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LPD Holdings Pty Ltd v Russells[2022] QSC 48

LPD Holdings Pty Ltd v Russells[2022] QSC 48

SUPREME COURT OF QUEENSLAND

CITATION:

LPD Holdings Pty Ltd & Anor v Russells & Anor [2022] QSC 48

PARTIES:

LPD HOLDINGS (AUST) PTY LTD ACN 060 214 511

(First Plaintiff)

and

MAYSON ASSOCIATES LIMITED

(Second Plaintiff)

v

RUSSELLS (A FIRM)

(First Defendant)

and

STEPHEN CHARLES RUSSELL

(Second Defendant)

FILE NO/S:

7571 of 2018

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

6 April 2022

DELIVERED AT:

Cairns

HEARING DATE:

18 March 2022 at Brisbane

JUDGE:

Henry J

ORDER:

  1. Application granted.
  2. The plaintiffs will provide further security for the defendants’ costs of the proceeding up to and including the first day of the trial in a total amount of $200,000 to be secured by:
  1. (a)
    payment into court, or
  2. (b)
    provision of a bank guarantee in a form satisfactory to the Registrar, or
  3. (c)
    a combination of (a) and (b), or
  4. (d)
    payment into Thomson Geer’s trust account, subject to an undertaking by Thomson Geer not to deal with the monies except by order of this Court or the defendants’ prior written agreement,

by no later than 14 April 2022.

  1. The plaintiffs will provide further security for the defendants’ costs of the proceeding beyond day one of the trial in a total amount of $147,000 to be secured by:
  1. (a)
    payment into court, or
  2. (b)
    provision of a bank guarantee in a form satisfactory to the Registrar, or
  1. (c)
    a combination of (a) and (b), or
  2. (d)
    payment into Thomson Geer’s trust account, subject to an undertaking by Thomson Geer not to deal with the monies except by order of this Court or the defendants’ prior written agreement,

by no later than seven days prior to the listed commencement of the trial.

  1. The plaintiffs pay the costs of and incidental to this application, to be assessed.
  2. The plaintiffs pay the defendants’ costs thrown away by reason of the adjournment of this application from 24 February 2022 to 18 March 2022.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – POWER TO ORDER – where the applicants are a solicitors’ firm and its principal – where the applicants acted for the respondents – where the applicants are being sued by the two corporate respondents for alleged negligence, breach of contract and misleading and deceptive conduct in connection with the alleged failure of litigation – whether the respondents are ordinarily residents outside of Australia – whether the court is satisfied there is reason to believe the respondents will be unable to pay the applicants costs if ordered to pay them – whether discretion should be exercised in favour of granting security for costs

Uniform Civil Procedure Rules 1999 (Qld), rr 670 and 671

Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301, cited

De Beers Consolidated Mines Limited v Howe [1906] AC 4485, cited

Equititrust Limited v Tucker [2019] QSC 51 [111], cited

COUNSEL:

G Beacham QC and D Tay for the applicants/defendants

K Horsley for the respondents/plaintiffs

SOLICITORS:

Bartley Cohen for the applicants/defendants

Thomson Geer for the respondents/plaintiffs

  1. [1]
    The applicant defendants, a solicitors’ firm and its principal, are being sued by the two corporate respondents for alleged negligence, breach of contract and misleading and deceptive conduct in connection with the failure of litigation in which the applicants acted for the respondents.  The alleged damages are constituted by over $1.5 million paid by the respondents to meet court-ordered and legal costs.
  1. [2]
    The ten day trial of the claim is listed to occur in May 2022.  The defendants make application for security for costs pursuant to Rule 670 Uniform Civil Procedure Rules 1999 (Qld) (‘UCPR’).  The application was foreshadowed at the time the trial was listed back on 18 November 2021.  The order sought is for:
  1. the payment within seven days of $232,810 security for costs from 16 November 2021 to and including day 1 of the trial; and
  1. the payment of a further $155,000 for costs for the balance of the trial by one month before its commencement.
  1. [3]
    These amounts are additional to $250,000 already held in trust by the respondents’ solicitors as security for costs. 
  2. [4]
    It is necessary to determine whether a security for costs order ought be made and, if so, the quantum and timeframe for provision of such security. 

Enlivening the discretion

  1. [5]
    UCPR Rule 671 lists various potential prerequisites in enlivening the discretion to make a costs order.  Those invoked by the applicants here are:

“(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. (e)
    the plaintiff is ordinarily resident outside Australia …”

Ordinarily resident outside Australia?

  1. [6]
    Prerequisite (e) clearly applies to the second respondent Mayson Associates Limited (‘Mayson’) for it is a company incorporated in the British Virgin Islands and registered in Hong Kong.  Mayson’s counsel accepts Mayson is ordinarily resident outside Australia.  Rule 671 therefore applies to it.
  2. [7]
    As to the first plaintiff, LPD Holdings (Aust) Pty Ltd (‘LPD’), the defendants submit that it too is ordinarily resident outside Australia.  LPD contends it is ordinarily resident within Australia because it is incorporated here. 
  3. [8]
    In De Beers Consolidated Mines Limited v Howe [1906] AC 4485, 458 Lord Loreburn rejected the location of the company’s registration as being the test of where it resides, observing:

“In applying the conception of residence to a company, we ought, I think, to proceed as nearly as we can upon the analogy of an individual.  A company cannot eat or sleep, but it can keep house and do business.  We ought, therefore, to see where it really keeps house and does business.  An individual may be a foreign nationality, and yet reside in the United Kingdom.  So may a company.  Otherwise it might have its chief seat of management and its centre of trading in England under the protection of English law, and yet escape the appropriate taxation by the simple expedient of being registered abroad and distributing its dividends abroad.  The decision of Kelly CB and Huddlestone B in the Calcutta Jute Mills v Nicholson and the Cesena Sulphur Co v Nicholson[1], now 30 years ago, involved the principle that a company resides for purposes of income tax where its real business is carried on.  Those decisions have been acted upon ever since.  I regard that as the true rule, and the real business is carried on where the central management and control actually abides.”

  1. [9]
    While the test of assessing where a company is ordinarily resident by reference to where its central management and control abides had its origins in the context of income tax law, it is a test which has been adopted in the context of security for costs applications.[2] 
  2. [10]
    ASIC’s records provide no real support for the notion that LPD’s central management and control abides in Australia.  The address for LPD’s principal place of business is partly vacant office space occupied by other businesses.  Further, two of LPD’s four directors reside outside Australia while the other two are recorded as having residential addresses identical to LPD’s alleged principal place of business, which is not residential space.  Moreover, one of those directors, Mr Wai Tak Kwok, the “controlling director and or shareholder of both Mayson and LPD”,[3] has deposed that his address is in Hong Kong. 
  3. [11]
    The respondents were put on notice of the applicants’ concerns that LPD has no resident Australian directors by letter of 8 June 2020 and no attempt has been made to correct the understanding founding that concern.[4]
  4. [12]
    Against the above background, ASIC’s apparently erroneous records of the location in Australia of LPD’s registered office and the residence in Australia of its two supposedly Australian residing directors carries no weight as circumstantial evidence of where LPD ordinarily resides.
  5. [13]
    The difficulty remains for the defendants that, despite LPD’s lack of response regarding the true residency of its directors, LPD can point to having carried on corporate activity in Australia.  That is relevant because in applying the central management and control test to a non-trading corporation, it has been recognised that in the absence of features arising from the carrying on of its business it may be necessary to look to the company’s corporate activity.[5]  LPD’s counsel highlighted of its corporate activity that it has long had an accountant in Australia, that it owns shares in an Australian company, that it has security registered against it in Australia, that it is owed money in Australia, that it is involved in substantial litigation in Australia and that its registration in Australia subjects it to Australian tax laws.  The latter consideration is neutral in circumstances where ASIC’s residential records pertaining to the registration are apparently incorrect.  The rest of the considerations are iterations of some degree of corporate activity, albeit not trading activity, in Australia. 
  6. [14]
    While that is not substantial evidence of LPD’s corporate activity it remains that the plaintiffs have the advantage of it as some positive evidence of LPD, a company incorporated in Australia, engaging in corporate activity in Australia.  This does not directly answer the mystery raised by the defendants about ASIC’s erroneous records of the address of LPD’s directors and office.  However, it does weigh against that mystery being regarded as raising a determinative unmet evidentiary onus on the issue of residency.  It must be remembered the plaintiffs are not obliged to prove LPD ordinarily resides in Australia and rather the defendants have the onus of satisfying the court that LPD is ordinarily resident outside Australia.  In the result, despite the opaque state of the evidence about LPD, the aforementioned activity leaves me unsatisfied that LPD is ordinarily resident outside Australia.  As will be seen, the opaque state of the evidence about LPD will not work to its advantage in respect of the next pre-requisite.

Reason to believe the plaintiffs will not be able to pay the defendants’ costs?

  1. [15]
    The consideration at Rule 671(a), that there is “reason to believe” a plaintiff “will not” be able to pay a defendant’s costs is replicated in s 1335 Corporations Act 2001 as grounding a discretion to order security for costs.  It requires more than belief of a risk a plaintiff might not be able to pay.[6]  On the other hand, reason to believe a plaintiff will not be able to pay does not require proof of the fact the plaintiff will not be able to pay, for “the assent of belief is given on more slender evidence than proof”.[7]  What is required is that the objective circumstances provide a rational basis to believe a plaintiff will not be able to pay a defendant’s costs.[8]  Of course that assessment should be made having regard to the whole of the potentially relevant circumstances, not just those which are adverse to the plaintiff, for some circumstances may counter the force of others in providing a rational basis for the belief. 
  2. [16]
    In the present case it is relevant, and I take into account, that the plaintiffs are suing in effect for very substantial amounts previously paid by them for legal and court costs.  The fact that they or others funding them did make such payments trends against a belief they will not be able to pay the defendants’ costs.  However, its probative significance is significantly reduced by an absence of evidence that the plaintiffs’ then financial position and the circumstances propelling the making of those payments are comparable to the financial position and circumstances likely to be prevailing by the conclusion of the present case. 
  3. [17]
    The documentary evidence provided in respect of Mayson’s financial position consists of a so-called balance sheet exhibited to the affidavit of the plaintiffs’ solicitor, Mr Conaghan.[9]  The actual author of the document is unknown, let alone the source of the information contained therein.  The high point is that Mr Conaghan deposes the document was provided to him by Mr Kwok, a director of Mayson, and Mr Kwok had advised him that Mayson was trading, that loans to it were related party loans, that the entities owed money by Mayson are controlled by Mr Kwok and that Mr Kwok will not call up a loan from him to Mayson until after any liability arising to pay the defendants’ costs. 
  4. [18]
    The balance sheet, which is in Hong Kong dollars, records current assets of HK$25,042,337.38 as against current liabilities of HK$26,013,246.47, a deficit of HK$970,909.09.  In the current liabilities, the amount due to Mr Kwok is said to be HK$4,633,229.85.  The plaintiffss’ counsel makes much of the point that if Mr Kwok is to be believed and this loan is not taken into account in assessing whether there is reason to believe the plaintiffs will not be able to pay the defendants’ costs, it would place Mayson in a net asset position.  But this would be to ignore a host of other vagaries in the balance sheet, including in the assets section which contains six different amounts, the highest of which is HK$11,650,000, described as amounts due from various entities. 
  5. [19]
    Exhibited with the balance sheet is an undertaking of Mr Kwok stating:

“I, Wai Tak (Edward) Kwok, of Flat B, 13th floor, Highcliff, 41D Stubbs Road, The Peak, Hong Kong, as director of each plaintiff company irrevocably undertake to pay to the defendants any order for costs made against the plaintiffs in the proceedings at the conclusion of the trial.”

The worth of that undertaking is unknown for there is no evidence of Mr Kwok’s worth, nor evidence of whether he has assets in the jurisdiction. 

  1. [20]
    Mr Conaghan’s affidavit, to which the undertaking is exhibited, deposes Mr Kwok has instructed “he is arranging for an irrevocable bank guarantee for the sum of $50,000 drawn on Citibank (Hong Kong) Limited, made payable to Bartley Cohen Trust account, to be held by the Defendants’ solicitors, upon their undertaking, to hold the guarantee and not to call upon it, until 14 days after the quantification of any costs order made against the Defendants, as additional security for costs”.  That information about an assertion of future intention does not shed material light on the present issue. 
  2. [21]
    The upshot is that Mayson has chosen to meet this application by providing a balance sheet of doubtful evidentiary value which refers to loans or collectables without any supporting evidence as to their recoverability.  Moreover, the balance sheet places Mayson’s assets in the negative.  In the circumstances, there is reason to believe Mayson will not be able to pay the defendants’ costs if ordered to pay them.
  3. [22]
    The same conclusion should be reached in respect of LPD.  The defendants’ enquiries showed LPD owned no real property in Queensland, that its paid-up share capital was $100 and that its only apparent asset in Australia was its shareholding in Macarthur Minerals Limited, which was worth about $624,000 in mid-February 2022. 
  4. [23]
    The plaintiffs’ initial response to the defendants’ raising of concerns about the plaintiffs’ ability to pay costs was, in summary, that they had in the past paid substantial legal costs and had voluntarily provided security for costs.  The fact of the making of such previous payments is of limited persuasive value as a predictor of future conduct, in the absence of any evidence of the actual origins of those funds.  If, rather than being funds provided at the whim of a non-party, they were funds owned or raised on a commercial basis by one of the corporate plaintiffs, then as much could presumably be demonstrated by documentary evidence.  However, such documentary evidence as was eventually provided of LPD’s financial position was only a set of financial statements of dubious evidentiary value.[10] 
  5. [24]
    The statements are exhibited to an affidavit of the plaintiffs’ solicitor, Mr Conaghan, who deposes they were prepared by Mr Raymond Mak of Accounting Intelligence Pty Ltd, who advised him he had acted as accountant to LPD since 2010 and that the financial position of LPD had “remained relatively stable over that period”.  Unfortunately, the statements only relate to a six-month period, namely 1 July 2021 to 31 December 2021 and are annexed to a compilation report with a disclaimer explaining Accounting Intelligence Pty Ltd were “not required to verify the reliability, accuracy or completeness of the information provided” and that Accounting Intelligence Pty Ltd did “not express an audit opinion or a review conclusion on these financial statements”.  ASIC’s records named Grant Thornton as LPD’s currently appointed auditor.  No explanation has been provided for why audited financial statements have not been produced.  That they are unaudited undermines the degree of comfort the court can derive from the documents.[11]
  6. [25]
    The compilation report describes the financial statement as “special purpose financial statements” stating “the specific purpose for which the special purpose financial report has been prepared is set out in Note 1”.  That purpose is not set out with any specificity in Note 1 which records:

“The director has prepared the financial statements on the basis that the company is a non-reporting entity because there are no users dependent on general purpose financial statements.  The financial statements are therefore special purpose financial statements that have been prepared in order to meet the needs of members.”

  1. [26]
    That reference to “the director” appears to be a reference to the director of LPD, whose responsibility the compilation report explained in these terms:

“The director of LPD HOLDINGS (AUST) PTY LTD is solely responsible for the information contained in the special purpose financial statements, the reliability, accuracy and completeness of the information and for the determination that the significant accounting policies used are appropriate to meet their needs and for the purpose that the financial statements were prepared.”

  1. [27]
    Those “significant accounting policies”, summarised in Note 1, are that investments including shares are measured “at cost”.   This has significance in that the financial statements record total liabilities of $12,415,674.18 and only slightly higher total assets of $12,447,957.88.  One of those assets is said to be $3,333,331.12 worth of shares in Macarthur Minerals Limited.  When it is understood that was the cost of purchase and that those shares in more recent times are only worth a little over $600,000 that fact alone plunges LPD into several million dollars’ deficit. 
  2. [28]
    The current value of some of LPD’s other supposed financial assets recorded in the financial statements includes an amount of $4,317,862.94 for “legal fee – capital”.  No evidence is provided as to what that asset consists of.  Also recorded in its non-current assets are so-called receivables in the form of six loans totalling $4,367,967.55 but there is no evidence before the court as to the terms of those loan transactions or the loans’ recoverability. 
  3. [29]
    LPD’s current liabilities are said to be constituted by a loan of $368,082.18 and its non-current liabilities are said to be constituted by substantial loans to Edward Kwok, “Mayson Associates” and “Mayson Associates (Hong Kong)”, as well as a non-current liability described as “shareholders current account”.  Mr Conaghan deposes he has been told by Mr Kwok that Mr Kwok has no intention of calling up his loan in the foreseeable future or calling it up to avoid liability arising pursuant to a costs order in favour of the defendants.  This mere hearsay about an expressed present intention is scarcely an assurance of future conduct and, in any event, similar evidence has not been advanced in respect of the other loans. 
  4. [30]
    The combined effect of the above discussed evidence is that I am satisfied there is reason to believe LPD will not be able to pay the defendants’ costs if ordered to pay them.
  5. [31]
    It follows the potential discretion to order security for costs has been enlivened in respect of both plaintiffs.

Should the discretion be exercised?

  1. [32]
    Once a court is satisfied pursuant to Rule 671 that it “may” order a plaintiff to give security for costs, it remains for the court to decide whether to make such an order.  Rule 672 relevantly provides:

“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;
  1. (b)
    the prospects of success or merits of the proceeding;
  1. (c)
    the genuineness of the proceeding;
  1. (d)
    for rule 671(a)—the impecuniosity of a corporation;
  1. (e)
    whether the plaintiff’s impecuniosity is attributable to the defendant’s conduct;
  1. (f)
    whether the plaintiff is effectively in the position of a defendant;
  1. (g)
    whether an order for security for costs would be oppressive;
  1. (h)
    whether an order for security for costs would stifle the proceeding;
  1. (i)
    whether the proceeding involves a matter of public importance;
  1. (j)
    whether there has been an admission or payment into court;
  1. (k)
    whether delay by the plaintiff in starting the proceeding has prejudiced the defendant;
  1. (l)
    whether an order for costs made against the plaintiff would be enforceable within the jurisdiction;
  1. (m)
    the costs of the proceeding.”
  1. [33]
    This is not a case in which matters (f), (h), (i) or (j) have relevance.  As to (a), the plaintiffs have not chosen to adduce evidence of the means of those standing behind their proceeding. 
  2. [34]
    In respect of matters (b) and (c) there is no reason to doubt the genuineness of the plaintiffs’ proceeding.  However, that appears to present as an essentially neutral factor in circumstances where the state of the materials does not permit me to conclude the proceedings have a high degree of probability of success or failure.  I place no weight on the opinion of the plaintiffs’ solicitor premised upon his experience and an expert report that the plaintiffs’ prospects of success are high.  The opinion was advanced without analysis of its purported foundation, let alone of the issue of advocate’s immunity or the significance of the defendants’ reliance upon the advice of counsel.  Further, the defendants are yet to put on their expert evidence.
  3. [35]
    As to matter (d) and (e), I have already canvassed such material as there is about each plaintiff’s financial position and concluded there is reason to believe that neither will be able to pay the defendants’ costs.  This plainly tells in favour of making an order for security for costs unless of course the apparent degree of impecuniosity of the plaintiffs’ companies is attributable to conduct of the defendants.  The plaintiffs submitted that was the case, the onus being upon them to persuade the court of it.[12]  The plaintiffs’ submission reasoned that, if the plaintiffs had not been deprived of the amounts of money they had paid and which they, in effect, now sue for the return of, they would not seem impecunious because it may be inferred their balance sheet and financial statement would reflect a surplus.  Such an inference does not rest comfortably with Mr Mak’s assertion of financial stability since 2010.  More determinatively though, it is unsupported by evidence capable of bearing it out, such as evidence of the plaintiffs’ previous financial position, corporate financial gains and losses in the interim and evidence that the amounts paid over were funds owned or raised on a commercial basis by one of the corporate plaintiffs. 
  4. [36]
    It also tells in favour of the defendants’ application, given the parlous financial position of the plaintiffs, that the costs of the proceeding will obviously be very substantial, which is a relevant per matter (m).  In a similar vein, matter (l), whether an order for costs made against the plaintiff would be enforceable within the jurisdiction, is also a consideration favouring the defendants’ application.  The earlier discussion of the lack of substantial connection between the plaintiffs and the jurisdiction strongly suggests there would be formidable difficulty in the successful enforcement of a costs order against them.
  5. [37]
    Counsel for the plaintiffs did rely upon delay, though not delay of a kind specifically described in matter (k).  The delay of which they complained was relied upon as mitigating against an order as a matter of general principle,[13] the argument in effect being that it would be distracting and oppressive to have to meet an order for security for costs, oppression being relevant in matter (g).  However, the chronology of events exposes the complaint of delay as lacking substance. 
  6. [38]
    The defendants made historically timely requests for security for costs which, as earlier mentioned, culminated in $250,000 being held by the plaintiffs’ solicitors as security by 16 June 2021.  In the same month an additional amount of $75,000 by way of security was requested; and on 16 July 2021 the plaintiffs’ solicitors responded that $250,000 was sufficient and that further security would not be provided.  On 16 November 2021 the defendants’ solicitors advised that the amount of $250,000 as security had been exhausted and that further security in the sum of $300,000 was now required.  Two days later on 18 November 2021 Boddice J made consent orders which included a requirement that any applications for security for costs be filed and served by 21 January 2022.  On 22 November 2021 the plaintiffs’ solicitors indicated they were seeking instructions in relation to the provision of any further security and that they would revert to the defendants’ solicitors with their clients’ instructions in “sufficient time for you to consider the position”.  They did not do so.  On 20 December 2021 and on 14 January 2022 the defendants’ solicitors unsuccessfully sought the foreshadowed response by the plaintiffs’ solicitors.  On 28 January 2022 the defendants’ solicitors proposed an extension to the consent order timetable on the basis the plaintiffs would provide their response in respect of security for costs by no later than 4 February 2022.  There was then further correspondence between the parties’ solicitors during February, culminating with an acceptance that the plaintiffs would not take issue with the application for security costs being filed late and, in the upshot, the application was filed on 15 February 2022.  The initially listed hearing of the application was adjourned by consent at the request of the plaintiffs’ solicitors.  The defendants progressed their various attempts to gain security for costs in a timely way. 
  7. [39]
    Having particular regard to the force of matters (d), (l) and (m) I am satisfied this is an appropriate case in which to exercise the discretion to order the plaintiffs to give security for costs in a form satisfactory to the Registrar.  It remains to determine the amount of security to be ordered.

Quantum of security?

  1. [40]
    UCPR r 670(1) provides that 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”.  The parallel discretion enlivened under s 1335 Corporations Act contemplates the provision of “sufficient security”.  Bowskill J, as her Honour then was, observed in Equititrust Limited v Tucker[14]:

“In determining what is appropriate or sufficient, the court does not give a full indemnity, and the amount is not determinative with mathematical precision but rather on the basis of a ‘broadbrush’ approach.”

  1. [41]
    The assessment of the appropriate quantum of security to order in the present case occurs against a backdrop of $250,000 security for costs having already been provided.[15]  The defendants’ solicitor Mr Cohen deposed as at 15 February 2022 that the defendants had incurred a total of $336,156.61 in professional fees and disbursements thus far and had a further $11,455 in unbilled professional costs.[16]  This materially exceeds the $250,000 security already provided.  Of that security $50,000 was ostensibly for costs up to the point of mediation.  The second amount of $200,000 was provided in response to a request for further security in the amount of $300,000 made on 15 March 2021.[17]  That estimate of $300,000, to and including day one of the trial, turned out to be itself materially inadequate because there were a variety of ensuing steps in the litigation that had not been anticipated in calculating that amount.[18] 
  2. [42]
    The defendants seeks, in addition to the $250,000 security, two court ordered tranches of security, namely $232,810 security in the near future and a further $155,000 in the more immediate lead-up to the trial.  The combined total of all those amounts, $637,810, is very substantial, although it is to be borne in mind that a material proportion of costs have been consumed by what have been substantial pretrial processes and that the trial for which the parties must prepare is apparently anticipated to last 10 days.  Moreover, it is more complex than usual litigation in the sense that the events which it must unpick relate to the course of earlier litigation and decisions made in connection with it.
  3. [43]
    Mr Blume, a costs assessor engaged by the defendants, has provided a useful expert report in respect of the costs of the proceedings.  Based on his assessment and the plaintiffs’ urged approach, the defendants’ counsel provided a useful comparable summary as follows:[19]

Period

Defendants’ estimate

Plaintiffs’ estimate

Up to June 2021

$139,587.11[20]

$105,000[21]

June 2021 to 9 February 2021[22]

$90,000.00

$90,000

9 February up to and including the first day of trial

$342,800.00[23]

$239,174.85[24]

Total

$572,387.11

$434,174.85

Total further security payable (total less $250,000)

$322,387.11

$184,174.85

Security for trial

Period

Defendants’ estimate

Plaintiffs’ estimate

Day 2 to the conclusion of trial

$155,000.00[25]

$141,137.00[26]

  1. [44]
    Components of some of the amounts constituting the further amount of $322,387.11 for up to and including the first day of the trial are alleged to be excessive by the plaintiffs.  Examples include the need for senior and junior counsel to appear at potentially two further pre-trial reviews, the inclusion of the costs of this application, the inclusion of costs for a now unnecessary application for further and better particulars, an allowance for senior and junior counsel preparation time of 12 and 10 days respectively in respect of a ten day trial in which most evidence in chief is documentary and allowance for likely unnecessary further disclosure.  It would be unwise to express a concluded view on the future need for such components but the probability that a number of them will be unnecessary or not justifiable to the full extent contemplated should provoke a material tempering in my approach.  There should in any event be some tempering bearing in mind the court’s usual discretion in ordering security for costs does not favour complete indemnity of standard costs.
  2. [45]
    Another argument advanced by the plaintiffs is that the costs here claimed are at least in part the same costs as costs which are the subject of review in a presently stayed cost assessment proceeding in connection with another proceeding in which the first plaintiff and first defendant are involved.  Security for costs in the amount of $80,000 from the first plaintiff is held in respect of that proceeding.  The first defendant has rejected an offer that any unused component of that security be applied as security in the present matter, asserting the full amount is exhausted.  The plaintiffs submit that is improbable, particularly bearing in mind the first defendant was self-acting in that matter.  Even if that is right, and I express no concluded view about that, it is unlikely the full $80,000 would be notionally available and in any event it is security in a different proceeding.  The point does no more at best than providing support for the material tempering in my approach which I have already foreshadowed.
  3. [46]
    In my conclusion the appropriate amount of security for costs up to and including day one of the trial is $200,000.
  4. [47]
    One criticism of the amount of $155,000 for the balance of the trial is that allowance is made for the solicitor to spend eight hours a day instructing and conferring.  The criticism is misplaced.  The estimate of eight hours appears unremarkable.  Another criticism is of an allowance of about $8,000 for a second solicitor to confer, assist with document management and counsel at trial where necessary.  It is unnecessary to express a concluded view but this does present as a more speculative future cost and it is to be borne in mind allowance has been made by Mr Bloom for care and conduct. 
  5. [48]
    In my conclusion the appropriate amount of security for costs for the balance of the trial is $147,000.

Orders

  1. [49]
    The parties preferred to be heard as to costs after publication of my reasons.  I had these reasons distributed to the parties in advance of handing them down and the parties have agreed on an appropriate order regarding the costs of this application and its adjournment on an earlier date.
  2. [50]
    I will allow about a fortnight from the pre-publication distribution of these reasons for the plaintiffs to provide the first security for costs and require the second amount to be paid no later than seven days prior to the listed commencement of the trial. The orders as to security will include at the parties’ agreement the alternative of payment into the plaintiffs’ solicitors’ trust account.
  3. [51]
    My orders are:
  1. Application granted.
  2. The plaintiffs will provide further security for the defendants’ costs of the proceeding up to and including the first day of the trial in a total amount of $200,000 to be secured by:
    1. (a)
      payment into court, or
    2. (b)
      provision of a bank guarantee in a form satisfactory to the Registrar, or
    3. (c)
      a combination of (a) and (b), or
    4. (d)
      payment into Thomson Geer’s trust account, subject to an undertaking by Thomson Geer not to deal with the monies except by order of this Court or the defendants’ prior written agreement,

by no later than 14 April 2022.

  1. The plaintiffs will provide further security for the defendants’ costs of the proceeding beyond day one of the trial in a total amount of $147,000 to be secured by:
  1. (a)
    payment into court, or
  1. (b)
    provision of a bank guarantee in a form satisfactory to the Registrar, or
  1. (c)
    a combination of (a) and (b), or
  2. (d)
    payment into Thomson Geer’s trust account, subject to an undertaking by Thomson Geer not to deal with the monies except by order of this Court or the defendants’ prior written agreement,

by no later than seven days prior to the listed commencement of the trial.

  1. The plaintiffs pay the costs of and incidental to this application, to be assessed.
  2. The plaintiffs pay the defendants’ costs thrown away by reason of the adjournment of this application from 24 February 2022 to 18 March 2022.

Footnotes

[1](1876) 1 XD 428.

[2]See, for example, in Re Little Olympian Each Ways Ltd [1995] 1 WLR 560, 566-567; Global Access Limited v Educationdynamics, LLC [2010] 1 Qd R 525, 526.

[3]Second Further Amended Statement of Claim [13].

[4]Affidavit of Benjamin Cohen court doc 51 exhibits p 14.

[5]In Re Little Olympian Each Ways Ltd [1995] 1 WLR 560, 568.

[6]Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301, 305.

[7]George v Rockett (1990) 170 CLR 104, 116.

[8]Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301, 312; Monto Coal 2 v Sanrus Pty Ltd [2019] 3 Qd R 143, 154.

[9]Court doc 66.

[10]Affidavit of Anthony James Conaghan court doc 62, exhibit pp 169-176.

[11]Livingspring v Kliger (2008) 20 VR 377, 385.

[12]Jazabas Pty Ltd v Haddad (2007) 65 ACSR 276, 298.

[13]Relying inter alia on the observations of French J in Bryan E Fencott and Assocs Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497, [140]-[143] and of Martin J in Attorney-General of Botswana v Aussie Diamonds Products Pty Ltd [2009] WASC 299, [15]-[16].

[14][2019] QSC 51 [111]; also see the more expansive summary of principle by Crow J in Murphy Operator v Gladstone Ports Corporation (No 6) [2020] QSC 192 [119].

[15]It was not provided pursuant to an order of the court, so this is not a matter in which it is necessary to vary an earlier order for security for costs “in special circumstances” as referred to in r 675. 

[16]Affidavit of Benjamin Timothy Cohen court doc 51 [37]-[38].

[17]Affidavit of Benjamin Timothy Cohen court doc 51 [13].

[18]Affidavit of Benjamin Timothy Cohen court doc 51 [51].

[19]Exhibit B.

[20]Plaintiffs’ approach, outline paragraph 66 without the additional 25% reduction.

[21]Plaintiffs’ approach, outline paragraph 66 with the additional 25% reduction argued in Plaintiffs’ outline at 68.

[22]Bloom assessment at page 18 of exhibit bundle.

[23]Bloom assessment at page 18 of exhibit bundle.

[24]Bloom assessment at page 18 of exhibit bundle less the deductions argued in Plaintiffs’ outline at 69-70.

[25]Bloom assessment at page 18 of exhibit bundle.

[26]Bloom assessment at page 18 of exhibit bundle less the deductions argued in Plaintiffs’ outline at 71-72.

Close

Editorial Notes

  • Published Case Name:

    LPD Holdings Pty Ltd & Anor v Russells & Anor

  • Shortened Case Name:

    LPD Holdings Pty Ltd v Russells

  • MNC:

    [2022] QSC 48

  • Court:

    QSC

  • Judge(s):

    Henry J

  • Date:

    06 Apr 2022

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
Attorney-General of Botswana v Aussie Diamonds Products Pty Ltd [2009] WASC 299
1 citation
Jump To
Cite 1 - [2009] WASC 299
Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497
1 citation
Jump To
Cite 1 - (1987) 16 FCR 497
Cornelius v Global Medical Solutions Australia Pty Ltd (2014) 98 ACSR 301
3 citations
Jump To
Cite 1 - (2014) 98 ACSR 301
Cite 2 - (2014) 98 ACSR 301
Cite 3 - (2014) 98 ACSR 301
Equititrust Ltd v Tucker [2019] QSC 51
2 citations
Jump To
Cite 1 - [2019] QSC 51
Cite 2 - [2019] QSC 51
George v Rockett (1990) 170 CLR 104
1 citation
Jump To
Cite 1 - (1990) 170 CLR 104
Global Access Ltd v Educationdynamics, LCC[2010] 1 Qd R 525; [2009] QSC 373
1 citation
Jump To
Cite 1 - [2010] 1 Qd R 525
In De Beers Consolidated Mines Limited v How [1906] AC 4485
2 citations
Jump To
Cite 1 - [1906] AC 4485
Cite 2 - [1906] AC 4485
In re Little Olympian Each Ways Ltd [1995] 1 WLR 560
2 citations
Jump To
Cite 1 - [1995] 1 WLR 560
Cite 2 - [1995] 1 WLR 560
Jazabas Pty Ltd v Haddad (2007) 65 ACSR 276
1 citation
Jump To
Cite 1 - (2007) 65 ACSR 276
Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377
1 citation
Jump To
Cite 1 - (2008) 20 VR 377
LPD Holdings Pty Ltd & Anor v Russells & Anor (1876) 1 XD 428
1 citation
Jump To
Cite 1 - (1876) 1 XD 428
Monto Coal 2 Pty Ltd v Sanrus Pty Ltd[2019] 3 Qd R 143; [2018] QCA 309
1 citation
Jump To
Cite 1 - [2019] 3 Qd R 143
Murphy Operator v Gladstone Ports Corporation (No 6) [2020] QSC 192
1 citation
Jump To
Cite 1 - [2020] QSC 192

Cases Citing

Case NameFull CitationFrequency
Lal Family Holdings Pty Ltd v Brygon M.C. Pty Ltd [2022] QDC 1222 citations
1

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