COVID no cover for defendants to hide behind: the show goes on (ASIC v GetSwift)

This is a regulatory proceeding brought by the ASIC against GetSwift Ltd, GetSwift’s managing director, executive chairman and its general counsel and non-executive director.

Background

This is a regulatory proceeding brought by the Australian Securities and Investments Commission against GetSwift Ltd (GetSwift) and GetSwift’s managing director (Mr McDonald), executive chairman (Mr Hunter) and its general counsel and non-executive director (Mr Eagle) (ASIC Proceeding). A shareholder class action has also been commenced against GetSwift and Mr McDonald (Class Action), which canvasses substantially the same issues as the ASIC Proceeding.

The two proceedings are listed for sequential hearing, with the trial of the ASIC Proceeding scheduled to commence on 9 June 2020 and the trial of the Class Action commencing shortly thereafter on 17 August 2020.

Application for Adjournment due to COVID-19

This decision concerned an application by the defendants for an adjournment of the trial of the ASIC Proceeding due to the COVID-19 pandemic. The plaintiff opposed the adjournment.

Broadly speaking, the reasons cited by the defendants in support of their application can be grouped into five categories.

  • Technological issues: the defendants identified a range of potential issues associated with the use of the video-conferencing software proposed by the Court (Microsoft Teams), including drop-outs and difficulties with displaying documents and hearing or seeing counsel.
  • Examination of witnesses: the proceeding involves 41 witnesses being called to give evidence, 31 of which are proposed to be cross-examined. The defendants submitted that were witnesses to give evidence over Microsoft Teams, the Court would be deprived of seeing the witnesses in person, which may give rise to difficulties in the assessment of demeanour and credit. The defendants also pointed out that Mr Hunter and Mr McDonald are currently located in New York, and could not travel to Australia to give evidence without endangering their health. In the event they were required to give evidence virtually, the defendants argued Mr Hunter and Mr McDonald would suffer the disadvantage of giving evidence in the middle of the night, or the Court and counsel would be inconvenienced by taking evidence outside of court hours.
  • Separation of legal teams: the defendants submitted that the physical separation of legal teams would give rise to difficulties with senior counsel taking instructions from their instructing solicitors and collaborating with junior counsel, including during the process of cross-examination.
  • Civil penalty proceeding: the defendants submitted that the ASIC Proceeding being a civil penalty proceeding was highly significant to the question of whether or not it would be just to proceed to trial in the present circumstances.
  • Prejudice: the defendants submitted the trial ought to be adjourned to a date to be fixed, probably in late 2021 or early 2022. The defendants argued that this would cause no real prejudice to the plaintiff and that useful work could be done in the interim to prepare the matter for hearing.

Adjournment Refused

Justice Lee dismissed the defendants’ application. His Honour said that if he was satisfied that the arrangements that would need to be put in place to hold the trial remotely would result in the trial being ‘second-rate’ or ‘substandard’, then he would not proceed. However, his Honour said (at [7]):

Just because one cannot have a hearing conducted in accordance with traditional practices and procedures, does not mean that the Court’s judicial function cannot be performed effectively where it is necessary to do so. As Voltaire observed, one must ensure the perfect does not become the enemy of the good.

His Honour said that central to his analysis of the defendants’ submissions was “the accumulating experience of the Court in the use of the Microsoft Teams technology to hear cases” (at [25]), including his own experience conducting a number of interlocutory hearings and a complex defamation trial, which involved extensive cross-examination. His Honour said that “as someone who was quite sceptical about how the trial could be conducted in the present circumstances, I was pleasantly surprised”.

His Honour considered that while some aspects of receiving evidence and submissions in these hearings was “sub-optimal”, it “was not impaired to such an extent that I considered that there was anything second-rate about the experiences that I have had with the Microsoft Teams technology” (at [25]).

Ultimately, his Honour did not consider that the reasons propounded by the defendants warranted adjourning the trial of the ASIC Proceeding. Some of the key aspects of his Honour’s decision are set out below.

  1. Technological issues: his Honour said that the parties would need to work with the Court to ensure any technical issues were minimised, and that, in the event such problems do materialise, they could rest assured that the Court would “show some latitude and forbearance in having those problems work themselves out” (at [31]).
  2. Examination of witnesses: his Honour said that he would not have proceeded with the hearing unless he was satisfied that Mr Hunter and Mr McDonald could give evidence remotely from New York. His Honour also said that he would not require the witnesses to give evidence late at night, and that he would be prepared to sit outside of court hours to ensure they can give evidence at some convenient time. Turning to the issue of cross-examination, his Honour said (at [33]):
    To the extent that demeanour does play an important role in assessing the evidence of witnesses, then my experience, particularly in the recent trial that I conducted, is that there is no diminution in being able to assess the difficulty witnesses were experiencing in answering questions, or their hesitations and idiosyncratic reactions when being confronted with questions or documents. Indeed, I would go further and say that at least in some respects, it was somewhat easier to observe a witness closely through the use of the technology than from a sometimes partly obscured and (in the Court in which I am currently sitting) distant witness box.
  3. Physical separation of legal teams: his Honour said that although not ideal, it is possible through the use of technology for legal teams to work together remotely. His Honour said that the Court would allow for appropriate accommodations to be made to account for any problems arising out of legal teams’ separation, including by taking short adjournments prior to the conclusion of cross-examination to allow senior counsel to confer with her or his junior counsel and instructing solicitors.
  4. Prejudice: his Honour did not agree that the adjournment would cause no prejudice. His Honour observed that adjourning the trial would result in a lengthy delay and require the hearing to be re-listed, which would, in turn, disrupt the listing of other matters. His Honour pointed out that this would prejudice the litigants involved in those matters. His Honour also observed that adjourning the trial of the ASIC Proceeding would also necessitate an adjournment of the trial of the class action, which would prejudice the interests of the applicant and class members, and that the ASIC Proceeding involved serious issues that may affect the ability of the defendants to be involved in the management of corporations, which should be determined promptly.
  5. Open justice: his Honour said that, consistent with the demand and necessity of ‘open justice’, he was “satisfied appropriate arrangements can be put in place to ensure the ASIC Proceeding (and the class action) is fully accessible and can be observed by the public” (at [41]).

Case details

Australian Securities and Investments Commission v GetSwift Ltd [2020] FCA 504

  • Federal Court of Australia, Lee J, 9 April 2020
  • Plaintiff's Solicitors: Johnson Winter & Slattery
  • Defendant's Solicitors: Quinn Emanuel Urquhart & Sullivan
  • Plaintiff's Funder: N/A

Read more about this case on Austlii: Australian Securities and Investments Commission v GetSwift Ltd [2020] FCA 504

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