FEDERAL COURT OF AUSTRALIA

Refund Property Fees Pty Ltd v Prime Project Development (Cairns) Pty Ltd (No 2) [2011] FCA 1414

THE COURT ORDERS THAT:

1.    The second respondent have liberty to file and serve an amended defence by 16 December 2011.

2.    The applicant have liberty to file and serve an amended reply by 11 January 2012.

3.    The second respondent deliver to the applicant the documents or the relevant parts of those documents of Promoseven showing the entries in the accounts of Promoseven respecting the state of its loan agreement and mortgage with Bluechip as at 7 September 2009, together with any documents supporting that entry or entries, by 16 December 2011.

4.    The applicant, by 22 December 2011 deliver to the second respondent, by electronic means where possible, any documents:

(a)    that the applicant relies upon, or proposes to rely upon, for proof of its loss and damage; and

(b)    provided to, or to be relied upon, by the expert appointed by it.

5.    The applicant file and serve any expert accounting report, verified by affidavit, by or on 23 January 2012.

6.    The second respondent file and serve any expert accounting report, verified by affidavit, by or on 29 February 2012.

7.    The experts confer and report to the court and the parties on the extent of any agreement or disagreement by or on 9 March 2012.

8.    Save for expert evidence, the further evidence in this case is to be by way of oral evidence.

9.    The applicant provide summaries of any further evidence upon which it proposes to rely by 23 February 2012.

10.    The second respondent provide summaries of any further evidence upon which it proposes to rely by 8 March 2012.

11.    The applicant prepare a draft index for a bundle of documents by or on 23 February 2012.

12.    The respondent respond to the draft index for the bundle of documents by or on 8 March 2012.

13.    The applicant prepare and deliver to the court and to the parties an agreed bundle of documents by or on 15 March 2012.

14.    The trial of this proceeding take place for five days commencing on 19 March 2012.

15.    The interlocutory applications be dismissed.

16.    The costs of each of the applications, and otherwise today, be reserved.

17.    Liberty to apply.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

1    As to the applications today, the application made by the second respondent in seeks the stay or permanent dismissal of the proceeding. Whether or not this case is to be regarded as an abuse of process depends very much on the making of a value judgment about the nature of the substantive cause of action which in turn rests on making a value judgment about matters of creditability.

2    There is, as I observed in the course of the oral submissions, a persuasive case that is put in the second respondent’s outline, but it is a case which in my opinion is one which is for trial rather than summary disposition. The observation “persuasive” does not indicate any view other than that second respondent’s outline reflects a particular assessment of the case, depending on views one reaches about matters of fact. This Court has been reminded powerfully and recently by the High Court in Edwards v Santos Ltd (2011) 242 CLR 421 about the caution that should attend a summary disposition of a case, even allowing for whatever relaxation of the more traditional tests that has been effected by s 31A of the Federal Court of Australia Act 1976 (Cth).

3    Insofar as the application relates to the pleadings, reference has been made in the course of the second respondent’s well crafted written submission to observations which I made in Wide Bay Burnett Conservation Council Inc v Burnett Water Pty Ltd (No 2) [2009] FCA 237 at [26] and, in particular, to an observation that particulars are not a substitute for the allegation of material facts. In the passage quoted from that case, I also referred to:

… a discernible tendency in modern times against striking out when a pleading even with such a technical fault can be seen fairly to convey when read as a whole, including it so-called particulars, the case which a respondent has to answer.

I referred in that regard to Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41-691 at 42, 827-9.

4    This seems to me a case where that “modern discernible tendency” is applicable. That is not in any way to gainsay the critique made of the amended pleadings of the applicant, but rather to reinforce a view which I formed when considering whether the case was one which was an abuse of process which was that there is, albeit with some difficulty, a discernible cause of action the merits of which depend on factual value judgments as much as anything else and that the case very definitely is one which needs a trial.

5    It seems to me that any summary disposition would be fraught with the risk of elongating rather than truncating a final resolution of issues between the parties. It is for that reason, having regard to my ability to offer a relatively early trial date, that I consider that so much of the application of the second respondent seeks to strike out or stay the proceeding or strike out the pleadings should not succeed.

6    The nature of the applicant’s case is relevant also to the other application made which concerns security for costs. As to that, I do not consider the application to be made at such a late stage of proceedings as would be oppressive. Of course, even at a late stage, in particular circumstances, an application for security for costs may be entertained and security ordered.

7    It is a concern in this case that the costs may well be equal to, if not greater than, the amounts at issue. That, though, is not a basis for ordering security.

8    The worth of the applicant depends very much on an assessment of the worth of loan accounts and set offs as against those. The applicant is under no obligation to prove why it should not be ordered to give security. There is an interrogative note established on the second respondent’s case about the applicant’s worth. For all that, there is also something of an element of the applicant’s worth being inherently tied up with the nature of the claim that it makes. On one view, the applicant is worth at least $800,000.

9    It is unfortunate that there is no verified balance sheet of the applicant to give substance to that view. Nonetheless, having regard to the worth that the applicant apparently has, this is not a case, in my opinion, where security for costs should be ordered.

10    Having said that, I can well see why the second respondent was motivated to bring the application. It is for that reason that, notwithstanding the absence of forensic success, my disposition is to reserve costs rather than award them as against the second respondent. In other words, my very strong view is that the fate of the application, so far as costs are concerned, should be determined by the fate of the trial proper.

11    I should indicate, as well, insofar as there was an assault made on the defence that in its current form the defence is very much a product of having to deal with a very difficult statement of claim. I am not disposed in any way to strike out the defence as opposed to, as the interlocutory orders propounded reflect, granting leave to the second respondent to file and serve an amended defence. Again, the costs in relation to that application also are costs which I regard as costs that should be reserved to abide the result at trial.

12    The further orders then are that each of the interlocutory applications is dismissed with costs reserved. There will also be orders in terms which have been agreed between the parties.

Associate:

Dated:    9 December 2011