Moage Ltd (in liquidation) v Joseph Grant Jagelman & Ors [1998] FCA 999 (14 August 1998)

Last Updated: 11 November 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	SG 3069 of 1995

IN THE MATTER OF MOAGE LIMITED (IN LIQUIDATION)

BETWEEN:	MOAGE LIMITED (IN LIQUIDATION) Applicant
AND:	JOSEPH GRANT JAGELMAN, BASEFORM PTY LTD, RHETFORD PTY LTD, DI DARKE PTY LTD AND TUNAX PTY LTD FIRST RESPONDENTS COUNTY NATWEST SECURITIES AUSTRALIA THIRD RESPONDENT ATLANTIC CAPITAL CORPORATION FOURTH RESPONDENT FAI TRADERS INSURANCE COMPANY LTD, FAI GENERAL INSURANCE COMPANY LTD AND FAI INSURANCES LTD FIFTH RESPONDENTS MALLESONS STEPHEN JAQUES SIXTH RESPONDENT

JUDGE:	BURCHETT J
DATE:	14 AUGUST 1998
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

In this matter I am asked to set aside, or to excuse the party served from compliance with, a notice to produce which has been issued in support of a motion for security for costs. The principal application is brought by a company in liquidation. It is conceded that an order for security for costs is appropriate and that only the quantum will be in issue upon the motion for security. A further question, perhaps, may be whether the security should be in instalments or not, although I have already indicated during argument that I would see it, at the moment, as a case in which the security, which is offered to be provided by bank guarantee, should almost certainly not be broken up into instalments.

The notice to produce, other than formal parts, reads as follows:

"FAI Traders Insurance Company Ltd, FAI General Insurance Company Ltd and FAI Insurances Ltd (the Fifth Respondents) require you to produce at the Directions Hearing in this matter at 9.30am on 5 June 1998 the following documents for the purpose of evidence:

1. All documents recording or referring to any arrangement or understanding between Moage Limited (In Liquidation) ("Moage") and any other person or persons (including any corporation) in respect of the following matters:

(a) The provision of funding to Moage to enable it to meet the costs of the liquidation;

(b) The provision of funding to Moage to enable it to meet its costs and disbursements of proceeding No. SG3069 of 1995 in the Federal Court of Australia;

(c) The provision of funding to Moage to enable it to meet the costs and disbursements of the respondents in the said proceeding, if so ordered by the Court;

(d) The payment by Moage to any other person of the whole or part of the proceeds of any judgment recovered in the said proceeding.

2. The Deed of Novation between `Tiger Investment S.A., Edja B.V. the Company, the liquidator and himself' referred to in the minutes of a meeting of creditors of Moage held on 13 February 1998.

3. Any funding agreement or amended funding agreement between any or all of `the Company, the liquidator and himself' and any other parties, including but not limited to, Tiger Investment S.A. or Edja B.V."

What is said in support of the motion to excuse the applicant from compliance with the notice to produce is that its concession makes that notice irrelevant. If it is irrelevant, a notice to produce in these terms, which could have a collateral impact, should not, in my opinion, be permitted to be enforced.

As I understand the matter, and I have confirmed this with the applicant's senior counsel, the applicant does not seek any allowance, in the exercise of my discretion, in respect of the fixing of an amount to be provided as security for or by reason of: (a) any impecuniosity of those who would benefit, or any difficulty which the applicant might have in providing security in such amount as the court might consider proper; or (b) any discretionary consideration pointing to a reason for reducing the amount of the security on a ground related to the nature or the availability of finance to be relied on by the liquidator in respect of the litigation.

In these circumstances, I think that the notice to produce is indeed irrelevant and oppressive. I think there would remain a discretion as to the amount of the security to be provided, but it would not be a discretion dependent upon any issue as to which the notice to produce could possibly provide any assistance, and for these reasons I will make the order sought in the applicant's notice of motion.

I think there would have been a valid ground for a costs order in its favour, had the party issuing the notice to produce, upon the concession being made, then refrained from pressing the notice to produce. It would have been entitled to ask for its costs in that situation, but, as it chose to proceed with the matter, there is no logical reason to think that the lateness of the concession made any difference at all. It would equally have chosen to proceed, in my opinion, had the concession been made a week ago. For that reason, I think it is appropriate to make the order sought that the applicant's costs of the motion be paid by the fifth respondent. I so order. But, of course, as is usual under the rules of the court, there cannot be any taxation of them at this stage.

In his absence, I will reserve to Mr Williams' clients (the first respondents) liberty to apply on three days notice should there be some problem in relation to his notice to produce, but, subject to any variation that might lead to, I make the same substantive order in the applicant's motion to set aside the notice to produce issued by the first respondents, which is in substantially the same terms as those of the fifth respondents' notice to produce. I think it would not be appropriate to make any costs order in that motion at this stage. I grant liberty to apply as to a costs order, if so advised.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Burchett

Associate:

Dated: 21 August 1998

Counsel for the Applicant:	Mr J C Kelly SC
Solicitor for the Applicant:	Piper Alderman
Counsel for the 3rd Respondent:	Mr D J Hammerschlag
Solicitor for the 3rd Respondent:	Allen Allen & Hemsley
Counsel for the 5th Respondents:	Mr M A Pembroke SC
Solicitor for the 5th Respondents:	Blake Dawson Waldron
Date of Hearing:	14 August 1998
Date of Judgment:	14 August 1998