Welsh v Digilin Pty Ltd

Case [2008] FCA 78

FEDERAL COURT OF AUSTRALIA

Welsh v Digilin Pty Ltd (ACN 078 278 449) [2008] FCA 78

PRACTICE AND PROCEDURE – application for leave to appeal from interlocutory decision of single Federal Court judge – judge ordered proceedings stayed pending payment of costs by the applicant – whether judgment attended by sufficient doubt to warrant reconsideration – whether substantial injustice would result if leave were refused

Held: There was sufficient doubt to warrant reconsideration of the interlocutory decision. A substantial injustice would result if leave were refused, supposing the decision to be wrong. Leave to appeal granted and interlocutory decision stayed.

Federal Court of Australia Act 1976 (Cth) s 24(1A)
Federal Court Rules O 52 r 10, r 17
Supreme Court Rules (Vic) r 63.03(3)

ACCC v BMW (Australia) Ltd (No 2) [2003] FCA 864 cited
Cox v Journeaux (No 2) (1935) 52 CLR 713 considered
Davidson v Fesl [2005] FCAFC 183 cited
Décor Corporation v Dart Industries Inc (1991) 33 FCR 397 cited
Energex Limited v Alstom Australia Limited [2005] FCAFC 215 cited

Gao v Zhang [2005] VR 380 discussed

Johnston v Cameron [2002] FCAFC 251 cited
M111 of 2003 v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 97 cited
Rivera v United States of America [2004] FCAFC 154 cited
Shaw v Holland (1900) 2 Ch 305 cited
Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (No 2) (1990) 21 NSWLR 200 distinguished
Telstra Corporation Ltd v AAPT Ltd (1997) 38 IPR 539 cited
The Marconi’s Wireless Telegraph Company Ltd v The Commonwealth (No 3) (1913) 16 CLR 384 cited
Welsh v Digilin Pty Ltd [2007] FCA 2064 related
Wilson v Church (No 2) (1879) 12 Ch D 454 cited

JAMES ANGUS WELSH v DIGILIN PTY LTD (ACN 078 278 449), DIGILIN HOLDINGS PTY LTD (ACN 010 581 058), JONATHAN DAVIS AND LORELLE TAYLOR
QUD2 OF 2008

COLLIER J
18 FEBRUARY 2008
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

QUD2 OF 2008

BETWEEN:

JAMES ANGUS WELSH
Applicant

AND:

DIGILIN PTY LTD (ACN 078 278 449)
First Respondent

DIGILIN HOLDINGS PTY LTD (ACN 010 581 058)
Second Respondent

JONATHAN DAVIS
Third Respondent

LORELLE TAYLOR
Fourth Respondent

JUDGE:

COLLIER J

DATE OF ORDER:

18 FEBRUARY 2008

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

1.Leave to appeal against the judgment of his Honour in Welsh v Digilin Pty Ltd [2007] FCA 2064 be granted pursuant to section 24(1A) Federal Court of Australia Act 1976 (Cth) and Order 52 rule 10 Federal Court Rules.

2.The judgment of his Honour in Welsh v Digilin Pty Ltd [2007] FCA 2064 be stayed pursuant to Order 52 rule 17 Federal Court Rules.

3.Costs be reserved.

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

QUD2 OF 2008

BETWEEN:

JAMES ANGUS WELSH
Applicant

AND:

DIGILIN PTY LTD (ACN 078 278 449)
First Respondent

DIGILIN HOLDINGS PTY LTD (ACN 010…

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Details
AGLC
Welsh v Digilin Pty Ltd [2008] FCA 78
Case
[2008] FCA 78
Decision Date

CaseChat Overview and Summary

The applicant, Mr Welsh, sought leave to appeal from the judgment of Dowsett J, handed down on 14 December 2007 in Welsh v Digilin Pty Ltd. The appeal was brought pursuant to section 24(1A) of the Federal Court of Australia Act 1976 (Cth) and Order 52 rule 10 of the Federal Court Rules. Additionally, Mr Welsh sought an order that the judgment of Dowsett J be stayed under Order 52 rule 17 of the Federal Court Rules. The substantive proceedings originated from the mid-1990s, with the application filed in 2005. Despite multiple trial dates being set and vacated, the applicant failed to pay the costs ordered by Dowsett J on 22 December 2006. Consequently, the respondents moved to strike out the application for want of prosecution, which was upheld by Dowsett J in his judgment dated 14 December 2007. The applicant's affidavit, filed on 13 December 2007, asserted financial hardship and attempts to secure funding, but Dowsett J observed that the proposed claim against previous counsel lacked detail and was of little relevance.

The primary legal issue for the court was whether to grant leave to appeal Dowsett J's decision, given that it was interlocutory and required leave under section 24(1A) of the Federal Court of Australia Act 1976 (Cth) and Order 52 rule 10 of the Federal Court Rules. The principles guiding the court's decision included whether the judgment was attended by sufficient doubt to warrant reconsideration and whether substantial injustice would result if leave were refused. The applicant's reliance on the Victorian Court of Appeal decision in Gao v Zhang highlighted the discretionary nature of dismissal pending payment of costs, emphasizing the principle that a claim honestly made by a suitor must be investigated and decided according to due process, unless proceeding would amount to an abuse of jurisdiction or inflict unnecessary injustice on the opposing party.

The court granted leave to appeal against the judgment of Dowsett J, considering that the decision involved discretionary aspects of case management and the potential for substantial injustice if the appeal were not allowed. The judgment of Dowsett J was stayed under Order 52 rule 17 of the Federal Court Rules to prevent further proceedings until the appeal was resolved. Costs were reserved pending the outcome of the appeal.

Orders

Orders of the court

1. Leave to appeal against the judgment of his Honour in Welsh v Digilin Pty Ltd [2007] FCA 2064 be granted pursuant to section 24(1A) Federal Court of Australia Act 1976 (Cth) and Order 52 rule 10 Federal Court Rules.

2. The judgment of his Honour in Welsh v Digilin Pty Ltd [2007] FCA 2064 be stayed pursuant to Order 52 rule 17 Federal Court Rules.

3. Costs be reserved.

Background

Background to the litigation

This is an application for leave to appeal from the judgment of Dowsett J of 14 December 2007 (Welsh v Digilin Pty Ltd [2007] FCA 2064) pursuant to s 24(1A) Federal Court of Australia Act 1976 (Cth) and O 52 r 10 Federal Court Rules, and for an order that the judgment of his Honour be stayed pursuant to O 52 r 17 Federal Court Rules. The application has been brought by the applicant to the substantive proceedings, Mr Welsh.Background Facts relevant to this matter appear from the background summary in the decision of his Honour and include the following:· the substantive application in these proceedings was filed in 2005, although the relevant circumstances date from the mid 1990s· the matter was set down for trial before his Honour in April 2006 however at that time the applicant indicated that he proposed to raise new issues in the proceedings. Accordingly the trial dates were vacated· the matter was subsequently listed for trial before his Honour in October 2006, however it subsequently emerged that another amendment to the statement of claim would be required. Accordingly the trial dates were again vacated· on 22 December 2006 his Honour ordered the applicant to pay costs of the respondents, including, inter alia, costs thrown away by reason of the vacation of the trial dates. His Honour also ordered that, in view of the history of the matter, the proceedings be stayed pending payment by the applicant 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 subsequently 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, in the expectation that the applicant would have complied with the costs order· no amount of costs was paid by the applicant to the respondents. Accordingly, the respondents moved to strike out the application for want of prosecution. That application was the subject of his Honour’s judgment of 14 December 2007· the applicant’s solicitor, Mr Boaz Ben Yani, filed an affidavit on 13 December 2007 asserting in summary that:othe applicant had suffered financial hardship;oapart from his claim, the applicant’s only asset was a car worth approximately $4,000;othe applicant’s net income was approximately $728 per week;othe applicant intended to lodge a claim against his previous counsel for professional negligence; andothe applicant had approached a litigation funder to assist him in payment of $20,000 towards the respondents’ costs, which sum the applicant believed he would be able to obtain by the end of February 2008.His Honour observed however that, in the absence of any evidence as to the nature of the cause of action against his previous counsel the proposed claim against counsel was of little relevance. Further, his Honour noted that it appeared that the claim against counsel and the approach to the litigation funder had occurred recently, and one might have expected to see more detail concerning the applicant’s efforts if the applicant were genuinely trying to advance the matter (at [6]).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

COLLIER J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: COLLIER J

In the case before me there is no dispute that the decision of his Honour is an interlocutory decision, and that leave to appeal is required pursuant to s 24(1A) Federal Court of Australia Act1976 (Cth) and O 52 r 10 Federal Court Rules. The principles to be applied by the Court when considering whether leave to appeal should be granted in such circumstances are well settled, and can be summarised as:· whether the judgment was attended by sufficient doubt to warrant it being reconsidered, and· whether substantial injustice would result if leave were refused, supposing the decision to be wrong.(Décor Corporation v Dart Industries Inc (1991) 33 FCR 397, Telstra Corporation Ltd v AAPT Ltd (1997) 38 IPR 539)“Sufficient doubt” to warrant reconsideration Previous decisions of this Court indicate that issues that are relevant as to whether a decision is attended by sufficient doubt to warrant reconsideration include the following:-a decision may be of “sufficient doubt” where a contrary position is reasonably arguable (Tamberlin J in Johnston v Cameron [2002] FCAFC 251 at [65]) or the view taken by the trial judge is debatable (Davidson v Fesl [2005] FCAFC 183 at [22])-leave to appeal is not necessarily granted simply because the reviewing court does not agree with every aspect of the trial judge’s reasons (Energex Limited v Alstom Australia Limited [2005] FCAFC 215 at [65]) and-leave is more readily granted where substantive issues, rather than points of practice, are at issue (Rivera v United States of America [2004] FCAFC 154 at [13], M111 of 2003 v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 97 at [8]).Dismissal pending payment of costs: Gao v Zhang In her submissions Ms Heyworth-Smith for the applicant relied on the decision of the Victorian Court of Appeal in Gao v Zhang [2005] VR 380, a decision to which his Honour also referred in his judgment. That case concerned an interpretation of r 63.03(3) Supreme Court Rules (Vic) which provided inter alia that, where the court had made an interlocutory order for costs and the subject party failed to pay them, the court had power to stay or dismiss the proceeding or, where the party was the defendant, to strike out the defence. In Gao v Zhang [2005] VR 380, the applicant sought leave to appeal against the decision of a judge upholding an order of a master that, inter alia, the proceeding be stayed pending payment of costs already awarded against him in the proceeding. Ormiston JA, delivering the decision of the Court of Appeal, observed that such orders were discretionary, and the applicant faced a heavy burden in showing that it was appropriate to grant leave to appeal. However, his Honour observed further that, although the Supreme Court had power to make an order for a stay, dismissal or striking out where orders for costs of interlocutory applications remained unpaid, it did not necessarily follow that whenever costs remained outstanding some such order should be made (at 383). Indeed his Honour considered that it was not appropriate that orders of this kind be adopted as a day-to-day means of recovering costs ordered by the court (at 394). His Honour continued (at 384):“The power to stay a proceeding, to dismiss a proceeding without trial, or to strike out a defence are each powers which, if exercised, in one way or another deny justice to the party affected and ought not to be employed unless it is the only fair way of protecting the interests of the party seeking such an order. The basal principle, frequently adopted, was stated by Dixon J in Cox v Journeaux (No 2) (1935) 52 CLR 713 at [720] when he said, in relation to a striking out application,...The principle, in general paramount, that a claim honestly made by a suitor for judicial relief must be investigated and decided in the manner appointed, must be observed. A litigant is entitled to submit for determination according to the due course of procedure a claim which he believes he can establish, although its foundation may in fact be slender. It is only when to permit it to proceed would amount to an abuse of jurisdiction, or would clearly inflict unnecessary injustice upon the opposite party that a suit should be stopped.”