Michael Wilson & Partners Ltd v Nicholls (No 10)
[2023] ACTCA 13
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Michael Wilson & Partners Ltd v Nicholls (No 10) |
Citation: | [2023] ACTCA 13 |
Hearing Date: | 22 February 2023 |
DecisionDate: | 24 February 2023 |
Before: | Loukas-Karlsson J |
Decision: | See [112] |
Catchwords: | APPEAL – APPEAL FROM SUPREME COURT – further application to set aside or vary order for security for costs made – issue of compliance with order raised – whether matters now advanced differ from those addressed in earlier judgment of the Court – whether fact applicant is seeking to register various foreign or interstate judgments relevant to the decision in relation to security for costs – many of matters raised by applicant identical or variations on previous submissions – application to set aside order dismissed – further order made permitting applicant to amend bank guarantee – indemnity costs ordered – consideration of whether applicant can continue to be represented by Mr Michael Earl Wilson – no such order made at this stage |
Legislation Cited: | Court Procedures Act 2004 (ACT) s 5A |
Cases Cited: | Benjamin v GB Franchising Australia Pty Ltd [2011] ACTCA 26 Dunstan v Higham (No 3) [2020] ACTCA 50 |
Parties: | Michael Wilson & Partners Ltd ( Applicant) Robert Colin Nicholls ( First Respondent) David Ross Slater (Second Respondent) Temujin Services Ltd (Third Respondent) Temujin International Ltd (Fourth Respondent) Temujin International FZE (Fifth Respondent) John Forster Emmott (Sixth Respondent) Effective Funds Management Pty Ltd (Seventh Respondent) |
Representation: | Counsel M Wilson ( Applicant) J Baird (Sixth Respondent) |
| Solicitors Michael Wilson & Partners ( Applicant) Duggan Legal ( Sixth Respondent) | |
File Number: | ACTCA 36 of 2021 |
Decision under appeal: | Court/Tribunal: ACT Supreme Court Before: McWilliam AsJ Date of Decision: 30 June 2021 Case Title: Michael Wilson & Partners Ltd v Nicholls & Ors Citation: [2021] ACTSC 128 |
Loukas-Karlsson J:
Introduction and Introductory Matter
1․On 23 February 2023 sitting as the Court of Appeal constituted by a single judge pursuant to s 37J of the Supreme Court Act 1933 (ACT) (Supreme Court Act) I heard an application filed by the applicant on 6 February 2023. By that application, the applicant sought to set aside the order for security for costs made on 21 July 2022. This is the second application of that type brought by the applicant.
2․At the hearing I also heard from the parties in relation to an issue brought to the attention of a Registrar of the Court by the sixth respondent. Namely, that the applicant had not complied with the order made on 18 November 2022 which required amendments to the form of the bank guarantee that the applicant had provided to the sixth respondent in the sum of $22,500. There was no suggestion by the sixth respondent that the security had not been provided.
3․The effect of the applicant having not complied with the order was, according to the sixth respondent’s submission, which I accept, that the proceedings were automatically stayed by the operation of the Court Procedures Rules 2006 (ACT) (Court Procedures Rules). The issue brought to the Court’s attention was therefore what should be done in relation to that matter. I will address that issue later in these reasons.
4․Before I turn to those issues and the substantive reasons, there is one matter to note in relation to the issue that had been raised by the sixth respondent. Namely, that the applicant had, by email sent to my chambers in advance of the hearing, referred to the fact that no application in proceeding had been filed by the sixth respondent. In particular, the email of 21 February 2023 noted that:
… Of course, as of today, the Sixth Respondent has no actual application before the Court in Form 2.7, and has paid no fee and no actual application has been listed to be heard.
5․Similarly at the hearing counsel for the applicant noted that counsel understood that there was an oral application before the Court (T3.22). The applicant’s written submissions also refer to the application as “an informal application made by email only”.
6․It is not apparent whether the applicant continued to press that submission at the oral hearing (beyond noting the understanding that there was an oral application before the Court) and, in any event, the sixth respondent noted that it was not actually pressing any application. It is, however, appropriate in the circumstances of the question being raised to note that, in my view, no application in proceeding is required to be filed to raise a question of compliance with an order for security for costs.
7․Such a view is supported by the fact that unlike the rules relating to the filing of an application for security for costs, or an application seeking to set aside or vary an extant order, there is no note that accompanies r 1904 of the Court Procedures Rules suggesting that an application in proceeding is required. In particular, and by way of contrast, rr 1904-1905 are set out below:
1904 Security for costs—effect of order
(1) This rule applies if the court orders the plaintiff to give security for costs.
(2) The time set by these rules or by an order of the court for another party to take a step in the proceeding does not run until security is given.
(3) If security is not given under the order—
(a) the proceeding is stayed as far as it concerns steps to be taken by the plaintiff; and
(b) the court may, on the defendant’s application, dismiss all or part of the proceeding.
1905 Security for costs—setting aside or amending order
The court may, in special circumstances, amend or set aside an order made under this division.
Note Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule.
8․Further, in my view, it is apparent that my conclusion above that no application in proceeding would be required in such a circumstance is supported by a clear policy rationale. Namely, that an application (however described) seeking to raise a question of compliance with an order for security for costs can be viewed as a continuation of the original application (for which a filing fee has already been paid).
9․In the result, there is, in my view, no need for a party to file a further application in proceeding and incur any additional filing fee. I interpolate to note that, in my view, it would be strange that a party who had successfully obtained an order for security would need to be put to the expense of filing a formal application in proceeding where it was alleging that the opposing party had not complied with the order (and as such where it did not have the benefit of that security). In my view, that could lead to a situation where a party would suffer the adverse costs consequence of having to file an application with no guarantee that those monies would be recoverable (ie. because the opposing party was impecunious, was not resident to the jurisdiction or may not have any funds within the jurisdiction).
10․In any event, as noted above, counsel for the sixth respondent expressly disavowed moving on a particular application.
Background
11․It is regrettable that this matter is once again before the Court to deal with purported non-compliance with my orders.
12․These reasons for judgment assume a familiarity with my earlier judgments in this proceeding, which outline the steps taken in the proceeding since it came before me in May 2022: see MichaelWilson & Partners Ltd v Nicholls (No 4) [2022] ACTCA 23; MichaelWilson & Partners Ltd v Nicholls (No 5) [2022] ACTCA 39 (Wilson (No 5)); MichaelWilson & Partners Ltd v Nicholls (No 6) [2022] ACTCA 41 (Wilson (No 6)); MichaelWilson & Partners Ltd v Nicholls (No 7) [2022] ACTCA 43 (Wilson (No 7)); MichaelWilson & Partners Ltd v Nicholls (No 8) [2022] ACTCA 64 (Wilson (No 8)) and MichaelWilson & Partners Ltd v Nicholls (No 9) [2022] ACTCA 70 (Wilson (No 9)).
13․In Wilson (No 9) (a judgment dealing with the issue of costs of the various applications in the matter) I summarised the procedural history of the matter and which judgment dealt with which of the myriad of interlocutory issues raised by the parties at [4]. I adopt that summary.
14․Of particular relevance to the matters before me is Wilson (No 8). By that judgment I outlined why I refused the applicant’s application to set-aside or vary the extant order for security for costs and why I ordered various amendments be made to the bank guarantee the applicant had, at that stage, provided to the sixth respondent. It is one of these orders that the sixth respondent submits the applicant has not complied with.
15․It is clearly necessary to deal with the applicant’s application first as, if the order for security for costs should be varied and/or set-aside that may dispose of any issue of non-compliance.
16․Before I turn to that application and the parties’ submissions, I note that in advance of the hearing I ordered the parties to provide written submissions directed to the two issues before the Court. Those orders also provided for the parties to provide any reply submissions. That course was taken to ensure the parties’ focused on the key issues relevant to the determination of the matters before the Court and to ensure an efficient use of court time at the listing of the hearing for oral argument.
17․Such an approach was taken given the prior history of the matter before me and the tendency of the applicant to advance arguments directed to broader matters between the parties. Such observations are not unique to this jurisdiction, and I again repeat the comments of Jackson LJ in Emmott v Michael Wilson & Partners Ltd [2019] EWCA Civ 219 at [70]:
Any court in this jurisdiction that has to consider this dispute in future would do well to remember that the overriding objective in civil proceedings includes a duty on the court to save expense, deal with the case expeditiously and fairly, and allot to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases; further, that the parties have a duty to help the court to achieve this. This pathological litigation has already consumed far too great a share of the court’s resources and if it continues judges will doubtless be astute to allow the parties only an appropriate allotment of court time.
18․Those comments were quoted with approval in Michael Wilson & Partners Ltd v Emmott [2021] EWCA Civ 505 at [66].
19․The applicant’s written submissions included submissions directed to two “additional issues”. I note that no leave was granted for the submissions to address issues other than the application before me and the other issue raised with the Court by the sixth respondent. A not inconsiderable amount of the hearing time was dedicated to these “additional issues”.
20․The first was the purported conditional appearance of the sixth respondent, with the applicant submitting that this issue was a matter that needed to be urgently resolved by the Court and that the sixth respondent was not entitled to appear conditionally. I have already addressed that matter in Wilson (No 6) at [88]-[89] where I accepted the sixth respondent’s submissions as to why it had filed a conditional appearance and continued to appear conditionally. There is no scope, nor reason to revisit that finding from which leave to appeal has not been sought. Indeed, that the applicant persisted in reagitating issues already determined by the Court was one relevant factor to my disposition of the various costs issues: Wilson (No 9) at [93] (where I rejected a submission that the sixth respondent’s conditional appearance disentitled the sixth respondent to a costs order).
21․The second issue related to the question of whether the Court was entitled to make an order as to costs absent an oral hearing. The applicant submitted in its written submissions that this was an issue “directed to the parties” citing Wilson (No 8) at [42]. This was also an issue that then-counsel for the applicant referred to in oral submissions.
22․The issue is plainly not raised in that judgment, nor was it an issue referred to the parties. Indeed, as the applicant submitted in written submissions, that was a matter that I had addressed in Wilson (No 7). There is no cause to revisit that issue at this stage. The applications were, at the date of the written submissions, already set down for an oral hearing before me. At the conclusion of the hearing, I expressly invited the applicant to respond to the sixth respondent’s submissions concerning the costs of the hearing of 22 February 2023.
23․Before turning to the substantive matters before me it is convenient to outline the evidence the parties sought to rely upon.
24․The sixth respondent read the affidavit of Peter Duggan sworn on 1 February 2023. There was no objection to that affidavit.
25․The applicant read the affidavits of Michael Wilson sworn 16 January 2023, 9 February 2023, 13 February 2023 and 17 February 2023. The affidavit of 13 February 2023 was an affidavit lodged in the underlying Supreme Court proceeding in support of an application to register various foreign or interstate judgments with the Court. The remaining affidavits were lodged in the Court of Appeal file. I note that the effect of McWilliam AsJ’s judgment in Michael Wilson & Partners Ltd v Nicholls & Ors [2021] ACTSC 128 is that the underlying proceedings are taken to have been dismissed at [51] and that the application to re-instate the proceedings is also dismissed at [85](1). While leave to appeal from that judgment has been sought, the judgment has not been stayed. In the result, there is a very real question as to whether the applicant can continue to lodge documents in that proceeding. That is not an issue that needs to be addressed in this judgment, however, and for the purposes of this application only I am prepared to accept the affidavit of 13 February 2023 as having been lodged and before me.
26․The sixth respondent objected to the receipt of the entirety of the affidavits on various bases (primarily relevance). Counsel for the sixth respondent noted at the oral hearing, however, that the sixth respondent was content for me to adopt the course I have previously taken with respect to the evidence of Mr Wilson. Namely, that the evidence be admitted subject to weight for the purpose of deciding the interlocutory application before me. I have again taken such an approach to avoid the need for the likely significant hearing time that would be dedicated by the applicant in seeking the admissibility of that material.
27․I again note for the applicant’s benefit that such an approach is unlikely to be taken at the hearing of the substantive application for leave to appeal (at the least the applicant should not assume that the same course will be taken). The applicant is on notice that if the applicant continues to lodge affidavits in the form of submissions or annexing material which is not relevant to the matters before the Court the applicant is at risk of that evidence not being admitted.
28․There is one final matter to note before turning to the application before me. That is that at the hearing on 22 February 2023, the applicant was initially represented by counsel. Following an adjournment, counsel withdrew from the hearing as the applicant had withdrawn instructions. The cover page of this judgment has therefore recorded Mr Wilson as counsel for the applicant.
The application to set-aside or vary the order for security for costs
Relevant legal principles
29․I discussed the test that applies to an application to vary or set aside an order for security for costs in Wilson (No 8). Such an application is brought pursuant to r 1905 of the Court Procedures Rules as picked up through the operation of r 5001(2) to matters before the Court of Appeal.
30․That rule states, relevantly, that the Court may “in special circumstances” amend or set aside an order for security for costs.
31․I had noted at [18]-[25] of Wilson (No 8), that the question of the test to apply had been discussed by at least two judges of the Court (with the latter, Elkaim J expressly deciding not to follow the test adopted by Mossop J in circumstances where Elkaim J had not been referred to the earlier ACT Supreme Court judgment of Mossop J): see Today’s Homes and Lifestyle Pty Ltd (in liquidation) v McCoullough (No 2) [2020] ACTSC 330 at [15]-[19].
32․As I outlined in Wilson (No 8), in those reasons, Elkaim J suggested that the test outlined by Griffiths J in Waters v Commonwealth (Australian Taxation Office) [2017] FCA 312 (Waters) was one concerning a “material change in circumstances” rather than “special circumstances” and his Honour adopted what was said in relation to the test by Rockett v Moneycorp Securities Pty Ltd [2008] QCA 142 (which had quoted part of a statement of principle from the case of Goodman v Lorenzen [2000] QCA 11).
33․I noted in Wilson (No 8) at [23] that:
It is not entirely clear that the bolded aspect of the Queensland Court of Appeal’s reasons in Goodman differs from the test outlined by Griffiths J in Waters. In particular, both judgments outline that the test when determining whether to set aside or vary an order for security for costs is the same test that applies in relation to varying an interlocutory order. There is, in my view, at least an argument that “material change of circumstance” refers to new information which, if available at the time of the original judgment, would have led to a different order being made.
34․Ultimately, it was not necessary for me to reach a concluded view in Wilson (No 8) as to the test to apply, noting that I had not heard from the parties on that issue. In written submissions in relation to this application, the applicant submitted that the test to apply was that from Waters (as endorsed by Mossop J in Dunstan v Higham (No 3) [2020] ACTCA 50). Counsel for the sixth respondent also submitted in writing that there was no dissent from the test outlined by me in Wilson (No 8).
35․The question for the Court to apply in determining whether to grant an application under r 1905 is whether there are “special circumstances” in that there has been a material change in circumstances. That is whether there is new information which, if available at the time of the hearing of the security for costs application, would have led to a different order being made.
Submissions of the parties
36․The applicant in written submissions referred to the following matters as new information which amounted to a material change in circumstances:
(a)The findings and determinations of Judge Pelling KC in his judgments, rulings and orders of 17 June 2022, 30 June 2022, 26 August 2022, 9 September 2022, 3 January 2023, 5 January 2023, 9 January 2023, 30 January 2023 and 13 February 2023.
(b)The order of Lord Justice Popplewell in the England and Wales Court of Appeal of 29 November 2022.
(c)The fact that the applicant has applied to reciprocally recognise and enforce a series of judgments in the ACT (I interpolate to note that those judgments appear to include most (if not all) of the various orders referred to above) and that the applicant submitted that these judgment amounts will, in principle, be available in the ACT by way of set-off against a costs order.
(d)Through the operation of the second addendum, vesting letter, notices of demand and various deeds of assignment the applicant owns a series of debts that the applicant submits totals in the order of US$26 million which the applicant submits are owed by the sixth respondent to him as a result of those documents.
37․In oral submissions counsel for the applicant referred to the above matters, however, also directed submissions towards broader matters (including an alleged fraud or concealment on behalf of lawyers acting for the sixth respondent). I reject those submissions in the strongest terms, noting that I also discussed submissions of that kind in Wilson (No 9). I further note that no evidence was provided by the applicant for the assertions, with counsel simply noting that they were “self-evident”. On my review of the material there is nothing to suggest such matters are self-evident or in any way established.
38․The sixth respondent submitted that these were, in effect, attempts to reagitate the matters dealt with by me in Wilson (No 8) and that none of those matters were matters which amount to a material change in circumstances.
39․At the outset I note that the evolving nature of the litigation between the parties in the UK is something that I addressed in detail in Wilson (No 8). I further note that many of the orders referred to above were also orders that were put to me by the applicant at the hearing in September 2022 (or by email following the hearing on 1 November 2022: Wilson (No 8) at [77]) as reasons for the setting aside of the order for security for costs. Those matters are plainly not now new information for the purpose of the test.
40․I have similarly also addressed arguments in various forms as to the fact that the applicant is a net-creditor in the United Kingdom and have held that that matter (even if established) is not a matter that would have altered my previous ruling in relation to security for costs: see, for example, Wilson (No 8) at [51]-[53].
41․Those are not findings that the applicant has sought leave to appeal from and there is nothing now advanced in the applicant’s written or oral submissions that raises doubt with those earlier findings. The applicant is not now entitled in a further application pursuant to r 1905 to attempt to reagitate issues previously decided by the Court.
42․I again note that the applicant’s submissions have a tendency to draw on broader matters relating to the litigation between the parties. By way of example, the claim that the applicant is owed in the order of US$26 million due to debts that he has acquired from various bankrupt parties appears to draw on broader issues. In particular, it appears these debts have arisen, at least in part (as best as can be ascertained from Mr Wilson’s submissions), as various people lent money to the sixth respondent by way of litigation funding relating to various proceedings in the United Kingdom. The debts or at least part of the debts then rely on a finding that the applicant is now entitled to these amounts. That is not a matter that can be determined by this Court. Indeed, such a question is well outside this Court’s jurisdiction.
43․I note that in oral submissions, counsel for the applicant submitted that:
If one looks at [Wilson (No 8)] … it doesn’t address the Sinclair position. It focusses on the fact that there is no longer a freezing order, but it doesn’t focus on the fact that, if we move back from August 2021, and if he [I infer the applicant] had purchased all rights of Mr Sinclair, and therefore owned and was owed by Mr Emmott, more than $25 million [US] of funding that Mr Emmott … had borrowed from Mr Sinclair …
44․That very matter had been expressly considered in Wilson (No 8) (albeit in the lower amount of debt that was, at that time, advanced before this Court and without direct reference to Mr Sinclair) at [29]-[30], [48], [77] where I referred to various judgments and orders made by Judge Pelling KC that had been raised by the applicant. I further note that there is no clear information before me as to why the applicant now claims to be owed the greater sum of US$25 or 26 million as opposed to the £2 million as at the time of the hearing of Wilson (No 8) (noting a similar amount was advanced before me at the hearing of the costs application: Wilson (No 9)).
45․As outlined above, this Court cannot determine the applicant’s net-debt/creditor position in the United Kingdom – that matter is beyond this Court’s jurisdiction. This finding does not change even if the applicant were successful in having some (or all) of those judgments recognised. The process of recognition would not enable this Court to determine any ongoing matters in the United Kingdom.
46․It is clear that I expressly considered at the time of the first application whether the fact the applicant claimed to be owed various sums in the United Kingdom (or indeed whether the applicant had court orders that supported such claims) was a matter relevant to my original order for security for costs. In my view, no additional claims as to the basis for that debt nor the fact they are for a greater amount vary any of my conclusions in Wilson (No 8).
47․Of the matters referred to by the applicant it is clear that in substance the matters are generally similar to or variations of the arguments already advanced before me and rejected in Wilson (No 8). For the reasons contained in that judgment, those submissions should again be rejected.
48․The one matter that appears, in my view, to differ from the arguments I dealt with in Wilson (No 8) is the applicant’s contention that it has applied to recognise judgment debts in the ACT and that these can, at some point in the future, be set-off against any future costs award.
49․I note that it is not clear from the information before me at the hearing whether the application has been filed. Nor is it at all apparent whether the application will be successful. Counsel for the sixth respondent, however, sensibly directed submissions as to whether that information would have altered the underlying basis of the order for security for costs on the assumption that the judgments could be and would be registered here. As I have stated that submission was sensible, as otherwise the applicant may have sought to file a further application if he was successful in the application to recognise the various judgments.
50․Counsel for the sixth respondent submitted that, in effect, a registered judgment here was no different to the existence of the foreign judgment, matters I had already dealt with in Wilson (No 8).
51․The applicant did not point to any authority in support of its submission that a judgment debt from a United Kingdom decision or a court in NSW which was registered in this jurisdiction would tend against the making of order for security for costs as it could be, in-effect, set-off against any future costs ordered in the proceeding. It is not clear to me that would be a definite outcome. For the reasons that follow, however, there is no need to resolve that rather novel question.
52․First, the very nature of the above proposal, namely that at some future date (ie. at the conclusion of the proceeding) there may be a set-off available to the applicant in respect of any costs awarded (assuming that the judgments can be recognised and are recognised) tends against acceptance of the applicant’s submission. That is because there could not be any guarantee at the time of setting aside the order for security for costs that as at that date of the judgment on the application for leave to appeal the registered judgment debt would remain registered. In particular, the judgment debt at that point may have been enforced in either the United Kingdom (or in the ACT assuming the judgment can be registered) and any outstanding debt discharged.
53․That finding has even more force when it becomes clear that the parties have been routinely (and by the applicant’s submissions in writing – by correspondence with each other) setting-off various debts as between the parties in the United Kingdom depending on the respective past-immediate victor in the latest round of litigation in that country.
54․There is no basis on the material before me to assume that the United Kingdom litigation has now ceased and there will be no variation to the parties’ respective positions. Indeed, the applicant submitted there had been some inquiry of damages ordered. At a minimum that inquiry could lead to some adjustment of the current costs orders depending on which party succeeds (to say nothing of any appeal). Further, and again, assuming for the purposes of this judgment that a registered judgment debt can be set-off against a costs order, the parties also appear to be embroiled in litigation in New South Wales. Further judgments in which and costs orders in which could (at least theoretically) also be sought to be registered here.
55․In the result, there is no certainty in my view, that the set-off that the applicant claims the applicant would be entitled to (even were the application to register the judgments be successful) would reflect the end position at the conclusion of the application for leave to appeal.
56․The result of that finding is that the value of any set-off could only be determined at the conclusion of the hearing of the application for leave to appeal (ie. at the date of judgment hand down).
57․Such a finding means that the application seeking to register a number of foreign judgments could have had no bearing on my original ruling that the applicant was required to pay security for costs. In particular, that there was such an application would not have varied the multiple bases on which the jurisdiction to order security for costs was enlivened and nor would it have altered the view I took as to why, balancing the relevant factors, security for costs should have been ordered.
58․Rather, it seems in my view, that even were the judgments registered, in the context of the broader global litigation between these parties, those judgments are in effect no different to the applicant’s current non-fixed assets in Australia (namely the bank account) in that the asset could be reduced or dissipated, including through enforcement action brought by the applicant in a foreign jurisdiction which resulted in payment of net amount of the various debts to be.
59․In conclusion, the applicant’s application filed on 6 February 2023 will be dismissed. I will come to the issue of costs later in these reasons for judgment.
60․It is necessary therefore to turn to the issue before the Court in relation to the non-compliance of the applicant’s bank guarantee.
The issue of non-compliance with Court orders
61․As outlined above, in Wilson (No 8) I ordered that the applicant make various amendments to the bank guarantee and permitted the applicant 21 days to provide the sixth respondent with an executed original copy of the amended guarantee.
62․The matter raised with a Registrar of the Court by the sixth respondent relates to purported non-compliance with one of those orders, namely the order recorded at [91](c)(iii) of Wilson (No 8) that the applicant make the following amendment:
The service details for any demand for payment in accordance with the guarantee are to be amended to provide an email address and postal address by which the sixth respondent can effect service and to provide an address for personal service that is accessible to members of the public during business hours.
63․In particular, the sixth respondent’s concern is in relation to the guarantee not containing an email address by which service of a letter of demand can be affected. While it also appears a demand cannot be sent by post (but can be delivered by courier) that was not a matter agitated at the oral hearing before me. In the result, I will not require any further amendment to the guarantee in relation to that matter.
64․That order was made on 18 November 2022.
65․There is no argument advanced at the hearing by the sixth respondent that any other amendment required by my orders has not been made.
66․The issue the sixth respondent was bringing to the Court’s attention, both before the Registrar and then before me was that under the Court’s rules as the guarantee was not compliant with the order, the security had not been paid and as such the appeal (or in this case the application for leave to appeal) had been automatically stayed. The sixth respondent, in effect, submitted that some course had to be taken to regularise the matter. I will turn to the possible options later in these reasons.
67․The rationale underpinning the making of that order was described at [80] of Wilson (No 8). In that paragraph, I stated:
In relation to service of any demand, I accept the sixth respondent’s submission that service should be able to be effected by email or post and that the address for personal service must be an address accessible to the public during business hours. The need for an unencumbered way to effect service is clear as, otherwise, the sixth respondent may be unable to or may be delayed in serving any letter of demand (or similar) in the event of a dispute.
68․Mr Duggan’s affidavit outlines the correspondence between the parties in relation to the amendments to the guarantee makes the following points clear:
(a)The applicant emailed the sixth respondent’s representatives with a draft tracked change amended version of the guarantee on 19 November 2022.
(b)Mr Duggan replied on behalf of the sixth respondent on Monday 21 November noting that, in the sixth respondent’s view, the guarantee did not comply with the order in that it:
(i)… “did not provide an address for personal service that is accessible to members of the public during business hours” as the only accessible part of the building address included was the ground floor.
(ii)Did not include a postal address for service; and
(iii)Did not permit the sixth respondent to effect service of a Demand for Payment by email or by post.
(c)On 29 November, Mr Wilson emailed the sixth respondent enclosing a final version of the bank guarantee. No changes had been made from the previous form.
(d)In the email accompanying the guarantee, Mr Wilson stated that “Please note that as you are already aware, and for the avoidance of all and any doubt, the Bank does not and will not accept service by email”.
(e)On 30 November 2022, Mr Duggan emailed Mr Wilson with the email noting, inter alia, that “The signed bank guarantee similarly does not comply with Her Honour’s orders. If changes cannot be made to make the guarantee compliant with Her Honour’s orders, then your alternative is to pay the sum of $22,500 into Court”.
(f)On 1 December 2022, Mr Wilson replied to that email noting, inter alia, that the guarantee fully complied with the judgment and stating that “You have no right to request any further amendments”.
(g)There then followed a series of emails where Mr Wilson indicated that the sixth respondent was talking “arrant nonsense”.
69․Mr Duggan’s affidavit also annexed a copy of the amended guarantee executed on 25 November 2022 that the sixth respondent has now received. The fourth paragraph on the second page of that guarantee is the most crucial aspect of the guarantee for present purposes. That paragraph relevantly states:
Upon receipt by us of Demand for Payment in original by courier or by hand from you, we undertake to remit the relevant amount demanded to you, within five (5) banking days …
70․There is no question that that paragraph does not comply with the order made on 18 November 2022. In particular, that paragraph requires an original Demand for Payment to be provided to the bank by courier or in person. It plainly does not permit a demand to be served on the bank by email as contemplated by my order of 18 November 2022.
71․With respect, Mr Wilson’s assertions in his correspondence that the guarantee was fully compliant, and that the sixth respondent was not entitled to seek further amendments to the guarantee were and continue to be wrong.
72․In written submissions, the sixth respondent submitted that the Court was empowered under r 1904(3) of the Court Procedures Rules to dismiss the proceeding where security is not given in the required form. This, it was submitted, was because the security would not have been given under the order as it would not have been “given for the amount, in the form, at the time the court directs”: r 1903(1). The sixth respondent also submitted that the Court had inherent jurisdiction to dismiss the application for leave to appeal due to the ongoing and deliberate breach of its order by the applicant. By the original set of submissions the sixth respondent also indicated that “[i]f the Court were minded … to allow the [a]pplicant one final opportunity to remedy its default … then that should be ordered to be done within 7 days, failing which the [a]pplication for leave to appeal ought to be dismissed, with costs”.
73․In written submissions, the applicant submitted that the sixth respondent’s submissions that the guarantee were “fallacious” as the guarantee included the address of the bank where deliveries can be made or collected at the ground floor reception desk.
74․Second, the applicant submitted that “no bank ever agrees to accept service of a demand under a guarantee only by email”. In support of that submission, the applicant referred to an email purportedly authored by an Associate Private Banker by the name Jaya Rakhani.
75․A copy of that email is annexed to these reasons as Annexure A.
76․The applicant further submitted that “[w]hilst a technical amendment may need to be made to the order, which in error wrongly envisaged demand being merely made by email, in line with all guarantees issued and accepted since 2006 to date, there can be no … objection to … demand [being made] by courier”.
77․The applicant’s written submissions then diverged into consideration of whether leave to appeal from the judgment of McWilliam AsJ should be granted. A matter not presently before the Court.
78․Mr Wilson, as counsel for the applicant advanced a series of different submissions, including that the guarantee was compliant as it was in a form that had been previously accepted by the sixth respondent in NSW since the early 2000s. Counsel for the applicant further submitted that as the correspondence with the Bank made clear they could not accept service by email and as such the appropriate course would be to amend the order to remove the reference to service by email.
79․In particular, counsel for the applicant stated:
No email service was allowed under two prior [NSW] Supreme Court guarantees accepted by my learned friend. That didn’t cause a problem and we submit there should be a simple variation to the order to delete the requirement for there to be service by email or facsimile, because emails are inherently unreliable, as Lord Sumption summarised in the Supreme Court judgment I cite.
80․Counsel for the sixth respondent referred to the Electronic Transactions Act 2001 (ACT) and submitted that s 8 permitted the sixth respondent to serve a letter of demand by email on the bank.
81․Counsel for the sixth respondent appeared generally to submit that what was done in relation to the issue was at the Court’s discretion. For example, counsel for the sixth respondent submitted that:
What I was trying to put to the court was that there [were] two obvious suggestions to – how to remedy the position because clearly there is an existing … disconformity between the court’s orders and the bank guarantee … One was to pay the amount into court and the second was to either have the bank guarantee amended or alternatively, of it were to be left as it was, for the bank to write a signed letter saying, ‘Having regard to sections 8 and 9 of the Electronic Transactions Act, it would accept service by email.’
Consideration
82․As outlined above, I am satisfied that the bank guarantee dated 25 November 2022 does not comply with the order I made on 18 November 2022. In particular, the form of the guarantee does not permit service of a notice of demand by email as had been required by my order.
83․This is a matter that had been quite properly raised with the applicant in the emails of Mr Duggan as set out in his affidavit. It is clear that the applicant was aware of the issue and took no steps to rectify the issue.
84․Instead, the applicant has appeared to have sought to rely on emails from the bank indicating that it would not only accept service of demand in-person or by courier and that it would not accept service by email.
85․This is not to the point. The orders of 18 November 2022 were clear. The guarantee was required to permit service by email. If the applicant’s private bank was not able to accept service in that form, then it remained open to the applicant under those orders to pay the money into Court.
86․Indeed, that was expressly outlined to the applicant at [72] of Wilson (No 8) where I stated:
… Of course, if the applicant prefers (or if the applicant is unable to provide a bank guarantee in accordance with that order), the applicant could (as the original order for security for costs permitted) provide security by way of a payment into Court of the required amount.
(Emphasis added)
87․That step was not taken and the effect of the decision by the applicant through its legal representative not to amend the guarantee as required is that security has not been provided in the form ordered by the Court.
88․The potential consequences of that order are clear. Rule 1904 of the Court Procedures Rules states:
1904 Security for costs—effect of order
(1) This rule applies if the court orders the plaintiff to give security for costs.
(2) The time set by these rules or by an order of the court for another party to take a step in the proceeding does not run until security is given.
(3) If security is not given under the order—
(a) the proceeding is stayed as far as it concerns steps to be taken by the plaintiff; and
(b) the court may, on the defendant’s application, dismiss all or part of the proceeding.
89․The effect of r 1904(3)(a) is clear that the effect of non-compliance is that progress of the appeal is stayed insofar as it concerns steps to be taken by the applicant.
90․The matter must, accordingly, be regularised. The question is now what option should be taken to regularise the matter.
91․There are effectively three options the Court can take:
(a)The Court could exercise the power contained in r 1904(3)(b) of the Court Procedures Rules to dismiss the proceeding due to the failure of the applicant to provide security in the required form within the time period permitted by the Court (relevantly 21 days from 18 November 2022);
(b)The Court could amend the order of 18 November 2022, including, potentially nunc pro tunc, to effectively make the current form of the guarantee compliant with the order;
(c)The Court could provide the applicant with a further period of time to either amend the guarantee or to pay the sum of $22,500 into Court.
92․I note that, in my view, it would not be desirable to make an order requiring the applicant’s bank to provide a letter in a particular form. The bank is not a party to the proceedings and is based in NSW. Any order should, in my view, be directed at the applicant and not specifically the bank.
93․In my view, in light of the fact that the sixth respondent did not seek that the application for leave to appeal be dismissed at this stage and the fact that the breach could be described as somewhat technical (in the sense it relates to how a letter of demand could be served) it is not appropriate, at this time, that the application for leave to appeal be dismissed without providing the applicant one last chance to comply with the order.
94․Against those matters I have balanced the fact that, in my view, and as previously found to be the case the applicant has very low prospects of success on the appeal. Contrary to the submissions of Mr Wilson this is not a case that in my view has good prospects. Indeed, in Wilson (No 6) at [120]-[121] I discussed the prospects of the application for leave to appeal concluding that: “the likelihood of leave being granted to the applicant is itself an extremely doubtful prospect”. The reasoning of McWilliam AsJ is clear as it is compelling.
95․In my view, a decision to dismiss a proceeding under r 1904 is not a decision to be taken lightly.
96․No party referred me to authority in their written submissions applying r 1904(3) or outlining the test the Court should apply. Indeed, on review, it appears the only reference to the rule in judgments of the Court are those in M M International (Australia) Pty Ltd v Aerial Consolidated Transport Ltd [2017] ACTSC 374 per Elkaim J at [18] (recording that the order made by the Magistrate was within the options available under r 1904(3) but not the reasons for the making of that order) and in Benjamin v GB Franchising Australia Pty Ltd [2011] ACTCA 26 per Refshauge J at [3] (noting that no action had been taken in response to a delayed payment of security into court).
97․It is clear, in my view, that a decision to dismiss a proceeding under r 1904 must be made judicially and consistently with the overarching purpose of civil litigation as contained in s 5A of the Court Procedures Act 2004 (ACT). Such is the case where an application to dismiss a proceeding for non-compliance with a court order or direction is brought: Su v Kamal (No 2) [2022] ACTSC 239 per McCallum CJ; Su v 5 Blackman Cres Macquarie Pty Ltd [2022] ACTCA 62 per Loukas-Karlsson J.
98․By that judgment, McCallum CJ stated at [32]:
As long ago as 2010, the New South Wales Court of Appeal in Bi v Mourad [2010] NSWCA 17 explained why parties should expect that if they do not prosecute their claims with due expedition, or if they permit themselves repeatedly not to comply with orders of the court, proceedings may be dismissed.
(Emphasis added)
99․I note that in the case of the applicant the original order for security for costs was made on 21 July 2022. The issue of compliance (and the associated issue of the application for leave to appeal being stayed) should not still be before the Court in February 2023.
100․In my view the appropriate course to take is to provide the applicant with a final 10 days to amend the guarantee to comply with the relevant order of 18 November 2022. This is the case for the following reasons.
101․In reaching that view I have not accepted the applicant’s submission that the letter of demand should not be able to be served by email. There is no reason that the sixth respondent should be put to the expense or inconvenience of having to serve a letter of demand in person or by courier. Experience of the courts has generally shown there may be difficulties in effecting personal service. See further Wilson (No 8) at [80].
102․If the applicant does not wish to make that amendment or the applicant’s chosen bank cannot issue a demand in compliance with that order the applicant may pay the sum of $22,500 into Court. There is a clear and simple alternative.
103․It is appropriate in my view to also make a self-executing order in similar terms to that made at the time of the original order for security for costs as recorded in Wilson No (6) at [131](e). This further time to make a further amendment or pay the sum into Court should serve as the applicant’s final warning. If the order is not complied with the applicant’s application for leave to appeal will be deemed to be dismissed in accordance with the power available to the Court under r 1904, the inherent power of the Court and/or r 1404 due to continued breach of court orders.
104․The fact that a simple application for security for costs has devolved into a repeated series of questions concerning compliance and continues to require court hearing time over six months after that order was made is of concern. So too is the fact that at various points in time, due to the applicant’s non-compliance, the application for leave to appeal was technically stayed. This matter must proceed to the hearing of that application. The comments made by Stewart J in Michael Wilson & Partners Ltd v Porter (No 2) [2022] FCA 901 at [49] apply in force in this case. Enough is enough. The interlocutory litigation must end.
Costs
105․In relation to costs, the sixth respondent sought costs on an indemnity basis. I dealt with the principles to apply in relation to whether to order indemnity costs in Wilson (No 9). It is worth setting out, in part, the test outlined in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 (Melbourne City Investments) at [5]:
… Such circumstances may include where allegations are made “which ought never to have been made”, where the case is “unduly prolonged by groundless contentions” … and where “the applicant, properly advised, should have known that he had no chance of success” … or “persists in what should on proper consideration be seen to be a hopeless case” …
106․At the hearing of the application, I asked the applicant if there were any submissions to advance in reply in relation to the question of indemnity costs (T32.11-12). In reply, counsel for the applicant repeated the general submissions which I have already rejected in relation to the basis of the order, the reference to the second addendum, made allegations of misconduct (which I will not repeat) and that there was no basis to the order as the applicant had permanent assets in Australia.
107․It is apparent, in my view, that the applicant’s application generally repeated the arguments already advanced in his first application to set aside the order for security for costs. The reagitating of those issues, in circumstances where the applicant had not sought leave to appeal from my earlier judgment, is a matter that justifies an order for indemnity costs on that application. Put simply, the applicant, properly advised must have been aware he had no prospects of success on the application in circumstances where the matters the applicant was relying on had previously been determined by the Court adversely to the applicant.
108․The sixth respondent is entitled to its costs of and incidental to the hearing of the applicant’s application to set aside the order for security for costs on an indemnity basis. Similar reasoning applies in relation to the issue of compliance. That matter was not one the sixth respondent should have been forced to incur expenses prosecuting. The correspondence to the applicant had foreshadowed the matter being raised and had provided a clear opportunity for the applicant to rectify the situation by making the requested amendment (or to seek some minor amendment to the order by consent). The applicant, properly advised, would have known there were no prospects of success.
109․Finally, I again note the applicant’s propensity to advance personal attacks directed to counsel for the sixth respondent and the instructing solicitor. Allegations of that kind must not be made by admitted practitioners against other admitted practitioners without clear and compelling evidence. No such evidence was advanced before me. The applicant has been previously warned in relation to the making such allegations by the Federal Court of Australia and this Court. That matter forms an independent basis, in my view, for ordering indemnity costs as allegations were made “which ought never to have been made”: Melbourne City Investments at [5]. The sixth respondent should not be put to any cost in respect to the agitating of those allegations.
110․In that regard I also note the comments of Stewart J in Wilson v Porter (No 2) at [30]-[31]:
These reasons for judgment, as well as many others in this Court and courts abroad, including in the Court of Appeal of England and Wales, have been critical of Mr Wilson’s conduct of this and other related cases on behalf of MWP. Mr Wilson is a principal of MWP and apparently has a financial interest in it. He has pursued, and continues to pursue, this and related litigation on MWP’s behalf in an obsessive, unrelenting and burdensome way which is, perhaps, borne of his personal interest in it. None of that need be explored any further, let alone decided, now.
However, a question arises whether in any further litigation by MWP in Australian courts Mr Wilson should continue to appear on its behalf, or represent it as a solicitor, having regard to the principles identified in Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; 269 CLR 333 at [19]; Kallinicos v Hunt [2005] NSWSC 1181; 64 NSWLR 561 at [76]; McIlraith v Ilkin (Costs) [2007] NSWSC 1052 at [25]; Mumbin v Northern Territory (No 2) [2020] FCA 475 at [39]; Dyer v Chrysanthou (No 2) (Injunction) [2021] FCA 641; 402 ALR 659 at [138] and Porter v Dyer [2022] FCAFC 116; 402 ALR 659 at [113]-[114]. See also r 17.1 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) which requires that a solicitor representing a client in a matter that is before the court must not act as the mere mouthpiece of the client and must exercise the forensic judgments called for during the case independently.
111․In my view, it may be open at this stage for this Court to find that Mr Wilson is not in a position to give impartial and independent advice to the applicant: McIlraith v Ilkin (Costs) [2007] NSWSC 1052 at [25] and is acting as a mere mouthpiece for his personal interest and grievance against the sixth respondent and the legal advisors to the sixth respondent. As such the power to restrain Mr Wilson from continuing to act for the applicant may be enlivened both in terms of the Court’s inherent powers but also from the operation of rr 17.1 and 27.2 of the Legal Profession (Solicitors) Conduct Rules 2015 (ACT). In my view, it may be open to the Court to make an order restraining Mr Michael Earl Wilson from continuing to act for the applicant in this proceeding, or in any matter before the Court. Such an order is, however, an exceptional one and not one to be made lightly. In circumstances where the parties did not advance submissions on the question it is not appropriate at this time to make such an order.
Orders
112․I make the following orders:
(a)The applicant’s application in proceeding dated 6 February 2023 be dismissed.
(b)By 4.00pm on 10 March 2023, the applicant is to either:
(i)serve on the sixth respondent an executed amended guarantee which provides an email address by which the sixth respondent can effect service of any letter of demand or similar and is otherwise in the terms of the existing guarantee; or
(ii)pay the sum of $22,500 into Court as security for costs.
(c)If the applicant fails to comply with order (b) by 4.00pm on 10 March 2023 then, pursuant to r 1404 and/or r 1905 and/or the inherent powers of the Court the applicant’s application for leave to appeal be deemed to be dismissed from that time.
(d)Subject to further order or direction, and to the extent such costs have not already been addressed by any previous order of the Court, if the applicant’s application for leave to appeal is deemed to be dismissed the applicant is to pay the sixth and seventh respondents costs of the proceeding on a party-party basis.
(e)The applicant is to pay the sixth respondent’s costs of and incidental to the hearing of the application on 22 February 2023 on an indemnity basis.
113․To those orders I will note that if the applicant intends to pay the sum into Court, the applicant should note that any such payment must be received by the Court Registry and processed by the time of the expiry of the order.
| I certify that the preceding one-hundred and thirteen [113] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Loukas-Karlsson Associate: Andrew Ray Date: 24 February 2023 |
Annexure A
3
27
0