13 The liquidators have expressed the preference of having the plaintiff's claim dealt with in accordance with the proof of debt procedure prescribed by the Corporations Act 2001.
14 If leave is granted, there will be an impact on unsecured creditors. I shall mention certain matters without intending to be exhaustive. The plaintiff's claim may be earlier resolved. The liquidators would be put to the expense of defending the action and be placed at risk of an adverse costs order. A hearing would be a distraction disruptive of the performance of the various many tasks confronting the liquidators.
15 The liquidators are yet to seek legal advice in relation to the plaintiff's claim. They say that they are not in a position to currently deal with it. They are presently unable to estimate when they would be able to assess the claim. It is proposed to deal with the assessment of it at such time when claims or proofs of debt are examined by them in a managed and efficient environment and this is not anticipated to occur in the next twelve months.
16 There are other factors which the plaintiff emphasises as being relevant to the exercise of the court's discretion in its favour. I shall now deal with certain of them.
17 The proceedings were commenced prior to the commencement of the liquidation. The circumstances of this case are somewhat different from the cases in which such a matter has been given weight. In this case, they had been commenced about ten years before that event. If the proceedings had been diligently prosecuted, it could have been expected that the claim would have been resolved some years prior to the liquidation.
18 Attention has been directed to the reasons offered for past delay. The reasons were considered in the said judgments (the reasons included the financial crisis caused by the loss of deposit moneys, the death of Mr Theeman and a subsequent history of financial difficulty which prevented the raising of money to provide the security).
19 It is said that since these financial problems have been resolved, the plaintiff has sought to litigate the matter promptly but that it has been delayed by reason of matters outside the control of the plaintiff. Reference has been made to the application to dismiss for want of prosecution and the appeal, together with the liquidation itself.
20 It is said that the claim is one appropriate for determination by a court. Such a submission does not seem to be in dispute.
21 The plaintiff presents the claim as being a very large one (a range in the order of between $6,000,000 (lost deposit money) and $150,000,000 (lost profits) has been given). It is said to be a claim that arises out of a separate commercial transaction and is unlike the many insurance claims made against the defendant. It is said to have separate considerations.
22 The plaintiff says that there is a real prospect that the proof of debt would be rejected and it would be necessary for it then to have to approach the court by way of appeal. There would be further delay. The liquidators do not dispute this contention but stress that this must be seen in the context of the plaintiff's own lengthy delay and the lack of good reason to depart from the statutory procedure.
23 There is authority for the proposition that the court would not exercise its discretion in order to permit a person to proceed with a claim which is not reasonably arguable. The plaintiff contends that its claim is reasonably arguable. The liquidators join issue with that contention. In the present case, it seems to be accepted that the court is not really in a position to assess the prospects of success of the plaintiff's claim. However, for the purpose of this application, I will assume that it is not unarguable.
24 There has been complaint, that since the provisional liquidation, the liquidators have had notice of the claim and of applications but have failed to respond to correspondence (see communications of 9 May 2001 and 24 August 2001).
25 For completeness, I should refer to other matters which were the subject of consideration during the hearing.
26 These proceedings were commenced by Summons filed in the Commercial Division. Since the filing of that document on 6 May 1991, apart from what has been earlier mentioned, little has been done to advance the proceedings towards hearing.
27 If leave was granted, it could be expected that preparation would involve a number of interlocutory steps before the case would be ready for hearing.
28 It could be expected that the court would direct that the matter proceed by way of pleadings. Whilst no defence has been filed, there are indications that all aspects of the claim may be put in issue. The plaintiff has indicated that it will require a number of interlocutory processes to be undertaken (including discovery, interrogatories and exchange of witness statements and/or affidavits). The plaintiff envisages that there will be a need for experts and it appears that its experts are yet to be obtained. A state of readiness for hearing would be some considerable distance away.
29 The court has some material before it in relation to the question of the future costs of the proceedings. Information had been provided by Mr Scarcella to the liquidators. He made the assumption of a hearing of a matter that will last two to three days. He gave an estimate of $110,000 as being the liquidators' costs for such a hearing.
30 He was made available for cross-examination on this material. Although he was the subject of some cross-examination, it was not directed inter alia to his estimate.
31 Some cross-examination was directed to Mr Beazley also on this matter. He professed inability to speak as to the liquidators' costs. He gave evidence as to what his costs may be. He envisaged a longer hearing (in the order of four days or more). He estimated the plaintiff's costs for such a hearing to be in the order of about $80,000.
32 The estimates that were given did not contemplate what might be additionally expended in preparation costs (such as in relation to interlocutory matters).
33 Whatever the actual quantum of future costs may be, it is clear that the sum that has been provided as security now falls well short of such quantum. In considering this matter, I bear in mind that the plaintiff has been successful in obtaining certain orders for costs against the defendant. In all of the circumstances, it seems to me that unless further security is provided, a consequence of a successful defence may simply be a further loss of funds available to unsecured creditors.
34 Initially, during his cross-examination, Mr Beazley appeared to express the view that any application to increase the quantum for security for costs would be opposed. Later, during that evidence, he seemed to resile to a position that would leave him seeking instructions when he became aware of the actual application. In any event, there has been no offer to provide additional security (inter alia as a condition of obtaining the relief sought).
35 The plaintiff accepts that it bears the onus and also accepts that a condition of the granting of leave must be that any judgment in its favour obtained in the proceedings be stayed until further order.
36 The court is faced with the question of whether or not it should enable the plaintiff to depart from the statutory scheme (the proof of debt process) and allow it to proceed with the conduct of its litigation.
37 The task of the court is to look at the particular circumstances of this case and decide whether or not the onus has been discharged. In my view, when that exercise is performed the plaintiff has failed to discharge the onus.
38 The Notice of Motion is dismissed. The plaintiff is to pay the costs of the Notice of Motion. The Exhibits may be returned.
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