Siyan Pty Ltd v Nillumbik Shire Council
[2001] VSC 285
•16 August 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORT LIST
No. 5847 of 1999
| SIYAN PTY. LTD. | Plaintiff |
| v | |
| NILLUMBIK SHIRE COUNCIL and BANYULE CITY COUNCIL | First Defendant Second Defendant |
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JUDGE: | HEDIGAN, J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 31 July 2001 | |
DATE OF JUDGMENT: | 16 August 2001 | |
CASE MAY BE CITED AS: | Siyan Pty Ltd v. Nillumbik Shire Council & Anor | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 285 | |
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LOCAL GOVERNMENT – Order-in-Council – Local Government Act 1989 - Planning and Environment Act 1987 – Proceeding against two Councils, with respect to alleged breaches of former Council, dissolved by legislation – Application by first defendant Council for summary judgment on basis that second defendant was the only successor in law to former Council – Summary judgment for first defendant.
SECURITY FOR COSTS – Application by second defendant – Relevant considerations – Security in sum of $55,000 ordered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C. Northrop | Deacons |
| For the First Defendant | Mr J. Delaney | Herbert Greer Rundle |
For the Second Defendant | Mr J. Peters | Frenkel Partners |
HIS HONOUR:
The plaintiff company commenced this proceeding against the first defendant the Shire of Nillumbik (hereinafter called “the first defendant” or “Nillumbik)” on 21st June 1999. The plaintiff alleged that on 13th March 1989 it had entered into a written contract with a company Hyleja Pty Ltd (“Hyleja”) to purchase from it the property at 62 Fraser Street, Diamond Creek (hereinafter called “the land”) for $975,000. It was alleged that special condition 1 of the contract of sale provided that the contract was conditional upon the issue of a Town Planning permit for the development of the property into not less than 19 allotments in accordance with a plan of subdivision. Hyleja undertook to use its best endeavours to obtain the permit. The special condition also provided that in the event that the permit was not granted within 15 months from the date of the contract then the contract for sale would be voidable at the option of either party. At that time, in 1989, the Shire of Diamond Valley was the responsible authority for the granting of planning permits for the Shire of Diamond Valley in which the land was situated. I will return to some features of the reform and alteration of the law in relation to authorities responsible for local development shortly.
Essentially, however, the plaintiff Siyan sued Nillumbik because it claimed that Nillumbik had become the responsible authority for the granting of planning permits for what had been the Shire of Diamond Valley but had become the Shire of Nillumbik (that is, that it was the successor to the Shire of Diamond Valley) pursuant to legislation subsequently enacted. The plaintiff claimed that the Shire of Diamond Valley issued a planning permit in respect of the land permitting its subdivision so that on each allotment a house might be built. In a word, the plaintiff was developing the land. Paragraph 5 of the original statement of claim alleged that the Shire of Diamond Valley knew or ought to have known (and that Nillumbik was subsequently fixed with this actual or constructive knowledge) that the land had been used at an earlier time for the purpose of goldmining, that mining shafts were present upon the land and that thereby the Shire of Diamond Valley knew or ought to have known of the risk of contamination of the land, arising from its prior use as a goldmining area. It was also alleged that the land was contaminated with arsenic, mercury and zinc, a fact not known to Siyan until 1995, when a report of consulting engineers to the plaintiff advised that there was widespread and significant arsenic concentration, with mercury, in the land at such levels as to create a potential and significant risk to human health. It was also advised that as such the land was not suitable for development, in the absence of an appropriate environmental audit and certificate. Some years later in 1998 another expert advised the plaintiff that the site had been used intermittently as a goldmine for nearly 90 years and that as a result of the soil contamination, the site was not suitable for development for residential purposes in the absence of substantial remedial work, alleged to cost in excess of $1m. The plaintiff alleged that a duty of care was owed to the plaintiff to take reasonable care in granting of the permit and to make full investigations, that the Shire had failed to do this, had granted a permit negligently and had failed to conduct an environmental assessment of the site. It was alleged that if the plaintiff had known that the land was contaminated it would not have proceeded with the purchase of the land by way of the contract of sale. The claim for damages is founded upon the allegation that the costs of remediation exceed the value of the land as the subdivisional site and that the land had thereby no commercial value unless the contamination of the land is remedied.
No attempt to develop the land was undertaken and the permit lapsed as a consequence of the effluxion of the period of 15 months. The plaintiff did not commence the proceeding until June of 1999. Subsequently, however, the plaintiff apparently became uncertain that Nillumbik was the successor to the Shire of Diamond Valley and thought that Banyule City Council might arguably be the successor. Thus it made application to amend the writ and the statement of claim so as to join the Banyule City Council as a second defendant. This application was granted. A plea in the same form was thereby made against the second defendant Banyule City Council. This was a claim in the alternative to the claim against Nillumbik. The particulars given in respect of paragraph 2 of the statement of claim include the statement that the land is located within the municipal district of Nillumbik and that it is therefore the responsible authority for the purpose of the Planning and EnvironmentAct 1987 pursuant to clause 84 of the Ministerial Order published in the Government Gazette of 14th December 1994. I will shortly set out the relevant provisions which would appear to indicate with some clarity that the Banyule City Council is the successor to the Shire of Diamond Valley, not Nillumbik Shire Council. As I understand the plaintiff’s claim, it claims that liability nevertheless attaches to Nillumbik Shire Council the first defendant because the land is located within its municipal district. It would appear that the land or part of it is within the municipal district of the first defendant. The plaintiff’s particulars aver that the land had been used for goldmining between 1862 and 1946 and that the Shire of Diamond Valley was at all material times the responsible authority for the granting of planning permits in respect of the Diamond Valley planning scheme, pursuant to the 1987 Act. I should say that very ample affidavits and exhibits have been filed by all parties but the area of factual dispute is relatively small. The plaintiff also relies upon earlier applications for development by the company Nestrae Pty Ltd which refer to the existence of mine-shafts and the necessity to fill or cap them. The plaintiff’s particulars and material refers to correspondence between the Shire of Diamond Valley and the manager of Nestrae Pty Ltd, the then applicant, referring to mine-shafts and the early history of mining activities on the land, it being claimed that this documentation evidences the Council’s knowledge of the existence of old goldmines on the land. The plaintiff alleges that the sole reason for buying the land was to sub-divide it into allotments and develop it. It is also claimed that the total cost of remediation to levels to allow residential development had, shortly by the commencement of the proceeding, been estimated to be $2-$4m.
The matter comes before me on a number of bases but only two of them will be dealt with by me. The first defendant Nillumbik by summons of 5th April seeks orders pursuant to Rule 23.03 for summary judgment for it against the plaintiff or an order that the proceeding against Nillumbik be dismissed. It also seeks relief on the basis alternatively that the plaintiff’s claim against it be struck out as not disclosing a cause of action. If that primary relief is not granted and the plaintiff’s action against Nillumbik remains on foot, then the first defendant seeks an order that the plaintiff provide security for Nillumbik’s costs and other relief, namely to amend the defence. Affidavits in support of Nillumbik’s application for summary judgment are those of Stephen Douglas George, solicitor for Nillumbik, and Robert Michael McGirr, solicitor for Banyule. There are affidavits in reply on behalf of the plaintiff by Anton Block, his solicitor, attracting further affidavits of Mr McGirr. The position of the second defendant Banyule City Council is essentially the same as that of Nillumbik. It agrees that Banyule City Council is at law the successor of the Shire of Diamond Valley and therefore the relevant responsible authority with respect of the proceeding against it. There is no application by it to have the proceeding struck out, although it has various other arguments against the plaintiff’s claim against it. It also seeks an order for security for costs against the plaintiff.
It is common ground that the land in question was in 1989 within the former Shire of Diamond Valley. It does not appear to be in dispute that the matters alleged to constitute the cause of action arise out of alleged acts or omissions of the former Shire of Diamond Valley although it appears to be contested that there was any negligence, reliance or causation. Nillumbik in effect claims that the pleading is embarrassing and fails to disclose a cause of action but, as I have indicated, the key argument is not as to form but is that the plaintiff has no claim at law against the first defendant. The plaintiff’s claim in effect is that either Nillumbik or Banyule is liable as successor in law to the former Shire of Diamond Valley. It is not disputed that it cannot be both. The fact that both the City of Banyule and Nillumbik Shire Council agree that the successor in law is the Banyule City Council cannot conclude the matter against the plaintiff, although it must be said that the fact that both defendants are in agreement that the second defendant was the successor in law to the Shire of Diamond Valley is, at least as a commencing point, a potent disadvantage in the plaintiff’s case.
The governing law as to this matter is, of course, critical. As is well known, in 1994 the Government of Victoria affected substantial reformation of local government by revamping various shires and local government cities, effecting mergers and departures of former shires and councils. The order of the Governor-in-Council of 13th December 1994 (acting under Part 10C of the Local Government Act 1989) and published in the Victorian Government Gazette of 15th December 1994 (exhibited as SDG1 to the affidavit of the first defendant’s solicitor Mr Stephen George) constituted a number of new councils including both defendants (see clause 3(1)) and caused a number of councils, including the Shire of Diamond Valley, to cease to exist. Clause 6 of the Order (hereinafter called “the Order”) provided as follows:
“Banyule City Council is Successor in Law
On the appointed day –
(a)All property rights and assets of the former Council are vested in the Banyule City Council.
(b)All liability of the former Council are liabilities of the Banyule City Council.
(c)The Banyule City Council is the successor in law of the former Council.”
Clause 1 of the Order provided inter alia that the former Shire of Diamond Valley was a “former Council” in relation to “Banyule”. The argument is thus advanced on behalf of Nillumbik that Banyule is beyond doubt the successor in law of the former Shire of Diamond Valley and by virtue of the provisions of the Order, all liabilities of the former shire (including all or any of the liabilities alleged in the statement of claim) have been assumed by Banyule as the successor in law to the former shire. These include any liabilities relating to the exercise or non-exercise of planning powers. The argument is that notwithstanding that the land in Diamond Creek is now within the municipal boundaries of Nillumbik rather than the municipal boundaries of Banyule that has nothing to do with the resolution of legal liability of the new shires. This is because express provision was made to deal with liabilities, events or actions concerning land not within the physical boundaries of the council succeeding at law. The phrase “adjacent area” is defined in clause 1 of the Order:
“In relation to a Council, an area which does not form part of the municipal district of the Council but which immediately before the commencement of this order formed part of the municipal district of the former Council.”
The land in this case falls within that definition, a consequence of which is that clause 81(3) of the Order applies, its provisions being as follows:
“A newly constituted Council must come to an agreement with a neighbouring Council on the apportionment settlement transfer adjustment of determination of any property income assets liabilities expenses staff or other matters in relation to an adjacent area by the 28th of February 1995.”
Clause 1 of the Order defined “neighbouring Council” in the following terms:
“In relation to another Council a Council the municipal district of which an adjacent area in relation to the other Council form parts.”
It would seem to follow from that that as the land is an adjacent area of Banyule but now forms part of the municipal district of Nillumbik the first defendant is a neighbouring Council of the second defendant. That appears to have been the view taken by both of the new Councils because on 1st March 1995 an agreement pursuant to clause 81(3) of the Order was made between Banyule and Nillumbik (see the affidavit of Mr George – Exhibit 2). Clause 3 of that agreement drew a distinction between loan liabilities and other liabilities. The clause in dealing with other liabilities stated as follows:
“All other liabilities shall remain the responsibility of the successor in law Council as named in the Order in Council.”
I note also that paragraph 2 of the agreement stated as follows:
“The Order specified that the Banyule City Council is the successor in law and therefore responsible for all of the liabilities of the form all of the ... liabilities of the former Shire of Diamond Valley.”
The agreement between Banyule and Nillumbik concerning liability appears to point strongly in the direction of Banyule as assuming the liability in respect of adjacent areas, if there were any doubt arising under the Order itself. My own view is there is no such doubt arising under the Order itself. ‘
Mr Northrop for the plaintiff argued that a plaintiff’s rights could not be set to naught nor depreciated by an agreement made between Banyule and Nillumbik. However I do not agree with this proposition as the Order obliges as a matter of law the new Council to come to an agreement with a neighbouring Council as to liabilities. It must be assumed from the Order, itself made pursuant to the relevant Act, that the intention was that the persons in respect of whom the liability might exist would be bound and intended by the Parliament to be bound by that agreement. I note also that the first defendant’s submissions claimed that that really had been acknowledged in the plaintiff’s further and better particulars (to which I have already referred) wherein the plaintiff stated:
“The second defendant is the successor at law to the Shire of Diamond Valley pursuant to clause 6 of the Ministerial Order. The land was in 1989 located within the boundaries of the Shire of Diamond Valley.”
Nillimbuk’s defence of 30th August specifically raised the contention that Banyule was the correct defendant in the proceeding. That issue has been the subject of telephone conversations between Nillumbik’s solicitors and the plaintiff’s solicitors and in correspondence. Notwithstanding these matters, the plaintiff declined to discontinue against Nillumbik, thus producing the present application for summary judgment. As I apprehend what was put to me, the plaintiff would not let the first defendant out, even though Banyule accepted that it was the successor in law of the former shire, not Nillumbik, unless Banyule made further concessions which it declined to do. There is a dispute as to what was really required but it appears to me to be arguable that the plaintiff was seeking to have Banyule admit a potential liability to the plaintiff, rather than the mere fact that it was the successor to the Shire of Diamond Valley, not Nillumbik. Indeed, it is apparent from the correspondence and the submissions that were made that it is a fundamental argument to be advanced by whatever Council was the successor in law of the Shire of Diamond Valley that the plaintiff’s cause of action is flawed on a number of grounds, including the lapsing of the permit, the expiration of ten years before the proceeding was commenced, the full knowledge of the plaintiff of the condition of the land including the instability and the contamination of the soil before the contract was entered into. It was argued before me (more in relation to the application for security) that the plaintiff was therefore aware of the mining activities of the land, was aware that any development on the land would be subjected to soil tests, was aware by its own particular records that physical inspection of the land would have indicated the existence of mining activities and was aware that such mining activities involved the use of arsenic and other contaminants well known in the area of goldmining. It is contended that all this must have been known to the plaintiff prior to entering into the contract of sale in 1989 and that with such knowledge the plaintiff did not exercise any right to avoid the contract the conditions of which it knew and which were incorporated into the decision to grant and issue the permit. It was also contended the plaintiff must have been aware that any application for a building permit must have led to soil tests which would have revealed the level of contamination.
The plaintiff’s written submissions accepted that only one or other of the defendants could be liable but “that the difficulty is that neither accepts responsibility for the Shire’s conduct.” There is no doubt that the Shire of Banyule accepts that it is the responsible authority as a matter of law but it does not accept there is any liability. The plaintiff’s submission misstates, in my judgment, the position of Banyule. Reliance was sought to be placed by Mr Northrop for the plaintiffs on clause 84(3) of the Ministerial Order to this effect:
“For the purposes of the Planning and Environment Act 1987 and the administration, amendment or enforcement of each of the planning schemes in sub-clause (1) –
...
(b)anything done or in relation of the Council which ceases to exist by virtue of this order that concerns a matter of a continuing nature has effect as if done by the newly constituted Council of the municipal district to which the matter relates.”
However, in my view it is clear that that part of the order is concerned with the administration and enforcement of planning schemes and is not dealing with pre-existing liabilities transmitted by the legislation and the Order.
Reliance was sought to be placed upon the language of s.15 of the Planning and Environment Act to similar effect but the answer is the same. The Act’s provisions are there concerned with acts done under planning schemes and not the liabilities that arise from them. Thus it would appear that s.15 preserves the validity of schemes and existing permits but gives power to the new responsible authority to continue administration and enforcement of them. The phrase “subsequent administration and enforcement” would appear to indicate that. Accordingly I reject Mr Northrop’s submission concerning that aspect, deeming that it is clause 6 of the Order that fundamentally deals with liabilities. It would, in my view, be an insupportable construction to interpret the language of s.84(3), concerned as it is with the administration, amendment and enforcement of each of the planning schemes, as drawing in liabilities at law arising from breaches in 1989 that might give rise to causes of action.
I bear firmly in mind the well-established principles that emphasise caution and require a degree of satisfaction verging on certainty before the power to enter a summary judgment for a defendant against the plaintiff is exercised. However, the issue here is really one of the construction of the relevant legislation and sub-delegated legislation pursuant to it against the relatively non-contentious facts that have emerged from the material.
For the reasons already indicated by me, I have reached the state of mind that I regard the plaintiff’s chances of success against the first defendant are so negligible as to attract the description of “hopeless”. In those circumstances I grant the relief sought in the first defendant’s summons and order that the plaintiff’s claim against it stand dismissed and that there be judgment entered for the first defendant against the plaintiff in respect of the plaintiff’s claim against it.
I turn then to the question of whether or not any order for security for costs ought to be made at the second defendant’s behest against the plaintiff.
The plaintiff’s discovery and the affidavits filed on behalf of the second defendant (see principally those of Robert McGirr) establish that the plaintiff is the trustee of the Yang Family Trust, that the plaintiff was incorporated on 29th February 1988 (directors Mark Yang and Yo Hsien Yang) and that its shares held by Jane Yang, Chsi Pen Yang, San Yang and Chsi Mu Yang. On the basis of the financial records produced it would appear that from 1994 to the years 2000, the plaintiff was balance sheet insolvent, that is that there was an excess of liabilities over assets and that the only asset that the company has is a right of indemnity out of Trust assets. According to the affidavit of Mr McGirr (Exhibit 25) the plaintiff is in considerable debt and has not repaid loans that were made to it on 13th June 1989. Further records have been sought and refused and will be the subject of a further discovery dispute. On March 2000 the Banyule City Council sought security for costs by letter. It was not offered.
The amendment to the writ which joined the second defendant into the proceeding was in May 2000 but it was not served until some time later. The plaintiff opposes any order requiring it to provide security for costs. The second defendant argues that the claim has little prospect of success. The plaintiff says that the second defendant has delayed in making its application for security for costs .
The plaintiff is suing for the benefit of others and has not filed any material or produced documentation to state or suggest that the provision of security would stultify the litigation or, for that matter, that those who stand behind the plaintiff are incapable of providing security.[1] It was argued by Mr Peters for the second defendant that once the Court had a basis for concluding that the corporate plaintiff does not have assets in its own right to pay the costs of the second defendant, if it was successful in its defence, then a burden lay on the plaintiff to bring forward material either of its own accounts or in some other way to give the Court reason to believe that it has funds to meet the costs. He argued further that this was a case in which the plaintiff’s prospects of success were dubious. He accepted the position, as I understood his argument, that cases in which the Court might materially take into account the prospects of success are relatively sparse. Nevertheless he contended that this was one of the cases in which it was clear that the plaintiff’s case was near to hopeless.
[1]See Gentry Brothers Pty Ltd v. Wilson Brown & Associates Pty Ltd (1992) 8 A.C.S.R. 405.
As I apprehend it, this submission was founded upon the delay of nearly ten years in commencing the proceeding, the lapse of the permit rather than any step being taken in respect of it, the strong evidence (drawn to my attention by Mr Peters in his submissions) as to the plaintiff becoming aware as a consequence of the transmission of documents to it that clearly pointed to the existence of the defects in the land prior to the plaintiff’s purchase).
It appears that some resumption of the attempts to regenerate the land and make it commercially viable commenced some time in 1999. Whilst I take the view that it is not difficult to see some formidable obstacles in the plaintiff’s path, I do not take the view that the plaintiff’s prospects of success are negligible, the difficulties notwithstanding. However, in my view, the jurisdiction to order security has been enlivened by the fact that the plaintiff has no assets other than his right of indemnity from those who stand behind it. I include in my reference to this aspect the argument that was advanced that reliance on the grant of the permit was not a consideration in the transaction or an inducement to enter into the purchase because of the plaintiff’s knowledge as revealed by the documents referred to and that the plaintiff’s having a planning permit was conditional only and depended upon soil testing.[2] However, my discretion is, in my judgment, enlivened by the financial position of the plaintiff.[3] There is, it seems to me, uncontradicted evidence of the impecuniosity of the plaintiff company that enlivens the jurisdiction and, having been enlivened, this is a significant factor to be taken into account in the exercise of my discretion.[4] The proposition is not a difficult one, namely that the Court has been invested with the power in the appropriate case to provide security for the costs which the relevant company is likely to be unable to pay. There has nothing been before me to suggest that the ordering of security for costs would be oppressive or, for that matter, that the directors referred to would not themselves be unable to put up security. It may be that they would not want to chance their money on a risky case but I can draw no conclusions about that at this point of time nor do I. There are many cases in which varying views are expressed including the view that the courts ought not to be unduly reluctant to exercise the power to order security in cases that clearly attract it. I do not see the plaintiff as resisting an order for security here on the ground of stultification and if it was, there is no evidence of any concrete kind to establish the factual basis for that argument to be considered in the exercise of the discretion. I note the statements of Phillips, J.A. in Ariss[5]:
“The argument of stultification means no more than that if an order for security is made the order cannot be met, with the result that the litigation will be brought to a premature end. Bell Wholesale decided only that, if the plaintiff relies upon a want of means to establish that the order cannot be met, the plaintiff must demonstrate that fact by reference, not to its resources (which ex hypothesi must be inadequate if the discretion is called into play), but by reference to the resources of those who will benefit from the litigation and who might reasonably be expected to meet some of the costs.”
The plaintiff’s expert’s estimate of the length of the trial is ten days. According to counsel, to date there are 3050 discovered documents and discovery is not yet concluded. Moreover, it is a case in which the plaintiff relies upon events going back as far as 1862 in order to establish mining activities. It is likely to be an expensive and protracted piece of litigation.
[2]See Condition 6 of the Planning Permit.
[3]See Ariss & Anor v. Express Interiors Pty Ltd (In Liq) [1996] 2 V.R. 507 at 513.
[4]See the statements in Pearson v. Naydler (1977) 1 W.L.R. 899 at 906 and numerous and well known cases such as Newton’s Travel Services Pty Ltd v. A.T.I. (Operations) Pty Ltd (1992) 44 A.L.R. 163 at 165.
[5]Supra at 515.
Since the plaintiff is really suing for the benefit of others, it has a duty to bring forward for the consideration of the Tribunal the facts that would permit the inference that the provision of security would frustrate the litigation or that those who stand behind the litigation are in fact without means.[6] Here the plaintiff has not even produced the Trust Deed and had a notice to produce, not complied with, of 30th March seeking financial records. There is a reasonable conclusion open to me that there are other persons who would benefit if the plaintiff in this case succeeded and no material has been put before the Court concerning security from those persons. No director, shareholder or any other person interested in the plaintiff’s prospective gains from the outcome of the litigation has offered security by way of guarantee or otherwise, a matter which I am entitled to take into account (even in some cases said to be decisive) in considering whether or not to make an order for security for costs.[7] It appears in this case from the material put forward by the defendants that the plaintiff’s only tangible assets is its right of indemnity from the Trust assets, whatever they may be. They may be worthless. Further in this respect it does not appear to me to lie upon the defendants but upon the trustee to establish that there are sources of property held by it or which would be available in the event that the defendant is successful.[8]
[6]See Bell Wholesaler Co. Ltd. v. Gates Export Corporation (1984) 2 F.C.R. 1., Gentry Bros Pty Ltd v. Wilson Brown & Associates Pty Ltd (1992) 8 A.C.S.R. 405.
[7]See K.P. Cable Investments Pty Ltd v. Meltglow Pty Ltd. (1995) 56 F.C.R. 189.
[8]See Epping Plaza Fresh Fruit and Vegetables Pty Ltd v. Bevendale [1999] VSCA 43.
The plaintiff has argued that the delay in making the application is a potent reason in this case to refuse an order. If there were delay, it is sometimes coped with by making a security only for the future but not for the past. In this case, however, the nature of the delay and extent of the delay has to be considered carefully. The second defendant was not brought into the case by service until July of last year. The plaintiff did not provide an affidavit of discovery, despite orders made, until 19th January 2001. The documents were inspected in March when the family trust was revealed. The material gave some indication of what costs have been incurred but, as I emphasize, there is no material to suggest that if the Court were to order security the plaintiff’s action could not be proceeded with. In this case, the paradox may be that if there was inappropriate lateness in the application the plaintiff may have benefited, as had it been ordered earlier the period between the grant of security and trial will be greater. The plaintiff’s material indicates that there has been an expenditure of $58,000 in costs to date, but, without knowing the break-up, some of that must have been related to the joinder of the first defendant and not the second defendant, and arguments about whether the first defendant could be liable. Moreover the plaintiff is still seeking to amend the statement of claim and discovery is incomplete. The plaintiff has never provided further particulars of damage from the date of commencement in 1999 until the middle of the year 2000. Mr Peters argued not only that they have never given particulars of their damage, they still have not given appropriate discovery in relation to it. He argued that all of these matters were strongly in support of his client’s claim that it should be provided with security for costs since the plaintiff is plainly impecunious.
In my view, the delay in applying for security is a long way short of being inordinate and much of it has been due to the plaintiff’s failure to push the action on and permitting it to become bogged down on the issue of two defendants when it ought to have been apparent that the Banyule City Council was the relevant defendant. In my judgment this is an appropriate case in which to order security for costs and I turn then to the question of the appropriate amount. I do not propose to set out in detail what the likely future costs will be. Both sides have filed affidavits about this.
The affidavit of Mr de la Rue estimated the second defendant’s costs and disbursements up to the commencement of trial at $104,660. He also took the view that the additional costs would be occasioned by the plaintiff’s application to amend the statement of claim requiring re-pleading. Extraordinarily enough, he estimated the cost of that as being in the sum of $20,000, a gross over-estimate that in my judgment seriously impugns the estimates he had otherwise made comprising the figure of $104,000. Exhibit RJD1 to that affidavit exhibits an apparently liberal approach to the professional expenses including $2,000 to senior counsel for settling interrogatories drawn by junior counsel ($249), senior counsel’s agreed fee for a mediation of $6,500, $10,000 to provide documents for counsel with the brief. Senior counsel’s fees for conferences, consultations and drawing of settling of submissions over five days is $25,000 and $2,500 for junior counsel. Potentially, disbursements of $51,000, and for professional costs of solicitors $53,000. The affidavit of Juliana Horsfall for the plaintiff supported a security for costs approach as a divided exercise, namely an estimate from the time of obtaining an order to completion of a mediation, and then from the completion of the mediation to trial. On that basis the estimated that the appropriate party/party costs of the second defendant as $14,210 to the completion of the mediation process and from then to the trial a further $24,000, roughly $38,500. Each of the costs experts was critical of the approach of the other. The plaintiff argued that if security were ordered it should only be up until mediation. However, I do not favour a divided approach to security for costs. If mediation were held and were successful, then of any sum ordered by way of security to cover the period from at the present time to trial, some part of it would have to be refunded. If unable to agree, parties could be heard and orders made. However, to divide the process is in my experience uncommon and could lead to the necessity for another hearing on security for costs if the mediation failed. I favour an order for security for costs from the time of the making of this order until the commencement of the trial and, making some allowance for the positions expressed by both costs experts, I propose to order security in the sum of $55,000.
Accordingly on this application, I make the following order that on or before 21st August the plaintiff provide to the second defendant security for its costs to the commencement of the trial in the sum of $55,000 by way of a bank guarantee in favour of the defendant Banyule City Council lodged with the Prothonotary in a form acceptable to the defendant and the Prothonotary.
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