Tong v Brancato
[2019] FCA 2036
•3 December 2019
FEDERAL COURT OF AUSTRALIA
Tong v Brancato [2019] FCA 2036
File number: NSD 1327 of 2019 Judge: ROBERTSON J Date of judgment: 3 December 2019 Catchwords: PRACTICE AND PROCEDURE – notice of discontinuance by applicant seeking that there be no order as to costs – appropriate form of order where neither respondent had filed a notice of address for service and where no evidence that either respondent had notice of the date of the adjourned case management hearing and where neither respondent had notice that the applicant sought to discontinue the whole of the proceedings with no order as to costs Legislation: Bankruptcy Act 1966 (Cth) s 58
Federal Court Rules 2011 (Cth) r 26.12
Date of hearing: 3 December 2019 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 23 Solicitor for the Applicant: Ms N Ben of Jemmeson & Fisher Counsel for the Respondents: The Respondents did not appear ORDERS
NSD 1327 of 2019 BETWEEN: WILSON KWOK FAI TONG
Applicant
AND: MICHAEL BRANCATO
First Respondent
C.I.R. REALTY INTERNATIONAL PTY LTD ACN 618 093 253
Second Respondent
JUDGE:
ROBERTSON J
DATE OF ORDER:
3 DECEMBER 2019
THE COURT ORDERS THAT:
1.Leave be granted to the applicant to file a notice of discontinuance, discontinuing the whole of the proceeding.
2.Subject to orders 3, 4 and 5, there be no order as to the costs of the proceeding.
3.By 5 PM on 6 December 2019, the applicant serve on the first respondent and on the second respondent a copy of these orders and of his “notice of discontinuance” dated 29 November 2019 but marked “draft”.
4.If either respondent wishes to contend that the discontinuance should be on terms that the applicant pay his or its costs, by 5 PM on 13 December 2019 that respondent is to so notify my associate by email to [email protected]. Thereafter any further necessary directions will be made.
5.If no notification is received in accordance with order 4, that is, by 5 PM on 13 December 2019, order 2 will thereupon take effect.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
ROBERTSON J:
This application was commenced on 15 August 2019 by way of originating application accompanied by a statement of claim. In substance the proceedings arise out of a transfer of a real estate agency business in March 2017, representations said to be made by the first respondent at that time, and amounts said to have been lent to the respondents following the transfer. The second respondent is the company which it is said that the applicant and the first respondent agreed to be incorporated to receive and carry on the business following the transfer.
The applicant and the first respondent were each directors of the second respondent and each held a real estate agents licence under the Property, Stock and Business Agents Act 2002 (NSW). For present purposes it is unnecessary to go into the detail of the alleged representations, payments made or loans.
The applicant claimed as well that the first respondent had excluded him from the day-to-day management of the second respondent, without reasonable justification, and had misappropriated monies from the second respondent’s trust account.
The final relief sought was for a declaration, for compensation or damages and for the repayment by the first respondent and by the second respondent of debts which were enumerated. The applicant also sought orders under ss 232, 233, 461 and 1323 of the Corporations Act 2001 (Cth).
I am satisfied that each respondent was served with the relevant documents as they then were, the second respondent having been served on 20 August 2019 and the first respondent on 28 August 2019.
By letter dated 15 September 2019, the first respondent wrote to the Court requesting an adjournment until “February/March 2020” so that he could “obtain the necessary paperwork from [a solicitor] to assist in my Case and to provide the solicitor with this evidence.” He referred to “the solicitor who prepared some of the documents” being very unwell such that he would not be back to work until late February 2020. He also referred to having time to consult with the solicitor who prepared some documents to be entered into evidence.
Neither the first respondent nor the second respondent had filed a notice of address for service. That remains the position.
A letter dated 30 September 2019, from NSW Fair Trading to the applicant as director of C.I.R. Realty International Pty Ltd, confirmed that a manager had been appointed over the business of the second respondent, effective on the date of service of that letter, under ss 126(1) and 127 of the Property, Stock and Business Agents Act 2002 (NSW).
On the first return date, 3 October 2019, there was no appearance on behalf of either the first respondent or the second respondent.
The applicant first sought judgment against the first respondent and the second respondent pursuant to r 5.21(d) of the Federal Court Rules 2011 (Cth). At that stage there was no evidence filed. The applicant proposed that the respondents would have a week to file a defence and notice of address for service and that if they failed to do so the applicant would have judgment against the respondents on liability. At that point the applicant had not told the two respondents that he proposed to seek a self-executing order under that rule.
I refused the generalised application by the first respondent made by his letter to the Court dated 15 September 2019 for a lengthy adjournment and made timetabling orders for the filing and serving of evidence. I also ordered that by 10 October 2019 the respondents file and serve a notice of appearance. I stood the matter over, for case management and any interlocutory hearing, to 14 November 2019 at 9:30 AM.
By interlocutory application filed on 24 October 2019 and served on 30 October 2019, the applicant sought the following interlocutory orders, by default:
1.A declaration that the First Respondent breached section 18 of the Australian Consumer Law.
2.That there be judgment for the Applicant against the First Respondent in accordance with order 2 sought in the Originating Application filed in this proceeding in the amount of $240,662.38.
3.Alternatively, that there be judgment for the Applicant against the First Respondent in accordance with order 3 sought in the Originating Application filed in this proceeding in the amount of $240,662.38.
4.That there be judgment for the Applicant against the First Respondent in accordance with orders 4 and 5 sought in the Originating Application filed in this proceeding in the amount of $72,770.00.
5.That there be judgment for the Applicant against the Second Respondent in accordance with orders 6 and 7 sought in the Originating Application filed in this proceeding in the amount of $22,502.68.
6.That the First Respondent pay the Applicant’s cost of this proceeding, including all reserved costs and the costs of the applicant's interlocutory application for summary judgement as taxed or agreed.
7. Interest.
8. Such further order as the Court deems fit.
The substantive affidavit in support of the relief claimed by the applicant was sworn by the applicant, Mr Wilson Kwok Fai Tong, on 23 October 2019. This affidavit was served on 30 October 2019.
By letter dated 12 November 2019, the Court was notified by the Official Trustee in Bankruptcy that the first respondent became bankrupt on 29 October 2019. This brought into play s 58(3) of the Bankruptcy Act 1966 (Cth), providing that after a debtor has become a bankrupt it is not competent for a creditor, except with the leave of the Court and on such terms as the Court thinks fit, to take any fresh step in any legal proceedings in respect of a provable debt.
On 13 November 2019 the applicant indicated that he would apply for leave of the Court to proceed to obtain judgment against the first respondent, pursuant to s 58(3)(b) of the Bankruptcy Act.
In the event, when the matter was called on 14 November 2019, the solicitors for the applicant asked for the matter to be stood over for the filing of affidavit evidence and submissions in relation to the application for leave to proceed against the first respondent. Mention was made of an amended application and of a substantive affidavit by Ms Natalia Ben, also of the applicant’s solicitors’ firm. So far as I am aware, those two documents have not been filed.
At that stage there was also an indication that the matter may perhaps be withdrawn as against the first respondent and also as against the second respondent.
The matter was then stood over to 20 November 2019. Subsequently, on 19 November 2019, on the applicant’s application the matter was stood over until today, 3 December 2019.
On 2 December 2019, the Court received a notice of discontinuance on behalf of the applicant dated 29 November 2019. Rule 26.12 of the Federal Court Rules 2011 (Cth) provides that a party claiming relief may discontinue a proceeding in whole or in part by filing a notice of discontinuance, in accordance with Form 48. In the present circumstances the applicant may require leave of the Court under r 26.12(2)(c). In any event, the notice of discontinuance seeks that there be no order as to costs so that the applicant in effect seeks an order of the Court providing otherwise than the default position under r 26.12(7), that is otherwise than that the discontinuing applicant is liable to pay the costs of each other party to the proceeding.
As I have said, neither respondent has filed a notice of address for service. There is no evidence that the other parties, the two respondents, are aware that the matter has been stood over until today and neither respondent has notice of the applicant’s proposed discontinuance or the terms of it, including that the applicant not be liable to pay the costs of each other party.
In the circumstances outlined in [20] above, in my opinion the appropriate order is a conditional one, that is, that the applicant have leave to discontinue the proceedings, with no order as to costs, but that either respondent have leave to notify the Court within seven days of the date of service of these orders if they wish to contend for a different exercise of the Court’s discretion under r 26.12(7).
The applicant submitted that a conditional order was unnecessary as it could be assumed that neither respondent had incurred any costs. It may be that neither respondent has incurred any costs, but it seems to me that each should have an opportunity to be heard on the question of whether the Court should order that there be no order as to costs, as sought by the applicant.
I therefore order as follows:
1.Grant leave to the applicant to file a notice of discontinuance, discontinuing the whole of the proceeding.
2. Subject to orders 3, 4 and 5, there be no order as to the costs of the proceeding.
3.By 5 PM on 6 December 2019, the applicant serve on the first respondent and on the second respondent a copy of these orders and of his “notice of discontinuance” dated 29 November 2019 but marked “draft”.
4.If either respondent wishes to contend that the discontinuance should be on terms that the applicant pay his or its costs, by 5 PM on 13 December 2019 that respondent is to so notify my associate by email to [email protected]. Thereafter any further necessary directions will be made.
5.If no notification is received in accordance with order 4, that is, by 5 PM on 13 December 2019, order 2 will thereupon take effect.
I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson. Associate:
Dated: 3 December 2019
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