Eriksson v Commonwealth Bank of Australia

Judgment 1On 22 of November 2013 I heard an application in the Applications List by the second plaintiffs in these proceedings, James Barry Martinek and Patricia Maree Martinek, made by notice of motion filed on 8 November 2013, for the review of a decision of Assistant Registrar Musgrave made on 11 October 2013 in favour of the defendant Commonwealth Bank of Australia. 2On that date the Registrar ordered: "The second plaintiffs' Statement of Claim filed on 9 July 2013 be stayed pursuant to Part 12 Rule 4 of the Uniform Civil Procedure Rules 2005 (NSW) until the second plaintiffs pay the defendant's costs of proceedings No 137106 filed in this Court on 3 May 2013 and dismissed pursuant to orders dated 11 July 2013." 3The second plaintiffs' application to this Court was made pursuant to UCPR r 49.19. That rule relevantly provides: "If in any proceedings a registrar...makes an order or decision...the court may, on application by any party, review the...order, decision or other act and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit." 4The power that the Court is given by this rule is not the same as that which is exercised on a conventional appeal, where it is generally necessary for the appellant to establish that there has been a material error of fact or principle on the part of the first instance court or tribunal. The Court in carrying out the review is able to re-decide the issue on the basis of all of the material that is put before it: see for example Tomko v Palasty (No 2) [2007] NSWCA 369 and In the Will of Sheppard [1972] 2 NSWLR 714. However, it is proper for the Court to exhibit a natural inhibition against the unrestrained substitution of the reviewing court's views for those of the Registrar: Westpac Banking Corporation v Abemond Pty Ltd (NSWSC, Santow J, 28 October 1994, unreported). 5At the end of the hearing on 22 November 2013 I made an order dismissing the second plaintiffs' notice of motion, and ordered them to pay the Bank's costs on the ordinary basis. Because of the lateness in the day when the hearing ended, and the unavailability of time to give reasons for judgment, I advised the parties that I would publish my reasons at a later time. These are those reasons. I propose to follow the course of providing summary reasons in accordance with the practice that is customary in the Applications List. 6On 9 July 2013 the plaintiffs, being Trevor Eriksson as first plaintiff, and the second plaintiffs, filed a statement of claim in these proceedings against the Bank. It was these proceedings that the Registrar ordered be stayed on the terms set out in the order above. 7There is no real contention about the basic facts. The Bank (as BankWest) obtained a judgment in the Supreme Court of Queensland against the second plaintiffs for an amount of about $4.7 million on the basis that they were liable to the Bank under a guarantee. The second plaintiffs did not defend the claim. The Bank commenced bankruptcy proceedings against the second plaintiffs. The bankruptcy notice was set aside on 23 April 2013, on the condition that the second plaintiffs commenced proceedings to set aside or stay the Queensland judgment by 3 May 2013. 8The second plaintiffs did not institute proceedings in the Supreme Court of Queensland to set aside or stay the judgment. Instead, on 3 May 2013, the second plaintiffs commenced proceedings in this Court by summons for an injunction against the Bank to prevent it from enforcing the Queensland judgment. 9Apparently, the second plaintiffs also sought an order that they file a statement of claim within 28 days, and on 25 June 2013 a solicitor employed by the second plaintiffs' present solicitor swore an affidavit that attached a draft statement of claim. The allegations and claims for relief in that draft statement of claim are in substance identical to those contained in the statement of claim in the present proceedings. 10On 11 July 2013 Hammerschlag J dismissed the proceedings commenced by the second plaintiffs on 3 May 2013, and the second plaintiffs were ordered to pay the Bank's costs. The second plaintiffs say that they did not oppose the making of those orders. The reasons why, the second plaintiffs say, that they took that course are set out in pars 17 and 18 of their written submissions provided in support of their present application. The reasons are not entirely straightforward or easy to follow. It is said that the second plaintiffs agreed to the dismissal of their claim because of reasons connected with steps taken by the first plaintiff, Mr Eriksson, in other related litigation. The second plaintiffs also say that they "made their intentions known" that they would commence new proceedings substantially in the form of their present statement of claim. 11Rule 12.4 of the UCPR provides: "If: (a) as a consequence of the discontinuance of proceedings, a plaintiff is liable to pay the costs of another party in relation to those proceedings, and (b) before payment of the costs, the plaintiff commences further proceedings against that other party on the same or substantially the same cause of action as that on which the former proceedings were commenced, the court may stay the further proceedings until those costs are paid and may make such consequential orders as it thinks fit." 12That is the rule upon which the Bank successfully relied on its application that led to the Registrar making his orders on 11 October 2013. 13The second plaintiffs conceded before the Registrar and this Court that the facts of this case fully satisfy the requirements of pars (a) and (b) of rule 12.4. They submitted, however, that the use of the word "may" shows that the power in rule 12.4 is discretionary, and further submitted that the Court in the exercise of its discretion should decline to make an order staying the proceedings. 14The second plaintiffs based their argument on a number of submissions. They submitted that the Registrar placed too much weight on what they described as a presumption that, if the requirements for the application of the rule were satisfied, it should be applied. In my view that is not an entirely fair way to categorise the Registrar's reasons. It would be fairer to say that he took into account the proposition that ordinarily a stay will be granted when the conditions are satisfied. At [15] of his reasons for judgment the Registrar did say "the court will grant a stay where the circumstances are within the rule", but he went on in the same paragraph to note that the order is discretionary, and he referred to some situations when a stay would not be granted, even when the conditions were satisfied. The Registrar made it clear that, in deciding to order the stay, he was actuated primarily by the fact that the course that the second plaintiffs had voluntarily undertaken had wasted the Bank's costs, even if it might turn out that the amount wasted was relatively small. 15I must proceed on the basis, however, that on the present application the issue is not whether the Registrar made an appealable error, but whether his decision should be reviewed and varied in any way. 16The second plaintiffs argued that a stay should only be ordered where costs will be wasted, or have been wasted, or are to no avail because the plaintiff, having elected to commence one set of proceedings, then elects to discontinue that action and bring new proceedings on the same subject matter. They say that in fact costs were saved, in that the second plaintiffs in the new proceedings have done by way of right that for which leave was required in the first proceedings, namely seeking leave to file a statement of claim: written submissions pars 22 and 23. 17The reality is that the Bank or its lawyers must have read and considered the draft statement of claim in the first proceedings, which was the subject of the proposed application by the second plaintiffs for an order that it be filed. When the new proceedings were commenced by a statement of claim that was in substance identical to the earlier draft, the Bank and its lawyers would have been required to read and consider the new statement of claim. That would be the case even if they had reason to suspect that the new statement of claim was likely to be identical to the earlier draft. It would have been irresponsible for the Bank and its lawyers simply to assume that the two documents were identical. 18In my view the Registrar was right, and the Bank and its lawyers were required to duplicate the work necessary to digest, first the original draft statement of claim, and then the statement of claim that was filed. 19It cannot therefore validly be said that in any real way the conduct of the second plaintiffs has saved any money. Hammerschlag J ordered the second plaintiffs to pay the costs of the first proceedings. If those costs are not paid, then the Bank will necessarily incur what is, effectively, double the cost of reading, considering and digesting the one statement of claim. 20The conditions for the ordering of a stay in rule 12.4 are satisfied, and it was, and is, appropriate that a stay be granted until the earlier costs order was paid. 21The second plaintiffs put an argument that, because on the one hand the Bank's costs incurred in responding to the original proceedings were de minimus compared with the amount of the default judgment of $4.7 million, and on the other hand even those costs were likely to have been increased by the high calibre of lawyers retained by the Bank, the Court should effectively excuse the second plaintiffs from their obligation to pay the costs of the first proceedings, before they continue with the second. I reject that argument, as the rights of the Bank should not be made dependent on the financial position of the second plaintiffs. In any event, if the amount of the costs was relatively low, then it should have been easier for the second plaintiffs to pay those costs. 22If the second plaintiffs were of the view that the amount of costs incurred by the Bank was excessive, the proper way for them to protect themselves was to challenge the reasonableness of those costs on an assessment. 23For these reasons the appropriate order for the Court to make was to dismiss the second plaintiffs' application with costs.