Chrubasik v National Australia Bank

REASONS FOR JUDGMENT 1 This proceeding was commenced by Professor Dr Sigrun Adeline Chrubasik and Professor Dr Joachim Chrubasik, ("the Applicants") against the National Australia Bank Ltd, the Commissioner of Taxation and the Deputy Commissioner of Taxation (collectively "the Respondents") on 11 March 2008. On 14 May 2008 the matter came before me for directions, having previously been before Allsop J on 29 April 2008. 2 On 14 May 2008 I made directions that: 1. The Respondents file and serve any motion seeking security of costs, together with any supporting affidavits, by 5 June 2008. 2. The Applicants file and serve any amended pleading by 19 June 2008; and 3. The matter return for directions on 17 July 2008 with the Respondents' motions for security for costs to be heard on 26 June 2008. 3 On 6 June 2008, each of the Second and Third Respondents (the "ATO") and the First Respondent (the "NAB") applied by motion for security for their costs in defending the proceeding. On 26 June 2008, those notices of motion came on for hearing. In addition to orders being made for the provision of security for the costs of NAB in defending the proceeding up to and including mediation in the amount of $75,000 by way of bank guarantee to be provided on or before 11 July 2008, additional orders were made in the following general terms: 1. The Applicants were to provide security for costs for the ATO's costs in defending the proceeding until the close of pleadings in the sum of $18,000 by way of bank guarantee on or before 11 July 2008; 2. Pending compliance with the orders for the provision of security, the proceeding be stayed; 3. Time for compliance with my earlier orders for the provision of an amended pleading by the Applicants be extended until 31 July 2008, and if the Applicants failed to comply with this order, the proceeding would stand dismissed. 4 At the directions hearing on 26 June 2008, it was common ground that the then extant statement of claim filed by the Applicants was unintelligible and could not be relied upon by the Applicants to prosecute the proceeding. No amended pleading was filed by 31 July 2008 and no subsequent pleading has been filed although I understand an amended statement of claim has been served on the NAB but not on the ATO. I will return to that issue in a moment. 5 Security was subsequently provided by the Applicants by way of bank guarantee in compliance with order 1 of the orders made on 26 June 2008, albeit late, in the form of a bank guarantee from Credit Suisse in Zurich, addressed to the NAB. It is a bank guarantee in any amount up to AUD$75,000 which provides that the guarantee is valid until 18 August 2009, at which point it "expires automatically and in full if the claim has not been made on or before that date". It is "… governed by and [to be] construed in accordance with substantive Swiss law". No security was provided for the costs of the ATO. 6 The amended pleading, which has been served on NAB but not filed with the Court, discloses a number of interesting facts. First, no claim is now sought against the ATO. It is, as described by Counsel for the ATO, merely a claim in negligence against the NAB. The claims made against the NAB allegedly relate to interest bearing foreign currency bank accounts held with the NAB into which the Applicants allege they transferred funds from sources overseas. The allegation is that by reason of the relationship allegedly existing between the Applicants and the NAB (being that of banker and customer), the NAB owed each of the Applicants a duty to keep all information regarding their banking accounts confidential and secret, and that the NAB breached that duty of care when it provided information, which it alleges was incorrect, to the ATO in response to a request by the ATO. The Applicants allege that this information was then transmitted to the German taxation authorities in circumstances and for reasons that remain unclear. 7 Since the matter was before the Court on 26 June 2008, and subject to the two matters I have identified, the Applicants have taken no step to prosecute these proceedings. Moreover, in relation to the actions against the ATO, the solicitor for the ATO provided sworn evidence to the Court that as a result of discussions had with the solicitor for the Applicants, the Applicants no longer wished to prosecute proceedings against the ATO. That is a fact confirmed by the substance of the amended pleading which was served on the NAB but not filed with the Court. 8 On 24 July 2009, the NAB moved by way of notice of motion for a number of orders. The first is that, pursuant to O 35A r 3 of the Federal Court Rules 1979 (Cth) ("the Rules"), the Applicants' proceeding as against the NAB be dismissed, and, secondly (in substance), that the NAB's costs of defending the proceeding up to and including the date of this notice of motion be fixed in the sum of $24,000. The ATO also moved by motion, dated 24 July 2009, seeking orders in similar terms although the order in relation to costs was an order in the usual form - costs to be taxed in default of agreement. 9 Both those applications by way of notice of motion and supporting affidavits were served on the Applicants' solicitors, and on 30 July 2009, the Applicants' solicitor, Mr Noel Stewart Waters, filed and served a substantive affidavit, comprising some 21 paragraphs, acknowledging receipt of the notices of motion, together with the relevant supporting materials. It will be necessary to return to the substance of that affidavit in a moment. Mr Fitzgibbon of Counsel, who appeared on behalf of the Applicants, made an oral application for adjournment of the notices of motion to a date after 10 August 2009 and, more particularly, to 17 August 2009. The application was made on three bases. First, purported late service of the notices of motion and supporting documents. Secondly, because of allegedly related proceedings pending in Germany and, thirdly, by reason of purported difficulties in communication between Australia and Switzerland and, in particular, between Australia and the Applicants and their legal Counsel. 10 Unsurprisingly, the adjournment was opposed. I will deal with each of the bases upon which the adjournment was sought. First, the late service of documents. As I have said, the applications brought by the Respondents through their respective motions are applications for the proceeding to be dismissed for failure to prosecute it in the usual manner or indeed in any respect and, in particular, for failure to comply with orders of the Court. The nature of that application is not unfamiliar and, given the nature of the affidavit material filed by Mr Waters, there was, in my view, not only service within the relevant time as provided by O 19 r 3 of the Rules, but ample time for Mr Waters to put on any material to justify the lack of prosecution of the proceeding by the Applicants. He did not do so. There is no reason to grant an adjournment on the first basis. 11 The second basis upon which the adjournment was sought was due to the commencement of what were described as German criminal proceedings, on 10 August 2009. As Counsel for the Respondents explained, there is no material in the affidavit of Mr Waters which would justify an adjournment due to some feature of or matter related to these proceedings. Particularly, I note the failure to explain any of the following: 1. The nature of that criminal proceeding; 2. The status of that criminal proceeding; 3. The anticipated outcome in terms of progress of that criminal proceeding; and 4. Most importantly, what it is about that proceeding that impacts, at all, upon the broad allegations made in the proposed claim that the NAB somehow breached a duty of confidentiality to the Applicants, in disclosing information to the ATO, which the ATO Office then provided to either the Swiss or the German authorities. 12 Thirdly, there was contention that Mr Waters has difficulties in communicating either with the Applicants or their advisers in Germany or Switzerland. There is nothing before me which would support such a finding. Indeed, the affidavit of Mr Waters, taken at its highest, would appear to suggest that this is not the position. He at least seems to be acting on instructions, because he summarises the alleged positions of the Applicants in his affidavit (though I acknowledge that much of the affidavit is most likely inadmissible). 13 Finally, I deal with a matter which was put by way of reply by Mr Fitzgibbon, on behalf of the Applicants. That is that the Respondents would suffer no prejudice by the grant of an adjournment. I reject that contention. As Counsel for the NAB submitted there is before the Court, by way of evidence, a bank guarantee securing the security of costs order in favour of the NAB. 14 That bank guarantee, on its face, discloses the facts I have referred to earlier, namely, it expires on 18 August 2009, and is subject to Swiss law. The motions the subject of this application for adjournment were made returnable on 31 July 2009. If the hearing of the motions were adjourned to a later date, there is potentially great prejudice if the Respondents' motions were successful. For these reasons, I refuse the oral application for adjournment and will move to hear the substantive notices of motion. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon