Somerville, Hugh Ross v Australian Securities Commission & Ors ANZ Executors & Trustee Co Ltd v Australian Securities Commission & Ors Day Neilson Jenkins & Johns v Australian Securities Commission
[1995] FCA 854
•26 Oct 1995
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 188 of 1993
GENERAL DIVISION )
BETWEEN:HUGH ROSS SOMERVILLE
Applicant
AND:AUSTRALIAN SECURITIES COMMISSION & OTHERS
Respondents
CORAM: RYAN J
PLACE: MELBOURNE
DATE: 26 OCTOBER 1995
MINUTE OF ORDERS
THE COURT ORDERS:
That the motion on notice dated 25 May 1995 be refused.
That the applicant pay the respondents' costs of and incidental to the said motion, such costs to be taxed in default of agreement.
NOTE:Settlement and entry of orders is dealt with in O 36 of the Federal Court of Australia Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 190 of 1993
GENERAL DIVISION )
BETWEEN:ANZ EXECUTORS AND TRUSTEE COMPANY LTD
Applicant
AND:AUSTRALIAN SECURITIES COMMISSION & OTHERS
Respondents
CORAM: RYAN J
PLACE: MELBOURNE
DATE: 26 OCTOBER 1995
MINUTE OF ORDERS
THE COURT ORDERS:
That the motion on notice dated 20 June 1995 be refused.
That the applicant pay the respondents' costs of and incidental to the said motion, such costs to be taxed in default of agreement.
NOTE:Settlement and entry of orders is dealt with in O 36 of the Federal Court of Australia Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 205 of 1993
GENERAL DIVISION )
BETWEEN:DAY NEILSON JENKINS & JOHNS
Applicant
AND:AUSTRALIAN SECURITIES COMMISSION & OTHERS
Respondents
CORAM: RYAN J
PLACE: MELBOURNE
DATE: 26 OCTOBER 1995
MINUTE OF ORDERS
THE COURT ORDERS:
That the motion on notice dated 15 June 1995 be refused.
That the applicant pay the respondents' costs of and incidental to the said motion, such costs to be taxed in default of agreement.
NOTE:Settlement and entry of orders is dealt with in O 36 of the Federal Court of Australia Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 188 of 1993
GENERAL DIVISION )
BETWEEN:HUGH ROSS SOMERVILLE
Applicant
AND:AUSTRALIAN SECURITIES COMMISSION & OTHERS
Respondents
No VG 190 of 1993
BETWEEN:ANZ EXECUTORS AND TRUSTEE COMPANY LTD
Applicant
AND:AUSTRALIAN SECURITIES COMMISSION & OTHERS
Respondents
No VG 205 of 1993
BETWEEN:DAY NEILSON JENKINS & JOHNS
Applicant
AND:AUSTRALIAN SECURITIES COMMISSION & OTHERS
Respondents
CORAM: RYAN J
PLACE: MELBOURNE
DATE: 20 OCTOBER 1995
REASONS FOR JUDGMENT
RYAN J: The nature of these proceedings and their interlocutory history have been conveniently described by Lockhart J as a member of a Full Court in Somerville v Australian Securities Commission and Others (unreported 18 September 1995). I am content, as I did in reasons for
judgment delivered in the same proceedings on 20 October 1995, to adopt that description. The present controversy concerns the sufficiency of answers made by each of the respondents, the Australian Securities Commission ("the Commission"), Peter Chapman and Ailsa Wilson to interrogatories delivered on behalf of each of the applicants. For the purposes of illustrating the issues and explaining the reasons for my orders I shall concentrate on the Commission's answers to the interrogatories delivered on behalf of the applicant in the proceeding numbered VG 188 of 1993, Hugh Ross Somerville.
In his challenge to the sufficiency of the respondents' answers to interrogatories, Counsel for Mr Somerville have directed attention first to those interrogatories which enquire after the matters which the respondents took into account in making the decisions to institute proceedings pursuant to s 50 of the Australian Securities Commission Act 1989 ("the ASC Law") in selecting the plaintiffs in whose names the Supreme Court proceedings have been brought. In the same context, submissions have been directed to those interrogatories which enquire after the purpose of one or other of the respondents in taking a particular decision. Interrogatory 2 of Mr Somerville's interrogatories illustrates each of these aspects. It requires the respondents to:
"2A.Look at paragraph 6 of the Statement of Claim and paragraph 6 of the Further Amended Defence and:
(a)Identify each and every matter which -
(i)the First Respondent;
(ii)the Second Respondent;
took into account in making the decision referred to in paragraph 6 of the Statement of Claim;
(b)Give the usual particulars of each such matter enquired after in sub-paragraph 2(a) hereof;
(c)For what purpose did -
(i)the First Respondent;
(ii)the Second Respondent;
make the decision referred to in paragraph 6 of the Statement of Claim;
(d)Upon what date or dates did -
(i)the First Respondent;
(ii) the Second Respondent;
decide whether or not it was in the public interest to begin and carry on the proceeding referred to in paragraph 6 of the Statement of Claim in the name of each person referred to in paragraph 6 of the Statement of Claim (including Meadow Gem Pty Ltd)?
(e)Identify each and every matter which -
(i)the First Respondent;
(ii)the Second Respondent:
took into account in deciding that each person referred to in paragraph 6 of the Statement of Claim (including Meadow Gem Pty Ltd) was a suitable Plaintiff in the Supreme Court proceeding No 2045 referred to in paragraph 6 of the Statement of Claim.
To enable a better understanding of interrogatory 2, it is necessary to set out para 6 of Mr Somerville's Statement of Claim which is in these terms:
"On or about 18 March 1993, the ASC, alternatively Chapman, decided that it was in the public interest for each of:
(a)Meadow Gem Pty Ltd;
(b)Hilton John Shaw;
(c)Patricia Margaret Shaw;
(d)Neville George Trewheela; and
(e)Betty Constance Trewheela (collectively, "the original plaintiffs") to begin and carry on a proceeding for the recovery of damages against the defendants, upon allegations to the same or similar effect as the allegations contained in proceeding No 2045 of 1993 in the Supreme Court of Victoria ("the original proceeding")
PARTICULARS
(i)The original proceeding was commenced on 23 March 1993.
(ii)Paragraph 1 of the Statement of Claim filed in the original proceeding alleged that the original proceeding was caused to be begun and carried on by the ASC under and by virtue of the provisions of section 50 of the ASC Law. That section only applies where it appears to the ASC that it is in the public interest for a person to begin and carry on a proceeding.
(iii)The Applicant relies on the matters referred to in paragraphs 2.2 and 2.3(b) of the Further and Better Particulars of Defence."
The answer provided by the respondents to Interrogatory 2 is:
"2B(a) In answer to part (d), the first Respondent refers to and repeats each of the facts set out in -
(i)sub-paragraphs (a), (b), (c), (d) and (e) of paragraph 3.1; and
(ii)paragraph 3.2,
of the Further and Better Particulars of the Defence dated 9 July 1993. By reason of those matters the first Respondent believes that the decision was made by the first Respondent on 7 January 1993 and/or 18 March 1993 and by the second Respondent on 18 March 1993.
(b)The first-named Respondent objects to answer the remaining parts (a), (b), (c) and (e) of the interrogatory on the ground:
(i)that as to those parts the interrogatory is vexatious or oppressive;
(ii)that as to those parts the interrogatory does not relate to any matter in question between the Applicant and the first Respondent;
(iii)of privilege.
(c)The facts relied upon in support of the said objections are as follows:
(i)the enquiry into matters taken into account:-
(A)is too wide;
(B)is not restricted to the matters in issue as pleaded in paragraphs 21 to 29 of the Statement of Claim and paragraphs 21 to 29 of the Further Amended Defence;
(ii)the enquiry into purpose:-
(A)is too wide;
(B)does not relate to any issue between the parties in relation to the decision alleged in paragraph 6 of the Statement of Claim
(iii)any answer would require the disclosure of privileged communications;
(iv)the interrogatory enquires into a state of mind and/or other subjective matters of a body corporate;
(v)the interrogatory enquires as to conclusions and not the facts upon which such conclusions are based."
The applicants contend, first, that Interrogatory 2 is not vexatious or oppressive in the sense in which that concept was explained by Woodward J in Aspar Autobarn Co-operative Society v Dovala Pty Ltd (1987) 16 FCR 284 where his Honour first referred to O 16 sub-rr 6(2) and 6(3) of the Rules of this Court which provide:
A statement in answer to interrogatories shall deal with each interrogatory specifically either -
(a)by answering the substance of the interrogatory without evasion; or
(b)by objecting to answer the interrogatory on one or more of the grounds mentioned in sub-rule (3) and briefly stating the facts on which the objection is based.
Subject to sub-rule (4), a party may object to answering any interrogatory on the following grounds but no other -
(a)where the answering is not required by an order, that the interrogatory does not relate to any matter in question between him and the party requiring the answer;
(b)that the interrogatory is vexatious or oppressive; and
(c)privilege."
His Honour then continued, at 287:
"In my view, the wording of the rule does to some extent limit the objections which might be taken in other jurisdictions. While the grounds referred to comprehend some of the traditional objections which were first relied on in this case, they do disclose a general intention that interrogatories should be answered unless they are either improper or distinctly unfair.
Ground (a) of the rule covers the objection that the question is "irrelevant". In a particular instance it may also overlap the allegations that the question is "too wide", "fishing" and "immaterial". It is, however, easier to apply than any of those criteria.
In ground (b) of the rule, I believe that "vexatious" is used in the sense illustrated by the Shorter Oxford Dictionary when it says "Of legal actions: Instituted without sufficient grounds for the purpose of causing trouble or annoyance to the defendant".
Thus an interrogatory administered for a purpose foreign to the proceeding would be vexatious, as would the traditional "fishing" interrogatory, which seeks information on which to base claims not yet made: see Cayron v Crevelli (supra); WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 at 189-190 and cases there cited.
The word "oppressive" in ground (b) of the rule means, I think, unfair, or unreasonable, in the sense that a good deal too much is expected of the party questioned. It may be that the details sought would take many hours to extract from records and would only be relevant to some side issue in the case. Or the question may be so ambiguous that it would be unfair to expect the party questioned to make assumptions about its meaning. Or the question may cover a wider geographic area or a longer period of time than is reasonably necessary in readying the case for trial. There are many questions which might be admissible in cross-examination, but are by their very nature inappropriate, and thus oppressive, in interrogatories. Questions going to credit or to motive are obvious examples.
Thus it can be seen that the types of question which may properly be objected to as "oppressive" are many and varied. Each contested instance will have to be resolved on the basis of the court's general impression as to what is reasonable. In reaching a conclusion, the court may find that the particular interrogatory or answer takes colour from those surrounding it. Thus an apparent attempt to pose clear and precise questions, related directly to the particular case, should be treated more sympathetically than one bearing the hallmark of mass-production. Similarly a demonstrated willingness to answer questions in a helpful way will lend credence to a particular objection."
Interrogatory 2(a) - matters taken into account
Interrogatory 2(a) is said to be relevant to a matter in issue because the Statement of Claim alleges that, in making the impugned decision, the respondents took into account a large number of allegedly irrelevant matters and failed to take into account a similarly large number of matters which are said to have been relevant to the exercise of power under s 50. The paragraphs containing those allegations are 21 to 24, in these terms:
"21.In making the decisions referred to in paragraphs 5 to 7 (inclusive) above, the ASC purported to exercise the power conferred by section 50 of the ASC Law by taking into account:
(a)the ASC's belief that there were a large number (up to 1400) noteholders who might benefit from the original proceeding;
(b)the ASC's understanding that the power conferred by section 50 of the ASC Law could be used as a means of beginning and carrying on an action in the nature of a class action alternatively a representative action;
(c)the ASC's intention that the original proceeding would be carried on in the names of a large number of (up to 1400) noteholders;
(d)the ASC's intention that an application would be made to the Supreme Court of Victoria to join as additional plaintiffs in the original proceeding a large and unascertained number of noteholders, with as then unidentified causes of action against the applicant;
(e)that none of the plaintiffs would be entitled to revoke consent to the original proceeding being begun and carried in his, her or its name or unilaterally to withdraw from that proceeding;
(f)that the ASC would have absolute control over the conduct of the proceeding;
(g)that the ASC would have absolute discretion over the distribution of any sums recovered by the original plaintiffs by way of damages or costs from the defendants;
(h)that the ASC would indemnify each of the original plaintiffs against the cost of the original proceeding.
Each of the considerations referred to in paragraph 21 above was an irrelevant consideration in exercising the power conferred upon the ASC by section 50 of the ASC Law.
In making the decisions referred to in paragraphs 5 to 7 (inclusive) above in purported exercise of the power conferred by section 50 of the ASC Law, the ASC failed to take into account:
(a)the provisions of the Supreme Court Act and/or the Rules and Regulations of the Supreme Court;
(b)that at the time the decisions were made the ASC had not ascertained the identity of each of the noteholders in whose name the ASC intended to carry on the original proceeding;
(c)the nature and merits of the cause(s) of action of each noteholder who might be joined in the original proceeding ("each potential noteholder plaintiff");
(d)the nature and extent of the differences between the cause(s) of action pertaining to each potential noteholder plaintiff;
(e)the financial means and circumstances of each plaintiff in the original proceeding and each potential noteholder plaintiff;
(f)whether or not it was lawful for the ASC to deny to the plaintiffs in the original proceeding and each potential noteholder plaintiff all power whatsoever in relation to the conduct of the proceeding;
(g)whether or not it was lawful for the ASC to deny to the plaintiffs in the original proceeding and each potential noteholder plaintiff the power unilaterally to withdraw their consent to the proceeding;
(h)whether or not it was lawful for the ASC to claim the right to distribute amongst the plaintiffs in the original proceeding and each potential noteholder plaintiff sums recovered by way of damages or costs from the defendants;
(i)whether or not it was oppressive to Somerville to conduct the action like a class action alternatively a representative action (if that were possible to do) and/or to join as additional plaintiffs) in the original proceeding an unknown number of potential noteholder plaintiffs, with unknown causes of action against the applicant;
(j)whether or not it was in the public interest (as opposed to the private interests of the plaintiffs) to cause the original proceeding to be begun and carried on;
(k)that prior to 7 January 1993 the liquidator appointed to wind up FFC had (to the knowledge of the ASC) determined to institute a proceeding ("the liquidator's action") in the Supreme Court of Victoria claiming compensation in respect of the same damage as that for which compensation is sought in the original proceeding;
(l)that if compensation were recovered in the liquidator's action in respect of the alleged damage, that compensation would extinguish and/or substantially diminish any damage suffered by the noteholders.
Each of the considerations referred to in paragraph 23 above was a relevant consideration in exercising the power conferred upon the ASC by section 50 of the ASC Law."
It is further alleged in para 25 that, in making each of the decisions referred to in para 5 to 7 (inclusive), the Commission purported to exercise the power conferred by s 50 in a manner which was so unreasonable that no reasonable person could have exercised the power in that way. Particulars are given of that allegation and the applicant goes on to allege in para 26 that:
"In making the decisions referred to in paragraphs 5 to 7 (inclusive) above, the ASC purported to exercise the power conferred by section
50 of the ASC Law for a purpose other than that for which the power was conferred.
PARTICULARS
The ASC intended to begin and carry on a class action alternatively a representative action and to fund the plaintiffs on the basis that they gave absolute control over the conduct of the original proceeding to the ASC and that each plaintiff gave to the ASC a discretion to apportion any sum recovered against the defendants amongst the plaintiffs."
Section 50 of the ASC Law confers the power in question on the Commission by providing:
"Where, as a result of an investigation or from a record of an examination (being an investigation or examination conducted under this Part or a corresponding law), it appears to the Commission to be in the public interest for a person to begin and carry on a proceeding for:
(a)the recovery of damages for fraud, negligence, default, breach of duty, or other misconduct, committed in connection with a matter to which the investigation or examination related; or
(b)recovery of property of the person;
the Commission:
(c)if the person is a company - may cause; or
(d)otherwise - may, with the person's written consent, cause;
such a proceeding to be begun and carried on in the person's name."
The applicants have pointed to Seidler v John Fairfax & Sons Ltd [1983] 2 NSW LR 390 at 393 as establishing that "relate" in the context of O 16 r 6(3)(a) means "has some association or connection" with the matter in question between the parties. Interrogatory 2, in that sense, is related to the matters in question in the present case. Those matters were identified as follows by Northrop J in Somerville v Australian Securities Commission (1993) 118 ALR 149 at 162:
"[Counsel for the applicants] contended there were at least six separate matters of substance arising between the parties most of which in reality concern the proper construction of s 50 of the ASC Law. The first issue was said to be whether s 50 was in substance a
class action. There was an issue of fact of whether the Commission had examined the merits of the claim by each individual potential plaintiff. This was the second issue. Third was the issue of fact of whether the Commission gave consideration to the financial means of the individual potential plaintiffs in circumstances where the plaintiffs' costs were to be paid from public moneys. The fourth issue related to the arguments between the Commission and the potential plaintiffs under which a plaintiff had no entitlement to withdraw from the action. The fifth issue concerns the power of the Commission to apportion any damages awarded as between the plaintiffs. The sixth issue arises from a possible conflict between the Supreme Court rules and the nature of the proceedings brought by the Commission. This relates to the procedural difficulties arising from the large number (possibly over 1000) of plaintiffs in the one action."
I accept that where the motive, purpose or other state of mind of a person, including a body corporate, is relevant to an issue, interrogatories may properly be directed to that state of mind. That may require the person answering the interrogatory to enquire of each person who comprised the majority of the directors or officers responsible for taking a decision or authorizing an action what was then his or state of mind as to the relevant matter. Thus, in Kelly v Raymor (Illawarra) Pty Ltd [1981] 1 NSWLR 720 it was held that an interrogatory may be directed to the state of mind of individuals, such as directors, where that state of mind is relevant to the validity of a corporate act. That judgment was approved in Wildia Pty Ltd v Lee (1984) 9 ACLR 122 and T.C. Newman (Qld) Pty Ltd v D.N.A. Rural (Qld) Pty Ltd [1985] 2 Qd R 223.
However, that is not to say that an interrogatory may enquire, without specifying them, of all the matters which the directors or other relevant individuals took into account or all the purposes or objects which each of them had in mind at
the relevant time. It is true, as Mr Chernov QC who appeared with Dr Kenny for Mr Somerville submitted, that the state of mind of those who directed the actions of a corporation is a fact peculiarly within the knowledge of the corporation interrogated. Normally that consideration might well prove decisive of the entitlement of the other party to an answer, provided that the fact being the relevant state of mind is sufficiently identified. On the other hand, the consideration to which Mr Chernov pointed does not permit a party interrogating to ask the other party, in effect, to list every fact within that party's knowledge which may be relevant to a matter raised by the pleadings.
In my view, the objection to answering Interrogatory 2(a) is well-taken on the ground that it is oppressive in one of the senses used by Woodward J in Aspar Autobarn v Dovala (supra), namely that it expects too much of the party questioned. The pleadings have identified with some precision eight allegedly irrelevant considerations said to have been taken into account, and twelve considerations claimed to be relevant which were allegedly not taken into account, by the Commission in arriving at the impugned decision. However, the draftsman of Interrogatory 2(a) has not been content to ask whether each of those considerations was or was not taken into account, but has required each respondent to catalogue each and every matter which was taken into account. Even putting to one side the notorious elasticity of the concept of "matter", that requirement travels so far beyond the pleadings as to be oppressive as too wide. It offends against the principle enunciated by the New South Wales Court of Appeal (Asprey and Mason JJA and Taylor AJA) in Ring-Grip Pty Ltd v HPM Industries Pty Ltd [1971] 1 NSWLR 798 where it was observed, at 800:
"It is the function of the pleadings and the particulars to define the issues. It is not permissible to interrogate as to matters beyond the issues as disclosed by the pleadings and the particulars. In Aktiengesellschaft für Autogene Aluminium Schweissung v London Aluminium Co Ltd [1919] 2 Ch 67, at p 76, the Court of Appeal decisively rejected the argument that a plaintiff should be permitted to administer interrogatories as to infringement of patent outside the breaches contained in its particulars. Referring to earlier authorities from which the plaintiff sought to derive some support Swinfen Eady MR said: "In my opinion those authorities are no justification for allowing the interrogatories to travel outside the particulars, and by interrogatories of a sweeping character to endeavour to find out whether any further breach has, at any time and under any circumstances, been committed by the defendants."
The oppression to which I have just referred is compounded by the requirement in Interrogatory 2(b) to give "the usual particulars" of each "matter" enquired after by Interrogatory 2(a). The prefatory note to the interrogatories defines "usual particulars" by stipulating:
"PLEASE NOTE:
In these interrogatories, unless the contrary intention appears, where you are asked to give "the usual particulars" of any act, matter or thing, say whether it was wholly or partly in writing, in computer-readable form, oral or to be implied, and -
(a)in so far as it was in writing, identify sufficiently each document or paper constituting any part of it and say where and in whose possession that document or paper now is, when and where it may be inspected, and, if it has been lost or destroyed, say where a copy of it may be inspected and if there be no copy give the material substance of it;
(b)in so far as it is contained in any computer-readable form (for example, a disc, tape, random access memory, or the like) identify that form, say where and in whose possession it now is, when and where it may be inspected, and, if it has been lost or destroyed, say where a copy of it may be inspected and if there be no copy give the material substance of it;
(c)in so far as it was oral say when, where and between what actual persons, and whether face to face or by way of
telephone, each conversation constituting any part of it took place and give the material substance of each conversation;
(d)in so far as it was to be implied, state the acts, facts, matters, circumstances and things, and where they occurred or arose from which the implication is to be drawn
and if the act, matter or thing (as the case may be) was made, entered into, carried out or done by a person acting, or purporting to act, on behalf of or with the authority of another, give the like particulars as are sought above of the authority (express, implied or ostensible) of that person to act on behalf of that other."
Thus, to answer Interrogatory 2(a), as well as compiling a catalogue of all "matters" taken into account, the maker of the answer would have to identify, in respect of each item in that catalogue, whether it came to the mind of each member of the Commission who participated in the decision in the form of a written or oral communication or by implication. It is not inconceivable that a particular item which the maker of the answer might choose to catalogue as a "matter" came to the mind of a member of the Commission in more than one of those forms. The process of characterisation and identification involved in answering the interrogatory has only to be adumbrated in that way for the excessive demands it makes on the party questioned to become apparent. As well, as the respondents have indicated in sub-paras (b)(iii) and (c)(iii) of their answer that, if that process were to be undertaken, some of the communications identified in the course of it might well attract the protection of legal professional privilege or public interest immunity. However, that ground of objection is anticipatory given the objectionable character of Interrogatory 2(a).
Interrogatory 2(c) - purpose
Having regard to the way in which the respondents' allegedly improper purpose is circumscribed by the particulars to para 26 of the Statement of Claim, this part of Interrogatory 2 is also oppressive for the reasons set out above in respect of Interrogatory 2(a). I entertain some doubt whether those particulars actually comprehend a "purpose" in the sense in which the substantive pleading in para 26 appears to use that concept. However, I am prepared to assume that they do. I also assume that it is permissible to interrogate about a "purpose" made relevant by the pleadings, being equivalent to "motive" discussed in Kelly v Raymor (Illawarra) Pty Ltd (supra). It may be noted parenthetically that in Service v Coote (1891) 17 VLR 40 an interrogatory enquiring as to "motive" was held to be the same as one asking "why" a party did something and to be impermissible. On the other hand, in Jordan v Sanders [1934] 5 ASR 424 a Full Court of the South Australian Supreme Court upheld an interrogatory which enquired whether certain "family reasons" referred to in a cablegram were the reasons why the defendant did not sell his shares to the plaintiff. In Navair Pty Ltd v Transport Workers' Union of Australia (1981) 52 FLR 177 Evatt J in this Court followed Service v Coote in preference to Jordan v Sanders. However, it is unnecessary for me to choose between these lines of authority or attempt to reconcile them because I consider that, when analysed in the way suggested for Interrogatory 2(a), Interrogatory 2(c) in asking after an unspecified "purpose" is simply too wide.
Interrogatory 2(e) - selection of suitable plaintiffs
The expression "a suitable plaintiff" which has been taken up in this interrogatory was apparently derived from certain paragraphs in the further and better particulars of the respondents' Defence. Those paragraphs include the following given by way of further and better particulars of paras 2 and 3 of the Defence:
"2.1On 7 January 1993, the Commission at a meeting attended by Mr Alan Cameron, Chairman, Mr Charles Williams Deputy Chairman and Mr Bill Robinson, Statutory Member:
(a)received a report dated 24 December 1992 prepared under sub-section 16(2) of the ASC Law by David John Habersberger about the investigation of the affairs of Farrow Corporation Limited and related corporations made by him as delegate of the Commission.
(b)was satisfied that the report contained findings that negligence, default, breach of duty or other misconduct had been committed in connection with the affairs of Farrow Finance Company Limited, in particular in connection with the offering by that corporation to the public of unsecured notes during the period from 1988 to 1990 and the administration of the Trust Deed under which those notes were issued.
(c)determined that it would be in the public interest for holders of those unsecured notes to begin and carry on a civil proceeding against ANZ Executors & Trustee Company Limited, Day Neilson Jenkins & Johns and Hugh Ross Somerville for the recovery of damages for the said negligence, default, breach of duty or other misconduct.
(d)was satisfied that the commencement of such a proceeding had been discussed with officers of the Director of Public Prosecutions, who had been provided with a copy of the report, and those officers had expressed no objection to the commencement of a civil proceeding in connection with the above mentioned matters.
(e)resolved to cause the proceedings referred to above to be begun and carried on in the names of such noteholders:
(i)who give their written consent to such a proceeding being begun and carried on in their name; and
(ii)whom the Australian Securities Commission from time to time determine are suitable Plaintiffs in the proceeding, at its absolute discretion."
Paragraph 2.2 of the same further and better particulars then goes on to recite:
"2.2On 18 March 1993, the Commission decided to cause a proceeding to be commenced in the names of:
(a)Meadow Gem Pty Ltd,
(b)Hilton John and Patricia Mary Shaw, and
(c)Neville and Betty Trewheela
being the proceeding which was commenced by Writ in the Supreme Court of Victoria on 23 March 1993 against the Applicant and others. The said decision was made by the Commission by its delegate, Peter Chapman, acting under the authority of an instrument of delegation dated 12 March 1991 and being the person occupying the position of Director, Special Operations, referred to in that instrument."
However, it can be seen from the particulars appended to paras 22 and 25 of the Statement of Claim that only sub-paras (xiii) and (xiv) subjoined to para 25 identify allegedly relevant considerations which were not taken into account on the admitted decision to joint as plaintiffs certain noteholders who were deemed by Mr Chapman to be "suitable". For the reasons given above in respect of Interrogatory 2(a), I regard as too wide, and therefore oppressive, an interrogatory which requires an answer to catalogue "each and every matter" taken into account in selecting each of five presumptively "suitable" plaintiffs.
Conclusion on Interrogatory 2 and similar interrogatories
For the reasons outlined above, I decline to order a further and better answer by the Commission or the other respondents to the following interrogatories which are similar in form to that discussed above and suffer from the same defects:
Interrogatories administered on behalf of Mr Somerville
(a) to the Commission - 1, 2(a) (b) (c) and (e), 3, 4, 5(a) (b) (c) and (e), 6, 7, 8, 9, 10, 11(a) (b) (c) and (e), 12, 13, 14, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25.
(b) to the respondent
Chapman -2(a) (b) (c) and (e), 3, 4, 5(a) (b) (c) and (e), 6, 7, 17, 18, 20, 21, 22.
(c) to the respondent
Wilson -5(a) (b) (c) and (e), 6, 7, 20, 21.
Interrogatories administered on behalf of Day Neilson Jenkins & Johns
(a) to the Commission - 1, 2(a) (b) (c) and (e), 3, 4, 5, 6(a) (b) (c) and (e), 7, 8, 9, 10(a) (b) (c) and (e), 11, 12(a) (b) (c) and (e), 13, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27.
(b) to the respondent
Chapman -2(a) (b) (c) and (e), 3, 5, 6(a) (b) (c) and (e), 7, 19, 20, 22, 23, 24.
(c) to the respondent
Wilson -6(a) (b) (c) and (e), 22, 23.
Interrogatories administered on behalf of ANZ Executors and Trustee Company Limited
(a) to the Commission - 1, 2(a) (b) (c) and (e), 3, 4, 5(a) (b) (c) and (e), 6, 7, 8, 9, 10, 11(a) (b) (c) and (e), 12, 13(a) (b) (c) and (e), 14, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27.
(b) to the respondent
Chapman -2(a) (b) (c) and (e), 3, 5(a) (b) (c) and (e), 6, 9, 19, 20, 22, 23, 24.
(c) to the respondent
Wilson -5(a) (b) (c) and (e), 6, 22, 23, 24.
Interrogatory 26 - opportunity to be heard
Interrogatory 26 of Mr Somerville's interrogatories for the examination of the Commission is in these terms:
Look at page 27(a)(a) and 36(a) of the Defence and, in relation to the allegation contained therein that the Applicant had the opportunity to be heard:
(a)State (with all material dates and places) the acts, facts, matters, circumstances and things upon which you rely on making that allegation;
(b)say whether in the course of the investigation referred to the Applicant had an opportunity to be heard on whether a decision under s 50 of the ASC Law should be made?"
The Commission has given the following answer to that interrogatory:
"26BIn answer to part (a)
(a)On 6 July 1990 the National Companies and Securities Commission appointed David John Habersberger, QC as inspector pursuant to sub-section 292(3) of the Companies (Victoria) Code to carry out an investigation into the affairs of Farrow Finance Company Limited and other corporations.
(b)Mr Habersberger commenced to carry out that investigation.
(c)Pursuant to section 14A of the ASC Law the first respondent continued that investigation through Mr Habersberger as its delegate.
(d)On 23, 30 and 31 March 1992 and 15 May 1992, Mr Habersberger conducted examinations of the applicant.
(e)The applicant instructed a solicitor, Mr Hugh-Jones, to appear with him at the examinations.
(f)At the examinations, the substance of the allegations of fact made against the applicant in the original proceeding (as that term is defined in the Statement of Claim), were put to the Applicant and he was given an opportunity to answer them.
(g)The applicant knew or ought to have known that:
(i)by virtue of section 305 of the Companies (Victoria) Code and section 17 of the ASC Law a report about the investigation was required to be prepared;
(ii)having regard to the evidence given by him, any such report might contain findings that the applicant had been guilty of negligence, default, breach of trust or breach of duty;
(iii)any such report would be considered by the first Respondent;
(iv)it might appear to the first Respondent from the report that it was in the public interest for proceedings to be commenced against the applicant pursuant to section 50 of the ASC Law.
(h)On and from 15 May 1992, the Applicant had an opportunity to make submissions to Mr Habersberger or to the first Respondent as to the subject matter of the inquiry or any related matter concerning any proceedings which might result therefrom, but did not do so.
In answer to part (b):
Save that it refers to and repeats the answer to part (a) of this interrogatory the first respondent objects further to answer it on the ground that part (b) of the interrogatory is vexatious or oppressive. The facts relied on in support of the objection are that part (b) enquires after a conclusion of law, of fact, or of mixed law and fact, and not the facts upon which any such conclusion may be based."
By paragraph 27(1) of its Further Amended Defence, the Commission denies that in making a decision under s 50 it is obliged to afford a proposed defendant the opportunity to be heard and specifically denies that it was under any such obligation to Mr Somerville in making the decisions referred to in paragraphs 5 to 7 of his Statement of Claim. Sub-paragraph (2) of paragraph 27 of the Defence is in these terms:
"(2)(a)They say further that the decision made under section 50 was made as the result of an investigation during the course of which Somerville was afforded an opportunity to be heard in respect of the subject matter thereof.
PARTICULARS
The investigation referred to is the investigation by Mr D J Habersberger QC. Somerville was examined on 23, 30 and 31 March 1992 and 15 May 1992. Somerville was legally represented at the examination and had an opportunity to put such matters relating to the affairs of FFC before the inspector as he thought fit or was advised.
(b)Accordingly if any obligation to give Somerville an opportunity to be heard can otherwise arise under section 50, it did not arise in the circumstances of the present case by reason of the matters in paragraph (a) above."
Paragraph 36 of the Further Amended Defence embodies a substantially identical plea in respect of decisions referred to in paras 8, 11, 12 and 13 of the Statement of Claim.
The applicants have complained that the answer to Interrogatory 26 is defective because it does not respond to the question asked. In essence the complaint is that the interrogatory enquired after an opportunity to be heard before the members of the Commission who made the impugned decisions, whereas the answer refers to an opportunity to be heard before Mr Habersberger who took no part in any of those decisions. However, as I read the Defence, the Commission does not suggest that any other opportunity to be heard was afforded to Mr Somerville beyond that which occurred in the course of Mr Habersberger's investigation. Whether that was sufficient to comply with the obligation alleged in paragraphs 27 and 36 of the Statement of Claim will be a matter for the trial judge. However, in the absence of any issue about other alleged opportunities to be heard, I decline to order a further answer to Interrogatory 26. This ruling has equal application to Interrogatory 16 administered on behalf of ANZ Executors and Trustee Company Ltd and to Interrogatory 16 administered on behalf of Day Neilson Jenkins & Johns which are similar in form to Interrogatory 26 and have been answered in broadly similar terms.
Other answers complained of
By his motion on notice dated 25 May 1995 Mr Somerville also sought a further answer by the Commission to his interrogatories numbered 15(a) and 27(a), (c) and (d). However, no argument has been addressed to me on the sufficiency of those answers. Moreover when the answers to Interrogatory 15(b) and (c) are read together an adequate answer has been furnished to part (b). Interrogatory 27 partakes of some of the vices exemplified by Interrogatory 2 and, insofar as it is not objectionable, has, I consider, been sufficiently answered.
The ANZ Executors and Trustee Company Ltd sought a further answer by the Commission to its Interrogatory 17. In the absence of any argument specifically addressed to that answer and because parts (c) and (d) appear to sustain the objections which have been taken, I decline to order a further answer to that interrogatory.
The motion by Day Neilson Jenkins & Johns sought a further answer to its interrogatories numbered 14 and 17(a), (c) and (d). No argument has been addressed to these interrogatories which have each been answered to some extent. Some of my remarks in relation to Mr Somerville's Interrogatory 2 apply with equal force to the parts of these answers in which objection has been taken. I therefore decline to order further answers on the motion of Day Neilson Jenkins & Johns.
CONCLUSION
In the result the applicants have failed to persuade me that further answers should be given to any of the interrogatories in issue. Each motion must therefore be refused with costs.
I certify that this and the preceding twenty two (22) pages are a true copy of the reasons for judgment of his Honour Justice Ryan
Associate:
Date:
Counsel for H R Somerville Mr A Chernov QC
with Dr S Kenny
Solicitors for H R Somerville Mallesons Stephen Jaques
Counsel for ANZ Executors
and Trustee Company Ltd Mr G Moloney
Solicitors for ANZ Executors
and Trustee Company Ltd Arnold Bloch Leibler & Co
Counsel for Day Neilson
Jenkins & Johns Mr M B Derham QC
Solicitors for Day Neilson
Jenkins & Johns Phillips Fox
Counsel for Australian
Securities Commission,
P Chapman and A Wilson Mr R Merkel QC
with Mr R Strong
Solicitors for Australian
Securities Commission,
P Chapman and A Wilson Australian Government Solicitor
Hearing date: 29 June 1995
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