Readymix Holdings International Pte Ltd v Wieland Process Equipment Pty Ltd

8 Both of the Applicants in the present proceedings are corporations with their places of business outside Australia. The First Applicant is incorporated in Singapore. 9 One of the recognised circumstances in which security for costs may be ordered is where an applicant is resident overseas. Indeed, Order 28, r 3(1)(a) of the Federal Court Rules 1979 (Cth)recognises that that is one of the matters which may be taken into account when considering an application for security. 10 But, as that Rule makes apparent, the fact that an applicant is ordinarily resident outside Australia is but one matter which the Court may take into account when exercising the discretion and the fact of overseas residence is not in itself decisive as to the manner in which the discretion is to be exercised. Bowen CJ in CBS Records Australia Ltd v Telmark Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 at 284-5 has thus observed: Counsel for the respondent also asked for an order for security for costs to be made against CBS (UK), CBS Inc and Mindbangles Inc in accordance with O 28, r 3(1)(a). This rule certainly gives a discretion to the court to make an order for security. However, it appears to me that it is a discretion to be exercised upon rational grounds and any party applying for security carries the onus of establishing a case showing that security should be granted. The fact that an applicant is ordinarily resident outside Australia is a precondition to an application under that part of the rule but is not sufficient in itself, in my view, to induce the court to exercise its discretion to make an order…

11 The purpose of ordering security for costs in such circumstances is to ensure that a respondent has available to it funds within the jurisdiction against which it can enforce any judgment for costs which may ultimately be made in their favour: Energy Drilling Inc v Petroz NL [1989] ATPR 50,418. Gummow J there said: [24] The purpose of ordering security for costs against an applicant ordinarily resident outside the jurisdiction is to ensure that a successful respondent will have a fund available within the jurisdiction of this Court against which it can enforce the judgment for costs, so that the respondent does not bear the risk as to the certainty of enforcement in the foreign country and as to the time and complexity of the action there which might be necessary to effect enforcement… On the other hand, the mere circumstance that an applicant is resident outside the jurisdiction does not necessarily invite an exercise of discretion in favour of ordering security, the question being how justice will best be served in the particular case… Cited: Thai Silk Co Ltd v Aser Nominees Pty Ltd (Unreported, Federal Court of Australia, Hill J, 31 May 1989). 12 Indeed, it may be accepted for present purposes that the practice of this Court and other Superior Courts has been to order such a party to provide security unless that party can point to other factors which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction: Logue v Hansen Technologies Ltd [2003] FCA 81 at [38]-[40], 125 FCR 590 at 600-1 per Weinberg J; Ogawa v University of Melbourne [2004] FCA 491 at [23]-[24] per Marshall J; Worldwide Australia LLC v Jacobsen Platinum Pty Ltd [2005] NSWSC 846 at [3] per Einstein J. 13 One such factor is the ability to register a judgment for costs in the overseas jurisdiction. In resisting the Motion for security, the Applicants contend that the ability to register a judgment overseas has the consequence that such a judgment "will be as effective … as it would be in the case of a plaintiff who did not ordinarily reside" overseas: Barton v Minister for Foreign Affairs (1984) 2 FCR 463. That was also an application for security and the case was said to raise "an important question as to the ambit of the discretion of the court to make an order for security for the payment of costs in a case where the applicant is ordinarily resident outside Australia". Morling J reviewed the authorities, including the decision of Rath J in Connop v Varena Pty Ltd [1984] 1 NSWLR 71 and concluded at 469-70: In Connop v Varena Pty Ltd… Rath J dealt with a somewhat similar case. In that case the plaintiff was ordinarily resident in New Zealand. There is legislation in force in New Zealand which makes it possible to enforce (by registration in that country) a judgment of the Supreme Court of New South Wales. His Honour said that an order for costs against the plaintiffs in that case could be register without difficulty in New Zealand, although there might be some delay inconvenience and expense arising from registration of the judgment. Having referred to those matters he said: "But apart from this I see no difference in regard to the costs of the first and second defendants between the circumstances of this case and those of a similar case where a plaintiff is not ordinarily resident outside this State. With only minor reservations, a judgment for costs will be as effective against the plaintiffs here as it would be in the case of a plaintiff who did not ordinarily reside outside this State: see Re Percy and Kelly (etc) Co (1876) 2 Ch D 531, per Jessel MR, at 531." His Honour made an order for security for costs, fixing the amount of security at $750. This sum was apparently an estimate of the cost of registration and execution in New Zealand of a judgment for costs in the Supreme Court of New South Wales in favour of the defendants in the action before him.

Particular reliance is placed by the Applicants upon the approach pursued by Rath J. 14 A judgment of this Court may be registered in Singapore. That was the evidence of an advocate and solicitor of 19 years standing in the Supreme Court of Singapore, Mr Narayanan Sreenivasan. The Respondent did not put this in issue. That which the Respondent did submit was, again, the ability to enforce a judgment of this Court in Singapore was but another matter to be considered when exercising the discretion. 15 Security for costs, it should be noted, was previously ordered by Conti J in the present proceedings - but that order was made by consent. 16 An application for security should also be made promptly: KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 196-8 per Beazley J; James v ANZ Banking Group Ltd (No 1) (1985) 9 FCR 442 at 446 per Toohey J. 17 In the present proceedings, the rather lengthy span of time that has occurred since the proceedings were first commenced can be divided into three periods, namely: (i) the period as between March 2004 and September 2006 - a period during which there had been an order for security, that order being vacated when the September 2006 hearing was vacated; (ii) the period as between September 2006 and May 2007 - a period during which the parties were resolving the order for costs made by Conti J that the Respondent was to pay the Applicants, those costs ultimately being paid; and (iii) the period from May 2007 to date - the period commencing with the filing in May 2007 of the present Motion again seeking security. Counsel for the Applicants quite properly accepted that the passage of time as from May 2007 should not count against the Respondent for the purposes of the present Motion. 18 It is not considered that the period between September 2006 and May 2007 should disentitle the Respondent to an order for security. The vacation of the September 2006 hearing was attributable to the Respondent - but that is yet a further consideration relevant to the exercise of the discretion. Also relevant to the exercise of the discretion is the fact that the Respondent has already been ordered to pay, and has paid, such costs as were thrown away by reason of the vacation of the September 2006 hearing. It is not considered appropriate to deny the Respondent the benefit of an order for security by reason of such past conduct as occasioned the vacation of the earlier hearing where it has already incurred the consequences of such conduct in the form of an adverse order for costs. 19 In all of the circumstances it is considered that an order for security should be made but that that order should be confined to the future costs to be incurred. Confining the order in that way effects an appropriate balance between the fact that, as at present, the Respondent has incurred costs without the benefit of any order for security, but should have the benefit of such an order for the future conduct of the proceedings. Notwithstanding the ability to register a judgment in Singapore, it is nevertheless considered of importance that the Respondent has available to it funds within Australia against which it can enforce any order for costs which may ultimately be made in its favour. Also of importance is the "great weight" which has long been given to the fact that the Applicants are resident outside Australia: Worldwide Australia LLC v Jacobsen Platinum Pty Ltd, supra, at [3] per Einstein J. Whether or not that factor should be given such "great weight" when there is the ability to register a judgment overseas may be left to one side; the fact of overseas residence remains a matter to which weight may be given. 20 Various estimates have been provided quantifying those costs, the estimates varying between $83,449.40 to $120,347.00. Included with those estimates are costs incurred in respect to both the Amended Application and the application for security. Those sums, it has been submitted, should not be included in any order. Excluding those costs, the Applicants quantify the future costs to be $72,549.40. The ability to register a judgment of this Court in Singapore has been taken into account, together with the further evidence of Mr Sreenivasan that the First Applicant has a paid up capital of SGD1,200,000. Nothing is known as to the financial position of the Second Applicant. 21 Estimates as to the totality of all costs from the outset and including future costs varied from $313,027.31 to $418,294.76. It may be accepted that an order for security could now be made extending to all costs, including costs incurred prior to the application for security being made: Bryan E Fencott & Associates v Eretta Pty Ltd (1987) 16 FCR 497 at 515 per French J. It may further be accepted that considerable costs have been incurred to date in the preparation of this case for hearing. Indeed, with few exceptions, it is understood that the entirety of the evidence of the Applicants and the Respondent has been filed or is ready for filing. The case has been set down for hearing for two weeks commencing on 21 July 2008. 22 Any order is discretionary but must be an exercise of discretion that takes into account the usual practice of the Court and the particular circumstances of the proceedings in which the order is sought. And there is no mathematical certainty as to the quantum. The quantification of an appropriate amount by way of security is "certainly not an exact science": East Grace Corp v Xing (No 1) [2005] FCA 219 at [6] per French J. An order for security in the present proceedings for an appropriate amount provides the Respondent with some certainty that there is in Australia an available fund from which costs may be paid if ordered. 23 In the present proceedings, it is considered that security should be ordered in the sum of $85,000 and should be provided within 21 days. 24 The orders of the Court are:

1. Leave be granted to file the Further Amended Application and Further Amended Statement of Claim, including liberty to join as the Second Respondent Stuart Mitchell Wieland.
2. The Applicants to provide security for costs in the sum of $85,000 within 21 days.
3. The costs of both Notices of Motion be reserved.

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.