FEDERAL COURT OF AUSTRALIA Healey v Rubynet Pty Ltd, in the matter of Rubynet Pty Ltd [2012] FCA 880 Citation: Healey v Rubynet Pty Ltd, in the matter of Rubynet Pty Ltd [2012] FCA 880 Parties: CARINA LEE-ANNE HEALEY v RUBYNET PTY LTD (ACN 091 395 041) File number: WAD 414 of 2010 Judge: SIOPIS J Date of judgment: 17 August 2012 Date of hearing: 14 August 2012 Date of order: 14 August 2012 Place: Perth Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 39 Counsel for the Plaintiff: Mr CP Stokes Solicitor for the Plaintiff: Chris Stokes & Associates Counsel for the Defendant: Ms S Edwards Solicitor for the Defendant: Sonia Edwards Legal IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 414 of 2010 IN THE MATTER OF RUBYNET PTY LTD (Acn 091 395 041) BETWEEN: CARINA LEE-ANNE HEALEY Plaintiff AND: RUBYNET PTY LTD (ACN 091 395 041) Defendant JUDGE: SIOPIS J DATE OF ORDER: 14 AUGUST 2012 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The originating application is dismissed. 2. The plaintiff is to pay the defendant's costs, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 414 of 2010 IN THE MATTER OF RUBYNET PTY LTD (Acn 091 395 041) BETWEEN: CARINA LEE-ANNE HEALEY Plaintiff AND: RUBYNET PTY LTD (ACN 091 395 041) Defendant JUDGE: SIOPIS J DATE: 17 AUGUST 2012 PLACE: PERTH REASONS FOR JUDGMENT 1 On 14 August 2012, I made orders dismissing the originating application made by the plaintiff, Ms Carina Lee-Anne Healey (Ms Healey), for relief under s 247A of the Corporations Act 2001 (Cth). I said that I would give my reasons later. These are the reasons. 2 On 23 December 2010, Ms Healey filed an originating application in this Court seeking orders under s 247A of the Corporations Act that the defendant company permit Ms Healey and/or a forensic accountant nominated by her, to inspect and take copies of the financial records of the defendant company. 3 The originating application was supported by an affidavit sworn by Ms Healey on 23 December 2010. 4 In her affidavit, Ms Healey deposed that she was a director and shareholder of the defendant company. The company search of the defendant company attached to Ms Healey's affidavit, showed that there were two company directors, Ms Healey and Ms Tina Michelle Bazzo and that Ms Bazzo had been a director since 8 February 2000 and Ms Healey had been a director since 12 November 2001. Ms Healey also deposed that the defendant company, which appeared to be a vehicle for the conduct of a joint venture, was engaged in property developments; and that in 2010, she found out by searching the titles register that the defendant company had sold a large number of blocks of land and not accounted to her in respect of the proceeds of the sales. 5 Ms Healey went on to say that she sought orders permitting her and/or her forensic accountant to inspect the financial records of the defendant company for each financial year since 1 July 2001. The financial records of the defendant company in respect of which inspection was sought, included the MYOB data files, business activity statements, bank statements, balance sheets, profit and loss statements, the general ledger and taxation returns. 6 Chris Stokes & Associates were the solicitors on the record for Ms Healey. the interlocutory process 7 There was a prolonged interlocutory process. 8 On 25 January 2011, by consent, directions were made for the filing and serving of any affidavits by the defendant company in response to the application, and the filing and service of affidavits in reply. 9 An affidavit sworn by Mr Allen Bruce Caratti in opposition to the application was filed by the defendant company on 14 March 2011. 10 Thereafter, the matter went into abeyance as a consequence of the parties filing a number of consent orders adjourning the directions hearing. 11 However, on 7 February 2012, consent orders were made requiring that by 6 March 2012, Ms Healey file and serve any affidavits in response to the affidavit filed by the defendant company, and requiring that Ms Healey file and serve her written outline of submissions in support of her application by 19 April 2012. The directions hearing was adjourned to 10:15 am on 4 May 2012. On 15 March 2012, with the consent of the parties, the date of the directions hearing was changed to 7 May 2012. 12 On 19 March 2012, Ms Healey filed an affidavit by Mr Philip Drummond Metcalf in response to the affidavit of Mr Caratti. However, in breach of the Court's order, Ms Healey did not file and serve any written outline of submissions by 19 April 2012. 13 At the next directions hearing on 7 May 2012, neither party appeared. The Court, of its own motion, adjourned the directions hearing to 21 June 2012. 14 At the directions hearing on 21 June 2012, only Ms Sonia Edwards, the representative of the defendant company, appeared. There was no representation on behalf of Ms Healey. Also, by that time, Ms Healey had still not filed any outline of submissions in support of her application as required by the orders of 7 February 2012, nor had Ms Healey taken any steps to vary the orders made on that day, nor taken any further steps to prosecute her application. 15 At the directions hearing on 21 June 2012, Ms Edwards indicated to the Court that the defendant intended to apply at the next directions hearing, for the dismissal of Ms Healey's claim on the basis of want of prosecution. The Court said that Ms Edwards should notify Ms Healey's solicitors of that intention. The directions hearing was adjourned to 4 July 2012. 16 On 21 June 2012, the solicitor for the defendant company sent an email to Chris Stokes & Associates, the firm of solicitors then on the record for Ms Healey, advising that the directions hearing had been adjourned to 4 July 2012 at 11:00 am and that the defendant intended to bring an application for the dismissal of the proceeding at that hearing. 17 No further steps were taken by Ms Healey thereafter to prosecute her application. 18 However, on 4 July 2012, a notice of change of solicitors was filed by Ms Healey, appointing Mr Tim Retallack of Culshaw Miller Lawyers, as solicitors for Ms Healey. A representative of that firm, Ms Yu, appeared for Ms Healey at the directions hearing on that day. 19 At that directions hearing, I stated that the delay in the prosecution of the application was unacceptable and that I intended to make directions for the trial of the application. On that basis, I declined to entertain Ms Edwards' oral application for the dismissal of the proceeding. At the hearing, Ms Edwards, on behalf of the defendant company, advised that the deponents of the affidavits filed by Ms Healey would be cross-examined and that it was likely that the hearing would last two days. I made the following directions: 1. The matter was listed for hearing for two days commencing at 11:00 am on 14 August 2012. 2. By 4:00 pm on 13 July 2012, Ms Healey was to file and serve any further affidavits upon which she intended to rely. 3. By 4:00 pm on 27 July 2012, the defendant company was to file and serve any further affidavits upon which it intended to rely. 4. By 4:00 pm on 3 August 2012, Ms Healey was to file and serve her submissions. 5. By 4:00 pm on 10 August 2012, the defendant company was to file and serve its submissions. 20 By 4:00 pm on 13 July 2012, Ms Healey had not filed any further affidavits. 21 By 4:00 pm on 3 August 2012, Ms Healey had not filed and served her submissions in support of the originating application. Nor did she file the submissions at any time thereafter. 22 On 9 August 2012, the defendant company filed an application to dismiss Ms Healey's application on the grounds that she had failed to comply with the directions. 23 On 10 August 2012, Chris Stokes & Associates, one clear working day before the trial, filed a notice of change of solicitors and on the same day filed an affidavit of Mr Kevin Trevor Pollock, said to be in support of Ms Healey's application. the trial 24 On the first morning of the trial, Mr Stokes of Chris Stokes & Associates appeared for Ms Healey. 25 Mr Stokes made an oral application to vacate the trial and to extend the time for the filing and serving of the affidavit of Mr Kevin Trevor Pollock and consequential extensions of time. 26 In support of that application, Mr Stokes produced to the Court an affidavit of Mr Jamie Kevin Pollock. Ms Edwards, who appeared on behalf of the defendant, opposed the application made by Mr Stokes and moved for the dismissal of Ms Healey's originating application. 27 In the case of AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 (AON), French CJ at [30] observed: It might be thought a truism that "case management principles" should not supplant the objective of doing justice between the parties according to law. Accepting that proposition, JL Holdings cannot be taken as authority for the view that waste of public resources and undue delay, with the concomitant strain and uncertainty imposed on litigants, should not be taken into account in the exercise of interlocutory discretions of the kind conferred by r 502. Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes. 28 In my view, these observations have application in the circumstances of this case. 29 In his affidavit, Mr Jamie Pollock deposed that the law firm, Chris Stokes & Associates had been retained by a group of companies within, what he referred to as, the "Pollock group of companies" to conduct litigation, commenced in 2010 and 2011, in the Supreme Court of Western Australia against companies within, what he referred to as, the "Caratti group of companies". Chris Stokes & Associates were also at that time, solicitors on the record in this proceeding. 30 Mr Jamie Pollock went on to say that in March 2012, on the authority of Ms Healey, he instructed another law firm, Tang Legal, to take over the conduct of this proceeding because of the workload arising from the Supreme Court proceedings on Chris Stokes & Associates. Mr Pollock then deposed that Tang Legal accepted the instructions, but later advised him in mid-May 2012, that they were not in a position to act for Ms Healey. Mr Pollock said that in June 2012, he instructed Mr Tim Retallack of Culshaw Miller Lawyers to act for Ms Healey. However, a few days after the directions hearing on 4 July 2012, Mr Retallack advised Mr Pollock that he could not continue to act for Ms Healey. Mr Pollock went on to say that after having had discussions with another law firm, Karp Steedman Ross-Adjie, he again approached Mr Stokes of Chris Stokes & Associates on 27 July 2012, to act for Ms Healey in this proceeding. As mentioned, on 10 August 2012, one clear working day before the commencement of the trial in the matter, Chris Stokes & Associates filed a notice of change of solicitors and an affidavit from Mr Kevin Trevor Pollock. Mr Jamie Pollock said that there were difficulties in obtaining an affidavit from Mr Kevin Pollock arising from the fact that Mr Kevin Pollock and the relevant documents were in Casuarina prison. 31 The conduct of Ms Healey from March 2012, in failing to comply with directions and in failing to attend directions hearings, reflected an unwillingness or an inability to prosecute her application. There is, and was, an obvious prejudice to the defendant company in the continuance of litigation against it in these circumstances. Further, as French CJ observed in AON, there is a potential for loss of public confidence in a legal system which would accommodate, without adequate explanation, a plaintiff delaying the progress of litigation to trial by failing to take steps diligently to prosecute his or her application. 32 In my view, the affidavit of Mr Jamie Pollock did not provide a sufficient explanation for Ms Healey's delay in prosecuting the application since March 2012, and demonstrated a lack of commitment on behalf of Ms Healey to progress the litigation. The affidavit did not disclose why Tang Legal during the period after March 2012, when they were instructed by Ms Healey to act in the proceeding, did not file a notice of change of solicitors, nor take any steps to comply with the directions of the Court made on 7 February 2012, which required Ms Healey to file a written outline of submissions by 19 April 2012, and why there was no attendance at the directions hearing on 7 May 2012. Nor did the affidavit explain the absence of any appearance by anyone on behalf of Ms Healey at the directions hearing on 21 June 2012. 33 Further, the affidavit did not adequately explain why, having approached Karp Steedman Ross-Adjie, after Culshaw Miller Lawyers advised that they could not continue to act for Ms Healey, it took almost three weeks to again approach Mr Stokes to act for Ms Healey. 34 This is a case where there has been a continuing failure by Ms Healey from March 2012, to comply with directions and to prosecute diligently her application. There has, as a consequence, been obvious prejudice to the defendant company. The defendant has previously taken steps to dismiss the proceeding due to the failure of Ms Healey to prosecute the proceeding diligently and I declined to entertain that application on the basis that there would be a trial of the application commencing on 14 August 2012. There is also potential for a loss of public confidence in the legal system if the Court were to accommodate Ms Healey's dilatory approach to the conduct of this litigation by permitting the trial dates to be vacated. Further, as I have found, no adequate explanation has been given for Ms Healey's failure to prosecute the claim diligently and her failure to be ready for trial. I am of the view that these factors outweigh the circumstance that the defendant company could be compensated by costs if the trial was to be vacated, and an extension of time for filing Mr Kevin Pollock's affidavit was granted. 35 For these reasons, Ms Healey's application for a vacation of the trial dates and the extensions of time was dismissed. 36 I then called on Mr Stokes to open the case for Ms Healey. Mr Stokes sought to read the affidavits filed by Ms Healey into evidence. However, Ms Edwards on behalf of the defendant company, objected to the reading of the affidavits on the grounds that the witnesses were not available for cross-examination. I upheld the defendant company's objection. Mr Stokes then said that if he could not read the affidavit evidence, he was not in a position to proceed with Ms Healey's case. I, accordingly, dismissed Ms Healey's originating application. 37 I would observe that I would not, in any event, have been inclined on the basis of the evidence of Ms Healey, had her affidavit been read, to grant the relief. As mentioned, Ms Healey sought to inspect the financial records of the defendant company for each of the financial years after July 2001. 38 Ms Healey, as a director of the defendant company, during each of the years in question, has been entitled at common law and pursuant to s 290 of the Corporations Act, to have access to the financial records of the company. Ms Healey's affidavit does not disclose that she has made any effort, during that period, to appraise herself of the state of the financial records of the company, except for one occasion in 2008. Nor does the affidavit describe any efforts by her to ensure that the company complied with its obligations under s 286 of the Corporations Act to keep financial records. In other words, the affidavit does not disclose a situation in which Ms Healey has, during the last 10 years, diligently sought to keep abreast of the financial affairs of the company but has consistently been frustrated by her fellow director in that endeavour. Had that been the case, one would have expected that Ms Healey would have taken steps long before now, to complain about oppression in the conduct of the affairs of the company. 39 The picture that emerges, therefore, is of a person who now seeks to invoke the assistance of the Court to carry out an exercise which she has always, during the last 10 years, been empowered to carry out in her capacity as a director and, indeed, in a sense, required to carry out; but who failed to do so, without providing any satisfactory explanation for her lassitude in this respect. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate: Dated: 17 August 2012