New South Wales Supreme Court CITATION : Thrumby Holdings Pty Ltd v Michael Roper (trading as Michael Roper & Co Solicitors) [2002] NSWSC 560 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 20687 of 2002 HEARING DATE(S) : 3 June 2002 JUDGMENT DATE : 3 June 2002 THRUMBY HOLDINGS PTY LTD (Plaintiff) PARTIES : v MICHAEL ROPER (Trading as MICHAEL ROPER & Co SOLICITORS) (Defendant) JUDGMENT OF : Levine J A Abdul-Karim (Plaintiff) COUNSEL : S Skelton (Defendant) McKell's (Plaintiff) SOLICITORS : Acuiti Legal (Defendant) CATCHWORDS : Application for security for costs Buckley v. Bennell Design & Constructions (1974) 1 ACLR 301 CASES CITED : Idaport Pty Ltd v. National Bank [2001] NSWSC 744 Rosenfield Nominees v. Baine & Co (1988) 14 ACLC 467 DECISION : See paragraphs 13, 14 and 18 - 4 - DJL:1 (Ex Tempore- Revised) [2002] NSWSC 560 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION JUSTIE DAVID LEVINE MONDAY 3 JUNE 2002 20687 OF 2002 THRUMBY HOLDINGS Pty Ltd (p laintiff) v MICHAEL ROPER (Trading as MICHAEL ROPER & Co solicitors) (Defendant) JUDGMENT (Application for security for costs) 1 HIS HONOUR: On 4 October 2001 an order was made requiring the plaintiff to provide security for costs in the sum of $20,000. By notice of motion filed 6 March 2002 the defendant, pursuant to leave granted to it, moves the court for an order that the plaintiff provide further security in the sum of $70,000. 2 In support of the application the evidence is constituted by an affidavit sworn 14 March 2002 by Simon Skelton, solicitor, who has the carriage of the defence of the action. Exhibited to that affidavit is Ex SS-1, being communications essentially between the parties relating to security, and in particular a letter dated 18 February 2002 from the solicitors for the defendant to the solicitors for the plaintiff, making the claim in support of which there is attached a schedule. 3 Exhibit A on the application is a compilation report in relation to the plaintiff which relevantly discloses assets in the sum of $232 and non-current assets said to be a loan repayable from Quig Pty Limited for $489,263. The same material discloses a non-current liability constituted by a loan to F & B Quig in the sum of $205,000 in round figures. 4 Exhibit B is an ASIC report as to the identity of the director Quig in relation to the loan from the plaintiff. Exhibit C is constituted by a notice to produce in relation to that loan, and a document from the National Australia Bank dated 3 April 2002 which purports to provide some information in answer to the notice to produce, but provides in my view little that would provide comfort to the defendant. 5 Although objection was taken to certain parts of Mr Skelton's affidavit, I am in the end persuaded to accept what is therein deposed as to the mechanism by which the costs have been assessed, the basis thereof which leads to the amount of security sought of $70,000. 6 Whilst the court has been provided with some information, for example as to why it is that the plaintiff corporation has not effectively traded for twelve years, presumably on the basis that its principle asset, a building, burnt down, no evidence has been filed for the respondent plaintiff company in response to this substantive application. 7 This substantive application, as I have remarked, is made pursuant to an order granted by the court after the order was made in relation to the first payment of security, which I gather to have been founded in an accommodation reached between the parties. 8 As has been submitted, the plaintiff's ability or capacity to meet any adverse order for costs in full is wholly dependent upon, or so it appears from the evidence, recovering at least a half a million dollars of the loan made to Quig and its incurring no further expenses in the meanwhile, including expenses in relation to these proceedings. 9 The evidence offers no indication as to when the debt owed by Quig is due and payable, nor indeed the capacity of Quig to repay it. I accept that there exists a real apprehension as to Quig's repaying that loan, or more precisely not repaying that loan, and that there is a basis for seriously questioning the nature of the loan transaction itself, given the company and the plaintiff have the common director. 10 The basis upon which security can be ordered against a corporation has been the subject of many decisions, the principles being established as long ago as 1974 in Buckley v. Bennell Design & Constructions (1974) 1 ACLR 301, applied in Rosenfield Nominees v. Baine & Co (1988) 14 ACLC 467 and recently by Einstein J in Idaport Pty Ltd v. National Bank [2001] NSWSC 744. 11 I accept the submissions for the applicant defendant in the action as to the status of the corporate plaintiff, the opinion expressed by Mr Skelton based upon his experience in the litigation and propose to order that the additional security be given. The fact that the plaintiff gave $20,000 security is noted, but it is not determinative in the light of the circumstances in which it was provided. 12 The other matter pointed to by Mr Abdul-Karim for the respondent plaintiff is the fact that the defendant has instituted a cross claim. On reflection I do not think that constitutes the "spanner in the works" as it was described. At present, as I understand it, that cross-claim is discrete and it is quite clear that the application for security by the defendant is founded only in the structure of the action brought against it by the plaintiff. 13 I order that the plaintiff provide further security for the defendant's costs of the action as between the plaintiff and the defendant. I order that that security be in the sum of $70,000 in a form to be agreed between the plaintiff and the defendant, or failing agreement within seven days, as ordered by the Registrar or Judge of the Professional Negligence list. 14 I continue the order made that the defendant be entitled to apply from time to time for increases in the amount of security in respect of which liberty to apply on seven days notice is granted. 15 I take this opportunity to make the following observation. This action was instituted in the Professional Negligence list. Practice Note 104 made under the rules of court provides for the conduct of that list. I am of the view that applications of the kind with which I have just dealt should more desirably be dealt with in the Professional Negligence list. That list is one of the three principal specialist lists in the Common Law Division, the others being the Defamation list and the Possession list. 16 It would seem to me to conform with the policy that established each of those lists, and in particular the Professional Negligence list, that matters intimately concerned with the conduct of matters within each of those lists should be dealt with through the Registrar or the Judge designated as being in charge of that list. I happen to note that cl 14 of the Professional Negligence List Practice Note provides that applications can be made at a conference hearing by notice returnable at a conference hearing, or by letter to the Registrar, and indeed that urgent applications may be made at any time by arrangement with the Professional Negligence List Judge. 17 I mention these matters in the hope that any application to be made pursuant to the orders I have just announced with respect to the current application will be facilitated by their being processed through the Professional Negligence List rather than the Applications List on a Monday morning of a Duty week generally of the Common Law Division. 18 The plaintiff is to pay the defendant's costs of the motion, and the plaintiff's proceedings are stayed pending compliance with the orders for security which I have just made. The exhibits are to be returned. ********** Last Modified: 06/28/2002 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.