FEDERAL COURT OF AUSTRALIA Australian Competition & Consumer Commission v Oceana Commercial Pty Ltd [2002] FCA 1307 AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v OCEANA COMMERCIAL PTY LTD, MARKFAIR PTY LTD, ADVANCED COMMERCIAL DEVELOPMENTS PTY LTD, COMMONWEALTH BANK OF AUSTRALIA, CHRISTOPHER RUSSELL BILBOROUGH, DUDLEY JAMES QUINLIVAN, SHANE ANDREWS, MICHAEL BYROM, PETER EGGENHUIZEN, GREGORY POINTON, DEAN CORNISH, JOHN GROUNDS, RODNEY JOHANSON and SHORT PUNCH & GREATORIX Q232 of 2002 KIEFEL J BRISBANE 25 OCTOBER 2002 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q232 OF 2002 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: OCEANA COMMERCIAL PTY LTD (ACN 070 287 991) FIRST RESPONDENT MARKFAIR PTY LTD (ACN 065 542 671) SECOND RESPONDENT ADVANCED COMMERCIAL DEVELOPMENTS PTY LTD (ACN 076 810 672) THIRD RESPONDENT COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) FOURTH RESPONDENT CHRISTOPHER RUSSELL BILBOROUGH FIFTH RESPONDENT DUDLEY JAMES QUINLIVAN SIXTH RESPONDENT SHANE ANDREWS SEVENTH RESPONDENT MICHAEL BYROM EIGHTH RESPONDENT PETER EGGENHUIZEN NINTH RESPONDENT GREGORY POINTON TENTH RESPONDENT DEAN CORNISH ELEVENTH RESPONDENT JOHN GROUNDS TWELFTH RESPONDENT RODNEY JOHANSON THIRTEENTH RESPONDENT SHORT PUNCH & GREATORIX TENTH CROSS-RESPONDENT JUDGE: KIEFEL J DATE OF ORDER: 25 OCTOBER 2002 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The applicant pay the costs of the third, eleventh and twelfth respondents; the fourth respondent; the sixth respondent; the thirteenth respondent and the tenth cross-respondent; and the tenth respondent, thrown away by reason of the adjournment of the trial in these proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q232 OF 2002 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: OCEANA COMMERCIAL PTY LTD (ACN 070 287 991) FIRST RESPONDENT MARKFAIR PTY LTD (ACN 065 542 671) SECOND RESPONDENT ADVANCED COMMERCIAL DEVELOPMENTS PTY LTD (ACN 076 810 672) THIRD RESPONDENT COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) FOURTH RESPONDENT CHRISTOPHER RUSSELL BILBOROUGH FIFTH RESPONDENT DUDLEY JAMES QUINLIVAN SIXTH RESPONDENT SHANE ANDREWS SEVENTH RESPONDENT MICHAEL BYROM EIGHTH RESPONDENT PETER EGGENHUIZEN NINTH RESPONDENT GREGORY POINTON TENTH RESPONDENT DEAN CORNISH ELEVENTH RESPONDENT JOHN GROUNDS TWELFTH RESPONDENT RODNEY JOHANSON THIRTEENTH RESPONDENT SHORT PUNCH & GREATORIX TENTH CROSS-RESPONDENT JUDGE: KIEFEL J DATE: 25 OCTOBER 2002 PLACE: BRISBANE REASONS FOR JUDGMENT 1 On 30 September 2002, I ordered that the trial of this action, due to commence on 7 October 2002 and to take three weeks, be adjourned until March 2003. It had then become tolerably clear that the trial could not finish in the time allowed. Something in the order of 5 weeks appeared to be necessary and other Court commitments did not allow an extension of the hearing. It was, in my view, undesirable to have a trial of this nature and complexity part heard over a relatively lengthy period. The first, second and fifth respondents, the third, eleventh and twelfth respondents, the fourth respondent, the sixth respondent, the thirteenth respondent and tenth cross-respondent and the tenth respondent, all seek an order against the Australian Competition and Consumer Commission (" the ACCC") for the costs they have incurred, but which will be wasted because of the adjournment. The sixth respondent seeks further orders - that costs be allowed on an indemnity basis and that they be permitted to tax the costs forthwith. The respondents say that the ACCC was not in a position of preparedness for the hearing and that it would have been adjourned for that reason, in any event. They add that the ACCC did not advise the Court or the respondents, as it should, that further time would be necessary for the hearing. The ACCC concedes that it was not ready for trial. Indeed it is still pursuing discovery against the first, second and fifth respondents and has yet to provide particulars to some of the respondents and its valuation evidence. It says that the particulars could not be supplied and its evidence put in order until discovery against those three respondents was completed. It submits that the first, second and fifth respondents should pay the other respondents' costs of the adjournment, including its costs. 2 The proceedings were commenced on 13 November 2001. On 8 February 2002, the court was asked for trial dates in the last third of the year. They were sought at an early stage of the preparation of the matter because there were a number of people who were said to have lost money in the alleged scheme and there was a public interest in an early determination of the proceedings. At that stage three weeks was the ACCC's "best guess". It was not until 18 September that it revised that estimate. By this time the respondents say that they had incurred costs in preparation which will be wasted. I take it that there may be some duplication when the matter comes to be prepared again for trial. Each of them say that they were ready to proceed. 3 On 20 March 2002, I directed all respondents to file and serve their list of documents, by way of discovery, by 10May. The ACCC had, prior to this time, used its powers to obtain some information from some of the respondents but it is difficult to assess the extent of it. Clearly it required further documents, especially at least from the first, second and fifth respondents. On 7 June 2002, I ordered all parties to complete discovery and disclosure by 28 June 2002. The first, second and fifth respondents did not comply with these directions. On 26 April 2002, about one month after the order for discovery was made, their solicitors withdrew. It was not until about mid-July 2002 that another solicitor acted for them. On 23 July 2002, the ACCC wrote to the second solicitor for those respondents concerning outstanding discovery. They had not completed discovery by 23 August 2002. At a directions hearing on that date it was observed that the timing for the steps yet to be taken was "tight", having regard to the trial dates. The ACCC pursued further discovery against the first, second and fifth respondents through late August and brought one application for an order. The process continued through September. The ACCC says that the documents to be provided by the first, second and fifth respondents are important to their case against all of the respondents. They are the main source of documents in the action, it would seem. If that is the case it seems to me that it must have been alert to the prospect in this period that its preparedness for trial was at risk. It may also be that the ACCC under-estimated the extent of the discovery. In this regard there has been a particularly lengthy delay because tapes of meetings have been provided without transcription. One might describe the process of discovery as evolutionary, but even towards the end of August the correspondence suggests the ACCC considered that there was much missing. 4 On 17 September 2002, the ACCC wrote to the respondents for the first time saying that, because of problems with discovery, it was not anticipating that it could be ready for trial. The matter came on for directions on 18 September. At that time the court was also told that the ACCC's valuation evidence was not yet ready. It is not however suggested that this delay was productive of the adjournment. The reception of that evidence could have been accommodated at a later point. 5 It was on 18 September 2002 that the ACCC first mentioned the prospect that its case would take two of the three weeks, and that the entire trial might take up to five. When that view was formed is not apparent. It is not clear what occurred prior to this point which affected its perception of the time necessary for hearing. It has not explained at what point, in the discovery process referred to above, it realised that it was not likely to be able to be ready. 6 Some of the respondents, more particularly the sixth respondent, had expressed misgivings about the estimate of three weeks as early as 26 February 2002. These concerns were reiterated on 4 March, 7 June and 23 August 2002. As I have said, it was at the last mentioned directions hearing that the observation was made that the timing was "tight". 7 It is difficult to resist the conclusion that the costs which may have been incurred by the respondents and which may be wasted, other than the first, second and fifth respondents, were occasioned because the ACCC did not act more promptly in informing the Court of the difficulties it was having in preparation, and of the expansion of the time necessary for a hearing. I do not accept that the other parties were in as good a position as the ACCC to assess the time necessary. The ACCC sought to maintain the trial dates until 17 September, but that was only a few weeks away from trial. Most of the respondents, it should be added, sought to maintain the trial dates at that point, but this is understandable, given the monies they would have expended on preparation. 8 It would therefore seem to me that the ACCC should pay the respondents' costs occasioned by the adjournment, other than those of the first, second and fifth respondents. Those respondents could not say that they had complied with their obligations to that date. The more difficult questions are whether or not the first, second and fifth respondents should indemnify the ACCC for the costs of the other respondents, or contribute to some extent for them, and whether they ought to pay the ACCC's costs. 9 As I have mentioned there was a period from the end of April to mid to late July when the first, second and fifth respondents had no solicitors apparently acting for them. The ACCC appears to have allowed the matter of discovery to wait. In any event nothing was done towards pursuing it. There may have been good practical reasons for this. Nevertheless, the fact remains that discovery of a substantial body of material was envisaged as necessary and important to the ACCC's case. Any substantial delay in that regard would affect their ability to provide the other respondents with the outstanding particulars and finalise the evidence necessary to be put. 10 It is true to say that the first, second and fifth respondents have been a cause of the ACCC's delay in preparing for trial, although I find it difficult to assess the extent of its influence in that regard. Nevertheless, the costs occasioned by the other parties in preparation for trial could have been avoided, in whole or in part, if the ACCC had advised them and the Court at an earlier point that there was a substantial risk, or even a real risk, that it would not be ready for trial because of problems with discovery. It has not explained why it was not until 17 September 2002 that it came to this view. It is difficult to accept that it did not occur to it at an earlier point, given the stream of correspondence and the extent of the discovery being sought from the first, second and fifth respondents. On 29 August 2002, the ACCC's solicitors wrote to those respondents asking for inspection of some documents "as a matter of urgency". As at 13 September 2002, they were still writing saying that it could not finalise its evidence without proper discovery. 11 In these circumstances I consider that the ACCC should bear the costs thrown away by the adjournment. The first, second and fifth respondents, who were in part responsible for the delays should not have their costs. I do not however consider that the circumstances warrant an order for indemnity costs. Whilst the ACCC has not fully explained what occurred I do not consider the sixth respondent's accusations of wrongful conduct to be established. I do not propose to make an order that the costs may be taxed forthwith. The trial is set for March 2003. Even if the matter could be attended to by then, the parties resources, including the ACCC's, will be focussed upon preparing the matter for trial. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. Associate: Dated: 20 October 2002 Counsel for the Applicant: Mr S Couper QC and Mr K Wilson Solicitor for the Applicant: Australian Government Solicitor Solicitor for the First, Second and Fifth Respondents: Lynch & Co Counsel for the Third, Eleventh and Twelfth Respondents: Mr T Carmody SC Solicitor for the Third, Eleventh and Twelfth Respondents: Hopgood & Ganim Counsel for the Fourth Respondent: Mr J Hilton and Mr C Wilson Solicitor for the Fourth Respondent: AJ Mullumby Counsel for the Sixth Respondent: Mr A Morris QC and Mr Atkinson Solicitor for the Sixth Respondent: Quinn & Box For the Seventh Respondent: In Person Solicitor for the Eighth Respondent: No Appearance Solicitor for the Ninth Respondent: No Appearance Counsel for the Tenth Respondent: Mr N Thompson Solicitor for the Tenth Respondent: Grays Lawyers Counsel for the Thirteenth Respondent and Tenth Cross-Respondent: Mr J Griffin QC with Mr C Carrigan Solicitor for the Thirteenth and Tenth Cross-Respondent Respondent: McCullough Robertson Date of Hearing: 16 October 2002 Date of Judgment: 25 October 2002