Lydiard Financial Services Pty Ltd v Moran
[2005] VSC 184
•30 May 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 4250 of 2003
| LYDIARD FINANCIAL SERVICES PTY LTD (ACN 005 932 276) previously CUTHBERTS NOMINEES PTY LTD (ACN 005 932 276) | |
| RICHARD ERIC OAKLEY | |
| DAVID ANDREW FAWELL | |
| ALAN WALTER SANDBACH | |
| ALAN ARTHUR GAY | Plaintiffs (Respondents) |
| v | |
| JOHN GERARD MORAN | Defendant (Appellant) |
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JUDGE: | Balmford J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 May 2005 | |
DATE OF JUDGMENT: | 30 May 2005 | |
CASE MAY BE CITED AS: | Lydiard Financial Services v Moran | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 184 | |
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APPEAL – order of a Master striking out defendant’s defence – Supreme Court (General Civil Procedure
) Rules 1996 – r 66.03 – appeal dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the First to Third and Fifth Plaintiffs | Mr D G Guidolin | Wisewoulds |
| Defendant | In Person |
HER HONOUR:
This is an appeal against orders of Master Evans made on 6 May 2005 on a Summons seeking as the principal order that the defendant’s defence be dismissed pursuant to Rule 63.03 of the Supreme Court (General Civil Procedure) Rules 1996. The Master’s orders read:
1.The Plaintiffs have leave to amend their application by substituting in paragraph 1 of the summons for the word “dismissed” the words “struck out”.
2.The Defendant’s defence is struck out.
3.The Defendant pay the Plaintiffs’ costs of the application.
4.The application is otherwise dismissed.
The appeal was conducted by re-hearing de novo in accordance with Rule 77.05(7)
Rule 63.03 reads:
(1)The Court may in any proceeding exercise its power and discretion as to costs at any stage of the proceeding or after the conclusion of the proceeding.
(2)Costs which a party is required to pay under any of these Rules or an order of the Court shall, unless the Court otherwise orders, be paid forthwith.
(3)Where the Court makes an interlocutory order for costs, the Court may then or thereafter order that if the party liable to pay the costs fails to do so—
(a)if that party is the plaintiff, the proceeding shall be stayed or dismissed;
(b)if that party is a defendant, his defence shall be struck out.
(4)In paragraph (3)—
(a)“plaintiff” includes any person who makes a claim in a proceeding;
(b)“defendant” includes any person against whom a claim is made in a proceeding.
The history of the matter is set out in the following terms in the decision of Mandie J delivered on 5 March 2003.[1]
1. In this proceeding the defendant has filed a number of charges and summonses in the Magistrates’ Court at Ballarat against two solicitors, a member of counsel and a real estate agent, who were all in one way or another involved with the sale of a property which was subject to a first mortgage in favour of the first-named plaintiff. The other plaintiffs are the persons who are the subject of these charges and summonses filed by the defendant. There are four conspiracy charges, one against each of the individual plaintiffs. There are four charges of attempting to pervert the course of justice, one against each of the individual plaintiffs. There are four charges of obtaining property by deception, again against each of the personal plaintiffs, and, in addition, against one of the solicitors involved there is a charge of obtaining financial advantage by deception by disbursing certain proceeds of sale of the first mortgaged property.
2. The plaintiffs invoke the inherent jurisdiction of the court to deal with an abuse of process and seek orders that the defendant be ordered to discontinue these charges and that in the meantime he be restrained from proceeding with them, and further orders that he be restrained from bringing like charges.
3. The background to the matter is that there were a number of proceedings in relation to this piece of real estate which was the subject of a mortgage, and that those proceedings were ultimately the subject of terms of settlement reached between, for present purposes, the mortgagee, which was the first plaintiff, and a Mrs Moran, who was the mortgagor and who is now deceased. . . .
5. . . . the settlement of the sale of the land was completed. The proceeds were applied, and the evidence shows the details of how the proceeds of sale were applied to principal, interest and various costs related to enforcement and the sale.
[1][2003] VSC 65 at [1] to [5]
His Honour found that all of the charges were hopeless and had been brought with an improper purpose. He ordered that they be discontinued, that in the meantime stays granted by Beach J and Redlich J be continued, and that until the trial and determination of the proceeding the defendant be restrained from laying further charges. In addition, he found that it was unlikely that the matters would get to trial, although he had in part granted interlocutory injunctions. In the circumstances, he considered that it was desirable that he should deal with costs on a final basis and accordingly he ordered that the defendant pay the costs of the proceeding to date, including the costs of the application before him, on an indemnity basis, and the costs be taxed in default of agreement.
An application by the defendant to the Court of Appeal for an extension of time to serve a notice of appeal was dismissed with costs on 16 May 2003, the Court being satisfied that the grounds in the notice of appeal were quite hopeless and the defendant had no reasonable prospect of succeeding on the appeal. An application to the High Court for special leave to appeal against that decision was dismissed on 10 December 2004.
On 30 June 2003 Master Bruce ordered that the costs of the plaintiffs pursuant to the order of Justice Mandie were taxed and allowed in the sum of $53,400; and on 30 July 2003 he ordered that the costs of the plaintiffs pursuant to the order of the Court of Appeal were fixed at $5,924.50.
By letter dated 23 September 2003 Wisewoulds, the solicitors for the plaintiffs, wrote to the defendant requesting payment of (inter alia) the costs ordered by Master Bruce in this proceeding and advising that if the total amount requested was not paid within 30 days they had instructions to issue bankruptcy proceedings. On 31 January 2005 the defendant purported to pay the sum of $82,521.27 in satisfaction of this request by forwarding to Wisewoulds a promissory note for that amount payable twenty years after date. Wisewoulds refused to accept the promissory note. A bankruptcy notice was issued on 17 February 2005. On 5 April 2005 Wisewoulds wrote again to the defendant indicating that unless they received within 14 days payment of $59,324.50, being the total costs ordered by Master Bruce pursuant to the orders of Mandie J and the Court of Appeal, they proposed to apply pursuant to Order 63.03(3)(b) for a order that his defence be struck out.
Such an application was brought by the plaintiffs and granted by Master Evans on 6 May 2005. On 12 May 2005 the defendant filed the notice of appeal with which I am concerned.
Mr Guidolin, for the plaintiffs, conceded that, as the Full Court said in Exell v Exell[2] and Beach J in Thomson v Ronstan International Pty Ltd[3] the making of an order striking out the defence was draconian in its effect and was a remedy of last resort. He referred to the statement by the Court of Appeal in British American Tobacco Ltd v Cowell[4] that “the rules do not exist to punish”. He submitted, nevertheless, that this was a case for the making of such an order.
[2][1984] VR 1 at 9
[3][2000] VSC 47 at [29]
[4](2002) 7 VR 524 at 588; decided before the enactment of Rule 63.03(3)
He referred first to the passage in Exell v Exell[5] where the Court, having pointed out that there was (at that time) no Rule giving power to dismiss an action for failure to comply with a costs order, nevertheless noted the relevance, in that context, of intentional and contumelious failure to comply with a direction, albeit a direction related to the prosecution of the action. The enactment of Rule 63.03(3) removes the difficulty which their Honours found, but does not remove the relevance of contumelious behaviour to the decision whether to make an order pursuant to that Rule.
[5]At 8
Mr Guidolin submitted that the behaviour of the defendant in purporting to pay the costs ordered by Master Bruce by means of a promissory note at twenty years was intentionally contumelious and ought to be taken into account by the Court in reaching a decision.
He then referred to Thomson v Ronstan where Beach J, having expressed the view that the power in Rule 63.03(3) should be exercised sparingly, found that in the case before him the exercise of that power was warranted, one reason being that “the costs in question are significant and were incurred by the defendant as a consequence of the plaintiff’s conduct of the case.”[6] He submitted that in the present case the costs were also significant, and were incurred as a consequence of the defendant’s conduct of the case.
[6]At [32]
His principal submission, however, was that the defendant had no prospect of success in the action. This was apparent from the findings of Mandie J, supported as they are by the decisions of the Court of Appeal and the High Court. The contumelious behaviour of the defendant and the fact of his behaviour having caused the costs to be incurred were also relevant.
For all those reasons, he submitted that the appeal against the orders of Master Evans should be dismissed, and that the defendant should be ordered to pay the costs of the appeal on an indemnity basis.
Mr Moran sought to refer to a submission relating to the Constitution Act 1975, but, accepting that that submission had been rejected by the High Court, he did not press it further.
As to the argument based on Thompson v Ronstan, referred to in [12] above, he submitted that the costs in question here were incurred as a result of the plaintiffs’ choosing to bring this proceeding in the Supreme Court, rather than to defend the criminal charges in the Magistrates’ Court at Ballarat.
He submitted that the tender of the promissory note was effective compliance with the orders of Master Bruce, because those orders did not require payment at any particular time, and the tender of a promissory note constituted legal tender. However, Rule 63.03(2) provides that costs which a party is required to pay by any order of the Court shall, unless the Court otherwise order, be paid forthwith. In no sense could the tender of that promissory note, payable twenty years after date, be considered as payment “forthwith”.
He submitted that it was not possible to determine the likely outcome of the trial of the proceeding, and that if he was successful the costs might go the other way. However, that submission runs contrary to the findings of Justice Mandie, upheld as they were by the Court of Appeal; and the costs in question, in any case, relate to what were, when they were incurred, interlocutory proceedings.
He submitted that Wisewoulds owed him four million US dollars, and they could deduct the amount ordered by Master Bruce and pay him the difference. However there was no material before the Court to support that claim other than an invoice addressed to Wisewoulds and a printed document, unsigned and unauthenticated, headed “Copyright notice”.
Nothing in the submissions of Mr Moran leads me to reject the submissions of Mr Guidolin. I accept those submissions in their entirety. The appeal is dismissed, and there will be orders in the same terms as the orders under appeal. Counsel may wish to make submissions as to costs.
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