FEDERAL COURT OF AUSTRALIA Ambergate Limited v CMA Corporation Limited (Administrators Appointed) [2014] FCA 948 Citation: Ambergate Limited v CMA Corporation Limited (Administrators Appointed) [2014] FCA 948 Parties: AMBERGATE LIMITED (NZ COMPANY NUMBER 963855) v CMA CORPORATION LIMITED (ABN 40 113 329 016) (ADMINISTRATORS APPOINTED), TREVOR SCHMITT and DOUGLAS ROWE File number(s): NSD 939 of 2013 Judge(s): BUCHANAN J Date of judgment: 2 September 2014 Catchwords: PRACTICE AND PROCEDURE – security for costs – where applicant is a foreign corporation incorporated in New Zealand – where no evidence of assets in Australia or New Zealand – whether security for costs should be awarded Legislation: Federal Court of Australia Act 1976 (Cth), s 56 Federal Court Rules 2011 (Cth), r 19.01(1)(b) Cases cited: Berry v Innovia Security Pty Ltd [2014] FCA 357 Date of hearing: 2 September 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 15 Counsel for the Applicant: Mr J Emmett Solicitor for the Applicant: Garland Hawthorne Brahe Counsel for the Second Respondent: Mr T M Faulkner Solicitor for the Second Respondent Toomey Pegg Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 939 of 2013 BETWEEN: AMBERGATE LIMITED (NZ COMPANY NUMBER 963855) Applicant AND: CMA CORPORATION LIMITED (ABN 40 113 329 016) (ADMINISTRATORS APPOINTED) First Respondent TREVOR SCHMITT Second Respondent DOUGLAS ROWE Third Respondent JUDGE: BUCHANAN J DATE OF ORDER: 2 SEPTEMBER 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to s 56 of the Federal Court of Australia Act 1976 (Cth), the applicant is to give security for the payment of the second respondent's costs of the proceeding that may be awarded against it in the amount of $150,000 ("the Security") by payment into Court of the Security by the following four instalments: (a) $25,000 within 30 days; (b) $50,000 by the date by which the applicant is required to file and serve its evidence in chief; (c) $25,000 by the date by which the applicant is required to file and serve its evidence in reply; and (d) $50,000 no later than 60 days before the trial date. 2. Pursuant to r 19.01(1)(b) of the Federal Court Rules 2011 (Cth), the applicant's proceeding be stayed until payment of the first instalment of the Security referred to in order 1(a) above. 3. The applicant pay the second respondent's costs of and incidental to the interlocutory application so far as it relates to security for costs. 4. The matter be listed for further directions at 9.30 am on Friday, 10 October 2014. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 939 of 2013 BETWEEN: AMBERGATE LIMITED (NZ COMPANY NUMBER 963855) Applicant AND: CMA CORPORATION LIMITED (ABN 40 113 329 016) (ADMINISTRATORS APPOINTED) First Respondent TREVOR SCHMITT Second Respondent DOUGLAS ROWE Third Respondent JUDGE: BUCHANAN J DATE: 2 SEPTEMBER 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The second respondent has sought an order for security for costs. The order is opposed. I have decided that the second respondent is entitled to an order for security for costs in the sum which he seeks and pursuant to the regime which he proposes, save that the first instalment is to be paid within 30 days not 14 days as sought by the interlocutory application filed 17 April 2014. I will return to the detail of the orders to be made in due course. 2 The proceedings were commenced by application and statement of claim against the first respondent on 28 May 2013. The matter is not proceeding against the first respondent (which is in administration) but the second and third respondents have been joined to the proceedings. 3 The applicant is a foreign corporation. It is incorporated in New Zealand. It is common ground that the applicant has no assets in Australia. There is no evidence at all of whether the applicant has assets in New Zealand and, if so, what those assets might be. Those are matters which it was within the capacity of the applicant to address and I must assume that it has elected not to do so. 4 Although Mr Emmett, who appeared for the applicant, stated a number of reasons why it was neither necessary nor appropriate in the present case to make any order for security for costs, the position appears to me to fall clearly within the principles which I discussed in Berry v Innovia Security Pty Ltd [2014] FCA 357 and, in particular, within the general principle identified at [34] in these terms: … A foreign applicant with no assets in Australia should normally expect to provide some security for costs if requested to do so. The amount of the security which is appropriate will depend on all the circumstances. A foreign applicant bears a practical onus of showing that the party seeking security will not be unreasonably disadvantaged if a costs order is made against the foreign applicant. 5 No attempt has been made in the present case to discharge that practical onus. 6 Both the applicant and the second respondent relied upon affidavits sworn by the solicitors who act for them which provided an estimate of the likely costs of the proceedings. Those affidavits were sworn by Mr Andrew Loel and Mr Brenden Miller. Each of them addressed the question of the likely costs of the proceedings, bearing in mind the same likely procedural steps in the proceedings and on the basis of an estimate of a five day trial. They differed in their estimates and calculations in one important respect. 7 Mr Loel's calculations were based upon charge out rates used in his firm, Toomey Pegg Lawyers. Mr Miller did not dispute these as inappropriate. The major difference between them was that Mr Miller confined the level of involvement of an instructing solicitor with carriage of the matter to 6.5 hours on each day of trial preparation and each day of trial, an estimate which Mr Faulkner, who appeared for the second respondent on the present application, described as "manifestly inadequate." 8 Mr Loel's calculations involved making an allowance on taxation of 55 to 75 per cent of solicitor/client costs to be awarded as party/party costs. His calculations produced an estimate of a range of $140,000 to about $190,000 in legal costs for the second respondent plus GST. Mr Miller assumed that 70 per cent of solicitor/client costs would be allowed as party/party costs on taxation. His calculations produced an estimate of a little under $115,000 inclusive of GST. 9 In the circumstances of the present matter, I am not satisfied that Mr Loel's estimates should not be accepted. In particular, I am not persuaded that I should take the view at this point that only 6.5 hours per day will be necessary or reasonable in the context of the present matter. 10 I am satisfied that the amount sought of $150,000 falls comfortably within a responsible range and I note that it would incorporate security for any additional amount (which Mr Miller estimated at around $5000) to enforce a judgment in New Zealand, if necessary. 11 The second respondent proposed that security for costs should be provided in stages and although there was debate about the amount to be provided at particular stages (reflecting the debate about the quantum of security overall), there was no serious dispute about the appropriateness of the stages proposed, save that the applicant sought that 30 days, rather than 14 days, be allowed for the first payment to be made. 12 The second respondent proposed that the proceedings be stayed until payment of the first instalment. Although there was some debate about that proposal, I am satisfied that it is appropriate. 13 The second respondent proposed that the proceeding would be dismissed automatically if any instalment due was not paid on the day after its due date. I am not prepared to make such an order at the present time. First, if security commenced to be paid and then there was a failure, that would seem to me not to be a satisfactory outcome without some further examination of the position. Secondly, I do not at the moment think I should cast the burden upon the applicant to excuse itself rather than upon the second respondent to seek some further sanction if there is a failure to provide security at any particular stage. The way in which any such failure should be addressed would require assessment in the light of the circumstances at the time and the explanations which were given. 14 The second respondent has sought costs of and incidental to the interlocutory application so far as it relates to security for costs and I am satisfied that such an order should be made. 15 Accordingly, I make the following orders: 1. Pursuant to s 56 of the Federal Court of Australia Act 1976 (Cth), the applicant is to give security for the payment of the second respondent's costs of the proceeding that may be awarded against it in the amount of $150,000 ("the Security") by payment into Court of the Security by the following four instalments: (a) $25,000 within 30 days; (b) $50,000 by the date by which the applicant is required to file and serve its evidence in chief; (c) $25,000 by the date by which the applicant is required to file and serve its evidence in reply; and (d) $50,000 no later than 60 days before the trial date. 2. Pursuant to r 19.01(1)(b) of the Federal Court Rules 2011 (Cth), the applicant's proceeding be stayed until payment of the first instalment of the Security referred to in order 1(a) above. 3. The applicant pay the second respondent's costs of and incidental to the interlocutory application so far as it relates to security for costs. 4. The matter be listed for further directions at 9.30 am on Friday, 10 October 2014. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. Associate: Dated: 4 September 2014