Esteem Holdings Pty Ltd as trustee for the Esteem Trust v Caratti [No 2]
[2012] WASC 391
•24 OCTOBER 2012
ESTEEM HOLDINGS PTY LTD AS TRUSTEE FOR THE ESTEEM TRUST -v- CARATTI [No 2] [2012] WASC 391
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 391 | |
| Case No: | CIV:1372/2011 | 11 OCTOBER 2012 | |
| Coram: | MASTER SANDERSON | 24/10/12 | |
| 6 | Judgment Part: | 1 of 1 | |
| Result: | Springing order made | ||
| B | |||
| PDF Version |
| Parties: | ESTEEM HOLDINGS PTY LTD AS TRUSTEE FOR THE ESTEEM TRUST ALLEN BRUCE CARATTI WEDGEPOINT PTY LTD |
Catchwords: | Practice and procedure Application for springing order where failure to provide security for costs when ordered to do so Turns on own facts |
Legislation: | Nil |
Case References: | Dallas Development Corporation Pty Ltd v Western Australian Land Authority [2000] WASCA 49 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ALLEN BRUCE CARATTI
First Defendant
WEDGEPOINT PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Application for springing order where failure to provide security for costs when ordered to do so - Turns on own facts
Legislation:
Nil
(Page 2)
Result:
Springing order made
Category: B
Representation:
Counsel:
Plaintiff : Mr P G McGowan
First Defendant : Mr D H Solomon
Second Defendant : Mr D H Solomon
Solicitors:
Plaintiff : Chris Stokes & Associates
First Defendant : Solomon Brothers
Second Defendant : Solomon Brothers
Case(s) referred to in judgment(s):
Dallas Development Corporation Pty Ltd v Western Australian Land Authority [2000] WASCA 49
(Page 3)
1 MASTER SANDERSON: On 11 September 2012 on the application of the defendants I ordered the plaintiff provide security for the defendants' costs in an amount of $100,000. Security was to be provided within 14 days. I also granted liberty to apply. The security sum has not been paid and pursuant to the liberty granted the defendants have applied for the following order:
1. Unless the sum of $100,000 is paid into Court by the plaintiff within 7 days of this order as required by the order made on 11 September 2012:
1.1 The action be dismissed; and
1.2 The plaintiff pay the defendants' costs of the action including reserved costs, to be taxed.
3 At the hearing of the defendants' application for security for costs no argument was put that an order for security would stultify the proceedings. It was open to the plaintiff to make such a submission but it did not do so. Further at the conclusion of the hearing I specifically asked counsel how long the plaintiff would want to make the security payment. No submission was made to the effect a lengthy delay was required for any particular reason. Nothing was said which indicated payment could not be made within the time specified.
4 In his affidavit Mr Pollock says that the plaintiff needs until 31 January 2013 to make the payment into court - that is three and a half months after the order was made. It is clear the plaintiff does not have the funds to make the payment as matters stand at present. What Mr Pollock proposes is as follows.
5 Mr Pollock has a 'colleague' Annette Kuhnert who is a director of Buildline Pty Ltd. Buildline Pty Ltd is currently finishing a subdivision in the Stirling area. The subdivision comprises 13 lots three of which have been sold but not yet settled. In his affidavit Mr Pollock gives details of these three lots.
6 The first is lot 801 Potenza Avenue, Stirling. This lot has been sold for $405,000 but is subject to finance. Although the finance was to have been approved by 15 October 2012 it had not been approved to
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- Mr Pollock's knowledge when he swore his affidavit on 17 October 2012. So the settlement may or may not proceed.
7 The second property is lot 802 Potenza Avenue, Stirling. This lot has been sold for $410,000 and it would appear this sale is unconditional. It should settle on 25 October 2012. Based on the evidence lead by Mr Pollock there is no reason to doubt the settlement will take place.
8 The third sale is lot 803 Potenza Avenue, Stirling. Again the sale price is $410,000 but it is subject to finance. It would appear that it is also subject to foreign investment review board approval and that approval has been obtained. There is no indication whether or not finance has been approved.
9 What Mr Pollock proposes is this. The combined sales value of the three lots is $1.225 million. Approximately $30,000 will be deducted from each of the three settlement figures to cover the agent's fees and other expenses pertaining to each sale. That will leave net proceeds of sale of approximately $1.1 million. Two secured creditors are then to be paid leaving 'an approximate surplus amount of between $300,000 and $400,000'. Mr Pollock says Ms Kuhnert has confirmed that $100,000 of the surplus funds will be paid into court on behalf of Esteem Holdings Pty Ltd. Mr Pollock does not anticipate it will be possible to make this payment until 31 January 2013.
10 All of this is highly unsatisfactory. The plaintiff was given ample time to put all of its evidence before the court prior to the hearing of the application for security for costs. All of this new material could have been put on before the hearing. There is no explanation as to why that was not done. Nor has any party who stands behind the plaintiff (and it should be remembered it is trustee for the Esteem Trust) undertaken to meet the defendants' costs of the action. There is no detail as to how Ms Kuhnert relates to Mr Pollock - the statement they are 'colleagues' is close to meaningless. While two of the Potenza Avenue sales seem likely to take place the third is very doubtful. There is no explanation as to what happens if the sales do not take place.
11 Leading on from all that there seems no guarantee that Ms Kuhnert will necessarily make the payment on behalf of the plaintiff. There is nothing in the evidence to suggest she has any direct interest in the plaintiff. The evidence does not explain why she, an apparent stranger, should be prepared to put into court a significant proportion of the profits of these three sales. A company search of Buildline Pty Ltd which
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- appears as annexure JKP2 to Mr Pollock's affidavit shows that it is a $2 company. No other detail as to its financial position is provided. The best interpretation that can be placed on Mr Pollock's evidence is he has a pious hope Buildline Pty Ltd through the agency of Ms Kuhnert will make payment of the security at some time well into the future.
12 In the course of his submissions counsel for the defendants referred to the decision of the Full Court in Dallas Development Corporation Pty Ltd v Western Australian Land Authority [2000] WASCA 49. This case was an application for leave to appeal from an order of a master. The master had made a springing order consequent upon the failure of the applicant to comply with a security for costs. It is to be noted there had been a delay of six months from the making of the order to the making of the springing order.
13 The applicant's argument was no springing order should have been made. The court dismissed the application. In giving his reasons Templeman J said:
The springing order was not sought because the action was not being pursued with due diligence. It was sought because the applicant had failed to comply with a court order made some six months earlier and had not, in the interim, sought any indulgence from the court or sought to explain the reasons for its inability to comply with the order when it was well in breach [25].
14 It is also interesting to note the comments of Wheeler J. Her Honour said:
I agree that the application should be dismissed for the reasons given by his Honour Templeman J, and particularly in view of the limited evidence before us as to what, if anything, was or might have been said to the Master about the applicant's efforts to obtain security and the likely prospects of any success following those efforts. Indeed I note that it seems to me, as his Honour has remarked, there is limited evidence before us as to what efforts have been made and as to the current likelihood of obtaining adequate security [28].
15 There is a material difference between the Dallas decision and the present circumstances. Whereas in the Dallas decision there had been a delay of six months here the delay is a matter of weeks. Moreover some efforts have been made to explain how security will eventually be provided. But the point to be drawn from the Dallas decision is a springing order is not inappropriate. Moreover the Dallas decision is now some 13 years old. A rather more robust approach to case management now applies.
(Page 6)
16 In the circumstances I am satisfied a springing order ought be made and the plaintiff ought not be given the indulgence it seeks. The security ought be provided by 9 November 2012. There will be a springing order to that effect. The orders I will make are:
1. Unless the sum of $100,000 is paid into court by the plaintiff by 4.00 pm on 9 November 2012:
1.1 the action be dismissed; and
1.2 the plaintiff pay the defendants' costs of the action including reserved costs to be taxed.
2. The plaintiff pay the defendants' costs of this application.
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