Su v Kamal

[2022] ACTSC 161

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Su v Kamal

Citation:

[2022] ACTSC 161

Hearing Date:

1 July 2022

DecisionDate:

5 July 2022

Before:

McCallum CJ

Decision:

(1)       That the plaintiff give further discovery in accordance with the previous order to comply with the notice to produce discoverable documents within 14 days;

(2)       Stand the proceedings over before McCallum CJ on 26 July 2022 at 9am.

(3)       Order the plaintiff to pay the sixth defendant’s costs of the matters determined today which include the costs of Mr Barry’s appearances on 9, 23 and 27 May, 23 June and 1 and 5 July 2022.

Catchwords:

CIVIL PROCEDURE — DISCOVERY — Possession, custody or control — Where certain documents were not produced — Where documents must have been in solicitor’s possession — Where no explanation provided for failure to produce

Legislation Cited:

Court Procedures Rules 2006 (ACT), rr 606(1)(c), 607(3)

Cases Cited:

Cossey v Canberra Airport Pty Limited [2022] ACTSC 70

Mulcahy v Registrar General Office of Regulatory Services [2013] ACTCA 45

Parties:

Haiyong Su ( Plaintiff)

Fadi Nihad Kamal ( First Defendant)

Danny Noumeir (Second Defendant)

Pepper Finance Corporation Limited (Third Defendant)

Secure Funding Pty Ltd (Fourth Defendant)

5 Blackman Cres Macquarie Pty Ltd (Sixth Defendant)

B & F O Z Investment Pty Ltd (Third Party)

Representation:

Counsel

N Li ( Plaintiff)

S Barry ( Sixth Defendant)

Solicitors

Yingke Law ( Plaintiff)

CKB Associates Lawyers ( Sixth Defendant)

File Number:

SC 214 of 2020

McCALLUM CJ:

1. These are proceedings for the enforcement of a loan.  The plaintiff initially sought possession of two properties owned by the sixth defendant in Macquarie in the Australian Capital Territory.  The proceedings originally also sought relief against other parties but those claims have been resolved either by the discontinuance of the proceedings as against those parties or, in the case of the second and third defendants, by the entry of judgment.

1. The plaintiff and the sixth defendant are the only remaining active parties.  The properties have been sold and the proceeds, an amount of some $460,000, have been held in Court since last November, presumably attracting interest at a lower rate than might be the case if those funds were available to the sixth defendant for its own commercial use.

1. On 24 March 2022, the plaintiff consented to an order to comply with a notice to produce discoverable documents.  The matter was listed again on 9 May 2022.  On that date, there was no appearance for the plaintiff and the proceedings were stood over to 23 May 2022.  The Registrar indicated that on that return date the plaintiff should show cause why the proceedings should not be dismissed in light of his failure to appear.

1. On 23 May there was again no appearance for the plaintiff and the matter was stood over before me on 27 May.  The plaintiff was notified of that adjourned date by the Court and I think also by letter from the solicitor for the sixth defendant.  On 27 May the matter came before me and directions were made for affidavits to be filed, the show-cause hearing being stood over to 16 June (later moved, on the Court’s motion, to 23 June 2022). 

1. On 23 June 2022, the solicitor for the plaintiff indicated that he was not ready to argue a show-cause hearing, evidently not having understood the basis on which the proceedings were stood over to that day. 

1. I accept that the non-appearance of the plaintiff’s solicitor on the two occasions to which I have referred is adequately explained in an affidavit filed by him, which deposes to his having suffered from illness resulting in administrative oversight as to the return dates.

1. In the meantime, however, the solicitor for the sixth defendant has sought to press a concern as to the apparent inadequacy of the plaintiff’s compliance with the initial order of 24 March 2022 requiring the plaintiff to comply with the notice to produce discoverable documents.  The Court heard submissions from both parties last Friday as to the adequacy of the discovery that has been given. 

1. The position is carefully set out in two affidavits sworn by Mr Barry, the solicitor for the sixth defendant.  In short, Mr Barry’s affidavits reveal that the plaintiff initially sought to comply with the notice simply by correspondence stating that his client had nothing to produce.  Mr Barry wrote to the plaintiff’s solicitor on 27 April 2022 carefully setting out the content of the plaintiff’s obligation to comply with the notice and explaining why he, Mr Barry, considered that discovery had been inadequate up to that point.

1. In particular, Mr Barry pointed out:

(a) that, to comply with the order, r 607(3) required the plaintiff to file and serve a list of documents, an affidavit verifying the list of documents and the plaintiff’s lawyer’s Certificate of Advice as to the list of documents;

(b)     that the requirement was to give discovery of a document “if it is or has, at any time, been in the possession of that party”;

(c)      that the rules define “possession” to include a document in the party’s custody and power;

(d)     that documents held by the plaintiff’s former solicitor might be regarded as being in the plaintiff’s custody or power; and,

(e)     that the form of the list of documents to be provided required the plaintiff to list documents that were presently in his possession, custody or power or, if no longer in his possession, custody or power, then certain details specified in the rules as to any such documents.

1. It should have been clear to the plaintiff’s solicitor, upon considering that letter, that the earlier correspondence did not constitute proper compliance with the order of the Court.  The plaintiff’s solicitor did subsequently provide a verified list of documents.  However, in my assessment it is clear on the face of that list that the plaintiff still has not complied with his discovery obligation. 

1. The list specifies only two documents in the possession of the plaintiff.  What is wholly unexplained is the position in relation to the documents which, it can readily be inferred from the documents that are discovered, must have been in possession of the solicitor at some point.  To that extent, Mr Barry’s argument is made good and so much was, in effect, accepted during the hearing last Friday. 

1. The more difficult question is what remedy should be granted in respect of the apparent failure adequately to comply with the notice.

1. Mr Barry submitted that the time has come for the Court to exercise its discretion to strike out the statement of claim and enter summary judgment in favour of the sixth defendant on the basis of the plaintiff’s failure to comply with the order of the Court of 24 March 2022. 

1. To a lesser extent, Mr Barry also relied upon the two failures to appear to which I have referred.  But in my view, those are secondary matters, an explanation having been proffered. 

1. Mr Barry drew the Court’s attention to the decision of the Court of Appeal in Mulcahy v Registrar General Office of Regulatory Services [2013] ACTCA 45. That was an appeal from a decision of the Master striking out a statement of claim and entering summary judgment on the grounds of a plaintiff’s failure to provide particulars and to comply with directions of the Court.

1. The Court of Appeal, noting that the Master’s decision was discretionary, held that no error was established in his decision and dismissed the appeal.  It must be accepted, however, that the remedy of bringing proceedings to an end for failure to comply with an order of the Court is one that should be exercised sparingly and, in my view, only where the failure to comply with the Court’s order can confidently be inferred to have been deliberate or, at least, a significant breach of the party’s duty to the Court.

1. I have to say the present case sails very close to that line.  However, in my view, it is appropriate to afford the plaintiff one further opportunity to provide proper compliance with the Court’s order of 24 March 2022.  The plaintiff drew the Court’s attention to the decision of Kennett J in Cossey v Canberra Airport Pty Limited [2022] ACTSC 70. That, like this case, was a case in which there was a complaint as to the adequacy of a party’s discovery.

1. Kennett J noted the Court’s power to order a party to give further discovery.  However, his Honour characterised that as a power to be exercised sparingly.  At [6] of the judgment, his Honour explained:

In Talada Investments v Rivera Scaffolding [2017] ACTSC 160, Mossop J referred to the principles stated by Menzies J in Mulley v Manifold (1959) 103 CLR 341 at 343–344 (applying the Rules of the High Court as they then stood), and the influence of those principles in decisions concerning the rules of this Court. The rules considered by Menzies J included one which provided power to the Court to order compliance with a notice of discovery in circumstances where a party had made insufficient discovery. As to that rule, his Honour observed (citing earlier authority) that “it cannot be shown by a contentious affidavit that the discovery made is insufficient”. Insufficiency of discovery might be demonstrated from the pleadings, the affidavit of discovery, the documents referred to therein or any other source that constituted an admission of the existence of discoverable documents. Otherwise, “the affidavit of discovery is conclusive”. As observed by Mossop J at [15], that principle appears to find an echo in r 606(6), which prohibits reliance on an affidavit unless the court orders otherwise.”

1. So much may be accepted.  However, as Kennett J went on to acknowledge at [8], there are cases in which:

“…[T]he likely existence of undiscovered documents can be inferred from the documents that have been discovered or from material already filed in the proceeding…”

1. Or where there can be an inference as to:

“…[S]pecific documents which the party seeking discovery has reason to think are or have been in the other party’s possession.”

1. Contrary to the plaintiff’s submissions, this is not a case in which the Court should accept the affidavit of discovery as conclusive.  Mr Barry’s careful correspondence and the contents of his affidavits in my view provide a cogent basis for inferring the existence of documents which have not been discovered and which the Court can readily infer ought to have been discovered.

1. Principally, that includes the solicitor’s file, which Mr Barry pointed out was in the custody and power of the plaintiff, if not in his possession, and as to which, with no explanation, the verified list of documents is silent. 

1. However, I would not confine my concerns to the solicitor’s file.  The response to Mr Barry’s correspondence, which, if not cavalier, is at least inattentive to the points carefully made by him, prompts me to be concerned generally as to the adequacy of the process by which the plaintiff’s solicitor has advised him as to his obligation to give discovery, or else as to the plaintiff’s preparedness to adhere to that advice.

1. In short, in my assessment this is a case falling within the characterisation of Kennett J’s judgment at [8]. That is, it is a case in which the Court can infer that there exist documents which have not been discovered based on the material already filed. It is not a case falling within the principles set out earlier in his Honour’s judgment that the Court must regard the affidavit of discovery as being conclusive.

1. Rule 606(1)(c) of the Court Procedures Rules 2006 (ACT) provides:

If the court considers that a party has not, or may not have, adequately disclosed discoverable documents, the court may make an order for a party to make further disclosure.

1. In the present case, the order with which the plaintiff was required to comply was an order to comply with a notice to produce discoverable documents.  The appropriate order, in my view, is that the plaintiff make further disclosure to comply with the notice to produce discoverable documents verified in accordance with the rules within 14 days.

1. It is appropriate to emphasise the following matters.  First, that the order today should be understood by the plaintiff to be very much a “last chance” kind of order. Secondly, that what is established on the evidence, at the very least, is that the discovery should have included reference to the solicitor’s file and also to the earlier loans to Mr Noumeir referred to in Mr Barry’s submissions in Court last week.

1. If none of those documents are to be discovered, a proper explanation should be provided.  In the circumstances, I indicate that the show cause hearing is not determined by this judgment but will remain open depending upon the further discovery given within the next 14 days.  The orders, accordingly, are as follows:

(1)       That the plaintiff give further discovery in accordance with the previous order to comply with the notice to produce discoverable documents within 14 days;

(2)       Stand the proceedings over before me on 26 July 2022 at 9am.

(3)       Order the plaintiff to pay the sixth defendant’s costs of the matters determined today which include the costs of Mr Barry’s appearances on 9, 23 and 27 May, 23 June, and 1 and 5 July 2022.

I certify that the preceding twenty-eight [28] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice McCallum

Associate:

Date: