LPH Developments Pty Ltd v Jameson Moore Pty Ltd [No 2]
[2017] WASC 128
•9 MAY 2017
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: LPH DEVELOPMENTS PTY LTD -v- JAMESON MOORE PTY LTD [No 2] [2017] WASC 128
CORAM: BANKS-SMITH J
HEARD: 8 MAY 2017
DELIVERED : 9 MAY 2017
FILE NO/S: CIV 2343 of 2015
BETWEEN: LPH DEVELOPMENTS PTY LTD
Plaintiff
AND
JAMESON MOORE PTY LTD
Defendant(BY ORIGINAL ACTION)
JAMESON MOORE PTY LTD
PlaintiffAND
LPH DEVELOPMENTS PTY LTD
Defendant(BY COUNTERCLAIM)
Catchwords:
Practice and procedure - Security for costs - Second application - Undertaking to stay counterclaim - Exercise of discretion - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 1335
Result:
Application successful
Security ordered
Category: B
Representation:
Original Action
Counsel:
Plaintiff: Mr B Grubb
Defendant : Ms K R Lendich
Solicitors:
Plaintiff: Metaxas & Hager
Defendant : Mettam Legal
Counterclaim
Counsel:
Plaintiff: Ms K R Lendich
Defendant: Mr B Grubb
Solicitors:
Plaintiff: Mettam Legal
Defendant: Metaxas & Hager
Case(s) referred to in judgment(s):
Addenbrooke Pty Ltd v Duncan (No 3) [2014] FCA 322
Aspendale Pastoral Co Pty Ltd v WJ Drever Pty Ltd (1983) 7 ACLR 937
Bakers Investment Group (Australia) Pty Ltd v Caason Investments Pty Ltd [2014] VSC 154
Christou v Stanton Partners Australasia Pty Ltd [2011] WASCA 176
David Clarke Air Conditioning Pty Ltd v Quann [No 2] [2016] WASC 176
Edenham Pty Ltd v Meares [No 2] [2016] WASC 302
Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306
Interwest Ltd v Tricontinental Corp Ltd (1991) 5 ACSR 621
January Force Pty Ltd v Tricon Restaurants Australia Pty Ltd [1999] FCA 1746
LPH Developments Pty Ltd v Jameson Moore Pty Ltd [2015] WASC 416
Momentum Mortgages Ltd v Elmowy [2010] NSWSC 950
Orica Australia Pty Ltd v Garard Chemical Engineering Pty Ltd [2013] NSWSC 1426
Scanlan v Greenport Nominees Pty Ltd [2001] WASC 307
Spargos Mining NL v Fuller [2003] WASC 37
Sunlea Enterprises Pty Ltd as Trustee for Drummond Cove Unit Trust v Pollock [2014] WASC 91
Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57
BANKS-SMITH J:
Background
This is a second application brought by the defendant for security for costs. The parties have proceeded on the basis that the application is brought under s 1335 of the Corporations Act 2001 (Cth).
The first application was determined by Beech J and was dismissed: LPH Developments Pty Ltd v Jameson Moore Pty Ltd.[1] It was brought relatively early in the proceedings. Although the court was satisfied that there was credible evidence that the plaintiff would be unable to pay the costs of a successful defendant, there was a substantial overlap of issues with the defendant's counterclaim and there was no offer on the part of the defendant to stay the counterclaim.
[1] LPH Developments Pty Ltd v Jameson Moore Pty Ltd [2015] WASC 416.
The facts pleaded in the statement of claim and counterclaim were summarised by Beech J[2] and I do not need to repeat them, suffice to say that expressed generally, the plaintiff claims breach of contract and damages by way of the lost opportunity to acquire and profit from a commercial development site, and by counterclaim the defendant claims it properly terminated the contract and seeks damages for the loss of the sale.
[2] LPH Developments Pty Ltd v Jameson Moore Pty Ltd [10] ‑ [12].
Although there have been some amendments to the pleadings since the first application, the amendments do not relevantly change the position insofar as this application is concerned. It is of some importance, however, that since the first application the defendant has sold the land the subject of the dispute and quantifies its loss the subject of the counterclaim at some $850,000.
For the reasons that follow I have decided to order that the plaintiff provide security for the defendant's costs.
Relevant principles
The purpose of an order for security against a corporate plaintiff is to protect the defendant against the risk of being deprived of the benefit of compensation by way of a costs order, should the defendant be successful.[3]
[3] Sunlea Enterprises Pty Ltd as Trustee for Drummond Cove Unit Trust v Pollock [2014] WASC 91 [44].
The principles on a security application are well known and summarised elsewhere. In Westonia Earthmoving Pty Ltd v Cliffs Asia,[4] Edelman J set out a list of non‑exclusive factors relevant to the exercise of the discretion to order security and Beech J also referred to those matters in the first application.
[4] Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57.
Importantly, the plaintiff does not dispute that there is credible evidence that the plaintiff would be unable to pay the costs of a successful defendant and so the discretion to order security is enlivened. The plaintiff is a trustee company and has no assets.
Further, the defendant does not suggest that the plaintiff does not have an arguable claim. In the context of such applications, that factor may well be a neutral and that is how I treat it in this application.[5]
[5] Sunlea Enterprises Pty Ltd as Trustee for Drummond Cove Unit Trust v Pollock [74].
Why the second application is brought now
There is no bar to the bringing of further security applications. Indeed, it is not uncommon for security applications to be brought to cover various stages of proceedings.
The defendant says that the catalyst for bringing a second application is that information was received in December 2016 to the effect that the plaintiff has incurred a further judgment debt that has not been met and its financial position has declined.
First, the defendant refers to a District Court judgment in the sum of $297,000 entered against the plaintiff (as defendant) and the plaintiff's director, Phillip Hirschberg, in favour of Ewa Holker on 8 December 2016.[6] The plaintiff admits the debt has not been paid. Mr Hirschberg says he hopes to compromise the debt but there is no evidence as to what steps have been taken in that regard, the terms of any proposed compromise or how any payment to Ms Holker is to be met.[7]
[6] Affidavit of Gregory Mettam filed 2 February 2017 [7] ‑ [11].
[7] Affidavit of Phillip Hirschberg filed 14 March 2017 [9.2].
Second, the defendant refers to a judgment debt in the sum of $143,023 against the plaintiff in favour of Brajkovich Demolition and Salvage (WA) Pty Ltd (BDS) on 28 April 2015.[8] Mr Hirschberg says that judgment debt was compromised by the parties entering into a deed of settlement on 10 November 2016 (Deed). The Deed provides that the plaintiff will pay the sum of $110,000 to BDS within seven days of, relevantly, the outcome of these proceedings. Mr Hirschberg is a party to the Deed and guarantees such payment. Both the plaintiff and Mr Hirschberg agreed to provide security by way of charge over all their property in favour of BDS in order to secure the payment.[9]
[8] Mettam affidavit [12].
[9] Hirschberg affidavit [10].
In short, the BDS debt is not currently payable but has been deferred. The defendant has made inquiries and was told by Mr Brajkovich on behalf of BDS the settlement sum has not been paid.[10]
[10] Mettam affidavit [12].
The plaintiff says that the BDS debt was aired at the time of the first security application and did not lead to security being ordered at that time, so should not now be relevant to the exercise of discretion. However, in my view it is relevant that the debt remains unpaid.
Further, in December 2016 the plaintiff's former lawyers obtained an order from the court declaring that they had ceased to act for the plaintiff in this matter. At a subsequent directions hearing, Mr Hirschberg sought an adjournment of the security application in order to appoint new solicitors. He told the court that one reason for the request was that he had been dealing with other matters, including that the plaintiff had received a statutory demand from its former solicitors.[11]
[11] Directions hearing 7 February 2017. There have been three firms retained by the plaintiff. The first ceased to act in April 2016. The second ceased to act in December 2016. The current firm has been on the record since 10 March 2017.
In his evidence on this application, Mr Hirschberg has not been forthcoming about that statutory demand, the amount of the claimed debt, whether it has been resolved or how it is to be paid. However, I was told by the plaintiff's counsel that the statutory demand has been withdrawn and the plaintiff is now involved in a taxation of the costs of his previous lawyers.[12]
[12] ts 14.
Against a backdrop where the plaintiff has incurred the Holker judgment debt, has not satisfied that debt and has only deferred its obligation to pay the BDS debt under the Deed,[13] the defendant's concerns about recovery of costs have increased and have a real foundation. Mr Hirschberg is also liable for the Holker judgment debt and apparently has not met his obligation. Such concerns justified it reconsidering its position and bringing the second application upon becoming aware of the Holker judgment debt. Presumably, the prospect of a costs order being met by, say, a third party in order to avoid liquidation of the plaintiff reduces as the level of unsecured debt increases. However, the plaintiff does not assert that Mr Hirschberg is impecunious, a matter returned to below.
[13] Noting the debt was compromised from $143,023 to $110,000 under the Deed.
An additional change in circumstances is that the defendant now undertakes to stay its counterclaim pending the payment of any security by the plaintiff. Where such an undertaking is given, the existence of the counterclaim is not a reason to deny security.[14]
[14] LPH Developments Pty Ltd v Jameson Moore Pty Ltd [19].
The plaintiff's opposition
The plaintiff says the application should be refused for reasons that fall under six heads:
(1)the first application failed and there has been no relevant change in circumstances;
(2)the defendant has delayed in bringing the application;
(3)the plaintiff claims to have spent $450,000 in legal fees and disbursements since the last application;
(4)Mr Hirschberg has offered an unsecured undertaking to the court in the amount of $50,000;
(5)the defendant has brought a counterclaim and its offer to stay the counterclaim should be disregarded; and
(6)the proximity to trial.
Failure of first application
I consider that the circumstances have changed since the first application, for the reasons set out above.
Delay by defendant
The period between judgment in the first security application and the filing of this application is some 14 months.
Whilst the plaintiff complains of delay, it is the plaintiff that has repeatedly failed to comply with orders of the court, leading to many extension applications. For example:
(a)as to pleadings, its reply and defence to counterclaim was filed late;
(b)it defaulted with respect to orders to make further and better discovery on three occasions;
(c)as to witness statements, it failed to comply with the original order. It sought an extension and failed to comply with the extension order. One witness statement was subsequently filed;
(d)as to its obligation to file expert reports, on 31 May 2016 it was ordered to do so by 13 July 2016. It did not comply and sought an extension. On 25 August 2016, it was granted an extension until 5 September 2016. That was by way of a self‑executing order. It complied with that order;
(e)the plaintiff has failed to comply with orders that it notify the defendant whether it concedes any of the defendant's objections to its lay witness statement;
(f)the plaintiff has failed to comply with an order that it inform the defendant of the documents it intends to rely upon at trial.
Such a pattern of non‑compliance results in delay but also increases the costs for all parties in that there is a need for conferral, applications and additional court hearings.
There have been some defaults on the part of the defendant in complying with due dates but they have been minor by comparison.
There are three other matters relevant to the time period that has expired between applications.
First, after several months of conferral, the plaintiff issued proceedings in April 2016 for a freezing order, seeking in effect to secure moneys under the control of the defendant pending judgment in this matter. That application was resolved by consent and the defendant agreed to refrain from disposing of a significant sum. The plaintiff, having initiated that application in order to obtain a level of security, cannot properly complain about the time that has passed as a result.
Second, the defendant deliberately refrained from bringing this application in December 2016 to allow the plaintiff a period to retain new solicitors and then confer. It filed the application in February 2017 because the plaintiff had by then still not retained new solicitors.[15] The bringing of and hearing of this application has been delayed while the plaintiff sought to retain new lawyers. Again, that is not a delay about which the plaintiff can properly complain.
[15] Mettam affidavit [17].
Third, it is not as if the defendant has downed its tools. Since the last application it has prepared witness statements, obtained experts' reports, made discovery, issued subpoenas, dealt with the freezing application and made supplementary discovery.
The defendant has explained the catalyst for considering the further application from December 2016. There has been no relevant delay on the part of the defendant.
Costs incurred in intervening period
The plaintiff asserts it has incurred some $450,000 by way of legal fees and disbursements in the period since the previous application.[16] It does not say whether that amount has been paid. I assume from the fact of the statutory demand proceedings and taxation that it has not all been paid. The amount ultimately payable is unknown.
[16] Hirschberg affidavit [7].
There is no doubt work has been done since that time. One witness statement of Mr Hirschberg was filed (11 pages). Discovery has been undertaken, although it is not sizeable. Two experts' reports have been provided, one a valuation of land. Counsel has not been involved.[17] No lawyers were retained during a period of some three months. Viewed objectively, the figure of $450,000 seems high for that period, taking into account the work that has been done on the face of the court record. The plaintiff has not put on any corroborative evidence as to the amount of fees and disbursements allegedly incurred, but it is fair to say that the defendant would not have anticipated that fees of that level were being incurred for the work necessary for trial that was undertaken in the period. Indeed, the defendant describes that level of fees as 'grossly excessive' given the nature of this matter and questions to what extent some of the fees incurred may have resulted from the fact the plaintiff is now represented by its third set of lawyers.[18] That is a fair question which cannot be resolved in the absence of any information from the plaintiff.
[17] ts 5.
[18] Defendant's outline filed 5 May 2017 [8]; ts 5.
However, for the purpose of this application I will assume that the plaintiff has incurred an obligation to pay a substantial sum by way of fees and disbursements.
The fact that costs have been incurred by a litigant during a period when the plaintiff was not aware that the defendant may apply for security is a relevant factor.
In Christou v Stanton Partners, Newnes JA said as follows:[19]
It is, however, incumbent upon a defendant who wishes to obtain security for its costs to apply promptly for that relief once it is, or ought reasonably be, aware that the plaintiff would be unable to meet an order for costs. Security for costs is not a card that a defendant can keep up its sleeve and play at its convenience. Delay is an important consideration in the determination of an application for security for costs because it is capable of causing prejudice or unfairness to the plaintiff. A plaintiff is entitled to know at the earliest opportunity, before it has committed substantial resources to pursuing the litigation, whether it will be required to provide security. The later an application is made the greater the likelihood that it will cause substantial disruption or distraction in the conduct of the plaintiff's case, and if the plaintiff is unable to provide security, the greater the costs that will have been wasted. The oft-cited words of Moffitt P in Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301 are apposite:
'The right to seek security for costs and to stay proceedings, with the possible result that a claim for damages is frustrated, is a powerful weapon. Therefore, the litigant who seeks to use it against his opponent is at risk of not having it available, unless the application is made and persevered with in circumstances involving the least oppression of his opponent. The primary reason why the application should be brought promptly and pressed to determination promptly is that the company, which by assumption has financial problems, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it is allowed to or commits substantial sums of money toward litigating its claim (309).'
I would add that in an era when the need to ensure the efficient use of judicial resources has become increasingly important, delay may also be significant in that regard. A late application which frustrates the action will mean that the judicial resources already devoted to the case will have been wasted. Where it results in the adjournment of an imminent trial it will often have the result that the trial dates will be wasted ....
There are, however, degrees of delay and the effect of delay will vary according to the circumstances. The reason for the delay will also be an important consideration. Where delay has occurred it will not necessarily bar an order for security for costs, but generally the longer the delay, the more proximate the hearing and the more that has been done by the plaintiff to advance the case, the greater will be the significance of the delay and the more difficult it will be for the defendant to persuade the court that an order for security for costs will not be unfair or oppressive ...
In order to show prejudice it is not necessary for a plaintiff to establish what it would have done differently if the application had been made earlier (although such evidence would be an important consideration in the exercise of the discretion); prejudice will generally be regarded as inherent in substantial delay.
[19] Christou v Stanton Partners Australasia Pty Ltd [2011] WASCA 176 [20] ‑ [23].
I have carefully considered the issue of prejudice to the plaintiff in ordering security after fees have been incurred during the period since the last application. In this case, I do not consider that the prejudice is such that security ought not be granted. I have taken into account the following matters:
(a)the period has been drawn out because of conduct on the part of the plaintiff, as set out above;
(b)the defendant has explained the delay in bringing the second application: 'promptness is relative';[20]
(c)there is no evidence that the litigation will be disrupted or stymied by an award of security and so the costs incurred by the plaintiff are not in the category of wasted costs. Mr Hirschberg does not say an order for security will prevent the trial proceeding. Mr Hirschberg says the plaintiff is paying its current lawyers and experts and so it is clearly able to do so, presumably with third party support;[21]
(d)Mr Hirschberg has provided no evidence of what the plaintiff would have done differently had it anticipated the second security application would be brought; and
(e)the matter is not yet listed for trial and there will be no vacating of trial dates or any real inconvenience to the court.
[20] January Force Pty Ltd v Tricon Restaurants Australia Pty Ltd [1999] FCA 1746 [22].
[21] Hirschberg affidavit [11]. See also Spargos Mining NL v Fuller [2003] WASC 37 [23]: application brought after 10 years but no evidence person standing behind the litigation and standing to benefit from it would be caused hardship by order, order for security made.
Further, and whilst not a matter that sways my decision, in circumstances where the plaintiff has moved by way of freezing order to secure for its own potential benefit a fund the property of the defendant, it is somewhat incongruous that the plaintiff takes issue with the defendant seeking some comfort with respect to its costs.
Offer of undertaking
Mr Hirschberg makes an offer of an unsecured 'undertaking to the court in the amount of $50,000'.[22] The plaintiff accepts that such an offer is a matter to be taken into account but it does not preclude an order for security.[23]
[22] Hirschberg affidavit [12].
[23] Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306 (317); Orica Australia Pty Ltd v Garard Chemical Engineering Pty Ltd [2013] NSWSC 1426 [25].
The fact that Mr Hirschberg is willing to put his assets into play and risk bankruptcy by an undertaking is a matter I take into account. However, such an unconditional offer must be approached with caution when it is not supported by evidence as to his ability to meet the undertaking.
Mr Hirschberg appears to have unpaid debts, as referred to above. Whether Mr Hirschberg's assets are already the subject of prior security is unknown. He has not disclosed his financial position. The absence of information as to his financial position and his ability to meet any undertaking means I can give the undertaking little weight in exercising my discretion.[24]
[24] Sunlea Enterprises Pty Ltd as Trustee for Drummond Cove Unit Trust v Pollock [88]; Addenbrooke Pty Ltd v Duncan (No 3) [2014] FCA 322 [19] ‑ [20], [32], [38]; Orica Australia v Garard [27].
Whether Mr Hirschberg is impecunious is not known and he does not assert that to be the case. Nor does he assert the plaintiff's action would be frustrated by an order for security. There is no basis for a conclusion that Mr Hirschberg cannot facilitate security being put up by way of cash.[25]
Stay of counterclaim
[25] Cf Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (there was evidence that those behind the company had no ability to provide cash payment).
The plaintiff denies any weight should be given to the defendant's undertaking to stay its counterclaim pending the payment of any security.
The plaintiff relies on the following extract from Ormiston J's reasons in Interwest Ltd v Tricontinental Ltd:[26]
The defendants in argument themselves relied upon the defensive nature of the counterclaim and therefore sought to overcome the difficulties created by the elaborate defence to counterclaim and the almost identical issues raised by it. But I should first deal with their offer to submit to a stay of that counterclaim as a price for any stay of the corporate plaintiffs' claims. It is hard to believe that a claim of over $250m could be so easily abandoned. Nevertheless, in my opinion it is not appropriate to allow the applicants the luxury of pursuing the counterclaim and then having it stayed when it suits them. As mentioned in an earlier hearing, they could well have discontinued those counterclaims, especially as they say they have such little value to them. As I have said above, there is no evidence as to either the fact that it has little value, or indeed as to their belief as to that issue. Such objective facts as exist do not support such a conclusion. So far as the counterclaims against three of the corporate plaintiffs are concerned, there appear to be claims exceeding $60m which are not only the subject of the counterclaim but are the basis of the three winding up applications. When asked what would happen to these applications if the counterclaim was stayed, the defendants did not likewise offer to have those winding up proceedings stayed, so that in a very real sense the claims would remain alive and have to be litigated. It was not suggested that those claims should be severed and those plaintiffs excluded from the application for security. If the defendants had been genuine they could have discontinued the counterclaims as such and merely sought to defend the plaintiffs' claims by way of set-off, as is presently pleaded in para 155 of their defence. That would have required some reconstitution of the pleadings to particularise those claims of set-off, which presently are set out in detail in over 150 paragraphs of the counterclaim. But the whole exercise is artificial. The defendants cannot blow hot and cold. They must accept the consequences of the fact that up to the present they have been seeking to enforce by counterclaim claims exceeding $250m which cannot be resolved without entering upon most of the issues raised by the plaintiffs in their statement of claim.
[26] Interwest Ltd v Tricontinental Corp Ltd (1991) 5 ACSR 621 (627).
The plaintiff says that here, too, the defendant cannot 'blow hot and cold.' It did not offer to stay the counterclaim on the first application and the late offer to do so should be disregarded.
Interwest was distinguished in Bakers Investment Group (Australia) Pty Ltd v Caason Investments Pty Ltd.[27] Notably, in Bakers Investment Group, the court said that it is clear from the passage quoted that Ormiston J was not convinced that the defendants genuinely intended to forego the counterclaims the subject of that proceeding.[28]
[27] Bakers Investment Group (Australia) Pty Ltd v Caason Investments Pty Ltd [2014] VSC 154.
[28] Bakers Investment Group [50].
In this case, taking into account the decline in the plaintiff's financial position, it is not at all surprising that the defendant would now be prepared to forego the pursuit of its counterclaim pending payment of security. I also consider Interwest is distinguishable.
Undertakings to treat a counterclaim as stayed pending payment of security have been accepted by the court in various cases, including Bakers Investment Group. In that case, factors taken into account included that it was considered highly unlikely the defendant would have pursued the plaintiff for the counterclaim had it not first been sued, taking into account the precarious position of the plaintiff. Based on the undertaking given to the court, the existence of the counterclaim was not considered a reason to decline an order for security.[29]
[29] Bakers Investment Group [48] ‑ [50].
Similarly, in Momentum Mortgages Ltd v Elmowy,[30] on receipt of an undertaking to stay the counterclaim the court was not disposed to refuse an order for security.
[30] Momentum Mortgages Ltd v Elmowy [2010] NSWSC 950 [40].
It is unsurprising that in December 2016 when the change in the plaintiff's financial position became apparent that the defendant reconsidered its position with respect to an undertaking to stay the counterclaim. The plaintiff criticises it for offering that undertaking only recently. However, I have already dealt with delay and the catalyst for this application and I do not consider there is anything in the conduct of the defendant that devalues its offer of the undertaking.
The plaintiff also points to Mr Hirschberg's offer of an undertaking to the court to distinguish Bakers Investment Group and Momentum Mortgages. Nothing in those cases suggests the absence of an undertaking from a third party to meet costs was decisive. In any event, in Bakers Investment Group the court took into account the fact that a third party litigation funder may have capacity to meet the plaintiff's obligations to pay costs in support of a security order being made. That is a factor somewhat analogous to Mr Hirschberg's offer of an undertaking. I do not consider Mr Hirschberg's undertaking is a real point of distinction.
Accordingly, I take into account the defendant's offer of the undertaking to stay the counterclaim. The undertaking having been offered, the risk of the counterclaim being pursued while the plaintiff's claim may be stayed is obviated.
Proximity to trial
It cannot be said that the application was made close to trial in the sense that was a factor in, for example, Scanlan v Greenport Nominees Pty Ltd.[31] In that case, the application was brought one week before trial.[32]
[31] Scanlan v Greenport Nominees Pty Ltd [2001] WASC 307.
[32] See also Aspendale Pastoral Co Pty Ltd v WJ Drever Pty Ltd (1983) 7 ACLR 937 (942) ('All the cases to which I was referred were cases in which the action had either proceeded to the stage where a date had been fixed for its hearing or where the action had in fact been heard and the application was made on the eve of the hearing of the appeal.'); also David Clarke Air Conditioning Pty Ltd v Quann [No 2] [2016] WASC 176 [21] (unfair to order security on the eve of trial).
The matter has not been allocated trial dates. The plaintiff is still to comply with certain procedural steps. The experts have yet to confer. The trial bundle has not been finalised. Submissions have not been provided. Notices of objections remain outstanding. However, it would be open to the parties to now seek further programming orders and trial dates.
Even accepting that significant fees have been incurred since the last application, there are still further fees to be incurred (and by both parties). In particular, the parties are yet to embark on the getting up process. Experience indicates fees increase immediately prior to trial as the parties intensify their preparation. The defendant properly seeks security for this next period and trial, and not for costs already incurred.
Determination
In all of the circumstances, I consider that the defendant is entitled to security for costs. The words of Le Miere J in Edenham Pty Ltd v Meares [No 2] are also appropriate in this case:[33]
In my view [the application] is close to the borderline, there being significant factors for and against the making of an order. At the end of the day while impecuniosity must be no bar to a legitimate claim and s 1335(1) must not be resorted to, to stifle such a claim, those matters do not confer immunity from the operation of the statutory provision where a corporate trustee is suing for the benefit of others who have not been shown, and do not claim, to be unable to provide security. Having regard to the factors to which I have referred the justice of the case favours making an order for security for costs.
[33] Edenham Pty Ltd v Meares [No 2] [2016] WASC 302 [24].
In particular, I take into account the plaintiff's inability to meet a costs order made against it; the increase in debts incurred by the plaintiff; the point now reached in the litigation; the plaintiff's approach to the litigation and court orders and its role in extending the term of these proceedings; the fact that little weight can be put on Mr Hirschberg's proposed undertaking in light of his failure to provide any information as to his financial circumstances; the fact that the plaintiff continues to pay its own lawyers and experts and the lack of any evidence that the plaintiff's claim will be stymied. Those matters outweigh any potential prejudice to the plaintiff arising out of the timing of this application.
The defendant has provided a bill of costs for the period since the filing of this application until the end of trial. The draft bill has been drawn taking into account the prescribed items, the potential for further identified interlocutory disputes and has been drawn on the basis of a five day trial. The parties have agreed that the likely length of trial is five days. The total claimed is $125,554. The plaintiff did not take issue with the estimate. It is trite that security is not necessarily given for the full sum claimed. The defendant seeks $50,000.
In the circumstances of this case, I consider $50,000 is an appropriate amount to be ordered by way of security, such sum to be paid into court. The proceedings are stayed pending payment. The parties should confer and provide a minute of proposed orders.
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