Glenhill Enterprises P/L v B.P. Australia Ltd

[1993] FCA 1023

1023 1 9 3 . .

JUDGMENT NO. ...ene..ma..mm **a*rnwm*arne

ERAL COURT OF AUSTRALIA	1
)

S DISTRICT REGISTRY	) No. VG 112 of 1991
1

DIVISION 1

BETWEEN: GLENHILL ENTERPRISES PTY. LIMITED

Applicants

AND B.P. AUSTRALIA LIMITEP

Respondents

Corm: Whitlam J

Date: 1 June 1993

RECEIVED

Place: Sydney -1 FEB 1994

FEDEAAL COURT OF

AUSIRALIA PRINCIPAL REQlSTRV

REASONS FOR JUDGMENT

The applicant applied by notice of motion filed 15

December 1992 for orders in the following terms:

"1. That the whole of the Application be dismissed

pursuant to Order 10 rules 3(2) and 7(l) (a) of
the Federal Court Rules.

"1. These proceedings be restored to the list.

2.  The orders made in these proceedings of the 9th March, 1992 be vacated.

3.  The Applicant be given leave to prosecute its claim for substantive relief in these proceedings."

The orders referred to in item 2 of the notice of motion

were made by Morling J., in the absence of the applicant, as

follows :

2.  That Judgment be entered in favour of the Cross-Claimant against the Cross-Respondent pursuant to Order 10 rule 7(l) (b) of the Federal Court Rules in the sum of $882,812.25.

3. That interest on the sum of $882,812.25 be paid by the Cross-Respondent to the Cross-Claimant pursuant to section 51A of the Federal Court of Australia Act 1976.

4. The Cross-Respondent pay the Cross-Claimant's

costs. "

It may be observed that Morling J. did not merely stand the proceedings out of "the list" or stay the applicant's claim. His Honour dismissed its application, invoking in part the powers of the Court under 0 10 r 7(l)(a). The nature of that power was explained by Wilcox and Gummow JJ. in Leniiamar ptv Ltd v. AGC Ltd (1990) 27 FCR 388 as resting in the Court's case management system. The exercise of the power depends upon non-compliance with a direction. It is convenient, therefore, to trace the course of the proceedings prior to his Honour's order.

The application was filed on 16 May 1991 in the Victorian District Registry accompanied by a statement of claim, which alleged breaches of contract and contraventions of the Trade Practices Act. The application also claimed relief in respect of a notice of demand under s 460 of the Corporations Law served on the applicant on 29 April 1991, although the statement of claim contained no allegations in respect of such a notice.

On 17 May 1991 the applicant obtained ex parte relief from Olney J. restraining the respondent from commencing winding-up proceedings until 27 May 1991, which date his Honour fixed for further directions, or until further Order. However, on that same day, 17 May 1991, Mr R.J. Dean-Willcocks was appointed receiver and manager of the applicant. On 23 May 1991 the solicitor for the receiver asked the respondent to agree to an adjournment for two weeks in order that the receiver might decide whether to fund the proceedings. On 27 May 1991 the respondent gave an undertaking not to take any steps to wind up the applicant "pending final hearing of the matters in dispute" and Olney J., by consent, discharged the injunction and transferred the proceedings to the New South Wales District Registry.

~t appears that up to this point of time the applicant's conduct of the proceedings had been funded by the Australian Petroleum Agents and Distributors Association ("APADA"). The matter came before Foster J. for directions on 12 July 1991

when it was stood over to 9 August 1991 because the receiver

was not yet in a position to make a decision on funding the

matter. His Honour noted that "the Court will expect the matter to proceed at that tune." On 29 July 1991 the respondent filed a cross-claim against the applicant in respect of the moneys whlch were the subject of its earlier notlce of demand. On 8 August 1991 the applicant retained new solicitors, who informed the respondent's solicitors that the applicant wished to file an amended statement of claim. on g

August 1991 Foster J., by consent, made orders for the future conduct of the matter, including a direction that the applicant file and serve an amended statement of claim and its defence to the cross-claim by 9 September 1991. The directions hearing was adjourned until 29 November 1991.

On 10 September 1991 the applicant's solicitors informed the respondent's solicitors that the Attorney General had refused to grant aid to the applicant, that they had terminated their instructions and that they would file a notice of ceasing to act. On 30 October 1991 the respondents's solicitors wrote to M1: Phielix, a director of the applicant, at its registered office, demanding that within seven days the applicant admit Owing the sum claimed in the cross-claim, failing which the respondent would apply for summary judgment in respect of its cross-claim. On 25 November 1991 the respondent filed a notice of motion returnable on 29 November 1991 seeking judgment on the cross- claim. The notice of motion was served on the applicant at	its registered office on 26 November 1991. On 29 November	1991 there was no appearance for the applicant when the matter
came before Davles J., and his Honour adjourned the notice of motion to a date to be flxed.
On 25 February 1992 the respondent filed a notice of motion returnable 9 March 1992 seeking relief in terms of the orders made by Morling J. on that day. The respondent's
solicitors informed the receiver's solicitors of the motion
and later that day those solicitors Said the receiver did not want a copy of the notice of motion as he did not want to take any further part in the proceedings. The notice of motion was served on the applicant at its registered office that day. By letter dated 26 February 1992 the applicantts accountant (whose office was the registered office of the applicant) returned the served documents to the mspondent's solicitors stating, quite incorrectlyr that the applicant's registered office was now located at the office of the receiver. On 27 February 1992 the respondent's solicitops sent those documents back to the registered office of the applicant, whence I have no doubt the applicant's accountant returned then) once more to the respondent's solicitors, this time anonymously. On 27 February 1992 the respondent 'S Solicitors also served the documents on the receiver, who said or\ 4 March 1992 that he had not been able to give a copy of the documents to the applicant's directors as he did not know their whereabouts, but that he had forwarded a copy to the applicant's accountant at its registered office. On 6 March 1992 the receiver wrote
to confirm that he would not be represented at the hearing on 9 March 1992.
The evidence upon which the applicant relies for its present motion consists of two affidavits of m phielix sworn 17 May 1991 and 31 December 1992. The first of those affidavits was that filed in court on 1 7 May 1991 when Olney J. granted the ex parte injunction. surprisingly the facts deposed to in that affidavit relate to the allegations

in the statement of claim. His second affidavit is the starting point for this application. Mr Phielix was cross- examined.

Mr Phielix has never resigned as a director of the applicant and understands now that he did not cease to be a director upon the appointment of the receiver. There is little doubt that the proceedings were initiated at the suggestion of APADA which funded the applicant. After the receiver was appointed Mr Phielix hardly took a back seat. True, he waited to see whether the receiver would fund the litigation. But when the receiver would not do so, the applicant retained new solicitors pending the fate of an application for aid to the Attorney General. Those solicitors resigned their retainer when aid was not granted. Indeed, Mr Phielix says that following the appointment of the receiver he has concerned himself with obtaining legal representation. That would certainly seem to have been the case at least up

until early September 1991. In March 1992 the applicant's current solicitors agreed	to review the applicant's claim. Yet, according to Mr
Phielix, it was only in September 1992, when those new solicitors told him, that he first learned of the orders made by Morling J. on 9 March 1992. Prior to September 1992 Mr Phlelix evidently made inquiries of the progress of the litigation of nobody other than APADA. The applicant's solicitors filed thls notice of motion on 15 December 1992. Yet they did not get around to filing what they called a "notice of appearance" until 4 February 1993. What emerges from the evidence of Mx Phielix is that these proceedings are being revived at the behest of APADA who are once more interested in funding, at least, this motion. The receiver, I am told from the Bar table, is content for the application to be pursued, though it is clear that he is not supporting the proceedings financially.
The orders made by Morling J. on 9 March 1992 were entered on 26 March 1992. However, I have to accept that Mr Phielix did not know of those orders until some six months later. The applicant itself was, of course, notified of the hearing on 9 March 1992. That does not control the disposition of this application, however, because the applicant \ss absent and hence the power of the Court under
0 35 r 7(2)(a) is available.
Counsel for the applicant submits that in the present case the applicant meets what he describes as "both tests", that is, a reason for not appearing on the application for
summary dismissal and a case on the merits. This is an adaptation of the well-known formula for being let in to defend and set aside a default judgment. However, even in those cases it is always necessary to look at the whole of the relevant circumstances, as was emphasized in Adams v. Kennick Tradina (International) Ltd (1986) 4 NSWLR 503 per Hope JA at
506. I am prepared to assume that the applicant has a case on
the merits, although I find the explanation for its failure to attend the hearing before Morling J. quite inadequate. However, these are only two relevant matters and by no means the most influential in the present case. It seems to me that in September 1991 the applicant abandoned its claim when a source of funding was not available. The applicant completely ignored the direction of Foster J. in relation to its pleadings. No doubt, it was this "unwillingness to co-operate with the Court" (as Wilcox and Gummow JJ. describe it in
at 396) that prompted Morling J. summarily to dismiss the application. The only thing that has changed is that now once more APADA is willing to fund this litigation (at least for the time being) and the receiver is content for the directors of the applicant to pursue the claim. These are not sufficient reasons, in my view, for the Court to set aside the orders of Morling J. This renewed interest of APADA comes some fifteen months after the time for compliance with the direction given by Foster J. Even now the applicant does not
propound the amended statement of claim or defence to cross- claim that it was required to file. This is particularly important, of course, in relation to the application to set
aside the judgment on the cross-claim, whether under 0 5 r 14 or 0 35 r 7(2)(a). The respondent adduced detailed evidence of indebtness before Morling J., which was read again before me. There was no material whatsoever to suggest the existence of a bona fide ground of defence to the cross-claim.
Accordingly, for these reasons I dismissed the applicant's notice of motion with costs.

I certify that this and the preceding eight (8) pages are

a true copy of the Reasons for Judgement herein of the

Honourable Mr Justice A.P. Whitlam.

Date:

Counsel for the applicants:  M.B. Evans

instructed by Teakle Ormsby & Associates

Counsel for the respondents:  M.A. Ashhurst

instructed by Clayton Utz

Dates of hearing:	26 May 1993
Date judgment delivered:	1 June 1993