Medtel Pty Ltd v Courtney - [2003] FCAFC 51

FEDERAL COURT OF AUSTRALIA
Goodwill Group Pty Ltd v Pongrass Associates Pty Ltd [2003] FCAFC 51
PRACTICE AND PROCEDURE – appeal from primary Judge’s order dismissing application against fifth respondent – primary Judge found no cause of action against fifth respondent in proposed amendment to Statement of Claim – considerations taken into account by primary Judge – failure to consider merits of new claims against fifth respondent –whether arguable case against fifth respondent – whether primary Judge erred in dismissing application against fifth respondent
Federal Court of Australia Act 1976 (Cth) s 23
Queensland v J L Holdings Pty Limited (1997) 189 CLR 146 discussed
THE GOODWILL GROUP PTY LTD v PONGRASS ASSOCIATES PTY LIMITED,
PONGRASS INVESTMENTS GROUP PTY LIMITED, MOUNTAIN SUNSET PTY LTD, ACME AVALANCHE PTY LTD, STEVEN PONGRASS, STEPHEN CHARLES BERRY AND PETER GEORGE KENSEY
N 661 OF 1999
MOORE, TAMBERLIN AND HELY JJ
SYDNEY
25 MARCH 2003

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 661 OF 1999

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

THE GOODWILL GROUP PTY LTD
ACN 056 258 201
APPLICANT

AND:

PONGRASS ASSOCIATES PTY LIMITED
ACN 070 660 954
FIRST RESPONDENT

PONGRASS INVESTMENTS GROUP PTY LIMITED
ACN 000 704 932
SECOND RESPONDENT

MOUNTAIN SUNSET PTY LTD
ACN 053 954 582
THIRD RESPONDENT

ACME AVALANCHE PTY LTD
ACN 058 604 907
FOURTH RESPONDENT

STEVEN PONGRASS
FIFTH RESPONDENT

STEPHEN CHARLES BERRY
SIXTH RESPONDENT

PETER GEORGE KENSEY
SEVENTH RESPONDENT

JUDGES:

MOORE, TAMBERLIN AND HELY JJ

DATE OF ORDER:

25 MARCH 2003

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1. Leave to appeal is granted.
2. The appeal is allowed.
3.The order made by the primary Judge dismissing the application against the fifth respondent is set aside.
4.The applicant is granted leave to amend its Amended Statement of Claim as against the fifth respondent.
5.The costs of the appeal are the applicant’s costs in the cause.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 661 OF 1999

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

THE GOODWILL GROUP PTY LTD
ACN 056 258 201
APPLICANT

AND:

PONGRASS ASSOCIATES PTY LIMITED
ACN 070 660 954
FIRST RESPONDENT

PONGRASS INVESTMENTS GROUP PTY LIMITED
ACN 000 704 932
SECOND RESPONDENT

MOUNTAIN SUNSET PTY LTD
ACN 053 954 582
THIRD RESPONDENT

ACME AVALANCHE PTY LTD
ACN 058 604 907
FOURTH RESPONDENT

STEVEN PONGRASS
FIFTH RESPONDENT

STEPHEN CHARLES BERRY
SIXTH RESPONDENT

PETER GEORGE KENSEY
SEVENTH RESPONDENT

JUDGES:

MOORE, TAMBERLIN AND HELY JJ

DATE:

25 MARCH 2003

PLACE:

SYDNEY

REASONS FOR JUDGMENT
THE COURT:

This is an application for leave to appeal from a judgment of a Judge of the Court given on 26 September 2002 in which his Honour refused an application by The Goodwill Group Pty Limited (a company controlled by Bradley Cooper (“Cooper”)) to further amend the Amended Statement of Claim as against…

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: [2003] FCAFC 51
Decision Date: 25 MARCH 2003

CaseChat Overview and Summary

Medtel Pty Ltd v Courtney is an appeal against a judgment given by a Judge of the Federal Court of Australia on 26 September 2002. The judgment concerned an application by The Goodwill Group Pty Limited, a company controlled by Bradley Cooper, to further amend the Amended Statement of Claim against the fifth respondent, Pongrass, and dismissed the proceeding as against Pongrass. This appeal concerns only Pongrass. The proceeding involved claims of misleading and deceptive conduct by the respondents, including Pongrass, in relation to a management buyout of businesses. The primary Judge dismissed the proceeding against Pongrass, finding that the applicant's claims were not fairly arguable based on the pleadings and evidence filed.

The key legal issues before the court were whether the applicant's application to further amend its Amended Statement of Claim should be allowed and whether the proceeding should be summarily dismissed as against Pongrass under O 20 r 2 of the Federal Court Rules. The primary Judge concluded that the proceeding should be dismissed as against Pongrass because there was no case fairly arguable made out against him. The court considered the high threshold for summary dismissal and the need to ensure proceedings are not an abuse of the court's process.

The court granted leave to appeal and allowed the appeal. The order dismissing the application against Pongrass was set aside, and the applicant was granted leave to amend its Amended Statement of Claim as against Pongrass. The costs of the appeal were ordered to be the applicant's costs in the cause.

Orders

Orders of the court

1. Leave to appeal is granted.

2. The appeal is allowed.

3. The order made by the primary Judge dismissing the application against the fifth respondent is set aside.

4. The applicant is granted leave to amend its Amended Statement of Claim as against the fifth respondent.

5. The costs of the appeal are the applicant’s costs in the cause.

Background

Background to the litigation

This is an application for leave to appeal from a judgment of a Judge of the Court given on 26 September 2002 in which his Honour refused an application by The Goodwill Group Pty Limited (a company controlled by Bradley Cooper (“Cooper”)) to further amend the Amended Statement of Claim as against the fifth respondent (“Pongrass”) and dismissed the proceeding as against Pongrass. There were seven respondents in all to the proceeding. This appeal concerns only Pongrass. Prior to coming before the primary Judge, the proceeding had been case managed by and was part-heard before Katz J. Before Katz J could make a determination his Honour resigned from the Court for health reasons. By consent, the applications were consequently determined by the primary Judge on the papers, his Honour having no previous acquaintance with the matter. BACKGROUND On 24 April 2001 the respondents, with the exception of the seventh respondent (“Kensey”), filed a Notice of Motion seeking orders that the proceeding be summarily dismissed. Having regard to the earlier non-appearance and the highly unsatisfactory conduct of the proceeding on the part of the applicant, Katz J, on 1 May 2001, made a self-executing order against the applicant in the following terms:“The applicant’s evidence (for the purpose of the hearing of the application) be put on by 25 May 2001 in default of which the application will stand dismissed with costs.” Affidavits in support of the motion for dismissal of the proceeding were filed on behalf of the respondents on 1 and 2 May 2001. A large number of affidavits were then filed on behalf of the applicant between 16 and 24 May 2001. They were sworn by Rodney Adler (“Adler”), Darryl Swindells, Cooper, Emma Hodgman, Brian Ferguson, and David Gale. Subpoenas were issued by the applicant on 28 May 2001. The subject matter of the proceeding related to claims of misleading and deceptive conduct in the form of misrepresentations on the part of the respondents, which allegedly induced financial support for a management buyout by the sixth and seventh respondents of businesses operated by various companies of which Pongrass was a director. Financial support by the Cooper and Adler interests was provided by two nominee companies, one of which was the present applicant, The Goodwill Group Pty Limited which is controlled by Cooper. The principals behind the two investing companies in the relevant finance transactions were Adler and Cooper. In November 1999, the Adler company (Two Gables Pty Limited), decided not to continue with the proceedings. On 20 June 2001, more than three weeks after the cut-off date specified in the order made by Katz J, the applicant filed a motion for leave to further amend its Amended Statement of Claim and an affidavit in support of that motion was sworn by Ms Hodgman of the applicant’s solicitors on 19 June. On 12 July 2001, the motion for dismissal first came on for hearing before Katz J but an Amended Notice of Motion was filed seeking orders that the proceedings be dismissed as to the whole of the relief sought by the applicant and that they be dismissed as disclosing no reasonable cause of action against all respondents, except the third respondent, and, in the alternative, an order that they be dismissed as disclosing no reasonable cause of action against Pongrasss. The matter was adjourned on 12 July 2001. The applications were heard before Katz J on 26 July and on 10 October 2001. Judgment was reserved.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

MOORE, TAMBERLIN AND HELY JJ (dissent)

The factual background is fully summarised in detail in his Honour’s judgment and for the purposes of this appeal it is not necessary to repeat that summary.THE JUDGMENT BELOW It is common ground that the conduct of the proceedings by the applicant up to the making of the self-executing order was characterised by continuous and repeated defaults over a substantial period of time and that the proceeding was not commenced until shortly before the expiration of the limitation period. The questions as presented to the primary Judge were of considerable complexity and included applications for dismissal, leave to amend and security for costs. In all his Honour made eleven orders in respect of the applications. The primary Judge did not have the benefit of hearing the argument before Katz J and question counsel, although he did have a transcript record of the proceedings. In his judgment his Honour referred to the numerous detailed affidavits which had been filed on the applications and outlined their contents. In relation to the application for dismissal with respect to Pongrass, after setting out the evidence, his Honour first considered whether the application had been automatically dismissed for want of compliance with the self-executing order. His Honour concluded that the applicant’s efforts had been sufficient, in filing evidence setting out its case, to satisfy the terms of the order, although the primary Judge did not consider that the evidence as filed, when read in the light of the pleadings as they stood then, disclosed any arguable cause of action against Pongrass. It is common ground on the hearing before this Court that on the basis of the allegations made in the Amended Statement of Claim as they stood then, the claims made were doomed to failure as against Pongrass. His Honour then directed his attention to whether the applicant’s claim should be summarily dismissed as against Pongrass under O 20 r 2 of the Federal Court Rules (“FCR”). That rule provides:“Frivolity2 (1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding:(a) no reasonable cause of action is disclosed;(b) the proceeding is frivolous or vexatious; or(c) the proceeding is an abuse of the process of the Court,the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding.(2) The Court may receive evidence on the hearing of an application for an order under subrule (1).” His Honour first considered whether, on the pleadings as they then stood without the proposed amendments, and in the light of all the evidence filed up to the date of the hearing, the proceedings should be dismissed as against all respondents. His Honour referred to the high threshold for summary dismissal prescribed by the authorities but nevertheless found that having regard to all the evidence filed by the applicant pursuant to the order made by Katz J on 1 May 2001, there was no case fairly arguable made out against Pongrass consistent with the pleadings as they then stood.

Ratio Decidendi

Legal Principle Established

Established by:

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 661 OF 1999

BETWEEN:	THE GOODWILL GROUP PTY LTD ACN 056 258 201 APPLICANT
AND:	PONGRASS ASSOCIATES PTY LIMITED ACN 070 660 954 FIRST RESPONDENT PONGRASS INVESTMENTS GROUP PTY LIMITED ACN 000 704 932 SECOND RESPONDENT MOUNTAIN SUNSET PTY LTD ACN 053 954 582 THIRD RESPONDENT ACME AVALANCHE PTY LTD ACN 058 604 907 FOURTH RESPONDENT STEVEN PONGRASS FIFTH RESPONDENT STEPHEN CHARLES BERRY SIXTH RESPONDENT PETER GEORGE KENSEY SEVENTH RESPONDENT
JUDGES:	MOORE, TAMBERLIN AND HELY JJ
DATE OF ORDER:	25 MARCH 2003
WHERE MADE:	SYDNEY

JUDGES:	MOORE, TAMBERLIN AND HELY JJ
DATE:	25 MARCH 2003
PLACE:	SYDNEY