Fish & Anor v Solution 6 Holdings Limited & Ors

NEVILLE BUCH Third Respondent

NEIL GAMBLE Fourth Respondent FILE NUMBER: IRC 1168 of 2002 CORAM: Schmidt J CATCHWORDS : Practice and Procedure - notice of motion - extension of time for filing response to summons - order sought for further particulars - Rule 18A of the Court's Rules - identification of documents - further details of conversations and copies of documents sought - order declined LEGISLATION CITED : Industrial Relations Act 1996 Industrial Relations Commission Rules CASES CITED : Bitekiteku & Ors v P & ND & Ors [2002] NSWIRComm 83 Deemah Marble & Granite Pty Ltd v Sutherland [2001] NSWSC 829 HEARING DATES: 04/30/2002 DATE OF JUDGMENT: 05/08/2002

APPLICANTS: Ms K Nomchong of counsel SOLICITORS: Clayton Utz LEGAL REPRESENTATIVES: RESPONDENTS: Mr B Shields of counsel SOLICITORS: Anderson Legal

JUDGMENT: - 14 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J

NICHOLAS TERRENCE FISH AND ANOTHER v SOLUTION 6 HOLDINGS LIMITED AND OTHERS Application under section 106 of the Industrial Relations Act 1996

1 By notice of motion filed on 19 April 2002, the respondents sought an extension of time for filing their response to the summons brought by the applicants under s106 of the Industrial Relations Act 1996 ('the Act'), together with an order that the applicants be required to provide the outstanding particulars requested in a letter sent by the respondents' solicitors on 22 March. This judgment deals with the motion.

2 The applicants had provided certain particulars, but declined to provide more, relying upon the provisions made in Rule 18A of the Court's rules. At the hearing of the motion, the respondents pressed only three aspects of the outstanding particulars.

3 The first went to those parts of the claim where it was alleged that representations had been made, and where it had been revealed by the applicants' response to the particulars sought, that the representation relied upon was partly written and partly oral. The respondents thus sought an identification of the documents in question. The particulars sought in relation to paragraph B9 of the summons and the response, illustrate the difficulty.

4 Paragraph B9 provided: 'Between 2 July 1999 and May 2000, the First and Second Respondent's then Chief Executive Officer, Mr Chris Tyler, discussed several proposals with the First Applicant for the purchase of an interest in FishTech from the Second Applicant. During that period, Mr Tyler represented to the First Applicant: (i) that the First Respondent would list on NASDAQ through a "back door listing" once it purchased Elite Inc (" Elite "), a competitor of the First and Second Respondent's business which was an entity incorporated in the United States; and

(ii) that the, then, current financial year (1999/2000) performance of the First and Second Respondents was strong;

(iii) that the First Respondent's share price would continuously increase given its impending purchase of Elite and its dual listing on NASDAQ; and

(iv) that Mr George Soros, a key global investor, would be investing in the First and Second Respondent's business.'

5 The particulars sought were: 'Please provide the usual particulars in relation to the alleged representations of Mr Tyler referred to in paragraph B9.'

6 The 'usual particulars' were defined as: a) was the [item] expressed or implied or partly expressed and partly implied? b) if express or partly express, was the [item] oral, in writing or partly oral and partly in writing? c) if oral or partly oral, then:

i) what means of communication? ii) on what date? iii) at what time? iv) where? v) by which persons was the [item] made?

Please provide particulars of the alleged conversation. d) if written or partly or partly written, please identify the writing and supply a copy?

7 The response provided was: 'The representations referred to were express and were partly written and partly oral. The remainder of your requests are matters of evidence. In any event, the terms of the representations are identified in paragraph B9(i), (ii), (iii), and (iv) of the Summons.' 8 It will be seen that the summons, as framed, suggested that the representations referred to had been made orally. The request for particulars revealed that the representations were at least partly contained in, or confirmed by, written communication. It follows that the summons not having made this clear, the particulars which revealed this were properly sought. No doubt it was for that reason, that they were answered.

9 It was the complaint pressed for the respondents by Mr Shields of counsel, that the response did not go further so as to identify the documents said to contain the representations. It was submitted that the respondents should not be left guessing. It was a simple matter for the applicants to identify the document in question, so that instructions could be sought about it, in order that the response could be prepared.

10 It was the case for the applicants, explained by Ms Nomchong of counsel, that the effect of the request was to require the applicants to identify the evidence upon which it would rely to prove the allegation made in paragraph B9 of the summons. This it was not obliged to do under the Rules. Rule 18A provides: 18A. New procedure under section 106 (Unfair contracts) (1) An application to the Commission to exercise the powers conferred on it by section 106 must be in Form 12A and must: (a) specify in summary the matters of fact and law which form the basis of the application, but not the evidence by which those facts are to be proved, and (b) contain sufficient information to allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary. (2) Unless otherwise ordered by the Registrar the application must be served on the respondent. (3) Where within the required period of time, an appearance has not been entered by a respondent, the applicant may proceed to have the matter determined in the absence of that respondent. (4) Within 21 days after the date of expiry of the time limited for the respondent's appearance the respondent must file and serve its reply. Such reply must be in Form 12B and must: (a) answer each of the matters raised in the application, and (b) specify in summary any additional matters of fact and law upon which the respondent will rely in opposition to the application, but not the evidence by which those facts are to be proved, and (c) contain sufficient information to allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary. (5) An applicant must within 14 days of the time of filing of the reply file and serve a response answering each of the matters specified in the reply pursuant to sub rule (4). Such response must be in Form 12C. (6) The applicant or respondent, as appropriate, must file and serve with the application, reply and response an affidavit verifying the matters of fact set out therein. If the relevant party is a corporation the affidavit may be sworn by an officer or employee of the corporation who is able to verify the matters of fact relied upon. (7) Nothing in this Rule is to be taken to derogate from or otherwise limit the requirements of or the Commission's powers under Parts 9 and 13 of these Rules. (8) The Registrar must, as soon as practicable after the filing or expiration of the time for filing of the response, whichever occurs first, refer the matter for allocation to a Member of the Commission for conciliation in accordance with section 109 or, if the Registrar considers it appropriate, for directions either before the Registrar or a Judge of the Commission. (9) This Rule takes effect from 31 January 2000. An application to the Commission to exercise the powers conferred on it by section 106 may be commenced and proceeded with pursuant to either Rule 18 or Rule 18A until 6 October 2000 from which time all such applications are to be commenced and proceeded with in accordance with Rule 18A.

11 It was further submitted that the 'pro forma' request for particulars here produced by a word processor was typical of a practice which had emerged amongst some firms of solicitors, which was entirely contrary to the purpose of the new Rule. Rule 18A had been introduced by the Court to reduce the costs formerly incurred by parties in proceedings under s106, where large affidavits were required to be put on before conciliation, the costs of which itself then presented a bar to settlement. It was argued that what an applicant was obliged to do in s106 proceedings in order to satisfy its obligations under Rule 18A, was to put a respondent clearly on notice of the allegations made against it, so as to permit it to put on its response to the summons. Here, in their motion, the respondents had pressed some 30 pages of particulars which they had earlier sought, in circumstances where the representations asserted against them had already been identified in the summons. It had later been clarified that they had been made orally and in writing, the time of making the representations having already been specified in the summons. The applicants were obliged to give no more particulars. Nor was it reasonable to require the applicants to identify all the documents relied upon, at this stage. What was sought amounted to the provision of evidence, which the applicants were not obliged to provide prior to conciliation.

12 As to whether the provisions of such particulars was desirable, given that it might advance a conciliation by the respondents having a better understanding of the case to be brought against them, it was argued that while this might be the case, it would, nevertheless, involve an applicant in significantly increased costs, which the Rules did not contemplate would be incurred prior to conciliation. The Rules required only the provision of certain information so as to "specify in summary the matters of fact and law which form the basis of the application, but not the evidence by which those facts are to be proved", in order to "allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary". This was because the Rule contemplated that the purpose of the initial pleadings was to get the proceedings initiated and before a member of the Commission for conciliation.

13 If the conciliation failed, other procedures which the Court required the parties to pursue, including putting on evidence in chief in affidavit form as well as the processes available for production and inspection of documents, would lead to more of the case which the applicants brought against the respondents being revealed to them prior to the hearing. It would only unnecessarily increase costs to require the applicants to further identify or produce documents at this stage of the proceedings.

14 It was for similar reasons that the two other requests for particulars were resisted.

15 Paragraph B32 of the summons provided: 'Prior to this time, the business group for which the First Applicant had been responsible had been trading successfully, In fact, in a Board Report emailed to the Third and Fourth Respondents on or about 4 December 2000, it was apparent that the business group for which the First Applicant had been previously responsible had been performing better than the budget and forecast set for that group.'

16 The particulars sought and reply provided were: 'Please provide full details of the board report referred to in paragraph B32 and please provide a copy. 'This is not a proper request for particulars and is a matter of evidence.'

17 For the respondents it was submitted that in order to prepare its response, the respondents needed to be provided with an identification of the date of the document and a copy. The respondents were large commercial entities and the document in question could be any of a large number of documents, so that the respondents sought its identification and if a copy was available, its provision would not be a hardship.

18 The parties each made reference to the judgment of Boland J in Bitekiteku & Ors v P & ND & Ors [2002] NSWIRComm 83, where his Honour required an applicant to provide certain particulars. The respondents argued that they were in a similar position in this case. The applicants denied this and submitted that the approach there adopted would in this case lead to a subversion of the purpose of Rule 18A.

19 Further, it was submitted that this claim, in reality, fell within that category of circumstances where particulars would not be required in any event, given that the document in question comprised board papers emailed to the applicants by the respondents. Boland J referred at para [8] to the decision of Young CJ in Eq in Deemah Marble & Granite Pty Ltd v Sutherland [2001] NSWSC 829, where his Honour considered in a general way the provision of particulars and said at para (5) that: 'When one party has the means of knowing the real facts, ordinarily the opponent will not be ordered to supply particulars until after discovery: Millar v Harper (1888) 38 Ch D 110; TPC v CC (NSW) Pty Limited (1995) 131 ALR 581, 593.'

20 The third particular pressed was in relation to paragraph B52 of the summons. This was a long paragraph in narrative form, which related to a series of conversations said to have taken place between specified times, in which it was alleged that the applicants had raised various concerns with the 3rd respondent. It was argued that the respondents required sufficient particulars of these conversations to enable them to understand this aspect of the case, so that at least, the dates of the alleged conversations should be provided. A broad description of the substance of the conversations was not adequate. It was argued that the pleading had to be sufficient to enable the respondents to understand the case brought against it and to be able to refine the issues in dispute. Evidence was not sought.

21 For the applicants it was argued that all that was required had been provided. The summons was a detailed document of over 30 pages. Where dates of conversations could be identified by the applicants, they had been. Here, the applicants had identified that the conversations had taken place between certain times. The respondents had been provided with an outline of what it was said had occurred in these conversations. Nothing further could be required of the applicants, without transgressing Rule 18A.

22 In his recent judgment in Bitekiteku, Boland J was dealing with the provision made in the Rules as to the giving of particulars. His Honour observed in para [7] that: Part 9 of the Industrial Relations Commission Rules 1996 deals with particulars. Rule 57(1) provides that a party filing any process must give the necessary particulars of any claim or other matter raised by that party in such process. Rule 59 provides that a party must give particulars of any fraud, misrepresentation, breach of trust, willful default or undue influence on which the party relies. Rule 64 provides the power to order further particulars: 64. Order for particulars (1) A tribunal may, on terms, order a party to file and serve on any other party: (a) further particulars of any claim or other matter stated in any process, or in any affidavit filed by that party, or (b) a statement of the nature of the case on which the party relies, or (c) where the party claims damages, particulars of those damages. (2) Without limiting the generality of sub rule (1), where a party alleges as a fact that a person had knowledge or notice of some fact, matter or thing, the tribunal may, on terms, order that party to file and serve on any other party: (a) where knowledge is alleged, particulars of the facts on which the party relies, and where notice is alleged, particulars of that notice.

23 While the claim in Bitekiteku was brought under s106 of the Act, it is not apparent from his Honour's judgment whether the application was proceeding under Rule 18 or 18A. His Honour makes no reference to this aspect of the Rules and the arguments here advanced did not arise in that case. Rather, at para [10], his Honour concluded: 'Proceedings under s 106 are, like Equity, conducted by way of affidavit. The opportunity is similarly available to strike out, in whole or part and allow amendment of, a summons for relief. In my opinion, the principles outlined by Young CJ ought to be applied in assessing whether to order further particulars in this case.'

24 The difficulty here arising is somewhat different to that considered by Boland J, with no complaints being advanced that the substance of the various allegations made in the summons are not clear, or that who made them is not clear. Rather, greater detail is sought, as well as identification of certain documents.

25 I am satisfied in this case, that the applicants' resistance to the provision of further particulars must be upheld. The pleadings in the summons and the answers given in relation to the particulars sought, in my view, are adequate to meet the obligations imposed upon them by Rule 18A.

26 Rules 57 and 64 have general application to proceedings brought under the Act. They are not dissimilar to the Supreme Court Rules in relation to particulars, but their application in a particular case, must be considered, having in mind the proceedings before this Court in which they are relied upon and the other of the Court's Rules which apply to such proceedings. Whether a discretion will be exercised in favour of a respondent seeking further particulars of an applicant's claim or affidavit, thus depends in a particular case, not only on the particulars sought, but also why. In this case the provisions of Rule 18A and its purpose cannot be overlooked.

27 Here, voluminous particulars were sought by the respondents, in order for it to put on its response to the summons. While an order for all of the particulars not provided by the applicants in answer to the original request was sought in the motion, it was not pressed at the hearing. That was certainly a proper approach, given that Rule 18A(4) requires that: (4) Within 21 days after the date of expiry of the time limited for the respondent's appearance the respondent must file and serve its reply. Such reply must be in Form 12B and must: (a) answer each of the matters raised in the application, and (b) specify in summary any additional matters of fact and law upon which the respondent will rely in opposition to the application, but not the evidence by which those facts are to be proved, and (c) contain sufficient information to allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary.

28 This system introduced by Rule 18A for initiating s106 claims and preparing them for conciliation, involved a significant departure from that encompassed by Rule 18 which provides: 18. Proceedings under section 106 (Void contracts) and section 111 (Regulated contracts)

(1) An application to the Commission to exercise the powers conferred on it by section 106 or by section 111 must be accompanied by affidavits, stating briefly but specifically the facts, matters and circumstances relied upon in support of the application.

(3) Unless otherwise ordered by the Registrar, the application, together with a copy of the affidavits in support, must be served on the respondent.

(4) Where, within the required period, an appearance has not been entered by a respondent, the applicant may proceed to have the matter determined in the absence of that respondent.

29 Under the Rule 18 procedures, the Court then issued directions to the parties to file their affidavit evidence, which also often involved discovery and inspection of documents, as a part of the preparation process. This was an expensive and time consuming process, in which parties incurred considerable costs and delay before any attempt was made to conduct the conciliation required by s109 of the Act. The new Rule 18A procedure was designed to alleviate some of this burden, so as to maximise the prospects which parties had to settle their differences, before significant legal fees had been incurred.

30 The applicants complained that the end result of the type of particulars here sought by the respondents, was to result in this streamlining and cost reduction being avoided. The result sought to be achieved was provision of information formerly provided in the applicant's affidavits and through the discovery process, at considerable cost to an applicant.

31 Given the voluminous nature of the particulars here sought, the application made in the motion and the limited further particulars actually pressed at the hearing, one must have some sympathy for that concern. The respondents, of course, asserted that this was not their aim, but rather to ensure that the allegations made by the applicants were properly understood, in order to identify from the outset, what truly was in issue between the parties. This would also facilitate the conciliation process. Those too are aims with which one must have sympathy.

32 It is obvious that there must be a balance between the two views. Indeed, that is what Rule 18A itself seeks to achieve, by the requirement that the matters of fact and law which form the basis of the claim must be specified in the summons by an applicant, but not the evidence - that having formerly been provided by affidavit sworn prior to the conciliation. Now these matters are to be provided in the summons by a 'succinct summary', so as to enable the Commission 'to carry out its duty to conciliate under s109 of the Act'. Likewise, a respondent is obliged to answer each matter raised, to specify additional matters of fact and law which it will rely upon in opposition to the claim, but not the evidence. Again, this is to be done by provision of a succinct summary, to enable the Commission 'to carry out its duty to conciliate under s109 of the Act'.

33 If the conciliation does not succeed, those succinct summaries of the facts will be fleshed out by the affidavits which will be filed by the parties prior to the hearing. In that process, the provisions of Rule 64 will also be available to the parties, if further particulars are required in relation to the matters contained in the pleadings or the affidavits.

34 Having this balance in mind, it must be accepted that at this point, the necessary particulars of a s106 claim, as required by Rule 57, are in fact those specified by Rule 18A. Thus it is that the details of alleged conversations and what is contained in documents are not required to be given in a summons, if the representations alleged have been sufficiently provided in summary form. Nor are copies of documents in which representations were made required to be provided. What is required is a statement of the matters of fact which form the basis of the claimed unfairness, sufficient to enable the Commission 'to carry out its duty to conciliate under s109 of the Act'.

35 In this case, I am satisfied that the particulars sought, which seek further details of conversations and documents in which alleged representations or concerns were expressed, need not be provided, either to enable the respondents to understand the matters which they are required to answer, or to enable the Commission 'to carry out its duty to conciliate under s109 of the Act'.

36 Despite having come to this conclusion, I sympathise with the concern of the respondents that in this case, given its nature and the size of the monetary claims advanced, that they will in their response thus have to deny or not admit matters, which might later prove not truly to be in issue between the parties, once the documents are provided and affidavit evidence is put on. The alternative for the respondents is to expend considerable effort at this stage in trying to identify what documents are being relied upon. It must be observed, particularly given the time frame for the filing of a response which is imposed by Rule 18A(4), that the Rules do not envisage the effort and expense involved in the latter course.

37 I do observe that despite the obligations imposed by the Rules, litigation usually best proceeds by co-operation between parties as to procedural matters. Here, given the claims advanced, it is apparent that if the matter is not resolved in conciliation, the documentary case will be voluminous. In such a case, in the long run, costs are likely to be reduced by the applicant providing information prior to conciliation, in relation to the documents which it will rely on as establishing particular claims which it has made in the summons. It is, after all, of no advantage to an applicant to have the respondent run up costs searching for documents, or trying to identify them, when that could be avoided by such information being shared.

38 Given that an applicant must verify its summons by affidavit, it seems inconceivable that such documents have not been identified prior to the claim being made, or the particulars being answered. Here, provision of that information to the respondents can only increase the prospect of a conciliation bearing fruit. Withholding such information merely because the applicant is not obliged to provide it under the Rules at this stage, makes no sense, especially when it is considered that an unsuccessful applicant is always at risk of a costs order being made against it. Considerations of 'forensic advantage', may, in the long run, only prove counter productive.

39 This explains why it is usually in all of the parties' interests in the long term, that they co-operate with each other as much as possible in the preparation of the case for hearing, so as to reduce costs as far as possible. Legal practitioners, given their duty to the Court in relation to the efficient disposition of litigation such as this, also have an onus in drawing concerns such as this to their clients' attention, in order to enhance the prospects of settlement at conciliation and an overall reduction of the costs of litigation, if the matter does not settle.

40 For all of these reasons, I decline to order the further particulars pressed by the respondents and reserve on the question of costs. I will hear the parties on the question of further directions to be made, having in mind the conciliation which has been programmed for 29 November at 10am.

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