FEDERAL COURT OF AUSTRALIA

Fubilan Catering Services Limited v Compass Group (Australia) Pty Ltd

No 3 [2005] FCA 1009

PRACTICE AND PROCEDURE – security for costs – additional security for costs – lengthier and more complex pre-trial preparation including discovery and cross claims than earlier anticipated – substantial claim – additional security ordered

FUBILAN CATERING SERVICES LIMITED (INCORPORATED IN PAPUA NEW GUINEA), MINERAL RESOURCES STAR MOUNTAINS LIMITED (INCORPORATED IN PAPUA NEW GUINEA v COMPASS GROUP (AUSTRALIA) PTY LTD (ACN 000 683 125), EUREST (SOUTH PACIFIC) LIMITED (INCORPORATED IN PAPUA NEW GUINEA) and COMPASS GROUP PLC (INCORPORATED IN THE UNITED KINGDOM)

COMPASS GROUP (AUSTRALIA) PTY LTD (ACN 000 683 125), EUREST (SOUTH PACIFIC) LIMITED (INCORPORATED IN PAPUA NEW GUINEA, COMPASS GROUP PLC (INCORPORATED IN THE UNITED KINGDOM)          v MOROCCO HOLDINGS PTY LTD and WILLIAM FENWICK

WAD 252 OF 2003

FRENCH J

22 JULY 2005

PERTH

THE COURT ORDERS THAT:

1.         The applicants are to provide additional security for costs in the sum of $50,000 by way of bank guarantee in a form acceptable to the Registrar on or before 1 September 2005.

2.         In the event that the additional security for costs is not provided in accordance with this order by 1 September 2005 the action will be thereafter stayed until the security is provided or until further order.

3.         The costs of the application for further security be reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

ON MOTION FOR ADDITIONAL SECURITY FOR COSTS

1                     On 29 March 2004 I made an order in these proceedings that the applicant provide securities for the respondents’ costs in the sum of $50,000.  The security was to be provided by way of bank guarantee to be lodged with the Registrar or in such other form as might be agreed by the parties.  It was to be provided by 27 May 2004.  In the event it was provided on or about 21 June 2004 by way of a bank guarantee with a termination date of 31 December 2004.  This was replaced by a bank guarantee with a termination date of 31 December 2005 pursuant to an order made on 15 December 2004. 

2                     By a motion filed on 31 May 2005, returnable on 29 June 2005, the respondents sought additional security in the sum of $620,000. 

3                     The motion for additional security for costs was supported by two affidavits sworn by Mr Curlewis, a solicitor acting for the respondents.  Mr Curlewis stated that when the first application for security for costs was made to the Court in early 2004 the estimate of costs did not include any amounts for a mediation (which subsequently occurred) or preparation for trial and attendance at the trial itself.  At the time, the inspection of the respondents’ documents for discovery purposes was estimated at 20 hours with the provision and drafting of their discovery involving another 20 hours and inspection of 20 hours.  The task of providing discovery had turned out to be more complicated with the financial and operational management agreement documents which had to be transported from Papua New Guinea to Port Moresby, copied and then air freighted to Perth.  Some 54 cartons of documents were delivered to Perth and inspected by the applicants’ and the respondents’ solicitors.  The time taken with the discovery process was well in excess of the original estimate of 60 hours.  The process has taken some 142.1 hours all in.  There were some 35 hours of work involved in the preparation for and attendance at the mediation.  Considerable time had also been spent in joining cross claimants since early 2005.  The respondents intend to brief senior counsel at the trial given the nature of the claim and the amount of alleged damages claimed by the applicants which is said to be in excess of $70 million.  Mr Curlewis’ estimate for future costs at the time of swearing his affidavit was $543,400. 

4                     The applicants say that the respondents previously applied for security by notice of motion dated 4 March 2004.  They noted that the costs of mediation were built into the estimate.  The mediation is still ongoing and its costs are not recoverable.  The costs of joinder of the cross respondents was a matter in which the respondents are, in effect, the claimant and they cannot look to the applicants for security.  Moreover it is argued by the applicants that the increased costs claimed in relation to discovery are claimed in a context where, having refused to supply particulars of ‘rebates’ received by the respondents, the respondents had failed to comply with two orders of the Court to produce documents for inspection. 

5                     The estimates offered by the respondents are said to be unjustifiable.  They are based upon a proposed 30 day trial.  The trial, according to the applicants, should take a maximum of ten days.  In that regard the solicitor for the respondents said in his affidavit that counsel estimated preparation for trial to involve at least seven days of senior counsel time and another seven to ten days of junior counsel and solicitor time in the preparation and the trial itself lasting some 38 days.  No basis beyond that is given for the estimate of 38 days.

6                     The respondents in their submissions point out, and I accept, that the applicants have not suggested that they have an inability to give the security or that the giving of the security is likely to frustrate their action. 

7                     In my opinion, the application is one of some complexity and I think has probably become more expensive since the original order for security for costs was made.  The respondents’ estimate of costs at that time was at least $190,000 - $200,000.  I think the costs could well exceed $300,000.  I consider that some additional security for costs is warranted.  I do not think however that the amount granted should be anywhere like the amount sought by the respondents.  Of the amount sought some $407,360 is attributable to the trial on the basis of a 38 day trial.  Some $92,200 is based on further preparation for trial, including seven days involvement by senior counsel of $5,000 a day.  In my opinion the security for costs should be increased by some amount.  In this case I am prepared to order that additional security in the sum of $50,000 be lodged by the applicants.  At this stage I have not formed a view on the likely length of the trial but do not accept that the respondents have justified their contention of a 38 day hearing. 

Associate:

Dated:              22 July 2005