Cleary Bros (Parramatta) Pty Limited; Parker Constructions Pty Limited; Icehot Pty Limited; Michael Francis Buggy v Commonwealth Bank of Australia; National Australia Bank Limited; Victorian Securities Corporation...
[2011] ACTSC 130
•8 August 2011
CLEARY BROS (PARRAMATTA) PTY LIMITED; PARKER CONSTRUCTIONS PTY LIMITED; ICEHOT PTY LIMITED; MICHAEL FRANCIS BUGGY v COMMONWEALTH BANK OF AUSTRALIA; NATIONAL AUSTRALIA BANK LIMITED; VICTORIAN SECURITIES CORPORATION LIMITED; BENDIGO AND ADELAIDE BANK LIMITED (NO 2) [2011] ACTSC 130 (8 August 2011)
LEGAL PROCEEDINGS – dismissal of fourth plaintiff’s action – action of fourth plaintiff abandoned by trustee in bankruptcy – action that cannot be continued in any form should be dismissed – action of fourth plaintiff against all four defendants dismissed.
LEGAL PROCEEDINGS – application by plaintiffs for adjournment of hearing of application for security for costs – new solicitor instructed two working days before hearing date – plaintiffs failed to take steps to be ready to hear the application for security for costs – application for adjournment refused.
EX TEMPORE JUDGMENT
No. SC 584 of 2006
Judge: Penfold J
Supreme Court of the ACT
Date: 8 August 2011
IN THE SUPREME COURT OF THE )
) No. SC 584 of 2006
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:CLEARY BROS (PARRAMATTA) PTY LIMITED (ACN 105 359 957)
First plaintiff
PARKER CONSTRUCTIONS PTY LIMITED (ACN 008 469 743)
Second plaintiff
ICEHOT PTY LIMITED
(ACN 085 175 867)
Third plaintiff
MICHAEL FRANCIS BUGGY
Fourth plaintiff
AND:COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124)
First defendant
ANDNATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)
Second defendant
ANDVICTORIAN SECURITIES CORPORATION LIMITED (ACN 004 496 208)
Third defendant
ANDBENDIGO AND ADELAIDE BANK LIMITED
Fourth defendant
ORDER
Judge: Penfold J
Date: 8 August 2011
Place: Canberra
THE COURT ORDERS THAT:
The action of the fourth plaintiff, Michael Francis Buggy, against all four defendants is dismissed.
The fourth plaintiff pay the costs of his action against all four defendants from 1 July 2008 until 8 August 2011.
The application for adjournment is refused, and the application for security for costs be heard immediately.
Introduction
[The plaintiffs are three companies closely associated with Mr Michael Buggy, and Mr Buggy himself. The defendants are three banks and a subsidiary company of one of the banks. The actions concern losses alleged to have been suffered by the plaintiff companies, who were engaged in mezzanine lending, when the defendants engaged in conduct alleged to have affected the plaintiff companies’ commercial operations. After trial dates had been vacated on more than one occasion, the trial began on 19 July 2010, and was adjourned part-heard on 23 July 2010. A date for resumption of the hearing was set for April 2011 but was later vacated by consent because of Mr Buggy’s bankruptcy.]
The applications
The defendants in the action have applied for an order for security for costs.
Before that application could be heard, there were two other applications to be dealt with:
(a) The defendants applied for the fourth plaintiff’s action to be dismissed following the deemed abandonment of his action by his trustee in bankruptcy.
(b) The new solicitor for the first, second and third plaintiffs applied for an adjournment of the application for security for costs.
I have decided to dismiss the fourth plaintiff’s action, and to refuse the adjournment, for the following reasons.
Dismissal of the fourth plaintiff’s action
As to the dismissal of the fourth plaintiff’s action, the matter was heard ex parte. The trustee in bankruptcy for the fourth plaintiff, Mr Buggy, was aware of the application and did not appear. Mr Buggy attended court in person and made some remarks from the gallery, but was obviously not entitled to represent the fourth plaintiff given the bankruptcy processes.
The defendants by affidavit established:
(a) that Mr Buggy’s trustee in bankruptcy had sought several extensions of the period within which to make an election under s 60(2) of the Bankruptcy Act 1966 (Cth); and
(b) that the extended period had now expired and no election had been made.
There was also affidavit evidence that the defendants’ solicitors had written to the trustee noting his oral advice that he was unaware of:
(a) any proposal to seek review under s 178 of the Bankruptcy Act of his failure to make an election;
(b) any challenge to the making of the sequestration order; and
(c) any request to assign the fourth plaintiff’s cause of action in the current matter.
There was an email reply to that letter, from the trustee. The reply did not challenge the contents of the letter, and it also noted that the trustee had been the subject of a complaint from a named company, which counsel for the defendants advised was a company claiming to be a creditor of Mr Buggy.
What counsel for the defendants did not do was to identify clearly the power under which it was appropriate for me to dismiss an action that is under s 60(3) of the Bankruptcy Act deemed to have been abandoned. No appropriate power could be identified in the Court Procedures Rules2006 (ACT).
Counsel disclaimed an application for dismissal for want of prosecution, and noted that it could not be said at this stage that Mr Buggy has failed to do anything in the proceedings that should have been done.
Counsel also disclaimed any submission that the deemed abandonment should be treated as amounting to an application by the fourth plaintiff for leave to discontinue, noting that it was too late for the fourth plaintiff to discontinue unilaterally. Counsel noted that giving leave to discontinue would not guarantee the termination of the fourth plaintiff’s action, since that would require the trustee to take further action that had already been available to him, but which he had so far failed to take.
Counsel asserted that to the extent that the rules about discontinuance were aimed at protecting the defendants in respect of costs, the defendants did not seek any such protection under an order for discontinuance.
I noted that the rules about discontinuance where there was more than one plaintiff might also be aimed at protecting other plaintiffs, and that any costs order made on dismissal would need to be carefully drafted, especially since the fourth plaintiff had only been joined as a plaintiff several years into the proceedings.
Counsel sought to rely on r 1600, which on its face gives the court unlimited power to “make any order that the nature of the case requires”. I am not at this stage satisfied that this rule is intended to have the substantive effect relied on by counsel. However, I note in case it turns out to be relevant that, for the purposes of r 1614 which deals with the effect of an order dismissing proceedings, and despite the fact that this matter is now part-heard, the dismissal order that I shall make does not follow any determination of the matter on the merits.
Counsel relied on the court’s inherent power to dismiss an abandoned action. He referred to comments made by Emmett J in Cole v Challenge Bank [2002] FCAFC 200 (Cole) at [22] that:
The trustee has evinced a clear intention not to prosecute the appeal, whether by way of discontinuance or abandonment does not much matter.
The proposition that it “does not much matter” whether the trustee has abandoned or discontinued the proceedings may be a correct statement in relation to determining the proper description of the trustee’s position. I am not convinced that it is particularly useful in trying to work out the consequences of dismissing an action that a trustee has, to use a neutral term, given up on.
In relation to the court’s inherent powers, I note also the Victorian case of Muto v Faul [1980] VR 26, in which the Full Court of the Victorian Supreme Court referred to the court’s inherent power to stay or dismiss cases that are frivolous or vexatious or an abuse of process and went on at 30:
This inherent power must extend ... to purging the Court list of cases which have not been reasonably prosecuted. (citations omitted)
I am satisfied, having regard also to the views of the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 about the importance of proper management of court resources (see for instance at [93], Gummow, Hayne, Crennan, Kiefel and Bell JJ), that an action that cannot be continued in any form should be dismissed, and that there is no reason to require the defendants to come back to the court after a sufficient time has elapsed to seek to have the matter dismissed for want of prosecution.
The defendants seek a costs order. I note both the comment in Cole at [16] that on dismissal of an action that has been abandoned, costs would ordinarily follow the event, and the absence of any challenge to the defendants’ application for dismissal.
Orders
Accordingly, I dismiss the action of the fourth plaintiff, Michael Francis Buggy, against all four defendants.
I order that the fourth plaintiff pay the costs of his action against the four defendants from 1 July 2008 until today, and note for the purpose of any taxation that the order is limited to costs properly attributable to the fourth plaintiff’s part in the action.
Application for adjournment
As to the application for an adjournment, on 7 June this year the matter was before me for a mention, and an application for security for costs was foreshadowed. Mr Michael Buggy was in the courtroom for at least part of that application and the other three plaintiffs were represented by an agent. Orders were made for the filing and serving of the application and supporting affidavits, and for the plaintiffs to file and serve any affidavits in response. Today’s hearing date was set down. It was then two months away, and it was clear that at that stage, it was the earliest date available. Counsel for the defendants also foreshadowed an application for an expedited date for completion of the part-heard trial, and it became apparent in discussion about that application that my list was effectively full until well into 2012.
This morning (Monday) the plaintiffs appeared by a new lawyer who had been instructed last Thursday. He provided affidavits from Mr Michael Buggy, the former fourth plaintiff and former director of some or all of the remaining plaintiffs, and a Mr Alan Buggy, currently an office-holder in some or all of the remaining plaintiffs.
Mr Michael Buggy’s affidavit recounted disagreements between himself and his associates on the one hand and the previous solicitor on the other hand about the appropriate contents, and the appropriate deponents, for the necessary affidavits, but gave no dates for any activity by or on behalf of the plaintiffs until late July when the previous solicitor withdrew his services. In short, there was no indication that the plaintiffs had done anything in the previous seven weeks except to argue with their last solicitor. Mr Alan Buggy’s affidavit claims that only after speaking to his new solicitor has he become aware that the court will require a statement of assets and liabilities, and says that last Thursday he instructed his accountant to prepare such a statement. The affidavit annexes a bank statement showing that one of the plaintiffs has $213,000 in its working account.
The affidavit also mentions a costs order made against the defendants said to be worth $120,000, which the plaintiffs have asked to be paid, but which has been ignored. I note, however, that those costs, which were ordered in 2006, have not been taxed and that other costs orders made against the plaintiffs, including some made by me, have apparently not been met either.
I am not satisfied that the plaintiffs made any real effort to be ready to meet the application for security for costs to be heard today. Whatever the failings of their previous solicitor, I would be surprised if the plaintiffs were unaware that their financial position would be in issue in this application and so I am not convinced that they only realised last week that they would need proper evidence of that position. The argument with the previous solicitor about who could swear the affidavits is really irrelevant to what serious evidence, as distinct from unsubstantiated assertions, would need to be brought to court for today and how that material was to be obtained.
I am also concerned that the plaintiffs’ knowledge of the listing difficulties in this court does not seem to have encouraged them to ensure that they were ready to meet the application when it was supposed to have been heard, but may instead have rendered an application for an adjournment more attractive on the assumption that if the adjournment were granted, the matter could be expected to be delayed for at least some months.
Orders
Accordingly, the adjournment sought is refused and the application for security for costs will be heard immediately.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of her Honour, Justice Penfold.
Associate:
Date: 25 August 2011
Counsel for the 1st, 2nd and 3rd Plaintiffs: Mr J Choy
Solicitors for the 1st, 2nd and 3rd Plaintiffs: Jeffrey Choy Legal
Solicitor for the 4th Plaintiff: No appearance by the fourth plaintiff
Counsel for the 1st and 2nd Defendants: Mr J Solomon
Solicitors for the 1st and 2nd Defendants: Moray & Agnew
Counsel for the 3rd and 4th Defendants: Mr T Faulkner
Solicitors for the 3rd and 4th Defendants: Middletons
Date of hearing: 8 August 2011
Date of judgment: 8 August 2011