Swevenings Pty Ltd v Ferguson Consolidated Holdings Pty Ltd & Anor
[2008] FMCA 1319
•18 September 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SWEVENINGS PTY LTD v FERGUSON CONSOLIDATED HOLDINGS PTY LTD & ANOR | [2008] FMCA 1319 |
| PRACTICE AND PROCEDURE – Discovery order – non-compliance with discovery order – withdrawal of solicitors – medical condition of second respondent – whether further time for compliance. TRADE PRACTICES – Misleading and deceptive conduct. |
| Federal Magistrates Act 1999 (Cth), s.45(1) Federal Magistrates Court Rules 2001(Cth), r.9.02 |
| Abrahams v Qantas Airways Pty Ltd (2007) 210 FLR 314; [2007] FMCA 639 Verge & Anor v Devere Holdings Pty Ltd & Ors (No 3) [2008] FMCA 1220 |
| Applicant: | SWEVENINGS PTY LTD |
| First Respondent: | FERGUSON CONSOLIDATED HOLDINGS PTY LTD |
| Second Respondent: | ERIC JOHN FERGUSON |
| File Number: | PEG 45 of 2008 |
| Judgment of: | Lucev FM |
| Hearing date: | 18 September 2008 |
| Date of Last Submission: | 18 September 2008 |
| Delivered at: | Perth |
| Delivered on: | 18 September 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr W.C Chesnutt |
| Solicitors for the Applicant: | Mackinlays Solicitors |
| First and Second Respondent: | No appearance |
| Friend of the Court: | Ms S Lowery |
ORDERS
The Respondents comply with Orders 2 and 3 of the Orders of 8 September 2008 by 4:00pm on 25 September 2008.
The Applicant’s Application in a Case filed 16 September 2008 be adjourned to 9:30am on 26 September 2008.
Any other order made by the Court on 8 September 2008 be stayed pending the adjourned hearing.
Leave be granted for Mr D.F Beere of Beere & Meyer to withdraw as solicitor on record for the Respondents.
Copies of these orders be served on the First and Second Respondents and it be sufficient service for copies to be served personally on Mark Ferguson at 4 Morfontaine Pde Port Kennedy by 4:00pm on
20 September 2008 and to be posted by registered post to the last addresses of the First and Second Respondents known by the Applicant’s solicitor by 4:00pm on 20 September 2008.
The Applicant file an affidavit of service by 4:00pm on 24 September 2008.
The Respondent pay the Applicant’s costs of today fixed in the sum of $1455 by 4:00pm 17 October 2008.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 45 of 2008
| SWEVENINGS PTY LTD |
Applicant
And
| FERGUSON CONSOLIDATED HOLDINGS PTY LTD |
First Respondent
| ERIC JOHN FERGUSON |
Second Respondent
REASONS FOR JUDGMENT
(Ex tempore - edited and revised from the transcript)
Background
This matter relates to a further Application in a Case filed by the applicant on 16 September 2008, in which an order was sought that the respondents comply with order 3 of the Orders of 8 September 2008 by 4:00pm on 18 September 2008 and unless they do so the respondents’ cross-claim be dismissed and judgment be entered for the applicant.
The Application in a Case is made against a background of Orders made by the Court on 8 September 2008. Those Orders include Orders made in respect of the previous Application in a Case filed by the applicant on 1 September 2008:
a)dismissing an application to vacate the trial date by the applicant;
b)ordering that the respondents make further and better discovery on affidavit, of a number of classes of documents, which are set out in the Order; and
c)providing that further and better discovery be provided on affidavit by 4:00pm on 15 September 2008 and inspection by 4:00pm on 19 September 2008.
Background to the Litigation
The litigation commenced by Application and Statement of Claim filed in the Federal Court on 3 August 2006. The matter proceeded in the Federal Court and on 18 October 2006 the Federal Court ordered that all parties provide discovery within 21 days thereafter. The parties failed to comply with that Order, but lists of documents were filed, firstly by the applicant on 11 December 2006 and secondly by the respondents on 24 January 2007.
There were various exchanges in writing, in relation to the failure of the parties, or the alleged failure of the parties to provide proper discovery. As a result, on 11 December 2007, the Federal Court ordered that the respondents provide further and better discovery by 30 January 2008. So far as this Court can ascertain, that Order was not complied with.
The matter was then transferred to this Court by consent, by an Order of the Federal Court on 10 March 2008.
Various orders made by this Court have not been complied with by the parties. The Court’s view about that and the general state of the proceedings was made apparent to the parties at the hearing on 8 September 2008 and is recorded in the transcript.
On 27 August 2008 the applicant filed extensive further discovery and, in compliance with the Orders of this Court on 8 September 2008, filed a further list of documents for the supplementary discovery on affidavit on 15 September 2008.
This Court made Orders on 8 September 2008, particularly Order 2(b) with respect to discovery, because the Court was satisfied that in a trade practices case of this nature, it was necessary for the applicant to have access to those documents, which the respondents were ordered to discover and that it was in the interests of the administration of justice that they be discovered.[1]
[1] Federal Magistrates Court Act 1999 (Cth), s.45(1).
It is appropriate to note, in the context of a Court which does not necessarily usually order discovery, that the discovery then ordered, was in the interests of the administration of justice, the documents being relevant, not voluminous and likely to narrow or at least clarify the issues and in their overall context that they would be of benefit to the litigation. The Court, in making those Orders on 8 September 2008, had regard to earlier judgements by it in Abrahams v Qantas Airways Pty Ltd,[2] and to comments that it made in Verge & Anor v Devere Holdings Pty Ltd & Ors (No 3).[3]
[2] (2007) 210 FLR 314 at 321 per Lucev FM; [2007] FMCA 639 at para 25 per Lucev FM.
[3] [2008] FMCA 1220 at paras 4-10 per Lucev FM.
The current Application in the Case
The current Application in the Case is supported by an affidavit sworn by Mr Julian Ostern Hosgood on 17 September 2008, he being a solicitor employed by the solicitors for the applicant. Mr Hosgood’s affidavit indicates that the respondents’ discovery, pursuant to Order 3 of the Orders of 8 September 2008 had not been received at the time the affidavit was sworn.
The affidavit states that by facsimile dated 11 September 2008,
Mr Hosgood had put the solicitor on the record for the respondents, Mr Beere, of Beere & Meyer, on notice that if Order 3 of the Orders of 8 September 2008 was breached, an application would be made pursuant to Order 13 of the Orders of 8 September 2008. Order 13 provided for urgent application to be made to the Court by way of telephone application to the Associate, and by way of written application within four hours of the telephone application, the written application to be filed and served by facsimile. Mr Beere apparently responded to Mr Hosgood’s email by advising that he no longer acted for the respondents.
At that stage, Mr Hosgood checked the Court record and found that Mr Beere was still on the record, not having given notice of withdrawal. Mr Beere emailed Mr Hosgood on 15 September 2008 and indicated that he had given a notice of withdrawal. The Court notes that a notice of withdrawal, apparently signed by Mr Beere, was tendered this morning by Ms Lowery, who (having previously appeared as agents for the solicitors on the record for the respondents) was granted leave to appear as a friend of the Court today. That notice of withdrawal was tendered this morning, signed and dated 15 September 2008. The Court would have, but for that notice of withdrawal, been prepared to make a declaration this morning that Mr Beere was still the solicitor on the record for the respondents, there having been no compliance with the relevant rules of the Court.
Mr Hosgood’s affidavit goes on to say that he then made contact with the second respondent personally. The second respondent is a director of the first respondent. Mr Hosgood made that contact on
12 September 2008. The second respondent apparently indicated to Mr Hosgood that he was aware that Mr Beere was no longer acting, because he, that is, the second respondent, presumably also on behalf of the first respondent, had decided to terminate Mr Beere’s retainer. Mr Hosgood told the second respondent that unless discovery was provided by 15 September 2008 in compliance with the Orders of 8 September 2008, he was instructed to make an application for default judgment on 16 September 2008, thereby repeating what he had earlier told Mr Beere.
The second respondent apparently said to Mr Hosgood that he would seek an extension because he was:
a)not able to engage new solicitors until October 2008; and
b)due to have what is described in Mr Hosgood’s affidavit as an “operation”.
The applicant’s solicitors from there on in copied to the second respondent, by facsimile, all of the subsequent correspondence.
In relation to the question of discovery, proper discovery by both parties has been in issue and on foot since the Federal Court made orders on 18 October 2006. The respondents were subsequently ordered to provide further and better discovery by the Federal Court by 30 January 2008, and this Court made further orders for discovery by the respondents on 8 September 2008. In those circumstances, it can hardly be said that the respondents have not had time to comply with those Orders or to provide proper discovery to the applicant.
Notwithstanding what has been said about the health status of the second respondent, there was, and remains, no evidence on the record before the Court as to why other employees or officers or agents of the first respondent cannot attend to compliance with the Court’s Orders with respect to further discovery.
Mr Hosgood’s affidavit then goes on to say that he was contacted by a Mr Lovitt of the firm of Hewett & Lovitt on 12 September 2008. It was indicated that Hewitt & Lovitt had been approached by the second respondent to act for him in the matter, and although the affidavit says for him, it would seem, in the circumstances, that it is probably for both the first and second respondents.
Mr Hosgood repeated to Mr Lovitt that his instructions were to apply for default judgment if there was no compliance with Order 3 of the Orders made on 8 September 2008 by 15 September 2008, and he later on left a message to that effect, or a further message to that effect, with Mr Lovitt’s office. On 15 September 2008 Mr Hosgood received a fax from Mr Lovitt in which it was indicated that the second respondent was required to undergo a coronary angiography on 23 September 2008.
On 16 September 2008 Mr Hosgood was advised that certain documents were available for inspection at the offices of Hewett & Lovitt. He attended at that office to inspect those documents.
Mr Hosgood’s affidavit then continues as follows at paragraphs 14 to 17:
14. That morning I attended the office of Hewett & Lovitt to inspect the documents that were in their possession. I noticed that only additional documents provided that fell within the document categories of the Orders of 8 September 2008 were:
a. bank statements from July 2004 to January 2005;
b. a tax return for the First Respondent for 2004/05; and
c. a document titled “Summary of day sheets (not to be discovered)”; and
d. an untitled document that set out as follows:
No MYOB as our office girl at that time was computer illiterate.
The figures for disclosure are from July 04 to January 05 as this was the period of sale and profit that was provided for the sale of the business. If required it will take me about a week to provide as I will have to do the calculations manually and collect the necessary records out of storeage [sic].
I believe I have provided everything they require.
15. I requested copies of the above documents by facsimile dated 16 September 2008 to Mr Beere and copied to his Perth agent Mossensons, Hewett & Lovitt and Mr Ferguson (“JOH-16”). In this facsimile I also notified Mr Beere that of the following document categories of the Orders of 8 September 2008, the following documents appear to be missing:
a. First Respondent’s accounting records for the 2004/05 financial year (documents of prime entry or summary financial statements);
b. First Respondent’s bank statements for February 2005 to 30 June 2005.
c. First Respondent’s BAS statements for the 2004/05 financial year; and
d. Any documents indicating the manner in which the “Midland Figures” were prepared.
16. In a telephone conversation on 16 September 2008, Mr Lovitt of Hewett & Lovitt advised me that Hewett & Lovitt were not going to go on the record on this matter but as the Respondents’ documents were on their premises, he would provide copies of the Respondents’ documents upon request.
17. In telephone conversation on 17 September 2008, Mr Lovitt of Hewett & Lovitt requested that his firm not be served with a copy of this affidavit as they did not intend to act for the Respondents.”
(transcribed from the original without amendment).
The Court notes the following:
a)the further discovery adverted to in paragraphs 14 and 15 does not comply with the Orders of 8 September 2008, and specifically Order 2(b) with respect to specific discovery;
b)amongst the documents inspected by Mr Hosgood there was a document entitled “Summary of Day Sheets (not to be discovered)”. It might be inferred from that document that the respondents had, at some point in time at least, been attempting to thwart or impede discovery by the applicant of relevant documents;
c)it is now said that there are no MYOB records in, or in connection with, the business. As the Court previously understood, there were MYOB records, but they were general records relating to the business of the corporation and not the specific business which is the subject of this litigation;
d)the untitled document referred to at paragraph 14(d) notes that it would take about a week to find the relevant source documents, in relation to the relevant business records. That untitled document, inspected by Mr Hosgood on 16 September 2008, must have been prepared on or before 16 September 2008.
Mr Hosgood’s affidavit lists the following documents in which Mr Hosgood has requested that the respondents provide copies of documents referred to in the respondents’ affidavit of discovery sworn on 9 January 2007, and says that the documents requested have not been provided:
a. Facsimile to Mr Beere, the solicitor for the Respondents, dated 2 September 2008 (“JOH-01);
b. Facsimile to Mr Beere, dated 11 September 2008 and copied to his Perth agent Mossensons (“JOH-02”);
c. Facsimile to Mr Beere dated 12 September 2008 and copied to his Perth agent Mossensons (“JOH-03”);
d. Facsimile to Mr Beere dated 16 September 2008 and copied to his Perth Agent Mossensons (“JOH-10”).
From the failure to provide copies of those documents it might again be inferred that there was an intention to thwart or impede the applicant’s inspection of the documents, or at least the applicant’s preparation for trial.
At paragraph 19 Mr Hosgood refers to the fact that he had been informed on 17 September 2008 by Mossensons, who have acted as agents on at least two occasions for the respondents’ solicitors on the record, that they were no longer instructed to act as the agents for the solicitors on the record. The Court notes Ms Lowery’s appearance today as a friend of the Court, and with respect to her, she has acted properly and responsibly, and the Court records its appreciation of what she has done in that regard.
Summary of the evidence pre-hearing
That was the state of the evidence as it stood at 9.30am when this morning this matter came on for hearing. At that point in time the Court would have been entitled to conclude without anything further, that the respondents have not complied with Orders 2 and 3 of the Orders of the Court of 8 September 2008. Further, against the background of the failure to discover or provide inspection, and also the general history of the matter and the earlier orders made by this Court and the Federal Court in the proceedings, that there was evidence from which it might be inferred that the respondents had endeavoured to impede or thwart the discovery and inspection process.
Further developments at hearing
Withdrawal of respondents’ solicitors on record
At the outset of the hearing this morning, Ms Lowery handed to the Court a notice of withdrawal by the respondents’ solicitors then on the record, and notwithstanding the non-compliance with rule 9.02 of the Federal Magistrates Court Rules 2001(Cth)[4], but given the fact that it would appear from the evidence provided by Mr Hosgood, that the retainer of the solicitors on the record had been terminated by the respondents, the Court is prepared to grant leave to those solicitors to withdraw, notwithstanding the terms of rule 9.02 of the FMC Rules.
[4] “FMC Rules”.
The second respondent’s medical condition
Ms Lowery then indicated that she had spoken to the second respondent and that he had been admitted overnight to the emergency department at Rockingham Hospital, seemingly with a heart related complaint.
Ms Lowery also provided the Court with a copy of a letter seemingly from the second respondent’s treating medical practitioner at the Cape Naturaliste Medical Centre in Dunsborough, Dr Buckridge, attached to which were a number of documents. These documents appear to have been faxed from the Cape Naturaliste Medical Centre on 16 September 2008 at 1.46 pm and then faxed from Hewitt & Lovitt, the solicitors who assisted the respondents for some short period of time in the last few days, but they were faxed from the offices of Hewitt & Lovitt at 9.27 am on 17 September 2008.
The documents attached to Dr Buckridge’s covering letter appear to indicate that the second respondent has had a history of heart problems for something in the order of two decades. They indicate that he was seen by Dr Hendricks, who appears to be a consultant cardiologist at the Murdoch Medical Clinic, in March of this year, and at that point in time there were no adjustments to his treatment and he was to be seen again in six months. Dr Hendricks has provided a dictated but not signed letter, which is the final document in the bundle, dated 12 September 2008, indicating that he had reviewed the second respondent in Dunsborough on that date and that the second respondent was having major ongoing cardiac issues, compounded by major external stressors, that he should avoid unnecessary stress and that Dr Hendricks will be happy to provide further information if required. The letter also indicates that the second respondent was having semi-urgent cardiac investigation with coronary angiography, which had been previously booked at St John of God Hospital, Murdoch, on 23 September 2008 and that he may require further cardiac intervention following that angiogram.
The date and timing of those documents is important, given the supplementary affidavit of Mr Hosgood. That affidavit is presently unsworn, but Counsel has indicated that it will be sworn and filed in due course and the Court accepts that. That affidavit indicates that notwithstanding the date of the various medical documents to which reference has been made and the fact that they were faxed to someone by Hewitt & Lovitt yesterday morning, that during the course of yesterday, and as late as 4.50pm yesterday, the second respondent was indicating to Mr Hosgood that he intended to attend the hearing today before this Court.
Counsel for the applicant made some submissions in relation to the course of these events. The timing of the sending of these various documents does raise concerns about the conduct of the second respondent, when viewed against the background overall of the conduct of the litigation previously and the failure of the respondents to comply with orders of the Court.
The Court specifically notes that there is no apparent reason why officers of the first respondent or employees or contractors or agents of the first respondent, are not able or have not been able to ensure compliance with the Court Orders for discovery and inspection. For some reason, which is not apparent to the Court, the task seems to fall to the second respondent. If there are to be any further applications by the respondents in relation to these proceedings it would need to be made apparent to the Court why it is that others – that is other than the second respondent – cannot assist the Court in relation to compliance with the various orders that have been made.
In the circumstances, however, the Court, as indicated in the course of an exchange with Counsel for the applicant, is prepared to grant a short period of further time to comply with Orders 2 and 3 of the Orders of
8 September 2008. In the circumstances of the matters raised by Ms Lowery and against the background set out above, the Court is prepared to allow a further seven days for there to be compliance with Orders 2 and 3 of the Court made on 8 September 2008. The proceedings will be adjourned to 26 September 2008, for further hearing, and directions if necessary.
If the respondents have any application to make there will be certain things that the Court will need to be satisfied about, but that application, if any, should be made in the normal manner and properly supported by appropriate affidavit evidence.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Lucev FM
Deputy Associate: Michele Lord
Date: 25 September 2008
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