Yates Property Corp Pty Ltd v John Boland (as representative partner of Abbott Tout Russell Kenedy, Solicitors) & Ors [1998] FCA 8 (16 January 1998)

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 495 of 1997

BETWEEN:	YATES PROPERTY CORPORATION PTY LIMITED Appellant
AND:	JOHN BOLAND (as representative partner of Abbott Tout Russell Kennedy, solicitors) first Respondent
	theodore simos second respondent
	john webster third Respondent

JUDGE:	DAVIES J
DATE:	16 january 1998
PLACE:	SYDNEY

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. Orders 1, 2 and 3 made on 7 October 1997 be terminated.

2. The appellant provide security for costs in the sum of $40,000 in respect of each respondent by way of payment into Court or by way of bank guarantee in a form approved by the Registrar and that such security be provided on or before 30 January 1998.

3. Liberty be reserved to the respondents to apply thereafter for dismissal of the proceedings if the security is not provided.

4. The costs of the motion be costs in the appeal.

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	NG 495 of 1997

BETWEEN:	YATES PROPERTY CORPORATION PTY LIMITED Appellant
AND:	JOHN BOLAND (as representative partner of Abbott Tout Russell Kennedy, solicitors) first Respondent
	theodore simos second respondent
	john webster third Respondent

JUDGE:	DAVIES J
DATE:	16 january 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

On 7 October 1997, in these proceedings, which are an appeal from a judgment of Branson J, I ordered that the appellant, Yates Property Corporation Ltd ("Yates Property"), provide security for costs in the sum of $100,000 in respect of each respondent, such security to be provided on or before 15 December of that year. I reserved liberty to the parties to apply for termination or variation of that order.

The order was made as the person principally concerned with the affairs of Yates Property, Mr I.F. Yates, had given evidence that he was in receipt of a remuneration of about $300,000 a year and that he was the moving party in a prospectus to the public for an issue by Yates Security Ltd, which was seeking to raise funds between $6.1m and $35m. Mr Yates gave evidence that, if the float was successful as he anticipated, then security could be provided to the Court. In the light of these facts and in the light of the fact that it appeared that Yates Property would not be able to meet any order as to costs made against it in proceedings, I ordered that security be provided. It appeared that there were sources from which Mr Yates, who would be likely to benefit if the proceedings were successful and who was the person standing behind Yates Property, would be able to provide security.

However, the matter has come back to me pursuant to the leave reserved, and I have been informed that the float of Yates Security Ltd was unsuccessful. Mr Yates himself apparently does not have assets which he can put forward by way of security. His offer to give his personal indemnity for costs is of little value as the trial Judge made an order that Mr Yates be jointly and severally liable with the appellant to pay the costs of the proceedings below, and it is anticipated that those costs will amount to $2m or thereabouts.

As the circumstances on which I based the order of 7 October 1997 have altered, it is necessary that I should consider the matter afresh.

An order for security will rarely be made against an individual who is impecunious. See Cowell v Taylor (1885) 31 Ch D 34. An individual should not be denied access to the courts merely because he is poor. The same principle does not apply to corporations. See, eg. s 1335 of the Corporations Law. Nevertheless, as a general rule, an impecunious corporation should not be hindered by the making of an order for security from obtaining the ruling of a court of law provided there is some matter in issue upon which the ruling of the court is desirable.

Therefore it is necessary to consider the merits of the appeal. Branson J dismissed an application brought by Yates Property against its solicitors and senior and junior counsel who had acted for it in proceedings in the Land and Environment Court of New South Wales, in which Yates Property sought compensation for the resumption of certain land at Darling Harbour which had been owned by Yates Property. In those proceedings, evidence was given by a number of witnesses, including Mr Yates. Three experts gave evidence on behalf of Yates Property and two experts gave evidence on behalf of the acquiring authority, the Darling Harbour Authority. Cripps CJ gave judgment on 1 May 1990 fixing compensation in the sum of $22,334,500. From that judgment, an appeal was taken by Yates Property to the Court of Appeal of New South Wales. In general, the Court dismissed the grounds of appeal but remitted the matter for reconsideration on two issues, one being costs incurred which had been rendered abortive by the resumption and the other being the special value which the land had provided for Yates Property. Cripps CJ declined to increase the compensation for special value, holding that he had taken the issue into account in assessing the value per square metre of the acquired land. It is perhaps worth noting that in his reasons for judgment, Mahoney JA expressed the view that he assumed that that was the course that Cripps CJ had taken. Cripps
CJ added $217,443 for the abortive expenditure which he had earlier overlooked.

Having read the judgments of Cripps CJ, who was a very experienced member of the Land and Environment Court, and the judgments of the distinguished members of the Court of Appeal, Kirby P, Mahoney JA and Handley JA, I am left with the impression that it is unlikely that there was any significant factor relevant to the compensation which was not taken into account or which was not given the weight which Cripps CJ thought proper to give it. Yates Property is dissatisfied with the compensation, taking the view that the land had a very special value in its hands. However, it is not uncommon for litigants to place a much higher value upon their unrealised expectations than that which a court adopts.

The case against the solicitors and counsel before Branson J covered a wide field but the main thrust of it appears to have been that the case for Yates Property with respect to the issue of "special value" and a "head start" was not adequately put to Cripps CJ. Evidence was given on behalf of Yates Property by Mr P D McClellan QC as to the type of evidence which he would have expected to have been called. However, Mr McClellan was not asked to and did not express any opinion as to whether the approach which counsel had taken in the Land and Environment Court to the issue of special value was one which could reasonably have been taken by competent senior and junior counsel at the time. Mr W R Davison SC gave evidence on behalf of the second respondent. He expressed the opinion that the views which had informed senior counsel's preparation for and presentation of the case before the Land and Environment Court were views which could reasonably have been held by competent counsel and that, in his personal opinion, those views were correct. Branson J also pointed out that the type of evidence which it was alleged should have been called on behalf of Yates Property would have been inconsistent with the evidence given by the valuers called on behalf of Yates Property. Their evidence, if it had been accepted, had the apparent potential to lead to higher levels of compensation to Yates Property than the "head start" claim that was now identified. Having regard to the evidence and other material before her, Branson J considered that all the allegations made of negligence and misleading conduct failed.

As I have said, the issues of "special value" and "head start" were investigated in the proceedings before the Land and Environment Court and in the proceedings before the Court of Appeal. The Court of Appeal by majority, Mahoney JA dissenting, remitted the matter to Cripps CJ to determine the issue of additional compensation for abortive expenditure which the Yates Property had claimed, $217,443, and the issue of special value which the land had possessed for Yates Property. Handley JA specifically said, in his reasons for judgment, that, if Cripps CJ had not included an allowance for special value assessed in accordance with the principles declared by the Court, then the Judge's task on the remitted hearing would be limited to identifying the compensation awarded on the basis of market value and the additional amount to be awarded on the basis of special value. In the result, Cripps CJ considered the matter having regard to the expositions of "special value" and "head start" contained in the reasons for judgment of the Court of Appeal but allowed no further sum in relation to that matter as his Honour had taken those principles into account when assessing compensation.

Having read the reasons for judgment of Cripps CJ, the reasons for judgment of the members of the Court of Appeal and the reasons for judgment of Branson J, I consider that the prospects of success in the appeal are slight. Indeed no material has been put before me affirming that there is a seriously arguable point. Cripps CJ assessed the compensation as he was entitled to do on the basis that the best use of the subject land was its use as a market, and his Honour took into account the special value which the land had held for Yates Property. There does not appear to me to be any significant point of law which is now in issue. Yates Property complains that the compensation awarded was low due to the negligence of its lawyers and, impliedly, of its valuers, but the material before the Court does not show that the compensation awarded was other than fair and reasonable.

It is further relevant to observe that there is no material before me which constitutes a prima facie case that the impecuniosity of Yates Property was attributable to the conduct of the respondents or any of them. The cause of the insolvency of Yates Property has not been explained; but no doubt one factor was the compulsory acquisition of the land owned by Yates Property at Darling Harbour and the amount of the compensation awarded. The material before me does not show a prima facie case that the amount of that compensation was not correctly assessed or that the financial position of Yates Property resulted from actions or negligence of the respondents or any of them.

Another factor to consider is that we are concerned with an appeal, not with a claim made at first instance. In this Court, there is no prima facie rule that security for the costs of an appeal will be ordered. Order 52 r 20 provides that, unless the Court or a judge otherwise directs, no security for costs of appeal shall be required. But, as Bowen CJ said in O'Brien Pty Ltd v Shell Co Ltd [1983] FCA 96; (1983) 70 FLR 261 at 264:

"In the case of an appeal the position is slightly different. For one thing the plaintiff has had his day in court."

In the present case there is not, in my opinion, any significant issue which, in the public interest or in the interest of the parties, it is desirable for a Full Court to consider. Indeed, the position is worse than that. The claim of Yates Property is fundamentally that it should have received greater compensation for its land at Darling Harbour than that which it was awarded. This claim has been considered in the Land and Environment Court, by the Court of Appeal of New South Wales and by Branson J in this Court. In these three legal proceedings, the view of Yates Property has been rejected.

It is also a relevant factor that Branson J considered that Mr Yates was inclined to put forward contentions and of law which were without substance. Branson J held that she would consider only with care any uncorroborated evidence of Mr Yates. Her Honour rejected some of the evidence which Mr Yates gave to support his contentions of "special value". Her Honour ordered that the costs arising after 22 March 1996 be taken on an indemnity basis as she considered that the contentions put on behalf of Yates Property were not supported by necessary evidence.

In all the circumstances, I think it is appropriate that an order for security for costs should be made. In my opinion, in the absence of a clear issue which it is desirable that a Full Court should consider, the respondents should not be put to the expense of an appeal unless security is provided for their costs. Yates Property has already been heard in court and its contentions have been rejected more than once.

However, the Court has a discretion as to the amount of the security. Evidence was given that the party/party costs of each of the respondents would be likely to exceed $100,000. In view of the appellant's impecuniosity, I think that an order in the sum of $40,000 in respect of each of the respondents would be appropriate. That security should be provided on or before 30 January 1998.

The costs of this motion should be costs in the appeal.

I certify that this and the preceding five (5)

pages are a true copy of the Reasons for

Judgment herein of the Honourable Justice

Davies.

Associate:

Dated: 16 January 1998

Counsel for the Appellant: D.K.L. Raphael

Solicitor for the Appellant: Crisp & Associates

Counsel for the First Respondent: D.J. Fagan

Solicitor for the First Respondent: Minter Ellison

Counsel for the Second Respondent: P.R. Whitford

Solicitor for the Second Respondent: Corrs Chambers Westgarth

Counsel for the Third Respondent: S.T. White

Solicitor for the Third Respondent: Moray & Agnew

Date of hearing: 16 December 1997

Date of judgment: 16 January 1998