FEDERAL COURT OF AUSTRALIA Ample Source International Limited v Bonython Metals Group Pty Limited; In the Matter of Bonython Metals Group Pty Limited (No 3) [2011] FCA 435 Citation: Ample Source International Limited v Bonython Metals Group Pty Limited; In the Matter of Bonython Metals Group Pty Limited (No 3) [2011] FCA 435 Parties: AMPLE SOURCE INTERNATIONAL LIMITED (BVICN 1575638) v BONYTHON METALS GROUP PTY LIMITED (ACN 141 257 294), JOHN HILLAM, CFM MEDIA HOLDINGS PTY LIMITED (ACN 143 465 909), SARABOL TEERANUKUL and WENTWORTH METAL GROUP PTY LIMITED (ACN 139 532 719); IN THE MATTER OF BONYTHON METALS GROUP PTY LIMITED (ACN 141 257 294) File number: NSD 1784 of 2010 Judge: FOSTER J Date of judgment: 2 May 2011 Date of hearing: 2 May 2011 Place: Sydney Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 18 Counsel for the Plaintiff: Mr JC Giles, Ms JE Maconachie Solicitor for the Plaintiff: DibbsBarker Solicitor for the First Defendant: The First Defendant submitted save as to costs Counsel for the Second to Fifth Defendants: Mr F Kunc SC, Mr A Shearer Solicitor for the Second to Fifth Defendants: Allsop Glover IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1784 of 2010 IN THE MATTER OF BONYTHON METALS GROUP PTY LIMITED (ACN 141 257 294) BETWEEN: AMPLE SOURCE INTERNATIONAL LIMITED (BVICN 1575638) Plaintiff/First Cross-Defendant AND: BONYTHON METALS GROUP PTY LIMITED (ACN 141 257 294) First Defendant/Second Cross-Defendant JOHN HILLAM Second Defendant/First Cross-Claimant CFM MEDIA HOLDINGS PTY LIMITED (ACN 143 465 909) Third Defendant SARABOL TEERANUKUL Fourth Defendant/Second Cross-Claimant WENTWORTH METAL GROUP PTY LIMITED (ACN 139 532 719) Fifth Defendant JUDGE: FOSTER J DATE OF ORDER: 2 MAY 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The plaintiff provide security for the costs of the second, third, fourth and fifth defendants (the secured defendants) of and incidental to this proceeding in the sum of $390,000. 2. The said security be provided on or before 24 May 2011 by providing to the solicitors for the secured defendants the original of a Guarantee or Letter of Credit from an Australian bank in favour of the secured defendants containing terms to the effect that: (a) The amount secured be in respect of costs which the plaintiff agrees or is ordered to pay to any of the secured defendants in respect of their costs incurred in the proceeding up to a maximum amount of $390,000 (including interest) (Costs); and (b) Any of the secured defendants be entitled to call upon the said security upon presentation to the bank of evidence of an agreement between the plaintiff and any of the secured defendants as to the amount payable by the plaintiff in respect of Costs (such evidence including, without limitation, an exchange of correspondence between those parties or their solicitors) or an entered order of the Court in respect of Costs together with, if costs are to be assessed, a Certificate of Taxation, on terms that any such call can be made without prior reference to or demand being made of the plaintiff for those Costs, and otherwise in such terms as the parties may agree (or in default of agreement in a form satisfactory to the Registrar of the Court). 3. If security is not provided in accordance with Order 2 above, then: (a) The claims the subject of the Amended Originating Process and the Statement of Claim be stayed until further order; and (b) The parties have liberty to apply on 24 hours' notice. 4. The plaintiff pay the costs of the secured defendants of and incidental to the Notice of Motion filed by them on 12 April 2011. 5. The plaintiff's Notice of Motion filed on 21 April 2011 in which the plaintiff seeks to set aside parts of the secured defendants' Notice to Produce filed on 12 April 2011 be dismissed. 6. The plaintiff pay the secured defendants' costs of and incidental to the Notice of Motion referred to in Order 5 above. 7. The plaintiff's Notice of Motion filed on 8 March 2011 in relation to contempt of Court allegedly committed by the second and third defendants be dismissed. 8. The plaintiff's costs of the Notice of Motion referred to in Order 7 above be the plaintiff's costs in the proceeding. 9. The proceeding be listed at 9.30 am on Thursday, 5 May 2011 for further directions in relation to discovery and generally. 10. The parties have liberty to apply generally on two days' notice or on such shorter notice as may be allowed by a judge of the Court. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION NSD 1784 of 2010 IN THE MATTER OF BONYTHON METALS GROUP PTY LIMITED (ACN 141 257 294) BETWEEN: AMPLE SOURCE INTERNATIONAL LIMITED (BVICN 1575638) Plaintiff/First Cross-Defendant AND: BONYTHON METALS GROUP PTY LIMITED (ACN 141 257 294) First Defendant/Second Cross-Defendant JOHN HILLAM Second Defendant/First Cross-Claimant CFM MEDIA HOLDINGS PTY LIMITED (ACN 143 465 909) Third Defendant SARABOL TEERANUKUL Fourth Defendant/Second Cross-Claimant WENTWORTH METAL GROUP PTY LIMITED (ACN 139 532 719) Fifth Defendant JUDGE: FOSTER J DATE: 2 MAY 2011 PLACE: SYDNEY REASONS FOR JUDGMENT 1 There are before me today three Notices of Motion: The first is a Notice of Motion filed on 8 March 2011 by which the plaintiff seeks orders punishing the first and second defendants for contempt of Court by reason of non-compliance by them with orders of the Court; the second is a Notice of Motion filed on 12 April 2011 whereby the second to fifth defendants seek security for their costs of the proceeding; and the third is a Notice of Motion filed on 21 April 2011 whereby the plaintiff seeks to set aside a Notice to Produce dated and filed on 12 April by which the second to fifth defendants require production of various documents said to be relevant to the disposition of their security for costs Motion. 2 In addition to the Notices of Motion which I have identified, I have been asked to maintain the present listing throughout the day so that the time can be deployed by the legal representatives of the parties to finalise categories for discovery and any other matters requiring directions. These matters are not the subject of any formal Notice of Motion but they are, in effect, before me today. 3 I will deal with each of these matters in turn. 4 The Notice of Motion for security for costs was filed on 12 April 2011. It was supported by several affidavits which have not been read because the Motion has now been substantially resolved by the parties. The plaintiff has agreed to provide security for the costs of the second to fifth defendants but agreement has not been reached on all of the terms upon which that security is to be provided. 5 The amount of security sought by the second to fifth defendants in their Notice of Motion was $450,000. The parties have agreed that an amount of $390,000 should be provided. That amount is intended to secure the costs of the second to fifth defendants up to the end of the trial. 6 In addition to agreement on the amount to be provided by way of security, certain other matters are agreed. Unfortunately, several matters remain in dispute. Working off a version of the proposed orders which has been provided to me by Senior Counsel for the second to fifth defendants, which I shall mark as Exhibit A in the Security for Costs Motion, the matters which are agreed are the following: Paragraph 1 and the substance of paragraph 2(b). 7 The matters in dispute, working through that version, are the following: First, the plaintiff informs me that it requires 21 days within which to provide the agreed amount of security. The second to fifth defendants submit that that period of time is far too long, having regard to the history of the matter and the inference that I should draw that those who stand behind the plaintiff are well able to procure cash funds more quickly than that. The second to fifth defendants submit that I should order that the whole amount of the security be provided within seven days or, in the alternative, that an amount of cash be put up within seven days and that the balance be provided within 21 days by way of Letter of Credit or bank guarantee. 8 The plaintiff stressed that it is simply unable to provide the agreed amount of security any more quickly than within the 21 day period which its Counsel informed me was required. The second to fifth defendants did not raise the question of security until 15 March 2011. This was almost three months after the proceeding was commenced. This delay can be explained to some extent by the fact that the defendants had to deal with several interlocutory applications made by the plaintiff on short notice and also by the fact that, from time to time in the period between 20 December 2010 and 15 March 2011, the parties made several attempts to resolve the disputes between them by mediation and other means but were unsuccessful in their efforts to do so. Also, the defendants submitted that, in the next three weeks, they will be required to spend significant amounts on costs which may turn out to be wasted, if security is not provided as ordered. 9 Balancing these considerations, I am of the view that I should allow the 21 day period sought by the plaintiff, primarily because I am reluctant to order the plaintiff to do something which it frankly says it cannot do in circumstances where the factors favouring a tighter timetable for the provision of security are not particularly weighty. 10 The second to fifth defendants also seek a self-executing order to the effect that, in the event that the plaintiff defaults in providing the necessary security, the proceeding should stand dismissed with the consequence that the undertakings previously given by the defendants to the Court would be discharged. I am not prepared to make such an order at this point in time. However, I propose to make an order that, in the event that security is not provided within 21 days, the proceeding will be stayed. In order to ensure that the second to fifth defendants are not disadvantaged any more than absolutely necessary, I will provide in the orders that there be liberty to apply on 24 hours' notice. What I have in mind there is that, in addition to any other reason for an application to be made to the Court, if the security is not provided within the timeframe ordered by me, the defendants will be free to come back to the Court seeking an order for dismissal as soon after the expiration of the 21 day period as they may choose. 11 The next point which arises is that the plaintiff wishes to confine the defendants in terms of the costs which are to be secured by the amount ordered to be provided, to costs incurred after 15 March 2011 when the demand for security was first made. This case has moved very quickly and the defendants have had to meet a number of applications on short notice and to comply with various orders of the Court made on an urgent basis. It seems to me that it would not be fair, in the exercise of the Court's discretion, to confine artificially the costs which are the subject of the security to those costs which are incurred after a certain date (viz 15 March 2011). Implicit in the plaintiff's position is the recognition of the fact, which I think is correct, that past costs can be included within those costs which can be secured and there is no reason why, in the circumstances of this case, past costs should not be so included. If that be right, then I do not think that selecting 15 March 2011 as an arbitrary date before which costs actually incurred cannot be secured would be an appropriate exercise of the Court's discretion. For that reason, I would not be disposed to include the date 15 March 2011 within the orders which I propose to make. 12 The next point concerns the terms upon which the security is to be provided. The difference of opinion here may be shortly stated: The second to fifth defendants wish to have the entitlement to draw down on the banking instrument by which security is provided by providing to the bank evidence of an agreement between the parties to the effect that they may do so or by providing appropriate orders of the Court authorising them to do so whereas the plaintiff submitted that, if an agreement is to be relied upon, a formal written agreement should be required. I think that the approach of the second to fifth defendants is satisfactory and, therefore, I propose to reflect the language of their draft in the orders which I will make. 13 The next point is the costs of the security for costs Motion. This is a matter which calls for the exercise of a discretion by the Court. The Notice of Motion was filed on 12 April 2011. Affidavits were subsequently filed. The plaintiff did not agree to provide any security until very recently. The terms upon which security is to be provided remained in dispute to some extent as late as this morning, when the matter was called on for hearing. I think that the plaintiff should pay the costs of the second to fifth defendants of the security for costs Motion. I will make an order to that effect. 14 The next point is the costs of the Motion seeking to set aside the Notice to Produce. The parties have agreed that that Motion should be dismissed. I will make an order dismissing that Motion. I think that the plaintiff should pay the second to fifth defendants' costs of that Motion. It seems to me that, in effect, notwithstanding the submissions of Counsel for the plaintiff, the costs of the Motion to set aside the Notice to Produce should be resolved in the same way as the costs of the security for costs Motion. 15 There remains the question of the costs of the contempt Motion. Mr Kunc SC has submitted to me that I should not embark upon an inquiry as to the merits of that Motion in order to determine the question of costs. He has informed me, and I understand it to be the fact, that his clients provided information and documentation to the solicitors for the plaintiff in the context of the complaints which the plaintiff made in that Notice of Motion. It does seem that, by bringing the contempt Motion, the plaintiff eventually secured compliance with what it alleged were the requirements of certain orders of the Court. 16 I do not propose to investigate the merits of that Motion any further than I have just outlined. However, I think that the fair order in respect of costs of that Motion is that those costs be the plaintiff's costs in the proceeding. I will make an order to that effect. 17 As far as the question of categories for discovery is concerned, I propose to list the matter (provisionally) for directions on Thursday, 5 May 2011 at 9.30 am before me in order to resolve any outstanding matters concerning discovery. At that time, I will also make any other directions that may be required. If that listing is not required, I ask the parties to let my Associate know and I will remove the matter from the list. 18 There will be orders accordingly. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. Associate: Dated: 4 May 2011