BOZIC -v- RAND MINING LIMITED [2019] WASC 73 (12 March 2019)

(3) There be judgment for the plaintiff in terms of the relief sought in the writ of summons.

(4) The defendant pay the plaintiff's costs of the chamber summons and of the action.

1. The defendant submits that the plaintiff's application has been brought in breach of O 59 r 9 RSC in that the plaintiff's memorandum of conferral dated 8 November 2018 expressly acknowledges that no conferral has occurred.
2. In Real Estate and Business Agents Supervisory Board v Espanol Holdings Pty Ltd (in liq) [2007] WASCA 67, Buss JA agreed with the observations of Master Sanderson in a circular to practitioners dated 31 January 2006 where the Master stated:

(5) Order 59 rule 9 requires that parties confer in there being an exchange of views whether oral or in writing for the purpose of trying to resolve the matters in issue. Conferral is required no matter how unlikely it is that the parties will reach agreement or even narrow the issues between them.

(6) Conferral must occur shortly prior to the making of any application and must relate to the application itself rather than simply to the issue that is the subject of the application. The giving of notice of an intention to make an application is not conferral.

(7) Practitioners are encouraged to confer either face by face or by telephone. While an exchange of correspondence will often be part of the conferral process it will only be where face to face or telephone contact is not feasible that relies simply upon written communication can be justified.

...

(11) A failure to confer or a failure to file a memorandum of conferral may result in adverse costs orders being made against those parties who are at fault.

(12) In Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161 Martin CJ said at par [3] to [5]:

Before dealing with this particular case, I would also like to make some general observations about O 59 r 9 as will be abundantly apparent from any sensible reading of its terms, it's clear purpose is to reduce interlocutory disputes and avoid adverse consequences of the kind to which I have just referred by requiring the representatives of the parties to confer with a view to resolving the interlocutory dispute before the court is called upon to entertain and resolve it.

In far too many cases, the rule is complied with in form rather than substance. That is because too often the representatives of the parties consider that the exchange of furious correspondence is an adequate substitute for meaningful conferral in relation to the substance of the interlocutory dispute. This case provides an unfortunate example of that phenomenon. For my part, I say that an approach to the construction of the rule which would lead to the conclusion that it has not been substantively complied with unless and until legal representatives of the parties, with authority to resolve the particular interlocutory dispute in question, have orally conferred in respect of the substantive issues that arise in relation to that dispute, either by telephone or by meeting face to face. It follows that any legal representative who declines or refuses to participate in such a process of conferral, without good cause, is at risk of being ordered to pay the costs which flow from that refusal personally. There may, of course, be cases in which a departure from this approach to the application of O 59 r 9 is justified, but, in my view, those cases will be exceptional.

1. In Real Estate and Business Agents Supervisory Board, the Board had filed and served the application for a stay without proper conferral having occurred. His Honour Buss JA held:

'...if there had been a meaningful conferral then it is likely that the application would not have been brought. This is apparent from the Board's decision not to proceed with the application after affidavits and written submissions had been filed and served, and discussions had occurred.'[1]

1. Counsel for the plaintiff submitted that there was no practical benefit in the parties conferring as this was an application for summary judgment and no amount of conferral would have resulted in an agreement being reached between the parties.
2. The court does not insist on compliance with the obligation of conferral contained in O 59 r 9 RSC when there would be no utility in doing so.[2]
3. This case is, in my view, distinguishable from Real Estate and Business Agents Supervisory Board. I accept the submissions of counsel for the plaintiff that meaningful conferral could not have prevented this application from being made.
4. I order that the obligation to confer pursuant to O 59 r 9(1) RSC be waived.

Leave to file the application for summary judgment out of time

1. The defendant submits that, as the application has been brought outside of the time permitted by O 14 r 1(1) RSC, and in circumstances where the plaintiff does not provide any evidence explaining and justifying the delay, the application ought be dismissed.
2. Counsel for the defendant relies upon the decision of Pritchard J in Westpac Banking Corporation v Anderson [2017] WASC 106 [38]:

The 21 day limit for applications for summary judgment clearly reflects a policy view that such applications should be brought at an early stage in the proceedings, and before too much expense has been incurred. If there is a delay, it must be explained, and it is up to the applicant to show that the delay in bringing the application was justifiable in the circumstances. However, the Court clearly has a broad discretion as to whether to grant leave to apply out of time. Clearly the prospects of the application will be relevant. To proceed to trial, with the expense that that may incur, when there is no defence to an action, or where an action pursued by counterclaim has no prospect of succeeding, would of itself be contrary to modern principles of case management. Prejudice to the other party, occasioned by the delay in bringing the application, will clearly be relevant.

1. The plaintiff commenced the proceedings by writ of summons filed on 23 August 2018. The application for summary judgment was filed on 8 November 2018, some two and a half months later. The plaintiff submitted that there was no prejudice to the defendant arising from the delay in bringing the application.
2. The plaintiff did not adduce any evidence to explain and justify the delay in bringing the application.
3. Given that the court's discretion is broad and that the defendant can point to no significant prejudice arising from the delay in the plaintiff bringing the application for summary judgment, I exercise my discretion to grant leave to the plaintiff to bring the application for summary judgment out of time.

1. The law in relation to summarily determining a civil action is well established. The High Court held in Fancourt v Mercantile Credits Limited [1983] HCA 25; (1983) 154 CLR 87, 99 that:

The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings failed to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies with such a disposition is sought in a summary judgment application supported by evidence (references omitted).

1. Summary judgment must only be ordered in the clearest of cases. The High Court in Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57] held:

It is, of course, well accepted that a court whose jurisdiction is regularly invoked in respect of a local defendant ... should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way (citations omitted).

1. The plaintiff's application must be supported by an affidavit verifying the facts on which the claim is based: O 14 r 2(1) RSC. The affidavit must state that, in the opponents belief, there is no defence to the claim: O 14 r 2(1) RSC.
2. As a general principle, an applicant for summary judgment who complies with the requirements of O 14 r 2 RSC establishes a prima facie right to summary judgment. The burden then shifts to the defendant to satisfy the court why judgment should not be given against it.[3]
3. The defendant may resist an application for summary judgment on the basis that 'with respect to the claim, or the part of the claim to which the application relates ... there is an issue or question in dispute which ought to be tried': O 14 r 3(1) RSC.
4. The defendant does not have to show a defence on the balance of probabilities, but must at least show cause why there is an arguable defence.[4] If after argument, there remains real uncertainty as to the applicant's right to judgment without further investigation of the facts, summary judgment must be refused.[5]

Has the plaintiff established a prima facie right to judgment?

1. The plaintiff relies upon the affidavit of Franjo Bozic sworn on 11 September 2018 in support of the application for summary judgment (Bozic Affidavit). That affidavit is taken as read in this application, save for the words 'and beneficially' at par 8, which I have ordered to be struck out.
2. Mr Bozic deposes that he:

(a) holds 250,000 ordinary fully paid shares in the defendant and that he holds those shares legally (Shares);[6]

(b) believes he is entitled to sell and transfer the Shares on the ASX;[7]

(c) is being prevented from selling and transferring the Shares by reason of a circular resolution entered into by the directors of the defendant on 25 August 2016 to prohibit the registration of a transfer of the shares until a dispute regarding legal and beneficial ownership of the shares is resolved (Circular Resolution).[8]

(a) declaring the Circular Resolution to be void; and

(b) compelling the defendant to register any share transfer of the Shares held by him forthwith.

1. Mr Bozic deposes that the defendant has no defence to the relief sought.[9]
2. I am satisfied that the plaintiff has established a prima face right to summary judgment and that the onus shifts to the defendant to show cause why there is an arguable defence.

1. The defendant relies upon the following evidence in opposition to the summary judgment application:

(a) affidavit of Anthony Billis sworn on 20 November 2018 (Billis Affidavit);

(b) affidavit of Dominko Sunjic sworn on 25 January 2019 (Sunjic Affidavit);

(c) affidavit of Gordon Alfred Sklenka sworn on 30 January 2019 (Sklenka Affidavit); and

(d) affidavit of Otakar Demis sworn on 29 January 2019 (Demis Affidavit).

1. Mr Billis advised Mr Sklenka and Mr Demis, as directors of the defendant (Board), that Mr Billis had loaned the plaintiff a substantial sum of money for a project in Indonesia and that the plaintiff's Shares were to be used as security for that loan.[10].
2. The fact that Mr Billis told the Board that the Shares were security for a loan is not in issue. What is in issue is whether the Board passed the Circular Resolution for an improper purpose, such that it should be set aside.
3. The Circular Resolution reads as follows:

Background

The board has been advised there is a dispute arising as to the beneficial and legal ownership of 250,000 ordinary fully paid shares in Rand Mining Ltd (Rand). The shares are currently held by Mr Frank Bozic (Rand Shares).

The board have agreed that, until the dispute regarding the ownership of the Rand Shares is resolved and the company is provided with supporting evidence as to the beneficial and legal ownership of the Rand Shares, any purported transfer of the Rand Shares will not be registered.

Resolution

By signing this circular resolution, all of the directors of Rand that are entitled to vote RESOLVE:

To prohibit the registration of any purported transfer of the Rand Shares currently held by Mr Frank Bozic until the dispute regarding legal and beneficial ownership of these Rand Shares is resolved.

1. Counsel for the defendant submitted that the Circular Resolution was not made for an improper purpose because:

(a) the Board was entitled, pursuant to s 1072F(2)(c) of the Corporations Act 2001 (Cth) (the Act), to refuse to register a transfer of shares where the right of the person transferring the shares to make the transfer is in issue; and

(b) pursuant to ASX listing rule 8.10.1(c) the defendant is expressly permitted to institute a holding lock in circumstances where the Board is entitled to refuse to register a transfer.

1. Section 1072F(2)(c) of the Act provides:

The directors are not required to register a transfer of shares in the company unless:

(c) the directors have been given any further information they reasonably require to establish the right of the person transferring the shares to make the transfer.

...the entity may apply, ..., a holding lock to prevent a transfer, ... in any of the following circumstances.

...

(c) Registration of the transfer may break an Australian law, and ASX has agreed in writing to the application of a holding lock or that the entity may refuse to register a transfer.

1. I accept that, in certain circumstances, the Board is entitled, pursuant to s 1072F(2)(c) of the Act and ASX listing Rule 8.10.1(c), to refuse to register a transfer of shares and to place a block on the registration of a transfer of the Company's shares.
2. It is the defendant's position that those circumstances exist in this case. Counsel for the defendant submits, that 'there is, and was, clearly evidence before the directors to show that the [S]hares had been pledged by the plaintiff as security for the loans'.[11]
3. The evidence to which counsel for the defendant refers to is that contained in the Demis Affidavit at pars 5 to 9 and the Sklenka Affiavit at pars 5 to 8. In summary, the evidence of both Mr Demis and Mr Sklenka is that Mr Billis told them he had loaned a substantial amount of money to the plaintiff and that the plaintiff had pledged his Shares as security for that loan.
4. Counsel for the defendant further submits that the plaintiff does not, in any evidence or pleadings, deny having pledged his Shares as security for any loans.

(a) having been informed by Mr Billis that the Plaintiff pledged his Shares as security for a loan from Mr Billis to the Plaintiff; and

(b) in the absence of any evidence from the plaintiff that he did not pledge the Shares as security for any loan to him from Mr Billis,

there is a serious question to be tried as to whether the Board was entitled, pursuant to s 1072F(2)(c) of the Act and ASX listing Rule 8.10.1(c), to pass the Circular Resolution.

1. I, therefore, dismiss the Plaintiff's application for summary judgment.

1. Given that the plaintiff's application for summary judgment has been dismissed, I am required to consider the defendant's application for security for costs.
2. The defendant seeks the following orders:
   • (a) ... the Plaintiff do give security for the defendant's costs of the action in an amount to be determined by payment of that money into Court, and that in the meantime all further proceedings be stayed;
   • (b) the plaintiff pay the defendant's costs of the application to be taxed if not agreed.
3. The defendant relies upon the following affidavits in support of its application for security for costs:

(a) affidavit of Raffaele Carmine di Renzo sworn on 8 October 2018 (di Renzo Affidavit);

(b) affidavit of Anthony Billis sworn on 20 November 2018 (Billis Affidavit); and

(c) second affidavit of Raffaele Carmine di Renzo sworn on 20 November 2017 (Second di Renzo Affidavit).

1. Pursuant to O 25 r 3 RSC, the court has unfettered discretion to make an order for security for costs.
2. In the case of Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132, Newnes J stated the following:

The fact that a plaintiff is ordinarily resident out of the jurisdiction is a ground upon which an application for security for costs may be granted: O 25 r 2(a). The basis of the rule in O 25 r 2(a) is the risk that either an order for costs is likely to be unenforceable or that it will be enforceable only by a significant expenditure of time and money. But while residence out of the jurisdiction enlivens the court's jurisdiction, it is not of itself a sufficient ground for making an order. Whether or not an order will be made will depend upon the circumstances of the case. In Energy Drilling Inc v Petroz NL (1989) ATPR 50, 518, Gummow J put the position as follows;

The purpose of ordering security for costs against an applicant ordinarily resident outside the jurisdiction is to ensure that a successful respondent will have a fund available within the jurisdiction of this court against which it can enforce the judgment for costs, so that the respondent does not bear the risk as to the certainty of enforcement in the foreign country and as to the time and complexity of the action there which might be necessary to affect enforcement. ... On the other hand, the mere circumstance that an applicant is resident outside the jurisdiction does not invite an exercise of discretion in favour of ordering security, the question being how justice will best be served in the particular case [50, 422].

Where a party resident out of the jurisdiction has no assets within the jurisdiction, that will usually be a factor weighing heavily in favour of an order for security. In PS Chellaram & Co Ltd v China Ocean Shipping Co, McHugh J said:

... the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a circumstance of great weight in determining whether an order for security for costs should be made. Indeed, for many years the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which outcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction [323].[12]

1. The defendants rely upon the following facts in support of its application for security for costs:

(a) the plaintiff is a citizen and resident of Croatia;[13]

(b) the plaintiff has no fixed or permanent assets within this jurisdiction;[14]

(c) the plaintiff has no real property in Australia;[15]

(d) the Supreme Court has made a previous security for costs order in favour of the defendant in CIV 2557 of 2017, proceedings which relate to substantially the same subject matter;[16]

(e) although the plaintiff has legal ownership of the Shares which are within the jurisdiction, the Shares cannot be considered assets in this jurisdiction that are available to satisfy a costs order if the defendant is ultimately successful because Mr Billis asserts that the Shares have been pledged as security for a loan from Mr Billis to the plaintiff.

1. It is appropriate that an order for security for costs payable by the plaintiff is made in circumstances where the plaintiff is ordinarily resident outside of the jurisdiction and there is a serious question to be tried in relation to the beneficial ownership of the Shares, the only asset held by the plaintiff within the jurisdiction.
2. I am satisfied that an order that the plaintiff pay security for costs ought be made.
3. The amount of costs sought by the defendants is $50,000.[17]
4. The real dispute over the Shares is one between the plaintiff and Mr Billis and who has beneficial ownership of the Shares. Once that issue has been determined, the defendant will be required to comply with any joint direction of the plaintiff and Mr Billis or an order of a Court as to whom the shares are to be transferred. The issues raised in these proceedings will not be determinative of the real issue as to whether Mr Billis has a beneficial entitlement to the Shares.
5. Therefore, I do not consider that the draft Bill of Costs reflects the more limited role that the defendant will play in these proceedings.
6. In all of the circumstances, I consider security for costs in the sum of $20,000 should be paid by the plaintiff.
7. I will hear submissions from the parties in relation to final orders and costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Real Estate and Business Agents Supervisory Board v Espanol Holdings Pty Ltd (in liq) [23].

[2] Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382 [14] (Acting Master Gething, as his Honour then was) cited with authority in Bertola v Australia and New Zealand Banking Group Ltd [2016] WASC 165 [16] (Martino J).

[3] Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109, 1110 (Brinsden J).

[4] Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [No 2] [2012] WASCA 27 [4] (reasons of the court).

[5] Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184 [28] (Newnes M).

[8] A copy of the circular resolution is annexed to the Bozic Affidavit at Annxure 'D'.

[10] Billis Affidavit at [12], Demis Affidavit at [7], Sklenka Affidavit at [6].

[11] Defendant's Outline of Submissions dated 11 February 2019 at [13].

[12] Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [58] to [59].

[14] Di Renzo Affidavit at [17] - [27].

[15] Di Renzo Affidavit at [28] - [29]; Attachment RCD 13.

[16] Di Renzo Affidavit at [8] - [11]; Attachment RCD 3.

[17] Defendant's Submissions in Support of its Application for Security for Costs dated 4 December 2018 at [34].