McShane v Rohan - [2009] FMCA 1131

FEDERAL MAGISTRATES COURT OF AUSTRALIA

McSHANE v ROHAN & ORS

[2009] FMCA 1131

TRADE PRACTICES – Case management of claim for relief relating to franchise agreement – application for change of venue – parties conducting businesses in different States – effect of submission to jurisdiction clause in franchise agreement – onus of persuasion for change of venue not satisfied – inadequate pleading of defence of corporate respondents – struck out for embarrassment – refusal of future representation by managing director – costs awarded for extensive interlocutory hearing – directions for future preparation of proceedings.

Fair Trading Act 1987 (NSW)
Federal Court Rules (Cth), O.11 rr.2, 3, 10, 13, 16
Federal Magistrates Act 1999 (Cth), s.52
Federal Magistrates Court Rules 2001 (Cth), rr.1.05(2), 1.05(3), 1.05(3)(b), 4.05(2)(b), 4.05(3), 8.01, 9.04
Trade Practices Act 1974 (Cth), ss.86(1A), 86AA, 87

Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724
Lolliland Pty Ltd v Dollar Sweets Company Pty Ltd [2009] FMCA 257
Sartori v BM2008 Pty Ltd (ACN 005 762 685) [2009] FCA 467

Applicant:

KENNETH EDWARD McSHANE

First Respondent:

BRIAN FRANCIS ROHAN

Second Respondent:

MR CARPORTS LICENSING PTY LTD

ACN 079 909 587

Third Respondent:

ROHAN LICENSING PTY LTD

ACN 091 303 481

Fourth Respondent:

ACTIVE ASSETS PTY LTD

ACN 091 303 525

File Number:

SYG 1875 of 2009

Judgment of:

Smith FM

Hearing date:

11 November 2009

Delivered at:

Sydney

Delivered on:

11 November 2009

REPRESENTATION

Counsel for the Applicant:

Mr D Clarke

Solicitors for the Applicant:

Clamenz Corporate Lawyers

Counsel for the First Respondent:

First Respondent in person

Representing the Second, Third and Fourth Respondents:

First Respondent appeared in his capacity as Director of the Second, Third and Fourth Respondents (with leave of the Court)

ORDERS

The first respondent has leave under r.9.04 to represent the corporate respondents today, but not in relation to any future document filed or step taken on their behalf in the proceedings.
The respondents’ application for change of venue is refused.
The pleadings filed on 7 October 2009 by the respondents are struck out under r.4.05(3), 1.05(3)(b) and Federal Court Rules O.11 r.16.
The respondents must pay one half of the applicant’s costs in relation to the two interlocutory applications listed today, as agreed or as assessed at 80% of his costs taxed in accordance with Federal Court Rules O.62. Pursuant to r.21.02(2)(c), refer those costs for taxation by a registrar under O.62. The balance of the parties’ costs are to be their costs in the cause.
The respondents must make any request for particulars of the statement of claim on or before 9 December 2009.
Any such request must be answered on or before 23 December 2009.
The respondents must file and serve their defences and any cross‑claims on or before 29 January 2010.
Any request for further particulars of a defence or cross‑claim is to be made on or before 17 February 2010.
Such request is to be responded to on or before 3 March 2010.
A defence to cross‑claim and reply is to be filed on or before 24 March 2010.
The parties have leave to request the issue of more than 5 subpoenas.
All evidence in chief in the proceeding shall be by way of affidavits.
The applicant must file and serve all affidavits relied upon on or before 24 March 2010.
The respondents must file and serve all affidavits relied upon on or before 21 April 2010.
The applicant must file and serve any affidavits in reply on or before 12 May 2010.
The matter is referred to a registrar for mediation pursuant to Part 27 of the Federal Magistrates Court Rules 2001 (Cth). Mediation must be completed before 28 May 2010.
If any party is in default in relation to the above time‑table for more than 4 working days, the other party must immediately request the Associate to appoint a directions‑hearing. Alternatively, the parties may forward to the Associate consent orders signed by all parties, which varies the timetable except in relation to listings.
Any party may request that the proceeding be listed for further directions or for the hearing of an interlocutory application on a date allowing 3 clear days’ notice to the other parties. The appointment shall be obtained from the Associate on 9377 5528.
The proceeding is listed for further directions on 4 June 2010 at 9.30 am. The parties must forward by email to the Associate on the preceding day short minutes of proposed directions, including directions preparatory for a final hearing.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1875 of 2009

KENNETH EDWARD McSHANE

Applicant

And

BRIAN FRANCIS ROHAN

First Respondent

MR CARPORTS LICENSING PTY LTD
ACN 079 909 587

Second Respondent

ROHAN LICENSING PTY LTD
ACN 091 303 481

Third Respondent

ACTIVE ASSETS PTY LTD
ACN 091 303 525

Fourth Respondent

REASONS FOR JUDGMENT

(revised from transcript)

I have today heard submissions in relation to two interlocutory applications and other issues concerning the case management of this matter. The principal application was commenced on 4 August 2009 by Mr McShane acting through solicitors. It was commenced pursuant to r.4.05(2)(b) of the Federal Magistrates Court Rules 2001 (Cth), that is, by way of application accompanied by a statement of claim.
The Federal Magistrates Court Rules allow proceedings, particularly in the commercial area, to be thus commenced, although they do not themselves prescribe any pleading rules. However, pursuant to Federal Magistrates Court Rule 1.05(2) and (3), the provisions of the Federal Court Rules (Cth) in relation to pleadings will apply. The intention that these provisions should apply in the present case was confirmed in my orders at the first court date on 4 September 2009, when I directed that the pleadings should continue “in accordance with the Federal Court Rules by way of defence and cross‑claim”.
The statement of claim seeks relief under the Trade Practices Act 1974 (Cth) in relation to Mr McShane’s obligations under a franchising agreement, in which it is alleged that the franchisor “permit[ed] franchises to sell carports and other outdoor structures using its systems, intellectual property and trademarks”. Submissions today suggest that this characterisation of the franchise may not be accurate, and the legal effects of the franchise agreement appear to require careful analysis. There are issues between the parties as to the extent to which a franchisee, such as Mr McShane, became a builder of the carports and structures whose sale was assisted by the franchisee. A substantial issue is whether the activities of the franchisee were regulated by building licensing and insurance requirements of New South Wales law in relation to building work conducted in New South Wales.
There is today in evidence only part of the written franchise agreement, which appears to identify all three corporate respondents, being the second to fourth respondents, as the franchisor, without distinguishing separate roles or functions for those companies, but it is possible that other parts of the agreement gave them separate functions.
The statement of claim was not precise in relation to these matters, nor is it precise in its particulars in relation to its allegations of misrepresentations inducing the entry of the contract, nor in relation to its allegations of subsequent misrepresentations made in trade or commerce. It also has some obscurity as to the alleged causation and nature of damages suffered by Mr McShane, and as to the extent of the liabilities under the agreement from which he seeks to be relieved under s.87 of the Trade Practices Act. In short, the pleading of the statement of claim cries out for further or better particulars.
At the first court date, the first respondent, Mr Rohan, sought leave to appear on behalf of himself and the corporate respondents, on the basis that he was a director of all three of them and apparently the person primarily responsible for their management. Clear evidence to this effect is not before the Court. He attended the first court date by telephone from Adelaide, where he is located and where his companies principally carry on business. He told me today that their business has franchises around Australia, and that he travels around Australia supervising various activities under the franchises. However, most of the respondents’ business appears to be conducted out of Mr Rohan’s Adelaide office using local solicitors where appropriate.
I gave Mr Rohan leave to represent the respondents at the first court date, and have given leave today for him to appear and represent them again. However as I shall explain, I do not propose to extend that leave which is required pursuant to r.9.04 of the Federal Magistrates Court Rules:
9.04Corporation must be represented
Except as provided by or under an Act or regulations made under an Act, or with the leave of the Court, a corporation may not start or carry on a proceeding otherwise than by a lawyer.
In the absence of any contrary submission, it appears to me that the second to fourth respondents require the further leave of the Court if Mr Rohan is to continue to carry on the proceedings on behalf of those respondents. Mr Rohan, of course, is entitled to appear and represent himself in the proceedings. He is, however, not the principal respondent in the proceedings, since the relief was principally directed at the corporate respondents, although Mr Rohan faces a possible personal liability to damages as a person involved in alleged contraventions of the Trade Practices Act.
In my orders at the first court date, I directed that a pleading by way of defence and cross‑claim should be filed on or before 2 October 2009. I made no directions for the provision of further particulars, since this was not sought. It appears today that, in fact, particulars of the statement of claim have not been sought by Mr Rohan, nor by any solicitor engaged to act on behalf of the respondents. Instead, unaided by any apparent legal assistance, Mr Rohan filed on 7 October 2009, a bundle headed “Pleadings – General Federal Law”, which I shall consider further below.
Mr McShane has brought an interlocutory application which was returnable for hearing today, seeking to strike out those ‘pleadings’ pursuant to O.11 r.16 of the Federal Court Rules in their application in this Court. This provides:
16Embarrassment etc
Where a pleading:
(a)discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;
(b)has a tendency to cause prejudice, embarrassment or delay in the proceeding; or
(c)is otherwise an abuse of the process of the Court;
the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out.
Also returnable today was an interlocutory application by Mr Rohan, on behalf of himself and the corporate respondents, seeking an order “that the case be transferred to the relevant court in South Australia”. In support of this application, Mr Rohan made reference to two clauses which were claimed to be in the franchise agreement with Mr McShane:
1.7Applicable Law and Construction
This Agreement shall be governed by and construed in accordance with the laws of the State of South Australia. The covenants, provisions and conditions of this Agreement and each and every part thereof contained in this Agreement shall be construed so as not to infringe the provisions of any Act of Parliament applicable thereto or be void or invalid according to the common law but if any such covenant, provision or condition on its true interpretation does infringe any such provision or is void or invalid according to the common law that covenant, provision or condition shall be read down to such extent as may be necessary to ensure that it does not so infringe or is not so void or invalid and as may be reasonable in all the circumstances so as to give it a valid operation of a partial character and in the event that the infringing covenant, provision or condition cannot be so read down it shall be deemed to be void and severable.
…
1.9Jurisdiction
The Licensor and the Licensee irrevocably submit to the jurisdiction of the relevant Court of the State of South Australia in respect to all disputes which may arise in respect to this Agreement.
There appears to be no issues that, in fact, there is an agreement between the parties containing those clauses.
Neither party today made submissions concerning the construction of these clauses, although they are open to some differences of interpretation. Clause 1.7 refers to the laws of the State of South Australia, however, it appears to me that the relevant law which this Court is asked to apply is the law of the Commonwealth found in the Trade Practices Act, although there is also a reference to the New South Wales Fair Trading Act. It is not apparent to me that the relevant laws of the State of South Australia applied in a court in South Australia would be any different than the laws which would be applied by the Federal Magistrates Court sitting in any state of Australia. In my opinion the effects of cl.1.7 do not raise any significant consideration pointing against the proceeding continuing in this Court’s Sydney registry.
Clause 1.9 is open to interesting questions of construction whether it carries an implied exclusivity in the parties’ submission to the jurisdiction “of the relevant Court of the State of South Australia”. I was not addressed on the construction or effect of the provision, however, clauses of the present type have a long history of judicial interpretation. It was, with respect, clearly explained and analysed recently by Brereton J in Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724. After referring to authorities which might appear to be somewhat conflicting about very similar contractual terms, his Honour concluded:
33In the light of the foregoing, the following conclusions may be expressed. First, while absence of the word “exclusive” is not determinative, the distinction between an exclusive and non‑exclusive jurisdiction clause is sufficiently well‑known, and the facility of making the clause manifestly an exclusive jurisdiction clause so straightforward, that its absence is not merely neutral but tends against the clause being an exclusive jurisdiction clause. Secondly, where the courts of the selected forum would have jurisdiction in any event, that tells in favour of a clause being an exclusive jurisdiction clause; a fortiori where they would be the “natural forum”. Thirdly, the suggested exception in respect of insurance policies is not well supported by the authorities, save that in the case of ambiguity the court will more readily incline to a construction that favours the insured. Fourthly, use of words such as “all” or “any” disputes, and mandatory words such as “shall”, tell in favour of a clause being an exclusive jurisdiction clause.
Applying the authorities cited by his Honour, and his Honour’s discussion of them, I would be inclined in the present case not to construe the present cl.1.9 as carrying an implied exclusivity as to an agreed forum for litigating all disputes arising in relation to the franchise agreement. In its terms it does not do that, but merely makes clear that neither party may dispute the jurisdiction of “the relevant Court in the State of South Australia” if they are sued in such a court. In the context of a franchising agreement, I would not be inclined to construe the language broadly in favour of the author of the agreement, which is likely to have been the South Australian franchisor. The evidence before me as to the surrounding circumstances of the making of the agreement falls far short of showing that the courts of South Australia were the obvious forum in any event, so as to imply an intention to provide for exclusivity which Brereton J, for example, found in the circumstances of Ace Insurance itself. In circumstances where performance of the agreement on Mr McShane’s part appears to have been intended to occur entirely in NSW, it does not appear necessary to give cl.1.9 any effect beyond imposing on him an obligation to submit to South Australian jurisdiction if he is sued in a court of that State. I therefore am disinclined to construe the clause as binding him to commence his own proceedings in such a court, if some other court – such as this Court in its Sydney registry – has clear jurisdiction and convenience from his perspective.
In any event, the construction of cl.1.9 does not appear to be in controversy between the parties, since Mr Rohan’s submissions accepted that this Court could be regarded as a “relevant Court of the State of South Australia”, when conducting its proceedings in its Adelaide Registry. Both parties therefore made their submissions in relation to the venue of the further proceedings by reference to s.52 of the Federal Magistrates Act 1999 (Cth), which provides:
52Venue
(1)The Federal Magistrates Court may sit at any place in Australia.
(2)The Federal Magistrates Court or a Federal Magistrate may, at any stage of a proceeding in the Federal Magistrates Court, order that:
(a) the proceeding; or
(b) a part of the proceeding;
be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Federal Magistrates Court or Federal Magistrate imposes.
The Federal Magistrates Court Rules provide:
8.01Change of venue
(1)A party who files an application or response in a proceeding may apply to have the proceeding heard in another registry of the Court.
(2)In considering an application, the Court must have regard to:
(a)the convenience of the parties; and
(b)the limiting of expense and the cost of the proceeding; and
(c)whether the matter has been listed for final hearing; and
(d)any other relevant matter.
The parties’ submissions directed my attention to both the expressed terms of considerations raised by r.8.01, and also general discretionary considerations in relation to matters of change of venue, for example, by reference to the recent discussion of McKerracher J in Sartori v BM2008 Pty Ltd (ACN 005 762 685) [2009] FCA 467 at [11], and the judgment of Barnes FM in Lolliland Pty Ltd v Dollar Sweets Company Pty Ltd [2009] FMCA 257. I do not propose to repeat their discussion, but have taken into account all the matters that they identify when considering the issue of venue. I shall return to that issue, after addressing other issues which might affect my consideration of it.
As I have indicated above, as well as the two applications in the case which were returnable for hearing today, the principal proceedings are listed today for further directions in relation to their case management. Underlying my consideration of all those issues, is the important issue whether the Court will permit Mr Rohan to continue to represent the corporate respondents on the record of the Court, in particular by taking responsibility for the documents filed on their behalf by way of pleadings and evidence, and without their engaging a solicitor on the record to take that responsibility.
For reasons which will emerge later from my discussion of the pleadings which have been filed today, and which were reinforced strongly by the nature of the submissions made to me by Mr Rohan generally, I have decided that in future I would not grant that leave. It appears to me that it is strongly in the corporate interests of those respondents, and their shareholders and creditors, that the Court should insist upon the normal requirement that corporations should act through a solicitor when involved in commercial litigation. I accept that Mr Rohan is strongly of the belief that he understands the current dispute with Mr McShane and can adequately represent the companies, and that he firmly believes that it is their interest that he should attempt to save the companies further legal expenses in relation to that dispute. However, I have concluded that he is not capable of properly understanding the requirements of the Court’s rules and of the necessary processes of litigation in disputes of the present sort, which are directed at the isolation of the relevant legal and factual issues and the efficient presentation of relevant evidence. If I allowed him to continue to represent the corporate respondents, I see a real prospect that, rather than saving legal expenses for both parties, his involvement would lead to a protracted morass of allegation and counter allegation on matters of dubious relevance and in relation to evidence of dubious admissibility. I have formed a firm view, particularly arising from the strikeout application, that the corporate respondents should in the future be represented by a legal practitioner. If their financial position is such that they are unable to afford this assistance, or need to reach business compromises in relation to the dispute, then the sooner they start assessing that situation the better.

Turning to Mr McShane’s strike‑out application, I do not consider it necessary to refer to authority as to the effect of the Federal Court pleading rules reflected in O.11 rr.2 and 3. These require that a pleading should only contain “a statement in a summary form of the material facts on which the party relies, but not the evidence by which those facts are to be proved”, and that pleadings must be “as brief as the nature of the case admits”. There is also a need for pleadings by way of a defence to be keenly alive to the implications of rr.10 and 13 in relation to the pleading of specific matters, and the joinder of issue by way of properly traversing contentions made in the statement of claim. A pervasive failure to observe these requirements in a defence will give rise to a document which is ‘embarrassing’ in a legal sense, and provide grounds for an order striking it out under r.16.
Mr Rohan’s effort to address the present statement of claim falls clearly short of these requirements. Although he has endeavoured to address the statement of claim paragraph by paragraph, and at times it is possible to distil from his responses the extent to which he denies, admits, or puts Mr McShane to proof, there are important points at which he has not appreciated the contention which it needs to be responded to (see, for example, his defence in relation to paragraph 9). Extensively throughout the pleading there is embarrassing reference to evidence, arguments and irrelevant background dealings of the parties, and at one point a ‘witness statement’ is inserted (see, for example, the response to paragraph 22). The defence in its pleading to the claims for relief contains a very embarrassing excursion into how Mr Rohan sees the underlying dispute. The ‘counter claim’ suffers from multiple concerns under r.16, and cannot be regarded as even an attempt properly to plead the material facts supporting its claims for outstanding moneys and damages for breach of contract and tort.
If I had been persuaded that the issues in the case were simple, and that the case of a corporate respondent could properly and efficiently be presented to a Court through an unqualified managing director, I might have given that person’s attempt at pleading some leeway, and might have attempted to isolate issues through some other informal means. However, I have been shown enough of the underlying dispute today, to see that it is important in the present case that it be properly pleaded. I have reached a clear conclusion that Mr Rohan is not properly equipped to do that. Rather, I consider that he will not be able to separate the wood from the forest, as is required at the start of the present case, even before the parties start isolating the evidence they will need to present to the Court.
I therefore accept that Mr Rohan’s pleading should be struck out under O.11 r.16. It is not disputed that further leave should be given to re‑plead, and it is also accepted that provision should be made in a timetable for the respondents to have an opportunity to get better particulars of the statement of claim where this is needed.
In short, I do not consider that there is any shortcut that can be provided to Mr Rohan in the case management of the proceeding if it continues to trial, which would allow him to avoid employing legal representation on the part of the corporate respondents, and – desirably – himself. I propose to frame my present and future directions for the case management of the proceeding on the expectation that this will occur. I also propose to include provision for a mediation to allow the parties to continue their discussions outside the Court on a confidential basis to explore whether a commercial compromise can be reached. As I emphasised today to Mr Rohan, those exchanges both in the past and future should be kept confidential, and not be disclosed in any fashion to the docket judge.
Returning to Mr Rohan’s application for a change of venue, my above conclusions as to representation of the corporate respondents, and the need for further pleadings for which a legal practitioner takes responsibility, are relevant to my consideration of the appropriate venue for the future case management of the case and for its trial. Undoubtedly, however efficiently the matter is pleaded, it appears to me to involve considerable complexities of legal and factual issues and possibly multiple witnesses from both sides. A trial may therefore be protracted over several days, even many days.
Neither party has suggested and, I would not on my own motion consider, transferring the proceeding to the Federal Court. On my understanding of the relief sought, it is well within the jurisdiction of the Court, which under the Trade Practices Act is $750,000 (see ss.86(1A) and 86AA), and appears very suited for this Court. It may well be that in the hands of competent lawyers on both sides the important issues can be isolated and the unimportant issues put aside.
When considering the venue for the proceedings, it should be noted that this Court operates on a docket system, in which the docket judge takes responsibility both for case management and then for the conduct of a trial in the event that a matter proceeds to trial. The benefits of this, and the general philosophy of the Court, suggests that a matter should not be transferred out of a docket without good cause, including for the hearing of a matter in another State. These are considerations that suggest that the present application in relation to change of venue was appropriately brought at an early stage, and that it will be necessary to show some new circumstance to obtain a different order or a further change of venue.
I therefore propose to take into account some of the logistic issues in relation to the conduct of a trial, upon an assumption that the trial is more likely than not to occur in the location where the proceeding is to be case managed. This is, of course, subject to the possibility that the evidence of some witnesses might not be required orally, or might be taken by telephone or video connection.
Mr Rohan’s case in relation to transferring the proceedings for case management and trial in Adelaide relied principally upon the provisions of the franchising agreement which I have referred to above, but he also emphasised the inconvenience and additional costs which would be incurred by himself and his companies in the event that the proceedings continued to be managed and tried in Sydney.
He attempted to make a provisional assessment of the possible witnesses for the respondents. I have doubts about whether some of the witnesses which he identified would be able to provide relevant and admissible evidence, but this is a matter yet to be considered. However, it is clear that he would wish to call both himself and officers of his company and possibly the company’s solicitor, all of whom are resident and work in Adelaide. He also referred generally to the inconvenience of his being involved in litigation in another State, notwithstanding his travelling around Australia on the business of the respondents.
For his part, Mr McShane pointed to similar considerations in favour of retaining the matter in Sydney. The area of operations of the franchise taken by Mr McShane was Newcastle, he appears to live there, and it was his attempts to implement the franchise in that location which will be in issue. It is also clear that some of the issues in the case concern dealings with the New South Wales Office of Fair Trading, and it is possible that documents from that agency, and even a witness, may be necessary. If so, the agency may be more inclined to cooperate if the matter remained in a court in Sydney.
It was pointed out that Mr McShane had employed Sydney solicitors and instructed them to conduct the present litigation, and that it would be highly inconvenient for him to change solicitors or to pay for them to travel to Adelaide. It was pointed out that Mr Rohan had not yet employed lawyers in the proceedings, and therefore did not face a similar difficulty. However, I am prepared to accept that he is more likely than not to wish to employ the companies’ Adelaide solicitors in the matter, if he accepts that legal representation will be necessary.
Weighting up all these consideration, it appears to me, on the very rough indications which I was given today as the logistic dimensions of a trial, that the trial will present similar inconvenience to both parties if it is not heard in the venue of their choice.
Other considerations which were referred to by McKerracher J, in terms of the considerations affecting the convenience of the Court and its docket management systems, also appear to be neutral in the present case. The matter can be as easily brought to trial if managed from either Adelaide or Sydney, in my opinion. This Court, as I understand it, is able to offer a trial in either location suitable to the present matter as soon as it is ready. Issues of delay do not, therefore, arise.
The provisions of the contract of the franchise are important considerations, however, as I have indicated above, I do not read clause 1.9 as binding Mr McShane to have commenced the proceeding in a court in Adelaide, and I do not consider that any issues of the proper law to be applied have any significance for the question of venue.
On balance, I have not found any particular preponderance of considerations in favour of a particular venue being chosen in the present case for a trial, and certainly not in relation to the case management of the proceeding. In that circumstance, I propose to deal with the present application for transfer by reference to the consideration which McKerracher J referred to in his first dot point in [11], and which Barnes FM refers to as a ‘presumption’, that is, that “there must be sound reason to direct that the proceeding be conducted or continued elsewhere”.
In effect, an applicant for a change of venue within Australia in relation to this Court’s places of sitting has an onus of persuasion which Mr Rohan has not satisfied me of at this stage in the case. I therefore propose to refuse the present application to change venue, without confining him or the future legal representatives of the respondents from repeating their request once the dimensions of the matter become clearer. It may be that the question of venue of the trial can be revisited, after pleadings are completed and evidence by way of affidavits is filed. At that point it will be possible better to assess who are the relevant witnesses in the proceedings, and the extent to which their evidence is in controversy so as to require their attendance in the witness box. Although I am not inviting future applications, nor suggesting their likely outcome, I therefore do not wish my present ruling about venue to be regarded as circumscribing my future rulings about this.
For the above reasons, I therefore propose to refuse the interlocutory application brought by Mr Rohan concerning venue, to uphold the application brought by Mr McShane for the striking out of the pleading, and to give further directions which will, hopefully, bring the matter to a stage where at the next listing a trial can be appointed, if it has not resolved.
In relation to costs of today’s proceedings, Mr McShane seeks an unconditional order for costs in relation to both interlocutory applications and the directions issues which were addressed today.
The issue of venue was a matter which was, in my opinion, reasonably arguable on both sides, and was not an easy question. As I have indicated above, this issue, and the appropriateness of directing more pleadings, were also closely related to the issue of whether the respondents should be forced to employ solicitors for the future conduct of the proceeding. In a sense, the interlocutory applications were, in my opinion, addressing matters which were appropriately examined by this Court in the course of case management. Although Mr Rohan’s efforts at pleading were manifestly defective, I am not persuaded that his failure prior to today to appreciate his inability to present his companies’ responses adequately without legal assistance was clearly unreasonable.
Many of these considerations points to a costs order which would make today’s costs the costs of each party in the cause, to await the eventual outcome of the case. However, Mr McShane has succeeded in relation to two substantial interlocutory applications, and should receive some acknowledgement that his legal expenses in doing so should be met by the losing party to those applications, even if such costs would not be recoverable until the conclusion of the case.
On balance, I think it is appropriate and just to take a global and simple approach to all the costs of today’s listing, and to award Mr McShane half his legal costs in relation to the two interlocutory applications when taxed at 80% of the Federal Court scale, and that the balance of his costs should be included in his costs in the cause generally. Mr Rohan does not appear to have incurred any taxable costs.

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate: Lilian Khaw

Date: 27 November 2009