Australian Competition and Consumer Commission v Sensaslim Australia Pty Ltd

Background 2 Before dealing with the basis on which the adjournment is sought, it is necessary for me to set out some background matters that have occurred since this proceeding was commenced on 15 July 2011 with an application for ex parte injunctive relief and for the abridgement of time for service of the application commencing the proceeding and other court process. Those applications were made before me. The proceeding has remained in my docket since that time. In very general terms, the proceeding concerns the marketing of a product called Sensaslim which was said to have been promoted to a large number of individuals each of whom acquired that product as a franchisee based on representations made about the product. It is alleged that the second respondent was implicated in those matters and contravened provisions of the Trade Practices Act 1974 (Cth) and the Australian Consumer Law. The applicant seeks declarations of contravention, injunctions, civil penalties, compensation orders and banning orders, amongst other relief. The banning order sought against the second respondent is that he be disqualified from managing corporations for a period of 20 years. 3 The first background matter is that, during the pendency of the present proceeding, the applicant filed an interlocutory application and statement of charge on 11 November 2011 alleging criminal contempt by the second respondent in a proceeding that had been commenced in the Queensland District Registry of the Court: QUD 252 of 2001 - Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (Deregistered) (the contempt proceeding). In that proceeding a warrant for the imprisonment of the second respondent was issued on 28 November 2011. By an order made on 7 December 2011 the second respondent was conditionally released pending the determination of the charge against him. One of the conditions of his release was that he reside at a certain address in Queensland (or at such other place in Queensland as may be authorised in writing by the applicant). The order was made subject to the payment into court of, or the provision of a bank guarantee for, the sum of $125,000 by a surety or sureties. Luigina Foster (also known as Louise Foster), the second respondent's mother, became his surety and paid the sum of $125,000 into court. 4 The second respondent unsuccessfully sought to have the hearing of the contempt proceeding deferred until the hearing of the present proceeding. In support of his application in that regard the second respondent, by his counsel, argued that the present proceeding should be heard first because many more individuals were affected by this proceeding than the contempt proceeding, which only concerned him. He relied on the existence of a number of freezing orders that had been made in this proceeding (to which I will refer below) and the hardship being suffered by those subject to those orders, and the fact that in excess of 100 franchisees of the Sensaslim product might well be entitled to compensation as a result of this proceeding. He also referred to the possible commencement of a class action to recover compensation with respect to the Sensaslim product. 5 The hearing of the contempt proceeding commenced in June 2012. It is presently part-heard with the hearing to resume on 24 September 2012 and to continue until 5 October 2012. The second respondent wishes to call evidence in that proceeding from Robin Howard Reichelt who is currently in prison at HMP Ford in Arundel in the United Kingdom. Apparently Mr Reichelt was not available to give evidence during the June hearing. Mr Reichelt's evidence is now to be given by videolink on 2 October 2012 whilst he is on day release. He is not able to give evidence by videolink from prison. It is said by the second respondent that Mr Reichelt is due for relase from prison on 7 December 2012. 6 The second respondent is and has been represented in the contempt proceeding by a solicitor (Mr Fisher of Fisher Dore Lawyers) and by counsel. He has the benefit of a grant of legal aid, although the details of that grant and the basis for it are not in evidence in the present application. 7 The second background matter is the course of the present proceeding since its commencement on 15 July 2011. Mr Fisher was acting for the second respondent in this proceeding from 20 July 2011 until 1 February 2012, when he filed a notice of ceasing to act. Since 1 February 2012, and subject to Ms Johnson's participation in the present application for an adjournment, the second respondent has been self-represented. He has participated in all directions hearings by telephone from Queensland and has made submissions in the course of those directions hearings as to the conduct of this proceeding and, in particular, the conduct of the hearing that he now seeks to adjourn. 8 Between commencement and 5 December 2011, a number of applications were made which resulted in the granting of various forms of interlocutory relief, including orders restraining the respondents from making certain representations. A number of freezing orders were also made. These orders involve third parties, including members of the second respondent's family. The orders remain in place. There was also an application by the second respondent that I disqualify myself from further hearing the matter. This application was filed on 5 August 2011. At that time Mr Fisher was acting for the second respondent. Counsel was briefed on the hearing of the application. The second respondent's application was unsuccessful: Australian Competition and Consumer Commission v Sensaslim Australia Pty Ltd (In Liquidation) (No 2) [2011] FCA 1013. There was no appeal from the dismissal of his application. A further such application was foreshadowed on 17 August 2012 by Ms Johnson, however no such application has been filed or otherwise proceeded with. 9 On 5 December 2011 a number of orders were made that included the following: (a) The applicant file and serve the remainder of its affidavit evidence on or before 19 December 2011. (b) The second to fifth respondents, if asserting a positive defence, file and serve a document identifying the positive defence on or before 30 January 2012. (c) The applicant give standard discovery and inspection pursuant to r 20.14 of the Federal Court Rules 2011 in relation to the allegations raised in the statement of claim, on or before 13 February 2012. (d) The applicant serve on the respondents hard or electronic copies of all documents upon which it intends to rely at the hearing, on or before 20 February 2012. 10 The proceeding was listed for further directions on 27 February 2012 for the purpose of allocating a hearing date. These orders were made while Mr Fisher was acting for the second respondent. It was not until approximately two months later that Mr Fisher ceased to act for the second respondent in this proceeding. 11 On 10 February 2012 the listing of the proceeding for directions on 27 February 2012 was vacated. On that day orders were made that included the following: (a) The time for the applicant to give standard discovery and inspection be extended to 14 February 2012. (b) The time for the second respondent, if asserting a positive defence, to file and serve a document identifying the positive defence, be extended to 20 February 2012. (c) The second to fifth respondents file and serve any affidavit evidence in support of any positive defence, on or before 24 February 2012. (d) The second to fifth respondents serve on the applicant hard or electronic copies of all documents on which each intends to rely at the hearing, on or before 24 February 2012. (e) The applicant file and serve any affidavit evidence in reply, on or before 9 March 2012. 12 At the directions hearing on that day the orders proposed by the applicant were discussed with the second respondent. The only other respondent appearing was the fifth respondent, who was represented by a solicitor. The following exchange took place with the second respondent in relation to the proposed orders: HIS HONOUR: Mr Foster, is there anything else you wanted to say for or against the short minutes of order that have been proposed? MR FOSTER: I don't have any difficulties with them, your Honour. The only issue, I think, that will need to be canvassed in regard to eventually the sitting of the hearing date is, as was mentioned yesterday, in the event that the contempt proceedings are heard prior, and in the event that I am convicted, I will be incarcerated almost certainly, and that would have the effect, I would have thought, of certainly delaying the main proceedings insofar as I wouldn't be able to attend, and given the nature of the orders that are being sought in the substantive proceedings, which is a ban of me being a director of a company for 20 years and basically from commerce - virtually a life ban - it's important that I believe I need to be able to defend the proceedings. Logan J yesterday mentioned, just as a thought, I suppose, that one possibility, in the event of my incarceration, would be for the matter to be transferred from Sydney to the Federal Court in Brisbane, because I would be incarcerated in Brisbane. So it's just something I mention in regard to hearing date. The real difficulty we have in me being able to defend myself in the main proceedings - the contempt proceedings are heard first and I am incarcerated. So I'm of a view that I would like to have the main proceedings be heard as expeditiously as possible. However, I would also be calling witnesses from the United Kingdom. And the only comment I would make, and I know how late the time is - - - HIS HONOUR: I'm sorry - are you still on the line, Mr Foster? MR FOSTER: I am, yes. The only other comment, your Honour, is I think that when we do start, whether the matter is moved to Brisbane or what actually happens, I just think the length of time for the trial - two weeks - is a little bit conservative. I think it will be more like four weeks, based upon the evidence I've seen and the witnesses that will be called, and given the seriousness of the orders sought against me, which, as I say, is a life ban, I intend to take every opportunity to dissect every piece of evidence presented against me, and I don't think I would be able to do that in two weeks. HIS HONOUR: Well, thank you for those observations. I won't anticipate anything that may happen in the immediate future. In paragraph 6 of the short minutes, rather than providing that the matter be listed for hearing, I will say that the matter be listed for further directions at 9.30 am on 12 March 2012. So with that addition, and also with the addition to paragraph 3 that I've indicated, I will make the orders in accordance with the form of short minutes of order, which I will sign, date and place with the papers. 13 A further directions hearing was held on 12 March 2012. The second respondent and the fifth respondent (who was, once again, represented by a solicitor) were the only respondents who appeared. At that time the length of the hearing was discussed. Counsel for the applicant estimated that the hearing would take two to three weeks. The solicitor appearing for the fifth respondent said that he could not offer anything in relation to the length of time for the hearing but did state that he did not anticipate that his client would have "much of a role to play in these proceedings". He said that he may play some role but that he could not see him having "a significant role in any event". The length of the hearing was raised with the second respondent. The following exchange took place: HIS HONOUR: I see. Thank you. Mr Foster, how long do you see the proceeding taking? MR FOSTER: Your Honour, I'm imagine that the estimate of three weeks is probably accurate. 14 At that time I said that the proceeding would be set down for hearing with a provisional commencement date of 3 September 2012. The following exchange took place: HIS HONOUR: I can give you provisional dates in September commencing on Monday the 3rd. MR WHITE: It's convenient to the Commission. HIS HONOUR: Mr Foster. MR FOSTER: Yes, your Honour. HIS HONOUR: I hope you've heard what I've said. I can allocate provisional hearing dates in this matter commencing on Monday, 3 September for three weeks. MR FOSTER: Yes, your Honour. I'm anxious of course to have this matter heard as possible, not only because it affects my family members who are subject to freezing orders but I think the greater public interest with respect to the people that are affected, the hundreds of area managers, the thousands of ..... to consumers so I think it's important that it's heard. I think this conundrum is a making of the ACCCs own doing insofar as the contempt proceedings which seems to now make these more important in my opinion, the civil proceedings secondary, were brought by the ACCC where I thought it would have been more logical that the evidence should have been tested in the main proceedings and then if there was seen to be evidence of a contempt then the charges could have been brought. My concern is that there is no provision for a prisoner, in the event that I am convicted in the contempt matter, there is no provision for a prisoner to be moved interstate on civil matters. We have investigated that. So I think this rental that Mr White refers to is the size of the Grand Canyon and I can see that these proceedings are going to be just unnecessarily delayed, but I'm keen for a date to be set although I'm concerned that it won't be met, your Honour. HIS HONOUR: Well, I've noted what you've said, Mr Foster. As I think I might have said at the last directions hearing, I will try not to anticipate too many difficulties in that regard but it's appropriate that you've informed me of those matters… 15 Apart from other matters, this passage reveals a clear appreciation by the second respondent that, as at March 2012, there was a commonality of factual issues in the contempt proceeding and this proceeding. 16 On 14 March 2012, following the directions hearing, the matter was provisionally set down for hearing for 15 days commencing on 3 September 2012. On that day other orders were made that included the following: (a) The applicant deliver: (i) to each respondent, one hard copy; and (ii) to the Associate to the trial judge, two hard copies of the court book (comprising the pleadings and evidence upon which the applicant will seek to rely at the hearing) on or before 20 August 2012; (b) Each respondent give the applicant written notice of any objections to the applicant's affidavit evidence, on or before 27 August 2012; (c) Each respondent give the applicant written notice of witnesses required for cross-examination on or before 27 August 2012; (d) The applicant be granted leave to issue subpoenas to attend to give evidence to the deponents of affidavits required for attendance at the hearing; and (e) The applicant make any application pursuant to s 47A of the Federal Court of Australia Act 1976 (Cth) for the testimony of any witness whose evidence it seeks to be given by video link or audio link, on or before 6 August 2012. 17 A further directions hearing was held on 2 July 2012. Once again the only respondents appearing were the second respondent and the fifth respondent. Certain procedural orders were made that are of no particular significance for the present application. At that time, however, the question was raised as to whether the proceeding should commence on 3 September 2012, as ordered, given that the last week of the scheduled hearing (ie the week commencing on 17 September 2012) then clashed with the date to which the hearing of the contempt proceeding had been adjourned. At that time counsel for the applicant indicated that the present proceeding could be accommodated within two weeks rather than the originally scheduled three weeks. The fifth respondent's solicitor said that the applicant's revised hearing estimate of two weeks was "more than realistic". On the other hand Mr Foster said that there was "absolutely no chance that this matter would be concluded in two weeks" and said that, on the basis of counsel's advice, "we need to budget for four and, perhaps, as much as five weeks". It should be noted that, as counsel for the applicant pointed out at the time, this was quite at variance with what the second respondent had said at the directions hearing on 12 March 2012. At that directions hearing the second respondent also said that "we are placing ourselves in funds" to retain counsel who would be retained "in the near future". The second respondent also raised the difficulty that he was subject to release conditions which prevented him from leaving Queensland. 18 In the end result I determined that the hearing should proceed so that it would commence on 3 September 2012 as provisionally fixed and that, if necessary, I would hear the matter in the Brisbane. At that time I also indicated that, if required, I would make available hearing dates in the weeks commencing 22 and 29 October 2012. I should record that, as events have now transpired, there is no clash because the adjourned hearing of the contempt proceeding which will now commence on 24 September 2012. Having said that, I have now allocated other hearings for the week commencing 17 September 2012. 19 On 3 August 2012 I ordered that the proceeding be set down for hearing in the Queensland District Registry of the Court at Brisbane commencing on 3 September 2012. 20 It can be seen from the above that on 5 December 2011 each of the second to fifth respondents, if asserting a positive defence, was required to file and serve a document identifying that positive defence and that, in the case of the second respondent, that document was to have been filed and served by no later than 20 February 2012. No such document has been filed by the second respondent (or any other respondent). 21 It can also be seen that on 10 February 2012 each of the second to fifth respondents was required to file and serve any affidavit evidence in support of any positive defence and serve hard or electronic copies of all other documents on which reliance was to be placed at the hearing, by 24 February 2012. No such affidavit or documents have been filed by the second respondent (or any other respondent). 22 Finally, it can also be seen that on 14 March 2012 the matter was set down for hearing to commence on 3 September 2012, thus giving the parties nearly six months advance notice of the hearing of this matter. On 3 August 2012 I ordered that the hearing take place in Brisbane to accommodate the second respondent's inability to leave Queensland.

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