FEDERAL COURT OF AUSTRALIA

Cosdean Investments Pty Ltd v Football Federation Australia Limited (No 3)

[2007] FCA 766

COSDEAN INVESTMENTS PTY LTD v FOOTBALL FEDERATION AUSTRALIA LIMITED AND SOCCER NEW SOUTH WALES LIMITED

SAD 114 OF 2006

MANSFIELD J

17 MAY 2007

ADELAIDE

THE COURT ORDERS THAT:

1.                  In the event that the applicant does not pay security for costs in favour of the first and second respondents in accordance with the Orders made on 19 February 2007 by 17 August 2007, the proceedings be dismissed.

2.                  In the event that the proceedings are dismissed, the applicant pay to the respondents their costs of and incidental to the proceedings including all reserved costs.

3.                  Within 14 days the applicant do all things necessary (including instructing its former solicitor Mr Greg Griffin) to cause the sum of $40,000 presently on deposit with the Bendigo Bank to be paid to the first respondent, and the sum of $25,000 presently on deposit with the Bendigo Bank to be paid to the second respondent.

4.                  The applicant pay the first and second respondents’ costs of and incidental to their notices of motion filed respectively on 17 and 26 April 2007.

5.                  Leave be given to the applicant to apply for Orders 1 to 4 hereof or any of them to be varied or discharged, such application to be filed and served with any supporting affidavits by 23 July 2007.

6.                  Direct each respondent to serve as soon as practicable a sealed copy of these Orders upon the applicant at its address for service.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     On 20 February 2007, I published reasons for orders made on 14 and 19 February 2007 directing the applicant to provide further security for costs of these proceedings to each of the respondents.  That required payment of further amounts for security for costs by 5 April 2007.  In the meantime, the proceedings which were part heard were adjourned to a date to be fixed.  The applicant has not made any payments for further security for costs in the terms ordered or at all, and has not sought to make any arrangement by which it may do so.  In those circumstances, each of the respondents has applied, by motion, for the proceedings to be dismissed.  They contend that it is apparent the applicant will not provide the security for costs which has been ordered and so it is appropriate simply now to dismiss the proceedings.

2                     There is no doubt that the Court has power under s 56(4) of the Federal Court of Australia Act 1975 (Cth) and O 28 r 5 of the Federal Court Rules to dismiss these proceedings for failure to provide the security for costs.  That power was recognised in the decision of the Full Court in Microbio Resources Inc v Betatene Ltd (unreported, Black CJ, Sheppard and Einfeld JJ, 8 October 1993).

3                     In that case, their Honours said:

The Court is careful to see that orders for security for costs do not work injustice to parties against whom such orders are made, but if those parties do not comply with the orders and give no evidence or explanation as to why they have not complied with them, they cannot be heard to complain of injustice if, after a considerable length of time, and extensions of time, the ultimate sanction of dismissal is applied.  It is incumbent on parties in such circumstances to provide evidence of their position.

The decision of the Full Court has been followed in Jalpalm Pty Ltd v Hamilton Island Enterprises Pty Ltd (unreported, Kiefel J, 1 September 1995) and in Billinudgel Pastoral Co Pty Ltd v Westpac Banking Corp (unreported, Cooper J, 27 March 1998).

4                     In this matter, the applicant has been served with each of the notices of motion.  It has not appeared today.  It has not adduced any evidence to indicate that it has any prospect of meeting the order for security for costs, nor to suggest that it is exploring avenues by which it may do so.  In particular, it has not indicated that it is taking any steps to negotiate with its principal creditor so that that creditor may provide the funds sufficient to provide the security for costs and to maintain the action.  That issue is discussed in my decision in Cosdean Investments Pty Ltd v Football Federation Australia Limited (No 2) [2007] FCA 163. 

5                     More recently in Idoport Pty Limited v National Australia Bank Limited [2002] NSWSC 18, at [24], Einstein J identified five factors which flow from the remarks of the Full Court in Microbio Resources relevant to the exercise of a discretion whether to dismiss a proceeding where there has been a failure to comply with an order for security for costs.  His Honour’s decision in that respect was upheld on appeal.  See Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271.  I have taken into account each of those five factors. 

6                     The period of time which elapsed since the security for costs was ordered is relatively short and I propose to accommodate that by making orders which give the applicant an additional period of three months from today within which to comply with the order for security for costs before the proceedings are dismissed.  It is plain that the applicant has notice of the proceedings.  It is also plain, in the absence of any further material, that the applicant has no prospect within its own resources to further fund the proceedings.  I so found in my earlier judgment.  Its only prospect of doing so was if its principal creditor, which stood, in essence, to benefit from the continued prosecution of these proceedings if they were successful, were prepared to provide resources to it.  The applicant has apparently chosen not to pursue that avenue, or having pursued that avenue privately has chosen not to inform the Court of the outcome of those inquiries.

7                     In those circumstances, it seems to me plain that the applicant is not in a position to further fund the proceedings.  However, the further time which I propose to allow before the proceeding is dismissed, will give the applicant a further opportunity to expose to the Court any such steps which it has taken and its prospects of meeting the orders for security for costs.

8                     I have also taken into account the position of the respondents.  They are entitled to finality of the proceedings.  They have incurred significant costs already in the conduct of the proceedings which extended considerably beyond the initial time estimate.  I have endeavoured to minimise their ongoing costs by making what is commonly called a guillotine order but extending the operation of that order for some time.

9                     It is also desirable, in the interests of justice, that proceedings which are not going to be prosecuted be brought to an end.  I have the firm view, on the material now before me, that it is highly unlikely that the applicant will be in a position to prosecute these proceedings further.  If, however, it is of the view that it may be able to do so, because I am reserving liberty for it to apply to discharge the orders which I propose to make, it will have the opportunity to inform the Court of a different state of affairs, if such a state of affairs exists or may exist within the next three months.

10                  At present I am satisfied on the material before me that on each notice of motion I should make the orders sought, but should delay their operation.  The orders I propose to make are as follows:

1.                  In the event that the applicant does not pay the security for costs in favour of the first and second respondents in accordance with the orders made on 19 February 2007 by 17 August 2007, the proceedings be dismissed.

2.                  In the event that the proceedings are dismissed, the applicant pay to the respondents their costs of and incidental to the proceedings including all reserved costs.

3.                  Within 14 days the applicant do all things necessary (including instructing its former solicitor, Mr Greg Griffin) to cause the sum of $40,000 presently on deposit with the Bendigo Bank, to be paid to the first respondent and the sum of $25,000 presently on deposit with the Bendigo Bank to be paid to the second respondent.

4.                  The applicant pay the first and second respondents’ costs of and incidental to their notices of motion filed respectively on 17 and 26 April 2007.

5.                  Leave to applicant to apply for orders 1 to 4 hereof or any of them to be varied or discharged, such application to be filed and served with any supporting affidavits by 23 July 2007.

6.                  Direct each respondent to serve as soon as practicable a sealed copy of this order upon the applicant at its address for service.

11                  I am conscious that Order 3 may involve the premature payment of the amount for security for costs.  I am doing so in the awareness that if that Order was set aside or varied in whole or in part, there is nothing to suggest that either of the respondents would not be in a position to repay the amount which they respectively receive for the costs already paid to them.  It seems to me, given the history of this matter, that it is appropriate, at present, that the amount presently held for security for costs for their respective costs be paid out to them at this stage.

Associate:

Dated:         18 May 2007