Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited trading as ANI Bradken Rail Transportation Group (No 3) [2010] FCA 32 (2 February 2010)

Last Updated: 3 February 2010

FEDERAL COURT OF AUSTRALIA

Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited trading as ANI Bradken Rail Transportation Group (No 3) [2010] FCA 32

Citation:	Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited trading as ANI Bradken Rail Transportation Group (No 3) [2010] FCA 32
Parties:	LYNX ENGINEERING CONSULTANTS PTY LTD (ACN 059 949 469) v THE ANI CORPORATION LIMITED TRADING AS ANI BRADKEN RAIL TRANSPORTATION GROUP (ACN 000 421 358), BRADKEN RESOURCES PTY LTD (ACN 098 300 988), BRADKEN LIMITED (ACN 108 693 009) and WORLEYPARSONS SERVICES PTY LTD (ACN 001 279 812)
File number(s):	WAD 219 of 2006
Judge:	MCKERRACHER J
Date of judgment:	2 February 2010
Catchwords:	PRACTICE AND PROCEDURE – costs – principles applicable to exercise of discretion to award security for costs – quantum of security – application for gross sum of costs order – assessment of gross sum pursuant to O 62 r 4(2)(c) of the Federal Court Rules (FCR) – application of discount – relationship between assessment of a gross sum and principles of taxation of costs COSTS – strike out application – application for costs to be paid forthwith pursuant to O 62 r 3 FCR – factors relevant to exercise of discretion as to whether costs should be paid forthwith – failure to rectify deficiencies in pleading – relevance of award of security for costs
Legislation:	Corporations Act 2001 (Cth) s 1335 Federal Court of Australia Act 1976 (Cth) s 56 Federal Court Rules O 28, O 62 r 3, O 62 r 4(c)
Cases cited:	Allstate Life Insurance Co & Ors v Australia & New Zealand Banking Group Ltd & Ors (No 13) [1995] FCA 626 Australian Quarry Holdings v Dougherty & Ors (1992) 8 ACSR 569 Batten v CTMS Ltd [1999] FCA 1576 BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857 Bradken Rail Transportation Group (No 2) [2009] FCA 363 Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 Capital Webworks Pty Ltd v Adultshop.com.Limited [2008] FCA 40 Caruso Australia Pty Ltd v Portec (Australia) Pty Ltd (1984) 1 FCR 311 Dominion Brewery Ltd v Foster (1897) 77 LT 507 Famel Pty Ltd v Burswood Management Ltd (1989) ATPR 40-962 Farmitalia Carlo Erba SrL v Delta West Pty Ltd [1994] FCA 950; (1994) 28 IPR 336 Gemelle Investments Pty Ltd v Federal Commissioner of Taxation [1983] HCA 47; (1982) 82 ATC 4,432 Harpur v Ariadne Australia Ltd (1984) 2 Qd R 523 Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited trading as ANI Seven Network Limited v News Limited [2007] FCA 2059 Procon (Great Britain) Ltd v Provincial Building Co Ltd [1984] 1 WLR 557 Rosenfield Nominees Pty Ltd v Bain & Co (1988) 14 ACLR 46 Sent v Jet Corp of Australia Pty Ltd (1984) 2 FCR 211 Thunderdome Racetiming & Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 Vasyli, Anthony v AOL International Pty Ltd & Anor [1996] FCA 804 Wainter Pty Ltd ACN 008 725 586 v Freehills (A Firm) (No 2) [2009] FCA 770
Date of hearing:	10 December 2009
Place:	Perth
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	40
Counsel for the Applicant:	JJ Garnsey QC with DJ Garnsworthy
Solicitor for the Applicant:	Karp Steedman Ross-Adjie
Counsel for the First Respondent:	J Campbell
Solicitor for the First Respondent:	DLA Phillips Fox
Counsel for the Second and Third Respondents:	SK Dharmananda
Solicitor for the Second and Third Respondents:	Corrs Chambers Westgarth
Counsel for the Fourth Respondent:	DJ Pratt
Solicitor for the Fourth Respondent:	Jackson McDonald

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 219 of 2006

BETWEEN:

LYNX ENGINEERING CONSULTANTS PTY LTD (ACN 059 949 469) Applicant

AND:	THE ANI CORPORATION LIMITED TRADING AS ANI BRADKEN RAIL TRANSPORTATION GROUP (ACN 000 421 358) First Respondent BRADKEN RESOURCES PTY LTD (ACN 098 300 988) Second Respondent BRADKEN LIMITED (ACN 108 693 009) Third Respondent WORLEYPARSONS SERVICES PTY LTD (ACN 001 279 812) Fourth Respondent

JUDGE:	MCKERRACHER J
DATE OF ORDER:	2 FEBRUARY 2010
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1. The motion for the costs of the strike out application to be paid by the applicant forthwith be dismissed.
2. The amount for which security for costs be provided by the applicant in favour of the second and third respondents is fixed at $500,000.
3. The amount for which security for costs be provided by the applicant in favour of the fourth respondent is fixed at $400,000.
4. Those parties do either:

(a) within five weeks file a consent minute of orders as to the terms of payment of instalments of the security for costs referred to in Order 3; or

(b) absent agreement, within six weeks file submissions not exceeding two pages as to the terms of payment of instalments of the security for costs referred to in Order 3.

5. Costs of today be in the cause.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 219 of 2006

BETWEEN:

LYNX ENGINEERING CONSULTANTS PTY LTD (ACN 059 949 469) Applicant

AND:	THE ANI CORPORATION LIMITED TRADING AS ANI BRADKEN RAIL TRANSPORTATION GROUP (ACN 000 421 358) First Respondent BRADKEN RESOURCES PTY LTD (ACN 098 300 988) Second Respondent BRADKEN LIMITED (ACN 108 693 009) Third Respondent WORLEYPARSONS SERVICES PTY LTD (ACN 001 279 812) Fourth Respondent

JUDGE:	MCKERRACHER J
DATE:	2 FEBRUARY 2010
PLACE:	PERTH

REASONS FOR JUDGMENT

INTRODUCTION

1. These reasons deal with questions of costs. The first relates to security for costs and the second, payment of costs following an earlier application and judgment (Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited trading as ANI Bradken Rail Transportation Group (No 2) [2009] FCA 363).

SECURITY FOR COSTS

2. The second and third respondents (Bradken) and the fourth respondent (WorleyParsons) each apply for security for costs of the proceedings as against the applicant (Lynx). Bradken seeks orders that Lynx give security for Bradken’s estimated costs in this matter in the amount of $852,110 less a discount in respect of security already given ($75,000).
3. Bradken pursues its application for security for costs pursuant to O 28 Federal Court Rules 1979 (FCR), s 56 of the Federal Court of Australia Act 1976 (Cth) (FCA) and s 1335 of the Corporations Act 2001 (Cth) (CA) and the inherent jurisdiction of the Court.
4. Relevantly, the Rules and the two statutes respectively provide as follows:

Order 28 Security for costs

1 Interpretation

In this Order:

1. references to an applicant extend to any person who makes a claim for relief in any proceedings; and
2. references to a respondent extend to any person against whom a claim for relief is made in any proceeding.
   

2 Application

(1) An application that an applicant shall provide security for costs shall be made by motion upon notice.
(2) The notice of motion shall be supported by an affidavit stating the material facts and the grounds upon which security for costs is sought.

3 Cases for security

(1) When considering an application by a respondent for an order for security for costs under section 56 of the Act, the Court may take into account the following matters:

(a) that an applicant is ordinarily resident outside Australia;
(b) that an applicant is suing, not for the applicant’s own benefit, but for the benefit of some other person and the Court has reason to believe that the applicant will be unable to pay the costs of the respondent if ordered to do so;
(c) subject to subrule (2), that the address of the applicant is not stated or is incorrectly stated in the originating process;
(d) that an applicant has changed address after the commencement of the proceeding in an attempt to avoid the consequences of the proceeding.

(2) The Court shall not order an applicant to give security by reason only of paragraph (1) (c) if it appears to the Court that the failure to state his address or the mis-statement of his address was made without intention to deceive.

4 Manner of giving security

Where the Court orders an applicant to give security for costs, the security shall be given in such manner, at such time, and in such terms (if any), as the Court may by order direct.

5 Stay or dismissal

(1) Where the Court orders that the applicant provide security for costs, it may order:

(a) that the proceeding on any claims by the applicant for relief be stayed until security is provided; or
(b) that if the applicant fails to comply with the order to provide security within the time limited in the order, the proceeding be thereafter stayed or dismissed.

(2) Subject to subrule (1), the Court may set aside or vary any order made under this Order.
(3) Where a proceeding stands dismissed pursuant to an order under this Order, that order shall not be set aside or varied except in special circumstances.

6 Saving

This Order does not affect the provisions of any Act under which the Court may require security for costs to be given.

56 Security

(1) The Court or a Judge may order an applicant in a proceeding in the Court, or an appellant in an appeal under Division 2 of Part III, to give security for the payment of costs that may be awarded against him or her.

(2) The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs.

(3) The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given.

(4) If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed.

(5) This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the furnishing of security.

1335 Costs

(1) Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.

5. Lynx accepts that the threshold identified in s 1335 CA has been established. It does not accept that the Court should make the order for security for costs and certainly opposes security being granted in the sum requested by Bradken.
6. As s 56 FCA makes clear, the security should be of such an amount and given at such time and in such manner and form as the Court directs. Section 1335 CA focuses on ‘sufficient security’ being given for costs which the impecunious plaintiff may be ordered to pay in the event the defendant is successful. The order is discretionary.
7. In Capital Webworks Pty Ltd v Adultshop.com.Limited [2008] FCA 40 (at [10]-[14], I outlined what I considered to be the relevant principles, saying:
   10. There is of course no doubt about the power under s 56 of the Federal Court Act 1976 (Cth) to order an applicant (or a respondent) to give security for costs and also a power to increase the amount of any security ordered to be given. Relevant considerations have been referred to in many cases. Amongst the list of considerations which may be taken into account are the following:
       
       1. whether the claim is genuine and has a reasonable prospect of succeeding;
       2. whether the party applying for security for costs is attempting to shut down a genuine claim;
       3. whether the impecuniosity might have been caused or contributed to by the conduct of the applying party;
       4. whether, in the case of a corporation, those standing behind the corporation have made their assets available to fund the costs of litigation and in turn for the benefit that they might receive if it is successful; and
       5. whether making the order would frustrate the claim.
          
   11. There are also instances where orders have been made where the existence or otherwise of the matter of public interest has been taken into account in the exercise of the discretion.
       
   12. In addition to the express power to increase the security to be given (s 56(3) of the Federal Court Act 1976), O 28 r 5(2) of the Federal Court Rules provides that ‘... the Court may set aside or vary any order made under this Order’. Ordinarily in an application to set aside or vary an order of a substantive nature made after a contested hearing it would be expected that a material change in circumstances since the original order was made has occurred or new evidence provided which was not otherwise reasonably available at the time of the granting of the order: Truth about Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [2001] FCA 1603.
       
   13. The primary purpose of an order for security for costs is to ensure that the successful party has protection for the costs incurred in defending the unsuccessful party’s proceedings. It is in the circumstances of the impecuniosity of the unsuccessful party pursuing the litigation that protection is afforded to the successful party. In the present case there is no dispute in relation to the issue of impecuniosity relative to a possible costs order.
       
   14. It is not the case that the Court should give a complete and certain indemnity to a claimant: Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171 at 175. In the previous application the Court exercised its discretion to fix the amount of security to be provided by Adultshop at half of the amount sought. There is to be a balance between ensuring that an impecunious corporation or other applicant does not use the impecuniosity in order to put unfair pressure on another party on the one hand and, on the other hand, between shutting out an impecunious applicant on its entitlement to pursue a legitimate case.
8. More recently in Wainter Pty Ltd ACN 008 725 586 v Freehills (A Firm) (No 2) [2009] FCA 770, Barker J confirmed (at [9]):
   9. It is well understood, and little authority need be recited in this regard, that in ordering security for costs the Court does not give a full indemnity. The effect of this principle is that the Court has a discretion to choose such amount as it thinks fit in all the circumstances of the case. The amount will not exceed the estimate of party and party costs but it may be less. The Court usually takes "a broad brush" approach to the determination of the amount. In that regard the process of estimation embodies to a considerable extent reliance upon the "feel" of the case after considering relevant factors. It is not usually necessary to descend into the minutiae of the claims and the Court does not sit as a taxing officer would to determine the amounts. However, it may be appropriate to consider some of the detail of the estimates made by the parties in determining quantum. See generally in relation to these principles Reinsurance Australia Corporation Ltd v HIH Casualty and General Insurance (in liquidation) [2003] FCA 803 at 16-17.
9. Bradken also submits that it has good defences to Lynx’s claim which weighs heavily against a discount and that there should be no discount as the costs estimate provided by Bradken is ‘already a conservative estimate’. It is based on a trial of four weeks and circumstances where there is a reasonable prospect it may be six to eight weeks. It contains no provision for dealing with interrogatories foreshadowed by Lynx and contains no provision for dealing with further interlocutory disputes which given the history of the matter to date appears to be inevitable. That is supported, it is argued, by Lynx’s actual experience in costs as set out in its own affidavit where the legal costs of Lynx to date exceed $2 million.
10. Bradken argues (on the basis of Farmitalia Carlo Erba SrL v Delta West Pty Ltd [1994] FCA 950; (1994) 28 IPR 336) that one valid way of identifying quantum of an appropriate sum is by establishing the likely award of party and party costs and applying a discount if appropriate based on the following factors:

(a) the chance of the case collapsing before trial;
(b) the relative prospects of success;
(c) whether the order would be oppressive; and
(d) whether the material is sufficient to support the costs claimed.

11. In the present circumstances, I am not persuaded that those factors are all appropriate for the following reasons. It is not possible to formulate a clear impression as to the prospects of success. I accept that the claim is not fanciful. Whilst a factor for consideration by the Court is whether Lynx has a reasonably good prospect of success (Australian Quarry Holdings v Dougherty & Ors (1992) 8 ACSR 569), it is not appropriate in an application for security for costs to embark on a detailed consideration of the merits of the action: Caruso Australia Pty Ltd v Portec (Australia) Pty Ltd (1984) 1 FCR 311 at 313). Lynx does have some challenges ahead of it.
12. I accept that Bradken is entitled to protection. It should not be so much as to stultify any claim by Lynx.
13. The Court has discretion pursuant to O 62 r 4(2)(c) FCR to order that a party should be entitled to costs by way of a gross sum rather than taxed costs. Sackville J in Seven Network Limited v News Limited [2007] FCA 2059 (at [25]) said:
    25. The authorities establish a number of principles applicable to a claim for a gross sum costs order to be made pursuant to FCR, O 62 r 4(2)(c):

(i) The purpose of the subrule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum v Johnson (No 2), at 120, per von Doussa J, applying Leary v Leary [1987] 1 All ER 261; Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738, at 742 [21] per Giles JA.
(ii) An order that costs be assessed as a gross sum does not envisage that any process similar to that involved in taxation should take place. On the contrary, the Court applies a much broader brush than would be used on a taxation of costs pursuant to O 62: Beach Petroleum v Johnson (No 2), at 120, 124, per von Doussa J; Harrison v Schipp, at 743 [22], per Giles JA.
(iii) The Court should be confident that the approach taken to the estimate of costs is logical, fair and reasonable. The Court should be astute to avoid both overestimating the recoverable costs and underestimating the appropriate amount, for example by applying an arbitrary discount to the amounts claimed: Beach Petroleum v Johnson (No 2), at 123, per von Doussa J.
(iv) Although the power to assess a gross sum for costs involves the exercise of a discretion, it is necessary to bear in mind fundamental principles applicable to an assessment of costs on a party and party basis. These include the principles contained in O 62 r 19 (embodying the ‘necessary or proper’ test) and those stated in Stanley v Phillips [1966] HCA 24; (1966) 115 CLR 470, at 478, per Barwick CJ (on a party and party taxation the emphasis is upon obtaining adequate representation to enable justice to be done, not upon the propriety of steps taken to ensure maximum success in the cause): Auspine Ltd v Australian Newsprint Mills Ltd [1999] FCA 673; (1999) 93 FCR 1, at 4-5 [12]-[15], per O’Loughlin J; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629, at [6]-[8], per Mansfield J.
(v) Although the methodology permitted by O 62 r 4(2)(c) initially involves a broader approach than on a normal taxation, the provisions of O 62 and Schedule 2 provide assistance in fixing an appropriate gross sum: Charlick Trading Pty Ltd v ANRC, at [10], per Mansfield J.

14. Bradken points out that the range of party and party costs awarded as a proportion of solicitor and client costs seems to fall broadly within the range of 60 to 70 per cent of total costs and disbursements. Bradken also submits that it would be appropriate for the Court to make a gross sum determination in this matter and that in the event that Lynx is unsuccessful in the proceedings, the Court would need to assess three sets of legal costs incurred over the course of over three years. Bradken submits that it is appropriate to assess the amount of security for costs in accordance with the usual range of recoverable costs in gross costs determinations and consistent with the broad brush approach taken to gross sum determinations, it would be appropriate to use a figure of 70 per cent, according to Bradken, as a reasonable estimate of Bradken’s party and party costs. On that basis, Bradken contends that the party and party costs recoverable from Lynx would be $852,110.
15. As a matter of principle, I consider the approach taken in Seven Network is distinguishable from that which is suitable to the current case. The primary reason for this is simply that the observations made by Sackville J were at completion of an extremely lengthy trial rather than in advance of a case which is by no means small but is nowhere near the likely length of the Seven Network litigation. It seems to me that there are some fundamental philosophical differences between striking a figure for a gross sum at the completion of a case (a practice which I consider, with respect, is entirely appropriate) on the one hand as compared with estimating an appropriate figure for the purposes of s 56 FCA at the earlier stages of a case of this nature, before some of the discovery, interrogatories and trial.
16. From the Lynx point of view, although it opposes the grant of any security for costs, it estimates that the appropriate amount of security is at $300,000. That is based upon the scale of costs set out in an affidavit of the solicitor for Lynx.
17. Bradken submits that the scale figures relied upon by Lynx would, if applied to Bradken’s circumstances, indicate that Bradken can on a party and party basis expect to recover costs and disbursements of $485,100 to $605,840. It argues that those amounts are for the costs of trial preparation and the trial alone and do not include recoverable costs and disbursements in relation to costs to date (which exceed $600,000 on a solicitor and client basis) and costs and disbursements for dealing with interrogatories foreshadowed by Lynx.
18. WorleyParsons relies on essentially the same principles and statutory provisions. Before concluding my views on the Bradken claim, I will turn to WorleyParsons’ submissions.
19. WorleyParsons emphasises that once the Court’s jurisdiction has been invoked (which is not in dispute), the Court’s discretion is unlimited and unfettered save by a duty to act judicially: Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497.
20. It argues correctly that some of the discretionary factors identified by the Courts as relevant to the determination of applications for security for costs include:

(a) the loss that a respondent will suffer if a costs order remains unsatisfied;
(b) any delay by the respondent in applying;
(c) the strength and bona fides of the applicant’s case;

(d) whether the making of an order would prevent the applicant from prosecuting its action; and

(e) whether any inability of the applicant to meet a costs order has been caused by the respondent’s conduct.

21. Evidence pointed to by WorleyParsons in support of the application demonstrates that:

(a) Lynx does not own any land in Western Australia.
(b) Lynx has declined to put on any evidence of the nature and extent of its assets.

(c) Lynx has recently granted a fixed and floating charge over its assets securing a borrowing of $2,275,000 by a related corporation. The maximum prospective liability secured by the charge is $10,000,000.

22. WorleyParsons has observed that in addition, Lynx has put on affidavit evidence to the effect that Lynx’s own legal costs incurred (exceeding $2 million) are a significant burden to it. Indeed, this is one of the matters relied upon by Lynx in relation to the stay application. However as previously observed, Lynx has accepted that s 1335 CA is enlivened.
23. WorleyParsons has already incurred solicitor and client costs in relation to pre-action discovery and these proceedings in excess of $500,000. WorleyParsons estimates that its solicitor and client costs of trial will exceed $1,500,000. WorleyParsons’ costs estimates are commensurate with Bradken’s costs estimates.

Conclusion on security for costs

24. There is no fixed practice requiring the amount of security for costs to be at approximately two-thirds of the estimated inter parties costs on a party and party basis: Procon (Great Britain) Ltd v Provincial Building Co Ltd [1984] 1 WLR 557. The amount of the security is entirely discretionary: Procon; Gemelle Investments Pty Ltd v Federal Commissioner of Taxation [1983] HCA 47; (1982) 82 ATC 4,432 at 4,435.
25. A ‘sufficient’ amount does not require the Court to give a complete and certain indemnity (Famel Pty Ltd v Burswood Management Ltd (1989) ATPR 40-962 at 50,515) but one that is neither illusory nor oppressive, neither too little or too much, substantial but not in the nature of an indemnity: Dominion Brewery Ltd v Foster (1897) 77 LT 507.
26. The parties appear to be agreed that in the circumstances of the current proceeding, the appropriate course to take is to indicate the gross amounts at which security for costs should be ordered, if at all, and then to leave it to the parties to attempt to agree tranches at which the provision for security should be paid by certain dates. If agreement on those details cannot be reached, short submissions (no longer than two pages each) should be filed to enable final orders to be made.
27. For the reasons stated, I do consider that it is an appropriate case for ordering that security for costs be paid in respect of the costs which may be incurred by each of Bradken and WorleyParsons. In considering the amounts at which security should be ordered, it appears to me that the litigation is likely to be more complex and hard fought than Lynx suggests but on the other hand, it appears to me that each of Bradken and WorleyParsons have made allowances at the higher end of the scale, if not at the ‘Rolls Royce’ end of the scale as suggested by Lynx. Attempting to pinpoint precisely how many days and hours might be consumed in the detailed work ahead is quite unrealistic but an impression needs to be formed as a result of the considerable material compiled by each party including the draft costs estimates by each of the respondents. Having done that, I am of the view that a reasonable estimate for each of the respondents is that the appropriate amount in respect of which security for costs should be paid by Lynx is in respect of Bradken:

$500,000
In respect of WorleyParsons:
$400,000

28. I will allow the parties a period of five weeks in which to attempt to agree the timing and amount of instalments by which security should be paid.
29. If agreement cannot be reached within five weeks from the date of this judgment, the parties should each file within seven days thereafter submissions not exceeding two pages in length as to their respective positions on the timing and amount of instalments of security for costs payments.

Costs payable forthwith on strike out application

30. Bradken also seeks an order that Lynx pay costs of $32,374.40 forthwith in respect of costs orders made following successful application by Bradken to strike out the statement of claim in these proceedings.
31. There is power for the Court to order that costs of and incidental to such an application be payable forthwith pursuant to O 62 r 3 FCR. However, the usual position is that a party would not be entitled for payment of interlocutory costs forthwith unless the party establishes that the demands of justice require that there be a departure from that normal rule (Thunderdome Racetiming & Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 per Olney J at 312).
32. Bradken, however, contends that interlocutory costs should be paid forthwith in the present circumstances because there will be a long delay before completion of the matter when it would otherwise recover its legal costs. It draws on the example given in Allstate Life Insurance Co & Ors v Australia & New Zealand Banking Group Ltd & Ors (No 13) [1995] FCA 626.
33. Another reason given for ordering strike out costs to be payable forthwith may be where, upon filing the new statement of claim, there can be seen that it is, in effect, a new proceeding such that the costs of the application for strike out have been thrown away (Vasyli, Anthony v AOL International Pty Ltd & Anor [1996] FCA 804) or, alternatively, that the party ordered to pay the costs of the strike out application fails to attend to the rectification of the deficiencies despite being alerted to them at an early stage (Batten v CTMS Ltd [1999] FCA 1576).
34. Bradken specifically argues that in the present circumstances where it is unlikely that the matter will be resolved for at least the next 12 to 24 months, costs should be payable forthwith. And, secondly, that Lynx had ample opportunity to rectify the problems in its pleading in response to numerous requests to do so.
35. More specifically, the complaint raised was that the pleading concerned failed to identify which confidential information was misused, failed to give an indication as to which of the Lynx copyright works were alleged to have been reproduced by Bradken and the manner of reproduction and failed to articulate the basis on which copyright subsisted in the Lynx works that had been reproduced and whether or not Lynx contends that Bradken infringed copyright as a result of a two-dimensional reproduction or by way of a three-dimensional reproduction directly or indirectly.
36. These proceedings are complex. Lynx has been endeavouring within the constraints which may often confront an applicant on a matter such as this to bring its statement of claim into order as soon as reasonably possible. Nevertheless, I was firmly of the view that the statement of claim was deficient which is why I struck it out.
37. An additional matter for consideration in the exercise of discretion is the fact that a significant order for security for costs in favour of Bradken will be made and while Bradken will, if it ultimately succeeds, not have the benefit of the costs awarded on the strike out application for a considerable period of time, the security for costs application should go some considerable way in ensuring that it will be protected on the existing costs order regardless of the outcome.
38. I do not consider that the factors relied upon by Bradken warrant a departure from the normal rule. I will not order that costs of the strike out application are to be paid forthwith.

Costs of today

39. A substantial portion of the argument in this motion has been concerned with a stay application which was initially brought by Lynx but which was settled. In relation to the remaining aspects of the application, Bradken has failed in its application for an order that Lynx pay costs of the strike out application forthwith and succeeded in its application for security for costs but not to the amount at which it pitched its claim. WorleyParsons, likewise, has fallen short of the amount sought but has received security for costs.
40. In the circumstances the appropriate order is that the costs of today be in the cause. The orders will be:
    1. The motion for the costs of the strike out application to be paid by the applicant forthwith be dismissed.
       
    2. The amount for which security for costs be provided by the applicant in favour of the second and third respondents is fixed at $500,000.
       
    3. The amount for which security for costs be provided by the applicant in favour of the fourth respondent is fixed at $400,000.
       
    4. Those parties do either:

(a) within five weeks file a consent minute of orders as to the terms of payment of instalments of the security for costs referred to in Order 3; or

(b) absent agreement, within six weeks file submissions not exceeding two pages as to the terms of payment of instalments of the security for costs referred to in Order 3.

5. Costs of today be in the cause.
   

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Associate:

Dated: 2 February 2010