Australian Securities & Investments Commission v Exotic Timbers of Australia Ltd [2003] FCA 703

FEDERAL COURT OF AUSTRALIA

Australian Securities & Investments Commission v Exotic Timbers of Australia Ltd [2003] FCA 703 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v EXOTIC TIMBERS OF AUSTRALIA LTD, JOSEPH PETER KARRA AND CHRISTINE CAROL KARRA D 3001 OF 2003 DOWSETT J 17 JUNE 2003 BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY D 3001 OF 2003

BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

APPLICANT

AND: EXOTIC TIMBERS OF AUSTRALIA LTD

FIRST RESPONDENT

JOSEPH PETER KARRA

SECOND RESPONDENT

CHRISTINE CAROL KARRA

THIRD RESPONDENT

JUDGE: DOWSETT J

DATE OF ORDER: 17 JUNE 2003

WHERE MADE: BRISBANE

THE COURT ORDERS THAT:

1. The trial will proceed as against the first and second respondents.

2. The proceedings as against the third respondent will be adjourned to a date to be fixed.

3. The second respondent pay the applicant's costs of today and yesterday.

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 D 3001 OF 2003

BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

APPLICANT

AND: EXOTIC TIMBERS OF AUSTRALIA LTD

FIRST RESPONDENT

JOSEPH PETER KARRA

SECOND RESPONDENT

CHRISTINE CAROL KARRA

THIRD RESPONDENT

JUDGE: DOWSETT J

DATE: 17 JUNE 2003

PLACE: BRISBANE

REASONS FOR JUDGMENT

1 This matter is set down for trial for five days commencing on Monday next. The second respondent seeks an adjournment of the trial, the primary reason being that he says that he is not ready to proceed. The trial dates were identified in mid-March. Since that time there have been at least two orders relating to the conduct of the matter. No respondent has yet filed a defence and so the issues, if there are any, to be ventilated between the parties have not been defined. The second respondent's explanation for this is that his former solicitors ceased to act for him in about mid-April and that he does not know what steps they had taken to prepare for the trial. They are apparently presently exercising a lien over their file. He says that between mid-April and late May, he had discussions with the applicant, or with officers of the applicant, and with various other people, implying that he was trying to find out what to do. He now has retained other solicitors. In my view he has not explained his failure to prepare for trial, given that he has known since mid-March that the matter was to be heard next week. It is irrelevant that he failed to make proper arrangements with his solicitor. Further, as it is clear that he at least knew that he needed legal advice, it is upon his own head that he has chosen not to secure it until very late in the piece. There is a second aspect upon which I have already touched, namely, that it is not even clear at this stage that he has a defence. He has not condescended to deliver a defence. He has not even sought to outline any defence in the material which he has filed in support of this application for an adjournment. Apparently the Court is expected to accept the assertion that there is such a defence and that he should be given an opportunity to investigate and to prepare it. If the matter were at the stage at which it was in March, that might be reasonable, but that is not the case. The matter has gone on for three months since then and as far as I can see, the second respondent is no closer to being ready than he was at the beginning of that period. 2 Nonetheless, and notwithstanding what I consider to be the second respondent's egregious default, I would be seriously minded to allow an adjournment on terms were it not for other factors of which I must take note. The first respondent, Exotic Timbers of Australia Ltd, has been actively engaged in the promotion and maintenance of schemes in connection with which invitations have been issued to the public to invest. The business in which such investments were made involved various timber-growing activities. Investors have continuing obligations to make financial payments, and the evidence discloses that some are still making them, whereas others are not because of the current state of affairs concerning the first respondent. I should say that a receiver has been appointed. In those circumstances, the interests of the investors dictate that this matter be resolved as quickly as possible. Further, it is clear that the financial position of the company and of the various investment schemes are worsening as a result of the continued involvement of the receiver and the lack of any appropriate direction other than from the receiver. In those circumstances, it seems to me that the matter must at least proceed to the extent of resolving the applicant's claims as against the first respondent. 3 In the course of argument I raised the possibility of allowing the matter to proceed as against the first respondent (who is not presently represented) and adjourning the proceedings as against the second respondent. However, upon further consideration, I have concluded that this would be an undesirable and, in a sense unfair, course to take. Clearly, the factual issues involved in the claims against the second respondent are closely associated with those which will be ventilated in connection with the claims for relief as against the first respondent. There is no good reason why Court time should be wasted and the applicant put to the additional cost of a second hearing as against the second respondent when all matters could quite conveniently be dealt with together. Further, that is the basis upon which the parties have been proceeding since mid-March. It is far too late in the day to change that course simply because the second respondent has chosen, as I see it, not to prepare for trial. In those circumstances, the trial will proceed as against the first and second respondents. 4 The third respondent is in a different, and more difficult position. It appears clear to me that serious questions surround her capacity to give appropriate instructions. As I understand it, the applicant is at least equivocal as to whether it should proceed against her. In the circumstances I will take this opportunity to cut the Gordian knot and order that proceedings as against the third respondent be adjourned to a date to be fixed. I order that the second respondent pay the applicant's costs of the hearing yesterday and today.