Nonox Australia Pty Ltd v Certain Underwriters at Lloyd's Subscribing to Contract No CV0263CGL
[2014] NSWSC 790
•06 June 2014
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Nonox Australia Pty Ltd v Certain Underwriters at Lloyd's Subscribing to Contract No CV0263CGL [2014] NSWSC 790 Hearing dates: 6 June 2014 Decision date: 06 June 2014 Before: Ball J Decision: (1) Proceedings be dismissed.
(2) The plaintiff pay the first and second defendants' costs of the proceedings, including the costs of the motion.
Catchwords: PROCEDURE - civil - UCPR r 42.21 - plaintiff's failure to pay security for costs instalment - application for order that plaintiff's claim for relief be dismissed - factors to be considered by the Court in determining whether to dismiss proceedings Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18
Nonox Australia v Certain Underwriters at Lloyds Subscribing to Contract No CV0263CGL [2014] NSWSC 221
Nonox Australia v Certain Underwriters at Lloyds Subscribing to Contract no CV0263CGL [2014] NSWSC 222
Owners Corporation - Strata Plan 61732 v TR Druce Pty Ltd [2009] NSWSC 1024Category: Procedural and other rulings Parties: Nonox Australia Pty Ltd (Plaintiff)
Certain Underwriters at Lloyd's Subscribing to Contract No CV0263CGL (First Defendant)
Berkley Insurance Company (Second Defendant)
Marsh Pty Ltd (Third Defendant)Representation: Counsel:
S Wolfe, Director of Nonox (Plaintiff)
DH Mitchell (First and Second Defendants)
M Cash, Solicitor (Third Defendant)
Solicitors:
Self Represented (Plaintiff)
Moray & Agnew (First and Second Defendants)
King Wood & Mallesons (Third Defendant)
File Number(s): 2013/297111 Publication restriction: Nil
EX TEMPORE Judgment
On 7 March 2014, McDougall J made orders that the plaintiff, Nonox Australia Pty Ltd, provide security for the costs of the first and second defendants in these proceedings, Certain Underwriters at Lloyd's Subscribing to Contract no CV0263CGL and Berkley Insurance Company, in the sum of $245,000 to be provided in instalments, with the first instalment of $45,000 to be paid within 28 days: see Nonox Australia v Certain Underwriters at Lloyds Subscribing to Contract no CV0263CGL [2014] NSWSC 222. That instalment has not been paid and the first and second defendants now seek an order pursuant to Uniform Civil Procedure Rules 2005 (UCPR) r 42.21(3) that the proceedings be dismissed.
UCPR r 42.21(3) provides that, if a plaintiff fails to comply with an order of the court made under r 42.21 concerning security for costs, the court may order that the proceeding on the plaintiff's claim for relief be dismissed.
At the time the application for security was heard, the plaintiff was legally represented. Since that time, however, its legal representatives have withdrawn and today the plaintiff was represented by Mr Wolfe, the sole director of the plaintiff.
In making an order that security be provided, McDougall J said at para [48] of his judgment in Nonox Australia v Certain Underwriters at Lloyds Subscribing to Contract No CV0263CGL [2014] NSWSC 221:
The balancing of the discretionary considerations is sometimes not an easy matter. This is one of those cases. Were there any evidence that could support the conclusion that the grant of security would stultify the litigation then, taking that into account the other matters relied upon by Mr Duncan (to the extent that I have accepted his submissions), I would be inclined to reject the application for security for costs.
In drawing the conclusion that the proceeding would not necessarily be stultified if the security were ordered, his Honour observed that the shares in the plaintiff are held by another company which holds those shares on trust for some unidentified trust: [2014] NSWSC 221 at [29]-[30]. His Honour also observed that it may be inferred that the company was run, and the proceedings were brought, for the indirect benefit of the beneficiaries of that trust. However, there was no evidence before his Honour concerning who those parties might be and what ability they had to assist in providing any security which was ordered.
Mr Wolfe submits that the proceedings should not be dismissed for two principal reasons. First, he submits that this matter is appropriate for mediation and that at least some of the interested parties in the proceedings are willing to attend mediation. The preferable course, in that event, is for the Court to order that there be mediation rather than to dismiss the proceedings.
Second, Mr Wolfe submits that the Court should not infer that the persons who ultimately stand to benefit from the trading of the company and from this litigation are unwilling to fund the litigation. Rather, he submits it is equally open to the Court to infer that those persons do not have the capacity to do so. He submits that that inference is supported by the fact that despite the defendant's application, the plaintiff has been unable to provide security with the possible result that the proceedings will be dismissed and it may therefore be inferred that the persons who ultimately stand to benefit are not in a position to provide security.
In my opinion, there are difficulties with Mr Wolfe's submissions. So far as the question of mediation is concerned, the proceedings have been stayed and, absent variation of McDougall J's orders, the Court has no power to make orders in respect of stayed proceedings. No formal application was made to vary McDougall J's orders. In my opinion, it is very unlikely that the Court would entertain such an application in circumstances where those orders have been made following a contested hearing in which the plaintiff had been legally represented.
I do not accept the second submission made by Mr Wolfe. It has been open to the plaintiff since McDougall J made his orders, and particularly having regard to what McDougall J said, to reveal the names of those who ultimately stand to benefit from the proceedings and to offer information to the Court concerning their financial position to enable the Court to make an assessment of whether any stultification of the proceedings arises from the inability of those who have an interest in the proceedings to fund them, or merely a commercial decision by the interested parties that they are not willing to take the risks associated with court proceedings and, for that reason, have not proffered any information concerning their financial circumstances. The plaintiff has not done so.
In Owners Corporation - Strata Plan 61732 v TR Druce Pty Ltd [2009] NSWSC 1024 at [21], White J, referring to the decision of Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18 at [24], set out various matters that the court normally takes into account in determining whether to dismiss proceedings under UCPR r 42.21(3). Those matters are:
(1) the period that has elapsed since security was ordered;
(2) the fact that the plaintiff has been on notice of the application for dismissal;
(3) the seeming inability of the plaintiff to further fund the Main Proceedings;
(4) the prejudice to the defendants;
(5) the position of the Court.
So far as the first matter is concerned, Mr Mitchell, who appeared for the first and second defendants, pointed out that it has now been three months since McDougall J made his orders. There have also been two previous adjournments to permit the plaintiff to provide security and to seek a variation of the orders that have been made or to proffer information concerning the financial position of those who ultimately stand to benefit from the proceedings.
In relation to the second matter, the plaintiff has been on notice of the current application since 5 May 2014.
In relation to the third matter, it is plain that the plaintiff is unable to provide security and, on the evidence before me, there seems no reasonable likelihood that it will be able to do so in the future. In particular, it has sought funding from third party claimants against it. It appears from the evidence that that funding has been refused. And, as I have said, it appears that those who ultimately stand behind the plaintiff are at least unwilling to provide funding for these proceedings.
I accept that, in relation to the fourth matter, the defendants will suffer prejudice by a continuation of the proceedings. I also accept Mr Mitchell's submission that, particularly in the Commercial List, parties should expect to be required to act promptly themselves and expect prompt action by the Court.
It is also relevant that dismissal of the proceedings will not of itself prevent the plaintiff from bringing a further action.
Accordingly, it is appropriate that the proceedings be dismissed and that the plaintiff pay the first and second defendants' costs of the proceedings, including the costs of the motion.
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Amendments
19 June 2014 - Typographical error - solicitor representation for plaintiff
Amended paragraphs: Coversheet
Decision last updated: 19 June 2014
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