Chadwick, K.M. and A v Yeung, E.T.M

[1994] FCA 770

JUDGMENT NO. ... 770 9 .. ........ . J .,k,,,,,

NOT FOR DISTRIBUTION

FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY j	NO. NG 3187 of 1994
GENERAL DIVISION	)

BETWEEN:

K.M. h A. CHADWICK

Applicant

AND :

ERIC TSUN MAN YEUNG

and OTHERS

Respondent

RECEIVED

CORAM :	SACWILLE J.	2 5 OCT 1994
DATE :	7 OCTOBER 1994	FEDERAL COURT OF
PLACE :	SYDNEY	AUSTRALIA PRINCIPAL REQISTRY

REASONS FOR JUDGMENT

HIS HONOUR: In this matter the applicants on the notice of motion, who are the respondents in the proceedings, move the court for orders that notices for discovery be set aside. The notices are dated 13 July 1994 and are directed to each of the respondents. It appears that the notices referred to were in fact filed in the Court on 15 July 1994, and were served on 20 July 1994. The basis of the application is that the notices for discovery constitute, in the circumstances of the case, a fishing expedition and that, for this reason, the notices should be set aside. The source of authority for the application made in the notice of motion is order 15, rule 1 of the Federal Court Rules. That rule provides as follows:

After a directions hearing pursuant to order 10 and

within any period limited by the Court for this purpose, any party may, unless the Court otherwise orders, by notice of discovery filed and served on any other party, require any other party to give discovery of documents.

The substantive proceedings were instituted by a statement of claim filed on 9 May 1994. In the statement of claim, the applicant (the respondent to this notice of motion), pleads a case intended to invoke 8.592 of the Coruorations Law. The statement of claim pleads that during 1990 and 1991 the respondents were directors of Stafford Mining Pty Limited. That allegation is admitted in the defence filed on behalf of the respondents. The statement of claim alleges that, between February and April 1991, the company, Stafford Mining Pty Ltd, incurred debts to the plaintiff in the sum of $81,583.48, in respect of petroleum and related products sold and delivered. It is also alleged that judgment was obtained in the District Court by the plaintiff against the company in respect of the debts. These allegations are not admitted in the defence.

Paragraph 4 of the statement of claim alleges that,	immediately before the time when the debts to the plaintiff
the company would not be able to pay its debts as and when they became due, and that there were reasonable grounds to expect that, if the company incurred the debts, it would not be able to pay all of its debts as and when they became due. The particulars to paragraph 4 refer to a demand by the Federal Commissioner of Taxation that the company pay some $96,000 in 1989. The particulars also refer to a debt, said to have been incurred by the company to Volvo Australia Pty Limited, in the sum of $15,306. In each case the particulars state that the company did not pay the amounts due. In the case of the Volvo Australia debt, a judgment was obtained against the company. The particulars state that they are the best that the applicant could give at this stage of the proceedings. The allegations in paragraph 4 of the statement of claim are denied by the respondents in their defence.
The statement of claim also alleges that a receiver was appointed to the company in February 1992, and that on 2 June 1992 the Supreme Court of New South Wales ordered that the company be wound up. Those allegations are admitted in the defence.
The litigation has not thus far provided a model as to how litigation ought to be conducted, whether in this Court or elsewhere. I have been informed that the applicant was directed to file and serve affidavits, initially in accordance
with a timetable requiring this to be done by 1 July 1994. On 15 July 1994, Registrar Hedge directed the applicant to file
and serve affidavits upon which it relied, on or before 9 September 1994. No such evidence has been filed. I was also told from the bar table that, in the course of the proceedings before Registrar Hedge, the applicant was advised that if a notice for discovery were filed in the proceedings an application might be made for it to be set aside.
I should add that Mr Aldridge, who appeared for the applicants
on the motion initially indicated that a basis for seeking to set aside the notice of discovery might be that the notice would require some or all of his clients to be exposed to the possibility of self incrimination. That ground, however, was not pressed before me, as Mr Aldridge conceded that the appropriate course was to consider the application of the privilege on a document by document basis.
Mr Aldridge has pointed out that there is no absolute right to discovery in proceedings in this Court. He has also pointed out, quite correctly, that a ground for setting aside a notice for discovery is that the party issuing the notice seeks to use it for the purposes of "fishing". Mr Aldridge drew my attention to the case of W.A. Pines Ptv Ltd v Bannerman (1980) 30 ALR 559, and in particular the passages at 574 to 576. In the course of that judgement Lockhart J cited observations of Owen J in Associated Dominion Assurance Society Ptv Ltd v John Fairfax & Sons Limited (1952) 72 WN (NSW) 250, at 254:

were incurred, there were reasonable grounds to expect that

has been used in the law, means, as I understand it, that	"A 'fishing expedition', in the sense in which the phrase
a person who 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 out whether there are any there or not".

This test leaves some room for its application to the particular circumstances of a case. Mr Aldridge quite correctly acknowledged that the facts of W A Pines v Bannerman were different from the case before me. In the present case the statement of claim, albeit in a somewhat laconic fashion,

alleges material facts that are capable of constituting the basis of a claim under s.592 of the Cor~orations Law. Certain particulars had been provided of the key allegations in paragraph 4. No further particulars have yet been sought by the respondents. The material facts alleged indicate that there were debts incurred prior to the time the debts to the applicants were incurred and that these prior debts have never been paid by the company. The Statement of Claim also indicates that, within a relatively short time of the applicant's debts being incurred, the company was placed into receivership. Ultimately, some 14 months after the last of the debts to the applicants were incurred, fhe company was wound up by an order of the Supreme Court of New South Wales.

In these circumstances it does not seem to me that the notice for discovery issued in the present case answers the description of a document intended as a fishing expedition, in the sense of seeking to ascertain whether there might be some evidence where none is presently available to the applicant.

detailed particulars of the allegations in paragraph 4, beyond	It is true that the statement of claim does not provide
a reference to the two substantial debts incurred but unpaid at the relevant time. It is also presumably true that some evidence in support of the allegations could be obtained by the applicant through subpoenas directed to the liquidator and perhaps others. I was informed by Mr Brabazon, who appeared for the respondent to the motion, that subpoenas had been issued and that some documents had been produced
Nonetheless, it seems to me that the pleadings allege facts that take the case out of the category of those where an applicant seeks discovery in order to ascertain whether there is any evidence to support the case. Facts are alleged in the pleadings and particulars that suggest, if true, that there may be grounds for establishing a case under 6.592 of the Cor~orations Law. Whether that material is sufficient in the end to make out the case pleaded is of course another question. Of course, the respondents thus far have not sought any particulars of the applicant's case.
Mr Aldridge drew my attention to the now repeated failures of
the applicant in the substantive proceedings to comply with the directions to file and serve affidavits. It is certainly an unsatisfactory state of affairs that the applicant should have so conducted itself in the conduct of the proceedings. Furthermore, it has chosen not to provide any explanation as to why default has occurred. Mr Brabazon has indicated that it may be that the applicant was awaiting the provision of the
discovered documents before preparing its affidavit. Whether or not that is the case, the course of action that should have been adopted was either to vacate the orders that had been
made or to proceed with an application to ensure the discovery was given in an appropriate and timely manner.
While the applicant may be deserving of censure for this failure to comply with the directions of the Court, I do not think it leads to the conclusion that the issue and service of the notice for discovery can be characterised simply as a fishing expedition. The outline of the case (the details of which remain to be filled in on many respects) is clear enough. In these circumstances I propose to dismiss the notice of motion.
I will now proceed to deal with the future conduct of this matter in order to attempt to ensure that it is conducted in a timely fashion by the parties.
RECORDED NOT TRANSCRIBED
HIS HONOUR: The first thing I will do as far as directions are concerned is this. In the light of my reasons, and in order to ensure that this case as far as possible is conducted expeditiously, I shall direct the respondents to file and serve affidavits of discovery in response to the notices of discovery within 21 days from today's date. Next, I direct that inspection take place within 14 days of the service of
the affidavits of discovery. Thirdly, I direct that the applicant file and serve evidence upon which it intends to
rely, other than evidence arising out of discovery by the respondents, within 28 days from today's date. I note that this direction extends to the evidence of experts upon which the applicant intends to rely. I direct that the matter be before the court for directions at 9.30 am on Friday, 18 November before me. At that time the parties will be expected to deliver a full account of themselves and their conduct of the litigation in the intervening seven weeks.
RECORDED : NOT TRANSCRIBED
HIS HONOUR$ I have given consideration as to whether I should deprive the respondents to the notice of motion of the costs that would ordinarily be theirs in the light of their success on the motion. I have given consideration to this because of their failure to comply with the directions of the court. On balance, I am persuaded that the failure to comply really raises separate issues. As Mr Brabazon has pointed out, the primary focus of the notice of motion as initially framed was on the application of the privilege against self incrimination. It was not obvious that a major part of the argument would involve reference to the default by the applicant in complying with the Court's directions relating to the filing and serving of affidavits. In the circumstances I think costs should follow the event. I order that the respondents in the principal proceedings (applicants on the
notice of motion. notice of motion) pay the costs of the respondent of the I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment of the Honourable Justice

Sackville. / -

Associate:  -Js Fe--.f,h

Dated: 7 October, 1994
7 October 1994

Place:	Sydney
Decision:	7 October 1994
Appearances:	Mr L Brabazon instructed by Wilkinson, Throsby & Edwards, Solicitors, appeared for the applicant.
Mr Aldridge instructed by Bouzanis, Solicitors, appeared for the respondents.