FEDERAL COURT OF AUSTRALIA

Cao v Apollo Phoenix Resources Pty Ltd (No 2) [2019] FCA 469

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 20 of the Federal Court of Australia Act 1976 (Cth) and r 5.23 of the Federal Court Rules 2011 (Cth) (Rules) the proceeding as against the first defendant is dismissed with costs.

2.    Pursuant to r 19.01(1)(c) of the Rules the proceeding against the second and third defendants is dismissed with costs.

3.    The defendants have liberty to apply for lump sum costs orders in this proceeding by filing and serving any application and affidavit in support by 17 May 2019.

4.    Service on the plaintiff in relation to any further steps in the proceeding be effected by sending a registered letter to the plaintiff at Runyuan Feicuicheng, No 112, Gongnong Street, Daoli District, Harbin, People’s Republic of China.

5.    Service of any letter or other process be deemed to have been effected within seven days after the date of its dispatch in accordance with Order 4.

6.    Payment of $150,000 is to be made to the first defendant from the amount paid by the plaintiff into Court for security for costs, on account of its costs incurred to date as set out in the affidavit of Peter Hodges sworn 25 March 2019.

7.    Payment of $25,000 is to be made to the second and third defendants being the amount paid by the plaintiff into Court for security for costs, on account of their costs incurred to date as set out in affidavit of Dirk Maurice Fairweather sworn 14 March 2019.

8.    Unless the Court otherwise orders, the balance of the monies paid by the plaintiff into Court for security for costs of the first defendant not be paid or disbursed until resolution of the applications for lump sum costs orders to be made in accordance with Order 3.

9.    The first defendant is released from its undertaking to the plaintiff dated 2 July 2018, a copy of which is annexed and marked “A”, which on and from the making of this order is of no further force and effect.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

MARKOVIC J:

1    This proceeding was commenced by the filing of an originating process by the plaintiff, Zhong Cao, on 18 June 2018. Since that time there have been a number of applications made in the proceeding. I do not propose to set them out in any detail, save to say that the proceeding has been hard fought by the parties.

2    By email dated 25 October 2018 the parties were notified by my Associate that the proceeding had been listed for hearing for five days commencing on 25 March 2019. As is evident from the correspondence with the parties’ solicitors, including the solicitors then acting for the plaintiff, those dates were agreed to by the parties. The proceeding was listed for hearing with some expedition, given the nature of the issues that arose between the parties and the terms of an inter partes undertaking given by the first defendant to the plaintiff by which the first defendant agreed not to deal with or dispose of certain assets.

3    From the time of the commencement of the proceeding and following the date on which a hearing date was allocated, orders were made by the Court on a number of occasions requiring the parties to take steps preparatory to the hearing. In that time, the Court has also dealt with applications for security for costs made by each of the defendants. Most recently on 12 February 2019, I made orders that the plaintiff provide security for the first defendant’s costs in the amount of $340,000 and, on 18 March 2019, Gleeson J made orders that the plaintiff provide further security for the second and third defendants’ costs in the amount of $80,000 by way of payment into Court by 21 March 2019.

4    While the plaintiff complied with the orders made on 12 February 2019, by providing security for the first defendant’s costs as ordered, he failed to comply with the orders made by Gleeson J on 18 March 2019 and has not provided the further security which he was ordered to pay for the second and third defendants’ costs by 21 March 2019.

5    The plaintiff has also failed to comply with the orders of the Court requiring certain steps to be taken preparatory to the hearing of the matter. Other than the filing of submissions, no further steps have been taken including by way of the filing of a court book, the provision of objections to evidence and other related matters. That is not surprising, given that on 22 March 2019 the plaintiff’s solicitor, Timothy Atkin of Maddocks Lawyers, filed a notice of ceasing to act in the proceeding. There has not been any notice of change of solicitor or notice of acting filed by any solicitor on behalf of the plaintiff since that time. Indeed, on 24 March 2019 at 9.40 pm, a Mr Gary Gu sent an email to my Associate, in which he wrote:

…

I am Gary Gu and I work in Australia for [the plaintiff]. [The plaintiff] has asked me to say the following for him for the judge:

Due to the large amounts totalling $410,000 I have paid in security for costs I have had trouble transferring funds out of China quickly enough to pay my outstanding legal bills and the payment of further security of $80,000 last week.

I have enough funds in China But it may now take some weeks to transfer sufficient funds for this.

My lawyers have withdrawn because I was unable to pay them quickly enough and I think my case may now be dismissed if I do not have someone to present my case tomorrow. I also understand that my case may be dismissed against Mr Kingswoods and Chris Daws additionally because of the failure to pay security.

I have looked for alternative lawyers to represent me but I have not been able to find anyone who is prepared to help me with the hearing so close.

I would humbly request the court in respect that the hearing be postponed to give me time to send funds out of China to pay my lawyers so they can represent me again at a new hearing or to pay new lawyers and I also request more time to pay security.

…

6    When the matter was called on for hearing this morning, there was no appearance by or on behalf of the plaintiff. I do not propose to accede to the request made by Mr Gu on behalf of the plaintiff to have the hearing adjourned to permit the plaintiff to send funds out of China to pay his lawyers. The plaintiff has been on notice of the hearing date for some six months. He, I would infer, was aware of the orders that had been made by the Court and the expedition that had been granted to this matter to enable it to be resolved, given the nature of the proceeding and the inter partes undertaking that was provided by the first defendant.

7    It is not appropriate in the circumstances of this case to grant the adjournment sought by the plaintiff at the eleventh hour and cause further inconvenience and cost to be incurred by the defendants, particularly given the history of the proceeding and, as was evidenced most recently by the plaintiff’s application to adjourn the proceeding to permit him to obtain further evidence, his somewhat dilatory attitude to the preparation of the matter for hearing.

8    The defendants have applied to have the proceeding dismissed; in the case of the first defendant, pursuant to s 20(5) of the Federal Court of Australia Act 1976 (Cth) (Act) and r 5.23 of the Federal Court Rules 2011 (Cth) (Rules) for failure by the plaintiff to take steps in the proceeding and to appear at the hearing today and, in the case of the second and third defendants, pursuant to r 19.01(c) of the Rules for failure by the plaintiff to pay the security required to be paid by 21 March 2019. I note that, in the case of the second and third defendants, orders could equally be made under s 20(5) of the Act and r 5.23 of the Rules.

9    Given the status of the matter, including the failure by the plaintiff to comply with the Court’s orders for payment of further security as ordered on 18 March 2019, the failure by the plaintiff to comply with the Court’s directions and the failure by the plaintiff to appear this morning, I propose to make those orders.

10    The defendants have also sought orders that they be granted leave to file applications for lump sum costs orders in the proceeding. I will make those orders.

11    Finally, I note that the defendants seek orders for release of the monies paid by the plaintiff as security for their respective costs. In the case of the first defendant, it seeks an order that $150,000 of the total security paid by the plaintiff into Court as security for its costs be paid on account of costs incurred by it to date. Peter Hodges, partner of Mills Oakley, who acts for the first defendant, has provided evidence of the costs incurred by the first defendant to date in defending this proceeding as well as the current value of their work in progress and anticipated disbursements. That amount far exceeds the amount of $150,000. In the case of the second and third defendants, while there is no evidence of that nature before me, given that Gleeson J made an order that the second and third defendants pay additional security in the amount of $80,000 just one week ago, I am satisfied that their costs exceed the amount of security thus far paid into Court by the plaintiff on account of the second and third defendants’ costs, namely, $25,000. I will therefore make the orders sought by the defendants.

12    I will also make an order that the balance of the monies paid by the plaintiff as security on account of the first defendant’s costs not be released by the Court until such time as all issues of costs have been resolved in the proceeding and the second and third defendants have made any application they wish to make in relation to any such balance.

13    I will make orders accordingly.

Associate:

Dated:    4 April 2019