HPM Pty Ltd v Fear

Case [2002] FCAFC 403

FEDERAL COURT OF AUSTRALIA

HPM Pty Ltd v Fear [2002] FCAFC 403

APPEAL – proceeding dismissed as abuse of process – whether dismissal order final or interlocutory – whether leave to appeal should be granted

Corporations Act2001 (Cth) ss 236, 237, s 471A(1), s 471A(1A)
Federal Court Rules O 4 r 14(2), O 20 r 2(1), O 52 r 10

Licul v Corney (1976) 8 ALR 437 cited

Carr v Finance Corporation of Australia Limited (No 1) (1981) 147 CLR 246 cited

Brouwer v Titan Corporation Ltd (1997) 73 FCR 241 cited

Wilson v Official Trustee in Bankruptcy [2000] FCA 304 cited
Palm Springs Ltd v Darling (2002) 192 ALR 763 cited
Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 cited
Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346 cited
Yooralla Sponsors Club v JABI Nominees Pty Ltd (1980) 49 FLR 86 cited
Sea Culture International v Scoles (1991) 32 FCR 275 cited

HPM PTY LTD (IN LIQUIDATION) (ACN 008 679 481) v CHARLES ANTHONY CANDLIN FEAR and RESI STATEWIDE MORTGAGE CORPORATION

(ACN 005 083 394) and ROBERT CLAUDE COOK, TERENCE CORNELIUS McMANUS, ROBERT HENRI DE BUF, PATRICIA ANNE DE BUF, REGINALD SARSFIELD FINN, ELIZABETH ROSE FINN, DONALD GEORGE LYSTER, LEONE BEATRICE LYSTER, JOHN SELSMARK, ROGER LLOYD GEORGE RICHARD-COOMBES, IDA ELEANOR RICHARD-COOMBES, GRAEME CAMPBELL REYNOLDS, LESLEY HANNAH REYNOLDS, JOSEPH COCI, HELEN JOY COCI, ERNEST RAMPELLINI, JENNIFER ANNE RAMPELLINI, PETER JOE CHITTENDEN, MICHAEL SKUBA, MICHAEL CYRIL HALPIN, GEORGE HUGH MARGETTS, GWENDOLINE MARY MARGETTS, TOLEEN NOMINEES PTY LTD, LAVIN NOMINEES PTY LTD, TUDOR COURT INVESTMENTS PTY LTD, MacDOUGALL PTY LTD and OREGON NOMINEES PTY LTD

W91 OF 2002

LEE, CARR & RD NICHOLSON JJ
9 DECEMBER 2002
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W91 OF 2002

APPLICATION FOR LEAVE TO APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

HPM PTY LTD (IN LIQUIDATION) (ACN 008 679 481)
Applicant

AND:

CHARLES ANTHONY CANDLIN FEAR
First Respondent

RESI STATEWIDE MORTGAGE CORPORATION
(ACN 005 083 394)
Second Respondent

ROBERT CLAUDE COOK, TERENCE CORNELIUS McMANUS, ROBERT HENRI DE BUF, PATRICIA ANNE DE BUF, REGINALD SARSFIELD FINN, ELIZABETH ROSE FINN, DONALD GEORGE LYSTER, LEONE BEATRICE LYSTER, JOHN SELSMARK, ROGER LLOYD GEORGE RICHARD-COOMBES, IDA ELEANOR RICHARD-COOMBES, GRAEME CAMPBELL REYNOLDS, LESLEY HANNAH REYNOLDS, JOSEPH COCI, HELEN JOY COCI, ERNEST RAMPELLINI, JENNIFER ANNE RAMPELLINI, PETER JOE CHITTENDEN, MICHAEL SKUBA, MICHAEL CYRIL HALPIN, GEORGE HUGH MARGETTS, GWENDOLINE MARY MARGETTS, TOLEEN NOMINEES PTY LTD, LAVIN NOMINEES PTY LTD, TUDOR COURT INVESTMENTS PTY LTD, MacDOUGALL PTY LTD and OREGON NOMINEES PTY LTD
Third Respondents

JUDGES:

LEE, CARR & RD NICHOLSON JJ

DATE OF ORDER:

9 DECEMBER 2002

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.The application for extension of time to apply for leave to appeal be dismissed.

2.        The applicant and Mr Blakeley pay the 1st and 2nd respondents’ costs of the application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


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HPM Pty Ltd v Fear [2002] FCAFC 403
Case
[2002] FCAFC 403
Decision Date

CaseChat Overview and Summary

HPM Pty Ltd, through its former managing director and principal shareholder Mr H T J Blakeley, sought leave to appeal against the Supreme Court of Western Australia's dismissal of its action against the respondents. The respondents opposed the grant of leave and time to apply for leave. The primary issue was whether the applicant's application for leave to appeal was an abuse of process, as it sought to circumvent the Supreme Court's decisions. The Federal Court considered whether the applicant's application was an attempt to re-open proceedings that had already failed in the Supreme Court and whether it was an abuse of the Federal Court's process. The Federal Court held that the application was an abuse of process, as the Federal Court and the Supreme Court are both superior courts of coordinate jurisdiction and neither court reviews the decisions of the other. Therefore, the application was dismissed as an abuse of process, and the applicant and Mr Blakeley were ordered to pay the respondents' costs of the application.

The Federal Court's reasoning was based on the well-established authorities that, when considering whether to grant leave to appeal, the court normally has regard to two factors. The first is whether in all the circumstances the decision below is attended with sufficient doubt to warrant its reconsideration on appeal, and the second is whether substantial injustice would result if leave were refused, supposing the decision to be wrong. In this case, the Federal Court found that the applicant's application was an abuse of process, and therefore, there was no sufficient doubt to warrant reconsideration on appeal. Furthermore, the Federal Court found that substantial injustice would result if leave were granted, as it would allow the applicant to circumvent the Supreme Court's decisions. Therefore, the Federal Court dismissed the application for leave to appeal and ordered the applicant and Mr Blakeley to pay the respondents' costs of the application.

Orders

Orders of the court

1. The application for extension of time to apply for leave to appeal be dismissed.

2. The applicant and Mr Blakeley pay the 1st and 2nd respondents’ costs of the application.

Background

Background to the litigation

The applicant did not, until the appeal was called on, seek leave to appeal. It has maintained that it does not require such leave. But when the hearing started Mr H T J Blakeley (a former managing director and principal shareholder of the applicant who was granted leave to appear on its behalf) asked that leave to appeal be granted to the applicant. Implicitly (by asking for whatever leave he needed) he asked that time be extended to apply for leave. The first and second respondents opposed the grant of such leave. FACTUAL AND PROCEDURAL BACKGROUND Supreme Court of Western Australia Action No CIV 2236 of 1994 On 14 September 1990 the first respondent (a chartered accountant) was appointed to be receiver and manager of the applicant under the terms of a mortgage and charge held by the second respondent over the applicant’s property. Eventually the first respondent sold to the third respondents one of the applicant’s assets, being a property known as the Hotel Peninsula at Mandurah. On 20 December 1994 the applicant commenced proceedings in the Supreme Court of Western Australia in action number CIV 2236 of 1994 against BPM Pty Ltd, trading as Bird Cameron, Accountants. Their role in the matter is described below. The first respondent and the third respondents were named as defendants to that action together with The Bank of Melbourne. On 17 October 1995 the second respondent was substituted for The Bank of Melbourne by order of a Master and an amended statement of claim dated 18 October 1995 was filed. In that statement of claim the applicant alleged that the appointments of the first respondent as receiver and manager were invalid as the applicant was not in default under the terms of the mortgages when the appointments were made. The bases for that contention were that, first, notices of demand issued by the mortgagee did not specify the amounts owing to it under the relevant securities, and, secondly, that those notices of demand were “nullified” by an agreement made between the applicant and the second respondent on 23 August 1990. The substance of that agreement was said to be that the applicant would continue to trade, on certain conditions. The first respondent was said to have failed to make certain of the validity of his appointment, to have acted without power, to have failed to act in good faith and to have breached a statutory duty under s 229(2) of the Companies (Western Australia) Code to exercise a reasonable degree of care and diligence in exercising his power of sale. He was said to have been negligent and in breach of his duties in failing to take reasonable care to obtain either a proper price or the true market value of the hotel and other property sold under the relevant mortgages. The applicant alleged that the first respondent had allowed its hotel business to degenerate through lack of proper management, care and maintenance, thereby reducing its saleability and value. He was also said to have failed to advertise and present the property in a proper and adequate manner prior to public auction. There were a number of other respects in which he was said to have failed to discharge his duty of care.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 30 January 2002, the solicitors for the first and second respondents filed a motion for summary dismissal of the application, under Order 20 of the Federal Court Rules, as disclosing no reasonable cause of action, as frivolous or vexatious or as an abuse of process. Alternatively, orders were sought for the statement of claim to be struck out under Order 11 or for the application to be stayed generally until solicitors were appointed by the applicant. At the time of the decision at first instance the third respondents had not been served. THE DECISION AT FIRST INSTANCE The learned primary Judge set out in his reasons the procedural history of the matter. He observed that the present proceedings were nothing less than an attempt to re-open in this Court proceedings which have been instituted and had thus far failed in the Supreme Court of Western Australia. His Honour noted that it was apparent from the applicant’s written submissions that he was seeking to avoid, by proceeding in this Court, the effect of the adverse decisions of the Supreme Court of Western Australia. Amongst other things, the applicant argued that the imposition of the security of costs order was unconscionable conduct. His Honour concluded: “In my opinion the application invokes the jurisdiction of this Court in order to circumvent or avoid the effect of decisions of the Supreme Court of Western Australia. As I explained to Mr Blakeley at the hearing of the motion to dismiss this application, the Court and the Supreme Court are both superior courts of co-ordinate jurisdiction. It is no part of the function of either court to review, expressly or by implication, decisions of the other in matters of which the other court is seized. The history of the proceedings in the Supreme Court make it plain that the present application is an abuse of the process of this Court. In so finding, I make no determination on the question whether the proceedings are time barred as contended by the respondents. I have no doubt, in any event, that the leave granted in the Supreme Court does not cover this action. In my opinion the application should be dismissed as an abuse of process. Mr Blakeley should pay the respondents’ costs of the application.” Mr Blakeley filed lengthy written submissions on behalf of the applicant. He also made short oral submissions at the hearing of the appeal. It is not necessary to review to them in any detail. The submissions included a contention that the application was not an action to review, expressly or by implication, matters which have been heard by the Supreme Court of Western Australia but was, so it was submitted, “… an action to allow this matter to progress, by assessing appropriate security for costs, assess relief for unconscientious dealing/financial oppression which is in the public interest, and assess the statute of limitations”. MY REASONING It is well-established by the authorities that when considering whether to grant leave to appeal, the court normally has regard to two factors. They are, first, whether in all the circumstances the decision below is attended with sufficient doubt to warrant its reconsideration on appeal; and, secondly, whether substantial injustice would result if leave were refused, supposing the decision to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 400.

Ratio Decidendi

Legal Principle Established

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