FEDERAL COURT OF AUSTRALIA

Salfinger v Napiat Pty Ltd No 2 [2012] FCA 435

THE COURT ORDERS THAT:

1.    The interlocutory application filed by the respondent on 12 April 2012 is stood over to 10.15am on 25 May 2012 before the Full Court assigned to hear the appeal in this matter or to such other time as the Full Court may determine.

2.    Costs of the interlocutory application are reserved.

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

REASONS FOR JUDGMENT

1    Before me is an interlocutory application by the respondent for an order dismissing the appeal by the appellant against a sequestration order made on 18 November 2011. The application is supported by evidence that shows the order made by me on 19 March 2012 requiring the appellant to provide security for costs of the appeal has not been complied with. The appellant does not dispute that he has not complied with that order.

2    The application for an order dismissing the appeal is opposed by the appellant. The appellant, who apparently lives in Canada, appeared at the hearing of the interlocutory application by audio link pursuant to leave granted by me.

3    The circumstances which led me to make the order for security for costs are described in my previous judgment: see Salfinger v Napiat Pty Ltd [2012] FCA 247. Pursuant to that order the appellant was required to provide security for the respondent’s costs of the appeal in the amount of $25,000 by 9 April 2012.

4    The appeal has been fixed for hearing. The hearing of the appeal is scheduled to take place before a Full Court in Sydney at 10.15am on 25 May 2012.

5    The appellant relied upon a document in the form of an affidavit signed by him but which has not been sworn or affirmed before an authorised person. Relevantly this statement makes three assertions. First, the appellant has been a permanent resident of Canada since 1991; secondly, the appellant’s appearance in the proceeding below was only provisional and he did not submit to the jurisdiction of the court; and thirdly, the appellant has a judgment against the respondent that establishes fraud on the part of the respondent in their dealings with him which will be registered in Australia shortly.

6    There was no evidence before me to explain why the appellant had not complied with the order made by me on 19 March 2012 or whether there was any prospect of him providing security in the amount ordered or in any other amount at any time in the future.

7    However, the appellant informed me during the course of the hearing that he had not been able to comply with the order for security for reasons which, according to him, could be traced back to attempts by the respondent to ruin him. The respondent also informed me that he would be in a position to lodge security for costs in the amount ordered within 60 days. There was no evidence before me to substantiate any of these statements.

8    Of course, with the hearing of the appeal now less than 25 days away, an extension of time of the length sought by the appellant would put the date by which security must be provided well beyond the scheduled hearing date.

9    Section 56(4) of the Federal Court of Australia Act 1976 (Cth) allows a judge to make an order dismissing an appeal in the event that an order for security made under that section is not complied with. In the present case I am satisfied that the order for security has not been complied with. The question is whether an order dismissing the appeal or some other order should now be made.

10    There is no evidence to suggest that the respondent will suffer any significant prejudice if the hearing of the appeal is delayed. The sequestration order the subject of the appeal has not been stayed. The appellant has still not lodged a statement of affairs and it is unclear whether the trustee in bankruptcy is taking any steps to compel him to do so. I expect the difficulties that confront the trustee in this case have more to do with the fact that the appellant is in Canada than with any uncertainty arising out of the existence of the appeal.

11    The Court must be careful to ensure that orders for security do not work injustice against a party against whom such an order is made. There is good reason to be especially careful when it is suggested, as it is by the appellant here, that a sequestration order was wrongly made against him in favour of a creditor who was actuated by some improper purpose. In the present case, however, that suggestion is not supported by any evidence.

12    The notice of appeal filed by the appellant is discursive. I accepted when making the order for security that the respondent would need to undertake significant preparation in order to meet the appeal. A respondent to an appeal who has obtained an order for security for costs is ordinarily entitled to have the security provided before incurring the costs which the order was intended to secure.

13    However, in the present case I am not willing to embark upon a course that would in all likelihood result in the vacation of the hearing of the appeal. For that reason, I am not willing to grant the appellant the extra time he seeks to provide security for costs.

14    I think the preferable course is for me to stand over the interlocutory application so that it may be considered by the Full Court at, or prior to, the hearing of the appeal. In the event that the appellant has not provided security by the time the hearing of the appeal commences then it will be open to the respondent to press its application for an order dismissing the appeal to the Full Court.

15    I appreciate that this puts the respondent in a position where it may be required to carry out substantial preparation for the appeal at a time when it is unprotected as to costs as a result of the appellant’s non-compliance with the order for security. I have taken this into account. But the desirability of maintaining the hearing date, particularly where the appeal concerns a sequestration order, is a factor that should also be given considerable weight.

16    The course I propose to take leaves it open to the Full Court to dismiss the appeal for non-compliance with the order for security for costs, adjourn the hearing of the appeal in order to allow the appellant some additional time to comply with the order, or to simply proceed to hear the appeal regardless of what the position is in relation to security. Indeed, there may be other options available to the Full Court beyond those that I have mentioned.

17    Accordingly, the interlocutory application will be stood over to 10.15am on 25 May 2012 before the Full Court or to such other time as the Full Court shall determine. Costs of the interlocutory application will be reserved.

18    Of course, the appellant must comply with any orders or directions previously made in relation to the hearing of the appeal, including those relating to the preparation and filing of appeal books and written submissions.

19    There will be orders accordingly.

Associate:

Dated:    1 May 2012