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[2002] FCA 1310
plaintiff. The seventh respondent's application to be dismissed from the proceedings is refused. The seventh respondent must file and serve a further response to the Notice to Admit Facts clarifying, in each...
The ACCC alleged a marketing scheme in which properties were marketed at inflated prices and purchasers were given financial analyses that used those prices and optimistic growth rates. Mr Andrews, one of the financial advisers, sought to be removed from the proceedings. The Court examined the Statement of Claim and Mr Andrews' responses to a Notice to Admit Facts, and found that the ACCC had pleaded a cause of action against him. The Court refused to dismiss him, required him to clarify ambiguous answers in the Notice to Admit, and declined to compel a formal defence at that interlocutory stage because the factual disputes needed to be resolved at trial through evidence.
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The ACCC brought multi‑defendant proceedings alleging a coordinated marketing and sales scheme involving entities controlled by Mr Bilborough. The scheme, as pleaded, used telemarketing and in‑house consultations to target prospective purchasers, assigned financial advisers, and marketed residential units at prices the ACCC alleges exceeded their real market value. Investlend Pty Ltd (later Markfair Pty Ltd) and National Asset Planning Corporation Pty Ltd (NAPC, later Coastal Reef) were central to the arrangement. Financial advisers used a computer program labelled "Property Information Analysis", applied marketed prices as fair market value and projected capital growth rates (commonly 7–8%), in computing purported investment benefits. The ACCC alleges contraventions of s 52 Trade Practices Act 1974 (Cth) and s 38 Fair Trading Act 1989 (Qld), and further alleges that a number of individuals, including the seventh respondent, Mr Shane Andrews, were knowingly concerned in the contraventions (Reasons [2]–[3]).
Mr Andrews, who had been engaged by Investlend only the week before 24 September 1998 and who was unrepresented, applied orally on 16 October 2002 to be dismissed from the proceedings (Reasons [1]). He had not filed a defence but had answered a Notice to Admit Facts served by the ACCC. The ACCC sought directions that he file a defence. The crux of Mr Andrews' position was that his short period of employment, lack of knowledge of the alleged scheme, reliance on valuations and on the bank's valuation, and the explanations he gave to purchasers meant that the ACCC could not maintain a cause of action against him (Reasons [5], [9]).
Kiefel J reviewed the Statement of Claim, Mr Andrews' Notice to Admit responses and his oral assertions. The Court found that the ACCC had disclosed a cause of action against Mr Andrews sufficient to maintain him as a party (Reasons [10]). The Court refused the application to be dismissed, declined to order that he file a defence but directed him to clarify those responses to the Notice to Admit Facts in which he had used the words "I cannot admit" (Reasons [11]–[12]).
Two procedural and substantive considerations drove Kiefel J's decision.
First, on the substantive pleading question, the Court determined that the Statement of Claim contained allegations which, taken at face value, disclosed a cause of action against Mr Andrews. Kiefel J stated: "The ACCC has however, disclosed a cause of action against him in the statement of claim and that is sufficient to maintain him as a party to the proceedings" (Reasons [10]). That is the pivotal point: the pleadings, properly read, pleaded actionable conduct by the seventh respondent and could not be struck out or dismissed at that interlocutory stage.
Second, on the procedural question of whether the Court could or should determine the matter then, the Judge emphasised the limits of interlocutory determinations on unsworn oral submissions. The Court refused to resolve the factual disputes (value, asserted growth rates, what precisely Mr Andrews said, and his knowledge of an overarching scheme) on the basis of unsworn assertions. The Court said it "cannot determine it on the basis of unsworn assertions and without the parties' evidence being tested" (Reasons [10]). That led to the refusal to dismiss.
Concerning pleadings, the Court accepted that the ACCC had used an extensive Notice to Admit Facts and that Mr Andrews' answers to that notice admitted a number of matters, but also used the phrase "I cannot admit" in relation to other allegations. The Court saw no reason to compel a full defence where the Notice to Admit and its answers had largely disclosed the respondent's position; it ordered only clarification of the "I cannot admit" statements (Reasons [4], [11]). Hence, rather than adopting a rigid requirement for a pleading in every case, the Court preferred a pragmatic approach tailored to what had already been put before it.
The Court also acknowledged, obiter, doubts about the utility of pursuing smaller players in an alleged scheme and expressed sympathy at delay, but made clear these concerns did not justify dismissal (Reasons [10], [12]).
The Reasons do not purport to create new legal tests. They apply established procedural principles:
Kiefel J implemented those principles in the concrete circumstances of the case: he refused dismissal where the pleadings disclosed a cause of action (Reasons [10]); he resisted compelling a defence where the Notice had already elicited many admissions but required clarification of ambiguous answers (Reasons [11]). The decision therefore confirms a pragmatic, fact‑sensitive application of existing civil‑procedure principles rather than a doctrinal shift.
"The seventh respondent's application to be dismissed from the proceedings is refused." (Reasons [1].)
"The ACCC has however, disclosed a cause of action against him in the statement of claim and that is sufficient to maintain him as a party to the proceedings." (Reasons [10].)
"I certainly cannot determine it on the basis of unsworn assertions and without the parties' evidence being tested." (Reasons [10].)
"Apart from clarifying those responses I consider the ACCC's approach to the requirement of a pleading to be unreasonable." (Reasons [11].)
"His application is refused." (Reasons [12].)
This decision is directly applicable where:
In such scenarios, Kiefel J's approach demonstrates that a court will:
The Reasons for Judgment do not cite or discuss subsequent decisions. The text contains no analysis of later judicial treatment or follow‑on authority. Therefore, from this judgment alone, one cannot determine how later courts have treated Kiefel J's interlocutory approach in ACCC v Oceana Commercial Pty Ltd.
Users seeking to understand subsequent judicial treatment should consult later reported decisions and relevant authorities addressing dismissal applications, the sufficiency of pleadings, and the use of Notices to Admit Facts.
The judgment leaves several substantive and procedural questions open for trial and unresolved as matters of law in this decision:
Practitioners should note the Court's emphasis that interlocutory resolution of contested factual matters is inappropriate where evidence has not been tested. That underscores the importance of careful evidence‑based case management in multi‑party proceedings involving alleged schemes.
This is general legal information about the judgment ACCC v Oceana Commercial Pty Ltd [2002] FCA 1310 based only on the Reasons for Judgment provided. I am not your lawyer. I can make mistakes. Before you act on, rely on, or use anything from this analysis, get a qualified Australian lawyer to check it.
REASONS FOR JUDGMENT 1 Mr Andrews, the seventh respondent, applied orally to the court on 16 October 2002 to be dismissed from the proceedings. He has not had legal representation and has not to date filed a defence. He has answered a notice to admit facts. His essential point is that the applicant, the Australian Competition and Consumer Commission ("ACCC"), should not then continue these proceedings against him. It is necessary to outline the allegations made in the Statement of Claim.
the statement of claim 2 Mr Andrews is alleged to have been an employee or agent of the company Investlend Pty Ltd, which is now known as Markfair Pty Ltd, the second respondent. The company is alleged to have been owned and controlled by Mr Bilborough, the fifth respondent and the wife of Mr Quinlivan, the sixth respondent, until 9 September 1998 and thereafter by Mr Bilborough alone. Until that date the company was managed by Mr Quinlivan. The respondents are alleged to have participated in a "scheme" involving the sale of units at inflated prices and commissions. Coral Reef Pty Limited (now Oceana Commercial Pty Ltd, the first respondent) was controlled by Mr Bilborough. It would enter into a marketing agreement with a developer of residential units on the Gold Coast. It would be agreed between them that units be sold at a market price which exceeded their real value. Coral Reef would be paid a marketing fee which was substantially in excess of the commission normally payable to a licensed real estate agent in Queensland. Coastal Reef Pty Ltd, (then called National Asset Planning Corporation Pty Ltd ("NAPC") was to market the property. It was also controlled by Mr Bilborough. It is now in liquidation. Telemarketers would contact people and encourage them to attend a public investment seminar. An in-house consultation would follow, in which prospective purchasers were assessed. The financial information relevant to them was sent to Investlend. If the purchasers were considered to meet the criteria for a purchaser, they were encouraged by various means, to attend at the Gold Coast. Upon arrival there, they were assigned a person who would show them investment properties and a financial advisor. Investlend assigned the latter. Mr Andrews was one such person. Each such financial advisor is alleged to have explained negative gearing, to have undertaken an analysis of properties, reviewed the financial position of prospective purchasers to determine how much they could borrow and represented the financial benefits of the proposed investment. They used the marketed price as the fair market value of the property and attributed a capital growth rate of 7 or 8 per cent to the property and described it as conservative. If a purchase was then sought they would then organise a financial application and a solicitor for the purchasers. 3 It is alleged that on 24 September 1998 Investlend, through Mr Andrews, represented to Mr and Mrs Gleeson that the purchase price of $164,900 was fair market value for a unit in the Chevron Unit building, Unit 29; that it was the appropriate price to use to analyse the benefits of an investment; that it would be profitable for them to purchase; that it was reasonable to apply a capital growth rate of 8 per cent to the purchase price; that they would be able to sell Unit 29 for $242,292.00 after five years; that selling costs and capital gains tax would be $15,404; that they would be able to sell it for $356,007 after 10 years with selling costs and capital gains tax of $53,697; that there would be no net outgoing to them after negative gearing, even if rent and occupancy figures were less than those which had been represented by another participant in the scheme; and that Investlend was providing independent advice to them and was acting in their interest. It is alleged that Mr and Mrs Gleeson acted upon these advices in purchasing the property, which had a lower market value. The representations are alleged to have contravened s 52 Trade Practices Act 1974 (Cth) and s 38 of the Fair Trading Act 1989 (Qld). It is alleged that Mr Andrews was knowingly concerned in the contraventions.
response to notice to admit facts 4 Because the ACCC seeks a direction that Mr Andrews file a defence, it is necessary to consider his response to the Notice to Admit Facts which the ACCC gave to him. It was thought possible to obviate the need for a pleading by this means. 5 Mr Andrews admits that he was engaged by Investlend as an agent or employee and says that he started the week before 24 September 1998. In oral submissions he sought to make the point that he had only been there a very short time, from which I expect one is to infer that he was not familiar with the alleged scheme. He denies that his duties were to provide financial and investment advice to customers of NAPC. He says his duties were to explain negative gearing, borrowing capacity and debt reduction strategies. He says that he wasn't aware of the scheme, as he had only been employed for a week prior to meeting with the Gleesons. He denies awareness of the steps in the scheme up to the point where persons were encouraged to travel to the Gold Coast. He does not know (he uses the words "cannot admit" on this and other occasions) whether an in-house consultant prepared the information about the Gleesons, but he received a sheet listing their financial position. He admits that upon the arrival of a prospective purchaser at the Gold Coast they would be introduced to, and assigned, a financial advisor at Investlend. This admission would not seem to be entirely consistent with his denial of his duty mentioned above. He says that he cannot admit that the assigned financial advisor showed them only residential units from the stocklist maintained by NAPC, or that, if they agreed to purchase, they were introduced to a solicitor who would act for them. He agrees that he explained to prospective purchasers negative gearing, that he reviewed their financial position to determine the amount that they could borrow and made representations about the financial benefit of the proposed investment using a program called "Property Information Analysis". He admits that the capital growth rate of 7 or 8 per cent was used by him. He says this was supported by valuations in the office. I take it that he also admits that the purchase price was said to represent fair market value. Mr Andrews denies that he said it was conservative to use 7 or 8 per cent as the capital growth figure and says that he discussed rates between 3-11 per cent and said that it would be conservative to use 5 per cent. He says this is consistent with documents he sent to the Gleesons' accountants. He arranged a financial application, but not insurance, on the unit when they indicated they wished to purchase. He says he cannot admit whether he arranged a solicitor or that the solicitor was chosen from a panel, made up of solicitors who had sought referrals from NAPC and Investlend. He adds that it is "not known to me". He admits that NAPC and Investlend maintained separate offices in different premises. He denies he knew of the "NAPC scheme" as it is described, or that he participated in it, and denies that he knew its alleged purpose. He denies, or does not admit, the allegations as to his belief that purchasers would not buy if certain features of the scheme were disclosed to them. He adds that he told the Gleesons that the bank, the Commonwealth Bank of Australia, would do a valuation and if it did not come up to value the loan would not be approved. He did not know of aspects of the scheme so that he could disclose them and denies that he knew others were withholding advice from the Gleesons. Mr Andrews disagrees with the assertion that investment opportunities did not offer unique benefits. He maintains his denial that he represented that Gold Coast properties had a capital growth in excess of 10 per cent per annum as at September 1998. He denies that it was unlikely that the property would have a growth rate of 7 or 8 per cent in its value. He says that 21 years of local authority records, from 1977 to 1998, showed that historically they had. He denies that the purchase price was not the fair market value of the property. He says that the bank told him, on 12 November 1998, that the valuation was "okay". Further, there were two valuations held in his office "close to the purchase price". He denies that it was the purpose of his advice to secure marketing fees for NAPC. He denies that Investlend did not attempt to find the most economical rates, or the best financial products, or that it sought to maximise its commission by advising customers to borrow greater amounts than necessary. He says that it was prudent to have some "buffer" against future uncertainties. He mentioned figures of $10,000 and $12,000. This would seem to me to amount to an admission, in whole or in part. 6 Mr Andrews agrees that Mr Byrom introduced Mr and Mrs Gleeson to him on about 24 September 1998 but not that it was for the purpose of financial advice. He admits that he took them to the property and told them that $164,900 represented fair market value for Unit 29 and that it was an appropriate price for them to rely on in analysing investment benefits to them. He admits that he said it would be a profitable investment, but says that he said this is so viewed over a 10 year period. He told them that they would lose money if they sold within 3 years. He says that he got their agreement to use a capital growth rate of between 3-11 per cent. He denies that he made specific representations about what they would receive for the unit if they sold in 5 or 10 years. He admits that the spreadsheet contains reference to such figures "but there were no guarantees". I take him to say that he advised them of this. He admits that he told them that there would be no cost to them if rent and occupancy figures, being those represented by Byrom ($90-$100 per night for holiday letting at almost 100 per cent occupancy) remained the same. He said that this would depend on the figure for income and expenses remaining the same. He says that in fact the Gleesons made twice as much by way of income, but that the goods and services tax, and tax rebates which subsequently came into effect, affected the net position. He agrees that he said to the Gleesons that Investlend would provide reliable advice "subject to receiving reliable information from other parties". He denies that he said that he was acting on their behalf and in their interests. He says they were making their own decisions and one based on Mr Gleeson's discussions with his accountant. Mrs Gleeson had said that it did not matter which property they bought. 7 He says that he cannot admit that the NAPC scheme was being used to market the property to the Gleesons. He denies that he would derive commission if the Gleesons agreed to buy one or more properties. He says that he would derive a commission if they used him to arrange finance and that this was disclosed to them. Mr Andrews denies that he was aware of the marketing fees for the units and says that he "cannot admit" that NAPC, Investlend, Byrom and himself were acting in the interests of the NAPC scheme and not the Gleesons. He denies that he knew of the relationship between participants to the alleged scheme. He denies that 8 per cent per annum was not a reliable figure but says that he advised them to use 5 per cent.
whether there is a claim AGAINST mr andrews 8 It remains in issue whether the unit in question had the value Mr Andrews attributed to it, what was a proper rate for capital growth and what he said to them about that topic. His knowledge of the alleged scheme remains in question. He has raised the question of reliance on the part of Mr and Mrs Gleeson. 9 In his oral and written submissions on the application, Mr Andrews pointed out that he could not have been guilty of collusion because he was working for Investlend for only a very short period and his engagement was terminated after 6 weeks. He could not have been guilty of false and misleading conduct because there were valuations in the office, and the bank confirmed the valuation. The rental figures were confirmed, as was the occupancy rate, to be higher than that he had used. The use of a capital growth rate at 3 per cent, 5 per cent or 8 per cent were used, whereas charts showed higher growth rates. He told them that they could lose money if they sold within three years. He says that he made no representation as to the value apart from a computer printout but that he honestly believed the price to be market value because of the valuations in the office. He was not a licensed real estate salesman or valuer. He says that he could not be guilty of non-disclosure because he told them of the fee he would receive. He says that he spoke of the risks and recommended protection including that the property be viewed as a long term investment of 10 years. He points out that they relied upon their accountant for advice, a person who is said to be reliable and conservative by Mrs Gleeson. 10 It may be, as Mr Andrews says, that there will be some difficulties in the path of the ACCC in establishing reliance on the part of Mr and Mrs Gleeson. The ACCC has however, disclosed a cause of action against him in the statement of claim and that is sufficient to maintain him as a party to the proceedings. The question now is not whether they can establish it. That is a matter for evidence at trial. As I attempted to explain to Mr Andrews, on the hearing of the application, I could not determine his matter separate from the rest of the proceedings. I certainly cannot determine it on the basis of unsworn assertions and without the parties' evidence being tested. The Court may harbour some doubts about the utility of bringing proceedings against the smaller players in an alleged scheme, but it cannot prevent the ACCC from taking this course. 11 There remains the question whether Mr Andrews should be required to file a defence, as the ACCC contends he ought. The ACCC has given an extensive notice to admit facts, to which he has responded. The only area of uncertainty would appear to me to be what he means by the words "I cannot admit" in some of the responses - whether he means that he declines to respond to the question. Apart from clarifying those responses I consider the ACCC's approach to the requirement of a pleading to be unreasonable. It has not been pointed out in what respect it remains uncertain about what he says was the extent of his participation. 12 I sympathise with Mr Andrew's position. As with the other respondents, the matter has taken longer to come to trial than was originally anticipated. That does not however provide a basis for dismissing an action against him. His application is refused. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel.
Associate: Dated: 25 October 2002 Counsel for the Applicant: Mr S Couper QC and Mr K Wilson
Solicitor for the Applicant: Australian Government Solicitor
Solicitor for the First, Second and Fifth Respondents: Lynch & Co
Counsel for the Third, Eleventh and Twelfth Respondents: Mr T Carmody SC
Solicitor for the Third, Eleventh and Twelfth Respondents: Hopgood & Ganim
Counsel for the Fourth Respondent: Mr J Hilton and Mr C Wilson
Solicitor for the Fourth Respondent: AJ Mullumby
Counsel for the Sixth Respondent: Mr A Morris QC and Mr Atkinson
Solicitor for the Sixth Respondent: Quinn & Box
Solicitor for the Seventh Respondent: In Person
Solicitor for the Eighth Respondent: No Appearance
Solicitor for the Ninth Respondent: No Appearance
Counsel for the Tenth Respondent: Mr N Thompson
Solicitor for the Tenth Respondent: Grays Lawyers
Counsel for the Thirteenth Respondent and Tenth Cross-Respondent: Mr J Griffin QC with Mr C Carrigan
Solicitor for the Thirteenth and Tenth Cross-Respondent Respondent: McCullough Robertson
Date of Hearing: 16 October 2002
Date of Judgment: 25 October 2002
Australian Competition & Consumer Commission
Oceana Commercial Pty Ltd
The seventh respondent's application to be dismissed from the proceedings is refused. The seventh respondent must file and serve a further response to the Notice to Admit Facts clarifying, in each case where the words 'I cannot admit' are used, what is meant by them (Order dated 25 October 2002; Reasons [11]-[12]).