Barton v Minister for Foreign Affairs

Judgment 1HIS HONOUR: Three interlocutory applications are listed before me for hearing today. The first in time is an interlocutory process filed on behalf of the plaintiff on 24 February 2011. It seeks leave to continue proceedings against the fourth defendant, which is in liquidation. It also seeks leave to amend the originating process and to further amend the points of claim. It seeks the joinder of a new party as fifth defendant. 2The second interlocutory process was filed for the first, second and third defendants on 28 February 2011. It seeks an order that the plaintiff provide security for those defendants' costs in the amount of $60,000. 3The third interlocutory process is brought by notice of motion filed on 17 June 2011 by the first to third defendants. It seeks, amongst other orders, an order that the proceedings be dismissed for want of prosecution. 4The plaintiff gives his residential address as an address in Hong Kong. He commenced these proceedings through his solicitor on 12 March 2010. The originating process was supported by an affidavit of the plaintiff's son which deposed to material facts on which the plaintiff would rely. 5Points of claim were filed on 11 May 2010 and amended on 22 June 2010. The defendants filed a substantive affidavit of the first defendant on 2 August 2010 and the plaintiff filed an affidavit in reply by the plaintiff's son on 27 August 2010. Thus far the proceedings were conducted on both sides with proper dispatch. 6As amended on 22 June 2010, the plaintiff's claim appears essentially to be as follows. He says he was induced to purchase shares in the fourth defendant, representing 25 per cent of that company's issued capital, and was induced to make loans to the fourth defendant in the amount of $117,500 as a result of representations allegedly made by the first defendant to the plaintiff's son. It is said that those misrepresentations were misleading and that there was no reasonable basis for alleged predictions as to the viability or profitability of the business the fourth defendant was to carry on. 7It is also alleged that the fourth defendant failed to keep proper financial records. The plaintiff pleaded that he had not been recorded on the Australian Securities and Investments Commission's register as a shareholder of the fourth defendant. He claimed that the fourth defendant did not pay dividends and it appears from an affidavit of the plaintiff's son, Thomas Lee, that the plaintiff also complains that the fourth defendant made payments in reduction of a loan to another shareholder but not in reduction of the plaintiff's loan. 8The business carried on by the fourth defendant was a car wash business. It failed. On 26 November 2010 voluntary administrators were appointed to the fourth defendant. 9So far as the conduct of these proceedings is concerned, it appears there was an issue concerning discovery raised at the end of 2010. On 13 December 2010 the matter was stood over by consent to 31 January 2011 and on that day, at the plaintiff's request, it was further adjourned to 28 February 2011. Meanwhile, on 24 February the plaintiff filed the first of the interlocutory processes which was listed for hearing today. 10That process was supported by an affidavit of the solicitor then acting for the plaintiff. He annexed to his affidavit a proposed further amended points of claims. The proposed further amended points of claim, if filed, would join as a fifth defendant a company called Law & Cheung Pty Limited, which was the majority shareholder of the fourth defendant and a party to the agreement by which the plaintiff acquired a 25 per cent shareholding in the fourth defendant. 11The proposed further amended points of claim pleaded additional grounds on which the plaintiff sought to set aside the agreement by which he acquired shares in the plaintiff. However, it appears from that agreement that the plaintiff paid only a nominal price for the shares, albeit that he also agreed to provide a loan to the fourth defendant. 12The plaintiff, by his interlocutory process, sought leave to proceed against the fourth defendant. I infer that he would claim that the fourth defendant is liable to repay the loan. The proposed further amended points of claim also pleads that the second and third defendants, as director of the fourth defendant, caused it to make repayments of the loan to Law & Cheung Pty Limited in preference to the plaintiff's loan. This would appear to be relevant to the claim for relief against oppression. 13I think it clear from the affidavits filed for the plaintiff and from the proposed further amended points of claim that if the plaintiff proposed pursuing the claims in these proceedings, he would necessarily have to pursue his claim to amend further the points of claim and he would wish to pursue his application for leave to continue the proceedings against the fourth defendant. 14As I have said, the defendant's application for security of costs was filed on 28 February 2011. On that day both applications were stood over to 22 March 2011. On 22 March 2011 orders were made listing both applications for hearing on 17 May 2011. The plaintiff was ordered to file and serve any further evidence in support of his interlocutory application by 4 April 2011. He was ordered to file and serve an outline of submissions in support of his interlocutory application by the same date and ordered to serve any evidence in opposition to the defendants' application for security for costs by 18 April 2011. 15The plaintiff did not file any further evidence in support of his interlocutory application, nor any evidence in opposition to the defendant's application. He failed to comply with the requirement that he file and serve an outline of submissions in support of his interlocutory application by 4 April 2011. 16On 16 May 2011 the solicitor for the plaintiff advised the associate to Barrett J, who was the Corporations List judge, that he was instructed that the plaintiff's wife had been diagnosed with cancer and he had to take care of her in China and was not in a position to proceed with the hearing fixed for the next day. The plaintiff requested, and the first and third defendants consented to, an adjournment of that hearing. The applications were relisted for hearing today. 17On the same day further orders were made in relation to the service of evidence and filing and service of an outline of submissions. The time for the plaintiff to file and serve any further evidence in support of his interlocutory application and to serve any evidence in opposition to the defendants' application for security for costs was extended to 31 May 2011. The plaintiff was ordered to file and serve the outline of submissions in support of his interlocutory application by 31 May 2011. No further evidence has been served by the plaintiff and no submissions were filed or served as required by those orders. 18On 16 June 2011 the solicitor for the first to third defendants had a telephone conversation with the plaintiff's solicitor, Mr Chao Deng of William Chan & Co. She advised that she had instructions to apply for the proceedings to be dismissed. Mr Deng advised that he had difficulty in getting instructions from his client, from whom he had not heard for a long time, and proposed to file a notice of ceasing to act. In fact, on 7 June 2011 Mr Deng had filed notice of his intention to file a notice of ceasing to act. On 17 June 2011 he filed a notice of ceasing to act. 19The notice of ceasing to act stated that the residential or business address of the plaintiff last known to Mr Deng was an address in Mount Kellett Road, Hong Kong. Rule 4.5 of the Uniform Civil Procedure Rules 2005 requires that a person's address for service be the address of a place in New South Wales (other than a DX address) at which documents may be left for the person during ordinary business hours and to which documents in the proceedings may be posted to the person. Since the filing of the notice of ceasing to act, the plaintiff has not had an address for service in New South Wales. 20The third of the applications before me, that is to say, the first to third defendants' notice of motion seeking to have the proceedings summarily dismissed, was served on William Chan & Co on 17 June 2011 before the first to third defendants' solicitors were served with a notice of seeking to act. That was good service. For abundant caution the notice of motion and supporting affidavit have also been sent by post to the address given for the plaintiff in Hong Kong. However, the tracking record of delivery of that document records " incorrect address - recipient moved. " 21On 23 June 2011 the defendant's solicitor had a further conversation with Mr Deng of William Chan & Co. She asked whether Mr Deng was aware that the plaintiff had moved from the Mount Kellett Road address in Hong Kong. Mr Deng advised he was not aware of that matter. He said he corresponded with the plaintiff at that address but also had other means to contact him. The defendants' solicitor, Ms Sin, asked to be provided with that other means of contact. Mr Deng said he would have to ask his client first and would come back to her. Despite a follow-up call, there has been no further advice from Mr Deng as to other means of contacting the plaintiff. 22When the matters came on for hearing before me this morning there was no appearance for the plaintiff. The matter was duly called. 23Thus, the present position is that the plaintiff has no address for service in New South Wales, that it appears that the only address for him known to the defendants and the address stated in the notice of ceasing to act is no longer the address for the plaintiff. The defendants have no other means of contacting him except through his former solicitor, who no longer acts. 24Rule 12.7 of the Uniform Civil Procedure Rules provides that if a plaintiff does not prosecute the proceedings with due despatch the court may order that the proceedings be dismissed or make such other order as it thinks fit. The power to dismiss an action for want of prosecution is not defined or confined by rigid guidelines, but given the drastic nature of summary dismissal it is a power to be exercised with caution, and I think only in a clear case, where justice so requires. In exercising the power under that rule, the court is required to have regard to the matters in ss 56, 57 and 58 of the Civil Procedure Act 2005. The essential requirement is that the court seek to act in accordance with the dictates of justice. 25In the present case the plaintiff does seem to have pursued the proceedings with reasonable diligence up to about the time the fourth defendant went into voluntary administration. It has subsequently been wound up and is subject to a creditors' voluntary winding-up. It can be inferred also from the filing of the plaintiff's interlocutory application on 24 February 2011 that at that time the plaintiff still continued to pursue the claim. 26However, since then nothing has been done by the plaintiff to bring his application on for hearing. I infer that if the plaintiff really proposed to seek to have his claim heard and determined, he would have taken steps to pursue the application, at least to further amend the points of claim. He also would not have left the defendants in the position that they had no place, on the face of it, at which documents in the proceedings could be served, and he would have appeared through some representative at today's hearing. 27In my view, the plaintiff has not prosecuted the proceedings with due despatch and I infer he has no intention of doing so. In those circumstances, it is appropriate to dismiss the proceedings, and I will in due course make that order. 28I order that the plaintiff's interlocutory application filed 24 February 2011 be dismissed. In case I am wrong in my conclusion that the proceedings themselves should be summarily dismissed, I will deal briefly with the defendants' application for security for costs. Whilst there was considerable delay in that application being brought, the delay was substantially explained by steps taken by the first to third defendants to ascertain whether the plaintiff had assets available here or elsewhere to meet an adverse costs order. 29I do not think there are any discretionary reasons which would justify the refusal of an order for security for costs. It does not appear that the plaintiff's claim is particularly strong. There is certainly no material to suggest that to order security for costs would be to stultify the proceedings. The plaintiff is a foreign resident. The only real question is the amount for which security should be ordered. 30It appears that the plaintiff is a resident of Hong Kong. However, the evidence that the plaintiff no longer resides at the only address given for him in Hong Kong raises doubt as to whether he is still a resident of Hong Kong, or whether he may now be resident in another part of China. In correspondence from William Chan & Co it was said that the plaintiff has to take care of his wife in China, and, in the context in which that letter was written, it may well refer to parts of China other than Hong Kong. 31Hong Kong is a jurisdiction in which a judgment of this court could be enforced by a simple process of registration under the Foreign Judgments (Reciprocal Enforcement) Ordinance of that jurisdiction. The evidence on this application is that in the absence of contest, the cost of registering a judgment with the High Court of Hong Kong is in the order of about $7,500. 32If I were satisfied that the plaintiff is resident in Hong Kong, then I think the appropriate quantum for security for costs would be an amount of about $7,500, being the cost which the first to third defendants would incur in registering a favourable costs order in that jurisdiction. That approach is consistent with Barton v Minister for Foreign Affairs [1984] 2 FCR 463, which in turn applied a decision of Rath J in Connop v Varena Pty Ltd [1984] 1 NSWLR 71. It is also consistent with Dense Medium Separation Powders Pty Limited v Gondwana Chemicals Pty Limited [2011] NSWCA 84 at [32]; MindShare Communications Ltd v Orleans Investments Pty Ltd [2000] FCA 521; and Maxim's Caterers Ltd v Magnona Pty Ltd (No 1) [2010] FCA 450. 33Counsel for the first and third defendants placed reliance on the decision in Logue v Hansen Technologies Ltd [2003] FCA 81; (2003) 125 FCR 590, in particular at [55] and [59]. But Weinberg J in that case did not address the question as to whether the quantum of security should be confined to the amount required to be spent to put the defendants in as secure a position in enforcing a judgment for costs against an individual foreign plaintiff as they would be if such a judgment were obtained against an individual plaintiff resident in the jurisdiction. 34However, there is a point of distinction in this case, namely, that it is not clear that Hong Kong is a place which is still the plaintiff's place of residence, let alone that he has assets there. For all it appears, to enforce a judgment for costs the first to third defendants may have to register a judgment in other parts of China in which reciprocal arrangements for the registration of foreign judgments are not in place. 35In those circumstances I think the first to third defendants would be entitled to security for a proper estimate of the amount of costs which they could be expected to recover if the costs order were made in their favour on the conclusion of the proceedings adversely to the plaintiff. Accordingly, were it necessary to do so, I would order security for costs in the sum of $60,000 in respect of the costs of the first, second and third defendants. 36However, for the reasons I have given earlier, I think this matter ought be summarily dismissed for want of prosecution. I order that the amended originating process be dismissed and that the plaintiff pay the defendants' costs. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 July 2011