FEDERAL COURT OF AUSTRALIA

Quin v Buchanan, in the matter of Queensland Roads, Earthmoving and Civil Construction Pty Ltd (In Liq) [2015] FCA 722

THE COURT ORDERS THAT:

1.    Each party bear their own costs of the interlocutory application

2.    The defendant pay the plaintiff’s costs of this directions hearing.

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

REASONS FOR JUDGMENT

1    On 6 July 2015, the plaintiff liquidators brought an interlocutory application for default judgment relying upon r 5.23(2) of the Federal Court Rules 2011 (Cth). The basis for the application was the failure of the defendant, Mr Buchanan, to file a defence as ordered by 23 June 2015. The application for default judgment has now been dismissed by consent. The liquidators apply for their costs of that application. I refuse that application. The purpose of this judgment is to explain my concern about how this litigation has been conducted.

2    On 22 May 2015, I ordered, by consent as follows:

1.    By 4.00 pm on 23 June 2015, the Defendant is to file and serve a detailed defence and provide any documentary evidence to be relied on in support of his defence.

2.    By 4.00 pm on 14 July 2015, the Plaintiff file and serve any reply.

3.    Pursuant to Rule 28.02 of the Federal Court Rules 2011 (Cth), the proceeding be referred to mediation by a Registrar of the Court. The mediation shall be conducted in Brisbane on or before 4 August 2015. In the event that the matter does not settle at the conclusion of the initial mediation, the Registrar conduct a case management conference immediately following the mediation to consider the most economic and efficient means of bringing the proceedings to trial and of conducting the trial, at which conference the Registrar may give further directions. The mediator is to report the result of the mediation / case management conference to the Court by 11 August 2015.

4.    The matter be listed for further directions on 18 August 2015 at 9.00 am.

5.    Costs reserved.

3    On Thursday 25 June 2015, the lawyers for the liquidators emailed the lawyers for Mr Buchanan referring to his default in filing a defence and requesting that he comply with the orders by 4 pm on 26 June 2015 otherwise they would seek default judgment.

4    On Monday 29 June 2015, the lawyers for Mr Buchanan explained that instructions had been sought but that Mr Buchanan had not responded. They said that Mr Buchanan expected to be in a position to file a defence the next day.

5    At 10.24 am the next morning, the liquidators’ lawyers emailed Mr Buchanan’s lawyers to say that unless the defence were filed by 4 pm that day, then they would file the application for default judgment without further notice.

6    Later that day, Mr Buchanan’s lawyers replied and explained that Mr Buchanan is presently in a tenancy dispute which has resulted in him being locked out of his business premises. They explained that this disruption was expected to be temporary. They requested an indulgence and an extension of time until Friday 3 July 2015 to file the defence.

7    Also on 30 June 2015, the liquidators’ lawyers replied saying that if the requirements of Order 1 from 22 May 2015 are not complied with by 10 am on Friday 3 July 2015 then they will file the default judgment application without further notice.

8    On Monday 6 July 2015, the liquidator’s lawyers filed the interlocutory application for default judgment.

9    On Tuesday 7 July 2015, the court emailed the parties regarding the application and indicated that it would be listed for directions today with a likely hearing on 30 July 2015.

10    On Tuesday 7 July 2015, the lawyer for the liquidators replied to the email from the Court saying that the date was suitable for the liquidators. Mr Buchanan’s lawyer also replied saying that he hoped to be responding with more substantive materials shortly.

11    At 5.12 pm last night, the lawyer for Mr Buchanan filed and also emailed to my associate at 5.31 pm:

(1)    notice of acting;

(2)    genuine steps statement; and

(3)    the defence.

12    The amount of money at stake in these proceedings is around $140,000 plus interest. In litigation it is essential that the legal representatives of the parties act in a co-operative fashion and in a manner which communicates, to each other and to the Court, concerns about compliance with court orders, other than trivial defaults, as soon as possible. That is not what has occurred in this case.

13    As a matter of strict procedure the response of the liquidators, in these circumstances involving exasperation with the continued delays by Mr Buchanan, is understandable. However, the proper and efficient course to have taken would have been to approach the court to ask for the matter to be relisted for directions, particularly as the lawyers for the liquidators were aware that Mr Buchanan’s lawyers had not sought that the matter be relisted for directions nor had they sought proposed consent orders extending the dates for their compliance with the 22 May 2015 orders. A directions hearing could have been relisted within days. At such a directions hearing, the liquidators could also have sought a self-executing order under rule 5.21 of the Federal Court Rules as was sought and granted today in relation to the documents accompanying the defence (as those documents have still not been filed by Mr Buchanan). All of these matters could have occurred within several days. There would have been less time wasted. There would have been less expense incurred. An unnecessary interlocutory application would have been avoided. The court could have been informed early of the reasons for non-compliance, particularly when it became apparent that the delay might be longer than a short period. This is the approach which should usually be taken to litigation. A fortiori, when the sums of money involved are not large by the usual scale in this court.

14    As for the approach of the lawyers for Mr Buchanan, they seemed to take the approach to this litigation that it was for the liquidators to consent to any extension of time. At no stage did they communicate with the court any reasons for Mr Buchanan’s delay, nor did they propose consent orders varying the time for compliance. Even when the matter was listed for directions and proposed minutes were sought, none was provided by the lawyers for Mr Buchanan.

15    The appropriate order is that each party bear their own costs of the interlocutory application but that Mr Buchanan pay the liquidators’ costs of this directions hearing today which, on any view, was made necessary as a result of his defaults.

Associate:    

Dated:    15 July 2015