New South Wales Supreme Court CITATION : Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors; Idoport Pty Limited & Anor v Donald Robert Argus; Idoport Pty Limited ("JMG") v National Australia Bank Limited [36] [2001] NSWSC 837 FILE NUMBER(S) : SC 50113/98; 50026/99; 3991/00 HEARING DATE(S) : 19/09/01 JUDGMENT DATE : 20 September 2001 Idoport Pty Limited (Plaintiff) PARTIES : Market Holdings Pty Limited (Plaintiff) National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant) JUDGMENT OF : Einstein J COUNSEL : Mr Dicker, Mr Alkadamani (Plaintiffs) Mr A Bell (Defendants) SOLICITORS : Withnell Hetherington (Plaintiffs) Freehills (Defendants) CATCHWORDS : Practice and procedure - Security for costs - Guillotine Orders CASES CITED : Oshlack v Richmond River Council (1998) 193 CLR 72 DECISION : Short minutes of order to be brought in providing for automatic ('Guillotine') stay orders if security for costs not complied with to the letter. THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION - COMMERCIAL LIST EINSTEIN J Thursday 20 September 2001 ex tempore Revised Friday 25 September 2001 50113/98 IDOPORT PTY LIMITED & ANOR v NATIONAL AUSTRALIA BANK LIMITED & 8 ORS 50026/99 IDOPORT PTY LIMITED & ANOR v DONALD ROBERT ARGUS 3991/00 IDOPORT PTY LIMITED "JMG" v NATIONAL AUSTRALIA BANK LIMITED & 8 ORS JUDGMENT 1 Judgment was delivered in relation to the security for costs applications on 13 September 2001. Leave was reserved to either party to address submissions on any matter relating to quantum which it was suggested had not yet been dealt with or which may require clarification in terms of detail. A limited number of issues have been raised which require determination in that general sense. One of those issues dealt with the question of a stay of proceedings, and the purpose of this judgment is to deal with that topic only. Stay of Proceedings 2 The defendants did not in the notices of motion seek orders to the effect that in the event that security for costs was ordered, any default in compliance with such order would be visited with an immediate stay of the proceedings [sometimes referred to as "a guillotine order"]. Mr Dicker, who argued the security for costs applications for the plaintiffs, raised this matter at transcript 12511 when he submitted that in circumstances when and if any order for security for costs may not be obeyed, a separate application for a stay would require to be pursued by the defendants. 3 Dr Bell, in reply for the defendants, submitted that the application being for an order for security and for such further orders as the court thinks fit, the only sanction which the court would have in such circumstances would be a stay of the courts orders. Hence his submission was that the defendants "regard [a stay] as commensurate" [transcript 12551]. Dr Bell also submitted that the defendants saw the plaintiffs' submission on this issue as "somewhat mischievous". He pointed out that it was true that sometimes an application for an order for a stay was included in the notice of motion but then submitted that questions of this type would necessarily involve timing as to when the stay sanction would be triggered being a matter for the formulation of any orders which the court might make. 4 The position which now obtains is that following the judgment having been handed down, the defendants seek an order that the proceedings be stayed in the event that the orders for security be disobeyed. The plaintiffs oppose any such order being made on the basis that no application for any such order had been included in the motions and that the defendants had every opportunity prior to judgment being reserved, to seek to have the notices of motion amended to add a claim for an order of this nature. The plaintiffs particularly submit that in the face of Mr Dicker's submissions prior to judgment being reserved, the defendants' failure to seek leave to so amend the notices of motion should be an important factor in the courts present decision on the issue. 5 During argument before judgment was reserved, Mr Dicker accepted that in all of the matters in which he had been involved, acting principally for defendants, it had been the practice to include, as part of the application seeking security for costs, a claim to a relevant stay order where security might not be paid as ordered. 6 My own view is that the defendants, even now, are entitled to have leave to amend the notices of motion to pursue the automatic stay order and that the question of whether or not an automatic stay order should be imposed, should be determined in terms of the appropriate exercise of the court's discretion. 7 The considerations for and against imposing the guillotine order regime seem clear. If the guillotine order regime is imposed and a set of circumstances leads to the security for costs orders being disobeyed, then the automatic stay will come into effect. In that circumstance, the continued final hearing of the proceedings will come to an abrupt end. At the same time, the plaintiffs may receive instructions to seek to have the court discharge the stay order or vary the security for costs orders. Any such application would no doubt be required to be made on notice and evidence would be adduced in support of the application and in answer to the application. The application may be anticipated to come on some little time after it was made and by definition, there would be a likely hiatus between the time when the stay order came into operation, and the time when the plaintiffs' application would be heard and determined. 8 The burden of the plaintiffs' submissions was that no such hiatus should be permitted. The plaintiffs' submission was that if the defendants, in circumstances where the security for costs orders were disobeyed, were obliged to make a positive application for a stay, then, whilst evidence from both sides of the bar table would be required and the application could only be heard some little time after the security for costs orders had, by definition, been disobeyed, the continued hearing of the final proceedings would proceed. The plaintiffs' submission was that an abrupt termination of the final hearing should not be countenanced as there would be some wastage of time during the hiatus, which time could usefully have been used, for example, by a week or two of further evidence being adduced. 9 My own view is that the appropriate exercise of the court's discretion is to require the guillotine order approach. One Commercial List Judge has been generally unavailable for the hearing of Commercial List proceedings since the middle of last year. That Commercial List Judge should be made available to other litigants as soon as any circumstance arises whereby the plaintiffs, by failing to comply with any court order for provision of security for costs, will have forfeited the right to a continued final hearing. To the extent that this approach suggests real pressure being placed upon the plaintiffs to ensure that the court's orders for security for costs are always complied with to the letter [cf Justice McHugh's reference in Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 to the instilling into parties litigating of a sober realisation of the potential final expenses involved] then this is simply the price of the plaintiffs being entitled to regularly continue this extensive litigation. 10 For those reasons, it seems to me that notwithstanding that the defendants did not, in terms of the express orders sought in the notices of motion, seek the default/immediate stay orders, and arguably may have only been entitled to seek such orders under the claim for such orders as may otherwise be appropriate in the circumstances, the appropriate order to make in the short minutes of order when they come forward is to provide for a guillotine order regime. I certify that paragraphs 1 - 10 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 20 September 2001 and revised on 25 September 2001 ___________________ Susan Piggott Associate 25 September 2001 Last Modified: 06/13/2002 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.