Pearson & Ors v Secret Harbour Pty Ltd & Ors [2010] FMCA 249 (9 April 2010)

Last Updated: 15 April 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PEARSON & ANOR v SECRET HARBOUR PTY LTD & ORS SMITH v SECRET HARBOUR PTY LTD & ORS GULLAN & ANOR v SECRET HARBOUR PTY LTD & ORS BLEZARD & ANOR v SECRET HARBOUR PTY LTD & ORS S. BOWMAN & ANOR v SECRET HARBOUR PTY LTD & ORS AIKMAN & ANOR v SECRET HARBOUR PTY LTD & ORS LAZENBY & ANOR v SECRET HARBOUR PTY LTD & ORS BUNCE & ANOR v SECRET HARBOUR PTY LTD & ORS G. BOWMAN & ANOR v SECRET HARBOUR PTY LTD & ORS MARTIN & ANOR v SECRET HARBOUR PTY LTD & ORS ASHRAT v SECRET HARBOUR PTY LTD & ORS

[2010] FMCA 249

PRACTICE AND PROCEDURE – Default in compliance with previous orders – anticipated filing of new cross-claim. PRACTICE AND PROCEDURE – Application to adjourn mediation – factors for consideration. COSTS – Indemnity costs.

Genovese v BGC Construction Pty Ltd [2007] FMCA 601

First Applicant:

KELVIN CLIVE PEARSON

Second Applicant:

SHELLEY ANNE PEARSON

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 85 of 2009

Applicant:

MATTHEW JAMES SMITH

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 86 of 2009

First Applicant:

PAUL VANCE GULLAN

Second Applicant:

HEIDI DAMGAARD GULLAN

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 87 of 2009

First Applicant:

WILLIAM NEIL BLEZARD

Second Applicant:

JULIE FRANCES BLEZARD

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 88 of 2009

First Applicant:

STEPHEN ROBERT BOWMAN

Second Applicant:

MICHAELA POTTS

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 89 of 2009

First Applicant:

JAMES EDWARD AIKMAN

Second Applicant:

SUSAN RUTH AIKMAN

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 90 of 2009

First Applicant:

GLEN ANDREW LAZENBY

Second Applicant:

JENNIFER DIANE LAZENBY

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 91 of 2009

First Applicant:

CHRISTOPHER EDWARD BUNCE

Second Applicant:

WENDY JEAN BUNCE

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 92 of 2009

First Applicant:

GARY DAVID BOWMAN

Second Applicant:

JULIE ANN SHAKESPEARE

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 93 of 2009

First Applicant:

DANIEL TERENCE MARTIN

Second Applicant:

HELLEN FAITH MARTIN

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 130 of 2009

Applicant:

MARIAM ASHRAT

First Respondent:

SECRET HARBOUR PTY LTD

Second Respondent:

SATTERLEY PROPERTY GROUP PTY LTD

Third Respondent:

ANNE BROWN

File Number:

PEG 174 of 2009

Judgment of:

Lucev FM

Hearing date:

9 April 2010

Date of Last Submission:

9 April 2010

Delivered at:

Perth

Delivered on:

9 April 2010

REPRESENTATION

Counsel for the Applicants:

Mr J Hammond

Solicitors for the Applicants:

Hammond Legal

Counsel for the First Respondent:

Mr N Gentilli

Solicitors for the First Respondent:

Jackson McDonald

Counsel for the Second and Third Respondents:

Mr J Wyatt

Solicitors for the Second and Third Respondents:

Sparke Helmore

ORDERS

(1) Order 1 made on 19 February 2010 be discharged.
(2) The first respondent have leave to file and serve:

• (a) any Cross-Claim and affidavits in support thereof;
• (b) any further affidavits on which they intend to rely in support of their Response; and
• (c) a written outline of contentions of fact and law in relation to their Response and any Cross-Claim,

on or before 7 May 2010, failing which the applicants may apply for default judgment.

(3) The second and third respondents’ application for adjournment of the mediation presently listed for 12 April 2010 be dismissed.
(4) The first respondent pay the applicants’ costs of the directions hearing on 19 February 2010 fixed in the sum of $500.
(5) The first respondent pay the costs of today fixed in the sum of $880 payable to the applicants and $880 payable to the second and third respondents.
(6) The costs in orders 4 and 5 be payable by 23 April 2010.
(7) In the event that the matter is not resolved beforehand by mediation that there be a further directions hearing at 11:00am on 24 May 2010.

AND THE COURT NOTES that the costs in orders 4 and 5 are the total costs in respect of all eleven applications.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH

PEG 85 of 2009

KELVIN CLIVE PEARSON

First Applicant

SHELLEY ANNE PEARSON

Second Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

PEG 86 of 2009

MATTHEW JAMES SMITH

Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

PEG 87 of 2009

PAUL VANCE GULLAN

First Applicant

HEIDI DAMGAARD GULLAN

Second Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

PEG 88 of 2009

WILLIAM NEIL BLEZARD

First Applicant

JULIE FRANCES BLEZARD

Second Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

PEG 89 of 2009

STEPHEN ROBERT BOWMAN

First Applicant

MICHAELA POTTS

Second Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

PEG 90 of 2009

JAMES EDWARD AIKMAN

First Applicant

SUSAN RUTH AIKMAN

Second Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

PEG 91 of 2009

GLEN ANDREW LAZENBY

First Applicant

JENNIFER DIANE LAZENBY

Second Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

PEG 92 of 2009

CHRISTOPHER EDWARD BUNCE

First Applicant

WENDY JEAN BUNCE

Second Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

PEG 93 of 2009

GARY DAVID BOWMAN

First Applicant

JULIE ANN SHAKESPEARE

Second Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

PEG 130 of 2009

DANIEL TERENCE MARTIN

First Applicant

HELLEN FAITH MARTIN

Second Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

PEG 174 of 2009

MARIAM ASHRAT

Applicant

And

SECRET HARBOUR PTY LTD

First Respondent

SATTERLEY PROPERTY GROUP PTY LTD

Second Respondent

ANNE BROWN

Third Respondent

REASONS FOR JUDGMENT

(Ex tempore reasons edited from the transcript)

1. This is an application by the second and third respondents for the adjournment of mediation which is due to occur in this matter on Monday, 12 April 2010 and associated cost issues.
2. It is appropriate to say something about the history of the matter. The applications were made on 15 June 2009. A response was filed on behalf of all three respondents on 1 July 2009 by solicitors then acting for all three respondents. The solicitors were Jackson McDonald, who continue now to act for the first respondent.
3. There was a first directions hearing on 24 July 2009, following which the applicants filed and served an amended application on 23 September 2009, their contentions of fact and law on 23 September 2009, and a further affidavit on 8 October 2009.
4. There was a second directions hearing on 23 October 2009, following which expert evidence from a valuer by way of affidavit was filed on 6 November 2009 on behalf of the applicants. On 23 October 2009, the Court made, relevantly, orders that the respondents file and serve:
   1. any further affidavits on which they intend to rely; and
   2. a written outline of contentions of fact and law by 4 pm on 18 December 2009;

and that the matter be adjourned for further directions at 9:45 am on 1 February 2010.

5. On 20 November 2009, the second and third respondents filed a notice of change of lawyer.
6. There was a consent order filed on 17 December 2009, and orders (1) and (2) of that consent order had the effect of extending time for the respondents to file their affidavits and contentions of fact and law to 1 February 2010, and also vacated and re-listed a directions hearing from 1 February 2010 to 19 February 2010.
7. Albeit late, the second and third respondents filed and served their affidavits and contentions of fact and law on 16 February 2010, three days before the third directions hearing on 19 February 2010, which had been listed as a consequence of the consent order. The first respondent did not file or serve any affidavits or contentions of fact and law in compliance with the consent order of 17 December 2009.
8. The third directions hearing took place on 19 February 2010, and at that directions hearing, there were orders which had the following effect:
   1. to again extend the time for filing and service by the respondents, but effectively this time only by the first respondent, of affidavits and contentions of fact and law to 12 March 2010;
   2. to refer the matter for mediation, which was to occur on or before 28 May 2010; and
   100. to list a further directions hearing in the matter for 4 June 2010.
9. Today’s directions hearing was requested by the second and third respondents earlier this week. It occurs against a background which, from what the Court has recited, and the affidavit of Mr Graham[1] which has been tendered, appears to be as follows:
   1. that the first respondent has failed to comply with orders to file and serve affidavits and contentions of fact and law by 12 March 2010. That has occurred despite three extensions of time in which to do so, and the first respondent is now in default of orders of the Court for a second time, and at this stage, by a period a weekend short of a month in respect of the last orders; and
   2. in circumstances where more than six months has passed since the filing of the amended application and contentions of fact and law by the applicants, and more than six weeks has passed since the filing of affidavits and contentions of fact and law on behalf of the second and third respondents.
10. It also occurs in circumstances where the first respondent has intimated an intention to file a cross-claim against the second and third respondents.
11. The first respondent, despite being in default twice of orders of this Court, has not concerned itself sufficiently with the matter to file any affidavit in the Court, or otherwise prior to today, endeavouring to explain the reason for its non-compliance. In that regard, it is seriously in default to the point where the issue of default judgment against the first respondent may well arise if the default is ongoing. Further, the intimation that there may be a cross-claim, which appears to have been made, or at least alluded to, appears to have been alluded to some months ago, if one looks at the content of the letter of 7 April 2010 from Spark Helmore to Jackson McDonald.[2]
12. It is a matter in respect of which, at this stage, no cross-claim has been filed and served and it also gives rise, as has been said in submissions and is referred to in that correspondence, to the possibility of the first respondent’s solicitors having a conflict. It is a possibility, and no more than that at this stage, on the papers. It is a possibility that there is a conflict by reason of the first respondent’s solicitors having previously acted for the second and third respondents.
13. In the circumstances the Court was minded to make orders that the first respondent have a further week to file and serve affidavits and contentions of fact and law in support of the response, and have the same period of time in which to file and serve any cross-claim and any affidavits in support of that and contentions of fact and law; that is, by 16 April 2010. That, when put to Counsel for the first respondent, met with a response which indicated that that was simply not possible in the circumstances.
14. As the Court has already indicated there has been no prior explanation by the first respondent as to the delay and, indeed, on the last occasion (on which Mr Louden appeared as Counsel), every indication was given to the Court that the first respondents would act without delay.
15. There has been some explanation given in relation to negotiations between the first, second and third respondents, as to whether or not the second and third respondents should also act for the first respondents, but as the Court has indicated that is not a matter which prior to Mr Graham’s Affidavit on the part of the second and third respondents, has been put in any way before the Court by the first respondent. It is self-evident, with respect, that the first respondent has simply failed to comply with the orders of the Court to the point where, should it do so again, the Court will be prepared to entertain an application for a default judgment against it. That said, and nothing having been said by Counsel for the second and third respondents or Counsel for the applicants as to the issue of time, the Court will afford the first respondent a further week so that it will have two weeks in which to get in order the affidavits and contentions of fact and law in support of the response, any application for a cross-claim and the affidavits of contentions of fact and law in support of any cross-claim.
16. The Court now turns to the question of the adjournment of the mediation. In the circumstances the issue is not without difficulty. Understandably, the second and third respondents say that their position is that they cannot go into a mediation with a threatened cross-claim which has not been formalised and which is not before the Court, not having been filed and served. However, the applicants, of whom there are eleven, would appear to have been put in a position where they are prepared for the mediation, which is due to proceed at 8.30 am next Monday, before Registrar Eaton, with all of the attendant pre-requirements of the mediation apparently having been met.
17. Were the mediation to now be adjourned the Court can envisage that the applicants would be severely disadvantaged. Given the nature of the mediation process, it may be that were the mediation to proceed on Monday the position of the respondents, at least vis-à-vis the applicants, might be clarified in some way, shape or form, whether it be that the applicants’ claims are denied and not settled and, therefore, proceed to trial, subject to any cross-claim and any issue of conflict. Alternatively there may be some progress made in relation to a potential settlement, as between the applicant and the first, second and third respondents. The issue of the cross-claim need not necessarily be discussed at mediation on Monday. That is a matter, obviously, for the Registrar and the parties, but there will be no reason why any cross-claim could not be the subject also of an adjourned mediation. In those circumstances the Court is of the view that the mediation ought to proceed on Monday, and in that respect at least, the application for adjournment of the mediation fails.
18. The circumstances in which the application for adjournment of the mediation has failed are such that they have been brought about by circumstances where the first respondent is in default, not for the first time, and significantly in default, and in circumstances where a cross-claim is threatened against the second and third respondents about which, at least formally, there has been nothing filed and served at this stage. The Court, therefore, is of the view that the second and third respondents’ position is entirely understandable, and the Court considers that it is entirely proper that the application was brought. In those circumstances the Court considers that it is appropriate that the first respondent bear the costs of today.
19. As Mr Hammond for the applicants indicated, the question of the costs of the last occasion, that is, 19 February 2010, were reserved as between the applicant and the first respondent, and given that the first respondent continues to be in default notwithstanding the orders made on that day, the Court is of the view that the first respondent also ought to bear the costs, as between the applicant and the first respondent, of the directions hearing on 19 February 2010.
20. In the circumstances of this matter the costs of today and of 19 February are sought on an indemnity basis. The Court has regard for its judgment in Genovese v BGC Construction Pty Ltd,[3] in which it dealt with the relevant authorities concerning indemnity costs, including the fact that indemnity costs may be payable where a party is in default in relation to orders of the Court, which have caused the parties and the Court to incur further costs and inconvenience. That is certainly the case with respect to the costs of 19 February 2010 which arise by reason of the first respondent’s default. The costs of today arguably also arise by reason of the default of the first respondent in relation to the provision of its affidavits and contentions of fact and law, and the indication that a cross-claim would be filed and no cross-claim having been filed.
21. Notwithstanding that there has been some indication of the possibility of a cross-claim for some months, the Court is of the view that the applicants’ costs of the directions hearing on 19 February 2010 ought to be paid on an indemnity basis by the first respondent.
22. As to the costs of today, given all the circumstances, the explanations which have been given, and the orders that the Court otherwise proposes to make, the Court is of the view that the costs of today ought not be paid on an indemnity basis, but that the first respondent should, nevertheless, pay the costs of today of both the applicants and the second and third respondents, because it is essentially the default and non-compliance, and the position adopted by the first respondent, which has resulted in the matter being brought before the Court today in the circumstances that the Court has outlined.

I certify that the preceding 22Error! No text of specified style in document.!Syntax Error, !Error! No text of specified style in document.Error! No text of specified style in document.!Syntax Error, !twenty-twotwenty-two (22) paragraphs are a true copy of the reasons for judgment of Lucev FM

Associate: S. Gough

Date: 14 April 2010

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[1] Affidavit of Paul William Graham sworn 8 April 2010 (“Mr Graham’s Affidavit”).
[2] Mr Graham’s Affidavit, Annexures PWG 7-PWG 10.
[3] [2007] FMCA 601.