Swick Nominees Pty Ltd (ACN 008 850 619) ‑v- Norncott Pty Ltd (ACN 008 841 352) [No 2]
[2011] WASC 348
•16 DECEMBER 2011
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SWICK NOMINEES PTY LTD (ACN 008 850 619) ‑v- NORNCOTT PTY LTD (ACN 008 841 352) [No 2] [2011] WASC 348
CORAM: ALLANSON J
HEARD: 14 NOVEMBER 2011
DELIVERED : 16 DECEMBER 2011
FILE NO/S: CIV 1252 of 2000
BETWEEN: SWICK NOMINEES PTY LTD T/As SWICK DRILLING AUSTRALIA
Plaintiff
AND
NORNCOTT PTY LTD
First DefendantDRESSER INDUSTRIES
Second DefendantLEROI INTERNATIONAL INC
Third Defendant
Catchwords:
Practice and procedure - Application to strike out for failure to comply with orders - Application to vary order for provision of security for costs - Turns on own facts
Practice and procedure - costs
Legislation:
Nil
Result:
The plaintiff to pay the third defendant's costs of the plaintiff's application
The third defendant to pay the plaintiff's costs of the third defendant's application
Category: B
Representation:
Counsel:
Plaintiff: Mr I A Morison
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : Mr N D C Dillon
Solicitors:
Plaintiff: Eastwood Sweeney Law
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : Minter Ellison
Case(s) referred to in judgment(s):
Chua v Wang [2002] WASC 74
ALLANSON J: On 14 November 2011 I heard two applications. At the conclusion of the hearing I gave my decision and made orders on all matters but costs, with reasons to be provided in due course. These are my reasons and my decision on the question of costs.
The third defendant applied for orders that:
1.The action be struck out and dismissed;
2.The plaintiff and Randall Lloyd Swick (the plaintiff's former director) pay the third defendants' costs of the proceedings on an indemnity basis.
The plaintiff applied to vary orders made on 8 July 2011. On 8 July 2011, the court ordered, in terms of an agreed minute, that the plaintiff provide security for costs in the sum of $225,000 by means of the provision of the bank guarantee in that sum, and that all further proceedings would be stayed pending provision of security in that way.
The plaintiff asks the court to vary that order, by replacing it with the following:
The plaintiff provide security for the third defendant's costs of the action in the sum of $225,000 by means of payment of that sum into court within seven days.
The plaintiff asks the court to remove the stay of the action, and to schedule the completion of the remaining interlocutory steps.
Background
This matter has had a difficult history. It has twice been placed on the Inactive Cases List. Most recently, on 15 June 2011, I ordered that the matter be removed from the Inactive Cases List and adjourned it to 1 July 2011 (later adjourned to 8 July 2011 by consent of the parties), for further directions. The third defendant appeared on the application to remove the matter from the Inactive Cases List. While counsel for the third defendant made submissions regarding the plaintiff's dilatory conduct of the action, the third defendant did not oppose the application.
On 8 July 2011, I made the order for security for costs, together with orders that the plaintiff's action against the second defendant be discontinued, and that the plaintiff file and serve a re‑amended writ of summons and a re‑amended statement of claim by 15 July 2011. The plaintiff was also required to file and serve its chronology of relevant events and any supplementary witness statement of Mr Swick by 29 July 2011.
The plaintiff filed the amended writ and statement of claim on 15 July 2011. The amendment to the writ, so far as I can tell in the now five coloured document, is formal only ‑ altering the paragraph numbering and the details of the plaintiff's legal representation. The amendments to the statement of claim are also limited in their scope.
The plaintiff did not provide security for costs in the manner prescribed by 29 July 2011, and accordingly the action has been stayed since then. The other two orders for a chronology and a further witness statement were also not complied with, but that may arise out of the stay.
The plaintiff explains its failure to comply. While it had funds to provide security for costs, it could not obtain a bank guarantee. The plaintiff is a trustee company. Emails between the plaintiff and its bank disclose concern by the bank about the ability of the plaintiff to secure a guarantee because it is a trustee.
Unfortunately the plaintiff allowed 29 July 2011 to pass without either approaching the court or the third defendant. It was only on 3 August 2011, in response to an email from the solicitors for the third defendant, that the plaintiff stated that it did still intend to provide security, and expected to complete the arrangements 'within the next few days'.
Despite that email, the solicitors for the plaintiff next spoke to the solicitors for the defendant on 16 August 2011. In an affidavit of the plaintiff's solicitor, Mr Cameron Sweeney, sworn 16 September 2011, Mr Sweeney says that on 16 August 2011, he spoke to the solicitor for the third defendant (Mr Gough) by telephone. He told Mr Gough that the plaintiff had experienced difficulty in obtaining a bank guarantee and why. He told Mr Gough that the plaintiff could provide $225,000 into the trust account of the plaintiff's solicitors, and suggested payment into court, alternatively into a trust account to be jointly administered. Mr Gough expressed a preference for the funds to be kept in a trust account, with the plaintiff providing an undertaking not to disperse them. Mr Sweeney says that Mr Gough told him he should take steps to arrange for the plaintiff to deposit $225,000 into Mr Sweeney's trust account, and that after that had occurred the parties should seek to resolve 'the precise basis upon which security would be provided'. Mr Sweeney's evidence is not challenged.
Mr Sweeney says that he was informed by his practice manager that the sum had been deposited 'a few days after this'. Again (and I must say inexplicably in the circumstances) he does not appear to have told the solicitors for the third defendant. He did not speak to the third defendant's solicitors again about this matter until 30 August 2011, when the third defendants' solicitors contacted him. Mr Sweeney says that, in the meantime, he gave consideration to the question of the proposed undertaking, and upon that further consideration 'had reservations about providing the undertaking'.
When he spoke to a solicitor for the third defendant on 30 August 2011, Mr Sweeney told him of his concerns, and asked the third defendant's solicitors to advise him precisely what undertaking was wanted. The solicitor (not, on this occasion, Mr Gough) told Mr Sweeney that he had phoned for the purpose of conferring about an application which his client was going to make to strike out the action. Mr Sweeney told the third defendant's solicitor that he was prepared promptly to make a firm proposal about the mechanism by means of which security for costs was to be provided. The conferral, if it can be called that, resolved nothing, hence the two applications before the court.
The application of the third defendant
The third defendant asks the court to strike out the statement of claim on two bases:
1.The prejudice that it has suffered from delay, not simply the delay in the most recent delay in providing security for costs, but the cumulative prejudice arising from the many delays in bringing this matter to trial. The third defendant points out that the events leading to this claim began in about 1994, the action was commenced in 2000, and 11 years later it has still not gone to trial.
2.The prospective risk, evidenced by the apparent lack of urgency shown by the plaintiff on this occasion, that it will again fail to meet its procedural obligations.
The third defendant points to particular aspects of prejudice in obtaining evidence for trial, including difficulty in locating witnesses with any recollection of events after such a long delay. The plaintiff disputes some of these claims. I do not need to resolve these disputes.
I may have taken a different attitude to this application were it brought earlier, in particular, had the third defendant opposed the removal of the case from the Inactive Cases List on the grounds that it now advances. But the third defendant did not then oppose the application on the grounds of the prejudice caused by delay.
In essence, it supports the claim that it is prejudiced in the conduct of the action by reference to an affidavit of Mr Richard Saunders sworn on 30 January 2008. That affidavit was made in relation to an earlier application to remove the case from the Inactive Cases List. That application was heard by Master Sanderson on 5 February 2008. The Master allowed the application and removed the matter from the list.
Unfortunately the matter did not progress as it should have, and it was again placed on the list. It is not necessary to go into the reasons why, some of which arose from misunderstandings. What is important is that the application to remove the case from the list came before me and was not opposed. Since then, the delay by the plaintiff has been adequately explained: the plaintiff tried to obtain a bank guarantee and met an unexpected obstacle. It overcame that obstacle and, from mid‑August 2011, has been in a position to provide security for costs in cash. The only matter to be resolved was how that cash was to be held. The plaintiff met the timetable for amendment of the writ and statement of claim. It is in a position to immediately file its chronology and further witness statement (and has put copies of each before the court).
It does not, in my opinion, advance the interests of justice to dismiss this action now for a short delay which has been adequately explained. The third defendant refers to cumulative prejudice, but in reality relies on matters which are not affected by the recent events. The alternative submission that the plaintiff has shown a lack of urgency that must give rise to concern about its future conduct is not made out. The plaintiff approached its bank to arrange a guarantee in what should have been ample time to arrange it before the due date. The problems arising from its trustee status were not anticipated.
For these reasons, I refused the application to strike out the action, and made the following orders:
1.The stay of this action be lifted.
2.The third defendant's application by chamber summons to strike out the action be dismissed.
3.The plaintiff pay into court the sum of $225,000 by way of security for costs by 4.00 pm on 21 November 2011. If the plaintiff fails to comply with this order, the action will be stayed, pending further order.
4.The time under Order 21 rule 3(4) of the Rules of the Supreme Court 1971 (WA) for the third defendant to apply to the Case Manager for any amendment to the writ of summons and statement of claim to be struck out be extended to 4.00 pm on 21 November 2011.
5.The time for the third defendant to file and serve any amended pleading be extended to 4.00 pm on 28 November 2011.
6.The time for the third defendant to respond to the plaintiff regarding documents for the trial bundle be extended to 4.00 pm on 28 November 2011.
7.The plaintiff enter the matter for trial by 9 December 2011.
8.The matter be adjourned to 9.15 am on 16 December 2011.
9.The question of the costs of these two applications is reserved
Costs
The question of costs on these two applications is complicated. The purpose of an award of costs is to compensate the other party for the costs they have incurred. It is not to over compensate them in order to impose a sanction on the other party: Civil Procedure WA (the Red Book) 66.1.1. Only in limited circumstances is an award designed to mark the court's censure of the conduct of the parties or their representatives, for example, by an award of indemnity costs. Similarly, a successful party may be deprived of costs if guilty of misconduct.
I will not repeat the sequence of events leading to these applications. The conduct of the plaintiff's solicitors falls well short of how they ought to have proceeded. Where a time limit is imposed by a court order, both commonsense and common courtesy suggests that at least your opponent (if not the court) be advised about what is happening when there is, or is likely to be, a delay in compliance. Where a party is aware that it will not be able to meet a date set by the court, it is good practice to approach the other party or the court or both before the due date has arrived.
In these circumstances I agree with counsel for the third defendant that the plaintiff is seeking an indulgence of the court in the extension of time to provide security for costs. Despite the submission of counsel for the plaintiff, it is not an answer that the solicitors had conferred about the mechanism for how the security was to be provided on 16 August 2011 and had reached an agreement in principle when:
1.Mr Sweeney decided, on further consideration, that he did not wish to proceed in that way; but
2.did not inform the defendant.
I find it extraordinary that it was only on 30 August 2011, over a month after the plaintiff was required to comply with the order of the court, that Mr Sweeney again spoke to the solicitors for the third defendant, and then only when they approached him.
In my opinion the plaintiff is seeking an indulgence of the court and should pay the costs of its application.
The third defendant did not, in my opinion, fully comply with its obligation to confer before bringing its application. The only discussion between the parties about the proposed strike out was on the afternoon of 30 August 2011. The third defendant filed its application, and an application for indemnity costs against Mr Swick, together with supporting affidavits and submissions the same afternoon. There was no time limit due to expire. It is hard not to draw the inference that the phone call was only technical compliance with O 59 r 9.
Counsel for the third defendant submitted that conferral on an application to strike out can only be limited, due to the radical nature of the application. There is some support for that approach in the decision of Master Sanderson in Chua v Wang [2002] WASC 74 [8]. The Master said that where a party is seeking judgment which will put an end to the claim, it is unlikely that much will flow from conferral. The Master said, however, that conferral should still take place, although he recognised that the best that can be hoped for is that the issues might be narrowed or some aspect of the evidence might be clarified.
I agree that what is adequate conferral will depend on the circumstances of the particular case and application. In circumstances where the parties had been discussing the means by which the plaintiff would give security for costs, I think that this case required more than the phone call that was made.
I have, however, considered and dismissed the application on its merits, rather than for failure to comply with the obligations under O 59 r 9. Since this matter was removed from the Inactive Cases List in June 2011, the only delay by the plaintiff was short and has been satisfactorily explained. There is nothing in the conduct of the plaintiff to disentitle it to the costs of the third defendant's application to strike out.
I considered whether the appropriate order should be to make no order as to costs, with each party to bear the cost of its application. The two applications were, however, quite different in nature, in their potential consequence, and in the extent to which evidence was required to meet them.
Accordingly, I order:
1.the plaintiff pay the third defendant's costs of the plaintiff's application to vary the orders of 8 July 2011; and
2.the third defendant pay the plaintiff's costs of the third defendant's application by chamber summons dated 30 August 2011.
Both sets of costs should be taxed and paid forthwith.
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