Federal Court of Australia

Invast Financial Services Pty Ltd v Pseven International DWC LLC (No 2) [2023] FCA 564

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 10.44 of the Federal Court Rules 2011 (Cth) (the Rules), leave be given to the applicant nunc pro tunc to serve on the second respondent the interlocutory application filed by the applicant on 5 April 2023, and the affidavit sworn by Brendan John Miller made on 4 April 2023, by sending a copy of the same to the second respondent by prepaid post to the addresses specified in Orders 1(a) and (b), and by email to the address specified in Order 1(c), of the orders made on 30 November 2022.

2.    Pursuant to r 10.48 of the Rules, service of the documents referred to in Order 1 be taken to have been effected on the second respondent by 20 April 2023.

3.    The report of the referee dated 30 November 2022 be adopted in whole.

4.    Judgment be entered forthwith for the applicant against the second respondent for damages in the sum of US$441,786.26.

5.    Judgment be entered forthwith for the applicant against the second respondent for interest under s 51A of the Federal Court of Australia Act 1976 (Cth) in the sum of US$79,260.06.

6.    The second respondent pay the applicant’s costs on a lump sum basis assessed in the amount of $210,038.85 (excluding GST).

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

YATES J:

1    In reasons for judgment published on 22 July 2022, I found (at [115]) that the second respondent, Musa Umar Choudhary, had no reasonable prospect of successfully defending this proceeding and that the applicant, Invast Financial Services Pty Ltd, is entitled to judgment against the second respondent for damages to be assessed: Invast Financial Services Pty Ltd v Pseven International DWC LLC [2022] FCA 861.

2    On that day, I made the following orders:

1.    Pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) (the Act), the following questions be referred to a Registrar of the Court for inquiry and report as a referee:

(a)    the amount of damages to which the applicant is entitled as against the second respondent for the loss which the Court has found was suffered by the applicant because of the first respondent’s contraventions of s 18(1) of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) and the second respondent’s involvement in those contraventions;

(b)    the interest to which the applicant is entitled on such damages under s 51A of the Act; and

(c)    the costs to which the applicant is entitled on a lump sum basis.

2.    The inquiry be conducted in any way the referee thinks fit.

3.    The proceeding be listed for further hearing on a date to be fixed after receipt of the referee’s report.

3    On 18 August 2022, Registrar Schmidt was appointed as the referee.

4    On 30 November 2022, Registrar Schmidt gave his report pursuant to r 28.66 of the Federal Court Rules 2011 (Cth) (the Rules).

5    On that day, he also made the following order:

1.    Pursuant to Rule 10.24 of the Federal Court Rules 2011, service of the Referee Report and a copy of these orders, be effected on the Second Respondent by:

(a)    prepaid Australia Post International Standard postal delivery to First Floor Business Centre, Dubai World Central, PO Box 390667, Dubai, United Arab Emirates;

(b)     prepaid Australia Post International Standard postal delivery to Unit 2416, Burj Khalifa, Dubai 89103; and

(c)      electronic mail to the address ch@pseven.ae,

such service to be deemed to have been effected 7 days after the last method of service in Order 1 is completed.

6    The address in Order 1(a) is the address provided by the second respondent’s former solicitors in their notice of ceasing to act filed on 16 March 2022. The address in Order 1(b) is the address given to the applicant by the second respondent as his address as a director of the first respondent. The address in Order 1(c) is the address given to the applicant by the second respondent as his email address.

7    On 2 December 2022, the applicant’s solicitors sent a copy of the report and the orders made on 30 November 2022 to the second respondent by prepaid post to the addresses specified in Orders 1(a) and (b), and by email to the address specified in Order 1(c). Accordingly, service in accordance with Order 1 was effected on the second respondent on 9 December 2022.

8    On 5 April 2023, the applicant filed an interlocutory application (dated 4 April 2023) seeking an order, pursuant to r 28.67(a) of the Rules, that the Court adopt the whole of the report and enter judgment for the applicant accordingly.

9    On 6 April 2023, the applicant’s solicitors sent a copy of the interlocutory application and the supporting affidavit of Brendan John Miller sworn on 4 April 2023 to the second respondent via the email address specified in Order 1(c) of the orders made on 30 November 2022.

10    On 13 April 2023, the applicant’s solicitors sent a copy of the interlocutory application and the supporting affidavit to the second respondent by prepaid post to the addresses specified in Orders 1(a) and (b) made on 30 November 2022.

11    I am satisfied that it is not practicable to serve the respondent other than by these methods. I am satisfied that, on the balance of probabilities, these documents have been brought to the attention of the second respondent and that an order for deemed service should be made in all the circumstances.

12    The second respondent has not come forward to oppose the application. Indeed, on the evidence before me, he has not actively participated in this proceeding since 16 March 2022, when his former solicitor filed the notice of ceasing to act. In these circumstances, I considered it appropriate to determine the application on the papers.

13    The report contains the following opinions.

(a)    As against the second respondent, the applicant should be awarded the sum of US$441,786.26 for damages because of the first respondent’s contraventions of s 18(1) of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) and the second respondent’s involvement in those contraventions.

(b)    The applicant is entitled to pre-judgment interest under s 51A of the Federal Court of Australia Act 1976 (Cth) in the amount of US$68,459.26 calculated up to 30 November 2022, with interest thereafter at the daily rate of US$58.70 per day until judgment is entered.

(c)    The second respondent should pay the applicant’s costs on a lump sum basis in the amount of $210,038.85 (excluding GST).

14    The principles to be applied in an application for adoption of a referee’s report were conveniently summarised by Katzmann J in Gulf Conveyor Systems Pty Ltd v Gulf Integrated Systems Solutions Pty Ltd [2020] FCA 1245 at [12] – [21]:

12    On the face of things the Court is given a broad discretion, as the applicant submitted. But the exercise of the discretion is governed by principles drawn from the object and purpose of the relevant rules. Those principles are well-established. They were summarised by McDougall J in Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902 at [12] and Chocolate Factory Apartments v Westpoint Finance Pty Ltd [2005] NSWSC 784 at [7]. Although these principles were formulated in the context of Pt 72 r 13 of the Supreme Court Rules 1970 (NSW), that rule is not materially different from r 28.67 of the Federal Court Rules and the same principles have been cited with approval in numerous judgments of this Court: see, for example, Shannon (in his capacity as receiver and manager of North East Wiradjuri Co Limited) v North East Wiradjuri Co Limited (No 3) [2012] FCA 106 at [3]–[9] (Jacobson J); Sheehan v Lloyds Names Munich Re Syndicate Ltd [2017] FCA 1340; 19 ANZ Ins Cas ¶62-158 at [10] (Allsop CJ); Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Ltd [2018] FCA 647 at [6]–[7] (Burley J). The relevant principles are these.

13    First, an application made under the relevant rule is not an appeal. The Court does not conduct a hearing de novo or a rehearing. A party who is dissatisfied with a referee’s report is not entitled to require the Court to reconsider and redetermine afresh matters, whether of fact or law, which the party wants to contest. See Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 at 562–563 (Gleeson CJ). “The right to be heard does not involve the right to be heard twice”: Super Pty Ltd at 567 (Mahoney JA).

14    Second, the discretion to adopt, vary or reject a referee’s report is to be exercised in a manner consistent with the context and purpose of the relevant rules. The purpose of the rules is to provide, where the interests of justice so require, “a form of partial resolution of disputes alternative to orthodox litigation, and it would frustrate that purpose to allow the reference to be treated as some kind of warm-up for the real contest”: Super Pty Ltd at 563.

15    Third, if the source of a party’s dissatisfaction with a report is a question of law or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh.

16    Fourth, “if the referee’s report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection”: Chocolate Factory Apartments at [7]. In this context, “patent misapprehension of the evidence” means a lack of understanding of the evidence and not the weight attributed to it; and “perversity or manifest unreasonableness” means a conclusion that no reasonable tribunal of fact could have reached: Chocolate Factory Apartments at [7].

17    But in general, the referee’s findings of fact should not be re-agitated before the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee has expertise. It is not enough for an aggrieved party to point to errors of fact which would be amenable to correction by an appellate court.

18    Fifth, even if it were to be shown that the Court might have come to a different conclusion in some respect from that reached by the referee, absent any error of the kind referred to above, it would not be a proper exercise of the discretion conferred by r 28.67 to allow matters agitated before the referee to be re-explored so as to lead to qualification or rejection of the report.

19    Sixth, the Court is entitled to consider the futility and cost of re-litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee the evidence and submissions upon which they wish to rely.

20    Seventh, although the reasons given by the referee may appear to be adequate, where the party challenging the report contends that they are not because the referee did not deal with “very significant evidence”, the Court may examine the evidence to see whether the reasons were in fact inadequate because they omitted to refer to such evidence: Chocolate Factory Apartments at [7].

21    Eighth, if the Court decides that the reasons are flawed, either on their face or because they have been shown not to deal with important matters, the Court may decline to adopt the report or examine the evidence to see whether the expense of a further proceeding before the referee is justified.

15    I will proceed on the basis of these principles.

16    I have read and considered the report. There is no substantive objection to its adoption. Having regard to the above quoted principles, I am satisfied that the report should be adopted in whole.

17    It is now appropriate that judgment be entered for the applicant against the second respondent, taking into account the findings of the report. Orders will be made accordingly.

Associate:

Dated:    2 June 2023