Jazabas Pty Limited v City of Botany Bay Council [2009] HCATrans 31 (17 February 2009)

Last Updated: 18 February 2009

[2008] HCATrans 031

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S100 of 2001

B e t w e e n -

JAZABAS PTY LIMITED

Applicant

and

CITY OF BOTANY BAY COUNCIL

Respondent

Summons

GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 17 FEBRUARY 2009, AT 9.31 AM

Copyright in the High Court of Australia

MR C.P. CARTER: I appear for the applicant, respondent on the application. (instructed by Cropper Parkhill Solicitors)

MR G.P. McNALLY, SC: I appear for the respondent, the applicant in respect of the summons. (instructed by Houston Dearn O’Connor)

HIS HONOUR: Now, the summons was filed on - - -

MR McNALLY: 20 October, your Honour.

HIS HONOUR: 20 October 2008. It seeks an order pursuant to rule 4.03.2 of the High Court Rules that the Council be granted leave to take a further step in these proceedings, namely, the filing of a bill of costs to have the costs of the Council taxed pursuant to Court order dated 19 April 2002 and that dismissed an application for special leave to appeal from the New South Wales Court of Appeal. That is right, is it not?

MR McNALLY: Yes, your Honour, that is right.

HIS HONOUR: There is a summary of argument from both sides - - -

MR McNALLY: Yes, your Honour, and the Council has also filed a chronology which might be of some assistance.

HIS HONOUR: Yes, and there is an affidavit in support of Mr O’Connor.

MR McNALLY: That is correct, your Honour. There are three of those.

HIS HONOUR: One sworn 15 October.

MR McNALLY: Another sworn 3 December.

HIS HONOUR: On 3 December and the third one sworn the 6th and filed 9 February.

MR McNALLY: That is correct, your Honour.

HIS HONOUR: Then there is an affidavit from your side by Mr Haigh sworn 10 February. That is right, Mr Carter?

MR CARTER: Yes, there is.

HIS HONOUR: Yes, I have looked at those materials. Let me just look at the rule – where a year or more has elapsed any party has to give notice and where three years or more have elapsed, which is this case:

no step shall be taken in the proceeding without the leave of the Court or a Justice.

Yes, all right. Is there anything you want to say in supplementation of the written submissions?

MR McNALLY: Just briefly, your Honour. The explanation for the delay in respect of having the costs assessed in this matter is set forth in the affidavits of Mr O’Connor and essentially they are that the Council was of the belief that it was not worthwhile pursuing Jazabas for the costs order. Since that time, in 2005, as your Honour would have seen from the relevant chronology, Jazabas has commenced further proceedings against the Council and there was a finding by Associate Justice Harrison in the Supreme Court recently that those second set of proceedings arise from, substantially – they arise from the same facts but they are in respect of substantially the same cause of action and seek substantially the same relief that was sought in the proceedings in which Jazabas was previously unsuccessful.

Certain steps were taken then. A notice of motion was filed for security for costs. That was successful. Those proceedings are presently stayed, but there is at present an application for leave to appeal before the Court of Appeal - - -

HIS HONOUR: Wait a minute. Who made an order for security of the costs?

MR McNALLY: Justice Simpson made an order for security - - -

HIS HONOUR: Who applied?

MR McNALLY: The Council did and the other defendants, so that there was an order in favour of the Council for security for costs. That has not been complied with and those proceedings are presently stayed. There was an application before Associate Justice Harrison to - - -

HIS HONOUR: To lift the stay.

MR McNALLY: That was unsuccessful. One of the grounds that her Honour refused to lift the stay was that those proceedings were substantially the same as the proceedings that were already dismissed and where the High Court refused special leave to appeal. That decision of Associate Justice Harrison has now been appealed and it was after that appeal was lodged that the Council finally applied to the Court to take a further step in these proceedings in having its costs assessed.

HIS HONOUR: This Court, and the appeal from the Associate Justice, did that go to the Court of Appeal or - - -

MR McNALLY: It goes to the Court of Appeal, although there is an argument about that, but it is presently listed before the Court of Appeal for hearing in March. So that unless the Council is granted leave to proceed in respect of taxation of its costs, it might face the position where if somehow Jazabas is successful in reagitating these issues and obtains a judgment against the Council, the Council will not be able to offset the costs that it has already been ordered in similar proceedings.

In summary, your Honour, the delay has been explained because it was not worthwhile pursuing Jazabas. It is clear from the affidavit of Mr Haigh filed on behalf of Jazabas that Jazabas does not have any assets - - -

HIS HONOUR: But it seems still to be so, does it not? It seems from that affidavit that this further litigation is being funded by the other party.

MR McNALLY: By the other party, and there is reference to loan arrangements being made between the parties as and when appropriate.

HIS HONOUR: You sought to be in a position you can get a set-off, is it?

MR McNALLY: A set-off or have the costs paid. We just wish now to proceed in relation to those costs. There is now purpose in proceeding, whereas before there seemed to be no purpose. If Jazabas is able to fund the proceedings presently in the Supreme Court, there is no reason as to why it should not pay the outstanding costs order.

HIS HONOUR: Yes, Mr Carter.

MR CARTER: Your Honour, in relation to the other proceedings before the Supreme Court, they involve two other companies, BAS Developments and Permtree. Mr Haigh’s affidavit does set out the funding arrangements by which BAS is funding those proceedings. As set out in the affidavit of Mr O’Connor of 6 February, paragraph 3(f) - - -

HIS HONOUR: Just a minute, 6 February. Yes, paragraph 3.

MR CARTER: As Mr McNally has indicated, a decision has been taken to move forward following the commencement of the proceedings in the Court of Appeal in relation to the judgment of Associate Justice Harrison. Whilst there is a security for costs order presently made vis-à-vis Jazabas in those proceedings pursuant to that of Justice Simpson, the Court of Appeal had previously indicated an alternate form of security by way of personal undertakings of the directors and shareholders of Jazabas may be sufficient. Those personal undertakings by the directors and shareholders have been made, not accepted by my friend’s client and not accepted by Associate Justice Harrison. That is what is the subject of the appeal.

If, on 20 March, the shareholders and directors are successful before the Court of Appeal in that their personal undertakings are to be treated as sufficient security, the ability for – and as set out in my summary of argument, if there is a debt owed pursuant to the costs order before this Court in 2002, the directors and shareholders fear that the Council will then seek to enforce that, wind up Jazabas, which will render nugatory the security undertakings given by them personally and that that has an ulterior purpose. As I have set out in my submissions in reference to the cases, including your Honour’s decision in Batistatos [2006] HCA 27; (2006) 226 CLR 256 at 266 where your Honour has considered in that case and in the case of Ridgeway, other purposes may be a factor in which a party seeks to obtain orders. We would submit that this is one of those cases. If, however, your Honour is of the view - - -

HIS HONOUR: I mean, prima facie you lost the special leave application here.

MR CARTER: That is accepted.

HIS HONOUR: Ordinarily your client would have to bear the costs. Well, that is the order.

MR CARTER: That is accepted, your Honour.

HIS HONOUR: There has been a delay.

MR CARTER: However, if I may take you to the affidavit of Mr Haigh sworn in support of these proceedings at exhibit 1, which is the amended statement of claim, exhibit SWH1, one of the claims for relief includes, at paragraph 46(b), costs in relation to the previous court proceedings which ultimately led to an application for special leave before this Court. It is a situation where there has been a change of circumstances. There is two different parties. The Court of Appeal has indicated that Jazabas has a bona fide and reasonable case when Justice McClellan had heard part of this in October last year and, we respectfully submit, that to allow the enforcement of the costs order at this stage would have the stymieing approach.

However, if your Honour is against me in relation to that, then an alternate submission would be that the Court give my friend what he wishes to agitate on the summons, however, stay enforcement of it until such time as final resolution of the proceedings before the Supreme Court,
20020 of 2005, are finally determined. That would have the effect of maintaining the status quo, preserving my friend’s position if Jazabas is successful vis-à-vis a set-off, but avoiding any possibility that Jazabas as a corporate vehicle would by stymied in light of security which is obviously not acceptable to my friend but, nonetheless, has been offered by the directors and shareholders.

HIS HONOUR: What is the significance for what you have just been proposing if the statement by your client’s deponent that the company still does not have any assets or income?

MR CARTER: If it does not have any assets, your Honour, my friend may obtain the order and then still seek issue of statutory demand upon it and will not be able to meet it and therefore move to wind it up. That may occur before the determination of the Supreme Court proceedings. As outlined by Mr Haigh in his affidavit, the claim on Jazabas’ part is some $4 million. The costs order, I think from memory, in relation to the special leave application is in the order of 40,000. Unless there is anything further, your Honour.

HIS HONOUR: Yes. What do you say about that alternative position that Mr Carter takes?

MR McNALLY: Well, that would be a fallback position, your Honour, but what it does deprive the Council of is the opportunity to recover the costs in respect of Jazabas which is able to find funding and has found funding to date in respect of these further proceedings. The Council should then be permitted the normal remedies that a creditor would have in respect of a costs order. Jazabas has been able to fund a proceedings in the Supreme Court to date and there is no suggestion that it could not borrow the funds from BAS Developments in order to pay any costs order.

HIS HONOUR: Yes, thank you.

The contentions between the parties on this summons as to what should be done have been sufficiently detailed, I think, in the oral submissions this morning. The delay is very substantial and beyond the three years which triggers rule 4.03.2 of the High Court Rules. Nevertheless, I am satisfied that there has been an explanation of that delay.

The explanation catches up subsequent litigation in the Supreme Court of New South Wales in which these parties are involved and which are said to arise from or to include the same or similar issues to those already ventilated in the earlier litigation that led to the costs order in this Court. However, the proceedings in the Supreme Court include other parties and it appears that the respondent on the summons is being funded by one of those parties in the Supreme Court litigation.

In all the circumstances, I think the appropriate course is to make the order in the summons and, accordingly, I make order 1 as sought in the summons filed 20 October 2008.

What is the position of costs on that summons?

MR McNALLY: The Council would seek costs, your Honour. There is annexed to the affidavit of Mr O’Connor sworn 15 October 2008 as TOC1, a letter of 20 November 2007 seeking the consent of Jazabas to the – pointing out that leave is needed, asking for consent, indicating that costs would be incurred if that consent was not forthcoming and foreshadowing that this particular correspondence would be tendered on that basis. On that basis, the Council seeks costs, your Honour.

HIS HONOUR: Yes. What do you say, Mr Carter, on costs? I think they may have to follow the event.

MR CARTER: I would otherwise put that each party bear their own costs given the period of time, that there was no explanation in that affidavit as to the cause of the delay, of 20 October. That explanation only came about in the February affidavit.

HIS HONOUR: Yes, that is right.

MR CARTER: Jazabas was not in a position to consider the explanation for the delay as of that time.

HIS HONOUR: Yes. What do you say about that, Mr McNally?

MR McNALLY: It still could have consented, your Honour. It has not. We have had to be here today. There is other correspondence where further requests were made in relation to the matter, your Honour. We have basically had an unnecessary appearance because of their failure to consent.

HIS HONOUR: Yes. I think in all the circumstances Mr Carter is correct and I will make no order as to costs of the summons.

AT 9.49 AM THE MATTER WAS CONCLUDED