Yates Property Corp Pty Ltd v Boland, John & Ors [1997] FCA 1113

EX TEMPORE REASONS FOR JUDGMENT The principles that apply in relation to an application for security for costs are now well known. One of those principles is that the application for security should be brought reasonably promptly. Another is that, if the person who brings the proceedings is a company, and that company is impecunious in the sense that there is a substantial risk that it will not be able to meet the costs awarded, then the court looks to see what security can be provided by the persons who stand to benefit from the litigation or who stand behind the company. When the proceedings are an appeal the same rule and the same approach applies, perhaps with even more force, for there has already been a hearing before a judge and there is a judgment in favour of one party or the other. So, when deciding whether to require security in an appeal, there is perhaps less reason for being generous in permitting impecunious people to litigate. The principle that I have mentioned must be applied having regard to the particular circumstances of each case. However, there is nothing special about this present case; this is simply commercial litigation. I have heard both parties on the judgment the subject of the appeal. I can only say that I have not heard anything which to me demonstrates an error in the judgment, nothing in the nature of a prima facie case that the judgment is wrong. That is not to say that there may not well be strong matters that can be put. I have sat on appeals from judgments which on their face have seemed prima facie to be extremely sound and I have heard them brought to destruction in the course of a well-presented argument on appeal. So I approach this matter on the footing that it is commercial litigation and that I have no view at all about the judgment except of course that there is a judgment and it is in favour of the respondent. Nor is there anything special in the appeal in the nature of a point of law that ought to be decided by the court. Every now and then we have cases where, even though a matter is brought by persons in an impecunious position, it is obvious that there is a point of law that ought to be resolved either at first instance or on appeal, and of course the Court takes that into account. This is not such a case. It may be that there will be some interesting points of law arising out of it but this is not a case in which it is demonstrably in the public interest that the litigation proceeds. The case as put for the appellant, Yates Property Corporation Pty Limited, was as stated in the affidavit of Mr Yates: "If this court were to order that YPC, the appellant, pay or lodge security for costs in these proceedings then effectively such an order would end YPCs ability to continue this appeal as it and I would be unable to either pay or lodge security in a form acceptable to the court." That point to my mind does not defeat the application. The principle that I earlier mentioned applies, namely, that even if a company is impecunious you ought to look at the persons who are to benefit from the litigation and to see what position they are in and whether they can provide security, even security by way of a personal indemnity for the costs. Very late in the day, an offer was made by Mr Yates on his own behalf and on behalf of the trustee of his family company, Jillinda Pty Limited, that each would give an indemnity for the costs of the respondents in these proceedings. Earlier, that offer had been made with respect to only one set of representation. That was not an acceptable offer because the parties have differing interests. Although no cross-claim was made, it seems to me that the interests of the respondents are different and they ought to be separately represented. Clearly Branson J was of the same view when that matter was put to her on the question of costs. During the course of the hearing, I have come to the view that an indemnity from Mr Yates and Jillinda ought not to be accepted. One of the main points is that Branson J made an order for costs not only against Yates Property Corporation Pty Limited but also against Mr Yates personally. That order was made on the basis that issues had been brought forward and submissions made that, in the opinion of Branson J, ought not to have been made or were not well based. Branson J took the view that Mr Yates personally should bear responsibility for the costs of the proceedings. An estimate of those costs has been made and it appears that the costs when taxed may amount to over $2 million. In that event, it seems to me that Mr Yates' personal indemnity would be of little value. Jillinda Pty Ltd we know very little about. Without seeing the trust deed, I am concerned whether the trustee could properly give an indemnity as to someone else's costs. That material is not before me. I do not think I would have accepted any indemnity unless it had been offered from both Mr and Mrs Yates and from Jillinda Pty Ltd. That has not been offered. Putting the offer of indemnity to one side, it seems to me that the oral evidence given does not support the evidence given by Mr Yates in his affidavit. It is clear that Mr Yates is involved in business affairs in which there is a good deal of money passing from one company to another. Mr Yates himself apparently receives a remuneration of about $300,000 a year and he has been the moving party in a prospectus to the public for an issue by Yates Security Limited which seeks to raise funds with a minimum subscription of $6.1 million and a full subscription of $35 million. It is proposed in the prospectus that from those funds the sum of $1 million will be used to purchase Longhurst & Andrew Pty Ltd and Yates Security Network Pty Ltd, companies in which Mr Yates has an interest. In the prospectus Mr Yates is described as a person who built his wealth in property. I think anyone reading the prospectus would assume that he was a man of substance. He is in any event involved in business affairs of substance and therefore it seems to me quite probable that security can be provided. Indeed Mr Yates in his evidence said that, if the float was successful as he anticipated, then security could be provided to the court. I think that the order I should make is that security in the sum of $100,000 in respect of each respondent be provided by way of payment into court or by way of bank guarantee in a form approved by the Registrar and that such security be provided on or before 15 December of this year. I reserve liberty to the respondents to apply thereafter for the dismissal of the proceedings if the security is not provided. I will reserve liberty to the parties to apply in the meantime either to terminate or to vary the order. The respondents should have the costs of today. I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies