Ferella v Official Trustee In Bankruptcy

Federal Court of Australia|2014-05-22|Before: Gleeson J

Introduction 1 On 2 December 2013 a single judge of this Court refused an application by the present applicants to vacate the final hearing listed to commence on that date: Ferella v Official Trustee in Bankruptcy [2013] FCA 1319. The applicants now apply for an extension of time in which to seek leave to appeal from the primary judge's decision and, if granted, leave to appeal from that decision. 2 A decision to refuse an adjournment is interlocutory: Marketing Advisory Services v Football Tasmania Ltd (2002) 42 ACSR 128; [2002] FCAFC 165 at [27]. Leave to appeal from the primary judge's decision is therefore required by s 24(1A) of the Federal Court of Australia Act 1976 (Cth). 3 By r 35.13 of the Federal Court Rules 2011 (Cth) ("the Rules") the time for filing an application for leave to appeal expired on 16 December 2013. The applicants lodged an application for an extension of time to seek leave to appeal pursuant to r 35.14 on 27 December 2013. 4 The applicants' draft notice of appeal sets out the following two grounds of appeal in relation to his Honour's refusal "to order an adjournment": a. His Honour failed to have regard or proper regard to the applicants no longer had legal representatives to advance the proceedings to hearing (sic); and b. His Honour failed to have regard or proper regard to procedural fairness.

Circumstances leading to application to vacate final hearing 5 It appears that a Mr Angelo Ferella had been actively involved in the conduct of the proceedings for the applicants. The first applicant is his mother. The second applicant is a company, the sole director of which is Mr Ferella's sister. Mr Ferella gave evidence in support of the application to vacate the final hearing. 6 The primary judge made the following undisputed findings: (a) In April 2013, the matter was listed for a final hearing commencing on 9 December 2013, with an estimated duration of four days. (b) In August 2013, the hearing date was vacated upon the application of the applicants. (c) In September 2013, the matter was re-listed for a final hearing commencing on 2 December 2013. That listing was obtained by Mr Svelha of counsel who was then briefed for the applicants. (d) Shortly before 14 November 2013, Mr Ferella had a conversation with Mr Svehla in which Mr Ferella sought to vary an instalment arrangement he had made with Mr Svehla for the payment of counsel's fees. The proposed variation was not "palatable" for counsel, who then withdrew from the case. (e) On 18 November 2013 the matter came before the primary judge for a readiness hearing. On that occasion, the primary judge was informed by Ms Margaret McCue, a solicitor then retained by the applicants, that Mr Svehla had withdrawn from the case. Ms McCue informed the Court that she would also be withdrawing from the case and sought to have the 2 December 2013 hearing vacated. The primary judge refused that application. (f) Ms McCue filed a notice of ceasing to act on 18 November 2013. (g) On 19 November 2013, Mr Ferella wrote to the Australian Financial Security Authority ("AFSA") in terms which demonstrated that he had made a decision by that date that the applicants would not participate the final hearing. The letter said: I refer to the above mentioned proceedings in the Federal Court of Australia proceedings no. NSD 405/2012 and respond as follows. On 18 November 2013 Margaret McCue of McCue & Associates appeared before his Honour Jacobson J to seek an adjournment as Counsel has withdrawn from the matter as of 14 November 2013. As of 19 November 2013 Margaret McCue has ceased to act in the proceedings. I have flagged urgently to the Associate for Jacobson J the circumstances why the adjournment is warranted and to allow the plaintiffs to engage new representation. I have made it clear to the Associate the Plaintiffs will not participate any further in the proceedings with regard to any further directions with regard to a joint tender bundle etc notwithstanding the plaintiffs have filed and served some many months ago without a Solicitor on the record and new Counsel briefed. The Plaintiffs are not in a position to now proceed the time left is inadequate for the preparation of Submissions, List of Authorities etc. The Plaintiffs will not appear on 2 December 2013 the Associate for Jacobson J has been made aware of the position, if you proceed to appear on 2 December 2013 notwithstanding you have been put on notice the plaintiffs will appeal any adverse decision and seek all costs without recourse. What you do from this point on in the proceeding is a matter for you adequate notice has been given to you so as to make your solicitor and counsel aware they need not prepare for a hearing where the plaintiffs will not appear. (h) Thereafter, Mr Ferella did not speak to any solicitor about the matter until 29 November 2013. (i) On 25 November 2013, the interlocutory application was filed together with an affidavit of Mr Ferella sworn on 25 November 2013. In that affidavit, Mr Ferrella said, amongst other things that, "[t]o instruct new solicitors and counsel to prepare for the hearing set down for 2 December 2013 [was] not possible". (j) The interlocutory application was given a return date of 2 December 2013 but the primary judge brought the return date forward to 28 November 2013 and arranged for the parties to be notified. On 28 November 2013, there was no appearance for the applicants although the primary judge was informed during the course of the hearing that Mr Ferella had acknowledged receipt of the communication from the Court that the matter was listed for 28 November. In those circumstances, the primary judge adjourned the hearing of the interlocutory application to 2 December 2013. (k) On 28 November 2013, Mr Ferella wrote a further letter to AFSA which concluded as follows: Failing acceptance of the offer solicitors will be instructed this day to appear on Monday to formerly [sic] vacate the hearing of 2 December 2013 in accordance with the interlocutory application and supporting affidavit filed and served 25 November 2013 and listed for mention on 2 December 2013 at 10.15 am notwithstanding the defendant being given substantial notice prior that the applicants will not and cannot proceed on 2 December 2013.

Application to vacate the final hearing 7 On 2 December 2013, Mr John Conti appeared as solicitor for the applicants on the interlocutory application. Mr Conti informed the Court that he was not retained for the hearing in the event that it was not vacated. Mr Ferella gave oral evidence supplementing his affidavit of 25 November 2013. Mr Ferella: (a) said that he had no criticism of Mr Svehla's actions in withdrawing from the case; (b) accepted that he had been on notice from April 2013 that the hearing was listed for December 2013; (c) agreed that he had informed his mother and his sister of the hearing date; (d) said that he had informed his mother and sister of the commercial terms on which Mr Svehla had been retained some time well in advance of the hearing; (e) accepted that he, his mother and his sister were aware of the need to pay counsel some months before the hearing; and (f) accepted that the 19 November 2013 letter to AFSA reflected what he told his mother and sister and that, by 19 November 2013, his mother and sister had decided that neither would appear on 2 December 2013 to conduct the proceeding because there was inadequate time to prepare. 8 No evidence was provided by the applicants as to the following matters: (a) why the first applicant could not swear an affidavit in support of the application (although Mr Ferella said that "[i]t would be over her head to try and do so" as she was an "elderly lady"); (b) why the director of the second applicant could not swear an affidavit in support of the application; (c) why the applicants had not been able to satisfy the apparently agreed arrangements for payments of counsel's fees; (d) the applicants' financial position and, in particular, any factors affecting the applicants' ability to pay counsel's fees; (e) when the matter may be ready for hearing, if at all; (f) the steps that the applicants proposed to take to prepare the matter for hearing, including to pay any associated costs. 9 No explanation was given as to the circumstances in which there was what Mr Ferella referred to as a "mediation" with Mr Svehla in early November 2013 to vary the arrangement for the payment of counsel's fees.

Primary judge's reasons 10 The primary judge gave the following reasons for refusing to vacate the hearing: 1. The evidence did not provide an adequate explanation as to the full circumstances in which the lawyers withdrew. His Honour inferred that the applicants were not prepared to fund the litigation. 2. The case could have been prepared on very short notice, notwithstanding Mr Ferella's evidence that this was "not possible". 3. There was no reason to believe that, if the matter were adjourned, the position would alter so that the applicants would be ready for a final hearing. 4. The principles of case management required the Court to balance the need for the expeditious conduct of litigation and the strong reluctance of courts to prevent litigants having "a proper opportunity" to present their cases. His Honour concluded that the applicants had been given a proper opportunity to present their case because they had been given eight months to prepare for the final hearing (from April to December 2013) and because there was "ample" time from Ms McCue's withdrawal from the case to approach and brief alternative counsel. 5. There was no reason to believe that a costs order would meet the respondent's prejudice as a result of vacating the hearing. The applicants, being apparently unwilling or unable to fund their own litigation, could not be expected to be in a position to meet a costs order against them resulting from the time and expense that would be wasted if the hearing were vacated. 11 Following the dismissal of the interlocutory application, the respondent applied for the proceedings to be dismissed under r 5.23(1)(b)(i) of the Rules and the proceedings were duly dismissed.

Extension of time for leave to appeal 12 The relevant considerations in deciding whether to grant an extension of time for leave to appeal are: first, the reasons for the delay and secondly, whether the application for leave to appeal has such prospects of success as not to render the extending of time an exercise in futility: Sharman License Holdings Ltd v Universal Music Aust Pty Ltd [2005] FCA 802. See also WAAD v Minister for Immigration and Multicultural Affairs [2002] FCAFC 399 at [9].

Leave to appeal 13 The principles governing the grant of leave to appeal are well established. Although each case must be considered on its merits, generally an applicant for grant of leave must establish: (a) that, in all the circumstances of the case, the decision is attended by sufficient doubt to warrant its being reconsidered by the Full Court; and (b) that substantial injustice would result if leave were refused, supposing the decision to be wrong: DÉcor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 ("DÉcor Corporation") at 398-400; [1991] FCA 655 at [2]; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564; [2000] FCA 1572, at [43]-[44] per French J (as he then was) (Beaumont and Finkelstein JJ agreeing); Samsung Electronics Co. Ltd v Apple Inc (2011) 217 FCR 238; [2011] FCAFC 156 at [26]-[30].

Application for adjournment 14 In Squire v Rogers (1979) 39 FLR 106 Deane J said (at 113-114): The question whether an application for an adjournment of a matter should be granted or refused is a matter within the discretion of the trial judge to be resolved according to the overall requirements of justice in the particular circumstances … A court of appeal will not, as a general rule, interfere with the decision of a judge at first instance on that question unless it is satisfied that the exercise of his discretion has miscarried in the sense that it had been affected by wrongful application of principle or misunderstanding or erroneous assessment of the factual material before him. This general rule is subject to any power of the particular appellate court to receive new evidence on the hearing of an appeal (see, for example, Federal Court of Australia Act 1976, s 27) and the benefit of hindsight in a case where it can be seen that serious injustice has resulted or will, in fact, result from the exercise of the discretion". See also Ali v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 41 AAR 410; [2005] FCA 1415 at [29]. 15 In Sali v SPC Ltd (1993) 116 ALR 625; [1993] HCA 47 Brennan, Deane, and McHugh JJ said (at 629): In determining whether to grant an adjournment, the judge of a busy court is entitled to consider the effect of an adjournment on court resources and the competing claims by litigants in other cases awaiting hearing in the court as well as the interests of the parties. As Deane J pointed out in Squire v Rogers this "may require knowledge of the working of the listing system of the particular court or judge and the importance in the proper working of that system of adherence to dates fixed for hearing". What might be perceived as an injustice to a party when considered only in the context of an action between parties may not be so when considered in a context which includes the claims of other litigants and the public interest in achieving the most efficient use of court resources. (Citation omitted.) 16 In Commonwealth Bank of Australia v Robson [2013] FCA 1430, after citing the above passage from Sali, Rares J stated (at [39]): Those considerations have only been reinforced by the enactment of Pt VB of the Federal Court Act, which expressly provides in s 37M(2) that considerations in the overarching purpose include the efficient disposal of the Court's overall workload and the disposal of all proceedings in a timely manner: see too Aon Risk Services Australia Limited v Australia National University [2009] HCA 27; (2009) 239 CLR 175 at 213 [97]- [98], 217-218 [113]-[114] per Gummow, Hayne, Crennan, Kiefel and Bell JJ. 17 His Honour went on to cite Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management Marketing Pty Ltd (2013) 303 ALR 199 at [51]-[57] where French CJ, Kiefel, Bell, Gageler and Keane JJ said at [51]: Speed and efficiency, in the sense of minimum delay and expense, are essential to a just resolution of proceedings. The achievement of a just but timely and cost-effective resolution of a dispute has effects not only upon the parties to the dispute but upon the court and other litigants. The decision in Aon Risk was concerned with the Court Procedures Rules 2006 (ACT) as they applied to amendments to pleadings. However, the decision confirmed as correct an approach to interlocutory proceedings which has regard to the wider objects of the administration of justice.

Applicants' submissions 18 The applicants did not take issue with the primary judge's first, third and fifth reasons for refusing to vacate the hearing. 19 As to the primary judge's second reason, the applicants maintained that it was "impossible" for them to have instructed a new solicitor and counsel by 2 December. It was also put that Mr Ferella was affected by injury in November 2013 and that this injury had impeded his ability to prepare for a final hearing. 20 As to his Honour's fourth reason, beyond the matters raised in addressing the second reason, the applicants did not identify any basis for doubting the reasonableness of his Honour's conclusion that they had indeed been given a proper opportunity to present their case. 21 No submissions were directed to the draft grounds of appeal. 22 On the subject of the injustice that would result if leave were refused, the applicants contended that the issues in the proceeding had now been resolved in the respondent's favour without a hearing. The respondent took issue with that contention, referring to s 47 of the Limitation Act 1969 (NSW) and r 39.03 of the Rules, which permits an applicant to apply for leave to claim the same relief in a new proceeding. The applicants did not make any submission concerning the effect of those provisions.

Consideration 23 The applicants were eleven days late in lodging their application for leave to appeal. I accept the explanation given by Mr Ferella for that delay. Accordingly, I would grant an extension of time if I identified any prospect that the applicants might succeed if leave to appeal were granted. 24 However, in my view, the application for leave to appeal must fail because there is nothing to suggest that the discretion of the primary judge miscarried. There is no suggestion that his Honour made any error of fact and there is no credible criticism of any of his reasons for refusing to grant the adjournment. The evidence as to Mr Ferella's injury does not cast doubt on his Honour's conclusion that the case could have been prepared for a hearing had the applicants chosen to fund the litigation. There is nothing to suggest that either of the proposed grounds of appeal has any merit, and no submissions were directed to those grounds. As the first limb of the test in DÉcor Corporation has not been satisfied, leave to appeal must be refused. 25 For the above reasons, the application for an extension of time to seek leave to appeal filed on 27 December 2013 should be dismissed with costs. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.

Federal Court Rules 2011(Cth)rr 5.23(1), 35.13, 35.14, 39.03

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