Bo's Demolitions Pty Ltd v Commonwealth Bank of Australia [1999] QSC 450

\ ~) 3·7677 State Reporting Bureau -TRANSCRIPT OF PROCEEDiNGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION WHITE J No 9641 of 1996 BO'S DEMOLITIONS PTY LTD (ACN 010 600 601) and COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) BRISBANE .. DATE 09/09/99 JUDGMENT REV5ED COPfES ISSUED State Reporting Bu~u Date J.f / (0 / Plaintiff Defendant II, fI,,,,/', Tire I.:IW Courts, Cl'tlq.!l· Stn:d, IIl'i:;I':IIIl', Q. ~(H)1l Tc:fCI'Ir'l/ll': (1l7) .12~7 ~.1r.o I-':,'c (1l7) .1247 5::.I~ -- 1 of 8 -- 090999 T5-6/JW5 M/T 5179/99 (White J) HER HONOUR: This is an appl~cation by the defendant bank for an order pursuant to rUlE! 670 of the Uniform Civil Procedure Rules that the pla~ntiff give security for the defendant's costs of the action including preparation up until and including the trial. 10 It is conceded by Mr Barlow, who appears on behalf of the bank, that in an application of this kind the usual practice is to grant security for costs if security is to be granted only to include the first day of trial. This application is brought on the ground provided in rule 671 (a) of the Rules that the plaintiff is a corporation and there is reason to believe that the plaintiff will not be able to pay the defendant's costs if so ordered at the conclusion of the action or at any other stage in the action. The action by the plaintiff arises out of loans by the bank to the group of companies of which the plaintiff is one, as I understand it, and which the plaintiff guaranteed. In November 1990 the defendant demanded payment of outstanding sums and between then and the middle of the following year it seized and sold a number of assets from which the debt was repaid. In its action the plaintiff alleges that the defendant seized and sold assets unlawfully or alternatively that it 2 JUDGMENT 20 ( ( 30 c 40 50 60 -- 2 of 8 -- .. / 090999 T5-6/JW5 M/T 5179/99 (White J) damaged or lost the equipmeni: or sold it at under-value. The total value is said to bE! some $365,000. Mr Barlow contends that the balance sheets show that the plaintiff has no assets itself apart from some loans and draws attention to a letter from the plaintiff's solicitors that indeed the company has not traded since about the mid to early 1990s. The balance sheet for the year ended 1994 shows the current assets of the plaintiff company as consisting only of loans. Those loans are about $93,000. The net assets are $61,000-odd. One might be inclined to discount such loans as not of a great deal of value. However, Mr Consiglio's affidavit - Mr Consiglio is the solicitor for the plaintiff - deposes to the assets of the debtors on information and belief. Mr Robert James would appear to be the principal of the demolition group of companies and. the affidavit shows that he has substantial assets. It also shows that one of the debtors, Pikecorp Proprietary Limited, has assets which are estimated to be in the vicinity of $800,000, being investment houses. It would appear then that there is available to the plaintiff moneys by way of resort to its debtors which would satisfy any order for costs. 3 JUDGMENT 10 20 30 40 50 60 -- 3 of 8 -- 090999 T5-6/JW5 M/T 5179/99 ~White J) The historical records of thE! company show that it had in 1991 three charges over its cLssets. The defendant bank has charges on its fixed assets, of which there are none, and the Suncorp Metway Corporation and a company called Pacine have fixed and floating charges. There is nothing to 10 reflect the indebtedness to those creditors in the balance sheets of the company. Mr A Lyons, who appears on behalf of the plaintiff, submits that it might be that the charges simply have not been 20 removed because there is nothing to reflect any basis for concluding that there are any outstanding debts owed to either of those entities by the plaintiff. I think in the absence of any other evidence I would accept that 30 submission. There are some other matters which I should touch upon. The factors which a Court takes into account - the discretionary (/ factors - are set out in rule 671. They include the factors 40 with which Courts are familiar arising out of the former rules. There has been considerable delay in bringing this action. The allegations arise out of events that occurred in 1991. ., 50 The writ was not issued until 30 November 1996 and served almost a year later. The statement of claim was only delivered on 19 August 1998. 60 4 JUDGMENT -- 4 of 8 -- 090999 T5-6/JW5 M/T 5179/99 :White J) There have been assertions that as a consequence of this delay many documents pertain:.ng to the bank's dealings with this property are irretrievably lost to it. The auctioneers and agents and accountants who were seized of these matters on behalf of the bank certainly depose that they no longer 10 hold documents. But it does appear that the bank itself has a great many documents relating to these matters. It is probably worth mentioning that there is also proceeding at the same time a much more complex action by Mr and Mrs James against the bank in which, no doubt, enormous quantities of documents will be needed to be consulted, which probably overlap these documents in this case. I say that because it puts a slightly different complexion on the action. It is but one aspect of the relationship between the plaintiff and those who stand behind it and the bank, in which case the issue of the documents is probably not as vital as might at first sight appear. The application for security for costs is not made by any means at an early date. The plaintiffs have expended some $2,000 in advancing the action since that time. It is not a large sum of money but it has progressed and it is a factor which is taken into account as a discretionary factor. There is completely a different attitude to this litigation between the parties. Mr Barlow maintains that it is complex, Mr Lyons that it is a very simple action. 5 JUDGMENT 20 30 50 60 -- 5 of 8 -- 090999 T5-6/JW5 M/T 5179/99 ~White J) On its face it does look to he a relatively speaking simple action. There are chattels :.dentified except for the building materials which havn come from a variety of sites and it is not difficult to see that this may cause some difficulty of particularity if they come from many jobs. 10 But on the whole it seems to me it is not a complex piece of litigation. The quantum which is set out in detail in Mr MCBride's exhibit 10 is based in my view on complex litigation rather than what seems to me to be the more simple litigation 20 involved in this case. Counsel's fees are calculated on the ( basis of senior counsel. One would be disinclined to think that that would be an item which was allowed. Discovery is identified as $23,000. It seems to me that that is an excessively large amount of money for discovery in this action which could be, I would have thought, delimited much more than that. The other items, for example, for mediation with which issue is taken by Mr Lyons, seem to me to be not a considerable sum of money. That is a standard fee, even if it is run in tandem with the other litigation. The number of letters identified seem to me extraordinarily high and communication with the client. $9,000 for care and consideration in an application of this kind also seems to me to be significantly high and I wonder whether there has 6 JUDGMENT 30 40 50 60 -- 6 of 8 -- 090999 T5-6/JW5 M/T 5179/99 ,'White J) not been a frame of mind which has tended to look at the more complex litigation rathE!r than this one standing alone. I form the view that in view of what has appeared in Mr Consiglio's affidavit today that the company could pay an order for costs were it to be unsuccessful in its litigation. I say that because I am not persuaded that the quantum, which is some $65,000, is a quantum which I would have allowed had I been giving security for costs, but it would more likely have been something like half of that amount up to and including the first day of trial. $35,000 in round figures is probably what I would have been prepared to order. I think it unnecessary in view of the conclusion to which I have come to deal with the question of the form of the security. It was proposed that Mr James give a personal guarantee and the order of the Court would normally be in such circumstance that the plaintiff give security in a form satisfactory to the Registrar, which is usually a bank guarantee. The submission was that it ought not to be that because it is expensive. I would be prepared to accept that had I been ordering security that a personal guarantee from Mr James would be sufficient to satisfy that order. HER HONOUR: Although the plaintiff has been ultimately 10 20 30 50 successful in resisting the application for security for 60 7 JUDGMENT -- 7 of 8 -- 090999 T5-6/JW5 M/T 5179/99 (White J) costs in my view it was not unreasonable that the application be brought given both the correspondence and lack of correspondence from the plaintiff about this matter. The material upon which the plaintiff has been able successfully to resist the application has come into the hands of the applicant late. All the costs would have be~n expended. , I am persuaded that the appropriate order then is that there be no order as to costs. 8 JUDGMENT 10 20 ( c 30 40 C, 50 60 -- 8 of 8 --