Ocean Pacific Group Pty Ltd v Jade Northcliffe Pty Ltd
[2023] QSC 108
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- Ocean Pacific Group Pty Ltd v Jade Northcliffe Pty Ltd[2023] QSC 108
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Ocean Pacific Group Pty Ltd v Jade Northcliffe Pty Ltd[2023] QSC 108
Ocean Pacific Group Pty Ltd v Jade Northcliffe Pty Ltd[2023] QSC 108
![Ocean Pacific Group Pty Ltd v Jade Northcliffe Pty Ltd [2023] QSC 108](/judgmentview/image?name=359459.001.jpg&id=359459)
QUEENSLAND COURTS AND TRIBUNALS
SUPREME COURT OF QUEENSLAND
CIVIL JURISDICTION
HINDMAN J
No 14089 of 2021
OCEAN PACIFIC GROUP PTY LTD Applicant
and
JADE NORTHCLIFFE PTY LTD & ANOTHER Respondent
BRISBANE
9.44 AM, WEDNESDAY, 19 APRIL 2023
DAY 1
JUDGMENT
HER HONOUR: This is a decision about two applications. The first application is one made by the second defendant to set aside summary judgment entered against him on the 14th of September 2022 in circumstances where he did not appear at the hearing when the judgment was given. The second application is an application by the second defendant to withdraw deemed admissions. If the first application is successful, the second application is not opposed.
In respect of the first application, the application to set aside summary judgment, it is necessary to say something very briefly about the circumstances that permitted summary judgment to be entered. The proceeding had been on foot since December of 2021. It was commenced by way of originating application for freezing orders. The proceeding was ordered to continue as if started by way of claim on the 16th of February 2022 with the claim and statement of claim filed the next day. An amended statement of claim, which is the current plaintiff’s pleading, was filed on the 5th of May 2022. It is Court document 22. There was an application by the defendants about the pleading requirements of the defence heard by me on the 18th of July 2022, and I delivered a decision on the 20th of July 2022. That application was made by the defendants to
be relieved from the pleading requirements of the rules on the basis of claims that pleading to certain matters might incriminate them. I made orders which effectively put in place a regime to allow claims for privilege to be made by the defendants, which then could be challenged by the plaintiffs, and the defendants then being required to set out the grounds for their claims.
A defence was filed by the defendants. It was filed on the 11th of August 2022. Court document 37, which did contain claims for privilege against self-incrimination. There were challenges made by the plaintiff to those claims but the orders that I had made requiring the defendants to then justify those claims were not complied with, effectively leading to deemed admissions in the defence, which formed a significant but not the whole of the basis for the summary judgment that was then granted when the defendants did not appear on the application for summary judgment.
The nature of the case, just in brief terms, put by reference to the proposed defence, is as follows. It is alleged that the second defendant made three relevant oral representations to the plaintiff. They are set out in paragraphs 6(b) to (d) of the amended statement of claim. The second defendant admits two of those representations, denies one, and says that further relevant conversations occurred after the representations. That is paragraph 6 of the defence. The allegation about the further relevant conversations is new in that previously the paragraph claimed privilege.
The plaintiff says it relied upon the representations in executing an agreement with the first defendant and transferring approximately $6.6 million to the first defendant’s account. That is paragraphs 10 and 14 of the amended statement of claim. The second defendant admits the agreement and the money transfer. It denies reliance and points to other sources of information relied upon as a basis for the denial. That is paragraph 10 of the proposed defence.
The plaintiff alleges that the oral representations were false, paragraph 11 of the amended statement of claim, for identified reasons. To the extent that the representations are as to future matters, the plaintiff relies upon section 4 of the Australian Consumer Law and its equivalent. That is paragraph 13 of the amended statement of claim. In response, the second defendant says that no representation was made as per paragraph 6(b) of the amended statement of claim. In respect of the allegations of representations in paragraph 6(c) and (d) of the amended statement of claim, the second defendant says that those were representations as to future matters, and that he had reasonable grounds for the making of those representations. That is paragraphs 11 and 13(d) of the proposed defence.
The plaintiff then says that the conduct in the making of the oral representations was misleading and deceptive conduct. That is paragraph 12 of the amended statement of claim. And says that the loss that has been suffered as a consequence of the misleading and deceptive conduct comprises unreturned funds in the amount of approximately $5.6 million. That is paragraphs 14 to 17 of the amended statement of claim. The second defendant says that the matters alleged are not causative of any loss; that the cause of the loss was cybercrime. That is paragraph 12 of the proposed defence.
When considering this type of application, usually the factor that is given the most weight is the interests of justice in the sense of determining whether the defendant ought be deprived of having the case against him determined on the merits based on the true defence that the defendant wishes to advance in respect of the claim. That is not to say that procedural matters, such as the explanation for the failure to appear on the summary judgment application or any delay that has occurred since the summary judgment was entered in the making of the application to set aside the summary judgment is irrelevant, but, generally, the stronger the defence, the less weight those procedural type matters or concerns might be given. A defence or the real defence can be demonstrated either by way of a combination of a proposed pleaded defence or by evidence which substantiates the matters which give rise to the defence, which generally will be more persuasive than a mere unsupported pleading.
Here, the second defendant provides a proposed amended defence with some limited evidence in support of the defence. If the proposed defence reveals a defence adequate to prevent summary judgment being entered, as if it had not been entered, then that may provide a basis for setting aside the summary judgment and allowing the disputed issues to proceed to trial in the ordinary way. As I have said, that basis would be enhanced by the proposed defence being supported by evidence which would assist to demonstrate the position advanced in the proposed defence to be true.
Ordinarily, it would be usual on this type of application to see first, evidence explaining the reasons for the second defendant not appearing at the summary judgment application. Second, explaining the delay in the making of the application to set aside the summary judgment. Third, evidence, not just swearing up the proposed defence, but also, where appropriate, putting on evidence to demonstrate that the proposed defence has merit. But ultimately, as I have already indicated, whilst all of those procedural matters in the context of setting aside a summary judgment are relevant, none of them alone or together are determinative and need to be balanced against, as I indicated, the interests of justice in the sense of whether the defendant should be given the opportunity to run a reasonably available defence.
The outcome in this matter is that I am going to, on conditions, set aside the summary judgment. That is because ultimately, in balancing the various factors, I conclude that there are real issues to be tried and despite my concerns about the paucity of evidence supporting the defence, and whilst I am also concerned that the procedural matters might have been better explained, on balance, I think in the interests of justice, the second defendant should be given the opportunity to agitate the matters in defence that it wishes to.
For that reason, I am only briefly going to outline where I think that the evidence of the second defendant as to the procedural matters is either lacking in its entirety or is very slim on the ground, but with the caveat, as I have just mentioned, that, ultimately, that does not dissuade me that the judgment should be set aside. That the matters that ought to have been better explained by the second defendant include why the previous solicitor ceased acting, why the defendant did not file a document which would have avoided the deemed admissions, why the defendant did not seek leave to appear remotely at the summary judgment hearing,
although, can I say, in terms of what the second defendant says about that, that there does appear to have been some suggestion that he thought he was not able to appear on his own behalf, why he did not retain the lawyers that Friday, as he had foreshadowed in correspondence about the summary judgment application, why he did not retain new lawyers until January of this year, why the application was not then made until March of this year, and also a fulsome explanation as to why any new matters not previously pleaded were in fact not previously pleaded. For example, paragraph 6(b), 6(e) and (f), 11(i) and (o) of the defence. Although, again, I note that those paragraphs of the proposed defence were previously the subject of the claims against self-incrimination, which is now not being advanced, so there is perhaps some explanation that might be inferred, although it is not actually sworn to.
The other matters that have caused me concern but ultimately I have decided are not determinative is in terms of the evidence that has been sworn in support of the proposed defence. The evidence is somewhat lacking in respect of how the alleged cybercrime actually took place, and why there is only hearsay evidence of what is alleged to be relevant conversations, that is, the conversations to which Ms Doyle was a party.
The reason though, ultimately, I allow the application to set aside the summary judgment on conditions is because I consider that there are real issues to be tried.
The second defendant, in its outline of submissions at paragraph 25, sets out four questions it says are the real issues. The first is which party made the alleged representations. There is, in my view, nothing in that first point. Only oral representations are alleged to have been made by the second defendant. The second defendant admits making those oral representations. There is no pleading that the oral representations were made only on behalf of the first defendant. Compare that to the pleading in paragraph 9(b) of the proposed defence dealing with the written representations made on behalf of the first defendant.
The second alleged issue is whether those representations were later counteracted. As the argument was put in oral submissions, I understand there to be, in fact, two points perhaps made under that heading. It is dealing with 6(b) of the statement of claim. Paragraph 6(b) of the defence, says that, in fact, the relevant conversation had other content other than that alleged by the plaintiff. So, it is, alleged by the second defendant that the alleged representation was not made. Paragraph 6(e) of the defence then goes on to describe the new part of the defence. That is, concerning a previously unpleaded conversation alleged to affect the earlier conversations and statements made.
I note that the second defendant swears as to the correctness of the pleaded defence. That is paragraph 31 of his affidavit, and some details of the conversation are given at paragraphs 32 to 40 of his affidavit. There is also the hearsay evidence of Reik swearing as to what Mr Carrick told him Ms Doyle said. As I have already noted, why there is not an affidavit from either Mr Carrick or Ms Doyle is unexplained. While the supporting evidence is not compelling, this is not the final hearing of the issue. Had the proposed defence about whether representation 6(b) on the statement of claim was, in fact, made and whether it was counteracted by later conversations, been pressed at the summary judgment application, it would have, in my view, offered grounds to decline the summary judgment on the basis of a disputed question of fact that would be properly resolved at trial.
The third point in paragraph 25 of the second defendant’s submissions is if not whether those representations were actually misleading at the time they were made. In that respect, it does not appear to me to be contentious that the representations in paragraph 6(b) to (d) of the amended statement of claim are representations as to future matters. I said as much in the reasons for the decisions that I gave back in 2002. The plaintiff has relied upon sections 4 of the Australian Consumer Law and its equivalent which casts the onus on the second defendant to prove reasonable grounds for the making of the representations. The second defendant asserts it had reasonable grounds in respect to paragraphs 6 (c) and (d) of the amended statement of claim. That is in paragraphs 11(o)(ii) and 13(d) of the proposed defence. Although no proper particulars are provided in respect of those grounds.
However, as I understood the second defendant’s submissions, although this perhaps is not presently adequately clear from the proposed defence, the argument seems to be that the second defendant had reasonable grounds because, in fact, the second defendant did, broadly, what was represented. That is, he invested the funds received in a non-depletion account. Those moneys did only act as security or collateral for a line of credit and no trades actually occurred. Although, apparently with some of the line of credit funds, trades were attempted but were unsuccessful.
The second defendant’s case is that it was cybercrime that affected the account into which the received funds from the plaintiff were placed, and that was not something contemplated by the representations at all. In that way, it contends that the representations were not misleading or deceptive. As I have remarked, the evidence about the alleged cybercrime is severely lacking. It seems little more than a mere statement by the second defendant at present. That there is apparently contradicting information about how the alleged cybercrime took place is concerning comparing the second defendant’s evidence with the letters from its previous solicitors, Marino Law, from January of 2022. The explanation in that letter perhaps colloquially being able to be described as being as clear as mud.
Despite the dearth of evidence, some weight needs to be given to the fact that the second defendant has now identified the defence he wishes to run and has sworn it up. Again, whilst the supporting evidence is not compelling, this is not the final hearing of the issue. Had the proposed defence been pressed at the application for summary judgment it would have, in my view, offered grounds to decline a grant of summary judgment on the basis of the disputed question of fact properly resolved at trial.
The fourth point raised by the second defendant is, whether the alleged representations were actually causative of the plaintiff’s alleged loss, raising an issue of causation. Again, in the second defendant’s oral submissions yesterday there, in fact, appeared to be two points made. The first concerned reliance. This is dealt with in paragraph 10 of both of the pleadings. In the summary judgment application before Justice Martin, the pleadings were, as they are presently proposed, that is the proposed defence has not made any changes to these paragraphs. The plaintiff produced at that application before Justice Martin evidence to firm up its position about reliance and that evidence, of course, was unopposed and unchallenged in circumstances where the second defendant did not appear.
I think that if the second defendant had appeared, reasonable arguments could have been advanced as to why the dispute about reliance in paragraph 10 of the defence stood in the way of the summary judgment being granted. The argument could have been advanced, as it was yesterday, that the reference to other matters being relied upon by the plaintiff was not merely to show that there was something other than the representations that were relied upon by the plaintiff, but it could have been shown that it was in support of an ultimate submission to be made after the close of evidence and, in fact, no reliance was placed on the representation.
The fact of the terms of the agreement was relied upon in oral submissions but has not found its way into the proposed defence, the proposed defence is likely to require further consideration in that regard. Again, had the proposed defence and what was argued orally yesterday been pressed at the application for summary judgment it would have, in my view, offered grounds to decline the grant of summary judgment on the basis of a disputed question of fact properly resolved at trial.
The second part concerns causation proper. What was in paragraph 12(d) of the defence before Justice Martin is now expanded upon or at least made clearer in paragraph 12(e) of the proposed defence. The second defendant proposes to run a case that none of the alleged misrepresentations were causative of any loss in any event. That is because he says the loss was, in fact, caused by cybercrime activity. Under the Australian Consumer Law, the statutory cause of action relies upon the loss and damage sought to be recovered being caused by the contravening conduct. There is a not hopeless argument if the cybercrime be proved that the loss and damage was not caused by the alleged representations. Again, that is a matter that ought be resolved at trial. If that had been the only issue that stood in the way of summary judgment, I might have been inclined to actually decide that issue, given it seems to involve more of a legal issue than a mere factual issue but, because in respect of other matters I have determined that there are factual issues that need to be resolved at trial, I do not propose to consider causation further.
Accordingly, despite my concerns about the matters that I have described as not being adequately explained and the paucity of the evidence filed in support of the application, I do consider that the interests of justice require the summary judgment to be set aside, and the second defendant to be given the opportunity to defend the proceeding as proposed in its proposed defence. Although, I suspect it requires some further amendment and certainly some better particularisation, particularly about reasonable grounds on which he bears the onus.
I propose to set aside the summary judgment, subject to a condition that I will mention shortly, and to make directions for the progress of the proceeding. I am proposing, subject to anything the parties wish to say, to place the matter on the commercial list under my supervision to ensure that the proceeding is properly expedited to trial. Now, the setting aside of the judgment will be conditional upon the second defendant paying any outstanding costs orders that have been assessed in the plaintiff’s favour. I do not consider that the plaintiff should be put to further costs of the proceeding where it has regularly entered summary judgment unless those outstanding costs are first paid.
As I have indicated, the second application about the withdrawal of certain deemed admissions I understand to be consented to, and, in those circumstances, I do propose to set aside those deemed admissions. As I raised with counsel yesterday, I am proposing to make costs orders in favour of the plaintiff in respect of both applications, and in favour of the plaintiff for any costs thrown away as a consequence of the summary judgment being set aside. Subject to any submissions I hear from the parties about it, I am also proposing to make those costs orders on the indemnity basis in light of what I consider to be the unsatisfactory explanations provided in respect of how the summary judgment came about and the delays and deficiencies in the making of the application. Those matters seem to me to justify an award of costs on the indemnity basis, but I will hear further from the parties about that if it is contended that some other order for costs ought be made.