IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No. 195 of 2008

BETWEEN :

ARUN KUMAR trading as 
BABU’S MECHANICAL AND ENGINEERING WORKS of Ba.
Plaintiff

AND :

The FIJI SUGAR CORPORATION LIMITED 
a limited liability company having its registered office at Lautoka.
Defendant

Counsel : H A Shah for the Plaintiff
AK Narayan for the Defendant

R U L I N G

INTRODUCTION

1.	This is an application for specific discoveries. The application is made pursuant to Order 25 and Order 24 Rules 7, 10 and 12 of the High Court Rules 1988. The allegations in the plaintiff’s claim may be summarised as follows. Sometime in November 1992, a certain rail cart belonging to the Fiji Sugar Corporation Limited (”FSC”) derailed onto the plaintiff’s business premises and cement-block making plant at Veitau Street in Ba on Viti Levu Island. In the process, the derailed cart actually came into contact with certain equipment and machinery belonging to the plaintiff. As a result, the equipment/machinery was damaged beyond functionality. The plaintiff alleges that the accident happened due to the negligence of FSC servants/agents who were in control of the cart. The plaintiff claims loss and damages namely: cost of repairs of the block making machine which he quantifies at $37,000 as well as loss of income from the date of the damage. This, he quantifies at $10,000 average per month.

APPLICATION FOR SPECIFIC DISCOVERIES

2.	The application seeks that the plaintiff do within 14 days disclose by affidavit whether the following documents/classes of documents is or has at any time been in his possession, custody or power and if he parted with them, when he parted with any of them and what has become of them AND FOR A FURTHER ORDER that the plaintiff do within 14 days thereafter make available such documents or copies of them for inspection on behalf of the defendant:

(a)	copies of all complete financial statements including profit and loss and balance sheets of the business generally and that of the block making from November, 2001 to present inclusive together with the assessments by the Tax office and VAT returns and assessments for the said years pertaining to the plaintiff and his business generally and that of the block making. 

(b)	copies of receipts and other documents pertaining to cost of repairs to the block making plant/machine pertaining to the plaintiff’s claim.

(c)	copies of orders, sales records, invoices, receipts, bank deposit books, bank statements for the business generally and that of block making November, 2001 to date pertaining to the plaintiff.

(d)	copies of business licence and any permit to operate his business generally and that of the block making operation, plant/machine on the premises where the block making machine was situated for the years November 2001 and to date pertaining to the plaintiff.

(e)	copies of all leases, tenancies, agreements to lease, certificate of title or any other instrument of title or right to occupy the land on which the block making machine was situated together with the boundary maps of the premises which housed the block making plant/machine pertaining to the plaintiff’s claim.

(f)	copies of receipts, invoices, payment vouchers, etc. of purchases raw materials for the manufacture of blocks for the period of November 2001 to present pertaining to the plaintiff’s business of block making.

(g)	copies of all approved plans and development approvals from the Ba Town Council and/or the Ba Rural Local Authority for the erection or construction of all buildings to house the block making plant/machine and/or installation and operation of the block making plant/machine on the land giving rise to the claim pertaining to the plaintiff business of block making and his claim.

3.	The application is supported by an affidavit sworn by Ashneel Sudhakar, then a solicitor with the law firm of AK Lawyers, sworn on 19 April 2010 who deposes as follows:

2.	… in claims of this nature that the documents relating to title and right to occupy the premises, business licence, approvals for development permission on land and other documents listed … are highly relevant for issue of liability for the Plaintiff’s claim.

3.	… in claims of this nature for damages and claims for economic loss that financial documents such as the profit/loss accounts, balance sheets, depreciation schedules, tax and VAT Returns and assessments of tax and VAT, bank statements and other documents listed in the Summons aforesaid are highly relevant for the purposes of assessing quantum.

4.	Our office wrote to the Plaintiff’s Solicitors on 22nd March 2010 requesting documents ... The Plaintiff’s Solicitors did not respond. I annex a copy of the said letter marked “AS-1”.

5.	The Plaintiff has not complained that it does not have the documents listed in our letter of 22nd March, 2010 and the financial statements, VAT Returns and tax assessments can in any event be obtained from the tax office as with approvals and copies of business licences and permits. I verily believe that the original or copies of the financial documents and sales records listed in the summons herein would have in the ordinary course of business been prepared and financial statements by law would have had to be lodged with all relevant tax authorities. Ordinarily, copies would have been supplied to the accountant’s preparing the financial statements and copies would have been retained by the accountants and the plaintiff for reference and records.

6.	Discovery of all documents requested would ordinarily in the course of his business have been with the Plaintiff.

7.	I pray for order in terms of the Summons files herewith. 
 
4.	The plaintiff opposes the application. By a 7-paragraph affidavit sworn on 9 September 2010, the plaintiff deposes as follows right through from paragraphs 1 to 6:

That in response to paragraph …, I say that all records have been lost in the flood of 2008 at Ba, Fiji.

5.	At paragraph 7 though, he deposes as follows:

7.	That in answer to paragraph (g) of the said Summons I say that the subject area was at the material time not within a town boundary and there are no approvals from the Ba Rural Local Authority.

THE LAW

6.	Courts have a wide jurisdiction to order discovery and inspection of documents. Behind this robust approach, is the philosophy that, with proper discoveries and the more discovery there is between the parties, the better disposed they are in thrashing out the issues between them in the pleadings. Ultimately, the Court will be far better disposed to determine the real issues raised in the pleadings. This is cost effective in that it saves time.

7.	Discovery can be sought at any stage of a proceeding even after a judgement or order in an action has been made (see Singh v Minjesk Investment Corporation Ltd & Anor – High Court Civil Action No. HBC 148 of 2006 where Master Udit cited Korkis –v- Wer & Co. [1914] LT 794 as authority for this position).

8.	In Singh v Minjesk, Master Udit canvassed the applicable principles and case law authorities in some detail. From his analysis, what emerges clearly is that the onus initially is on the applicant to establish the following by way of affidavit evidence:

(i) identify clearly the particular document or documents or class of documents that he seeks from to be discovered by the opposing party (see Order 24 Rule 7(1)).

(ii) show a prima facie case that the specific document or class of documents do in fact exist or have existed (see Order 24 Rule 7(1)).

(iii) establish that these documents are relevant in the sense that they relate to the matter in question in the action. In other words, the information in the document must either directly or indirectly enable the applicant either to advance his own case or to damage the case of his or her adversary. Alternatively, it is sufficient if the information in the document is such that it may fairly lead to a train of enquiry which may have either of these consequences. The relevance of a document is to be tested against the issues and/or questions raised by the pleadings (see A.B Anand (Christchurch) Ltd –v- ANZ Banking Group Limited (1997) 43 FLR 22 30 January 1997). 

(iv) show that these documents were in the physical possession, custody (i.e. the mere actual physical or corporeal holding of the document regardless of the right to its possession) or power (i.e. the enforceable right to inspect it or to obtain possession or control of the documents from one who ordinarily has it in fact) of the opposing party (see Order 24 Rule 7(3)). 

9.	Whether or not any particular document is admissible or inadmissible is immaterial to its discoverability. It is enough if the document is likely to throw some light on the case (see Volume 13 paragraph 38 of Halsbury's Laws of England – 4th Edition) page 34 s cited in Singh v Minjesk).

10.	There is accumulated case law material that Courts will not allow the discovery process to be used towards assisting a party upon a fishing expedition such as to fish for witnesses or a new case (see Martin and Miles Martin Pen Co. Ltd v Scrib Ltd [1950] 67 RPC 1-7 as cited in Singh v Minjesk), Calvet -v- Tomkies [1963] 3 All ER 610. Nor will discovery be ordered in respect of documents which are not related to or may not affect the actual outcome of the action: Martin and Miles Martin Pen Co. Ltd. -v- Scrib Ltd. [1950] 67 RPC 1-7). Furthermore, discovery will also be prohibited if it is for the general purpose of enabling a party.

ANALYSIS

11.	Having noted the above, let me now then analyse whether the documents sought are discoverable.

All complete financial statements including profit and loss and balance sheets of the business generally and that of the block making from November, 2001 to present inclusive together with the assessments by the Tax office and VAT returns and Assessments for the said years pertaining to the plaintiff and his business generally and that of the block making is or has at any time been in his possession, custody or power and if he parted with them, when he parted with any of them and what has become of them

12.	It would appear to me reasonable that, in any claim for loss of income from a business, the defence would want to verify, firstly, that the alleged business operation was actually happening at all material times, and secondly, that the average income from the business was actually as alleged in the claim at the time of incident.

13.	These will go towards establishing quantum.

14.	Any accountant will tell us that the profit and loss balance sheets of any business, ordinarily, would summarise the trading transactions of the business. It should show the business' income, sales and expenditure and will show clearly the profit or loss suffered by the business for any given period. Any profit shown will ordinarily be before-tax profit. 

15.	The figures on the balance sheet, on the other hand, will give us a financial snapshot of the business at any given moment and will relate to the profit and loss transactions on any given period of time. 

16.	I think any genuine business undertaking will have these documents prepared in the ordinary course of business and it is quite reasonable for anyone to assume that they exist or have existed in so far as the plaintiff's business was concerned, at all material times.

17.	Both these documents are relevant in such a case as the one before me and are therefore discoverable. I cannot think of any way by which these documents might be privileged or immune from discovery. 

18.	One might easily assume that these documents were in the physical possession/custody of the plaintiff or, otherwise, that it is within the plaintiff's power to obtain them from any other person/entity that might have possession/custody of the documents. In this regard, I think the accountant who prepared his tax returns at all material times may have financial statements to accompany the tax return as required by law. Also, the tax records at the Fiji Islands Revenue & Customs Authority would be the ultimate repository of these documents and/or some form of record pertaining to them.

19.	But are the assessments by the Tax Office and VAT Returns and Assessments relevant? Are they discoverable? Are they privilege and immune from discovery?

20.	In lay terms, if the balance sheets of a business should reflect the before-tax profit (if the business is profitable), then whatever tax/vat assessments are made on that business must be based on the kind of figures on the balance sheets. In that sense, I think the tax/vat assessments are also relevant. They are particularly useful to a defendant who wants to be doubly sure that a plaintiff who alleges that he realizes a particular level of income or profit from his business, and who bases his claim for loss of income/profit on that level of income or profit, has also been accountable to the tax authorities on that alleged level of income/profit.

21.	The Privy Council opinion in Chem Products Ltd v American Life and General Insurance Co Ltd & Ors (2004) 2 ALL ER 358 at 370-371 demonstrates how tax returns are crucial from an insurer's point of view in terms of assessing an insured's alleged consequential losses as a result of a fire which damaged the insured's stocks and stores.

22.	The insured had filed a claim against its insurer for losses and damages to stock and stores suffered after its manufacturing business was destroyed by a fire on 3 April 1990. A particular policy ("stock policy") provided cover against loss and damage to stocks and stores at the premises. Another particular policy ("consequential loss policy") provided cover against business interruption and other losses consequent upon the loss of, or damage to stocks and stores at the premises. The insured had claimed under both policies. However, the insurers denied liability under both policies. 

23.	Notably, both policies contained what is called a claims cooperation clause. These clauses placed an obligation upon the insured to, at its own expense, produce/furnish/procure/give to the insured various documents with respect to the claim, any matter touching the liability of the insured, the amount of liability and any other document which the insurer may require for the purpose of investigating or verifying the claim. Interestingly, both clauses end with the following words:

No claim under this Policy shall be payable unless the terms of this Condition have been complied with."

24.	In resisting the claim, the insurer alleged that it had requested of the insured inter alia the insured's tax returns but that the insured had failed to provide this. It is argued that the insured's failure was therefore a breach of the respective claims cooperation clause of the stock policy and the consequential loss policy. As such, no claim under either of the policies is payable. 

25.	The judge at first instance found that there were failures to provide documentation and information in relation to, inter alia, the insured's income tax returns and that, although the plaintiffs had explained that the documents "were destroyed by fire and efforts by their auditor to obtain them were unsuccessful", there was no evidence that the insured had exhausted all efforts to obtain the tax returns.

26.	The Court of Appeal and the Privy Council would later affirm these findings. Although this case was not one that concerned specific discoveries, and although the obligation on the part of the insured to provide the tax returns requested was said to have arisen by contract out of the claims cooperation clauses (see footnotes), there is a clear position that emerges from it in terms of the discovery of tax returns in general and that is that, where loss of business profit and/or income are part of the damages-claim, whether in an insurance claim or in any other civil claim, the discovery of tax returns and financial statements will shed light on the plaintiff's financial situation.

27.	Loss of earning (or income) is ideally to be classified as special damages and must be specifically proven, as the Fiji Court of Appeal has said in Credit Corporation (Fiji) Ltd v Khan [2008] FJCA 26; ABU0040.2006S (8 July 2008).

21 The loss of earnings asserted by Wasal Khan were perfectly quantifiable both as to amount and as to the duration. The judge recognized they could have been pleaded and calculated as special damages . This court would go considerably further than that. In simple language, they had to be presented as special damages . The claim for deprivation of loss of profits by the bulldozer being in the custody of the Credit Corporation from late December 1998 until August 1999 was perfectly quantifiable and the judge clearly undertook this exercise. Future losses of profits were not part of the equation. Those could probably have been dealt with as general damages had there been an unascertainable end to that loss of earnings or loss of earning capacity - as might have been the case in a personal injury action so far as, for example, post trial loss of earnings. However what was at stake in the instant case was a bulldozer. Once brought back into the working capacity that it might have had at the time of its wrongful seizure by Credit Corporation, then issues in relation to loss of profits were, as a head of damage, well and truly at an end. Equally, the time between wrongful seizure and the consent order was entered was eminently the subject of calculation and brought that within the rubric of special damages . In the result, where this court differs from the judge concerning this topic is in relation to only one passage of his judgment. The judge said that these amounts could have been pleaded as special damages . On definitions cited, including the definition accepted by the judge, we conclude these items had to be pleaded as special damages . Indeed, the very decision that the learned judge very carefully considered Ilkiw v Samuels & Others (above) rules out the treatment of pre-trial loss of earnings (albeit in the context of a personal injury action) as anything other than special damages . That is the very basis upon which the Court of Appeal in that decision allowed the appeal and reduced the award of damages.

Copies of Receipts & Other Documents Re- Cost of Repairs 

28.	The plaintiff claims cost of repairs. Cost of repairs is ordinarily classed as special damages and must be specifically proven by one who alleges it. The best proof of cost of repairs would be in the invoices and/or receipt. These class of documents are relevant in this case and are discoverable. 

29.	The Fiji Court of Appeal in Credit Corporation (Fiji) Ltd v Khan [2008] 
(supra) revisited the subject of special damages:

Special damage consists in all items which must be specified by him before they may be proved and recovery found. The basic test of whether damages are general or special is whether particularity is necessary and useful to warn the defendant of the type of claim and evidence or the specific amount of the claim that which he will be confronted with at trial. In this regard, in Ratcliffe v Evans [1892] 2 QB 524, 528, Bowen LJ held that special damage "means the particular damage (beyond the general damage), which results from the particular circumstances of the case, and of the Plaintiff's claim to be compensated, for which he ought to give warning in his pleadings in order that there may be no surprise at the trial." In the court below, Finnigan J followed a decision in Sharma v Dominion Wire & Cables Ltd HBC 352 of 1998. He cited in particular from a passage in that judgment which in turn quoted from McGregor on Damages, 17th edition, paragraph 43-010. One part of the passage quoted was: "where the precise amount of a particular claim of damages becomes clear before the trial, either because it has already occurred and so crystallised or because it can be measured with complete accuracy, its exact loss must be a pleaded as special damage ."

Copies of Orders, Sales Records, Invoices, Receipts, Bank Deposit Books, Bank Statements for the Business Generally

30.	These are relevant and discoverable but only for the relevant period concerned.

Copies of Business Licence & Permit to Operate Business & Block-Making Operation, Plant/Machine on Premises

31.	This class of documents would go towards establishing that the business operation that the plaintiff alleges actually did happen at all material times. 

Leases, Tenancies, Agreements to Lease, Certificate of Title or Any Other Instrument of Title or Right to Occupy Land on which Block-Making Machine Situated

32.	I think this would tend to go towards the issue of whether or not the plaintiff was actually carrying on the business on the premises in question.

Receipts, Invoices, Payment Vouchers 

(etc. of purchases raw materials for the manufacture of blocks for the period of November 2001 to present pertaining to the plaintiff's business of block making)

33.	Same as above.

Approved Plans & Development Approvals from the Ba Town Council and/or the Ba Rural Local Authority 
(for the erection or construction of all buildings to house the block making plant/machine and/or installation and operation of the block making plant/machine on the land giving rise to the claim pertaining to the plaintiff business of block making)

34.	I think this is relevant and discoverable. If the plaintiff alleges that he was carrying out a cement block manufacturing operation on the property in question, then such regulatory approvals must be in place. The production of these documents will go towards establishing that the plaintiff did indeed carry out the said operation on the said property at all material times. 

CONCLUSION

35.	After considering all, I order that the plaintiff is to make available for discovery and inspection all the above documents in twenty eight (28) days. If the plaintiff is unable to discover any document, then he should set out clearly in an affidavit what attempts he has made to locate the documents and why he is not able to discover these documents including details of when he parted with any of them and what has become of them. 

36.	If the plaintiff intends to amend his statement of claim to discontinue in whole or in part his claim for special damages on account of his inability to discover all or certain of the documents stated hereinabove in paragraph 3, then he is at liberty to file and serve an amended statement of claim in 28 days hereof. Costs in the cause. Case adjourned to 01 March 2016 for mention at 10.30 a.m.

…………………………….
Anare Tuilevuka
JUDGE
04 February 2016