Supreme Court New South Wales Medium Neutral Citation: Metro Environmental Logistics Pty Ltd v Newcastle Port Corporation (No 6) [2024] NSWSC 958 Hearing dates: On the papers; written submissions 2 August 2024 Decision date: 05 August 2024 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Undertakings proffered by shareholders of plaintiff not accepted Catchwords: COSTS – security for costs – order for security declined on basis including that certain corporate shareholders give undertakings concerning defendant's costs to the same effect as proffered by individuals standing behind such shareholders – where those shareholders seek to introduce carve outs to proposed undertakings – where court invited to determine what undertakings should be given Cases Cited: Metro Environmental Logistics Pty Ltd v Newcastle Port Corporation (No 5) [2024] NSWSC 714 Category: Procedural rulings Parties: Metro Environmental Logistics Pty Ltd (Plaintiff/Respondent) Newcastle Port Corporation trading as Port Authority of New South Wales (Defendant/Applicant) Representation: Counsel: S T White SC / D Tynan (Plaintiff/Respondent) J A Hogan-Doran SC / A A Cameron (Defendant/Applicant) Solicitors: McCullough Robertson Lawyers (Plaintiff/Respondent) HWL Ebsworth Lawyers (Defendant/Applicant) File Number(s): 2022/101288 JUDGMENT 1. The background to this matter is set out in my earlier judgments, particularly that of 13 June 2024, [1] in which I refused Port Authority's application that MEL provide security for costs. 2. The matter has since been set down for hearing for 40 days, commencing on 4 August 2025. 3. One matter that I took into account in declining to order security was the proffering of undertakings by two of MEL's ultimate shareholders, Mr Ellis and Mr Deane, to pay Port Authority's costs in the event that it is ultimately successful. 4. Mr Ellis's and Mr Deane's undertakings include an undertaking that they will: "… not take any step to dissipate my assets outside of my ordinary business activities, customary expenditure and existing liabilities and commitment until the later of either the conclusion of these Proceedings or the fulfilment of my obligations under the undertaking [to pay Port Authority's costs]." 1. In my 13 June 2024 judgment I noted that MEL had indicated that companies associated with Mr Ellis and Mr Deane, Jetset Properties Pty Ltd and Cereo Pty Ltd, "will also give undertakings to the same effect". [2] 2. I discussed the nature of the undertakings proposed to be given in my earlier judgment and concluded that the value of those undertakings was "at best uncertain" but that the willingness of the appropriate parties to give the undertaking was a factor to be taken into account in exercising the discretion to order security. [3] 3. I said that Jetset and Cereo would give undertakings "to the same effect" as those given by Mr Ellis and Mr Deane because, in its written submissions, MEL said that the issues that Port Authority had raised in respect of the undertakings proffered by Mr Ellis and Mr Deane "can be remedied by Jetset and Cereo becoming parties to the undertaking" and by Mr White SC, who appeared with Mr Tynan for MEL, confirming during oral submissions that Jetset and Cereo "if it be desirable" could be "joined as part of that offering" and that those companies "will join in that undertaking". 4. There is now dispute between the parties as to the form of the undertakings to be given by Jetset and Cereo. 5. Jetset seeks to carve out from the undertaking: "… distributions for ordinary living expenses of Luke Anthony Deane and the transfer, sale, mortgage or other encumbrance of the shares which Jetset holds in North Scottsdale Resources Pty Limited for value for the purpose of distributing the proceeds: a. to pay the ordinary living expenses of Luke Anthony Deane; b. to fund these Proceedings; c. to fund in the ordinary course of business the development of a sand mine to be located at Rushy Lagoon in Tasmania by North Scottsdale Resources Pty Limited; or d. to fund in the ordinary course of business the development of a prospective calcium carbonate mine to be located in Lansak, Uthaithani, Thailand by Leader Minerals Limited and Newport Minerals (Thailand) Limited." 1. Cereo seeks to carve out from the undertaking: "…other than distributions for ordinary living expenses of Anthony Winthrop Ellis and the transfer, sale, mortgage or other encumbrance of the shares which Cereo holds in North Scottsdale Resources Pty Limited for the value of the purpose of distributing the proceeds: a. to pay the ordinary living expenses of Anthony Winthrop Ellis; b. to fund these Proceedings; or c. to fund in the ordinary course of business the development of a sand mine to be located at Rushy Lagoon in Tasmania by North Scottsdale Resources Pty Limited." 1. Both Jetset and Cereo also seek to delete from the form of undertaking proposed by Port Authority an undertaking not to cause its shares in North Scottsdale Resources Pty Ltd ("NSR") [4] to be transferred, sold, mortgaged or otherwise encumbered without giving 28 days' notice to Port Authority. 2. These proposed carve outs would have the effect that the undertakings to be given by Jetset and Cereo would not be "to the same effect" as those given by Mr Ellis and Mr Deane. 3. Further, as Port Authority has pointed out, there is no evidence about the ordinary business of either Jetset or Cereo which would support such carve outs. 4. In particular, there is no evidence that funding the ordinary living expenses of Mr Ellis and Mr Deane would fall within the ordinary business of either Jetset or Cereo. Indeed, on the application before me, it was the evidence of Mr Ellis that Cereo's "sole purpose is to hold shares in MEL and NSR", and Mr Deane's evidence was this his "living expenses" for the "foreseeable future" would be paid from the income from Telmen Holdings Pty Ltd, [5] and not from Jetset. 5. There is also no evidence that the costs of funding these proceedings would fall within the ordinary business of either Jetset or Cereo. The evidence before me was that Cereo's sole purpose was to hold shares. Mr Deane's evidence before me was that he had no funds available, through Jetset or otherwise, to meet the future costs of these proceedings. 6. Further, as Port Authority has pointed out, the implicit suggestion in the carve outs is that the NSR shares could be transferred, sold, mortgaged or encumbered to provide funding for the litigation. This appears to be inconsistent with MEL's submissions before me on the security for costs application which were to the effect that the NSR shares could not be offered "as collateral to obtain security for Port Authority's costs of these proceedings". This was a central plank of MEL's stultification argument. 7. In those circumstances, I am not prepared to accept undertakings from Jetset and Cereo with the carve outs proposed. ********** Endnotes 1. Metro Environmental Logistics Pty Ltd v Newcastle Port Corporation (No 5) [2024] NSWSC 714. 2. At [83]. 3. At [82]-[97]. 4. Referred to at [87] and [91] of my 13 June 2024 judgment. 5. See [94] of my 13 June 2024 judgment. 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: 05 August 2024