IG Markets Ltd v Huang

[2013] VCC 1961

IN THE COUNTY COURT OF VICTORIA
AT MELBOURNE Revised
(Not) Restricted

COMMERCIAL LIST
GENERAL DIVISION

Case No. CI-13-01390

IG MARKETS LIMITED	Plaintiff
v
ROBERT HUANG	Defendant

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JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	11 November 2013
DATE OF JUDGMENT:	12 December 2013
CASE MAY BE CITED AS:	IG Markets Ltd v Huang
MEDIUM NEUTRAL CITATION:	[2013] VCC 1961

REASONS FOR JUDGMENT

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Catchwords:              Practice and procedure – Application to set aside default judgment – Derivatives trading account – Defendant unable to sell contracts on plaintiff’s trading platform quickly enough to avoid extensive losses – Failure by the defendant to articulate legal basis of his defence and any counterclaim .    

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms M Wilkening-Le Brun	Peter G Richards
For the Defendant	Mr R Huang in person

HIS HONOUR:

1        Robert Huang works as a mortgage broker. On 28 October 2011, he commenced trading in derivatives, or Contracts for Differences (“CFD”), through the defendant, IG Markets Pty Ltd  (“IG Markets”). IG Markets’ parent company is listed on the London Stock Exchange and has worldwide operations, including in Australia.

2        In the period between 28 October and 1 December 2011, Mr Huang traded from his home computer, placing requests to buy and sell, depending on which way he assessed the Australian Dollar would move against its American counterpart. He financed the trade with a mortgage advance on his home of $217,000. During the period Mr Huang traded, he executed about 2,200 separate trades (88 each day on average). He achieved profits of $1,974,499.48 and losses of $2,498,125.87. Prior to the evening of 30 November 2011, Mr Huang said he had a credit of “approximately $550,519” in his trading account. That evening, Mr Huang lost the sum of $857,978.

3        On 30 November 2011, Mr Huang held “short AUD/USD positions of 3,900 mini contracts” with an “exposure” of $39 million. The market was “extremely volatile” that evening as the Australian Dollar rose 3% against the United States Dollar, resulting in significant losses to Mr Huang. Mr Huang said that within hours the “fund in my trading account was fully gone and [IG Markets’] platform generated a further paper loss of $300,000 for me”.

4        IG Markets, by writ dated 25 March 2013, sought to recover the sum of $298,620.72 from Mr Huang. On 21 May 2013, it recovered judgment in default of appearance for $338,566.35 (including interest). Mr Huang, by summons dated 26 July 2013, sought to set aside the judgment.

5        Immediately following the events which resulted in his losses, Mr Huang blamed IG Markets, alleging that its trading platform had not responded as he tried to sell his contracts. Mr Huang said that on that evening, IG Markets did not provide a “reliable and fast” trading platform which it had promised on its website and which was fundamental for him to be able to trade in derivatives.

6        Mr Huang said that, “before I completed an application [to commence trading] on the IG Market internet site, I read what was on the IG Markets’ website. IG Markets’ internet site said that IG Markets was a “market leader” and specifically referred to “a fast and reliable trading platform”. Mr Huang appears to be relying upon the statement on IG Markets’ website that it offered “a fast and reliable trading platform” as a representation that constituted misleading and deceptive conduct or an implied term of the customer agreement.

7        IG Markets denied any responsibility. It said it responded very quickly to Mr Huang’s requests to sell. At times, the market was moving so fast that Mr Huang’s selling instructions could not be executed. IG Markets also relied upon the terms of the “Margin Trading Customer Agreement” which it submitted excluded any liability in the circumstances complained of.

8        Mr Huang lives in Sydney. He was served with a writ on 15 April 2013. He consulted a solicitor, Mr George Loupus, in Sydney on about 10 May 2013. Mr Loupus spoke to a barrister in Sydney and lawyers in Melbourne, but eventually told Mr Huang that he could not help. Mr Huang did nothing further until after a bankruptcy notice was served upon him on 5 July 2013.

9        To have the judgment set aside, Mr Huang must provide an explanation as to why he allowed judgment to be entered by default and he must also show that he has a defence on the merits.

The application to set aside judgment

10      Mr Huang wrote letters of complaint to IG Markets on 2 and 5 December 2011. IG Markets replied with a detailed letter in response on 9 January 2012. It made an offer to resolve the matter by allowing the sum of $100,000 and suggested to Mr Huang that he refer his complaint to the Financial Ombudsman Service. Mr Huang filed the summons on 26 July 2013 to set aside judgment, which was supported with an affidavit he swore that day. Mr Huang also sought an order that the case be transferred to Sydney for hearing. Mr Huang engaged solicitors on or prior to 14 August 2013. The solicitors remained on the record until they obtained leave on 29 October 2013 to file a notice of ceasing to act.

11      At hearings of the summons on 5 September 2013 and 14 October 2013, Mr Huang was represented by counsel. On each occasion, the matter was adjourned at the request of the defendant and orders for costs were made in favour of the plaintiff. Mr Huang has sworn four affidavits, on 26 July, 17 September, 28 October and 4 November 2013. Answering affidavits have been sworn by Mr Tamas Szabo on 1 August and 4 October 2013. On 14 October 2013, the Court ordered Mr Huang to file and serve “a draft defence and set off and/or counterclaim”, to require him to articulate his defences coherently. However, Mr Huang’s solicitors sought leave to cease to act and Mr Huang simply filed a further affidavit on 28 October 2013. He appeared for himself upon the hearing of his application on 11 November 2013.

Mr Huang’s failure to file an appearance

12      Although Mr Huang engaged a solicitor in Sydney, he did not file an appearance. After judgment was entered, a bankruptcy notice was served on 5 July 2013 and the present application was made on 26 July 2013. I consider, however, that this issue should not be determinative of the application for the following reasons:

a.        immediately after the trading on 30 November/1 December 2011, Mr Huang complained to IG Markets of what he perceived to be the faulty operation of the trading platform which had caused him to suffer extensive losses;

b.        although the response by IG Markets was to deny any liability, they did offer a financial discount, which may have been perceived by Mr Huang as a concession or admission that the company was at fault;

c.        when Mr Huang was served, he consulted lawyers and apparently believed that the matter was being handled on his behalf. There was even some communication between his Sydney solicitor and the plaintiff’s solicitor;

d.        the proceeding was not issued until May 2013 and it was the service of the bankruptcy notice and the threat of being made bankrupt which caused Mr Huang to make the present application. There was no substantial delay.

Mr Huang’s letters of complaint in December 2011

13      In his first letter to IG Markets on 2 December 2011, Mr Huang raised the following matters:

a.        at about midnight on 30 November/1 December 2011, Mr Huang tried “to sell all my contracts as the Australian Dollar rose in value. However, my computer was frozen [and] the platform just did not respond to me”. At this time, Mr Huang “watched the price jumping up from about 1.0050 to 1.0080 in seconds”;

b.        later, the platform did respond and Mr Huang tried to sell his contracts at 1.0153. However, the “selling order was rejected” and “an error message displayed on my screen later”;

c.        the “market moved up quickly, I was fully taken out of the control again when the platform did not respond to me again”;

d.        IG Markets later “closed out” Mr Huang’s sell contracts, leaving him “with a net balance of about $284,000 shown on [his] account”.

e.        Mr Huang referred to the following conversations with representatives of IG Markets:

(i)      after the debt balance of $284,000 was shown on his account, Mr Huang spoke to an “English speaking female staff” member of IG Markets. She advised “that the accounts were not closed early enough to prevent the debt balance due to the huge amount of the order tickets coming in at that time (due to the unexpected big movement in the market)”;

ii.      on the afternoon of 1 December 2011, Mr Huang spoke to Mr Leo Hung and Ms Teresa Pang. They said that as a result of the movement in the currencies “in such a short time that the dealers would need time to process the huge amount of the order tickets coming in at that time”;

iii.      Mr Huang confirmed “that my selling instruction at 1.0153 did go through to your platform but the market had moved up to 1.0156 after the dealer had looked at the market debt, balanced up and then processed the order as usual. This is why my selling instruction was then declined with an error message”;

iv.     IG Markets’ staff also advised “that my Sell Contracts accounts could not be closed soon enough to prevent the further loss [with the debt balance] as all the dealers were all too busy (to look after my account) at that time due to the unexpected big volume of the orders [that] came in”.

14      In his letter to Mr Hung at IG Markets dated 5 December 2011, Mr Huang set out what he said was the substance of discussions with Mr Hung on 2 December, primarily in relation to two issues:

a.       Mr Huang’s attempts to sell contracts and his inability to do so because of the unresponsiveness of his computer;

b.       soon after, when Mr Huang was “eventually allowed to operate in your trading platform again”, the attempt to close “400 mini contracts of sell contract at 1.01530” was rejected.

15      It is appropriate to set out in detail what Mr Huang said happened during these periods and the response made by IG Markets in its letter dated 9 January 2012 and in the affidavit material filed in the application.

Mr Huang’s attempts to sell contracts and the unresponsiveness of his computer

16      Mr Huang has made the following statements about this period:

a.       at about midnight he “was desperately trying to sell all my contracts when I watched the price jumping from about 1.0050 to 1.0080 in seconds. But my computer was frozen…I clicked my mouse and hit my keyboard very hard, but the platform just did not respond to me” (letter 2 December 2011);

b.       Mr Huang later tried to recreate what would have been shown on his computer screen (Exhibit 8A to his affidavit sworn 17 September 2013). “At the time my account showed 10 lines of open contract positions, nine of which identified 400 sold contract positions and one which identified 300 sold contract positions” (paragraph 40, affidavit sworn 17 September 2013);

c.       Mr Huang said that if he clicked on a line, a “CFD ticket” immediately opened on the screen (an example is given as Exhibit 8B to the 17 September 2013 affidavit). “To close a position was…simple and immediate. All that was required was to click the box ‘close position’” (paragraph 41);

d.       Mr Huang said that “it was always my practice to have a ticket open on my screen. This enabled me to close the position very quickly and save me a short period of time, perhaps a half second being the time taken to click on a line and time it took for the ticket to open. So in summary when I looked at my IG Markets’ account page late on 30 November and early on 1 December 2011, I was able to see the live buy and sell market for the Australia/US Dollar, I could see the market price change. I had one CFD ticket open and if I wanted to trade by closing the contracts the subject of the open ticket all I had to do was click on the close position icon. If I wanted to close additional contract positions or to close existing open contract positions it was a simple process. All I had to do was click on the line and then click the close position icon for each ticket that then opened”;

e.       Mr Huang said that “during the five weeks or so I traded forex…I had never had an occasion where my trades were not able to be executed because of the volume of contracts I wanted to buy or sell when IG Markets’ platform was functioning properly” (para 47);

f.        Mr Huang said he watched “the buy price increase from 1.005 to 1.008. At that moment I decided to close all my open positions as soon as possible so as to limit my losses…and remove the risk of keeping the positions open in what at the time was a rising market” (para 49);

g.       what happened next is not clear. Mr Huang, using the mouse, clicked “to close the first CFD ticket already open on the screen, then each of the remaining nine lines on my screen very quickly. I closed immediately whatever CFD tickets I could get from my screen. The trading platform did not respond” (para 50);

h.       it appears what Mr Huang was saying was that no CFD tickets closed. Ordinarily after clicking close position on the first CFD ticket, the last line (of the 10 lines of open contract positions) should have disappeared, “but it remained there on my screen”. Mr Huang said he “frantically kept clicking on the lines”. The first CFD ticket may have closed, as Mr Huang said that “no more CFD tickets appeared on my screen and the responding lines did not disappear after clicking. This meant I could not close the contracts identified by each line” (para 50);

i.        “on every previous occasion I had traded, a CFD ticket had appeared on my screen almost immediately after I clicked on the line in question and the responding lines would disappear after clicking” [‘close position’ on the CFD ticket] (para 50);

j.        Mr Huang believed that how IG Markets trading platform operated was by him clicking on the icon “close position” on the “CFD ticket” to either buy or sell the parcel of contracts highlighted on the main screen of his computer. He considered that the trading platform would ensure my trades were executed almost instantaneously;

k.       Mr Huang had this belief because:

i.       IG Markets was part of a worldwide organisation that “operated by providing a live market via its trading platform in about 28 different countries” (para 46);

ii.      in the five weeks Mr Huang traded, there “had always been a liquid market. By that I mean that to my knowledge there had always been sufficient traders on either the buy or sell side to ensure my trades were executed almost instantaneously” (para 47);

iii.     on no previous occasion had Mr Huang not been able to execute his trades “because of the volume of contracts I wanted to buy or sell”. (para 47).

IG Markets’ 9 January 2012 response to Mr Huang’s complaints

17      IG Markets, in its letter to Mr Huang dated 9 January 2012, made a comprehensive response to the complaints made by Mr Huang in his letters dated 2 and 5 December 2011 and his earlier telephone communications. The matters raised by IG Markets were as follows:

a.       after Mr Huang’s complaint had been “fully investigated”, it was concluded that IG Markets had “acted in a fair and reasonable manner” in processing Mr Huang’s trades;

b.       IG Markets had “no record of any technical issues occurring with our platform at that time which would have affected your ability to execute trades online”;

c.       IG Markets had “not received any other reports from other clients detailing the same issue” that Mr Huang claimed to have experienced, although IG Markets had “received many other trades from clients during this time”;

d.       accordingly, it was concluded that the “technical issues” that Mr Huang experienced at this time “were not due to a technical problem with the platform at IG’s end”;

e.       the first trade received by IG Markets from Mr Huang was to “close (by) 400 mini contracts of AUD/US at a level of 1.00153 at 00:00:54”. The trade was rejected because in the three seconds before it was received by IG Markets the price had moved by “more than two points (for or against the trader)”;

f.        IG Markets relied upon clause 4(3) of the Margin Trading Customer Agreement which provided that, “A transaction will be initiated by you offering to open or close a transaction in respect of a specified instrument at the level quoted by us. We may, acting reasonably, accept or reject your offer at any time until the transaction has been executed or we have acknowledged that your offer has been withdrawn. A transaction will be opened or as the case may be closed only when your offer has been received and accepted by us. Our acceptance of an offer to open or close a transaction, and thus the execution of the transaction, will be evidenced by our confirmation of its terms to you” (emphasis added);

g.       reliance was also placed upon clause 4(4) which provides that, “If we become aware that any of the factors set out in term 4(5) are not satisfied at the time you offer to open or close a transaction, we reserve the right to reject your offer at the level quoted.” Clause 4(5)(d) provides that, “If you obtain the quote electronically…your offer to open or close a transaction, and our acceptance of your offer, must be given while the quote is still valid”;

h.        IG Markets claimed that their records showed that, “The longest period of time between the time you clicked on a price to deal, and the time that we received that instruction and sent a message back to you (accepting or rejecting the trade) was three seconds, the standard processing time”;

i.         Mr Huang’s claim, “that it took 13 seconds between the time that [he] placed the trade to close 400 contracts at a level of 1.0153, and the time that [he was] able to trade again”, was rejected. It was suggested that “the 13 seconds” represented “the length of time it took for your system to update and present this information, not the time it took for IG to process your instruction and send it back”;

j.         it was suggested that Mr Huang’s “system was not…able to process the increase in the number of updates on your side in a timely manner, and in circumstances where there is an increase in the number of updates, despite the fact that we send out all of the updates as normal, there is more of a stretch on your system at your end, hence the 13 second delay”;

k.        IG Markets suggested that because Mr Huang held 3,900 contracts (“an extremely large position”) it was “entirely unrealistic” for Mr Huang “to expect to be able to close a position of that size in the market conditions at that time”;

l.         Mr Huang “would simply not have been able to trade 10 times 400 mini lots every two seconds, and have all those trade accepted”;

m.       the basis for that statement was that, “Firstly, the market was trading too quickly, and secondly the size would not have been available to accommodate those trades – one after one – every two seconds”;

n.        IG Markets “did however accept a trade in 800 mini lots…within the space of 30 seconds”;

o.        it was suggested that, “over such a severe market move, to accept two out of the five trades in the sizes you were trading is a good ratio, considering the speed of the move and size of your position”;

p.        In response to Mr Huang’s complaint that his position should have been closed out prior to the account falling into negative equity, IG Markets said in the letter that, “We do not guarantee to close positions prior to an account falling into negative equity, nor do we guarantee that you cannot lose more than you deposit in your account”;

q.        further, IG Markets relied upon the following contract documents:

i.        “section 4 of the product disclosure statement clearly outlines the risks of trading CFDs, and this is one of the most significant risks”;

ii.       the product disclosure statement also says that, “Under certain trading conditions, it may be difficult to liquidate a position and that due to the leverage involved in trading CFDs you can lose more than your initial deposit”;

iii.       under the customer agreement, “failure to pay any margin required in relation to your transactions” is “an event of default” by clause 16(2). If “an event of default occurs…we may, at our absolute discretion, at any time and without prior notice…close or part close all or any of your transactions at a closing level based on the then prevailing quotations or prices in the relevant markets”.

Further responses by IG Markets in its affidavit material

18      Mr Tamas Szabo, who swore the plaintiff’s affidavit in opposition to the application, was, “deputy head of global dealing for the IG group worldwide for two years and…was in charge of the global book of IG group in Australian hours for approximately three years”. He said that he was, “thus very familiar with the matters the subject of the defendant’s affidavit insofar as they relate to trading, hedging, dealing and the plaintiff’s operations”.

19      Notwithstanding this expertise, Mr Szabo’s affidavit primarily referred to the provisions of the Margin Trading Customer Agreement and the product disclosure statement rather than providing clarity as to how the trading was expected to occur. Mr Szabo referred to “hedging in the underlying market” as “basic and fundamental to the operation of IGM”. He also referred to the fact that “on the evening of 30 November the market was extremely volatile”. Mr Szabo, however, does not address the issue raised by Mr Huang of his attempts to trade before the market reached the level of 1.0153 at 54 seconds past midnight.

20      Mr Szabo repeated the earlier statement that, “The overall attempts by the defendant was to close out 10 times 400 mini lots every two seconds, which especially with the market so volatile, was wholly unreasonable”. That statement is based, in part on the plaintiff’s records of the trade after the request to sell at 1.0153. The affidavit does not disclose the time period involved in the movement of the currency difference from 1.0050 to 1.0080 and then to 1.0153. It may be that it is unreasonable to expect some clarity in relation to that issue. However, as this is the basic complaint made by Mr Huang, without it being directly addressed by IG Markets, it is difficult to assess whether there is any real substance in the complaint he makes.

21      Although Mr Huang has been assisted in preparing affidavit material in support of his application, there has not been a draft defence and counterclaim filed which would put these factual matters in a legal context. Mr Huang was himself unable to offer any assistance to the Court on the hearing of the application by setting out the legal bases of his claim or how he might meet the reliance by the plaintiff on the terms of the product disclosure statement as to the risks involved in trading and the many terms of the Margin Trading Customer Agreement which limit the liability of the plaintiff.

22      Mr Szabo’s affidavit refers to the following further terms of the customer agreement:

a.       clause 8(2), which provides in part as follows, “We are under no obligation to accept or to execute or cancel, all or any part of a transaction that you seek to execute or cancel through an electronic trading service. Without limitation of the foregoing, we have no responsibility for transmissions that are inaccurate or not received by us, and we may execute any transaction on the terms actually received by us”;

b.       clause 19(3), which provides in part as follows, “In the absence of fraud, wilful default or negligence, we give no warranty regarding the performance of our websites, our electronic trading services or other software or their suitability for any equipment used by you for any particular purpose”;

c.       clause 18(3) provides that, “Without prejudice to any other terms of this agreement, we will have no liability to you in relation to any loss that you suffer as a result of any delay or defect in or failure of the whole or any part of our electronic trading services, software or any systems or network links or any other means of communication”;

d.       clause 18(4) provides that, “Unless we are prohibited from excluding such liability by law…we will not be liable for any direct or indirect, special, incidental, punitive or consequential damages (including, without limitation loss of business, loss of profits, failure to avoid a loss, loss of data, loss or corruption of data, loss of goodwill or reputation) caused by any act or omission of ours under this agreement”;

e.       clause 18(5) provides that, “If and to the extent that we are found liable for our losses or damages in relation to a transaction then, unless we are prohibited from limited such liability by law, the maximum amount of our liability will be limited to four times the amount of commission or spread paid or payable by you in respect of transaction”.

Possibility that Mr Huang’s computer was not operating correctly

23      Mr Huang was confident that his computer was operating correctly. He said that:

a.       he had purchased a new computer when he commenced trading at the end of October 2011;

b.       the antivirus software on his computer would have made a “request for a scan if any virus [was] coming into the computer or the trading platform”;

c.       there had been no interruption in the internet connection during the period of five weeks that he had traded.

24      Mr Huang’s conclusion was to point to “a most possible situation that the trading platform was overloaded during this extremely unexpected peak time”. The heavy trading appears to be confirmed by what Mr Huang was told by Mr Hung and Ms Pang from IG Markets on 1 December 2011 that “the dealers would need time to process the huge amount of the order tickets coming in at that time”. This conversation was not denied by IG Markets in the letter dated 5 December 2011.

25      Mr Huang said that in a telephone discussion with Mr Hung on 2 December 2011 that Mr Huang’s “order to close the 400 mini contracts of sell contract at 1.01530 did reach your UK server three seconds after I was eventually allowed to operate in your trading platform again”. This statement has not been denied by the plaintiff. Mr Huang’s report of the conversation suggests that:

a.       three seconds was an acceptable time for a response to be made to a request to sell;

b.       the IG Markets trading platform operated through its “UK server”;

c.       IG Markets considered that the order to close at 1.01530 was the first request made by Mr Huang to sell the contracts. This is unlikely because the request was made at 1.01530, whereas Mr Huang has stated that his computer froze as he saw the price jump from 1.0050 to 1.0080.

26      I questioned plaintiff’s counsel as to whether the plaintiff was able to indicate the time at which the market moved from 1.0050 to 1.0080. Plaintiff’s counsel, after taking instructions, said that the plaintiff was unable to provide this information. That seems surprising as it was likely the IG Markets trading platform was constantly executing buy and sell contracts during this period,

Conclusion – unresponsiveness of Mr Huang’s computer

27      It was represented to Mr Huang in IG Markets marketing literature that the IG Markets’ trading platform would be “fast and reliable”. This meant, to Mr Huang, that the “buy” and “sell” prices on the CFD ticket, representing current positions of other traders in the market, would be available if Mr Huang clicked the icon “close position”. On the night of 30 November/1 December 2011, there was a period of time shortly after midnight during which the trading platform did not respond.

28      IG Markets raised three matters in response:

a.       Mr Huang had not excluded the possibility that at the relevant time the hardware or software on his computer or his internet provider’s service malfunctioned;

b.       in the circumstances of the trading on the evening in question, Mr Huang’s expectations as to how the trading platform would operate were unrealistic. In fact, the trades were timely and reasonable;

c.       the terms of the Margin Trading Customer Agreement excluded liability;

d.       IG Markets was not a “market maker” that would “balance up all the buy and sell orders they have received” but was a “counterparty” which “hedges its exposure to the client, by taking equal and complimentary positions as the client (or in fact the totality of all clients’ net positions) in the underlying market…Implicit in this business model is the basic precept that IGM does not profit from client losses. Client losses are not IGM’s gain, because IGM’s counterparty position is fully hedged”.

29      Although there is certain information Mr Huang says that he obtained from “an industry expert in Sydney” (not named) and from Mr Tang, an accounts manager for Axi Trader (a foreign exchange trader in Sydney), most of the factual matters upon which he relies are from his personal knowledge. Further, many matters Mr Huang has raised in his letters and affidavits have not been contested by IG Markets. However, at present, it is unclear what questions of fact, expert opinion or law would require determination if the matter were tried.

Conclusion – Mr Huang’s lack of experience

30      Mr Huang entered into the Margin Trading Customer Agreement online. He ticked boxes indicating he had read and understood the product disclosure statement (40 pages), which included the Margin Trading Customer Agreement (19 pages). Mr Huang apparently disclosed his “experience” as “sometimes” trading in “shares or bonds” and “rarely” trading in “OTC or exchange traded derivatives (eg CFDs, FX, warrants, futures or options”. Mr Huang said that, in fact, his experience of derivatives involved limited trading in options. In response to, “How have you mostly traded these?”, Mr Huang answered “execution advisory”.

31      Mr Huang initially transferred $10,000 into his trading account. He borrowed a further $217,000 on the security of a home loan in November 2011. He was permitted to trade on a “non-professional individual forex trading account with 200 times margin”. Mr Huang said that during the five weeks he operated the trading account with IG Markets, the commissions earned by the plaintiff would have totalled about $750,000. Mr Huang said that this trading continued “without any support, even a phone call”.

32      Mr Huang has stated his understanding of how the trading platform would operate, based on his own trading experience over five weeks and the, generally unsourced, information he has been given by others.

33      There were no submissions made that IG Markets had breached its obligations under the Australian Financial Services Licence, or the terms of the Margin Trading Customer Agreement.

34      At present, it is not possible to say whether the complaints made by Mr Huang as to the level of support and assistance offered to him by IG Markets, or the fact that he was permitted to trade at all, raise any possible defences. In fact, Mr Huang had no complaint about his trading with IG Markets prior to 30 November and, even in his letter of 2 December 2011, after stating his demands, said that, “I deserve a much better service including a much quicker or direct market access in the future”.

Conclusion – circumstances in which Mr Huang’s open contracts were closed

35      At 51 seconds past midnight, the first dealing by Mr Huang on the IG Markets trading platform is recorded. Mr Huang sought to sell 400 contracts. However, at the time the trade was attempted, the currency had moved to 1.0156.9 and the trade was rejected. Two further trades at 1 minute 17 seconds and at 1 minute 26 seconds past midnight were also rejected for similar reasons. However, all the 3,900 contracts were successfully traded in 10 lots, the first at 1 minute 45 seconds past midnight at 1.0188.2 and the last at 9 minutes 47 seconds past midnight at 1.0236.9.

36      In its letter dated 9 January 2012, IG Markets stated that, “We do not guarantee to close positions prior to an account falling into negative equity, nor do we guarantee that you cannot lose more than you deposit in your account”.

37      Mr Huang had earlier, in discussion with the IG Markets staff member in London in the early morning on 1 December, “questioned her why their platform failed to close my open contracts when my total equity in the trading account was run down to 40% of the margin or less”.

Determination

38      It is clear that Mr Huang has little understanding of the legal processes and has proved quite unable to adequately represent himself. Although he was ordered to file a draft defence and counterclaim, the document he filed was simply an affidavit which repeated matters previously raised. The affidavit, presumably drafted by his solicitors, which he swore on 17 September 2013, provides a clear statement of the factual matters relied upon by Mr Huang. However, without a draft pleading and proper legal submissions, Mr Huang has been unable to articulate how his claim will be pleaded and how he might meet the matters raised by the plaintiff in answer to his complaints.

39      In the circumstances, Mr Huang’s application cannot succeed. If the judgment were set aside without a properly drawn pleading, or at least a clear statement of the basis for the defence and therefore the issues to be determined in the proceeding, it is difficult to see how the “dispute” could be litigated.

40      It is unnecessary to decide the question of the appropriate forum at this stage as the judgment stands. Mr Huang lives in Sydney, but he does not advance anything further as to why, if the judgment were set aside, the dispute should be heard in Sydney.

Proposed Orders

41      The defendant’s summons filed 26 July 2013 will be dismissed. No further application by the defendant to set aside the judgment entered in default of appearance on 21 May 2013 may be filed, unless the defendant first files and serves a proposed defence and counterclaim and the leave of the Commercial List Duty Judge is obtained to issue the application.

42      I will hear submissions from the parties as to the proposed orders and on the question of costs.

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Certificate

I certify that these 18 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 12 December 2013.

Dated:       12 December 2013

Philippa Gilkes    

Associate to His Honour Judge Anderson