Modern Holdings Pty Ltd v Scentre Management Limited [No 2] - [2023] WASC 220

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   MODERN HOLDINGS PTY LTD -v- SCENTRE MANAGEMENT LIMITED [No 2] [2023] WASC 220
CORAM:   STRK J
HEARD:   14 JUNE 2023
DELIVERED          :   14 JUNE 2023
PUBLISHED           :   20 JUNE 2023
FILE NO/S:   CIV 1467 of 2020
BETWEEN:   MODERN HOLDINGS PTY LTD
Plaintiff
AND
SCENTRE MANAGEMENT LIMITED
First Defendant
REI LIMITED
Second Defendant

Catchwords:

Practice and procedure - Springing order - Failure to comply with security for costs order - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA)

Result:

Springing order made

Category: B

Representation:

Counsel:

Plaintiff	:	T Galic
First Defendant	:	C Slater
Second Defendant	:	C Slater

Solicitors:

Plaintiff	:	TGC Lawyers
First Defendant	:	Watts Legal Consultants
Second Defendant	:	Watts Legal Consultants

Cases referred to in decision:

Ansa Enterprises Pty Ltd v St James Finance Corporation Pty Ltd [2023] WASCA 32
Australian Growth Managers Ltd v Egerton-Warburton [2007] WASC 10
Dallas Development Corporation Pty Ltd v Western Australian Land Authority [2000] WASCA 49
Durolek v Pier (WA) Pty Ltd [No 2] [2019] WASCA 138
Esteem Holdings Pty Ltd as trustee for the Esteem Trust v Caratti [No 2] [2012] WASC 391
FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1998) 165 CLR 268
Firmware Technologies Inc v Asia Platinum Group Ltd [2016] WASCA 179
Gas Sensing Technology Corporation v Prox Pty Ltd [No 2] [2020] WASC 240
Girgis v Poliwka [No 6] [2019] WASC 230
Hancock Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398
Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271
Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18
Latoudis v Casey; Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164
Lewandowski v Lovell (1994) 11 WAR 124
Modern Holdings Pty Ltd v Scentre Management Limited [2022] WASC 19
Ohn v Walton (1995) 36 NSWLR 77
Philips Electronics Australia Pty Ltd v Matthews (2002) 54 NSWLR 598
Skahill v Kestral Holdings Pty Ltd (in liq) [2000] WASCA 185
Trafalgar West Investments Pty Ltd (as trustee for the Trafalgar West Investments Trust) v Superior Lawns Australia Pty Ltd [No 9] [2016] WASC 68
Watson v Foxman (1995) 49 NSWLR 315
Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [No 2] [2014] WASC 196

Table of Contents

Introduction

Procedural history

The evidence

The defendants' evidence

The plaintiff's evidence

Defendants' position

Plaintiff's position

Applicable principles

Disposition

Conclusion and orders

STRK J:

(This judgment was delivered extemporaneously on 14 June 2023 and has been edited from the transcript to correct infelicity of language, to include complete references to materials and evidence before the court, and to include complete citations of authorities relied upon in the disposition of the application.)

Introduction

This is an application made by Scentre Management Ltd and REI Limited, the first and second defendants. The defendants seek an order that unless Modern Holdings Pty Ltd, the plaintiff, complies with order 1 of the orders made on 28 January 2022 within 14 days and pays $50,000 into court as security for costs, the proceeding be dismissed. The defendants also seek an order that upon dismissal, the plaintiff pay the defendants' costs of the application and the proceeding, including all reserved costs.
The plaintiff opposes the application and contends that an extension of time for payment of security for costs ought be granted. It is the plaintiff's position that there are cogent and legitimate financial management reasons for the plaintiff's failure to make payment into court, and a period of up to three months, commencing on 3 May 2023, is required for the plaintiff to comply with order 1 of the orders made on 28 January 2022. That is, the plaintiff says that payment into court will be made by 2 August 2023, if not earlier. Through counsel, I understand the plaintiff to concede that if an extension of time were now granted, there would be a proper basis for the exercise of the court's discretion to make a springing order should the plaintiff fail to make payment into court by 2 August 2023.
For the reasons that follow, I consider that it is appropriate to make a springing order. However, rather than 14 days, the plaintiff will have until 4.00 pm on 31 August 2023 to comply with order 1 of the orders made on 28 January 2022 and pay $50,000 into court as security for the defendants' costs of this proceeding to entry for trial, failing which the proceeding will be dismissed and the plaintiff shall pay the defendants' costs of the proceeding, including all reserved costs.

Procedural history

I heard an application for security for costs made by the defendants pursuant to the Corporations Act 2001 (Cth) s 1335(1), alternatively pursuant to the Rules of the Supreme Court 1971 (WA) (RSC) O 25. In the reasons published granting that application, I outlined the plaintiff's claims as pleaded against the defendants and the then status of the proceeding: Modern Holdings Pty Ltd v Scentre Management Limited [2022] WASC 19 [3] to [9].
On 28 January 2022 an order was made requiring the plaintiff to pay within 30 days $50,000 into court as security for the defendants' costs of this proceeding up to entry for trial. In the event the plaintiff did not pay the $50,000 into court within 30 days of the order, the proceeding would be stayed until further order.
The plaintiff did not pay $50,000 into court within the time prescribed or at all. On 15 March 2022, Registrar Fatharly made an order pursuant to the RSC O4A adjourning the proceeding sine die as the plaintiff had not complied with order 1 of the orders of 28 January 2022.
By a chamber summons filed on 5 April 2023, the defendants applied for a springing order. The application was supported by an affidavit sworn by Rosemary Genevieve Jeanes on 3 April 2023 and a memorandum of conferral pursuant to the RSC O59 r 9.
Programming orders were made on 19 April 2023 and the application listed for a special appointment on 14 June 2023.
A written outline of submissions was filed in support of the application on behalf of the defendants on 17 May 2023. In opposition to the application, the affidavit of Ala'Audden Ahmad Al-Khatib sworn 3 May 2023 was filed on behalf of the plaintiff, and a written outline of submissions was filed on 13 June 2023.

The evidence

The defendants' evidence

At the hearing of the application, counsel for the defendants read the affidavit of Ms Jeanes sworn 3 April 2023. Ms Jeanes is a solicitor employed by Watts Legal Consultants, the solicitors for the defendants in this proceeding.
Among other things Ms Jeanes deposed to the communications as between Watts Legal Consultants and TGC Lawyers, the plaintiff's legal representatives, in relation to the payment of security for costs. In this regard, Ms Jeanes deposed that an application to dismiss the proceeding if security was not paid was foreshadowed by Watts Legal Consultants to TGC Lawyers on 23 November 2022 and 9 February 2023.
Ms Jeanes attached to her affidavit attachments marked RGJ-1 to RGJ‑4, being various correspondence as between the parties' legal representatives.

The plaintiff's evidence

At the hearing of the application, counsel for the plaintiff read the affidavit of Mr Al-Khatib sworn 3 May 2023 in opposition to the application. Mr Al-Khatib is one of the plaintiff's two directors. The other director is Mohannad Hammad Abdel Qadar.
Among other things, Mr Al-Khatib briefly described other proceedings before this court to which the plaintiff is party. He also described the proceeding known as CIV 1242 of 2022, which concerns a dispute in relation to a food court tenancy in Westfield Carousel Shopping Centre as between Scentre Management and REI and Italian Gourmet Kitchen Pty Ltd. Mr Al-Khatib and Mr Abdel Qadar are also the directors of Italian Gourmet Kitchen Pty Ltd; and that entity pursues a counterclaim against Scentre Management and REI in that proceeding.
As to the proceeding known as CIV 1458 of 2020, he deposed that the plaintiff brought that proceeding against the defendants and Reco Whitford Pty Ltd in respect of a food court tenancy in the Whitfords City Shopping Centre; and on 20 October 2021 Master Sanderson made an order in that proceeding for security for costs be paid by the plaintiff in the sum of $50,000.
Mr Al-Khatib deposed that the plaintiff also commenced a proceeding against ISPT Pty Ltd and Vicinity Manager Pty Ltd in respect of a food court tenancy (which I understand from the application for security for costs is known as CIV 1457 of 2020);[1] and on 20 May 2021 Master Sanderson made an order in that proceeding that security for costs be paid by the plaintiff in the sum of $50,000.
[1] Modern Holdings Pty Ltd v Scentre Management Limited [35] - [36].
I understood Mr Al-Khatib's evidence to be that $100,000 had been paid into court by way of security in proceedings which concern the plaintiff; that he and his co-director had budgeted to meet the costs and expenses of litigating the current proceeding and the other proceedings; that significant and not insubstantial legal costs had already been incurred in the proceedings; and that while he and his co-director had budgeted to meet the plaintiff's expected legal costs and expenses in all of the proceedings, they had not budgeted for having to provide security for costs for any of them, as Mr Al-Khatib did not believe any security was appropriate given his view of the strength of the cases.
Mr Al-Khatib deposed that as none of the proceedings had settled at mediation and settlement was not expected, preparation for trial was now underway for the proceeding known as CIV 1242 of 2022, which was placing pressure on the plaintiff's finances. He deposed that funds are being sourced from overseas, which was likely to take up to three months.
Mr Al-Khatib deposed that this proceeding has been dormant since 15 March 2022, and to his belief that the defendants will not suffer prejudice by the late payment of security for costs into court. He deposed that the plaintiff had always expected to have one trial first followed by another and so on, and that was the only way which the plaintiff would be able to afford to complete the matters.

Defendants' position

In summary, the defendants say that the plaintiff has not paid into court security for costs; has not progressed with providing security; and there should be finality in litigation such that a springing order should be granted.[2] In support of the application, counsel for the defendants made points which included the following.
[2] Defendants' submissions par 1.
The defendants complained about the length of the plaintiff's delay. They say that this proceeding has now been stayed for over a year by reason of the plaintiff's failure to comply with the court's order of 28 January 2022.
What is now three years since the commencement of the proceeding and over a year since the security for costs order was made, the defendants said that they should be entitled to finality, and relief from the prejudice of preserving evidence and preparation for a case that has not been progressed.[3] No other prejudice was deposed to or sought to be relied upon on behalf of the defendants.
[3] Defendants' submissions par 12.
As to the context in which the application is made, the defendants said that there was correspondence between the parties regarding compliance with the court's order concerning security for costs in March, November and December 2022, to no avail.[4] As at 5 April 2023 (when the application was filed), security for costs had not been paid into court.
[4] Affidavit of RG Jeanes pars 6 - 12.
As to the evidence before the court, the defendants complained that no weight ought be given to the unsupported assertion in Mr Al‑Khatib's affidavit that funds will be forthcoming by August 2023 to pay into court security for costs. Further, they noted that, as was the case at the hearing of the security for costs application, there was no evidence as to the plaintiff's financial position before the court, nor any explanation from where the plaintiff intends to secure funds.[5] In this context, it was submitted that the financial capacity of the plaintiff to meet the continued costs of three Supreme Court actions remains doubtful.
[5] Defendants' submissions par 18 referring to Modern Holdings Pty Ltd v Scentre Management Limited [23] - [30], [40], [63], [73] - [76].
It was also submitted that the pursuit of multiple proceedings by the plaintiff is not a basis for the plaintiff to resist a springing order in this proceeding, or a basis to seek an extension of time to comply with the court's order. Further, they complained that it appeared that the plaintiff had prioritised the prosecution of other proceedings to this proceeding.
It was submitted that the weakness of the plaintiff's claim ought also inform and weigh in favour of the making of a springing order in the defendants' favour. It was submitted on behalf of the defendants that the plaintiff's action lacks merit, for the reasons as set out in their submissions filed in support of the security for costs application. That is, the action is founded upon allegedly undocumented oral representations, noting the warning about reliance on oral statements that are not supported by contemporaneous documents in cases such as Watson v Foxman (1995) 49 NSWLR 315, 318 - 319, and Girgis v Poliwka [No 6] [2019] WASC 230 [116] - [123].[6] Counsel for the defendants referred to [57] of my earlier reasons in this proceeding where I record as follows:[7]
However, having regard to the pleadings and to the affidavits read, I accept the submission of the defendants that the merits of the plaintiff's case are not so strong as to say that no security is appropriate.
[6] Defendants' submissions par 18.
[7] Defendants' submissions par 19 referring to Modern Holdings Pty Ltd v Scentre Management Limited [57].
The defendants submitted that the plaintiff should not have held the expectation (referred to in paragraph 12 of Mr Al-Khatib's affidavit) that the hearing of this matter would proceed at a time that would suit the plaintiff's financial capacity. It was submitted that the continued dormant status of this proceeding is not supported by the policy for positive case management of matters before the court as prescribed in the RSC O 1 r 4A and r 4B and the public policy that requires there be finality in litigation.[8]
[8] Defendants' submissions par 25 referring to FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1998) 165 CLR 268, 283; and Ansa Enterprises Pty Ltd v St James Finance Corporation Pty Ltd [2023] WASCA 32 [31].

Plaintiff's position

The plaintiff sought an extension of time for payment of security for costs. In opposing the application, counsel for the plaintiff made points which included the following.
It was submitted that there are cogent and legitimate financial management reasons why security for costs in this proceeding had not been paid. The costs of prosecuting a number of proceedings concurrently was proffered as an explanation for the plaintiff's failure to pay security for costs in this proceeding.
By way of explanation, counsel for the plaintiff referred to the evidence of Mr Al-Khatib, where Mr Al-Khatib deposed to the plaintiff being involved in a number of proceedings, and that the plaintiff was ordered to satisfy two security for costs orders in other proceedings, which orders predated the orders made 28 January 2022 in this proceeding. Mr Al-Khatib deposed that a total sum of $100,000 had been paid into court by the plaintiff.
As to the payment of the security for costs, it was submitted on behalf of the plaintiff that a period of up to three months (calculated from 3 May 2023) was required for the plaintiff to satisfy the security for costs order and that the plaintiff would pay the money into court by not later than 2 August 2023.
Submissions were also made as to the prejudice to the defendants and the conduct of the defendants. First, it was submitted that no more prejudice will be suffered by the defendants if the court was to grant a seven-week extension for payment into court. That is, to the extent that the defendants had suffered prejudice of a type that any other litigant forced to contest major litigation suffers, the grant of additional time in favour of the plaintiff will make no difference. Secondly, it was submitted that the defendants had delayed in bringing the application for a springing order (which could have been made earlier), and the defendants' delay had enabled the delay in payment on the part of the plaintiff.[9]
[9] Plaintiff's submissions pars 8 - 9.
It was also submitted that if a springing order was made and the plaintiff's claim was dismissed, the prejudice to the plaintiff would be significant.
As noted above, it was accepted on behalf of the plaintiff that if an extension of time for payment were to be granted on this occasion, and should the plaintiff fail to make payment into court following the extension of time, that there would be a proper basis for the exercise of the court's discretion to make a springing order.

Applicable principles

This court has both inherent power and the case management powers in the RSC O 4A to make springing orders for reasons the court 'considers just'. Reasons of justice include violation of orders of the court as well as a failure to pursue the action with due diligence.[10]
[10] Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [No 2] [2014] WASC 196 [2].
The Court of Appeal summarised the relevant principles to be applied in determining whether to make a springing order in Durolek v Pier (WA) Pty Ltd [No 2] [2019] WASCA 138, taking guidance from Firmware Technologies Inc v Asia Platinum Group Ltd[2016] WASCA 179 at [41] - [49] as to the proper practice in relation to springing orders made in the course of case management prior to trial.
The court emphasised that the factors did not establish when a springing order should be made, but were merely a guide in determining whether or not a springing order should be made. The five factors were described as follows:[11]
1.Where the basis for the springing order is non-compliance with an order of the court consideration should be given to whether the delay has been inordinate. A springing order should ordinarily only be made where a party has, by its conduct, shown a contumelious disregard to compliance with orders of the court.
2.A springing order should only be made where there is no other available sanction which is appropriate and sufficient to enable the court to determine the matter consistently with the goal and objects in O 1 r 4A and r 4B of the RSC - in particular the fair and just determination of the litigation. The fair and just determination of the litigation encompasses the concern of procedural fairness expressed in Firmware Technologies Inc v Asia Platinum Group Ltd. The concept acknowledges that a point will be reached where a litigant will have been accorded a sufficient opportunity and that no litigant has an absolute right to avail itself of procedural steps when it has failed to take advantage of its opportunity.
3.A springing order sought by way of an enforcement order to secure compliance with a pre-trial case management direction should not be made if its execution would prevent the party from advancing an argument unrelated to the procedural step the subject of the intended springing order.
4.A springing order should only be made if the criterion for compliance is clear and unequivocal.
5.Springing orders should ordinarily only be made as a last resort when necessary to enable the court to fairly and justly determine the substantive matter in dispute. In that regard, before making a springing order, a case manager should take into account the fact that the self-executing nature of a springing order is such that, once made and absent an extension of time for compliance, the only question is whether the order has been complied with. There is no further assessment of the merits of the case or whether it is in the interests of justice for judgment to be entered.
[11] Durolek v Pier (WA) Pty Ltd [No 2] [113] citing Firmware Technologies Inc v Asia Platinum Group Ltd [41] - [49].

It was also observed in Durolek v Pier (WA) Pty Ltd [No 2] that the above may be qualified by the suggestion that the circumstances in which springing orders may be made are not limited to cases of contumacy, persistent dilatory behaviour and where it can be inferred that a litigant will not or is unlikely to take steps as required, with Dallas Development Corporation Pty Ltd v Western Australian Land Authority [2000] WASCA 49 cited as an example.[12] Further, the court may act to support the integrity of its processes where otherwise the administration of justice would be brought into disrepute, which approach was adopted by Archer J in Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 3] [2021] WASC 414 [24].
[12] Durolek v Pier (WA) Pty Ltd [No 2] [111].
There have been a number of decisions which concern the making of a springing order in circumstances where there has been a failure to furnish security for costs. In this context, it is accepted that the court has inherent power to dismiss an action if it is not being pursued with due diligence, the time limit has expired and there is no prospect of security being lodged; and similar considerations to those involved in an application to dismiss an action for want of prosecution are to be applied.[13] The principles developed in Lewandowski v Lovell (1994) 11 WAR 124 and in Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18 (affirmed on appeal) have been adopted and approved in recent cases, including by Archer J in Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 3], which decision also provides a convenient summary of the authorities which concern a failure to comply with an order for security for costs.
[13] Dallas Development Corporation Pty Ltd v Western Australian Land Authority [23] and [28].
In Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 3], Archer J made reference to the decisions of Kenneth Martin J in Gas Sensing Technology Corporation v Prox Pty Ltd [No 2] [2020] WASC 240, and Trafalgar West Investments Pty Ltd (as trustee for the Trafalgar West Investments Trust) v Superior Lawns Australia Pty Ltd [No 9] [2016] WASC 68, in which his Honour addressed some of the factors which may be taken into account in the court's exercise of discretion to dismiss a proceeding in the face of a failure to comply with a security for costs order.[14] The factors were first identified by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd and upheld on appeal in Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271. They include:[15]
1.the period that has elapsed since security was ordered;
2.the fact that the party against whom the security has been ordered has been on notice of an application for dismissal;
3.the apparent inability of the plaintiff to fund the proceedings;
4.the prejudice to the defendant; and
5.the position of the court.
[14] Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 3] [27].
[15] Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 3] [27] citing Gas Sensing Technology Corporation v Prox Pty Ltd [No 2] [17] - [18].
These factors are not to be considered exhaustive, and it was emphasised that all relevant factors must be weighed in the balance such that the ultimate decision reflects the interests of justice in all its relevant notions or senses.[16] In earlier cases, it was suggested that a failure to provide security should be considered in the determination as to whether, overall, there has been a want of prosecution of the action by the plaintiff that justifies the action being dismissed, as opposed to it being considered as a discrete issue.[17]
[16] Australian Growth Managers Ltd v Egerton-Warburton [2007] WASC 10 [104]; Gas Sensing Technology Corporation v Prox Pty Ltd [No 2] [18].
[17] Australian Growth Managers Ltd v Egerton-Warburton [115].
In Idoport Pty Ltd v National Australia Bank Ltd at first instance, the application for adjournment and the proceeding as a whole was dismissed, on the basis that time to provide the security had run out.
There are various other examples of the court considering exercising its discretion with respect to a springing order where there has been a failure to comply with a security for costs order. Most cases recorded the considerations weighed in the balance with respect to the springing order, and each turned on the facts of that particular case.
By way of example, Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 3] concerned an application for a springing order to the effect that if the security for costs order was not complied with within seven days, the pleadings be struck out and judgment be entered for the defendants. Security for costs had been ordered to be paid in two tranches. The plaintiff had missed the first tranche by a period of three months, and had notice of the defendants' application for springing orders for approximately two months. There was no probative evidence as to whether the plaintiff could fund the proceeding, and the defendants had adduced evidence that the delay in the proceeding was in fact prejudicial to them. The plaintiff had not taken any steps in the proceeding, or communicated with the court in any way. In making the springing order, Archer J also weighed in the balance the judicial resources and court time taken up by the proceeding, stating '[t]he interests of other litigants and the community in the efficient and proportionate disposition of proceedings cannot be disregarded.'[18]
[18] Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 3] [33].
In Gas Sensing Technology Corp v Prox Pty Ltd [No 2], orders for security for costs in two tranches were made. The plaintiff sought an extension of time for compliance with the orders and at the same time the defendant filed a competing minute seeking that the proceeding be stayed until further order and that springing orders striking out the writ be made if the plaintiff did not pay the security. Justice Kenneth Martin referred to the guidance provided in Firmware Technologies Inc v Asia Platinum Group Ltd as to the making of springing orders, and emphasised that the primary focus of making springing orders for circumstances of party non-compliance is the 'achievement of justice',[19] and further that 'case management is a means to an end and not an end in itself'.[20] His Honour also referred to the reasons of Steytler P and Owen J in Hancock Memorial Foundation Ltd v Fieldhouse [2005] WASCA 93; (2005) 30 WAR 398 in exploring the concept of justice (in the context of striking out for want of prosecution), and identified the relevant points as being:[21]
1.the court must ensure that justice is done in any cause brought before it;
2.the concept of justice is not fixed;
3.the flexible nature of justice exists to be applied to the particular circumstances in which its dictates are called in aid;
4.justice involves aspects of both private and public interests; and
5.all these notions of justice play a part at various stages of the litigation process.
[19] Gas Sensing Technology Corp v Prox Pty Ltd [No 2] [13] citing Firmware Technologies Inc v Asia Platinum Group Ltd [41], citing Skahill v Kestral Holdings Pty Ltd (in liq)[2000] WASCA 185 [17] (Owen & Heenan JJ).
[20] Gas Sensing Technology Corp v Prox Pty Ltd [No 2] [13] citing Firmware Technologies Inc v Asia Platinum Group Ltd [41].
[21] Gas Sensing Technology Corp v Prox Pty Ltd [No 2] [14].
His Honour further noted that making of a springing order which results in the entry of judgment prior to trial, without regard to the merits will be justified 'where necessary to enable the court to fairly determine the substantive matter in dispute and as a last resort'.[22] His Honour noted that this was the plaintiff's first significant default in providing security, and the action was still in the early stages of litigation, ultimately concluding that it was appropriate to extend the time for compliance with the payment of security.
[22] Gas Sensing Technology Corp v Prox Pty Ltd [No 2] [16].
The decision of the Court of Appeal in Dallas Development Corporation Pty Ltd v Western Australian Land Authority concerned an application for leave to appeal a springing order which had been granted by the learned Master in circumstances where the applicant had failed to comply with a court order made some six months earlier, and had not in the interim sought any indulgence from the court or sought to explain the reasons for its inability to comply with the order when it was well in breach. The circumstances were distinguished from one where a springing order is sought because an action has not been pursued with due diligence. In relation to springing orders generally, the court approved commentary in the following terms:[23]
In exercising the discretion to make a springing order to further principles of positive case flow management, the Court has wide-ranging powers which are not confined to considerations of intentional default or contumelious conduct or inordinate or inexcusable delay.
[23] Dallas Development Corporation Pty Ltd v Western Australian Land Authority [22].
The application was dismissed and the springing order upheld.
The decision of this court in Australian Growth Managers Ltd v Egerton-Warburton concerned an application for strike out for want of prosecution. It was submitted on behalf of the defendant that persistent and long lasting failure to provide security for costs when ordered may justify striking out proceedings for want of prosecution.[24] In refusing the application, the court followed the approach of Einstein J in Idoport Pty Ltd v National Australia Bank Ltd at first instance, but distinguished the situation arising in Australian Growth Managers Ltd v Egerton-Warburton, as the original order to provide security for costs did not specify a time within which the security was to be provided, but simply specified that until it was provided the action be stayed; and secondly, as the security was eventually provided. The learned Master considered that the failure to provide security should be considered in the determination as to whether overall there has been a want of prosecution of the action by the plaintiff that justifies the action being dismissed, as opposed to being considered as a discrete issue.[25] Although there had been substantial delays on the part of the plaintiff, sometimes spanning years, there was little prejudice to the defendant, yet there would be substantial prejudice to the plaintiff should the claim be struck out, as any further action would be statute barred. In the circumstances, the Master did not consider that the interests of justice required the action to be dismissed, but rather, required that the action be prosecuted by the plaintiff with a diligence that recognised the delays that have occurred and the need to bring the matter to trial at the earliest possible time.[26]
[24] Australian Growth Managers Ltd v Egerton-Warburton [94] citing Philips Electronics Australia Pty Ltd v Matthews(2002) 54 NSWLR 598 [47].
[25] Australian Growth Managers Ltd v Egerton-Warburton [115].
[26] Australian Growth Managers Ltd v Egerton-Warburton [126].
In Esteem Holdings Pty Ltd as trustee for the Esteem Trust v Caratti [No 2] [2012] WASC 391, a springing order was made in circumstances where there had been a failure to provide security for costs. While no issues were raised by the plaintiff at the initial application for security, affidavit material was later filed in which a proposal to obtain the required funds from the director of a company responsible for the management of a subdivision was outlined.
In considering the application for a springing order, the court found the proposal to be highly unsatisfactory, as there was no guarantee or undertaking from anyone on behalf of the plaintiff to meet the costs, the plaintiff had not provided any detail relating to the proposed sale of the subdivided property, and no financial details of the proposed third party company were provided.[27] The plaintiff's proposal was described as a 'pious hope' that the third party company would make payment of the security.[28] In making the springing order, the court placed emphasis on the development of case management principles since Dallas Development Corporation Pty Ltd v Western Australian Land Authority, and the more robust approach to case management now preferred by the courts.[29]
[27] Esteem Holdings Pty Ltd as trustee for the Esteem Trust v Caratti [No 2] [10].
[28] Esteem Holdings Pty Ltd as trustee for the Esteem Trust v Caratti [No 2] [11].
[29] Esteem Holdings Pty Ltd as trustee for the Esteem Trust v Caratti [No 2] [15].
In Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [No 2], the substantive proceeding had been stayed until security for costs was paid. Springing orders were sought on the basis of the plaintiff's delays. The plaintiff had been placed into voluntary administration, and the administrator claimed that additional time was needed to gather further information to determine whether the litigation had a reasonable prospect of success. In considering the application for springing orders, Edelman J considered the manner in which the proceeding had been conducted to have been wholly unsatisfactory and unacceptable.[30] The matter was not particularly complex, yet close to two years had elapsed and the matter was not close to trial. Further, the court noted that the plaintiff had 'been warned again and again and again' about the delay in the proceeding[31]. It was ordered that if the plaintiff failed to furnish the security for costs within six weeks, then the claim would be dismissed.
[30] Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [No 2] [37].
[31] Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [No 2] [37].
In Trafalgar West Investments Pty Ltd (as trustee for the Trafalgar West Investments Trust) v Superior Lawns Australia Pty Ltd [No 9], the court concluded that although there were compelling reasons to enforce compliance with the security order, the proceeding was still some way from trial and the interests of the plaintiff did not favour an immediate dismissal of the proceeding, as the delay represented five years of 'stuttered' development.[32] Justice Kenneth Martin made orders similar to those in Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [No 2], requiring that unless the amount was paid in accordance with the previous orders by a certain date (being by then a period of over four months since the obligation to provide that tranche of security arose), then the action would be brought to an end.
[32] Trafalgar West Investments Pty Ltd (as trustee for the Trafalgar West Investments Trust) v Superior Lawns Australia Pty Ltd [No 9] [45].
The reasons for decisions described above are by no means an exhaustive list of those which address or record a springing order outcome in the context of a failure to furnish security for costs, nor do they necessarily reflect all of the possible approaches that may be adopted with respect to the same. They are instructive in so far as they demonstrate that there are a number of guiding principles to be applied, and that context and circumstances inform how discretion is exercised so that what is fair and just between the parties may be achieved.

Disposition

In all of the circumstances, I consider that it is appropriate to make a springing order in favour of the defendants, but afford the plaintiff the time deposed by Mr Al-Khatib as being necessary to comply with the court's order of 28 January 2022. In so concluding, I weighed the following in the balance.
First, the length of the delay on the part of the plaintiff has been significant. The plaintiff was ordered to make payment into court within 30 days of 28 January 2022, and did not make payment by the time stipulated, or at all.
Secondly, by way of explanation for the plaintiff's delay in making payment into court, I understand that Mr Al-Khatib and Mr Qadar, as directors of the plaintiff, had budgeted to meet the estimated legal costs and expenses of this proceeding, in addition to other proceedings. Mr Al-Khatib deposes that he and Mr Qadar had not however budgeted for the eventuality of having to provide security for costs in any of the proceedings.[33] Further, Mr Al-Khatib deposed that the plaintiff had always expected to have one trial first followed by another and so on, as:[34]
That is the only way our finances will be able to afford to complete these matters.
[33] Affidavit of AA Al-Khatib par 9.
[34] Affidavit of AA Al-Khatib par 12.
Thirdly, no application was made on the part of the plaintiff to extend the time for compliance with the order made on 28 January 2022, despite this application having been foreshadowed by the defendants' representatives on 23 November 2022 and 9 February 2023.[35]
[35] Affidavit of RG Jeanes pars 10 and 13.
Fourthly, the evidence of Ms Jeanes makes plain that the representatives for the plaintiff indicated as early as 15 March 2022 that the plaintiff sought an extension of time to make payment into court and wished to confer in respect of the same. Despite this, no application to extend time was made, no minute of proposed consent order was provided to the defendants' representatives (although the provision of a minute had been foreshadowed), and conferral in relation to an extension of time was not meaningfully pursued on the part of the defendants.
Fifthly, it cannot be said that this application was made with haste after the plaintiff failed to make payment into court within 30 days of 28 January 2022. The defendants waited over a year before bringing the application.
Sixthly, I do not accept, as was suggested on behalf of the plaintiff, that the conduct of the defendants ought be impugned by having waited until April 2023 to bring this application, as having 'enabled the delay in payment' on the part of the plaintiff.[36] It was the plaintiff that failed to comply with the court's order, and the prejudice that flows by reason of delay cannot properly be attributed to the defendants.
[36] Plaintiff's submissions par 9.
In all of the circumstances, the delay is not of a kind that would prevent a springing order being made, nor is there a proper foundation to draw the adverse implication against the defendants as was suggested on the part of the plaintiff.
Seventhly, I proceed on the basis that the nature of the prejudice to the defendants is the prejudice to a fair trial which may ultimately be caused by delay. Further, the defendants have suffered prejudice in that they have incurred costs in instructing their representatives to confer with and write to the plaintiff, and by bringing this application, so as to prompt and now compel the plaintiff to do what it was already obliged to do. However, I am cognisant that the defendants do not seek to put their prejudice any higher.
Eighthly, I proceed on the basis that there will be significant hardship to the plaintiff if the action is dismissed. In summary, the plaintiff pleads that oral representations were made to its directors by the defendants' senior executive managers regarding the re-development of the shopping centre. It claims that the defendants' representations were misleading and deceptive, or likely to mislead or deceive, contrary to the Australian Consumer Law s 18. Alternatively, it claims that the representations were representations as to future matters for which there were no reasonable grounds, which turned out to be false and untrue, and accordingly were misleading and deceptive contrary to the Australian Consumer Law s 4. The plaintiff claims that it suffered loss and damage as a consequence of the defendants' misleading and deceptive conduct, and claims relief under the Australian Consumer Law, including damages.

Also in the alternative, the plaintiff claims that it was owed a duty of care and diligence by the defendants, including by undertaking redevelopment works in a manner that would not inconvenience or cause interruption to its business; and to inform its directors, prior to their entering into the lease, of the defendants' intention to allow the introduction of another tenancy in the food court selling the same or similar foods; and to not recklessly place the plaintiff's business in competition with another identical or substantially similar business trading in close proximity inside the food court. Among other things, the plaintiff claims that the defendants (in breach of their duty) permitted the introduction of a Turkish fast-food tenancy selling the same or similar goods to those sold by its business in the food court, trading in direct competition and only metres away from its business. The plaintiff claims that by reason of various breaches, it suffered loss and damage. It seeks damages in tort for negligence and breach of duty of care by the defendants, including for negligent misstatement. At par 14 of the amended writ of summons filed on 8 July 2020, the plaintiff gives particulars of loss and damage in tort with respect to the redevelopment of the Westfield Carousel Shopping Centre, with a total claim of $879,541.
I understood it to be accepted by counsel for all parties that prejudice will be suffered on the part of the plaintiff if the proceeding was dismissed, as most, if not all, of the plaintiff's claims would now be statute barred.[37] I have given considerable weight to the prejudice to be suffered by the plaintiff should the proceeding be dismissed by way of springing order.
[37] ts 44 and 47 (14 June 2023).
Ninthly, as to the submission made on behalf of the defendants as to the strength of the plaintiff's case, it remains the position that given the relatively early stage of the proceeding and the limited evidence before the court, it is not possible, necessary, nor appropriate that I attempt to undertake a detailed evaluation of the plaintiff's case.[38] Therefore, in determining whether to make a springing order, I did not give particular weight to the submission made on behalf of the defendants that the plaintiff's claim is weak.[39]
[38] Modern Holdings Pty Ltd v Scentre Management Limited [55].
[39] ts 42 (14 June 2023).
Tenthly, the evidence concerning the availability of funds is limited to Mr Al-Khatib's evidence, unsupported by any documents and proffered in a context where no financial records were adduced with respect to the plaintiff.
Finally, I understand from Mr Al-Khatib's affidavit that additional funds are being sourced from overseas; and that process is likely to take up to three months to source funds needed to comply with the order made on 28 January 2022 to pay $50,000 into court by way of security.[40] However, as noted above, Mr Al-Khatib's evidence is not supported by documentary evidence, nor is the source of funds deposed to.
[40] Affidavit of AA Al-Khatib par 11.
The plaintiff's delay has been inordinate. It appears that the delay comes about in circumstances where the directors of the plaintiff determined it best to prefer the prosecution of other proceedings to this proceeding. In light of Mr Al-Khatib's evidence, and the plaintiff's failure to do what it was already obliged to do, I am satisfied that the plaintiff will not or is unlikely to take steps as required, that is pay into court security for costs and prosecute this proceeding in a timely way, absent a springing order.
I have also approached the application cognisant that a springing order should only be made where there is no other available sanction which is appropriate and sufficient to enable the court to determine the matter consistently with the goal and objects in O 1 r 4A and r 4B of the RSC - in particular the fair and just determination of the litigation.
I have considered whether it might be appropriate to grant a further extension of time, as sought on behalf of the defendants, noting the concession made through counsel that if an extension of time was now granted, there would be a proper basis for the exercise of the court's discretion to make a springing order should the plaintiff fail to make payment into court by 2 August 2023.[41] In different circumstances, perhaps with a less egregious delay and with cogent evidence of the source of imminent funding, such an approach may have been appropriate.
[41] Plaintiff's submissions par 12.
I also considered whether it might be appropriate to make a springing order pursuant to the RSC O 4A r 23 that unless order 1 of the orders made on 28 January 2022 is complied with by a particular date, that the proceeding be put on the inactive cases list. The consequences of such an order would be that if the proceeding were to remain on the inactive cases list for six continuous months after the date on which the notice is given under r 25(1)(b) to the parties, the proceeding will be taken to be dismissed for want of prosecution.
Such an order was opposed by the defendants. In the end, I did not consider that such an order would be fair or just to the defendants given the length of the plaintiff's delay; the real prospect that unless compelled to act, the plaintiff will continue to prefer other proceedings and not prosecute this proceeding in a timely way; and the potential for the proceeding to remain on foot for an additional six months, should the plaintiff take no step to remove the proceeding from the inactive cases list.
I consider that the form of springing order advanced on the part of the defendants clearly and unequivocally records the criterion for compliance.
I proceed on the basis that springing orders should ordinarily only be made as a last resort when necessary to enable the court to fairly and justly determine the substantive matter in dispute. In that regard, before making a springing order, I ought take into account the fact that the self-executing nature of a springing order is such that, once made, absent an extension of time for compliance, the only question is whether the order has been complied with. There is no further assessment of the merits of the case or whether it is in the interests of justice for judgment to be entered.
Weighing all of these matters in the balance, given the clear and significant prejudice to the plaintiff should the proceeding be dismissed, and given Mr Al-Khatib's evidence that he expects to be able to source funds to comply with the order made on 28 January 2022 to pay $50,000 into court by way of security by early August 2023, I consider it appropriate to afford the plaintiff until the end of August 2023 to make payment into court, failing which the proceeding will be dismissed.

Conclusion and orders

For these reasons, I informed the parties at the conclusion of the hearing that I proposed to make an order in the following terms:
1.Unless by 4.00 pm on Thursday, 31 August 2023 the plaintiff complies with order 1 of the orders made on 28 January 2022 and pays $50,000 into court as security for the defendants' costs of this proceeding to entry for trial:
(a)the proceeding be and is hereby dismissed; and
(b)the plaintiff shall pay the first and second defendant's costs of the proceeding, including all reserved costs, to be taxed if not agreed.
Counsel for the parties did not seek to be heard as to the form of order.
As to the costs of the defendants' application made by chamber summons filed on 5 April 2023, I proceeded on the basis that costs generally follow the event because such an order is intended, at least to the extent that the costs incurred were not unreasonable or unreasonably incurred, as compensation (and vindication) for the successful action or application.[42] In circumstances where the plaintiff failed to comply with the order made on 28 January 2022 by making payment of security into court, and the defendants have secured a springing order (albeit not with the timeframe of 14 days as promoted on behalf of the defendants), it is fair that the court exercise its discretion to award costs in favour of the defendants in any event, to be taxed if not agreed. I consider that such an order will achieve what is fair and just between the parties according to the circumstances of this case.
[42] LexisNexis, Civil Procedure Western Australia, vol 1 (185-12-19) at [66.1.2], citing Latoudis v Casey; Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 [30] - [31]; Ohn v Walton (1995) 36 NSWLR 77.
Finally, I note that a springing order pursuant to the RSC O 4A r 23 might have been considered as a potential alternative to the continued operation of the stay that came into effect by operation of order 2 of the orders made on 28 January 2022, granted pursuant to Corporations Act s 1335(1) and the RSC O 25 r 6. That is, upon the plaintiff's default, discretion may have been exercised to make an order pursuant to r 23, putting the proceeding on the inactive cases list, which if not removed from the list pursuant to r 27, would have been dismissed six months later.
As a stay was ordered and operated pursuant to order 2 of my orders of 28 January 2022, the onus fell to the defendants to bring this application for a springing order and to incur the costs associated with the same. In appropriate matters, consideration might be given to use of the RSC O 4A div 5, particularly r 23, so that the onus falls instead to a defaulting plaintiff to make a request under the RSC O 4A r 27.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RW
Associate to the Honourable Justice Strk
20 JUNE 2023