Vicland Live Animals -v- Wexco Airfreight [2001] NSWSC 282

New South Wales Supreme Court

CITATION : Vicland Live Animals -v- Wexco Airfreight [2001] NSWSC 282 CURRENT JURISDICTION: Equity Division Commercial List FILE NUMBER(S) : SC 50088/99 HEARING DATE(S) : 11.5.01 JUDGMENT DATE : 17 May 2001

PARTIES : Vicland Live Animals Pty Ltd -v- Wexco Airfreight (Australia) Pty Limited & Ors JUDGMENT OF : Hunter J

COUNSEL : Applicant/Second Defendant: G Nell Respondent/Plaintiff: M Hadley SOLICITORS : Applicant/ Second Defendant: Phillips Fox Respondent/Plaintiff: Andrew P Quigley & Co CATCHWORDS : Practice & procedure - security for costs - plaintiff unable to meet order for security - whether plaintiff's impecuniosity result of defendant's conduct - capacity to meet order by persons gaining from plaintiff's success - delay in application - whether order should be limited to future costs. CASES CITED : Bell Wholesale Co Ltd -v- Gates Export Corporation (1984) 2 FCR 1 DECISION : Plaintiff to provide security in the sum of $40,000 in the form of a bank guarantee or payment into Court. Costs of the application be costs in the proceedings.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST HUNTER J THURSDAY 17 MAY 2001

50088/99 VICLAND LIVE ANIMALS PTY LTD -v- WEXCO AIRFREIGHT (AUSTRALIA) PTY LTD & ORS REASONS FOR JUDGMENT

1 This is an application for security for costs by notice of motion filed 26 April 2001. This is the second such application in these proceedings, the history of which bears some comment upon as I think it has a bearing on the appropriate approach to this application. 2 The proceedings were first instituted in the Court in its Common Law Division in 1997 and was transferred to the Commercial List by order of Rolfe J of 9 July 1999. At that time, motions for security for costs by the first and second defendants were outstanding. Those motions were dismissed after a hearing on the merits on 23 July 1999. 3 The basis upon which those motions were dismissed was expressed in His Honour's reasons for judgment as follows: "There is, through the evidence, some indication that the plaintiff may be suffering some financial difficulties or may have suffered from some financial difficulties. On the other hand, there is, through the evidence, an indication that it has been able to overcome these financial difficulties and, particularly, there is evidence from Mr Luxford that on 7 April 1999 a notification was filed of the withdrawal of an application to wind up the plaintiff, which, at least prima facie, would seem to indicate that the plaintiff had overcome whatever that problem was. The basic difficulty which, in my opinion, the present applications face is that there is no evidence before me on the basis of which I could be satisfied that the plaintiff is not likely to be able to pay the amount of costs, if ordered to do so. In this case no evidence has been placed before me about the financial position of the plaintiff, save that it is what is referred to as a two dollar company, meaning thereby that it is a company which has issued two shares of $1 each and that it has not filed annual returns since for the financial year ended 30 June 1996. However, that material is equivocal. The fact that it is a company with only two issued shares of $1 each in itself seems to me inconsequential, and the fact that it has not filed returns may mean it is in breach of some requirements of the Corporations Law, but does not indicate the matters necessary to satisfy me that an order for security for costs should be made. More importantly, there has been no attempt made to obtain financial information from the plaintiff, either by requesting it, in the first instance, which would be the normal course, or by subpoenaing it in the event of its not being supplied pursuant to a request. Further, there is no inference open, from the failure to provide financial information pursuant to a request, that there is some financial problem. There is a suggestion in the correspondence that security for costs may be considered by the plaintiff, and in particular, in the letter of 24 June 1999, which is annexure M to Mr Luxford's affidavit of 29 June 1999, the solicitors for the plaintiff set out the position of the second defendant and state that the plaintiff's solicitors are seeking their client's instructions in that regard. Earlier correspondence denied any entitlement to security either on the basis of lack or funds and, further, on discretionary grounds. At the moment I am not satisfied that the defendants have established the matters necessary to found an order for security for costs. I propose, in those circumstances, that the Notice of Motion be dismissed." 4 One may infer from those reasons for judgment that the first and second defendants had failed to require the production of financial records upon which to ground findings of impecuniosity of the plaintiff or of the capacity of those with vested interests in the plaintiff to comply with an appropriate order for security. 5 Several directions hearings in the proceedings took place thereafter. On 20 August 1999 directions were given providing for an amendment to the summons, the provision of particulars and the filing of defences and cross claims together with discovery and inspection of documents, all of which took preparatory steps to hearing up to December 1999. 6 On 10 December 1999 further directions were given requiring the provision of particulars by the plaintiff of its amended summons together with directions as to pleadings and discovery. 7 On 18 February 2000 directions were given requiring the plaintiff to provide particulars and on 25 February 2000, the plaintiff was granted leave to further amend its summons to join the third and fourth defendants. Directions were also given for the return of a notice of motion by the second defendant as cross claimant seeking summary judgment on its cross claim against the first defendant. 8 On 10 March 2000 a directions hearing dealt, primarily, with discovery. On 24 March 2000 the second defendant's notice of motion was dismissed by consent and further directions were given relating to discovery. 9 On 19 May 2000 leave was granted to the first, third and fourth defendants to file cross claims. Directions were also given for the parties to file and serve statements of evidence. 10 On a further directions hearing on 1 September 2000, the time for the plaintiff to file statements of evidence was extended and the first, third and fourth defendants were ordered to provide verified discovery. The time for filing cross claims by the third and fourth defendants was extended. 11 On 27 October 2000 extensive directions were given as to outstanding discovery and inspection and as to the pleadings. The second defendant was granted leave to amend its defence to the plaintiff's summons. 12 On 1 December 2000 directions were given in relation to the cross claims and supplementary discovery by the plaintiff. The time for the filing of an amended defence was extended. 13 On 9 February 2001 it was noted that the plaintiff's evidence in chief was complete and a direction given for the filing of statements in reply by 6 April 2001. The completion of the filing of statements of evidence by the plaintiff was not without default on the part of the plaintiff in complying with directions of the Court. 14 Of particular note is that, on the directions hearing of 1 September 2000, I had occasion to make the following observation: "In this matter there has been a frank admission on behalf of the plaintiff of its delinquency in complying with earlier directions of the Court as to filing statements of evidence. That has been explained from the Bar table on the basis of the limited resources available to the plaintiff, which it is said is not unrelated to the subject matter of the dispute." 15 That was not the only occasion in which I felt the need to make some comments concerning the performance of the parties in complying with the directions of the Court. On 10 March 2000 I made the following observations: "The history of this matter, as far as it involves the first defendant, is such that I think that a judgment in default of a defence would be warranted. There has appeared today presumably in answer to an application for summary judgment, an officer of the first defendant whom I permitted to address the Court. I think all that can be gleaned from what was being stated by that officer is that it has not persisted with legal representation in the matter largely due to its strained financial position. I have ascertained from him that if an adjournment is granted of some two weeks legal representation will be sought. Notwithstanding the history of the matter that opportunity should be given to the first defendant".