Hydron Pty Ltd v Harous
[2005] SASC 74
•4 March 2005
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
HYDRON PTY LTD v HAROUS
Judgment of The Honourable Justice Besanko
4 March 2005
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PRACTICE UNDER RULES OF COURT - OTHER MATTERS ARISING BEFORE TRIAL
Application for order pursuant to r 54.02 of the Supreme Court Rules 1987 that defendant file a further and better statement in response to plaintiff's Notice to Admit - where defendant denied the truth of the facts in paragraphs 2, 3, 11 and 12 of the Notice to Admit because they were not within his knowledge - where defendant denied the truth of the facts in paragraphs 6 and 13 because they were not within his knowledge due to his limited involvement in the market since 6 August 2003 - where defendant denied the truth of the facts in paragraphs 15 and 17 by referring to statements in an affidavit - where defendant denied the truth of the fact in paragraph 28 on the basis of relevance - where defendant denied the truth of the fact in paragraph 30 on the basis of its hearsay content - whether the defendant's statements comply with r 54.02 - application refused in respect of paragraphs 6, 13 and 28 but granted in respect of paragraphs 2, 3, 11, 12, 15, 17 and 30.
Supreme Court Rules 1987 r 54.02, referred to.
Rak v Coles Myer Ltd (1996) 68 SASR 272, considered.
HYDRON PTY LTD v HAROUS
[2005] SASC 74Civil
BESANKO J: By Notice for Specific Directions dated 16th February 2005, the plaintiff in this action, Hydron Pty Ltd, seeks an order that the defendant, Mr Christopher Harous, file and serve a further and better statement in response to the plaintiff’s Notice to Admit filed and served on 21st December 2004. The order is sought under r 54.02 of the Supreme Court Rules 1987. Rule 54.02 provides:
“54.02(1) Unless the Court otherwise orders, the truth of a fact or the authenticity or admissibility of a document specified in a notice to admit shall be deemed to be admitted unless within fourteen days, or such extended time as may be agreed between the parties, the party receiving the notice files and delivers to the party giving the notice a written statement that:
(a) specifically denies the truth of that fact or the authenticity or admissibility of that document and sets forth in detail the reasons why he cannot make the admission; or
(b) states that the refusal to admit the truth of that fact, or the authenticity or admissibility of that document, is made on the grounds of privilege or irrelevancy or that the request is otherwise improper, and sets forth in detail the reasons for the refusal.
(2) Within 21 days of the receipt of a written statement under subrule (1) the Court upon application by the party giving the notice to admit may order:
(a) that the party giving the written statement file a further and better statement within such time as is allowed by the Court;
(b) that the written statement, or some part of it, be struck out.
(3) The Court may make an order pursuant to subrule (2)(b) if it is satisfied that the truth of any fact, the execution of any document or the authenticity of any document as sought in the notice to admit is not bona fide disputed by the party giving the written statement.
(4) An order made under subrule (2)(b) striking out a written statement, or part thereof, shall take effect as though the said statement, or such part thereof, had never been filed and delivered.”
It is unnecessary to describe the plaintiff’s claim in any detail. It is described in the Points of Claim and Statement of Contentions filed by the plaintiff on 23rd November 2004. In short, the plaintiff claims that under various agreements between it and the defendant, namely, a Purchase Agreement, a Deed of Non Competition and an Employment Agreement, the defendant agreed not to engage in any business or activity which is the same or similar to the business as defined in the agreement, namely the sale and distribution of contact lenses and contact lens products or any material part. There was also said to be an obligation not to solicit business of any client of the plaintiff for similar services supplied by the plaintiff. The plaintiff alleges that the defendant has contravened these obligations and it seeks declarations to this effect. It also seeks an injunction restraining the defendant from breaching the obligations and damages to be assessed.
On 21st December 2004, the plaintiff filed a Notice to Admit and on 14th January 2005 the defendant filed an Answer to the Notice to Admit. The plaintiff asserts that the defendant has not properly answered certain paragraphs in the Notice to Admit and that an order that he provide a further and better statement should be made. It is convenient if I deal with the disputed paragraphs in the Notice to Admit in turn.
Paragraphs 2 and 3
The plaintiff asks the defendant to admit or specifically deny the truth of the following:
“2.The companies competing in the wholesale market in Australia for the sale and distribution to retailers of soft contact lenses are, in order of market share:
2.1CIBA Vision;
2.2Johnson & Johnson;
2.3Bausch and Lomb;
2.4CooperVision Hydron;
2.5Ocular Sciences;
2.6Australian Contact Lenses;
2.7Capricornia;
2.8Gelflex;
2.9Menicon; and
2.10Contact Lens Care Australia.
3.The companies competing in the wholesale market in Australia for the sale and distribution to retailers of RGP lens market, in order of market share:
3.1Capricornia;
3.2Australian Contact Lenses;
3.3CIBA Vision;
3.4CooperVision Hydron;
3.5Gelflex;
3.6Menicon; and
3.7Contact Lens Australia”
The defendant’s answers are as follows:
“2.Denies the facts the subject of paragraph 2, as they are not within his knowledge, in particular as to the order of market share of the companies.
3.Denies the facts the subject of paragraph 3, as they are not within his knowledge, in particular as to the order of market share of the companies.”
Lander J considered the operation of r 54 in Rak v Coles Myer Limited (1996) 68 SASR 272. His Honour held that it was not a sufficient answer to a request for the admission of a fact for a responding party to say that he does not know and therefore could not admit the fact. I agree. The relevant sub-rule in relation to paragraphs 2 and 3 is r 54.02(1)(a) and that provides that the responding party must specifically deny the truth of the fact and set forth in detail the reasons why he cannot make the admission. A response that a party does not know and cannot admit a fact is not a specific denial of the truth of the fact, nor, other than at a very general level, does it provide in detail reasons why the party cannot make the admission.
In this case, there is a specific denial of the fact. However, I do not think that the defendant has gone on to set forth in detail the reasons why he cannot make the admission. It seems to me that the rule would be easily circumvented if a responding party is able to deny a fact and say that he does so simply on the basis that he does not know the fact. At the same time, I do not think that a party is bound to admit a fact unless he is able to state that the fact is wrong. It is proper for a party to deny a fact on the basis that he does not know whether the fact is true. To take an example given by Lander J in Rak v Coles Myer Limited (supra) (at 281 – 282), he may do so because he was not present when a conversation took place. In my opinion, to give proper effect to the rule and the words “in detail” a responding party needs to state reasons why he does not know the fact. In my opinion, the answers to paragraphs 2 and 3 do not comply with r 54.02 and the defendant should state the reasons why he cannot make the admission. To take paragraph 2 as an example, it may be that he has not heard of some of the companies or businesses referred to therein, or he may not have dealt with some of the businesses or he may have no knowledge of their sale figures or he may have some knowledge of their sale figures but is unable to “rank” the various businesses in the manner requested. There may of course be other reasons.
I will order a further and better statement in relation to paragraphs 2 and 3.
Paragraph 6
The plaintiff asks the defendant to admit or specifically deny the following:
“6.At all times from 1 November 2002, OPSM had over 400 stores in Australia.”
The defendant’s answer is as follows:
“6.Denies the fact the subject of paragraph 6 as it is not within his knowledge due to his limited involvement in the market since 6 August 2003 and in any event says that the fact sought to be admitted is irrelevant.”
In my opinion, this response complies with r 54. The defendant provides a reason why he denies the fact (r 54.02(1)(a)) although it must be said that in this respect the answer is borderline. Furthermore, he relies on r 54.02(1)(b) when he states that the fact is irrelevant. Irrelevancy is a ground upon which a party may refuse to admit the truth of a fact and it is not for the Court at this stage to go behind the claim of irrelevancy, save in perhaps an extreme case. This is not such a case.
I will not order a further and better statement in relation to paragraph 6.
Paragraphs 11, 12 and 13
The plaintiff asks the defendant to admit or specifically deny the truth of the following:
“11.The sale to practising Optometrists and company’s employing groups of practising Optometrists comprises over 90% of the wholesale market for the sale of contact lens and contact lens care products in Australia.
12. As at September 2004, there were:
12.1 4008 registered optometrists in Australia;
12.2 2855 active optometrists in Australia.
13.As at 1 November 2002, and at all times since that date, between 20 and 24 percent of all active Optometrists in Australia work for OPSM.”
The defendant’s answers are as follows:
“11.Denies the facts the subject of paragraph 11 as they are not reasonably within his knowledge and in any event says that the facts sought to be admitted are irrelevant.
12.Denies the facts the subject of paragraph 12 as they are not reasonably within his knowledge and in any event says that the facts sought to be admitted are irrelevant.
13.Denies the facts the subject of paragraph 13 as they are not within his knowledge due to his limited involvement in the market since 6 August 2003 and in any event says that the facts sought to be admitted are irrelevant.”
As I have already said, the Court will not go behind the claim that a fact is irrelevant. The objection of irrelevancy is based on r 54.02(1)(b). However, the defendant also relies on r 54.02(1)(a) and the answers to paragraphs 11 and 12 are inadequate for the reasons I have given in relation to paragraphs 2 and 3. I think the plaintiff is entitled to know whether or not the only objection to those facts is in fact one based on irrelevancy. The answer to paragraph 13 is unobjectionable for the same reasons I have given in relation to paragraph 6.
I will order a further and better statement in relation to paragraphs 11 and 12 but not in relation to paragraph 13.
Paragraphs 15 and 17
The plaintiff asks the defendant to admit or specifically deny the truth of the following:
“15.Harous held the position of sales director OPSM with Hydron from 1 November 2002 to 24 October 2003.
…
17.Through his position as sales director, OPSM, Harous knew of Hydron’s:
17.1 contractual relationships with OPSM;
17.2marketing strategies aimed at growing sales with OPSM;
17.3product range and the placement of those products with OPSM; and
17.4pricing arrangements with OPSM.”
The defendant’s answers are as follows:
“15.Denies the fact the subject of paragraph 15 for the reasons set forth in paragraphs 75 to 77 inclusive of his Affidavit sworn 18 November 2004.
…
17.Admits the facts the subject of sub-paragraphs 17.1 to 17.3 inclusive but denies the fact the subject of sub-paragraph 17.4 by reason that although he believed he had knowledge of the pricing arrangements with OPSM in the event he had no actual knowledge of what were in fact pricing arrangements with OPSM for the reasons set forth in paragraph 79 of his Affidavit sworn 18 November 2004.”
In relation to paragraph 15, the relevant paragraphs in the defendant’s affidavit sworn on 18th November 2004 are as follows:
“75.On 6 August 2003, I was required to attend a meeting with the Managing Director of the Plaintiff, Mr Michael Kotow. Mr Kotow gave me a letter dated 6 August 2003 which had been written by Minter Ellison. The letter made various allegations. The effect of these allegations was that I had misled the Plaintiff in relation to the sale of the business of Nu contacts – see Tab 18.
76.In addition to being given the letter from Minter Ellison, I was also given a letter from the Plaintiff – see Tab 19. This second letter advised me that commencing forthwith, I was stood down with pay for a period of two weeks. During this two week period, I was instructed to have no contact with OPSM and that I was to perform work from home. Given the instruction that I was to have no contact with OPSM, this meant that I was unable to perform any work of substance during the period of the stand down. I complied with the instruction. The letter dated 6 August 2003 from the Plaintiff also required me to attend an interview on the premises of the Plaintiff on 14 August 2003 to respond the matters raised in the letter from Minter Ellison.
77.Wednesday 6 August 2003 was the last day that I performed any work for the Plaintiff.”
In relation to paragraph 17, the relevant paragraph in the defendant’s affidavit sworn on 18th November 2004 is as follows:
“79.I noted at the time that I was given the letters dated 6 August 2003 from Minter Ellison and from the Plaintiff that just prior to receipt of the letters, I had discovered that the Plaintiff had (inadvertently but significantly) overcharged OPSM for product supplied to it by the Plaintiff. When I had initially raised this issue with the Plaintiff, I had been urged not to advise OPSM of the overcharging. The allegations of dishonesty made against me came after this event.”
In the ordinary case I do not think that it is appropriate to answer a notice to admit by referring to statements in an affidavit and a notice to admit should be complete on its face. Furthermore, the response should be as concise as possible and I think the nature of the statements in the affidavit means that the answers are not concise.
I will order a further and better statement in relation to paragraphs 15 and 17.
Paragraphs 28 and 30
The plaintiff asks the defendant to admit or specifically deny the authenticity and admissibility of the following:
“28.A paper prepared by Peregrine Horton for the Optometrists Association Australia, entitled ‘The Australian Optometrist workforce’, a true copy of which is annexure C to this Notice.
…
30.The document published by OPSM, a true copy of which is annexure E to this Notice.”
The defendant’s answers are as follows:
“28.Admits the authenticity but denies the admissibility of the document the subject of paragraph 28 on the basis of relevance.
…
30.Admits the authenticity but denies the admissibility of the document the subject of paragraph 30 by reason of its hearsay content and on the basis of relevance.”
The answer to paragraph 28 is a proper one (r 54.02(1)(b)) and, as I have said, this Court will not go behind a claim of irrelevancy at this stage.
The answer to paragraph 30, insofar as the objection is based on a claim of irrelevancy, is unobjectionable. However, the other basis of objection, hearsay content, is not so easily dealt with.
I do not think hearsay is a proper ground of objection under r 54.02(1)(b). It is not a ground referred to in that paragraph. Nor is hearsay of itself a proper ground of objection under r 54.02(1)(a). It is not a reason why a responding party “cannot” make an admission as to the admissibility of the document. However, I think a party can specifically deny the admissibility of a document if he has reasons for taking that position. He may have reasons why he specifically denies the document in terms of the statements in the document and providing they are set out in detail that would be a proper answer. At present the answer to paragraph 30 is not in that form.
I will order a further and better statement in relation to paragraph 30.
Conclusion
The defendant must provide a further and better statement in accordance with these reasons in relation to paragraphs 2, 3, 11, 12, 15, 17 and 30 of the Notice to Admit. I will hear the parties as to the time within which this must be done and the question of costs.
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