CNIP Pty Ltd v Chan and Naylor Pty Ltd (No 1)
[2011] FCA 377
•7 April 2011
FEDERAL COURT OF AUSTRALIA
CNIP Pty Ltd v Chan & Naylor Pty Ltd (No 1) [2011] FCA 377
Citation: CNIP Pty Ltd v Chan & Naylor Pty Ltd (No 1) [2011] FCA 377 Parties: CNIP PTY LTD ACN 122 763 240 and CHAN & NAYLOR PTY LTD v CHAN & NAYLOR NORWEST PTY LTD ACN 126 573 475 and SALVATORE ARCURI File number: NSD 1766 of 2010 Judge: PERRAM J Date of judgment: 7 April 2011 Catchwords: PRACTICE AND PROCEDURE – Pleadings – application to strike-out defence – principles relevant to strike-out application
PRACTICE AND PROCEDURE – Costs – indemnity costs order
Legislation: Federal Court Rules O 11 r 1B Cases cited: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 25 cited Date of hearing: 7 April 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 9 Counsel for the Applicants: Mr F Lever SC Solicitor for the Applicants: Swaab Attorneys Solicitor for Respondents: Ms A Finnerty of Sydney Legal Support as a Friend of the Court
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1766 of 2010
BETWEEN: CNIP PTY LTD ACN 122 763 240
First ApplicantCHAN & NAYLOR PTY LTD
Second ApplicantAND: CHAN & NAYLOR NORWEST PTY LTD ACN 126 573 475
First RespondentSALVATORE ARCURI
Second Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
7 APRIL 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The defence filed on 1 March 2011 be struck out.
2.Respondents be granted leave to file an Amended Defence within 14 days.
3.Respondents to pay the Applicants’ costs of today on an indemnity basis.
THE COURT DIRECTS THAT:
4.Respondents to file and serve their defence by 20 April 2011.
5.Applicants to file and serve any reply by 27 April 2011.
6.Respondents to serve verified list of documents for discovery by 10 May 2011.
7.Parties to inspect discovered documents by 21 May 2011.
8.Applicants to serve affidavits upon which they intend to rely by 3 June 2011.
9.Respondents to serve any affidavits on which they intend to rely by 1 July 2011.
10.Applicants to serve any affidavits in reply by 15 July 2011.
11.The directions hearing listed for 7 June 2011 be vacated.
12.The matter be listed for further directions at 9.30am on 22 July 2011.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1766 of 2010
BETWEEN: CNIP PTY LTD ACN 122 763 240
First ApplicantCHAN & NAYLOR PTY LTD
Second ApplicantAND: CHAN & NAYLOR NORWEST PTY LTD ACN 126 573 475
First RespondentSALVATORE ARCURI
Second Respondent
JUDGE:
PERRAM J
DATE:
7 APRIL 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 8 February 2011, I made directions in this matter with a view to getting the case along its way for trial. One of those directions was that the respondent file and serve a defence by 22 February 2011. On 28 February 2011, that is, six days after the expiry of the time under that direction, Mr Arcuri, who is both the second respondent and, as I understand it, the directing mind of the first respondent, sent an email to Mr Snow who is the solicitor for the applicants. That email enclosed, in draft, a document entitled “Defence and Cross-Claim”. As a matter of substance, the document was, in fact, not a cross-claim, but merely a defence. Mr Arcuri indicated in his email that he proposed to file the defence with the Court and that lawyers would shortly be retained.
The document is signed by Mr Arcuri and I draw the inference in those circumstances that it was prepared by him. Paragraph 15 of the proposed draft defence contains two particulars as follows:
(c)… The second respondent states that he has never sighted the documents the applicants purport to have been discussed at the alleged meetings with Reiss as the meeting did not take place. The Respondents allege that these documents have been falsely composed and manufactured only to mislead and deceive the Court.
Particular (d) provided:
The second Respondent alleges that the unsigned Deed of Understanding referred to by the applicants is not the original document produced at the meeting with Messrs Melville and Wilkes. The Respondents allege that these documents have been falsely composed and manufactured only to mislead and to deceive the Court.
I take those particulars to contain allegations that the parties referred to have uttered false documents which, as I understand it, is an indictable offence, properly characterisable as an allegation of serious misconduct. Paragraph 20 of the proposed draft document contained, by way of particular (ii):
The second Respondent does also recall a practice management system and terminology devised by Hubbard and the Church of Scientology which was implemented in the Chan & Naylor head office at Pymble. Initially, the system was implemented to better manage a dysfunctional Pymble office comprising of some 30 employees and accounting fees in excess of $2M. All JVPs, regardless of individual size and fee quantum, were also made to adhere to same model and management practice. The Respondents admit to its intended altruistic goal, but deny that any improved management was ever attained by the practice or any of the JVPs that The Respondents have communicated. Indeed, the model only caused added costs to the practice and confusion within the group. [sic]
Shortly after the draft document was provided to Mr Snow, Mr Kekatos of Proctor & Associates came into the matter and on 1 March 2011, in apparent compliance with the Court’s direction of 8 February 2011 Mr Kekatos caused to be filed with the registry of this Court a document entitled “Defence of the First and Second Respondents”. That document is engrossed in the name of Proctor & Associates. It is apparent, having considered that document, that it is the same document which Mr Arcuri had prepared in draft and forwarded to Mr Snow. At the time that the document was filed with the Court, it did not, contrary to O 11, r 1B of the Federal Court Rules, have attached to it a Certificate of Lawyer, but it appears nevertheless to have been accepted by the registry for filing.
On 4 March 2011, Mr Kekatos caused to be sent to the registry of the Court, via post, a Certificate of Lawyer dated 4 March 2011 in accordance with Form 15B, being the document contemplated by O 11, r 1B, and that document was attached to the pleading which had been filed. It follows that the pleading must necessarily have been filed in contravention of O 11, r 1B. I must say, I have some misgivings about the process by which a lawyer might issue a certificate in respect of a pleading to which it is not attached. This is even more the case where the pleading is identical to the document which had been drafted by the client. It suggests that the professional duties of the solicitor have not been brought to bear and that the solicitor has proffered himself as a mere amanuensis for the client. There are, unsurprisingly in that light, further irregularities. I will not set them all out. It suffices to observe that the pleading as filed, and as originally proposed by Mr Arcuri, does not distinguish in any meaningful way between allegations of material fact and particulars.
On many occasions, the pleader has set out allegations of material fact in the particulars in contravention of well-known, established and orthodox pleading rules. In my opinion, this pleading should not be on the court record and I will strike it out. Mr Lever SC, who appeared for the applicants, did not oppose the granting of leave to the respondents for the purposes of putting on a further defence. What I propose to do is to order that the defence be struck out, but that the respondents be granted leave to file a further defence within 14 days.
Mr Lever SC also sought that the costs of today should be on an indemnity basis, and that they should be taxed forthwith. It is apparent from what I have said that the steps and procedures which have brought the defence onto the Court file, and which have brought the parties before the Court this morning, are ones which properly deserve the disapprobation of the Court: cf Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225. The conduct which occurred was improper and it is appropriate to mark the disapproval of the Court by making an indemnity costs order. I will not make an order that the costs be taxed forthwith, as there is no suggestion that the applicants are being hindered in their ability to conduct the litigation by its continuation.
That leaves then the question of what directions are to be made in the future. I will direct:
1.The respondent to file and serve their defences by 20 April;
2.the applicants to file and serve any reply by 27 April;
3.the respondents to serve their verified list of documents for discovery by 10 May;
4.the parties to inspect discovered documents by 21 May 2011;
5.the applicant to serve affidavits upon which they intend to rely by 3 June 2011;
6.the respondents to serve any affidavits on which they intend to rely by 1 July 2011,
7.the applicants to serve any affidavits in reply by 15 July 2011,
8.The matter be listed for further directions at 9.30 on 22 July 2011.
The matter being so listed, on 22 July 2011, all other things being equal, I will fix it for hearing.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 13 April 2011
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