FEDERAL COURT OF AUSTRALIA

Welsh v Digilin Pty Ltd ACN 078 278 449 [2007] FCA 2064

JAMES ANGUS WELSH v DIGILIN PTY LTD ACN 078 278 449, DIGILIN HOLDINGS PTY LTD ACN 010 581 058, JONATHAN DAVIS AND LORELLE TAYLOR

QUD 476 OF 2005

DOWSETT J

14 DECEMBER 2007

BRISBANE

THE COURT ORDERS THAT:

1.                  Order 21 of the order of 22 December 2006 be amended by substituting the amount of $68,609.41 for $20,000.

2.                  The proceeding is to stand dismissed unless on or before 29 February 2008 the applicant pays the above sum on account of costs; and

3.                  The applicant pay the respondents’ costs of the motion filed on 22 November 2007 and of the hearing today.

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

REASONS FOR JUDGMENT

1                     These proceedings have a sorry history.  Although the current application was filed in 2005, the relevant circumstances go back much further.  The statement of claim indicates that many of them occurred in the mid-1990s.  However, for present purposes, it is the conduct of the matter throughout 2006 and 2007 which is of most significance.

2                     The matter was set down for trial in April of last year.  Prior to the commencement of the trial, the applicant indicated that he proposed to raise new issues.  The trial dates were vacated.  The trial was then listed for October of last year.  When the matter came on, the applicant indicated that the new allegations raised in April would no longer be pursued.  However, in the course of the proceedings it emerged that yet another amendment to the statement of claim would be necessary.  Again, the trial dates were, in effect, vacated. 

3                     Given the history of the matter, a considerable amount of time was devoted, in October 2006 and subsequently, in determining questions of costs, resulting in orders dated 22 December 2006.  Pursuant to those orders the applicant was to pay:

·                    the respondents’ costs of the application to adjourn the hearing on 4 April 2006;

·                    the costs thrown away by the adjournment limited, in the case of counsel’s fees, to the first day of the hearing;

·                    the costs thrown away by reason of the vacation of the trial dates on 19, 20 and 21 April;

·                    the respondents’ costs of the issues raised in para 23(b) of the second amended statement of claim, to the extent that they were no longer part of the applicant’s claim;

·                    the respondents’ costs of 2 and 3 October;

·                    the costs thrown away by amendments contained in the further amended statement of claim; and

·                    to the extent that costs had been increased by an application to wind up the second respondent, those costs.

4                     At that time I indicated to the parties that, in view of the history of the matter, it was appropriate that a condition of the applicant’s further prosecution of the action be that he make a substantial payment of the costs incurred to date by the respondents, but thrown away as a result of the two adjournments of the trial.  Considerable discussion ensued concerning this question.  In the end it was ordered that the proceedings be stayed pending payment by the applicant of $20,000 on account of costs, and that the respondents be at liberty to apply for additional stays as the costs orders became quantified by assessment or taxation.  This may have been an inelegant way of saying that the respondents could apply to increase the amount to be paid as the costs were assessed or taxed.  The bills have now been assessed.  The total is, as I understand it, $68,609.41, including the costs of the figure.  I do not understand there to be any challenge to that figure.  The trial was listed for last week, in the expectation that the applicant would have complied with the order and got on with the litigation.  However neither the amount of $20,000, nor any other part of the costs has been paid.  In those circumstances, the respondents have moved to strike out the action for want of prosecution.  That motion was listed last week, but adjourned until today to ensure that service had been effected on the applicant.  There was some difficulty caused by the fact that his solicitors had indicated that they no longer had instructions.  They have instructed counsel to appear today.  Apparently they now have appropriate instructions.

5                     The applicant’s explanation for these events appears in the affidavit by Mr Boaz Ben Yani, his solicitor, which was filed on 13 December 2007.  He asserts that the applicant has limited assets, apart from his claim, and has a net income of approximately $728 per week.  It is also said that he has a claim against counsel who previously appeared for him in these proceedings.  Although the proceedings have not been conducted satisfactorily, I am unable to attribute blame for that fact.  The material does not demonstrate any cause of action as against counsel, although I accept that a claim has been made, in the sense that a letter of demand has been written.  Counsel has indicated that he has referred the matter to his insurer, or will do so in the near future.  However, in the absence of any evidence as to the nature of the cause of action, that is of little relevance for present purposes.  It is also said that the applicant has had discussions with a litigation funder.  The applicant believes that if he has no other choice, he will be able to obtain funds from that source to pay the amount of $20,000 referred to in my orders.  However the funds will not be available until the end of February.

6                     The affidavit does not seek to explain the circumstances in which the litigation has got into this parlous state.  There is nothing to indicate when the applicant claimed against his counsel, nor when he approached the litigation funder.  As far as I can see, both steps were taken quite recently.  If the applicant had been genuinely trying to advance the matter, one might reasonably have expected to see more detail concerning his efforts.  One might have expected that he would have commenced to pursue these or other avenues late last year when the difficulty of his position must have been apparent to him.  I remain of the view that the applicant should not be allowed to continue to prosecute these proceedings against the respondents until such time as he meets the orders for costs made as a result of his conduct in connection with the scheduled hearings in April and October of last year. 

7                     Although the respondents seek dismissal of the proceedings, I have canvassed with them the alternative of an order pursuant to which the proceedings would be dismissed unless, by a certain date, the whole amount of the order for costs has been paid, that is the amount of $68,609.41.  I do not understand the respondents to depart from their primary position, which is that the proceedings should be struck out.  Counsel for the applicant submits that the amount of $20,000 ought not be increased.  Counsel submits that it would not be appropriate, in effect, to prevent the applicant from prosecuting his claim merely because of his inability to pay the orders for costs, referring appropriately to the reasons of Ormiston JA in Gow v Yan Zang [2005] VSCA 200, particularly at [15].  His Honour said:

‘It follows therefore, that unless the object of the order is merely to provide a temporary stay to force a wealthy, or at least not impecunious, but recalcitrant litigant to pay awards of costs which that party is well able to pay, then the power should be treated as one which will have the effect of bringing to an end litigation without the benefit of a trial to which a litigant is ordinarily entitled.  The reason for making such an order must therefore be serious and, essentially the only practical way to ensure justice between the parties.  …’

8                     At [17] his Honour continued:

‘Finally, at least for the present, if an order of this kind is to be made, there must be seen to have been some conduct on the part of the party in default which falls for condemnation to the extent of making so draconian an order.  For this purpose frequent litigation of minor interlocutory points may, at least in due course, point to misuse of the Court’s process, in the limited sense of a deliberate harassing of the other side, such that it can no longer be permitted to continue.  Ordinarily, therefore, one would assume before making an order of this kind that there would be a series of orders for costs and that they usually would be of a kind which did not involve the genuine resolution of disputes relating to interlocutory matters which have to be resolved before the matter can go to trial.  For this purpose, then, the way in which each interlocutory dispute has been contested may well be relevant.  …’

9                     I am inclined to agree with the sentiments which underlie those observations.  It will, in general, be inappropriate to prevent a party from litigating a claim to resolution simply because he or she is impecunious.  However fairness as between the parties must be the primary consideration.  As Ormiston JA recognized, the conduct of a party may lead to an order which effectively prevents his or her continuation of the proceedings.

10                  In this case the applicant seems to have encountered serious difficulty in formulating his claim.  He has, to some extent and in very general terms, sought to blame his previous counsel for that.  I am not willing to act on the basis that such difficulty was necessarily attributable to counsel.  That is one possibility, but not the only one.  That the applicant has experienced difficulty in formulating his claim does not encourage confidence in its merits.  On the other hand it does not exclude the possibility that it is a meritorious claim.  The difficulties which he has experienced have caused the respondents to incur considerable costs which ought not to have been incurred, and which they ought not to have to pay.  They have, however, paid, or are liable to pay, a considerable amount of money, no doubt at least $68,000, and probably significantly more.  They, or their lawyers, are out of pocket to that extent.  That may not be a compelling consideration in cases where there is reason to hope that the proceedings will be quickly resolved.  The history of this matter offers no cause for such optimism, even if the stay is lifted.  The applicant’s failure to pay the specified sum, and so lift the stay, has resulted in this matter not having progressed since December 2006, further demonstrating that the case is unlikely to be resolved quickly.  This is all the more reason, in my view, for steps being taken to ensure, as far as possible, that the respondents are not out of pocket. 

11                  Although there is considerable merit in the respondents’ application, I am minded to give the applicant one further chance to regularise the proceedings.  I order that para 21 of the order made on 22 December 2006 be amended by deleting the amount of $20,000 and inserting, in lieu thereof, the amount of $68,609.41.  I further order that unless, on or before 29 February 2008, the applicant pays to the respondents the sum of $68,609.41, these proceedings are to stand dismissed.  The applicant is to pay the respondents’ costs of the motion and the hearing today. 

Associate:

Dated:         21 December 2007