Kurniadi and ORS v Loh and ORS (No.2) - [2003] FMCA 163

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KURNIADI & ORS v LOH & ORS (No.2)

[2003] FMCA 163

PRACTICE AND PROCEDURE – TRADE PRACTICES – Security for costs.

Smale v Burton Reinsurance Associates Pty Ltd (1975) VR 776
Kurniadi v Loh [2002] FCA 1021

Applicants:

HERMAN KURNIADI, IWAN SALIM, CHARLEW LIAW and HERLINA LIAW, MARIATI HARDI, SOEDARJANTO, SYLVIA POERWITA, PANTIRATA DIBASA PANGGABEAN, JOHNSON TOBING and SURANI TAHIR, LELA LAKSANA, OEMAR KRESNO OETOMO, LEONG TEK LUNG, DEWI ANGGRAENI ANGGAWIRIJA AND RETNO WACHJOEWIGAJAT

Respondents:

SIMON THUANG CHYE LOH, ROBERT ASHMAN, STEPHEN WILLIAM MARSHALL, NEIL HENRY POLLARD and OSTRICH MEAT & MARKETING COMPANY (AUSTRALIA) LIMITED (ACN 067 005 190)

File Nos:

WZ156 of 2002 to WZ161 of 2002 and

WZ221 of 2002 to WZ227 of 2002

Delivered on:

1 April 2003

Delivered at:

Melbourne

Hearing Date:

1 April 2003

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicants:

Mr S Jacobs

Solicitors for the Applicants:

Stewart Green Mijovich

First Respondent:

No appearance

Counsel for the Second Respondent:

Mr S Forbes

Solicitors for the Second Respondent:

Paiker & Overmeire

Third Respondent:

No appearance

Fourth Respondent:

No appearance

Fifth Respondent:

No appearance

ORDERS

The Applicants shall within 28 days of this order pay into Court the sum of $6,000 as security for costs of the Second Respondent and that in the event that the said sum is not paid within the time prescribed that the proceedings be thereafter otherwise stayed.
The Orders of the Court made on 21 February 2003 be amended as follows:
Order 3 delete “25 April 2003” insert “16 May 2003”.
The Applicants pay the Second Respondent’s costs fixed in the sum of $700.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PERTH

WZ 156 of 2002 to WZ 161 of 2002 and

WZ221 of 2002 to WZ227 of 2002

Applicants

And

SIMON THUANG CHYE LOH, ROBERT ASHMAN, STEPHEN WILLIAM MARSHALL, NEIL HENRY POLLARD AND OSTRICH MEAT & MARKETING COMPANY (AUSTRALIA) LIMITED (ACN 067 005 190)

Respondents

REASONS FOR JUDGMENT

This is an application by way of notice of motion which has been filed by the second respondent to a number of applications which are before the court and which will be reflected in the court heading of this judgment and orders to be made.
The notice of motion which has been filed with the court seeks orders pursuant to Rule 21.01 of the Federal Magistrates Court Rules 2001 that within 14 days of the date of the order the applicant in the above applications give security for the costs of the second respondent in the action in the sum of $30,000 by payment of that amount into court and that until that payment is made, further proceedings be stayed.
Mr Forbes, who appears for the second respondent, has relied upon an affidavit sworn by himself on 5 March 2003. The applicant by written submissions dated 31 March 2003 also relies upon an affidavit of Karen Garrett sworn 25 March 2003 together with earlier affidavit material sworn by the same deponent and notably an affidavit sworn by her on 4 November 2002 and other affidavits sworn by her on 1 May 2002, 9 September, 11 September, 21 October and two affidavits on 4 November, all of 2002.
In making the application for security for costs, Mr Forbes for the second respondent has agreed that the form of the order should at least be such as to enable - in the time frame provided for the provision of security of costs at least enable all the parties to continue with the proceedings so that there should be no stay of the proceedings until after the time has passed for the lodgment of the sum for security for costs, assuming the court were minded to make such an order.
The applicant has referred to the affidavit material to which I have now just referred, and in particular has also raised an issue that the second respondent effectively had on the affidavit material evaded service or conducted himself in such a way that, as I understand the submission, relying upon the authorities and in particular the authority of the Full Court of the Supreme Court in the matter of Smale v Burton Reinsurance Associates Pty Ltd (1975) VR 776 at 777, I should take into account that conduct both in terms of reaching a decision as to whether to make any order for security for costs and, as I understand it, in deciding the amount of those costs and the form of the orders.
In my view, the conduct of the second respondent, which was the subject of a judgment delivered by this court on 7 February 2003, is not of a kind that would justify as a matter of law refusal to make an order for security for costs. There is clearly some dispute about the nature and extent to which it could be said that the second respondent has sought to avoid service and in my decision which I delivered, as indicated, on 7 February 2003, I certainly took the view that there was some force in the criticism of the method of service which had been attempted for and on behalf of the applicants and indeed perhaps some criticism of there not being any earlier application for substituted service or other orders of a similar kind.
In any event, it is not necessary for me in this application to do anything other than note that there has been considerable expense incurred for and on behalf of the applicants in reaching a point which ultimately was reached with the judgment of this court on 7 February 2003 that meant the second respondent became a party to these proceedings.
In my view, the basis upon which security of costs should be awarded has been set out adequately in the decision of Carr J (see Kurniadi v Loh [2002] FCA 1021) to which I had referred in my decision in this matter on 7 February 2003. I have not altered my view that, in principle, the security for costs should not be an order made out of proportion to the amount which is the subject of the claim and nor does it provide a full indemnity even for taxed costs. I further conclude that at the moment the way the applications are pleaded, there is a great degree of similarity in the issues of all the applications and, whilst there are multiple applications, in my view the issues raised in those applications are not so diverse as to necessarily involve significant expenditure over and above what would normally be incurred by a defendant defending proceedings of this kind.
I am also satisfied, as indicated in my earlier decision, that I agree with Carr J that in fact there is indeed, in the present case, an arguable or triable case by the applicants. Nevertheless, it does seem to me in circumstances of this kind where the parties are now engaged in what can only be described as an extensive examination and inspection of documents both provided by the liquidator of the company which is now in liquidation named as a respondent in these proceedings and indeed inspection of their own documents and for the second respondent the obtaining of instructions from the respondent overseas in preparation of defence, there is clearly going to be expense incurred by the second respondent at least up to and including the time of the mediation.
In the circumstances, it is submitted on behalf of the applicants that if I were minded to make any order for security of costs, it should be of a modest amount and should really not interfere with the process and preparation of a case up to and including mediation. In principle, I accept that submission. It seems to me in matters of this kind that it is desirable not to inhibit the parties from preparing the application or defence to such a level that would at least enable a mediation to be properly and meaningfully conducted. It is in the interests of all parties that the mediation be conducted free of any other onerous obligation, whether it be by way of financial obligations to meet security for costs or for the parties to incur costs of a kind which make either the pursuit of the application or defence by respondents no longer viable.
In my view, having regard to the fact that orders have previously been made which effectively have meant that there is a sum of $40,000 lodged by the applicants is a relevant matter to be taken into account in terms of assessing the degree of commitment that is now required by the applicants and indeed the financial contribution not only to the costs so far incurred by the applicants by their own counsel but also the expense and potential expense and exposure to expense in the event that the respondents were to succeed.
It is clear to me that the second respondent, as with the other respondents, on the material currently before me similar to, in a sense, material that was then before Carr J, would prima facie be entitled to an order for security for costs. However, in assessing the amount of those costs, it is in my view relevant to take into account the following: there is indeed common purpose for all respondents in relation to discovery and inspection of documents, and those representing the respondents ought to be capable of reaching agreement in relation to the most cost‑effective manner of achieving that discovery.
It also seems to me that the second respondent, having recently become formally a party as a consequence of my decision regarding service which was delivered on 7 February 2003, could not be said to have incurred costs of a kind similar to the other respondents who gain the benefit of the security for costs order by his Honour Carr J. I accept, however, that there will be work required in obtaining instructions for the purpose of the defence, in analysing and inspecting documents, however supplied and provided, despite the best will in the world in terms of the reduction of costs by the respondents and, further, that there will be costs and expenses incurred up to and including the mediation of this matter.
I do not accept, however, that the amount that is appropriate is $30,000 as, again, I stress that the purpose of security for costs order is not to provide a full indemnity even for tax costs. It is appropriate, however, that I do in the circumstances make an order for security for costs and the amount which I regard as appropriate in order to facilitate the process, as best this court is able to, prior to and including mediation would be an amount of $6000.
It seems appropriate to me that in making that order I should have regard, again by way of clarification, that the amount is intended to secure costs of those interlocutory steps including preparation of defences and, in part, preparing the case for hearing up to and including the mediation, and, as indeed has been the case in the other orders made prior to this matter being transferred by the Federal Court, I will hold over the notice of motion of the second respondent for the purpose of the second respondent being granted liberty to apply for further security during the course of proceedings after the conclusion of the mediation.
Otherwise it seems to me, subject to hearing submissions, that the appropriate order of the court is that the applicant should within 28 days of this order pay into court the sum of $6000 as security for the costs of the second respondent and that in the event that the said sum is not paid within the time set by the court, that the proceeding as against the second respondent be thereafter otherwise stayed. That would be the order I propose.
I will direct that the parties be permitted to make copies of the inspected documents produced by the liquidator by means of a portable photocopying device.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 1 April 2003