Gary Sydney Green & Anor v AMP Financial Planning Pty Limited & Ors

DECISION : Notice of Motion seeking stay of proceedings to be dismissed.

CATCHWORDS : Costs - Stay of proceedings - Defendants seek a stay of the proceedings pending payment by the first plaintiff of the outstanding costs in other proceedings before this Court and the Court of Appeal between Mr Green and AMP Life - alternatively, a stay pending the payment of security for costs

Civil Procedure Act 2005 (NSW) Industrial Relations Act 1996 (NSW) LEGISLATION CITED : Service and Execution of Process Act 1992 (Cth) Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 2005 (NSW)

Energy Drilling Inc v Petroz NL (1989) ATPR 40-954 In the Marriage of MKA and SH Fahmi (1995) 19 Fam LR 517 KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 Leaway Pty Ltd v Newcastle City Council (No2) [2005] NSWSC 826 CASES CITED : Microcorp Pty Ltd v Terran Computers Pty Ltd [unreported, Federal Court of Australia, Heerey J, 19 December 1991] Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [unreported, Federal Court of Australia, Foster J, 1 July 1998] Whyked Pty Ltd v Yahoo Australia and New Zealand Pty Ltd [2006] NSWSC 1236 Winnote Pty Ltd (in liq) v Page [2005] NSWCA 362 Woollahra Municipal Council v Shahani (1990) 69 LGRA 435 X Limited v Morgan-Grampian (Publishers) Ltd [1991] 1 AC 1

Gary Sydney Green (First Plaintiff) PARTIES : Gary Green Pty Limited (Second Plaintiff) AMP Financial Planning Pty Limited (First Defendant) AMP Life (Second Defendant)

COUNSEL : Mr J O'Sullivan (Plaintiffs) Mr AJL Bannon SC, Mr BL Jones (Defendants)

SOLICITORS : The Argyle Partnership (Plaintiffs) Mallesons Stephen Jaques (Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

Tuesday 20 March 2007 ex tempore Revised 21 March 2007

50060/05 Gary Sydney Green & Anor v AMP Financial Planning Pty Limited & Ors JUDGMENT The notice of motion 1 The defendants to proceedings 50060 of 2005 [AMP Financial Planning Pty Ltd, AMP Life Limited and AMP Capital Investors Limited] by notice of motion filed on 31 October 2006 seek:

i. a stay of the proceedings pending payment by the first plaintiff ["Mr Green"] of the outstanding costs in other proceedings before this Court and the Court of Appeal between Mr Green and "AMP Life";

ii. alternatively, a stay pending the payment of security for costs. The earlier proceedings 2 Mr Green commenced proceedings against AMP Life in this Court seeking relief in respect of an income protection insurance policy he had with AMP Life. Mr Green was unsuccessful both at first instance [[2005] NSWSC 370] and on appeal [[2005] NSWCA 354]. Special leave to appeal to the High Court was also refused. 3 Mr Green was ordered to pay the costs of AMP Life at first instance and on appeal. Those costs have been assessed and a Certificate of Determination of Costs in the sum of $94,324.60 was issued on 21 August 2006, a Certificate of Determination of Costs of Costs Assessment in the sum of $3847.69 was also issued on that date. Despite a demand, Mr Green has failed to pay those costs. The present proceedings 4 The present proceedings were commenced in February 2002 in the Industrial Relations Commission in a circumstance where the defendants are said to have engaged the plaintiffs as agents to market their financial products for approximately 26 years. The proceedings were transferred to this Court by order on 15 November 2004. 5 The claims made may broadly be described as follows:

i. the plaintiffs' claim that the defendants harshly and unconscionably terminated their agency in breach of s106 of the Industrial Relations Act 1996 (NSW) and s51AC of the Trade Practices Act 1974 (Cth);

ii. the plaintiffs also claim the value of investments in AMP products lost by reason of the defendants negligence and breach of contract and fiduciary duty. 6 The proceedings have had an unfortunate history:

i. since the proceedings commenced the summons has been amended 9 times;

ii. on 16 December 2005 the matter was listed for hearing for 4 weeks commencing 28 August 2006.

iii. on 11 August 2006 McDougall J vacated the hearing on the plaintiff's motion. The plaintiffs were ordered to pay the defendants' costs thrown away forthwith on an indemnity basis;

iv. on 22 September 2006, the plaintiffs were ordered to file any further evidence by Friday 3 November 2006. No such evidence had been filed. Past costs orders 7 The solicitors for the defendants served a bill of costs for the costs thrown away by the vacation of the hearing date on 12 October 2006. Those costs amounted to $103,249.32. 8 The plaintiffs as at the date of hearing of the motion had served a notice of objection to the bill of costs but did not dispute the sum of $12,234.08. However, the plaintiffs had not offered to pay the undisputed costs [Mr Green had only offered to pay $5,000].

9 As will appear from what follows, the position has altered on the occasion when this judgment was about to be delivered. The power to order a stay 10 The Court has power under s67 of the Civil Procedure Act 2005 to order a stay of proceedings. Rule 12.4 of the Uniform Civil Procedure Rules 2005 (NSW) provides.

(a) as a consequence of the discontinuance of proceedings, a plaintiff is liable to pay the costs of another party in relation to those proceedings, and

(b) before payment of the costs, the plaintiff commences further proceedings against that other party on the same or substantially the same cause of action as that on which the former proceedings were commenced. 11 In my view it cannot be said that the instant proceedings involve the same or substantially the same causes of action as the earlier proceedings. 12 Whilst I accept that there is a power to order a stay of one set of proceedings in a situation where the payment of costs in earlier proceedings is outstanding, that power is no more than a discretionary power rather than a strict rule: X Limited v Morgan-Grampian (Publishers) Ltd [1991] 1 AC 1; KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 206; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [unreported, Federal Court of Australia, Foster J, 1 July 1998] at 3; Woollahra Municipal Council v Shahani (1990) 69 LGRA 435 at 439-440; In the Marriage of MKA and SH Fahmi (1995) 19 Fam LR 517 at 524; cf Leaway Pty Ltd v Newcastle City Council (No 2) [2005] NSWSC 826. 13 The unusual circumstances in terms of the nature of the two separate sets of proceedings and the fact that the causes of action were plainly disparate, mean that there is no substance in the proposition that the present proceedings should be stayed in the absence of Mr Green having failed to pay the costs of the earlier proceedings at first instance or on appeal. 14 There has been no suggestion that either set of proceedings were vexatious. Security for costs 15 The defendants also seek an order for security for costs and if this were to be paid then the defendants would have established an alternative basis for a stay order pending compliance with any such order. 16 Mr Green is plainly in substance the moving party. Although he is resident in Queensland the defendants have not suggested that in so far as his position as personal plaintiff is concerned, the instant circumstances engage Part 42 rule 21(a) of the Uniform Civil Procedure Rules [since of course there would be no difficulty in enforcing a judgment against Mr Green]. Courts will not order security for costs against a plaintiff who, although ordinarily resident out of the jurisdiction, is not shown to have real or personal assets of sufficient value within the jurisdiction to satisfy any order as to costs. 17 In Energy Drilling Inc v Petroz NL (1989) ATPR 40-954 Gummow J said at 50,422:

"The purpose of ordering security for costs against an applicant ordinarily resident outside the jurisdiction is to ensure that a successful respondent will have a fund available within the jurisdiction of this Court against which it can enforce the judgment for costs, so that the respondent does not bear the risk as to the certainty of enforcement in the foreign country and as to the time and complexity of the action there which might be necessary to effect enforcement…On the other hand, the mere circumstance that an applicant is resident outside the jurisdiction does not necessarily invite an exercise of discretion in favour of ordering security , the question being how justice will be served in the particular case…" 18 Here, there is no question of Mr Green's assets being put beyond the reach of the defendants or the defendants encountering any difficulty in enforcing any judgment by reason of Mr Green residing in Queensland. A judgment in NSW may be enforced in Queensland under the Service and Execution of Process Act 1992 (Cth). As the plaintiffs have contended, in the present circumstances the fact of Mr Green being resident in Queensland is a "mere circumstance". The threshold requirement that available assets be put beyond the reach of the defendants is not satisfied. 19 Nor as I understood it, did the defendants seek to invoke any other of the provisions of Part 42 rule 42.21, preferring to ground their application upon the suggested inherent and statutory discretion to order a stay of proceedings pending the payment of costs in the earlier proceedings between the parties and pending the costs of and occasioned by the vacated hearing dates being paid. Against the event that I misunderstood the position, I deal below with the second plaintiff's position and whether or not there is reason to believe that it [being a corporation] will be unable to pay the costs of the defendants if ordered to do so. 20 In so far as the defendants seek a stay of these proceedings as a result of the costs orders made on 11 August 2006, the plaintiffs on the hearing of the motion contended that the application was premature because those costs were yet to be assessed and as objection had been taken to approximately 92% of the costs claimed. The now position is that the costs have been determined at $44,671.77. The more formal position is that the plaintiffs have 31 days from a particular date upon which to lodge any appeal from the costs determination and that 31 day period apparently ends shortly on 9 April 2007. 21 The short position in so far as the second plaintiff is concerned seems to me to be as follows:

i. as observed in Whyked Pty Ltd v Yahoo Australia and New Zealand Pty Ltd [2006] NSWSC 1236: "There is authority that where co-plaintiffs include corporations and natural persons and the personal plaintiffs are in substance the moving parties who are likely to suffer an order for the whole of the costs if the proceedings fail, an order for security ought not be made against the corporation. However, there is also authority to the effect that security would be ordered if there are large areas of claim that are not common between the plaintiffs and, as a result the personal plaintiffs are not likely to suffer an order for the whole of the costs if the proceedings fail [Ritchie at 42.21.75]: (at [25]." "…[T]his is of course not the first time when it has become necessary for a court to work through the principled fashion of treating with a suit in which there are certain plaintiffs who are natural persons and other plaintiffs who are corporate entities. In a circumstance where one had the mix as between a personal and corporate plaintiff, Mason P has observed that no sharp principle emerges from the cases in the area: Winnote Pty Ltd (in liq) v Page [2005] NSWCA 362 at [35]: (at [23]";

ii. in the instant circumstances the proper inference is that litigation is in truth pursued in substance for the benefit of Mr Green;

iii. in any event I do not accept that the defendants have discharged their onus of satisfying the Court that the second plaintiff is unlikely to be in a position to meet any costs order. [The only evidence relied upon by the defendants in this respect was deficient. It comprised:

a) the tender of a company search of the corporate plaintiff which simply showed the amount of paid-up capital being irrelevant to the company's ability to pay: Microcorp Pty Ltd v Terran Computers Pty Ltd [unreported, Federal Court of Australia, Heerey J, 19 December 1991];

b) the tender of correspondence from the defendant's solicitors to the plaintiff's solicitors asking for the plaintiffs to provide details of their respective financial positions, including any evidence of their respective abilities to meet existing costs orders and further adverse costs orders- This correspondence not having brought forward an answer.

c) I infer from the tender today of the affidavit of Ms Michaels of 20 March 2007 that the defendants further rely upon the recent correspondence from Stephen Jaques to the plaintiffs requiring payment of the amount of $44.671.77 and indicating that in the event of that sum is not forthcoming the defendants will take all necessary steps to enforce their rights in relation to the costs certificates.] 22 It is well established that there is an onus on a defendant to satisfy the Court that on the balance of probabilities the relevant plaintiff would be unable to satisfy the defendant's costs in the event the defendant would succeed in the litigation. The present defendants did not pursue any route of inquiry such as by notice to produce, but preferred to rely only upon the above-described search and correspondence. Neither of those matters discharged the onus which lay upon the defendants on an application for security for costs. Discretionary Factors 23 The plaintiffs also sought to rely upon submissions going to the proper exercise of the discretion to order security for costs. As the above reasons make plain, although there may well have been substance in certain of these submissions, [arguably raised by a focus upon the amounts expended by both parties on the litigation, the current state of readiness of the litigation and the date of making of the application in terms of the background history] it has not been necessary to treat with these discretionary considerations. 24 In the result the notice of motion requires to be dismissed. Costs 25 Costs of the notice of motion are reserved. 26 The parties are ordered to jointly fund the external transcription of the hearing of the motion and of today's hearing.

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