As to impecuniosity, the respondents concerned rely substantially upon the fact that annual returns filed by Crypta indicate that Crypta is a trustee company apparently without substantial assets of its own. What assets it may hold as trustee is a matter on which there is no evidence before me. I should add, however, that Mr Levitt who appeared yesterday for Crypta in effect conceded, I believe, that Crypta is indeed impecunious for the purpose of any relevant test on an application for security for costs.
The matters raised on behalf of Crypta in opposition to the motions were threefold. First, delay; secondly, special considerations said to arise out of the fact that Crypta is a trustee; and thirdly, the existence of cross claims which had the effect, so it was said, that Crypta is not so much the attacker as the attacked, as those terms, or terms like them, are used in authorities to which I was referred.
I can deal with the second and third of those grounds of opposition quite briefly. The second related to Crypta's position as trustee. There it was said, and truly, that there are a number of authorities which hold that a trustee is not a nominal party for the purposes of rules of court such as Order 28, rule 3(1)(b) of the Federal Court Rules.
I was referred also to other authorities, for example, the decision of Sheppard J in this Court in Orr v Lusute Pty Ltd (1987) 72 ALR 617, to the effect that in certain circumstances it may not be appropriate to make an order for security for costs against a trustee. I confess to a considerable degree of scepticism in relation to that
argument. Principally and obviously, this is not a motion under the rules of court, but rather, one relying on sections 56 and 1335 of the Federal Court of Australia Act and Corporations Law respectively, as I have said. Consequently, the question whether for the purposes of O 28 r 3(1)(b) Crypta is a nominal plaintiff probably does not arise. In any event, I must say that I can see no reason why authorities which hold that security for costs may, as a discretionary matter, be awarded where an impecunious corporate applicant or plaintiff has substantial parties standing behind it, whether they be shareholders or creditors as in the recent decision of Finn J in Pasdale Pty Ltd v Concrete Constructions (1995) 131 ALR 268 should not apply equally to a situation where a trustee company has standing behind it, and in a position to benefit from any decision in its favour, substantial beneficiaries of a trust. For reasons which will appear, however, there is no need for me now to come to a definite conclusion on that matter.
Nor is there any necessity for me now to come to a firm decision on the matter raised in relation to cross claims. I was referred to a number of authorities to the effect that one is to take a substantial rather than a technical view as to whether a party is an applicant or respondent, that in doing so one has regard to cross-claims and that in some circumstances, particularly where the amount of a cross-claim may exceed the amount of the claim, it will be appropriate to regard the applicant as, in substance, the respondent. The application of those principles to this case raises issues which are not entirely straightforward and which, because of my conclusion in relation to delay, I need not pursue.
That leaves the ground of opposition which may be described broadly as delay. I was referred to a series of cases which discuss the general principles applicable to the grant of an order for security for costs and deal, among other things, with delay. Notable among those for present purposes are the decision of Hill J in Equity Access Ltd v Westpac Banking Corporation 1989 ATPR 50,631 and the unreported decision of Lindgren J in Omega Data Furniture Pty Ltd v Email Furniture Ltd, delivered on 22 August 1995.
I was referred to a number of other decisions, particularly relating to delay including, notably, the decision of Waddell J in the Equity Division of the Supreme Court of New South Wales in Southern Cross Exploration N.L. v Fire & All Risk Insurance Co. Ltd (1985) 1 NSWLR 114. Without referring in any greater detail to those authorities, my conclusion from a consideration of them is that there is first and foremost a proposition accepted in every one of the cases which is that if an application for security for costs is to be made it must be made promptly.
Obviously, there are degrees of promptness and obviously, equally, security for costs being a discretionary matter, there are cases where delay will weigh more heavily with the court than it does in other cases. In Southern Cross Exploration, for example, Waddell J held that it was appropriate to order that security be provided for costs well into a very long hearing. It is notable, however, that in the cases where, despite delay, an order has been made for the provision of security, there have been present at least one and usually two other factors. One is that the hearing or resumed
hearing was not immediately imminent, certainly not as immediately imminent as it is in these proceedings. The other is that there has been some forewarning: usually correspondence concerning the financial standing of those who might benefit from the success of an applicant or plaintiff, and often detailed correspondence foreshadowing an application for security for costs. In this case, there is, so far as anything before me indicates, no history of correspondence or suggestion or question about matters relevant to the provision of security before the notices of motion were actually filed and served.
There is additionally the factor which weighed with O'Loughlin J of this Court in one of the cases to which I was referred, Town and Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd which again, so far as I know, is unreported but judgment in which was delivered on 19 July 1991 where his Honour held that one of the relevant factors in considering such a motion in such circumstances is the scarce availability of court time and the undesirability of vacating on short notice hearing dates already set for a particular matter. There is a similar strong reference to that same topic and to the system of case management which this Court has now adopted in a decision, again I think unreported, of French J to which I was referred of 24 June 1992 in Ricochet Pty Ltd v Equity Trustees Executors and Agency Co Ltd.
There is finally one other matter which is I think peculiarly relevant to these proceedings and that is the matter to which I referred at the outset. An order has been made for a concurrent hearing of the Crypta proceedings and the Zaknic
proceedings. That hearing has already proceeded for two weeks. There are parties who are not directly concerned with this motion but whose interests will undoubtedly be adversely affected by any further disruption to these already protracted and, in some respects, somewhat disrupted proceedings.
For those reasons, while otherwise I might well have regarded this as an appropriate case for security, I dismiss the motions with costs. I should add, however, that circumstances can, as this case has already demonstrated, change and change rather rapidly. If, as I devoutly hope will not turn out to be the case, it appears during the next five sitting days that this matter may have to be adjourned further, it may be that one party or another may wish to make a further application. If that happens it is perhaps not unduly pious to express a hope that in doing so the parties concerned will take account of the reasons I have just delivered.
I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lehane.
Associate:
Dated: 7 February 1996
Heard: 5 December 1995
Place: Sydney
Decision: 5 December 1995
Appearances: Stewart Levitt & Company appeared for the applicants in proceedings NG 975 of 1993 and for the third and fourth respondents and first and second cross respondents in proceedings NG 216 of 1994.