District Court New South Wales Medium Neutral Citation: Wang v Chea (No 3) [2015] NSWDC 164 Hearing dates: 20 February 2015 Date of orders: 20 February 2015 Decision date: 20 February 2015 Jurisdiction: Civil Before: P Taylor SC DCJ Decision: (1) The plaintiffs are to further provide security for the defendants' costs of the proceedings by depositing the additional sum of $81,000 into an account controlled jointly by the plaintiffs' solicitor and the defendants' solicitor or such other form of security as is agreed upon by the parties, within 28 days. (2) Any interest that accrues on the sum of $81,000 whilst it is so held is to be paid to, or for the benefit of, the plaintiffs. (3) In the event that security is not provided within 28 days then the proceedings will be stayed. (4) Order the plaintiffs to pay the defendants' costs of the notice of motion. (5) Note that this order is intended to resolve the question of security until the conclusion of the proceedings, so that no further application for security for costs would be warranted, unless the amount of further costs incurred by the defendants, after today, considered on a party/party basis, exceeds $80,000. Catchwords: PRACTICE AND PROCEDURE – security for costs – application to increase amount of security Category: Procedural and other rulings Parties: Shikuan Wang (first plaintiff) Fenlian Jin (second plaintiff) Rui King Pty Ltd ACN 156 351 441 (third plaintiff) Pauline Yi Bin Chea (first defendant) Kevin Cheang Meang Chea (second defendant) Golden Tower Enterprises Pty Ltd ACN 130 397 634 (third defendant) Representation: Counsel: Mr I Archibald (plaintiffs) Mr B Lloyd (defendants) Solicitors: Hu Solicitors (plaintiffs) Jason Li Lawyers (defendants) File Number(s): 2013/335053 Publication restriction: None Judgment 1. The defendants bring an application for an increase to $217,000 the amount of security for costs of $69,000 ordered previously. 2. The upper end of the estimate of costs at the time of the previous order was in the region of $150,000. There is evidence before me from the defendants' solicitor that costs to date total $206,000 and might be expected, by the conclusion of the proceedings, to approach $300,000. 3. The reasons for the substantial increase in costs were the subject of evidence. In the course of the proceedings the plaintiffs have incurred four adverse costs orders. At least two of those orders relate to substantial arguments on applications before judges of this Court. The defendants have not been the subject of an adverse costs order. 4. That fact of the adverse costs orders may indicate that the increased amount of costs cannot readily be attributed to the defendants' conduct. It might also be that the additional costs were not wholly because of the plaintiffs' conduct, as the plaintiffs submitted. But that does not impact significantly on the appropriate level of security that should be provided. Higher costs that are a reasonable if unanticipated consequence of the litigation is not a reason to deny the defendants protection against being unable to recover their costs in the event that they are successful. 5. No issue is taken about the entitlement of the defendants to security. The plaintiffs initially submitted that the increase should be in the order of $30,000, bringing security up to the sum of approximately $100,000. 6. I accept the defendants' submission that where a global sum of costs incurred is stated in any affidavit without any breakdown or itemisation I should be cautious about adopting it as the figure from which the appropriate amount of party/party costs might be determined. On the other hand, there were steps that the plaintiffs could have taken to more effectively challenge this sum. There was no cross-examination of the defendants' solicitor. Nor did the plaintiffs prove the amount of their costs as some indication that the amount of costs incurred by the defendants was excessive. There was no attempt to obtain documents from the defendants about the detail of their costs. 7. Even if it be assumed that the defendants have incurred $150,000 in costs to date and another $75,000 are likely to be incurred (given the evidence is not yet complete and previous estimations of costs were on the conservative side) there would need to be a substantial increase in the amount of security to give the defendants some protection against the prospect of succeeding and yet being out-of-pocket for the bulk of their costs. 8. The plaintiffs argue that the increased costs amount to an additional $133,000 above the estimate, that 70% of that sum of $133,000 is $91,000 approximately and that that sum should be further reduced because it is an order to cover costs already incurred. A court is less inclined to order security for costs incurred before an application for security is brought. But the circumstance of past costs is of less significance when an application has been brought and it was contemplated at the time of the earlier order that a substantial increase in costs might result in an award of further security. 9. I also take into account that it is in neither party's interest to have continued applications for security. It is my intention that the order I make today should cover the security to be provided until the conclusion of the proceedings, unless the party/party costs after today are established to exceed $80,000. 10. If I were to award approximately 70% of the $133,000 additional costs, being approximately $91,000 added to the $69,000 already awarded, it would produce an amount of security of $160,000. In my view, that is a little on the high side and there should be some reduction. One relevant matter is that the amount of costs should be proportionate to the amount of the claim. And it is not intended that security be a complete indemnity. 11. It is apparent that the case has some complications which have added to the costs. The defendants raised the circumstance that the crucial witness, an intermediary between the plaintiffs and the defendants, has proved difficult to locate. No affidavit has been obtained from him and his attendance has not yet been secured. The plaintiffs accept that this witness, a Mr Wu, is important but deny that his evidence is crucial. They submit that if his attendance could not be secured the proceedings could be successfully maintained by the use of hearsay evidence or statutory declarations that he has previously sworn or affirmed. 12. No doubt there are some challenges to the plaintiffs' case, but I do not think I should proceed on the basis that the plaintiffs' case is hopeless. However, it is fair that I recognise that there is a real prospect that the plaintiffs' case may fail because of, in particular, the absence of an important witness. 13. Bearing all these matters in mind and attempting to engage in a balancing act between ensuring fair protection of the defendants and not providing excessive security, I have determined that the amount of security should be increased to the sum of $150,000. That is, an additional $81,000 should be provided within four weeks, by being deposited in the same account which holds the existing security. A failure to provide that amount will result in the proceedings being stayed until such time as it is provided. 14. It also seems to me that the defendants have been largely successful in this application. Although not in obtaining the entire amount of security they sought, yet they obtained a significant increase and more than that which was submitted by the plaintiffs. The plaintiffs should pay the costs of the application. 15. The orders of the Court therefore are: 1. The plaintiffs are to further provide security for the defendants' costs of the proceedings by depositing the additional sum of $81,000 into an account controlled jointly by the plaintiffs' solicitor and the defendants' solicitor or such other form of security as is agreed upon by the parties, within 28 days. 2. Any interest that accrues on the sum of $81,000 whilst it is so held is to be paid to, or for the benefit of, the plaintiffs. 3. In the event that security is not provided within 28 days then the proceedings will be stayed. 4. Order the plaintiffs to pay the defendants' costs of the notice of motion. 5. Note that this order is intended to resolve the question of security until the conclusion of the proceedings, so that no further application for security for costs would be warranted, unless the amount of further costs incurred by the defendants, after today, considered on a party/party basis, exceeds $80,000. ********** 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. Decision last updated: 14 August 2015