Mimi's Fine Foods Pty Limited v Cimino & Anor

Supreme Court of NSW|2011-02-25|Before: White J

Judgment 1HIS HONOUR : The defendants seek orders that these proceedings be summarily dismissed. If that order is not made, they seek orders that the proceedings continue on pleadings and security for costs. There is no issue that the proceedings should continue on pleadings if they are not dismissed. 2There are two grounds for the application for summary dismissal. The first is that the proceedings are an abuse of process because they raise the same issues as did proceedings commenced in this court on 16 March 2009. The parties to those proceedings included the parties to the present proceedings. Those proceedings were transferred to the Family Court. 3On 23 June 2009 orders were made by consent in the Family Court that the proceedings originally instituted in this court be dismissed. A further order was made by consent which the defendants rely on as itself precluding the institution of these proceedings. It is said that it is an abuse of process for the plaintiff to commence fresh proceedings making the same allegations and relying on the same evidence as was adduced in the earlier proceedings. 4The second basis for the contention that these proceedings are an abuse of process is that they were brought for an improper and collateral purpose being, as I understand it, to coerce the first defendant's sister (who was formerly the wife of the person now standing behind the plaintiff) and the defendants into agreeing to refrain from courses of conduct which are not put in issue in these proceedings, such as to, in the case of the former wife, for her to abandon claims of harassment and the like made against her former husband.

Abuse of process: collateral purpose 25The allegation of abuse of process based on improper or collateral purpose is founded on a letter written by the solicitor for Mr Yiasemides to the solicitors acting for Dorothy Cimino. Mr Yiasemides' solicitors, Paul & Paul Lawyers, wrote on 17 July 2009 that there were serious matters that needed to be addressed if all litigation between the parties were to cease. They alleged that a forensic examination of the MYOB database of Mimi's Fine Foods had concluded that the database had been manipulated when it was in Dorothy Cimino's possession. 26The solicitors observed that no indemnity had been given to the first and second defendants. They then broached allegations that Dorothy Cimino was said to have made concerning threats or harassments by Mr Yiasemides or his son. These allegations were rejected. Paul & Paul Lawyers went on to say that they requested Dorothy Cimino's and the first and second defendants' consent to certain orders. These included that those three persons be restrained from manufacturing any kind of confectionary produce or for coming near certain properties, including Mr Yiasemides' house and a chocolate store and factory occupied by companies he controls. 27The solicitors also proposed that Dorothy Cimino acknowledge that there had been no harassment and that she withdraw AVO proceedings which she had instituted. The solicitors said that if consent to the proposed orders was not given, proceedings would be brought against the first and second defendants. 28Mr Menadue for the defendants submits that by this correspondence, Mimi's Fine Foods, which was and is under Mr Yiasemides control, was threatening to commence these proceedings to obtain a collateral advantage unconnected with the proceedings. 29It is an abuse of process to institute proceedings with a predominant purpose of obtaining a collateral advantage outside the proper purpose for which the proceedings are designed. It is not an abuse of process to bring proceedings for the purpose of pursuing them to a conclusion to obtain whatever entitlement or benefit the law provides if the proceedings are successful. It is not an abuse to pursue a claim which has substance, even though the plaintiff is motivated by personal hostility or the hope of some indirect advantage, or compromise, if the plaintiff does not use fraudulent means. ( Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509; Dowling v Colonial Mutual Life Assurance Society Ltd [1915] HCA 56; (1915) 20 CLR 509; Australian Beverage Distributors Pty Ltd v Redrock Co Pty Ltd [2007] NSWSC 966). 30These proceedings were instituted on 7 October 2010. That is to say, more than a year after the letter written by Mr Yiasemides' solicitor was sent. It is clear from that letter that had Mr Yiasemides' demands been met, he would have agreed not to pursue these proceedings. However, it is not an abuse of process for a party to endeavour to compromise the claim before instituting proceedings, even if the compromise relates to matters which go beyond the scope of the issues or the relief raised in the proposed proceedings. 31I do not infer from the making of that offer that Mr Yiasemides' predominant purpose in pursuing these proceedings is not to bring them to a conclusion, but to obtain an advantage which is outside their scope by coercing his former wife into abandoning other proceedings she has brought in relation to allegations of harassment. Nor do I infer that his predominant purpose in bringing these proceedings is to intimidate or coerce the first and second defendants to accept restraints on their behaviour to which Mr Yiasemides is not otherwise entitled. 32A clear case would need to be established that that was Mr Yiasemides' predominant purpose. This is not shown from the tender of the letter, nor the fact that Mr Yiasemides does not in his evidence on this application specifically address that letter. 33Mr Yiasemides' principal affidavit gives rise to the inference that he is pursuing the proceedings in order to recover for Mimi's Fine Foods moneys which, he says, has been misappropriated. The fact that he offered terms not to bring such proceedings a year before their commencement is not enough to justify a conclusion that that is not his predominant purpose. He was not cross-examined on this point. 34For these reasons, I do not consider that the proceedings should be summarily dismissed. 35There is an issue whether a certificate should be provided by the plaintiff's solicitor under s 347 of Legal Profession Act 2004. Counsel for the plaintiff accepts that the proceedings have to be pleaded. That pleading will establish whether or not the plaintiff is truly claiming damages to which s 347 of Legal Professional Act refers. 36There is no reason to apprehend that if a certificate under that section is required it will not accompany the statement of claim that is to be filed. The proceedings are not invalidly constituted for the arguable want of such a certificate.

Security for costs 37The plaintiff accepts that it may be unable to meet an order for costs if costs are ordered against it. It accepts that it is financially impecunious. The jurisdiction to order security for costs is not in issue. The plaintiff submits that the court in its discretion should not make an order for costs because its impecuniosity has been caused by the conduct of the defendants about which it complains. 38Consideration relevant to making an order for security for costs were considered by Beazley J (as her Honour then was) in KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; (1995) 56 FCR 189 at 196 to 198. I will not repeat them all. 39One ground on which security may be opposed is if the plaintiff has a bona fide claim which will be stultified by the making of an order for security for costs. In Bell Wholesale Co Limited v Gates Export Corporation (No. 2) (1984) 2 FCR 1, the Full Court of the Federal Court said that security should not be refused on this ground unless the company establishes that those who stand behind it and who will benefit from the litigation, if it is successful, are also without means. In this case the person standing behind the plaintiff is Mr Yiasemides. There is no evidence of his means. He has not proffered an undertaking to be liable for any costs orders made against the plaintiff. 40I accept that there is a separate principle that security for costs may be refused where it can be seen that the plaintiff's impecuniosity is caused by the defendant's conduct. In the present case, Mr Yiasemides deposes that, for reasons he gives, the defendants have deprived Mimi's Fine Foods of an amount ranging anywhere from approximately $135,000 plus GST to over $1 million. However, that evidence falls short of establishing that the plaintiff's impecuniosity was caused by the defendants. There is no evidence as to plaintiff's financial position before the alleged misconduct of the defendants. 41Moreover, Mr Yiasemides' evidence has not been tested and involves, it seems to me, a degree of speculation. 42This is an appropriate case for an order for security for costs. I accept that security should be ordered in stages and it is appropriate to make an order for security for costs in an amount up to trial, with liberty for the defendants to apply to increase that amount. 43The defendants' solicitor, Mr Alexander Law, estimates the defendants' costs of the proceedings to be in the order of $209,600. He provides a breakdown of that estimate. It is difficult for a solicitor and for the court to make a reliable estimate of costs, given the nature of court proceedings. It seems to me from Mr Yiasemides' affidavit that there will be a degree of investigation required, including, no doubt, the issues of subpoenas to third parties; perhaps many third parties. 44Mr Law's estimate was not challenged, save in one respect, and appears to me, if anything, to be conservative. Part of his estimate of costs includes an amount of $25,600 for the cost of this application. I do not regard that estimate as conservative. In any event, it should not be included in the amount for which security is to be provided. Mr Law estimates approximately $100,600 as being the costs of a trial. 45In other words, he estimates about $75,000 as the costs of preparation up to hearing, although I expect that part of the estimated costs of hearing would be the barrister's costs of preparation. I think an amount of security of $70,000, given the nature of the case, up to but not including the costs of hearing, would not be excessive. I will make an order for security in that amount.

Orders 46I order that the plaintiff file and serve a duly verified statement of claim by 25 March 2011. 47I order that the defendant file and serve a verified defence by 27 April 2011. 48Any reply should be filed and served by 6 May 2011. 49I stand the proceedings over to the Corporations List before the Corporations List Judge on 9 May 2011. 50I order that para 1 of the plaintiff's interlocutory process filed on 3 November 2010 be dismissed. 51I order that by 25 March 2011 the plaintiff provide security for the defendants' costs of this proceeding by way of a bank guarantee issued by an Australian bank, and otherwise to the satisfaction of the Registrar, in the sum of $70,000. 52I note that the amount of security for costs in the preceding order does not include security for the costs of hearing and that the defendant has liberty to apply for further security for costs of the hearing. 53I will not make an order at this stage for a stay of the proceedings pending provision of security for costs. If security is not provided, the defendants can apply then for a stay. 54I give liberty to the defendants to apply on seven days' notice for a stay of the proceedings if security is not provided. 55I order that the costs of the interlocutory process be the plaintiff's costs in the proceedings. The exhibits may be returned but should be held by the parties' solicitors pending further order. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 March 2011

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