Strazdins v ANZ Banking Group Ltd (No 2)

[2017] SASC 43

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

STRAZDINS v ANZ BANKING GROUP LTD (No 2)

[2017] SASC 43

Judgment of The Honourable Justice Hinton

22 March 2017

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS - AMOUNT AND NATURE OF SECURITY

Application for setting the amount of security for costs.

On 25 January 2017 this Court dismissed an appeal from a decision of a Master of this Court who ordered the plaintiff to provide security for costs to the defendant.

The defendant filed an application that the plaintiff provide security fixed in the amount of $369,249.54 and that the action be stayed until the plaintiff provides such security.

The plaintiff contends that they should pay no more than $211,264.00 in security.

Held:

1.       The plaintiff is ordered to pay into Court the sum of $270,000 in security for the costs of the defendant.

2.       If the plaintiff fails to comply the action shall be stayed until further order.

Proude v Visic (No 3) (2012) 118 SASR 444; Saint-Gobain RF Pty Ltd v Maax Spa Corporation Pty Ltd [2004] VSC 335; Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497, considered.

STRAZDINS v ANZ BANKING GROUP LTD (No 2)
[2017] SASC 43

Civil: Application

HINTON J.

1. On 10 May 2016 her Honour Judge Bochner handed down her judgment on an application seeking orders that the plaintiff in this matter provide security for costs. Judge Bochner granted the application but did not set the amount of security to be paid into court.

2. On 7 June 2016 the plaintiff filed a notice of appeal against the order of Judge Bochner. On 1 July 2016 that appeal was heard before me. On 25 January 2017 I dismissed the appeal.[1]  The defendant has now applied for me to set the amount of security that the plaintiff must pay into court. In addition the defendant applies for an order that the matter be stayed until such time as the amount set for security is paid into court.

   [1]    Strazdins v ANZ Banking Group Ltd [2017] SASC 3.

3. In Proude v Visic (No 3) Blue J observed that “[w]here security for costs is ordered, it is frequently ordered up to the first day of trial and the question is revisited at the commencement of trial.”[2] The parties agreed that I should adopt this approach. The parties also agreed that the power to determine the quantum of any amount to be paid into court in security for costs, like the power to order that security for costs be paid, was discretionary.

   [2] (2012) 118 SASR 444 at [176].

4. In support of the application made before Judge Bochner the defendant filed an affidavit sworn by Lisa Anna Calabrese on 11 February 2016. In that affidavit Ms Calabrese deposed that in her opinion the defendant’s costs to the end of the first day of trial would be in the order of $255,000. That estimate sum was arrived at having regard to the anticipated significant tasks to be undertaken by counsel and the solicitors instructing counsel in preparing the matter for trial having regard to the pleadings. 

5. That estimate was made without knowing that the plaintiff would appeal Judge Bochner’s order. Further, a third statement of claim has since been filed, as has an application that the matter be referred to mediation and an application that the matter be transferred to the Supreme Court of the Northern Territory.

6. Additionally, a third party claim has been instituted by the defendant seeking indemnification from eight third parties for any sum that the plaintiff recovers in the substantive proceedings from the defendant that the defendant recovered from DPNW Pty Ltd and which was secured by the third parties. That claim has prompted the third parties to institute proceedings themselves counterclaiming against the plaintiff. I mention these matters to discount them; the order Judge Bochner made for security for costs did not include security for costs likely to be incurred by the defendant in prosecuting its third party claim nor for work done by the defendant in addressing issues arising from the counterclaims. I make plain that I have not taken into account in setting the amount to be paid in security work likely to be done in relation to the third party claim and the counterclaim.

7. In view of the additional work occasioned by the filing of the third statement of claim and the applications that the matter be referred to mediation and be transferred to the Northern Territory, the defendant filed an affidavit sworn by James Brazel Jarvis on 2 March 2017 updating the estimate of costs to be incurred by the defendant up until the first day of trial. Mr Jarvis estimates those costs to be $369,249.54 and the defendant seeks an order for security in that amount.

8. Since handing down my judgment in January 2017 the parties have attempted to agree the amount to be paid into court without success. As mentioned the defendant assesses the appropriate amount as $369,249.54. The plaintiff’s position is that the appropriate amount is no more than $211,264.00.

9. In Saint-Gobain RF Pty Ltd v Maax Spa Corporation Pty Ltd Habersberger J said:[3]

   … In calculating an amount to be ordered for security for costs the Court does not set out to give the applicant a complete and certain indemnity for costs. The amount ordered to be provided is, after all, only an estimate of the probable costs which the applicant will incur as far as they can be ascertained. Uncertainties, such as the possibility that the proceeding may settle, have also to be taken into account by way of a discount.

   (footnotes omitted).

   [3] [2004] VSC 335 at [71]; Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 19) (1995) 134 ALR 187 at 199 (Lindgren J); Brundza v Robbie & Co (No 2) (1952) 88 CLR 171 at 175 (Fullagar J).

10. As an estimate determined upon predicted future events any assessment of an amount to be paid in security for costs will necessarily lack mathematical precision. This being so, the authorities indicate that the discretion to set an amount should not be exercised in a manner reflecting the care and attention to detail that a Master would bring to a bill of costs subject of a taxation.[4] In Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd[5] French J, as he then was, referred to the authority of Pearson v Naydler[6] and stated that the fixing of an amount to be paid as security for costs involved a process of estimation embodying “to a considerable extent, necessary reliance on the “feel” of the case”.[7] That said, the discretion must be exercised judicially on the basis of evidence taking into account all relevant matters.

    [4]    Mineral Crushing Services (WA) Pty Ltd v Edna May Operations Pty Ltd (No 2) [2016] WASC 184 at [21] (Martino J); Crawley Investments Pty Ltd v Noble Group Ltd (No 2) [2015] WASC 16 at [28] (Edelman J); Quadrant Constructions Pty Ltd v Morgan Smith Barney Australia Pty Ltd [2009] VSC 455 at [56] (Forrest J); Save the Ridge Inc v Commonwealth of Australia [2004] FCA 1289 at [24] (Emmett J).

    [5] (1987) 16 FCR 497.

    [6] [1977] 1 WLR 899 at 902.

    [7] (1987) 16 FCR 497 at 515.

11. Generally an application for security for costs may be based upon an estimate of costs made by an experienced practitioner. Such estimate may be broad, but should have sufficient specificity so as to reveal to the opposing party and to the Court not only the matters upon which it is based, but also the cost that has been assigned to each of those matters. It is unnecessary that it be in a form akin to a bill in taxable form.[8]

    [8]    Rolfe v Investec Bank (Australia) Ltd [2013] VSCA 293 at [52] (Osborn and Santamaria JJA).

12. In this case the evidence relied upon is contained in the affidavits of Ms Calabrese and Mr Jarvis, experienced solicitors, to which I have referred. Exhibited to each of their affidavits is a schedule setting out the anticipated tasks to be done, the hours it is expected will be spent on each task, by whom the work is expected to be done and the amount per hour or per page charged for the work. The schedule exhibited to Mr Jarvis’ affidavit is an update of that exhibited to Ms Calabrese’s affidavit and assesses costs on the basis of a trial lasting 15 days and not 10 as Ms Calabrese had previously thought likely. Mr Jarvis also advises that actual costs and disbursements incurred by the defendant to date that he considers would be recoverable under an order for costs on a party/party basis amount to $68,332.00. That sum is included in the $369,249.54 that the defendant seeks be paid into court.

13. The schedule exhibited to Mr Jarvis’ affidavit sets out the anticipated costs to be incurred for the following work:

    ·     Cross-Vesting Application affidavit material and outline of submissions

    ·     Cross-Vesting Application Hearing

    ·     Perusal of Plaintiff’s Disclosure

    ·     Photocopying Plaintiffs’ Disclosure

    ·     Perusal of Plaintiffs’ Additional Disclosure limited to the matters raised in the Defence to the Third Statement of Claim filed by the First, Third and Eighth Parties (Additional Disclosure)

    ·     Photocopying Plaintiffs’ Additional Disclosure

    ·     Perusal of First, Third and Eighth Third Parties’ Disclosure limited to the matters raised in the Defence to the Third Statement of Claim filed by the First, Third and Eighth Third Parties

    ·     Photocopying First, Third and Eighth Third Parties’ Disclosure limited to the matters raised in the Defence to the Third Statement of Claim filed by the First, Third and Eighth Third Parties

    ·     Examining of Second, Fourth, Fifth and Sixth Third Parties’ Disclosure limited to the matters raised in the Defence to the Third Statement of Claim filed by the Second, Fourth, Fifth and Sixth Third Parties

    ·     Photocopying Second, Fourth, Fifth and Sixth Third Parties’ Disclosure limited to the matters raised in the Defence to the Third Statement of Claim filed by the Second, Fourth, Fifth and Sixth Third Parties

    ·     Perusal of Defendant’s documents for purposes of disclosure, drawing lists of documents

    ·     Interviewing witnesses

    ·     Drawing witnesses statements

    ·     Review of Tender Books and liaising with plaintiffs’ solicitors

    ·     Preparing Brief for Counsel

    ·     Preparation for Trial

    ·     Attending the first day of Trial

    ·     Ancillary directions hearings and liaising with opposing solicitors, including incidental correspondence and telephone calls

    ·     Expert forensic accounting report

    ·     Transcript fees

    ·     Miscellaneous photocopying

14. The plaintiff contends that no additional disclosure from him is likely and no present need arises for the obtaining of an expert report. Accordingly he does not agree that the amount for security should include provision for these things.  As to the remaining tasks he disputes the amount of work each will require. The table below sets out the tasks contained in Mr Jarvis’ estimate on which the parties disagree.

Negotiated Cost Differences
Item	Defendant	Plaintiff	Variance
1	Costs incurred to 6 February 2017	$68,332	$45,000	$23,332
2	Perusal and photocopying of Plaintiff’s Disclosure [Senior Counsel 5 hrs : Solicitor 1500 pages : Copying 1500 pages]	$32,400	$20,000	$12,400
3	Perusal and photocopying of Plaintiff’s Additional Disclosure limited to matters raised in the Defence to the Third Statement of Claim filed by the Third Parties [Senior Counsel 2 hrs : Solicitor 250 pages : Copying 250 pages]	$5,925	$0	$5,925
4	Perusal of Defendant’s documents for purposes of disclosure, drawing list of documents [Senior Counsel 2 hrs : Solicitor 10 pages : Copying 3000 pages ]	$60,780	$15,000	$45,780
5	Interviewing witnesses and drawing witness statements [Senior Counsel 22 hrs : Solicitor 12 hrs : Solicitor 40 pages]	$17,102	$10,000	$7,102
6	Review of tender books and liaising with client solicitors [Senior Counsel 6 hrs : Solicitor 6 hrs : Solicitor 3000 pages]	$12,330	$8,000	$4,330
7	Preparation for trial [Senior Counsel 105 hrs : Solicitor 195 hrs]	$119,398	$78,300	$41,098
8	Expert forensic accounting report	$15,000	$0	$15,000
16	Total	$331,267	$176,300	$154,967

1. In my view the trial of the issues in dispute between the plaintiff and defendant will take in the region of 15 days. Bearing in mind the history of this litigation I am inclined to agree with the plaintiff that there is unlikely to be much in the way of additional disclosure. Confining myself to the issues in dispute between the plaintiff and defendant, I do not anticipate a large number of witnesses, do anticipate lengthy cross-examination involving the interrogation of a considerable number of documents, and do expect a tender bundle of considerable size. That suggests significant preparation will be required. On my understanding of the pleadings I could not say that the services of an expert forensic accountant are unlikely to be needed.

2. I bear in mind that I have ordered that this matter proceed to mediation. The authorities suggest that I may discount the sum I might otherwise order to account for the possibility of the matter resolving. I have done so.

3. I also bear in mind that any amount ordered to be posted for security can be revisited by the Court at any time during the proceedings.

4. Applying the broad rush approach to which I have referred above, and reminding myself that my task is not to give the defendant “complete and certain” indemnification for costs, and having regard to the material provided to me in the affidavits of Ms Calabrese and Mr Jarvis, I consider it appropriate that the plaintiff pay into Court as security for the defendant’s costs the sum of $270,000.00.

5. Accordingly I order that:

   1.   The plaintiff pay into court the sum of $270,000.00 being security for the costs of the defendant.

   2.   If the plaintiff fails to comply with order 1 by the close of business on 24 April 2017, Action No. 858 of 2011 shall be stayed thereafter and until further order.

   3.   Costs of the application reserved.

   4.   Liberty to apply.