Federal Court of Australia

Wiswell v Marine Industrial Developments Pty Ltd, in the matter of Marine Industrial Developments Pty Ltd [2022] FCA 695

File number(s):

NSD 1177 of 2020

Judgment of:

GOODMAN J

Date of judgment:

14 June 2022

Date of publication of reasons:

15 June 2022

Catchwords:

PRACTICE AND PROCEDURE – Application for leave to discontinue proceeding against the second defendant with no order as to costs – r 26.12 of the Federal Court Rules 2011 (Cth) – where second defendant failed to appear at the resumption of a mediation and thereafter failed to participate in the proceeding – application granted.

Legislation:

Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law

Corporations Act 2001 (Cth)

Federal Court of Australia Act 1976 (Cth)

Federal Court Rules 2011 (Cth)

Division:

General Division

Registry:

New South Wales

National Practice Area:

Commercial and Corporations

Sub-area:

Commercial Contracts, Banking, Finance and Insurance

Number of paragraphs:

31

Date of hearing:

14 June 2022

Solicitor for the Plaintiffs:

Mr H Krha of Strategic Legal

Counsel for the Defendants:

The defendants did not appear

ORDERS

NSD 1177 of 2020

IN THE MATTER OF MARINE INDUSTRIAL DEVELOPMENTS PTY LTD ACN 156 355 547

BETWEEN:

TIMOTHY WISWELL

First Plaintiff

JOHN DANIEL LEWIS

Second Plaintiff

PETER MALCOLM CRAVEN

Third Plaintiff

AND:

MARINE INDUSTRIAL DEVELOPMENTS PTY LTD ACN 156 355 547

First Defendant

RAYMOND LEONARD LA FONTAINE

Second Defendant

order made by:

GOODMAN J

DATE OF ORDER:

14 JUNE 2022

THE COURT ORDERS THAT:

1.    Leave be granted to the plaintiffs to discontinue this proceeding as against the second defendant, on the basis that the plaintiffs are not liable to pay the costs of the second defendant.

2.    The plaintiffs are to file a Notice of Discontinuance within seven (7) days.

3.    The plaintiffs are to provide a copy of these Orders to the Second Defendant by sending them to the email address ray@marinadelray.co.

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

REASONS FOR JUDGMENT

GOODMAN J

INTRODUCTION

1    The plaintiffs seek leave to discontinue this proceeding as against the second defendant on the basis that they are not liable for the costs of the second defendant. For the reasons set out below, such leave should be given.

BACKGROUND

2    The factual background set out below is extracted from the affidavit of the plaintiffs’ solicitor, Mr David Lalic, affirmed on 1 June 2022.

3    On 28 October 2020, the plaintiffs commenced this proceeding by filing an Originating Process, a Concise Statement, and an affidavit of the first plaintiff affirmed on 26 October 2020. It is unnecessary to go into detail concerning the allegations made by the plaintiffs. It is sufficient to note that the plaintiffs alleged that they had each subscribed for shares in the first defendant, a company of which the second defendant was a director and which, through subsidiary companies, operated a marina business in the Republic of Indonesia; and that the plaintiffs sought relief pursuant to the oppressive conduct provisions in Part 2F.1 of the Corporations Act 2001 (Cth) and compensation for misleading and deceptive conduct pursuant to ss 236 and 237 of the Australian Consumer Law for alleged contraventions of s 18 of that Law.

4    On 13 November 2020, Mr Lalic sent an email by way of service to the second defendant attaching the Originating Process, the Concise Statement and the first plaintiff’s affidavit affirmed on 26 October 2020.

5    On 17 and 19 November 2020, Mr Lalic sent further emails to the second defendant in connection with the proceeding.

6    On 2 December 2020, the second defendant sent an email to the chambers of Markovic J which made clear that he was aware of the proceeding but in which he asserted that neither he nor the first defendant had been served with a claim.

7    On 3 December 2020, Markovic J made orders granting leave to the plaintiffs to file and serve any interlocutory application seeking orders for service on the second defendant pursuant to r 10.43 of the Federal Court Rules 2011 (Cth).

8    During December 2020, the second defendant sent further emails to the chambers of Markovic J, including an email in which he stated that he had “received and had a chance to carefully read” the affidavits in this proceeding.

9    On 26 February 2021, the plaintiffs filed an interlocutory application seeking orders pursuant to rr 10.43 and 10.48 of the Rules in respect of the service of the Originating Process and other documents filed in this proceeding. That application was listed for hearing on 11 March 2021.

10    On 4 March 2021, Mr Zamir Hameed of M & Z Lawyers filed a Notice of Appearance on behalf of the second defendant.

11    On 9 March 2021, orders were made by consent as between the plaintiffs and the second defendant dismissing the interlocutory application filed on 26 February 2021 with no order as to costs (on the basis that the second defendant had filed a notice of appearance and the interlocutory application was no longer necessary).

12    On 25 March 2021, Markovic J made orders by consent as between the plaintiffs and the second defendant, including an order that the second defendant file a Defence on or before 23 April 2021 and an order that the plaintiffs and second defendant engage in mediation, with such mediation to be concluded by 18 June 2021. Her Honour also made an order requiring the first defendant to file any Defence on or before 23 April 2021.

13    On 23 April 2021, the second defendant filed a Concise Response and an affidavit of the second defendant.

14    On 1 June 2021, Mr Joshua Wilson of M & Z Lawyers filed a Notice of Appearance on behalf of the first defendant.

15    On 29 June 2021, Markovic J made orders by consent of all of the parties, referring the proceeding for mediation, with such mediation to be concluded by 6 August 2021.

16    On 4 August 2021, all of the parties attended a mediation before Registrar Farrell. The dispute did not resolve on that day and the mediation was adjourned for a further half-day of mediation on 19 August 2021.

17    On 19 August 2021, there was no appearance on behalf of the defendants. The mediation was then adjourned until 10 September 2021.

18    On 25 August 2021, M & Z Lawyers filed a Notice of Intention to Cease to Act for the defendants and on 7 September 2021, they filed a Notice of Ceasing to Act for those defendants.

19    On 8 September 2021, Registrar Farrell sent an email to the second defendant concerning the mediation which was scheduled to resume on 10 September 2021.

20    On 10 September 2021, Registrar Farrell sent an email vacating the mediation in view of the lack of a response from the second defendant to his email dated 8 September 2021.

21    Since 10 September 2021, there have been several case management hearings, at which the second defendant has failed to appear; Mr Lalic has sent various emails to the second defendant to which no response has been received, including emails seeking to engage in a dialogue for the progress of the proceeding on matters such as discovery; and Mr Lalic made a telephone call to a mobile telephone number for the second defendant provided to him by the plaintiffs, but the call was not answered.

22    On 28 February 2022, the second plaintiff instructed Mr Lalic to commence a proceeding for the winding up of the first defendant. On 6 April 2022, Registrar Segal made an order that the first defendant be wound up in insolvency and an order appointing joint and several liquidators to the first defendant. As a result, the present proceeding is stayed as against the first defendant.

23    On 13 May 2022, I granted leave to the plaintiffs to file the present application.

CONSIDERATION

24    Rule 26.12 provides, in so far is presently relevant:

26.12    Discontinuance

(1)    A party claiming relief may discontinue a proceeding in whole or in part by filing a notice of discontinuance, in accordance with Form 48.

(2)    The party may file the notice of discontinuance:

(a)    without the leave of the Court or the other party’s consent:

(i)    at any time before the return date fixed in the originating application; or

(ii)    if the proceeding is continuing on pleadings—at any time before the pleadings have closed; or

(b)    with the opposing party’s consent—before judgment has been entered in the proceeding; or

(c)    with the leave of the Court—at any time.

(7)    Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued.

25    The plaintiffs seek leave to file a notice of discontinuance. That leave unquestionably should be given. The question for determination is whether the Court should make an order providing otherwise than for an order that the plaintiffs pay the costs of the second defendant in relation to the discontinued claim against him. The Court’s discretion to do so is broad: see s 43 of the Federal Court of Australia Act 1976 (Cth). That discretion is to be exercised having regard to the overarching purpose of facilitating the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: s 37M of the Act.

26    The plaintiffs are seeking to abandon their claim against the second defendant without being subject to a costs order in circumstances where the second defendant has incurred the costs associated with the filing of a Concise Response and in attending the mediation on 4 August 2021. Nevertheless, I am satisfied, for the following reasons, that the order sought by the plaintiffs should be made.

27    First, between 2 December 2020 (on which date the second defendant indicated that he had not been served with the Originating Process) and 9 March 2021 (when he consented to the dismissal of the plaintiffs’ interlocutory application concerning service) the plaintiffs incurred the costs of preparing and prosecuting that interlocutory application. Whilst it is the case that the plaintiffs chose to pursue a defendant resident outside of Australia; and that the plaintiffs ultimately consented to an order dismissing their interlocutory application on the basis that there be no order as to costs, it nevertheless remains the case that those costs would have been avoided if the second defendant had agreed to accept service of the documents that had been provided to him on 13 November 2021; or if he had entered an appearance well before March 2021.

28    Secondly, since 4 August 2021 the second defendant has not engaged with this proceeding at all and this has caused the plaintiffs to incur unnecessary costs, such as the costs of preparation for and attendance at the adjourned mediation on 19 August 2021 and 10 September 2021; and the costs of preparing correspondence seeking to advance the proceeding, to which the second defendant failed to respond.

29    Thirdly, the above matters evidence conduct by the second defendant contrary to the obligation upon the second defendant as a party to this proceeding to conduct the proceeding in a manner consistent with the overarching purpose: ss 37M and 37N of the Act. The conduct of the second defendant not only increased the costs incurred by the plaintiffs, but his non-attendance at the mediation on 19 August 2021 and 10 September 2021 had an obvious adverse impact upon the efficient use of the resources of the Court, which resources could have been deployed for the benefit of litigants in other proceedings.

30    In these circumstances it is appropriate that each of the plaintiffs and the second defendant bear their own costs of the plaintiffs’ discontinued claim against the second defendant.

CONCLUSION

31    For the above reasons, the plaintiffs have leave to discontinue the proceeding as against the second defendant with no order as to costs.

I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman.

Associate:

Dated:    15 June 2022