Osten & Chrome Pty Ltd v Hale Corp Pty Ltd
[2025] VSC 320
•5 June 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY, ENGINEERING AND CONSTRUCTION LIST
S ECI 2024 02365
| OSTEN & CHROME PTY LTD (ACN 623 916 594) | Plaintiff |
| v | |
| HALE CORP PTY LTD (ACN 122 193 257) | First Defendant |
| -and- | |
| MATTHEW JOHN FRANCIS COLLINS | Second Defendant |
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JUDGE: | DELANY J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 5 June 2025 |
CASE MAY BE CITED AS: | Osten & Chrome Pty Ltd v Hale Corp Pty Ltd & Anor |
MEDIUM NEUTRAL CITATION: | [2025] VSC 320 |
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PRACTICE AND PROCEDURE — Security for costs — Proceeding stayed due to failure to provide security for costs — Discretion to dismiss — Short extension of the time by which security must be paid following which the proceeding will stand dismissed — Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 62.04; Civil Procedure Act 2010 (Vic) ss 7, 8, 25.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Beckwith | Mathas Law |
| For the Defendants | Mr M G McNamara | C and P Legal Pty Ltd |
HIS HONOUR:
This ruling concerns whether the proceeding which is stayed by reason of the plaintiff’s failure to provide security for costs in accordance with an Order made on 1 April 2025 should be dismissed.
The defendants contend the security not having been provided by 16 May 2025, the proceeding should immediately be dismissed. The plaintiffs seek an extension of time until 31 July 2025 to provide security.
For the reasons that follow I have determined that in the particular circumstances of this case, where the original Order did not expressly record that if the security was not provided on the due date the defendant or the Court on its own motion might immediately move to dismiss the proceeding, that it is appropriate to order that unless the security is provided by 31 July 2025 the proceeding shall stand dismissed.
The security for costs decision
On 1 April 2025, Associate Justice Efthim ordered that the plaintiff provide security for costs in the sum of $300,000 to be paid into Court within 30 days of the Order (‘security’). His Honour also ordered that if payment of security is not made within 30 days, this proceeding be stayed.
The reasons the Associate Justice ordered that security be provided were helpfully stated in ‘Other Matters’ in the 1 April 2025 Order.
His Honour’s reasons include a finding that the plaintiff is clearly impecunious. Although the plaintiff’s director proposed an undertaking not to dispose of particular units forming part of the development, his Honour found that it appeared that seven apartments would need to be sold before any funds could be paid into Court and there was no evidence whether that would occur. His Honour noted there was a debt in the region of $8 million which would need to be repaid.
The circumstances of the present dispute
The plaintiff failed to provide the security within the 30 days, being 1 May 2025.
On 2 May 2025 my Chambers emailed the parties noting that security for costs had not been paid. The email advised that the Court proposed to order on its own motion that unless the security was paid by 4:00pm on 16 May 2025, the proceeding be dismissed.
On 6 May 2025 the plaintiff requested that the Court hear it on the question of dismissing the proceeding on its own motion.
Upon receipt of that request, on 6 May 2025 an Order was made that by 13 May 2025 the plaintiff file and serve any submissions and any affidavits in support in relation to the dismissal of the proceeding and that by 15 May 2025 the defendant file any responding submissions and affidavits.
The parties filed written submissions in accordance with the 6 May 2025 Order. The plaintiff filed an affidavit of Vincent Sun dated 13 May 2025. The defendant filed an affidavit of James Anglicas dated 15 May 2025.
The further evidence
The hearing before the Associate Justice took place on 26 March 2025.
On 17 March 2025 the first defendant demanded the plaintiff pay $3,176.80 by 21 March 2025. That amount represents the costs of an oral examination in a County Court proceeding ordered to be paid by the plaintiff to the first defendant on 14 March 2025.
On 15 April 2025 the Costs Court ordered the first defendant’s taxed costs of the County Court proceeding, previously ordered to be paid by the plaintiff in this proceeding, are fixed at $23,825.
On 12 May 2025 the first defendant caused to be filed in the County Court an application for a warrant of seizure and sale to enforce the two unpaid costs orders outstanding against the plaintiff.
As at 15 May 2025 the amounts of $3,176.80 and $23,825 remained unpaid.
The plaintiff is the registered proprietor of units in a development at 71 Station Street, Fairfield (‘development’). The affidavit of Mr Sun exhibits the following sales authority agreements in relation to the sale of units in the development:
(a) on 17 November 2021 the plaintiff signed an exclusive sale authority agreement for a period of 90 days;
(b) on 25 November 2024 for the plaintiff signed an exclusive sale authority agreement for the sale of the units by expression of interest closing 23 December 2024;
(c) on 11 January 2025 the plaintiff signed a 60 day exclusive sale authority agreement.
Two unit sales have been completed. None of the units in the development advertised for sale as at 13 May 2025 are the subject of contracts of sale.
On 3 May 2025 a loan with Perpetual Corporate Trust Ltd as lender and La Trobe Financial Services Pty Ltd (‘La Trobe’) as manager secured over the unit development mature. The evidence discloses that as at January 2025, the total amount of the facility was $8,317,231.77. On 9 May 2025 La Trobe advised it would not extend the loan and that repayment in full was required. Late payment fees due to expiry of an additional 5% interest were advised to be applicable monthly pursuant to the loan contract from 7 June 2025 until the loan is fully discharged. The same communication stated that the interest budget would soon be exhausted and that the plaintiff will be required to start making payments from its own resources to cover the full interest payments currently at $67,684.44.
As at 13 May 2025 no written offer to finance all of the property or any of the units had been received by the plaintiff.
In his affidavit Mr Sun expresses his ‘belief’ that the plaintiff received an extension of the loan until 6 June 2025. The only basis for this belief appears to be the email communication which identifies the date from which late payment fees will be applicable.
Mr Sun also gives evidence in his affidavit about land owned by a company called Osten Albion Pty Ltd (ACN 623 916 594) (‘Albion’) of which he is the sole director and secretary. It is his evidence that on 9 April 2025 Albion entered into a contract of sale to sell land at 19 St Georges Crescent, Ashburton for a sale price of $2 million. Under the contract settlement was due to occur on 8 May 2025 to take place on 10 June 2025.
It appears that the property at 19 St Georges Crescent together with the property at 17 St Georges Crescent is owned by Albion. The substance of Mr Sun’s evidence is that upon the sale of 19 St Georges Crescent he will be able to complete refinancing of 17 St Georges Crescent ‘for the purpose of freeing up capital that will enable Osten to pay the security into Court for the proceeding’.
It is Mr Sun’s evidence that he is informed that the refinancing process of 17 St Georges Crescent is anticipated to be completed by July 2025.
The applicable principles
Rule 62.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’) provides that ‘where a plaintiff fails to give the security required by an order, the Court may dismiss the plaintiff's claim’.
There is no dispute about the principles to be applied in circumstances such as the present. Those principles are helpfully set out in the plaintiff’s submissions. It is sufficient for present purposes to reproduce the relevant part of the submissions including to refer to the authorities cited:
B. Exercise of the Court’s discretion
4. Rule 62.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’) provides that, where a plaintiff fails to give the security required by an order, the Court may dismiss a plaintiff’s claim. Rule 62.04 confers a discretionary power which is to be exercised judicially: that is, according to the requirements of reason and justice,[1] and having regard to the subject matter, scope and purpose of the power.[2]
5. Dismissal of a claim without adjudication on the merits is a “severe order”, given it terminations the litigation.[3] Accordingly, the Court ought exercise its power conferred by r 62.04 with caution. Factors relevant to the exercise of that discretion may include: whether the proceeding has been pursued with due diligence; whether there is a reasonable prospect that the security will be paid; and whether there has been a failure to comply with a Court‑prescribed time limit for payment.[4] Those factors are illustrative, not exhaustive. It may also be accepted that the period of any delay and any associated prejudice will be relevant;[5] as well as whether the plaintiff was put on notice of the dismissal at the time security was ordered.[6]
6. More generally, it has been said that the Court must ‘take into account the nature of the proceedings and every aspect of or related to the circumstances in which the security for costs orders have not been complied with’[7] and will strain ‘wherever practicable consistently with the interest of justice to avoid taking the radical step of denying the plaintiff its day in court’.[8]
[1]Sharp v Wakefield [1891] AC 173, 179 (Lord Halsbury LC).
[2]See Minister forImmigration and Citizenship v Li (2013) 249 CLR 332, 348–349 [23] (French CJ) and the authorities there cited.
[3]Bodycorp Repairers Pty Ltd v Maisano [2013] VSC 220 [62] (Elliott J).
[4]See Bodycorp [2013] VSC 220 [60] (Elliott J), referring to Speed Up Holdings Ltd v Gough & Co (Handly) Ltd [1986] FSR 330, 334–335 (Deputy Judge Evans‑Lombe).
[5]Such factors have been identified as relevant in the context of the distinct discretion to lift a stay that has been imposed due to a failure to give security: see Ascot Vale Self Storage Centre Pty Ltd v Nom De Plume Nominees Pty Ltd (No 2) [2019] VSC 285 at [92] (Gardiner AsJ), citing University of Sydney v ObjectiVision Pty Ltd [2016] FCA 1199 at [130], [134]–[135] (Burley J).
[6]Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18 [24] (Einstein J) (‘Idoport’); Idoport Pty Ltd v National Australia Bank Ltd & Ors [2002] NSWCA 271; Farnell v Penhalluriack [2010] VSCA 305 [18]–[20] (Mandie JA).
[7]Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18 [58].
[8]Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18 [24] (Einstein J).
Consideration
I accept the plaintiff’s submission that whether it was put on notice of the dismissal is a relevant consideration for the Court to have regard to in exercising its discretion. In this case the Order did not record in Other Matters that if the security was not provided on or before 1 May 2025 then either the defendants or the Court on its own motion might dismiss the proceeding. In those circumstances the first notice given to the plaintiff that the proceeding would be dismissed if security was not paid occurred when the email was sent from my Chambers on 2 May 2025.
There are limitations to the evidence in Mr Sun’s affidavit about how the security will be paid by 31 July 2025. I place no weight on the prospect of funds being available by that time from the sale of the units owned by the plaintiff. While that is so, I accept there is a reasonable prospect the plaintiff will be in a position to pay the security and will do so by 31 July 2025 following the completion of the contract of sale of 19 St Georges Crescent by Albion.
I accept that is the case notwithstanding the failure of the plaintiff to satisfy the judgment debts relating to the County Court proceeding. While the non‑payment of those debts confirms the finding by the Associate Justice that the plaintiff is impecunious, they do not directly bear on whether or not there is a reasonable prospect that the plaintiff will be in a position to pay the security by 31 July 2025.
I do not regard the fact that the plaintiff issued the proceeding relatively promptly after the issue of the occupancy permit in March 2024 in the context of the long stop limitation period provided for in s 134 of the Building Act 1993 (Vic) as a material consideration in the exercise of the discretion for which r 62.04 provides.
I am not in a position to evaluate the strengths and weaknesses of the respective cases of the parties. I do accept that if the proceeding is dismissed that the plaintiff will suffer prejudice because it will be deprived of its opportunity to pursue its claim.
I also do not consider that the period of time which has elapsed since the security was required to be paid is of itself a significant factor in the exercise of the discretion. Orders are not guidelines. Section 25 of the Civil Procedure Act 2010 (Vic) (‘CPA’) imposes an overarching obligation upon the parties to the proceeding and their legal practitioners to use reasonable endeavours in connection with a civil proceeding to act promptly and to minimise delay. The failure by the plaintiff to provide security for costs within the 30 days specified in the Order of the Associate Justice is inconsistent with that overarching obligation.
To allow a proceeding to be stayed for more than a very short period of time for the provision of security pursuant to an Order to be paid is not to act consistently with the overarching purpose specified in s 7(1) of the CPA, namely to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute. Section 8(1) requires the Court to seek to give effect to the overarching purpose. It is with that obligation in mind that the email was sent by my Chambers on 2 May 2025.
There are three reasons why in this case I consider an extension of the time for security for costs until 31 July 2025, failing which the proceeding will be dismissed, is appropriate. Those reasons are as follows:
(a) I accept on the basis of the evidence concerning the refinance of 17–19 St Georges Crescent by Albion as the proposed source of funds to satisfy the order for security for costs, that there is a reasonable prospect that the security will be paid by 31 July 2025;
(b) the plaintiff was not put on notice of the proposed dismissal of the proceeding at the time security was ordered; and
(c) the plaintiff was not on notice of the proposed dismissal of the proceeding until the email from the Court on 2 May 2025.
I will order as follows:
1. Unless by 4:00pm on 31 July 2025 the plaintiff provides security for costs in the sum of $300,000 by paying that amount into Court, the proceeding shall stand dismissed.
2. If the proceeding is dismissed pursuant to that order that the plaintiff shall pay the defendants’ costs including any reserved costs on a standard basis.
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