La Rosa Constructions Pty Limited v PWR Developments Pty Limited

[2004] NSWSC 235

CITATION:	La Rosa Constructions Pty Limited v PWR Developments Pty Limited & Ors [2004] NSWSC 235
HEARING DATE(S):	12/03/04
JUDGMENT DATE:	12 March 2004
JURISDICTION:	Equity Division Technology and Construction List
JUDGMENT OF:	Einstein J
DECISION:	Defendants motion for security for costs dismissed.
CATCHWORDS:	Security for costs
LEGISLATION CITED:	Corporations Act 2001 (Cth) Trade Practices Act 1974 (Cth)
CASES CITED:	Bankinvest AG v Seabrook (1988) 14 NSWLR 711 Beach Petroleum NL v Johnson (1992) 10 ACLC 525 Bell Wholesale Co Pty Ltd v Gates Export Corporation (No 2) (1984) 2 FCR 1 Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301 Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates (Aust) Pty Ltd (1986) 13 FCR 46 Caruso Australia Pty Ltd v Portec (Aust) Pty Ltd (1984) 8 ACLR 818 Clyde Industries Ltd v Ryad Engineering Pty Ltd (1993) 11 ACLC 325 Cowell v Taylor (1885) 31 Ch D 34 Equity Access Limited v Westpac Banking Corporation (1989) ATPR 40-972 Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1992) 8 ACSR 405 Grant v Banque Franco-Egyptienne (1878) 3 CPD 202 Harpur v Ariadne Australia Ltd (No 2) [1984] 2 Qd R 523 Heller Factors Pty Ltd v John Arnold's Surf Shop Pty Ltd (in liq) (1979) 4 ACLR 492 Hession v Century 21 South Pacific Ltd (in liq) (1992) 28 NSWLR 120 Idoport Pty Ltd v National Australia Bank Ltd & Ors [2001] NSWSC 744 Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621 KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 M A Productions Pty Ltd v Austarama Television Pty Ltd & Anor (1982) 7 ACLR 97 Memetu Pty Ltd v Lissenden (1983) 8 ACLR 364 Mummery v Irvings Pty Ltd (1956) 96 CLR 99 Oshlack v Richmond River Council (1998) 193 CLR 72 Pearson v Naydler [1977] 1 WLR 899 PS Chellaram and Mr Courtney v Chine Ocean Shipping Co (1991) 65 ALJR 642 Rosenfield Nominees Pty Ltd v Bain and Co (1988) 14 ACLR 467 Rugby Union Players Association [30/7/1997, SCNSW, 50225/96, unreported Scott Fell v Lloyd (Official Assignee) (1911) 13 CLR 230 Sent v Jet Corporation of Australia Pty Ltd (1984) 2 FCR 201 Smail v Burton (1975) VR 776 Spiel v Commodity Brokers Australia Pty Ltd Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 5 ACLC 480 Tricorp Pty Ltd (in liq) v Deputy Commissioner of Taxation (WA) 10 ACLC 474 Tulloch v Walker Warren Mitchell Pty Ltd v Australian Maritime Officers Union (1993) 12 ACSR 1 Weily's Quarries v Devine Shipping Pty Ltd (1994) 14 ACSR 186 Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542
PARTIES :	La Rosa Constructions Pty Limited (Plaintiff) PWR Developments Pty Limited (First Defendant) Andrew Albert Koolloos (Second Defendant) John angus Sherwood (Third Defendant)
FILE NUMBER(S):	SC 55054/03
COUNSEL:	Ms R Rana (Plaintiff) Mr J Thomson (First, Second and Third Defendants)
SOLICITORS:	Henry Davis York (Plaintiff) Brook Worthington (First, Second and Third Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST

Einstein J

Friday 12 March 2004 ex tempore
Revised 6 April 2004

55054/03 La Rosa Constructions Pty Limited v PWR Developments Pty Limited & Ors

JUDGMENT

The Proceedings

1 These proceedings are brought by the plaintiff against three defendants, the first defendant of which is a company. The summons identifies the issues and it is unnecessary to do more than to note that the proceedings arise by way of a dispute out of a building contract for the construction of a multi unit residential development at Pittwater Road, Mona Vale. The first defendant was the developer owner of the property and the land on which it was built. The second and third defendants are directors of the first defendant who had guaranteed obligations and liabilities of the first defendant. The plaintiff company is the builder and entered into a building contract on or about 27 September 2001 with the first defendant to construct 13 strata title townhouses.

2 The summons, which was filed on 27 November 2003, pleads that on 21 August 2003 the first defendant repudiated the contract, which repudiation is said to have been accepted by the plaintiff on 22 August 2003.

3 The cross-claim is brought by the first defendant against the plaintiff and Mr La Rosa. The burden of the cross-claim is the cross contention that it was the first cross defendant which failed to achieve practical completion by 28 February 2003 or by 21 August 2003 and that the cross-claimant terminated the contract on 21 August 2003. The first cross-defendant is said to have breached contractual obligations, to have carried out its work negligently and in breach of its duty of care owed to the cross-claimant. The work carried out by the first cross-defendant is said to have been overvalued and the first cross-defendant to have been overpaid in progress payments.

4 The cross-claim seeks $805,071.30, the summons being a general claim for damages.

5 Broadly speaking the plaintiff’s claim to damages is in the order of some $790,000, together with interest being a combination of its final claim and retention funds of which part are claimed as part of the final claim. Trade Practices Act section 52 claims are pursued.

The security for costs applications

6 The security for costs applications: by the defendants on the plaintiff’s suit and by the plaintiff [for security for the costs of the cross-claim] were in each case made reasonably promptly so there is no question of the delay factor. The parties have reached an agreement in relation to the cross defendants application for security. That application is settled.

7 There is further no dispute on the evidence nor at the bar table but that the plaintiff is clearly unable to meet the defendants costs should the defendants succeed in the proceedings and there is further undisputed evidence before the court that the plaintiff is a company of one shareholder only, Mr La Rosa, whose own personal financial position is such that he likewise is unable to fund any indemnity which he might otherwise be ordered, by way of an obligation, to indemnify the plaintiff against any orders for costs which the plaintiff may suffer in the proceedings.

8 This then means that the parameters for debate are essentially parameters concerned with the proper exercise of the court’s discretion. The position is not a simple position but as I see it, having given the matter some careful consideration, the proper exercise of the court’s discretion subject to certain conditions, is not to accede to the defendants’ application for security for costs.

9 The principles which inform the proper exercise of the court’s discretion were generally set out in detail in the Idoport Pty Limited v National Australia Bank Ltd & Ors [2001] NSWSC 744 delivered on 13 September 2001, and I do not propose to repeat those principles save to refer to some of them briefly [at [47 – 60]]:

“Security for costs

47. It is clear that the discretion to award security for costs requires to take into account all of the relevant facts matters and circumstances and is a judicial discretion to be exercised following the adducing of all evidence by each party to an application seeking to have such an award made. As Giles J (as His Honour then was) made plain in Rosenfield Nominees Pty Ltd v Bain and Co (1988) 14 ACLR 467 at 470, in exercising the discretion as to whether or not to make an order for costs, the Court must have a concern to achieve a balance between ensuring that adequate and fair protection is provided to the defendant, and avoiding injustice to an impecunious plaintiff by unnecessarily shutting it out or prejudicing it in the conduct of the proceedings [cf Street CJ in Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301 at 304]. Giles J referred to the debate over whether the discretion should be exercised with some predisposition in favour of the defendant and expressed the view with which I agree, that the debate is largely semantic. The principle which his Honour identified at 470 was that:

"the discretion must be exercised having regard to all the circumstances of the case, but the inability of the plaintiff to meet the costs of the successful defendant, being the occasion for invoking the exercise of the discretion, is likely to play an important if not decisive role".

48. Because the discretion to be exercised by the Court is a wide one which should remain unfettered, the circumstances in which the discretion should be exercised in favour of making the order cannot and should not be stated exhaustively: Spiel v Commodity Brokers Australia Pty Ltd at 415. In Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1992) 8 ACSR 405, Cooper J stated:

“(i)t is not possible or appropriate to list all of the matters relevant to the exercise of the discretion. The factors will vary from case to case. The weight to be given to any circumstance depends upon its own intrinsic persuasiveness and its impact on other circumstances which have to be weighed: PS Chellaram and Mr Courtney v Chine Ocean Shipping Co (1991) 65 ALJR 642 at 643.” (at 415)

49. Notwithstanding the unfettered nature of the discretion, Beazley J in KP Cable Investments set out 7 guidelines which the Court is said to typically take into account when determining such an application:

“1. That such applications should be brought promptly. This is a principle of longstanding: see Grant v The Banque Franco-Egyptienne Egyptienne (1876) 1 CPD 143; see also Smail v Burton (1975) VR 776 per Gillard J at 777; Caruso Australia Pty Ltd v Portec (Aust) Pty Ltd (1984) 8 ACLR 818 at 820; Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 514…

2. That regard is to be had to the strength and bona fides of the applicant's case are relevant considerations: see M A Productions Pty Ltd v Austarama Television Pty Ltd and Anor (1982) 7 ACLR 97 at 100; Bryan E Fencott Pty Ltd at 514. As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success. ( Bryan E Fencott at 514).

3. Whether the applicant's impecuniosity was caused by the respondent's conduct subject of the claim: see M A Productions Pty Ltd v Austarama Television Pty Ltd at 100.

4. Whether the respondent's application for security is oppressive, in the sense that it is being used merely to deny an impecunious applicant a right to litigate: see M A Productions v Austarama Television at 100; Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542 per Clarke J at 545; Bryan E. Fencott at 513. In Yandil Holdings at 545 Clarke J stated the principle in these terms:

‘(t)he fact that the ordering of security will frustrate the plaintiff's rights to litigate its claim because of its financial condition does not automatically lead to the refusal of an order. Nonetheless it will usually operate as a powerful factor in favour of exercising the court's discretion in the plaintiff's favour.’


This factor is related to the next, namely:

5. Whether there are any persons standing behind the company who are likely to benefit from the litigation and who are willing to provide the necessary security: see Memetu v Lissenden (1983) 8 ACLR 364; Sent v Jet Corporation (1984) 2 FCR 201; Bell Wholesale Co Pty Ltd v Gates Export Corporation (No.2) (1984) 2 FCR 1; Hession v Century 21 South Pacific Ltd (1992) 28 NSWLR 120 at 123; Bryan E. Fencott at 513; Yandil Holdings at 545. The combined effect of these two principles was summarised by Meagher JA in Hession at 123 as follows:

‘...a company in liquidation against whom an order for security for costs is sought cannot successfully resist such an order merely by proving that it cannot fund the litigation from its own resources if an order for security is made; it must prove that it cannot do so even if it relies on the other resources available to it (the company's shareholders or creditors)...Finally, whilst it is both true and important that poverty must be no bar to litigation, what that means is that the courts must be astute to see that no person pursuing a claim which is not frivolous is precluded from doing so by the erection of obstacles which poverty is unable to surmount; it does not mean that proof of insolvency automatically confers an immunity from statutory provisions which deal with insolvent plaintiffs.’


6. An issue related to the last guideline is whether persons standing behind the company have offered any personal undertaking to be liable for the costs and if so, the form of any such undertaking: see Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates Pty Ltd (1986) 13 FCR 46 at 53; Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304; Clyde Industries Ltd v Ryad Engineering Pty Ltd (1993) 11 ACLC 325.

7. Security will only ordinarily be ordered against a party who is in substance a plaintiff, and an order ought not to be made against parties who are defending themselves and thus forced to litigate: see Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621 at 626; Heller Factors Pty Ltd v John Arnold's Surf Shop Pty Ltd (in liq) (1979) ACLC 32,446; Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 5 ACLC 480 ; Weily's Quarries v Devine Shipping Pty Ltd (1994) 14 ACSR 186 where Zeeman J stated at 189:

‘(t)he general proposition that security ought not to be ordered where the proceedings are defensive in the sense of directly resisting proceedings already brought or seeking to halt self-help procedures is no more than that, a general proposition. It ought not to be elevated to being a rule of law. In many cases of that nature it could be considered oppressive to require security and that in itself may be sufficient to refuse to make an order...(see) Sydmar Pty Ltd v Statewise Developments (supra) and Interwest Ltd v Tricontinental (supra).” (at para 39)

50. Clearly as Beazley J recognised, the possibility of stultification is a “powerful” factor to be taken into account by the Court in exercising its discretion as to whether an order is appropriate: Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542. However, Clarke J in Yandil observed that the fact that a plaintiff is financially unable to provide security does not lead to the inevitable conclusion that the making of the order will stultify the plaintiff’s claim nor does it lead to the automatic refusal of an order. He went on to cite a line of authorities (see Tulloch v Walker, Yeldham J, 8 December 1976, unreported; Bell Wholesale Co Pty Ltd v Gates Export Corp & Ors (No 2) (1984) 8 ACLR 588) in support of the view that it is generally inappropriate to refuse an order for security where:

“the personnel behind the corporate plaintiff, or other parties who will benefit if the plaintiff succeeds, are financially able to provide adequate security.” (at 545)
In other words, without fettering the Court’s discretion, it was said to be unlikely that a plaintiff could successfully resist a security order on the grounds of their own impecuniosity in the absence of evidence of the financial status of those who stand behind it (see Yandil at 545).

51. McHugh J in Oshlack also made plain at 97 that:

"[T]he jurisdiction to award security for costs should thus be seen as protecting the efficacy of the exercise of the jurisdiction to award costs. The discretion should be exercised with the same rationales in mind, namely that, to the extent it can be avoided, the court should not permit a situation to arise where a party’s success is pyrrhic."

52. The purpose of a security for costs order is therefore a protective jurisdiction to ensure that the primary purposes for having costs orders themselves, can be achieved. A defendant is protected against the risk that a costs order obtained at the end of the day may turn out to be of no value by reason of the impecuniosity of the plaintiff. The jurisdiction therefore assists both the compensation purpose as well as the public interest objective.

Plaintiffs: natural persons vs corporations

53. In relation to natural person plaintiffs, the mere fact that the plaintiff is impecunious does not provide a gateway into security for costs. However with respect to a corporation it has long been established in terms of the Corporations Act and its predecessors, and the rules of court as well as the inherent jurisdiction, that if there is good reason to believe that the corporation may be unable to pay costs at the end of the day, this provides a gateway by which an application for security for costs may be made.

54. Giles CJ in Rugby Union Players Association [30/7/1997, SCNSW, 50225/96, unreported] described the rationale behind the exceptions to the general rule that the impecuniosity of a plaintiff should not be a ground for making an order for security for costs (this principle having been well established by the authorities in relation to plaintiffs who are natural persons: Cowell v Taylor (1885) 31 Ch D 34), in the following terms:

“In both cases the rationale is that those who will benefit from success in the proceedings, as shareholders in or creditors of a corporation or as third parties for whose benefit the plaintiff (whether a natural person or a corporation) sues, should not be able to litigate and expose the defendant to the risk of irrecoverable costs while themselves shielded, by reason of the interposition of the impecunious plaintiff, from the burden of an adverse order for costs.” (at 11)

55. The Court in Harpur v Ariadne [1984] 2 Qd.R 523 at 532 described the rationale behind this principle in the following terms:

“The mischief at which the provision is aimed is obvious. An individual who conducts his business affairs by medium of a corporation without assets would otherwise be in a position to expose his opponent to a massive bill of costs without hazarding his own assets. The purpose of an order for security is to require him, if not to come out from behind the skirts of the company, at least to bring his own assets into play.”

56. The inability of a plaintiff company to pay the costs of the defendant not only opens the jurisdiction for the giving of security, but also provides a substantial factor in the decision whether to exercise it: Pearson v Naydler [1977] 1 WLR 899 at 906; cited with approval in Sent v Jet Corporation of Australia Pty Ltd (1984) 2 FCR 201 at 215.

57. Where a winding-up order has been made in relation to the plaintiff company on account of its insolvency, the company will not prima facie be in a position to pay any costs ordered against it. The Court will generally treat this circumstance as a special factor justifying the making of an order for security for costs: Tricorp Pty Ltd (in liq) v Deputy Commissioner of Taxation (WA) 10 ACLC 474 at 475.

58. In considering an application under s1335, the Court is required to form an opinion about what the financial position of the plaintiff will be at the time of judgment and immediately after. An important consideration will be the financial position of the plaintiff at the time of the application, however this is not the sole consideration. Other factors may include the outcome of the trial, the costs associated with the trial and the success or otherwise of its business and investments in the meantime. When the Court is required to make a judgment involving the anticipation of future events, it must consider the degree of probability that a particular event might occur: Beach Petroleum NL & Anor v Johnson & Ors (1992) 10 ACLC 525 at 526-52; Jingellic Minerals NL & Anor v King & Ors.

59. With specific regard to security for costs against corporations, the Court in Pearson v Naydler recognised that the basic notion of security for costs empowers the Court to order the plaintiff to do something that it will likely find difficult to do, ie. to provide security for the costs which ex hypothesi it is likely to be unable to pay. Despite this, the Court noted that this discretionary power should not be used as an instrument of oppression “by shutting out a small company from making a genuine claim against a large company” (see also Equity Access Limited v Westpac Banking Corporation (1989) ATPR 40-972 at 50,635). The Court must thereby strike a balance between this consideration and the notion that:

“…the court must not show such a reluctance to order security for costs that this becomes a weapon whereby the impecunious company can use its inability to pay costs as a means of putting unfair pressure on a more prosperous company. Litigation in which the defendant will be seriously out-of-pocket even if the action fails is not to be encouraged. While I accept that there is no burden of proof one way or the other, I think that the court ought not to be unduly reluctant to exercise its power to order security for costs in cases that fall squarely within the section .” Pearson v Naydler at 906-907.

Burden of proof

60. Whilst from one point of view it may seem inappropriate to approach the matter in terms of the strictures of burden of proof whether of a legal or forensic character [cf discussion in Mummery v Irvings (1956) 96 CLR 99 at 118ff], there is certainly substantial authority which is followed in these reasons, to the effect that the defendants, as applicants for security for costs, have an evidentiary burden of leading evidence to establish a prime facie entitlement to such an order and to such an order in relation to a particular amount. Normally, in any court, the party who asserts must prove in order to succeed: Scott Fell v Lloyd (Official Assignee) (1911) 13 CLR 230 at 241; Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 717 per Kirby P. In Warren Mitchell Pty Ltd v Australian Maritime Officers Union (1993) 12 ACSR 1 the word “credible” in s1335 was said to suggest that an evidentiary burden is undertaken by the party seeking the order who must show:

“…that the material before the Court is sufficiently persuasive to permit a rational belief to be formed that, if ordered to do so, the corporation would be unable to pay the costs of that party upon disposal of the proceedings.”

10 Having given careful consideration to the statements of principle set out in Idoport it is clear that the applicant for security, namely here the defendants, have an onus or burden of proof to establish a prima facie entitlement to an order and they have satisfied that onus here. What then occurs is that there is an evidentiary onus which moves across the bar table to the plaintiff here to establish proper reasons as to why, when the court takes into account all relevant factors, its discretion ought be exercised by either refusing to order security or ordering security in a lesser amount than was sought by the defendants.

11 The authorities, and in particular Yandil Holdings (supra), support the proposition that the fact that a plaintiff is financially unable to provide security does not lead to the inevitable conclusion that the making of the order will stultify the plaintiff’s claim, nor does it lead to the automatic refusal of an order. In Yandil, Clarke J cited a line of authorities in support of the view that it is generally inappropriate to refuse an order for security where the person behind the corporate plaintiff [or other parties who will benefit if the plaintiff succeeds] are financially able to provide adequate security. Bearing that proposition in mind it had seemed to me for a period during hearing the current application that in the absence of Mr La Rosa himself being prepared to indemnify the plaintiff for such costs as the plaintiff may be liable to pay each of the defendants, the logical and possibly proper exercise of the Court’s discretion was simply to make an order for security in favour of the defendants and against the plaintiff That would have given the plaintiff an opportunity to see whether Mr La Rosa was prepared to bind himself by indemnifying the plaintiff company accordingly and if so, my general frame of mind would have been that the order otherwise for security would then be discharged.

12 On reflection and looking carefully at these statements of principle, I note the further statement by Clarke J in Yandil to the effect that without fettering the Court’s discretion, it is unlikely that a plaintiff could successfully resist a security order on the grounds of its own impecuniosity in the absence of evidence of the financial status of those who stand behind it. (See Yandil at 545).

13 To like effect the following proposition from the Butterworth’s Online Lexus Nexus Service has been relied upon by Ms Rana for the plaintiff. It reads:

“The fact that an order for security for costs might stifle proceedings is not a ground for refusing an order for security for costs but it does militate against the making of an order. This is especially where the plaintiff is able to show that the plaintiff is able to show that the claim is bona fide, strong and meritorious, involves public policy or where the plaintiff’s impecuniosity is attributable to the defendant’s conduct. It is essential for a plaintiff resisting an order for security for costs to raise in affidavit material the impecuniosity of those who stand to benefit from the proceedings . Brian E Fencott supra is cited as authority for that last proposition.

14 If and in so far as it is obviously necessary in exercising the Court’s discretion on a security for costs application to look at the prima facie strength of a plaintiff’s case and of course the prima facie strength of a defendants’ case, the parties have taken the opportunity of mobilising some detailed materials in that regard.

15 The present is a case in which the plaintiffs have now shouldered the burden on affidavit material of proving the impecuniosity of the person who stands to benefit from the proceedings. In those circumstances and although I have been very apprehensive lest the proper exercise, in this case, of the discretion would effectively become a weapon placed in the hands of an impecunious company to use its inability to pay costs as a means of putting unfair pressure upon a more prosperous company, the proper exercise of the discretion it seems to me in all those circumstances is subject to one condition, to refuse to make the order for security for costs sought by the defendants.

16 The condition to which I refer is this. Whilst it is certainly the case that there is presently evidence of the financial position of Mr La Rosa, it seems to me that the defendants are entitled on a continuing basis, to monitor that financial position. Hence a condition of the Court dismissing the remaining live application for security for costs is to order that the plaintiff procure that Mr La Rosa, on the first working day of each month, file and serve a detailed affidavit identifying his then assets and liabilities and to the extent that he has banking account or credit account facilities, append to the affidavit printouts of his dealings on those facilities.

17 Additionally it should be made clear that applications for security for costs are sometimes renewed. I have in my mind’s eye that if there is any question as to a change in the asset position of either the plaintiff company or of its sole shareholder, then there could be no real difficulty in the defendants renewing their application for security for costs in terms of what would then be changed circumstances.

18 The deed which has been furnished to the Court by way of an original and which is the vehicle for settlement of the claim for security for costs which was pursued by the plaintiff will go into evidence as exhibit A1. It seems to me that in all the circumstances where the one motion has been settled and the other motion has now been the subject of a determination as to costs, the proper order is simply to order that costs of the motions be costs of the proceedings. I think that is the proper order in the circumstances because there is a lot which is in cohort and this is a case in which Ms Rana it has been a close call to say the least and ultimately the discretion as to costs is simply a judicial discretion. One will know one day or another what the substance of the plaintiff’s case has been and the defendants’ and I think whomever loses the case should be ordered to pay the other side’s costs.

19 I am able to say from those materials that to my observation the plaintiff does have a serious prima facie case and it does seem to me that in those circumstances that is a consideration which the Court is entitled to take into account.

20 The plaintiff would have been in a better financial position had it not been for the alleged breaches of contract.

21 These are always awkward circumstances because until the parties have their final opportunity to have a hearing where all the evidence is before the Court, the Court can only carry out its best endeavours on an interlocutory basis to assess whether or not the plaintiff’s case is transparently untenable or whether or not the plaintiff’s case seems to have the wherewithal capable of ultimate success.

22 Of course on a final hearing the Court will decide those matters, but they have been included in the exercise of the Court’s discretion as factors to be taken into account.

I certify that paragraphs 1 - 22
are a true copy of the reasons
for judgment herein of
the Hon. Justice Einstein
given on 12 March 2004ex tempore
and revised 6 April 2004

___________________
Susan Piggott
Associate

6 April 2004

Last Modified: 04/08/2004