Du Bray v ACW

1. The appeal be dismissed.
2. The appellant pay the respondent's costs of and in connection with the appeal, as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT: 1 By an interlocutory application, filed on 30 March 2021, the respondent seeks orders that the appellant's appeal be dismissed pursuant to r 1.32 of the Federal Court Rules 2011 (Cth) (the Rules), and for costs. 2 Rule 1.32 provides that: The Court may make any order that the Court considers appropriate in the interests of justice. 3 The background to the respondent's application may be briefly stated. 4 Justice Wigney made an order against the appellant sequestrating his estate in ACW v Du Bray (No 2) [2020] FCA 994. 5 The appellant appealed against the sequestration order. 6 The respondent filed an interlocutory application seeking security for the costs of the appeal. 7 On 24 November 2020, for reasons given in Du Bray v ACW [2020] FCA 1680, Flick J made these orders (amongst others): 1. On or before 8 December 2020 the Appellant is to provide security for the costs of the appeal in the sum of $50,000. 2. In the event of non-compliance with Order 1, the appeal is stayed. 8 The respondent also sought an order that, if the appellant failed to provide the security as ordered, the appeal be dismissed. In making the orders, Flick J said in his reasons at [48]: In the absence of security being provided, the appeal should be stayed - but not dismissed. Although the Interlocutory Application sought an order that the appeal be dismissed in the event of an order for security not being provided, the power of the Court to make such an order was not addressed during the course of submissions. Reason for reservation arises by reason of the following observations of Beaumont J in Endormer Pty Ltd v Australian Guarantee Corporation Ltd [2001] FCA 510, made in a context where his Honour set out the terms of s 56(1) of the Federal Court Act and continued: [4] Taken literally, this provision empowers a single Judge of the Court (even though, as in this case, that Judge will not be a member of the Full Court on the appeal) to order security for costs of the appeal. [5] I made such an order in a case which bears some similarity to the present case in Cummings v Lewis, unreported, 4 December 1991. The order in that case was in the usual form, that is to say, that unless, before a certain date, security for costs in the amount specified was provided, the proceedings on the appeal be stayed. Such an order is, in my view, interlocutory both as a matter of form and substance. In other words, in my view, a single Judge cannot exercise the appellant [sic] jurisdiction of the Court to dismiss an appeal in the event that security were not provided; or even to order a permanent stay of proceedings on the appeal. [6] It must follow, in my opinion, that the jurisdiction of the Court should more properly be exercised by the Full Court assigned to hear the appeal itself in a case such as the present where there is a substantial contest on the question of whether or not security should be provided, and where the appellants invite a single Judge of the Court who will not be participating in the appeal itself, to embark upon and make findings about questions that will be agitated on appeal (such as the history of the dealings between the parties and considerations of the kind considered by Brennan J in Lucas v Yorke (1983) 50 ALR 228). Although both the Federal Court Act and the Federal Court Rules have undergone considerable amendment since his Honour made those observations, the power of a single Judge to make an order dismissing an appeal was not a subject addressed in submissions. It is a decision which has not been departed from in more recent decisions of this Court: Fard v Secretary, Department of Immigration and Border Protection [2016] FCA 1224 at [60] to [62] per Collier J. In those circumstances, a cautious approach should be pursued. It is for that reason that it has been concluded that the appeal should be stayed in the event that security is not provided. 9 Section 56 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act), which has not been materially amended since Endormer Pty Ltd (In Liquidation) v Australian Guarantee Corporation Ltd [2001] FCA 510, provides that: (1) The Court or a Judge may order an applicant in a proceeding in the Court, or an appellant in an appeal under Division 2 of Part III, to give security for the payment of costs that may be awarded against him or her. (2) The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs. (3) The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given. (4) If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed. … 10 The appellant has not provided the security in accordance with order 1. As a result, the appeal is stayed. By the interlocutory application filed on 30 March 2021, the respondent seeks an order that the appeal be dismissed given that the appellant has not complied with order 1. The respondent also requests that a Full Court determine the interlocutory application and make the orders sought given the observations of Flick J in [48] of his reasons. 11 The parties consented to the interlocutory application being determined on the papers and without an oral hearing. 12 An order dismissing the appeal should be made. As explained below, the source of the power to do so is s 25(2B)(bb)(i) of the FCA Act. 13 The appellant has not complied with order 1. The appellant's former lawyer filed a notice of ceasing to act for the appellant on 18 December 2020. The appellant has not sought to vary order 1, whether by way of seeking an extension of time or otherwise. There is no evidence suggesting that the appellant will or can satisfy order 1. 14 There is evidence that the undetermined status of the appeal is causing concerns for the trustee of the appellant's bankrupt estate. The trustee stated in a letter dated 5 February 2021 that: The fact that the appeal proceedings have been stayed rather than dismissed has created uncertainty as to the status of the bankruptcy estate and is impeding my ability to act as Trustee and progress the administration of the Bankrupt's estate. 15 In the same letter, the trustee provided examples of these difficulties. 16 Further, there is evidence that the undetermined status of the appeal is affecting the capacity of the Australian Financial Security Authority to decide whether to take enforcement action against the appellant for his failure to provide the Official Receiver with a statement of his affairs in response to a notice under s 77CA of the Bankruptcy Act 1966 (Cth). 17 The respondent also submitted that it was relevant that, in assessing whether a stay of the sequestration order should be granted, Stewart J observed in Du Bray v ACW [2020] FCA 1142 at [25] that the "prospects of success on appeal are not good". We do not give weight to this consideration. In circumstances where there is no evidence suggesting that the appellant will or can satisfy order 1, and the undetermined status of the appeal is undermining the effective and timely resolution of issues relating to the appellant's bankruptcy, it is not necessary to reach any view about the prospects of the appeal in order to conclude that it is in the interests of justice that the appeal be dismissed. 18 The appellant's written submissions do not address the relevant issue. Those submissions concern the sequestration order and other litigation between the appellant and the respondent, in particular in New Zealand. They do not address whether the appeal should, or should not, be dismissed on account of the appellant's failure to comply with order 1 requiring the provision of security for costs of the appeal. 19 In our view the concerns which have been expressed in first instance decisions (Fard v Secretary, Department of Immigration and Border Protection [2016] FCA 1224 and Du Bray v ACW [2020] FCA 1680) about the power of a single judge to make an order dismissing an appeal if security that has been ordered is not provided should no longer apply. The concerns are based on the observations in Endormer. At the time Endormer was decided, however, s 25(2B) of the FCA Act was in a different form. It did not include ss 25(2B)(ba), (bb)(i), or (aa), which, respectively, were inserted into the FCA Act by the Jurisdiction of Courts Legislation Amendment Act 2002 (Cth), Law and Justice Legislation Amendment Act 2004 (Cth), and the Migration Litigation Reform Act 2005 (Cth). 20 Section 25(2B) of the FCA Act, since 2005, has included these provisions as follows: 25 … (2B) A single Judge (sitting in Chambers or in open court) or a Full Court may: … (aa) give summary judgment; or … (ba) make an order that an appeal to the Court be dismissed for want of prosecution; or (bb) make an order that an appeal to the Court be dismissed for: (i) failure to comply with a direction of the Court; or … 21 It is apparent from the terms of s 25(2B), and the equivalent provisions for the original jurisdiction of the Court in s 20 of the FCA Act, that the making of an order for security is a direction of the Court. In short, all directions are orders, but not all orders are directions. 22 Directions are orders made by a court for the future conduct of proceedings. They operate as orders of the court and must be obeyed for that reason. The term "orders" describes all directions for the future conduct of proceedings as well as orders that constitute dispositive relief as to the claims in the proceedings whether on an interlocutory or final basis. An order for security for costs is an order by way of direction. It is not dispositive of any substantive aspect of the claim. It is what is sometimes described as procedural in character. It ensures that the proceedings are conducted in a manner that is just and fair. It does not resolve any substantive matter in issue. 23 If, for example, s 25(2B)(bb)(i) had been part of s 25(2B) of the FCA Act when Endormer was decided, it is apparent that Beaumont J would not have expressed the views he did. It would have been clear from the terms of s 56 and s 25(2B)(bb)(i) of the FCA Act that a single judge is able to exercise the appellate jurisdiction of the Court to dismiss an appeal for failure to provide security as required by an order of the Court. Indeed, by s 25(2BB) of the FCA Act, an application for an exercise of power in s 25(2B) must be heard and determined by a single judge unless: (a) a Judge directs that the application be heard and determined by a Full Court, or (b) the application is made in a proceeding that has already been assigned to a Full Court and the Full Court considers it is appropriate for it to hear and determine the application. The provision for these possibilities ensures that, in an appropriate case, orders that are not dispositive may be heard and determined by a Full Court. As a general guide, and without being exhaustive, orders that are novel in the sense that they do not yet have a recognised character as usual procedural orders or orders of a kind about which there is a divergence of views as to whether they are appropriately made by a single judge may be in that category. By reason only of the difference in views expressed by single judges, the present case, for that reason, is an example. 24 This effect of s 25(2B) of the FCA Act was correctly applied by single judges in Mead v Mead (No 2) [2010] FCA 432, Nyoni v Pharmacy Board of Australia (No 2) [2019] FCA 225, and Lafferty v Waterton (No 2) [2020] FCA 1673. 25 In the present case, on 9 June 2021, the Chief Justice made a direction under s 25(2BB)(a) of the FCA Act that the respondent's interlocutory application be heard and determined by a Full Court. 26 It appears that the attention of the judges in Fard and Du Bray v ACW [2020] FCA 1680 was not drawn to the amendments to s 25(2B) of the FCA Act made after Endormer, which make the reasoning in that matter inapplicable. For these reasons, to the extent that Fard and Du Bray v ACW [2020] FCA 1680 express doubt about the capacity of a single judge to make an order that an appeal be dismissed for failure to comply with a direction of the Court as provided for in s 25(2B)(bb)(i) of the FCA Act, or otherwise (which also includes any application for summary dismissal in s 25(2B)(aa) and any application that an appeal be dismissed for want of prosecution), they are incorrect and should not be followed. Rather, a single judge may and must hear and determine those applications (and the other applications specified in s 25(2B)) subject only to the contrary operation of s 25(2BB). 27 For the same reasons, in making an order for the provision of security for the costs of an appeal under s 56 of the FCA Act and r 36.09 of the Rules, a single judge may also order, as appropriate, both that the proceeding be stayed until security is given and that if the appellant fails to comply with the order to provide security within the time specified in the order, the appeal be stayed or dismissed. 28 For these reasons, orders should be made dismissing the appeal, with costs. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Jagot, Yates and Colvin.