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- Unreported Judgment
Lee v Klean King Pty Ltd QDC 103
DISTRICT COURT OF QUEENSLAND
Lee v Klean King Pty Ltd  QDC 103
JONG KAP LEE
KLEAN KING PTY LTD (ACN 106 068 642)
District Court, Brisbane
28 June 2019
24 June 2019
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – DISCOVERY OF DOCUMENTS – APPLICATION AND ORDER – where documents already disclosed were incomplete and in an inconvenient form – where the applicant sought further disclosure – where further disclosure provided by respondent after filing of application – whether order should be made for the disclosure of any further documents – whether affidavit required in relation to documents no longer in possession of respondent – whether indemnity costs order appropriate
R Ivessa for the plaintiff/applicant
M Black for the respondent/defendant
Brighthill Lawyers for the plaintiff/applicant
P.M. Lee & Co Lawyers for the respondent/defendant
- The applicant/plaintiff by its application sought further disclosure on the basis that the disclosure given to date by the respondent/defendant was incomplete and in an inconvenient form.
- By the date of the hearing of the application, the documents the subject of the application had been largely disclosed with the exception of certain documents which it was said were not in the possession or control of the defendant.
- The plaintiff sought formal orders for the disclosure of the documents and an order, that to the extent the documents were not in the possession or control of the defendant, the defendant file an affidavit in accordance with r 223(2) of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR).
- The defendant disputes the need for the court to make any orders given that all the documents in its possession and control have been disclosed and explanations provided for any non-disclosure.
- The defendant says no order for costs should be made. The plaintiff seeks its costs on an indemnity basis.
Issues in dispute
- The plaintiff was a director of the defendant and worked for the defendant. The parties at various times loaned money to each other.
- The plaintiff alleged in the period between 2007 to 2013 he loaned $553,765 to the defendant in 13 separate transactions. Between 2009 and 2013, the plaintiff alleges the defendant only repaid $250,000 of the plaintiff’s loans in six transactions.
- The defendant admits loans totalling $424,000 were made and denies the making of other loans. The defendant alleges the plaintiff’s loans were entirely repaid between 2009 and 2013.
- By way of counterclaim, the defendant alleges further amounts totalling $205,806 were loaned by the defendant to the plaintiff between 2009 and 2013 which remain unpaid and are owing by the plaintiff to the defendant. In reply, the plaintiff says a further $38,000 was repaid but says otherwise the amounts were either not paid by the defendant to the plaintiff, were repaid by the plaintiff to the defendant or were wages and other payments as consideration for services rendered.
- The issue in the proceedings will be which payments were in fact made and how those payments should be characterised.
- On 17 May 2019, in making disclosure the defendant provided copies of extracts of two electronically maintained documents, being:
- Cash Fund Management (CFM) records for the period May to December 2010, January to September 2011 and July to December 2012 (defendant’s first CFM version); and
- Electronic ledger extract for a few days across an unknown period.
- Both the documents are said to be the day to day financial cash and electronic records of the defendant and purport to record financial transactions between the parties.
- The plaintiff had in his possession from when he was a director of the defendant a version of the CFM records which differed to the version disclosed as the defendant’s first CFM version.
- As a result, by letter from the plaintiff’s solicitor dated 27 May 2019 the plaintiff requested the defendant provide the electronic image of the CFM records together with the Electronic Ledger (and metadata for both) in order to clarify the veracity of the records already disclosed.
- In response, by email dated 31 May 2019, by way of a r 445 letter, the defendant refused to provide the Electronic Ledger and metadata but agreed to provide for the inspection of the CFM records (original and successive versions).
- The defendant refused to produce the Electronic Ledger on the grounds that it was not directly relevant, and it was further said that at best it was relevant to credit only, it contained extensive and highly confidential commercial information that is of no relevance, it is likely to be time consuming, costly and inconvenient to be produced and the plaintiff is unlikely to be prejudiced by its non production.
- In terms of the CFM records, the plaintiff’s solicitor sent an email on 13 June 2019 seeking clarification as to whether the hard copy of the CFM records was to be produced or whether the electronic version would be available for inspection.
- That email was not responded to until 17 June 2019 at 11:52am. The email indicated that a hard copy would be provided and the electronic version would be available for inspection.
- It would seem that by the time of the sending of that email, the making of the application for further and better disclosure had already been commenced with the application and supporting affidavit being served by email on 17 June 2019 at 3:52pm.
- At the hearing, the court was told by counsel that at some time between the email of 13 June 2019 and the email of 17 June 2019, the solicitor for the plaintiff had told the solicitor for the defendant that the plaintiff’s CFM version and the defendant’s first CFM version were different.
- In any event, the existence of the different versions would have been apparent to the defendant from the documents disclosed by the plaintiff which were attached to the email sent by the plaintiff’s solicitor at 4:33pm on 17 June 2019 attaching the plaintiff’s list of documents and the documents referred to therein. At that time, the plaintiff had also disclosed copies of the Electronic Ledger in excel format for 2009 to 2013 which were in his possession.
- The plaintiff’s solicitor attended inspection of the electronic version of the CFM records on 19 June 2019. At that time, the defendant disclosed a different version of the CFM records (the Defendant’s second CFM version) and disclosed CFM records for additional periods not previously disclosed (October to December 2011, January to June 2012 and January to March 2013). The Defendant’s second CFM version was materially the same as the plaintiff’s CFM version.
- On 21 June 2019 by email at 12.49pm, the solicitors for the defendant sent to the plaintiffs further documents. The email enclosed a copy of the Electronic Ledgers in excel spreadsheet format for the period 2009 to 2013 together with an amended list of documents. In that email, the defendant’s solicitors referred to having already made available an electronic copy of the CFM records, which it said had come from the company accountant. It was said that some of the descriptions in the version were different to the original version supplied.
- On behalf of the plaintiff it was submitted that in the defendant’s first CFM version the nature of the payments had been altered which obscured the nature of the payments. It is not disputed the two versions produced by the defendant are different.
- Following receipt of the documents, by email to the defendant’s solicitor at 3.50pm, the plaintiff’s solicitor acknowledged that the disclosure largely obviates the need to continue with its application and made an offer that the plaintiff would only press for copies of the CFM records for 2008 to April 2010 and the Electronic Ledger from 2007 to December 2008. There was no reference in the letter to any continuing request for the provision of the metadata relating to those documents. It was said that to the extent the defendant does not have in its possession or control the documents requested, the defendant should file and serve an affidavit within seven days explaining that the documents do not exist and why the documents are unavailable for disclosure. It was said that costs would be sought on a standard basis.
- The letter of offer from the plaintiff’s solicitors was left open for acceptance until 8:30am on Monday, 24 June, the date of the hearing of the application. If the offer is not accepted, it was said the letter would be put before the court on the question of costs (including costs on an indemnity basis) in accordance with the principles in the case of Calderbank v Calderbank.
- The defendant responded by letter sent by email at 5.24pm with an offer for the application to be dismissed with no order as to costs. The offer said that the defendant was prepared to provide an affidavit regarding the nonexistence of the Electronic Ledgers for the years 2007 and 2008.
- Further affidavits were sworn on Friday by the defendant’s solicitor and by a director of the defendant and filed by leave at the hearing. In the affidavits, it was said the defendant:
- (a)does not have any CFM records earlier than May 2010; and
- (b)does not any longer have Electronic Ledger excel files for 2007 and 2008.
- No more detailed explanation was offered either in the affidavits or the letter of 21 June 2019 or in oral submissions.
- In its letter and in oral submissions, the defendant continued to assert that the full Electronic Ledgers were not relevant and not required to be disclosed.
- At the hearing, consistent with its correspondence with the defendant and in view of the disclosure made, the plaintiff did not press for disclosure of the metadata.
- Clearly the documents requested in the application by the plaintiff are directly relevant to the determination of the matters in issue. It is wholy unsatisfactory that it be left to the defendant to choose what parts of the electrionic records are to be disclosed; particularly given that in relation to some of the electronic records at least different versions are maintained by the defendant.
- The defendant should make disclosure of the documents as detailed in the plaintiff’s application. Given the disclosure which has now been made, some as belatedly as Friday 21 June 2019, the making of orders in terms of the application are no longer required. Orders will be made for the disclosure of the more limited category of documents which have not been disclosed by the defendant, with the exception of the metadata the disclosure of which is not pressed for by the plaintiff.
- In terms of the documents to be disclosed, in affidavits filed by leave at the hearing, it was stated the documents are non-existent. The explanations offered by the defendant as to the reasons for the non-existence of some of the records is deficient. For example, it is not explained what happened to the entries said to have been made by employees in 2007, why they cannot not be retrieved and what efforts have been made to retrieve them. In those circumstances, it is appropriate that an order be made for the filing of an affidavit by the defendant explaining the documents that do not exist and why the documents are unavailable for disclosure.
- At the hearing of the application, the plaintiff pressed for his costs of the application on an indemnity basis. In the submissions, reliance was placed on the failure of the defendant to disclose only some of the records without any explanation, its disclosure of only a version of the CFM records which was helpful to its case and to having only disclosed the true version after the application for disclosure was served. In addition, reliance was placed on the letter of offer sent on the afternoon of 21 June 2019.
- Another factor of relevance, though not relied upon at the hearing, was the defendant’s continuing refusal even at the hearing to acknowledge that the documents should have been disclosed when it purported to make disclosure over a month ago.
- The letter of offer from the plaintiff’s solicitor’s did not involve a compromise of the orders it would now be entitled to receive, nor did it involve any compromise as to costs.
- None of the three matters referred to in the submissions nor the additional matter to which I have referred are matters which would ordinarily justify an order for indemnity costs within the principles discussed in cases such as Colgate-Pamolive & Anor v Cussons Pty Ltd.
- In the cirucmstances, the appropriate order is for the defendant to pay the plaintiff’s costs of and incidental to the application on a standard basis.
- Accordingly, orders will be made in the following terms:
- Pursuant to r 211 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) the defendant, within 7 days of such documents coming into the defendant’s possession, disclose to the plaintiff electronic copies of the original and successive versions of:
- (i)The Cash Fund Management document from July 2007 to April 2010; and
- (ii)The Electronic Ledger from July 2007 to December 2008;
- To the extent that the defendant does not have in its possession or control the documents referred to in order 1 above, the defendant file and serve an affidavit stating, pursuant to r 223(2) of the UCPR, the circumstances in which any such documents ceased to exist or passed out of the possession or control of the defendant within 7 days from the making of this order.
- The defendant pay the plaintiff’s costs of and incidental to this application on a standard basis.
- Published Case Name:
Jong Kap Lee v Klean King Pty Ltd
- Shortened Case Name:
Lee v Klean King Pty Ltd
 QDC 103
28 Jun 2019