FEDERAL COURT OF AUSTRALIA

Darley v Wesfarmers Landmark (Qld) Pty Ltd (ACN 008 743 217) [2008] FCA 1577

PRACTICE AND PROCEDURE – application for extension of time for leave to appeal – whether applicant in default – non-appearance of applicant at hearing of application – non-appearance of applicant at directions hearing – applicant has history of non-compliance with Court orders – whether application should be dismissed pursuant to O 35A r 3 Federal Court Rules

COSTS – application for indemnity costs – principles guiding discretion of Court to award indemnity costs – whether case exhibited special or unusual features

Held: application dismissed with standard costs – applicant in default for failure to comply with Court orders and non-appearance at hearing of application and directions – within discretion to dismiss application – no special or unusual features warranting indemnity costs

Federal Court of Australia Act 1976 (Cth) s 43

Federal Court Rules O 35A r 2 and r 3

Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 followed

InterTAN Inc v DSE (Holdings) Pty Ltd [2005] FCAFC 54 followed

KEVIN FRANCIS ANTHONY DARLEY v WESFARMERS LANDMARK (QLD) PTY LTD (ACN 008 743 217)

QUD 181 of 2008

COLLIER J

21 OCTOBER 2008

BRISBANE

THE COURT ORDERS THAT:

1.                  The applicant’s application for extension of time within which to file an application for leave to appeal be dismissed.

2.                  The applicant pay the respondent’s costs.

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

REASONS FOR JUDGMENT

1                     This is an application for extension of time to file and serve a notice of appeal from a judgment of Burnett FM given on 14 May 2008. The federal magistrate ordered, inter alia, that a sequestration order be made against the estate of the applicant. When the hearing commenced before me at 10.15 am this morning there was no appearance in court by the applicant.

BACKGROUND

The Federal Magistrate’s decision

2                     The proceedings in the Federal Magistrates Court were by way of application for a sequestration order against the estate of the applicant by Wesfarmers Landmark Queensland Pty Ltd (the respondent in this matter) pursuant to Pt IV Bankruptcy Act 1966 (Cth). On 14 May 2008, Burnett FM made the following orders:

1.         That a sequestration order be made against the estate of Kevin Darley subject to:

a.         such order be stayed for a period of 21 days from the date of this order;

b.         the sequestration order made be vacated in the event that the debtor pay the following sums within 21 days of today’s date:

i.          $65,000 to Forbes Dowling Lawyers for discharge of the indebtedness including costs to Wesfarmers Landmark (Qld) Pty Ltd the applicant creditor;

ii.          $8360.00 to Porter Davies Lawyers.

2.         That the respondent pay the costs of and incidental to Porter Davies’s appearance in the application to be assessed if not agreed.

3.         That the respondent pay the costs for today of the applicant creditor to be assessed if not agreed.

4.         That Derek Rowan Andrew and Daniel Peter Juratowitch be appointed as trustees of the bankrupt estate of Kevin Darley pursuant to s 156A of the Bankruptcy Act 1966.

3                     On 29 May 2008 the applicant applied to the Federal Magistrates Court for further orders including, inter alia, that a further 14 day stay be applied to the 14 May 2008 orders. On 4 June 2008 Burnett FM ordered the application filed 14 May 2008 be dismissed.

Before this Court today

4                     On 30 June 2008 the applicant, Mr Darley, filed and served an application for extension of time to file and serve a notice of appeal from the decision of Burnett FM of 14 May 2008. Accompanying the application was an affidavit deposed by the applicant and sworn on 30 June 2008. The affidavit did not annex a draft notice of appeal, although the affidavit itself included what appear to be draft grounds of appeal. The applicant deposed that he did not know that he had only 21 days after the order made 14 May 2008 to file and serve an application for leave to appeal. Mr Darley believed his 21 days began after the conclusion of the stay, or so it appeared.

5                     This matter was first listed for directions before me on 29 July 2008. By a letter dated 23 July 2008, the applicant requested, for various health and personal reasons, that the directions hearing be vacated to another date. After consultation with the respondent, the matter was vacated and relisted for hearing on 26 August 2008.

6                     By a letter dated 24 August 2008, the applicant requested leave of the court to appear at the hearing of 26 August 2008 by telephone. The request of the applicant was allowed. At the directions hearing on 26 August 2008, despite numerous attempts, the court officer could not contact the applicant on the mobile telephone number provided to the court. Following a short delay, I made directions taking the matter to hearing in the applicant’s absence.

7                     Included in the orders made on 26 August 2008 was an order that the matter be set down for hearing on 25 September 2008. Moreover, I also directed that the parties file and serve respective submissions and the applicant file and serve a draft notice of appeal. A stamped copy of the orders of 26 August 2008 was posted to the applicant’s postal address by the Federal Court Registry under cover of letter dated 1 September 2008. This letter also drew the applicant’s attention to aspects of the orders that required his specific attention or action. There is no suggestion that the applicant did not receive this letter.

8                     On 12 September 2008 the court informed both parties that the hearing date of 25 September 2008 was to be moved to 26 September 2008. All orders made on 26 August 2008 remained unchanged.

9                     The applicant did not comply with any of the orders of 26 August 2008. On four occasions between 9 September 2008 and 17 September 2008 my associate unsuccessfully attempted to call the applicant with respect to non-compliance. Four messages were left on the applicant’s mobile phone messagebank requesting him to contact the court.

10                  On 24 September 2008, one day before the scheduled hearing of this matter, the applicant telephoned my associate requesting that the hearing be vacated for one month. The applicant cited illness of family members and personal reasons for the request of the extension. The respondent did not oppose adjournment of the hearing. The matter was again vacated and relisted for trial at 10.15 am on 21 October 2008. I made orders from chambers updating the existing directions. Signed and sealed copies of the orders of 25 September 2008 were posted to the applicant’s postal address by the registry. Furthermore, in a telephone conversation on 25 September 2008, my associate verbally informed the applicant of dates by which he was required to file documents to the court and also of the hearing date.

11                  On 13 October 2008 my associate attempted to call the applicant regarding his non-compliance with orders of 25 September 2008. On this occasion the applicant’s phone was disconnected. On that same day, the respondent’s solicitors contacted the court relating to the applicant’s continuing non-compliance.

12                  I understand that the respondent has attempted to contact the applicant on several other occasions by telephone, fax and postal address, but to no avail. An affidavit filed in court this morning by Mr Morgan gives evidence of the endeavours of the respondent to contact the applicant.

13                  At the hearing this morning at 10.15 am there was no appearance by the applicant. I asked the court officer to call the matter outside. There was no appearance by the applicant. I then asked the court officer to contact the applicant on the mobile telephone number provided to the court. The court officer informed me that, upon calling the number, there was a Telstra message to the effect that the telephone number had been disconnected. At this point the respondent requested that the application be dismissed for non-attendance, or otherwise pursuant to O 35A r 3(1) Federal Court rules.

Consideration

14                  Orders on default are provided for under the O 35A Federal Court Rules. Inter alia, this rule provides:

2          When a party is in default

(1)        For this order, an applicant is in default if the applicant:

(a)        fails to comply with an order of the court in the proceeding; or

(b)        fails to attend a directions hearing; or

(c)        fails to file and serve a pleading as required by order 11; or

(d)        fails to serve a list of documents on affidavit or other document, or does not produce a document as required by order 15; or

(e)        fails to do any act required to be done by these rules; or

(f)         fails to prosecute the proceedings with due diligence.

…

3          Orders on default

(1)        If an applicant is in default, the court may order that:

(a)        the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the applicant; or

(b)        a step in the proceeding be taken within the time limit in the order; or

(c)        the proceeding be stayed or dismissed, as to the whole or any part of the relief claimed by the applicant, if the applicant does not take a step ordered by the court in the proceeding in the time limit in this order.

15                  In light of the failure of the applicant to:

·                    comply with the court orders of 26 August 2008 and 25 September 2008; and

·                    appear at the hearing today without explanation,

I consider the application should be dismissed in accordance with O 35A r 3(1)(a) Federal Court Rules. I agree with the respondent’s submissions that the applicant has failed to comply with an order of the court pursuant to O 35A r 2(1)(a) Federal Court Rules. I also consider the applicant has failed to prosecute this matter with due diligence pursuant to O 35A r 2(1)(f) Federal Court Rules.

16                  The respondent has also requested costs of the proceedings on an indemnity basis today.

17                  As a general proposition, costs follow the event. However costs are usually awarded on a party to party basis.

18                  In relation to indemnity costs, categories of cases warranting the court in departing from the usual course of ordering costs on a party to party basis were described in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 as including:

1.         making allegations of fraud knowing them to be false.

2.         evidence of particular misconduct that causes loss of time to the court and to other parties.

3.         making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.

4.         the fact that proceedings were commenced or continued for some ulterior motive or unlawful disregard of known facts or clearly established law.

5.         any prudent refusal of an offer to compromise.

19                  These principles, as articulated in Colgate-Palmolive, are well known and were recently reinforced by the Full Court of the Federal Court in InterTAN Inc v DSE (Holdings) Pty Ltd [2005] FCAFC 54 at [11]. The categories of cases I have listed are not closed. The court clearly has wide discretion under s 43 Federal Court of Australia Act 1976 (Cth) to order costs in any particular matter. In this particular case I am not persuaded that the circumstances of the case are such as to warrant a departure from the usual practice of the court in awarding party to party costs so far as the costs of the respondent are concerned. There is no evidence before me that this case exhibits special or unusual features so as to justify the court exercising its discretion so as to award indemnity costs. Further, notwithstanding the failure of the applicant to attend on numerous occasions there is no evidence before me that the applicant’s case against the respondent was “hopeless” or had no chance of success, or that the applicant’s case was not based on evidentiary or factual foundations.

20                  Accordingly, in my view, the appropriate order is that the respondent is entitled to its costs on a party to party basis.

Associate:

Dated:         23 October 2008