Punjab and Sind Bank v Commonwealth Bank of Australia Commonwealth Bank of Australia v Punjab and Sind Bank

[1997] FCA 1106

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 82 of 1993

BETWEEN:

PUNJAB & SIND BANK
Applicant

AND:

COMMONWEALTH BANK OF AUSTRALIA
(ACN 123 123 124)
Respondent

COMMONWEALTH BANK OF AUSTRALIA
(ACN 123 123 124)
Cross Claimant

PUNJAB & SIND BANK
Cross Respondent

JUDGE:	EMMETT J
DATE:	10 OCTOBER 1997
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

HIS HONOUR:   In these proceedings the applicant (“the Punjab Bank”) seeks damages from the respondent (“the Commonwealth Bank”) by reason alleged failure to comply with instructions given in connection with collection of bills of exchange.  Instructions were received by the Commonwealth Bank in early 1987 to deliver shipping documents against payment of the bills of exchange on sight.  The Commonwealth Bank says that it received further instructions from the Punjab Bank authorising the change of the tenor of the bills from sight to 120 days from acceptance and authorising release of the shipping documents against acceptance.

There is a dispute as to the authenticity of the further instructions.  The Commonwealth Bank asserts that, having complied with the further instructions, it wrote to the Punjab Bank informing the Punjab Bank of its actions and received no response.  Had it been told in a timely fashion that the instructions were not authentic, it could have recovered the shipping documents or at least prevented delivery of the goods represented by the shipping documents.

In order to establish whether the Punjab Bank received the correspondence from the Commonwealth Bank informing it of the action which had been taken, the Commonwealth Bank sought to interrogate the Punjab Bank.  On 27 May 1994 Beazley J gave the Commonwealth Bank leave to serve interrogatories by 17 June 1994 and ordered the Punjab Bank to provide answers by 8 July 1994.  In the event, the Commonwealth Bank served a notice to answer interrogatories on 4 July 1994 requiring answers within 21 days.  No answers have yet been furnished in response to the notice to answer interrogatories.

On 28 April 1995, apparently in response to a telephone conversation between the solicitors for the respective parties, the solicitors for the Punjab Bank wrote saying that the notice to answer interrogatories had been referred to their client and that while those solicitors could satisfactorily answer the interrogatories, they were instructed that there was a possible question of fraud in New Delhi, the place of incorporation of the Punjab Bank, which they wished to attend to.  On 1 May 1995 the solicitors for the Commonwealth Bank responded to that letter indicating puzzlement as to why the possible question of fraud in New Delhi was causing the Punjab Bank delay in answering the interrogatories.

That letter prompted a response of 16 June 1995 in which the solicitors for the Punjab Bank said that as a result of their detailed recommendations to their client, their client was carrying out further investigations and that the notice to answer interrogatories was presently being dealt with.  Nothing further appears to have happened until January 1997 when the Registrar inquired as to why no steps had been taken to set the matter down for hearing.  The solicitors for the Punjab Bank wrote both to the Court and to the Commonwealth Bank indicating that they were experiencing difficulties in obtaining instructions from their client in India and that they had only recently re-established contact with their client.

They said that they had pressed their client for answers to the interrogatories.  Nothing further occurred until September of this year when the Registrar again wrote to the parties listing the matter for directions with a view to bringing the matter to a head one way or the other.  That action seems to have prompted response on both sides.  The solicitors for the Punjab Bank filed a notice of ceasing to act, together with an affidavit annexing a letter to the Punjab Bank explaining that they intended to cease to act because of the difficulties they had experienced in obtaining instructions.

The Commonwealth Bank, on the other hand, filed a notice of motion seeking dismissal of the proceedings under Order 30, Rule 5 of the Federal Court Rules.  That motion came before me today and at the commencement of the hearing leave was granted, without opposition, to amend the motion to seek dismissal in the alternative under Order 10, Rule 7 of the Federal Court Rules.  The notice of motion also sought alternative relief in the nature of a guillotine order to the effect that if the interrogatories were not answered within 14 days then the proceedings be dismissed.

An affidavit by a law clerk employed by the solicitors for the Punjab Bank was read.  The affidavit was said to be based on instructions received from the Punjab Bank.  The only explanation for the delay hitherto is contained in the following paragraph in the affidavit:

I am instructed that when it was informed of the Respondent’s settlement offer, the Applicant commenced discussions with the parties involved in the Indian litigation with a view to ensuring that the Applicant's response to the Respondent's offer would not prove would not prove to be prejudicial in respect of the ongoing conduct of the Indian litigation.  I am instructed that those discussions have proved lengthy and slow and that, in the meantime the Applicant's attention has been distracted from preparing answers to the Respondent's Notice to Answer Interrogatories.

The settlement offer referred to in that paragraph was one apparently made on behalf of the Commonwealth Bank on 29 December 1995.  The affidavit contains no explanation as to why the interrogatories had not been answered between July 1994 and receipt of that offer.  Nor does it offer any satisfactory explanation as to why the consideration of the settlement offer distracted the Punjab Bank from preparing answers to the interrogatories.  During the hearing of the motion the solicitor for the Punjab Bank indicated that draft answers had been prepared.  He also said that his instructions were that an officer of the Punjab Bank responsible for the matter was away from India for approximately 14 days.  There was however no evidence about those matters.

In the course of argument I indicated that my present disposition was that I did not regard the affidavit filed on behalf of the Punjab Bank as a satisfactory explanation as to why the interrogatories had not been answered.  In Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388, the Full Court referred to the discretion conferred by Order 10, Rule 7. In their joint judgment, Wilcox and Gummow JJ observe (at 396) that it is impossible to foresee all of the circumstances under which the rule might be sought to be used.

Two situations however were suggested as obvious candidates for the exercise of the power; the first is a case in which:

the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period...

The other case is one in which:

...whatever the applicant's state of mind or resources - in which non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent.

As I understood the argument for counsel for the Commonwealth Bank, this case is said to be in the first category.  On the face of it, the conduct of the Punjab Bank to date, if unexplained, would suggest either an inability or an unwillingness to cooperate with this court.  The solicitor for the Punjab Bank, however, has said that he would like the opportunity to obtain further instructions with a view to filing a further affidavit indicating, in specific terms, the reasons why the Punjab Bank has not answered the interrogatories to date and indicating that the failure was not the result of inability or unwillingness to co-operate.

I am disposed to give the Punjab Bank that opportunity, bearing in mind that while there have been desultory attempts at communication by the Commonwealth Bank, what has really brought the matter to a head has been the Court's intervention rather than the Commonwealth Bank's intervention as respondent.  I also regard as relevant the fact that when the directions were given by Beazley J they were not strictly complied with by the Commonwealth Bank.  The file also shows that, prior to the orders made by Beazley J, earlier directions had been breached by both parties, although I think it is fair to say that the breaches by the Punjab Bank were more serious than those of which the Commonwealth Bank was guilty.

In the circumstances I propose to adjourn the hearing of the motion to enable the Punjab Bank to file any further evidence which it is advised to explain why the interrogatories have not been answered up until now.  However, in the meantime I propose to make an order as sought in paragraph 2 of the notice of motion requiring that verified answers to the interrogatories be filed and served within five weeks.

The Commonwealth Bank has asked for an order for costs on an indemnity basis.  This motion was brought in circumstances where the Commonwealth Bank was entitled to assume that the Punjab Bank had abandoned the proceedings having regard to the fact that its solicitors had indicated that they were intending to withdraw from the proceedings.  It was only in recent days, apparently, that the solicitors received instructions again and when the matter was called on a notice of appointment of Michell Sillar as solicitors for the Punjab Bank was filed.

I think, having regard to the history of default on the part of the Punjab Bank prior to the orders made by Beazley J and having regard to the absence of any satisfactory explanation today, it is appropriate that the Punjab Bank be ordered to pay the Commonwealth Bank's costs of today on an indemnity basis and that otherwise the costs of the motion be borne by the Punjab Bank on the ordinary basis.

I order the applicant in the proceedings to file and serve verified answers to the respondents notice to answer interrogatories dated 4 July 1994 on or before 14 November 1997.  I order that if the applicant does not file and serve verified answers to that notice to answer interrogatories on or before that day these proceedings stand dismissed.  I adjourn the further hearing of the motion to Friday, 21 November 1997 before me at 9.30 am.

I direct the Punjab Bank to file and serve on or before 14 November 1997 any further affidavits on which it intends to rely in relation to the notice of motion.  I order the Punjab Bank to pay the costs of the motion to date and I order that the costs of today of the motion be paid on an indemnity basis.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett

Associate:

Dated:             10 October 1997

Counsel for the Applicant:	A. G. Bell
Solicitor for the Applicant:	L E Taylor
Counsel for the Respondent:	-
Solicitor for the Respondent:	Michell Sillar
Date of Hearing:	10 October 1997
Date of Judgment:	10 October 1997