Supreme Court New South Wales

• Medium Neutral Citation: In the Matter of Olsen Infrastructure Pty Limited [2012] NSWSC 1202
• Hearing dates: 6 August 2012
• Decision date: 06 August 2012
• Jurisdiction: Equity Division - Corporations List
• Before: Brereton J

Decision

That the defendant answer the proposed interrogatories

• Catchwords: PRACTICE & PROCEDURE - interrogatories - UCPR r 22.1 - whether interrogatories are necessary - Supreme Court Practice Note SC Eq 11 - whether interrogatories should be ordered before defence filed or evidence served - factors justifying interrogatories at an early stage - where plaintiff requires information solely in the hands of the defendant to quantify its claim
• Legislation Cited: (NSW) Uniform Civil Procedure Rules 2005, r 22.1(1), r 22.1(4); Supreme Court Practice Note SC Eq 11 - Disclosure in the Equity Division
• Cases Cited: Boyle v Downs [1979] 1 NSWLR 192; Yamazaki v Mustaca [1999] NSWSC 1083
• Category: Interlocutory applications
• Parties: Mirko Lepagier (Plaintiff); Torten Olsen (First Defendant); Olsen Infrastructure Pty Limited ACN 132 641 813 (Second Defendant)
• Representation: Counsel: C N Bova (Plaintiff); S Ipp (Defendants); Solicitors: Marque Lawyers (Plaintiff); Malouf Solicitors (Defendants)
• File Number(s): 2012/213062

Judgment (ex tempore)

1 HIS HONOUR: By interlocutory process filed on 26 July 2012 the plaintiff Mirco Lepagier seeks interlocutory injunctive relief, an order that the defendant answer certain interrogatories, and directions. The claim for interlocutory injunctive relief has been settled, and in due course I will make orders to give effect to that settlement.

2 So far as interrogatories are concerned, UCPR r 22.1(1) authorises the Court "at any stage of the proceedings" to order any party to answer specified interrogatories. The limitation on this is, under r 22.1(4), that such an order is not to be made unless the Court is satisfied that it is necessary at the time it is made. The concept of necessity has been considered in many cases, and variously characterised as necessary in the interests of a fair trial, or for disposing fairly of the case [Boyle v Downs [1979] 1 NSWLR 192, 204-5 (Cross J); Yamazaki v Mustaca [1999] NSWSC 1083, [4] (Sully J)]. Thus the test is not one of absolute necessity, but of reasonable necessity in the interests of a fair trial.

3 Although Practice Note SC Eq 11 - Disclosure in the Equity Division - does not apply in terms to interrogatories, nonetheless the Court would not countenance a party using the process of interrogatories to circumvent the requirements of SC Eq 11. Under that Practice Note, disclosure will only be ordered in exceptional circumstances before the parties have served and exchanged their evidence. The reason for that is that the exchange of evidence will focus and refine the issues in dispute.

4 In the present proceedings, the plaintiff alleges, in its statement of claim filed in court by leave today, inter alia, that:

From the incorporation of Olsen Infrastructure it was agreed and/or was the common understanding of each of Mirco Lepagier, Sterling Ashbee and Torsten Olsen that the profits of Olsen Infrastructure would be shared 50% to Torsten Olsen, 25% to Mirco Lepagier and 25% to Sterling Ashbee (Common Agreement)

Particulars

Meeting between Mirco Lepagier, Sterling Ashbee and Torsten Olsen on 5 February 2012 at which the shareholding and profit splits were agreed.

Meeting between Mirco Lepagier, Sterling Ashbee and Torsten Olsen on 17 October 2012 at which the shareholding and profit splits were confirmed.

5 The interrogatories, leave to administer which is sought, are as follows:

1. In the period 8 August 2008 to 30 June 2012, for each job undertaken by Olsen Infrastructure and/or Mr Torsten Olsen paid by cash:

(a) What was the job number in Olsen Infrastructure's accounts?

(b) On what date was the job undertaken?

(c) What was the customer's name?

(d) What was the street address of the land on which the job was undertaken?

(e) Was an invoice issued to the customer?

(f) If the answer to paragraph (e) is "yes", for each invoice what was the invoice number issued to the customer?

(g) If the answer to paragraph (e) is "yes", for each invoice what was the total amount invoiced to the customer, including and excluding GST?

(h) If the answer to paragraph (e) is "yes", for each invoice were any of the invoices subsequently deleted from Olsen Infrastructure's accounts?

(i) If the answer to paragraph (h) is "yes", for each invoice on what date was the invoice deleted?

(j) On what date was the cash paid by the customer?

(k) How much cash was paid by the customer?

6 It will be seen that the interrogatories closely reflect the allegations in paragraph 14 of the statement of claim.

7 In correspondence between the parties, the first defendant, after initially denying "allegations... of improper dealings concerning certain funds allegedly received by him on behalf of the company", has subsequently admitted, in a letter from his solicitors of 9 July 2012, that sales income amounting to a total of $21,100 in the financial years 2010 and 2011, and a further $7,100 in the year 2012, has not been recorded as income in the company's books. The defendant contends, and the plaintiff disputes, that this was pursuant to an agreement between the plaintiff and the defendant. The defendant, indeed, alleges that cash payments were made to the plaintiff representing half of the amounts not recorded in the books. Nonetheless, there is to that extent an admission on the part of the defendant of funds received but not accounted for in the books of the company.

8 The defendant has submitted that it would be premature to order interrogatories at this stage, essentially because the defence to the statement of claim may render them superfluous. But while it is conceivable that the defence to paragraph 14 of the statement of claim might contain some admissions reflective of those in the letter to which I have referred, nonetheless even if paragraph 14 were admitted in full, that would not reveal the quantum of the cash payments so received, nor the extent of the conduct admitted. In those circumstances, it would not be possible for the plaintiff to value the company for the purposes of the buyout order that he seeks.

9 To my mind, the factors that make this case sufficiently exceptional to justify an order for interrogatories at this stage include (1) the defendant's at least partial admission, (2) the circumstance that, in addressing paragraph 14 of the statement of claim, the defendant will in any event have to turn his mind to the matters raised in the proposed interrogatories (3) the circumstance that, without the information sought by the proposed interrogatories, the plaintiff will not be in a position to adduce expert evidence of value, and (4) fundamentally, the circumstance that the relevant knowledge and information is solely in the hands of the defendant. There may well be other means of obtaining the material facts, but they are likely to be more difficult and time-consuming than the proposed interrogatories.

10 No objection has been taken to the form of the individual specified interrogatories. Accordingly, I propose to make an order that the defendant answer the interrogatories. I have already made an order that the proceedings continue on pleadings, and the plaintiff's statement of claim has been filed in Court today.

Orders

11 I make the following orders:

(1) By consent and upon the plaintiff by his counsel giving to the Court the usual undertaking as to damages, order (1) in the document entitled short minutes of order initialled by me dated this day and placed with the papers.

(2) Direct that the first defendant file and serve his defence and/or cross-claim by 27 August 2012.

(3) Direct that the plaintiff file and serve any defence to the cross-claim by 10 September 2012.

(4) Order that Defendant answer the interrogatories contained in the Annexure to the Plaintiff's interlocutory process, filed on 26 July 2012, by 3 September 2012.

(5) Direct that the Plaintiff not be entitled to rely on any lay or expert evidence in chief not served by 17 September 2012 without the further leave of the court.

(6) Direct that the First Defendant not be entitled to rely on any lay or expert evidence not served by 15 October 2012, without the further leave of the court.

(7) Direct that the Plaintiff not be entitled to rely on any evidence in reply that has not been served by 26 October 2012, without further leave of the Court.

(8) Adjourn the proceedings to 29 October 2012.

[Counsel addressed]

(9) Order that the Defendant pay the Plaintiff's costs of the interlocutory process filed 26 July 2012.

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Decision last updated: 08 November 2012