Australian Competition and Consumer Commission v Jutsen (No 2)

The Australian Competition and Consumer Commission (ACCC) sought leave to amend its Further Amended Application and its Amended Statement of Claim during closing submissions on 3 September 2010, which was the fifth day of the hearing. The respondents opposed the proposed amendments. Justice Nicholas allowed the respondents until 7 September 2010 to consider their position in relation to the proposed amendments, to obtain advice if they so chose, and to give them an opportunity to prepare submissions in support of their opposition to the proposed amendments. When the hearing resumed, the respondents reiterated their opposition to the proposed amendments and made further submissions as to why they should not be allowed. The ACCC alleges that each of the respondents has participated in a pyramid selling scheme in contravention of the prohibition contained in s 65AAC of the Trade Practices Act 1974 (Cth) (the Act) as extended to natural persons by s 6. The ACCC seeks declarations, injunctions, and pecuniary penalties against each of the respondents. The proposed Further Amended Statement of Claim includes new allegations that the TVI Express System was a pyramid selling scheme and that the respondents participated in the TVI Express System.

The power to grant leave to amend a pleading is subject to Order 13, rule 2 of the Federal Court Rules, as well as s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act). In particular, O 13, r 2(2) provides that all necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings. Justice Nicholas held that the application to amend was made in good faith, and there was no risk of prejudice to the respondents if the leave sought was granted. The factual underpinnings of the new case were precisely the same as those of the existing case and the relevant facts were already pleaded in the Amended Statement of Claim. Whether the TVI Express System was a pyramid selling scheme was a “real question raised by the proceeding.” There was no need or justification for a lengthy adjournment to enable the respondents to meet the new case. There was also a public interest to be considered in this case. If the scheme was defined to encompass the TVI Express System as a whole and it was indeed a pyramid selling scheme within the meaning of the relevant statutory provisions, it would be in the public interest for the court to make a clear finding to that effect. The ACCC should be allowed to put as part of its pleaded case that the TVI Express System was a pyramid selling scheme. The ACCC should pay the respondents’ costs of and incidental to the amendment application which are to include the costs of the additional hearing time that had been taken up by the consideration of the proposed amendment.