A company and a natural person as plaintiffs.
40 In Harpur & Ors v Ariadne Australia Ltd & Ors (No 2) (1984) 8 ACLR 835, the Full Court of Queensland considered an application for security for costs in circumstances where there were a number of plaintiffs. Some were companies, where there was reason to believe they would be unable to pay the costs of the defendants were they to lose. Another was a natural person. Connolly J (Campbell CJ and Demack J agreeing) stated the principles in these terms: (at 841)
"…what is the rule where there is more than one plaintiff? In such a case, all plaintiffs suing in the same interest and by the same solicitors and counsel, there is but one set of costs. If the defendants have an opponent who is worth powder and shot they have as much as any litigant is fairly entitled to. The court cannot by its orders guarantee a successful outcome in a practical sense to any party. It is thus no answer when security for costs is sought to say that a person of apparent substance may be able to make away with his assets within the jurisdiction before a judgment for costs can be executed: Re Apolinaris Company's Trade Marks [1891] 1 Ch 1 per Lord Halsbury LC at 3 sitting in the Court of Appeal. The 'two plaintiff' cases start with the situation in which one is out of the jurisdiction. Prima facie he ought to be ordered to provide security but his co-plaintiff is within the jurisdiction. In such a case it was considered that there was no ground for ordering security. See Sykes v Sykes (1869) 4 LR CP 645 at 648 per Byles J and Montague Smith J. This principle was held to apply even where the plaintiff within the jurisdiction was insolvent. I take the underlying reason to be that the defendant was really in no worse position than if he had been sued by a single plaintiff resident within the jurisdiction and insolvent. As Brett J remarked at 650, the cases show that, unless there is ground for making an order for security against all the plaintiffs, it cannot be made against any. One of the earlier cases was McConnell v Johnston [1801] 1 East 431; [1801] 102 ER 167 where it was held that if one of the plaintiffs reside within reach of the process of the court, security will not be required for the costs although the other plaintiff be a foreigner residing abroad and though the first mentioned plaintiff be a bankrupt in execution for debt. In D'Hormusgee & Co and Isaacs & Co v Grey (1882) 10 QBD 13 the same result was reached by Denman and Manisty JJ affirming Cave J in an action brought against a defendant as a common carrier by two plaintiffs, one resident abroad. The statement of claim alleged a contract by the defendant with the plaintiffs jointly and in the alternative with each of the plaintiffs separately. Although their Lordships cited no authority both referred to the practice in relation to security for costs before the Judicature Act. The critical point was that each plaintiff was liable for the whole of the defendant's costs. "
(emphasis added)
41 His Honour then considered a qualification upon that rule. He said:
"Now in John Bishop (Caterers) Ltd v National Union Bank Ltd [1973] 1 All ER 707 Plowman J made an order for security against a company although there was a co-plaintiff within the jurisdiction who was a natural person. His Lordship distinguished the earlier cases on the footing that there was in those cases a complete overlap as he put it of the causes of action. Accordingly, as he was not satisfied that the natural person would necessarily be ordered to pay all of the defendant's costs he ordered security. That is concededly not this case."
42 The same issue arose on an application for security in Maples v Hughes [2002] NSWSC 617. According to the plaintiffs, the case factually was remarkably similar to the present case. The first plaintiff was a natural person and the second, a company. Both commenced an action against a solicitor, alleging negligent advice concerning a proposed subdivision. The company claimed a loss allegedly suffered in the acquisition of the land. The first plaintiff (a director and shareholder of the company) claimed damages, being the diminution in the value of his shareholding in the second plaintiff. Studdert J, in that context, having quoted and adopted the judgment of Connolly J in Harpur, said this: (at [18])
"18 It seems to me that when one analyses the nature of the claim, Mr Whittle's submission is correct. The claims of the first plaintiff and of the second plaintiff are completely interlocked both as to liability and as to damages, and if the defendant is successful costs would ordinarily follow the event. On the material presently before the Court, it seems to me that the first plaintiff would be exposed to the liability of a costs order for all of the defendant's costs if the defendant succeeds."
43 Counsel for the defendants sought to distinguish these cases upon the basis that the claim of each plaintiff was substantially the same, so that they were "completely interlocked". Attention was drawn to a number of cases, where security had been ordered, because the claims of the corporate plaintiff and the natural person were not "interlocked". The first such case was referred to by Connolly J in Harpur above, namely John Bishop (Caterers) Ltd & Anor v National Union Bank Ltd & Ors [1973] 1 All ER 707. In that case Plowman J was taken to an authority dealing with an application for security, where one plaintiff lived abroad and another within the jurisdiction. It was determined that the person living abroad did not have to provide security. Plowman J, in that context, said this: (at 710/11)
"I am not prepared to express the view that D'Hormusgee & Co v Grey ((1882) 10 QBD 13) was wrongly decided, but there are, I think, two observations to be made about those cases. In the first place, they were quite different on the facts from the present case. There, as I have indicated when going through them, there was a complete identity or overlap of claim. In the present case - and I say this without attempting to analyse the long and complicated statement of claim which has been served - it seems to me that there are very large areas of claim raised by the plaintiff company, in which Mr Sneddon, whose interest is that of a secured creditor, appears to have no locus standi. In other words, unlike the cases to which I have referred, in the present case the overlap seems to me to be comparatively small. And if that is so and this action goes to trial and the plaintiff company loses, I am not satisfied that Mr Sneddon will necessarily be ordered to pay to the defendants all the costs which they incurred vis-a-vis the plaintiff company. ... "
(emphasis added)
44 Bergin J, in Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2002] NSWSC 609, adopted that analysis (para [80]) and said this: (para [84])
"[84] It is a rule applicable to cases in which there is a complete overlap or identity of issues between the cases brought by co-plaintiffs. There is also the question of whether the court hearing the application for security can be satisfied that the substantial plaintiff will, at the conclusion of the trial, be subject to a costs order that has the effect that it is liable for the costs of the impecunious plaintiffs. If there is not such an overlap or identity of issues and satisfaction it seems to me that the 'rule' is not applicable."
45 In Street & 7 Ors v Luna Park Sydney Pty Ltd & 3 Ors [2006] NSWSC 1317, a case which the defendants suggested provided a useful analogy in the present context, Brereton J made the following comment: (paras [28] and [29])
"28 However, this is not an absolute rule, as appears from the judgment of Plowman J in John Bishop (Caterers) Ltd v The National Union Bank Ltd [1973] 1 All ER 707; see also Fiduciary Ltd v Morning Star Research . Where there is a complete identity between the corporate plaintiff and the individual plaintiff, so that all plaintiffs are suing in relation to one and the same defendant, and all plaintiffs must succeed or fail together, security will not ordinarily be ordered against only one of them [ Bishop , 709-710]. But where the various plaintiffs' claims have different elements and aspects, so that they will not all necessarily succeed or fail together, although the existence of individual plaintiffs is a factor that diminishes the defendant's claim to be entitled to security against the corporate plaintiff, it does not extinguish it [ Interwest Ltd v Tricontinental ]. And where the degree of overlap between the claim of the individual and corporate plaintiffs is comparatively small, such that separate orders for costs might be made in respect of each of the plaintiffs, it is usually appropriate that an order for security be made [ Bishop , 716; Fiduciary v Morning Star , 33-36].
29 In the present case, while all the plaintiffs rely on similar facts, they do not sue on the same cause of action. This is particularly so in respect of the Trade Practices claims. Each plaintiff separately has to prove reliance, and each plaintiff separately has to prove that plaintiff's own damages. Importantly, it is only in respect of the Trade Practices claims that liability is asserted against the third and fourth defendants."
46 Each counsel analysed the Further Amended Statement of Claim in order to determine the degree to which the actions by each plaintiff were interlocked. The plaintiffs said the same issues will arise in each case and the same evidence will be called to address those issues. Whilst the company relied upon contract counts, which were not available to Mr Carter, the evidence to be called in relation to the defendants' retainer by the company would also be relevant to the allegations of negligence made by both the company and Mr Carter. Hence, according to the plaintiffs, the cases to be presented on behalf of each plaintiff were substantially the same.
47 The defendants responded that there were differences between the position of each plaintiff. Indeed, to come within the Prudential principles the second plaintiff had to establish an independent cause of action. Further differences, as yet unforeseen, may also emerge.
48 I believe, however, that the cases to be presented by the first and second plaintiffs are, on the pleadings, substantially the same. There is not complete overlap, but the two cases appear to be very similar. Since they are not identical, I should, nonetheless, consider whether the existing security can be said to be adequate.