PHOENIX EAGLE COMPANY PTY LTD -v- TOM McARTHUR PTY LTD [No 3] [2020] WASC 272 (22 July 2020)

1. And, of course, there is also RSC O 4A r 28, which I reaffirm to the effect that if a case is not taken off the Inactive Cases List, and it has been there for six continuous months, then it is deemed to be dismissed for want of prosecution.

1. The key question is whether, on all the evidence, I am satisfied that the case will be conducted in a timely way or there is any other good or sufficient reason. Effectively, counsel for the plaintiff, Mr Warnick, relied upon the fact that the proof of the pudding, effectively, is the substantial security for costs money ($200,000) which has finally emerged.

1. There is no cavilling over the fact that the money has arrived very late. But the explanation of the financial difficulties faced by the plaintiff in terms of its inability to find funds and how things have gone from worse to better as is now fully outlined particularly by Mr Richardson's affidavit is now provided. There is obviously a need for an explanation where a party seeks an indulgence from the court.
2. Yesterday there was not any affidavit material before the court. Today there is, and because of it I am left satisfied that for the purposes of providing an explanation to meet criteria discussed by the court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 that the two affidavits (of Mr Richardson and Mr Baumanis) do provide an explanation for what has occurred.

1. One of the significant matters raised against the present application is the absence of conferral, and there is an in principle divide between the parties over whether or not conferral was mandatory and the consequences of the absence of conferral. I accept there was an absence of conferral prior to the plaintiff's application of 25 June 2020.
2. Applying the observations of Beech J in Lashansky v Legal Practice Board [No 2] [2010] WASC 159, I am of the view that the present application is interlocutory in character. It is an application made in chambers. There is no sensible or justifiable reason for why conferral ought not to precede such an application. Indeed, it may be that in most cases sensible conferral about such an application to take a matter off the Inactive Cases List will obviate many of the difficulties associated with such an application, particularly such an application being heard and determined late, with all the associated cost, potential disruption, and inconvenience.
3. The position of the plaintiff is that it frankly accepts that it applied late on 25 June 2020 by its letter. But it points to events subsequent in terms of what has occurred, particularly yesterday in terms of the matter being returnable by the Principal Registrar and the opposition of the defendants that was manifest then, and indeed today, against leave being given to have the matter removed from the list.
4. Furthermore, the defendants say that - on the assumption that the matter is to be taken off the Inactive Cases List, which is a big assumption -the parties have not really conferred meaningfully over how the matter might progress to be determined in future by way of a trial determination.
5. The matter has been going since 2016. Since then there have been extensive pleadings, interlocutory applications, witness statements exchanged on each side and it is said (although I should note that I am not the case manager) that discovery is not very far advanced and there does still remain some significant interlocutories, including expert evidence, to be addressed before the matter is ready for a trial.
6. The defendants also say that if I were to be satisfied, in accordance with RSC O 4A r 27, that I ought to exercise discretion, in light of the history of the matter and the other matters set out in the written submissions of the defendants, I should decline the present request for the matter to be removed from the list in any court in any event. Let me address those matters one by one.
7. It is correct that there should have been conferral, and that would have been the optimal thing to have occurred, shortly prior to 25 June 2020 when the application or request by letter was made on behalf of the plaintiff. But conferral is not an end in itself. It is an important mechanism to be followed in the achievement of justice. Here, I am satisfied that by reference to Mr Richardson and Mr Baumanis' affidavits an explanation has been given.
8. Whatever one might say in hindsight in terms of earlier communication on the hypothesis that the outstanding security money was about to be received at 30 June 2020 the fact of the matter is that -bearing in mind how this matter got to be on the Inactive Cases List in the first place - until the plaintiff was in a position to actually provide security and remedy the breach which it had been in default of meeting since 19 November 2019, effectively any application to take the matter off the Inactive Cases List was going to be pointless.
9. I understand, therefore - but I do not entirely excuse - the plaintiff for it waiting until the position solidified as regards it actually receiving or having at their call $200,000. With those funds it would be able to pay the security into court as the motivation effectively holding them back was only that it did not have the funds to bring. This was less than optimal and it is obviously not endorsed as desirable practice. But bearing in mind the history of the matter and the failure to obtain the money until effectively 30 June 2020, it is understandable.
10. I accept the point raised by counsel for the defendants that conferral should have occurred, and if this application is to be advanced the court will need to waive the default in respect of conferral. The court has the power to do under RSC O 59 r 9(2) in a case of urgency or for other good reason. Here, urgency is present but, as Mr Terren for the defendants rightly points out, to some extent the urgency that arose is attributable to the plaintiff by leaving matters to 25 June 2020.
11. But a court can waive the operation of the rule for any other good reason. The history of this matter tells me that this matter went onto the Inactive Cases List originally not because, as one too often sees, a party does nothing for 12 months, the matter becomes 'inactive' under RSC O 4A r 24 and then is placed on the Inactive Cases List by O 4A r 25(1)(a). Here, the matter came on to the Inactive Cases List as a sanction, effectively, when Allanson J's order for security was not met within the extended time afforded.
12. So a historic nexus to the absence of the ordered security amount, coupled to a late proffering of what is a significant amount of security, $200,000, with the element of urgency that does now exist given the potential for a termination of the action at midnight tomorrow, I find would together provide sufficient good reason to waive the operation of RSC O 59 r 9, as regards a deficient conferral scenario.
13. I also, in the weighing exercise, take into account the fact that the range of possible conferral issues here, was somewhat different to many other cases where there is a landscape of potential issues that need to be sorted out. Here the scope of a proper conferral was relatively straightforward. It was something like 'The plaintiff is about to provide the security for costs of $200,000, albeit late. In such circumstances, will you, the defendants, consent to orders that the matter can come off the Inactive Cases List, because otherwise it is about to be ended automatically on 3 July 2020 unless an order to that effect is made beforehand?'
14. True enough, for that hypothetical conferral scenario, one could also discuss issues about how the action might then progress on a hypothesis of removal. But here my strong impression is that if there had been such a proper level of conferral it is very likely - although one is speculating - that the response would have been fairly much as has manifested in fact both yesterday and today, namely, a firm refusal to agree to the action being removed from the Inactive Cases List. That being the case, I will, in the end, waive the need for the conferral, so I can then deal substantively with merits of the present application to remove the action from the Inactive Cases List.

1. The first question is whether the court is now satisfied that the matter is likely to proceed in a timely way, in accord with RSC O 4A r 27(2). However, the rule is not confined merely to the 'timely' satisfaction criteria. The removal threshold under O 4A r 27(2) is also governed by the words 'or for any other good reason'. Those two criteria, in terms of future progress in a timely way or for other good reason, are not separate, siloed and discrete criteria. Were it only the mere proffering of a $200,000 bank cheque as security for costs which has emerged, I would effectively be left wavering over whether that would be enough by itself to satisfy me as to a timely future progression of the action in the future, given the past history of the litigation.
2. There are pros and cons associated with the late payment, viewed alone. Certainly, $200,000 is a substantial amount of money for costs. But it does arrive almost 10 months late. Having said that, the affidavits of Mr Baumanis and Mr Richardson now explain the underlying financial problems of the corporate plaintiff, in terms of providing that security and also signify that Mr Baumanis, as a director and significant shareholder, is prepared to stand behind the company to the extent of $50,000.
3. Mr Richardson, as the plaintiff's managing director, explains in his affidavit the past financial history problems, but also for the future that, on a more positive note, a term sheet has been entered in respect of a prospective licence for the specific application of Phoenix Eagle's intellectual property and so, for now, there is an amenability of a licensee to lend on that basis. Consequently, a viable source of funds has been opened up in June 2020 that had not previously been there for this plaintiff. Likewise, there is a reference to a Mr Fitz Gerald, an existing shareholder, providing a loan of $25,000.
4. What all that now indicates for me is that there is now some significant plaintiff shareholder support forthcoming, albeit it has not been there for a considerable time. That being the case, the commitment that is now made to progressing the action through the $200,000 provided as security for costs has been provided in circumstances which do demonstrate that at this time persons are prepared to effectively stand behind the plaintiff financially. That, today, is enough to persuade me that there is now a 'good reason' shown by reference to RSC O 4A r 27(2) to enliven the court's discretion to remove the action from the Inactive Cases List.
5. The last question is whether I should exercise that discretion in terms of removal or not. To that end, I look again at everything holistically and weigh all the material before me in terms of whether or not I should make the removal order. It is quite correct, as the defendants point out, that there have been past delays which are unsatisfactory, and the failure to confer properly was also highly unsatisfactory. But still, having said all that, the court at the end of the day is here to administer justice. It is a pinnacle of justice that a plaintiff should receive a fair opportunity, where possible, to have its disputes determined by a court on their merits.
6. Whilst less than satisfactory, the late provision now of $200,000 in security, with the earlier $70,000 tranche of security, does provide a substantial measure of comfort in terms of the exposure to costs for the defendants if, in fact, this matter were to be taken to a full trial and the defendants were successful in rebutting the plaintiff's claim and later receive an order of costs in their favour. I have also taken account of matters of so‑called prejudice that the defendants have emphasised under their written submissions. With respect, I would assess such considerations in truth to be matters of inconvenience, rather than of true forensic prejudice.
7. An inability to secure senior counsel for today, or a need to prepare materials urgently (bearing in mind tight deadlines) and, of course, the imminence of the court's winter recess, all combined adversely to cause this matter to have to be prepared and argued on an urgent basis. That is less than optimal. I accept all that. Indeed, I am sympathetic. But at the end of the day the interests of justice ought not to be derailed by mere inconveniences, especially where an inconvenience is capable of being redressed by ameliorative case management orders of a court in terms of costs or the like.
8. Here, I will also draw attention to two further matters. First of all, if in fact this matter is to be case managed again in the CMC List, there is as regards timeliness the further potential sanction of RSC O 4A r 28(2). That rule says that if no procedural step (except an application to dismiss the case for want of prosecution) is taken in the six months after the date on which the case is ordered to be taken off the Inactive Cases List, then the case is taken to be dismissed for want of prosecution.
9. So there will be another, in effect, 'Sword of Damocles' poised over the applicant who succeeds in getting their action taken off the Inactive Cases List, if they do not then progress it along, once it is restored.
10. The second point I make is that, brief as the opportunity was, I have looked at the pleadings to some extent for this action. I note an invocation by the defendants of equitable principles of laches and acquiescence and the like grounded upon asserted delay.
11. The fact of this action going on or coming off the Inactive Cases List would not, on my assessment, impede any such submission being made longer term to a trial judge about such matters if, in fact, the threshold for meeting such tests can be demonstrated as a matter of substance at a trial. Accordingly, I see no real prejudice to those longer term potential forensic arguments that the defendants may make, depending upon whether the matter is taken on or off the Inactive Cases List. And I put that on the record.

1. In the end then, bearing in mind the plaintiff will otherwise see its action dismissed otherwise than on its merits and, in effect, for a want of prosecution at midnight tomorrow unless the court intervenes, I am ultimately left satisfied overall that it is in the interests of justice for the court to urgently intervene to remove the action from the Inactive Cases List. Consequently, I will issue an order that the matter come off the Inactive Cases List.
2. The orders that the court should make should be, first, that the obligation to confer under RSC O 59 r 9 is waived for good reason by the court; secondly, that the matter be removed from the Inactive Cases List, pursuant to RSC O 4A r 27(2) and, thirdly, that the matter ought to be returned to the CMC List of Allanson J for further case management orders at the earliest convenient opportunity in terms of his Honour's availability.
3. In the meantime, the parties now ought to confer further about steps by way of progressing the action so as to be able to present either an agreed minute or, post-conferral, rival minutes of progress in the action when the matter can next be conveniently listed before his Honour for directions.
4. The fourth matter is that I ought to make some provision as to costs, and I will hear the parties about what they say in that respect.
5. In the end, having heard from counsel, I issued orders in these terms:
   1. The obligation under O 59 r 9 of the Rules of the Supreme Court 1971 (WA) (RSC), of the Plaintiff's lawyers to confer with the Defendants' lawyers prior to bringing their client's present application by request of 25 June 2020, is waived for good reason.
   2. Pursuant to O 4A r 27(2) of the RSC, the action is hereby removed from the Inactive Cases List.
   3. The time to comply with order 1 of the Honourable Justice Allanson dated 22 October 2019 is extended to 12.00 pm (WST) on Friday, 3 July 2020.
   4. The case be returned to Justice Allanson's CMC List, to be listed for a directions hearing at his Honour's earliest convenient availability. In the interim, the parties are to confer upon a minute of orders as to future steps to be taken to progress the action to trial.
   5. The plaintiff shall pay the Defendants' costs of the present application, made by request of 25 June 2020, and the hearings of 1 July 2020 and 2 July 2020, to be taxed and be then payable forthwith, if not agreed.

Hearing of Defendants' application to strike out statement of claim as abuse of process, obtain further and better particulars and set aside subpoenas

Allanson J delivers judgment striking out statement of claim with liberty to re-plead, and setting aside subpoenas: [2017] WASC 130

Defendants file defence and counterclaim, and request for further and better particulars of substituted statement of claim

Plaintiff files amended substituted statement of claim

Defendants file requests for further and better particulars of: amended substituted statement of claim and of reply and defence to counterclaim

Plaintiff files 10 witness statements (including statement of Richardson, 749 pages including annexures)

Plaintiff files minute of proposed further amended statement of claim

Defendants apply for further security for costs and further discovery

Allanson J orders plaintiff to pay security for costs ($200,000)

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