Philips Electronics Australia Pty Ltd v Matthews

Case [2002] NSWCA 157

NEW SOUTH WALES COURT OF APPEAL

CITATION:     Philips Electronics Australia Pty. Ltd. v. Matthews [2002]  NSWCA 157

FILE NUMBER(S):
40504/01

HEARING DATE(S):    20 March 2002

JUDGMENT DATE:      29/05/2002

PARTIES:
Philips Electronics Australia Pty. Limited - claimant
Clive Matthews - opponent

JUDGMENT OF:        Mason P Sheller JA Hodgson JA   

LOWER COURT JURISDICTION:       District Court

LOWER COURT FILE NUMBER(S):     DC10435/00

LOWER COURT JUDICIAL OFFICER:   Karpin DCJ

COUNSEL:
Mr. C. Leahy for claimant
Mr. K. Andronos for opponent

SOLICITORS:
Deacons, Sydney for claimant
B.A. Chora & Company, Parramatta for opponent

CATCHWORDS:
PROCEDURE - District Court - Security for costs - Stay of proceedings - Abuse of process - Whether stay can be ordered unless security provided, in cases outside categories in respect of which security may be ordered.

LEGISLATION CITED:
District Court Act ss.8, 9, 156, 161
District Court Rules Part 40

DECISION:
1. Leave to appeal granted 2. Subject to a Notice of Appeal being filed within 7 days, appeal allowed
3. Orders of Karpin DCJ made on 21st June 2001 set aside, and matter remitted to the District Court for further consideration in accordance with these reasons as to whether the second order sought in the Notice of Motion should be granted 4. Opponent to pay claimant's costs of the appeal, and to have a suitors fund certificate if otherwise entitled.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40504/01
DC 10435/00

MASON P
SHELLER JA
HODGSON JA

Wednesday 29 May 2002

PHILIPS ELECTRONICS AUSTRALIA PTY. LTD.  V.  MATTHEWS

Judgment

  1. MASON P:  I have had the advantage of reading the judgments of Sheller JA and Hodgson JA.

  2. Hodgson JA sets out the relevant provisions of the District Court Act and Rules. I agree with his reasons and the orders he proposes.

  3. The question at issue is whether the District Court, in the course of exercising its jurisdiction to determine a civil claim, has power to order a stay until security for costs is provided, where the plaintiff’s circumstances fall outside the categories specifically addressed in Pt 40 r 1 of the District Court Rules.

  4. The language of s156(1) supports the existence of such a power.

  5. Section 156 does not confer power to direct the giving of security in terms. But it does, in my view, empower a judge to impose a stay and to make the giving of security a condition of its removal.

  6. Sheller JA explains why, in his view, it is not open to the District Court to exercise the power in question, notwithstanding the terms of s156(1). I acknowledge the force of what he has written. Nevertheless, for the reasons which follow, I have concluded that Pt 40 r 1 does not restrict the categories of plaintiffs against whom a stay may be ordered until security for costs is provided. (This is not to deny that Pt 40 r 1 might operate somewhat as a code in relation to the five categories of plaintiff which it addresses (cf eg r 1(3)), although I…

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Philips Electronics Australia Pty Ltd v Matthews [2002] NSWCA 157
Case
[2002] NSWCA 157
Decision Date

CaseChat Overview and Summary

Philips Electronics Australia Pty Ltd (the claimant) sought leave to appeal from a decision of Karpin DCJ in the District Court. The claimant had applied for orders that the opponent, Clive Matthews, provide security for the claimant's costs and that the proceedings be stayed until such security was provided. The opponent had commenced proceedings against the claimant alleging misleading conduct in relation to the acquisition of a business, claiming damages for legal expenses, liability under guarantees, and loss of income.

The central legal issue before the Court of Appeal was whether the District Court had the power to order security for costs and a stay of proceedings in circumstances not expressly provided for by the relevant Rules, particularly when the Rules themselves prescribed the specific categories and conditions under which security could be ordered. This involved considering the interplay between the general power to stay proceedings and the specific rules governing security for costs, and whether a court could circumvent the limitations imposed by the Rules by relying on its inherent or general powers.

The Court of Appeal, in allowing the appeal, reasoned that the legislature intended for the Rule Committee to prescribe the specific circumstances in which security for costs could be required. Once these rules were made and published, the general expression in section 156(1) of the relevant Act could not be used to extend or vary those prescribed circumstances. The Court held that a judge could not dispense with the conditions imposed by the Rules for the grant of security, nor could they bypass these conditions by relying on the general power to stay proceedings, as this would undermine the limitations established by the Rules.

Consequently, the Court of Appeal granted leave to appeal, allowed the appeal, and set aside the orders of Karpin DCJ. The matter was remitted to the District Court for further consideration regarding whether the second order sought in the Notice of Motion (the stay of proceedings) should be granted, with the claimant to pay the opponent's costs of the appeal.

Orders

Orders of the court

1. Leave to appeal granted 2. Subject to a Notice of Appeal being filed within 7 days, appeal allowed

3. Orders of Karpin DCJ made on 21st June 2001 set aside, and matter remitted to the District Court for further consideration in accordance with these reasons as to whether the second order sought in the Notice of Motion should be granted 4. Opponent to pay claimant's costs of the appeal, and to have a suitors fund certificate if otherwise entitled.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Gummow J continued:McTiernan J (20-21) spoke to the same effect. This reasoning has been applied in subsequent decisions of this Court.His Honour set out several of them. I think like principle applies here. The legislature intended that the Rule Committee prescribe the cases and circumstances in which security may be required in relation to proceedings. When made a rule must be published and notice of it laid before each House of Parliament, either of which may by resolution disallow the rule; see ss 39-41 of the Interpretation Act 1987 and the definition of “statutory rule” in s21. Once the Rule Committee prescribes the cases and circumstances the general expression in s156(1) cannot operate or be called in aid to extend or vary the cases or circumstances. For my own part I do not think that the power to dispense with compliance permits the judge not to comply with the conditions imposed by the Rules for the grant of security. Nor do I think, in light of the reasoning adopted in the cases to which I have just referred, it is possible to side-step those conditions by relying on the general power to stay proceedings upon terms. Effectively that makes a mockery of the limits on the exercise of the power prescribed by the Rules. I would grant leave to appeal but, in my opinion, the appeal should be dismissed with costs. HODGSON JA: On 21st June 2001, Karpin DCJ dismissed an application for security for costs brought by the claimant Philips Electronics Australia Pty. Ltd. against the opponent Clive Matthews. The claimant seeks leave to appeal from that decision. The matter was argued in this Court on the basis that, if leave be granted, the Court would proceed to determine the appeal.CIRCUMSTANCES On 21st December 2000, the opponent commenced proceedings in the District Court, seeking damages from the claimant for alleged misleading conduct in relation to the acquisition by the company Accalade Pty. Ltd. (Accalade) of a certain business from the claimant. The opponent claimed damages alleged to flow from the incurring by the opponent of legal expenses, the liability of the opponent under certain guarantees, and loss of income which the opponent would have earned as the New South Wales Service Manager of the claimant. The claimant applied by Notice of Motion returnable on 18th May 2001 for the following orders:1. That the plaintiff provide security for the defendant’s costs.2. That the proceedings be stayed until security for costs is provided. The application was supported by affidavits which the claimant alleged supported two propositions: (1) the proceedings arose from identical facts and circumstances as dealt with in Supreme Court litigation between Accalade and the claimant, which was ultimately settled on terms recorded in a deed dated 20th October 2000 pursuant to which the claimant paid Accalade’s liquidator $350,000.00, with judgment being entered in favour of the claimant; (2) the opponent has divested himself of assets, specifically by joining in a transfer dated 4th September 2000 from himself and his wife to his wife of real estate for a stated consideration of $95,000.00.

Ratio Decidendi

Legal Principle Established

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