[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
JUDGMENT
On 1 February 2024, the primary judge, Robb J made orders dismissing proceedings by Blue Mirror Pty Ltd (Blue Mirror) against Tan & Tan Australia Pty Ltd (in liq), Mr Anthony Tan, and Australian Construction Company Pty Ltd: Blue Mirror Pty Ltd v Pegasus Australia Developments Pty Ltd (in liquidation) [2024] NSWSC 28. At the trial before the primary judge Mr Anthony Tan represented himself and, by leave, Australian Construction Company Pty Ltd. Blue Mirror had been ordered to pay security for costs of the trial in two tranches: in September 2021, Blue Mirror provided $100,000 in security for costs which was increased by a further $225,000 by order of Hammerschlag CJ in Eq on 21 April 2023.
On 26 April 2024, Blue Mirror filed a notice of appeal. Tan & Tan Australia Pty Ltd (in liq), Mr Anthony Tan, and Australian Construction Company Pty Ltd are the first, second and third respondents to that appeal.
On 9 May 2024, Mr Anthony Tan and Australian Construction Company Pty Ltd filed a notice of cross appeal. At that time, Mr Anthony Tan continued to represent himself and Australian Construction Company Pty Ltd. No application for security for costs was made or foreshadowed by Mr Tan. [1]
On 20 May 2024, Mr Tan and Australian Construction Company Pty Ltd filed a notice of appointment of solicitor, naming Mr Damian Ward of Brown Ward King (BWK).
On 27 May 2024, the matter came before the Registrar of the Court of Appeal. Mr Anthony Tan and Australian Construction Company Pty Ltd were represented by BWK and the following orders were made:
This matter is listed for Directions (Court of Appeal) on 24 June 2024 2:30 PM before the Court of Appeal at Supreme Court Sydney.
Estimated duration: 5 Minutes
Orders and Directions
1. Orders 1 - 2 of the Short Minutes of Order.
SHORT MINUTES OF ORDER
1. In relation to the Notice of Appeal filed 26 April 2024:
a. The Appellant is to file and serve the Red Book by 31 May 2024.
b. The Appellant is to file and serve written submissions and a chronology by 21 June 2024.
c. The Appellant is to file and serve the Blue and Black Books by 21 June 2024.
d. Listed for Directions at 2:30pm on 24 June 2024.
2. In relation to the Notice of Cross Appeal filed 9 May 2024:
a. The First and Second Cross Appellants are to file and serve a Summons seeking Leave to Appeal along with a white Folder by 31 May 2024.
b. The Cross Respondents to the Cross Appeal are to file and serve a UCPR 51.13 Response by 14 June 2024.
c. The Summons seeking Leave to Appeal is listed for Directions Hearing at 2:30pm on 24 June 2024, along with the Cross Appeal (ID 67236408)
On 24 June 2024, the matter again came before the Registrar of the Court of Appeal. The Cross Appeal was dismissed for want of prosecution. Mr Anthony Tan and Australian Construction Company Pty Ltd were represented by BWK. The matter was adjourned to enable draft short minutes to be provided.
On 25 June 2024, the parties' legal representatives provided draft consent orders to the Registrar of this Court. The Court made orders in preparation for the hearing as follows:
This matter is listed for Hearing on 5 September 2024 10:15 AM before the Court of Appeal at Supreme Court Sydney.
Estimated duration: 1 Days
In accordance with the short minutes of order the following orders are made:
1 The time for the Appellant to file and serve submissions and chronology be extended until 28 June 2024.
2 The Respondents are to file and serve submissions and any alternative or supplementary chronology by 26 July 2024.
3 Listed for directions hearing on 29 July 2024, which is to be vacated if the Respondents submissions and alternative or supplementary chronology has been filed.
4 The Appellant is to file and serve any submissions in reply by 16 August 2024.
5 The Appellant is to file and serve the Orange Book by 23 August 2024.
6 Listed for directions hearing on 26 August 2024, which is to be vacated if the Orange Book has been filed.
7 Listed for hearing on 5 September 2024 with the estimation of 1 day.
Blue Mirror has filed and served the Red Book, the Blue Book and the Black Book in accordance with the Court's orders. Written submissions were filed by Blue Mirror on 4 July 2024.
On 26 July 2024, Mr Tan and Australian Construction Company Pty Ltd filed a notice of change of solicitor, identifying their new solicitor as Ms Lucy Nguyen of Law Australia.
On 26 July 2024, Mr Tan and Australian Construction Company Pty Ltd filed a notice of motion seeking that Blue Mirror provide security for costs pursuant to s 1335(1) of the Corporations Act and r 51.50 of the UCPR in the amount of $154,550 (including GST) being estimated costs on a solicitor/client basis. Subsequently, the amount sought by the applicants on the motion was revised as being $121,450 (excluding GST), calculated on a party/party basis.
The applicants on the motion also sought an order pursuant to s 67 of the Civil Procedure Act 2005 (NSW) that the proceedings be stayed until security for costs was provided by Blue Mirror.
[3]
Evidence on the motion
In support of the motion, the applicants relied on an affidavit of Ms Lucy Nguyen affirmed on 26 July 2024 together with its exhibits, an affidavit of Ms Nguyen affirmed on 31 July 2024 and its exhibits and an affidavit of Ms Nguyen affirmed on 2 August 2024. Blue Mirror relied on an affidavit of Mr Brett Trevillian affirmed on 2 August 2024 and its exhibits.
In essence, the evidence, all of which was admitted without objection and which I take into account, provided:
1. Ms Nguyen affirmed on 26 July 2024 that, on information and belief, on or about 22 May 2024, Mr Tan instructed Mr Ward of BWK to seek security for costs. On 10 July 2024, Mr Tan received an email from Mr Ward with an estimate of the costs of making a security for costs application. On 15 July 2024, Mr Ward told Mr Tan that he would not continue to appear by reason of outstanding costs. On 23 July 2024, Mr Ward sent an email which, inter alia, referred to the appointed hearing date. Ms Nguyen also gave evidence about searches undertaken to determine Blue Mirror's financial position and provided calculations underpinning the quantum of security sought, identified at [10] above.
2. Ms Nguyen affirmed on 31 July 2024 that, on information and belief, Mr Tan had incurred additional costs in the trial proceedings. The affidavit also exhibited a notice to produce issued to Blue Mirror on 29 July 2024. Ms Nguyen stated that she did not become aware of the listing date on 5 September until late 28 July 2024.
3. Ms Nguyen affirmed on 2 August 2024 that her law firm had now received the Blue, Red and Black Appeal Books from BWK. She also exhibited an answer to the notice to produce issued on 29 July 2024.
4. Mr Trevillian affirmed on 2 August 2024 that it was agreed that a sum of $100,000 would be held in a solicitor's trust account with an irrevocable direction that it be held pending order of the court. Mr Trevillian stated that Blue Mirror has been awarded costs in multiple proceedings and estimated that Blue Mirror has an off-set to any costs order entered against it of approximately $76,000 from Tan & Tan Australia Pty Ltd, Mr Tan and Australian Construction Company Pty Ltd.
[4]
Consideration
Section 1335 of the Corporations Act confers a discretionary power on this Court to order security for costs against corporate appellants. This power is not constrained by the requirement for "special circumstances" contained in r 51.50 of the Uniform Civil Procedure Rules 2005 (NSW): Pioneer Park Pty Ltd (In liq) v Australia and New Zealand Banking Group Ltd [2007] NSWCA 344; LSKF Holdings Pty Ltd v Shield Lifestone Holdings Pty Ltd [2018] NSWCA 109 at [13]. As I said in SSABR Pty Ltd v AMA Group Ltd [2024] NSWCA 104 at [14]:
In exercising the undoubted discretion to award security for costs, I am guided by the following principles:
(1) Any order for security for costs must be crafted to avoid stultifying the appeal proceedings: Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 at [18] per Basten JA (Ipp JA and Hoeben J agreeing); McMillan v Coolah Home Base Pty Ltd [2023] NSWCA 172 at [75] per Mitchelmore JA.
(2) If the Court is satisfied an award of security should be made, then it is inappropriate to fix the quantum by assessing the strength of the appellant's prospects of success: LSKF Holdings at [14] per Leeming JA; Swift v McLeary [2013] NSWCA 173 at [55]; Reddy v C&P Syndicate Pty Ltd [2013] NSWCA 425 at [34]. The discretion does not involve a preliminary hearing of the appeal: Mualim v Dzelme [2020] NSWCA 333 at [8] per Basten JA.
(3) The appropriate amount of security should be assessed on a "broad brush" basis: Palermo Seafoods Pty Ltd v Lunapas Pty Ltd [2015] NSWCA 149 at [9] per Leeming JA; Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd [2019] NSWSC 1082 at [206] per Ward CJ in Eq.
(4) The Court's power is to require "sufficient security". The Court does not set out to provide a complete indemnity to a respondent in respect of their costs: Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2008] NSWCA 283 at [90] per Gyles AJA; Tyneside Property Management Pty Ltd v Hammersmith Management Pty Ltd [2014] NSWCA 417 at [163] per Emmett JA. Even where a relatively detailed and realistic estimate of actual and apprehended costs of an appeal is provided in the evidentiary material, it is the ordinary course for only a fraction of those costs to be ordered by way of security: Palermo Seafoods Pty Ltd at [8] per Leeming JA.
(5) The Court is not, in any event, bound to accept a respondent's assessment of the costs likely to be incurred or recovered.
I am satisfied that the jurisdictional preconditions to the making of an order for security for costs have been met, although the quantum sought was excessive. The critical question in the present case, however, is whether an order for security for costs should be made in the present case by reason of the applicant's delay.
In Boensch v Transport for NSW [2024] NSWCA 86, Leeming JA said:
[32] The basic point is that applications for security for costs should be brought promptly. When an application for security for costs is brought in the Court of Appeal, that promptness needs to be informed by the reality that most ordinary appeals are allocated hearing dates on the first return date. It is true that that accelerated timetable that applies in this Court may give rise to practical difficulties in some matters. To the extent that that presents a difficulty in cases where the respondent it unapprised of any entitlement to apply for security for costs, this case is undoubtedly not such a case. That is because prominent in the submissions and materials before me is the fact that these same parties who are actively involved in the motions, namely Mr Boensch and Transport for NSW, have in November 2023 and January and February of this year been litigating in the Equity Division over the costs of various interlocutory orders, and one of the aspects that has emerged and indeed affidavits that have been read in the Equity Division have been supplied to me is Mr Boensch's relative impecuniosity. That evidence was deployed in support of an application for a gross sum costs order in relation to some interlocutory costs which a judge in the Equity Division was persuaded to make, although his Honour was not persuaded to order that the costs be enforced forthwith.
I have concluded that in this case, for essentially the reasons of Leeming JA in Boensch, that by reason of the delay in making the application, an order for security for costs should not be made. As Leeming JA explained at [37] in Boensch, the application of principle governing the order for security for costs for appeals is quite different from that at trial, at least in most cases. This reflects the basic fact that the incurring of costs is quite different in this Court than it is at trial. In this Court, the record has already been established. A respondent who stands by whilst an appellant spends time and money on preparation may fail if a later application for security for costs is made.
On 9 May 2024, at a time when Mr Tan appeared for himself and Australian Construction Company Pty Ltd, he took active steps in the proceeding and filed a notice of cross appeal. No application for security for costs was made or foreshadowed at that time. Mr Tan well understood at that time that he was entitled to ask the Court to make an order for security for costs. Security for costs had been awarded and paid in relation to the trial before the primary judge. In addition, as Ms Nguyen says in her 26 July 2024 affidavit, on or about 22 May 2024, Mr Tan instructed Mr Ward of BWK to seek security for costs. The consequences of Mr Ward's failure to make an application for security for costs of the appeal in a timely manner or at all, should not be visited upon Blue Mirror. A fundamental principle of our system is that parties are bound by the conduct of their lawyers: R v Birks (1990) 19 NSWLR 677; Dibb v Transport for New South Wales [2024] NSWCA 157 at [38]-[49] and the cases there cited. If the applicants on the motion were to seek security for costs their obligation was to do so in a timely manner.
Unlike many cases in this Court, this is a case where there were two directions hearings before the Court of Appeal and the making of consent short minutes before the present motion was filed. On the appellant's side, the matter is now essentially ready for hearing. Whilst BWK apparently failed to comply with Mr Tan's instructions to make an application for security for costs, as I have said, this is a case where Mr Tan himself was on the record at the outset of the proceedings and took positive steps to assert his interests, and those of Australian Construction Company Pty Ltd, yet took no steps to seek security for costs. In any event, parties are bound by the conduct of their lawyers and on 25 June 2024, by consent, the matter was set down for hearing on 5 September 2024 and additional preparatory orders were made. Again, no application for security for costs was made or foreshadowed at that time.
As a result, in the period before the present notice of motion seeking security for costs was filed, Blue Mirror took all the necessary steps in preparation for the appeal. [2] The delay by the applicants on the motion, in and of itself, provides a sufficient reason to refuse to make the order for security for costs sought.
In the present case, however, there is an even more important reason in the exercise of discretion to refuse to make an order for security for costs. If an order for security for costs in the conventional form were made now, it would result in the inevitable loss of the 5 September hearing date; a hearing date fixed by consent.
The conventional course in an application of this kind is that a stay of the appeal is granted for a period of time, of 14, 21 or 28 days, to permit security to be provided. A stay of that kind was sought by the applicants on the motion. Given the present timetable for preparation, a stay for even 14 days would mean that the written submissions of the respondents to the appeal could not be filed on time and the period available to prepare and file the reply submissions would evaporate. The Orange Books could not be filed on time and the 5 September 2024 hearing date would inevitably be lost. This would not be a fair result for the appellant. It has participated in preparing the appeal and has completed all of the tasks ordered to be completed for the appeal to proceed on 5 September 2024. If ordered now to provide security for costs, the hearing date for the appeal will be lost. Further, it is not only the rights of these parties which are affected by the applicants' delay. Other litigants, whose cases might otherwise have occupied the 5 September date, have also been affected.
Despite suggesting in oral argument that the application for a stay would be abandoned by the applicants for the period of 14 or 21 days granted to make the payment of security, Mr Burchett who appeared for the applicants on the motion, ultimately submitted that if security was not paid in whatever abbreviated period was selected, his clients would then seek a stay of the appeal. Upon reflection, this is an unsatisfactory solution. The fact remains that, even if a stay were not granted when making an order that security for costs be paid, the appeal date of 5 September would, at the very least, remain in serious jeopardy. Additional costs would be expended but the critical problem caused by the applicants' delay would not be solved.
It is unacceptable that a belated application for security for costs could be permitted to derail or threaten an appeal hearing, which hearing date was fixed by consent. To paraphrase Bell P and Simpson AJA in Mohareb v Harbour Radio Pty Ltd [2020] NSWCA 231 at [16], there is nothing novel about the proposition that applications for security for costs should be made promptly. If a belated application for security for costs is made, particularly if success in the application means that a hearing date is lost and the rights of other litigants are prejudiced, the applicant on the motion can expect to fail. This is such a case.
[5]
Conclusion
For the foregoing reasons my orders are:
1. Notice of Motion dated 26 July 2024 is dismissed.
2. Applicants on the motion pay the respondent's costs of the motion.
[6]
Endnotes
The cross-appeal was eventually dismissed by the Registrar of the Court of Appeal for want of prosecution after a failure to comply with procedural orders: see [5].
Save filing the Orange Book including written submissions in reply which cannot occur until the respondents file their written submissions which (following earlier delays in compliance) are now due to be filed on 16 August 2024.
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Decision last updated: 06 August 2024