Munkberg Pty Ltd v Endopine Pty Ltd
[2006] WASC 248
MUNKBERG PTY LTD & ANOR -v- ENDOPINE PTY LTD & ORS [2006] WASC 248
| Link to Appeal : | [2007] WASCA 177 |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WASC 248 | |
| Case No: | CIV:2302/2005 | 24 OCTOBER 2006 | |
| Coram: | MASTER SANDERSON | 3/11/06 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Security refused | ||
| B | |||
| PDF Version |
| Parties: | MUNKBERG PTY LTD (ACN 078 824 567) SWANSDALE PTY LTD (ACN 079 005 477) ENDOPINE PTY LTD (ACN 079 030 452) LUPIN NOMINEES PTY LTD (ACN 008 998 990) GECKO MANAGEMENT PTY LTD (ACN 083 043 243) KAHMIA HOLDINGS PTY LTD (ACN 112 315 689) MARK JOHN BEESON LYNDON EDWARD DYSON |
Catchwords: | Corporations law Application for security for costs Turns on own facts |
Legislation: | Corporations Act 2001 (Cth), s 1335 |
Case References: | Nil Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
SWANSDALE PTY LTD (ACN 079 005 477)
Second Plaintiff
AND
ENDOPINE PTY LTD (ACN 079 030 452)
First Defendant
LUPIN NOMINEES PTY LTD (ACN 008 998 990)
Second Defendant
GECKO MANAGEMENT PTY LTD (ACN 083 043 243)
Third Defendant
KAHMIA HOLDINGS PTY LTD (ACN 112 315 689)
Fourth Defendant
MARK JOHN BEESON
Fifth Defendant
LYNDON EDWARD DYSON
Sixth Defendant
- <Party Name1="MUNKBERG PTY LTD (ACN 078 824 567)", Type1="First Plaintiff", Name2="SWANSDALE PTY LTD (ACN 079 005 477)", Type2="Second Plaintiff", Name3="ENDOPINE PTY LTD (ACN 079 030 452)", Type3="First Defendant", Name4="LUPIN NOMINEES PTY LTD (ACN 008 998 990)", Type4="Second Defendant", Name5="GECKO MANAGEMENT PTY LTD (ACN 083 043 243)", Type5="Third Defendant", Name6="KAHMIA HOLDINGS PTY LTD (ACN 112 315 689)", Type6="Fourth Defendant", Name7="MARK JOHN BEESON", Type7="Fifth Defendant", Name8="LYNDON EDWARD DYSON", Type8="Sixth Defendant",>
Catchwords:
Corporations law - Application for security for costs - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 1335
Result:
Security refused
Category: B
Representation:
Counsel:
First Plaintiff : Mr T Galic
Second Plaintiff : Mr T Galic
First Defendant : Mr H R Robinson
Second Defendant : Mr H R Robinson
Third Defendant : Mr H R Robinson
Fourth Defendant : Mr H R Robinson
Fifth Defendant : Mr H R Robinson
Sixth Defendant : Mr H R Robinson
Solicitors:
First Plaintiff : Galic & Co
Second Plaintiff : Galic & Co
First Defendant : Haydn Robinson
Second Defendant : Haydn Robinson
Third Defendant : Haydn Robinson
Fourth Defendant : Haydn Robinson
Fifth Defendant : Haydn Robinson
Sixth Defendant : Haydn Robinson
(Page 3)
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
(Page 4)
1 MASTER SANDERSON: By application dated 11 January 2006, the defendants sought an order for security for costs against the plaintiffs. The amount of the security sought was $223,076. The matter came on in chambers on 18 January 2006. Programming orders were made. The programming orders anticipated the plaintiffs filing answering affidavits, the defendants filing an affidavit in reply and both parties filing their submissions by 16 February 2006. No affidavits on behalf of the plaintiffs were filed. The matter came on again on 11 April 2006. I extended the time for the plaintiffs to file affidavits until 28 April 2006 and I adjourned the matter to 18 May 2006 for hearing.
2 When the matter came on, on 18 May 2006, the plaintiffs had still not filed any affidavits. Over the defendants' objection, I further extended the time for the plaintiffs to file and serve any affidavits and submissions to 25 May 2006. I then adjourned the matter to 2 June 2006 for hearing.
3 When the matter came on, on 2 June 2006, the plaintiffs had still not filed any affidavits or any submissions. Rather than deal with the matter, I made orders for mediation of the whole dispute. The mediation order was in the standard form. It required the plaintiffs to serve a statement of issues within 7 days of the date of the order - that is, by 9 June 2006. If the defendants did not agree with the statement of issues, then within a further a 7 days - that is, by 16 June - the defendants were to file their own statement of issues.
4 The parties were then to confer about the differing statements of issues and that conferral was to take place by 4 August 2006. Thus the parties had some seven weeks in which to confer about any differences in their views as to the statement of issues.
5 On 15 June 2006, the plaintiffs' solicitors wrote to the mediation Registrar enclosing a statement of issues. On 19 June 2006, the Registrar's associate spoke to the plaintiffs' solicitor, Mr Galic. The associate advised Mr Galic to extract the order for mediation and to provide unavailable dates. Mr Galic was further advised that there would be no further action until those two steps were taken. Nothing happened. On 3 August 2006, the Registrar's associate wrote to the plaintiffs' lawyers asking why no action had been taken and seeking a report as to what steps had been taken to list the matter for mediation. On 9 August 2006, the defendants filed a statement of issues for mediation. Clearly, there is considerable difference between the parties as to what the issues between them are. There is nothing to suggest that a meeting has taken place with a view to narrowing those issues.
(Page 5)
6 On 27 September 2006, the Court having heard nothing subsequent to its letter of 3 August 2006, the case manager's associate wrote to the parties advising that a status conference had been listed on 24 October 2006. This advice of the re-listing provoked a response from the defendants' solicitors. Their letter is dated 4 October 2006. They point out the progress of the matter and that they had provided the plaintiffs' solicitors with a statement of issues and unavailable dates for mediation on 8 August 2006. They requested vacation of the hearing date for the status conference and a re-listing of the application for security for costs. The plaintiffs' solicitors also wrote to the Court. Without providing any explanation as to why they had not progressed the mediation, they asked that the status conference proceed and that it be treated as "an informal mediation".
7 The Registrar's associate wrote back to the plaintiffs' solicitors on 9 October 2006. He pointed out that the status conference was not an informal mediation but rather a conference to determine why the matter had not been listed for mediation. The associate also pointed out the failure on the part of the plaintiffs' solicitors to comply with the orders or make any realistic attempts to list the mediation. The matter was then re-listed before me on 24 October 2006.
8 At that hearing counsel for the defendants maintained that the application for security ought be determined on the evidence before the Court. His point was simple. The matter had gone on for 10 months and the lack of progress was due entirely to the plaintiffs' failure to comply with programming orders up until June and thereafter their failure to take steps to organise a mediation conference. Counsel submitted it was entirely inappropriate to allow the matter to drift on further with his clients incurring cost and expense while the action went nowhere.
9 For his part counsel for the plaintiffs maintained that it was in everyone's interests to proceed with the mediation. He maintained that there had been some confusion in obtaining unavailable dates from the parties and listing the mediation conference, although he maintained that this confusion was not entirely the responsibility of the plaintiffs. Quite how that submission could be made in the light of the history I have outlined above is unclear.
10 In my view, the proper approach is to proceed to determine the security for costs application. The plaintiffs have had ample opportunity to put on any evidence and file any submissions in opposition to the application. They have not done so. They have shown no urgency
(Page 6)
- whatever to force this matter to a mediation. If I was to further adjourn the matter to a mediation conference, it is unlikely that such a conference would be held before February 2007. In other words, 13 months after an application was filed, it will still be extant. If the matter did not settle at mediation, then there is a prospect that the application would not be heard before April 2007. A delay of that magnitude is simply unreasonable.
11 That being the case, it is appropriate that I determine the application for security on the basis of the material filed by the defendants.
12 The application is brought under s 1335 of the Corporations Act 2001 (Cth). For an order for security to be made, the defendants must establish on credible testimony that if called upon to do so the plaintiffs will be unable to meet any order for security for costs made against them. The first question, then, is what does the evidence establish about the financial position of Munkberg Pty Ltd ("Munkberg") and Swansdale Pty Ltd ("Swansdale").
13 The simple answer is nothing. The defendants rely upon affidavits of Mark John Beeson sworn 10 January 2006 and Duncan Nash Hannay sworn 16 May 2006. Mr Beeson's affidavit goes into some detail as to the nature of the dispute. It also annexes searches of both plaintiff companies. Those searches disclose that both companies are single director, single shareholder corporations. The searches also indicate that annual returns for the 2001/2002 financial years have been lodged but no further information is available. There is nothing to indicate what if any business undertakings the companies have, what if any real estate holdings they have, whether or not they are trustee companies - in short, nothing is said about their financial position. In summary, there is no credible testimony upon which I could conclude that the plaintiffs would be unable to pay the costs of the defendants if the defendants were successful in the action.
14 The position is not assisted by the affidavit of Mr Hannay. Mr Hannay was for a period an accountant and manager of the third defendant. He was responsible for passing on details of expenses and revenues to the accountants for Munkberg and Swansdale. He is able to say that neither company carried on business in its own right. Munkberg was trustee for The Miss Trust and Swansdale was trustee for The Swansdale Family Trust. A copy of the 2002 accounts for The Miss Trust appears as annexure MJB12 to Mr Beeson's affidavit. That shows in 2002 the trust earned a profit of $366,464. The balance sheet shows assets of over $1.46 million with liabilities of almost the same amount, with the
(Page 7)
- effect that the net assets of the trust are $10. That balance sheet must, I think, be read with some caution. The assets are said to be a series of loans made to trusts and the liabilities are said to be loans from various trusts. There is no bank debt or other obviously third party borrowings. Overall, given the substantial profit made by the trust, it appears to be in a healthy financial position.
15 No accounts are available for Swansdale. It is not possible to say anything about its financial position.
16 In my view, this application should fail. I will hear the parties as to the precise form of orders and as to costs.