Marshall v Soedarjanto

REASONS FOR JUDGMENT LEE J: 1 This is an application for leave to appeal from an interlocutory judgment of the Federal Magistrates Court made on 7 February 2003 which dismissed the appellant's motion for security for costs in a matter in that court in which the appellant was one of four respondents and the respondent the applicant. 2 Section 24(1A) of the Federal Court of Australia Act 1976 (Cth) ("the Act") provides that an appeal shall not be brought to this Court from an interlocutory judgment of the Federal Magistrates Court unless the Court or a Judge gives leave to appeal. As French J stated in Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564 at [42] in respect of appeals from interlocutory orders: 'The time and resources of the Court and the parties should not lightly be taken up with appeals about decisions in connection with proceedings which do not finally determine the rights of the parties.' 3 Pursuant to s 25(1A) of the Act the Chief Justice has directed that the appellate jurisdiction of the Court in this matter, and, therefore, determination of the application for leave to appeal, be exercised by a single Judge of the Court. 4 In May 2002 the respondent, a citizen and resident of Indonesia with no assets in Australia, commenced a proceeding in this Court seeking orders under s 82 of the Trade Practices Act 1974 (Cth) ("the TPA") or, in the alternative, pursuant to s 1005 of the Corporations Law, against the appellant and three other respondents. The respondent had entered into a contract relating to the agistment of ostriches with a company called Ostrich Meat and Marketing Co (Australia) Ltd ("the company"). The appellant and the co-respondents were said to be directors of the company. 5 The respondent claims that he was induced to enter the contract by conduct of the company which, he says, constituted misleading or deceptive conduct in contravention of the TPA andtheCorporations Law. The respondent commenced proceedings against the appellant and the co-respondents on the basis that they had been involved in the contraventions committed by the company. The respondent raised similar causes of action and pleaded similar facts to those relied upon by other applicants who, severally, had commenced earlier proceedings in this Court against the appellant and the co-respondents. 6 On 20 December 2001 the appellant and two co-respondents filed motions seeking orders that security for costs be provided by the applicants in two of those earlier proceedings. The motions were heard by Carr J on 21 May 2002 and his Honour made the following orders in each matter: 'The applicant shall within 21 days of this order pay into Court the sum of $20,000 as security for the costs of the first, third and fourth respondents to the point of time when the parties have given discovery and have had inspection of their respective documents. By way of clarification, that amount is intended to secure costs of other interlocutory steps to that point, including a portion of preparation of the defences and getting up case for hearing. In the event that the applicant does not make payment in accordance with paragraph 1 of this order all further proceedings (other than any orders which may be made by the Court of its own motion) be stayed. The first, third and fourth respondents have liberty to apply for further security during the course of the proceedings and this motion is stood over for that purpose.' 7 In his reasons for decision his Honour observed that other applications in similar terms were on foot in the Court and that the proceedings had not been consolidated. The proceeding initiated by the respondent in this Court was not commenced until after his Honour had made the orders referred to above. 8 On 14 August 2002 his Honour made an order that all of the proceedings in this Court involving the company and its directors be transferred to the Federal Magistrates Court. 9 On 20 September 2002 the appellant filed a notice of motion in the Federal Magistrates Court seeking an order that the applicant in each transferred proceeding provide security for costs. It appears that the heading of the motion was a composite heading, in that it recited the heading of each proceeding transferred to the Federal Magistrates Court although the matters had not been consolidated by any order of that court. Perhaps it was not surprising that a notice of motion in those terms became a source of confusion. On 7 February 2003, the learned Magistrate dismissed the appellant's motion in each matter. It seems that his Honour's orders were extracted as a single order in which each proceeding was again recited in a composite heading. On 28 February 2003 the appellant sought leave to appeal from his Honour's interlocutory order. 10 The application for leave to appeal was made in the one notice of motion as if all proceedings in the Federal Magistrates Court had been consolidated. Upon the defect in that procedure being pointed out by the Court, counsel for the appellant elected to have the application for leave confined to the proceeding in the Federal Magistrates Court in which the respondent was the applicant. Counsel for the respondent raised no objection to that course. 11 The principles for the grant of leave in those matters are well known, namely, that the decision be attached with sufficient doubt to warrant reconsideration by the Court and that there be the risk that substantial injustice may be suffered by the appellant if the decision was made in error and remained uncorrected. (See: Bomanite Pty Ltd v Slatex Corp Australia Pty Ltd (1991) 32 FCR 379; Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397.) 12 Although the order made by his Honour did not prevent the appellant from making another application for security for costs and, therefore, did not determine the appellant's rights in a substantive respect, the argument sought to be put by the appellant on appeal was that the order dismissing the application had been affected by a fundamental error of law with the result that the application had not been duly considered and determined at all making it appropriate for leave to appeal to be granted. Being satisfied that grounds for the grant of leave had been established, leave to appeal was granted and the appeal heard instanter. 13 The appellant submitted that the learned Magistrate had relied on a fact that did not exist, namely, that on 21 May 2002 Carr J had made an order that the respondent provide security for costs in the proceeding transferred to the Federal Magistrates Court, being proceeding WZ 160/02 in that court. 14 The learned Magistrate described the applications transferred to the Federal Magistrates Court by this Court as "the transferred applications" and then said: "In the transferred applications an application was made to the Federal Court by way of notice of motion by the [appellant and others] seeking orders for security for costs. Orders were made by the Federal Court on 21 May 2002" Later in his reasons, his Honour said: '…at this stage I am satisfied that it would be inappropriate to make a further order for security over and above the order reasonably made by Carr J'. 15 I am satisfied that the learned Magistrate mistakenly believed that an order for security for costs had been made in matter WZ160/02 and that his Honour erred by determining that the application for security for costs in the matter should be dismissed for that reason. Although determination of the application depended on the exercise of a discretion by his Honour the discretion as exercised by his Honour miscarried entirely due to a fundamental mistake of fact. (See: House v R (1936) 55 CLR 499.) 16 It follows that the appellant's application for security costs was not determined on its merits, or at all. The appeal must be allowed, the decision made on the appellant's motion for