Crand & Ors and Crand & Ors
[2018] FamCA 631
•15 August 2018
FAMILY COURT OF AUSTRALIA
| CRAND AND ORS & CRAND AND ORS | [2018] FamCA 631 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Where the applicants seek particulars relating to the Statement of Claim filed by the first respondent – Where the first respondent seeks disclosure of documents in order to provide particulars – Where the particulars and details of the transactions referred to in the Statement of Claim are known only to the applicants and second respondent – Application dismissed. | ||
| Crand & Crand [2016] FamCA 1154 Lyons and Another v Kern Konstructions (Townsville) Pty Ltd and Another (1983) 47 ALR 114 Perpetual Trustees Australia Limited v OneSteel Trading Pty Ltd [no. 2] [2008] VSC 21 | ||
| 1ST APPLICANT: | Mr Crand Snr |
| 2ND APPLICANT: | Ms Crand Snr |
| 3RD APPLICANT: | R Pty Limited |
| 4TH APPLICANT: | Q Pty Limited |
| 1ST RESPONDENT: | Ms Crand |
| 2ND RESPONDENT: | Mr Crand |
| 3RD RESPONDENT: | F Pty Limited |
| FILE NUMBER: | SYC | 5368 | of | 2013 |
| DATE DELIVERED: | 15 August 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Stevenson J |
| HEARING DATE: | 20 July 2018 |
REPRESENTATION
| COUNSEL FOR THE 1ST, 2ND, 3RD AND 4TH APPLICANTS: | Mr Elliott |
| SOLICITOR FOR THE 1ST, 2ND, 3RD AND 4TH APPLICANTS: | Barkus Doolan |
| THE RESPONDENT HUSBAND: | In person |
| COUNSEL FOR THE RESPONDENT WIFE: | Mr Henry |
| SOLICITOR FOR THE RESPONDENT WIFE: | Newnhams Solicitors |
Orders
The Amended Application in a Case filed on 2 July 2018 is dismissed.
By 14 September 2018 each party will file and serve a list of documents verified by affidavit which sets out:
2.1the documents to which the duty of disclosure applies and which relate to the issues in the proceedings and
2.2the documents which are no longer in the possession or control of the parties to which the duty of disclosure would otherwise apply and
2.3the documents to which privilege from production is claimed.
3.1 The objection to the subpoena issued to Mr Crand Snr, Ms Crand Snr and Q Pty Ltd is dismissed.
3.2Leave is granted to the wife to inspect documents produced in response to such subpoena.
Leave is granted to the wife to provide a copy of her Amended Initiating Application filed on 22 May 2018 to the Australian Securities and Investment Commission.
Leave is granted to the parties to re-list the matter for further directions before me, if necessary, by arrangement directly with my Associate.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Crand and Ors & Crand and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 5368 of 2013
| Mr Crand Snr |
1st Applicant
And
| Ms Crand Snr |
2nd Applicant
And
| R Pty Limited |
3rd Applicant
And
| Q Pty Limited |
4th Applicant
And
| Ms Crand |
1st Respondent
And
| Mr Crand |
2nd Respondent
And
| F Pty Limited |
3rd Respondent
REASONS FOR JUDGMENT
The proceedings
These proceedings concern financial issues arising from the breakdown of the marriage of the wife, Ms Crand (“the wife”), and the husband, Mr Crand (“the husband”). The wife commenced the proceedings in 2013 and on 22 May 2018 she filed an Amended Initiating Application, to which there were six respondents. Two of the respondents are the husband and a company known as F Pty Limited ("FPL"). There was no issue that the husband has sole control of and ultimately is beneficially entitled to all shares in that company.
The husband's parents, Mr Crand Snr and Ms Crand Snr, are also respondents to the application of the wife. Two companies under the control of the husband's father and/or parents, Q Pty Limited ("QPL") and R Pty Limited ("RPL") are also respondents to the application of the wife. RPL is the registered proprietor of a parcel of real property known as II Street, S Town.
On 22 May 2018 the wife filed a Statement of Claim along with her Amended Initiating Application. Although this document is lengthy, it is necessary to set out the contents of this Statement of Claim for present purposes. The document read as follows:
…
B.Chronology
B.1Purported payments by [FPL] to [QPL] in respect of destroyed equipment
10.On a date or dates not presently known to the Wife, [FPL] entered into a contract with [JJ Pty Ltd] by which [FPL] installed [its products at a] site in [Suburb U], New South Wales.
11.On or about 12 March 2014, a fire occurred at the [Suburb U] building site destroying equipment that [FPL] had hired from [QPL] (the Destroyed Equipment).
12.On or about 1 May 2015, [Mr Crand Snr] caused [QPL] to issue [FPL] an invoice in the amount of $1,948,899 for the Destroyed Equipment.
13.The Husband caused [FPL] to accept that [FPL] had a liability of $1,948,899 to [QPL] for the Destroyed Equipment.
14.The amount of $1,948,899 materially exceeded the value of the Destroyed Equipment.
15.During the period between about 14 May 2015 and about 21 July 2015, the Husband caused FPL to pay QPL $915,000 for the Destroyed Equipment (the First Destroyed Equipment Payment).
16.On or about 8 March 2017, FPL paid [QPL] pursuant to its deed of company arrangement an additional $604,069.78 for the Destroyed Equipment (the Second Destroyed Equipment Payment).
B.2Purported payments by [FPL] to [QPL] for hired equipment
17.After the [Suburb U] Fire, [Mr Crand Snr] caused [QPL] to issue [FPL] invoices for equipment hired by [FPL] (Post-Fire Equipment Hire Invoice).
18.The Husband caused [FPL] to pay the Post-Fire Equipment Hire Invoices (Post-Fire Equipment Hire Fees).
Particulars
i.Hire fees of $78,981 were paid in relation to April 2014.
ii.Hire fees of $78,981 were paid in relation to May 2014.
iii.Hire fees of $75,392 were paid in relation to June 2014.
iv.Hire fees of $82,572 were paid in relation to July 2014.
v.Hire fees of $22,617 were paid in relation to August 2014.
vi.Hire fees of $23,695 were paid in relation to September 2014.
vii.Hire fees of $16,514 were paid in relation to October 2014.
viii.Hire fees of $14,360 were paid in relation to November 2014.
ix.Hire fees of $3,052 were paid in relation to December 2014.
19.The Post-Fire Equipment Hire Invoices materially exceeded the hire value of any of the equipment hired by [FPL] from [QPL].
B.3Purported payments of rent by FPL to R
20.On a date or dates not presently known, [Mr Crand Snr] caused [RPL], and the Husband caused [FPL], to enter into an agreement or agreements by which [FPL] would pay [RPL] rent to store equipment which [FPL] had hired from [QPL] (Rental Agreement).
21.The Husband caused [FPL] to pay rent to [RPL] to store equipment that [FPL] hired from [QPL] (Storage Rental).
Particulars
i.During the financial year ended 30 June 2013, [FPL] paid [RPL] rent of $524,000 to store equipment which [FPL] had hired from [QPL].
ii.During the financial year ended 30 June 2014, [FPL] paid [RPL] rent of $384,437 to store equipment which [FPL] had hired from [QPL].
22.There is no commercial justification or explanation for [FPL] hiring equipment from [QPL] only to pay to store that equipment with [RPL].
C.Knowing assistance and/or knowing receipt
C.1The Husband's breach of fiduciary duty
23.The Husband owed fiduciary obligations to [FPL] as its director.
24.The fiduciary obligations owed by the Husband to [FPL] included one or more of the following:
(a)to avoid conflicts of interest between the interests of [FPL] and the interests of the Husband;
(b)not to take unauthorised benefit or gain from his position as [FPL's] director;
(c)to act honestly and in good faith; and
(d)to act in the best interests of [FPL].
25.In breach of the Husband's fiduciary obligations he caused FPL to:
(a)accept that it had a liability of $1,948,899 to [QPL] for the Destroyed Equipment;
(b)pay the First Destroyed Equipment Payment;
(c)pay the Post-Fire Equipment Hire Invoices;
(d)pay the Storage Rental.
26.The Husband's breaches of his fiduciary obligations were dishonest and fraudulent and/or the product of a dishonest and fraudulent design.
C.2[Mr Crand Snr] and/or [QPL's] knowing assistance
27.[Mr Crand Snr] and/or [QPL]:
(a)had actual knowledge of the matters pleaded in paragraphs 25(a)-(c) and 26 above;
(b)wilfully shut their eyes to the matters pleaded in paragraph 25(a)-(c) and 26 above;
(c)wilfully and recklessly failed to make such enquiries as an honest and reasonable person in their position would have made, which enquiries would have alerted them to the matters pleaded in paragraphs 25(a)-(c) and 26 above; and/or
(d)knew of the circumstances which would have indicated the matters pleaded in paragraphs 25(a)-(c) and 26 above to an honest and reasonable person in their position.
28.In the circumstances alleged in paragraph 27 above, [Mr Crand Snr] and/or [QPL] knowingly assisted in the breaches pleaded in paragraphs 25(a)-(c) and 26 above.
29.In the premises:
(a)[Mr Crand Snr] and/or [QPL] held the First Destroyed Equipment Payment, the Second Destroyed Equipment Payment, and/or the Post-Fire Hire Fees on constructive trust for [FPL];
(b)[FPL] is entitled to trace the proceeds of the First Destroyed Equipment Payment, the Second Destroyed Equipment Payment, and/or the Post-Fire Hire Fees;
(c)[Mr Crand Snr] and/or [QPL] are liable to account to [FPL] for the First Destroyed Equipment Payment, the Second Destroyed Equipment Payment, and/or the Post-Fire Hire Fees; and/or
(d)[Mr Crand Snr] and/or [QPL] are liable to pay equitable compensation to [FPL].
C.3[QPL's] knowing receipt
30.Further or in the alternative, [QPL] had:
(a)actual knowledge of the matters pleaded in paragraph
25(a)-(c) above;(b)wilfully shut its eyes to the matters pleaded in paragraph 25(a)-(c) above;
(c)wilfully and recklessly failed to make such enquiries as an honest and reasonable person in its position would have made, which enquiries would have alerted it to the matters pleaded in paragraph 25(a)-(c) above; and/or
(d)knew of the circumstances which would have indicated the matters pleaded in paragraph 25(a)-(c) above to an honest and reasonable person in its position.
31.In the circumstances alleged in paragraph 30 above, [QPL] knowingly received the First Destroyed Equipment Payment, the Second Destroyed Equipment Payment, and/or the Post-Fire Hire Fees as a result of the breaches pleaded in paragraph 25(a)-(c) above.
32.In the premises:
(a)[QPL] held the First Destroyed Equipment Payment, the Second Destroyed Equipment Payment, and/or the Post-Fire Hire Fees on constructive trust for [FPL];
(b)[FPL] is entitled to trace the proceeds of the First Destroyed Equipment Payment, the Second Destroyed Equipment Payment, and/or the Post-Fire Hire Fees;
(c)[QPL] is liable to account to [FPL] for the First Destroyed Equipment Payment, the Second Destroyed Equipment Payment, and/or the Post-Fire Hire Fees; and/or
(d)[QPL] is liable to pay equitable compensation to [FPL].
C.4[Mr Crand Snr], [Ms Crand Snr] and/or [RPL's] knowing assistance
33.[Mr Crand Snr], [Ms Crand Snr] and/or [RPL]:
(a)had actual knowledge of the matters pleaded in paragraphs 25(d) and 26 above;
(b)wilfully shut their eyes to the matters pleaded in paragraph 25(d) and 26 above;
(c)wilfully and recklessly failed to make such enquiries as an honest and reasonable person in their position would have made, which enquiries would have alerted them to the matters pleaded in paragraphs 25(d) and 26 above; and/or
(d)knew of the circumstances which would have indicated the matters pleaded in paragraphs 25(d) and 26 above to an honest and reasonable person in their position.
34.In the circumstances alleged in paragraph 33 above, [Mr Crand Snr], [Ms Crand Snr] and/or R knowingly assisted in the breaches pleaded in paragraphs 25(d) and 26 above.
34.In the premises:
(a)[Mr Crand Snr], [Ms Crand Snr] and/or [RPL] held the Storage Rental on constructive trust for [FPL];
(b)[FPL] is entitled to trace the proceeds of the Storage Rental;
(c)[Mr Crand Snr], [Ms Crand Snr] and/or [RPL] are liable to account to [FPL] for Storage Rental; and/or
(d)[Mr Crand Snr], [Ms Crand Snr] and/or [RPL] are liable to pay equitable compensation to [FPL].
C.4[RPL's] knowing receipt
36.Further or in the alternative, [RPL] had:
(a)actual knowledge of the matters pleaded in paragraph 25(d) above;
(b)wilfully shut its eyes to the matters pleaded in paragraph 25(d) above;
(c)wilfully and recklessly failed to make such enquiries as an honest and reasonable person in its position would have made, which enquiries would have alerted it to the matters pleaded in paragraph 25(d) above; and/or
(d)knew of the circumstances which would have indicated the matters pleaded in paragraph 25(d) above to an honest and reasonable person in its position.
37.In the circumstances alleged in paragraph 36 above, [RPL] knowingly received the Storage Rental as a result of the breaches pleaded in paragraph 25(d) above.
38.In the premises:
(a)[RPL] held the Storage Rental on constructive trust for [FPL];
(b)[FPL] is entitled to trace the proceeds of the Storage Rental;
(c)[RPL] is liable to account to [FPL] for the Storage Rental; and/or
(d)[RPL] is liable to pay equitable compensation to [FPL].
D.Transactions to defeat the Wife's claims
39.The First Destroyed Equipment, the Second Destroyed Equipment Payment, the Post-Fire Hire Fees and/or the Storage Rental were dispositions by or on behalf of, or by direction or in the interest of, the Husband, which were made to defeat anticipated orders in these proceedings and which, irrespective of intention, are each likely to have such effect.
40.In the premises, the First Destroyed Equipment Payment, the Second Destroyed Equipment Payment, the Post-Fire Hire Fees and/or the Storage Rental ought to be set aside pursuant to s 106B of the Act.
E.[FPL's] interest in the [S Town] Property
41.On a date or dates not presently known to the Wife, [FPL] invested approximately $200,000 into the development of the [S Town] Property.
42.It would be unconscionable for [RPL] to deny [FPL's] interest in the [S Town] Property.
43.In the premises:
(a)[RPL] holds [FPL's] interest in the [S Town] Property on constructive trust proportionate to [FPL's] investment in the [S Town] Property; and/or
(b)[RPL] is liable to pay equitable compensation to [FPL].
By an Amended Application in a Case filed on 2 July 2018 [Mr Crand Snr], [ Ms Crand Snr], [RPL] and [QPL] sought the following orders:
1.That on or before 14 days of the date of these Orders, the Wife file and serve an affidavit verifying the following particulars:
1.1.The alleged acceptance referred to in paragraph 13 of the statement of claim.
1.2.As to paragraph 14 of the statement of claim identify:
1.2.1.the alleged value of each item of the Destroyed Equipment; and
1.2.2.every fact, matter and circumstance relied upon by the wife for the purposes of making this allegation.
1.3.As to paragraph 19 of the statement of claim identify:
1.3.1.the alleged hire value of each item the subject of the Post-Fire Equipment Hire Invoices; and
1.3.2.every fact, matter and circumstance relied upon by the wife for the purposes of making this allegation.
1.4.Identify the factual basis for the allegation in paragraph 22 of the statement of claim that [FPL] hired equipment from [QPL] "only" to pay to store that equipment with [RPL] AND identify every fact, matter and circumstance relied upon by the wife for the purposes of making this allegation.
1.5.As to each sub-paragraph of paragraph 25 of the statement of claim:
1.5.1.specify what particular duty is said to be breached; and
1.5.2.in respect of each duty so identified, identify the particular facts, matters and circumstances relied upon by the wife for the allegation that the conduct described constituted a breach of that duty.
1.6.As to paragraph 26 of the statement of claim identify what the alleged design is, or what material facts are relied upon for the proposition that the design was fraudulent AND provide proper particulars of this allegation.
1.7.As to paragraph 27 of the statement of claim:
1.7.1.specify what particular duty is said to be breached;1.7.2.
in respect of each duty so identified, identifythe particular facts, matters and circumstances relied upon by the wife for the allegation that each respondent had the knowledge alleged,the conduct described constituted a breach of that duty; and1.7.3.identify every fact, matter and circumstance relied upon by the wife for the purposes of making these allegations.1.8.As to paragraph 28 of the statement of claim and the allegation of "knowingly assisted in the breaches":
1.8.1.specify what particular duty is said to be breached;
1.8.2.in respect of each duty so identified, identify the particular facts, matters and circumstances relied upon by the wife for the allegation that the conduct described constituted a breach of that duty; and
1.8.3.identify every fact, matter and circumstance relied upon by the wife for the purposes of making these allegations.
1.9.As to paragraph 29 of the statement of claim identify:1.9.1.every fact, matter and circumstance relied upon by the wife for the purposes of making these allegations;1.9.2.the relevance of the allegations made by the wife; and1.9.3.specify the quantum of the claim in respect to the allegations contained in paragraphs 19 and 22 of the statement of claim.1.10.As to paragraph 30 of the statement of claim:
1.10.1.specify what particular duty is said to be breached;1.10.2.
in respect of each duty so identified, identifythe particular facts, matters and circumstances relied upon by the wife for the allegation that each respondent had the knowledge alleged,the conduct described constituted a breach of that duty; and1.10.3.identify every fact, matter and circumstance relied upon by the wife for the purposes of making these allegations.1.11.As to paragraph 32 of the statement of claim identify:1.11.1.every fact, matter and circumstance relied upon by the wife for the purposes of making these allegations;1.11.2.the relevance of the allegations made by the wife; and1.11.3.specify the quantum of the claim in respect to the allegations contained in paragraphs 19 and 22 of the statement of claim.1.12.As to paragraph 33 of the statement of claim and as to each of the three respondents:
1.12.1.specify what particular duty is said to be breached;1.12.2.
in respect of each duty so identified, identifythe particular facts, matters and circumstances relied upon by the wife for the allegation that each respondent had the knowledge alleged.the conduct described constituted a breach of that duty; and1.12.3.identify every fact, matter and circumstance relied upon by the wife for the purposes of making these allegations.1.13.As to paragraph 33 of the statement of claim and as to each of the three respondents:
1.13.1.specify what particular duty is said to be breached;1.13.2.
in respect of each duty so identified, identifythe particular facts, matters and circumstances relied upon by the wife for the allegation that each respondent had the knowledge alleged.the conduct described constituted a breach of that duty; and1.13.3.identify every fact, matter and circumstance relied upon by the wife for the purposes of making these allegations.1.14.As to paragraph 36 of the statement of claim:
1.14.1.specify what particular duty is said to be breached;1.14.2.
in respect of each duty so identified, identifythe particular facts, matters and circumstances relied upon by the wife for the allegation that each respondent had the knowledge alleged.the conduct described constituted a breach of that duty; and1.14.3.identify every fact, matter and circumstance relied upon by the wife for the purposes of making these allegations.
1.15.As to paragraph 39 of the statement of claim:
1.15.1.In respect of each disposition, please identify whether it is being alleged that they were:
1.15.1.1.by the Husband (and if so, how that allegation is being made);
1.15.1.2.on behalf of the Husband (and if so, the basis for that allegation);
1.15.1.3.at the direction of the Husband (and if so, particulars of the direction); and
1.15.1.4.in the interest of the Husband (and if so, the basis for that allegation).
1.15.2.in respect of each disposition, please identify:
1.15.2.1.the alleged anticipated order the disposition is said to have been made to defeat;
1.15.2.2.in what respect it is alleged that the disposition operated so as to defeat that anticipated order; and
1.15.2.3.the facts, matters and circumstances relied upon for the allegation that the disposition was made for that particular purpose.
1.16.As to paragraphs 41 and 42 of the statement of claim:
1.16.1.The word "investment" is vague and embraces a variety of possibilities. Provide proper particulars of the alleged legal character of the transaction, and the facts, matters and circumstances relied upon to support that allegation;
1.16.2.What is the development being referred to in paragraph 41? What works are being referred to, and when was it carried out?
1.16.3.What is [FPL's] interest in the property being referred to?
1.16.4.Please confirm the alleged fact relied upon for the allegation in paragraph 42 is the allegation in paragraph 41.
2.That within 21 days of the wife's compliance with Order 1 above, each Respondent (insofar as relevant) file and serve a Defence to the wife's statement of claim filed 22 May 2018.
3.That within a further 14 days of the period referred to in Order 2 the wife file and serve a Reply.
4.That within 14 days of the close of pleadings referred to in Orders 1 – 3 above each party serve categories of documents sought for the provision of Lists of Documents arising from the pleadings filed.
5.That within 21 days of receipt by each party of the requested categories of documents referred to in Order 4 above each party shall serve upon the other parties a List of Documents by category.
6.That the wife pay the costs of and incidental to this application.
By a Response to Amended Application in a Case filed on 16 July 2018 the wife sought the following orders:
1.That the Amended Application in a Case filed 2 July 20018 [sic] be dismissed.
2.That by 17 August 2018 each party file and serve a List of Documents, verified by Affidavit setting out:-
2.1The documents to which the duty of disclosure applies and which relate to the issues in these proceedings;
2.2The documents no longer in the parties possession or control to which the duty of disclosure would otherwise apply;
2.3The documents for which privilege from production is claimed;
3.That each of the Respondents in the substantive proceedings file and serve their Amended Response and Defence to the Applicant Wife's Statement of Claim by 17 August 2018.
4.That the Applicant wife file and serve any Reply by 14 September 2018.
5.That any request for particulars be served by 14 September 2018 and verified answers to those particulars be filed and served by 12 October 2018.
6.That the Objection to the Subpoena issued on behalf of [Mr Crand Snr], [Ms Crand Snr] and [QPL] be dismissed and that leave be granted to inspect and photocopy the bank statements produced by the Commonwealth Bank of Australia.
7.That leave be granted to the Wife to forward a copy of her Amended Application Initiating proceedings to the Australian Securities & Investments Corporation.
8.That the parties appoint [KK Valuers] to undertake all necessary real estate valuations in relation to the former matrimonial home at [B Street, Suburb C] in the State of New South Wales and being the whole of the land comprised in Folio Identifier …, and [II Street, S Town] in the State of New South Wales and being the whole of the land comprised in Folio Identifier …;
9.That each of the parties to the proceedings contribute equally to the costs of the single expert;
10.The proceedings be listed for further directions on …2018 at 9.30 am.
11.Leave granted to each party to restore the matter to list by contacting Her Honour's Associate.
12.That the Applicants pay the wife's costs of and incidental to this Application.
Consideration
Counsel for the wife submitted that she was unable to meet the application for dismissal of her Statement of Claim at the interim hearing on 20 July 2018. Such an order was not sought in the Amended Application in a Case filed on 2 July 2018 but was pressed by counsel in final submissions on 20 July 2018. I accept that the wife was not in a position to meet this application. In appropriate circumstances, this application can be made at a later stage in the proceedings.
Counsel for the applicants contended that the wife's inability to particularise her claim is fatal to her cause of action against them. The written submissions on behalf of the wife contained concessions that a number of these particulars are not known to her. The wife contended that these matters are within the knowledge of the husband and/or his parents.
Counsel for the applicants also stressed the seriousness of the levelling allegations of fraud by one party as against another and noted the necessity for proper pleading and particularisation. Counsel for the applicants contended that the wife is "is manifestly fishing" and submitted that if they had not been joined "improperly", they could have objected validly to subpoenas issued to them.
Counsel for the wife submitted that "the issue is the order in which things should occur to achieve justice between the parties". Counsel for the wife conceded that the applicants "are entitled to know the case they are to meet" but submitted that, as she is not a party to commercial transactions between the husband, his parents and their companies, she "cannot give particulars at the moment".
In Lyons and Another v Kern Konstructions (Townsville) Pty Ltd and Another (1983) 47 ALR 114 at 126-128 Fitzgerald J said as follows:
...
The proper approach, as it seems to me, is to see this aspect of the present dispute as involving a contest, as so often occurs, between the respondents' entitlement to particulars from the applicants and the applicants' claim to have the delivery of particulars postponed until after they obtain discovery from the respondents. The applicants' inability to provide particulars is well established by the form of the Statement of Claim, their affidavits, and the concession candidly made by their Counsel. However, proceedings lacking particularity through want of information cannot be described as vexatious, frivolous, or an abuse of the process of the court if the applicants can show that the circumstances are such that the respondents should be ordered to make discovery in advance of the applicant providing particulars. For present purposes, I propose to assume in favour of the applicants that they will be entitled to discovery at an appropriate point in these proceedings, whether or not the respondents can object to disclosure: cf Refrigerated Express Lines (A'Asia) Pty Ltd v Australian Meat and Livestock Corp (1979) ATPR 40-137.
In Waynes Merthyr Co v D Radford and Co [1896] 1 Ch 29, a plaintiff in an action for deceit claiming damages for business allegedly lost by reason of the fraudulent acts of the defendant gave one specific instance in the Statement of Claim and alleged that the defendants had fraudulently supplied coal to divers other persons on divers other occasions. Chitty J held that discovery should precede the particulars which the defendants requested. At 35 he said: ". . . There is no hard and fast rule as to the class of cases in which particulars should precede discovery, or discovery be ordered before particulars; but the judge must exercise a reasonable discretion in every case after carefully looking at all the facts, and taking into account any special circumstances."
His Lordship went on to conclude that the plaintiff's case had a substantial foundation and was not a fishing case, and said at 36: ". . . it seems to me that this is a case in which, having regard to the position of the parties and the admitted facts, and having regard to the circumstances that many of these alleged frauds are within the defendant's means of knowledge, and are not within the knowledge of the plaintiffs, I think discovery ought to precede particulars and I think this order should be made for the purpose of effecting justice between the parties, because I see the use which the defendants may be able to make of the order for particulars as originally made in chambers, in which event the plaintiffs might fail to obtain justice."
...
In Leitch v Abbott (1886) 31 Ch D 374, the plaintiff alleged that he had employed the defendant as a stockbroker but that the defendant had in many of the transactions dealt with himself as principal and had also charged the plaintiff with moneys not paid. The Court of Appeal held that though there were no particulars of the fraud alleged, the plaintiff was entitled to answers to interrogatories asking for details of the dealings by the defendant on behalf of the plaintiff and the names of the person with whom the defendant had dealt and the amounts paid. Commencing at the foot of 376, Cotton LJ said: "There is here a general allegation of fraud and the plaintiff wants the discovery to enable him to prove his allegation. It may be that he will afterwards have to amend his pleadings, but to say that he must give details of the fraud in the first instance would be to reduce the right of discovery in cases of fraud to very narrow limits indeed. . . . there is here a statement of the nature of the fraud alleged. The plaintiff may hereafter have to condescend to particulars, but, in my opinion, it would be wrong to say that he is not entitled to have this discovery now, because he has not given full details of the fraud which he alleges. We may possibly have to decide to what extent the defendant is obliged to go into all these matters, but, in my opinion, it would be wrong to say that the court has a discretion to deprive the plaintiff of discovery altogether, either until the trial of the action, or until he has given details of the fraud which he alleges. He wants the discovery in order to enable him to give those details, and to establish his right to relief at the trial. I think, therefore, that the defendant must give a further answer to the interrogatories . . .".
Commencing at the foot of 378, Bowen LJ said: "Ought, then, the generality of an allegation of fraud to be a bar to the right to discovery? It seems to me that the very fact that the pleader is unable to plead except in general terms, is in many cases the very reason why he should have discovery from the other party, so as to enable him to plead the fraud in detail. If at a particular stage of an action you are stopped by reason of your ignorance of some fact which is known only to the other party, that is the very reason why you should have discovery of that fact from him, and what difference does it make whether you are stopped at the trial or before? . . ."
However, in Zierenberg v Labouchere [1893] 2 QB 183, Lord Esher MR, in a judgment with which Bowen LJ expressed entire agreement, said at 188 that the decision in Leitch v Abbott, supra, was founded on the relationship between the parties. In Zierenberg, the rule that particulars must normally be given before discovery in support of a plea of justification in a libel action founded on a generally expressed defamatory statement was
re-affirmed....
However, discovery before particulars plainly is not available as a matter of course. It is the exception rather than the rule.
...
The ability of a plaintiff in a fraud action to provide one or more specific instances seems to have been accepted as sufficient to enable him to have discovery before being required to particularize further examples of the defendant's misconduct of which he is not and could not be aware: see per Farwell LJ in Arnold and Butler v Bottomley [1908] 2 KB 151, at 157. Somewhat similarly, in Russell v Stubbs [1913] 2 KB 200 a plaintiff who was able to specify one person to whom a trade journal had published a defamatory statement concerning the plaintiff was held entitled to discovery before particularizing the other persons to whom it was alleged it had been published.
...
"Though the power to require discovery be acknowledged, how should it be exercised? It depends upon the nature of the case and the stage of the proceedings at which the discovery is sought. In the present case discovery is sought before there is a title of evidence to suggest that the Chairman did not have the requisite cause to believe which para 6 of the Statement of Claim would put in issue. Some assistance was sought to be derived from cases where discovery had been given to a party before he was required to give particulars of his claim: cases such as Ross v Blake's Motors [1951] 2 All ER 689 but in cases of that kind there is either an anterior relationship between the parties which entitles one to obtain information from the other, or sufficient is shown to ground a suspicion that the party applying for discovery has a good case proof of which is likely to be aided by discovery. This is not such a case. This is a case where a bare allegation is made by para 6 of the Statement of Claim and, the paragraph being denied, the applicant seeks to interrogate the Chairman and ransack his documents in the hope of making a case. That is mere fishing. As Smithers J said in Melbourne Home of Ford Pty Ltd v TPC (1979) ATPR 40-107 at 18,087: 'In the absence of such evidence the proceeding is essentially speculative in nature. In such circumstances for the Court to assist the applicants by making available to them the processes of interrogatories and discovery would be to assist them in an essentially fishing exercise and from this the Court on established principles should refrain.' His Honour's refusal of discovery was right and it ought not to be disturbed."
See also RHM Foods Ltd v Bovril Ltd [1982] 1 All ER 673 (CA).
Each case must be decided on its merits and particular circumstances. The ultimate object is to mould the court's procedure to do justice between the parties: Waynes Merthyr Co v Radford, supra; Millar v Harper (1888) 38 Ch D 110, 112 per Bowen LJ; Ross v Blake's Motor Co [1951] 2 All ER 589 (CA). However, throughout all the cases, there is an insistence that discovery not be made available to a party before pleading or particulars for the purpose of "fishing". Even if a fishing investigation is not what is intended, the proper balance of the competing considerations may require the Court to refuse early discovery: see Latec Finance Pty Ltd v Jury, supra, at 323.
...
In Perpetual Trustees Australia Limited v OneSteel Trading Pty Ltd [no. 2] [2008] VSC 21 Habersberger J said as follows:
19.Other aspects of the discretion were referred to by Lindgren J in Trade Practices Commission v CC (New South Wales) Pty Ltd. First, his Honour referred to the well recognised rule that discovery (and interrogatories) will not be ordered if the purpose is to carry out a "fishing expedition". He continued:
What does the reference to a "fishing expedition" mean? After all, ex hypothesi, the giving of discovery will often, if not always, reveal documents of which the other party was not previously aware (similarly, the administering of interrogatories will often, if not always, reveal information of which the other party was not previously aware). What is meant is that discovery must not be used for the purpose of ascertaining whether a case exists, as distinct from the purpose of compelling the production of documents where there is already some evidence that a case exists: see, for example, Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 575; Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd [(1952) 72 WN(NSW) 250]; WA Pines Pty Ltd v Bannerman [(1980) 41 FLR 175]; Barbarian Motor Cycle Club Inc v Koithan (1984) 35 SASR 481 at 486; Nestle Australia Ltd v Commissioner of Taxation (1986) 10 FCR 78 at 82-83; Mobex Pty Ltd v Comptroller-General of Customs (unreported, Federal Court, Foster J, 18 May 1994), at p 18. In WA Pines Pty Ltd v Bannerman at 181, Brennan J said that what is required is that "sufficient is shown to ground a suspicion that the party applying for discovery has a good case proof of which is likely to be aided by discovery". On the facts of particular cases, the application of the distinction between "fishing" and "non-fishing" may well be difficult.
20.Secondly, Lindgren J stated that:
A well-accepted situation [in] which the court often exercises its discretion by ordering discovery before particulars are supplied is that in which the party which seeks particulars and resists discovery is alone in possession of the relevant documents: Millar v Harper (1888) 38 Ch D 110 at 112; Egg & Egg Pulp Marketing Board v K H Korp Tocumal Trading Co Pty Ltd [1963] VR 378; L Grollo & Co Pty Ltd v Nu-Statt Decorating Pty Ltd (1978) 34 FLR 81 at 90-91; Halsbury's Laws of England (4th ed, 1975), Vol 13, par 28; BC Cairns, Australian Civil Procedure (3rd ed, 1992), p 348. …
[footnotes omitted]
These proceedings are included in my docket and ultimately will proceed to trial before me. Accordingly, I have considered previously various interim issues and made orders and directions both by consent and following contested hearings. In other words, in general terms I am seized of the issues between the parties.
On 22 December 2016 I delivered judgment in relation to the husband's applications, inter alia, for discharge of orders for interim spouse maintenance and Child Support Departure. In my Reasons for Judgment I said, inter alia:
21.At the interim hearing on 6 December 2016 the wife sought to tender a bundle of documents which were divided into twelve tabs. Objection was taken on behalf of the husband to the documents contained in tabs 1, 2, 3, 4 and 5. Tab 1 contained statements for bank accounts operated by the husband's parents. Tab 2 contained statements in relation to the husband's mother's credit card, in particular those which were said to contain gambling charges. Tab 3 comprised one statement for a business account of [FPL] and a summary of deposits and withdrawals for the period 22 May 2015 to 19 June 2015. Tab 4 consisted of bank statements in relation to [FPL] and a summary of payments to [QPL] for the period 15 July 2014 to 21 July 2015. Tab 5 contained bank statements for the company [I Pty Ltd] and a summary of deposits.
22.I admitted these documents over the objection of the husband. His own evidence was that he intermingles his funds with those of his mother, thus I considered it appropriate to admit the documents contained in tabs 1 and 2. I saw no reason to exclude from evidence bank statements in relation to [FPL], which was a company under the sole control of the husband until the administration in September 2015. [I Pty Ltd] was incorporated on 27 November 2013, with a former employee of the husband alleged to be sole director and shareholder. The husband consented to the admission into evidence of the documents contained in Tabs 6, 7, 8, 9, 10, 11 and 12.
...
33.Documents contained in Tab 3 of Exhibit 2 demonstrated that a total sum of $1,300,000 was withdrawn from the business account of [FPL] between 22 May 2015 and 19 June 2015. Documents contained in Tab 4 showed that a total amount of $1,797,483 was transferred from [FPL] to [QPL] between 15 July 2014 and 21 July 2015. All of these transactions occurred before [FPL] was placed into administration on 1 September 2015.
34.There could well be valid reasons for these transactions but the husband elected to provide no explanation. His counsel tendered in evidence paragraphs 24, 30 and 56 of the husband's affidavit sworn on 26 September 2014. This material indicated that:
·the husband's companies paid rent and lease fees to his father's entities, at a rate below market level;
·[FPL] paid fees for equipment hire to entities other than [QPL];
·[FPL] invested $200,000 in a development project of [QPL];
·the Suburb U fire resulted in debts of [FPL] to [QPL] for loss of equipment; and
·as at September 2014 an insurance claim was pending as a result of the fire.
35.The financial relationships between the husband, [FPL] and [QPL] are blurred and, as noted, will no doubt attract considerable scrutiny at trial. It is clear that substantial sums of money have moved between [FPL] and [QPL], in largely unexplained circumstances, and prior to the administration of the former company.
It is abundantly clear that the nature and details of the financial transactions between the husband, his parents, FPL, QPL and RPL are beyond the knowledge of the wife. She was a party to none of these arrangements, which occurred after the separation of herself and the husband. It is the fact that this information is within the knowledge of the husband and his parents, both in their personal capacity and as shareholders and directors of their corporate entities.
As I observed in my judgment of 22 December 2016, blurred financial relationships exist between the husband, FPL and QPL. In my view, the same observation can be made in respect of the financial relationships between the husband, FPL, the husband's parents, QPL and RPL.
I note that the wife already has had access to some bank statements of the husband's parents and FPL. The bank statements for FPL showed payments to QPL during the period 15 July 2014 to 21 July 2015. Accordingly, the wife is in possession of some information concerning the financial affairs of the husband's parents and QPL.
It seems to me that the following observations can validly be made drawing on the authorities to which I have referred above:
·the wife's proceedings cannot be described as "vexatious, frivolous or an abuse of the process of the court"
·the particulars and details of the transactions referred to in the Statement of Claim are known only to the husband and his parents
·the wife seeks discovery in order to enable her to give particulars and "it would be wrong to say that [s]he is not entitled to discovery now because she has not given full details of the fraud which [s]he alleges"
·"the very fact that [the wife] is unable to plead except in general terms is ... the very reason why [s]he should have discovery ..., so as to enable [her] to plead the 'fraud in detail'"
·the wife is "stopped by reason of [her] ignorance of some fact which is known only to the other party" and "that is the very reason why [she] should have discovery ..."
·the wife has shown sufficient “to ground a suspicion that [she] has a good case proof of which is likely to be aided by discovery".
For these reasons, I propose to make orders as set out in terms of paragraph 2 of the wife's Response to an Amended Application in a Case, subject to an extension of the suggested date for compliance. I will not make directions for the filing of an Amended Response, Defence and Reply as it may be that the wife must re-plead her claim upon receipt of these documents.
I propose to dismiss the objection to the subpoena issued to Mr Crand Snr, Ms Crand Snr and QPL and grant leave to the wife to inspect these documents. As noted, the wife already has access to some bank statements of the husband's parents and QPL and these documents demonstrate movement of substantial funds between FPL and QPL. It thus seems to me that those documents have relevance to some issues in the proceedings. I will not grant leave to the wife to photocopy these documents at this stage but she can renew this request, if a proper basis can be established, at a later time.
I will grant leave to the wife to provide a copy of her Amended Initiating Application to the Australian Securities and Investment Commission. The purpose of this order is simply to demonstrate that she has instituted proceedings against FPL, in the context of its impending deregistration.
It seems to me to be premature that there be orders for valuation of the former matrimonial home and the S Town property at this stage. The reality of the resources of the court dictates that trial dates are distant, which means that valuations would almost certainly require updating and additional expense for the parties.
It follows that I will dismiss the Amended Application in a Case filed on 2 July 2018.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 15 August 2018.
Associate:
Date: 15 August 2018
0
3
0