Singh v Singh
[2011] VSC 82
•16 March 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. S CI 2009 07497
| SURYA DEEP SINGH | Plaintiff |
| - and - | |
| PRADEEP SINGH | Defendant |
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JUDGE: | MUKHTAR As J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 11, 18 February 2011 | |
DATE OF JUDGMENT: | 16 March 2011 | |
CASE MAY BE CITED AS: | Singh v Singh | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 82 | |
DISCOVERY ― Oppression ― Banking documents in Canada ― Documents concerning transfer of moneys ― Whether discovery in truth directed at future execution on judgment ― Whether claim for profits against fiduciary is in reality a split trial ― Ambit of remedies for breach of fiduciary duty ― Right to discovery to enable plaintiff to make an informed choice on remedies
REASONS FOR DECISION
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Sowden | Nicholas O’Donohue & Co |
| For the Defendant | Mr C Harrison SC with Mr C Truong | Mills Oakley Lawyers |
HIS HONOUR:
The Court has to decide three applications each made by separate summons They are:
(a)an application filed 3 December 2010 by the plaintiff for eight categories of documents (which has now reduced to four in light of the evidence) which in essence concern financial transactions or placements of money having a connection in Canada;
(b)a cross application filed 15 December 2010 by the defendant, for further discovery of ten categories of documents (now reduced to seven in light of the evidence) which is more a case of insisting on the rectitude of discovery by requiring the plaintiff to say when he last had documents now said to be no longer in existence;
(c)an application filed 14 February 2011 to strike out six consecutive paragraphs of the statement of claim.
It is necessary to record something about the third application. It was filed after the discovery application was part-heard and before the resumption of argument on the second day. Before then, the defendant’s senior counsel analysed, then attacked the relevant part of the pleading saying that if an allegation is bad (here it was said variously to be unsustainable or embarrassing) then the Court should disallow discovery, for which he called in aid s 55 of the Civil Procedure Act. That law permits the Court to give directions about discovery or to modify or regulate discovery. I think that is something the Court always had the power to do.
Discovery is a tool of justice, and when conducted responsibly and not as a tactical instrument, it helps to get to the truth of a matter. The need for an order for bountiful discovery is energised where, by nature of the case, the facts are very much in the possession of one party, usually the alleged wrongdoer. Generally speaking, at least in an uncomplicated case dependant on objective facts, a Court may regulate or modify discovery where the labour involved, the attendant costs and delay, and utility appear to be disproportionate to any possible benefit in the adjudication of the case and the granting of the remedy or relief sought.
Discovery in this case has been administered according to the existing pleadings. If an allegation is bad or imperfect in some way, then an adversary may seek to strike it out promptly, certainly before discovery is activated. There is a school of thought in litigation that prescribes passivity and says an opponent should not be given a chance to improve its case; so that tactically a bad plea is best left alone until the trial when it can be scorned. But if the allegations remain there, the adversary should not complain about their defects when it comes to the burden or amplitude of the discovery obligations that attaches to the allegations.
In this case, I think there is something unfair in letting discovery take place according to unchallenged allegations; engaging in a dispute about sufficiency of discovery based on existing allegations; provoking a summons, and then looking to deal with a discovery dispute, in part at least, by trying to strike out allegations. Yet, I am bound to say, although the essence of the plaintiff’s case is clear enough I can see some problems in the composition of this pleading (I say nothing about the substance) which ought be rectified or clarified now to ensure the case is stabilised and ready for trial. But in the interests of minimising costs and delay, and progressing the case, I will not allow those problems to modify the Court’s approach to discovery.
Discovery depends on relevance, as determined by the pleadings. There was an ample examination of the pleadings throughout argument and I will not rehearse the contents. In the main this case is about an alleged breach of fiduciary duty in the context of a joint venture or quasi partnership between two brothers. Rather I will identify the issues or points of principle that arose, state my decision; and confine myself to brief reasons. I take that approach because this is intensive commercial litigation which has had a long and troubled history. In one aspect or another, the disputation has been before the County Court and in the High Court of Fiji, and the subject of an anti suit injunction before this proceeding was formed. And these applications went for a day and a half.
The outcome is first, that I will order further discovery from the defendant on a substantive issue in the case concerning documents thought to be in Canada. I think it is relevant and necessary for the plaintiff to ascertain by discovery the dealings that have taken place with moneys once held in a joint account. That will enable the plaintiff to see if there is a corpus of funds somewhere to which a Court may impress constructive trust. If not it will enable the plaintiff to be in an informed position to know what remedies to pursue, and that is not something to be deferred until liability is determined. As the documents are said to be in Canada, and as I can foresee possible disputations if the defendant says there are no relevant documents I will direct that the defendant state on oath some facts concerning his handling and examination of those documents in an attempt by the Court to avert further disputation.
Secondly, I think the challenges on the defendant’s cross application are largely technical or as I say matters of discovery rectitude. I have my doubts whether the orders sought truly will advance this litigation. But in the interests of putting to bed any apprehensions by the defendant about lost documents, I will make orders directed at matters of precision concerning, in the main, when documents were last in the plaintiff’s possession. I will assume the defendant will apply the same standards to any further discovery.
Thirdly, without any disrespect to its author, I think the statement of claim needs some repairs. Rather than striking out parts of the pleading I will fashion an order to give the plaintiff a chance to modify the pleading to remove identified defects or omissions. I do not regard those defects as preventing the allowance of the further discovery. That is, there is “enough there” on the pleading to apprehend the case to be put and to allow further discovery, but I think the pleading ought to be clarified.
I shall isolate the issues as I see them.
Issue: is the plaintiff’s application bad because it is really seeking discovery in aid of judgment execution rather than the adjudication of this case?
In my view it is not.
Up to paragraph 32 of the statement of claim, the plaintiff claims the defendant has in breach of a fiduciary obligation, wrongfully appropriated his 50% share of profits from a joint venture or partnership. True it is, as Mr Harrison emphasized, paragraph 26 of the statement of claim pleads loss and damage to the extent of one half of the equity in the joint accounts. It does not plead as a matter of mixed fact and law, or legal conclusion[1] that funds are held on constructive trust or anything else to make a claim on a corpus of funds or some tracing type exercise to see where money went or how it was converted so as to identify a proprietary claim. Maybe that is because the same facts as form the foundation for the operation of the fiduciary principle seem to be used for a common law claim of negligent misstatement as well as a Waltons Store[2] type estoppel. But it is plain that the plaintiff seeks declaratory relief in paragraph A for a constructive or resulting trust over the proceeds of the joint account. I realise that is a general claim, but that is why the body of the pleading needs to be clarified to make the discernible link to the relief sought.
[1]See rule 13.02(2).
[2]Waltons Store v Maher (1988) 164 CLR 387.
Fiduciary obligations arise because a person has come under an obligation to act in another’s interests, and if those obligations are breached, the fiduciary must account for any profits and make good any losses arising from the breach: see Pilmer v Duke Group:[3] Equity is equipped with an array of remedies to ensure the errant fiduciary is held accountable in some way. If funds still exist, then equity will impress those funds with a constructive trust. A constructive trust, as Giumelli[4] reminds, is a remedy provided by a court of equity after facts are construed. The trust institution can involve both the holding of property by the trustee, and a personal liability to account in the same manner as an express trustee. If the funds have disappeared, then equity may turn its remedial hand to some other form of restorative justice be it equitable damages, injunction, account of profits or some other order: see Warman International v Dwyer.[5] Here the plaintiff’s statement of claim is seeking a variety of remedial orders, and I think legitimately so.
[3](2001) 207 CLR 165 at [74].
[4]Giumelli v Giumelli (1999) 196 CLR 101 at 112.
[5](1994) 182 CLR 544 at 546.
Out of the eight categories of document sought by the plaintiff, only four remain in contest. They are identified in a letter from the plaintiff’s solicitors to the defendant’s solicitors dated 18 November 2010. Following the paragraph numbers in that letter, what remains in issue are the documents in paragraphs (i) to (iii). Each of those paragraphs concern transfer of money to the Integer Canada account. The documents in category (viii) are a little more broad. That category says:
…[O]ur client claims an interest in the monies contained in the accounts held in the joint names of the Plaintiff and Defendant. We are of the view that your client is required to provide full discovery not only as to what account or accounts those monies were transferred, but also in relation to where those monies terms are currently deposited.
Then the letter makes this statement, upon which the defendant has seized:
Your client is a citizen of Australia and either a citizen or resident of Canada. Our client is concerned that the monies withdrawn from the joint account are currently deposited in off-shore bank accounts. In our view, it is critical that our client be apprised of where the monies are currently located so that, if necessary, he be afforded an opportunity to freeze at least part of those funds pending the outcome of the current litigation.
The word freezing should not be misconstrued. It conjures conceptions of a Mareva or freezing order under rule 37A designed to prevent a defendant from dealing with assets to render a judgment ineffective. One can see what the plaintiff is looking to do. He is asking his fiduciary, his brother with whom he once held a joint account, by discovery: where is the money half of which I say is mine? Has it possibly been transferred somewhere else? Has it found its way and been transformed into some other asset? How has the money been siphoned off? Do you have any documents concerning Integer Canada which show or throw light on how this money has been handled? Once identified, at trial the plaintiff may want to contend that the Court should impress certain funds with a trust, or grant injunctions. Or up to trial the plaintiff may want to be in an informed position to know what is at stake and what remedy to seek at or before trial.
I would hold first that whilst the letter from the plaintiff’s solicitors was enough to cause apprehension, this is not in truth discovery in aid of enforcement. It may eventually serve that object as well, but I think on a fair reading of the statement of claim (although as I have said, I am going to direct that it be clarified) the plaintiff is squarely raising a breach of fiduciary duty and a claim that the moneys are half his. The letter is really saying that the plaintiff wants to discover the subject matter of litigation, possibly preserve it, and ultimately if it exists to ask the Court at trial to impress it with a constructive trust. It would have been better if the statement of claim squarely pleaded that the funds so deposited belonged to the plaintiff to the extent of one half. When facts are established by discovery maybe the plaintiff will be in a position to do so.
I think the plaintiff is entitled to discovery to find out where those trust funds or assets are, or what has become of them, or how they have been dealt with.
Issue: are the documents relevant?
My conclusion is that they are. The defendant submits that the documents are irrelevant because there is no claim for the corpus of monies as such that requires a prurient (so described) tracing type exercise. For reasons I have given on the first issue, the documents are relevant, at the very least to the relief sought and the question of the utility of any relief the Court may give.
I would also add that legal authorities have established a principle that where alternative remedies are sought, and elections have to be made about remedies, a litigant must be able to make an informed choice: see Island Records v Tring International;[6] Technomin Aust v Geometals.[7] Here I think the plaintiff is entitled to know how the moneys have been handled and where they may be found now. If the moneys are gone, then attention has to turn to other remedies, and that is something to be determined at trial.
[6][1995] 3 All ER 444 447.
[7](1991) 5 WAR 346 at 352-3
Further, I also think that dealings with the money by or through Integer Canada might also be of forensic relevance on the substance of the claim. Trial experience has it that there are evidentiary connections between questions of liability and quantum or remedy. In a case where the joint venture of this scale was said to be entirely unwritten and based upon conversations, all in the family context, I can foresee that how the moneys were actually handled even after 2000 may throw some light on the intentions of the parties and whether equity will construe a trust between the parties.
Issue: is it right to defer any question of discovery on matters of quantum until the Court determines liability first?
In my view, the discovery sought is not to be characterised as “quantum”. It goes to the extent of final relief and availability of remedy; and that will be integral or a concomitant to the trial on “liability”. That is why it is just and convenient that there not be a deferral: see SogeleaseAustralia v David James Griffin.[8]
[8][2003] NSWSC 178 at [11]
The defendant relied on authorities which establish that it is rare for accounts to be made before questions of principle have been resolved: see Rockhampton Permanent Building Society v Peterson;[9] Sharpe v Goodhew[10] and Baldcock v Addison.[11] It was submitted, correctly, that where a plaintiff seeks the remedy of account “he must prove, inter alia, that the defendant is an accounting party and that he the plaintiff is entitled to some sum of money from the defendant although he is uncertain what is the quantum of that sum”.[12] This is typically the approach in partnership disputes or intellectual property cases, such as infringement of copyright.
[9][1986] 1 Qd R 128.
[10]Unreported, Fed Crt of Aust, Queensland District Registry, Drummond J; BC9203908.
[11][1995] 3 All ER 437.
[12]From Meagher and ors, Equity Doctrines & Remedies, at [25-025]
True it is, one of the many claims made here is for an account of profits from the defendant fiduciary. But I think the case is not apposite for the application of the principle on which the defendant relies. First of all, this is not a split trial. There is not a clear division between the two exercises. Secondly, the discovery is sought not truly to conduct a premature taking of accounts but to obtain facts to see where the most efficacious remedy may lie to be sought at trial and what remedy the Court may give. This connects I think with the view taken by Smith J in Bichler v Ipex[13] that discovery (in that case they were financial records) should be available in preparation for the debate at trial about the scope of relief, as well as for decision making by the plaintiff. This really is a call to the basic virtue or justification of discovery, that is, discovery should be ordered if it is necessary or desirable for disposing fairly of the cause or matter and that includes relief sought, unless the order would be oppressive harsh or prejudicial to the interests of the party against whom the order is to be made: see Technomin v Geometals.[14] A balancing exercise is involved of these factors: the competing interest of the parties; how impelling is the need for the information; how expensive and intrusive will be the exercise of making discovery; and whether there are alternative means to obtain the information: see Baldock v Addison.[15]
[13][2007] VSC 241 at [11].
[14](1991) 5 WAR 346 at 352-3
[15][1995] 3 All ER 437 at 442.
It seems to me that the real resistance here concerns the oppression and general unfairness ground. The defendant expostulates: the documents if they exist are in Canada; I accept the plaintiff and I were the joint holders of several bank accounts; I closed those accounts in 2000 and transferred that asset to a personal account money was in a joint account; the money is mine and the plaintiff has no claim to it; I should not have to be put to the expense of a “wild goose chase” ( so described) to find banking records and; the plaintiff’s whole case about a joint venture or partnership is not only unmeritorious but is precluded by an issue estoppel or a procedural estoppel of the Anshun[16] variety.
[16]Port of Melbourne Authority v Anshun 919810 147 CLR 589.
Issue: is it unreasonable or oppressive to order further discovery if the documents are in Canada?
I do not think it is. There is no evidence from the defendant stating how or in what way an order would be oppressive or unreasonable. He is or was the owner and operator of the company. He is a Canadian citizen. Arrangement can by agents to arrange for the transport of documents to Australia for examination by the defendant or his lawyers in preparation for discovery. That is the burden of discovery in cases where litigants do business trans nationally. I reject the suggestion that the plaintiff should undertake to pay the costs of the exercise. The defendant can seek recovery of those costs if he is ultimately successful in the case.
In an affidavit sworn 24 January 2011, the defendant responds to each of the categories of documents as sought. There is a common response to categories (i) to (iii). He says this:
… I do not have in my possession, custody or power bank statements in respect of Integer Canada’s bank account for the period 1989 to 1998. I believe that during the period between 1989 and 1998, Integer Canada held a bank account with HSBC in Canada. I did have those bank statements in my possession but I now no longer do. The last time I had the documents in my possession was in around early 2002. The documents were stored at the home of my brother, Chandra Deep Singh, in White Rock, British Columbia, Canada.
8.Some time after 2002, Chandra Deep Singh moved homes. At that time I arranged for the documents to be given to my friend Sham-Shaad Ali, who lives in Vancouver, Canada. I believe that the documents were last in his possession. Since receiving [the plaintiff’s solicitors’] letter I have contacted Mr Ali and asked him whether he has the documents. He told me that he does not know whether he still has the documents, but that I was welcome to travel to Canada to look for them. I have not done so.
It was first submitted said that the documents as sought belonged to a company and not to the defendant. But I see that the defendant has already filed an affidavit of documents, and documents no. 6 and 7 of that affidavit relates to Integer Computing (Canada) Ltd. The affidavit refers to various financial statements of Integer Canada and a folder comprising company documents. It is apparent then that the defendant has turned his mind to documents concerning Integer Canada and, properly advised, regards them as relevant.
Nor does the defendant say that the documents as sought are not in his power possession or control. He only says that the documents which might answer the description sought are in Ali’s possession in Vancouver who has said in effect “come and have a look for yourself”. There is not said to be anyone impeding him from taking possession of them or at least inspecting them, or nothing to stop Ali from sending the documents to Australia. After all, the defendant deposited the documents with Ali in the first place. He can now retrieve them. Thus on the test in Lonrho v Shell Petroleum[17] this is a situation where the defendant does not need the consent of his own one-man company in order to exercise a power to obtain the documents.
[17][1980] 1 WLR 627 at 635.
Of course, some element of proportionality or reasonableness always enters into the burden of discovery. There are instances where an order will not be made where it is oppressive in the sense that the labours involved are so arduous or possibly productive of expense and delay that a court would not order it. So much depends on the type or nature of documents and the expected utility of the documents. I have already decided that the documents are relevant and this is complex litigation, where fact finding is going to be difficult. It will involve a court understanding what the parties said, how they acted and how monies were handled amidst all of the business and financial dealings. If the Court finds the defendant is liable to the plaintiff then a real question will arise as to what the defendant did with the joint venture moneys at all relevant times and where those monies may now be found.
On the balancing exercise, I think there is a real need for the information and it is not outweighed by the expense and intrusiveness of bringing the documents to Australia. The defendant was responsible for the handling of the money because he admits in his defence that he closed the joint account and moneys were transferred out. It is safe to say that the defendant must or ought to know the dealings at least involving the Canadian company.
I am concerned that disputations may arise later if the defendant says that having brought the documents over there is nothing answering the description of the documents sought. I have to assume that properly advised the defendant will act conscientiously. I mean no disrespect to the defendant or his advisors when I say to avoid interlocutory skirmishes, I will direct the defendant to file an affidavit that states precisely what steps were taken to obtain the documents, from who, by what means, and a description of the exercise undertaken by him to search for the documents as sought. As I mentioned in argument, in modern litigation, my view is not to have unduly argumentative correspondence about discovery but to invoke powers under s 57 of the Civil Procedure Act and allow cross examination or an oral examination of the deponent.
Issue: should the application be declined because of delay?
No. There has been no delay within this proceeding by the plaintiff.
The defendant submitted that eight or nine years have passed since the plaintiff sued in Fiji (2002), and the County Court action (2003) and the anti-suit injunction (2009). Why should the defendant be vexed all these years later, it was asked?
I reject this submission. It is based on indignation. This claim was commenced in November 2009. It was removed from the Commercial List in April 2010. It is fixed for hearing in November this year. There is no delay at least of a duration in circumstances where a Court might conclude that the plaintiff had signified a definite acceptance of the sufficiency of the defendant’s discovery and was now pursuing further discovery for an improper or not genuine purpose.
Issue: should the plaintiff give further discovery?
Yes. The affidavit of the defendant’s solicitor, Cesarino Piotti sworn 15 December 2010 identifies 10 categories of documents in paragraph 11 (a) to (j). The plaintiff swore an affidavit on 2 February 2011 responding to each request. I shall deal with each request.
Category (a). First, I should highlight here that the defendant asks the plaintiff for documents concerning the very same Canadian company as is the subject of the plaintiff’s application. The plaintiff says he and the defendant destroyed these documents, but does not say when. I have my doubts about the utility of this technical request and many others, but for completeness, he should state when.
Category(b). The plaintiff has 3 documents that he says he will discover.
Category (c). Same ruling as for (a).
Category (d). Already discovered . No further discovery required.
Category (e). The use of the expression there are no documents that “survive” has been productive of distrust, even though this concerns a goat farm run as a cash operation. To put an end to this, the defendant should state if documents ever existed and if so, when, and what became of them.
Category (f). This concerns the reliance loss suffered by the plaintiff. Particulars were provided in paragraph 15 of a document dated 22 June 2010. The request is vague. To deal with the matter, the Court on its own initiative will order discovery of any documents that show or demonstrate: (i) that the defendant was receiving a wage of about FJD$1000 in 1990; (ii) the source of that wage; (iii) the nature of the work done; (iv) the qualifications required to perform that work, and the qualifications attained by the defendant.
Category (g). No further discovery required. The plaintiff’s sworn response is conclusive.
Category (h). I will not order further discovery. This ought be picked up in the ruling on category (e).
Category (i). I will not order further discovery. The plaintiff’s sworn response is conclusive.
Category (j). I think the plaintiff gives a convincing response. For completeness, he ought say about when the documents were destroyed.
Issue: the strike out
There was discourse about this throughout argument which I need not repeat. Of course a Court cannot compel a litigant to amend or dictate how to amend, but only give an opportunity to do so. The defendant sought to strike out paragraphs 32 to37 which deal with matters distinct from preceding paragraphs. It is not clear to me whether the allegations are predicated on the allegation of a joint venture and there is a troublesome allegation that transfers were made on “the understanding” of a 50% equity.
Paragraphs 32 to 34 concern revenue earned by Intesys as assignee of the maintenance agreement with the Fiji Electricity Authority as referred to alleged in paragraph 9 (b) and 18 (b) . I think paragraph 34 which is a rolled up plea of mistake of fact should be rearticulated. The plaintiff can plead that he authorised certain payments. He can then plead the belief under which he acted in so giving the authorization. He can then plead what in truth happened, or what were the facts, contrary to his belief. He can then plead the operative mistake of fact or law, and then the legal consequences. I am doing no more than exposing the ingredients of the cause of action. And I would say the same for the allegations concerning the goat farm in paragraph 35.
Paragraphs 36 and 37 need to be reconsidered. Paragraph 36 does not distinguish between moneys derived by Intesys and moneys derived from the operations of the goat farm. It must. More fundamentally, the plaintiff seems in those paragraphs to be making a claim for himself that belongs to Intesys. This is not a derivative action nor is there any other known legal basis pleaded by which he claims to be entitled to personally make a claim belonging to a corporation. Moreover as I understand the facts, he once was a shareholder of the company, and the company is now defunct. Because the allegations in paragraph 36 and 37 commingle the Intesys claim with the goat farm claim it is hard to separate the two.
As well as those problems, I think in the light of this discovery dispute, the plaintiff ought revisit the statement of claim and ensure facts or allegations of mixed fact and law are pleaded in the breach of fiduciary duty case leading up to paragraph 26 so as to support or cohere with the claim in paragraph A for the declaration of a constructive trust.
Ordinarily, the Court would strike out. But things have not happened ordinarily here. The strike out application came mid stream in a discovery fight. I think in modern litigation, the better course is for the Court to try and stimulate action and progress. It is better I think to get the further discovery underway and expect the plaintiff to repair its statement of claim, in circumstances where broadly speaking, given the long history of this dispute, the defendant cannot say he does not understand the essence of the case against him.
I would order that the plaintiff have leave to amend its statement of claim, if so advised, in accordance with these reasons or in any other additional way necessary or incidental to these reasons. That will mean an amended defence.
Orders
I would ask the parties to consult and prepare a proposed order dealing with my discovery findings and the strike out application, and try to reach agreement on the timing of steps. As for costs, of course I would hear argument if agreement cannot be reached. Costs for any amendment carry the usual consequences under rule 63.17. Otherwise, unless a clear “winner” can be identified, parties should consider making costs in the cause.
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