Maurice Hodgson Lyford & Ors v Kingsburg Pty Ltd & Ors [1998] WASC 151 (20 May 1998)

Last Updated: 21 July 1999

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CORAM : MASTER SANDERSON

HEARD : 6 MAY 1998

DELIVERED : 20 MAY 1998

FILE NO/S : CIV 1164 of 1998

BETWEEN : MAURICE HODGSON LYFORD

Plaintiff

AND

KINGSBURG PTY LTD

First Defendant

(Plaintiff by Interpleader)

BARAT ALL KHAN MUKARAM JAH

Second Defendant

(Defendant by Interpleader)

Catchwords:

Practice and procedure - Interpleader summons - Meaning of "summarily" in O 17 r6 - When summary disposal appropriate.

Representation:

Counsel:

Plaintiff : No appearance

First Defendant : Mr C D Raymond

(Plaintiff by Interpleader)

Second Defendant : Mr P J Hannan

(Defendant by Interpleader)

Solicitors:

Plaintiff : No appearance

First Defendant : Edwards Thompson

(Plaintiff by Interpleader)

Second Defendant : Kitto & Kitto

(Defendant by Interpleader)

Case(s) referred to in judgment(s):

Case(s) also cited:

Davies & Davies v Nyland & O'Neil (1974) 10 SASR 76

In re Tarn [1893] 2 Ch 280

Library Number : 980263

MASTER SANDERSON:

This matter relates to an interpleader summons. On 17 February 1998 Maurice Hodgson Lyford in his capacity as Liquidator of Murchison House Pastoral Company (In Liquidation) Pty Ltd (Murchison House) sought interpleader relief against Kingsburg Pty Ltd, described in the summons as the first defendant and Barat All Khan Mukaram Jah described as the second defendant. The matter first came on for hearing on 27 February 1998. On that date I ordered, inter alia, that the sum of $754,043.15 being the proceeds of sale of assets of Murchison House and which were described as the "disputed funds", be paid into court. I further ordered that the first and second defendants appear and state the nature of their respective cases. For the purposes of that action, Kingsburg Pty Ltd was described as the plaintiff and Barat All Khan Mukaram Jah (Jah) was described as the defendant. I will use that description of the parties.

There were various appointments set and the parties from time to time made submissions about how this matter should proceed. It is unnecessary for me to go into these procedural steps in any detail. It will suffice if I say I ordered that pleadings be filed and that each of the parties support their case by affidavit evidence. The matter was then adjourned until 8 May 1998. At that time, counsel for the plaintiff argued that this matter should be dealt with summarily under the provisions of O 17 r6. That order reads as follows:

"The Court may, with the consent of both claimants or on the request of any claimant, or if the applicant is the Sheriff, dispose of the merits of the claims and decide the same in a summary manner."

It was the plaintiff's submission that this matter could be disposed of on the basis of affidavit evidence without the need for any interlocutory steps or any cross-examination of the deponents on their affidavits and, consequently, without the need for the matter to go off to trial. To support the plaintiff's contention, counsel not only addressed the question of how O 17 r6 should be properly interpreted but also examined in some detail the affidavit material. The reference to the evidence was to illustrate the submission that there was no merit in the defendant's defence.

The defendant took an altogether different view. Counsel for the defendant submitted that, properly interpreted, r6 allowed a Master to deal with the interpleader summons without a full trial but still reserving to the parties the right to obtain discovery and to cross-examine deponents upon their affidavits. Although counsel for the defendant went into some detail as to the facts of the matter, he did so reluctantly and to preserve his client's position. It was always the defendant's case that judgment given after an examination of the affidavits without the defendant having the benefit of discovery and the benefit of cross-examination of the plaintiff's witnesses was inappropriate.

In Seaman: Civil Procedure, Western Australia at para 16.6.1 the learned author puts the position as follows:

"The summary disposal of the interpleader proceedings is not appropriate if the matter in issue is of considerable value and difficult points of law arise depending on quite precise facts, and this is so even if the parties consent: Fredericks and Pelhams Timber Buildings v Wilkins [1971] 1 WLR 1197 at 1202, 1204, 1205."

Consideration of the decision in Fredericks and Pelhams Timber Buildings v Wilkins is of some assistance. The headnote (taken from the All England Report) puts the position as follows:

"Notwithstanding that O 17 r5(2) [the direct equivalent of our O 17 r6] permits the precise formulation of an issue and pleadings to be dispensed with in a summary determination, it does not entitle a Master to deal 'out of hand' with a question which requires to be tried or otherwise than by a hearing conducted in the same way as the normal trial of an issue, except perhaps in quite exceptional circumstances."

The use of the expression "out of hand" would appear to have been drawn from the decision of the Court of Appeal in PBJ Davis Manufacturing Co Ltd v Fahn [1967] 2 All ER 1274. The facts of the case can be conveniently summarised by quoting from the headnote:

"On the Sheriff seizing furniture and goods in the debtor's matrimonial home, the debtor's wife claimed that the furniture and goods belonged to her and were the subject of hire purchase agreements in her name. The execution creditor did not admit her claim and the Sheriff issued an interpleader summons. At the hearing of the summons the execution creditor asked for an appointment at which evidence could be taken orally. The Master, however, elected to try the matter straight away, in purported pursuance of the power summarily to determine the question conferred by O 17 r5(2)."

An appeal against this decision was allowed. Lord Denning (at 1276) put the position as follows:

"But 'summarily' does not mean that he can determine it straight away out of hand. It means only that he can determine it himself without directing an issue. The usual practice of the Master when he 'summarily' determines the question, is to give a special appointment at which evidence can be taken orally and witnesses can be cross-examined; and at which the relevant documents can be produced."

Interpleader is dealt with in vol 25 of Halsbury's Laws of England (4th ed). At para 1029 the learned authors, dealing with the English O 17 r5(2), put the position as follows:

"An order under this rule cannot be made against a claimant who actually appears and who makes out some sort of claim, however nebulous; likewise such an order should not be made in a claimant's favour without giving the execution creditor a chance to test the claimant's evidence by cross-examination and there should be discovery of documents in order to test whether the claim in good."

In support of these propositions the learned authors refer to PBJ Davis Manufacturing Company Ltd v Fahn and to the case of JRP Plastics v Gordon Rossall Plastics Ltd [1950] 1 All ER 241. This case was not directly on point. However, it does appear as though the learned authors have picked up on the decision of Justice Lynskey who, in the course of his decision, had this to say (at 245):

"In this case the claimants did appear. They did state the nature of their claim, however nebulous that claim might appear to be from the point of view of the lack of supporting material, and, in those circumstances, they were not in default in carrying out any orders made by the Master. No such default has been proved before us. In those circumstances, the Master in this case, in my view, had no power under the rules to make the order which he in fact did make."

The learned authors also go on to consider further the practice on summary determination. At para 1041 they put the position as follows:

"Summary determination is a procedure adopted in straightforward cases, particularly where expedition is desirable and the claimant's affidavit sufficiently defines the dispute. It avoids the necessity for an issue to be stated and tried. It is not a procedure which permits the Master to deal with matters out of hand."

It is apparent, however, that it is not always the case that a matter, to be dealt with summarily, will be adjourned for what is tantamount to a full trial of the action. The Supreme Court Practice 1997, vol 1, Part 1 at 268, puts the position as follows:

"An adjournment for vive voce evidence is not necessary if the facts appear clearly from documents before the Master."

In support of that proposition reference is made to Koppelmann v Emmerson, Shield Factors Ltd, an unreported decision of the English Court of Appeal. Neither counsel were able to provide me with a copy of that decision. However, counsel for the plaintiff also referred to Bank of The Commonwealth v Banco de Bilbao (1971) 115 Sol J 426. This was an appeal from a decision of Donaldson J who had dealt with interpleader proceedings summarily. It must be said that the report is of limited value. Relevantly, the report reads as follows:

"Lord Denning MR said that in interpleader proceedings it was open to the court under O 17 r5(2) to determine the matter in dispute summarily at the request of either party. That applied even though the amount in dispute might be of great value. Although PJB Davis Manufacturing Co Ltd v Fahn intimated that there should be discovery or cross-examination it was open to the court if it thought there was nothing in the particular claimant's claim to decide it straight away out of hand."

Finally, counsel for the defendant referred to a number of judicial dictionaries for the meaning of the term "summarily". Perhaps of most assistance is Words and Phrases Legally Defined (3rd ed), vol 4 at 259 where, under the heading "Summary Proceedings", there appears the following:

" 'Summary' when applied to proceedings, is a descriptive term without restriction to special tribunals and not in ordinary acceptation exclusively confined to Courts of Petty Sessions. It has been held to apply, for instance, to certain proceedings in County Courts and Courts Martial: and application for summary judgment is a well known special mode of procedure in the Supreme Court itself. The term is in law used as a reference to a mode of dealing with certain matters expeditiously and without ordinary incidental formalities; in fact, one of the earliest references to the term there cited is '1798, Depriving the Subject of Trial by Jury': see Dowson v McGrath (1956) 58 WALR 27 at 32 per Dwyer CJ.

In my view it is apparent from all of these authorities, not all of them consistent, that proceedings are to be disposed of summarily when there is no real argument between the parties and when the evidence clearly establishes the right and entitlement of one of the parties. In its modern usage it does not seem to me appropriate to apply the term "summarily" to disposal of a matter by a Master after hearing vive voce evidence and after allowing for the full interlocutory process. Given that Masters, in this State at least, are members of the Court it would seem to me that they deal with matters summarily when a decision is made without calling oral evidence, without cross-examination and without all other interlocutory proceedings. The alternative is that matters go off to trial before a Judge.

Determination of a question summarily is a final determination of the rights of the parties. It would therefore take a very clear case indeed before judgment could be entered. After all, dealing with the matter summarily, on the definition that I have proposed, would deprive both parties of discovery and would also deprive them of the opportunity to test the credit of various deponents to affidavits by way of cross-examination. But I think it states the position too widely to say that, if a party appears, no matter how nebulous its claim, it is entitled to a full hearing. It seems to me that a party must at least demonstrate that it has an argument or that there is a real prospect if interlocutory steps are taken some material may come to light which would assist the parties' case.

In this context, during the course of argument, there was some discussion as to how, if at all, summary proceedings under O 17 r6 relate to an application for summary judgment either under O 14 or O 16. Both counsel submitted, in my view correctly, that there was no similarity at all between dealing with a matter summarily and an application for summary judgment. It is apparent from all the authorities that if an interpleader summons is determined summarily, then final judgment is entered for one or other of the parties. On a summary judgment application an applicant succeeds or fails. In the event that the application is unsuccessful, then the action goes off for trial. It does not follow that the applicant's rights have been finally determined. It is not appropriate then to apply the principles applicable to summary judgment in determining whether or not a matter should be dealt with summarily. The question is whether or not the matter can be disposed of promptly because there is, in truth, no real argument between the parties. That is a different approach to what is proper when dealing with a summary judgment application.

In this case it is appropriate to begin with the pleadings. The plaintiff has filed a statement of claim, the defendant has filed a defence and counterclaim and the plaintiff has filed a reply and defence to counterclaim. By paras 1 and 2 of the statement of claim the plaintiff pleads its incorporation and the incorporation of Murchison House. By para 3 it pleads the execution by Murchison House of a deed of debenture securing moneys advanced to Murchison House by the plaintiff. Paragraph 4 pleads that Murchison House was at all material times the proprietor of a property known as "Murchison House Farm" and that this property was subject to the pleaded charge. Paragraph 5 pleads that Murchison House Farm was sold and that Lyford, as Liquidator of Murchison House, came into funds the subject of this dispute. It is then said that, pursuant to the charge, these funds are the property of the plaintiff.

The defendant admits Murchison House was the proprietor of Murchison House Farm and also admits the debenture. It is then pleaded that from time to time the defendant expended his personal funds upgrading Murchison House Farm. Without going into details, it is claimed that the defendant has an equitable lien over the funds as a consequence of his personal expenditure in upgrading Murchison House Farm. It is further pleaded, in the alternative, that the funds provided to Murchison House by the plaintiff were in fact derived from the sale of assets belonging to the defendant. As a consequence of that, it is said, the defendant is entitled to the fund. The counterclaim does no more than repeat the defence and seek payment of the fund to the defendant.

The reply takes issue with the defence. Essentially, it denies that the defendant provided any funds for upgrading the Murchison House Farm but says, rather, that the funds provided were provided by companies associated with the defendant. There then follows a quite complex pleading, the upshot of which is that the plaintiff denies that funds he provided to Murchison House were in any way derived from the assets of the defendant. The defence to the counterclaim goes into some detail in refuting the claims made by the defendant. Once again, it will be sufficient if I say that the plaintiff denies all aspects of the defendant's claim.

Having reviewed these pleadings, it seems to me that they raise complex issues of fact which it is not appropriate to deal with on a summary basis. Counsel for the plaintiff suggested that although the pleadings appeared complex at first glance, in fact the evidence disclosed that there was nothing raised by the defendant against the plaintiff's claim. I will deal with the evidence below. But, so far as the pleadings are concerned, it seems to me that it is apparent, from their face, that they raise matters of some complexity. Further, neither the statement of claim nor the defence suggest a hopeless case with no merit. Neither document would be liable to be struck out under applicable pleading principles.

In support of the plaintiff's claim there were filed two affidavits. The affidavit of David Eric William Nuttall sworn 27 February 1998 runs to 319 pages. The affidavit of the plaintiff sworn 5 March 1998 runs to 536 pages. The shear size of these affidavits is a factor against dealing with this matter summarily. Counsel for the plaintiff responded by suggesting that the affidavit material represented a "belt and braces" approach. He said that the material was put before the court in anticipation of arguments that might be raised by the defendant. Counsel suggested the fact that it was not necessary for the plaintiff to file any affidavits in reply was indicative of the success of that approach. Further, counsel suggested that most of the affidavits were taken up with annexures, these being documents which, in the context of the dispute between the parties, did not fall for consideration. The defendants filed two affidavits. The first was an affidavit by David Michael sworn 28 April 1998. Mr Michael says he is the personal assistant to the defendant. He then says that he has been advised by the defendant that the matters of fact pleaded in the defence are true. He then goes on to annexe certain documents suggesting that the plaintiff could not have provided funds from his own account to Murchison House. It is not necessary for me to go into detail as to these documents.

There was also filed on behalf of the defendant an affidavit of Richard Vincent Howell sworn 29 April 1998. Mr Howell says that he was, at all material times, a director of Murchison House. He deals with a number of matters raised by the defence and says, at paras 12 and 13 of his affidavit, the following:

"12. I was responsible for the day-to-day payment of Murchison's bills and expenses. I certainly do not recall ever receiving much less paying an invoice in respect of the construction of an air strip. To the best of my recollection none of the other items in the schedule which is annexure 'RVH 2' to this affidavit were billed to Murchison House or paid by that company.

13. I verily believe that the defendant by interpleader paid for the improvements to which I have referred from his own personal funds."

It is open to question whether para 13 is admissible evidence. But even leaving that aside there is some evidentiary support for the defendant's proposition that he personally paid for improvements to Murchison House Farm. This is an issue of fact which, in my opinion, can only be explored at trial. It is not the only issue of fact which is live between the parties. It is also not only Mr Howell's affidavit which supports the defendant's position. There is a statutory declaration by the defendant in which he claims he personally provided funds to upgrade Murchison House Farm: see affidavit of Lyford sworn 16 February 1998 page 9. Although I appreciate the strength of the plaintiff's case and although the evidence provided by the defendant is not entirely convincing, I am not satisfied that I could properly resolve this matter on the papers and deny the defendant the right to the usual interlocutory processes and the right to cross-examine all relevant witnesses.

There is one final matter to which I should refer. Paragraph 15 of the affidavit of Mr Nuttall was the subject of a dispute between the parties. The defendant objected to this paragraph being read into evidence on the basis that it related to privileged conversations. The plaintiff maintained that para 15 was important to establish that the defendant was acting with an improper motive. In the event, I have not found it necessary to consider the matters raised by para 15. In my view the nature of the dispute, both as to the facts and as to the issues of law involved, is sufficiently complex to warrant this matter going to trial. It will be for the trial Judge to determine what, if any, motives of the plaintiff are relevant to the dispute between the parties.

For these reasons I would decline to deal with the matter summarily under O 17 r6. I will hear the parties as to how the action should proceed from this point onwards and as to the question of costs of the application to date.