New South Wales Supreme Court CITATION : Gujarat NRE Australia Pty Limited & Anor v Gary Alexander Williams & Ors [2006] NSWSC 1131 HEARING DATE(S) : 20/10/06 JURISDICTION : Equity Division Commercial List JUDGMENT OF : Einstein J EX TEMPORE JUDGMENT DATE : 10/20/2006 DECISION : Security for costs ordered. CATCHWORDS : Security for costs Gujarat NRE Australia Pty Limited (First Plaintiff) Gujarat NRE Coke Pty Limited (Second Plaintiff) Gary Alexander Williams (First Defendant) Mark Ngataiawhio William Gray (Second Defendant) PARTIES : Malcolm Anthony Carson (Third Defendant) Continental Mining and Materials Handling Pty Limited (Fourth Defendant) Billiva Pty Limited (Fifth Defendant) Ambigo Pty Limited (Sixth Defendant) Bounty Industries Australia Pty Limited (Seventh Defendant) FILE NUMBER(S) : SC 50056/06 Mr Gillard (Plaintiffs) COUNSEL : Mr Farrar (Second and Seventh Defendants) Mr Hall (1st, 3rd, 4th, 5th and 6th Defendants) Gillard Consulting Lawyers (Plaintiffs) SOLICITORS : Horton Rhodes (Second and Seventh Defendants) Tzovaras Legal (1st, 3rd, 4th, 5th and 6th Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Friday 20 October 2006 ex tempore Revised 27 October 2006 50056/06 Gujarat NRE Australia Pty Limited & Anor v Gary Alexander Williams & Ors JUDGMENT 1 The position in relation to the present proceedings is that by the judgment delivered on 20 September 2006, the Court gave reasons for a decision that the second and seventh defendants, who by motion had sought security for costs, had established an entitlement to security for costs. 2 The Court further gave reasons, which it is unnecessary to repeat, for the appropriate way forward to require that the amount of security to be ordered, await a decision by such defendants as had not at that time sought security for costs in terms of whether or not they would also be applying for security for costs. 3 The position which has been reached today is that the first, third, fourth, fifth and sixth defendants, all of whom have instructed Tzovaras Legal to act on their behalf, have joined also in applications for security for costs. 4 In the circumstances it has been unnecessary for the Court to revisit the earlier decision as to general entitlement to security for costs and the submissions which have been taken this afternoon and the affidavit which are before the Court today have generally gone to, and in the main only to, the question of the appropriate amounts to be ordered. 5 In that regard, the judgment delivered on 20 September 2006 had broadly outlined the issues in the plaintiffs' case and the rather unusual circumstance in which the defendants would be placed, bearing in mind the facts that the first plaintiff is incorporated in Victoria; the second plaintiff is incorporated and listed in India; approximately 95 per cent of the shares in the first plaintiff are held by second plaintiff; and importantly, where the financial position of the first plaintiff and in particular the charge given by it to the second plaintiff was such that were the first plaintiff the only plaintiff, it would be appropriate that the Court order security. 6 The judgment also travelled through the second plaintiff's non-residence in Australia, not having a presence in Australia, having no accounts in financial institutions in Australia and into the circumstance that there is no reciprocal enforcement treaty between Australia or any part of Australia and India or any part of India. Other particular matters of significance in this general area of the plaintiffs' position were set out in paragraph 42 of the earlier judgment. It is not necessary to repeat that paragraph. 7 One of the areas which has been the subject of some submissions this afternoon has concerned the two cross-claims, but it seems to me difficult for the Court, in determining the application now made by the several defendants for security for costs, to treat to any real extent with the subject of these cross-claims, notwithstanding that one of the cross-claims seeks an amount in the order of $50 million. 8 The fact is that insofar as the plaintiff is effectively a cross-defendant, it would be possible, were it advised to do so, for it to seek an order for security for costs of the cross-claims, or either of them, but it has not yet determined to attempt that exercise. 9 Whilst the principled exercise of the discretion to order security for costs to defendants is a wide discretion, it is to be exercised in a principled fashion. The central focus must require the court to look at the nature of the issues on the summons, albeit accepting that some part of the hearing will of course treat with the cross claims. 10 It has to be said that conventionally the proper approach to an application for security for costs before the Commercial List court involves the adducing of evidence from costs assessors, who will often have been asked to look at affidavits put on by solicitors and to give their own expert opinions as to amounts which may or may not be seen as reasonably likely recoverable, bearing in mind the specialised knowledge, training and experience of costs assessors. 11 In this particular circumstance, where the security for costs applications now before the Court are concerned, no such evidence from any costs assessors has been put forward by any party and all that the Court has, are the respective affidavits of the solicitors for the two groups of defendants setting out the costs which in their view would be the actual outgoings by way of costs on preparation for the hearing. 12 In that regard the position is that the affidavit by Mr Farrar, the solicitor for the second and seventh defendants, in a number of paragraphs has carefully set out the estimates. The net total of costs put on behalf of the second and seventh defendants is $472,395 upon an assumption that the hearing will take ten days, senior and junior counsel to be briefed. 13 The other evidence before the Court, this time put on by Mr Tomaras, who acts for the first, third, fourth, fifth and sixth defendants, in similar vein travels through the various costs estimates. The net total of the costs anticipated by him to be expended by his client, also on the basis of senior and junior counsel being briefed and a ten day hearing, is $490,000. 14 There has been no submission from any part of the Bar table that essentially the hourly rates which have been adopted in these two affidavits are unfair or inappropriate, nor that the GST assessments have been incorrect, unfair nor inappropriate. Having said that, there has been no concession that a costs assessor may not have had, in the usual course of events, an ability to question a deal of the recoverability outside of an indemnity costs regime, of the full amounts now claimed as security for costs. 15 One of the difficulties involved for the Court in reaching a fair assessment as far as the security for costs application is concerned consists of the amount of time to be taken in the hearing where the defendants will be represented by separate senior counsel and juniors and where the court, in the ordinary way, would almost certainly require that cross-examining counsel on the defendants' part consult with one another to avoid overlap or unnecessary overlap. 16 It is common ground that where defendants are separately represented there will often be certain areas where each of the sets of counsel will require to treat with issues which may not need to be treated with or treated with to the same extent by other cross-examining counsel. In any event, it is common practice for the court to look extremely closely at overlap and in my experience to not permit overlap wherever the court is in a position to prevent a doubling up of cross-examination and the court pays close attention to that matter during the course usually of the second cross-examiner's cross-examination. 17 Having said that, obviously the principal source of reference for the court in endeavouring to assess the fairness of the anticipated period of time for the hearing is the pleadings and the issues, and having looked at the pleadings in the present case, my own view is that a ten day estimate, bearing in mind the amounts claimed by the plaintiffs and the amounts at least of one of the cross-claims, cannot be said to be an unjustified or impracticable assessment. Indeed, it is the experience of the Court that in a major piece of litigation it is virtually impossible to with precision anticipate in advance exactly how long a hearing will take. 18 The other matter which is generally taken as a given on an application for security for costs is that the court gives a discount for uncertainties. That discount is very much a matter which lies in the discretion of the judge hearing the application for security for costs. The discount is for contingencies and really to reflect the fact that the number of witnesses may be less than was anticipated by the evidence of the solicitors as to what was or was not required and that the course of the trial might be in some fashion different to that which has been estimated. 19 In the present circumstance the rather unusual parameter is that, as the earlier judgment made plain, the second plaintiff has extremely substantial assets. The difficulties of enforcement of the judgment in India were also adverted to in the earlier judgment and it is unnecessary to revisit that difficulty. 20 In my view the principled exercise of the Court's discretion, in the rather unusual circumstances of the position of the plaintiffs and in the rather unusual circumstance where it is certainly not beyond the pale to imagine that the defendants, if successful, may need to enforce orders for costs overseas, is to err on the side of the defendants in terms of a reasonably generous grant of security for costs. It seems to me that on the materials presently before the Court, the principled exercise of the relevant discretion is to order that the plaintiffs pay to each of the groups of defendants the sum of $450,000. 21 During the course of submissions reference was made to the fact that whilst the Court will have exercised its discretion in relation to making an order for security for costs on the materials then before the Court and discourages the notion of subsequent applications for security for costs, there is always a possibility that, depending upon a blow-out, a defendant may seek to have an order increasing the security for costs. 22 The parameters of the present case and the stage of preparation of the present case suggests that it may or may not ultimately be necessary for an application to be put to the court for some additional security for costs. No such application would be likely to succeed absent some very real and rather radical alteration to the cases which have been pressed today. 23 For all those reasons the amounts of security are as I have indicated and I understood that counsel wished to address on the mode of producing the security. ***************************** 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.