New South Wales Supreme Court CITATION : Jazabas Pty Ltd & 2 Ors v Haddad & 2 Ors [2006] NSWSC 880 HEARING DATE(S) : 28 July 2006 JUDGMENT DATE : 28 July 2006 JUDGMENT OF : Simpson J EX TEMPORE JUDGMENT DATE : 07/28/2006 DECISION : A joint order in favour of the first and second defendants for security for costs in the sum of $100,000. CATCHWORDS : order for security for costs - security for costs applications - costs of interlocutory applications - joint representation LEGISLATION CITED : Uniform Civil Procedure Rules r42.7 New South Wales Civil Practice and Procedure r42.7 CASES CITED : Fiduciary Limited v Morningstar Research Pty Limited [2002] NSWSC 342; 55 NSWLR 1 Jazabas Pty Limited v Haddad [2006] NSWSC 559 Jazabas Pty Ltd - 1st Plaintiff BAS Developments Pty Ltd - 2nd Plaintiff PARTIES : Permtree Pty Ltd - 3rd Plaintiff Sam Hadded - 1st Defendant State of NSW - 2nd Defendant City of Botany Bay Council - 3rd Defendant FILE NUMBER(S) : SC 20020/05 PE King - Plaintiffs COUNSEL : G Craddock - 1st & 2nd Defendants G McNally - 3rd Defendant Cropper Parkhill - Plaintiffs SOLICITORS : IV Knight, Crown Solicitor - 1st & 2nd Defendants Houston Dearn O'Connor - 3rd Defendant IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION SIMPSON J Friday 28 July 2006 20020/05 Jazabas Pty Ltd & 2 Ors v Sam Haddad & 2 Ors JUDGMENT on appropriate orders for security for costs applications and on appropriate orders for costs 1 HER HONOUR: On 9 June 2006 I delivered an interlocutory judgment in these proceedings: Jazabas Pty Limited v Haddad [2006] NSWSC 559. The subject matter of the judgment was applications by all three defendants for an order for security for costs. 2 Although I signified my intention of making such orders, I did not formulate any order and I directed the parties to bring in short minutes reflecting the conclusions I had expressed. 3 The parties have been unable to reach agreement on the form of the orders. There are two principal points of difference. The first and second defendants are jointly represented and, accordingly, I indicated my intention of making one order only jointly in their favour, in the sum of $100,000, or, as I expressed it, "at their option", separate orders each of $50,000. 4 The reason for this was that these defendants are represented by the same solicitors and I expected that there would be a good deal of commonality in the incurring of costs. However, I left the issue open because I am unaware of the manner in which the solicitor operates its accounting procedures. 5 This has given rise to the first, and the principal, point of difference between those two defendants and the plaintiffs. What the plaintiffs propose is separate orders in respect of each of those defendants in the sum of $50,000. The first and second defendants prefer a joint order of $100,000. No evidence was put before me as to any particular reason for that, although I was told, from the Bar table, that it has to do with accounting procedures in the office of the Crown Solicitor. 6 Paragraph 55 of the judgment is, I thought, and think, quite clear. The choice is to be that of the first and second defendants, by reason of matters perhaps known to them and not known to me. No benefit was stated on behalf of the plaintiffs in the making of separate orders in the sum of $50,000. What was proposed was that, in the event that the plaintiffs are unable to raise the whole of the sum, they may be able to proceed against one or other of those defendants. 7 That would not meet the circumstances of the case. The only reason that the order made in respect of the first and second defendants was equal to the amount ordered in respect of the third defendant was their common representation. If the proceedings were abandoned against one of those defendants, then the remaining of those defendants would be entitled to an order in the whole sum. 8 Accordingly, the order I will make is as proposed on behalf of the first and second defendants in the sum of $100,000. 9 The second matter that has arisen is the costs order that should be made in respect of the security for costs applications. The plaintiffs oppose an order that they pay the costs of each application. All defendants propose an order to that effect, with a rider that payment is to be made forthwith. 10 Rule 42.7 of the Uniform Civil Procedure Rules provides for costs of interlocutory applications. Prima facie, such orders are to be in accordance with the way orders are made in respect of general costs of the proceedings. Subrule (2) specifically provides that, unless the Court otherwise orders, costs do not become payable until the conclusion of the proceedings. 11 There are a number of circumstances in which the jurisdiction has been exercised in favour of defendants. Ritchie's New South Wales Civil Practice and Procedure under rule 42.7 at para 42.7.40 sets out a list of circumstances in which the discretion has been exercised in favour of defendants. None of those appears to be an order for security for costs. 12 I was provided with a copy of the decision of Barrett J in Fiduciary Limited v Morningstar Research Pty Limited [2002] NSWSC 432; 55 NSWLR 1, in which Barrett J identified three circumstances which may prompt the exercise of the discretion. One of these is where there has been a determination of a separately identifiable matter, or the completion of a discrete aspect of the matter. The second is unreasonable conduct on the part of the party against whom the costs have been ordered, and the third is that there may be a long way to travel in the proceedings, the implication being that significant costs have been or will be incurred, and the successful defendants will be out of the money expended in successfully prosecuting or defending the relevant interlocutory application(s). 13 It is surprising to me that the question does not appear to have previously arisen in relation to security for costs applications. The very purpose of an order for security for costs is to protect defendants against the prospect of incurring significant costs which, if the defendants are successful, the plaintiffs are likely to be unable to meet. 14 The fact that these costs have actually been incurred, as distinct from being putative costs, suggests a further reason that it would be appropriate to make such an order; that is, the very circumstances that give rise to the order for security for costs also support an order that the costs incurred in pursuing that application should be paid before further costs are incurred. 15 Accordingly, I will make an order of the kind proposed in favour of each of the defendants. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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