United Industries International Limited v Chameleon Mining N/L

Federal Court of Australia|2009-09-18|Before: Stone J

REASONS FOR JUDGMENT 1 By notice of motion filed on 5 August 2009, the first respondent sought orders dismissing the present proceeding pursuant to O 35A r (3)(1)(a) of the Federal Court Rules. At the hearing of the first respondent's motion on 20 August 2009, the second and third respondents were given leave to file in Court a notice of motion seeking the same orders. For reasons that will become clear service was dispensed with and both motions were heard together. At the conclusion of the hearing I made orders dismissing the proceedings and undertook to provide written reasons at a later date. These are my reasons. 2 The substantive proceeding was commenced by the plaintiffs on 20 June 2008. The second plaintiff, Mr Whitbread, is the sole director and secretary of United Industries International Limited, the first plaintiff. United Industries held shares in the first defendant, Chameleon Mining N/L. The second defendant, Mr Koh, was a director of Chameleon as well as a director of Centrebright Pty Ltd, the third defendant. 3 The history and conduct of the proceedings shows a lamentable failure on the part of the plaintiffs to progress their claims. It appears that at least in part this may be because the second plaintiff has major health problems. At a directions hearing on 9 October 2008 the Court was informed from the bar table that the second plaintiff's health had taken a serious turn and that he may have suffered a stroke and although the information was not supplied by way of admissible evidence I have no reason to doubt that this is true. Irrespective of this, however, certain facts are beyond dispute.

THIS NOTICE OF MOTION 10 The first defendant's notice of motion was set down for hearing on 20 August 2009. At that time Mr McDonald again appeared based on standing instructions from the second plaintiff however he told the Court that his instructing solicitors had been unable to contact their client and that he did not have instructions to deal with the motion one way or another. 11 Mr McDonald said he understood that his instructing solicitor's difficulty in contacting Mr Whitbread stemmed from the continuing deterioration of Mr Whitbread's health and his possible relocation to a supervised care facility. Without instructions from the second plaintiff Mr McDonald was clearly unable to argue the substance of the motion. After mentioning that, in accordance with his standing instructions, all he could do was seek an adjournment, he requested to be excused. I refused to adjourn the matter and, in the circumstances I excused Mr McDonald from further attendance at the hearing. 12 Before Mr McDonald left the Court, counsel for the second and third defendants sought leave to file in court a notice of motion seeking relief identical to that sought in the first defendant's motion. In the circumstances, Mr McDonald was understandably unwilling to accept service of that notice of motion however, since the first defendant's notice of motion was filed and served 15 days before the present hearing and no additional orders were sought by the second and third defendants' motion, I decided that no prejudice would be afforded to the second plaintiff if service were dispensed with and the second and third defendants' motion heard instanter. I therefore made orders to that effect and both motions were heard together.

The Court's discretion under O 35A r 3(1)(a) 13 The notice of motion seeks orders dismissing the proceedings under O 35A r 3(1)(a) of the Federal Court Rules. Order 35A r 3 states: (1) If [a plaintiff] is in default, the Court may order that: (a) the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the [plaintiff]. Relying on observations made in Lenijamar Pty Ltd v AGC (Advances) Limited (1990) 27 FCR 388 at 396, the first defendant submitted that, before dismissing the proceedings under O 35 r 3(1)(a) I needed to be satisfied either (a) that the second plaintiff's history of non-compliance indicates that he is unwilling or unable to progress his application so that it is ready for trial within an acceptable period or (b) that irrespective of his intention or resources his continued failure to comply is occasioning unnecessary delay, expense or other prejudice to the defendants. 14 While the principles articulated in Lenijamar relate to the now defunct O 10 r 7, it is clear that the same principles are applicable in relation to the Court's power under O 35 r 3(1)(a); Jianshe Southern Pty Ltd v Turnbull Cooktown Pty Ltd (No 2) [2007] FCA 903 per Besanko J. 15 In light of the circumstances outlined above, I was satisfied that the second plaintiff is either unable or unwilling to co-operate in getting the matter ready for hearing within an acceptable period or, at least, has occasioned unnecessary delay by reason of his non-compliance. There is no reason to believe that this situation is likely to change. Mr Whitbread is 86 years of age and there is no evidence that his health is improving. Indeed, such evidence as there is suggests that Mr Whitbread's health is, if anything, continuing to deteriorate. Consequently I ordered that the proceedings be dismissed as against the second plaintiff.

COSTS 16 On 30 July 2009 I ordered the first plaintiff to pay the defendants' costs on an indemnity basis. Both notices of motion sought orders that the second plaintiff also be liable for costs on an indemnity basis. Ms Roccisano, upon whose submissions the second and third defendants also relied, described the second plaintiff's failures as occasioning "inexcusable and inordinate delay without satisfactory explanation" and submitted that his conduct was sufficient to warrant such an order being made; Wilcox, Re; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151. Based on the history of the proceedings set out above, I was persuaded that this was an entirely appropriate characterisation of the circumstances and warranted the costs order sought. As a result I ordered that the second plaintiff be jointly and severally liable with the first plaintiff for the defendants' costs of these proceedings, payable on an indemnity basis. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate: Dated: 18 September 2009 Counsel for the Second Plaintiff: G McDonald

Solicitor for the Second Plaintiff: Dennis & Company

Counsel for the First Defendant: L Roccisano

Solicitor for the First Defendant: Piper Alderman Lawyers

Counsel for the Second and Third Defendants: L Byrne

Solicitor for the Second and Third Defendants: Macpherson + Kelley Lawyers (Sydney) Pty Limited

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