Mane Market Pty Ltd, Mane Lion Pty Ltd, Potanc Pty Ltd, Brighton Management Pty Ltd, Flinders Management Pty Ltd v Russell James Temple, and Northeast Management Pty Ltd, Quantile Pty Ltd, Ocean East Pty Ltd and..

[1997] SASC 6389

Downlaod RTF

IN THE SUPREME COURT OF SOUTH AUSTRALIA

DOYLE, CJ

CATCHWORDS:

Procedure - plaintiffs sued defendant to recover $735,000 allegedly wrongfully withdrawn by defendant from plaintiffs' bank accounts - plaintiffs obtained a Mareva injunction - defendant filed application for discharge of injunction - defendant said he was a professional punter and that the injunction had severely resricted his earning capacity - by agreement a less restrictive injunction was granted - plaintiff issued application for orders under s49 of the Evidence Act permitting plaintiffs to inspect and take copies of bank records relating to a number of identified cheques - Master made orders sought in absence of defendant - on appeal - whether TAB records are "banking records" for purposes of s49 of Evidence Act - whether TAB is to be regarded as "any other body that accepts money or deposit from public" - whether Master erred in making order without notice of application being given to defendants' solicitors - orders are not to be made in absence of a party represented in civil proceedings, unless there is the power and proper grounds for doing so - appeal allowed. Evidence Act, 1929 (SA) s49; Racing Act, 1976 (SA) s62, referred to. Williams v Summerfield [1972] 2 QB 512; R v Marlborough Street Magistrates Court ex parte Simpson (1980) 70 Cr App R 291, considered.

HEARING:

ADELAIDE, 24 September 1997 (hearing), 3 October 1997 (decision)

#DATE 3:10:1997

#ADD 7:10:1997

Appearances:

Appellants:

Counsel: Mr R D Ross-Smith

Solicitors: Phillips Fox

Respondents :

Counsel: Mr N J Swan

Solicitors: Hynd & Co

Order: appeal allowed.

DOYLE CJ

The defendant in this action appeals against a decision of a Master, refusing to revoke an order made on the plaintiffs' application and in the defendant's absence.

To understand the issues that were argued upon appeal, it is necessary to have an understanding of the circumstances in which the order came to be made.

The proceeding

The plaintiffs have sued the defendant Temple. They claim to recover $735,000 which the plaintiffs allege was wrongfully withdrawn by Temple from the plaintiffs' bank accounts. Temple was at the relevant time a director and employee of each plaintiff. Temple says that he operated running loan accounts with each plaintiff, was authorised to make the withdrawals, and that the plaintiffs are indebted to him for more than the amount that he withdrew. That is a brief summary of the effect of the Statement of Claim and of the defence.

In their Statement of Claim the plaintiffs claim that assets acquired by Temple with the plaintiffs' money were held on constructive trust for the plaintiffs. The plaintiffs claim an order vesting those assets in the plaintiffs.

The claim for relief at the end of the Statement of Claim includes a claim for an order for an account and enquiry into Temple's use of the money, and an order vesting in the plaintiffs title to and possession of the assets acquired by Temple with the plaintiffs' money.

The summons to institute the action, and the Statement of Claim were filed on 4 October 1996. Temple's defence was filed on 7 November 1996.

An injunction granted

On 31 January 1997 the plaintiffs obtained the grant of an injunction. The injunction was granted in Temple's absence. The injunction is a form of Mareva injunction. The injunction is expressed in terms which are, in my opinion, unnecessarily convoluted. The effect of the order is to restrain Temple from removing any of his assets from South Australia, from disposing of any of his assets or from dealing with any of his assets. The order provided that Temple was at liberty to expend a sum not exceeding $1,000 a week for living expenses (not to include the amount of any wager or bet), that Temple was at liberty to pay costs incurred in the proceedings up to an amount of $10,000 and that Temple was at liberty to pay debts (other than gambling debts) already incurred, not exceeding in aggregate the sum of $15,000.

That order was continued in effect on at least two subsequent occasions.

On 18 February 1997 an affidavit of Temple was filed in support of an application for the discharge of the Mareva injunction. In that affidavit Temple denied having taken any steps to prevent the plaintiffs recovering anything that might be due from him to the plaintiffs. In the course of the affidavit he said that he was a professional punter, and that the injunction had "severely restricted my earning capacity as a punter and also restricts my day to day expenditures which are necessary for me to earn income in this fashion". Other grounds of opposition to the continuation of the Mareva injunction were advanced.

On 20 February 1997 by agreement between the parties, without concession by Temple as to whether the original order should have been made, a less restrictive injunction was granted. This order also was expressed in rather convoluted terms, but now the restraints were limited to dealing with certain specified land and shares or the beneficial interest in any trust or asset derived from that land or those shares.

Subject to that last point, there is nothing in the injunction of 20 February 1997 which restrains Temple from betting or from dealing with money to which he is entitled.

An application to inspect and copy records

On 24 February 1997 the plaintiffs issued an application for orders under s49 of the Evidence Act 1929 (SA) permitting the plaintiffs to inspect and take copies of bank records relating to a number of identified cheques. All or most of these cheques are cheques identified in the Statement of Claim as having been wrongfully drawn by Temple. The affidavit filed in support of the application is to the effect that the plaintiffs wished to identify who received the proceeds of those cheques.

The application also sought an order that the plaintiffs be at liberty to inspect and copy "banking records" held by the Totalisator Agency Board being:

"A detailed telephone betting statement for Russell James Temple for 1996 and 1997."

The "Totalisator Agency Board" ("TAB") is a reference to the South Australian Totalisator Agency Board which is continued in existence and regulated by s43 of the Racing Act 1976. The functions of TAB include conducting off-course totalisator betting on racing. By s62 of the Act TAB is not permitted to accept a totalisator bet unless the amount of the bet is deposited in cash, or the bet is made by a person who has "an account with TAB that is sufficiently in credit to meet the amount of the bet". The same section authorises the TAB to credit to such an account any winning dividend on a bet.

As to this further application, the affidavit in support is to the effect that Temple operated an account with TAB and that the plaintiffs wished to ascertain whether "they have been partially deprived of the protection intended to be conferred by the said injunction and whether the defendant has acted in contempt thereof."

On hearing the appeal I was informed that the TAB records in question were already at court when the application was considered. I was told that the plaintiffs had issued, without leave, a subpoena directed to TAB. The documents had been produced. On 20 February, when the more limited Mareva injunction was granted by agreement, the Master directed that the documents produced by TAB in response to the subpoena be held by the court for return to TAB, because the subpoena had been issued without leave.

Temple was represented on 20 February. There is no record of the direction relating to the documents produced under subpoena on the court file. I was informed that counsel for the plaintiffs said on this occasion that application would be made under the Evidence Act for access to the documents. I was informed that no protest was made by counsel for Temple when that announcement was made.

The application under s49 of the Evidence came before a Master on 27 February. The application included an application for orders as to service. The Master directed that the matter proceed in Temple's absence and made the orders sought. The order included a provision that the relevant banks and TAB and the parties were "at liberty to apply on forty-eight hours notice".

It is relevant for the purpose of the appeal to note that, on the hearing of the appeal, I was informed by counsel for the plaintiffs that on 27 February, 1997 it was submitted to the Master that the TAB records were also relevant to the claim made in the Statement of Claim for relief by way of tracing, and vesting orders. The Master was also apparently told that the order relating to the TAB records was relevant to the claim made by Temple, in his affidavit filed on 18 February, 1997, that he was a professional punter and that the injunction had restricted his earning capacity as a punter. It was suggested on appeal that access to the TAB records would show to what extent he was a punter and on what scale, and that in this way it was relevant to the Mareva injunction.

Although the order of 27 February, 1997 reserved liberty to apply on forty-eight hours notice, the making of the order was not brought to the attention of Temple's solicitors for about six weeks. It came to their attention in the course of correspondence between solicitors relating to an allegation by the plaintiffs' solicitors that Temple had withdrawn $7,000 from his TAB account in breach of the Mareva injunction. Having regard to the terms of the injunction granted by the court, it would appear that that breach, if it had occurred, must have occurred somewhere between 1 February 1997 when the injunction was served and 20 February 1997 when the more limited injunction was granted.

Despite that correspondence about an alleged breach of the injunction, the plaintiffs have not pursued their allegation of a breach of the injunction.

On 17 April 1997 Temple's solicitors filed an application for an order that the order permitting access to the TAB records be revoked, or alternatively that the order be limited to transactions between 3 February 1997 and 20 February 1997. Various consequential orders were sought.

The application was subsequently argued on 13 May 1997. On 4 July 1997 the Master published his reasons for refusing to make the orders sought. He said it was argued that the Statement of Claim related to cheques drawn in the period between 24 November 1993 and 30 June 1995, and that TAB records for 1996 and 1997 were irrelevant to the period of that claim. He appears to have adopted the response by the plaintiffs, which was that, because they had sought the tracing order, betting records from the time of the first cheque to the time of the hearing were relevant.

It remains to record that subsequently discovery has been embarked upon. I was informed that it was complete, or more or less complete. However, upon enquiry I was told that neither party had made an application to have determined or in any way limited the scope of discovery to be made.

I find that surprising. In my opinion it needs to be established, before this action can go to trial, to what extent the trial is to include an enquiry as to Temple's use of monies obtained from the plaintiffs, assuming that some monies were obtained. The extent of any such enquiry is relevant to the scope of the discovery to be made by Temple. It may or may not be convenient, at trial, to carry out an enquiry as to Temple's use of monies obtained from the plaintiffs. In my opinion it is unsatisfactory that the action should progress towards trial without that matter being resolved. I also find it difficult to understand how discovery can be dealt with satisfactorily without this matter being sorted out.

There is one other comment that I wish to make. In my opinion it is odd, and unsatisfactory, that the order of 27 February was not brought to the attention of Temple's solicitors until some six weeks later. That made the reservation of liberty to apply more or less pointless. Once the access to the records had been obtained, I can think of no reason why the order should not have been served on Temple's solicitors. If there was any concern about falsification of the records, that concern could not have continued after the order had been complied with. The failure to serve the order was not satisfactorily explained to me on the hearing of the appeal.

Banking records

The starting point on appeal is whether the TAB records are "banking records" for the purposes of s49 of the Evidence Act. They are clearly records, but are they banking records?

"Bank" is defined by s46 of the Evidence Act as follows:

"46. In this Part - 'bank' means -

(a) a body corporate carrying on the business of banking in a State or Territory of the Commonwealth;

(b) a building society;

(c) a credit union;

or

(d) any other body that accepts money on deposit from the public"

As I have already indicated, the Racing Act requires that if a bet is not made in cash, the TAB must be holding, to the credit of the person who places the bet an amount sufficient to meet the amount of the bet: s62. I was not referred to any rules or regulation relating to the operation of such accounts. However, I infer, drawing in part on the circumstances of this case, that an account holder is at liberty to withdraw funds from such an account at any time. I assume, from the terms of s62, that a TAB account must be maintained in credit at all times, and s62 states that TAB may credit winnings to such an account. I do not have any information as to whether the TAB pays interest on credit balances.

It is clear enough, in the light of that, that the TAB does accept money on deposit from the public, unless those words are to be given some special or limited meaning. I have considered whether the words should be read as referring only to an interest bearing deposit. In the context of a bank, or like body, that is what they would usually mean. However, no particular reason occurs to me for reading the words with that limitation. I therefore conclude that TAB does, for the purposes of sub-par(d) of the definition of "bank", accept money on deposit from the public.

However, can the TAB regard it as "any other body" for the purposes of the definition of "bank"? Is the definition of "bank" to be read as restricted to bodies like banks, buildings societies and credit unions? The feature that such bodies have in common is that a significant part of their business, and perhaps the core of their business, is the activity of receiving money from the public and lending money to the public, or to their members. In addition, at least these days, such bodies provide a range of financial and other services to the public or to their members. There is something to be said for limiting the meaning of the expression "any other body" to bodies that have some similarity to banks, building societies and credit unions: see the discussion of the relevant principles in Pearce and Geddes, Statutory Interpretation in Australia (4th Edition) par 4.13 and following. However, the difficulty is to identify, with any precision, the class of bodies referred to, bearing in mind the varied activities now carried on by banks, building societies and credit unions. In addition, the drafter has not simply referred to "any other body" after referring to bank, building societies and credit unions. The drafter has referred to "any other body that accepts money on deposit from the public".

I take into account the fact that although the relevant statutory provisions have their origin in earlier provisions dealing only with banking records, the provisions have been subsequently revised and clearly extend well beyond banks now. Moreover, it is clear that the provisions are intended to facilitate proof of business records of a type which, before the widespread use of modern information technology, could have been brought to court for direct proof only with considerable inconvenience. The purpose which emerges from these provisions is an intention to enable those who want to prove the relevant records to go to the holder of records, make a copy of the records and then prove the relevant transaction by the production of that copy. It is reasonable to conclude that the intention is to enable proof, without inconvenience to the record holder, of records relating to the receipt of money on deposit.

When I take into account the difficulty of constructing a clearly defined class of body referred to in the definition of "bank", and the apparent intention to avoid inconvenience to those who hold records of the receipt of monies on deposit from the public, I reach the conclusion that the expression "any other body" should not be restricted to bodies that bear some identifiable similarity, beyond the receipt of money on deposit, to banks, building societies and credit unions.

Accordingly, I conclude that records held by the TAB of credit accounts maintained by it under s62 of the Racing Act, are "banking records" for the purposes of s49 of the Evidence Act.

Was the order rightly made?

The question that next arises is whether the Master erred in the making of the order. There are two issues here that are intertwined. The first is whether the order should have been made without notice of the application being given to Temple's solicitors. The second is the scope of the order.

In my opinion the Master erred in making the order without notice of the application being given to Temple's solicitors. Orders are not to be made in the absence of a party represented in civil proceedings, unless there is power to do so, and unless there are proper grounds for doing so. No authority needs to be cited for that basic proposition.

There is no doubt about the power to do so. Section 49(2) provides in terms that an order may be made "... either with or without summoning the bank or any other person ...".

But that power is not to be exercised as a matter of course. As I have already said, there must be some satisfactory reason for proceeding in the absence of a party to the proceedings.

Mr Swan, counsel for the plaintiffs, relied upon the fact that when the subpoena was returned before the Master, counsel for the plaintiffs said that application would be made under the Evidence Act for access to the TAB records. He relied upon the fact that no protest was made. In my opinion the absence of any complaint by Temple's solicitors is of no significance. There was no particular reason why Temple's solicitors should, at that time, protest about a course of action yet to be undertaken. In my opinion, if anything, the statement of the intention to make application would carry the implication that Temple's solicitors could expect to be given notice, when the application was made.

Counsel for both parties referred to a number of cases, all of them English, relating to the use of these provisions. I refer only to the two most recent of these cases, both of which, as it happens, relate to the use of the relevant provisions in the course of criminal investigations: Williams v Summerfield [1972] 2 QB 512 and R v Marlborough Street Magistrates Court ex parte Simpson (1980) 70 Cr App R 291. Statements can be found in the cases referring to the propriety of proceeding without notice to the person whose records are to be inspected.

In my opinion reference to these cases is not helpful. There is power to proceed without notice to the party whose records are to be inspected. But in deciding whether to do so, the Court must bear in mind that ordinarily notice should be given, and that the making of an order for the inspection of bankers' records involves an intrusion upon the privacy of the person affected. One is simply left to address the issue that I have already identified, namely whether there is some good reason for proceeding without notice to the person whose records are to be inspected.

Mr Swan then placed reliance upon the fact that inspection of the TAB records was relevant to the ongoing operation of the Mareva injunction. I acknowledge the theoretical relevance of that point. However, by 27 February, 1997 the scope of the Mareva injunction had been limited, by agreement, and on my reading of the injunction it no longer related to Temple's use for betting of funds that were available to him. The court records indicate that more recently there have been further applications relating to the injunction, but the relevant affidavits do not suggest a need to inspect betting records. In the light of the restricted nature of the injunction operative after 20 February 1997, I am unable to identify any good reason for making an order for access to the TAB records without notice to Temple's solicitors. In the light of the injunction as it then stood, Temple's use of his TAB account was of no particular significance.

Mr Swan's further submission was that the order was relevant to the alleged breach of the injunction originally granted, the breach being the alleged withdrawal of $7,000 from the TAB account on 1 February 1997. I acknowledge that the allegation of the breach did make relevant Temple's use of the account between the grant of the injunction and the date of the application to the court, but the order made was for access to, and inspection of, records for the whole of 1996 and 1997. While I doubt the need for an order for access to the TAB records without notice to Temple, based upon the allegation of the breach of the injunction, I am not prepared to say that the Master would have been wrong in making an order for access to the TAB records, relating to the period from 31 January 1997 to 24 February 1997.

Mr Swan's final argument was that the order was properly made because the TAB records were relevant to the issues raised in the action. He referred in particular to the claim made in par 11 of the Statement of Claim, that assets acquired with the use of the plaintiffs' money were held on trust for the plaintiffs and should be vested in them, and to the claim for an order for an account and enquiry and a vesting order.

I acknowledge that, having regard to the generality of the pleading, it could be said that the TAB records are relevant to issues raised in the proceedings, and that that is a basis to support the order made. However, if the pleading is to be read in that manner then, in my opinion, it follows that all of Temple's financial and property dealings from 1993 to date are relevant and discoverable. That observation simply highlights the need, previously referred to by me, for the parties to have determined the scope of the enquiry to be undertaken at trial, and the scope of discovery that should be made. At the moment, in my opinion, all one can say is that the TAB records might be relevant to matters to be enquired into at the trial, and might be documents in respect of which discovery should be ordered by Temple.

But, even conceding that the TAB records might be discoverable, and that therefore the plaintiff should have been given an order for inspection and copying, the question remains of why an order for what was, in substance, third party discovery, should be made without giving notice to Temple. Viewed this way the order for access to the TAB records was part of the ordinary process of pre-trial discovery, as we understand it these days. In my opinion the provisions of the Evidence Act should not be read as a code entitling a party to make use of those powers without reference to the procedural context in which they are used.

When I enquired of Mr Swan why an order should be made in Temple's absence, when the application was viewed in this way, his response was to point to the risk of the records being falsified. He did not suggest, which would have been unrealistic, that there was any risk that TAB would alter or falsify its records. He referred to the fact that a withdrawal was made from a TAB agency at a hotel of which Temple was the manager, and to the risk that Temple might be able to alter the TAB records. I regard that as fanciful. It is common knowledge that these days TAB operations are conducted through terminals linked with a central computer. Bearing in mind the obvious need for the TAB to maintain accurate records, I do not accept that there was any real risk that Temple would be able, retrospectively, to remove or falsify the record of an earlier withdrawal from his account.

In short, while I acknowledge that discovery and inspection of Temple's TAB account records might be ordered in the action, I can see no reason for making an order for inspection in Temple's absence. Nor, on that approach, is there any good reason why the order should have been limited to the accounts for 1996 and 1997. As a matter of logic the order should have extended to the accounts for 1994 and 1995, if that were the basis of the making of the order. It also has to be borne in mind that, once proper attention was paid to the matters to be determined at the trial of the action, it is possible that the range of the enquiry into Temple's use of money obtained from the plaintiffs would be in some way limited, and that it would not include his betting activities at all. It is not to be assumed that every aspect of Temple's business activities will be dealt with at the trial, or should be the subject of discovery or inspection orders at this stage. In saying that I am not saying that an order for inspection of the TAB records should not be made at this stage, merely that, in my opinion, it is not obviously correct to say that such an order will be made.

Conclusions

It follows that while, in my opinion, there are grounds upon which the Master might have ordered, without notice being given to Temple, that inspection of the TAB records for the period of 1 February 1997 to 24 February 1997 be permitted, there was no proper basis for the making of an order in respect of the years 1996 and 1997 without notice to Temple. I add that, in my opinion, the order made should have been served on Temple's solicitors much sooner than it was. I also have some concern about the fact that the order was made on the basis of an alleged breach of the injunction, but that since having access to the relevant records that allegation has been left unresolved. However, it may be that there is some good reason for the matter not having been pursued.

Mr Swan argued that even if the order should not have been made, the error was one of procedure only, and that the order should not be set aside. That argument proceeds upon the assumption that, if application is made, the plaintiffs will in any event get an order for discovery of the records, and for inspection of them if necessary. If the parties had attended properly to the scope of the discovery to be made at this stage, I would know now whether or not discovery of the TAB records will be ordered. As things stand, the matter remains one of speculation.

Under all the circumstances, I consider that the proper order is that the appeal be allowed, and that the order of the court of 27 February 1997 be varied by deleting par 1.3.1, which is set out above, and by substituting for that:

"1.3.1 A detailed telephone betting statement for Russell James Temple for the period from 1 February 1997 to 24 February 1997."

At this stage I do not propose to make orders that the plaintiffs deliver up the copy records in their possession, or identify the names of all persons who have been provided with Temple's TAB records. I do not regard the intrusion into Temple's privacy as of such significance that such an order, with all the costs that will entail on both sides, when the likely consequential applications are considered, should be made at this stage. I am mindful also of the fact that the TAB records may yet be determined to be relevant to the issues in the action. I consider that Temple's position is sufficiently vindicated by the variation of the order that I propose. Should it later be determined that the TAB records are wholly irrelevant, Temple's solicitors can make a further application should they be so instructed.

Nor do I propose to make orders that the plaintiff's solicitors disclose their source of instructions relating to the alleged breach of the injunction. The circumstances of the allegation of the breach of the injunction, and the reasons for that allegation not being pursued, were not dealt with in any detail before me. I therefore decline to make any orders relating to that matter.

I will hear the parties on the question of costs. My tentative view is that because Temple's application was, in the alternative, for a limitation of the order for inspection, and bearing in mind that fairly wide ranging orders, that I have not made, were sought before the Master, the proper order is that the plaintiff should pay one half of Temple's costs of the application made by application dated 17 April 1997 and should pay the costs of this appeal.