Nathan v Macquarie Leasing Pty Ltd (Security for Costs) - [2024] VSC 606

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

GROUP PROCEEDINGS LIST

S ECI 2020 03924

BETWEEN:

DAIMIN NATHAN	First Plaintiff
TANIA NATHAN	Second Plaintiff
v
MACQUARIE LEASING PTY LTD (ACN 002 674 982)	Defendant

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JUDGE:	Gobbo AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	28 November 2023
DATE OF RULING:	30 September 2024
CASE MAY BE CITED AS:	Nathan v Macquarie Leasing Pty Ltd (Security for Costs)
MEDIUM NEUTRAL CITATION:	[2024] VSC 606

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SECURITY FOR COSTS – Group proceeding – Form and quantum of security – Group Costs Order – Liability of law practice to meet any order for security – Risk that law practice may not be able to meet an adverse costs order – Whether risk necessitates security – Whether form of security proposed adequate – Undertaking offered by law practice – Undertaking not accepted by defendant – Fox v Westpac Banking Corporation (2021) 69 VR 487 – Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293 – DIF III Global Co-Investment Fund, L.P. & Anor v BBLP LLC & Ors [2016] VSC 401 – Hall v Australian Finance Direct Ltd [2005] VSC 306 – Stuart v Said (2021) 65 VR 50 – Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377 – Austcorp Project Number 20 Pty Ltd v LM Investment Management Ltd (in liq) [2014] FCA 1371.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs and Maurice Blackburn Pty Ltd	Mr L Armstrong KC with Mr D Fahey of counsel	Maurice Blackburn Pty Ltd
For the Defendant	Mr J Williams SC with Mr S Gerber of counsel	Gilbert + Tobin

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Evidence............................................................................................................................................... 2

Principles............................................................................................................................................. 3

The Court’s power to order security for costs.......................................................................... 4

An examination of the corporation’s (Maurice Blackburn) financial affairs......................... 9

Do the interests of justice require an order for security?........................................................ 9
The effect of the GCO................................................................................................................... 9
Will Maurice Blackburn be able to satisfy an adverse costs order?..................................... 12
Audited accounts........................................................................................................................ 13
Expert reports.............................................................................................................................. 17
The Atkins Report.............................................................................................................. 18
The Nicolaides Report....................................................................................................... 24

The parties contentions and consideration............................................................................. 34
Maurice Blackburn’s contentions.................................................................................... 34
Macquarie’s contentions................................................................................................... 37

Is an undertaking sufficient?..................................................................................................... 43

Conclusion on Security................................................................................................................... 48

Quantum............................................................................................................................................ 49

HER HONOUR:

Introduction

This proceeding, which commenced in October 2020, concerns transactions by which group members entered into finance agreements for the acquisition of motor vehicles during the period 1 March 2013 to 31 October 2018 (inclusive) in respect of which a ‘flex commission’ was paid to a car dealer. Macquarie has identified approximately 193,900 potential group members in the proceeding against it. It is one of three ‘flex commission’ class actions advancing the same case theory, with the other class action proceedings being S ECI 2020 02946 Fox v Westpac Banking Corporation (‘Fox Proceeding’) and S ECI 2020 03365 O’Brien v Australian and New Zealand Banking Group Limited (‘O’Brien Proceeding’).

On 9 March 2023, Nichols J made a group costs orders (‘GCO

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] VSC 606
Decision Date: 30 September 2024

CaseChat Overview and Summary

Nathan has brought an action against Macquarie Leasing Pty Ltd in the Supreme Court of Victoria. The dispute concerns a dispute over a financing arrangement, and Nathan is seeking a determination of liability and damages. The case revolves around the issue of security for costs, specifically the form and quantum of security required in the context of a group proceeding. The court had to decide whether the risk that the law practice may not be able to meet an adverse costs order necessitated security and whether the form of security proposed was adequate.

The court considered the relevant legal principles and authorities, including Fox v Westpac Banking Corporation (2021) 69 VR 487, Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293, DIF III Global Co-Investment Fund, L.P. & Anor v BBLP LLC & Ors [2016] VSC 401, Hall v Australian Finance Direct Ltd [2005] VSC 306, Stuart v Said (2021) 65 VR 50, Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377, and Austcorp Project Number 20 Pty Ltd v LM Investment Management Ltd (in liq) [2014] FCA 1371. The court held that the risk that the law practice may not be able to meet an adverse costs order did necessitate security, and the form of security proposed was adequate. However, the court also noted that an undertaking offered by the law practice was not accepted by the defendant.

The court concluded that the form and quantum of security required in the case were appropriate, and the Group Costs Order should be made in favour of the plaintiff. The court also noted that the defendant's liability for costs should be determined at the conclusion of the proceeding. The court made the Group Costs Order in favour of the plaintiff and ordered the defendant to pay the plaintiff's costs of the proceeding up to the point of determination of the defendant's liability for costs. The court also ordered that the defendant's liability for costs should be determined at the conclusion of the proceeding.

Orders