FEDERAL COURT OF AUSTRALIA

Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 3) [2016] FCA 224

ORDERS

THE COURT ORDERS THAT:

1.    The cross-claim, to the extent that it is brought by the first, second and third cross-claimants (the corporate cross-claimants), be dismissed.

2.    The corporate cross-claimants pay the cross-respondent’s costs of the interlocutory application, filed by the cross-respondent on 23 February 2016, and of the cross-claim, as brought by the corporate cross-claimants.

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

REASONS FOR JUDGMENT

YATES J:

1    By interlocutory application filed on 23 February 2016, the cross-respondent seeks an order dismissing the cross-claim filed on 18 May 2015 to the extent that it is brought by the first, second and third cross-claimants (the corporate cross-claimants).

2    There was no appearance by the corporate cross-claimants at the hearing of the interlocutory application. On the evidence, I am satisfied that the interlocutory application and the affidavit in support (of Nathan Thomas Mattock sworn 19 February 2016) were served on the corporate cross-claimants on 1 March 2016, by communication to their lawyer’s nominated email address for service.

3    The dismissal is sought pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth) (the Act). Section 56(4) of the Act provides:

If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed.

4    Reliance is also placed on r 19.01(1)(c) of the Federal Court Rules 2011 (the Rules). Rule 19.01(1)(c) of the Rules provides:

(1)    A respondent may apply to the Court for an order:

(a)    …

(b)    …

(c)    that if the applicant fails to comply with the order to provide security within the time specified in the order, the proceeding be stayed or dismissed.

5    For the purposes of r 19.01 of the Rules, “applicant” includes a cross-claimant.

6    On 24 July 2015, I made an order that the corporate cross-claimants provide security for the cross-respondent’s costs of the cross-claim in the sum of $67,781.25. The security was to be provided by payment into Court in accordance with Div 2.5 of Pt 2 of the Rules. I also ordered that the corporate cross-claimants’ claims under the cross-claim be stayed until such time as that security was provided: Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd [2015] FCA 747.

7    No security, as ordered, has been provided, despite the fact that the order for security was made more than seven months ago. There has been no explanation by the corporate cross-claimants as to why security has not been provided. Further, no application has been made by them to vary or modify the relevant orders.

8    The cross-respondent submits that I should infer that the corporate cross-claimants are not in a position to provide such security. That may be so, although at the hearing of the application for security for costs I rejected the corporate cross-claimants’ submission that the making of an order for security for costs would “unduly stultify” their ability to pursue the cross-claim: see at [19]. I also noted that the person apparently standing behind the corporate cross-claimants is Andrew Christopher, the fourth cross-claimant, who elected not to give evidence as to the financial position of the corporate cross-claimants or, indeed, his financial position. In the absence of any evidence from the cross-claimants, it is just as likely that the corporate cross-claimants have simply elected not to provide security. Whatever may be the true position, the cross-claim has languished for many months. That position should not be allowed to continue, certainly so far as the corporate cross-claimants are concerned.

9    In Microbio Resources Inc v Betatene Ltd [1993] FCA 848, the Full Court 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 upon parties in such circumstances to provide evidence of their position.

10    Those observations are plainly apposite to the case at hand.

11    The cross-claim, to the extent that it is brought by the corporate cross-claimants, should be dismissed. The corporate cross-claimants should pay the cross-respondent’s costs of this interlocutory application and of the cross-claim as brought by the corporate cross-claimants.

Associate:

Dated:    11 March 2016