Tinkler Group Holdings Pty Ltd v Winter

[2023] FCA 214

FEDERAL COURT OF AUSTRALIA

Tinkler Group Holdings Pty Ltd v Winter [2023] FCA 214   

File number(s):

NSD 41 of 2022

Judgment of:

JACKMAN J

Date of judgment:

7 March 2023

Catchwords:

 PRACTICE AND PROCEDURE – application for security for costs – whether application premature – whether security should be provided for past costs

Legislation:

Corporations Act 2001 (Cth) s 1335

Federal Court Rules 2011 (Cth) rr 2.42, 19.01

Division:

General Division

Registry:

New South Wales

National Practice Area:

Commercial and Corporations

Sub-area:

Corporations and Corporate Insolvency

Number of paragraphs:

9

Date of hearing:

7 March 2023

Counsel for the Applicants:

Mr B Hancock

Solicitor for the Applicants:

SMB Law

Counsel for the Respondents:

Mr O Jones

Counsel for the Respondents:

Gilbert + Tobin

ORDERS

NSD 41 of 2022

BETWEEN:

TINKLER GROUP HOLDINGS PTY LTD

First Applicant

BENTLEY RESOURCES PTE LTD

Second Applicant

AND:

WILLIAM SCOTT WINTER

First Respondent

MACH ENERGY AUSTRALIA LTD

Second Respondent

ORDER MADE BY:	JACKMAN J
DATE OF ORDER:	7 MARCH 2023

THE COURT ORDERS THAT:

1.Pursuant to r 19.01 of the Federal Court Rules 2011 (Cth), the applicants are to give security for the respondents’ costs in the initial amount of $450,000.

2.The security for costs pursuant to order (1) is to be paid by the applicants into court, pursuant to r 2.42 of the Federal Court Rules 2011 (Cth), by 4 pm on 11 April 2023.

3.Subject to order (4), pursuant to r 9.01(1)(b) of the Federal Court Rules 2011 (Cth), the proceedings are to be stayed until security is given pursuant to order (1).

4.If the applicants have failed to comply with orders (1) and (2) above by 18 April 2023, an application may be made returnable at 9.30 am on 28 April 2023 for an order that the proceedings be dismissed pursuant to r 19.01(1)(c) of the Federal Court Rules2011 (Cth).

5.The respondents have liberty to apply for further security for costs on three days’ notice.

6.The applicants pay the respondents’ costs of, and incidental to, this application.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)

JACKMAN J

1. This is an application for security for costs pursuant to s 1335 of the Corporations Act 2001 (Cth) and r 19 of the Federal Court Rules 2011 (Cth). It is accepted that the applicants are in a financial position such that there is reason to believe that those corporations would be unable to pay the costs of the respondents if successful in their defence of the proceedings. The issues before me are, first, whether it is premature now to order security for costs, and second, the quantum of the order which ought to be made at this stage.

2. As to the issue of prematurity, the applicant companies have foreshadowed an application for a separate question to be tried on liability with questions of relief to be determined later. I am informed that the respondents will resist any such application, and, naturally, the outcome of that application cannot be predicted at the moment. The only certainty in relation to that application is that it will incur costs, and the respondents should be protected by way of an order for security for costs against the possibility or likelihood that such an application will be made.

3. There is also reference in the affidavit of Mr Briggs for the applicants that the applicants wish to call the expert evidence of a costs consultant concerning the issue of quantum. In my view, the applicants have had ample opportunity since 22 February 2023, when Mr Harris’ affidavit for the respondents was filed, to prepare this evidence. There is no basis, in my view, for delaying the determination of a security for costs application because of a desire at some stage in the future to call such expert evidence. Accordingly, I do not regard the application for security for costs as premature. Indeed, I think it is entirely appropriate that the matter of security for costs be decided at an early stage of the proceedings, and I propose to make an order for security.

4. As to the question of quantum of that order, the respondents seek an order in the amount of $900,000, based on estimates of the likely costs which the case will incur until the end of the trial. That estimate has been prepared by Mr Harris, the solicitor for the respondent, a highly experienced litigation solicitor, and, in my view, there is no reason to doubt the cogency of the estimates that he has given at this stage. However, the proceedings are at an early stage.  The costs may ultimately prove to be substantially higher or substantially lower than Mr Harris is able to estimate at this point. It is usual in a security for costs application to order that security be provided in stages as the preparation for trial progresses, and I propose to adopt that approach in the present case.

5. The applicants submit that the initial tranche should be for an amount of $100,000, which would take the proceedings through the hearing of an application for separate questions to be determined and also the stage of discovery. The applicants contend that Mr Harris’ estimates for those stages should be reduced by 50% in contrast to the express evidence by Mr Harris that, in his experience, when costs are assessed on a party/party basis, approximately 70% of a party’s actual costs are recovered.

6. There is no competing evidence to that of Mr Harris which I regard as cogent and persuasive, and I propose to adopt Mr Harris’ estimate of 70% recovery on party/party costs ordered. I do not regard it as appropriate to order security for costs limited to the stage of discovery which the parties will, in all likelihood, reach in two or three months’ time, thus necessitating another application, perhaps disputed as to quantum, as this one is, in the relatively near future. Rather, what I propose to do is to order that half of the current estimate given by Mr Harris of $900,000 be provided by way of security at this stage, reserving liberty to the respondents to apply for further security as they approach a position where that figure of $450,000 may be exceeded.

7. The question arose as to whether the order for security should include past costs. This is not a case where there has been any delay at all on the part of the respondents in seeking security. They were served with the statement of claim on 13 October 2022, but not served with the originating application until 15 November 2022, and Mr Harris wrote a letter seeking security for costs as early as 25 November 2022.

8. In my view, the respondents have conducted themselves with exemplary promptness, and no criticism at all can be levelled against them for any delay. In fact, any delay arose on the part of the applicants themselves who took an inordinate length of time to respond to correspondence from Mr Harris concerning the question of security, and it is not appropriate for the applicants to complain that costs in the meantime have been incurred by the respondents in the conduct of the proceedings. Absent any circumstances of inordinate or unreasonable delay on the part of the respondents, I would not be minded to deduct from their claim for security for costs the element of costs incurred to date.

9. Accordingly, I will make orders as follows: 

   (1)Pursuant to r 19.01 of the Federal Court Rules 2011 (Cth), the applicants are to give security for the respondents’ costs in the initial amount of $450,000.

   (2)The security for costs pursuant to order (1) is to be paid by the applicants into court, pursuant to r 2.42 of the Federal Court Rules 2011 (Cth), by 4 pm on 11 April 2023.

   (3)Subject to order (4), pursuant to r 9.01(1)(b) of the Federal Court Rules 2011 (Cth), the proceedings are to be stayed until security is given pursuant to order (1).

   (4)If the applicants have failed to comply with orders (1) and (2) above by 18 April 2023, an application may be made returnable at 9.30 am on 28 April 2023 for an order that the proceedings be dismissed pursuant to r 19.01(1)(c) of the Federal Court Rules2011 (Cth).

   (5)The respondents have liberty to apply for further security for costs on three days’ notice.

   (6)The applicants pay the respondents’ costs of, and incidental to, this application.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman.

Associate:

Dated:       7 March 2023