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Mystic Crystals Franchises (Australia) Pty Ltd v Vynotas Pty Ltd

 

[1999] QCA 278

 

COURT OF APPEAL

 

de JERSEY CJ

McMURDO P

THOMAS JA

 

Appeal No 3940 of 1999

 

MYSTIC CRYSTALS FRANCHISES Applicant (Plaintiff)

(AUSTRALIA) PTY LTD

v

VYNOTAS PTY LTD First Respondent (First Defendant)

NORWICH UNION LIFE AUSTRALIA Second Respondent (Second Defendant)

LIMITED

JLW (QLD) PTY LIMITED Third Respondent (Third Defendant)

ROBERTS LEU & NORTH Fourth Respondent (Fourth Defendant)

(A FIRM)

 

BRISBANE

 

DATE 15/06/99

 

JUDGMENT

 

THE CHIEF JUSTICE:  As to whether an extension of time for the filing and service of a notice of appeal should be granted the circumstances that there was an aborted attempt to institute an appeal within the prescribed period, and the considerable similarity between the notice of appeal then in mind and that which is associated with the current notice of motion, assume significance.

We were pressed with the argument that the proposed appeal is without merit.  I am not satisfied that it is so unarguable that we should not grant leave.  I focus, in saying that, on the question whether a sufficient attempt was made to establish a genuine dispute as to the debt founding the statutory demand.  That being so, I consider that time should be extended.

I would order that the time for the filing and service of a notice of appeal against the orders made by Mr Justice Muir on 11 March 1999 be extended until 4 p.m. on 16 June 1999.

I would further direct that any notice of appeal then filed and served not seek orders for committal or for the joinder as parties of the natural persons named in paragraphs (xvi), (xvii) and (xviii) on page 5 of the draft notice of appeal before us or that it seek to agitate the issue of amendment raised in paragraphs (xiv) and (xv) on page 5 of that notice of motion.  I would exclude those from the ambit of the appeal for the reasons which have been ventilated in argument before us this morning.  There would seem to be absolutely no valid ground for an appeal with relation to those matters.

MR FLEMING:  Your Honours, there is presently an order for security for costs in place and there is a stay on the action.  One can assume that the appeal will also be against not only the order for security for costs but also that stay, otherwise the stay remains in place.  The other thing that we want to ventilate is that there is, I think, at least four - there are at least four applications for security for costs in respect of the appeal, and that is on the basis that there are no assets disclosed anywhere.

THE CHIEF JUSTICE:  We know that.  We'll come to that.

MR FLEMING:  Thank you.  Thank you.

THE CHIEF JUSTICE:  Is it possible to accurately define the scope of the appeal by saying that it is to be confined to the order dismissing the application to set aside the statutory demand.  I don't think we can be as limiting as that, can we?  I've sought to dissect out those other matters which I think are simply unarguable and I note for the record that Mr Dart doesn't really disagree with that.  But I can't limit it as far as that, can I, because there is an appeal, as you've just pointed out, with relation to the security for costs order made below.

MR FLEMING:  Yes, there's - the five appeals which we've been able to discern are the statutory demand that Your Honours have just dealt with, the dismissal of an application to amend to add further defendants, that was dismissed, and that included companies that were derivatives of JLW, and that was dismissed, natural persons as plaintiffs, Your Honours have dealt with that, contempt, Your Honours have dealt with that, and then security for costs, so the three orders that appear to be still alive - or at least the appeals - statutory demand, joining defendants and security for costs.

THE CHIEF JUSTICE:  That conforms with your understanding of where the matter now rests, Mr Dart?

MR DART:  And the stay of proceedings, Your Honour, which would automatically-----

THE CHIEF JUSTICE:  Yes, yes.

MR TROTTER:  -----fit within the-----

THE CHIEF JUSTICE:  The security for costs.

MR DART:  -----application for security for costs.

THE CHIEF JUSTICE:  But you agree that those are the live issues which-----

MR DART:  They're the substantive issues, Your Honour.

THE CHIEF JUSTICE:  Well, there will be a direction that the-----

MR CLOTHIER:  Excuse me, Your Honour, I don't wish to interrupt, but it doesn't seem, on my reading of the matters anyway that there is any appeal against orders dismissing applications to join defendants.  The only-----

THOMAS JA:  Are you sure it's not hidden away there somewhere?

MR CLOTHIER:  I can't see it, Your Honour.  On pages 1 and 2 of the amended notice of appeal five matters are set out which, if you exclude those which the Court has already dealt with, really just leave the statutory demand and the security for costs.

THE CHIEF JUSTICE:  Can you point to the issue of joinder anywhere within the most recent notice of appeal, Mr Dart?

MR DART:  His Honour erred in his assessment by refusing permission for natural persons to be joined as plaintiffs.

THE CHIEF JUSTICE:  You were dealt with that.

MR DART:  Yes.

THE CHIEF JUSTICE:  We're talking here about the joinder of defendants.

MR DART:  We have no intention of attempting to rejoin those other persons as defendants, Your Honour.

THE CHIEF JUSTICE:  All right.

THOMAS JA:  So you're not troubled about that.

MR DART:  We have no intention of attempting to rejoin them.

THE CHIEF JUSTICE:  All right.

MR DART:  We accept His Honour's rulings on those points.  As I explained earlier we over-reacted to events that occurred.

THE CHIEF JUSTICE:  Well, I would direct that any appeal be confined to the issue of the correctness of His Honour's determinations with relation to the setting aside of the statutory demand and ordering security for costs and the related stays.

THE PRESIDENT:  I agree.

THOMAS JA:  I agree.

THE CHIEF JUSTICE:  Now, the question of the-----

MR CLOTHIER:  Sorry, Your Honour.  Can I say in relation to that that those matters don't concern my client.  My client didn't apply for security for costs and wasn't a party to the statutory demand application, so the proposed appeal should really exclude the fourth respondent.  The only concern that I have with respect to that is that a notice of motion had currently been filed which really seeks to have the terminations made with respect to the merits of the action below, which may be of some interest to my client but it's, I would assume, effectively excluded by Your Honour's order.

THOMAS JA:  Well, you can sit and watch, but if you're not a party you shouldn't be here.  Do you submit that there should be a direction that the appeal be against the first defendant only?

MR CLOTHIER:  Yes, Your Honour - well, certainly not against my client, because-----

THOMAS JA:  And those who have applied for security for costs.

MR CLOTHIER:  Yes.

THOMAS JA:  Yes.

THE CHIEF JUSTICE:  Anything you wish to say about that, Mr Dart?  A proposed direction excluding the fourth respondent from the proposed appeal.

MR DART:  Your Honour, we seek to retain the fourth respondent on the basis that it is our considered opinion that the fourth respondent has pursued this litigation against us on behalf of the first defendant with little if any chance of real success on the basis of the evidence, and we-----

THE CHIEF JUSTICE:  But there was no determination-----

MR DART:  -----quote as authority on that the-----

THE CHIEF JUSTICE:  There was no determination made by Mr Justice Muir about this, was there?

THOMAS JA:  It wasn't an issue.

THE CHIEF JUSTICE:  It wasn't an issue at all before him, was so it?

MR DART:  We did claim, Your Honour, that the fourth respondent had aided and abetted the first and third respondent in their action against us.

THE CHIEF JUSTICE:  But you didn't seek any relief with relation to Roberts Leu and North upon which His Honour adjudicated, did you?

MR DART:  No, Your Honour.

THE CHIEF JUSTICE:  I direct that they be excluded.  There must be a direction that the fourth respondent be struck out of the proceedings.

MR DART:  Very well, Your Honour.

THOMAS JA:  That's out of the appeal proceedings.

THE CHIEF JUSTICE:  Out of the appeal proceeding.  That they not be included in any appeal instituted tomorrow by the proposed notice of appeal.  Now there's nothing further at this stage?

MR FLEMING:  No, not in respect of that order, Your Honour.

THE CHIEF JUSTICE:  Do you wish to make any submissions with relation to costs?  This seems to be a discrete part of the whole proceeding before us today, doesn't it?

MR CLOTHIER:  Your Honour, for my part I seek the costs of the application on the basis that we've now been excluded from the appeal.

THE CHIEF JUSTICE:  Today, yes.  Do you wish to say anything about that, Mr Dart?  It would seem to follow that you should pay the costs of the fourth respondent.

MR DART:  Your Honour, I'd seek to ask the Court that they order that all costs be reserved until such time as this matter is finally dispensed with by the Court.

THE CHIEF JUSTICE:  Well, we've dismissed Roberts Leu and North effectively from the appeal proceedings and it should follow then that the applicant is ordered to pay the costs of the fourth respondent of and incidental to these proceedings to be taxed.

MR FLEMING:  Mr Moon is in that position, too, Your Honour, although it is very difficult to point out where he was actually a party.  There was a notice of motion-----

THOMAS JA:  No, but he wasn't served with a notice, was he? He wasn't named as a respondent?

MR FLEMING:  No, I don't think he was served as a-----

THE CHIEF JUSTICE:  Well-----

THOMAS JA:  No.  It's just vexatiously in the middle of the notice of appeal-----

THE CHIEF JUSTICE:  Yes.

THOMAS JA:  -----he gets a mention.

MR FLEMING:  Yes.

THOMAS JA:  So, I mean, I don't blame him for protecting himself in this way but, strictly speaking, I don't think he needed to be represented when he wasn't actually a party.

MR FLEMING:  Well, he'd be a brave man not to be represented on such an application, Your Honour.

THE CHIEF JUSTICE:  For my part I would make no order with relation to Mr Moon's costs but reserve the others.

THE PRESIDENT:  Yes, I agree.

THOMAS JA:  Yes, I agree.

THE CHIEF JUSTICE:  Now that leaves-----

MR FRASER:  I'm sorry, Your Honour.  I wasn't sure what Your Honour meant in relation to the question of costs at the moment.  If we're dealing with simply the costs of this application then I do have a submission on that, Your Honour.

THE CHIEF JUSTICE:  Well, you can raise it at the end of the next hearing when we'll deal with the issue of security of costs.  When I reserved I really meant it can be re-agitated when we next meet at 2.30 if you wish following the determination on the security for costs application which is the only further business involving the Court in this matter, isn't it, this afternoon.  Yes.

MR O'SHEA:  I hand up a copy of an outline of argument in cases.

THE CHIEF JUSTICE:  No.  My colleagues want to read it at lunch; I'm too tired, Mr O'Shea.

THOMAS JA:  Yes.  Could you give it to my Associate.

THE CHIEF JUSTICE:  We've had a very busy morning.  We'll resume at 2.30 and you can assume that we've digested the material which you've helpfully provided with relation to security for costs.

THE COURT ADJOURNED AT 1.14 P.M.

THE COURT RESUMED AT 2.41 P.M.

THE CHIEF JUSTICE:  Yes, Mr Fleming?

MR FLEMING:  Yes, thank you, Your Honour.  In respect of the application for security of costs we have our outline of argument which we won't go over, however we want to make two additional points.  The first is - and this is touched upon briefly in the outline of argument - within a day of - in May, I'm sorry, the applicant here issued another writ.  Your Honours will appreciate that there was a stay on proceedings in respect of the first writ until such times as security for costs was provided.

The applicant then issued another writ essentially for the same relief with precisely the same defendants but with, in addition to Mystic Crystals Franchisees Australia Pty Ltd adding Shirley Norma Dart and Sidney Ronald Dart.  He then proceeded to issue writs of non party discovery against people in that action, of course, which is simply a circumvention of the stay order in the first matter.

The other issue we want to point out to Your Honours is that there are no cost consequences upon the plaintiff in this case because he is impecunious.  Except for one debt which he says is owed to him by Mystic Crystals Franchisees Australia Pty Ltd which itself is insolvent, he says that his only income is from Austudy.  I understand he is studying law at James Cook University.  So Austudy plus this non-existent debt is his only source of income or his only asset.  So he will continue on, in effect, ignoring the order of the Court with his second action, running up costs, and there is very little, short of bringing an application to strike that action out as an abuse of process, that the applicants can do - the applicants for the security for costs here.

Your Honours, we would urge that there be an order for security for costs.  One other matter we-----

THE CHIEF JUSTICE:  Now, who do you appear for?

MR FLEMING:  The first and second defendants.

THE CHIEF JUSTICE:  That's Vynotas and Norwich Union.

MR FLEMING:  Yes.

THE CHIEF JUSTICE:  And you seek Thirty-two and a half thousand dollars.

MR FLEMING:  Yes.  My instructing solicitor informed me that he probably worked that out on a solicitor-client basis, so we make that concession immediately.

THE CHIEF JUSTICE:  JLW only asked for 9,160 and Roberts Leu and North aren't in it any more.  They were asking for Fifteen and a half thousand.  Quite disparate amounts, aren't they?

MR FLEMING:  They are, Your Honour, yes.

THE CHIEF JUSTICE:  Is there some reason for that or - what accounts for the difference between the JLW at 9,000 and you're at 32,000?

MR O'SHEA:  Your Honour, could I mention one matter?  I think our estimate deals solely with the appeal and I think Mr Fleming's costs-----

THE CHIEF JUSTICE:  You're for JLW?

MR O'SHEA:  Yes, for JLW.  I think Mr Fleming's estimate deals with the costs of this application, as well.

THE CHIEF JUSTICE:  And that's thirty two and a half thousand dollars.

MR FLEMING:  Yes.  That's the security for costs, which is our application here resisting the application for leave to extend time and then the appeal as well, and for two parties.

THOMAS JA:  Well, it's really an appeal plus one day in Court.  I mean, they're multiple applications but it's the one overall brief.

MR FLEMING:  Yes.  We concede that they're done on a solicitor-client basis, Your Honours, and they're too high.

THE CHIEF JUSTICE:  Yes.  But you - what, you knock a third off, don't you?

MR FLEMING:  I'm sorry, Your Honour.

THE CHIEF JUSTICE:  Take a third off to get back to party and party.

MR FLEMING:  If you take a third off-----

THE CHIEF JUSTICE:  That used to be the old rule of thumb.  But, how can yours be only 9,000?  It's just for the appeal-----

MR O'SHEA:  Yes, Your Honour.

THE CHIEF JUSTICE:  -----is that what you're saying?

MR O'SHEA:  Yes, Your Honour.

THOMAS JA:  Conversely-----

THE CHIEF JUSTICE:  Not today.

MR O'SHEA:  Yes, not today.

THOMAS JA:  Conversely, how can Mr Fleming's be 32?

THE CHIEF JUSTICE:  Well, if we knock him back 20-----

MR FLEMING:  Yes.

THE CHIEF JUSTICE:  So we've got a disparity between 20,000 and 9.  It seems extraordinary, doesn't it?

MR FLEMING:  Well, there are two clients-----

THE CHIEF JUSTICE:  I suppose that's why we have costs assessors in the Court.

THOMAS JA:  Your two clients don't add much to an appeal.

MR FLEMING:  There will be some duplication in respect to taking instructions, for example.

THOMAS JA:  What instructions do you need in an appeal except to hold if you can?  You don't have evidentiary-type conferences with clients over appeals.

MR FLEMING:  Yes, we accept that, Your Honour, but nevertheless they still have to take instructions, and then there are the other two aspects that weren't included in our learned friends'-----

THE CHIEF JUSTICE:  Remind me what they are, the other two aspects.

MR FLEMING:  That's the costs of this application-----

THE CHIEF JUSTICE:  Oh, yes.

MR FLEMING:  -----in two respects.  One, our application for security for costs and resisting the applicant's application.

THOMAS JA:  See, your costs don't even have the costs of preparing the record.  All you have is - your solicitors don't have much to do on appeals, in general, or this one might be exceptional.  All you've got to do is collect the - you've got to participate in preparing - helping prepare the record to see that the right things go in, receive it, deliver it to counsel.

MR FLEMING:  Your Honour, having regard to the material that's already here, there is some concern about what the record might be and the amount of work that is put in by solicitors to, in fact, get an accurate record before the Court of Appeal.

THOMAS JA:  Yes, although if you put the whole file that was read before the Chamber Judge it surely ought to be able to be controlled.  That surely is all that should go in the appeal record at most.

MR FLEMING:  We say that, Your Honour, but whether or not that will be-----

THOMAS JA:  Whether there'll be fresh evidence applications or the like.

MR FLEMING:  Yes.  There are - there is, of course, a considerable body of evidence here before this Court which we anticipate it will be attempted to put before the Court of Appeal who actually hears it.  There are other discrepancies as well.  There are two counsel compared to one and our instructing solicitor is from Townsville as well.  And Your Honours have seen the voluminous amount of material in respect of this application which has been very, very difficult to come to terms with.

Your Honours, the only other issue that we raise in respect of Mr Dart is that the exhibits to his wife's affidavit show three - at least three sets of financial accounts for Mystic Crystals, and they are confusing in the extreme because it doesn't sort out who the owner of Mystic Crystals is, and we refer Your Honours to the transcript before Mr Justice Cullinane in that respect but it shows that there are deferred liabilities to Mr Dart in each case of the years 95, '96 and '97 of $63,259.10.

He says that that's one of his assets.  However, during that period of time he was a bankrupt.  He came out of bankruptcy in May of 1998 and then assumed the reins of both the business, it seems, and the company in July of 1998.  So he purports to say that a debt owed by the company to him during his bankruptcy is yet an asset to him and, Your Honours, we simply say that there is grave doubts as to, first, the integrity of Mr Dart and, second, there is no doubt whatsoever as to his worth, and that is nil, and the defendants in this case will be left with no source of funds whatsoever in the event that the appeal and then the action - I'm sorry, we're talking about the appeal now - if the appeal is dismissed.  Thank you, Your Honours.

THOMAS JA:  Before you sit down I'd like to ask counsel generally whether there was any reported or unreported decision since Desmond and Mount Isa City Council which I as a single Judge gave back in 1989 where I recognised at that time although impecuniosity would be no bar to keep a person out of Court at trial level and you wouldn't issue security to bar him at that level lightly, an appeal was something different.  It's a second go, as it were, and that Courts were more prone to order security for costs at appellate level.  Now, has that changed?

MR FLEMING:  No.  No, Your Honours, no, because the rule itself requires security for costs as well but we, of course, seek security beyond that.

THOMAS JA:  Yes.  Well, I'm speaking about the discretion to order-----

MR FLEMING:  Yes.

THOMAS JA:  -----full or adequate security-----

MR FLEMING:  Yes.

THOMAS JA:  -----rather than the purely perfunctory rules level.

MR FLEMING:  No, Your Honour, that hasn't changed.

MR FRASER:  In relation to that last topic, I have looked again at Desmond and Your Honour's decision.  In my outline, I refer to Warry and PB Pty Ltd and I note that in that case the Court observed that the appellant would appear to have little by way of assets having only comparatively recently in August 1996 emerged from some years of bankruptcy.  So it would seem that the sentiments which apply at trial, that is, a litigant -having his day in Court, are not seen as in the same light when a litigant wishes to appeal having had the day in Court.  I have copies of that-----

THE CHIEF JUSTICE:  Mr Fraser, now that you're up, Vynotas - help me on this - seemed somewhere or other separately to seek $26,155.10.  What's that about?

MR FRASER:  Your Honour, that is in relation to the costs of this application today, the costs of the appeal, that is, if it proceeds.  They are respectively amounts of around $6,000 in each case together with the costs of the proceedings before Muir J that we seek that those be secured.

THE CHIEF JUSTICE:  But you've got costs - security for costs before Mr Justice Muir.  That's what he ordered.

MR FRASER:  No, Your Honour, not in relation to the winding-up application but I am in a position where the parties are separately represented.  Roberts Leu and North who instruct me and instructed me in relation to the application to set aside the statutory demand were themselves made a party to the writ action.  In those circumstances, although they had the conduct of the winding-up application, they didn't take any role in the action itself.

So there were two sets of representation before Justice Muir on two separate applications.  One was the - as I say, the application to set aside the statutory demand.

THE CHIEF JUSTICE:  But we're here only dealing with security for costs of the appeal.

MR FRASER:  That's right, Your Honour.

THE CHIEF JUSTICE:  So I can ignore that 26,000 claim.

MR FRASER:  No, Your Honour, for this reason, that although the position may be able to be changed now that the fourth defendant is going to play no role in the appeal and no doubt further instructions would have to be sought as to whether separate representation is still required by the clients involved, the position at the moment is that there's been this application for leave to extend the time together with prospectively the incidents of further costs on the appeal and separate representation.

THE CHIEF JUSTICE:  But if we allow the 30 - an amount in respect of the 32 and half thousand which Mr Fleming claims, I understood that to relate to both Vynotas and Norwich Union.  That's right, isn't it, Mr Fleming?

MR FLEMING:  Yes, Your Honour.

THE CHIEF JUSTICE:  Yes.

MR FLEMING:  Your Honour, the origins of the appeals are different.  Ours is the writ action.

THE CHIEF JUSTICE:  Yes.

MR FLEMING:  And there were applications in that.  My learned friend's, Mr Fraser's, was an application to set aside the demand.

THE CHIEF JUSTICE:  I understand that.

MR FLEMING:  So it has a separate origin.

THE CHIEF JUSTICE:  They were going to be heard together.

MR FLEMING:  They probably will be now, and that's one of the issues which has been exercising our minds over lunch.

THE CHIEF JUSTICE:  Mmm.

THOMAS JA:  It just seems inappropriate that separate counsel are appearing for the same----

THE CHIEF JUSTICE:  Yes.

THOMAS JA:  -----client on an issue just as close as this is at this point.  I mean, I can see how it happened but I would hope that arrangements will be made in the future for unifying representation.

MR FRASER:  Your Honour, in fact, discussions took place over lunch time with a view to doing that, at least between myself and my instructing solicitor.

THE CHIEF JUSTICE:  But you're both still here.  They couldn't have been very fruitful.  You're both still here.

MR FRASER:  Well, I don't remember being given leave to withdraw at the time.

THE CHIEF JUSTICE:  Anyway we understand the point.  Thank you.

MR FRASER:  And, Your Honour, we have provided an estimate of costs on the basis of one counsel for one day and costs of this application.  A more modest estimate was provided by my learned friend, Mr Fleming - Mr Fleming's solicitors.  Since that estimate was prepared we have been served with additional material, two separate amended notices of motion and additional affidavit material, so that estimate is probably too light in view of events that have transpired.  On the merits of the-----

THOMAS JA:  What figure is that you're talking about now?

MR FRASER:  Your Honour, it's an exhibit RIH24.  It's a figure of - this for the costs of the application to extend time $5,945 on a party party basis, with one counsel retained and the costs of the appeal of $6,146.20 based on one counsel and one day of appeal.

THE CHIEF JUSTICE:  Extraordinarily precise descending to cents.

MR FRASER:  Well, we had an assessment made from a person who is extraordinarily precise no doubt, Your Honour.  Your Honour, I just wish to make two further points.  So far as the application - in relation to this application to extend time is concerned, the applicant has sought obtaining indulgence and the respondent have no choice in the matter with the motions.  The relief which has been sought by the proceedings today has been cut down substantially.  The applicant is impecunious----

THE CHIEF JUSTICE:  It should cut down the cost then too.

MR FRASER:  Not unfortunately to get to this stage.  Subsequently it may hopefully do so.  The application so far as my role is concerned concerns the winding up and the solvency and as part of the price of having to regularise matters the applicant ought to secure the respondent for the costs of those proceedings.  And I would mention, Your Honours, I have copies of Wurrie v. BP Ltd.  I can hand them up to Your Honours.  Mr Dart has already a copy of the decision.  I don't know if it will assist Your Honours.  It's only short.

THE CHIEF JUSTICE:  Nothing further?

MR FRASER:  No, Your Honour.

THE CHIEF JUSTICE:  Mr O'Shea?

MR O'SHEA:  Your Honour, I only wish to add two brief comments to the outline.  The first was to emphasise the difference between security for costs in a trial Court from that in an appeal Court, to which Justice Thomas has already referred.

The second point is also to ask for the costs of the leave application this morning.  Should I address that now, Your Honours, or leave that till later?

THE CHIEF JUSTICE:  No, say something now about it.

MR O'SHEA:  Essentially, Your Honour, the applicant was firstly seeking an indulgence and secondly the nature of the appeal was clarified and restricted as a result of the application today.  In those circumstances, in my submission, it's appropriate for a costs order to be made today and that costs order should be that the applicant pay the third respondent's costs.

THE CHIEF JUSTICE:  Yes.

MR O'SHEA:  Thank you, Your Honour.

THE CHIEF JUSTICE:  Are those costs sought by you as well on behalf of the first two respondents or not?

MR O'SHEA:  Yes, Your Honour.

THE CHIEF JUSTICE:  All right.  Now, Mr Dart.

MR DART:  Your Honours, we claim that we have a strong case here.  And in my reading I see that that is not necessarily taken into account by the Court when considering security for costs.  In this case we maintain that the defendants do not have a defence and cannot mount a defence.  We further maintain that-----

THOMAS JA:  A defence to what?

MR DART:  A defence to our action as a whole.  We further maintain that it has been their intention from the start to frustrate our claim by locking us out of the Court with security.  I would refer the Court to Exhibit 69 in the matter before the Court in which we deposed that in a meeting with Mr Weaver of Roberts Lou & North on 22 September 1996 this was, he stated to us quite categorically:

"You can comply to the ACCC, the Australian Competition and Consumers Commission if you like. It won't do you any good. If you ever get them into Court we will simply bury you with legal costs''.

And it would seem to us that this has been the intention all along.  It is our contention that our impecuniosity has been brought about by the breaches of the Trade Practices Act that have occurred and by the actions of the defendants.  My learned friend at the end referred to the new action we brought 369 of '99.  This encompasses new causes of action which have occurred 780 of 1998 was filed, and the new causes of action were the breaking and entering of the shop et cetera, et cetera, the breach of estoppel.

What we have here is a simple case where Your Honours in your wisdom have given us the right to appeal the decisions of Justice Muir where we were locked out of the Court by security of costs, and they are now asking you to lock us out of the Court of Appeal by the same factor.  They know that we're broke and they know why.  They would now seek to use that against us to lock us out and deny us any chance of recovery.  And my simple contention, Your Honours, is it's unjust, absolutely unjust and they should not be allowed to do so.

THE CHIEF JUSTICE:  Do you wish to say anything with relation to the costs reserved this morning?  They're now being sought by the first, second and third respondents.

MR DART:  Once again, Your Honour, my submission is that all costs in this matter should be reserved pending the outcome of the appeal and pending the outcome of the dispensation of the action as a whole.  At the end of the day, we will win, even if it is necessary to go from here to the High Court, we will win.

THOMAS JA:  That doesn't help us that this might - I assume that the prospects are that you will be a litigant in person in the Appeal Court?

MR DART:  Yes, Your Honour.

THOMAS JA:  You're not intending to brief counsel or solicitors?

MR DART:  We have no money.

THOMAS JA:  No.  In which case the costs that might otherwise - that make an imbalance between the parties are not going to emerge so clearly, are they?  You're not going to be able to tax very much against them except the cost of getting the record together.

MR DART:  I would have to submit, Your Honour, that we're blameless in this.  The defendants have brought this action on themselves by their activities.  Had they not committed the offences against the Trade Practices Act that they have done, we would not be here today.  Had they not locked us out of the Court we would not be here today.  And now they seek to do the same thing again.

THE CHIEF JUSTICE:  All right.  Well, you've made that point and we're seized of that.  We'll retire to consider this matter for a short time.

THE COURT ADJOURNED AT 3.04 P.M.

THE COURT RESUMED AT 3.14 P.M.

THE CHIEF JUSTICE:  Mr Dart, the Court does intend to order that the plaintiff furnish security for costs in the total sum of $18,000.  I ask you now for any submission as to a date by which that should be required.

MR DART:  It cannot be provided, Your Honour.  We do not have the money and we have no prospects of having the money.  What you're doing to us is effectively locking us out of the appeal.  Having granted the appeal, we are now being locked out of the appeal.

THE CHIEF JUSTICE:  All right.  Thank you, Mr Dart.

Bearing in mind in particular the small paid-up capital of the plaintiff, the fact that it does not own any real property, that its guiding director is in very limited financial circumstances, that on 11 March 1999 it was ordered to pay security for costs in action 780 of 1998, which has not yet been provided, while on the other hand moderating the amount which should prima facie be paid by way of security, to meet a suggestion that this is being used as an instrument of oppression I consider that security should be required in this case with relation to the first and second respondents in the sum of $10,000 in respect of the costs of this application and the appeal, and with relation to the third respondent in the sum of $8,000 in respect of the costs of the appeal.

I consider that it would be reasonable to require the provision of the security within a month or such further period as the Court may, prior to the expiration of that time, allow.  The order I would make is as follows.  In the event that the plaintiff files and serves a notice of appeal by 4 p.m. tomorrow, 16 June 1999, order the plaintiff to furnish to the Registrar as security for the costs of the appeal by 4 p.m. on 15 July 1999, or such further period as the Court may prior to the expiration of that time allow, with respect to the first and second respondents the sum of $10,000 in respect of the costs of this application and appeal, and with respect to the third respondent the sum of $8,000 in respect of the costs of the appeal, and further order that pending the provision of such security all proceedings in the appeal be stayed.

I would reserve the costs of the applications for security for costs.  As to the costs reserved this morning relating to the plaintiff's application for an extension of time within which to appeal I would order that the costs of the first, second, and third respondents be their costs in the appeal.

THE PRESIDENT:  I agree with the orders proposed by the Chief Justice and with his reasons.

THOMAS JA:  In agreeing with the orders proposed I would add that in my view the main point at issue on the appeal, that is to say the appeal against the order concerning the application to set aside the statutory demand, is, to say the least, not promising.  It is inevitable, on the material before us, that in the event of these respondents succeeding in the appeal they would not recover their costs against the appellant.

I perceive a different approach to the ordering of security for costs at appeal level to that at trial level.  Taking all matters into account I do not think it would be just to the respondents to deprive them of at least the reduced security that the Chief Justice proposes in respect of the appeal.  I accordingly agree in the orders proposed.

THE CHIEF JUSTICE:  Those are the orders.

MR CLOTHIER:  Your Honour, can I say one thing that matters to my client?  It had brought an application for security for costs which can undoubtedly be dismissed in light of what's occurred.  I ask for the costs of that application on the basis that it was reasonably brought, particularly given the fact that the appeal against my client was destined to fail.  Thank you, Your Honour.

THE CHIEF JUSTICE:  Do you wish to say anything about, Mr Dart?

MR DART:  No, Your Honour.

THE CHIEF JUSTICE:  No.  We'll make that order, Mr Clothier.

MR O'SHEA:  Your Honour, in the outline of submissions the third respondent also sought an order that the appeal be struck out if the security wasn't provided within the period determined by the Court.  I'd press for that order.

THE CHIEF JUSTICE:  I have ordered a stay.  There will in addition then be an order that in the event that security is not furnished in accordance with this order the appeal will be taken to have been struck out without the need for any further order on the part of this Court.  That means, obviously enough, if it is not provided by 4 p.m. on 15 July 1999, or within such further period as the Court may, prior to the expiration of that time, allow.  Thank you.

MR O'SHEA:  Your Honour, my understand is that that order would also mean that costs would follow - the costs that Your Honours have already ordered.

THE CHIEF JUSTICE:  I'm sorry-----

MR O'SHEA:  Be costs in the appeal, and - perhaps we should wait and see what happens because Your Honour has also reserved the costs.

THE CHIEF JUSTICE:  Of the-----

MR O'SHEA:  Of this application.

THE CHIEF JUSTICE:  Of this application.

MR O'SHEA:  So perhaps another appearance will be necessary in any event.

Thank you.

THE CHIEF JUSTICE:  Liberty to apply.

MR O'SHEA:  Thank you, Your Honour.

MR DART:  Your Honours, do I understand from the order that we have liberty to apply for an extension of time to provide that security?

THE CHIEF JUSTICE:  Yes.  Of course you have told us that you do not have and will never have any capacity to pay, as I understand your position, but I-----

MR DART:  We have no foreseeable-----

THE CHIEF JUSTICE:  -----we have allowed that as a matter of fairness if proper investigation of your capacity to put up the money shows some avenue.

MR DART:  At this stage we have no foreseeable prospects, Your Honour.

THE CHIEF JUSTICE:  Yes.  Thank you.

Close

Editorial Notes

  • Published Case Name:

    Mystic Crystals Franchises (Australia) Pty Ltd v Vynotas Pty Ltd & Ors

  • Shortened Case Name:

    Mystic Crystals Franchises (Australia) Pty Ltd v Vynotas Pty Ltd

  • MNC:

    [1999] QCA 278

  • Court:

    QCA

  • Judge(s):

    de Jersey CJ, McMurdo P, Thomas JA

  • Date:

    15 Jun 1999

Litigation History

No Litigation History

Appeal Status

No Status