Darling Point Pty Ltd v Delairco Industries Pty Ltd

[1985] FCA 410

Re: DARLING POINT PTY. LTD.
And: DELAIRCO INDUSTRIES PTY. LTD.
No. WA G5 of 1984
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Toohey J.

CATCHWORDS

Practice and Procedure - order for discovery - alleged failure to comply - observations as to whether earlier list of documents an abuse of process - observations concerning appropriateness of self-executing orders - form of order for costs.

Trade Practices Act 1974 s.52

Federal Court Rules 0.15 r.16, 0.62 r.3

HEARING

PERTH
#DATE 27:8:1985

ORDER

1. By 4 p.m. on Monday, 2 September 1985 the respondent file and serve on the applicant's solicitors a further list of documents verified by affidavit to comply with the order of 18 June 1985.

2. The respondent pay the applicant's costs of the hearing on 22 August 1985 and of today's attendance, those costs to be taxed and paid forthwith by the respondent.

3. The further hearing of the applicant's motion filed 22 July 1985 be adjourned until 3 September 1985 at 9.15 a.m.
   
   Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is a motion by the applicant for an order that the respondent's defence be struck out and judgment entered for the applicant by reason of the respondent's failure to comply with an order for discovery of documents made on 18 June 1985.

The applicant claims damages against the respondent arising from the purchase of a Crossfield Magnascan 540 quadracolor large format scanner and ancillary equipment ("the Magnascan"), used in film processing. The applicant alleges that, in the course of negotiations for the purchase of the Magnascan, the respondent made statements that constituted misleading or deceptive conduct within s.52 of the Trade Practices Act 1974.

At a directions hearing on 24 February 1984, it was ordered that the applicant and the respondent each give discovery of documents by 6 April 1984. The applicant gave discovery of documents on 26 July 1984, outside the time specified in the Court's order but apparently without any complaint from the respondent.

The respondent gave discovery on 25 July 1984. It discovered a substantial number of documents and claimed privilege for some. Although some other steps were taken in the proceeding, the question of discovery did not arise again until 7 March 1985 when the applicant filed notice of motion calling upon the respondent to make and serve on the applicant "a further and better list of the documents which are or have been in its possession, custody or power relating to any matter in question in this action". The respondent's solicitors had admitted in correspondence the existence of documents other than those discovered and the existence of other documents might be inferred from the affidavit of documents itself.

The question of further discovery was before the Court on several occasions. Objection was taken by the respondent to giving further discovery on the ground inter alia that it would be oppressive. These issues were finally resolved by an order made on 18 June 1985 requiring the respondent, within 30 days, to make and file an affidavit stating whether it had or had at any time in its possession, custody or power any of the documents specified in the schedule to the order and, in the case of documents no longer in its possession, stating when it parted with those documents and what had become of them. I think it is necessary to set out the schedule. It is quite short and, as appears, it is directed at four categories of documents relating to all Magnascan 530 and 540 machines installed and operating in Australia and New Zealand between 1 January 1982 and 1 March 1983.

"SCHEDULE

In relation to all Magnascan 530 and 540 machines installed and operating in Australia and New Zealand between 1 January 1982 and 1 March 1983 ("the period"):

(1) service reports prepared by the respondent's engineers documenting, inter alia, faults experienced and the corrective action taken in relation to the above for the period;

(2) correspondence between the respondent and Crossfield Electronics Ltd, the manufacturer of the Magnascan 530 and 540 in relation to the above for the period;

(3) letters from the users of the Magnascan 530 or 540 to the respondent in relation to the above for the period;

(4) documents or records maintained by the respondent showing complaints from users of the Magnascan 530 or 540 in relation to the above for the period."

On 22 July 1985 the applicant lodged notice of motion for an order that the respondent's defence be struck out and judgment entered for the applicant unless, within 14 days, the respondent gave discovery in accordance with the order made on 18 June. That motion came before the Court on 31 July. When the hearing began counsel for the respondent sought leave to file an affidavit received that morning, in purported compliance with the order of 18 June. I say "in purported compliance" because the affidavit was, both in form and substance, entirely unresponsive to the order made. At the hearing I described the affidavit as very close to an abuse of process; on reflection, that was probably too kind a description. Omitting formal parts, the document had one paragraph which read:

"1. - The Respondent no longer has in its possession any documentation subject to the directions made by His Honour Toohey J. on 18th June, 1985 as the Respondent, in the normal course of its business, destroyed all such documents approximately two years ago".

Leaving aside the accuracy of the paragraph, as to which I shall say something later in these reasons, the document made no attempt to comply with the order requiring the respondent to identify documents in its possession or, where no longer in its possession, "when it parted with those documents and what has become of same". The matter is all the more serious when it is remembered that, during earlier hearings as to the additional discovery that should be ordered, the respondent objected that the tracing of the documents called for by the applicant would be oppressive. The clear implication of this argument was that further relevant documents existed. I must also express my concern that the affidavit carries a certification by the respondent's solicitor that "according to my instructions, this List and the statements in it are correct". No solicitor giving a moment's thought to the schedule and the affidavit could conscientiously give such a certificate.

The hearing on 31 July ended with a request by counsel for the respondent (who, I should say, was not the certifying solicitor) that his client be given further time to comply with the order. The applicant's notice of motion was adjourned until 21 August, that is three weeks later, with a warning to the respondent that almost inevitably its defence would be struck out unless it had more to offer by way of discovery. The matter duly came before the Court on 21 August. No further affidavit had been filed on behalf of the respondent but its counsel assured the Court that one was on its way from Sydney and was due to arrive that day. Against opposition from the applicant's counsel, the motion was adjourned until the following morning.

On 22 August the respondent's counsel produced two documents. One was an affidavit sworn 19 August 1985 by Robert Henry Purssell, the respondent's sales director, and the other was described as a further list of the respondent's documents, verified by an affidavit of Mr. Purssell sworn 20 August 1985. The earlier affidavit dealt with the difficulties the respondent had encountered in locating documents and asked for a further three weeks "in which to make a full and proper discovery in this matter". Notwithstanding the implied admission in that affidavit, Mr. Purssell's later affidavit purported to be a compliance with the order of 18 June. The affidavit lists 125 documents, 124 of which are telexes or copies of telexes between the respondent and Crossfield Electronics Limited. These documents are said to be in the possession, custody or power of the respondent. Schedule 2 of the list, being documents no longer in the respondent's possession, custody or power, are identified as "The originals of such of the copies of telexes referred to in Schedule 1 as were despatched by the Respondent".

The applicant's counsel made a strong attack on the adequacy of the later list and urged that the Court strike out the respondent's defence and enter judgment in favour of the applicant for damages to be assessed.

I am quite satisfied that the later list of documents does not constitute compliance with the order of 18 June and that it falls far short of compliance. In this regard the applicant's counsel submitted a detailed list of criticisms. I shall not refer to the criticisms in great detail though they are well founded. The most important defects are that the list refers to only one of the categories of documents contained in the schedule to the order of 18 June. It makes no attempt to deal with the existence of any other documents or to indicate, if such documents were once in the possession of the respondent, when and in what circumstances they ceased to be in its possession. The present list is in stark contradiction to the earlier list in which the respondent claimed to have no longer in its possession any documents described in the schedule. The affidavit of Mr. Purssell of 19 August 1985, intended in part to support an application for further time for compliance, itself refers to working papers and correspondence, of which no mention is made in the latest list. Other material contained in documents filed in these proceedings provides clear evidence of the existence of relevant documents to which no reference is made in the list.

The question is - what order should be made in these circumstances? It is not only delay of which the respondent stands accused; it appears to have made no real effort to comply with the order, despite being granted additional time. And while the later list does not involve quite the affront that the earlier list did, the respondent must have been aware that it was incomplete and inconsistent with other material which it had filed or which had emanated from it. Its conduct has elements of contumacy.

One option, and it is the one urged upon the Court by the applicant, is to exercise the power in O.15 r.16 of the Federal Court Rules and direct judgment for the applicant. Of course such a step would have drastic consequences for the respondent, though they are consequences of which the respondent could hardly complain. It is possible to order that the respondent's defence be struck out unless, within a time specified, it files and serves on the applicant a supplementary affidavit of documents so as to complete the discovery required by the order of 18 June. In my view orders of a self-executing or self-operating nature are rarely satisfactory. See Barwick C.J. in Turner v. Bulletin Newspaper Co. Pty. Ltd. (1974) 131 C.L.R. 69 at p.74.

Such orders are particularly unsatisfactory when serious questions may arise as to whether or not there has been compliance with the order. The present case is a good example for, on the filing of a further affidavit, questions may well arise as to whether the respondent has furnished the discovery required by the order of 18 June. Where a judge makes such an order and the time for compliance has passed, it is not within his power to extend the time. Freeman v. Rabinov (1981) V.R. 539. The only recourse open to the person against whom the order is made is by way of appeal, as happened in the case just mentioned. In the present case the respondent can of course be ordered to pay the applicant's costs of the motion in any event and an order made pursuant to O.62 r.3 that those costs be taxed and paid forthwith. I have already made such orders against the respondent in relation to the earlier hearings on the applicant's motion. But although courts have from time to time spoken of the healing balm of costs, there comes a time when the balm ceases to heal. The applicant must feel that in the present case.

This matter has given me much concern, not only as to the proper disposition of the applicant's motion but also because of the apparent attitude of the respondent to the order of the Court. The latter is in part explained by Mr. Purssell's affidavit of 19 August 1985 which suggests that he was under some misapprehension as to what was required of the respondent. He can be under no misapprehension now. While it is tempting to strike out the respondent's defence and enter judgment for the applicant, I think that is probably too high a price for the respondent to pay, especially when there has been no suggestion that it does not have an arguable defence. I order that by 4 p.m. on Monday, 2 September 1985 the respondent file and serve on the applicant's solicitors a further list of documents verified by affidavit to comply with the order of 18 June 1985. I order that the respondent pay the applicant's costs of the hearing on 22 August and of today's attendance, those costs to be taxed and paid forthwith by the respondent. I adjourn the further hearing of the applicant's motion until 3 September 1985 at 9.15 a.m.