FEDERAL COURT OF AUSTRALIA

Ozmen Entertainment Group Pty Ltd v Neptune Hospitality Pty Ltd (No 6) [2020] FCA 288

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application of Terry Borella filed on 13 February 2020 be dismissed.

2.    Terry Borella pay the costs of the applicants and former receivers incurred in respect of his interlocutory application filed on 13 February 2020.

3.    The former receivers’ remuneration and expenses for the period 6 July 2019 to 14 February 2020 be approved in the sum of $91,900 and be paid by the applicants to the former receivers in two equal instalments as follows:

(a)    $45,950 on or before 21 February 2020; and

(b)    $45,950 on or before 28 February 2020.

4.    The interlocutory applications of the former receivers filed on 14 June 2019 and 10 February 2020 be otherwise dismissed.

5.    Any claim by Terry Borella for his fees and expenses against the former receivers be permanently stayed by reason of his default in complying with order 2 made on 30 September 2019 and his failure to appear on 7 February 2020.

6.    The proceeding be listed for a case management hearing on 25 September 2020.

THE COURT NOTES THAT:

7.    The claim for the former receivers’ remuneration and expenses determined by Order 3 above is the final claim for the former receivers.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

RARES J:

Introduction

1    On 9 August 2019 I ordered that Terry Borella, who acted as accountant for the respondent, Neptune Hospitality Pty Ltd, in relation to the conduct of the affairs of the joint venture, the subject of the proceeding, be joined as a respondent to the former receivers’ interlocutory application that the court appointed former receivers (Brian Silvia and Ian Currie) filed on 14 June 2019 seeking that their remuneration be approved by the Court. That was because Mr Borella had a claim against the former receivers for $130,614 in respect of his fees, which was, at that time, contentious. I also ordered on that occasion that

    Mr Borella submit a list of questions to the former receivers as to the basis and calculation of the fees owed to him by 16 August 2019 and that they respond to those questions by 23 August 2019

    by 6 September 2019, Mr Borella file and serve any interlocutory application in respect of his fees returnable for case management on 13 September 2019 together with any affidavits on which he proposed to rely, with submissions limited to five pages

    the former receivers interlocutory application be fixed for case management on 7 February 2020.

2    Mr Borella’s solicitors wrote to the former receivers’ solicitors on 20 August 2019, with the list of questions, four days after they should have. The former receivers solicitors responded with a schedule on, as I was informed from the bar table, 27 August 2019, in which they acknowledged their clients’ preparedness to admit Mr Borella’s claim for fees to the extent of $26,798.75.

3    Mr Borella appears not to have accepted that position. On 11 September 2019, he, represented by his solicitor and senior counsel, and the former receivers and their lawyers had a settlement conference, but that was unsuccessful in resolving Mr Borella’s claims.

4    Later, the parties consented to an order that I made on 11 September 2019, that Mr Borella file and serve his interlocutory application in respect of his fees, returnable for case management on 11 October 2019, together with affidavits on which he proposed to rely, and submissions limited to five pages, by 27 September 2019. Once again, Mr Borella did not do so.

5    On 30 September 2019, by consent, I extended the date for compliance with the orders of 11 September 2019 to 25 October 2019 and made any interlocutory application returnable for case management on 15 November 2019. Mr Borella again defaulted and filed nothing.

6    On 4 February 2020, the solicitors for the former receivers wrote to Mr Borella’s solicitors. However, on 6 February 2020, Mr Borella’s solicitors responded saying that they no longer acted for him. The former receivers’ solicitors then emailed Mr Borella their letter of 4 February 2020. Mr Borella responded later that evening by email, in which he wrote:

The latest information that was conveyed to me in relation to this matter is that Rares J. had refused to list the matter for consideration and there did not appear to be any willingness for his Honour to deal with the matter further. I am therefore very surprised about this notification. Prior to my departure overseas on 3 February 2020, I had commenced the process of engaging new representation for me in relation to the matter.

7    Mr Borella asked that the former receivers’ solicitors cause the next day’s case management hearing to be vacated so that he could have the opportunity to be represented.

8    On 7 February 2020, the former receivers’ interlocutory application filed on 14 June 2019 was in the list for case management. Both the applicants and the former receivers appeared on that occasion, but Mr Borella did not. He had filed nothing since 9 August 2019. Mr Borella’s request in his email of 6 February 2020 was drawn to my attention on 7 February 2020, but I refused it.

9    Accordingly, on 7 February 2020 I made the following orders:

2. Upon the applicants paying the sum of $34,203.40 the subject of order 1 made on 3 December 2019 and such further sum as the former receivers and the applicants agree and or is approved by the Court in respect of the former receivers’ final claim for remuneration:

a. the ship’s mortgage given over Seadeck in favour of the former receivers be discharged forthwith;

b. subject to order 3, any claim by Mr Borella for his fees and expenses against the former receivers be permanently stayed by reason of his default in complying with order 2 made on 30 September 2019 and his failure to appear today.

3. If Mr Borella seeks to advance any claim for his fees and expenses against the former receivers, he file and serve on or before 12 February 2020:

a. an interlocutory application returnable on 14 February 2020 for case management at 2:15pm seeking that order 2(b) not take effect and any such fees and expenses as he seeks to claim;

b. all affidavits on which he relies in support of the relief sought in that interlocutory application, including an explanation of his failures to comply with order 10 made on 9 August 2019, order 1 made on 11 September 2019, order 2 made on 30 September 2019 and to appear today.

10    I listed the matter for case management and hearing of any new interlocutory applications today. The former receivers undertook to serve Mr Borella with those orders, and they did so.

11    On 10 February 2020 the former receivers filed an interlocutory application seeking that their claim for remuneration and expenses, including for the costs of today, be allowed in the sum of $103,360.01 so as to finalise their involvement in the proceeding. They also filed an affidavit of Brian Silvia sworn on 10 February 2020 in support of their claim.

12    On 13 February 2020 both the former receivers and the applicants resolved the former receivers’ claim for certain of their remuneration and anticipated that they would be in a position either to agree, or deal, today with any further claim for remuneration so that the former receivers could be dismissed from the proceeding and the ship’s mortgage over Seadeck, given to secure their remuneration, could be discharged upon the payment of any moneys outstanding. Obviously enough, the former receivers would be entitled to have the Court include in any amount due to them anything due by them to Mr Borella in respect of the receivership, in their earlier capacity as officers of the Court.

13    Later, on 13 February 2020, Mr Borella filed, with my leave, an interlocutory application returnable today seeking orders that order 2(b) of the orders of 7 February 2020 not take effect and allowing him leave to file an affidavit, or further affidavit, in support of his application for fees and expenses. He also filed an affidavit on 13 February 2020.

14    Later still on 13 February 2020 the solicitors for the former receivers and the applicants signed consent orders that the former receivers’ remuneration and expenses for the period 6 July 2019 to 14 February 2019 be approved in the sum of $91,900 and that that sum be paid by the applicants in two instalments of $45,950, the first on 21 February 2020 and the second on 28 February 2020 on the basis that that remuneration would be the final amount claimed by the former receivers.

15    In his affidavit of 13 February 2020, Mr Borella said that he was in Japan and did not have access to correspondence and documents in his office. He explained that he was unaware of his failure to comply with the orders of 9 August 2019 and 11 September 2019 because, he said, his previous solicitor had not explained to him that those orders had not been complied with. He explained his failure to comply with the order of 30 September 2019 by saying that his previous solicitor had told him that he had obtained an initial extension of time within which to compile his affidavit but required a further extension. Mr Borella said:

The extension was necessary as we (my solicitor and I) wished to examine evidence and related material that was part of the hearing between the parties that was held before Rares J. As I understand it, my solicitor obtained the consent of the other parties to that proposed extension but his Honour did not agree to that.

16    He said that, from his recollection, his previous solicitor attempted to have the matter listed before me but that I had refused to do so. That was correct, the refusal being on the basis that there was no material before me from Mr Borella to explain his default or what he was doing, or going to do, to cure it. Therefore the listing of his unfiled interlocutory application, previously anticipated to be listed for case management on 15 November 2019 did not occur. Mr Borella did nothing thereafter to remedy that situation until 13 February 2020.

17    The applicants and former receivers today made common cause that Mr Borella should not be allowed to proceed with his claim against the former receivers, although, in fairness, the former receivers acknowledged that, as officers of the Court, on 27 August 2019 they had indicated that they were prepared to admit part of his claim as payable.

Mr Borella’s submissions

18    Mr Borella argued that I should grant him a further short opportunity, on his return from Japan, anticipated to occur on Sunday, 16 February 2020, to put before me a proper explanation for his delay and claim for his fees prior to my discharging the former receivers entirely from any obligation to him, so as to enable justice to be done. He relied on the previous acknowledgment on 27 August 2019 by the former receivers of the part of Mr Borella’s claim in the sum of $26,798.75 for remuneration as justifying a further extension of time in which he could seek to substantiate what he asserted he was owed.

Consideration

19    On 9 August 2019, I ordered that Mr Borella be joined as a respondent to the former receivers’ interlocutory application filed on 14 June 2019. He is in default, for the purposes of r 5.22 of the Federal Court Rules 2011. In effect, Mr Borella is in the position of an applicant seeking to have the Court make orders that he be allowed to file an interlocutory application and evidence in support of his claim for fees against the former receivers, albeit that, formally, he is, in substance, a respondent to an interlocutory application and a third party to the actual proceeding. Indeed, the former receivers’ interlocutory application is also by third parties to the proceeding whom the Court appointed to conduct the joint venture pending the final hearing.

20    Where an applicant is in default, a respondent, may apply, under r 5.23, for an order that the proceeding be stayed or dismissed in respect of the whole or part of the relief claimed by the applicant immediately, or on conditions specified in the order. Here, relevantly, the former receivers and the applicants are in the position of a respondent to Mr Borella’s claim or foreshadowed claim for fees, because each of them may have had a liability to, or in respect of, Mr Borella, had he availed himself of the several opportunities to file an interlocutory application under the three orders that I made last year requiring him to do so.

21    In my opinion, Mr Borella should not be allowed to make any claim now against the former receivers for his fees, having regard to his persistent defaults that I have outlined above. As he admitted in his affidavit of 13 February 2019, he was aware before I refused to allow the matter to be listed on 15 November 2019 that he needed an extension of time from the Court in which to compile an affidavit in support of his claim for fees. Yet, before and since then, it is apparent, he has done nothing to do so. Nor did he seek in any way to rectify his default before departing for Japan earlier this month.

22    Allowing for the fact that he did not have access to all of his documents while he was away, in Japan, Mr Borella’s explanation for his delay demonstrated, plainly, that he was not in a position, and had not made any real attempt, to comply with the Court’s orders. He has failed to pursue his claim for fees in accordance with his obligations as a litigant under Pt VB of the Federal Court of Australia Act 1976 (Cth) to assist in achieving the overarching purpose of the civil practice and procedure provisions, namely to enable his dispute to be justly resolved according to law as quickly, inexpensively and efficiently as possible.

23    Rather, although Mr Borella caused the Court to make two orders for an extension of time to benefit him, he failed to avail himself of each of those extensions of time or to do anything thereafter to remedy his defaults and to do what he needed to progress his claim. In my opinion, he has been insouciant in the conduct of his claim. He has, and has given, no justification for seeking now to keep the former receivers involved in the proceeding. Mr Borella chose not to accept the former receivers’ acknowledgment of his being due $26,798.75, but rather wanted to put them and the applicants to the expense of contesting that calculation and claimed over four times that sum, but he has done nothing of substance since 27 August 2019 to progress or justify whatever claim he might wish to make.

24    In my opinion, Mr Borella should not be allowed to use the processes of the Court anymore having regard to his default. His explanation for his delay and defaults is inadequate: Tamaya Resources Ltd v Deloitee Tomche Tohmatsu (2016) 332 ALR 199 at 226-227 [153]-[160] per Gilmour, Perram and Beach JJ. His delay has caused injustice, undue further inconvenience and expense to the parties and has protracted the proceeding unnecessarily. Mr Borella has lost any entitlement to further indulgences from the Court by his persistent defaults and failure to conduct himself as he was bound to do under s 37N of the Act.

25    In the circumstances, the former receivers are entitled to be discharged from their role in the proceeding and from any liability to Mr Borella. That will enable them to give a discharge of the ship’s mortgage and release the applicants, as the parties liable to pay the former receivers’ costs and expenses once they pay the outstanding agreed sum of $91,900 the subject of the former receivers’ interlocutory application of 10 February 2019. The applicants, and the former receivers, agreed the quantum of those fees. Following a review of them and their basis as Mr Silvia explained in his affidavit of 10 February 2020, I am satisfied that those fees and expenses, as agreed, are appropriately quantified.

Conclusion

26    I will make the orders that the applicants and the former receivers have agreed so that order 2(a) that I made on 7 February 2020 will operate once the applicants have discharged their further obligation to pay the $91,900.

Associate:

Dated:    9 March 2020