Genocanna Nominees Pty Ltd v Thirsty Point Pty Ltd [2006] FCA 70 (8 February 2006)

PRACTICE AND PROCEDURE – application for leave to amend statement of claim and application to vacate hearing date – where no opposition to proposed amendment to statement of claim – whether adjournment in the interests of justice – application to vacate hearing date dismissed.

Trade Practices Act 1974 (Cth), s 75B

GENOCANNA NOMINEES PTY LTD ACN 008 809 649 & ORS v THIRSTY POINT PTY LTD ACN 054 451 768 & ORS

WAD 102 of 2005

LANDER J
8 FEBRUARY 2006
ADELAIDE (VIA VIDEO LINK TO PERTH)

BETWEEN:	GENOCANNA NOMINEES PTY LTD ACN 008 809 649 FIRST APPLICANT BRIAN FRANCIS WHITE SECOND APPLICANT GLORIA ANNETTE WHITE THIRD APPLICANT
AND:	THIRSTY POINT PTY LTD ACN 054 451 768 FIRST RESPONDENT JOHANNA BAHR SECOND RESPONDENT MICHEAL WALTER BAHR THIRD RESPONDENT CROSSCORP ACCOUNTING PTY LTD ACN 088 925 080 FOURTH RESPONDENT LEWIS GEORGE CROSS FIFTH RESPONDENT
JUDGE:	LANDER J
DATE OF ORDER:	8 FEBRUARY 2006
WHERE MADE:	ADELAIDE (VIA VIDEO LINK TO PERTH)

BETWEEN:	GENOCANNA NOMINEES PTY LTD ACN 008 809 649 FIRST APPLICANT BRIAN FRANCIS WHITE SECOND APPLICANT GLORIA ANNETTE WHITE THIRD APPLICANT
AND:	THIRSTY POINT PTY LTD ACN 054 451 768 FIRST RESPONDENT JOHANNA BAHR SECOND RESPONDENT MICHEAL WALTER BAHR THIRD RESPONDENT CROSSCORP ACCOUNTING PTY LTD ACN 088 925 080 FOURTH RESPONDENT LEWIS GEORGE CROSS FIFTH RESPONDENT

1 There are two notices of motion before me today. First, the first, second, and third respondents seek an order vacating the hearing date on 13 March 2006 and some consequential orders. The second notice of motion is brought by the applicants seeking to amend their statement of claim. It would be convenient to deal with the second notice of motion first. The respondents do not oppose the amendment by the applicants of their statement of claim. However, the respondents rely upon what, they say, are the extensive amendments in support of the first, second and third respondents’ application to vacate the hearing date.

2 Because there is no opposition to the amendments to the statement of claim, except as to paragraph 14(c) which is not pursued by the applicants, I give leave to the applicants to file a further amended statement of claim in the form of the Minute of the Further Re-amended Statement of Claim filed in the Western Australian District Registry on 7 February 2006 except for proposed paragraph 14(c). That then leads me to a consideration of the first, second and third respondents’ application to vacate the hearing date of 13 March.

3 The application has been supported by the fourth and fifth respondents who, essentially, have put two arguments - first, that if the first, second and third respondents are not ready for trial, that will prejudice the fourth and fifth respondents in the conduct of their defence. Secondly, and in any event the matter now should be adjourned because of the extensive amendments which have been allowed to the applicants’ statement of claim.

4 These proceedings were commenced on 9 May 2005, initially against the first four respondents. The fifth respondent, who is employed by the fourth respondent, was joined on 27 September 2005 by order of French J. The originating application was accompanied by the affidavit of Andrew John Gilmour, who has been retained by the applicants as their expert for the purpose of these proceedings and in particular the trial.

5 Mr Gilmour exhibited to his affidavit a report which had been provided to the first applicant. The applicants sought an interlocutory injunction restraining the first, second and third respondents from disposing of real property upon which the applicants conducted their business. On 12 May 2005, upon undertakings given by the first, second and third respondents that they would not dispose of those properties, the application for interlocutory relief was dismissed.

6 The first, second and third respondents entered their appearance on 17 May 2005 and filed their first defence on 14 June 2005. The fourth respondent who is separately represented filed its defence on the same day. The first, second and third respondents filed an amended defence on 8 July 2005, expanding upon the previously filed defence and raising positive assertions not previously raised.

7 On 12 May 2005 the parties were ordered to give discovery before 11 July 2005 and provide each other with inspection of the discovered documents by 18 July 2005. The first, second and third respondents failed to comply with that order and on 25 July 2005 their solicitors were ordered to file an affidavit explaining non-compliance with that order. An affidavit explaining non-compliance was filed on 20 September 2005.

8 As I have said, in response to the applicants’ notice of motion issued on 2 September 2005, the fifth respondent was joined by order of French J on 27 September 2005. On 7 September 2005 French J made further orders directing the first, second and third respondents to give further and better discovery. On 11 October 2005 an amended statement of claim was filed by the applicants and on 18 October 2005 the first, second and third respondents filed a further amended defence. On 25 October 2005 the fourth and fifth respondents filed separate defences.

9 On 1 November 2005 the applicants filed replies to the fourth and fifth respondents’ defences. On 1 November 2005 the applicants provided the respondents with Mr Gilmour’s further report which not only dealt with the question of the respondents’ liability in this matter but, also, the applicants’ damages. No further experts’ reports have been provided by the applicants and the applicants’ case still rests, at least in the evidential sense, upon Mr Gilmour’s report of 1 November 2005.

10 On 8 November 2005 leave was given to the applicants to file yet a further amended statement of claim which was filed on the same day. No further pleadings have been filed by the respondents. On the same day, 8 November, French J ordered the applicants to file their witness statements on or before 22 November 2005; the fourth and fifth respondents to file their witness statements on or before 20 December 2005; and the first, second and third respondents to file their witness statements by 16 January 2006. His Honour also ordered the respondents to file and serve any expert’s reports upon which the respondents intended to rely by 16 January 2006.

11 On 23 November 2005, French J varied the orders made on 8 November and directed the applicants to file their witness statements on or before 9 December 2005, and all respondents to file their witness statements on or before 16 January 2006.

12 That order was further varied by the consent of the parties to allow the applicants to file their witness statements by 23 December. The applicants complied with the varied orders. On 9 December 2005 the Registry wrote to each of the parties advising that it was proposed that the matter be listed for hearing for a period of seven days, commencing on Monday, 13 March 2006, and seeking advice as to the availability of the legal advisers.

13 The applicants advised that they were available for trial on that date. Mr Tait, the solicitor for the fourth and fifth respondents asked that the matter start a week later because he would be overseas until 12 March 2006, and his absence from the country might interfere with the preparation of the fourth and fifth respondents’ defence. The first, second and third respondents’ solicitors indicated that their clients were intending to change solicitors and that they were having difficulty contacting their clients who were in the United States.

14 A directions hearing was held by French J on 16 December 2005, when the matters of which the Registry had been advised were brought to his Honour’s attention. On that date French J extended the time within which the respondents had to file and serve their experts reports to 30 January 2006. He extended the time within which all of the parties had to agree on the filing of a bundle of documents to be tendered in evidence until the same date. He listed the matter for trial on 13 March 2006 for seven days.

15 On 18 January the present solicitors for the first, second and third respondents filed a notice of change of solicitors. On 25 January 2006 the first, second and third respondents filed the notice of motion seeking to vacate the hearing date and consequential orders. The notice of motion was accompanied by affidavits of the second respondent, the third respondent and the first, second and third respondents’ solicitor.

16 The proceedings, the subject of the application, relate to the sale by the first respondent to the first applicant of a business of a liquor store and video shop known as the Thirsty Point Liquor. The business was carried out at 8 Cadiz Street, Cervantes in Western Australia. The applicants claim that the respondents provided them with a brochure promoting the sale of the business. It is the applicants’ claim that the brochure misrepresented the gross and net profits of the business during the financial years prior to the sale and purchase of the business.

17 It is the applicants’ case that those misrepresentations induced the applicants to enter into the contract for the purchase of the business as a result of which they suffered loss and damage. It is pleaded in the Statement of Claim that the business was worth less than was paid, if not worthless. It alleged that the second and third applicants suffered further losses by reason of the acquisition by the first applicant of the business.

18 The case against the fourth and fifth respondents is that they had the responsibility of preparing the financial statements of the first respondent and, thus, became parties to the misrepresentations contained in the brochure because they were also aware of the contents of the brochure. It is pleaded that they have an accessorial liability under s 75B of the Trade Practices Act 1974 (Cth).

19 The defences contain denials and some positive assertions. First it is pleaded the applicants conducted an independent due diligence and did not rely upon the material contained in the brochure. Secondly, it is claimed that various circumstances have affected the profitability of the business since it was acquired by the applicants. Those changes, it is pleaded, account for the difference in profitability of the business, if there be a difference after purchase by the first applicant.

20 If I might say so, the case is relatively uncomplicated. It raises a number of factual issues but apart from the usual factual issues associated with cases of this kind, there are no special points of difficulty.

21 The matter was referred by French J to mediation on 12 May 2005. The mediation was to take place on 18 July 2005. In due course it was listed on 21 July 2005, adjourned until 24 August 2005 and subsequently adjourned until 14 November 2005. I think from what I have been told from the bar table that the mediation subsequently failed. I think also from what I have been told from the bar table that the matter is due for mediation again within a week or so and under the direction of the Court and a Court officer.

22 The first, second and third respondents have provided affidavits in which the second and third respondents have indicated in some detail why it is that they are not ready to proceed on 13 March 2006. The second and third respondents have been, at different times, outside the country, in the United States, and as a result they say they have had difficulty in instructing their former solicitors and now have difficulty in instructing their present solicitors. They say that they would not be ready for trial by 13 March.

23 I am not convinced that the second and third respondents were put under any difficulties by the order made by French J in December 2005, listing the matter for hearing on 13 March 2006. It seems to me that that order gave plenty of time to the second and third respondents to properly instruct their lawyers and to be ready for trial. It has to be borne in mind that when that order was made the respondents had the expert’s report upon which the applicants’ case almost totally relies for something like six or seven weeks. They have had sufficient time in those circumstances to instruct experts to consider the applicants’ case.

24 There is nothing, my opinion, in the respondents’ affidavits which would make it appropriate in the exercise of my discretion and in the interest of justice to adjourn the matter. However, all of the respondents rely upon the late amendments made by the applicants to the statement of claim as a further and independent reason why the matter should be adjourned. They say that there are matters now raised in the statement of claim which require investigation and which has taken them by surprise. It is submitted they will not be able to be properly investigated before the hearing.

25 The statement of claim is not, if I might say, with respect, an elegantly drawn document. It has not until more recently, articulated with much particularity the applicants’ claim against the respondents. However, the applicants’ claim against the respondents has always been contained in the expert’s report that was provided by Mr Gilmour with the originating application. That expert’s report may not address with exactly the same particularity the amendments which have been recently allowed but the expert’s report must have brought to the attention of the respondents the heads of damages which are being sought and the sums of money which are sought by the applicants under those heads of damages.

26 I think the respondents have had adequate time to address the matters contained in the applicants’ expert’s report. They still have adequate time to address the matters which are now better particularised in the statement of claim and which were generally averted to in the expert’s report. They should, with due diligence, be able to be ready for trial on 13 March.

For those reasons I refuse the first, second and third respondents’ application to adjourn the proceedings.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.

Counsel for the Applicants:	Mr Mendelow

Solicitor for the Applicants:	Feinauer Commercial Lawyers

Counsel for the First, Second and Third Respondents:	Mr Oakley

Solicitor for the First, Second and Third Respondents:	Granich Partners

Counsel for the Fourth and Fifth Respondents:	Mr Tait

Solicitor for the Fourth and Fifth Respondents:	Tait & Co Business Lawyers

Date of Hearing:	8 February 2006

Date of Judgment:	8 February 2006

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 102 OF 2005

JUDGE:	LANDER J
DATE:	8 FEBRUARY 2006
PLACE:	ADELAIDE

Federal Court of Australia

Genocanna Nominees Pty Ltd v Thirsty Point Pty Ltd [2006] FCA 70 (8 February 2006)