Cao v Apollo Phoenix Resources Pty Ltd (No 2)
[2019] FCA 1113
•5 July 2019
FEDERAL COURT OF AUSTRALIA
Cao v Apollo Phoenix Resources Pty Ltd [2019] FCA 1113
Appeal from: Application for leave to appeal: Cao v Apollo Phoenix Resources Pty Ltd (No 2) [2019] FCA 469 File number: NSD 557 of 2019 Judge: LEE J Date of judgment: 5 July 2019 Legislation: Federal Court of Australia Act 1976 (Cth) Pt VB Cases cited: FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268
Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2005] FCA 153
Cao v Apollo Phoenix Resources Pty Ltd(No 2) [2019] FCA 469
Deangrove Pty Ltd (Receivers and Managers Appointed) v Commonwealth Bank of Australia [2001] FCA 173; (2001) 108 FCR 77
Hutchinson v Comcare [2017] FCA 136
LFDB v SM [2017] FCAFC 178: (2017) 256 FCR 218
Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388
Nucoorilma Clan of the Gamilaaroy Aboriginal People v NSW Minister for Land & Water Conservation [2009] FCA 1043
Sammy Russo Meat Supplies Pty Ltd v Australian Safeway Stores Pty Ltd [1999] FCA 1381
Skinner v Commonwealth of Australia [2012] FCA 1194
Wiri People #2 v State of Queensland [2006] FCA 1069
Brocx v Hughes [2010] WASCA 57; (2010) 41 WAR 84
Skahill v Kestral Holdings Pty Ltd (in liq) [2000] WASCA 185
Date of hearing: 5 July 2019 Registry: New South Wales Division: General National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: No Catchwords Number of Paragraphs: 16 Counsel for the Applicant: Mr C Carter Solicitor for the Applicant: Australian Business Lawyers & Advisors Counsel for the First Respondent: Mr P Silver Solicitor for the First Respondent: Mills Oakley Counsel for the Second and Third Respondent: Mr A P Coleman SC Solicitor for the Second and Third Respondent: Fairweather Litigation ORDERS
NSD 557 of 2019 BETWEEN: ZHONG CAO
Applicant
AND: APOLLO PHOENIX RESOURCES PTY LTD
Respondent
JUDGE:
LEE J
DATE OF ORDER:
5 JULY 2019
THE COURT ORDERS THAT:
1.The application of the respondents for the dismissal of the application for leave to appeal be adjourned sine die.
2.The time to pay the amounts referred to in orders 1, 2 and 3 made by consent on 30 May 2019 be extended to 5pm on 31 July 2019.
3.The applicant pay the respondents’ costs thrown away by the adjournment of the application to dismiss the application for leave to appeal, with such costs to be paid on an indemnity basis.
4.In the event that payment does not occur in accordance with order 2, in respect of which time is of the essence, then the application for leave to appeal is to be dismissed with costs.
5.In the event that payment is made in accordance with order 2, then the parties have leave to approach the Associate to Lee J in Chambers to obtain a hearing date for the application for leave to appeal.
6.On or by 31 July 2019, the applicant file any affidavit explaining the circumstances of the payment of amounts for legal fees on 18 May 2019 and 24 June 2019, and why the payment of those accounts were preferred over complying with the then extant orders of the Court.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
Revised from the TranscriptLEE J:
The history of this application could fairly be described as out of the ordinary. On 25 March 2019, a judge of the Court made orders dismissing the proceeding commenced by the current applicant against the respondents with costs: see Cao v Apollo Phoenix Resources Pty Ltd(No 2) [2019] FCA 469. It is unnecessary for me to recount in this judgment the circumstances that gave rise to those orders. An application for leave to appeal was filed on 10 April 2019.
An application for security for costs for the application for leave to appeal was filed by the first respondent on 14 May 2019 and, on 30 May 2019 the following orders were made by consent:
1.On or by 24 June 2019, the applicant pay the amount of $80,000 pursuant to the orders of Gleeson J made on 18 March 2019 in proceeding NSD 1037 of 2018.
2.On or by 24 June 2019, the applicant pay an amount of $57,000 as security for the first respondent’s costs in relation to the application for leave to appeal and any substantive appeal.
3.On or by 24 June 2019, the applicant pay an amount of $45,000 as security for the second and third respondents’ costs in relation to the application for leave to appeal and any substantive appeal.
Order 1 of the orders dated 30 May 2019 related to the applicant agreeing to rectify a default in complying with an order for security made in the proceeding below.
At the same time, the Court made orders that if there was a failure by the applicant to comply with the consent orders, then the application for leave to appeal would be “stayed forthwith upon default of that order” and that if such a stay arose, then an application for dismissal of the application for leave to appeal would be listed for determination today.
What then occurred is somewhat surprising.
According to the evidence adduced by the applicant at the hearing, on 24 June 2019, a sum of approximately $150,000 was paid by the applicant to his then solicitors. Despite this money being remitted from the People’s Republic of China to Australia, there was noncompliance with the orders of the Court, made by consent, that, among other things, security be provided for the respondents’ costs of this application for leave to appeal. Prima facie, this is a somewhat strange state of affairs to which I will return below.
When the matter was called on this morning, counsel now appearing on behalf of the applicant made an application for an adjournment of the dismissal application. Counsel identified the orders being sought as first, that the application for dismissal be adjourned; second that the time by which the applicant was to pay the amounts referred to in the consent orders of 30 May 2019 be extended to 31 July 2019; and third, that the applicant pay the respondents’ costs thrown away by reason of the adjournment. The order proposed had a further important condition, being that, in the event that there was a failure to pay the amounts required to be paid by 31 July 2019, then upon noncompliance, in respect of which time is of the essence, the application for leave to appeal would be dismissed with costs.
The evidence adduced in support of the application for an adjournment was less than satisfactory. It is unclear to me the circumstances in which the applicant has not complied with the orders which were made by consent, particularly when the amount I have referred to above at [6] was paid to his previous solicitors, who appear to have ceased to act around 6 June 2019. The applicant has now retained a solicitor who has the ability to speak the applicant’s native tongue with fluency. The solicitor deposes to conversations she has had with the applicant (Affidavit of Ms Lou sworn 4 July 2019 (Lou Affidavit) at [6]). This evidence reveals that, among other things, since July 2018 the applicant has paid a total of $415,000 into Court pursuant to orders requiring the payment of security (Lou Affidavit at [17(e)]). Further, the applicant has apparently expressed to his new solicitor “his strong desire and great determination to pursue the appeal and [p]rinciple (sic) [p]roceedings” (Lou Affidavit at [17(i)]).
The evidence also reveals that the applicant has booked airline tickets to travel to Australia (Lou Affidavit at [17(i)]; see also Exhibit BL-1 at 5); a step which at least is consistent with wanting to pursue the litigation.
The respondents resist the application for an adjournment and both Mr Coleman SC and Mr Silver, who appear on behalf of the second and third respondents and the first respondent respectively, have said all they can in opposition to the application. At the bottom of all of this, however, is a sense of disquiet as to two facts: first, my lack of understanding as to what has occurred since the date I made the consent orders; and secondly, a recognition that a very large amount of money has been paid by way of security and legal costs by the applicant. It is quite odd that matters have turned out the way they have.
What tips the balance in favour of providing one final opportunity to the applicant is that it is difficult to see the real prejudice that will be occasioned to the respondents in the event that the indulgence sought by the applicant is granted. No doubt the continuation of the application for leave to appeal is a vexation, and there may be some expenditure of costs that will never be recovered, but the proposed self-executing or “springing” order goes a long way to ameliorating any real prejudice. Orders of the type proposed, which debar litigants from being heard in continuing proceedings, need to be approached with caution, but are not unknown. As the Full Court explained in LFDB v SM [2017] FCAFC 178; (2017) 256 FCR 218 (Besanko, Jagot and Lee JJ), they are a form of peremptory order which constitutes a remedial response to the vice of a failure to comply with orders of the Court. As the Full Court noted at 227-228 [40]:
The High Court recognised the existence of peremptory orders of an analogous type in FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268 in determining that a court at first instance has the power to extend time under a self-executing order which has ‘sprung’. The Court of Appeal of Western Australia has noted that ‘springing’ orders are a well-established method of applying appropriate sanctions for non-compliance with orders: see Skahill v Kestral Holdings Pty Ltd (in liq) [2000] WASCA 185. That intermediate Court also equated ‘unless’ orders and ‘springing’ orders as reflecting the need to have regard to those rules of court (reflected in this Court in Part VB of the Federal Court of Australia Act 1976 (Cth) which provide that the processes of the [C]ourt are to be applied so as best to attain the just determination of litigation, the efficient use of the resources of the [C]ourt, and the timely disposal of the business of the [C]ourt at affordable cost. Such peremptory orders “are made to be obeyed and they are generally made only where the party in default has already failed to comply with an order of the [C]ourt, or has failed to pursue the action in accordance with the rules of court and has been responsible for serious delay”: see Brocx v Hughes [2010] WASCA 57; (2010) 41 WAR 84 at 101 [95] per Newnes JA. Similar, although not identical, orders are not only not foreign to this Court, but self-executing orders which have the effect of bringing a proceeding to an end are not novel: see, for example, Sammy Russo Meat Supplies Pty Ltd v Australian Safeway Stores Pty Ltd [1999] FCA 1381; Deangrove Pty Ltd (Receivers and Managers Appointed) v Commonwealth Bank of Australia [2001] FCA 173; (2001) 108 FCR 77; Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388; Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2005] FCA 153; Wiri People #2 v State of Queensland [2006] FCA 1069; Nucoorilma Clan of the Gamilaaroy Aboriginal People v NSW Minister for Land & Water Conservation [2009] FCA 1043; Skinner v Commonwealth of Australia [2012] FCA 1194; Hutchinson v Comcare [2017] FCA 136.
This seems to me to be an unusual case where a “self-executing” or “springing” order should be made. I am confident, given what counsel for the applicant has told me this morning, that it will be relayed to the applicant in no uncertain terms, and in language he understands, that he has one final chance to provide funds which will allow the application for leave to appeal to be determined on its merits.
Accordingly, I am content to make an order adjourning the application for dismissal sine die on the basis that in the event payment does not occur in accordance with my orders, the application for leave to appeal is to be dismissed with costs.
I noted above at [6] that on 24 June 2019 an amount of approximately $150,000 was paid by the applicant to his solicitor in circumstances where there were extant orders of the Court to pay the amounts (referred to in the orders of 30 May 2019) by 24 June 2019. Similarly, it appears from the evidence on this application, that shortly after Gleeson J made an order on 18 March 2019 in proceeding NSD 1037 of 2018 that the applicant pay the amount of $80,000 by way of security, an additional payment of $26,125 was made to the applicant’s then solicitors (Lou Affidavit at [17(d)]; see also Exhibit BL-1 at 3).
In circumstances where throughout this application the applicant has placed heavy emphasis on the fact that currency restrictions have prevented him from discharging his obligations (Lou Affidavit at [17(c)]), it is strange that it appears that he can remit funds to discharge obligations to his solicitors but cannot remit funds to comply with orders made by the Federal Court of Australia.
In these circumstances, I propose to make a further order, which is not opposed by the applicant, that an affidavit be filed on or by 31 July 2019 explaining the circumstances of the payments referred to above at [14] and why the payment of those costs were preferred over complying with the orders of the Court. I will consider what, if any, further orders should be made in relation to this matter upon review of that affidavit.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee. Associate:
Dated: 22 July 2019
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