Scanlan v Greenport Nominees Pty Ltd
[2001] WASC 307
SCANLAN & ANOR -v- GREENPORT NOMINEES PTY LTD & ORS [2001] WASC 307
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 307 | |
| Case No: | COR:308/1998 | 6 NOVEMBER 2001 | |
| Coram: | WHITE AUJ | 9/11/01 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed Costs reserved | ||
| B | |||
| PDF Version |
| Parties: | LAWRENCE SCANLAN L J SCANLAN & ASSOCIATES PTY LTD GREENPORT NOMINEES PTY LTD (ACN 067 084 057) PETER JERMYN CAPITAL ALLIANCE PTY LTD (ACN 008 802 757) |
Catchwords: | Application by respondents for an order that security for costs be provided by the applicants Application listed during the week proceeding the date for the trial listed for 10 days Turns on own facts |
Legislation: | Nil |
Case References: | Aspendale Pastoral Co Pty Ltd v WJ Drever Pty Ltd [1983] 7 ACLR 937 Black & Anor v Brockley Investments Ltd, unreported; FCt SCt of WA; Library No 930039; 27 January 1993 Blackbird Entertainment Pty Ltd & Anor v I O Research Pty Ltd, unreported; WASC; Library No 980297; 2 June 1998 Brown v Haig [1995] 2 Ch 379 Chester & Fein Property Developments Pty Ltd v Candam Investments Pty Ltd & Anor (1985) ATPR 40-618 Lagarna Pty Ltd & Ors v Bridge Wholesale Acceptance Corporation (Australia) Ltd [1995] 1 VR 150 Laundry Coin-Wash Nominees Pty Ltd v Dunlop Olympic Ltd & Ors (1985) 7 ATPR 40-584 Leary & Anor v Tasmanian Kit Homes Pty Ltd, unreported; SCt of Tas; Library No BC9506634; 15 August 1995 MA Productions Pty Ltd v Austarama Television Pty Ltd [1982] 1 ACLC 404 RP Securities Pty Ltd v Martin, unreported; Library No 3687; 7 August 1986 Sir Lindsay Parkinson & Co Ltd v Triplan Limited [1973] 2 All ER 273 Temwood Holdings Pty Ltd v Oliver [1999] WASC 251 Warren Mitchell Pty Ltd v Australian Maritime Officers' Union (1993) 12 ACSR 1 Bell Wholesale Corp Co Pty Ltd v Gates Export Corp (No 2) [1984] 8 ACLR 588 BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857 Brocklebank & Co v The King's Lynn Steamship Co (1878) 3 CPD 365 Brundza v Robbie & Co (No 2) (1952) 88 CLR 171 Caruso Australia Pty Ltd v Porter (Aust) Pty Ltd (1984) 1 FCR 311 Cowell v Taylor [1885] 31 Ch D 34 Crypta Fuels Pty Ltd v Svelte Corp Pty Ltd (1995) 19 ACSR 68 Doran v Cottam, unreported; FCA; No WAG 83 of 1994; Fed No 439/95; 27 June 1995 Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [1999] WASC 36 Espanol Holdings Pty Ltd v Banning [1999] WASC 49 Fexuto v Bosjnak Holdings Pty Ltd (1998) 28 ACSR 688 Harpur v Ariadne Australia Pty Ltd (1984) 2 ACLC Intercraft Cabinets v Sampas Pty Ltd (1997) 18 WAR 306 John Bishop (Caterers) Ltd v National Union Bank Ltd [1973] 1 All ER 707 John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63 Mantaray v Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 Michael Bickley Pty Ltd v Westinghouse Electric Australasia Ltd (1983) 1 ACLC 967 New Trend Pty Ltd v Oceanic Life Ltd [1990] WAR 1 Pearson v Naydler [1977] 3 ALL ER 531 Porzelak KG v Porzelack (UK) Ltd [1987] 1 All ER 1074 Procon (Great Britain) Ltd v Provincial Building Co Ltd [1984] 1 WLR 557; [1984] 2 All ER 368 Ravi Nominees Pty Ltd v Phillips Fox (1992) 10 ACLC 1313 Slazengers Ltd v Seaspeed Ferries Intl Ltd [1987] 3 All ER 967 Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114 Tipperary v State of Western Australia (1996) 22 ACSR 241 Tune Masters Pty Ltd (in Liq) v Sectam Pty Ltd, unreported; SCt of WA (Sanderson M); Library No 970267; 23 May 1997 Wests Process Engineering Pty Ltd v Westralian Sands Ltd and Lumley General Insurance, unreported; SCt of WA; Library No 980188; 15 April 1998 Yandil Holdings Pty Ltd v Insurance Company of North America (1985) 3 ACLC 542 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
and
GREENPORT NOMINEES PTY LTD (ACN 067 084 057)
BETWEEN : LAWRENCE SCANLAN
- First Applicant
L J SCANLAN & ASSOCIATES PTY LTD
Second Applicant
AND
GREENPORT NOMINEES PTY LTD (ACN 067 084 057)
First Respondent
PETER JERMYN
Second Respondent
CAPITAL ALLIANCE PTY LTD (ACN 008 802 757)
Third Respondent
(Page 2)
Catchwords:
Application by respondents for an order that security for costs be provided by the applicants - Application listed during the week proceeding the date for the trial listed for 10 days - Turns on own facts
Legislation:
Nil
Result:
Application dismissed
Costs reserved
Category: B
Representation:
Counsel:
First Applicant : Mr P G McGowan
Second Applicant : Mr P G McGowan
First Respondent : Mr N W McKerracher QC & Mr R A C Cullen
Second Respondent : Mr N W McKerracher QC & Mr R A C Cullen
Third Respondent : Mr N W McKerracher QC & Mr R A C Cullen
Solicitors:
First Applicant : Tottle Christensen
Second Applicant : Tottle Christensen
First Respondent : Dwyer Durack
Second Respondent : Dwyer Durack
Third Respondent : Dwyer Durack
(Page 3)
Case(s) referred to in judgment(s):
Aspendale Pastoral Co Pty Ltd v WJ Drever Pty Ltd [1983] 7 ACLR 937
Black & Anor v Brockley Investments Ltd, unreported; FCt SCt of WA; Library No 930039; 27 January 1993
Blackbird Entertainment Pty Ltd & Anor v I O Research Pty Ltd, unreported; WASC; Library No 980297; 2 June 1998
Brown v Haig [1995] 2 Ch 379
Chester & Fein Property Developments Pty Ltd v Candam Investments Pty Ltd & Anor (1985) ATPR 40-618
Lagarna Pty Ltd & Ors v Bridge Wholesale Acceptance Corporation (Australia) Ltd [1995] 1 VR 150
Laundry Coin-Wash Nominees Pty Ltd v Dunlop Olympic Ltd & Ors (1985) 7 ATPR 40-584
Leary & Anor v Tasmanian Kit Homes Pty Ltd, unreported; SCt of Tas; Library No BC9506634; 15 August 1995
MA Productions Pty Ltd v Austarama Television Pty Ltd [1982] 1 ACLC 404
RP Securities Pty Ltd v Martin, unreported; Library No 3687; 7 August 1986
Sir Lindsay Parkinson & Co Ltd v Triplan Limited [1973] 2 All ER 273
Temwood Holdings Pty Ltd v Oliver [1999] WASC 251
Warren Mitchell Pty Ltd v Australian Maritime Officers' Union (1993) 12 ACSR 1
Case(s) also cited:
Bell Wholesale Corp Co Pty Ltd v Gates Export Corp (No 2) [1984] 8 ACLR 588
BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857
Brocklebank & Co v The King's Lynn Steamship Co (1878) 3 CPD 365
Brundza v Robbie & Co (No 2) (1952) 88 CLR 171
Caruso Australia Pty Ltd v Porter (Aust) Pty Ltd (1984) 1 FCR 311
Cowell v Taylor [1885] 31 Ch D 34
Crypta Fuels Pty Ltd v Svelte Corp Pty Ltd (1995) 19 ACSR 68
Doran v Cottam, unreported; FCA; No WAG 83 of 1994; Fed No 439/95; 27 June 1995
Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [1999] WASC 36
Espanol Holdings Pty Ltd v Banning [1999] WASC 49
Fexuto v Bosjnak Holdings Pty Ltd (1998) 28 ACSR 688
Harpur v Ariadne Australia Pty Ltd (1984) 2 ACLC
Intercraft Cabinets v Sampas Pty Ltd (1997) 18 WAR 306
(Page 4)
John Bishop (Caterers) Ltd v National Union Bank Ltd [1973] 1 All ER 707
John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63
Mantaray v Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304
Michael Bickley Pty Ltd v Westinghouse Electric Australasia Ltd (1983) 1 ACLC 967
New Trend Pty Ltd v Oceanic Life Ltd [1990] WAR 1
Pearson v Naydler [1977] 3 ALL ER 531
Porzelak KG v Porzelack (UK) Ltd [1987] 1 All ER 1074
Procon (Great Britain) Ltd v Provincial Building Co Ltd [1984] 1 WLR 557; [1984] 2 All ER 368
Ravi Nominees Pty Ltd v Phillips Fox (1992) 10 ACLC 1313
Slazengers Ltd v Seaspeed Ferries Intl Ltd [1987] 3 All ER 967
Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114
Tipperary v State of Western Australia (1996) 22 ACSR 241
Tune Masters Pty Ltd (in Liq) v Sectam Pty Ltd, unreported; SCt of WA (Sanderson M); Library No 970267; 23 May 1997
Wests Process Engineering Pty Ltd v Westralian Sands Ltd and Lumley General Insurance, unreported; SCt of WA; Library No 980188; 15 April 1998
Yandil Holdings Pty Ltd v Insurance Company of North America (1985) 3 ACLC 542
(Page 5)
1 WHITE AUJ: This matter involves a claim for relief against alleged oppression by an architect who was concerned with the original development of the Indiana Teahouse in Cottesloe. The application was commenced in 1998 and the matter is listed for hearing for ten days commencing on 12 November 2001. The nature of the proceedings and the background to the present application are conveniently set out in the judgment of Hasluck J published on 31 August 2001. There is no need for me to repeat what his Honour there said.
2 By a chamber summons filed on 29 October 2001 and heard on 6 November 2001, the respondents seek an order for the provision by both applicants of security for costs.
The claim against the first applicant
3 The first applicant is an architect and a unit holder in the Mill Point Unit Trust, trading as Lawrence Scanlan Architects, of which the second applicant is the corporate trustee.
4 The respondents claim against the first applicant is made pursuant to the inherent jurisdiction of the Court and to O 25 of the Rules of the Supreme Court. Rule 1 of that order provides:
"1. The Court may order security for costs to be given by a plaintiff, but no order will be made merely on account of the poverty of the plaintiff or the likely inability of the plaintiff to pay any costs which may be awarded against him."
5 Rule 2 sets out, without limiting the generality of r 1, a number of the grounds upon which the Court may order security for costs to be furnished. The respondents do not invoke any of those grounds in the present application but rely upon the impecuniosity of the first applicant and upon his deliberate failure to respond to their requests, over a lengthy period, for information as to his financial position.
6 The Court has an unfettered discretion whether or not to order the provision of security for costs, having regard to the circumstances of the case before it.
7 The first applicant resides within this State in a residential property owned by his wife. He carries on the practice of an architect in Perth. The statement of his assets and liabilities which the first applicant has produced indicate that his assets consist of:
(Page 6)
- 1. A piece of land in Bali, said to have a value of $750,000;
2. An interest in the second applicant, said to have a value of $250,000,
3. A loan of $20,000, a personal debt to be payable from the proceeds of the sale of the Bali property,
4. Shares and superannuation, in the total sum of $9,390.
8 The first applicant's affidavit sworn on 5 November 2001 does however throw doubt upon those assets and their valuations.
9 In relation to the land in Bali, the first applicant says that he was a director of and a substantial shareholder in Silver Sails Holdings Pty Ltd ("Silver Sails"), a company registered in this State. In or about May 1989, Silver Sails sought to acquire an interest in some land in Bali, Indonesia. He was aware that foreign nationals cannot own land in Indonesia. Silver Sails held 70 per cent of the shares in an Indonesian company called Pt Indosail Sakti. The first applicant held 70 per cent of the shares in an Indonesian company called Pt Indosail Sakti. The first applicant arranged an advance of funds to enable Pt Indosail Sakti to purchase the land which was done. The land was conditionally sold in 1998 for a price of US$2,000,000. The conditions included a requirement that certain development approvals in respect of the land be obtained. In the result, Pt Indosail Sakti was not able to obtain all necessary development approvals and the sale fell through.
10 In his affidavit sworn on 5 November 2001, the first applicant says, in par 11(k):
" … I described as an asset in my statement of assets and liabilities an interest in 1.5 acres of land in Bali. I further explained to Mr John Carrington a partner in the law firm of Blake Dawson Waldron on 6 June 2000 that I have a property interest in Bali. I said to Mr Carrington that the relevant company had been trying to sell the land for 3 to 4 years and its potential value if it had to liquidate immediately could and would more than likely be nil. The reason for this is that it would be sold as vacant land, not as a development site with all its approvals."
11 Silver Sails was deregistered on 24 June 1993 for failure to furnish accounts and annual returns. The first applicant says, in that affidavit, that there are no moneys available to complete the accounting records of Silver Sails and that: "in those circumstances it remains at present that any
(Page 7)
- loan moneys being repaid are contingent upon the sale of the land in Indonesia".
12 The first applicant says in his affidavit sworn on 5 November 2001 that he has been reluctant to provide information concerning his stated interest in land in Bali and, despite requests from his solicitors, he has not forwarded to them documents until "now". He says that his reluctance has been as a result of fears that he holds in relation to disclosure of his financial position to Mr Jermyn (the second respondent). He advances the reasons for those fears, while acknowledging that they may be "perceived and not real".
13 The evidence of the first applicant shows, I think, that, if the Bali property has any value, this is not readily available to be realised by the first applicant. It is any case situated outside of the jurisdiction of this Court and it is owned by an Indonesian company, not by the first applicant.
14 In Temwood Holdings Pty Ltd v Oliver [1999] WASC 251, Master Sanderson said that the considerations for the exercise of the discretion include the:
· merits of the plaintiff's claim; (while a detailed examination of the merits is inappropriate, the strength of one case may be determinative; does the defendant have a prima facie defence?);
· plaintiff's impecuniosity (has the defendant been responsible for the plaintiff's impecuniosity?);
· possibility that the proceedings will be stultified;
· delay in applying for security;
· nature of any counterclaim (if the counterclaim requires many issues on the primary claim to be litigated it may be inappropriate to order security, but if the counterclaim is limited, the existence of the counterclaim does not preclude an order for the provision of security for costs).
15 This case has proceeded on affidavit and there are 15 affidavits upon which the applicants intend to rely and several others on which the respondents intend to rely. The "concise statement of issues of facts and law" filed by the applicants specifies more that 60 issues for determination in the matter. The disputes relate, inter alia, to an alleged
(Page 8)
- oral agreement between the first applicant and the second respondent, the determination of which may depend upon findings of credibility. There are claims for architectural work and counterclaims for damages. In my opinion, it is not possible in the limited time available to form any firm conclusion as to the merits of the applicants' claims.
16 In my opinion, the evidence shows that the first applicant is unlikely to be able to meet any order for costs that may be made against him. Save to the extent that a denial of the applicants' claims can be said to have contributed to the impecuniosity of the first applicant, as to which I can express no opinion at this stage, it does not seem that the respondents can be said to have contributed to the impecuniosity of the first applicant.
17 Although this has not been submitted by the first applicant, the financial statements filed by him suggest to me, quite strongly, that an order for the provision of security for costs at this stage might well have the effect of stultifying the litigation. Counsel for the respondents submits that, as the first applicant has not suggested that this would be the effect, I should not take it into account. However, in maintaining the state of his financial strength, the first applicant continues to claim the assets consisting of his interest in the Bali land and in the loan which is payable upon the sale of that land, and I am not satisfied that there is any reasonable prospect of the Bali land being sold in the immediate future, nor does it appear that Silver Sails is likely to be restored to the register within a reasonable time.
18 Accordingly, I consider the first applicant to be impecunious. That alone is not a basis for the order for security for costs to be made pursuant to O 25 of the Rules of the Supreme Court.
19 An order may be refused as oppressive and resulting in real prejudice to the plaintiff when the application for security is not made until the plaintiff has incurred considerable costs in bringing the action to the stage where it is about to be tried: Aspendale Pastoral Co Pty Ltd v WJ Drever Pty Ltd [1983] 7 ACLR 937 at 942; RP Securities Pty Ltd v Martin, unreported; Library No 3687; 7 August 1986. However, it has been said that delay in making the application is irrelevant unless it cannot be satisfactorily explained and the plaintiff is adversely affected or prejudiced by it: Black & Anor v Brockley Investments Ltd, unreported; FCt SCt of WA; Library No 930039; 27 January 1993.
20 Another significant aspect in relation to the financial situation of the first applicant, and to the respondents' perception thereof, is the fact that
(Page 9)
- the Bali land, being situated outside of the jurisdiction, is of little consequence in considering the first applicant's ability to pay costs.
21 The delay in bringing this application, which has not been satisfactorily explained, in all the circumstances, has the result, in my opinion, that an order for the provision of security at this late stage could well have the effect of requiring the adjournment of the trial yet again. It has the potential to inflict injustice upon the first applicant who has incurred very substantial legal costs to date, of the order of $160,000 it appears.
22 In the exercise of my discretion, I refuse the application for an order for the provision by the first applicant of security for costs.
The claim against the second applicant
23 Against the second applicant, the claim is made under s 1335 of the Corporations Law.
24 That section provides:
"Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given."
25 In Laundry Coin-Wash Nominees Pty Ltd v Dunlop Olympic Ltd & Ors (1985) 7 ATPR 40-584, Smithers J said at 46,729:
"Where the only tangible assets of an applicant company are held in trust for another entity and its solvency depends on its rights as trustee to indemnity as against that entity it is necessary for the Court to have in mind the difficulties which a successful respondent would face in attempting to execute in respect of an order for costs. Indeed, unless some step is taken to alleviate those difficulties it is reasonable and just to treat the applicant company as if it were without assets to meet such a liability."
26 At 46,731, his Honour said:
(Page 10)
- "I have concluded that an applicant being a trustee company which desires to resist an order for security for costs should establish that recourse to property held by or for it will be available to the party against whom it has brought its action and be adequate, at the appropriate time, to meet the possible liability for costs."
27 His Honour's views were approved by Jenkinson J in Chester & Fein Property Developments Pty Ltd v Candam Investments Pty Ltd & Anor (1985) ATPR 40-618 and by the Appeal Division of the Supreme Court of Victoria in Lagarna Pty Ltd & Ors v Bridge Wholesale Acceptance Corporation (Australia) Ltd [1995] 1 VR 150 and by Underwood J in Leary & Anor v Tasmanian Kit Homes Pty Ltd,unreported; SCt of Tas; Library No BC9506634; 15 August 1995 and I accepted them in Blackbird Entertainment Pty Ltd & Anor v I O Research Pty Ltd, unreported; WASC; Library No 980297; 2 June 1998.
28 An application under s 1335 of the Corporations Law involves a two-stage process:
1. An enquiry as to whether it appears by credible testimony that there is reason to believe that the plaintiff will be unable to pay the costs of the first defendant if successful in its defence; and,
2. if so, whether the court should exercise its discretion to order security for costs. (Sir Lindsay Parkinson & Co Ltd v Triplan Limited [1973] 2 All ER 273.)
29 In MA Productions Pty Ltd v Austarama Television Pty Ltd [1982] 1 ACLC 404, the court listed some of the matters which go to the exercise of the proper discretion, as follows:
1.The strength and bona fides of the plaintiff's case.
2.Whether the application is oppressive and being used merely to deny the impecunious plaintiff a right to litigate.
3.Whether the lack of assets experienced by the plaintiff is caused by the default of the defendants.
4.Whether the order, if made, would stultify the plaintiff's actions.
30 The first applicant has annexed to his affidavit recently prepared balance sheets and profit and loss accounts relating to the Mill Point Unit Trust (of which the second respondent is the corporate trustee) in respect of the 30 June in each of 1997, 1998, 1999, 2000 and 2001. Each of the
(Page 11)
- balance sheets for the period 1997 to 1999 reflects a deficiency of funds, while those of 2000 and 2001 reflect a net profit of $99,853.93 and $153,353.81 respectively. In each balance sheet, the disputed claims against Greenport Nominees Pty Ltd for fees and a success fee are shown as assets at their full value. It seems to me that, for the purpose of considering whether or not there is credible testimony that there is reason to believe that the second applicant will be unable to pay the costs of the first respondent if successful in its defence, it is illogical to take into account as an asset disputed claims against that respondent. I say that, as it is implicit in the proposition that the respondent be successful in its defence, that the applicant has failed to make out those claims against the respondent. Without those disputed claims being assets, the second applicant would apparently be insolvent. The second applicant submits that it is a trading company which earns substantial architectural fees and that, accordingly, there is no evidence that it would not be able to meet any order as to costs which might be made against it. I was referred to Warren Mitchell Pty Ltd v Australian Maritime Officers' Union (1993) 12 ACSR 1. An order may be refused as oppressive and resulting in real prejudice to the plaintiff when the application for security is not made until the plaintiff has incurred considerable costs in bringing the action to the stage where it is about to be tried: Aspendale Pastoral Co Pty Ltd v WJ Drever Pty Ltd (supra) at 942; RP Securities Pty Ltd v Martin (supra). However, it has been said that delay in making the application is irrelevant unless it cannot be satisfactorily explained and the plaintiff is adversely affected or prejudiced by it: Black & Anor v Brockley Investments Ltd (supra).
31 It follows, in my opinion, that the threshold question in relation to the second applicant must be answered in favour of the respondents. On that basis, it is necessary to consider whether, in the Court's discretion, the applicant should be required to furnish security for the costs of the trial.
32 An important factor, in my opinion, is that the trial of this matter has been listed to be heard for a period of ten days commencing on 12 November 2001. The matter has previously been listed and the trial dates vacated. I do not apportion any blame for that, but consider that it is desirable that the matter should now proceed as listed. The application for security for costs has been brought at a very late stage. The respondents submit that the reason for the delay in bringing the application lies in the deliberate failure of the applicants to disclose fully their financial position, details of which were sought over a long period. However true that is, the fact is that the respondents could have brought an application for appropriate relief several months ago, as soon as it became apparent that
(Page 12)
- the plaintiffs were not responding appropriately to their requests for information. An application for security for costs may be made at any stage of the proceedings, even after judgment as when an order is made for the taking of an account: Brown v Haig [1995] 2 Ch 379 at 382. The application should be made promptly and delay may be a significant discretionary consideration militating against the making of an order, particularly when it may have led the plaintiff to act to his or her detriment or cause hardship in the future conduct of the action.
33 Mr McKerracher QC for the respondents submitted that relevant factors in the consideration of the exercise of the discretion pursuant to s 1335 of the Corporations Law are:
· whether or not a party standing behind the company is liable to have a costs order made against them because they are a party to the proceedings;
· the merits of the action;
· the likelihood of any order for costs stultifying the proceedings
· the issue of whether the respondents are responsible for the applicant's impecuniosity.
(a) in failing to comply with an order made on 4 August 2000 to file any further affidavits within 35 days;
(b) in failing to inform the court at the callover in February 2001 that they intended applying for leave to file and serve further affidavits, despite seeking to complete these affidavits in November 2000.
(c) in applying for leave to file and serve substantive affidavits on 1 May 2001, the application being heard on 17 May 2001, shortly before the listed trial dates on 11 June 2001, resulting in the necessity for the applicants to vacate the trial dates to enable them to respond.
(d) In failing to disclose fully the results of the private investigation by Mr Terry McLernon into the financial
(Page 13)
- affairs of the first applicant, an inference available from the evidence that the respondents paid Mr McLernon a sum of $10,000 for that investigation.
- (e) In failing to comply with orders 11, 13 and 19 of the trial directions made on 27 September 2001.
35 He summarised his submissions in this regard as follows;
"The combined effect of the conduct referred to … above and that (sic the) fact that no prior application for security was made is that these proceedings have been instituted for approximately 3 years while the Respondents have delayed in making application despite their investigations, the Applicants have incurred in excess of $160,000 on legal costs, the Respondents have conducted themselves in a manner which has directly resulted in the delay and incurrence of unnecessary costs and the Respondents have not in this application disclosed to the court the information available to them and when it was available to them. In these circumstances it is open for the court to infer that the application for security for costs is brought for the improper purpose of frustrating the litigation."
36 At this stage and in the absence of tested evidence, I do not feel able to draw the inference contended for by the applicants as to the respondents' lack of bona fides. Nonetheless, the delay in bringing this application until a few days before it is listed for trial has not been satisfactorily explained. It is clear from the affidavit of the second respondent sworn on 29 October 2001 that a number of attempts to obtain relevant financial information from the applicants were made by the solicitors for the respondents, commencing in October 2000, more than a year ago and that they did not receive replies until 28 August 2001 or later. The respondents say that they have offered to give to the first applicant the precise relief that he seeks in the action, namely a 25 per cent interest in the first respondent and that the first applicant has refused to accept this. However, it is said by the first applicant that, since the institution of these proceedings, the first respondent has sold the Indiana Teahouse and that the situation of the company is now different from that prevailing when the proceedings commenced. This aspect, which has not been the subject of argument as yet, may affect the appropriateness of the present claims.
(Page 14)
37 In the result, I shall exercise my discretion against the grant of the order that the applicants furnish security for the respondents' costs of the action.
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