Pave Wealth Services Pty Ltd v Danielle Jones as Executrix of the Estate of Late Michael Frederick Jones - [2017] WADC 40

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: PAVE WEALTH SERVICES PTY LTD -v- DANIELLE JONES AS EXECUTRIX OF THE ESTATE OF LATE MICHAEL FREDERICK JONES [2017] WADC 40

CORAM: PRINCIPAL REGISTRAR MELVILLE

HEARD: 15 MARCH 2017

DELIVERED : 22 MARCH 2017

FILE NO/S: CIV 2379 of 2015

BETWEEN: PAVE WEALTH SERVICES PTY LTD
Plaintiff
AND
DANIELLE JONES AS EXECUTRIX OF THE ESTATE OF LATE MICHAEL FREDERICK JONES
First Defendant
WOTIF PTY LTD
Second Defendant

Catchwords:

Further and better discovery

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

The second defendant pay the plaintiff's costs of the application

Representation:

Counsel:

Plaintiff:     Mr D Morris
First Defendant              :     Mr P Lafferty
Second Defendant         :     Mr P Lafferty

Solicitors:

Plaintiff:     HHG Legal Group
First Defendant              :     Kings Park Corporate Lawyers
Second Defendant         :     Kings Park Corporate Lawyers

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

Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co [1882] 11 QBD 55
Mulley v Manifold (1959) 103 CLR 341
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60

PRINCIPAL REGISTRAR MELVILLE: This is now a dispute about costs. The plaintiff, having brought an application for an order for further and better discovery of certain documents by the two defendants, no longer seeks the order due to the defendants filing a further affidavit that satisfies the plaintiff’s concerns. The defendants seek the costs of dealing with the application as does the plaintiff.
The background to this is that the plaintiff brought a chamber summons for orders pursuant O 26 r 7 of the Rules of the Supreme Court 1971 (WA). The orders sought are that the first defendant make, file and serve an affidavit stating whether the documents or any of the documents within the class or classes of documents described in the affidavit of Paul Anthony Stojanovic made on 24 January 2017 are or have at any time been in the first defendants or the second defendant's possession, custody or power and in each case where the document is part of such a class of documents, identifying that document.
The basis of such an application can only be that these documents exist or did exist, they are relevant to the issues between the parties and that the first defendant and/or the second defendant have them or once had them.
The legal principles relating to such an application appear not to be contentious. The starting point is that the affidavit of discovery filed on behalf of the defendants is conclusive and cannot be challenged by way of an argumentative affidavit filed on behalf the plaintiff. However, the conclusiveness of that affidavit can otherwise be called into question in certain circumstances.
In Mulley v Manifold (1959) 103 CLR 341 the insufficiency of the affidavit might be established having regard to:
(a)the pleadings;
(b)the affidavit of documents itself or the documents therein referred to;
(c)any other source that constitutes an admission of the existence of a discoverable document; and
(d)if it appears the party has excluded documents under a misconception of the case.
Beyond this point the affidavit of discovery is conclusive.
Mulley v Manifold has been considered further and applied by Master Newnes in Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60. The principles stated in Mulley v Manifold have been refined and described in the following ways:
(a)the court must have reasonable grounds for being fairly certain that there are other relevant documents which ought to have been discovered;
(b)the court must be able to infer from the nature of the document in question that its relevant, will not speculate as to its contents;
(c)relevance may either appear from the nature of the document or its contents, and if the latter, there must be a prima facie case as to the contents before an order for discovery will be made;
(d)where an application is made in respect of a document that is referred to in a document already discovered (the relevance of the latter being conceded by its discovery, it is generally reasonable to assume in the absence of a contrary indication in the document discovered … document referred to is relevant.
Other considerations that bear on the question of relevance is the test propounded in Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co [1882] 11 QBD 55 which requires consideration to be given to:
Whether the document contains information which may directly or indirectly advance the requesting parties' case or damage his adversary's case which may fairly lead to a chain of inquiry which may have that consequence.
In essence, in the normal course of events I would have needed to decide whether I am fairly certain the documents referred to in the chamber summons:
(a)existed or once existed;
(b)are relevant;
(c)are or were in the possession of the first and/or second defendant.
Having regard to the issues raised by the statement and claim and defence, it is to be observed that the plaintiff's case is essentially that it purchased from the second defendant the 'client base' of the second defendant. The 'client base' was not particularised in the statement of claim but it is clear that reference to the '[client base' refers to at least some (a specific segment) of the second defendant's clients.
It is further alleged that at the time negotiations were taking place for the purchase of the client base, negotiations were led by Mr Michael Frederick Jones who at the time was the managing director of the second defendant and who has since died. The first defendant is sued in her capacity as executrix of the estate of the late Michael Frederick Jones
It is further alleged by the plaintiff (among many more allegations) that the deceased made various representations regarding the 'client base' and what might be expected by way of earning from the purchase of that 'client base'. It is alleged that it was represented the 'client base' would produce $150,000 by way of yearly earnings and that upon settlement of the sale, the plaintiff would be provided with a physical client file for each client comprising the client base (see par (k)).
At par 7(b)H it was alleged the second defendant represented that the financial services provided to the clients constituting the 'client base' would result in a fixed annual income including trailing commissions. Further particulars at (ii) were provided of the representation, said to also have been made by the deceased providing a spreadsheet highlighting the names said to be fully engaged clients with the second defendant who would become the plaintiff's upon settlement.
These representations are alleged to constitute a breach of the Trade Practices Act and of the Fair Trading Act.
In the defence, the first defendant does not deny any of these allegations. However, the second defendant admits that on payment of the purchase price the 'client base' would be transferred to the plaintiff (see par 8). At par 6(b) the second defendant says the agreement provided that the 'client base' means 'Prosperity Partners' clients identified by Paul Stojanovic quarantine account with such information set out in annexure 1'.
I observe at this point that neither party has provided me with either a copy of the unsigned agreement or annexure 1.
By the affidavit of the first defendant sworn 23 February 2017, she states she had reviewed the supplementary affidavit of the plaintiff and noted in item 5 part 2A that the plaintiff had identified hard copy client files purchased by the plaintiff by the second defendant as documents it once had in its possession, custody or power. I also note from part 2B of that affidavit those client files are said to have been returned to the possession of the second defendant. The first defendant also refers to a discovered document being an email chain from C Bayly, AMP to G Komodromou and M Jones sent 10 June 2011 at 12:29 am (being item 30 in the defendant's discovery). That email chain is exhibited as DJ6 to the affidavit of the first defendant and shows an email from Prosperity Partners dated 27 May 2011 to Mr Stojanovic advising his ' … files will be available for collection from the front foyer of our building … '.
From that information it is crystal clear that the second defendant at least once had in its possession, custody or power paper files containing the names of the clients constituting the client base. So, having regard to the state of the pleadings and this information that I consider to be an admission as to the existence of client files, I am fairly certain that they either exist or once existed.
I am further of the view that these documents are relevant having regard to the test set out in the Peruvian Guano Co case, namely that this information may directly or indirectly advance the plaintiff's case or damage the defendant's case in that it may fairly lead to a chain of enquiry which may have that consequence. It seems to me there can be no doubt that the names of the persons constituting the client base and any information associated with those names and the number of them will be relevant to determining what income might be derived from them or at least relevant insofar as it may lead to a chain of enquiry that will bear on the question of what income may be generated from the client base. This in turn may bear on the question as to the value of the business and what losses if any the plaintiff may have suffered as a result of the alleged misrepresentation.
Against that background, it is necessary then to look at the list of discoverable documents provided by the defendants. In my view nowhere in the list of documents is any hard copy files discovered. Further, although there is reference in part 2A to email correspondence 'or any other data on computer hard drives or storage devices that have been lost due to routinely being deleted from time to time on dates that cannot in your cases now be identified', this description does not clearly identify electronic files or records that constitute the client base the subject of this litigation as being documents that have been lost or destroyed. It is not to the point that the plaintiff may have once had in its possession power or custody some or all of the files constituting the 'client base'. The plaintiff may have good reason for wanting to know what documents the defendants have or had, and in the latter case what became of the documents. The ability to identify the clients on the 'client base' may give the plaintiff the opportunity to track down the clients and obtain information from them that bears on the issues raised in the pleadings, such as the retention rate of clients that was alleged to be 99 percent. However, as observed above, it was only after the first defendant in her supplementary affidavit filed in opposition to this application of further and better discovery that it becomes clear that that description 'or any other data on computer hard drives or storage devices that have been lost due to routinely being deleted from time to time on dates that cannot in your cases now be identified' was intended to encompass these documents.

Conclusion

In my view both the electronic documents and the hard copy documents ought to have been included in the original affidavit of discovery. To the extent the defendants argue they were, the description given was inadequate to discharge their discovery obligations. Whilst I am not satisfied that these documents were ever in the possession, custody or power of the first defendant in her capacity as executrix of the estate, I am fairly certain they were in the possession, custody or power of the second defendant.
The plaintiff was put to cost and expense in bringing an application that was unnecessary had the second defendant performed its discovery obligations more thoroughly and in my view the second defendant should be required to pay the plaintiff's costs of this application.
Further, I do not consider it appropriate that the plaintiff pay the first defendant's costs of the application. The first defendant swore an affidavit that jointly discovered documents with those of the second defendant and in doing so confused and obfuscated what documents she had and did not have in her possession, custody or power. In my view the proper way to have proceeded was for the first defendant to prepare an affidavit of discovery in her capacity as executrix of the estate and to prepare a further affidavit of discovery of those documents that were or once were in the possession, custody of power of the second defendant.