Redville Holdings Pty Ltd v Four Fingers Pty Ltd
[2007] WADC 51
•17 APRIL 2007
REDVILLE HOLDINGS PTY LTD -v- FOUR FINGERS PTY LTD [2007] WADC 51
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WADC 51 | |
| Case No: | CIV:2542/2006 | 5 APRIL 2007 | |
| Coram: | KEEN DCJ | 17/04/07 | |
| PERTH | |||
| 6 | Judgment Part: | 1 of 1 | |
| Result: | Security ordered | ||
| PDF Version |
| Parties: | REDVILLE HOLDINGS PTY LTD (ACN 077 760 582) FOUR FINGERS PTY LTD (ACN 102 366 343) |
Catchwords: | Practice and procedure Security for Costs Form of security Turns on own facts |
Legislation: | Corporations Act 2001 |
Case References: | Erolen & Anor v Baulkham Hills Shire Council & Ors (1993) 10 ACSR 441 Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
FOUR FINGERS PTY LTD (ACN 102 366 343)
Defendant
Catchwords:
Practice and procedure - Security for Costs - Form of security - Turns on own facts
Legislation:
Corporations Act 2001
Result:
Security ordered
(Page 2)
Representation:
Counsel:
Plaintiff : Mr T O Coyle
Defendant : Mr J B Blackburn
Solicitors:
Plaintiff : Lavan Legal
Defendant : Carlo Primerano & Associates
Case(s) referred to in judgment(s):
Erolen & Anor v Baulkham Hills Shire Council & Ors (1993) 10 ACSR 441
Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306
(Page 3)
1 KEEN DCJ: By chambers summons dated 12 February 2007 the defendant seeks orders pursuant to s 1335(1) Corporations Act2001 that the plaintiff do give security for the defendant's costs of the action in the sum of $40,000 by payment of that amount into Court. Ancillary to that order further orders are sought that the proceedings be stayed until such time as the security has been provided.
2 By the time this application came on for hearing many matters usually the subject of argument on such applications were not in dispute. There was no dispute that the jurisdictional basis for the application under Corporations Act had been met, that is to say, that there was reason to believe that the plaintiff will be unable to pay the defendant's costs if the defendant is successful. It was acknowledged that some form of security for costs had to be provided by the plaintiff.
3 The live issues on the hearing of the application were as to the form that the security should take and the quantum of that security.
4 By an affidavit of Ian David Brain, sworn 22 February 2007, the plaintiff deposed that Westhaven Nominees Pty Ltd (Westhaven) was prepared to provide an indemnity to the plaintiff against adverse costs orders in the action up to a limit of $40,000. It was said that that was in the form of an unsecured undertaking on the part of Westhaven.
5 That undertaking was unacceptable to the defendant. The plaintiff referred to Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306. In that case it was the individuals standing behind the plaintiff company that were prepared to give a guarantee in relation to the costs of the defendant. Those guarantors were impecunious. After reviewing a number of authorities Malcolm CJ at 314 said:
"The true position is that there is a discretion, but the fact that shareholders or other persons behind the company are exposed to personal liability for whatever they may be worth, is a relevant but not necessarily a decisive consideration."
6 His Honour went on to note, at 315:
"There are other matters to be considered such as the merits of the action, the conduct of the parties and any other matter relevant to the exercise of the discretion, including the proposition that the mere impecuniosity of a plaintiff should not be a bar to the commencement of proceedings."
(Page 4)
7 In the present case it was conceded that I need not look to the merits of the case. On 23 February 2007 I had heard and dismissed an application on the part of the plaintiff for a Mareva or asset preservation type order over funds and property belonging to the defendant. In giving my reasons for decision I dealt with whether the plaintiff had demonstrated a good arguable case. I do not need to repeat what I said on that occasion except to say that the plaintiff's case appeared to be weak.
8 It was pointed out by counsel for the defendant that the materials supporting the undertaking to be given by Westhaven were, on any reasonable analysis, unsatisfactory and untested. Counsel for the plaintiff candidly accepted that that was the case and that little reliance could be placed upon them. Accordingly, I am left with the position that the value of the undertaking proffered by Westhaven cannot be determined. It was suggested by counsel for the defendant that such an undertaking was a "Claytons security"; see Erolen & Anor v Baulkham Hills Shire Council & Ors (1993) 10 ACSR 441 at 456.
9 By affidavit sworn 16 March 2007 by Mr Carmello Giuseppe Primerano, Mr Primerano annexed an indicative bill of costs for the purposes of the application. The bill of costs was prepared by reference to items of costs within the Rules of Court and the total costs, assuming a three day trial, amounted to $68,500.
10 Counsel for the defendant advised that the dispute in respect of that indicative bill of costs related to items 4 and 7. Item 4 related to the costs of the present application and was in the sum of $7,348 and Item 7 was in respect of getting up the case for trial, $18,150. I pause to note that under the current costs schedule the maximum for proceedings in chambers (Item 10(a)) is $9,306 for two days preparation and a one day hearing. Under the scale Item 16 for getting up case for trial (assuming 100 hours of work) allows $36,300.
11 Mr Coyle, for the plaintiff, argues that the sum of $4,000 would be reasonable in respect of Item 4 in the indicative bill and for Item 7 a reasonable sum would be $9,000. He argues that in Item 3 allowance has been made for the costs of the Mareva proceedings in the sum of $10,450 which is in excess of the maximum amount allowable under the scales and much of the work in relation to that application would form part of the work required for getting up case for trial.
12 Counsel for the defendant argued that Item 4 was based upon two days preparation and half a day's argument. He pointed out that it was
(Page 5)
- only at the last minute that the plaintiff conceded the jurisdictional basis for the application and only on the hearing of the application that the material provided in support of the undertaking given by Westhaven was of no value. As to Item 7, he pointed out that the sum claimed was half of the scale fee and noted that there was still a considerable amount of work to be done in the way of proofing of witnesses before the matter came on for trial. He acknowledged that there would be some overlap between the Mareva proceedings and getting up for trial. He pointed out that apart from inspection of documents and preparation for trial all of the other work had been carried out and was not prospective.
13 Counsel for the defendant argued that security should be based upon that part of the indicative bill which is up to the first day of trial. That reduces the total amount of the bill to $50,000 and it is that sum that the defendant claims by way of security.
14 Counsel for the plaintiff pointed to the propensity for courts, in dealing with such applications, to adopt a two-thirds rule in relation to the amount of costs and award only two-thirds of the indicative bill by way of security. However, he acknowledged that there was no fixed rule and it was a matter of discretion. As to that, counsel for the defendant noted that a good deal of the work had already been done.
15 In this case I am not satisfied that the undertaking given by Westhaven is appropriate as a means of giving security. Counsel for the defendant has acknowledged that there is no material upon which one can base a proper assessment of the worth of that undertaking. Nevertheless, I do not believe that this is a case where the only form of security ought to be by way of a payment into court. The defendant can be adequately protected if a suitable guarantee can be given by a bank or some other financial institution.
16 So far as the amount of the security is concerned it is well accepted that in giving security it should not necessarily be a complete indemnity against the defendant's anticipated costs. Those anticipated costs, as suggested by the defendant as required protection by way of security, amounted to $50,000. To grant security in that sum would be to give an indemnity in respect of the full amount of the costs.
17 I accept the argument put forward by the plaintiff that a good deal of work in getting up for trial may well have already been done in the context of the Mareva proceedings. Nevertheless, I also accept what was
(Page 6)
- argued on behalf of the defendant that a lot of the work has in fact been done and is not prospective.
18 In these cases security can be provided in stages and I consider that the sum of $40,000 would be adequate security at this stage of the proceedings. In coming to this decision I accept the argument of the plaintiff that Item 4 of the indicative bill of costs might well be overstated and that there may well be some duplication between Items 3 and 7 of that indicative bill. However, it is not for me to try to carry out some anticipatory taxation of the bill at this stage.
19 The order that I would propose would be:
(1) the plaintiff do within 28 days provide or cause to be provided security for the defendant's costs of the action in the sum of $40,000, such security to be either:
(a) by way of a bank guarantee or some guarantee from some other financial institution in a form acceptable to the defendant's solicitors or in a form to be settled by a Registrar of this Court; or
(b) by way of payment into court.
(2) the proceedings be stayed until such time as such security has been provided;
(3) there be liberty to apply for further and additional security for the defendant's costs of the action and generally;
(4) costs of the application be reserved.
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