Nugawela v Dudley (Trustee)

Case [2024] FCA 285

FEDERAL COURT OF AUSTRALIA

Nugawela v Dudley (Trustee) [2024] FCA 285  

File number(s): WAD 162 of 2023
Judgment of: JACKSON J
Date of judgment: 22 March 2024
Catchwords: BANKRUPTCY AND INSOLVENCY - application under r 39.05(a) to set aside interlocutory order made in absence of applicant - no good reason for being absent when order was made established - no prima facie argument of sufficient merit - application to set aside interlocutory order dismissed
Legislation: Federal Court Rules 2011 (Cth) r 39.05
Cases cited:

Nugawela v Dudley (Trustee) [2023] FCA 1603

Polis v Zombor (No 5) [2022] FCA 122
Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 43
Date of last submission/s: 11 March 2024
Date of hearing: 22 March 2024
Counsel for the Applicant: The applicant is self-represented
Counsel for the Respondent: Mr C Touyz
Solicitor for the Respondent: Greenstone Legal

ORDERS

WAD 162 of 2023

IN THE MATTER OF PATRICK NUGAWELA
BETWEEN:

PATRICK ALLAN NUGAWELA

Applicant
AND:

GREGORY BRUCE DUDLEY AS TRUSTEE FOR THE ESTATE OF PATRICK NUGAWELA

Respondent

ORDER MADE BY:

JACKSON J

DATE OF ORDER:

22 MARCH 2024

THE COURT ORDERS THAT:

1.The time in paragraph 4 of the orders made on 14 December 2023 (appellant to provide security for costs by 19 February 2024 or appeal is dismissed) is varied to 4.00 pm AWST on 5 April 2024. 

2.Paragraph 1 of the orders made on 14 February 2024 (stay of springing order) is vacated. 

3.The appellant's application to set aside the orders made on 14 December 2023 is otherwise dismissed. 

4.The appellant's interlocutory application filed on 9 February 2024 is otherwise dismissed. 

5.The appellant must pay the respondent's costs of the above applications, to be assessed in the same manner as the costs that were awarded on 31 January 2024 and in accordance with further directions from the Chambers of Justice Jackson.   

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

JACKSON J:

  1. On 14 December 2023 I ordered the appellant, Dr Nugawela, to give security for the costs of this appeal in the sum of $50,000, and made an order that if the security was not provided by 19 February 2024, the appeal would be dismissed:  Nugawela v Dudley (Trustee) [2023] FCA 1603 (Nugawela (No 1)). 

  2. Dr Nugawela has applied to set those orders aside.  Despite some initial confusion about the nature of his application, that is how I will treat it; any other course would only cause inefficiency. 

  3. The application is, or at least should be taken to be, made under r 39.05(a) of the Federal Court Rules 2011 (Cth). That provision empowers the Court to vary or set aside a judgment or order after it has been entered if it was made in the absence of a party. It applies because Dr Nugawela did not appear at the hearing of the security for costs application, when the…

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AGLC
Nugawela v Dudley (Trustee) [2024] FCA 285
Case
[2024] FCA 285
Decision Date

CaseChat Overview and Summary

Dr Nugawela, a bankrupt, sought to set aside interlocutory orders made in his absence in the Federal Court of Australia. The orders required him to provide security for costs or face dismissal of his appeal. The orders were made in the absence of Dr Nugawela, who claimed he was hospitalised at the time. The trustee in bankruptcy opposed the application to set aside the orders. The court had to determine whether Dr Nugawela had a good reason for his absence and whether he had a prima facie case to resist the orders.

The court examined Dr Nugawela's evidence and submissions. He claimed he was hospitalised and unable to attend the hearing. However, the court found his evidence lacked specificity regarding the timing of his hospital admission and medical procedures. Dr Nugawela failed to provide a clear reason for his absence or establish a prima facie case to resist the orders. The court also noted Dr Nugawela's failure to comply with directions to file evidence or submissions before the hearing. The principles governing applications to set aside interlocutory orders emphasise the importance of finality in litigation and the need for exceptional circumstances to warrant setting aside such orders.

The court concluded that Dr Nugawela did not establish a good reason for his absence or a prima facie case to resist the orders. The application to set aside the interlocutory orders was dismissed. However, the court varied the time for Dr Nugawela to provide security for costs to allow him additional time. Dr Nugawela was also ordered to pay the trustee's costs of the application. The orders made on December 14, 2023, remained in effect, except for the variation in the time for providing security for costs.

Orders

Orders of the court

1. The time in paragraph 4 of the orders made on 14 December 2023 (appellant to provide security for costs by 19 February 2024 or appeal is dismissed) is varied to 4.00 pm AWST on 5 April 2024.

2. Paragraph 1 of the orders made on 14 February 2024 (stay of springing order) is vacated.

3. The appellant's application to set aside the orders made on 14 December 2023 is otherwise dismissed.

4. The appellant's interlocutory application filed on 9 February 2024 is otherwise dismissed.

5. The appellant must pay the respondent's costs of the above applications, to be assessed in the same manner as the costs that were awarded on 31 January 2024 and in accordance with further directions from the Chambers of Justice Jackson.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The ground on which Dr Nugawela seeks to set the orders aside is essentially that he was unable to attend the hearing because he was in hospital. The respondent, who is Dr Nugawela's trustee in bankruptcy, opposes the application to set the orders aside. Dr Nugawela's evidence and submissions The background and reasoning set out in Nugawela (No 1) will not be set out again here; these reasons assume familiarity with those reasons. Dr Nugawela relies on two affidavits he has sworn, one on 7 February 2024 and the other on 5 March 2024. While both affidavits refer to Dr Nugawela's hospitalisation at the time of the hearing of 14 December 2023, it is the affidavit of 5 March which deals with it in the most detail. A cursory reading of that affidavit could lead to the view that Dr Nugawela had a reasonable excuse for his non-attendance on that day. But a document which Dr Nugawela himself tendered at the hearing of the application to set aside the orders of 14 December put a different complexion on his earlier evidence, and it is important to be precise as to what that evidence did and did not say. Dr Nugawela's affidavit of 5 March 2024 says:3.I suffered a series of episodes leading up to my hospital admission on 12 December 2023. These were syncopal (loss of consciousness) and pre-syncopal (warning of imminent loss of consciousness) episodes. This was assessed initially upon being transported by ambulance to Sir Charles Gairdner Hospital. 4.An episode of momentary loss of consciousness leading to collapse occurred at the Perth Magistrates Court and required me to be taken downstairs from the courtroom, where I was assisted by orderlies. 5.The symptomatic disabilities required me to have radiographic coronary angiography. Then I consulted consultant cardiologist, Dr Mabote who arranged further angiographic procedures towards prevention of a serious coronary event. I had various procedures undertaken as an inpatient at the Hollywood Hospital. 6.Whilst in hospital I requested that an email be sent to Justice Jackson's associate to advise my admission and consequential inability to attend court on 14 December 2023. I understand that the initial email was not received by the court, and that a follow-up email was. I had a period of recuperation upon discharge from hospital, and remain under the care of the coronary unit. What this does not say is whether the assessment at Sir Charles Gairdner Hospital following the ambulance trip occurred on the same day as the admission to Hollywood Private Hospital. The date of the ambulance trip and of the assessment at Sir Charles Gairdner is not given. No documentary record of those things is presented. None of the dates of the syncopal or pre-syncopal episodes are given. The date of the momentary loss of consciousness at Perth Magistrates Court is not given. The procedures referred to in paragraph 5 of the affidavit appear to have resulted from a consultation with the cardiologist at Hollywood Hospital, Dr Mabote, which took place at a different time to the ambulance trip and assessment at Sir Charles Gairdner Hospital.

Decision

Reasons for decision

As a result, I am not persuaded that Dr Nugawela has a prima facie case that the respondent's conduct caused his impecuniosity. Beyond that, the reasons articulated in Nugawela (No 1) stand. Conclusion The matters I have canvassed, as well as the importance of finality in litigation, even at a putatively interlocutory stage, compel the conclusion that the orders of 14 December 2023 should not be set aside. A further discretionary consideration strengthens that conclusion. Not only did Dr Nugawela not appear at the hearing of 14 December 2023, he failed to comply with directions for him to file evidence or submissions in advance of that hearing. Therefore this is different to a case where a person has simply not been informed of a hearing and has had no opportunity to present his or her case. Dr Nugawela did not take the opportunity to put his position in writing when it was given to him. The application to set aside the orders of 14 December 2023 will be dismissed. One of the orders made on that day was that if security for costs was not given by 19 February 2024, the appeal would be dismissed. While that time has passed, the order was stayed pending the outcome of the present application. Counsel for the respondent rightly accepted that it would not be appropriate for that order to be reinstated in such a way that it would take immediate effect, so as to dismiss the appeal. Given that Dr Nugawela has already had ample notice of the possibility that he will, in the end, be required to provide security for costs in the sum of $50,000, it is appropriate to give him two more weeks to do so.

Ratio Decidendi

Legal Principle Established

The orders Dr Nugawela seeks to set aside are interlocutory in nature. I respectfully adopt O'Bryan J's summary of the principles governing applications to set aside such orders, given in Polis v Zombor (No 5) [2022] FCA 122 at [43]-[45] (most citations removed):43 The discretion permitted to the Court by r 39.05, while in its terms unconfined, should ordinarily be exercised only in exceptional circumstances, bearing in mind the overarching principle of the finality of litigation. Generally, the exercise of the discretion is limited to circumstances where it can be shown that, without fault on the part of the applicant, he or she has not been heard on a relevant question. An application under r 39.05 is not an appeal and is not the appropriate means by which to contend that the Court’s orders are affected by an error of law.44 In determining whether to exercise the discretion permitted by r 39.05(a), “… it is usual for the court in these circumstances, to have regard to the explanation given by the absent party for its absence, and whether the evidence discloses a defence of sufficient merit to warrant setting aside the order …”: 3D Funtimes Ltd v Intellec Development Group Pty Ltd (No 2) [2011] FCA 407 at [6]. The requirement of a reason for the absence is based in the fundamental principle that a party should be bound by a decision if he or she has had full notice and an opportunity to appear and oppose the proceedings. In respect of the second element, the court should consider whether the respondent has a prima facie, arguable, defence.45 In respect of r 39.05(c), the principle of the finality of litigation is also relevant to interlocutory orders and “counsels courts to exercise caution when considering whether orders previously made and final on their face and entered should be re-opened for consideration and set aside”: Professional Administration Service Centres Pty Ltd v Commissioner of Taxation [2012] FCAFC 180; 295 ALR 52 at [53] per Edmonds, McKerracher and Nicholas JJ. The too-ready resort to, or incautious application of, the power to vary or set aside orders, even of a procedural nature, also subverts the overarching purpose identified in s 37M of the Federal Court of Australia Act 1976 (Cth) … of facilitating the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. The ability of a party to re-litigate interlocutory matters after they have been thoroughly determined is generally limited to situations where there has been a material change in circumstances or where new material has been discovered which could not reasonably have been put before the Court on the previous occasion.Consideration The two 'elements' O'Bryan J describes are not, of course, immutable prerequisites to making any order to set aside. But they are useful guidelines to the exercise of the discretion, and the hearing was conducted on the basis that Dr Nugawela did have to establish a good reason why he was unable to attend Court on 14 December 2023, and that he did have to establish that he had a prima facie basis to resist the orders for security for costs and for the dismissal of the appeal if security was not given within a certain time.