3a IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G76 of 1987 GENERAL DIVISION ) a BETWEEN: KALDOVER PTY. LTD. Applicant AND: CLAIR MARGARET MAHER and JOAN PATRICIA FRIEL MAHER First Respondents AND: PATTEN TREWIN Second Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 20 JULY 1987 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. the applicant, Kaldover Pty. Ltd., lodge with the District Registrar at Brisbane as security for the costs of the second respondent the sum of $15,000, payable as follows: (a) $2,000 on or before 3 August 1987; (b) $4,000 on or before 7 September 1987; (c) $9,000 not less than 5 weeks prior to the date fixed for trial of this application; 2. should the applicant fail to make any of the payments aforesaid, the application shall be stayed 7 as against the second respondent; 3. the applicant pay the second respondent''s costs of and incidental to the application for security, to be taxed. "3. NOTE: Settlement and entry of orders is dealt in SON Order 36 of the Federal Court Rules. on sN , r ' 271001987 | | F2lEN AL COUR ay a AUSTRALIA. oF A : "OUICIPAL in a4 Penqe ' - ve IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G76 of 1987 GENERAL DIVISION ) BETWEEN: KALDOVER PTY. LTD. Applicant AND: CLAIR MARGARET MAHER and JOAN PATRICIA FRIEL MAHER First Respondents AND: PATTEN TREWIN Second Respondent PINCUS J. 20 JULY 1987 EX TEMPORE REASONS FOR JUDGMENT This is an application for security for costs against the second respondent, in respect of which I have already refused an application for adjournment. The amended statement of claim Says in paragraph 3(a) that the second respondent, for whom Mr. Bowden appears, was a hotel broker and in paragraph 3(b) that he acted as agent for the first respondents. The case against him seems to be that he is personally liable on the basis that he was guilty of fraud, or negligence, or that he was knowingly involved in the contravention of s.52 which is alleged against the other respondents. The application for an adjournment I have mentioned was made on the basis that there should be complete material before the court as to the facts of the case. The material which is now before the court 1s largely in the form of correspondence, there is no suggestion that the correspondence is incomplete, and I have found reference to it helpful. The statement of claim says that there was an agreement made on 27 January 1987. Mr. Carter's affidavit exhibits a document dated 25 January 1987, which is presumably the relevant one, although the statement of claim makes reference to its being dated 27 January. Paragraph 7 of the statement of claim says that the second respondent represented that the takings of the business in guestion, which 1s a hotel, were $8,000 or $8,400; that the gross margin was $6,960, less expenses of $2,200, and that "Fourex" brand draft beer was not sold at the hotel. Now, the correspondence to which Mr. Bowden has directed my attention shows that complaints of a similar kind were raised by letter of 17 February 1987 from solicitors acting for the purchaser. In that letter they purported to rescind, and they said that the takings of the hotel were said to be $8,000 per week and that inquiries had shown that they were less than §6,000. They also said that Fourex beer had been sold at the hotel for the previous four months. * On the same day, 17 February, solicitors for the vendor wrote back to say that the takings were about $6,000 per week, saying: ",.. the Vendor was aware prior to the Contract being executed that the weekly takings of the Hotel were approximately $6,000.00." Rae a a And the same letter said: "The matter of whether XXXX Beer is sold from the Hotel by the present occupant is not a condition of the Contract". That, as Mr. Bowden accurately says, implies an admission that something had been said about it. Then, by a letter which 1s dated 19 February 1987, the vendor''s solicitors wrote again proposing a variation of the contract, and on 25 February 1987 they wrote confirming settlement of the transaction. It seems clear enough that the contract was varied by conduct, 1f not by express words. The correspondence goes on to discuss these present proceedings and shows that the applicant 1s insolvent. The only other matter which 1s necessary to refer to in the correspondence 1s that a letter dated 18 May 1987 from the solicitors for the second respondent said that the applicant has no assets other than as trustee for the Rekab Family Trust - that does not seem to be in dispute - and that the trust has no assets apart from the interest ain the Palace Hotel, which, after payment of all liabilities, is worth nothing, and that Mr. Baker, to use his own expression, "went broke" ina _ venture in Wollongong. That was replied to by a letter dated 20 May 1987, which is exhibit "G" to Mr. Carter's affidavit, from the solicitors for the applicant. It does not appear to dispute the assertions made in the letter of 18 May to which I have referred. I note also that the assertion in the letter of 18 May that Mr. Baker "went broke" in a venture in Wollongong is not easy to reconcile with the suggestion made before me that the very quickly appearing financial problems of the applicant purchaser were due to the wrongdoing of the respondents. The solicitors for the second respondent have placed before me a letter dated 9 June 1987 which estimates costs on a party and party basis in the sum of $11,204 up to and including the first day of trial, and at $1,359 per day thereafter. I do not go through the pretence of having no view about those estimates, because I do have one: they seem to me to be surprisingly low. In a mumber of cases, estimates of costs of current proceedings have been placed before me, and the figure of $1,359 a day 1s the lowest figure I have recently seen. The case seems to me to be one in which security should clearly be given. The reasons why it should be include: (1) that the statement of claim appears to be, at least to some extent, inconsistent with the facts as revealed by the correspondence; (2) that the second respondent is not one of the parties to the transaction, but an agent for the first respondents, according to the pleading, and 1t may very well be that even if the applicant succeeds, the second respondent will not be held liable; (3) the case is one in which, prima facie, there should be some consideration of security, because the persons standing behind the applicant are otherwise given an unfair advantage as against the second respondent. That is, his assets are at risk in this litigation; if he loses, there will be an order for costs against him, presumably recoverable from his personal assets, whereas the persons standing behind the applicant are not risking their personal assets. That 1s, on the face of it, an unequal distribution of risk. I order that the applicant, Kaldover Pty. Ltd., do lodge with the District Registrar at Brisbane as security for the costs of the second respondent the sum of $15,000 payable as follows: (1) $2,000 on or before 3 August 1987; (2) $4,000 on or before 7 September 1987; (3) $9,000 not less than five weeks prior to the date fixed for the trial of this application. I further order that should the applicant fail to make any of the payments aforesaid, the application shall be stayed as against the second respondent and that the applicant pay the second respondent's costs of and incidental to the application for security, to be taxed. i certify that this and the ¥ preceding pages are a true copy of the reasons for judgment herein of H's Honour Mr, Justice Pincus Associat? Dated 20 Juty (48)