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Motil v North (Fiji) Group Ltd [2016] FJHC 45; HBC15.2014 (2 February 2016)

IN THE HIGH COURT OF FIJI
AT LABASA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC 15 OF 2014

BETWEEN:

GARY SCOTT MOTIL and LAURIE JEAN MOTIL both of 413 Saint May Avenue Cayucos, California, America
PLAINTIFF

AND:

NORTH (FIJI) GROUP LIMITED a limited company having its registered office at Savusavu, Fiji
1st DEFENDANT

AND:

LAWRENCE DOUGLAS FISH and
BONNIE SHERLOCK FISH both of Savusavu,
Fiji, Director and Secretary respectively of
NORTH (FIJI), GROUP LIMITED and in purpura persona
2nd DEFENDANT

Appearances : Mr. Sen of Maqbool & Co for the plaintiff.
Mr. Naidu J of Qarcia Law for the defendant.

Date of Application: 1 September 2015
2 February 2016

INTERLOCUTORY JUDGEMENT

Introduction

1. The plaintiff by summons dated the 16 April 2015 applies to the Court for an order for specific discovery and thereafter for leave to serve interrogatories. The application is vigorously opposed by the defendant. Both parties filed their affidavits reflecting their positions on the application. At the hearing of the application the defendants were represented by Garcia Law. Both parties were given time to file and their submissions, the plaintiff 14 days after the hearing and the defendant 14 days thereafter. The plaintiff was to reply to the defendant's submission 7days thereafter.

2. The defendants then changed solicitors on the 14 October and the new Counsel the filed a motion seeking further time to file submissions. This application was for first call on the 19 January 2016 but there appears to be no notes on the file about any appearances on that date. I have considered the position of all the parties in arriving at the conclusions taken in this judgment.

3. A brief outline of the action and the remedies sought would help us understand whether the application has merit or whether it is a frivolous exercise.

Background

4. The action arose from a contract entered into between the plaintiffs and the 1st Defendant for the conveyance of a parcel of land situated in Vanua Levu sometimes in January 2007.

5. An alleged breach of the terms of the contract of the above conveyance was disputed between the parties and resulted in litigation in the High Court in Labasa (Civil Action No. 18 of 2009). That matter was determined by the High Court in favour of the plaintiff on the 27 August 2013 and an appeal was filed in November of that year. An application for stay was granted on the 20 May 2014. The action was against the 1st defendant only. As far as this Court is aware the appeal is yet to be heard. Further this Court is also aware that the matter in dispute between the parties relate on the consideration of the conveyance not the value added tax.

6. In paragraph 11 of this claim the plaintiffs allege that during the hearing of the proceedings of civil action No.18 of 2009 it came to light that payment of property tax referred to as value added tax paid to the defendant by the plaintiff was done fraudulently. This action is in fact a claim for the reimbursement of this money together with interest.

7. The 2nd defendant in its defence states that it is entitled to charge value added tax and that the payment of the money was not fraudulent and that there was no particulars of fraud in the claim.

The Application

8. The application is made under Order 24 rule 7 and Order 26 rule 1 of the High Court Rules. Order 24 rule 7 states:-

7.-(1) Subject to rule 8, the Court may at any time, on the application of any party to a cause or matter, make an order requiring any other party to make an affidavit stating whether any document specified or described in the application or any class of document so specified or described is, or has at any time been, in his possession, custody or power, and if not then in his possession, custody or power, when he parted with it and what has become of it.

(2) An order may be made against a party under this rule notwithstanding that he may already have made or been required to make a list of documents or affidavit under rule 2 or rule 3.

(3) An application for an order under this rule must be supported by an affidavit stating the belief of the deponent that the party from whom discovery is sought under this rule has, or at some time had, in his possession, custody or power the document, or class of document, specified or described in the application and that it relates to one or more of the matters in question in the cause or matter.

9. This rule allows a party to the proceedings to seek an order from the Court requiring the other party to the proceedings to disclose specific documents or documents described in the application. The only proviso is that the Court in the exercise of its discretion may dismiss the application, adjourn the application or refuse the application if the Court is of the opinion that such an application is not necessary. In other words the power of the Court in such an application is discretionary in nature.

10. Rule 8 states:

Discovery to be ordered only if necessary (O.24, r.8)

8. On the hearing of an application for an order under rule 3 or 7, the Court, if satisfied that discovery is not necessary, or not necessary at that stage of the cause or matter, may dismiss or, as the case may be, adjourn the application and shall in any case refuse to make such an order if and so far as it is of opinion that discovery is not necessary either for disposing fairly of the cause or matter or for saving costs.

11. The plaintiff further makes the application under Order 26 rule 1, this rule states:-

Discovery by interrogatories (O.26, r.1)

1.-(1) A party to any cause or matter may apply to the Court for an order-

(a) giving him leave to serve on any other party interrogatories relating to any matter in question between the applicant and that other party in the cause or matter, and

(b) requiring that other party to answer the interrogatories on affidavit within such period as may be specified in the order.

(2) A copy of the proposed interrogatories must be served with the summons, or the notice under Order 25, rule 7, by which the application for such leave is made.

(3) On the hearing of an application under this rule, the Court shall give leave as to such only of the interrogatories as it considers necessary either for disposing fairly of the cause or matter or for saving costs; and in deciding whether to give leave the Court shall take into account any offer made by the party to be interrogated to give particulars or to make admissions or to produce documents relating to any matter in question.

(4) A proposed interrogatory which does not relate to such a matter as is mentioned in paragraph (1) shall be disallowed notwithstanding that it might be admissible in oral cross-examination of a witness.

The Legal Principles

12. The above rules provide the framework in which interrogatories apply but the legal principles arose out of the practice of the English Court of Chancery in the early 1800's. During that period it was possible to commence a separate suit in the Chancery for the sole purpose of discovery, this was known as the Bill of Discovery Procedure". The reason behind it appears to be the belief that a party has a right to "keep his cards close to his chest and to play only such cards as he thinks appropriate". That is, that there was no obligation to disclose any material to the other party except by a separate action. (see Young, O'Leary, Hogan "Supreme Court Civil Procedure, New South Wales (2nd Edition) Butterworths 1987 at page176)

13. The procedure has since changed and the overriding philosophy is that in most proceedings commenced by writ or summons discovery through interrogatories are given so that at the trial each party is fully prepared with the knowledge of the relevant issues to be determined.

The first and most important principle is that the question in interrogatories must relate to a matter in question between the interrogating party and the one interrogated. The matter in question between the parties, are defined by the issues, the issues are those in the pleadings and the particulars supplied in the pleadings. It follows then that one cannot go beyond the issues disclosed in the pleadings and the particulars: Ring-Grip Pty Ltd v HPM Industries Pty Ltd [1971] 1 NSWLR at 800.

14. Secondly the interrogatories or questions must not only relate to the issues but it must be necessary for the determination of the matter. If they are not necessary then the Court will not order the interrogatories; (Order 26 rule 1(3)). Further a party cannot obtain verified particulars from an opponent by putting the request in an interrogatory form, a request for particulars has to come first and then supplement it with interrogatories.

15. Confusion about the purpose of interrogatories arose from the notion that it is often asked solely to destroy or damage the opponent's case, as a result most questions are directed at the opponents pleadings. The truth is that in order to destroy the opponent's case the interrogator must strengthen its own case and the only way it could do that is to interrogate about the truth or untruth of statements of fact in his own pleadings.

16. One is not allowed to interrogate on the truth or untruth of the statements in the opponents pleadings; ((see Young, O'Leary, Hogan "Supreme Court Civil Procedure, New South Wales (2nd Edition) Butterworths 1987 at page 201).

17. In other words interrogatories are not designed so the interrogator can obtain the opponents evidence or case. In West v Conway (1923) 23 SR (NSW) at 347 Street CJ in Eq said:

"A litigant is entitled to know the nature of the case which he has to meet, and he may therefore according to the authorities as to the material facts on which his opponent relies, but he is not entitled to put interrogatories in order to ascertain how his opponent is going to prove the facts on which he relies, or who the witnesses are by whom they are to be proved."

18. In Knapp v Harvey [1911] 2 KB at 732, Buckley LJ said:

"The purpose on interrogatories is not to enable a litigant to come into court knowing how his opponent is going to prove his case. He is not entitled to ask what his opponent's evidence is going to be ... Directly the conclusion is reached that the object of the interrogatories is to find out what the evidence adduced by the plaintiff in support of his case is going to be, or what witnesses he intends to call, it follows that they be supported."

19. Consonant with the above reasoning is that interrogatories should not be in the nature of cross-examination: Dunbar –v-Perc [1956] VicLawRp 19; (1956) VLR 583 neither should it be a "fishing expedition" in the sense that "..a person who has no evidence that there are a particular kind of fish in a pool desires to be at liberty to drag it for the purpose of finding out whether there are any there or not': Associated Dominions Assurance Society Pty Ltd v John Fairfax and Sons Pty Ltd (1995) 72 WN (NSW) per Owen J at 254.

20. Further Menzies J said in Mulley v Manifold (1959) 103 CLR at 345:

'...Discovery is a procedure directed towards obtaining a proper examination and determination of (the) issues – not towards assisting a party upon a fishing expedition'.

21. Similarly in Southern Pacific Hotel Services Inc.-v- Southern Pacific Hotel Services (Supreme Court of New South Wales – 10 December 1984 – Unreported) his Honour was of the opinion that a party cannot plead a case an then, by an oppressive set of interrogatories seek to ascertain whether it can be made good.

22. There appears to be some difficulty in separating a request for particulars from that of interrogatories. The correct position is that interrogatory comes after a request for particulars has been made. Interrogatories supplement the request for particulars: Gonde –v- 2KY Broadcaster Pty Ltd (1982) 2 NSWLR 221. In the above case the plaintiff's counsel administered the interrogatories in the form of particulars and these was justified by the plaintiffs upon the basis that one of the purposes of interrogatories is to seek better and further particulars. This was rejected by His Lordship Justice Hunt who stated that the authority most usually cited for that proposition was Green -v- Green [1912] NSWStRp 94; (1912) 13 SR (NSW) 126 at 132,141. In His Lordship's view the process of discovery by way of interrogatories was known only to the old Equity Court and that Court would not even lend its aid to enforce such discovery in an action at law where that action was for mere tort". And therefore statements in cases such as Green -v- Green must be considered against the background that particulars were rarely ordered in Equity. The Honourable Justice Hunt then declined to order that the particular interrogatories be answered on oath. Further that except in special circumstances it was unreasonable to oblige the party interrogated to verify particulars of his case when he did not have to verify his pleadings.

23. In this jurisdiction Justice Byrne in The Estate of Harry Janson Ho considered the difference between better particulars and interrogatories and supported the view that interrogatories are not in the nature of further and better particulars.

24. Justice Shameem in Huang Tzung-Hao & Yang Man-Hwa –v- A Team Corporation Ltd & Anor. (1999) HBC 346/98) confirmed that unrelated interrogatory as that stated in Order 26 rule 1(4), where it interrogates solely on credit is not allowed. The reason here I would be presume is that a party can always cross-examine on credit and therefore credit need not be adduced by interrogatories.

25. Similarly interrogatories which are designed specifically to obtain the name of witnesses are not allowed as these information are not material to the issues (see Day Break Pacific Limited & Anor. -v-Donaldon & Ors. (2006) NZHC 957.

26. Neither should an interrogatory seek an opinion from the person interrogated; (see Re: Security Bank Ltd (N0. 32) 1PR NZ 523). Although a person's opinion may be relevant but it is a matter for trial and an opposing opinion can be used to counter this, it is obvious that this should not be the subject of an interrogatory.

27. In summary the Court can grant an application for discovery by interrogatories if the interrogatories are necessary for disposing fairly of the cause or matter or for saving costs (Order 26 rule 1(3) and in this regard the questions asked must:-

(i) relate to a matter in question between the interrogating party and the one interrogating i.e. material facts only and issues disclosed in the pleadings and the particulars;

(ii) not be intended to obtain the opponents evidence or case (he/she is not entitled to put interrogatories in order to ascertain how his/her opponent is going to prove the facts on which he/she relies)

(iii) not be in the nature of cross-examination;

(iv) be directed towards obtaining a proper examination and determination of the issues not assisting a party upon a fishing expedition;

(v) not be used to discredit the case of one interrogated when this could be achieved by cross-examination;

(vi) used only to supplement request for particulars not a substitute for it; and

(vii) not to be used to obtain names of witnesses; and

(vii) not be used to obtain an opinion

28. The above list is not exhaustive of the considerations needed to determine whether interrogatories should be allowed.

29. If the Court allows the application to answer interrogatories, the answer has to be in a form of affidavit and is sworn by the person interrogated. The main advantage to the interrogator is that this answers being sworn, is evidence and can be tendered.

30. The applicant in this matter has also asked for an order for specific discovery under Order 24 rule 7. The same reasoning in determining discovery by interrogatories is used in a request for specific discoveries. Is it necessary or is this a fishing expedition are two of questions which is often asked.

31. In A.B. Anand (Christchurch) Ltd –v– ANZ Banking Group (1997) 43 FLR 22 Justice Fatiaki stated that the public interest that in a civil action, the Court should be possessed of all relevant information to enable it reach a decision. In Pradeep Kumar –v- National Insurance Company of Fiji (2001) HBC 148D/98L Justice Madraiwiwi allowed the application as it would portray a more accurate picture of the plaintiff's financial situation at the relevant time and is of crucial relevance to the claim and defence.

32. In Nainendra Nand -v- Judicial Services Commission & Ors. (2008) HBC 578/07S Justice Hickie ruled that discovery of documents be allowed as it is important for the determination of pleaded issues and mitigation of loss.

33. The overriding factor is that discovery would normally be allowed if it assists the Court in arriving and dispensing of justice. It is not justified however against a person who is not a party to the proceedings or to whom no reasonable cause of action has been pleaded; per Inoke J in Gulf Investments (Fiji) Pty Ltd -v- Reserve Bank of Fiji (2009) HBC 154/09. In some Jurisdictions an order can be made allowing discovery against a person not a party to the proceedings if it appears to the Court that that person may have or have had possession of a document that relate to any question in the proceedings. We have not made a firm decision on this point although it appears that the current position is as stated in Gulf Investments.

34. Discovery of specific documents is further not allowed where it is solely directed to the interpretation of discoverable documents which involve questions of mixed law and fact, allowed only if it clears litigious purpose, per Master Udit in Mohammad Alam -v- Colonial National Bank & Ors (2007) HBC 2/06.

35. Neither is discovery of documents allowed where at the conclusion of a trial the plaintiff request to produce outpatients records where the plaintiff had not properly turned his mind for the discovery of documents during the interlocutory stage of the action; per Calanchini J in Suden Mahotra -v- Dr. Rege, General Manager Hospital Services of Labasa Hospital & Ors (2010) HBC 7/06.

36. In summary an order for discovery of particular documents can only be made if the court is satisfied that the document or documents are necessary for the determination of the issues in the matter. In determining whether the discovery is necessary the Court would look at the matters considered and referred to above. The above list in my view is not exhaustive of the matters to be considered by the Court in the exercise of its discretion under the rules of discovery particularly in respect of interrogatories. Different circumstances may require different considerations depending on the nature of the matter under consideration and the necessity of disclosure.

The Questions and Determination

37. The interrogatories are:-

1. Has the defendant ever been VAT registered?

The issue of VAT appeared in the plaintiff's pleading under the paragraphs referred to as paragraph (b) on particulars "relevant to the claim". This question was answered by the defendants in the affirmative under paragraphs (4) & (6) of its defence.

This question need not be asked as the answers provided by the defendants are sufficient.

2. If so, provide a date when they got registered together with VAT registration certificate.

The second question follows from the first and now takes the form of an examination of the defendants own pleadings. The question must relate only to the facts in the plaintiffs own pleadings and further I am of the view that this question is not necessary.

Therefore questions 1 & 2 are not allowed.

3. The 3rd question is: The 2nd defendants agree that pursuant to an agreement of 28th October 2006, it sold a residential lot to the plaintiffs in a sum of US$400,000.00?

It is not necessary to ask this question as the parties had already agreed in their pleadings that a Preliminary Agreement and Memorandum of Terms of Sale was entered into between them and that a payment of $US400,000:00 was made.

4. The 4th question is: That the defendants agree that it charged a sum of US$50,000.00 on the sale of the residential lot to the plaintiffs but the said sum was not accounted as one property tax.

This question is not necessary, the pleadings refer to the payment of $US50,000:00 made by the plaintiffs to the defendant, this has been accepted by the defendants as VAT payments. The question is cross-examining the defendants as categorising the payment as other than VAT. This question is therefore not allowed.

5. The 5th question is: That the 2nd defendants agree that it received a sum of US$50,000.00 as value added tax from the plaintiffs on/about 31st January 2007.

It is not necessary to ask this question, the defendants has already acknowledged that it received the sum of $US50,000:00.

6. The 6th question is: The 2nd defendants agree that the full sum of US$450,000.00 was paid into the defendants foreign currency account at ANZ Bank Account No. 7718300.

This question need not be answered – the pleadings confirm that such a payment was made and therefore unnecessary.

7. The 7th question: The defendants agree that it did not provide the plaintiffs with an invoice detailing that it has received a sum of US$50,000.00 as value added tax.

In my view it is not necessary to ask this question, this is a matter which could be determined at trial. The plaintiff here is trying to cross-examine the defendants on whether the payment was acknowledged.

8. The 8th question is: The defendants agree that they are not entitled to charge value added tax on sale of a residential lot.

The defendants have already stated in their pleadings that they are entitled to charge VAT. The interrogatories must relate only to the plaintiffs pleadings not an examination of the defendant's pleadings.

9. The 9th question is: Do the defendants agree that the said sum of US$50,000.00 collected was to be accounted in vat returns and paid to Inland Revenue Department?

It is not necessary to ask this question, it is a matter between the defendant and the Inland Revenue Department. It does not determine the issues between the parties.

10. The 10th question is: Did the 1st defendant file vat return upon receipt of the sum of US$50,000.00 as value added tax?

This again a matter between the defendant and the Inland Revenue Department and is not relevant to the issues between the parties.

11. The 11th question is: If the answer is affirmative, when was the vat return filed accounting for the sum of US$50,000.00 received by the 1st defendants as vat on 31st January 2007.
    
12. The 12th question is: Do the defendants agree that it did not file a vat return accounting for the sum of US$50,000.00 until after filing of this writ of summons?
    
13. The 13th question is: Do the defendants agree that the sum of US$50,000.00 collected as vat was never accounted in the vat returns in the years 2006 – 2011 instead it was withdrawn from foreign currency account of the 1st defendant and converted by the defendants for their use and benefit?
    
14. The 14th question is: If the answer to question 12 is negative, can the defendants explain how the sum of US$50,000.00 was utilized by the 1st defendant after it was paid into its foreign currency account.
    

38. The defendants in my view should not answer any of the above questions, that is, from question 11 to 14. The questions are designed to discredit not only the defendants but its relationship with the Inland Revenue Department. This can be better achieved through cross-examination.

39. The plaintiff further sought an order for specific discovery of the following documents:

(i) A copy of their foreign currency account or the account in which the consideration sum was paid on 1st October 2006 and 31st January 2007 and transactions concerning the relevant period.

(ii) VAT returns of the defendant for the years 2006, 2007 and 2008.

40. The most important consideration in allowing specific discovery is whether the discovery of the documents is necessary in determining the issues between the parties and whether it will enlighten the Court in determining the issues between them. This is of course subject to certain caveats including confidential considerations and whether the documents are in the control or power of the person to whom discovery is required.

41. The first document is in my view not necessary to be disclosed. It will not enlighten the Court in determining whether such a payment was made. The defendants admits to receiving the money claimed from it but says that it is entitled to pay VAT. To ask for the document is to fish for other documents which may be disclosed and may affect other confidential information which is not the subject of these proceedings. For the above reasons I am of the view that the documents are not necessary for the determination of the matter.

42. The second document relates to VAT returns for the years 2006 to 2008. It is clear from the pleadings that a sum of money was paid to the defendants as VAT. The defendants acknowledge the payment and says that it is entitled to it. The plaintiffs dispute this entitlement, that's the crux of the matter. The Court in my view will be enlightened by the information requested and can in my view determine the issue clearly. I would therefore allow specific discovery for VAT returns but only for the statutory period for VAT returns covering the period at which the payment was made. I would presume this to be the period for the lodgement of VAT returns for the year 2007. Therefore I would allow the request for specific discovery for VAT returns for the year 2007.

Conclusion

43. I am of the view that the questions or the interrogatories are not necessary for the determination of the issues between the parties. Where it may appear necessary it takes the form of cross-examination and is therefore not allowed.

44. In respect of specific discovery I conclude that the Court will be enlightened and will determine the issues better between the parties by being provided with a copy of VAT returns for the year 2007.

Orders:

45. I therefore make the following orders:

(i) That the plaintiff application for discovery by interrogatories of questions 1 to 14 is denied;

(ii) That the plaintiff's application for specific discovery of documents referred to in paragraph (i) is also denied;

(iii) The plaintiff's application for specific discovery of documents referred to in paragraph (ii) of it application is allowed but limited to VAT returns for the year 2007 only;

(iv) That the defendants is given 28 days provide the documents referred to in paragraph (iii) above to the plaintiff;

(v) That costs be in the cause; and

(vi) The matter be adjourned for mention and for further direction on 2 March 2016.

H Robinson
Master, High Court, LABASA
2 February 2016