction to the conduct of the matter as may be necessary and I will authorize him to fix a date for the hearing if he thinks that is appropriate.

I certify that this and the four (4)

preceding pages are a true copy of

the Reasons for Judgment of the

Honourable Mr Justice Davies.

Associate: &&v-.& m.

Date : December 13 1988

I

. 1 '

6 .

I )

Counsel for the applicant:	Mr D.H. Lloyd
Solicitor for the applicant:	S p a i k e , Helmore hnd Withycombe
Counsel for first respondent:	Mr R.H. Macready
Solicitors f o r flcst respondent:	YandelLs
Counsel for second respondent:	M r J. Marshal1
solicitors for second respondent:	Murray, Stewart and Fogarty
Date of Hearing:	13 December 1988
Date of Judgment:	13 December 1988