SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO: | |
Trial Division | |
PROCEEDING: | Application |
ORIGINATING COURT: | |
DELIVERED ON: | 24 October 2008 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 10 October 2008 |
JUDGE: | McMeekin J |
ORDERS: | 1. That the defendant prepare minutes of orders reflecting these reasons and serve them on the plaintiff on or before 4 pm on 28 October 2008; 2. That the plaintiff advise the defendant of its attitude to the proposed orders on or before 4pm on 30 October 2008; 3. That if agreed, the proposed minutes of orders be forwarded to my associate on or before 4 pm on 31 October 2008 whereupon I will make the orders; 4. Failing agreement between the parties the matter be listed for further hearing on 3 November 2008; and 5. The order made on 2 May 2008 requiring that RS 375/07 be heard together with RS 111/06 is vacated. |
CATCHWORDS: | PROCEDURE – COSTS – SECURITY FOR COSTS – OTHER MATTERS - where the respondent seeks to have the proceedings stayed for non-payment of a security order – where the plaintiff seeks to have the security order varied by extending time to provide security – where the time would be extended to a date after a related trial for both parties. UCPR, r 674, r 675 Rodgers Family Investments Pty Ltd v Australia and New Zealand Banking Group Ltd [2008] QSC 85, cited. |
COUNSEL: | The plaintiff appeared on its own behalf |
SOLICITORS: | The plaintiff appeared on its own behalf Minter Ellison for the Respondent |
[1] McMEEKIN J: There are two applications before me. They each relate to an order for security for costs made by me against Rodgers Family Investments Pty Ltd. To understand the applications I need to say something about the background facts.
[2] There are two proceedings extant between the defendant and the Rodgers family interests. In one Mr and Mrs Rodgers sue in their personal capacity for damages – that is proceeding RS 111/06. In the other the company which Mr and Mrs Rodgers control, Rodgers Family Investments Pty Ltd, also seeks damages and essentially on the same grounds as do Mr and Mrs Rodgers in RS 111/06 – that is proceeding RS 375/07. The two actions – RS111 of 2006 and RS375 of 2007 – involve virtually the same issues. The significant difference is in the damages claimed.
[3] On 2 May 2008 I ordered Rodgers Family Investments Pty Ltd to provide security for costs in the sum of $50,000 by 5 June 2008: Rodgers Family Investments Pty Ltd v Australia and New Zealand Banking Group Ltd [2008] QSC 85. No security has yet been provided. At the time that I made the order I recognised in my reasons for judgment that the making of the order would, in all probability, stifle the litigation as the plaintiff was impecunious and Mr and Mrs Rodgers were also impecunious (see paragraph 10 of the reasons).
[4] The defendant, the Australia and New Zealand Banking Group Limited (“ANZ”), seeks an order pursuant to r 674 of the Uniform Civil Procedure Rules 1999 that the proceeding be dismissed because of the plaintiff’s failure to provide the security ordered. The plaintiff seeks an order that the security order be varied by extending the time within which to provide the security ordered to a date after the trial in the related proceedings, RS111 of 2006 and following judgment. The submission made was that in the event that Mr and Mrs Rodgers were successful in those proceedings then they would be able to provide the security ordered in this proceeding.
[5] When the defendant’s application first came on for hearing on 15 September 2008 the plaintiff applied from the Bar table and without notice for the extension of time within which to provide the security ordered. The plaintiff is a self-represented litigant. No proper material was then before the Court to justify an extension of time within which to provide the security that had been previously ordered. I adjourned the application to 10 October 2008 and made orders that the plaintiff file and serve various affidavits effectively setting out evidence as to the likely quantum of damages in a related action RS111 of 2006, and a statement of assets, liabilities and income of the plaintiff and Mr and Mrs Rodgers.
[6] The order made on 15 September 2008 was a guillotine order - if the required affidavits were not filed within 21 days then the proceeding was to be dismissed. Ms Downes of counsel, who appears on behalf of the defendant, submits that the required affidavits were not filed and hence there is no need to consider the application further – the guillotine order has taken effect.
[7] The affidavit which Ms Downes contends was required to be filed and was not filed was an affidavit by an expert valuing the damages claimed in proceeding RS 111/06.
[8] What Mr and Mrs Rodgers did do in order to comply with the order was to file an affidavit by an expert valuer, Mr Sheehan. Mr Sheehan valued the current day value of two pieces of real estate. By their pleading, at least in its current form, Mr and Mrs Rodgers contend that their damages are properly measured by the value of those two pieces of real estate – their argument being that the unconscionable conduct of the ANZ complained of in the proceedings led them to losing these two pieces of real estate which they had owned at the time of their dealings with the ANZ. Hence that expert’s opinion measures their loss.
[9] The difficulty with Ms Downes’ submission is that it carries with it the implication that the time for determination of the damages issue has arrived. It is highly doubtful that the damages that Mr and Mrs Rodgers could claim in RS111/06, assuming success in that action, is measured simply by the present day value of those two pieces of real estate. Nonetheless that is the way they frame their case and that is the argument they wish to advance, and I do not think it can be said that they have failed to comply with the order of the Court justifying the operation of the guillotine orders simply because their legal analysis might prove to be wrong.
[10] I turn then to the merits of the matter. Logically it is necessary to deal first with the oral application made to vary the original security order.
[11] It is not disputed that I have the power to set aside or vary the order for security for costs. Rule 675 UCPR provides:
“The Court may set aside or vary an order made under this Part in special circumstances”.
[12] The issue then is whether the plaintiff can demonstrate “special circumstances”. Ms Downes submitted on behalf of the ANZ:
(a)generally speaking there would need to be new material providing evidence of additional relevant facts which have arisen or been discovered since the order was made and that would require a different order from that originally made citing the judgment of McPherson JA (with whom Thomas JA and Byrne J agreed) in Goodman v Lorenzen [2000] QCA 11 at [6].
(b)there are no new circumstances shown here within the meaning of the Rules and if anything the circumstances demonstrate that it would be unjust to vary the order;
(c)no explanation has been proffered to explain why the plaintiff delayed until 15 September 2008 to apply for the variation of the order;
(d)in any case the plaintiff’s prospects of success in RS111 of 2006 is poor;
(e)even if all is assumed in the plaintiff’s favour, that is that they succeed in RS111 of 2006 and that the current day value of the two items of real estate that Mr Sheehan has valued are taken as a starting point for their damages claim, that will not put Mr and Mrs Rodgers in funds to enable them to meet the security order – there is therefore no utility to the claimed extension.
[13] Mrs Rodgers, who appeared on behalf of the plaintiff, submitted:
(a)that the plaintiff had a good case and that the evidence at trial would reveal that;
(b)that she had not brought an application sooner to vary the security order because she had not appreciated the need to do so;
(c)that she proposed amending the statement of claim to bring in further heads of loss. Those heads of loss would include a claim for the loss of an aircraft and the revenue that would have come to the Rodgers. She quantified that claim at some $400,000;
(d)that the Court ought not to bring into account the amount of costs that have been ordered against them in other proceedings as she proposed further amending the claim to seek orders that would result in Mr and Mrs Rodgers avoiding payment to the ANZ of those costs;
(e)that the Court ought not to bring into account the debts owed by Mr Rodgers to third parties which total some $154,000 as relevant to the funds likely to be available to Mr and Mrs Rodgers following the success of RS111 of 2006.
[14] I am satisfied that there is an explanation for the delay – as Mrs Rodgers said, she did not really know what she ought to do. The parties each contend that their case is a strong one. I do not intend to say anything more on that point than I already have given the stage that the proceedings have reached.
[15] As to the utility of the suggested extension there is a deal of force in Ms Downes submission. Ms Downes provided an analysis of Mr and Mrs Rodgers’ asset position, assuming success in RS111 of 2006 and accepting Mr Sheehan’s valuation of the two items of real estate as the starting point. She submitted that if one is to assume the current day values of those two items of real estate as advised by Mr Sheehan ($760,000) then in order to value the benefit likely to be derived by Mr and Mrs Rodgers it is necessary to bring into account liabilities that would still be in place if the real estate had not been sold up by the ANZ. Not only must the existing and unsatisfied judgment debt in favour of ANZ against Mr and Mrs Rodgers pursuant to the findings and orders of Muir J in the sum of $248,121.10 be brought into account but also the amounts achieved on sale of the land ($194,000) and which were applied to the debt owing to the bank (which reduced the judgement debt to $248,121.10) and the interest that Mr and Mrs Rodgers would have had to pay assuming that reduction had not occurred (about $117,000 and growing daily).
[16] Ms Downes also submitted that the amount of costs that have been ordered against Mr and Mrs Rodgers and in favour of the ANZ in other proceedings as estimated by her instructing solicitors ought to be brought into account. Mrs Rodgers submitted that she and her husband would be entitled to an order in RS 111/06 (but not yet claimed) protecting them from payment of these costs. The precise basis of that right to an indemnity is yet to be articulated however I cannot conceive of the legal basis upon which the Court that hears RS111/06 could give such an indemnity. The costs orders made against them were in proceedings S 319/05 and CA 2 of 2006. The former action was brought by Mr and Mrs Rodgers against the ANZ Bank and their solicitors alleging fraud in the conduct of the trial before Muir J, as he then was, and seeking to set aside the findings made by Muir J in those earlier proceedings. Those proceedings were struck out as an abuse of process by Dutney J and costs orders made. The latter proceedings related to an appeal from Dutney J’s decision to strike out S 319/05. In my view, admittedly provisional as I have had no argument on the matter, Mr and Mrs Rodgers will not be able to show that the incurring of those costs orders has been caused by the actions of the ANZ Bank, in the sense that the law considers causation.
[17] If one brings all these matters into account as reducing the worth to Mr and Mrs Rodgers of the two pieces of real estate then the Rodgers’ net asset position is a credit of about $30,000.
[18] There remain substantial undisputed debts owing to third parties by Mr and Mrs Rodgers in the sum of $154,000, one such debt being to the Australian Tax Office in the sum of at least $95,000. The ANZ submission is that the creditors would expect to be paid and would not accept a loan by the Rodgers to the company should take precedence. Mrs Rodgers answer is that all creditors are presently content to wait until the disposition of the proceedings and would hardly be likely to insist on payment when the merits of their cause had been established – which is the assumption behind the request to extend the time to provide security until after the trial of RS 111/06. Whilst there is some force in that submission I have no evidence as to the probable attitude of the creditors.
[19] If Ms Downes’ analysis is accepted in its entirety there is a shortfall of about $120,000, i.e. the liabilities that Mr and Mrs Rodgers have exceed the assets when one brings into account all relevant matters. Even assuming all creditors (except the ANZ) would be content for Mr and Mrs Rodgers to lend to the company the necessary funds to meet the security order there will not quite be sufficient monies to do so. Of course other funds may become available by that time, especially following a successful prosecution of the personal action.
[20] As to the assertion from the bar table that there remains a previously undisclosed claim for the loss of the aircraft and its consequent revenue, I observe two things – first that the approach that Mr and Mrs Rodgers take to this litigation causes considerable difficulties. The order made on 15 September 2008, in requiring that an affidavit be filed by an expert witness containing an opinion as to the quantum of the likely damages that could be recovered, was intended to put the Court in a position to be able to judge the worth of that action. For Mrs Rodgers to then come along to Court and state from the Bar table that she intends to amend her claim to add further claims which would significantly alter the picture, runs contrary to the letter and spirit of that order.
[21] Secondly, the lateness of notice has prevented there being any real examination of the claim and hence considerably limits the weight that can be given to it - all that I know is that Mr and Mrs Rodgers owned an aircraft, that the plaintiff in this action paid lease payments to them for the use of it, that the aircraft was apparently repossessed by BankWest under their security entitlements because of non-payment of monies under a hire purchase agreement and hence the Rodgers lost possession of the aircraft and any consequent revenue. As Ms Downes pointed out there is no evidence before me as to when these events occurred, what outgoings would necessarily be incurred to operate the aircraft in a commercial manner, what revenue has been achieved or could have been achieved from the use of the aircraft over the years since it was repossessed and fundamentally why any of this should be attributed to the ANZ Bank.
[22] In short it seems to me that the submissions made by Ms Downes have a deal of force.
[23] However, these submissions overlook the peculiar aspect of the litigation here - there are two related proceedings, covering identical liability issues, and one proceeding will go ahead irrespective of the security order. That is so because there is no obstacle to Mr and Mrs Rodgers proceeding with their personal action and it is set for hearing next February. The principal point that the ANZ makes is that it should not be exposed to ongoing, unmeritorious litigation in circumstances where they have no prospect of recovering costs should the bank be successful. The force of that submission is considerably diluted in these circumstances where the ANZ will be exposed anyway to the litigation brought by Mr and Mrs Rodgers.
[24] The bank contends that the proceedings brought by Mr and Mrs Rodgers (and for that matter by this plaintiff) “will almost certainly fail” (see paragraph 33 of the defendant’s outline of submissions). Assuming that to be so then it is difficult to see what real disadvantage the bank will suffer by varying the order for security to a time after judgment in RS111/06, provided the bank is protected from a further hearing. The effect of a security order is that all further proceedings in RS 375/007 would be stayed (r 674(b) UCPR). There is therefore no need for ANZ to incur further costs in the meantime. No relevant evidence is likely to be lost given that all liability evidence is required to be examined in RS 111/06.
[25] In the course of argument Mrs Rodgers claimed that she had given an undertaking in her affidavit that the plaintiff would not proceed with RS375/07 if Mr and Mrs Rodgers were unsuccessful in RS111/06. Closer examination of her affidavit demonstrated that her assertion was not accurate. Nonetheless she did not retreat from the position that that was in fact the view that she and her husband held in relation to that action.
[26] Whatever prejudice the bank can point to seems to me to be met by an appropriate undertaking from the plaintiff that it will not pursue RS 375/07 should Mr and Mrs Rodgers be unsuccessful in their proceedings RS 111/06.
[27] The special circumstance justifying a change to the order that I identify is that if Mr and Mrs Rodgers are successful in RS 111/06 then it almost certainly follows that the plaintiff should be successful in RS 375/07 and a key plank in the thinking underpinning the making of the security order would be gone – namely that the plaintiff’s prospects were poor. On that assumption the security order would not be stifling unmeritorious litigation but litigation shown by curial process to be a good one. That is against a background of no material prejudice to the defendant. It is true that such an analysis is not new but the undertaking is new, if it is offered in an effective form.
[28] I propose to order the extension sought by the plaintiff provided that an undertaking of the type indicated by Mrs Rodgers is entered into by the plaintiff. It follows that I must dismiss the defendant’s application to have the proceedings dismissed.
[29] I will invite the parties to prepare orders reflecting an appropriate form of undertaking. My intention is that upon that undertaking being filed with the Registrar the order made on 2 May 2008 be varied by requiring that the plaintiff give security as ordered but within 30 days of judgment in RS 111/06 assuming that judgment be in favour of the plaintiffs, and assuming that no appeal is filed by the defendant, but if such an appeal is filed that the security be paid within 30 days of any judgment of the Court of Appeal in favour of the plaintiffs.
[30] If the parties wish to be heard on the matter of costs I will do so. My present view is that it is the plaintiff who seeks the indulgence of an order varying the order already in place and which it failed to comply with, that but for the late oral application and the very recent intimation of the possibility of the undertaking from the bar table the defendant would have succeeded in its application, and there seems to be no good reason why the defendant should not have its costs on the standard basis.
[31] I direct that the defendant prepare minutes of orders reflecting these reasons and serve them on the plaintiff on or before 4 pm on 28 October 2008; that the plaintiff advise the defendant of its attitude to the proposed orders on or before 4pm on 30 October 2008; that if agreed the proposed minutes of orders be forwarded to my associate on or before 4 pm on 31 October 2008 whereupon I will make the orders; and failing agreement the matter be listed for further hearing on 3 November 2008. The order previously made requiring that the two proceedings be heard together should be vacated.
[32] I note that since preparing the draft of these reasons Mrs Rodgers has filed further material in the form of a draft unexecuted affidavit. I have perused it. It confirms my understanding of her position at the hearing concerning the proposed undertaking. It has not affected my analysis of the situation or my orders. Rather than adopting the undertaking suggested I wish to give to ANZ the opportunity of preparing a form of undertaking that will adequately protect their legitimate interests.
