Strata Consolidated (Australia) Pty Ltd & Ors v Bradshaw & Ors [2000] NSWCA 225 | Case summary

There is a significant difference between the latter order and the order as described in the notice of motion but nothing in the argument turned on that. 2 A few days before the day fixed for hearing a volume containing three hundred and fourteen pages called a tender bundle was delivered to the Court. This comprised the notices of motion and affidavits considered by the Registrar, the written submissions to him and transcripts of four days of the hearings before him. Neither the notice of motion nor any other document indicated what was complained of in Registrar Jupp's reasoning until written submissions were delivered to the Court at 9.30 this morning. The submissions revealed that very little of the tender bundle was material. 3 The Registrar was exercising the powers of a single judge of appeal pursuant to section 46(2) of the Supreme Court Act 1970 by reason of part 51 rule 58 of the Supreme Court Rules. Accordingly this review of his decision has been undertaken pursuant to section 46(4) of the Supreme Court Act. Decisions about the award of security for costs are quintessentially discretionary decisions and decisions on a matter of practice and procedure. The claimant, on one view, must demonstrate at least that the principles in House v R (1936) 55 CLR 499 are satisfied. That was the view of Handley JA in Wentworth v Wentworth (1994) 35 NSWLR 726 at 733. Another view is that the claimants must demonstrate that Registrar Jupp misdirected himself in principle and that his orders were plainly wrong. That was the view of Mahoney JA in Wentworth v Wentworth at page 731. A further view is that the claimants must demonstrate that the discretion vested in the Registrar plainly miscarried. That was Powell JA's view in Wentworth v Wentworth at page 737. 4 Prima facie the Registrar's orders appear reasonable and indeed as to quantum conservative. His reasoning appears, with respect, to be prima facie coherent and convincing. The only challenges made to it were two in number. One concerned a matter not mentioned in his reasons for judgment and the other concerned a matter not put to him. 5 The first challenge complained that two submissions put in writing to the Registrar have not been dealt with. The first of the submissions put in writing appeared in paragraph 74 in the following terms: "A further discretionary factor against the Ney claimants [the opponents to the present notice of motion], is that on Mr Blanks' [the Ney claimants' solicitor] own calculations the principal claimants owe the opponents $65,000. On the respondents' calculations [i.e. the appellants in the appeal who are the claimants on the present notice of motion] the net debt is about $150,000 pursuant to judgments and orders of the Court below. This figure is approximately twice the amount of the sum sought as security for costs of the appeal. In those circumstances, it would not be appropriate to order security for the costs of the appeal." Paragraph 75 read as follows: "Alternatively, if the Court considers that it can and should order security, the nature and quantum of the security arises for consideration. In that case it is submitted that such security should comprise a charge over any sum currently owed by the Ney claimants to the opponents." 6 So far as paragraph 74 refers to a figure of $65,000, that is arrived at by taking the estimate of Mr Blanks for the costs entitlements of his clients, being $300,000, and subtracting it from $365,000 which he estimated as the amount of the damages verdict of $230,000 together with interest thereon which Hunter J, the trial judge, had ordered them to pay. 7 It is unnecessary to rehearse the factors which the claimants have pointed to as indicating that that figure of $300,000 might be excessively high. 8 The claimants said, and it is not in contest, that the Registrar did not deal with those two arguments. The claimants ask this Court to deal with those arguments. 9 The first argument was propounded as a discretionary factor indicating that no order for security for costs should have been made at all. In my opinion that contention should be rejected. 10 There are strong reasons of substance supporting the Registrar's decision to make an order for security. They rest on the impecuniosity of the appellants, together with the fact that some person behind the appellants on the probabilities is likely to obtain a benefit if the appeal is successful. These are matters dealt with in paragraphs 28 and 29 of the Registrar's reasons for judgment. 11 Notwithstanding the Registrar's failure to take into account the additional discretionary factor urged against that outcome, in my judgment the factors to which the Registrar did pay regard are sufficient to outweigh that factor and to justify the conclusion that security should be ordered. 12 The second argument appearing in paragraph 75 concerns the form of the security that should be ordered. The first difficulty with the proposed order is that it is possible that such a security might be vulnerable to attack from a liquidator appointed to Strata Consolidated (Australia) Pty Limited or the other claimants. While it is possible that such an attack may well fail, the possibilities of success cannot be excluded. Obviously any attack by a liquidator which succeeded would take away from the opponents their security. However, even if there were no successful attack by a liquidator the effect of an order of the Court that security be in that form would be to prejudice other creditors. 13 Before the Registrar there was read affidavit evidence from Kenneth James Pridmore, an accountant, to the effect that the accounts of the company revealed no liabilities other than loans from the parent company. Mr Pridmore also referred to a continuing letter of financial support, but when Mr Pridmore was being cross-examined it was called for but not produced. 14 As to the question of other liabilities, whether or not there are any creditors other than persons involved in this litigation the fact is that by reason of the orders of Hunter J certain of the Ney interests have an entitlement to have forty per cent of their costs paid. More importantly the so-called Bradshaw interests received the benefit of an order that the plaintiffs below (the claimants here) be ordered to pay ninety per cent of the Bradshaw defendants' costs. That figure was estimated by Mr Blanks to be equivalent to $540,000. 15 To make the order for security contemplated by paragraph 75 in the event that it does not give priority over Mr Bradshaw would be to dilute the security available to the opponents. In the event that the order is intended to give security preferring the opponents to the position of Mr Bradshaw it is undesirable to make the order because it would injure the interests of Mr Bradshaw and his company without any opportunity for Mr Bradshaw or his company to be heard on that question. 16 The Court was referred to a decision of Brinsden J in the Supreme Court of Western Australia, namely Process Engineering Pty Limited v Derby Meat Processing Company Limited [1977] WAR 145. For my part the decision appears to have little application to the present case. In the first place it concerned an order made by Brinsden J after the plaintiff company in that case had gone into liquidation so that no possible issues of preference arose. In the second place the facts are too obscurely reported to permit any meaningful inquiry into whether a close analogy is to be drawn between that case and this. Further, one of the matters that Brinsden J reminded himself of was the importance of preventing an order for security becoming a weapon of oppression. In my judgment it cannot be said of Registrar Jupp's order for security that it is a weapon of oppression. 17 For those reasons I would reject the first of the two criticisms which the claimants made of Registrar Jupp's decision. 18 The second criticism, which was propounded on the assumption that the first criticism failed, concerned the costs order that the Registrar made. The essence of the submission was that a very large part of the time spent before the Registrar was spent on an unusual application made by the Ney interests. That was an application that they receive further security for costs not in relation to the appeal but in relation to the trial. 19 The claimants submitted that that was an issue on which the Ney interests had failed and that as between themselves and the Ney interests the proper order was that there be no order as to the costs of the argument before the Registrar. Further it was submitted that the Ney interests should pay some substantial percentage of the costs which the claimants have been ordered to pay to the Bradshaw interests in relation to the security for costs application. The point made was that the Bradshaw interests, although they had pursued a similar application initially, had abandoned it and the Ney interests had pursued it to the bitter end. The bitter end involved its rejection by Registrar Jupp. It was submitted that so much time had been wasted during which the Bradshaw interests had had to be represented that proper allowance for that should be made in the costs orders. 20 Both the claimants and the opponents had some difficulty, understandably, in quantifying precisely how much time had been spent on the submission in relation to security for the costs of the trial. Had the matter been argued before Registrar Jupp I would have been loath to disturb any costs order he made after being asked to consider the topic because he was in a much superior position, compared to this Court, to determine how much time had been spent on the failed submission as distinct from how much time had been spent on the partially successful submission of the Ney interests. However, that can be put on one side because the argument put to this Court was not put to Registrar Jupp. No error of fact or law was pointed to in relation to this part of Registrar Jupp's decision. No irrelevant consideration was taken into account and no relevant consideration which he was asked to attend to was not taken into account. The result does not seem so unjust as to indicate that such an error, though not apparent, must have occurred. In the circumstances I would not favour disturbing Registrar Jupp's costs order. 21 Accordingly I would dismiss the claimant's notice of motion with costs. 22 SHELLER JA: I agree. 23 BEAZLEY JA: I agree. 24 SHELLER JA: The order of the court will be as Heydon JA proposed.

Strata Consolidated (Australia) Pty Ltd & Ors v Bradshaw & Ors

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Judgment (14 paragraphs)

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