FEDERAL COURT OF AUSTRALIA

Deangrove Pty Ltd v Commonwealth Bank of Australia [2002] FCA 1352

DEANGROVE PTY LIMITED (RECEIVERS AND MANAGERS APPOINTED) & ANOR v COMMONWEALTH BANK OF AUSTRALIA

N 1142 OF 2000

SACKVILLE J

SYDNEY

1 NOVEMBER 2002

THE COURT ORDERS THAT:

1. The hearing dates of 3 to 13 December 2002 be vacated.
2. Order 1 made on 1 October 2002 be varied by deleting 7 November 2002 and substituting 16 November 2002 therefor.
3. The applicants pay the respondent’s costs of this motion, on an indemnity basis.
4. The applicants pay the respondent’s costs thrown away by the vacating of the hearing dates, on an indemnity basis.
5. The respondent be at liberty to tax the costs referred to in paragraphs 3 and 4 forthwith.

Note:          Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The applicants have applied to vacate the hearing dates in this matter.  The proceedings are set down for a hearing, estimated to take nine days, commencing on 3 December 2002.

2                     The matter was last before the Court on 2 October 2002.  At that time, Mr Gye, counsel for the applicant (who had not previously been involved in the case), applied to vacate the hearing dates.  He did so, in substance, on the ground that, despite assurances that I had been given earlier that the matter was ready for hearing, counsel briefed to appear on behalf of the applicant had formed the view that there were many deficiencies in the case as prepared and that these had to be remedied before it would be ready for hearing.  I was also informed that the applicant had recently changed solicitors.  I was not informed, however, that there was any difficulty in funds being provided to prepare the case for trial.  (Since the first applicant is in receivership, it is the second applicant who must fund the proceedings.)

3                     I declined to accede to Mr Gye’s application to vacate the hearing dates.  Instead, I urged upon the applicants the desirability of putting their house in order as quickly as possible.  I took this course, in large measure, because the explanation provided by Mr Gye of the matters to be attended to did not by any means suggest that there were insuperable difficulties in maintaining the hearing dates.  I adjourned the proceedings until today, having made a number of orders for the further conduct of the proceedings.

4                     Mr Gye today renewed the application to vacate the hearing dates.  He relied on evidence from Mr Axtens, the solicitor now appearing for the applicants, to the effect that the previous solicitors had failed to prepare the case for hearing “properly and in a timely manner”.  Mr Axtens also gave evidence that he is a sole practitioner and has limited resources to enable him to carry out the “urgent, complex and substantial preparation of this case”.  The affidavit also recorded information supplied to Mr Axtens by the second applicant, to the effect that attempts had recently been made to “finalise transactions so as to provide sufficient funds to facilitate the carrying out of all of the work required in the final preparation of [the] matter”.  This affidavit was the first indication to the Court that the essential problem in the preparation of the applicants’ case, at least in relatively recent times, relates to the funding of the litigation.

5                     The cross-examination of Mr Axtens made it quite clear that the reason that no substantial work had been undertaken on behalf of the applicants since 2 October 2002 was the lack of funding.  There was some evidence suggesting that the applicants hoped to have funding in place within the next two weeks or so.  I am not satisfied that there is a likelihood that funding will be in place within this timeframe or, indeed, within an extended timeframe.  I cannot, however, rule out the possibility that funding will become available, either by the means referred to in the evidence or by Mr Jeans otherwise taking steps to ensure that the funding is available.  (There was no evidence adduced as to Mr Jeans’ means.  Indeed, Mr Jeans himself gave no evidence.)

6                     Mr Bell, who appeared with Mr Abadee on behalf of the respondent, submitted that the hearing dates should not be vacated.  He pointed out that the applicants have repeatedly breached the directions of the Court.  He also pointed out, correctly, that I had been informed as long ago as April 2002 that the applicants’ case was ready for hearing.  Moreover, no hint had been given until very recently that the basic difficulty confronting the applicants in preparing their case more recently has been the inability or unwillingness of the second applicant to fund the litigation.

7                     Mr Bell, with the frankness he has consistently displayed in this litigation, accepted that, despite the inconvenience to the respondent and the Court, the Court usually would vacate a hearing date where an applicant indicates, a month in advance of the hearing, that it is unable to put its house in order in time for the hearing.  He submitted, however, that this case is different.  In part he relied on the matters referred to in the previous paragraphs.  He also submitted that, on the evidence, there was nothing to indicate that any costs order would actually be met by either applicant.  Accordingly, a costs order was unlikely entirely to compensate the respondent for costs incurred in respect of the hearing dates or other costs thrown away.

8                     Mr Bell’s submissions have considerable force.  I do not wish to make any criticism of any counsel involved in this case, but it can be said that I have not always been provided with reliable information as to the state of preparation of the applicants’ case.  There is also a real risk that the respondent will not be reimbursed for all of the costs thrown away (although the second applicant has been required to provide security to support an indemnity he has given to the first applicant).  Moreover, a delay in providing a hearing date, should the respondent ultimately succeed in the proceedings, may involve it in some further disadvantage by reason of the delay in recovering judgment on its cross claim.

9                     After considerable hesitation, I have decided that I should grant the applicants’ motion.  I take into account four matters, in particular:

• The evidence indicates that, if the applicants were required to proceed in December, their case would be prejudiced because of the defects in preparing their evidence.
• Secondly, there is still a month before the hearing is scheduled to commence.  While case management considerations can never be determinative (Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146), those considerations are less important in this case than they might be in some others.
• Thirdly, as it happens, it will be possible to set the case down for hearing in late March 2003, so that the respondent will not be subjected to a further substantial delay before the hearing takes place.
• Fourthly, while the respondent may incur some irrecoverable costs, they are not likely to be substantial.  And while interest on the moneys said to be owed by the second applicant to the respondent is accruing, the recoverability of that interest (assuming the respondent succeeds in its claim) is likely to depend on the second applicant’s solvency rather than on any increase in the interest payable by reason of the delay.

10                  In the course of argument, I made it clear to Mr Gye that if the hearing dates were vacated, the applicants could expect no further indulgence in relation to an adjourned hearing.  As Mr Gye acknowledged, the applicants have been granted many indulgences by the Court.  The time has now come when the second applicant must accept responsibility for funding the litigation and for ensuring that the necessary steps are taken to prepare the case for hearing.  As Mr Gye acknowledged, even if these steps are not taken, the applicants can expect that the case will proceed on the adjourned hearing dates.

11                  The applicants’ motion also sought to vary the order made by this Court on 2 October 2002 for the payment by the second applicant of an indemnity in favour of the respondent in the sum of $87,000, so that the date for payment of such indemnity is extended to 16 November 2002.  The respondent does not object to that amendment and I propose to make the necessary order.

12                  The applicants must pay the respondent’s costs, on an indemnity basis, of the applicants’ motion filed on 28 October 2002.  The applicants must also pay the respondent’s costs thrown away by the vacating of the hearing dates, also on an indemnity basis.  I direct that the respondent should be at liberty to tax these costs forthwith.

Associate:

Dated:              1 November 2002