Lighthouse Corporation Limited v Republica Democratica de Timor Leste (No 5)
[2025] VSC 319
•5 June 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S CI 2016 04287
BETWEEN:
| LIGHTHOUSE CORPORATION LIMITED (IBC 051 557) & ANOR (according to the Schedule attached) | Plaintiffs |
| and | |
| REPUBLICA DEMOCRATICA DE TIMOR LESTE & ANOR (according to the Schedule attached) | Defendants |
| (by original proceeding) | |
| AND BETWEEN: | |
| REPUBLICA DEMOCRATICA DE TIMOR LESTE & ANOR (according to the Schedule attached) | Plaintiffs |
| and | |
| LIGHTHOUSE CORPORATION LIMITED (IBC 051 557) & ORS (according to the Schedule attached) | Defendants |
| (by counterclaim) |
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JUDGE: | M Osborne J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 15 April 2025 |
DATE OF JUDGMENT: | 5 June 2025 |
CASE MAY BE CITED AS: | Lighthouse Corporation Limited & Anor v Republica Democratica de Timor Leste & Anor (No 5) |
MEDIUM NEUTRAL CITATION: | [2025] VSC 319 |
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PRACTICE AND PROCEDURE – Application to dismiss a proceeding for failure to pay security for costs – Application to dismiss proceeding for want of prosecution within the inherent jurisdiction of the Court – Whether inordinate and inexcusable delay - Discretion – Applicable principles – Prejudice – Whether substantial risk that it is not possible to have a fair trial – Whether the plaintiffs have failed to comply with Court orders - Ability to fund litigation – Idoport Pty Ltd v National Australia Bank & Ors [2002] NSWSC 18 - Farnell v Penhallurick (2010) 29 VR 727 - Imaging Applications Pty Ltd v Sun Alliance Australia Ltd [1999] VSC 230 – Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 62.04, 24.05.
PRACTICE AND PROCEDURE – Case management principles – Administration of justice - Conduct of the parties – Paramount duty – Overarching obligations - Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293 - Pentridge Village Pty Ltd (In Liq) v Capital Finance Australia (No 3) [2023] VSC 605 – Civil Procedure Act 2010 (Vic) ss 7, 16.
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APPEARANCES: | Counsel | Solicitors |
Plaintiffs/Defendants by Counterclaim | E Gisonda with S Cromb | Merton Lawyers |
| Defendants/Plaintiffs by Counterclaim | P Solomon QC with | DLA Piper Australia |
HIS HONOUR:
Introduction
By summons filed 23 August 2024, the first and second defendants and plaintiffs by counterclaim, Republica Democratica de Timor Leste and Estado da Electricidade Agua e Urbanizaco (for convenience, collectively ‘Timor Leste’), seek an order dismissing the proceeding commenced by the plaintiffs and first and second defendants by counterclaim, Lighthouse Corporation Limited and Lighthouse Corporation Pty Ltd (for convenience, collectively ‘Lighthouse’), pursuant to r 62.04 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) or the inherent jurisdiction of this Court. Further, and consequent upon any such order of dismissal, Timor Leste seeks leave of the Court pursuant to r 25.02(3)(b) of the Rules to discontinue its counterclaim.
In support of the application, Timor Leste relies on four affidavits of its instructing solicitors: three affidavits of Liam Thomas Prescott dated 20 August 2024, 7 February 2025 and 7 April 2025, together with accompanying exhibits; and the affidavit of Wei Xin Le dated 14 April 2025, together with an accompanying exhibit. Timor Leste also relies on written submissions dated 20 August 2024 and written submissions in reply dated 7 February 2025.
Lighthouse opposes the application, relying on five affidavits of its instructing solicitor, Nicholas McKenzie-McHarg dated 14 November 2024, 18 November 2024, 19 December 2024, 24 February 2025 and 14 April 2025, together with accompanying exhibits;[1] an affidavit of its director, Albert Jacobs, dated 20 December 2024, together with accompanying exhibit; and five affidavits of various individuals detailing issues concerning Lighthouse’s former solicitors, Welner Lawyers.[2] Lighthouse also relies on written submissions dated 18 November 2024 and 20 December 2024.
[1]There is no exhibit accompanying the affidavit of Nicholas McKenzie-McHarg dated 24 February 2025.
[2]Affidavit of Vanessa Andrews dated 18 December 2024, together with accompanying exhibit (Head of Insurance at Maxima Litigation Solutions Limited), affidavit of Michael Kenny dated 18 December 2024 (Partner of Kalus Kenny Intelex Lawyers), affidavit of Sharat Kanthan dated 19 December 2024, together with accompanying exhibit (Business Development Director subcontracted to Lighthouse), affidavit of Jose Agudelo dated 19 December 2024 together with accompanying exhibit (former Special Projects Coordinator of Lighthouse) and affidavit of Geroge Stathopoulos dated 20 December 2024 (former client of Welner Lawyers).
The application was brought in light of Lighthouse’s failure to provide security for costs in the sum of $390,400 by 3 November 2023, as ordered on 5 October 2023, and to have filed its lay witness statements by 31 October 2023 as ordered on 26 July 2023.
Ordinarily a dismissal application made some 10 months after the due date for the filing of witness statements and the time for provision of security for costs would stand a strong chance of success. That will particularly be so where it is not the first time where there has been a delay in providing security.
However, on 12 November 2024, about one week prior to the hearing date for the application, Lighthouse in substance provided the security ordered.[3] Further, it accepts that any extension of time for the provision of its lay witness statements should be accompanied by a self executing order dismissing its claim if the statements are not provided. It has also deposited just over $1 million into its solicitor’s trust account and has undertaken to the Court that those funds will only be used for the purposes of prosecuting its claim. These matters notwithstanding, Timor Leste persists with the dismissal application.
[3]See below [30].
In order to place Timor Leste’s application in its proper context, it is necessary to outline the history to the proceeding in more detail.
Background
The proceeding concerns a claim by Lighthouse for breach of an alleged fuel supply contract said to have been entered into in October 2010 and terminated in August 2011. Assuming the contract is valid and enforceable (which is denied by Timor Leste), Timor Leste brings a counterclaim alleging that it was induced to enter into the contract by reason of fraudulent misrepresentations made by Lighthouse. The claims relate to events which occurred in both Timor Leste and Australia over a period of more than two years, between 2009 and 2011. Several of the events alleged by Lighthouse are disputed by Timor Leste, and conversely, several events alleged by Timor Leste are disputed by Lighthouse.
Prior to the commencement of this proceeding, Lighthouse initiated arbitral proceedings against Timor Leste in December 2014 before the International Centre for Settlement of Investment Disputes. Timor Leste raised a jurisdictional objection, which was ultimately successful; however, it took three years to resolve, with the arbitration not concluding until December 2017.
In the meantime, and presumably to ensure its claims were not time-barred, Lighthouse filed a writ in this Court on 21 October 2016. Following the termination of the arbitration, Lighthouse filed its statement of claim in March 2018 and an amended version in May 2018. Timor Leste raised another jurisdictional objection; however this time it was unsuccessful, first in this Court before Almond J in May 2019, then before the Court of Appeal in December 2019, and finally before the High Court of Australia in May 2020.
Between July 2020 to October 2020, the proceeding was largely occupied with Timor Leste’s application for security for costs in the sum of $391,639.60, sought in respect of the period up to the filling of its defence. Almond J ultimately ordered security in the amount of $150,000 which was paid by Lighthouse on 15 December 2020.[4]
[4]By paragraph 1 of orders made 8 November 2021 a further $75,000 was ordered in security to be paid within 14 days. The receipt evidencing payment of the funds into Court by Lighthouse is dated 24 November 2021.
Timor Leste filed its first defence and counterclaim in February 2021. In May 2021, Lighthouse and Mr Jacobs sought summary judgment and/or strike out in respect of the counterclaim. Timor Leste then filed an amended defence and counterclaim in June 2021, revising only its counterclaim to clarify, and in some cases address, Lighthouse’s and Mr Jacobs’ criticisms. In August 2021, the Court delivered its reasons, summarily dismissing the counterclaim against Mr Jacobs and striking out parts of the counterclaim against Lighthouse.[5] A further amended defence and counterclaim, together with a rejoinder, was filed in November 2021, at which point pleadings closed, approximately five years after the proceeding commenced.
[5]The Court also ordered Timor Leste pay Mr Jacobs costs of the counterclaim. Mr Jacobs says these costs have not been paid and once paid, the funds will be used for this proceeding.
Over the next six months, the proceeding continued with discovery and various interlocutory applications including for further security for costs, discovery and third party discovery by Timor Leste, bringing the proceeding to mid-2022.
Since at least 2014, Lighthouse was represented by Johnson, Winter & Slattery (‘JWS’). In September 2022, Lighthouse replaced JWS with Welner Lawyers and also changed its counsel team. The change in legal teams caused Welner Lawyers to experience delays in obtaining documents and files held by JWS on a solicitor’s lien for unpaid legal fees.[6] The appointment of Welner Lawyers by Lighthouse has proven calamitous.
[6]It is unclear whether Welner Lawyers obtained the documents and files held by JWS. However, JWS was awarded a judgment debt of $391,689.01 for fees owing by Lighthouse Corporation Limited on 26 November 2024.
On 10 October 2022, Lighthouse was ordered to provide further discovery and to pay additional security for Timor Leste’s costs in the amount of $360,860. Lighthouse failed to comply with those orders by the respective deadlines in October and November 2022, and remained in breach until March 2023. By that time, the proceeding had been automatically stayed due to unpaid security, and Timor Leste made an application for a permanent stay on 14 February 2023.
Between November and December 2022, Timor Leste formally raised Lighthouse’s non-compliance with the Court’s orders through correspondence with its solicitors. In response, Lighthouse attributed the delay to a family bereavement affecting Mr Jacobs and sought, by consent, to extend the existing Court orders, initially proposing a revised compliance date in late November 2022. Lighthouse also indicated that, in the absence of agreement, it intended to apply to the Court for the extension. Timor Leste rejected the request, citing insufficient explanation, prompting Lighthouse to provide further details regarding Mr Jacobs’ cultural and familial obligations arising from the deaths, and to seek a further extension of time to January 2023. Timor Leste maintained its position, reiterating that Lighthouse remained in breach of the Court’s orders, and invited Lighthouse to apply to the Court for an extension.
On 7 March 2023, Lighthouse attempted to pay the further security by approaching the Registry, shortly before the scheduled hearing of Timor Leste’s permanent stay summons.
On 10 March 2023, Timor Leste’s application for a permanent stay was listed for hearing, together with Lighthouse’s application for directions to lift the stay arising from non-payment of security and to extend the dates for discovery. Lighthouse explained its delay in complying with the 10 October 2022 order as being due to personal difficulties faced by Mr Jacobs, including the deaths and illness of family members, which had hindered Welner Lawyers from obtaining proper instructions. In addition, Lighthouse’s ability to provide security was said to depend on funding from an associated entity, which did not become liquid until 7 March 2023. The outstanding security was paid on 14 March 2023, and by order made 16 March 2023, the Court granted the requested extension for discovery. As a result, the application for a permanent stay was not determined at that time and was adjourned to a date to be fixed.
At the hearing on 10 March 2023, counsel for Timor Leste noted that it would not ‘allow what’s happened to [Timor Leste] in the last five months to happen again. If it happens again, we’ll apply again and Your Honour can then, on the merits, determine our permanent stay application some other time. We’re not holding this over then forever’.
Between March and July 2023, several interlocutory issues remained unresolved between the parties. These included Lighthouse’s applications concerning the adequacy of Timor Leste’s discovery and claims of confidentiality over certain documents it had discovered but not produced, as well as Timor Leste’s application challenging the adequacy of Lighthouse’s discovery.[7] In March 2023, Mr Jacobs filed an additional discovery affidavit, which Timor Leste considered unsatisfactory and indicated that it would seek to relist its application and seek leave to cross-examine Mr Jacobs.
[7]The discovery applications had been on foot since July 2022.
In April 2023, Timor Leste filed and served an affidavit made by one of its instructing solicitors concerning the confidentiality application. A dispute arose concerning whether two solicitors had breached written confidentiality undertakings concerning documents over which Lighthouse claimed confidentiality, prompting Lighthouse to threaten contempt proceedings against those two solicitors. Although Lighthouse’s counsel foreshadowed filing contempt applications by 2 May 2023, no such applications were made, but neither was the threat withdrawn. On 21 April 2023, the Court ordered that the parties file submissions in relation to the outstanding interlocutory applications ahead of the May 2023 hearing.
While Lighthouse filed submissions in support of its confidentiality application and in opposition to Timor Leste’s discovery application, it failed to file submissions regarding its own application concerning Timor Leste’s discovery and ultimately sought an adjournment, which Timor Leste opposed. At the hearing Lighthouse’s discovery application was dismissed without adjudication on the merits, and Timor Leste’s application regarding Lighthouse’s discovery was also dismissed after a hearing which included some confined cross-examination of Mr Jacobs.
Subsequently, in late June 2023, the Court made orders limiting the inspection of certain documents on the Court file but otherwise dismissed Lighthouse’s confidentiality application[8] and discharged the related undertakings, subject to a 14 day stay. Counsel for Lighthouse informed the Court that the stay was sought to facilitate an intended appeal of the confidentiality judgement and that he had been instructed such an appeal would be filed. In July 2023, Lighthouse requested Timor Leste’s consent to extend the stay, which was refused, and then sought an urgent hearing. Although the Court listed the matter for directions, Welner Lawyers later advised the Court via email that the hearing had been prematurely sought. No appeal was ever filed.
[8][2023] VSC 363.
At a directions hearing on 26 July 2023, the Court ordered that Lighthouse file and serve its lay evidence by 31 October 2023.
On 5 October 2023, the Court heard Timor Leste’s contested application for further security for costs. Following that hearing, the Court ordered Lighthouse to pay additional security of $390,400 for the costs of and incidental to Timor Leste’s preparation of lay evidence, by 3 November 2023.
During the 5 October 2023 hearing, senior counsel for Timor Leste emphasised the importance of Lighthouse filing and serving its lay evidence by 31 October 2023, highlighting that timely compliance was essential for the efficient management of the case. Counsel noted that Timor Leste did not wish to be placed in a position where, on 30 October 2023, Lighthouse indicated that its lay evidence was still two months away. Lighthouse made no submissions regarding its lay evidence or any anticipated difficulty in meeting the 31 October deadline.
Lighthouse failed to file and serve its lay evidence by 31 October 2023 and did not pay the ordered security of $390,400 by 3 November 2023. As a consequence of the non-payment, the proceeding was automatically stayed on 3 November 2023. Lighthouse did not communicate with Timor Leste regarding any anticipated delay in complying with the orders, nor did it provide any explanation for its non-compliance thereafter.
Between 5 October 2023 and 20 August 2024, a period of over 10 months, neither party communicated with the other or the Court and no steps were taken to progress the proceeding.
On 20 August 2024, Timor Leste filed the summons which is the subject of these reasons. The Court listed the summons for directions on 23 August 2024. In response to the hearing notification, Welner Lawyers, although still the solicitors on record, advised that they held no instructions in the matter and declined to appear. Mr Jacobs sought an adjournment of the directions hearing on the basis that Welner Lawyers was being wound up, he had been unable to contact them, and he was in the process of securing new legal representation. The Court refused the adjournment and ordered that Lighthouse file any materials in opposition to the application by 6 November 2024, with the matter listed for a one day hearing on 19 November 2024.
Between 6 and 14 November 2024, Lighthouse took several steps in response to Timor Leste’s dismissal application. On 6 November, Mr Jacobs sought a seven day extension to file materials in opposition, and on 8 November, Merton Lawyers were retained to act on Lighthouse’s behalf. Significantly, on 12 November the Registry received a money transfer for $390,400 designating the Senior Master as the beneficiary and identifying the description or purpose of the payment as ‘SCI201604287’, which is the proceeding number. There was no other accompanying communication and nor was in any notice given to Timor Leste. On 13 November 2024, the Court emailed the parties advising that the funds had been received and were being retained for now in the Court’s common fund no 1 and would only be credited to the proceeding’s funds in court account when the current stay was lifted. On 14 November, Lighthouse applied to adjourn the dismissal hearing scheduled for 19 November 2024, citing, among other things, the appointment of new legal representation, and the need for additional time to address the non-compliance allegations. Timor Leste opposed the adjournment.
On 19 November 2024, the Court granted the adjournment noting the gravity of the application brought by Timor Leste and to ensure Lighthouse was afforded a proper opportunity to supplement the material on which it intends to rely in opposition. Orders were made adjourning the summons to 27 February 2025 and extending the time for Lighthouse to file any responsive material to 19 December 2024. Lighthouse filed and served responsive material by the time specified.
On 27 February 2025, Timor Leste sought an adjournment of the dismissal application on the basis that critical documents responsive to a notice to produce, concerning Lighthouse’s financial capacity and the proper use of funds purportedly allocated to the litigation, were only provided at 8:54am on the day of the hearing, despite repeated earlier requests. Timor Leste argued that this late production denied them a fair opportunity to prepare for the hearing, particularly in relation to the purpose and use of $1 million held in Merton Lawyers’ trust account allegedly for the conduct of this proceeding and the adequacy and reliability of a Commonwealth Bank of Australia (‘CBA’) line of credit facility to support Lighthouse’s capacity to fund the litigation. The Court, though reluctant, granted the adjournment, acknowledging Lighthouse’s significant and prolonged non-compliance with earlier security for costs orders, the late production of the relevant documents and the need for Timor Leste to have a fair opportunity to explore issues relevant to Lighthouse’s funding capacity.
On 15 April 2025, the Court heard Timor Leste’s application for dismissal. Following discussion during the hearing at its conclusion the Court made orders that the time for the provision of security for costs of $390,400 ordered on 5 October 2023 be extended nunc pro tunc to 13 November 2024. Lighthouse’s lay evidence remains outstanding, but counsel for Lighthouse advised during the course of the hearing that it would be ready in three weeks and Lighthouse would not oppose an order that the proceeding would be dismissed if that evidence was not filed within that extended time.
Relevant Principles
Order 62 of the Rules deals with security for costs. Relevantly, r 62.04 provides that:
Failure to give security
Where a plaintiff fails to give the security required by an order, the Court may dismiss the plaintiff’s claim.
Order 24 of the Rules prescribes alternative modes of disposition of proceedings without trial where a party fails to prosecute or comply with orders for particulars or discovery. Notably, r 24.05 preserves the Court’s inherent power to dismiss any proceeding for want of prosecution or failure to act or comply with an order, notwithstanding rr 24.01 to 24.04, stating:
Inherent jurisdiction
Nothing in this Order affects the inherent power of the Court -
(a) to dismiss any proceeding for want of prosecution; or
(b)to order that upon the failure of a party to do any act or take any step which under these Rules the party is required to do or take or to comply with an order that the party do any such act or take any such step the proceeding shall be dismissed or the defence struck out and that judgment be entered or that there be judgment accordingly.
The power to dismiss for non-payment of security or for want of prosecution lies within the Court’s discretion and must be exercised judicially.[9] In doing so, the Court must take into account all relevant circumstances; weighing each factor so that the ultimate decision reflect the interests of justice.[10] However, the Court is to strain, wherever possible and consistently with the interests of justice, to avoid taking the radical step of denying a party its day in Court.[11]
[9]Sunshine Energy Australia Pty Ltd v Youssef [2023] FCA 189, [8] (‘Youssef’); Hancock Family Memorial Foundation Ltd v Fieldhouse (2005) 30 WAR 398, 414 [100] (‘Hancock’).
[10]Farnell v Penhallurick (2010) 29 VR 727, 732 [20] (‘Farnell’).
[11]Ibid.
In Idoport Pty Ltd v National Australia Bank Ltd[12] (‘Idoport’), Einstein J considered, in the context of a dismissal application arising from a failure to pay security, that there were five non-exhaustive factors that were significant:
[12][2002] NSWSC 18 (‘Idoport’).
(a) the period that had elapsed since security was ordered;
(b) the fact that the plaintiff had been on notice of the application for dismissal;
(c) the seeming inability of the plaintiff to further fund the proceedings;
(d) the prejudice to the defendants; and
(e) the position of the Court.[13]
[13]Ibid [24]. Idoport was upheld on appeal: Idoport Pty Ltd v National Australia Bank & Ors [2002] NSWCA 271. The matters identified in Idoport, and the approach identified by Einstein J, have been followed in Victoria in Farnell (n 10) where the Court of Appeal followed Porter v Goridan Runoff Ltd (No 3) [2005] NSWCA 377, [21]-[27] where the Idoport principles were approved at [19]-[20]. The approach in Farnell was followed in R V Investments v ACN 110 769 929 & Ors [2014] VSCA 210. The Idoport approach has also been applied in the Federal Court in Youssef (n 9) [9] which was followed in Tinkler Group Holdings Pty Ltd v Winter (No.2) [2023] FCA 412, [10]-[16] and St Mary’s Hog Pty Ltd v HBCA Pty Ltd (No 2) [2024] FCA 36, [28]-[29] (‘St Mary’s Hog’s’).
Additional considerations may include the explanation for non-compliance, the likelihood of, and timeframe for, future payment of security, and whether the plaintiff could recommence proceedings at a later point.[14]
[14]Business & Personal Solutions Pty Ltd v Witherspoon (No 2) [2022] QSC 147, [6] (‘Business & Personal Solutions’).
A failure to provide security may be treated analogously to a want of prosecution dismissal.[15] Although the powers to dismiss are formally distinct, that distinction in truth is largely illusory: in either scenario the potential to disrupt the administration of justice is the same. In each instance, the Court must weigh the substantive impact of the plaintiff’s default, whatever its nature, as part of the ‘calculus’ governing its discretion to dismiss.[16]
[15]Tropicana Ltd v Australasia Corporate Services Pty Ltd [2011] FCA 684, [28]; Business & Personal Solutions (n 14) [5]; Goodman v Lorenzen [2000] QCA 11, [11].
[16]Idoport Pty Ltd v National Australia Bank & Ors [2002] NSWCA 271, [41]-[43] (Mason P) (‘Idoport Appeal’).
Dismissal for want of prosecution requires, in addition, satisfaction that the default has been intentional and contumelious or there has been an inordinate and inexcusable delay on the part of the plaintiff giving rise to a substantial risk of unfair trial or serious prejudice to the defendants.[17]
[17]Newtronics Pty Ltd v Gjergja [2010] VSC 594, [2] (‘Newtronics’); Bishopsgate Insurance Australia Ltd v Deloitte Haskins & Sells [1999] 3 VR 863, 871-872 [23]–[25] (‘Bishopsgate’); Hancock (n 9) 413-414 [99]-[100].
In assessing whether a delay is inordinate and inexcusable, the Court will have regard to whether there was a delay in commencing proceedings,[18] the time consumed by related litigation or procedural steps,[19] and any relevant impecuniosity of the party facing dismissal, which, though seldom a standalone excuse, contextualises the plaintiff’s conduct[20] and, in conjunction with other factors, informs whether the delay is excusable.[21]
[18]Bishopsgate (n 17) 874-875 [31]-[33].
[19]Newtronics (n 17) [47].
[20]Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2007] VSCA 75, [24] (‘Tenth Vandy’).
[21]Imaging Applications Pty Ltd v Sun Alliance Australia Ltd [1999] VSC 230, [44] (‘Imaging Applications’).
In assessing prejudice to the defendant, the Court ordinarily begins with a provisional view that a lengthy lapse between the triggering events and trial will be prejudicial[22] but that presumption yields to a case-specific inquiry.[23] Therefore whether evidence can still be assembled and led depends on the issues in dispute,[24] and it is a relevant consideration if a defendant asserting prejudice does not particularise any unavailable witnesses, the critical evidence now unattainable, or any diminished recollections of witnesses.[25] It bears emphasis that courts routinely admit testimony concerning events that occurred long ago.[26]
[22]Ibid [51].
[23]Ibid; Tenth Vandy (n 20) [26].
[24]Tenth Vandy (n 20) [26].
[25]Imaging Applications (n 21) [52]-[53].
[26]Ibid.
Ultimately, the Court must exercise its discretion to dismiss, whether for non-payment of security or for want of prosecution, ‘guardedly, having regard to the interest of justice generally, although it may be appropriate to have regard to particular criteria’.[27]
[27]Farnell (n 10) 731 [18].
Consideration must also be afforded to case management imperatives and the proper use of judicial resources.[28] The overarching purpose of the Civil Procedure Act 2010 (‘CPA’) is to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute,[29] and each party to the proceeding owes a paramount duty to further the administration of justice.[30] That duty stands alongside various overarching obligations on the parties, including but not limited to, the need to minimise delay;[31] ensure costs are reasonable and proportionate;[32] take only steps to resolve or determine the dispute;[33] and cooperate in the conduct of proceedings.[34] These obligations are far more than mere high-minded rhetoric;[35] they impose a strict, positive duty on all participants, lay and professional alike, to comply with each overarching obligation, and the Court is compelled to enforce that duty.[36] Consistently, the CPA grants the Court broad supplemental powers, among them the power to dismiss, to remedy any contraventions of those obligations.[37]
[28]Pentridge Village Pty Ltd (In Liq) v Capital Finance Australia (No 3) [2023] VSC 605, [37] (‘Pentridge Village’); Cappelleri v Cappelleri [2020] VSC 306, [46]; Aon Risk Services Australia Ltd v Australia National University (2009) 239 CLR 175.
[29]Civil Procedure Act 2010 (Vic) s 7.
[30]Ibid s 16.
[31]Ibid s 25.
[32]Ibid s 24.
[33]Ibid s 19.
[34]Ibid s 20.
[35]Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293, [102]-[104].
[36]Yara Australia Pty Ltd v Oswal (2019) 41 VR 302, 311 [26].
[37]Civil Procedure Act 2010 (Vic) s 29(1)(f); Pentridge Village (n 28) [28].
Parties’ Submissions
Timor Leste
It is undisputed that Lighthouse has now paid the current tranche of security in the amount of $390,400. Consequently, the Court’s consideration of dismissal now extends beyond the confines of r 62.04 to encompass r 24.05 and this Court’s inherent jurisdiction to regulate its own procedure. This combined with the considerable passage of time between the filing of the dismissal summons and the hearing has resulted in Timor Leste’s submissions evolving over time.
As things now stand, Timor Leste’s dismissal application rests on three principle grounds:
(a) Funding Risk: Lighthouse’s inability to fund the proceedings to trial, including doubts about the sufficiency and reliability of the funds held in Merton Lawyers’ trust account.
(b) Conduct: Lighthouse’s conduct to date which exhibits a sustained pattern of unresponsiveness and non-compliance, especially from 2022 to 2024, including failures to satisfy security orders and other court directions, most notably its non-service of lay evidence.
(c) Prejudice: the prejudice to Timor Leste including the substantial risk that it will not be able to obtain a fair trial.
Funding Risk
In oral submissions, senior counsel for Timor Leste sought to persuade the Court, in a broad sense, of the unreliability of the persistence of the $1 million transferred by Mr Jacobs into Merton Lawyers’ trust account for the purpose of funding this proceeding. He did so by traversing the affidavit of Liam Thomas Prescott dated 7 April 2025 (‘Prescott Affidavit’) which traces informal transfers in and out of three CBA bank accounts; two in the name of Mr Jacobs and the other in the name of name of the second plaintiff, Lighthouse Corporation Pty Ltd. Mr Prescott deposes, inter alia, that his analysis of the account histories reveal that approximately $3.25 million was paid into Mr Jacobs’ personal account and thereafter transferred almost in full to Lighthouse Corporation’s account and subsequently to Mr Jacobs’ other personal account, without any documentation that explains or governs the transfer of those funds, or if any transfer was a loan, the loan or repayment terms. He identifies the origin of these funds as the surplus from the refinance of a loan facility in the name of Lighthouse Capital Properties Pty Ltd (‘Lighthouse Capital’). Under the refinancing, Lighthouse Capital borrowed approximately $8 million across three CBA investment home loans, of which $7.47 million had been drawn down as at 11 March 2025, leaving circa $813,744 available for redraw, noting that the loans carry combined monthly interest only repayments of approximately $36,000.
Mr Prescott further deposes that roughly $2.1 million of the sale proceeds of a property in Bentleigh, in the name of Lighthouse Capital, similarly flowed through these accounts, of which $1 million was paid to, and remains, in Merton Lawyers’ trust account for these proceedings, with the balance having been transferred out of Mr Jacobs’ personal account for loan repayments and other undisclosed purposes. Additionally, senior counsel highlighted a $32,900 debit recorded on the Merton Lawyers’ trust statement, exhibited to the Prescott Affidavit, for a separate Lighthouse proceeding, to demonstrate that the $1 million is not earmarked solely for this litigation and thereby underscoring its unreliability.
Timor Leste submitted that, without any documentary support or explanation from Mr Jacobs or persons associated with the companies, the funds remain inherently unstable: as senior counsel put it, ‘if at any point in time a third party enforces recovery at any point in this chain, the whole chain will break apart’.
Moreover, despite the $1 million deposit into Merton Lawyers’ trust account, Timor Leste submitted that Mr Jacobs had given no undertaking not to withdraw those funds, nor any assurance as to the conditions under which they would remain intact for this proceeding.[38] While it is common in litigation for money to circulate and for a plaintiff to cover costs as they arise, it was submitted that two features here rendered the absence of any undertaking inadequate. First, security was ordered and went unpaid for over twelve months. Secondly, despite requests as early as 5 December 2024 for information on the funds’ provenance and reliability, as late as 14 April 2025 further information emerged in response to information sought last year, adding to the uncertainty as to Lighthouse’s ability to fund the proceedings.
[38]Counsel for Lighthouse gave an undertaking on behalf of Mr Jacobs and Lighthouse during the course of the hearing on 15 April 2025.
In addition, Timor Leste also considers that the sum of $1 million will not be sufficient to cover Lighthouse’s own legal fees and disbursements from the date of the hearing to trial in 2026 as well as providing security for Timor Leste’s costs up to and including trial.
Conduct
Timor Leste submitted that proper regard should be had to Lighthouse’s conduct generally in the proceeding in consideration of its dismissal application. Since 2022, there has been a marked inefficiency in case management and, more troubling, there has been a pattern of improper conduct: unsubstantiated allegations of contempt; repeated threats of appeals that were never pursued; a failure to comply with this Court’s orders and on two occasions a failure to provide security, despite the movement of substantial funds among Lighthouse, related entities and individual stakeholders. Despite being fully aware of the requirement to pay security and his own inability to meet the order, Mr Jacobs never took any step to inform Timor Leste or this Court of the that fact or provide any explanation until forced to do so by the filing of the dismissal application. In addition, Lighthouse remains in default of the order requiring it to put on lay evidence.
Mr Jacobs is no novice litigant given his familiarity with procedural requirements, parties duties, how to manage his legal representatives and others involved in the litigation. It was submitted that it was therefore implausible that he was unaware of the need to file evidence or take active steps to address the ongoing failure to provide security. Yet, he portrays himself as helpless before uncooperative solicitors, and for nearly a year, failed to replace his lawyers, failed to inform the Court or Timor Leste of Lighthouse’s non-compliance, and failed to pay the security ordered despite being aware of the need to do so from at least 3 October 2023.
It is submitted that this conduct collectively demonstrates a fundamental disregard for Lighthouse’s own case, the Court’s processes, and the principles of proper litigation, thereby undermining the administration of justice.
Prejudice
Timor Leste submitted it suffers a real and ongoing prejudice including a substantial risk it will not be able to obtain a fair trial. First, the longer this case drags on, the more insurmountable it becomes to litigate events that occurred over 15 years ago. The prolonged delay risks further eroding witnesses’ independent recollection of material events and thereby compromising their ability to recall them accurately. Secondly, the proceedings will require the involvement of senior members of Timor Leste Government, and that will prejudice the incumbent administration. Thirdly, the administration of justice requires not only a fair trial but also expeditious and efficient conduct, yet Timor Leste has endured over two years of non-compliance, non-engagement, and sporadic, minimal interaction in proceedings spanning more than six years, with no indication that the Lighthouse’s conduct will improve. Thirdly, Timor Leste is exposed to continuing uncertainty about the status of the proceeding. Lighthouse’s conduct leaves Timor Leste to speculate about the disposition of the matter and requires them to be in a semi-permanent state of readiness, uncertain of how and when costs may be incurred or when resources will need to be deployed.
Regarding Lighthouse’s prejudice if its claim is dismissed, Timor Leste submitted that even if limitations would bar recommencement, that consequence carries little weight here in light of Lighthouse’s sustained non-compliance and the absence of any reliable prospect that it can pursue the proceedings to hearing.
Lighthouse
Counsel for Lighthouse raised 10 points for the Court’s consideration in determining the dismissal application. First, counsel emphasised that the Court is to strain wherever practical and consistently with the interest of justice to avoid taking what is described as a ‘radical step of denying a party its day in court’[39] or a ‘draconian remedy’.[40]
[39]Farnell (n 10) 732 [20]; Pi v Zhou (No 4) [2018] NSWCA 87.
[40]Hancock (n 9) 423 [157].
Second, the fact that Lighthouse attempted to pay the ordered security and the funds are sitting in Court,[41] by the return date weighs strongly against dismissal. There is no reported instance in which proceedings have been dismissed once security has been satisfied. If the security remains unpaid, courts typically scrutinise the plaintiff’s financial capacity to meet both that order and future litigation costs. Here, the payment of security is a factor of such weight that it is near determinative, and it colours the balance of the remaining discretionary considerations in Lighthouse’s favour.
[41]Despite Lighthouse paying the security into Court on 12 November 2024, it was not technically paid until the order made 15 April 2025 extended the time for compliance with paragraph 1 of the order made 5 October 2023 to 13 November 2024.
Third, there is presently $1,132,219 in Merton Lawyers’ trust account, and Mr Jacobs and Lighthouse have undertaken that no portion of those funds will be withdrawn except in respect of these proceedings.
Fourth, dismissal would irreparably prejudice Lighthouse, as the limitation period has now expired, permanently extinguishing its right to have these claims adjudicated in this Court.
Fifth, the plaintiffs’ conduct has not necessitated the adjournment of any trial date; accordingly, unlike cases where delay disrupts court efficiency and prejudices other parties’ entitlement to a timely hearing, no such detriment arises here.
Sixth, there is no material before the Court permitting any conclusion that Lighthouse’s case has no merit.[42]
[42]Cf Farnell (n 10) 732 [24].
Seventh, the delay here cannot properly be characterised as inordinate. The term carries both quantitative and qualitative aspects within in it,[43] and the Court should have regard to the following factors. First, the stage of the proceeding: the delay has neither arisen at a late stage necessitating the adjournment of a trial date, nor occurred at the outset to impede Lighthouse from finalising its statement of claim and leave Timor Leste uncertain of the case to be met. Although the proceedings have been lengthy and hard fought by both parties[44] the post October 2023 delay, when viewed against the overall timeline and Timor Leste’s own contributions to it, cannot be properly described as inordinate. Second, there was no express warning by the Court that non-compliance after October 2023 would result in dismissal.[45] Third, between October 2023 and August 2024 Timor Leste sent no correspondence in respect of Lighthouse’s non-compliance. Whilst Timor Leste bore no positive duty to monitor Lighthouse’s compliance, its silence, when weighed alongside the other factors, demonstrates that the delay, whilst lengthy and arguably borderline, cannot properly be deemed inordinate in the circumstances.
[43]Hancock (n 9) 421 [139].
[44]See above [10]-[33].
[45]Cf Idoport (n 13) [104]; Idoport Appeal (n 16) [27]; Bishopsgate (n 17) 883 [51].
Eighth, even if the delay were characterised as inordinate, it remains excusable for two principle reasons. First, Lighthouse did not have liquid funds to pay the security. A genuine inability to pay has been considered a relevant excuse when weighed alongside other factors.[46] Here, nine years of litigation had depleted Lighthouse’s resources, even before accounting for the nearly $5 million that was previously expended on the arbitration.[47] Furthermore, of the $246,000 credited to Welner Lawyers’ trust account after June 2023, only $95,065 is substantiated by invoices; there are no records of work beyond May 2023, and all calls and emails to Welner Lawyers remain unanswered. Mr Jacobs also proactively sought to cure the shortfall by pursuing litigation funding and after the event insurance (efforts which were thwarted by Welner Lawyers’ conduct); he marketed and sold the Bentleigh property and at a $600,000 discount due to interest rate and seasonable pressures; and he refinanced an existing loan facility, a process that required seven months to negotiate and an additional month for the funds to clear. It was submitted viewed against the substantial financial burden imposed by this protracted litigation, these concerted efforts collectively establish a sufficient basis to render the delay excusable.
[46]Imaging Applications (n 21) [44].
[47]Lighthouse Corporation Ltd & Anor v Republica Democratica de Timor Leste & Anor [2020] VSC 659, [20] (‘Lighthouse’).
Additionally, Welner Lawyers neglected the proper carriage of the file. The evidence shows Welner Lawyers’ trust account records were deficient and its principal, David Welner, was repeatedly uncontactable or unresponsive. Multiple witnesses deposed to encountering such difficulties with Mr Welner: Mr McKenzie-McHarg of Merton Lawyers, Mr Jacobs, Sharat Kanthan a business development director subcontracted to Lighthouse Corporation, Jose Agudelo of Lighthouse Corporation, and Vanessa Andrews of Maxima Litigation Solutions Ltd, who deposed that she has never seen a solicitor so disengaged. In addition, Michael Kenny of Kalus Kenny Intelex Lawyers, who is acting for two clients in three proceedings against Welner Lawyers and Mr Welner, deposes to Welner Lawyers being evicted from its business premises for unpaid rent. George Stathopoulos, a former client of Welner Lawyers, deposes to Mr Welner being frequently absent and uncontactable. He further stated that when he finally reached Mr Welner via phone in August 2024, Mr Welner yelled and swore at him whilst threating to kill himself. The day before the hearing, further affidavit evidence was put on by Lighthouse detailing more litigation against Welner Lawyers and/or Mr Welner. The consequence of this neglect was that Mr Welner failed to advised Mr Jacobs of the October 2023 evidence deadline, did nothing to prepare the evidence, and failed to enter into any communications with Timor Leste’s solicitors. Counsel submitted that the authorities establish the courts’ reluctance to penalise a client for the inaction of their solicitor and generally will not dismiss a party’s claim where default arises due to the carelessness of the party’s solicitors.[48]
[48]Pogue Fodder Services Pty Ltd v Kurmond Feed and Freight Pty Ltd [2022] VCC 1983, [106]-[107] quoting Du v Ivy Real Estate Pty Ltd [2021] VCC 154, [28] and Kostokanellis v Allen [1974] VR 596, 607.
Ninth, the question of prejudice. It was submitted the focus of prejudice in delay applications is the harm suffered by the defendant.[49] Lighthouse relied on Imaging Applications Pty Ltd v Sun Alliance Australia Ltd[50] (‘Imaging Applications’) where Hedigan J held that, despite a nine year delay which was largely due to the plaintiffs doing nothing at all, he was not persuaded the defendants had suffered prejudice from the delay: there was no identification of witnesses who could no longer be called (by name, role, or relevance), nor any account of critical evidence lost due to a witness’s death, absence, illness, or fading memory.[51] Reliance was also replaced on GLJ v Trustees of Roman Catholic Church for Diocese of Lismore[52] where the High Court observed that the mere passage of time, or even a witness’s death, does not necessarily deny a fair hearing.[53] It was submitted, there has been no evidence from Timor Leste to demonstrate how there would be prejudice to the fair running of trial in circumstances where over 90% of the representations referred to in the pleadings are documentary in nature and whilst there appears to be a few in person meetings between the parties, the representations that are the subject of those meeting are either subsumed by other representations that are in writing or otherwise appear to sit at the periphery of Timor Leste’s counterclaim.
[49]Bishopsgate (n 17) 873-874 [30].
[50]Imaging Applications (n 21).
[51]Ibid [52].
[52](2023) 414 ALR 635.
[53]Ibid 653 [53].
Counsel also submitted that there is no bar to suing a State in commercial matters, and it falls to the relevant officeholders to manage such litigation. It would be dangerous to exercise the Court’s discretion so as to shield governments from substantial or important disputes merely because public officials and politicians have pressing duties. Further, it was accepted that mere exposure to a serious claim can amount to prejudice, but submitted this mainly concerns individuals who professional reputations, and therefore livelihoods, are at stake, which does not apply here.
Tenth, the question of funding the litigation to trial. Lighthouse’s primary submission is that, insofar as future funding bears on these proceedings, the Court’s focus should be limited to the corporate plaintiffs’ own capacity to meet costs, rather than additionally encompass prospective further security for costs. Any question of the latter properly arises in the context of any security for costs applications when a plaintiff’s impecuniosity is in issue. In support of Lighthouse’s ability to the fund the litigation, it was submitted Merton Lawyers’ trust account holds over $1.1 million on behalf of Lighthouse for the purpose of funding the proceeding and Lighthouse has paid into Court the ordered security. In addition, Mr McKenzie Mc-Harg’s evidence demonstrates that sums of approximately $138,000 and $99,000 were deposited into Lighthouse Corporation’s account in May 2025 for work done, that Mr Jacobs has access to circa $1 million across various accounts and he is expected to receive a further $1 million within six months and $4 million within the next year from clients for ongoing work. Mr Jacobs has also secured existing loans against an eight-and-a-half-acre Heatherton property, which received an offer at $12.6 million in 2020, and can further leverage a Clayton South property and borrow $500,000 against an additional residential asset. Against that background, it was submitted the Court should not dismiss Lighthouse’s claim because of a concern that monies will not be available in the future to pay its costs or further security ordered by the Court.
Analysis
In determining whether to dismiss Lighthouse’s claim, it is necessary to address the following five issues:
(a) Lighthouse’s ability to fund the proceedings to trial;
(b) whether there has been an inordinate and inexcusable delay on the part of Lighthouse;
(c) whether the delay poses a substantial risk to Timor Leste’s right to a fair trial, and the prejudice to Lighthouse if its claim is dismissed after the limitation period has expired;
(d) Lighthouse’s conduct generally; and
(e) the position of the Court.
Lighthouse’s ability to fund the proceedings
Timor Leste urged the Court to view the continued retention of $1 million in the Merton Lawyers’ trust account as unreliable. That submission, however, was addressed by the undertaking given to the Court at the hearing of the dismissal application by counsel on behalf of Lighthouse and Mr Jacobs, expressly limiting use of those funds to this proceeding. Moreover, Mr Jacobs further demonstrated his bona fides by depositing $35,000 into the trust account to replace the $32,900 previously applied to an invoice in an unrelated matter—a transaction upon which Timor Leste relied to suggest that the funds would not be reserved solely for these proceedings.
As at the date of the hearing, Lighthouse had access to around $2 million to fund these proceedings. This sum comprises $1,132,219.22 held in the Merton Lawyers’ trust account; $863,968.96 in the form of undrawn loan facilities available across four CBA accounts (being three investment home loan accounts of Lighthouse Capital and Mr Jacobs’ personal account); and a contingent $500,000 facility secured against an unencumbered residential property into which Mr Jacobs had invested $1.5 million. Further, Mr Jacobs operates multiple enterprises within the Lighthouse Group, including a construction company that recently recorded receipts of $138,318 and $99,196, which generate ongoing income. Looking ahead, Mr Jacobs anticipates realising at least $5 million over the next 12 months from completed work and in‐progress construction contracts. He also owns two additional properties in Heatherton and Clayton South, which could readily serve as collateral to underwrite litigation costs. Even in the hypothetical absence of the projected $5 million, it would be a bold move for a court to dismiss a plaintiff’s suit without adjudication of the merits on the basis that the plaintiff has ‘only’ liquid funds available of circa $2 million. The radical nature of such a course is exacerbated where the consequence of such dismissal is that the $901,260 in security for costs already provided will in all likelihood be lost to Lighthouse in the sense that will be paid out in satisfaction of Timor Leste’s costs of the proceeding. Such a consequence will no doubt act as a powerful incentive for Lighthouse to take such steps as may be necessary to procure further funding in the event that the amount held in the Merton Lawyers’ trust account and any further moneys available from drawdowns prove for whatever reason insufficient to meet its own cost obligations and provide any further security. The consequence extends further to the wastage of the sunk costs of the moneys it has already paid for its legal costs of this proceeding and the arbitration.
It is a weighty factor that the security at issue has already been paid. The Court ordinarily scrutinises a plaintiff’s ability to meet future litigation costs where security remains unpaid; in such cases, non-payment frequently results in a negative finding and dismissal of the proceeding.[54] That is not the situation here, thereby reducing the relevance of those considerations. In Idoport, Einstein J dismissed the proceeding, observing that the plaintiff had adduced no reliable evidence of any, let alone reasonable, prospect of securing further funding to continue to final hearing.[55] By contrast, Lighthouse has filed affidavit material demonstrating multiple means by which it can access the necessary funds to prosecute this litigation. It is pertinent to observe that no case has resulted in dismissal for failure to pay security where the security has been furnished at the time of the application. Indeed, non-payment remains the critical factor in such decisions.[56]
[54]Nonox Australia Pty Ltd v Underwriters at Lloyd’s [2014] NSWSC 790, [13]; St Mary’s Hog’s (n 13) [43].
[55]Idoport (n 13) [30].
[56]Farnell (n 10) 732 [21]; Metar Pty Ltd v Hagan [2004] QSC 462; H and R Management Consulting Pty Ltd v Bickford [2010] QSC 144; Zoo Sport (Europe) Ltd v Zoo International Pte Ltd [2019] FCA 1660, [13].
Timor Leste further contends that the $1 million held in the Merton Lawyers’ trust account will not suffice both to defray Lighthouse’s own legal fees and disbursements through trial and to satisfy any future security for Timor Leste’s costs following lay evidence—estimated at between $1,644,000 and $2,079,000.[57] By contrast, Lighthouse’s solicitors say that the $1 million is more than sufficient to cover Lighthouse’s costs to prepare for and conduct the trial. If that is accepted, the surplus of approximately $1 million can be deployed as security for Timor Leste’s costs, without even accounting for anticipated income from the Lighthouse Group or the use of additional properties as collateral. Moreover, Lighthouse’s solicitors have indicated their willingness, should the funds prove insufficient, to accommodate payment arrangements for any residual legal fees. In any case, the question of further security and the amounts to be ordered are a matter for further determination. Given the history of the matter, there may well be further orders for security. Whether that is so and whether the amounts ordered are in the preliminary range estimated by Timor Leste or the lower quantum estimated by Lighthouse is a matter to be determined. Given the unsatisfactory delays which have attended Lighthouse’s provision of security, any application by Timor Leste for dismissal in the event that any further security is not provided, will warrant strong consideration and may well find favour. Any alleged inability to provide further security however is not a basis for dismissal now; it may be in the future, if security is ordered and not provided.
[57]I don’t say anything as to the accuracy of these figures save for noting Almond J’ general observation in the context of an earlier security for costs application that ‘there is a tendency on behalf of the defendants to characterise this proceeding as more complex than it perhaps is’: Lighthouse (n 47) [36].
Whether inordinate and excusable delay
Was the delay inordinate?
Timor Leste submitted Lighthouse’s conduct, particularly between 2022 to 2024, was non-compliant and unresponsive, thereby causing delay to the progression of the proceeding. As at the date of compliance with the order for the fourth tranche of security in November 2024, approximately 13 months had elapsed since the order was made – a considerable default on a Court order. However, those 13 months formed part of an even longer period, exceeding two years, during which the proceeding advanced at a glacial pace. In the initial 13 month phase (September 2022 to October 2023), Mr Jacobs retained Welner Lawyers and then suffered the bereavement of multiple family members. The attendant familial and cultural obligations delayed Lighthouse’s compliance with discovery orders and the payment of a third tranche of security by roughly six months. During that time, Welner Lawyers corresponded with Timor Leste’s solicitors, explaining Mr Jacobs’ circumstances and seeking extensions of both the discovery and security deadlines; those requests were refused. While the Court afforded allowances for the difficulties under which Mr Jacobs was labouring, the reality remains that the period of non-compliance was both significant and unacceptable. Ultimately, Lighthouse satisfied its discovery obligations and furnished the outstanding security in March 2023.
Between March and October 2023, the proceeding continued with numerous interlocutory applications, including: additional discovery; Lighthouse’s claims of confidentiality over certain documents; directions concerning lay evidence; the issue of a subpoena to a foreign third party; and an application for further security for costs. Notably, several of these applications were brought by Timor Leste—among them a challenge to the adequacy of Lighthouse’s discovery, which was dismissed.
During the second 13 month period, from October 2023 to November 2024, 10 months elapsed after the tranche of security fell due before Timor Leste filed its dismissal application. Further, Lighthouse’s lay witness statements due 31 October 2023 have still not been filed and served; as at the date of the hearing of the application, they were approximately 18 months over due.
A delay of 18 months and continuing in the provision of lay witness statements and a delay of 13 months in respect of the provision of security is inordinate, particularly where it is the second time Lighthouse has been late in providing security.[58] Lighthouse’s conduct was manifestly deficient but its significance must be assessed against the backdrop of the litigation’s overall glacial progression.
[58]On 10 October 2022 security for costs of $360,860 was ordered to be provided within 28 days of the order. It was provided on 14 March 2023; see above [15].
I note that Lighthouse also contended it received no express warning from the Court that continued non-compliance after October 2023 could lead to dismissal. That is not entirely accurate. At the hearing of Timor Leste’s permanent stay summons on 10 March 2023, I observed that the Court would be ‘open to the application that you [Timor Leste] would have foreshadowed today if there were further failures to provide security, absent a very good reason’. Although Merton Lawyers had not then been retained, the transcript demonstrates that Welner Lawyers were fully apprised of Timor Leste’s intention to seek drastic relief for further security breaches. That said, having regard to Welner Lawyers’ conduct, it is reasonable to infer that the Court’s warning may not have been communicated to Mr Jacobs.
Was the delay inexcusable?
Lighthouse’s delay is however excusable when its explanations are viewed in their proper context. Admittedly and regrettably, Lighthouse did not immediately explain its lack of liquid funds nor maintain consistent communication during the relevant period—conduct that falls short of the standards the Court expects for the effective prosecution of litigation. Critically, however, that breakdown in communication emanated in large part from Welner Lawyers’ neglect of the file and their subsequent unresponsiveness to repeated attempts by Mr Jacobs and his agents to provide instructions and secure funding, rather than any deliberate silence on Lighthouse’s part.
The affidavit material demonstrates Mr Welner’s dereliction. Mr Jacobs deposed that late 2023 onward, Mr Welner effectively ceased meaningful contact, responding infrequently, if at all, to his enquiries. This hampered efforts to work with Ms Andrews on Lighthouse’s funding application, as she was likewise unable to elicit any response. Mr Jacobs’ experience with Mr Welner was corroborated by multiple persons including Messrs Kanthan and Agudelo each of whom attested to their own unsuccessful attempts to consult with Mr Welner. Between August 2023 and April 2024, Mr Kanthan recorded at least 11 unreturned telephone calls, three unanswered emails, seven unacknowledged text messages, and numerous unannounced office visits to Welner Lawyers, each met with silence or absence. Similarly, between June 2024 and August 2024, Mr Agudelo placed 13 telephone calls and made five in person visits to Welner Lawyers’ offices, on four occasions finding Mr Welner absent, unwell, or unable to assist, and on one occasion obtaining a USB of Lighthouse’s documents from Mr Welner.[59]
[59]This occurred on 26 August 2024. Mr Jacobs deposes that the USB contained what appeared to be documents from the data room, but many of the documents were in folders which he could not access.
While impecuniosity will not of itself excuse delay, it may contextualise the lapse and be weighed alongside other factors in assessing whether interruption of the litigation is excusable.[60] The absence of immediately available funds in order to comply with an order for security was not a cavalier oversight but a reality exacerbated by Welner Lawyers’ retention of Lighthouse’s monies in trust, and the prior depletion of Mr Jacobs’ resources, some $10 million having already been spent in this action (including the various appeals and in the earlier arbitration). The making of an order for security in cases like the present is predicated on there being a real concern that the plaintiff will be unable to pay the defendant’s costs of the proceeding if the plaintiff’s claim fails. The failure to provide security is often the product of the very impecuniosity which results in the making of the order. In that respect, categorising the failure to provide security as inexcusable is problematic. That of course does not mean that a court will not dismiss a proceeding for want of the provision of security. It simply means that a rote application of the approach followed in want of prosecution cases has its limits. In any case, Mr Jacobs’ efforts to secure new financing—through litigation funding proposals, the sale of a property and the refinance of his existing facility, demonstrate that his lack of liquid assets was a state of affairs that he endeavoured to remedy. Timor Leste’s criticism that security was paid only after a dismissal application was filed overlooks that the filing of that application was the catalyst that prompted the completion of a process already underway. In March 2024, Mr Jacobs initiated discussions with CBA to refinance his existing facility. Formal approval was not granted until October 2024, and the funds did not clear until 11 November 2024. Upon receipt, Lighthouse immediately paid the ordered security into Court.
[60]Imaging Applications (n 21) [44].
The underlying cause of the delay was therefore a liquidity shortfall—exacerbated by Welner Lawyer’s neglect—rather than a tactical decision to stall proceedings. Although the failure to articulate these difficulties directly to the Court or Timor Leste was manifestly unsatisfactory, it was not so egregious as to warrant the Court’s most severe sanction. The eventual provision of security, although paid following the filing of the dismissal application, reflects the culmination of bona fide endeavours rather than dilatory tactics, and thus the delay must be characterised as excusable.
With respect to the outstanding lay evidence, Mr Jacobs explains that he was unaware of the filing obligation because he had effectively been abandoned by Welner Lawyers. As previously noted, the evidence from each of the witnesses confirms that something had gone seriously wrong with Mr Welner’s ability to represent his clients and act in their best interests. Mr Jacobs has deposed to his desire for Lighthouse to file its lay evidence and to expedite the hearing of its claim. Merton Lawyers have further confirmed that preparation is well advanced: numerous conferences have been held, draft witness statements have been finalised, and arrangements are in place to comply with any self-executing order compelling the filing of lay evidence within a short, reasonable period after determination of this application. In view of these circumstances, I accept that Welner Lawyers failed to effectively communicate about the filing of evidence to Mr Jacobs, and accordingly I do not regard the delay in filing the lay evidence as inexcusable.
Prejudice
Timor Leste submitted that the prolonged delay in prosecuting Lighthouse’s claim has caused it prejudice. In support, it points to three categories of prejudice: the substantial risk that it will be unable to secure a fair trial due to the erosion of witness recollections of material events; the drain on senior government resources; and the state of uncertainty for Timor Leste regarding the proceeding. First, while it is true that memories fade, the majority of the sets of misrepresentations[61] alleged by Timor Leste to have been made by Lighthouse are recorded in writing. Only one set of misrepresentations were oral representations. Given the documentary foundation for the vast bulk of the case, the risk that unreliable recollection will materially impair the trial is correspondingly reduced. Moreover, Timor Leste has not identified any particular witness whose absence or defective memory would prove critical; it has not adduced evidence demonstrating any essential testimony has been lost or irretrievably compromised. The mere passage of time, even a lengthy period, does not, without more, establish prejudice sufficient to justify dismissal.
[61]Timor Leste alleges that Lighthouse made 56 different sets of representations which make up 359 separate representations. In the one set of representations that are not in writing, there are five separate individual representations.
Second, although litigation will inevitable call on senior officials of the Timor Leste Government, there is no categorical rule against a State defending a commercial dispute, nor any reason to believe that the incumbent administration cannot make those arrangements without undue imposition. Public bodies routinely engage in litigation, coordinating their own resources in the national interest. Third, although ongoing uncertainty regarding costs and resource allocation can be inconvenient, it fails to meet the requisite prejudice threshold. Moreover, Lighthouse has engaged new solicitors and is likely to be subject to guillotine orders, which should afford Timor Leste greater clarity as to the future conduct and timetable of the proceedings.
There is another issue. The relevant delay is the delay in complying with the order for the provision of security for costs and the order for the provision of the lay evidence. Whilst the historical nature of the subject matter of the proceeding is material to an evaluation of the significance of this delay, Timor Leste’s submissions tended to elide alleged prejudice arising from the effect of the delay in the provision of security and the lay witness statements with the historical nature of the proceeding’s subject matter and the glacial pace at which the proceeding has progressed. The fact that a dispute arising from an agreement allegedly entered into in October 2010 and terminated in August 2011 has yet to be terminated is regrettable and unsatisfactory. That unsatisfactory circumstance is the product of a number of factors the most recent of which lay overwhelmingly at Lighthouse’s feet. However, from December 2014 to December 2017 the parties were occupied by Timor Leste’s ultimately successful jurisdictional objection to the arbitration commenced by Lighthouse and from about mid-2018 to May 2020 by Timor Leste’s unsuccessful objections to this proceeding.[62] Timor Leste had every entitlement to make those applications and its position in respect to the arbitration was upheld. However, a consequence of that approach was that if the claims nevertheless proceeded, they would be heard some years after the relevant events.
[62]See above [9]-[10].
I am not persuaded Timor Leste faces a substantial risk of an unfair trial or prejudice whether due to the delayed provision of the security, the lay witness statements or indeed the delayed resolution the claim more broadly. The documentary nature of the allegations, the absence of any specific lost testimony, the routine involvement of government in commercial litigation, and the manageable nature of any resource uncertainty collectively show that any prejudice is not sufficiently grave to warrant dismissal.
It is also necessary to consider the prejudice to Lighthouse if its claim were dismissed. Dismissal would permanently extinguish its right to recommence the action, as the limitation period has now expired. Timor Leste submitted that this consequence should carry little weight, given Lighthouse’s previous non-compliance and apparent inability to prosecute the matter to trial. However, I have found that the delay was excusable, largely attributable Welner Lawyers’ conduct, and that Lighthouse now possess the means to fund the proceedings to trial. Accordingly, that submission lacks force. Importantly, the Court should be slow to deprive a party of its day in court, and I am satisfied that Lighthouse would suffer irreparable prejudice if this claim were dismissed.
Lighthouse’s conduct generally
There is merit in Timor Leste’s criticisms of aspects of Lighthouse’s conduct of the proceeding. In particular, the threats of contempt proceedings against Timor Leste’s solicitors with respect to the alleged provision of documents, appeared entirely devoid of merit and ought not to have been made. Once a decision had been made not to press the application, it was at the very least discourteous not to convey that to the solicitors concerned. The mooting of an appeal and its subsequent non initiation falls into a different category albeit both foreshadowed courses represent a most unusual choice as to the deployment of resources by a plaintiff whose financial resources were apparently stretched. That said, they are not matters which are of moment in the disposition of this application.
The position of the Court
In exercising its discretion to dismiss a proceeding, the Court must also have regard to its own interests in the efficient administration of justice, including proper case management and the rational allocation of finite judicial resources.[63] In this case, the parties’ conduct has fallen short of the CPA’s overarching purpose—to resolve real disputes justly, efficiently, and in a timely and cost effective manner. It is unacceptable that a proceeding commenced in 2016 remains at the close of pleadings nine years later, consuming Court time that could be devoted to other matters. In light of Lighthouse’s engagement of new solicitors, I will afford it an opportunity to rectify its own shortcomings as well as those of its former solicitors. Going forward, both parties must advance this litigation expeditiously and in furtherance of the administration of justice, incur only reasonable and proportional costs, and adhere strictly to the Court’s case management processes.
[63]Idoport (n 13) [53].
Conclusion
Having regard to the above matters, I do not consider that it is appropriate to dismiss the plaintiff’s proceeding. The exercise by the Court of the power to dismiss is a radical step and a court must be careful in the exercise of such a power,
Whilst the delay has been significant, and occurs against the backdrop of earlier instances of delay on Lighthouse’s part, I do not consider that the extent of the delay is such that it gives rise to a substantial risk of an unfair trial or serious prejudice to Timor Leste. Further and critically, Lighthouse has now remedied the default in providing security and it has substantial liquid funds available to prosecute its claim including in excess of $1 million held in its solicitor’s trust account. Further, the extension of time sought by Lighthouse for the provision of its lay witness statements will be subject to a guillotine order. If it does not comply, its claim will be dismissed.
The proceeding from will now be case managed in the most intense fashion. Having regard to the recent history, Lighthouse will be given short shrift if it fails to comply with any further procedural orders and the Court will be open to making self-executing in respect of such further interlocutory steps as may be required to be observed by Lighthouse. Further, it will be open to Timor Leste, if so advised, to make an application for further security for costs. Whilst it is a matter for Timor Leste, the Court would be assisted if any such application seeks security for the entirety of those costs anticipated to be incurred from the time of completion of Timor Leste’s lay witness statements to the conclusion of the trial. If such application is made and succeeds, any order for the provision of further security will likely require the provision of security on a staggered basis with clear consequences which follow if those timelines are not met. The consequences will likely be influenced by the recent history and the effect on the orderly processes of the Court including the vacation of any trial date.
Further, it is now appropriate for the proceeding to be set down for trial. The Court proposes to list the matter for trial in the early months of 2026.
Accordingly Timor Leste’s dismissal application fails. The proceeding shall be listed for directions within the next seven days at which time orders will be made dismissing Timor Leste’s application, and any costs issues will be determined. The orders shall record the undertaking to the Court provided by Lighthouse and Mr Jacobs with respect to the moneys held in the Merton Lawyers trust account, and extend the time for the provision of Lighthouse’s lay witness statements with an accompanying self executing order. The proceeding shall be fixed for trial and other ancillary trial directions shall be made.
SCHEDULE OF PARTIES
| S CI 2016 04287 | |
| BETWEEN: | |
| LIGHTHOUSE CORPORATION LIMITED (IBC 051 557) | First Plaintiff / First Defendant by Counterclaim |
| LIGHTHOUSE CORPORATION PTY LTD (ABN 25 343 263 433) | Second Plaintiff / Second Defendant by Counterclaim |
| - and - | |
| REPUBLICA DEMOCRATICA DE TIMOR LESTE | First Defendant / First Plaintiff by Counterclaim |
| ESTADO DA ELECTRICIDADE AGUA E URBANIZACO | Second Defendant / Second Plaintiff by Counterclaim |
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