Case: Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 3) [2006] FCA 1498
Outcome: cited
This application for security for costs comes in the context of a dispute which has been the subject of multiple applications during the course of 2006 including adjournment of the original date of the trial ( Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd [2006] FCA 920) , a recent unsuccessful application for security for costs brought by the respondents ( Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 3) [2006] FCA 1498) , and delays because of extensive objections to evidence (some of which have not yet been determined). As a result of developments including extensive and complex argument concerning objections to evidence of witnesses of the applicants, the non-appearance of a key witness for the applicants and foreshadowed amendment to his evidence, and other unforeseen complications during the course of the two weeks of the trial (which re-commenced 13 November 2006 following the adjournment in July 2006), the hearing of the matter was not completed during the time allocated. 19 In summary, the submissions of the applicants are as follows: 1. Short notice was given by the respondents for this application. 2. It is admitted that the first and third applicants are unable, from their own resources, to meet any costs order made against them in these proceedings. 3. The respondents have not adduced any new factual evidence in support of the application to justify the costs of $217 229. 4. It is inappropriate to consider future costs in light of the affidavit of Mr McLellan. 5. Mr McLellan made no calculation of the costs now claimed, and there is no suggestion that a person experienced in the calculation of legal costs has turned their mind to claims made in items 4-7 of the schedule. 6. No authority was cited by the respondents or principle enunciated to support the contention that in exercise of its discretion the Court will order security for costs already incurred, particularly where there has been an earlier unsuccessful application. 7. Mr Graham's evidence is that the daily rate for party and party costs is $7124.25, making a total of $21 372.75 for the further three days of the trial. Accordingly, in all the circumstances if the Court decides to exercise its discretion to order further security then the appropriate quantum of such security is $21 372. 8. The effect of Mr Graham's evidence is that the costs claimed at items 1, 2, 3 and 6 of the schedule are not appropriate to form part of an order for security because they have already been incurred and because they have been dealt with by the orders made by the Court on the two previous security for costs applications. 9. In giving his evidence, Mr Graham relies on the fact that all that remains to be done in relation to the witnesses is cross-examination and re-examination. 10. The facts in Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd were not relevant to this case; further the observations of French J in that case concern the issue of power rather than discretion. Neither Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd nor another case, Southern Cross Exploration NL v Fire and All Ricks Insurance Co Ltd (1985) 1 NSWLR 114, are authority for the proposition that the Court has power to order security for costs already incurred in the circumstances of this case. 11. The fact that the respondents have relied on previous affidavits filed by them in support of earlier applications for security for costs is a tacit admission that nothing that has occurred since those affidavits were filed. 12. The respondents chose not to cross-examine Mr Graham, and in those circumstances Mr Graham's evidence as to the quantum of any appropriate security order is uncontested. 13. There is no admissible evidence before the Court to support the assertion that the trial will take a further seven days to complete. The only admissible evidence which comprehends the extent to which the trial has been heard and the likely further duration of the trial is Mr Graham's evidence in which he gives his expert opinion that the trial will take a further three days to complete. This estimate is based on a consideration of the remaining witnesses to be cross-examined by the applicants and has regard to the fact that written submissions are likely to be required. 14. It is inappropriate for the Court to take into account any of the evidence adduced thus far at the trial because the evidence is incomplete and no findings of fact have yet been made, including in relation to whether the third applicant was trading whilst insolvent or whether Mr Tracy had transferred property to which he was beneficially entitled in order to defeat creditors. 15. As the respondent had failed in its most recent application for security for costs ( Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 3) [2006] FCA 1498) and had not appealed the decision, the decision created an estoppel against a further application based on the facts extant at the date of the order. The policy reason for such an estoppel is that, had the applicants known on the date upon which the Court dismissed the most recent security for costs application that they would have to provide a further $200 000 security, they may have elected to discontinue the proceedings at that point, thereby saving the costs of the 10 day trial because of their inability to meet the further security order. This is prejudice which cannot now be remedied. 16. Mr McLellan's evidence is unhelpful in that it does not contain any assessment of the likely further duration of the trial having regard to the witnesses already dealt with or remaining witnesses; whether the respondents are able to obtain an order for security for incurred costs or whether the respondents are estopped from obtaining further security; or whether the respondents are entitled on a party and party basis to obtain an allowance for preparation for trial more than once. 42 As I have already noted, the respondents brought an application for security for trial costs 10 days before the trial was due to re-commence, which application I heard two days before the trial re-commenced. I held that, in the circumstances, the delay in bringing the further application was unacceptable, and dismissed the application: Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 3) [2006] FCA 1498. Clearly in making that order I did not preclude any subsequent application for security for costs. 48 In my view there are, as Hill J said in Equity Access , a number of discretionary issues peculiar to the facts of the present case which are persuade me that it is not appropriate to order that costs of 10 days of the trial already heard be encompassed in an award for security for costs. They are as follows: 1. In cases where security for costs have been awarded in respect of costs already incurred, there is often a catalyst which distinguishes the case from the usual circumstance where security is awarded in respect of prospective costs, and therefore justifies the application. So, for example: &#8226; in Pooley , Procon and Bryan E Fencott the retrospectivity of the award for security was not in contention &#8226; in Turner and Pooley the respondents had only immediately prior to bringing the application discovered that the applicants were insolvent. In the case before me, no such catalyst is evident. 2. In my view it would be oppressive to require the first and third applicants to now pay security for costs for those 10 days of trial already held, when they could reasonably rely on the decision in Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 3) [2006] FCA 1498 as meaning that they were not subject to a security for costs order in respect of that part of the trial. Although Mr Bell on behalf of the respondents made no secret of the fact that, if the trial did not commence within the scheduled time, his clients would be making an application for security for costs in the sum of $200 000, in my view to allow the respondents to have security for costs which have already been denied would be unjust in the circumstances. 3. Following on from this point, I note that I had dismissed the application by the first and second respondents for security for costs for that part of the trial just heard, on the basis of delay in bringing that application . Notwithstanding that the matter has now been adjourned, that the respondents indicated that they would seek security for costs if the trial did not get underway, and that the respondents were prompt in renewing their call for security for costs in respect of the trial dates once it was clear that the trial would not conclude within the scheduled 10 days, nothing has occurred which impacts on the reasons I gave dismissing the application of the respondents in respect of security for costs for the 10 days of trial. 4. The fact that the trial was not completed within the 10 days could substantially be attributed to such actions which could properly be laid at the feet of the applicants including the failure of the applicants to comply with earlier directions in relation to exchanging objections to evidence (thus requiring valuable scheduled trial time to be spent dealing with such issues), an adjournment requested by the applicants for the entirety of Wednesday 15 November 2006, and the failure of a key witness of the applicants to appear at Court which required me to stand down the Court while I considered an appropriate ruling in the circumstances. Having said that, it appeared that, despite my formal direction that the parties seek to resolve objections to evidence in advance of the trial and further attempts by Counsel on this score, the respondents' objections to evidence required two days of trial time which was considerably more than had been anticipated. Further, while no blame at all attaches to Counsel the fact remains that the examination, cross-examination and re-examination of the second applicant extended over four days, which also appeared to be considerably more than had been anticipated. Accordingly, in light of these developments it would be unfair to lay fault for the failure of the trial to finish during the allotted time completely at the feet of the applicants.