Kurniadi & Ors v Loh & Ors - [2003] FMCA 24

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KURNIADI & ORS v LOH & ORS

[2003] FMCA 24

PRACTICE AND PROCEDURE – Trade practices claim – security for costs – strike out application – whether Court satisfied service effected – Rule 6.04 Federal Magistrates Court Rules – relevance of transfer from Federal Court to Federal Magistrates Court – role of pleadings in Federal Magistrates Court.

Applicants:

HERMAN KURNIADI, IWAN SALIM, CHARLEW LIAW and HERLINA LIAW, MARIATI HARDI, SOEDARJANTO AND SYLVIA POERWITA

Respondents:

SIMON THUANG CHYE LOH, ROBERT ASHMAN, STEPHEN WILLIAM MARSHALL, NEIL HENRY POLLARD and OSTRICH MEAT & MARKETING COMPANY (AUSTRALIA) LIMITED (ACN 067 005 190)

File Nos:

WZ156 of 2002 to WZ161 of 2002

Delivered on:

7 February 2003

Delivered at:

Perth

Hearing Date:

11 November 2002

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:

Mr S Jacobs

Solicitors for the Applicant:

Stewart Green Mijovich

First Respondent:

In person

Second Respondent:

No appearance

Counsel for the Third Respondent:

Mr S Forbes

Solicitors for the Third Respondent:

Paiker & Overmeire

Counsel for the Fourth Respondent:

Mr N Pakes

Solicitors for the Fourth Respondent:

Murcia Pestell Hillard

Counsel for the Fifth Respondent:

Mr S England

Solicitors for the Fifth Respondent:

Lawton Gillon

ORDERS

The notice of motion filed by the third respondent on 20 September 2002 seeking security for costs be dismissed.
The notice of motion filed by the third respondent on 20 September 2002 seeking to strike out the statement of claim be dismissed.
The notice of motion filed by the fourth respondent on 20 September 2002 seeking security for costs be dismissed.
The notice of motion filed by the fourth respondent on 20 September 2002 seeking to strike out the statement of claim be dismissed.
The costs in relation to the notices of motion referred to in Orders 1 to 4 hereof be reserved.
The notices of motion filed by the second respondent on 1 November 2002 in relation to service be dismissed with no order as to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PERTH

WZ 156 of 2002 to WZ 161 of 2002

HERMAN KURNIADI, IWAN SALIM, CHARLEW LIAW and HERLINA LIAW, MARIATI HARDI, SOEDARJANTO AND SYLVIA POERWITA

Applicants

And

SIMON THUANG CHYE LOH, ROBERT ASHMAN, STEPHEN WILLIAM MARSHALL, NEIL HENRY POLLARD AND OSTRICH MEAT & MARKETING COMPANY (AUSTRALIA) LIMITED (ACN 067 005 190)

Respondents

REASONS FOR JUDGMENT

There are number of applications before the Court as set out in the cover sheet to this judgment. The following applications had previously been filed in the Federal Court of Australia:-
Kurniadi v Simon Thuang Chye Loh & Ors – WZ156 of 2002 (formerly N1190 of 2001), Iwan Salim v Simon Thuang Chye Loh & Ors – WZ157 of 2002 (formerly N1191 of 2001), Liaw & Anor v Simon Thuang Chye Loh & Ors – WZ158 of 2002 (formerly W147 of 2002), Hardi v Simon Thuang Chye Loh & Ors – WZ159 of 2002 (formerly W148 of 2002), Soedarjanto v Simon Thuang Chye Loh & – WZ160 of 2002 (formerly W157 of 2002) and Poerwita v Simon Thuang Chye Loh & Ors – WZ161 of 2002 (formerly W168 of 2002).
All of the above applications (the transferred applications) were the subject of an order by Carr J in the Federal Court of Australia on

14 August 2002 transferring each and every one of the applications to the Federal Magistrates Court. After that date the remaining applications, that is WZ221 through to WZ227 of 2002 have been filed in the Federal Magistrates Court. This judgment relates to the transferred applications.
It is noteworthy that in the transferred applications an application was made to the Federal Court by way of notice of motion by the first, third and fourth Respondents seeking orders for security for costs. Orders were made by the Federal Court on 21 May 2002 as follows:
“1.The applicant shall within 21 days of this order pay into Court the sum of $20,000 as security for the costs of the first, third and fourth respondents to the point of time when the parties have given discovery and have had inspection of their respective documents. By way of clarification, that amount is intended to secure costs of other interlocutory steps to that point, including a portion of preparation of the defences and getting up case for hearing.
2.In the event that the applicant does not make payment in accordance with paragraph 1 of this order all further proceedings (other than any orders which may be made by the Court of its own motion) be stayed.
3.The first, third and fourth respondents have liberty to apply for further security during the course of the proceedings and this motion is stood over for that purpose.”
It is common ground that the applicants in the proceedings then before the Federal Court complied with the order for security for costs made by Carr J on 21 May 2002.
For convenience I adopt the summary of the applications subject to the transfer to this Court and indeed those subsequently filed in this Court from the Reasons for Judgment delivered by Carr J on 21 May 2002 as follows;-
“It appears from the application and the statement of claim that each applicant lives in Indonesia and is a citizen of that country. The claims made in each application appear to be very similar.
In the principal proceedings the applicant seeks damages pursuant to s 82 of the Trade Practices Act 1974 (Cth) or, in the alternative, pursuant to s 1005 of the Corporations Law against the respondents and one other respondent. In summary, the applicant claims that he was induced to enter into a contract relating to the agistment of ostriches with a company called Ostrich Meat and Marketing Co (Australia) Ltd (“the Company”). The respondents are said to be directors of the Company.
The applicant claims that he was induced into entering into the contracts with the Company by virtue of conduct which he says constituted misleading or deceptive conduct. The respondents are sued on the basis that they are said to have been involved in contraventions of the Trade Practices Act and the Corporations Law.”
After the order was made by Carr J in relation to security for costs on 21 May 2002 the Court file reveals that on 29 May 2002 an affidavit in support of a notice of motion for joinder was filed for and on behalf of the applicant, submissions of the third and fourth respondents were received then in relation to a proposal that the proceedings be transferred to the Federal Magistrates Court. A fourth respondent Neil Henry Pollard entered a notice of appearance and those applications then before the Federal Court were subject to the order to which I have already referred transferring each and every application to the Federal Magistrates Court. Hence, it can be seen from the brief examination of the Federal Court file that very little has taken place in terms of filing and preparation of documents since the order for security for costs was made by the Federal Court on 21 May 2002.
When the matter was transferred to the Federal Magistrates Court by order made on 14 August 2002 a number of documents were filed for and on behalf of the applicants in those transferred applications.
The fourth respondent in the transferred applications namely Neil Henry Pollard filed a notice of motion on 20 September 2002 seeking an order for security for costs (the fourth respondent’s security for costs motion). The filing of the further notice of motion would seem to be unnecessary having regard to order 3 made by Carr J on 21 May 2002 where His Honour had granted liberty to the first, third and fourth respondents to apply for security during the course of the proceedings and the motion was stood over for that purpose. In any event a further notice of motion was filed by the fourth respondent for security for costs as indicated on 20 September 2002 and although the applications had then been transferred to the Federal Magistrates Court reference was made to the Federal Court Rules rather than Rule 21.01(1) of the Federal Magistrates Court Rules 2001.
The fourth respondent relied upon an affidavit sworn by Victoria Winifred Wetherby on 20 September 2002 in support of the fourth respondent’s security for costs motion.
In that affidavit the deponent set out in some detail the estimated costs of the fourth respondent in the transferred proceedings to be $25,750. It is noted in that affidavit that the fourth respondent had previously been represented by solicitors acting for and on behalf of other respondents and as a result of a possible conflict of interest was to be now separately represented throughout the proceedings. It is on that basis that correspondence was forwarded to the solicitors for the applicants seeking consent to security of the fourth respondent’s costs in the amount of $20,000 for each applicant. The concern expressed both in correspondence and the affidavit relates to each of the applicants being overseas residents without Australian assets.
The fourth respondent also filed a further notice of motion on

20 September 2002 seeking to strike out the applicant’s statement of claim in applications WZ156 to WZ161 of 2002 inclusive (the fourth respondent’s strike out notice). In the fourth respondent’s strike out notice application is made to strike out paragraphs 4 to 27 of the statement of claim on the grounds that those paragraphs disclose no reasonable cause of action or other case appropriate to the nature of the pleading; have a tendency to cause prejudice embarrassment or delay in the proceedings; and are otherwise an abuse of the process of the Court. The affidavit sworn again by Victoria Winifred Wetherby on

20 September 2002 was filed this time in support of the fourth respondent’s strike out application.
By notice of motion filed 20 September 2002 Stephen William Marshall the third respondent seeks orders for security for costs for the third respondent’s costs in the sum of $160,000 and other consequential orders (the third respondent’s security for costs motion). In support of the third respondent’s security for costs motion an affidavit has been filed by Grant Anthony Pestell which was sworn

20 September 2002.
Also on 20 September 2002 the third respondent by way of notice of motion seeks to strike out paragraphs 4 to 27 of the applicant’s statement of claim (the third respondent’s strike out notice).
In support of the third respondent’s strike out notice an affidavit sworn by Grant Anthony Pestell on 20 September 2002 has been relied upon.
Hence by 20 September 2002 the third and fourth respondents in the transferred applications have filed further notices of motion seeking security for costs and to strike out paragraphs 4 to 27 of the relevant statements of claim. From the chronology it will be clear that there has been very little activity by those respondents in terms of Court proceedings notwithstanding the point of clarification in the orders made by the Federal Court on 21 May 2002 that the amount fixed by the Court at that time was an amount intended to secure costs for the point of time when the parties are given discovery and have had inspection of their respective documents. In the order made by the Court on 21 May 2002 His Honour further states, “By way of clarification that amount is intended to secure costs of other interlocutory steps to that point including a portion of preparation of the defences and getting up case for hearing.”
It should be noted for the sake of completeness that when the matter was first listed for directions before this Court on 5 September 2002 orders were made for the filing and serving of any applications to strike out the application and/or any applications for security for costs as both matters were foreshadowed by at least the third and fourth respondents. Those foreshadowed applications were otherwise listed for hearing on 26 September 2002.
On 26 September 2002 the notices of motion referred to by the third and fourth respondents were fixed for hearing on 11 November 2002. Directions were made in relation to filing and serving of further affidavits by the applicant in opposition to the notices of motion and an outline of submissions by the respondents together with an order that the applicant be granted leave to file and serve a further amended statement of claim on or before 16 October 2002. The applicants also relied upon an affidavit sworn by Karen Garrett on 21 October 2002 in opposition to the notices of motion.
Submissions have been received from the third and fourth respondents in relation to both the strike out and security for costs applications.
By notice of motion filed 1 November 2002 Robert Ashman the second respondent who had filed a notice of conditional appearance on

15 October 2002 seeks orders that the Court declare the originating process had not been served or that the service of the originating process in the manner alleged in the affidavits of Rashidan Bin Harum dated 28 August 2002 subject to the applicants being liable for the costs of and incidental to that service (the second respondent’s notice of motion). That second respondent’s notice of motion was supported by an affidavit sworn by Stewart Vivyan Forbes sworn 31 October 2002.
A further affidavit sworn by Victoria Winifred Wetherby on

5 November 2002 was relied upon in support of the fourth respondent’s security for costs notice and submissions on behalf of the fourth respondent’s strike out notice were filed on 5 November 2002 (comprising 20 pages).
A further affidavit sworn by Karen Garrett on 4 November 2002 was filed on behalf of the applicants. This related to the issue of service upon the second respondent. Karen Garrett also relied upon a further affidavit sworn 4 November 2002 in relation to the security for costs claimed by the third and fourth respondents. Essentially that affidavit refers to total funds of $130,000 being made available of which $40,000 have already been paid pursuant to the security for costs order of Carr J. Reference is made to costs of $32,000 being expended for and on behalf of the applicants from the remaining balance of $90,000. Further costs were anticipated to amount to $14,000 leaving a balance of funds of $44,000. It is suggested that after consultation with her clients the capacity of the applicants to raise further funds would appear limited because the financial resources appear to be exhausted. It should be noted that on 18 October 2002 the solicitors for the applicants in the proceedings transferred from the Federal Court filed a further seven applications being applications numbered WZ221 to WZ227 of 2002 (inclusive). Hence, all matters including those issued in the Federal Magistrates Court on 18 October 2002 and those transferred from the Federal Court were then before the Court when it made orders on 11 November 2002. The orders made on that day included an order that the issues of security for costs, applications to strike out and the service upon the second respondent be the subject of determination based upon written submissions unless directed otherwise by the Court. A timetable was fixed for further submissions to be filed and served by the applicant and the applicant was granted leave to file and serve further documents not exceeding “15 pages” related to those submissions. The respondents were likewise granted leave to file any further submissions by 22 November 2002. Liberty to apply was granted to the parties. In compliance with those orders further submissions were received from the applicant and the respondents.
It should be noted that a criticism has been made by the third respondent of the applicant’s submissions namely that it is said the applicants have wrongly included applications WZ221 to WZ227 of 2002 in the heading of their submissions. This no doubt arose due to the heading of the court orders made on 11 November 2002 and in the circumstances it is correct. The applications to strike out and security for costs only relate to those applications which had been the subject of transfer from the Federal Court namely applications WZ156 to WZ161 of 2002.

Security for costs

The principles of law to be applied in relation to an order for security for costs were discussed in the decision of Carr J on 21 May 2002. For convenience I accept in the present case that the applicants have an arguable or triable case. I also accept that the applications involve similar issues and that there is a likelihood that a great deal of discovery and preparation for trial on the respondents’ part will be common to all applications and ultimately evidence in one matter may be regarded as evidence in another. I further apply the principle that an order for security for costs should not be out of proportion to the amount currently the subject of the claim. A security for costs order does not as His Honour Justice Carr states provide a full indemnity even for taxed costs.
It is clear in the present case that the difficulty experienced by Carr J in estimating the costs continues to be a difficulty for this Court save and except that upon transfer it is hoped that the costs will be reduced.

A further reduction may occur in terms of any agreement the parties may reach regarding the appropriate conduct of the hearing including the use of evidence in one application being applied in other applications. Likewise it seems that there is potential for the respondents to provide joint discovery.
It is of concern to the Court that since the last order was made for security for costs apart from the notices of motion there has not been a great deal more documentation filed and relied upon by the respondents. Instead shortly after transfer to this Court the notices of motion were filed by the third and fourth respondents seeking the security for costs.
A great deal of effort has been taken by all parties to prepare very detailed affidavits concerning estimates of costs.
Security for costs however in my view should not provide a barrier to litigation even in the circumstance of the present case where it is clear that the applicants are resident overseas and there is very little evidence of assets being held by any of them in Australia. It is also clear that the costs associated with this action are significant for all parties.
The fact that the matter has been transferred to this Court is relevant both in terms of considering the application for security for costs and any strike out application. It is relevant to note again what has been stated by Carr J in the Reasons for Judgment on 14 August 2002 whereby he decided to transfer the applications to this Court. His Honour stated,
“If each proceeding is transferred to the Federal Magistrates Court I consider that it is likely to be heard and determined at significantly less cost and more convenience to the parties than if it is not transferred. My impression of the proceedings in the Federal Magistrates Court is that they are conducted with significantly less formality than in this Court – see O’Neill v Medical Benefits Fund [2002] FCAFC 188 at [13] and [14].”
In the Federal Magistrates Court an application for security for costs may be made under Rule 21.01 and that rule provides as follows:
“On application by a Respondent the Court may order the Applicant to give the security that the Court considers appropriate for the Respondents costs of the proceeding.”
Hence there is no significant difference in the matters to be considered in my view by this Court compared with the Federal Court. However, the factors taken into account in the transfer to this Court by the Federal Court are relevant, as indeed it is the practice of this Court to endeavour to provide a quicker and less formal process for applications of this kind. It is relevant to have those matters in mind when considering the current applications by the third and fourth respondents. It is also noted that there may be some further consideration given to the hearing of a number of applications which may be regarded as representative and the outcome of which may be regarded by the parties as binding in so far as least findings of fact and law are concerned on other applications.

As a matter of fairness it should be noted that the third respondent and fourth respondent have sought to apply the relevant section of the Federal Magistrates Court Act and Rule 21.01 of this Court’s Rules.
It is clear that in the exercise of discretion the Court needs to take into account the possible inability of the applicants to meet the costs of the successful respondents. On the other hand I take into account the affidavit evidence relied upon by the applicants in relation to the current financial circumstances and at this stage I am satisfied that it would be inappropriate to make a further order for security for costs over and above that order reasonably made by Justice Carr.
I note the issues raised by the very detailed submissions for and on behalf of both the third and fourth respondents. However, in my view both the transfer to this Court and the yet to be determined procedure which may assist in the reduction of costs of the hearing in this Court are matters which need to be properly taken into account and if necessary further application can be made closer to the hearing date.
Whilst I accept the submission that it is undesirable to periodically revisit the issue of security for costs it is likewise undesirable for applicants to face costs and expense of meeting such application too frequently which otherwise draws on limited resources to prepare and finalise the matter for hearing. I accept that there are potentially significant costs which all parties may incur though in my view the costs should be a matter which the parties will address when discussing and reaching agreement if possible as to the most cost efficient method of obtaining discovery, completing interlocutory steps and preparing the matter for trial including the use of evidence in one application to apply in another or indeed giving consideration to the prospect of certain applications being regarded as what might be described as “test cases”.
In the circumstances exercising my discretion and having regard to the principles and authorities to which I have been referred it is my view that it is not appropriate at this stage to make any further order for security for costs.
It follows therefore that the notices of motion by the third and fourth respondents for security for costs filed 20 September 2002 should be dismissed.

Strike out applications

Both the third and fourth respondents have referred in considerable detail to the paragraphs in the statement of claim which it is understood equally apply to what is now the amended statement of claim filed

18 October 2002. It is noted that there have been some amendments to that document but they are not sufficient to detract from the submissions which were of course based upon the earlier statement of claim.
It is important to note that in the Federal Magistrates Court pleadings are not a matter allowed as of right. The Court does not follow the practice and procedure of superior Courts in relation to pleadings generally. In trade practices matters whilst I have allowed pleadings in many cases it does not and should not mean that the purpose of those pleadings is anything other than providing an opportunity for the parties to at least make some assessment of the case and that those pleadings disclose the case. It is clear both before me and I note before Carr J that there was at least sufficient to enable the Court to determine the general nature of the claim and the specific complaints of the applicants.
The Federal Magistrates Court is able to proceed with this matter simply on affidavit evidence or otherwise and is not required to allow pleadings at all. It would be therefore inconsistent with the less formal and overall objective of a speedy hearing for this Court to embark upon a detailed analysis of the amended statement of claim in the manner advanced for and on behalf of the third and fourth respondents. In particular whilst reference is made to the language of the amended statement of claim being imprecise and/or vague and/or not providing sufficient and further particulars of the claim, it seems to me that those matters can be dealt with in directions for the trial of the action which would include that the parties file and serve appropriate affidavit evidence.
I am further satisfied that if after discovery and the filing of appropriate affidavit evidence there is further uncertainty then a request can be made for particulars though it should be noted that this would not necessarily involve further undue expense to the parties but rather a genuine attempt to identify specific provisions of the Trade Practices Act to be relied upon in this matter and the basis upon which the applicants seek to rely upon those provisions.
Having considered the amended statement of claim in detail I am satisfied at the very least it provides a basis upon which the action can be argued for and on behalf of the applicants pursuant to the provisions of the Trade Practices Act referred to therein and in particular the representations or what is described and/or what is described as the “two omissions” provides sufficient material upon which the respondents ought to be able to make an assessment of the case against them.
By declining to embark upon a detailed analysis of the pleadings in the manner advanced by the third and fourth respondents it is my view that Court is acting in a manner consistent with the basis upon which the applications have been transferred from the Federal Court to this Court. If the Court were to embark upon the detailed and somewhat technical approach proposed by the respondents then there would be great difficulty in the matter proceeding to trial. If I were minded to analyse in detail the pleadings in the manner sought by the respondents then it seems to me that in the circumstances an alternative remedy might be to make an order that the application not proceed on pleadings but rather by way of affidavit. I shall resist making that order at this stage and propose making further directions regarding the filing and service of a defence or any difficulties responding to the amended statement of claim as pleaded can be clearly identified by the respondents in the preparation of their defences.
Accordingly in my view it is inappropriate to make an order striking out the offending paragraphs of the amended statement of claim. I am mindful of the fact that a strike out application is a matter which should be regarded carefully and should only be applied in those cases where it is plain and obvious that to do so would be appropriate. I am not satisfied in the circumstances of the present case that it would indeed be appropriate.
For those reasons the third and fourth respondents’ notices of motion filed 20 September 2002 should be dismissed.

Second respondent’s notice of motion — service

The notice of motion filed 1 November 2002 by the second respondent deals with the issue of service as described in paragraph 19 of this judgment. It is noted in relation to service that there are two affidavits relied upon by the applicants in support of service. The first is an affidavit affirmed by Karen Garrett on 21 October 2002 and a second affirmed on 4 November 2002.
On a proper analysis of those documents I accept that there is insufficient which would satisfy the Court that there has been personal service of a kind required by the Court Rules. No application has been made either for substituted service or leave to effect service outside the jurisdiction prior to the attempts being made in accordance with the affidavits to which I have referred.
I have taken into account the affidavit in support of the second respondent’s notice of motion sworn by Stewart Vivyan Forbes on

31 October 2002. In my view there is a great deal of force in the criticism in that affidavit and annexed correspondence of the method of service attempted for and on behalf of the applicants.
In the circumstances however the Court needs to further consider whether it should then exercise its discretion in relation to service which is provided in Rule 6.04 of the Federal Magistrates Court Rules. Relying upon the affidavits to which I have referred of Karen Garrett, whilst I am not satisfied that there has been personal service in a conventional sense or indeed that there has been any application for substituted service, it is my view on the material before me that it is appropriate to find that the second respondent has been satisfactorily served with the appropriate applications. He now has a solicitor acting for and on his behalf unless there be any doubt about the service of documents then I would expect that any request for further documents should be met promptly by the applicants to ensure that the second respondent and/or his legal advisers are in possession of all relevant documents. In the circumstances I am prepared to conclude that the application and other documents have now been served upon Mr Ashman and he is properly a party to the proceedings.
Given the failure to apply at an early stage for substituted service and/or to seek leave for further service outside the jurisdiction in my view it is appropriate that the notice of motion of the second respondent filed 1 November 2002 be dismissed and that there be no order as to costs. The issue of costs incurred by the applicants in relation to attempts to serve the second respondent may be dealt with at a later stage by the Court and liberty is reserved to the second respondent to make submissions in relation to those costs at the appropriate time after due consideration of the material.

Conclusion

It is proposed to list the applications for further directions hearings with a view to making the necessary arrangements so that a trial can be arranged at the earliest possible date. The costs of the third and fourth respondents notices of motion to strike out and seek security for costs will be reserved.
It is not appropriate for the Court to otherwise deal with the other matters raised by the applicants in their submissions which are not the subject of the notices of motion.

I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 7 February 2003