Smith v Gould
[2012] VSC 89
•20 March 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2006 04269
IN THE MATTER OF a Part IX of the Property Law Act 1958 (Vic)
| GEOFFREY ANDREW SMITH | Plaintiff |
| v | |
| ROBERT GOULD | Defendant |
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JUDGE: | ZAMMIT AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7 and 8 February 2012 | |
DATE OF JUDGMENT: | 20 March 2012 | |
CASE MAY BE CITED AS: | Smith v Gould | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 89 | |
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PRACTICE AND PROCEDURE – Discovery – s 57 of the Civil Procedure Act 2010 (Vic)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Kendall QC with Dr P Vout | Clarke Toop & Taylor Lawyers |
| For the Defendant | Mr S Wilson QC with Mr P Herzfeld | HWL Ebsworth Lawyers |
HER HONOUR:
At the commencement of this hearing on 7 February 2012, the plaintiff and defendant each had a summons dated 31 January 2012 for further discovery before the Court. In addition, the plaintiff had an application seeking leave to conduct an oral examination, of the defendant as the deponent of an affidavit of documents pursuant to s 57 of the Civil Procedure Act 2010 (Vic) (“CPA”).
Following negotiations by the parties, the further discovery summonses, save for one item, were not pursued. The parties reached agreement by consent about the matters raised in their respective summonses.
The substance of this hearing related to the plaintiff’s application pursuant to s 57 of the CPA.
The evidence before the Court was constituted by:
(a)an affidavit of Robert Gould sworn 24 November 2011 (the 24 November Gould affidavit);
(b)the affidavits of Gary Douglas Taylor sworn 25 November 2011 and 31 January 2012 (the 25 November and 31 January Taylor affidavits);
(c)an affidavit of Jonathan Alan Kramersh sworn 13 December 2011 (the 13 December Kramersh affidavit);
(d)affidavits of Jonathan Alan Kramersh sworn 13 December 2011, 31 January 2012 and 3 February 2012 (the 13 December 2011, 31 January and 3 February 2012 affidavits).
At its simplest, the plaintiff’s claim is pursuant to Part IX of the Property Law Act 1958 (Vic). The plaintiff alleges that he and the defendant resided together in a domestic relationship from approximately April 1990 until June 2004 within the meaning of Part IX of the Property Law Act 1958 (Vic).
In the plaintiff’s Amended Statement of Claim dated 28 September 2007, he seeks amongst other things, an order and declarations that the plaintiff’s interests and the defendant’s interests in the property and financial resources which existed in June 2004 be adjusted between them. The pool of assets in question includes significant artworks. For the purpose of the plaintiff’s claim, he will need to identify what were the assets in the pool at the end of the said relationship and what was the value of the pool of assets. It is now agreed between the parties that relevant artwork was sold after the relationship ended in June 2004. The post June 2004 assets became a live issue in October last year. Therefore, financial records relating to the sale of any of the said artwork, even post June 2004, are relevant for the purpose of ascertaining the value of the pool of assets.
On 8 February 2012, Mr Wilson QC, counsel for the defendant, read from proposed consent minutes which the plaintiff’s legal representatives had not yet had an opportunity to consider. Subject to having an opportunity to review the proposed consent minutes there was no objection by Mr Kendall QC, plaintiff’s counsel, to what the Court was told had been agreed between the parties. At the time of handing down my judgment, no issue has been raised with the Court as to the proposed consent minutes.
Discovery – copy of all Gould Gallery catalogues
The plaintiff seeks discovery from the defendant of all Gould Gallery catalogues including from June 2004 to date. The defendant has agreed to discover all Gould Gallery (“catalogues”) catalogues up to 2004.
The plaintiff submits that the post-2004 catalogues are relevant in that they “might assist” an enquiry into identifying which precise paintings have been offered for sale and when and how long they were offered for sale.
The plaintiff submits that the catalogues would normally have attached price lists to them. The price lists would be relevant to ascertain what prices were being asked for what paintings.
The plaintiff submits that this is important because it goes to identifying the precise number of paintings and the accurate description of those paintings which were part of the assets of the relationship. The plaintiff concedes that the catalogues would not provide conclusive assistance but only some assistance in the process of completing a schedule of pool of assets so far as the artwork is concerned.
The plaintiff has raised a concern about the information which he has received in the past from the defendant by way of discovery and answers to interrogatories. The plaintiff now says that he cannot be confident about which artwork should be included in the pool of assets and more importantly for what price any such artwork has been sold by the defendant, particularly artwork sold post June 2004. The plaintiff identifies inconsistencies between the defendant’s answers to interrogatories (dated 22 March 2010 and 26 July 2010) where he was interrogated about this issue and recent discovery of invoices for 53 paintings.
In the plaintiff’s summons for further discovery, 53 paintings are identified in a schedule containing items (a) to (aaa) inclusive. The plaintiff prepared and provided the Court with an artwork reconciliation from the discovered invoices it was recently given by the defendant and the defendant’s previous answers to interrogatories. What is evident is that in relation to a number of paintings, there are discrepancies between the defendant’s answers to interrogatories and the invoices. By way of example, item (a) in the artwork reconciliation refers to a painting by Howard Arkley, “Home with Bush” 1998. In relation to this artwork there is no invoice and no answers to interrogatories. Item (b) is Howard Arkley’s “House Western Suburbs” 1995. Invoice number 1567 has been discovered and the price on the invoice is $285,000. In his answers to interrogatories, the defendant deposed to the painting being sold for $140,000.
In relation to item (r), Arthur Boyd “Shoalhaven Riverbank Cockatoo”, 2 February 2006, the plaintiff submits that there are a number of Arthur Boyd Shoalhaven paintings with various descriptions added to them and queried whether the invoice for the Arthur Board “Shoalhaven Riverbank Cockatoo” is the same as the invoice relating to “Riverbank with Black Swan and Cockatoo”.
The plaintiff submits that there is not just a concern about the amount that some of the paintings were sold for but also concern about the actual identity of specific paintings that were offered for sale. The plaintiff submits that the catalogues post‑June 2004 may help identify the precise identity of which painting was sold.
The plaintiff says that of the 53 artworks identified in the schedule there are inadequacies in relation to 36 of the items. That is, either inconsistencies between amounts on the invoices and answers to interrogatories; no invoices; no answer to interrogatories or incomplete answers to interrogatories. For 11 paintings there are no invoices.
Included in the 53 artworks is Brett Whiteley’s “Bather and Garden” (item yy). The evidence before the Court is that Brett Whiteley’s “Bather and Garden” was sold on 1 July 2005 for $1 million.[1]
[1]Defendant’s answers to plaintiff’s interrogatories dated 22 March 2010, paragraph 38(c).
On 25 July 2011, the defendant deposed that all documents relating to the sale of Brett Whiteley’s “Bather and Garden” were last in his possession in approximately 2006.[2]
[2]Affidavit of Gary Douglas Taylor sworn 23 November 2011, at [11](b) and Exhibit GDT‑5; defendant’s affidavit dated 25 July 2011.
On 26 September 2011, the defendant deposed that “in or about May 2011, [he] located a bank statement that revealed that [he] received $1,500,000 and not $1 million.[3]
[3]Affidavit of Gary Douglas Taylor dated 23 November 2011 – Exhibit GDT- 6.
On 24 November 2011, the defendant deposed that: [4]
In answers to interrogatories [about sale of Brett Whiteley’s ‘Bather and Garden’] … I gave answers which … did not, I believe, represent my actual knowledge.
[4]Affidavit of Robert Gould sworn 24 November 2011 at [17].
In the 25 July 2011 affidavit, the defendant swore that: [5]
(a)documents relating to the sale of Brett Whiteley’s “Bather and Garden” were not relevant;
(b)all documents relating to the sale of that painting were last in his possession in approximately 2006;
(c)in that year his computer malfunctioned;
(d)in about 2009 he replaced the computer without keeping hard copies of the documents relating to the sale of Brett Whiteley’s “Bather and Garden”.
[5]Affidavit of Gary Douglas Taylor dated 23 November 2011, at [11](b) – [14].
On 26 September 2011, the defendant swore a further affidavit of documents and further answers to interrogatories. In the further affidavit of documents the defendant repeated under oath the claim that his computer malfunctioned in 2006 and was replaced in 2009 without retention of records. In the further answers to interrogatories, the defendant said under oath:
I refer to my answer to the plaintiff’s interrogatories sworn by me on 26 March 2010 and 26 July 2010 in which I deposed that the sale price of Brett Whiteley’s “Bather and Garden” 1978 was $1 million. In or about May 2011, I located a bank statement which revealed that I received $1,500,000 for the painting and not $1 million.
The evidence demonstrates that the defendant found a bank statement in May 2011 which evidences the correct price paid for Brett Whiteley’s “Bather and Garden”. Despite this, two months later, on 25 July 2011, he swore no such documents were in his possession.
The plaintiff submits that since the defendant has given contradictory information under oath:
(a)in relation to the sale price of Brett Whiteley’s “Bather and Garden”;
(b)about the existence of documents in his possession evidencing that sale and the price paid;
(c)that he has disposed of a computer containing evidence relevant to this proceeding three years after its commencement
the Court can no longer accept the defendant’s sworn evidence regarding the subsequent sale of artworks owned by the Gould Gallery in June 2004. For these reasons the plaintiff seeks discovery of the catalogues from 2006 to date. The defendant has agreed to discover the catalogues prior to 2004.
Application for an examination of the defendant pursuant to s 57 of the Civil Procedure Act2010 (Vic)
Section 57 of the CPA provides:
57.Cross-examination regarding discovery obligations
Unless a court orders otherwise, any party to a civil proceeding may cross‑examine or seek leave to conduct an oral examination of the deponent of an affidavit of documents prepared by or on behalf of any other party so that if there is a reasonable basis for the belief that the other party may be –
(a)misinterpreting the party’s discovery obligations; or
(b)failing to disclose discoverable documents.
The plaintiff submits that there is a reasonable basis to believe that the defendant may be misinterpreting his discovery obligations by failing to disclose discoverable documents.
The plaintiff relies on the evidence in relation to the discovery that Brett Whiteley’s “Bather and Garden” was sold for $1.5 million, not $1 million.
The plaintiff submits that in light of circumstances where the defendant’s computer has malfunctioned and that he replaced the computer without keeping hard copies of documents, the plaintiff has had to issue subpoenas to various financial institutions in order to obtain relevant financial information relating to value of the asset pool.
In relation to the invoices which were the subject of the plaintiff’s application for further discovery and which have been provided, the plaintiff notes that there are approximately 11 paintings in the schedule for which there are no invoices. The plaintiff submits that it might be said that some of them have not been sold but there is, for example, no invoice for the Brett Whiteley “Bather and Garden” painting, which has been sold.
In relation to the computer, the plaintiff submits that the defendant has been silent on extremely relevant issues such as:
- who may have serviced the computer;
- why the computer was thrown out;
- what attempts were made to retrieve documentation recorded on it;
- whether there was any back-up of that documentation or where it may be; or
- whether the person who serviced it made a back-up or otherwise.
The plaintiff submits that the defendant has provided three affidavits of discovery, deposed to two sets of answers to interrogatories and still the plaintiff and the Court do not know why there was no attempt to retrieve the information from the computer or what, if any, back-ups may have existed for the computer, and/or information in relation to the inconsistencies between the invoices recently provided and the defendant’s answers to interrogatories. These matters raised an issue as to whether the defendant understands his obligations in relation to discovery and whether he has provided full discovery in a proper manner.
The plaintiff referred to the explanatory memorandum to the Civil Procedure Bill 2010 (Vic):
General Background
The Civil Procedure Bill 2010 is a Bill to provide for an Act that will reform and modernise the laws, practice, procedure and processes for the resolution of civil disputes which may lead to civil proceedings, and the initiation of conduct in civil proceedings and appeals in the Supreme, County and Magistrates’ Courts.
The Bill provides the foundation for a comprehensive overhaul of the civil justice system in Victoria. It aims to redress an imbalance and to achieve essential goals, accessibility, affordability, proportionality, and getting to the truth quickly and easily. …
To facilitate this resolution of disputes, judges and magistrates are given clear legislative assistance to proactively manage cases in a manner that will promote the overarching purpose of the courts when exercising civil jurisdiction, which is the just, efficient, timely and cost-effective resolution of the real issues in dispute.
The explanatory memorandum refers to clause 57 and that it:
provides that a party may cross-examine – or seek leave to conduct an oral examination of, the deponent of an affidavit of documents if there is a reasonable basis for the belief that the other party may be misinterpreting a party’s discovery obligations or failing to disclose discoverable documents. This is subject to any order of the Court.
The plaintiff submits that in light of the evidence in relation to the Brett Whiteley “Bather and Garden” painting and the defendant’s computer malfunction and eventual disposal of computer, the Court should be satisfied that examination of the defendant is appropriate.
The plaintiff submits that the examination would take no longer than two hours, and that the fact that the trial is on 16 April 2012 should not be a reason why leave should not be given to examine the defendant. The application, pursuant to s 57 of the CPA, was initially made by the plaintiff towards the end of last year and adjourned by consent to February this year.
The defendant submits the plaintiff is shifting the issue of the plaintiff’s accuracy of answers to interrogatories to the discovery process. That is, that as a result of the defendant’s discovery, doubt has been cast upon the defendant’s answers to interrogatories.
The defendant says that he has complied with requests for discovery and has cooperated with the subpoena process undertaken by the plaintiff.
In relation to the invoices for the 53 paintings in the plaintiff’s schedule for further discovery, the plaintiff notes that 11 invoices are missing and that there are discrepancies between the defendant’s answers to interrogatories and the invoices. The defendant submits this does not mean that discovery of relevant documents has not been made, or that there is a lack of integrity in the discovery process.
In relation to the 11 missing invoices, the parties have reached at least in principle agreement that the defendant will provide an affidavit explaining the missing invoices and in particular the missing invoice for the Whiteley painting “Bather and Garden” and the way in which the painting was invoiced. As noted, I have not had the opportunity to review the proposed orders but plaintiff’s counsel did not suggest that this was not to be provided by the defendant or that it would in some way fall short of giving an explanation in relation to the invoices.
The defendant submits that in relation to the computer he has provided an affidavit which sets out the circumstances of why the computer was thrown out and about the malfunctioning of the computer.
In his affidavit sworn 25 July 2011, the defendant deposes that:
I say that all documents relating to the sale of Brett Whiteley’s “Bather and Garden 1978” was last in my possession in approximately 2006 when my computer malfunctioned. My computer was replaced in or about September 2009. I did not retain hard copies of these documents.
In the defendant’s second supplementary affidavit of documents sworn 26 September 2011, he deposes that: [6]
The hard drive of my computer which malfunctioned in or about 2006 and again in 2009 was last in my possession, custody or power in approximately 2009 after which time I believe that I would have thrown it away and I don’t know what has become of it.
[6]Affidavit of Gary Douglas Taylor sworn 23 November 2011, at [11](d); Defendant’s second supplementary affidavit of documents sworn 26 September 2011.
In addition to the information already provided by the defendant about the computer issue under oath, he has now agreed under the proposed discovery regime (resulting from the plaintiff’s 31 January 2012 summons) to depose on oath to further matters in relation to the computer issue.
As discussed, the Court has not had the opportunity to review the proposed agreement reached between the parties in relation to the further discovery. However, in the course of submissions Mr Wilson SC said: [7]
So what we say is that the question of the computer and anything that may be on that so far as is relevant, which is now defined by the parties’ last round of summonses, is going to be addressed because it must under that emphasis in the order about, well, if you haven’t got it anymore you tell us where it is and what happened to it. What happened to it is not going to be addressed just by I had a computer and threw it away. I can assure we’ll need a much more detailed explanation than that and I’m telling Your Honour that because I’m going to insist on it and the reason I’m going to insist on it is because I think it’s in my client’s interests to do so rather than leave it up in the air and leave Mr Kendall with some free hit about cross‑examination.
[7]Transcript 8 February 2012, page 115 at Lines 6 – 20.
Decision
This matter is listed for trial on 16 April 2012 with a 15 day estimate. The proceeding was commenced in December 2006.
As a result of this last round of discovery summonses, the plaintiff will file and serve his fifth affidavit of documents and the defendant his third affidavit of documents.
While the discovery process has been slow and laboured, subject to the final “proposed orders” it seems that discovery of relevant documents going to the pool of assets as at June 2004 and the value of that pool of assets has been completed.
The defendant’s discovery has raised issues about the accuracy of his answers to interrogatories and the fact that the computer which contained relevant material was thrown away by the defendant while this litigation was on foot.
Section 57 of the CPA provides the means for a party to seek leave to cross‑examine or conduct an oral examination of the deponent, if there is a reasonable belief that the deponent may be misinterpreting his discovery obligations; or failing to disclose discoverable documents.
It would be appropriate to grant such leave if the Court wanted to extinguish any doubt that there has been incomplete discovery by any party, or if the integrity of the discovery process is in question.
At the time of this application, I consider that the defendant has disclosed or will disclose all relevant discoverable documents. The defendant has agreed to go on oath and explain when relevant documents were last in his possession and why they are no longer in his possession. This includes information and/or discovery about the 11 missing invoices, the Brett Whiteley “Bather and Garden” 1978 painting, and the computer issue.
Much has been said by the plaintiff about the discrepancy between the defendant’s answers to interrogatories in relation to the Whiteley “Bather and Garden” painting and discovery. The fact remains that the defendant has discovered relevant documents, which confirmed his answers to interrogatories about the sale price of the “Bather and Garden” painting was incorrect. There is nothing to suggest that the discovery process has not been complied with or that the defendant is withholding documents.
The plaintiff has had good reason in the past to believe that the defendant’s discovery may not be complete. The defendant has admitted his computer malfunctioned in or about 2006 and that in 2009 he threw away the hard drive. The computer it seems did contain information which would assist in establishing a proper record of what artworks had been sold since June 2004 and for how much. Since the discrepancy in relation to the sale price of the “Bather and Garden” painting and the computer issue, the plaintiff has issued numerous subpoenas to obtain the information to establish a proper and reliable record of what artworks have been sold since June 2004 and for how much. In relation to the subpoenaed documents the parties have agreed the process for inspection by which confidentiality and relevance concerns are being addressed, without prejudice to the parties’ position concerning the subpoena. The process is not yet complete.[8] The defendant has agreed to provide further discovery in accordance with the plaintiff’s summons dated 31 January 2012.
[8]Affidavit of Jonathan Alan Kramesch sworn 13 December 2011 at [13] – [18], Exhibits JAK-9, JAK-10.
In these circumstances, at the time of this application, I do not consider that the defendant is failing to disclose discoverable documents or that he is misinterpreting his discovery obligations. Quite the contrary, the defendant’s agreement to comply with the plaintiff’s 31 January 2012 summons for further discovery and the issues documented in Other Matters in the proposed minutes suggest the contrary.
The issue of the post June 2004 artwork only arose in or about October 2011. Since then, as discussed the plaintiff has taken numerous steps, from issuing subpoenas to summonses for further discovery. The parties, to their credit, have reached agreement on most issues, including a regime for inspection of subpoenaed documents and redaction of those documents, and the further discovery by both parties.
The parties should be equipped with the information necessary to determine the value of the asset pool. The defendant’s credit in relation to the discrepancy between his answers to interrogatories and discovery and the computer issue will no doubt be the subject of cross‑examination at trial.
I consider that allowing the plaintiff to cross‑examine the defendant at this stage would do no more than confer an advantage to the plaintiff and would not advance the discovery issues between the parties.
Section 57 of the CPA is to be understood in the context of the overarching purpose of the CPA. The overarching purpose of the CPA as set out in s 7 is to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute. The real issue in dispute in relation to discovery is the proper assessment of the pool of assets for distribution.
I consider the plaintiff is now armed with invoices, bank statements, catalogues of exhibits and the defendant on oath in relation to the computer issue and the “Bather and Garden” painting. In circumstances where I do not find the defendant has failed to disclose discoverable documents or that the defendant does not understand or misinterprets his discovery obligations, any order granting leave to cross‑examine the defendant would do no more than to add cost and distract the parties from preparation for trial which is appropriately six weeks away. I do not consider that this would be efficient or timely.
In relation to the catalogues, in circumstances where the defendant no longer has the computer which may have contained relevant information about the artwork sold post June 2004 and the fact that the plaintiff has had to issue subpoenas to obtain relevant information, I consider it is appropriate that the defendant provide the catalogues from 2004. There is no evidence before the Court that such a task would be onerous for the defendant or that the catalogues were not in the defendant’s possession.
Accordingly, I dismiss the plaintiff’s application pursuant to s 57 of the CPA. I order the defendant provide discovery of copies of all Gould Gallery catalogues from June 2004 to date.
Subject to hearing from the parties on costs, I make the following observations. The parties reached agreement except for the post 2004 Gould Gallery catalogues. While I have dismissed the plaintiff’s application pursuant to s 57 of the CPA, given the circumstances of this case and the recent introduction of the Civil Procedure Act, I do not consider the plaintiff’s application was misconceived or frivolous. Each party had a summons before the Court. Each party has had some success, but most importantly the parties have reached agreement over issues which would have resulted in unnecessary costs to the parties, delay and use of court resources. I consider an appropriate costs order in relation to the two summonses and the plaintiff’s application pursuant to s 57 of the CPA is that such costs be reserved. These observations are relevant to any outstanding costs orders in relation to the objections to the plaintiff’s subpoenas.
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