FEDERAL COURT OF AUSTRALIA Investa Properties Pty Ltd v Nankervis [2012] FCA 743 Citation: Investa Properties Pty Ltd v Nankervis [2012] FCA 743 Parties: INVESTA PROPERTIES PTY LTD (ACN 084 407 241) and INVESTA RESIDENTIAL GROUP PTY LTD (ACN 098 527 390) v ASHLEY COLIN NANKERVIS, ADAM KIMBERLY BARCLAY, DAMIAN ANTHONY LONG and OLIVER HUME SOUTH EAST QUEENSLAND PTY LTD (ACN 128 863 230) File number: QUD 231 of 2011 Judge: COLLIER J Date of judgment: 10 July 2012 Catchwords: PRACTICE AND PROCEDURE – vacation of trial dates – principles in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 – indemnity costs Legislation: Corporations Act 2001 (Cth) Federal Court of Australia Act 1976 (Cth) s 37M Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 cited Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261 cited Date of hearing: 10 July 2012 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 24 Counsel for the First and Second Applicants: Mr DH Murr SC with Ms M Painter Solicitor for the First and Second Applicants: Swaab Attorneys Counsel for the First Respondent: Ms M Hoch Solicitor for the First Respondent: Shand Taylor Lawyers Counsel for the Second Respondent: Mr D O'Brien Solicitor for the Second Respondent: Warlow Scott Lawyers Counsel for the Third Respondent: Mr M Jones Solicitor for the Third Respondent: Butler McDermott Lawyers Solicitor for the Fourth Respondent: Ms DL Wood of Carter Newell Lawyers IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 231 of 2011 BETWEEN: INVESTA PROPERTIES PTY LTD (ACN 084 407 241) First Applicant INVESTA RESIDENTIAL GROUP PTY LTD (ACN 098 527 390) Second Applicant AND: ASHLEY COLIN NANKERVIS First Respondent ADAM KIMBERLY BARCLAY Second Respondent DAMIAN ANTHONY LONG Third Respondent OLIVER HUME SOUTH EAST QUEENSLAND PTY LTD (ACN 128 863 230) Fourth Respondent JUDGE: COLLIER J DATE OF ORDER: 10 JULY 2012 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The hearing listed to commence on 23 July 2012 be vacated. 2. The parties are to agree on terms of an indemnity costs order in light of these reasons, and are to provide them to the Judge's Chambers by 4.00 pm on 17 July 2012. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 231 of 2011 BETWEEN: INVESTA PROPERTIES PTY LTD (ACN 084 407 241) First Applicant INVESTA RESIDENTIAL GROUP PTY LTD (ACN 098 527 390) Second Applicant AND: ASHLEY COLIN NANKERVIS First Respondent ADAM KIMBERLY BARCLAY Second Respondent DAMIAN ANTHONY LONG Third Respondent OLIVER HUME SOUTH EAST QUEENSLAND PTY LTD (ACN 128 863 230) Fourth Respondent JUDGE: COLLIER J DATE: 10 JULY 2012 PLACE: BRISBANE REASONS FOR JUDGMENT 1 The trial in this matter is listed to commence on 23 July 2012, less than two weeks from today. It is a trial of some substance, listed for 10 hearing days. 2 Today I heard an urgent interlocutory application by the applicants in the substantive proceedings to vacate the trial dates. In my view the trial dates should be vacated and indemnity costs orders made against the applicants. My reasons for this finding are as set out below. BACKGROUND 3 The substantive matter involves an application by the applicants against former employees or agents for damages and equitable relief under the Corporations Act 2001 (Cth) and under the general law. The applicants are in the business of real property development. The applicants claim that the respondents were fiduciaries, entrusted with the sale of development properties, and that the respondents arranged matters so that associates or related entities were able to buy development properties below valuation. The originating application and statement of claim were filed on 24 August 2011. 4 The respondents have strongly opposed all claims against them. Each respondent has separate legal representation. One of the respondents is a corporation, and the remaining three are individuals. At the hearing today the point was made that at least one of the respondents is in limited financial circumstances. 5 The trial dates ordered by a Judge of this Court (on 10 November 2011) as commencing 23 July 2012 were originally described as "tentative". However it does not appear to be seriously contended, in light of subsequent correspondence from the Registrar of this Court to the parties, that the parties were left in any doubt that the trial would take place on the dates identified in his Honour's order of 10 November 2011. Indeed, on 20 March 2012 I made further consent orders, including that the matter was listed for a pre-trial review on 3 July 2012 in anticipation that the trial dates were certain. 6 On 19 June 2012 the matter came before Deputy District Registrar Belcher in Brisbane for a case management conference. At that conference the Registrar made new timetabling and other orders. One of those orders was as follows: 9. Any interlocutory applications seeking any orders: a) for the deferral of the hearing dates; … are to be filed by 26 June 2012. 7 It is clear from this Order that, by 19 June 2012, the prospect of an application for vacation of the trial dates was real at least in the minds of the applicants and their legal representatives. 8 The applicants filed an interlocutory application for vacation of the trial dates on 26 June 2012. SUBMISSIONS OF THE PARTIES 9 In Court this morning Mr Murr SC for the applicants relied upon written and oral submissions, and in particular two affidavits affirmed by Mr Tean Kerr, the solicitor with conduct of the matter on behalf of the applicants. Briefly, the applicants claim as follows: At the moment none of the parties has served any evidence apart from the applicants' valuations. Although the applicants' preparation of evidence is advanced, it could not be completed prior to the scheduled dates of hearing. The principal reason for the disarray in the applicants' case is that the Brisbane-based counsel for the applicants has had certain personal difficulties unrelated to this matter which required her to return her brief. The applicants submit that these difficulties affected former Counsel's ability to prepare the case for some time before she withdrew. The applicants have a serious case to present. The applicants do not suggest that they are beyond reproach in respect of preparation and compliance with Court directions. However the position would not be as it is currently had the state of preparation been as Mr Kerr believed it to be, in particular in respect of the preparation of finalised drafts of affidavits of principal witnesses. The personal circumstances of former Counsel of the applicants appear to have had a detrimental effect on the drafting of subpoenas, some of which required redrafting. Issues relating to former Counsel of the applicants were all beyond the control of the applicants. Loss of their former Counsel, who had a detailed knowledge of the facts, puts the applicants at an obvious disadvantage. Although the applicants have two new Counsel, Mr Murr SC submitted that because of his very recent involvement in the proceedings his knowledge of the case is not yet detailed. The applicants potentially wish to amend the statement of claim, obtain orders for further and better discovery, and undertake further investigations. 10 The third respondent did not oppose the applicants' interlocutory application for vacation of the trial dates. However the third respondent sought costs thrown away by any adjournment of the trial, payable on an indemnity basis. 11 The first, second and fourth respondents strongly opposed the interlocutory application. 12 The submissions of counsel for the first, second and fourth respondents as to why the Court ought not exercise its discretion to vacate the trial dates may be summarised as follows: The trial dates have been known to the parties since 10 November 2011, and timetabling orders made since then to take the proceedings to 23 July 2012. The applicants have provided no satisfactory explanation of their delays in preparation of affidavit evidence or drafting of subpoenas, which delays cannot fairly be laid at the feet of their former Counsel. Any prejudice which the applicants suffer – which has not been identified – is of their own making. If the trial dates were vacated, the respondents would suffer prejudice of being required to bear the ongoing stress associated with litigation. Section 37M of the Federal Court of Australia Act 1976 (Cth) provides, inter alia, that the overarching purpose of the Federal Court Act and the Federal Court Rules is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. The material before the Court demonstrates an lack of activity by the applicants in respect of, for example, proofing of key witnesses. Dismissal of the interlocutory application is consistent with the reasoning of the High Court of Australia in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175. There was an unexplained absence of detail in the affidavits of Mr Kerr in respect of matters including liaison between Mr Kerr and the applicants' former Counsel (in the form of correspondence, file notes, emails or otherwise). Much of the affidavit of Mr Kerr purporting to explain these delays consists of unsubstantiated bare assertions, lacking detail. Although the applicants foreshadow in their submissions the prospect of taking steps to join third parties to the proceeding, no explanation as to delay in so doing is apparent. So, for example, no steps have been taken by the applicant to seek to join Oliver Hume (Australia) Pty Ltd despite the delivery of the fourth respondent's defence on 21 October 2011 stating that the second respondent was employed by that company; and no steps have been taken by the applicant to seek to join Two Eight Two Nine Pty Ltd to the proceeding despite discovery by the fourth respondent on 7 February 2012 relevant to that company. RELEVANT PRINCIPLES 13 The decision of the High Court in Aon has been the subject of considerable judicial comment and adoption. As explained by the Full Court of the Federal Court in Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261 at 272-273, in Aon the High Court rejected the proposition that the powers of a court to allow an amendment to a pleading should, as a general rule, be exercised in favour of allowing the amendment subject only to the payment of costs thrown away as a result. I note in particular the following comments of Gummow, Hayne, Crennan, Kiefel and Bell JJ in Aon: 111. An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in J L Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases[176]. On the contrary, the statements are not consonant with this Court's earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future. 112. A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate. 113. In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy[177]. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings. 14 In the case before me it is clear that the applicants are not ready for trial. The submissions of the respondents in relation to notice of the trial dates, the questionable lack of activity and focus of the applicants' legal representatives in relation to preparation of the trial, and the lack of fault of the respondents in this proceeding, have merit. Further, I am not satisfied that new counsel for the applicants could not be sufficiently familiar with the applicants' case by 23 July 2012 to properly conduct the trial on the applicants' behalf. Finally, as I indicated to counsel this morning, should the trial dates be vacated it is unlikely that I would be able to hear this matter, given the length of the proposed trial, until early 2013. 15 However in my view it is appropriate that the Court should exercise its discretion to order the trial dates be vacated. I take this view for the following reasons. 16 First, notwithstanding that the reasons for failure of the applicants to be ready for trial on 23 July 2012 appear to lie squarely with their legal representatives, as observed by French CJ in Aon at [35] a punitive response to the substance of an interlocutory application of this nature is not appropriate. Aon does not stand for the principle that a dilatory party ought be punished for its delays in litigation preparation or the delays of its legal representatives. 17 Second, notwithstanding powerful submissions put to me by Mr O'Brien for the second respondent, I am not persuaded that there has been an absence of satisfactory explanation by the applicants as to why they are not ready for trial. I accept the submission of Mr Murr SC that the absence of fine detail in the affidavit of Mr Kerr was attributable in this case to the nature of today's hearing, being interlocutory, and in any event I accept that the evidence of Mr Kerr was adequate for the purposes of this hearing. It also appears that, reasonably or not, the solicitors for the applicants had relied to a greater extent than one might have expected on former Counsel, and her withdrawal from the case at this late stage has left the applicants in disarray. 18 Third, I accept that this is not a case where the applicants have sought vacation of the trial dates for reasons which are deliberately not explained, as was the case in Aon. I note that the applicants have been prepared to put all relevant material before the Court as to why they seek vacation of the trial dates, including material relevant to difficulties faced by former Counsel. 19 Finally, it is clear that the applicants cannot be ready for trial by 23 July 2012. Notwithstanding the recognition given by the High Court in Aon to discretionary matters such as consideration of case management issues and delays in hearing, as observed by the majority at [98] a just resolution of proceedings remains the paramount purpose of the rules of Court. This is particularly so in the Federal Court, where just resolution of disputes is the overarching purpose of the relevant provisions. I accept that the respondents will be prejudiced by delay in the hearing of this proceeding until early 2013, however I also consider that the respondents would be inevitably prejudiced (although perhaps to a lesser degree) should the trial proceed as listed and they be required to both digest and respond to possibly detailed evidence filed by the applicants immediately before commencement of the trial. 20 In my view, the respondents in the circumstances of this case would be adequately compensated by an award of costs thrown away, payable by the applicants on an indemnity basis. I note Mr Murr SC at the hearing this morning conceded that his clients could not oppose an award of costs on this basis, and in my view given the lateness of the application and the circumstances of the case it is appropriate that the Court exercise its discretion to make such an order. INDEMNITY COSTS 21 Detailed submissions were made by Counsel for the respondents as to the costs thrown away. In my view it is appropriate to make orders in terms of those proposed by Mr O'Brien, namely that the applicants be liable to pay to the respondents their costs thrown away in respect of the vacation of the trial dates, including: Costs associated with today's hearing; Costs associated with the case management conference before Deputy District Registrar Belcher on 19 June 2012; and Costs associated with the directions hearing on 3 July 2012. 22 I include the costs associated with the case management conference before Deputy District Registrar Belcher on 19 June 2012 because while the purpose of that conference was for the Registrar to make new and general timetabling orders in the lead up to trial (largely because the applicants had failed to file evidence as required) it is in my view very likely that the applicants had already anticipated by that date that they would be unlikely to be able to comply with the orders subsequently made by the Registrar, particularly in view of the difficulties their former Counsel was already facing. To that extent, it could be said that that case management conference was a waste of both time and money for the respondents, and the applicants should be held liable for that waste. 23 I also consider that, if the parties cannot agree on the amount of costs by a specific date, costs should be fixed by the Court. 24 As it may be possible for the parties to agree on the amount of indemnity costs payable, and the date upon which those costs ought be paid, I will now direct the parties to agree on terms of appropriate costs orders in light of my reasons for judgment by next week. In lieu of such agreement, a date will be set down for a hearing as to the fixing of costs. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. Associate: Dated: 10 July 2012