CON-PAC Systems (Aust) Pty Ltd v Wijeyewardene
[2006] FMCA 462
•5 April 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CON-PAC SYSTEMS (AUST) PTY LTD v WIJEYEWARDENE | [2006] FMCA 462 |
| TRADE PRATICES – Security for costs – issues of delay and frustration of litigation – application dismissed. |
| Federal Magistrates Act 1999 (Cth) Federal Magistrates Court Rules 2001 Trade Practices Act 1975 (Cth) Fair Trading Act 1999 (Vic) Family Law Act 1975 |
| Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3ACLR133 Equity Access Ltd v Westpac Banking Corporation (1989) APTR 50 |
| Applicant: | CON-PAC SYSTEMS (AUST) PTY LTD |
| Respondent: | KALUTARA ARATCHIGE GAMINI WIJEYEWARDENE |
| File number: | MLG1039 of 2004 |
| Judgment of: | Hartnett FM |
| Hearing date: | 3 April 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 5 April 2006 |
REPRESENTATION
| Counsel for the Applicant: | Mr S Stuckey |
| Solicitors for the Applicant: | Zervos Lawyers |
| Counsel for the Respondent: | Mr P H Clarke |
| Solicitors for the Respondent: | Frenkel Partners |
ORDERS
The application filed 31 March 2006 is dismissed.
The respondent pay the costs of the applicant as agreed and failing agreement as determined by the Court.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG1039 of 2004
| CON-PAC SYSTEMS (AUST) PTY LTD |
Applicant
And
| KALUTARA ARATCHIGE GAMINI WIJEYEWARDENE |
Respondent
REASONS FOR JUDGMENT
By application filed 31 March 2006 the respondent has sought the applicant give security for the costs of the respondent and that the proceeding against the applicant be stayed until security is given. The application is supported by affidavit sworn by Mr Mark Gentile Fiorenti and filed on 31 March 2006.
The application was returnable on the first day of the final hearing in the proceedings. The proceedings were initiated on 10 August 2004 and were first listed for a final hearing date of 7 April 2005. Thereafter and by consent a further final hearing date in August 2005 was vacated with the matter finally commencing this day. The application for security for costs is therefore made very late in the day and could have the effect of vacating the hearing dates at short notice which is a difficulty for Court administration. It is opposed by the applicant.
Turning to s.80 of the Federal Magistrates Act 1999 (Cth) the provision is as follows:
Section 80 Security for costs
80(1) [Exclusion of family proceedings] This section does not apply to family law or child support proceedings.
Note: See section 117 of the Family Law Act 1975 in relation to family law or child support proceedings.
80(2) [Security for costs] The Federal Magistrates Court or a Federal Magistrate may order an applicant in a proceeding in the Federal Magistrates Court to give security for the payment of costs that may be awarded against him or her.
80(3) [Matters re security] The security is to be of such amount, and given at such time and in such manner and form, as the Federal Magistrates Court or Federal Magistrate directs.
80(4) [Variation of security] The Federal Magistrates Court or a Federal Magistrate may:
(a) reduce or increase the amount of security ordered to be given; and
(b) vary the time at which, or manner or form in which, the security is to be given.
80(5) [Power to dismiss or stay] If security, or further security, is not given in accordance with an order under this section, the Federal Magistrates Court or a Federal Magistrate may order that the proceeding be:
(a) dismissed; or
(b) stayed until security or further security is given in accordance with the first mentioned order.
80(6) [Other provisions not affected] This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the giving of security.
Rule 21.01 of the Federal Magistrates Court Rules 2001 provides relevantly that the Court may order the applicant to give the security that the Court considers appropriate for the respondent’s costs of the proceeding.
The proceedings are a claim made pursuant to ss.52, 51AC and 51A of the Trade Practices Act 1975 (Cth) and ss.4, 7 and 9 of the Fair Trading Act 1999 (Vic). The origins of that claim are a request by the respondent on behalf of the company Nature’s Own Brands Pty Ltd in or about August 2003 to the applicant to provide a quotation to supply a conveyor system for a tea bag line.
This application is made on the basis of the apparent impecuniosity of the applicant as firstly revealed to the respondent in a Baycorp Advantage Multipower Express Credit Search of the applicant conducted by the solicitor of the respondent and as secondly set out in paragraph 47 of the affidavit of Mr Kerry Filidis, a director of the applicant, sworn the 18 March 2006. Such search was not conducted until 16 March 2006 despite the respondent having opportunity to conduct that search at any earlier time. The paragraph in the affidavit of Mr Filidis said to be of concern to the respondent are as follows:-
47. In constructing the conveyor system the applicant incurred liabilities in the sum of $185,341.87 of which I have paid $100,547.53. I still owe $84,794.34 to various Creditors.
The applicant continues to repay $660.00 per month on the loan that remains outstanding in the sum of $65,000. I merely meet the interest repayments as I have been in arrears. Now produced and shown to me and marked “KF20” are true copies of the invoices or other demands for payment received from each of the contractors or suppliers. Now produced and shown to me and marked “KF 21” are true copies of the cheque stubs and bank statements disclosing the payment of those amounts.
There is no evidence before me of notice of any applications of this type other than correspondence dated 15 February 2005 from the respondent’s solicitors to the applicant’s solicitors expressing a concern about the financial viability of the applicant - an expressed concern which might have lead it to conduct a credit search at an earlier time. Notice of this application was given to the applicant on the date of filing being the last working day before the hearing commenced. By that time the applicant’s investment in this litigation is prejudiced. Counsel for the applicant concedes that the applicant has outstanding judgment creditors and is in financial difficulty. To the present time however those creditors have not taken further action albeit the first of the judgments entered against the applicant was in 2003.
The consideration of whether to make an order for security for costs is a discretionary matter. This application has been made after considerable delay and with no forewarning. Whilst I am satisfied there is not insignificant risk that the applicant if unsuccessful may not have the ability to satisfy a costs order I have determined that the applicant’s shortage of funds may have been brought about as a consequence of the respondent’s conduct of which the applicant complains and which includes a default judgment obtained by the applicant which is incapable of execution in any meaningful way. As such, it is unfair to require the applicant to provide security for costs (Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3ACLR133).
Furthermore, I am satisfied that the applicant’s claim is bona fide and that if an order were to be made for the provision of security for costs it is very likely the litigation will not proceed and a reasonably arguable claim will be defeated.
I have considered the above being matters identified for consideration in an application of this type by Hill J in Equity Access Ltd v Westpac Banking Corporation (1989) APTR 50, 631 at 50-635. Having regard to the facts of this case it would not be a proper exercise of discretion to make an order as sought by the respondent. I will dismiss the application and costs will follow the event.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Hartnett FM
Associate: Tracey Jones
Date: 4 April 2006
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