//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2011] FCA 1215
Federal Court of Australia
2011-10-26
Stone J
Original judgment source is linked above.
The application to vacate the hearing dates in October 2011 24 Transpacific's application to vacate the October hearing dates was supported by an affidavit sworn on 17 October 2011 by its new solicitor, Evangelos Patakas. Mr Patakas was retained to act for Transpacific on 10 October 2011. He described the difficulties he had in familiarising himself with the case and with obtaining instructions. He deposed that Mr Nicholas Leach, a director of Transpacific had been in the United States attempting to raise finance for the company and had been delayed in returning to Sydney because his flights were cancelled or rescheduled as a result of industrial problems. He also described difficulties he experienced in obtaining Transpacific's files from its former solicitor. 25 In his affidavit of 17 October Mr Patakas indicated that, in his opinion it might be necessary to bring proceedings in the Supreme Court of New South Wales for orders under s 728 of the Legal Profession Act 2004 (NSW) in order to obtain the files. 26 Mr Patakas deposed that having reviewed affidavits filed by Prudential he considered that it was necessary for Transpacific to file both lay and expert evidence in reply, in particular in relation to Prudential's expert evidence about relevant New York law. Mr Patakas gave details of his efforts to retain US experts and the likely timeframe within which the evidence could be expected to be available. He also referred to the difficulty of retaining counsel to appear at the hearing. 27 In his affidavit and also in his oral submission Mr Patakas said that he was not sufficiently apprised of the details of the case to allow him to represent Transpacific if the hearing was not vacated. If the hearing was to proceed as scheduled he would have to terminate his retainer in which case Mr Leach would seek leave to appear for the company personally. 28 It was not in dispute that Mr Patakas had been retained by Transpacific only from 10 October 2011. Given the short time he had been involved in the matter and his evidence as to the difficulty he has had in obtaining the files from Transpacific's former solicitor it is no reflection on Mr Patakas that he was not in a position to proceed with the hearing on 19 October. Although the legal issues may not be complex the procedural history is confusing. Attempting to unravel that history would not have been helped by the fact that Mr Leach did not return to Australia from overseas until 17 October. 29 Although the difficulties confronting Mr Patakas may be accepted it is nevertheless the case that since March the matter has been listed as described above, there has been extension after extension to the timetable. The imminence of the hearing has been mentioned in directions hearings on a number of occasions, in particular on 30 August 2011. It was the reason a guillotine order was imposed in relation to Transpacific's evidence: see [20] above. 30 In referring to Transpacific's need to put on expert evidence in relation to New York law, Mr Patakas submitted that Prudential's evidence on this issue was evidence in chief and that Transpacific was entitled to have time to reply to that evidence. Prudential's evidence on the point was contained in an affidavit sworn on 4 October 2011 of Clayton P Gillette who is the Max E Greenberg Professor of Contract Law at New York University School of Law. That affidavit was served on Transpacific on 6 October 2011 and filed on 7 October. As the orders made on 30 August required Prudential's evidence to be filed and served by 29 September the evidence was about a week late. Mr Patakas complained that this factor should be taken into account in weighing the impact of Transpacific's failures to meet deadlines however while the formal filing of the affidavit was late, I accept Mr Newlinds assurance that scanned copies of the affidavit were provided to the solicitors for Transpacific well before the deadline. 31 Clearly the evidence of Professor Gillette is of critical importance. Both Mr Patakas and Mr Newlinds expressed the view that unless his evidence was contradicted then the inevitable result would be that Transpacific would be unable to prove its case. This was not news to Transpacific. As can be seen from the account of the directions hearing on 30 August 2011 the notion that evidence on New York law would be required did not come as a surprise to Transpacific's solicitor. In fact Mr Hansen admitted that he had been aware of this issue from the outset of the proceeding. 32 Despite this, it appears from the submissions made by Mr Patakas that, as at 19 October, quite apart from the difficulties occasioned by the change of solicitors, no relevant expert has been retained and counsel have not been briefed. It appears that an expert has been identified however it is necessary for possible conflicts of interest to be ruled out before the gentleman can be formally retained. While Mr Patakas has been in contact with US lawyers he has been advised that there will be some delay, in part occasioned by the imminence of the Thanksgiving Day celebrations (24 November) and the need for Mr Patakas to be fully conversant with the issues so that he can brief the expert. 33 Prudential submitted that the adjournment should not be granted and that the delay envisaged by Transpacific would be significantly to the prejudice of Prudential. In relation to prejudice, Prudential referred to the affidavit of Angus Mackay, a professional senior aircraft appraiser. In his affidavit of 18 October 2011, Mr Mackay gave an estimate of the present value of the aircraft which is the subject of the dispute between the parties and of its likely value in the next 6-24 months. 34 Mr Patakas objected to the admission of Mr Mackay's affidavit into evidence on a number of bases. The most telling of his objections was that the opinion was unsubstantiated by reference to facts and therefore could be accorded no weight. Examples of unsubstantiated statements included a comment that the valuation of the aircraft was based in part on Mr Mackay's "understanding of the present maintenance status" of the aircraft without any indication of the basis of the understanding. 35 In relation to the aircraft's future value Mr Mackay asserted that "in the next 6-24 months Qantas and Malaysian Airlines are expected to place an estimated 50 737-400 passenger aircraft on the global market" and that this would have a significant effect on the value of the aircraft in question. For this reason Mr Mackay's estimate of the future value of the aircraft was considerably less than its present value. 36 I admitted Mr Mackay's evidence over the objections of Mr Patakas and said that I would take into account his submissions in attributing weight to the evidence. On further consideration I find that Mr Mackay's evidence is so lacking in substantiation that the weight I can attach to it is negligible. 37 Ultimately, Prudential's objection to the adjournment was that Transpacific had had ample time to prepare its case and that its need for further time was attributable to choices it had made as to how to conduct its case rather than to unexpected issues arising, the change of solicitors or the lack of funds. In particular it submitted that: already considerable latitude had been extended to the applicant which had taken over seven months to serve its evidence; while complaining that lack of funds had affected its ability to prepare for the hearing the applicant had expended copious legal resources on disputing the issue of Prudential's right to refuse consent to the lease to NAC; when Mr Hansen appeared for the last time on 5 October, he had advised the Court that Transpacific wished to preserve the hearing date yet only days later it appears that Transpacific is far from ready to proceed; the assurance that if the adjournment were granted preparation of the matter would proceed expeditiously is inconsistent with the assertion that lack of funds has been a major limiting factor to date; Transpacific's failure to prepare the case for hearing can be attributed in large part to its failure to focus on the fundamental issue of the validity of the appointment of the Receivers and Managers and to it being diverted by the secondary consideration of the consent to lease; and Prudential would be considerably prejudiced by delay in the hearing as, the terms of the injunction prevent it from selling the aircraft and minimising its loss. 38 At the hearing Mr Patakas said that he was confident that Transpacific could be fully prepared for the hearing in 2012 and that he was looking for dates towards the end of February. It was submitted by Prudential that, given the history of the matter, the Court can have no confidence in this assurance. Unless the Court is of the opinion, at least on the balance of probabilities, that Transpacific will be in a position to argue its case if the requested adjournment is granted then there can be no utility in the adjournment and no benefit to offset any prejudice occasioned by the adjournment.
Principles relevant to the exercise of the Court's discretion 39 The Court has considerable discretion in matters of civil practice and procedure. There are, however, well established principles relevant to its exercise. Those principles find expression in ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth) and in the decisions of the High Court in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 and the Full Federal Court in Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 273 ALR 147. The "overarching purpose of the civil practice and procedure provisions" to which the above sections refer may only recently have found statutory embodiment however they reflect the long established principles of case management in this Court. 40 Consistent with that overarching purpose to facilitate the just resolution of disputes, "according to law" and "as quickly, inexpensively and efficiently as possible" the Court must consider the following objectives listed in s 37M: (a) the just determination of all proceedings before the Court; (b) the efficient use of the judicial and administrative resources available for the purposes of the Court; (c) the efficient disposal of the Court's overall caseload; (d) the disposal of all proceedings in a timely manner; (e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. 41 Prudential submits that proper pursuit of these objectives "may lead to the applicant appearing unrepresented and not given the opportunity to delay the hearing to try and lead evidence it wishes to lead, even if that evidence is important". In support of this submission Prudential cited two cases: Mediterranean Olives Financial Pty Ltd v Loaders Traders Pty Ltd (Subject to Deed of Company Arrangement) (No 1) [2011] FCA 177 and Shirreff v Beck Legal Pty Ltd (No 2) [2011] FCA 603. Each of those cases presented situations that had little or nothing in common with the present proceeding and for that reason do not provide useful guidance here. 42 The objectives listed in s 37M are stated at such a high level of generality that, while the decided cases may give some guidance, ultimately each case must be decided on its unique facts. In oral submissions both sides accepted that if the commencement of the hearing were not adjourned then it would inevitably follow that Transpacific would be unable to make its case. The evidence of Professor Gillette would be unchallenged and on his view of New York law it would follow that Prudential was within its rights to appoint the Receivers and Managers. There may be situations in which accepting the inevitability of such an outcome is the only way to avoid unacceptable prejudice to the other party. I do not accept that this is such a situation. 43 Prudential came to Court on 19 October ready to answer the case that had been listed for hearing since March. If the hearing is postponed for any length of time, at the very least, Prudential, through its legal advisors will need to work up the case again to its present level. Transpacific will have additional evidence, and with new advisors, perhaps new or differently nuanced analyses of its position. All this involves additional costs. The more significant prejudice to Prudential would be that it is unable to recoup its debt by selling the aircraft in which it has a security interest. 44 I accept that the injustice and inconvenience consequent on allowing a late application for adjournment cannot always be remedied by an order for costs. This is more particularly the case where, as here, the applicant, Transpacific, has admitted that it has severe financial problems. In this case, however, it is not necessary to rely solely on a costs order. Although, as mortgagee, Prudential has security for the amount advanced to Transpacific it is restrained from exercising rights it may have over that security by the injunction. Were the injunction to be lifted it would be free to decide to sell the aircraft and recoup the amounts owed by Transpacific. Of course, in doing so Prudential would take on itself the risk of the Court finding in due course that it was not entitled to sell the aircraft and ordering relief in favour of Transpacific in respect of the unauthorised sale. In dissolving the injunction the Court would not be expressing any opinion on the central issue in this proceeding, namely whether Prudential was entitled to appoint the Receivers and Managers. 45 If the adjournment were not permitted and, as both parties seem to accept, its application was unsuccessful, Transpacific would have lost any opportunity to recover the aircraft and implement its business plans. It would also lose any opportunity to recover its costs and seek compensation from Prudential. If, however, the hearing is adjourned on terms that the injunction is dissolved, then even assuming that the aircraft is sold, Transpacific will still have the opportunity to vindicate any other rights it may have including the present claim for economic loss and, perhaps, a claim in conversion and for consequent damages. There is nothing to suggest that Prudential would not be able to meet any monetary award. On balance this seems to me to be a fairer resolution of the present dilemma than proceeding with the hearing. Of course an order vacating the hearing date and dissolving the injunction would need to be coupled with strict orders for the preparation of the hearing to ensure as far as possible that it would be ready for hearing at the earliest date possible in the new year.
Costs 46 Prudential made an application for its costs thrown away by the vacation of the hearing dates to be paid on an indemnity basis. Mr Newlinds submitted that notwithstanding the strong arguments that could be made against vacating the hearing the Court was granting an indulgence to Transpacific. Furthermore he pointed out that the costs thrown away were part of the prejudice to Prudential and the only way to remedy this was by a costs order more closely approximating the costs incurred. 47 Although the award of costs is pre-eminently a matter within the Court's discretion costs are usually awarded on a party to party basis. Nevertheless in my view there are aspects of Transpacific's application that warrants indemnity costs in this case. Transpacific's preparation for hearing on dates that were settled seven months in advance was within its control. The inference that it was diverted from the central issue in the proceeding by Prudential's refusal to consent to the lease to NAC is inescapable. Transpacific persisted in this approach despite persistently falling behind the timetable set by the Court but with which it had agreed. In the circumstances indemnity costs limited to those thrown away by vacating the hearing is not unreasonable. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.
Transpacific Pty Ltd
Prudential Retirement Insurance and Annuity Company
Prudential's refusal to consent to lease 10 The other aspect of the dispute relates to the use that Transpacific may make of the aircraft and the need to obtain Prudential's consent. On 13 May 2011, by interlocutory application, Transpacific sought orders in respect of the control and operation of the aircraft to enable it to pursue its plans for the aircraft's commercial use. Those plans involved a proposed lease to NAC which required the consent of Prudential. 11 Prudential refused to give its consent claiming that it needed more information from Transpacific before it was in a position to make a decision. The circumstances of that application which I dismissed on 9 June 2011 are set out in the reasons for judgment in Transpacific Pty Ltd v Prudential Retirement Insurance and Annuity Company [2011] FCA 630.
(2009) 239 CLR 175
(2010) 273 ALR 147