Plaintiff v Defendant

2 I informed the parties that because of the urgent need to determine the Downer security for costs application I would endeavour to do so on 3 February 2016.

3 By summons dated 29 January 2016 the defendant, Downer EDI Limited (Downer) applied for an order that the plaintiff, Camping Warehouse Australia Pty Limited provide further security in an amount to be determined by the court for the defendant's costs of preparations up to trial and in relation to the hearing. Downer also seeks an order that until security is provided by the plaintiff these proceedings be stayed.

4 Downer's application is supported by its solicitor's letter to Elliott Legal Pty Limited dated 15 December 2015, reports from its cost consultant, Elizabeth Mary Harris dated 23 December 2015 and an affidavit sworn by Ms Harris dated 23 December 2015 and a further cost report provided by Ms Harris dated 29 January 2016 together with a further affidavit sworn by Ms Harris on 29 January 2016 and affidavits of Paul Anthony Bannon sworn 29 January 2016, and written submissions of 27 and 29 January 2016.

5 The background to this application up to 28 January 2016, including my findings in relation to the unjustified delays by the plaintiff in relation to its responses to the Downer application for further security for costs are detailed in paragraphs 25-35 of my earlier ruling on 28 January 2016 in relation to related aspects of the Downer security for costs application, and in particular paragraphs 30-33 thereof.

6 I am critical of what I consider to have been unjustified delays and an associated lack of reasonably diligent endeavours by the plaintiff in respect of the Downer current application. My reasons for this conclusion are set out in the above identified paragraphs of my earlier ruling of 28 January 2016 and are now expanded to include further delay and lack of diligence on the plaintiff's part in relation to addressing Downer's application for additional security, as a result of Mr Elliott, solicitor for the plaintiff, not writing to Mr Trimbos, the cost consultant earlier engaged by the plaintiff, until 31 January 2016 probably resulting in a further delay in Mr Trimbos' ability to produce timely opinions to the plaintiff. Furthermore, this occurred in circumstances where I have emphasised to the plaintiff my view that it should have been diligently and urgently pursuing its development of all necessary responses to Downer's application for additional security, from about mid-December 2015 and from the dates those materials were provided, especially the cost claim materials provided by Downer particularly reports produced by Ms Harris.

7 The plaintiff's position in relation to delays is in my view exacerbated by the fact that even now it has failed to explain satisfactorily the reason it did not move to re-engage Mr Trimbos at the earliest possible point in time to provide responses to the current Downer application. In that regard I do not consider that the plaintiff's plea that the defendant's failure to provide requested information, and that this has prevented it from progressing development of a response to the defendant's application, provides a sufficient answer in the circumstances. My reasons for this conclusion follow.

8 The plaintiff no doubt appreciates that the longer the delay in it being ordered to provide additional security for costs in this proceeding the greater the potential pressure on Downer as a result of the increased prospect that the enormous cost it is incurring in defending this proceeding may not be recoverable. The plaintiff also no doubt appreciates that the greater the potential for the plaintiff to conclude its case in this proceeding, or largely conclude it, without having to provide what may be a substantial further sum of money to secure Downer's costs the better for the plaintiff. The plaintiff also understands that in the event that further security of costs is ordered to be provided, its proceedings will be stayed until the payment of that sum to secure Downer's costs and the plaintiff is therefore likely to be motivated to attempt to avoid a scenario which may lead to a delay in the completion of its case or perhaps in the finalisation of its claim.

9 These features, and the pressing exigency created by the fact that this trial has commenced and is now in its third day, with something in the order of two weeks of remaining hearing time, in my view both justifies me taking a pragmatic, robust and very expeditious approach to resolve the present application, at least on an interim basis, in these special and unsatisfactory circumstances.

10 Accordingly, for the above reason I shall make an interim determination of appropriate additional security for costs, assessing as best I can on the present materials, what additional sum should be provided at this point by the plaintiff, while reserving my final decision on the more precise sum of security until after the plaintiff has filed the further cost report it has foreshadowed it now desires to obtain and after receipt of possible responses to those materials from Downer. I shall not however delay making an interim decision on the Downer application until a point in time, probably many many days hence, at least, as would otherwise occur if the plaintiff is afforded the time it has suggested will be required for it to file a fully developed responsive expert report from Mr Trimbos, and any potential response to that report was awaited from Downer.

11 If it transpires that the plaintiff can ultimately justify an order reducing the amount of security which I shall today order or conversely Downer justifies an order for an increased level of security to be provided by the plaintiff, I shall as soon as possible make further orders which reflect the ultimate entitlements of the parties.

12 I add that I consider that such a pragmatic, robust and expeditious approach to Downer's security for costs application is in my view sanctioned by the provisions and intent of the Civil Procedure Act 2010, and in particular, ss 7(1), 8(1) and 65C(1) which requires courts to determine issues arising between litigants on the most efficient and cost effective basis possible while ensuring that the parties are treated justly and fairly. I add that I consider that s 65C(1) of the Civil Procedure Act 2010 encompasses matters of security for costs.

13 In my view it is efficient, cost effective and fair, in the circumstances which exist, to determine the sum of additional security to be provided by the plaintiff on a summary interim basis and to eschew at this point, that is during the running of the trial, what would likely be a time consuming disruptive and costly determination of quantum, which would probably not be determined until after the trial concluded in any event.

14 In my view the above outlined approach is also supported by the way in which the courts have dealt with security for costs applications, including by determining, where appropriate, the sum to be provided by way of security in a broad brush manner, with the Court doing the best it can in the circumstances.**

15 Downer's application is supported principally by a cost report provided by Ms Harris annexed to her affidavit of 29 January 2016. Ms Harris has also provided a Cost Report of 23 December 2015. The costs detailed and justified by Ms Harris are set out in Annexure 2 to Ms Harris' update report of 29 January 2016.

**16 Ms Harris's report of 29 January 2016 purports to justify a further security entitlement on the part of Downer in the sum of $1,200,086.

17 In its submissions of 29 January 2016 Downer also submits in a conclusive manner, that the Court should order security for costs in its favour of no less than 50% of the assessment of the costs put forward by the Cost Expert, Ms Harris.[1]**

**18 By written submissions dated 2 February 2016 the plaintiff states that on 31 January 2016 it re-engaged Mr Peter Trimbos (costs lawyer) to address Downer's cost application materials in particular the reports provided by Ms Harris.[2] The plaintiff points out that Mr Trimbos by letter dated 1 February 2016 has indicated that he will not be in a position to prepare a responsive expert report until he receives certain information requested by him, and that after receipt of what he and the plaintiff's advisors consider to be adequate responses from Downer in relation to information which has been requested it will take Mr Trimbos another three to four days to review the materials and prepare a responsive report. The plaintiff also states that Mr Trimbos will be unable to progress his responses on 8 and 9 February 2016 due to other work commitments.

19 The plaintiff's submission makes it clear enough that its responsive materials, including a report from Mr Trimbos will take a week at least to provide. Downer would then probably require some time to address the plaintiff's responsive material, and I would also take some time to deal with what would probably be a considerably more voluminous application than the application as presently developed which is already substantive and supported by many affidavits, expert reports and many written submissions. In the result the defendant's application, and the plaintiff's responses to it, will probably not be fully elaborated in the way the parties desire and decided before this trial concludes.

20 This creates an impractical and unsatisfactory situation and one which prejudices the applicant in the ways I have elsewhere described. Such a situation, coupled with the Court's desire to ensure that the time and cost involved in parties addressing aspects of their cases including an application such as this, is not disproportional to that which, in the circumstances is appropriate, justifies a robust, expeditious, and cost effective approach to Downer's present application.

21 The plaintiff also submits that it will be prejudiced if Mr Trimbos is not given sufficient time to prepare his reports and respond to the defendant's reports. However, the plaintiff's submissions note that it does not desire to put further argument to the Court on Downer's application.

22 As mentioned the plaintiff asserts that it requires additional information from Downer to enable Mr Trimbos to respond to the Downer security for costs top up application. That further information is in the nature of:**

**(a) The 'matter ledger' as to the Defendant's solicitors' professional costs of preparation for trial;

(b) Counsel's invoices and fee slips as to preparation for trial;

(c) invoices in relation to consideration of the Plaintiff's expert reports, meetings of the experts, and preparation of the joint expert report; and

(d) actual rates to be charged for airfares and accommodation.**

This further information and materials, are it appears, required so that the plaintiff can undertake a more detailed consideration as to whether or not the build up of costs undertaken by Ms Harris in her expert reports is accurate and based on reasonable costs and charges.

**23 It appears from the plaintiff's submissions that Downer will refuse to provide at least the requested 'matter ledgers' for costs of preparation for trial on the basis that those materials are the subject of legal professional privilege. The plaintiff however asserts that it is arguable that Downer has waived privilege in respect of the 'matter ledgers' by way of discovery.

24 The plaintiff also concedes that Downer has to date provided some detail in relation to the plaintiff's request for information as to actual rates for airfares and accommodation, although requested invoices have not yet apparently been provided by Downer to the plaintiff in respect of those costs.

25 The plaintiff submits that the Downer delay referred to in my ruling of 28 January 2016 has in turn contributed to the plaintiff being unable to finalise its expert evidence and comply with orders for filing a report in relation to the quantum. The plaintiff relies in particular upon the fact that, from about 10 January 2016, the plaintiff has been seeking clarification as to certain matters arising from Ms Harris's affidavit of 23 December 2015. The plaintiff contends that the defendant has been slow to respond to the plaintiff's request on these matters dated 10 January 2016, which in turn has retarded the plaintiff's ability to re-engage Mr Trimbos in mid-January 2016.

26 In my view, however, the time taken by Downer to respond to the plaintiff's letter of 10 January 2016 concerning cost justification issues does not, in itself, adequately explain the plaintiff's delay in re-engaging its cost consultant to address Downer's detailed additional security for costs claim. That detailed Downer claim was served on the plaintiff well before 10 January 2016 and responses could have been developed by the plaintiff and its cost consultant to many if not most of the Downer cost components notwithstanding that it is arguable that the further information sought by the plaintiff's letter of 10 January 2016 was also material to the plaintiff and Mr Trimbos finalising the plaintiff's responses to Downer's cost justification evidence. Neither has the plaintiff to this point applied to force the provision of what it says are necessary details from Downer. I am not therefore satisfied that the plaintiff has satisfactorily explained the delay in progressing the completion of its responsive expert report from Mr Trimbos.

27 The plaintiff also argues that because it has not been possible for the defendant's security for costs application to be determined before the commencement of the current trial, and because the trial is progressing notwithstanding that the defendant's further application for security for costs has not been determined, there will be no prejudice to Downer if further time is allowed for the filing of a report by Mr Trimbos and the determination of the Downer application is delayed by at least a further week.

28 I reject the plaintiff's assertion that there will be no prejudice to Downer arising from a delay in the determination of Downer's further security for costs application. I also reject the plaintiff's assertion that it requires only a short amount of time to put on a reply report. The plaintiff's submission ignores the reality that this trial will probably take only a further eight hearing days. It also ignore the very real possibility that as time passes the defendant may be placed in an increasingly insidious position of expending large sums in respect of the trial of this proceeding in circumstances where, without security for costs, it may be successful but ultimately never recover the costs of its defence of this proceeding beyond the small security earlier provided.

29 The plaintiff's submission also raise the following matters:**

**_(i) the plaintiff asserts that it is unsatisfactory that the Harris report only projects likely legal expenditure in circumstances where now the cost of preparation for trial is known and should be able to be more precisely identified.

(ii) the plaintiff requires the defendant to produce the documents relating to costs which should now exist so as to allow its expert to opine upon the reasonableness of the actual costs incurred by the defendant in preparing for trial rather than the estimated costs referred to in Ms Harris's reports._**

There is, in my view, merit in the plaintiff's submission on this aspect. It is preferable that if the facts associated with actual costs and disbursements incurred are available they should be detailed so as to produce the most accurate summary possible of the relevant costs.

**30 However, for the reasons which I have earlier emphasised, in my view largely as a result of the plaintiff's dilatory approach to its responses to the Downer application under consideration, these matters have not advanced as they should have and it will clearly be at least a week, at best, before the plaintiff will be in a position to provide a detailed response.

31 I consider the approach which I have outlined above, in essence to make the best interim determination I can in relation to the amount of further security for Downer's costs which is just in all the circumstances at this time, will meet the present unsatisfactory situation, and meet the possible need for a further adjustment in due course to the amount now determined by way of further security payable by the plaintiff.

32 Further, the plaintiff disputes Downer's costs relating to discovery, principally on the ground that all documents which were discovered had already been processed and were available to Downer through the Database referred to in the affidavit of 'document management' of Mr Paul Anthony Bannon, sworn 25 September 2015. The plaintiff submits that because of the history of discovery and because the collation of relevant documents had already occurred due to other anticipated litigation against the defendant, Downer's cost of discovery should have been greatly reduced. The plaintiff also submits that there were other approaches to discovery which would have been effective to reduce the costs of discovery to the defendant.

33 However, beyond the above general points the plaintiff has not yet specified the cost consequences of the points of principle which it says should give rise to a greatly decreased cost discovery on the part of the defendant.

34 This issue can also be addressed in more detail when the plaintiff puts on its responsive material and an appropriate order can be made on an application pursuant to liberty to apply, in respect of the sum of the further security ordered today.

35 The plaintiff also challenges the charges claimed by Downer in respect of LitSupport. However, this dispute between the parties has not yet been defined.

36 The plaintiff contests that Downer is justified in retaining an overseas expert when the plaintiff asserts that it could have engaged an Australian based, appropriately qualified 'event study' expert. The plaintiff also alludes, in a general way, to issues which it wishes to pursue in relation to the time allowed for the preparation of outlines and for conference with expert witnesses.

37 Further, as mentioned, the plaintiff has instructed Mr Trimbos to report as to the appropriate amount for an event study expert. The plaintiff has also foreshadowed some limited arguments which it may wish to advance by a report to be provided by Mr Trimbos in respect of the costs of lay witnesses. Mr Trimbos will, it appears, take at least a further seven days to provide such a report.

38 Accordingly, in many respects, the precise bases upon which the plaintiff will argue its foreshadowed criticisms of Downer's claim for security of costs of expert evidence has not yet crystallised.

39 However, when all the materials the parties wish to put to the Court before Downer's application, the final consideration of the sum of the security to be provided can also address the cost ramifications of the history of this matter, giving rise to security for costs being determined after the commencement of trial.[3]

40 The plaintiff further flags that it may develop an argument to seek to reduce security provided on account of the engagement of interstate counsel, and perhaps Victorian counsel as junior counsel to an interstate leader. At this point it is quite unclear what the substance of the dispute might be on this aspect.

41 The plaintiff also argues that it may be inferred from the history of the earlier Downer claim for security for costs that the present cost claim is exaggerated. The plaintiff submits specifically that the defendant appears to have been satisfied by the receipt of somewhere between the range of 12 to 29 per cent of its original claim for security in respect of $200,000 ordered in July of 2015.

42 In my view there is no material upon which it would be appropriate for me to draw any inference against the defendant on the basis asserted by the plaintiff in relation to Downer's present application for further security for costs.**

43 By submission dated 2 February 2016 Downer in essence submitted the following by way of reply to the plaintiff's submissions in connection with Downer's security for costs top up application:

**_(i) The Defendant is entitled to top up security.

(ii) The debate about quantum should be resolved by the Court making its best estimate upon the material in order to ensure that in so far as reasonably possible the Defendant receives a reasonable amount as top up security. The Defendant agrees to the above course without the need for further argument._**

**44 For the reasons I have outlined above, I consider that it is just and appropriate in all the circumstances at this point in time I make an interim order for further security, to be provided for Downer's costs. I shall order the plaintiff provide a further $685,000 towards the security of the defendant's costs in this proceeding to the completion of this trial, based also on present projections as to its duration.

45 The additional security of $685,000 which I have determined as payable is not intended to be a complete and certain indemnity for the defendant's costs nor does my allowance represent anything in the nature of an exercise in taxation of costs or a detailed estimate or accurate calculation, but rather reflects the best assessment possible on incomplete imperfect materials at this time.

46 I have assessed the sum of $685,000, above as appropriate taking into account the considerations to which I have referred and aggregating the following allowances of costs in favour of Downer.**

Costs and disbursements including LitSupport costs and disbursements for copying generated by Downer's solicitors in respect of discovery orders, included at approximately 50% of Downer's claim:

Expert witnesses professional fees and costs, included at approximately 50% of Downer's claim:

Costs and disbursements generated by Downer's solicitors in relation to 27 days of preparation for trial, included at approximately 50% of Downer's claim:

Costs generated by Downer's Counsels' fees for 27 days of preparation, included at approximately 50% of Downer's claim:

Costs and disbursements in relation to Downer's expert witness costs in relation to the Trial and associated attendances, included at approximately 50% of Downer's claim:

Costs of Downer's expert witness costs in preparing a Joint Expert Report and alike, attending meetings with plaintiff's experts, included at approximately 50% of Downer's claim

Cost of Downer's solicitors attending to an 11 day trial, included at approximately 50% of Downer's claim:

Costs of Downer's counsel appearing at trial for 11 days, included at approximately 50% of Downer's claim:

Additional Downer expert costs in relation to attending Court to observe evidence and giving evidence included at approximately 50% of Downer's claim:

Additional Downer disbursements, including live transcript, travel and accommodation for counsel and related expert witness costs, included at approximately 50% of Downer's claim:

**_(i) On or before 5.00 pm on Monday 8 February 2016, the plaintiff provide further security for the defendant's costs in the sum of $685,000;

(ii) In default of payment by the plaintiff of the amount of security referred to in paragraph (i) these proceedings shall be stayed;

(iii) there be liberty to the plaintiff and the defendant to apply in respect of any adjustment to the amount of security ordered to be paid by the plaintiff and/or in respect of any further security to be paid by the plaintiff on account of the defendant's costs in these proceedings._**

48 I shall hear submissions as to appropriate refinements of the above orders prior to authentication.

[1] Downer's written submissions dated 29 January 2016, [17].

[2] The plaintiff also relies on the Affidavit of Mark Edward Elliott sworn 2 February 2016 and all materials referred to in that submission and its submissions of 27 January 2016.