3081/97 PETER LAWRENCE LEWIS v NORTEX PTY LIMITED (In Liq)
1750/02 LAMRU PTY LIMITED v KATION PTY LIMITED
JUDGMENT
1 HIS HONOUR: A number of further matters are before me this morning in this protracted litigation. They have some interrelation. There are two applications concerning security for costs. One is an application by the first and second defendants for extension of an order for security for costs that they originally obtained from the Registrar and which, on review, was subsequently varied by me. The form of the order, as it was finally made, was that the security be given by way of guarantee of Mr Lamb and Ms Tilbury to the extent of $120,000. That security was subsequently given. The application now is for the amount to be extended by reason of the greatly extended estimate of the length of the hearing and for security formally to be given over the equity of redemption in Mr Lamb's and Ms Tilbury's jointly owned home ("the property"), which is undoubtedly their principal asset. The liquidator now also applies for the first time for security for his costs. The reason for his application is that he has previously deemed the fund held by him sufficient to meet his costs of the proceedings, but he says that that situation no longer applies, in view of the diminution of the fund by the costs of the litigation to date. The other application is an application for directions arising from the transformation, since the matter was last before the Court, of the state of Mr Lamb's health from normal to a diagnosed condition of lymphoma. This has not only a possible bearing on the date and manner of the trial, but also potentially some impact on the security for costs situation.
2 To deal with the third matter first, the diagnosis and prognosis of Dr Jonathan Blackwell, a consultant physician in clinical haematology and medical oncology, in relation to Mr Lamb is now available. The report is short. On first reading I thought it inadequate. But on a second reading, it seems to me that, although elliptical in its terms, it probably says all that can be said at the present time. Dr Blackwell records a diagnosis of malignant lymphoma. His prognosis is, "I would expect, however, for him to make a full recovery within the next twelve months." He does not state an alternative prognosis, if that happy expectation is not met. The disease requires radiation therapy and chemotherapy lasting about six months, during which "Mr Lamb is likely to be physically and mentally impaired as a result of treatments."
3 Initially there was a suggestion that Mr Lamb's evidence needed to be taken before me urgently, which was problematical, in view of my lack of immediately available sitting time. However, it seems to me that, happily, the November/December dates for which the case is presently fixed probably meet, as best they can be met on the present evidence, the requirements of Mr Lamb's medical condition. He should, by that time, have undergone the heaviest impact of his immediate treatment and there is reason to hope that he will be reasonably well at the time he needs to give oral evidence, and may be well enough to give instructions in the meantime. Of course, if that situation changes, the position may need to be revisited. It is important that the plaintiff bring the matter back to the Court for consideration as a matter of urgency if there is any significant change in the medical view as to Mr Lamb's condition.
4 The only dissent from the view I have expressed was by Mr M W Young, of counsel for the plaintiff, who at least suggested, if he did not emphatically press, that it may be desirable for Mr Lamb's evidence to be taken on commission in the meantime. He said that it would not so much matter if his evidence were heard before a person other than myself, because I had had some opportunity to form a view of Mr Lamb's credibility when he was cross examined before me on the voir dire. However, that, in my view, only emphasises the desirability of the balance of his evidence being taken before me. I indicated a very provisional view that his credit had been done no particular harm by his cross examination for a very limited time on a very limited issue, whilst seeking to make it quite plain that that situation might well change upon fuller and more wide ranging cross examination. That occurred because I had to make a ruling as to the admissibility of the important document which was being tendered. Its admissibility really turned entirely on whether certain oral evidence of Mr Lamb was accepted. I therefore had to make an assessment of his evidence on that point. It is most desirable, in my view, that I should hear the balance of Mr Lamb's oral evidence. Furthermore, I have indicated the matter should come back to me if there is a change in Mr Lamb's medical condition. But on the material now before me, Mr Lamb will be better able to cope with the stresses of the witness box in November/December than he would during the period of treatment which will occur between now and that time. I therefore do not accede to the suggestion that his evidence be taken on commission.
5 So far as the motions concerning security for costs are concerned, there is no issue before me as to the revised quantum of security sought in favour of the first and second defendants, nor as to the fact and quantum of security sought by the liquidator, provided, Mr Young says, the orders for security are in the same form as the order for security that I have already made, ie, there is no requirement of a charge over the property. Mr Cotman, of Senior Counsel for the first and second defendants, and Mr Ventry Gray, of counsel for the liquidator, have pressed on me that the circumstances have now so changed that, in addition to the other orders that they seek, I should order that there should be some formal charge to support the security over the equity of redemption in the property. If it were limited to the equity of redemption, they say, there would be no good reason why the Bank, which holds a first mortgage over the property, should not give its consent to the charge. Without that consent the further encumbering of the property would be a breach of the terms of the Bank's mortgage.
6 Mr Cotman gave, as the change of circumstances on which he relied, the fact that there was now no shortage of time in which to deal with the Bank concerning a charge or mortgage: see Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 238 at [4], [5] and [6]. Secondly, he relies on the increase in the costs involved. Thirdly, he relies on the diminution, probably to extinction, of the fund, that it was formerly thought would be available in the liquidator's hands and the diminution of assets in the plaintiff's camp that will be caused by the greater costs burden that will fall on the plaintiff as well as the defendants.
7 Mr Gray added a fourth change in the form of the deterioration in Mr Lamb's health which may impact on his earning capacity. He also suggested that there would be no real prejudice to Mr Lamb and Ms Tilbury in giving the security since their asset would, in any event, be liable to be taken to satisfy a costs order, whether there were security or no, and suggested that the valid interests of the defendants in the circumstances required the protection of the property against third party interests.
8 Whilst I cannot say that those considerations put forward by counsel are totally illusory or of no account, in my judgment they ought not change the form of the order by which security has already been given. Lateness, from the point of view of dealing with the Bank, played some, but not a dominant part, in the conclusion that I earlier came to concerning security. The trial will now be longer for everyone, obviously absorbing more financial resources. But in my view the correct conclusion remains that the appropriate form of security is that which I previously determined and, subject in Ms Tilbury's case to the same requirement of evidence of independent advice as was required on the earlier occasion. I invite the parties to formulate appropriate orders in the light of these reasons for judgment.
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