Allstate Life Insurance Co v ANZ Banking Group Ltd (No 25)

[1996] FCA 36

NOT FOR DISTRIBUTION

CATCHWORDS

PRACTICE AND PROCEDURE - motion for further and better discovery - whether party complied with its obligation to give discovery -distinction between general order for further and better discovery and order for discovery of a particular document, particular documents or a particular category of documents - no question of principle.

ALLSTATE LIFE INSURANCE CO & ORS v ANZ BANKING GROUP LTD & ORS (No 25)
Nos NG 523, 622 and 635 of 1991 and NG 381 of 1994.

Lindgren J
Sydney
2 February 1996

MINUTE OF ORDERS

THE COURT:

NOTE:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )
GENERAL DIVISION                 )

No NG 381 of 1994

BETWEEN:

ALLSTATE LIFE INSURANCE CO and the parties listed in Annexure A to the third further amended statement of claim.
  Applicants

AND:

AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522 and the parties listed in Annexure B to the third further amended statement of claim.
  Respondents

No NG 523 of 1991

BETWEEN:

ALLSTATE LIFE INSURANCE CO and the parties listed in Annexure A to the third further amended statement of claim.
  Applicants

AND:

AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522 and the parties listed in Annexure B to the third further amended statement of claim.
  Respondents

No NG 622 of 1991

BETWEEN:

ALLSTATE LIFE INSURANCE CO and the parties listed in Annexure A to the third further amended statement of claim.
  Applicants

AND:

AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522 and the parties listed in Annexure B to the third further amended statement of claim.
  Respondents

No NG 635 of 1991

BETWEEN:

ALLSTATE LIFE INSURANCE CO and the parties listed in Annexure A to the third further amended statement of claim.
  Applicants

AND:

AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522 and the parties listed in Annexure B to the third further amended statement of claim.
  Respondents

CORAM:Lindgren J

PLACE:Sydney

DATE:2 February 1996

REASONS FOR JUDGMENT (No 25)
        (Motion by Price Waterhouse for further and
               better discovery by Skadden)

There is before the Court a notice of motion filed on 25 January 1996 brought by the 207th cross-respondent ("Price Waterhouse") seeking an order that the 1st and 2nd to 187th cross-respondents, Skadden, Arps, Slate, Meagher & Flom ("Skadden"), give further and better discovery and file a verified further supplementary list of documents.

The history of the matter appears from an affidavit of David Michael Lumb filed 31 January 1996 in support of the motion.  Mr Lumb is a solicitor employed by Blake Dawson Waldron ("Blakes") the solicitors for Price Waterhouse.

Skadden's original verified list of documents was filed on 31 March 1995.   The covering affidavit stated that Skadden had delivered its files in connection with the issue of debentures by Linter Textiles Corporation Ltd ("Linter Textiles") which is at the centre of these proceedings to Kirkland & Ellis in July 1994.  Kirkland & Ellis were the New York attorneys for the liquidators of the Linter companies.  The affidavit stated that the files included the documents listed in Schedule "A" to Skadden's list.  These were numerous.  Apparently, at some stage the files delivered to Kirkland & Ellis or copies of them were supplied to the liquidators' Australian solicitors in Melbourne.

Blakes wrote to the solicitors for Skadden, Dibbs Crowther & Osborne ("Dibbs"), on 16 August 1995 inquiring whether copies of all the documents delivered by Skadden to Kirkland & Ellis had been included in Skadden's list.

On 22 August 1995, Dibbs replied that Skadden's list comprised only documents which had been provided to Kirkland & Ellis in about July 1994 and that as a result of the inspection of the documents discovered by other parties and of the originals of Skadden's documents forwarded to Kirkland & Ellis held by the liquidators, Dibbs had concluded that Skadden's list did not comprise all the documents which had been delivered by Skadden to Kirkland & Ellis.

There was further correspondence between Blakes and Dibbs.  In reply to an inquiry by Blakes as to whether all documents provided by Skadden to Kirkland & Ellis had been discovered by the Linter companies, Dibbs advised Blakes on 28 August 1995 as follows:

"As we have stated previously, it appears our client did not obtain copies of all documents of its original file handed to Kirkland & Ellis in July 1994.  We have been able to determine this following an inspection of our client's original file in the possession of the liquidator.  Therefore, it would seem to us that you will satisfy your queries if you, inspect the original Skadden Arps files in the possession of the liquidator in Melbourne and secondly, make enquiries of Kirkland & Ellis whether they forwarded to the liquidator all original files handed to them by our client."

Blakes wrote in reply on 29 August as follows:

"Your client's discovery obligations include an obligation to enumerate documents that have been in its possession custody or power.  All documents provided by your client to Kirkland & Ellis apparently fall within that category.

You have mentioned that your inspection of your client's original file in the possession of the liquidator indicates that your client's initial discovery did not include copies of all of the documents provided by Skadden Arps to Kirland [sic] & Ellis.

We ask that you identify from the Linter discovery those documents that were in your client's possession prior to their delivery to Kirkland & Ellis but which were not included in your client's initial discovery.  We also ask as [sic] that you obtain instructions upon whether the material discovered by Linter comprises the whole of the material provided by Skadden Arps to Kirkland & Ellis."

Dibbs replied on 1 September 1995 as follows:

"Please note that item 4 of schedule 2 and annexure B
of our client's list of documents refers to those documents (which we have been able to identify) in the possession custody and control of the liquidator or Freehill Hollingdale & Page [other cross respondents in the proceedings) which our client has had but does not now have in its possession custody or power.  We have not been able to identify any other documents in this category since filing our client's list of documents."

There was yet further correspondence between the parties. It does not seem to be necessary for me to give an account of all of it.  However, I should note that by a letter dated 3 November 1995, Dibbs advised Blakes as follows:

" ... the discovery by Skadden Arps has always been limited to the extent of documents which Skadden Arps copied from its original files prior to handing over those original files to Kirkland & Ellis, attorneys of New York.  Skadden Arps does not now have the possession, custody or control of its original file and cannot demand that file to be returned to it.  In other words, neither Kirkland & Ellis nor the liquidator of Linter are agents for Skadden Arps in respect of Skadden Arps' original documents."

Blakes was not satisfied with this response and made this clear by its reply dated 6 December 1995 to which I need not refer further.

In the meanwhile, Skadden's supplementary list of documents was filed on 17 November 1995.  The terms of the covering affidavit were relevantly identical to those of the original affidavit but Schedule "A" was different.  In effect the supplementary discovery gave particulars of further documents which had been included in Skadden's files handed over to Kirkland & Ellis.
There was not disclosed in Skadden's supplementary list details of certain further items of correspondence which, it may well be, had once been in Skadden's possession.  It is alleged by Price Waterhouse that copies of letters from other parties addressed to Skadden are in existence and that the inference should be drawn from their existence that Skadden had once possessed the originals of them.  Skadden has not listed those documents as documents which had in fact at any time been in its possession.  Skadden says that it cannot be known for certain that it did indeed once hold the originals.  Skadden's position in this respect is outlined in the letter dated 3 November 1995 from Dibbs to Blakes quoted above.

Blakes has assiduously identified and particularised the documents which, it alleges, there is reason to suspect were once in Skadden's possession and have not been discovered.  The nature of the evidence before the Court is Mr Lumb's affidavit which annexes letters passing between Blakes and Dibbs making assertions and counter assertions.  The evidence does not include the actual documents from which it is said that the inference unfavourable to Skadden should be drawn.

It is important to appreciate that the motion seeks an order in general terms, rather than an order for discovery of any particular document or documents or category of documents.  The order sought is as follows: 

"The First and Second to One Hundred and Eighty Seventh cross-respondents within fourteen days, give further and better discovery and file a verified further supplementary list of documents."

An order of that kind is rarely made.  Perhaps the better way of stating the position is that such an order will be made only where the evidence demonstrates that the discovering party has failed to understand properly its obligation to give discovery, that is to say, where there is reason to think that in substance discovery has not been given.  With the kind of order sought must be contrasted an order under O 15 r 8 of the Federal Court Rules for the discovery of a particular document or documents or category of documents; and cf Mulley v Manifold (1959) 103 CLR 341 (Menzies J) at 343.

I am not satisfied that a case of the kind necessary to support the order sought in the notice of motion is established here.  An explanation has been given by Skadden of the course followed in relation to the documents which were in Skadden's hands.  I appreciate that there may be reason to suspect that particular documents were once in Skadden's possession.  But a "reason to suspect" is not enough to warrant the making of a general order of the kind applied for.  The fact that Skadden may not now be in a position to say precisely what has happened with particular documents, as to which there is some evidence suggesting that they were once in Skadden's possession, does not, in my view, reveal that Skadden has failed generally in its obligation to give discovery, and, in particular, has failed to understand the
obligation incumbent upon it.

In these circumstances, the appropriate response to Price Waterhouse's motion is not to grant the relief which is sought.  Accordingly that motion is dismissed. There will be an order that Price Waterhouse pay the costs of Skadden of the motion.

I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated:12 February 1996

Heard:       1 February 1996

Place:       Sydney

Decision:         2 February 1996

Appearances:  Mr R W White of counsel instructed by Blake Dawson Waldron appeared for Price Waterhouse as applicant on the motion.

Mr S J Gageler of counsel instructed by Dibbs Crowther & Osborne appeared for Skadden as respondent to the motion.