1045 Burke Rd Pty Ltd v Bosi
[2018] VSC 157
•10 April 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S CI 2018 00982
BETWEEN:
| 1045 BURKE RD PTY LTD (ACN 146 342 789) | Plaintiff |
| v | |
| YEHIEL BOSI | Defendant |
S CI 2018 00994
AND BETWEEN:
| 1045 BURKE RD PTY LTD (ACN 146 342 789) | Plaintiff |
| v | |
| RONEN BOUSI | Defendant |
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JUDGE: | DERHAM AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 April 2018 |
DATE OF RULING: | 10 April 2018 |
CASE MAY BE CITED AS: | 1045 Burke Rd Pty Ltd v Bosi & Anor |
MEDIUM NEUTRAL CITATION: | [2018] VSC 157 |
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PRACTICE AND PROCEDURE – Notices to produce – Whether too wide and fishing – Whether any legitimate forensic purpose – Too wide and fishing and no legitimate forensic purpose – Notices to produce set aside – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 35.08; Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477; Jefferson Ford Pty Ltd v Ford Motor Co of Aust Pty Ltd [2007] VSC 450; Crown Joinery Pty Ltd v Lyleho Pty Ltd [2007] VSC 214, Shaw v Yarranova Pty Ltd [2011] VSCA 55; Woolworths Ltd v Svajcer [2013] VSCA 270; Webb v Wheatley [2015] VSC 153; ACN 096 450 770 (formerly AJH Lawyers Pty Ltd) v Mathieson Nominees [2017] VSC 559.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Herskope | Kalus Kenny Intelex |
| For the Defendant | Mr A K Panna QC | Jessop & Komesaroff Lawyers |
TABLE OF CONTENTS
Introduction......................................................................................................................................... 1
Notices to produce.............................................................................................................................. 1
The caveators’ claimed interest in the Property............................................................................ 2
The relevant legal principles............................................................................................................ 6
Submissions and consideration...................................................................................................... 9
Conclusion......................................................................................................................................... 14
HIS HONOUR:
Introduction
This ruling concerns an application by the plaintiff to set aside two notices to produce (‘Notices’) given by the defendants pursuant to r 35.08 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’), one in proceeding S CI 2018 00982 (‘Bosi proceeding’) and one in proceeding S CI 2018 00994 (‘Bousi proceeding’).
Each proceeding is an application by the plaintiff to remove a caveat lodged on behalf of the defendant over the property at 1045 Burke Road, East Hawthorn, Victoria (‘Property’).[1] The applications are brought pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) (‘TLA’). Directions were made by consent on 28 March 2018 for the hearing of objections by the plaintiff to the defendants’ Notices, with the hearing of the caveat removal application to be held a week later.
[1]The land more particularly described in Certificate of Title Volume 03175 Folio 923.
The plaintiff has filed affidavits in each proceeding that are substantially the same. There is one in each proceeding made by the plaintiff’s solicitor, Michael Jonathan Kenny, on 19 March 2018. There is also an affidavit by one of the directors of the plaintiff, Dean Bustin, in substantially the same form in each proceeding, sworn 19 March 2018. Mr Bustin’s affidavits merely confirm the evidence given in Mr Kenny’s affidavits.
The defendant in the Bousi proceeding made an affidavit on 4 April 2018 on his own behalf and in the Bosi proceeding on behalf of Yehiel Bosi, on 5 April 2018.
Notices to produce
The Notices are almost precisely the same. The difference is in the period covered by each Notice. In the Bosi proceeding the start date for each period is 1 May 2013. In the Bousi proceeding it is 1 June 2013. The Bousi Notice requires production to the Court for inspection of the following documents:
1. for the period 1 June 2013 to date a copy of the plaintiff’s bank statements for all bank accounts held by the plaintiff during that period;
2. for the period 1 June 2013 to date a copy of the plaintiff’s financial records (as defined in s 9 of the Corporations Act 2001 (Cth);
3. for the period 1 January 2013 to date a copy of the plaintiff’s minutes of directors meetings;
4. for the period 1 January 2013 to date, a copy of all correspondence, including any notes or emails, between Ian Feren (aka Ian Ferenbach) and Dean Bustin in relation to sourcing, procuring or securing funds or investment for the plaintiff’s property development at 405 Burke Road, Hawthorn East.
In order to rule on the objections to the Notices, it is necessary to understand the basis upon which the caveats were lodged on the title to the Property, and thus how the documents sought by the Notices relate to the caveats and the interests they purport to protect.
The caveators’ claimed interest in the Property
The caveat in each proceeding is in the same terms, save for the name of the caveator. They were each registered on 15 December 2017 on the title to the Property. The grounds of claim in each case are ‘Implied, Resulting or Constructive Trust’. The estate or interest claimed is ‘Interest as Chargee’ and the prohibition is ‘Absolutely’.
The plaintiff’s affidavits produce a company search of the plaintiff showing the directors to be Ian Feren and Dean Bustin and the shareholders to be the same persons each holding six ordinary shares. The evidence then given in Mr Kenny’s affidavits is as follows:
(a) the plaintiff has constructed an apartment complex comprising 29 apartments on the Property, all of which have been sold. The construction of the apartments will be completed in about four weeks (from 19 March 2018) and the plaintiff intends to register the plan of subdivision for the Property, which once registered will enable completion of each of the contracts to take place;
(b) under each contract, general condition 10 provides that settlement is due on the later of 28 days after notification of registration of the plan of subdivision or the issue of an occupancy permit with respect to the particular lot;
(c) the lodgement of the caveat and the production of the copy of it;
(d) the correspondence passing between the plaintiff’s solicitors and the solicitors for each defendant;
(e) a copy of the document that each defendant relies upon to support the caveat; and
(f) that the plaintiff has never received any funds from either defendant, directly or indirectly via Mr Feren or from any other person or corporation.
The document produced upon which each defendant relied to support the caveat is in the form of a handwritten agreement. In the Bousi proceeding it comprises two handwritten agreements (on the one sheet) as follows:[2]
[2]Affidavit of Michael Jonathan Kenny made 19 March 2018, exhibit MJK-6; see also affidavit of Ronen Bousi made 4 April 2018, exhibit RB-8.
THIS AGREEMENT FORMS THE INVESTMENT AGREEMENT BETWEEN RONEN BOUSI AND IAN FEREN AS AT 1/6/2013.
It is agreed that Ronen has invested $300,000 on 1/6/2013 into project at 1045 Burke Road, Camberwell which is due for completion approximately 15 June 2015.
Ronen will receive a return of 25.0% per annum on his capital of $300,000.
…
THIS AGREEMENT FORMS THE INVESTMENT AGREEMENT BETWEEN RONEN BOUSI AND IAN FEREN AS AT 17/6/2013
It is agreed that Ronen has invested $150,000 on 17/6/2013 into project at 1045 Burke Road Camberwell which is due for completion approximately 15th June 2015.
Ronen will receive a return of 25.0% per annum on his capital of $150,000.
In the case of the Bosi proceeding the agreement is in the following terms:[3]
[3]Affidavit of Michael Jonathan Kenny made 19 March 2018, exhibit MJK-6; see also exhibit RB-6 to the affidavit of Ronen Bousi made 5 April 2018.
THIS AGREEMENT IS BETWEEN IAN FERENBACH AND BOSI YEHIEL DATED 07-05-2013.
Ian Ferenbach and Dean Bustin are 50/50 partners in the property situated and known as 1045 Burke Road East Hawthorn, and own this property in their company 1045 Burke Road Pty Ltd.
It is our intention to secure a planning permit for 33 apartments on this site, and it is our expectation to secure this permit by no later than 30th June 2013.
There is a VCAT hearing scheduled for this property for 20th May 2013, and the hearing could last up to seven days.
Once having secured the permit, we will pre-sell the project, and commence construction hopefully prior to Christmas 2013.
We expect the project to be finished by approximately June 2015 when your capital will be refunded to you in full, and any outstanding interest will also be paid to you.
For your investment of $200,000 you will receive a return of 15.0% payable to you every six months from commencement of your contribution. 7-11-2013, 7‑05-2014.
Your capital of $200,000 is to be deposited into my account as follows:
Name: Ian Ferenbach
Commonwealth Bank of Australia Branch No. 063303 Account no. 10031701
Upon receipt of your investment into this account, the agreement will commence.
In each case these hand written agreements appear to be signed by the parties. In no case is a party stated to be the plaintiff.
In each proceeding the defendant claims to be entitled to maintain his caveat based upon the provision of funds by him to the plaintiff for use in the redevelopment of the Property. It was put that the funds were procured by Feren (or Ferenbach) in his capacity as a director of the plaintiff, for use by the plaintiff to carry out the redevelopment of the Property. The background to each of the so called investments is set out in the affidavit of Ronen Bousi in the Bousi proceeding and by him also in the Bosi proceeding.
In the Bousi proceeding, the affidavit gives a history of Bousi having invested moneys with Mr Feren in development projects since 2007. In each case, the so-called investment is recorded in a handwritten agreement signed by Mr Bousi and Mr Feren and provides for the investment of various sums at quite high rates of interest.
In relation to the development of the Property, the relevant events began on about 7 May 2013 when Mr Bousi and Mr Bosi met Mr Feren to discuss investing in the Burke Road development. The evidence of Mr Bousi is that at the meeting Mr Feren said to them both words to the effect of the introductory paragraphs of the Bosi agreement, that is that Ian Ferenbach and Dean Bustin are 50/50 partners in the property, and so on. It is also said that in the course of the meeting Mr Feren said to them both that he was dealing with them as a director of the plaintiff that owned the property, as he was a co-owner with Dean Bustin of the Burke Road development. He gives evidence of the transfer of funds, both by himself and by Mr Bosi and of the handwritten loan agreements that I have set out above. He also gives evidence of the investment by others in the Burke Road project (in particular by one Gilad Bousi and one Yuri Miloslavsky.
Other relevant evidence given by Mr Bousi is that
(a) Mr Bosi had requested that a lawyer handle the documentation, but Mr Feren said words to the effect ‘no, that is not how I do business. I will draw up the agreement’;
(b) sometime during discussions about investing in the Burke Road project Mr Bousi requested to meet Mr Feren’s business partner, Dean Bustin, about the project and get a better understanding about what he did. Mr Feren responded with words to the effect that ‘Dean was a jealous person’ and ‘controlling’ such that it was better that he did not meet with him or get involved with the process. Mr Feren said that Dean was the project manager and also his partner in the development;
(c) he discussed the progress of the Burke Road development with Mr Feren throughout 2016 and 2017, and was repeatedly promised by Mr Feren that he was in the process of securing some moneys to make partial payments to the investors in the development. In the late afternoon on Friday 1 December 2017, Mr Bousi had a telephone conversation with Mr Feren and asked him about the money which he had promised him and others. Mr Feren told him that he expected to receive the money by Monday, 1pm from a commercial lender. That was the last telephone conversation Mr Bousi had with Mr Feren. He learnt later, through other sources in his community, that on 1 December 2017 Mr Feren had left the country with his Chinese wife and two children for Hong Kong and has not been seen or heard of since;
(d) all the discussions that Mr Bousi had with Mr Feren regarding the Burke Road development and his investment were on the basis that he would be repaid when the project was completed. He became concerned about repayment of his investment in December 2017 and instructed his solicitors to lodge the caveat believing he had good grounds for doing so.
The relevant legal principles
Rule 35.08 of the Rules permits a party to a proceeding to serve on another party a notice requiring that the other party produce documents mentioned in the notice ‘on any application in or at the trial of the proceeding’.[4] Unless the Court otherwise orders, the party on whom the notice is served must produce on the application or at the trial such of the documents mentioned in the notice as are in the party’s possession, custody or power and which that party does not object to produce on the ground of privilege.[5] If the party on whom the notice is served fails to comply with it, the Court may order that the party produce the document or give such directions for the proof of any matter in relation to the document, including the contents of the document and its making, delivery or receipt, as it thinks fit.[6]
[4]Rule 35.08(1).
[5]Rule 35.08(2).
[6]Rule 35.08(3).
A Notice to Produce served under r 35.08 of the Rules is of the same effect as a subpoena for production of documents.[7] Considerations applicable to the setting aside of a subpoena are applicable to the setting aside of a Notice to Produce.[8]
[7]Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477; Jefferson Ford Pty Ltd v Ford Motor Co of Aust Pty Ltd [2007] VSC 450 (‘Jefferson Ford’).
[8]Portal Software International Pty Ltd v Bodsworth [2005] NSWSC 1115; Crown Joinery Pty Ltd v Lyleho Pty Ltd [2007] VSC 214 [31] (‘Crown Joinery’); Jefferson Ford [2007] VSC 450; Matthews v SPI Electricity Pty Ltd (Ruling No 27) [2013] VSC 483.
The following broadly stated principles govern the application to set aside a subpoena:[9]
[9]This statement of the general principles is adapted from my decision in Webb v Wheatley [2015] VSC 153 [55]-[56].
(a) it is necessary for the party at whose request the subpoena was issued to identify expressly and precisely the legitimate forensic purpose for which access to the documents is sought;[10]
[10]R v Saleam (1989) 16 NSWLR 14, 18; R v Mokbel(Ruling No 1) [2005] VSC 410 [45]; Principal Registrar of the Supreme Court of New South Wales v Tastan (1994) 75 A Crim R 498, 504; R v Sergi [1998] 1 Qd R 536; NSW Commissioner of Police v Tuxford [2002] NSWCA 139 [22]; Re Don [2006] NSWSC 1125 [26].
(b) except in cases where the subpoena is plainly too broad or merits the description of a fishing expedition, the judge should normally inspect the documents for the purpose of making a final decision as to whether a legitimate forensic purpose exists;[11]
[11]Woolworths Ltd v Svajcer [2013] VSCA 270 [40]-[47] (Nettle, Ashley and Neave JJA).
(c) however, the Court will not require production of subpoenaed documents, and will not permit access to subpoenaed documents, if the subpoena is expressed so broadly that the applicant cannot demonstrate, having identified a forensic purpose, that it is ‘on the cards’[12] or that there is a ‘reasonable possibility’[13] that the documents will materially assist the case of the party;[14]
[12]Alister v The Queen (1984) 154 CLR 404, 414.
[13]DPP v Selway (Ruling No 2) (2007) 16 VR 508 [10]; Ragg v Magistrates’ Court of Victoria (2008) 18 VR 300 [96].
[14]Attorney-General (NSW) v Chidgey [2008] NSWCCA 65 [62], [64]; R v Mokbel(Ruling No 1) [2005] VSC 410 [45]; R v Saleam [1999] NSWCCA 86 [11]; Alister v The Queen (1984) 154 CLR 404, 414; R v Saleam (1989) 16 NSWLR 14, 18; Woolworths Ltd v Svajcer [2013] VSCA 270 [40]-[47] (Nettle, Ashley and Neave JJA).
(d) a ‘fishing expedition’ is not a legitimate forensic purpose and will not be permitted;[15]
[15]Alister v The Queen (1984) 154 CLR 404; R v Saleam (1989) 16 NSWLR 14, 17, 414; Commissioner for Railways v Small (1938) 38 SR (NSW) 564, 575; Re Don [2006] NSWSC 1125 [26].
(e) the relevance of a document to the proceeding alone will not substantiate an assertion of legitimate forensic purpose.[16] There is no legitimate forensic purpose if the party is seeking to obtain documents to see whether they may be of relevance or of assistance in his or her case;[17]
(f) a mere assertion of bad faith by an applicant or that something might be found demonstrating bad faith is not enough – the criteria set out in (c) must be satisfied; and
(g) where a party fails to demonstrate a legitimate forensic purpose, the Court should refuse access to the documents and set aside the subpoena.[18]
[16]Attorney-General (New South Wales) v Chidgey 2008] NSWCCA 65 [59].
[17]Carroll v Attorney-General (NSW) (1993) 70 A Crim R 162, 181.
[18]R v Saleam (1989) 16 NSWLR 14, 18; See also R v Sergi [1998] 1 Qd R 536; R v Saleam [1999] NSWCCA 86, [11].
Further to the principle identified in paragraph 18(a), it has been held in several cases that it is the duty of the Court, where the issue is raised, to require the party calling on a subpoena to produce documents to identify expressly and precisely the legitimate forensic purpose for which access to the documents is sought and to refuse access unless such an identification is made.[19]
[19]Principal Registrar of the Supreme Court of New South Wales v Tastan Tastan (1994) 75 A Crim R 498, 504; R v Saleam (1989) 16 NSWLR 14, 18 (Hunt J).
A Notice to Produce which is fishing will be set aside.[20] There are circumstances where the timing of a Notice to Produce shortly before the hearing or trial imposes a considerable obligation and disruption on the parties which may be unreasonable and vexatious.[21]
[20]Crown Joinery [2007] VSC 214 [31]; Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136.
[21]See Tony Azzi Automobiles Pty Ltd v Volvo Car Australia Pty Ltd [2006] NSWSC 283; Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) [2012] FCA 61 [7].
Submissions and consideration
The plaintiff produced 4 bundles of documents in response to the Notices. There were two bundles in the first category (bank statements), one bundle in the third category (minutes of directors meetings) and one bundle in the fourth category (correspondence). Counsel for the plaintiff informed the Court that no documents were produced in the second category (financial records) because the plaintiff undertook the Burke Road development as a bare trustee. The plaintiff objected to the defendants inspecting the documents produced and applied for the Notices to be set aside.
Counsel for the plaintiff submitted that the Notices were too wide, fishing and oppressive. He also objected to the admissibility of the affidavit sworn by Mr Bousi in the Bosi proceeding because it was apparent that it contained hearsay evidence and neither r 43.03(2) of the Rules nor s 75 of the Evidence Act 2008 (Vic) had been complied with.
It is apparent that the information contained in Mr Bousi’s affidavit in the Bosi proceeding is based partly on information and belief from Mr Bosi. No source is expressly identified, although there was a strong inference that the source was Mr Bosi who was said to be in Israel. I accordingly have allowed a short affidavit confirming the source of the information to be filed, which was filed on 9 April 2018. The particular relevance of the objection taken by counsel for the plaintiff was that the agreement in the Bosi proceeding did not operate until payment was made and the evidence of the payment being made in Mr Bousi’s affidavit was plainly hearsay, or based on information and belief, and no source was disclosed nor were any grounds disclosed for that information and belief.
Counsel for the plaintiff submitted that on the face of the Notices, and by their content and evident purpose, they are a paradigm example of Notices that are too wide and fishing. On the evidence as it presently stands, neither defendant can establish any case that the moneys advanced to Mr Feren were invested in the Burke Road development. The Notices seek the production of too wide a range of documents:
(a) all the bank statements of whatever number of banks the plaintiff banked with over a period of nearly five years, unlimited in any way save for the period;
(b) all the plaintiff’s financial records, defined by reference to s 9 of the Corporations Act 2001 (Cth), unlimited in any way, save for the same period;
(c) all plaintiff’s minutes of directors meetings, on any subject matter for the same period;
(d) all correspondence between Mr Feren (aka Ian Ferenbach) and Dean Bustin in relation to sourcing, procuring or securing funds or investment for the plaintiff’s Burke Road development, no matter whence they came.
In s 9 of the Corporations Act 2001 (Cth), ‘financial records’ is defined to include:
(a) invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; and
(b) documents of prime entry; and
(c) working papers and other documents needed to explain:
(i) the methods by which financial statements are made up;
(ii) adjustments to be made in preparing financial statements.
There is no limitation in the description of the second category required by the Notices. It encompasses any of the financial records whether they relate in any way to the investment supposedly made pursuant to the agreements. It is quite plainly too wide and fishing. There is simply no basis apart from the wording of the agreements themselves to suppose that any of the moneys that were advanced to Mr Feren found their way into the plaintiff’s bank accounts or financial records.
It is evident from a reading of each notice to produce that they are on their face too wide and fishing. The period in respect of which the four categories of documents are sought is nearly five years. The agreements in question were each made in May or June 2013. Counsel for the defendants justified the width of the notices on the basis that the moneys the subject of each agreement might have been passed through, or paid to the plaintiff, at any time between the dates of the payment to Mr Feren and the date of the Notices.
No application was made to amend the Notices so as to restrict their scope. Nevertheless, the defendants sought to sustain the Notices by reference to the forensic purposes of obtaining evidence:
(a) that the moneys the subject of each agreement had been paid to and received by the plaintiff for used in the development;
(b) that Mr Feren was acting on behalf of the plaintiff, with express authority to source funds from the defendants, and other persons for use in the development;
(c) whether the plaintiff has, either directly or indirectly, acknowledged receipt or use of the funds from the defendants and other investors;
(d) Mr Bustin’s knowledge that Mr Feren was procuring funds on behalf of the plaintiff for use in the development.
The Notices are expressed so broadly and with no particular reference to the identification of the investment moneys passing through to the plaintiff for the development, or any of the other matters. It therefore cannot be said with any degree of confidence that it is ‘on the cards’ or that there is a ‘reasonable possibility’ that the documents will materially assist the defendants in the maintenance of the caveats on the Property. Put another way, a fishing expedition is not a legitimate forensic purpose and will not be permitted.
The only basis upon which the defendants can advance the proposition that they have invested in the plaintiff’s Burke Road development is the wording of the particular agreements, each of which have all the hallmarks of a personal loan to Mr Feren, even though they are described as an ‘investment’. In that regard, the evidence that in December 2017 Mr Feren was seeking to borrow money to repay the so called investors tends to confirm the nature of the transaction as a simple loan to him. There are no other facts that support, directly or indirectly, that the funds were provided to the plaintiff, the plaintiff authorised Mr Feren to raise them on its behalf or that Mr Bustin knew of them. Indeed, the evidence from Mr Kenny, confirmed by Mr Bustin, is ‘that the plaintiff has never received any funds from either defendant, directly or indirectly via Mr Feren or from any other person or corporation’. The latter part of that evidence points to the development having been undertaken by another entity.
Counsel for the defendants submitted that there is a clear distinction to be drawn between a notice to produce which involves a fishing expedition and one which seeks to obtain evidence to support a party’s case. In the latter instance, the notice to produce will not be regarded as fishing or as an abuse of process or as vexatious and will not be set aside. That will only be the case where the party is seeking to discover whether they have a case at all.[22] The defendant submitted that they are not seeking to fish for the existence of a case, but rather to obtain evidence to support their claim that the funds provided to Mr Feren in fact were provided to the plaintiff for use in the Burke Road development. In this way, they say the authorities support the validity of the notices to produce as not being fishing.[23]
[22]See Equuscorp Pty Ltd v Malcolm [2001] VSC 66.
[23]Bailey v Beagle Management (2001) 105 FCR 136.
The decision in Equuscorp Pty Ltd v Malcolm[24] turns on facts and circumstances materially different to the facts and circumstances of this case. It concerned notices to produce in a security for costs application where the Court first found that there was evidence produced by the defendant Malcolm which can be described as credible testimony which establishes that there is reason to believe that the plaintiff will be unable to pay his costs if he is successful in his defence of the proceedings. That opened the door to the exercise of the Court’s jurisdiction to make an award of security for costs, and made it a case where the notice was one seeking to obtain evidence to support a case the defendant already had, as distinct from a fishing expedition.[25] A fishing expedition is one where the person ‘has no evidence that fish of a particular kind are in a pool desires to be at liberty to drag it for the purpose of finding whether there are any there or not’.[26] That is what the defendants are seeking to do in this case.
[24][2001] VSC 66.
[25]See also Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136.
[26]Associated Dominions Assurance Society Pty Ltd v John Fairfax & Son Pty Ltd (1952) 72 WN (NSW) 250, 254 (Owen J).
The defendants’ submissions state:
It is trite law to say that Ian Feren, as a director of the Plaintiff, at the very least had ostensible authority or implied authority to act on behalf of the Plaintiff and obtain funds for use by the Plaintiff in the development project.
If he did not provide the funds to the Plaintiff despite the fact that he said to the Defendants that he was seeking funds on behalf of the Plaintiff that would be a breach of his duty, both statutory and at law, but that would not be a bar to the Defendants’ claim against the Plaintiff.
As a director, Ian Feren was clearly held out by the Plaintiff as a person with authority to seek funding for the Plaintiff’s Burke road development project.[27]
[27]Defendants’ outline of submissions 6 April 2018 [22]–[24].
There are no facts supporting the proposition that the plaintiff held out Mr Feren as a person with authority to seek funding for the plaintiff’s Burke Road development beyond the fact that he is and was such a director and the text of the agreements. Indeed, by refusing Mr Bousi’s request to speak to Mr Bustin, Mr Feren tends to deny that the plaintiff had given him the authority to raise funds for the development. It does not necessarily follow from his position as one of two directors of the plaintiff that Mr Feren alone had the authority to raise investment funding on its behalf.
The defendants also submitted that it can be safely assumed that a document sought in each of the classes in fact exists. There cannot be any doubt about categories one, three and four as the plaintiff produced documents to the Court in each of these categories. That does not, however, demonstrate that there is a legitimate forensic purpose for production of the documents nor that they are proper Notices.
That the bank statements might reveal some funds emanating from Mr Feren went to the plaintiff, will not establish that those funds had come from the so-called investments made pursuant to the agreements, unless there is an exact correspondence in date and amount. Thus, even though bank statements may be relevant, in the broadest sense, to the issues in the proceeding, that alone does not substantiate the assertion of a legitimate forensic purpose. What is quite evident in relation to each of the categories of the Notices is that the defendants are seeking to obtain documents to see whether they may be of relevance or of assistance in their cases.
A notice to produce documents used for the purposes of discovery may be set aside.[28] The rationale of the principle is where a particular method has been prescribed under the rules for the achievement of a particular objective, such as the obtaining of discovery of documents, it is impermissible to attempt to achieve that objective through the use of a notice to produce.[29] This is a case where that principle applies.
[28]Pico Holdings Inc v Voss [2002] VSC 269 [24]–[25]; Liberty Financial v Scott [2004] VSC 382 [33]; Lucas Industries Ltd v Hewitt (1978) 18 ALR 555, 569.
[29]ACCC v Shell Co of Australia Ltd (1999) 161 ALR 686, 696.
Conclusion
A notice to produce or a subpoena must specify with reasonable particularity the documents required to be produced. The Notices in this case do not do so. They are too wide and so unconnected with the issues in the proceeding that they cannot be sustained. The descriptions of the documents is so wide that they inevitably include documents that are not relevant to any question or issue in dispute between the parties.
These are both cases where, in my view, the defendant has failed to demonstrate a legitimate forensic purpose, where the plaintiff has shown that the notices to produce are too wide and fishing and where the only conclusion is for the Court to refuse access to the documents and to set aside both Notices.
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