Thomson v Ronstan International Pty Ltd [2000] VSC 47

9. By his amended statement of claim delivered 7 April 1998 the plaintiff seeks to recover the sum of $506,022 from the defendant in respect of photographic work he alleges he performed for the defendant pursuant to various agreements entered into by him and the defendant between September 1995 and August 1996.

12. The defendant denies its liability to pay the sum claimed and has filed a counterclaim against the plaintiff seeking to recover damages from him for breach of contract.

15. From the material on the Court file it is not possible to form any view as to the parties' likely prospects of success in the proceeding.

18. At all events on 10 November 1998 the Listing Master fixed the proceeding for trial on 9 June 1999. At the same time as the Master made the order fixing the proceeding for trial, the Master ordered that there be a callover of the proceeding on 14 May 1999.

21. At the callover on 14 May the solicitor then acting for the plaintiff informed the Master that the plaintiff was ready to proceed with the trial on the fixed date.

24. However, on 4 June 1999 the plaintiff dispensed with his original solicitors and retained his present solicitors to act on his behalf.

27. On that same day the plaintiff's new solicitors filed a summons in the Court returnable before the Listing Master on 7 June 1999 whereby they sought an adjournment of the trial.

30. On 7 June the Master adjourned the hearing of the summons to the trial Judge appointed to hear the proceeding and ordered that the plaintiff pay the defendant's costs of the application that day.

33. Both the summons and the proceeding as such came before Coldrey, J. on 11 June 1999.

36. His Honour dismissed the plaintiff's summons seeking an adjournment of the proceeding and commenced the trial of the proceeding.

39. On 16 June 1999 and following a two day hearing, a fresh application was made to his Honour for an adjournment of the proceeding. Based upon the material then before him Coldrey, J. granted the application but ordered that the costs of the defendant thrown away by reason of the adjournment be paid by the plaintiff.

42. On 19 October 1999 the Taxing Master taxed the defendant's costs ordered to be paid by the plaintiff by both the Listing Master and Coldrey, J., in the sum of $24,974.60.

45. Despite requests by the solicitors for the defendant that the plaintiff pay the costs, the plaintiff has declined to do so.

48. On 24 December 1999 the defendant's solicitors filed a summons in the Court whereby they sought the following order:

"1. Unless within 7 days the plaintiff pay the costs ordered to be paid by Master Kings on 7 June 1999 and by the Honourable Justice Coldrey on 11 and 16 June 1999, and taxed and allowed by the Taxing Master in the amount of $24,974.60 on 19 October 1999, the plaintiff's claim in the proceeding be dismissed and his defence to the defendant's counterclaim be struck out."

52. It was that summons which was before the Listing Master on 3 February 2000.

55. The defendant's application is made pursuant to the provisions of Rule 63.03 of the Supreme Court Rules. The rule reads:

"63.03(1) The Court may in any proceeding exercise its power and discretion as to costs at any stage of the proceeding or after the conclusion of the proceeding. (2) Costs which a party is required to pay under any of these Rules or an order of the Court shall, unless the Court otherwise orders, be paid forthwith. (3) Where the Court makes an interlocutory order for costs, the Court may then or thereafter order that if the party liable to pay the costs fails to do so - (a) if that party is the plaintiff, the proceeding shall be stayed or dismissed; (b) if that party is a defendant, his defence shall be struck out. (4) In paragraph (3) - 'plaintiff' includes any person who makes a claim in a proceeding; 'defendant' includes any person against whom a claim is made in a proceeding."

59. It was argued on behalf of the plaintiff that the discretion to stay or dismiss a proceeding pursuant to Rule 63.03 should be exercised sparingly and only in exceptional circumstances.

62. In that regard the plaintiff relied upon the decision of the Full Court of this Court in Exell v. Exell[1] and the decision of Chernov, J. as he then was in Towie & Anor. v. Medi 7 Australia Pty. Ltd. & Ors.[2]

65. In Exell's case the Court was required to consider whether a Judge or Master of the Court had power to dismiss an action for want of prosecution on the ground that the plaintiff had failed to comply with an order for payment of costs.

68. In determining that at that time a Judge or Master had no such power, the Court said at p.8:

"There is no rule of Court that gives the Court or a Judge, still less a Master, power to dismiss an action for want of prosecution on the ground that the plaintiff has failed to comply with an order for payment of costs. It is true that in decisions of high authority there appear statements to the effect that dismissal for want of prosecution may be ordered where the plaintiff has intentionally and contumeliously failed to comply with a curial direction. But in all such cases the direction was to take a step that was a step in the prosecution of the action: see Freeman v Rabinov [1981] VicRp 52; [1981] VR 539, at p. 544, per Lush J. We are of opinion that contumely unrelated to prosecution of the action cannot be a basis for dismissal of that action on the ground of want of prosecution of the action, or, at all events, can be so only in rare and very exceptional circumstances. Before a plaintiff's impugned conduct can lead to dismissal of an action for want of prosecution of that action the conduct must be capable of being characterized as evidence of such want of prosecution. There appears to be no rational connection between dismissing a plaintiff's action for want of prosecution on the one hand and delay in the payment by one of the parties of a civil debt to another on the other hand. It is not for the Court to act as a debt collector. Ample processes exist to permit a party to proceed for the recovery of his debt. Should a debtor party be impecunious such an order is no more, in effect, than an order requiring that party to give security for costs. Yet, as the principles relating to giving security would not be taken into account when such an order is made such an order in consequence must plainly be considered to have been incorrectly made. As we have sought to explain, a failure to pay costs is just simply not an act constituting a want of prosecution of the action. How then can an action be dismissed for such alleged want of prosecution if there is no more than a non-payment of costs? Even if non-payment of costs should be thought to require the imposition of a sanction it should in the case of a plaintiff's default ordinarily be confined to an order that proceedings be stayed until the order for payment is obeyed. Whilst a plaintiff who defaults such an order may, if he is not statute-barred, recommence his action if dismissed for want of prosecution, a defendant who has his defence struck out because he has failed to pay costs ordered against him within a stipulated time is left with no answer to judgment's being entered against him. If the defaulter should happen not to be a plaintiff but a defendant and dismissal of a plaintiff's action is the appropriate sanction for a defaulting plaintiff then striking out of the defence must be the appropriate order to make in respect of a defaulting defendant. That such a Draconian result should be allowed to ensue renders it obvious, in our opinion, that no such orders should be made - if there be power to make them at all - save in the most exceptional circumstances, or, as a last resort."

72. If my understanding of the decision is correct what the Court was saying in Exell was that if the Court did have power to dismiss an action for want of prosecution because the plaintiff had failed to comply with an order for costs, such an order should not be made save in the most exceptional circumstances or as a last resort; that if in a given case non-payment of costs should be thought to require the imposition of a sanction it should in the case of a plaintiff's default, ordinarily be confined to an order that the proceeding be stayed until the order for payment is obeyed.

75. In other words a defendant does not have to demonstrate the existence of exceptional circumstances before being entitled to an order that the proceeding be stayed until the order for payment is obeyed, it is sufficient that he demonstrate that in the circumstances of the particular case it is appropriate that a sanction be imposed.

78. But of course Exell's case was determined prior to the coming into operation of Rule 63.03. See Williams Civil Procedure of Victoria at p.5614. And as the author points out at that page: "The existence of R.63.03(3) means that the Court is no longer bound to act in accordance with Exell v. Exell [1984] VicRp 1; (1984) VR 1."

81. A similar view was expressed by Coldrey, J. in Australia & New Zealand Banking Group Ltd. v. Parker & Ors.[3].

84. It is true that in Towie, Chernov, J. as he then was, spoke of the power given to the Court by Rule 63.03(3) being exercised sparingly and only in exceptional circumstances. But I think that if one reads the whole of the relevant passage in his Honour's judgment dealing with the matter, his Honour was speaking in relation to an application for a permanent stay of the proceeding or a dismissal of the proceeding rather than merely a stay of the proceeding until such time as the plaintiff had paid the costs in question. At p.2 of the judgment his Honour said:

"The application to stay the proceeding is brought essentially under R63.03(3), which says that, 'Where the court makes an interlocutory order for costs, the court may then or thereafter order that if the party liable to pay the costs fails to do so - (a) if that party is the plaintiff, the proceeding shall be stayed or dismissed.' Mr Simon, who appeared for the defendants, pointed to the fact that this Rule was introduced after the decision of the Full Court in Exell v Exell [1984] VicRp 1; [1984] VR 1, and is a response to what the Full Court said at pages 8 and 9 of that report. Mr Arthur does not contradict or contest that the Rule has been brought in so as to give the court power to make the order sought by Mr Simon, but he has submitted that this power should be exercised only in exceptional circumstances. He points to the underlying basis of the decision in Exell v Exell in relation to this point. I agree that the power should be exercised sparingly and only in exceptional circumstances. I should say that this situation borders on being exceptional, but I have in mind that Mr Arthur has informed me that the plaintiffs will pay the costs within 30 days of today. He has stopped short of giving an undertaking on behalf of his clients because he obviously does not have instructions to give such an undertaking. He has informed me that the payment is to be made 'under protest'. Be that as it may, if it were paid, I would be disinclined to make an order staying the proceeding. In the circumstances, what I propose to do is to stay the proceeding pending payment of the defendants' taxed costs to which I have referred. I indicate now that if that payment is not effectively made within 30 days, namely, by bank cheque or cash or by cheque which is cleared within that period, it will be open to the defendants to return to court to pursue their application to have the matter struck out or permanently stayed on the basis stated by Mr Simon. Any exceptional circumstances on which reliance may then be sought to be placed, would have to be made out on proper material."

88. There is no requirement in the rule that a defendant seeking an order that a proceeding be permanently stayed or dismissed demonstrate the existence of exceptional circumstances before being entitled to relief, let alone such a requirement where he or she is seeking a stay of the proceeding until such time as the costs are paid. Nor is there any provision in the rule to the effect that the power given by the rule is to be used sparingly. In that regard the rule may be contrasted with other of the Supreme Court Rules, for example, Rule 56.02(3) which provides that the Court shall not extend the time for commencing a proceeding for judicial review beyond the 60 day period stipulated in Rule 56.02(1) except "in special circumstances".

91. In my opinion the correct view to take of the matter is that where the application is to dismiss or permanently stay the proceeding the power should be exercised sparingly and only if the circumstances justify the making of such a Draconian order. If on the other hand, the application is to stay the proceeding pending the payment of the costs in question such an order may be made if the circumstances justify the imposition of a sanction.

94. In the present case, and despite the relief sought in the defendant's summons, counsel for the defendant informed me that the application to the Listing Master and now to me was no more than an application for a stay of the proceeding pending the payment of the costs. In that situation I consider that I am required to do no more than determine whether in the circumstances of this case, the imposition of such a sanction is warranted.

97. The short answer to the question posed is that in my opinion it is.

100. The costs in question are significant and were incurred by the defendant as a consequence of the plaintiff's conduct of the case.

103. In the affidavit sworn by the plaintiff's solicitor in opposition to the defendant's application, the plaintiff's solicitor has sought to fix the responsibility for the adjournment of the trial on the shoulders of the plaintiff's former solicitors rather than the plaintiff. Such a suggestion has been rejected by those solicitors. In that regard I refer to the letter of 2 December 1999 which they wrote to the plaintiff's present solicitors concerning the matter, the relevant paragraphs of which read:

"Dear Sirs Peter Thomson v Ronstan International Pty Ltd We refer to your letter dated 26 November 1999. We are surprised that this matter has been raised yet again having been fully ventilated in discussions between representatives of your firm, Mr Golvan and Mr Thomson in June this year. At the conclusion of those discussions it was acknowledged by all parties: 1. That Mr Thomson had failed to pay our invoices when they were due and in some cases invoices were outstanding over 12 months at the time we advised we would not commence the work required for the trial. 2. Mr Golvan had made it clear that he was not prepared to commence preparation for the trial until his outstanding invoices were paid and moneys were received from Mr Thomson on account of his fees. 3. We had made it clear that we were not prepared to commence preparation of the matter for trial until all our fees which were outstanding were paid and moneys on account of costs were received. 4. Mr Thomson had acknowledged these requirements and agreed that he would pay the outstanding accounts and provide money on account of costs but had failed to do so as agreed. Had Mr Thomson honoured his agreement to pay fees there was ample time to properly prepare the matter for trial between 14 May 1999 and 11 June. Indeed, notwithstanding the non-payment of costs a number of tasks were undertaken by my firm in order to comply with the directions of Master Kings. In conclusion, we take no responsibility for the costs thrown away or Orders made against Mr Thomson. Mr Thomson must take responsibility for this consequence which was caused solely by his failure to honour his agreement to pay our costs and to provide money on account of future costs. Just as Mr Golvan acted properly and in accordance with his agreed arrangements not to perform work until outstanding fees were paid, so did we. Furthermore, Mr Thomson's position was exacerbated by the fact that in the period prior to commencement of the trial he decided to change legal firms and spent significant time and costs negotiating the transfer of files and payment of outstanding costs. No doubt further time was lost in your firm familiarising yourselves in the matter. We gave no cause for this surprising decision, except that in accordance with normal business practice insisted on our costs being paid. No doubt your firm operates on similar business principles."

107. The plaintiff has not seen fit to challenge the content of that letter. In that situation I reject the notion that his former solicitors were responsible for the adjournment of the proceeding on 16 June.

110. I am satisfied therefore that it is appropriate in the circumstances of this case to make the orders that the Listing Master, in fact, made in the proceeding.

113. In conclusion I should add that there is one further reason why I consider that it is appropriate to make such orders.

116. Nowhere has the plaintiff sworn that he is unable to pay the costs in question. At most the affidavit of his solicitor gives the impression that he may have some difficulty doing so. I am not prepared to accept therefore that the orders made by the Listing Master will necessarily have the effect of delaying the trial of the proceeding.

119. I refrain from considering whether a plaintiff's impecuniosity is a relevant factor in any event.

122. The appeal will be dismissed with costs to be taxed and paid by the plaintiff.

[1] [1984] VicRp 1; (1984) VR 1