FEDERAL COURT OF AUSTRALIA

Fanchel Pty Limited v Landau, in the matter of Continental Coal Limited [2017] FCA 119

ORDERS

THE COURT ORDERS THAT:

1.    The plaintiff’s application for an order, that if the defendant is in default of the order extending the time for filing an address for service to 13 February 2017, judgment be entered pursuant to r 5.21(d) of the Federal Court Rules 2011, be refused.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GLEESON J:

1    On 6 February 2017, the plaintiff (“Fanchel”) made an ex parte application for a self-executing order in the event that the defendant (“Mr Landau”) fails to file an address for service by 13 February 2017.

2    The proposed self-executing order is to the effect that, if Mr Landau fails to file an address for service by 13 February 2017, judgment will be entered against him pursuant to r 5.21(d) of the Federal Court Rules 2011 (“general Rules”) with:

(a)    an order pursuant to s 197 of the Corporations Act 2001 that [Mr Landau] pay [Fanchel] the amount of $342,000;

(b)    an order that all of the amount ordered to be paid to [Fanchel] bear interest at the rate(s) prescribed pursuant to the provisions of s 51A of the Federal Court of Australia Act 1976 (Cth) from 19 December 2014; and

(c)    an order that [Mr Landau] pay [Fanchel]’s costs on a party / party basis to be assessed using the lump-sum costs procedure.

3    After hearing submissions, I made orders that:

(1)    the time for Mr Landau to file an address for service be extended to 13 February 2017 pursuant to r 1.39 of the general Rules;

(2)    Fanchel notify Mr Landau of my orders by sending them via email to plandau39@gmail.com and by registered post to 8 Grant Street, Cottesloe, Western Australia no later than 7 February 2017; and

(3)    the proceeding be adjourned to 20 February 2017.

4    I also reserved judgment on Fanchel’s application for the self-executing order.

Fanchel’s claim against Mr Landau

5    The proceeding was commenced by an originating application filed on 10 November 2016, and supported by an affidavit of Ian Stolyar sworn 9 November 2016. The following details of the claim are set out in the originating application:

This Originating Application is made under sections 722, 197, 1324 and 1325 of the Corporations Act 2001.

In September 2014 the Applicant applied for securities being offered for issue by Continental Coal Limited and paid $342,000 to Continental Coal as application money.

The application money received by Continental Coal Limited from the Plaintiff was required to be held by it on trust pursuant to section 722 of the Corporations Act 2001 until the securities were issued or the money was returned. As of the date of this Originating Application, the securities have not been issued and neither the whole nor any portion of the monies paid for their issue has been returned, despite several requests being made.

The Respondent was a director of Continental Coal Limited at all material times. The Respondent is liable to refund the application money to the Applicant, or pay to the Applicant an equivalent amount by way of damages or compensation, pursuant to sections 197, 1324 or 1325 of the Corporations Act 2001.

6    The originating application was not the correct form of initiating process. Under r 2.2 of the Federal Court (Corporations) Rules 2000 (“Corporations Rules”), generally, an application required or permitted by the Corporations Act 2001 (Cth) (“Corporations Act”) must be made by filing an originating process. In any event, the notice of filing and hearing that forms the first page of the originating application shows that the document was received by the Registry as an originating process pursuant to r 2.2 of the Corporations Rules.

Mr Landau’s default

7    To date, Mr Landau has not participated in the proceeding.

8    The notice of filing and hearing that forms the first page of the originating application listed the proceeding for a first case management hearing on 1 December 2016 at 9:30 am.

9    The originating application and supporting affidavit were not served on Mr Landau before the first case management hearing. Accordingly, on 1 December 2016, I made an order that the time to effect service on Mr Landau be extended to 23 January 2017 pursuant to r 1.39 of the general Rules, and adjourned the matter to 9:30 am on 6 February 2017.

10    The originating application and Mr Stolyar’s affidavit were served on Mr Landau by a process server at what is asserted by the process server to be Mr Landau’s current residential address on 13 December 2016. The process server’s affidavit does not refer to the 1 December 2016 order.

11    By email dated 30 January 2017 addressed to plandau39@gmail.com, Fanchel’s lawyers attempted to inform Mr Landau of the case management hearing listed for 6 February 2017.

12    There is no evidence that Mr Landau responded to the 30 January 2017 email.

13    By email dated 2 February 2017 addressed to plandau39@gmail.com, Fanchel’s lawyers attempted to send him short minutes of orders they intended to seek at the 6 February 2017 case management hearing. There is no evidence that Mr Landau responded to the 2 February 2017 email.

14    On behalf of Fanchel, Mr Brady argued that Mr Landau is in default by reason of his non-compliance with rr 5.01 and 5.02 of the general Rules.

15    Rule 1.3(2) of the Corporations Rules provides relevantly that the other rules of the Court apply, to the extent they are relevant and not inconsistent with the Corporations Rules, to a proceeding in the Court under the Corporations Act commenced after the commencement of the Corporations Rules.

16    Rule 5.22 of the general Rules provides:

A party is in default if the party fails to:

(a)    do an act required to be done, or to do an act in the time required, by these Rules; or

(b)    comply with an order of the Court; or

(c)    attend a hearing in the proceeding; or

(d)    prosecute or defend the proceeding with due diligence.

17    Rule 5.01 provides:

A party, or the party’s lawyer, must attend the Court on the return date fixed in the originating application.

Note 1:        Originating application is defined in the Dictionary.

Note 2:    When a proceeding is started, the Registrar will fix a return date and place for hearing and endorse those details on the originating application.

18    Rule 5.02 provides:

A respondent who has been served with an originating application must file a notice of address for service, in accordance with Form 10, before the return date fixed in the originating application.

Note:    Rule 11.01 contains requirements in relation to the address for service.

19    Rule 2.9 of the Corporations Rules makes separate provision for filing a notice of appearance. It provides, relevantly:

(1)    A person who intends to appear before the Court at the hearing of an application must, before appearing:

(a)    file:

(i)    a notice of appearance in accordance with Form 4; and

(ii)    if appropriate--an affidavit stating any facts on which the person intends to rely; and

(b)    serve on the plaintiff a copy of the notice of appearance and any affidavit not later than:

(i)    if the person is named in an originating process--3 days before the date fixed for hearing ...

20    The return date fixed in the originating application was 1 December 2016. Since the originating application was not served prior to the return date (in default of r 8.06 of the general Rules, which required service of the originating application and the accompanying affidavit at least 5 days before the return date), Mr Landau was not in a position to comply with either rr 5.01 or 5.02 according to their terms (assuming in Fanchel’s favour that those rules apply in this case despite rr 1.3(2) and 2.9 of the Corporations Rules).

21    Mr Brady argued that the Court should make the proposed self-executing order on the basis of Mr Landau’s failure to comply with r 5.02 of the general Rules despite the “inordinate length of time” since he was served with the originating application and supporting affidavit.

22    In the absence of an order having the effect that Mr Landau was required to attend the Court on 6 February 2017, or an order requiring him to file a notice of address for service before 6 February 2017, I am not satisfied that his failure to do either of those things was a failure to comply with rr 5.01 or 5.02 of the general Rules.

23    Mr Brady relied on r 5.21(d) of the general Rules as the source of the Court’s power to make a self-executing order. Rule 5.21(d) provides:

A party may apply to the Court for an order that, unless another party does an act or thing within a certain time:

…

(d)    the party have judgment against the other party.

24    The Court may make any order that the Court considers appropriate in the interests of justice: r 1.32 of the general Rules.

25    In the circumstances set out above, I do not accept that it is appropriate for the Court to make a self-executing order. To the extent that Mr Landau is in default of the general Rules, that occurred in the context of Fanchel’s own default in failing to serve the originating application and supporting affidavit prior to the 1 December 2016 return date.

26    Accordingly, the application for a self-executing order for judgment is refused.

Associate:

Dated:    20 February 2017