FEDERAL COURT OF AUSTRALIA

Citrus Queensland Pty Ltd ACN 110 855 359 v Sunstate Orchards Pty Ltd ACN 095 659 733 [2009] FCA 798

COSTS – basis of payment – conduct of parties – indemnity

CITRUS QUEENSLAND PTY LTD ACN 110 855 359, PETER MICHAEL TRACY and SUNSTATE CITRUS PTY LTD ACN 112 847 560 [SUBJECT TO THE DEED OF COMPANY ARRANGEMENT] v SUNSTATE ORCHARDS PTY LTD ACN 095 659 733, ANDREW COLIN STRAHLEY and DAVID BREED

QUD 368 of 2008

MOORE J

30 JULY 2009

SYDNEY

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.         The application for costs to be payable on an indemnity basis is dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

1                          On 24 July 2009 I made orders dismissing appeals brought by Citrus Queensland Pty Ltd (in liquidation), Mr Peter Tracy and Sunstate Citrus Pty Ltd (subject to a deed of company arrangement).  In so far and as the appeals were brought by Citrus Queensland, I did so because the liquidator of the company had indicated it did not wish to participate further in the appeal proceedings and plainly, it did not intend to prosecute the appeal.  In so far as the appeals were brought by Mr Tracy and Sunstate Citrus, I did so with their consent.

2                          I also ordered the appellants to pay the respondents' costs.  This was not opposed.  The respondents submitted that the costs should be payable on an indemnity basis.  The solicitor for the second and third appellants resisted this order.  This judgment deals with that question.

3                          Much of the relevant history of the litigation between the parties is recounted by Greenwood J in the judgment given on 6 May 2009 ordering the winding up of Citrus Queensland: [2009] FCA 452 at [3] - [10].  Other relevant events and the more recent history of significance are as follows. The appeals were listed before Spender J as the appeals call-over judge on 13 March 2009.  His Honour listed the appeals for hearing on 17 to 20 August 2009 inclusive.  The Court informed the parties on about 26 May 2009 that the settling of the appeal book index was listed to 15 June 2009.  The appellants failed to file and serve a draft appeal book index on or before 5 June 2009 as was required by the rules (8 June being a public holiday). 

4                          At the request of the appellants on about 12 June 2009, the Court gave the appellants 14 days to determine whether the appeals were to proceed and, accordingly, the Court adjourned the settling of the appeal books.  On 9 July 2009 the Court notified the parties that the index would be settled on 20 July 2009.  No draft index was filed and served by any of the appellants and the first appellant did not attend the hearing to settle it.  On 21 July 2009, the respondents filed a notice of motion seeking that the appeals be dismissed for want of prosecution.  It was listed for hearing on 24 July 2009 when the orders referred to earlier dismissing the appeals were made.

5                          The gravamen of the argument of the respondents was that the appellants had not prosecuted the appeals, they had been put on notice that it would be necessary for the respondents to prepare for the hearing of the appeals and their conduct was, in all the circumstances, so unreasonable as to warrant an order for indemnity costs.  Reference was made to Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, Davidova v Murphy [2009] FCA 601 at [23] and Khera v Jones [2008] FCA 548 at [24].  The solicitor appearing for the second and third appellants submitted that the circumstances have to be viewed through the prism created by the liquidation of the first appellant on the application of the respondents.  I agree.

6                          It is true that the appellants have not prosecuted the appeals with alacrity.  In relation to the first appellant, that is understandable because the appointment of a liquidator alters, obviously enough, the circumstances in which and the basis on which the company then might continue to prosecute litigation in which it was involved at the time it was wound up.  Almost invariably that will complicate and often delay the prosecution of such litigation even if it proceeds.  In a case such as the present where the direct primary beneficiary of any successful appeal was likely to be the first appellant, the winding up of the company had an impact on the participation in the litigation of other parties whose interests are allied to impose of the company in liquidation.

7                          While it is regrettable that the liquidator was not able to make a decision about prosecution of the appeal until 23 July 2009, I do not view the conduct of the first appellant and the consequential or at least allied indecision on the part of the second and third appellant as evidencing conduct which would warrant costs being ordered on an indemnity basis.  I refuse to do so.

Associate:

Dated:         30 July 2009