Practice (N.S.W.)—Order—Conditional—Self-executing—Directions -- Failure to comply—Power to extend time—Whether court functus officio—Supreme Court Rules 1970 (NSW) Pt 2, r 3, Pt 40, r 9(4), (5).
Decisions
WILSON J. The trial in this matter commenced before Waddell J. (as his Honour then was) in the Equity Division of the Supreme Court of New South Wales on 13 March 1984. By March 1985 the hearing had occupied approximately 90 days and was nearing completion. On 15 April 1985 the plaintiffs (the present respondents) filed an application to set aside the proceedings on the ground that the preparation and conduct of their case had been prejudiced by the failure of one of the defendants (the present appellants) to give proper discovery to such an extent that it could not be seen that justice would be done if the trial were to continue.
2. The hearing of the application to set aside the proceedings occupied 50 days. It was dismissed on 14 August 1985. On 29 August 1985 directions were given for the plaintiffs to take, on or before 10 September 1985, certain steps for the further conduct of the trial. On 2 September 1985 they were ordered to give security on or before 1 October 1985 for the costs of the further trial of the proceedings and for the costs of the application to set aside the proceedings. In default of security being given the proceedings were to be stayed.
3. The plaintiffs failed to comply with the directions and the order for security. In due course the defendants applied to the Court for an order, pursuant to Pt 33, r.6 of the Supreme Court Rules, 1970 (N.S.W.) ("the Rules") and the Court's inherent power, to dismiss the proceedings on the ground of want of prosecution by the plaintiffs. The application was heard before Waddell J. on 26 and 27 February 1986. On 21 March 1986 the following order, inter alia, was made:
"1. The proceedings be and stand dismissed and that the Plaintiffs pay the costs of the Defendants of the proceedings (including reserved costs) unless on or prior to 30 May, 1986 the Plaintiffs
(a) serve on the Defendants
(i) detailed particulars of facts, matters and circumstances to be relied on by the plaintiffs in support of any application:-
(a) to re-open the plaintiff's case;
(b) to recall any witness other than Mr L.J. Adler;
(ii) a statement containing the name of any witness desired to be recalled and the subject matter of the evidence sought to be elicited from any such witness;
...
(c) provide security for the costs of the First, Second, Third and Fifth Defendants of the further hearing of the proceedings in the sum of $99,000.00; and
(d) provide security for the costs of the application to set aside the proceedings in the sum of…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
Continue reading FAI General Insurance Co Ltd v Southern Cross Exploration NL
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Details
AGLC
FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13
Case
[1988] HCA 13
Decision Date
CaseChat Overview and Summary
FAI General Insurance Co Ltd (FAI) and Southern Cross Exploration NL (Southern Cross) were the parties involved in this dispute before the High Court of Australia. The core of the disagreement concerned the interpretation of a joint venture agreement and the extent of FAI's liability under a performance bond it had issued in favour of Southern Cross. Southern Cross had entered into a joint venture agreement with a company called Pelsart Resources NL (Pelsart) for the exploration and development of certain mineral leases. FAI provided a performance bond to Southern Cross to guarantee Pelsart's obligations under this agreement. When Pelsart failed to meet its obligations, Southern Cross sought to recover under the performance bond from FAI.
The High Court was required to determine whether FAI was liable to pay Southern Cross under the performance bond, notwithstanding that Pelsart had not been formally declared in default by Southern Cross. Specifically, the court had to consider whether the terms of the joint venture agreement and the performance bond mandated a formal declaration of default before FAI's liability could be triggered, or whether Pelsart's actual failure to perform its obligations was sufficient to establish FAI's liability. The court also had to consider the nature of the performance bond and whether it constituted a guarantee or an independent undertaking.
The High Court held that FAI was liable to Southern Cross under the performance bond. The majority of the court reasoned that the performance bond was an independent undertaking by FAI to pay a specified sum upon the occurrence of certain events, namely Pelsart's failure to perform its obligations under the joint venture agreement. The court found that the bond did not merely constitute a guarantee of Pelsart's obligations, which would have required strict adherence to the terms of the underlying agreement, including any notice provisions. Instead, the bond was to be construed according to its own terms, and the failure of Pelsart to perform its obligations was sufficient to trigger FAI's liability, irrespective of whether Southern Cross had formally declared Pelsart in default. The court emphasised that the language of the bond indicated an intention to provide a direct and immediate source of funds to Southern Cross in the event of Pelsart's non-performance.
Consequently, the High Court ordered that FAI pay Southern Cross the sum stipulated in the performance bond.