_Ransard Pty Ltd v MM Holdings

Supreme Court of Queensland|2009-11-26|Before: Fryberg J

HIS HONOUR: The defendant applies for security for costs. The plaintiff is a corporation, and it is admitted that there is reason to believe that the plaintiff will not be able to pay the defendant's costs if ordered to pay them. The plaintiff also does not suggest that the making of any order for security would stifle the litigation.

It resists the application, first on the basis that there has already been an order for security for costs made some three years ago in the sum of $30,000 and, it submits, that means that any application must be an application to vary the order that's already made, save to the extent that the application covers costs after the first day of trial. Second, the plaintiff submits that the defendant has a counter-claim involving substantially the same facts. It submits that the authorities indicate that in such circumstances, security should not be ordered. Third, it submits that the defendant has delayed in bringing the application. Finally it submits that the amount claimed by the defendant is excessive.

For the first proposition, the plaintiff relies upon the decision of Martin J in Covecorp Constructions Pty Ltd v Indigo Projects Pty Ltd [2007] QSC 262. In that case, in circumstances not distinguishable from the present circumstances, his Honour dealt with a similar submission. He wrote at para 20:

"[20] Indigo contends that it is not seeking to vary an existing order but to make an application under the inherent jurisdiction of the Court to control its own processes. In its outline of submissions, Indigo says that the application is made pursuant to UCPR 670. In any event, Indigo says, if this is an application seeking to vary an existing order, then the 'special circumstances' requirement in UCPR 675 has been satisfied.

[21] I do not see how this application can be anything but an application to vary another order, whether that application is made in the inherent jurisdiction or under UCPR 670. If granted, this application will yield orders which will change the effect of the order made in August 2002 which required security in the amounts referred to above to be provided for Indigo's costs up to and including the first day of trial. No order was made granting liberty to apply for further security. (cf Iron Gates Pty Ltd (in liquidation) & Anor v Richmond River Shire Council & Ors [2006] QSC 141 at [41])."

With great respect for his Honour's view, I do not agree. If this were a case of seeking to vary the order on the basis that it was to deal with something which underpinned the judgment given by Acting Justice Robin in the earlier application, the situation might be different. However, what I have before me, in my view is simply a further application for further security.

The security which has heretofore been provided is plainly insufficient in the events which have happened. The evidence shows that it will be more than consumed by the expenses incurred to date. I see no reason why I should not order further security in the action. I do not think that r 675 applies.

It is therefore unnecessary to deal with the plaintiff's arguments relating to whether any special circumstances exist.

On the second point, that is the fact that the claim and the counter-claim raise the same facts, the plaintiff submits that I should apply what was said by Smart J in Sydmar Pty Ltd. v Statewise Developments Pty Ltd (1987) 73 ALR 289 at page 300. There his Honour stated that one of the factors relevant to the exercise of the discretion is

"whether substantially the same facts are likely to be canvassed in determining the action and the cross-action. The court would be slow to allow a situation where the action is stayed because of the inability to provide security but the cross-action covering substantially the same factual areas proceeds."

The defendant's response to that submission is two-fold. First, it accepts that the cross-action should not proceed if the action is stayed. Second, it submits that the claim in the counter-claim is purely defensive. I am not too sure that the second submission is correct. The counter-claim arises out of the same facts as are pleaded in the defence, and to that extent, there is some substance to it, but it is still a claim for a substantial amount of money. It does not matter, in my view, because if there is to be a stay, it is to be a stay of the whole of the proceedings, and therefore the purpose of the consideration is achieved.

The third factor, delay, is argued by the plaintiff in relation to the proof of special circumstances, and I need not go into it in the view that I take. Nonetheless, it does arise also in relation to the fixing of the amount of the costs in this way. The defendant has sought an order for a further $120,000 to be provided by way of security. That amount is based on a proportion of the estimate of costs which is contained in a schedule to the affidavit of Mr Cowen filed in the proceedings on the 18th of November. That schedule shows that costs incurred to date are some $201,000. It allows preparation for trial at $9,000, the first day of trial at $16,000, and a further $20,000 for care and consideration, and $24,000 for GST, a total of some $271,000.

In my judgment, this is not an appropriate case to allow the defendant security for costs incurred up until the making of this application. It is some three years since the previous order was made, and the defendant has had abundant time to make an application to cover costs incurred up to this time, had it wished to do so.

Mr Tucker told me quite frankly that the reason the application is now made is because the parties both see the matter now as being ready for trial and they are about to sign and file a request for trial date.

In my judgment, the defendant should have security provided by the plaintiff for its costs, but only in respect of costs not yet incurred.

Looking at that broadly, the evidence in the affidavit suggests that there remains to be incurred some $70,000. Of that, as I have said, almost $25,000 is GST, 80 percent of which will be attributable to costs incurred uptil now. I would, therefore, only allow $5,000 dollars of that amount.

I would allow $15,000 of the $20,000 claimed for care and consideration, and I would also allow $8,000 for the second and third day of trial and I would discount the resulting figure by 10 percent to take account of the difference between indemnity and standard costs. That on my calculations brings the result to approximately $50,000, subject to the correction of my mathematics and making allowance for rounding. This seems to me an appropriate figure in which to order that the security be provided.

I would ask that the parties prepare a draft order and bring it in. If initialled by both sides, a further appearance will not be required.

HIS HONOUR: In my judgment, the appropriate order for costs in the present case is that they be the defendant's costs in the cause. The defendant has had substantial success on the application but not nearly to the extent that it sought, in the sense that the amount ordered is about one-third of the amount sought.

The nature of the application also is such that in my view it would not be right to have the costs determined purely on the outcome of the application. The outcome of the trial is something which seems to me is also relevant, and that can best be done by making the defendant's costs in the cause. That reflects the defendant's level of success and also the relationship of the application to the whole action.

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