Beneficial Finance Corp Ltd v Baker No. Scgrg-95-2177 Judgment No. S6460

[1997] SASC 6460

BENEFICIAL FINANCE CORPORATION
LIMITED  v  BAKER

Perry J   (ex tempore)

This is an appeal from a Master against an order in which he required the deponent to an affidavit filed in the proceedings, namely, Erich Paul Reichert, to attend for cross-examination.

The order was made in the context of an application by the defendant for summary disposal of the proceedings, that is to say, their summary dismissal.  A number of affidavits were filed by the defendant in support of that application, of which the affidavit of Mr Reichert was one.  An order for the presentation for cross-examination of another deponent, Mr Blunt, who had sworn one of the other affidavits in support of the application, was refused at the same time as the order now under appeal was made.

The learned Master did not publish any reasons, either orally or in writing, substantiating the ruling which he had made.  The ruling followed a disputed hearing, and in that context it is unfortunate that no reasons were given.  In those circumstances when an appeal, as is the case here, is brought, the appeal Court is obliged to start afresh, and to hear the application without any presumption as to the propriety of the exercise of the discretion appealed against.

In any event, under the rules, an appeal of this kind is an appeal de novo.  But more regard would be paid to a decision exercised by a Master in the exercise of his or her discretion if it was accompanied by reasons.

Be that as it may, the application for summary disposal of the proceedings was advanced on the basis that on no view of the matter could the plaintiff prove what was submitted to be a critical element in its claim.

The general nature of the proceedings and the context in which the matter is to be determined are set out in the judgment of Lander J given at an earlier stage of these proceedings on the hearing of an appeal against a ruling as to further and better discovery.  That ruling was published on 15 July 1997 (see judgment No S6269).  It is unnecessary for me to summarise afresh the nature of the case, but I adopt what is set out in the judgment of Lander J as to that aspect of the matter.

The element in the plaintiff's case upon which the attack by the defendant has been mounted finds expression in paragraph 18 of the further amended Statement of Claim. Paragraph 18.7 refers to an agreement said to have been reached in a series of conversations, more particularly described in that paragraph, but as to which the plaintiff confesses it is unable to give full particulars.

The affidavits which have been filed, including that of Mr Reichert, were put forward by the defendant as evidence that no such agreement was ever made, and that relevant matters were never discussed with him.

The case gives rise to the need to have regard to the principles upon which the discretion to allow cross-examination of a deponent to an affidavit is ordinarily exercised.  The discretion is conferred by R 83.12 of the Supreme Court Rules.  The scope of its application is conveniently discussed by Lunn AJ in Southern Cross Commodities Pty Ltd. (In Liquidation) v Martin and Anor.[1]  His discussion of the authorities indicates that the discretion is a broad one.  But there is a natural reluctance on the part of the courts to allow examination of witnesses on factual matters relevant to the disposal of the proceedings at an interlocutory stage.

[1] (1985) 123 LSJS 480, upheld on appeal to the Full Court at (1985-86) 126 LSJS 306.

Despite the fact that some authorities support the view that cross-examination of deponents to affidavits may be allowed as to matters going to credit only,[2] I do not think that such a process should be countenanced in the case of affidavits filed in support of or in opposition to applications for summary judgment or dismissal of proceedings.  In such cases, any view taken by a Master of the credit of a witness during the course of interlocutory proceedings would never be binding on a trial judge, or even relevant to the task of the trial judge.

[2]    See Lunn Civil Procedure South Australia, Vol 1, para R 83.12.10 and the cases and articles there cited.

For a defendant to succeed in an application for summary disposal of the proceedings, it is necessary for the defendant to deliver what might be described as a knockout blow.  It can rarely satisfy such an onus by advancing evidence as to factual matters which are genuinely in dispute.

Although the defendant has seen fit to come into court with a series of affidavits designed to throw doubt upon the existence of any agreement of the kind alleged in paragraph 18 of the Statement of Claim, it would be an unusual exercise of the discretion of the Court to accept the argument that evidence as to a factual matter of that kind, dependent upon conversations and dealings between the parties, could conclusively be established in favour of the defendant on affidavit evidence.

Against that background it is necessary to have regard to the manner in which the application to cross-examine Mr Reichert was advanced before the learned Master.  The application was supported by an affidavit of Ms Coram.  The application (court file document 52) did not itself disclose any grounds upon which it was sought to cross-examine either Mr Reichert or Mr Blunt.  Neither did the supporting affidavit.

Ms Coram in that affidavit simply states:

“The plaintiff wishes to cross-examine Mr Reichert as to the contents of his affidavit concerning the summary judgment application.”

During the course of the argument before me, I put to counsel that at the very least one would expect evidence to be put before the Court in support of an application to cross-examine a witness, indicating the topics upon which it was desired to cross-examine and identifying any material which it might be thought desirable to put to the witness.  It was put to the learned Master, and repeated before me, by Mr Stanley who appeared as counsel for the respondent that the respondent wished to cross-examine Mr Reichert in an endeavour to put to him earlier statements made by him inconsistent with the matters deposed to in his affidavit.  But the earlier alleged inconsistent statements were not otherwise identified.

When I pointed out my concern as to that approach to the matter and what I saw to be the limitations inherent in it, Mr Stanley put before the Court, against the objection of Mr Mancini for the appellant, an affidavit of Barry John Jenner.

Mr Jenner was retained by the Crown Solicitor, solicitor for the plaintiffs.  The affidavit annexes a letter said to have been written by Mr Reichert in June 1993 to Norman Waterhouse, Solicitors, concerning the Auditor-General's enquiry into the State Bank of South Australia and Beneficial Finance Corporation Ltd, and as well two signed statements which I was informed had been given to the Crown Solicitor by Mr Reichert in October 1995 and August 1996 respectively.

There is in those documents material which tends to contradict assertions made by Mr Reichert in his affidavit filed in these proceedings in relevant respects.

It seems to me that the affidavit of Mr Jenner and its exhibits will be highly relevant documents to be considered in connection with the ultimate disposal of the application made by the defendant for summary dismissal of the action.  For present purposes, however, it tends to underscore the concern which I entertain about the propriety or desirability of sanctioning an examination of Mr Reichert as to essentially factual matters bearing on his credit at this stage of the case.

I would have thought that in the context of an application for summary dismissal of the action by a defendant, insofar as the defendant relies upon factual matters to suggest that the plaintiff could never sustain its claim, it would be sufficient for the purposes of the disposal of that application in favour of the plaintiff to identify a serious dispute as to those factual matters. Ordinarily, a defendant will not succeed in an application for summary dismissal of the action if there is a serious dispute as to factual matters going to the prospects of its success.  Here, if not before, there was, after the filing of Mr Jenner's affidavit, a clear indication that any evidence which might be available from Mr Reichert in terms of his affidavit is likely to be placed in serious contest.   But even without Mr Jenner's affidavit, I would have thought that ordinarily an application for summary dismissal of an action based on factual grounds could successfully be met by submissions indicating a genuine dispute as to the factual matters relevant to the application.

What is important to bear in mind is that ordinarily it is not proper in the course of interlocutory proceedings to embark upon a hearing designed to test disputed matters of fact, or the credit of a witness deposing to them, let alone to come to a conclusion about them which could put one party or another out of court.

Bearing those considerations in mind, it seems to me that the proper course is for the application for summary judgment brought by the defendant to be determined on the basis of the affidavit material, supplemented as it now is by the affidavit of Mr Jenner.  I can see no useful purpose which could be served by the cross-examination of Mr Reichert at this stage.  In my opinion, whatever view a Master might take as to his veracity and as to the truth or otherwise of the matters set out in his affidavit, any such view would not be germane to the success or otherwise of the application for dismissal of the proceedings.  It would be sufficient, as I have emphasised, to dismiss such an application if it appears that there is a serious factual conflict which could only satisfactorily be resolved by the trial judge after hearing all relevant evidence.

There are other aspects of the present matter which need to be borne in mind.  I am far from satisfied that the proof of an agreement of the kind alleged in paragraph 18 of the Statement of Claim is essential for the success of the plaintiff's case against the defendant.  That case is based broadly upon alleged breaches of fiduciary duties on the part of Mr Baker, in particular in the discharge of his office as a director of Beneficial Finance.  Even short of an agreement of the kind alleged, knowledge on his part of the transaction in question and of the involvement of other parties in it might well be sufficient to prove a breach of the relevant fiduciary duty.

On a proper consideration of the nature of the plaintiff's case as advanced in the Statement of Claim, it could not safely be said that the attack mounted by the defendant is targeted at an element in the plaintiff's claim which is necessarily conclusive or decisive of that claim.

For these reasons I am of the view that the appeal should be allowed and the order for the examination of Mr Reichert should be quashed.  But I would emphasise that the allowance of the appeal should not be regarded as an indication of any view as to the merits or otherwise of the application by the defendant to dismiss the plaintiff's claim.  It seems to me that the application can properly and adequately be disposed of on the basis of the affidavit material which the parties have now brought into Court.  In the disposal of it, the considerations to which I have referred to earlier in this judgment should be borne in mind.

I order that the respondent, that is the plaintiff, pay the appellant's costs of and incidental to the appeal, including the hearing before me today.

I reserve for the Master's consideration the question of the costs of the proceedings before him from which the appeal is brought.