Oz B and S P/L v Elders IXL Limited

[1993] FCA 528

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION	1	NG 635 of 1990
STATE OF NEW SOUTH WALES	1

BETWEEN:  OZ B AND S PTY LIMITED
Applicant

AND: ELDERS IXL LIMITED

Respondent

AUSTRALIA pRlNClPAL REGISTRY

EX TEMPORE JUDGMENT

EINPELD J SYDNEY 9 JULY 1993

This action was commenced by application and statement of claim filed on 7 November 1990 seeking declarations that the respondent had engaged in conduct contravening section 52 of the Trade Practices Act (the Act) and that it was in breach of contract. The factual basis of each claim was the same, namely that the respondent had induced the applicant into entering into a contract by representations that were misleading or deceptive. The failure to deliver on the representations were the alleged breaches of contract.

breach of contract.

The applicant also sought damages under the Act in the sum of

$1,020,000. The statement of claim is not particularly

clearly drawn, but it seems that were the applicant to succeed under the Act, the damages would be very much less than the amount claimed and would probably be not more than a four- figure sum. The substantial damages claim is made on the

The action proceeded towards and right up to hearing, which

was apparently fixed for Monday 4 May 1992 before Justice

Spender. At the commencement of that hearing, the respondent

sought an order for security for costs. An earlier order for

security in the sum of $12,500 had been made by Justice

, I

Morling and although the transcript of that hearing is not before me, from the transcript of the hearing before Justice Spender on 4 May, it seems that Justice Morling's order was intended to be for pre-trial costs whereas the application to Justice Spender was for the costs of the trial itself. It appears that a sum of the order of $60,000-$65,000 was sought, but after evidence and some argument, which took virtually the whole of the day, his Honour ordered that the sum of $30,000 be provided by way of security for costs and that pending its provision, the application be stayed. The official Court order of the day contains an additional note reflecting words used by his Honour at the conclusion of his judgment ordering the provision of this security:

If security in that amount to the satisfaction of	the registrar is not provided within 90 days the
respondent should take steps to have the matter brought before the court for determination.

The case made to his Honour on behalf of the applicant in relation to security was that the applicant was to all intents and purposes an impecunious company. Whether on evidence or from the bar table -- from my reading probably a little of each -- it seems to have been accepted that the applicant company was certainly not in possession of liquid funds or

assets to the value of $30,000 to support or provide the
security.

There was considerable debate before his Honour about the merits of the case based on evidence which has not been made available to me. His Honour appeared to take a fairly critical even dismissive view of the contract claim. Whilst agreeing that the statutory claim might succeed, his Honour apparently felt that the amount of money likely to be recovered would be so small that the respondent would lose substantial funds by way of costs.

The applicant did not meet the requirement to supply security for costs within the 90 day period referred to in the note or any other period. Indeed, right up to this very day, the applicant's position is that it cannot provide security to the value of $30,000 but can only provide $10,000. Having in mind the provisions of order 28 rule 5 and order 10 rule 7, the respondent filed a motion dated 2 September 1992 on 17

dismissal of the proceedings and an order for the applicant to	September and made returnable on 24 September seeking the
pay the costs of the proceedings including the costs of the motion.
On 18 September the motion together with the affidavit in support was served on the applicant in two ways. A set of documents was delivered by courier to the Sydney city agents of the applicant's solicitors who were based in Canberra. A

second set of the documents were conveyed to the applicant's solicitors in Canberra by facsimile transmission. There is in evidence before me today a facsimile transmission report of the Sydney agents of the respondent's Adelaide solicitors which makes unarguably clear that the documents were received by the applicant's solicitors in Canberra in the period between 3.25 pm and 3.28 pm on 18 September.

The motion came before me on 24 September in due course. There was no appearance by or on behalf of the applicant and the proceedings were accordingly dismissed with an order that the applicant pay the respondent's costs as asked. The official order of the Court does not disclose the jurisdiction which the Court exercised on that occasion. Order 28 rule 5(1) provides:

Where the c o u r t o r d e r s t h a t the a p p l i c a n t p r o v i d e

s e c u r i t y for costs i t may o r d e r -

(b) t h a t i f the a p p l i c a n t f a i l s t o c o m p l y w i t h the

o r d e r t o p r o v i d e security w i t h i n the t i m e

l i m i t e d i n the o r d e r the p r o c e e d i n g be

t h e r e a f t e r s t a y e d or d i s m i s s e d .

Subrule (3) provides:

Where a p r o c e e d i n g s t a n d s d i s m i s s e d p u r s u a n t t o a n

o r d e r u n d e r th is o r d e r the o r d e r s h a l l not be set

a s i d e or v a r i e d e x c e p t i n s p e c i a l c i r c u m s t a n c e s .

It is clear that order 28 rule 5 deals with the circumstance that the Court has attached to its order for security an

additional order that failure to supply the security within a certain specified period of time is to result in the proceeding being stayed or dismissed. The order made by Justice Spender on 4 May 1992 was not such an order because it did not make provision that the proceeding was or was to be stayed or dismissed in the event that the applicant fails to comply with the order to provide security within a time specified.

Accordingly, the order of dismissal made by me on 2 4 September 1 9 9 2 was an order made under order 10 rule 7. I should add that the associate's note of the proceedings on that day makes specific reference to the fact that the order was made under

order 10 rule 7(l)(a). This provides that:

Where a party fails to comply with an order of the court directing that party to take a step in the proceeding, any other party may move the court on notice

(a)	if the party in default is an applicant - for an order that the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by
him in the proceeding.

The motion for dismissal was supported by an affidavit dated

2 4 September by Robyn Lesleigh Morrison, a senior associate in

the firm of solicitors acting as Sydney agents for the Adelaide solicitors for the respondent, deposing to the two methods of service to which I have referred. MS Morrison also deposed to a telephone conversation with Paul McKenzie, the solicitor handling the matter at the office of the Sydney

a g e n t o f the a p p l i c a n t ' s Canberra s o l i c i t o r s , s a i d t o h a v e

t a k e n p l a c e a t 5 .55 pm on 23 Sep tember 1992 , the d a y p r i o r t o

the h e a r i n g . M S Morrison a s k e d :

Do you h a v e i n s t r u c t i o n s i n r e l a t i o n t o the

a p p l i c a t i o n tomorrow?

T o w h i c h Mr McKenzie r e p l i e d :

When I r e c e i v e d y o u r notice o f m o t i o n and a f f i d a v i t

I f a x e d them t o G a r y Robb and A s s o c i a t e s i n

Canberra . I s u b s e q u e n t l y r a n g G a r y Robb and

A s s o c i a t e s and a s k e d t o s p e a k w i t h P e t e r Kaye, the

solicitor	there	who	was h a n d l i n g the m a t t e r .	I	was
t o l d by a	s e c r e t a r y t h a t he	had	l e f t the	f i r m .	She

s a i d t h a t she would c o n t a c t M r Kaye. I r a n g her

a g a i n t o d a y and she s a i d t h a t she had not h e a r d

a n y t h i n g from Mr Kaye. I therefore h a v e no

i n s t r u c t i o n s	i n	r e l a t i o n	t o	the	a p p l i c a t i o n
tomorrow.

M S Morr i son r e p l i e d :

I w i l l t e l e p h o n e you a g a i n tomorrow morn ing .

M S Morrison further deposed t h a t a t a b o u t 8 .45 am on the

f o l l o w i n g d a y , name ly on the d a y o f the h e a r i n g o f the m o t i o n

for d i s m i s s a l , she t e l e p h o n e d Mr McKenzie a g a i n and had t h i s

c o n v e r s a t i o n :

Have you r e c e i v e d a n y i n s t r u c t i o n s i n r e l a t i o n t o

the a p p l i c a t i o n a t 9.30 am?

Mr McKenzie r e p l i e d "No".

By motion filed in the registry on 11 June 1993, but not otherwise dated, the applicant gave notice that it would apply today for orders setting aside the order made on 24 September striking out the cause of action and "reinstating" the proceedings. In fact, what happened on 24 September was that the cause of action was not struck out but dismissed. Moreover, the application for "reinstatement" of the proceedings, so far as I am aware, has no statutory or regulatory basis, but I treat the motion as one seeking that the order for dismissal made on 24 September be vacated so that the action may proceed. The motion filed on behalf of the applicant also sought an order that the additional security for costs ordered by Justice Spender be reduced to $10,000 or such other amount as the Court thinks fit.

The motion is supported by four affidavits. One was by Anthony Croke, described in the affidavit as a company director but from his evidence in the witness box, the

principal director in the sense of the one most actively	involved in the affairs of the applicant company. M r Croke
provided no address in his affidavit but said in evidence that he lives in the Australian Capital Territory. His affidavit stated that when the company was unable to raise the $30,000 ordered by Justice Spender within the 90 days referred to in the note:

The applicant intended to apply to the court for an extension of time.

The reason why this application was never made, apparently, was that he was advised, so he says, by Gary Robb and Associates, his solicitors "at the time", to wait until the respondent raised the matter before the Court. As will be seen, Gary Robb and Associates were the applicant's solicitors until early November 1992. Mr Croke said in his affidavit that he was now able to obtain funds to lend to the applicant up to a maximum of $10,000. These funds were to be provided by C.M. Croke Pty Limited, a family company, if necessary, although he expected to be able to obtain the funds from what were described as "directors' loans and advertising revenue of the applicant".

I take the plural word "directors'" in relation to the suggested loans to mean that the directors of the applicant were prepared to lend $10,000 to the company to provide the security suggested. The evidence showed that the directors of the applicant company are Mr Croke and his wife and another man. No information was given about the income or assets of	these persons. No details were given about the directorship,
assets or business of C.M. Croke Pty Limited. No explanation
was proffered as to how the figure of $10,000 was chosen and why it could not be $20,000 or $30,000 or any other amount. No information was provided about what was described as "the advertising revenue of the applicant", and nothing at all about the applicant company or its directors and their attitudes and capacities to supply financial backing to the applicant company. In other words, the Court is left with no

basis for concluding that those behind the applicant company or who stand to gain from the proceedings could not comply with Justice Spender's order. As the authorities on security have so often said, there are so many $2 companies operating in these times that a company's lack of substantial shareholders' funds will rarely without more be sufficient to defeat an otherwise apparently meritorious application for security.

I have earlier related a telephone conversation that showed that at some stage in the proceedings the applicant's particular solicitor at Gary Robb and Associates was a person named Peter Kaye. The affidavits in support of the motion disclose that in about August 1992 Mr Kaye left the firm and went to work elsewhere. Mr Kaye's own af f idavit dated 31 May 1993 stated that he was employed by Gary Robb and Associates up to 28 August 1992 when he joined a firm called Hill and Rummery. He said that on or about the date he left the company, he had a telephone conversation with Mr Croke in

which Mr Croke asked him to continue to look after the present	case when he moved to the new firm. This conversation was not
referred to in Mr Croke's affidavit. Mr Croke said that when Mr Kaye left Gary Robb and Associates:

I decided to obtain the files from Gary Robb and

Associates so that Peter Kaye would continue to act on my behalf at his new firm and on 7 October 1992 I hand delivered a letter to Gary Robb and Associates requesting the release of files.

- l0 -

There is some significance in the date 7 October. Apart from the fact that Mr Kaye said that he was invited to continue to look after the matter as long before that date as 28 August, he also deposed to the fact that on or about 23 September, he received a facsimile from Gary Robb and Associates' office regarding a hearing in what is described as "a Federal Court" on 24 September. Putting together the information up to this point, it seems that Mr McKenzie of the city agent of Gary Robb and Associates had faxed the motion for judgment and supporting documents to Gary Robb and Associates shortly after he received them on 18 September; that on 18 September MS Morrison directly faxed Gary Robb and Associates with a set of the documents; but that Mr Kaye received none of these documents at Hill and Rummery until 23 September.

At this time Mr Croke had apparently not yet instructed Gary Robb and Associates to release the files to Mr Kaye. Mr Kaye said that he attempted to telephone Mr Croke to discuss the contents of the fax received from Gary Robb and Associates on

23 September but he was only able to contact him on 28

September. I take it from that -- and Mr Kaye was not available for cross-examination in these proceedings -- that his attempt to telephone Mr Croke was shortly after, if not immediately upon, the receipt of the documents on the 23rd. Yet Mr Croke said in evidence that he was at home between 23 and 28 September 1992; that he has a combined telephone and fax machine and that this was well known to Mr Kaye from whom he had received numerous past communications utilising that

facility; that he did not receive a telephone call from Mr Kaye on the afternoon of 23 September; but that his first contact with him was on 28 September when both Messrs Kaye and Croke agree they had a telephone conversation.

Although not entirely identical, the accounts of both Messrs Kaye and Croke of the conversation on 28 September are similar. Certainly the conversation contained a reference to Mr Kaye having said that he could not do anything as Gary Robb and Associates were still the solicitors on the record and he needed them to release the files. It is thus quite clear from the affidavit of M r Kaye that prior to the hearing on 24 September, he was informed of the case and that he knew what the case was about, including the fact that if the orders sought were made, the case would be brought to a summary end. It hardly needs saying that a solicitor receiving a notice that a client's or former client's case is under threat of being struck out of the list who satisfies himself with peremptory or casual efforts to contact his client and other

professional obligation requires.	solicitors involved in the matter, does far less than his
There is another significance to the date 7 October 1992. As
earlier mentioned, Croke said in his affidavit that the applicant did not apply for an extension of the 90 day period fixed by Justice Spender because Gary Robb and Associates advised him to wait until the respondent raised the matter in Court. I do not know which proceedings they could have had in

mind; more importantly, it means that after 7 October at the latest, the failure to apply for an extension is completely unexplained.

One of the significant differences between the accounts of the conversation of 28 September are that Mr Croke adds that Mr Kaye said to him:

You s h o u l d g i v e David E l l i o t t a c a l l and see i f he

i s aware o f a n y t h i n g and le t me know what happens .

David Elliott was and remains the counsel appearing for the applicant. Mr Croke says that he rang Mr Elliott late in the afternoon of Monday 28 September, presumably after his conversation with Mr Kaye, inquiring as to whether Mr Elliott knew anything of the motion before the Court of four days earlier. He was told, not surprisingly, that Mr Elliott had no information because he had received no notification of the hearing.

Gary Robb and Associates who had taken over the conduct of the	On 1 October Mr Croke says that he telephoned a partner of
proceedings after Mr Kaye had left. He inquired of this partner, Gerard Rees, as to whether he had received any notice of the motion of 24 September and was told:

I h a v e not r e c e i v e d a n y notice and I w i l l n o t i f y you

i f I receive a n y notice. I f there h a s been a

h e a r i n g o f a notice o f m o t i o n I would expect some

c o r r e s p o n d e n c e	from	E lders '	solicitors	r e g a r d i n g	the
outcome.	In	the meant ime,	would you	p l e a s e	d r o p i n

the letter of release so that I can forward the
files to Peter Kaye.

This strikes me as a quite extraordinary response. The firm's client had just had its case dismissed in the absence of an appearance by the solicitor on the record. And the solicitor handling the matter at the time sits back in his seat and tells the client "don't call us, we'll call you -- but we won't call anyone else who might know the facts as to how you just lost your casel"

The letter of authority to Gary Robb and Associates of 7 October to release the files to which I earlier referred obviously followed the conversation between Mr Croke and Mr Rees but, even still, the files were not apparently delivered to Mr Kaye at his new firm until early November. Mr Croke said that on 26 October "since [he] had heard nothing from Peter Kaye in relation to this matter," he telephoned the Court and had a conversation with my secretary. As he identified the person concerned as a male, he must in fact have been my associate at the time. The conversation was said

to be about whether there had been a motion and, if so, what	the outcome was. Mr Croke says that he was informed that the
motion was to strike out the proceedings, and that the proceedings were struck out. Mr Croke says that he conveyed this information to Mr Kaye immediately afterwards.
On 5 November 1992, Mr Kaye wrote a letter to the respondent's solicitors in Adelaide. In the course of the letter he pointed out that the proceedings had been dismissed in the

absence of an appearance for the applicant. The assertion was made that the applicant had not received notice of any motion, which explained the lack of an appearance, and he said:

W e now have i n s t r u c t i o n s t o have the m a t t e r r e l i s t e d

and have the o r d e r s made on 24 September set a s i d e .

W e have i n s t r u c t i o n s t h a t o u r client i n t e n d s t o

proceed w i t h th i s m a t t e r . H e i n t e n d s t o prov ide the

s e c u r i t y costs -

as is stated in the letter. Mr Kaye did not reveal that he actually knew of the proceedings on the day before they took place.

The solicitors for the respondent were asked for their attitude to this application as a matter of urgency. Stating that the letter of 5 November was only received on the 9th, they replied:

W e a r e s u r p r i s e d t h a t your client i n s t r u c t s you t h a t

i t r e c e i v e d n o n o t i c e o f the n o t i c e o f mo t ion f i l e d

on b e h a l f o f o u r cl ient . W e e n c l o s e a c o p y of an

a f f i d a v i t sworn by o u r Sydney a g e n t s depos ing t o the

service	of	the	n o t i c e	o f	mo t ion	and	s u p p o r t i n g
a f f i d a v i t .

This was obviously the affidavit of MS Morrison. The solicitors for the respondent went on to tell Mr Kaye that he and his client would have to file affidavits in support of the contention that the client was not served, and advised Mr Kaye that the respondent intended to oppose any application to have the strike out or dismissal order set aside.

An affidavit by Mr Rees was filed on behalf of the applicant.

He deposed that Mr Kaye's employment with Gary Robb and Associates stretched between 8 January 1991 and 28 August

1992; that the applicant's file was brought by Mr Kaye with

him when he joined the firm; that whilst he was there he had the sole carriage of the matter; and that at the time Mr Kaye left it was anticipated that he would take the file with him to his new firm if the client so wished. Mr Rees said that in late September or early October, Mr Croke telephoned him and directed that the file be forwarded to Mr Kaye, and it was subsequently forwarded. He does not make any reference to the alleged hand-delivered letter of 7 October. Mr Rees said in his affidavit that while he was in charge of the applicant's file:

I d o n o t r e c a l l r e c e i v i n g a n y c o u r t documents.

He also could not recall receiving any court documents after the file had been sent on to Mr Kaye, but if he had received

any, he would have telephoned Kaye immediately. The

inference is that between 28 August, when Mr Kaye left, and about 5 November, when the file was delivered to Hill and Rummery, Mr Rees had care of the file. His affidavit does not explain how and why nothing was done between his being informed on 1 October that the case had been dismissed and the transmission of the file to Mr Kaye more than a month later.

No explanation was given about how it could happen that the facsimile sent by MS Morrison on 18 September and the facsimile sent by Mr McKenzie on or about the same day could conceivably both have been mislaid by Gary Robb and Associates. No mention was made of any examination of the facsimile transmission recording mechanism at Gary Robb and Associates. There was no reference to any inquiries with other members or employees of the firm as to the handling and placement of facsimiles received at or about the same time. There was indeed no explanation as to who and what was faxed to Mr Kaye on 23 September or how Mr Kaye received the documents faxed to Gary Robb and Associates at all. The Court is left to accept that of nine pages transmitted by facsimile by each of two separate solicitors on two separate occasions from two separate machines, Gary Robb and Associates either received not a single page or all 18 pages went astray in the office by incompetence or negligence. Moreover, when the partner in the firm who had care of the matter was informed about what had happened, he did not a thing about it. I am

unable to draw either such conclusion.

The respondent's unwillingness to consent to any application to set aside or vacate the dismissal order was conveyed by Mr Kaye to Mr Croke in a telephone conversation on 16 November 1992. That is the only part of that conversation which Mr Croke related in his affidavit. It seems strange to me that if Mr Croke was anxious about his litigation, such a disastrous piece of information could have been permitted to

be limited merely to the news that an application to restore the matter to the list would be opposed. Another setback followed almost immediately. Two days later, Mr Croke related in his affidavit, Mr Kaye telephoned him to say:

I have just been informed that my firm cannot spare

me the time to continue with this matter. However,

I am happy to help you instruct a new solicitor and

to assist that solicitor if required.

It should be observed that, on the evidence, this was Mr Croke's first piece of information that nothing had yet been done to set aside an order made by the Court almost two months before, and that Mr Kaye would be unable to go on with the matter.

There then commenced a series of events that can only be described as quite bizarre. I shall explain the use of that term. The actual motion before the Court today to vacate the order of 24 September was not filed until 11 June, although the affidavits in support of the motion are actually noted by

could have been filed in support of a motion that had not yet	the registry as having been filed on 3 June. Quite how they
been filed is not immediately clear, but I shall assume for present purposes that they were all filed together, or certainly that it was made clear that they were all related to the same proceedings.
That means that from 28 September 1992 when Mr Kaye told Mr Croke that there was or may have been a final disposition of

the case four days earlier, 26 October when this was confirmed to him by my associate, and 18 November, when on the evidence Mr Croke first discovered that Mr Kaye was no longer going to act for him, it took until June 1993 to get the proceedings on foot that I am deciding today. By any standards this is extraordinary and disconcerting. The story related by Mr Croke thereafter is of an astonishing largely futile search for a solicitor who would act for him. His affidavit refers to his only having approached two named solicitors prior to his present solicitors, but in his evidence in the witness box he suggested that he actually may have tried several others.

The first named solicitor who was an old university friend said that he could not act for him but could refer him to another. The named person to whom he was thus referred told Mr Croke that he did not think he could get on top of the matter quickly enough and that he should retain another firm, preferably one in Sydney. It was not a particularly difficult problem to grapple with. This took the matter until early to

mid-December 1992 when Mr Croke said he spoke to Mr Elliott	again, who gave him a list of solicitors he could contact.
Thereafter, so far as his affidavit is concerned, he made no telephone calls at all to any solicitors from then until around mid-March 1993. This is because during what was described as "most of December and January", Mr Croke was in Young, a New South Wales country town, to assist his family company run its electrical equipment business over the

Christmas/New Year period. During this time he said he "did not have time to discuss the matter with the solicitors whose names were provided by David Elliott".

Mr Croke went on to say that the Federal Court was closed from Christmas until the end of January and therefore he did nothing until the end of January. He claims to have received this information from a solicitor or from someone in the Court. The statement is wrong. It is unlikely to have been made by a Court officer who would by definition have been on duty at the very time. Just as it is in the rest of the year, the Court was open on every one of those days except the public holidays. I myself was sitting between Christmas and New Year that year, as the law list in the newspaper would have shown. On 25 January, because his wife had obtained an unexpected professional engagement, he had to remain at home to look after his three children who were all 5 years of age and under, so that he did not have time to search for a solicitor. On 1 February his family home was burgled and many

were stolen, including the names and telephone numbers of the	of his notes and other documents relating to these proceedings	solicitors provided by Mr Elliott.
Early in February 1993 he telephoned Mr Elliott to obtain the names of the solicitors again, but Mr Elliott was not in chambers until around 9 March. He waited until then, when armed with the regurgitated Elliott list, Mr Croke set out to obtain a Sydney solicitor. He retained his present solicitor

about a week later. A solicitor in the employ of that firm, Michael David West, has sworn an affidavit of 2 May to explain why the proceedings were not commenced in less than three months, approximately, from the time the instructions were first obtained.

The principal reason given was that he spoke to somebody in the Court and asked whether he should serve the notice of motion and affidavits on the respondent before or after the documents were filed. Mr West says that he was informed that he should file the documents so that they can be reviewed by a judge to decide whether or not they should be accepted. As this is wrong in fact, and was not an answer to the question asked, it seems unlikely that the advice was misunderstood. This conclusion is supported by the additional question:

Does t h a t mean I should prov ide a l l r e l e v a n t

suppor t ing a f f i d a v i t s a t t h a t t ime?

which was answered in the affirmative. The question had been	whether he should serve the motion and affidavits before or	after filing; ultimately, he got the answer that he should
file the motion and affidavits all at the same time. As previously pointed out, the motion and affidavits do not seem to have been filed at the same time, so that the advice given was not taken, but that is of no particular moment now. Mr West's evidence simply did not explain why it took almost three months from the obtaining of instructions to the filing of a very simple motion to vacate a court order made the

previous September and four affidavits all of which were short and all but one of which were simple. It must have been obvious that the matter was urgent and that every day's delay made success more difficult to achieve.

It has been necessary to relate this history because a number of matters must be considered in the determination of this motion. The first is, of course, the quite enormous delay between the dismissal of the proceedings and the motion to set the dismissal aside. Arguing a difficult case, counsel for the applicant vigorously strived to persuade me that the delays were not all that serious and were in fact explained. In my opinion, they are very serious and they are not explained. The evidence has disclosed extreme casualness at best about something which is now argued to be a matter of very great importance to the applicant.

Obviously a case for a million dollars is not commenced by a small company every day of the week, but in the light of

Justice Spender's comments on its merits, an assessment does

have to be made as to how serious the case truly is when,

firstly, the solicitors for the applicant behaved in an extraordinarily uncaring and inconsequential way upon being notified both before and after the hearing of a motion to strike out their client's proceedings; and secondly, when having discovered that there had been such a hearing and that an order for dismissal had been made, the applicant itself took almost nine months to get things and people moving to

have it reversed. I find it difficult to accept that a small company which was seriously pressing a big case in which it has a major interest would be waiting for so long to obtain answers from its lawyers as to how this circumstance could have occurred and what they were doing to correct their error.

Having said that, it must be noted that notwithstanding that Justice Spender's lack of attraction to the contract claim and his Honour's view that the statutory claim was likely to be of a very small variety, the respondent admits that the applicant has an arguable claim, and that it would not ordinarily fall to be considered for transfer to the District Court or elsewhere.

For his part, counsel for the applicant conceded that the solicitors had been seriously in default in their duties but he says that this matter should be set to one side because the client was not at fault. He even raised but later withdrew the possibility that there was some form of moral, though not

to notify the applicant directly. If this were required, of

legal, obligation upon the respondent, even perhaps the Court,

course, litigation could never be conducted. Amongst other things, although required to do so in the rules, solicitors rarely include in their pleadings or notices of appearance the names and addresses of their clients. They almost never give their clients' telephone numbers and fax numbers. Of course no such notice was given but notice was given to both the actual solicitor on the record and to the city agent, and Mr

Kaye's affidavit showed that he knew about the proceedings prior to the hearing. He can also be taken to have known Mr Croke's telephone and fax number.

But the most important aspect of this matter is not what happened before the hearing but what happened after it. If I accept the submission of counsel for the applicant, as I am inclined to do, that only the actions of the client rather than the gross behaviour of the solicitors should be used to assess the delays and actions involved, the applicant's case does not improve. The response of the applicant to the notification that proceedings had taken place in the Court on 24 September 1992 in its absence, which on the evidence first came to Mr Croke's notice on 28 September in the telephone call with M r Kaye, was a great deal less than might have been expected. It is possible to divine, as the reason why he did not react quickly and decisively, his inability or unwillingness to supply the security ordered by Justice Spender as far back as 4 May 1992, but as the respondent

places no reliance upon such an inference, I set it to one	side. Yet I cannot and should not ignore the glaring gaps in
the applicant's evidence on the security question to which I have earlier drawn attention.
The subsequent delays are really quite extraordinary. It is one thing to say that the applicant might not have known what its options were when it found out that there had been a hearing at which it had not been present. It is something

else to assert that when it discovered another month later that the proceedings had been struck out, it still may not have known that something could and should be done immediately. I should have thought that having telephoned Mr Kaye on the same day as he found out that the proceedings had been struck out, Mr Croke's inquiries of Mr Kaye would and almost certainly must have been accompanied by a request for advice as to what he could now do. Mr Kaye would certainly have known and would have been obliged to tell Mr Croke. Indeed, there is nothing in the affidavit of Mr Croke to explain when he first ascertained, and by whom he was told, that it was open to him to make an application to set aside or vacate the orders made on 24 September.

I agree with the respondent's submission that the applicant's explanations of the subsequent delays in obtaining a legal representative and legal advice and in taking action to have vacated the orders made on 24 September are quite inadequate.

I am sympathetic to the pressures that presumably were upon Mr

Croke in relation to his family's business activities in Young

and his domestic responsibilities in Canberra consequent upon

his wife's acceptance of a public service contract, but it is simply impossible to accept that from 18 November 1992, when he first found out that Mr Kaye did not wish to continue with the matter, it would take some four months to obtain a Sydney solicitor to take over what he would wish me to believe was an urgent and important matter critical to the future of his company. Looking after three young children is certainly an

all-consuming and at times stressful pastime but it does not usually prevent the making of a few telephone calls in a period of some weeks.

To the applicant's submission that there is no prejudice to the respondent in the event that the judgment of dismissal is set aside, the respondent pointed to a likely dimming of memories of the witnesses. There is something in that response but I do not believe the prejudice to be so insuperable as otherwise to prevent the order sought being made. The respondent also submitted that I should import the words of order 28 rule 5 into the spirit of order 10 rule 7, and require special circumstances before granting the application to vacate the dismissal. Again, this argument is interesting and may be correct, but I think it would be safer in the circumstances to consider this matter directly on the terms of order 10 rule 7 rather than try to read into it a philosophy taken from the words of another rule.

unexplained, I do not think I would refuse the applicant's

Despite the fact that most of the delays in this matter are

motion on the ground of delay alone. But the problem is that ceding to the motion would only recommence the problem and not solve it. The restoration of the matter to the list would have the effect of restoring the order of Justice Spender that pending the supply of security, the application be stayed. Because of the reference in the note to the 90 days, the spirit of his Honour's order at least would permit another

application by the respondent for dismissal, if not under order 28 rule 5, then again under order 10 rule 7, because the applicant says in these proceedings that it is simply unable or unwilling to supply the $30,000 ordered.

The application in the present motion that I should reduce the security to $10,000 or some other sum really invites me to sit by way of appeal or review of Justice Spender's order. Such a procedure is not sanctioned or provided for in the rules and would be somewhat invidious, not least because his Honour spent a whole day on the motion for security, had a great deal more evidence than I have in the matter, and was addressed in full on all the arguments that have been put to me today and more. Moreover, despite the contrary arguments of the applicant's counsel, there are no new circumstances which have emerged since the hearing before Justice Spender some 14 months ago to justify a different order made by another single judge.

There certainly is provision for more than one motion for

security, but proceedings of this kind would never stop if

another judge could hear a motion to reduce an amount earlier ordered for security for costs which one party did not like or could not meet, as a consequence of which action was taken to stay or dismiss the proceedings. This was a motion for security heard at the threshold of the hearing to provide for the costs of the respondent. Justice Spender is a most experienced judge and it is obvious that he knew well what his

duties were and the way he was supposed to approach the matter. His Honour gave the matter his usual comprehensive and careful consideration. He dealt with the problem that arises in this case, like it does in many others, of balancing the public interest of litigants who are poor being able to litigate cases against wealthy companies, with that of not requiring a party being sued to be at risk of being unable to recover costs even if it wins and therefore facing a loss regardless of the result. If this could be done with complete impunity, there would be nothing to stop unmeritorious suits being commenced every day. His Honour stated, with respect unarguably correctly, that it was necessary to hold a balance between the two. There is no doubt that his Honour felt this balancing burden acutely.

It should also be noted that there is evidence before me today, as there was before Justice Spender, suggesting that the costs of the respondent in the preparation of this hearing up to and beyond its conduct are very substantially in excess

be something of the order of double the amount which he	of $30,000. In fact Justice Spender was told that they would
ultimately ordered. His Honour obviously took into account the respective merits of the substantive case being put forward. This is a task I am quite unable to undertake because the evidence is not before me. Even if it had been, I would almost certainly not have undertaken the task because the applicant has had one hearing on the matter and it is not

entitled to a second. There was provision for appeal from
Justice Spender's decision which was not availed of.

Thus, on the applicant's own evidence filed on this motion, to set aside the order without reducing the security, would merely be to add more futile litigation to what has already gone before. As I mentioned in the course of argument, the order was that security be supplied, not money. In other words, what was necessary was for the applicant to have satisfied the Registrar that it was in a position to and did in fact secure the sum of $30,000 on account of the respondent's costs, which it seems indisputable will far exceed that sum if the matter proceeds and the applicant fails. The applicant has now had 14 months since Justice Spender's order to present to the Court the security ordered or to explain how and why it cannot do so. It has done neither.

The motion should be taken as a package, viz. to vacate the

without the second would be merely to invite another

dismissal order and reduce the security. To do the first

application for dismissal and further argument of the type put forward today. That would be a complete waste of time and money for everyone concerned. I am not prepared to sit in judgment on Justice Spender's order. If I did, it is not possible on the evidence in this motion that a different order would be made. Together with the serious and unexplained delays in taking action to set aside the order of dismissal,

this means that there is only one order that I can make on
this motion, and that is to dismiss it.

The following timetable will apply in respect to any application by the respondent for the costs of the motion. The respondent will file and serve its submissions by not later than 4 pm on Monday July 12. The applicant will file its submissions by not later than 4 pm on Monday July 26. Any submissions in reply will be filed and served by not later than 4 pm on Thursday July 29. By filing, I mean supplying a copy to my associate either by hand delivery to level 20 of this building or by fax to 221 3238. The matter will stand part heard until the final submissions are in when the decision will be reserved.