Mainbanner Pty Ltd v Dadincroft Pty Ltd

[1988] FCA 586

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JUDGMENT No ...5. Eh!/. ... 8%-

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY 1 QLD G55 Of 1988

DIVISION GENERAL )

BETWEEN: NAINBANNER PTY LTD

First Applicant

AND: ROBERT BERNARD LUBKE

Second Applicant

AND:  ANNETTE LUBKE

Third Applicant

AND: DADINCROFT PTY LTD

First Respondent

Second Respondents

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	4 OCTOBER 1988
WHERE MADE:	BRISBANE

on or before 8 November 1988;

THE COURT ORDERS THAT:

1.    the appllcants have leave to file and serve an

amended statement of claim on or before 11 October

1988;

2.    the application for security for costs be refused;

3 .    the defence and cross-claim, if any, be filed and served on or before 25 October 1988;

4 .    the reply and answer, if any, be filed and served

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5.    discovery be made on or before 22 November 1988;

6 .    inspection take place on or before 6 December 1988;

l . the matter be further mentioned on Monday, 12

December 1988 at 9.30 a.m.;

8.    the costs of today be the respondents' costs in the proceedings.

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

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IN THE FEDERAL COURT OF AUSTRALIA 1

QUEENSLAND DISTRICT	REGISTRY	1	QLD G55 Of 1988
GENERAL DIVISION	1

BETWEEN: MAINBANNER PTY LTD

First Applicant

AND:  ROBERT BERNARD LUBKE

Second Applicant

AND:  ANNETTE LUBKE i-

Third Applicant	i
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AND:  DADINCROFT PTY LTD

First Respondent

AND: OSWALD HENRY BLACKER and I '

DOROTHY CLAIRE BLACKER

Second Respondents

PINCUS J. 4 OCTOBER 1908

EX TEMPORE REASONS FOR JUDGMENT !.

By this notice of motion the respondents seek, among

other things, an order for security for costs and relief with
respect to the statement of claim. As to the latter, I understand

that the applicants propose to amend to meet the objections which

have been made to the statement of claim and	it is intended that
an amended statement	of claim will be delivered within seven days.
To cover that aspect	of the notice of motion it seems to me

! sufficient to order, and I do order, that the applicants have

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!	leave to flle and serve	an amended statement	of claim on	or before	i _ I
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1988. , . 11 October

That leaves for determination the only issue which is . .-

contentious, and that is an application for security for costs.

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On that question I have had substantial assistance from counsel

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who have argued the matter carefully. I .

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The principal application seeks a declaration under s.87 '.

of the Trade Practices Act 1974 that certain contracts are void,
and an order for repayment of certain moneys paid thereunder,

reconveyance of property, and damages.

The present form of the statement of claim which, I

gather from discussion wlth counsel, is not llkely to be changed

in a way which affects the matter I am presently considering,

asserts that various contracts were made induced by

misrepresentatlons on the part of Mr O.H. Blacker on behalf of the I. .

first respondent, he being one of the second respondents. The

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posltion of the applicants is that they entered lnto the contracts	L .
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in question by way of achieving the overall purpose	of purchasing
a business which was for sale and which was bought by the first

applicant. The roles of the second and third applicants in the

matter is that they were vendors of a property for the sum of

$60,000, and the contract in question was made conditional upon .

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another contract, namely, that between the first respondent and

nr R.P. Lubke. The contract between the first respondent and

Mr R.P. Lubke related to the sale of the business. So the two . e ,

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together. < tied were contracts

The matter was before me in March 1988 when an attempt

was made to restrain the exercise of security rights under a bill

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of sale given in respect to part of the purchase price. I refused

that application. Mr R.P. Lubke, the second applicant in these

proceedngs, gave some evidence before me and I made a comment upon

his evidence in the reasons for judgment in that interlocutory

application. I have read the reasons for judgment and have also

read the affidavits which	were used on that occasion and were used
today also.

It is unnecessary for the purpose of disposition of this

matter to go into detail with respect to the prospects	of success,
but I should say that	so far as the material before me shows, the

applicants' case does not appear to be a very strong one. It may

be that it will strengthen with discovery and interrogatories, or

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in some other way, but going simply on the material	I have, one	I
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would be a llttle surprised to see the claim succeed. That is, as

was argued by Mr Doyle, a circumstance which should incline one I

towards granting an order for security.

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A	second question whlch was debated, of a factual kind,	L
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is whether or not there is some risk that if the respondents	L~
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succeed they will not be able to obtain from the applicants, and	1%
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in particular the first applicant, such a sum as would represent	.

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the likely costs of the suit.	On that point, also, mys opinion is
in favour of the respondents; that is, I am of the opinion that	. /

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there is a risk that if the respondents succeed they will not

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recover their costs of the suit.

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i In those circumstances, it would seem to me a proper

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course to order security against the first applicant were it not .,

for a point raised by Mr Savage, with which I have had some little

difficulty, and that is the way in which the presence of the

second and third applicants affects the matter.

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Mr Doyle contended, and I think it is correct, that on

the authorities the presence of the second and third applicants
does not destroy the Court's discretion to order security against

the first applicant.

The cases to which I have been referred are two: one is

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the decision of Sir Robert Megarry in Pearson v. Naydler in [l9771 :.

3 All E.R. 531. There the Vice-Chancellor was faced with a

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submission that, just as in the case of orders for security

against plaintiffs resident out of the jurisdiction, the presence

of a co-plalntiff within the jurisdiction deprived the Court of

its jurisdiction, similarly, the presence of a natural person as

co-plaintiff deprived the Court of jurisdiction to order security

against a plaintiff company.

The judge was against that contention, as he points out

at	p.536	- a view which	he adopted without regard to the
particular facts	of	that case. Nevertheless, it is right to	i
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notice the particular facts of that	case, where an order for
security was made. They were that the plaintiff company was	i

argued to be in truth the only real plaintiff, and in that

submission, the judge thought, there was considerable force. He

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added that he had already decided the point on broader and more

general grounds:

A second particular circumstance existing in Pearson v.

Naydler which is not present here is referred to immediately after

the passage I have just mentioned at p.536.	I do not think it is
necessary to explain what it was.

The second case I was referred to is the decision of the

Full Court of the Queensland Supreme Court	in Harpur v. Ariadne
Australia Limited [l9841 2 Qd.R. p.523. The principal	ludgment in

that case was written by Connolly J. It is true that parts of his

Honour's reasoning suggest that he	was of	the view that the
presence of	a	natural person plaintiff with the incorporated

plaintiff was sufflcient to defeat an application for costs. His

Honour said, for example, at p.531:

"The court cannot by orders its guarantee a

successful outcome In a practical sense to any

party. It thus isno answer when security for

costs is sought t o say that a person of apparent

substance may be able to make away	with his assets
within the jurisdiction ..."

His Honour goes on to discuss those cases. He seems inclined to

apply their spirlt, at least.

It is, on the other hand true and important, s Mr,Doyle

pointed out, that Mr Harpur, who was the natural person plaintiff

in that case, was a man of substance. He was, it appeared, able

to meet any order for costs. This	case, then, differs as to the
facts from both of those to which	I ave referred. It seems to me

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that as against the applicants as a group, the respondents are at	,	i
risk as to costs. There is also the circumstance which should be
taken into account in favour	of	granting security, that the

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applicants' case is not one of great strength.

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In the English case, the precise form of order made is

not set out. The reasons conclude:

"Doing the best I can, I order the plaintiff company

to give security for the	defendants'	costs	in	the
sum of E7,500, the	security	being	in respect	of

those costs up to and Including the first day of

the trial. I will hear counsel on the details of

the order."

Then there	is noted "Order accordingly". It is not absolutely
clear to me how one handles	an order of this sort.

Here, it could not be contended that the second and

third applicants are not properly joined. It seems to me that	" '
they are essential parties. If	an order were made in the form

which Sir Robert Megarry used, then presumably it would follow, if

the order for security were not complied with, that the Mainbanner

part of it would be stayed. That would leave Mr and Mrs Lubke

with a suit in which they apparently would, as I read the

statement of claim, seek to have their contract rescinded and to

have damages on the basis precisely of the same

misrepresentations. That seems to me to be quite	an inconvenient
outcome, so far as the Court is concerned.	l .._
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In the papers, It appears that the respondents are owed

a substantial sum still, and it	is likely, as Mr Savage contended,
that a claim will	be made, either in this Court or elsewhere, for
that sum.	Again, there would be something slightly anomalous, as
it seems	to me, if that occurs, in having the respondent or
defendant in that case unable	to set up by way of cross-claim the

matters presently advanced in the statement of claim.

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That aspect of it, that is, the awkwardness which would !:

arise if the respondents made a cross-claim, is in my view

subsidiary, because they have not yet done so. The principal

point, and I think the only substantial reason against an order

for security in	a case of this sort where	you have natural persons
necessarlly ~oined	as applicants is how one handles the suit as a	L -
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practical matter. I am of the view that the question raised 1s j :

essentlally one of principle. As a matter of principle I feel,

somewhat reluctantly, impelled towards the conclusion pointed to	’ ./
by Mr Savage that an order for security for costs should not be
made leaving a truncated suit whlch cannot be properly handled	by
the Court.
I would add that the question of principle I mentioned does not seem to arise in cases such as those dealt with by Sir Robert Megarry where the natural person plaintiff was added, as it
appears, simply with cost considerations	in mind.

I therefore propose to refuse the application for

security on the ground which

I have-mentioned.

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I had	intended	to	make	the	costs,	costs	in	the	, ,
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proceedings, but I have been persuaded I should not do that. I

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think the fairer order would be to make the costs of today, in

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toto, the respondents' costs in the proceedings.	: ,
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The other orders I will make are that the defence and

cross-claim, if any, be filed and served on or before 25 October

1988; the reply and answer, if any, be filed and served on or

before 8 November 1988; discovery be made on or before	22 November
1988; inspection take place on or before 6 December 1988; and the	,
matter to be relisted for further mention on Monday, 12 December
1988, at 9.30 am before me.

'i certify tiiat this and the 7 preceding

Pages ars a trua copy of the reasons for

judgment herein of His Honour

Mr. Justice Pincus

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Dated + cc+cbe-- FtSE