Williams & Kersten Pty Ltd v National Australia Bank Limited

Federal Court of Australia|2023-06-14|Before: Ms P, Lee J

THE COURT ORDERS THAT:

Pursuant to s 37P(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act), Orders 1, 2, 3, 5 and 6 of the Orders dated 26 April 2023 be vacated.
Pursuant to s 37P(1) of the FCA Act, on or by 5pm on 26 July 2023, the applicant provide to the Associate to Justice Lee and the NAB a draft second further amended statement of claim.
On or by 2 August 2023, the NAB indicate whether it opposes the grant of leave to the applicant to file a second further amended statement of claim.
The matter be listed for a case management hearing at 9:30am on 4 August 2023. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

(Delivered ex tempore, revised from the transcript)

B CASE MANAGEMENT TO DATE 5 When the matter came into my docket, I brought the parties before me as soon as practicable, on 11 July 2022. 6 The first step was to get the pleadings in shape. I made orders requiring the applicant to file and serve an amended originating application and an amended statement of claim, and for the National Australia Bank Ltd (NAB) to file a defence. 7 When the parties returned before me on 7 October 2022, I granted the applicant, Williams and Kersten Pty Ltd (which has brought this proceeding both in its own right and as representative of group members), leave to file and serve a further amended statement of claim conforming with the reasons given on that occasion: Williams & Kersten (at [13]-[17]). In brief, there were numerous issues with the amended statement of claim, including controversy as to (1) the group member definition; and (2) the addition of an insolvent trading claim pursuant to s 588M(3) of the Corporations Act 2001 (Cth). I also cautioned that the applicant's pleading seemed to be overly complex, and should be simplified (at [18]). 8 At the next return in December 2022, it was necessary to iron out problems with the NAB's defence. I also responded to a complaint by the applicant as to a deficiency of information by giving leave to administer some interrogatories. Extensive discovery has now been provided by the NAB, although there remains a complaint about the adequacy of that discovery in some respects. 9 Next, in February 2023, I granted the applicant leave to provide to the NAB and the Court a draft second further amended statement of claim addressing further difficulties, in particular, clarifying the allegations as to the NAB's knowledge of certain facts. By the end of that hearing, I had hoped the pleadings could soon be resolved, and listed the matter for a case management hearing on 26 April 2023 "to deal with all outstanding interlocutory issues". 10 It became apparent in April that my orders had been the subject of continuing default. I extended time for the applicant to provide the NAB and the Court with its pleading. I also made a series of directions relating to legal professional privilege claims and orders that the applicant notify the NAB as to the evidence upon which it proposes to rely in relation to the insolvency of the former second and third respondents, an issue which is presently in dispute. Finally, I listed the matter for a case management hearing on 27 July 2023.

C THE HEARING TODAY 11 Recent events necessitated a relisting today. 12 At 4:27pm on 30 May 2023, one business day prior to the Court requiring the provision of a draft second further amended statement of claim, a communication was received by my Associate in the following terms: I have been instructed by the Applicant that he is in ill health and not in a condition to provide instructions to my firm for a minimum period of approximately 3 weeks … Having regard to the firm's inability to obtain instructions from the Applicant, the firm will not be in a position to comply with paragraphs 1 and 6 of Justice Lee's Order dated 26 April 2023. That non compliance [sic] will have onflow [sic] effects to timetabling at paragraphs 2 and 3. I attach those Orders for the Court's convenience. 13 Accordingly, I was told a day before the date of compliance that the applicant would not, in effect, be complying with my orders. 14 This was self-evidently unsatisfactory. It is difficult to understand how the illness of a lay representative applicant is any excuse for non-compliance with an order put in place to address deficient a pleading and particularisation. The applicant's core allegation (explained in Williams & Kersten (at [6]-[7])) has not changed since the last iteration of the pleading was settled and, as I noted above, the applicant has now had access to internal documents from the NAB related to proving such a claim. The delay continues: I am comfortably satisfied the applicant's legal representatives have not progressed this matter adequately in accordance with their duties in s 37N(2) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). 15 Given the notification, I determined to list the matter on my own motion. 16 Shortly before that case management hearing, I learned the applicant had engaged new solicitors. Counsel previously briefed are not presently engaged, although it was suggested that junior counsel with some background knowledge of the claim may be retained by the new solicitors. 17 As I indicated to Mr Coburn, who appeared on behalf of the applicant today, I have given ample opportunity to the applicant to articulate its claim. I do not propose to rehearse the well-known reasons why it is incumbent upon an applicant to plead its case clearly: see, recently, Business Travel Media Pty Ltd v M Media Group Pty Ltd [2023] FCA 411 (at [9]-[10] per Lee J). It seems to me the applicant has become distracted by focussing on the sufficiency of evidence to prove a case at trial, the adequacy of the NAB's initial defence, and the sufficiency of discovery (rather than initially concentrating on pleading the case with precision, based upon its current and evolving state of knowledge).

D NEXT STEPS 18 I will not allow this case to proceed to a final hearing unless adequate discovery has been given and the issues between the parties have been sufficiently narrowed. But as I indicated almost a year ago, the first and critical step is for the applicant to articulate its case cogently. 19 I have determined to give a further indulgence to the applicant. I have been told that the pleading is "90 per cent" complete and there has been communication between the parties to the effect that the pleading is "substantially complete". 20 Notwithstanding this asserted progress, I was told that a period of four weeks is required for the pleading to be finalised. Given that it may be necessary for the new solicitors to brief senior counsel, and given the importance of ensuring the pleading is finally placed in a proper form, I intend to give the applicant more time than requested. 21 I will make a direction under s 37P(1) of the FCA Act that certain of my previous timetabling orders be vacated and that on or by 5pm on 26 July 2023, the applicant provide to my Associate and the NAB a draft pleading. 22 I then intend to list the matter at 9:30am on 4 August 2023. By 2 August 2023, NAB should indicate whether or not it opposes the grant of leave. If it is possible to do so on 4 August, I will deal with any application for leave to amend and make orders belatedly readying this matter for hearing. 23 I explained today that an order under s 37P(2) of the FCA Act is a matter of some significance. The applicant (and those acting for it) are on notice they have a final chance to get their house in order. I reminded the applicant today that if a party fails to comply with an order made under s 37P(2), s 37P(5) empowers the Court to make such order as the Court thinks appropriate, including dismissing the proceeding in whole or in part (see s 37P(6)(a)). 24 Needless to say, this class action, commenced almost four years ago, should not be allowed to languish any longer. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.

Federal Court of Australia Act 1976(Cth)ss 37N(2), 37P(1), 37P(2), 37P(5), s

Corporations Act 2001(Cth)s 588M(3)

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