McLeod v MUNRO

[2005] FMCA 774

FEDERAL MAGISTRATES COURT OF AUSTRALIA

McLEOD v MUNRO & ANOR [2005] FMCA 774

BANKRUPTCY – Application to set aside bankruptcy notice – where applicant’s counsel withdraws – where requests for adjournment refused – where costs are awarded on an indemnity basis for a portion of the application.

Federal Court Rules
Federal Magistrates Court Rules 2001

Porter v OAMPS [2004] 207 ALR 635
Re Brink; Ex Parte The Commercial Banking Company of Sydney Ltd (1980) 44 FLR 135
Re Pollnow and Queensboro Pty Ltd & Anor (unreported) Burchett J FCA 19 October 1988
Re Ling; Ex Parte Ling v Commonwealth of Australia [1995] 58 FCR 129

Applicant: DAVID MCLEOD

First Respondent: KEVIN MUNRO

Second Respondent: YALTARA NOMINEES PTY LTD

File Number: SYG 3572 of 2004

Judgment of: Raphael FM

Hearing date: 25 May 2005

Date of Last Submission: 25 May 2005

Delivered at: Sydney

Delivered on: 25 May 2005

REPRESENTATION

Counsel for the Applicant: Mr D Hayes QC

Solicitors for the Applicant: Mr P Loiterton

Counsel for the Respondent: Mr C Branson QC/Mr T Barrett

Solicitors for the Respondent: Bamford & Associates

ORDERS

1. Application dismissed.

2. On the applicant's undertaking to file as soon as possible an application to the Court of Appeal in New South Wales for expedition of the appeal in matter No CA40051/2005, the time for compliance with the bankruptcy notice is extended until 4 pm 1 June 2005.

3. Applicant to pay the respondents’ costs of the proceedings on a party and party basis until 24 May 2005 and thereafter on an indemnity basis including fees of counsel for second day’s hearing, such costs to be taxed if not agreed, according to the Federal Court Act and Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 3572 of 2004

DAVID McLEOD

Applicant

And

KEVIN MUNRO

First Respondent

YALTARA NOMINEES PTY LTD

Second Respondent

REASONS FOR JUDGMENT

1. These proceedings have gone badly awry.  At an initial directions hearing on 1 March 2005 I made orders for the conduct of the application which was to set aside a bankruptcy notice or to extend time for compliance thereof.  Included in those orders were a hearing date of today and tomorrow, 25 and 26 May 2005 and another order that an outline of case be filed with my associate seven days before the hearing, in other words by 18 May 2005.

2. On 12 May 2005 there was a general directions hearing concerning the matter and also a hearing relating to some subpoenas which had been issued against Phillips Fox.  On that day, in circumstances which I am afraid I cannot now recall, I agreed and ordered that the submissions should be supplied to my associate by Monday 23 May 2005.  The respondent complied slightly late with that order but the applicant did not comply at all.

3. On Tuesday 24 May the matter came before me again as a result of an urgent request from the applicant for an adjournment.  Mr Stuart of counsel appeared on behalf of the applicant and he was instructed by Mr Loiterton.  The grounds of the application for an adjournment were that the appeal against the judgment which founded the bankruptcy notice had now been set down for hearing in the Supreme Court of New South Wales in October.  I declined to grant the adjournment noting the authorities on that matter which are contained and included in a decision known as Porter v OAMPS [2004] 207 ALR 635. I made specific reference to that case because Mr Hayes QC, who appears in these proceedings, was counsel in that case as well. I also said to Mr Stuart that I thought that granting the adjournment was effectively giving the result of the application that he was making because it would have had the effect of extending time for compliance with the bankruptcy notice until after the hearing of the appeal.

4. At the directions hearing I asked Mr Stuart why his client had not complied with my orders to file an outline of case.  I cannot recall Mr Stuart's response but I do recall that I ordered the outline of case be filed by noon on that day.  This did not occur.  Mr Loiterton was in court when I made that order.

5. When the matter commenced at 10.15 this morning Mr Hayes appeared on behalf of the applicant.  No written submissions had been received.  I questioned Mr Hayes about this.  I was critical of the legal representatives of the applicant for failing to comply with my orders.  Mr Hayes informed me that he was not aware of my order.  Mr Branson made certain representations.  Mr Hayes took offence at those representations.  Mr Hayes told me that he was in a difficult position.  He alleged that Mr Branson had said things about him which he did not accept but on the other hand his version of the events indicated that he had been kept in the dark by his junior and his instructing solicitor.  Mr Hayes requested that he withdraw from the case.  I do not believe I had any alternative but to permit that withdrawal as Mr Hayes felt that he had been personally compromised.  It would not be fair to him as a member of the inner bar or indeed as a legal representative to require him to appear under those circumstances.

6. Now Mr Loiterton comes before me seeking an adjournment for him to find Mr Stuart who is apparently in some other court so that if possible Mr Stuart could continue the representation of the applicant.  I am not prepared to grant that adjournment or any further time to the applicant.  There is no indication that Mr Stuart would be readily available.  The applicant's senior counsel has withdrawn because, if I accept his assurances to me, which I do, he has had an order of the court not passed on to him, a severe failing on the part of those instructing him.  There is no reason for me to grant those instructing him any further indulgence.

7. Mr Loiterton then sought an adjournment on the grounds that there was a new argument concerning the exit agreement document upon which the claim had originally been founded.  This ground for setting aside the judgment had been mentioned by Mr Hayes before he left the court.  Mr Hayes admitted that the matter had not been raised in the notice of appeal although it may well now be.  It seems to me that any argument concerning the very document upon which the plaintiff in the District Court proceedings sued must be something which, within the scope of the authorities, could have been raised in the original proceedings as Mr Branson and Mr Barrett have pointed out in their helpful written submissions; Re Brink; Ex Parte The Commercial Banking Company of Sydney Ltd (1980) 44 FLR 135, Re Pollnow and Queensboro Pty Ltd & Anor (unreported) Burchett J FCA 19 October 1988, Re Ling; Ex Parte Ling v Commonwealth of Australia [1995] 58 FCR 129 at [132].

8. Whilst the point raised by Mr Hayes and Mr Loiterton may have some validity at the hearing of the appeal it has no validity as an argument for setting aside a bankruptcy notice validly issued on a valid judgment in respect of which no application for a stay has been made but which is subject to an appeal that has taken quite a considerable time to wind its way through the processes of the Supreme Court of New South Wales.  I would decline to grant an adjournment on that ground either.

9. Mr Loiterton now withdraws from the application and I consequently dismiss it. Mr Branson has submitted that this is a case in which I should order indemnity costs payable by the applicant to the respondents.  He says that it is clear there was no intention to proceed and that there has been a contumelious disregard for the orders of the court.  Mr Loiterton argues that it is clear that the applicant did intend seriously to proceed and had instructed senior Counsel to represent him.

10. I am satisfied that the applicant did intend to put forward the best possible case and moved towards that presentation following the first directions hearing in March.  However, what occurred and resulted in Mr Hayes' withdrawal from the case, namely the complete disregard of my order concerning the filing of submissions, does seem to warrant some different order than the ordinary order as to costs.

11. I think in the circumstances the appropriate order to make in this case is that the applicant pay the respondent's costs of the application, such costs to be on a party and party basis until 24 May 2005 and thereafter on an indemnity basis, such costs to be taxed if not agreed.

12. My grounds for providing that the costs be on an indemnity basis, effectively for today, are that the events occurred purely through the fault of the applicant and his legal advisers and the respondents were brought here for no purpose having prepared in a detailed manner for a difficult and lengthy case.  In regard to the costs of the proceedings which are to be paid on an indemnity basis, those costs should properly include the costs of counsel for both days set down for the hearing of this case.

13. Upon the application of Mr Loiterton, I order that upon the applicant's undertaking to file as soon as possible an application to the Court of Appeal in New South Wales for expedition of the appeal in matter
    No CA40051/2005, the time for compliance with the bankruptcy notice is extended until 4 pm, 1 June 2005.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date: