FEDERAL COURT OF AUSTRALIA
Hudson v Sigalla [2016] FCA 1204
Appeal from: Hudson v Sigalla (No.3) [2016] FCCA 2140 File number: NSD 1605 of 2016 Judge: KATZMANN J Date of judgment: 28 November 2016 Catchwords: PRACTICE AND PROCEDURE — whether leave required to appeal from judgment of Federal Circuit Court varying order for costs in favour of successful party by substituting order for costs in a lump sum to be paid to successful party’s lawyers — whether judgment final or interlocutory — whether leave to appeal should be granted Legislation: Federal Circuit Court Rules 2001 (Cth) rr 1.05, 16.05(3), 16.07, 21.02
Federal Court of Australia Act 1976 (Cth) ss 24(1A), 43
Federal Court Rules 1979 (Cth) O 36 r 2, O 62 r 4(2)(c)
Federal Court Rules 2011 (Cth) rr 18.01, 39.31(1)(d), 40.02, 40.20
Cases cited: Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170
Akki Pty Ltd v Martin Hall Pty Ltd (1994) 35 NSWLR 470
Australian Competition and Consumer Commission v Shell Co of Australia Ltd (1997) 72 FCR 386
Australian Securities and Investments Commission v Yandal Gold [2003] FCA 77
Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119
Bienstein v Bienstein [2003] HCA 7; 195 ALR 225
Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224
Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397
Dunstan v Seymour [2006] FCA 917
Ex parte Bucknell (1936) 56 CLR 221
Ginos Engineers Pty Ltd v Autodesk Australia Pty Ltd [2008] FCA 1051
Hacker v Weston [2015] FCA 790
Hall v Nominal Defendant (1966) 117 CLR 423
House v The King (1936) 55 CLR 499
Hudson v Sigalla (No.3) [2016] FCCA 2140
Hudson v Sigalla [2015] FCAFC 140
In the Estate of Fuld (No 4) [1968] P 727
Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388
Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27
Probiotec Ltd v The University of Melbourne (2008) 166 FCR 30
Salfinger v Niugini Mining (Aust) Pty Ltd (No 5) [2008] FCA 1119
Short v Crawley (No 45) [2013] NSWSC 1541
Smith v Cowell (1880) 6 QBD 75
Younan v Queensland Building Services Authority [2011] QCA 1
Date of hearing: 25 November 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 77 Counsel for the Appellant: Mr C D Wood Solicitor for the Appellant: Marque Lawyers Counsel for the First Respondent: The First Respondent did not appear Counsel for the Second and Third Respondents: Mr B Katekar Solicitor for the Second and Third Respondents: IHS Law Counsel for the Fourth and Fifth Respondents: The Fourth and Fifth Respondents did not appear Solicitor for the Sixth to Fourteenth Respondents: Mr D R Stack of Kemp Strang ORDERS
NSD 1605 of 2016 BETWEEN: FRANK HUDSON
Appellant
AND: ANDREW JOHN SIGALLA
First Respondent
GUY REYNOLDS
Second Respondent
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Details
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- Hudson v Sigalla [2016] FCA 1204
- Case
- [2016] FCA 1204
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CaseChat Overview and Summary
In the Federal Circuit Court, Hudson v Sigalla [2016] FCCA 2140, the appellant, Frank Hudson, sought to appeal against a variation of a costs order made by the primary judge, Justice Gilmour. The primary judge had ordered Mr Hudson to pay the respondent’s costs as agreed or taxed. After Mr Sigalla’s lawyers asserted a lien over the fund constituted by the costs order, the primary judge varied the order, substituting a lump sum payment to be made directly to the lawyers. Mr Hudson challenged the validity of this variation and sought leave to appeal. The legal issues before the court were whether the primary judge had the jurisdiction to vary the costs order and whether the variation was an appealable order. The court found that the primary judge had the power to vary the costs order, rejecting Mr Hudson's argument that the limitation period in Federal Circuit Court Rule 21.02 precluded the variation. The court also held that the variation was a final order, and therefore appealable. The court dismissed the application for leave to appeal and the notice of appeal as incompetent. The appellant was ordered to pay the respondent’s costs.
Orders
Orders of the court
1. The application for leave to appeal be dismissed.
2. The notice of appeal be dismissed as incompetent.
3. The appellant pay the respondents’ costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
This judgment is concerned with an appeal or proposed appeal about the variation of a costs order. In brief, at the conclusion of the proceeding the primary judge dismissed the appellant’s application and ordered him to pay the respondent’s costs as agreed or taxed. Costs were not agreed and the taxation process commenced. In the meantime, the respondent failed to pay his own lawyers, the lawyers asserted a lien over the fund constituted by the costs order, and they later applied to the court for relief. The primary judge granted this relief and ordered that Mr Hudson pay costs directly to the practitioners in lump sums. The appellant claims that in so doing his Honour fell into appealable error. Background The appellant, Frank Hudson, and the respondent, Andrew Sigalla, are former business allies, who fell out. Mr Hudson, who is a licensed bookmaker, claims that Mr Sigalla owes him more than $1.9 million in respect of unpaid gambling debts. Mr Sigalla became bankrupt upon the making of a sequestration order but, at a meeting of his creditors, which Mr Hudson did not attend, a composition was agreed to and the bankruptcy was annulled. Mr Sigalla then sued Mr Hudson in the Supreme Court to recover monies he claims Mr Hudson owes him. Mr Hudson filed a cross-claim in respect of the alleged gambling debts. After Mr Sigalla applied for summary dismissal of the cross-claim, Mr Hudson applied to the Federal Circuit Court to set aside or terminate the composition. At the same time he sought leave under s 58(3) of the Bankruptcy Act 1966 (Cth) to pursue the cross-claim. The primary judge made an order granting leave but otherwise dismissed the application: Hudson v Sigalla [2014] FCCA 1652. Two months later, Mr Sigalla moved the court for orders that the proceedings be reopened and the grant of leave to proceed with the cross-claim be revoked. The primary judge was persuaded to accede to the motion and to make those orders: Hudson v Sigalla(No.2) [2015] FCCA 542. At the time judgment was pronounced on 30 March 2005, his Honour invited submissions as to costs. After hearing from the parties he made an order (order 4) requiring Mr Hudson to pay Mr Sigalla’s costs and disbursements of and incidental to the entire proceedings, including the re-opened proceedings, to be taxed and paid in accordance with the Federal Court Rules, in the absence of agreement. Mr Hudson appealed unsuccessfully to a Full Court of this Court: Hudson v Sigalla [2015] FCAFC 140. The Full Court made no order as to costs and did not interfere with the primary judge’s costs orders. On 4 November 2015 Mr Sigalla’s solicitors, Kemp Strang, wrote to Mr Hudson’s solicitors, Marque Lawyers, asking them to indicate whether Mr Hudson was willing to pay $437,776.44 in respect of Mr Sigalla’s costs. Evidently he was not. Consequently, on 9 March 2016 Mr Sigalla filed a bill of costs, thereby initiating the process of taxation: see Federal Court Rules 2011 (Cth) (FCR), r 40.17. The bill was in the amount of $377,313.96, comprising solicitors’ costs of $159,260.75 and disbursements (including counsel’s fees) of $218,053.21.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
The proposed appeal relates to the orders made on 5 September 2016 and challenges certain aspects of the primary judge’s reasons in the judgment published on that day (Hudson v Sigalla (No.3) [2016] FCCA 2140). In a nutshell, Mr Hudson contends that the primary judge had no power to vary order 4 and, assuming that he had, that his approach to the assessment was flawed. The hearing and judgment below The primary judge received affidavits from the practitioners as to their fees, and detailed submissions. Mr Hudson did not oppose the making of the declarations concerning the practitioners’ liens. The controversy related to the variation of the costs order. Mr Hudson submitted that he should not have to pay any more than he would be required to pay on a party and party assessment and, in particular, that he should not have to pay costs “approaching indemnity costs” absent an order for indemnity costs. Although Mr Hudson opposed a variation of the costs order, he nonetheless conceded that it would be beneficial to bring “all elements of the disputes” to a prompt and firm end. His Honour decided that the court had both the jurisdiction and the power to make a lump sum costs order. In so doing he rejected an argument by Mr Hudson that r 21.02 of the Federal Circuit Court Rules 2001 (Cth) (FCCR) precluded it because no application to vary the costs order was made within 28 days of the original order, holding that the limitation did not apply to a variation. In determining that a lump sum costs order should be substituted for the original costs order his Honour said at [12]–[13]:12.As noted above, the parties have been unable to reach any agreement as to costs. No taxation has been commenced, although Registrar Ng provided an estimate pursuant to rule 40.20(3) of the Federal Court Rules to Mr Hudson and Mr Sigalla on 2 May 2016 in the sum of $241,767.35. A registrar has also ordered a mediation prior to any taxation but that has not yet occurred. The conduct of a mediation would involve (scil) further time and expense and, given the acrimonious relations between Mr Hudson and Mr Sigalla, and the way in which all issues in the proceedings have been hotly contested, a productive outcome of a mediation is, in my view, unlikely. 13.A taxation would resolve the issue of quantification but would put the parties to further trouble and significant additional expense. The estimate provided by Registrar Ng was based on different material to that presented to me by the practitioners. I heard argument over a full day in relation to the issues on 10 August 2016. Except for one directions hearing in June this year before Judge Barnes, I have had the sole conduct of the entire proceedings in this Court over several years and am intimately familiar with the work done on behalf of Mr Hudson and Mr Sigalla. Further, the practitioners were not parties to the assessment process before the registrar. In addition, the establishment of their particular liens over the fruits of the costs order arguably alters in a subtle but important way the manner in which costs should be assessed. There is a risk that that subtlety may be lost in the taxation process.
Ratio Decidendi
Legal Principle Established
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