Alpen v Richards

[2013] FCA 1387

FEDERAL COURT OF AUSTRALIA

Alpen v Richards [2013] FCA 1387

Citation:	Alpen v Richards [2013] FCA 1387
Parties:	CARMELA ALPEN and MARK ALPEN v GORDON RICHARDS, DIANE THOMAS and EDITH BOEHM
File number(s):	QUD 657 of 2012
Judge(s):	GREENWOOD J
Date of judgment:	3 December 2013
Catchwords:	PRACTICE AND PROCEDURE – consideration of an application under s 31A of the Federal Court of Australia Act 1976
Legislation:	Federal Court of Australia Act 1976, s 31A(2)
Cases cited:	Spencer v The Commonwealth [2010] 241 CLR 118 - cited Houghton v Arms [2006] 225 CLR 553 - cited
Date of hearing:	3 December 2013
Date of last submissions:	3 December 2013
Place:	Brisbane
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	17
Counsel for the Applicants:	Mr Andrew Fraser
Solicitors for the Applicants:	Mark Treherne, Adams Wilson Lawyers
Solicitor for the Respondents:	Jonathan de Vere Tyndall, Tyndall & Co, Lawyers

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	QUD 657 of 2012

BETWEEN:

CARMELA ALPEN
First Applicant

MARK ALPEN
Second Applicant

AND:

GORDON RICHARDS
First Respondent

DIANE THOMAS
Second Respondent

EDITH BOEHM
Third Respondent

JUDGE:	GREENWOOD J
DATE OF ORDER:	3 DECEMBER 2013
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.The interlocutory application of Ms Boehm filed on 22 August 2013 is dismissed. 

2.The costs of and incidental to the application are reserved for later determination.

3.The defence in the proceeding is to be filed by Friday, 20 December 2013. 

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	QUD 657 of 2012

BETWEEN:

CARMELA ALPEN
First Applicant

MARK ALPEN
Second Applicant

AND:

GORDON RICHARDS
First Respondent

DIANE THOMAS
Second Respondent

EDITH BOEHM
Third Respondent

JUDGE:	GREENWOOD J
DATE:	3 DECEMBER 2013
PLACE:	BRISBANE

EX TEMPORE REASONS FOR JUDGMENT

1. This is an interlocutory application made by the third respondent in the proceeding whose name is Ms Edith Boehm. By this application, Ms Boehm seeks judgment in her favour on the footing that the applicants in the principal proceeding have no reasonable prospects of success in prosecuting the proceedings against her for the relief sought, or at all. The application is made under s 31A(2) of the Federal Court of Australia Act 1976 (Cth) which is familiar to the participants and I do not propose to quote the elements of the section here, other than to observe that it is a statutory mechanism by which a party may seek a judgment against another in circumstances, relevantly, where the Court is satisfied that the applicants have no reasonable prospect of successfully prosecuting the proceeding against Ms Boehm.

2. The power to summarily dispose of a claim against a party and therefore foreclose the contended claims of applicants against such a party, should be exercised with caution and with care but nevertheless the provision must be applied according to its terms.  So far as the jurisprudence concerning the section is concerned, I accept the observations as correctly put by counsel for the applicants, having regard to Spencer v The Commonwealth [2010] 241 CLR 118 at 56 and the observations that are well known in that case on the proper approach to the principles to be applied in applications made under this section.

3. The case pleaded by the statement of claim against the third respondent has both its own particularity in relation to what is called the “second scheme”, as set out in para 41 of the statement of claim, but also has a contextual sequence which needs to be taken into account. 

4. Briefly, the amended statement of claim pleads conduct in relation to two investment schemes.  By para 2, the applicants contend that the first respondent in the proceedings, Mr Gordon Richards, caused advertisements to be placed in the Adelaide Advertiser newspaper in which words appeared (and by reference to Cumberland Real Estate, Gordon Richards, Director), with the observation “pay off your loan in five years, not 20 years and please contact my mobile number”.  The advertisement contained a mobile telephone number and encouraged parties to respond to it so as to investigate the provision of financial services and the provision of a financial product which would have the effect of paying off a loan in five years rather than 20 years.  The applicants were approached by Mr Richards in their home and they invested $50,000 in an “Interbank” product. 

5. They lost their money.

6. The pleading then asserts that Mr Richards approached the applicants in relation to a second scheme and the elements of that engagement are set out in para 41 of the amended pleading.  That paragraph contends for these things.  In or around September 2007, Mr Richards and on this occasion, Ms Boehm, visited the applicants at their home in Tweed Heads.  Secondly, it is said that Mr Richards and Ms Boehm had a conversation with the applicants during which a number of things were said.  The pleaded case it that Mr Richards said to the applicants words to the effect, “My girlfriend, Edith, has made $17,000 from PFG, a foreign exchange account, it is the same as Interbank but PFG is better.  You will not lose money.”  It is pleaded that in response to that statement Ms Boehm smiled and said, “You will make a lot of money.”

7. The applicants plead that Mr Richards said words to the effect, “If you want to go ahead with this I will be more than happy to meet at the bank.”  The pleading then goes on to identify a communication by the first applicant to the effect, “Will we lose money like the last time?”  In response to that question, Mr Richards is said to have said words to the effect that the applicants would not lose money like the first time and that the applicants would retrieve the money lost from Interbank.  Particulars are given of those exchanges.  It should, of course, be immediately noted that the applicants are engaging in these exchanges through the intermediary of a 12 year old girl who is “signing” for them because they are not otherwise able to engage due to hearing impairments. 

8. In para 42 of the amended statement of claim, the applicants plead that in the course of the conversation referred to previously in para 41, Mr Richards and Ms Boehm represented to the applicants that they would make money and would not lose money by providing funds to PFG. That is to say, by engaging in the second scheme. The relief claimed against Ms Boehm is a declaration that she and Mr Richards contravened s 12DA of the Australian Securities and Investment Commission Act 2001 (Cth) (the “ASIC Act”) and also, in the alternative to that declaration, a claim for damages pursuant to s 12GF of the ASIC Act. Section 12DA of the ASIC Act provides that a person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or likely to mislead or deceive.

9. The interlocutory application for judgment in favour of Ms Boehm is mounted on the footing that Ms Boehm’s engagement on the day and in the conversations pleaded was in the nature of a social engagement because she was attending the meeting as the partner of Mr Richards and nothing more. Ms Boehm contends that she was not engaged in trade or commerce in any material respect and thus, anything she said bears no characteristic which would engage a contravention of s 12DA of the ASIC Act. 

10. What is put against that proposition is the notion that firstly, the engagement by Ms Boehm in the events must be seen in context.  It is contended and pleaded that Mr Richards was engaged in trade or commerce in the relevant sense for the purposes of the ASIC Act and that Ms Boehm was attending the meeting on the day in question as affirmation of the proposition advanced by Mr Richards that there would be no problem for the applicants in making the second investment.  It is said that Ms Boehm is present on the footing that her presence is necessary to buttress the approach by Mr Richards because the applicants had already experienced a loss of investment in the Interbank product and Mr Richards was again in their home pressing the virtue of the second investment. 

11. Ms Boehm is said to be there on the day engaging in the pleaded conversations on the footing that the applicants had had a bad investment experience in dealing with Mr Richards previously.  It is said that it follows that Ms Boehm’s engagement, at least so far as the pleaded case is concerned, is not simply one of transient visitor on the day as part of a social engagement, but is there with Mr Richards engaging in conversations that lend integrity and veracity to the proposition that they would not lose their money again like the last time should they invest again.  At least as pleaded, it is said that Mr Richards was suggesting that they would make money from the second investment. 

12. At this point, I pause to observe that the application is supported by two affidavits.  The first is an affidavit from Ms Boehm, who gives an explanation of the events that day setting out where individuals were sitting, the communication between the applicants and the 12 year old child and other such matters.  Ms Boehm also gives evidence about her version of the conversations and what she said and did not say.  The application is also supported by an affidavit from Mr Richards who essentially supports the recollections of Ms Boehm on these matters.  I have approached the present application on the footing that all of the facts pleaded by the applicants in the statement of claim can and will be made good at the trial, for the purposes of testing the causes of action.

13. But, of course, I approach the matter on that footing, not because I accept that that is necessarily so, but for the purposes of the present application I proceed on the footing that the facts, as pleaded in the statement of claim, would be facts to which the applicants would depose on this application, but more importantly, I treat those facts as the facts for the disposition of the application.  The evidence from Ms Boehm and Mr Richards on affidavit really simply puts the facts in controversy and at a trial of the questions of fact, findings of fact would be made dispositive of that controversy.  It may be that all of the contentions advanced by Ms Boehm would be accepted, but it may be that the case as pleaded on the facts is made good which would then give rise to the questions of law. 

14. That brings me back to the second feature of the respondent’s contentions in relation to the application and that feature is that it is not necessary for the applicants to establish that Ms Boehm was engaged in conduct in trade or commerce, herself.  It is enough that Ms Boehm was present in a context which involved engaging in conduct relevantly related to the trade and commerce of Mr Richards.  I accept the submission that that is the proper way to approach the determination of the legal question and I accept that the principal authority for that proposition is Houghton v Arms [2006] 225 CLR 553. Every case turns on its own facts, of course, but this case is pleaded on the footing that Ms Boehm was engaging in the visitation on the day relevantly related to Mr Richards’s conduct in circumstances where she had a particular relationship with Mr Richards.

15. At least, as pleaded, Ms Boehm engaged in conversations which are material to Mr Richards’s conduct and ultimately, in terms of the pleaded case, her own conduct.  It follows from these observations that I am not satisfied that the framing of the causes of action and relief, as against Ms Boehm, is so untenable that the claims ought to be summarily dismissed on the footing that the Court can be satisfied that the applicants have no reasonable prospect of successfully prosecuting the proceeding against her.  I am satisfied that this bundle of factual contentions in the context of the case at large ought to go to trial and, no doubt, Ms Boehm would be cross-examined upon aspects of her affidavit and ultimately questions of credit might be alive (or not), but findings of fact would need to be made about these matters and it seems to me that the forensic examination at trial of the factual controversy ought not to be forestalled prematurely by this application. 

16. I now turn to the question of costs.  The applicant has been unsuccessful.  I propose to dismiss the interlocutory application but I propose to take this course in relation to costs.  I do not contend that Ms Boehm’s application is frivolous or not made in circumstances which would warrant consideration of such a question.  It seems to me that the question of the costs on this application ought to be determined at the end of the trial in the context of findings then made.  I propose to reserve the exercise of the discretion as to costs on this interlocutory application until the determination of the ultimate result at trial.  

17. Thus, the orders for today will be that the interlocutory application filed on 22 August 2013 is dismissed and secondly, the costs of this application will be reserved for later determination.  I will further order that the defence be filed by Friday, 20 December 2013. 

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Associate:
Dated:       3 December 2013