FEDERAL COURT OF AUSTRALIA Australian Securities and Investments Commission v Australian Lending Centre Pty Limited [2010] FCA 1138 Citation: Australian Securities and Investments Commission v Australian Lending Centre Pty Limited [2010] FCA 1138 Parties: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v AUSTRALIAN LENDING CENTRE PTY LIMITED & ORS File number(s): NSD 606 of 2010 Judge: EMMETT J Date of judgment: 8 October 2010 Date of hearing: 8 October 2010 Place: Sydney Division: GENERAL Category: No Catchwords Number of paragraphs: 9 Counsel for the plaintiff: D.L. Cook Solicitor for the plaintiff: Australian Securities and Investments Commission Counsel for the defendants: C. Newlinds SC & J. Giles Solicitor for the defendants: S Moran & Co IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 606 of 2010 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff AND: AUSTRALIAN LENDING CENTRE PTY LIMITED First Defendant SYDNEY LENDING CENTRE PTY LIMITED Second Defendant AMR INVESTMENTS PTY LIMITED Third Defendant CHRISTOPHER JOHN RIOTTO Fourth Defendant JUDGE: EMMETT J DATE OF ORDER: 8 October 2010 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The motion filed on 27 August 2010 be dismissed. 2. The statement of claim filed on 6 July 2010 be struck out. 3. The plaintiff serve on the defendants, no later than 29 October 2010, its proposed amended statement of claim. 4. The defendants notify the plaintiff in writing no later than 5 November 2010, any objections to the proposed amended statement of claim, together with the grounds for any such objections. 5. The plaintiff indicate in writing to the defendants, no later than 10 November 2010, whether it wishes to make further amendments in the light of the notification by the defendants. 6. The plaintiff pay the defendants' costs of the motion together with any costs thrown away by reason of any amended statement of claim that may be filed. 7. Leave be granted to the defendants to assess or have taxed those costs referred to in paragraph 6 above, noting that the defendants have foreshadowed that they may wish to make an application for an order that the costs be paid forthwith. 8. The proceeding be listed for directions on Friday, 12 November 2010 at 9:30 am. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 606 of 2010 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff AND: AUSTRALIAN LENDING CENTRE PTY LIMITED First Defendant SYDNEY LENDING CENTRE PTY LIMITED Second Defendant AMR INVESTMENTS PTY LIMITED Third Defendant CHRISTOPHER JOHN RIOTTO Fourth Defendant JUDGE: EMMETT J DATE: 8 October 2010 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This proceeding was commenced by originating process filed by the plaintiff on 31 May 2010. The originating process was served on the defendants on 1 June 2010. They filed appearances on 17 June 2010, and the matter first came before me for directions on 18 June 2010. On that day, I directed the plaintiff to file and serve a statement of claim no later than 25 June 2010 and adjourned the proceeding to 23 July 2010. For reasons that have not been explained, the plaintiff did not comply with the direction to file a statement of claim by 25 June 2010. However, a statement of claim was filed on 6 July 2010. On 13 July 2010, the defendants notified the plaintiff of their intention to apply to strike out parts of the statement of claim. 2 On 23 July 2010, the plaintiff accepted that the statement of claim that had been filed on 6 July 2010 required amendment. Accordingly, it was proposed that the plaintiff serve on the defendants, by 13 August 2010, a proposed amended statement of claim. The matter was stood over to 20 August 2010. The plaintiff did not serve a proposed amended statement of claim and on 20 August 2010, the plaintiff was given leave to file a notice of motion seeking leave to file an amended statement of claim. A notice of motion was filed on 27 August 2010, supported by an affidavit sworn on the same day, to which a proposed amended statement of claim was annexed. The motion was made returnable for today, 8 October 2010. 3 On 30 September 2010, the solicitor for the plaintiff wrote to the solicitors for the defendants, requesting that they inform the plaintiff's solicitors no later than 1 October 2010 whether the defendants would consent to the filing of the proposed amended statement of claim. The letter also requested that, if consent was not given, the grounds of objection should be provided by 1 October 2010. On 6 October 2010, the plaintiff's solicitors wrote again to the defendants' solicitors indicating that the plaintiff proposed to seek further amendments to the statement of claim beyond those in the draft amended statement of claim annexed to the affidavit of 27 August 2010. The plaintiff's solicitors proposed that today's hearing be adjourned for three weeks and invited the defendants to consent to the proposed adjournment. 4 By letter of 7 October 2010, the defendants' solicitors indicated that they opposed the extension of time and suggested that, if the plaintiff was not ready to proceed with the action, the proceeding should be dismissed with costs without prejudice to the plaintiff's right to recommence the proceeding. The letter said that written submissions on the deficiencies in the then current draft pleading, which was said to be the third draft, would be furnished later that day. Submissions were not, in fact, furnished that day, but were provided by senior counsel for the defendants to counsel for the plaintiff during the course of this morning. 5 The matter now before me is the notice of motion of 27 August 2010. In the course of argument, counsel for the plaintiff has indicated that the plaintiff wishes to make amendments to the proposed pleading beyond those that are made by the draft amended statement of claim of 27 August 2010. Those amendments would take into account, at least to some extent, the deficiencies referred to in the written submission provided by senior counsel for the defendants. As I understand the position, counsel proposes to make other proposed amendments in order to finalise the form the pleading. 6 In circumstances where, as I understand the position, the plaintiff accepts that its proposed amended statement of claim is deficient, it must follow, a fortiori, that the filed statement of claim is also deficient. It has not been suggested that the plaintiff wishes to maintain the statement of claim as originally filed; nor does the plaintiff intend to propound the proposed amended statement of claim of 27 August 2010. 7 I have considered, briefly, the defendants' outline of submissions of today, which deal with a number of alleged deficiencies in the proposed amended statement of claim. They concern the following topics: alleged contravention of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) by AMR Investments Pty Limited; alleged contravention of the ASIC Act by Australian Lending Centre Pty Limited and Sydney Lending Centre Limited; accessorial liability of Christopher Riotto; allegations of reasonable inquiries that it is alleged might have been undertaken; allegations of wilful failure to inquire; allegations that defendants ought to have known certain facts; want of particulars as to the cases based on s 12DA and s 12DB of the ASIC Act; want of particulars of other specific allegations. 8 I have not had the benefit of any argument on those submissions. However, from my reading of the draft amended statement of claim in the light of the submissions, there appears to me to be considerable substance in a substantial number of the complaints. In all of the circumstances I consider that the appropriate course is to order that the notice of motion of 27 August 2010 be dismissed and to order that the statement of claim filed on 6 July 2010 be struck out, without prejudice to the right of the plaintiff to file an amended statement of claim. 9 In order to ensure the proper management of the proceeding, I consider that the appropriate course is to direct the plaintiff to serve on the defendants a proposed amended statement of claim in such form as it is advised. The defendants should then be required to indicate to the plaintiff in writing any objections that they have to the proposed amended statement of claim, together with grounds for those objections. The plaintiff should then indicate to the defendants whether it wishes to make further amendments in the light of those objections. Once that course has been followed the parties should come back for further directions with a view to seeing whether there are still issues with the pleadings. If so, those issues will be resolved as quickly as possible so that the true issues between the parties can be formulated and directions be given for the further prosecution of the proceeding. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 21 October 2010