HP Mercantile Pty Ltd v Clements

Judgment 1These proceedings are listed for hearing for 4 days commencing on 4 February 2014 and the Court made directions, to which I will refer below, for steps to be taken so that the matter is ready for hearing commencing on that date. The Court also directed that, in the event of any non-compliance with those orders, the matter should be relisted. By letter dated 29 December 2013, Mr Phillip Clements, who is the Defendant and the principal lawyer with the firm Legal & Commercial Solutions, wrote to my Associate advising that he had not complied with the orders for serving his evidence and was "still not in a position to do so", requested that the matter be relisted at the Court's earliest convenience and indicated that he would be requesting the Court to vacate the hearing date in February 2014. 2The basis of that application was set out in Mr Clements' affidavit dated 5 December 2013 and the application was heard before me on 9 December 2013. Mr d'Arville, who appeared for Mr Clements, acknowledged in submissions that Mr Clements' position was not that he required some short further period, for example, to complete his evidence, but instead that he seeks to vacate the hearing date and not put anything in its place other than further directions. Mr d'Arville did put an alternative submission that Mr Clements should be given "some further time" to put on his evidence in the case, but was not in a position to indicate how long would be required. I declined Mr Clements' application to vacate the hearing date, on the basis on which it was originally put, on 9 December and indicated I would deliver a written judgment. These are my reasons for directing that application. I subsequently made further orders deferring the hearing date for a relatively short time, on a further application made by Mr Clements. 3I should say something further as to the long history of the proceedings. The parties handed up a chronology of events in the proceedings, on which I have drawn, together with a review of the Court's file, with a narrative which follows, which does not seek to include all of the steps taken in respect of the proceedings. 4The proceedings were commenced over 7 years ago, on 6 December 2006, when the Plaintiff, HP Mercantile Pty Limited ("HP Mercantile") commenced them in the District Court of New South Wales seeking to recover the amount of $102,163.76 and interest from Mr Clements. Mr Clements was at that point represented by another firm of solicitors in the proceedings. An Amended Statement of Claim was filed in April 2007 and a Defence on 21 June 2007, and the parties thereafter served categories for discovery and lists of documents. In April 2008, Mr Clements' solicitors ceased to act for him, or he terminated their retainer, and he was thereafter self-represented in the proceedings. 5The Plaintiffs initially served affidavit evidence in the proceedings in May 2008 and, on 24 October 2008 and February 2009, Mr Clements swore affidavits in the District Court proceedings. Mr Clements filed an Amended Defence and First Cross-Claim in the District Court proceedings in March 2009 and, in April 2009, a motion was filed to transfer the proceedings to the Supreme Court. The proceedings, which had then been on foot for 3 years, were transferred to this Court in June 2009 and, on 30 September 2009, HP Mercantile was granted leave to file a Further Amended Statement of Claim. There seems to have been further delay in the proceedings between 2009 and August 2010, although it is not necessary or appropriate to attribute any responsibility for that delay to any particular party, and Mr Clements filed and served a Defence to the Further Amended Statement of Claim in August 2010. Mr Clements sought further categories of discovery in November 2010 and HP Mercantile verified its discovery in February 2011. Mr Clements also filed further affidavits in the proceedings in February 2010, July 2010 and November 2011. 6In June 2012, HP Mercantile commenced proceedings against 35 other persons. It appears those persons engaged a firm of solicitors to represent them in the proceedings, Thames Legal, primarily between July and October 2012 although in one case as late as May 2013. Mr d'Arville indicated, in the course of submissions, that he was instructed that Mr Clements was then associated with that firm. In September 2013, the firm of which Mr Clements is now principal, Legal & Commercial Solutions, was retained to represent those 35 persons in the proceedings brought by HP Mercantile against them. 7In August 2012, HP Mercantile was granted leave to file and serve a Second Further Amended Statement of Claim in the proceedings against Mr Clements. The matter was first listed before me in the Corporations List for directions on 4 September 2012, when Mr Clements represented himself, and has been before me for directions on several occasions since that date. Mr Clements filed a Second Further Re-Amended Defence in September 2012. 8The matter was again listed before me for directions on 8 April 2013 when Mr Clements again represented himself. I then raised a concern that the matter had been on foot for over 6 years and suggested that the proceedings had been an "inordinately long time in the pleadings stage". That observation, on one view, understated the then difficulties with the history of the proceedings. I made directions by consent and relisted the matter on 13 May. By email dated 10 May, Mr Clements advised the Court that he had been unable to comply with the timetable contemplated by those directions and, in my judgment delivered on 12 May 2013, I expressed concern that the matter had not progressed since it was last listed by reason of Mr Clements' non-compliance with those directions and observed that: "A state of affairs by which directions are made and disregarded in their entirety cannot continue in the proceedings." 9In my further judgment dated 17 June 2013, I again referred to the history of the proceedings and noted that: "directions seek[ing] to obtain a finalised pleading have been on foot, and not complied with, for some considerable time and the Court still does not have a finalised pleading from Mr Clements". I also noted, in the course of that judgment, the complexity of the matters which Mr Clements was seeking to raise by defence and the fact that it would be open to Mr Clements to retain lawyers to represent him; I was not then aware, as has since emerged, that Mr Clements was himself a practising solicitor. 10On 14 August 2013, I granted leave to Mr Clements to file a Third Further Amended Defence and made directions which, if complied with, would have allowed the proceedings to go to hearing commencing 22 October 2013 with an estimate of 4 days. Mr Clements filed a Second Cross-Claim on 10 September 2013. On 23 September 2013, Mr Clements advised the Court of a delay in the service of HP Mercantile's evidence - which, I interpolate, involved no fault on his part - and, on 3 October, I made orders extending the time for certain steps contemplated by the previous directions. 11On 11 October 2013, HP Mercantile filed its Defence to the Second Cross-Claim filed by Mr Clements and an affidavit of Mr Chapman sworn 9 October 2013, which I understand to be the substance of the evidence on which it relies in the proceedings. The matter was again listed on that date and I made orders vacating the October hearing dates and listing the matter for hearing in February 2014. I also made an order requiring Mr Clements to serve any evidence on which he relied by 22 November 2013. On 29 November 2013, Mr Clements advised the Court, as I have noted above, that that order had not been complied with and requested the relisting of the matter. 12Mr Clements relies on his affidavit dated 5 December 2013 in support of his application to vacate the hearing date,. He sets out the background to his investment in an agricultural scheme operated by Tumut River Orchard Management ("TROM"). He states that he was not able to complete his evidence prior to 22 November 2013 and notes, inter alia, that he has faced a difficulty in the proceedings in that "the events the subject of the proceedings happened a number of years ago" and it has been difficult to obtain documents showing what occurred in relation to the project. I should interpolate that a difficulty of this kind is to be expected where proceedings continue over a period of 7 years prior to reaching a hearing date, and that the difficulties which the parties might now face in access to documents are unlikely to be reduced by further delay in the proceedings. Mr Clements also notes that TROM and other entities involved in the project went into liquidation at various times. I accept that this may have caused difficulty in obtaining relevant documents, but equally the parties have had a very long period in which to conduct their inquiries in order to bring the documents that are available into evidence. 13Mr Clements refers to the issue of further subpoenas in the proceedings, the first of which was issued in October 2013, and to discovery variously given in 2007-2008, 2010 and 2011 and contends that: "I have not been able to gain a reasonable picture of the operation and management of the scheme for large parts of the time the scheme was on foot." I note, however, that discovery has been given on several occasions; subpoenas had been issued by HP Mercantile in the proceedings as long ago as 2009 and there is no reason why Mr Clements could not previously have taken earlier steps to issue such subpoenas, and any difficulties which Mr Clements has had in obtaining evidence as to the operation of the Scheme over the last seven years are again not likely to be reduced by further delaying the proceedings. I would add that other proceedings of a similar character between HP Mercantile and investors in projects involving TROM have already gone to hearing in this Court, so there is no obvious reason why Mr Clements, acting with proper diligence, could not have prepared himself for a hearing in the same manner as the parties to those proceedings. 14Mr Clements also indicates that he has requested HP Mercantile to provide certain categories of documents by letter dated 4 November 2013. HP Mercantile's solicitors responded that it relied on its evidence and was not required to provide further documents in this manner. It does not seem to me that HP Mercantile was required to provide categories of documents on request, where discovery had been ordered and apparently given on several occasions, and Mr Clements did not establish that the documents which he now sought had not in fact previously been discovered by HP Mercantile within its existing discovery. 15Mr Clements also refers to having made further inquiries after receiving HP Mercantile's further evidence in October 2013. He indicates that he has contacted various persons and refers to documents annexed to Mr Chapman's affidavit dated 9 October 2013 to indicate why such inquiries are necessary. I accept that it is possible that this matter might have warranted a deferral of the hearing date for a short period, to allow Mr Clements to complete those inquiries to the extent that it was possible to do so, although Mr Clements did not seek an order of that character. I do not consider that the nature of those inquiries is such to warrant vacating the hearing date, without allocating another date for it to proceed in the near future, as Mr Clements seeks. So far as Mr Clements indicates that he is making inquiries of Mr Hennessy, he fairly acknowledges that he had been in contact with Mr Hennessy as long ago as 2006, although he lost contact with him until he was recently given his telephone number again, nearly six months ago in July 2013. So far as Mr Clements indicates he is making inquiries of Mr Flude, he acknowledges that Mr Flude has previously been reluctant to speak to him or to consider providing evidence, and Mr Flude has apparently now done no more than agree to meet with Mr Clements and Counsel to discuss the "possibility" of him giving evidence. Mr Clements also refers to inquiries of Mr McKay, of whim he became aware in October 2013, but does not indicate whether Mr McKay is prepared to give evidence. He also refers to inquiries of Mr Silm, but has apparently not yet spoken to Mr Silm, whose telephone number he obtained in October 2013. 16Mr Clements also suggests that some documents annexed to Mr Chapman's affidavit filed in HP Mercantile's case had not been discovered and that further discovery may be required. There is a dispute as to that matter between the parties which it is not possible to resolve on the evidence before me. In any event it does not seem to me that this matter warrants vacating the hearing date. If the earlier discovery orders made over several years have been complied with, then there is no reason for the Court to vacate the hearing date. If they were not complied with, and Mr Clements is prejudiced by any failure by HP Mercantile to discover documents which in fact fell within existing discovery categories, then the Court has power to address that matter at a hearing, including by declining to admit those documents into evidence under s 135 of the Evidence Act 1995 (NSW). Mr Clements suggests that he intends to write to HP Mercantile's solicitor about whether documents annexed to Mr Chapman's affidavit have been discovered, but it seems to me that that course could have been taken at any time after Mr Chapman's affidavit was filed in early October 2013. 17Mr Clements also indicates that he is the solicitor on the record for the 35 other defendants in proceedings brought by HP Mercantile, to which I referred above, in relation to either the particular project in which he invested or other projects which, he says, have a similar structure and were set up by TROM. He refers to his intention, and his understanding that it was HP Mercantile's solicitors' intention, that those 35 proceedings be heard together. As events have developed, those proceedings have now been stayed by reason of a failure by HP Mercantile to provide security for costs and Mr d'Arville did not press any suggestion that Mr Clements' proceedings should be heard together with the 35 other proceedings which presently cannot be heard until security is provided in them. 18In these circumstances, it is not necessary to address in any detail several issues as to actual and potential conflicts of interest which would have arisen had that suggestion been pressed. I do no more than note that it is difficult to see how Mr Clements could give disinterested advice to the 35 clients as to whether it was in their interests that their proceedings be joined with proceedings in which he personally was a defendant. Second, it is difficult to see how Mr Clements could have addressed the potential difficulties involved in, for example, his making an assessment as to whether other clients should give evidence in the proceedings that may assist their interests but be detrimental to his interests, or whether he should give evidence in the proceedings if that would assist his interests but be detrimental to the clients' interests. Further, while Mr Clements drew attention to a disclosure which had been made to the 35 clients that Mr Clements was a defendant in "separate proceedings" by HP Mercantile upon substantially the same causes of action as the proceedings brought by it against those clients, that disclosure was expressly directed to separate proceedings and Mr d'Arville properly accepted that further disclosure and further consents would need to be sought from each of those clients if there were any suggestion that the proceedings be joined. 19In circumstances that the suggestion that Mr Clements' proceedings should be heard together with the 35 other client proceedings is not pressed, it is not necessary to address the issues which might also have arisen under rule 42 of the Legal Profession Conduct Rules 2010 (WA) and in the Court's inherent jurisdiction over proceedings conducted in it, to the extent that the proposed joinder of the proceedings would have the result that Mr Clements might be giving substantive evidence in his own case, at the same time as representing the 35 clients in the proceedings against them heard at the same time. 20In oral submissions, Mr d'Arville placed reliance on the fact that three further proceedings had been commenced by HP Mercantile in the District Court in 2012; the three defendants in those proceedings had in turn commenced proceedings in the Supreme Court in 2013; and those proceedings have been consolidated and were being heard together in the Commercial List of this Court. Those three clients were represented by solicitors other than Mr Clements or his firm. Mr d'Arville indicated from the bar table, and it was not suggested that there was any controversy, as to the fact that the investors in the three proceedings had filed evidence as to their own position; that HP Mercantile had not yet filed evidence in those proceedings; that the investors may seek to file further evidence in those proceedings; and that there has not yet been any discovery in those proceedings. 21Mr Clements' evidence was that the three additional proceedings were in respect of investment schemes which are "similar or identical to the investment scheme" which is the subject of the proceedings against him and similar issues arise in them. There is little detailed evidence before me to allow me to assess the extent of similarity between the issues in the relevant proceedings. In the absence of such evidence, I am not satisfied that it would further the just, quick or cheap resolution of these proceedings, consistent with s 56 of the Civil Procedure Act 2005 (NSW), to defer a hearing of these proceedings, which have now been on foot for several years, because other proceedings had recently been commenced in this Court by other parties. Mr d'Arville accepted that the consequence of Mr Clements' submission in that regard was, as is obvious enough, that the hearing of proceedings commenced in late 2006 should be deferred so that they could be heard with proceedings that were not commenced until 2013. The difficulty with that course is, among other things, that the same logic would warrant the continued deferral of these proceedings and those other proceedings so long as any further proceedings were commenced by HP Mercantile or any party against which it brought proceedings from time to time. 22Mr Clements also refers to an appeal brought from the decision of White J in HP Mercantile Pty Ltd v Dierickx [2012] NSWSC 1005 which, he contends, involved a scheme run by TROM which was substantially identical to the scheme in which he invested. He notes that that appeal was heard by the Court of Appeal in September 2013 and, whatever the outcome of the appeal, it was likely that it would affect the issues between the parties in these proceedings, the 35 proceedings affecting his clients and the three additional proceedings. I accept that there may be a degree of overlap in the issues in the respective proceedings, although once again there is no detailed evidence before me to permit the extent of that overlap to be assessed, and I have had regard to this matter in the exercise of the Court's discretion. 23Mr Clements also refers to orders for security for costs made in the proceedings against the 35 clients and to the fact that HP Mercantile has declined to provide security in those proceedings but indicated that any recovery from Mr Clements in these proceedings may be used to fund that security. Mr Clements suggests that he has previously operated on the basis that HP Mercantile had the financial capacity to meet a costs order, but that he intends now to file a motion seeking security for costs in these proceedings. There may or may not ultimately be an issue of delay in respect of that application, of the kind considered in Karl Suleman Enterprises Pty Ltd (in liq) v Pham [2010] NSWSC 886 at [50]. If such an application is brought by Mr Clements promptly, it can be determined by the Court by the end of term, and it does not seem to me that this matter provides any reason to vacate the hearing date. 24Mr Clements acknowledges, in his affidavit, and with a degree of understatement, that the current proceedings have been on foot for "a significant time". He suggests that the Court will be given an incomplete picture if he is required to put on his evidence prior to completing the investigations to which he has referred; however, that proposition needs to be balanced against the time for which the proceedings have been on foot, the fact that the Court has repeatedly emphasised in directions hearings over the last several months that the delays in the proceedings to date are not consistent with the just, quick and cheap resolution of the real issues in dispute in the proceedings; and that there is no real explanation of why Mr Clements could not have conducted these investigations over the last several years and specifically over the last several months since Mr Chapman's primary evidence was filed. 25Mr Clements also suggests that these proceedings going ahead may be disadvantageous to the other 35 clients for whom he acts (at least if the stay affecting their proceedings is ultimately lifted) and the three clients in the additional proceedings, because there are issues in common in this and the other proceedings. It does not seem to me that the suggested disadvantage is substantial, because a finding in proceedings concerning Mr Clements will not bind his clients who are not a party to these proceedings or the three parties to the other proceedings. So far as Mr Clements' solution to the suggested disadvantage is for the proceedings to be vacated and heard together with the other three proceedings, that suggestion has the difficulties to which I have referred above. Mr d'Arville also drew attention to the risk of inconsistent judgments, and I have had regard to that issue so far as there may be common issues in respect of the various proceedings, notwithstanding that they involve different parties and a judgment in one matter would not bind the parties to the other. 26The principles applicable to the exercise of the Court's discretion whether to vacate the hearing date are well established. In Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, the Court emphasised the relevance of prejudice arising from delay in dealing with applications of this kind. In Bi v Mourad [2010] NSWCA 17 at [47], Allsop P also observed that: "Delay is a feature of litigation intended to be eliminated as far as possible by the statutory enactment of the regime in the Civil Procedure Act ... The reforms that have taken place under the Civil Procedure Act and the evident attempt by Courts to ensure efficiency can be seen not merely to reflect worthy efforts for efficiency but also to be steps vital for the provision of timely individual justice." 27I should also have regard more broadly to s 56 of the Civil Procedure Act 2005 (NSW) which provides that the overriding purpose of the Act and the Rules of Court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issue in dispute in the proceedings. The Court is required to give effect to that overriding purpose when it exercises any powers given to it by the Act or by the Rules of Court. Section 58 in turn requires the Court, in deciding whether to make any order for direction for the management of proceedings, to act in accordance with the dictates of justice. For the purposes of determining what are the dictates of justice in a particular case the Court must have regard to the provisions of ss 56 and 57 and may have regard to specified matters, including the degree of expedition with which the respective parties have approached the proceedings, the degree to which they have been timely in their interlocutory activities, the use which they have made, or could have made, of any opportunity available to them in the Courts in the course of proceedings and the degree of injustice that will be suffered by the respective parties as a consequence of any order or direction. Section 57 in turn requires the Court to have regard to other specified matters, including the just determination of the proceedings, the efficient disposal of the Court's business, the efficient use of available judicial administrative resources and the timely disposal of the proceedings and all other proceedings in the Court, at a cost affordable by the respective parties. 28These provisions were considered by the Court of Appeal in Hans Pet Constructions v Cassar [2009] NSWCA 230. Although the parties did not refer to that case in submissions, I consider that I may properly refer to since it is a leading authority as to the operation of the relevant sections. Allsop P there observed at [36] that these provisions bring about: "a new statutory balance among factors in litigation including court and party efficiency and the delivery of individual justice. Delay and case backlog are not merely matters affecting the public cost in delivering of justice, they corrode the ability of the courts to provide individual justice...the reforms that have taken place under the Civil Procedure Act...can thus be seen not merely to reflect worthy governmental and judicial efforts for efficiency, but also to be vital for the provision of timely individual justice. To these salutary ends, the significant powers of case management have been placed in the hands of judicial officers which, if exercised, can often be seen to have sharp, and sometimes detrimental effects on the claims of the parties." His Honour also emphasised that the terms and importance of ss 56 to 58 should be borne in mind as I have done when exercising these powers. 29I am not satisfied, having regard to the matters to which I have referred above, that it would be consistent with the just, quick and cheap resolution of the real issues in dispute in the proceedings, in all the circumstances, now to vacate the hearing date so that these proceedings can be heard together with the three other proceedings in the Commercial List, or with the 35 other proceedings, were security for costs to be provided by HP Mercantile and the stay listed. I am also not satisfied that the hearing date should be vacated on the basis that the matter should be returned for further directions in February 2014, as Mr Clements submitted in the alternative. 30It has not been necessary for me to determine, and I have not determined, whether an order should be made extending the time for Mr Clements to file affidavit evidence or deferring the start of the hearing by some limited period, since Mr Clements has not sought orders of that kind. I will, however, list the matter for further directions so that any further questions of case management may be addressed prior to the hearing.