Australian Aged Dental Care Pty Limited v Australian Dental Association (New South Wales Branch) Limited (No 2)

[2024] FCA 635

FEDERAL COURT OF AUSTRALIA

Australian Aged Dental Care Pty Limited v Australian Dental Association (New South Wales Branch) Limited (No 2) [2024] FCA 635  

File number:	NSD 138 of 2020
Judgment of:	BROMWICH J
Date of judgment:	7 June 2024
Catchwords:	PRACTICE AND PROCEDURE – application for extension of time to comply with orders to pay security – failure to apply for reinstatement of proceeding where self-executing order had already taken effect – self-executing order – dismissal of proceeding – bare assertions of fact from the applicant’s solicitor
Legislation:	Federal Court Rules 2011 (Cth) r 2.25(3)(a)
Cases cited:	Nassif v Harbour Radio Pty Ltd [2024] FCA 466
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Number of paragraphs:	19
Date of hearing:	7 June 2024
Solicitor for the Applicant:	Mr C Douglas
Counsel for the Respondent:	Mr P Herzfeld SC and Mr D Farinha
Solicitor for the Respondent:	Meridian Lawyers

ORDERS

NSD 138 of 2020

BETWEEN:

AUSTRALIAN AGED DENTAL CARE PTY LIMITED ACN 147 176 583

Applicant

AND:

AUSTRALIAN DENTAL ASSOCIATION (NEW SOUTH WALES BRANCH) LIMITED ACN 000 021 232

Respondent

ORDER MADE BY:	BROMWICH J
DATE OF ORDER:	7 JUNE 2024

THE COURT ORDERS THAT:

1.The originating application dated 29 May 2024 be dismissed with costs.

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

REASONS FOR JUDGMENT
Delivered ex tempore, revised from transcript

BROMWICH J:

1. On 2 November 2023, I made a number of orders for the future conduct of this proceeding.  Previous orders for security for costs had been made by the prior docket judge, Griffiths J.  Order 3 of the orders made on 2 November 2023 was for additional security for costs in the sum of $180,000, to be provided in three tranches, numbered as the following subparagraphs to order 3:

   (i)       $63,000 within 21 days of the date of these orders;

   (ii)      $83,000 within 14 days of the service by the applicant of its evidence; and

   (iii)     $34,000 within 14 days from the conclusion of a mediation of the disputes.

2. The 2 November 2023 orders also provided:

   (a)by order 7, that if the applicant failed to provide security in accordance with order 3, the proceedings would be stayed until such time as security was provided; and

   (b)by order 11, that the parties had liberty to apply on 72 hours’ notice, which remained in place until 31 May 2024. 

3. The first tranche of security for costs referred to in order 3(i) was not provided within the 21 days, or indeed, at all.  It still, to this day, has not been provided. 

4. On 8 March 2024, security for costs not having been paid as ordered, or at all, the respondent filed an interlocutory application dated 7 March 2024, seeking dismissal of the proceeding for failure to comply with the order to pay security.  The precise terms of that interlocutory application were departed from in a practical way, in that, at the hearing of the respondent’s interlocutory application on 28 March 2024, the respondent instead sought automatic dismissal of the proceedings if security for costs were not paid by 18 April 2024.  That is, the respondent was willing to agree to a further three-week period from the date of the hearing for the first tranche of security to be paid, being the amount of time originally provided for in order 3(i) made on 2 November 2023.  The applicant sought a longer period of time to comply, expressed in terms of being “on the safe side”, of six months, until the end of September 2024.

5. In the course of the 28 March 2024 interlocutory hearing, Mr Douglas, general counsel for the applicant appearing on its behalf, said he did not anticipate the applicant would need until the proposed September 2024 deadline, and that he believed that it would be able to pay security within two to three months.  Throughout the hearing of the respondent’s interlocutory application, Mr Douglas made a series of factual assertions which were not supported by evidence.  I made it clear that the Court needed to proceed upon evidence, particularly when the assertions being made were of importance to what was being sought or resisted.

6. I ultimately concluded that an additional two months should be allowed.  The orders made on 28 March 2024 were in the following terms:

   1.In the event that the applicant complies with order 3(i) made on 2 November 2023 by 4.00 pm on 31 May 2024, the matter be listed for case management hearing on 9.00 am on 7 June 2024.

   2.        In the event that the applicant does not do so, then:

   (a)the proceedings be dismissed;

   (b)the applicant pay the respondent’s costs of and in connection with the proceedings, including the costs with respect to the respondent’s interlocutory application dated 7 March 2024, as agreed or taxed; and

   (c)security for costs previously provided by the applicant in the proceedings be released forthwith to the respondent.

   3.The sum of $25,000 for security for costs in this proceeding, paid into the trust account of McLachlan Thorpe Partners in or around November 2021, be paid into Court forthwith.

7. Towards the end of the interlocutory hearing on 28 March 2024, I said to Mr Douglas the following (T-22.20):

   Mr Douglas, I’m giving you the most generous outcome I possibly could, which is to take you at your word in relation to two months, not to give extra time just in case and therefore the date I would propose is 31 March – 31 May, which is the full two calendar months of April and May.

8. To which Mr Douglas responded:

   I'm grateful, your Honour.

9. I then said – and this is important:

   And I can indicate that, absent the most compelling of evidence – and even then – that will not be extended, and therefore the guillotine will fall.

10. Notwithstanding the clarity attending the order made on 28 March 2024 as to the need for compelling evidence before any further extension of time for the provision of security would be granted, no additional security for costs has been paid as ordered on 2 November 2023.  In particular, the first tranche of security has not been provided to this day, being 7 June 2024, let alone within the three weeks originally allowed.  However, in the lead up to the deadline on 31 May 2024, there was some email traffic between my chambers and Mr Douglas, in which he indicated that he had sought from the respondent agreement to extend the deadline of 31 May 2024.  Unsurprisingly, that agreement was not forthcoming. 

11. On 29 May 2024, an interlocutory application was filed by the applicant. That application was lodged at 2.57 pm on 29 May 2024 and accepted for filing the next morning. Under r 2.25(3)(a) the Federal Court Rules 2011 (Cth), it was therefore taken to be filed at the time of lodgement at 2.57 pm on 29 May 2024. That was not within the liberty to apply time period in order 11 made on 2 November 2023, even in relation to the extended deadline for the payment of the security, and was not even close to the 72 hours required to seek any sort of relief before the guillotine order took effect. Mr Douglas insisted that his interlocutory application be heard, and accordingly, I made the interlocutory application returnable today, 7 June 2024, at 9.00 am. However, the order made on 28 March 2024, reproduced above at [6] did take effect according to its terms at 4.00 pm on Friday, 31 May 2024. Accordingly, at that time the proceedings were automatically dismissed with costs by the operation of the guillotine aspect of order 2(a) of the 28 March 2024 orders.

12. Today I have heard an argument and received an affidavit in respect of the applicant’s 29 May 2024 interlocutory application.  That interlocutory application seeks the following:

    1.In the event that the applicant complies with order 3(i) made on 2 November 2023 by 4.00 pm on 30 June 2024, the matter be listed for case management hearing on 9.00 am on 7 July 2024.

    2.Any other order the court deems fit.

13. During the course of the hearing of the 29 May 2024 interlocutory application today, numerous references were made by Mr Douglas to the Court not dismissing the proceeding.  I repeatedly pointed out to him that the proceedings had already been dismissed.  I also repeatedly pointed out to him that no application had been made for reinstatement.

14. The evidence that the applicant relied upon, even if I were to treat its interlocutory application also as an application for reinstatement, is an affidavit from Mr Douglas.  It is 13 paragraphs in length, in just over two pages, and with annexures A through H.  The transcript of the hearing will reflect the reliance that was placed on that affidavit by the applicant.  However, it discloses little more than that, in the period after the orders had been made up to the date of the affidavit on 29 May 2024, there were discussions between:

    (a)Mr Douglas;

    (b)a potential solicitor to come into the proceeding for the applicant; and

    (c)an investment manager with a company referred to as Litigation Capital Management (LCM), Ms Siba Diqer.

    The affidavit contains little indication as to what the content of those discussions was.

15. Mr Douglas’ affidavit also discloses that some work was commissioned by the applicant on the damages assessment by way of a discounted cash flow analysis.  However, that work was done in 2019.  In his affidavit, Mr Douglas also asserts that there was a conference call on 14 May 2024 (it is unclear between whom), where certain questions were asked regarding the assumptions made in arriving at the discounted cash flow document prepared back in 2019.  At around the same time – that is, 14 May 2024 – the applicant’s accountants were commissioned to provide further and better particulars of damages, particularly in relation to the assumptions used to arrive at the figures presented in the 2019 cash flow analysis.  The short document that was produced by the applicant’s accountants was provided to Ms Diqer of LCM 13 days later, on 27 May 2024. 

16. Also annexed to Mr Douglas’ affidavit was an email that was sent by him on behalf of the applicant to Ms Diqer on 27 May 2024, enclosing a number of documents.  That email to Ms Diqer also referred to the 31 May 2024 deadline for the payment of security in the Court’s order (made on 28 March 2024).  The response from Ms Diqer by way of a reply email that afternoon, 27 May 2024, was as follows:

    Dear Cabral [Mr Douglas],

    Thanks for your call earlier.  As discussed, it ordinarily takes approximately 2 weeks to have an offer out for funding.  However, with my current capacity (currently in trial with a number of applications), given the amount of material you've sent me to review and members of my investment committee's leave commitments, it would be better if you could seek a month's extension of time.

    I will keep you updated on my progress and try to get this in front of my committee ASAP.

17. It is evident from the limited affidavit evidence relied upon by the applicant that, despite agreeing to a 21-day period for the provision of security for costs back in November 2023, nothing much seems to have been done until after 28 March 2024, being the date on which the respondent’s interlocutory application was heard and orders were made with the cautions and warnings that I have already reproduce above at [7]. The evidence indicates that the most that has happened is that there is now an application before LCM, which had, as at 27 May 2024, yet to go before its investment committee. I have no update on the situation in the almost two weeks since that email was sent by Ms Diqer.

18. I am asked from the bar table by Mr Douglas to give the applicant more time and various factual assertions are made, without the support of evidence, as to optimism as to where things are going to go and so on.  However, the simple fact of the matter is that there have been repeated extensions of time, and repeated opportunities to explain the situation properly.  I have given a clear indication of a need for proper evidence in order to have the guillotine order not take effect according to its terms, but this has fallen on deaf ears.  As I have already made clear, there was, in fact, no application for a reinstatement.  I refer in that regard to the observations of Abraham J in Nassif v Harbour Radio Pty Ltd [2024] FCA 466 at [47]. A copy of that judgment was provided to the parties shortly before I came on the bench. Each party made reference to it in oral submissions.

19. In all the circumstances, and having regard to the principles that are carefully laid out by Abraham J in Nassif, the applicant has not satisfied me that this would have been an appropriate case for a grant of reinstatement, had that been sought.  And as her Honour points out in Nassif at [47], there is no point in granting an extension of time unless there is first reinstatement, because there would only be an extension of time in relation to a non-extant proceeding. In all the circumstances, the interlocutory application cannot therefore succeed, and is therefore dismissed with costs.

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Bromwich.

Associate:

Dated:       7 June 2024