Bendigo and Adelaide Bank Ltd v Crown Melbourne Ltd
[2012] VSC 493
•25 October 2012
| IN THE SUPREME COURT OF VICTORIA |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2009 05709
| BENDIGO AND ADELAIDE BANK LTD | Plaintiff |
| – and – | |
| CROWN MELBOURNE LTD | Defendant |
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JUDGE: | MUKHTAR AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 21 August, 13 September 2012 | |
DATE OF JUDGMENT: | 25 October 2012 | |
CASE MAY BE CITED AS: | Bendigo and Adelaide Bank Ltd v Crown Melbourne Ltd | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 493 | |
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PRACTICE AND PROCEDURE ― Interrogatories ― Action for knowing receipt of trust property ― Allegations of objective facts constituting requisite knowledge ― Interrogatories directed generally at corporation’s state of knowledge ― Principle of attribution and aggregation of employees’ and agents’ knowledge to corporation ― Proper approach to interrogation about a company’s knowledge ― Necessity for precision ― Necessity to interrogate about specific facts allegation ― Certain “open ended” interrogatories disallowed and objections upheld ― Leave to re-interrogate
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms W Harris SC with Mr S Goubran | HWL Ebsworth Lawyers |
| For the Defendant | Mr N Hopkins | Minter Ellison |
HIS HONOUR:
“No one need be afraid of interrogatories except the man who draws them.”[1]
[1]Harris QC, Before Trial (1896), p 107
This is an intense dispute between the plaintiff bank and the defendant casino about the sufficiency of the casino’s answers to interrogatories, and the sustainability of the objections taken to the interrogatory. The interrogatories are in essence in essence about the casino’s state of knowledge about a gambler’s socio economic personal circumstances, and the magnitude of her gambling and losses at the Crown casino which is operated by the defendant in Melbourne. Proving the knowledge of the casino is a crucial to the plaintiff because its case is based on what is commonly spoken of in the law as the first limb of Barnes v Addy.[2] That is, putting it basically, the law can make someone accountable who receives trust property from a fraudulent trustee, unless the property was received in good faith without notice of the fraud.
[2](1874) Ch App 244.
In this case an ordinary employee of the plaintiff bank with limited responsibility, one Kate Jamieson, stole over $3.8 million from the bank between 2001 and 2004. She was convicted of that crime and imprisoned. The bank claims that Jamieson gambled and lost most of the stolen funds at the Crown casino. Its second cause of action (the first is under statute and not relevant for present purposes) is for equitable compensation for knowing receipt of the stolen funds. It says the casino knew or should have realised that Jamieson “…was a person of ordinary circumstances and means, and unlikely to have gained access to the sort of funds she expended on gambling…by lawful means”.
In the ordinary case, a challenge to sufficiency of answers to interrogatories would require the Court to do not much more than examine the pleadings and see if the interrogatory is directed to a matter pleaded or is otherwise directed to a denial or non-admission which is said to be unclear.[3] Assuming precise form or plain substance in the question, the task is to then assess whether the answer is responsive and meaningful, or if the objection is sound legally. The Court in the exercise of discretion has to make a judgment whether the interrogatory really will help get to the truth of an allegation or if it will put the other side to unreasonable labour and expense. But, this application was preceded by much argumentative correspondence, and there were additional affidavits from the lawyers mainly argumentative in nature, all directed at justifying or explaining their respective client’s position on the interrogatories and answers. There were substantial written submissions and reference to legal authorities on a 2 day hearing.
[3]ACCC v ANZ Banking Group Ltd [2010] FCA 230, [91]ff
The expense of interrogation and the delay and cost of fights over answers is one reason why the use of interrogatories in modern litigation is frequently put into question. Some are unafraid to say they are totally useless.[4] Whatever may be said, I should say at the outset that the nature of this case is such that interrogation as a tool of justice to discover facts was certainly justifiable ― assuming proper and precise administration. There are some difficult questions in the assessment here, largely because of the nature and the elements of the case as pleaded and the way the interrogatories have been asked, but what has emerged are two points of principle.
[4]See ACCC v ANZ Bank [2010] FCA 230 at [9]
The first concerns interrogation about a corporation’s state of knowledge. Although a company is frequently equated to a natural person, it is a legal device or a fictional entity. It does not have a mind of its own. But the law will attribute knowledge or some cognitive state based upon the knowledge of its officers, employees and agents and on objective facts. The overall question here, as I see it, is whether the bank has properly (i.e., not oppressively) interrogated to gain admissions according to pleaded facts or whether it has used interrogation as a form of general inquisition to find out what the casino knew through its gaming house workforce. The interrogatories here have not been drafted by reference to certain staff or other personnel at the casino who were told things by Jamieson or saw things about her or were otherwise exposed to objective facts to put them on notice that something might not be right about her big spending.
The second related point of principle is whether the person swearing the answers can be expected to fairly admit a company’s knowledge when the interrogatory does not identify the company employee or agent said to have the knowledge, and which in turn involves a legal adjudication whether that received or observed knowledge by any employee can be imputed or attributed to the corporation as a matter of law. Not everything said or observed by a staff member or other employee can be brought home to a corporation so as to constitute the company’s knowledge.
The starting and the governing point is the pleadings.
The pleadings
I will not make copious reference to the pleadings. It is clear that the statement of claim has been drafted with a careful eye to the content or expression of the law concerning knowledge in the context of knowing receipt cases: see paragraph 9 of the statement of claim. The categories of knowledge, which can be actual or constructive, are usually referred to in legal discourse as the Baden categories.[5] The High Court in Farah Constructions v Say‑Dee Pty Ltd [6] has affirmed the first four of those categories. In this case, the plaintiff pleads explicitly in paragraph 9 of its statement of claim the second, third and fourth categories of Baden to allege this:
(b)In receiving the stolen funds and any of them from Jamieson as or for or by way of on account of wagers or bets … Crown thereby knowingly received or dealt in trust property because:
(i)it wilfully shut its eyes to the obvious fact that Jamieson had stolen all or most of the monies wagered or bet by her at the casino during the period between about July 2001 and May 2004 [the second category of Baden];
(ii)further or alternatively, it wilfully and recklessly failed to make such enquiries as an honest and reasonable person would make as to the source of the funds wagered or bet by Jamieson at the casino…; [the third category of Baden];
(iii)further or alternatively, it had knowledge of circumstances which would have indicated to an honest and reasonable person that Jamieson had stolen all or most of the monies wagered or bet by her at the casino… [The fourth category in Baden].
[5]See Baden v Societe Generale etc [1993] 1 WLR 509.
[6](2007) 230 CLR 89, 163.
The knowledge to which the law looks can be conceptualised in various ways. The authors of the work On Equity say compendiously: “In other words, all that is necessary is that the known facts would have communicated to a reasonable person a general understanding that fraud, breach of trust or fiduciary duty had occurred.”[7] In Say‑Dee it was this statement by the majority: “… The morally obtuse cannot escape by failure to recognise an impropriety that would have been apparent to an ordinary person applying the standards of such persons.”[8]
[7]Young, Croft and Smith, On Equity at 459.
[8]At 164.
To the plaintiff’s allegation of knowledge, the defendant pleads only this: “It denies that it knowingly received from Jamieson or dealt in any trust property during the Relevant Period or at all.” That denial, which is not improper or evasive as a matter of pleading is saying to the bank more than “You allege it … you prove it”. It is saying positively “I did not have the knowledge that you seek to attribute to me.”
The problem with paragraph 9 of the statement of claim, patently, is that it pleads a legal conclusion or it makes a legal submission, rather than stating material facts. The casino could not do much more than state a denial. But it demonstrates why material facts ought be pleaded as principal facts in order to elicit a direct response in pleading and, in turn, an interrogatory can be administered to gain an admission on that specific allegation. The body of facts that are alleged to constitute knowledge are to be found in the particulars under paragraph 9 and in a separate body of further particulars in private letter form. This is sometimes done for ease of amendment and enlargement where a litigant is not so sure of its facts.
The particulars, which it may be supposed have come from information received from Jamieson, are widespread but all tend to portray objective facts along the following lines:
(a)she gambled frequently and substantially at the casino in a “VIP”room area, gambling to a high point of $857 956 in 2003 and typically taking $20 000 to $30 000 in cash to spend on gambling ;
(b)she was by invitation of the casino a “Crown Casino VIP Slots Member”;
(c)she was given privileges, all sorts of largesse, and access to the exclusivity of the “Mahogany Room” which is available only to the select few or those with high volume or high value gambling means;
(d)she was a person of ordinary circumstances and means, and not the sort of person to have that sort of money living a life of a lavish gambler;
(e)she was known personally to the VIP Room attendants and duty managers who were told by her that she worked at a bank and that her husband was a fitter at the Ford factory.
Thus it is not a case where facts are uniquely in the possession of a defendant. But I will reject the casino’s indignant submission that the bank was engaged in the improper purpose of making bare allegations and interrogating the casino about facts that ought to be ascertainable from Jamieson. The bank can call Jamieson as a witness, and she may give evidence of the objective facts said to constitute actual or constructive knowledge. She may be reliable. But by the office of interrogation, properly administered, the bank is entitled to obtain by precise interrogation an admission that the casino knew of the alleged objective facts and from there contend at trial ultimately that knowledge of those objective facts attracts legal liability.
The question is whether the bank has gone about it the right way, for interrogation requires rigorous precision if they are to be fair and useful. They are not an inquisition of an adversary, but that is frequently the attempt ― why not ask and see if you get an answer? Interrogatories must be directed to a matter pleaded in the statement of claim including particulars. They cannot be oppressive which means unfair or unreasonable “…in the sense that a good deal too much is expected of the party questioned…”or that the question is so vague or ambiguous that it would be embarrassing and unfair to expect the party questioned to make assumptions about its meaning” or to read between the lines: see Aspar Autobarn Cooperative Society v Dovala [9] and generally ACCC v ANZ.[10]
[9](1987) 16 FCR 284, 287-8
[10][2010] FCA 230
The point of principle which dominated submissions was this: what are the limits to a corporation being asked about corporate knowledge? The objections taken were largely on the basis that the interrogatory about knowledge (the crucial issue) was, put in an intolerably open ended way which required the person answering to enquire who within its organisation might have been told something by Jamieson or seen something concerning her activities, and then form a legal opinion about attribution and aggregation of people’s knowledge to the company. The casino contended that properly and fairly administered, the bank should interrogate by putting an alleged fact and asking whether the casino knew or believed such a fact. In that regard if there were conversations or events between Jamieson and a Crown employee, the bank should put precisely that to the casino for an admission rather than requiring the casino, for itself, to find out at large who knew what within its organisation 11 years ago about this one gambler amongst the multitudes at the casino, and then have to form a legal opinion whether the knowledge of particular staff or employees could be attributed to the corporation so as to amount to knowledge by the corporation.
Attribution and aggregation
Much reference was made to case law. The question of attribution and aggregation of knowledge arose in K & S Corporation Limited v Sportingbet Australia.[11] In that case a gambler stole millions from his employer and gambled it on horse racing. The victims of the theft, the employer, successfully sued the bookmaker because it was found to have the required level of knowledge to constitute it a constructive trustee of the disputed monies as it wilfully and recklessly failed to make the enquiries an honest and reasonable man would have made. In Sportingbet, the bookmaker submitted that the only knowledge to be attributed to it are matters known to those representing the directing mind and will of the company. Avoiding details, some of the administrative staff in that case had knowledge of certain relevant facts but, so it was held, their knowledge could only be attributed to the company if they were relevantly the directing mind and will of the company, or if they were agents of the company in relation to the information gained. Then, the question was whether information known by some of the staff could be aggregated with information known by a controlling mind of the company and then attributed to the company.
[11][2003] SASC 96.
Sportingbet held that if a number of people were part of the directing mind and will of the company, then the knowledge could be aggregated and attributed to the company. Aggregation can especially occur if one person in the company knows one piece of information and is under a duty to ascertain the other piece of information known by another officer of the company. But the law looks to those that can be regarded as the directing mind of the company. Besanko J said this:
I do not think that I should find that something is known to a company when part of the information is not known to anyone forming part of the directing mind and will of the company and is known only to an agent who was under no duty to communicate the information to those persons forming part of the directing mind and will. One might criticise the company for not having a proper system in place, but that is a different issue from knowledge.[12]
[12]At [110].
The issue of aggregation also arose in the major Western Australian litigation of Westpac Banking Corporation v The Bell Group Ltd (No 3).[13] I shall not refer to the facts. It is sufficient to say, for present purposes, the case affirms a number of principles. First, where the requisite knowledge is not held by a single person representing the directing mind and will of a company, the law might aggregate the knowledge of a number of persons to determine the knowledge of the company. But, it will depend on the type of information and the significance of that information as well as the employee’s position, duties, responsibilities and proximity to the relevant transaction. Secondly, it is also possible to aggregate knowledge even where the personnel in question cannot be said to be the guiding mind of the company. That is, a company’s state of mind can be discovered or determined by aggregating the knowledge of subordinate personnel. Thirdly, the case dispels I think the proposition that aggregation can or should only occur if various employees or officers of the company had a duty to communicate what each of them knew to each other or to some person in a position of superiority. These principles demonstrate, so the casino said, the factual investigation and then the legal cogitation it would have to go through in order to deal with the behest of an interrogatory which asked in an open ended way about its knowledge.
[13][2012] WASCA 157.
The third case to which I was referred was the decision of Gillard J in Langley v The Age Company Limited.[14] Much argument took place on this case. The bank said it was capable of direct application here, and that I was bound by it. The casino said it was confined to its peculiar facts, and there was a better view in New South Wales authority on the general question.
[14][2001] VSC 370.
Langley was a defamation case and, it is apparent, was strongly influenced by pleading practice and procedure in that special field. The plaintiff sued The Age newspaper over a feature article written by a named Church Minister and another article written by a named staff journalist. The newspaper pleaded a defence of fair comment and qualified privilege. The plaintiff replied with an allegation of actual malice, meaning that the newspaper published the articles without an honest belief in the truth of the imputations in a publication or careless whether the imputations were true or false. That was the “state of knowledge” in issue. The plaintiff interrogated to ascertain the publisher’s state of mind or knowledge or belief at the time of publication. The publisher objected on the ground that, as a corporation, it was without a mind.
Gillard J rejected the argument that it was not permissible to direct an interrogatory to ascertain the mind of a corporation.[15] That much is unremarkable. Of course a corporation does not have a mind, but it acts organically through its employees and agents and, so his Honour held, the state of mind, knowledge and belief of certain employees and agents constitutes the mind of the corporation for the purposes of the enquiry at hand. (That assumes attribution.) All of that is commensurate with the specific obligation under the rules of Court for a corporate litigant, by its proper officer, to respond to an interrogatory based on knowledge, information and belief after having made all due and proper enquiries of its employees and agents both past and present.[16]
[15]At [74].
[16]See rule 30.05.
But something was agitated in Langley that I think gets close to the problem in this case. The newspaper publisher put the argument that the interrogatory should have been directed to the state of knowledge not of the corporation but of a particular or relevant employee or agent that was responsible for the publication. Then, the answer or the admission about what a particular person knew could then be placed before the trial Court as part of the evidence from which a Court could determine the state of knowledge to be attributed to the corporation.
Support for that being the proper technique of interrogation exists in New South Wales authority. Street J in Tooth & Co Limited v Lanecove Municipal Council[17] held that interrogatories directed to ascertaining mental processes of a corporation ought not be allowed. His Honour said that inferences to be drawn and conclusions reached upon a corporation’s state of mind such as purpose or intention or knowledge are drawn and reached as a result of evidence of objective facts. It would be permissible, his Honour held, for the interrogatories to be directed for example to the state of mind of the directors involved in a particular transaction.
[17](1968) 2 NSWLR 17, 19.
McLelland J in Kelly v Raymor(Illawarra) Pty Ltd[18] adopted the same attitude, saying (with my emphasis):
… interrogatories could not be directed to a corporation in terms requiring as to the state of mind of the corporation because a corporation does not have a mind which can be investigated, notwithstanding that, by a legal fiction, attitudes of mind can be imputed to it. So much may be accepted, but it does not follow that an interrogatory may not be directed to a corporation in terms inquiring as to the actual state of mind of individuals, such as directors when they participated in a corporate act such as the adoption of a resolution, where the state of mind of those individuals is relevant to the validity of the corporate act, in proceedings where the validity of the corporate act is in issue and the state of mind of the individuals concerned is relevant to that issue.
[18](1981) NSWLR 720.
This approach, described as compelling, was adopted by Patten AJ in O’Brien v Little.[19]
[19][2007] NSWSC 64.
The point, according to these New South Wales authorities is that it will be naturally problematic asking, at large or in an open ended way, a corporation about its mental state or its state of knowledge. A case against a corporation about its knowledge has to be based on the knowledge of its employees or agents who were involved in the transaction or dealing or the state of affairs in question. It follows that the interrogatories ought be directed to gaining admissions from the company about the words and the conduct of those employees and agents as were involved or instrumental in the events as alleged. To that end, the corporation would be bound to make all enquiries of those employees or agents, be they existing or past, and for the corporation to state its knowledge or belief about the matter of which the enquiry is made. That then leaves the legal issue of attribution for argument at trial.
I regard all that as being sound in principle. It has the attraction of precision and reasonableness, and therefore the productive use of interrogatories. A corporation can only act and have knowledge according to the individuals acting on its behalf, and presumably the case of the interrogating party as pleaded would have to identify words and actions by individuals on behalf of the corporation that are alleged to have attracted legal liability of the corporation. Thus to ask for example “What did the casino know about Jamieson’s employment?” is not putting a pleaded allegation to elicit an admission. It puts the question of knowledge at large and thus requires enquiries and surveys of all employees past and present, and then judgments to be made whether that knowledge can be attributed to the company. If the interrogatory was put according to the pleaded allegation so as to ask in substance “Do you admit that Jamieson told X the manager (or someone having the designation of Y) that she was working for the bank?” then the interrogated party has a source to whom enquiries can be made. If the answer is yes, then the question for legal submission at trial is whether that admitted knowledge is to be attributed to the corporation and, in turn, to make a basis for attracting Barnes v Addy liability. So done, it serves the purpose of narrowing the issues for trial and saving the expense and inconvenience of proving facts.
Gillard J seems to have rejected the view of Street J in the Tooth case by saying that it overlooks the obligation upon the deponent to answer the interrogatory based on belief, after making all due and proper enquiries.[20] (I take leave to say respectfully that I doubt if such an elementary matter could be overlooked.) In doing so Gillard J acknowledged that Beach J in Flegeltaub v Telstra Super Pty Ltd[21] adhered to the approach of Street J in Tooth. Gillard J reasoned (with my emphasis):
The issue of the state of mind, knowledge and belief of The Age, at the date of publication of both articles, is relevant to the issues raised in the case. The Age, as publisher, is a corporation and has no mind of its own. On the other hand, as the authorities well establish, the knowledge, information and belief of certain relevant employees and agents can be attributed to the corporation. … The Age published the alleged defamatory articles, some employee or agents, or employees or agents, were responsible for that publication, and, in my opinion, the persons so responsible constitute, at the relevant time, the corporation. In my opinion, the authorised officer, who is obliged to make all due and proper enquiries of the employees and agents, is required to form some belief, with respect to the information obtained, and to answer in accordance with his knowledge and belief. His knowledge and belief is the knowledge and belief of the corporation.[22]
[20]At [82].
[21][1998] VSC 144
[22]At [86]
The result in Langley might be thought to support the general view that an interrogatory can be directed to a corporation without referring to the particular involved employee. But I am not at all sure it does, for Gillard J made this pronouncement which I view as a statement of what the case truly stands for (with my emphasis)
In my opinion, it is open to direct a question to the corporation, seeking to ascertain the mind of the relevant employee and/or agent. … What the general proposition of Street J [in Tooth] overlooks is the obligation upon the deponent to answer the interrogatory [is] based on belief, after making all due and proper enquiries.[23]
[23]At 82.
I think the New South Wales authorities and Langley are reconcilable. First, as Mr Hopkins submitted, Langley must be carefully understood according to the particular factual composition of the case. That is, by its very nature, the plaintiff in Langley was naming and alleging that two articles written by two named authors and published by newspaper had defamed him. The “relevant employee and/or agent” is known. It was not a case where the corporation would have to conduct an internal investigation of who said what, and who knew what. In effect, an interrogatory administered about the corporation’s knowledge in those confined circumstances is the same as interrogating a corporation about the knowledge of named individuals, the authors. Secondly, and accordingly, I do not regard Langley as standing for a general proposition that in any litigation a corporation can be interrogated in an open ended way about its state of knowledge about an event or state of affairs. I think Langley stands or is a demonstration of the elementary proposition that for the purposes of interrogation about knowledge a corporation cannot wriggle out of its obligation to answer by saying it does not have a mind. It must make enquiries of its relevant employees or agent which in Langley were known and named because their identity as authors of the articles was innate to the defamation case.
I think too much was made of Langley by the bank. It does not give the solution to this dispute. It has to be understood by reference to the elements of its cause of action. It does not stand for the general proposition that a company can be interrogated about knowledge or state of mind without reference to the relevant employees and agents. There may be a case where the legal elements make that proper or not problematic; for example, where the identity and enquiries of the known relevant employees are directed by the naming of people in the case itself. Otherwise, it is not proper, and it can be productive of problems and oppression to interrogate a company about its knowledge of something at large. It all depends on the fabric of the case. The guiding principle is no more sophisticated than saying that the object of interrogatories is to gain admissions on facts as pleaded. In this case, the plaintiff has squarely alleged in a body of particulars, the objective facts which it will contend at trial ought to have put it on enquiry that Jamieson was gambling with stolen money. The permissible extent of interrogation will depend on the extent of the pleading. Otherwise, interrogation is being used improperly to see if a case can be made.
Finally, on another point of principle, it was submitted by the bank that it was necessary to ask open ended questions in interrogation and that should therefore include open ended questions about a company’s knowledge without any greater specificity. Reliance was placed on the decision of Sholl J in Dunbar v Perc.[24] The objection in that case was that an interrogatory amounted to cross examination. It was held that “The test of propriety of such questions in an interrogatory is whether the defendant could be asked them on examination-in-chief if called as the plaintiff’ witness at trial”.[25] But, I think that case has no application. It was a case about form. Of course a question will not be in the nature of cross examination if it is asked in the form of a question in chief. The case does not inform the question whether it is allowable to interrogate a corporation with an “in chief” form about its knowledge without reference to the relevant employees and agents whose knowledge will be said to be attributable to the corporation. Nor does not mean that a question which could be asked in chief is therefore allowable as an interrogatory.
[24][1956] VLR 583.
[25]At 590
With those principles, I turn now to the interrogatories in dispute. They are dated 11 November 2011. The answers to interrogatories were sworn on 6 February 2012 on behalf of the casino by Jacobus Cornelis Troost. He is described as its legal counsel. It is curious, I think, that the in house legal counsel for the casino, and not someone in management or administration has been chosen to swear answers on what might be called “operational” matters. But he swears in the preamble to his answers that he made all due and proper enquiries of the defendant’s servants and agents who may be in a position to provide information, and the information provided is the result of those enquiries. That is the language that rule 30.05 requires a party to give as the source for any answers to interrogatories.
Interrogatory 2
This interrogatory is dependant on interrogatory 1 which asks: “Did Ms Jamieson gamble and lose any money in the VIP slots room of the Defendant during the relevant period?” The VIP slots room was defined. It is not just a singular room but included a place at the Crown casino where the VIP slots gambling was available. The relevant period is defined to be between July 2001 and May 2004. To this, Troost answers that based upon the casino’s records (which immediately arouses or confirms the natural expectation that records of gambling on this heavily regulated industry are kept), Jamieson “gambled and lost money in the VIP slots room …after she became a member of Crown’s VIP Slots Club (19 February 2002), until May 2004…”. So the answer can be taken to be yes. There is no difficulty expressed in recognising the correlative phenomena of money gambled and money lost.
Interrogatory 2 asks: “If yes to Interrogatory 1, how much, to the knowledge of the Defendant, did she gamble and lose during the relevant period?” that is, in the VIP slots room. Knowledge was defined, inadvisably I think, to mean actual knowledge and constructive knowledge of the Baden species. But, the substance of the question is, to my mind, plain. Objection is taken on the ground first that it seeks an opinion. It certainly does not. It is directed to a fact. Secondly, Troost objects on the ground of the expanded, and legislative style definition of “knowledge” in the interrogatories. That is technically correct, but he can conscientiously ignore the inapplicable reference to constructive knowledge and attend to the question according to actual knowledge. Then he says the question fails to identify whether it is “directed to monetary amounts gambled and lost, frequency of gambling and losses or some other matter.” The meaning of that is not at all clear. He already answered that Jamieson “gambled and lost” at the Casino slots room .
Then under cover of that objection, Troost says three things. He is “unable to say” how much money Jamieson gambled. But according to the Casino’s records, he says total losses of $1 508 545 were recorded in respect of gambling undertaken in connection with…” a Crown Club card and VIP Slots Club members card registered to Jamieson in the relevant period. He says he is otherwise unable to say how much money she lost in the relevant period.
The question asks simply “How much did Jamieson gamble and lose in the VIP slots room?” It seems to have been construed, erroneously I would say, as including gambling in the casino generally. What the interrogatory conveys, I would think in an ordinary way to any reader, is how much did she bet and lose in the VIP room? Troost can say with precision what she lost using the card, but is unable to say what she gambled using the card. He says he has made all due and proper enquiries.
What is troubling, I think, is that the objection taken by Troost may be informing why he is unable to say; and it does not seem to concern the ascertainability of the information. His objection seems to be directed to an asserted imprecision or debate to be had about the meaning of “gambling”. Yet, the interrogatory is asking about matters which one would think would be known by a party in the business of running a casino, especially where the gambling in this case occurred in the “VIP slots room” for which it appears the casino has records of gambling losses according to data on a card. One would think the same card would have data on amounts gambled. If it does not, then let Troost say so.
Perhaps the interrogatory could have been more precise to an exacting mind, but I think the substance is clear enough and it deserved a more conscientious and, if needs be, an explicative answer. The casino is being asked “How much did she gamble in the VIP slots club?” I do not accept the submission that the pleading is confined to the amount of money that Jamieson “lost” and not to her gambling “turnover”. Nor do I accept the submission that the pleading or the particulars does not permit the defendant to know who it should question. I think the amount of her gambling is reasonably and incidentally linked, or gives meaning to, the amount lost which will naturally be a major forensic fact to the case to be made. If the casino can say how much she lost then it ought be able to say how much she gambled or at least form a belief or better explain why it does not know or cannot form a belief how much Jamieson gambled, and what it is about the phenomenon of “gambling “that requires greater precision before it can give an answer. A diligent answer in my view should state what enquiries have been made and, if it be the case, why those enquiries do not enable the deponent to form a belief on such an ordinary matter, that is, ordinary for the business of a casino operator.
In the end, the Court is asking the defendant to do no more than to demonstrate a willingness to answer a question in a helpful way that will lend credence to a particular objection: Aspar Autobarn Cooperative Society v Dovala Pty Ltd.[26] Answers should include some statement that the person swearing the answers has applied his mind to the duty and has attempted to discharge it: see Stanfield Properties Ltd v National Westminister Bank.[27]
[26](1987) 74 ALR 500.
[27][1983] 2 All ER 249, 251
I would order a further and better answer to interrogatory 2.
Interrogatory 4
This interrogatory which is under the heading “The knowledge of the Defendant” is the most significant for legal purposes. It attracts the matters of legal principle I have considered. The problem again is with the definition of knowledge in the interrogatories. Of course, to be interrogated about “constructive knowledge” is impermissible because it is a legal conclusion. This could have been met by an objection to answering anything beyond actual knowledge.
The substantive objection by Troost is that the interrogatory requires the expression of a legal opinion; is unclear vague or too wide and enquires into “…the Defendant’s knowledge, which raises various legal issues, including aggregation of knowledge”. That is, if a corporation’s knowledge depends on which company employee knew or saw things, then it was a controversial legal question whether that could be, when aggregated, then attributed to the company so as to constitute the company’s knowledge.
To characterise that last step as a legal conclusion is right. But what it does is to expose not so much a problem with the object of the interrogatory, but the way it has been put. And that is where submissions were directed, because it is the real issue. The real question became one of oppression or width, and raised the Langley type point about asking an open ended question about corporate knowledge. Put simply, the casino submitted it was improper in this type of case to be interrogated in effect by being asked “Tell me what you knew about subject X; and in telling me that, you are expected to make all enquiries of employees and agents past and present”. The interrogator should put, it was submitted, a specific fact based on an alleged fact in the pleading. To embark on a general inquisition was fishing as well as unfair. The riposte was that Langley vindicated the bank’s approach.
I think the casino’s objection is reasonable as it is principled. Interrogation is a concomitant of pleadings. Its purpose is to seek admissions on alleged facts. The problem with this interrogatory as I see it, concerns the issue in Tooth and Langley. That is, the casino is being asked in an open ended way what it knew about various matters. It does not put the objective alleged facts to the interrogated party and ask, in one form or another, directly, with a view to obtaining an admission whether the defendant knew or had a belief about a specific objective fact. In my view, given the nature and elements of the case, the proper administration of interrogatories in this case required the plaintiff to extract from or within the pleadings, the objective facts (whether they be conversations or events which it contends brought knowledge home to the casino) and to then interrogate the casino to obtain admissions on those facts. So done, it would overcome any problem with attribution and aggregation as I have already discussed. Questions can be asked on the facts thus leaving the ultimate legal determination whether knowledge of certain facts by certain employees (as alleged by the plaintiff) can then be attributed to the defendant.
Thus the problem to my mind is not that Troost is being asked to give a legal opinion. The problem is related to one of width and oppression. I see he has not put it precisely in those terms in his answer, but on proper analysis his objection necessarily requires the question of oppression and width to be considered. That is, the interrogatory ought to put precise facts and seek an admission rather than employ the technique of requiring the defendant in some inquisitorial way to make enquiries of staff in 2001 to 2004 not about some specific event or circumstances or conversation but generally about “knowledge”. I have said enough already in my dissertation on the cases to conclude that whilst it may not be a hard and fast rule in all cases, the approach in Tooth is sound in principle and apposite to this case. Langley does not stand definitively for a different approach.
The problem here, I am afraid to say, is the imprecise and open ended way in which the interrogatory is cast. The Court is not here to re‑draft or settle answers but the course that I think is faithful to principle is to interrogate by eliciting from the defendant whether it knew or believed a certain specific fact as alleged, which the plaintiff would say goes to make up its case that the defendant had knowingly received trust monies. To ask a litigant “Tell me what you a corporation knew about this?” in this type of case is I think problematic. What must be kept steadily in mind is that the office of interrogatories is to seek admissions on facts.
The legal solution as I see it is to permit the plaintiff to re‑interrogate afresh on the question of knowledge as pleaded. For that purpose, I would rule that, generally, any interrogation about constructive knowledge is inadmissible as is a question which unavoidably requires a legal opinion about attribution and aggregation. But, the casino can be asked to admit facts about what particular employees knew or saw or were told. To require that is to do no more than require a litigant who has conceived of a case and solemnly alleged it in Court proceedings (presumably with an evidentiary foundation) to put the facts of its case to the casino to seek an admission. If the defendant is asked about such a matter, then it is no answer in my view to raise the objection that it involves a legal opinion. If the interrogatory is precise enough and identifies in some reasonable way the employees or staff members, it then will be something about which the Casino, acting diligently, must form a belief or state its knowledge after making all enquiries of its employees and agents. If despite that, there is an oppression point to be taken, that is a different matter. But Troost will have to state, explicatively, why it would be oppressive to make enquiries of employees and agents or why it is he cannot form a belief.
Thus, I think that the objection, although it ended up taking a different complexion in argument, is sound. But there is no doubt the subject matter is propitious for interrogation and I would give leave to re-interrogate on this issue, should the plaintiff seek to do so.
Interrogatory 5
I think this comes to be dealt with collaterally in my decision concerning interrogatory 4 on which this interrogatory is dependent. Moreover, this interrogatory demonstrates the problem with the bank’s approach. It will not put facts to the casino. It asks an open ended question and then asks the casino to tell the bank its factual basis for its knowledge and to identify by designation the employees from whom enquiries were made.
Accordingly I would disallow this interrogatory. It may be a matter for re‑interrogation. The defendant can be asked whether it knew or believed something in particular, in the way I have already considered, by asking it to admit that something was said or something occurred (and from that fact to ultimately contend something was therefore known to it). But if the defendant is to be asked if it knew something, and then the answer is given that it did; then to my mind the purpose of interrogation has been satisfied. To go further and ask “How did you know that?” or “Who told you that?” I think goes beyond what is necessary. Once there is an admission about a certain fact, then the purpose of interrogation is fulfilled.
Interrogatory 7 (c) and (d)
This interrogatory is based upon interrogatory 6 which asks “Did the defendant offer Ms Jamieson membership of its VIP slots program?” The answer corrects an inaccuracy in the question and goes on to say positively:
The Defendant does not, and did not in the relevant period, operate a ‘VIP clots program’.
The Defendant did, during the relevant period, operate a club for VIP slots patrons in its casino called ‘VIP Slots Club’. Ms Jamieson was offered membership of the Defendant’s VIP Slots Club.
Interrogatory 7(c), which is predicated on that answer, asks in substance for details of the matters that qualified Ms Jamieson for membership of the VIP Slots Club. Troost answers not knowing what was actually taken into account in giving Jamieson membership, but refers to the casino’s usual practice. His answer in my view is certainly responsive but I think, as was submitted by the bank, it is incomplete in a material respect. He swears that a person who attained a “certain level of turnover” was offered membership of the club. If nothing else, this answer shows the casino has some knowledge of gambling turnover, which may be pertinent to interrogatory 2.
It is plain on the pleadings that a significant forensic fact integral to the plaintiff’s case is the magnitude of Jamieson’s gambling and her losses. The level of turnover that qualified Jamieson for membership is therefore irrelevant. Whether that is enough to attract recipient liability at law is another question. No good reason has been advanced why such information should not be disclosed in this answer. It is apparent from the answer itself there was a level of turnover which was a relevant consideration to qualify Jamieson for membership of the VIP Slots Club. I would order a better answer to Interrogatory 7(c); that is a complete answer that states the magnitude of the “certain level of turnover”.
Troost’s answer to Interrogatory 7(d) repeats his answers to 7(c) and 25(c)(ii). That latter answer says that the casino did not require any provision of information concerning Jamieson’s “personal circumstances”. That is a sufficient answer. However, the incompleteness in his answer to 7(c) also affects the answer to 7(d). There is no need to order a further answer here as the further answer to 7(c) ought by reference give a better answer to this interrogatory.
Interrogatory 12(b) & (c)
These related interrogatories concern the question of whether the casino promoted Jamieson to a higher level of membership of the VIP Slots Club. Troost has used the same verbiage in his answer to this interrogatory as was used in answer to interrogatory 7. He says that, as a matter of usual practice, a person was offered membership of a higher level of the VIP Slots Club where “… a certain level of turnover was recorded on the card associated with their membership within a six month period … “.
This answer is responsive but, for the same reasons that affects interrogatory 7(c), the answer is not complete in a material way because it ought state the “certain level of turnover” that was achieved by Jamieson within a six month period. As I have said, that is in my view a relevant forensic fact. I would therefore order a better answer here, one which reveals the magnitude or any other measure of the “certain level of turnover”. That would also result in a better answer to interrogatory 12(c).
Interrogatory 17(b)
This interrogatory comes under the heading of “Defendant’s employees in the VIP Slots Program”. The casino admits there was a VIP slots club. The casino’s answer to interrogatory 17(a) is rather informative in giving, by designation, a description of the managers of the VIP Slots Club and their line of reporting. Interrogatory 17(b) asks for the name, position and role of any employee who worked as gaming staff in the VIP Slots Club area during the relevant period. The interrogatory is then refined by reference to the dates upon which Jamieson used her VIP card. That usage is recorded in a substantial computerised document attached to the interrogatories identified as a “Player Trip Report.”
The casino objects to stating the name of any employee, but I need not rule on the validity of that objection as the bank no longer seeks names. It will confine itself to the position and role of any employee who worked as gaming staff. This is obviously directed to the general forensic question about the calibre of employees or their responsibility which will ultimately inform any possible question of attribution of knowledge gained by any of those staff about Jamieson and her activities. The objection is that the interrogatory is oppressive and/or too wide. The deponent does not say why or in what way the interrogatories are oppressive. Seeing as the relevant period was between July 2001 and May 2004, I can only suppose the objection is that the question would require the casino to go back and make laborious enquiries about who was working in the slots room eight to eleven years ago. It would be said, I suppose, that it would be all the more laborious if such an enquiry had to be made by reference to the days upon which Jamieson was using her VIP membership card.
Certainly, to have to ascertain the names of the gaming staff could be oppressive. It is another example where a more productive interrogatory could have been fashioned to seek an admission according to an asserted fact by the bank about the position and apparent designations and responsibility of people who worked as gaming staff in the VIP room rather than asking interrogatories in an inquisitorial way. But, in my assessment of this interrogatory, it is asking for a description of the responsibility to those who worked in the gaming room. This all goes forensically to attribution. It is looking to obtain an admission about the level of staff in the corporate hierarchy. Were they purely there fulfilling the role of hospitality and being the good hosts or was it something more? Were they there to in some way observe or make discerning judgements about the sort of gamblers that were in the room in such a way as to arouse the curiosity and possibly managerial consideration, about the gambler’s means and ability to be gambling for such substantial amounts in the VIP area? It may be that evidence of such matters may of itself be nowhere near enough to attract recipient liability. But in my judgment the enquiry is forensically relevant (really for both parties and not just the bank) and I see there being no true oppression if the casino has to give a description of the role and responsibilities of the people who worked as gaming staff.
Annexure A to the interrogatories looks menacing but on a close examination it is not. No‑one is asking for names of the staff who were doing their shift on the multitude of dates in that annexure. It will suffice in my view for the casino to give a general but nonetheless informative answer describing the staffing arrangements. That is the substance of the interrogatory and I would disallow the objection and order an answer; that is, without the necessity to name the staff.
Interrogatory 18
This interrogatory refers to a two page document discovered by the casino entitled “CROWN SOUTHBANK … Patron Comments Report”. This document was discovered by the casino. Needless to say, it is permissible to administer an interrogatory about the contents of a document that seeks to obtain information that is either not available from discovery, or is necessary to give full meaning to documents so obtained: see generally Simpson Bailey and Evans, Discovery and interrogatories.[28] The interrogatory asks the casino to describe the positions and responsibilities of various persons identified in that document. Troost was willing by reference to each of the names that appear on that document to state the employment designation of each of those names and put a specific date in which they so acted. What he has failed to do, without any apparent reason, is to give some description of the responsibility that came with that designation. Having gone as far as he has in a responsive way, in my judgment a complete answer would have given some description of what the responsibilities were that attached to the designation. It would not require very much one would think for him to have explained the responsibilities of the “Crown Club attendant” or the “customer service adviser” or the “guest service host”. There are other designations but it is apparent I think, as yet another forensic fact which could work in favour of either party, that what matters for the purposes of recipient liability, is an understanding by the Court of the staffing in the VIP slots room.
[28]Second edition (Butterworths 1990) at p. 167-8.
It is not apparent to me that there would be any oppression in ascertaining from management the role and responsibility that was given to the gaming staff who worked in that area in the relevant period. I would order a further answer to interrogatory 18 requiring the casino to give a description of the responsibilities of the job designations it has already given in its answer.
Interrogatory 21
This interrogatory seizes upon the names of the staff in Annexure C and asks in essence whether they had any knowledge of various matters. Interrogatory 22 asks for the usual details of that knowledge.
I think this interrogatory is problematic for the same reason as I have identified, as a matter of principle, in interrogatory 4. Superficially, it may be said to have the attraction of at least specifying names but even then, they are names that have come from a discovered document rather than emanating from any allegation in the statement of claim. Yet curiously the objection taken is based upon the defined meaning of knowledge, that is, that it is impermissible to ask about constructive knowledge. As I have already said, that objection is partially sound but the casino should have conscientiously approached these answers by confining themselves at least to actual knowledge.
I am afraid this is another example where the objection is not clear, yet this application was argued in a way that had to give elaboration to that objection. As it stands, the objection is that the interrogatory requires the expression of an opinion, or is unclear, vague and too wide. That seems to be “based upon” the defined meaning of knowledge. But confining it to actual knowledge, I do not think it requires the expression of an opinion at all. The problem in a broad sense is the width of the interrogatory and, I would have to add, it is interrogating about the contents of a document to see if it can find some possible evidence to support its case, and even then, in an open ended way. The bank is not really asking the casino, through the idiom of this document, to admit some alleged fact. It is really asking “I have seen some names on one of your internal documents. What did they know about Jamieson’s gambling and her personal circumstances?” To my mind, that is an inquisitorial use of interrogation, and it is improper in that it does not put one way or another an alleged fact and seek to elicit and admission. It is another way of saying “Ask you staff of eight to twelve years ago what they knew about me and my gambling”.
Again, applying the principles at the outset of this judgment, I think that despite the limited objection, having heard argument on a wider objection, I would not allow this interrogatory. I would have resort to my earlier remarks concerning interrogatory 4 and rule that the proper use of interrogation in a case of this nature is not inquisitorial or cross‑examination. It is to put alleged facts, or forensically connected facts, to the casino to elicit an admission. I would rule that open-ended questions asking for a general revelation of knowledge are overreaching.
Interrogatory 27
This interrogatory asks:
Did the Defendant organise its employees engaged in connection with the VIP slots program and VIP slots room in such a way that specific employees of the Defendant, or employees with specific positions or job descriptions, were responsible for or assisted in managing the Defendant’s relationship with its members of the VIP slots program?
Reduced to its essentials, the question asks if there was a casino employee responsible for managing relationships with members of the VIP Slots Club. The object of the question is plain enough. It is part of the forensic fabric of the case to attempt to show the casino’s exposure, through its employees, to the objective facts said to constitute actual or constructive knowledge of the objective facts which, the bank will contend, attract legal liability.
Troost answers:
In relation to the Defendant’s VIP Slots Club, yes, the Defendant employed persons whose position required them to manage the Defendant’s relationship with members of its VIP Slots Club. The Defendant did not, however, employee any person or persons to manage its relationship with individual or designated members of its VIP Slots Club.
I have read and re-read this answer. I think it responds to the interrogatory. The answer is yes. But it goes on to say, plainly I think, that there was not a person who could be said to be dedicated to managing the relationship with any particular member of the VIP Slots Club. In other words, there was not a person who was assigned, as it were, to look after Jamieson in the VIP slots program like a personal attendant. I regard this answer as responsive and complete.
As the answer is yes to interrogatory 27, interrogatory 28 asks:
What was the name or position of the employee of the Defendant whose responsibilities included responsibility for or assisting in managing the Defendant’s relationship with Ms Jamieson during the relevant period? [The persons identified in answer to this interrogatory are hereafter referred to as the “Host” or “Relationship Officer”]
To that, Troost answers: “The Defendant employed no such person and I otherwise refer to and repeat my answer to interrogatory 27 above.”
I think this answer misunderstands or takes an unduly restrictive view of interrogatory 27. That interrogatory does not ask if there was a dedicated or assigned employee to manage the casino’s relationship with Jamieson as a member of the VIP slots program. The answer given is that there was such a person to manage relationships with all members of the VIP Slots Club. Interrogatory 28 asks for the name or position of that person. It does not ask for the name and position of the person who was dedicated singularly to managing Jamieson’s relationship.
I would order a further answer.
Interrogatory 29
This interrogatory incurs the same problems as, on principle, I regard as present in interrogatory 4 and interrogatory 21. It is inquisitorial in nature in that in an open‑ended way, and not in any way referrable to an allegation in the pleading, is asking “Tell me what the relationship officer knew about my gambling and my personal circumstances?” Whilst, as I would emphasise, I do not regard interrogation in this case as having been administered for an improper purpose, it is this species of interrogatory which I think amounts in effect to fishing or as I have described it, being inquisitorial in nature. In my view, the function of interrogation in a case of this nature is not as a free ranging opportunity to find out what the defendant knew. The proper conduct of civil legal proceedings is for a plaintiff in a case of this nature to allege with reasonable precision what it says the defendant knew and to then interrogate by reference to those allegations in a way to elicit an admission that the defendant knew those things which the plaintiff alleges the defendant knew.
In my view this interrogatory is inadmissible although, as on the earlier interrogatory, I have made this ruling based upon an objection not truly made by Troost but one developed in argument.
Interrogatory 30 and 31
In my view these interrogatories collaterally fall as a result of my ruling for interrogatory 29.
Overview
The interrogatories I have disallowed are inquisitorial or fishing or overreaching in nature. Of course, the casino’s knowledge is a relevant issue. But that does not therefore mean the bank can use the technique of asking the casino in effect “Tell me what you knew”. The interrogatories must be composed, with precision, to seek admissions on the alleged objective facts which are pleaded to constitute actual or constructive knowledge.
In making that ruling I have rejected the objection that such interrogatories, properly administered, are objectionable as requiring the giving of a legal opinion. That is because interrogatories properly directed at facts and knowledge of particular employees and agents will then leave for trial the consequential legal questions of attribution and aggregation on the basis of those facts.
Given the significance of the issue of knowledge, I would grant leave to the plaintiff to re‑interrogate.
For those interrogatories for which I would order further answers, they concern largely factual matters going to internal organisation or management, or the designations of various people at the casino.
Accordingly, subject to hearing from counsel I would order as follows:
1.The defendant by its proper officer provide further answers to interrogatories 2, 7(c), 12 (b), 17 (b), 18 and 27 that is, further to the answers given in the affidavit of Jacobus Cornelius Troost in his affidavit sworn 6 February 2012.
2.The plaintiff has leave to re‑administer interrogatories for the examination of the defendant on the allegations concerning the alleged knowledge of the defendant’s employees and agents.
Given the mixed success in this case, I am inclined to make no order for costs, or, to order that the costs be in the proceeding. But of course, I would hear parties on this.
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