Axis Investment Centre Pty Ltd v Mathew - [2016] FCA 1562

FEDERAL COURT OF AUSTRALIA
Axis Investment Centre Pty Ltd v Mathew [2016] FCA 1562

File number(s): QUD 522 of 2016

Judge(s): GREENWOOD J

Date of judgment: 21 December 2016

Catchwords: PRACTICE AND PROCEDURE – consideration of an application for leave to amend the Originating Application and the question of the disposition of the costs associated with that application and related matters

Legislation: Federal Court of Australia Act 1976, s 31A

Cases cited:
Spencer v Commonwealth (2010) 241 CLR 118

Pihiga Pty Ltd v Roche (2011) 1278 ALR 209

Date of hearing: 14 December 2016

Date of last submissions: 14 December 2016

Registry: Queensland

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Commercial Contracts, Banking, Finance and Insurance

Category: Catchwords

Number of paragraphs: 49

Counsel for the Applicant: Mr C Johnstone

Solicitor for the Applicant: Lander & Rogers Lawyers

Counsel for the Respondent: Mr M Stunden

Solicitor for the Respondent: Crilly Lawyers

ORDERS

QUD 522 of 2016

BETWEEN:
AXIS INVESTMENT CENTRE PTY LTD ACN 107 287 874 (and others named in the Schedule)

First Applicant

AND:
JOSEPH MATHEW (and others named in the Schedule)

First Respondent

JUDGE:

GREENWOOD J

DATE OF ORDER:

21 DECEMBER 2016

THE COURT ORDERS THAT:
1.The applicants file and serve an Amended Originating Application in terms of the proposed Amended Originating Application the subject of the interlocutory application by the applicants which was to be filed on 13 December 2016 and although not filed was nevertheless relied upon by the applicants at a case management hearing on 14 December 2016.
2.The Amended Originating Application contemplated by Order 1 be filed and served by Friday, 13 January 2017.
3.The applicants file and serve an Amended Statement of Claim in respect of the final relief claimed in the Amended Originating Application, by 4.00pm, 27 January 2017.
4.The first, second and third respondents file their Defence by 4.00pm on 10 February 2017.
5.The parties complete discovery by 4.00pm on 3 March 2017.
6.The parties have liberty to apply.
7.The parties have leave to issue, after the completion of discovery, such subpoenas as may be necessary.
8.The proceeding be listed for review at 9.30am on 10 March 2017.
9.The applicants pay the costs of the first, second and third respondents of and incidental to all claims abandoned by the applicants and, for the sake of clarity, those claims are the claims made by the applicants at paragraph 6 of the Originating Application to the extent that the claim sought a declaration, paragraphs 7, 9, 11 and 12 of the Originating Application and paragraph 13 as proposed by the solicitors for the applicants and ultimately abandoned.
10.The applicants pay the costs of the first, second and third respondents of and incidental to their application filed on 29 November 2016 by which those parties sought judgment in the proceeding in respect of paragraphs 6, 7, 9, 11 and 12 of the Originating Application and other orders.
11.The first, second and third respondents have leave to tax the costs the subject…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] FCA 1562
Decision Date: 21 December 2016

CaseChat Overview and Summary

In the Federal Court of Australia, the case of Axis Investment Centre Pty Ltd v Mathew involved an application for leave to amend an originating application and the related costs. The applicants sought to amend their claims, which had been previously dismissed, against the respondents who had fraudulently misappropriated funds from bank accounts. The applicants also sought to dismiss certain abandoned claims and to amend the costs associated with those claims. The legal issues before the court included whether the applicants were entitled to amend their originating application and, if so, whether the respondents should bear the costs of the abandoned claims and the associated application for judgment. The court also had to consider the appropriate allocation of costs between the parties.

The court held that the applicants were entitled to amend their originating application as the proposed amendments were not an abuse of process and were in the interest of justice. The court noted that the applicants had not unreasonably delayed in seeking leave to amend their claims. Regarding the costs, the court determined that the applicants should bear the costs of the abandoned claims and the associated application for judgment. The court found that the applicants had not provided sufficient justification for the costs and that the respondents were entitled to recover those costs. The court also held that the respondents were entitled to tax the costs and recover them immediately. The court's decision was based on the principle that parties should bear their own costs unless there are exceptional circumstances that justify a different outcome.

The final orders of the court included granting the applicants leave to amend their originating application and statement of claim, setting timelines for the filing of the amended documents, and requiring the applicants to pay the respondents' costs of and incidental to the abandoned claims and the associated application for judgment. The court also granted the respondents leave to tax the costs and recover them immediately. The decision highlights the importance of considering the principles of justice and fairness in determining whether to grant leave to amend pleadings and in allocating costs between parties.

Orders

Orders of the court

1. The applicants file and serve an Amended Originating Application in terms of the proposed Amended Originating Application the subject of the interlocutory application by the applicants which was to be filed on 13 December 2016 and although not filed was nevertheless relied upon by the applicants at a case management hearing on 14 December 2016.

2. The Amended Originating Application contemplated by Order 1 be filed and served by Friday, 13 January 2017.

3. The applicants file and serve an Amended Statement of Claim in respect of the final relief claimed in the Amended Originating Application, by 4.00pm, 27 January 2017.

4. The first, second and third respondents file their Defence by 4.00pm on 10 February 2017.

5. The parties complete discovery by 4.00pm on 3 March 2017.

6. The parties have liberty to apply.

7. The parties have leave to issue, after the completion of discovery, such subpoenas as may be necessary.

8. The proceeding be listed for review at 9.30am on 10 March 2017.

9. The applicants pay the costs of the first, second and third respondents of and incidental to all claims abandoned by the applicants and, for the sake of clarity, those claims are the claims made by the applicants at paragraph 6 of the Originating Application to the extent that the claim sought a declaration, paragraphs 7, 9, 11 and 12 of the Originating Application and paragraph 13 as proposed by the solicitors for the applicants and ultimately abandoned.

10. The applicants pay the costs of the first, second and third respondents of and incidental to their application filed on 29 November 2016 by which those parties sought judgment in the proceeding in respect of paragraphs 6, 7, 9, 11 and 12 of the Originating Application and other orders.

11. The first, second and third respondents have leave to tax the costs the subject of Orders 9 and 10 and recover those costs immediately.

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

Background

Background to the litigation

The applicants accept that the respondents’ costs of and incidental to the abandoned claims (that is, that part of para 6 relating to the declaration and the claims set out at paras 7, 9, 11, 12 and the putative para 13 claim) are to be paid by the applicants. The applicants also accept that because those claims are not being pressed, they are to be dismissed. The background to the principal proceeding In Proceeding 398, the Mathew parties alleged that they each “lost” money when a director of Redwood Capital Group Pty Ltd and Redwood Securities Pty Ltd, Mr Sunny Madhoji, fraudulently misappropriated funds from bank accounts to which Redwood and Mr Madhoji had been granted third party access by Dr Mathew. The Mathew parties sued the Axis parties for recovery of the loss they claimed to have suffered. They sought orders that the Axis parties pay damages or compensation at law, in equity and pursuant to ss 1041I and 1325 of the Corporations Act 2001 (Cth) (the “Act”) and s 12G(f) of the Australian Securities and Investments Commission Act 2001 (Cth) (the “ASIC Act”) based on various contended contraventions of the legislation and other breaches of duties said to be owed to the Mathew parties in all the circumstances of the case. The Mathew parties asserted a “no transaction” case in the sense that but for the relevant conduct none of those parties would have invested any monies with Redwood or Mr Madhoji at all. Various defences were asserted by the Axis parties. The hearing of those proceedings came before Dowsett J on 16, 17, 23 and 24 April, 28 and 29 May and 14 September 2015. As part of the loss said to have been suffered by the Mathew parties and made the subject of a claim for damages on the pleaded case, the Mathew parties claimed amounts on account of legal costs said to have been expended by them in attempts to recover the funds said to have been fraudulently misappropriated by Mr Madhoji. The legal costs set out in Annexure A to the amended statement of claim involved three categories of costs. The Mathew parties said that they incurred legal costs in proceedings before the Supreme Court of New South Wales in proceedings called the Macquarie Bank proceedings but conveniently referred to in these proceedings as the “Interpleader Costs”: $109,256.35. The second category of costs related to proceedings in the Queensland District Court called the Pavlou proceedings (the “Pavlou Costs”): $80,117.69. The third category involved costs associated with attempted recovery from third parties (the “Third Party Costs”): $12,508.20. On 7 November 2014, Dowsett J ordered that the parties to Proceeding 398 attend and participate in a mediation on or before 27 March 2015. Pursuant to that order, a mediation was convened by a Registrar of the Federal Court on 10 March 2015. Obviously enough, the purpose of the mediation was to enable the parties to explore options for settlement of the dispute. To the extent there may have been any doubt about the matter, the Registrar observed in a letter of 10 February 2015 convening the mediation that: “Parties attending the mediation are advised that the mediation is a confidential process. Additionally, s 53B of the Federal Court of Australia Act 1976 provides that parties may not rely on any disclosure made at the mediation in any subsequent court hearings”.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

File number(s):	QUD 522 of 2016
Judge(s):	GREENWOOD J
Date of judgment:	21 December 2016
Catchwords:	PRACTICE AND PROCEDURE – consideration of an application for leave to amend the Originating Application and the question of the disposition of the costs associated with that application and related matters
Legislation:	Federal Court of Australia Act 1976, s 31A
Cases cited:	Spencer v Commonwealth (2010) 241 CLR 118 Pihiga Pty Ltd v Roche (2011) 1278 ALR 209
Date of hearing:	14 December 2016
Date of last submissions:	14 December 2016
Registry:	Queensland
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Category:	Catchwords
Number of paragraphs:	49
Counsel for the Applicant:	Mr C Johnstone
Solicitor for the Applicant:	Lander & Rogers Lawyers
Counsel for the Respondent:	Mr M Stunden
Solicitor for the Respondent:	Crilly Lawyers

JUDGE:	GREENWOOD J
DATE OF ORDER:	21 DECEMBER 2016