1st Fleet Pty Ltd (in liq) v Transms Pty Ltd

[2017] NSWCA 147

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	1st Fleet Pty Ltd (in liq) v Transms Pty Ltd [2017] NSWCA 147
Hearing dates:	20 June 2017
Decision date:	20 June 2017
Before:	Basten JA and Payne JA
Decision:	(1)   Refuse leave to appeal from the orders made by the District Court on 2 March 2017 granting an adjournment of the trial before it.  (2)   Order that the applicant pay the respondent’s costs in this Court.
Catchwords:	APPEALS – leave to appeal – leave sought to appeal against District Court order adjourning ongoing proceedings – futility of challenge to effected adjournment – whether applicant’s waste of costs sufficient basis for grant of leave – whether appropriate to grant leave
Legislation Cited:	Corporations Act 2001 (Cth), s 553C
Category:	Principal judgment
Parties:	1st Fleet Pty Ltd (In liq) (Applicant) Transms Pty Ltd (Respondent)
Representation:	Counsel: Mr M Pesman SC (Applicant) Mr M Ashhurst SC (Respondent)   Solicitors: ERA Legal (Applicant) Yates Beaggi (Respondent)
File Number(s):	2017/81841
Decision under appeal	Court or tribunal: District Court Jurisdiction: Civil Date of Decision: 02 March 2017 Before: Maiden DCJ File Number(s): 2015/333472

Judgment

1. THE COURT: The parties to the present leave application are engaged in litigation in the District Court. The hearing commenced on 2 March 2017. At the end of the plaintiff’s case, the defendant (the present respondent) sought and was granted an adjournment to allow it to file an amended pleading. The applicant (the plaintiff in the District Court) seeks leave to appeal from that order.

2. Before it went into liquidation in 2012, the applicant provided services as a freight carrier. The respondent provided freight brokerage services. The applicant claimed an amount of $195,000 in unpaid fees from the respondent. It alleged a contract pursuant to which it was paid fees for carrying freight. The applicant’s case was largely documentary and was completed before lunch on the first day of the hearing. According to the discussion which then ensued, the respondent’s case was that payment was only required upon proof of delivery of goods and that not only did the applicant not in fact deliver all the goods for which it was claiming payment, but the respondent incurred additional costs in having some of the goods for which payment was claimed delivered by other carriers.

3. There was then a dispute as to the extent to which the respondent would be permitted to call evidence in support of that case on the basis of the defence as pleaded. The defence, filed on 18 January 2016, included a paragraph alleging negligence on the part of the applicant, as a result of which the respondent suffered loss or damage which it said it was entitled to set off against amounts claimed by the applicant. [1] On 27 June 2016 the applicant filed a reply objecting to par 7(b) on the basis that the respondent “has not provided sufficient particulars of the allegation to enable the [applicant] to plead in reply.”

   1.    Defence, par 7(b).

4. An application by the respondent at the commencement of the trial for leave to rely upon an amended defence dated 24 February 2017 was rejected.

5. In the course of submissions before the trial judge leading up to the adjournment, there was a debate as to whether the respondent’s claim to a set off should be pleaded only by way of a cross-claim, or whether it could properly be pleaded by way of set off, as had been done in a skeletal form in the original defence. Counsel for the respondent submitted, although the point was not fully argued, that the respondent was entitled to rely upon evidence of mutual dealings by way of a set off, pursuant to s 553C(1) of the Corporations Act 2001 (Cth).

6. Faced with a clear indication that much of the evidence sought to be relied upon by the respondent would be rejected absent an amendment to the defence (or the filing of a cross-claim), counsel for the respondent sought an adjournment. The trial judge granted the adjournment on conditions identified in the following terms: [2]

“(1)   that the defendant pay the plaintiff’s costs thrown away of today;

(2)   that the pleading, if it’s to be amended, is to be done within seven days, including any cross-claim.”

2.    Tcpt, 02/03/17, p 47(10).

7. The judge noted that he had not looked at the Corporations Act, but expressed a view that “it does require a cross-claim as to what is contended as to the non-delivery matters and for the costs associated with the other matters, which have been set out in the affidavits.” He explained the grant of the adjournment as being “to avoid any separate proceedings against the plaintiff company because of those matters raised”.

8. The present application for leave to appeal challenges that order. No copy of the order has been taken out and no greater detail is available beyond that referred to above. The respondent did not oppose the term requiring it to pay costs thrown away, which appear to have been fixed in an amount of $15,000. [3]

   3.    Tcpt, p 49(5)-(12),

9. The basis of the application for leave to appeal from the grant of an adjournment is somewhat obscure. The reasoning underlying it appears to have been a sense of frustration that the respondent was now being given a second opportunity to file a cross-claim, when consent orders made on 30 May 2016 had provided for the service of any cross-claim by 21 June 2016. The respondent not having availed itself of that course, and having been refused leave to rely upon the amended defence, was apparently being given a second chance to take either or both of those steps.

10. As senior counsel for the respondent aptly noted, a challenge to the grant of an adjournment which has already occurred is an exercise in futility. The trial judge has indicated that he will case manage the proceedings hereafter. The Court was advised that it is relisted before him next Monday, 26 June 2017. Apart from some brief delay, which has been exacerbated by the application for leave to appeal, the only legitimate complaint which the applicant had with respect to the adjournment was the waste of costs it had incurred. If there are further complaints as to wasted costs they can be addressed when the nature of the amended pleadings, and an indication of what further evidence is proffered by the respondent, are understood and are before the District Court. The applicant has obtained the relief it sought in that regard, but still pursues its application for leave to appeal from the order adjourning the proceedings. There is no reason to grant leave in relation to that order.

11. It is common ground that, if the respondent seeks to file a cross-claim, it will need leave to do so, the applicant being in liquidation. It is also common ground that an amended defence will require a grant of leave which will not be considered until the proposed pleading is before the District Court. The fixing of a term within which that step is to be taken, as a condition of an adjournment, does not constitute such a ruling.

12. The applicant’s challenge is, in effect, a request that this Court make an order preventing the District Court considering any further amended pleading filed by the respondent. It would be a most unusual case in which this Court would take any such step, preceding and precluding the proper exercise of the unexercised discretionary power of the trial judge. Apart from anything else, the District Court might itself reject the proposed amended pleading. On the other hand, apart from the question of costs, which has already been disposed of, there is no arguable basis for challenging the grant of an adjournment in this case. Nothing has been put before this Court to suggest that the respondent is necessarily wrong in claiming that it can rely upon a set off; nor has any reason been given why a possible cross-claim would be rejected out of hand in circumstances where the relevant evidence appears to have been served. Of course that assumption may be proved wrong, but again, it is a matter which will be dealt with by the trial judge. The grant of leave to rely on an amended defence or a cross-claim is a matter within the as yet unexercised discretion of the trial judge.

13. The applicant’s complaint is, in effect, no more than that the trial judge appears to be giving the respondent an opportunity to reagitate a matter which had been disposed of, perhaps, as the applicant thought, finally when the amended defence was rejected. However, there is no discretionary error demonstrated in the trial judge allowing the respondent that further opportunity.

14. In these circumstances, the Court should refuse the application for leave to appeal with costs. The orders of the Court are:

1. Refuse leave to appeal from the orders made by the District Court on 2 March 2017 granting an adjournment of the trial before it.

2. Order that the applicant pay the respondent’s costs in this Court.

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Endnotes

Decision last updated: 26 March 2018