FEDERAL COURT OF AUSTRALIA Sereika v Cardinal Financial Securities Ltd [2002] FCAFC 179 JOHN ANTHONY SEREIKA vCARDINAL FINANCIAL SECURITIES LIMITED (FORMERLY INTEQ CUSTODIANS LIMITED), PHILLIP WASS, LYALL WILLIAMS, STEVEN SEREIKA, STAPLETON PARTNERS PTY LIMITED, PRICEWATERHOUSECOOPERS SECURITIES LIMITED (FORMERLY COOPERS & LYBRAND (SECURITIES) LIMITED), AUSTRALIAN TEA TREE MANAGEMENT LIMITED (IN LIQUIDATION), TEA TREE PLANTATION LIMITED (IN LIQUIDATION) and LANDMARK FINANCE PTY LIMITED (FORMERLY FARM FINANCE AUSTRALIA PTY LIMITED) N 30 OF 2002 JOHN ANTHONY SEREIKA vCARDINAL FINANCIAL SECURITIES LIMITED (FORMERLY INTEQ CUSTODIANS LIMITED), PHILLIP WASS, LYALL WILLIAMS, STEVEN SEREIKA, STAPLETON PARTNERS PTY LIMITED, DELOITTES TOUCHE THOMATSU INTERNATIONAL, AUSTRALIAN TEA TREE MANAGEMENT LIMITED (IN LIQUIDATION), TEA TREE PLANTATION LIMITED (IN LIQUIDATION) and LANDMARK FINANCE PTY LIMITED (FORMERLY FARM FINANCE AUSTRALIA PTY LIMITED) N 31 OF 2002 GRAY, NORTH and GYLES JJ SYDNEY 17 MAY 2002 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 30 OF 2002 ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JOHN ANTHONY SEREIKA APPLICANT AND: CARDINAL FINANCIAL SECURITIES LIMITED (FORMERLY INTEQ CUSTODIANS LIMITED) ACN 058 560 212 FIRST RESPONDENT PHILLIP WASS SECOND RESPONDENT LYALL WILLIAMS THIRD RESPONDENT STEVEN SEREIKA FOURTH RESPONDENT STAPLETON PARTNERS PTY LIMITED ACN 051 887 748 FIFTH RESPONDENT PRICEWATERHOUSECOOPERS SECURITIES LIMITED (FORMERLY COOPERS & LYBRAND (SECURITIES) LIMITED) ACN 003 311 617 SIXTH RESPONDENT AUSTRALIAN TEA TREE MANAGEMENT LIMITED ACN 175 869 402 (IN LIQUIDATION) SEVENTH RESPONDENT TEA TREE PLANTATION LIMITED ACN 175 869 402 (IN LIQUIDATION) EIGHTH RESPONDENT LANDMARK FINANCE PTY LIMITED (FORMERLY FARM FINANCE AUSTRALIA PTY LIMITED) ACN 076 073 017 NINTH RESPONDENT JUDGES: GRAY, NORTH and GYLES JJ DATE OF ORDER: 17 MAY 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The time for filing an application for leave to appeal from the orders of Tamberlin J made on 7 December 2001 be extended until today. 2. The applicant's solicitor pay the costs of the respondents of and incidental to the application for an enlargement of time for filing the application for leave to appeal, such costs to be taxed on an indemnity basis. 3. The respondents be permitted to tax their costs forthwith and the costs so taxed shall be paid forthwith. 4. The application for leave to appeal be adjourned to a date to be fixed and be stayed until the costs referred to in orders 2 and 3 have been paid. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 31 OF 2002 ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JOHN ANTHONY SEREIKA APPLICANT AND: CARDINAL FINANCIAL SECURITIES LIMITED (FORMERLY INTEQ CUSTODIANS LIMITED) ACN 058 560 212 FIRST RESPONDENT PHILLIP WASS SECOND RESPONDENT LYALL WILLIAMS THIRD RESPONDENT STEVEN SEREIKA FOURTH RESPONDENT STAPLETON PARTNERS PTY LIMITED ACN 051 887 748 FIFTH RESPONDENT DELOITTES TOUCHE THOMATSU INTERNATIONAL SIXTH RESPONDENT AUSTRALIAN TEA TREE MANAGEMENT LIMITED ACN 175 869 402 (IN LIQUIDATION) SEVENTH RESPONDENT TEA TREE PLANTATION LIMITED ACN 175 869 402 (IN LIQUIDATION) EIGHTH RESPONDENT LANDMARK FINANCE PTY LIMITED (FORMERLY FARM FINANCE AUSTRALIA PTY LIMITED) ACN 076 073 017 NINTH RESPONDENT JUDGES: GRAY, NORTH and GYLES JJ DATE OF ORDER: 17 MAY 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The time for filing an application for leave to appeal from the orders of Tamberlin J made on 7 December 2001 be extended until today. 2. The applicant's solicitor pay the costs of the respondents of and incidental to the application for an enlargement of time for filing the application for leave to appeal, such costs to be taxed on an indemnity basis. 3. The respondents be permitted to tax their costs forthwith and the costs so taxed shall be paid forthwith. 4. The application for leave to appeal be adjourned to a date to be fixed and be stayed until the costs referred to in orders 2 and 3 have been paid. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 30 OF 2002 N 31 OF 2002 ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JOHN ANTHONY SEREIKA APPLICANT AND: N 30 OF 2002 AND: CARDINAL FINANCIAL SECURITIES LIMITED (FORMERLY INTEQ CUSTODIANS LIMITED) ACN 058 560 212 FIRST RESPONDENT PHILLIP WASS SECOND RESPONDENT LYALL WILLIAMS THIRD RESPONDENT STEVEN SEREIKA FOURTH RESPONDENT STAPLETON PARTNERS PTY LIMITED ACN 051 887 748 FIFTH RESPONDENT PRICEWATERHOUSECOOPERS SECURITIES LIMITED (FORMERLY COOPERS & LYBRAND (SECURITIES) LIMITED) ACN 003 311 617 SIXTH RESPONDENT AUSTRALIAN TEA TREE MANAGEMENT LIMITED ACN 175 869 402 (IN LIQUIDATION) SEVENTH RESPONDENT TEA TREE PLANTATION LIMITED ACN 175 869 402 (IN LIQUIDATION) EIGHTH RESPONDENT LANDMARK FINANCE PTY LIMITED (FORMERLY FARM FINANCE AUSTRALIA PTY LIMITED) ACN 076 073 017 NINTH RESPONDENT N 31 OF 2002 CARDINAL FINANCIAL SECURITIES LIMITED (FORMERLY INTEQ CUSTODIANS LIMITED) ACN 058 560 212 FIRST RESPONDENT PHILLIP WASS SECOND RESPONDENT LYALL WILLIAMS THIRD RESPONDENT STEVEN SEREIKA FOURTH RESPONDENT STAPLETON PARTNERS PTY LIMITED ACN 051 887 748 FIFTH RESPONDENT DELOITTES TOUCHE THOMATSU INTERNATIONAL SIXTH RESPONDENT AUSTRALIAN TEA TREE MANAGEMENT LIMITED ACN 175 869 402 (IN LIQUIDATION) SEVENTH RESPONDENT TEA TREE PLANTATION LIMITED ACN 175 869 402 (IN LIQUIDATION) EIGHTH RESPONDENT LANDMARK FINANCE PTY LIMITED (FORMERLY FARM FINANCE AUSTRALIA PTY LIMITED) ACN 076 073 017 NINTH RESPONDENT JUDGES: GRAY, NORTH and GYLES J DATE: 17 MAY 2002 PLACE: SYDNEY EX TEMPORE REASONS FOR JUDGMENT GRAY J: 1 I will ask Gyles J to give the first judgment. GYLES J: 2 Today the Court had appeals in two related matters listed for hearing. When these were called on it became apparent that there had been wholesale default in relation to the preparation of the matters for hearing notwithstanding directions having been given both by the callover judge, Beaumont J, and by the Registrar, and notwithstanding continual reminders by the solicitors for the respondents. In particular, there was no proper application for leave to appeal before us and there was certainly no application for leave to appeal filed within time. The necessity for that application for leave to appeal was adverted to by Beaumont J at the callover on 15 February 2002. Apparently at that time the solicitors for the respondents also drew the matter to the attention of the solicitor for the applicant, indeed by reference to authority. This led to the preparation at least of a draft, although blank, form of application by the solicitor for the applicant. The written submissions for the respondents had drawn attention to the issue when filed and served some days ago. 3 When counsel for the applicant rose this morning, and the lack of a proper application was pointed out to him together with the difficulty he was in in relation to time, he accepted that leave was necessary in each matter and handed up motions seeking leave to file applications for leave to appeal out of time. After a process which has been adequately recorded on the transcript of the proceedings, the matter was adjourned in order that counsel could obtain instructions from his solicitor as to the cause of this default. Those instructions having been obtained, he then obtained the leave of the court to adjourn the proceedings until 2.15pm in order that an affidavit or affidavits be filed by his instructing solicitors explaining the default. This was done. Those affidavits have been read, the two solicitors concerned have been cross-examined and the respondents have themselves tendered evidence. 4 It is apparent that the failure to seek leave to appeal has been the result of consistent and cavalier default by the solicitor on the record and his employed solicitor. It is unnecessary for me to go into the details of this. They are recorded on the transcript and, at the end of the day, counsel for the applicant has been unable to do more than accept that the default has been of that character. Indeed he accepts that it is inevitable that if this application for extension of time is to succeed it will be on terms that the solicitor pays the costs. I will come back to that in a moment. 5 Counsel for each of the respondents puts the submission that the defaults here have been so grave, particularly bearing in mind the background which led to this application in the first place, as to mark this proceeding out as one of those unusual cases where, although they are unable to point to any prejudice apart from costs and delay, the court should vindicate its own processes by refusing an extension of time in relation to the application for leave to appeal. They make a powerful case. It is necessary to bear in mind that this proceeding is seeking to defend a statement of claim which is the fourth version from the current team of advisers for the applicant. There is no application to re-plead. There is a defence of that which has been pleaded. The docket judge has found none of these attempts successful. Furthermore the focus upon the application for leave to appeal distracts attention from the fact that the appeal books themselves were not filed until well after the time which was appropriate. No submissions for the applicant were filed in time. The respondents had to file their submissions in the absence of submissions from the applicant. It is without doubt a case of gross default. Although it is said on behalf of the solicitors for the applicant that there was no intention to breach the orders of the Court or the Rules of the Court, the fact is that their inattention to the matter has been cavalier. 6 If this were only a case of an interlocutory appeal against the striking out of a pleading, I would be disposed to accept the submissions for the respondents. However, in the present case, the result of the order of the primary judge is that time limits which exist in relation to relief pursuant to the Trade Practices Act 1974 (Cth) mean that any future proceeding would not be able to take advantage of causes of action arising under that Act. Furthermore, as each proceeding purports to be a class action, the disposal of it may have an effect on the rights of people who are not yet represented in the ordinary sense. It seems to me that those factors make it undesirable that the proceedings be nipped in the bud at this stage only on account of the failure to file within time. I therefore would not be disposed to decline the grant of leave on that account. That conclusion makes it inevitable, however, that these proceedings for leave to appeal must be adjourned to another day and before another bench. That means that there has been a great deal of wasted time, not only by and on behalf of the respondents but by the Court itself. 7 So far as the adjournment is concerned, it clearly must be upon terms that costs are paid by the solicitors and that is accepted by counsel for the applicant. However, he resists the application by the respondents that those costs be paid on an indemnity basis. In my opinion that is like King Canute trying to hold back the tide. If ever there was a case for indemnity costs, it is this one. I need not repeat what I have said about the gross and cavalier fashion in which the rules and directions of the Court were disregarded. The effect upon the respondents must have been that they have incurred a great deal of unnecessary cost, including not only the wasted costs of the day but also the costs of the solicitors regularly endeavouring to point out to the solicitors for the applicants what they had to do to get this matter in order. I have no doubt that the default is serious enough to compel an order for indemnity costs against those solicitors. Further, it is clear to me that the respondents are on sound ground when they submit that no proceeding should be brought on for hearing until those costs are paid. It follows that I would order that the costs be paid immediately and I would stay further hearing of the proceedings until those costs are paid. 8 Another application was made on behalf of the sixth respondent in matter N 30 of 2002 as to costs which were ordered to be paid forthwith in relation to a previous striking out of a statement of claim. Those costs have now been assessed and a certificate of taxation issued. It is submitted that, in all of the circumstances, it would be just if we, in the exercise of our discretion, impose the payment of those costs as a term of the adjournment. Whilst from the point of view of that respondent that would be a desirable order, I am not persuaded that there is a logical or necessary link between those costs and the present application. The sixth respondent may pursue that order as they see fit, but I do not think it right to hold up the hearing of this application, which is seeking to appeal from another order, on that account. 9 For my part I would therefore propose that, in each proceeding: 1. The time for filing an application for leave to appeal from the orders of Tamberlin J made on 7 December 2001 be extended until today. 2. The applicant's solicitor pay the costs of the respondents of and incidental to the application for an enlargement of time for filing the application for leave to appeal, such costs to be taxed on an indemnity basis. 3. The respondents be permitted to tax their costs forthwith and the costs so taxed shall be paid forthwith. 4. The application for leave to appeal be adjourned to a date to be fixed and be stayed until the costs referred to in orders 2 and 3 have been paid. GRAY J: 10 I agree with the orders proposed by Gyles J and with the reasons that his Honour has given. I have nothing to add. NORTH J: 11 I also agree. GRAY J: 12 The orders of the Court in each of these two matters will be: 1. The time for filing an application for leave to appeal from the orders of Tamberlin J made on 7 December 2001 be extended until today. 2. The applicant's solicitor pay the costs of the respondents of and incidental to the application for an enlargement of time for filing the application for leave to appeal, such costs to be taxed on an indemnity basis. 3. The respondents be permitted to tax their costs forthwith and the costs so taxed shall be paid forthwith. 4. The application for leave to appeal be adjourned to a date to be fixed and be stayed until the costs referred to in orders 2 and 3 have been paid. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Gray, North and Gyles. Associate: Dated: 7 June 2002 Counsel for the Applicant: RW Cameron Solicitor for the Applicant: Dennis & Co Counsel for the Fifth Respondent: RG McHugh and S Balafoutis Solicitor for the Fifth Respondent: Phillips Fox Counsel for the Sixth Respondent in N 30 of 2002 DL Williams Solicitor for the Sixth Respondent in N 30 of 2002 Coudert Brothers Counsel for the Sixth Respondent in N 31 of 2002 F Gleeson Solicitor for the Sixth Respondent in N 31 of 2002 Holding Redlich Date of Hearing: 17 May 2002 Date of Judgment: 17 May 2002