HIS HONOUR: This matter came before me this morning with an estimate of half a day. The estimate is risible. Before me was a notice of motion filed on 9 March 2021 in which the defendants seek security for costs from the plaintiffs in the sum of $150,000 or such other amount as to the Court sees fit. There is also before me a notice of motion filed by the plaintiffs on 1 June seeking to set aside a notice to produce addressed by the defendants to the plaintiffs on 25 April 2021 and subpoenas for production sealed on 18 June 2021 addressed to Westpac Banking Corporation and Kelly Partners (Northern Beaches) Pty Limited.
Eventually it was ascertained that the defendants could not proceed with the hearing of their notice of motion filed on 9 March 2021 seeking security for costs because of a lack of relevant evidence, but that evidence may be able to be obtained depending on the relief claimed in the notice of motion filed by the plaintiffs on 1 June 2021. Before I come to make orders in respect of the latter, the motion filed on 9 March 2021 already having been adjourned, I shall make this observation: counsel and the solicitors involved have approached this matter by looking at the trees and sometimes the leaves without looking at the forest.
These proceedings arise out of a boating accident. The statement of claim filed on 1 January 2021 contains these allegations:
"12. On or about 18 November 2020, the Vessel, whilst in the custody of the first defendant and control of the first defendant and the second defendant (collectively the defendants), was being operated and navigated by the defendants nearby Coogee Beach, New South Wales.
13. By reason of the matters pleaded in para 12 above, a Collision occurred involving the vessel and Wedding Cake Island situated in the Tasman Sea and nearby Coogee Beach.
Particulars:
(a) The vessel was travelling in the ocean and in the vicinity of Coogee Beach.
(b) The Defendants permitted or otherwise caused the vessel to drift and move into shallow water and in the direction of the Island.
(c) The Defendants lost control of the vessel resulting in the vessel moving onto the Island.
(d) By reason of the matters pleaded in paras 13(a) to (c) inclusive above, the Vessel collided with the Island causing damage to the propellers, shafts, skegs and hull of the Vessel."
The plaintiffs are A and B Management Pty Limited and A and B Marine Custodians Pty Limited. A director and shareholder of each of those companies is Mr Andrew James Young.
The background to the dispute is described in this fashion by the defendants' solicitor in an affidavit sworn by her yesterday for the proceedings that have recently been commenced in the Supreme Court. The background is this;
"4. In about September 2020, Mr Hong Fei (Stanley) Lei (Mr Lei) was referred by a friend...to Mr Andrew James Young (Mr Young), who is and was at all material times the sole director and shareholder of;
(a) A and B Management Pty Limited...(Management);
(b) A and B Marine Custodians Pty Limited...(Custodians);
(c) Boating Syndication Australia Pty Limited...(Finance); and
(d) Fairline 58GT Boat Share Pty Limited...(Fairline).
5. Mr Young, through his companies mentioned above, operates a boat syndication business which sells shares in boats owned by Custodians to customers and the owners for each boat from an individual syndication. Management is then responsible for the day-to-day operation of each syndication including but not limited to the
maintenance of the boats.
6. In late September 2020, Mr Lei met Mr Young and discussed about his interest in potentially investing in a boat syndicate.
7. In or about early to mid-October 2020, Mr Lei and his wife, Ms Pintian Wu, inspected a boat known as 'Trinity' (Vessel) and became interested in acquiring shares in the said Vessel.
13. On about 29 October 2020, Ms Wu caused $115,000, being the purchase price for the units and a security deposit of $5,000 to be paid to the bank account under the name of Finance.
14. In early November 2020, Mr Lei and Ms Wu attended a two-day boat training course provided by Finance and subsequently obtained their boat licences from Service NSW.
16. At about 8.25am, Mr Lei navigated the Vessel near Wedding Cake Island nearby Coogee Beach when it collided with the reef below the Vessel's hull and damage was caused to the vessel.
17. Shortly after the collision, the water police arrived and one police officer drove the Vessel back to the Spit Marina near the Chinamans Beach after examining the damage [to] the Vessel."
The plaintiffs' claim is for unliquidated damages presumably fixed at the jurisdictional limit of this Court, $750,000. It is clear that essentially the claim is in respect of property damage so that once the vessel has been repaired and the cost of repairs has been ascertained and once a potential claim for loss of earnings has been ascertained the claim may become a liquidated one.
The causes of action alleged against the first defendant are for breach of contract and also in the tort of negligence. The cause of action alleged against the second defendant is purely in the tort of negligence. The case against the defendants appears to be nothing more than a claim against an owner of a motor vehicle and against its driver who negligently caused the motor vehicle to collide with a tree. There are, of course, permutations arising from the nature of the contractual relationship between the plaintiffs and the first defendant.
The defendants seek, as I have said, security for costs. The defendants' solicitor estimates that the costs of defending the claim are approximately $171,500. Hence, the prayer that security in the sum of $150,000 be provided. If the case could be heard and determined in one day one would not think the costs of the defendants would exceed more than about $75,000.
The plaintiffs have provided to the defendants affidavits sworn by Mr Young on 27 April 2021 and 13 May 2021. Also read today is an affidavit from the plaintiff's solicitor, Mr Mark Smith, affirmed on 1 June 2021. According to Mr Young's first affidavit there was in a bank account owned by A and B Management Pty Limited $474,512.73. There was also in a bank account owned by "Boating Syndication Australia" monies amounting to $366,493.67, but it is unclear on the evidence currently before me whether Boating Syndication Australia is used by A and B Management Pty Limited as a name for one of its accounts, or whether it is an entirely separate company, and there is a company search for Boating Syndication Australia Pty Limited which indicates that one of its directors is Mr Young and its address is Mr Young's residential address. However there is another director and the shareholder is another corporation. However according to Mr Young's affidavit of 13May 2021 total funds in the bank available to Management as at 7 May 2021 were $841,006.40.
Paragraph 5 of this affidavit contains this matter:
"Custodian currently owns shares in six boats with a value of approximately $2,752,500."
The paragraph goes on to describe the vessels and their nature and the extent of Custodian's ownership of those vessels. There are some records attached to this affidavit which support the estimation of the capital owned by Custodian in those vessels.
Although there is a claim made by the plaintiffs seeking to set aside the subpoena addressed to the Westpac Banking Corporation the documents were physically produced to the Court this morning and I have had an opportunity of looking at them and I have drawn the attention of Counsel to them.
The inference to be drawn from all the evidence is that Mr Young, using various company structures, has had over a period of some ten years a viable career in boat syndication. There are large turn overs of money through the various accounts owned by, inter alia, A and B Management Pty Limited. It would appear that there is a separate account in respect of each vessel and one major running account in which, for example, there was at any one time about $400,000 excess of income over expenditure in any one quarter. The Westpac Banking Corporation has also granted to A and B Management Pty Limited an overdraft of $370,000. On any broad view of the matter this has been a successful business over a decade.
However the defendants are not persuaded by anything deposed to by Mr Young to date nor by the plaintiff's solicitors but cavil with almost every assertion made by Mr Young in his affidavits. Indeed time was spent today seeking leave to cross examine him on his affidavits. In Ren v Giang [2014] NSWCA 1 Leiming JA said this at [11];
"Cross-examination in support of an interlocutory application is not as of right but requires leave (contrary to the submissions which were initially made to me at the directions hearing), which leave is granted 'cautiously' and normally 'somewhat sparingly'; see the decisions collected and applied by Kenny J in Wu v Avin Operations Pty Limited (No.3) [2006] FCA 132 at [18]. It is common practice not to commit cross-examination at all in interlocutory matters; see, for example, Markisic v The Commonwealth of Australia [2010] NSWCA 273 at [31](Beazley v Young JJA)."
In Freehill, Hollingdale and Page v Bandwill Pty Ltd [2000] WASCA 150 the West Australian Court of Appeal confirmed that, "the discretion to permit cross-examination in interlocutory applications will be sparingly exercised."
My reasons include this: I am required to deal with interlocutory matters efficiently, quickly, cheaply. Requiring cross-examination on the financial viability of a going business whose property has been damaged in an accident is hardly conducive to either an expeditious dispatch of the Court's business or is likely to elucidate any matter. Much has been said by the plaintiffs as to why the notice to produce and the subpoena should be set aside. I have taken a more pragmatic view in the hope that this whole issue will with an application of prudence and insight go away. The plaintiffs were ordered by the Judicial Registrar to comply with the notice to produce by 14 May 2021. They have not done so. The documents called for by the notice to produce are in a very narrow compass and should cause little work in their production. Documents having been produced by the Westpac Banking Corporation certainly add to the available evidence to suggest that the plaintiff companies have had a long standing, viable business with a large turnover and have substantial cash reserves.
For those reasons I make the following orders;
1. Application for leave to cross examine Andrew James Young on his affidavits is refused.
2. I order the defendants to comply with the notice to produce dated 25 April 2021 by 4pm on 18 June 2021.
3. I set aside that part of the subpoena to produce documents addressed to Kelly Partners (Northern Beaches) Pty Limited sealed on 28 May 2021 under the heading, "A and B Management Pty Limited (ACN 149 442 768)," the paragraph numbered 4.
4. I grant access to documents produced on subpoena by Westpac Banking Corporation.
5. Noted no documents have yet been received by the Court from Kelly Partners (Northern Beaches) Pty Limited.
6. Otherwise I dismiss the notice of motion filed by the plaintiffs on 1 June 2021. Costs are reserved.
7. If the defendants secure an order requiring the plaintiffs to give security for costs, the costs of this notice of motion ought be the defendant's costs in the cause; otherwise, these costs ought be the plaintiff's costs in the cause.
8. I order that exhibit BB be returned to the plaintiff's solicitor on his signing there for.
9. I order that exhibit 2-2 be returned to the defendant's solicitor on her receipt there for as it contains a copy of exhibit B-B.
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Decision last updated: 19 August 2021