[*37] 1985 June 27
(NIKITAS, P.D.C.)
IN THE DISTRICT COURT OF NICOSIA
PIaintiffs,
v.
A. Kriticos & Sons Ltd.,
Defendants.
(Action No. 4241/83) .
Civil Procedure - Discovery of documents - The Civil Procedure Rules, Order 28 - The two criteria applicable in order to ascertain whether any document must be discovered - Discovery in relation to similar cases - Kennedy v. Dodson (1895) 1 Ch. 394 adopted.
Civil Procedure - Discovery, inspection, production of documents - Application for, by means of the same application - The claim in respect of production is premature - The Civil Procedure Rules, Order 28.
Civil Procedure - Discovery of documents - Power to determine any issue or question in the cause of matter before discovery - The Civil Procedure Rules, Order 24(1).
D. Ioannides - For the Defendants-Applicants.
N. Pelides - For the Plaintiffs-Respondents.
RULING
The following ruling was delivered by:
NIKITAS, P.D.C.:- By this motion the defendants in the action ask for an order against the plaintiffs, an [*38] Austrian company, for discovery and inspection of documents upon oath. It is founded on the Civil Procedure Rules, 0.28, rr. 1 and 4,and the order sought is in these terms:
(A) All cash books and ledgers with supporting vouchers showing all payments and receipts of the company’s transactions from 1.7.82 to-date; and
(B) Extract of statement of account and/or accounts of Panayiotis Kontoulis in connection with transactions between the plaintiff company and A. Kriticos and Sons Ltd. (the defendants in the action), E. Philippou Ltd., N. G. Marangos and Sons Ltd. and Varnavas Nicolaou and Sons Ltd., from 1.1.82 to-date.
It is, I think, necessary before coming to the vital aspects of the matter to state, albeit briefly, the nature of the dispute as disclosed in the pleadings. The plaintiffs’ claim is for US$103,478.11 by virtue of a bill of exchange dated the 26.1.83 signed by the defendants and payable to the plaintiffs on 17.6.83 which, however, had been dishonoured. The plaintiffs also claim 12% interest on that amount by way of damages.
A defence was put in on 23.1.84 by which the defendant, a local company, set up an oral agreement (denied by the plaintiffs) said to have been made in [*39] September 1982 with one Panayiotis Kontoulis, who was allegedly acting as plaintiff’s agent, to the effect that the latter undertook and agreed to consign timber to defendants for resale to countries in the Middle East on certain terms which are set out in the defence. It is alleged that defendants refused to take delivery of timber shipped for them by plaintiffs in purported execution of the oral agreement made through Mr. Kontoulis and on the terms appearing in the proforma invoice supplied by plaintiffs, the main ground for rejecting the goods being that there was short delivery of the quantity ordered by 42%. The defendants admit signing the bill, subject matter of the action, but contend that they were induced to do so by the fraud of the plaintiffs and further or in the alternative that they accepted the bill for the accommodation of the plaintiffs. Consequentially they raise a counterclaim for damages exceeding US$54,000. By their reply the plaintiffs not only deny that any oral agreement was ever made with the said Kontoulis, but assert that at the crucial time he had in fact negotiated the sale on behalf of the defendants as their agent and had signed in due course the bill of lading in that capacity to the effect that the goods were inspected and found to comply with the terms of the proforma invoice.
In his written address counsel for the defendants submitted that the documents required to be discovered satisfy the well established test in Compagnie Financiére [*40] v. Peruvian Guano Co. (1882) 11 Q.B.D. 62, in that such documents may materially assist the defendants to advance their case or damage that of their opponents. As the defence and counterclaim, counsel added, are founded on the alleged agency, which is in question in the action, discovery of the accounts may reveal entries concerning commission and expenses paid to Mr. Kontoulis in respect of his services thus enabling the Court to decide the case fairly.
In his long address counsel for plaintiffs referred extensively to the principles regulating discovery and put forward a number of reasons why the application should be refused. He contended that defendants have wrongly invoked Ord. 28, r. 4, for it only empowers the Court to order production upon oath, but not inspection which is covered by rr. 5 and 6 of the same order. Secondly, it was said that the question of agency has to be resolved first before an order for discovery may be made. While on this topic I may well say that under R.S.C. Ord. 24, r. 4(1), where it appears to the Court hearing the application for an order for discovery that any issue or question in the cause or matter should be determined before discovery is made by the parties an order for the determination of that issue or question may be made. However, no such power is given by ord. 28 of the Civil Procedure Rules and the Court cannot, therefore, proprio motu follow the course suggested. The case of the party [*41] seeking discovery may just have to be assumed to be true. (See Bray “Principles and Practice of Discovery”, page 18, quoted with approval in the Annual Practice 1959, page 702).
Thirdly, it was urged on behalf of plaintiffs that the discovery desired in this case would enable defendants to fish for witnesses contrary to established principle. Fourthly, it would have the effect of disrupting plaintiffs’ business activities besides burdening them with huge expense. And lastly, no possible trading link has been established between plaintiffs and the third parties named in the application that may justify granting the remedy. The application, counsel concluded, is merely a fishing expedition and an attempt to obtain information as to credit.
Discovery as a remedy in equity has a long history. It was evolved in the courts of equity by the end of the 18th century as a method of proof, comprising discovery of deeds and documents and discovery of facts, the modern equivalent of which is the delivery of interrogatories. The authority of a court in Cyprus to require litigants to disclose to each other documents relevant to the proceedings or to obtain production and inspection of all but certain protected documents stems from the provisions of Ord.28 of the Civil Procedure Rules. It will be observed, however, [*42] that unlike the English rules the Civil Procedure Rules do not contain any provision relating to the procedure of administering interrogatories.
The two criteria applicable for ascertaining whether any document must be discovered are (a) whether it is relevant to any question in issue between the parties, and (b) whether it is or has been in the possession, custody or power of the party making discovery. ord. 28, r.1 envisages discovery of documents “relating to any matter in question” in the action. As the Supreme Court Practice 1982, p. 447, explains these words:
“.... are not limited to documents which would be admissible in evidence (Compagnie Financiere v. Peruvian Guano Co. (1882) 11 Q.B.D. 62, per Esher M.R. at 63; O’Rourke v. Darbishire (1920) A.C. 581 at 630), nor to those which would prove or disprove any matter in question: any document which, it is reasonable to suppose, ‘contains information which may enable the party (applying for discovery) either to advance his own case or damage that of his adversary, if it is a document which may fairly lead him to a train of inquiry which may have either of these two consequences’ must be disclosed (Compagnie Financiere, etc. supra, at 63)”. [*43]
The procedure for discovery and inspection are closely inter-related and the normal sequence is (a) disclosure of the existence of relevant documents, (b) inspection of those documents excepting privileged documents, and (c) production of non-exempted documents for use by the parties in the conduct of their case. An illustration of the application of ord. 28, r.4, corresponding to the former R.S.C. ord. 31, r.4, is to be found in Speyside Estate v. Wraymond Freeman (1949) 2 ALL E.R. 796. To quote the White Book 1959 again (page 718):
“No order for production of a document can be made against a party unless he has directly or indirectly admitted both possession and relevancy. See Bray’s Digest, Arts. 31 and 32”.
There is not the case here and in my judgment this part of the claim relating to production is premature at the present stage and must be dismissed.
Coming now to the general claim for the discovery of all the plaintiffs’ transactions covering the period mentioned in para. (A) of the application it has not been shown nor am I satisfied that they are in any way relevant to the matters in dispute. The application in this connection is quite unwarranted and if I were to accede to it it would only mean a wasteful expenditure of costs. [*44]
Likewise the claim for discovery of any similar transactions with the companies named in para. (B) of the application must also be refused. In my opinion such evidence, if it exists, will have no probative value and its discovery, therefore, is unnecessary.
The leading case on discovery in relation to similar cases is Kennedy v. Dodson (1895) 1 Ch. 394, which was followed by Walton J. in Ballantine v. Dixon (1974) 2 ALL E.R. 503, a case cited to me by counsel for the plaintiffs. In Kennedy v. Dodson interrogatories by the plaintiff claiming partnership in a particular purchase of a piece of land as to partnership of other purchases of land were held to be irrelevant and oppressive. The matter was put by Lord Herschell, L.C., as follows:
“Suppose the Defendant says, ‘I did enter into such and such transactions at such and such dates on such and such terms’, would that be relevant to the issue, what were the terms on which this property was purchased? Could the truth of his statement be tried in this action? Could the plaintiff say, ‘I will shew you that Carswell and the Defendant purchased twenty properties on certain terms before 1873, and that they purchased ten properties on the same terms afterwards’? Would the Judge be bound to try the question [*45] on what terms all these properties were purchased for the purpose of determining the terms upon which the property involved in this action was purchased? No doubt there are cases in which evidence of what happened in one transaction may be relevant to the question what happened in another. I do not dispute that general proposition. In the present case the suggestion is this, that if it can be proved that in a number of prior transactions Carswell and the Defendant had been purchasing land on partnership terms, that would render it probable that such was the nature of this transaction also. But this is not relevant evidence. Cases of this description are not determined upon probabilities, but upon evidence of what happened upon the particular occasion”.
See also Merchants’ and Manufacturers’ Insurance Co. Ltd. v. Davies (1937) 2 ALL E.R. 767.
Finally, I will deal with the part of the application praying for discovery of any account of Mr. Panayiotis Kontoulis in connection with transactions between the parties. In the light of the principles to which I have referred, I think that this part of the claim comes within the proper sphere of discovery and to that extent, therefore, I make an order for discovery covering [*46] the period between 1.1.82 to 12.10.84, the date when the first application for discovery (subsequently withdrawn) was filed. Plaintiffs to make and file their affidavit within 40 days. Costs in cause.
Before ending this ruling, I shall have to mention that similar applications for discovery are pending in Actions Nos. 4242/84 and 2432/83. In the former we have the same plaintiffs but different defendants, namely, a Cyprus company called E. Philippou Ltd.; while in the other the plaintiffs are another Austrian company and the defendants are the defendants in this action. It is to be noted that the pleadings in all three actions are identical save that in the two actions I have just mentioned the claims and counterclaims are for smaller amounts. It is to be noted further that the same points were raised and discussed in the written addresses of counsel. I accordingly make the same order for discovery in each of those actions for the reasons stated in this ruling, but I reserve the costs.
Order for discovery of documents.