Foody v Horewood

REASONS FOR JUDGMENT 1 Andrew Foody's application against Timothy Horewood and others for orders under s 260 and s 461 of the Corporations Law was due to be heard shortly after the High Court handed down its decision in Re Wakim; Ex parte McNally (1999) 163 ALR 270. In consequence of that decision it became clear that this Court did not have jurisdiction to entertain the application. Accordingly, when the matter was called on I ordered the proceeding be adjourned to a day to be fixed to enable a transfer of the application to the Supreme Court of Victoria in accordance with legislation that the former Attorney-General for the State of Victoria had announced would be passed. 2 Not surprisingly, each party has incurred considerable costs in preparing the case for trial. Those costs, or at least a good proportion of them, will be wasted notwithstanding that the trial will take place in the Supreme Court. 3 To alleviate the burden of wasted costs the parties have joined in an application for the grant to each of them of a certificate under s 10 of the Federal Proceedings (Costs) Act 1981 (Cth). That section relevantly provides: "(2) Subject to this Act, where any proceedings in a court to which this section applies are rendered abortive by reason that the person, or a person before whom the proceedings are being conducted dies, resigns, or is removed or dismissed from, his or her office, suffers a protracted illness or otherwise becomes unable to continue with, or to give judgment in, the proceedings, the court may, on the application of a party to the proceedings, grant to that party a costs certificate in respect of the proceedings. (3) Subject to this Act, where: (a) the hearing of any proceedings in a court to which this section applies is discontinued and a new hearing is ordered; and (b) the discontinuance and new hearing are not attributable to the neglect, default or improper act of any party to the proceedings; the court may, on the application of a party to the proceedings, grant to that party a costs certificate in respect of the proceedings. (4) The certificate that may be granted under subsection (2) or (3) by a court to a party to proceedings that have been rendered abortive or the hearing of which has been discontinued, as the case may be, is a certificate stating that, in the opinion of the court, it would be appropriate for the Attorney-General to authorize a payment under this Act to that party in respect of such part as the Attorney-General considers appropriate of any costs incurred by that party in relation to those proceedings." 4 The grant of a certificate under the section creates an entitlement to costs from the Commonwealth out of funds made available by Parliament for the purpose of the Federal Proceedings (Costs) Act. A certificate may be granted under s 10 where it would be appropriate for the Attorney-General to authorise a payment under the Act upon a judge finding that a condition exists for the grant of a certificate. However, if it is not possible to make findings upon which the grant of a certificate depends, no party can receive costs under the section. 5 The parties argue that the proceeding has been "rendered abortive" within the meaning of s 10(2), because I and every other judge of the Federal Court are "unable to continue with, or give judgment in" the proceeding. 6 There are difficulties with the argument. Quite apart from the general question whether s 10 is designed to deal with a situation such as has arisen here, one problem that arises is whether it can be said that the proceeding has been "rendered abortive". Another problem is whether it is accurate to state that I am unable to continue with or give judgment in the proceeding. 7 Prima facie, a proceeding is only "rendered abortive" or is "discontinued" within the meaning of s 10 if, for a reason that is usually beyond the control of the parties, the proceeding is terminated before judgment. The proceeding must be rendered abortive or discontinued in consequence of the occurrence or non-occurrence, as the case requires, of one of the events specified in subsections (2) or (3). The section assumes that in the absence of such circumstances the trial would have continued uninterrupted. In other words the assumption that underlies subsections (2) and (3) is that an aborted or discontinued proceeding is one which is temporarily interrupted and when the cause for the interruption has been removed, the proceeding can be taken to judgment. Obviously, this is not such a case. 8 Further, it does not seem to me that this is a proceeding which I am unable to continue or in which I am unable to give judgment within the meaning of s 10(2). The consequence of Re Wakim is that the proceeding can not be considered on the merits. Nevertheless it is a proceeding that must be dealt with even if only to make an order that it be stayed or dismissed: compare In re Crittendon; Ex parte The Law Institute of Victoria [1958] VR 101. In addition an order for the costs of the proceeding may be made: s 43(1) of the Federal Court of Australia Act 1976 (Cth); Khatri v Price [1999] FCA 1289. Moreover, if Mr Foody wished to contend that the facts upon which his claim is based also gave rise to a federal matter within the jurisdiction of this Court so that the non-federal matters could be heard together with the federal matter, I would have been obliged to consider that argument and rule upon it. 9 There is yet another difficulty. It does not seem to me that s 10 is directed to a case where a court is required to rule that it lacks jurisdiction to entertain a suit. That is to say, s 10 is directed to a situation where the trial judge is for one reason or another unable to deal with or continue hearing a case that is within the jurisdiction of the court to adjudicate. It would require a strained construction of the section to have it apply to a case where a party has commenced an action that is beyond jurisdiction. In such a case the position of the respondent is protected, because the court has the ability to make a costs order against the applicant. The applicant is not entitled to protection. 10 The unfortunate result is that I cannot grant the certificates that the parties seek. They will be required to bear their own costs thrown away.