New South Wales Supreme Court CITATION : Gemtaf P/L & Ors v Tradebanc International P/L [No 2] [2000] NSWSC 705 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S) : SC 11419/98 19/05/99 HEARING DATE(S) : 11/06/99 17/07/2000 JUDGMENT DATE : 17 July 2000 Gemtaf Pty Limited t/as "El Paso Motor Inn" (1 Appel) PARTIES : Margaret Denise Pursell (2 Appel) Terence Edward Fitzgibbon (3 Appel) Tradebanc International Pty Ltd (Resp) JUDGMENT OF : Kirby J LOWER COURT Local Court JURISDICTION : LOWER COURT 13632/97 FILE NUMBER(S) : LOWER COURT Ms J Wahlquist JUDICIAL OFFICER : COUNSEL : D Knaggs, sol (Appels) A P Spencer (Resp) SOLICITORS : Douglas Knaggs (Appels) Tony Simons (Resp) CATCHWORDS : Appeal against Magistrate's decision - Sufficiency of Stated Case LEGISLATION CITED : Supreme Court Procedure - Pt 32 r 7 CASES CITED : Allan v Kerr (CCA, unreported, 7 August 1995) DECISION : Ref para 18 THE SUPREME COURT Extempore Revised OF NEW SOUTH WALES COMMON LAW DIVISION KIRBY J Monday 17 July 2000 11419/98 - GEMTAF PTY LTD & ORS v TRADEBANC INTERNATIONAL PTY LIMITED JUDGMENT [No 2] - Application in respect of the Stated Case 1 HIS HONOUR: This is litigation with a long history. The matter first came before me as a stated case on 19 May 1999. At that time Mr Knaggs appeared for the plaintiffs/appellant, Gemtaf Pty Limited, and Mr Bellanto QC appeared with Mr Goldsworthy for the defendant/respondent, Tradebanc International Pty Limited. 2 The matter raised three issues in relation to the determination by a Local Court Magistrate of a dispute between the parties. The first aspect was relatively straight forward. It involved the admissibility of evidence. No more need be said about that. That issue has been argued, submissions have been made, and it awaits only a determination by me. 3 The second issue related to an assertion by the appellant, Gemtaf Pty Limited, that the learned Magistrate was in error in not characterising the arrangements between the parties as having infringed the provisions of the Corporations Law dealing with prescribed interests. 4 The third issue related to an allegation of fraud. It relied upon the construction of certain rules. As I understand the appellant's argument, these rules were said to give rise to a secret commission. There was, unknown to members, a right on the part of Tradebanc to deal with monies that it received in a way which suggested fraud. 5 The business of Tradebanc International involved what might be loosely described as a barter system of trade between various people who joined the company as members. Aspects of the system were not easy to understand. In the course of an exploration of the system by me, when counsel sought to acquaint me with the facts, a question arose in my mind, namely, in circumstances where the credit of a member is reduced, or the membership of that party ultimately terminated, was there an obligation on the part of Tradebanc International to deal with the money in a particular way. Specifically, was it required to redirect the money back into the system? 6 The rules, as Mr Spencer points out, he now appearing for Tradebanc International, appear to deal with two situations. The first is concerned with credit reduction, and the second with termination of membership. In the latter case only, on his argument, is any cash generated, and then the obligation on the part of the company, that is Tradebanc International, is defined by the rules to use the money in its administration of the system. Mr Spencer points out that the system is defined by the rules. 7 Returning to the history of the litigation, upon my raising this issue, Mr Bellanto stated from the bar table, that in fact Tradebanc International, in circumstances where it receives money, rechannelled that money back into the system. By this means there was, at any given moment, equilibrium, that is the trade debits equalled the trade credits. Mr Knaggs disputed that assertion. Mr Bellanto apparently saw it as important to prove this aspect of the defendant's system. He, therefore, made application to me under Part 32 Rule 7 to call evidence in relation to the practice in fact followed by Tradebanc International. That course was opposed by Mr Knaggs. I gave a judgment in which ultimately I permitted evidence to be called. 8 As I remember the circumstances, and refreshing my memory by re-reading my judgment, it appeared to me that the stated case was insufficient. It did not describe adequately, at least to my mind, the system as it operated, so that it appeared to me just and reasonable that a more complete description should be furnished. However, it has to be said that once the matter was opened up in this way, it took on a life of its own. 9 Evidence was called from various directors of the company, and those directors were cross-examined. Other issues emerged, and to some extent Mr Knaggs, I think it is fair to say, sought to broaden the allegations of fraud to incorporate matters which, in his mind, might suggest fraud arising from the evidence as it emerged. 10 At the end of the hearing it was plain that further court time would be required. I then directed the parties to set out in written form their respective versions of the way in which the system operated, so that I could identify the common ground, and the points of difference. There I believe the matter was left. 11 It was listed for hearing early this year, but had to be vacated because of another lengthy matter which was then proceeding. In the meantime Mr Knaggs, and the defendants, had not been inactive. Various steps have been taken, and subpoenas issued, which were expected to broaden the matter even further, were these issues pursued. 12 When the matter began today, Mr Spencer identified a preliminary matter. Indeed, he believed that it was his obligation to draw it to my attention, since he saw the course that has been pursued, which I have described, as being contrary to Part 32 Rule 7 as explained by the Court of Appeal from time to time, and most recently by his Honour Mr Justice Powell in Allan v Kerr, (CCA, unreported, 7 August 1995) and specifically at the foot of page 12 and over on to page 13. 13 Mr Knaggs at this point indicated his instructions. He joined with Mr Spencer in seeking to have the evidentiary material confined to that material available before Mr Bellanto QC made his application; that is, that the evidence should be confined to the following: · first, the amended stated case; · secondly, the exhibits before her Worship; and · thirdly, the judgment of the learned Magistrate. 14 Mr Knaggs also foreshadowed the need to consider whether the transcript of proceedings before the learned Magistrate ought to be material before me. Mr Spencer, for his part, as I understand his position, prefers that it not be tendered, and that the matter be dealt with on the documents which I have identified. I will deal with that issue later, once the parties have examined the transcript, and considered their position. 15 I am content in the unusual circumstances of this case to deal with it upon the basis which the parties jointly see as being in their respective interests. I will disregard entirely the evidence that has been given after Mr Bellanto QC made his application to call evidence on 19 May 1999. 16 There remains the issue of costs. There has been some debate on that issue. It seems to me the order that is appropriate is as follows: First, that the defendant, Tradebanc International Pty Limited, should pay the plaintiff's costs thrown away as a result of the application made, which was the subject of my judgment of 19 May 1999. Such costs will include, inter alia, the costs of part of 19 May 1999, 20 May 1999, and today's hearing, 17 July 2000 (whatever the final outcome of these proceedings). 17 Secondly, that in respect of the subpoena to which objection is taken, and in respect of which there is a notice of motion by the defendant, the appropriate order is that each party should pay its own costs. 18 There is a separate notice of motion by the trustee of Tradebanc International Limited, Ms Leigh Thompson. In view of the way in which the case will now proceed, the plaintiff will not rely upon the subpoenaed material. In these circumstances, counsel for Ms Thompson seeks costs. I will deal separately with that issue. ********** Last Modified: 09/26/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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