On 3 June Hargrave J made an interim ruling as to the further conduct proceedings in Director of Consumer Affairs Victoria v Scully & Ors (No 2) (Scully).  It is an important decision in considering the approach the court should take to civil prosecutions brought by the Director of Consumer affairs under the Fair trading Act.

Facts

The proceedings relate to two schemes promoted by Scully and others designed to allow consumers with financial problems to acquire their own home without a deposit or finance from banks or financial institutions in the short term [8].  The Director brought an action under sections 9, 11 and 12 of the Fair Trading Act in the public interest and representing the interests of certain individuals who participated in the schemes.  There were no pleadings and Associate Justice Daley dismissed an application to order a statement of claim [10 at footnote 1].

On 10 May 2011 the trial was adjourned, part heard, until 26 July 2011. The court called the parties back because of concerns as to the course the trial was taking.  His Honour was concerned that since the proceedings had been issued the nature of the allegations were contained across and originating motion, numbering 50 pages but drawn in broad terms, voluminous affidavit material, running to 11,000 pages over 26 volumes, and written outline of submissions which was at “..a high level of generality” [10]. As a consequence the court was reliant upon the Director and his legal representatives to identify his case, which the did not occur in the first four days of trial [11]. His Honour was quite critical of the assistance provided by the Director (see [15]) saying “..the Court requires significantly greater assistance from the Director than has been provided to date.”

The court was of the view that pleadings were necessary to define the many issues in the case and avoid possible injustice to the defendants ([3] – [4]).

Decision

Pleadings

At [26] the Court cited Mason and Gauldron’s statement in Banque Commerciale SA v Akhil Holdings Ltd that the function of pleadings “..is to state with sufficient clarity the case that must be met, so as to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision by the court.” Here the Director maintained a general case against “a number of defendants” and a six specific cases, involving multiple allegations and seeking various forms of relief, in respect of individual complainants.

Given the potential consequences of findings by the Court, including publication orders, compensation and legal costs, it was a case which requires pleadings “..to assist the Court and provide procedural fairness to the defendants who seek to defend themselves” [27].  This was not a proceeding which should be commenced by originating motion. It was a multifaceted proceeding raising substantial allegations of fact and law (see [32]). If defended it would involve a dispute over facts and even if undefended, pleadings would define the issues for determination. Properly pleading and particularising the claim would also rationalise the discovery.

At [33] his Honour stated “..proceedings of this kind ought be commenced by writ with a fully pleaded and particularised statement of claim, and not just by voluminous affidavits from which a case may be gleaned from submissions.”

Unrepresented litigants

Hargraves J quoted the recent decision of Noone Director of Consumer Affairs Victoria v Operation Smile (Australia) Inc & Ors (No 2) (“Operation Smile”) addressed what was expected of the Director, as a model litigant.  Hargrave endorsed Pagone’s statements in Operation Smile (see [18]):

(1) Circumstances such as the present place the Court and the parties in a difficult position. The Court has an obligation to assist unrepresented litigants. Further, the represented party may have a common interest with the Court in co-operating to achieve the correct result and, in every case, the legal practitioners for the represented party have duties to assist the Court in the discharge of its functions

(2)The Court’s duty to assist unrepresented litigants must be balanced against the requirement that the judge preserve his or her neutrality between the parties. However, the Court must ensure a fair trial for the unrepresented litigant.

(3) A public official such as the Director has an obligation to act as a model litigant. In that capacity, the Director shares a common interest with the Court in co-operating to achieve the correct result. Where one party has a burden to discharge, it is in the interests of justice to ensure that the burden is adequately and reliably discharged.

(4) In some cases, the represented party must assist the Court by drawing attention to matters which, if the unrepresented party was represented, would likely be brought to the Court’s attention by opposing practitioners. This includes matters which might be adverse to the interests of the represented party, ‘but which the Court ought fairly to consider even if only to reject’. It is particularly important for a model litigant, such as the Director, to bring such matters to the attention of the Court.

In cases involving allegations of falsity or misleading conduct it was necessary that the case with respect of each complainant group must be examined individually after hearing comprehensive submissions regarding the evidence and whether as a matter of law they constitute evidence of contraventions [19].

Overarching obligations under the Civil Procedure Act -unrepresented litigants

His Honour stated, at [21], that the Director had a paramount duty under the Act to further the administration of justice (section 16) which in specific terms in the context of this type of case included obligations:

1. to co-operate with the other parties to the proceeding – section 20;
2. to narrow the issues in dispute – section 23;
3. to use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the proceeding are reasonable and proportionate to (among other things) the amount in dispute – section 24; and
4. to use reasonable endeavours in connection with the proceeding to minimise delay – section 25.

Having regard to those obligations the Court was quite critical of the Director in the conduct of the litigation to date (see [23] – [25]).

Issues

In the gradually building jurisprudence of consumer protection law in Victoria this decision is of note in higlighting the complexity of defending a claim brought by originating motion by the Director of Consumer Affairs.  In my experience in Director Consumer Affairs Victoria v  Midas  Trading (Australia) Pty Ltd [2009] VSC 141 (9 April 2009) and Director of Consumer Affairs Victoria v  Abesta  International Pty Ltd & Anor [2009] VSC 639 (16 December 2009) an originating motion is accompanied by a significant number of voluminous affidavits in support.  This poses challenges for a defendant in framing a response.  Scully gives strong and binding guidance as how such cases should be framed by the Director in future and what issues defendants should expect. His Honour did not go so far as to find that all or even most proceedings issued by the Director under the Fair Trading Act should be accompanied by a statement of claim, whether by way of writ or otherwise, however it is a matter that practitioners should consider when dealing with consumer affairs litigation.

His Honour’s statements regarding the operation of the Civil Procedure Act regarding unrepresented litigants are particularly relevant.  They were framed in the context of a model litigant issuing complex proceedings however they are as equally applicable to a plaintiff/defendant opposed to an unrepresented litigant.