Termite Proofing Installation Services Pty Ltd Now Lawley Investments Pty Ltd v Venema

[2004] WASC 193

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   TERMITE PROOFING INSTALLATION SERVICES PTY LTD NOW LAWLEY INVESTMENTS PTY LTD  & ANOR -v- VENEMA [2004] WASC 193

CORAM:   COMMISSIONER ZILKO SC

HEARD:   27 AUGUST 2004

DELIVERED          :   3 SEPTEMBER 2004

FILE NO/S:   CIV 2549 of 2002

BETWEEN:   TERMITE PROOFING INSTALLATION SERVICES PTY LTD (ACN 062 242 817) NOW LAWLEY INVESTMENTS PTY LTD  (ACN 062 242 817)

First Plaintiff

TERMGUARD PTY LTD (ACN 009 302 265)
Second Plaintiff

AND

CORNELIUS ALFRED VENEMA
Defendant

(BY ORIGINAL ACTION)

CORNELIUS ALFRED VENEMA
Plaintiff

AND

TERMITE PROOFING INSTALLATION SERVICES PTY LTD (ACN 062 242 817) NOW LAWLEY INVESTMENTS PTY LTD (ACN 062 242 817)
First Defendant

TERMGUARD PTY LTD (ACN 009 302 265)
Second Defendant

PHILIP HEARSE
ROBYN HEARSE
Third Defendants

HHMC PTY LTD (ACN 050 123 503)
Fourth Defendant

(BY COUNTERCLAIM)
 

Catchwords:

Practice and procedure - Interrogatories - Consideration of questions directed to without prejudice negotiations, questions incorporating "the usual particulars" and questions directed to construction of contract by reference to subsequent conduct of parties

Legislation:

Nil

Result:

Application partly successful

Category:    B

Representation:

Original Action

Counsel:

First Plaintiff                :     Mr R M Wilenski

Second Plaintiff            :     Mr R M Wilenski

Defendant:     Mr I A Morison

Solicitors:

First Plaintiff                :     Tottle Partners

Second Plaintiff            :     Tottle Partners

Defendant:     Holborn Lenhoff Massey

Counterclaim

Counsel:

Plaintiff:     Mr I A Morison

First Defendant             :     Mr R M Wilenski

Second Defendant         :     Mr R M Wilenski

Third Defendants          :     Mr R M Wilenski

Fourth Defendant          :     Mr R M Wilenski

Solicitors:

Plaintiff:     Holborn Lenhoff Massey

First Defendant             :     Tottle Partners

Second Defendant         :     Tottle Partners

Third Defendants          :     Tottle Partners

Fourth Defendant          :     Tottle Partners

Case(s) referred to in judgment(s):

L Schuler AG v Wickman Machine Tools Sales Ltd [1974] AC 235

Norton v Hoare (1913) 17 CLR 348

Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd (1999) 21 WAR 350

Case(s) also cited:

Nil

1. COMMISSIONER ZILKO SC:  This is the plaintiffs' application for orders compelling the defendant to answer interrogatories administered by the plaintiffs pursuant to leave of Master Sanderson on 30 March 2004.  The defendant's answers to the interrogatories are contained in his affidavit sworn on 10 May 2004.  By their application the plaintiffs seek orders that the defendant provide proper answers, verified on oath, to interrogatories 2.1(b), 4.1(a), 5, 6, 7, 8.1(b), 9.1(b), 9.2, 9.3, 10, 11 and 12.

2. By their amended statement of claim filed on 8 April 2003, the plaintiffs plead that pursuant to a licence agreement made on or about 8 September 1994, the defendant granted to the first plaintiff an exclusive licence of certain patents held by the defendant.  Thereafter it is said that the licensed rights of the first plaintiff under the licence agreement were wholly assigned to the second plaintiff in or about June 1997 and that the defendant consented to the assignment on or about 8 February 1999.  The plaintiffs then plead a number of issues arising from the operation of the licence agreement which I need not set out in detail.  It is sufficient to mention only two matters:  the first is that the plaintiffs contend that certain royalties paid by them were paid under a mistake of fact or a mistake of law.  Second, the plaintiffs say that a purported termination of the licence agreement by the defendant was either invalid or of no effect.  The plaintiffs seek declaratory relief in respect of the validity of the termination notice, their rights as licensees and the defendant's alleged unlawful interference with the contractual relations established between the plaintiffs and their various licensees in respect of the product the subject of the dispute.  Other relief is sought which is not relevant for the purposes of this application.

3. The defendant has filed a defence and counterclaim in which he joins issue with most of the matters pleaded by the plaintiffs in their amended statement of claim.  However, he does admit serving a notice of termination on the plaintiffs in respect of the licence agreement and he asserts that the licence agreement has been validly terminated.  He also admits preparing four documents which have been annexed to the interrogatories.  Aside from his defence, the defendant also makes a counterclaim against the plaintiffs, Philip Hearse, Robyn Hearse and HHMC Pty Ltd.

4. The general principles relating to the administration and answer of interrogatories are not in doubt.  At the heart of many arguments regarding interrogatories is the use of questions which in themselves are prolix or ambiguous.  If interrogatories are to be of any use, the language used by the drafter must be crisp and, if possible, framed in such a way as to call for a relatively short response rather than to invite either a long or a qualified response.  Insofar as the answers to interrogatories are concerned, the deponent must always bear in mind that he or she is required to answer the substance of the question asked without evasion and, if taking objection, to state briefly the facts on which the objection is taken (O 27 r 4).  In this case some of the questions asked were not as clearly framed as they might have been and counsel for the defendant indicated examples in which this caused some difficulty for the defendant and those advising him.  Equally, however, several of the answers were argumentative and evasive.  I have set out hereunder my view on each of the interrogatories referred to in the plaintiffs' application.

Interrogatory 2.1(b)

1. The defendant claims privilege in respect of the discussions which took place at the meeting referred to in the interrogatory.  The plaintiffs complain that no grounds are set out in respect of the claim to privilege but I ask, perhaps rhetorically, what more can the defendant say other than that at the meeting the participants agreed that their discussions would take place on a without prejudice basis?  In my view that was an adequate objection to answering the interrogatory.

Interrogatory 4.1(a)

1. The defendant refuses to answer this interrogatory on the basis that the letter referred to therein was a continuation of the without prejudice discussions which had been commenced at the meeting referred to in the previous paragraph.  Whilst it is true that the letter is not marked with the words "without prejudice", that is not conclusive of the issue.  The question of whether the without prejudice negotiations between the defendant and the other parties at the meeting continued beyond the confines of the meeting itself and embraced both the sending of the letter and its later annotation is a question of fact.  The annotated letter concludes with the words "Subject to final draft agreement, we hereby agree with the above ... ".  The defendant says this adequately demonstrates that the without prejudice negotiations were still on foot.  On the other hand the plaintiff says the discovery of the annotated letter by the defendant waives any privilege in it.  If the letter had not been discovered I would have been obliged to accept at face value the defendant's assertion that the letter formed part of the continuing without prejudice negotiations.  However, discovery of the letter is a clear waiver of any privilege previously claimed by the defendant.  Accordingly, I consider that the defendant should answer interrogatory 4.1(a).

Interrogatory 5

1. Interrogatory 5.1 asks whether the defendant has ever referred to the first plaintiff by use of the name "Termguard" and whether he has ever had dealings with the first plaintiff in which he used the name "Termguard".  The defendant objects to answering this question on the grounds that it is unreasonable and oppressive.  He contends that because it is unlimited in time or as to the mode of the reference, he is being called upon to cast his mind back more than 10 years and consider whether either in person, by telephone or in a form of writing he has referred to the first plaintiff by the above name or has had dealings with the first plaintiff in which he has used that name.  There is also another objection which alleges the defendant might be placed in jeopardy by answering the interrogatory because of the defendant's ownership of the trademark in "Termguard".  However, this objection was not further ventilated at the hearing.  Importantly, I note that there is no objection on the ground of relevance.  If I consider the question in its two parts, I am not persuaded that it is unreasonable or oppressive.  Whilst it is unlimited in time or mode of communication, it is not a difficult question to answer.  The defendant may answer yes or no or he may genuinely be unable to recall the position any longer.  I cannot think of any other answer which is invited by either part of the question and in the circumstances the defendant should answer interrogatory 5.1.

2. Notwithstanding my views in relation to interrogatory 5.1, I am not satisfied that the defendant should be compelled to answer interrogatories 5.2 and 5.3.  Although they spring from interrogatory 5.1, they are in my view oppressive and unreasonable in that they require the defendant to state each occasion on which he dealt with the first plaintiff referring to it as "Termguard" and to give the usual particulars of each of those dealings.  The usual particulars are defined at the commencement of the interrogatories and require the defendant to state whether each occasion was in writing (and to identify the documents involved) or oral (and to identify where, when and between which persons and the substance of the conversations) or implied (in which case the defendant was required to state the facts, matters and circumstances relied on as giving rise to the implication).  This is the type of preamble one sees in a request for further and better particulars of claim and in my opinion has no role to play in the administering of interrogatories.  Counsel for the plaintiffs suggested that being required to state each occasion on which the defendant dealt with the first plaintiff by referring to it as "Termguard" on the one hand, and giving the usual particulars on the other, were not conjunctive requirements.  However, on a plain reading they are conjunctive requirements but in any event even requiring the defendant to state each occasion (my emphasis) on which he dealt with the first plaintiff referring to it as "Termguard" is oppressive and unreasonable.  The same considerations apply to interrogatory 5.3 which calls for the usual particulars in respect of any occasion when the defendant informed the first plaintiff that it was to cease using the name Termguard or not authorised to use the name Termguard.  In my opinion it is far too wide in its application and must, by any assessment, be considered oppressive.  For these reasons the defendant is not required to answer interrogatories 5.2 and 5.3.

Interrogatory 6

1. Interrogatory 6 mirrors interrogatory 5 and all of the comments I have made in relation to interrogatory 5 apply equally to interrogatory 6.  Accordingly, I consider that the defendant should answer interrogatory 6.1 but should not be required to answer interrogatories 6.2 and 6.3.

Interrogatory 7

1. Interrogatory 7.1 deals with ownership of the "Termguard" trademark and asks the defendant to state whether a person called Joe Mann ever stated or claimed to the defendant that he held an ownership interest in the trademark.  If so, the defendant is required to provide the usual particulars of that occurrence.  I have already referred above to what the usual particulars is intended to mean in the context of these interrogatories.  The only reference to Joe Mann in the pleadings is unrelated to questions of ownership of the trademark.  Mr Mann is referred to in an entirely different context.  Counsel for the plaintiffs was unable to show how Mr Mann's assertion of an "ownership interest" was relevant to any issue between the parties.  It appears to be an attempt to ascertain a fact or facts which may enable the plaintiffs to establish a case which is not presently pleaded.  Interrogatories are not permitted to be used for that purpose.  Aside from that concern, I consider that the use of the phrase "ownership interest" was always likely to cause difficulties for the defendant in answering the interrogatory.  It is not a term of art or a universally recognised legal term.  It may mean different things to different people.  It is, on any view, an ambiguous term.  I am not prepared to order the defendant to answer interrogatory 7.1.  It follows that interrogatories 7.2, 7.3, 7.4 and 7.5 need not be answered.  I observe that interrogatories 7.4 and 7.5 are also blemished by the problem which arose in interrogatory 7.1, namely, the requirement that the defendant state the usual particulars when answering the question.

Interrogatory 8.1(b)

1. The defendant admits that the document annexed and marked "C" to the interrogatories appears to be a true copy of the Termination Notice issued to the plaintiffs by him or at his request.  However, he objects to answering interrogatory 8.1(b) which asks him to say what facts were relied upon to make the statement in the Termination Notice that it was issued pursuant to the Licence Agreement.  In my view the language of interrogatory 8.1(b) raises a number of problems.  First, it is unclear what is meant by the words "what facts were relied upon".  It seems to me that the facts relied upon by the defendant to make the statement in the Termination Notice that it was issued pursuant to the Licence Agreement are likely to be conclusions of law, for example, that there had been a breach of the Licence Agreement.  Interrogatories should not be used to seek conclusions of law (Norton v Hoare (1913) 17 CLR 348 at 352). Counsel for the plaintiffs contended during the hearing that what was being sought were the factual matters preceding the formation of a view by the defendant or his legal advisers that there had been a breach of the Licence Agreement. If this were so the interrogatory would be unobjectionable. However, in the present case, it seems to me that in the end there is no distinction between one and the other. To assert that the Termination Notice was issued pursuant to the Licence Agreement is to assert a legal right and so the question asked of the defendant is no more and no less than asking him why he concluded that he had a legal right to send the Termination Notice. In turn that calls for a conclusion of law in answering the interrogatory. Second, interrogatories are not normally permitted as to the contents of a document and this is what is being attempted here. The plaintiffs are seeking to identify reasons for the issue of the Termination Notice when its preamble sets out the various grounds on which it has been issued. In this regard I accept the submission of counsel for the defendant that what the defendant had in his mind prior to the preparation and issue of the notice is not relevant to any matter in the pleadings. The notice was either a valid notice or it was not. The question of its validity will not be affected by the defendant's subjective assessment of his position immediately before the notice was given. Although interrogatories can be administered as to a person's state of mind, the defendant's state of mind in the context of this particular matter is not a relevant consideration. In the circumstances, the defendant is not required to answer interrogatory 8.1(b).

Interrogatory 9.1(b)

1. Interrogatory 9.1(a) asked the defendant to look at the documents marked as annexure "D" to the interrogatories and say whether the documents were prepared by him.  The curious thing about this interrogatory is that the defendant has admitted in his defence and counterclaim (at par 30) that he did prepare those documents.  In the circumstances, the interrogatory need not have been asked.  However, to compound the confusion the defendant answered no to the question of whether he had prepared the four documents.  Thus, it appears that his sworn answer to this interrogatory is in direct contradiction of his pleading on the point.  Whatever the correct position is, the defendant's unequivocal answer to interrogatory 9.1(a) is not open to challenge and the plaintiffs do not seek to do so.  However, interrogatory 9.1(b) asks the defendant to say, if his answer to 9.1(a) is no, who prepared each of the four documents.  These documents appear to have been sent to current licensees of the second plaintiff and make a number of observations about the status of the arrangements between the second plaintiff and the defendant.  I need not go into the contents of the documents here except to point out that they may arguably be construed as inviting the licensees to bring their contractual relationship with the second plaintiff to an end.  I mention this only because it is a matter raised by the plaintiffs in the amended statement of claim.  Whatever the position regarding the documents, it is my view that if the defendant denies preparing the documents it is not open to the plaintiffs to interrogate him as to who did prepare the documents because eliciting the name of the party responsible is not relevant to the plaintiffs advancing their case or disproving the defendant's case.

Interrogatories 9.2 and 9.3

1. Counsel for the defendant explained during the hearing that in the course of advising the defendant on the interrogatories, he understood the reference to third parties in interrogatory 9.2 to mean persons other than the licensees because licensees had been specifically referred to in interrogatory 9.1.  As I understood his position, he agreed that if the interrogatory was intended to refer to the licensees, the defendant ought to answer interrogatory 9.2.  That is certainly my view.  Whilst I was not labouring under any misunderstanding about the ambit of the term "third parties", I can accept that it may have been confusing for the defendant and those advising him when there was specific reference to the licensees in interrogatory 9.1.  In any event the defendant should answer interrogatory 9.2 but he can of course qualify his answer by stating that the answer is made on the assumption that the reference to third parties is intended to refer to licensees only.  This then brings me to interrogatory 9.3.  For the reasons set out above in relation to interrogatory 9.2, I consider that 9.3(a), (c) and (d) should be answered by the defendant and, again, I see no difficulty in the defendant qualifying his answer to ensure that it is confined to licensees.  However, I see no reason for the defendant to answer 9.3(b) which asks the defendant to specify the quantity of documents delivered, provided, sent or distributed.  I am not sure what the word "quantity" means in that context and in the circumstances I think it would have been difficult if not impossible to answer the question.  The plaintiffs will in any event obtain the information they seek when 9.3(c) is answered.

Interrogatory 10

1. The defendant has conceded that he should answer interrogatory 10.1.  With regard to interrogatory 10.2, the information sought therein is almost certainly to be found in documents in the defendant's possession or within his power to obtain (for example, from his accountants).  Interrogatories are rarely to be used in circumstances where the proper processes of discovery and inspection will suffice to elicit the information sought in the interrogatories.  In my view this is such a case although if discovery and inspection of the defendant's documents does not reveal the information sought in interrogatory 10.2, I see no reason why the plaintiffs would not be given leave at that juncture to administer further interrogatories on the point.

1. Insofar as interrogatory 10.3 is concerned, I have some difficulty in understanding the issue to which this question relates.  If it is intended to assist the plaintiffs in construing the terms of the Licence Agreement, then it surely must fail.  First, how payments are treated in the books of the defendant after the agreement has been made will not assist the Court in construing the terms of the agreement (Posgold (Big Bell) Pty Ltd v Placer (Western Australia) Pty Ltd (1999) 21 WAR 350 at 362 ‑ 363; L Schuler AG v Wickman Machine Tools Sales Ltd [1974] AC 235 at 261). Second, the manner in which the payments have been treated may not be attributable to the defendant but rather to his accountants or his bookkeeper. It seems that this question required a preceding question to establish whether the defendant was the person responsible for the treatment of the payments in his books of account. Third, it suffers from the same problems as interrogatory 8.1(b) insofar as it asks the defendant to state the facts on which he relied to reach certain legal conclusions. In the circumstances I am not prepared to order the defendant to answer interrogatories 10.2 and 10.3.

Interrogatory 11

1. This interrogatory is a mirror of interrogatory 10.  In that regard the defendant's counsel advises that the defendant will answer interrogatory 11.1.  My comments in relation to interrogatories 10.2 and 10.3 apply equally to interrogatories 11.2 and 11.3.

Interrogatory 12

1. Interrogatories 12.1, 12.2 and 12.3 are relevant to the plea in par 50 of the counterclaim and par 13 of the defence to counterclaim.  I also note that the Termination Notice (annexure "C" to the interrogatories) refers in the preamble to matters relating to the plaintiffs' alleged failure to defend the patents.  Insofar as these matters are concerned, the plaintiffs say that in order to defend the patents it was necessary for the defendant to consent to the second plaintiff being registered as the exclusive licensee of the patents but that the defendant failed to do so.  This is a borderline issue but on balance I consider that the defendant should answer interrogatories 12.1, 12.2 and 12.3 because, at least in an indirect way, they touch on issues which arise from the above paragraphs in the pleadings.  In particular, the answers may assist the plaintiffs in establishing the material facts necessary for par 13 of the defence to counterclaim.  However, I do not have the same view regarding interrogatories 12.4, 12.5 and 12.6.  Whether the defendant himself took any legal action against possible infringers of his patents is not raised as an issue in the pleadings.  What the defendant did or did not do in relation to his patents cannot bear upon the second plaintiff's duties (if any existed) in that regard.

Conclusions

1. For the above reasons I am prepared to order that the defendant answer interrogatories 4.1(a), 5.1, 6.1, 9.2, 9.3(a), 9.3(c), 9.3(d), 10.1, 11.1, 12.1, 12.2 and 12.3.  I will hear the parties as to the time within which such interrogatories should be answered and the question of costs.