Billinudgel Pastoral Co Pty Ltd v Westpac Banking Corp
[1998] FCA 576
•29 MAY 1998
FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE - Application for extension of time for compliance with self-executing order requiring further security for costs.
Federal Court Rules O 28 r 5
FAI General Insurance Company Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Samuels v Linzi Dresses Ltd [1981] 1 QB 115 (CA)
Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388
BILLINUDGEL PASTORAL COMPANY PTY LTD, AUSTRALIAN TEA TREE ESTATES PTY LTD, COPPERFIELD PASTORAL CO PTY LTD, COLIN UEBERGANG, COLIN ROBERT UEBERGANG AND CHRISTOPHER LEWIN UEBERGANG TRADING AS C UEBERGANG & SONS (A FIRM), COLIN UEBERGANG AND CHRISTOPHER LEWIN UEBERGANG AND COLIN UEBERGANG v WESTPAC BANKING CORPORATION, LIONEL HENRY STEMP, KENNETH STRAHLEY, LINDSAY RICHARD DICKSON AND ALAN RAPHAEL TUTTLE, PHILIP ARTHUR HENNESSY AND JAMES WARWICK ARMSTRONG AND KPMG PEAT MARWICK (A FIRM)
No QG 28 of 1993
COOPER J
BRISBANE
29 MAY 1998
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG28 of 1993
BETWEEN:
BILLINUDGEL PASTORAL COMPANY PTY LTD
FIRST APPLICANTAUSTRALIAN TEA TREE ESTATES PTY LTD
SECOND APPLICANTCOPPERFIELD PASTORAL CO PTY LTD
THIRD APPLICANTCOLIN UEBERGANG, COLIN ROBERT UEBERGANG AND CHRISTOPHER LEWIN UEBERGANG TRADING AS C UEBERGANG & SONS (A FIRM)
FOURTH APPLICANTCOLIN UEBERGANG AND CHRISTOPHER LEWIN UEBERGANG
FIFTH APPLICANTCOLIN UEBERGANG
SIXTH APPLICANTAND:
WESTPAC BANKING CORPORATION
FIRST RESPONDENTLIONEL HENRY STEMP
SECOND RESPONDENTKENNETH STRAHLEY
THIRD RESPONDENTLINDSAY RICHARD DICKSON AND ALAN RAPHAEL TUTTLE
FOURTH RESPONDENTPHILIP ARTHUR HENNESSY AND JAMES WARWICK ARMSTRONG
FIFTH RESPONDENTKPMG PEAT MARWICK (A FIRM)
SIXTH RESPONDENTJUDGE:
COOPER J
DATE OF ORDER:
29 MAY 1998
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
Paragraph 1 of the order of Cooper J made on 27 March 1998 in these proceedings be varied pursuant to O 28 r 5(2) of the Federal Court Rules by deleting “1 May” in the third line and inserting in lieu “15 June”.
The costs of and incidental to the notice of motion be each parties’ costs in the proceedings.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG28 of 1993
BETWEEN:
BILLINUDGEL PASTORAL COMPANY PTY LTD
FIRST APPLICANTAUSTRALIAN TEA TREE ESTATES PTY LTD
SECOND APPLICANTCOPPERFIELD PASTORAL CO PTY LTD
THIRD APPLICANTCOLIN UEBERGANG, COLIN ROBERT UEBERGANG AND CHRISTOPHER LEWIN UEBERGANG TRADING AS C UEBERGANG & SONS (A FIRM)
FOURTH APPLICANTCOLIN UEBERGANG AND CHRISTOPHER LEWIN UEBERGANG
FIFTH APPLICANTCOLIN UEBERGANG
SIXTH APPLICANTAND:
WESTPAC BANKING CORPORATION
FIRST RESPONDENTLIONEL HENRY STEMP
SECOND RESPONDENTKENNETH STRAHLEY
THIRD RESPONDENTLINDSAY RICHARD DICKSON AND ALAN RAPHAEL TUTTLE
FOURTH RESPONDENTPHILIP ARTHUR HENNESSY AND JAMES WARWICK ARMSTRONG
FIFTH RESPONDENTKPMG PEAT MARWICK (A FIRM)
SIXTH RESPONDENT
JUDGE:
COOPER J
DATE:
29 MAY 1998
PLACE:
BRISBANE
REASONS FOR JUDGMENT
On 29 August 1997 I ordered that the first, second and third applicants provide security for costs in the sum of $150,000 and that proceedings by the first, second, third, fourth, fifth and sixth applicants be stayed until such security was provided. The security was not provided as required by the order. In consequence, on 27 March 1998 I ordered that the security ordered on 29 August 1997 be provided by 4.00 pm on 1 May 1998. In default of compliance, the applicants’ proceedings were ordered to be dismissed with costs.
On 29 April 1998 the applicants filed a notice of motion seeking, pursuant to O 28 r 5(2) of the Federal Court Rules, that the order of 27 March 1998 be varied to provide that security be provided by 4.00 pm on 12 June 1998 in lieu of 1 May 1998. The application came on for hearing on 1 May 1998. After hearing argument, the order was varied to extend the time for compliance until the delivery of these reasons, in order to prevent the default provision taking effect and bringing into operation O 28 r 5(3).
When I ordered the provision of security in August 1997 I said, in part :-
“In my opinion there has been a material change in circumstances since the making of the original order for security for costs. Whether or not the Uebergangs and the applicants were impecunious at that time, there is credible evidence that they now have access to substantial sources of money through an overseas entity. Whether or not that source is the property of any of the Uebergangs, or is controlled by them or whether it acts in accordance with their wishes or the wishes of Mr Colin Uebergang, is unexplained. I do not accept that provision of funds in excess of $1,000,000 is merely a generous gift of a friendly corporation to help out an old acquaintance. In the absence of any explanation as to the basis of the funding and the inability to cross-examine Mr Uebergang on this issue because he has not sworn any explanatory affidavit, it is open to infer that the Swiss corporation has a financial interest in the outcome of the litigation but maintains a position where it cannot be made directly liable for an order for costs in the event that the proceedings fail.
In these circumstances it is no answer to say that no further order for security will be made by the court because the natural persons interested in the corporate applicants have made themselves liable for the costs of the litigation. That they have done so is not decisive of the issue; it is but one factor to be taken into account in the exercise of the discretion whether or not to order security for costs: Gentry Bros at 415; K P Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 204; Jalpalm Pty Ltd v Hamilton Island Enterprises Pty Ltd (Cooper J, Federal Court of Australia, QG 198 of 1994, 9 June 1995 at 7 - 8).”
When I ordered, on 27 March 1998, that security be provided by 1 May 1998, I said, in part :-
“Seven months have now passed since I ordered that the first, second and third applicants provide further security. In that time no explanation has been offered for the failure to provide security, save that Mr Uebergang was in prison and Lontana was no longer providing funds. Mr Uebergang has now been released. So far as Lontana is concerned, the material relied upon to support the assertion that it is no longer funding the litigation takes the matter no further than when the matter was last before me. The open letter of 29 January 1998 from Lontana’s solicitors is a disingenuous attempt to explain Lontana’s interest in the litigation. It goes no further than to suggest that Lontana is a creditor of Mr Uebergang in respect of the advances applied to fund Mr Uebergang’s lifestyle and litigation. The letter was written at Mr Uebergang’s request, in response to what was said in my reasons of 29 August 1997, by Lontana’s Australian solicitors, clearly acting on direct instructions. In any event, as at 31 January 1997, Lontana was still providing funds to Mr Uebergang and his wife for their “living expenses”. It is also relevant to note that, apart from what Mr Uebergang told Mr Purcell, there is no evidence that Lontana has in fact ceased to provide funds to Mr Uebergang for the purposes of this proceeding. The letter from Lontana’s solicitors of 3 September 1996 requesting information about the progress of the litigation as a condition of considering Mr Uebergang’s request for further funds, does not lead to an inference that no further funds will be provided.
None of the applicants, and in particular Mr Uebergang, has gone on oath as to his, or its financial circumstances or sworn to impecuniosity or the details of it. No person having relevant direct knowledge has gone on oath to explain the link between Lontana and the applicants or the basis for the provision by it of substantial sums to Mr Uebergang and the applicants. Mr Purcell’s affidavit, based upon what he has been told by Mr Uebergang, is not sufficient. There has been no material put before me which addresses the issues raised on the last occasion namely, whether the natural person applicants are in fact impecunious or, rather, have organised their affairs so as to put their assets beyond the vicissitudes of commercial life and litigation (Shannon v Australia and New Zealand Banking Group Ltd (No 2) 2 Qd R 563; Cherry v Read (unreported, Federal Court of Australia (FC), Black CJ, Sackville and Finn JJ, 21 November 1996) at 7 - 8) and the nature of Lontana’s interest in the litigation and its failure to come forward and offer security: Sent v Jet Corporation of Australia Pty Ltd (1984) 2 FCR 201.
There has been, therefore, no acceptable explanation offered by the applicants for their failure to provide the further security since they were ordered to do so on 29 August 1997. It has not been sought to show, and nor has it been shown, that there has been a change in the applicants’ circumstances so as to justify a variation in the order for further security in favour of the applicants. Nor has such an application been filed or foreshadowed. It has not been shown to my satisfaction that an order of the kind sought by the respondents would stifle the litigation. The respondents are entitled to know with reasonable certainty, whether the litigation, commenced in 1993, is to proceed against them.”
In support of the present application, affidavits have been sworn by Colin Uebergang, Colin Robert Uebergang and Christopher Lewin Uebergang.
Mr Colin Robert Uebergang deposes that he is employed as the manager of a helicopter charter business. However he deposes that he has no property other than a $50 credit in a bank account. He attributes his present impecunious state to the circumstances the subject of the principal proceedings, and to the dissolution of his marriage in 1991.
Mr Christopher Uebergang deposes that he is unemployed, has personal effects of no more value than $500, and at the time of swearing the affidavit had $350 in the bank.
Mr Colin Uebergang, in his affidavit, deposes that he is unemployed and is being financially maintained by his wife. He swears he has no assets other than clothing and personal effects and that he has no interest in any company or any trust, either in or outside Australia.
In his affidavit Mr Colin Uebergang, for the first time sets out in detail, information as to the controller of the Swiss corporation, Lontana Société SA (“Lontana”), and the financial arrangements between himself and Lontana. According to Mr Colin Uebergang, Lontana is ultimately beneficially owned by a Mr Jamieson of Sydney, New South Wales, a personal friend of Mr Colin Uebergang. Mr Colin Uebergang, in April/May 1994, approached Mr Jamieson for a loan of $200,000 to fund these proceedings. That money was provided by Lontana, a Swiss corporation administered by Mr Peter Thornton, solicitor of Ebsworth and Ebsworth, solicitors of Sydney, New South Wales.
Mr Colin Uebergang deposes that over time, up to $830,000 has been advanced by way of loan to pay for the legal costs of these proceedings and for criminal proceedings against him and his son. He further deposes that he has attempted to obtain a further sum of $150,000 from Mr Jamieson to provide the security for costs, but has been unsuccessful in that regard; Mr Jamieson, it is said, is seriously ill and in consequence cannot, or will not, provide further funds to Mr Colin Uebergang.
In paragraph 8 of his affidavit Mr Colin Uebergang details approaches he has made to third parties to obtain funds, including a body described as “The Enterprise Council”. By letter dated 29 April 1998, Mr Geoffrey Moss, the Executive Director of The Enterprise Council, wrote to Messrs Nicol Robinson & Kidd. The letter records that Mr Colin Uebergang has sought assistance in the provision of a bank guarantee for $150,000 to satisfy the order for security for costs. The letter says, in part :-
“We require an overview of the case and a success evaluation to Mr Uebergang’s claims to present to York Private Capital Pty Ltd, a private investment bank controlled by the writer’s brother. This evaluation must include independent advice describing the success chances and negatives to Mr Uebergang’s claims.
Currently my brother is in Europe facilitating settlements for various other matters unrelated to this inquiry. It is expected he will return to Melbourne no earlier than 8 May 1998 and therefore in view of your client’s requirement we would appreciate your consideration to apply to the Court for an extension of 45 days to submit the bank guarantee in accordance to the Court requirements.”
The effect of the affidavit of Mr Colin Uebergang is that Lontana is a lender to him of $830,000 to fund this litigation and the criminal proceedings. As a source of loan funds, Lontana is no longer available and it has declined to provide the security sought. Further, that The Enterprise Council is a possible source of the security, but requires until 15 June 1998 to consider, and if satisfied that it is an appropriate case to do so, to provide the required guarantee. Mr Colin Uebergang deposes that in the event that, within that period, a bank guarantee is not obtained from this or some other source, the principal proceedings will stand dismissed because neither he, nor the other applicants, have the resources or access to the resources to provide the security ordered.
No deponent was cross-examined by the respondents to the notice of motion. The evidence in support of the application is therefore not challenged, save as to its inherent improbability and the inconsistency of it with statements made in the criminal proceedings in the District Court as to funds available to Mr Colin Uebergang.
The respondents resist the extension on the ground that there has been no material change in the circumstances of the applicants since the making of the order on 27 March 1998. Additionally, it was submitted that :-
(a)the applicants have failed to disclose the basis of the loan from Lontana to the applicants;
(b)it ought to be inferred that Lontana has funded the litigation on the basis that it would be repaid out of the proceeds recovered by the applicants;
(c)it ought be inferred that Lontana, having funded the proceedings to this stage, wishes to stand back and not expose its assets to an order for costs in respect of litigation being carried on for its benefit;
(d)the financial arrangements between Lontana and the applicants, as deposed to by Mr Colin Uebergang, are inconsistent with the version of events given to Chief Judge Shanahan in the District Court on 31 January 1997;
(e)there is no merit in the applicants’ claim that they may be able to obtain finance in the future.
The original application of the respondents to seek a self-executing order was made pursuant to O 28 r 5 of the Federal Court Rules. That rule provides :-
“5(1) Where the court orders that the applicant provide security for costs, it may order -
(a)that the proceeding on any claims by the applicant for relief be stayed until security is provided; or
(b)that if the applicant fails to comply with the order to provide security within the time limited in the order, the proceeding be thereafter stayed or dismissed.
5(2) Subject to sub-rule (3), The Court may set aside or vary any order made under this Order.
5(3) Where a proceeding stands dismissed pursuant to an order under this Order, that order shall not be set aside or varied except in special circumstances.”
The present application is brought pursuant to r 5(2). In the context, the sub-rule requires that there exist an order for security for costs and an order staying the proceedings (r 5(1)(a)), or staying or dismissing the proceedings in default of payment within a limited time (r 5(1)(b)). The discretion under sub-rule 5(2) to vary or set aside such an order is unconfined, save that it is subject to sub-rule 5(3) where the proceedings stand dismissed pursuant to an order made under sub-rule 5(1)(b). In these circumstances there is no reason to read down the discretion other than to say it must be exercised judicially.
In FAI General Insurance Company Ltd v Southern Cross Exploration NL (1988) 165 CLR 268, the High Court had before it the issue of the jurisdiction and power of a superior court to extend the time for complying with an order where the order, upon default, was self-executing and provided that the proceedings stand dismissed. The Court held that the superior court had both the jurisdiction and the power. The principal judgment was given by Wilson J and agreed in by the other members of the Court. As to the power of the Court to extend time, Wilson J said (at 283 - 284) :-
“... It is a remedial provision which confers on a court a broad power to relieve against injustice. The discretion so conferred is not readily to be limited by judicial fiat. The fact that it manifestly is a power to be exercised with caution and, in the case of conditional orders, with due regard to the public policy centred in the finality of litigation does not warrant an arbitrary limitation of the power itself, not expressed in the words of the rule, so as to deny its capacity to apply to circumstances such as those which are to be found in the present case. It would be wrong to so read the rule as to deny to a court power to prevent injustice in circumstances where the party subject to a conditional order ought to be excused from non-compliance.”
Such an approach picks up the observations of Lord Justice Roskill in Samuels v Linzi Dresses Ltd [1981] 1 QB 115 (CA) to which Wilson J referred. Roskill LJ, with whom Lawnton LJ and Sir Stanley Rees agreed, said at 126 - 127 :-
“To say that there is jurisdiction to extend the time where an ‘unless’ order has been made and not complied with is not to suggest - let this be absolutely plain - that relief should be automatically granted to parties who have failed to comply with the orders of the court or otherwise than upon stringent terms either as to payment of costs or as to bringing money into court or the like. Orders as to time, and in particular as to the time for delivery of pleadings and particulars are made not to be ignored but to be complied with. ...
.....
In my judgment, therefore, the law today is that a court has power to extend the time where an ‘unless’ order has been made but not been complied with; but that it is a power which should be exercised cautiously and with due regard to the necessity for maintaining the principle that orders are made to be complied with and not to be ignored. Primarily, it is a question for the discretion of the master or the judge in chambers whether the necessary relief should be granted or not.”
The need to bear in mind the public interest in compliance with orders as a relevant circumstance, when the issue is relief from non-compliance, was also observed by a Full Court of this Court (Wilcox, Gummow and Pincus JJ) in Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 401, 402.
It follows, in my view, that it is not incumbent upon the applicants to show changed circumstances from those existing at the time the self-executing order was made, in order to obtain a favourable exercise of the discretion under O 28 r 5(2). Obviously, if there are changed circumstances, they will be relevant to the exercise of the discretion.
The present application is not one to set aside the order for the provision of security for costs. Nor does it seek any variation of the order, other than extension of the time for compliance. If the order is extended and there is continuing non-compliance, the proceedings will stand dismissed; the affidavit of Mr Colin Uebergang acknowledges that such a result will follow. Therefore, in such a context, the relationship of Lontana to the proceeding as a creditor which will benefit from the fruits of success, is irrelevant to this application. Whilst such a circumstance was highly relevant to the question of whether an order should be made for security for costs, the only relevance of Lontana on the present application is that security was sought from it to comply with the order, but that security was refused. The evidence of the request of, and refusal by, Lontana is relevant to explain, in part, the reason for non-compliance. The failure to cross-examine Mr Colin Uebergang on that issue and the explanation he gives for the refusal not being inherently improbable, persuade me that I should accept it as a fact.
Similarly, I accept the evidence of Mr Colin Uebergang and his sons that they do not have, and have not had, personal assets or funds to provide the required security as that evidence was not challenged by cross-examination. Again this evidence goes to the explanation for non-compliance.
The submission that there has been substantial delay in attempting to obtain the security and no explanation from the applicants, other than Mr Colin Uebergang, for the delay, is a matter to be weighed against the granting of additional time. However, the clear impression over a number of applications in these proceedings, is that Mr Colin Uebergang is the driving force behind the applicants bringing and maintaining the litigation, and that the criminal prosecution against him, his conviction and incarceration until release after a successful appeal, impacted significantly on the progress of these proceedings and attempts to raise the necessary security.
I do not accept the submission that I should reject out of hand the possibility that security for costs will come from The Enterprise Council because it is “some obscure entity”. The failure to cross-examine Mr Colin Uebergang as to the circumstances of his approach to The Enterprise Council, the nature and identity of that organisation and the circumstances in which the Council came to write to the applicants’ solicitors, makes it difficult to deal with the letter at anything other than face value. On this basis, an attempt has been made to obtain the security ordered and a positive response has been obtained. The extension sought is to allow The Enterprise Council to look at the merits of the applicants’ litigation and to put the security in place, if satisfied that the claims made have substance.
These proceedings were filed in 1993. Although there is a clear public interest in bringing finality to them if the order for security is not complied with, there is nothing in the material relied upon by the respondents to show any prejudice, beyond delay, in an extension being granted until 15 June 1998. If the order is complied with, the respondents get the benefit of the security for costs order and the applicants have the opportunity to have their claims adjudicated upon by the court. If the order is not complied with, the proceedings will stand dismissed. The applicants have demonstrated, particularly since the release of Mr Colin Uebergang from prison, that they have attempted to comply with the order made on 27 March 1998 and given an explanation for their non-compliance.
I am satisfied that in the circumstances the extension should be granted.
The applicants seek an indulgence. It was unsuccessfully resisted by the respondents. The justice of the situation is that the costs should be each parties’ costs in the proceedings.
I certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper
Associate:
Dated: 29 May 1998
Counsel for the Applicants: Mr JAM Innes Solicitor for the Applicant: Nicol Robinson & Kidd Counsel for the Respondent: Mr RM Derrington Solicitor for the Respondent: Allen Allen & Hemsley Date of Hearing: 1 May 1998 Date of Judgment: 29 May 1998
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