//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2019] FCA 2070
Federal Court of Australia
2019-12-05
Anderson J
Original judgment source is linked above.
ANDERSON J: 1 On 5 December 2019, I dismissed an application by the applicants for summary judgment in this proceeding. These are my reasons for doing so.
Procedural history 2 This proceeding was commenced in June 2017. The applicants allege that the respondents engaged in conduct that was misleading and deceptive in contravention of s 1041H of the Corporations Act 2001 (Cth) (Corporations Act) in relation to the subscription by the first applicant for shares in the first respondent, BTAC Coal Pty Ltd (Company), for a price of $50,000 on or about 31 July 2014. The applicants allege that the first applicant completed the subscription form and paid the subscription price but that the respondents: (a) failed to account for the moneys in the manner required by the share application form; (b) failed to issue 50,000 new shares in the Company as required by the share application form; and (c) without the first applicant's authority, diverted the $50,000 to another company called "Between the Tiger and the Crocodile Limited", being the third respondent. 3 This description of the applicants' claims represents my broad understanding of the factual and legal matters alleged having read the statement of claim and the affidavits filed by the applicants. I say this because the statement of claim is, in my view, defective in multiple respects. This includes that the statement of claim, as currently drafted: (a) fails to identify with any precision the alleged misleading and deceptive conduct said to contravene s 1041H of the Corporations Act. Moreover, the claims pleaded do not identify the specific representations made by the respondents, nor do they identify what representations were relied upon by the applicants; (b) does not identify the allegations which are made against the second to eighth respondents and the causes of action which are relied upon; and (c) does not plead with sufficient clarity to enable this Court to grant the relief which is sought in the applicants' originating process. 4 Notwithstanding these defects, the respondents filed a defence dated 12 September 2017 which: (a) admits that the first respondent received $50,000 of share application moneys from either the first or the second applicant; (b) alleges that the first applicant received what he had bargained for, namely 50,000 shares in the Company; (c) denies the allegations of misleading and deceptive conduct; and (d) alleges that the applicants had already been compensated in the sum of $50,000 by reason of a claim previously made by the applicants in the High Court of New Zealand. 5 On 22 November 2017, the applicants issued an interlocutory application seeking summary judgment against the respondents in accordance with the relief sought in the originating process. In support of that application, the applicants relied upon four affidavits affirmed by the second applicant, Professor Gordon Walker, and two affidavits affirmed by the solicitor for the applicants, Gurpal Singh. 6 On 15 December 2017, O'Callaghan J made the following orders: 1. The respondents file and serve affidavit(s) and material by 12.00p.m on 22 December 2017. 2. The applicants file and serve their response to the affidavit(s) and material by 4.30p.m on 15 January 2018. 3. The matter be listed for a further case management hearing and application for summary judgment on 14 February 2018 at 9.30a.m via video link from Sydney. 4. The parties file written submissions on the issues relating to the summary judgment application by 4.30p.m on 9 February 2018. 5. Costs reserved. 7 Pursuant to the first order above, the respondents filed an affidavit of Rahul Vendra Singh (the fifth respondent) affirmed on 22 December 2017 (Rahul Affidavit). 8 The applicants filed written submissions in support of the application for summary judgment dated 12 February 2018. The first, second, third, fourth and fifth respondents filed written submissions in opposition dated 13 February 2018. 9 The applicants filed an affidavit in reply of Professor Walker affirmed 19 February 2018 (Walker Reply Affidavit). 10 The parties subsequently engaged in a successful mediation that resulted in the first and fifth respondents (but not the other respondents) agreeing to pay the applicants $67,500, inclusive of costs and interest and GST, in full settlement of the applicants' claims in the proceeding. This agreement was given effect to by O'Callaghan J making orders by consent on 5 March 2018 as follows: 1. The First and Fifth defendants jointly pay the sum of $67,500 inclusive of costs, interests and GST to the Applicants jointly in full settlement of all the Applicants' claims in this matter. 2. The sum specified in clause 1 will be paid as follows: (a) $25,000 on or before 22 March 2018; and (b) $42,500 on or before 16 April 2018. 3. Upon receipt of payment, the Applicants release and forever discharge the Respondents from all claims arising for the subject matter of this claim. 4. The proceedings shall be adjourned to a date after 16th April 2018 awaiting payments. 5. The parties will keep the contents of these terms of settlement confidential and neither directly nor by agent communicate the contents or any part of these terms to any person except where such communication is compelled or required by law. 6. No modification of these Terms of Settlement shall be valid unless in writing and agreed upon by both Parties. 7. These Terms of Settlement supersede any prior agreements, understandings, or negotiations, whether written or oral. 8. Upon receipt of payment in full, the Applicants shall deliver up any share certificate in the First Defendant in their name, or the name of either of them, which is in their possession to the First Defendant and shall take no objection to the First Defendant cancelling any share of any class issued by the First Defendant to either of them. 9. Liberty to apply. 11 By an interlocutory application dated 8 July 2019, the applicants sought to avail themselves of the liberty to apply pursuant to the above orders. That interlocutory application was supported by an affidavit of Professor Walker affirmed 8 July 2019. In that affidavit, Professor Walker relevantly deposed to the following: (a) the circumstances giving rise to the first applicant subscribing for shares in the Company and the payment of $50,000 to the respondents; (b) the mediation that resulted in the settlement whereby the first and fifth respondents agreed to pay the applicants $67,500 (inclusive of costs, interest and GST) in full settlement of the applicants' claims; (c) the fact that no payments were ever made pursuant to the terms of the consent order made by O'Callaghan J on 5 March 2018; (d) on 4 May 2018, the Official Receiver issued a bankruptcy notice against the fifth respondent; (e) the service of that bankruptcy notice could not be effected on the fifth respondent. On 15 October 2018, a Registrar of the Federal Circuit Court of Australia directed that service of a bankruptcy notice be effected on the fifth respondent by substituted means; (f) service of the bankruptcy notice was effected on the fifth respondent in accordance with the order of the Registrar; (g) no payment was received from the fifth respondent in respect of the debt the subject of the bankruptcy notice; (h) on 20 December 2018, the first applicant filed a creditor's petition under s 43 of the Bankruptcy Act 1966 (Cth) seeking sequestration orders against the estate of the fifth respondent; and (i) on 4 April 2019, a Registrar of the Federal Circuit Court of Australia allowed that petition and ordered that the estate of the fifth respondent be sequestrated under the Bankruptcy Act 1966 (Cth). 12 On 8 August 2019, Norbury Lawyers filed a notice of ceasing to act on behalf of the second, third, fourth, sixth, seventh and eighth respondents. 13 On 10 October 2019, at a case management hearing, I ordered the following: 1. The applicants file any further affidavit material in support of their application for summary judgment dated 22 November 2017 by 4.00 p.m. on 8 November 2019. 2. The applicants file written submissions in support of the application for summary judgment dated 22 November 2017 by 4.00 p.m. on 8 November 2019. 3. The applicants' application for summary judgment dated 22 November 2017 be listed for hearing at 10.15 a.m. on 5 December 2019. 4. The costs of the case management hearing on 10 October 2019 are reserved. 14 On 29 November 2019, the applicants filed written submissions in support of their application for summary judgment. 15 The application for summary judgment was returnable on 5 December 2019. Mr Singh, a solicitor, appeared on behalf of the applicants. There was no appearance on behalf of the respondents.
Relevant principles 16 The applicants apply under s 31A of the Federal Court of Australia Act 1976 (Cth) (Act) and r 26.01(e) of the Federal Court Rules 2011 (Cth) (Rules) for summary judgment against the respondents on the basis that the respondents have no reasonable prospect of successfully defending the proceeding or part of the proceeding. 17 The principles relevant to a summary judgment application were summarised by Gilmour J in Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 at [6] as follows: (a) the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings; (b) the Court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed; (c) in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading; (d) it is not Parliament's intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospects of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial; (e) if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds that there is 'no reasonable prospect of success; (f) it ought not be used to shut out proceedings where, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial; (g) evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects; (h) in determining if there are real issues of fact in issue so as to preclude summary judgment the courts must draw all reasonable inferences in favour of the non-moving party. 18 A further elucidation of s 31A of the Act was undertaken by Sundberg J in Adnunat Pty Ltd (ACN 005 816 268) v ITW Construction Systems Australia Pty Ltd (ACN 004 297 009) [2009] FCA 499 at [37] where his Honour said that the authorities appear to have endorsed the following principles: • In applying s 31A, the court does not conduct fact finding but must assess the strength of the allegations made by reference to the pleadings, affidavits and any other evidence adduced, in order to determine whether the claim is sufficiently strong to warrant a trial … Ultimately, the court must consider whether there are any real, as opposed to fanciful, issues of fact or law that require proper determination at a trial; • In assessing whether there are reasonable prospects of success, the court should draw all reasonable inferences (but only reasonable inferences) in favour of the non-moving party … Moreover, where the evidence is of an ambivalent character, there will be a real issue of fact and therefore reasonable prospects of success for the purposes of s 31A …; • The moving party bears the onus of persuading the court that its opponent has no reasonable prospects of success … [h]owever, where the moving party establishes a prima facie case for summary judgment, the opposing party must be able to point to specific factual or evidentiary disputes that make a trial necessary …; • As s 31A requires in effect a prediction as to the outcome of a claim, the court should be more reluctant to summarily dismiss a claim where real questions of fact and credit arise; in such cases, the court will not have all material evidence before it until trial, the credit of important witnesses will not have been tested and it will as a consequence be very difficult if not impossible to fairly assess the prospects of the claim …. 19 These statements of principle are also relevant to an application for summary judgment under r 26.01(e) of the Rules.
Consideration 20 For the following reasons, I am not satisfied that the respondents have no reasonable prospect of successfully defending all or part of the proceeding. 21 First, there is a conflict in the facts deposed to in affidavits filed on behalf of the applicants and the Rahul Affidavit filed on behalf of the respondents. The conflict is apparent from the Walker Reply Affidavit, in which Professor Walker refers to and denies aspects of the Rahul Affidavit. The Walker Reply Affidavit then deposes to other matters relied upon by Professor Walker to contest the veracity of matters deposed to in the Rahul Affidavit. It is unnecessary to say anything more about this other than it is apparent that there are real factual issues in dispute which are required to be tested at trial. 22 Second, the respondents' defence pleads the following matters: (a) in December 2015, the first applicant was issued with 50,000 shares in the first respondent; (b) the subscription moneys were for the shares in the first respondent and the first applicant was issued shares in the first respondent; (c) that no moneys have passed from either applicant to any of the respondents; (d) the first applicant received what he bargained for, namely shares in the first respondent. Further, the applicants have already been compensated in the sum of $50,000 by reason of a claim in the High Court of New Zealand against Clendons, a firm of solicitors, arising from the payment by the first applicant to Clendons of $50,000 in connection with the issue of shares in the first respondent to the first applicant; 23 The respondents duly plead that: (a) they have not engaged in conduct which would entitle the applicants (or one of them) to the declarations sought; (b) there is no basis upon which the respondents should be made to pay the applicants the sum of $50,000 or any other sum; (c) the applicants have no basis on which to claim interest or costs from the respondents. 24 The fifth respondent deposes in the Rahul Affidavit to the respondents having a good defence to the applicants' claims in the following terms: (a) the first applicant received what it paid for (the 50,000 shares in the first respondent); (b) the funds for the purpose of acquiring the shares were transferred on an irrevocable basis and for the purpose of working capital; and (c) as a result of the settlement of its litigation against Clendons, the first applicant received a payment equal or greater to the value of the funds transferred to Clendons, meaning that it has suffered no damage in any event. 25 My view is that, based upon a review of the material filed in the proceeding (in particular the respondents' defence and the Rahul Affidavit), the Court cannot be satisfied that the respondents have no reasonable prospect of successfully defending all or part of the proceeding should the matter go to trial. The allegations in the defence and the matters deposed to by the fifth respondent in his affidavit raise real factual and legal issues which can only be resolved at trial. 26 Third, the applicants have already obtained an order of this Court requiring the first and fifth respondents to jointly pay the sum of $67,500 (inclusive of costs, interest and GST) to the applicants. The first and fifth respondents have failed to pay these moneys to the applicants. The consent order obtained on 5 March 2018 by the applicants, the terms of which are extracted above at [10], may give rise to a res judicata. 27 A res judicata applies solely by reason of the exercise of judicial power in pronouncing a judgment or order. It does not matter what led to the judgment or order; whether it be default, consent or an adjudication on the merits. The relevant question is to enquire into what cause of action was adjudicated upon by the final judgment or order. In determining the extent of the res judicata that arises in a particular case, the Court looks only at the record, the nature of the claim and the final orders. See generally Western Australia v Fazeldean (No 2) [2014] FCAFC 58; 211 FCR 150 at [20]-[28] per Allsop CJ, Marshall and Mansfield JJ and Zetta Jet Pte Ltd v The Ship Dragon Pearl (No 2) [2018] FCAFC 132; 265 FCR 290 at [18]-[51] per Allsop CJ, Moshinsky and Colvin JJ. 28 It is unnecessary for the purposes of this summary judgment application to determine whether a res judicata arises in relation to the consent order obtained on 5 March 2018. It is sufficient to conclude that this issue raises a real question of law such that it is appropriate that the proceeding proceed to trial. 29 For these reasons, the applicants' application for summary judgment is dismissed. As the respondents have not appeared on the application, there will be no order as to costs. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Anderson.
SCHEDULE OF PARTIES VID 646 of 2017 Respondents Fourth Respondent: ANDREW RONALD MACKINNON Fifth Respondent: RAHUL VENDRA SINGH Sixth Respondent: JAN PETER SLOANE Seventh Respondent: BERNICE HELEN SINGH Eighth Respondent: AMELIA SINGH
Cargill Consulting Ltd
BTAC Coal Pty Ltd