New South Wales Supreme Court CITATION : Karl Suleman Enterprizes Pty Limited (In Liquidation) v Suzy David & Ors [2007] NSWSC 401 HEARING DATE(S) : 5/03/07 JUDGMENT DATE : 3 May 2007 JUDGMENT OF : Patten AJ at 1 DECISION : See paragraph 59 Uniform Civil Procedure Rules LEGISLATION CITED : Civil Procedure Act 2005 Corporations Law Companies Act 1936 Venacom Pty Ltd v Morgan Brooks Pty Ltd (2006) NSWSC 43 Director General Department of Community Services v D (2006) NSWSC 827 CASES CITED : McBride v Sandland (1917) SALR 249 Summerville v Walsh Court of Appeal unreported 26 February 1998. Lang v Australian Shipping Commission and Anor (1974)2 NSWLR 70 Haywood v Collaroy Services Beach Club (2005) NSWSC (203) PARTIES : Karl Suleman Enterprizes Pty Limited (In Liquidation) - Plaintiff Suzy David & Ors - Defendant FILE NUMBER(S) : SC 20258 of 2003 COUNSEL : Mr G Laughton SC - Plaintiff Mr M Dicker - Defendant SOLICITORS : Corrs Chambers Westgarth - Plaintiff Middletons - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Patten AJ 3 May 2007 No: 20258 of 2003 Karl Suleman Enterprizes Pty Ltd v Suzy David and Ors JUDGMENT 1 This was a motion for leave to administer interrogatories to the First Defendant (Ms David). Mr Laughton SC appeared for the Applicant Plaintiff and Mr Dicker of counsel for Ms David. 2 The motion filed on 6 October 2006 seeks leave to administer interrogatories in the form annexed to the affidavit of Mr B. T. I Black sworn 4 October 2006. A copy is attached to this judgment. As will be observed, the interrogatories are numbered 1 to 62 but many contain multiple parts. 3 Rule 22.1 of the Uniform Civil Procedure Rules stipulates that an order for the administration of interrogatories should not be made unless they are necessary. Rule 22.2 provides: "A party may not object to being ordered to answer an interrogatory except on the following grounds: (a) the interrogatory does not relate to any matter in issue between that party and the party seeking the order. (b) the interrogatory is vexatious or oppressive, (c) the answer to the interrogatory could disclose privileged information." 4 Before dealing with the matter raised by the motion, it is necessary to say something about the action itself. The Plaintiff, a company in liquidation sues four defendants alleged to have been at the relevant time solicitors practising in partnership as Dominic David Stamfords. The Statement of Claim in its amended form is lengthy and complex but in outline it alleges: · That between 17 December 1999 and November 2001 the Plaintiff dealt with member of the public as lenders or investors in a scheme which was illegal, as being contrary to various provisions of the Corporations Law. · On or about 7 November 2001 Australian Securities and Investments Commission (ASIC) commenced proceedings in this court for declarations and orders in relation to the alleged illegal activities of the Plaintiff and its director, Mr K Suleman. · On or about 12 November 2001, the Plaintiff appointed Messrs Paul Weston and Neil Cussen as administrators pursuant to s 436A of the Corporations Law. Pursuant to a creditors resolution of 7 December 2001, the Plaintiff was wound up and Messrs Weston and Cussen were appointed liquidators. On 10 December 2001 this court ordered that the illegal management investment scheme conducted by the Plaintiff be wound up pursuant to s 601EE of the Corporations Law and appointed Messrs Weston and Cussen as receivers of the scheme's funds. · From September 2000until May 2001, the Defendants acted for the Plaintiff in providing advice about the illegal scheme. · In breach of their retainer or negligently, the Defendants failed to provide advice that the scheme was operating in breach of the law; failed to advise as to steps required to constitute compliance and failed to advise that further investments should not be accepted in the meantime. · That the Plaintiff through Mr Suleman would have acted upon any advice given by the Defendants as the Defendants knew or ought to have known. · That as a consequence of the Defendants breach of their retainer and/or negligence, the Plaintiff suffered loss and damage. 5 One other matter of relevance is that Ms David was examined before Registrar Wearne of this court under s 596B of the Corporations Law over a number of days in 2002 and 2003. 6 There is no direct evidence before me as to why, or indeed whether, the Plaintiff contends that answers to the interrogatories are "necessary". Mr Black's affidavit does not in terms so assert, but the element of necessity may, I think, be inferred in an appropriate case. In that connection, in the light of authority, I am satisfied that "necessary" means "necessary in the interests of a fair trial". Moreover, in that context, "necessary" is not an absolute term and considerations of reasonableness, of saving costs, and of reduction of hearing time may be taken into consideration (see for instance the decision of Master Cantor as he then was in Lang v Australian Shipping Commission and anor (1974) 2 NSWLR 70 and Haywood v Collaroy Services Beach Club per Rothman J (2005) NSWSC (203). These considerations are reinforced by sections 56, 57 and 58 of the Civil Procedure Act. 7 In supporting the order sought, Mr Laughton pointed to the complex nature of the proceedings, which principally involve Ms David and Mr Karl Suleman, the director of the Plaintiff, who is presently serving a sentence of imprisonment. Whilst conceding that some of the facts sought by the interrogatories can be proved by the tender of the transcript of the examination of Ms David before the Registrar, he submitted that this circumstance is not necessarily determinative, as the interrogatories provide a convenient means of reducing both costs and the length of the trial. 8 In opposing the application, Mr Dicker submitted, inter alia, that the application is premature, in that it is made before service of Ms David's affidavits and expert evidence. In that connection no order has been made pending the disposal of the present matter. He contended that some of the interrogatories, at least, may be rendered otiose by the evidence. 9 In support of this submission Mr Dicker relied on what was said by Campbell J (as he then was) in Venacom Pty Ltd v Morgan Brooks Pty Ltd (2006) NSWSC 43. The relevant passage appears at paragraph 12 of His Honour's judgment which was delivered ex tempore on 3 February 2006. "The third order which is sought in the Amended Notice of Motion is for the plaintiff to provide to the first defendant answers to certain interrogatories. I have been taken through the interrogatories with some care. The principles upon which interrogatories are required to be drafted include that they take the form of questions which could be asked of a witness in the witness box in evidence-in-chief: Powell v Wilson and McKinnon (1908) VLR 574; James v Davis (1883) 9 VLR L140. It may be that some of the interrogatories which are in issue fail to meet that test, because they seek to have an answer to a question which asks what is the mental state of a corporation at a particular time. However, I will not make the decision concerning interrogatories on that basis, or on the basis of any other deficiencies there might be in individual interrogatories. Under Uniform Civil Procedure r 22.1(4) the Court is not to make an order for interrogatories unless the Court is satisfied that the order is necessary at the time it is made. In my view, when the plaintiff's evidence-in-chief has not been put on, it is premature for any interrogatories at all to be delivered. Thus, I decline to make order 3 in the Amended Notice of Motion." 10 Although His Honour quoted no authority in support of the proposition stated, it is to be noted that he was dealing with an application by a defendant to interrogate the plaintiff. The opposite situation applies in this case and, in my view, different considerations apply. It might well, in my opinion, be "necessary" as I have earlier explained that term for a plaintiff to know before preparing his evidence what matters are in issue and need to be proved. I would reject the submission. 11 The Defendants next submission was that the requirement of necessity is absent when the matters covered by the interrogatories are already admitted or may readily be otherwise proved. This proposition was recently endorsed by Brereton J in Director General Department of Community Services v D (2006) NSWSC 827. His Honour quoted the South Australian case McBride v Sandland (1917) SALR 249 which, as it seems to me, is certainly direct authority for the first limb of the proposition, if perhaps not the second. In relation to a matter which otherwise, arguably, may easily be proved, questions of degree, reasonableness and the exercise of discretion arise. Again reference should be made to the overriding principles set forth in sections 56,57 and 58 of the Civil Procedure Act. 12 Mr Laughton identified the issues in the case as "retainer", "duty of care", "partnership", "the state of Ms David's knowledge" and "breach of duty of care". He pointed out that the action is brought for the benefit of creditors of an insolvent company; that the imprisonment of the sole director of the Plaintiff create logistical and other difficulties in obtaining his testimony, and that although the examination of Ms David before the Registrar encompassed many matters relevant to this action, the interrogatories seek to focus on the particular issues of the case. In the circumstances, I would not regard the fact that the interrogatories canvass matters which were, or could have been, asked of Ms David at the examination as sufficient of itself to refuse, either as a matter of discretion or otherwise, all of the proposed interrogatories out of hand. Rather, if thought appropriate, this could be reflected in costs. 13 In my opinion, it thus becomes necessary to deal with the proposed interrogatories individually. 14 Interrogatories 1 and 2. The allegations in the Statement of Claim were not fully admitted by the Defence, nor, as it seems to me, are they entirely covered by the transcript taken before Registrar Wearne. I would allow the interrogatories. 15 Interrogatory 3. Mr Dicker contends that the interrogatory is oppressive and too widely framed. It, of course, requires Ms David to make enquiries so far as she can of others working in the firm at the time. However, as the period is short and relatively recent, I do not regard the interrogatory as unreasonably onerous. Nor do I think it is too widely expressed. The interrogatory should be allowed. 16 Interrogatory 4. Consistently with what I have said in relation to interrogatory 3, I think this interrogatory, which relates only to Ms David, should be allowed. 17 Interrogatory 5. I fail to understand the relevance of this interrogatory, which, in any event, in my opinion, is too vaguely expressed and therefore oppressive. Indeed, I would have thought that it is not reasonably open to question that every solicitor in practice, at least in the city of Sydney and the Sydney metropolitan area, has more than adequate library facilities and internet resources readily available. 18 Interrogatories 6-9. In my opinion, these interrogatories are so imprecisely expressed as to be oppressive. In my view, a practising solicitor should be assumed to have at least a basic knowledge and understanding of the objects and scheme of the legislation regulating corporations. For instance, there have been for very many years restrictions on the issue of debentures and other interests to members of the public. (eg s 137 of the Companies Act 1936). See also Riley Solicitors Manual at paragraphs 4165.5 and following and cases such as Summerville v Walsh Court of Appeal unreported 26 February 1998. 19 Interrogatory 10. Although, in a sense, Ms David is being asked to interpret someone else's document, I think, on balance, it is an appropriate interrogatory and I would allow it. 20 Interrogatory 11. This interrogatory makes a rather insulting assumption and is oppressive for that reason. In any event, in my view, whatever answer Ms David gave could not be relevant to any issue in the case. 21 Interrogatory 12. It is claimed on behalf of Ms David that this interrogatory is oppressive and unfair but I do not agree. It is not unduly onerous to require her to enquire of relevant persons working in her firm. "The Scheme" is defined in the interrogatories by reference to paragraphs 9 to 12 of the Statement of Claim. There is perhaps an ambiguity or tension in light of the opening words of paragraph 9 but I think what is meant is tolerably clear in the context of all three paragraphs. I would allow the interrogatory. 22 Interrogatory 13. I see nothing oppressive in this interrogatory. It relates only to Ms David herself and, in my opinion, it is not onerous to call upon her to identify agreements falling within the definition of "Investment Agreements" and seen by her. If she cannot remember she is entitled to say so. I would allow the interrogatory. 23 Interrogatory 14. This interrogatory as Mr Dicker pointed out is carelessly drafted. In my view, in any event, it is oppressive and irrelevant by requiring Ms David to state her understanding of the contents of written documents, which seemingly took a variety of forms. They will speak for themselves. I would disallow the interrogatory. 24 Interrogatories 15 and 16. It follows from what I have said in relation to interrogatory 14 that these interrogatories should also be disallowed. 25 Interrogatories 17 to 20. Ms David objects to these interrogatories and it was submitted that the evidence would be "best dealt with by way of affidavit or cross-examination where the effect of conversations in their context can be given". However, in my opinion, the interrogatories are proper, being focused on very limited aspects of the telephone conversation referred to. I would allow them. 26 Interrogatory 21. There seems to be no objection to this interrogatory and I would allow it. 27 Interrogatory 22. In my opinion, this interrogatory addressed to a solicitor is oppressive. Moreover, such words as "understand" and "required" are vague and uncertain. In any event, I doubt the relevance of the interrogatory. The Plaintiff's case is that Ms David "knew, ought to have known, or had an obligation to ascertain". On that basis, the level of her actual knowledge seems irrelevant, particularly as it is not alleged that she claimed any particular expertise. I would disallow the interrogatory. 28 Interrogatories 23 and 24. There seems to be no particular objection to these interrogatories and they should be allowed. 29 25. The objection to this interrogatory is based upon the proposition that it requires Ms David to form views and make judgments. However, given that she is a solicitor, I think, the interrogatory may be fairly understood by her and is not oppressive. Again if she cannot remember, she may say so. I would allow it. 30 Interrogatory 26. I think this interrogatory to a solicitor is sufficiently precise and I would allow it. 31 Interrogatory 27. It was submitted on behalf of Ms David that what was said at the conference should be viewed in its entirety and that the interrogatory requires Ms David to form an opinion as to the overall effect of any advice given. However, again I think it is relevant to bear in mind that Ms David was, and is, a solicitor. I do not regard the interrogatory to her as unfair or insufficiently precise and would allow it. 32 Interrogatory 28. For the reason given in relation to interrogatory 27, I would allow this interrogatory. 33 Interrogatory 29. There was no objection to this interrogatory. 34 Interrogatories 30 and 31. For reasons given above, in relation to interrogatory 27, I would allow these interrogatories. 35 Interrogatory 32. In light of interrogatory 30, I regard this interrogatory as repetitive, oppressive and irrelevant. I would disallow it. 36 Interrogatories 33 and 34. I agree with the submission made on behalf of Ms David that these interrogatories are so imprecise as to render them irrelevant. They should be disallowed. 37 Interrogatory 35. There is no objection to this interrogatory and it should be allowed. 38 Interrogatories 36 and37. Again bearing in mind that these interrogatories are addressed to a solicitor, I think they are sufficiently precise. I would allow them. 39 Interrogatory 38. I would allow interrogatory 38.1, 38.2 and 38.4. Interrogatory 38.3 is objectionable as being uncertain in meaning and irrelevant. 40 Interrogatory 39. In one sense Ms David's understanding of the opinion held by Mallesons Stephen Jacques is irrelevant. However, in the sense that she sought advice from the firm, the interrogatory is presumably designed to obtain an admission by Ms David as to her understanding of the substance of the advice given. On that basis, and bearing in mind again that Ms David is a solicitor, I would allow the interrogatory. 41 Interrogatory 40. I think this interrogatory is sufficiently precise and relevant. I would allow it. 42 Interrogatories 41 and 42. Ms David submitted that these interrogatories are unfair and oppressive because of use of the word "scheme". However, I think, in the context of these proceedings they are sufficiently clear and I would allow them. 43 Interrogatory 43. Ms David submitted that the interrogatories require her to form a view or make a judgment as to the advice she gave to Mr Suleman. However, I do not regard 43 and 44.1 as oppressive or otherwise objectionable and I would allow them. 44.2, however, is, in my opinion, oppressive, if the advice was oral, and should be disallowed. If the advice was written it could readily be proved. 44 Interrogatory 45. This interrogatory makes the unwarranted assumption that Ms David had a duty to do something. Moreover, its terms are so unclear as to render it oppressive. I would disallow it. 45 Interrogatory 46. I agree with the submission on behalf of Ms David that the interrogatory is insufficiently precise by its use of the phrase "Style Similar". Nor do I think that the answer yes or no would be relevant to any issue. I would disallow the interrogatory. 46 Interrogatory 47. This interrogatory should be disallowed for the same reason as interrogatory 46. It also makes the unwarranted assumption that Ms David had a duty to give advice. 47 Interrogatory 48. In my opinion, this interrogatory is oppressive and should be disallowed. My reasons for that conclusion are that it is repetitive vaguely expressed and in any event irrelevant. 48 Interrogatories 49 and 50. There are no objections to these interrogatories and they should be allowed. 49 Interrogatory 51. This interrogatory is not very happily drafted. However, on balance, I think it is sufficiently precise to be allowable. 50 Interrogatory 52. This interrogatory, in my view, is oppressive. To my mind its meaning is entirely unclear, in particular the words "that fact" are quite meaningless. 51 Interrogatory 53. I think this interrogatory addressed to a solicitor is sufficiently clear. I would allow it. 52 Interrogatories 54 and 55. I agree with Ms David's submission that these interrogatories are oppressive. They are worded with imprecision and, moreover, in my view, her answers would be irrelevant to any issue in the case. 53 Interrogatory 56. Although Ms David contends that this interrogatory requires her to form judgments and to address questions of law, I respectfully disagree. The interrogatory, in my opinion, is precisely focussed and should be allowed. 54 Interrogatory 57. In my opinion this interrogatory is also precisely targeted and should be allowed. 55 Interrogatory 58. In light of my rulings in relation to interrogatories 56 and 57, I think this interrogatory should be allowed. 56 Interrogatories 59, 60 and 61. For reasons given in relation to interrogatories 56, 57 and 58, I think these interrogatories should be allowed. 57 Interrogatory 62. I agree with the submission made on behalf of Ms David that this interrogatory is oppressive. Its terms are, in my view, insufficiently precise. Moreover, as Mr Dicker pointed out, discovery has taken place. 58 Both parties have had a degree of success and I will provisionally order that costs of the motion be costs in the cause. I will, however, reserve liberty to apply in case either party seeks some different order, particularly having regard to the terms of the affidavit of Simon Skelton, sworn 1 March 2007. 59 I make these orders: 1. The Defendant Suzy David to provide within 28 days answers on oath to interrogatories numbered: 1, 2, 3, 4, 10, 12, 1317, 18, 19, 20, 21, 23, 24, 25, 26, 27, 28, 29, 30, 31, 35, 36, 37, 38.1, 38.2, 38.4, 39, 40, 41, 42, 43, 44.1, 49, 50, 51, 53, 56, 57, 58, 56, 57, 58, 59, 60 and 61 of the proposed interrogatories annexed to the affidavit of B T I Black sworn 27 November 2006. 2. Otherwise motion dismissed. 3. Costs provisionally costs in the cause. 3. Both parties liberty to apply regarding costs on 7 days notice. 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