Re Michael Vincent Bourke; Terence Marcellin Bourke; L and M Holdings Pty Ltd; Lra Restaurants Pty Ltd and Others v Philip Charles Young; Noel Patrick Taylor; Jennifer Harper; Ian L Mcgregor; Frank Garment; Paul Robertson and Others [1993] FCA 24 (10 February 1993)

FEDERAL COURT OF AUSTRALIA

Re: MICHAEL VINCENT BOURKE; TERENCE MARCELLIN BOURKE; L and M HOLDINGS PTY
LTD; LRA RESTAURANTS PTY LTD and OTHERS
And: PHILIP CHARLES YOUNG; NOEL PATRICK TAYLOR; JENNIFER HARPER; IAN L
MCGREGOR; FRANK GARMENT; PAUL ROBERTSON and OTHERS
No. G387 of 1990
FED No. 27
Number of pages - 20
Strike Out Application

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Hill J.(1)

CATCHWORDS

Strike Out Application - contumelious failure to comply with Court directions - supply of inadequate particulars - inadequate compliance with Court directions - litigant in person - respondents inability to be aware of case against them - individual applicants bankrupt - proceedings stayed as against them - whether in the circumstances proceedings should be dismissed.

Trade Practices Act 1974 Part V: s.75B

Bankruptcy Act 1966: s.60(3)

Federal Court Rules: O.10 r.7(1)

Corporate Affairs Commission v Solomon, New South Wales Court of Appeal, unreported 1 November 1989; considered.

Rajski v Scitec Corporation New South Wales Court of Appeal, unreported 16 June 1986, considered.

Tardy v Secretary of Department of Community Services and Health, New South Wales Court of Appeal, unreported 9 October 1990; discussed.

HEARING

SYDNEY
10:2:1993

Counsel and Solicitors for the Applicants: Mr Michael Vincent Bourke

Solicitors for the First to
Eleventh Respondents: P.W. Kearns

Solicitors for the Thirteenth

and Fourteenth Respondents: Middletons, Moore and Bevins

Counsel and Solicitors for the Fifteenth: M. Clark instructed by

to Seventeenth Respondents: Minter Ellison Morris Fletcher

Solicitors for the Eighteenth

and Nineteenth Respondents: Murray, Stewart and Fogarty

ORDER

THE COURT DECLARES THAT:

1. By force of the Bankruptcy Act 1966 the proceedings against
Mr M.V. Bourke and Mr T.M. Bourke are stayed.

THE COURT ORDERS THAT:

2. The proceedings brought by the third, fourth, fifth, sixth,
seventh, eighth and ninth applicants respectively against
the first to seventeenth respondents respectively are struck
out.
3. The applicants, other than Mr M.V. Bourke and Mr T.M.
Bourke, to pay the costs of the respondents in respect of
whom the proceedings stand dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

HILL J. Before the Court are three motions to strike out in respect of various respondents, the applicant's Statement of Claim.

2. The proceedings themselves are brought by Mr Michael Vincent Bourke ("Mr Bourke") and his brother, as first and second applicants, and seven corporations, of which it is said, in the Statement of Claim, that Mr Bourke and his brother are and were, at all relevant times, directors. Mr Bourke represented all the applicants at the hearing. For present purposes, the respondents fall into three categories; the first to eleventh respondents, respectively, who, at all material times, are alleged to have been employees of the State Bank of New South Wales ("the Bank"), the thirteenth and fourteenth respondents, being Jones Lang Wootton Auctioneers Pty Ltd, and Mr Madsten who, apparently, is alleged to be an employee of that firm. The fifteenth to seventeenth respondents, respectively, are Tony Cant Real Estate Pty Ltd and a Mr Sarroff and a Mr Court, both of whom are apparently alleged to be employees of Tony Cant Real Estate Pty Ltd. Jones Lang Wootton Auctioneers Pty Ltd and Tony Cant Real Estate Pty Ltd are estate agents whom, it is alleged by the applicants, were employed by the Bank to sell various properties owned by certain of the applicants.

3. The Statement of Claim, in its most recently amended manifestation, alleges that, in the period 30 June 1986 to 8 July 1986 the Bank lent to L and M Holdings Pty Ltd the sum of $5,300,000 pursuant to a loan agreement dated 30 June 1986. That loan was guaranteed by the first and fourth to ninth applicants, respectively. It is also alleged that the third to ninth applicants provided first mortgage securities to the Bank pursuant to the said guarantees. The inconsistency concerning the third applicant has not been the subject of any comment.

4. The case against the Bank employees as pleaded is in the following terms:

"10. At all material times when purporting to
exercise its right to sell the Applicant's
properties the Bank and its employees were
under a duty of care to act in good faith
or alternatively were under a duty to take
reasonable care to obtain a proper price
or true market value of the property sold
or to sell only assets over which they had control.
11. In selling the Applicant's properties the
Bank and its employees acted mala fide or
alternatively failed to take reasonable
steps to obtain a proper price or true
market value of the properties."

5. The case against the fourteenth, fifteenth and eighteenth respondents is pleaded in the following terms:

"12. At all material times when purporting to
sell or in selling the Applicant's
properties the Fourteenth, Fifteenth and
Eighteenth Respondents were under a duty
of care to act in good faith or
alternatively to take reasonable care to
obtain a proper price or a true market
value of the property.
13. The Fourteenth, Fifteenth and Eighteenth
Respondents in selling the Applicant's
properties acted mala fide or
alternatively failed to take reasonable
steps to obtain a proper price or true
market value of the properties.
PARTICULARS RELATING TO THE MALA FIDES AND
FAILURE TO TAKE REASONABLE STEPS AS AGAINST THE
FOURTEENTH, FIFTEENTH, EIGHTEENTH AND FIRST TO
TWELFTH RESPONDENTS
i. Failure to make any or any adequate
inquiry or investigation or to seek any or
any adequate advice as to the proper
method of sale.
ii. Failure to advertise the properties
properly.
iii. Failure to give any or any adequate
consideration as to the extent of the
actual or prospective market for the
particular properties involved.
iv. Failure to consider whether the properties
ought to have been developed in any
particular way prior to the sale.
v. Failure to properly advertise or promote
the development potential of the
properties.
vi. Failure to obtain tenants in respect of
the commercial properties prior to sale.
vii. Failure to impose any or any adequate
restrictions as to the reserved price.
viii Failure to make the properties available
for inspection adequately or at all prior
to sale.
ix. Selling chattels over which the Bank had
no charge.
x. Selling chattels at grossly underprice.
xi. Selling property on a rising market too
early.
xii. Failure to heed advice as to the danger of
releasing all of the property for sale
times too close to one another. Like poor
advertising of the property in effect
depressing the market.
14. By reason of the facts and particulars
stated above the Fourteenth, Fifteenth and
Eighteenth Respondents have contravened
S.52 of the Trade Practices Act 1974 by,
in trade or commerce, engaging in conduct
that was misleading or deceptive.
15. By reason of the matters pleaded above the
Fourteenth, Fifteenth and Eighteenth
Respondents have contravened S.52A of the
Trade Practices Act 1974 by, in trade or
commerce, engaging in conduct that was
unconscionable."

6. The case against the individual respondents, being the thirteenth and sixteenth respondents respectively, is that they aided and abetted, counselled, procured or induced conduct in contravention to the Trade Practices Act 1974 and, as a result, that the applicants had suffered loss and damage. As against the Bank employees, it is alleged that they also were involved in aiding, abetting, counselling, procuring or inducing conduct in breach of Part V of the Trade Practices Act 1974 and that in so doing they had acted in contravention of the Act pursuant to provisions of s.75B of that Act.

7. It may be inferred that the circumstances involved in the present application are, if not identical, at least related to the circumstances involved in other proceedings pursuant to which the applicants, or some of them, have proceeded against the Bank. Those proceedings have not yet been heard. I might perhaps indicate, at this early stage in the judgment, that Mr Michael Bourke and his brother were made bankrupt on the petition of Beneficial Finance Corporation Ltd on 14 February 1992. In consequence, the present proceedings, so far as they are concerned, are stayed pursuant to s.60(2) of the Bankruptcy Act 1966. The trustee, having been notified of the proceeding, has not, it would seem, made any election in writing to prosecute or discontinue the action, with the result that, by force of s.60(3), he is deemed to have abandoned it.

8. Another consequence of the bankruptcy of Mr Michael Bourke and his brother is that, as a result, they ceased to be directors of the remaining applicants. Mr Bourke, who appeared with the leave of the Court for the applicants on the assumption that he was authorised to do so, had not, he conceded, been authorised to appear by the Board of Directors of any of the applicants. It would seem that the shareholders of the companies are, or include, Mr Bourke's family, so that it is probable that authority would be forthcoming. Nevertheless, none would seem to exist at the present time. From what Mr Bourke said from the bar table, it would seem that at least one of the applicant companies is in liquidation, and may indeed have been in liquidation prior to the commencement of the proceedings. There was no evidence, however, about this matter and I say nothing further of it.

9. The present proceedings were commenced by the applicants on 16 July 1990. Service, however, was not effected until 28 February 1991, in the case of the Bank employees, and shortly thereafter in respect of other respondents. At a directions hearing held on 1 March 1991, the matter was stood over for further directions until 8 March 1991 to enable those respondents not then served to be served. The matter was stood over again until 3 April 1991, as not all the respondents had by then been served. Leave was given to file and serve amended application and Statement of Claim, particularly as there had been errors in the names of the parties initially.

10. The applicants did not, as directed, file and serve amended Statements of Claim and at the directions hearing on 3 April 1991 the matter was stood over to 1 May 1991. A direction was made for amended application and Statement of Claim to be filed and served no later than 26 April 1991. On 1 May 1991, no amended Statement of Claim or application having been served, directions were given again for the filing and serving of an amended Statement of Claim, on or before 3 May 1991, and also for particulars to be supplied, on or before 13 June 1991, the matter to be relisted on 17 June 1991. It was noted that any application to strike out the proceedings would be dealt with on 17 June 1991. Such an application had by then been foreshadowed.

11. On 16 May 1991, the Bank employees requested particulars. Particulars were also requested by the other applicants. On 17 June 1991, the requested particulars not having been supplied, I made a direction that the applicants supply the particulars on or before 2 September 1991 and the matter was stood over for further directions on 6 September 1991. Notices of Motion, either to strike out or for the supply of particulars, were adjourned to that date and thereafter from time to time.

12. On 6 September 1991, I stood the matter over until 15 July 1992. I did this for a number of reasons. The applicants, by this stage, were unrepresented. Mr Bourke indicated that he had been seeking legal aid. I warned, however, that the applicants must take steps to pursue their claim before the matter next came before the Court on 15 July 1992. On that day the matter came before Mr Justice Beaumont, in my absence from Sydney, and was stood over until 14 August for the hearing of the strike out application which had been adjourned to that date.

13. On 14 August 1992, after hearing argument, I directed the applicants to reply to requests for particulars on or before 4 September 1992 and directed him to file and serve all affidavits upon which he proposed to rely on or before 26 October 1992. I stood the matter over until 27 October at 9.30 am. I indicated that failure to comply could result in the application being struck out. I ordered the applicants to pay the costs of that day and of 15 July.

14. On 14 August 1992, the requested particulars had still not been supplied. Mr Bourke pleaded that there had been a volume of work to do in this and other litigation and that he had had to endeavour to run the numerous cases in which he was involved including appeals against his bankruptcy and the proceedings against Beneficial Finance Corporation Ltd. without assistance. He indicated that legal aid had been refused to him on 12 May 1992. Mr Bourke indicated that he expected to be in a position to provide answers to the particulars in a relatively short time with some help. By that time, approximately fourteen months had gone by since particulars were first ordered to be supplied. He said:

"But I would be happy to give you an
undertaking, your Honour, to have these answered
now because I have got the time and I feel I
have got the confidence to do it with some
assistance and get them to the parties in a
reasonably short period."

15. Because the applicants were unrepresented, and because the strike out of the proceedings may have had the consequence that any new application in respect of the same claims under the Trade Practices Act would be statute barred, I declined then to strike out the proceedings. A timetable for the further conduct of the case was discussed. Accordingly, I directed the applicants to respond to all requests for particulars on or before 4 September 1992, and to file and serve all affidavits upon which he proposed to rely on or before 26 October, with the matter to be listed for further directions on 27 October 1992.

16. The matter was restored to the list on 16 September 1992. The respondents alleged that the particulars, which Mr Bourke had by then given, were nevertheless inadequate. There was substance in this claim. Some of the answers were completely unresponsive. For example, in response to a question relating to a particular paragraph as to which particular sections of the Trade Practices Act it was alleged that the fourteenth respondent had contravened, the answer was given: "the disposal of assets by firesale". When asked to identify what investigations the first to eleventh respondents had made to the proper method of sale of the relevant properties, the answer was given: "unknown, little."

17. To be fair to Mr Bourke, he was faced with a large number of questions expressed in technical language and a number of his replies were intelligible, if not necessarily expressed in language which a lawyer would use. I ordered that the respondents notify Mr Bourke the respects in which the particulars were inadequate, and directed Mr Bourke to supply, by 14 October 1992, the particulars which were necessary to ensure adequate compliance with the request for particulars. I noted that any failure by Mr Bourke to comply with those orders could have the consequence of ensuring that the action was struck out. The respondents complied with my direction. Mr Bourke's response to the particulars requested was again somewhat unhelpful. For example, when asked upon what facts the applicants relied on alleging that the fifteenth respondent acted mala fide, particularly in the failure to make any or any adequate inquiry or investigation or to seek any or any adequate price, Mr Bourke replied:

"Firesale mentality applied, created firesale
atmosphere and sold properties at firesale
prices."

18. On 27 October 1992, the matter again came before me on an application to strike out. After considerable argument as to the adequacy of Mr Bourke's answers and also as to whether all of the particulars requested were appropriate or proper, I refused to strike out the proceedings, but I ordered Mr Bourke to provide answers to the fourteenth and fifteenth respondents by 31 December 1992, to the following questions:

"(a) Upon what facts, matters and circumstances
do the Applicants rely in alleging that
the Fourteenth and Fifteenth Respondents
in selling the properties referred to in
the Schedule to the Amended Statement of
Claim acted mala fides.
(b) What conduct of the Fourteenth and
Fifteenth Respondents is alleged by the
Applicants to be unconscionable."

19. I made further directions that Mr Bourke file and serve on or before 31 December, on all parties, all affidavits upon which he proposed to rely. I ordered that, except with the leave of the Court, no further evidence, affidavit or oral, could be adduced by the applicants in chief, with the proviso that this was not to preclude evidence in documentary form arising from discovery. I directed that, if the first order was not complied with, or if no affidavits were filed by 31 December 1992, an application to strike out would be entertained.

20. The applicants did not provide the particulars ordered to the fourteenth respondent. This, Mr Bourke says, was an oversight in that he confused the thirteenth and fourteenth respondents with the fourteenth and fifteenth respondents and so provided the information only to the solicitors for the fifteenth respondents, who also acted for the party Mr Bourke believed to be the fourteenth respondent. This confusion had arisen, so Mr Bourke said, out of a confusion of numbering the respondents in various documents in Mr Bourke's word processing files. Correspondence at the time suggests that Mr Bourke suffered no such confusion. Although I do not go so far as to find that Mr Bourke deliberately misled the Court on this matter, I am left with a feeling of uneasiness.

21. The letter that was sent to the fifteenth respondent, in reported answer to the requested particulars, is annexed to this judgment. One affidavit of Mr Bourke, without relevant annexures, was served upon the solicitors for the fourteenth respondents on or about 4 January 1993. That same affidavit, also without annexures, was served upon the solicitors for the fifteenth respondent around the same time, although it is suggested that a copy was available at an earlier date. The applicants filed a number of other affidavits, which were not served. In an affidavit filed in opposition to the strike out procedure, Mr Bourke foreshadowed yet additional affidavits being filed. He acknowledged that leave of the Court would be required before these affidavits could be read.

22. The solicitor for the fourteenth respondent submits that, in respect of his clients, the applicants did not comply with the orders made and that, having regard to the history of the matter as a whole, the proceedings should be struck out as against his clients. He says that to date, his clients have incurred legal costs in excess of $10,000 for attending at nine directions hearings when, after approximately a two year period, he is still not in a position to advise his clients of the case against them. He submits that, even if I were to accept that Mr Bourke made an honest mistake in failing to serve the letter of particulars by 31 December 1992, nevertheless the replies as given were an inadequate response. He submitted further that a perusal of the one affidavit served indicated that the applicants simply did not have a case, even if every word in that affidavit were accepted as true. So it was said that the application was frivolous and ought not to have been made.

23. Counsel for the fifteenth respondent submitted that, although the applicants had served upon her client an answer to the requested particulars, that answer was so unsatisfactory that it should not be seen as an appropriate answer at all. She referred to the affidavit of Mr Bourke and indeed all other affidavits that Mr Bourke served up to the date of the present hearing and submitted that they did not disclose any case at all against her client. She submitted that in these circumstances the application should be dismissed as frivolous.

24. The solicitor for the employees of the Bank supported the submissions made by the other parties and submitted that, when consideration was given to the affidavit of Mr Bourke, no case at all emerged against his clients. He submitted that the applicants' evidence should be restricted to that of Mr Bourke, since that was the only affidavit that was filed around the time that the applicants were permitted to file affidavits, albeit not, in fact, served until after 31 December 1992.

25. I should say straight away that submissions to the effect that the application should be struck out because the only evidence filed by Mr Bourke disclosed no cause of action against relevant respondents is misconceived. The applicants would not, at the hearing, be restricted merely to the affidavit material which they were required to file. They may be able to rely upon a wholly documentary case obtaining the necessary documents by discovery from the respondents. However, so far as it is relevant, I would agree with the submissions of the applicants that, if the only evidence ultimately adduced on a hearing were the affidavit evidence which Mr Bourke has so far filed, then the applicants' case would fail. However, I must, at this stage, accept the possibility that other evidence of a documentary kind may be adduced by the applicants.

26. The more difficult question is whether, having regard to the history of the present matter and the fact that after two years and innumerable directions hearings, the case is still at a point where the respondents are able to say that as they are unaware of the case really put against them, the application should be struck out under the provisions of O.10 r.7 of the Federal Court Rules. Sub-rule (1) of that Rule provides as follows:

"Where a party fails to comply with an order of
the Court directing that party to take a step in
the proceeding, any other party may move the
Court on notice -
(a) if the party in default is an applicant -
for an order that the proceeding be stayed
or dismissed as to the whole or any part
of the relief claimed by him in the
proceeding;".

27. It is evident from a perusal of the chronology that there has been a history of non-compliance by Mr Bourke with directions that have been made for the conduct of the matter. I have endeavoured, over a considerable period of time and over the objections of the respondents, to give the applicants every opportunity to rectify non-compliance, particularly because they have, over most of the time, been unrepresented, unable to obtain legal aid, and faced with difficulty in complying with orders made.

28. Counsel for the fifteenth respondent (supported by the other parties) submits that a point of time must come, even where applicants are unrepresented, where it may be said "enough is enough". The present is, she submitted, such a case. Reference was made to the unreported judgment of McClelland J, as his Honour then was, of the Supreme Court of New South Wales, in Tardy v The Secretary of the Department of Community Services and Health (9 October 1990) and of Mahoney AP in Corporate Affairs Commission v Solomon (unreported, Court of Appeal, 1 November 1989). Both cases concerned proceedings brought by plaintiffs who were unrepresented. In Solomon, Mahoney AP warned of the need to have regard not merely to the position of the litigant in person, but also to the position of the other party or parties to the litigation and:

"to what is required, in justice, to prevent the
unnecessary expenditure of public and private
resources." (At 8).

29. His Honour referred, as did McClelland J in Tardy, to passages from the judgments in Rajski v Scitec Corporation Pty Ltd (NSW Court of Appeal, unreported, 16 June 1986) where it was said:

"In my view, the advice and assistance which a
litigant in person ought to receive from the
court should be limited to that which is
necessary to diminish, so far as this is
possible, the disadvantage which he or she will
ordinarily suffer when faced by a lawyer, and to
prevent destruction from the traps which our
adversary procedure offers to the unwary and
untutored. But the court should be astute to
see that it does not extend its auxiliary role
so as to confer upon a litigant in person a
positive advantage over the represented
opponent. ...At all events, the absence of legal
representation on one side ought not to induce a
court to deprive the other side of one gist of
its lawful entitlement. ...An unrepresented
party is as much subject to the rules as any
other litigant. The court must be patient in
explaining them and may be lenient in the
standard of compliance which it exacts. But it
must see that the rules are obeyed, subject to
any proper exceptions. To do otherwise, or to
regard a litigant in person as enjoying a
privileged status, would be quite unfair to the
represented opponent." (Per Samuels JA).
Where a party appears in person, he will
ordinarily be at a disadvantage. That does not
mean that the court will give to the other party
less than he is entitled to. Nor would it
confer upon the party in person advantages
which, if he were represented, he would not
have. But the court will, I think, be careful
to examine what is put to it by a party in
person to ensure that he has not, because of the
lack of legal skill, failed to claim rights or
to put forward arguments which otherwise he
might have done." (Per Mahoney JA).

30. It seems to me that the question which I must ask myself is whether Mr Bourke's failure to provide appropriate answers to the questions posed by me stemmed from the disadvantage which Mr Bourke suffers by being unrepresented, so that the standard of compliance, whatever it may be, is explicable by this fact, rather than by a deliberate failure to comply with the Court's directions. In considering that question, I take into account the need to do justice as well to the respondents in the present proceedings who have already incurred significant expense and who have had the present proceedings hanging over their heads for some two years already, as well as to the applicants. I bear in mind too that Mr Bourke is not unintelligent. While it is true that he is not a lawyer, he is an accountant and is neither illiterate nor uneducated. The question asked required Mr Bourke to specify what the facts, matters and circumstances were upon which the applicants relied in alleging mala fides and the conduct alleged by the applicants to be unconscionable. The response contains a number of paragraphs which can hardly be said to constitute facts, matters and circumstances constituting mala fides. Some of the paragraphs concern matters that are clearly not pleaded at all. For example, reference appears throughout the letter of 5 November 1992 to "wrongful detention and conversion of goods". Nothing in the Statement of Claim suggests that there was any such wrongful detention and conversion. The alleged misrepresentation referred to at the end of para.4 is another example of a matter not pleaded. Other matters set out in the letter are such as virtually to be totally unable of constituting bad faith. A statement that the directors and officers of the fourteenth and fifteenth respondents had "wilfully shut their eyes" so that they could be assumed to have condoned and ratified wilful, misleading and deceptive conduct, hardly seems to bear on questions of mala fides. Nor could it be said to particularise conduct.

31. When I put a number of these matters to Mr Bourke in the course of argument, he professed to understand and sought a further opportunity to respond.

32. I have considered very carefully whether Mr Bourke should be given, yet again, another chance. I am not, at the end of the day, satisfied that Mr Bourke's failure to provide the requested particulars stemmed from his lack of legal representation or ignorance of legal procedures. The default must be seen in the context of Mr Bourke's failure to comply with the numerous directions in the past for filing, inter alia, affidavits. Mr Bourke's disregard of this Court's directions amounts to a contumelious disregard of them. In my view, it is such as to warrant the Court taking what is rather drastic action to cause the proceedings to be dismissed.

33. However, as the proceedings have been stayed in any event against Mr Bourke and his brother by virtue of the provisions of the Bankruptcy Act, clearly no order should have been made against Mr Bourke or his brother to provide particulars, and for that reason it is inappropriate, in my view, to dismiss the proceedings so far as he and his brother are concerned. That difficulty does not apply to the other applicants. Accordingly, I would dismiss the proceedings against the third, fourth, fifth, sixth, seventh, eighth and ninth applicants respectively, so far as the proceedings relate to the first to seventeenth respondents respectively. No application was made by the eighteenth, nineteenth, twentieth and twenty-first respondents, and accordingly the proceedings remain on foot with respect to them.

34. I would order the applicants, other than Mr Bourke and his brother, to pay the costs of the respondents in respect of whom the proceedings stand dismissed.