Homes and Property Guides Pty Ltd v Real Estate Publications Australasia Pty Ltd [2005] FCA 872

FEDERAL COURT OF AUSTRALIA

Homes and Property Guides Pty Ltd v Real Estate Publications Australasia Pty Ltd [2005] FCA 872 HOMES AND PROPERTY GUIDES PTY LTD v REAL ESTATE PUBLICATIONS AUSTRALASIA PTY LTD NSD 1432 of 2004 WILCOX J 23 JUNE 2005 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 1432 of 2004

BETWEEN: HOMES AND PROPERTY GUIDES PTY LTD

APPLICANT

AND: REAL ESTATE PUBLICATIONS AUSTRALASIA PTY LTD

RESPONDENT

JUDGE: WILCOX J

DATE OF ORDER: 23 JUNE 2005

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1 Pursuant to order 35A rule 3 of the Federal Court Rules, the proceeding be dismissed as to the whole of the relief claimed in the principal proceeding by the applicant, Homes and Property Guides Pty Ltd. 2 The said applicant pay the costs of the proceeding, including the costs of the motion for dismissal, incurred by the respondent, Real Estate Publications Australasia Pty Ltd. 3 Costs may be taxed forthwith. 4 The said applicant be restrained from commencing any further proceedings against the said respondent, based on the allegations made in the Statement of Claim filed on 29 November 2004, until such costs have been paid. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 1432 of 2004

BETWEEN: HOMES AND PROPERTY GUIDES PTY LTD

APPLICANT

AND: REAL ESTATE PUBLICATIONS AUSTRALASIA PTY LTD

RESPONDENT

JUDGE: WILCOX J

DATE: 23 JUNE 2005

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 I have before me a Notice of Motion filed on 20 May 2005 by the respondent, Real Estate Publications Australasia Pty Ltd ('REPA'). The Notice of Motion seeks an order for summary dismissal of the proceeding. 2 The principal proceeding was commenced on 1 October 2004 by Homes and Property Guides Pty Ltd ('HPG'). There has been considerable delay in its prosecution. 3 The application for summary dismissal is put on two bases: first, failure by HPG to comply with an order for provision of security for costs; second, that the evidence filed on behalf of HPG does not disclose an arguable case. 4 I have heard submissions in respect of the first basis of the application for dismissal. I have put to one side, for the moment, the question whether the evidence discloses an arguable case. My conclusion is that I should accede to the application for summary dismissal because of the failure of HPG to provide the security ordered by the Court. 5 It is necessary to refer briefly to the history of the matter. Correspondence between the parties' solicitors was put into evidence by REPA. This evidence shows the solicitors for HPG made an offer, on 14 December 2004, to provide security for costs by way of a bank guarantee, in the sum of $200,000, in favour of REPA. That offer was not immediately accepted. The solicitors for REPA requested security in the sum of $500,000. However, on 15 March 2005, REPA changed its position. Its solicitors wrote to the solicitors for HPG, indicating their client would accept a bank guarantee in the sum of $200,000, on the basis that REPA reserved its right to seek further security at a later stage of the proceeding. 6 On 15 April 2005, a number of consent orders were made, including an order that, on or before 26 April 2005, HPG provide security for costs, in the amount of $200,000, by way of bank guarantee. 7 No bank guarantee was provided by 26 April 2005. 8 When the matter was in the directions list on 26 May 2005, the date for provision of the bank guarantee was extended to 10 June 2005. The bank guarantee has still not been provided. 9 Evidence was put before the Court of a telephone conversation, on 3 June 2005, between Mr Michael Canti, a director of HPG, and Mr Robert Stewart of PayNow Australia Pty Limited ('PayNow'), which is described as a 'debtor finance company'. Apparently PayNow has provided financial support to HPG in the past. It holds a fixed and floating charge over HPG's assets. 10 In the conversation, Mr Stewart relayed to Mr Canti the content of a telephone call he had received earlier that day from an unidentified person, in which certain allegations were made about HPG's commercial conduct. Mr Canti denied the substance of the allegations. Mr Stewart reported the situation to other people in PayNow. He subsequently informed Mr Canti that PayNow wished to carry out a 'full and detailed debtor audit', in order to test the integrity of the trade debtors, prior to agreeing to release funds for security for costs. Mr Stewart estimated audit costs would be between $14,000 and $35,000, payable in advance by HPG. 11 Mr Canti decided not to incur this expense, but rather to terminate HPG's agreement with PayNow. As a result, PayNow will now not assist HPG in providing security for costs. Moreover, HPG is obliged to retire its debt to PayNow before it can provide security for costs. 12 There is no evidence that HPG has applied to any bank for a bank guarantee. There is no evidence that HPG has the financial strength to obtain a bank guarantee. Two of the three directors of HPG have recently resigned from its board, leaving Mr Canti as sole director. The reasons for the resignations have not been revealed to the Court. 13 In an affidavit sworn on 23 May 2005, before the severing of the relationship between HPG and PayNow, Mr Canti stated: 'During this past last week I received verbal assurances from Robert Stewart of Pay Now to the effect that Pay Now will be prepared to furnish a guarantee in favour of REPA, subject to the provision of financial records, in particular a taxation certificate. I am informed by Robert Stewart of Pay Now that upon provision of the aforementioned financial records, Pay Now can move quickly to put a guarantee in place in favour of REPA of $200,000. It is therefore expected that security for costs can be put in place in favour of REPA within the next one or two weeks.' 14 Mr D W Rayment, counsel for HPG, contended provision of security for costs was frustrated by what he called "someone doing a serious mischief" to his client. He conveyed a suggestion, at least, that the "someone" was associated with REPA. That suggestion is strongly disputed by REPA's counsel, Mr M R Ellicott. There is no evidence, one way or the other, about it. 15 The telephone call of 3 June 2005 occurred during the period of two weeks referred to in Mr Canti's affidavit. There is no evidence about any relevant events between 23 May and 3 June. There is no evidence that a 'taxation certificate', whatever that is, was obtained or even requested. In short, there is nothing to show that, but for the telephone call of 3 June 2005, the bank guarantee would have been forthcoming. 16 If I had formed the impression that HPG was in a position to provide security for costs, but provision was temporarily disrupted by the telephone call, I would have been minded to give it a further opportunity to provide the security. However, there is nothing to indicate that, but for the telephone call, HPG would have been able to provide security for costs; nor is there anything to indicate it is now in a financial position to arrange for this to be done. 17 Mr Rayment suggested the appropriate course is for the principal proceeding to be stayed, with perhaps an order that it stand dismissed if the security is not provided by a particular date. 18 Mr Ellicott said this would be futile; there is no reason to think security can be provided. He referred to some hearsay evidence, in an affidavit of his instructing solicitor, about REPA having suffered commercial inconvenience (even embarrassment) from the fact that the proceeding remains pending. 19 I note this material. Because it is hearsay material and untested, I do not put much weight on it. However, it seems likely that the material has some factual basis, having regard to the nature of the businesses being carried on by the parties. 20 I think the appropriate course is to dismiss the proceeding. As I pointed out to Mr Rayment in the course of discussion, it would be open to his client to commence a fresh proceeding, if it is so minded, once it puts its house in order. I have no confidence that HPG will ever be able to do that. That is a major factor in my decision to dismiss the case at this stage, thereby relieving REPA of the burden of the matter and accumulation of further legal costs. 21 Accordingly, I make an order, pursuant to order 35A rule 3 of the Federal Court Rules, that the proceeding be dismissed as to the whole of the relief claimed by the applicant (HPG) in the principal proceeding. I order that HPG pay the costs of the proceeding, including the costs of this motion, incurred by REPA. Costs may be taxed forthwith. I further order that the applicant (HPG) be restrained from commencing any further proceeding, based on the allegations made in the Statement of Claim filed on 29 November 2004, until such costs have been paid. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.