Pegasus Gold Australia Pty Ltd v Bateman Project Engineering Pty Ltd

[2001] FCA 377

FEDERAL COURT OF AUSTRALIA

Pegasus Gold Australia Pty Ltd v Bateman Project Engineering Pty Ltd
[2001] FCA 377

COSTS – security for costs sought in relation to cross-claim – the cross-claim is essentially defensive in nature – most issues raised in cross-claim already raised in proceedings – application refused.

PEGASUS GOLD AUSTRALIA PTY LTD V BATEMAN PROJECT ENGINEERING PTY LIMITED & ORS

NG 471 of 1998

MATHEWS J
5 APRIL 2001
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG471 OF 1998

BETWEEN:	PEGASUS GOLD AUSTRALIA PTY LIMITED APPLICANT
AND:	BATEMAN PROJECT ENGINEERING PTY LIMITED FIRST RESPONDENT
KINHILL PACIFIC PTY LIMITED  SECOND RESPONDENT
KILBORN ENGINEERING PACIFIC PTY LIMITED THIRD RESPONDENT
JUDGE:	MATHEWS J
DATE OF ORDER:	5 APRIL 2001
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1)   I decline to make the order sought in paragraph one of the Notice of Motion dated 5 October 2000.

2)   I order PGA to pay BKK’s costs of the application for security for costs.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG471 OF 1998

BETWEEN:	PEGASUS GOLD AUSTRALIA PTY LIMITED APPLICANT
AND:	BATEMAN PROJECT ENGINEERING PTY LIMITED FIRST RESPONDENT
KINHILL PACIFIC PTY LIMITED  SECOND RESPONDENT
KILBORN ENGINEERING PACIFIC PTY LIMITED THIRD RESPONDENT

JUDGE:	MATHEWS J
DATE:	5 APRIL 2001
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. By Notice of Motion dated 5 October 2000, the third applicant Pegasus Gold Australia Pty Limited (“PGA”) sought security for costs from the respondents (“BKK”) in relation to the seventh cross-claim which BKK had lodged against PGA.  In the cross-claim BKK sought contribution and/or equitable contribution in relation to any liability it might be found to have to the first and second applicants (“PGI/PGC”).

2. BKK has conceded that it would be unable to meet an adverse costs order if it were unsuccessful under the seventh cross-claim.  The primary basis upon which it resists an order for security is that the cross-claim is, in substance, a defensive one.  BKK has already raised, as a defence to PGA’s claim, that any damage suffered by PGA was the result of PGA’s contributory negligence.  There is a further defence that PGA has failed to mitigate its losses.  Most of the issues raised under the cross-claim will be traversed in any event pursuant to these defences, according to the submissions of BKK’s counsel, Mr McDougall QC.

3. Mr Gee QC, who appears for PGA, urges that there are a number of matters raised under the cross-claim additional to those which would need to be litigated in the principal proceedings.  In particular, the cross-claim is dependent upon the proposition that PGA owed a duty of care to PGI/PGC or otherwise had a co-ordinate liability to make good any loss suffered by PGI/PGC.  These are new issues which would not need to be ventilated without the cross-claim.

4. BKK’s solicitor, Michael Dawson, gave evidence on the application and was cross-examined by Mr Gee.  Mr Dawson said that it was unlikely that the cross-claim would necessitate the calling of additional witnesses.  Existing witnesses might need to be asked additional questions, but the evidence under the cross-claim would by and large be similar to that raised in the main proceedings.  Mr Dawson pointed out that the need for BKK to mount a cross-action against PGA was occasioned by the fact that there were two sets of applicants (PGI/PGC on the one hand, and PGA on the other) seeking essentially the same damage in two separate proceedings which raised different causes of action.  In order to “join the circle”, as Mr Mc Dougall described it, it was necessary to lodge a cross-claim against PGA. 

5. In my view insufficient grounds have been shown for ordering security for costs, at least at this stage of the proceedings.  On the evidence before me, the issues raised under the seventh cross-claim are essentially defensive.  The litigation of these issues will, it seems, do little to increase the costs of the proceedings, either at pre-trial or hearing level.  If in due course this assessment is shown to be wrong it will always be open to PGA to make a further application for security for costs.

6. I decline to make the order sought in paragraph one of the Notice of Motion dated 5 October 2000.  I order PGA to pay BKK’s costs of the application for security.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mathews.

Associate:

Dated:            5 April 2001

Counsel for the Applicant:	CG McGee QC and M Dempsey
Solicitor for the Applicant:	Allen Allen & Hemsley
Counsel for the Respondents:	RC McDougall QC
Solicitor for the Respondents:	Tress Cox Maddox
Date of Hearing:	2 March 2001
Date of Judgment:	5 April 2001