IN THE FEDERAL COURT OF AUSTRALIA)No. QG 39 of 1995 QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION ) BETWEEN: ANDREW NICHOLAS SIMMONS of 6 Bellevue Crescent Edge Hill, Queensland First Applicant RONALD LEE STEPHENS of 4 Bellevue Crescent Edge Hill, Queensland Second Applicant AND: CLEARVIEW ALUMINIUM WINDOWS (AUST) PTY. LIMITED, (ACN 000 432 637) of 22 Clearview Place Brookvale, New South Wales First Respondent NASIB PTY. LIMITED, (ACN 062 086 426) C/- Coopers & Lybrand, Level 4 National Mutual, 15 Lake Street Cairns, Queensland Second Respondent STEPHEN CHARLES MARROW of 12 Tyrone Street SOUTH YARRA VIC 3141 Third Respondent NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) of 255 Adelaide Street Brisbane, Queensland Fourth Respondent MINUTES OF ORDERS JUDGE MAKING ORDER: Drummond J DATE OF ORDER: 9 May, 1995 WHERE MADE: Brisbane UPON the applicants undertaking, until further order or final judgment in these proceedings, to provide, through their solicitors, 14 days' notice in writing to the solicitors for the second and third respondents: (a) of any change of residential address; and (b) of any proposed journey overseas; THE COURT ORDERS THAT: 1. The second and third respondents' motion for security for costs be adjourned sine die. 2. The second and third respondents be granted liberty to apply, upon giving three days' notice in writing to the applicants, to bring the motion on. 3. Costs be reserved. THE COURT FURTHER ORDERS THAT: 1. The second and third respondents' motion to strike out the whole of the claim made against each in the applicants' statement of claim be granted. 2. The applicants be granted leave to re-plead against the second and third respondents. 3. There be no order as to costs. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA) No. QG 39 of 1995 QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION ) BETWEEN: ANDREW NICHOLAS SIMMONS of 6 Bellevue Crescent Edge Hill, Queensland First Applicant RONALD LEE STEPHENS of 4 Bellevue Crescent Edge Hill, Queensland Second Applicant AND: CLEARVIEW ALUMINIUM WINDOWS (AUST) PTY. LIMITED, (ACN 000 432 637) of 22 Clearview Place Brookvale, New South Wales First Respondent NASIB PTY. LIMITED, (ACN 062 086 426) C/- Cooper & Lybrand, Level 4 National Mutual, 15 Lake Street Cairns, Queensland Second Respondent STEPHEN CHARLES MARROW of 12 Tyrone Street SOUTH YARRA VIC 3141 Third Respondent NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) of 255 Adelaide Street Brisbane, Queensland Fourth Respondent Coram: Drummond J Date: 9 May, 1995 Place: Brisbane REASONS FOR JUDGMENT The second and third respondents apply for an order that the applicants provide security for the costs of their defence to the proceedings brought by the applicants. Security up to the start of the trial is sought now. These proceedings were commenced on 20 March, 1995 with the filing of an application and a statement of claim. I infer that they were provoked by an action on a mortgage commenced in the Supreme Court of Queensland by the fourth respondent against the applicants a few weeks earlier. The applicants are now also suing the fourth respondent in the proceedings they have brought in this Court. Earlier today I took the view that the applicants' statement of claim against these two respondents was deficient in that the cause of action against these respondents and the material facts intended to be relied on were pleaded in a way that did not enable these recipients of the pleading to get a fair understanding of the issues of fact and law the applicants intended to deal with at the trial. Accordingly, I ordered the applicants' statement of claim be struck out. Because I considered that it was likely that the applicants would be able to formulate a claim, albeit a fairly complex one against these two respondents, I gave general leave to re-plead. Both applicants are currently resident in Australia. As a general rule, security will not be ordered against an applicant who is a natural person resident in the jurisdiction. However, it is common ground that I have a wide jurisdiction, not circumscribed by O. 28, r. 3 the Federal Court Rules, to order that the applicants provide security for the respondents' costs, if the justice of the case requires it. (See Tomlinson v Cut Price Deli Pty. Limited & Ors., an unreported judgment I gave on 20 April, 1993). In their solicitor's letter of 28 April, 1995, the respondents asserted, in reliance on certain factual contentions, firstly, that the applicants have misstated their addresses in the statement of claim and amended application possibly to avoid any costs orders made against them. Secondly, that there is a real risk that the applicants will leave the jurisdiction to avoid any costs orders made against them. Thirdly, that the applicants have evidenced an intention to evade any costs order made against them. Fourthly, that the applicants have insufficient assets in the jurisdiction to satisfy any costs order made against them and, finally, that the applicants are not bona fides in bringing this proceeding against the second and third respondents. The first basis on which the second and third respondents sought security was founded on what was said by the third respondent in his affidavit to be, by inference, deliberate misstatements by the applicants of their true residential addresses. It is clear not only that this contention is without substance and that there is no support for the inference that the respondents sought in their solicitor's letter of 28 April, 1995 to draw in this regard, but also that the third respondent has been less than frank in his affidavit evidence on this issue. For example, in paragraph 7 of his second affidavit filed 3 May, 1995, he seems to me to have plainly attempted to create the impression that the second applicant had given a false address in his statement of claim, when the third respondent's oral evidence shows that that respondent well knows, and well knew when he swore his affidavit, that all the second applicant is guilty of in this regard, at the most, is a failure to be meticulously precise in his description of his address. The third respondent has never been misled by what either applicant has had to say about his address. The respondents' counsel properly did not seek to rely on this element of the case initially advanced by the respondents. The third respondent's conduct here is, however, relevant insofar as it shows that he is prepared to overstate the respondents' case in an effort to obtain the relief now sought. At the core of the respondents' remaining case for security is a concern about the limited links with Australia that each applicant has, and a further concern about the assets each has within the jurisdiction. For some time prior to late 1994, early 1995 the applicants lived together at 4 Bellevue Crescent, Edge Hill, Queensland, which the first applicant still owns. The second applicant still owns the adjacent property. They then moved to Sydney and currently live in a unit in Liverpool Street. The applicants have only lived in Australia since 1990. The first applicant was born in Singapore of English parents and he lived in Australia in the early to mid-1970s and late 1980s (i.e., 1970-1976 and 1988 and 1989). After his arrival in 1990, he took out Australian citizenship. However, he holds dual Australia and United Kingdom citizenship. The second respondent is a national of the United States. He arrived in Australia in about February 1991 on a visitor's visa. Later that year he obtained a business visa. He says he is entitled to permanent residence in Australia because of his relationship with the first applicant. In September 1994 he applied for permanent residence and has been granted what he describes as a bridging visa. His claim for permanent residence is, as yet, undisposed of. He says that in two years he will be eligible to apply for Australian citizenship and intends to do so, and that he is a resident of Australia and has made Australia his home and has no intention of leaving Australia. All this appears from the affidavit of the applicants' solicitor. The applicants themselves have avoided going on oath to answer these two respondents' contentions. Each travels overseas, the second applicant more frequently since 1990 than the first applicant. Each has ties overseas, particularly in Bermuda and the United States respectively, and none here, apart from the assets they own and apart from what their solicitor says about their future intentions to reside in Australia. As to their assets, professionally prepared valuations are in evidence with respect to the two properties at Edge Hill owned by the first and second applicant. Each appears to be a high quality home. Together they are valued at between $1.1M and $1.175M. Both are encumbered, securing, according to what the applicants have told their solicitor, a total indebtedness of about $740,000. They say they have also bought a property in Darlinghurst for $555,000 on a $10,000 deposit and with a building society loan of $150,000. They have vendor finance for the balance purchase price of approximately $395,000 for which this property and the Edge Hill properties stand as securities to a total extent of $360,000. The Sydney property is further mortgaged to the building society to secure, in addition to the $150,000 purchase moneys, a further $200,000 which has been used to fit out the premises as a restaurant. Even if the assertion to their solicitor that they have received an offer for $1M for the Sydney premises, which they rejected, is accepted, it is doubtful if they have much equity in the restaurant premises. There is no valuation evidence that throws any light on this. They also say that they have, between them, furniture and collectables worth at least $300,000. They had insurance on such items to the extent of about $390,000 up to 29 November 1994, although the insurer declined to renew this insurance for reasons that are not disclosed in the evidence. They say they are also liable, to the extent of about $520,000, jointly with a number of others on guarantees given in respect of the failed business the subject of these proceedings. While neither of the applicants has any long-standing link with Australia, both have been residents here for about five years. They have assets in Cairns in which they may have an equity of some value. They have apparently established a business in Sydney where they are now living. On the other hand, the level of their total indebtedness appears to be such as to suggest that it may well exceed the total amount of their own interests in the real estate they own in Cairns and Sydney. In response to an inquiry by me, the applicants, by their solicitor, have each offered an undertaking to the Court to provide, through their solicitors, 14 days' notice in writing to the solicitors for the second and third respondents, of any change of residential address and of any proposed journey overseas. In these circumstances, I am not prepared to draw any of the inferences suggested by the second and third respondents, including those set out in paragraphs (b) to (d) of their solicitor's letter of 28 April, 1995, although there is a question mark in my mind about their bona fides in mounting this action. This is created by the circumstances in which the action was commenced and to which I have referred and is reinforced, to an extent, by the form in which they have been content to leave their claim against the respondents until today. I propose, upon the undertakings proffered, to adjourn the application for security sine die. I will give liberty to the second and third respondents to bring it back on on three days' notice to the applicants if they are so advised. In view of the reasons I have given in which I comment on the limited links of the applicants with Australia and the other matters which tell, to a degree, against them but not to the extent of justifying an order for security, I propose to order that costs be reserved. I certify that this and the preceding seven pages are a true copy of the reasons for judgment herein of the Honourable Justice Drummond. Associate: Date: 9 May, 1995