Australian Securities and Investments Commission v Channic Pty Ltd (No 2)
[2014] FCA 1327
•2 December 2014
FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v Channic Pty Ltd (No 2) [2014] FCA 1327
Citation: Australian Securities and Investments Commission v Channic Pty Ltd (No 2) [2014] FCA 1327 Parties: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v CHANNIC PTY LTD (ACN 141 145 753), CASH BROKERS PTY LTD (ACN 144 652 951) and COLIN WILLIAM HULBERT File number(s): QUD 536 of 2013 Judge(s): GREENWOOD J Date of judgment: 2 December 2014 Catchwords: PRACTICE AND PROCEDURE – consideration of an application brought by the respondents to amend the defence – where amendments involved withdrawal of admissions of fact – where application to amend made after commencement of trial Legislation: Federal Court of Australia Act1976 (Cth)
National Consumer Credit Protection Act 2009 (Cth)Date of hearing: 2 December 2014 Place: Cairns Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 17 Counsel for the Applicant: Mr R M Derrington QC Solicitor for the Respondents: Dr R Spence, Integrity Criminal Legal
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 536 of 2013
BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
ApplicantAND: CHANNIC PTY LTD (ACN 141 145 753)
First RespondentCASH BROKERS PTY LTD (ACN 144 652 951)
Second RespondentCOLIN WILLIAM HULBERT
Third Respondent
JUDGE:
GREENWOOD J
DATE OF ORDER:
2 DECEMBER 2014
WHERE MADE:
CAIRNS
THE COURT ORDERS THAT:
1.The respondents have leave to amend their defence dated 10 April 2014 as set out in the schedule of amendments (Exhibit 10) only in respect of the following items of that schedule:
(a)27;
(b)31;
(c)39;
(d)40;
(e)50
(f)51;
(g)56
(h)57;
(i)58;
(j)69;
(k)70;
(l)71;
(m)77
(n)78;
(o)79;
(p)93;
(q)94;
(r)102;
(s)103;
(t)112; and
(u)114.
2.The respondents’ application to amend their defence is otherwise dismissed.
3.The respondents pay the applicant’s costs of the application to amend the defence.
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 536 of 2013
BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
ApplicantAND: CHANNIC PTY LTD (ACN 141 145 753)
First RespondentCASH BROKERS PTY LTD (ACN 144 652 951)
Second RespondentCOLIN WILLIAM HULBERT
Third Respondent
JUDGE:
GREENWOOD J
DATE:
2 DECEMBER 2014
PLACE:
CAIRNS
EX TEMPORE REASONS FOR JUDGMENT
This is an application for leave to amend the defence filed on behalf of the respondents. As I have already indicated, the defence, on behalf of the respondents, was filed on 10 April 2014. On 18 November 2014, a further amended defence document was filed, but I have already ruled that that document will not be received and leave will not be granted to amend the defence of 10 April 2014 in terms of that document for the reason that as a result of exchanges at the directions hearings in November, the position which was adopted was that the respondents, through Dr Spence, would formulate amendments which they wished to make to the defence filed on 10 April 2014 and set those proposed amendments out in a schedule.
The aim of the schedule was to try and accommodate the particular circumstances which have emerged in which the respondents had not formulated the defence in a way which would show the amendments clearly, either the deletion or the addition of words. The schedule which sets out the paragraphs of the defence which are to be changed was attached, as I have already mentioned, to an email dated 23 November 2014.
The particular difficulty in the matter is that the defence filed in the proceeding does seek to plead to very many matters, not only of material facts alleged in the statement of claim, but also, separately and sequentially, to every one of the particulars pleaded in support of allegations of material fact. That has made the document difficult to comprehend. Nevertheless, the applicant seemed to be willing to proceed on the footing that the defence as framed would represent the pleading of the matters which would then be in controversy for the purposes of the proceeding at large. It may be that applications could have been made about the defence to regularise aspects of it but, nevertheless, the applicant was willing to proceed on the footing that that document reflected the matters in controversy. Perhaps more importantly, the proceeding proceeds on the footing that matters which are not in controversy are also provided for by the defence.
As I have already mentioned, a schedule has been prepared which sets out the existing paragraphs of the 10 April 2014 defence and then formulates what would be the proposed changes to the pleading.
There are probably two general observations that can be made about the proposed changes.
The first is that throughout parts of the existing pleading, the respondents take the position that they do not admit matters of fact and, for that matter, matters of law, largely on the footing that the circumstances the subject of the statement of claim pleading in the relevant paragraph are not within the knowledge of the respondents, and therefore, they can do no more than not admit the allegation.
Sometimes, the pleadings of non‑admission are contextually set against some other matters. For example, para 25.2(b), as it was pleaded, pleads that the respondents do not admit that the second respondent did not inquire as to Ms Kingsburra’s actual living expenses and say that this is a matter of fact which is not within the knowledge of the respondents, but admit that the second respondent used a standardised formula as particularised. So it can be seen that the non-admission goes to a matter outside the knowledge of the respondents and is qualified to the extent that there is an admission that a standardised formula, as particularised, has been used. That is the first general observation.
The second general observation is that throughout the schedule of amendments, there is, from time to time, a challenge or change to a paragraph where what was previously non-admitted is now denied, but the denial is then put forward on the footing of a bare denial of the matter of fact. A further aspect of the schedule is that there are matters which were previously the subject of admissions of particular paragraphs and, very often, admissions as to paragraphs comprehended by a particular paragraph. For example, para 62.1(a) was admitted in the existing pleading and 62.1(b) was denied. It can be seen that each of these sequential particularisations have been the subject of specific pleadings. What is now said is that, for example, in that case, para 62.1 will be denied, 62.2 will be denied.
My own review of the schedule against the statement of claim and the existing defence, by taking each one of the boxes in the schedule over 22 pages in length, suggested to me that there were 26 paragraphs within the defence where the respondents would now wish to convert an admission into a denial. There are other paragraphs where a non-admission is converted to a denial, but the nature of the qualifying language has changed. I do accept the submission of the applicant that these features of the changes to the pleading do suggest a reformulation, not only of former admissions, but of aspects of the case, particularly that part of the case in relation to whether or not a preliminary assessment, as required by the National Consumer Credit Protection Act 2009 (Cth), was properly undertaken.
There is another aspect to the matter which is this: Mr Marcus Jafari, on 10 November 2014, on behalf of the applicant, sent an email to Dr Spence in which he said that if the respondents intended to repeat a sequence of paragraphs in the defence, could the respondents please ensure that the allegation that Super Cheap’s overheads per vehicle sold were between $3000 and $4000 is properly particularised. I will not recite, in these brief reasons, the range of paragraphs which affect that question, but every one of those paragraphs nominated in Mr Jafari’s email concerns that question.
The position, I think, which is appropriate in the matter, at this stage of the proceeding, is largely informed by a number of factors. The two principal factors are that amendments to a pleading during the course of the trial or as formulated within a week of the trial is a very unusual thing. That is especially so where the purpose of the changes, in a large part, is to withdraw admissions which have previously been made in the pleading and upon which the controversy was framed and upon which the evidence was formulated in accordance with the directions orders and the orthodox and orderly conduct of the litigation.
The second feature of the matter is that the Commonwealth Parliament has intervened in these matters in a general policy sense by enacting legislation in which the Parliament has said, by s 37M of the Federal Court of Australia Act 1976 (Cth), that the overarching purpose of civil practice and procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. Moreover, this overarching purpose, by s 37M(2), is one in which a party’s lawyer must, in the conduct of civil proceedings before the Court on the party’s behalf, take account of this duty imposed by the legislation of an overarching purpose.
The position here is, of course, that this matter has been allocated trial dates from about June 2014, and the parties have had a long time to prepare the matters for trial and have, thus, had a very long time to reflect upon an informed gathering of the evidence, coming to grips with the issues in controversy, understanding the scope of the contest and then framing a pleading which would identify, quite precisely, that which was in issue and that which was to be admitted. It goes without saying that a schedule which consists of 22 pages of extensive changes to the pleading, delivered up on 23 November 2014 for a trial starting for two weeks on 1 December 2014, is inherently difficult to come to grips with.
Not only does the pleading change aspects of the case in a most fundamental way, as it departs from admissions already made, but the position of ASIC is that should the amendments be allowed, it would need time to come to terms with the scope of those changes properly and respond to them appropriately. Counsel for the applicant says that it may be that not too much time is lost in dealing with it, but nevertheless, an adjournment would be required in order to deal with them. I accept, really, as I must, at face value, without suggesting otherwise, of course, that the position that the applicant finds itself in on the second day of the trial – by reason of having had an opportunity to look closely at these amendments and hear the applicant on the application – is that it will need time to deal with these matters. It is simply not proper to put the trial off for two or three days or any other period on the footing that these amendments would be allowed.
I, of course, would allow the amendments to the paragraphs which are reflected in the email from Mr Marcus Jafari which formulates the basis for the contentions referred to in those paragraphs. There are three paragraphs mentioned in the schedule in which the respondents have indicated a willingness to change a denial to an admission. They seem to be unproblematic, really. As to the other matters, however, in the schedule, having regard to its length and the nature of the changes, it seems to me entirely inappropriate to give leave to amend.
Accordingly, the pleading upon which the case will proceed is the defence of 10 April 2014. Matters which are not admitted will be treated – by that pleading and by the Federal Court Rules 2011 – as denials, and those contextual facts which are said to explain the non‑admission will stand or fall for what they are. The applicant has come to Court ready to meet a case based on non‑admissions explained in the way the pleading explains them, and the applicant will have to discharge the onus in respect of those matters. Otherwise, the proposed amendments in the schedule are not to be made and will not be accepted.
The question of dealing with the amendments is a matter which has consumed quite a lot of time, not only judicial time – but that is the nature of the undertaking and I personally have been through every one of these paragraphs and cross-referenced them to the statement of claim and the defence to understand precisely the scope of the changes and the implications – but, nevertheless, so far as the inter‑parties questions are concerned, I accept that the matter commenced at 10.00am this morning and is now resolved at 12.15pm and thus a half a day of the trial has been lost. I will order the respondents to pay the costs of and incidental to the application to amend the defence. My preliminary impression would be that a half a day of costs would be appropriate as the scope of that order because the remainder of the day will be available for the conduct of the trial.
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: 2 December 2014
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