Australian Competition & Consumer Commission v INFO4PC.com Pty Ltd

REASONS FOR JUDGMENT 1 The applicant brings a notice of motion seeking orders that the first respondent provide answers to the applicant's notice to answer interrogatories failing which default judgment be entered pursuant to O 16 r 9(1)(b) of the Federal Court Rules. The same motion seeks orders that the first respondent provide discovery failing which default judgment be entered pursuant to O 15 r 16(1)(b). Interrogatories 2 The background to the notice of motion to administer interrogatories is that on 11 April 2001 a similar motion was brought by the applicant against the first respondent. It was heard ex parte on 25 June 2001 and leave was granted to the applicant to administer the interrogatories. It was also ordered that service of interrogatories be effected by service on the first respondent by service on its registered office by post and by service on the second respondent by facsimile. When the order for service was made in respect of the service on the second respondent it was in his personal capacity in circumstances where a question had arisen as to whether or not he was the appropriate person to answer the interrogatories. At the directions hearing the second respondent stated to the Court he definitely would not be able to answer all the interrogatories but could answer some of them, that is on behalf of the first respondent. 3 As appears from an affidavit from the office of the solicitors for the applicant, on 12 July 2001 a document headed "Answers by the Second Respondent to Interrogatories by the Applicant to the First Respondent" purportedly prepared by the second respondent on behalf of the first respondent was served on the Australian Government Solicitor. That affidavit also discloses that on 25 July 2001 the service of the notice to answer interrogatories was served by post on the registered office of the first respondent but returned to sender. On 3 August 2001 the solicitors for the applicant sent a letter to the first respondent at its registered office stating that as no answers had been provided by it in response to the notice to answer interrogatories, the applicant intended to strike out the first respondent's defence and seek orders that judgment be entered. This letter was returned on 7 August 2001 to sender. On that date the wife of the second respondent advised the solicitors that it was the second respondent's recollection of the hearing on 25 June 2001 that he could answer the interrogatories to the first respondent on behalf of the first respondent. 4 On 13 August 2001 the solicitors for the applicant sent a letter to the second respondent confirming that the first respondent did not have leave to defend the proceedings other than by a solicitor and advising of the applicant's intention to proceed with its application to strike out the first respondent's defence. On 16 August 2001 the second respondent responded to that letter seeking clarification which was provided by further letter on 20 August 2001. That letter advised that the applicant considered the answers provided by the second respondent to interrogatories by the applicant to the first respondent were "nullity" because: "(a) the First Respondent is a Company and can only be represented by (and file documents by) a solicitor. You do not have leave of the Court to file documents on behalf of the First Respondent in these proceedings (the application was refused on 15 June 2001); (b) pursuant to Order 16 rule 7(1)(c) of the Federal Court Rules the affidavit verifying the answers to interrogatories must be made, where the party is a corporation, by a member or officer of the corporation, which you say that you are not." 5 It is submitted here for the applicant that the document being the answers by the second respondent to interrogatories by the applicant to the first respondent and prepared by the second respondent on behalf of the first respondent is a nullity and an abuse of process and cannot be used by the first respondent to defend the proceedings. This, it is said, comes about because the application dated 27 April 2001 by Mr Colin Addison on behalf of the second respondent for leave for either himself or the second respondent to represent the first respondent was refused by the Court except for the hearing of the contempt motion dated 31 January 2001. It is said therefore that the first respondent can only defend the proceedings by way of a solicitor. 6 Additionally, reference is made to O 16 r 7(1)(c) of the Federal Court Rules which provides that where a party is a corporation or organisation the affidavit verifying a statement of a party in answer to interrogatories must be made by a member or officer of the corporation or organisation. At the directions hearing on 25 June 2001 it was accepted in submissions for the applicant that it maintained that the second respondent was a de facto director. In reasons delivered in this matter on 31 July 2002 it was found that it had not been established beyond a reasonable doubt (in response to a charge of contempt) that the second respondent was a de facto director of the first respondent but it was so established that he was a director of the first respondent. That was a finding referable to the dates of 24 and 31 January 2001 and 8 and 15 February 2001. 7 Here it is submitted for the applicant that the second respondent is not the appropriate person to answer interrogatories on behalf of the first respondent for two reasons. Firstly, he has an adverse interest to that of the company - Welsbach Incandescent Gas Lighting Company v New Sunlight Incandescent Company [1900] 2 Ch 1. Secondly, and more particularly, he claims not to be an officer or member of the company. 8 Additionally, it is submitted that as the first respondent remains unrepresented it will not or is unlikely to remedy its default in failing to answer the interrogatories: Freeman v Rabinov [1981] VR 539. 9 The difficulty which I have with the exercise of the discretion pursuant to O 16 r 9(2) is that no finding of fact has presently been made on whether or not the second respondent remained a director of the first respondent as at the date on which he filed the response on behalf of the first respondent namely, 12 July 2001. If he was, then the further question would arise whether the answers which he provided are sufficient for the purposes of the litigation. On behalf of the applicant it is contended that it should not have to rely on the response of the second respondent in circumstances where he has told the Court that he would not be able to answer all the interrogatories. However, if his answers are a partial answer of interrogatories on the basis that he was then a director of the company that is a relevant circumstance to the exercise of the discretion arising pursuant to O 16 r 9(1). 10 In those circumstances I consider it is not appropriate at the present time to exercise that discretion to make the springing order sought by the applicant. The motion in that respect should be held over pending determination of the factual question in issue. For the same reason the further order sought that the answers provided by the second respondent be struck out should likewise be held over. Discovery 11 On 11 May 2001 it was ordered that the respondents provide discovery. On 25 June 2001 it was ordered that they provide discovery within 14 days in accordance with the orders previously made, failing which their defences would be struck out. The orders for discovery were in respect of documents: "(a) relating to the sale or proposed sale of client information to third parties; and (b) in the nature of financial records including accounting records, bank records, wages records, book-keeping records, cheque books and deposit books." 12 On 9 July 2001 the second respondent filed a document headed "Revised List of Documents". In a letter of that date he advised that he had completed the discovery as requested by the Court to allow the case to proceed as smoothly as possible, although he was no longer "an employee" of the first respondent. He did not address whether he was an officer of the first respondent. 13 In a letter dated 23 July 2001 the solicitors for the applicant advised the second respondent that the revised list of documents did not satisfy the requirements of giving discovery for the following reasons: "(a) Order 15 rule 2(2) of the FCR requires discovery be by filing and serving not only the list of documents required to be disclosed, but also an affidavit verifying the list …; (b) All of the documents in a party's control, or which have been under his control, in the sense contemplated by the rules, are to be accurately described in the list. The point of this is that when the opponent refers to the list it is to decide whether discovery is complete and which documents should be inspected. For this purpose, the list must be sufficiently detailed for that judgment to be made. This applies to both documents for which privilege from productions is claimed and for those which privilege is not claimed. Consequently, the following details are required to be provided in the description of the documents, (i) person to whom correspondence is to and from; and (ii) person to whom contracts and bills are addressed, executed, authorised or paid by; and (iii) person to whom quotes were provided. (c) Justice Nicholson's order clearly states that the Respondents must discover all documents relating to the sale or proposed sale of client information to third parties. We advise that we are unable to identify any documents of this description… (d) In the case of a group of documents of the same nature, the list of documents must describe the group of documents sufficiently to enable the group to be identified: O 15 r 6(3) FCR ... (e) Legal professional privilege only covers communications between third parties and the lawyer or the client if they are made in contemplation of, and for use in, existing or anticipated litigation. Therefore, communications with third parties which were not made in contemplation of litigation are not privileged. Please state who the letters enumerated in 643 and 644 were addressed to. (f) Please confirm whether you produced or relied on documents enumerated 679 and 683 in the Supreme Court proceedings. (g) The claim that documents enumerated 559, 593, 594 and 649 - 659 are commercially sensitive is not a valid claim for privilege. A party to whom documents are produced on discovery impliedly undertakes not to use them or allow them to be used for any purpose other than the proper conduct of the action, and if that party wishes to use documents for any other purpose, then the Court's leave is necessary before that can be done. We confirm that the applicant does not intend the documents to be used other than for the proper conduct of the action. The applicant is not a trade competitor and accordingly, disclosure can be made without threat to the commercial sensitivity of the material." 14 In a response dated 24 July 2001 the second respondent again asserted that he was "now not … connected to the first respondent" and had "not been associated with the first respondent in a formal capacity since late December 2000". Nevertheless, he responded to each of the specific matters raised in the letter of 23 July 2001 by the solicitors for the applicant. 15 On 3 August 2001 solicitors for the applicant wrote to the first respondent at its registered office confirming that the first respondent was obliged to discover documents and advising unless there was fully compliant affidavit of discovery by 13 August 2001 an application for strike out would be made. This was returned to sender. A letter was addressed to the second respondent by name in the similar terms. 16 On 6 August 2001 a facsimile letter was received from the second respondent in which he stated that, with the exception of the provision of an affidavit to confirm the list of documents, the list itself was complete and complied with the order. This was supported by a statement that there were no documents relating to the sale or proposed sale of client information to third parties. 17 On 13 August 2001 the solicitors for the applicant wrote to the second respondent by name requesting that he file and serve the affidavit of discovery by no later than 17 August 2001. Times were also proposed for inspection. He was further advised that documents over which he maintained a claim for privilege should be filed at the Court in sealed envelopes as soon as possible to enable determination of the claim for privilege. 18 By facsimile letter of 16 August 2001 the second respondent appointed a place for inspection and undertook to arrange to file the requested affidavit. 19 On 20 August 2001 the solicitors for the applicant wrote to the second respondent by name enclosing the notice of motion now before the Court. 20 The submissions for the applicant on the motion contend that the discovery made by the second respondent is not the discovery of the first respondent. It is said that although the documents may belong to the first respondent they are in the possession, custody and power of the second respondent as established by reference to the list and evidence. As the second respondent does not have the leave of the Court to defend the proceedings or file documents on behalf of the first respondent it is said that the consequence for the first respondent is that it has failed to provide discovery. 21 For the applicant it is also stated that it has a legitimate forensic interest in obtaining the first respondent's discovery. I accept that. There may be further discovery available from the first respondent for which the second respondent is not able to answer. 22 As with the issue for interrogatories the absent finding of fact relevant to the exercise of the discretion to make the proposed springing order is that which relates to whether the second respondent still continued as a director of the first respondent at the relevant dates when discovery was given. Despite his disavowals of any association with the first respondent, the finding of fact made was that at least as late as 15 February 2001 he was still a director of the first respondent. The applicant seeks to state that the finding is limited to that date. However, it raises a presumption of regularity of that appointment and the continuance of it in the absence of further evidence. As with the issue of interrogatories, it is necessary for that finding of fact to be resolved. If the second respondent continued as a director of the first respondent then whatever claimed inadequacies there may be in his discovery the fact that such discovery had been given would be relevant to the exercise of the present discretion. 23 Again, I consider that the motion seeking a springing order in respect of the first respondent in respect of discovery should, like the proposed springing order in relation to interrogatories, be held over to enable the applicant to bring evidence to displace the presumption raised by the finding of fact of the status of the second respondent as on 15 February 2001. Conclusion 24 For these reasons I consider that the notice of motion should be adjourned and opportunity be given to the applicant to file further evidence. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice RD Nicholson.