Abalone Fishermans Co-operative Ltd v Bongiorno Ltd

[1992] FCA 769

JUDGMENT No. .;?hg./ .......,..

IN THE FEDERAL COURT OF AUSTRALIA	) )
VICTORIA DISTRICT REGISTRY	) No. VG 194 of 1991
)
GENERAL DIVISION	)

BETWEEN:

ABALONE FISHERMAN'S CO-OPERATIVE LTD. MICHAEL MINEHAN, PHILLIP EATHER, JOHN BLACK. JOHN ARMSTRONG and GERARDES MENKE

Applicants

AND:

BONGIORNO LTD. MARK THOMPSON. ROBERT CRUICKSHANK. THE NATIONAL
MUTUAL LIFE ASSOCIATION OF

AUSTRAIASIA LTD and B N FINANCE

LTD

Respondents

AND:

B N FINANCE LTD

Cross Clalmant

AND:

ABALONE FISHERMAN'S CO-OPERATIVE LTD, MICHAEL MINEHAN, PHILLIP EATHER. JOHN BLACK. JOHN ARMSTRONG AND GERARDES MEIENKE

Cross Respondents

L a m	:	Ryan J
Date:	11 September 1992

Place: Melbourne

of the Co-operative.

EX TEMPORE REASONS FOR JUDGMENT

Rvan J: By their amended statement of claim in this matter the

applicants have alleged that the first respondent ("Bongiorno")
or the fourth respondent ("NML") made certain representations and
gave certain advice as to the taxation benefits and other
advantages which would accrue to the first applicant ("the Co-
operative") if it took out what has been referred to as "key-man
life assurance policies" issued by NML on the lives of members

It is alleged in paragraph 4 of the amended statement of claim

that:

"Each of the Second Respondent ("Thompson") and Third Respondent ("Cruickshank") is and was at all materral times an employee or agent of either Bongrorno and/or the Frfth Respondent or acted on behalf of erther or both of them."

The particulars of the giving of advice included these two

paragraphs:

"The advice was partly written, partly oral and partly to be implied. To the extent to whlch it was written it was contained rn letters and facsimrles from Bongrorno to the CO-operatrve dated 2 December 1987 (together wrth sample print-outs referred to therein), 1 March 1988, 2 March 1988, 21 April 1988 and 11 August 1988.

To the extent to whrch rt was oral it was constrtuted by varrous meetrngs between some or all Guarantors on their own behalf and on behalf of the Co-operative and Thompson and Cruickshank on their own behalf and on behalf of Bongiorno and BNF at the offices of Bongiorno and the Co-operative in November and December 1987 and the address to the Annual General Meetrng by Thompson for and on behalf of Bongiorno and BNF in December 1987 and varrous conversations between the parties during that period."

It is then alleged that to pay the premiums on the key-man

policies the Co-operative obtained a loan from the fifth

respondent ("BNF"), guaranteed by the individual applicants who

are members of the Co-operative.

Another loan, it was pleaded, was obtained from NML on 5 April	1989, and on 22 June 1990 a second loan of $128,000 was obtained
from NML. The advice allegedly given by Bongiorno is said to have been erroneous, misleading and deceptive in contravention of ss.52 and 55A of the Trade Practices Act 1974, and ss.11 and 17 of the Fair Tradina Act 1985 (Vic). As well, it is alleged
that the advice was given negligently.
By leave of this Court, the applicants have administered interrogatories for the examination of, amongst others, Bongiorno, Cruickshank and NML. Complaint is made by motion on notice dated 3 September 1992 about the sufficiency of certain of the answers to those interrogatories. It is convenient to consider separately and in order each of what are contended to be the defective answers and to rule specifically on its sufficiency. I deal first with the interrogatories which have been administered for the examination of the first respondent, Bongiorno.
Interrogatory 1 asks:

In November 1987;
In August 1988;
Between November 1987 and August 1988;
In September 1988;
In March 1989;
Between September 1988 and March 1989;
In Aprrl 1989;

In June 1989;

(9) Between April 1989 and June 1989;

(10) In July 1989;

(11) In June 1990;

(12) Between July 1989 and June 1990;

(13) In July 1990;

(14) In December 1990;

(15) Between July 1990 and December 1990,

was -

(a)

Bonglorno;

(i)	an agent of NML in relatlon to the sale of life insurance policies;
(ii)	an employee of NML in relat~on to the sale of life

insurance polrcres;

(irr)	a person who for reward and as agent for NML arranged contracts of lrfe insurance in Australia and/or elsewhere;
(1V)	the employer of -
(A) Thompson;
(B) Cruickshank;

(V) the principal of -

(A) Thompson;

(B) Crurckshank;

(b) Thompson -

(i)      an employee of Bongiorno;

(ii)     an employee of NML;

(iii) an agent of Bongrorno;

(iv)     an agent of NML;

(C) Cruickehank -

(i)      an employee of Bongiorno;

(i1)	an employee of NML;
(iii)	an agent of Bongiorno;
(iv)	an agent of NML;

(d) Bongiorno -

(1)	an agent for BNF;
(ii)	engaged by BNF to introduce borrowers to BNF;
(rii)	actrng on behalf of BNF rn arranging loans for persons

to whom Bongiorno had sold or proposed to sell lrfe

insurance polrciee."

To that interrogatory Bongiorno has answered:

"I ob~ect to answering this rnterrogatory on the grounds it is oppressive in that it requrres answers to questrons which contain 250 drfferent combinations and permutations."

An interrogatory may be oppressive because it requires the answering deponent to provide separate answers to the same question erected on a multiplicity of different temporal or other predicates. As Woodward J pointed out in Asuar Autobarn Co-

o~erative Societv v Dovala Ptv Ltd (1987) 16 FCR 284 at 287:

"The word 'oppressive' m ground (b) of [0.16 r.61 means, I thrnk, unfair, or unreasonable, an the sense that a good deal too much 1.9 expected of the party questroned. It may be that the detarls sought would take many hours to extract from records and would only be relevant to some slde issue a.n the case. Or the questron may be so ambiguous that rt would be unfair to expect the party questioned to make assumptrons about rts meanrng. Or the questron may cover a wrder geographrc area or a longer perrod of time than is reasonably necessary in readying the case for trial. There are many questa.ons which mlght be admissible in cross-examinatron, but are by their very nature znapproprrate, and thus oppreserve, in rnterrogatorles. QueStrOns going to credit or to motive are obvious examples.

Thus it can be seen that the types of question whrch may properly be oblected to as 'oppressive' are many and varied. Each contested rnstance will have to be resolved on the basis of the court's general rmpression as to what rs reasonable. In reachrng a conclusron, the court may find that the partrcular rnterrogatory or answer takes colour from those surroundrng it. Thus an apparent attempt to pose clear and precise questlone, related directly to the partrcular case, should be treated more sympathetically than one bearing the hallmark of mass- productron. Similarly, a demonstrated wrlllngness to answer questrons rn a helpful way will lend credence to a partrcular objection."

I do not regard the present interrogatory, despite the fact that it enquires after each of four distinct persons in respect of 15 separate periods of time, as oppressive in the sense in which his Honour explained it.

To require a statement from knowledge, information or belief, whether a given person was at a particular time an employee or agent of another does not of its nature require extensive

examination of documents, or the making of far-reaching or	detailed enquiries of other persons. That prima facie character,
of course, may be displaced in respect of a given interrogatory, as Woodward J suggested in the passage just cited, by a demonstrated willingness to answer the question as far as that can be done without oppression. No such willingness has been demonstrated by the present answer to interrogatory 1. I therefore consider that I should order a further and better answer to it and to interrogatory 2, which is dependent on it.
Interroqatorv 3. This interrogatory requires the first respondent to:

"3.	Look at paragraph 4 of the Amended Defence and -
(a)	state whether the agency of -
(1) Thompson;
(1i) Cru~ckshank;
referred to therein was pursuant to a contract, agreement or arrangement and, if so, give the usual partlculars thereof;
(b)	give the usual partlculars of the agency of -
(1) Thompson;
( ~ i ) Cru~ckshank
referred to therezn."

By paragraph 4 of their amended defence, the first, second and third respondents have pleaded:

"They admit that the Secondnamed Respondent ("Thompson") and the Th~rdnamed Respondent ("Cru~ckshank") were between November 1987 and

August 1988 agents of Bongiorno.	Save as aforesaid they deny each and
every allegat~on	contained in paragraph 4 thereof."

An objection has been taken to answering interrogatory 3 "on the grounds that it does not relate to any question in issue between the applicants and the firstnamed respondent."

respect of Thompson and Cruickshank include whether either of	The matters in issue between the applicants and Bongiorno in	them was an employee of Bongiorno and whether either of them acted on behalf of Bongiorno at any material time. The terms of the admitted agency are in my view capable of throwing light on the resolution of those questions. I therefore consider that interrogatory 3 should be answered.
Interroqatorv 4.
Interrogatory 4 requires the first respondent to:

"4.	Look at paragraph 7 of the Amended Defence and -
state whether Bongiorno carried on business as an rnsurance agent
(a)	of NML pursuant to a contract, agreement or arrangement and, if so, give the usual particulars thereof;
(b)	give the usual particulars of the agency referred to therein;

(C) state whether rn carrylng on business as an insurance agent of

NML, Bongiorno -

(1)	tendered financial advrce to customers;
(ir)	tendered taxation advice to customers."

By paragraph 7 of the amended statement of clalm it is alleged:

"Bongiorno carrres on and at all material trmes carrred on the business of insurance advrsors [sic], financial advisors and taxatlon advisors."

By paragraph 7 of the amended defence Bongiorno has pleaded:

"They admit that between November 1987 and August 1988 Bongiorno carried on busrness as an insurance agent of NML. Save as aforesaid they do not admit paragraph 7 thereof."

It is clear that matters raised by paragraph 7 of the amended statement of claim which remain in question between the applicants and Bongiorno include whether Bongiorno carried on business as insurance, financial or taxation advisers. The tens

of the agreement between Bongiorno and NML, pursuant to which	Bongiorno admittedly carried on business as an insurance agent
for NML, may illuminate those questions and whether pursuant to its admitted agency Bongiorno tendered financial or taxation advice to customers. Accordingly I order that a further and better answer be made to interrogatory 4.
Interrogatory 5 . [After discussion with Counsel, his Honour continued:] I am prepared to direct a further and better answer to interrogatory 5 in the light of the discussion which has just occurred.
Interroaatorv 6.
In response to a request for "(c) The subject matter of discussion at the meeting or meetings: [and] (d) the usual particulars of the discussion of that subject matter at the meeting or meetings", Bongiorno has answered:

"(C) G (d) The d~scusaions were oral and concerned revenue and
capital keyman policles and the funding therefor."

In my vlew that answer fails to give the material substance of each conversation constituting the discussion, and fails to identify (if that can be done) the participant who contributed a particular part of that substance. I therefore order a further and better answer to interrogatory 6(d).

Interroaatorv 7.

Interrogatory 7 requires the first respondent to:

"Look at paragraph 10 of the Amended Defence and -

(i)      give the usual particulars of the advice glven by Thompson to Abalone and some of ~ t s drrectors and members (naming the directors and members to whom advice was glven) -

(a)	in September 1987;
(b)	in October 1987;
(C)	in November 1987;
(d)	in December 1987;
(e)	in January 1988;
(f)	in February 1988;

(ii)     give the usual partrculars of the advice that "Keyman Insurance Policies would be 'nrl out of pocket' havrng regard to tax deductions, bonuses, capital rncreases in the pollcy and the abllity to utilise the polrcy as a caprtal asset to borrow against thus introducing tax savings srnce rnterest 1s deductible because the money is borrowed for workrng capital";

( i i ~ ) give the usual particulars of the advice that 'financing premrums by borrowrng would be on a 'nil out of pocket' basis to the Frrstnamed Applicant and its members'."

Paragraph 10 of the statement of claim alleges that:

"Between November 1987 and August 1988 NML, alternatively Bong~orno m

trade and commerce adv~sed	the Applicants that:
(a)	rf the Co-operative took out lrfe assurance policies generally known as keyman life assurance polrcres wrth NML over the lives of its members they would rnvolve nil out of pocket expenses so that the insurance would be free..."

Then follow eight further sub-paragraphs setting out the effect of other aspects of the alleged advice. By paragraph 10 of the amended defence of the first, second and third respondents it is pleaded :

"They admrt that between about September 1987 and about February 1988 Thompson advised the F~ratnamed Applrcant and some of rts drrectors and members rncludrng the Second to slxthnamed Applrcants to the effect that:

(a)	Keyman Insurance Pollcres would be "nil out of pocket" havlng regard to tax deductrons, bonuses, cap~tal increases in the polrcy and the ability to ut~lrse the polrcy as a capital asset
to borrow against thua lntroducrng tax savLngs since interest 1s

deductrble because the money is borrowed for working capital;

(b) financing premiums by borrowing would be on a ' n ~ l out of pocket'

basis to the Firatnamed Applicant and its members.

Save as aforesaid they deny each and every allegation contarned in paragraph 10 thereof."

Neither sub-paragraph (a) nor sub-paragraph (b) of paragraph 10 of the amended defence admits in precise terms any of the nine sub-paragraphs of the corresponding paragraph of the amended statement of claim. For the reasons already indicated in respect of interrogatories 3 and 4, I order a further and better answer to interrogatory 7.

Interroaatorv 9.
Interrogatory 9 is dependent on an answer to interrogatory 8
which enquires about arrangements or enquiries made by Bongiorno,

Thompson or Cruickshank to obtain a loan for the Co-operative,

and asks :

"If yes to any part of rnterrogatory B hereof, glve the usual particulars of the arrangements, enqulrles and/or steps made or taken by Bongiorno, Thompson or Cruickshank, as the case requires."

The answer given to that interrogatory is:

"Thompson, on behalf of the firstnamed respondent orally introduced BN Finance Lim~ted ("BNF") on the basis that it would look at flnanclng

working cap~tal for the busrness of Abalone."

In my view that answer is not sufficiently specific, in the sense that it does not set out, if that can be done, the substance of any statement, representation or request made by Thompsonto BNF. Nor does it set out the effect of any statement made by Thompson when he introduced BNF to the Co-operative or some of its members. I therefore order a further and better answer to

interrogatory 9.

Interroaatorv 11.
Interrogatory 11 is dependent on an affirmative answer to

interrogatory 10 which asks:

"Prlor to acceptance by National Mutual Limrted of the polrcies, d ~ d	-
( 1)	Bonglorno;
( ~ i )	Thompson;

(iii) Cruickshank;
(iv) some other servant or agent of Bongiorno,

arrange medical examinat~on	of any and if so which of the l ~ v e s	to be
insured under the policies?"

Interrogatory 11 then asks:

"If yes to any part of rnterrogatory 10 hereof, give the usual
particulars thereof."

Objection has been taken to answering interrogatory 11 in these terms :

"I object to answering t h ~ s interrogatory on the grounds that it is not

amenable to answer by reference to the usual particulars."

In my view, on a fair reading of interrogatories 10 and 11, what is enquired after are the particulars of the arrangements said to have been made. I consider that it may be possible to answer that question by indicating whether a request or other arrangements for medical examinations were made in writing or orally. In my view it may be possible for the first respondent to provide an answer to interrogatory 11 and I make an order in respect of that interrogatory accordingly.

Interroaatorv 14.

Interrogatory 14 is dependent on an affirmative answer to

interrogatory 13 which asks:

"13. On or about 15 December 1987 drd -

(a) Thompson;

(b) Cruickshank;

(C) John Doquile;

(d) some other servant or agent of Bongiorno and/or NML, and if so state whom,

attended [sic] a meeting with members of Abalone at Abalone's premises
at Mallacoota rn the State of Victoria."

An answer has been given to that interrogatory which suggests that Mr Thompson, Mr Doquile and one Dowling, another servant or agent of Bongiorno or NML, attended the meeting enquired after.

Interrogatory 14 then asks:

"14.

If yes to any part of interrogatory 13 hereof -

(a)	was the subject of Keyman Insurance polrcies the subject of a presentation and/or discussion at the meeting?
(b)	if yes to paragraph (a) hereof, glve the usual particulars thereof;
(c)	glve the usual particulars of the presentation and/or drscussron held at the meeting."

The answer to that interrogatory is:

(a)	yes;
(b) and (c) A general discuss~on	and whiteboard presentation was made

explaining how both revenue and capital purpose of the
keyman policies worked."

In my view the rolled up answer to parts (b) and (c) of interrogatory 14 suffers from the same vice which I identified in respect of interrogatory 6, and for similar reasons I consider that a further and better answer to interrogatory 14 should be provided, giving the substance of the discussion or presentation

to whom each part of that substance is attributed. at the meeting and identifying, as far as possible, the person Interroaatorv 25.
Interrogatory 25 requires the first respondent to:

"25.	Look at paragraph 14 of the Amended Defence and -
(a) state and spec~fy (with all material dates and places) each

and every act, fact, matter, circumstance and thing by reason of which it is alleged that ~nsofar as the advice alleged in paragraph 10 of the Applicants' Amended statement of Claim was with respect to future matters there were reasonable grounds for giving the said advice;

(b)	state and specify (with all mater~al dates and places) each and every act, fact, matter, circumstance and thing by reason of whrch it is alleged that insofar as that advlce contamed or conveyed statements of opinion that advice was based on reasonable grounds;
(C)	In each case specrfy the reasonable grounds relred upon."

Paragraph 14 of the amended defence recites:

"Further or alternatively, if (wh~ch is not adm~tted but expressly denled) subject to paragraph 10 hereof Thompson gave the advice alleged In paragraph 10 thereof then they say that:

(a)	insofar as the same was wrth respect to future matters there were reasonable grounds for givrng the said advice;
(b)	insofar as the same contained or conveyed statements of
opin~on the said advlce was based on reasonable grounds."

The answer given to interrogatory 25 is:

"(a) - (C) Based on projected profrt, tax benef~ts, tax deductions and

bonus commlseion rates and other factors premium levels would be such that the lnsureds would be 'nll out of pocket' on an annual basis. The flrstnamed respondent also relies on the fact that the r ~ s k portion of premium and moneys borrowed for revenue purposes should be tax deductrble, the h~story of bonus rates, Interest rates and tax rates which formed reasonable grounds for projecting

f ~gures. "

~t is clear, in my view, from the answer which has been given, that the first respondent bases its contention of the existence

of reasonable grounds on certain assumptions about income levels, rates of taxation and matters of that kind. I consider that	those assumptions should be set out in a summary way, to make
clear the basis of the conclusion referred to in the answer that the insureds would be "nil out of pocket" on an annual basis. I therefore order a further and better answer to interrogatory Conclusion
Counsel for the applicants did not press the request for interrogatories 26 (b) and 27 (b) , and it is unnecessary for me to deal with those interrogatories. As far as interrogatories administered for the examination of the third respondent are concerned, it has been indicated that the complaints about those answers are substantially the same as those about the corresponding answers to interrogatories provided by the first respondent, and I indicate that I require, mutatis mutandis, further and better answers to the interrogatories administered for the examination of the third respondent in the light of the application of the reasons just given.
[After hearing further submissions from Counsel, his Honour continued:]
I exclude from the required further and better answers to the
interrogatories administered to the third respondent an answer to interrogatory 14, in the light of the concession which was
made by Mr Connor in the course of argument. I shall make orders giving effect to the reasons that I have just pronounced.

I certify that this and the preceding thirteen (13) pages are a true copy of the ex tempore reasons for judgment herein of his Honour Mr Justice Ryan.

Date:  11 September 1992

Counsel for the Applicants:  M r C A Connor

Solicitor for the Applicants: Wilmoth Field and Warne

Counsel for the First and

Third Respondents:	Mr	P G Cawthorn
Solicitor for the First and

Third Respondents:  Minter Ellison Morris Fletcher