Bodycorp Repairers v Maisano

Supreme Court of Victoria|2013-07-31|Before: ELLIOTT J

PRACTICE AND PROCEDURE - SECURITY FOR COSTS - previous orders for security for costs - previous application dismissed - previous undertaking to be personally liable for further costs - applications for further security - evidence previously tendered incorrect -additional undertaking by another to be personally liable for further costs - delay in determining application until after completion of trial - exceptional circumstances causing delay in tendering evidence in opposition - utility of further order - Supreme Court (General Civil Procedure) Rules 2005, rr 62.02(1), 62.04.

2 Accordingly, these applications are now being dealt with after the close of the case; that is, after all the evidence and submissions have been heard and the parties are awaiting a final judgment of the court. Maisano and the AAMI Defendants do not seek a stay in default of security being provided; they seek dismissal pursuant to the Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 62.04.

3 By reason of the nature and timing of the applications, together with the further undertaking that has been proffered, the applications will be dismissed.

4 It is necessary to set out in some detail the history of the numerous applications for security for costs in order to understand how it is that the matters now before the court have arisen.

5 This proceeding has been on foot since 2002. The first judgment handed down in relation to a security for costs application in this proceeding was on 12 January 2004.[1] On that occasion, the AAMI Defendants obtained an order for security for costs in the sum of $60,000. Between 2004 and October 2012, a number of further security for costs applications were made. Pursuant to those applications, security for costs was ordered in favour of Maisano on 19 April 2012 ($14,400) and 15 November 2012 ($30,000); security for costs was ordered in favour of the AAMI Defendants on 23 March 2007 ($10,000); and security for costs was ordered in favour of the then 7th and 8th defendants ("the Melton Defendants") on 8 March 2012 ($18,000) and 18 October 2012 ($10,000). The Melton Defendants settled with the plaintiff ("Bodycorp") on 16 May 2013, with security for costs moneys returned to Bodycorp.

6 Security for costs is now sought by the AAMI Defendants for the period from day 4 of the trial until the last day of trial, inclusive. The AAMI Defendants seek a further amount of $178,900 (representing 15 days, for both out-of-court work and hearing time). Maisano seeks a lesser sum, namely $111,500 (representing 12 days for his solicitors and 16 days for his counsel).

7 The relevant background to the proceeding generally is set out in my judgment delivered 2 May 2013.[2] I will not repeat that detail here.

8 On 24 April 2013, I heard applications by Maisano, the AAMI Defendants and the Melton Defendants for security for costs. At the end of the hearing on that day, I made orders for security for costs.[3] On 2 May 2013, I published my reasons for the orders made on 24 April 2013 ("the First Reasons").

9 As may be seen from the First Reasons, security for costs was ordered up to and including the first 3 days of trial. This was because the court was informed there was a prospect that the trial may only run for a short period of time; namely, as short as 3 days.

10 At the time of the present applications, by reason of the orders previously made, the total security for costs ordered to be provided by Bodycorp, and paid by Bodycorp, was as follows:

11 A pre-trial directions hearing was also held on 2 May 2013. At that time I was informed by counsel that it was unlikely the trial would be completed within 3 days. The trial was scheduled to commence on 6 May 2013. As part of the directions made, I ordered that any further affidavit material upon which Bodycorp wished to rely in resisting any further security for costs application be filed and served by 4.00 pm on 7 May 2013. I also ordered that any further application for security for costs be made at 2.00 pm on 8 May 2013.

12 The trial commenced on Monday, 6 May 2013. As anticipated, Maisano, the AAMI Defendants and the Melton Defendants made further applications for security for costs at 2.00 pm on 8 May 2013. Bodycorp filed and served further affidavit material in opposition to the applications, albeit very late. At the end of argument on 8 May 2013, I reserved my decision in relation to these further applications for security for costs.

13 On 9 May 2013, the trial did not proceed. A hearing was held before Daly AsJ in relation to privilege issues. The issues were heard and determined by her Honour. The trial recommenced on 13 May 2013.

14 On 13 May 2013, judgment was given by the court in relation to the applications made on 8 May 2013 for further security for costs. The applications were refused upon Tony Murdaca, the sole director and sole shareholder of Bodycorp ("Murdaca"), providing an undertaking to the court to be personally liable for any costs of the defendants incurred after 8 May 2013 in the event the defendants were successful at trial. As may be seen from the reasons published on 13 May 2013 ("the Second Reasons"),[4] the application was refused based on the undertaking given and the evidence before the court to the effect that Murdaca was the person "standing behind" Bodycorp for the purposes of the proceeding.[5]

15 On 13 May 2013, shortly after the court pronounced its orders in relation to the application for security for costs, senior counsel for the AAMI Defendants raised an issue in relation to the standing of Bodycorp to continue to prosecute this proceeding. It was submitted on behalf of the AAMI Defendants that if (as had been submitted by Bodycorp on 8 May 2013) Bodycorp was no longer acting as a trust company, then there must be a real issue as to whether or not Bodycorp was the proper plaintiff. It was submitted on behalf of the AAMI Defendants that unless Bodycorp could prove that it was the proper plaintiff, then the action must fail. Leave was sought by the AAMI Defendants to amend their defence to raise the issue.

16 In response, Bodycorp's counsel indicated the application to amend would be opposed. Counsel for Bodycorp referred to authority on the point. Senior counsel for the AAMI Defendants said they were not then in a position to argue the matter. Accordingly, I deferred any further submissions on the issue and the trial continued.

17 At the end of the day's hearing on 13 May 2013, I raised the issue of the position of Bodycorp in light of the matters that had been raised by the AAMI Defendants. I informed the parties that this additional issue should not be allowed to derail the trial as it would be in nobody's interest for the matter to be adjourned or delayed. I asked the parties to think about the most practical way forward in relation to addressing this issue. I also indicated that, given what had occurred, it was for Bodycorp to put proper material before the court as to which entity was the proper plaintiff for the purposes of prosecuting the causes of action the subject of this proceeding.

18 On 14 May 2013, the issue was raised again by the AAMI Defendants. Subject to hearing submissions from the parties, I suggested that the most appropriate course would be for Murdaca to file and serve a further affidavit of documents which dealt with any documents relevant to the issue of the standing of Bodycorp, such affidavit to deal with documents in the possession of Bodycorp or Murdaca, together with any documents that were no longer in their possession. I said I was minded to direct that that affidavit should be provided as soon as reasonably possible and in the meantime the trial should proceed. Counsel for the relevant parties indicated to the court that that was an appropriate course. Accordingly, I so directed and the trial continued.

19 Later on 14 May 2013, Murdaca instructed Bodycorp's representatives to search for documents relating to the Bodycorp Unit Trust to seek to address the matters that had been raised.

20 On 15 May 2013, counsel for Bodycorp sought to make submissions on the issue of the standing of Bodycorp. Counsel for the AAMI Defendants also made some short submissions. However, the matter was not fully agitated as the relevant documents were still not available. I was informed by senior counsel for Bodycorp at the end of the day's hearing on 15 May 2013 that Bodycorp's former accountant, Vincent Rizzo ("Rizzo"), was still seeking to locate the relevant documents in relation to what occurred with the Bodycorp Unit Trust.

21 On the morning of 16 May 2013, I was informed by senior counsel for Bodycorp that some documents had now been provided to Bodycorp by Rizzo. I was told that the documents provided related to a change in the shareholding of Bodycorp. However, I was also informed that Rizzo was still continuing his search to obtain the remainder of the relevant documents.

22 At the end of the day on 16 May 2013, the AAMI Defendants made a further inquiry in relation to the outstanding documents. Counsel for Bodycorp was unable to take the matter further.

23 On Friday 17 May 2013, the issue was raised again. The discussion concluded with senior counsel for Bodycorp indicating to the court that Rizzo would provide a written report by 10.00 am on Monday, 20 May 2013 concerning the result of his search for the relevant documents.

24 On 20 May 2013, no report from Rizzo was proffered by Bodycorp. I was told that the report was forthcoming, and that the contents of the report would indicate that there had been no material change in relation to the position of the Bodycorp Unit Trust since 2002. Counsel for Bodycorp stated that, on that basis, a submission would be made that there had been no change in the vesting position. Upon being informed of this, I said that the position stated by Bodycorp obviously raised issues in relation to matters that had been put before the court on the security for costs applications heard on 8 May 2013 and ruled upon on 13 May 2013.

25 Late on 20 May 2013, the issue was raised yet again. I was informed by counsel for Bodycorp that a report had been provided by Rizzo, but it consisted of only a single page and it was "opaque" as to the issue of the trust. I was told that the report only dealt with information that was already available to the court by way of the ASIC search the subject of evidence on the security for costs applications made on 8 May 2013. I was further informed that it was the policy of Rizzo's firm that documents were destroyed after 7 years. I was told Rizzo had done a search and there were no further materials available beyond those that Rizzo had provided to that time. I was also told by counsel for Bodycorp that the documents had been discovered in this proceeding back in 2003. I directed that copies of the documents be provided to the defendants forthwith so that the defendants could consider their position. In the meantime, the trial continued.

26 On 21 May 2013, senior counsel for the AAMI Defendants revisited the issue. He said the documents that had been provided to the defendants suggested that the court had been misled when it made the orders that it did on 13 May 2013. This was stated on the basis that counsel for Bodycorp had previously submitted that the evidence indicated that Bodycorp was now "a stand alone company" and because the court was told the shares in Bodycorp were held by Murdaca "in his own right and not as a trustee of any trust".

27 Senior counsel for the AAMI Defendants also referred to the fact that during his evidence at trial Murdaca said that the trust had ceased to exist. It was submitted that the evidence now available to the defendants demonstrated that Repose Nominees Pty Ltd ("Repose") also held a beneficial interest in assets held by Bodycorp as trustee.

28 Further, it was submitted that although Murdaca had given a personal undertaking to the court it was doubtful that he would have any recoverable interest in the family trust. The AAMI Defendants then submitted that Repose, as an entity which plainly had an interest in the litigation, "ought to bring its assets into play" by giving an undertaking to the court in addition to that undertaking given by Murdaca.

29 It was also submitted that I should reconsider the question of security for costs in light of the fresh evidence that had been provided.

30 Finally, it was submitted that it was appropriate in the circumstances to order a dismissal of the proceeding under r 62.04 of the Supreme Court Rules in the event that any security ordered was not paid. As noted above, no application for a stay of the proceeding was sought by any of the defendants. They specifically stated they did not want a stay.

31 During the course of the day on 21 May 2013, the AAMI Defendants provided a form of undertaking they sought from Repose in relation to their costs in the event they were successful in the proceeding. The undertaking sought was in the following terms:

Repose in its own capacity and in the capacity of trustee of the Antonio Murdaca Family Trust undertakes to the court that:

(1) It will be liable to the [AAMI] Defendants for any costs which Bodycorp is ordered to pay those defendants in relation to this proceeding.

(2) Between the giving of this undertaking and the making and satisfaction by it of such an order for costs (or an order with the effect that Bodycorp is not obliged to pay any costs to the [AAMI] Defendants in relation to this proceeding), it will not encumber or dispose of any of its assets other than in the normal course of its business, nor allow any corporation under its control within the meaning of s 50AA of the Corporations Act 2001 ("Controlled Corporation") to dispose of or encumber the assets of that corporation, other than in the normal course of any business conducted by the Controlled Corporation.[6]

32 After hearing from Bodycorp's counsel, I directed that Murdaca file and serve an affidavit by 10.00 am the following morning. I stated that the affidavit was to include an explanation to the court as to the position of Bodycorp and the Bodycorp Unit Trust, and, if so advised, an explanation as to the basis upon which the evidence was provided to the court on the security for costs applications on 8 May 2013. At the end of the hearing on 21 May 2013, I formalised this direction by reference to s 47 of the Civil Procedure Act 2010 (Vic).

33 At approximately 9.15 am on 22 May 2013, the court was provided with an affidavit of Murdaca in response to the direction made on the previous day. Counsel for Bodycorp submitted that, by filing the affidavit, Bodycorp had complied with the direction. The affidavit exhibited a proposed form of undertaking from Repose. Counsel for Bodycorp stated that he had instructions that an undertaking to the court was now being provided by Repose, which was substantially in accordance with the undertaking that had been sought on the previous day by the AAMI Defendants (save that it operated from the end of the 3rd day of the proceeding because there was already money paid into court up until that time). However, counsel also informed me he did not have instructions to act on behalf of Repose. He explained that Murdaca was not in court because of an unexpected event that had occurred the previous night.

34 I will refrain from going into all the details in relation to this unexpected event. The court was informed that the eldest son of Murdaca suffered a severe medical condition the previous evening, which compounded an already existing medical condition. The court was informed that Murdaca's son was in an intensive care unit on life support and, in substance, he was in a critical condition.

35 I enquired as to whether there was anyone in court on behalf of Repose that could give the proposed undertaking to the court. However, counsel for the AAMI Defendants stated that, in light of the affidavit material that had been filed and served that morning, the AAMI Defendants no longer sought the undertaking. In any event, I was informed that there was no one available to give the undertaking on behalf of Repose as Mrs Murdaca (a director of Repose) was also at the bedside of the Murdacas' eldest son.

36 It is unnecessary to go into the daily explanations that were given thereafter in relation to Murdaca's inability to personally attend court by reason of his son's critical condition. Suffice to say that I deferred the further hearing of the security for costs issue until Murdaca was in a position to properly address the matter.

37 I informed the parties that, if ultimately I were minded to make a further order for security, I could make an order nunc pro tunc (now for then) if that were appropriate. I further expressed the view that I thought it was inappropriate to interrupt the progress of the trial given that it was only likely to be 2 further days of lay evidence, and 1 further day of expert evidence, before the trial would be completed. All of the parties agreed that it was not in any party's interests for the trial to be interrupted by reason of the issues that had arisen in relation to the security for costs applications.

38 Evidence in the trial was completed on 27 May 2013. The court received written submissions from Maisano and the AAMI Defendants on 28 May 2013 in relation to the security for costs applications. However, the court was informed that Murdaca was still not in a position to provide further evidence on the issue as his son still remained in a critical condition.

39 On 30 May 2013, at the end of closing submissions for the trial, I made orders that Bodycorp file and serve any further affidavit upon which Bodycorp intended to rely, together with any written submissions, by 4.00 pm on 11 June 2013. I further ordered that Maisano and the AAMI Defendants file and serve any reply submissions by 4.00 pm on 13 June 2013.

40 As can be seen from the rather extensive background facts, various unexpected events occurred which have resulted in the security for costs applications being addressed at the completion of the trial. In relation to some of these events, fault clearly lies with Bodycorp. It is plain that the evidence put before the court on 8 May 2013 was, at best, incomplete. However, it is also clear that some of the events causing the delay were exceptional circumstances and beyond the control of the parties.

41 As the events have transpired, the court finds itself in the highly unusual position of considering an application for security of costs after the trial has been completed and judgment has been reserved.

42 In the Second Reasons I provided a summary of the evidence before the court as at 8 May 2013. That summary read as follows:[7]

(1) In relation to the beneficial interest in the company, Murdaca is the person standing behind Bodycorp.

(2) Murdaca's liabilities substantially exceed his assets, and he is financially stretched.

(3) Notwithstanding (2) above, there is still a significant amount of equity in the family home, albeit that Murdaca is not able to secure further funds for Bodycorp.

43 In relation to subparagraphs (2) and (3) above, nothing has changed. The only change is in relation to subparagraph (1), as set out in section B above.[8] The evidence, such as it is, now suggests that Repose also stands to benefit from this proceeding. In those circumstances, I am of the view that it is appropriate for the court to accept the undertaking proffered by Repose and I intend to do so prior to making any orders the subject of these applications.

44 Although somewhat repetitive, it is convenient to again set out the approach of the court in relation to these applications. To quote from the Second Reasons:[9]

[T]he court has an altogether unfettered discretion, but on the footing that the very fact that the jurisdiction has been enlivened in the first place may itself be a factor, even a most significant factor, in the exercise of the discretion. Put another way, the satisfaction of the threshold condition "calls for" the fulfilment of the purpose for which the power was conferred, subject to a proper exercise of the discretion depending on all the circumstances. Further, although the exercise of the power may be "called for", that circumstance does not alter the fact that the burden rests on the defendants to persuade the court that security should be ordered.

(Citations omitted.)

45 The Second Reasons disclose that the threshold condition was clearly satisfied and the only matter before the court on the previous occasion was whether or not the applications for security for costs would stultify the proceeding.[10] For the reasons set out in the Second Reasons, my conclusion was that the proceeding would be stultified.[11] The question of stultification continues to be an issue between the parties. It needs to be considered afresh in light of the further evidence. Notwithstanding the evidentiary deficiencies of Bodycorp in relation to previous applications, the defendants still bear the onus of persuading the court that security for costs should be ordered.

46 So far as is relevant, the further evidence filed by Bodycorp may be summarised as follows:

(1) Murdaca's brother, Ralph Murdaca, "left" Bodycorp in 2002.

(2) In 2002, Ralph Murdaca transferred his shares in Bodycorp to Murdaca.

(3) Interests associated with Ralph Murdaca had held half of the units in the Bodycorp Unit Trust through a company known as Broome Time Investments Pty Ltd.

(4) In 2002, Broome Time Investments Pty Ltd transferred its units in the Bodycorp Unit Trust to Repose.[12]

(5) Murdaca does not believe any person holds any units in the Bodycorp Unit Trust other than Repose.

(6) Repose is the trustee of the Murdaca family trust. The Murdaca family trust is a trust for the benefit of Murdaca, his wife and their children.[13]

(7) Repose is an inactive company that has not operated a bank account since 2000 and does not trade. Repose has not made or received any distribution since approximately 2002.

(8) Bodycorp has not traded since 2002 and the Bodycorp Unit Trust is no longer active.

(9) In 2002, Murdaca was told by Ralph Murdaca that Rizzo had "detached" the Bodycorp Unit Trust from Bodycorp.

47 Previously, Bodycorp had tendered a document entitled "Statement of assets and liabilities Antonio Murdaca" ("the Statement of Financial Position").[14] The Statement of Financial Position included as part of the assets an interest in Repose. In turn, the Statement of Financial Position listed 3 companies in which Repose held an interest. It recorded that interest as being a 40% shareholding in each company. As noted in the Second Reasons,[15] the value of Repose's interest in these companies was recorded as $210,000.

48 In his affidavit sworn 22 May 2013, Murdaca stated that Repose has an interest in 5 companies. In relation to 4 of them[16] he deposed those companies have no substantial assets. In relation to the 5th company, International Vehicle Integrity Centre Ltd ("IVIC"), which had previously had a value attributed to it of $160,000, Murdaca states that Repose has an approximately 20% interest in that company. There is no explanation as to why that interest was previously stated to be 40%. In any event, Murdaca swears that the shares are not presently realisable. To date that company has not made a profit or a distribution, although it continues to trade.

49 Curiously, the affidavit sworn 22 May 2013 made no reference to one of the original 3 companies referred to in the Statement of Financial Position; namely, "2UpGaming". That company was the subject of further evidence in Murdaca's final affidavit, sworn 11 June 2013. That evidence was to the effect that the company was listed on an exchange in the United Kingdom, but its shares were unable to be traded until 1 July 2013. Murdaca also deposed that the shares were highly illiquid. As noted in the Statement of Financial Position, these shares are said to be worth $50,000. However, Murdaca has failed to indicate how many shares are actually held.

50 The AAMI Defendants advanced evidence in support of a submission that IVIC had substantial means which could provide a source for the security sought. That evidence disclosed that IVIC operated at business premises at 350 Spencer Street, Melbourne. It also showed that Murdaca himself was a current director, having been appointed on 1 February 2010. The records indicated that Murdaca held 100 ordinary shares in IVIC that were issued on 19 July 2006. This fact had not been disclosed by Murdaca in the Statement of Financial Position. However, the 100 shares represents only a very small fraction of the 52,200,100 shares issued in IVIC. Further, although the issued capital totalled $653,162, the net assets of IVIC were recorded at only $161,997 as at 30 June 2009. By 30 June 2010 the net assets had reduced to the sum of $11,723, IVIC having suffered a loss of $150,274 for that year. After 30 June 2010, IVIC has not lodged any further financial statements with the regulator. Murdaca deposes that accounting losses had been incurred every financial year from 2007 to 30 June 2012. An accountant's letter was exhibited to support this evidence.

51 The AAMI Defendants also tendered a printout of the home page of the website of IVIC. That web page stated that IVIC was the only internationally accredited post-collision repair expert in Australia. It stated that IVIC had highly trained expert staff with over 100 collective years of motor vehicle collision repair experience. The contact details included 3 telephone numbers; 1 in Melbourne, 1 in Sydney and a "1300" telephone number. The page contained a copyright symbol with the year 2013. It clearly demonstrated that IVIC was a going concern. This was not disputed by Bodycorp.

52 In his affidavit sworn 22 May 2013, Murdaca specifically referred to paragraph 20 of the Second Reasons. Paragraph 20 of the Second Reasons read as follows:

... The evidence before the court, by way of a company search, was that Murdaca was the only shareholder and that he held the beneficial interest himself. The AAMI Defendants and the Melton Defendants submitted that the court should not accept the evidence given by Murdaca that he is now the sole shareholder and he holds his shareholding as the beneficial owner. This submission was made on the basis that there was no explanation as to how the previous structure was unwound. In particular, it was submitted there was no evidence as to how the interests previously held by others in the Bodycorp Unit Trust have now been transferred to, or otherwise reposed in, Murdaca.

When I gave instructions that I was the only person entitled to shares in Bodycorp, I did not believe:

(a) that the Bodycorp Unit Trust was still in place;

(b) that my family trust may have an interest in the present proceedings.

54 It follows that the evidence previously given by Murdaca was incorrect and incomplete, albeit that the mistakes and omissions appear to have been innocently made.

55 Notwithstanding the further evidence, Murdaca maintains that he is the only person who has a beneficial interest in the shares in Bodycorp. This asserted position appears highly doubtful. Given the units in the Bodycorp Unit Trust are held by Repose, and that Repose is a trustee on behalf of not only Murdaca, but apparently also other members of his family, it is difficult to see how Murdaca can properly make this assertion. Murdaca's assertion may reflect his belief, but it appears in more recent years Murdaca has paid very little, if any, attention to the legal structures in place in relation to Bodycorp. The position is properly stated in Bodycorp's submissions; namely, the beneficial interest is held by Murdaca and the members of his family.

56 In the 2 further affidavits filed by Murdaca he has sworn that he has no assets presently available to him that can be realised for the purposes of providing security. He also swears that if security is ordered the proceeding will be stultified. Given the history of this matter, this evidence must be viewed with some scepticism.

57 Although the evidence is not entirely satisfactory, I remain convinced that it is likely the proceeding will be stultified if an order for further security for costs in the amount sought is ordered. Collectively, the defendants seek a sum of $290,400. On the evidence before the court, there appears to be no practical means by which such an amount could be raised.

58 In particular, the evidence now available in relation to IVIC does not suggest that Murdaca has available to him financial resources that could provide security for costs in the sums now sought by the AAMI Defendants and Maisano. His personal shareholding is very small. Repose's shareholding (whether it be 20% or 40%) appears to be worth a very modest amount. In short, there is nothing to support a contention that Bodycorp or Murdaca have been concealing assets of substantial value from the court. Without diminishing the significance of the obvious deficiencies in the evidence previously provided to the court, the clear position from the further information is that there are no substantial assets or resources available to fund a security for costs order.

59 The AAMI Defendants submitted[17] that the evidence now before the court could and should have been before the court on 8 May 2013. They submitted that it is likely that further security can and will be provided if it is ordered by the court. They also submitted that on the evidence now available Bodycorp had failed to establish the "necessary facts" to satisfy the court that the proceeding would be stultified.[18]

60 The AAMI Defendants further submitted that Bodycorp and Murdaca had not been full and frank in their disclosure to the court about the financial position of both of them. They contended the evidence now before the court still has serious inadequacies. They submitted that it was now not appropriate for the court to accept undertakings from Murdaca or Repose. They submitted that the previous undertaking given by Murdaca should be revoked, the current undertaking proffered by Repose should not be accepted and in lieu thereof security should be ordered. In making these submissions reliance was placed upon Bell Wholesale Co Pty Ltd v Gates Export Corp[19] and Epping Plaza Fresh Fruit and Vegetables Pty Ltd v Bevendale Pty Ltd.[20]

61 Another factor the AAMI Defendants submitted the court should take into account was the absence of evidence on how Bodycorp had funded the trial, and the period leading up to the trial. They relied on a decision of McHugh J (sitting alone) in PS Chellaram & Co Ltd v China Ocean Shipping Co.[21]

62 The AAMI Defendants also referred to authorities in support of the proposition that the court is not confined to ordering security for costs in relation to future costs, but may also order security in relation to costs already incurred.[22]

63 The AAMI Defendants' criticism of the previous evidence of Bodycorp is warranted. Matters now before the court should have been advanced on the earlier applications. The failure of Bodycorp in this regard has led to a misleading portrayal of the relevant financial circumstances, and in particular the ownership of the beneficial interest in Bodycorp. Criticism made by the AAMI Defendants in relation to the more recent evidence is also justifiable in a number of respects.

64 However, as stated above, the evidence as it now stands still demonstrates the proceeding is likely to be stultified if security for costs is ordered. In my view, the "necessary facts" are before the court.

65 The fact that Bodycorp has not disclosed how it is funding the litigation is not determinative, nor does it necessarily lead to an inference that there are funds available for security for costs. I do not read what McHugh J said in PS Chellaram & Co Ltd v China Ocean Shipping Co[23] as suggesting otherwise. While it is a factor to consider, such evidence is not necessary to reach the level of satisfaction required in relation to stultification. In the case before McHugh J there was "no evidence" before the court that those standing behind the company had insufficient funds. That is not the position presently before me.

66 Contrary to the AAMI Defendants' submissions, in my view it is appropriate to accept the further undertaking proffered, and to allow the existing undertaking to continue. This allows whatever assets that are available to Murdaca and Repose to be susceptible to meeting any award of costs in the defendants' favour. In saying this, I am not ignoring the fact that Repose is a trustee and that there are persons "standing behind" Repose in addition to Murdaca. If the circumstances were that this issue had arisen earlier in the proceeding, I may have reached a different conclusion about the adequacy of the undertaking. But given the fact that there is nothing further for the proceeding to be determined at first instance other than delivery of the trial judgment, the most appropriate course is for the court to accept the undertakings being proffered and then proceed to deliver judgment as soon as practicable.[24]

67 My findings in relation to stultification are sufficient to dispose of the matter. However, I wish to make a further observation. Put bluntly, it would be contrary to the administration of justice if security were ordered, not provided by Bodycorp and then the proceeding was dismissed.[25] After the trial has been conducted over nearly 4 weeks (having had a history before trial which stretches over 11 years), it would be most unsatisfactory for the court to dispose of the proceeding other than by a decision based on the merits. If security were ordered, it is probable that this will be the outcome.

68 For the reasons stated, subject to Repose giving an undertaking to the court as foreshadowed, I would dismiss the applications. I will hear the parties on the question of costs.

[1] Bodycorp Repairers Pty Ltd v Maisano, Federal Court (unreported, 12 January 2004, Efthim Reg).

[2] Bodycorp Repairers Pty Ltd v Maisano [2013] VSC 220, [10].

[4] Bodycorp Repairers v Maisano (No 4) [2013] VSC 247.

[5] At [20]-[25]. The undertaking is at [33].

[6] Subsequently, Maisano sought an undertaking in the same terms in relation to him.

[8] See in particular pars 27-28, 31, 33, 35.

[12] A resolution dated 1 July 2002 was produced as evidence of this transfer.

[13] Murdaca was unable to produce a copy of the trust instrument for the Murdaca family trust.

[14] See Second Reasons, [12]-[15].

[16] Those companies were referred to as Asia Australia Group Pty Ltd, Tasi Forest Holdings Pty Ltd, Vicprop Pty Ltd and International Vehicle Inspection Services (Intl) Pty Ltd.

[17] Maisano simply adopted AAMI's submissions in this regard.

[18] See Bell Wholesale Co Pty Ltd v Gates Export Corp [1984] FCA 34; (1984) 2 FCR 1, 4.4.

[22] Pathway Investments Pty Ltd v National Australia Bank Ltd [2012] VSC 97, [6]-[8]; Brocklebank & Co v The King's Lynn Steamship Co (1878) 3 CPD 365.

[24] I would have also reached this conclusion if the matter had been heard and determined on 22 May 2013, rather than being heard on 30 May 2013.

[25] In relation to the power of the court to dismiss the proceeding if security were ordered and a plaintiff fails to pay, see Bodycorp Repairers Pty Ltd v Maisano [2013] VSC 220, [57]-[62]. For completeness, I note this case is clearly distinguishable from the circumstances in Vedatech Corporation v Crystal Decisions (UK) Ltd [2002] EWCA Civ 356, as the trial in that case had not commenced at the time security for costs was ordered.

Court (General Civil Procedure) Rules 2005

At a glance

Court

Decision date

Before

Source

Judgment (103 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (2)