Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd

[1995] FCA 1082

NOT FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA  )
NEW SOUTH WALES DISTRICT REGISTRY  )        No NG 381 of 1994
GENERAL DIVISION                 )

BETWEEN:

ALLSTATE LIFE INSURANCE CO and the parties listed as applicants in Annexure A to the third further amended statement of claim.
  Applicants

AND:

AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED and the parties listed as respondents in Annexure B to the third further amended statement of claim.
  Respondents

CORAM:Lindgren J

PLACE:Sydney

DATE:19 December 1995

REASONS FOR JUDGMENT (No 21)
      (Application by Freehills for leave to administer
  interrogatories)

The 54th respondent ("Freehills") seeks leave to file in Court a notice of motion and to have it made returnable instanter.  By the notice of motion Freehills would seek leave to serve a notice to answer interrogatories, in the form of the form of the notice annexed to the notice of motion, upon the 1st, 2nd, 3rd, 7th, 8th, 9th and 16th applicants.  For convenience, I will refer to them in these Reasons as "the applicants" although they are only seven of the seventeen applicants. 
The application for leave to file in Court the notice of motion on the basis that it is made returnable instanter is opposed.  I have taken into account the submissions and grant leave to Freehills to file the notice of motion in Court and I make it returnable instanter.  The case is fixed for hearing on 18 March 1996 and it is desirable that the question be resolved prior to the Law Vacation.

The way in which the issue between the parties to the motion arises is this; the applicants have furnished witness statements by individuals who took the decision on behalf of the respective applicants, to acquire the senior subordinated debentures issued by Linter Textiles Corporation Limited ("Linter Textiles"), the subject of the proceedings.  Clearly, the individuals concerned will be giving evidence relating to the issues of reliance and inducement.  More particularly, their evidence will be relevant to the question whether the investor applicants which they represent relied upon certain alleged representations to be found in the prospectus issued by Linter Textiles in relation to the debentures, and were induced as a result of that reliance to subscribe for the debentures.

The interrogatories sought to be administered do not relate to the debentures issued by Linter Textiles itself but to securities issued by other corporations.  Those securities are "high risk" securities.  So were the senior subordinated debentures issued by Linter Textiles.  No doubt it will be put that the applicants were not particularly concerned with the contents of the prospectus issued in relation to the Linter Textiles debentures and it will be suggested that support for this view is to be found in the fact (if it be established) that the applicants were engaged in a practice of investing in high risk securities without much care as to the content of prospectuses.

The first interrogatory proposed is the question whether the individual who has provided the witness statement performed any act or acts in relation to the acquisition by the investor applicant in question, of the securities in the companies identified in an annexure to the proposed notice to answer interrogatories.

The second interrogatory proposed requires the investor applicant in question, if the answer to the first question is "yes", to identify the securities in question and then to identify the act or acts performed by the individual in relation to each of them. 

To take the case of the first applicant as an illustration, the proposed interrogatory is as follows:

"1.Did Mark D Senkpiel ('Senkpiel') perform any act or acts in relation to the acquisition by the First Applicant of any security of the companies identified in Annexure 'A'?

2.If yes to interrogatory 1:

(a)identify each such security; and

(b)identify the act or acts performed by Senkpiel in relation to each security identified in the answer to interrogatory 2(a)."

Annexure "A" referred to in this interrogatory lists the securities of 27 corporations.   The interrogatory is designed to lay a basis for challenging Mr Senkpiel's evidence that he relied on the prospectus issued by Linter Textiles when deciding that the first applicant should subscribe for the debentures to which the prospectus referred.  The interrogatories are the kinds of question which might well be asked at the beginning of a cross examination of Mr Senkpiel in relation to the issues of reliance and inducement.

It is put for the applicants, that Freehills seeks to gain an advantage not permissible in adversary litigation in Australia of, in effect, cross-examining prior to the oral hearing.  That does not put quite accurately the submission; more precisely, the submission is that the witnesses in question have provided their witness statements and that in these circumstances the normal course of adversary litigation in this country is for the opposing side to have its opportunity for cross-examination on the hearing and not before, it allows an impermissible advantage to permit an opportunity of interrogating a party in relation to the witness's evidence in advance of the hearing.  The interrogating party would be able to use or not use the answers obtained as it might see fit,
rather than have to deal with the answers given in cross examination, for good or ill, as they emerge on the hearing.

Freehills points to the fact that the interrogatories proposed cover areas not dealt with in the witness statements (this is not contested by the applicants).  Moreover, Freehills points to the fact that an order that the interrogatories be answered would save the unnecessary time of asking orally on the hearing whether, in the case of Mr Senkpiel, he had a role in relation to 27 corporations and if so, what his role was in relation to each of them.  It is put that the witness might not be in a position to answer in relation to all 27 corporations without having records available to him.  In other words, Freehills submits that for me to grant it leave to administer the interrogatories would assist in the efficient conduct of the trial.

I appreciate the force of the submissions for Freehills, but think that taking all circumstances into account, the leave sought should not be granted.  Essentially, this is because I accept the submission of Mr A R Emmett QC for the applicants, referred to above.  Although, as Mr R M Smith of counsel for Freehills submits, there might be an element of efficiency to be achieved if I were to grant the leave in question and interrogatories to varying extents commonly involve an element of cross-examination in advance of the trial (in the present case the witness is not a party), these are not the primary purpose properly served by interrogatories.
Another factor which I take into account is that to a substantial extent at least, the proposed interrogatories go to the credit of the witnesses in question.  It seems to me appropriate that an issue as to credit, in particular, should not generally be the subject of interrogatories and should be dealt with on the hearing. 

I am influenced finally by the general reluctance to grant leave to administer interrogatories unless a clear case for them is made out.  In my view a clear case is not made out by Freehills as to why the ordinary course should not be followed.

In the circumstances, I decline to make the orders sought in the notice of motion filed in Court.

The notice of motion is dismissed and the 54th respondent is to pay the costs of the 1st, 2nd, 3rd, 7th, 8th, 9th and 16th applicants of the motion.

I certify that this and the preceding 5 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated:22 December 1995

Heard:        19 December 1995

Place:        Sydney

Decision:     19 December 1995

Appearances:   Mr A R Emmett QC of counsel instructed by Deacons Graham & James appeared for the 1st, 2nd, 3rd, 7th, 8th, 9th and 16th applicants (respondents on the motion).

Mr R M Smith with Mr L V Gyles of counsel instructed by Norton Smith & Co appeared for the 54th respondent ("Freehills") (applicant on the motion).