Commonwealth Bank of Australia v Starrs & Starrs
[2011] SASC 37
•22 March 2011
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
COMMONWEALTH BANK OF AUSTRALIA v STARRS & STARRS
[2011] SASC 37
Reasons of Judge Withers a Master of the Supreme Court
22 March 2011
PROCEDURE
Notices to Admit administered by plaintiff - application by plaintiff to strike out responses - form of responses.
Supreme Court Rules 2006 (SA) r 156, referred to.
Rak v Coles Myer Limited (1996) 68 SASR 272; Southern Equities Corporation Ltd (In Liquidation) & Ors v Bond & Ors (No 2) (2000) 34 ACSR 660, applied.
Scott v Williams & Ors & Sims & Ors [2001] SASC 148, considered.
COMMONWEALTH BANK OF AUSTRALIA v STARRS & STARRS
[2011] SASC 37
JUDGE WITHERS. This is a claim by the plaintiff against the defendants for money said to be due pursuant to a Deed of Guarantee allegedly executed by the defendants on 27 November 2006. It is alleged that the defendants guaranteed the obligations of a company to the plaintiff to a maximum of $3.8 million. While the company names are different it was put in submissions that this action arises out of the failed Truscotts electronics business.
It was pleaded that the company defaulted on its obligations to the plaintiff and as at 18 September 2009 the total amount outstanding by the company to the plaintiff was $3,192,577.57. The plaintiff pleads that Notices of Demand were given to each defendant dated 18 September 2009 and that at the time of the issue of the proceedings, namely 28 October 2009, the amount outstanding under the guarantee was $3,835,151.12 with interest accruing at the rate of $1,453.21 per day.
By a defence filed on 18 December 2009 – FDN 6 – the defendants jointly pleaded that the debt had been paid in full; that the guarantee was a joint but not a several obligation; that the legal process to date had been ineffective; and that the interest and costs components were not accepted.
An amended defence was filed by the defendants on 13 April 2010 – FDN 8. In this document the defendants repeated the pleas in the original defence and then added further pleas responding to paragraphs 3, 4, 5 and 6 of the plaintiff’s statement of claim. In the additional pleas it was asserted that the guarantees provided for a maximum liability of $3 million and not $3.8 million as claimed by the plaintiff. It was further asserted that the first defendant, Dr C D Starrs had a limited capacity to understand the implications of the guarantee because of poor health; that he was not independently informed by the Bank of negotiations and amendments to the loan arrangements; that he was not a director of the borrowing company Starrs & Co Pty Ltd; and that he signed the guarantee and consent to extension of guarantee under coercion. It was further pleaded that he received the consent to extension of guarantee via the second defendant, Mrs Starrs and that he signed a mortgage on a house property at Medindie under coercion. Who is said to have coerced the first defendant is not pleaded. It is pleaded that the proper construction of the guarantee document was that once the properties securing the guarantee had been disposed of no further liability attached to the first defendant under the guarantee.
It was further pleaded by the defendants that the receivers appointed by the plaintiff had not provided a detailed reconciliation of the liquidation process and that it had not been proved that the original debt had not been fully satisfied. The defendants pleaded that the plaintiff had included amounts of interest and costs improperly and had not provided detailed accounting information. The plea generally went to the defendants not having been provided with satisfactory evidence of the return to the Bank from disposal of the defendants’ property as part of the receivers’ activities. In essence they pleaded that their property had not been disposed of in a manner calculated to realize a maximum return in breach of an obligation by the plaintiff so to do. Each party subsequently made disclosure of documents.
On 26 July 2010 the plaintiff delivered to the defendants a Notice to Admit. As the last disclosure occurred by a list of documents filed by the plaintiff on 17 June 2010 it would seem that the plaintiff’s Notice to Admit was delivered outside the 28 day time frame allowed by 6R 156(5) without the permission of the Court. The defendants, who are self-represented, have not taken any point on that late delivery.
Rule 156 of the Supreme Court Rules 2006 (SA) deals with Notices to Admit. Relevantly it is in the following terms:
[6R 156] Notice to admit facts or documents
156 (1) A party may give notice to another party (a notice to admit) asking the other party to admit a particular assertion that the party makes for the purposes of the action.
(2) The assertion may be—
(a) a statement purporting to be a statement of fact; or
(b) an assertion of the authenticity of a particular document; or
(c)an assertion that a particular document is, for stated reasons, relevant to the subject matter of the action; or
(d)an assertion that a particular document is, for stated reasons, admissible in evidence at the trial of the action.
(3) …
(4) If a notice to admit asserts the authenticity or relevance of a document, a copy of the document must, unless the Court otherwise directs, be attached to the notice.
(5) …
(6) A party to whom a notice to admit is addressed (the respondent) must, within 14 days after the notice is given or a longer time agreed by the parties or allowed by the Court, give a notice (a notice of response) responding to each assertion in the notice to admit—
(a) by admitting the assertion; or
(b) by—
(i) denying the assertion and stating the grounds of the denial; or
(ii)stating that the respondent is not in a position to admit or deny the assertion and explaining why the respondent is not in a position to do so; or
(iii)claiming privilege or some other proper ground for refusing to respond to the assertion.
(7) If the respondent fails to respond to an assertion in a notice to admit as required by subrule (6), the respondent is taken to have admitted the assertion.
(8) …
(9) The Court may, on application made within 21 days after a notice of response is given—
(a)order the respondent to give a further and better notice of response within the time allowed by the Court; or
(b)if satisfied that the respondent has denied or failed to admit an assertion without adequate reasons for doing so—determine the issue raised by the assertion in advance of the trial.
(10) …
(11) …
Supreme Court Rule 156 replaces 87R 54.01, which provided in subrule (1):
54.01 (1) A party may request any other party to admit in writing the truth of any relevant fact or the authenticity or admissibility of any relevant document specified in the notice.
It was put in submissions by counsel for the plaintiff that the form of the Notice to Admit had been drafted in response to the language of r 156 which it was suggested had a different consequence from that of 87R 54. What is different is that an explanation of relevance is now required as an integral part of an assertion as to relevance and admissibility.
In my view the requirements of 6R 156 in relation to the Notice to Admit can be conveniently split into two sections. The first section is contained within r 156(2)(a) and is an assertion by the applicant of a matter “purporting to be a statement of fact”. The second section is comprised in r 156(2)(b), (c) and (d) and relates to the authenticity, relevance and admissibility of documents for stated reasons. Assertions as to relevance on admissibility of a document must now be accompanied by reasons explaining why the document is relevant and admissible.
The law that applied to 87R 54 also applies to 6R 156. While the wording of r 156 is more prescriptive than that of 87R 54, it has the same import. The wording of r 156 tends to incorporate within it the approach to Notices to Admit mandated by the Court in the decision of Lander J in Rak v Coles Myer Limited (1996) 68 SASR 272, and Debelle J in Southern Equities Corporation Ltd (In Liquidation) & Ors v Bond & Ors (No 2) (2000) 34 ACSR 660 at 663.
Those decisions are conveniently reviewed by his Honour Judge Burley in the matter of Scott v Williams & Ors & Sims & Ors [2001] SASC 148 in [10] to [13], where he said:
[10] In Rak v Coles Myer Ltd (supra), Lander J reviewed the provisions of SCR 54.00 in some detail. In relation to the rule his Honour said (at 275):-
There is now an obligation upon the party receiving the notice to respond in writing, specifically denying the truth of the fact or the authenticity or admissibility of the document and at the same time setting forth in detail the reasons why the party cannot make the admission, or stating that the refusal to admit the truth of that fact or the authenticity or admissibility of that document is made on the grounds of privilege or irrelevancy or on the ground that the request is otherwise improper. There is also an obligation to set forth in detail the reasons for the refusal.
[11] Lander J also said (at 276):-
The purpose of the rules relating to notices to admit is to aid a party in the proof of that party’s case in two ways. First, it allows the party to establish well before trial the authenticity of a document so that the party can be confident at trial that the party will not need to call formal proof to establish the provenance, execution, integrity or the authenticity, of that document. Secondly, it allows the party to be confident, subject to a ruling by the trial judge that the document will be admitted in evidence at the trial without the need for further proof or, except in unusual circumstances, further argument.
Therefore, a party seeks the opposing party’s concession, as it were, that the documents which are presented to that opposing party are both authentic and admissible.
Clearly enough the purpose of the rule in relation to documents is for the easier proof of that party’s case and for the saving of costs and time in the proof of that case.
So also in relation to facts, the purpose of the rule is to allow a party to establish a fact without the necessity of calling either oral evidence or documentary evidence to prove that fact. Again, the purpose of the rule is to make the proof of that fact easier and for a saving of costs and time in so doing.
When used properly the rules have the effect of narrowing the issues between the parties, avoiding unnecessary expense, and avoiding unnecessary time in the trial process.
The fact that a party can no longer simply not admit the authenticity of a document or the truth of any relevant fact but must instead now give reasons for declining to do [so] is consistent, in my opinion, with the modern concept of the orderly disposal of litigation.
[12] In Southern Equities Corporation Ltd (In Liquidation) and Ors v Bond and Ors (No 2), (2000) 34 ACSR 660 at 663, Debelle J dealt with SCR Rule 54.00. He referred to the decisions of Lander J in Rak v Coles Myer (supra) and Thomson Brindal Ltd v McLachlan, (2000) 207 LSJS 90, and set out there what he considered to be the essential points to be made in relation to the rule. They are as follows:-
(1) In relation to documents, the notice to admit aids a party to prove his case in two ways, namely,
(a)it allows a party to establish, well before trial, the authenticity of a document so that he can be confident at the trial that there will be no need to call formal proof to establish the provenance, execution, integrity, or the authenticity of that document; and
(b)it allows a party to be confident, subject to a ruling by the trial judge, that the document will be admitted in evidence at the trial without the need for further proof or, except in unusual circumstances, further argument.
For that reason, a party seeks his opponent’s concession that the documents are both authentic and admissible in order to make proof of his case easier and to save the cost of proving documents which may not be truly in issue.
(2) Similarly, in relation to facts, the purpose of Rule 54 is to allow a party to establish a fact without the necessity of calling either oral evidence or documentary evidence to prove that fact. Here again, the purpose of the rule is to make proof of that fact easier and to save costs and time in doing so.
(3) When used properly, the Rule has the effect of narrowing the issues between the parties even further than pleadings, thereby avoiding unnecessary time and expense in the trial process.
(4) The obligation to give reasons for declining to admit the authenticity of a document or the truth of a relevant fact is consistent with the modern concept of the orderly disposal of litigation. The Rules reflect the fact that the court has a significant part to play, not only in the administration of justice, but also in the management of each individual action so as to ensure that the litigation proceeds smoothly and expeditiously and with the least cost to the parties. As I will note in a moment, the Rules have the goal of seeking to limit the issues to be tried to what is truly in dispute.
(5) The obligation of Rule 54 is to answer requests for admissions as to the authenticity and admissibility of documents is consistent with the enactment in recent years of statutory provisions designed to facilitate proof of documents, for example, s 45a, s 45b, s 45c and s 59j of the Evidence Act 1929.
[13] His Honour then said:-
It is useful to repeat what Lander J said on this topic in Rak v Coles Myer Ltd (supra) at 279:
In circumstances, therefore, where there is no objection on the grounds of relevance or where the request does not raise a question of privilege or the request is not otherwise improper, then the only way the consequences of objections under r 54.02 can be avoided is by first denying the truth of the fact or the authenticity or admissibility of the document and secondly setting forth in detail the reasons why the party cannot make the admission.
All of that seems to me to be consistent with the modern concept of litigation which requires a party to face up, as early as possible, to the responsibility of decisions. The responsibility of decisions includes making, as early as possible, a determination of the facts truly in issue between the parties. The previous luxury of allowing a party to require the other party to prove formally each and every fact where those facts are not genuinely in dispute is no longer appropriate for litigation at the end of this century. Neither the parties themselves nor the State can afford to allow parties to litigate at their own pace and with their own agenda because to do so would disadvantage the parties themselves and the other parties wishing to have their litigation dealt with.
Bearing the above principles in mind, and the wording of the rule, I now turn to a consideration of the Notice to Admit and the responses. It should be noted that the defendants by interlocutory application FDN 12 filed on 31 August 2010 sought an extension of time in which to file notices of response because of various matters set out in the affirmation of the second defendant filed on 31 August 2010. The Court granted that extension by order on 4 August 2010. The defendants thereafter filed on 15 September 2010 documents entitled “Reply to Notice to Admit”, being a separate document or reply for each defendant When the matter came before the Court on 15 September 2010 the plaintiff sought an adjournment to consider the responses and to obtain counsel’s advice.
On 22 October 2010 the plaintiff by interlocutory application FDN 16 sought the following orders:
1.The Plaintiff be given an extension of time to bring the within application.
2.In respect of the Plaintiff’s Notice to Admit filed on 26 July 2010:
2.1 Pursuant to Rule 156 (6) and (7) that the Defendants’ Replies to the Plaintiff’s Notice to Admit both filed on 15 September 2010 do not comply with the Rules and are deemed to be admitted; and
2.2 Pursuant to Rule 156 (6) and (7) that the Defendants’ Replies to the Plaintiff’s Notice to Admit both filed on 15 September 2010 concerning the authenticity, relevance and admissibility of the documents annexed to the Notice to Admit do not comply with the Rules and are deemed to be admitted.
3.In the alternative to paragraph 2 that the Court determine pursuant to 6R 156 (7) and (9)(b) that the Defendants’ Replies to the Plaintiff’s Notice to Admit both filed on 15 September 2010 are admitted.
…
The plaintiff sought orders for costs and such other orders as the Court deemed fit.
The plaintiff’s application was supported by an affidavit of its solicitor which annexed a schedule of the plaintiff’s objections to the reply or response of each defendant – see Document 17A.
When the matter came back before the Court on 27 October 2010 I directed the attention of the defendants to r 156 and to Lunn, Civil Procedure South Australia and also to pro bono legal assistance that might be available to them through the Justice Information Network or the Law Society. I adjourned further consideration of the application to enable the defendants, firstly, to be served with the plaintiff’s application and affidavit and, secondly, to consider their position.
The matter was next before the Court on 24 November 2010 when the parties informed the Court that they had been unable to reach any agreement. The plaintiff’s application FDN 16 was listed for hearing on 27 January 2011. The defendants were given permission to file affidavits in opposition and the plaintiff affidavits in reply.
On 15 December 2010 the second defendant filed an affidavit in opposition asserting that the Notice to Admit did not comply with the requirements of r 156(2) in that there were many assertions of law therein made – FDN 20. She sought an order that if any order were to be made on the plaintiff’s application then it should be that the defendants give a further and better notice of response rather than the Court substituting admissions in place of defective responses.
The second defendant also attested that before the Court hearing on 24 November 2010 the defendants had advised the plaintiff that they had no objection to the documents attached to the Notice to Admit being received in evidence “but with nothing more”. In relation to the documents annexed to the Notice to Admit the second defendant attested that she had no objection to those documents being admitted into evidence but that she did not admit:
·their legal effect; or
·that she received them in their entirety; or
·that they were properly served on her; or
·that they had the legal effect for which the plaintiff was contending.
This is different to the position that was put at argument where the defendants on several occasions acknowledged that they admitted the authenticity and admissibility of the documents as being relevant to the plaintiff’s claim and asserted that they had no objection to those documents being received in evidence at the trial of this action. I understood that the plaintiff accepted their concession as sufficient and satisfactory.
The first defendant filed an affidavit on the same date (15 December 2010) – FDN 19 – which was largely in the same terms as that filed by the second defendant. Annexed to his affidavit FDN 19, Dr Starrs exhibited his response to the plaintiff’s objections to the defendants’ replies, addressing each of the questions in the Notice to Admit.
On 24 November 2010 the defendants filed a summary of their argument in opposition to the orders sought in interlocutory application FDN 16.
I address two further matters of law before turning to consider the assertions and responses in this matter. It was argued that a number of the assertions in the plaintiff’s Notice to Admit were mixed questions of fact and law. In Scott v Williams (supra), his Honour Judge Burley in [16] said in considering a mixed question of fact and law:
[16] … It may technically be a mixed question of fact and law but the factual content of the request so predominates that it would be unduly technical to reject an answer which took the point that, at least in part, the request was made in respect of a matter of law.
An assertion in a Notice to Admit cannot generally seek an admission in respect of a matter of law. It is also improper for an assertion to call for admission of a conclusion of facts or multiple conclusions of facts. Equally it is improper for an assertion to require defendants to admit the meaning of the content of documents referred to in the request. A document speaks for itself.
I turn now to the assertions in the Notice to Admit and the responses.
Assertion 1 is in the following terms:
1.On 27 November 2006 the first defendant executed a Deed of Guarantee in favour of the plaintiff whereby he guaranteed the obligations of Starrs & Co Pty Ltd ACN 057 365 090 (then known as Senior Care Services Pty Ltd) (“the Borrower”) to the plaintiff for a maximum amount of $3 million.
The response of the first defendant is:
1.The Defendant does not admit that on 27 November 2006 he executed a Deed of Guarantee in favour of the plaintiff whereby the First Defendant guaranteed the obligation of Starrs & Co Pty Ltd ACN 057365090 to the plaintiff for a maximum amount of $3million.
The response is not acceptable because it does not comply with the requirements of r 156. It is apparent from the later affidavit of Dr Starrs and in particular Document 19A, that he asserts that the date alleged in the assertion is incorrect, that he does not object to the document being admitted to evidence, and that its legal effect is not admitted for the reasons therein given.
In responding to an assertion of fact a respondent must follow the form required by r 156(6). If the respondent does not admit the assertion then the respondent can only:
1.Deny the assertion and state the grounds of the denial; or
2.State that the respondent is not in a position to admit or deny the assertion and explain why; or
3.Claim privilege or some other proper ground for refusing to respond to the assertion.
The response must accord with the directions given by Lander J in Rak v Coles Myer (supra). To paraphrase his words:
-A denial of the truth of an assertion of fact must be accompanied by detailed reasons why the responder cannot make the admission.
-A denial of the authenticity or admissibility of a document must similarly be accompanied by detailed reasons for the denial.
-A refusal to admit the truth of the fact or the authenticity or admissibility of a document on the grounds of privilege or irrelevancy or as otherwise improper must again be accompanied by detailed reasons for the refusal.
The only other form of response that is acceptable is an admission of the asserted fact or of the authenticity and admissibility of a document.
Where an assertion is so drawn that it contains within it a number of discrete assertions the responder should separately address the different components of the assertion to provide a response that satisfies the requirements of the rule in light of the objectives it seeks to achieve.
It appears on the affidavit evidence and on the submissions made by the defendants that the first defendant’s response is probably that he denies executing a Deed of Guarantee on 27 November 2006 because he signed the document on some other date, but otherwise admits that he executed the Deed of Guarantee, being “Document A” attached to the Notice to Admit. Further it seems likely that the first defendant objects to responding to the balance of the assertion as he contends the same to be either a conclusion of fact or a matter of law.
It is not surprising that the defendants as unrepresented litigants have had difficulty in responding to the Notice to Admit. That difficulty is sometimes experienced by admitted practitioners. Some of the assertions in the Notice to Admit contain a mixture of fact, conclusions of facts, or assertions of legal effect or law. However, the rule and the authorities require a very careful adherence to the form of the response. The purpose of the notice is to endeavour to reduce at trial the need for unnecessary factual proof or documentary proof where the same is not really in issue.
Assertion 2 is in the following terms:
2.On 27 November 2006 the second defendant executed a Deed of Guarantee in favour of the plaintiff whereby she guaranteed the obligations of the Borrower to the plaintiff for a maximum amount of $3 million.
The second defendant’s response is in exactly the same terms as that of the first defendant. Again it is not acceptable in form. Again looking at FDN 19A it appears that the defendants are acknowledging execution but not on that date and refusing to respond to the balance of the assertion claiming it to be a matter of law or conclusion of facts.
Assertions 3, 5, 8, 10, 14 and 17 are all assertions in relation to documents, copies of which are annexed to the Notice to Admit. In their initial response to the Notice to Admit, each defendant responded to assertion 3 as follows:
3.Whether the documents are admissible is a question of law.
At the hearing each of the defendants asserted and conceded that the documents annexed to the Notice to Admit are authentic and admissible as relevant to the plaintiff’s claim against them. The admission does not extend beyond that, eg assertion 5 suggests certain documents are authentic and admissible:
… because they evidence a step taken by the plaintiff to ensure that the defendants understood the nature of the obligation they were undertaking upon signing the Deeds of Guarantee.
Since that assertion calls upon the defendants to admit a state of mind or motivation of the plaintiff it is clearly one that would be objectionable.
In my view the concession by the defendants at argument that those documents annexed to the Notice to Admit are authentic and admissible and relevant to the plaintiff’s claim against them is in these circumstances a sufficient response to each of assertions 3, 5, 8, 10, 14 and 17. Accordingly, pursuant to r 156(9)(b) I determine that each of the documents referred to in those assertions is authentic and admissible into evidence as being relevant to the plaintiff’s claim against the defendants. My understanding is that this ruling is made with the consent of the plaintiff and the defendants .
Assertion 4 is in the following terms:
4.At the time of providing the Deeds of Guarantee to the defendants for execution, the plaintiff also provided each of the defendants with a letter dated 24 November 2006, (copies of which are attached hereto and marked “B”).
The response of each defendant is in the same terms:
4.Not admitted. The documents were provided by the plaintiff to the Second Defendant only. The Second Defendant was given a copy to pass on to the First Defendant. The page labelled “INSTRUCTIONS FOR SIGNING A GUARANTEE” was not provided. The First Defendant was treated as if he was a director of the company when he was not.
Clearly the response is not in the required form. In FDN 19A the first defendant agreed that the document could be admitted into evidence, but its legal effect was not acknowledged. The response of the respondents is likely to be different as it would appear that the first defendant will deny that the plaintiff provided to him the letter dated 24 November 2006 but admit that he received the letter through the second defendant but that the same did not include the page labelled “Instructions for signing a Guarantee”. The second defendant’s proper response would likely admit receiving the documents but note that the documents received did not include the instructions for signing the guarantee. The second defendant’s response would also likely assert that she was provided with a like document to pass onto the first defendant which she did.
It is not for the Court to settle the responses of the defendants to the Notice to Admit, but I am mindful that the defendants are self-represented and I am satisfied that they are not endeavouring to be pedantic or unhelpful in their replies but rather are having considerable difficulty with complying with the form of response required by the Rules.
Assertion 6 is another assertion where the defendants accept that a document therein referred to can be admitted into evidence, but deny what they assert to be a legal effect or factual conclusion contained in the assertion. It is in the following terms:
6.On 1 June 2008 each of the defendants executed a Consent and Acknowledgement to Extension of Guarantee whereby they acknowledged an increase in their maximum liability under their respective Guarantees to the sum of $4,500,000 plus enforcement expenses as set out in the respective Guarantees.
In my view the proper response of the defendants is likely to be in the form similar to that of assertion 1.
There is little point in continuing through the various assertions. I note that assertion 9 not only makes assertions of fact and possibly matters of law or conclusion of facts but also contains multiple assertions of facts which the defendants will need to address separately and carefully.
In my view the proper outcome of the plaintiff’s application is for the Court to order pursuant to r 156(9)(a) that the defendants each give a further and better notice of response to assertions 1, 2, 4, 6, 7, 9, 11, 13, 15 and 18 of the Notice to Admit. I note that assertions 12 and 16 are admitted. In relation to assertion 16 the defendants have admitted same but did not admit the truth of what was contained in the letter. The only assertion was that the letters had been sent by the plaintiff to the defendants. I regard that assertion as admitted.
Accordingly, the orders of the Court will be:
1.
Pursuant to 6R 156(9)(b) that the documents annexed to the Notice to Admit and referred to in assertions 3, 5, 8, 10, 14 and 17 are authentic and admissible as relevant to the plaintiff’s claim against the defendants.
2.
That the first defendant is to provide a further and better response to assertions 1, 4, 6, 7, 9, 11, 13, 15 and 18 of the Notice to Admit.
3.
That the second defendant is to provide a further and better response to assertions 2, 4, 6, 7, 9, 13, 15 and 18 of the Notice to Admit.
4.
That the further and better notices of response are to comply with the requirements of r 156 and are to be filed and served within 28 days.
5.
That the plaintiff is to have the costs of and incidental to application FDN 16.
6.I certify fit for counsel.
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