Olson v Keefe

Judgment (18 paragraphs)

[1]

The applicant provide security for the respondents' costs of and incidental to this proceeding in the amount of AUD200,000 (Security Amount).
The Security Amount be provided by an irrevocable bank guarantee issued by an Australian bank in favour of the respondents, or by payment into Court, by 4:00pm on 17 March 2023.
If the applicant fails to comply with orders 1 and 2, then: (a) the proceeding be stayed until the security is given; (b) the parties are to notify the Associate to Goodman J forthwith of such non-compliance; and (c) the respondents have liberty to restore the matter before the Court on 24 hours' notice for the purpose of seeking: (i) the vacation of the hearing dates commencing 27 March 2023; and (ii) the dismissal of the proceeding.
The applicant pay the respondents' costs of and incidental to the respondents' interlocutory application filed on 20 December 2022. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

[2]

introduction 1 By interlocutory application filed on 20 December 2022, the respondents seek an order that the applicant provide security for costs in the sum of $200,000 for anticipated future costs; together with ancillary orders, including orders for a stay of the proceeding and for the vacation of the hearing dates commencing on 27 March 2023 if the security is not provided. The principal basis upon which the order is sought is that the applicant is not presently ordinarily resident in Australia and lacks sufficient funds in this country to satisfy any adverse costs order. 2 The applicant resists the application. He concedes for the purposes of the application that he is not presently ordinarily resident in Australia and that his assets in this country are insufficient to satisfy any costs order that may be made against him if he were to be unsuccessful in the proceeding. He contends that the application should be refused principally because of the respondents' delay in bringing the application.

Events leading up to the filing of the application for security for costs 3 The proceeding was commenced in 2016. On 27 March 2017, the respondents' solicitors wrote to the applicant's solicitors stating, in so far as is presently relevant: We have conducted real property searches in respect of Mr Olson. These have revealed that Mr Olson does not own any property in Australia. In circumstances where: (a) we understand that Mr Olson is a citizen of the United States of America, and is not a citizen of Australia; (b) Mr Olson appears to have no real assets in Australia; and (c) there is no treaty between Australia and the United States for the reciprocal enforcement of judgments, making any costs order that our clients obtain in their favour against Mr Olson in the Proceedings difficult to ultimately enforce, our clients are deeply concerned about whether they will recover the costs that they have incurred in defending the Proceedings if they are ultimately successful and have costs orders made in their favour. This is particularly so when your client's contractual claims and his misleading and deceptive conduct claims are made against the Third and Fourth Respondents in the alternative, meaning that at least one of them will be entirely successful in the Proceeding and entitled to a costs order against your client. In these circumstances, our clients are seriously considering making an application to the Court for security for costs. In order to determine whether an application for security for costs should be made, we request that Mr Olson confirm: (a) whether he is an Australian citizen or permanent resident and, if he is, provide us with documentary evidence of the same; and (b) whether he has any assets within Australia, and if so, the nature and value of these assets and any encumbrances over them. We request that this information is provided by 5pm on 31 March 2017. 4 On 3 May 2017, the applicant's solicitors wrote to the respondents' solicitors: We refer to your letter dated 14 March 2017 (sic) requesting information in relation to the Applicant's citizenship and assets. We advise as follows: 1. The Applicant has recently become an Australian citizen. We will provide a copy of evidence of citizenship shortly. 2. The Applicant currently has sufficient unencumbered assets in Australia to satisfy any costs order against him which include: a. Approximately $160,000AUD in an Australian bank account; b. Bonuses in the amount of approximately $650,000AUD which will be paid in the next month. 5 On or about 26 July 2021, the applicant travelled from Australia to the United States of America, together with his wife and teenage daughter. He did so to provide care, support and assistance to his elderly parents, one of whom was struggling with a long-term illness. The applicant expected to spend several months in California but did not intend to stay there permanently. 6 In or around July 2021, Ms Tatasciore, the solicitor on the record for the respondents, received instructions which indicated that the applicant had commenced a new role with his employer and had returned to the United States of America to take up that new role. 7 On 11 November 2021, the respondents' solicitors wrote to the applicant's solicitors: We refer to our letter to you dated 27 March 2017 and your response to that letter dated 3 May 2017. As you may recall, our 27 March 2017 correspondence requested information regarding Mr Olson's residency status and whether Mr Olson held any assets in Australia. Subsequently, in your May 2017 response you informed us that: 1. Mr Olson was an Australian citizen; and 2. Mr Olson held $160,000AUD in an Australian bank account and would be paid approximately $650,000AUD in bonuses in June 2017. It has come to our attention that Mr Olson may have since relocated overseas. We have also conducted property searches in respect of Mr Olson and have found that currently Mr Olson does not own any property in Australia. In these circumstances, our clients are concerned that Mr Olson would not be able to satisfy any further costs order if made by the Court in favour of our clients. Accordingly, our clients are considering making an application to the Court for security for costs. In order to determine whether an application for security for costs should be made, we request that Mr Olson confirms the following: (a) whether he has relocated overseas; and, if he has not, please let us know his current residential address in Australia; and (b) whether he still holds bank accounts in Australia, or any other assets in Australia, that can satisfy any cost orders that may be made against him in these proceedings. We anticipate that the quantum of such costs orders could be at least $500,000. We request that this information be provided as soon as possible and by no later than 5pm on 17 November 2021. (emphasis in original) 8 On 6 December 2021, the applicant's solicitors responded: We refer to your letter dated 11 November 2021. We are instructed as follows: 1. Since around April 2016, Mr Olson has been employed by GA Australia Pty Ltd (GA Australia) in the position of Managing Director. GA Australia is a wholly-owned subsidiary of B. Riley Financial Inc. (BRF), which is based in California in the United States. 2. In around July 2021, Mr Olson accepted an offer to become the Senior Vice President of Business development for the North American division of B. Riley Retail Solutions (BR Retail), which is also a member of the BRF group of companies and is a leading provider of asset disposition services specialising in large-scale retail liquidations in the United States, Australia and Europe. 3. Mr Olson's role with BR Retail is in addition to his existing role as the Managing Director of GA Australia. His responsibilities in both roles will require him to travel frequently between the United States and Australia once all travel restrictions imposed as a result of COVID-19 have been relaxed. 4. In around May 2021, Mr Olson applied to the Australian government for an exemption to travel to the United States to visit his elderly parents, one of whom is suffering from a serious illness. Mr Olson's application was rejected, and a second application was also rejected. Mr Olson was then advised by his local Member of Parliament that his application would have better prospects of succeeding if he were to apply for a longer visit overseas. Mr Olson submitted a third application which sought permission in relation to a three-month stay in the United States for the purposes of assisting his parents and meeting with members of BR Retail's head office in connection with his new role. Mr Olson's application was accepted, and he departed Australia on 26 July 2021. He is planning to return to Australia early in the New Year, subject to any change in travel restrictions. 5. Mr Olson remains an Australian citizen and he has no plans to renounce his Australian citizenship. Since 3 July 2021, he has been in continuous occupation of rented residential premises in Mosman, Sydney. The terms of the lease, which were set by Mr Olson's current employer, provided for an initial six-month term and additional six-month terms on a rolling basis thereafter. Mr Olson owns all of the furniture in the Mosman property. 6. Mr Olson also rents commercial premises located at Level 29, Chifley Tower, 2 Chifley Square in the Sydney CBD, from which he conducts his activities as the Managing Director of GA Australia. He also owns a motor vehicle and maintains a superannuation account with an Australian financial institution. The matters set out above will be the subject of evidence to be led in the proceeding, if that becomes necessary. In the circumstances, we consider that there is no basis for your clients to seek an order for security for costs. In our view, having regard to the very considerable delay in bringing any such application and the courts' general disinclination to order security against natural persons (see, for example, Knight v Beyond Properties Pty Ltd [2005] FCA 764 at [32] and the authorities referred to therein; recently approved in Etnyre v Australian Broadcasting Corporation [2021] FCA 610 at [11]), any application by the respondents for security for costs is likely to fail. 9 The applicant had intended to return to Australia in the early part of 2022. However, in around February or March 2022, his parents contracted COVID-19 and were hospitalised. The applicant stayed in California in order to care for them. 10 On 18 March 2022, the applicant's solicitors served upon the respondents' solicitors an affidavit of Mr Davis, the solicitor on the record for the applicant, sworn on that day. Paragraph 15 of that affidavit was in the following form: 15. In the period between mid-January 2022 and late February 2022, I had difficulty communicating with the Applicant and obtaining instructions from him in relation to the Respondents' lay evidence. I am informed by the Applicant, and believe to be true, that: (a) Since around April 2016, the Applicant has been employed by GA Australia Pty Ltd (GA Australia) in the position of Managing Director. GA Australia is a wholly-owned subsidiary of B. Riley Financial, Inc. (BRF), which is based in California in the United States. (b) In around July 2021, the Applicant accepted an offer to become the Senior Vice President of Business Development for the North American division of B. Riley Retail Solutions (BR Retail), which is also a member of the BRF group of companies and is a leading provider of asset disposition services specialising in large-scale retail liquidations in the United States, Australia and Europe. (c) The Applicant's role with BR Retail is in addition to his existing role as the Managing Director of GA Australia. His responsibilities in both roles require him to travel frequently between the United States and Australia. (d) In around May 2021, the Applicant applied to the Australian government for an exemption to travel to the United States to visit his elderly parents, one of whom is suffering from a serious illness. The Applicant's application was rejected, and a second application was also rejected. The Applicant was then advised by his local Member of Parliament that his application would have better prospects of succeeding if he were to apply for a longer visit overseas. The Applicant submitted a third application which sought permission in relation to a three-month stay in the United States for the purposes of assisting his parents and meeting with members of BR Retail's head office in connection with his new role. The Applicant's application was accepted, and he departed Australia on 26 July 2021. (e) The Applicant initially planned to return to Australia in early 2022. However, the emergence of the Omicron variant of COVID-19 in December 2021 and the resulting difficulties in making travel arrangements meant that the Applicant was forced to delay his plans. (f) In around February 2022, the Applicant and members of his immediate family contracted COVID-19 and he was unable to travel outside the United States. (g) The Applicant intends to return to Australia in the coming months but is yet to finalise his travel arrangements. (emphasis in original) 11 On 30 March 2022, the respondents' solicitors wrote to the applicant's solicitors (as written): We refer to our letter to you dated 10 November 2021 and 10 December 2021, your letter dated 6 December 2021, and the affidavit of Malcolm Davis sworn 14 February 2022 (Davis 2022 Affidavit). The purpose of this letter is to request security for costs from Mr Olson. Our clients hold a real fear that they will not be able to recover the costs that they have incurred in defending the proceeding, and that Mr Olson would not be able to satisfy any further costs order if made by the Court in favour of our clients, including costs at the scheduled hearing in October 2022. 1 What you have told us and what we understand to be Mr Olson's current circumstances 1.1 From our prior correspondence and the Davis 2022 Affidavit, we understand the following to be Mr Olson's current circumstances: (a) In or around July 2021, Mr Olson relocated to California, United States to commence the role Senior Vice President of Business Development for the North American division of B. Riley Retail Solutions. (b) Mr Olson has not returned to Australia since July 2021. (c) Mr Olson's elderly parents reside in the United States. Mr Olson assists his elderly parents in some capacity. (d) Mr Olson's ordinary place of work is Irvine, California. So much is clear from Mr Olson's current employer's website which notes his business contact and biographical details, as follows: (i) a US direct phone number and mobile phone number; (ii) a US physical work address: 19800 MacArthur Boulevard Suite 820, Irvine CA 92612; and (iii) the following biographical description (emphasis added): Olson joined the firm in 2016 and has been pivotal in helping to establish and build the firm's presence across the Australasia region. He has over 25 years of experience working with retailers in providing differentiated financial solutions to generate value. While Olson will be primarily based in Irvine, California, he will continue to maintain a regular presence in Australia while overseeing the firm's overseas operations. (e) Mr Olson's assets in Australia are limited to the following: (i) a motor vehicle; and (ii) the furniture in a Mosman residential premises (a premises Mr Olson does not own). (f) Mr Olson retains a superannuation account in Australia but unless Mr Olson is aged 65 or older (which we know he is not), he will have no access to any funds in that account to satisfy any costs order in our clients' favour. (g) As noted in our 10 November 2021 letter, we have conducted searches that note Mr Olson owns no other property in Australia, and otherwise holds insufficient assets in Australia to satisfy any further cost orders in our clients' favour. (h) Mr Olson remains an Australian citizen. 2 Remaining questions in connection with Mr Olson's circumstances 2.1 We require the following information from you: (a) Is Mr Olson's current ordinary residence in California, the United States of America? (b) Is Mr Olson's family's current ordinary residence in California, the United States of America? (c) Are Mr Olson's children currently enrolled in educational institutions in the United States of America, and will they remain enrolled at those for the remainder of 2022? (d) Does Mr Olson's spouse currently have employment in the United States of America? (e) It is asserted in paragraph 15(g) of the Davis 2022 Affidavit that Mr Olson "intends to return to Australia in the coming month". Please indicate the precise date that Mr Olson intends to return to ordinarily reside in Australia, or confirm that Mr Olson does not have a precise date of return to ordinarily reside in Australia. (f) Does Mr Olson intend to ordinarily reside in Australia on a permanent basis upon his return? (g) Please confirm that the Mosman residential property and the commercial premises in Chifley Tower referred to in your 6 December 2021 letter continue to be rented and, if so, are either rented directly by GA Australia Pty Ltd (or one of its related bodies corporate), or the costs entirely reimbursed by GA Australia Pty Ltd (or one of its related bodies corporate). 2.2 With respect to points 2.1(e) and (f) above, please provide evidence to substantiate the date that Mr Olson intends to return to ordinarily reside in Australia, and to substantiate Mr Olson's intention to ordinarily reside in Australia (if either of those two positions are correct). 3 Other relevant factors 3.1 We note the following other relevant factors: (a) We anticipate our clients' costs of the current proceeding (having regard to Schedule 3 of the Federal Court Rules 2011) through to the end of the trial on 19 October 2022 will conservatively be at least $524,000 (ex gst), comprising the following: (i) our costs up to the commencement of the trial on 11 October 2022: $150,000; (ii) our costs during the trial: $150,000; (iii) our clients' counsel costs before and during the trial: $154,000; (iv) lay witness costs: $20,000; and (v) expert witness costs: $50,000. The estimate in items (i) to (iii) is based on the hourly costs of our lawyers and senior and junior counsel. The estimate also assumes that Mr Olson does not commence any further futile interlocutory applications which will accrue further costs. (b) There is no treaty between Australia and the United States for the reciprocal enforcement of judgments, making any costs order that our clients obtain in their favour against Mr Olson in the proceeding difficult to ultimately enforce (including in respect of those extant costs orders identified below). (c) As you know, on 27 March 2017 our clients first raised their concerns about their ability to recover costs that they have incurred in defending the proceedings. Since that date numerous costs orders have actually been made against Mr Olson in favour of our clients. Those extant costs orders made against Mr Olson, which remain unpaid, including the following: (i) our clients' costs (including costs thrown away) in relation to their interlocutory application dated 23 May 2017 which struck out or summarily dismissed parts of Mr Olson's claim, made by Bromwich J on 16 October 2017 in matter NSD1498/2016; (ii) our clients' costs of the application for an extension of time to seek leave to appeal, made by Lee J on 13 March 2019 in matter NSD29/2019; (iii) our clients' costs of and incidental to Mr Olson's application to file the second Further Amended Statement of Claim on an indemnity basis, made by Bromwich J on 17 May 2019 in matter NSD1498/2016; and (iv) our clients' costs of and incidental to our clients' costs application, made by Bromwich J on 17 May 2019 in matter NSD1498/2016. 4 Next steps 4.1 We are instructed to request that Mr Olson pay security for costs equal to $524,000 by 30 April 2022. Please let us know if Mr Olson will pay security for costs equal to $524,000 by 10.00am 8 April 2022. 4.2 If Mr Olson refuses to pay security for costs on a voluntary basis: (a) please give us the answers to our legitimate questions and requests for information set out in paragraph 2 by 10.00am 8 April 2022; and (b) we are instructed to apply for security for costs pursuant to rule 19.01 of the Federal Court Rules 2011. If our clients are required to apply for security for costs, they will rely on this letter when seeking their wasted costs of that application on an indemnity basis. (emphasis in original) 12 On 5 April 2022, the Court made orders, which included: Security for costs 4. By 10.00am on 8 April 2022, the Applicant must inform the Respondents' solicitor whether he will provide security for costs for the amount specified in the letter from King & Wood Mallesons to Mills Oakley dated 30 March 2022 (KWM Security for Costs Letter). 5. If the Applicant refuses to provide security for costs for the amount specified in the KWM Security for Costs Letter: (a) by 10.00am on 8 April 2022, the Applicant must provide the information specified in paragraph 2 of the KWM Security for Costs Letter; and (b) by 5.00pm on 22 April 2022, the Respondents may file and serve an interlocutory application and accompanying affidavit seeking security for costs from the Applicant pursuant to rule 19.01 of the Federal Court Rules 2011 (Cth). 13 On 13 April 2022, the applicant's solicitors wrote to the respondents' solicitors, stating in so far as is presently relevant: We refer to your letters dated 30 March and 5 April 2022 and respond as follows. Security for costs In relation to the matters raised in paragraph 1.1 of your letter dated 30 March 2022, we are instructed as follows: 1. In response to paragraphs 1.1(a) to (c), the statement that Mr Olson "relocated" to California in is not accurate, in the sense that it implies that Mr Olson moved back to the United States on a permanent basis. As explained in paragraphs 1 to 4 of our letter dated 6 December 2021 and paragraph 15 of the affidavit of Mr Malcolm Davis sworn 18 March 2022, in around July 2021, Mr Olson accepted an offer of employment with B. Riley Retail Solutions in addition to his ongoing responsibilities as the Managing Director of GA Australia Pty Ltd. Mr Olson travelled to California in July 2021 in order to attend to his parents and with the goal of dividing his time between the United States and Australia. He planned to return to Australia in early 2022 but was unable to do so due to the introduction of new travel restrictions in the wake of the Omicron variant. Members of Mr Olson's family also contracted Covid-19 around that time and their recovery is ongoing, as explained below. 2. In response to paragraph 1.1(d), notwithstanding the statements appearing on the website (which Mr Olson did not prepare), he continues to lease commercial premises located at Level 29, Chifley Tower, 2 Chifley Square in Sydney and maintains Australian mobile and landline telephone numbers. As to the requests set out in paragraph 2.1 of your letter: 3. In response to paragraph 2.1(a), as explained in paragraph 1 above, whilst Mr Olson currently resides in California, he does not intend to live there permanently, and he has made arrangements to return to Australia on 12 May 2022 (see paragraph 7 below). During the time that he has spent in California, like many employees during the pandemic, Mr Olson has been working remotely and carrying out his duties for both B. Riley Retail Solutions and GA Australia. 4. In response to paragraph 2.1(b), Mr Olson's parents reside in California. However, his two eldest children continue to live in Australia. Mr Olson's youngest child travelled to the United States on 26 July 2021 in order to complete her studies for her International Baccalaureate in person. She will graduate from high school in May 2022 and intends to return to Australia in around June 2022 to commence university in Sydney. 5. In response to paragraph 2.1(c), please see paragraph 4 above. 6. In response to paragraph 2.1(d), Mr Olson's spouse is not currently employed in the United States. She intends to return to Australia with her youngest daughter in June 2022. 7. In response to paragraph 2.1(e), Mr Olson has made arrangements to return to Sydney on 12 May 2022. We attach to this letter a copy of his e-ticket flight itinerary from Qantas. 8. In response to paragraph 2.1(f), Mr Olson intends to reside in Australia on a permanent basis upon his return and to live with his family in Sydney. However, he will be required to travel frequently between Australia and the United States in connection with his responsibilities at B. Riley Retail Solutions and GA Australia. 9. In response to paragraph 2.1(g), Mr Olson continues to rent the Mosman premises using his own funds. The commercial premises in Chifley Tower are rented directly by GA Australia. In light of the matters set out above and the authorities referred to in the final paragraph of our letter dated 6 December 2021, we do not consider that your clients are entitled to an order for security for costs. The applicant accordingly declines to pay security in the amount requested in paragraph 4.1 of your letter. … (emphasis in original) 14 On the same day, the respondents' solicitors wrote to the applicant's solicitors: We refer to our letter dated 30 March 2022 and your response dated 13 April 2022 on the question of security for costs. The purpose of this letter is to seek further clarification in respect of Mr Olson's current circumstances relevant to the question of security for costs. 1 Your 13 April 2022 letter failed to provide our client with any meaningful comfort that Mr Olson ordinarily resides in Australia. In particular, in response to our question in paragraph 2.1(f) "Does Mr Olson intend to ordinarily reside in Australia on a permanent basis upon his return?", your response was (emphasis added): 8. Mr Olson intends to reside in Australia on a permanent basis upon his return and to live with his family in Sydney. However, he will be required to travel frequently between Australia and the United States in connection with his responsibilities at B. Riley Retail Solutions and GA Australia 2 Accordingly, we require, on an urgent basis, answers to the following questions (a) How long will Mr Olson remain in Australia after he arrives in Sydney on 12 May 2022? (b) How frequently will Mr Olson travel to the United States of America between 12 May 2022 and 12 May 2023? (c) What proportion of the year between 12 May 2022 and 12 May 2023 will Mr Olson be located in the United States of America? (d) What proportion of Mr Olson's time is devoted to his duties as Senior Vice President of Business Development for the North American division of B. Riley Retail Solutions relative to his duties as Managing Director of GA Australia Pty Ltd. Please provide any supporting documents to substantiate any answer provided. (e) Please disclose Mr Olson's current employment contract for his role as Senior Vice President of Business Development for the North American division of B. Riley Retail Solutions. (f) Please disclose any position description for Mr Olson's current role as Senior Vice President of Business Development for the North American division of B. Riley Retail Solutions. (g) Please confirm that Mr Olson's remuneration in respect of his employment with B. Riley Retail Solutions is deposited into a bank account located in the United States of America. (h) Please disclose whether Mr Olson is a tax resident of Australia for the current tax year ending 30 June 2022. 3 Moreover, we note in response to our question in paragraph 2.1(g) "Please confirm that the Mosman residential property … continue[s] to be rented and, if so… [whether] the costs [are] entirely reimbursed by GA Australia Pty Ltd (or one of its related bodies corporate).", your letter responded with the following: "… Mr Olson continues to rent the Mosman premises using his own funds." Your response failed to answer the question asked, and your answer is incongruous with statements you have previously provided in connection with Mr Olson's Mosman premises. We require you to: (a) answer whether the cost of Mr Olson's Mosman premises is reimbursed by GA Australia Pty Ltd (or one of its related bodies corporate) in whole or part; and (b) disclose the terms of the rental tenancy agreement, noting that your letter dated 6 December 2021 stated (emphasis added): Since 3 July 2021, [Mr Olson] has been in continuous occupation of rented residential premises in Mosman, Sydney. The terms of the lease, which were set by Mr Olson's current employer, provided for an initial six-month term and additional six-month terms on a rolling basis thereafter. Mr Olson owns all of the furniture in the Mosman property. Given the timing specified in order 5(b) made by the Court on 5 April 2022, we require urgent responses to the questions above. Please provide us with your responses by 10.00am 20 April 2022. (emphasis in original) 15 On 22 April 2022, the date set in the 5 April 2022 orders for the filing of any application seeking security for costs passed without such an application having been filed. 16 On 28 April 2022, the applicant's solicitors wrote to the respondents' solicitors: We refer to your letter dated 13 April 2022 regarding security for costs. We are instructed to respond as follows, adopting the numbering that is used in your letter. 1. For the avoidance of doubt, we do not accept your assertion that our letter dated 13 April 2022 failed to provide your clients with sufficient information to accept that Mr Olson ordinarily resides in Australia. 2. (a) Mr Olson has purchased a one-way ticket to arrive in Sydney on 12 May 2022. He intends to remain in Australia indefinitely, subject to making business trips to the United States in accordance with his responsibilities as Senior Vice President of Business Development for the North American division of B. Riley Retail Solutions. The timing of those trips will depend upon the timing of transaction opportunities in the USA. At present, Mr Olson has not made any arrangements to travel back to the USA after returning to Sydney. (b) Mr Olson intends to visit the USA approximately three to four times a year in accordance with his working and family commitments. (c) Mr Olson expects that he is likely to spend between 30 to 50 per cent of the period from 12 May 2022 to 12 May 2023 in the USA, though this will depend on the level of business activity in his areas of responsibility at B. Riley Retail Solutions. (d) The proportion of time that Mr Olson spends on his duties as Senior Vice President of Business Development for the North American division of B. Riley Retail Solutions relative to his duties as Managing Director of GA Australia tends to fluctuate depending on the level of business activity at each organisation. Over the last 12 months, GA Australia has experienced less activity as a result of the Covid-19 lockdowns in several States. Consequently, Mr Olson spent the majority of his time during that period on his work at B. Riley Retail Solutions. However, Mr Olson expects that the proportion of time spent on both roles will likely move to a more even split as the year progresses. (e) B. Riley Retail Solutions is a direct competitor to the third respondent in the North American restructuring industry. As such, Mr Olson is not at liberty to disclose a copy of his employment contract without first obtaining approval from B. Riley's corporate counsel and CEO. We will seek instructions on that matter and will provide you with an update in due course. (f) We are instructed that Mr Olson is not aware of any written position description for the role of Senior Vice President of Business Development of B. Riley Retail Solutions, other than what is stated in his employment contract. (g) We confirm that Mr Olson's remuneration in respect of his employment with B. Riley Retail Solutions is deposited into a bank account located in the USA. (h) Mr Olson is a tax resident of Australia for the current financial year ending 30 June 2022. 3. (a) The cost of leasing Mr Olson's Mosman premises is not reimbursed by GA Australia or one of its related bodies corporate, in whole or in part. (b) Having sought further clarification regarding the rental arrangements for the Mosman premises, we confirm that the statement in our letter dated 6 December 2021 that the terms of the lease "were set by Mr Olson's current employer" was in error. The letter should have stated that the terms of the lease were set by the real estate agency that manages the property on behalf of the landlord. We enclose a copy of the Residential Tenancy Agreement that is presently in force in relation to the Mosman premises. 17 On the basis of the information provided in that letter, Ms Tatasciore determined to take no further action with respect to the foreshadowed security for costs application because she formed the view that the applicant was likely a person who was ordinarily resident in Australia. In particular, she relied upon the applicant's intention as expressed in that letter: to reside in Australia following his return on 12 May 2022; to continue in his position as the managing director of GA Australia Pty Ltd; and to spend less than 50 per cent of his time in the United States of America. 18 In around April 2022, the applicant purchased a one-way airfare to return to Australia on 12 May 2022. 19 In May 2022, the applicant contracted COVID-19 and was incapacitated for several weeks. His wife also contracted the virus around that time. As a result, the applicant was forced to delay his return to Australia for several months. 20 On 10 November 2022, a solicitor in the employ of the respondents' solicitors became aware that GA Australia Pty Ltd had entered voluntary liquidation. 21 On 28 November 2022, the respondents' solicitors wrote to the applicant's solicitors: We refer to your letter dated 13 April 2022 and 28 April 2022 regarding Mr Olson's refusal to pay security for costs. The purpose of this letter is to raise, in light of new information which has recently become available, our client's serious concerns that the Federal Court of Australia would not be able to compel Mr Olson to satisfy any further costs order made against him. 1 In our 30 March 2022 letter, we told you our clients were concerned that Mr Olson has permanently resided in the United States of America since July 2021 as a consequence of Mr Olson commencing the role Senior Vice President of Business Development for the North American division of B. Riley Retail Solutions, where his employer considers and publicly states that "Olson will be primarily based in Irvine, California". We also told you that we were concerned that Mr Olson had no or negligible assets in Australia to satisfy any further cost orders made in our clients' favour. 2 In your 13 April 2022 letter, you told us: (a) Mr Olson had not moved back to the United States on a permanent basis. (b) Mr Olson has accepted an offer of employment with B. Riley Retail Solutions in addition to his ongoing responsibilities as the Managing Director of GA Australia Pty Ltd. (c) Mr Olson travelled to the United States in July 2021 but has made arrangements to returned to Australia on 12 May 2022. (d) On Mr Olson's return to Australia on 12 May 2022, he intends on residing in Australia on a permanent basis, but will be required to travel frequently between Australia and the United States in connection with his responsibilities at B. Riley Retail Solutions. 3 In response to our clients' further concerns, in your letter dated 28 April 2022 you told us: (a) Mr Olson intends to remain in Australia indefinitely, subject to making business trips to the United States in accordance with his responsibilities as Senior Vice President of Business Development for the North American division of B. Riley Retail Solutions. (b) Mr Olson intends on visiting the United States 3 to 4 times per year, and is likely to spend 30-50% of his time in the United States between 12 May 2022 and 12 May 2023. (c) The proportion of time spent on Mr Olson's duties to B. Riley Retail Solutions relative to his duties as Managing Director of GA Australia Pty Ltd fluctuates depending on the level of business activity at each organisation, and that Mr Olson expects the proportion of time spent in both his GA Australia Pty Ltd role and B. Riley Retail Solutions role to be equally split in 2022. 4 As a consequence of Mr Olson's representations, our client took no further action at that time. 5 It has now come to our clients' attention that on 6 October 2022 a liquidator was appointed to GA Australia Pty Ltd. 6 The circumstances expressed in your previous correspondence all indicated that Mr Olson's intention to reside permanently in Australia was tied to his role as the Managing Director of GA Australia Pty Ltd. It now appears that Mr Olson's only employment is as Senior Vice President of Business Development for the North American division of B. Riley Retail Solutions based in Irvine, California. 7 We also noted that on 15 September 2022, Mr Olson sworn his discovery verification affidavit in Irvine, California. 8 Our clients are concerned that: (a) Mr Olson's prior stated intention to permanently reside in Australia was untrue or is no longer true; (b) Mr Olson does not permanently reside in Australia, and since 12 May 2022 Mr Olson has not spent more than 50% of his time in Australia and does not intend to; and (c) Mr Olson's only employment is now with B. Riley Retail Solutions (or one of its non-Australian related bodies corporate), and as the business level of GA Australia Pty Ltd is now none, Mr Olson's time is now exclusively devoted to B. Riley Retail Solutions in the United States. 9 Given the circumstances described above, we require Mr Olson to disclose: (a) the dates that he has resided in Australia since 12 May 2022; (b) if Mr Olson claims that he still carries on business in Australia for B. Riley Retail Solutions: (i) the location of the commercial real estate in which that business is carried on in Australia given that GA Australia Pty Ltd is now in liquidation; and (ii) the proportion of Mr Olson's time spent carrying on business in Australia; (c) whether Mr Olson's wife permanently resides in Australia and since which date; and (d) whether Mr Olson and his family reside in the one-bedroom apartment 2/12 Mosman Street, Mosman. 10 Please disclose the information requested in paragraph 9 above by 10.00am 2 December 2022. 11 If Mr Olson fails to disclose the information requested, or his answers are insufficient to give our clients comfort that the Federal Court of Australia could compel Mr Olson to satisfy any further costs order made against him, we may make an application for security for costs. (emphasis in original) 22 On 2 December 2022, the applicant's solicitors responded: We refer to your letter dated 28 November 2022 regarding security for costs. We are instructed to respond as follows: 1. For the avoidance of doubt, we do not accept your assertion that: a. Mr Olson's prior stated intention to permanently reside in Australia was untrue or is no longer true; b. Mr Olson does not permanently reside in Australia, and since 12 May 2022 Mr Olson has not spent more than 50% of his time in Australia and does not intend to; and c. Mr Olson's only employment is now with B. Riley Retail Solutions and Mr Olson's time is now exclusively devoted to B. Riley Retail Solutions in the United States. 2. In response to paragraph 5, we apologise for any confusion in relation to Mr Olson's present employment. GA Australia Pty Ltd is a wholly owned subsidiary of B.Riley Retail Solutions. It was established as the corporate vehicle to deal with the rationalisation of the Masters Retail operations. Upon the completion of that activity, it ceased to trade. Another corporate vehicle, GA Australia II Pty Ltd (ACN 615 882 329) has since conducted all activity in the Australian operations of B.Riley Retail solutions. Given the nature of your client's concerns the distinction between the two companies did not appear material when Mr Olson was answering your previous questions. Mr Olson remains employed as the Managing Director of GA Australia II Pty Ltd. 3. In response to paragraph 9(a), as reiterated in previous correspondence, Mr Olson planned to return to Australia in early 2022 but was unable to do so due to the introduction of new travel restrictions in the wake of the Covid-19 Omicron variant. Mr Olson's travel was also restricted as members of his family contracted Covid-19 in the early half of 2022, which took them considerable time to recover. As one can appreciate, Mr Olson's elderly parents were struck hard with Covid-19 and had to be hospitalised. During the course of caring for his elderly parents, Mr Olson then contracted Covid-19 and took an extensive time to recover as a result of post Covid-19 complications. Despite these debilitating symptoms, Mr Olson, made two trips to Australia in August 2022 and November 2022. 4. In response to paragraph 9(b)(i), Mr Olson continues to carry on business in Australia for B. Riley Retail Solutions, under GA Australia II Pty Ltd, which has been the primary company conducting business in Australia for B. Riley Retail Solutions. Mr Olson is a current managing director and company secretary of GA Australia II Pty Ltd and has been since 2016. GA Australia II Pty Ltd continues to lease commercial premises located at Level 29, Chifley Tower, 2 Chifley Square in Sydney. 5. In response to paragraph 9(b)(ii), it is appreciated that there has been a downturn in the commercial market as a result of Covid-19, which has been reflective of the level of business activity in Australia. As a result of the downturn in the commercial market and Mr Olson's immediate family's medical needs, he has been unable to travel to Australia as often as he anticipated to carry out his duties for GA Australia II Pty Ltd. Nonetheless, Mr Olson has made concerted efforts to travel to and carry out his duties in Australia as much as possible given the circumstances. Given the easing of Covid-19 restrictions and the increased growth in Australia's market activity and transactions, Mr Olson will be required to be present in Sydney during most of 2023. 6. In response to paragraph 9(c), Mr Olson's daughter will be undertaking full time studies at an Australian University in 2023 and his spouse will be residing in Australia to support her daughter throughout those studies. 7. In response to paragraph 9(d), Mr Olson and his family continue to rent the Mosman premises and when in Australia do reside in the property. Mr Olson anticipates that he will be purchasing another larger property in Sydney in the near future. 23 On 12 December 2022, the respondents' solicitors wrote to the applicant's solicitors (as written): We refer to your letter dated 2 December 2022 responding to our queries for further information concerning Mr Olson's residency status in our letter dated 28 November 2022. This letter should be read together with the facts noted in paragraph 1 of our letter dated 30 March 2022, and our other correspondence on this issue. The purpose of this letter is to request that Mr Olson pay security for costs to our client. Mr Olson does not permanently reside in Australia 1 Your response to our queries in your 2 December 2022 letter gives our clients no comfort that Mr Olson ordinarily resides in Australia. 2 Our clients relied on Mr Olson's prior statements that he intended to relocate his family and himself to permanently live in Australia on and from 12 May 2022. Mr Olson has not done so. 3 Our clients and the Court can have no confidence in Mr Olson's now revised stated intention to permanently reside in Australia on an unknown date in "2023", given his prior inconsistent statements about his intention to permanently reside in Australia. It will be open to the Court to find that Mr Olson's prior stated intention to permanently reside in Australia on and from 12 May 2022 was confected for the purpose of avoiding a security for costs application from our clients in April 2022. Our clients' costs 4 As such, our clients continue to hold seriously concerned that the Court would not be able to compel Mr Olson to satisfy any costs order made against him. Those costs comprise: (a) extant cost orders which have been made against Mr Olson in this and related appellate proceedings; and (b) our clients' future costs, which relate mainly to the costs of the trial in this proceeding. 5 We anticipate our clients' future costs of running this proceeding to trial on 27 March 2023 (having regard to Schedule 3 of the Federal Court Rules 2011) will conservatively be at least $454,000 (ex gst), comprising the following: (a) our costs up to the commencement of the trial on 27 March 2023, and during the trial: $280,000; (b) the costs of our clients' counsel before and during the trial: $154,000; and (c) our clients' lay witness costs: $20,000. 6 For completeness, we note that the risk of non-payment of costs orders by Mr Olson is not contingent on the outcome of the trial. Aside from the risk of future unsatisfied costs orders made against Mr Olson in the event he is unsuccessful at trial, he is currently liable to pay the following extant costs orders: (a) our clients' costs (including costs thrown away) in relation to their interlocutory application dated 23 May 2017 which struck out or summarily dismissed parts of Mr Olson's claim, made by Bromwich J on 16 October 2017 in matter NSD1498/2016; (b) our clients' costs of the application for an extension of time to seek leave to appeal, made by Lee J on 13 March 2019 in matter NSD29/2019; (c) our clients' costs of and incidental to Mr Olson's application to file the second Further Amended Statement of Claim on an indemnity basis, made by Bromwich J on 17 May 2019 in matter NSD1498/2016; and (d) our clients' costs of and incidental to our clients' costs application, made by Bromwich J on 17 May 2019 in matter NSD1498/2016. 7 The value of our clients' costs in connection with the extant costs orders above is $210,000 (ex gst). Next steps 8 We are instructed to request that Mr Olson pay security for costs equal to $200,000 by 13 January 2023. This is a substantial and reasonable compromise on our clients' anticipated costs to trial, and does not take into account the extant costs orders. 9 We require you to inform us whether Mr Olson will pay security for costs by 2.00pm 16 December 2022. If Mr Olson does not indicate whether he will pay security for costs on a voluntary basis by that time, we will: (a) apply for security for costs pursuant to rule 19.01 of the Federal Court Rules 2011; and (b) seek to have that application heard on 9 February 2023 at 9.30am, being the date currently listed for hearing in this proceeding. 10 If our clients are required to apply for security for costs, they will rely on this letter and our previous correspondence on this issue when seeking their costs of that application on an indemnity basis. (emphasis in original) 24 On 20 December 2022, the present application was filed.

(2) Delay 32 The applicant relies principally upon the respondents' delay in bringing the application. As noted at [29] above, the discretion is to be exercised by reference to the particular circumstances arising in each case. This principle of course applies to the consideration of delay. In PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 Bell P and Simpson AJA observed at [11]: The relative significance of delay in the making of a security for costs application and as a factor in the exercise of judicial discretion to award security for costs will inevitably vary with the facts of each case, the nature, extent and cause for any delay and the overall justice of the case. Insofar as his Honour suggested that some authorities established that delay could "possibly even [be] irrelevant, unless it can be seen to have generated or produced some consequence of significance", we would not agree. In our opinion, delay will invariably be a relevant discretionary factor in any application for security for costs, but the degree or extent of its relevance will vary according to the circumstances of any given case along a spectrum from the slight to the extreme. 33 I take into account the delay in bringing the present application. However, it is a factor of little weight on the facts of the present application, for the following reasons. 34 First, the delay is explained. In particular: (1) the correspondence between the solicitors for the parties, set out above, makes clear that the respondents at various times held concerns from 2017 about the recoverability of their costs based upon uncertainty as to the applicant's residency and assets in Australia; and that these concerns were addressed by the applicant; (2) matters came to a head in early 2022 and led to orders being made for the provision of answers by the applicant to the respondents' questions raised by the respondents in the letter from the respondents' solicitors to the applicant's solicitors dated 30 March 2022 by 8 April 2022 and for the respondents to file any interlocutory application seeking security for costs by 22 April 2022; (3) the responses to those questions and to clarifying questions were provided on 13 April 2022 and 28 April 2022 respectively; (4) Ms Tatasciore has explained that no application for security for costs was filed at that time as she had formed the view (based in particular upon the contents of the letter from the solicitors for the applicant dated 28 April 2022) that the applicant was likely ordinarily resident in Australia. This is a reasonable explanation particularly: (1) in view of the assertions in the correspondence from the applicant's solicitors prior to and including that letter including as to factors from which it could reasonably be concluded that the applicant was resident in Australia; and (2) in circumstances where the applicant is a natural person and the prospects of a successful application would be considerably diminished if the respondents were not able to use the absence of Australian residency in order to overcome the difficulties which attend the pursuit of security against a natural person (such difficulties being referred to in the letter from the applicant's solicitors dated 6 December 2021 ([8] above) and reiterated in their letter dated 13 April 2022 ([13] above)). Ms Tatasciore's explanation was not challenged and I accept it; (5) after information came to light later in 2022 which cast doubt upon the proposition that the applicant was resident in Australia, an explanation was sought and a demand for the provision for security was made; and (6) shortly after the deadline for the provision of the security passed, the application was filed. 35 Secondly, I am not satisfied that the delay has caused any significant prejudice to the applicant, as: (1) the applicant's evidence did not suggest that the delay in bringing the application caused him any prejudice. Further, he confirmed that he was in a position to provide the security sought; (2) it is generally not open to infer or presume that delay, even substantial delay, has been prejudicial: see United Commercial Projects Pty Ltd v PHHH Investments No 2 Pty Ltd [2019] VSCA 192 at [39] (Whelan JA); (3) whilst I accept the applicant's submissions that the bulk of the work necessary for the preparation of the proceeding for hearing has been done and that the applicant has already incurred most of the costs that he will incur in this proceeding, I do not accept that this amounts to prejudice caused by the delay. The work would have been done and the costs would have been incurred in any event; there is no evidence that the applicant would have taken a different course if the application had been made earlier; and there can be no suggestion that the costs incurred have been wasted unless the making of an order for security for costs would stultify the proceeding (which it will not, as discussed at [38] below); (4) I do not accept the applicant's submission that I should infer that the delay was tactical and the application is brought now to place pressure upon the applicant ahead of the hearing. Such an inference, it was suggested, arises from the proximity of the application to the commencement of the hearing and the fact that the bulk of the work to be done has been done. This is an insufficient basis from which to draw such an inference. The drawing of such an inference would also require: (1) the rejection of Ms Tatasciore's explanation of the delay which, as noted above, I accept; (2) the acceptance of a proposition not put to Ms Tatasciore. Further, there is no evidence that the applicant has in fact been placed under pressure; (5) whilst I accept the applicant's submission that the applicant is a natural person who, if the order were to be made, would be required to find $200,000 in addition to what are likely to have been substantial fees paid, and to be paid, to his own legal team and that the $200,000 may be tied up for some time, I do not accept that this amounts to material prejudice in the absence of evidence from the applicant to that effect, and in the face of the applicant's evidence that he is in a position to provide security of $200,000; and (6) the applicant has been on notice since 2017 that the respondents were concerned about the recoverability of their costs if he were not resident in Australia. So much is evident from the correspondence set out above. Thus, the present is not a case in which the making of the application could have come as a surprise to the applicant. 36 Finally, I note that delay may be of less importance where the basis of the application for security is that the applicant is not resident in Australia than it is where there is another basis for the application (for example, impecuniosity): see Brundza v Robbie & Co (No 2) (1952) 88 CLR 171 at 175 (Fullagar J). The view expressed by Fullagar J in Brundza is consistent with the views expressed by Kenny and Edelman JJ in Vasiliades at [74] to [75] based upon the judgment of McHugh J in PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321 at 323, as to the significance of the fact that an applicant is not resident in Australia to the exercise of the discretion.

At a glance

Court

Decision date

Before

Source

Judgment (18 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (19)

Cited By (2)