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Ambulabat Pty Ltd v International Live Exports Corporation Pty Ltd[2006] QDC 70

Ambulabat Pty Ltd v International Live Exports Corporation Pty Ltd[2006] QDC 70

DISTRICT COURT OF QUEENSLAND

CITATION:

Ambulabat Pty Ltd v International Live Exports Corporation Pty Ltd & Ors [2006] QDC 070

PARTIES:

AMBULABAT PTY LTD (ACN 103 101 855)

Plaintiff (APPLICANT)

V

INTERNATIONAL LIVE EXPORTS CORPORATION PTY LTD (ACN 093 987 592)

First Defendant

And

AUSTRALIAN COASTAL & RURAL ENTERPRISES PTY LTD (ACN 094 461 775)

Second Defendant

And

DAIRY WORLD PTY LTD (ACN 092 877 953)

Third Defendant (RESPONDENT)

FILE NO/S:

BD 3670 of 2004

DIVISION:

Civil

PROCEEDING:

Originating Application

ORIGINATING COURT:

District Court, Brisbane

DELIVERED ON:

28 March 2006

DELIVERED AT:

Beenleigh

HEARING DATE:

6 April 2005

JUDGE:

Tutt DCJ

ORDERS:

  1. Dairy World Pty Ltd give Ambulabat Pty Ltd security for costs in the sum of $8,000.00;
  2. Such security can be satisfied by Dairy World Pty Ltd providing a bank guarantee to Ambulabat Pty Ltd for security for costs in that amount;
  3. The proceeding in respect of Dairy World Pty Ltd’s counterclaim is stayed until it complies with the order for security for costs herein;
  4. Dairy World Pty Ltd pay Ambulabat Pty Ltd’s costs of and incidental to Ambulabat Pty Ltd’s application for security for costs as agreed or assessed on the standard basis under the District Court scale;
  5. Dairy World Pty Ltd’s application for security for costs be dismissed;
  6. Dairy World Pty Ltd pay Ambulabat Pty Ltd’s costs of and incidental to Dairy World Pty Ltd’s application for security for costs as agreed or assessed on the standard basis under the District Court scale; and
  7. Each party have liberty to apply.

CATCHWORDS:

Security for costs – plaintiff’s application and defendant’s cross-application for security for costs – “competing considerations” to an application – “two-stage threshold test”.

Corporations Act 2001 (Cth) s 1335.

Uniform Civil Procedure Rules 1999 rr 671 and 672.

Harpur v. Ariadne Australia Ltd (1984) 2 Qd R 523

Harpur & Ors v. Ariadne Australia Pty Ltd & Ors [1995] QCA 221 (unreported 7/4/95).

Natcraft Pty Ltd & Anor v. Det Norske Veritas & Colley [2002] QCA 241.

Sir Lindsay Parkinson & Co Ltd v. Tripland Ltd (1973) QB 609.

SP Hay Pty Ltd & Anor v Allcorp Pty Ltd & Ors [2004] WASC 77.

COUNSEL:

Mr P D Tucker for the applicant.

Mr P J Watts for the third respondent.

SOLICITORS:

Hollingworth & Spencer for the applicant.

Watts & Company for the third respondent.

Introduction

  1. [1]
    There are currently two interlocutory applications before the court by the plaintiff, Ambulabat Pty Ltd (“Ambulabat”) and the third defendant Dairy World Pty Ltd (“Dairy World”) respectively, seeking primary orders for security for costs against each other in the proceeding.
  1. [2]
    The first application was filed by Ambulabat for various relief including security for costs to be provided by Dairy World in respect of its counterclaim in the proceeding together with an order for Dairy World to provide “further and better particulars of its amended defence and counterclaim…” but at the hearing of the application the latter order was not pursued and that part of the application was adjourned by consent to a date to be fixed. Dairy World has also filed a cross-application seeking the primary order that Ambulabat provide security for Dairy World’s costs of defending the plaintiff’s claim against it.
  1. [3]
    The court’s jurisdiction to order a plaintiff to give security for a defendant’s costs of a proceeding is primarily governed by Chapter 17 Part 1 of the Uniform Civil Procedure Rules 1999 (“UCPR”) and s 1335 of the Corporations Act 2001 (Cth) (“the Act”) together with the court’s inherent jurisdiction to make such an order.
  1. [4]
    Rule 671 of the UCPR sets out the criteria of which the court must be satisfied before making an order that a plaintiff give security for costs and relevantly r 671(a) provides:

“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;”
  1. [5]
    Section 1335 of the Act relevantly provides:

“(1)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. (2)
    The costs of any proceeding before a court under this Act are to be borne by such party to the proceeding as the court, in its discretion, directs.”
  1. [6]
    In the current proceeding the plaintiff’s application is brought as a defendant to the defendant’s counterclaim whereas the defendant’s application is brought in the more traditional manner as a defendant in the proceeding.

Nature of the Claim

  1. [7]
    It is unnecessary for present purposes to set out in detail the contractual relationship between the plaintiff and all three defendants in this proceeding but suffice it is to say that vis-à-vis the parties to these applications Ambulabat owned and raised dairy cattle and a number of those dairy cattle were agisted on a property operated by Dairy World and there is currently a dispute between Ambulabat and Dairy World in respect of those cattle.
  1. [8]
    When security for costs is sought against a defendant upon its counterclaim, two threshold questions arise namely:
  1. Whether a plaintiff by counterclaim “... is a “plaintiff” within the meaning of s 1335, so as to be amenable to an order for security for costs”; and
  2. “If so whether it appears by credible evidence that there is reason to believe...” that the putative plaintiff “...will be able to pay the costs of the defendant to the counterclaim if the latter (is) successful in its defence to the counterclaim?”[1]
  1. [9]
    It has been held that:

“A defendant who counterclaims will be a plaintiff within the meaning of s 1335 where the counterclaim is a separate and distinct claim from that of the plaintiff:  Buckley v Bennel Design & Construction Pty Ltd (1974) 1 ACLR 301; John Arnold’s Surf Shop Pty Ltd (In Liq) v Heller Factors Pty Ltd and Allert [1979] 22 SASR 20; Ramsay Contracting Pty Ltd v Matthew Hall Mechanical and Electrical Engineers Pty Ltd [1993] SASC 4156.  That will depend upon the connection between the claim and the counterclaim.  A counterclaimant will not be a plaintiff where the counterclaim is merely defensive, arising out of the same transaction as the claim: Mapleson v Masini (1879) 5 QBD 144.  Accordingly, where a respondent counter-attacks on the same front on which it is a respondent opens an attack on a different front, even to relieve pressure on the front attack by the applicant, it is in danger of an order for security for costs: Visco v Minter [1969] 2 All ER 714.  Where the counterclaim raises separate issues outside those raised by way of defence to the plaintiff’s claim, the cross-claimant assumes, in relation to those issues, the position of a plaintiff and s 1335 applies to the cross-claimant as if it were a plaintiff.”[2]

Counsels’ Submissions

  1. [10]
    Ambulabat’s counsel submitted that the “two-stage threshold test” in this application can be summarised in the following terms:

“When security for costs is sought against a defendant upon its counterclaim, there is a two-stage threshold test, which in the present application can be stated as follows:

  1. (i)
    Is Dairy World’s Counterclaim a defensive action that has been raised only to meet Ambulabat’s claim, or is it in reality a separate claim in its own right?
  1. (ii)
    Is there credible evidence to support a reason to believe that Dairy World will be unable to pay Ambulabat’s costs of meeting Dairy World’s Counterclaim?”[3]
  1. [11]
    It was further submitted that it was Dairy World which had applied to the Supreme Court in 2004 seeking orders in respect of the agisted cattle and “…orders were made by her Honour Justice White that Dairy World commence proceedings expeditiously in respect of the property in issue”[4].
  1. [12]
    It was further submitted that those proceedings were not commenced by Dairy World in the Supreme Court but have now become part of this proceeding by way of counterclaim.[5]
  1. [13]
    Further submissions were made on behalf of Ambulabat as to Dairy World’s questionable financial status and in particular that it has a “…paid-up capital of (only) $100 and owns no real property”.[6]
  1. [14]
    It was finally submitted on behalf of Ambulabat that Dairy World’s evidence to the point by way of the affidavit of “Mr Wallader”[7] did not provide sufficient satisfaction to the court that an order for security for costs should not be made against it on the basis of its doubtful financial capacity to pay Ambulabat’s costs of successfully defending Dairy World’s counterclaim.  Reference was also made to press reports in January 2005 that Mr Wallader had stated that Dairy World had lost “more than $300,000.00” through a failed cattle export scheme to Vietnam.[8]
  1. [15]
    Dairy World opposes Ambulabat’s application and seeks a like order against it.
  1. [16]
    It is submitted by Dairy World that it is a company of substantial assets[9] consisting mainly of chattels and livestock situated on Mr Wallader’s property “…called Collinton Station at Collinton in the Brisbane Valley”,[10] but that it does not own any real property.[11]
  1. [17]
    From the material filed it was submitted that Dairy World had a “net-worth” of 3 million dollars[12] but no real property and the only reason it did not pay a costs order of $1000 in another matter between the parties was that Mr Wallader was overseas and it was “….not possible to obtain instructions from him to pay the relevant amount”.
  1. [18]
    Dairy World further submits that it is entitled to an order for security for costs against Ambulabat on the basis that it has valid reason to believe that Ambulabat will not be able to meet any costs order made against Dairy World in the successful defence of Ambulabat’s claim.
  1. [19]
    Dairy World submits that Ambulabat has few tangible assets and that any real property owned by it is held in its capacity as trustee for the Williams Family Trust.[13]
  1. [20]
    Dairy World challenged the value placed upon the real property in the Ambulabat’s name to the value exceeding $3 million and that the only acceptable evidence before the court is that “…the paid-up value of Ambulabat is $20”.[14]

Competing Considerations

  1. [21]
    There are a number of discretionary factors set out in r 672 of the UCPR to which a court “may have regard” in deciding whether security for costs should be given to an applicant most of which have been referred to in one way or another in the course of the respective submissions by both parties.
  1. [22]
    The ultimate decision is entirely in the court’s discretion and “there is no burden one way or another. It is a discretion to be exercised in all the circumstances of the case”. See Sir Lindsay Parkinson & Co Ltd v. Tripland Ltd (1973) QB 609 cited with approval in Harpur v. Ariadne Australia Ltd (1984) 2 Qd.R. 523 at 529 per Connolly J. 
  1. [23]
    All authorities on point in one way or another refer to “competing considerations” in considering the question: see Natcraft Pty Ltd & Anor v. Det Norske Veritas & Colley [2002] QCA 241 (“Natcraft”) and the various authorities referred to therein.
  1. [24]
    It would seem that an order will be made if it can be shown by an applicant that there is a real likelihood that it would have considerable difficulty in recovering its costs were it to be successful in the proceeding: see Harpur & Ors v. Ariadne Australia Pty Ltd & Ors [1995] QCA 221 (unreported 7/4/95).
  1. [25]
    There is little doubt that there are strongly held views by each party in respect of the efficacy of the claim and counterclaim in this proceeding which may influence its future course and in particular its resolution and these views, it seems have acted as a catalyst for both parties to seek the respective orders they have whether the perceived apprehension by each party as to the capacity of the other to pay costs is genuine or not.
  1. [26]
    In all the circumstances and upon a review of the evidence and submissions made, I make the following findings:
  1. (i)
    Dairy World’s counterclaim is not “merely defensive” but is in the nature of a separate and distinct claim against Ambulabat thereby justifying Ambulabat’s current application;
  1. (ii)
    While the net value of the financial status and assets of both parties is difficult to identify in precise terms on the material filed, particularly with Dairy World’s assets being of a transitory nature, on balance, I find that Ambulabat’s financial position is the more stable and having regard to all of the discretionary factors referred to in r 672 of the UCPR and those matters referred to in Natcraft by Jerrard JA as being relevant to these applications, I find that Dairy World should be required to give security for Ambulabat’s costs of and incidental to Dairy World’s counterclaim against it and I order accordingly.
  1. [27]
    On the material available and the submissions made I am not satisfied that Dairy World has established the necessary criteria entitling it to an order for security for costs against Ambulabat and I therefore dismiss Dairy World’s application.

Quantum

  1. [28]
    Ambulabat’s solicitor has given evidence that the additional costs his client is likely to incur in defending Dairy World’s counterclaim is the sum of $12,000.
  1. [29]
    An estimate of this nature in the circumstances is somewhat speculative as Ambulabat will necessarily incur costs of the action including preparation for trial and at trial in any event.
  1. [30]
    There has been no contrary evidence placed before the court on this issue but taking into account the nature of the additional evidence to be adduced, its preparation and the witnesses to be called, in respect thereof I find that a reasonable amount for which Dairy World should be required to give security for Ambulabat’s additional costs is the sum of $8,000.00.
  1. [31]
    At the hearing it was indicated that if the court was of the view that security for costs should be given then the form of security could be determined at that time but it is appropriate that security for costs should be given in precise terms and a form of bank guarantee is the most efficient method of achieving this result.
  1. [32]
    I therefore make the following orders:
  1. (i)
    Dairy World give Ambulabat security for costs in the sum of $8,000.00;
  1. (ii)
    Such security can be satisfied by Dairy World providing a bank guarantee to Ambulabat for security for costs in that amount;
  1. (iii)
    The proceeding in respect of Dairy World’s counterclaim is stayed until it complies with the order for security for costs herein;
  1. (iv)
    Dairy World pay Ambulabat’s costs of and incidental to the Ambulabat’s application for security for costs as agreed or assessed on the standard basis under the District Court scale;
  1. (v)
    Dairy World’s application for security for costs be dismissed;
  1. (vi)
    Dairy World pay Ambulabat’s costs of and incidental to Dairy World’s application for security for costs as agreed or assessed on the standard basis under the District Court scale; and
  1. (vii)
    Each party have liberty to apply.

Footnotes

[1]  See SP Hay Pty Ltd & Anor v Allcorp Pty Ltd & Ors [2004] WASC 77 at paragraph [22].

[2]  Ibid see paragraph [23].

[3]  See paragraph [22] of plaintiff’s submissions.

[4]  Transcript page 8 lines 14-16.

[5]  Transcript page 8 line 30.

[6]  Transcript page 9 lines 2-3.

[7]  Affidavit of William David Wallader sworn 4 April 2005 and filed 5 April 2005.

[8]  Paragraph 16 of affidavit of Peter Frederick Gray filed 30 March 2005.

[9]  Ibid.

[10]  Transcript page 16 line 55.

[11]  Transcript page 17 line 5.

[12]  Transcript page 17 lines 43-45.

[13]  Transcript page 19 line 48.

[14]  Transcript page 19 line 55.

Close

Editorial Notes

  • Published Case Name:

    Ambulabat Pty Ltd v International Live Exports Corporation Pty Ltd & Ors

  • Shortened Case Name:

    Ambulabat Pty Ltd v International Live Exports Corporation Pty Ltd

  • MNC:

    [2006] QDC 70

  • Court:

    QDC

  • Judge(s):

    Tutt DCJ

  • Date:

    28 Mar 2006

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Buckley v Bennell (1974) 1 ACLR 301
1 citation
Harpur v Ariadne Australia Limited [1995] QCA 221
2 citations
Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523
2 citations
John Arnolds Surf Shop Pty. Ltd. (in liquidation) v Heller Factors Pty. Ltd (1979) 22 SASR 20
1 citation
Mapleson v Masini (1879) 5 QBD 144
1 citation
Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241
2 citations
Ramsay Contracting Pty Ltd v Matthew Hall Mechanical and Electrical Engineers Pty Ltd [1993] SASC 4156
1 citation
Sir Lindsay Parkinson & Co v Triplan Ltd (1973) QB 609
2 citations
SP Hay Pty Ltd & Anor v Allcorp Pty Ltd & Ors [2004] WASC 77
2 citations
Visco v Minter [1969] 2 All ER 714
1 citation

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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