Federal Court of Australia

Ross (Liquidator) in the matter of Print Mail Logistics (International) Pty Ltd (In Liq) v Elias [2022] FCA 296

ORDERS

THE COURT ORDERS THAT:

1.    The application for extension of time and leave to appeal filed 3 February 2022 is dismissed.

2.    By 4.00 pm AEST on 1 April 2022, the applicants shall file and serve any written submissions (limited to three pages) in reply to paragraphs 17 – 21 of the respondents’ submissions filed on 24 February 2022 and on the issue of whether any costs order should be made on a lump sum basis.

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

REASONS FOR JUDGMENT

DOWNES J:

Background

1    The applicants were the wholly unsuccessful plaintiffs at a trial, the hearing of which occurred in September 2020: Ross, in the matter of Print Mail Logistics (International) Pty Ltd (in liq) v Elias (2021) 151 ACSR 476; [2021] FCA 419 (Ross (1)).

2    On 28 October 2021, following written submissions by the parties, the primary judge delivered a further judgment and ordered that the applicants pay the respondents’ costs on an indemnity basis from 27 February 2020: Ross, in the matter of Print Mail Logistics (International) Pty Ltd (in liq) v Elias (No 2) [2021] FCA 1334 (Ross (2)).

3    The date of 27 February 2020 which is referred to in the order made by the primary judge was the date on which the respondents had made a Calderbank offer to the applicants, which offer had not been accepted. The offer, which is set out in full in [3] of the Reasons in Ross (2), included the following statement:

In full and final settlement, release and discharge by our respective clients (and their successors and assigns) of each other from all:

1.     court proceedings (including QUD240/19 & QUD366/2019);

2.     other suits,

3.     claims,

4.    demands, or

5.     causes of action of whatsoever nature (whether legal, equitable or under statute);

arising from or in connection to the subject matter of QUD240/2019 or QUD366/2019; and the operation and affairs of Print Mail Logistics (International) Pty Ltd (in liquidation) or Print Mail Logistic [sic] Limited (or any related or associated entity) that our respective clients may have now or at any time in the future, our clients will:

1.    pay your clients the sum of $15,000.00 in cleared funds within 14 days of acceptance; and

2.    release your clients (Messrs. Ross and Pleash) from the personal costs orders made against your clients on 28 October 2019 and 21 November 2019.

(emphasis in original)

4    The application for indemnity costs which resulted in the decision in Ross (2) was determined on the papers.

5    An appeal from the decision in Ross (1) was dismissed with costs on 18 November 2021: Ross (Liquidator) in the matter of Print Mail Logistics (International) Pty Ltd (In Liq) v Elias [2021] FCAFC 203.

6    The applicants lodged a notice of appeal in relation to the decision in Ross (2) on 25 November 2021. The primary relief which is sought by that notice of appeal is that the order of the primary judge be varied such that the applicants be ordered to pay the respondents’ costs of the primary proceeding on the standard basis.

7    Rule 35.13(a) of the Federal Court Rules 2011 (Cth) provides that an application for leave to appeal must be filed within 14 days after the date on which the judgment was pronounced or the order was made.

8    No application for leave to appeal from Ross (2) was filed by the applicants within 14 days of the decision in Ross (2) being handed down or at any time in 2021. It was not in contest that leave to appeal was required.

9    The applicants filed an application for extension of time and leave to appeal on 3 February 2022. The applicants also filed an affidavit of Mr Ashley Stanton.

10    The applicants filed submissions in relation to their application on 17 February 2022. The respondents provided submissions on 28 January 2022 (which have not been filed and will be made exhibit 1) and filed further submissions on 24 February 2022.

11    The parties accepted that the application for extension of time and leave to appeal could be determined on the papers.

12    For the following reasons, the application is dismissed.

Relevant principles

13    In Kapp as substituted trustee for The Twin Trust v Aravanis as trustee of bankrupt estate of Kapp [2021] FCA 116, Wigney J observed at [20] – [22]:

The principles relevant to the exercise of discretion to grant an extension of time are well-established and do not need to be rehearsed in detail: … The length of the delay in filing the application is a relevant consideration and an applicant must generally give an adequate explanation for the delay. Any prejudice to the respondent would also militate against the grant of an extension of time, though the absence of such prejudice alone would generally not, without more, justify an extension.

The merits of the substantive appeal, if an extension were granted, must also be considered. It will seldom be in the interests of justice to grant an extension of time where an appeal would have little or no prospects of success: ....

Where the application for an extension of time is in respect of the filing of an application for leave to appeal, it is also necessary to have regard to the principles applicable to the grant of leave to appeal…

(citations omitted)

14    The principles relevant to an application for leave to appeal were summarised by the Full Court in Nationwide News Pty Ltd v Rush [2018] FCAFC 70 (Lee J, Allsop CJ and Rares J agreeing) at [3] as follows:

Consistently with the facilitation of a just resolution, an applicant must usually show that: (a) in all the circumstances, the decision to be appealed is attended with sufficient doubt to warrant its reconsideration on appeal; and (b) supposing the decision to be wrong, substantial injustice would result if leave were refused: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399 (Sheppard, Burchett and Heerey JJ). The sufficiency of the doubt in respect of the decision to be appealed and the question of substantial injustice bear upon each other so that the degree of doubt which is sufficient in one case may be different from that required in another. It has also been said that the considerations are cumulative such that leave ought not be granted unless each limb is made out: Rawson Finances Pty Ltd v Deputy Commissioner of Taxation [2010] FCAFC 139; (2010) 81 ATR 36 at 38 [5] (Ryan, Stone and Jagot JJ); Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98; (2017) 252 FCR 1 at 4 [3] (Jagot, Yates and Murphy JJ).

15    In FJE20 v Minister for Home Affairs [2022] FCAFC 45 (Allsop CJ, Mortimer and SC Derrington JJ) stated at [8] – [9]:

… The principles that govern the grant of leave [to appeal] are well established. In Bienstein v Bienstein [2003] HCA 7; 195 ALR 225 at [29], McHugh, Kirby and Callinan JJ held that “[a]n applicant for leave must establish that the decision in question is attended with sufficient doubt to warrant the grant of leave. The applicant must also show that substantial injustice will result from a refusal of leave to appeal.”

… it is necessary for this Court to consider the merits of the substantial application in considering whether an extension is to be granted. Neither an extension of time nor leave to appeal will be granted where there are no reasonable prospects of success on the appeal: Hunter Valley Developments Pty Ltd v Cohen [1984] FCA 186; 3 FCR 344 at 348-349; Parker v R [2002] FCAFC 133 at [6]; BQQ15 v Minister for Home Affairs [2019] FCAFC 218 at [33].

Proposed grounds of appeal

16    The notice of appeal sets out the following grounds of appeal:

1.    The Trial Judge erred by failing to find that the [Applicants] did not act unreasonably in not accepting the Respondents’ offer made 27 February 2020 (Offer).

2.    The Trial Judge erred by failing to find that at the time that the [Applicants] did not accept the Offer:

a.    there was insufficient evidence for the [Applicants] to assess their prospects of success to such a degree so as for it to be unreasonable for them to have not accepted the Offer; and/or

b.    the Offer was not one to solely settle the issues in dispute in the proceeding.

3.    Further, the Trial Judge erred by failing to take into account, or give sufficient weight to the following issues at the time that the [Applicants] did not accept the offer:

a.    the stage of the proceeding at which the Offer was received;

b.    the extent of the compromise offered;

c.    the [Applicant’s] prospects of success assessed at the date of the Offer;

d.    that the compromise offered would have required the First [Applicants] to settle all claims (and not those the subject of or related to the proceeding) with the Respondents.

(emphasis in original)

Consideration

Length of delay and explanation for delay

17    The delay of approximately twelve weeks before filing the application for leave was not insignificant. However, an adequate explanation for the delay was provided by the solicitor for the applicants, Mr Stanton, to the effect that the delay was caused by solicitor error. This explanation was not challenged by the respondents.

Prejudice to respondents caused by the delay

18    As to the issue of prejudice to the respondents caused by the delay in filing the application for leave, it is relevant that the notice of appeal was filed and served within time. This means that the respondents were on notice that the decision in Ross (2) was being appealed. The respondents complain that they will continue to be shut out of the benefit of the costs order if the extension of time is granted, but no stay of that order has been granted. In any event, significant prejudice to the respondents if an extension of time was granted has not been demonstrated.

Merits of proposed appeal

The applicants’ submissions on this application

19    By their submissions, the applicants accept that they must demonstrate that they have prospects of success in relation to their proposed appeal and that this is a “key consideration” in relation to both the application for extension of time and the application for leave to appeal.

20    The applicants submit that the “strongest grounds of appeal” are grounds 2(b) and 3(d) of the notice of appeal. The applicants accept that if those grounds of appeal are of insufficient weight to warrant a grant of leave to proceed, then the other grounds would also be insufficient. I infer from this that the applicants also accept that, in these circumstances, the application for extension of time should also be refused.

21    The applicants’ submissions identify the terms of the offer and state the following:

In effect, the offer proposed a settlement that would have applied (and been binding on the Liquidator) in respect of not just the matters connected to or the subject of the proceeding but also any claims that the Liquidator had as to the operation and affairs of the company in liquidation (Print Mail Logistics (Intl) Pty Ltd) and its parent entity (Print Mail Logistics Ltd), which was not a part of the proceeding, and any related or associated entity of those corporate vehicles.

The liquidators [sic] role is to administer the insolvent company’s affairs strictly in accordance with the duties and obligations imposed by the Corporations Act 2001 (Cth) (‘Corporations Act’) and the Corporations Rules. A liquidator’s principle duties have been described as including taking possession of and protecting the company’s assets, making lists of contributories and creditors, having disputed cases adjudicated upon, realising the company’s assets and in the due course of the administration, applying the proceeds amongst the creditors and contributories, with all provision transactions containing Part 5.7B of the Corporations Act are consistent with a process to achieve a fair and efficient distribution of the realisable assets amongst the creditors.

The question before the learned trial Judge was whether or not the Liquidator’s rejection of the Calderbank offer was unreasonable in all of the circumstances. It was enlivened by paragraph 6 of the Plaintiff’s submissions on the appropriate order for costs filed in the primary proceedings which put into issue that there was a public interest to be considered in liquidators acting in the best interests of the insolvent company to which they were appointed. The issue was also flagged at paragraph 9 of the submissions which identified that the offer sought to bind parties, namely Print Mail Logistics Ltd and other unknown parties, that were not the subject of the proceeding.

Relevantly here, it is sufficient for the Court to be satisfied that the Applicants have prospects of success on the Appeal if the extension is granted. On the Applicants’ submission, the Court ought be so satisfied because the learned trial Judge failed to take into account:

(a)    the fact that the Calderbank offer required the Liquidator (who had the public duties identified above) to compromise claims that may have gone beyond the scope of the proceeding and in relation to third parties who were not parties to the proceeding (and indeed where [sic] not wholly identified); and

(b)    there was a public interest in the Liquidator being conscious of and acting in accordance with these concerns;

(c)    in these circumstances, it was not unreasonable for the Liquidator to not have accepted the Calderbank offer.

In the circumstances outlined above, the Applicants submit that the determinative factor on the application to extend time for leave to appeal is the third identified factor (being the Applicants’ prospects of success on appeal) and that it is a factor that falls in favour of the Applicants. Accordingly, it is submitted that leave ought be granted.

(emphasis in original, footnotes omitted)

New points not raised below

22    Ground 2(b) criticises the primary judge for “failing to find” that the offer was not one to solely settle the issues in dispute in the proceeding. The applicants did not make any submission to the primary judge that the finding in ground 2(b) should be made.

23    Ground 3 complains of an error by the primary judge in “failing to take into account, or give sufficient weight” to certain “issues” including that which appears in ground 3(d), being that the compromise would have required the first applicants to settle all claims (and not those the subject of or related to the proceeding) with the respondents. No submission was made by the applicants to the primary judge to this effect.

24    In Elzahed v State of New South Wales (2018) 97 NSWLR 898; [2018] NSWCA 103, the Court noted at [1]-[2]:

…To succeed in challenging [a discretionary] decision the appellant must demonstrate that the decision was affected by error of the kind described in House v The King (1936) 55 CLR 499; [1936] HCA 40.

When a court is invited to make a discretionary decision, to which many factors may be relevant, it is incumbent on the party who contends on appeal that attention was not given to particular matters to demonstrate that the primary judge’s attention was drawn to those matters, at least unless they were fundamental and obvious. The alternative approach would permit a party to run one case before the primary judge and different cases on appeal: Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [120]–[121].

25    The primary judge was required to make a discretionary decision, and his attention was not drawn by the applicants to the points now sought to be raised by grounds 2(b) and 3(d). These points were not fundamental and obvious, and the applicants do not submit that they were. This is a significant obstacle to the success of any appeal on these grounds.

26    That the applicants did not address the primary judge on the points raised by grounds 2(b) and 3(d) was discussed at the case management hearing on 28 January 2022.

27    By their submissions, the applicants appear not to accept that these matters were not raised with the primary judge. Instead, the applicants submit that they “flagged” the “issue” to the primary judge by including one sentence in a section of their submissions below which was entitled “The stage of the proceeding at which the Defendants’ Calderbank Offer was received”. That sentence read:

The offer sought include [sic] to bind parties, namely, Print Mail Logistics Ltd and other unknown future parties and associates, not subject to the proceedings.

28    However, that sentence is directed to the fact that the offer sought to bind non-parties to the proceedings (and this was referred to in [10] of the Reasons). It did not “flag” the issue now sought to be raised by grounds 2(b) and 3(d).

Lack of evidence

29    As submitted by the respondents, the points now sought to be raised are not supported by any evidence as to what the claims outside of the existing proceeding are asserted to be – “there is no evidence now, and none was put before the trial judge”.

30    Without such evidence, the primary judge was and any Full Court would be operating in a vacuum, with no understanding of the nature of the claims which were offered to be compromised beyond the existing proceeding. That is a serious deficiency in the applicants’ case because it is difficult to assess the reasonableness of the applicants’ conduct without such evidence.

31    Further, had such evidence been adduced, there is a possibility that it could have been the subject of responsive evidence. This provides another obstacle to the appeal succeeding for the reasons explained by the Full Court in Woodhouse v Comcare (2021) 285 FCR 14; [2021] FCAFC 95 (Collier, Rangiah and Derrington JJ) at [49]:

The issue of whether a new point sought to be raised on appeal could possibly have been met by the respondent calling further evidence at first instance is generally of crucial importance and it is necessary for the party seeking to raise the new point to negative the possibility that it could have been so answered: ... Only once that possibility is negatived is it necessary to consider whether it is expedient and in the interests of justice to permit the new point to be raised: ...

Appeal on point of practice and procedure

32    A further reason to conclude that any appeal lacks prospects is that it would be an appeal from an exercise of discretion on a point of practice and procedure, with which the Full Court is reluctant to interfere. In Nationwide News at [4], it was stated that:

… consistent with the facilitation of a quick, inexpensive and efficient resolution is the principle which emerges from the oft-cited warning of Jordan CJ in In re the Will of F. B. Gilbert (Deceased) (1946) 46 SR (NSW) 318 at 323, that if a tight rein is not kept upon the interference with orders of judges at first instance in the exercise of discretion on a point of practice and procedure, the result will be “disastrous to the proper administration of justice”.

33    In Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v MB [2021] FCAFC 194, Griffiths J stated at [13] – [14] with Thomas and Stewart JJ agreeing:

It is well settled that discretionary costs orders are, as a general rule, matters of practice or procedure (see, for example, Hudson v Sigalla [2016] FCA 1204 at [38] per Katzmann J and Gorczynski v Annandale Services Pty Ltd [2004] NSWCA 7 at [16] per Santow JA (with whom Meagher and Ipp JJA agreed)).

It is equally well settled that appellate courts are loathe to grant leave to appeal on matters of practice or procedure. As the Full Court (Jacobson, Siopis and Foster JJ) stated in Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2010] FCAFC 16; 265 ALR 112 at [113] (in the context of whether to grant leave to appeal from a costs order):

There is no doubt that appellate courts are loathe to overturn discretionary costs orders made by single judges. This reluctance reflects a history of caution expressed by appellate courts when asked to overturn discretionary judgments generally.

(To similar effect, see Tenser v Quigley [2016] FCAFC 178 at [28]-[30] per Nicholas, Katzmann and Markovic JJ; Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222; 256 FCR 306 at [69] per Logan J, Bromberg and Charlesworth JJ agreeing and Zreika v Royal [2019] FCAFC 82; 271 FCR 65 at [317] per Besanko, Farrell and O’Callaghan JJ.)

34    The applicants have not demonstrated that this case warrants leave to appeal being granted in respect of a matter of practice and procedure.

Conclusion

35    For these reasons, the proposed appeal has little or no prospects of success, and it is not in the interests of justice to grant an extension of time for this reason. Further and for the same reasons, the judgment of the primary judge in Ross (2) is not attended by sufficient doubt to warrant it being reconsidered by an appellate court.

Whether substantial injustice

36    For the following reasons, the applicants have failed to demonstrate substantial injustice if leave to appeal was refused supposing the decision to be wrong.

37    The only consequence of a refusal of leave is that they will be required to pay the respondents’ costs on an indemnity basis after 27 February 2020 instead of costs on the standard basis. It will be recalled that the trial occurred in September 2020, which was approximately seven months after the offer was made.

38    The applicants did not adduce any evidence of the difference between the likely amount of costs which they will be required to pay on the indemnity basis as opposed to the standard basis, or that they will suffer any special prejudice if those additional costs are required to be paid.

39    The applicants also submit that there is a public interest in clarification of a liquidator’s position when faced with an offer of this nature, but it is not explained why this is relevant to the issue of substantial injustice or why such clarification is necessary. A liquidator or any litigant who is served with a Calderbank offer which seeks to compromise claims beyond an existing proceeding should seek to identify what those claims are or could be as part of a reasoned decision as to whether or not to accept the offer. For example, if there are no other existing claims, and the prospects of any future claim are low, it may be unreasonable not to accept such an offer. It is something which can only be assessed having regard to the particular circumstances.

Conclusion

40    For these reasons, the application for an extension of time and leave to appeal must be dismissed.

41    By their submissions, the respondents seek an order that the applicants pay their costs on an indemnity basis in the event that this application is dismissed.

42    I will invite the applicants to file brief submissions in reply. Those submissions should also address whether they oppose an order that the respondents’ costs be assessed on a lump sum basis, which appears to be an appropriate order in this case.

Associate:

Dated:    29 March 2022

SCHEDULE OF PARTIES