Kurniadi v Loh [2005] FCA 976 | Case summary

REASONS FOR JUDGMENT ON MOTION FOR SECURITY FOR COSTS AND FOR PROGRAMMING ORDERS 1 Orders for security for costs and for programming directions are sought in respect of four applications filed in this Court by residents of Indonesia. The applicants are former investors in a Western Australian ostrich-farming project. They are members of a group of thirteen applicants each bringing their own separate proceedings. 2 The applicants made agreements with Ostrich Meat & Marketing Company (Australia) Ltd (OMM) in 1998 and/or 1999 for the purchase of ostriches for agistment and breeding by OMM. They say they were induced to do so by misleading or deceptive conduct by OMM in connection with projected income streams, its own financial situation and the payment of substantial commissions to foreign agents. In addition to the claims of misleading and deceptive conduct there are allegations of unconscionable conduct in contravention of s 51AC of the Trade Practices Act 1974 (Cth), breach of fiduciary duty and negligence. Former directors of OMM are also named as respondents. 3 Six of the applications were filed between 13 August 2001 and 30 May 2002. Each claimed recovery of amounts in the vicinity of $50,000. On 21 May 2002 the applicants in WAD 8 and WAD 9 of 2004 were ordered to pay security for the costs of the third and fourth respondents in the sum of $20,000. All applications were transferred to the Federal Magistrates Court on 14 August 2002 by order of Carr J. A further seven applications were filed in the Federal Magistrates Court on 18 October 2002 all raising similar claims against OMM and its directors. 4 A Registrar of the Federal Magistrates Court made orders on 2 September 2003 consolidating the applications. There was then an application on behalf of the second respondent that the proceedings be transferred to the Federal Court of Australia. McInnis FM transferred the consolidated application to the Federal Court. On 5 March 2004 Carr J ordered that the thirteen separate proceedings should remain consolidated until further order. He made directions for the expedition of future interlocutory steps and the trial of the action so that some or all of the applications could be brought to trial as soon as reasonably possible. His Honour foreshadowed that the Court would consider deconsolidation of part or all of the proceedings. 5 On 4 February 2005, for reasons then published, I ordered that the proceedings in WAD 8-20 of 2004 be deconsolidated and that each application be treated as a separate proceeding - Kurniadi v Loh [2005] FCA 49. In so ordering I expressed the opinion that the consolidation order had not led to a more efficient and expeditious progress of the matters to trial. The applicants in WAD 9 and WAD 10, who at that time remained the only legally represented applicants, were anxious to progress their matters to trial and had a reasonable prospect of so doing. The other applicants were legally unrepresented and remained so. I said, inter alia (at [19]): 'When W9 and W10 are ready to go to trial then I would be prepared to direct that they be heard together. In the event that any of the other applications is ready to go to trial at or about the same time, then I will be prepared to consider directions that any such applications be heard concurrently or consecutively and that evidence in one be evidence in all.' 6 On 6 April 2005, I published reasons for judgment dismissing strike out and summary judgment motions brought in respect of WAD 9 and WAD 10 of 2004. Security for costs in WAD 9 of 2004 was ordered and further directions given for the progression of both matters to trial. The amended substituted statement of claim then relied upon by the applicants was an inadequate pleading. It was nevertheless allowed to stand as a statement of facts and contentions. Pleadings were dispensed with and the respondents required to file and serve their contentions of fact and law - Salim v Loh [2005] FCA 372. As appears from the above, there have been no further steps taken in the other applications which had previously formed part of the consolidated proceeding. 7 Mr Robert Ashman, who is the second respondent in WAD 8 and WAD 18 and Mr Stephen Marshall who is the third respondent in WAD 11 and WAD 12 have filed motions seeking security for costs and further programming directions in those matters. The second respondent's motion for security for costs in WAD 8 and WAD 18 of 2004 8 The proceedings in WAD 8 are brought by Mr H Kurniadi. Those in WAD 18 are brought by Mr LT Lung. Mr Ashman's motion for security for costs is supported by an affidavit sworn by his solicitor, Mr Forbes, setting out the basis upon which the security is sought. 9 Mr Forbes refers in his affidavit to the history of the matter including the orders made by McInnis FM on 1 April 2003 in which the applicants in WAD 8 of 2004 (then WZ156 of 2002) and WAD 18 of 2004 (then WZ225 of 2002), in conjunction with other applicants were ordered to pay into Court the sum of $6,000 as security for Mr Ashman's costs. The amount so ordered was said by the learned magistrate to be intended to secure costs of interlocutory steps including the preparation of defences and preparing the matter for hearing up to and including mediation. The applicants were also ordered to pay Mr Ashman's costs of the application for security which were fixed at $700. The sum of $6,000 was paid into Court in accordance with the orders made on 1 April 2003. A mediation conference held on 17 June 2003 did not resolve the proceedings. 10 On 8 April 2005 I directed in WAD 9 and WAD 10 of 2004 that $700 out of the $6,000 held by the Court be paid to Mr Ashman in respect of the previous order for costs which remained unpaid. 11 According to Mr Forbes the documents in the case comprise about 36 boxes provided by the liquidator of OMM. At the time of swearing his affidavit he had not inspected any of them. Mr Ashman is neither an Australian resident or citizen. He lives and works in Singapore. Mr Forbes estimated that it would take at least five days and possibly more to go through the documents held in the Court. If the applications are heard after the related proceedings in WAD 9 and WAD 10 of 2004 then he accepts that the time required to consider the documents in relation to WAD 8 and WAD 18 will be drastically reduced. 12 Mr Forbes says that the applicants in the related proceedings have filed substantial reports by an accountant and a zoologist. The applicants in WAD 8 and WAD 18 have not filed any expert reports but will probably have to do so to progress the matter to trial. It would be necessary for Mr Ashman, through his advisers, to instruct similar experts to examine the reports provided by the applicants' experts and provide their opinions as to the correctness or otherwise of those reports. 13 The trial of the matters is likely to be more time consuming than would ordinarily be the case because the applicants are each unrepresented and an interpreter is likely to be required. 14 Mr Forbes prepared a schedule of likely costs which was exhibited to his affidavit totalling $36,793. This sum was estimated for each of the matters in which he was appearing. The third respondent's motions for security for costs in WAD 11 and WAD 12 of 2004 15 The proceedings in WAD 11 are brought by Mariati T Hardi. Those in WAD 12 are brought by Mr Soedarjanto. In each case an affidavit in support of the motion for security for costs was sworn by Mr Grant Pestell, a partner of the firm of solicitors representing the third respondent, Mr Marshall. 16 Mr Pestell's affidavits in support of the motions were in similar terms for both WAD 11 and WAD 12. After setting out the history of the proceedings he referred to a schedule which he had prepared setting out his estimate of Mr Marshall's likely taxed costs in each of the matters. In doing so he made provision for the fact that a considerable amount of the legal work done in defending the matter would be common to the work performed for Mr Marshall's defence to claims by other applicants. Weighed against this was the probability that if Mr Marshall succeeded at the trial of the action the applicant in each case would be severally liable for his costs in respect of the work done which is common to Mr Marshall's defence in each of these matters. The estimated costs in each case were $54,616. This covered the range of steps from initial instructions through to judgment and taxation of costs. 17 According to Mr Pestell, Mr Marshall had instructed him that he had previously had in his possession 36 boxes containing a variety of documents relating to the operation of the ostrich farm and that these were the documents provided by him to the liquidator of OMM. They are now held at the Court pursuant to a subpoena. Mr Pestell has conducted a preliminary inspection of those documents but he estimated that a full inspection would take at least three to five days. He has also been instructed that there are a further six boxes in the possession of Mr Marshall's accountants containing correspondence files. He anticipated that these would need to be discovered along with other documents which Mr Marshall had provided to his firm. 18 Mr Pestell anticipated that Mr Marshall would seek to interrogate the applicants in relation to various matters and documents. He adverted to possibility that the applicants might seek to amend or expand the claims along the lines of the amended statement of claim of the applicants in WAD 9 and WAD 10. The applicants might also seek to rely upon evidence similar to the expert reports circulated by the applicants in WAD 9 and WAD 10. 19 Mr Pestell estimated that the trial of the actions would take at least three days and possibly more. 20 In WAD 12 of 2004, the proceedings brought by Mr Soedarjanto, there was an additional consideration referred to by Mr Pestell. Following the transfer of what is now WAD 12 and other applications to the Federal Magistrates Court in August 2002, Mr Marshall had made applications for security for costs in those matters. On 7 February 2003 McInnis FM had dismissed those applications. Mr Marshall then appealed against McInnis FM's decision. The appeal was heard by Lee J. On 18 June 2003 Lee J allowed the appeal and set aside the order of McInnis FM which had dismissed Mr Marshall's application against Mr Soedarjanto for security for costs. 21 In allowing the appeal Lee J ordered that the respondents to the appeal pay Mr Marshall's costs. Those costs were ultimately taxed in the sum of $11,978. They were taxed on 16 December 2003 against each of the applicants who were respondents to the appeal, namely Messrs Kurniadi, Salim, Liaw, Herlina Salim, Hardi, Soedarjanto and Poerwita. In this respect the affidavit is a little misleading as it tends to suggest in its text that the costs were allowed against Mr Soedarjanto only. Mr Pestell seems in fact to be invoking Mr Soedarjanto's joint and several liability in asserting that costs were taxed against him in the sum of $11,978. As against Mr Soedarjanto, who did not appear on the hearing of this motion, Mr Marshall seeks, in addition to the order for security for costs in the sum of $40,000, an order that the sum of $11,978 be paid out to him in payment of his taxed and certified costs of the appeal. Whether security for costs should be ordered and programming directions made 22 In addition to the orders for security for costs which are sought by Mr Ashman in respect of WAD 8 and WAD 18 of 2004 and Mr Marshall in respect of WAD 11 and WAD 12 of 2004, those respondents also seek programming directions requiring that the applicant in each case file and serve a statement of contentions of fact and law relied upon. 23 There was a degree of confected concern in the respondents' submissions and affidavit material about the costs of each of these proceedings and the need to move them forward so that they would not be 'hanging over' the respondents' heads. The practical reality is that if WAD 9 and WAD 10 can be brought to trial the outcome in those cases is likely to have a very significant bearing on the question whether the remaining applications proceed. In my opinion, while some steps should be taken to define the contentions of fact and law raised against each of the respondents by the applicants in the present matters it would be impracticable and a waste of resources to program the present matters to trial as though the lead applications, WAD 9 and WAD 10, were entirely independent of them. The fact of the matter is that the processes of discovery and consideration of expert evidence in WAD 9 and WAD 10 are likely to substantially meet the requirements for discovery and consideration of expert evidence in relation to the other applications. 24 I am prepared to make orders in the terms sought requiring the filing of statements of facts and contentions by each of the applicants and reply statements of facts and contentions by the respondents. However, for the time being I will not program the matter further subject to the progress of applications WAD 9 and WAD 10. Indeed, I will be inclined to make directions at a later stage that discovery and inspection in WAD 9 and WAD 10 should stand as discovery and inspection for the purposes of the remaining applications save for any additional or supplementary discovery of documents that may be particular to those applications. 25 In my opinion each of these cases does warrant the making of an order for the provision of security for costs given that the applicants are non-residents, each apparently lacking any ascertainable assets in Australia. However, the quantum of the security which I will order will reflect my view of the future progress of these applications and the importance of the outcomes of the applications in WAD 9 and WAD 10. I will therefore order in each case that security for costs be provided by each of the applicants in the sum of $10,000. 26 In relation to the order sought against Mr Soedarjanto for payment out of the sum of $11,978 from such amount as is ordered by way of security for costs, it is not clear to me that the Court has power to do so at this stage. The costs order against Mr Soedarjanto and the other applicants mentioned earlier was made in different proceedings, namely an appeal against a decision of McInnis FM. I will not therefore make that order at this time. If Mr Marshall's counsel wishes to pursue that matter he may make supplementary written submissions in relation to it. In any event, I would not be inclined to order the payment out by Mr Soedarjanto of the whole of the amount given that he is jointly and severally responsible with other applicants. 27 Each of the applicants should be aware that it is necessary for him or her to formulate, as precisely as possible, the allegations which are made against each of the respondents. That is the function of the statement of facts and contentions which I will require each of the applicants to file. As was pointed out in the course of argument on the motions, it is not good enough to make global allegations against OMM. The way in which the directors of OMM are said to be involved needs to be spelt out in each statement of facts and contentions. Conclusion 28 For the preceding reasons I will order that security for costs be provided in the sum of $10,000 in each case, that the action be stayed as against the relevant respondent if the security is not provided within the time limited by those orders, and that statements of contentions of fact and law should be filed and served in any event by each of the applicants. The respondents will also be required to file statements of their contentions of fact and law by way of response. I certify that the preceding twenty eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.

Kurniadi v Loh

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