FEDERAL COURT OF AUSTRALIA

Dubow v Fitness First (Australia) Pty Ltd [2010] FCA 660

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.         The Order of the Federal Magistrate as made on 3 May 2010 for the payment of costs in the amount of $25,594.32 be stayed until further order.

2.         Costs reserved.

3.         Orders 1 and 2 are conditional and shall only take effect upon the Appellant, within 14 days:

(i)             filing an undertaking with the Court seeking to have the Notice of Appeal heard at the earliest date convenient to the Court; and

(ii)           paying into Court the sum of $25,594.32.

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 Federal Law Search on the Court’s website.

THE COURT ORDERS THAT:

1.         The Notice of Motion as filed on 14 May 2010 is dismissed.

2.         The Applicant is to pay the costs of the Respondent.

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 Federal Law Search on the Court’s website.

On appeal from the federal magistrates court of australia 

REASONS FOR JUDGMENT

1                     On 12 April 2010 a Federal Magistrate declined an application made by Ms Dubow that he disqualify himself from further involvement in her proceeding: Dubow v Fitness First Australia Pty Ltd (No. 2) [2010] FMCA 286. Thereafter, on 3 May 2010, the same Federal Magistrate made orders as to costs consequential upon an earlier discontinuance of proceedings in that Court by Ms Dubow: Dubow v Fitness First Australia Pty Ltd (No. 3) [2010] FMCA 287. Costs were assessed in the lump sum of $25,594.32.

2                     Now before the Court are two separate proceedings and two Notices of Motion, being:

·                    a Notice of Motion (in NSD 526 of 2010) seeking both leave to appeal the decision of the Federal Magistrate delivered on 12 April 2010 and an extension of time in which to do so; and

·                    a Notice of Motion (in NSD 523 of 2010) seeking a “stay of judgment” in respect to the judgment delivered on 3 May 2010.

3                     There is a degree of overlap between the two judgments of the Federal Magistrate and the two Motions now before this Court. In the decision of 12 April 2010 the Federal Magistrate declined to disqualify himself upon an allegation of a reasonable apprehension of bias arising by reason of views he had previously expressed when delivering a judgment on 8 February 2010: Dubow v Fitness First Australia Pty Ltd [2010] FMCA 56. The Notice of Appeal filed in respect of the decision delivered on 3 May 2010 raises identified Grounds of Appeal but also seeks to rely upon the same argument as to a reasonable apprehension of bias. The Grounds of Appeal there expressed go beyond this argument and provide as follows:

1.      The assessment of costs in favour of the Respondent is erroneous.

2.      The process of assessment of costs by the Federal Magistrate is inconsistent with the application of the schedule, disproportionate to the Costs awarded to the second Respondent in the same proceedings and otherwise arbitrary and unreasonable.

3.      There is an inherent unfairness in permitting the set aside of a judgment on Costs but awarding costs against a successful party on a set aside application. The decision represents a penalty or is perverse, absurd or otherwise unfair.

4.      The Federal Magistrate erred in not disqualifying himself on the basis of Apprehension of Bias from hearing the Costs Applications in matters SYG 1510 of 2005 and SYG 2624 of 2009.

4                     A stay of the orders made on 3 May 2010 was apparently granted for a period of 21 days, presumably to permit an appeal to be filed in this Court.

5                     Each of the Motions should be separately considered.

Leave To Appeal and a Reasonable Apprehension of Bias?

6                     The decision in which the Federal Magistrate refused to disqualify himself was that delivered on 12 April 2010: [2010] FMCA 286.

7                     The challenges to that decision came on 14 May 2010.

8                     It is considered that this application for both an extension of time and for leave to appeal should be refused.

9                     The Notice of Motion filed on 14 May 2010 correctly recognised that an extension of time was necessary.

10                  However, the only explanation advanced by Ms Dubow in support of any extension of time was that there had been some confusion at the time of filing the Notice of Motion with the Registry.

11                  Such an explanation on its own may well have not justified any extension of time being granted. But, had there been a basis upon which it could have been concluded that any appeal had merit, the extension of time involved was minimal and may well have been granted.

12                  But it is considered that the arguments sought to be advanced in support of the application for leave to appeal have such little merit that the Notice of Motion should be dismissed. There is little point in extending time if the substantive argument sought to be advanced is to be rejected.

13                  Considerations relevant to the exercise of discretion to grant or refuse leave are well settled, namely:

·                    “whether in all the circumstances the judgment of the primary judge is attended by sufficient doubt to warrant it being reconsidered … ”; and

·                    “whether substantial injustice would result if leave were refused supposing the decision would be wrong”.

See: Jarrett v Seymour (1993) 46 FCR 557 at 559 per Lockhart and Beaumont JJ; Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398 to 399 per Sheppard, Burchett and Heerey JJ; Harrington v Rich [2008] FCAFC 61 at [25], 166 FCR 440 at 446 per Sackville, Emmett and Jacobson JJ; CSR Limited, in the matter of CSR Limited [2010] FCAFC 34 at [5] per Keane CJ and Jacobson J.

14                  The decision of the Federal Magistrate not to disqualifyhimself is respectfully considered to be clearly correct.

15                  The basis upon which it was sought to be contended that there was a reasonable apprehension of bias on the part of the Federal Magistrate founded itself upon the earlier comments he made in his decision in February 2010. In dealing with this argument the Federal Magistrate addressed the detailed written submissions apparently filed by Ms Dubow and her reference to 21 individual aspects of the judgment previously given: [2010] FMCA 286 at [11]. The Federal Magistrate then went on at [12] to separately address the oral submissions advanced by Ms Dubow by reference to his earlier judgment.

16                  In rejecting the argument that there was a basis for reasonably apprehending bias on his part, the Federal Magistrate concluded in part as follows:

[13] Ms Dubow submits that from reading those paragraphs, a fair-minded lay observer might apprehend that I had decided against her submissions, which had been made to me in writing and orally at the hearing on 19 January 2010 and which she relies upon again today, that any award of costs against her should be determined by reference to Sch. 1 of the Federal Magistrates Court Rules 2001 (Cth), and not on any other of the approaches which are opened up by the Federal Magistrates Court Rules.

[14] Ms Dubow also identified my statements at the end of my judgment in which I gave tentative opinions about the costs consequences of my judgment in relation to the costs of the set-aside application, and Fitness First’s costs thrown away at the hearing on 10 March 2006.

…

[18] In my opinion, a fair reading of my judgment would cause a fair-minded lay observer to conclude that I had not predetermined any issue in relation to costs on the discontinuance. I do not consider that a fair-minded lay observer might conclude that I might not be open to giving full consideration to all of Ms Dubow’s submissions on whether Fitness First should be given a costs award, and if so, on how that should be quantified or assessed.

[19] It is inevitable that a consequential costs order will be influenced by the findings previously announced by the judge when determining the principal application, whether final or interlocutory. I consider that a fair-minded lay observer would think it ridiculous to contemplate the judge disqualifying himself by reason of those findings, so that another judge could decide those issues afresh in the course of deciding consequential costs issues. The observer would accept that it is inevitable, under the current practices of courts when addressing costs arising from the delivery of a reserved judgment, that the judge who has given that judgment will decide the consequential costs issues and will decide them by reference to the judge’s findings on the issues which he has decided in his judgment.

[20] In the present case, those findings concerned the circumstances of Ms Dubow’s absence from the hearing on 10 March 2006. In my opinion, it would be astonishing if principles of apprehended bias required a different judge to reconsider or readdress those factual issues as to the circumstances of Ms Dubow’s absence, for the purpose of deciding how to award costs in relation to the set-aside application. I therefore would not accept Ms Dubow’s submissions that seem to suggest that this was necessary.

[21] In relation to [59] and [60] of my earlier judgment, I accept that they, unlike the previous paragraphs, do contain an opinion suggesting that Fitness First should have an award of costs in relation to the hearing on 10 March 2006 and the set-aside application, although they do not venture to suggest how this might be quantified. However, the tentative and qualified language of my opinion to that effect would show to a fair-minded lay observer that I had not arrived at any concluded opinion on that matter, and that, indeed, I wished to receive additional submissions from the parties if they could not reach agreement.

[22] It is not uncommon for judges to include such tentative opinions about costs outcomes when giving judgment, and in my opinion a fair-minded lay observer might be aware of that practice. It is intended to focus the minds of the parties, and to encourage them to reach agreement on the costs consequences of the judge’s principal findings without incurring additional substantial costs. A fair-minded lay observer would be aware of this, and, in my opinion, would not conclude that the judge was not open to considering the parties submissions on costs in the event that they could not reach agreement.

[23] I therefore do not accept that anything in my judgment explaining my reasons for setting aside my previous costs order should cause me to disqualify myself from deciding the costs issues arising from that judgment.

Concurrence is expressed with these observations and reasons of the Federal Magistrate.

17                  Any argument that the Federal Magistrate erred in not disqualifying himself is without merit.

18                  The Applicant, Ms Dubow,should pay the costs of the Respondent of and incidental to her Notice of Motion filed in NSD 526 of 2010.

A Stay — The Principles To Be Applied

19                  The power to grant a stay is primarily to be found in s 29 of the Federal Court of Australia Act 1976 (Cth). That section provides as follows:

Stay of proceedings and suspension of orders

(1)    Where an appeal to the Court from another court has been instituted:

(a)     the Court or a Judge, or a judge of that other court (not being the Federal Magistrates Court or a court of summary jurisdiction), may order, on such conditions (if any) as it or he or she thinks fit, a stay of all or any proceedings under the judgment appealed from; and

(b)    the Court or a Judge may, by order, on such conditions (if any) as it or he or she thinks fit, suspend the operation of an injunction or other order to which the appeal, in whole or in part, relates.

(2)    This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the stay of proceedings.

20                  Also of present relevance is O 52 r 17 of the Federal Court Rules which provides as follows:

Stay

(1)    An appeal to the Court shall not:

(a)     operate as a stay of execution or of proceedings under the judgment appealed from; or

(b)    invalidate any intermediate act or proceedings;

except so far as the Court or a Judge or the court below may direct.

(2)    The Court may vary or vacate any direction of the Court or the court below referred to in subrule (1).

(3)    An application for a direction of the Court or a Judge under subrule (1) shall be made to the Court or a Judge by motion upon notice, and may be made whether or not a similar application has been made to the court below. An application for a direction under subrule (2) shall be made to the Court by motion upon notice, and may be made whether or not a similar application has been made to the court below.

21                  As is made evident by the terms of O 52 r 17(1), the mere filing of a Notice of Appeal in this Court does not itself result in the stay or execution of proceedings. And, as is evident from the terms of s 29(1) and the use of the term “may”, the Court retains a discretion to grant or refuse a stay. The usual principle is that “a successful party is entitled to the fruits of his judgment” and there must be “sound reasons” to justify a suspension of that right: McBride v Sandland (No 2) (1918) 25 CLR 369 at 374 per Barton J.

22                  Considerations relevant to the exercise of that discretion include whether there is an arguable point to be resolved on appeal and whether the balance of convenience favours the granting of a stay: Freeman v National Australia Bank Ltd [2002] FCA 427 at [4] per Spender J; Reynolds v Aluma-Lite Products Pty Ltd [2010] FCA 322 at [10] per Spender J. In Australian Competition and Consumer Commission v BMW (Australia) Ltd (No. 2) [2003] FCA 864, Finkelstein J summarised the principles which govern the exercise of the discretion as follows:

[5] The principles which govern a court’s discretion in granting a stay pending the determination of an appeal are well known: see generally Alexander v Cambridge Credit Corp Ltd (Receivers Appointed) (1985) 2 NSWLR 685. Although it is not possible to state exhaustively the considerations that may be taken into account in the exercise of this discretion, it is appropriate that I mention those that bear on this application. The general rule is that a stay will be granted where there is a likelihood that a successful appeal will be rendered nugatory: Wilson v Church (No.2) (1879) 12 Ch D 454, 458. A court will also consider the balance of convenience and the competing rights of the parties as well as whether either party will be prejudiced by the stay: The Marconi's Wireless Telegraph Company Limited v The Commonwealth [No3] (1913) 16 CLR 384, 386; Philip Morris (Australia) Ltd v Nixon [1999] FCA 1281 at [17]. Even though a judge will generally not be required to speculate about the appellants prospects of success, it is well established that a stay will not be granted in the absence of arguable grounds of appeal, or if the appeal is not bona fide: J C Scott Constructions v Mermaid Waters Tavern Pty Ltd (No. 1) [1983] 2 Qd R 243, 248; Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) [1985] 2 NSWLR 685, 695. It necessarily follows that a stay will not be granted if an appeal has no prospect of success: Australian Workers’ Union v Pilkington (Aust) Ltd (2000) 101 FCR 35, 43.

These principles were applied in Harbour City Real Estate Pty Ltd (t/as Re/Max Harbour City Real Estate) v Cargill [2008] FCA 1382 at [11] per McKerracher J.

23                  And the weight of authority is that there is no need for an applicant to demonstrate “special or exceptional circumstances before the order will be made”: Stirling Harbour Services Pty Ltd v Bunbury Port Authority (No 2) [2000] FCA 87 at [13] per French J.

24                  As is also apparent from the terms of s 29(1), when granting a stay a Court may impose “such conditions (if any) as it … thinks fit…”. In Harbour City Real Estate Pty Ltd v Cargill, supra, McKerracher J, for example, granted a stay subject to a condition that the monies the subject of the judgment from which the appellants were appealing be paid into an appropriate interest-bearing account. In circumstances where the other party is a foreign company, a stay has thus been granted where there was an offer to pay costs into an interest-bearing account: Welcome Real-Time SA v Catuity Inc (No 2) [2002] FCA 258. Although it is for an appellant to show the lack of reasonable probability of getting monies back, in Australian Solar Mesh Sales Pty Ltd v Anderson [1999] FCA 964 at [7] Gyles J observed that “it seems to me that the appellant, in order to carry that onus, would not need to do very much to throw upon the respondent the need to show means”.

The Present Application for A Stay

25                  It must be recognised at the outset that any appeal against a decision as to costs may confront considerable difficulties. The costs decision of the Federal Magistrate delivered on 3 May 2010 was made in circumstances where an earlier order for the payment of costs made in the absence of the Appellant had been set aside: Dubow v Fitness First Australia Pty Ltd [2010] FMCA 56. In the course of making that earlier order, the Federal Magistrate had noted that “the relevant circumstances are complex”: at [3].

26                  The width of the discretion being exercised by the Federal Magistrate placesconsiderable obstacles in the path of Ms Dubow. Whether those obstacles may be overcome on appeal, however, is a matter which can await the hearing of the appeal.

27                  For present purposes it is sufficient to note the observation of Finkelstein J that a judge “will generally not be required to speculate about the appellant[’]s prospects of success”.

28                  In opposing the application for a stay pending the resolution of the appeal, it was contended on behalf of the Respondent at the outset that the decision was an interlocutory decision requiring the leave of the Court and no application for leave had been expressly made. It was, however, further accepted that the Notice of Appeal as filed could be regarded as an application for leave to appeal containing the Grounds of Appeal should leave be granted. No prejudice was claimed on behalf of the Respondent if the Court were to proceed in this manner.

29                  The pragmatism advanced on behalf of the Respondent is to be commended.

30                  The submission that the decision was interlocutory had considerable merit. That argument was that the proceeding in which the costs order had been made was a proceeding which had been discontinued by Ms Dubow. Discontinuance, it was said, did not prevent a fresh proceeding being commenced and was, accordingly, an interlocutory decision.

31                  But the pragmatism of the Respondent avoided the necessity to resolve any such submission and focussed attention upon the merits of the arguments sought to be advanced by Ms Dubow. It was an approach which fell comfortably within the mandate now imposed upon this Court by s 37M and the duty imposed upon parties by s 37N of the Federal Court of Australia Act 1976 (Cth).

32                  On behalf of the Respondent it was also conceded that it would be a “bold” proposition to contend that the decision of 3 May 2010 did not expose at least “arguable” grounds of appeal. Again that concession was properly made.

33                  The position adopted on behalf of the Respondent was twofold, namely:

·                    there is no basis upon which a stay should be ordered – there being no evidence as to either the inability of Ms Dubow to presently pay such costs as have been ordered to be paid or the inability of the Respondent to repay such monies as may be paid prior to the resolution of the appeal. It was contended that Ms Dubow is the owner of a number of properties and has some equity in each of these properties. She would be exposed to no hardship should she be required to comply with the order as made; and

·                    if a stay is ordered, it should be subject to a condition that the monies be paid by Ms Dubow into Court pending the resolution of her appeal.

34                  In the circumstances of the present case it is considered that a stay should be granted – but subject to two conditions, namely:

·                    that Ms Dubow seek a hearing of her appeal at the earliest time convenient to the Court and the Respondent; and

·                    that Ms Dubow pay into Court the sum of $25,594.32.

Conclusions

35                  Although it is considered that the appeal is not without considerable difficulties, it is considered that itraises issues which are arguable and which should be finally resolved.

36                  But the difficulties confronting the Appellant are such that it is considered that conditions should be imposed upon the granting of a stay. Those conditions will require the Appellant to seek to have her appeal heard and resolved at the earliest date convenient to the Judge into whose docket the appeal is placed and to pay into Court the sum of $25,594.32. The stay granted will be “until further order” such that if the Appellant fails to comply with either of the conditions imposed an application may be made to vacate the stay now granted.

37                  The Notice of Motion as filed on 14 May 2010 in proceeding NSD 526 of 2010 is dismissed.

ORDERS

38                  In NSD 523 of 2010, the Orders of the Court are:

1.                  The Order of the Federal Magistrate as made on 3 May 2010 for the payment of costs in the amount of $25,594.32 be stayed until further order.

2.                  Costs reserved.

3.                  Orders 1 and 2 are conditional and shall only take effect upon the Appellant, within 14 days:

(i)             filing an undertaking with the Court seeking to have the Notice of Appeal heard at the earliest date convenient to the Court; and

(ii)           paying into Court the sum of $25,594.32.

39                  In NSD 526 of 2010, the Orders of the Court are:

1.             The Notice of Motion as filed on 14 May 2010 is dismissed.

2.             The Applicant is to pay the costs of the Respondent.

Associate:

Dated:         24 June 2010