Michael Wilson & Partners Ltd v Nicholls (No 8)
[2022] ACTCA 64
•18 November 2022
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Michael Wilson & Partners Ltd v Nicholls (No 8) |
Citation: | [2022] ACTCA 64 |
Hearing Date: | 1 November 2022 |
DecisionDate: | 18 November 2022 |
Before: | Loukas-Karlsson J |
Decision: | See [91] |
Catchwords: | APPEAL – APPEAL FROM SUPREME COURT – CIVIL – where applicant seeks that earlier order of the Court of Appeal requiring the applicant to provide security for costs be set aside – where sixth respondent seeks orders that the applicant amends the present form of the bank guarantee provided in accordance with Court order – consideration of test to apply pursuant to r 1905 of the Court Procedures Rules 2006 (ACT) – where previous decisions of the Supreme Court reached different conclusions – where worldwide freezing order in place due to previous order of a court of the United Kingdom set aside – where final order not available at date of original decision – whether that information amounts to special circumstances or material change of circumstance – relevance of order of High Court refusing special leave application from decision of NSW Court of Appeal – where earlier reasons did not rest on existence of worldwide freezing order – where no material change of circumstance shown – applicant’s application dismissed – whether current form of guarantee complies with Court order – consideration of the appropriate jurisdiction and forum to any dispute arising from guarantee – amendments to guarantee ordered to ensure that ACT Supreme Court can enforce the order |
Legislation Cited: | Supreme Court Act 1933 (ACT) s 37J |
Cases Cited: | Dunstan v Higham (No 3) [2020] ACTCA 50 |
Parties: | Michael Wilson & Partners Ltd (Applicant) Robert Colin Nicholls (First Respondent) David Ross Slater (Second Respondent) Temujin Services Ltd (Third Respondent) Temujin International Ltd (Fourth Respondent) Temujin International FZE (Fifth Respondent) John Forster Emmott (Sixth Respondent) Effective Funds Management Pty Ltd (Seventh Respondent) |
Representation: | Counsel M Wilson (Applicant) J Baird (Sixth Respondent) |
| Solicitors Michael Wilson & Partners (Applicant) Duggan Legal (Sixth Respondent) | |
File Number: | ACTCA 36 of 2021 |
Decision under appeal: | Court/Tribunal: ACT Supreme Court Before: McWilliam AsJ Date of Decision: 30 June 2021 Case Title: Michael Wilson & Partners Ltd v Nicholls & Ors Citation: [2021] ACTSC 128 |
Loukas-Karlsson J:
Introduction
1․On 1 November 2022 I heard three applications sitting as the Court of Appeal constituted by a single judge pursuant to s 37J of the Supreme Court Act 1933 (ACT). This judgment deals with my orders and reasons in relation to two of those applications. The first is an application filed by the applicant seeking to set aside the security for costs order made on 21 July 2022. The second is an application by the sixth respondent arguing that the present form of security the applicant has provided is in breach of the security for costs order and seeking a variation to the form of bank guarantee provided. The third application relates to the appropriate costs order of the earlier hearings before me in this matter.
2․While the seventh respondent appeared at the hearing on 1 November 2022, that appearance was only in relation to the third application concerning costs. The seventh respondent did not seek to be heard in relation to the applications addressed in these reasons.
3․The background to my reasons for making orders for security for costs is explained in MichaelWilson & Partners Ltd v Nicholls (No 6) [2022] ACTCA 41 (Wilson (No 6)). By that judgment I provided the reasons for making orders on 21 July 2022, including the relevant order that: “[p]ursuant to r 1900 of the Court Procedures Rules 2006 (ACT) the applicant is to provide security for the sixth respondent's costs of the application for leave to appeal within 28 days of the date of these orders fixed in the sum of $22,500”.
4․These reasons for judgment assume a familiarity with the earlier judgments in this proceeding, which outline various procedural background matters: see MichaelWilson & Partners Ltd v Nicholls (No 4) [2022] ACTCA 23; MichaelWilson & Partners Ltd v Nicholls (No 5) [2022] ACTCA 39; Wilson (No 6) and MichaelWilson & Partners Ltd v Nicholls (No 7) [2022] ACTCA 43. There is no need to repeat those details.
5․With regard to the two applications the subject of these reasons for judgment, it is clear that the second application is only relevant if I am minded not to set aside the order for security for costs. Accordingly, I will deal first with the applicant’s application seeking to set aside the order for security for costs.
6․Before turning to address the applications before me, I note that there were extensive objections advanced as to parts of the applicant’s evidence, including general objections to a large bundle of material that the applicant sought to rely on at the hearing and objections to large parts of the sixth affidavit of Michael Earl Wilson dated 14 September 2022.
7․Similarly to the approach I have taken previously in this matter, I have reached the view that there is no need to rule on these objections. Having reviewed the material, much of which duplicates material the applicant has relied on in the Federal Court of Australia and the New South Wales Supreme Court and Court of Appeal, I am of the view that my decision on the applications would be the same whether I take the material into account or not. In the result, it seems to me that it is preferable to admit the material provisionally and only for the purpose of considering the interlocutory applications.
8․I also note, again as I have done previously, that much of the applicant’s affidavit evidence is perhaps in the form of submissions rather than evidence. Again, even were I to exclude that material subject to the sixth respondent’s objections, I would have had regard to it in assessing the applicant’s submissions.
9․I note, for the applicant’s benefit, that when the matter comes before the Court of Appeal for the hearing of the applicant’s application for leave to appeal, there will likely be a correspondingly higher degree of scrutiny applied to any material on which he seeks to rely.
Application to set aside the order for security for costs
10․By an application in proceeding dated 14 September 2022, the applicant sought an order vacating the hearing then listed on 16 September 2022 and an order “set[ting] aside and vary[ing] the Order”. It is clear that “the Order” referred to in the application refers to my order requiring the applicant to provide security for costs fixed in the sum of $22,500.
11․The original hearing date for the application was vacated due to Court commitments concerning an ongoing jury trial. As such, the application is only pressed in relation to setting aside the order for security for costs. I note that there is no application in relation to varying the amount of security, the applicant simply seeks that the order be vacated.
12․The application is brought on the basis that new information has become available since the original order for security for costs was made. In particular, the judgment of Judge Pelling KC setting aside the worldwide freezing order, which was included in the applicant’s bundle that he referred to at the hearing. As I will come to Mr Wilson submits that this and other new information now available means that the order for security for costs should be vacated.
13․The application is supported by the sixth affidavit of Michael Earl Wilson. In support of the application the applicant also relied upon an almost 1,000 page bundle of material some of which is said to be relevant to this application. As noted above, this bundle included copies of affidavits filed by the applicant in the NSW Supreme Court and submissions filed by the applicant in the Federal Court of Australia.
14․I expressly asked the applicant to draw my attention to the material in the bundle said to be relevant to his application and he referred me to a number of specific documents some of which I will discuss further later in these reasons.
15․Before turning to the parties’ submissions, it is necessary to discuss the test that applies to applications of this nature.
What test does the Court apply to applications to vary or set aside an order for security for costs?
16․An application to set aside the order for security for costs is brought under r 1905 of the Court Procedures Rules 2006 (ACT) (Court Procedures Rules). That rule relevantly provides:
1905 Security for costs—setting aside or amending order
The court may, in special circumstances, amend or set aside an order made under this division.
Note Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule.
17․Although I was sitting as the Court of Appeal when making the original security for costs order, as I noted in Wilson (No 6), the rules relating to the provision of security (including r 1905) are picked up by the operation of r 5001(2): Wilson (No 6) at [31]. In the result, it is clear that the original order for security (made under r 1900), may be amended or set aside in accordance with r 1905 where there are special circumstances.
18․Rule 1905 has been previously discussed by at least two judges of the ACT Supreme Court.
19․In Today’s Homes and Lifestyle Pty Ltd (in liquidation) v McCoullough (No 2) [2020] ACTSC 330, Elkaim J discussed the meaning of “special circumstances”. It is worth setting out in full his Honour’s remarks at [15]-[19] in full:
Neither party could identify an authority in the ACT relating to the meaning of special circumstances under r 1905.
The plaintiff said I should consider the existence of special circumstances by reference to the test referred to by Griffiths J in Waters v Commonwealth (Australian Taxation Office) [2017] FCA 312 where his Honour (at [52]) adopted the following test from Brimaud v Honeysett Instant Print Pty Ltd (1998) 217 ALR 44 at [46]:
In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application.
(Citations omitted).
The difficulty with following the test stated in Brimaud is that it relates to a “material change of circumstances” as opposed to “special circumstances”.
The defendants said I should follow the test stated in the Queensland Court of Appeal in Rockett v Moneycorp Securities Pty Ltd [2008] QCA 142. The applicable rule in Queensland is identical to the ACT rule. The Court said at [10]:
Counsel on all sides suggested that the test for special circumstances should be regarded as akin to that for seeking to set aside or vary [an] interlocutory order: that one would generally require new material with evidence of additional facts which have arisen or been discovered since the order was made so as to require a different order; see Goodman v Lorenzen [2000] QCA 11 at [6]. I do not think it necessary in this matter to attempt any definitive test of what is required under Rule 675. What is plain in my view is that nothing in the applicant's material amounts to special circumstances, either in the form of new material or in any broader sense. The fact that a more formal valuation is available hardly suffices, and the removal of the caveats does not make the offer of the second mortgage a strikingly better proposition than was before the learned judge at first instance. No basis has been shown for variation of the order under Rule 675.
In my view the test stated in Rockett, especially having regard to it being applicable to an identical rule, is the test that should be applied by me.
(my emphasis added)
20․In the earlier decision of Dunstan v Higham (No 3) [2020] ACTCA 50, Mossop J considered the meaning of r 1905 at [40]-[42], stating:
CPR r 1905 permits the court, “in special circumstances”, to amend or set aside an order made under div 2.17.8, the division relating to security for costs.
This rule makes express, but also qualifies, the power of the court to amend or set aside orders relating to the provision of security for costs. It is not necessary to seek to describe the scope of “special circumstances”. However, consistent with the nature of the rule in question, special circumstances will usually involve at least a material change in circumstances. That has been the approach taken to variation or discharge of security for costs orders in the Federal Court: see Waters v Commonwealth (Australian Taxation Office) [2017] FCA 312 at [49]-[53].
The rule does not provide for an appeal from one single judge to another. Any assertion that the discretionary decision to make the order for security for costs that her Honour did was affected by a House v The King error was a matter which could only be resolved by an appeal. There was no such appeal in the present case.
(emphasis added)
21․As Elkaim J’s judgment noted, counsel had not referred his Honour to the earlier judgment of Mossop J (or indeed any earlier authority interpreting r 1905). This is unfortunate in circumstances where Mossop J appears to endorse the approach of Griffiths J in Waters v Commonwealth (Australian Taxation Office) [2017] FCA 312 (Waters), whereas Elkaim J held that the meaning of special circumstances was the same as found by the Queensland Court of Appeal and expressly found that the approach adopted by Griffiths J in Waters did not apply given the language of r 1905.
22․It is worth noting that the test outlined in Rockett v Moneycorp Securities Pty Ltd [2008] QCA 142 does not fully reproduce the statement of the Queensland Court of Appeal in Goodman v Lorenzen [2000] QCA 11 (Goodman) at [6], where the Court stated:
… What is, however, generally required as a prerequisite to varying or setting aside such an order [an interlocutory order] is new material providing evidence of additional relevant facts, which have arisen or been discovered since the earlier application or order was made, that require a different order from that originally made, or would have done so at the time when that order was made. See ex p Edwards [2989] 1 Qd R 139, 142. Without material of that kind, a further such application would, as Taylor J described in Hall v Nominal Defendant (1966) 117 CLR 423, 440-441, ordinarily prove “fruitless”.
(emphasis added)
23․It is not entirely clear that the bolded aspect of the Queensland Court of Appeal’s reasons in Goodman differs from the test outlined by Griffiths J in Waters. In particular, both judgments outline that the test when determining whether to set aside or vary an order for security for costs is the same test that applies in relation to varying an interlocutory order. There is, in my view, at least an argument that “material change of circumstance” refers to new information which, if available at the time of the original judgment, would have led to a different order being made.
24․At the hearing before me I drew the parties’ attention to Elkaim J’s judgment and no party submitted that a different test applied or that his Honour’s approach was not correct. No party referred me to Mossop J’s judgment or submitted that the statement of principle outlined by Elkaim J should not be followed.
25․There is, however, no need to resolve the question whether there is any substantive difference between the approaches and, if so, which test applies in this Court. That is because, for reasons I will come to, even if the “lower” standard is applied I am not satisfied there is a material change of circumstance in the present case.
Submissions
26․The applicant submitted that the following matters were new information that was not available to the applicant as at the date of the original hearing. The applicant submitted that each matter was a “special circumstance” and that had I had that information at the time of my original decision I would not have made the order for security for costs.
27․First, the applicant submitted that subsequent to my decision Judge Pelling KC discharged the worldwide freezing order by a final order that became available to the parties on 9 September 2022. That order related to a judgment of Judge Pelling KC dated 17 June 2022: Michael Wilson & Partners Limited v Emmott [2022] EWHC 1550 (Comm). I understand from the applicant’s submission, subject to a re-opening application by the sixth respondent which led to a further judgment of Judge Pelling KC dated 26 August 2022: Michael Wilson & Partners Limited v Emmott [2022] EWHC 1957 (Comm). The applicant submitted that the existence of the freezing order was the “primary basis” on which the sixth respondent had sought the order for security for costs and that the discharge of that order was a special circumstance.
28․The applicant submitted that the final order was not available until 9 September 2022 and that the applicant had acted swiftly to bring the matter to the Court’s attention, filing the application to set aside the order for security for costs with a supporting affidavit within a week of that judgment.
29․The applicant further submitted that the effect of the order of Judge Pelling KC was that the applicant was a net creditor, and that the sixth respondent owes the applicant “significant sums of money” in the order of £2 million. This, the applicant submitted, would have “negated the [sixth respondent’s] application for security”.
30․The applicant submitted that had I been aware of these matters I would not have made the order for security for costs. This appeared to be advanced on two bases. First, that the discharge of the worldwide freezing order means that the applicant has access to his Australian bank account, and, on that basis, there would have been no need for an order for security. Second, the applicant appeared to submit that, based on Judge Pelling KC’s judgment, I should find that the applicant is owed significant sums of money by the sixth respondent. In that circumstance as the applicant is a net-creditor and not a net-debtor, the applicant submitted that I would not have ordered security for costs.
31․The applicant also referred me to the outcome of a special leave application to the High Court from a NSW Court of Appeal judgment. It is not clear how the applicant submitted that this decision was relevant to my order for security for costs. The applicant’s submission on this matter was stated as follows:
[T]he High Court of Australia order is also a material change in circumstances because that means that the issue of contribution and joint and sever[al] liability, which features in the underlying claim leading to this appeal is also now fall squared in this court, because that issue is now no longer before the Supreme Court of New South Wales.
…
We say that our claim below and on appeal is also strengthened by the High Court of Australia order which means that … there is no duplication between the New South Wales proceedings and these proceedings …
32․In relation to this submission, counsel for the sixth respondent submitted that the High Court order finally determined the claim in NSW and that, as I had referred to in Wilson (No 6), the applicant appeared to be, in effect, attempting to relitigate that matter in a different court. Counsel for the sixth respondent submitted and that this would amount to an abuse of process.
33․Counsel for the sixth respondent emphasised the test outlined by Elkaim J as one looking for new material or new information which would require a different order. The sixth respondent, quite appropriately, did not submit that the matters advanced by the applicant did not comprise new material or new information. It is clear that the information the applicant now relies on is information that was not available to the applicant at the time of the original hearing.
34․Counsel for the sixth respondent, however, submitted that the new material would not have required a different result. In particular, counsel submitted that the original order for security for costs was not based on the existence of a worldwide freezing order. Counsel based this submission on [110]-[112] of Wilson (No 6) where I stated:
The applicant submitted in relation to that issue that it had significant assets in this jurisdiction and internationally. Some of these assets are discussed above. Significant court time was also directed to the issue of the current status of the worldwide freezing order made in the UK and whether, the effect of that order, should be such that the Court would be satisfied that the applicant will not be able to pay any costs orders made following the leave to appeal application.
Given my findings above, there is no need to consider these submissions in detail or decide whether the conditions in r 1901(a) are met by virtue of the existence of a worldwide freezing order that has not been discharged. I note that it appears that the applicant could discharge any remaining freezing order by paying into the UK High Court an amount equal to the amount of the freezing order. I further note that, accepting the applicant’s evidence as to the amounts held in various bank accounts and the value of assets held in Kazakhstan, there is no explanation advanced by the applicant as to why the applicant has not sought to do so.
I therefore make no finding under r 1901(a) as it is unnecessary to do so for the resolution of the applications before me.
35․Counsel for the sixth respondent submitted that as these paragraphs make clear, my decision that r 1901 was satisfied was not based on the then-existence of the freezing order and that I had not expressly made a finding in relation to the freezing order when deciding to order security for costs.
36․Counsel further submitted that the outcome of the United Kingdom litigation was not relevant to my discretion whether to order security for costs in relation to the ACT proceedings.
37․In relation to the applicant’s submission that the applicant is a net-creditor, counsel for the sixth respondent advanced two arguments. First, the sixth respondent submitted that judgment creditors can be ordered to provide security for costs. Second, counsel submitted that the overall position of the applicant vis-à-vis the sixth respondent is a matter that is subject to appeals and as such the applicant’s asserted position may ultimately not be the true or correct position.
Consideration
38․I accept that the material the applicant relies on is new material that was not (and could not) have been before me when I made the original order for security for costs. In particular, the final order discharging the worldwide freezing order in full was not available to the applicant until 9 September 2022. Nor was the order of the High Court available until the same date.
39․I do not accept, however, that either matter is a “special circumstance” in line with my discussion above in relation to the test that applies.
40․First, in relation to the order of the High Court, I do not accept that the High Court denying special leave to appeal from a decision of the NSW Court of Appeal is relevant to my decision relating to security for costs. It is not a matter that could be relevant to my determination that security could be ordered, or the exercise of my discretion to order security for costs.
41․In the result, it is not necessary or desirable to say anything further regarding the sixth respondent’s submission regarding abuse of process.
42․Second, in relation to the judgment of Judge Pelling KC I do not accept that this is a material change of circumstance, or one that would require a different result to my original decision. In the result, regardless of the test that is applied, it is not a special circumstance within the meaning of r 1905.
43․It is clear from my original decision that my decision was not based on the existence of the worldwide freezing order. Indeed, I was made aware at the original hearing that the freezing order had already been reduced significantly and may yet be fully discharged. In the result, the subsequent variance or lifting of that order cannot be a special circumstance.
44․This is the case for the following reasons. First, as is clear from Wilson (No 6) at [110]-[112] where I expressly declined to consider r 1901(a), my original decision that the Court had the power to order security for costs was not based on a finding that there was (or was not) a worldwide freezing order in a particular amount. The matters that enlivened my discretion to order security for costs were matters that satisfied rr 1901(h), (e) and (f). Judge Pelling KC’s decision to vacate the worldwide freezing order has not altered any of the matters underpinning my findings that r 1901(h), (e) and (f) were (and continue to be) satisfied.
45․In relation to the exercise of my discretion to order security, the relevant passage in my judgment was at [126]-[127]:
In addition to the above matters, I consider it relevant that the applicant has no Australian office and is wholly outside the jurisdiction. While the applicant, on its evidence, has some assets in Australia none of those assets are fixed or permanent. Absent an order for security, there is nothing that appears to prevent the applicant from removing its Australian assets from this jurisdiction which would lead to costs being incurred by the sixth respondent if it had to seek to enforce any future costs order made against the applicant overseas.
Balancing the various factors discussed above and while noting that it is significant that the applicant has assets in Australia, in my view, the prospects of success of the case are so low that security for costs should be ordered. I also regard it as significant that the order is not oppressive and will not prevent the application from being prosecuted. Rather, the order will simply ensure that the applicant provides to the Court a suitable form of security ensuring that any future order for costs will be met.
(emphasis added)
46․As is apparent from those extracts, I ordered security for costs on the basis that the applicant’s prospects in the leave to appeal application (or the appeal if leave is granted) were so low that security should be ordered. I also noted the applicant had no Australian office, and its Australian-based assets were not fixed or permanent.
47․None of those matters are changed by the effect of Judge Pelling KC’s judgment or final order removing the worldwide freezing order. Indeed, the lifting of the worldwide freezing order further permits the applicant to move funds outside of Australia if it chooses to do so.
48․Turning to the final matter the applicant pointed to, that he is now a net-creditor rather than debtor, I again am of the view that this is not a matter relevant to my original decision. In my view, this is not a matter that, had I been aware of it at the date of my original order, would have required a different result and is not a material change in circumstance.
49․First, I accept the sixth respondent’s general submission that an order for security for costs can be ordered against a party who may presently be a creditor in another jurisdiction. The global status of the litigation between the applicant and the sixth respondent is not a matter that affects this Court’s assessment of the applicant’s prospects of success on his appeal. As I found in Wilson (No 6) those prospects can only be described as very low.
50․Second, I also accept that the global nature of the ongoing litigation between the applicant and the sixth respondent means that it is far from clear that the applicant is owed the sum he claims, or that he will continue to be owed that sum.
51․There is, however, no need to make a definitive finding on that issue. Even accepting, to the applicant’s benefit and only for the purpose of the present application, that the sixth respondent owes the applicant £2 million due to the United Kingdom litigation, this is not a matter that is a material change of circumstance or a special circumstance for the purposes of an Australian order for security for costs.
52․That order, as outlined above, was based on the finding that the applicant’s prospects were so low that despite the accounts the applicant controls in Australia security should be ordered.
53․None of the material the applicant has advanced before me has persuaded me that had the material been available to me at the hearing on 21 July 2022 I would have been required to make a different order. Nor, to adopt the (potentially) lower test, does any of the material amount to a material change of circumstances. None of the material would alter any of the findings I made in Wilson (No 6) that led to the order for security for costs being made.
54․In relation to the applicant’s application, the order will be that the application be dismissed.
55․It is therefore necessary to consider the second application relating to the applicant’s compliance with the security for costs order.
Application regarding compliance with the order for security for costs
56․As outlined above, the second application before me was an application by the sixth respondent in relation to the applicant’s compliance with the security for costs order. The issue, as emerged from oral submissions at the hearing of the application, related to the form of the bank guarantee that the applicant had provided.
57․There did not appear to be any issue between the parties that the applicant had not provided a bank guarantee by the date required by my orders of 21 July 2022.
58․Counsel for the sixth respondent helpfully referred to an email dated 23 August 2022 sent by the solicitor for the sixth respondent to the applicant. That email outlined the concerns the sixth respondent had with the form of bank guarantee the applicant had provided. That email, which was in evidence before me, outlined the issue as follows:
…
In order to comply with the order of the Court, the bank guarantee:
1. must, if it contains recitals, recite the orders of the Court and nothing more (paragraph (ii) of the draft form must be omitted);
2. must provide for service of the demand for payment by post and by email in addition to personal service, and in relation to personal service must provide an address of the issuing bank which is accessible and open to the public during business hours (the address stated … is not a public access level and can be accessed only on invitation from an occupier);
3. should have as its proper law the laws of the Australian Capital Territory, and should not refer to the International Chamber of Commerce Rules; and
4. should include our correct telephone number (…)
(address and phone number omitted)
59․Counsel for the sixth respondent submitted that the most substantial matter, was paragraph three, with the current guarantee including as the proper law the International Chamber of Commerce Rules and not the laws of the Australian Capital Territory.
60․This objection related to the section of the guarantee which stated:
This Guarantee is subject to the Uniform Rules for Demand Guarantees as published by the International Chamber of Commerce in Paris, Publication No. 758, as may be amended from time to time, and, subject always to the precedence of such rules is otherwise subject to, governed by and shall be construed in accordance with New South Wales law, in force from time to time.
61․The second most important objection, counsel submitted, was the need for a public address for the address of personal service, with the current address being the address of the applicant’s bank that is only accessible by appointment and is not open to the general public during business hours.
62․The applicant submitted that the form of bank guarantee provided is (in substance, bar changes to matters such as amounts and dates) identical to previous guarantees the applicant has provided to the sixth respondent in NSW courts. The applicant noted that no issue was raised by the sixth respondent in relation to those guarantees.
63․The applicant further submitted that the uniform rules on bank guarantees were standard rules that applied to guarantees of this kind, were not rules that favoured the applicant or the sixth respondent, and that the guarantee being subject to the laws of NSW was acceptable in circumstances where the representatives of the sixth respondent are based in NSW.
64․The applicant also referred me to a decision from the NSW litigation, noting that previously there had been issues with the sixth respondent returning guarantees. I accept the sixth respondent’s submission on this point that there was a dispute as to the construction of that guarantee which was ventilated before the NSW Supreme Court and that the decision was not of any assistance to me when assessing the ACT guarantee.
65․The applicant further noted that significant costs had been involved in the preparation of the form of the guarantee and that the applicant would incur additional costs, including legal expenses, if the form of the guarantee was now changed. In particular, the applicant submitted that the Uniform Rules of Demand were not favourable to the applicant or the bank and that these amendments add a layer of complexity and cost that was not necessary.
66․I note that the applicant did not refer me to any evidence that supported his submission that significant costs had been incurred, especially in circumstances where the guarantee according to the applicant’s submission was identical in substance to previous guarantees the applicant had provided in the NSW litigation.
67․In reply, counsel for the sixth respondent submitted that the previous guarantees were made in NSW proceedings and so it was perfectly appropriate that they be subject to NSW law. Counsel also noted that the standard rules the applicant was relying on were not, in fact standard, and referred me to a different guarantee issued by the Commonwealth Bank that was included in the bundle the sixth respondent had tendered on the application. Counsel further submitted that the guarantee should be subject to ACT law, and that it was not relevant where the sixth respondent’s representatives happened to reside.
68․In response to the point regarding the Commonwealth Bank guarantee, the applicant submitted that this was not in a standard form.
Consideration
69․I accept the submissions of the sixth respondent that a bank guarantee issued in compliance with an order of the ACT Supreme Court requiring security for costs should be in a form that makes clear that the guarantee is subject to the laws of the Australian Capital Territory.
70․The applicant’s primary opposition to this point appeared to be that different guarantees issued in the NSW litigation had used the same language as the guarantee the subject of the present application. So much can be accepted. However, it is tolerably clear, in my view, that guarantees issued for NSW proceedings should be subject to NSW law as guarantees issued subject to ACT proceedings should be subject to ACT law. Such an approach is important, least of all to ensure that this Court can enforce a guarantee issued pursuant to its own order.
71․In relation to the applicant’s submission that the applicant will incur costs and need further legal advice on the matter, I do not accept that submission. The order that the sixth respondent sought at the hearing was an order replacing a section of text in the guarantee with the words “this guarantee shall be construed in accordance with the law in force from time to time of the Australian Capital Territory”.
72․With respect to the applicant, this would not be a matter on which he would require extensive advice. The order would require the language of the guarantee to be altered to ensure that ACT law applied. Of course, if the applicant prefers (or if the applicant is unable to provide a bank guarantee in accordance with that order), the applicant could (as the original order for security for costs permitted) provide security by way of a payment into Court of the required amount.
73․There is one further matter that was of concern regarding the guarantee, namely that the guarantee in its present form states that disputes arising out of the guarantee are to be litigated in NSW.
74․On reviewing the parties’ oral submissions from the hearing, it seemed to me that additional consequential amendments to the guarantee were needed to ensure that any dispute arising from the guarantee will be litigated in the ACT. To do otherwise would be to risk a NSW Court being asked to rule on a bank guarantee issued subject to an order of the ACT Supreme Court to which ACT law applies.
75․To that end, after the hearing my chambers contacted the parties seeking an indication regarding whether consequential amendments were needed if I were minded to make the order that the sixth respondent sought at the hearing to the following passages from the guarantee:
All and any disputes howsoever arising out of or in connection with this Guarantee shall be referred to and settled by proceedings before the courts of New South Wales, and we and you hereby submit to the jurisdiction of the courts of New South Wales.
This Guarantee has been issued pursuant to the laws of New South Wales, and we confirm that we have all necessary authorisations and approvals, as are required by the laws of New South Wales, and our constitutional documents to execute and deliver this Guarantee.
76․Counsel for the sixth respondent replied with a short email in the following terms:
…
Her Honour is indeed correct that consequential amendments should be made in the two following paragraphs in the proposed bank guarantee so as to refer in the two places mentioned to the Court of the ACT rather than to the Courts of NSW.
…
77․The applicant replied with an email that was directed to matters broader than the query regarding consequential amendments. I have had regard to the content of that email which advanced slight variations on or repeated the submissions considered earlier in these reasons, for example, that the location of NSW is appropriate. Nothing in that email altered the conclusions I have reached above regarding the applicant’s submissions. The applicant sent a further email regarding further orders made in United Kingdom courts which the applicant submitted established various debts owed to the applicant. Again, this point went to the applicant’s broader submission that the applicant was a net-creditor. I have already addressed that submission earlier in these reasons.
78․It is clear that the references in the guarantee to the courts of NSW and the law of NSW will need to change to refer to the courts of the ACT and the law of the ACT respectively.
79․In relation to the other matters raised by counsel for the sixth respondent, if amendments are already being made to the text of the guarantee, it seems desirable for the guarantee to include the correct phone number for the sixth respondent.
80․In relation to service of any demand, I accept the sixth respondent’s submission that service should be able to be effected by email or post and that the address for personal service must be an address accessible to the public during business hours. The need for an unencumbered way to effect service is clear as, otherwise, the sixth respondent may be unable to or may be delayed in serving any letter of demand (or similar) in the event of a dispute.
81․In relation to the first complaint, in my view, having had regard to the paragraph of the guarantee and the matter raised in the email, I accept that that is a matter of style rather than substance. There is no need, in my view, for that aspect of the guarantee to be amended.
82․The orders I will make in relation to the guarantee will be to require the paragraph discussed above at [61] to be replaced with the text: “This guarantee shall be construed in accordance with the law in force from time to time of the Australian Capital Territory”.
83․I will also order that the reference to the sixth respondent’s phone number be updated to the number outlined in the email dated 23 August 2022.
84․I will also order that consequential amendments be made to the guarantee to replace references to the courts and law of NSW with the courts and law of the ACT.
85․The final outstanding matter is the service details. I will make an order requiring the guarantee to be amended include details for service by post to an address in Australia, email and an address for personal service that is accessible to the Australian public during business hours.
86․In terms of timing, the applicant will have 21 days after the provision of those reasons to amend the guarantee in accordance with my orders or to provide security by paying the sum required into Court. The sixth respondent had submitted that 14 days was an appropriate period and the applicant 28 days. It seems to me that 21 days will be sufficient time for the applicant to make the necessary arrangements.
87․I will also make an order requiring the sixth respondent to return any original copies of the current guarantee to the applicant on receipt of the amended guarantee or on receiving written confirmation that the sum of $22,500 has been paid into Court.
Costs
88․It seems desirable that I deal with the costs issues arising from these applications with the other outstanding costs issues in a single judgment. Accordingly, costs of these applications will be reserved.
Steps to bring the matter on for the hearing of the application for leave to appeal by the Court of Appeal
89․At the conclusion of the hearing on 1 November 2022, the applicant sought orders listing the matter down for hearing of the substantive application for leave to appeal. I declined to make those orders at that time given the then-outstanding issues in the appeal.
90․Having now resolved the issues regarding security for costs, it is appropriate that the matter be listed in the appeal index list before the Deputy Registrar to determine whether the matter can proceed before the Court of Appeal or whether there are any other procedural steps that should be taken.
Orders
91․I make the following orders:
(a)The applicant’s application dated 14 September 2022 be dismissed.
(b)Within seven days of the date of this judgment, the applicant is to indicate by email to my Associate whether the applicant would prefer to make amendments to the guarantee, as outlined in these reasons for judgment, or pay the sum of $22,500 into Court.
(c)The applicant is to make the following amendments to the bank guarantee:
(i)The text “This Guarantee is subject to the Uniform Rules for Demand Guarantees as published by the International Chamber of Commerce in Paris, Publication No. 758, as may be amended from time to time, and, subject always to the precedence of such rules is otherwise subject to, governed by and shall be construed in accordance with New South Wales law, in force from time to time” is to be replaced with “This guarantee shall be construed in accordance with the law in force from time to time of the Australian Capital Territory”.
(ii)The phone number for the sixth respondent is to be amended to the correct phone number as contained in the email dated 23 August 2022.
(iii)The service details for any demand for payment in accordance with the guarantee are to be amended to provide an email address and postal address by which the sixth respondent can effect service and to provide an address for personal service that is accessible to members of the public during business hours.
(iv)Consequential amendments are to be made to the two paragraphs of the guarantee that follow the one amended by order 3(i) to replace references to the courts of NSW and the law of NSW with the courts of the ACT and the law of the ACT.
(d)The applicant will have 21 days from the date of this judgment to make the required amendments to the guarantee and to provide the sixth respondent with an executed original copy of the amended guarantee.
(e)On receipt of the amended guarantee, or, on receiving confirmation the applicant has paid the sum of $22,500 into Court as security for costs, the sixth respondent is to return to the applicant any original copies of the previous bank guarantee.
(f)Orders (c) and (d) be vacated if the applicant pays into Court the sum of $22,500 as security for costs.
(g)Costs of these applications be reserved.
(h)The matter be listed at 2.30pm (Canberra local time) on Thursday 24 November 2022 before the Deputy Registrar in the Appeals Index List for the Deputy Registrar to determine whether the matter is ready to proceed to hearing.
| I certify that the preceding ninety-one [91] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Loukas-Karlsson Associate: Andrew Ray Date: 18 November 2022 |
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