Livingspring Pty Ltd v Kliger Partners (No.2)
[2007] VSC 511
•3 December 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 4924 of 2006
| LIVINGSPRING PTY LTD | Plaintiff |
| v | |
| KLIGER PARTNERS | Defendant |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3 December 2007 | |
DATE OF JUDGMENT: | 3 December 2007 | |
CASE MAY BE CITED AS: | Livingspring Pty Ltd v Kliger Partners (No.2) | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 511 | |
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PRACTICE AND PROCEDURE: Application to stay order for security for costs – Whether special or exceptional circumstances made out – Whether, without a stay, there was a real risk appellant would not be restored substantially to its current position – Risk of prejudice to mediation if security for costs ordered – Orders 66.16, 64.25 & 62.05 Supreme Court (General Civil Procedure) Rules 2005.
Cellante v. G. Kallis Industries Pty Ltd [1991] 2 VR 653.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S.K. Wilson QC with Mr S. Rubenstein | Hambros and Cahill |
| For the Defendant | Mr J. Gleeson SC | Minter Ellison |
HIS HONOUR:
On 17 October this year, I heard an application by the defendant, Kliger Partners for an order for security for costs against the plaintiff, Livingspring Pty Ltd. On 15 November 2007, I delivered judgment in favour of the defendant and ordered, amongst other things, that the plaintiff give security for the defendant’s costs in the proceeding incurred up to the time of the commencement of trial of the proceeding in the sum of $118,471.50 in the form of a payment into court, a bank guarantee or such other form of security acceptable to the Prothonotary.
I also ordered that if the plaintiff fails to provide such security within 21 days of the order, the plaintiffs claim in the proceeding against the defendant would be thereafter stayed.
I have before me a summons dated 29 November 2007 which seeks an order that my decision of 15 November 2007 be stayed until (a) the hearing and determination of any appeal commenced upon granting of leave sought by application made by summons issued the 28 November 2007 or (b) completion of the mediation of the proceedings ordered by Justice Hansen on 9 November 2007, whichever is later or as otherwise ordered by the court.
The plaintiff sought leave to amend the summons to read that my decision be stayed until (a) the hearing and determination of any appeal or in the alternative the hearing and determination of any application for leave to appeal. Leave to amend is granted.
Orders 66.16, 64.25 and Order 62.05 enable me to make an order to stay a decision or execution of judgment. There is no dispute between the parties that the authorities establish that to obtain a stay it is necessary for the applicant to establish special or exceptional circumstances, or otherwise, the ordinary rule will apply; which is that a successful party is entitled to the fruits of his or her judgment.
In Cellante v. G. Kallis Industries Pty Ltd[1] the Appeal Division of the Supreme Court of Victoria comprising Sir John Young CJ and Brooking J considered an application seeking a stay of execution of a judgment debt pending the hearing and determination of an appeal. Young CJ held that special circumstances generally exist where a successful appeal will be rendered nugatory unless a stay is granted and that special circumstances will also exist where, for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed.[2]
[1][1991] 2 VR 653.
[2]Ibid 657.
There is no suggestion in this case that the appeal will be rendered nugatory, if successful, without a stay. The plaintiff submits, however, that there is a real risk that it will not be possible for it to be restored substantially to its former position if the judgment against it is not stayed and the appeal is successful. In essence the plaintiff argues that there is a real risk that the possible successful mediation (which I refer to below) of this dispute might be frustrated or materially prejudiced if order for security is not stayed.
The plaintiff relies upon the affidavit of Katie Pound sworn 29 November 2007. She recites the history of the matter referred to above and refers to her affidavit dated 28 November 2007 in support of the application for leave to appeal and in particular paragraphs 35-51. There are two points relied on. The first deals with interlocutory steps to be completed in this proceeding. The second relates to other related proceedings.
As to the first point, the plaintiff submits that there are two outstanding interlocutory matters. First, the defendant will be required to plead to an amended statement of claim, but the amendments are minor, more in the nature of particulars, and the plaintiff submits that the defence will not be significantly amended.
Secondly, the plaintiff submits that the defendant has not yet given full discovery, and says that its failure to do so existed prior to the order for security for costs and that should be a relevant matter to bear in mind. The substance of this point, is that there is little further expense to be incurred by the defendant prior to the mediation.
As to the mediation, in the main proceeding, number 2001 of 2004, the plaintiff has brought suit against Mr Ng and related parties, alleging that when he was managing a joint venture property development on behalf of the plaintiff, he misappropriated some $15m. The plaintiff seeks to recover those moneys and interest.
In addition, in separate actions, proceedings are taken against the accountants for the joint venture, Williams Accountants, and a claim is made against the National Australia Bank for paying out moneys to benefit Mr Ng, which, it is alleged, NAB was not authorised to do.
The proceedings in the case before me are against the solicitors for the joint venturers, Kliger Partners, and they are alleged to have paid out moneys on the instructions of Mr Ng when they were not authorised to do so from moneys properly belonging to the joint venture.
After the matter was argued before me on 17 October, Hansen J gave directions in the main proceedings, and in the three other related proceedings and ordered that the four of them be the subject of mediation, which is to take place at the end of February 2008.
The plaintiff tendered letters showing, that prior to my order, one of the parties Williams Accountants had been suggesting it may seek an order for costs against Livingspring, and that since my judgment, the threat, if I can describe it as such, of making an application for security for costs has increased.
Livingspring also anticipates that the order for security for costs may well activate an application by the Ng group of defendants. The plaintiff tendered a letter indicating that they are also suggesting making an application for security for costs. I do not think there was any reference to any application by the National Australia Bank in the material handed to me. The plaintiff described these and other anticipated applications, as being “a run on the bank”.
The plaintiff also relies on the defendant, as a firm of solicitors, being insured, and that it will not be prejudiced by a stay on the order for security of costs, because its insurer would pay any further costs it has to incur if there is no stay of proceedings.
Counsel for the plaintiff took me through, in some detail, paragraphs 35 to 41 in the affidavit of Katie Pound of 28 November, and I have taken all the matters referred to in those paragraphs of the affidavit into account.
The matter comes back, in substance, to whether exceptional or special circumstances have been shown by the plaintiff. The question that must be asked is whether there is a real risk that if the order is not stayed it would not be possible, should the appellant succeed, for the appellant to be restored substantially to its current position.
I accept that the likelihood will be increased of the other parties, who are subject to actions by the plaintiff bringing an application for security for costs. I accept that dealing with any such applications would constitute extra work that the plaintiff has to do between now and the mediation.
The defendant submitted that I should bear in mind that any application for security by one of the other three parties is unlikely to be heard before the mediation is held. There is, however, a risk that an application could be made and heard before then.
Taking all these matters into account, I fail to see how, to a material extent, the defendant having the benefit of its judgment, will undermine or prejudice the plaintiff’s participation in the mediation. I am not satisfied that the existence of the order by itself will materially prejudice a productive mediation between the parties. The further interlocutory steps to be taken by the defendants do not constitute a special or exceptional circumstance.
In my view, therefore, the plaintiff has not established that necessary special or exceptional circumstances exist and has not made out the grounds for a stay.
The defendant also submitted that the real beneficiaries of this proceeding are not prepared to put up their money like normal plaintiffs. They were the defendant’s counsel’s words. I would not term it such as that. The defendant is still facing the situation, however, where the true beneficiaries of this action are not prepared to guarantee the costs. This issue is only of small moment in my mind, but I think it is only fair that I mention it.
The substantive reason for my decision, however, is that the necessary special or exceptional circumstances have not been established by the plaintiff. Therefore I dismiss the application.
I propose to order that the plaintiff pay the defendant's costs, but will stay that order pending the hearing and determination of the plaintiff’s application for leave to appeal.
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