FEDERAL COURT OF AUSTRALIA Rumsley v Vegas Enterprises Pty Ltd [2015] FCA 1526 Citation: Rumsley v Vegas Enterprises Pty Ltd [2015] FCA 1526 Appeal from: Application for extension of time and leave to appeal: Williamson (Trustee) v Rumsley, in the matter of Clifford (a Bankrupt) [2015] FCA 639 Parties: ALAN RUMSLEY v VEGAS ENTERPRISES PTY LTD (ACN 009 078 148) File number(s): WAD 300 of 2015 Judge(s): SIOPIS J Date of judgment: 20 August 2015 Date of hearing: 20 August 2015 Place: Perth Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 33 Counsel for the Applicant: Dr J Schoombee Solicitor for the Applicant: Mr A Rumsley Counsel for the Respondent: Mr B Luscombe Solicitor for the Respondent: Clifford Chance IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 300 of 2015 BETWEEN: ALAN RUMSLEY Applicant AND: VEGAS ENTERPRISES PTY LTD (ACN 009 078 148) Respondent JUDGE: SIOPIS J DATE OF ORDER: 20 AUGUST 2015 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The applicant's application for extension of time and leave to appeal filed on 17 June 2015 is granted. 2. Costs in the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 300 of 2015 BETWEEN: ALAN RUMSLEY Applicant AND: VEGAS ENTERPRISES PTY LTD (ACN 009 078 148) Respondent JUDGE: SIOPIS J DATE: 20 AUGUST 2015 PLACE: PERTH REASONS FOR JUDGMENT 1 This is an application for an extension of time and for leave to appeal against the interlocutory decision of the primary judge. 2 In brief outline, this proceeding involves a claim by the applicant, Mr Rumsley, a legal practitioner, against the respondent, Vegas Enterprises Pty Ltd (Vegas) for payment of a sum of money pursuant to a costs order made against Vegas which had been assigned to Mr Rumsley. 3 Sometime ago, Mr Rumsley acted as a lawyer for Mr Phillip Clifford in a proceeding which Mr Clifford brought in this Court against Vegas. In the course of that proceeding, Vegas abandoned a cross-claim against Mr Clifford and, by consent, the Court awarded the costs of the cross-claim to Mr Clifford. Mr Clifford then assigned the benefit of that costs order to Mr Rumsley, I assume, in consideration of the payment of legal fees. 4 Mr Clifford, however, ultimately lost the main claim he had bought against Vegas and costs orders were made in Vegas's favour against Mr Clifford. Mr Clifford subsequently was declared bankrupt. 5 Mr Rumsley then decided that he wanted to take some action in relation to the judgment debt of which he was the assignee, so he asked to be joined as a party to the main proceeding before Barker J so that he could have the costs assessed. That order was made by Barker J and the costs were then assessed and allocated by District Registrar Jan. 6 At the time, there was a dispute between Mr Clifford's trustees in bankruptcy and Mr Rumsley as to whether the assignment which Mr Clifford had made to Mr Rumsley was void against the trustees in bankruptcy, or had been set off against the costs order granted in favour of Vegas. The trustees in bankruptcy then commenced a proceeding (WAD 17 of 2015) in this Court in which they challenged the effectiveness of the assignment to Mr Rumsley on the grounds referred to above. Vegas was named as a respondent to that proceeding and filed a submitting appearance. However, no steps were taken by either the trustees in bankruptcy or Vegas to stay the enforcement of the costs order which had been assigned to Mr Rumsley. 7 Mr Rumsley then made demand on Vegas to pay the costs order in the sum that had been allocated by Registrar Jan. Vegas refused to pay the costs order on the basis that it contended that the assignment to Mr Rumsley was ineffective and under challenge. By reason of Mr Rumsley's demand, Vegas became aware that Mr Rumsley was seeking to enforce the costs order in his favour. However, Vegas took no steps to seek to enjoin Mr Rumsley from seeking to enforce the costs order; or to seek a stay of the enforcement of the costs order. 8 After having been rebuffed by Vegas, Mr Rumsley, then, applied for a debt appropriation order. The process for the application for a debt appropriation order in this Court is governed by the Civil Judgments Enforcement Act 2004 (WA) read with s 53 of the Federal Court of Australia Act 1976 (Cth). Mr Rumsley filed an application, supported by an affidavit, for the issue of a debt appropriation order, addressed to Westpac Banking Corporation (Westpac), the bankers of Vegas. Mr Rumsley's affidavit disclosed that he was the assignee of the costs order comprising the judgment debt. 9 In the materials which Mr Rumsley submitted to a registrar of this Court applying for the making of the debt appropriation order, Mr Rumsley did not disclose that the assignment which he relied upon for the benefit of the judgment debt, was the subject of the challenge by the trustees in bankruptcy in proceeding WAD 17 of 2015. 10 On 20 May 2015, Deputy District Registrar Stanley made the debt appropriation order on the basis of the papers submitted by Mr Rumsley. That order was served on Westpac and then Westpac contacted Vegas. Vegas then brought an urgent application in WAD 17 of 2015, to stay the debt appropriation order which Deputy District Registrar Stanley had made. 11 Vegas's interlocutory application was heard urgently by the primary judge on 29 May 2015. On that day, the primary judge ordered that the order of Deputy District Registrar Stanley made on 20 May 2015 be stayed pending the determination of the proceeding WAD 17 of 2015 or further order. The primary judge also ordered that Mr Rumsley pay Vegas's costs of the interlocutory application on an indemnity basis, to be taxed if not agreed; and that the costs be paid forthwith. 12 At the hearing before the primary judge, Vegas's counsel, Mr Luscombe, submitted that in applying for the debt appropriation order, Mr Rumsley had failed to disclose to Deputy District Registrar Stanley that the assignment upon which he based his entitlement to the costs order was the subject of a challenge in WAD 17 of 2015, and that in failing to do so, Mr Rumsley had failed to act in accordance with his duty as an officer of the Court, and that Deputy District Registrar Stanley's order should be set aside. 13 It is common ground that prior to the commencement of the hearing of the urgent application neither Mr Rumsley nor his counsel had been put on notice that this allegation of professional misconduct was to be made as the basis of the complaint against Mr Rumsley. 14 The primary judge accepted the submissions of Vegas's counsel, and found that Mr Rumsley's conduct in not informing Deputy District Registrar Stanley of the existence of the challenge to the assignment in WAD 17 of 2015, and in failing to advise the other parties to WAD 17 of 2015 and the docket judge in that proceeding, of his application for a debt appropriation order was "inimical to the administration of justice in this Court". The primary judge ordered that Deputy District Registrar Stanley's order be stayed pending the determination of WAD 17 of 2015. 15 Vegas then immediately applied for an order for indemnity costs. Counsel for Mr Rumsley submitted that he and his client had not been given notice of the professional misconduct allegation made against Mr Rumsley until arriving in Court for the hearing; and that he had not had sufficient time to consider and deal with the costs application on his feet there and then. The primary judge rejected those submissions and made an order that Mr Rumsley pay costs on an indemnity basis forthwith. 16 Mr Rumsley now seeks an extension of time and leave to appeal against the order of the primary judge granting the stay and the costs order made by the primary judge. 17 The application for the extension of time is necessary because the application was made four business days late. Mr Rumsley explained the delay on the basis that he had misunderstood the period within which appeals should be brought in respect of interlocutory decisions. The delay is short and no issue was taken in that respect. 18 Mr Rumsley seeks to advance seven proposed grounds of appeal, which are identified in the proposed notice of appeal. 19 The Court has a discretion whether to extend time or grant leave to appeal. The Court will usually have regard to the merit of the proposed grounds of appeal, or as it is sometimes put, whether the primary judgment is attended with sufficient doubt to warrant the grant of appeal; and also whether there would be a substantial injustice if the impugned orders were wrong but were permitted to stand. 20 I deal with the merit of the proposed grounds of appeal. 21 Although there are seven proposed grounds of appeal, Mr Rumsley seeks in the proposed grounds of appeal to raise four issues. 22 The first issue is whether there was an obligation on Mr Rumsley to disclose to the registrar that the assignment which was the foundation for the judgment debt which he was seeking to enforce, was under challenge; or to give to the other parties to WAD 17 of 2015 and the docket judge, notice of his application for the debt appropriation order. 23 The second issue is whether it was appropriate for the primary judge to make findings of professional misconduct by Mr Rumsley, and whether Mr Rumsley was afforded natural justice, in circumstances where Mr Rumsley and his counsel had not been put on notice prior to the hearing that an allegation of professional misconduct by Mr Rumsley was being relied upon by Vegas. 24 The third issue is whether, in considering whether to stay Deputy District Registrar Stanley's order, the primary judge erred in failing to have regard to the merits of the trustees in bankruptcy's claims in WAD 17 of 2015 which challenge Mr Rumsley's entitlement as an assignee. 25 The fourth issue is whether it was an appropriate exercise of discretion for the primary judge to order that Mr Rumsley pay costs forthwith on an indemnity basis. This issue relates back to the question of whether it was appropriate to make the professional misconduct findings in the absence of Mr Rumsley being given prior notice of those allegations. 26 A court is cautious about granting leave to extend time and leave to appeal from an interlocutory order. 27 However, this is an unusual case. In this case, the primary judge has made a finding of professional misconduct, and on the basis of that finding has made an order for indemnity costs to be payable forthwith. Although the costs order may technically be an interlocutory order, in this case it is an order which practically speaking is of final effect. In my view, the fact that professional misconduct findings have been made which will weigh upon the professional reputation of Mr Rumsley, and that the indemnity costs order payable forthwith is practically speaking of final effect, are factors which are sufficient by themselves to weigh very strongly in favour of granting leave to appeal. Certainly, these circumstances satisfy the "substantial injustice" requirement for the grant of leave to extend time and leave to appeal. 28 As to the second and fourth issues referred to above, the contention that there was insufficient notice given to Mr Rumsley of the allegations of professional misconduct is, in my view, sufficiently arguable to warrant the grant of leave. The question as to what constitutes sufficient notice of allegations of professional misconduct is a matter upon which minds have differed in this Court. 29 As to the first and third issues, Dr Schoombee, on behalf of Mr Rumsley, said that there is a distinction between the professional duty on counsel in relation to disclosure, when applying ex parte for an interlocutory order, compared to professional duty on a legal practitioner in taking steps to enforce a judgment already obtained. 30 In support of that contention, Dr Schoombee said that it is normally the party who is challenging a judgment who take steps to prevent the enforcement of that judgment by applying for a stay of the enforcement of the judgment. In other words, said Dr Schoombee, the party with the benefit of the judgment is entitled to act on that judgment - and that would include an assignee - and it is for the party challenging the validity of that judgment to take steps to prevent the enforcement of the judgment pending the determination of the challenge. Dr Schoombee contended that it followed that the party with the benefit of the judgment did not have to advise either a registrar or other official who assisted in the enforcement of a judgment debt, that the judgment debt was the subject of a challenge. 31 Dr Schoombee also contended that enforcement of a judgment debt under a debt appropriation order was regulated by the Civil Judgments Enforcement Act and that there are processes in that Act to safeguard against any injustices in relation to parties who are not represented before a registrar who makes such an order. Accordingly, said Dr Schoombee, the professional obligations which are founded on protecting the interests of unrepresented parties in ex parte applications do not apply. 32 In the absence of having been referred to binding authority on the issues the subject of these contentions, I am content to accept that they are sufficiently arguable to warrant the grant of leave. 33 I will grant Mr Rumsley an extension of time and leave to appeal against orders 2 and 3 of the primary judge. Costs will be in the appeal. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate: Dated: 11 February 2016