Kurniadi v Loh

[2002] FCA 723

FEDERAL COURT OF AUSTRALIA
Kurniadi v Loh [2002] FCA 723

HERMAN KURNIADI v SIMON THUANG CHYE LOH, ROBERT ASHMAN
STEPHEN WILLIAM MARSHALL and NEIL HENRY POLLARD

N1190 of 2001

IWAN SALIM v SIMON THUANG CHYE LOH, ROBERT ASHMAN
STEPHEN WILLIAM MARSHALL and NEIL HENRY POLLARD

N1191 of 2001

CARR J
21 MAY 2002
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	N1190 OF 2001

BETWEEN:

HERMAN KURNIADI
Applicant

AND:

SIMON THUANG CHYE LOH
First Respondent

ROBERT ASHMAN
Second Respondent

STEPHEN WILLIAM MARSHALL
Third Respondent

NEIL HENRY POLLARD
Fourth Respondent

JUDGE:

CARR J

DATE OF ORDER:

21 MAY 2002

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.The applicant shall within 21 days of this order pay into Court the sum of $20,000 as security for the costs of the first, third and fourth respondents to the point of time when the parties have given discovery and have had inspection of their respective documents.  By way of clarification, that amount is intended to secure costs of other interlocutory steps to that point, including a portion of preparation of the defences and getting up case for hearing.

2.In the event that the applicant does not make payment in accordance with paragraph 1 of this order all further proceedings (other than any orders which may be made by the Court of its own motion) be stayed.

3.The first, third and fourth respondents have liberty to apply for further security during the course of the proceedings and this motion is stood over for that purpose.

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

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	N1191 OF 2001

BETWEEN:

IWAN SALIM
Applicant

AND:

SIMON THUANG CHYE LOH
First Respondent

ROBERT ASHMAN
Second Respondent

STEPHEN WILLIAM MARSHALL
Third Respondent

NEIL HENRY POLLARD
Fourth Respondent

JUDGE:

CARR J

DATE OF ORDER:

21 MAY 2002

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.The applicant shall within 21 days of this order pay into Court the sum of $20,000 as security for the costs of the first, third and fourth respondents to the point of time when the parties have given discovery and have had inspection of their respective documents.  By way of clarification, that amount is intended to secure costs of other interlocutory steps to that point, including a portion of preparation of the defences and getting up case for hearing.

2.In the event that the applicant does not make payment in accordance with paragraph 1 of this order all further proceedings (other than any orders which may be made by the Court of its own motion) be stayed.

3.The first, third and fourth respondents have liberty to apply for further security during the course of the proceedings and this motion is stood over for that purpose.

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

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	N1190 OF 2001

BETWEEN:

HERMAN KURNIADI
Applicant

AND:

SIMON THUANG CHYE LOH
First Respondent

ROBERT ASHMAN
Second Respondent

STEPHEN WILLIAM MARSHALL
Third Respondent

NEIL HENRY POLLARD
Fourth Respondent

N1191 Of 2001

BETWEEN:

IWAN SALIM
Applicant

AND:

SIMON THUANG CHYE LOH
First Respondent

ROBERT ASHMAN
Second Respondent

STEPHEN WILLIAM MARSHALL
Third Respondent

NEIL HENRY POLLARD
Fourth Respondent

JUDGE:	CARR J
DATE:	21 MAY 2002
PLACE:	PERTH

REASONS FOR JUDGMENT

1. The Court has before it a motion on notice in each of these two applications whereby the first, third and fourth respondents seek an order that the respective applicant in each matter give security for their costs in the sum of $150,000 by paying that amount into Court. They base their motions on s 56 of the Federal Court of Australia Act when read with Order 28 rule 3 of the Federal Court rules.  I shall henceforth refer to the first, third and fourth respondents as “the respondents”.  It was common ground that the evidence and the submissions in each motion be the evidence and submissions in the other motion.  I shall refer to the motions and to the applications in the singular.

2. It appears from the application and the statement of claim that each applicant lives in Indonesia and is a citizen of that country.  The claims made in each application appear to be very similar. 

3. In the principal proceedings the applicant seeks damages pursuant to s 82 of the Trade Practices Act 1974 (Cth) or, in the alternative, pursuant to s 1005 of the Corporations Law against the respondents and one other respondent. In summary, the applicant claims that he was induced to enter into a contract relating to the agistment of ostriches with a company called Ostrich Meat and Marketing Co (Australia) Ltd (“the Company”). The respondents are said to be directors of the Company.

4. The applicant claims that he was induced into entering into the contracts with the Company by virtue of conduct which he says constituted misleading or deceptive conduct.  The respondents are sued on the basis that they are said to have been involved in contraventions of the Trade Practices Act and the Corporations Law.

5. The motion is supported by two affidavits, each of which were sworn by Mr Grant Anthony Pestell, a solicitor and the partner in the firm of solicitors who at the time of swearing his first affidavit had the responsibility for the matter on behalf of the respondents.  His firm now acts for only the third and fourth respondents.  

6. Mr Pestell’s first affidavit was sworn on 19 December 2001.  It annexes certain correspondence which has passed between Mr Pestell’s firm and the solicitors for the applicant.  The subject matter of that correspondence was whether the applicant had sufficient assets to meet any costs order and whether he was prepared to provide security for such a costs order.  The correspondence covered both applicants and both matters.

7. The respondents indicated in that correspondence that their clients were seeking security in an amount of $150,000.  In a letter dated 21 September 2001 the solicitors for the applicant stated that, without making any admissions, they had received instructions that the applicants (i.e. the applicant in each of the abovementioned applications) would be willing to secure an amount “not exceeding $30,000” with respect to both proceedings.  In a later letter the applicant’s solicitors stated that any application for security for costs would be resisted on the basis, amongst other things, “of the strength of the Applicants’ claim”.  In oral submissions this morning it appeared from what Mr Sidney Jacobs of counsel told me on behalf of the applicant that his client's position was essentially that it be left to my discretion (a) as to whether there be an order for security for costs, and (b) the amount of that order.  Mr Jacobs also strongly supported the proposition that if there be an order for security for costs that it be a staged order.  Mr Jacobs drew my attention to the fact that two further applications have been sent to the court for filing.  I am aware that they have in fact been filed.  Those two applications, although I have not seen the applications and statement of claim, are, so I am told from the bar table, essentially similar to the claims made in the two present proceedings.

8. Mr Pestell’s affidavit of 19 December 2001 provides an estimate that the trial of the two applications would last between approximately seven and ten days.  He states his reasons.  Mr Pestell swears that he has prepared an estimate of costs which he annexed to his affidavit.  That estimate puts the range of costs as between “$128,776 and $178,776”. 

9. The applicant has filed two affidavits sworn by Ms Karen Garrett, a solicitor having the conduct of the matter for the applicant. 

10. In her affidavit sworn 30 April 2002, Ms Garrett gives particulars of her experience in making assessments of costs in matters such as these.  I accept that she has that experience, just as I accept Mr Pestell’s experience on the other side.  Ms Garrett deposes to her instructions from the applicant as to the circumstances in which he entered into contracts with the Company for the purchase and agistment of ostriches as a cost of $72,000 and that the applicant has received no return on his investment.  Ms Garrett deposes to the circumstances whereby proceedings were not brought against the Company but against the four respondents as directors of the Company.  Ms Garrett also deposes to the existence of a group of some 15 Indonesian people, all of whom propose to file applications arising out of what are said to be substantially similar facts to the present case.  She says that they have put together a common pool of funds in the sum of $80,000.  Ms Garrett says that she anticipates that the only witness who will be called for the applicant in each application is the applicant himself. 

11. Ms Garrett then turns to Mr Pestell’s estimate of costs.  She challenges Mr Pestell’s estimate in relation to discovery.  Mr Pestell’s estimate for that item was between $20,000 and $30,000.  Ms Garrett says that, in her experience, this work would be done by a junior solicitor charging an hourly rate of $150.  Applying those figures to an estimate of $30,000 would, so she deposes, allow 5.7 weeks on the assumption of a 35 hour week.  Ms Garrett’s estimate is that the discovery process would take only three to five days.  Accordingly, so it seems to me, Ms Garrett’s estimate of the cost to the respondents of providing discovery of documents is in the vicinity of $5,000. 

12. Next Ms Garrett asserts in her affidavit that a substantial part of her client’s case would be documentary and that she does “not see that the scope for cross-examination of the applicant is very wide”.  Her estimate is that the trial would not exceed six days.  Mr Pestell’s estimate of costs is based on a hearing lasting ten days. 

13. Mr Pestell swore a supplementary affidavit on 16 May 2002 in answer to Ms Garrett’s affidavit.  In his supplementary affidavit Mr Pestell indicates that only four of the facts pleaded in the statement of claim are likely to be admitted.  He says that in relation to the matters required to be proved, his assessment is that the documentation which will require to be discovered will be lengthy and complex.  Mr Pestell says that his client has so far identified 36 boxes containing relevant correspondence and records.  He also raises some legal issues and asserts that the applicant’s pleading is fundamentally defective.  Mr Pestell says that the number of witnesses likely to be called at the trial is such that he “would be surprised in the circumstances if a trial could … be conducted in less than a week”. 

14. The applicant and the respondents have each filed an outline of submissions.  I do not propose to summarise all of those submissions but I have considered all of them.  I shall go to some of the points made on either side.

15. The respondents say that given the fact that the applicant is ordinarily resident in Indonesia, has not given any information about any assets held by him in Australia and has admitted that security should be provided to the extent of $30,000 in respect of the two applications, the only issue is the quantum of the security to be provided.  The applicant says that there was no such admission. 

16. In identical joint submissions filed in each application the applicant in each matter says that he stands by his offer of a total of $30,000 “without admission”. 

17. The applicant says that he has an arguable or triable case and that that is a relevant factor when an application is made for security for costs.  He cites, as authority for that proposition, the decision of Hill J in Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972. As I read that case, his Honour was expressing agreement with a general rule that in applications of this type one does not consider the likelihood of a party succeeding. The applicant went so far as to submit that where there is prima facie evidence in support of the merits and bona fides of the claim, then this would militate either against providing any security or a large amount of security. However, it is not necessary for me to venture into that area. I note that Hill J in Equity Access stated that the applicant in that case had an arguable or triable case.  I shall proceed on the basis that the applicant in this matter has an arguable or triable case. 

18. Next, again relying on Equity Access, the applicant contends that the public interest in the enforcement of s 52 of the Trade Practices Act should be taken into account.  His Honour did so in that case but stated (at 50,637):

    “No doubt the more serious the allegation of unfair practice the more the public interest in the litigation might be attractive.”

19. I take the public interest into account in this matter. 

20. The applicant says that while he could not submit that the ordering of security would shut him out from pursuing his claims, the ordering of security above “a certain amount” would “certainly dissuade” him from continuing. 

21. The applicant made other submissions which it is not necessary for me to summarise.  As to the quantum of security the applicant submitted that an order might be made in a sum designed to take the matter up to and including the end of the discovery process with liberty to the respondents to apply for increased security thereafter. 

22. The applicant then made specific challenges to Mr Pestell’s estimate.  I shall not set out those challenges, but they appear in the applicant’s written submissions and to some extent were covered in oral submissions this morning.  In particular I note the applicant’s submission to the effect that to have a partner on the respondent’s side take a substantial part in the discovery process would not be an appropriate factor for me to take into account when assessing costs.  I appreciate the reasons advanced by Mr Pestell why the respondent would want a partner to be engaged in that work.  I also note Mr Jacob’s objection to the paragraph in question in Mr Pestell’s affidavit as not disclosing a reasoned basis for taking that course.   I also note Mr Pakes’ comment in response that it is intended that the duties in relation to discovery should be of a supervisory nature. 

23. In addition to the factors which I have already mentioned, I have also taken into account the following. 

24. First I note that this application is one of four similar applications.  Two further similar applications, as I have mentioned, were filed in the Western Australia District Registry earlier this month. 

25. At this stage none of these proceedings has been consolidated, nor has there been any order for the evidence in one matter to be evidence in another.  Nevertheless, and I take this into account as a relevant factor, I think that it is likely that much of the discovery and preparation for trial on the respondents’ part will be common to all four applications. 

26. Next I take into account the applicant’s submission that any order for security for costs should not be out of proportion to the amount currently sued for.  As I understand the applicant’s submissions, the average amount sued for is in the vicinity of $50,000 per person.   Nevertheless, against that factor must be balanced the fact that the respondents are likely to incur very substantial costs regardless of the amount claimed by a particular applicant. 

27. I accept that an order for security for costs does not normally provide a full indemnity even of taxed costs. 

28. I find it extremely difficult to estimate the costs through to the conclusion of the hearing.  For that reason, I do not intend to make even an estimate of those costs at this stage. 

29. I propose to make an order which is intended to provide some security for the respondents’ costs to the point where discovery has been given in each application and that will include, to some extent, the getting up of the defence of the applications.  I then propose to stand the motion over for further consideration at a later stage of the proceedings. 

30. In my view, after weighing all of the factors relevant to the applications, I consider that an order for security in the amount of $20,000 would be appropriate in each application.

31. I have mentioned the further similar proceedings.  However, in fixing the interim amount in these two matters, I have excluded any estimate of the savings which might be achieved in giving discovery in those other proceedings. 

32. If and when applications are made in any of the further matters for security for costs then any savings achieved in, for example, the discovery process by the fact that discovery has been given in these applications might well be a relevant factor to be taken into account.

33. I propose to make orders in each motion along the following lines.

    1.The applicant shall within 21 days of this order pay into Court the sum of $20,000 as security for the costs of the first, third and fourth respondents to the point of time when the parties have given discovery and have had inspection of their respective documents.  By way of clarification, that amount is intended to secure costs of other interlocutory steps to that point, including a portion of preparation of the defences and getting up case for hearing.

    2.In the event that the applicant does not make payment in accordance with paragraph 1 of this order all further proceedings (other than any orders which may be made by the Court of its own motion) be stayed.

    3.The first, third and fourth respondents have liberty to apply for further security during the course of the proceedings and this motion is stood over for that purpose.

I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of Justice Carr.

Associate:

Dated:            21 May 2002

Counsel for the Applicant:	Mr S Jacobs
Solicitor for the Applicant:	Messrs Stewart Green Mijovich
Mr S T C Loh appeared on his own behalf
Counsel for the 3rd and 4th Respondent:	Mr N G Pakes
Solicitor for the 3rd and 4th Respondent:	Messrs Murcia & Associates
Date of Hearing:	21 May 2002
Date of Judgment:	21 May 2002