Manjimup Wine Enterprises v The Independent Liquor Group Distribution Co­Operative Ltd

[2017] WASC 198

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   MANJIMUP WINE ENTERPRISES -v- THE INDEPENDENT LIQUOR GROUP DISTRIBUTION CO­OPERATIVE LTD [2017] WASC 198

CORAM:   MASTER SANDERSON

HEARD:   11 MAY 2017

DELIVERED:   11 MAY 2017

PUBLISHED           :  20 JULY 2017

FILE NO/S:   CIV 2272 of 14

BETWEEN:   MANJIMUP WINE ENTERPRISES

Plaintiff

AND

THE INDEPENDENT LIQUOR GROUP DISTRIBUTION CO­OPERATIVE LTD
Defendant

Catchwords:

Practice and procedure - Application for extension of time to comply with springing order and to set aside judgment entered after failure to comply with order - Turns on own facts

Legislation:

Nil

Result:

Time extended
Judgment set aside

Category:    B

Representation:

Counsel:

Plaintiff:     Mr S G Leslie

Defendant:     Mr C G Colvin SC

Solicitors:

Plaintiff:     Zafra Legal

Defendant:     Gilchrist Connell

Case(s) referred to in judgment(s):

MTQ Holdings Pty Ltd v Lynch [2007] WASC 49

1. MASTER SANDERSON:  This was the plaintiff's chamber summons seeking an order extending time for the provision of security for costs pursuant to the terms of a springing order and to set aside a judgment entered for failure to comply with that springing order.  After hearing argument I made the orders sought by the plaintiff.  I indicated I would publish reasons for that decision.  These are those reasons.

2. This matter has a long and somewhat unfortunate history.  To explain why I made the orders sought by the plaintiff it is necessary to provide some background and a chronology of the relevant events.  What follows is taken largely from submissions filed on behalf of the plaintiff on 10 May 2017.  The relevant facts are to be found in four affidavits of Paul Eric Kordic affirmed between 16 March 2017 and 28 April 2017 and two affidavits of Mark Andrew Kordic one affirmed 7 January 2015 and the other affirmed 1 March 2017.

3. The plaintiff's claim concerns a partly written and partly oral agreement entered into on 23 February 2011.  The plaintiff alleges the defendant agreed to purchase 20,000 cases of wine from the plaintiff but defaulted on the agreement.  The claim is for loss of profits and additional storage and expenses incurred as a result of the defendant's refusal to accept delivery of all but 1,280 cases of the wine.

4. The writ with an endorsement of claim was issued on 10 September 2014.  It was served on 24 September 2014.  The defendant filed its defence on 26 November 2014.  On that same day the defendant applied by chamber summons for orders to transfer the proceedings to the Supreme Court of New South Wales and for security for costs.  Affidavits were filed in support of and in opposition to the application.  The applications were heard by me on 25 February 2015.  An issue arose as to the jurisdiction of a master to deal with an application under the cross‑vesting legislation.  Accordingly the matter was transferred to Justice Mitchell.  His Honour dismissed the application to transfer the proceedings to New South Wales but did order the plaintiff provide security for costs.  Relevantly his Honour's order was as follows:

   The plaintiff give security for costs of these proceedings in the sum of $96,000, such security to be provided by bank guarantee limited to the sum of $96,000 or other form of security acceptable to a registrar of this court.

5. There was no temporal limitation in the order.  On 7 September 2016 the proceedings were put on the inactive cases list.  That step was taken administratively.  There was no suggestion the placing of the matter on the inactive cases list was inappropriate.

6. On 1 March 2017 the plaintiff filed a chamber summons seeking orders removing the proceedings from the inactive cases list.  That application was supported by an affidavit of Mark Andrew Kordic affirmed 1 March 2017.  Mr Mark Kordic's affidavit explained the reason why the security had not been provided was the financial difficulties experienced by the plaintiff.  The cause of those difficulties was explained.  Mr Mark Kordic said the plaintiff now had the funds to provide the security for costs and the security would be provided in a timely fashion.  Mr Mark Kordic assured the court the matter would be pursued diligently and he further said he could see no reason why the matter could not be resolved expeditiously.

7. The application was heard on 2 March 2017.  I ordered the proceedings be taken off the inactive cases list and with respect to the provision of security for costs I made a springing order.  That springing order required the plaintiff to provide security for costs by 4.00 pm on 16 March 2017 failing which the claim would be struck out and judgment would be entered for the defendant with costs.  It is relevant to note the time frame in the springing order was proposed by counsel for the plaintiff.  It is also relevant to note the plaintiff's application was opposed strenuously by the defendant.

8. The plaintiff failed to provide the security within the time specified in the springing order.  By chamber summons filed and heard on 16 March 2017 (being the last day for compliance with the springing order) the plaintiff applied for and obtained an order extending the time for compliance with the springing order to 30 March 2017.  That application was supported by an affidavit of Mr Paul Kordic affirmed 16 March 2017.  Mr Paul Kordic explained where the funds required to provide the security for costs were coming from.  He detailed efforts by the plaintiff to obtain the bank guarantee and the administrative difficulties which meant there was no compliance with the springing order.

9. After hearing argument I extended time for compliance with the springing order until 30 March 2017.  Once again it is to be noted the date to which the order was extended was proposed by counsel for the plaintiff.  It is also relevant to note once again the application was strenuously opposed by the defendant.

10. The plaintiff was unable to provide the bank guarantee within the extended time period and on 11 April 2017 this application was filed seeking a further extension of time and to set aside judgment which had been entered consequent upon the failure to comply with the earlier order.  The application was supported by an affidavit of Mr Paul Kordic affirmed 11 April 2017.  That affidavit explained actions taken by the plaintiff in an attempt to obtain the bank guarantee.  It also attached a copy of the bank guarantee dated 6 April 2017.

11. There had been conferral between the plaintiff and the defendant as to whether time for compliance with the springing order would be granted.  The defendant declined to agree to any extension of time.  Given the history of the matter and the approach adopted by the defendant throughout the protracted delay in providing security nothing adverse to the defendant can be drawn from its failure to agree.  What can be said is conferral was undertaken and appears to have been conducted in good faith.

12. On 10 April 2017 the solicitors for the defendant raised a further issue.  A company search of the plaintiff recorded Mr Mark Kordic's resignation as a director of the plaintiff on 26 February 2016.  Essentially it was said because Mr Mark Kordic was not a director of the plaintiff on 1 March 2017, when he affirmed his affidavit in support of the chamber summons to remove the case from the inactive cases list, the order made 2 March 2017 was based on a mistake of fact.  As I understand the defendant's argument it was said the case should not have been removed from the inactive cases lists because the affidavit in support of that application was not sworn by an officer of the company.

13. As a consequence of that issue being raised Mr Paul Kordic affirmed two further affidavits one on 13 April 2017, and the other on 28 April 2017.  Without going into detail it would seem there had been some corporate restructuring undertaken by the plaintiff and while it may be that as at the relevant date Mr Mark Kordic was not a director of the plaintiff he did have relevant knowledge of events and by implication was authorised by the company to affirm the affidavit.  I am satisfied while there may have been a mistake made by the plaintiff as to the proper person to affirm any affidavit it was not in any way sinister and did not lead to any error which called into question the validity of the order to remove the matter from the inactive cases list.  This issue was not pressed by counsel for the defendant at the hearing of this application.

14. There was no dispute between the parties as to the legal principles surrounding the extension of time to comply with springing orders.  Generally there are four relevant circumstances which require consideration.  First, the circumstances in which the springing order came to be made.  Second, the reason for non‑compliance with a springing order.  Third, the prejudice to the defaulting party if time is not extended.  Finally, the prejudice to the other party if time is extended.  These principles emerge from a number of cases of which the decision in MTQ Holdings Pty Ltd v Lynch [2007] WASC 49 is perhaps the best known. Of course, as with all interlocutory matters, the prime consideration is the interests of justice. In this application the ultimate question can be expressed this way: was the default of the plaintiff and the repeated defaults of the plaintiff such as to warrant the plaintiff being denied the opportunity to have its day in court?

15. Turning then to consideration of the four factors mentioned above.  There was no suggestion that the making of the springing order was in any way inappropriate.  The matter was on the inactive cases list and had been on that list for a period of six months before the application was made.  Furthermore, the order for security for costs was made on 8 June 2015.  Some 15 months passed before the matter was placed on the inactive cases list.  That meant there was a period of some 21 months between the making of the order for security for costs and the matter being removed from the inactive cases list.  There was no point in removing the matter from the inactive cases list if the security for costs was not to be provided.  Counsel for the plaintiff maintained that it could be provided within the time specified in the springing order.  Consistent with case management principles there can be no suggestion the making of the springing order was not appropriate.

16. The reason why the security was not provided was adequately explained - that is so not only with respect to the last delay but delays on other occasions.  There was clearly no want of effort on the part of the plaintiff.  It was undone by the administrative inefficiency of its bank.  The money to support the security was available.  I am satisfied there is nothing more the plaintiff could have done to advance its position.  There was certainly no contumelious disregard of the court's order.

17. The prejudice to the plaintiff if time was not extended is obvious.  It may well be the time limit for bringing proceedings had not expired - the plaintiff alleges that the parties entered into the supply agreement in 2011.  Given the claim was based in contract it would appear the action was not statute barred until 2018.  There seemed little point in requiring the plaintiff to start again.  It would involve further delays in the proceedings, the costs incurred in this action would be wasted, and the actual issue between the parties would be no closer to resolution.  Having said that while I accepted there was some prejudice to the plaintiff that was not a decisive factor in my decision.  After all on one view the plaintiff was the author of its own misfortune.  But I did accept on balance the plaintiff would suffer prejudice - if only financial prejudice - if time were not extended.

18. Finally there is the prejudice suffered by the defendant.  As counsel submitted the order for security for costs was made in June 2015.  The order was clear and straightforward and it was the responsibility of the plaintiff to comply with that order.  It did not do so and then sought the indulgence of the court repeatedly.  Counsel submitted that was inappropriate - it ran counter to the principles of case management which aim for the expeditious disposition of actions.  This action had been stalled for years and really had progressed hardly at all since the writ was issued.  While not pointing to any specific prejudice - for instance the death of a witness who was crucial to the defendant's case - the defendant nonetheless suffered general prejudice occasioned by delay.

19. The strength of the defendant's argument on the issue of prejudice is obvious.  I gave it careful consideration in weighing all elements in the balance.  In the end I was satisfied time should be extended.  The compelling factor in my opinion was the real efforts made by the plaintiff to secure the bank guarantee.  On my reading of the evidence there is nothing more that the plaintiff could have done.  It came up against an administrative brick wall which was not of their making and which they could do nothing to breach.  In the end they obtained the guarantee as soon as possible.  That being so the granting of the extension of time was appropriate, and, consequently, the judgment entered for the defendant was set aside.