Jacobs v Edwards (No 6)
[2012] SASC 66
•24 April 2012
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
JACOBS & ANOR v EDWARDS & ORS (No 6)
[2012] SASC 66
Reasons of Judge Lunn a Master of the Supreme Court
24 April 2012
PROCEDURE
Action containing multiple claims against various defendants, some of which arose under the Corporations Act 2001 and some of which did not - held to be a single action governed by Rule 1.3 of the Corporations Rules - held exemption from R124 requiring a settlement conference from actions under the Corporations Act applied to the whole action.
PROCEDURE
Notice to Admit under 6R 156 - application to strike out for oppression - where one defendant asked to admit conduct of another, separately represented defendant - whether a request could be made about a fact denied in the pleadings.
JACOBS & ANOR v EDWARDS & ORS (No 6)
[2012] SASC 66Reasons on ninth defendant’s application to strike out the Notice to Admit served on it
In this action the first plaintiff pursues various causes of action against the ninth defendant (“Carrington”).[1] None of the causes of action now pursued by the plaintiff[2] arise under the Corporations Act 2001 (“the Act”).
[1] The second plaintiff has no cause of action against Carrington and it can be ignored for present purposes.
[2] The reference to “the plaintiff” from hereon means only the first plaintiff.
In the action the plaintiffs also pursue numerous causes of action against eight other defendants, many of which do arise under the Act. There has been no application to disjoin either Carrington from the action or any of the causes of action pleaded against it.
The pleadings as between the plaintiff and Carrington have closed. On 6 February 2012 the plaintiff served a Notice to Admit (FDN91) (“the Notice”) on Carrington. It seeks the admission of the 119 facts, but not any admission of documents. This Notice is addressed only to Carrington, although the plaintiffs have subsequently filed notices to admit addressed to other defendants.
Carrington has not yet filed any answer to the Notice. On 23 February 2012 it took out an application (FDN95) seeking that FDN91 be struck out, or that the time to respond to it be extended.
Whether the Notice was premature
6R 129(2)(b) precludes any notice to admit facts being filed or served before the closure of the settlement conference. There has been no settlement conference. Carrington asserts that this bars the plaintiff from having filed FDN91. The plaintiff says this sub-rule does not apply because of 6R 124(1) which provides:
(1) Subject to the following exceptions, this Part applies to all adversarial actions.
Exceptions—
1An action governed by the Corporations Rules 2003 (South Australia).
Rule 1.3 of the Corporations Rules 2003 (South Australia) (“Corporations Rules”) provides:
1.3 Application of these Rules and other rules of the Court
(1) Unless the Court otherwise orders:
(a)these Rules apply to a proceeding in the Court under the Corporations Act … that is commenced on or after the commencement of these Rules; and
…
(2) The other rules of the Court apply, to the extent that they are relevant and not inconsistent with these Rules:
(a)to a proceeding in the Court under the Corporations Act, or the ASIC Act, that is commenced on or after the commencement of these rules; and
Carrington’s contention that 6RR 124(1) and 129(2)(b) apply in this action is based on Corporations Rule 1.3 referring to a “proceeding”, whereas 6R 124(1) refers to an action. While I accept that “proceeding” is a wider term than “action”,[3] I do not accept that it means that a proceeding under the Corporations Rules can include a multiplicity of separate actions. Carrington contends that this present action is constituted of a number of separate actions by one or both of the plaintiffs against various defendants and that R 1.3 of the Corporations Rules only applies to such of the actions within the overall action as invoke jurisdiction under the Act. However, although it was not raised in the course of argument, this view of SCCIV-10-826 is contrary to 6R 73, which provides:
[3] See there respective definitions in 6R 4, although that definition of proceeding does not necessarily govern its meaning in the Corporations Rules.
(1) A single action may be brought by two or more plaintiffs if—
(a) they each claim to have a cause of action against the same defendant arising from the same or similar facts; or
(b) the claim of each involves the determination of a common question of law or fact; or
(c) the Court gives its permission.
(2) A single action may be brought against two or more defendants if—
(a) the claim against each arises out of the same or similar facts; or
(b) the claim against each involves the determination of a common question of law or fact; or
(c) the Court gives its permission.
[Underlining added.]
This Rule makes it clear that where a plaintiff brings separate claims against various defendants, which in their own right would each be actions as defined in 6R 28, the conglomerate of the various claims, as authorised by 6R 73, is a single action. By virtue of R 1.3(2) of the Corporations Rules 6R 73 applies to this action, as there is no Rule in the Corporations Rules on the same subject matter. Hence the Corporations Rules either apply to the whole action SCCIV-10-826 because some of the claims within it invoke jurisdiction under the Act, or it does not apply at all because no jurisdiction under the Act is invoked. It does not allow for the intermediate possibility that some parts of the single action are governed by the Corporations Act in respect of some of the parties or causes of action, but that the Corporations Rules do not apply to other parts of that action. Either the Corporations Rules apply to the action in its entirety, or they do not apply at all. Here, as some of the claims by the plaintiff against the defendants other than Carrington invoke the Act, the Corporations Rules apply to the whole of action SCCIV-10-826. Thus the Exception 1 in 6R 124 applies to the whole of this action, including the claims against Carrington. Therefore, 6R 129(2)(b) does not preclude the plaintiff from having filed FDN91.
Application to strike out the Notice to Admit
The primary ground relied upon by Carrington to strike out the Notice (FDN91) is that it is oppressive. It contends that the cost and effort to answer the Notice is out of all proportion to the likely savings of costs and time at the trial by seeking the admissions.[4]
[4] Southern Equities Corp Ltd (in liq) v Bond (No 2), Debelle J, 3 July 2000, [2000] SASC 213; Sheahan v Hertz Australia Pty Ltd (1993) 171 LSJS 359.
The essence of Carrington’s case on oppression is set out in the following extracts from its Outline of Argument:
22.The overwhelming majority of the matters referred to in the Notice to Admit directed to the Ninth Defendant … are unrelated to the Plaintiff’s claim against the Ninth Defendant.
23.The claim against the Ninth Defendant falls within a narrow compass. It concerns a simple action for breach of contract and an alleged fiduciary duty and is unrelated to the claims made by the Plaintiffs against the other Defendants. …
25.There is no dispute that the amount of work required to answer the Notice to Admit is extensive and would involve significant expense.
26.The documents required to be considered in order to answer the Notice to Admit comprise 6000 pages in seven volumes and are therefore very extensive.
27.Most of those documents are irrelevant as regards the claim against the Ninth Defendant and they appear to be related solely to the claims against the other Defendants.
[Footnotes omitted.]
I do not accept that the plaintiff’s claim against Carrington falls within a narrow compass and is unrelated to the claims against the other defendants. What are the plaintiffs’ claims are set out in its Second Statement of Claim (FDN76). This is a long and complicated document. The bulk of the pleading relates to claims against the other defendants. What follows is a brief summary of the Second Statement of Claim insofar as it relates to the plaintiff’s claim against Carrington.
The sixth defendant, Kirribilly Ltd (“Kirribilly”),[5] promoted and managed an investment scheme (“the Scheme”) concerning Schobers Road Vineyard at Auburn (“the vineyard”). Lots in the vineyard were sold to members of the Scheme and those members entered into a management agreement for Kirribilly to manage the Scheme. Kirribilly published an information memorandum about the Scheme including forecasts and projections about its profitability. Agents of Kirribilly made representations to the plaintiff about aspects of the Scheme.
[5] Its name is now Tidewater Funds Management Ltd.
Carrington was a conveyancer which acted for Kirribilly in various transactions related to the implementation of the Scheme. It also acted for the plaintiff in relation to his acquisition of interests in the vineyard and becoming a party to the management agreement for the ongoing operation of the vineyard. Thus Carrington owed tortious, contractual and fiduciary duties to the plaintiffs.
The plaintiff was induced through the breaches of duty of Carrington, along with other misrepresentations, breaches of duty and the like by many other defendants, to become part of the investment Scheme. Some of what was represented by Kirribilly was false and Carrington knew, or should have known, of its falsity and have informed the plaintiff of it.
If the plaintiff’s claim against Carrington is to succeed, it must show that the representations made by Kirribilly and its agents were false to the knowledge of Carrington and/or that Carrington knew, or should have known, of matters relating to the Scheme, which it should have passed on to the plaintiff. This requires the plaintiff as part of its case against Carrington to establish the relevant details of the Scheme, how it operated, what false representations were made, what Carrington knew or should have known about the Scheme and how much loss the plaintiff suffered by entering into the Scheme. If this was an action by the plaintiff against Carrington alone, these matters are essential to the plaintiff establishing his causes of action and his losses against Carrington. While many of those matters are also relevant to the plaintiffs’ claims against the other defendants, they are not confined to the cases against the other defendants. Therefore, the bulk of the numerous paragraphs in FDN91 which relate to the activities of Kirribilly and its agents are relevant on the plaintiff’s case against Carrington.
Carrington also objected to a number of other paragraphs, or groups of paragraphs, in the Notice on various grounds such as seeking admissions of law, that some were vague or ambiguous and some were otherwise irrelevant. These are objections better dealt with in the answers given to the Notice.[6] There may be cases where the issue of oppression or not is finely balanced and the fact that some of the individual requests may be ill-founded might be sufficient to tip the balance in favour of the whole Notice being oppressive. However, that is not the situation here. On an application to strike out the whole Notice the Court is not going to settle a permissible form of it by going through each of the paragraphs as it would if it was a set of pre-trial questions under 6R 150.
[6] Southern Equities, above, at [17].
Although it was not raised in the course of argument, there is a different point about oppression which needs to be addressed. Where, as is the case here, the same facts are pleaded against multiple, separately represented defendants, there is little utility in having only some, but not all, of the defendants admit those facts. If even one defendant does not admit a fact which is pleaded against more than one defendant, the plaintiff has to go to the expense and trouble at the trial of proving that fact. In that event there is probably little saving in costs through other defendants having admitted the fact.
Between 3 and 5 April 2012 the plaintiff filed a Notice to Admit Facts (FDN105) against the first, third, fifth and sixth defendants, a Notice (FDN106) against the eleventh defendant and a Notice (FDN107) against the seventh and tenth defendants. As yet, no notice has been filed against the eighth defendant, the National Bank, and I do not know whether one is intended or not. A quick perusal of the four notices to admit indicate that they significantly seek admissions of the same facts against the defendants to whom they are directed. No answers have yet been filed to any of FDNs 105, 106 or 107.
Realistically, if the particular defendant whose conduct is the subject of a request to admit does not admit it, it is highly unlikely that any other defendant will admit it. Conversely, if a defendant whose conduct is the subject of a request does admit it, there is a reasonable prospect that other defendants will follow suit. Thus, if worthwhile admissions are to be obtained, which will save costs and expedite the trial, it is desirable that the defendant which best has the means of knowledge about the subject matter of a particular request should answer it first. It is of no utility if other defendants, who have to answer in advance of that defendant, merely answer that it is outside of their knowledge.[7] Thus, staggered filing of the Notices to Admit, as has occurred here, can be potentially mischievous. I propose that the issue should be ventilated at a directions hearing involving the plaintiffs and all defendants which have been served with a notice to admit or upon whom the plaintiffs intend to serve such a notice.
[7] S, D R v Channel Seven Adelaide Pty Limited and Australian Broadcasting Commission (No 2), Lunn M, 6 February 2007, [2007] SASC 30.
Carrington submitted that it was not permissible for the plaintiff to request an admission of a fact which had been denied in Carrington’s Defence. I do not accept this. 6R 100 does not recognise a plea of a denial. 6R 100(5) deems there to be a denial of any fact pleaded where the defendant does not admit it or state that it does not propose to challenge it at the trial.
Carrington relied upon the following passage from the judgment of Debelle J in Southern Equities, above, at [21]:
[21]A notice to admit is not to be expressed in the same way as a statement of claim. By the time the solicitor for the plaintiff prepares the notice to admit, the solicitor knows what the defendant has or has not admitted in the defence. The notice to admit must be prepared as a series of questions addressing particular facts or documents. In the case of a request to admit facts relating to what might have been pleaded in the alternative in the statement of claim, the notice should, generally speaking, as a question as to each of the alternative allegations of fact. The manner in which a properly structured set of interrogatories is drawn will, in many cases, provide a useful model. Thus, if it is alleged in the statement of claim that “A, or in the alternative B, paid $1000 into a named bank account”, the notice to admit must separately ask whether it is admitted that A paid $1000 into the bank account and, if not, whether it is admitted that B paid the sum of $1000 into the bank account.
That case was decided under an earlier system of pleading[8] where defendants were required to plead express denials and could be taken to have impliedly admitted pleadings which they had not explicitly denied. A deemed denial under 6R 100(5) does no more than put the plaintiff to proof of the unadmitted pleadings. 6R 156(6)(b) requires a defendant answering a notice to admit to go much further in denying factual admissions requested than is required by the relevant pleading Rules. There is no reason in principle why the plaintiff should not be able to test the genuineness of any deemed denial under 6R 100(5) by taking advantage of 6R 156(6)(b). It may be that if a request for an admission is in the same terms as the pleading, there will be other objections to it as a proper request for an admission, possibly along the lines outlined by Debelle J above, but in itself it is not a bar to repeating in a notice to admit what is a deemed denial on the defence.
[8] 87RR 46 and 47 before their amendment on 3 June 2000.
Costs of security for costs application
In my reasons (No 5)[9] I dismissed the application of Carrington for security for costs. On 13 March 2012 I ordered that it pay the plaintiffs their costs of FDN81 and gave liberty to the plaintiffs to apply for any supplementary costs orders. The plaintiffs have now applied for the costs to be on an indemnity scale and for them to be payable forthwith.
[9] 13 March 2012, [2012] SASC 39.
I do not consider that Carrington’s application was so weak and unreasonable that costs on an indemnity scale should be ordered. As I stated in my reasons, I was not aware of any authority that no security for costs would be ordered against a joint plaintiff who did not claim relief against a successful defendant.
I do not consider that it is in the interests of justice to vary the effect of 6R 265(2) to make the costs payable forthwith.[10] There was no suggestion that the plaintiff would suffer any particular hardship by not recovering the costs at this stage. There are a number of interlocutory costs orders against the plaintiffs already in this action and there is the potential for orders to be made for set-offs between costs payable to and by the plaintiffs.[11] There may also be future costs orders which should be brought into account.
[10] See the authorities as set out in Civil Procedure South Australia [6R 265.5].
[11] H Stanke & Sons P/L & Cape Banks Processing Company P/L v Von Stanke, O'Meara & Ors (No 2), White J, 16 March 2007, [2007] SASC 109.
I have today made the following orders:
1FDN95 adjourned to a further directions hearing on Thursday 3 May 2012 at 2.30pm.
2Costs of FDN95 to date reserved.
3Directions hearing for 3 May at 10.40am is vacated.
4Plaintiff’s application for indemnity costs payable forthwith on the costs ordered on 13 March 2012 against the ninth defendant is refused.