Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd

BETWEEN: GRAHAM DONALD LEVIS First Applicant DANIEL ARMSTRONG Second Applicant DENIS LEE Third Applicant AND: ALICE McDONALD First Respondent BRIAN JOHN DALY Second Respondent

CORAM: LINDGREN J PLACE: SYDNEY DATED: 30 APRIL 1997

REASONS FOR JUDGMENT (Ex tempore) INTRODUCTION By their application filed on 20 February 1997, the applicants, ("Messrs Levis, Armstrong and Lee"), who are partners in a pharmacy business known as the "Kareela Community Pharmacy" conducted at the corner of Bates Drive and Freya Street, Kareela, seek, relevantly, an order under Order 15A of the Federal Court Rules as follows: "1. An order that the Respondents attend before this Honourable Court to be examined in relation to the description of the person concerned in the devising, writing and circulation of the open letter sent to Kareela residents on or about 15 January 1997, a copy of which is annexed hereto and marked 'A'."

Annexed to this judgment is a copy of annexure "A" referred to in para 1 ("the Open Letter"). With their application, Messrs Levis, Armstrong and Lee filed a notice of motion. The notice of motion seeks an order expressed in terms identical to those of para 1 of the application, not an order expressed as an interlocutory order. As will appear later, in my view the application seeks final, not interlocutory, relief. That conclusion has evidentiary consequences to which I will refer. As well, it shows that the motion was incompetent and must be dismissed as such. EARLIER PROCEEDING NG 806 OF 1995 In order to understand the background to the present proceeding, it is necessary to refer to an earlier proceeding NG 806 of 1995, in which Messrs Levis, Armstrong and Lee were the third respondents and one of the present respondents, Mr Daly, was the second of the eleven applicants ("the Earlier Proceeding"). In the Earlier Proceeding, the first applicant was the Pharmacy Guild of Australia ("the Guild"), an organisation of employers carrying on the business of pharmacists, individually or in partnership, and the remaining ten applicants were pharmacists or partnerships of pharmacists. The first respondent was the Australian Community Pharmacy Authority ("ACPA") established by s 99J of the National Health Act 1953 ("the Act"), the second respondent was the Secretary for the Department of Human Services and Health ("the Secretary"), and the third respondents were, as noted earlier, Messrs Levis, Armstrong and Lee, the present applicants. It is not necessary for me to give a detailed account of the Earlier Proceeding. It arose out of a decision of the ACPA to make a recommendation to the Secretary, and a decision of the Secretary, both under s 90 of the Act, to grant to Messrs Armstrong, Levis and Lee an approval, as a result of which they would supply pharmaceutical benefits from premises within the Kareela Shopping Centre, Kareela. Apparently, those premises were once the site of a pharmacy, and Messrs Levis, Armstrong and Lee intended to "transfer" an approval in respect of a pharmacy which they owned at Penrith to those premises. The Earlier Proceeding was an application under the Administrative Decisions (Judicial Review) Act 1977. The eleven applicants claimed to be aggrieved by both decisions. The second to eleventh applicants carried on business as pharmacists in the geographical area in which the Kareela Shopping Centre was located. Mr Daly, who was the second applicant, and the first of the pharmacist-applicants, was and is the proprietor of the Oyster Bay Pharmacy, Como Road, Oyster Bay. On 20 November 1996, Branson J found in favour of the applicants in the Earlier Proceeding. Her Honour ordered that the ACPA's recommendation and the Secretary's decision be set aside, and that the application by Messrs Armstrong, Levis and Lee for approval to supply pharmaceutical benefits be referred to the ACPA and the Secretary for further consideration according to law. Against the above background, the meaning of the Open Letter can, perhaps, be better appreciated. Messrs Levis, Armstrong and Lee suspect that the author or authors of the Open Letter are to be found among the pharmacist-applicants in the Earlier Proceeding. IMMEDIATE BACKGROUND TO THE PRESENT APPLICATION The present application is supported by an affidavit of Norman Lucas sworn 18 February 1997. Mr Lucas is a solicitor employed by Clayton Utz, solicitors, who represent the applicants. His affidavit is to the following effect. On 15 January 1997 he received from Mr Levis' wife a copy of the Open Letter. On the same day, Clayton Utz wrote to Ebsworth and Ebsworth, solicitors, who had represented the applicants in the Earlier Proceeding, asserting that the Open Letter contained factual errors which rendered it misleading and deceptive or likely to mislead and deceive. As well, they asserted that there could be said to arise from the Open Letter certain imputations which were defamatory of Messrs Levis, Armstrong and Lee. Clayton Utz requested identification of the pharmacists who were responsible for distribution of the Open Letter. They also asked to be informed by 4 pm on 16 January as to the extent of its publication and the identity of the persons to whom it had been published. There followed correspondence and telephone communications between Mr Lucas of Clayton Utz and Mr Paul Baker of Ebsworth and Ebsworth. Not being content with the result, on 16 January Clayton Utz wrote to all of the pharmacist-applicants in the Earlier Proceeding, enclosing a copy of the firm's letter to Ebsworth and Ebsworth and their reply of the same date, and asking to be informed whether the addressee was an author or one of the authors of the Open Letter and whether or not he or she was in any way responsible for its distribution. Five of the ten pharmacist-applicants replied denying involvement. This left five individuals or partnerships including Mr Daly. Further letters were forwarded to them on 21 January, but there has been no reply. There were, however, further developments. I now set out paras 10 and 11 of Mr Lucas' affidavit: "10.On 22 January 1997 I had a telephone conversation with Graham Levis in words to the following effect:

He said: 'Norman, one of my long-standing customers told me this morning that he saw a person distributing pamphlets. This customer, who I believe to be reliable, said that he was out in his front yard when he saw a person approach and place something in his letterbox. The customer then went directly to his mailbox and retrieved the item that had just been placed in it. It was a copy of the open letter to Kareela residents.'

I said: 'Who was the person delivering the letter?' He said: 'The customer says that it was Brian Daly.' I said: 'I would like to be able to speak to the customer. Is he happy to co-operate with us?' He said: 'Yes. He said that he was more than happy to provide a statutory declaration or something.' Mr Levis then provided me with the man's name and telephone number, which, for the benefit of the customer, I have agreed to keep confidential. 11. I then telephoned the customer referred to in paragraph 10 above and had a conversation lasting about 10 minutes with both he [sic] and his wife. During the course of that conversation words to the following effect passed between us: He said: 'I believe it was last Saturday afternoon when I saw this fellow putting the letter in our letterbox. I would describe him as tall, lean and probably getting on to about 60 years of age. However, the thing that I most noticed was that he had very slow movements. That's why I'm sure it was Brian Daly.' I said: 'I understand that you subsequently went to Mr Daly's pharmacy to confirm that the person at that pharmacy was the person that you saw delivering the letter.' He said: 'Yes, that's right. I made a small purchase and I'm positive that the person who delivered the letter to me was Brian Daly.' I said: 'Thanks, at this stage it's probably not necessary for us to trouble you further. Both we and Graham appreciate your assistance.'" On 22 January, Clayton Utz faxed a letter to Mr Daly advising that they had taken a statement from an independent person who had witnessed him putting a copy of the Open Letter in that person's mailbox. The letter asserted that Clayton Utz could only assume that Mr Daly's failure to answer previous letters and the continued distribution of the Open Letter were "malicious" and calculated to cause harm to their clients. Clayton Utz requested Mr Daly to identify to whom the Open Letter had been published, to provide a written undertaking to refrain from further publication, and to identify any person who assisted Mr Daly in either writing the Open Letter or distributing it. On 23 January 1997 Mr Daly faxed a reply as follows: "I do not know from whom you have obtained a statement, however I deny placing a copy of the letter in a mail box over the weekend or for that matter placing a copy of the letter in any mail box at any time. I can only assume that the independent person is terribly mistaken."

Clayton Utz faxed a further letter to Mr Daly on 23 January, suggesting that Mr Daly's reply had not addressed all the matters raised in their letter of 22 January, and, in particular, that Mr Daly had not said whether he had had a role in the writing of the Open Letter, and whether or not, despite not having personally delivered the Letter to Kareela residents, he had played some other role in its distribution. Clayton Utz's letter advised that if there was not a satisfactory reply, the firm would approach this Court to seek an order that Mr Daly be orally examined. Apparently, there was no reply to that letter. The next event was that on 3 February Mr Levis spoke to Mr Lucas by telephone. The conversation is recounted in paragraph 15 of Mr Lucas's affidavit, as follows: "15.On 3 February 1997 I had a telephone conversation with Graham Levis in words to the following effect:

He said: 'One of my customers saw a lady distributing the letter in her neighbourhood. The customer has told me that it is the overweight woman who sometimes works in Mr Daly's pharmacy at Oyster Bay.'

He said: Yes, I do. I am certain that the customer is referring to Alice McDonald, who works at Mr Daly's pharmacy each Wednesday. I suggest that you send a fax to her there this Wednesday to see what she knows.'

Following that telephone conversation, on 5 February Clayton Utz faxed a letter to Ms McDonald, care of the Oyster Bay Pharmacy facsimile number. The letter advised Ms McDonald that she had been seen placing copies of the Open Letter "in various mail boxes in the Kareela area". It requested her to identify to whom she had published the Open Letter, any other person who had assisted her in distributing it, any person who had requested or instructed her to distribute it, any person who had provided copies of it to her for distribution, and the person or persons who wrote it. Finally, the letter threatened the commencement of a proceeding of the present kind against Ms McDonald if she should fail to answer. On the same day, 5 February, Mr Daly responded by facsimile to Clayton Utz advising that Ms McDonald was not in attendance at the Oyster Bay Pharmacy that day, and that he (Mr Daly) was therefore unable to hand their letter to her. On 6 February, Clayton Utz again wrote to Mr Daly. They acknowledged receipt of his facsimile of the preceding day and asked him to provide them with an address or facsimile number through which they might contact Ms McDonald. They also noted that they had not received a response from him to their facsimile dated 23 January, and added "[t]he inference that we draw from your non-responsiveness is obvious." They advised that any application by their clients to this Court would include a claim for costs in respect of their endeavours to ascertain the publisher of the Open Letter. There has not been a response by Mr Daly. According to Mr Lucas's affidavit, the documents sought in the present application are: "(a)Any drafts or earlier versions of the Letter.

(b)Any correspondence either to or from either the first or second respondent or to or from any other person referring to, or related to, the writing or the publication of the letter."

THE RELEVANT FEDERAL COURT RULES The present application purports to be made under O 15A r 3 of the Federal Court Rules. It is useful, however, before I set out that provision, to refer to its recent background. I need not go back beyond Part 3 r 1 of the Rules of the Supreme Court of New South Wales. That provision was previously as follows: "An order to attend and be examined may be made where it appears to the court that: (a) the applicant has a prima facie case for relief in proceedings in the Court against any person (in the rule called the person concerned); and (b) the applicant, having made reasonable inquiries, does not know the name, or does not know the description, of the person concerned, or is otherwise unable to identify the person concerned sufficiently for the purpose of commencing proceedings against the person concerned; and (c) some person ... may have knowledge of facts ... tending to assist in the ascertainment of the name or description or other identification of the person concerned."

Under this rule, it was necessary for the applicant for an order to show that he or she had "a prima facie case for relief" against the "person concerned". That provision came before the Supreme Court in Taylor v Osborne [1973] 1 NSWLR 52. In that case, the applicant for an order suffered an injury when a bottle of lemonade, which had been delivered to her home by a person whom she believed to be an employee of Mr Osborne trading as "Osborne's Fruit Drinks", exploded, causing her to be hit on the leg by broken glass. She wished to commence an action for damages against Mr Osborne, the manufacturer of the bottle, the filler of the bottle, and the supplier of the drink, but she did not know their names and was unable by inquiry to ascertain them. She sought discovery from persons who were suspected to be those entities. She relied upon the explosion of the bottle as establishing a prima facie case of negligence by one or other of them, without being in a position to identify which. Master Cantor QC held that it was necessary under the rule for an applicant to establish some specific, but inadequately identified, potential defendant against whom a prima facie case for relief appeared to exist. The Master held that this test was not satisfied. Perhaps not surprisingly, the rule was amended. It was amended by Gazette 79 of 28 June 1974 page 2434, to eliminate the requirement that a prima facie case be established. There followed several decisions on the new rule: see Barton v Osborne, unreported, Nagle J, 20 February 1975; Exley v Wyong Shire Council, unreported, Master Allen, 10 December 1976 (Ritchie's Supreme Court Procedure, vol. 2, Practice Decision [13,004]); and Stewart v Miller [1979] 2 NSWLR 128 (Sheppard J). While these decisions recognised that an applicant for preliminary discovery under the amended rule was no longer required to establish a prima facie case, they also accepted that the prospects of the applicant's case for relief might be relevant to the exercise of discretion. Order 4 r 17 was inserted in the Federal Court Rules by Statutory Rule 87 of 1980, effective on 1 May 1980. That rule is as follows: "17(1) Where, on application by any person, it appears to the Court or a Judge that -

(a) the applicant, having made reasonable inquiries, is unable to ascertain the identity of a person for the purpose of commencing proceedings against the person or is unable to ascertain the description of any person sufficiently for that purpose; and

(b) some person has or may have knowledge of facts, or has or may have in his possession, custody or power any document or thing tending to assist in the ascertainment of the identity or description of the person concerned,

(c) to attend before the Court or a Judge and be orally examined on any matter relating to the identity or description of the person concerned; and

(d) to produce to the Court or a Judge any document or thing in his possession, custody or power relating to the identity or description of the person concerned."

Subsequently, Order 15A r 3 was inserted in the Federal Court Rules by Statutory Rule 54 of 1988, effective on 26 April 1988. That rule is as follows: "3(1) Where an applicant, having made reasonable inquiries, is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the Court against that person (in this rule called 'the person concerned') and it appears that some person has or is likely to have knowledge of facts, or has or is likely to have or has had or is likely to have had possession of any document or thing, tending to assist in such ascertainment, the Court may make an order under subrule (2).

3(2)The Court may order that the person, and in the case of a corporation, the corporation by an appropriate officer, shall -

(a) attend before the Court to be examined in relation to the description of the person concerned;

(b) make discovery to the applicant of all documents which are or have been in the person's or its possession relating to the description of the person concerned.

3(3)Where the Court makes an order under paragraph (2)(a), it may -

(a) order that the person or corporation against whom or which the order is made shall produce to the Court on the examination any document or thing in the person's or its possession relating to the description of the person concerned;

(b) direct that the examination be held before a Registrar."

Order 15A r 1 defines "applicant" and "description" as follows: "'applicant' means applicant for an order under this Order;

'description' includes the name, and (as applicable) the place of residence, registered office, place of business, occupation and sex of the person against whom the applicant desires to bring a proceeding, and also whether that person is an individual or a corporation;"

As was remarked by Sheppard J in Survival & Industrial Equipment (Newcastle) Pty Ltd v Owners of the vessel "Alley Cat" (1992) 36 FCR 129, "[t]here does not appear to be any difference of substance between the two sets of provisions [O 4 r 17 and O 15A r 3] so that it is unnecessary to distinguish between them" (at 132). REASONING Objection was taken to the admission into evidence of paras 10, 11 and 15 of Mr Lucas's affidavit. It was put for Messrs Levis, Armstrong and Lee, that those paragraphs should be admitted because the application was in the nature of an interlocutory one. They relied upon s 75 of the Evidence Act 1995, which provides: "75.In an interlocutory proceeding, the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source."

The notion of the "hearsay rule" is defined in the "dictionary" to that Act, by reference to sub-s 59 (1), which provides: "59.(1) Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that the person intended to assert by the representation."

Messrs Levis, Armstrong and Lee accepted that para 11 of Mr Lucas's affidavit was not admissible because there was no evidence as to the identity of the maker of the statement made on the telephone to Mr Lucas (it will be recalled that Mr Lucas said in his affidavit that he had agreed to keep the identity of Mr Levis's customer confidential). The expression "interlocutory hearing" is not defined in the Evidence Act 1995. The meaning of the word "interlocutory" in various contexts has given rise to difficulty. For recent judicial discussion of the question, see Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 3) (1996) 64 FCR 55, Brouwer v Titan Corporation Ltd, unreported, FCA/FC, 7 March 1997, and Wentworth v Wentworth, unreported, Supreme Court of NSW, Santow J, 17 April 1997. Without reference to authority, I would have thought that an application for the relief provided for in O 15A r 3 or O 4 r 17 is not an interlocutory proceeding, since the relief provided for finally determines the rights of the parties in relation to the particular issue tendered for decision, that is to say, the issue whether the person concerned is to be ordered to do the things provided for in the rule. The question has been the subject of judicial decision. In Stewart v Miller [1979] 2 NSWLR 128, Sheppard J referred to similar orders with which he was concerned as "intended to be final" (see 133B-134D). In John Fairfax and Sons Ltd v Cojuangco (1988) 165 CLR 346, the High Court had to consider Part 3 sub-r 1(1) of the Rules of the Supreme Court of New South Wales. In a joint judgment, the members of the Court said that an application under the provision was "not an interlocutory proceeding" (at 356) in the substantive defamation action that was in question in that case. It was submitted that the present proceeding is shown to be interlocutory by the fact that the making of the order sought is only a step on the way to the obtaining of the information. The submission is that the making of the order is not the end of this proceeding and that further orders may be necessary to enable Messrs Levis, Campbell and Lee to enjoy the benefit of the order sought, for example, orders compelling Mr Daly to answer questions or to produce documents. It seems to me, however, that this submission is analogous to a submission that an order for payment of damages or an injunction is not a final order because further orders may be necessary to enable the successful party to have the benefits of the order. I do not think that the order sought is any the less final because further orders may become necessary to compel compliance with it. I note that O 15A sub-r 9 (4) assumes that an application under either r 3 or r 6 is made by "notice of motion". In my view, this is an erroneous assumption, and cannot be taken as support for the view that a proceeding under either of those rules is interlocutory. The motion procedure may be used only in a proceeding which has already been commenced: O 19 sub-r 1 (1). In the ordinary case, it is an impossibility for an application for preliminary discovery to be made in any proceeding which has already been commenced. Moreover, sub-rr 9 (1), (2) and (3) corectly assume that the form of process which they require to be served and supported by an affidavit is an "application". Further, in the case of the similar O 4 r 17 noted earlier, it is provided expressly that an application for preliminary discovery under that rule must be made by way of application in the form of Form 5A. Order 15A sub-r 9 (4) should be amended by substitution of the word "application" for the words "notice of motion". Being of the view that the order sought is a final order, I am of the view that the present proceeding is not an interlocutory proceeding and that paras 10, 11 and 15 of Mr Lucas's affidavit are not admissible. I so rule. If, contrary to my view, the present proceeding is interlocutory, in my opinion paras 10 and 15, in addition to para 11, would still not be admissible. The concession made in relation to para 11 applies equally to paras 10 and 15 for the following reason. All three paragraphs are relied on to prove, not the making of statements, but the physical distribution of the Open Letter by Mr Daly in the case of paras 10 and 11, and by Ms McDonald in the case of para 15. The failure to identify the maker of the statement that constitutes the representation of the fact of that activity affects paras 10 and 15, just as it affects para 11. The source which is referred to in s 75 of the Evidence Act 1995 is the maker of the statement as to the asserted fact referred to in s 59. The lack of identification of the source of the original statement cannot be overcome by interposing a further person, in this case, Mr Levis, whose identity is revealed. In the absence of identification of Mr Levis's informant-customer, there is no evidence of the source of the representation as to the alleged activity of Mr Daly and Ms McDonald in distributing the Open Letter, and so the terms of s 75 are not satisfied. If, contrary to my conclusions expressed above, the present proceeding is interlocutory and paras 10, 11 and 15 are admissible, I would still not make the orders sought. There are two matters, in particular, which I find persuasive. The first concerns the case for relief. I readily accept that it is not required that a prima facie case be established. As was put on behalf of Messrs Levis, Armstrong and Lee, quite apart from the fact that there is no such element referred to in O 15A r 3, there is a distinction between that rule and O 15A r 6. In the latter case, it is required that there be: "reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained."

The absence of any similar requirement in r 3 of the same Order suggests deliberateness. In addition, there is the background to the present rule, referred to earlier, which puts the matter beyond question. However, I am entitled to take into account the consideration whether any cause of action has been identified. Although the Open Letter has been described as misleading or deceptive and is said to contain defamatory imputations, there has been no indication in what respect it is misleading or deceptive (apart from a general complaint that it contains "factual errors") or of what the imputations alleged to be defamatory of Messrs Levis, Armstrong and Lee, are. These matters are certainly not obvious. Secondly, it seems clear that Messrs Levis, Armstrong and Lee are able "to ascertain the description of" at least one person sufficiently for the purpose of commencing a proceeding against that person, namely, Mr Daly. They have access to their informant-customer and, no doubt, will be in a position to subpoena him to give evidence that Mr Daly distributed the Open Letter if he is not willing to give that evidence voluntarily. It seems that the only remaining issue as to Mr Daly's responsibility for communicating to others the statements contained in the Open Letter is whether he was aware of its contents or was only an unwitting "conduit", as his employee, Ms McDonald, may have been. The question surely admits of only one answer. It appears, from the Reasons for Judgment of Branson J in the Earlier Proceeding, that Mr Daly's Oyster Bay Pharmacy is, of the ten pharmacies of the pharmacist-applicants in that Proceeding, one of those susceptible to be adversely affected by the competition which would apparently arise from the opening of a pharmacy in the Kareela Shopping Centre. Further, Mr Daly was the only applicant in the Earlier Proceeding to swear two affidavits rather than one, was the firstnamed pharmacist-applicant in that Proceeding, and was described by Mr Paul Baker of Ebsworth and Ebsworth, the solicitors for the applicants in the Earlier Proceeding, as a "spokesperson" for the pharmacist-applicants ("Pharmacy Trade", October 1995, p 10). In sum, there is a strong suggestion that if Mr Daly in fact distributed the Open Letter as alleged, he must have known of its contents. It is true that Messrs Levis, Armstrong and Lee are not able to ascertain the description of additional persons sufficiently for the purpose of commencing a proceeding against them. But it is mere speculation to suggest that anyone other than, or in addition to, Mr Daly, wrote the Open Letter, or that anyone in addition to him and Ms McDonald distributed it. It is not, and could hardly be, suggested (a) that Mr Daly is the less responsible for making the representations contained in the Open Letter if he distributed it knowing of its contents but was not the author of it; or (b) that it is a purpose of an order under O 15A r 3 to resolve a factual conflict of the kind that apparently exists between the informant-customer and Mr Daly as to whether Mr Daly was, indeed, the person who placed the Open Letter in that person's letter box. I do not think, taking all discretionary considerations into account, that this is the kind of situation in which an order under O 15A r 3 should be made. Of course, during discovery in any proceeding which Messrs Levis, Armstrong and Lee may bring against Mr Daly, it may appear that other persons should be added as respondents. CONCLUSION For the foregoing reasons, I make the following orders: 1) I dismiss the motion brought by notice of motion filed on 20 February 1997 as incompetent. 2) I dismiss the application. 3) I order the applicants to pay the respondents' costs. I certify that this and the preceding 21 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren. Associate: Dated: 9 May 1997 Heard: 24 March 1997 Last written submission received: 9 April 1997 Place: Sydney Decision: 30 April 1997 Appearances: Mr N Lucas, solicitor, of Clayton Utz, appeared for the applicants. Mr S C G Burley of counsel, instructed by Ebsworth and Ebsworth, appeared for the respondents.