Equus Financial Services Ltd v Glengallan Investments Pty Ltd [1992] QSC 437

'~ ;;:,;'f;i.J.:!'.l :"~~ State Reporting Bureau TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND "------·· CIVIL JURISDICTION i ·~ \ ) ~~\ \~/ WILLIAMS J No 1688 of 1991 EQUUS FINANCIAL SERVICES LIMITED and GLENGALLEN INVESTMENTS PTY LTD BRISBANE .. DATE 18/12/92 .. JUDGMENT 1 Plaintiff Defendant ./ f~/lv -- 1 of 17 -- ,. 181292 HIS HONOUR: I have prepared reasons for judgment which I publish. HIS HONOUR: The orders that I make will be: On the summons of 11 November 1992, 1. Order that the defendant provide further and better particulars as sought in paragraphs 1A, 2B, 4B, SC, 7, 9, 12 and 15B of the request dated 9 October 1992 on or before 8 January 1993. ·2. Order that the defendant make and file a further and better affidavit of documents on or before 8 January 1993. 3. Order that the defendant pay the plaintiff's costs of and incidental to that application to be taxed. On the summons of 30 September 1992, 1. Order that the plaintiff make and file a further and better affidavit of documents on or before 8 January 1993. 2. Order that the plaintiff pay the taxed costs of and incidental to the hearing on that summons on 12 November 1992. JUDGMENT 2 ~ 1 t 10 0 20 ''--..../ 31) 40 50 60 -- 2 of 17 -- IN THE SUPREME COURT OF QUEENSLAND No. 1688 of 1991 Before the Hon. Mr Justice Williams BETWEEN: EOUUS FINANCIAL SERVICES LIMITED Plaintiff GLENGALLEN INVESTMENTS PTY LTD Defendant JUDGMENT - WILLIAMS J. Delivered the 18th day of December, 1992 CATCHWORDS: Practice - further and better particulars - NRNO v. MEO Nickel Pty Ltd (1991) 2 Qd.R. 592 followed certain further particulars ordered - further discovery ordered. Counsel: S. Couper for plaintiff Brabazon Q.C. and McGregor for defendant Solicitors: Gadens Ridgeway for plaintiff Lees Marshall and Warnick for defendant Hearing date: 12th November, 1992 -- 3 of 17 -- IN THE SUPREME COURT OF QUEENSLAND Before the Hon. Mr Justice Williams BETWEEN: No. 1688 of 1991 EQUUS FINANCIAL SERVICES LIMITED Plaintiff AND: GLENGALLEN INVESTMENTS PTY LTD Defendant JUDGMENT - WILLIAMS J. Delivered the 18th day of December, 1992 The plaintiff in the action seeks an order that the defendant give further and better particulars of a number of allegations contained in its amended defence and counterclaim delivered 6th October, 1992. The questions raised can only be resolved by considering each of the particular requests still in issue. Request paras. 1(b) and 2(b) In the defence it is alleged in para. 1 that at all material times Johnson Farm Management Limited ("Johnson") and a person by the name of Hassal were agents of Rural Finance Pty Ltd ("Rural") . Paragraph 1 (a) of the request asked whether ·Johnson was expressly appointed agent or whether it was alleged such agency was to be implied; paragraph 2(a) made a similar request with respect to Hassal. The response in -- 4 of 17 -- 2 each case was that "the agency is implied". Paragraph (b) of the request in each case asked for particulars of "every fact, matter and circumstance relied upon in support of the allegation" that each such person was impliedly the agent of Rural. The respondent declined to supply those particulars, stating in each instance that "this is not a proper request for particulars as it merely seeks evidence". In my view agency can only be implied either from a general course of conduct or some specific conduct on the part of the principal. In either situation an inference is to be drawn from facts. There is a distinction between facts and evidence; whilst it is true that a party to an action cannot under the guise of seeking particulars obtain details of the evidence relied upon to prove an issue, a party is entitled by way of a request for particulars to ascertain the facts providing the basis for the implication of agency. The respondent-defendant should furnish further and better particulars as sought in paras. 1 (b) and 2(b) of the request. Request para. 4(b) In para. 3 of the defence and counterclaim it is alleged that "the operative agreement" was entered into between the defendant and "Rural by its agents Johnson and Hassal". The plaintiff sought particulars of the "natural person" who acted on behalf of Johnson as therein alleged. The response identified Tony Johnson as the natural person in question. Then para. (b) asked for the specification of "every fact, matter and circumstance by reason of which it is alleged that" -- 5 of 17 -- 3 such person was authorised to act on behalf of Johnson. The response to that was that "this is not a proper request for particulars as it merely seeks evidence". For the reasons given above I am of the view that this was a proper request for particulars and the facts and circumstances relied upon should have been specifically provided. The respondent-defendant will therefore be ordered to provide the further and better particulars as requested in para. 4 (b). Request para. S(c) The respondent-defendant gave further and better particulars to the effect that the "operative agreement" referred to in its defence was oral. In those circumstances the plaintiff requested particulars of each conversation relied upon, the date of each such conversation, the parties to each such conversation, and the substance and effect of each such conversation. The particulars furnished in response to that request are the following: "The conversations relied upon are approximately two telephone conversations and two conversations in person between Thornton and Hassal and approximately two telephone conversations between Hassal and Johnson in the presence of Thornton between early June, 1989 and the 30th June, 1989 but prior to the execution of the loan agreement referred to in the statement of claim. The substance and effect of the conversations are as pleaded in paragraphs 4 and 7 of the amended defence and counterclaim." It will be seen that some six conversations in all are alleged but the substance of none of them is given. Paragraph 4 of the defence merely pleads the terms of the "operative agreement", and in para. 7 an allegation is made that certain -- 6 of 17 -- 4 oral representations, which are therein set out, induced the defendant to enter into the "operative agreement". The reference to paras. 4 and 7 of the defence in furnishing the particulars in no way clarifies the position. The plaintiff cannot differentiate between the six conversations referred to in any way. In my view the respondent-defendant should provide more particulars of those conversations, and an order will be made that it give further and better particulars as requested. Request paras. 5(d) and 5(e) The summons seeks an order that further and better particulars be provided as requested in paras. 5(d) and 5(e), but counsel for the applicant did not make any submissions with respect thereto, and informed the Court that he was not pressing the application with respect to those paragraphs. In those circumstances no order will be made with respect to those paragraphs of the request. Request para. 7 Paragraph 4 of the defence pleads the terms of the "operative agreement" by alleging they are: "(a) The liability of the defendant pursuant to the operative agreement is limited; (b) The liability of the defendant is limited to a payment of $70, 000 on 30th June, 1989 and two payments of $35,500 each on 30th September, 1989 and 31st December, 1989." The request sought further and better particulars with respect to para. (a). The request is in these terms: "(a) State what is the liability of the defendant pursuant to the operative agreement which islimited; -- 7 of 17 -- 5 (b) State in what respect and by how much is the said liability limited; (c) (d) (e) Identify the term, or terms agreement which create or liability; of the operative creates the said State whether such term was agreed to orally or in writing, or partly oral and partly inwriting; Insofar as the agreement to which the said term is comprised of, or evidence by (specifying which) writing, identify all such writing and documents relied upon and provide copies of same; (f) Insofar as the agreement to such term was oralor partly oral, identify: (i) each conversation relied upon; (ii) the date of each such conversation; (iii) the parties to each such conversation; (iv) the substance and effect of each such conversation." The following are the particulars supplied: " (a) The liability tooperative agreement the liability of limited; make payments under the and the loan agreement is the defendant which is (b) The respect in which the defendant's liabilityis limited and by how much is set out inpara. 4(b) and 7(iii) of the amended defence and counterclaim; (c) The terms of the operative agreement which create the liability are pleaded in the amended defence; (d) and (e) The terms are oral; (f) This request has already been answered." The applicant contends that the answer is embarrassing and contradictory. In para. 3 of the defence it is alleged that the "operative agreement" was entered into prior to the "loan agreement", and in those circumstances it appears that -- 8 of 17 -- 6 the particulars contradict allegations made in the defence; if the "loan agreement" had not been entered into how could the liability in question be a liability under it. When the defence and counterclaim and further and better particulars are read together there appears to be inconsistency as indicated; one cannot determine what is the relationship between the two agreements which the respondent- defendant is asserting. There is also a further difficulty with respect to the C defence and the particulars given. The request sought particulars of the liability which was limited by the "operative agreement". The particulars given assert that the c terms of the operative agreement creating the liability are pleaded in the amended defence, but that is not so. There is nothing in the "operative agreement" as pleaded which creates the initial liability. It follows that the respondent-defendant should be ordered to furnish further and better particulars as requested. Request para. 8(d} Paragraph SA of the defence alleged that the "loan agreement was never intended to have effect according to its terms and the rights and liabilities of Rural and the Defendant are, and were always, intenqed to be, governed solely by the terms of the operative agreement." Various particulars of that allegation were sought; for present purposes attention need only be directed to two specific matters: -- 9 of 17 -- 7 "(c) Specify every fact, matter and circumstance relied upon in support of the allegation that 1 the rights and liabilities of Rural and the Defendant are, and were always intended to be governed solely by the terms of the operative agreement 1 ; (d) Specify the person on behalf of Rural and the Defendant who held such intention and at what times." Particulars were furnished purportedly in response to that request; the one statement was made covering each of the sub-paragraphs quoted. The particulars given are as follows: "It was the intention of both Rural and the Defendant that the loan agreement would not have effect according to its terms, but the Defendant objects to providing further and better particulars by reason of 0. 22 r. 22". That rule so far as is relevant provides that when "it is material tp allege . . knowledge, or other condition of the mind of any person, it is sufficient to allege the same as a fact without setting out the circumstances from which it is to be inferred." Counsel for the respondent submitted that the matter was covered by the decision of Byrne J. NRNO v. MEO Nickel Pty Ltd (1991) 2 Qd.R. 592. Regrettably I have come to the conclusion that I should follow that decision and hold that 0. 22 r. 22 precludes the making of an order requiring the respondent to furnish any further particulars as sought, including particulars identifying the person who was the repository of the company 1 s intention. Like Byrne J. I am firmly of the view that the Court ought be regarded as having the power under 0. 23 r. 1 to order the furnishing of the particulars in question, and I am not persuaded by the reasoning in Burgess v. Beethoven Electric Equipment Limited (1943) K.B. 96 and -- 10 of 17 -- r-- - ---------------- ---- 8 Webster v. Peninsula Estates Pty Ltd (1969) Q.W.N. 29 to the contrary. However I do agree with Byrne J. that it is desirable that there be uniformity of practice in this regard, and until the rules are amended, or an appellate court holds otherwise, those authorities should be followed in this State. I will therefore refuse to order that further and better particulars be given as requested in para. 8(d). Request para. 9 Paragraph 7 of the defence, as already noted, alleges in order to induce the that representations were made defendant to enter into the "operative agreement". Paragraph 9 of the request sought further and better particulars as therein specified of that allegation. The applicant contends that the particulars furnished in response to that request are in a number of respects embarrassing and not responsive. It is asserted by the defendant that the "representations were oral as pleaded in the Amended Defence, but evidenced by the Guarantee". That to my mind is confusing. The inducement clearly had to have been made in June 1989 but the document styled "Guarantee" is dated 19th December, 1989. I do not understand how in those circumstances it could be said that the representations What the plaintiff are "evidenced" was seeking by the later document. was details of the representations as made, according to the defence, in about June. In my view the respondent should be ordered to give further and better particulars as requested. -- 11 of 17 -- 9 The applicant also contends that the particulars given in response to the request in para. 9 is embarrassing in another respect. It identifies as the conversations containing the representations the same conversations alleged to constitute the formation of the oral agreement. Counsel for the respondent submitted that it was a common situation for the same conversation to contain an inducement to enter into an agreement and the actual agreement itself. That may well be so, but in such instances it would always be possible to distinguish between that part of the conversation constituting ~ the inducement, and that part constituting the agreement. Here there is no attempt at all to make any such distinction, and it is difficult to see how the words constituting the inducement could be the very words creating the agreement. It follows that the defendant should give further and better particulars as requested in para. 9. Request para. 11 This particular matter was not pressed by counsel for the applicant during argument, and no order will be made. Request para. 12 In para. 8 of the defence it was alleged that the defendant was induced by the alleged representations to enter into the "operative agreement" and execute the loan agreement. The request asks the defendant to "identify every fact, matter and circumstance relied upon in support of the allegation that the representations referred to in para. 7: (a) induced the defendant to enter into the operative agreement; (b) induced the defendant to execute the loan agreement; (c) induced the -- 12 of 17 -- 10 defendant to execute the loan agreement having entered into the operative agreement." The response to that request was an assertion that it was "not proper" because it sought "evidence or the circumstances from which a condition of mind is inferred". There is no allegation in para. 8 of the defence of a "condition of mind" so as to call 0. 22 r. 22 into play and I am of the view that there was a proper request for particulars made which ought to be answered. Request paras. 13 and 14 Counsel for the applicant did not press these matters, and in the circumstances no order will be made. Request para. 15(b) In paragraph 11 of the defence the allegation was made that there was a "common assumption" between Rural and the defendant that the terms of the loan agreement were not intended to have force and effect to the extent of any inconsistency between it and the operative agreement. The plaintiff requested further and better particulars thereof by, inter alia, asking the defendant to identify "the facts, matters and circumstances by reason of which it is alleged that there existed such a common assumption." The defendant asserted that such was "not a proper request for particulars as it merely seeks evidence or the circumstances from which the condition of the mind of a person is to be inferred." The request is not seeking evidence but particulars of fact; this is really the same point as previously discussed with respect to paras. 1(b) and 2(b) of the request. -- 13 of 17 -- ' ' 11 Further, I do not consider that this is a matter covered by 0. 22 r. 22. In my view counsel for the applicant was correct when he submitted that this paragraph of the defence pleads an estoppel by convention. Such an estoppel was discussed by the High Court in Con-Stan Industries of Australia Pty Ltd v. Norwich Winterthur Insurance (Australia) Ltd (1986) 160 C.L.R. 226 at 244; there it was stated that an estoppel by convention is founded "on the conduct of relations · between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying." It seems ,..--... to me that the plaintiff here is entitled to particulars of "---- the state of facts which neither Rural nor the defendant can deny. In the circumstances the defendant will be required to provide further and better particulars as requested. Request para. 16(a) and (b) The request in relation to these matters was not pressed by counsel for the applicant and in the circumstances no order will be made. Request para. 18(c) In para. 13(b) of the defence it is alleged that the plaintiff took an assignment of the "operative agreement" and the loan agreement from Rural "with knowledge that it had no right to the payment of any further sum by the Defendant". The plaintiff sought particulars of the facts, matters and circumstances relied on in support of that allegation. The response from the defendant was that it was not a proper request for particulars as it sought details of the I I -- 14 of 17 -- 12 circumstances from which the condition of mind of a person is to be inferred. Again, regrettably, I must conclude that the defendant is correct; this is covered by the decision in NRNO V. MEO Nickel Pty Ltd. There is no need for me to say any more than I have already said on this topic above. This request for further particulars should be refused. Further discovery by the plaintiff Ryan J. made a consent order on 2nd October, 1992 which contained the following paragraph: "That the plaintiff and the defendant make and file any further and better Affidavits of Documents within seven (7) clear days after the date on which the Plaintiff's Amended Reply and Answer is delivered." The plaintiff conceded that, given the amended pleadings, it was obliged to make a further affidavit of documents, but it was not delivered within the time limited by that Order. Part of the reason given for that delay was that the affidavit could not be completed until further and better particulars had been obtained from the defendant. In all of those circumstances there is not much point in debating at length the authorities in relation to the making of further and better discovery. The plaintiff concedes that such a further affidavit should be filed, and an order should be made to that effect. Further discovery by the defendant The defendant has not filed any further affidavit of documents pursuant to the order of Ryan J., and contends that it is not obliged to do so as full discovery has already been ' . c -- 15 of 17 -- , . 13 made. That affidavit was made prior to the amendments to the defence and counterclaim effected 6th October, 1992 and the delivery of the Amended Reply and Answer on 22nd October, 1992. One essential allegation added to the defence and counterclaim by the amendment was that the loan agreement was a sham. The reply asserts that if the events happened as the defendant alleged then the motive for so doing was a desire to defraud the Commissioner of Taxation. The plaintiff submitted that in all the circumstances the financial records and books of account of the defendant, including its taxation returns, were clearly relevant and material documents given the issues raised by the pleadings; none has been discovered. In my view a consideration of the amended pleadings and the affidavit of documents filed on behalf of the defendant establishes an insufficiency in the defendant's discovery in that its books of account and taxation returns have not been discovered. (British Association of Glass Bottle Manufacturers Ltd v. Nettlefold (1912) A.C. 709 at 714; Mulley v. Manifold (1959) 103 C.L.R. 341 at 343; and Beecham Group Ltd v. Bristol-Myers Co. (1979) V.R. 273 at 275.) There will therefore be an order that the defendant file and serve a further affidavit of documents. Orders In broad terms I will therefore order that the defendant- respondent provide proper further and better particulars as sought in paras. 1(a), 2(b), 4(b), 5(c), 7, 9, 12 and 15(b). -- 16 of 17 -- 14 I will also order (on the plaintiff's summons) that the defendant make and file a further and better affidavit of documents. On the defendant's summons of 30th September, 1992 I will order that the plaintiff make and file a further and better affidavit of documents. I will hear submissions as to the precise form those orders should take. . '' -- 17 of 17 --