GAS SENSING TECHNOLOGY CORPORATION -v- PROX PTY LTD [No 2] [2020] WASC 240 (24 June 2020)

1. However, as at 14 May 2020, the interim tranche of security in the amount of $100,000 was not paid.
2. On 14 May 2020, the plaintiff filed a minute of proposed orders seeking an extension of time for compliance with this order. The orders sought by the plaintiff read:
   1. The time for compliance with Order 1 of the Orders made by the Honourable Kenneth Martin on 23 April 2020 for the plaintiff to provide security for costs be extended from 14 May 2020 to 26 June 2020.
   2. The matter be adjourned for a directions hearing on a date not before 26 June 2020.
   3. The defendant's obligation to file and serve a defence be suspended until further order of the Court.
   4. The costs of this Minute of Consent Orders be in the cause.
3. However, the defendant filed a competing minute on the same day seeking that the proceeding be stayed until further order and that springing orders issue (resulting in the striking out of the writ if the plaintiff does not pay the security by 29 May 2020). The orders sought by the defendant read:
   1. The plaintiff having failed to provide security for costs by 14 May 2020 as required by the orders dated 23 April 2020, the proceeding be stayed until further order.
   2. Unless, by 4pm on 29 May 2020, the Defendant [sic] provide security for the defendant's costs up to and including mediation by way of:

(a) an irrevocable and unconditional bank guarantee for the sum of $100,000 in favour of the defendant with no expiry date from a bank acceptable to the defendant; or

(b) payment into Court of the sum of $100,000,

the writ of summons be struck out and judgment be entered for the defendant on a self-executing basis.

1. The plaintiff pay the defendant's costs of the directions hearing.
2. I also note that the plaintiff filed an affidavit of Mhairi Jane Reid Stewart (a solicitor engaged with the lawyers of record for the plaintiff) affirmed on 14 May 2020. Attached to Ms Stewart's affidavit at MJS-4 is an engagement letter, dated 11 May 2020, sent from Westfleet Advisors LLC, a US based litigation finance broker and advisor, to Dr John Pope, the CEO of Gas Sensing Technology Corporation (GSTC) (the Letter). The Letter had been emailed by Dr Pope to his counsel, Mr MacLennan and copied to Ms Stewart.

1. These proceedings were commenced by writ on 27 October 2016. The plaintiff is a foreign corporation that does not have assets or funds within the jurisdiction. The stage of the litigation is still relatively infantile in terms of development. There is a substituted statement of claim dated 30 May 2019 (folio doc 247) which effectively sees the plaintiff plead out an attempted cause of action against the current sole defendant, ProX Pty Ltd (ProX).
2. My involvement as case manager in the matter goes back to 2016, at a time when there were multiple proposed defendants, in a context then of other litigation involving one of GSTC's Australian subsidiaries, that is, Welldog Pty Ltd, which subsequently went into liquidation.
3. The cause of action in Australia is in its early stages. It is clearly unsatisfactory that it has not progressed. However, it has unfolded effectively by a process of attrition and excision - down to a case as now seen against only one defendant.
4. For the reasons that follow, I am not minded to make the springing orders sought by the defendant at this time. In balancing the competing interests, it is my end view that it is appropriate to permit some extension of time, until 22 June 2020, for the plaintiff to pay the security. If, by this date, the security is not paid, and the plaintiff is then unable to provide a satisfactory explanation, a springing order may well follow.

1. Where no step has yet been taken by ProX to make arrangements for payment of security for costs in accordance with an order of the court, the court as part of its inherent jurisdiction, is able to grant a springing order.
2. Guidance as to the proper practice in relation to springing orders made in the course of case management prior to trial was provided by the court in Firmware Technologies Inc v Asia Platinum Group Ltd [2016] WASCA 179 at [41] - [49].
3. Ultimately, in considering the appropriate orders for circumstances of party non-compliance, it is perhaps of assistance to highlight that the primary focus is 'the achievement of justice'.[1] And further, that 'case management is a means to an end and not an end in itself'.[2]
4. I also refer to the reasons of Steytler P and Owen J in Hancock Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398 in exploring the concept of justice (in the context of striking out for want of prosecution). Drawing from [90] - [93], I identify these points:
   1. The court must ensure that justice is done in any cause brought before it;
   2. The concept of justice is not fixed;
   3. The flexible nature of justice exists to be applied to the particular circumstances in which its dictates are called in aid;
   4. Justice involves aspects of both private and public interests; and
   5. All these notions of justice play a part at various stages of the litigation process.
5. Clearly, the achievement of justice requires a flexible approach to be applied to the particular circumstances at hand and a balancing of interests.
6. Making of a springing order which results in the entry of judgment prior to trial, without regard to the merits will be justified 'where necessary to enable the court to fairly determine the substantive matter in dispute and as a last resort'.[3]
7. In Trafalgar West Investments Pty Ltd (as Trustee for the Trafalgar West Investments Trust) v Superior Lawns Australia Pty Ltd [No 9] [2016] WASC 68 at [14], I addressed some of the factors which may be taken into account in the court's exercise of discretion to dismiss a proceeding in the face of a failure to comply with security for costs order. fThe principles there discussed had been identified by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18 at [24], and then upheld on appeal in Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271. Those relevant factors include:
   1. The period that has elapsed since security was ordered;
   2. The fact that the party against whom the security has been ordered has been on notice of an application for dismissal;
   3. The apparent inability of the plaintiff to fund the proceedings;
   4. The prejudice to the defendant; and
   5. The position of the court.
8. This list of factors[4] is by no means exhaustive. The task requires all relevant circumstances to be taken into account.[5] '[T]he proper exercise of the Court's discretion requires all relevant factors to be weighed in balance, the ultimate decision reflecting the interests of justice'.[6]

Extension of time or Springing order? - Consideration of appropriate orders

1. So, now to address the question of what exactly the notions of justice require in the current circumstances.
2. Here the period of time that has elapsed since my first making of my security for costs orders of 23 April 2020, is a little over three weeks. Yesterday was in fact, only the first day the plaintiff had been put on notice of a potential application to dismiss the action for failure to meet the first tranche of security.

1. The defendant has not yet been called upon to plead to the current statement of claim as it now stands against it. The foreshadowed costs associated with engaging in the exercise of having to plead out a defence to the plaintiff's current pleading was one of the reasons for the security as ordered on 23 April 2020.
2. The orders I made on that day effectively did not require the defendant to embark on that pleading process until the tranche of security as ordered was provided. That is relevant in two senses. First, it demonstrates that from the defendant's point of view the action still has not progressed very far. And secondly, following on from that, the defendant has been relatively protected to date in terms of any costs exposure prejudice. When considering prejudice, it is clear that the defendant has not yet been forced to incur the expense of pleading to an extensive statement of claim and the issues, which are considerable, it advances.

1. Another point that I want to make is by reference to the decision of the United States Court of Appeals for the Tenth Circuit, delivered on 6 January 2020.[7] The plaintiff has provided me with what the Tenth Circuit said there in dismissing, effectively, a United States proceeding commenced out of the Wyoming State Court and referred to throughout the course of that judgment as Ashton 2.
2. That dismissal result is relevant in the context of the history between the parties - whereby the original application for security for costs was filed on 11 July 2019, then adjourned by consent by my orders of 2 September 2019 until January this year, and then further adjourned by consent by my orders of 22 January 2020. The reason for the adjournment, as explained by counsel for the plaintiff (ts 296), was the parties' mutual knowledge that the plaintiff had been awaiting the outcome of the appeal in the United States.
3. The plaintiff had clearly taken other litigation steps to pursue a claim that relates to the proceedings before me, in its home jurisdiction. If that United States appeal had been successful, counsel for the plaintiff explained (ts 296) it would have continued proceedings against the defendant in the United States and would have discontinued this action in Western Australia.
4. In the course of the decision dismissing Ashton 2, referred to above, it is plain a previous appellate decision was not appealed,[8] namely, Ashton 1 as it is defined. Ashton 1 had proceeded upon the basis of a forum conveniens assessment that Australia presents as the most desirable and appropriate forum for the disputes articulated by GSTC. GSTC, being a Wyoming company, brought the action against Mr Ashton and company (Mr Ashton, of course, being the dominant shareholder and directorial mind behind ProX). The consideration applied in the United States Appeals Court, that Australia was the appropriate forum, is for me a significant consideration from an access to justice point of view that I have to weigh in the overall balance today.
5. In other words, the United States Courts at appellate level have given a firm indication that the grievance that GSTC wishes to articulate, effectively in terms of an alleged loss of control over its valuable Australian subsidiary, is best determined in this country. That being the case, the question from an access to justice point of view is how much liberty ought I to afford the plaintiff in the wake of a sustained default in complying with the security for costs order previously made.

Plaintiff's efforts to secure litigation funding (and ability to fund the proceedings)

1. It is true, as counsel for the defendant has pointed out, that the material provided in Ms Stewart's affidavit relied upon by the plaintiff, is not overwhelmingly convincing in terms of the plaintiff's efforts to secure litigation funding. It indicates that in the United States, at 11 May 2020 (which would equate to 12 May 2020 here), some time after my 23 April 2020 orders, that the plaintiff through its CEO, Dr John Pope, only then took some steps to engage the services of a Nashville, Tennessee based intermediary - on the basis of that entity then itself taking steps to engage litigation funders or find litigation funders to assist the plaintiff in pursuing litigation in the United States, or Australia, as against entities identified in cl 2 of the Letter.
2. And it is also true, as counsel for the defendant points out (ts 295), that the named defendant, as the remaining defendant in this litigation, ProX Pty Ltd, is not identified there. Of course, Mr Ashton and Mr Linklater, who are former defendants in this litigation (prior to the discontinuances against them) are identified there. Nor is there anything in the affidavit to indicate a likelihood of success by the intermediary upon an as nominated extension time of until 26 June 2020 - which the plaintiff now seeks as extra time, in effect, to provide the interim tranche of security

1. I also weigh the fact that $100,000 in the scheme of things is not a lot of security in the context of the subject matters of this litigation. It is an interim tranche, effectively to take the matter up to a mediation, as was discussed on the previous occasion, 23 April 2020. If this action is to proceed to a full-blown trial, then its complexity is presently such that I can envisage it as a trial spanning some days. The costs incurred in such an exercise would be considerably higher than $100,000.
2. I have to weigh all those considerations now in terms of whether I grant an extension to the end of May or, to effectively 26 June 2020, and further or alternatively, whether there should be springing orders imposed.

1. As counsel for the plaintiff points out, this is the plaintiff's first significant default in providing security. In the scheme of things, the action as against the current defendant, ProX, is still in the early stages of the litigation. Thus, I am of the view that I should extend a little more time for compliance regarding the payment of security. As to how much time is appropriate, perhaps not all the time that the plaintiff asks for is warranted. No empirical basis is pointed to for that period (ts 290 - 291). More time than the defendant would tolerate is asked for in order to assess whether the efforts of the intermediary identified in Ms Stewart's affidavit will bear any success in locating a litigation funder who might step forward to assist the plaintiff in Australia with advancing this action.
2. I propose essentially to allow the plaintiff extra time until the close of business (WST) on Monday, 22 June 2020 to put up the security in the amount identified. Alternatively, if it does not, I would expect a detailed explanation as to the position on affidavit, including the success, or otherwise, of all efforts made by the intermediary to obtain a viable litigation funder for the action.
3. Consequently, I will list the action for a further directions hearing on Thursday, 25 June 2020 at 9.30 am, effectively, to review the position then, and at which point either the security will have been provided or not. There might be residual issues over costs. If the security has been provided, then I can make some programming directions forward for the action to advance. If it has not been provided, then I will look to the evidence then as has been submitted, about why that has not occurred.
4. Given then that would be a second occasion of default, following the extension, the likelihood would be at that time either that I would be inclined to dismiss the action instanter, or alternatively, issue a very short springing order, depending on the state of the evidence provided at that time, if there was continued default.
5. In that way, it seems I could then balance out the rival interests of providing a reasonable opportunity for the plaintiff to progress efforts to obtain a viable litigation funding arrangement. At the same time, I cannot countenance an open-ended period of delay in terms of progress in this action. One way or another, matters will have to be brought to a head, at or shortly after 22 June 2020.

1. I will issue orders in the following terms:
   1. The time for compliance with Order 1 of the Orders made by the Honourable Justice Kenneth Martin on 23 April 2020 for the plaintiff to provide security for costs be extended from 14 May 2020 to COB (WST) on Monday, 22 June 2020.
   2. The matter be adjourned for a directions hearing in the CMC List on Thursday, 25 June 2020 at 9.30 am.
   3. The defendant's obligation to file and serve a defence be suspended until further order of the Court.
   4. The plaintiff pay the defendant's costs of the directions hearing, to be taxed if not agreed.

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

[1] Firmware Technologies Inc v Asia Platinum Group Ltd [2016] WASCA 179 [41] citing Skahill v Kestral Holdings Pty Ltd (in liq) [2000] WASCA 185 [17] (Owen & Heenan JJ).

[2] Firmware Technologies Inc v Asia Platinum Group Pty Ltd [41].

[3] Firmware Technologies Inc v Asia Platinum Group Ltd [42].

[4] Having been referred to in a number of decisions in this jurisdiction: Marinis v Prendergast [2019] WASC 215 [56] (Martin K J); LPH Developments Pty Ltd (in liq) (as Trustees for the LPH Developments Keegan Street Trust) v Jameson Moore Pty Ltd [No 4] [2018] WASC 401 [130] (Smith J); Construction Industries Australia Ltd (in liq) v WFI Insurance Ltd [2017] WASC 187 [4] (Pritchard J); Australian Growth Managers Ltd v Egerton-Warburton [2007] WASC 10 [10] (Master Newnes).

[5] Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18 [24] (Einstein J).

[6] Idoport Pty Ltd v National Australia Bank Ltd [24].

[7] Gas Sensing Technology Corp v Ashton, 795 Fed Appx 1010 (10th Cir, 2020).

[8] Gas Sensing Technology Corp v Ashton, No 16-CV-272-F, 2017 WL 2955353 (D Wyo, 2017)