FEDERAL COURT OF AUSTRALIA Strategic Financial and Project Services Pty Limited v Bank of China [2012] FCA 701 Citation: Strategic Financial and Project Services Pty Limited v Bank of China [2012] FCA 701 Parties: STRATEGIC FINANCIAL AND PROJECT SERVICES PTY LTD ACN 110 336 966 and ENERGREEN WIND SYSTEMS PTY LTD ACN 100 729 842 v BANK OF CHINA LIMITED ARBN 002 979 955 and COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124 File number: NSD 1900 of 2008 Judge: ROBERTSON J Date of judgment: 29 June 2012 Catchwords: PRACTICE AND PROCEDURE – orders for further security for costs – non-compliance with orders – application for dismissal for non-compliance – no evidence as to reasons for non-compliance or when further security to be given – self-executing orders for dismissal of proceedings Legislation: Federal Court of Australia Act 1976 (Cth) s 56 Federal Court Rules 2011 (Cth) rr 5.21(a) and 19.01(1)(c) Cases cited: Microbio Resources Inc v Betaten Ltd (unreported, Black CJ, Sheppard and Einfeld JJ, 8 October 1993) Date of hearing: 29 June 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 22 Solicitor for the Applicants: Mr AK Singh of Colin Biggers & Paisley Counsel for the First Respondent: Mr BA Coles QC with Mr S Golledge Solicitor for the First Respondent: Freehills Counsel for the Second Respondent: Mr AG Bell SC Solicitor for the Second Respondent: Henry Davis York IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1900 of 2008 BETWEEN: STRATEGIC FINANCIAL AND PROJECT SERVICES PTY LTD ACN 110 336 966 First Applicant ENERGREEN WIND SYSTEMS PTY LTD ACN 100 729 842 Second Applicant AND: BANK OF CHINA LIMITED ARBN 002 979 955 First Respondent COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124 Second Respondent JUDGE: ROBERTSON J DATE OF ORDER: 29 JUNE 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth) and rr 5.21(a) and 19.01(1)(c) of the Federal Court Rules 2011, if the applicants do not, by 9.00 am on 13 July 2012, comply with order 1 of the orders made by Robertson J on 1 May 2012, the proceeding against the first respondent be dismissed, with the applicants to pay the first respondent's costs. 2. Pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth) and rr 5.21(a) and 19.01(1)(c) of the Federal Court Rules 2011, if the applicants do not, by 9.00 am on 13 July 2012, comply with order 1 of the orders made by Robertson J on 30 April 2012, the proceeding against the second respondent be dismissed, with the applicants to pay the second respondent's costs. 3. The applicants pay the respondents' costs of their interlocutory applications. 4. The matter be listed for directions at 9:30 am on 13 July 2012. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1900 of 2008 BETWEEN: STRATEGIC FINANCIAL AND PROJECT SERVICES PTY LTD ACN 110 336 966 First Applicant ENERGREEN WIND SYSTEMS PTY LTD ACN 100 729 842 Second Applicant AND: BANK OF CHINA LIMITED ARBN 002 979 955 First Respondent COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124 Second Respondent JUDGE: ROBERTSON J DATE: 29 JUNE 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 By their respective interlocutory applications, each of the respondents seeks an order, in effect, that if the applicants do not by today provide the further security for costs which I ordered on 30 April 2012 and 1 May 2012 be given by 21 May 2012, the proceeding against each respondent be dismissed with costs. The 30 April 2012 order was made by consent and was for the provision of further security in the amount of $300,000 in respect of the second respondent's costs of the proceedings. The 1 May 2012 order was for the provision of further security in the amount of $700,000 in respect of the first respondent's costs of the proceedings. 2 Further security was not given in either case by 21 May 2012 and has not yet been given. 3 The proceedings have been set down for final hearing on 27 August 2012 for a period of three weeks. 4 These interlocutory applications were last before me on 30 May 2012. At that hearing the applicants read an affidavit by Mr Murray, a solicitor employed by the solicitors for the applicants in the proceedings. Mr Murray deposed, on information and belief that "the final terms of the funding, including the date of the availability of the funds, should be known by 15 June 2012". In oral submissions on 30 May 2012 Mr Murray said "it's anticipated that by 15 June the applicants will know and on what terms the funding will be provided and can advise the court". Mr Murray further said that on the basis of what he had been instructed and advised, by 15 June the applicants would know when and on what terms they could obtain the security and if the proceedings were brought back after 15 June "we can address your Honour in relation to that, and it may be that security can be provided one or two days after or shortly after the 29th, which is the date nominated by the respondents." 5 On 30 May 2012 I listed the matter for 9:30 am today, 29 June 2012, with a strong indication that on 29 June I would make orders that the proceedings against the first and second respondent be dismissed if security in accordance with the Court's orders had not been made by that time. 6 The 15 June date passed without the further security being provided, or any notification to the Court. 7 When the matter came on this morning, the position was that there was no compliance by the applicants with the Court's orders for the provision of further security and no evidence on the part of the applicants as to why those orders had not been complied with or why the indication in relation to 15 June 2012 had not been fulfilled nor when any security would be provided. 8 There was instead tendered by the first respondent a letter from the applicants' solicitors to the respondents' solicitors dated 27 June 2012 which said: "We are instructed that our clients are confident that they will be able to provide the further security the subject of [the Court's] orders made on 1 May 2012, on or before 13 July 2012." That letter attached draft orders extending the time for the provision of additional security to 13 July 2012 and a proposed order as follows: If the Applicants fail to provide the additional security in respect of the costs of the First and Second Respondents in the form and amount ordered by his Honour Justice Robertson on 1 May 2012 and 30 April 2012 respectively, on or before 13 July 2012, the proceedings be dismissed on the basis that the Applicants pay the Respondents' costs as agreed or assessed. 9 The response to that letter, also dated 27 June 2012, from the solicitors for the first respondent contained the following paragraphs: You have offered no explanation of your client's (sic) continued failure to provide the security ordered, nor have you explained the basis for your client's (sic) "confidence" that it will be in a position to do so on or before 13 July 2012. As you know, since last December this matter has been set down for a three-week hearing commencing on 27 August 2012 together with a detailed timetable for the preparation of that hearing. In our submission, there will be prejudice to that hearing date if the various steps outlined in the directions made last December are not attended to promptly. Accordingly, our client does not consent to your proposed orders. If your client wishes to provide any evidence relevant to whether the proceeding should be dismissed we request you do so before 5 pm today. 10 It is extraordinary that the applicants have not descended to any level of particularity, let alone by way of evidence, as to the basis on which their confidence, referred to in their solicitors' letter of 27 June 2012, rests. Further, there is no particularity or evidence as to why the 15 June date passed without security being given or explanation being provided. 11 The relevant principles are not in doubt. The respondents referred to the Full Court decision in Microbio Resources Inc v Betaten Ltd (unreported, Black CJ, Sheppard and Einfeld JJ, 8 October 1993). 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. 12 There can be no doubt that in the present circumstances the Court has the power to order that the proceedings be dismissed today, the question is whether in the exercise of discretion I should do so. 13 By way of submission, the applicants say that the prejudice to them or the effect on them of an order dismissing the proceedings today would be catastrophic whereas the respondents would only suffer inconvenience. 14 The applicants say that the necessary interlocutory steps preparing the matter for hearing could still be attended to in the period of six weeks before and up to 27 August 2012. 15 The respondents rely on the non-compliance with the orders for further security; the lack of explanation for that non-compliance; the absence of evidence on the part of the applicants either by way of explanation of the applicants' capacity to provide security either at all or by 15 June 2012 or 13 July 2012; and the non-compliance with the interlocutory orders made in December 2011 for the preparation of the matter for hearing. 16 The first respondent relies particularly on the affidavit of Mr Hastings deposing to the lead times for obtaining the necessary documents for the first respondent's witnesses based in the People's Republic of China to travel to Sydney to give evidence. The first respondent wishes three of its witnesses to give evidence in person. 17 There is also in evidence a letter from the solicitors for the applicants dated 30 April 2012 objecting to a further four of the first respondent's witnesses giving evidence via video link from the People's Republic of China. In submissions the applicants suggested that they would revisit that objection if they were given further time to comply with the Court's orders for further security. They said there was no reason why an accommodation could not be reached: in that respect the prejudice would be the applicants' and not the respondents'. 18 There are powerful considerations in favour of dismissing the proceedings today. On 30 May 2012 the evidence on behalf of the applicants either explaining the non-compliance with the Court's orders or providing details as to when those orders would be complied with was unsatisfactory; on this occasion there is no such evidence. 19 On the other hand, there is no doubt that the prejudice to the applicants from the dismissal of the substantive proceedings today would be much greater than the prejudice to the respondents in allowing to the applicants a further short period to provide the further security. 20 Taking all these matters into account I now make self executing orders that if the applicants do not by 9 am on 13 July 2012 comply with order 1 of the orders I made on 1 May 2012 and 30 April 2012 respectively the proceeding against the respective respondent be dismissed with costs. 21 The orders I make are: Pursuant to s 56(4) of the Federal Court Act of Australia 1976 (Cth) and rr 5.21(a) and 19.01(1)(c) of the Federal Court Rules 2011, if the applicants do not, by 9.00am on 13 July 2012, comply with order 1 of the orders made by Robertson J on 1 May 2012, the proceeding against the first respondent be dismissed with the applicants to pay the first respondent's costs. Pursuant to s 56(4) of the Federal Court Act of Australia 1976 (Cth) and rr 5.21(a) and 19.01(1)(c) of the Federal Court Rules 2011, if the applicants do not, by 9.00am on 13 July 2012, comply with order 1 of the orders made by Robertson J on 30 April 2012, the proceeding against the second respondent be dismissed with the applicants to pay the second respondent's costs. 22 I also order that the applicants pay the respondents' costs of their respective interlocutory applications. I shall list the matter for directions at 9:30 am on 13 July 2012. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson. Associate: Dated: 29 June 2012