Mevon Pty Ltd v Nationwide Marine Pty Ltd

[1992] FCA 402

IN THE FEDERAL COURT OF AUSTRALIA) JUEMENT NO. 9%&&../ -92.

NEW SOUTH WALES DISTRICT REGISTRY)	NO G 119 of 1991
GENERAL DIVISION	1

BETWEEN MEVON PTY LIMITED

Applicant

AND NATIONWIDE MARINE PTY

LIMITED

First respondent

AND	TONY JEANS
Second respondent

AND AVDALL & BOZIER PTY

LIMITED

Third respondent

AND NATIONWIDE MARINE PTY

LIMITED

AND AVDALL & BOZIER PTY

LIMITED

EX TEME'ORE JUDGMENT

proofs of relevant matters existed. The applicant's problems	was to establish its case for relief, a deficiency in its
arose because it had previously acknowledged in writing that all its evidence was already filed. I therefore adjourned the notice of motion to today to enable the applicant to deal with that evidentiary deficiency. I said at the time of the adjournment that I did not believe that litigation should be run by ambush, in the sense that available evidence would be excluded, unless there were very special circumstances - one of which would have to be irremediable prejudice to another party.
I accept that this involves the Court and other parties accepting incompetence or error but I think that we must never lose sight of the fact that litigation is not for or about lawyers but for and about litigants and their financial and other genuine interests. The courts are provided by the public at considerable expense for the purpose of providing a forum to resolve disputes about those interests, not to engage in a blood sport or truncate and frustrate litigation by mechanisms that may well have been appropriate to another day
there has already been unconscionable expenditure on and another era. This is particularly so in this case where
preliminary and interlocutory matters that careful attention to the litigation would undoubtedly have substantially reduced, perhaps avoided altogether.
The first matter before the Court today is the status and effect of the filing of an affidavit on 13 March 1992 by John Clement Preston. Mr Preston is the managing director of Mevon Pty Limited (the applicant). His previous affidavit was shown to be deficient in relation to proving the case which the applicant seeks to lead here because it made no reference at all to his having read, still less relied on, a report by the third respondent concerning the boat which is the principal subject of this action. The report is a crucial matter for the applicant's claim under section 52 of the Trade Practices Act 1974 against the third respondent.
The new affidavit of Mr Preston supplies, on a prima facie basis at least, evidence to cover this deficiency. It will remain to be seen whether this evidence is accepted at the end of the day but for the moment it undoubtedly is sufficient to overcome the problem raised by the third respondent's notice of motion.
In the circumstances it seems to me that leave should be given to the applicant to call and rely upon Mr Preston's affidavit of 13 March 1992. I have already ordered that the applicant is to pay the costs of the third respondent's notice of motion
including the costs of 2 March 1992 and of today. I directed
that such costs may be taxed and enforced immediately and not require awaiting the outcome of the litigation as a whole.
It appears from an affidavit filed by the solicitor for the applicant that this whole fiasco was brought about by an oversight on his part together with the failure, apparently through pressure of work, of the applicant's counsel to give attention to the matter adequately prior to the hearing of the notice of motion. He says, and he outlines the circumstances, that he did not know what was the basis of the notice of motion until he actually heard it in court.
I passed some observations about this means of conducting litigation in my remarks on 2 March 1992 and there is no need to repeat them now. I merely emphasise that lawyers are under the public spotlight increasingly, not least with regard to the expenditure of costs. In my opinion, every one of us has the obligation to attempt to reduce or not increase costs in every piece of litigation in which we are involved. That certainly did not happen in this case. In the circumstances I order that the costs of the notice of motion of the third respondent be paid by the legal advisers of the applicant and not by the applicant itself. They are to be paid forthwith upon agreement or taxation.
The second matter that arises for resolution today is one
raised in the first instance by the first respondent but agreed to by the second and third respondents. They seek
orders that the orders for costs made in relation to the security of costs application which was earlier determined should also be permitted to be taxed immediately and paid on taxation and not at the end of the litigation as would be normal. I must say that I do not know why this practice is the norm but I accept for present purposes that it is.
The question here is of a somewhat different kind to that concerning the third respondent's notice of motion for summary dismissal to which I have just been referring. Security of costs is not much more than an insurance policy for respondents being required to engage in litigation against an impecunious moving party. Ordinarily the security would not be called upon until the action was completed and, the respondents being successful, the applicants had been ordered to but refused or been unable to pay the respondents' costs.
This application involves the applicant actually being required to pay out costs more or less on the merits of its claim without those merits ever having been subjected to testing in court. The order which the respondents seek cannot be used as some form of penalty for inefficiencies in the conduct of the litigation by the applicant to date. Nor can it be used, as was advocated at one stage of the argument, to test the suitability or availability of the security of costs in fact lodged in response to the Court's order.
Bank has lodged a security on behalf of another company, not I am informed that what has actually happened is that the ? N Z
the applicant. There is, as I am told, no inter-company arrangement vouchsafed to the Registrar or to the respondents to ensure that if the applicant is ordered to pay costs at some stage, this bank guarantee would be honoured in favour of those costs. The respondents have not been informed, so I am told, that there is an irrevocable direction that the bank pay out the amount ordered in due course by the Court at the direction either of the Court or of the applicant. This is undoubtedly a matter which primarily affects the respondents and they should take such initiatives to secure their position as seem to them to be appropriate. However, the Court also has an interest in the matter because it is not desirable that what purports to be a security under an order of the Court may in fact not comply with the spirit as well as the letter of its intention.
Although there is no reason to believe that the security lodged is or was intended to be an evasive or clever tactic on the part of the applicant, nonetheless it is not appropriate for a party ordered to provide security to do so in an indirect way without expressly satisfying the Registrar that what has been done in fact complies with the Court's orders in the matter.
I therefore direct that within seven days the applicant supply
establish that the security lodged is in fact the security to the Registrar sufficient evidence and documentation to
which the Court has ordered and that there will be no difficulty in the respondents' accessing that security should the circumstances so demand.
I return then to the question of whether the respondents should obtain an order that the costs on the security application should be taxed and paid forthwith. This case, as I have said on a number of occasions, has an inglorious history. No-one can with confidence predict that the litigation is near to the point where it can be fixed for hearing. Perhaps even more importantly, the applicant has, pursuant to an order which I made on 2 March 1992, filed a statement of the damages which it alleges together with some supporting documentation. I observe in passing that as with the affidavit of Preston, this statement was ordered to have been filed and served by not later than 4.00 pm on 12 March 1992. As was the case in relation to the af fidavit of Mr Preston, this order was not complied with.
Not only is this a further disregard of the Court's orders to those to which I have drawn attention before, but the affidavit filed in the matter by the applicant's solicitor to explain and answer the previous contempts did not even mention any reason why the statement of damages was filed out of time. It is of course not critical to the litigation that in fact these filings took place one day later than the order had
of the Court's orders and directions is tending to induce in specified. What is critical is that the continuous flouting
me a sense that this case may not be serious and that the Court is being toyed with for some interest of the applicant which is not immediately clear.
This feeling, which has accumulated over the long unhappy history of the present litigation on the applicant's side of the record, is given additional emphasis when attention is given to the statement of damages. Although no-one has had the courtesy to add up the various figures which go to make up the claim, it is perfectly clear that the bulk of them is to be found in three items. One is for $80,000 for what is called "diminution value of the vessel", because the boat that was supplied was a 1986 rather than a 1987 model. Precisely what this claim means is not at all clear to me.
The second major item is what is described as the "diminution in value of vessel due to engine hours at date of purchase being 430 instead of 248". This claim is for $50,000, for which little or no explanation is given. The third item is described as "damages for the loss of use of the vessel" for a ten month period based on interest claimed at 22 per cent. That amount is $104,000. How this claim comes into the case and particularly how it is made relevant to the alleged contraventions of the Trade Practises Act 1974 is not at all clear yet.
Yet, of course, the ordering of particulars of damages is
designed to achieve clarity in such very matters. The order for particulars was made not for the sake of form but to explain to the Court and the other parties what claims are being made, how they are calculated, how they are intended to be proved and, if there is doubt, the causal nexus between the claims made and the heads of liability relied upon. The statement of damages, the material filed with it and the rest of the applicant's evidence in this case far from complies with those requirements.
Despite having had the Court's opprobrium expressed in clear terms, despite having been under assault by three respondents on countless occasions in the Court, and despite the possibility of contempt of court proceedings against the legal representatives of the applicant or the applicant's directors or both, little attention to the applicant's responsibilities to the Court in relation to this claim has been given. The least I can say is that this type of haphazard and lackadaisical approach casts serious doubt upon whether this is a real piece of litigation at all.
I have taken the trouble to mention these matters because they are directly relevant to the respondents' application now before the Court. It seems to me that any parties facing this particular claim would have good reason to suspect that they are being required to meet litigation which at the end of the day will either not be pursued or will amount to a very minor claim.
Those circumstances, together with the way in which the security of costs order has been met, entitle the respondents
to be suspicious that they will not receive the costs already ordered on the security application if they wait until the litigation is completed. These suspicions are such as to entitle the respondents to secure their position more firmly than would otherwise be the case, rather than be required to wait until the end of the litigation and take their chances in relation to the costs now payable. I therefore order that the

EINFELD J SYDNEY 16 MARCH 1992

When a notice of motion was brought by Avdall & Bozier Pty Limited (the third respondent) to strike out the statement of claim against it summarily, a hearing was commenced on 2 March

1992. Towards the end of that hearing, the applicant

acknowledged, as it should have done long before, that if it

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costs granted to the respondents on the security application
may be taxed and enforced forthwith.

The further affidavits said by the applicant to be necessary to "clear up" inadequacies in existing affidavits of evidence are to be filed and served by not later than 4 pm on Monday 30 March 1992. This does not extend to permitting the applicant to file affidavit evidence on matters additional to those already deposed to. Any application for such purpose must be made by notice of motion supported by affidavit, a date for which, if required, will be given by my Associate on request and by consent.

The respondents' affidavits are to be filed and served by not later than 4 pm on Friday 24 April 1992. Any affidavits in reply are to be filed and served by not later than 4 pm on 1

May 1992. The matter will be listed for directions at 9.30 am on 7 May 1992 for the purpose of examining whether any further steps are necessary before the matter is fixed for

hearing. There will be liberty to apply on one week's notice.

I order that each of the parties supply their clients with a copy of this judgment.