Cargill Consulting Ltd v BTAC Coal Pty Ltd

1. The applicants' interlocutory application dated 22 November 2017 for summary judgment against the respondents is dismissed.
2. There be no order as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

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.