Harbinger Property Investments Pty Ltd v Jalvac Property & Development Pty Ltd [2006] NSWSC 76 | Case summary

4771/05 Harbinger Property Investments Pty Ltd v Jalvac Property & Development Pty Ltd JUDGMENT 1 HIS HONOUR: On 7 November 2005 Registrar Walton heard an application by the defendant that the plaintiff provide security for costs. The Registrar ordered that the proceedings against the defendant be stayed until the plaintiff provided security for the defendant's costs in the sum of $45,000 in a form acceptable to the Registrar and made an order for costs of the motion. No time limit was then placed specifying the date by which the security was to be provided. 2 On 8 December 2005 the matter was listed for directions. The defendant sought an order that the security be provided by 22 January 2006, and that in default, the plaintiff's claim against the defendant be dismissed. There was no appearance for the plaintiff on that occasion. The matter was referred to Registrar Walton to be dealt with in chambers. On 12 December 2005, Registrar Walton ordered that if the plaintiff failed to provide security in accordance with the orders made on 7 November 2005 on or by 10 February 2006, the plaintiff's claim against the defendant be dismissed. The Registrar ordered that the defendant's cross-claim be stayed whilst the plaintiff's claim was stayed, subject to the defendant having liberty to restore its cross-claim upon five days notice. 3 The plaintiff by notice of motion filed in Court today moves the Court for orders that the orders of 12 December 2005 be stayed until further order, and for an extension of time for the filing of the application seeking a review of the Registrar's decision of 7 November and of 12 December 2005. The same notice of motion in paragraph 3 seeks that those decisions be reviewed pursuant to subs 121(3) of the Supreme Court Act 1970 (NSW). 4 The evidence in support of the application was to the effect that the solicitors who were acting for the plaintiff at the time of the Registrar's decision of 7 November 2005 ceased acting for it on about 20 November 2005. Shortly before that date, the sole director of the plaintiff, a Mr Murabito, consulted another solicitor for the purpose of his acting in this and another proceeding. Mr Murabito deposes that he understood that the new firm would act for the plaintiff and would seek a review of the Registrar's decision. Mr Murabito deposes to being told by the solicitor that they would be "going on the record", and of giving instructions to him to appeal the Registrar's decision. This instruction was apparently given on 5 December 2005, which was the last day within which an application for review could be filed, unless an extension of time were granted. (See rule 45.20 of the Uniform Civil Procedure Rules). The solicitors whom Mr Murabito consulted did not "go on the record". 5 On 21 November, 2005, the plaintiff's previous solicitor filed a notice of intention to withdraw seven days after 20 November 2005. On 24 November 2005, the defendant's solicitors wrote to the plaintiff's then solicitors, and to the plaintiff directly, advising of the defendant's intention to seek an order that the security which the plaintiff was ordered to pay within two months, failing which the plaintiff's claim be dismissed. The communication was sent to the plaintiff directly, I infer, because of the filing of the notice of intention of ceasing to act. 6 The defendant's solicitor was contacted by Mr Campion, whom Mr Murabito had consulted on 2 December 2005. The defendant's solicitor, Mr Khoury, told Mr Campion of the defendant's seeking to impose a time limit for the payment of the security. In conversations on 2 and 7 December 2005, Mr Khoury was told by Mr Campion that the latter had not decided whether he would be acting for the plaintiff. Although Mr Murabito deposes to never having been told by Mr Campion that his firm had not gone "on the record", it does not appear that he took any steps to verify with Mr Campion that his firm had done so and had sought a review of the Registrar's decision. Mr Murabito received notice of the orders made on 12 December 2005 shortly prior to Christmas last year. In late January 2006, he consulted his present solicitor, Mr Hancock of Hancock Solicitors. The present application was not made until today. 7 The first question is whether time should be extended for seeking review of the Registrar's decision. In making that decision the Court must have regard to the overriding purpose of the Uniform Civil Procedure Act 2005 (NSW) and the rules of Court set out in s 56 of the Act, and to the matters in ss 57 and 58. It is relevant to that decision to make a prima facie assessment of the strength of the application for a review of the Registrar's decision of 7 November 2005. 8 Once the criterion which gives the Court jurisdiction to order security for costs is satisfied, the question of whether security should be ordered and, if so, in what amount is a discretionary decision to which the usual principles for review of discretionary decisions apply. The Registrar was satisfied that there was jurisdiction to order security for costs because there was reason to believe that the plaintiff, which is a corporation, would be unable to pay the costs of the defendant if ordered to do so. That conclusion was not challenged before me, and appears to be amply satisfied on the evidence to which the Registrar referred, and to which I have had regard. 9 It was submitted that there were, nonetheless, strong prospects of success on the review. This was so, it was said, because the Registrar did not properly consider the strength of the plaintiff's case and did not properly consider the effect of the cross-claim having been filed on the exercise of the discretion to order security. As to the first matter it was said that the plaintiff's claim is one to enforce a claim for commission under various agreements in writing. The defendant has admitted that a director signed the agreements in question, but has asserted, by reason of a variety of matters, that the agreements are unenforceable or should be set aside. The Registrar accepted that the plaintiff's claim was made bona fide, but concluded that she could not judge the merits of the case at that stage of the proceedings. 10 In my view the plaintiff has not shown an arguable case of error on this point. It is not possible from a review of the pleadings to assess the likely prospects of success of the plaintiff in the proceedings. 11 In relation to the relevance of a cross-claim having been filed, the Registrar cited the decision of the New South Wales Court of Appeal in Concrete Constructions Pty Limited v Dalma Formwork Pty Limited (Administrator Appointed) [1999] NSWCA 16. She quoted from the judgment of Sheppard AJA where his Honour said that where a claim and cross-claim arise out of the same or essentially the same factual matrix, it has been frequently and consistently said that an order for security would not generally be made in the exercise of the Court's discretion because it would be wrong to preclude a party from litigating matters by way of a defence to cross-claim merely because that party had instituted the proceedings. The Registrar noted that neither party had relied upon that case and that the plaintiff had only faintly argued that the application for security for costs should be dismissed on the basis of the defendant's cross-claim. She took the Court of Appeal's remarks into account but as neither party had raised or had an opportunity to argue the matter, she gave them little weight. 12 I do not think that the plaintiff has an arguable case to review the Registrar's decision on this ground. That is not only for the reasons which the Registrar gives, but also because the relevance of a cross-claim to an application for security for costs will depend upon the nature of the cross-claim. If it is essentially defensive, then different considerations may apply from those adverted to by Sheppard AJA in Concrete Constructions v Dalma Formwork. It seems that this matter was not argued before the Registrar, and in those circumstances she cannot be criticised for dealing with the matters in the way in which she did. 13 In deciding whether to extend the time for review the Court has regard not only to the object of the proceedings being determined justly, but also to the business of the Court being disposed of efficiently and in a timely way and at a minimum of costs to the parties. Although there is some explanation for the delay in seeking a review of the Registrar's decision, the explanation does not explain the entirety of the delay, nor is there any explanation as to why the plaintiff's director did not inquire of Mr Campion as to whether or not he had "appealed" from the Registrar's decision, or what the progress of any such appeal was. 14 Moreover, there is no great prejudice to the plaintiff if the appeal from the Registrar's decision is dismissed unless it be the case that the plaintiff is unable to provide the security ordered. Indeed, even if the order of 12 December 2005 stands without amendment, or without a stay, it is accepted by the defendant that the dismissal of the plaintiff's statement of claim would not operate as a res judicata and that there would be nothing to preclude the plaintiff after paying the costs of the defendant of the proceedings filing a notice of motion in the existing proceedings to file a fresh statement of claim, although, doubtless, the plaintiff would be required to provide security for costs. Even if that course were not open, it would be open to the plaintiff upon paying the costs of these proceedings to institute fresh proceedings. 15 Having regard to my assessment of the plaintiff's prospects of success on a review of the Registrar's decision of 7 November, to the explanation for the delay in seeking review of the Registrar's decisions, which I do not consider to be adequate, and to the type of detriment which the plaintiff would suffer if the decisions are not reviewed, I do not consider it appropriate to make an order extending the time for the review of either of the decisions of the Registrar. 16 In relation to the second decision, that is, her order of 12 December 2005, it was an appropriate order to make pursuant to rule 42.21(3). It follows that the orders sought in paragraphs 2 and 3 of the plaintiff's notice of motion should be refused. 17 The plaintiff also sought a stay of the order of 12 December 2005 until further order. Counsel for the plaintiff did not have instructions as to a time by which the plaintiff could or would provide the security which has been ordered if an extension of time were given for the provision of security. On the other hand, the defendant accepted that it would suffer no prejudice if the plaintiff were afforded a further 14 days to provide security. Whilst the plaintiff's application to review the Registrar's decision on the provision of security was still a possibility it is, perhaps, understandable that the security ordered would not have been lodged. 18 In the absence of opposition from the defendant, I am prepared to extend the time in paragraph 1 of the orders of 12 December 2005 by 14 days. No orders were sought in relation to paragraph 2 of the orders made on 12 December 2005, but there is a difficulty with the form of those orders because the plaintiff's claim, as I understand it, is not presently stayed. I will hear from counsel about what should be done in relation to those orders. I order that order 1 made on 12 December 2005 by the Registrar be varied by extending the time for the provision of security from 10 February 2006 to 5pm on 24 February 2006. Otherwise, I dismiss the plaintiff's notice of motion filed in Court today. I order the plaintiff to pay the defendant's costs of the notice of motion. [COUNSEL ADDRESSED]

Harbinger Property Investments Pty Ltd v Jalvac Property & Development Pty Ltd

At a glance

Court

Decision date

Before

Source

Judgment (13 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (1)