Federal Court of Australia

Royal Express Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v Huang, in the matter of Royal Express Pty Ltd (No 8) [2025] FCA 187

ORDERS

THE COURT ORDERS THAT:

1.    The plaintiff have leave to discontinue this proceeding as against the first and second defendants, on the basis that each party is to bear their own costs pursuant to r 26.12 of the Federal Court Rules 2011 (Cth) (Rules).

2.    The plaintiff is to file a notice of discontinuance in the form of Annexure A, within seven (7) days of the date of these orders.

3.    Pursuant to r 1.34 of the Rules, the plaintiff be dispensed from compliance with
r 17.01(2) of the Rules in relation to the service of this interlocutory application on the second defendant.

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

ANNEXURE A

Form 48

Rule 26.12(1)

Notice of discontinuance

Federal Court of Australia

District Registry: Victoria

Division: General                             No. VID287/2021

BETWEEN:    ROYAL EXPRESS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) IN LIQUIDATION (ACN 159 689 139)

    Plaintiff

AND:    DI HUANG

    First Defendant

MENQUI JI

    Second Defendant

1.    Royal Express Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (ACN 159 689 139), the Plaintiff, discontinues the whole of the proceeding.

1.    The Court on 12 March 2025 granted leave for the discontinuance.

2.    Each party is to bear their own costs of the proceeding.

Date:

Signed by Allens

Lawyer for the Plaintiff

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from transcript)

MCEVOY J:

1    Before the court is an interlocutory application pursuant to r 26.12 of the Federal Court Rules 2011 (Cth) (Rules) in which the plaintiff seeks leave to discontinue this proceeding against the first defendant, Mr Di Huang, and the second defendant, Ms Mengqui Ji.

2    The plaintiff relies on an affidavit of Mr Matthew Whittle affirmed on 28 February 2025 in support of its application.

3    Mr Huang and Ms Ji were notified of this application but they did not file any evidence or written submissions. The application was called and they did not appear at the hearing this afternoon.

4    It is unnecessary for present purposes to delve too deeply into the circumstances underlying the proceeding. In short compass, however, Royal Express Pty Ltd entered receivership on 7 May 2021 and Salvatore Algeri and Timothy Bryce Normal were appointed as joint and several receivers.

5    The proceeding was then commenced by originating process filed by the plaintiff on 28 May 2021. The plaintiff filed a statement of claim on 13 August 2021. The statement of claim alleges, amongst other things, that Mr Huang and Ms Ji breached the statutory duties imposed upon them by ss 181(1) and 182(1) of the Corporations Act 2001 (Cth) (the Corporations Act); or alternatively, fiduciary duties they owed by reason of their position with the plaintiff.

6    As at 5 December 2022 there were ten defendants to the proceeding. Each of those defendants, but for Mr Huang and Ms Ji, have entered into settlement agreements with the plaintiff and the proceedings against them have been discontinued. Accordingly, Mr Huang and Ms Ji are the only remaining defendants to the proceeding.

7    Mr Huang is unrepresented and apparently outside the jurisdiction. A warrant for his arrest was issued on 30 September 2022 by reason of his failure to comply with an examination summons pursuant to r 11.10 of the Federal Court (Corporations) Rules 2000 (Cth). Mr Huang has filed a defence and prepared an unfiled affidavit of lay evidence. He was denied his request to attend a case management hearing by audio visual link on 21 November 2023 and has not attended, or sought to participate, in any subsequent hearings. Mr Huang prepared a position paper for the mediation, and subsequently attended the mediation virtually, however as the mediator's report to the court indicates, the plaintiff and Mr Huang did not reach a settlement agreement. Since the mediation, Mr Huang has not responded to correspondence from the plaintiff seeking to engage with him to advance, and to resolve, the proceeding.

8    Ms Ji is also unrepresented in the proceeding. Ms Ji has not actively participated in the proceeding, she has not filed a defence, nor has she appeared at any case management hearings. Ms Ji has not responded to any correspondence from the solicitors for the plaintiff.

9    On 13 February 2025 the solicitors for the plaintiff advised the court that the plaintiff seeks to discontinue the proceeding against Mr Huang and Ms Ji, with an order that the parties are to bear their own costs of the proceeding. Mr Huang and Ms Ji were copied to that email correspondence.

10    On 19 February 2025 the solicitors for the plaintiff emailed Mr Huang and Mr Ji respectively to advise them that the plaintiff proposed to discontinue the proceeding against them on the terms that each party bear their own costs of the proceeding. Attached to that email was a copy of the notice of discontinuance prepared by the plaintiff which gave effect to that proposal. The solicitors for the plaintiff requested Mr Huang and Ms Ji to sign the proposed notice of discontinuance if they consented to the proposed position. If they did not consent to the proposed position, the solicitors for the plaintiff requested that Mr Huang and Ms Ji inform them of their position by reply email.

11    On 20 February 2025 I made orders requiring the plaintiff to file and serve a formal interlocutory application for orders pursuant to r 26.12 of the Rules and any evidence in support of that application.

12    As at 28 February 2025 the solicitors for the plaintiff had received no response from either Mr Huang or Ms Ji in response to their emails sent 19 February 2025 or 20 February 2025.

13    In that context, on 28 February 2025, the plaintiff filed the interlocutory application to discontinue the proceeding against Mr Huang and Ms Ji on terms that each party bear their own costs of the proceeding.

14    The plaintiff seeks to discontinue the proceeding against Mr Huang and Ms Ji on the basis that the plaintiff does not believe that they are active participants in the proceeding. Mr Matthew Whittle’s affidavit of 28 February 2025 provides evidence in support of the plaintiff’s belief, which I accept. The substance of it is that Mr Huang has not taken active steps in the proceeding since the mediation (which he attended by Teams) and that Ms Ji has never participated in the proceedings.

15    Rule 26.12 provides, in so far as is presently relevant:

(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

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

(b)    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.

16    I am satisfied that leave should be granted for the plaintiff to discontinue the proceedings against Mr Huang and Ms Ji. The question then becomes whether the court should make an order providing other than that the plaintiffs are to pay the costs of Mr Huang and Ms Ji in relation to the discontinued claim against them.

17    In El-Debel v Secretary, Department of Immigration & Border Protection (2014) 141 ALD 611, Foster J expressed the guiding principle behind r 26.12(7) at [17]:

[Rule] 26.12(7) reflects a more general policy of the law to the effect that a party should always be permitted to discontinue its proceedings but, in the modern setting, should usually have to pay the costs of the other parties occasioned by the bringing of the proceedings and their subsequent abandonment. This is not to gainsay the broad discretion in respect of costs given to the Court by s 43 of the Federal Court of Australia Act 1976 (Cth). Nonetheless, the Court should give effect to this general policy when making costs orders unless there is some good reason for declining to do so.

18    Pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth) (the Act), the court’s discretion to make an order as to costs is broad. That discretion, however, 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: see s 37M of the Act; Wiswell v Marine Industrial Developments Pty Ltd [2022] FCA 695 at [25] (Goodman J) (Wiswell).

19    The plaintiff is seeking to discontinue its claim against Ms Ji in circumstances where she has taken no substantive steps in nor otherwise engaged with the proceeding. It is apparent, therefore, that Ms Ji would most likely not have incurred anything other than nominal costs in the course of the proceeding. The plaintiff is seeking to discontinue its claim against Mr Huang without being subject to a costs order in circumstances where Mr Huang may have incurred costs associated with the filing of a defence and his preparation for and attendance at the mediation on 8 March 2024.

20    Nonetheless, I am satisfied that there is good reason for the court to exercise its discretion to depart from the ordinary course under r 26.12(7) of the Rules and that the costs order sought by the plaintiff should be made: see Wiswell at [26] to [29]. I have formed this view for the following reasons.

21    First, the plaintiff submits, and I accept, that it has incurred unnecessary costs to prosecute its claims against Mr Huang and Ms Ji who have respectively never been, or are no longer, active participants in the proceeding.

22    Secondly, I accept that Mr Huang and Ms Ji have not conducted the proceeding consistently with the obligations imposed on parties to civil proceedings by ss 37M and 37N of the Act. The plaintiff submits, and I accept, that their conduct has had an adverse impact on the efficient use of curial resources which could instead have been deployed for the benefit of other litigants. This is especially so in circumstances where the proceeding has been on foot since 2021.

23    Thirdly, the plaintiff has taken all reasonable steps to draw to both Mr Huang’s and Ms Ji’s attention the interlocutory application dated 28 February 2025 for leave to discontinue the proceeding against them with an order that the parties are to bear their own costs of the proceeding, and has been met with no response.

24    In these circumstances I consider it to be appropriate that the parties bear their own costs of the plaintiff’s discontinued claim against Mr Huang and Ms Ji. This is particularly so when regard is had to the fact that Mr Huang and Ms Ji are the only remaining defendants to the proceeding.

25    There will be orders that the plaintiff has leave to discontinue the proceeding against Mr Huang and Ms Ji on the basis that the parties are to bear their own costs of the proceeding. I am also satisfied, in the circumstances, that it would be appropriate that the court dispense with compliance with r 17.01(2) of the Rules in relation to the service of the interlocutory application on Ms Ji.

Associate:

Dated:    12 March 2025