Gingis v Gilbert
[2000] VSC 62
•8 March 2000
| SUPREME COURT OF VICTORIA | |
| PRACTICE COURT | Not Restricted |
No. 7593 of 1999
| ARON GINGIS AND FRANK LANGFORD CHARLES RAE | Plaintiffs |
| v. | |
| DENNIS ROBERT GILBERT AND PAUL ANDREW CASTRAN | Defendants |
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JUDGE: | BEACH, J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 28 FEBRUARY 2000 | |
DATE OF JUDGMENT: | 8 MARCH 2000 | |
CASE MAY BE CITED AS: | GINGIS & ANOR. v. GILBERT & ANOR. | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 62 | |
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CATCHWORDS: Discovery – Misuse of documents produced in one proceeding for purposes of another proceeding.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiffs | Mr. D. Baker | Lewenberg & Lewenberg |
| For the Defendants | Mr. D. Collins | Corrs Chambers Westgarth |
HIS HONOUR:
The history of this proceeding relevant for present purposes may be summarised as follows.
In about June 1988 the plaintiffs Aron Gingis and Frank Langford Charles Rae agreed to purchase from a company called Gull and Gilbert Pty. Ltd. the real estate business conducted by it at Wantirna South (the business). A new company called Gull and Gilbert (Wantirna) Pty. Ltd. was to be incorporated by the plaintiffs to operate the business.
It is the case for the plaintiffs that the directors of Gull and Gilbert at that time were the defendants Dennis Ronald Gilbert and Paul Andrew Castran.
To enable the first plaintiff to finance his share of the purchase of the business and to operate the new company, the first plaintiff obtained a finance facility from the National Australia Bank Ltd. (NAB). The finance facility was secured by a mortgage given by the first plaintiff and his wife Arkady Gingis over their home at Vermont South (the property) and by guarantees given by each of them to the bank. A similar guarantee was given to the bank of the second plaintiff.
In due course Mr. and Mrs. Gingis defaulted in repaying the facility and in 1995 NAB instituted a proceeding against them in this Court whereby it sought possession of the property. On 10 February 1998 a Master gave leave to NAB to amend its claim to enable it to enforce the guarantees Mr. and Mrs. Gingis had given to the bank in respect of the money owed to the bank by Gull and Gilbert (Wantirna).
In their defence and counterclaim to NAB's proceeding delivered 7 June 1995 Mr. and Mrs. Gingis allege that an officer of NAB made false and misleading representations to them concerning Gull and Gilbert thereby inducing them (or more accurately Mr. Gingis) to acquire the business.
On 14 July 1999 Mr. and Mrs. Gingis made application to a Master of the Court to join as third parties to the proceeding, Gull and Gilbert and the present defendants.
In his affidavit of 17 June 1999 filed in that application Mr. Gingis swore:
"27. As a consequence of the documents discovered by the plaintiff in its fourth supplementary affidavit of documents dated 12 February 1998, I was alerted to the fact that the directors of Gull and Gilbert Pty Ltd had made false representations to me for the purpose of inducing me to agree to purchase that company's Wantirna branch business. The documents to which I refer are those listed in the first schedule Part 1 of the fourth supplementary affidavit of documents. Those documents represent, so it appears, financial statements of the real estate business of Gull and Gilbert Pty Ltd, including the business conducted at its Wantirna branch office. It is not possible from those documents alone to ascertain the business income and expenses of the Wantirna branch business of Gull and Gilbert Pty Ltd. However, I was employed by Gull and Gilbert Pty Ltd and I am generally aware that the level of business conducted by its Waverley branch, including the sales of properties was far greater than the sales conducted at the Wantirna branch office and I have good ground for believing the overall loss suffered by Gull and Gilbert Pty Ltd reflected also a substantial loss in respect of its Wantirna branch business."
The Master refused the application.
Mr. and Mrs. Gingis then appealed to a Judge of the Court against the Master's decision.
The appeal came before me in the Practice Court on 17 August 1999. On 18 August 1999 I dismissed the appeal. At the time I did so I said:
"The granting of such an order at this late stage must have the effect of vacating the date which has been fixed for the trial of the proceeding and would cause further significant delay in bringing the proceeding to trial.
In my opinion, any claim that the defendants have against Gull and Gilbert, and/or its directors, is totally independent of the bank's claim against the defendants and the defendants' defence and counterclaim against the bank.
If the defendants have a genuine cause of action against Gull and Gilbert and its directors then, in my opinion, the appropriate course for them to adopt is to institute a fresh proceeding against those parties."
On 18 November 1999 the plaintiffs filed the present proceeding in the Court.
By their statement of claim the plaintiffs allege that the defendants made false and misleading statements to them relating to the profitability of the Wantirna business in order to induce them to purchase the business, and that as a consequence of such matters they have suffered loss and damage. The amount sought to be recovered from the defendants by the first plaintiff is the sum of $450,000 together with interest; the amount sought to be recovered by the second plaintiff is the sum of $265,000 together with interest.
In their statement of claim the plaintiffs allege that the representations were made orally and in writing. Insofar as they were made orally they consisted of statements made by the defendants to the plaintiffs at 214 Blackburn Road, Mount Waverley on a number of occasions during June and July 1998; to the extent that they were in writing they were contained in a Profit and Loss Statement concerning the Wantirna business for January 1988 which the defendants gave to the first plaintiff in June 1988.
In their defence to the plaintiffs' proceeding the defendants deny (inter alia) that they were at any time the owners of the business, deny that they sold the business to Gull and Gilbert (Wantirna), deny that they made the representations alleged, deny that the plaintiffs relied upon any representations in purchasing the business and plead that in any event the plaintiffs' claim is statute barred.
On 21 December 1999 the defendants' solicitors wrote a letter to the plaitniffs' solicitors which contained the following paragraphs:
"This action accrued over eleven years ago when representations are alleged to have been made. On what basis is it alleged that the claim is not statute barred pursuant to the Limitations of Actions Act.
If you are unable to provide information to validate the claim, application will be made to the court to have the matter struck out."
The plaintiffs' solicitors' reply to that letter is dated 17 January 2000 and contains the following paragraph:
"The facts supporting the cause of action against your client were fully disclosed to our client only as a result of documents discovered in recent Supreme Court proceedings."
On 9 February 2000 the defendants filed a summons in the Court seeking an order that the proceeding be dismissed or stayed as an abuse of the process of the Court.
The Master acceded to the application, ordered that the proceeding be dismissed, and ordered that the plaintiffs pay the defendants' costs of the proceeding, including the summons on an indemnity basis.
In dismissing the proceeding the Master noted on the Court Record of Proceeding:
"Having regard to Ex. 'BDD2' to the affidavit of Benjamin Donald Davidson of 9.2.2000, there is clearly an admission that there has been a misuse of documents produced on discovery and hence an 'abuse of process'."
Exhibit "BDD2" is the letter of 17 January 2000 from the plaintiffs' solicitors to the defendants' solicitors to which I earlier referred.
The plaintiffs now appeal against the Master's orders to a Judge of the Court.
When the appeal came before me in the Practice Court the plaintiffs sought special leave to rely upon an affidavit that was not before the Master.
The affidavit was sworn by the first plaintiff on 28 February 2000 and sets out a number of matters which occurred during the hearing of NAB's proceeding against Mr. and Mrs. Gingis, that proceeding having been heard by Byrne, J. during February last. (See unreported judgment of Byrne, J. in proceeding No. 5319 of 1995 delivered 1 March 2000).
Use of the affidavit was opposed by counsel for the defendants on the basis that if, as the defendants contend, the plaintiffs misused documents discovered by NAB in the other proceeding to formulate their claim in this proceeding, what may have subsequently occurred before Byrne, J. in relation to the documents has no relevance to the defendants' application or the appeal. In other words, if the plaintiffs were guilty of contempt in misusing the documents, their behaviour in that regard cannot be cured by subsequent events, for example the publication of the documents during the course of the hearing before Byrne, J.
In my opinion that argument is well founded. It is the plaintiffs' behaviour at the time they instituted this proceeding which is to be examined. In the circumstances of this case nothing which occurred later can have any bearing on such behaviour.
It is trite law that documents disclosed on discovery are not to be made use of except for the purpose of the action in which they are disclosed. See Riddick v. Thames Board Mills Ltd.[1] and Mobil Oil Australia Ltd. & Anor. v. Guina Developments Pty. Ltd. & Anor.[2]
[1] (1977) QB 881
[2] (1996) 2 VR 34
And a litigant and his legal adviser on whom a list or affidavit of documents is served or to whom the documents are produced under the discovery process, impliedly undertakes not to use them for a collateral or ulterior purpose. See Riddick.
Not only does the undertaking apply to the documents discovered themselves, it also applies to information derived from those documents whether the information is embodied in a copy or stored in the mind. See Crest Homes P.L.C. v. Marks.[3]
[3] (1977) QB 881
There can be little doubt in the present case but that the plaintiffs have misused the documents produced by NAB in the action brought by it against Mr. and Mrs. Gingis. That much is clear from the content of Mr. Gingis' affidavit of 24 July 1999 and the letter of 17 January 2000 from the plaintiffs' solicitors to the defendants' solicitors.
But are the circumstances in this case such as to justify dismissal of the plaintiffs' proceeding?
In my opinion they are not.
Having examined NAB's discovered documents the first plaintiff and his wife made application to join the present defendants as third parties to NAB's proceeding. Because of the delay which had occurred in the making of such an application they were unsuccessful in that regard.
Had the situation been otherwise, their application may well have succeeded. In formulating their claim against the defendants as third parties to that proceeding it would have been quite permissible for them to use the information they had acquired from the documents produced by the bank.
Further, when Mr. and Mrs. Gingis' application failed, I virtually invited them to institute a separate proceeding against the present defendants. They did not do so, instead, Mr. Gingis and the second plaintiff instituted a proceeding against the defendants and in doing so made use of the information contained in the documents produced by NAB.
Strictly speaking the plaintiffs should have made an application to the Court for permission to do so. Had they made such an application to me I would have granted it.
In my opinion the appropriate order to make now in the proceeding is an order nunc pro tunc that the plaintiffs have leave as of 18 November 1999 to use information contained in the documents produced by the National Australia Bank Limited in proceeding No. 5319 of 1995 for the purpose of instituting this proceeding against the defendants.
As to the defendants' contention that the plaintiffs' claim is statute barred in any event, in my opinion it is not possible to resolve such an issue at this stage of the plaintiffs' proceeding. It is possible that the plaintiffs will establish that they were unaware of the fact that certain of the statements said to have been made to them by the defendants, were false until such time as NAB produced the documents in question. If that proves to be the case the period of limitation would not run until that date.
The appeal from the order of the Master is allowed and paragraph 1 of the Master's order is set aside. I do not consider that it is appropriate to vary the Master's order as to the costs of the application to him. The plaintiffs should have sought leave to make use of the NAB documentation before they instituted this proceeding.
As to the costs of the appeal, I order that the plaintiffs' costs of the appeal be paid by the defendants.
I grant to the defendants an appropriate certificate pursuant to the provisions of the Appeal Cost Act in respect of their costs of the appeal and the costs of the appeal they are required to pay to the plaintiffs.
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