Project Lab North America Pty Ltd v Bell Microproducts Inc [2007] FCA 306

FEDERAL COURT OF AUSTRALIA

Project Lab North America Pty Ltd v Bell Microproducts Inc [2007] FCA 306 Bishop v The Queen (1982) 40 ALR 40 Gallo v Dawson (1990) 93 ALR 479 PROJECT LAB NORTH AMERICA PTY LIMITED v BELL MICROPRODUCTS INC NSD 312 OF 2004

SUNDBERG J

22 FEBRUARY 2007

MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 312 OF 2004

BETWEEN: PROJECT LAB NORTH AMERICA PTY LIMITED

Applicant

AND: BELL MICROPRODUCTS INC

Respondent

JUDGE: SUNDBERG J DATE OF ORDER: 22 FEBRUARY 2007

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT:

1. The application for an extension of time is dismissed. 2. The applicant pay the respondent's costs. 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 NSD 312 OF 2004

BETWEEN: PROJECT LAB NORTH AMERICA PTY LIMITED

Applicant

AND: BELL MICROPRODUCTS INC

Respondent

JUDGE: SUNDBERG J

DATE: 22 FEBRUARY 2007

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 On 23 June 2006 a Deputy Registrar dismissed PLNA's application that security for its cross‑claim be provided by Bell. 2 The ground for the dismissal was that PLNA was the "true plaintiff" for the purposes of s 1335(1) of the Corporations Act and thus was not competent to seek security. 3 By motion notice of which was filed on 27 November 2006 PLNA seeks a review by the Court of the Registrar's decision under s 35A of the Federal Court of Australia Act 1976. 4 The time prescribed for seeking a review under s 35A is 21 days after the date of the Registrar's decision. See Order 46 rule 7B of the Rules. 5 Time for the application expired on 14 July 2006. 6 PLNA seeks an extension of time within which to make its application for review. 7 The application for review is more than five months out of time. Instead of being made within 21 days of the Registrar's decision, it is sought to review that decision six months after it was made. 8 The power to extend time is conferred by Order 3 rule 3 of the Rules. 9 Many cases establish that in order to justify an extension of time there must be some material upon which the court can exercise the discretion conferred by a provision such as Order 3 rule 3. 10 In Bishop v The Queen (1982) 40 ALR 40 at 41‑42 Deane J, with whom the Chief Judge and Davies J agreed, said: "the relevant principles … were …enunciated by Cullen CJ in Morres v Papuan Rubber & Trading Co Ltd (1914) 14 SR (NSW) 141 at 144 '… when a party, who has neglected to observe those requirements which the rules place him under for the protection of the other side, comes for the indulgence of the Court to ask that the proceedings shall continue notwithstanding that default, he has to satisfy the Court that justice requires that that default of his shall be overlooked, and he must satisfy the Court that there is some reasonable kind of explanation or excuse for his neglect of the rules'." See also Gallo v Dawson (1990) 93 ALR 479 at 480‑481. 11 PLNA's affidavit filed in support of the application for review says nothing by way of explaining its delay. Nor is its case advanced by the fact that on 18 August 2006, at a hearing before the Registrar approximately two months after the decision sought to be reviewed, PLNA foreshadowed an application for review. It took PLNA another four months to file its motion. 12 The merits of PLNA's case for review are relevant to the exercise of the discretion to extend time: Gallo v Dawson 93 ALR at 48. 13 In my view PLNA has no real prospect of establishing that Bell is a plaintiff for the purposes of s 1335(1) of the Corporations Act 2001. The position is the same if the matter is approached under s 56 of the Federal Court Act in conjunction with Order 28 of the Rules, which enables the Court to order an "applicant" in a proceeding to give security. 14 It is clear in my view that as between PLNA and Bell, which are the only remaining parties, PLNA is in the position of the aggressor. That Bell's cross claim is essentially defensive is underlined by the fact that Bell's pleading states that it abandons the excess of its cross claim over and above the amount required to extinguish PLNA's claim. See also pars A, C and D of its claim for relief in the cross claim. 15 Further support for the view that PLNA is the aggressor and not a defendant or respondent is provided by the fact that in August 2004 Madgwick J ordered PLNA to provide security for Bell's costs. 16 Although I have made observations about the applicability of s 1335 and s 56, I would in any event have refused an extension of time by reason of PLNA's failure to explain its delay in seeking a review. 17 PLNA seeks to avoid the need for an extension of time by resort to the fact that it sought relief under s 56 as well as s 1335. 18 It is clear that the Registrar dismissed PLNA's motion in toto – on its merits as to s 1335 and as to s 56 for want of jurisdiction. Either way the time limit in Order 46 rule 7B applies to a review under s 35A. 19 The application for an extension of time is dismissed. PLNA must pay Bell's costs of the motion. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.