Supreme Court New South Wales Medium Neutral Citation: Statewide Developments Realty Pty Ltd v The Owners Corporation SP77457 [2014] NSWSC 330 Hearing dates: 21 March 2014 Decision date: 21 March 2014 Jurisdiction: Equity Division Before: Slattery J Decision: Proceedings dismissed under UCPR, rule 42.21(3). Plaintiff to pay the defendants' costs of the motion for dismissal and of the proceedings. Catchwords: PROCEDURE - application for dismissal of proceedings under UCPR, r 42.21(3) for failure to comply with an order for the payment of security as to costs - application to vary security for costs order - whether plaintiff can apply to pay security in instalments - whether sufficient evidence of intent to pay presented - whether sufficient evidence of ability to pay security presented - whether significant change of financial circumstances justifies plaintiff's application to vary orders Legislation Cited: Uniform Civil Procedure Rules, r 42.21(3). Cases Cited: Ballard v Brookfield Australian Investments Pty Ltd [2013] NSWCA 82 Category: Procedural and other rulings Parties: Plaintiff: Statewide Developments Realty Pty Ltd Defendant: The Owners Corporation SP77457 Representation: Counsel: Defendant: M. Ashhurst SC Solicitors: Plaintiff: N. Khoury File Number(s): 2013/205158 Publication restriction: No EX TEMPORE Judgment 1The forty-three defendants in these proceedings are the unit holders and the body corporate of a Strata Plan who are receiving caretaker services from Statewide Developments, the plaintiff in these proceedings ("Statewide"). Background 2The short history of the matter is this. On 15 November 2013 White J made orders that the security for costs in the proceedings be provided to the first forty-three defendants in the sum of $110,000. The underlying dispute in the proceedings relates to the termination of the caretaker service agreement between Statewide and the Strata Plan last year. 3Statewide has continued to provide caretaker services to the defendants pursuant to interlocutory orders 3 and 4 made by Kunc J on 9 August. When the matter first came to Court, notwithstanding the termination of the caretaker agreement by the defendants, orders were made pending disposal of the proceedings for the caretaker agreement to continue. Since then the plaintiff, Statewide, has been providing services under the umbrella of that injunction. 4The revenue from those caretaker services now flows to the plaintiff at the rate of approximately $18,000 per month. Since White J made his orders, the opportunity which they afforded to the plaintiff to provide security for costs within 28 days was not taken up. No money has been paid into Court by way of security for costs since mid-December. 5Correspondence before the Court shows that the defendants sought to inquire of Statewide as to why the funds were not paid into Court. An indulgence was granted for them to permit Statewide to pay the security by the middle of January this year. But they were not paid by that time. A warning was given that if the amount required as security were not paid, this motion would be put on, as it was on 20 February 2014. 6Statewide, represented by Mr Khoury today, filed a motion with the Court's leave, a motion seeking to vary the orders of White J. There was initially a procedural argument as to whether, by virtue of the operation of UCPR, r 36.16(3), it was now possible at this time (some four months after White J's orders were made) to vary them. I was referred by Mr Ashhurst SC to the recent decision of Ward JA in Ballard v Brookfield Australian Investments Pty Ltd [2013] NSWCA 82 from which it does appear that an application for variation for security for costs order in these circumstances maybe open procedurally. But the circumstances for a variation have to be right: a change in circumstances should usually be shown. And in my view, for the reasons that follow, the circumstances are not right for that application to be made. 7The application that Mr Khoury seeks on behalf of Statewide is to vary the order so that the $110,000 of security for costs is paid via 11 consecutive monthly payments each in the sum of $10,000. These payments would commence in April 2014, such that between now and the final payment in March next year, the security for the defendants' costs would be paid. 8No evidence is especially filed in support of Statewide's motion filed today. But Statewide has re-read parts of an affidavit of Mr Charles Touma of 10 October 2013 which was used when the matter came before White J. That affidavit describes the financial structure of the caretaker agreements that I have described earlier in these reasons. But it does not explain what attempts have been made to gather the $110,000 in the meantime. It does not explain what the prospects of gathering those funds are in the future. It does not explain why the funds were not able to be obtained in the last three months. And it does not explain why Statewide has done nothing to gather the funds in the last five weeks. All this conduct only strengthens the fundamental basis on which White J made the orders that he did. The history since November 2013 strongly indicates that Statewide would be unlikely to meet an adverse costs order at a final hearing. 9And Statewide's proposed variation would defeat the purpose of White J's original orders. Whilst the security was being accumulated over the next 12 months the defendants would be incurring more legal costs in the proceedings. By the time the security had been paid, if not before, even more security would be required. 10There is no final prejudice which would flow to Statewide from the dismissal of these proceedings. This is a dismissal on a procedural basis. Mr Ashhurst SC has properly conceded that these orders would not create an issue estoppel and prevent other proceedings being brought. 11There is every reason in the circumstances to make the orders sought in the defendants' motion. I will make orders dismissing the proceedings as sought. That has the consequence that all the existing interlocutory orders in the proceedings will also be dissolved. Orders 12Accordingly ,the Court makes the following orders and directions: 1. Pursuant to Rule 42.21(3) of the Uniform Civil Procedure Rules 2005 (NSW) the proceedings are dismissed. 2. The plaintiff is to pay the first to forty-second defendants' costs of this notice of motion. 3. The plaintiff is to pay the first to forty-second defendants' costs of the proceedings. 4. Dissolve Orders 3 and 4 (copied below) made by Kunc J on 9 August 2013:- "3. Until further order of the Court, the defendants in their capacity as Members of the Building Management Committee of Deposited Plan No 1097776 pay the sum of $21,839.84 inclusive of GST to the plaintiff on the 9th day of each month commencing 9 September 2013 subject to the following: a. The plaintiff complying with all of its obligations under the alleged caretaker agreement between the defendants and the plaintiff attached hereto; b. The plaintiff issuing to the defendant a tax invoice in the above sum as if it were doing so under the alleged caretaker agreement; c. The matter proceeding and remaining in the expedition list. 4. The defendants pay the sum of $11,160.16 inclusive of GST into Grace Lawyers Trust Account to be held in escrow until further order." ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 March 2014