Federal Court Denies Security for Costs in Defensive Cross-Claim

OUTCOME: Refused

FEDERAL COURT OF AUSTRALIA [APPELLANT] [COMPANY] v [APPELLANT] [COMPANY] [2001] FCA 377 COSTS – security for costs sought in relation to cross-claim – the cross-claim is essentially defensive in nature – most issues raised in cross-claim already raised in proceedings – application refused.

[APPELLANT] [COMPANY] v [APPELLANT] [COMPANY] & ORS

NG 471 of 1998 MATHEWS J 5 APRIL 2001 [APPELLANT]

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG471 OF 1998

[APPELLANT]: [APPELLANT]

APPLICANT

[APPELLANT] OF ORDER: 5 APRIL 2001

[APPELLANT]

THE COURT ORDERS THAT: 1) I decline to make the order sought in paragraph one of the Notice of Motion dated 5 October 2000. 2) I order [APPELLANT] to pay [NAME]'s costs of the application for security for costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG471 OF 1998

[APPELLANT]

APPLICANT

AND: [APPELLANT] [COMPANY]

[APPELLANT] [COMPANY] [APPELLANT] [APPELLANT]

JUDGE: MATHEWS J

DATE: 5 APRIL 2001

PLACE: [APPELLANT] FOR

JUDGMENT 1 By Notice of Motion dated 5 October 2000, the third applicant [APPELLANT] ("[APPELLANT]") sought security for costs from the respondents ("[NAME]") in relation to the seventh cross-claim which [NAME] had lodged against [APPELLANT]. In the cross-claim [NAME] sought contribution and/or equitable contribution in relation to any liability it might be found to have to the first and second applicants ("[NAME]"). 2 [NAME] has conceded that it would be unable to meet an adverse costs order if it were unsuccessful under the seventh cross-claim. The primary basis upon which it resists an order for security is that the cross-claim is, in substance, a defensive one. [NAME] has already raised, as a defence to [APPELLANT]'s claim, that any damage suffered by [APPELLANT] was the result of [APPELLANT]'s contributory negligence. There is a further defence that [APPELLANT] has failed to mitigate its losses. Most of the issues raised under the cross-claim will be traversed in any event pursuant to these defences, according to the submissions of [NAME]'s counsel, [NAME] [COUNSEL] [NAME]. 3 [NAME] [COUNSEL] [NAME], who appears for [APPELLANT], urges that there are a number of matters raised under the cross-claim additional to those which would need to be litigated in the principal proceedings. In particular, the cross-claim is dependent upon the proposition that [APPELLANT] owed a duty of care to [NAME] or otherwise had a co-ordinate liability to make good any loss suffered by [NAME]. These are new issues which would not need to be ventilated without the cross-claim. 4 [NAME]'s solicitor, [COUNSEL], gave evidence on the application and was cross-examined by [NAME] [NAME]. [NAME] [NAME] said that it was unlikely that the cross-claim would necessitate the calling of additional witnesses. Existing witnesses might need to be asked additional questions, but the evidence under the cross-claim would by and large be similar to that raised in the main proceedings. [NAME] [NAME] pointed out that the need for [NAME] to mount a cross-action against [APPELLANT] was occasioned by the fact that there were two sets of applicants ([NAME] on the one hand, and [APPELLANT] on the other) seeking essentially the same damage in two separate proceedings which raised different causes of action. In order to "join the circle", as [NAME] [NAME] [NAME] described it, it was necessary to lodge a cross-claim against [APPELLANT]. 5 In my view insufficient grounds have been shown for ordering security for costs, at least at this stage of the proceedings. On the evidence before me, the issues raised under the seventh cross-claim are essentially defensive. The litigation of these issues will, it seems, do little to increase the costs of the proceedings, either at pre-trial or hearing level. If in due course this assessment is shown to be wrong it will always be open to [APPELLANT] to make a further application for security for costs. 6 I decline to make the order sought in paragraph one of the Notice of Motion dated 5 October 2000. I order [APPELLANT] to pay [NAME]'s costs of the application for security. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mathews.

Associate: Dated: 5 April 2001

Counsel for the Applicant: [redacted]

Solicitor for the Applicant: [redacted]

Counsel for the Respondents: [redacted]

Solicitor for the Respondents: [redacted]

Date of Judgment: 5 April 2001