Hera Project Pty Ltd v Woolworths Ltd

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FEDERAL COURT OF AUSTRALIA

Hera Project Pty Ltd v Woolworths Ltd [2024] FCA 1339

File number(s): VID 335 of 2021
Judgment of: MCELWAINE J
Date of judgment: 21 November 2024
Catchwords: PRACTICE AND PROCEDURE - security for costs - failure to provide security as ordered - looming trial date - application to dismiss proceeding - competing applications to discharge security or extend time for its provision - no satisfactory evidence about mechanisms to provide security if time is extended - unsatisfactory history of non-compliance - cascading uncertainties - proceeding dismissed 
Legislation:

Federal Court of Australia Act 1976 (Cth) ss 37M, 37N, 37P, 56(3), 56(4)

Federal Court Rules 2011 (Cth) r 19.01(c)

Federal Court Rules 1979 (Cth) O 35A r 2(1)

Cases cited:

AON Risk Services Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27

Bell Wholesale Ltd v Gates Export Corporation (No 2) (1984) 2 FCR 1

Hera Project Pty Ltd v Bisognin (No 3) [2017] VSC 268

Idoport Pty Limited v National Australia Bank Limited [2002] NSWSC 18

Smart Company Pty Ltd (in liq) v Clipsal Australia Pty Ltd (No 6) [2011] FCA 419

Spencer v The Commonwealth (2010) 241 CLR 118

Sunshine Energy Australia Pty Ltd v Youssef [2023] FCA 189

Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [2001] FCA 1603
Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 102
Date of hearing: 15 November 2024
Solicitor Advocate for the Applicant: L Warren
Solicitor for the Applicant: William Murray Solicitors
Counsel for the Respondent: M Robins KC with A Golding
Solicitor for the Respondent: Ashurst

ORDERS

VID 335 of 2021
BETWEEN:

HERA PROJECT PTY LTD

Applicant
AND:

WOOLWORTHS LTD

Respondent

ORDER MADE BY:

MCELWAINE J

DATE OF ORDER:

21 NOVEMBER 2024

THE COURT ORDERS THAT:

1.The applicant’s interlocutory application filed 13 November 2024 is dismissed.

2.The proceeding is dismissed pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth) and r 19.01(c) of the Federal Court Rules 2011 (Cth);

3.I will hear the parties as to costs and application of the security amounts previously paid by the applicant.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

MCELWAINE J:

  1. The trial of this proceeding is listed to commence on 2 December 2024, with a 10-day estimate. The date was fixed pursuant to orders made on 4 March 2024.  A series of orders made on 27 May 2024 fixed a timetable for witness statements, the attendance before a Registrar to agree and settle a chronology of material events, a statement of agreed facts, a list of issues for determination of the trial and the common documents for the trial to be tendered without objection.  The orders also provided for expert conclaves, the preparation and filing of a comprehensive Court book and the provision of written opening submissions.

  2. The first order made on that day…

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Details
Case
[2024] FCA 1339
Decision Date

CaseChat Overview and Summary

Hera Project Pty Ltd sought to pursue a proceeding against Woolworths Ltd, but faced issues with providing security for costs as ordered. Despite being given multiple opportunities, Hera Project Pty Ltd failed to comply with the security orders, leading Woolworths Ltd to apply for the dismissal of the proceeding. The matter was heard by the Federal Court of Australia. The legal issues at hand involved the consequences of Hera Project Pty Ltd's failure to provide the required security for costs and whether this warranted the dismissal of the proceeding. The court had to consider whether the non-compliance with security orders justified dismissal under the Federal Court of Australia Act 1976 and the Federal Court Rules 2011.

The Federal Court determined that Hera Project Pty Ltd's history of non-compliance with court orders, combined with their current inability to provide security for costs, justified the dismissal of the proceeding. The court found that the applicant had not provided any satisfactory evidence about mechanisms to provide the security if time was extended. Given the cascading uncertainties and the looming trial date, the court concluded that the proceeding should be dismissed. The court emphasised that the applicant was presumed insolvent and had paid significant sums in legal fees without any guarantee of additional funding. Consequently, the court dismissed the proceeding and directed the parties to address the costs and the application of security amounts previously paid by the applicant.

The final orders of the court were that the interlocutory application filed by Hera Project Pty Ltd on 13 November 2024 was dismissed, the proceeding was dismissed pursuant to s 56(4) of the Federal Court of Australia Act 1976 and r 19.01(c) of the Federal Court Rules 2011, and the parties were to be heard regarding costs and the application of security amounts previously paid by Hera Project Pty Ltd. The entry of these orders was to be dealt with under Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The applicant’s interlocutory application filed 13 November 2024 is dismissed.

2. The proceeding is dismissed pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth) and r 19.01(c) of the Federal Court Rules 2011 (Cth);

3. I will hear the parties as to costs and application of the security amounts previously paid by the applicant.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

The applicant failed to pay the two outstanding costs orders by 6 November 2024, despite the representation of Mr Blythman in his correspondence of 25 October 2024. Also, on that day, the respondent served an expert report from a valuer and on 7 November 2024, a supplementary expert report from the valuer.Relevant evidence from Angellique There is much material in the evidence of Angellique that is objectionable, was objected to and which objections I upheld. A considerable portion of her affidavit is drafted in the form of submissions and is not confined to relevant and admissible statements of fact. As this is an interlocutory matter, Angellique was entitled to depose to matters of information and belief, by disclosing the sources. To an extent she did so. No application was made to cross-examine her. Her evidence discloses the following. Nickolaos died suddenly. His funeral was held on 6 September 2024. The Greek Orthodox religion traditionally provides for a morning period of 40 days, which concluded on 13 October 2024. There is no explanation why in that period urgent steps could not have been taken to appoint her as a director and to follow up on the Sandhurst land contract. Angellique and her husband have some knowledge relating to this proceeding and personally contributed unspecified amounts of money to the applicant to fund the development. Nickolaos died intestate, and did not have any substantial assets or income, save for an interest in the Sandhurst property. Angellique does not consider that it will be possible to proceed with the trial commencing on 2 December 2024 because the applicant seeks to rely on further (unspecified) evidence, a complaint is made by reason of the late filing of certain evidence by the respondent, the time for compliance with a number of the procedural orders made on 27 May 2024 has passed (without compliance) and the applicant will need to “organise its own funding to conduct the proceeding” and to comply with the security orders, if they are not varied. There is a proposal to seek litigation funding. Angellique contends that when the security orders were made, the applicant was “unable to submit” that in consequence the proceeding would be stultified. She gives as the reason that Nickolaos “was then hopeful” that the orders would be satisfied. The position is now that the applicant’s impecuniosity prevents it from satisfying the security orders and they operate to stultify the proceeding. To date, the applicant has paid approximately $642,000 in its own legal fees to advance the proceeding, there is an estimate of $350,000 or more to prepare for the hearing and to this must be added the daily hearing fees of approximately $60,000 as invoiced by the Court on 7 November 2024, transcript costs of approximately $15,000, the outstanding costs orders and the requirement to pay security of $550,000. The short point is the applicant is in no position to fund the cost of this proceeding itself, which is self-evidently so because it is now a corporation that is presumed insolvent. At best, there is an expectation that the applicant may receive some funds from the arrangements concerning the Sandhurst property or may obtain some form of litigation funding.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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