GIRGIS -v- POLIWKA [No 2] [2017] WASC 9 (18 January 2017)

3 The proposed interrogatories are limited to questions as to whether and how Mr Poliwka conducted due diligence as to those assets and the businesses, lessees or potential lessees associated with the assets, and conclusions formed by any due diligence process.

4 The plaintiffs allege that Mr Poliwka represented to Mr Girgis that he had carried out due diligence and that he was satisfied with his findings. This is only one representation upon which Mr Girgis alleges he relied in deciding to make the relevant investments involving the assets. There are other alleged representations and issues which are said to arise from them will no doubt be pursued regardless.

5 The plaintiffs allege that the representations were misleading or deceptive within the meaning of the Australian Consumer Law and other legislation. It is also alleged that Mr Poliwka had knowledge of certain matters relevant to the assets because he had carried out the due diligence, or (if he had not carried out the due diligence) he did not have knowledge but regardless represented he had carried out due diligence.

6 The representations are also pleaded to have been provided negligently.

7 The plaintiff also alleges a breach of a contractual obligation to conduct due diligence as to certain of the assets.

8 The defence denies the pleaded representations and does not otherwise engage on the issue of due diligence.

9 Quite clearly, whether or not due diligence was carried out is in issue in the proceedings. In my view, on the pleaded case that issue has some potential importance, albeit that other representations are also alleged and are also said to have been misleading or deceptive.

10 Whether or not due diligence was carried out and the nature of the due diligence is within the knowledge of the defendants but not the plaintiffs.

11 Witness statements have not yet been exchanged, but that is in any event the next step to be undertaken in trial preparation in this case. In the ordinary course, witness statements will elucidate the evidence as to the pleaded issues.[2]

12 In my view, the preferable course is for the parties to first exchange witness statements, a step which must be undertaken now regardless. This may alleviate the need for interrogatories at all. The plaintiffs say there is no guarantee the defendants will deal with the due diligence allegations in their witness statements and there is no guarantee they will in fact call witnesses at trial. All of that may be true, but I consider the most efficient course for the management of this matter is for the plaintiffs to receive the defendants' witness statements, review the defendants' evidence sought to be relied upon as to due diligence (to the extent it is dealt with, whether described as due diligence or otherwise) and then, if necessary, seek to rely on any particular admissions in the defendants' witness statements. Failing consent, the plaintiffs may apply for an appropriate order from the court permitting reliance on identified admissions.

13 The plaintiffs have sought an undertaking from the defendants that they will address due diligence in witness statements and permit the plaintiffs to rely on any admissions. The defendants have refused. I do not find that refusal surprising at present as the statements have yet to be prepared but, as indicated, once they are exchanged, it may be that assistance from the court can be obtained by way of appropriate orders.

14 If that course does not address the plaintiffs' concerns as to proving their case, they can then seek leave to issue interrogatories as sought by this application or as revised in light of information obtained by the witness statement process. On the face of it, there would at that point seem to be a good argument for at least some interrogatories suitably drafted and targeted to be issued and answered.

15 Accordingly, I will program the exchange of witness statements and adjourn the application for leave to administer interrogatories. I add that the plaintiffs have, it would seem, substantially edited the proposed interrogatories from those the subject of the previous application. On its face, the current minute is directed at the matters the subject of only the due diligence pleas, in circumstances where (depending on the outcome of the witness statement process) such interrogatories ultimately may be necessary to assist the plaintiffs to prove their case.[3] There may be room for further revision and objection but that can be addressed at a later date if necessary.

16 The defendants raise the issue of delay in bringing this application. Taking into account the pace of the case to date and the fact that the previous application was pursued to the Court of Appeal, I do not consider there has been undue delay such that case management principles direct the application must be dismissed or no further application brought.

17 The next issue is whether the exchange of witness statements should be sequential or concurrent.

18 The plaintiffs contend exchange should be concurrent as there are issues of credibility in play as to what was said between the parties on various occasions. The defendants contend exchange should be sequential as they are entitled to know the case against them.

19 It is true that where credibility is in issue, concurrent exchange may sometimes be appropriate.[4] For example, that may well be preferred where the factual issue between the parties is relatively confined.

20 However, this matter involves a statement of claim that runs to 112 pages and makes numerous allegations. The defence also makes positive pleas as to various communications and meetings between the parties. There is a significant risk with concurrent exchange of witness statements that they will be proverbial passing ships. This is likely to lead to many rounds of witness statements and supplementary witness statements. This is an important issue in the context of case management. I consider the witness statement process will be more efficient if the plaintiffs provide their statements first so that the defendants' witness statements address the matters raised in the plaintiffs' witness statements (to the extent the defendants intend to do so). There will be provision for reply statements.

21 It is not uncommon in misleading or deceptive conduct cases (or indeed many other cases) for what was said by respective parties to be in issue. That alone does not justify concurrent exchange.

22 I also note that at the trial, it may be that evidence in chief as to some of the meetings should be given viva voce. That issue can be addressed prior to trial.

23 I will hear the parties as to the timetable for witness statements.

[1] Girgis v Poliwka [2015] WASC 446; Girgis v Poliwka [2016] WASCA 158.

[2] Noting the defendants may have at minimum an evidential burden on some issues as to the representations: see Crowley v Worley Parsons Ltd [2017] FCA 3 [71].

[3] Ugle v State of Western Australia [2002] WASCA 117 [7], [8], [19].

[4] See Supreme Court Consolidated Practice Direction 4.5 [5].