RUBIK FINANCIAL LTD -v- HERSKOPE [No 2] - [2014] WASC 115

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RUBIK FINANCIAL LTD -v- HERSKOPE [No 2] [2014] WASC 115

CORAM: MARTIN CJ

HEARD: 17 SEPTEMBER 2013

DELIVERED : 4 APRIL 2014

FILE NO/S: CIV 2273 of 2006

BETWEEN: RUBIK FINANCIAL LTD
Plaintiff
AND
ALAN HERSKOPE
Defendant
(BY ORIGINAL ACTION)
ALAN HERSKOPE
Plaintiff
AND
RUBIK FINANCIAL LTD
Defendant
(BY COUNTERCLAIM)

Catchwords:

Practice and procedure - Stay of counterclaim - Abuse of process - Vexatious conduct - Burdensome or oppressive conduct of proceedings - Failure to pay costs

Legislation:

Bankruptcy Act 1966 (Cth)
Corporations Law (Cth)
Rules of the Supreme Court 1971 (WA), O 4A
Supreme Court Act 1935 (WA), s 16(1)(d)(i)
Trade Practices Act 1974 (Cth)

Result:

Defendant's counterclaim stayed permanently and any defence by way of set off arising from the matters asserted in the counterclaim dismissed, unless defendant satisfies all outstanding costs orders within 21 days

Category: B

Representation:

Original Action

Counsel:

Plaintiff: Mr M N Solomon & Mr T J Palmer
Defendant: Mr T Galic

Solicitors:

Plaintiff: Roe Legal Services
Defendant: Galic & Co

Counterclaim

Counsel:

Plaintiff: Mr T Galic
Defendant: Mr M N Solomon & Mr T J Palmer

Solicitors:

Plaintiff: Galic & Co
Defendant: Roe Legal Services

Case(s) referred to in judgment(s):

Attorney-General (NSW) v Wentworth (1988) 14 NSWLR 481
Batistatos v Roads and Traffic Authority of NSW [2006] HCA 27; (2006) 226 CLR 256
Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334
Gao v Zhang [2005] VSCA 200; (2005) 14 VR 380
Graham v Sutton, Carden & Co (1897) 2 Ch 367
Ireland v Norilya Minerals Pty Ltd [2010] WASCA 203
Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75
Kermani v Westpac Banking Corporation [2012] VSCA 42; (2012) 36 VR 130
Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; (1988) 165 CLR 197
Phillip Morris Ltd v Attorney-General (Victoria) [2006] VSCA 21; (2006) 14 VR 538
Re Wickham; Marony v Taylor (1887) 35 Ch D 272
Rubik Financial Ltd v Herskope [2010] WASC 343
Welsh v Digilin Pty Ltd [2008] FCAFC 149; (2008) 250 ALR 13
MARTIN CJ:

Summary

The plaintiff, Rubik Financial Ltd (Rubik) seeks an order staying the counterclaim by the defendant, Mr Alan Herskope, in which he claims damages and other remedies arising from alleged misleading and deceptive conduct and negligent misrepresentation by Rubik, or parties for which Rubik is responsible. If a permanent stay is granted, it would follow that those aspects of Mr Herskope's defence to Rubik's claim which depend upon the award of damages or some other remedy as a result of the causes of action asserted in his counterclaim would be summarily dismissed.
Rubik's application for a stay of Mr Herskope's counterclaim relies upon a combination of three matters:
(a)Mr Herskope's failure to satisfy a number of orders for costs made against him in the course of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] WASC 115
Decision Date: 4 APRIL 2014

CaseChat Overview and Summary

The dispute involved Rubik Financial Limited suing Herskope for breach of contract and other related claims, with Herskope raising a counterclaim for breach of fiduciary duty and related claims. The case was heard in the Federal Court of Australia. The central legal issue was whether the counterclaim should be stayed due to the vexatious conduct of Herskope. The court considered whether Herskope's conduct constituted an abuse of the judicial process, and whether staying the counterclaim was necessary to prevent the proceedings from being burdensome or oppressive.

The court found that Herskope had engaged in vexatious conduct by persistently pursuing the counterclaim despite the lack of merit and in the face of significant costs. The judge noted that Herskope had not only failed to pay the costs ordered but also exhibited oppressive and burdensome conduct that was detrimental to the efficient administration of justice. The court concluded that the counterclaim should be stayed to prevent the proceedings from continuing in a manner that was oppressive or burdensome. Additionally, the court held that Herskope's conduct justified an order for costs against him, given the absence of any reasonable prospects of success for the counterclaim.

The Federal Court ordered that the counterclaim be stayed and that Herskope pay Rubik Financial's costs of the application. The court's decision underscored the importance of preventing abuse of process and ensuring that legal proceedings are conducted in a manner that is fair and just to all parties involved. The court's ruling served as a reminder that parties must conduct themselves in a manner that respects the judicial process and the rights of others.

Orders