Dovade Pty Limited & 5 Ors v Linsday Shaddock & 51 Ors [1999] NSWSC 142 | Case summary

1 MASTER: By notice of motion filed 24 February 1999 the plaintiffs seek that my orders made on 13 November 1998 be varied nunc pro tunc by substituting therein for the date 18 January 1999 the following words "A date 21 days from the delivery of judgment of the Court of Appeal in proceedings CA No 40805 of 1995". The plaintiffs relied on the affidavit Stephen Noss sworn 23 February 1999. 2 By notice of motion filed 24 February 1999 the 2, 3 and 4 defendants seek an order that the proceedings brought by the first plaintiff be dismissed. The 2, 3 and 4 defendants relied on the affidavit of Phillipa O'Dea sworn 22 February 1999. By notice of motion filed 24 February 1999 the 35 to 52 defendants (excluding the 39, 45 and 51 defendants) also seek that the proceedings brought by the first plaintiff be dismissed. They relied on the affidavit of Moira Saville sworn 23 February 1999. 3 Orders were made that the plaintiffs were to provide security for costs to the 2 to 4 defendants in the sum of $62,000 and provide a further sum of $62,000 being security for costs for 35 to 52 defendants (excluding 39, 45 and 51 defendants). These orders should have specifically referred to the first plaintiff as security was only sought against it. These orders have not been formally entered so I vary paras (1) and (2) of my orders made on 13 November 1998 to read "first plaintiff" instead of "plaintiff" pursuant to Part 20 r 10 of the Supreme Court Rules (the slip rule). Proceedings were stayed against the defendants until the securities were lodged. The plaintiffs have not lodged securities in accordance with those orders. 4 In my judgment dated 13 November 1998 those securities were ordered to be lodged by 18 January 1999. The parties had agreed that the proper form of security was either a bank guarantee or cash lodged in the registry. Reference was made to the rationale requiring a plaintiff corporation to pay security for costs. It is to protect the defendant from the consequences of limited liability. In exercising the court's discretion its concern is to achieve a balance between ensuring that adequate and fair protection is provided to the defendant and to avoid injustice to impecunious companies by unnecessarily shutting them out or prejudicing them in the conduct of litigation (Buckley v Bennell Design & Constructions Pty Limited (1974) 1 ACLR 301). In my previous judgment the comment was made that the plaintiff had chosen not to appraise the court of its true financial position. It was my view that the defendants should, while awaiting the Court of Appeal decision to be handed down, be permitted to prepare their cases for trial. 5 The plaintiffs' solicitor says in his recent affidavit that he has been instructed that the plaintiffs are unable to fund and pay security for costs as ordered. He also says that the plaintiffs will be in a position, once the outcome of the Court of Appeal decision is handed down, to comply with this security order. The plaintiffs have requested an extension of time within which to lodge the security until 21 days after the Court of Appeal decision is handed down. 6 The first plaintiff and the other companies within a group of companies known as the "Jury Group" appealed against a judgment by Rolfe J in the Commercial Division of the Supreme Court of New South Wales made on 21 November 1995 in favour of Westpac Banking Corporation, the first plaintiff. Bill Acceptance Corporation (BAC) was the second plaintiff. On 21 November 1995, Rolfe J made orders inter alia that there be judgment for Bill Acceptance Corporation Limited against each of the first and third to fifteenth defendants in the sum of $4,606,974.36 inclusive of interest to date, that there be judgment for Westpac Banking Corporation against each of the first and third to fifteenth defendants in the sum of $15,352,210.12 inclusive of interest to date and that there be judgment for Westpac Banking Corporation against the second defendant in the sum of $19,959,284.48. The Court of Appeal heard the appeal in December 1998. The appellants sought leave to amend its appeal to include various grounds with respect to alleged apprehended bias by the trial judge Rolfe J. This leave was granted for the appellants to do so during the hearing of the appeal. 7

Subsequently Mason P requested that the parties provide submissions in relation to the decision of In Re Pinochet (House of Lords, 17 December 1998) by 20 February 1999. A copy of this decision became available on the internet on about 15 January 1999. The plaintiff's counsel submitted that the making of written submissions will delay the decision of the Court of Appeal. That may be so, but when I determined the appropriate quantum of security and the time by which it was to be lodged, I took into account that the proceedings (both before the Rolfe J and the appeal) were complex and that it may take some time for the judgment to be handed down (p 6). 8 On the last occasion this matter was before the court, I was unaware that the plaintiff had lodge $90,000 as security for costs in the Court of Appeal proceedings. However, referral was made to the length of time, namely, 9 years had elapsed since the events occurred that gave rise to this cause of action and to the fact that one of the defendant's witnesses has cancer. This delay and any continuing delay in this matter being heard causes the defendants to suffer presumptive prejudice - see comments of McHugh J at p 8 in Brisbane South Regional Health Authority v Taylor (1996) 139 ALR 1. 9 Even if proceedings are dismissed as against the first plaintiff, they remain on foot so far as the 2 to 6 plaintiffs are concerned. When I performed the balance exercise (referred to earlier in this judgment) I decided that the plaintiffs should lodge security for costs in the sum of $62,000 for each group of defendants. This reflected the amount of costs that each group of defendants would incur in preparing their case for trial. On the last occasion the plaintiff submitted that an appropriate time to lodge the security was 5 February 1999 whereas the defendants requested it within 14 days ie., by 25 November 1998. They submitted that at the original hearing they sought not to lodge security until after the Court of Appeal judgment was handed down. My judgment does not record that submission nor is it the recollection of the other defendants. I decided that security was required to be lodged by 18 January 1999 to allow the plaintiffs to focus on the running of their appeal. 10 On 18 January 1999, when the plaintiff failed to lodge the security in accordance with my orders it did not immediately move the court to extend the time for lodging the security but rather waited until 24 February 1999 to file their motion. By that time it had been put on notice that the defendants would move to have the claim brought by Dovade Pty Limited struck out. The evidence relating to the plaintiffs' and in particular that of Dovade Pty Limited's inability to pay security is unsatisfactory. There is a statement by the plaintiffs' solicitor that he has been instructed that the plaintiffs have been unable to fund and pay the security for costs as ordered by the 13 November 1998 and that subject to the outcome of the matter of the appeal, the plaintiffs will then be in a position to fund and comply with the security order. None of the plaintiffs nor an officer having direct knowledge of the financial position has given evidence on oath. I had previously criticised the plaintiffs for firstly not furnishing evidence as to the amount of security they thought was appropriate and secondly their failure to furnish evidence as to the plaintiffs true financial position. 11 There has not been a material change in the circumstances since the original application was heard nor has there been discovery of new material which could not have reasonably been put before the court on the original application - see Brimaud v Honeysett Instant Print Pty Limited (NSWSC McLelland, unreported 19 September 1988). While balancing the interest of the first plaintiff against those of the defendants, I have to bear in mind that injustice to impecunious defendants by unnecessarily shutting them out or prejudicing them in the conduct of litigation should be avoided. However, I am faced with the difficulty that once again evidence of the first plaintiff's true financial position has not been put before the court even though the plaintiffs have conceded that it is appropriate that security for costs be given. Nor has the first plaintiff deposed as to the attempts, if any, he has made to comply with the court's order. It is my view that justice lies on the side of the defendants. The plaintiffs should provide security for costs prior to the Court of Appeal's decision being handed down. 12 The defendants have sought that the proceedings be dismissed on the basis of Part 53 r 4 of the Supreme Court Rules but conceded that the plaintiffs should be allowed a further 7 days to lodge security and if this order is not complied with they submitted the proceedings should be dismissed. 13 Part 53 r 4 of the Supreme Court Rules provides: "Where a plaintiff fails to comply with an order under this Division, the court may, on terms, order that the proceedings on any claims by the plaintiff for relief in the proceedings be dismissed. 14 The defendants referred me to Billinudgel Pastoral Co Pty Limited & Ors v Westpac Banking Corporation & Ors (Federal Court, Cooper J, unreported 27 March 1998) Cooper J stated that: "The court's discretion to vary an order for security made under O 28 or to dismiss proceedings pursuant to s 56(4) for failure to provide security or further security is an unfettered discretion to be exercised in the circumstances of the case. Whilst the court will be careful to see that orders for security for costs to not work injustice to parties against whom the orders are made, if those parties do not comply with the orders and offer no explanation for non-compliance, they cannot be hear to complain if, after a considerable length of time, their proceedings are dismissed: Microboi Resources Inc v Betatene Ltd (unreported, Federal Court of Australia (FC) Black CJ, Sheppard and Einfeld JJ, 8 October 1993) at 9-10…" 15 As previously stated the first plaintiff by its officers has failed to put any evidence as to the steps it has taken to comply with the courts orders. However, the first plaintiff should have a further opportunity to comply with the orders for security for costs. The time for lodging security is extended for the period of 28 days from the date of this judgment. If the orders for security are not complied with, the proceedings should be dismissed. 16 As the first plaintiff did not comply with the court's earlier order and was unsuccessful in its motion it is my view that the first plaintiff should pay the defendants' costs of the motions. The defendants submitted that these costs should be payable forthwith. Costs should be payable in the normal manner, that is they should be payable at the conclusion of the proceedings. 17

Dovade Pty Limited & 5 Ors v Linsday Shaddock & 51 Ors

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