Jacobs v Edwards - [2011] SASC 6

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
JACOBS & ANOR v EDWARDS & ORS
[2011] SASC 6
Reasons of Judge Lunn a Master of the Supreme Court
20 January 2011
CORPORATIONS
Originating process not supported by affidavit as required by Corporations Rule 2.4(1) - order made dispensing with compliance with R 2.4(1) conditionally upon Statement of Claim being verified by affidavits of deponents who could verify all of its contents from their own knowledge or from documents with evidentiary value - affidavits filed held not to comply with conditions of dispensation order - failure to comply with that order held not an irregularity under 6R12 which justified striking out the Statement of Claim or the affidavits.

JACOBS & ANOR v EDWARDS & ORS
[2011] SASC 6
JUDGE LUNN:
Reasons on application to strike out affidavits and Statement of Claim

On 28 June 2010 the plaintiff instituted this action seeking relief under the Commonwealth Corporations Act 2001. Rule 2.4(1) of the Corporations Rules 2003 (South Australia) (“the Corporations Rules”) provide:
2.4(1) unless the court otherwise directs, an originating process must be supported by an affidavit stating the facts in support of the process”.
Rule 2.6 of the Corporations Rules provides:
2.6An affidavit must be in a form that complies with:
(a)     the rules of the Court; or
(b)     the rules of the Supreme Court of the State (if any) or Territory (if any) where the affidavit was sworn or affirmed …
(c)     the rules of the Federal Court of Australia.
Although the affidavit mentioned below of Mr Coulter was sworn in Victoria, it was not suggested in submissions that the Rules of the Supreme Court of Victoria were relevant. It is unclear where the affidavit of Mr Jacobs was sworn, but his oath was taken by a South Australian solicitor. I proceed, in accordance with the submissions, on the basis that it is the South Australian Rules on affidavits that are relevant. The originating process was supported by an affidavit of the plaintiffs’ solicitor which merely exhibited a proposed Statement of Claim. It was not suggested that this affidavit complied with Rule 2.4(1). Subject to any contrary direction or dispensation, under Rule 2.4 a proceeding under the Corporations Act must be supported by an affidavit, and pleadings can only be used if there is an order to that effect.[1]
[1] Litmus Australia Pty Limited(in liquidation v Canty (2006) 57 ACSR 71.
At a directions hearing on 30 July 2010, but before the second and ninth defendants were before the Court, the plaintiffs sought a direction that the matter proceed on pleadings. Master Burley indicated that he was not prepared to give such a direction at that stage. However, he did give the plaintiffs permission to file and serve a Statement of Claim.
At the next directions hearing on 8 October 2010 before myself, the defendants objected to the plaintiffs not having complied with Rule 2.4 in not having filed a supporting affidavit for the originating process which complied with that rule. They sought a direction that the plaintiffs do so, which was opposed by the plaintiffs.
At the next directions hearing on 28 October 2010, the plaintiffs made an oral application for dispensation from Rule 2.4. The plaintiffs’ submissions were to the effect that the complexity and nature of the matter required that it should be dealt with on pleadings and that the filing of affidavits complying with Rule 2.4 would serve no useful purpose and would be an unnecessary expense. The defendants submitted that while they agreed the matter should proceed on pleadings, the purpose of Rule 2.4 in requiring an originating process to be supported by affidavits was to ensure that there was proper evidence available to support the plaintiffs’ claim and that the defendants were not exposed to spurious claims. Although I did not give any reasons at the time, I considered that there was merit in the contentions of all parties and while the plaintiffs should be required to show that they had proper evidence on which to base their claim, they should not be put to the expense of filing what would probably be voluminous affidavits. Accordingly, I made the following order:
Plaintiffs’ application for dispensation from Rules 2.2 and 2.4 granted conditionally upon affidavits being filed with the statement of claim from deponents who can verify all of its contents from their own knowledge or from documents with evidentiary value.
There was no debate at the time about the terms of the order, but also no dissent from it. I imposed the term that the deponents swear to the facts of their own knowledge because that is what would have been required for a proper affidavit complying with Rule 2.4 and 6R 162. Under Rule 162 an affidavit could only have been filed on information and belief evidence where it was in support of an interlocutory process, which was not the case here. I also did not intend to allow a practice which has been adopted in other jurisdictions where pleadings are required to be verified by affidavit of merely allowing the plaintiffs to swear an affidavit that the contents of the pleading were true to the best of their knowledge, information and belief. I included the reference to documents of evidentiary value to cover matters which could be established by resort to evidentiary aids such as s 45A and s 45B of the Evidence Act. I did not intend that those documents should be exhibited to the affidavit, but it was necessary that they should be identified because without such identification it was impossible to know whether they were of evidentiary value.
On 24 November 2010 the plaintiffs filed their Statement of Claim being 76 pages in length. On that day they filed an affidavit of the first plaintiff purporting to verify parts of the Statement of Claim as set out in a schedule exhibited in that affidavit. On 3 December 2010 they filed an affidavit of Mr Coulter purporting to verify other parts of the Statement of Claim. Various of the defendants contend that these affidavits do not satisfy the terms of the dispensation in my order of 28 October 2010.
I rule that the affidavits of Mr Jacobs and Mr Coulter do not satisfy the terms of my order of 28 October 2010. The order required that the contents of the Statement of Claim be verified by deponents of their own knowledge. Mr Jacobs’ affidavit makes it clear that not all of that which he has purported to swear to, is of his own knowledge. In paragraph 2 he said:
… All the allegations in that Statement of Claim are to the best of my knowledge true and correct but may include matters which I have concluded by inference from statements by third parties and documents I have seen or the circumstances of my matter.
In paragraph 3 he said referring to an exhibit:
Where there is marked in the left hand column the word “Verified” I say that the matters are known to me either of my own knowledge and belief or I believe the allegation therein to be true based upon documents which I have seen and believe to be of evidentiary value.
The references inter-alia to “statements by third parties” and “the circumstances of my matter” are wider than what he could swear to from his own knowledge. What he has sworn to of his own knowledge is unclear. The affidavit of Mr Coulter assumes in what he verifies that Mr Jacobs has verified other matters of his own knowledge. Thus it does not comprise necessarily verification of the paragraphs of the Statement of Claim which it refers to. While I accept that the Court could overlook trivial departures from the requirements of the order, I am satisfied that it is impossible to know on what has been stated in the affidavits and the exhibit the extent to which Mr Jacobs and Mr Coulter have deposed to matters outside their own knowledge. As they have not identified the documents to which they have had reference, it is impossible to know whether they have evidentiary value. The effect of this is that the conditions precedent for the dispensation from compliance with Rules 2.2 and 2.4 have not been satisfied, and, unless they have been otherwise waived, they remain applicable.
The main argument revolved around the consequences of these conditions precedents not being satisfied. The first, third, fifth, sixth and ninth defendants, (“the multiple defendants”), who are jointly represented, took out an application (FDN23) seeking to strike out the Statement of Claim and the affidavits of Mr Jacobs and Mr Coulter. The eighth defendant took out an application (FDN26) seeking to strike out the Statement of Claim, or parts of it, or that particulars be given. The seventh and tenth defendants did not take any point on the issue.
On the directions which have been given there is no direct link between the direction to file a Statement of Claim and the dispensation granted from compliance with Rule 2.4. Insofar as non-compliance with Rule 2.4 is a procedural irregularity under 6R 12, it does not justify the striking out of the Statement of Claim. The irregularity could theoretically lead to the striking out of the Originating Process, but no defendant has sought such an order.
If the plaintiffs want the benefit of the dispensation from compliance with Rule 2.4 pursuant to the order of 28 October 2010, it is open to them now to apply for an extension of time to file affidavits which do comply with the terms of the dispensation. The order required the affidavits to be filed

“with the Statement of Claim”. Mr Coulter’s affidavit was filed later, but no point was taken on this. If the plaintiffs make such an application, I would also be prepared to entertain a reconsideration of the terms of the order of 28 October 2010, and in particular to make it clear that verification is only required for facts and that the documents of evidentiary value are only to be identified and not exhibited.
Insofar as the multiple defendants and the eighth defendant sought orders in the alternative, striking out parts of the Statement of Claim, the plaintiffs argued that this was barred by 6R 129 in that no settlement conference has yet been held or dispensed with. However, by 6R 124 Exception 1 6R 129 does not apply to this action. Counsel for the eighth defendant did not put full submissions on the point and left it to me whether it should be dealt with at this stage of the action. It would be prudent for the plaintiffs to review the Statement of Claim in the light of the complaints made. It needs to be amended in any event to delete the pleading against the 12^th defendant against whom a discontinuance has now been filed. The eighth defendant can then pursue its application if any proposed amendments are not to its satisfaction.
The multiple defendants sought orders that the plaintiffs provide copies of the documents relied upon by Mr Jacobs and Mr Coulter. I do not see the need for this order as presumably this will occur in the ordinary course of disclosure of documents.
I do not consider the affidavits of Mr Jacobs and Mr Coulter should be struck out. There is no inherent vice in them. It is merely that they do not satisfy the condition precedent for the dispensation from compliance with Rule 2.4.
I have today made the following orders:
1.Paragraphs 2, 3, 4 and 6 of FDN23 are refused;
2.Paragraph 5 of FDN23 is adjourned for further consideration;
3.Paragraphs 2 and 5 of FDN26 are refused;
4.Paragraphs 3 and 4 of FDN26 are adjourned for further consideration;
5.Costs reserved;
6.Further directions hearing set for Friday 11 February 2011 at 9.30am.