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Conlon Property Developments Pty Ltd v Cavanagh Bros Pty Ltd

 

[2018] QSC 127

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Conlon Property Developments Pty Ltd v Cavanagh Bros Pty Ltd & Others [2018] QSC 127

PARTIES:

CONLON PROPERTY DEVELOPMENTS PTY LTD & ORS

(applicant/defendant)

v

CAVANAGH BROS PTY LTD & ORS

(respondent/plaintiff)

FILE NO:

1069 of 2017

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

6 June 2018

DELIVERED AT:

Brisbane

HEARING DATE:

22 May 2018

JUDGE:

Ryan J

ORDER:

The plaintiff is to provide security for the defendants’ costs of the proceedings, up to and including the first day of trial, in the amount of $60,000.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – FACTORS RELEVANT TO EXERCISE OF DISCRETION – DELAY – PLAINTIFF’S OR APPLICANT’S IMPECUNIOSITY – Where the defendants applied for an order that the plaintiff give security for their costs – Where the defendants first raised the issue of security for costs on 1 December 2017 – Where the matter was not raised again until 27 March 2018 – Where the plaintiff accepted that the prima facie threshold had been met – Where the plaintiff delayed in bringing their action – Whether the delay by the defendants disentitled them to an order – Whether the plaintiff’s impecuniosity was caused by the defendant’s conduct the subject of the claim

COUNSEL:

M A Eade for the applicant/defendant

A P J Collins for the respondent/plaintiff

SOLICITORS:

Cooper Grace Ward for the applicant/defendant

Jensen McConaghy Lawyers for the respondent/plaintiff

Background

  1. [1]
    The plaintiff and the defendants engaged in a joint venture to develop land at Yatala.  The developed land was sold and the joint venture dissolved.  The parties are in dispute about the distribution of the sale proceeds and the amount to which the plaintiff is entitled.  The plaintiff claims $104,714.  The plaintiff also claims that the first defendant owed fiduciary duties to it which the first defendant breached by engaging in fraud or dishonesty, and that the second and third defendants knew of the fraud or dishonesty and actively participated or assisted in it. 
  2. [2]
    The primary issues at trial will concern the terms of the joint venture agreement and the way in which the sale proceeds of the developed land were to be distributed; the relationship (trust, fiduciary or otherwise) between the plaintiff and the first defendant; and the second and third defendants’ knowledge of, consent to, or involvement in, the first defendant’s alleged fraud or dishonesty.
  3. [3]
    The plaintiff company is a trustee proprietary limited company, with a paid up share capital of $2.  It is not registered as owning, or having a share in, any real property in Queensland or New South Wales.  It is not registered as the grantor of any security interest on the Personal Securities Register.
  4. [4]
    The defendants have applied for an order that the plaintiff give security for their costs, under Chapter 17 of the Uniform Civil Procedure Rules 1999 (Qld) (the UCPR) or under section 1335 of the Corporations Act 2001 (Cth) (the Act).

Statutory provisions

  1. [5]
    The relevant rules follow:

670 Security for costs

  1. (1)
    On application by a defendant, the court may order the plaintiff to give the security the court considers appropriate for the defendant’s costs of and incidental to the proceeding.
  2. (2)
    This rule applies subject to the provisions of these rules, particularly, rules 671 and 672.

671 Prerequisite for security for costs

The court may order a plaintiff to give security for costs only if the court is satisfied –

  1. (a)
    the plaintiff is a corporation and there is reason to believe the plaintiff will not be able to pay the defendant’s costs if ordered to pay them; or

  1. (h)
    the justice of the case requires the making of the order.

672 Discretionary factors for security for costs

In deciding whether to make an order, the court may have regard to any of the following matters –

  1. (a)
    the means of those standing behind the proceeding;
  2. (b)
    the prospects of success or merits of the proceeding;
  3. (c)
    the genuineness of the proceeding;
  4. (d)
    for rule 671(a) – the impecuniosity of the corporation;
  5. (e)
    whether the plaintiff’s impecuniosity is attributable to the defendant’s conduct;
  6. (f)
    whether the plaintiff is effectively in the position of a defendant;
  7. (g)
    whether an order for security for costs would be oppressive;
  8. (h)
    whether an order for security for costs would stifle the proceeding;
  9. (i)
    whether the proceeding involves a matter of public importance;
  10. (j)
    whether there has been an admission or payment into court;
  11. (k)
    whether delay by the plaintiff in starting the proceeding has prejudiced the defendant;
  12. (l)
    whether an order for costs made against the plaintiff would be enforceable in the jurisdiction;
  13. (m)
    the costs of the proceeding.
  1. [6]
    Under r 674(b), if the court orders the plaintiff to give security for costs, and if the security is not given, then the proceeding is stayed so far as it concerns steps to be taken by the plaintiff.
  2. [7]
    Section 1335(1) of the Act provides:

“Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.”

  1. [8]
    Although the application for security was brought under the UCPR and the Act, counsels’ submissions (written and oral) focused on the UCPR and these reasons respond accordingly.

Security for costs – general principles

  1. [9]
    The Court has a discretion to order that a plaintiff give security for a defendant’s costs.[1] 
  2. [10]
    The discretion is broad, but it may only be exercised in certain circumstances, including that the plaintiff is a corporation and there is reason to believe that it will not be able to pay the defendant’s costs if ordered to do so;[2] or if the justice of the case requires the making of such an order.[3] 
  3. [11]
    Rule 672 contains a non-exhaustive list of discretionary matters to which the Court may have regard if it is satisfied of one of the prerequisites contained in r 671.[4]
  4. [12]
    The exercise of the discretion requires the assessment and weighing of relevant factors, some of which may be interrelated.  It is not possible to ascertain or list all of the matters relevant to the exercise of the discretion, because relevant factors vary from case to case, as does the weight to give them.  The determination of an application for security for costs calls for the exercise of judicial discretion in all of the circumstances: Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd.[5]
  5. [13]
    In Base 1 Projects, the primary judge, whose approach was endorsed by the Court of Appeal, referred to the “convenient summary of relevant considerations” contained in Beazley J’s judgment in KP Cable Investments Pty Ltd v Meltglow Pty Ltd.[6] 
  6. [14]
    In KP Cable, her Honour set out “well established guidelines” for these applications, which may be expressed in this way:
  • Applications for security should be brought promptly. 
  • Regard is to be had to the strength and bona fides of the plaintiff’s case. 
  • It is relevant to consider whether the plaintiff’s impecuniosity was caused by the defendant’s conduct, the subject of the claim.
  • It is relevant to consider whether the defendant’s application for security is oppressive, in the sense that it is being used merely to deny an impecunious plaintiff a right to litigate. 
  • It is relevant to consider whether there are any persons standing behind the company who are likely to benefit from the litigation and who are willing to provide the necessary security.
  • Related to the guideline immediately above, it is relevant to consider whether any persons standing behind the company have offered any personal undertaking to be liable for the costs, and if so, the form of any such undertaking.
  • Security will only ordinarily be ordered against a party who is in substance a plaintiff, and an order ought not to be made against a party who is defending itself and thus forced to litigate.
  1. [15]
    Her Honour also stated that delay was a relevant factor, but not, of itself, disentitling.
  2. [16]
    The exercise of the direction involves a balancing exercise.  For example, on the one hand, there may be injustice to a plaintiff if it is prevented from pursuing a proper claim by an order for security for costs.  On the other, there may be injustice to a defendant if no security is ordered; the plaintiff fails at trial; and it is unable to recover its costs.  
  3. [17]
    The discretion to order security for costs is unfettered and should be exercised having regard to all of the circumstances of the particular case without any predisposition in favour of an award of security: Base 1 Projects.[7]

Onus

  1. [18]
    It is for the defendant to establish a prima facie entitlement to an order for security.  Once that has been established, the evidential onus shifts to the plaintiff to satisfy the Court that, taking all relevant factors into account, the Court’s discretion ought to be exercised by either refusing to order security, or by ordering security in some lesser amount than that sought by the defendant.[8] 
  2. [19]
    While the evidential onus may shift to the plaintiff once the threshold has been reached, the persuasive onus remains with the defendant: Livingspring Pty Ltd v Kliger Partners.[9] 
  3. [20]
    In Livingspring[10] the Court said:

“[21] … While the satisfaction of the threshold condition in the relevant sense ‘calls for’ the exercise of the power, this does not alter the fact that the burden rests on the defendant, from first to last, to persuade the court that the order for security should be made.

[22] There are, of course, particularly discretionary matters of which the plaintiff must necessarily have carriage.  If, for example, the plaintiff corporation asserts that an order for security would impose on it such a financial burden as would stultify the litigation, the plaintiff must establish the facts which make good that assertion …

[23] The same would be true of a contention that the plaintiff’s impecuniosity was caused by the defendant.” 

The evidence – the defendants first raised the issue of security for costs on 1 December 2017

  1. [21]
    The parties undertook the joint venture from about April 2009 until 1 July 2011. 
  2. [22]
    The dispute between the plaintiff and the first defendant arose in late 2011.  An informal mediation in December 2011 did not resolve matters. 
  3. [23]
    In May 2012, the plaintiff put the first defendant on notice of the proceedings, by informing the first defendant’s solicitors that a statement of claim would “shortly” be completed, and asking whether they had instructions to accept service.  However, no pleadings were filed until 3 February 2017 – almost five years later – and they were not served until 31 October 2017 – a further nine months later.  The proceedings identified a claim against the second and third defendants. 
  4. [24]
    The defendants filed their notice of intention to defend, and their defence, on 29 November 2017 and served it upon the plaintiff’s solicitors on 1 December 2017.
  5. [25]
    The letter of 1 December 2017 asserted, in effect, that the plaintiff’s claim would fail and that the defendants were confident of their success.  It concluded with this paragraph:

“Finally, we understand that your client no longer trades and has no assets.  On this basis we advise that any further steps in this matter will be met with a security for costs application.  We believe such an application is necessary to ensure our clients’ costs of defending this matter can be met.”

“Steps” taken by the plaintiff after 1 December 2017 and the defendants’ response thereto

  1. [26]
    By letter dated 15 December 2017 to the defendants’ solicitors, the plaintiff’s solicitors identified errors in its statement of claim and, under the heading “Plaintiff’s Reply”, sought “particulars and/or disclosure” of certain matters referred to in the defence.
  2. [27]
    The defendants’ solicitors did not reply.
  3. [28]
    On 26 February 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors –
  • asking whether the requested particulars/disclosure would be provided;
  • disclosing their list of documents ; and
  • seeking the defendants’ list of documents.
  1. [29]
    On 7 March 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors, complaining, under r 444 UCPR, that the defendants had failed to disclose their list of documents.
  2. [30]
    On 8 March 2018, the defendants’ solicitors wrote to the plaintiff’s solicitors –
  • noting that the plaintiff had not yet filed or served a reply;
  • asserting that the plaintiff was out of time to serve a reply; and
  • asserting that the pleadings had “now closed” (with rule 168/165(2) consequences).
  1. [31]
    On 8 March 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors –
  • asking whether they had received their letters of 15 December 2017 and 26 February 2018 (requesting particulars/disclosure);
  • asking whether the defendants would provide the requested particulars/disclosure;
  • informing them that the plaintiff would have its pleadings “in order” prior to any trial so that it could adduce evidence required to prove its claim; and 
  • stating that they were “looking forward” to receiving the defendants’ list of documents .
  1. [32]
    On 13 March 2018, the defendants’ solicitors responded to the rule 444 complaint by way of two letters.
  2. [33]
    In the first, they stated that they were under the impression (on the basis of the plaintiff’s letter of 15 December 2017) that the plaintiff was to file a reply and that the pleadings were not closed.  They stated that they (now) understood from the plaintiff’s letter of 8 March 2018, that the pleadings had closed, and that they would provide their list of documents within 28 days of that date. 
  3. [34]
    In the second letter, the defendants’ solicitors explained that that their list of documents would respond to the pleading as they stood –

“However, should [the plaintiff] amend the pleadings or file any further pleadings in any way which affects the nature and scope of our clients’ disclosure, we put you on notice that we will seek any additional costs thrown away.”

  1. [35]
    On 14 March 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors, noting the costs threat and stating (in very similar terms):

“Naturally, our client will seek any additional costs thrown away if your clients make any amendments to the pleadings, or file any further pleadings which in any way affect the nature and scope of our client’s disclosure.”

  1. [36]
    The plaintiff’s solicitor’s letter continued by –
  • responding to the assertion that the defendants were expecting the plaintiff’s reply by stating that the filing of the reply was “impending based on whether or not your clients would provide the further particulars and/or disclosure that we requested” and that there had been no response to that request;
  • asserting that the defendants were “endeavouring to unilaterally determine as to when the pleadings closed”;
  • asserting that the defendants’ list of documents was long overdue; and
  • requesting the list of documents by 4 pm, 23 March 2018, under threat of an application to the court.
  1. [37]
    On 23 March 2018, the defendants provided their list of documents to the plaintiff.

The defendants raised the issue of security for costs again on 27 March 2018

  1. [38]
    On 27 March 2018, the defendants raised the issue of security for costs in a letter stating, in effect, that the cost of defending the claim would be high and that (relying on an estimate) security in the amount of $100,000 to cover costs and disbursements to the first day of trial would be satisfactory.
  2. [39]
    The letter continued:

“If your client is of the position that they will be able to meet an adverse costs order against them, we invite your client to provide us with evidence to demonstrate this.  Otherwise, please confirm that your client will provide security for costs by 4.00 pm on 6 April 2018.

If your client does not agree to provide security for costs, or we do not hear from you by 4.00 pm on 6 April 2018, we will seek instructions to immediately proceed with an application seeking an order for security for costs without further notice.”

Correspondence between the parties and “steps” taken by the plaintiff after 27 March 2018

  1. [40]
    On 27 March 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors asking them to explain why the defendants had waited until disclosing their documents to raise “the threat of a security for costs application”. 
  2. [41]
    That letter also requested originals of certain documents for inspection and proposed Wednesday 4 April 2018 as the date upon which the originals might be inspected.
  3. [42]
    The defendants’ solicitors replied in two letters on 28 March 2018, creating in effect two streams of correspondence – one relating to the proceedings proper and the other relating to security for costs.
  4. [43]
    In their first letter, the defendants’ solicitors discussed an alternative date for inspection of the originals and asked for copies of certain of the plaintiff’s documents.
  5. [44]
    In their second letter, the defendants’ solicitors explained their delay in raising the issue of security for costs between 1 December 2017 and 27 March 2018 in these terms:

“As you correctly point out, we first raised our client’s intention to proceed with a security for costs application in our correspondence dated 1 December 2017 …

Since our client’s filing of its defence on 1 December 2017, your client has failed to file a reply in this matter.

Accordingly, until your recent correspondence on 26 February 2018 serving your client’s list of documents, we were unsure whether your client would be taking any further steps in this matter.

Since we received your client’s correspondence on 26 February 2018, we have promptly taken steps to proceeding with advising you of our client’s proposed security for costs application.

In these circumstances, we do not consider that there is any delay in putting you on notice of our client’s application for security for costs.”

  1. [45]
    The plaintiff’s solicitors replied by letter dated 29 March 2018, asserting that the defendants’ solicitors’ claim that they were unsure about whether the plaintiff would be taking any further steps was “frankly, disingenuous” and attributing the delay in filing a reply to the defendants’ failing to respond to the plaintiff’s request for information/documentation. 
  2. [46]
    The plaintiff’s solicitors stated that they considered the delay “very significant” and asserted that the defendants were proceeding with an application for security “now” to “stultify the litigation”.
  3. [47]
    On 11 April 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors about the failure of the defendants to produce originals of some of the documents inspected on 6 April 2018 and other issues concerning the documents produced. 
  4. [48]
    The defendants’ solicitors replied to this letter on 16 April 2018, advising that some of the originals were with the defendants’ accountants, with whom they were making inquiries.
  5. [49]
    On 16 April 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors asking them (among other questions) whether they intended to proceed with the application for security for costs.
  6. [50]
    In a separate letter that day, the plaintiff’s solicitors wrote to the defendants’ solicitors requesting copies of certain documents.
  7. [51]
    On 20 April 2018, the defendants’ solicitors wrote to the plaintiff’s solicitors informing them that they would be making an application for security for costs which “will succeed”.  The letter concluded (in substance) with this paragraph:

“If there is any doubt we confirm that we will be filing our clients’ application for security for costs as soon as the foreshadowed costs assessment is complete.  Our client will be filing this application without any further notice.”

  1. [52]
    On 23 April 2018, the plaintiff’s solicitor wrote to the defendants’ solicitors about their “tiresome” continued threats to bring an application for security for costs and stated that the matter was ready for trial.  The plaintiff’s solicitors asserted that the appointment of a costs assessor was unnecessary – a proper estimate could be made by an experienced partner of the defendants’ solicitors’ firm; and that the estimated costs would not exceed $50,000.  Their letter enclosed a Request for Trial Date and a draft trial plan.
  2. [53]
    On 4 May 2018, the defendants’ solicitors wrote to the plaintiff’s solicitors, notifying them that counsel had been briefed to appear on their application for security for costs, and that they expected to file such an application “next week”.
  3. [54]
    On 4 May 2018, the plaintiff’s solicitors acknowledged, by letter, the defendants’ correspondence about the application for security for costs and discussed the Request for Trial Date.  
  4. [55]
    On 10 May 2018, the defendants’ solicitors wrote to the plaintiff’s solicitors, reminding them of their invitations to the plaintiff, on 27 March and 20 April 2018, to provide evidence of the plaintiff’s ability to meet an adverse costs order and requesting certain financial documents and the relevant trust deed by 5 pm Friday 11 May 2018. 
  5. [56]
    The letter continued:

“If your client is unable to provide sufficient evidence of its financial position to meet an adverse costs order, or alternatively provide security for costs, we will proceed with filing the application with a return date of 17 May 2018 …”

  1. [57]
    The letter of 10 May 2018 also responded to the plaintiff’s assertions about the defendants’ delay in bringing the application for security for costs and its assertions that it was brought for the purpose of stultifying proceedings – stating, in effect, that there had been no delay, or no unreasonable delay, because they were entitled to wait until the pleadings were finalised to enable an accurate assessment of costs.
  2. [58]
    On 11 May 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors declining their request for information concerning the plaintiff’s and its directors’ financial position, asserting that the plaintiff and its directors held the same assets they held at the commencement of the joint venture.
  3. [59]
    Also in that letter, the plaintiff’s solicitors said of the delay:

“We accept you advised your clients would seek security for their costs at the time of serving their Defence.  However such assertions are not uncommon in litigation.  It is not uncommon for such assertions to be made and then an application not pursued once a response has been received (as happened in this instance).

We had assumed, as did our client, that if your clients were serious about an application for security for costs they would have acted promptly after receiving our initial response (as the case law dictates).  No such application was pursued.  Our client proceeded with the litigation in good faith and has incurred significant costs in doing so.  The issue is now only raised again when the proceedings are ready to be listed for trial.”

  1. [60]
    The letter concluded with an offer “[t]o put the security for costs issue to rest”.  The plaintiff’s directors offered a joint and several personal guarantee limited to $50,000 as security for costs from 27 March 2018, which would be provided within 14 days of the defendants executing the Request for Trial Date.
  2. [61]
    On 14 May 2018, the defendants’ solicitors wrote to the plaintiff’s solicitors –
  • stating that they did not agree that the matter was ready for trial;
  • listing the outstanding steps (from their point of view);
  • asserting that those steps were “reasonable for the progression of the matter to trial”;
  • commenting on the trial plan; and
  • proposing that the parties agree on directions for the progression of the matter to ensure its readiness for trial.
  1. [62]
    On 16 May 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors about the Request for Trial Date, asserting that the defendants’ delay in pursuing the litigation in a timely manner was unreasonable.
  2. [63]
    The letter continued by addressing the steps nominated by the defendants as matters to be completed before the proceedings were ready for trial.  The plaintiff  offered the directors’ guarantee “immediately” on the following conditions:
  • The Defendants will deliver a Request for Particulars of the Statement of Claim and provide any Supplementary List of Documents within 14 days from 16 May 2018;
  • The Plaintiff will provide Further and Better Particulars and a Reply (if necessary) on or before 13 June 2018;
  • The Defendants will provide an Amended Defence on or before 27 June 2018;
  • The Defendants will then sign a Request for Trial Date;
  • If a Request for Trial Date has been signed by 30 June 2018, our client will participate in a mediation (with the Defendants to pay the mediators fees) on or before 11 July 2018.
  1. [64]
    The application for security for costs was filed on 17 May 2018, returnable on 22 May 2018.
  2. [65]
    Throughout the correspondence, each party threatened the other with applications for indemnity costs were they to be successful in various pre-trial applications.

The plaintiff’s response to this application

  1. [66]
    In the present case, the plaintiff accepted that the “prima facie threshold” had been met – there was reason to believe it would not be able to pay the defendants’ costs if ordered to pay them.  However, it opposed an order for security for costs on two bases, set out in its written outline:[11]
  • the unexplained and unnecessary delay by the applicants who, despite threatening security on 1 December [2017], have allowed the matter to proceed to the stage where, at least according to the [plaintiff], the matter is effectively ready for trial.  The [plaintiff] sent a request for trial date on 23 April 2018;
  • the current financial position of the [plaintiff] is as a consequence of the conduct of the [defendants].
  1. [67]
    The plaintiff produced no evidence about its directors’ financial circumstances.
  2. [68]
    In response to a question from me about there being no evidence that the plaintiff would be unable to proceed to trial if an order for security for costs were made, the plaintiff’s counsel said:[12]

“But, your Honour, we don’t say to your Honour, yes, we can keep going.  [Nor do we say] [w]e can’t… We’re saying … if your Honour was persuaded to order security, it may bring it to an end… Depending on what – one of the orders sought is a quite oppressive one of actually paying all of the cash … retrospectively into court.  So your Honour bear that in mind … that may bring it to an end.” 

  1. [69]
    Counsel for the plaintiff agreed that the court had no way of knowing whether an order for security would bring the proceedings to an end or not.

Delay: the authorities

  1. [70]
    Although delay in making an application for security for costs is not listed as a discretionary factor in rule 672, it is relevant to the exercise of the discretion.  Beazley J, in KP Cable, described the principle, that applications for security be brought promptly, as one of “longstanding”.   
  2. [71]
    Delay is the principal issue in the present application.
  3. [72]
    In Covecorp Constructions P/L v Indigo Projects P/L,[13] Martin J set out the considerations relevant to delay at [27], beginning with the principle of longstanding:
  • An application for security must be made promptly: Foss Export Agency Pty Ltd v Trotman (1949) 67 WN (NSW) 1; Buckley v Bennell (1974) 1 ACLR 301 at 308; Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd (1985) 1 NSWLR 114 at 123.
  • It would be unfair to allow a defendant security if that defendant has stood by and allowed the plaintiff to work on its case and incur significant expense:  Smail v Burton; Re Insurance Associates Pty Ltd (in liq) (1975) 1 ACLR 74 at 75; King v Commercial Bank of Australia Ltd [1921] VLR 48 at 54; Stack v Brisbane City Council (1996) 71 FCR 523 at 531.
  • Although delay is a significant factor, there is no rule requiring refusal of an application on that basis alone.  It is a factor to be taken into account with other discretionary criteria: Commonwealth of Australia and Another v Cable Water Skiing (Australia) Ltd (1994) 14 ACSR 760 at 762; Rhema Ventures Pty Ltd v Stenders [1993] 2 Qd R 326 at 332-3 per Lee J.  For example, security for future costs was awarded to the defendant in Commonwealth v Cable where there had been a delay of 4 years after the proceedings had commenced.
  • The issue of delay will weigh more significantly in some cases than others: Crypta Fuels Pty Ltd v Svelte Corporation Pty Ltd (1995) 19 ACSR 68 at 71.  In Crypta Fuels, Lehane J noted that the cases in which orders for security were made despite delay have usually involved one or both of two factors, those being:

a)  “… that the hearing or resumed hearing was not immediately imminent …”; and

b)  “… that there has been some forewarning: usually correspondence concerning the financial standing of those who might benefit from the success of an applicant or plaintiff, and often detailed correspondence foreshadowing an application for security for costs.” (at 71)

  • To similar effect was the statement by French J in Bryan E Fencott P/L v Eretta P/L (1987) 16 FCR 497 at 514:

“The further a plaintiff has proceeded in an action and the greater the costs it has been allowed to incur without steps being taken to apply for an order for costs, the more difficult it will be to persuade the court that such an order is not, in the circumstances, unfair or oppressive.”

  • In Buckley v Bennell (1974) 1 ALCR 301 at 309 Moffitt P put the matter as follows:

“The right to seek security for costs and to stay proceedings, with the possible result that a claim for damages is frustrated, is a powerful weapon.  Therefore, the litigant who seeks it against his opponent is at risk of not having it available, unless the application is made and persevered with in circumstances involving the least oppression of his opponent.  The primary reason why the application should be brought promptly and pressed to determination promptly is that the company, which by assumption has financial problems, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it is allowed to or permits substantial sums of money towards litigating its claim.”

  1. [73]
    With respect to the last dot-point, Jackson J, in Lanai Unit Holdings P/L v Mallesons Stephen Jacques,[14] expressed the view that the statement that the plaintiff was “entitled” to know its position was “too strong”: “The powers under r 670 and s 1335[15] are discretionary and are not to be fettered by statements that a party is ‘entitled’ to know its position”.[16]
  2. [74]
    At [28] of Covecorp, Martin J said:

“When determining the weight to be afforded the effect of delay, the following issues need to be considered:

(a) is there an explanation for the delay and, if so, what is its weight? (Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 at 144; where the length of the proceedings was not foreseen when they commenced (Buckley v Bennell Design and Constructions Pty Ltd (1974) 1 ACLR 301 at 308); Thirteenth Corp Pty Ltd v State (2004) 50 ACSR 425; James v Australia and New Zealand Banking Group Ltd (No 1) (1985) 9 FCR 442 at 447; Stack v Brisbane City Council (1996) 71 FCR 523 at 532; per Drummond J);

(b) the level of prejudice caused to the plaintiff if required to lodge security at a late stage (Rhema Ventures Pty Ltd v Stenders [1993] 2 Qd R 326 at 333);

(c) the timing of the application for security (James v Australia and New Zealand Banking Group Ltd (No 1) (1985) 9 FCR 442.”

  1. [75]
    Of the authorities referred to by Martin J in paragraph [28] of Covecorp, Rhema is particularly relevant to the present matter. 
  2. [76]
    In Rhema the plaintiff sued the defendant for $6.5 million, alleging professional negligence.  The defendant raised the issue of security for costs on 22 June 1992, but did not make an application until 11 November 1992, seeking security in the amount of $200,000.  Between 22 June 1992 and 11 November 1992 (approximately five months) the plaintiff incurred $115,000 in costs. 
  3. [77]
    In resisting the application for security, the plaintiff argued that the delay had not been adequately explained and that an order for security would frustrate the action and the plaintiff’s considerable costs would be throw away, thus prejudicing the plaintiff. 
  4. [78]
    During the delay of five months, the matter had been before the court on 10 occasions; there had been “a considerable degree of activity” between the parties and both had incurred costs.  
  5. [79]
    The defendant’s explanation for the delay was that it did not become aware until November 1992 that Elders Finance Group was lending the plaintiff money to assist in its legal costs.  The benefit of any judgment obtained would go to Elders.  The plaintiff owed Elders $10 million. 
  6. [80]
    At the hearing, hearsay evidence was tendered to the effect that Elders would not provide security were it ordered.  Notwithstanding that evidence,[17] Lee J found that, having regard to Elders’ stake in the matter, it was unlikely not to fund security for costs were it ordered.
  7. [81]
    The defendant’s counsel submitted that the fact of delay itself was not conclusive: the question was whether the delay had caused prejudice to the plaintiff.  After considering the arguments of both sides, Lee J said:[18]

“Whilst delay is a significant factor and an application for security should be made promptly, there is no set rule, as appears from the judgment of Street CJ with whom Hutley JA agreed in Buckley v Bennell Design and Constructions Pty Ltd (1974) 1 ACLR 301 at 308.  Counsel for the defendants placed particular emphasis on a decision of the Full Court of the Federal Court in Bell Wholesale Co. Limited v Gates Export Corporation (1984) 2 FCR 1 at 4 where the following appears in the judgment of the Court:

‘In our opinion the Court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors, or, as in this case, beneficiaries under a trust) are also without means.  It is not for the party seeking security to raise the matter; it is an essential part of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of impecuniosity of those whom the litigation will benefit and prove the necessary facts.

We pause to make it clear that the matters we have considered are by no means the only relevant ones.  We have concentrated our attention on them because they were at the forefront of the appellant’s argument.  But the Court’s discretion is unfettered; each case must depend on its own circumstances.’

It seems to me that the submissions of counsel for the defendants in reliance upon Bell Wholesale … have substance.  It seems to me that before there can be prejudice to the plaintiff if an order for security is made, it must appear that the plaintiff is unable to afford providing security of its own resources or that those who stand behind the litigation and who will benefit from it also are unable to fund and provide the security.  There can be no prejudice to the plaintiff if the costs it has incurred are not thrown away as a result of the security, if ordered, being provided by those behind the litigation and who will benefit from it.

[His Honour then made his finding that Elders would be unlikely not to fund an order for security for costs and continued.]

I must, nevertheless, balance the various factors before me.  Of particular importance is the fact that the question of security was first raised in June 1992 with the plaintiff and then, apparently, abandoned.  Costs were incurred by both parties.  There is some explanation for the delay although not an entirely satisfactory one … In all of the circumstances of the case, the discretion should be exercised in favour of making an order for security and I do so …”

  1. [82]
    Christou v Stanton Partners Pty Ltd,[19] an appeal from a decision of a Master refusing to make an order for security for costs because of delay, is one of many other cases in which the interrelationship between delay and prejudice or unfairness was discussed.  In Christou, the Court of Appeal of Western Australia referred to non-monetary prejudice or unfairness (in the form of disruption or distraction) as well as wasted costs.  It said:[20]

“[20] It is, however, incumbent upon a defendant who wishes to obtain security for its costs to apply promptly for that relief once it is, or ought reasonably be, aware that the plaintiff would be unable to meet an order for costs.  Security for costs is not a card that a defendant can keep up its sleeve and play at its convenience.  Delay is an important consideration in the determination of an application for security for costs because it is capable of causing prejudice or unfairness to the plaintiff.  A plaintiff is entitled to know at the earliest opportunity, before it has committed substantial resources to pursuing the litigation, whether it will be required to provide security.  The later an application is made the greater the likelihood that it will cause substantial disruption or distraction in the conduct of the plaintiff’s case, and if the plaintiff is unable to provide security, the greater the costs that will have been wasted.  The oft-cited words of Moffit P in Buckley v Bennell Design & Constructions Pty Ltd … are apposite …”

  1. [83]
    Having found that the Master erred, and where it was not suggested that the plaintiff’s costs would be wasted were an order made, the Court of Appeal determined to make an order for security for costs, but only for future costs:

“[29] … [A] party which unreasonably delays in making an application for security for costs cannot ordinarily expect to obtain security for costs which it has incurred during the period of the delay.  Nor can it ordinarily expect to obtain security for costs in relation to interlocutory steps which it was ordered to complete before the application was made but which, by reason of the applicant’s default, have not been completed.  In such circumstances, it would be unjust to require a plaintiff to provide security for costs which the defendant had incurred before it finally bestirred itself to take steps to seek security for costs: see Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114, 125; Darelvale Holdings Australia Pty Ltd v Waterjet Designs Pty Ltd [2003] FCA 863 [15]; Felsink Pty Ltd v City of Maribyrnong [2007] VSC 49 [25].”

  1. [84]
    In Lanai, Jackson J explained the context for the consideration of delay as a relevant factor at [21], after observing that there was no suggestion that the plaintiff had a belief that it would be able to litigate the claim without providing security for costs from a point not long after the claim and statement of claim were served, or any basis for such a belief:

“Nevertheless, delay is a discretionary factor against an order for security.  For example, considerable costs, effort and court resources may be wasted if any application for security is not brought promptly, when the consequences of non-compliance with an order for security is that the proceeding does not continue, or the preparation for or conduct of the hearing of the proceeding may be unnecessarily interfered with.”

  1. [85]
    At [24], his Honour recognised that, in other cases, the outcome of delay on the defendant’s part had been an order for security for costs only in respect of future costs, or the application had been dismissed, but in his Honour’s view it was all a matter of discretion.  Having regard to the alleged delays, and the context and explanation for them, his Honour found that it would not be just to deny all of the defendant’s application for security for past costs because of a delay in the “second period”: the appropriate response was to reduce the security which would otherwise be ordered to reflect the unjustified delay.
  2. [86]
    In Covecorp, the defendant raised the issue of the provision of extra security in a letter to the plaintiff dated 6 June 2006.[21]  On 13 June 2006, the plaintiff’s solicitors asked how much security was required.  There was no answer to that inquiry until 8 May 2007 when defendant told the plaintiff that it intended to return to the issue. His Honour found that it was not unreasonable for the plaintiff to proceed on the basis that the defendant was not pressing its claim for security having not received a reply to its inquiry of 13 June 2006 for 11 months.  Accordingly, his Honour did not allow any security for the costs incurred prior to the service of the application.
  3. [87]
    In Stella Life Spa Pty Ltd v Elcorp Investments Pty Ltd,[22] on 29 November 2016 (20 days after the claim was filed), after noting its concern that the plaintiff might not be able to meet a costs order, the defendant asked the plaintiff to put forward a proposal as to how it would satisfy any costs order made against it. On 1 December 2016, the plaintiff’s solicitor responded to the effect that the plaintiff would oppose an application for security for costs.  On 31 January 2017, in a letter to the plaintiff’s solicitor, the defendant’s solicitor put the plaintiff “on notice” that the defendant still intended to make the security for costs application.  However, the issue was not raised again until 19 September 2017 – after the plaintiff’s financial statements were disclosed. 
  4. [88]
    In correspondence attempting to resolve the issue, the plaintiff argued that the application was “well overdue” and would cause prejudice to it.  It offered a personal guarantee from its sole director and shareholder instead.  The offer of a guarantee was rejected and an application for security for costs was made.
  5. [89]
    In dealing with the argument about delay, Henry J said that the significance of delay as a discretionary consideration favouring the plaintiff was “significantly undermined by the fact that the security for costs issue was flagged from the jump by the defendant”.  His Honour continued: “This case is different, for example, from a matter in which security for costs arises as a known issue for the first time near the eve of trial.”  The matter, his Honour observed, was “far from the eve of trial”.[23]
  6. [90]
    His Honour did not consider the delay between the topic being raised initially and subsequently (that is, the period between 31 January to 19 September) so long as to compel a conclusion by the plaintiff that the defendant would not bring an application.[24]

Delay by the plaintiff

  1. [91]
    In the present matter, the defendants also raised the plaintiff’s delay as a discretionary factor (rule 672(k)) – that is, the delay of many years between the conduct said to give rise to the cause of action, and the plaintiff bringing its cause of action.  The defendants identified, as a consequence of the plaintiff’s delay, difficulties in obtaining evidence for its defence. 

Delay: The plaintiff’s arguments

  1. [92]
    The plaintiff relied upon the fact of delay per se as the primary reason why there should be no order for security for costs.  
  2. [93]
    Counsel for the plaintiff further submitted that it was “totally appropriate” for the directors to have “come out from behind the corporate veil” and offer joint and several personal guarantees; exposing their assets[25] arguing that if the Court were to make any order, it ought to be an order requiring security in terms of the joint and several guarantees previously offered, in the amount previously offered. 
  3. [94]
    The plaintiff argued that there had been unsatisfactorily explained delay in the pursuit by the defendants of the application for security for costs, during which time the plaintiff had depleted its resources.  However it did not suggest that an order for security would bring an end to the proceedings.  Nor did it rely on evidence of any particular prejudice, monetary or otherwise – although it produced evidence of the costs it had incurred between 1 December 2017 and the date upon which the application was filed ($23,000 - $27,000).
  4. [95]
    The plaintiff alleged some “tactical approach to delaying the application to allow a plaintiff to deplete its own resources by incurring costs of its own accord”.[26]  The plaintiff described the “delays” as of “considerable substance” and “an intentional choice” by the defendants.[27]  It did not, however, nominate any prejudice or unfairness which flowed therefrom.  
  5. [96]
    The plaintiff sought to distinguish its position from that of the plaintiff in Stella Life primarily (but not only) on the basis that the proceedings in that case were far from the eve of trial – whereas here, proceedings were “on the eve of trial”.[28]

Delay: The defendants’ arguments

  1. [97]
    The defendants made eight arguments that they had not delayed, or not delayed to such an extent as to disentitle them to an order for security for costs. 
  2. [98]
    Stated briefly, the defendants argued that –
  • The significance of delay was reduced when there was no evidence that the proceedings would be stultified by an order for security – as was the present case;[29]
  • The plaintiff had been forewarned of this application – it had been, in the words of Henry J, “flagged from the jump”;[30]
  • Relying on a formal definition of “step” as something that advanced a proceeding – the plaintiff’s first step, after being put on notice of an application for security for costs, was its serving its List of documents.  Even then, the defendants’ solicitors were reasonably expecting that the plaintiff’s would file a reply.[31]
  • The defendants could not bring a premature application: the application was not brought between 1 December 2017 and 27 March 2018 because the defendants’ solicitors were unable to reasonably estimate costs until the issues in dispute had been clarified and the extent of the disclosure identified.[32]
  • The time period between 27 March 2018 and 17 May 2018 was reasonable – and any steps taken during that period by the plaintiff was on notice of this application.[33]
  • There is no evidence of “unfairness” to the plaintiff.  The delay was not substantial.[34]
  • The application was not made “at the eve of trial” because proceedings are not “at the eve of trial”.  The plaintiff, through its solicitors, has continued to reserve its right to file a reply.[35]
  • Any delay by the defendants must be viewed in the context of the history of the matter and the plaintiff’s delays between advising the first defendant of, and filing, its claim (about five years); and between filing and serving its claim (about nine/ten months). 
  • After five or six months, the plaintiff asserted that it was ready for trial.  “It is inequitable for the plaintiff to allege delay (and that it is prejudiced by such delay) whilst failing to recognise the material prejudice to the defendants if they are unable to be afforded a proper and reasonable opportunity to investigate and respond to the plaintiff’s claim”.[36]  
  1. [99]
    The explanation for the defendants’ delay was set out in the affidavit of their solicitor, Miranda Klibbe, sworn 17 May 2018.
  2. [100]
    The effect of Ms Klibbe’s explanation for the delay was that –
  1. (i)
    having placed the plaintiff on notice that “any further step” by the plaintiff would be met with an application for costs, she did not consider that the plaintiff had taken a “step” until it served its list of documents on 26 February 2018; and
  1. (ii)
    she expected a reply to the defendants’ defence and, until it was received, the issues in dispute between the parties could not be clarified and she was unable to estimate the defendants’ costs.

Consideration of delay

  1. [101]
    In my view, there has not been a wholly satisfactory explanation for all of the defendants’ delay.  However, the delay was not excessive and the plaintiff did not identify any prejudice – monetary or otherwise – which flowed from it.  
  2. [102]
    The plaintiff’s counsel’s submission, that I ought to bear in mind that the making of an order may bring proceedings to an end, was unsupported by any evidence and made immediately after a submission that the plaintiff was not saying to the court that it could “keep going” (were an order for security made) nor was it saying “we can’t’.
  3. [103]
    Earlier in the hearing, when it was suggested by the defendants’ counsel that the plaintiff was not suggesting, despite comments during correspondence, that an order for security for costs would stultify proceedings, the plaintiff’s counsel said: “the case law, in more recent times … also focuses on the financial capabilities of those who stand behind the company.  So we haven’t put any evidence before your Honour about that … and therefore I couldn’t make submissions about than on a bona fide basis … So your Honour won’t be delayed with any submission in that respect”.[37] 
  4. [104]
    As noted above, the plaintiff focused on the fact of delay of itself.
  5. [105]
    The plaintiff challenged Ms Klibbe’s assertion that, by her letter of 1 December 2017, she intended to convey that she would delay an application for security for costs until the plaintiff took a “step”, in the sense of a rule 389 step, in the proceedings. 
  6. [106]
    Regardless of what she meant by “step” in her letter of 1 December 2017, Ms Klibbe acknowledged that the plaintiff’s service of its list of documents amounted to a step she had in contemplation.  However she did not explain why that step (on 26 February 2018) was not met with an application for security as foreshadowed by her.
  7. [107]
    The only other conduct of the plaintiff after 1 December 2017, and before it disclosed its list of documents, was its sending of a letter on 15 December 2017, identifying errors in its statement of claim and requesting “particulars/and or disclosure” of certain matters.  That letter was ignored by the defendants. 
  8. [108]
    In her affidavit, Ms Klibbe did not explain why – even if the defendants’ costs could not then be satisfactorily estimated – she did not raise the issue of security in a general way after the plaintiff’s disclosure.  However, the tenor of the defendants’ submissions was that they had “raised the matter at the jump”, there was no need to repeat it, the plaintiff might have hoped that they were not intending to pursue their application, but it was not reasonable for them to presume that it had been abandoned.[38]   
  9. [109]
    Ms Klibbe did not explicitly explain in her affidavit why she did not respond to the plaintiff’s requests for “particulars/disclosure” which were or might have been relevant to the plaintiff’s reply, although there were oral submissions to the effect that the request was not made “formally or properly through rule 22 of the Uniform Civil Procedure Rules” and a similar statement was made in the defendants’ solicitors letter to the plaintiff’s solicitor dated 14 May 2018.
  10. [110]
    The explanation for Ms Klibbe’s delay between 8 March 2018 and 27 March 2018 seemed to be that she was still expecting a reply – despite her assertion on 8 March 2018 that pleadings had closed and that the plaintiff was out of time to serve a reply.  However, she did not explain why she did not simply ask whether the plaintiff was intending to file a reply.
  11. [111]
    During the month’s delay between 26 February 2018 and 27 March 2018, the plaintiff pushed the defendants for disclosure of their list of documents.  That list was provided on 23 March 2018 at an estimated cost to the defendants of $3,253.40. 
  12. [112]
    The parties exchanged correspondence on 13 and 14 March 2018, each threatening additional costs against the other if the other amended or filed further pleadings, but there was no reference, by the defendants, to an application for security for costs in that context.
  13. [113]
    Between 27 March 2018 and 16 May 2018, the parties were negotiating in an attempt to avoid this application.  I do not consider there to be anything unreasonable about delaying this application until the possibility of resolution without recourse to the court was exhausted.
  14. [114]
    The plaintiff tendered evidence that, since the letter of 1 December 2017, it had incurred costs and outlays (including for counsel’s fees not yet rendered) of between $23,000 and $27,000. As already noted, the plaintiff did not assert that it would suffer prejudice were an order to be made for security for costs because it could not proceed to trial.  Nor did the plaintiff assert that it would be disrupted or distracted by an order for security for costs in an unfair, oppressive or prejudicial way. 
  15. [115]
    Rather, counsel for the plaintiff submitted that I was entitled to say to the defendants “you wrote that letter on the 1st of December, you said you were going to do this, you must have known what you did … And I’m not going to exercise my discretion to order security now”.[39] 
  16. [116]
    The plaintiff also relied on the fact that there had been delay in the pursuit of this application until the “eve of trial” – attempting to distinguish Stella Life.[40]  The defendants’ challenged the suggestion that proceeding were at the eve of trial. 
  17. [117]
    Whether proceedings are genuinely on the eve of trial or not, in Stella Life, Henry J distinguished the defendant’s position in that case from that of a defendant who had raised the issue of security “for the first time” on the eve of trial.  That is not the case here.
  18. [118]
    It was suggested by the plaintiff that the delay was deliberate or tactical – but the plaintiff did not elaborate upon that argument beyond the statement that the plaintiff had depleted its resources.  The plaintiff did not submit that the alleged tactical delay in bringing the application had created prejudice.
  19. [119]
    The defendants’ delay was not particularly long. 
  20. [120]
    The plaintiff delayed for years in bringing its claim.           
  21. [121]
    In the absence of evidence of prejudice to the plaintiff, I do not consider the delay – albeit to some extent without satisfactory explanation – to have been such as to disentitle the defendants to an order for security for costs or to weigh significantly against the discretion to make an order.   

The defendants caused the plaintiff’s impecuniosity – plaintiff’s arguments

  1. [122]
    In addition to delay, in resisting this application, the plaintiff relied upon an argument that its impecuniosity was caused by the defendant’s conduct the subject of the claim.  At paragraph 16 of its written outline, it put its argument in this way:

“… the litigation relates to the failure to properly account for profits from a joint venture the respondent [/plaintiff] alleges it is entitled to. The respondent[/plaintiff] had intended that, by conducting the joint venture significant profits would have been derived.  The applicant[/plaintiff] contends that the respondents[/defendants] have effectively denied it its entitlements and left it in the financial position which it is now.”

  1. [123]
    The evidence supporting that argument is contained in paragraph 12 of the four-page affidavit of Timothy Balaam, sworn on 21 May 2018.  Mr Balaam swore that the plaintiff conducted no other business activity apart from the joint venture.  The profit from the joint venture was expected to be between $230,000 and $470,000.  Instead, it made a loss.  The plaintiff alleged that the defendants failed to account to it for its proper share of the distributable surplus and that accordingly its current financial position was a consequence of the defendants’ conduct.
  2. [124]
    This argument was not developed in written submissions beyond the statement in paragraph 16 set out above.  Nor was it taken further in oral submissions.

The defendants caused the plaintiff’s impecuniosity – defendants’ argument

  1. [125]
    The defendants submitted that the plaintiff’s impecuniosity was not caused by them and that it was, regardless, irrelevant because the conduct said to have caused the plaintiff’s impecuniosity occurred seven to nine years ago. 
  2. [126]
    They referred to the plaintiff’s pleading that it had received almost $520,000 from the first defendant in 2011 and noted that the whereabouts of that money was not in evidence. 
  3. [127]
    The defendants argued that, even if the first defendant had paid the amount now said to be owing to the plaintiff, there was no suggestion that it would be held by the plaintiff other than on trust for its beneficiaries.
  4. [128]
    The defendants’ also relied upon the bona fides of their dispute with the plaintiff.

Applicable principle – the defendants caused the plaintiff’s impecuniosity

  1. [129]
    This factor is relevant because a real causal connection between a defendant’s conduct and a plaintiff’s impecuniosity may, in the exercise of discretion, make it unjust to require security.[41]

Consideration of argument about impecuniosity

  1. [130]
    As noted, the plaintiff did not develop this argument beyond stating it in its written submissions. 
  2. [131]
    Nor did it lead evidence about the financial position of its directors.[42]  I note that the defendants invited the plaintiff to do so in the course of correspondence attempting to resolve this issue, but the plaintiff’s solicitors declined the invitation – responding by reference to the financial position of the plaintiff and its directors in 2008, before the joint venture commenced.
  3. [132]
    In those circumstances and having regard to the passage of time, the nature of the plaintiff, and the bona fides of the dispute (from the defendants’ perspective) this factor was of no weight in the exercise of the discretion.

Other factors

  1. [133]
    The defendants addressed factors other than the two referred to by the plaintiff, all of which I have taken into account, including that the plaintiff is impecunious and that its claim is bona fide.

Exercise of discretion

  1. [134]
    Having regard to the plaintiff’s acknowledgment that the threshold test has been satisfied, relevant discretionary considerations, and the evidential onus, I am persuaded that an order for security for costs should be made, up to and including the first day of trial.  
  2. [135]
    In reaching that conclusion, I have taken into account particularly the moderate length of the delay and the fact that it was not suggested by the plaintiff that the making of an order would end the proceedings or would otherwise cause prejudice or unfairness to the plaintiff in any relevant sense. 

Quantum

  1. [136]
    On the strength of an estimate prepared by Ms Klibbe, the defendants applied for an order in the amount $110,000 (noting that it had erred in adding GST in its original estimate of approximately $122,000).
  2. [137]
    Ms Klibbe’s assessment was challenged by Mr Balaam. 
  3. [138]
    Mr Balaam’s challenge was based on Mr Balaam’s greater experience, enabling him to state that certain claims were excessive, and errors in Ms Klibbe’s calculations.  Those errors included her use of the wrong hourly rate for solicitors, calculations based on the wrong number of original documents requested for inspection by the plaintiff and, as noted, the addition of GST.[43] 
  4. [139]
    Mr Balaam reached a figure of $48,696.72 as a reasonable estimate of the defendants’ standard costs.  He swore that he cross-checked his estimate with Greg Ryan, a costs assessor. 
  5. [140]
    The defendants also relied upon an affidavit from Graham Roberts, Ms Klibbe’s supervisor.  He swore that he considered Ms Klibbe’s estimate to be fair and reasonable. 
  6. [141]
    Mr Roberts’ affidavit (sworn on 22 May 2018) did not respond to the errors nominated in Mr Balaam affidavit (sworn on 21 May 2018).  Nor did the defendants’ otherwise suggest that the errors identified by Mr Balaam had not been made.
  7. [142]
    There was disagreement between the parties about reasonable times for trial preparation.  I agree with the plaintiff that the defendants’ estimate of the time required by its solicitor to prepare for trial involved some duplication.  For example, it is reasonable to assume that the bulk of the written material to be “perused” by the defendants’ solicitor in preparation for trial was created by the solicitor or was material with which the defendants’ solicitor would be very familiar.  Also, I note that Ms Klibbe has included costs for counsel’s “attendance at witness statements” as well as counsel’s conferences with the clients.  As I understand the matter, the second and third defendants are two of the witnesses. 
  8. [143]
    I note the different estimates of the hours the solicitors would need with each witness to take statements and the different estimates of a reasonable time to allow counsel for trial preparation, as well as the other difference between the costs estimates.
  9. [144]
    An order for security for costs does not aim to give complete indemnity to a defendant and the courts take a broad brush approach.  Courts are traditionally conservative in relation to the quantum of security[44] although I appreciate that there is a risk of underestimation as well as overestimation.
  10. [145]
    In all of the circumstances, I will make an order for security for costs in the amount of $60,000 up to the end of the first day of trial.

Other matter – further directions & costs

  1. [146]
    I will hear the parties as to the final form of the orders, any further directions required to progress the matter, and costs.

Footnotes

[1] UCPR, r 670. 

[2] UCPR, r 671(a).

[3] UCPR, r 671(h).

[4] Robson v Robson [2008] QCA 36 per Muir JA at [32] – [38] and McMeekin J at [61] – [66]; Bellaluz Pty Ltd & Ors v Westpac Banking Corp & Ors [2014] QSC 273 [14].

[5]  [2012] QCA 114 at [23] and [18].

[6]  (1995) 56 FCR 189 at 197 – 198.  Her Honour more recently (in Wollongong City Council v Legal Business Centre [2012] NSWCA 245) referred to Spender J’s summary of relevant considerations in Staff Development & Training Centre Pty Ltd v Commonwealth of Australia [2005] FCA 1643, which are differently expressed but which essentially cover the same ground.

[7]  Op cit at [18].

[8] Idoport Pty Ltd v National Australian Bank Ltd [2001] NSWSC 744 at [60] – [62]; Bellaluz Pty Ltd & Ors v Westpac Banking Corp & Ors [2014] QSC 273 [13].

[9]  (2008) 20 VR 377.

[10]  Ibid.

[11]  Paragraph 10, written submissions on behalf of the respondent/plaintiff.

[12]  Transcript of proceedings, 1-41 – 1-42.  Also see, as to the evidential onus borne by the plaintiff, Livingspring at [22] and [23] referred to above.

[13]  [2007] QSC 262.

[14]  [2016] QSC 2.

[15]  Of the Corporations Act 2001 (Cth)

[16]  Op cit at [19].

[17]  Which was not wholly consistent with other evidence which was to the effect that Elders would not voluntarily provide security, but which said nothing about how it would respond to a court order for security.

[18]  At 333 - 334.

[19]  [2011] WASCA 176

[20]  Newnes JA, with whom Murphy JA agreed.

[21]  By consent, the plaintiff agreed earlier to provide security for costs, at an agreed amount, up to and including the first day of trial, and the security was eventually provided.

[22]  [2017] QSC 333.

[23]  Ibid [19].

[24]  Ibid [20].

[25]  Ibid, 1-42 & 1-48 – 1-49.

[26]  Plaintiff’s written submissions, paragraph 11.

[27]  Ibid, paragraph 13.

[28]  Ibid paragraph 15.

[29]  Defendants’ written submissions, paragraph 56.

[30]  Ibid, paragraph 57.

[31]  Ibid, paragraph 58 – 59.

[32] Ibid, paragraph 60.

[33]  Ibid, paragraph 61.

[34]  Ibid, paragraph 62.

[35]  Ibid, paragraph 63.

[36]  Ibid, paragraph 64.

[37]  Transcript, 1-6 – 1-7.

[38] cf Stella.

[39]  Transcript of hearing, 1 – 45, ll 40 – 50.

[40]  Ibid, 1 – 44, Counsel for the plaintiff.

[41] Dalma Formwork Pty Ltd v Concrete Constructions Group Ltd [1998] NSWSC 472.

[42] cf for example Treadstone Developmensts Pty Ltd ATF Wever Family Trust v The Salisbury Group Pty Ltd & Ors [2014] QSC 109See also Epping Plaza Fresh Fruit & Vegetables Pty Ltd v Bevendale Pty Ltd [1999] 2 VR 191.

[43]  Five-page affidavit of Timothy Balaam, sworn 21 May 2018, especially at paragraph 8.

[44] Emanuel Management Pty Ltd (in liq) v Foster’s Brewing Group Ltd [2003] QCA 552 at [16].

Close

Editorial Notes

  • Published Case Name:

    Conlon Property Developments Pty Ltd v Cavanagh Bros Pty Ltd & Others

  • Shortened Case Name:

    Conlon Property Developments Pty Ltd v Cavanagh Bros Pty Ltd

  • MNC:

    [2018] QSC 127

  • Court:

    QSC

  • Judge(s):

    Ryan J

  • Date:

    06 Jun 2018

Litigation History

Event Citation or File Date Notes
Primary Judgment [2018] QSC 127 06 Jun 2018 Defendant's application for security for costs allowed; security for costs ordered in the amount of $60,000: Ryan J.

Appeal Status

No Status