FEDERAL COURT OF AUSTRALIA Australian Securities and Investments Commission v Channic Pty Ltd [2014] FCA 1311 Citation: Australian Securities and Investments Commission v Channic Pty Ltd [2014] FCA 1311 Parties: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v CHANNIC PTY LTD (ACN 141 145 753), CASH BROKERS PTY LTD (ACN 144 652 951) and COLIN WILLIAM HULBERT File number(s): QUD 536 of 2013 Judge(s): GREENWOOD J Date of judgment: 26 November 2014 Catchwords: PRACTICE AND PROCEDURE – consideration of an application brought by the respondents to adjourn the trial – where application to adjourn was made one week before the scheduled commencement of a two week trial in circumstances where the respondents have not yet briefed counsel, where the respondents have failed to provide funds for counsel and where the respondents' solicitor has been and continues to be engaged in unrelated proceedings in the New South Wales District Court which seem unlikely to conclude before the commencement of the Federal Court trial Legislation: National Consumer Credit Protection Act 2009 (Cth) Federal Court of Australia Act 1976 (Cth) Cases cited: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 Date of hearing: 26 November 2014 Place: Melbourne (with video links to Brisbane and Sydney) Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 24 Counsel for the Applicant: Mr R M Derrington QC with Mr S Seefeld Solicitor for the Respondents: Dr R Spence, Integrity Criminal Legal IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 536 of 2013 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Applicant AND: CHANNIC PTY LTD (ACN 141 145 753) First Respondent CASH BROKERS PTY LTD (ACN 144 652 951) Second Respondent COLIN WILLIAM HULBERT Third Respondent JUDGE: GREENWOOD J DATE OF ORDER: 26 NOVEMBER 2014 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The respondents' interlocutory application for the adjournment of the trial is dismissed. 2. The respondents pay the applicant's costs of and incidental to the application referred to in Order 1. 3. The applicant's foreshadowed application for an order that a non-party pay the applicant's costs of and incidental to the respondents' interlocutory application for an adjournment of the trial is reserved for later determination if and when any such application is made. 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 536 of 2013 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Applicant AND: CHANNIC PTY LTD (ACN 141 145 753) First Respondent CASH BROKERS PTY LTD (ACN 144 652 951) Second Respondent COLIN WILLIAM HULBERT Third Respondent JUDGE: GREENWOOD J DATE: 26 NOVEMBER 2014 PLACE: MELBOURNE EX TEMPORE REASONS FOR JUDGMENT 1 This is an application brought by the respondents by which they seek an order that the hearing dates for trial, commencing on 1 December 2014, be vacated. The trial dates are two weeks, commencing on that date. The application is supported by an affidavit of Dr Robert Alexander Spence who is the solicitor on the record for the respondents. The originating application in the matter was filed on 15 August 2013. The respondents to the proceedings are a company called Channic Pty Ltd ("Channic"), an entity called Cash Brokers Pty Ltd ("Cash Brokers") and a third respondent, Mr Colin William Hulbert, who is a director of both of the corporate respondents. 2 In the proceedings which have been commenced by the Australian Securities and Investments Commission ("ASIC"), the relief sought against the respondents involves claims for declarations and injunctions in relation to contended contraventions by Channic of ss 128, 130, 131 and 133 of the National Consumer Credit Protection Act 2009 (Cth) (the "Act"). So far as the relief claimed against Cash Brokers is concerned, the applicant seeks declarations and injunctions against Cash Brokers in respect of contended contraventions of ss 113, 114, 115, 117, 118, 121 and 123 of the Act. So far as Mr Hulbert is concerned, the applicant seeks declarations and injunctions against him in respect of contended contraventions of ss 113, 114, 115, 117, 118, 121, 123, 128, 130, 131 and 133 of the Act. 3 These provisions of the legislation, of course, are civil penalty provisions and the other relief claimed against each of the respondents is a claim for pecuniary penalties arising out of those contended contraventions. 4 As I mentioned a moment ago, the proceeding has been set down for trial in Cairns for two weeks commencing on 1 December 2014. At a directions hearing, relatively recently, on 20 November 2014, various steps in relation to the preparation of the matter for trial were discussed, and during the passage of 2014, particularly, various orders have been made for the orthodox preparation of the matter for trial. The proceeding has advanced to the point where tender bundles of documents are being prepared, the witnesses to be called have been identified, the witnesses to be cross examined have been nominated, and all of the other normal steps of preparation have been taking place. 5 At the directions hearing on 20 November, Dr Spence, who appears for the respondents, indicated that he would be in a position to proceed at the hearing in the sense that at least he would be able to appear. At the directions hearing and in the directions hearing prior to the most recent directions hearing, Dr Spence indicated that he had found himself in a difficult position because he is engaged in litigation in the District Court in New South Wales which has been consuming his engagement. 6 The application to vacate the dates is supported by an affidavit of Dr Spence and it is not necessary in these reasons in relation to the application to recite the total chronology of the matters which have brought Dr Spence and the respondents to the position where they feel it is necessary to make an application to vacate the trial dates. The matter can be summed up fairly briefly by observing that Dr Spence has been engaged in a matter in the Sydney District Court which was originally listed for trial on 13 October 2014. Various events occurred, including an adjournment of the matter for two weeks, the nomination of an additional witness to be called, the nomination of a trial period which would have extended to 28 November 2014, and a range of other matters which have meant that the proceeding which was originally to conclude within four weeks of the commencement date, and thus end on 21 November 2014, has not concluded, is continuing and, it seems from Dr Spence's observations this morning, that the matter is continuing to proceed. 7 Dr Spence says that these events in relation to the New South Wales District Court proceeding have placed him in considerable difficulty. So far as the preparation of the Federal Court proceedings is concerned, Dr Spence in his affidavit deposes to a conversation he had with Mr Brezniak, who is the counsel Dr Spence has instructed in the New South Wales District Court proceedings. Dr Spence intended to brief Mr Brezniak in the Federal Court proceedings, and on 21 November 2014, when speaking to Mr Brezniak, it became clear that it would be necessary to retain some other counsel in the Federal Court proceeding. Dr Spence then began making inquiries, which he deposes to in his affidavit, of a range of counsel and also solicitors who might be willing to accept an engagement in the matter and appear on behalf of the respondents. 8 What emerges, of course, from the affidavit of Dr Spence, consistent with the oral observations he has made at recent directions hearings, is that the District Court proceedings in New South Wales have placed him under great pressure and it has not been possible for him to prepare the necessary briefs to brief counsel in a fully informed way which would enable counsel to come to grips with the preparation of the matter for Cairns. 9 The additional factor which is relevant to note is that Dr Spence has been engaging with Mr Hulbert on this entire question of the preparation of the matter for trial, and it seems that, over a period of at least three months, Dr Spence has been requesting Mr Hulbert to put Dr Spence in funds in order to enable him to at least brief counsel for the trial. Not only were requests made of Mr Hulbert to this effect, at least three months ago, but at least seven or eight requests have since been made for the provision of funds to enable proper preparatory steps to occur. Funds have not been provided as requested. Dr Spence notes that in relation to various matters such as his attendance at the directions hearings, he has raised invoices to one or more of the respondents and those invoices have been paid. However, the position remains that the respondents, although requested over a lengthy period of time, have not provided Dr Spence with funds in order to enable the preparation to occur. 10 This is a particularly difficult set of circumstances because, on 6 May 2014, the Court indicated to the parties that the matter would be set down for hearing for two weeks commencing on a date to be notified, and then on 16 June 2014, the Court advised the parties that the proceeding would be set down for trial for two weeks in Cairns commencing on 1 December 2014. That means, of course, that the parties have had, since 16 June 2014, many months to embark upon the preparation of the matter for trial and come to grips with all of the factual and legal questions raised by the proceeding. Dr Spence contends that many of the matters related to the District Court proceedings in New South Wales which have engaged him are matters which weigh heavily in the exercise of the discretion to adjourn the trial, because these matters are proper matters of explanation as to why it is that the present matter has not been able to be prepared fully and, thus, it is said the respondents will suffer prejudice. 11 It seems to me, however, as I indicated to Dr Spence in the course of the application that the truth of the matter is that Dr Spence's engagement in the District Court matter in New South Wales has meant that he has been consumed in his professional tasks in representing the interests of the defendant in that proceeding, and having regard to the close symmetry in time between the Federal Court proceedings coming up for trial in December and the proceedings in October and November in the District Court, it must have become reasonably apparent to Dr Spence that it would be difficult to deal with both matters. It seems to me that the proper course would have been for Dr Spence to relinquish instructions in this matter to enable other legal representatives to assume the conduct of the matter. 12 I mention this factor because, although the circumstances confronting Dr Spence in the District Court proceedings in New South Wales are put forward as the explanation, I am not satisfied that they amount to an excuse for not preparing the matter fully in the orthodox, proper, professional way. I understand that they may be explanatory of those circumstances but they do not amount to an excuse. 13 The matter has moved a little though from that proffered explanation because Dr Spence recognises that the underlying difficulty is that he has been asking for funds for three months many times – at least seven or eight times – and those funds have not been forthcoming. Part of the difficulty, apparently, is that Dr Spence does not have a trust account, and one way of dealing with that circumstance was a proposition put to Mr Hulbert and, apparently, to counsel, that the client might pay the funds directly into counsel's account under some particular arrangements. I find all of those circumstances extremely odd indeed. If a client is to provide funds to a solicitor on account of the conduct of litigation, they ought to be paid into a trust account under the supervision of a solicitor, and when the work is done, the fee is rendered then funds can be appropriated from the trust account to deal with those properly incurred expenses. Any arrangement short of that would seem to me to be unorthodox, and may or may not be consistent with the trust account arrangements in the State of New South Wales. However, I need to say no more about that. 14 The only point of it for the present purposes is that the delay in the preparation of the matter is very largely a function of the respondents not providing Dr Spence with funds in a timely way in whatever manner might properly, as a matter of law, have been put in place. 15 The more significant matter then that Dr Spence relies upon is the question of whether the circumstances which have emerged in relation to Mr Humphreys are sufficiently prejudicial that those circumstances would warrant the adjournment of the trial. Those circumstances, essentially, are put this way. 16 Mr Humphreys is a person who has engaged with ASIC and has provided some information to ASIC and has answered questions, which appear in a transcript under relevant proceedings. 17 A statement or affidavit was prepared and was to be signed by Mr Humphreys (but he seems to have resiled from that) and ASIC had indicated that it intended to call Mr Humphreys and, if necessary, compel his attendance at court by way of a subpoena. Dr Spence says that Mr Humphreys is an important witness on a number of fronts and that the revelation that, perhaps, Mr Humphreys may now not appear is a matter of concern to him and the respondents. Dr Spence says that steps were not taken by his side of the record to compel Mr Humphreys' appearance because he rather understood that ASIC would be calling Mr Humphreys or that ASIC would be compelling Mr Humphreys' attendance. 18 Mr Humphreys has been served with a subpoena to attend by way of ASIC sending it to an email address to Mr Humphreys on the footing that that is the address they have and that Mr Humphreys is said to be a relatively elusive gentleman. Mr Humphreys has responded to the Federal Court in relation to that email by writing a letter to the Court, dated 26 November 2011, in which he says that he cannot contribute greatly to the matters in controversy in the proceedings because the events took place four years ago and there is nothing that he can usefully add. In addition to that, he says that he is impecunious and that he is suffering from some medical conditions. He has formulated an interlocutory application in which he seeks to be excused from appearance at the hearing and he has a short affidavit which he has sworn on 26 November 2014. 19 The Court will need to list that application for determination shortly. It cannot be dealt with today. It has not been served upon ASIC. The Court will take steps to forward the information to ASIC and/or take steps to list the application. However, I am not persuaded that the questions in relation to Mr Humphreys are decisive of the exercise of the discretion in relation to the application to adjourn the trial. ASIC, apparently, has indicated that Mr Humphreys will either attend or be compelled to attend, and it is clear that ASIC has taken steps to compel his attendance. Whether they have successfully done so is a question yet to be determined, and even if Mr Humphreys has been compelled to appear properly, then the application to be relieved from attendance needs to be determined. 20 So it follows that the matters which are put forward which would warrant the trial being adjourned, it seems to me, are not particularly compelling. In addition to these matters, it is necessary, of course, for the Court to take strongly into account the interests the public have in the proper, orthodox and expeditious determination of proceedings. Two weeks of court time has been allocated to this matter. The applicant is engaging with a range of individuals who are to be called to give evidence (perhaps 13 witnesses) and the respondents propose to call 10 witnesses. Questions arise about the extent to which individuals who are engaged in these processes can have confidence in the proper administration of justice if a proceeding which has been set down for a lengthy period of time is adjourned on the cusp of the hearing for reasons which are put forward by Dr Spence. 21 Having regard to the observations of the High Court in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, I am satisfied that a proper assessment of the observations of their Honours in that case apply to the facts of this case and make it clear that it is not in the interests of justice or a proper exercise of the discretion to adjourn the trial at this point. I take into account, of course, the notion that what is in issue in these proceedings is a controversy of fact which goes to contraventions of civil penalty provisions, which in themselves, if made good, would result in a claim for relief of pecuniary penalties. Although such proceedings are, of course, civil proceedings, they are, nevertheless, of sufficient seriousness that one must carefully consider the nature of any prejudice that would arise in the conduct of the proceedings. 22 Notwithstanding that consideration, having regard to the long period of time during which the respondents have been on notice, their failure to provide Dr Spence with funds in order to prepare the matter and the provisions of the Federal Court of Australia Act 1976 (Cth) which require the proceedings before the Court to be dealt with as expeditiously as possible, it seems to me that there is no proper basis made out upon which the proceedings, commencing on 1 December 2014, ought to be adjourned. Accordingly, I dismiss the interlocutory application to vacate the trial dates and the trial will proceed, commencing on Monday, 1 December in Cairns. 23 For the purposes of the respondents' application, I should observe, of course, that I have had regard to the interlocutory application filed by Dr Spence and, of course, Dr Spence's affidavit and the annexures. I have also read the affidavit of Mr Copley sworn 25 November 2014 and the attachments to that affidavit. I simply note that that material is read on the application. 24 As to the costs of today's application, it seems to me that the proper course is this: I am going to order that ASIC's costs of and incidental to the application to adjourn the trial are to be paid by the respondents. I will reserve the question of whether any order for costs ought to be made in any wider sense than that and, of course, Dr Spence would understand that what Mr Derrington QC is foreshadowing is that ASIC may seek an order for costs against him personally. I am not going to deal with that matter today, because it may be that other material will be filed about it. I will reserve that further question for later determination should the question arise. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate: Dated: 26 November 2014