FEDERAL COURT OF AUSTRALIA

United Industries International Limited v Chameleon Mining N/L

[2009] FCA 1064

UNITED INDUSTRIES INTERNATIONAL LIMITED and THOMAS GEORGE WHITBREAD v CHAMELEON MINING N/L, SIEW HONG KOH and CENTREBRIGHT PTY LIMITED

NSD 924 of 2008

STONE J

18 SEPTEMBER 2009

SYDNEY

THE COURT ORDERS THAT:

1.         The second and third respondent have leave to file in Court their notice of motion dated 20 August 2009

2.         Service be dispensed with in relation to the second and third respondents’ notice of motion

3.         The notice of motion referred to in Order 1 be heard instanter together with the notice of motion filed by the first respondent on 5 August 2009

4.         The proceedings be dismissed pursuant to Order 35A(3)(1)(a) of the Federal Court Rules

5.         The second plaintiff, jointly and severally with the first plaintiff, pay the respondents’ costs of the proceeding, including any reserved costs, on an indemnity basis.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     By notice of motion filed on 5 August 2009, the first respondent sought orders dismissing the present proceeding pursuant to O 35A r (3)(1)(a) of the Federal Court Rules.   At the hearing of the first respondent’s motion on 20 August 2009, the second and third respondents were given leave to file in Court a notice of motion seeking the same orders.  For reasons that will become clear service was dispensed with and both motions were heard together.  At the conclusion of the hearing I made orders dismissing the proceedings and undertook to provide written reasons at a later date. These are my reasons.

2                     The substantive proceeding was commenced by the plaintiffs on 20 June 2008.  The second plaintiff, Mr Whitbread, is the sole director and secretary of United Industries International Limited, the first plaintiff.  United Industries held shares in the first defendant, Chameleon Mining N/L.  The second defendant, Mr Koh, was a director of Chameleon as well as a director of Centrebright Pty Ltd, the third defendant. 

3                     The history and conduct of the proceedings shows a lamentable failure on the part of the plaintiffs to progress their claims.  It appears that at least in part this may be because the second plaintiff has major health problems.  At a directions hearing on 9 October 2008 the Court was informed from the bar table that the second plaintiff’s health had taken a serious turn and that he may have suffered a stroke and although the information was not supplied by way of admissible evidence I have no reason to doubt that this is true.  Irrespective of this, however, certain facts are beyond dispute.

HISTORY AND CONDUCT OF THESE PROCEEDINGS

4                     The plaintiffs filed an application and statement of claim on 20 June 2008.  On 4 July 2008 the proceedings came before the Court for the first time and were stood over by the Registrar until 24 July 2008.  On that date I ordered that the plaintiffs file an amended application and statement of claim by 7 August 2008 and stood the matter over for further mention on 14 August 2008.  I also ordered that the plaintiffs provide the defendants with their respective addresses by no later than 4 pm on 24 July 2008.  According to an affidavit of Gordon Grieve – the first defendant’s solicitor at the time of filing - the defendants were not provided with the second plaintiff’s address until 7 August 2008. 

5                     On 14 August 2008 the matter returned for further directions, at which time no amended application or statement of claim had been filed.  I therefore ordered that the plaintiffs file and serve an amended statement of claim and an amended application which complied with Orders 11 and 12 of the Federal Court Rules by 21 August 2008.  The amended statement of claim and application were filed by the plaintiffs on 21 August 2008. 

6                     On 29 September 2008 the first defendant filed a notice of motion seeking security for costs from the first plaintiff.  On 9 October 2008 the second and third defendants made a similar application.  On 23 October 2008, with the consent of the parties, I ordered that security for costs be paid by the first plaintiff in an amount to be agreed by the parties or determined by the Court.  I ordered the first plaintiff to provide the defendants with a proposal in respect of the amount and manner of security by no later than 30 October 2008.  According to Mr Grieve’s affidavit, the proposal was not received by the first defendant until 5 November 2008.

7                     The parties failed to reach agreement as to the quantum of the security and on 3 December 2008I ordered that the first plaintiff provide security in the amount of $120,000 in respect of the costs of the first defendant and $120,000 in respect of the costs of the second and third defendants.  I further ordered that the proceedings be stayed until such security had been provided.

8                     According to the affidavit of Ms Roccisano, solicitor for the first defendant, filed on 5 August 2009, the first defendant caused the orders of the Court made on 3 December 2008 to be entered in the Court records on 16 December 2008 and sent correspondence to the plaintiffs’ legal representatives annexing the entered orders.  On 9 June 2009 further correspondence was sent to the plaintiffs’ representatives outlining the extensive delay in the proceedings and proposing a course of action.  No response was received in relation to that letter.  It was subsequently forwarded to my associate on 20 July 2009 together with the defendants’ request that the proceedings be reinstated.  Notwithstanding this the security was not provided.

9                     At a directions hearing on 30 July 2009, the first and second plaintiffs were represented by Mr McDonald who had only recently been briefed and was not able to provide any cogent reasons why security had not been provided.  Accordingly, I ordered that if the first plaintiff did not provide security for costs in accordance with my orders of 3 December 2008 in a form as agreed or as approved by the Registrar by 14 August 2009 the proceeding was to stand dismissed in so far as the first plaintiff was concerned.  The first plaintiff did not provide such security and consequently is no longer a party to this proceeding.  The applications made in the defendants’ notices of motion presently of concern relate only to the second plaintiff.

THIS NOTICE OF MOTION

10                  The first defendant’s notice of motion was set down for hearing on 20 August 2009.  At that time Mr McDonald again appeared based on standing instructions from the second plaintiff however he told the Court that his instructing solicitors had been unable to contact their client and that he did not have instructions to deal with the motion one way or another.   

11                  Mr McDonald said he understood that his instructing solicitor’s difficulty in contacting Mr Whitbread stemmed from the continuing deterioration of Mr Whitbread’s health and his possible relocation to a supervised care facility.  Without instructions from the second plaintiff Mr McDonald was clearly unable to argue the substance of the motion.  After mentioning that, in accordance with his standing instructions, all he could do was seek an adjournment, he requested to be excused.   I refused to adjourn the matter and, in the circumstances I excused Mr McDonald from further attendance at the hearing.

12                  Before Mr McDonald left the Court, counsel for the second and third defendants sought leave to file in court a notice of motion seeking relief identical to that sought in the first defendant’s motion.  In the circumstances, Mr McDonald was understandably unwilling to accept service of that notice of motion however, since the first defendant’s notice of motion was filed and served 15 days before the present hearing and no additional orders were sought by the second and third defendants’ motion, I decided that no prejudice would be afforded to the second plaintiff if service were dispensed with and the second and third defendants’ motion heard instanter.  I therefore made orders to that effect and both motions were heard together.

The Court’s discretion under O 35A r 3(1)(a)

13                  The notice of motion seeks orders dismissing the proceedings under O 35A r 3(1)(a) of the Federal Court Rules. Order 35A r 3 states:

(1)           If [a plaintiff] is in default, the Court may order that:

(a)    the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the [plaintiff].

Relying on observations made in Lenijamar Pty Ltd v AGC (Advances) Limited (1990) 27 FCR  388 at 396, the first defendant submitted that, before dismissing the proceedings under O 35 r 3(1)(a) I needed to be satisfied either (a) that the second plaintiff’s history of non-compliance indicates that he is unwilling or unable to progress his application so that it is ready for trial within an acceptable period or (b) that irrespective of his intention or resources his continued failure to comply is occasioning unnecessary delay, expense or other prejudice to the defendants.

14                  While the principles articulated in Lenijamar relate to the now defunct O 10 r 7, it is clear that the same principles are applicable in relation to the Court’s power under O 35 r 3(1)(a); Jianshe Southern Pty Ltd v Turnbull Cooktown Pty Ltd (No 2) [2007] FCA 903 per Besanko J.   

15                  In light of the circumstances outlined above, I was satisfied that the second plaintiff is either unable or unwilling to co-operate in getting the matter ready for hearing within an acceptable period or, at least, has occasioned unnecessary delay by reason of his non-compliance.  There is no reason to believe that this situation is likely to change.  Mr Whitbread is 86 years of age and there is no evidence that his health is improving.  Indeed, such evidence as there is suggests that Mr Whitbread’s health is, if anything, continuing to deteriorate.  Consequently I ordered that the proceedings be dismissed as against the second plaintiff.

COSTS

16                  On 30 July 2009 I ordered the first plaintiff to pay the defendants’ costs on an indemnity basis.  Both notices of motion sought orders that the second plaintiff also be liable for costs on an indemnity basis.  Ms Roccisano, upon whose submissions the second and third defendants also relied, described the second plaintiff’s failures as occasioning “inexcusable and inordinate delay without satisfactory explanation” and submitted that his conduct was sufficient to warrant such an order being made; Wilcox, Re; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151.  Based on the history of the proceedings set out above, I was persuaded that this was an entirely appropriate characterisation of the circumstances and warranted the costs order sought.  As a result I ordered that the second plaintiff be jointly and severally liable with the first plaintiff for the defendants’ costs of these proceedings, payable on an indemnity basis.

Associate:

Dated:         18 September 2009