Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2008] NSWSC 1329

New South Wales Supreme Court

CITATION : Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2008] NSWSC 1329

HEARING DATE(S) : 20/11/08 JUDGMENT OF : McDougall J at 1

EX TEMPORE JUDGMENT DATE : 20 November 2008

DECISION : See para [43] of the judgment.

CATCHWORDS : COSTS - security for costs - discretion - whether, if ordered, plaintiff able to pay security for costs - whether plaintiff's impecuniosity was caused by the defendant's conduct, the subject of proceedings - whether an order for security for costs would stultify proceedings - whether security for costs should be ordered against a party who is, in substance a defendant.

Building and Construction Industry Security of Payment Act 1999 LEGISLATION CITED : Corporations Act 2001 UCPR

Amalgamated Mining Services Pty Ltd v Warman International Ltd (1988) 88 ALR 63 CASES CITED : Fiduciary Ltd v Morningstar Research Pty Ltd (2004) 208 ALR 564 Sharjade v Darwinia [2006] NSWSC 708

Perform (NSW) Pty Limited (Plaintiff) PARTIES : Mev-Aus Pty Limited (First Defendant) Paul Mitolo (Second Defendant) Bryan Medbury (Third Defendant)

FILE NUMBER(S) : SC 55066/08

COUNSEL : N A Nicholls (Plaintiff) Dr A J Greinke (Defendants)

SOLICITORS : Wilkinson Building & Construction Lawyers (Plaintiff) Doyles Construction Lawyers (First, Second and Third Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST

McDOUGALL J

20 November 2008 ex tempore (revised 20 November 2008)

55066/08 PERFORM (NSW) PTY LTD v MEV-AUS PTY LTD & ORS JUDGMENT 1 HIS HONOUR: This is an application for security for costs. At the outset of the hearing, the issues were stated to be: (1) Whether there was reason to believe that, if the plaintiff (Perform) was ordered to pay the costs of the defendants (to whom I shall refer collectively as Mev-Aus), it would be able to do so (I shall, although not entirely accurately, call this the jurisdictional fact). (2) Whether Perform's financial position was, in substance, the result of the matters of which it complains in these proceedings. (3) Whether in substance Perform was defending an attack made against it by Mev-Aus. 2 There was also an issue as to the amount for which security (if otherwise appropriate to be ordered) should be required to be given. Mev-Aus contended for a figure of some $350,000. Perform contended for a figure of some $187,000. 3 In the course of submissions, Mr N A Nicholls of counsel, who appeared for Perform, accepted that the evidence established the jurisdictional fact. He was correct to do so. Accordingly, it is unnecessary for me to go into that issue. The principles 4 Whether an application for security is brought under s 1335 of the Corporations Act 2001, or UCPR Rule 42.21(d), establishment of the jurisdictional fact does not mean that security must be ordered. It does no more than enliven the discretion to order security. I discussed that discretion in Sharjade v Darwinia [2006] NSWSC 708. After considering numerous authorities, I said at [10] to [12]: 10 Whilst the only formal constraint on the discretion is that it is to be exercised judicially (the nature of this particular constraint may be a matter of some conjecture), there are a number of factors that have been identified as relevant, although not as exhaustive. I take as relevant to my inquiry the seven factors, or "guidelines", identified in the judgment of Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 196-198. Her Honour commenced by stating that: "[t]he discretion to order security for costs is unfettered and should be exercised having regard to all the circumstances of the case without any predisposition in favour of the award of security." 11 She then referred to a number of decisions, including that of Cooper J in Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1992) 8 ACSR 405. She cited, with approval, a statement by his Honour in that case at 415 that: "[i]t is not possible or appropriate to list all of the matters relevant to the exercise of discretion. The factors will vary from case to case. The weight to be given to any circumstance depends upon its own intrinsic persuasiveness and its impact on other circumstances that have to be weighed." 12 Her Honour then turned to what she called "a number of well established guidelines which the court typically takes into account" in considering an application for security for costs. Those guidelines were, and I paraphrase her Honour's words: