Speedworx Pty Ltd v Bunbury Car Club (Inc) [No 2] - [2008] WASC 298

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: SPEEDWORX PTY LTD -v- BUNBURY CAR CLUB (INC) [No 2] [2008] WASC 298

CORAM: MASTER SANDERSON

HEARD: 9 DECEMBER 2008

DELIVERED : 22 DECEMBER 2008

FILE NO/S: CIV 2347 of 2004

BETWEEN: SPEEDWORX PTY LTD (ACN 070 004 223)
First Plaintiff
DESMOND ALAN FERRIS
Second Plaintiff
JOHN EDWARD GANDOSSI
Third Plaintiff
MICHAEL ANGELO GANDOSSI
Fourth Plaintiff
VINCE GANDOSSI
Fifth Plaintiff
AND
BUNBURY CAR CLUB (INC)
First Defendant
PETER CHARLES NEWMAN
Second Defendant
PHILIP ALAN ROSE
Third Defendant
MARGARET ANN PADMORE
Fourth Defendant
MAXWELL JAMES DUNSTAN
Sixth Defendant
BRIAN MOYLE
Seventh Defendant
HARRY WILLIAM BISHOP
Eighth Defendant
BRIAN LEE
Ninth Defendant
JENNIFER KAY LOWE
Tenth Defendant

Catchwords:

Practice and procedure - Application for security for costs - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 1335

Result:

Security ordered

Category: B

Representation:

Counsel:

First Plaintiff                :     Mr S R Sirett
Second Plaintiff            :     Mr S R Sirett
Third Plaintiff               :     Mr S R Sirett
Fourth Plaintiff             :     Mr S R Sirett
Fifth Plaintiff                :     Mr S R Sirett
First Defendant             :     Mr D F Beere
Second Defendant         :     Mr D F Beere
Third Defendant           :     Mr D F Beere
Fourth Defendant          :     Mr D F Beere
Sixth Defendant            :     Mr D F Beere
Seventh Defendant        :     Mr D F Beere
Eighth Defendant          :     Mr D F Beere
Ninth Defendant           :     Mr D F Beere
Tenth Defendant           :     Mr D F Beere

Solicitors:

First Plaintiff                :     Downings Legal
Second Plaintiff            :     Downings Legal
Third Plaintiff               :     Downings Legal
Fourth Plaintiff             :     Downings Legal
Fifth Plaintiff                :     Downings Legal
First Defendant             :     D F Beere
Second Defendant         :     D F Beere
Third Defendant           :     D F Beere
Fourth Defendant          :     D F Beere
Sixth Defendant            :     D F Beere
Seventh Defendant        :     D F Beere
Eighth Defendant          :     D F Beere
Ninth Defendant           :     D F Beere
Tenth Defendant           :     D F Beere

Case(s) referred to in judgment(s):

Speedworx Pty Ltd v Bunbury Car Club (Inc) [2005] WASC 16

MASTER SANDERSON: This is the defendants' application for further security for costs. This application was brought as part of an application to the case management registrar filed 25 July 2008. The application did not differentiate between the plaintiffs. It simply sought an order that security be provided in an amount of $150,000 by way of payment into court or provision of a bank guarantee. It is to be noted that the first plaintiff is a corporation, and the remaining four plaintiffs are natural persons.
An order for security for costs has already been made in this matter. It was made by Master Newnes (as his Honour then was) on 25 February 2005: Speedworx Pty Ltd v Bunbury Car Club (Inc) [2005] WASC 16. At the time of the making of the order, the present first plaintiff was the only plaintiff. The learned master dealt with the costs application in this way:
The plaintiff did not resist giving security for costs but put in issue the amount claimed by the first defendant by way of security. At the time of the hearing of the application the first defendant had not provided a draft bill of costs and I directed that a draft bill be filed and served. That draft bill was provided on 15 February 2005 and is in an amount of $81,422 exclusive of disbursements. No figure is provided for disbursements.
The plaintiff submitted that the costs claimed were excessive, the first defendant having claimed 10 hours of work by a senior practitioner for the defence and for discovery and inspection respectively. The first defendant had also claimed 100 hours for getting up case for trial and a lump sum of $5,000 for unspecified chambers appearances. The plaintiff submitted that in light of the issues and the limited documentation involved in the case, those claims were well above what would reasonably be required for the proper conduct of the litigation [29] ‑ [30].
In the event, Master Newnes ordered that the plaintiff (that is, the present first plaintiff) provide security in an amount of $40,000 to the first defendant for costs 'up to the entry for trial'. Liberty was given to the first defendant to apply for further security for trial at a later date. Presumably this application, so far as it concerns the first defendant, is brought pursuant to that liberty. At the time the application for security was heard before Master Newnes, the presently designated second to tenth defendants were collectively described as the second defendants. The security for costs order made no mention of the second defendant. It is not clear if the application was refused. But the application of 25 July 2008 was not the first application of the second to tenth defendants. No issue was taken by the plaintiffs on this issue.
The parties filed no less than ten affidavits in support of, and in opposition to, this application. The number of affidavits was not occasioned by the fact that there are five plaintiffs and ten defendants. Rather, it was occasioned because the parties treated the application as a moveable feast. In the end, very little of the material contained in these affidavits is either relevant or necessary for the purposes of this application. In my view, the matter is quite straightforward and relatively easily resolved.
Counsel for the defendants did not make plain either in his written or oral submissions whether the application, so far as it concerns the first plaintiff, was brought under s 1335(1) of the Corporations Act 2001 (Cth). Strictly speaking, there is no need, at least in the application, to highlight whether the Corporations Act is relied upon or whether the application is brought under O 25 of the Rules of the Supreme Court 1971 (WA). But it is to be expected that the submissions would address this question. As the matter proceeded, counsel appeared to rely on O 25. It was only late in counsel's submissions when I put a direct question to him that he made reference to s 1335 of the Corporations Act.
Insofar as the application under O 25 is concerned, and as it relates to all plaintiffs, I would not make an order for security for costs. Rule 1 provides that no order for security should be made based solely on the poverty of a plaintiff or the likelihood that the plaintiff will not be able to pay the costs. Much of the evidence relied upon by the defendants went to establishing that the plaintiffs would not be able to meet a costs order. Even if that were so, it would not justify an order for security for costs.
Rule 2 sets out the grounds for ordering security. None of the plaintiffs fall within these grounds. It is true that r 2 does not limit the general discretion to order security under r 1. As is said in Seaman on Civil Procedure Western Australia [25.0.1]:
The general discretion is to be exercised judicially, meaning that the court has to inquire on the whole how justice will best be served, depending entirely on the circumstances of each particular case.
Counsel for the defendants spent some time analysing the merits of the plaintiffs' action. It was his submission that the plaintiffs' case was highly problematical and likely to fail. Thus, it was submitted that the merits of the claim, a factor to be taken into account in determining whether security ought be ordered under the provisions of r 3(a), favoured the defendants. It was further submitted that under r 3(b), there was limited property in the jurisdiction which would be available to satisfy a costs order. Insofar as there was property available, it was the property of the second plaintiff. The other plaintiffs appeared to have limited means and on their own or taken together it is unlikely that they would have been in a position to meet a costs order.
An analysis of the merits of an action such as this which is complicated and which depends upon findings of fact that can only be made after all the evidence is heard, is, in my view, of limited value. What can be said is that the plaintiffs have an arguable case. That is revealed by a consideration of the pleadings and by reference to the affidavit material filed in opposition to the application. At this point, I am not in a position to conclude other than that the plaintiffs' case is arguable. This factor would not favour making an order for security.
It is true that there is limited property within the jurisdiction against which a costs order could be executed. Just what the value of any property might be is problematical. It depends in part upon the value of certain real estate. However, even on the defendants' case, it would appear that the second plaintiff has assets which would cover any likely costs award. Given that r 1 precludes the making of an order solely on the basis of the poverty of the plaintiffs, it would seem to me that consideration of r 3(2) would not justify an order for security being made.
Accordingly, insofar as this application is based on O 25, in my view it should be dismissed.
Turning then to the first plaintiff and s 1335 of the Corporations Act, it is clear that the first plaintiff could not, if called upon to do so, meet any costs order made against it. That appears to have been conceded before Master Newnes and no new evidence was led in this application which could lead to any other conclusion. That, then, is sufficient to enliven the jurisdiction under s 1335. The remaining question is what amount ought be ordered by way of security and what form that security ought take.
Despite all of the affidavit material lodged in support of this application, there was no draft bill of costs provided. However, there was no serious argument on the part of the plaintiffs that an amount of $150,000 for security was reasonable. The parties anticipate that the trial of this action would last for at least 15 days. On that basis, security in an amount of $150,000, even allowing for the $40,000 which has been lodged to date, would not be unreasonable.
Accordingly, then, I am prepared to order that security in an amount of $150,000 be provided by the first plaintiff. At the conclusion of the hearing, counsel for the defendants put up a proposal for the provision of security otherwise than by payment into court or provision of a bank guarantee. Without going into detail, the offer involved the second plaintiff providing a charge over certain of his real estate assets. This offer had been made by the solicitors for the defendant in correspondence some time before the application was heard. The offer had been rejected. Nonetheless, it was repeated by counsel. If, in the light of these reasons the second plaintiff is prepared to take up the defendants' offer, then that, in my view, will provide the defendants with adequate security. But if the second plaintiff is not prepared to accept the defendants' offer, then the first plaintiff should provide the security in the manner sought in the application.
I will hear the parties as to the precise form of orders and as to costs.