ReasonsIN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY                                                               No VG 346 of 1993

GENERAL DIVISION

B E T W E E N :

                                                    LEIGH-MARDON PTY LTD                                      Applicant

A N D :

                                        TITAN CORPORATION LTD and OTHERS                     Respondents

COURT:          NORTHROP J

PLACE:           MELBOURNE

DATE:  7 NOVEMBER 1996

                                                   REASONS FOR JUDGMENT

            I propose to indicate immediately that I am not prepared to grant an adjournment, be it short or not, based on the principle of the unfairness to the respondent arising from the existence of criminal investigations being undertaken by the police and the adverse effect that has on the preparation by the respondents in the preparation of their case. This matter commenced over three years ago and was originally fixed for hearing at the beginning of this year. Since the beginning of this year there have been many matters before the Court dealing with the application and various issues arising in relation to it. Dates have been fixed for hearing and for various reasons could not be adhered to and at present the date is fixed for the beginning of February 1997.

            During the course of the interlocutory steps taken this year, the nature of the claim against the respondents has been clarified. There are some 25 contracts presently forming the basis of the claims, but at the same time, it is said there are a larger number of other contracts which may become relevant on the various aspects of the case. On a number of occasions I have expressed opinions as to the unusual nature of the facts involved in this case. Arising from the fact that there was a contract of sale and purchase of a business by the Titan group of companies as vendors and Leigh-Mardon as the purchaser, the action has been brought by the applicant essentially under section 52 of the Trade Practices Act 1974 alleging that the respondents had engaged in conduct which was misleading or deceptive or likely to mislead or deceive. The essential feature of the claim is that for the purposes of the sale the conduct was said to constitute representations being the various balance sheets and profit and loss accounts and statements in relation to contracts between the Titan group of companies and their customers in relation to computer program services carried out by the respondents for which the clients were charged fees. An issue has arisen as to the basis upon which those charges were made.

            On one view it is on the key strokes, the number of actual depressions of each key when using the computer program, and on the other it is said that the key strokes had a different meaning resulting in a higher amount paid than on the amount per key strike itself. That is an issue. I have adverted before to the problems arising from the fact that the applicant has taken over all the books and records of the Titan companies and that the employees of the Titan companies have dispersed to a large extent. In addition there are a number of witnesses involved in the various client companies who were concerned in the original contracts with the Titan companies as well as what has been said about the meaning of the words "key stroke" and the way in which the contracts were to operate.

            It is true also that there have been great difficulties arising in the interlocutory steps in relation to the normal procedures of discovery, the non-discovering of documents and difficulties arising from lack of co-operation between the legal practitioners appearing for the parties. But the Court, as part of its oversight in trying to attempt a speedy resolution of matters, and at the same time acting fairly between the parties, has dealt with those problems from time to time. As a result, I think it is fair to say that many of the difficulties have been overcome.

            Overlaying all those matters has been the difficulty arising from the police activities in investigating alleged criminal offences against persons in the Titan group of companies, employees and officers of various kinds. Those investigations have been continuing for over three years. Although it is said in a letter from the police that it is anticipated that the decision of whether charges will be laid will be made before the end of March 1997, having regard to the history of this matter the Court is not prepared to accept that as a fair statement. The Court forms the view, having regard to what has occurred so far, that there is no degree of certainty or realistic expectation as to when the charges, if any, will be made against individual persons arising from what occurred during the various contracts between the Titan group of companies and their customers.

            The Court has also formed the view that to a large extent there has been a degree of co-operation between the police investigating the alleged or possible criminal activities and the applicants. This is not entirely to be unexpected seeing that their interests are similar in many respects. At the same time there has been a degree of unco-operative conduct by the police in relation to the respondents. To some extent this unco-operative conduct by the police may go beyond what is fair and reasonable and even possibly what
is lawful; the Court does not know, but the Court has been referred to the affidavits which set out conduct by the police in this matter. At the same time, the Court is aware that there are other means by which the respondents can invoke the procedures of this Court in an attempt to obtain statements given by possible witnesses, in this case to the police, and some of these have been dealt with already. There is another one pending to be heard shortly.

            The question of law which has been relied upon by the respondents in this motion and which is being considered specifically at the moment flows from the history of the legal principles and what has followed since the old rule of the felony and civil proceedings has been, in substance, put to one side by decisions in Australia. Reference may be made to what was said by Wooten J in the case of McMahon v Gould (1982) 7 ACLR 202 and subsequent authorities in Australia, including Phillipine Airlines v Gold Air Australia Proprietary Limited (1990) VR 385 at 389, the Australian Securities Commission v Kavanagh 12 ASCR 69 at 72, and what was said on the application for leave to appeal from the judgment of Hayne J in that matter to the Full Court of the Supreme Court of Victoria, and also in proceedings in the High Court seeking leave to appeal from that judgment of the Full Court of the Supreme Court refusing leave to appeal from the judgment of Hayne J.

            The Court accepts, and it is not really in dispute, that it has a jurisdiction or power, I think power is the proper word, to grant a stay of a civil proceeding on the basis of injustice likely to be caused by criminal proceedings either in existence or pending. This general principle has been discussed in a number of cases including the Court of Appeal in New South Wales in Yuill v Spedley Securities Ltd (In Liquidation) (1992) 8
ACSR 272. Reference may also be made to other authorities referred to by counsel for the respondents in Halabi v Westpac Banking Corporation (1989) 70 NSWLR 26. Similar type cases have been heard in the Federal Court in relation to taxation cases and reference is made to Hurley v Commissioner of Taxation (1992) 37 FCR 11 and other authorities.

            The matter comes down, and this is on a very narrow point, to whether, on the facts of this case, there is sufficient to justify the granting of the vacation of the hearing date and an adjournment of the hearing based upon this principle of law. As I said at the beginning, I am not so satisfied in this case. It is accepted the difficulties facing the respondents are great but in my opinion this is a matter where the normal procedures of this Court are sufficient to assist the respondents in properly preparing their case. The Court proceeds on the basis that there is no right of property in potential witnesses. Witnesses can refuse, if they so desire, to give statements. There is no way in which they can be forced to do so.

            It is accepted that, to some extent, witnesses have had pressure put upon them by police in trying to induce them not to co-operate with the respondents. It is also accepted that the police authorities have taken steps to try and prevent statements obtained by them from these potential witnesses being made available to the respondents. The Court will deal with those as and when they arise. It is accepted that parties have the right to have claims heard and determined according to proper procedures, including fairness to all parties, as speedily as possible.

            The Court, during the course of submissions, referred to the fact that in many cases the procedures of the Court are not appropriate to deal with cases of a kind, of
which this is one, where the length of trial to a large extent and the procedures to be followed defeat the proper administration of justice. But this is a case where those procedures are to be adapted to try and assist the parties to have the matter ready for trial and to overcome the difficulties which have been outlined. At the present time all the Court is saying is that on all the material which is before it, on the question of the adjournment based upon the existence of the police investigations, the Court is not satisfied that the adjournment should be sought and the hearing date vacated.

            As indicated earlier, this does not prevent those factors being taken into account when considering whether the matter will be ready for trial in February and whether the hearing date will need to be vacated because of those matters. They will be taken into account in conjunction with other factors which have not yet been determined in relation to other procedures.

            Accordingly, the motion for the vacation of the hearing date is refused insofar as it is based solely on this question of the fairness to the respondent based upon the activities arising from the criminal investigations and possibly pending criminal proceedings.

            I propose to reserve the question of costs on the motion of 19 July 1996. In doing that, I am aware that a major part of that motion involves a matter the subject of the judgment I have just given and that of necessity, in the exercise of discretion, the respondents should pay some proportion of the applicant's costs of that motion which has failed. But there has arisen during the course of hearing that motion, a far wider range of matters directed to the question of the adjournment and they have not yet been determined.

            The matter, to some extent, has been complicated by the fact that the adjourned hearing of the motion could not take place as originally planned and was delayed to a much later date. So apart from indicating that the Court's view is that the respondents should pay some part of the applicant's costs of the motion, without being specified, the Court reserves the question of costs of the motion until the whole question of the adjournment has been determined.

                                                                                    I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice R M Northrop.

                                                                                    Associate:

                                                                                    Date:

                                                               ATTACHMENT

Counsel for the applicant:                      Mr R Robson QC with N Lucarelli

Solicitors for the applicant:                    Maddock Lonie & Chisholm

Counsel for the First, Second,

Fifth to Eighth, Tenth and

Eleventh respondents:               Mr P Hayes QC with S Shirrefs and K Williams

Solicitors for the First, Second,

Fifth to Eighth, Tenth and

Eleventh respondents:               Jerrard & Stuk

Date of hearing:                                    7 November 1996