Southern Equities Corporation Ltd (in Liq) v Bond (No 7) No. Scgrg-96-113

[2000] SASC 427

SOUTHERN EQUITIES CORPORATION LTD (IN LIQ) & ORS v BOND & ORS (NO 7)
[2000] SASC 427

Civil

1................ DEBELLE J...... On 21 August 2000, the fourth, fifth and sixth defendants (“the defendants”) delivered a notice to admit to the plaintiffs.  The plaintiffs answered it on 5 September.  The defendants contend that the document filed in answer (“the response”) was an inadequate response in that it failed to comply with the requirements of Rule 54.02(1) as those requirements have been spelled out by this Court in decisions such as Rak v Coles Myer Ltd (1996) 68 SASR 272; Thompson Brindal Ltd v McLachlan (2000) 207 LSJS 90; Sheahan v Hertz Australia Pty Ltd (1993) 171 LSJS 359; and Southern Equities Corporation Ltd (in liquidation) v Bond & Ors (No 2) [2000] SASC 213. By application dated 26 September 2000 (Document 283), the defendants, therefore, applied for an order that certain paragraphs in the plaintiffs’ response to the notice to admit be deemed to be admitted. In the alternative, the defendants applied for an order that the plaintiffs file a further document in answer to the notice to admit with further and better answers.

1. The application was first considered at a directions hearing on 9 October 2000.  Mr Hoffmann, who appeared for the plaintiffs, said that the plaintiffs proposed to file an amended response to attempt to address a number of the complaints raised by the defendants as to the adequacy of the answers.  In the light of that proposal, I suggested that it was preferable to adjourn the application to a further directions hearing on 19 October in order to enable the amended response to be delivered and to enable the defendants to consider their position.  Mr Frayne, who appeared for the defendants, consented to that course.  The application was therefore adjourned to 19 October 2000.

2. The plaintiffs delivered an amended response on 17 October.  They did not, however, apply either for a dispensation from the obligations of Rule 54.02 or to be otherwise relieved from the obligations of the Rule.  At the hearing on 19 October, Mr Frayne contended that neither the initial response nor the amended response was a proper response to the notice to admit.  Relying on George v Dowling (1992) 57 SASR 579, he also referred to the fact that the plaintiffs had not applied for a dispensation from the obligations of Rule 54.02 It was apparent from Mr Frayne’s submission that it would be necessary to examine each of the paragraphs which the defendants considered were an inadequate answer and determine whether the answer complied with Rule 54.02. As there were about 90 to 100 answers in issue, I did not propose to adopt that course. I therefore adjourned the application and directed the parties to confer for the purpose of reducing the areas of controversy.

3. The hearing of the application resumed on 17 November 2000.  On reading the papers in preparation for the hearing, it was apparent that the parties had not in any real sense narrowed the areas of controversy.  I therefore examined each question and answer and formed a tentative view as to the adequacy of each answer.  On the commencement of the hearing on 17 November, I informed the parties that I had undertaken this exercise and that I proposed to rule on each of the answers which the defendants contended were inadequate without hearing argument on each.  I saw this as a reasonable course to avoid argument on each of the 90 to 100 questions remaining in dispute.  I was encouraged to adopt that course because on 9 October Mr Frayne had said that he did not wish to present full argument but was content to rely on the affidavit of Mr Davies sworn on 26 September 2000 which instead of reciting matters of fact had set out full argument.  In addition, on 19 October Mr Frayne had presented some argument and had then reiterated that he relied on the arguments in the affidavit of Mr Davies.  Counsel for the parties agreed with my proposal.  Nevertheless, in the case of a number of the questions, I heard argument from the parties.  In the result, I ruled that most of the answers made in the second response were adequate.  I directed that the plaintiffs provide further and better answers to only 15 out of the 100 or so answers which the defendants had contended were inadequate.  In making the rulings I had regard to the arguments advanced in the affidavit of Mr Davies.

4. It was implicit in the course that I adopted that I was not prepared to accede to the defendants’ application that the plaintiffs should be deemed to have admitted the questions which the defendants contended have been inadequately answered.  I dismissed the defendants’ application dated 26 September 2000 insofar as it sought such an order.  It was implicit in the order I made that the defendants had succeeded in their alternative application that the plaintiffs provide further and better answers.  Thus, the defendants obtained an order that the plaintiffs pay the solicitor’s costs of and incidental to filing the application dated 26 September 2000.

5. In the course of ruling on each of the answers I gave brief, if not peremptory, reasons for each ruling.  Those reasons are to be found at pages 1335 to 1355 of the transcript.  Mr Frayne asked for reasons for dismissing the defendants’ application that the answers in the initial response should be deemed to be admissions.  I gave brief reasons.  They are set out at page 1363 of the transcript.  I added that, if requested, I would elaborate upon them.  On 24 November Mr Frayne asked for further reasons.  The following are my more detailed reasons.

6. In Rak v Coles Myer Ltd (supra) at 276, Lander J identified the purpose of Rule 54 as facilitating proof of facts and documents by the party delivering the notice to admit, thereby saving time and cost at the trial. He added:

   “When used properly the Rules have the effect of narrowing the issues between the parties, avoiding unnecessary expense, and avoiding unnecessary time in the trial process.”

When Lander J’s reasons are read as a whole, it is apparent that there is more than one purpose to Rule 54 and that one important purpose is to narrow and elucidate issues.  That is particularly apparent from His Honour’s reasons at 279 where he said:

“All that seems to me to be consistent with the modern concept of litigation which requires a party to face up, as early as possible, to the responsibility of decisions.  The responsibility of decisions includes making, as early as possible, a determination of facts truly in issue between the parties.”

His Honour returned to this theme in Thompson Brindal Limited v McLachlan (supra) at 96 where he said:

“I endeavoured to explain in Rak v Coles Myer Limited (supra) the steps which had been taken over the years to attempt to require parties to identify the issues truly in dispute before trial.  I also endeavoured to show the efforts which had been made by Parliament to assist parties to prove facts which are not genuinely in dispute.  The Rules of Court are also designed, or should be so, to properly define the true issues between the parties.  The Court has an obligation to assist the parties to achieve that result or, if the parties will not willingly assist in achieving that result, to require the parties to achieve that result.  To that end courts have an obligation, it seems to me, to ensure that they have proper practices and procedures in place to require parties to make genuine endeavours to ensure that a trial is limited to the true issues in dispute.”

For the reasons which follow, once it is recognised that one important function of Rule 54 is to narrow and elucidate issues, a number of the questions in this application are resolved.

1. The notice to admit has 206 separate paragraphs seeking admissions.  A number of paragraphs have sub-paragraphs.  The total number of questions asked in the notice to admit is 378.  If regard is had to substance rather than to form, the first and second responses to the notice to admit are effectively the same.  In broad terms, there are two classes of differences between the first and second response.  The first class of differences is that the expression “not admitted” in a number of answers has been amended in the second notice to either “refuse to admit” or “denied”.  In this way the plaintiffs have, by their response, narrowed the issues.  The second class of differences concerns some 67 answers where an additional explanation has been provided.  Although that is a large number, it must be weighed with the fact that, in the case of some 31 of those 67 answers, the plaintiffs have explained that they have denied an assertion that an order was made on a particular date or have stated that no such order was ever made.  Here again, the amended reasons assist in defining and narrowing the issues.

2. Although the terms of Rule 54.02 deem a question to be admitted if the answer does not accord with the requirements of the Rule, it must be remembered that the Rules of Court are a servant and not a master.  Thus, if a party promptly provides an amended answer which provides more helpful and accurate information, it is manifestly preferable for the parties to proceed on that information.  The disadvantages of proceeding on incorrect information are readily apparent.  In those circumstances, it is not only quite pointless but also positively unhelpful, if not mischievous, to deem what were initially inadequate reasons to be admissions.  That will usually serve only to broaden the issues.  If issues are narrowed by an amended response, it is obviously beneficial to allow the amended response to be substituted for the initial response and to narrow the issues.  In this case, it is apparent that the amended answers were prompted by the defendants’ application dated 26 September 2000.  It would have been preferable if the plaintiffs had at an earlier stage given closer attention to the notice to admit and provided more complete answers.  But, in light of the fact that the amended answers are more accurate and more complete, the failure to provide complete answers in the initial response should not in the circumstances of this case result in the inadequate answers being deemed to be admissions.

3. A further reason why I was not prepared to deem allegedly inadequate answers to be admissions lies in the fact that many of the answers were in fact adequate.  Given the fact that the second response was in substance the same as the initial response, the rulings I have made in relation to the second response applied equally to the first.  In a relatively large number of instances, the plaintiffs objected on the grounds that the question concerned an irrelevant fact, was in the nature of a submission, or concerned a matter of legal professional privilege.  In large part, I have upheld the objection to answering the questions.  In some instances, the request for an admission involved a question of law, not a question of fact, and an objection was taken and upheld on that ground also.  In a surprisingly large number of instances, the request for an admission concerned the terms of an order which had been made by this Court and which was on the court’s file in this action.  Such a question is unnecessary, if not vexatious.  If a party seeks to rely on it, the document can be readily tendered.  Furthermore, the document speaks for itself.  Nothing is gained by seeking an admission.  The danger exists that if an admission is sought, there is a risk of an unjustified gloss being put on the document.  Broadly speaking, the rulings on a particular request to admit applied equally to the first as to the second response.  In that respect, the defendants have no ground on which to claim a deemed admission.

4. What then should be the position in those 15 or so instances where the plaintiffs have been ordered to file and deliver a more detailed response?  The failure to give a sufficient answer must be placed in context.  First, the circumstances of this case are quite different from those in George v Dowling (supra) where the person to whom the notice to admit was addressed failed to make any response.  In this case, each question has been answered, albeit in these 15 instances inadequately.  Secondly, this is a substantial action where the issues are complex.  The plaintiffs claim several million dollars from the defendants.  While it is plainly necessary for parties to adhere to the requirements of Rule 54.02 when responding to a notice to admit and while, generally speaking, the court will enforce those requirements, there will be instances where it is preferable not to do so.  The fact that an action is substantial and complex is not in itself a reason for permitting a party to be relieved of the consequences of failing to comply with Rule 54.02.  But it may be appropriate to do so where the elucidation of the issues and the interest of justice require.  This is such a case.  It will materially assist the conduct of the litigation and, in particular, the interests of the defendants if the plaintiffs are required to provide better answers to these 15 or so questions.

5. Finally, the failure of the plaintiffs to issue an application for dispensation from the requirements of Rule 54.02 should not, in the particular circumstances of this case, operate to their disadvantage.  They offered in open court to provide amended answers.  Counsel for the defendants assented to that course.  It might have been prudent for the plaintiffs to have filed and delivered an application for dispensation, particularly as they had been served with an application seeking orders that the answers said to be inadequate should be deemed to be admissions.  But in a substantial and complex action of this kind, it is proper and the interests of justice require that regard be had to the substance of the matter.  I repeat that the Rules of Court are a servant and not a master and that the purpose of Rule 54 is to narrow and elucidate the issues.  The process adopted in this action has assisted in achieving that latter object.  Nothing will be gained and a good deal will be lost by deeming the plaintiffs to have admitted those questions to which an inadequate response was made.

6. It is for these reasons that I did not allow the defendants’ application that the answers claimed by the defendants to be inadequate should be deemed to be admissions.  Instead, I have deemed most of the disputed answers to be adequate and, in the case of 15 or so answers, have required the plaintiffs to provide a more complete answer.