Category Archives: Case by Case

Strike Out Application for Failure to Pay Security

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The ACT Court of Appeal has considered a strike out application of the proceedings in Hussain & Anor -v- Ngep & Anor (No. 3) [2105] ACTCA 50 following the failure of the Applicant to comply with an earlier order to pay an amount as security of costs.

The Applicant (Respondent on Appeal) sought an order under Rule 425 which states that the Court may strike out the whole or any part of the proceedings if the pleading r425(1):

(a)   discloses no reasonable cause of action or defence appropriate to the nature of the pleading; or

(b)   may tend to prejudice, embarrass or delay the fair trial of the proceeding; or

(c)   is frivolous, scandalous, unnecessary or vexatious; or

(d)   is otherwise an abuse of the process of the court.

The Applicants had previously been awarded judgment in the Magistrate’s Court for the sale of a vehicle, the sum of this sale was not stayed. Further a Statutory Demand from the Applicant for the judgment debt went unanswered.

The application was appealing a decision of a single judge of the Court of Appeal awarding a security of costs in the substantive appeal against the party appealing the Magistrate’s Court decision. The Appellant had his matter put over to the Registrar by Robinson AJ at first instance on the appeal for an apparent lack of jurisdiction concerning whether the Court of Appeal can hear an appeal on an interlocutory decision (security of costs) from a single Judge of the Court of Appeal.

Before the matter could be progressed before the Registrar, the Applicant made the current application for the proceedings to be struck out for lack of payment on the security of costs order.

Chronology

  • Magistrate’s Court decision
  • leave to appeal out of time denied
  • appeals the denial
  • Statutory Demand made
  • security of costs application made
  • security of costs appealed, reverted back to registrar
  • applicant applies for strike out based on non-compliance with security of costs

The Appellant pleaded that a range of health concerns and apparently a clash with unrelated proceedings in Sydney as part of the reason for non-compliance.

There were a number of difficulties associated with the application, namely that rule 425 concerns deficient pleadings and the application was being sought on the grounds of non compliance with an order. The Applicant was permitted to alter their application to correctly plead rule 1904 which allows the Court to dismiss the proceedings if the security order is not complied with.

Interestingly in the published decision the Court also made a statement on the apparent strength of the appeal without ruling on it. The appeal purported to appeal a decision which of itself involved a decision not to grant leave to appeal to the Court, therefore no jurisdiction had ever been correctly invoked in the making of the actual appeal.

Given the inadequacy of the position of both parties the Court declined to make a ruling but has adjourned the matter before another Judge (as Murrell CJ had made the Security for Costs order) whilst also providing some clues about how the application will play out if it were to proceed;

Which is probably that the Court will look grimly on a failure to pay a security of costs order and if that were not enough to have the pleadings struck out, then there is no jurisdiction or even if there is then the appeal would probably fail anyway. Let’s hope the parties read the decision. 

Judge Not So Subtley Blasts “Defective Processes” in Registry

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Statutory Demands have a notoriously strict timeline imposed by the Corporations Act. But what on earth happens when the Court registry doesn’t issue your documents in time and the deadline lapses…..well, read on.

In Adhesive Pro P/L -v- Blackrook Supplies P/L the Court was pretty scathing of the turnaround time of the registry but didn’t recognise the set aside application despite the position of the plaintiff that it had been lodged within the 21 days.

To avoid confusion, the Plaintiff in Adhesive is the Debtor and the Defendant the Creditor.

The 21 day period was set to expire on 28 August 2014. On the 27th a solicitor for the plaintiff filed the originating application with the registry and was told that no service copy was available that day. The solicitor who lodged the application informed the registry that a copy was required that day. Signed, unsealed copies were served later that day. Sealed copies were served on the defendant’s solicitors on 31 August (day 24) and on the defendant’s registered office on 2 Sept (day 26).

s459G of the Corps Act requires that a copy of the set aside application must be served within the 21 day period.

There was extensive discussion on the authorities that explain what a “copy” of a document is as well as the differences between filing and lodging, noticeably how the Federal Court distinguishes but the ACT definitions do not make that distinction. [21]

The Court decided that it was unnecessary to decide on what constitutes service and what is a copy as the statutory provisions were intended to operate definitely without much room for interpretation. The Court noted that it did not need to rule on the position but if required it was inclined to agree with the position of Stanley J in Craneford Nominees Pty Ltd v VGC Co-Operative Ltd (2012) 262 FLR 283:

An analysis of the authorities demonstrates that a document will satisfy the definition of a “copy of the application” where:

(1) the copy document reflects the form of the originating process accepted by the court within the 21 day period;

(2) the copy document evidences the fact of the court’s acceptance, and hence, the fact that proceedings have been commenced, by some mark, whether it is the seal of the court, the Registrar’s signature, or some other authenticating mark such as the court stamp or action number; and

(3) the copy document records the important fact of the return date of the application.

“Acceptance” by the Court does not immediately occur upon the registry accepting the documents for consideration as they still hold the right to reject the documents under rule 6140. The proceedings were ultimately dismissed for lack of jurisdiction arising from the fact that a valid application had not been made in accordance with the Corporations Act, as adopted in Schedule 6 of the Supreme Court Act.

The Court had some sympathy towards the Plaintiff and all but directed the registry to refund the filling fee under the Court Procedures (Fees) Determination 2015 (ACT).

I am somewhat less sympathetic (in general, but also specifically). Everyone who has dealt with the ACT Court Registry understands that they can be frustrating at times but that it is completely normal for there to be a delay in returning documents sealed. Ultimately the solicitors for the plaintiff should have been aware that waiting until the 20th day of the 21 day period may result in an unfavourable outcome. Alternatively if the client waited that long to approach the solicitors then they will simply have to wear the consequences of that. Simply, do not delay on anything involving a statutory demand.

Court Rejects Late Inclusion of Statutory Defence

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The Supreme Court considered, and duly rejected, a late application for pleading a statutory bar against the Nominal Defendant from seeking contribution in Jausnik v Nominal Defendant [2015] ACTSC 251.

The primary case was a high profile claim for compensation by an ACT Police Officer from the Nominal Defendant claiming psychological damage, who subsequently sought contribution from an individual police officer and NSW. The Plaintiff and the individual officer arrived on the scene of a motor vehicle accident following a NSW Police pursuit.

The first third party, being the individual officer, has sought to plead a bar under the NSW Police Act protecting individual members against personal liable:

Section 213 of the Police Act 1990 (NSW) (‘Police Act’) provides:

213  Protection from personal liability

A member of the NSW Police Force is not liable for any injury or damage caused by any act or omission of the member in the exercise by the member in good faith of a function conferred or imposed by or under this or any other Act or law (whether written or unwritten).

This bar wasn’t pleaded until late in the game (after pleadings closed and even settlement) so the Court naturally turned to the Court Procedures Rules and our old friend Aon Risk. Particular points that were drawn from Aon include;

  • First, generally speaking where a discretion is sought to be exercised in favour of one party and to the disadvantage of another, an explanation will be called for so as to permit the circumstances giving rise to the amendments to be weighed in the discretionary balance: [103]
  • Parties have a right to bring proceedings but have to make choices as to what claims are made and how they will be framed and prosecuted.  Limits will be placed on the ability to change the case they wish to run.  That is why in seeking the just resolution of the dispute, reference is made to the parties having sufficient opportunity to identify the issues they seek to agitate: [112].
  • The reference in the Rules to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore a just resolution to an application for leave to amend.  It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings upon the payment of costs.

Ultimately Associate Justice Mossop was reasonably scathing of the application to amend and include the statutory defence. Mossop AsJ noted that the application was “extremely late”, making the application was “wholly attributable to lack of thoroughness in the [first third party’s] camp” (read professional liability claim), the amendment would create a complete defence and the amendment would essentially require reopening the question of liability including lengthy adjournments [38].

Aon Risk is essential reading for anyone hoping to conduct commercial litigation or wishing to challenge the Fourth Horseman to a game of chess. Like playing Death in Chess, commercial litigation requires punters to not commence anything without being thoroughly aware and prepared, and to have planned at least 3 moves ahead at all times if not able to win in 6.