Australian Independent Newspapers Ltd v John Fairfax Holdings Ltd (formerly Tourang Ltd)
[1994] FCA 406
•22 JUNE 1994
AUSTRALIAN INDEPENDENT NEWSPAPERS LIMITED v. JOHN FAIRFAX HOLDINGS LIMITED
(formerly TOURANG LIMITED), DESMOND LIVINGSTONE NICHOLL, KEITH WILLIAM
SKINNER, ORD MINNETT SECURITIES LIMITED, BARING BROTHERS BURROWS AND CO.
LIMITED AND MARK BURROWS
No. G153 of 1994
FED No 406/94
Number of pages - 4
Discovery
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
BEAUMONT J
CATCHWORDS
Discovery - documents in possession, custody or power of agents - meaning of "power" in "possession, custody or power" - whether documents "within the power" of the applicant.
Lonrho Ltd. v. Shell Petroleum Co. Ltd. (1980) 1 WLR 627.
HEARING
SYDNEY, 22 June 1994
#DATE 22:6:1994
Counsel and Solicitors Mr. V.R. Gray instructed by
for Applicant: Messrs Landerer and Co.
Counsel and Solicitors Mr. D.J. Hammerschlag
for First Respondent: instructed by Messrs Freehill
Hollingdale and Page
ORDER
THE COURT ORDERS:
DIRECT that Australian Independent Newspapers Limited:
1. Take all such steps as may be reasonably necessary to obtain from
Lazard Freres and Co. possession of any document held by Lazard Freres on behalf of AIN or in respect of which AIN is entitled to obtain a copy, which relate to any matter in question in the principal proceedings.
Give discovery of such documents in accordance with the Rules of
Court.
Order the costs of the motion be costs of John Fairfax in the principal proceedings.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
BEAUMONT J Before the Court is a notice of motion by which the first respondent, ("John Fairfax"), seeks an order that the applicant in the principal proceedings, Australian Independent Newspapers Ltd. ("AIN") provide further discovery of documents in its possession, custody or power including documents in the possession, custody or power of Lazard Freres and Co in its former capacity as the agents of or advisers to the applicant.
There appears to be no dispute about the background facts. The correspondence in evidence in the motion indicates that AIN retained a division of Macquarie Bank Limited to provide financial advice to it in relation to the proposed acquisition of the Fairfax Group and that in this connection with the approval of AIN, Macquarie Bank retained Lazard Freres to provide financial advice, in particular, with respect to dealings with junk bond holders in the Fairfax Group.
It appears that many, if not all, of the junk bond holders were resident in the United States and that Lazard Freres is a New York firm. The evidence also indicates that AIN has already given discovery of certain Lazard Freres documents and that a request has been made by AIN of Lazard to indicate whether further documents are available.
However, as I followed the argument advanced on behalf of AIN, the present application is resisted on all grounds. Indeed, at one stage in the argument even the court's jurisdiction was questioned.
In my opinion, the court clearly has jurisdiction to entertain the application pursuant to the court's general powers to give directions in relation to discovery under O.10 r.1(2)(a)(i). An alternative source of power, if it be needed, would be the Court's power to make orders for discovery, including special orders, if appropriate, under O.15.
As I have said, the application is opposed on all grounds, including not only substantive grounds but also the exercise of the Court's discretion. It is submitted that in the circumstances the Court should not in its discretion make the order sought.
In my view, it is appropriate to make a general order at this stage in terms that I will shortly indicate. I should emphasise however, that such an order is necessarily interlocutory in character and, as is the case with any interlocutory order, may, and perhaps should, be reviewed at a later stage if that is appropriate. In particular, as I have already indicated in argument, nothing in the general order that I now propose to make should be interpreted as final adjudication upon any entitlement, by way of right, in any party in terms certainly of proprietary right, or even of possessory title. Clearly a general order for discovery can have no such operation as a matter of power.
At one stage of the argument put on behalf of John Fairfax, I was invited to rule in advance, as it were, on the status, for present purposes, of supposed notes evidencing telephone discussions which were presumed to have been brought into existence by Lazard on behalf of and for the benefit of AIN. I declined the invitation to deal in any specific sense with such matters. They are clearly matters for another day and for adjudication, if it be necessary, in the light of the facts and circumstances then established in that particular connection. It is not appropriate that I express or indeed, attempt to express, any opinion on that sort of matter at this point.
Turning to the substance of the matter, it is clear as a matter of principle that under the Rules of Court, which are in the common form, there is an obligation on a party to make proper inquiries and efforts to identify and disclose all relevant documents that are not in his possession. It is also clear that the obligation extends to making inquiries from the person in whose possession the documents now are. See Re McGorm; Ex parte Co-operative Building Society of South Australia (1989) 86 ALR 275 per Von Doussa J at 278.
In the present case there is evidence, to which I have already referred, that AIN has in train such inquiries. In those circumstances I agree with Mr Gray on behalf of AIN that, to this extent, as a matter of discretion at least, it is not necessary that the Court make a specific order in that particular respect. However, Mr Gray has further submitted that, given the extra territorial location of the documents, no further order for discovery should be made as sought by John Fairfax. As I have noted, the submission is put not only in substantive terms but as a matter of discretion.
In my opinion, the relevant law is well settled and is conveniently stated in Halsbury's Laws of England 4th ed. Vol.13, para.39. Relevantly, it is that, for present purposes, "power" means an enforceable right to inspect or to obtain possession or control of the document from the person who ordinarily has it in fact.
I would only add the possible qualification, which I think is implicit in Halsbury's statement, that the right to inspect is, in that context, to be seen not as a bare right to inspect, but to carry with it the usual right which is incidental to a right to inspect, that is to say, a right to take a copy (cf. Theodore v Australian Postal Commission (1988) VR 272. In Lonrho Limited v Shell Petroleum (1980) 1 WLR 627, Lord Diplock said (at 635-6):
"...in the context of the phrase 'possession, custody or power' the expression 'power' must, in my view, mean a presently enforceable legal right to obtain from whoever actually holds the document inspection of it without the need to obtain the consent of anyone else. Provided that the right is presently enforceable, the fact that for physical reasons it may not be possible for the person entitled to it to obtain immediate inspection would not prevent the document from being within his power; but in the absence of a presently enforceable right there is, in my view, nothing in Order 24 to compel a party to a cause or matter to take steps that will enable him to acquire one in the future."
On behalf of AIN, Mr Gray relied on the following passage in the reasons of Lord Diplock in the Lonrho case (at 636) as follows:
"For the reasons already indicated Shell Mocambique's documents are not in my opinion within the 'power' of either of Shell or B.P. within the meaning of R.S.C., Ord. 24. They could only be brought within their power either (1) by their taking steps to alter the articles of association of Consolidated and procuring Consolidated through its own board of directors to take steps to alter the articles of association of Shell Mocambique, which Order 24 does not require them to do; or (2) by obtaining the voluntary consent of the board of Shell Mocambique to let them take copies of the documents. It may well be that such consent should be obtained; but Shell and B.P. are not required by Order 24 to seek it, any more than a natural person is obliged to ask a close relative or anyone else who is a stranger to the suit to provide him with copies of documents in the ownership and possession of that other person, however likely he might be to comply voluntarily with the request if it were made."
In my opinion, those observations are distinguishable here.
Lord Diplock went on to say (at 636-7) as follows:
"In dismissing the subsidiaries appeal on its own special facts, I expressly decline any invitation to roam any further into the general law of discovery. In particular, I say nothing about one-man companies
in which a natural person and/or his nominees are the sole shareholders and directors. It may be that, depending upon their own particular facts, different considerations may apply to these."
(See also Douglas Hill v Parke Davis Pty Limited (1990) 54 SASR 346 at 350-2.)
In my opinion, the evidence indicates that, prima facie at least, there appear to exist documents which are held by Lazard on behalf of AIN, which relate to a matter in question in the principal proceedings. As I have already said, this is not an appropriate stage, and I do not attempt, to embark upon the adjudication of the issue whether, in truth, any such documents are held. It is sufficient for present purposes for there to be material in evidence from which, prima facie, it may be said that there appears to be documents of that character. In my opinion, that test is satisfied here.
As I indicated in argument, the only order that could be made,at this stage of the proceeding, is an order that AIN take all such steps as may be reasonably necessary to obtain the documents in question and to give discovery of such documents. In other words, a question may arise, which I would not attempt to anticipate, whether, in the circumstances, AIN has in fact taken all such steps within its power, as may be reasonably necessary, to obtain the documents (cf. Mirtens v Haig (1863) 3 DG J and Sm.528). That will depend upon the circumstances of the case when they are known.
In my view, as a matter of substance, John Fairfax has made out a case for the grant of relief.
On the question of discretion, as I have said, AIN has resisted the making of any order but I cannot be confident that it is unnecessary that the Court intervene to ensure that proper discovery take place. Nor am I satisfied that it would be futile to make an order of the kind proposed, notwithstanding that AIN has now made certain inquiries of Lazard Freres.
In the circumstances I make the following orders.
I direct that AIN:
(1) Take all such steps as may be reasonably necessary to obtain from
Lazard Freres possession of any document held by Lazard Freres on behalf of AIN or in respect of which AIN is entitled to obtain a copy, which relate to any matter in question in the principal proceedings
(2) Give discovery of such documents in accordance with the Rules of
Court.
I order that the costs of this motion be the costs of John Fairfax in the principal proceedings.
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