Premier Events Group Limited v Beattie
[2015] NZHC 2428
•6 October 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-003178 [2015] NZHC 2428
BETWEEN PREMIER EVENTS GROUP LIMITED
Plaintiff
AND
MALCOLM JAMES BEATTIE First Defendant
ANTHONY JOESPH REGAN Second Defendant
CT NZ GROUP LIMITED (previously known as CARTAN GLOBAL LIMITED) Third Defendant
PARNELL PARTNERS GROUP LIMITED
Fourth Defendant
CARTAN GLOBAL LLP Fifth Defendant
CARTAN TOURS, INC Sixth Defendant
Hearing: 15 September 2015 Appearances:
Z Kennedy and J Harrop for the Plaintiff
J Eichelbaum for the First to Fifth Defendants
R Rose for the Sixth DefendantJudgment:
6 October 2015
JUDGMENT OF WOOLFORD J [As to security for costs]
This judgment was delivered by me on Tuesday, 6 October 2015 at 11:00 a.m. pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
PREMIER EVENTS GROUP LIMITED v BEATTIE & ORS [2015] NZHC 2428 [6 October 2015]
Introduction
[1] This is a proceeding of some antiquity. It does not currently have a trial date. I have before me an amended application, dated 17 June 2015, by the first to fifth defendants for:
(a) Security for costs;
(b) An enquiry into the plaintiff’s funding arrangements;
(c) An order that $500,000, paid into Court in 2010, be returned to the first to fifth defendants; and
(d)An order that the proceedings be struck out or stayed until all costs awards made against the plaintiff or its privies in the Employment Court are paid in full.
[2] I also have before me an application, dated 26 June 2015, by the sixth defendant for:
(a) Additional security for costs;
(b)An order that the plaintiff produce its litigation funding agreement for a decision about approval of the litigation funder and the funding agreement’s terms;
(c) An order that the plaintiff produce its contingency fee agreement for review; and
(d)An order that the proceedings be stayed until the Court approves the plaintiff’s litigation funding arrangements and the plaintiff gives security for the specified sum.
[3] At the outset of a one day hearing of the applications on 15 September 2015, it was agreed I should deal just with security for costs and leave the other issues for a
later date, if they were to be pursued. Counsel for the first to fifth defendants also filed a memorandum seeking leave to file an updating affidavit rebutting new points raised by the plaintiff, but I decline to grant leave and have not taken the draft updating affidavit into account.
Factual background
[4] On 27 May 2010, the plaintiff, Premier Events Group Limited (Premier Events) issued substantive proceedings against two of its former directions, Messrs Beattie and Regan, and three corporate entities they had established, as the first to fifth defendants. Premier Events alleges breaches of fiduciary duty against Messrs Beattie and Regan. As against Mr Beattie, it also alleges a breach of a restraint of trade provision. As against the third, fourth and fifth defendants, it alleges misuse of confidential information.
[5] On 23 November 2010 orders were made by consent, as part of a negotiated agreement between the parties, to settle a number of interlocutory applications which were then before the Court. Premier Events abandoned its application for interim relief in return for the first to fifth defendants agreeing to pay $500,000 into trust and provide discovery on an ongoing basis.
[6] The plaintiff subsequently successfully applied to join a United States company as the sixth defendant. As against the sixth defendant, it alleges knowing receipt, dishonest assistance and an unlawful means conspiracy.
[7] Independent of the High Court proceedings, Premier Events filed a claim in the Employment Relations Authority against Messrs Beattie and Regan alleging breaches of restraint of trade provisions. Separate and additional claims were made against Mr Beattie in relation to alleged breaches of his employee obligations of confidentiality and good faith. The claims were transferred to the Employment Court and heard over 12 days, ending in mid-May 2012.
[8] In March 2013 the High Court proceedings were set down for a 10 day hearing in April 2014. However, on 22 October 2013, Ellis J stayed the proceedings pending the release of the Employment Court decision.1
[9] On 10 December 2013, on an outstanding application by the sixth defendant, Wylie J ordered the plaintiff to pay security for costs on an interim basis in the sum of $75,000 in favour of the sixth defendant.2 He also reserved leave for the sixth defendant to make application for additional security, in the event that it considered additional security was required as a result of fees paid or payable to expert witnesses.
[10] The Employment Court decision was released on 17 December 2014.3 The Employment Court found that Mr Beattie had acted against the best interests of the plaintiff, and for his own benefit, by misusing confidential information to secure for himself the benefit of a joint venture with the sixth defendant. The Employment Court found, however, that Mr Beattie had not misappropriated four other clients during the currency of his employment contract with the plaintiff.
[11] The Employment Court decision was restricted to liability and liquidated damages. General damages and costs have still to be determined. On 14 May 2015, on Premier Events’ application, the Employment Court stayed the determination of remedies pending the determination of the High Court proceedings in order to preserve Premier Events’ right to elect remedies in either the Employment Court or the High Court.4
[12] In the Employment Court, the plaintiff was ordered to pay $12,000 plus interests and costs (later fixed at $10,000) to Mr Beattie for the unjustified reduction in his salary over the nine month period. Premier Events was also ordered to pay
$10,000 as a contribution towards the costs of another employee, Ms Panapa.
Finally, another company, BA Partners Limited (in liquidation and receivership) was
1 Premier Events Group Ltd v Beattie [2013] NZHC 2755.
2 Premier Events Group Ltd v Beattie [2013] NZHC 3299.
3 Premier Events Group Ltd v Beattie [2014] NZEmpC 231.
4 Premier Events Group Ltd v Beattie (No 6) [2015] NZEmpC 63.
ordered to pay a contribution to Mr Regan’s costs of $15,000. Ms Panapa’s costs of
$10,000 have been paid, but the other sums have not.
[13] On 25 May 2015, Ellis J lifted the stay against the plaintiff and the first to fifth defendants.5 Outstanding matters of res judicata and estoppel arising from the Employment Court’s decision of 17 December 2014, are set down for hearing before her on 13 October 2015. It is accepted that the case will have to be repleaded following her decision.
Funding arrangements
[14] Premier Events is impecunious, but nonetheless has been able to continue with the High Court proceedings on the basis of a conditional fee agreement with its lawyers, Minter Ellison Rudd Watts (Minter Ellison), and a term loan agreement with Wairarapa Vinters Limited. Premier Events has apparently paid no legal fees since June 2010. Under the conditional fee agreement, if Premier Events is successful, any funds received are to be applied as follows:
(a) First, in satisfaction of any remaining liability of the plaintiff to the
BNZ Bank up to the sum of $280,000;
(b)Second, to refund all expert accounting and other expert witness fees and third party disbursements incurred by the plaintiff to the party that paid the disbursements;
(c) Third, in satisfaction of Minter Ellison’s legal fees on a time and
attendance plus uplift for an unknown (redacted) percentage; and
(d)Fourth, if there are any excess funds, such funds are to be dealt with in accordance with the written instructions of Premier Events.
[15] If Premier Events is unsuccessful in the proceedings, then it remains responsible for disbursements. Consequently, under the conditional fee agreement it
5 Premier Events Group Ltd v Beattie [2015] NZHC 1129.
is principally the BNZ Bank (to the extent of the remaining borrowings) and Minter
Ellison that benefit from any recovery against the defendants.
[16] Premier Events has also entered into a term loan agreement with a company associated with a friend of Premier Event’s sole director – Wairarapa Vinters Limited. It has lent $75,000 to Premier Events, which has enabled the provision of security in favour of the sixth defendant. The interest rate is 20 per cent and the loan is repayable upon demand, provided demand will not be made until settlement of the High Court proceedings or two years from the interest commencement date (3 March
2015), whichever is the sooner. The loan is unsecured.
[17] In contrast, the first to fifth defendants have paid, by their estimation, the sum of $573,000 in respect of the Employment Court proceedings. This sum is in addition to the $500,000 which has been paid into the trust account of Minter Ellison. Further, the awards made in favour of Messrs Beattie and Regan in the Employment Court have not been paid by Premier Events or BA Partners Limited (in liquidation and receivership). Premier Events says that it has not paid the sum awarded to Mr Beattie because it has rights of set-off against him, and that it has no control over BA Partners Limited, which is in liquidation and receivership.
First to fifth defendants’ application for security for costs
[18] The purpose of security is to provide a successful defendant with some insurance against the risk of it being unable to enforce a costs order. The principles are well known. The Court has a broad discretion.
[19] While there is no formal checklist, the following factors are often seen as important in informing the exercise of the Court’s discretion:6
(a) The strength and weaknesses of the plaintiff’s claim.
(b)Whether an award of costs is likely to prevent the plaintiff from pursuing its claim.
6 See, for example, Highgate on Broadway Ltd v Devine [2012] NZHC 2288, [2013] NZAR 1017 at [19]–[25].
(c) Whether there is a reasonable probability that the plaintiff’s
impecuniosity has been caused by the defendant’s actions.
(d)Whether the defendant delayed in bringing the application for security for costs and the consequences of any delay.
[20] As to the strength and weakness of Premier Events’ claim, according to the first to fifth defendants, it is evident that the Employment Court’s decision has substantially weakened it’s current claim. The only third party entity in relation to which Mr Beattie’s conduct gave rise to a finding that he had breached any duties was the sixth defendant. The Employment Court found that there was no basis for claims for breach of contractual restraints or breach of statutory obligations in relation to any other parties, such as the New Zealand Olympic Committee, and other clients of Premier Events. As for possible damages, the sixth defendant submits that there remains no evidence that it received any of Primer Events’ property or earned any profits which Premier Events would otherwise have earned from the Rugby World Cup or the 2012 London Olympics. Yet Premier Events maintains its claim for around $12 million. Mr Regan has estimated that the gross revenue derived from dealings with the sixth defendant amounted to approximately
$500,000, and deductions would take the net sum at stake down to a negligible amount.
[21] On the other hand, Premier Events submits that it succeeded in the Employment Court on four out of five causes of action against Mr Beattie. It also emphasises the different and much wider jurisdiction of the High Court. Noting that Wylie J identified some difficulty with an account of profits claim, Premier Events has indicated that it will re-plead and claim equitable damages in the alternative. It submits that the measure of loss that was suffered can be determined by reference to a projected profit forecast prepared by Mr Regan, and presented to the sixth defendant for the purpose of the anticipated joint venture with Premier Events. Premier Events submits that this will be a sum significantly in excess of the profit which it believes the sixth defendant earned in this case.
[22] It is difficult to assess the merits of the claim and its prospects of success when Premier Events is committed to re-pleading its case. In those circumstances, I cannot say that the strength of Premier Events’ case is a significant factor against an order for the giving of security. There are certainly weaknesses with the pleaded account of profits claim.
[23] As to whether an award of costs is likely to prevent the claim being pursued, Premier Events strongly submits that it will not be able to proceed with its claim if an award is made. The same submission was made to Wylie J. Wylie J said that it was clear from material filed in Court that Premier Events’ sole director, Mr Gill, had previously backed the company, whether directly or through other entities controlled by him.7 He provided a personal undertaking as to damages when Premier Events applied for interim orders. Moreover, Mr Gill was involved with and controls a number of other companies including BrandAdvantage Measurement and Consulting
Limited. Wylie J said that it appeared from memoranda filed on Premier Events’
behalf that that company has in the past agreed to meet Premier Events’ costs.
[24] Accordingly, Wylie J held:
[29] In my judgment it is reasonable to conclude that an award for security of costs can be met, either by Mr Gill personally or by a related party, such as BrandAdvantage Management [sic] and Consulting Limited. This litigation has been running for some considerable time. Related litigation has been running in the Employment Court and other litigation involving Mr Gill and his business interests has gone to trial in this Court. I do not consider that an award for security against [Premier Events] is likely to have the effect of preventing it from advancing its claim against [the sixth defendant].
[25] Mr Gill has now filed an affidavit dated 10 July 2015 in which he says that Premier Events has had significant difficulties in securing funding, but that it was eventually able to borrow funds to pay security for costs ordered by Wylie J. He also says that regrettably, if further security for costs is imposed, the strategy by Messrs Beattie and Reagan to prevent Premier Events’ claims being brought to determination will in all likelihood succeed as Premier Events will not be able to pay or borrow further funds. Mr Gill states that he is also unable to advance funds to Premier Events to enable it to do so.
[26] In a subsequent affidavit dated 21 August 2015, Mr Gill discloses that the property in which he resides is not owned by himself, but by the trustees of the Robert Gill Trust. He says that he is a trustee of the trust together with John Gill and Trustee Management Limited. He further says that he has asked the other trustees to support Premier Events’ action, but they have advised him that no such support will be provided. Mr Gill annexes a certificate of title for the property and a rates and property search for the property. They disclose that the property has a capital value of $5 million and appears to be currently unencumbered.
[27] It appears that another trust associated with Mr Gill, which is identified in the conditional fee agreement with Minter Ellison as the R Gill Trust, owns 80 per cent of the shares in Premier Events. The trustees of the R Gill Trust are Robert Gill, John Gill and a corporate trustee B & M Trustees NZ Limited. The trust deeds for the Robert Gill Trust and the R Gill Trust are not available and accordingly it is not known who the beneficiaries of the two trusts are.
[28] The R Gill Trust appears to be a substantial shareholder in a number of other companies in addition to the plaintiff, including but not limited to Corporate Partnership Group Limited, BrandAdvantage Limited, BrandAdvantage Measurement and Consulting Limited and CPG York Limited. Mr Gill has not disclosed the extent and value of the R Gill Trust’s shareholding in other companies. Although the R Gill Trust will benefit from a successful outcome of the litigation, Mr Gill does not aver that the R Gill Trust is impecunious.
[29] In those circumstances, I note the comments of the Full Court of the Federal
Court of Australia in Bell Wholesale Co Pty Ltd as follows:8
In our opinion a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors, or, as in this case, beneficiaries under a trust) are also without means. It is not for a party seeking security to raise the matter; it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts.
8 Bell Wholesale Co Pty Ltd v Gates Export Corp (1984) 52 ALR 176 at pp 179-180.
[30] Mr Gill has not proved the necessary facts. I therefore intend to adopt the approach taken by Wylie and agree with his view that it is possible to conclude that an award for security for costs can be met by Mr Gill personally or by a related party.
[31] The question whether there was a reasonable probability that Premier Events’ impecuniosity has been caused by the actions of Mr Beattie and Mr Regan was also considered by Wylie J. His Honour did not accept the argument that there was a clear causative link between the actions of the defendants and Premier Events’ losses resulting in its impecuniosity. Wylie J said it was clear that Premier Events was impecunious before the matters in dispute arose.9 An example cited by Wylie J is that, on 5 July 2009, Mr Gill notified Mr Regan that the plaintiff had run up huge losses and that it could not fund the business going forward without finding new
capital or loans urgently. He advised that the group was moving to a four day week and that he and Mr Beattie had to make significant cuts to their salaries.
[32] Premier Events takes issue with the finding of Wylie J and points to the findings of the Employment Court, in which the Court found that both Messrs Beattie and Regan considered that the company’s fortunes had improved after September 2009.10 Premier Events also points to an agreement reached with Australia Post, with a total value of AU$2,486,000, which was suspended by Australia Post in February 2010 just before Messrs Beattie and Regan left Premier Events’ employment. On the other hand, the first to fifth defendants point to correspondence from the company’s solicitors in April 2010,11 after both Mr Beattie and Mr Regan had left the company, that Premier Events was in no better position than it was when the reductions in salary were agreed. Furthermore, the first to fifth defendants submit that the substantial failure of Premier Events’ claims in the Employment Court makes it likely that there was no more than a de minimis contribution to Premier Events’ financial woes.
[33] Having reviewed the competing submissions and materials, I am of the view, for the purposes of this application only, that any unlawful actions of Mr Beattie and
Mr Regan were not significantly causative of Premier Events’ losses. The company
9 Premier Events Group Ltd v Beattie, above n 2, at [32].
10 Premier Events Group Ltd v Beattie, above n 3, at [80] and [87].
was making substantial losses before any unlawful actions by Mr Beattie. Furthermore Premier Events was unlikely to retain many clients if Mr Beattie was to leave its employment. In that regard I note the following findings of the Employment Court:12
[349] However, I consider that on the balance of probabilities, [Premier Events] would not have retained a proportion of its previous business following Mr Beattie’s departure, even if he had acted properly and not in breach of his contractual and other lawful obligations to his employer although still resigning when he did. Such were the strength of Mr Beattie’s personal relationships with many clients and their senior management, and their concomitant disconnection from [Premier Events] and (especially) Mr Gill, that many of those clients would not have remained with [Premier Events] in the event of compliance with his obligations by Mr Beattie and a lawful departure from [Premier Events] by him. That finding also will affect damages that may be recoverable against Mr Beattie consequent upon his breaches whilst still employed by [Premier Events].
[350] [Premier Events’] financial losses in these circumstances are probably not as substantial claimed, although their extent will be a matter for decision at a later time and will be dependent upon the further evidence called about them.
[34] I again agree with Wylie J that there is a lack of causative link between any unlawful actions of the defendants and Premier Events’ losses resulting in its impecuniosity.
[35] Finally, as to whether the first to fifth defendants delayed in bringing the application for security for costs and the consequences of any delay, it is evident that the delay has been substantial. Premier Events submits that the first to fifth defendants were served with the proceedings on or about 27 May 2010, and knew from the outset that Premier Events was impecunious. The conditional fee agreement was also brought to the Court’s attention by way of a memorandum of counsel on behalf of Premier Events in 2002. Premier Events submits that the delay in bringing the application has prejudiced it. The company has expended substantial sums, including in deferred legal costs and payment of security for the sixth defendant’s costs, in order to progress the proceeding only to be met at this late stage by an application for security by the first to fifth defendants.
[36] On the other hand, the first to fifth defendants submit that the proceeding was stayed for 20 months from October 2013 to March 2015. When the 20 month stay is taken into account, the first to fifth defendants’ application has been made at a similar time to that of the sixth defendant as applications were not permissible without leave during the stay period. Ordinarily, one would not make such an application during the currency of a stay order.
[37] Furthermore, the first to fifth defendants submit that this is not a case where a trial date has been allocated and a last minute application made. The proceeding is not close to trial and there can be no prejudice claimed, particularly given the fact that all legal fees since 2010 have not been payable by Premier Events itself.
[38] In his judgment on the sixth defendant’s application for security for costs, Wylie J noted:13
[37] Here, I consider that there has been some delay. Nevertheless, in the circumstances of this case, I do not consider that that delay is material, and there is nothing to suggest that there is prejudice to [Premier Events]. Indeed, the proceedings are currently stayed pending receipt of a decision from the Employment Court potentially relevant to the matters in issue between the parties.
[39] Although the delay has been substantial, I too am of the view that it is not a significant factor against an order for the giving of security. There is no trial date and the plaintiff intends to re-plead its case. Any such re-pleading will mean that discovery will have to be reassessed. In fact, on 17 June 2015 Minter Ellison wrote to the solicitors acting for the sixth defendant seeking further and better discovery. That is currently being resisted by the sixth defendant until after the decision given by Ellis J on res judicata and estoppel issues, and Premier Events’ case is re-pleaded.
[40] The sixth defendant has also estimated the scale costs for all matters since Wylie J’s judgment to be $15,974, which is relatively insignificant given the costs already expended by the date of His Honour’s judgment. (In the case of the first to fifth defendants, $573,000 just for the Employment Court proceedings). Of significance also is the conditional fee agreement entered into by the plaintiff which
records Premier Events has only ever paid for legal services provided prior to
15 June 2010 in the sum of $71,527.50.
[41] Standing back and looking at the overall circumstances, because Premier Events is an impecunious limited liability company, it is currently immune to any risk arising from the proceeding. It has expended just $71,527.50 in legal fees. It is not liable for any further costs except disbursements. There are also obviously parties other than Premier Events who will benefit if Premier Events is successful in its prosecution of the proceeding, but they too are currently immune to any risk arising from the proceeding. On the other hand, the first to fifth defendants have expended well over $1 million and, if successful in their defence of the proceeding, will recover none of their costs. They also continue to incur substantial costs, unlike Premier Events.
[42] There is, in my view, a misallocation of risk such that an order for security for costs is appropriate and necessary in this case. The first to fifth defendants estimated scale costs for a three week hearing is $152,904. In addition to an order for security of scale costs, they seek the sum of $35,000 for expert witness fees. They have made no allowance for the myriad of interlocutory steps including the application for stay, the application for the lifting of the stay, this application itself, the hearing regarding res judicata and estoppel issues currently scheduled for next month, the expected re-pleading of the case and any further discovery to be sought.
[43] The first to fifth defendants have, however, sought 30 days of additional preparation time amounting to $66,900 and for second counsel costs. The complexity of the proceeding is such that second counsel is likely to be necessary.
[44] It seems to me that the sixth defendant’s estimate of past and expected future scale costs of $121,739.50 is more realistic. The sixth defendant makes no claim for
30 days of additional preparation time, but does make allowance for some of the myriad of interlocutory steps.
[45] I therefore set the sum to be paid as security for costs at $120,000 in favour of the first to fifth defendants, to which I add the sum of $30,000 for expert
accounting evidence. Mr Regan has deposed that the first to fifth defendants were charged that sum for expert accounting evidence in the Employment Court and they have been given to expect that they will be charged a similar sum if the matter proceeds to trial in the High Court.
Sixth defendant’s application for increased security for costs
[46] Wylie J ordered Premier Events to pay security for the sixth defendant’s costs in the sum of $75,000. He also reserved leave to the sixth defendant to apply for further security “in the event that it considers additional security is required as a result of fees paid or payable to expert witnesses.”14
[47] The sixth defendant now seeks additional security of $200,000, on account of changed circumstances which includes estimated expert fees if the proceeding proceeds to trial.
[48] Wylie J ordered security for costs in the sum of $75,000 when the total of scale costs for all anticipated steps in the proceeding (without expert fees) was
$86,067.50. Scale costs for all anticipated steps in the proceeding is now
$121,739.50, to which the sixth defendant adds the cost of re-pleading and discovery (an estimated $38,960) and the cost of expert witnesses (an estimated $120,750), making a total of $281,449.50. As $75,000 has already been ordered, the sixth defendant seeks an additional $200,000 as security.
[49] It is accepted that the Court has inherent jurisdiction to review, set aside or vary an order for security if there has been a material change of circumstances or the interests of justice so require.15
[50] The sixth defendant submits that there has been a material change of circumstances in three respects. Firstly, Premier Events has changed its approach, the proceeding is now more complex and it’s case has less merit. The sixth defendant submits that neither the defendants nor the Court anticipated that Premier
Events would seek a stay in the Employment Court after receipt of its long-awaited
14 Premier Events Group Ltd v Beattie, above n 2, at [44].
15 O’Malley v Garden City Helicopters Ltd (1994) 8 PRNZ 182 (HC).
decision. Furthermore, the Employment Court’s decision has created a number of res judicata and estoppel issues, and following Ellis J’s decision the plaintiff and all of the defendants will likely need to re-plead their cases. Further discovery and other interlocutory issues will inevitably arise.
[51] Secondly, there has been a change to Premier Events’ funding arrangements. At the time of the initial security hearing, the sixth defendant knew that Premier Events had a conditional fee agreement with Minter Ellison, but did not know the terms of that agreement or that the agreement covered multiple proceedings / disputes. Furthermore, the sixth defendant submits that neither the parties nor the Court contemplated that any security ordered would be paid by an unrelated third party with no interest in Premier Events. It is submitted that the funding arrangements substantially alter the balance between Premier Events and the defendants such that the Court should order additional security. This includes the fact that Minter Ellison now has an interest in and/or an incentive to obtain a “successful outcome” which is now much greater than it was in December 2013.
[52] Thirdly, there has been a change in the daily rates for scale costs. The initial estimated scale costs were based on a daily rate of $1,990. The daily scale rate increased from 1 July 2015 to $2,230, ie an increase of $240 a day or approximately
12 per cent.
[53] On the other hand, Premier Events submits that there has not been any change of circumstances. It points to a comment of Wylie J in his judgment that further interlocutories could be anticipated when the Employment Court released its decision. It also notes that the sixth defendant was not a party to the Employment Court proceedings and no estoppel issues therefore arise. As to the recent request for further and better discovery, the plaintiff submits that the documents sought fall within the scope of the discovery orders made by consent on 10 April 2013. Finally, Premier Events submits that all parties were aware of the conditional fee agreement in 2012 and accordingly there has not been a change in the funding arrangements.
[54] As to the expert’s costs sought of $120,000, Premier Events submits that the estimate is hearsay evidence, as it is contained in an affidavit sworn by a solicitor at
Bell Gully. In any event, Premier Events submits that the application for expert costs is premature. Such evidence may not be necessary, as a determination on res judicata and estoppel issues may affect the scope of the issues before the High Court at trial. Further, Premier Events’ claim is to be repleaded, which may, in any event, narrow the scope of the expert evidence required.
[55] Having reviewed the competing submissions and materials, I am of the view that there has been a change in circumstances, such that the amount of security for costs should be reassessed. The proceeding will be repleaded and discovery issues will arise. Although Wylie J referred to further interlocutories being anticipated, neither the parties nor the Court foresaw the number and scope of interlocutory steps, especially the need for a complex hearing into res judicata and estoppel issues. I agree with Premier Events, however, that disclosure of the detail of the conditional fee arrangement does not amount to a new circumstance. The increase in scale costs is a relatively minor matter, which by itself, would not be a change of circumstances, but does add weight to the first factor relied upon by the sixth defendant.
[56] In those circumstances, I am prepared to order an additional $45,000 as security for costs in favour of the sixth defendant, bringing the total to $120,000. This sum is similar to the total sum of past and expected future scale costs, without any allowance for repleading or discovery. Because the scope of the expert evidence required is still somewhat unclear, I am not prepared to order security for estimated expert costs of $120,000. I have, however, ordered security for estimated expert costs of $30,000 in respect of the first to fifth defendants. In those circumstances, I will likewise order the same for the sixth defendant, as anticipated in the judgment of Wylie J, making a total of an additional $75,000 by way of security for costs.
Result
[57] In summary, I order that security for costs be paid by Premier Events in the sum of $150,000 in favour of the first to fifth defendants to the satisfaction of the Registrar. In addition, I order that additional security for costs be paid by Premier Events in the sum of $75,000 in favour of the sixth defendant to the satisfaction of the Registrar. Alternatively, and on an agreed basis, security can be provided in the
form of undertakings or in any other way acceptable to the first to fifth defendants and the sixth defendant.
[58] The security is to be staged with payment of $120,000 in favour of the first to fifth defendants and $45,000 in favour of the sixth defendant, to be paid within
28 days of the date of this judgment. The balance of $30,000 in favour of the first to fifth defendants and $30,000 in favour of the sixth defendant is to be paid within three months of the date of this judgment. Should the security not be paid or an alternative mode of payment or undertaking is not agreed between the parties, the proceeding is stayed as between Premier Events and the first to fifth defendants and the sixth defendant.
[59] The first to fifth defendants and the sixth defendant are entitled to orders for their reasonable costs and disbursements on this application on a 2B basis.
[60] Finally, I reserve leave for the filing of further applications as to the mode of payment, the provision of undertakings, the terms of a possible stay and the costs of this application if they cannot be agreed.
……………………………….
Woolford J
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