IN COU: UST. NEW SOUTH W. S DIS C VISION BETWEEN: f ZO | C5 JUL 1999 vo \ AGT OF 15 DECEMBER 1994 JUDGMENT No. .. ra f if voocecsevovcocoa! opocecocenee ) ) ) No. G259 of 1994 ) ) YDA _INVE ¥ LIMITED First Applicant THE SHIRT FACTORY _ PTY LIMITED Second Applicant CONTIN SHIRTS co PTY LIMITED Third Applicant NENTAL HIRTS MANUFACTURING CO PTY LIMITED Fourth Applicant RO C_OAY Fifth Applicant ALLEN OA Sixth Applicant s 5) US COMPANY M IN UIDAT First Respondent ESTATE MORTGAGE __ MANAGERS I U 8) Second Respondent RVICES D N LIQUIDATION) Third Respondent MERCANTILE MUTUAL _ LIFE INS CO LIMIT Fourth Respondent MARTIN MADDEN Fifth Respondent GREGORY ROBERTSON Sixth Respondent LOCKHART J. On 25 November 1994 I gave judgment with respect to certain motions, the details of which are set out in my reasons. I did not make orders then because the case was complex, the motions were intricate and I wished the parties to have a chance to read them so that they could then formulate appropriate orders to give effect to the reasons for judgment. The parties have done that and have arrived at agreement as to the appropriate orders to be made to give effect to my reasons, save as to the question of costs. The difference between the applicants and the respondents is whether an order for costs should be on an indemnity or on the usual party and party basis. There is also disagreement between the applicants and the respondents as to whether any orders for costs should be limited to the motions that were before the Court and were the subject of my reasons of 25 November, or whether such orders should extend to the whole of the proceedings to date. The principles governing awards of security for costs have been referred to in a number of decisions in this Court. It is sufficient if I refer to Fountain Selected Meats Sales Pty Limited v International Produce Merchants Pty Limited (1988) 81 ALR 397, in the judgment of Woodward J; Colgate Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225, in the reasons for judgment of Sheppard J., and to the many cases which are conveniently collected by his Honour in his reasons. The Court in the exercise of its power to award costs must act judicially. Subject to that constraint, the Court's discretion is unfettered. The circumstances which may call for an order for indemnity costs are not closed, as has been pointed out in the cases to which I have referred. Instances of cases where it is appropriate to exercise that discretion are also conveniently collected in Sheppard J.'s reasons for judgment in Colgate Palmolive at 233. Courts do not make orders for indemnity costs lightly. There must be something of a special nature which calls for the making of such an order to warrant the departure from the usual order of party and party costs. In this case the proceeding was commenced in May this year, no statement of claim was filed until much later this year and it was filed only after there had been three directions of judges of the Court directing that a statement of claim be filed. The applicants did not comply with any of those directions. Eventually a statement of claim was filed. It was that statement of claim which I said in my reasons for judgment should be struck out. I need not repeat anything that I said in those reasons, they are extensive and they must be treated as being part of my reasons for the purpose of today's proceeding. The proceeding has been before judges of this Court for directions on no less than 10 occasions, and that does not include the hearing of the motions which were before me, which led to my judgment of 25 November 1994. The history of the matter has been most unsatisfactory, the respondents are in a position where the case having been commenced in May this year are now in a position where there is still no statement of claim because of the striking out. There is, I think, substance in the submission of counsel for the respondents, that if the case had been regularly prepared and if a proper statement of claim had been filed, the case would be well advanced, whereas it is in the same position in substance as it was when the proceeding was commenced. The respondents assert that they should be put in the same position as if the case had not been commenced. The statement of claim discloses no cause of action against any respondent in its present form, and I did not dismiss. the proceeding, I simply indicated that the statement of claim must be struck out and the proceeding is still on foot. In my view there are circumstances which justify the making of indemnity order for costs in this case and I have summarised them briefly. I therefore propose to make an order for indemnity costs. I propose to make them in respect of the proceeding as a whole today, and not just the motions, in the light of the history of the matter. Accordingly, the orders that the Court makes are: Orders 1 to 14, as set out in the short minutes of order, initialled by me, dated today, and placed with the papers. The Court also makes the following additional order which will be conveniently numbered 15: that the parties referred to as A & S Holding and Oayda, pay the costs of MML, the receivers, John William Murphy and Peter Bernard Allen, and Estate Mortgage Financial Services Limited, in liquidation, of the proceedings, including all motions on an indemnity basis. The Court also orders (order number 16) that the parties described as Manufacturing and Allen Oayda pay the costs of MML and the receivers of the proceedings on an indemnity basis. I have struck out from the short minutes what I numbered as 15, 16 and 17, and I substitute 15 and 16 in the terms I have indicated. The Cout then makes orders, 17, 18 and 19, in accordance with the short minutes (those numbers being my numbers in substitution for the typed numbers 18, 19 and 20). I note the matters referred to in paragraph 20, which I have renumbered 21 in the short minutes. I certify that this and the preceding four (4) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Dated: Counsel for the Applicants Solicitors for the Applicants Counsel for the Second and Third Respondents Solicitors for the Second and Third Respondents Counsel for the Fourth Respondent: Solicitors for the Fourth Respondent Counsel for the Fifth and Sixth Respondents Solicitors for the Fifth Respondents Date of Hearing Date of Judgment Mr L Gruzman QC Williams Palmer Noss Mr Davis Middletons Moore & Bevans Mr M Pembroke Mallesons Stephen Jaques Mr S M P Reeves Mallesons Stephen Jaques 15 December 1994 15 December 1994