Phoenix Eagle Company Pty Ltd v Tom McArthur Pty Ltd [No 3]
[2020] WASC 272
•22 JULY 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: PHOENIX EAGLE COMPANY PTY LTD -v- TOM McARTHUR PTY LTD [No 3] [2020] WASC 272
CORAM: KENNETH MARTIN J
HEARD: 2 JULY 2020
DELIVERED : 2 JULY 2020
PUBLISHED : 22 JULY 2020
FILE NO/S: CIV 1746 of 2016
BETWEEN: PHOENIX EAGLE COMPANY PTY LTD
Plaintiff
AND
TOM McARTHUR PTY LTD
First Defendant
TREVOR HOWARD BRICKHILL
Second Defendant
LAURA COSTANTINA BRICKHILL
Third Defendant
LAURA COSTANTINA BRICKHILL ATF THE TLAJ TRUST
Fourth Defendant
Catchwords:
Practice and procedure - Case management - Inactive Cases List - Application for removal - Six month period of matter on list due to expire - Discretionary considerations - Matter on list due to failure to provide security for costs - Security provided albeit later than ordered - Substantial security provided - Interests of justice - Matter removed from Inactive Cases List - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr L A Warnick |
| First Defendant | : | Mr C Terren |
| Second Defendant | : | Mr C Terren |
| Third Defendant | : | Mr C Terren |
| Fourth Defendant | : | Mr C Terren |
Solicitors:
| Plaintiff | : | KD Legal |
| First Defendant | : | Roe Legal Services |
| Second Defendant | : | Roe Legal Services |
| Third Defendant | : | Roe Legal Services |
| Fourth Defendant | : | Roe Legal Services |
Case(s) referred to in decision(s):
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Culleton v Kershaw [No 2] [2018] WASC 238
Jebb as trustee for Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2018] WASCA 123
Lashansky v Legal Practice Board [No 2] [2010] WASC 159
Phoenix Eagle Company Pty Ltd v Tom McArthur Pty Ltd [No 2] [2019] WASC 378
Rosebridge Nominees Pty Ltd (in liq) v Commonwealth Bank of Australia [2018] WASCA 112
Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [No 7] [2016] WASC 329
KENNETH MARTIN J:
(This judgment was delivered extemporaneously on 2 July 2020 and has been edited from the transcript.)
These are the reasons for the conclusion which I have reached and the orders that I will issue in relation to the application by request of the plaintiff in this action seeking that the action be removed from its current locus, which is on the court's Inactive Cases List.
The application is brought, heard and determined in circumstances of urgency. This is on the basis that, by reason of a communication sent by the Acting Principal Registrar of 3 January 2020 pursuant to O 4A r 25(1)(b) of the Rules of the Supreme Court 1979 (WA) (RSC) the parties were advised that the action had been placed upon the court's Inactive Cases List, the consequence of that being that if it was not removed from the list within a six-month period, then pursuant to RSC O4A r 28 the case is taken to have been dismissed for want of prosecution. Those time prescriptions mean that this matter would be taken to have been dismissed on 3 July 2020 - being tomorrow. Hence the urgency of the application to have the case removed from the Inactive Cases List.
Background
For present circumstances, let me just note the following brief matters by way of an introductory chronology. This action was commenced in 2016. On 14 June 2016 it was entered in the Commercial and Managed Cases List (CMC List) to be case managed by Allanson J. The action has been the subject of prior orders of 29 July 2016 for two tranches of security for costs to be paid into court by the plaintiff in the amounts of $35,000 each.
Matters progressed from there, and I will include as Schedule 1 to these reasons a history of the conduct of the case by way of chronology which was provided by the plaintiff in its written submissions in this application of 2 July 2020. The chronology shows events from 5 May 2016 through to 22 October 2019.
On 22 October 2019, Allanson J, in the light of his reasons in Phoenix Eagle Company Pty Ltd v Tom McArthur Pty Ltd [No 2] [2019] WASC 378 ordered that the plaintiff give further security for costs in the amount of $200,000 by payment into court.
By order 1 of his Honour's orders, he required that by 4.00 pm on 19 November 2019 the plaintiff provide security for costs by way of a payment to court in the amount of $200,000 indicating the basis upon which the regulations and schedules to the RSC deal with that process. His Honour further ordered that in the meantime further proceedings, including the counterclaim, be stayed. There was liberty to apply in relation to the counterclaim.
But as events transpired, 19 November 2019 came and went without security in that amount being paid into the court by the plaintiff.
Consequently, the matter returned to Allanson J in the light of that default. On 12 December 2019, his Honour issued further orders, one of which is particularly relevant to the present application. His Honour first of all extended time for compliance with his earlier security order until 20 December 2019. Thereafter, his order 2 of 12 December 2019 was that:
If by 4.00 pm on 20 December 2019, the plaintiff does not provide security for costs by way of a payment into Court pursuant to the Regulation 6 of Schedule 3 of the Rules of the Supreme Court 1971 (WA) in the amount of $200,000 the proceedings (including the counterclaim) will be placed on the Inactive Cases List.
His Honour further ordered the plaintiff to pay the first to fourth defendants' costs of the application for security for costs, which he fixed in the amount of $11,253, payable forthwith.
So as seen, the time for compliance with the order to pay the $200,000 into court was extended effectively for a period of eight days on 12 December to 20 December 2019. But even that extended time came and went without the security being provided.
Consequently, the action became the subject of the Inactive Cases List sanction his Honour had issued as per the wording of order 2 above.
That, in turn, led to the communication from the Acting Principal Registrar who, on 3 January 2020, wrote advising the parties of the matter being placed on the Inactive Cases List in accord with RSC O 4A r 25(1)(b). Correlative to that event was the six month exposure to termination consequence - where the matter remained on the list continuously. Various other repercussions as stated under the RSC in terms of what could be done and what could not be done in terms of the action were then notified to the parties.
The Inactive Cases List
I have dealt previously with the applicable rules governing matters on the Inactive Cases List: see my decision in Culleton v Kershaw [No 2] [2018] WASC 238 delivered on 10 August 2018. That was a case in which time had fully run against that plaintiff and he was bringing his removal application out of time. Commencing at [54], I discussed various case authorities, including Le Miere J's observations in Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [No 7] [2016] WASC 329, which was affirmed by the Court of Appeal in Rosebridge Nominees Pty Ltd (in liq) v Commonwealth Bank of Australia [2018] WASCA 112: see particularly at [34] of that decision.
I also mention the Court of Appeal's reasons (Mitchell and Beech JJA) in Jebb as trustee for Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2018] WASCA 123 delivered on 17 July 2018. Again, that was a different fact situation but at [70] displays a comprehensive discussion by the Court of Appeal around RSC O 4A r 27.
The order that Allanson J issued on 12 December 2019 was pursuant to RSC O 4A r 23(1). It is important to keep in mind procedurally that an action can be placed on the court's Inactive Cases List for three particular reasons.
The first is where a case manager convenes a hearing to show cause as to why a case ought not be put on the Inactive Cases List pursuant to RSC O 4A r 22. At that hearing, if the case manger is not satisfied an action is being conducted in a timely way, then an order can be made putting the matter on the Inactive Cases List under RSC O 4A r 22(4). That is not the present situation.
Second, a matter will be taken to be 'inactive' if no procedural steps have been taken in a case for 12 months (RSC O 4A r 24). The action can then be placed on the Inactive Cases List by the Principal Registrar, without need for any hearing: see RSC O 4A r 25(1)(a). Again that is not what happened here.
The third way, which is what happened here, is that the present action was ordered to be placed on the Inactive Cases List pursuant to RSC O 4A r 23(1). Effectively, this was as a sanction. Order 4A r 23(1) says:
A judge, master or registrar making an interlocutory order or case management direction in a case may include an order that unless the interlocutory order or direction is complied with by a date stated in the order, the case is to be put on the Inactive Cases List.
That was the mechanism under which Allanson J's order of 12 December 2019 resulted in the Acting Principal Registrar putting the matter on the Inactive Cases List on 3 January 2020 in accord with RSC O 4A r 25(1)(a) and, furthermore, then issuing the notifications as are required under r 25(1)(b).
Obviously, the 'death' date for this action in terms of how RSC O 4A r 28(1) operates will be 3 July 2020 - unless the action is earlier removed from the Inactive Cases List. And with that looming termination event approaching, obviously, things became more urgent as each day passes.
Form of an application to remove
On 25 June 2020 there was a request made by letter by the solicitors for the plaintiff for the action to be taken off the Inactive Cases List. There has been some debate over whether it is sufficient for a letter to be sent or whether, in fact, a formal chamber summons needs to be issued in order for such an application to be properly made. I understand there may have been some lively debate over that issue yesterday in a hearing before the Principal Registrar when the request for a hearing to take the matter off the Inactive Cases List was first returnable.
I understand the point is no longer pressed. If it were at all still relevant, my view is that the basis of an application under RSC O 4A r 26(1)(a), namely, a request for an order under r 27(1) can be made by way of letter. That is the effect of O 4A r 5A(2) when read in conjunction with O 4A r 5B.
There are, of course, certain rules within the RSC which do expressly require an application to be made by a summons or chamber summons if there is an interlocutory application made in chambers. For instance, an application by a lawyer to get off the record for their client refers to '[a]n application for an order under this rule must be made by summons', see RSC O 8 r 7(2). Likewise, in a summary judgment context, an application for summary judgment by a plaintiff must be by summons, see RSC O 14 r 2(1). But the same cannot be seen in terms of a request for a case to be removed from the Inactive Cases List made under O 4A r 27(1).
The present application and evidence in support
Thus for relevant purposes, a request for the matter to be removed from the Inactive Cases List was properly made here by the letter of 25 June 2020. The matter was then returnable before the Principal Registrar yesterday, when certain further problematic considerations emerged.
Payment of outstanding security
By letter of 25 June 2020, it was noted that the plaintiff had made arrangements to pay the outstanding $200,000 security into court. However, that foreshadowed payment was problematic given the embargo, in effect, against the filing of documents other than those as identified under O 4A r 26(1)(a) through to (d) when an action is placed on the Inactive Cases List.
However, I am satisfied that what was intended to be filed, very late as it was and then if it could have been yesterday, was an ANZ bank cheque as a payment into court by the plaintiff in the amount of $200,000 as the ordered security for costs amount.
That bank cheque is found appended to the materials before me today, albeit not before the Principal Registrar yesterday - when the matter was first returnable (see the affidavit of Mark Richardson the managing director of the plaintiff sworn 2 July 2020). That is because the Principal Registrar had then made orders, effectively, for a programming of the matter through to today and for the filing of further materials, including submissions and an affidavit on behalf of the plaintiff and defendants.
Appended to Mr Richardson's affidavit at MR-1 is a bank cheque for $200,000 proposed to be filed in attempted (late) satisfaction of the provision of security for costs by the plaintiff, as was ordered by Allanson J back in October 2019.
Mr Richardson's affidavit also related various other matters, in particular, the adverse financial circumstances of the plaintiff company, Phoenix Eagle, immediately after a mediation of the action that was conducted in this court. It explains the plaintiff's inability to meet the $200,000 security order of 22 October 2019 commencing at par 4 onwards of his affidavit. I incorporate by reference what is said at between pars 4 and 21:
4.On 22 October 2019, Allanson J made an order that the Plaintiff provide security for costs, by way of payment into Court in the amount of $200,000.
Financial position of Phoenix Eagle
5.In October 2019, Phoenix Eagle did not have the financial capacity to provide additional security for costs in the amount of $200,000.
6.Since that time, the Company has sought to find additional funding to meeting the Company's expenses, both to fund the security for costs order and for the continuing development of its intellectual property.
7.The Company's efforts to raise additional funding were significantly impeded by the travel and movement restrictions arising from the COVID-19 pandemic. This has made face to face meetings with prospective investors and other interested parties impossible since March 2020.
8.Despite these difficulties, the Company has considered and pursued a number of different avenues to secure additional funding.
9.On 29 February 2020, the Company executed a loan agreement with G Hacon Holdings Pty Ltd providing for a loan of $100,000 to Phoenix Eagle. G Hacon Holdings Pty Ltd is controlled by George & Pip Hacon. George & Pip Hacon are existing shareholders of and lenders to the Company.
10.On 5 June 2020, the Company entered into a binding term sheet with an Australian proprietary company (Licensee) regarding a proposed licence for a specific application of the Company's intellectual property. This term sheet was amended on 24 June 2020. Pursuant to the amended term sheet, the Licensee has agreed, among other things, to pay $100,000 to the Company by 30 June 2020 and a further payment of $200,000 by 31 December 2020. $75,000 was received by the Company on 29 June 2020 and $25,000 was received on 1 July 2020.
11.On 19 June 2020, G Hacon Holdings Pty Ltd provided a further loan of $50,000 to the Company.
12.On 29 June 2020, George Baumanis provided a loan of $50,000 to the Company. George Baumanis is a director of the Company.
13.On 29 June 2020, Mike Fitz Gerald provided a loan of $25,000 to the Company. Mike Fitz Gerald is an existing shareholder of the Company. I undertook to repay this loan to Mike Fitz Gerald within a short period of time.
14.All of the loans referred to above other than the loan to Mike Fitz Gerald have no fixed term and are repayable as and when the Company is able to do so. None of the loans referred to above contain terms that are linked to the outcome of this litigation.
15.Neither the Licensee nor the lenders referred to above have any influence over the conduct of this litigation.
16.On 30 June 2020, I caused the Company's bank to prepare a bank cheque in the amount of $200,000 made payable to 'Supreme Court of Western Australia' (Bank Cheque). Annexed here to and marked 'MR-1' is a copy of the Bank Cheque.
17.At approximately 10.45am on 1 July 2020, I hand delivered the Bank Cheque to the Plaintiff's solicitors KD Legal and instructed them to attend to payment of the Bank Cheque into Court on that day in satisfaction of the security for costs order.
Delay in proceedings - July 2018
18.The delay in conduct of the litigation after the unsuccessful mediation in August 2018 until July 2019 was entirely due to the impecuniosity of the Company. Up to that time the Company had spent $665,750 on the litigation ...
19.In February 2019, I had a meeting with a prominent law firm and a litigation funding company. Funding was declined.
20.In March 2019, Phoenix Eagle was able to conclude arrangements with counsel and our new solicitors (KD Legal) by which they both agreed to act on a deferred fee basis.
21.After a hand-over period between the Plaintiff's pervious solicitors and KD Legal, the action recommenced in July 2019 when the Plaintiff sought leave to further amend its Amended Substituted Statement of Claim.
The plaintiff also relies on the affidavit of George Victor Baumanis sworn 2 July 2020. Mr Baumanis is a director of the plaintiff and also a shareholder. He, effectively, agreed to provide more funds to the plaintiff in June 2020, as he relates, in the amount of $50,000. Mr Baumanis relates why he had been reluctant, from since September 2019, to make any further loans to the plaintiff to assist it to meet the security for costs order, but also why he has reached a late decision to advance the funds in the amount of $50,000, effectively, as 25% of the $200,000 worth of security (see par 8 of his affidavit).
Timely conduct of the proceedings
Returning to Mr Richardson's affidavit in terms of the future timely conduct of the proceedings, which is a very significant evaluative consideration for the court today on the present application, I note what Mr Richardson relates at pars 22 through to 28. In short, he says at par 22 the plaintiff company's only significant asset is its intellectual property, and that the primary objective of this litigation is for the company to be awarded a declaration of clear title to its intellectual property. Mr Richardson then relates the many impecuniosity factors and various other matters that I also incorporate (pars 22 - 28):
Timely conduct of the proceedings
22.The Company's only significant asset is its intellectual property. The primary objective of this litigation is for the Company to be awarded a declaration of clear title to all of its intellectual property.
23.The Company's impecuniosity has been caused in large part by its inability to attract serious partners due to the fact that the Company is embroiled in a long running litigation over the mis‑use of its intellectual property.
24.The negative impression caused by the litigation is exacerbated as the First Defendant is a company that was jointly controlled by and bears the name of the inventor of our intellectual property.
25.The Company has initiated and maintained a dialogue with a number of existing and new parties who have expressed an interest in co-operating with the Company when the title to its intellectual property has been validated by the Court.
26.I believe it is imperative for the Company's future success for this to happen as quickly as possible. It is my strong desire to ensure this matter progresses to trial as quickly as possible.
27.The Company is also anxious to get this matter to trial as it continues to cause considerable expense and delay. Since the commencement of proceedings in 2016, Phoenix Eagle has incurred the following legal costs in connection with this action:
Paid to
Amount ($)
Piper Alderman (including fees of counsel)
361,955
Mills Oakley (including fees of counsel)
213,542
Roe Legal, for costs of strike-out application
8,000
Roe Legal, for costs of application seeking further security for costs
11,253
Supreme Court, for security for costs 2016
70,000
Supreme Court, for security for costs 2020
200,000
Total
864,750
28.I am not aware of any matters relevant to the dispute between the parties that took place before the formation of Phoenix Eagle Company Pty Ltd in 2002.
Opposition to the application
The application to remove the action from the Inactive Cases List is opposed by the defendants. To that end, I have the affidavit of 30 June 2020 sworn by the defendants' lawyer of record, Christopher James Terren, appending certain materials. I also have the benefit of the parties' written submissions filed today in accord with a very truncated and urgent timetable set by the Principal Registrar yesterday, when the matter was first returnable.
The application is essentially opposed on the basis that, as the defendants would see it, the court ought not be satisfied that the threshold for removing a matter from the Inactive Cases List is met -particularly since the action has been on the Inactive Cases List for so long and together with the litigious adverse history in terms of the plaintiff not proceeding with the matter in a timely way.
The legal test in terms of removing a matter from the Inactive Cases List where an application is made or request is made for such an order is specified by RSC O 4A r 27(2), which relates:
The Court may order a case be taken off the Inactive Cases List if satisfied the case will be conducted in a timely way or for any other good reason.
I also refer to O 4A r 27(3) contextually:
An order that a case be taken off the Inactive Cases List may include any conditions necessary to ensure the case is conducted in a timely way.
And, of course, there is also RSC O 4A r 28, which I reaffirm to the effect that if a case is not taken off the Inactive Cases List, and it has been there for six continuous months, then it is deemed to be dismissed for want of prosecution.
Evaluation
The key question is whether, on all the evidence, I am satisfied that the case will be conducted in a timely way or there is any other good or sufficient reason. Effectively, counsel for the plaintiff, Mr Warnick, relied upon the fact that the proof of the pudding, effectively, is the substantial security for costs money ($200,000) which has finally emerged.
Explanation of delay
There is no cavilling over the fact that the money has arrived very late. But the explanation of the financial difficulties faced by the plaintiff in terms of its inability to find funds and how things have gone from worse to better as is now fully outlined particularly by Mr Richardson's affidavit is now provided. There is obviously a need for an explanation where a party seeks an indulgence from the court.
Yesterday there was not any affidavit material before the court. Today there is, and because of it I am left satisfied that for the purposes of providing an explanation to meet criteria discussed by the court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 that the two affidavits (of Mr Richardson and Mr Baumanis) do provide an explanation for what has occurred.
Conferral
One of the significant matters raised against the present application is the absence of conferral, and there is an in principle divide between the parties over whether or not conferral was mandatory and the consequences of the absence of conferral. I accept there was an absence of conferral prior to the plaintiff's application of 25 June 2020.
Applying the observations of Beech J in Lashansky v Legal Practice Board [No 2] [2010] WASC 159, I am of the view that the present application is interlocutory in character. It is an application made in chambers. There is no sensible or justifiable reason for why conferral ought not to precede such an application. Indeed, it may be that in most cases sensible conferral about such an application to take a matter off the Inactive Cases List will obviate many of the difficulties associated with such an application, particularly such an application being heard and determined late, with all the associated cost, potential disruption, and inconvenience.
The position of the plaintiff is that it frankly accepts that it applied late on 25 June 2020 by its letter. But it points to events subsequent in terms of what has occurred, particularly yesterday in terms of the matter being returnable by the Principal Registrar and the opposition of the defendants that was manifest then, and indeed today, against leave being given to have the matter removed from the list.
Furthermore, the defendants say that - on the assumption that the matter is to be taken off the Inactive Cases List, which is a big assumption -the parties have not really conferred meaningfully over how the matter might progress to be determined in future by way of a trial determination.
The matter has been going since 2016. Since then there have been extensive pleadings, interlocutory applications, witness statements exchanged on each side and it is said (although I should note that I am not the case manager) that discovery is not very far advanced and there does still remain some significant interlocutories, including expert evidence, to be addressed before the matter is ready for a trial.
The defendants also say that if I were to be satisfied, in accordance with RSC O 4A r 27, that I ought to exercise discretion, in light of the history of the matter and the other matters set out in the written submissions of the defendants, I should decline the present request for the matter to be removed from the list in any court in any event. Let me address those matters one by one.
It is correct that there should have been conferral, and that would have been the optimal thing to have occurred, shortly prior to 25 June 2020 when the application or request by letter was made on behalf of the plaintiff. But conferral is not an end in itself. It is an important mechanism to be followed in the achievement of justice. Here, I am satisfied that by reference to Mr Richardson and Mr Baumanis' affidavits an explanation has been given.
Whatever one might say in hindsight in terms of earlier communication on the hypothesis that the outstanding security money was about to be received at 30 June 2020 the fact of the matter is that -bearing in mind how this matter got to be on the Inactive Cases List in the first place - until the plaintiff was in a position to actually provide security and remedy the breach which it had been in default of meeting since 19 November 2019, effectively any application to take the matter off the Inactive Cases List was going to be pointless.
I understand, therefore - but I do not entirely excuse - the plaintiff for it waiting until the position solidified as regards it actually receiving or having at their call $200,000. With those funds it would be able to pay the security into court as the motivation effectively holding them back was only that it did not have the funds to bring. This was less than optimal and it is obviously not endorsed as desirable practice. But bearing in mind the history of the matter and the failure to obtain the money until effectively 30 June 2020, it is understandable.
I accept the point raised by counsel for the defendants that conferral should have occurred, and if this application is to be advanced the court will need to waive the default in respect of conferral. The court has the power to do under RSC O 59 r 9(2) in a case of urgency or for other good reason. Here, urgency is present but, as Mr Terren for the defendants rightly points out, to some extent the urgency that arose is attributable to the plaintiff by leaving matters to 25 June 2020.
But a court can waive the operation of the rule for any other good reason. The history of this matter tells me that this matter went onto the Inactive Cases List originally not because, as one too often sees, a party does nothing for 12 months, the matter becomes 'inactive' under RSC O 4A r 24 and then is placed on the Inactive Cases List by O 4A r 25(1)(a). Here, the matter came on to the Inactive Cases List as a sanction, effectively, when Allanson J's order for security was not met within the extended time afforded.
So a historic nexus to the absence of the ordered security amount, coupled to a late proffering of what is a significant amount of security, $200,000, with the element of urgency that does now exist given the potential for a termination of the action at midnight tomorrow, I find would together provide sufficient good reason to waive the operation of RSC O 59 r 9, as regards a deficient conferral scenario.
I also, in the weighing exercise, take into account the fact that the range of possible conferral issues here, was somewhat different to many other cases where there is a landscape of potential issues that need to be sorted out. Here the scope of a proper conferral was relatively straightforward. It was something like 'The plaintiff is about to provide the security for costs of $200,000, albeit late. In such circumstances, will you, the defendants, consent to orders that the matter can come off the Inactive Cases List, because otherwise it is about to be ended automatically on 3 July 2020 unless an order to that effect is made beforehand?'
True enough, for that hypothetical conferral scenario, one could also discuss issues about how the action might then progress on a hypothesis of removal. But here my strong impression is that if there had been such a proper level of conferral it is very likely - although one is speculating - that the response would have been fairly much as has manifested in fact both yesterday and today, namely, a firm refusal to agree to the action being removed from the Inactive Cases List. That being the case, I will, in the end, waive the need for the conferral, so I can then deal substantively with merits of the present application to remove the action from the Inactive Cases List.
Removal or not?
The first question is whether the court is now satisfied that the matter is likely to proceed in a timely way, in accord with RSC O 4A r 27(2). However, the rule is not confined merely to the 'timely' satisfaction criteria. The removal threshold under O 4A r 27(2) is also governed by the words 'or for any other good reason'. Those two criteria, in terms of future progress in a timely way or for other good reason, are not separate, siloed and discrete criteria. Were it only the mere proffering of a $200,000 bank cheque as security for costs which has emerged, I would effectively be left wavering over whether that would be enough by itself to satisfy me as to a timely future progression of the action in the future, given the past history of the litigation.
There are pros and cons associated with the late payment, viewed alone. Certainly, $200,000 is a substantial amount of money for costs. But it does arrive almost 10 months late. Having said that, the affidavits of Mr Baumanis and Mr Richardson now explain the underlying financial problems of the corporate plaintiff, in terms of providing that security and also signify that Mr Baumanis, as a director and significant shareholder, is prepared to stand behind the company to the extent of $50,000.
Mr Richardson, as the plaintiff's managing director, explains in his affidavit the past financial history problems, but also for the future that, on a more positive note, a term sheet has been entered in respect of a prospective licence for the specific application of Phoenix Eagle's intellectual property and so, for now, there is an amenability of a licensee to lend on that basis. Consequently, a viable source of funds has been opened up in June 2020 that had not previously been there for this plaintiff. Likewise, there is a reference to a Mr Fitz Gerald, an existing shareholder, providing a loan of $25,000.
What all that now indicates for me is that there is now some significant plaintiff shareholder support forthcoming, albeit it has not been there for a considerable time. That being the case, the commitment that is now made to progressing the action through the $200,000 provided as security for costs has been provided in circumstances which do demonstrate that at this time persons are prepared to effectively stand behind the plaintiff financially. That, today, is enough to persuade me that there is now a 'good reason' shown by reference to RSC O 4A r 27(2) to enliven the court's discretion to remove the action from the Inactive Cases List.
The last question is whether I should exercise that discretion in terms of removal or not. To that end, I look again at everything holistically and weigh all the material before me in terms of whether or not I should make the removal order. It is quite correct, as the defendants point out, that there have been past delays which are unsatisfactory, and the failure to confer properly was also highly unsatisfactory. But still, having said all that, the court at the end of the day is here to administer justice. It is a pinnacle of justice that a plaintiff should receive a fair opportunity, where possible, to have its disputes determined by a court on their merits.
Whilst less than satisfactory, the late provision now of $200,000 in security, with the earlier $70,000 tranche of security, does provide a substantial measure of comfort in terms of the exposure to costs for the defendants if, in fact, this matter were to be taken to a full trial and the defendants were successful in rebutting the plaintiff's claim and later receive an order of costs in their favour. I have also taken account of matters of so‑called prejudice that the defendants have emphasised under their written submissions. With respect, I would assess such considerations in truth to be matters of inconvenience, rather than of true forensic prejudice.
An inability to secure senior counsel for today, or a need to prepare materials urgently (bearing in mind tight deadlines) and, of course, the imminence of the court's winter recess, all combined adversely to cause this matter to have to be prepared and argued on an urgent basis. That is less than optimal. I accept all that. Indeed, I am sympathetic. But at the end of the day the interests of justice ought not to be derailed by mere inconveniences, especially where an inconvenience is capable of being redressed by ameliorative case management orders of a court in terms of costs or the like.
Here, I will also draw attention to two further matters. First of all, if in fact this matter is to be case managed again in the CMC List, there is as regards timeliness the further potential sanction of RSC O 4A r 28(2). That rule says that if no procedural step (except an application to dismiss the case for want of prosecution) is taken in the six months after the date on which the case is ordered to be taken off the Inactive Cases List, then the case is taken to be dismissed for want of prosecution.
So there will be another, in effect, 'Sword of Damocles' poised over the applicant who succeeds in getting their action taken off the Inactive Cases List, if they do not then progress it along, once it is restored.
The second point I make is that, brief as the opportunity was, I have looked at the pleadings to some extent for this action. I note an invocation by the defendants of equitable principles of laches and acquiescence and the like grounded upon asserted delay.
The fact of this action going on or coming off the Inactive Cases List would not, on my assessment, impede any such submission being made longer term to a trial judge about such matters if, in fact, the threshold for meeting such tests can be demonstrated as a matter of substance at a trial. Accordingly, I see no real prejudice to those longer term potential forensic arguments that the defendants may make, depending upon whether the matter is taken on or off the Inactive Cases List. And I put that on the record.
Conclusions and orders
In the end then, bearing in mind the plaintiff will otherwise see its action dismissed otherwise than on its merits and, in effect, for a want of prosecution at midnight tomorrow unless the court intervenes, I am ultimately left satisfied overall that it is in the interests of justice for the court to urgently intervene to remove the action from the Inactive Cases List. Consequently, I will issue an order that the matter come off the Inactive Cases List.
The orders that the court should make should be, first, that the obligation to confer under RSC O 59 r 9 is waived for good reason by the court; secondly, that the matter be removed from the Inactive Cases List, pursuant to RSC O 4A r 27(2) and, thirdly, that the matter ought to be returned to the CMC List of Allanson J for further case management orders at the earliest convenient opportunity in terms of his Honour's availability.
In the meantime, the parties now ought to confer further about steps by way of progressing the action so as to be able to present either an agreed minute or, post-conferral, rival minutes of progress in the action when the matter can next be conveniently listed before his Honour for directions.
The fourth matter is that I ought to make some provision as to costs, and I will hear the parties about what they say in that respect.
In the end, having heard from counsel, I issued orders in these terms:
1.The obligation under O 59 r 9 of the Rules of the Supreme Court 1971 (WA) (RSC), of the Plaintiff's lawyers to confer with the Defendants' lawyers prior to bringing their client's present application by request of 25 June 2020, is waived for good reason.
2.Pursuant to O 4A r 27(2) of the RSC, the action is hereby removed from the Inactive Cases List.
3.The time to comply with order 1 of the Honourable Justice Allanson dated 22 October 2019 is extended to 12.00 pm (WST) on Friday, 3 July 2020.
4.The case be returned to Justice Allanson's CMC List, to be listed for a directions hearing at his Honour's earliest convenient availability. In the interim, the parties are to confer upon a minute of orders as to future steps to be taken to progress the action to trial.
5.The plaintiff shall pay the Defendants' costs of the present application, made by request of 25 June 2020, and the hearings of 1 July 2020 and 2 July 2020, to be taxed and be then payable forthwith, if not agreed.
SCHEDULE 1
| 5 May 2016 | Writ and statement of claim issued |
| 3 Aug 2016 | Defendants request further and better particulars |
| 17 Aug 2016 | Plaintiff provides further and better particulars |
| 20 Oct 2016 | Hearing of Defendants' application to strike out statement of claim as abuse of process, obtain further and better particulars and set aside subpoenas |
| 12 May 2017 | Allanson J delivers judgment striking out statement of claim with liberty to re-plead, and setting aside subpoenas: [2017] WASC 130 |
| 9 Jun 2017 | Plaintiff files substituted statement of claim |
| 15 Aug 2017 | Defendants file defence and counterclaim, and request for further and better particulars of substituted statement of claim |
| 11 Sep 2017 | Plaintiff files amended substituted statement of claim |
| 6 Oct 2017 | Defendants file requests for further and better particulars of: amended substituted statement of claim and of reply and defence to counterclaim |
| 20 Oct 2017 | Plaintiff responds to requests for particulars |
| Jan-Feb 2018 | Plaintiff files 10 witness statements (including statement of Richardson, 749 pages including annexures) |
| 16 Feb 2018 | Strategic conference before Allanson J |
| May–Jun 2018 | Defendants file witness statements |
| 5 Jul 2018 | Initial mediation conference |
| 13 Aug 2018 | Resumption of adjourned mediation conference |
| Jul 2019 | Plaintiff files minute of proposed further amended statement of claim |
| Aug 2019 | Defendants apply for further security for costs and further discovery |
| 10 Oct 2019 | Hearing of defendants' application |
| 22 Oct 2019 | Allanson J orders plaintiff to pay security for costs ($200,000) |
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IH
Research Orderly to Justice Kenneth Martin22 JULY 2020
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