Sales Pond Pty Ltd v Telegate Pty Ltd

HIS HONOUR: By way of a summons seeking leave to appeal filed 10 July 2019 (“the summons”), Sales Pond Pty Ltd (“the applicant”) sought leave to appeal from two decisions of Atkinson LCM, namely:

Prior to turning to the details of the appeal, it is useful to set out the relevant parties and procedural background to the appeal.

The applicant was a company established in 2011. The sole director at that time was Mr Bora Kender. The applicant continued to be managed by Mr Kender up until his disqualification by the Australian Securities and Investment Commission (“ASIC”), pursuant to s 206F of the Corporations Act 2001 (Cth). I will return to the background to the disqualification under the next heading.

The respondent was a company involved in the supply of internet and telephone systems to businesses.

On 15 December 2017, the respondent filed a statement of claim in the Local Court of New South Wales against the applicant (“the Local Court proceedings”). The respondent sought damages in the sum of $56,354.48, plus interest and costs for the purported rendering of sale and goods and services. The purported services included the provision of telecommunication goods and services to the applicant.

On 26 February 2018, the applicant filed a defence to the statement of claim. The applicant denied the allegations made in the pleading.

On 4 April 2018, the respondent filed an amended statement of claim (“the ASOC”). The ASOC incorporated changes to the name of the respondent’s company. No other changes were made to the pleading.

On 26 April 2018, the applicant filed an amended defence to the ASOC.

On 28 August 2018, Huntsman LCM made case management orders, inter alia, confirming a hearing date for 25 September 2018.

On 31 August 2018, the applicant filed a notice of motion seeking, inter alia, the following orders:

On 3 September 2018, Kennedy LCM granted the motion and made, inter alia, the following orders:

On 22 January 2019, the Review was heard by McIntyre LCM, the following orders were entered:

The Short Minutes of Order referred to above, were as follows:

On 25 June 2018, as mentioned above, a delegate of ASIC made an order under s 206F(1) of the Corporations Act disqualifying the sole director of the applicant, Mr Kender, from managing corporations for 3 years (hereinafter, “the disqualification order”). The disqualification order came into effect on 9 October 2018.

Section 206F of the Corporations Act concerns the power of ASIC to disqualify a director of a company, subject to the requirements of the provision, from managing corporations for up to 5 years. The provision falls within Pt 2D.6 of the Corporations Act, which is titled “Disqualification from Managing Corporations”.

Section 206A(1) provides that a person who is disqualified under Pt 2D.6 of the Corporations Act commits an offence if they participate in certain conduct, which includes the following:

On 5 September 2018, the applicant’s solicitors, Gardner Ekes Lawyers, were made aware of the disqualification order. On 10 October 2018, Gardner Ekes Lawyers were instructed to file an application for review of the decision in the Tribunal. On 17 October 2018, a request for “Stay Order” of the disqualification order was filed. Mr Kender had sought review of the decision to make a disqualification order and applied to the Administrative Appeals Tribunal (“the Tribunal”) to stay the operation or implementation of the reviewable decision pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 Act (NSW), pending the outcome of the review. A stay application was listed before the Tribunal to be heard 26 November 2018.

By way of background to the disqualification order, Mr Kender was the sole director of two companies that were wound up in 2011. The liquidators filed reports in 2013, pursuant to s 533 of the Corporations Act, advising there would be zero return to creditors. Two other companies were wound up in 2013. Following which, the liquidators filed reports in 2014, pursuant to s 533 of the Corporations Act, advising that unsecured creditors would not receive a return. All of the companies were involved in the recruitment and labour hire business.

In 2011, as mentioned above, Mr Kender had set up another company, the applicant. He continued as the sole director until the disqualification order came into effect.

In support of his application to the Tribunal, in summary, Mr Kender relied upon the ASIC’s delay in taking regulatory action against him. The orders under s 206F were triggered by the s 533 reports, which ASIC had for a significant period of time before it took action. Whilst, Mr Kender did not suggest that the delay invalidated the decision, he contended that there was no reason to rush to implement the decision now.

On 28 November 2018, the Tribunal published its reasons for the decision to grant a stay of the disqualification order made against the Mr Kender by notice dated 25 June 2018 until the decision of the Tribunal on the application for review came into operation or until further order of the Tribunal.

The disqualification order was stayed upon the following conditions:

On 10 April 2019, Mr Kender was reinstated as a director of the applicant.

Following the above conditional decision, ASIC contended that Mr Kender had not fully complied with the orders of the Tribunal. This was owing to the fact that the reports produced by Mr Chadwick (see condition 2.6) did not comply with the requirements of the legislation. In the result, part of the undertaking had not apparently been complied with and the stay was, therefore, no longer effective. Thus, the original disqualification order of ASIC remained in force.

On 21 January 2019, the applicant filed a cross-claim against the respondent seeking, inter alia, damages for breach of contract. Both the ASOC and cross-claim were listed for hearing on 7 February 2019.

On 6 February 2019, the respondent filed a defence to the cross-claim. As set out earlier, the respondent was previously directed to file and serve the defence to cross-claim by 22 October 2018. In accordance with that former timetable, the cross-claim was to be filed by 1 October 2018. It may also be noted, on 22 January 2019, McIntyre LCM directed that the cross-claim be filed by 29 January 2019 (notwithstanding the fact is had been filed on 21 January 2019) but did not make any direction as to the timing of the filing of the defence to the cross-claim.

On 6 February 2019, the applicant filed a notice of motion, together with supporting affidavit of Hector Ekes, sworn 6 February 2019, seeking to vacate the hearing date fixed for 7 February 2019 (“the motion”). Whilst this application was contemplated by the orders of McIntyre LCM, whom provided leave to file and serve a notice of motion seeking to vacate the hearing, his Honour’s order provided a specific timetable, namely, any such motion is to be filed by 29 January 2019 and to be listed for hearing on 4 February 2019. Thus, the motion was filed late and not in conformity with the orders of the Court.

On 7 February 2019, the motion was heard before Atkinson LCM at Sydney Downing Centre Local Court. The basis of the application was summarised succinctly by Atkinson LCM as follows: “the person at the relevant time who was the sole director of the company had been subject to an order by ASIC disqualifying him from managing, being involved in the management of the company”. The relevant person was Mr Kender, the former director of the applicant.

During the course of submissions on the motion, the applicant contended that Mr Kender, the disqualified person, was a key witness in the defence case. However, owing to the operation of s 206A(1)(b) of the Corporations Act, it was contended, Mr Kender was prevented by law from being involved in the proceeding, which bar extended to the provision of evidence. Mr L D Robison of counsel, who appeared for the applicant in the Court below, stated that he was unable to provide the Court with any authority to support that construction.

At the hearing of the motion, Mr Robison confirmed that, on 4 December 2018, documents had been lodged to appoint a replacement director. However, he was unable to confirm whether such appointment had taken effect. Turning to the respondent, Atkinson LCM put the following question to Mr Pokoney:

Mr Pokoney further submitted:

In addition to disputing the construction advanced by the applicant, Mr Pokoney further contended: “in any event, there is no evidence to say that but for this disqualification we would be in a position to proceed because steps are on the evidence, or steps have been taken to effect the management of the proceedings”. Reference was made to the absence of expert evidence retained by the applicant and the fact that the respondent “is in a position to proceed having served its evidence”.

It may be noted, whilst the filing of the defence to the cross-claim one day prior to the hearing was referred to in the affidavit in support of the motion, that circumstance was not advanced by Mr Robison as an alternative argument in support of the motion to vacate the hearing.

Following the hearing of the motion, Atkinson LCM held:

In coming to that conclusion, Atkinson LCM made the following findings:

On 7 February 2019, immediately following the dismissal of the motion, the hearing of the substantive claim occurred. Her Honour reserved judgment and listed the matter for the purpose of delivering her decision and hearing any argument as to costs on 13 February 2019.

On 13 February 2019, Atkinson LCM delivered judgment.

At the outset of the judgment, her Honour dealt with the cross-claim brought by the applicant. Her Honour dismissed the cross-claim for lack of evidence to support the claim, in circumstances where the cross-claimant bore the onus of proving their case on the balance of probabilities.

As to the ASOC, which concerned a contractual dispute, her Honour made the following findings:

Her Honour held:

Following the above ruling, the parties reached an agreement as to the judgment sum and interest. Mr Pokoney submitted: “The judgment sum based on your Honour’s decision is $49,638.72 and the interest calculation is $4,308.37”.

As a disagreement remained as to costs, the parties were heard as to costs. Following that short hearing, Atkinson LCM held:

In summary, the Court gave judgment for the respondent and made the following orders:

On 5 July 2019, an unsealed copy of the summons was served by way of email on Peter Hodges of Mills Oakley, solicitor on record for the respondent. The applicant submitted that the summons was not filed instanter due to fact the applicant’s firm had no funds held on trust for the applicant to satisfy the filing fee. The summons was filed and served on 10 July 2019.

On 16 April 2019, the applicant filed a notice of motion seeking stay of enforcement of Local Court judgment (“the stay motion”).

On 16 May 2019, the stay motion was listed before Registrar McTegg. The following orders were, inter alia, made: the stay motion was listed for hearing on 6 June 2019 and the Court noted the undertaking of the respondent not to enforce judgment until finalisation of the stay motion. It may be noted, due to availability issues, the hearing was subsequently re-listed for 1 July 2019.

On 11 July 2019, the matter continued before the Local Court before Atkinson LCM for “Special Fixture” to determine the stay motion. On that occasion, a stay of execution was granted until such time an application for stay could be heard in this Court. On that occasion, Atkinson LCM made an order for stay of judgment until the first mention in this Court.

On 23 July 2019, following the filing of the summons, the appeal was listed for hearing on 1 November 2019.

On 30 and 31 October 2019, the proceedings were listed for mention. Following which, the Court vacated the date of the hearing and re-listed it for 14 November 2019. Those orders were crystallised in the short minutes of order provided by the respondent, which were dealt with administratively in Chambers.

On 6 November 2019, the Court made the following orders:

Those orders emerged out of an application to adjourn the hearing to a date to be fixed, which was informally made on the 31 October 2019, one day before the date listed for hearing, without a satisfactory explanation, save for the dilatory conduct of the solicitor representing the applicant. It will be observed that solicitor for the applicant, in order to secure an adjournment, gave an undertaking as to how their case would be put at the adjournment hearing, namely, “that that Applicant’s written submissions filed 30 October 2019 will not change, and that the matter will proceed upon the basis only of those written submissions”.

The appeal was heard by this Court on 14 November 2019.

The grounds of appeal are extracted below:

The following orders were sought:

As the appeal was filed on 10 July 2019, the applicant requires an extension of time to bring the appeal. The applicant further requires leave to appeal pursuant to section 40(2)(a) of the Local Court Act 2007 (NSW). However, it will be convenient to deal with these issues after generally considering the merits of the appeal.

The applicant relied upon the following evidence:

The respondent relied on the affidavit of Peter Hodges, sworn 29 October 2019.

The decision to adjourn proceedings is a discretionary one. Courts have both a specific statutory power under s 66 of the Civil Procedure Act, and an incidental power, to adjourn the hearing of any matter in appropriate circumstances: Hinckley & South Leicestershire Permanent Benefit Building Society v Freeman [1941] Ch 32; Dick v Piller [1943] 1 KB 497; Priddle v Fisher & Sons [1968] 1 WLR 1478.

That discretionary power must be exercised in accordance with the overriding purpose described in s 56(1) of the Civil Procedure Act and in accordance with the dictates of justice described in s 58 of that Act. Those considerations require particular justification for refusing an adjournment application if the practical effect would be to terminate the proceedings adversely to the applicant for adjournment: Sali v SPC Ltd (1993) 116 ALR 625 at 628; Scott v Handley [1999] FCA 404; Frugtniet v State Bank of New South Wales [1999] NSWCA 458.

Nevertheless the considerations in ss 56 and 58 also justify the ordinary rule that where proceedings have been regularly fixed for hearing, with due notice to the affected parties, they should commence on the appointed date and continue until their completion. For example, this ordinary rule is illustrated by refusal of adjournment applications made for the purpose of obtaining additional evidence that should have been obtained earlier: Watson v Watson [1968] 2 NSWR 647; (1968) 70 SR (NSW) 203 at 206; or made for the purpose of investigating the availability of additional evidence: EG & H Nominees Pty Ltd v General Mutual Insurance Co Ltd (in liq) (1976) 50 ALJR 460. In both instances, the applicant had sought an adjournment to obtain more evidence, which application was refused and the decision of the trial judge upheld on appeal. Further, a party who has put itself in a position where it is not able to present its own case, it may be noted, is not automatically entitled to an adjournment: see Apex Pallet Hire Pty Ltd v Brambles Holdings Ltd (Unreported, Supreme Court of Victoria, Full Court, 8 April 1988); Regal Life Insurance Ltd v Pacific Financial Resources Pty Ltd (Unreported, Supreme Court of Victoria, Batt J, 16 November 1994).

The applicant must demonstrate that the exercise of that discretion was infected by an error of the kind described by the Court in House v The King (1936) 55 CLR 499 (“House v King”). The species of error identified in House v King are well known. The classic statement, so far as it concerns this appeal, is to be found in the joint judgment of Dixon, Evatt and McTiernan JJ, at 505:

As to the principles governing appellate review of a trial judge’s refusal to grant an adjournment, the applicant relied upon the statement of principle in Frugtniet v State Bank of New South Wales. The relevant passage from that judgment is extracted below (at [84]-[89]):

The respondent did not cavil with the applicant’s reliance upon the authority of Frugtniet v State Bank of New South Wales, and submitted that [90] provides further guidance to the Court, in light of the issues raised on appeal. That passage is extracted below (at [90]):

An applicant must establish that the adjournment refusal resulted in “injustice”. The concept of injustice broadly involves a situation where there is a risk the determination of the proceedings will not involve a full hearing of all relevant considerations, and the prejudicial consequences of granting an adjournment do not outweigh that risk: Dubois v R & V Bergin Pty Ltd [2011] NSWCA 309 at [44] (per Young JA). Relevant injustice may arise because the adjournment decision was based on an inadequate regard to relevant considerations: Squire v Rogers (1979) 27 ALR 330 at 337–8 per Deane J, citing Sackville-West v A-G (1910) 128 LT 265.

Despite the ordinary rule, but consistent with the basic purpose of the discretion, an adjournment application should be granted where it has a proper basis and refusal would result in serious prejudice: see example, Walker v Walker [1967] 1 All ER 412 and Spencer v NSW Minister for Climate Change, Environment and Water [2010] NSWCA 75.

An appeal from a decision to refuse an adjournment, as with the present application, attracts the ordinary appellate disinclination to interfere with the exercise of such a discretionary power. It is a well-established principle that appellate courts are generally reluctant to grant leave to appeal where the order appealed from relates to a matter of practice and procedure, as distinct from involving the determination of substantive rights: In the Will of Gilbert (1946) 46 SR (NSW) 318 at 323; White v Grogan [1972] 2 NSWLR 347; Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170; [1981] HCA 39.

Ordinarily such a decision can only be overturned on appeal when it is demonstrated that the decision-maker either: made an error of legal principle; made a material error of fact; took into account some irrelevant matter; failed to take into account or gave insufficient weight to, some relevant matter; or, arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning. (See Age Co Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [13] per Bathurst CJ; Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [45]).

It is uncontroversial that litigants before the Court are entitled to procedural fairness. In Jeray v Blue Mountains City Council (No 2) (2010) 180 LGERA 1; [2010] NSWCA 367, Allsop P (as his Honour then was) said at [6]:

What is required to afford procedural fairness is also informed by the overarching principles of case management, contained in ss 56-60 of the Civil Procedure Act: Norfeld Pty Ltd v Amanda Lee Jones [2014] NSWCA 408 at [18].

As the requirement to give reasons depends on the nature and circumstances of the case, “it is properly within the decision and discretion of the trial judge to determine whether reasons ought to be given”: Pettitt v Dunkley [1971] 1 NSWLR 376 at 390.

If the circumstances of the case require the giving of reasons by the Court, the scope of that obligation should be cautiously stated, lest a rigid interpretation of the obligation conflict with the legitimate practical constraints upon busy trial courts: Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 259-260.

In Nominal Defendant v Clancy [2007] NSWCA 349, McColl JA (in dissent) summarised the principles relevant to the requirement to provide reasons (at [124]):

Notwithstanding the articulation of three grounds on the summons, at the outset of oral submissions, counsel for the applicant submitted that the appeal is primarily concerned with ground 1 and described the application before the Court as “a one point matter”. In that light, it was conceded, “if the Court finds against that proposition, all the things in the summons then become somewhat nugatory… the summons just simply falls away”.

Turning to the submissions of the applicant. The written submissions filed by the applicant outline a procedural history and the orders sought. They do not expressly engage with the grounds of appeal. In the result, the following summary of submissions is based upon oral submissions advanced at the hearing.

The following submissions were relied upon in support of ground 1:

During the hearing of the summons, in response to a question from this Court, counsel for the applicant articulated that the error relied on in support of its summons, namely, the prejudice error. Prior to the hearing, the applicant had not otherwise identified the House v King error, including that error, upon which it relied in its written submissions dated 10 October 2019.

In addition to written submissions dated 29 October 2019, and with leave of the Court, the respondent provided a further written submission on the “Further Error Identified During Oral Submissions” dated 15 November 2019, which is incorporated into the below summary.

As to the prejudice error, the respondent’s primary position was that the applicant ought not be entitled to rely on that formulation of error in circumstances where:

If that primary submission was not accepted, and the Court held the applicant is entitled to rely on the prejudice error, the respondent contended that ground 1 must fail for the following reasons:

In addition to the submissions advanced vis-à-vis the prejudice error, the following is a summary of the respondent’s remaining submissions with respect to ground 1 (albeit with some overlap with submissions advanced with respect to ground 3):

It is not in dispute that the decision to refuse an adjournment is a discretionary one and that the principles set out earlier in this judgment apply.

This first ground of appeal brought by the applicant requires the applicant to demonstrate that the Atkinson LCM’s exercise of discretion to refuse an adjournment was infected by an error of the kind described by the High Court in House v King. In advancing submissions with respect to that contention, the applicant accepted that there is no dispute as to the findings of fact made by the Atkinson LCM in the context of giving her ruling on the adjournment application and did not contend that Atkinson LCM acted on the wrong principle or allowed extraneous or irrelevant matters to guide her discretion. The remaining relevant consideration, therefore, was whether Atkinson LCM failed to take into account some material consideration.

In a response to a question of this Court, the applicant characterised the error as one of a failure to take into account some material considerations, with the material consideration being identified as the issue of i prejudice to the applicant in dismissing the motion. Reliance upon prejudice collided with the undertaking given by the solicitor for the applicant as recorded in orders given on 6 November 2019.

The onus lies with the applicant to establish the issue of prejudice to the applicant was a material consideration; and that material consideration was not taken into account in the Atkinson LCM’s exercise of discretion to refuse an adjournment of the final hearing of the proceedings; and the risk of such prejudice to the applicant by refusing the adjournment out-weighed the prejudicial consequences of granting an adjournment.

Turning to the first consideration, it may be accepted that prejudice to the applicant in refusing an adjournment application is prima facie a material consideration. In the absence of an adjournment to obtain or arrange evidence, the applicant, who had not filed any evidence with respect to its cross-claim (or the ASOC), would be unable to make out its case.

As to the second consideration, in my view, the applicant has failed to establish, on the material before this Court, that the potential prejudice to the applicant was not taken into account in Atkinson LCM’s exercise of discretion to refuse an adjournment. That conclusion may be reached for the following reasons:

Finally, as to the requirement of the Court to consider that the refusal of the application might result in the applicant being prevented from adequately presenting its case, with the consequence that there may be a miscarriage in the exercise of the discretion, does not take precedence over other considerations that her Honour was required to take into account (and which her Honour did take into account): Pilotto at [26]-[34], Hamod at [131]-[145]. In particular, her Honour had regard to the need to facilitate the just, quick and cheap resolution of the real issues in the dispute or proceedings: the Civil Procedure Act, s 56(1). See also Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 at 182-183, 200-201, 205, 210-211, 217-218.

In my view, and with respect, her Honour’s ex tempore decision provides a succinct and clear outline of reasons that display a logical process of reasoning as to why her Honour exercised her discretion in the manner that she did. First, at the outset of her Honour’s reasons, Atkinson LCM identified the gravamen of the applicant’s submission, noting the sole basis of the adjournment application concerned the impact of the disqualification proceedings upon the preparation of evidence for the hearing. Her Honour then proceeded to consider that application in the light of the discretionary considerations and case-management principles, in particular those under the Civil Procedure Act. Second, in approaching the motion, her Honour noted the applicant’s previous, successful, application to vacate the former date for final hearing. Her Honour found that the grant of a previous indulgence was a relevant factor in the consideration of the applicant’s subsequent application to vacate the final hearing. Nextly, her Honour considered, but rejected, the applicant’s assertion that the former director’s suspension from office precluded him from giving evidence at the final hearing. That contention formed the only basis upon which the applicant sought to vacate the final hearing. That conclusion by her Honour was also consistent with the concession made by counsel for the applicant during oral argument, that the former director was capable of giving instructions without conducting the litigation on behalf of the company. Her Honour properly concluded by reference to the overarching principles, contained within the Civil Procedure Act, in the circumstances of the case, to exercise a discretion to refuse adjournment and dismiss the motion. It was implicit her Honour’s judgment that costs were not an adequate remedy in the circumstances having regard to the factors discussed below.

When understood in the light of the procedural history of the matter, I accept the submission of the respondent that her Honour’s findings in disposing of the motion were consistent with a conclusion having been reached, which was available in the circumstances before her Honour that the applicant had exhausted its proper opportunity to prepare its evidence for final hearing. That is a matter separate to Mr Kender’s ability to prepare evidence, having regard to the argument that he was precluded from doing so due to a perceived contravention of s 206A of the Corporations Act. Further, the context before her Honour was one in which the applicant was required to file its motion to vacate by 29 January 2019 and, in any event, could have done so any time before the 6 February 2019, in order to properly address the issues it perceived it was confronting, but chose to make the application the day before the hearing upon a basis which, as her Honour found, was flawed.

It is correct that her Honour was required to consider, in accordance with Frugtniet v State Bank of New South Wales, that the refusal of the application might result in the applicant from being able to adequately prepare its case and any consequential injustice. Those considerations, however, need to be considered in the context of the entirety of the issues her Honour was required to take into account (which her Honour did), which ultimately resulted in her Honour properly finding there was not an injustice in refusing the adjournment, notwithstanding the absence of evidence having been prepared by the applicant and the resultant consequences for its cross-claim.

Although overlapping with ground 2, it is implicit in her Honour’s reasoning that the conduct of the applicant had the appearance of and created the effect of seeking to delay the hearing, which was only concerned with a debt proceeding. It may be noted, in that respect, that the applicant did not indicate to her Honour that steps had in fact been taken to prepare the evidence in its case, such that the proceedings may be readily disposed of in the event that an adjournment was given for a short timeframe. Nor was there any indication in the present proceedings that steps had been taken before the hearing of the motion to prepare such evidence in draft or otherwise beyond a bare statement of Mr Kender indicating his willingness to prepare such evidence. Nor had that position been advanced by the time of the hearing in this Court.

It should also be observed that the applicant advanced a series of submissions that are not sustained by the material before the Court, have a bearing on the disposition of this ground and to some extent overlap with considerations with respect to ground 2:

There was no error, in my view, in Atkinson LCM’s exercise of discretion insofar as the interlocutory decision was based upon her Honour’s understanding of the sole basis put before her on the application to adjourn. Further, I accept, with respect, her Honour’s reasoning as sound with respect to the issues arising under s 206A of the Corporations Act. The sole basis for bringing the adjournment application, in my view, was flawed from the outset. Whilst not squarely raised before her Honour, the question of prejudice, generally, was raised and considered appropriately in the exercise of her Honour’s discretion. The applicant raised another particular issue as to prejudice (namely, the timing of the filing of the defence to the cross-claim), which was not raised before her Honour, but, as discussed above, that consideration could not properly constitute error as it was not an issue raised below. In any event, that consideration did not result in error for the reasons discussed above.

Finally, it was conceivable that the applicant were thereby precluded from raising the issue of prejudice by the operation of the undertaking given by the applicant’s solicitor. Whilst it is unnecessary to decide this matter on that basis, it may be noted that a question by the Court as to what was the error in the exercise of the discretion, relied upon by the applicant to prosecute this contention, did not alleviate the undertaking given to obtain an adjournment.

Ground 1 lacks merit.

The applicant’s second ground of appeal is expressed to be a denial of procedural fairness, constituted by an alleged failure to permit the applicant an opportunity to adduce evidence in the proceedings below.

The applicant led no evidence in the proceedings below (with the exception of evidence in support of its motion). By its written submissions, the applicant contended:

In light of the procedural history, earlier summarised in this judgment, those two contentions cannot be accepted. The applicant had been afforded opportunities to file evidence to defend the claim against it, as evinced by the collective effect of the following:

Thus, the applicant had a number of opportunities to prepare and serve evidence to defend the claim against it. The applicant’s contention that it was denied procedural fairness by the Court, in my view, plainly ignores the successive opportunities afforded the applicant which it failed to act upon in accordance with directions of the Court. Further, notwithstanding that fact, the explanation for the failure to take steps required in the conduct of its case given by the applicant to Atkinson LCM was rejected by her Honour and the appeal against the decision in that respect was unsuccessful. In substance, the applicant’s application to adjourn a final hearing of its application on a flawed basis, in the light of a succession of failures by the applicant, was rejected in a proper exercise of discretion below.

This ground of appeal lacks merit.

Ground 3 does not specify the decision with which her Honour failed to give adequate reasons. As her Honour provided separate sets of reasons with respect to both the interlocutory and substantive decisions, the adequacy of her Honour’s reasons will be considered in turn.

The Local Court of NSW is a busy Court. On the day of hearing, her Honour noted the many competing demands upon the Court’s limited time that day:

The Court’s ex tempore judgment must be considered against the backdrop of the practical realities of the Local Court. Viewed in that light, the decision of the Court can properly be seen as containing a concise statement of her Honour’s consideration of the motion.

During the course of oral submissions in these proceedings, as to her Honour’s reasons for refusing the adjournment, the applicant submitted:

Whilst the applicant did not fully develop its submission as to the inadequacy of reasons vis-à-vis the prejudice to the applicant. At its highest, the contention sought to be advanced appears to overlap with concerns raised under ground 1, namely, a material consideration was not addressed. As such, the applicant is left wanting as to whether Atkinson LCM properly considered and/or dealt with that consideration as to prejudice.

In light of my findings with respect to ground 1, and having regard to the reasons which were delivered, I am not satisfied that her Honour failed to give adequate reasons on the motion.

At the conclusion of the hearing on 7 February 2019, her Honour twice said that the matter would be listed again on 13 February 2019 for the purpose of delivering oral judgment. The transcript does not record that the applicant objected to that course, or made any application for written reasons.

On 13 February 2019, her Honour delivered a comprehensive oral decision, summarising the Court’s findings on the evidence before it.

No attempt has been made by the applicant to identify a deficiency in her Honour’s reasons for the Court’s judgment. The respondent submitted, in those circumstances, and having regard to the reasons which were delivered, the Court could not be satisfied that her Honour failed to give adequate reasons. I accept that submission.

This ground of appeal, to the extent it concerns the substantive decision, must also fail.

In all the circumstances, ground 3 lacks merit.

During the course of oral submissions, counsel for the applicant submitted that the argument with respect to judicial review might not be pressed, in light of the House v King argument advanced under ground 1. At the close of oral submissions, the applicant confirmed it did not seek to advance submissions in this respect.

It is not in dispute that the applicant brought the appeal late.

A party seeking an extension of time in which to bring an appeal must satisfy the Court that it is in the interests of justice that the extension be granted. This ordinarily requires the party seeking such an extension to adduce evidence adequately explaining the failure to comply with the applicable time limits under the rules: Guinta v Commonwealth Bank of Australia [2008] NSWSC 222 at [28], citing Jackamarra v Krakouer (1998) 195 CLR 516 at 540.

The applicant addressed the relevant threshold questions in oral submissions:

Counsel for the respondent contended that the applicant had failed to adduce evidence containing a satisfactory explanation for the delay in bringing its appeal outside the permissible timeframe. The limited evidence available from the applicant instead offers contradictory explanations, neither of which provide an adequate or complete explanation.

That contention was amply supported with reference to the following:

In the respondent’s submission, the applicant’s evidence on the cause of delay falls far short of providing an adequate explanation as to the cause of delay, or the efforts made to minimise it.

During the course of the hearing on 14 November 2019, his Honour enquired whether the issue of prejudice to the applicant was a relevant consideration in exercising the discretion to extend time under r 50.3 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), and the Court asked counsel for the respondent to let the Court know of any authorities on the point, if any were identified. The respondent has since identified the following authorities: Gallo at 459 (per McHugh J); Nanschild v Pratt at [38]-[44] (per McColl JA, with Campbell JA agreeing); and Personnel Concepts WA Pty Limited v Adam & Ors t/as Marsdens Law Group [2019] NSWSC 301 (“Personnel Concepts”) at [14]-[23] (per Wright J).

In Nanschild v Pratt, the McColl JA (with Campbell JA agreeing) observed (at [38]-[44]):

In Personnel Concepts, Wright J summarised the relevant principles with respect to extension of time at [14], extracted below:

A summons commencing leave to appeal must be filed within 28 days of the material date: see rr 50.2 and 50.3 of the UCPR. If the appeal is from a judicial decision the material date is when the decision was “pronounced or given”. The power to extend time conferred by r 50.3(1)(c) overcomes the common law principle that generally an extension of time could not be granted after the original period had expired: Zobel v Croudace (1899) 16 WN (NSW) 32.

The basic consideration of a Court considering whether to grant an extension of time is whether the strict application of the time limitation will or may occasion injustice: Anthony v Chris Savage Pty Ltd [2003] NSWSC 698.

There are a number of substantial bases upon which an extension of time should be refused.

First, in the present proceedings the material date, with respect to the interlocutory decision, is 7 February 2019. The summons was filed and served on 10 July 2019, 5 months past the material date. It included an application to extend time pursuant to r 50.3(2). It is not disputed that the summons was filed out of time. The delay is substantial.

Secondly, there is an absence of a satisfactory explanation for the delay. No submissions were developed by the applicant as to the reasons for the 5 month delay, save for a non-specific reliance upon the “explanations” provided in the affidavit evidence of Mr Ekes and Mr Kender, neither of which, in my view, provide a satisfactory explanation for the significant delay in bringing the appeal outside the permissible timeframe of 28 days. I will examine each in turn.

Mr Ekes gave evidence of the inability to file the summons seeking leave to appeal “due to the fact that [his] firm had no funds held on trust… to satisfy the filing fee”. No evidence was given, in that respect, as to whether the applicant itself had available to it sufficient funds to satisfy the filing fee in the months following the material date, nor the steps taken by the applicant to provide those funds to its solicitors at any time prior to July 2019.

As to the evidence of Mr Kender, the respondent correctly, in my view, highlighted para 21 of Mr Kender’s affidavit in which he deposed: “On 10 April 2019 I was reinstated as director of Sales Pond and the burdens that plagued the original proceedings are now resolved. I am now in a position where I can fully commit my time and focus into the current proceedings”. No explanation was provided for the inaction of the applicant from 10 April 2019 to 10 July 2019, even if that explanation was found satisfactory.

The inappropriateness of extending leave in the absence of sufficient reasons for delay is further heightened when para 21 is read in conjunction with para 22, the final paragraph of the affidavit, where it was stated: “I am ready, willing and able to depose defence evidence in reply to the Telegate’s evidence-in-chief and evidence-in-chief on the Sales Pond Cross-Claim”. By that evidence, Mr Kender confirmed his capacity to give evidence but gave no explanation as to the inaction that followed. Thus, even if I were to accept the reasons for delay up until that point, which I do not, there remains a further 3 months, a significant period of delay, for which the applicant provided no explanation for inaction, notwithstanding his apparent capacity to do so.

Thirdly, the lack of the applicant’s prospects of success of appeal should be taken into account. I have earlier expressed a view as to the lack of merits of the three grounds of appeal. I propose to add some observations regarding leave to appeal, or more particularly, why there is a substantial basis to refuse leave to appeal in this case.

Leave to bring an appeal out of time will not ordinarily be granted where the applicant has no prospect of success: Gallo at 459 (McHugh J). Again, I have found the appeal lacks merit.

Further, it is equally probable that leave to appeal, as required by s 40(2)(a) of the Local Court Act, would be refused in light of the principles relevant to leave and the nature of the points raised on appeal, to which I now, in summary, turn.

In Rodi v Gelonesi [2012] NSWCA 424, the NSW Court of Appeal considered (at [24]) the circumstances in which leave to appeal should be granted, in the context of an appeal from the District Court. In refusing leave, Ward JA observed:

The relevant principles were recently considered in Ackerman v Morgan [2019] NSWSC 1250 at [53], which I adopt, and are extracted below:

The applicant’s challenge is primarily directed to the interlocutory decision of her Honour. The challenge to the substantive decision arose as a consequence of this primary challenge, in that the applicant was contending that the motion for an adjournment should have been granted, thereby avoiding the subsequent final hearing. In that light, it was submitted by the respondent, the applicant’s challenge to the interlocutory decision of Atkinson LCM constituted the “gateway”, through which her Honour’s substantive judgment is impugned. Accordingly, it was correctly submitted, the applicant required, in substance, leave of this Court pursuant to s 40(2)(a) of the Local Court Act.

There is no demonstrative error of principle which resulted in a substantial injustice in this case.

Fourthly, as to the extent of any prejudice that may be suffered by the respondent, if leave was granted to extend the time to appeal, I find the respondent would be prejudiced by granting the application. The respondent has a vested right to retain the judgment pronounced by Atkinson LCM on 7 February 2019, with respect to the interlocutory decision, and to that pronounced on 13 February 2019, with respect to the substantive proceedings. In the absence of a satisfactory explanation for delay, any grant of extension would be prejudicial to the respondent.

In all the circumstances, the applicant has failed to establish that strict compliance with the rules will work an injustice upon it and the application to extend time to bring the appeal should be refused.

The Court makes the following orders: