District Court New South Wales Medium Neutral Citation: Biocare Global LLC v David Frederick Booth Willis t/as Augmented Creative Studio [2023] NSWDC 65 Hearing dates: 10 March 2023 Date of orders: 10 March 2023 Decision date: 10 March 2023 Jurisdiction: Civil Before: Montgomery DCJ Decision: (1) The Plaintiff to provide security for the Defendant's costs in the sum of $27,000 by payment into court within 28 days of 10 March 2023. (2) In the event of the Plaintiff failing to satisfy Order 1, the proceedings be stayed until security is provided. (3) These orders are to be revisited by the Court when the matter is set down for hearing or at such other time on application by either party by Notice of Motion supported by affidavit evidence. (4) I return the matter before the Judicial Registrar on 18 April 2023. Catchwords: CIVIL PROCEDURE — Interlocutory applications – Security for Costs – Foreign Corporate plaintiff – Uniform Civil Procedure Rules 2005 (NSW) r 42.21 – Costs of Application Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) r 42.21 Category: Procedural rulings Parties: Biocare Global LLC, Plaintiff/Respondent David Frederick Booth Willis t/as Augmented Creative Studio, Defendant/Applicant Representation: Counsel: Mr Macinnis, Counsel for the Plaintiff/Respondent Mr Kuklik, Counsel for the Defendant/Applicant Solicitors: StevensVuaran Lawyers, Solicitors for the Plaintiff/Respondent Nicholas George Lawyers, Solicitors for the Defendant/Applicant File Number(s): 2022/00257840 JUDGMENT EX TEMPORE ON SECURITY FOR COSTS 1. HIS HONOUR: Having had the benefit of submissions from Counsel, I am going to state very short reasons for the order which I have indicated I will come to. The case concerns the Plaintiff's purchase of gloves, which I understand to be medical gloves, from the Defendant. The Plaintiff is a corporation in Tucson, Arizona. The Defendant is an Australian citizen. For the purposes of Uniform Civil Procedure Rules 2005 (NSW) r 42.21 (UCPR), there is obvious significance in those facts. The principal document, so far as I understand it on so much of the case as is before me, is an invoice dated 27 May 2020 from the Defendant, Mr. Willis, to the Plaintiff. 2. Mr. Willis was trading by a business of the name Augmented Creative, it had an Australian Business Number which appears on the invoice, it's address was 70 Fernleigh Road, Caringbah, Sydney. The invoice bears both Australian and Philippines international coded phone numbers. The invoice was for the sum, which is the subject of this dispute, of $94,440 US dollars, and provided for the direct banking of that sum, which on the agreed facts did occur into the account of "Augmented Creative" at St George Bank, 346 Kingway, Caringbah, Sydney, New South Wales, Australia. 3. The invoice is signed at the end by the Defendant personally, below his name is an Australian mobile phone number. Emails in evidence and to which both parties referred, include those by Mr. Sutton, and his email describes himself as Chief Executive Officer, Tucson Screamers Inc. Slaughterhouse, Managing Partner, Apocalypse Global LLC, Apocalypse Zombie Experience, Managing Partner, Slaughterhouse Tucson LLC. In the submissions before me today, it has been acknowledged that Mr. Sutton is the principal individual behind the Plaintiff company. 4. At [18] of his affidavit made 9 March 2023, Mr Macinnis, Solicitor for the Plaintiff states, "I am informed by Mr. Bobby Sutton (who is a director of the Plaintiff)". It is claimed by Mr. Macinnis, on the basis of information and belief based on instructions from Mr. Sutton, that the Plaintiff company is impecunious. It is put in the affidavit that the subject business venture was its start up, and that with the loss of the $94,000 USD, its impecuniosity is the consequence of the Defendant's impugned actions, the subject of the proceedings. 5. Firstly, Mr. Macinnis concedes that from the affidavit, it having been served on the Defendant lawyers only yesterday, no inference is to arise which would be against the Defendant's interest. The Defendant has not had an opportunity to meet that which is stated. 6. The suggestion of stultifying the proceedings has two problems: * The lesser of them is that it is just blandly made without more real reasoning behind it than I just stated and is made at the 11th hour when there is no opportunity to check it. It is not made by deposition of Mr. Sutton himself, but rather through information and belief of the Plaintiff's Solicitor. * The more serious and obvious problem is that Mr. Sutton, as a director of the company and as a person who has described himself in the business dealings as I just took from his email, does not stand behind, and has not offered to do, the Plaintiff for the purposes of liability for costs in the event of a costs order adverse to the Plaintiff. 1. Indeed, issues could arise in terms of enforceability of an order, made in this jurisdiction, against Mr. Sutton or the Plaintiff company in Arizona, USA, but there is no contest about that, and I do not need to go further to it. 2. The reasons which I have so far stated classically place this litigation within the purpose of protection of a litigant, by order for security for costs under UCPR r 42.21. Indeed, it is conceded that the Plaintiff would be unable to pay a costs order in favour of the Defendant if ordered to do so. 3. I shouldn't leave this matter without observing what I referred to during argument as there being a "mystery" to the case. That was a reference to the transaction, the subject of the dispute. At this early stage, and the evidence, the mystery is as to what happened in the Philippines. Behind the contract, if made in Australia on the basis of the invoice to which I have referred in some detail and as I understand to be common ground but, in any event, as would be inferred from the affidavits, is the circumstance that the gloves were to be supplied in the Philippines. Whether or not that meant that property was to pass in the Philippines is a question to be determined on the evidence. 4. Mr. Kuklik raises that very nature of the case is to strongly suggest the risk of expensive obtaining of evidence and instructions from foreign jurisdictions. Indeed, there are some dealings from Hong Kong which might be relevant, but at this stage of contemplation of the exercise of discretion for the provision of costs, in my opinion, it is only fair to restrict oneself to that which is known about the case, and not to be concerned about that which I referred to as "perhaps ghosts in the cupboard", in the future preparation of the matter. The defence is quite detailed as to that arrangement of dealing through the Philippines and if it is not already apparent from that which I have said, this is not a case where there are extensive commercial documents and contracts in evidence, which at this stage would permit one to have an understanding of exactly the nature of what the dealing was. Indeed, the Defendant says that at the time of the transaction he was not ordinarily resident in New South Wales but was resident in the Philippines, whereas he was resident in New South Wales in months preceding and following the transaction. 5. At [4] and [5] of the defence, the Defendant denies that the Plaintiff was required to pay the amount of $94,440 US to the bank account specified in the invoice and at [5.5] says that: "at the plaintiff's request the defendant allowed the plaintiff to deposit the funds into the defendant's New South Wales bank account, to help facilitate the plaintiff's payment to the supplier of the goods and agreed to forward the payment less any bank fees and currency conversion charges to the supplier of the goods." 1. At [5.7] the Defendant denies that sending of the invoice was intended to create legal relations. 2. Mr. Macinnis for the Plaintiff says that his strongest point is questioning the merits of the defence. As I said, it is premature to determine such a question and that there is, at this preliminary stage, a mystery about what the case might evolve to be on the evidence. Only the evidence, one would think, will explain that mystery. 3. In my view, it is appropriate that a security for costs order be made and that it be made with a view that it be revisited when the proceedings are set down for hearing. I have considered the estimate of legal representatives for each of the parties as to the costs of the matter, and what they might be. On the whole of the evidence before me I have determined that an appropriate sum is $27,000. Mr. Macinnis suggested and Mr. Kuklik of Counsel for the Defendant did not resist that the order be in the usual form of payment into Court. I make the following orders: 1. The Plaintiff to provide security for the Defendant's costs in the sum of $27,000 by payment into Court within 28 days of today. 2. In the event of the Plaintiff failing to satisfy Order 1, the proceedings be stayed until security is provided. 3. These orders are to be revisited by the Court when the matter is set down for hearing, or at such other time on application by either party by notice of motion supported by affidavit. COSTS 1. HIS HONOUR: Thank you. Mr. Kuklik of Counsel for the Defendant seeks an order for costs following the event of the Defendant's success in obtaining security for costs. Although he did not say it, it is necessarily inferred that the Defendant is entitled to rely on the fact that since the filing of the Notice of Motion four months ago, the Plaintiff has not proffered security and that has necessitated the hearing today. 2. At the hearing today, Mr. Macinnis for the Plaintiff relied on a very efficient affidavit of his own, made 9 March 2023 in which the substantive matters of the impecuniosity of the Plaintiff, that it is a company in Tucson, Arizona, and that Mr. Sutton, the officer of his client does not personally proffer protection of the Defendant, in relation to costs. Indeed, the affidavit concedes that it may be difficult for the Defendant to recover costs in that jurisdiction by enforcement of an order made here. 3. It is put by Mr. Kuklik that the Plaintiff's opposition was against any nature of security for cost order. If that was the nature of the opposition pressed by Mr. Macinnis, it did not take much of the time of this hearing. Principally, what Mr. Macinnis pressed was as set out in [12]-[17] of his affidavit, that the amount sought in the Defendant's application was excessive, and also of that as he explained at [22]-[23] of his affidavit, the appropriate order would be that security costs be considered at this stage as if on a first tranche basis. 4. I have adopted the view that the case has the uncertainty about it at this early stage, such that I have, hopefully not disrespectfully, referred to as having some mystery. I have explained what I meant by that. Of course, the defendant has done the appropriate thing in making the application for security at an early stage. I am of the view that the appropriate order is that the costs of the notice of motion be costs in the cause. ORDERS: 1. The Plaintiff to provide security for the Defendant's costs in the sum of $27,000 by payment into court within 28 days of 10 March 2023. 2. In the event of the Plaintiff failing to satisfy Order 1, the proceedings be stayed until security is provided. 3. These orders are to be revisited by the Court when the matter is set down for hearing or at such other time on application by either party by Notice of Motion supported by affidavit evidence. 4. I return the matter before the Judicial Registrar on 18 April 2023. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 March 2023