MODERN HOLDINGS PTY LTD -v- SCENTRE MANAGEMENT LIMITED [2022] WASC 19 (28 January 2022)

4 In summary, Modern Holdings pleads that oral representations were made to its directors by the defendants' senior executive managers regarding the re-development of the shopping centre. It claims that the defendants' representations were misleading and deceptive, or likely to mislead or deceive contrary to the Australian Consumer Law s 18. Alternatively, it claims that the representations were representations as to future matters for which there were no reasonable grounds, which turned out to be false and untrue, and accordingly misleading and deceptive contrary to the Australian Consumer Law s 4. Modern Holdings claims that it suffered loss and damage as a consequence of the defendants' misleading and deceptive conduct, and claims relief under the Australian Consumer Law, including damages.

5 Also in the alternative, Modern Holdings claims that it was owed a duty of care and diligence by the defendants, including by undertaking redevelopment works in a manner that would not inconvenience or cause interruption to its business; and to inform its directors, prior to their entering into the lease, of the defendants' intention to allow the introduction of another tenancy in the food court selling the same or similar foods; and to not recklessly place Modern Holdings' business in competition with another identical or substantially similar business trading in close proximity inside the food court. Among other things, Modern Holdings claims that the defendants (in breach of their duty) permitted the introduction of a Turkish fast-food tenancy selling the same or similar goods to those sold by its business in the food court, trading in direct competition and only metres away from its business. Modern Holdings claims that by reason of various breaches, it suffered loss and damage. It seeks damages in tort for negligence and breach of duty of care by the defendants, including for negligent misstatement.

6 Scentre Management and REI are represented by the same solicitors in the proceeding and a memorandum of appearance was filed on their behalf on 17 April 2020. Prior to the first case management conference, scheduled to be on 4 June 2020, consent orders were made by the case managing registrar which provided for the filing of an amended statement of claim by Modern Holdings. An amended writ and substituted statement of claim was filed on 8 July 2020. Since that time, Modern Holdings has provided further and better particulars of its claim; the defendants have filed a defence; and Modern Holdings has filed a reply. Pleadings are closed.

7 The proceeding was referred to mediation, which took place on 7 May 2021. The claim was not resolved and the mediation was adjourned sine die. This application for security for costs was made before the mediation conference, and programmed to a special appointment.

8 At the hearing of the application, Scentre Management and REI read and relied upon the affidavits of Rosemary Genevieve Jeanes, a solicitor engaged to act on behalf of the defendants, sworn 22 April 2021 and 5 July 2021, respectfully. Counsel also relied upon the written outline of submissions filed on 5 July 2021.[1]

9 Modern Holdings read and relied upon the affidavit of Ala'Audden Ahmad Al-Khatib sworn 22 July 2021 and the written outline of submissions filed on 22 July 2021 in opposition to the application.[2]

10 The application is made pursuant to the Corporations Act s 1335(1), alternatively the RSC O 25. There is no dispute as between the parties as to the principles to be applied in the determination of the application.

11 Under the Corporations Act s 1335(1), the court has the power to order that security be given for the likely costs of a proceeding over which it has jurisdiction. Further, the court has the power to order that any proceeding be stayed until any security ordered is given. The Corporations Act s 1335(1) provides as follows:

Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.

12 There is no entitlement to security, nor any predisposition towards an order for security.[3] Rather, as observed by Le Miere J in SAS Global Forrestdale Pty Ltd v Samsera Pty Ltd [2010] WASC 309 at [9], s 1335 carries both a threshold test and a discretionary test.

13 The precondition for the exercise of the court's jurisdiction under s 1335 is sometimes referred to as the 'threshold jurisdictional question'. That is, whether it appears by credible testimony that there is reason to believe that the plaintiff will be unable to pay the defendants' costs.[4]

14 The onus rests with the applicant to adduce evidence to persuade the court that the corporation in question will be unlikely to be able to meet a future costs order. Such a task includes persuading the court to make a prediction about what the financial position of the corporation will be at the time of the judgment and immediately after.[5] There is no onus on the company to prove its ability to meet an order for costs; the evidential burden rests with the applicant for security.[6]

15 If the threshold condition is satisfied, the court's jurisdiction is enlivened and the question then becomes whether discretion to make an order for security for costs should be exercised.[7] As was observed in Australian Reliance Group Pty Ltd v Coverforce Insurance Brokers Victoria Pty Ltd [No 5] [2017] WASC 171 [19], where the threshold jurisdiction to award security is made out, this in itself provides a substantial factor in the exercise of discretion in favour of the applicant.[8]

16 The threshold test was discussed in Livingspring Pty Ltd v Kilger Partners [2008] VSCA 93; (2008) 20 VR 377 [15] - [16], as follows:[9]

[15] The phrase "reason to believe" is the touchstone of jurisdiction. It requires a rational basis for the belief - and no more. The wording adopted may be contrasted with other familiar formulations such as "if the court is satisfied that" or "if in the view of the court it is likely that". The section requires the making of a judgment, a risk assessment: is there a risk that the corporation will be unable to pay? (It adds nothing, in our view, to say that it must be a "real risk".) A risk assessment is, of necessity, imprecise. The section calls for a practical, commonsense approach to the examination of the corporation's financial affairs.

[16] It may be said, with justification, that this is a low threshold. But the test simply reflects the policy of the provision, which is to protect a defendant against the risk of the plaintiff corporation's impecuniosity. The provision equips the court with the means to require that the defendant be secured against that risk.

17 The defendants refer to Laundry Coin-Wash Nominees Pty Ltd v Dunlop Olympic Ltd (1985) ATPR 40-584, 46,729, where Smithers J observed:[10]

Where the only tangible assets of an applicant company are held in trust for another entity and its solvency depends on its right as trustee two indemnity against that entity it is necessary for the Court to have in mind the difficulties which a successful respondent would face in attempting to execute in respect of an order for costs. Indeed, unless some step is taken to alleviate those difficulties it is reasonable and just to treat the applicant company as if it were without assets to meet such liability.

18 Once the court's jurisdiction is enlivened under s 1335(1), there is an unlimited discretion that is to be exercised considering all of the circumstances of the case.[11] While s 1335 does not list the factors that a court may take into consideration once the threshold condition is satisfied, the principles in relation to security for costs are well established.[12] There are a number of cases which have identified factors relevant to the exercise of discretion in awarding security for costs. None of the authorities claim to contain an exhaustive list, and the factors to be considered will vary from case to case.

19 Various factors may be relevant to that exercise of discretion. They may include (but will not be limited to):

(a) the strength and bona fides of the plaintiff's case;

(b) the likelihood of the plaintiff being able to pay the defendant's costs;

(c) whether the plaintiff's impecuniosity was caused by the defendant's conduct which is the subject of the claim;

(d) whether the application for security is oppressive;

(e) whether the award for security would deny the impecunious plaintiff a right to litigate;

(f) whether there are persons standing behind the plaintiff who are likely to benefit from the litigation;

(g) whether the persons standing behind the plaintiff have offered any security or personal undertaking;

(h) whether the plaintiff is in substance a plaintiff or whether the proceedings are defensive in the sense of directly resisting proceedings already brought or seeking to halt the defendant's self-help procedures;

(i) whether the application for security has been brought promptly;

(j) whether the defendant has any rights which it can exercise against the assets of the plaintiff to satisfy an order for costs in its favour; and

(k) any factors relating to public interest.[13]

20 The judicial discretion in balancing these factors has been described as the balance of justice between two extremes. First, not allowing the defendant to make oppressive use of s 1335, or similar provisions, to prevent the plaintiff pursuing a genuine claim; and, secondly, not permitting the controllers of an impecunious corporation to oppress a defendant by exploiting its incapacity to pay costs.[14]

21 If the court is not satisfied that security for costs should be granted under the Corporations Act, the defendants rely in the alternative upon the RSC O 25 r 1, which provides as follows:

The Court may order security for costs to be given by a plaintiff, but no order shall be made merely on account of the poverty of the plaintiff or the likely inability of the plaintiff to pay any costs which may be awarded against him.

22 The principles that apply to the exercise of the discretion under s 1335 apply to applications made pursuant to the RSC O 25.[15]

23 Modern Holdings is a company that was incorporated on 3 December 2014. The company structure is that of two directors, Mr Al-Khatib and Mr Abdel Qadar, between which the company's shares are equally divided. Neither director holds a beneficial interest in the shares.[16]

24 Modern Holdings is not the registered proprietor of any land in Western Australia.[17] Neither Mr Al-Khatib nor Mr Abdel Qadar own property in Western Australia.[18]

25 The defendants requested access to the financial records of Modern Holdings with respect to its ability to meet an adverse costs order. No access was granted and no records were produced.[19] As discovery has not yet been provided, the defendants have not had access to profit and loss statements, nor balance sheets for any period.[20]

26 Mr Al-Khatib deposes that Modern Holdings has no current financial materials to show.[21] He does however depose to having funded, with Mr Abdel Qatar, the initial capital start-up costs of setting up three food court businesses. He deposes that the sums involved were:[22]

(a) approximately $250,000 in respect of the food court tenancy the subject of this proceeding;

(b) approximately $215,000 in respect of the food court tenancy the subject of the District Court proceeding described below; and

(c) approximately $415,000 in respect of the food court tenancy the subject of another Supreme Court proceeding described below.

27 Mr Al-Khatib says that significant and not insubstantial legal costs have been incurred in each proceeding.[23]

28 Mr Al-Khatib deposes that he and Mr Abdel Qadar, as directors of Modern Holdings, have budgeted to meet the estimated legal costs and expenses of this proceeding, in addition to two other proceedings.[24]

29 Mr Al-Khatib deposes that he and Mr Abdel Qadar have access to funds with which they are able to press their claims. Mr Al-Khatib refers to his 'permanent employment' and 'significant monthly income' to meet these costs.[25] The income referred to by Mr Al-Khatib has not been disclosed in this proceeding.[26]

30 Mr Al-Khatib deposes that he and Mr Abdel Qadar have not budgeted for the eventuality of having to provide security in any of the proceedings. He says that of security were ordered, it would stultify Modern Holdings' ability to pursue cases, which he believes to be strong.[27]

31 In his affidavit, Mr Al-Katib deposes to the circumstances in which the claims pleaded in this proceeding arose, and says:[28]

The plaintiff's directors have considered all the cases against Westfield to have strong merits otherwise we would not be pursuing them. Security for costs will impede and stultify our ability to move forward with these cases.

Other proceedings Supreme Court proceeding CIV 1458 of 2020

32 Modern Holdings is pursuing another action in this court. The proceeding known as CIV 1458 of 2020 was commenced by Modern Holdings as against Reco Whitford Pty Ltd, Scentre Management and REI, in respect of a food court tenancy at Whitford City Shopping Centre.

33 Reco Whitford, Scentre Management and REI pursue a counterclaim as against Modern Holdings, Mr Abdel Qadar and Mr Al-Khatib.

34 As at date of Mr Al-Khatib's affidavit, pleadings in the proceeding had closed and the parties had attended a mediation. The second affidavit of Ms Jeanes reveals that an application for security for costs as against Modern Holdings had been made in CIV 1458 of 2020.[29]

35 Modern Holdings also pursues proceedings in this court against ISPT Pty Ltd and Vicinity Manager Pty Ltd known as CIV 1457 of 2020. This proceeding was not referred to by Mr Al‑Khatib in his affidavit, nor in the submissions filed on behalf of Modern Holdings. At the trial, counsel on behalf of Modern Holdings made brief reference to a fourth action, which I have taken to be CIV 1457 of 2020.[30]

36 The second affidavit of Ms Jeanes reveals that an application for security for costs against Modern Holdings had been made in CIV 1457 of 2020 and had been determined in the applicants' favour.[31]

37 Mr Al-Khatib and Mr Abdel Qadar are also the directors of Italian Gourmet Kitchen Pty Ltd.[32] Italian Gourmet Kitchen Pty Ltd pursues a counterclaim in a proceeding commenced against it by Scentre Management and REI in the District Court of Western Australia known as CIV 2990 of 2019. The counterclaim is in respect of a food court tenancy leased to Italian Gourmet Kitchen at Westfield Carousel Shopping Centre.

38 As at date of Mr Al-Khatib's affidavit, I understand that the counterclaim had been filed; further and better particulars of counterclaim had been provided; and the matter had been listed for mediation. The second affidavit of Ms Jeanes reveals that an application for security for costs against Italian Gourmet had been made in CIV 2990 of 2019.[33]

39 In response to an application for security for costs, one or more directors of a company may undertake to meet any costs awarded against the plaintiff company.

40 While no bank guarantee or other security was proffered, nor did either director provide an undertaking to the court, in his affidavit Mr Al‑Khatib says that he and Mr Abdel Qadar are 'prepared to underwrite' the defendants' costs of the action if the plaintiff was to 'ultimately lose this case'.[34]

41 Ms Jeanes deposes to the steps taken by the defendants in the defence of this proceeding to date.[35] Annexed to Ms Jeanes' affidavit of 22 April 2021 as RGJ-5 is a draft bill of costs prepared by Ms Jeanes in respect of costs estimated to be incurred by the defendants up to and including a trial. The draft bill is reproduced at sch A to these reasons.

42 The bill has been prepared having regard to the Legal Profession (Supreme and District Courts) (Contentious Business) Determinations 2020 (WA).

43 The total legal costs and counsel fees estimated to be incurred by the defendants up to and including trial is $79,913. A further $52,000 has been estimated for disbursements. Of the estimated disbursements, $50,000 concern the estimated fees to be incurred by briefing expert witnesses.

44 While the total estimated amount including disbursements is $131,913, the defendants have applied to the total estimated amount a discount of approximately 25%. (That is, applying a discount of $33,000.) The total amount of security sought on behalf of the defendants is $98,913.

45 Scentre Management and REI seek an order that Modern Holdings pay into court the amount of $98,913 as security for their costs. On balance, I am satisfied that the threshold question has been met and the discretion should be exercised to grant the application. I have had regard to the following matters.

46 Having regard to the affidavits filed on behalf of the defendants, I find that there is a reason to believe that Modern Holdings will be unlikely to be able to meet a future costs order. The evidence of Mr Al‑Khatib further supports a finding that the threshold jurisdictional question has been met. Having regard to all of the evidence filed, I am persuaded of the same.

47 In determining that the threshold question had been met, I have weighed in the balance:

(a) Modern Holdings is not the registered proprietor of any land in Western Australia;

(b) Mr Al-Khatib and Mr Abdel Qadar do not hold beneficially their shares in Modern Holdings; the identity of the beneficial holder or holders has not been disclosed; and there is no evidence before the court as to whether the beneficial holders of the shares are able to indemnify Mr Al-Khatib and Mr Abdel Qadar as trustees;

(c) no profit and loss statements, nor balance sheets are before the court for Modern Holdings for any period; and

(d) while Mr Al-Khatib and Mr Abdel Qadar have expressed their preparedness to underwrite the defendants' costs if Modern Holdings were to fail in its claim, neither are the registered proprietor of land in Western Australia, no bank guarantee or other security has been proffered, and there is no evidence that they hold assets available to meet an adverse costs order.

48 While I proceed on the basis that there is no onus on Modern Holdings to prove its ability to meet an order for costs, in the absence of evidence of the income and assets of Mr Al-Khatib and Mr Abdel Qadar, it is not possible to put much weight on their stated preparedness to underwrite the defendants' costs. In all of the circumstances, the defendant applicants have met their evidential burden.

49 At the hearing of the application, I understood counsel on behalf of Modern Holdings to submit that the prospect of success in the other proceedings was a basis to find that there was a means by which Modern Holdings could meet any obligation to pay costs in this proceeding.[36] I understood counsel to suggest that the other proceedings were means by which Modern Holdings would come into funds, and even if it were only successful in proving some of its claims, potential recovery in the other proceedings would answer the threshold jurisdictional question.

50 There is evidence that Modern Holdings has commenced other proceedings in this court; that it has been ordered to provide security for costs in one of those proceedings, and that it may be required to provide security in the other. However, they are proceedings of uncertain outcome, and on the evidence before me, no firm view can be taken as to Modern Holdings' prospects of success. Therefore, I do not accept counsel's submission that the other proceedings ground a finding that there is, on the evidence, no reason to believe that Modern Holdings will be unlikely to be able to meet a future costs order.

51 The inability of Modern Holdings to pay the defendants' costs not only enlivens the jurisdiction to require security, but it is also a substantial factor in the decision of whether to exercise it.[37]

52 In the exercise of discretion, I have weighed in the balance my conclusion that there is a reason to believe that Modern Holdings will be unlikely to be able to meet a future costs order.

What is the strength of Modern Holdings' case, and is it bona fides?

53 As observed by Allanson J in Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd [2019] WASC 378 [20], the bona fides of the claim and its merits may be considered in the exercise of discretion. However, the court should not embark on a detailed consideration of the merits.

54 In their respective written submissions, counsel identified areas where there will be substantial dispute at trial.[38]

55 Given the relatively early stage of the proceeding and the limited evidence before the court, it is not possible, necessary, nor appropriate that I attempt to undertake a detailed evaluation of the plaintiff's case.

56 I note that Modern Holdings seeks to pursue alternative causes of action in this proceeding. Some of the allegations involve representations made orally to Mr Al-Khatib and Mr Abdel Qadar. From the pleadings, it appears likely that findings as to credit will be called to be made, and whether there has been reliance and detriment, having regard to the broad factual context. Modern Holdings also calls for the court to find in the context of a lease a duty of care owed by a lessee to minimise inconvenience or interruption, to provide information on refurbishment works prior to the signing of a lease agreement and to ensure the lessor is free from unreasonable disturbances. While Modern Holdings' claim in this proceeding is not without difficulties, there is pleaded a prima facie case against the defendants.

57 However, having regard to the pleadings and to the affidavits read, I accept the submission of the defendants that the merits of the plaintiff's case are not so strong as to say that no security is appropriate.[39]

58 I have considered whether the claims made are bona fide, and there is no evidence that the claims have been made by this proceeding otherwise than in good faith.

59 I have weighed all of these matters in the balance in the exercise of discretion.

Would an order for security stultify the plaintiff's claims?

60 The court may decline to order security where to do so would stultify a plaintiff's claim. However, while this a powerful factor in the exercise of discretion, it is only one factor.[40]

61 In Sunlea Enterprises Pty Ltd (as trustee for the Drummond Cove Unit Trust) v Pollock [2014] WASC 91 [85], Allanson J observed that:[41]

The effect of the authorities is that a company seeking to resist an order for security on the ground that it will frustrate the litigation must exercise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts. It is incumbent upon a plaintiff who wishes to resist an application for security to put before the court a full and frank statement of the assets and liabilities of the plaintiff, and also of its shareholders and creditors (if relevant), and, if there are trust assets, of the beneficiaries of the trust. Without that evidence, no conclusion can properly be reached that the effect of an order for security will be to frustrate the plaintiff's claim. In this sense there is an evidential onus on a plaintiff resisting an order for security.

62 In this case, as noted above, the defendants requested access to the financial records of Modern Holdings with respect to its ability to meet an adverse costs order. No access was granted, and no records were produced.[42] Mr Al-Khatib deposes that Modern Holdings has no current financial materials to show.[43]

63 Mr Al-Khatib and Mr Abdel Qadar do not hold beneficially their shares in Modern Holdings; the identity of the beneficial holder or holders has not been disclosed; and there is no evidence before the court as to whether the beneficial holders of the shares are able to indemnify Mr Al-Khatib and Mr Abdel Qadar as trustees.

64 Given the evidentiary lacuna, in this case no conclusion can properly be reached that an order for security will frustrate the plaintiff's claims in this proceeding.

65 Indications of an application for security that is oppressive include (but are not limited to) where a defendant has made the application as a means to stifle a genuine claim, or where a defendant has conducted its defence in a manner that prolongs the proceeding.[44]

66 Mr Al-Khatib deposes that it is the actions and conduct of the 'Westfield parties', now the subject of several proceedings, which has caused the plaintiff to suffer the loss and damage claimed in those proceedings. He says that it is the defendants' conduct that has caused Modern Holdings to be in a parlous financial position.[45] He further deposes to his belief that the defendants have made late security for costs applications in the hope of impeding and stultifying the plaintiff's ability to move forward with these various proceedings.[46]

67 Counsel for the plaintiff submitted that the court should take into account in the exercise of its discretion the burden of costs that the directors are already shouldering, particularly as a consequence of the plaintiff being ordered to provide security for costs in another proceeding.[47] I understand counsel to submit that this application, when considered in light of the applications made in other proceedings, is oppressive.

68 The plaintiff has commenced several other proceedings. The defendants in those proceedings now seek that security be provided for their costs. I accept that if those costs are met by the directors in each proceeding personally, they may be put under financial pressure or constraint.

69 However, I do not accept that the evidence before me supports an inference that the defendants have made this or any application for security to stifle the claims of Modern Holdings, nor does the procedural history support a finding that the defendants have conducted their defence in a manner that prolongs the proceeding. The evidence does not support a finding that the application is oppressive.

70 Modern Holdings says that there was delay on the part of the defendants in bringing this application for security for costs.[48] It complains that there has been a delay, and that delay is an attempt by the defendants to stultify the ability of Modern Holdings to proceed with the action.[49]

71 While the proceeding was commenced in April 2020, the application was foreshadowed in correspondence issued by the defendants' representatives to the solicitors for Modern Holdings between 12 February 2021 (that is, before pleadings had closed) to 13 April 2021.[50] The proceeding is still in relatively early stages. The application was made about one month after pleadings closed. There has been no discovery or orders for leave to adduce expert evidence, and the proceeding is some way from entry for trial.

72 I consider that it was reasonable for the application to be made after the close of pleadings and after the parties attempted to settle the matters in dispute at mediation. In all of the circumstances, the delay is not of a kind that would prevent an order for security for costs being made, nor is there a proper foundation to draw the adverse implication advanced on the part of Modern Holdings.

Have the persons standing behind the plaintiff offered any security or personal undertaking to be liable for costs?

73 It is also appropriate to consider whether those who stand behind the plaintiff and would gain from the litigation are able to provide adequate security.[51] Where such persons can provide security this is a weighty consideration in favour of an order.[52]

74 The identity of beneficial holder (or holders) of the shares in Modern Holdings is not known. The beneficial holder has not offered any security or personal undertaking to be liable for costs.

75 The directors and holders of the shares have indicated that they are 'prepared to underwrite' the defendants' costs of the action if the plaintiff was to 'ultimately lose this case'.[53] However, neither is a registered proprietor of land in Western Australia, no bank guarantee or other security has been proffered, no formal undertaking was offered, and there is no evidence that they hold assets available to meet an adverse costs order.

76 These matters weigh in favour of the exercise of discretion to order security for costs.

77 For completeness, I note that this is not a case where the proceeding is defensive in the sense of directly resisting proceedings already brought or seeking to halt the defendants' self-help procedures. Also, there is no suggestion that the defendants have any rights which they can exercise against the assets of the plaintiff to satisfy an order for costs in their favour. Further, there are no factors relating to public interest that ought to be weighed in the balance.

78 Having weighed in the balance all of the matters described above, I am satisfied that the threshold jurisdictional question has been answered in the affirmative. I am also persuaded by the defendants that the discretion ought to be exercised and an order made compelling Modern Holdings to give security for the defendants' costs.

79 Counsel for both parties addressed the form of security in the event that the threshold question was met and the balance weighed in favour of the court ordering security for costs.

80 Counsel for Modern Holdings submitted that if security were to be ordered, then it should be provided in tranches. I understood Modern Holdings to contend that payment by tranches would go some way towards addressing its concern that the proceeding would be stifled by the imposition now of a significant financial impost.[54]

81 In all of the circumstances, it is appropriate that Modern Holdings be ordered to give security for costs. However, it is reasonable that it be provided in tranches. Having regard to the draft bill, I consider that it is appropriate to order that Modern Holdings pay into court the amount of $50,000 as security for the defendants' costs up to entry for trial.

82 I have made no allowance for disbursements in that amount. At this stage, leave to adduce expert evidence at trial has not been granted. The court can consider ordering that Modern Holdings make additional payments into court if such leave is granted, and again upon the plaintiff entering this matter for trial.

83 For the reasons set out above, on balance, I am satisfied that a consideration of all relevant factors favours the making of an order for security for costs.

84 The parties will receive an advance copy of these reasons. Subject to hearing from the parties, I propose to make the following orders:

1. The plaintiff do pay $50,000 into court as security for the first and second defendants' costs of this proceeding up to entry for trial, within 30 days of the date of this order.

2. In the event that the plaintiff does not pay $50,000 into court within 30 days of the date of this order, this proceeding will be stayed until further order.

3. Any party has liberty to apply in respect of these orders.

4. Without limiting order 3, the first and second defendants have liberty to apply to increase the amount of security for their costs of this proceeding.

5. The costs of the application be costs in the cause.

IN THE SUPREME COURT OF WESTERN AUSTRALIA HELD AT PERTH

DRAFT BILL OF COSTS FOR APPLICATION FOR SECURITY FOR COSTS

Date of Document: Filed on behalf of: Date of Filing:

Preparation for and attendance at 4 directions hearings related to the statement of claim (3 hrs) (Attendance at by counsel(@

$418 per hr) and an instructing Senior Practitioner (@t $495 per hr))

Counsel (@$418 per hr) Senior Practitioner (@$495 per hr) Restricted Practitioner (@$297 per hr)

Preparation for and attendance at mediation (5 hrs) (Attendance at mediation by counsel and an instructing senior practitioner @

Preparing discovery on the Statement of Claim (9 hours)

Senior Practitioner (@$495 per hr) Restricted Practitioner (@$297 per hr)

Inspection related to the Statement of Claim (3 hours) Senior Practitioner(@ 495 per hr)

Preparation for and attendance at interlocutory hearings on security for costs for the Statement of Claim

Preparation of written closing submissions on the Statement of Claim

Attendance on reserved judgment and attendance on final orders for the Statement of Claim

Taxation including drawing bill of costs and preparation

(i) The possibilities for minimising interruptions arising from the redevelopment.

(ii) The effect if any of the redevelopments on trading in general and trading for the Plaintiff.

(iii) The financial circumstances of the Plaintiff.

(iv) The opportunities if any for the Plaintiff to continue trading or to sell its business.

(v) The possible losses arising from the Claim.

I CERTIFY that I have taxed the within bill of costs and allowed the same at$

I APPOINT the day of at o'clock in the noon in Room Supreme Court, 28 Barrack Street, Perth as the time and place for the taxation of the within bill of costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[3] Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd [2019] WASC 378 [17] (Allanson J), citing Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd [1987] FCA 102; (1987) 16 FCR 497.

[4] Australian Reliance Group Pty Ltd v Coverforce Insurance Brokers Victoria Pty Ltd [2017] WASC 171 [16].

[5] LexisNexis, Ford, Austin & Ramsay's Principle of Corporations Law (at 20 October 2021) [4.053.27].

[6] LexisNexis, Ford, Austin & Ramsay's Principle of Corporations Law (at 20 October 2021) [4.053.27].

[7] SAS Global Forrestdale Pty Ltd v Samsera Pty Ltd [10] citing FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 22 WAR 241 [21] (Pidgeon & Owen JJ).

[8] Citing Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [No 2] [2014] WASCA 106 [19]; BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857, 860; Sent v Jet Corporation of Australia Pty Ltd [1984] FCA 178; (1984) 2 FCR 201, 215 - 217.

[9] Which passage was cited with approval by Le Miere J in SAS Global Forrestdale Pty Ltd [11].

[10] Which passage was cited with approval by Le Miere J in SAS Global Forrestdale Pty Ltd [29].

[11] Unified Pty Ltd v The Cancer Council Western Australia Inc [No 3] [2011] WASC 161 [10].

[12] See Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57 [5] - [6]; George 218 Pty Ltd v Bank of Queensland Ltd [2016] WASCA 56 [41] - [48].

[13] Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [6].

[14] Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd [14], citing Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301. See also Erolen Pty Ltd v Baulkham Hills Shire Councill (1993) 10 ACSR 441, 453.

[15] Crosswest Corporation Pty Ltd v Allstrike Enterprises Pty Ltd [2014] WASC 27 [14].

[16] Defendants' submissions filed 5 July 2021, par 4; the affidavit of RG Jeanes sworn 22 April 2021, par 5, RGJ-1.

[17] Defendants' submissions filed 5 July 2021, par 4; affidavit of RG Jeanes sworn 22 April 2021, par 6,

[18] Affidavit of RG Jeanes sworn 5 July 2021, pars 7 - 8, RGJ-3 and RGJ-4.

[19] Affidavit of RG Jeanes sworn 22 April 2021, par 8, RGJ-4.

[20] Defendants' submissions filed 5 July 2021, par 35.

[21] Affidavit of AA Al-Khatib sworn 22 July 2021, par 7.

[22] Affidavit of AA Al-Khatib sworn 22 July 2021, par 17.

[23] Affidavit of AA Al-Khatib sworn 22 July 2021, par 5.

[24] Affidavit of AA Al-Khatib sworn 22 July 2021, par 4.

[25] Affidavit of AA Al-Khatib sworn 22 July 2021, par 18.

[27] Affidavit of AA Al-Khatib sworn 22 July 2021, par 6.

[28] Affidavit of AA Al-Khatib sworn 22 July 2021, pars 11 - 19.

[29] Affidavit of RG Jeanes sworn 5 July 2021, par 5, RGJ-1.

[31] Affidavit of RG Jeanes sworn 5 July 2021, pars 9 - 10, RGJ-6.

[32] Plaintiff's submissions filed 22 July 2021, par 7(b); defendants' submissions filed 5 July 2021, par 41.

[33] Affidavit of RG Jeanes sworn 5 July 2021, par 6, RGJ-2.

[34] Plaintiff's submissions filed 22 July 2021, par 12; affidavit of AA Al-Khatib sworn 22 July 2021, par 8.

[35] Affidavit of RG Jeanes sworn 22 April 2021, par 11.

[37] Australian Reliance Group Pty Ltd v Coverforce Insurance Brokers Victoria Pty Ltd [No 5] [19], citing Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [No 2] [19]; BPM Pty Ltd v HPM Pty Ltd, 860; Sent v Jet Corporation of Australia Pty Ltd 215 - 217.

[38] Plaintiff's submissions filed 22 July 2021, pars 15 - 20; defendants' submissions filed 5 July 2021, pars 26 - 33; ts 6 - 11, 23 (28 July 2021).

[40] Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd [51]; see also Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 [92] - [93].

[41] Citing Bell Wholesale Co Pty Ltd v Gates Export Corporation [1984] FCA 34; (1984) 2 FCR 1; Newtrend Pty Ltd v Oceanic Life Ltd [1990] WAR 1, 3; Tirops Safety Technology Pty Ltd v Lazer Safe Pty Ltd [2005] WASC 164 [47]; BPM Pty Ltd v HPM Pty Ltd, 862.

[42] Affidavit of RG Jeanes sworn 22 April 2021, par 8, RGJ-4.

[43] Affidavit of AA Al-Khatib sworn 22 July 2021, par 7.

[44] Jaddcal Pty Ltd v Minson [No 2] [2011] WASC 138 [15]; Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [31].

[45] Affidavit of AA Al-Khatib sworn 22 July 2021, par 9.

[46] Affidavit of AA Al-Khatib sworn 22 July 2021, par 10.

[48] Plaintiff's submissions filed 22 July 2021, par 3.

[49] Plaintiff's submissions filed 22 July 2021, par 14.

[50] Affidavit of RG Jeanes sworn 22 April 2021, pars 7 and 8.

[51] Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd [52].

[52] Sunlea Enterprises Pty Ltd (as trustee for the Drummond Cove Unit Trust) v Pollock [84], citing Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542, 545; Sent v Jet Corporation, 215.

[53] Plaintiff's submissions filed 22 July 2021, par 12; affidavit of AA Al-Khatib sworn 22 July 2021, par 8.