J-Corp Pty Ltd v Pannell Kerr Foster (A Firm) - [2004] WASC 21

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: J-CORP PTY LTD -v- PANNELL KERR FOSTER (A FIRM) & ORS [2004] WASC 21

CORAM: MASTER NEWNES

HEARD: 12 FEBRUARY 2004

DELIVERED : 12 FEBRUARY 2004

PUBLISHED : 18 FEBRUARY 2004

FILE NO/S: CIV 1782 of 2001

BETWEEN: J-CORP PTY LTD (ACN 009 063 076)
Plaintiff
AND
PANNELL KERR FOSTER (A FIRM)
First Defendant
DEBORAH MICHELE CHOY MEI JONES
Second Defendant
GAVIN WAYNE JONES
Third Defendant

Catchwords:

Practice and procedure - Application for leave to interrogate - Delay - Principles to be applied - Turns on own facts

Legislation:

Nil

Result:

Leave granted

Category: B

Representation:

Counsel:

Plaintiff:     Mr A W Buchan
First Defendant             :     Ms B M Randall
Second Defendant         :     No appearance
Third Defendant           :     No appearance

Solicitors:

Plaintiff:     Hotchkin Hanly
First Defendant             :     Phillips Fox
Second Defendant         :     No appearance
Third Defendant           :     No appearance

Case(s) referred to in judgment(s):

Dalecoast Pty Ltd v Monisse [1999] WASCA 103
Skahill v Kestral Holdings Pty Ltd [2000] WASCA 185

Case(s) also cited:

Esther Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196
Irvine v State of Western Australia [1999] WASC 224
Jackamarra v Krakouer (1998) 195 CLR 516

MASTER NEWNES: On 12 February 2004, I granted the first defendant leave to administer interrogatories to the plaintiff. I said I would provide reasons for my decision. These are those reasons.
In the action, the plaintiff alleges that, as a result of certain express and implied representations allegedly made by the first defendant, the plaintiff was induced to acquire a 50 per cent interest in, and to advance substantial sums of money to, a building company, Edmonds Fine Homes Pty Ltd ("Edmonds"). It subsequently turned out that Edmonds was insolvent. The plaintiff alleges that, in making the alleged representations, the first defendant engaged in misleading and deceptive conduct, or alternatively was negligent in failing to make proper inquiries into Edmonds' financial position before making the alleged representations. The plaintiff claims damages for the money it advanced and, in addition, money that it says it had to pay to complete building works undertaken by Edmonds in order to preserve the plaintiff's reputation.
The first defendant denies that it made the alleged representations and says, among other things, that the plaintiff made its own examination of the financial affairs of Edmonds. The first defendant denies that the plaintiff relied on anything said by the first defendant in making the decision to acquire the half interest in Edmonds and to advance moneys to it.
The proposed interrogatories are directed, in substance, to what inquiries or investigations the plaintiff made before advancing the funds to Edmonds, what information and advice it had about Edmonds' financial affairs, and the circumstances in which the plaintiff came to pay for the completion of each of the outstanding buildings in respect of which it now claims damages.
The plaintiff did not, on this application, contend that the nature or form of the proposed interrogatories was such that leave should be refused on that basis. The plaintiff simply submitted that the application for leave to interrogate was too late in the day and should be refused for that reason. It is therefore necessary to consider the background to the current application.
The action was commenced on 11 June 2001. The first defendant filed its defence on 17 December 2001. The plaintiff gave discovery of documents on 25 June 2002 and the first defendant gave discovery of documents on 3 July 2002. On 4 December 2002, an order was made that the parties have leave to file and serve interrogatories by 24 January 2003.
On 16 January 2003, the plaintiff provided a supplementary affidavit of discovery and on 28 January 2003 consent orders were filed extending the time for the parties to file and serve interrogatories to 28 February 2003. On 19 February 2003, the first defendant provided a supplementary affidavit of discovery and shortly afterwards, on 26 February, an informal agreement was reached between the parties to extend the time for the filing and service of interrogatories to 12 March 2003.
On 12 March 2003 the plaintiff indicated that it wanted to extend the time to issue interrogatories further, in order to enable it to inspect the documents produced on the first defendant's supplementary discovery. The time was extended by agreement to 21 March 2003. On 24 March 2003, the plaintiff informed the first defendant that it was not yet in a position to serve interrogatories and eventually, on 14 May 2003, an order was made that the time within which the parties were to file and serve interrogatories be extended to 9 June 2003. The plaintiff administered interrogatories to each of the defendants on 9 June 2003.
On 11 June, the first defendant advised that it would not be in a position to file and serve interrogatories on the plaintiff until the week commencing 16 June 2003. In fact, it did not serve a minute of proposed interrogatories until 22 August 2003. At that time, it asked whether the plaintiff would consent to provide answers or objections to the proposed interrogatories. On 3 September 2003, the plaintiff advised it was not prepared to do so. The current application for leave to administer the interrogatories was filed on 3 October 2003.
It was not in issue that, although there is no prescribed time limit, interrogatories should be administered reasonably promptly after the pleadings have closed and discovery has been given, and that unjustified delay may militate against the grant of leave. It was also common ground that leave to administer interrogatories is not granted as of right, even in the absence of delay. In that respect, it is relevant to refer to what Owen J said in Dalecoast Pty Ltd v Monisse [1999] WASCA 103. While that case was concerned with an application to administer a second set of interrogatories, his Honour's comments have general application. At [5] ‑ [6] Owen J said:
"It is often the case that the benefit to be obtained from delivering interrogatories is far outweighed by the inconvenience and expense to the other party in having to answer them. As a mechanism for understanding the case which a party has to meet they have, at least to some extent, been replaced by the pre‑trial exchange of witness statements which is ordered in most cases. The standard form of pre‑trial documents orders mean that a party will seldom go to trial not knowing what documents it has to prove strictly.
These are developments that have occurred in recent times and the present regulatory framework for interrogatories has to be seen against that background. In the 1996 amendments to the Rules of the Supreme Court there was a significant change to the regime for interrogatories. It is now necessary to obtain leave before any interrogatories are administered. … The leave regime is administered with case management principles in mind. Considerable thought needs to be given to whether it really is necessary to administer interrogatories consistent with the principles enshrined in O 1 r 4B. If they are considered necessary, great thought must go in to the framing of them so that they achieve the object for which they are designed without putting the other party to unnecessary trouble and expense."
An affidavit of the first defendant's solicitor, Cameron MacLean, sworn 1 October 1003, was filed in support of the present application. Mr MacLean says that one of the reasons for the first defendant's failure to meet the deadline of 9 June 2000, and for the delay in seeking leave, was that there were difficulties associated with obtaining access to documents discovered by the National Australia Bank ("NAB") pursuant to an order for third party discovery obtained by the plaintiff.
Mr MacLean says the affidavit of discovery of NAB was served on the first defendant's solicitors on 17 February 2003. The discovered documents were inspected by the first defendant's solicitors on 28 May 2003. The solicitors then requested copies by letter to NAB of 3 June 2003. The copies, consisting of some 100 pages, were received on 20 June 2003. It was not until 22 August 2003 that the first defendant's solicitor wrote to the plaintiff's solicitors enclosing the proposed interrogatories.
Mr MacLean simply says that, after receipt of NAB's documents, it took time to review and then finalise the first defendant's interrogatories. No explanation, however, is provided for the delay between February and June in inspecting the documents, nor is there any indication of the reason why it took some two months after copies were obtained to review the documents and settle the interrogatories.
On the hearing of the application, counsel for the first defendant frankly, and in my view quite properly, conceded that the explanation for the delay was not entirely satisfactory, but submitted that, nevertheless, it was in the interests of justice that leave be granted.
The action has not yet been entered for trial and it was not suggested that it is at a point where it is likely to be entered for trial in the immediate future. Nor did the plaintiff contend that it would suffer prejudice if leave were granted. It simply argued that the delay was inadequately explained and that the delay was sufficient of itself to justify leave being refused.
In my view, it will be a rare case where, in the absence of any other factor, delay in and of itself will be sufficient to warrant the refusal of leave to take a significant interlocutory step. It is undoubtedly the case that parties to litigation should proceed to complete the interlocutory steps with all proper and reasonable expedition. But expedition is not an end in itself. It is to serve the interests of justice. Ultimately, therefore, the question in a case such as the present must be how the interests of justice will best be served.
There has been substantial delay and the explanation for it is not entirely satisfactory. It has, however, occurred in circumstances where the plaintiff itself cannot be regarded as having pursued the action with all due speed, at least in relation to the service of interrogatories. It was not suggested that the action would be unduly delayed, if delayed at all, if leave were granted. Although there was previously a grant of leave which has now lapsed, there is no question of the failure of the first defendant to comply with a peremptory order of the Court. It is also a relevant consideration that the delay in this case is, as the first defendant's counsel conceded, the fault of the solicitors rather than their client: Skahill v Kestral Holdings Pty Ltd [2000] WASCA 185.
The proposed interrogatories go to central issues in the action, namely, whether, in purchasing the interest in Edmonds and advancing moneys to it, the plaintiff relied on any representations which may be found to have been made by the first defendant or whether the plaintiff relied on its own inquiries, and the circumstances in which the plaintiff incurred the cost of completing the outstanding building work.
It would appear inevitable that in this case an order will be made for witness statements to be exchanged by the parties prior to trial. That is, as Owen J observed in Dalecoast (supra), a relevant consideration. It is also the case, however, that that exchange normally takes place relatively shortly before the trial. The issues to which the proposed interrogatories in this case relate are fundamental to the outcome of the action. As such, they are likely to bear substantially on the preparation of the first defendant's case for trial. They are also likely to bear on the assessment by the first defendant and the plaintiff respectively of their prospects of success in the action. Those assessments may well affect the prospects of the action being settled. If the action is to be settled, it is plainly desirable that that occur sooner rather than later, and in particular, that the parties do not delay settlement until the eve of the trial, with all the waste of costs and Court resources that that inevitably involves.
In the circumstances, despite the delay, I was satisfied that leave to interrogate should be granted in terms of the minute.