Quad Consulting Pty Ltd v David R. Bleakley & Associates Pty Ltd

[1991] FCA 105

JUDGMENT KO. 105 / .9.!.,

C A T C H W O R D S

Practice - security for costs - factors to be taken into

account in exercising discretion.

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-	U	Q	v. DAVID R. BLEAKLEY & ASSOCIATES
PTY. LIMITED No. G243 of 1990
Beaumont J. Sydney

22 March 1991
IN THE FEDERAL COURT OF AUSTRALIA	) )

NEW SOU TH WALES DISTRICT REGISTRY ) No.G243 of 1990

)

GENERAL DIVISION 1

BETWEEN:  QUAD CONSULTING PTY. LIMITED

Applicant

AND :  DAVID R. BLEAKLEY &
ASSOCIATES PTY. LIMITED

Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER:	Beaumont J.
DATE ORDER MADE:	22 March 1991
WHERE MADE:	Sydney
THE COURT ORDERS:

The application made in the respondent's notice of motion is refused with 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	) NO. G243 of 1990
)
GENERAL DIVISION	)

BETWEEN:  DUAD CONSULTING PTY. LIMITED

Applicant

AND :  DAVID R. BLEAKLEY &
ASSOCIATES PTY. LIMITED

Respondent

C A M	:	Beaumont J.
m:	22 March 1991

REASONS FOR JUDGMENT

(on application for further security for costs)

By its notice of motion filed on 26 February 1991, the respondent in these proceedings seeks an order under s.1335 of the Cor~orations Law for the provision of further security for its costs in the principal proceedings, and consequential relief. Section 1335 is in substantially the same terms as s.533(1) of the Uniform Companies legislation, that is to say, the Court may, if there is reason to believe that a corporate plaintiff will be unable to pay the costs of

proceedings), require sufficient security to be given for	the defendant (if successful in the defence of the	those costs, and may stay proceedings until the security is given.
It is, and has been, common ground that there is reason to believe that, if the respondent is successful in its defence, the applicant will be unable to pay the respondent's costs.

The background to the present application is as follows. The applicant instituted the principal proceedings on 10 May 1990 by filing an application claiming relief under the Trade Practices Act 1974. By its statement of claim filed at that time, the applicant alleged that, in respect of certain dealings in connection with a computer programme, the respondent had contravened ss.47, 52, 53(f) and (g) of the Trade Practices Act. In the application, a directions hearing was fixed for 7 June 1990. On that date, the respondent indicated that it wished to apply for security for costs and directions were given in that respect. On 25 June 1990, the applicant's solicitors wrote to the Registrar of the Court informing him that -

"The p a r t i e s have now agreed upon an amount for

s e c u r i t y for costs. S h o r t Minu tes o f Order. . . [ a r e ]

e n c l o s e d . I t i s r e q u e s t e d t h a t the m a t t e r be

r e l i s t e d for d i r e c t i o n s on 28 June , 1990 w i t h the

S h o r t Minu tes and t h a t a n y f u r t h e r d i r e c t i o n s may be

made for the conduct o f th i s m a t t e r . "

The Short Minutes enclosed were in these terms:

"The Cour t notes:

1 . Tha t t h e p a r t i e s have agreed t h a t the a p p l i c a n t w i l l

p r o v i d e s e c u r i t y f o r costs, i n the sum of $15,000.00

i n the form	o f a bank guarantee	addressed	t o t h e
Federal	Cour t o f A u s t r a l i a	which i s annexed	hereto.

The Cour t by c o n s e n t o r d e r s t h a t :

( 1 ) The r e s p o n d e n t f i l e and serve i t s d e f e n c e w i t h i n

f o u r t e e n ( 1 4 ) d a y s .

( 2 ) C o s t s be r e s e r v e d .

( e ) The m a t t e r be l i s t e d for f u r t h e r d i r e c t i o n s on 1 3

J u l y , 1990."

Although provision was made in the short minutes for the signatures of the solicitors for both parties, the solicitors had not signed the document.

An executed "Banker's undertaking" was annexed. It

was an undertaking dated 22 June 1990 executed by a bank
addressed to the Court as follows:

"BANKER ' S UNDERTAKING

B y :  WESTPAC BANKING CORPORATION

T o :  FEDERAL COURT OF AUSTRALIA

At t h e r e q u e s t o f QUAD CONSULTING PTY LIMITED

( t h e a p p l i c a n t ) and i n c o n s i d e r a t i o n o f

FEDERAL COURT OF AUSTEUlLIA

( t h e favouree ) a c c e p t i n g t h i s under taking

WESTPAC BANKING CORPORATION ( t h e Bank)

u n c o n d i t i o n a l l y under takes t o pay on demand any sum o r sums which may from t i m e t o t i m e be demanded by t h e favouree t o a maximum a g g r e g a t e sum o f

$15,000.00 (FIFTEEN THOUSAND DOLLARS) ( t h e sum). "

On 28 June 1990, counsel for the applicant announced that the question of security for costs "has now been resolved". Reference was then made to the short minutes which had been prepared. It was pointed out that the short minutes were not in the usual form, which is that it is ordered that, unless security is provided, the proceedings are stayed. It was also pointed out that it was not appropriate that the banker's undertaking be addressed to the Court. Af ter discussion, it was agreed by the parties that the bank should

be asked t o g i v e another under tak ing , i n an appropr ia te form,

i n favour o f t h e a p p l i c a n t . I t was t h e n o rdered , b y c o n s e n t ,

t h a t ,	u n t i l	f u r t h e r	o r d e r ,	t h e	proceedings	be	s tayed	u n l e s s
t h e a p p l i c a n t	provided,	w i t h i n	21	d a y s ,	s e c u r i t y	f o r	c o s t s ,	i n

t h e sum o f $15,000.00 as agreed, and i n a form t o be agreed b y

t h e responden t . I t i s common ground t h a t t h e a p p l i c a n t

provided s e c u r i t y i n accordance w i t h t h e terms o f t h i s o r d e r .

By le t ter dated 18 January 1991, t h e r e sponden t ' s

s o l i c i t o r s wro te t o t h e a p p l i c a n t ' s s o l i c i t o r s a s f o l l o w s :

"As you	know,	your	c l i e n t	t h e	a p p l i c a n t	p r e v i o u s l y
consented	t o an	o r d e r	t h a t	it	prov ide	s e c u r i t y f o r

c o s t s . S e c u r i t y was provided, a s you know, i n t h e

sum o f $15,000.00.

As	you	a l s o	know,	t h e r e	have	been	numerous
developments	i n	t h e	S U L t	s i n c e	t h a t	s e c u r i t y	was

provided.	The	respondent	h a s	f i l e d	a	c ros s - c la im ,
your	c l i e n t	and	t h e	cross - responden ts	have	f i l e d

d e f e n c e s , t h e r e have been numerous i n t e r l o c u t o r y

a p p l i c a t ~ o n s i n	r e l a t i o n	t o subpoenas,	N o t i c e s	t o
Produce,	p r i v i l e g e	i n r e l a t i o n	t o t h e MLC	documents,

a p p l i c a t i o n s f o r m in i t r i a l , and s o on. I t i s s t i l l

l i ke ly	t h a t	A f f i d a v i t s	w i l l	be	r e q u i r e d ,	and	o u r
c l ient	i n s t r u c t s	u s	t o r e q u e s t	an	i n c r e a s e	i n	t h e

amount provided by way o f s e c u r i t y f o r c o s t s t o

$45,000.00.

W e s h a l l prov ide a schedu le o f c o s t s i f you r e q u i r e ,

b u t	i n t h e	event	t h a t	you	do	r e q u i r e ,	our	c l ient
i n s t r u c t s	u s	t h a t	it	w i l l	not	be	l i m i t e d	t o

$45,000.00 i n i t s subsequent r e q u e s t and a n y

n e c e s s a r y a p p l i c a t i o n by way o f N o t i c e o f Motion.

A schedu le was p r e v i o u s l y supp l i ed t o you, i n

r e s p e c t o f t h e f irst r e q u e s t f o r s e c u r i t y , and t h a t

may be taken a s some guidance. W e would add t h a t

Counse l ' s fees have a l r e a d y amounted t o $2,400.00

and we a r e now i n s t r u c t e d t h a t jun ior Counsel would

charge $2,500.00 a day , f o r t h r e e days e s t ima ted f o r

t h e hear ing	t i m e	i n a d d i t i o n	t o a	f u r t h e r	$5,000.00
f o r	a d v i c e on	ev idence ,	con f e rences ,	and	o t h e r

interlocutory appearances. Please advise by 25 January

1991 your client's attitude. "

The reference to the schedule previously supplied was a reference to the schedule enclosed with a letter dated 6 June 1990 seeking securlty in the sum of $30,238 and inviting comments on the schedule which was as follows:

"SCHEDULE

DEFENCE

Conferences with client in relation	$700.00
to Application and Statement of Claim, taking Statements for witnesses including interstate witnesses and preparing Defence, say 10 hours at
$70.00 per hour
Counsel's fees on settling Defence,	$250.00
conferences and providing advices (estimated)
PREPARATION OF AFFIDAVITS I IF SO ORDERED	l
Confirming with witnesses and	$2,100.00
preparing draft Affidavits say
30 hours at $70.00 per hour
Counsel's fees on settling Affidavits (estimated)
DISCOVERY
To produce documents for inspection	$280.00
and preparing List of Documents and Affidavit (estimated 4 hours) at
$70.00 per hour
Inspection of documents at $124.00	$620.00
per hour (estimated 5 hours)
INTERROGATORIES IIF SO ORDERED	l
Conferences with client in relation	$700.00
to Interrogatories at $70.00 per hour (estimated 10 hours)
Preparing Defendant 'S Interrogatories	$350.00

( e s t i m a t e d 5 h o u r s ) a t $70.00 per hour

Counse l ' s fees on s e t t l i n g

I n t e r r o g a t o r i e s

PREPARATION FOR TRIAL

Inc lud ing ; $2,100.00

Tak ing f u r t h e r S ta t emen t s and

prepara t ion o f e x p e r t r e p o r t s s a y

30 hours a t $70.00 per hour

Exper t w i t n e s s e s expenses

( e s t i m a t e d )

CONFERENCES

J u n i o r Counsel a t $105.00 first $1,505.00

hour , $100.00 each subsequent

hour ( e s t i m a t e d 15 h o u r s )

HEARING

B r i e f on h e a r i n g - Jun io r Counsel $3,000.00

$1,000.00	per d a y based on a 3 d a y
h e a r i n g

Our c o s t s on a 3 d a y h e a r i n g a t $1.533.00

$511.00 per d a y

The principal proceedings are fixed for a final hearing to commence on 5 April next.

The power to order security is discretionary involving the weighing of various considerations one against the other (see Brundza v. Robbie & Co. (1952) 88 C.L.R. 171 at p. 174; see also the cases discussed by S.E. Colbran in his article "Security for Costs: A Fettered Discretion?", (1989)

5 Aust Bar Review 102). The present application is one not

merely for security, but for further security against the

background of an earller agreement on the amount of the
security to be provided in respect of the whole proceedings.

I have come to the conclusion that, in the exercise of my discretion, I should not now order further security. In coming to this conclusion, I have taken into account the following considerations:

(1) I am prepared to assume in the respondent's favour the circumstance that the sum of $15,000.00 already provided may be inadequate to indemnify the respondent in respect of its costs of the proceedings. However, it is material that this sum has already been provided. It is also material that, in ordering security, the Court "does not set out to give a complete and certain indemnity" to a respondent (see Brundza's Case, above, at p. 175). In gberdare & Plymouth Co. v. Hankev [l8881 32 S.J. 644, Cotton, Fry and Lopes L.JJ. held that "the court never ordered security to be given for such amount as

would entirely cover the costs. ..; they only ordered security

to be given of a reasonable amount.. . " In his work Security for Costs (1989), Jim Delany discusses (at p.120) the English convention of fixing security at about two-thirds of the party and party costs of the defendant up to the stage in proceedings in respect of which security is ordered. But in this respect, and generally in the area of security of costs, it is not possible, as Lindley M.R. observed in Dominion Brewerv Ltd. v. Foster [l8971 77 L.T. 507 (at p.508) to "lay down any very accurate principle or rule". As Lindley M.R.

there observed, in the course of argument (at p.507):

" W e have t o c o n s i d e r t h e p o s s i b i l i t y o f t h e c o l l a p s e

o f t h e a c t i o n . The [pounds] 1,000 e s t i m a t e i s based

on t h e assumption t h a t t h e c a s e w i l l be fought o u t .

The p r i n c i p l e t o be a p p l i e d i s t h a t t h e s e c u r i t y

ought n o t t o be i l l u s o r y n o r o p p r e s s i v e - n o t t o o

l i t t l e n o r t o o much."

Given the width of the Court's discretion, it is appropriate that a "by and large" approach be taken.

(2) Although the respondent has already incurred some expense in the interlocutory skirmishes which have taken place, it cannot be said, at this stage at least, that the proceedings, taken as a whole, have assumed a dimension that is substantially greater than could reasonably have been foreseen when the sum of $15,000.00 was agreed upon (cf. Southern Cross Exploration N.L. v. Fire & All Risks Insurance Co. Ltd. (1985) 1 N.S.W.L.R. 114 at p.124).

interlocutory in character and not final. It is therefore not	(3) The agreement on the sum of $15,000.00 was itself
conclusive of the present question. However, it is a matter properly to be taken into account in the balancing process (see R.D. Werner & Co. Inc. v. Bailev Aluminium Products Ptv.
Ltd. (1988) 80 A.L.R. 134).
(4) It is well established that applications for security should be made promptly and before significant expense is incurred by the moving party (see Devenish v. Jewel Food Stores Ptv. Ltd. (1990) 94 A.L.R. 664). As haa been said, the final hearing of the proceedings is fixed to commence in about two weeks' time. To borrow the language of Mason C.J. in Devenish, above, (at p.660), the present application "comes at the heel of the hunt."
Orders

The application made in the respondent's notice of

motion is refused, with costs.

I certify that this and the preceding
eight (8) pages are a true copy of the
Reasons for Judgment herein of his Honour

Mr. Justice Beaumont.

Associate

Solicitor for Applicant:	Mr. M. Meyer, Marshal1 Marks
Kennedy

Counsel and Solicitors	Mr. G.T. Johnson instructed
for Respondent:	by Werry Altobelli
Date of hearing:	14 March 1991
Date Judgment delivered:	22 March 1991