MCDS Group Nominees Pty Ltd v Angas Securities Ltd [2020] NSWSC 814

Supreme Court New South Wales

Medium Neutral Citation: MCDS Group Nominees Pty Ltd v Angas Securities Ltd [2020] NSWSC 814 Hearing dates: On the papers Date of orders: 6 April 2020 Decision date: 06 April 2020 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Plaintiff to provide further security for costs. Legislation Cited: Corporations Act 2001 (Cth) Category: Procedural and other rulings Parties: MCDS Group Nominees Pty Ltd (First Plaintiff) Angas Securities Ltd (First Defendant) Stephen James Duncan and Christopher Robert Powell t/as Korda Mentha through Korda Mentha (SA & NT) Pty Ltd (Second Defendant) Representation: Solicitors: Essey Legal (Plaintiff) Lynch Meyer Lawyers (Defendants) File Number(s): 2016/193433

Judgment 1. These proceedings were commenced in 2016 and have been in the Commercial List since 2019. 2. Little has been achieved. The pleadings have closed and the defendants have given discovery. 3. The plaintiff was a property investor and developer. The first defendant was its financier. The second defendants are receivers appointed by the first defendant to the plaintiff's property. The plaintiff alleges that the first defendant breached the terms of the relevant mortgage debenture and that the second defendants realised certain property at an undervalue in breach of s 420A of the Corporations Act 2001 (Cth). 4. The issues for determination in the proceedings are of significant scope and call for a range of lay and expert evidence. 5. On 6 December 2019, Ball J directed the plaintiff to notify the expertise and topics of proposed expert evidence by 31 January 2020 and to serve its lay and expert evidence by 28 February 2020. 6. The plaintiff has not complied with those orders. 7. Very recently, it retained fresh solicitors; the fifth so far in the proceedings. 8. On 25 November 2016, when the matter was in the General List, Rein J ordered that the plaintiff provide security for the defendants' costs in the sum of $305,000 by 23 December 2016, failing which the proceedings be stayed. 9. The plaintiff finally paid security into Court a year later, on 20 December 2017, and then took no further steps in the proceedings. 10. On 14 June 2013, the first defendant sought an order that part of that fund be paid out of Court in satisfaction of its assessed costs to date. Ultimately, on 12 July 2019, and by consent, $128,226.24 was paid out of Court to the first defendant. That left $176,773.26 in Court to the credit of the action. 11. Now, by Notice of Motion filed on 3 March 2020, the defendants seek further security for their costs in the sum of $524,439.74 being the difference between the defendants' solicitor's estimate of the defendants' recoverable past and future costs, a total of $814,519.00, and the funds still in Court. 12. The plaintiff's recently appointed solicitor, Mr Essey, sought an adjournment of this motion for three weeks so that the plaintiff can continue "negotiating with a company that specialises in funding medical negligence claims and operates in the health care field, but is now eager to fund a commercial litigation matter of this nature." 13. I am not prepared to adjourn the motion for this purpose. 14. There is no doubt that the plaintiff is impecunious and could not meet an adverse costs order. 15. Mr Essey accepted, indeed asserted, this. Thus he submitted that "most of the delay in this matter has been foisted upon the plaintiff through their own impecuniosity." 16. Nor did Mr Essey cavil with the defendants' solicitors' costs estimates. 17. Instead he submitted: "By any measure, more than adequate security is currently held to protect the Defendant's exposure to costs, at least in any reasonable medium-term view of these proceedings. Further, this security is not merely nominal or theoretical in notion, as the Defendants have already been availed of the benefit of such security and have not been left unreasonably out of pocket on their costs to date. This is even more remarkable when viewed through the prism of an impecunious plaintiff. The Plaintiff accordingly submits that any order for further security against the Plaintiff's interests would unfairly penalise the Plaintiff and would act as an unreasonable impediment to the Plaintiff's just and diligent prosecution of the claim against the Defendants. Indeed, it is the Plaintiff's earnest submission that the Defendant's motion is being pursued as a cudgel to bludgeon the Plaintiff's claim into harmless submission and should be viewed in this unfavourable light." 1. I do not accept those submissions. 2. The defendants do not hold adequate security to protect their exposure as to costs. 3. And I do not accept the defendants are seeking to "bludgeon the Plaintiff's claim into harmless submission." Rather the defendants are bringing a perfectly understandable and proper application to seek to protect their position. The submission should not have been made. 4. If it turns out that the plaintiff's pursuit of litigation funding is successful then the order I propose now to make will doubtless be complied with and the litigation can continue. 5. I make the following orders: 1. The plaintiff to give security in respect of the defendants' costs in the proceedings in the sum of $524,439.74 ("Security Amount") by payment of the Security Amount into Court within 21 days of the granting of these orders. 2. In the event that the Security Amount is not paid in accordance with Order 1, the proceedings are stayed until the Security Amount is paid. 3. The plaintiff pay the defendants' costs in respect of the Notice of Motion filed on 3 March 2020. 4. The parties have liberty to apply on 3 days' notice. 5. I stand the matter over for directions to 8 May 2020.