Stern Electronics Pty Ltd v Vascular Enhancement Technology Pty Ltd - [2010] QDC 42

[2010] QDC 42

DISTRICT COURT

CIVIL JURISDICTION

JUDGE ROBIN QC

No 3189 of 2008

STERN ELECTRONICS PTY LTD	Plaintiff
and
VASCULAR ENHANCEMENT TECHNOLOGY PTY LTD	Defendant

BRISBANE

..DATE 17/02/2010

ORDER

CATCHWORDS

Uniform Civil Procedure Rules r 674(c)
Claim struck out when plaintiff failed to provide security for costs as required by a court order (silent as to time) - "guillotine order" not made where plaintiff had no idea whether or when it might get funds

HIS HONOUR: The defendant seeks an order of kind made by Justice Jones in Metar Pty Ltd v Hagen [2004] QSC 462 pursuant to Rule 674(c) of Uniform Civil Procedure Rules for dismissal of the plaintiff's claim.

An order for security for costs, albeit less generous than the defendant had sought, was made by Judge Kingham on or about the 27th of August 2009. See [2009] QDC 284. In the exercise of the relevant discretion another Judge may or may not have made the order for security in the amount of $40,000 to be provided with the defendant at liberty to make a further application on the first day of the trial.

There has been no appeal made against that order however. No time for compliance was indicated. No security has been provided, hence this application.

As Jones J indicated, the Court is always reluctant to shut a litigant out of access to its processes to pursue a claim. On the other hand, in an era when legal costs loom so large, especially by comparison with the amount of the claim, which they do here as her Honour noted, the Court is properly concerned to protect a defendant against an outcome in which costs the defendant may be entitled to if the defence is successful are not forthcoming because the plaintiff has no resources to pay with.

The explanation for the plaintiff's failure to provide security is lack of funds. Mr Meyer, who represents the plaintiff with leave of the Court, indicates that if he had a crystal ball he might be able to indicate a time within which security could be provided. He says the plaintiff company has a history of decades of success in medical-related fields. It is currently encountering hard times, he says because of the actions of the defendant which has introduced a more commercial approach to the circumstances than might have been traditional. That consideration didn't influence Judge Kingham as a reason for not ordering security.

While a guillotine order appears not to be authorised in the Court's initial order for security for costs, it is established that where the initial order is not complied with and further time is allowed to the plaintiff to come up with security, a guillotine order may be made at that stage. See Billinudgel Pastoral Company Pty Ltd v. Westpac Banking Corporation BC9703988 which was noted with approval in Dovade Pty Ltd v. Shaddock [1999] NSWSC 142 at paragraph 14.

I would have been inclined to resolve the present application in that way…

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: [2010] QDC 42
Decision Date: 17/02/2010

CaseChat Overview and Summary

Stern Electronics Pty Ltd was the plaintiff and Vascular Enhancement Technology Pty Ltd was the defendant in a proceeding before the Queensland District Court. The dispute was related to a claim by the plaintiff for alleged breaches of contract and related matters. The court was required to consider whether the plaintiff's failure to provide security for costs as ordered should result in the dismissal of its claim. The legal issue was whether the court should grant an order dismissing the plaintiff's claim pursuant to Rule 674(c) of the Uniform Civil Procedure Rules due to the plaintiff's failure to provide security for costs as previously ordered.

The court held that it was reluctant to shut a litigant out of access to its processes but was also concerned to protect the defendant from potential costs if the defence was successful. The plaintiff had not provided the security for costs ordered by the court on 27 August 2009. The plaintiff's representative argued that the plaintiff lacked funds but could not specify when, if ever, it might be able to provide the required security. The court noted that while a "guillotine order" was not authorised in the initial order for security for costs, such an order might be made if the plaintiff failed to comply with the order and was granted further time to provide security. The court decided to dismiss the plaintiff's claim with costs to be assessed, including the defendant's costs of the application.

The court also dismissed the defendant's counterclaim with no order as to costs. This decision was based on the argument that the defendant had not strictly complied with Rule 444 in its communications to the plaintiff, though the court found that the communications had the same effect as a Rule 444 letter.

Orders