Leigh-Mardon Pty Ltd v Titan Corporation Ltd

[1996] FCA 1037

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY  No VG 346 of 1993
GENERAL DIVISION

B E T W E E N :

LEIGH-MARDON PTY LTD  Applicant
A N D :
  TITAN CORPORATION LTD and OTHERS  Respondents

COURT:         NORTHROP J
PLACE:          MELBOURNE
DATE:  21 NOVEMBER 1996

REASONS FOR JUDGMENT

The matter for determination by the Court at the moment is, essentially, whether the date fixed for hearing of this application, namely, 10 February 1997, should be vacated.  The Court has on many occasions described in brief outline the nature of the proceedings and has described in brief detail the problems being faced by the respondents in getting ready for trial. As was said a short time ago, in my opinion, it was not until the current statement of claim was delivered in March of this year that the respondents were in a position to ascertain for the first time what were the essential issues to be determined by this litigation.  It is also fair to say that before that time there were a number of amendments to the statement of claim and the matter had been set down for trial, but it was very apparent to the Court that it was not ready for trial.

There has also been a history of lack of co-operation between the legal advisers of the parties.  In many instances that lack of co-operation has been remedied and there have been consent orders made from time to time. At the same time there has been a continuation, to some extent, of problems being brought to the Court supported by material which was far too lengthy and far too detailed. This has merely illustrated further the problems arising as between the two solicitors involved.

The matters referred to in the affidavits read today illustrate that matter entirely.  This is not a case where the Court is going to consider who is to blame for delays in complying with orders of the Court or giving full discovery or matters of that kind.  The Court is concerned to ensure that the parties are treated fairly. In this case this means the respondent has a fair opportunity to prepare its defence properly.  In this regard, the difficult position in which in the respondents find themselves has been referred to.  The Court refused to adjourn the hearing based solely on the co-existence of criminal investigations and the civil proceeding, but, at the same time, the Court indicated that when it came to consider this matter the problems arising from the existence of those two matters would be a factor to be taken into account.

The essential problem here is that the respondents have not got all documents which were in their possession at the time of the sale.  They do not have the ability to obtain statements from a number of persons who could be material witnesses at the hearing of the matter. Although it must be remembered that a party does not have any right of property in witnesses, or potential witnesses, and a potential witness is able to refuse to co-operate with a litigant, nevertheless in cases of the kind before the Court, namely very heavy litigation involving a very wide range of factual material over a fairly
lengthy period and involving a large number of separate contracts, on 25 contracts, between the respondent group of companies and clients and alleged breaches of those contracts, the respondents should have every opportunity to prepare their defence.

In trying to achieve this, there have been delays occasioned in procedural matters. The view I take at the moment is that although many of those delays have been overcome there is still more work to be done to enable the respondents to prepare their case properly.  At the moment it is expected that the witness statements will be exchanged, or statements of what witnesses might be expected to say will be exchanged, mid-December. In addition, there is evidence before the Court that there is expert evidence sought to be given in relation to the two computer systems involved here, the Nixdorf and the Pertec, where the experts are overseas. Difficulties are being found in obtaining full statements from those persons. The one in Germany is co-operating now after initial problems in relation to his employer as to whether he should co-operate or not. As far as the Pertec computer is concerned, it does appear now that the expert in the United States of America is prepared to co-operate although it is unlikely that statements can be obtained before the new year.

The evidence of these expert witnesses is of vital importance to the whole of the case to be presented by the respondents.  It goes to the whole question of the meaning of "key strokes" in the context of this case.  A consideration of that matter supports the view that there ought to be an adjournment of the hearing.

In addition, this Court, I think on 7 November, ordered that the police produce certain documents pursuant to a subpoena being documents in relation to certain
statements obtained by them in the course of their criminal investigations. The police have appealed that decision. In the meantime the Court has directed that the order it made on 7 November be stayed pending the hearing and determination of the appeal or further order. It appears that that appeal cannot be heard before March of next year at the earliest, even though the appeal is to be expedited.  There is a possibility of it being heard in February, but not very strong. A question arises as to whether the production of these statements obtained by the police do form any part of the defence preparation for the respondents.  This again is an aspect of the problem of the co-existence of the criminal proceeding investigation and the hearing of this matter, and this has all occurred since the decision was given on that matter on 7 November. 

From all the material before me, in my opinion, and having regard to the unusual features of this case, it is necessary for the respondents to obtain if possible those witness statements the subject of the subpoena, the subject of the order of 7 November and the subject of the appeal at the moment.  The restriction on getting those for the time being in my opinion support the view that there should be an adjournment. 

A number of other factors have been put to the Court as to why there should be no adjournment.  It has been put that even though the current proceedings, from the legal point of view, only became clarified when the current statement of claim was served in March this year, nevertheless, before that, there was ample material from which the respondents could have ascertained what were the issues. They did, to some extent, ascertain those issues, but it is also fair to say that at that time there were many other allegations being made against the respondents.  A very large number of contracts were involved, although the pleadings did not make clear what those contracts were. It would
be unfair to infer that the respondents should have had a knowledge of what was being alleged so that the time spent before March 1996 should be considered on the question of the vacation of the hearing date.

It is also said that this is a case where the respondents have been, to some extent, deliberately delaying the proceedings, illustrated possibly by the large number of interlocutory steps being taken, the fact of not always fully appreciating what was being discovered, discovering the reality of the position at a later date and then, as it were, starting all over again to get those documents. In my opinion, there is some force in that but I have in mind the nature of this case, the size of it, the large number of documents involved and the conflicts which did develop between the solicitors which, in many cases, in my view, obscured the reality of their true position as professional people.  But the degree of delay so occasioned can be used as a factor against the granting of the vacation of the date for hearing.

It has also been suggested and urged on the Court that the Court should take into account the fact that here the main respondent company is to some extent dissipating its assets, with the result that if there is a long delay in the hearing of the matter and if judgment is obtained against the respondents for damages there is a likelihood those damages could not be recovered. To this extent evidence was given in relation to proceedings pending in the Supreme Court of Victoria, to various matters involving the formal documents of corporations being filed and possible excessive fees being paid to directors and other matters.  In my opinion this raises a very difficult question but I am not satisfied that merely giving evidence of that kind is sufficient to justify the non-vacation of a hearing date if on other grounds the hearing date should be vacated. The
problem of a respondent taking active steps to divest itself of assets during the conduct of litigation does give rise to many difficult problems and I do not know what the answer to it is.  But on the material presently before me and in the absence of any particular orders being sought in relation to the assets of the company, which apparently is now an investment company,  I can make no finding as to this conduct, whether it is intentional or not to deprive the applicants of any hope of recovering damages. Although some weight is given to the suggestion that this is a factor to take in to account I do not give it much weight.

Having regard to all the circumstances including particularly the co-existence of the criminal investigation and the civil proceedings, the fact that the appeal has been taken from the order for production of the statements obtained by the police, the fact that in my opinion it is important that those documents be supplied, if in law the respondents are entitled to them, and to the general issues involved and the state of the preparation at the present time, this is a case where the hearing date should be vacated.

What flows from that I do not know.  It is not known at the moment when the Full Court will give its judgment.  Certain dates were mentioned by counsel in the course of submissions.  I do not know if they are practicable or not. At the moment the dates for exchange of witness statements is 16 December 1996, and the trial, 10 February 1997.  In my opinion, as indicated, the hearing date on 10 February 1997 should be vacated. As a consequence the date for the exchange of the witness statements should also be vacated.  The other dates mentioned in submissions were exchange of witness statements by 28 February 1997 and the hearing date about 1 May 1997 or 30 April 1997 for exchange of witness statements and 1 June for the hearing date.

I am not in a position at the moment to give a date for the hearing but in my opinion I should not wait necessarily for the Full Court to give its reasons.  I realise that this could have an adverse effect on the applicant. If the appeal does succeed, the respondents must be prepared to go to trial without having obtained the statements produced pursuant to the subpoena.

Directions and orders made accordingly.

I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment of the Honourable Justice R M Northrop.

Associate:

Date: