Plaintiff v Defendants

Supreme Court of Victoria|2013-05-02|Before: ELLIOTT J

PRACTICE AND PROCEDURE - SECURITY FOR COSTS - previous orders for security for costs - applications for further security - security provided pursuant to previous orders - applications for stay of proceeding in default of provision of further security, alternatively dismissal of proceeding - Corporations Act 2001 (Cth), s 1335(1), Supreme Court (General Civil Procedure) Rules 2005, rr 62.02(1), 62.04.

2 During the course of his submissions, senior counsel for the AAMI Defendants sought to amend the summons to rely upon r 62.04 of the Supreme Court (General Civil Procedure) Rules 2005.

3 A like application was made on behalf of the Melton Defendants.

4 Given the urgency of this matter, I pronounced orders on 24 April 2013. The trial is set down for hearing on 6 May 2013.

By 4.00 pm on 1 May 2013, each defendant file and serve any outline of evidence upon which it intends to rely at the trial of the proceeding.
By 4.00 pm on 2 May 2013, each of the plaintiff and the first, seventh and eighth defendants file and serve on each other party an outline of argument:

which concisely summarises that party's submissions in relation to each of the issues in the proceeding; 2. which cites the main authorities on which that party will rely; and

which, save with the prior leave of a Judge or Associate Judge, does not exceed 10 pages of double spaced A4 paper.
Leave be granted to the fourth, fifth and sixth defendants to amend their summons filed 19 April 2013 to insert paragraph 1A in the following terms:

"1A. Alternatively, unless the plaintiff pays the security for costs ordered to be paid within 7 days, the proceeding be dismissed as against the fourth, fifth and sixth defendants."

Leave be granted to the seventh and eighth defendants to amend their summons filed 22 April 2013 to insert paragraph 1A in the following terms:

"1A. Alternatively, unless the plaintiff pays the security for costs ordered to be paid within 7 days, the proceeding be dismissed as against the seventh and eighth defendants."

In case it be necessary, the time in order 10 made by her Honour Associate Justice Daly on 17 July 2012 be extended to 4.00 pm on 24 April 2013.
In respect of the first defendant, the plaintiff provide security for costs up to and including the third day of trial in the amount of $12,000 (including GST).
In respect of the fourth, fifth and sixth defendants, the plaintiff provide security for costs up to and including the third day of trial in the amount of $34,500 (including GST).
In respect of the seventh and eighth defendants, the plaintiff provide security for costs up to and including the third day of trial in the amount of $12,400 (including GST).
In relation to each of orders 6, 7 and 8, if security is not paid by 4.00 pm on 1 May 2013, the proceeding is stayed in relation to the defendant or defendants respectively.
There be liberty to apply.
Costs be reserved.

6 I note for completeness that security was ordered on 6 previous occasions. The total of the security ordered to date is as follows:

(1) For Maisano, in the total of $44,400, up to and including the first day of trial.[1]

(2) For the AAMI Defendants, in the total of $70,000 up to and including mediation.

(3) For the Melton Defendants, totalling a sum of $28,000 up to and including the first day of trial.

7 It was accepted by Bodycorp that the financial position of Bodycorp was such that there was no issue that the threshold condition under s 1335(1) of the Corporations Act 2001 (Cth) and/or r 62.02(1)(b) of the Supreme Court Rules had been met.

8 The parties raised a number of issues in relation to the exercise of the discretion. Counsel for the plaintiff put forward the following submissions:

(2) The plaintiff's impecuniosity was caused by the defendants.

(3) Insofar as the AAMI Defendants are concerned, their application was in breach of a previous order of the court. In any event, the AAMI Defendants had delayed bringing their application.

(4) Insofar as the Melton Defendants are concerned, their application was inappropriately made as they made an application on 28 September 2012 and obtained orders for security by consent.

(5) Maisano had been engaged in "stripping" his assets, along with those of the third defendant, which ought to affect the exercise of the court's discretion.

(6) As a matter of case management, the applications should be dismissed.

The defendants (without distinguishing which defendant or defendants) raised the following issues:

(2) Previous orders of the court did not prevent the present applications from being properly made.

(3) Some moneys spent by Bodycorp to date were wasted by Bodycorp and ought not be taken into account.

(4) Any order for security should provide for the dismissal of the proceeding, rather than a stay, in the event that security is not provided.

9 It was accepted (ultimately, by all parties as I understood the position) that it was necessary for the court to exercise its discretion afresh in relation to the applications for further security. Therefore, I approach the matter on the basis that I have an "altogether unfettered [discretion], but on the footing that the very fact [that the jurisdiction has been enlivened] in the first place may itself be a factor, even a most significant factor, in the exercise of the discretion".[2] Put another way, the "satisfaction of the threshold condition ... 'calls for' the fulfilment of the purpose for which the power was conferred", subject to a proper exercise of the discretion depending upon all the circumstances.[3] Further, although the exercise of the power may be "called for", that circumstance does not alter the fact that the burden rests on the defendants to persuade the court that security should be ordered.[4]

10 This proceeding has had an extraordinarily long history. I do not propose to set out that history in any great length. It is sufficient for present purposes to refer to the decision of Associate Justice Daly in this proceeding on 5 August 2011, where her Honour said:[5]

The plaintiff is [Bodycorp], which was, at the time of the relevant events, a franchisor of motor vehicle repair shops in a number of Victorian locations, mainly in suburban Melbourne. The principal of Bodycorp is Mr Tony Murdaca. The third defendant ("Moorabbin Automotive Pty Ltd") was one of Bodycorp's franchisees, and the first and second defendants were directors of the third defendant. The second defendant is the former wife of [Maisano]. She was never served, and is now deceased.

The fourth defendant ("AAMI") is a well-known provider of motor vehicle insurance. At the relevant time, a number of Bodycorp franchisees were recommended repairers of AAMI. The fifth defendant ("All States") is a related entity of AAMI which referred repair work to Bodycorp franchisees. The sixth defendant (Mr Barry Martin) is and was a managerial employee of AAMI.

This proceeding was commenced in the Federal Court on 10 December 2002. The current version of the statement of claim (the amended statement of claim dated 18 September 2003)[6] alleges that the first to third defendants breached their franchise agreement with Bodycorp by ceasing to operate as a franchisee of Bodycorp. Further, Bodycorp alleges that [Maisano] and Mr Scott Munro (the purported seventh defendant), are liable for interfering with the contractual relationships between Bodycorp and four of their franchisees by telling the principals of these franchisees in mid 1998 that it was in their best interests to terminate their relationship with Bodycorp, and that if they did so, the franchisee would continue to be recognised by AAMI as a recommended repairer, but would no longer have to pay an 8% management fee to Bodycorp.

Bodycorp also alleges that AAMI (through Mr Martin and other officers, but primarily Mr Martin), made similar statements to a number of other Bodycorp franchisees. Further, Bodycorp alleges that AAMI breached the terms of an agreement between them made in or about November 1997 ("AAMI agreement"), which provided that if any Bodycorp franchisee ceased to be a Bodycorp franchisee before 29 June 2000, AAMI would terminate the recommended repairer agreement with the former franchisee and refrain from referring any repair work or reappointing the former franchisee as a recommended repairer for a period of six months. Bodycorp also alleges that AAMI has failed to pay Bodycorp for invoiced work done by its franchisees. Bodycorp also alleges that it entered into an agreement with All States in September 1995 to the effect that if Bodycorp established a franchise in a particular area and undertook to be responsible for the franchisee's quality of work, All States would send work to that franchisee. Bodycorp alleges that All States breached that agreement by failing to send work to Bodycorp franchisees.

In essence, the allegation is that AAMI, as represented by Mr Martin, along with Maisano and others, in effect destroyed the business of [Bodycorp] by inducing the Bodycorp franchisees to terminate their franchise agreements, and by ceasing to refer repair work to Bodycorp franchisees. The claims have been vigorously defended by the AAMI [D]efendants.

In their defence dated 21 October 2003, the AAMI [D]efendants deny that its officers had the conversations with representatives of the Bodycorp franchisees as alleged by Bodycorp. They admit the existence of the AAMI agreement but rely upon additional terms of that agreement, and state that only a small subset of the Bodycorp franchisees were the subject of the AAMI agreement. Further, they plead that if the AAMI agreement restricted AAMI's liability to deal with repairers other than those subject to the AAMI agreement, it was void and unenforceable as an unreasonable restraint of trade. The AAMI [D]efendants denied the existence of the All States Agreement, and pleaded in the alternative that if such an agreement existed, it was void and unenforceable as an unreasonable restraint of trade. They denied that any amounts were owing to Bodycorp on account of unpaid invoices.

11 Before turning to the submissions of the parties, I refer to Epping Plaza Fresh Fruit & Vegetables Pty Ltd v Bevendale Pty Ltd[7] in which their Honours, Winneke P and Phillips JA, made the following observations:[8]

It is thus apparent that the justification for the statutory rule is that the defendant, not being a voluntary litigant, deserves to be protected from the consequences of limited liability. Those who seek to conduct their businesses through limited liability companies expect to receive the benefits which such liability attracts. It seems to us a necessary corollary that they should be prepared to accept the strictures imposed by the section [s 1335] if the company embarks upon litigation: Buckley v Bennell Design and Constructions Pty. Ltd. (1974) 1 ACLR 301 at 304 (NSW Court of Appeal).

It has not been, and could not be, suggested that the section compels the court to order security against an impecunious corporate plaintiff. The court is given an unfettered discretion to do what is justly required by the circumstances of each case. Street CJ made this point in Buckley when he said, at 305:

It seems to me that the discretion could properly be regarded as ordinarily exercisable so as to protect a defendant sued by an impecunious company, but that, if the court in any case takes the view that this protection should not be afforded to the defendant, it has an unlimited and unrestricted discretion to give effect to such view without having to look for special circumstances.

E. Matters not considered in the exercise of the court's discretion

12 It is convenient first to deal with a number of submissions made on behalf of the defendants concerning the bona fides of the claims made by the plaintiff in this proceeding.

13 As matters presently stand, it is expected that I will be the trial judge. As noted above, that trial is due to commence on 6 May 2013. In the circumstances, I would be reluctant to make any determination about the bona fides of the plaintiff's claim unless it was absolutely necessary.

14 Submissions were made in relation to the pleadings, the outlines of evidence that have been filed by the plaintiff to date, and the overall merits of the claims made by the plaintiff. In short, it is said that the proposed evidence does not make out the case as pleaded. Also in relation to Maisano, it is said that the case as pleaded cannot be made out. Further, in relation to the Melton Defendants, it is said that the claims made are clearly statute barred.

15 I have come to the view that, independent of any consideration of the bona fides of the claims made by the plaintiff, security ought to be ordered (as reflected in my orders above). In those circumstances it is unnecessary for me to consider the submissions concerning the bona fides of the claims made for the purposes of exercising the court's discretion.

F.1 Whether an order for security for costs would stultify the proceeding

16 The real issue between the parties was whether or not the applications made by the defendants for further security would stultify the proceeding. In support of that contention, the plaintiff filed and served 2 affidavits of Tony Murdaca ("Murdaca"), both sworn on 24 April 2013 (ie the day of the hearing). Murdaca is the sole director and sole shareholder of the plaintiff. Murdaca swore that his present financial position as at 24 April 2013 was as follows:

(a) I and my wife have a family home in Airport West. I refer to paragraph [20] of my previous affidavit.[9] Since swearing that affidavit I have managed to borrow a further $150,000 against the value of my family home which money has been used to fund this litigation. There is now insufficient equity in my family home to enable any further funds to be borrowed against it;

(b) I own a warehouse at Airport West. I refer to paragraph [20] of my previous affidavit. Since swearing that affidavit I have managed to borrow a further $150,000 against the value of the warehouse which money has been used to fund this litigation. There is now insufficient equity in the warehouse to enable any further funds to be borrowed against it;

(c) I am a director and shareholder of Vicprop Pty Ltd (ACN 138 995 123). I own 50% of the shares of this company. The shares in this company are not realisable.

17 Murdaca also swore that a company known as Repose Nominees Pty Ltd continued to operate the Murdaca Family Trust. He stated that he was no longer director of that company. After referring to other incidental matters, Murdaca completed this aspect of his affidavit by stating "[i]n the short term, there is no other source of funds available to me whether by sale of assets or borrowing".

18 The submissions of the defendants were highly critical of the evidence led. It was submitted that the evidence did not go to the value of the 2 properties referred to, there was no provision of bank statements and there was no balance sheet.

19 In response to these submissions, the plaintiff tendered a rates notice in relation to the property referred to in paragraph 16(a) above and also a bank statement from 2008. Save for these 2 pieces of evidence, which were of limited probative value, the criticisms made by counsel for the defendants were not really met by the plaintiff.

20 In addition, Murdaca swore that he had expended in excess of $2 million on the proceeding to date. He further swore that if he was required to supply further security in the sum sought it would stultify the plaintiff's proceeding against the AAMI Defendants and also against the Melton Defendants. It was said from the bar table that this was also the position in relation to any order for security in favour of Maisano in the amount sought.

21 I was not satisfied that the proceeding would be stultified if security was ordered. There are a number of reasons for this.

22 First, the financial evidence led by the plaintiff was unsatisfactory. In my view the criticisms of counsel for the defendants were well-founded. In substance the court was invited to rely upon the assertions made by Murdaca about his financial position without there being proper details from which those assertions could be assessed.

23 Secondly, this is not the first time there has been a suggestion that the proceeding would be stultified in response to a security for costs application. Affidavit evidence was put before the Federal Court in 2004 to support a submission that the proceeding would be stultified if security were granted. History has shown that security has been ordered on a number of occasions, and yet the proceeding has continued to be prosecuted. Moreover, on Murdaca's own evidence, Bodycorp and those standing behind Bodycorp have managed to fund Bodycorp's own costs to an amount in excess of $2 million.

24 Thirdly, a balance sheet was provided in 2004 as to the financial position of Murdaca. That financial information having been tendered in the Federal Court application, Registrar Efthim found that information did not enable him to conclude that Murdaca was unable to pay security for costs.[10] The details of the assets and liabilities of Murdaca before the Federal Court in 2004 were far more detailed than they are now. There are a number of assets referred to in the balance sheet provided to the court at the time that are simply not referred to in the current material. The position is left completely uncertain.

25 Counsel for the plaintiff submitted that the impecuniosity of Bodycorp was caused by the defendants. In the written submissions relied upon, counsel for the plaintiff did not distinguish between the defendants for the purposes of this submission. When asked about this, I was told the court was required to look at the matter "in globo". Essentially the submission was that the allegations the subject of this proceeding relate to Bodycorp's association with AAMI and its franchisees in relation to performing work related to AAMI. It was submitted that the case concerned the loss of Bodycorp's business because of the wrongful conduct by the defendants. It was said that if Bodycorp was successful at trial, it would establish that the plaintiff's impecuniosity was caused by the defendants.

26 As a matter of logic, it does not necessarily follow that if Bodycorp is successful at the trial of this proceeding it would establish that the defendants caused the impecuniosity of Bodycorp. In any event, on an application such as this, I must consider the evidence before me rather than mere allegations made in pleadings.

27 The evidence put before the court was an affidavit of Murdaca sworn back on 18 September 2003. This was filed in the Federal Court and relied upon for the purposes of resisting a security for costs application heard and determined by Registrar Efthim. Based on that evidence, Registrar Efthim found that there was no evidence before him to demonstrate that the conduct of the AAMI Defendants had caused Bodycorp's lack of funds.[11] Registrar Efthim commented on the affidavit of Murdaca sworn 18 September 2003 in the following terms:[12]

[Murdaca] swears that the factual matters in the amended statement of claim are correct. He could not have been present when the alleged conversations between the 6th respondents (sic) and franchisees allegedly took place. ... I note that [Bodycorp] made a loss in 1999 and the commissions decreased by approximately 15% in 1999. It may be the loss was a consequence of franchisees not continuing their franchise agreements with [Bodycorp] but there is no material before me which leads to a conclusion [Bodycorp's] lack of funds were caused by the respondents.

28 This gives rise to a preliminary issue as to whether or not it is appropriate for me to revisit a matter which has already been heard and determined adversely to Bodycorp on an interlocutory application, based on precisely the same evidence as was previously before the Federal Court.

29 There is no question that a court has the power to revisit a previous interlocutory order made by the court, or for that matter another court from where the proceeding has been transferred.[13] However, a further order on the same subject matter will ordinarily only be appropriate whenever new facts come into existence or are discovered which render enforcement of the earlier order unjust. Those facts of the changed circumstances must be established by evidence.[14]

30 Accordingly, it seems entirely inappropriate for Bodycorp to seek to reagitate this issue. There is no existing order the enforcement of which would be unjust. Bodycorp seeks to rely on no new facts, and also an affidavit sworn nearly 10 years ago. Given the court is being invited to exercise its discretion afresh, it might be arguable that for this reason Bodycorp is entitled to reagitate this point afresh. In any event, I have read the affidavit of 18 September 2003 in its entirety. I agree that the evidence does not establish that the impecuniosity of Bodycorp was caused by the defendants.

F.3 Is the application of the AAMI Defendants in breach of an order made previously?

31 On 17 July 2012 Associate Justice Daly ordered, amongst other things, that any application with respect to security for costs be filed and served by 28 September 2012. Based on this order, Bodycorp submitted that the applications of the AAMI Defendants now before the court were out of time. Although not apparent from the terms of the order, I was informed from the bar table that the orders were put before the court with the consent of the parties.

32 It seems to me highly unlikely that on 17 July 2012 it was intended by the court (or the parties that proffered the orders) that all and any applications for security for costs had to be brought by 28 September 2012, including in relation to any security for costs application for the costs of the trial. If that were so, it would mean that applications were required to be made (and presumably determined) more than 7 months before the commencement of the trial.

33 It is common practice in this court for security for costs to be ordered either up to and including mediation, or up to and including the first day of trial. This is to ensure that there is not an undue burden placed upon a plaintiff. In many cases it would be unduly burdensome if a plaintiff was required to provide security, including for the duration of a proposed trial, when there is a real prospect the matter will not proceed to trial, or the trial is ultimately for a shorter duration than that anticipated in the early stages of the proceeding. It follows that it is also common practice that either on the first day of trial, or shortly before trial, a defendant makes, or defendants make, application for further security for costs on the basis that the trial is proceeding.

34 It would require clear language from the court before I would be satisfied that the court intended to shut out any defendant from making a further application for security for costs when pre-existing orders did not include costs being awarded for the duration of the trial.

35 Senior counsel for the AAMI Defendants submitted that the order did not apply to parties who had already made an application for security for costs and who would be expected to make a "top-up application" before trial. Alternatively, it was submitted that if the order did stand as an obstacle to these applications being made, the time provided in the order ought to be extended to 24 April 2013.

36 Counsel on behalf of the Melton Defendants submitted that the order in question ought to be read or understood as referring to any application "then appropriately made". It was submitted the order was not intended to cover applications appropriately made at a later time, ie shortly before trial.

37 In my view the order does not, of its natural and ordinary meaning, suggest that all defendants were shut out from making any further application for security for costs after 28 September 2012. If I be wrong about that, it seems to me that it would be extremely unfair to the defendants to have them shut out from making further applications. In the ordinary case it is what all parties would have expected, namely a further application for security for costs in order to protect the defendant(s) in relation to the costs of the trial.

38 Accordingly, out of an abundance of caution, I extended the time until 24 April 2013 so that the relevant applications could be made.

39 The only reason why an extension of time might not have been granted (assuming I was wrong about the proper construction and operation of the order), would be if there was any prejudice to Bodycorp by reason of the terms of the order made on 17 July 2012.

40 In that regard, Bodycorp submitted that the AAMI Defendants had delayed in making this application. Bodycorp said that the funds that might have been available, if the application had been made in September last year, are now not able to be sourced in the short time before trial.

41 In support of this submission the only evidence put before the court was an affidavit of Murdaca asserting that "had further security been ordered I would have been in a position to seek to raise the necessary amount in order to satisfy any such order. However, as the trial is now less than 2 weeks away, I am no longer in a position to do so." It follows there was no evidence of:

(2) the means by which Bodycorp or Murdaca would have sought to raise the funds in September 2012;

(3) why those means were not available at the time Murdaca swore his affidavit on 24 April 2013;

(4) what circumstances had changed in the relevant period of time which gave rise to the changed position.

42 In short, I simply cannot be satisfied that the assertion contained in the affidavit accurately reflects the position. However, in order to ensure that there is no relevant prejudice to Bodycorp by reason of the timing of the application by the AAMI Defendants, I have refrained from ordering any security for the preparation of the trial.

43 Before leaving this matter, there is one further issue I need to address. Murdaca swore that he had assumed that further security would not be required to be available in respect of the AAMI Defendants by reason of the order made on 17 July 2012. I accept this evidence. However, I do not accept this understanding was based on an objective consideration of the order made or the circumstances in which it was made. Leaving to one side it is not how I would have read the order (as referred to in my reasons above), it would seem to be extraordinary that the defendants would voluntarily forego rights they otherwise had to make further applications. Moreover, it is also plain it was not how Bodycorp's solicitor understood the order.

44 The evidence shows that on 9 April 2013, when put on notice that the defendants intended to make applications for security for costs, the solicitor for Bodycorp simply stated that his client did not consent to making further payments. There was no suggestion in the communication to the defendants that any of them were out of time in making such applications. Further, the solicitor for Bodycorp also sent an email on 12 April 2013 in which he stated that his client consented to Maisano issuing a security for costs application before 29 April 2013 "(as long as it is returnable on 24 April 2013, alongside any other applications by the other defendants)".[15] Again, there was no suggestion of any defendant being out of time.

F.4 The appropriateness of the making of the Melton Defendants' application

45 The previous application of the Melton Defendants was made on 28 September 2012. Security for costs were sought up to and including the first day of trial. The matter was settled with Bodycorp agreeing to pay an amount for the security sought.

46 Bodycorp submitted that because the Melton Defendants had made an application within time, namely on or before 28 September 2012, and had not actually sought security for the costs of the trial beyond the first day, they had elected not to make an application for costs beyond the first day.

47 In my view, the submission is entirely without merit. Given the established practice of this court referred to in paragraph 33 above, the mere fact that the order of 17 July 2012 referred to security for costs applications being made by 28 September 2012, coupled with the fact that an application was made by the Melton Defendants which was settled to only include costs up to the first day of trial, could not sensibly be seen as an election by the Melton Defendants that they would not to seek any security for costs for the trial after the first day.

F.5 Allegations concerning "stripping" of assets by Maisano and related entity

48 I propose to deal with this matter very briefly. An unsworn statement from a witness who was said to have had dealings with Maisano was put before the court.[16] In that unsworn statement serious allegations were made about the conduct of Maisano (and others). The unsworn statement was dated 12 April 2013. No satisfactory explanation was given as to why an affidavit could not be put before the court on 24 April 2013 in relation to the matters raised.

49 In the circumstances, where the evidence before the court was in such an unsatisfactory state, I propose to give that evidence little or no weight.

50 Accordingly, it follows that I also do not accept that there is probative evidence before the court establishing that Maisano had taken, or is taking, steps to ensure that he is "judgment proof" in the event that Bodycorp is successful.

51 Finally, it was submitted by Bodycorp that to allow an application to be made for security for costs for the trial now was contrary to good case management. This submission again ignores the common practice of this court in appropriate cases to order security on the basis that it does not include all the costs of the trial. Indeed, as noted above, it is commonplace for applications to be made shortly before or on the first day of trial for security for costs for the duration of the trial (or part thereof).

52 Most of the matters raised by the defendants have been addressed in my reasons for rejecting submissions made on behalf of Bodycorp. One of the matters I am yet to address is the submission that much of the costs incurred by Bodycorp to date (said to total in excess of $2 million) have been expended unnecessarily.

53 Senior counsel for the AAMI Defendants spent some considerable time going through the pleadings and the outlines of evidence filed to date by Bodycorp to seek to demonstrate that many of the outlines of evidence were not relevant. It was said, therefore, that moneys incurred in relation to such matters have been wasted. However, none of the defendants was able to say what part of the money spent by Bodycorp could be allocated to these wasted costs (assuming they were in fact wasted). Accordingly, I have given little or no weight to this factor in the exercise of the court's discretion.

54 This matter has been set down for trial on an estimate of 2 to 3 weeks. During the course of his submissions, senior counsel for the AAMI Defendants said that because the outlines of evidence were not relevant to the issues pleaded, the case may actually only run for 3 to 4 days. Counsel for the other defendants did not disagree with this proposition. When I put to senior counsel for the AAMI Defendants that it would then only be appropriate for any security for costs to be ordered for the shorter period of time (in case his submissions concerning the duration prove to be correct), he stated that he did not cavil with this approach, provided that there was an ability to seek further security in the event that the trial went beyond the shorter estimate.

55 Further, counsel for the Melton Defendants and the solicitor for Maisano stated they did not intend to attend the whole of the trial as many issues did not concern them.

56 In light of the above factors, I formed the view that any order for security should only be for the first 3 days of the trial. I made it clear at the time the orders were pronounced that the orders were made without fettering the ability of the defendants to make further applications for security, if so advised, at an appropriate time during the course of the trial.

57 As to the form of relief sought, as can be seen from the amendment to the summons referred to above,[17] the AAMI Defendants and the Melton Defendants sought a default order to have the proceeding dismissed. It was accepted by the defendants that if I were to order a stay, rather than a dismissal, and it ultimately transpired that security was not paid, this would not preclude the defendants from making a further application under r 62.04. In those circumstances, I considered it appropriate to order a stay at this point, reserving to the defendants their right to make a further application under r 62.04 in the event that security is not paid as ordered.

58 On the question of when it might be appropriate for the court to exercise its power under r 62.04, counsel for the AAMI Defendants was not able to direct me to any authority which indicated why a court might choose to exercise its powers under r 62.04 (and order a dismissal in default of security), rather than ordering a stay under r 62.02(1).

59 The one authority relied upon by the defendants was the decision of Speed Up Holdings Ltd v Gough & Co (Handly) Ltd.[18] That case is not directly on point. Unlike this case, at the time the application was made for the dismissal, the proceeding had already been stayed because the plaintiff had failed to pay security previously ordered.

60 In Speed Up Holdings Ltd v Gough & Co (Handly) Ltd the court was considering the question under the inherent jurisdiction of the High Court of Justice, rather than under some statutory rule.[19] In that context, 3 factors were identified (non-exhaustively) as being relevant to determining whether or not a court ought to exercise its power to dismiss a proceeding upon the failure to provide security as ordered. Those 3 factors were:

(1) The proceeding is not pursued with due diligence.

(2) There is no reasonable prospect that the security is, in fact, going to be paid.

(3) The court has prescribed a time limit within which the security is to be paid and that time limit has been disregarded by non-payment.[20]

61 None of these factors is applicable to the present case. Accordingly, the case provides no support for the submission that I ought to order a dismissal under r 62.04 (rather than a stay under r 62.02(1)).

62 It would seem that ordinarily, at first instance, a court would order a stay under r 62.02(1) rather than a dismissal under r 62.04. Although there is nothing to stop the court exercising its power under r 62.04 notwithstanding no previous order has been made under r 62.02(1), in the usual case one would not expect such a severe order to be made against a plaintiff who is not in default of any order for security for costs.

63 In circumstances where the application was originally made under r 62.02(1) by each of the defendants at the time each summons was filed, together with the fact that at the moment Bodycorp is not in breach of any court order for security for costs, it was more appropriate for the court to order that, in the event that the security is not paid, there be a stay rather than a dismissal of the proceeding.

[1] The time up until when security was to be provided was either part of the order or the basis of the relevant application. Counsel for the defendants accepted that the security previously ordered was for the periods set out in subpars (1) to (3) above.

[2] Ariss v Express Interiors Pty Ltd [1996] 2 VR 507, 514.8 (Phillips JA, with whom Ormiston and Charles JJA agreed). See also Livingspring Pty Ltd v Kliger Partners [2008] VSCA 93; (2008) 20 VR 377, 382 [18].

[3] Livingspring Pty Ltd v Kliger Partners, 382-383 [19].

[4] Livingspring Pty Ltd v Kliger Partners, 383 [21].

[5] Bodycorp Repairers Pty Ltd v Maisano, Supreme Court of Victoria (unreported, 5 August 2011), [2]-[7]. See also reasons for decision of Registrar Efthim (as he then was) in Bodycorp Repairers Pty Ltd v Maisano Federal Court (unreported, 12 January 2004) ("Federal Court Judgment").

[8] At 195 [14]-[15]. Counsel for the plaintiff submitted that this passage is inconsistent with what was said by the Court of Appeal in the later decision of _Livingspring Pty Ltd v Kliger Partners (_see fnn 2-4 above) and, in particular, the adoption by the Court of Appeal (at [22]) of the opinion expressed by the Full Federal Court in Bell Wholesale Co Pty Ltd v Gates Export Corporation (No 2) [1984] FCA 34; (1984) 2 FCR 1, 4.4. Whilst I seriously doubt any such inconsistency exists, it is not necessary for me to consider this matter as I am not satisfied on the evidence that Murdaca is without means or that he has put all his assets forward to meet any costs order that might be made against Bodycorp. In particular, I note Murdaca has not proffered any relevant undertaking in relation to his remaining assets.

[9] The reference to "my previous affidavit" is a reference to an affidavit sworn by Murdaca on 18 September 2003 filed in the Federal Court of Australia.

[13] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 178.2.

[14] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc, 178.3-178.4.

[15] For reasons it is not necessary to elaborate upon here, Maisano's position was different to the other defendants by reason that extensions of time had been obtained for making a security for costs application on or after 29 April 2013.

[16] It was exhibited to an affidavit of Murdaca sworn 24 April 2013, as exhibit TM-10.

Court (General Civil Procedure) Rules 2005

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