Moss v Aquisite Pty Ltd

Federal Court of Australia|2024-05-02|Before: McElwaine J, O'Callaghan J

Pursuant to rule 40.02(a) of the Federal Court Rules 2011 (Cth), the appellant pay the respondent's costs of the appeal and of the interlocutory application dated 19 April 2024 on an indemnity basis.
The assessment of the respondent's costs be determined on a lump sum basis. [Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011]

INTRODUCTION 1 By interlocutory application dated 19 April 2024, the respondent sought orders: (a) dismissing the appeal for want of prosecution or failure to comply with directions; (b) requiring the appellant to pay the respondent's costs of the appeal on an indemnity basis; and (c) fixing the costs in a lump sum to be determined, or for the assessment of costs on such other basis as the court sees fit. 2 The respondent relied on affidavits sworn by its solicitor, Oren Polichtuk, on 19 April 2024 and 30 April 2024 respectively. 3 The appellant relied on an affidavit that he affirmed on 1 May 2024. 4 I heard the application yesterday. Mr S J Maiden KC appeared with Ms L O'Rorke for the respondent. Mr B J Murphy of counsel appeared for the appellant. 5 I made each of the orders set out above, other than the order as to costs. I said I would make an order and give reasons about costs in these reasons.

The Facts 6 On 30 June 2023, McElwaine J ordered that there be judgment for the respondent against the appellant in the sum of $618,465.87. It was an insolvent trading claim. His Honour also ordered that the appellant pay to the respondent pre-judgment interest in the amount of $183,277.70 and the respondent's costs. 7 On 24 July 2023, the respondent served a bankruptcy notice on the appellant in respect of the principal and pre-judgment interest. The notice went unsatisfied. On 13 October 2023, the respondent filed a creditor's petition, which was listed for hearing on 16 November 2023. 8 In the meantime, the appellant had instituted this appeal. He first attempted to appeal on 2 June 2023, after the delivery of McElwaine J's reasons, but before the making of orders. On 25 July 2023 (the day after he was served with the bankruptcy notice), the appellant filed an "Amended Notice of Appeal". That notice was not served on the respondent until 15 November 2023, the day before the hearing of the creditor's petition. 9 Other than communicating with the respondent and the court regarding a listing date for the appeal and timetabling orders, the appellant has taken no steps to progress the appeal since then. 10 On 16 November 2023, the creditor's petition was adjourned for two weeks to allow for the filing of a notice of opposition. 11 On 30 November 2023, the creditor's petition was adjourned until 8 February 2024. It was subsequently adjourned to 14 March 2024 and later to 30 May 2024, in each case to await the outcome of the appeal against the orders of McElwaine J. 12 On 5 March 2024, the court listed the appeal for hearing on 16 May 2024, before a full court comprised of Anderson and Cheeseman JJ, and myself. 13 On 14 March 2024 the court, in response to proposed consent orders submitted by the appellant and the respondent, made timetabling orders to prepare the appeal for that hearing, including orders providing for the respondent to file and serve any notice of contention by 22 March 2024 and requiring the appellant to file and serve (among other things): (a) Part A of the appeal book within 14 days of being notified of the Registrar's approval of it; (b) an outline of submissions and chronology of relevant events by 4pm on 16 April 2024; and (c) Part C of the appeal book by 4pm on 1 May 2024. 14 On 22 March 2024, the respondent filed and served a notice of contention and asked the appellant's solicitor whether the appellant had applied to the Registrar for assistance in settling the index to Part A of the appeal book. The appellant did not respond. 15 On 4 April 2024, the court emailed the parties regarding the appeal book and other matters. 16 Between 5 April 2024 and 11 April 2024, the respondent emailed the appellant's solicitor regarding the appeal book and its index. It gave notice that it intended to apply to dismiss the appeal (with costs) if the appellant did not file and serve the appeal book, his outline of submissions and his chronology by 4pm on 16 April 2024. 17 The only response from the appellant was an email from his solicitor on 9 April 2024 stating "I will be in a position to reply by tomorrow at 1.00 pm". 18 The appellant has not: (a) filed or served Part A or Part C of the appeal book, its outline of submissions or its chronology of relevant events; and (b) submitted an index to Part A of the appeal book, or Part B of the appeal book, to the Registrar for settling. 19 Other than the very recent events referred to below, the appellant has not communicated with the respondent or with the court regarding his failure to comply with the court's orders, and has not communicated with the respondent's solicitors since the filing of this application.

power to dismiss the appeal 20 Pursuant to s 25(2B) of the Federal Court of Australia Act 1976 (Cth), a single judge has the power to order that an appeal be dismissed for (relevantly) want of prosecution (s 25(2B)(ba)) or failure to comply with a direction of the court (s 25(2B)(bb)(i)). 21 The procedure by which a respondent may apply for such an order is found in r 36.74 of the Federal Court Rules 2011 (Cth), which provides that a respondent may apply to the court for an order that an appeal be dismissed for an appellant's failure to comply with a direction of the court (r 36.74(1)(a)) or to prosecute an appeal (r 36.74(1)(d)). 22 Such an application must be served at the appellant's address for service or personally (r 36.74(2)). 23 The interlocutory application in this case was served on the appellant's solicitor on 24 April 2024. See the affidavit of Mr Polichtuk sworn 30 April 2024. 24 Similarly, r 36.11(2) provides for the procedure by which any party may apply to the court for directions in relation to the management, conduct and hearing of an appeal and, in doing so, may apply for an order dismissing an appeal for want of prosecution (r 36.11(2)(h)) or failure to comply with a direction of the court (r 36.11(2)(j)(i)), without any service requirements. 25 The interlocutory application seeks an order to dismiss the appeal pursuant to s 25(2B)(ba) and rr 36.11(2)(h), 36.11(2)(j), 36.74(1)(a) or 36.74(1)(d). 26 The respondent also sought leave, which I granted yesterday, to amend paragraph 1 of its interlocutory application permitting it also to rely on s 25(2B)(bb)(i) of the Act.

Consideration 27 The appellant has failed to prosecute his appeal at every turn. 28 In all the circumstances, in my view, the history of the appellant's non-compliance "is such as to indicate an inability or unwillingness to cooperate with the court and the other party" in having the appeal ready for hearing within an acceptable period, or at all. See Khera v Jones [2008] FCA 548 at [17]-[18] (Buchanan J), quoting Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 396 (Wilcox and Gummow JJ) as follows: The discretion conferred … is unconfined, except for the condition of non-compliance with a direction. As it is impossible to foresee all of the circumstances under which the rule might be sought to be used, it is undesirable to make any exhaustive statement of the circumstances under which the power granted by the rule will appropriately be exercised. We will not attempt to do so. But two situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to cooperate with the court and the other party or parties in having the matter ready for trial within an acceptable period and cases - whatever the applicant's state of mind or resources - in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. Although the history of the matter will always be relevant, it is more likely to be decisive in the first of these two situations. Even though the most recent non-compliance may be minor, the cumulative effect of an applicant's defaults may be such as to satisfy the judge that the applicant is either subjectively unwilling to cooperate or, for some reason, is unable to do so. Such a conclusion would not readily be reached; but, where it was, fairness to the respondent would normally require the summary dismissal of the proceeding. 29 Further, the power to dismiss an appeal for want of prosecution "must not be lightly exercised". See Van Reesema v Giameos (1979) 27 ALR 525 at 530 (Bowen CJ, Fisher and Lockhart JJ). 30 In my view, in this case the nature of the appellant's conduct - or rather lack of it - makes the exercise of that power appropriate. 31 As the respondent submitted, the following factors weigh strongly in favour of dismissing the appeal: (a) The failure of the respondent to file an outline of submissions or the appeal book on time, and the continued failure to do so nearing two weeks prior to the date set down for hearing is something that, self-evidently, prejudices the respondent's ability to draw its own submissions and prepare for the appeal; (b) The timetabling orders imposed by the court were made in consultation with the parties and are not unreasonable in any respect; (c) Until the day before the hearing, the appellant had not provided the court with any explanation for his non-compliance, sought further time to comply with the relevant requirements, or applied for any adjournment of the 16 May 2024 hearing; (d) The appellant has been represented by a solicitor and counsel, so the court can infer that he has been properly advised of his rights and obligations in connection with the appeal; (e) The final orders made below have not been stayed, such that the appellant now owes the respondent a judgment debt of $801,743.57, and the appeal is delaying the progress of the respondent's bankruptcy proceedings and has caused the respondent to incur the costs of multiple adjournments of that proceeding. 32 On the afternoon of 1 May 2024, the appellant caused to be filed through his solicitor an affidavit of the same date in which he swore as to the following. 33 In early March 2022, the appellant had surgery to remove cancer. 34 In late March or early April 2024, the appellant said that he "began to become seriously concerned that cancer had returned" and that as a consequence his "anxiety increased to the point where [he] was able to concentrate on only day to day tasks". He also said that he "was unable to tell anyone of [his] concerns until last week" although he did not say why. He also said that he has made an appointment to see his specialist, but that appointment is not until 24 May 2024 (which is well after the date fixed for the hearing of the appeal). 35 He also said that his "current state of mind since late March has prevented [him] from contacting or responding to [his] solicitors". 36 He contacted his solicitor on 26 April "only in response to a text message" from her. That was the extent of the evidence about any contact between the appellant and his solicitor since at least November last year. 37 Mr Murphy agreed that "the chronology was regrettable". He also accepted that there was no independent medical advice about the appellant's anxiety or his ability to provide instructions. He also agreed that there was nothing before me that touched upon the obligations of the appellant's lawyers to prepare the various materials pursuant to the orders of the court. He urged me not to dismiss the appeal, but instead to adjourn the appeal and to impose self-executing orders in a new timetable with a view to the appeal being heard at some (unknown) time in the future. 38 In my view, the appropriate order is that the appeal be dismissed, given the extent of the appellant's non-compliance which I have chronicled above, and which Mr Murphy did not dispute. 39 The late filed affidavit of the appellant is wholly inadequate. It was not supported with any medical evidence explaining why his claimed anxiety prevents or relevantly affects his ability to give instructions to his solicitors and to prosecute the appeal, including in relation to the preparation of submissions and an appeal book. 40 Secondly, there was no evidence from the appellant's solicitor, before whom he swore the affidavit and who appeared for him at the trial before McElwaine J, as to what steps, if any, she has taken since the filing of the notice of appeal in November last year to obtain instructions from him. 41 Thirdly, no explanation was given as to why the affidavit was not filed until the last minute. 42 Fourthly, in considering an application for an adjournment, the court has its own responsibility to have regard to its available judicial resources and to its obligation efficiently to dispose of its overall case load. See s 37M of the Federal Court Act 1976 (Cth). Such considerations have been relevant for a long time. As Brennan, Deane and McHugh JJ said in Sali v SPC Ltd (1993) 67 ALJR 841; [1993] HCA 47 at 843-844: 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 … 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. 43 That factor also weighs in favour of dismissing the appeal in this case.

COSTS 44 Mr Murphy accepted that costs should follow the event, and I made an order yesterday that the assessment of the respondent's costs of the appeal be referred to a Registrar for determination. 45 As I said above, I told the parties that I would rule on the form of the costs order in these reasons. 46 The respondent submitted that a costs order on an indemnity basis is justified in the present case, for the following reasons: (a) The appellant has shown disregard for the court's orders and its processes, and has failed to engage with the court or the respondent regarding his several breaches; and (b) In the circumstances, the court should infer that the appeal was served and remains on foot for the collateral purpose of avoiding or delaying the bankruptcy proceeding rather than out of any real intention to overturn the judgment below. 47 It is not necessary for me to make the inference urged in [46(b)] above. 48 In my view, the wholesale failure of the appellant to do anything to prosecute his appeal or to comply with the court's orders are circumstances that warrant departure from the usual rule, and the respondent should have a full measure of protection in relation to its costs. 49 I will therefore make an order that the appellant pay the respondent's costs of the appeal and the interlocutory application dated 19 April 2024 on an indemnity basis. 50 I also consider that it is appropriate in this case for the costs to be determined on a lump sum basis and I will make an order accordingly. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.

Federal Court Act 1976(Cth)

Federal Court of Australia Act 1976(Cth)ss 25(2B), 25(2B)(ba), 25(2B)(bb)(i), 37M

Federal Court Rules 2011(Cth)rr 36.11(2), 36.11(2)(h), 36.11(2)(j)(i), 36.74, 36.74(1)(a), 36.74(1)(d), 36.74(2)

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