FEDERAL COURT OF AUSTRALIA Australian Competition and Consumer Commission v FDRA Pty Ltd [2016] FCA 429 File number: NTD 70 of 2015 Judge: WHITE J Date of judgment: 4 April 2016 Catchwords: PRACTICE AND PROCEDURE – interlocutory applications – application for summary judgment or permanent stay of proceeding – application barring continuation of proceeding – application for striking out of pleadings – relevant factors – whether proceeding is an abuse of process or vexatious – whether pleadings disclose reasonable cause of action – no evidential basis for applications PRACTICE AND PROCEDURE – interlocutory application – leave to issue a subpoena – relevant factors – documents which have apparent relevance to issues in the proceeding – documents which have legitimate forensic purpose PRACTICE AND PROCEDURE – interlocutory application – leave for a corporation to proceed other than by a lawyer – factors relevant to grant of – financial capacity of corporation to fund legal representation – factual complexities of proceeding – capacity of proposed representative to conduct proceeding Legislation: Australian Consumer Law ss 18, 21, 29, 73, 74, 76, 78, 79, 80 Evidence Act 1995 (Cth) s 97 Federal Court of Australia Act 1976 (Cth) ss 31A, 37OP, 37AP Federal Court Rules 2011 (Cth) rr 4.01, 6.02, 16, 16.21, 24.01, 26.01 Cases cited: Alister v The Queen (1984) 154 CLR 404 Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 Deputy Commissioner of Taxation v Compumark Pty Ltd [2012] FCA 583; (2012) 292 ALR 8 Enviro Pak Pty Ltd v New Horticulture Pty Ltd [2013] FCA 306 Fried v National Australia Bank Ltd [2000] FCA 911; (2000) 175 ALR 194 Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 Wong v Sklavos [2014] FCAFC 120; (2014) 319 ALR 378 Date of hearing: 4 April 2016 Registry: Northern Territory Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 50 Counsel for the Applicant: Mr SM Davies with Ms TL Jonker Solicitor for the Applicant: Norton Rose Fulbright Counsel for the Respondents: Mr JT Anni appeared in person for the Respondents ORDERS NTD 70 of 2015 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant AND: FDRA PTY LTD (ACN 163 645 065) First Respondent JACKSON TEMI ANNI Second Respondent JUDGE: WHITE J DATE OF ORDER: 4 APRIL 2016 THE COURT ORDERS THAT: 1. The interlocutory applications of the respondents filed on 29 March 2016 are dismissed. 2. Consideration of the application for costs of the interlocutory applications and today's hearing is adjourned to the next directions hearing. 3. The matter is adjourned for further directions at the case management hearing at 2 pm on Thursday, 19 May 2016. 4. Both the Applicant and the Respondents are, by close of business on Monday, 16 May 2016, to serve on the other, and to provide to my Associate minutes of the orders which they will be asking the Court to make at the next case management hearing. 5. There be liberty to the parties to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. EX TEMPORE REASONS FOR JUDGMENT WHITE J: 1 In these proceedings the ACCC seeks orders against two respondents, FDRA Pty Ltd (FDRA) and Mr Anni. 2 The ACCC alleges that in its conduct of a business of supplying or offering to supply Nextbook electronic tablet devices (Tablets) and related products and services (Extras), FDRA has, at least from September 2014, breached several provisions in the Australian Consumer Law (ACL). 3 Mr Anni is the sole shareholder of FDRA, one of its directors and its CEO. In the period from 29 July 2014 until 10 February 2015, he was the sole director of FDRA. 4 The ACCC alleges that Mr Anni was knowingly involved in each of the contraventions of the ACL by FDRA and, accordingly, is liable as an accessory. 5 The ACCC commenced the proceedings on 23 December 2015 by filing an application supported by a statement of claim (SOC). The respondents have filed their defence, but the time for filing of a reply to that defence has not yet expired. 6 At this stage, neither respondent is legally represented. 7 The respondents have filed three interlocutory applications, with Mr Anni purporting to file these on behalf of FDRA as well as in his own right. It is necessary to refer only to the third of these application filed on 29 March 2016 because it supersedes the first two. By that application, the respondents seek, first, the leave of the Court for Mr Anni to represent FDRA in the proceedings. 8 Then the respondents seek orders in a descending scale of alternatives as follows: (1) summary judgment on the basis that the proceedings are an abuse of process; or (2) the permanent stay of the proceedings on the basis that they are an abuse of process; or (3) an order (said to be pursuant to r 6.02 of the Federal Court Rules 2011 (Cth) (the FCR) that the ACCC be not permitted to continue the proceedings against Mr Anni on the ground that its commencement of the proceedings is vexatious; or (4) an order pursuant to r 26.01 of the FCR for summary judgment, on the basis that the SOC does not disclose a reasonable cause of action; or (5) an order pursuant to r 16.21 of the FCR striking out the SOC because it does not disclose a reasonable cause of action; or (6) an order striking out [6]-[10], [63], [66]-[70] and [79] of the SOC on the grounds that they fail to disclose a cause of action. 9 In the first interlocutory application, the respondents also sought particulars of several of the paragraphs in the SOC but that aspect of the application is no longer pursued. 10 At the commencement of today's hearing, Mr Anni sought two further orders: leave to issue subpoenas directed to six persons and then the adjournment of today's hearing until after the return date of the subpoenas. He seeks to obtain documents in relation to his claim that the proceedings were issued for a collateral purpose and are, therefore, an abuse of the Court's process. The persons on whom Mr Anni seeks to serve the subpoenas are the following: (1) the Northern Territory Police Commissioner; (2) Louise Oriti, a General Manager at the Royal Darwin Hospital; (3) Priscilla Collins (of the Northern Australian Aboriginal Justice Agency (NAAJA)); (4) Craig Dunlop; (5) the Director of the ACCC; (6) Laetitia Lemke; and (7) the Attorney-General for the Northern Territory. 11 It is not necessary to set out in detail the documents which Mr Anni seeks to have each subpoena recipient produce. In general, they are documents "evidencing or recording or constituting communications directly or indirectly" concerning Mr Anni and/or FDRA in the period from 19 September 2015 to 26 February 2016 between the subpoena recipient and others and, in particular, between the ACCC and Ms Oriti. 12 The basis upon which Mr Anni seeks the issue of the subpoenas is set out in his affidavit of 29 March 2016 as follows: [13] Between May 2015 and November 2015, Mr Keith Djiniyini, a director of [FDRA], met with and had telephone conversations with employees of [the ACCC], at least thrice. [14] Based on my analysis of the memos of those meetings and telephone calls, I have formed the view that the relevant communications provide a basis for inferring that the proceedings were substantially or wholly commenced for a collateral purpose such that the proceeding constitutes an abuse of process. [15] I have also formed the view that some documents and records are relevant to the issue of the purpose for which the proceeding was substantially or wholly commenced and thus relevant to the disposal of the Interlocutory Application, namely, all communications in the period leading up and immediately after the commencement of the proceeding: (1) between the applicant and each of these individuals: (a) a journalist in the employ of NT News (News Corp Australia); (b) the Royal Darwin Hospital (and all its associated hostels); (c) the NT Department of the Attorney-General and Justice; (d) the NT Police; (e) a journalist in the employ of ABC News; (f) an employee of the Northern Australian Aboriginal Justice Agency; (2) all such communications between some of the individuals referred to above. [16] Accordingly, [Mr Anni] respectfully seeks the leave of the Court to issue subpoenas to produce documents for this purpose as against [the ACCC] and each of the individuals referred to in paragraph 15. … 13 I mention that counsel for the ACCC took objection to the Court receiving these paragraphs of Mr Anni's affidavit on the basis that they contained inadmissible statements of opinion and on the basis of their form, but I allowed Mr Anni to present this as part of his evidential material. I took the view that the objections raised by counsel for the ACCC went to the weight, if any, which could be given to Mr Anni's affidavit in relation to the present application. 14 Rule 24.01 of the FCR provides that a subpoena may be issued only with the leave of the Court. A number of matters bear upon the exercise of the Court's discretion with respect to the grant of such leave. Mr Anni referred to several authorities in which these matters have been discussed. In the view which I take of the matter, it is not necessary to refer to them all. I proceed on the basis that a party seeking to issue a subpoena has an onus to demonstrate that the subpoena has a legitimate forensic purpose in relation to the issues in the proceedings and that the documents sought bear apparent relevance to the issues arising on the pleadings: Wong v Sklavos [2014] FCAFC 120; (2014) 319 ALR 378 at [12]. In practice, this means that, viewed realistically, the documents sought must have an apparent bearing on an issue which is not unreal, fanciful or speculative: Wong v Sklavos at [12]. It must be "on the cards" that the documents sought will materially assist the party at whose request the subpoena is sought: Alister v The Queen (1984) 154 CLR 404 at 414. 15 I observe that there is a line of authority which suggests that the elements of "legitimate forensic purpose" on the one hand, and "apparent relevance" on the other, are separate and distinct. It is not necessary to explore that question for present purposes. 16 A subpoena cannot be used for fishing purposes. This is to say, it is not a legitimate use of a subpoena to have the specified documents produced in a speculative attempt to identify whether the documents might, ultimately, be of some evidential value: Fried v National Australia Bank Ltd [2000] FCA 911; (2000) 175 ALR 194 at [30]. 17 I refused Mr Anni's application for the grant of leave to issue the subpoena and said that I would give reasons as part of the reasons generally on the application. My reasons are as follows. 18 First, the subpoenas which Mr Anni wishes to issue do not seek documents which have any apparent relevance to any issue raised on the pleadings. The respondents' defence, filed as recently as 17 March 2016, does not contain any allegation that the proceedings are an abuse of process, nor any allegation of the kind to which Mr Anni referred in [14] and [15] of his affidavit. 19 Secondly, Mr Anni has not provided a proper evidential basis for the grant of the subpoenas on the grounds upon which he relies. He refers only to an analysis which he himself has carried out of the "memos" of meetings and telephone calls between Mr Djiniyini and unidentified employees of the ACCC. An affidavit of Mr Djiniyini upon which Mr Anni was given leave to rely identifies the relevant employee as a Ms Banghan but Mr Anni's evidence does not go beyond that. In particular, Mr Anni's evidence does not particularise the author of the memos, nor does he annex them to his affidavit so that the Court can form its own view about the merit or otherwise of the analysis which he has made. There is no indication that Mr Anni has any particular expertise which would enable him to form an opinion of the kind which he sets out in his affidavit. Given that Mr Anni is himself a respondent to the proceeding, his assessment of the memos may well be different from that which an independent and detached person may make. 20 Thirdly, Mr Anni does not particularise the "collateral purpose" for which he contends. 21 Fourthly, Mr Anni seeks the issue of subpoenas against seven persons but without indicating any basis at all with respect to at least some of them, on which the Court might consider that they have documents which may have apparent relevance to matters in issue in these proceedings. There is, for example, no basis upon which the Court could conclude that a journalist in the employment of the Northern Territory News may have some documents of apparent relevance to the issues in these proceedings. 22 Fifthly, the scope of the subpoenas seems to be unduly wide. Mr Anni seeks the production of all documents constituting or evidencing communications in the period 19 September 2015 to 26 February 2016 which concern, directly or indirectly, himself or FDRA with those communications being between identified people whether or not those communications have anything at all to do with the matters which are the subject of the present proceedings. 23 Sixthly, it is not appropriate for a subpoena to be issued to a party to an action. If the respondents seek documents from the ACCC, they should adopt the means contemplated by the FCR for that purpose. 24 Given my refusal of the application for the grant of leave to issue subpoenas, there was no point to the adjournment sought by Mr Anni, something which he acknowledged, and, accordingly, I refused the application for the adjournment. 25 Although the application for the grant of leave for FDRA to proceed other than by a lawyer was the first application in the interlocutory application, I will defer my ruling on that until I have dealt with the remaining matters. 26 It is convenient to deal with Mr Anni's application for summary judgment or for a permanent stay of the proceedings together. I observe, first, that Mr Anni seeks this relief only in relation to the claim against himself. Mr Anni contends that the Court should conclude now that, insofar as the proceedings concern him personally, they are an abuse of process. However, he has not provided any evidential basis upon which the Court could conclude that that is so. That being so, it is unnecessary to refer in any detail to the authorities which consider the matters relevant to the exercise of the Court's discretion under s 31A of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) on this basis. 27 A party seeking summary judgment or a permanent stay of proceedings has a heavy onus. Mr Anni's failure to provide any evidence to support the view that the proceedings have been issued for a collateral purpose means that the onus has not been discharged. That aspect of the application is refused. 28 I turn next to the application purportedly made pursuant to r 6.02 for an order that the ACCC must not continue the proceedings against Mr Anni without the leave of the Court, on the ground that it has commenced the proceedings against him vexatiously. This application is misconceived. Rule 6.02 specifies the procedure to be followed by a person seeking a certificate under s 37AP(1) of the FCA Act. Section 37AP provides a means by which a person may be informed whether another person is, or has been, the subject of a vexatious proceedings order made by the Court under s 37AO of the FCA. Rule 6.02 refers to a function of the Registrar and not of the Court itself. There is no basis upon which the Court presently could make an order of the kind sought by Mr Anni against the ACCC in this respect. 29 Next, I turn to those aspects of the interlocutory application which seek summary judgment or the striking out of the SOC on the basis that, considered generally, it does not disclose a reasonable cause of action. The principles upon which the Court acts in relation to applications of this kind have been discussed in a number of the authorities. It is sufficient to refer to Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 and Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 at [6]. Those authorities indicate the heavy onus carried by a litigant who seeks summary judgment or the striking out of a pleading on the basis that it discloses no reasonable cause of action. 30 The gist of the submission made by Mr Anni appears in the following paragraphs of his written outline. [8] The Applicant fail[s] to provide sufficient facts to demonstrate that the allegations contained in the Claim were the standard business practices of the Respondents. [9] The Applicant claims that the nature of the six complaints alleged in the Claim exposed the Respondents' conduct and representations tied to the exploitative business practices. But the existence of these complaints does not conclusively establish that FDRA made those false representations nor did it establish that FDRA did engage in the conduct alleged. (Emphasis added) 31 The submission made in those paragraphs ignores the distinction between the pleading of material facts in a statement of claim as required by r 16 of the FCR, on the one hand, and the later adducing of evidence to establish those facts, on the other. All the Court is concerned with at the present time is whether, if the factual matters asserted by the ACCC are established at trial, they will establish a cause of action of the kind alleged by the ACCC. That is a very different question from considering, at this stage, the quality or the adequacy of the evidence which the ACCC may be able to adduce. 32 Many of the respondents' submissions on this aspect of the application were directed to matters of evidence. Amongst other things, the respondents referred in some detail to authorities concerning the admissibility of similar fact evidence. It may become necessary at the trial for the Court to consider the admissibility of evidence of this kind but I observe, for present purposes, that all of the authorities to which the respondents referred discuss the principles which applied under the common law and not those arising under s 97 of the Evidence Act 1995 (Cth). At the present time, the Court does not know what evidence the ACCC will seek to adduce in order to establish its allegations and, accordingly, it is not in any position to make any assessment of the admissibility of the ACCC evidence, let alone to assess whether that evidence will establish the matters which the ACCC has pleaded in the SOC. 33 In my opinion, the respondents have not shown any tenable basis upon which the Court could conclude presently that the ACCC has not pleaded a reasonable cause of action or has no reasonable prospects of making out its allegations. It is unnecessary to engage in any detailed analysis of the ACCC pleadings. It is sufficient to observe that the ACCC has pleaded contraventions by FDRA of ss 29(1) and 18(1) of the ACL by forms of misleading or deceptive conduct; unconscionable conduct, in contravention of s 21 of the ACL; calling on consumers outside normal hours, in contravention of s 73; non-disclosure when making unsolicited calls, in contravention of s 74; as well as contraventions of ss 76, 78, 79 and 80. 34 On their face, the allegations which the ACCC makes with respect of these contraventions seem to be in a conventional form and, as I say, there is no basis upon which the Court could conclude that the matters pleaded, if established, will not make out the allegations made by the ACCC. 35 I reach the same conclusion even when one has regard to particular paragraphs in SOC which Mr Anni impugned. The first group were [6]-[10] inclusive. In those paragraphs, the ACCC pleads a pattern of behaviour by the respondents in relation to the negotiation of sales of Tablets and Extras to members of indigenous communities: the places at which the alleged conduct took place; characteristics of the consumers who purchased the Tablets; representations made by the respondents or their representatives to those consumers; matters about which the consumers were not informed; and the arrangements for payment which were made. 36 The pleadings in those paragraphs contain allegations of fact of a general kind. They seem to have been pleaded as a prelude to the legal characterisation which the ACCC indicates in later paragraphs of the SOC it will ask the Court to make. 37 I note, again, that the question presently is not whether the ACCC will be able to make out those allegations with the evidence presently available to it, but whether the ACCC has pleaded facts which, if established, are capable of making out the causes of action it alleges. On my assessment, the ACCC has done that. 38 Mr Anni impugns [63] of the SOC. This paragraph pleads that on 10 April 2015, Ms Oriti made a trespass order against him which denied him access to the Royal Darwin Hospital except when in need of medical assistance. Later paragraphs plead breaches by Mr Anni of that order, as I understand it, which form part of the conduct upon which the ACCC relies for its alleged contraventions. In particular, it is part of the conduct upon which the ACCC relies for its allegation of unconscionable conduct. On that basis, it ought not to be struck out. 39 Paragraphs [67]-[70] plead the contraventions of ss 18 and 29 and, indeed, the other provisions of the ACL which I mentioned earlier. Mr Anni's submissions have not provided a basis upon which it could be held that those paragraphs do not disclose a reasonable cause of action, and they should not be struck out. 40 Paragraph [79], which Mr Anni impugns, is the plea of his accessorial liability. It cannot be said that that does not disclose a reasonable cause of action, and it too should not be struck out. 41 This means that I reject all of those aspects of the interlocutory application which seek a summary judgment or a permanent stay or a striking out of some or all of the SOC. 42 That brings me to that part of the application which concerns the representation of FDRA. Again, the principles bearing upon the exercise of the Court's discretion pursuant to rr 4.01 and 1.34 of the FCR, are well established. It is sufficient to refer to Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 at [13]; Deputy Commissioner of Taxation v Compumark Pty Ltd [2012] FCA 583, (2012) 292 ALR 83 at [20]; and Enviro Pak Pty Ltd v New Horticulture Pty Ltd [2013] FCA 306 at [16]-[18]. 43 Some matters point in favour of the grant of leave. These include the circumstance that Mr Anni is the sole shareholder and CEO of FDRA and may be taken to be familiar with its operations, and that he is a party to the proceedings in his own right and is entitled to represent himself in that capacity. Mr Anni also says in his affidavit of 4 March that he has been authorised by the other two directors of FDRA to represent it in these proceedings; that the circumstance that he is the sole shareholder of FDRA means that its interests and his are wholly aligned; that FDRA cannot afford the cost of engaging legal representation; and that he has "some litigation experience", so that he is capable of presenting an argument coherently and succinctly. 44 I observe, however, that these matters do not rise above the level of submission. Mr Anni has not provided independent evidence of his authority from the other two directors. He has not provided any evidence that FDRA is unable to meet the cost of engaging legal representation, and he has not provided any evidence of the "litigation experience" on which he relies. Although the matters to which Mr Anni refers have some force, I have concluded that it is inappropriate to grant Mr Anni leave to represent FDRA in the proceedings. My reasons for that conclusion are as follows. 45 Although Mr Anni's outline of submissions and his oral submissions indicate that he has some familiarity with legal concepts and the ways of courts, the bringing of the present application and its content suggests that the Court cannot be confident that Mr Anni will be able to represent FDRA appropriately in the proceedings. The very nature of the applications and some of the submissions made in support of them give rise to my concerns. As the reasons I have already given indicate, some of Mr Anni's submissions involve misconceptions and some were made without there being a proper foundation. Mr Anni's reliance on r 6.02 is an example, as is his apparent failure to appreciate the distinction between material facts pleaded in a statement of claim, on the one hand, and the evidence which might be presented at the later trial in support of those material facts, on the other. 46 The second matter which concerns me is that the allegations made against FDRA are of a serious kind, and their resolution is going to involve matters of some complexity. It would be highly desirable for FDRA to have legal representation. 47 Thirdly, FDRA has not demonstrated an inability to fund legal representation. 48 Fourthly, if FDRA has legal representation, it is likely that the proceedings will be conducted with greater efficiency and expedition. In particular, it is likely that the conduct of the proceedings will benefit from FDRA being represented by someone with greater detachment from the matters which are the subject of the proceedings, than Mr Anni has. 49 For these reasons, I refuse to grant leave to FDRA to be represented by Mr Anni. 50 The consequence is that all aspects of the interlocutory applications in their amended form are dismissed. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White. Associate: Dated: 26 April 2016