Arnaout v Arnaout - [2019] NSWSC 565

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Arnaout v Arnaout [2019] NSWSC 565
Hearing dates: 27 September and 7 November 2018
Decision date: 17 May 2019
Jurisdiction: Equity
Before: Lindsay J
Decision:
Orders for Preliminary Discovery to be made on terms.

Catchwords: CIVIL PROCEDURE – Preliminary discovery – To identify cause of action – Discovery of documents from prospective defendant – Insufficiency of information to decide whether or not to commence proceedings against prospective defendant – Documents going to quantum of relief claimed, and whether prospective defendant held documents inconsistent with representations – Preliminary discovery available on conditions.
Legislation Cited: Australian Consumer Law
Civil Procedure Act 2005 NSW
Uniform Civil Procedure Rules 2005 NSW
Cases Cited: Morton v Nylex Ltd [2007] NSWSC 562
O’Connor v O’Connor [2018] NSWCA 214
Texts Cited: -
Category: Procedural and other rulings
Parties: Plaintiff: Ramy Arnaout
First Defendant: Wassim Arnaout
Second Defendant: Henry Davis York, Solicitors
Third Defendant: Pitcher Partners NSW Holdings Pty Ltd ACN 001 490 606
Representation:
Counsel:
Plaintiff: DB Studdy SC and GP Gee
First Defendant: MR Elliott SC
Third Defendant: H Grace
Solicitors:
Plaintiff: Bartier Perry
First Defendant: McCollough Robertson
Third Defendant: Ledlin Lawyers Pty Ltd

File Number(s): 2018/00065167

Judgment

INTRODUCTION

By summons (originally filed on 27 February 2018, successively amended on 24 April 2018, 24 May 2018 and 27 September 2018), the plaintiff applies for orders for “preliminary (cause of action) discovery“, under rule 5.3 of the Uniform Civil Procedure Rules 2005 NSW (“UCPR”), against three parties, each a prospective defendant in substantive proceedings.
The central dispute is between the plaintiff and the first defendant. The prospective defendants other than the first defendant provided professional (legal and accounting) services to the plaintiff and the first defendant at and about the time that the plaintiff and the first defendant ended their commercial relationship.

THE FACTUAL MATRIX

The plaintiff and the first defendant are brothers. Between 1999 and October 2013 or thereabouts they worked together in commercial operations which grew from small to big. Through a variety of corporations which came to be called “the Iris Group“, they together bought, operated, developed and sold businesses (including hotels) and real estate.
On 9 October 2013 the brothers executed a written contract (bearing that date and entitled “Implementation Agreement-Restructure of the Iris Group“) which provided, on terms, for the first defendant to buy out the plaintiff. The object of the contract was for the plaintiff to withdraw from the Iris Group so that its ownership and control would pass to the first defendant alone.
As events transpired, the Implementation Agreement provided for the first defendant to procure payment to the plaintiff of $19,499,970 by three instalments.
The first instalment was payable on or before 30 August 2014; the second, on or before 30 August 2015; and the third, on or before 30 August 2016.
Payments having been made to the plaintiff, more or less as contemplated by the Implementation Agreement, on 26 August 2016 the brothers executed a “Deed of Release“,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Arnaout v Arnaout

Details

AGLC: Arnaout v Arnaout [2019] NSWSC 565
Case: [2019] NSWSC 565
Decision Date: 17 May 2019

CaseChat Overview and Summary

The case of Arnaout v Arnaout was before the court to determine the availability of preliminary discovery in circumstances where insufficient information existed to identify the cause of action against a prospective defendant. The applicant sought discovery of documents from the prospective defendant to ascertain whether to commence proceedings and, if so, to determine the quantum of relief claimed. The applicant also sought to establish whether the prospective defendant held documents inconsistent with their representations.

The central legal issue before the court was whether preliminary discovery could be granted when there was insufficient information to identify the cause of action against the prospective defendant. The court had to balance the need for the applicant to obtain necessary information against the prospective defendant's right to protect their confidential information. The court considered whether the applicant had demonstrated a serious question to be tried and whether the documents sought were relevant to that question.

The court held that preliminary discovery could be granted, but on certain conditions. It found that while there was insufficient information to identify the cause of action, the applicant had demonstrated a serious question to be tried. The court reasoned that the documents sought were relevant to determining whether proceedings should be commenced against the prospective defendant and, if so, the quantum of relief claimed. The court imposed conditions to protect the prospective defendant's confidentiality, including limiting the scope of discovery and requiring the applicant to provide regular updates on their progress in identifying the cause of action.

The court ordered that preliminary discovery be granted on the conditions specified, allowing the applicant to obtain the necessary documents to determine whether to proceed with the prospective defendant and, if so, the appropriate quantum of relief.

Orders