Logan APZ Pty Ltd v Council of the City of Logan [2017] QCA 288

SUPREME COURT OF QUEENSLAND

CITATION: Logan APZ Pty Ltd v Council of the City of Logan [2017] QCA 288

PARTIES: LOGAN APZ PTY LTD ACN 150 788 319 (appellant) v COUNCIL OF THE CITY OF LOGAN (respondent)

FILE NO/S: Appeal No 2881 of 2017 / SC No 4503 of 2016

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: Supreme Court at Brisbane – Unreported, 22 February 2017 (Applegarth J)

DELIVERED ON: 22 November 2017

DELIVERED AT: Brisbane

HEARING DATE: 14 September 2017

JUDGES: Gotterson and McMurdo JJA and Mullins J

ORDERS: Appeal dismissed.Appellant to pay the respondent’s costs of the appeal on the standard basis.

CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – SECURITY FOR COSTS – AMOUNT AND NATURE OF SECURITY – where the appellant and the respondent entered into an agreement for the lease of land – where the respondent asserted it had terminated the agreement – where the appellant brought a claim for specific performance of the agreement and damages – where the learned primary judge made orders for security for costs on application by the respondent – where the appellant appeals the quantum and form of the security for costs – whether the learned primary judge erred by having regard to the actual legal costs chargeable between solicitor and client rather than predicting the costs assessed on the standard basis after a trial – whether the learned primary judge failed to discount his assessment of the amount of security to acknowledge the prospects of an early resolution – whether the learned primary judge erred by excluding security in the form of a registered mortgage over land / Uniform Civil Procedure Rules 1999 (Qld), r 670 / Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497; [1987] FCA 102, approved / Farmitalia Carlo Erba SrL v Delta West Pty Ltd (1994) 28 IPR 336; [1994] FCA 950, considered / House v The King (1936) 55 CLR 499; [1936] HCA 40, cited / Lanai Unit Holdings Pty Ltd v Malleson Stephen Jacques [2016] QSC 2, cited / Plyable Pty Ltd v Go Gecko (Franchise) Pty Ltd [2016] QSC 249, cited / Procon (Great Britain) Ltd v Provincial Building Co Ltd [1984] 2 All ER 368, approved

COUNSEL: D A Savage QC, with L D Bowden, for the appellant / L F Kelly QC, with D M Turner, for the respondent

SOLICITORS: R A Quinn (sol) for the appellant / Clayton Utz for the respondent

GOTTERSON JA: It is common ground that Logan APZ Pty Ltd (“the appellant”) and the Council of the City of Logan (“the respondent”) entered into a written Agreement for Lease (“the agreement”) of land known as 4150 Pacific Highway Loganholme (“the premises”) on 10 October 2012. By the terms of the agreement, the respondent was to grant the appellant, then the owner and operator of the “Alma Park Zoo”, a lease of the premises for 60 years with an option for a further 40 years, subject to certain conditions.

In 2016, the appellant commenced proceedings against the respondent in the Supreme Court of Queensland over the agreement which the respondent asserted it had terminated on 26 May 2015. By way of substantive relief, the appellant claims specific performance of the agreement or, alternatively, of the lease contemplated by it, and the sum of $14,436,780.00 as damages for breach of contract or as equitable damages for delayed performance under s 8 of the Civil Proceedings Act 2011 (Qld).¹

On 22 February 2017, a judge of the Trial Division heard two applications filed in the proceeding. One was an application filed by the respondent, as defendant, on 20 January 2017 for an order for security for costs.² The other was an application filed by the appellant on 31 January 2017 for an order pursuant to r 483 of the Uniform Civil Procedure Rules 1999 (Qld) that “the liability of the Defendant to the Plaintiff” be tried separately and in advance of the appellant’s damages claim against the respondent.³

On the following day, 23 February 2017, his Honour made orders in which security for costs was ordered. He dismissed the application for a separate determination. He ordered that the appellant pay the respondent’s costs of the two applications on the standard basis.⁴

The order for security for costs

The security for costs order made by the learned primary judge was in the following terms:

“1. Pursuant to rule 670 of the Uniform Civil Procedure Rules (Qld) and section 1335(1) of the Corporations Act 2001 (Cth), the plaintiff provide security for the defendant’s costs of and incidental to this proceeding, up to and including the first day of trial, in the sum of $370,000.

The plaintiff provide the security in paragraph 1 within 28 days of the date of this order, in the form of an unconditional bank guarantee from an Australian owned bank (as recognised by the Australian Prudential Regulation Authority) in favour of the defendant, with no expiration date.

This proceeding be stayed pending provision of the security in accordance with paragraphs 1 and 2.

In the event that the plaintiff provides security in accordance with paragraphs 1 and 2, the defendant has liberty to apply for the provision of additional security upon giving 7 clear business days’ notice in writing to the plaintiff.”

The appeal

On 21 March 2017, the appellant filed a notice of appeal against two aspects of the security for costs orders, the dismissal of the application for a separate determination and the costs order.⁵ The two aspects of the security for costs orders challenged were the fixing of the amount of the security at $370,000 up to and including the first day of the trial and the direction that the security be in the form of a banker’s guarantee.

Several days prior to the hearing of the appeal, the solicitors for the appellant advised the Court that the appeal against the dismissal of the separate determination application would not be pursued. The correspondence stated that the appeal with respect to the security for costs would be fully argued.⁶

The approach of the learned primary judge

The learned primary judge observed that for the reasons stated in the respondent’s written outline of submissions in support of its application, the discretion to order security for costs was engaged.⁷ That is not challenged on appeal. It was not a case, his Honour observed, on which he could venture any definite view concerning prospects of success.⁸

His Honour noted that he had been assisted by the principles set out in the parties’ respective submissions. Those principles involved a number of propositions which he summarised as follows:⁹

“There is the recurrent problem of attempting to quantify at an early stage in the proceedings the ultimate costs. Account has to be taken of what would be the outcome on an assessment. I have to consider whether security ought to be provided up to a particular stage.”

His Honour also recorded the assistance he had gained from the recent judgment of Bond J in Plyable Pty Ltd v Go Gecko (Franchise) Pty Ltd¹⁰ in which principles governing the exercise of the discretion and the assessment of quantum in awarding security for costs were set out.

There were two components to the $370,000 fixed by the learned primary judge: $70,000 for “past costs”, that is to say, costs already incurred by the respondent in the proceeding and $300,000 for “future costs”, that is to say, costs to be incurred in the future up to and including the first day of trial. These amounts were arrived at by the learned primary judge having regard to his analysis of reports prepared by two costs experts.¹¹

Mr Tony Garrett of Hickey & Garrett, Legal Costs Consultants, swore an affidavit on which the respondent relied in support of its security for costs application.¹² Exhibited to it were the letter of instructions Mr Garrett had received from the respondent’s solicitors¹³ and his letter dated 9 November 2016 to the Registrar of the Supreme Court which was in the nature of the report providing his estimate of the standard costs likely to be recovered by the respondent should it succeed in the principal proceeding.¹⁴

Mr Garrett assessed costs in two parts. Part A was for standard costs already incurred by the respondent immediately prior to receipt of the Reply and Answer. Part B was for “likely costs incurred from the receipt of the [appellant’s] Reply and Answer” and for the “likely steps to be included up to and including the first day of the trial”.¹⁵ His respective assessments were $107,898.75 for Part A and $447,832.30 for Part B, in total $555,731.05.

For the appellant, reliance was placed upon the affidavit of Mr Graham Robinson, Barrister, who practices in the area of the law of costs.¹⁶ Exhibited to the affidavit were Mr Robinson’s report and supplementary report both dated 5 December 2016.¹⁷ Mr Robinson had been supplied with Mr Garrett’s report and the instructions on which it had been prepared. Mr Robinson identified methodological issues on which he agreed or disagreed with Mr Garrett. He arrived at estimates of $42,355.16 for Part A costs and $183,330.13 for Part B costs, in total $225,685.29.

The learned primary judge evidently adopted Mr Garrett’s categorization of legal work for his Part A and Part B assessments as the basis for his categorization into work for which “past costs”, as he called them, had been incurred, and work for which “future costs” would be incurred. It was appropriate for him to have done so especially since both experts prepared their reports by reference to that categorization.

His Honour had regard to criticisms made by Mr Robinson of Mr Garrett’s assessments and to criticisms made by the respondent’s counsel of Mr Robinson’s assessments. How he relied upon the respective assessments and adjusted for criticisms that he considered were validly made about them, are central to the appellant’s criticism of the decision under appeal. Those aspects of his Honour’s approach as are criticized by the appellant are detailed later in these reasons.

As to the form of security, the learned primary judge noted that the appellant had offered security by way of first registered mortgage over real property.¹⁸ He rejected that as a satisfactory form of security for several reasons: the real property to be mortgaged was not identified; the respondent would have to go to the trouble and expense of enforcing the security were it necessary to do so; and, if it did, the respondent could be exposed to allegations of deficiencies in the manner in which it enforced the security.¹⁹ His Honour continued:²⁰

“If the plaintiff does have a claim of reasonable prospects for an order for specific performance and, in addition a claim for $14.4 million, then it should be able to borrow against its prospects. It seems to me there is no reason as to why the order for security should not be in the ordinary form. The plaintiff, if it has such a good claim, can go to a bank and get a bank guarantee and pay for it, which is the usual form of security if it does not want to pay money into Court. So I will not delay to look at the form of order, but I am inclined to make the usual form of order which would require the security to be in the form of, say, a bank guarantee or such other form of security as satisfies the registrar, taking account of my comments that a registered first mortgage would not be appropriate in the circumstances.”

The learned primary judge considered that costs should follow the event. He rejected a submission that the appellant pay costs on an indemnity basis.

Grounds of appeal

Relevantly, the appellant relies on the following grounds of appeal:²¹

“1. The learned applications Judge erred in that he gave no proper reasons for assessing the quantum of the security for costs, the form of the security or the costs of the application.

To the extent that there were reasons, none of those reasons supported or adequately support the order for security for costs made by the learned applications Judge or the order for the costs of the application actually made.

The learned applications Judge erred in assessing the quantum of security for costs, by ignoring or failing to be guided by the principle that the purpose of ordering security for costs is to provide security against the possibility that if the appellant (plaintiff) failed in its action, it would not be able to pay the defendant’s assessed party and party costs.

The learned applications Judge erred in that he failed to give sufficient weight to the report of Mr Robinson, for the appellant (plaintiff), in that the report of Mr Robinson was the only evidence before him as to the costs properly assessed on the Supreme Court scale.”

In the notice of appeal, the appellant sought by way of relief that the fixing of the security at $370,000 be set aside and that this Court fix the amount of the security and order that it be provided by way of first mortgage over real property in Queensland.²² However, in its written outline of argument, the appellant indicated that it would be content with an order providing for security in a form acceptable to the Registrar in the sum of $100,000.²³

Turning to the grounds themselves, I note that Grounds 1 and 2 are concerned with an alleged insufficiency or inadequacy of reasons for the orders made. Ground 3 asserts an error of principle in failing to have regard for the purpose for which security for costs is ordered. Ground 4 engages with the expert evidence before the learned primary judge and impliedly impugns Mr Garrett’s assessment as prepared on an inappropriate basis.

The appellant’s submissions did not address these grounds individually. In its written outline of argument, the appellant summarised its contentions thus:²⁴

“The primary judge erred in disregarding for the purposes of the security application and orthodox application of discretionary considerations namely:

the cogency of the evidence required to support an order for security;

the quantification of costs on a party and party basis;

the time at which the application was made and the consequent prospect of settlement etc;

such that the exercise of his discretion was vitiated by error in those regards.”

At the hearing of the appeal, senior counsel for the appellant further summarised his client’s contentions into three propositions. They are:that by preferring Mr Garrett’s report, the learned primary judge had erred by having regard to actual legal costs chargeable as between solicitor and client rather than to costs assessed on the standard basis after a trial;²⁵that his Honour departed from the authorities by not allowing any discount from the costs assessments he made;²⁶ andthat to have excluded security in the form of a first registered mortgage over land was “outside the proper bounds of the exercise of discretion”.²⁷

The oral submissions of both parties addressed these propositions. It is convenient then to adopt the appellant’s propositions as the appropriate frame of reference for deciding this appeal.

Proposition 1

The criticisms made by the appellant in respect of the Part A and Part B components of costs respectively tend to differ. In light of that, I propose to consider them separately.

Part A component

Appellant’s submissions: The appellant noted that Mr Garrett’s letter of instructions set out not only the professional time in hours that personnel at the respondent’s solicitors had spent on steps taken up to the point immediately preceding receipt of the Reply and Answer, but also the firm’s charge-out rates for a range of fee earners from paralegals ($185 per hour), up to partners ($518 per hour).

Although Mr Garrett reduced the professional time by 45 per cent for his assessment and adopted a charge-out rate of $298 per hour, the appellant submitted that those measures were insufficient. Mr Garrett’s assessment was not item-based. It did not, therefore, accord with the Supreme Court Scale of Costs (“the Scale”). Mr Robinson’s assessment did accord with the Scale and, it was submitted, should have been preferred.

Respondent’s submissions: The respondent submitted that the role in which the learned trial judge was engaged was not one of a costs assessor. It was open to his Honour to have been guided by both reports in exercising the broad discretion involved, especially where he was dissatisfied with significant aspects of Mr Robinson’s report. Notably, the figure of $70,000 is, in fact, closer to Mr Robinson’s assessment.

Discussion: A perusal of Mr Garrett’s report reveals that he well appreciated that the information given in his instructions did not align with the Scale with respect to categorisation of work or charging rates. As to the former, he noted in his report:²⁸

“With Part A, in assessing the recoverable costs on a standard basis the letter of instructions indicates a number of items which are grouped together by various producers. Some of this work would not be recoverable on a standard basis as an item on the Supreme Court Scale, but may be recoverable as a part allowance under care and consideration eg supervision or research.

Without personally having access to the file it is difficult to be precise as to what costs would be recovered on a standard basis should the matter proceed to an assessment.

With the limited information I have received, I believe it is appropriate for me when attempting to determine the likely recovery of costs to provide a percentage discount of the fees that may be recovered on a standard basis in relation to Part A.”

As to the charging rates, Mr Garrett said:²⁹

“The Supreme Court Scale allows for a personal attendance rate of $74.50 for the first 15 minutes or part thereof if the attendance demonstrates skill or legal knowledge, which equates to an hourly rate of $298 per hour. If an allowance of 25% for care and consideration is made, then the solicitor's hourly rate would equate to $372.50 per hour.”

Mr Garrett attempted to reconcile these differences in the following way:³⁰

“Taking into account the matters set out in this report as to the distinction between time costing and the use of the Scale and the likely overlapping of services provided by the various fee earners, I have converted the time being claimed by the fee earners to the applicable Supreme Court hourly rate. In summary, I believe that a reduction of 45% would be applicable for professional fees in a matter of this nature and then an allowance made for care and consideration. The methodology I have adopted reflects the quantum of fees the Defendant would he likely to recover on a standard basis.”

Adopting that methodology, Mr Garrett took the hours given in his instructions for each of the various steps in the proceeding that had been undertaken and reduced them by 45 per cent. He applied the rate of $298 per hour to the derived hours.

By contrast, Mr Robinson adopted an item-based assessment consistently with the Scale. It need be noted, however, that the Scale sets fixed item rates for certain work generally of a routine nature, and fixed quarter hourly rates, as alluded to by Mr Garrett, for attendance by a solicitor at court or other venue. Significantly, for work for which a cost is not provided in the Scale, the amount to be allowed is the cost the Registrar considers reasonable. Further, the general care and conduct component is to be allowed having regard to a range of factors including complexity and novelty of the proceeding, its difficulty, the number of documents prepared or perused, and its importance to the client.

Unsurprisingly, the amount to be allowed for work already done in completed stages of the proceeding were assessed in different amounts by Mr Garrett and Mr Robinson. For example, for the solicitor’s work in relation to the Conditional Notice of Intention to Defend and Request for Further and Better Particulars, Mr Garrett would have allowed $7,897 (26.5 hours at $298 per hour) whereas Mr Robinson would have allowed some $414.90.³¹ The latter sum was comprised of $158.40 for perusal of the Further Amended Statement of Claim (32 folios at $4.95 per folio) and $256.50 for drawing and producing a brief to counsel to prepare a request for further and better particulars.

The learned primary judge observed with respect to this example that if Mr Robinson was correct, then the respondent would recover only $414.90 which he disparaged as being “a princely sum”.³² He added:³³

“…a successful litigant who has to pay several thousand dollars to its solicitors to appropriately attend to a defence in a complex commercial matter should be compensated more than $414.90. To only award costs at that scale level is ridiculous, and for my part, having spent the time addressing this matter, I would entertain at some later time, on proper notice, an application to fix the defendant’s costs, as summarised in paragraph 33 of Mr Robinson’s report, in a more realistic amount than $414.90, given that I have spent the judicial time looking at that point.”

Having regard to the criticisms made by the parties of their opponent’s respective reports, his Honour determined to make a substantial discount to the respondent’s Part A costs as assessed by Mr Garrett to allow for “certain matters as identified by Mr Robinson”.³⁴ Evidently, the discount made was a substantial one.

I am unpersuaded that the appellant has identified any error of legal principle or error of the other kinds enumerated in House v The King³⁵ as ones that vitiate the exercise of a judicial discretion. His Honour accepted that he should set the security of the costs amounts “having regard to the Court scale”.³⁶ He was presented with an evidential platform consisting of two reports each of which attempted to do that but each of which was open to criticism.

Mr Garrett’s assessment ventured, in an admittedly imprecise way, to convert the hours-based information he was given to what, in his experience, would approximate the outcome if the Scale was applied, incorporating the discretions allowed within it.

Mr Robinson’s approach aligned more with the methodology of the Scale. However, his Honour instanced what he considered to be an unrealistic application of it.

In the circumstances, it was clearly open to his Honour to be guided by both reports and to adopt a figure between the respective assessments. His Honour’s approach was orthodox in that respect. By contrast, it might well be said that it would have been open to legitimate criticism for his Honour to have made no allowance for Part A costs in the base of the evidence, or to have arrived at an amount outside the range set by the respective assessments.

Part B component

Both experts assessed on the Scale basis, work to be done in the proceeding beyond receipt of the Reply and Answer. Mr Robinson accepted the rates for junior counsel used by Mr Garrett. He adopted a lower rate than Mr Garrett for senior counsel.

The learned primary judge considered that Mr Robinson has been “too conservative” having regard to his Honour’s judgment of the complexity of the case. Further, Mr Robinson had underestimated the length of the trial in his Honour’s opinion. He expressed his views on these aspects in the following way:³⁷

“There are differences between Mr Garrett and Mr Robinson’s estimates. It seems to me that Mr Robinson is too conservative in some respects concerning the involvement of solicitors, junior counsel and senior counsel in a case of this complexity and conferring with witnesses, experts and the like. Mr Robinson based his estimate of disclosure and the like on an instruction that there would be 700 documents. It would be surprising if the plaintiff had, at the end of this matter, only 700 documents in relation to a plan to build a huge zoo, which, according to the plaintiff, would generate $14 million in profits by now. I consider that the documents are likely to be more.

In any event, it seems to me that Mr Garrett has a more realistic view of the likely assessment in respect of the significant professional costs associated with interlocutory stages of this matter. Moreover, Mr Robinson’s assessment was based on an instruction that the trial would take six days. I think the prospect of this case taking six days is remote. If there is a single trial, it is likely to take 10 days. If there were separate trials, I would venture to suggest that if the combined trial took 10 days, then the total preparation would be much more, counsel and solicitors having to prepare, in effect, for two trials.”

His Honour considered that the respondent’s future costs were “likely to be closer to the figure estimated by Mr Garrett” of $447,832.30.³⁸ Notwithstanding, he adopted $300,000 as “an appropriate figure”³⁹ which, also, was closer to Mr Robinson’s assessed amount for future costs.

Appellant’s submissions: The appellant criticised aspects of Mr Garrett’s assessment of Part B costs. He overestimated the number of documents to be reviewed; he allowed for senior counsel unnecessarily; and he “doubled up” in some instances. It was an assessment that contained “an allowance for every possible contingency”, and allowances for senior counsel “at every possible stage.” “It grossly overestimated” the work involved.⁴⁰ The purpose of these criticisms was to illustrate why the learned primary judge ought to have taken no, or minimal, guidance from Mr Garrett’s assessment.

Respondent’s submissions: The respondent submitted that it was open on the evidence for the learned primary judge to have adopted the figure of $300,000. Significantly, the complexity of the issues, the number of documents needing review, the extent to which senior counsel would need to be engaged and the duration of the trial, were all factors about which his Honour was required to gain an impression. He had done so. There was no basis for interfering with that.

Discussion: In Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd⁴¹ French J (as his Honour then was) emphasised that the process of estimation undertaken by a judge determining a security for costs application embodies to a considerable extent necessary reliance on the “feel” of the case the judge has after considering relevant factors. This observation has been consistently applied in the Supreme Court of Queensland.⁴²

Mindful of the reliance on the feel for the case, the Court of Appeal in England developed a cautious approach to detection of error in an assessment of an amount for security for costs where such reliance had been instrumental in an assessment made for a commercial case by a judge with great experience in commercial litigation. The approach is illustrated in the decision of that Court in 1984 in Procon (Great Britain) Ltd v Provincial Building Co Ltd.⁴³ It is, in my view, an approach that ought to be applied by this Court.

Here, the experienced learned primary judge’s feel for the case was instrumental in the impression he gained of the number of documents that would need to be reviewed and the extent to which senior counsel would need to be briefed. It was also instrumental in his assessment of the likely duration of the trial, which, it might be noted, the appellant has not criticised on appeal.

Beyond stating its criticisms, the appellant has quite failed to demonstrate that his Honour’s impressions as to number of documents to be reviewed or to the degree of involvement of senior counsel were misconceived. Those impressions informed his criticisms of Mr Robinson’s assessment. Given these criticisms, no viable error in the exercise of the discretion has been established in respect of the Part B costs insofar as it was guided by Mr Garrett’s assessment.

I would add that just as an order for security for costs is not akin to a final assessment of recoverable costs, an appeal against an order fixing the amount of security is not a process in which this Court reviews individually the respective amounts allowed by experts in their estimates for every item in the Scale as it might apply to the proceeding. It need be borne in mind that the amount arrived at as the security, is, as Jackson J aptly observed in Lanai Unit Holdings Pty Ltd v Malleson Stephen Jacques,⁴⁴ “but a provision against a contingent amount that depends on a number of things that are not amenable to precise prediction.”

Conclusion: For these reasons, I have concluded that the appellant’s Proposition 1 has not been substantiated.

Proposition 2

Appellant’s submissions: The appellant contended that the learned primary judge had ignored orthodoxy by failing to discount his assessment of the amount of security. It was submitted that he ought to have done that by fixing an amount for security up until the mediation stage rather than the first day of trial and by adopting a lower figure particularly with regard to future costs in acknowledgement that the respondent could apply later for an increase in the amount.⁴⁵ In particular, reliance was placed upon the observations of Heerey J in Farmitalia Carlo Erba SrL v Delta West Pty Ltd⁴⁶ with respect to discounting for “the chance of the case collapsing without coming to trial, with the consequence that the security ordered turns out to be an overprovision”.⁴⁷

Respondent’s submissions: The respondent did not challenge the orthodoxy of discounting. It was submitted that the learned primary judge was conscious of it and adverted to it. The figure of $300,000 reflected meaningful discounting against Mr Garrett’s assessment of Part B costs which his Honour regarded as more reliable.

Discussion: That the learned primary judge was conscious of the discounting of which Heerey J spoke is evident in the following passage from his reasons:⁴⁸

“I should take into account the chance of the case collapsing, along with the chance, I suppose, of the case going for longer and becoming more complicated than is presently the case. It seems to me that the prospect of the case resolving or going shorter than expected has to be balanced against the risk of the case going longer than expected, conscious of the fact that a party can make a further application if there is material changes of circumstances.”

Further, he specifically considered the appellant’s proposal that any security ought to be to the mediation stage only.⁴⁹ As to it, his Honour observed:⁵⁰

“As to timing, the plaintiffs submits at that an order for costs should be staged, and so the plaintiff would be seeking an order for mediation. They concede there hasn’t been disclosure and the plaintiff is “confident that there can be useful mediation without full disclosure”.

I do not know upon what basis that confidence rests. I have not been asked to order a mediation, and I would not force the defendant to a mediation until it had had, if not full disclosure, then substantial disclosure of all documents in relation to the plaintiff’s capacity to construct this zoo and its financial capacity to operate a zoo at a profit. It seems to me that anything else would risk a mediation being a waste of time and money. I am not attracted to the idea of ordering a certain amount of security up to the time of a mediation when the conduct of a mediation and when it would be held is a matter for speculation, and so there will simply be one order for security.”

Those observations disclosed his Honour’s reasons for not adopting mediation as an appropriate stage for assessment of the amount of the security. They also revealed why he had serious reservations towards predicting, at that point, that mediation would bring an end to the proceeding. It was appropriate for his Honour to have discounted taking into account those reasons and reservations.

I accept that his Honour did not state how he discounted for the prospects of the case collapsing by stating a percentage rate or similar for the discount. However, it was neither necessary nor appropriate for him to have discounted in such a manner. In this context, the process of discounting is not one of allowing discrete deductions for conceivable contingencies that might shorten the proceeding.

To my mind the appellant has not demonstrated any legal error on the part of the learned primary judge with respect to discounting as would vitiate the exercise of the discretion by him. Accordingly, I am of the view that this proposition has not been established.

Proposition 3

Appellant’s submissions: In oral submissions, the appellant identified the object of its complaint as being that the order made was not one that left the form of the security to the satisfaction of the Registrar.⁵¹ It was further submitted that concerns about costs of enforcement and exposure to claims arising out of enforcement ought not, as a matter of principle, prejudice a registered mortgage as a form of security when it would in all respects be adequate.

Respondent’s submissions: The respondent submitted that the appellant’s proposed security was in no way acceptable. The land to be mortgaged had not been identified notwithstanding that, on 7 July 2016, the appellant’s solicitors had requested that it be identified.⁵² The land’s value, its ownership and the extent, if any, to which it was already collateral for debt were unknown by the respondent and by the learned primary judge.⁵³

Discussion: It clearly was open to the learned primary judge to have made the order he did make for security by way of bank guarantee. There was no error in principle on his part in not leaving the form of security to the satisfaction of the Registrar, especially in circumstances where the only other form of mooted security was wholly unparticularised. It goes without saying that it would not have been a sound exercise of the discretion to order security in the form of a registered mortgage over unidentified land.

I do not understand his Honour to have intended to formulate and act upon some principle of general application that a registered mortgage over land is an inferior form of security for costs. After all, he did not even have before him a proposal with respect to identified land.

To my mind, the appellant has not demonstrated that in this respect the making of the order was impaired by legal error. I consider that this proposition, too, has not been made out.

Disposition

None of the three propositions advanced by the appellant has prevailed. As a result, it has failed to make good any of its grounds of appeal. The appeal must therefore be dismissed.

Orders

I would propose the following orders:Appeal dismissed.Appellant to pay the respondent’s costs of the appeal on the standard basis.

McMURDO JA: I agree with Gotterson JA.

MULLINS J: I agree with Gotterson JA.

Footnotes

1. Further Amended Statement of Claim filed 19 October 2016: AB71-72. ↩

2. AB566-567. ↩

3. AB126-127. ↩

4. AB678-679. ↩

5. AB680-681. ↩

6. Separate submissions were not advanced by the appellant in respect of the costs order made in respect of the security for costs application. ↩

7. AB673: Reasons Tr6 ll44-46. See also Appellant’s Written Submissions, para 37: AB636; Appellant’s Oral Submissions: AB47 Tr1-47 ll24-28 (to the effect that it was not submitting that no order for security for costs ought be made). ↩

8. Ibid ll46-47. ↩

9. AB674 Reasons Tr7 ll3-7. ↩

10. [2016] QSC 249 at [47], [48]. ↩

11. Neither expert gave oral evidence in chief or was cross examined. ↩

12. Affidavit filed 31 December 2016: AB216-260. ↩

13. Exhibit IAG-1: AB219-238. ↩