Federal Court of Australia

Australian Securities and Investments Commission v Latitude Finance Australia (No 3) [2024] FCA 1433

ORDERS

THE COURT ORDERS THAT:

1.    Order 1 of the orders made on 5 November 2024 (Timetabling Orders) be vacated pending determination of the first defendant’s application for leave to appeal in proceeding NSD1663/2024, the second defendant’s application for leave to appeal in proceeding NSD1655/2024 and, in the event leave is given, the substantive appeal.

2.    The date in Order 3 of the Timetabling Orders, being the date by which the Defendants must file and serve any further evidence upon which they intend to rely at the relief hearing, be varied from "By 28 February 2025" to "In the event the Defendants are unsuccessful, in whole or in part, from either their applications for leave to appeal, or, in the event leave is given, from the substantive appeal, within 4 weeks of any such determination".

3.    The date in Order 4 of the Timetabling Orders, being the date by which ASIC must file and serve any evidence in reply to the Defendants' further evidence, be varied from "By 28 March 2025" to "In the event the Defendants are unsuccessful, in whole or in part, from either their application for leave to appeal, or in the event leave is given, from the substantive appeal, within 6 weeks of any such determination".

4.    The parties have liberty to apply on 48 hours' notice.

5.    The costs of the application be reserved.

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

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from transcript)

WIGNEY J:

1    On 18 October 2024, Yates J handed down a judgment in which his Honour concluded that the Australian Securities and Investments Commission (ASIC) had established that Latitude Finance Australia and Harvey Norman Holdings Ltd had contravened various provisions of the Australian Securities and Investments Commission Act 2001 (Cth) by engaging in misleading or deceptive conduct: Australian Securities and Investments Commission v Latitude Finance Australia (No 2) [2024] FCA 1205. His Honour did not make any substantive orders in that judgment, having previously ordered that there be separate hearings on the questions of liability and relief. On 5 November 2024, however, his Honour made declarations in respect of the contraventions and also made orders which provided a timetable of steps to be taken to prepare for the hearing in respect of relief (the Timetabling Orders). Two weeks later, on 19 November 2024, Latitude and Harvey Norman each filed applications for leave to appeal the declarations made on 5 November 2024.

2    The interlocutory issue now before the Court is whether the Timetabling Orders should be vacated or varied pending the hearing of Latitude’s and Harvey Norman’s applications for leave to appeal. Both Latitude and Harvey Norman sought orders the effect of which was to relieve them of the burden of filing evidence and preparing for the relief hearing until the hearing and determination of their applications for leave to appeal. Those orders were sought in the primary proceeding (NSD843/2022), not in the appeal proceedings commenced by the filing of the applications for leave to appeal (NSD1655/2024 and NSD1663/2024). ASIC opposed the orders sought by Latitude and Harvey Norman. The applications by Latitude and Harvey Norman to vacate or vary the Timetabling Orders came before me as general duty judge, Yates J having retired since making those orders. The appeal proceedings were not and are not listed before me.

3    The Timetabling Orders require ASIC to file and serve the evidence upon which it intends to rely at the relief hearing by 13 December 2024 and require Latitude and Harvey Norman to file the evidence upon which they intend to rely by 28 February 2025. Provision is also made for the subsequent filing of any reply evidence by ASIC and the filing of written submissions by each of the parties. The orders also provide for the listing of the relief hearing, with an estimate of 2 days, on a date no earlier than 19 May 2025.

4    Latitude and Harvey Norman argued that it would more efficient and less wasteful for the preparations for the relief hearing to be deferred pending the hearing and determination of their applications for leave to appeal. They submitted that the relief hearing would likely take two days, that being the estimate specified in the Timetabling Orders. They contended that they would be required to undertake substantial work to compile their evidence and prepare for the relief hearing. In relation to their applications for leave to appeal, Latitude and Harvey Norman submitted that the appropriate course would be for those applications to be referred to and heard by the Full Court immediately before or concurrently with the prospective appeals. They estimated that the leave applications and appeals could be heard by the Full Court in one day.

5    The crux of the argument mounted by Latitude and Harvey Norman in support of their proposed orders was that if the Timetabling Orders were not varied, the relief hearing was likely to proceed and perhaps even be determined before the hearing of the applications for leave to appeal and the appeals. If that occurred, and their applications for leave to appeal succeeded and their appeals were allowed, the result would be that the time and substantial legal costs incurred in respect of the relief hearing would be wasted. Another possibility was said to be that their appeals might be partly allowed. In their submission, the likely result, in that scenario, would be that the Full Court would have to conduct a further hearing in respect of relief. That again would, so it was submitted, be an inefficient and wasteful outcome.

6    If, on the other hand, the Timetabling Orders were varied as proposed by them, Latitude and Harvey Norman submitted that any disruption or delay to the progress of the relief hearing would be minimal. That was said to be because the orders sought by them provided that, in the event that their applications for leave to appeal, or their appeals, were unsuccessful, they would then be required to file their evidence within a fairly short space of time. It followed, so it was submitted, that if their applications or appeals failed, the relief hearing could proceed shortly thereafter.

7    ASIC took issue with the hearing estimates given by Latitude and Harvey Norman. ASIC pointed out that those estimates were unsupported by any evidence, whereas it relied on affidavit evidence from an ASIC solicitor, Ms Cynthia Di Blasio. Ms Di Blasio’s evidence was, in summary, that given the way that the liability hearing had been conducted, the relief hearing would in her opinion most likely be narrow in scope. That was said to be because the evidence that ASIC intended to rely on at the relief hearing was essentially limited to documentary evidence concerning the respective financial and market positions of Latitude and Harvey Norman. Perhaps more significantly, the evidence that Latitude and Harvey Norman would be permitted to rely on at the hearing would also, in Ms Di Blasio’s opinion, be relatively narrow given the approach that Latitude and Harvey Norman had taken to some of the evidence adduced by ASIC at the liability hearing. ASIC submitted, in that context, that the Court should not assume or infer, in the absence of evidence, that Latitude and Harvey Norman would be required to engage in a considerable amount of work compiling evidence and preparing for the relief hearing.

8    ASIC also questioned Latitude’s and Harvey Norman’s estimate of one day for the hearing of the prospective appeal. It pointed out, in that regard, that Latitude’s draft notice of appeal contained seven grounds and that Harvey Norman’s draft notice of appeal contained eight grounds. It is also important to note that ASIC indicated that it opposed the applications for leave to appeal and foreshadowed that it would be submitting that the applications for leave to appeal should be separately heard and determined by a single judge, rather than be referred to the Full Court as Latitude and Harvey Norman proposed. ASIC also foreshadowed that its submission in respect of the leave applications would be that they should be refused, both because the liability findings and declarations are not attended by sufficient doubt to warrant an appeal, and because there would be no substantial injustice to Latitude and Harvey Norman if their applications were dismissed, even supposing the liability findings to be erroneous, because they could in any event appeal as of right once final relief was granted.

9    The main thrust of ASIC’s opposition to the vacation or variation of the Timetabling Orders was that the filing of the applications for leave to appeal by Latitude and Harvey Norman should not be permitted to fragment and delay the finalisation of the primary proceeding. The primary proceedings cannot be finalised until the relief hearing proceeds. ASIC submitted, in that regard, that the course taken by Latitude and Harvey Norman in filing applications for leave to appeal was likely to lead to multiple appeals – an appeal in respect of the liability findings and an appeal in respect of relief. ASIC also submitted that the orders sought by Latitude and Harvey Norman, if granted, would effectively amount to a stay of the proceedings pending the determination of the leave applications and any appeals. It is well established that the mere filing of an application for leave to appeal, or an appeal, does not necessarily warrant the grant of a stay: see the Federal Court Rules 2011 (Cth) r 36.08; Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 at 66. ASIC emphasised, in that context, that the proceedings against Latitude and Harvey Norman were commenced with the intention of securing deterrence, both specific and general, and were essentially protective in nature. It was therefore important that the relief hearing not be delayed. That would, in ASIC’s submission, be the outcome if the orders proposed by Latitude and Harvey Norman were made.

10    It may readily be accepted that the inevitable fragmentation of the proceedings that has resulted from the filing of the applications for leave to appeal is unfortunate and regrettable. It would plainly have been preferable, in terms of the efficient use of the judicial resources of the Court, for the matter to have proceeded to the relief stage before the appellate jurisdiction was invoked. That, however, is always a potential outcome when questions of liability and relief are determined separately, as is often the case in civil penalty proceedings. Moreover, what is done is done. It was open to Latitude and Harvey Norman to file applications for leave to appeal once the declarations were made. The fragmentation has already occurred. The task for the Court now is to determine how to facilitate the just resolution of both the relief hearing in the primary proceeding and the applications for leave to appeal “as quickly, inexpensively and efficiently as possible”: s 37M(1)(b) of the Federal Court of Australia Act 1976 (Cth) (FCA Act).

11    The resolution of the case management conundrum arising from the filing of the applications for leave to appeal is by no means easy to resolve. There is some merit in the submissions advanced by each of the parties. There is no entirely satisfactory solution. Ultimately, however, my opinion, based on the somewhat limited information and evidence before me, is that the least unsatisfactory solution to the conundrum is to vacate and vary the Timetabling Orders as proposed by Latitude and Harvey Norman. I recognise that the making of those orders will unfortunately mean that the finalisation of the relief hearing will be delayed to some extent. That delay may not, however, be extensive.

12    In the ordinary course, applications for leave to appeal are triaged by a Registrar, in consultation with the National Appeals Coordinating Judge, within approximately one month of filing: Practice Information Note APP1: Case Management of Full Court and Appellate Matters. There is nothing before me to indicate that the triaging process, which generally takes place wholly on the papers, has occurred to date. Without in any way intending to prejudge or influence that process, the result of that process may be that the applications for leave to appeal are allocated to a single Judge to case manage and to consider and determine whether to hear the question of leave separately pursuant to 25(2)(a) of the FCA Act). Alternatively, the question of leave may be referred to the Full Court, pursuant to s 25(2)(e) of the FCA Act, to be determined immediately before or concurrently with the prospective appeal.

13    If the applications are referred to a single Judge for case management, and that Judge decides to determine the question of leave separately, the question of leave may be dealt with fairly promptly. If the leave applications are dismissed by the Judge, the orders proposed by Latitude and Harvey Norman provide that the timetabling orders for the relief hearing would then be immediately enlivened. ASIC has already filed and served its evidence. Latitude and Harvey Norman would in those circumstances be required to file and serve their evidence within a fairly short space of time. There would therefore not be a significant delay.

14    If, on the other hand, the case management Judge granted leave to appeal, the Judge could also then, on the application of one or more of the parties, revisit the issue concerning the timetabling of the relief hearing. That said, the grant of leave to appeal would perhaps provide a fairly compelling reason why the relief hearing should be deferred.

15    If the outcome of the triaging process is that the question of leave to appeal is referred to the Full Court to be heard immediately before, or concurrently with the prospective appeal, on the information available to me it would be likely, or at least possible, that the leave applications and prospective appeals would be listed for hearing in the August 2025 Full Court sittings. That would be the case even if, contrary to the estimates given by Latitude and Harvey Norman, the hearing of the appeals could not be concluded within one day – and I confess to being somewhat sceptical in respect of that estimate. In those circumstances, the likely result of the vacation and variation of the Timetabling Orders would be that the relief hearing would be unlikely to be heard until late 2025, or more likely in the first half of 2026. That is far from an ideal outcome. I accept ASIC’s submissions concerning the desirability of proceedings of this nature being determined as quickly as possible.

16    That said, in my view that outcome is preferable to the possible outcome if the Timetabling Orders are not disturbed, and the relief hearing takes place before the appeals are heard and determined. As has already been noted, a potential outcome in that scenario is that Latitude and Harvey Norman’s leave applications are granted and the appeals allowed, in whole or in part, with the result that the time and resources deployed in respect of the relief hearing would essentially go to waste. That outcome would be inconsistent with the overarching purpose of the Court’s civil practice and procedure provisions as specified in s 37M of the FCA Act. In particular, it would, among other things, not be an efficient use of judicial resources. Nor would it be an inexpensive or efficient outcome from the perspective of the parties. I should also note in that context that, despite Ms Di Blasio’s evidence, I entertain some doubts as to whether the relief hearing could realistically be concluded in less than the two-day estimate specified in the Timetabling Orders. I am also prepared to infer, despite the absence of evidence from Latitude and Harvey Norman in respect of this issue, that the time and resources expended by them in respect of the relief hearing would not be insubstantial.

17    As I have said, the effective deferral of the relief hearing until the determination of the applications for leave to appeal, and the appeal if leave is granted, is far from ideal. It is, however, the least unsatisfactory outcome in all the circumstances. I accordingly propose to make the orders proposed by Latitude and Harvey Norman. The costs of this application should in my view be reserved.

Associate:

Dated:    12 December 2024