Chapel Road Pty Ltd v Australian Securities & Investments Commission

Judgment 1These proceedings rest on the plaintiff's claim that it lost its securities licence, on which its business depended, as the result of actions wrongly taken by the defendant, in circumstances where it later succeeded in having its license restored to it, but was unable to re-establish its business, given what had transpired during the time that it was unable to operate. 2This judgment deals with questions of discovery, about which the parties were not able to reach complete agreement, as well as an oral application for leave to amend the second further amended statement of claim, which was made during the course of the hearing of the dispute over discovery. Leave to amend was opposed by the defendant. 3Governing the questions which arose to be determined were the requirements of s 56 of the Civil Procedure Act 2005, which requires the Court to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Consideration must also be given to the requirements of s 57, as to the just determination of the proceedings, the efficient disposal of the business of the court, the efficient use of available judicial and administrative resources, and the timely disposal of the proceedings; the requirements of s 58, which requires the Court to act in accordance with the dictates of justice; the elimination of delay dealt with in s 59 and s 60, as to proportionality of cost.

Financial Wisdom 4The matter has a protracted procedural history. Various discovery has already been ordered and given. Earlier this year, the plaintiff was given leave to amend its claim. In June 2012 in Chapel Road Pty Limited v Australian Securities Investments Commission (No 3) [2012] NSWSC 584, I concluded that amendments sought to be made to the further amended statement of claim were necessary to ensure that the real issues lying between the parties were properly raised in the proceedings; that the delay was properly explained; and that it had not resulted from any lack of diligence on the plaintiff's part. Earlier, in a judgment given in May 2011 (Chapel Road Pty Limited v Australian Securities Investments Commission [2011] NSWSC 419), I had ordered discovery, having concluded in relation to the alleged practice that: 31I accept that, albeit not very clearly, failure to apply the practice identified in [13] is alleged in the further amended statement of claim. That was not a claim made in the earlier pleadings considered by Registrar Bradford. It has been explained that the third party documents in issue are sought to establish that the defendant had that practice, the existence of which is in issue. That, it seems to me, must be accepted, given the defence to the further amended statement of claim. Application of such a practice to other companies with which the defendant dealt at the relevant time, is capable of establishing the existence of the claimed practice. That providing the documents sought may also establish that the plaintiff has a basis on which to advance the other claim it wishes to advance against the defendant, inconsistent treatment, is not a reason for concluding that the discovery sought ought not to be given. 5I then made orders that discovery be given as to documents referable to the defendant's investigations to the consideration of training, supervision and compliance issues during the period of 30 June 1998 to 30 June 2002 in respect of a number of entities, including Financial Wisdom Ltd. 6Discussion about the discovery ordered then ensued between the parties, understandably, given its cost. One outcome of those discussions was that in December 2011, this order was revisited, with the result that there was no discovery given in relation to Financial Wisdom, it having been agreed that: The plaintiff to notify the defendant of any further discovery sought including in relation to Financial Wisdom by 13 January 2012 noting that discovery in respect of that entity will await that advice 7Discovery in relation to Financial Wisdom was one of the matters later raised by the motion which the plaintiff filed in March 2012. There were further discussions about that motion, but finally no agreement reached in relation to the discovery sought in respect of Financial Wisdom. In part this reflected the terms of the second further amended statement of claim, which the plaintiff was given leave to pursue, for reasons given in the June judgment. There it was claimed at 41(d) that the defendant had displayed bad faith in the performance of its functions and duties by treating the plaintiff differently to four other named companies. Those companies are also referred to in other parts of the pleadings, clause 11(b)-(c) for example. No such claims were advanced in relation to Financial Wisdom. 8What was claimed in relation to Financial Wisdom appeared in clause 9, which provides: In or about August/September 1999 the Defendant carried out initial surveillance of the plaintiff's company following complaints relating to Stephen Cochrane who was a proper authority holder of the Plaintiff and Robyn Cochrane who was not connected with the plaintiff company but had been a representative of Financial Wisdom Limited. 9This was put in issue by the defence filed. 10The plaintiff's case was that the discovery it now sought in relation to Financial Wisdom was relevant to the claims it advanced in relation to its differential treatment, by comparison with others. The defendant's case was that the discovery sought in relation to Financial Wisdom was not relevant to any fact in issue in the proceedings, because there was no claim of differential treatment advanced in relation to Financial Wisdom. 11At the hearing that was initially disputed by the plaintiff, which relied on the orders made in May 2011 as to discovery and the parties' dealings with each other subsequently, which on its case made it clear that it had always sought to pursue the discovery initially ordered in respect of Financial Wisdom. It was explained at one point that Financial Wisdom was not referred to in the second amended statement of claim at [41], because, without discovery being given, a certificate could not be given by the plaintiff's solicitors that a claim of differential treatment was available to be advanced. An application to further amend the second further amended statement of claim, after discovery was foreshadowed. It was also submitted that the orders sought to reinstate the original order as to discovery made in May 2011 and later, that it expanded on the original order. After an adjournment the oral application to amend the second further amended statement of claim to refer to Financial Wisdom at clause 41 was made. 12While leave to make the application orally and without notice was not opposed, leave to further amend the pleadings was. 13Having heard the parties I am satisfied that leave to amend the pleadings must be refused. Without the amendment the discovery sought in relation to Financial Wisdom is plainly not relevant to any fact in issue. The question of amendment and discovery must be resolved in light of the circumstances which exist now, having in mind the parties' respective conduct to this point, not the circumstances as they existed in May 2011, when as I observed, the pleadings were inadequate. They have since been amended as the result of the leave then given. This alteration in course, to advance a claim of differential treatment by comparison to Financial Wisdom, may not be justly permitted, given what has transpired in the meantime and what would result, if the leave sought were granted. 14The plaintiff had the opportunity, if it wished, to advance a claim that the disputed practice was applied to Financial Wisdom, when it amended its pleading as the result of the leave it was earlier given. Discovery in relation to the third parties to whom it is alleged the defendant applied the disputed practice has proceeded at considerable cost. 15It is apparent that establishing the existence of the disputed practice does not depend on the discovery of the documents now sought from Financial Wisdom. If the plaintiff is not able to establish that the disputed practice existed from the documents it has discovered in respect of the other third parties to whom it alleges the plaintiff applied the practice, it will not be established by documents discovered in respect of Financial Wisdom. 16Given all that the parties have done to this point and the costs which have been involved, when considered with the further considerable time and extensive cost which would follow if the discovery sought in relation to Financial Wisdom is required, and with what it might add to the plaintiff's pursuit of its claims, that what the plaintiff sought could not justly be permitted, is apparent. The effort and cost involved was outlined in the unchallenged affidavit of Ms Goodman, the defendant's solicitor 17I am well satisfied that such additional burdens may not justly be imposed in relation to the discovery pursued in relation to Financial Wisdom and that in the circumstances, the orders sought must be refused. .