Harris Scarfe Pty Ltd v Shoe Source Group Importing Pty Ltd (No 3) - [2009] SASC 216

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
HARRIS SCARFE PTY LTD v SHOE SOURCE GROUP IMPORTING PTY LTD (No 3)
[2009] SASC 216
Reasons of Judge Lunn a Master of the Supreme Court
28 July 2009
PROCEDURE
Discovery of documents under 1987 Rules - application to cross-examine 3rd and 5th defendants on their affidavits verifying discovery under each of 87RR 58.04A(1) and 83.12 - principles for cross-examination being directed under 87R 58.04A(1) - what constitutes reasonable grounds to suspect - exercise of discretion not to be fettered - cross-examination under 87R 83.12 on affidavits on plaintiff's application to strike out defences for failure to make proper discovery - cross-examination not to be allowed under 87R 83.12 to challenge the completeness of discovery, but could be to test bona fides of explanation of why it had not been made at the proper time - cross-examination ordered.

HARRIS SCARFE PTY LTD v SHOE SOURCE GROUP IMPORTING PTY LTD (No 3)
[2009] SASC 216
Reasons on plaintiff’s application to cross-examine the third and fifth defendants on their affidavits respectively sworn on 11 and 13 May 2009.

JUDGE LUNN:
Background.
What follows is a general summary of the plaintiff’s case as pleaded in its second amended statement of claim, FDN 82. It is confined to the matters relevant to the present applications. Much of it is put in issue by the defences but as the present applications relate principally to discovery of documents what is relevant is to be ascertained from what has been pleaded. The action is governed by the now repealed Supreme Court Rules 1987.
The plaintiff is a large retail merchandiser. The third defendant (‘Mr Jongebloed”) was the sole director and shareholder in the second defendant, Strategy and Business Pty Ltd (“S & B”). Mr Jongebloed and S & B were employed by the plaintiff in various capacities. Their duties included arranging the importation from China of merchandise for the plaintiff. That necessitated employing the services of importation agents which were to be paid approximately 6% of the supplier’s price of the merchandise.
Mr Jongebloed was the sole director of Speed Shoes Group Pty Ltd (“Speeds”). S & B was a shareholder in Speeds. In March 2004, Speeds was placed in liquidation.
The first defendant, Shoe Source Group Importing Pty Ltd (“Shoe Source”), was a company in which S & B was the sole shareholder. Its sole appointed director was the fifth defendant, Sandy Arras (“Ms Arras”). Ms Arras acted as a director of Shoe Source in accordance with the instructions given to her by Mr Jongebloed and S & B, and therefore it is alleged that they also were de facto directors of Shoe Source.
In breach of their duties to the plaintiff Mr Jongebloed and S & B arranged for merchandise to be imported from China for the plaintiff through the agency of Speeds and Shoe Source on terms which enabled Speeds and Shoe Source to profit from the transactions to an extent far greater than the 6% agency fee which should have been properly payable. Shoe Source and Ms Arras were aware that S & B and Mr Jongebloed in arranging the transactions between the plaintiff and Speeds and Shoe Source were acting in breach of their duties to the plaintiff.
Central to the applications at present before me is the pleading in paragraph 30 of the second amended statement of claim (FDN 82) which states:
30S & B and Jongebloed, by virtue of their interests in Speeds and Shoe Source, stood to benefit, and did in fact benefit from the introduction of Speeds and Shoe Source to Harris Scarfe, from the placement of the Orders and the payment of the monies to Speeds and Shoe Source.
The further amended defence of S & B and Mr Jongebloed (FDN 83) does not expressly plead to paragraph 30. Paragraph 8 of the amended defence of Shoe Source and Ms Arras, FDN 46, which precedes the plaintiff’s latest statement of claim but to which the first and fifth defendants have chosen not to plead, states they do not plead to paragraph 30 as it does not contain allegations against them. No defendant has sought particulars of paragraph 30 and none have been pleaded. If particulars had been sought, it is likely the plaintiff would have responded by saying that what payments and benefits passed between Speeds and Shoe Source on the one hand, and S & B and Mr Jongebloed on the other hand, were matters peculiarly within their knowledge and particulars could not be given until after proper discovery of documents had been made by the defendants.
A major issue on the plaintiff’s applications for further discovery, as detailed below, has been what documents existed relating to how moneys received by Speeds and Shoe Source from Harris Scarfe for the merchandise in question were applied by them for the benefit of S & B and/or Mr Jongebloed.
On 25 March 2009 the plaintiff took out an application, FDN 111, seeking, inter alia, to strike out the defences of the first, second and third defendants and the counterclaim of the third defendant. That part of FDN 111 has not yet been argued or determined. On 25 March 2009 the plaintiff took out a further application, FDN 137, which incorporates the strike out applications sought in FDN 111, and in addition sought orders for the cross-examination of Mr Jongebloed and Ms Arras on their affidavits of discovery respectively sworn on 11 and 13 May 2009 (FDN 113 and 114). It is these two applications for cross-examination which are the subject of these reasons.
Previous discovery applications.
A survey of the Court file shows the history of the discovery of documents between the parties, insofar as it is relevant to the application FDN 137, to be as follows. In September 2005 the plaintiff and the first to fifth defendants respectively filed their lists of documents. The first and fifth defendants filed a joint list, FDN 18, disclosing 1,050 documents, the second defendant filed a list, FDN 20, disclosing 19 documents, the third defendant filed a list, FDN 21 disclosing 25 documents and the fourth defendant filed a list, FDN 22, disclosing 416 documents.
On 23 November 2005 the plaintiff took out an application, FDN 27, seeking better discovery from the third and fourth defendants of various categories of documents. Before that application was argued, the parties were given the opportunity to review their discovery. On 20 January 2006 I ordered that all parties make any further discovery by 13 March 2006 and on 29 March 2006 I extended that time until 26 April 2006. On that day the plaintiff filed a supplementary list of documents, FDN 37. On 25 May 2006 Mr Jongebloed filed a supplementary list disclosing 30 more documents. On 30 June I heard the argument on FDN 27. I refused to make any order for further discovery on the basis that no proper ground had been made out to go behind the lists of documents already filed by the second and third defendants. However, I ordered that all parties were to verify their discovery by affidavit to ensure that they had properly fulfilled their discovery obligations.
On 7 August 2006 the sixth defendant filed its list of documents, setting out 303 documents. It had only been joined as a defendant on 22 December 2005.
Ms Arras filed two affidavits sworn on 4 August 2006, FDN 48 and 49, verifying her own discovery and the discovery of Shoe Source of which she was an officer, subject to the disclosure of some additional documents. On 15 August the plaintiff filed a supplementary list of documents and an affidavit verifying its discovery, FDN 50 and 51. On that date Mr Jongebloed filed an affidavit verifying the discovery by S & B and himself, FDN 52, and the fourth defendant filed an affidavit verifying her discovery and that of the sixth defendant, FDN 53.
On 11 September 2006 the plaintiff issued an application, FDN 55, seeking further discovery by the first, second, third and fifth defendants. On 17 November 2006 I dismissed that application (Reasons FDN 64) principally on the grounds that no proper basis had been made out to go behind the defendants’ affidavits verifying their discovery. (The fact that they have since made significant additional discovery shows that there then was substance in the plaintiff’s complaints of inadequate discovery).
On 28 September 2006 the second, third, fourth and sixth defendants issued an application for further discovery by the plaintiff. On 30 October I ordered that the plaintiff make further discovery and an affidavit in compliance was filed, FDN 63. The plaintiff filed its third list of documents on 20 December 2006, FDN 66, and verified it by affidavit, FDN 67.
On 13 December 2006 Ms Arras filed an affidavit of discovery, FDN 65.
By an application issued on 31 January 2007, FDN 71, the first and fifth defendants sought better discovery from the plaintiff. The plaintiff filed its fourth list of documents on 24 February 2007, FDN 74. On 24 May 2007 Master Burley dismissed FDN 58 in which the second, third and fourth defendants had sought further discovery from the plaintiff.
On 16 May 2008 the plaintiff issued an application for non-party discovery against ANZ Bank, National Bank and Webb & Associates. This was opposed by the defendants. I published Reasons, FDN 92, allowing the application in part, but refused some orders on the basis that the documents, if directly relevant, should be obtainable by discovery from various of the defendants. I indicated that the parties should negotiate about the discovery of such documents by the defendants before the plaintiff mounted any further application for an order for their discovery by the defendants. The defendants did not then make discovery of such documents.
On 11 November 2008 the plaintiff issued an application seeking further discovery by the first and fifth defendants of documents relating to a bank account held in the name of Ms Arras with HSBC, which was apparently conducted for Shoe Source (FDN 99). On about 1 December Ms Arras produced the HSBC bank statements without an order being made. On 10 December 2008 the plaintiff issued an application (FDN 101) for further discovery by the first, second and third defendants for various categories of documents based on matters arising out of the documents disclosed by the ANZ Bank and the HSBC bank statements. On 11 December 2008 I ordered Mr Jongebloed to make further discovery on part of FDN 101 and adjourned the rest to be argued later. On 6 February 2009 I published Reasons (FDN 106) and made an order on FDN 101 for further discovery by each of the first, second and third defendants within 14 days. Those defendants did not comply with that order and on 25 March the plaintiff issued an application, FDN 111, to strike out their defences and counterclaim. On 1 and 2 April the first, second and third defendants each filed supplementary lists of documents, FDN 113, 114, 115 and 116.
On 2 April 2009 I directed without opposition that the first, second and third defendants file further affidavits verifying their discovery. On 14 April Ms Arras filed an affidavit, FDN 120, deposing that she had not fully complied with the earlier orders for disclosure of documents and that she had just appointed a new accountant and required further time to comply with her obligations. On 24 April Shoe Source filed a supplementary list of documents, FDN 126.
On 5 May S & B and Mr Jongebloed filed a further list of documents disclosing another 16 documents. On 6 May I ordered that Mr Jongebloed file a further affidavit verifying the discovery of S & B and himself and that Shoe Source also file an affidavit verifying it had made complete discovery. On 18 May Mr Jongebloed filed a further affidavit, FDN 133, verifying his discovery and that of S & B, and giving explanations about why full discovery had not previously been given.
On 20 May Ms Arras filed an affidavit, FDN 134, on behalf of Shoe Source verifying the discovery made by it. No affidavit was ordered, or filed, in respect of discovery by her personally.
On 29 June 2009 further lists of documents, FDN 140 and 141, were filed by S & B and by S & B and Mr Jongebloed jointly making disclosure of yet some further documents.
Although it is not clear from the wording of paragraphs 1 and 2 of FDN 137, the supporting affidavits and the submissions of counsel were to the effect that cross-examination was sought by the plaintiff under each of 87R 58.04A and 87R 83.12(1) in respect of the striking out applications in paragraphs 3, 4, 5 and 6 of FDN 137. It is necessary to consider the making of any orders for cross-examination under these two Rules separately as different considerations apply to them.
Cross-examination under 87R 58.04A.
87R 58.04A provides:
58.04A(1) The Court may at any time order that the deponent to an affidavit filed under Rule 58.04(e) either answer written interrogatories and/or attend before the Court for cross-examination on the affidavit where it is satisfied that there are reasonable grounds to suspect that such deponent, or a party for whom he has made the affidavit, has not made full and proper discovery of documents in the proceedings.
(2)In any interrogatories or cross-examination under subrule (1) above the Court may if it sees fit limit the questions allowed to those directly relating to the documents in issue as not to give the party asking the questions any unfair advantage in relation to the issues to be determined in the proceedings.
(3)The Court may discharge an order made under subrule (1) above if before the interrogatories are answered or the cross-examination occurs the party against whom the order has been made files a further affidavit making full and proper discovery of documents.
This Rule alters the common law position that there could not be cross-examination on an affidavit of discovery: Fruehauf Finance Corp Pty Ltd v Zurich Insurance Ltd (1990) 20 NSWLR 359. It is an exception provided by the Rules to the conclusiveness of an affidavit of documents as laid down in Mulley v Manifold (1959) 103 CLR 341.
Under that Rule the Court may make an order for cross-examination on an affidavit filed under 87R 58.04(e) in compliance with an order for further discovery if the Court “is satisfied that there are reasonable grounds to suspect that such a deponent, or a party for whom he has made the affidavit, has not made full and proper discovery of documents in the proceedings”. Although this Rule has existed since at least 1991, as far as I can ascertain there has never been any judicial consideration of what amounts to such “reasonable grounds to suspect”. The phrase is well known in the criminal jurisdiction in relation to issuing search warrants, exercising powers of arrest and similar matters. In those contexts it has been held that a suspicion is a positive feeling of actual apprehension or mistrust amounting to a slight opinion without sufficient evidence, but it more than mere idle wondering whether it exists or not: George v Rockett (1990) 170 CLR 104; R v Davidson (1991) 54 SASR 580; Police v Beck (2001) 213 LSJS 61. It has been held that suspicion in these contexts lies somewhere between mere speculation without any factual foundation – a mere idle wondering – and a belief based on reasonable grounds: R v Haydon (No 4) [2005] 238 LSJS 149; R v Rondo (2001) 126 A Crim R 562 at 576-7. In these contexts a suspicion is less than a belief: Rosey v Reynolds [1920] SASR 408 at 417-9. There is no reason why these authorities should not apply to 87R 58.04A(1). Thus the test is not a high one, and is less onerous than the test under 87R 58.04(e) for an order for further discovery which requires the establishment of a belief and not merely a suspicion. While it may seem incongruous that 87R 58.04(e) should require the establishment of a belief and 87R 58.04A(1) only a suspicion, it is explicable on the basis that an order for cross-examination under 87R 58.04A(1) can be discharged under subr (3) if the basis of the suspicion is dispelled by a further affidavit of discovery.
Counsel for the defendant cited the following passage from the Reasons of Judge Burley in Rann v Olsen, 11 June 1999, Judgment No [1999] SASC 237:
32There are other considerations which I must take into account. First, I think that the discretion to grant leave to cross-examine should be exercised sparingly whereas in this case, one party would be given the opportunity to cross-examine another party prior to trial about matters which will be live issues at trial. Such a result should be avoided if it is possible otherwise to be fair to the parties at the interlocutory stage. Second, I consider that the intention behind the rule is to permit cross-examination only in circumstances where there are reasonable grounds to suspect that a party to proceedings has either deliberately, recklessly or carelessly failed to make proper discovery of documents.
I am unable to agree with these conclusions of Judge Burley. In saying that the discretion under 87R 58.04A(1) should only be exercised sparingly and only where a party has either “deliberately, recklessly or carelessly failed to make proper discovery of documents” a gloss is being placed on the express provisions of the Rule. A general judicial discretion is conferred by subr (1) and its operation is not to be restricted by any gloss placed on its term: R v Wacyk (1996) 66 SASR 530; R v Fowler, CCA 1 February 2006, Judgment No [2006] SASC 18. The potential mischief of the cross-examination being used as a fishing expedition for the trial is dealt with by subr (2). I can see no justification for limiting the operating of subr (1) to where the suspicion is that the party has deliberately, recklessly or carelessly failed to make proper discovery. The purpose and utility of the whole discovery process laid down by the Rules 58 and 58A is, inter alia, to facilitate the expeditious and economic conduct of trials so that as far as possible parties are not taken by surprise at trial by documents adduced in evidence by other parties or referred to by witnesses and in the interests of a fair trial the trial Judge does not have to adjourn a trial for counsel to take instructions on documents of which they were not previously aware. In my view, a major factor in the exercise of the discretion under 87R 58.04A(1) is whether, if its preconditions are satisfied, any interrogatories or cross-examination will facilitate the expeditious and economic conduct of the trial. This will depend in part upon the significance of the documents in question to the issues which need to be resolved at the trial and the likely adverse consequences for the conduct of the trial if the accuracy of the affidavit of documents is only first undermined by cross-examination at the trial. Generally speaking, the more complicated are the factual issues, and the more voluminous is the documentary evidence, the more important it is that full discovery is enforced at the interlocutory stage of the action. On this view of subr (1) the subjective reason why full discovery has not been made is of little consequence: what is important is that all of the documents which should have been discovered in fact have been discovered.
Cross-examination under 87R 83.12.
87R 83.12 provides:
83.12(1) The Court may on the application of any party order the attendance for cross-examination of the person making any affidavit.
(2)Such requirement shall be made in writing to the party filing, or preparing to use, the affidavit.
(3)Where the attendance of a person is required under subrule (1) hereof and he does not attend, his affidavit shall not be used without the leave of the Court.
87R 83.12(1) gives the Court a discretion to direct whether a deponent is to be required for cross-examination. That discretion is to be exercised judicially and in the context of the issues which need to be resolved having regard to the time and cost which would be involved in such cross-examination: Southern Cross Commodities Pty Ltd v Martin (1985) 123 LSJS 480 and upheld on appeal (1986) 126 LSJS 306. Usually the applicant for cross-examination must establish some legitimate object to be achieved by the cross-examination. Whether the cross-examination is to be permitted at all is a separate issue from what limits should be placed on the cross-examination in the interests of justice. The case of Fruehauf Finance Corp Pty Ltd v Zurich Insurance Ltd above is authority for cross-examination other than under 87R 58.04A should not be allowed on an affidavit of discovery.
Cross-examination of the third defendant under 87R 58.04A.

All I have to determine at present is whether there should be cross-examination of the third defendant on his affidavit sworn on 11 May 2009. Precisely what cross-examination will be permitted will be dealt with as any cross-examination proceeds. I do not intend now to do more than give proper reasons why some cross-examination should be ordered. Counsel for the plaintiff put forward a helpful schedule collating the affidavit evidence dealing with 23 payments where he contended proper discovery had not been made by the second and third defendants. I will confine myself to one of them, and leave the others to be dealt with, if appropriate, during the cross-examination.
The HSBC bank statements for an account in the name of Ms Arras, which was apparently conducted by her for the financial affairs of Shoe Source, shows that on 13 September 2004 a sum of $510,025 was paid out of that account into the Logie-Smith Lanyon (“LSL”) trust account. Up until recently LSL had been the Victorian solicitors for S & B and Mr Jongebloed. A document discovered by Shoe Source shows that payment was debited in the books of Shoe Source to a loan account in the name of Mr Jongebloed and the entry was given the notation “Speeds”.
On 16 June 2009 the plaintiff’s solicitors wrote to the present solicitors for S & B and Mr Jongebloed referring, inter alia, to this payment of $510,025 and alleging the defendants had not made proper discovery of documents in relation to that transaction. By a letter of 26 June 2009 (which was handed up during argument) from the present solicitors for S & B and Mr Jongebloed it was stated that those defendants were making further inquiries with LSL about whether they could obtain documents on this topic, but otherwise they maintained that they had no further documents to discover. A further document dated 23 April 2009, being a “screen dump” from the LSL trust account, which was attached to that letter, did not show this $510,025. On 29 June the second and third defendants filed amended and corrected lists of documents, but they did not contain any documents on this topic. No further discovery was made by them up to the argument before me on 3 July.
The documents already obtained by the plaintiff show that Shoe Source paid $510,025 out of a bank account, which included moneys received from the plaintiff, into the LSL trust account. The books of account of Shoe Source show this amount was debited to a loan account in the name of Mr Jongebloed. Beyond that nothing is known by the plaintiff about the nature of the payment or why it should have been labelled “Speeds” in the Shoe Source loan account. There are strong indications that it was a payment made by Shoe Source to, or on behalf of, Mr Jongebloed, and very possibly for his benefit. However, further documentation, if it exists, is needed to show what happened to that money after it was deposited in the LSL trust account and whether it resulted in some benefit for Mr Jongebloed. I accept the submission of the plaintiff’s counsel that it would be extraordinary and inconceivable that there is no other documentation which is, or has been, in the possession or power of the second and/or third defendants which shows what happened to this $510,025. As LSL were the solicitors for S & B and Mr Jongebloed at the time of this transaction in 2004 and for most of the course of this action, it is highly likely there are documents at least in the power of the second and third defendants which are discoverable on this topic. On this point alone I am satisfied that there are reasonable grounds to suspect for the purposes of 87R 58.04A(1) that Mr Jongebloed has not made full and proper discovery of documents in these proceedings. Accordingly, there will be an order for his cross-examination under that subrule.
Although the point was not raised in argument, 87R58.04A(1) only applies where the affidavit of discovery has been filed under 87R 58.04(e). The affidavit in question was filed as a result of an order made by me on 2 April 2009. That hearing was a continuation of various applications made by the plaintiff including applications under 87R 58.04(e). On 2 April the defendants did not oppose the orders being sought by the plaintiff being made. Previous orders had been made against the defendants under 87R 58.04(e), and the order made on 2 April was an adjunct to those orders requiring that the second, third and first defendants verify their discovery on oath. I am satisfied this necessary precondition for an order under 87R 58.04A(1) existed.
In view of the likely length (in excess of 15 days) and complexity of the ultimate trial of this action it is important that proper discovery should have been made by all parties well before the commencement of the trial. Disruption to the trial, if further relevant documents come to light in the course of the evidence, which requires adjournments or the recall of earlier witnesses, will be highly inconvenient and potentially expensive. In the context of this action, it is appropriate to exercise the discretion under 87R 58.04A(1) to allow cross-examination about the completeness of the second and third defendants’ discovery.
Counsel for the plaintiff invited me to infer that the difficulty which the plaintiff had had up to the present time in obtaining proper discovery from the defendants was a reasonable ground from which to suspect that the defendants were deliberately reluctant to make discovery of documents which were against their interests and that therefore it was likely they still had not made complete discovery. I do not need to resort to this ground to make the order under 87R 58.04A(1). As the history of the discovery process in this action shows, the plaintiff has also had to have several attempts before making all of its discovery. In large and complex litigation it is frequently the case that parties do not initially make full discovery and it takes some prompting from the opposition to get all of the documents disclosed. However, that does not usually mean that after several attempts at making full discovery it can be reasonably suspected that a party still has not made complete discovery.
Cross-examination of the third defendant on the applications to strike out.
For similar grounds concerning the conclusiveness of an affidavit of discovery to those set out in my Reasons (No 2) published on 5 June 2009, FDN 136, an application to cross-examine on an affidavit verifying the completeness of discovery cannot be used to test or challenge the completeness of that discovery. The conclusiveness of the affidavit is not to be challenged other than is allowed by 87R 58.04A.
Mr Jongebloed’s affidavit sworn on 11 May 2009 goes further than merely deposing to the completeness of the discovery made by himself and S & B. It gives an explanation about why certain documents, although now discovered, were not discovered at the proper time. The plaintiff’s counsel has foreshadowed that he will submit as a basis of the application to strike out that the defendants have shown a wilful disregard of their obligations to make proper discovery. This puts in issue the explanation given by the third defendant in his affidavit of 11 May about why complete discovery was not made at the proper time. It is an important issue which goes to the bona fides of the defendants in conducting their defences. Where bona fides are in issue, cross-examination should usually be permitted: King v Winter, Cox J, 13 March 1984, Judgment No 7456 (unreported). I will permit cross-examination on this part of the affidavit. As it involves advice apparently received by some defendants from LSL it may raise complex questions of legal professional privilege, but that is not a reason not to permit the cross-examination, even if ultimately a witness may be excused from answering on the grounds of privilege.
Cross-examination of the fifth defendant under 87R 58.04A.
The application is for cross-examination of Ms Arras on her affidavit sworn on 13 May 2009, but that affidavit is only sworn by her on behalf of the first defendant and not in her personal capacity as the fifth defendant. Accordingly, the only issue is whether an order can be made under 87R 58.04A(1) in relation to the discovery made by Shoe Source with her being cross-examined as the director of that company.
In relation to the payment of the $510,025 by Shoe Source referred to above no documents have been discovered by Shoe Source other than the ledger account mentioned above. On a test as low as reasonable cause to suspect I accept the submission of the plaintiff’s counsel that it would be extraordinary if in relation to such a payment of this amount there was not some other document which is, or has been, in the possession or power of Shoe Source which shows the circumstances and nature of that payment. Although Shoe Source has pleaded in its defence that paragraph 30 of the statement of claim does not raise allegations against it, its discovery obligations still extend to all documents relating to any issue in the action whether it involves a claim against it or not.
There is also an issue on the pleadings about what has been referred to as the margin documents which deal with the calculations of the profits actually made by Shoe Source on each of its transactions with the plaintiff which will be relevant to the calculation of any damages to be awarded to the plaintiff. To take but one example, the profit and loss statement of Shoe Source shows that it had paid substantial import duty fees. Insofar as these were paid on merchandise imported for the plaintiff, the amount of that duty would need to be deducted in calculating the profit of Shoe Source on the transactions. The plaintiff’s contention that no documents relating to import duty had been discovered by Shoe Source was not contradicted by its counsel. That also gives rise to a reasonable suspicion for the purposes of 87R 58.04A(1) that Shoe Source has not made full and proper discovery.
Counsel for Shoe Source submitted that a general review of all of the documents discovered and produced by Shoe Source would show that it was likely that it had made full discovery. The plaintiff’s counsel disputed this. In order to resolve this dispute I indicated that I would inspect the documents discovered by Shoe Source to gauge for myself the extent of its discovery. However, I have reached my other conclusions before the documents were received by me and I have not found it necessary to undertake that exercise.
The other comments made above in respect of the 87R 58.04A application against the third defendant also apply to the fifth defendant.
Cross-examination of the fifth defendant on the applications to strike out.
The affidavit of Ms Arras, FDN 134, does no more than verify complete discovery by Shoe Source. For the reasons given above about the conclusiveness of an affidavit of discovery, I am not prepared to allow cross-examination of Ms Arras on this affidavit.
On 14 April 2009 Ms Arras filed another affidavit, FDN 120, in which she gave some explanation for the delays by the first defendant in making proper discovery of documents. I presume counsel for the first defendant will seek to rely on this affidavit in answer to the strike out applications. If so, presumably the plaintiff’s counsel will seek to cross-examine Ms Arras on it. I will deal with that application if and when it is made. If it is made, and it is successful, I would expect that cross-examination to proceed concurrently with the cross-examination of her under 87R 58.04A.
I have today made the following orders:
1The third and fifth defendants be cross-examined under 87R 58.04A(1) on their respective affidavits sworn herein on 11 and 13 May 2009 respectively.
2That the third defendant attend pursuant to 87R 83.12(1) for cross-examination on his affidavit sworn on 11 May 2009 on the hearing of FDN 137.
3Further consideration adjourned of the extent of the cross-examinations to be permitted.
4Costs reserved.
5Fit for counsel.
6A directions hearing is to be held on Tuesday 4 August 2009 at 9.15 am to fix the times for the cross-examinations.