PRACTICE AND PROCEDURE – interlocutory decision of single judge – guillotine order under O 35A r 3(1)(c) Federal Court Rules dismissing proceedings in event of non-payment of taxed interlocutory costs by appellant – whether judge erred in exercise of discretion under O 35A r 3(1)(c) – whether possible impecuniosity of appellant precludes dismissal of proceedings in such circumstances
Held: appeal dismissed – primary judge properly exercised discretion in O 35A r 3(1)(c) – justice between the parties is paramount
JAMES ANGUS WELSH v DIGILIN PTY LTD (ACN 078 278 449), DIGILIN HOLDINGS PTY LTD (ACN 010 581 058), JONATHON DAVIS and LORELLE TAYLOR
QUD 2 OF 2008
TAMBERLIN, GREENWOOD AND COLLIER JJ 19 AUGUST 2008 BRISBANE (VIA VIDEO LINK TO SYDNEY)
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QUD 2 OF 2008
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
JAMES ANGUS WELSH Appellant
AND:
DIGILIN PTY LTD (ACN 078 278 449) First Respondent
DIGILIN HOLDINGS PTY LTD (ACN 010 581 058) Second Respondent
JONATHON DAVIS Third Respondent
LORELLE TAYLOR Fourth Respondent
JUDGES:
TAMBERLIN, GREENWOOD AND COLLIER JJ
DATE OF ORDER:
19 AUGUST 2008
WHERE MADE:
BRISBANE (VIA VIDEO LINK TO SYDNEY)
THE COURT ORDERS THAT:
1.The appeal be dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QUD 2 OF 2008
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
JAMES ANGUS WELSH Appellant
AND:
DIGILIN PTY LTD (ACN 078 278 449) First Respondent
DIGILIN HOLDINGS PTY LTD (ACN 010 581 058) Second Respondent
JONATHON DAVIS Third Respondent
LORELLE TAYLOR Fourth Respondent
JUDGES:
TAMBERLIN, GREENWOOD AND COLLIER JJ
DATE:
19 AUGUST 2008
PLACE:
BRISBANE (VIA VIDEO LINK TO SYDNEY)
REASONS FOR JUDGMENT
THE COURT
This is an appeal…
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
AGLC
Welsh v Digilin Pty Ltd [2008] FCAFC 149
Case
[2008] FCAFC 149
Decision Date
CaseChat Overview and Summary
In Welsh v Digilin Pty Ltd, the appellant, Welsh, appealed against a decision of Dowsett J which dismissed his proceedings against Digilin Pty Ltd for his failure to pay costs previously ordered. The primary judge had ordered Welsh to pay $68,609.41 to Digilin Pty Ltd by 29 February 2008, or the proceedings would stand dismissed. Welsh argued that the primary judge had erred in dismissing his proceedings despite his financial difficulties. The key issues before the court were the nature of the power conferred by Order 35A rule 3(1) of the Federal Court Rules, the issues a judge may properly take into consideration in deciding whether to make an order under this rule, and whether the court may order proceedings to be stayed or dismissed in the event of non-payment of costs previously ordered in interlocutory proceedings in the same matter, where the evidence before the court demonstrates possible impecuniosity of the party in default. The court found that the power conferred by Order 35A rule 3(1) was discretionary, and that there was no requirement of intentional default or contumelious conduct on the part of the applicant. The court also found that while the interests of justice favoured the orders made, the appeal should be dismissed as there were no errors of the primary judge in reaching this decision. The appeal was dismissed, and the orders of the primary judge were upheld.
Orders
Orders of the court
1. The appeal be dismissed.
Background
Background to the litigation
This is an appeal from the decision of Dowsett J of 14 December 2007 (Welsh v Digilin Pty Ltd [2007] FCA 2064) in which his Honour ordered that:·Paragraph 21 of the order made on 22 December 2006 be amended by deleting the amount of $20,000 and inserting, in lieu thereof, the amount of $68,609.41.·Unless, on or before 29 February 2008, the applicant pays to the respondents the sum of $68,609.41, the proceedings are to stand dismissed.·The applicant pay the respondents’ costs of the motion and the hearing of 14 December 2007.Background The proceedings the subject of this appeal have been on foot for almost three years. Relevant background facts appear in the judgments of Dowsett J (Welsh [2007] FCA 2064) and Collier J (Welsh v Digilin Pty Ltd [2008] FCA 78), and may be summarised as follows:·The substantive application in these proceedings was filed in 2005, although the claims of the appellant relate to events occurring from the mid 1990s.·The matter was set down for trial before Dowsett J in April 2006, however the trial dates were vacated after the appellant indicated that he intended to raise new issues in the proceedings.·The matter was re-listed for trial before the primary judge in October 2006, however the appellant indicated that amendment to the statement of claim would be required. The trial dates were again vacated.·On 22 December 2006 by consent of the parties the primary judge ordered the appellant to pay costs of the respondents, including costs thrown away by reason of the vacation of the trial. His Honour also ordered that, in view of the history of the matter, the proceedings be stayed pending payment by the appellant of $20,000 on account of costs, and that the respondents be at liberty to apply for additional stays as the costs orders became quantified by assessment or taxation. As his Honour explained:This may have been an inelegant way of saying that the respondents could apply to increase the amount to be paid as the costs were assessed or taxed. The bills have now been assessed. The total is, as I understand it, $68,609.41, including the costs of the figure. I do not understand there to be any challenge to that figure. (Welsh [2007] FCA 2064 at [4])·The matter was again listed for trial in December 2007.·No costs ordered by the primary judge were paid by the appellant to the respondents. On 22 November 2007 the respondents filed a notice of motion moving for orders that the substantive application be dismissed pursuant to O 35A r 3(1) Federal Court Rules.·The appellant’s solicitor, Mr Boaz Ben Yani, filed an affidavit on 13 December 2007 deposing in summary that:-the appellant had suffered financial hardship;-apart from his claim the appellant’s only asset was a car worth approximately $4,000;-the appellant’s net income was approximately $728 per week;-the appellant intended to lodge a claim against his previous counsel for professional negligence; and-the appellant had approached a litigation funder to assist him in payment of $20,000 towards the respondents’ costs, which sum the appellant believed he would be able to obtain by the end of February 2008.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
TAMBERLIN, GREENWOOD AND COLLIER JJ
While the traditional approach of the courts to this issue is helpful, it is important not to lose sight of the fact that the judicial discretion vested by O 35A r 3(1) is unconditional. It is not the role of the appeal court to intervene in discretion properly exercised or without legal error. The analysis in Gao (2005) 14 VR 380, while both learned and helpful in considering the issues before this Court, does not in our view prescribe a standard of conduct which must be satisfied by a defaulting litigant before the primary judge can consider whether to make an order pursuant to O 35A r 3(1). There is no need for the defaulting litigant to have engaged in contumelious conduct in the nature of harassment or unfair dealing before the discretion of the judge conferred by O 35A r 3(1) is enlivened.Conclusion It is not in dispute that the paramount principle as described by Dixon J in Cox v Journeaux (No 2) (1935) 52 CLR 713 at 720 is that a claim honestly made by a suitor for judicial relief must be investigated and decided in the manner appointed. However, that principle also recognises that it may be appropriate to bring such proceedings to a close when they would amount to an abuse of jurisdiction or, more relevantly in this case, they would clearly inflict unnecessary injustice upon the opposite party (Cox (1935) 52 CLR at 720 cf Lenijamar (1990) 27 FCR 388 at 396). In these proceedings there may be merit - as yet untested - in the appellant’s claims; further, such evidence as exists indicates that the appellant suffers financial difficulties which may have prevented him satisfying outstanding costs orders against him. However the primary judge balanced these factors against the prejudice suffered by the respondents by the incurring of substantial and unnecessary costs, the fact that the appellant recognised this prejudice by conceding the award of costs against him, the ongoing difficulties the appellant had had in formulating a proper claim over a substantial period of time, and his Honour’s view that an early resolution of the proceedings, after several years in which little advancement had been made, was not likely. While we endorse the view of the Court of Appeal in Gao (2005) 14 VR 380 that an order of this kind because of failure to pay interlocutory costs is not to be treated as an everyday occurrence (at 385), in this case the primary judge considered that the interests of justice favoured the orders made. We cannot identify any errors of the primary judge in reaching this decision. In our view the appeal should be dismissed.
Ratio Decidendi
Legal Principle Established
Established by:
TAMBERLIN, GREENWOOD AND COLLIER JJ
The appellant seeks the following orders from the Court:1.The Appeal be allowed.2.The judgment of Dowsett J dated 14 December 2007 be set aside.3.The motion filed by the respondents on 22 November 2007 be dismissed with costs.4.No further stay of the proceeding should be granted pending payment of taxed costs.5.The respondents pay the Appellant’s costs of this Appeal.6.Further or other relief.Consideration The grounds of appeal raised by the appellant in these proceedings give rise to three key issues for determination by this Court. They are:·the nature of the power conferred by O 35A r 3(1) Federal Court Rules to stay or dismiss proceedings for failure to take steps previously ordered by the Court;·issues a judge may properly take into consideration in deciding whether to make an order pursuant to O 35A r 3(1); and·more specifically, whether pursuant to O 35A r 3(1) the Court may order that proceedings be stayed or dismissed in the event of non-payment of costs previously ordered in interlocutory proceedings in the same matter, where the evidence before the Court demonstrates possible impecuniosity of the party in default. We shall consider each issue in turn.Power conferred by Order 35A rule 3(1) Order 35A r 3(1) provides as follows:If an applicant is in default, the Court may order that:(a)the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the applicant; or(b)a step in the proceeding be taken within the time limited in the order; or(c)the proceeding be stayed or dismissed, as to whole or any part of the relief claimed by the applicant, if the applicant does not take a step ordered by the Court in the proceeding in the time limited in the order. As explained earlier in this judgment, his Honour ordered that, in default of payment by the appellant to the respondents of the sum of $68,609.41 on or before 29 February 2008, the proceedings were to stand dismissed. This order fell squarely within O 35A r 3(1)(c), and is in the nature of a “guillotine” order (Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388). The power conferred by this rule is discretionary, and, as observed by Wilcox and Gummow JJ in Lenijamar in relation to a precursor to this rule:the power given by the rule is conditional on one circumstance only: the failure of a party to comply with an order of the Court directing that party to take a step in the proceeding. There is no requirement of intentional default or contumelious conduct, although the attitude of the applicant to the default and the Court’s judgment as to whether or not the applicant genuinely wishes the matter to go to trial within a reasonable period will usually be important factors in weighing the proper exercise of the discretion. There is no requirement of “inordinate and inexcusable delay” on the part of the applicant or the matter. There is no requirement of prejudice to the respondent, although the existence of prejudice is also likely to be significant. (Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 395-396)