Lean v Tumut River Orchard Management Limited - [2004] FCA 1670

FEDERAL COURT OF AUSTRALIA
Lean v Tumut River Orchard Management Limited [2004] FCA 1670
PRACTICE AND PROCEDURE – costs – proceeding discontinued by consent – principles governing exercise of discretion to award costs – whether conduct of parties in the circumstances reasonable – relevance of first respondent’s status as company in liquidation
Federal Court of Australia Act 1976 (Cth) ss 33V(1), 33ZF, 43
FAIRA Aboriginal Corporation v Minister for Aboriginal and Torres Strait Islander Affairs [2002] FCA 9 cited
Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251 cited
Garwolin Nominees Pty Ltd v Statewide Building Society [1984] VR 469 cited
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 cited
Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284 cited
Harvey Norman Holdings Ltd v Fels (2002) ATPR 41-852 cited
Lean v Tumut River Orchard Management Ltd [2003] FCA 269 cited
Leghaei v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 1118 cited
Marks v GIO Australia Holdings Ltd (1996) 63 FCR 304 cited
Minister for Immigration & Ethnic Affairs, Re; Ex parte Lai Qin (1997) 186 CLR 622 applied
O’Neill v Mann [2000] FCA 1680 cited
Tasmanian Conservation Trust Inc v Minister for Environment and Heritage [2004] FCA 883 cited
GRAEME TREVOR LEAN v TUMUT RIVER ORCHARD MANAGEMENT LIMITED, H P MERCANTILE PTY LTD and RRKM PTY LTD
WAG 329 of 2002
RD NICHOLSON J
17 DECEMBER 2004
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAG 329 OF 2002

BETWEEN:

GRAEME TREVOR LEAN
APPLICANT

AND:

TUMUT RIVER ORCHARD MANAGEMENT LIMITED
(ACN 003 501 611)
FIRST RESPONDENT

H P MERCANTILE PTY LIMITED
(ACN 067 362 877)
SECOND RESPONDENT

RRKM PTY LTD
(ACN 008 930 532)
THIRD RESPONDENT

JUDGE:

RD NICHOLSON J

DATE OF ORDER:

17 DECEMBER 2004

WHERE MADE:

PERTH

THE COURT ORDERS THAT:
1.The discontinuance of the representative proceeding as between the applicant and the first respondent be approved.
2.There be no order as to costs.

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

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAG 329 OF 2002

BETWEEN:

GRAEME TREVOR LEAN
APPLICANT

AND:

TUMUT RIVER ORCHARD MANAGEMENT LIMITED
(ACN 003 501 611)
FIRST RESPONDENT

H P MERCANTILE PTY LIMITED
(ACN 067 362 877)
SECOND RESPONDENT

RRKM PTY LTD
(ACN 008 930 532)
THIRD RESPONDENT

JUDGE:

RD NICHOLSON J

DATE:

17 DECEMBER 2004

PLACE:

PERTH

REASONS FOR JUDGMENT

This proceeding is a representative proceeding. In accordance with s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (‘the Federal Court Act’) the applicant seeks the approval of the Court to the settlement and discontinuance of the proceeding. As against the first respondent, the applicant seeks that the proceeding be discontinued and as against the second and third respondents, that it be settled. By consent orders dated 17 November 2004 the proceeding against the second and third respondents were dismissed. As against the first…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] FCA 1670
Decision Date: 17 DECEMBER 2004

CaseChat Overview and Summary

In the case of Lean v Tumut River Orchard Management Limited, the applicant sought approval from the Federal Court to settle and discontinue a representative proceeding against three respondents. The first respondent, Tumut River Orchard Management Limited, was in liquidation when the proceedings began. The applicant aimed to discontinue the proceeding against the first respondent without costs and settle the proceeding against the second and third respondents. The second and third respondents consented to the dismissal, but the first respondent opposed the no-costs order.

The legal issues before the court included whether the court should exercise its discretion to allow the proceeding to be settled and discontinued, particularly in light of the first respondent's status as a company in liquidation. The court had to weigh the applicant's submissions against the first respondent's opposition, focusing on the principle of costs in litigation and whether the circumstances warranted a deviation from the general rules.

The court found that the status of the first respondent as a company in liquidation did not create exceptional circumstances warranting a deviation from the general principles of costs in litigation. The court noted that no statutory provisions or authority suggested a different outcome for companies in liquidation. Balancing the submissions from both parties, the court concluded that the general principles should apply. Consequently, the court approved the settlement and discontinuance of the proceeding against all respondents without ordering costs.

The final orders of the court were to approve the discontinuance of the representative proceeding against the first respondent without costs and to settle the proceeding against the second and third respondents, which had already been dismissed by consent.

Orders

Orders of the court

1. The discontinuance of the representative proceeding as between the applicant and the first respondent be approved.

2. There be no order as to costs.

Background

Background to the litigation

This proceeding is a representative proceeding. In accordance with s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (‘the Federal Court Act’) the applicant seeks the approval of the Court to the settlement and discontinuance of the proceeding. As against the first respondent, the applicant seeks that the proceeding be discontinued and as against the second and third respondents, that it be settled. By consent orders dated 17 November 2004 the proceeding against the second and third respondents were dismissed. As against the first respondent, it is sought that there be no orders as to costs. There is no consent to that from the first respondent. Rather the first respondent seeks costs attributable to the applicant’s application for leave to amend the application and statement of claim filed on 6 June 2003 and the applicant’s request on 20 September 2004 to subsequently amend the substituted application and substituted statement of claim with the consent of the respondents. BACKGROUND CIRCUMSTANCES The background circumstances are set out in the applicant’s outline of submissions as follows. As the first respondent had a liquidator appointed, it was necessary for the applicant to apply for leave to institute proceedings against the first respondent. On 16 September 2002 the applicant sought the leave of the Federal Court to institute the representative proceeding against the first respondent, namely proceeding No. 3017 of 2002 (‘application for leave to proceed’). The applicant’s application for leave to proceed against the first respondent was successful and the applicant was granted leave on 20 November 2002 to proceed against the first respondent in liquidation by way of the representative proceeding. The orders made by Carr J regarding the application for leave to proceed included provision that:‘7.1The First Respondent was excused from filing any pleadings in the Representative Proceedings (subject to obtaining legal advice that such a course was appropriate and subject to any contrary order by the docket judge or other responsible judge); and7.2The costs of the Application for Leave Proceedings would be costs in the cause in the Representative Proceedings as between the Applicant and the First Respondent.’ The applicant initiated the representative proceeding on 29 November 2002 against the respondents. On 6 June 2003 the applicant filed a notice of motion to amend the application and statement of claim (‘first application for leave to amend’) which was initially heard on 12 June 2003 by Carr J, on which occasion timetabling orders were made. On 15 August 2003 the first application for leave to amend was heard before Carr J at which time the first respondent’s counsel made the following submissions:(1)The first respondent had essentially taken no part in the representative proceedings since the applicant had successfully obtained leave to proceed against the first respondent on 20 November 2002; and(2)While counsel acknowledged that the first respondent had been provided with the minute of proposed substituted application and minute of proposed substituted statement of claim by way of service, the first respondent:(a)had not been advised by the applicant as to whether or not the amendments in the first application for leave to amend encroached upon the leave given on 20 November 2002; and(b)therefore counsel had not previously appreciated the changes made to the statement of claim and did not have instructions regarding the application.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The one additional circumstance that makes me hesitate in the exercise of the discretion is the fact that the first respondent is a company in liquidation and that, that was known to the applicant when it sought leave to commence proceedings against it. However, I do not consider that such circumstance alone creates the condition for exceptionality to the principles generally applicable. I have been unable to find and have not had my attention drawn to any statutory provisions or authority relevant to the circumstance of liquidation that would lead to a different conclusion. In counterbalance to the first respondent’s submissions concerning the significance of its status in liquidation, there are equally compelling submissions on behalf of the applicant. It is therefore appropriate that the general principles should apply to resolve the exercise of discretion.CONCLUSION For the above reasons I conclude the Court should give its approval to the settlement and discontinuance of the proceeding against the first, second and third respondents on the basis there be no order as to costs.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 329 OF 2002

BETWEEN:	GRAEME TREVOR LEAN APPLICANT
AND:	TUMUT RIVER ORCHARD MANAGEMENT LIMITED (ACN 003 501 611) FIRST RESPONDENT H P MERCANTILE PTY LIMITED (ACN 067 362 877) SECOND RESPONDENT RRKM PTY LTD (ACN 008 930 532) THIRD RESPONDENT
JUDGE:	RD NICHOLSON J
DATE OF ORDER:	17 DECEMBER 2004
WHERE MADE:	PERTH

JUDGE:	RD NICHOLSON J
DATE:	17 DECEMBER 2004
PLACE:	PERTH