Chelcourt Pty Limited v Park Lane Fashions Pty Limited - [2007] NSWSC 127

No judgment structure available for this case.

CITATION: CHELCOURT PTY. LIMITED and ANOTHER –v- PARK LANE FASHIONS PTY. LIMITED and ORS [2007] NSWSC 127

HEARING DATE(S): 5 February 2007

JUDGMENT DATE :
26 February 2007

JURISDICTION: Equity Division

JUDGMENT OF: Associate Justice McLaughlin

DECISION: 1. I make orders as sought in paragraphs 1, 2.1, 3, 4, 5 and 6 in the interlocutory process filed by the Plaintiffs on 4 September 2006; 2. I order, with respect to the subpoena issued on 17 August 2006 at the request of the Second to Fourth Defendants and addressed to Graham Hurwitz, an order that, insofar as paragraph 2 of the aforesaid subpoena seeks production of documents beyond group certificates or payment summaries (and amendments thereto) issued by the First Defendant for the late Allan Levin for the period 1 July 1995 to the date of the subpoena, such subpoena be set aside; 3. I order that the interlocutory process filed by the Second, Third and Fourth Defendants on 28 September 2006 be dismissed; 4. I order that the aforesaid Defendants pay the costs of the Plaintiffs of the aforesaid interlocutory process filed on 28 September 2006; 5. I order that MFI 1 be returned to the Plaintiffs; 6. The exhibits may be returned

CATCHWORDS: Practice. - Subpoenas. - Discovery. - Claim for client legal privilege.

LEGISLATION CITED: Civil Procedure Act 2005
Evidence Act 1995

PARTIES: Chelcourt Pty. Limited (First Plaintiff/ First Respondent)
Carolyn Levin (Second Plaintiff/ Second Respondent)
Park Lane Fashions Pty. Limited (First Defendant)
Belmorta Pty. Limited (Second Defendant/ First Applicant)
Mervyn Aaron Levin (Third Defendant/ Second Applicant)
Thelma Levin (Fourth Defendant/ Third Applicant)

FILE NUMBER(S): SC 1445 of 2006

COUNSEL: Mr V. Bedrossian (Plaintiffs)
Mr F. Lever SC (Defendants)

SOLICITORS: H. A Miedzinsky Solicitors (Plaintiffs)
Gibsons Lawyers (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Monday, 26 February 2007

1445 of 2006 CHELCOURT PTY. LIMITED and ANOTHER –v- PARK LANE FASHIONS PTY. LIMITED and ORS

JUDGMENT

1 HIS HONOUR: There are presently before the Court two applications. The first in point of time is that made by the Plaintiffs, Chelcourt Pty. Limited and Carolyn Levin, by way of interlocutory process filed on 4 September 2006. The later application is that made by the Defendants, Park Lane Fashions Pty. Limited, Belmorta Pty. Limited, Mervyn Aaron Levin and Thelma Levin, by way of interlocutory process filed on 28 September 2006.

2 The Plaintiffs by their application seek relief in respect to discovery required of them by the Second, Third and Fourth Defendants (to whom I shall hereafter refer “the Defendants”) and in respect to certain subpoenas issued at the request of the Defendants.

3 I would at the outset observe that applications of the nature of those presently before the Court are usually dealt with by the Registrar, who has ample power to do so. (See Part 1 of the Schedule to the Delegation to Registrars under section 13 of Civil Procedure Act 2005, dated 31 August 2005.)

4 Counsel who appeared before me at the hearing were unable to explain how it came about that these applications, originally in the Registrar’s list, had (presumably at the request of the parties) been referred to the Associate Judge’s call-over on 29 September 2006, or why, on that occasion, Associate Justice Macready had not been alerted to the fact that these applications should have been heard by the Registrar.

5 Regarding each application I have had the benefit of receiving a written outline of submission from Counsel for the respective parties. Those documents will be retained in the Court file.

6 I propose to deal separately with each application.

7 By paragraph 1 of their interlocutory process the Plaintiffs they seek the following interlocutory relief:

Uniform Civil Procedure Rules

8 It should here be recorded that the foregoing document, List of Categories of Documents to be Discovered by the Plaintiffs dated 28 July 2006, has been superseded by an Amended List of Categories of Documents to be Discovered by the Plaintiffs dated 29 August 2006. However, the paragraphs which are the subject of the interlocutory relief claimed by the Plaintiffs in paragraph 1 of the interlocutory process are in identical terms in each of the two documents. Those categories are as follows,

…

which came into existence since 1 February 2005.

15. All documents referring to or concerning the “fair price” of the shares in Park Lane Fashions Pty Ltd referred to in paragraphs 6.2, 6.4, 6.5 and 6.7 of the relief claimed in the Statement of Claim which came into existence on or after 19 July 2004 other than the documents referred to in paragraph 14 above.

9 The Plaintiffs object to providing discovery in accordance with the foregoing paragraphs 5, 14 and 15 in the List of Categories, upon the basis that the documents sought to be discovered are not relevant to the facts in issue in the proceedings as identified in the pleadings. An additional ground of objection to discovery of documents sought in paragraph 15 is that such paragraph is unclear and uncertain as to the nature of the documents that are sought by its terms.

10 Rule 21.1(2) of the Uniform Civil Procedure Rules provides,

relevant to a fact in issue

11 It is submitted on behalf of the Plaintiffs that in respect to paragraph 5 of the List of Categories, being statements in relation to any account conducted by Allan Levin with any financial institution for the period specified therein, either alone or with any other person, the financial position of Allan is not an issue that arises for consideration in the present proceedings; but it is the conduct of the First Defendant at the hands of the other Defendants that is in issue; and no aspect of the financial position of Allan bears upon this issue. Further, in respect to the alleged agreement for the granting to the Plaintiffs of the increased shareholding in the First Defendant, this issue also (the Plaintiffs submits) falls to be considered without any need (however remote or tangential) for a consideration of the financial position of Allan.

12 All parties were in agreement that the foregoing criterion stated in rule 21.1(2) regarding whether or not a document is relevant to a fact in issue must be determined upon a consideration of the issues disclosed by the pleadings.

13 However, it is submitted on behalf of the Plaintiffs that the essential question in this regard, which is thrown up by the pleadings, is whether the remuneration which Allan received from the First Defendant was adequate or satisfactory - not whether he received remuneration from any other source.

14 The Defendants, however, recognising that category 5 requires the discovery of documents which evidence monetary benefits received (not just his salary or wages) by Allan during the years while he was a director of Park Lane Fashions Pty. Limited (“Park Lane Fashions”), submit that evidence of such benefits is relevant to the issue of estoppel and unconscionability which is raised in the pleadings. The Defendants submit that such documents go directly to the issue raised by the Plaintiffs in the statement of claim that, in reliance upon the representation made to him by Mervyn Levin that Park Lane Fashions would allot additional shares to him, Allan remained in his employment with Park Lane Fashions “at a salary or wage significantly lower than that to which he would otherwise reasonably have been entitled” (paragraph 13.5). According to the Defendants, the issue is not simply the salary paid to Allan by Park Lane Fashions; it is the total remuneration package paid to both him and his wife Carolyn Levin, the First Plaintiff – that is, the actual extent of the benefits which he (and his family) received.

15 I am in agreement with the submission of the Plaintiffs that a determination of the issue identified by the pleadings, and recognised by the Defendants in their foregoing submission, that Allan remained in his employment with Park Lane Fashions at a salary or wage significantly lower than that to which he would otherwise reasonably have been entitled, must be determined upon a consideration of whether Allan’s remuneration from Park Lane Fashions was adequate or satisfactory, not whether he (or he and his wife, the First Plaintiff) received remuneration from other sources.

16 Accordingly, I am not satisfied that the material sought in paragraph 5 is relevant to any matter in issue in the proceedings, and thus that the Plaintiffs should relieved from any obligation to provide discovery of such material.

17 In respect to the material sought in category 14, being documents and communications between Bill Jansen (an accountant with Ernst & Young) or any other accountant or financial advisor, on the one hand, and the Plaintiffs, on the other hand, it will be appreciated that the material sought does not consist of contemporaneous documents, but only material which came into existence since the date of the death of Allan. It will be appreciated that at this stage in the proceedings the documents and communications sought constitute merely the opinions of a third party. They do not constitute expert evidence presented to the Court (although it will be appreciated that it is possible that ultimately Mr Jansen or some other accountant may, if appropriately qualified, and if complying with the expert’s code of conduct, present expert evidence to the Court on affidavit). Even if the value of the business, shares and other financial affairs of Park Lane Fashions becomes a matter for determination by the Court, the recent opinions of a person who is a stranger to the litigation and who is not presented by any party in the character of an expert witness are not relevant to such a determination.

18 The fact (if such be the case) that Mr Jansen may have initially been retained by the First Plaintiff, not by her solicitors, to perform evaluation of the shares in Park Lane Fashions before the commencement of the proceedings, does not in my conclusion make this material discoverable by the Plaintiffs. For the reasons which I have already expressed concerning the current status of the opinion of Mr Jansen or of Ernst & Young (or any other accountant or financial advisor who may have been retained by the Plaintiffs for a similar purpose) is not in my conclusion relevant to the issue of the “fair price” which the Plaintiffs might require the Defendants to pay for the First Plaintiff’s shares in Park Lane Fashions- that being a ground upon which the Defendants seek to establish the relevance of category 14.

19 In my conclusion, therefore, the Plaintiffs are not required to provide discovery of the material described in paragraph 14 in the List of Categories.

20 Paragraph 15 in the List of Categories is in the following terms,

All documents referring to or concerning the “fair price” of the shares in Park Lane Fashions Pty Ltd referred to in paragraphs 6.2, 6.4, 6.5 and 6.7 of the relief claimed in the Statement of Claim which came into existence on or after 19 July 2004 other than the documents referred to in paragraph 14 above.

21 The shares referred to in the foregoing paragraphs of the relief claimed in the statement of claim are the First Plaintiff’s shareholding in the First Defendant (including any shares registered in the name of the First Plaintiff pursuant to orders of the Court).

22 It is submitted on behalf of the Plaintiffs that the description of documents sought in paragraph 15 is entirely unclear. The Plaintiffs submit that it is unreasonable for them to be required to assess how, if at all, documents may be said to be “referring to or concerning” the “fair price” of the issued capital of the First Defendant.

23 The Plaintiffs further submit that even if such description is not uncertain, documents of the nature that might be said to be sought under this paragraph are entirely irrelevant to the issues arising on the pleadings. The substantive relief ultimately sought in the proceedings will include a determination by the Court of a “fair price” for the Plaintiffs’ shareholding in the First Defendant. The Plaintiffs point to the fact that that “fair price” is a matter for the determination of the Court. The personal views of the Plaintiffs – if they do, in fact, hold such views – about what that “fair price” should be are entirely irrelevant, especially in circumstances where allegations are also made concerning the failure of the Defendants to provide complete or accurate financial information about the First Defendant.

24 The Defendants, however, respond by submitting that paragraph 15 describes categories which go directly to “fair price of the shares in Park Lane Fashions”, which are referred to in the claim for relief in the foregoing paragraphs of the statement of claim.

25 I am in agreement with the submission on the part of the Plaintiffs that this category of documents which the Defendants seek should be discovered constitutes, in effect, an attempt to pry into the inner thoughts of a party to litigation during the course of the litigation. It will also be appreciated that the description of the documents sought in this category is not limited to documents contemporaneous with the complaints of the Plaintiffs concerning the conduct of the Defendants in relation to Allan, but seeks documents which came into existence on or after 19 July 2004, that is, documents which came into existence after Allan’s death.

26 I consider that the material sought in this paragraph is not relevant to any issue in the proceeding, and that the Plaintiffs should not be required to provide discovery of such material.

27 It follow, therefore, that the Plaintiffs are entitled to an order in the terms of paragraph 1 of the interlocutory process filed on 4 September 2006.

28 The relief sought in paragraphs 2, 3 and 4 of the interlocutory process filed on behalf of the Plaintiffs relates to the setting aside of certain parts of various subpoenas.

29 Paragraph 2 of the interlocutory process is as follows,

Uniform Civil Procedure Rules

2.1 paragraphs 3, 4, 5, 6, 7 and 8 of the aforementioned subpoena be set aside; and

30 I would here interpolate that it is my understanding that the effect of the alternative order sought in paragraph 2.2 is that the Plaintiffs do not object to the production of group certificates or payment summaries (or any amendments thereto) issued by the First Defendant for Allan Levin for the relevant period.

31 It was not in dispute between the parties that the jurisdiction of the Court to set aside a subpoena in whole or in part (pursuant to the provisions Part 33 rule 33.4 of the Uniform Civil Procedure Rules 2005) could be exercised upon the application of a party where, as here, the relevant subpoena was addressed to some person other than the party making the application.

32 The parts of the subpoena addressed to Graham Hurwitz, which are the subject of complaint by the Plaintiffs are as follows;

2. All tax returns, notices of assessment, group certificates, payment summaries and any amendments thereto for the late Allan Levin and/or the Second Plaintiff for the period 1 July 1995 to date.

3. All documents and other communications between the late Allan Levin or the executor of his estate or any nominee or agent thereof and/or the Second Plaintiff on the one hand and any officer, employee, agent or partner of Krochmalik Hurwitz & Co Chartered Accountants and/or Krochmalik & Hurwitz Pty. Ltd (joint and severally called “K&H”) on the other hand, containing information in relation to the preparation of income tax returns for the period 1 July 1995 to date of the late Allan Levin and/or the Second Plaintiff

4. All documents and other communications between K&H and the late Allan Levin or the executor of his estate or any nominee or agent thereof containing information in relation to his taxation, financial or business affairs for the period 1 July 1997 to date.

5. All diary notes created by K&H in relation to the late Allan Levin’s taxation, financial or business affairs for the period 1 July 1995 to date.

6. All letters, emails, faxes, file notes or other documents containing information relating to any and all benefits received by the late Allan Levin (or his nominees) or the Plaintiffs from any of the Defendants for the period 1 July 1995 to date, including (without limiting the generality of the foregoing) documents indicating loans or gifts provided to the late Allan Levin from any of the Defendants, dividends paid or credited to the First Plaintiff by the Second Defendant, wages paid to the Second Plaintiff by the First Defendant and the use of motor vehicles and other chattels by the Second Plaintiff provided by the First Defendant.

7. All documents sent since 1 July 1997 by K&H to any person who was not at the relevant time an officer, employee, agent or partner of Krochmalik Hurwitz and Co Chartered Accountants and/or Krochmalik & Hurwitz Pty. Ltd concerning the taxation, financial or business affairs of the late Allan Levin.

33 It was submitted on behalf of the Plaintiffs that the documents sought by paragraph 2 of the subpoena relate to the personal financial position of Allan, and that such documents are not relevant to a fact in issue, except insofar as Allan received payments from the First Defendant. The Plaintiffs observed that any such payments would be recorded in relevant group certificates or payment summaries issued by the First Defendant, and the Plaintiffs do not object to the production of such material pursuant to the subpoena.

34 However, the Plaintiffs observed that terms of paragraphs 3 to 8 of the subpoena also seek information relating solely to the personal financial position of Allan, and submit that such documents do not relate a fact in issue in the proceedings. If, submit the Plaintiffs, the production of documents is sought which relates to the payment of wages or salaries by the First Defendant to Allan then a greatly circumscribed form of subpoena should be issued. Further, if production of documents is sought which relate to documents that make any reference to the granting or proposed granting of additional shareholding in the First Defendant, then, again, a greatly circumscribed form of subpoena should be issued.

35 The Plaintiffs submit that the terms of the subpoena as presently framed are such as to make necessary inquiry concerning a vast quantity of personal information that is entirely irrelevant to the proceedings, and, hence, that the inclusion of such terms constitutes an abuse of the process of the Court. The Plaintiffs submit that these paragraphs not only seek production of irrelevant information, but also constitute a substitute for discovery against the Plaintiffs (albeit discovery of irrelevant documentation, given the lack of relevance of such documents to the proceedings). The Plaintiffs submit that these paragraphs of the subpoena are also oppressive.

36 The Defendants, however, point to the fact that the documents sought in paragraphs 2 to 8 of the subpoena relate to taxation returns and other documents concerning income earned by Allan and the Second Plaintiff for the period 1 July 1995 to date. The Defendants submit that the documents relate to income earned by Allan directly or through income splitting arrangements with his wife, the Second Plaintiff, during the period in which it alleged by the Plaintiffs that Allan relied to his detriment on the promise/representation said to have been made to him by Mervyn Levin, that Park Lane Fashions would allot additional shares to him, because he continued to work for Park Lane Fashions “at a salary or wage significantly lower than that to which he would otherwise reasonably have been entitled…” (paragraph 13.5 of the statement of claim).

37 The Defendants submit that the claim of the Plaintiffs puts in issue the benefits received by Allan, either directly or indirectly and whether personally or through the Second Defendant, during the period while he worked for and was a director of Park Lane Fashions. Further, that the question whether Mervyn Levin and/or Park Lane Fashions acted unconscionably will be influenced by this evidentiary mosaic, and that the totality of the benefits received by Allan during the relevant period will throw light on that aspect of the case of the Plaintiffs. Further, it is submitted on behalf of the Defendants that it may also influence the exercise of the Court’s discretion when determining the nature of any relief to which the Plaintiffs may ultimately be found to be entitled.

38 I consider that paragraph 2 is couched far too widely and goes beyond any matter in issue in the proceedings. However, to the extent that the income of Allan from the First Defendant may be relevant to the issue raised in paragraph 13.5 of the statement of claim, I consider that the Defendants are entitled to have produced on subpoena group certificates or payment summaries (and any amendments thereto) issued by the First Defendant for Allan for the period sought in the subpoena. (In passing, I would observe that it might be expected that the Defendants themselves, in particular, the First Defendant, would already hold copies of those documents.)

39 The material sought in paragraph 3 (“all documents and other communications… containing information in relation to the preparation of income tax returns…”) is extremely wide. It goes far beyond material relating to the income of Allan and of the Second Plaintiff. The Plaintiffs submit that, in any event Allan’s income is not relevant. However, even if his income is relevant, the terms of this paragraph are far too wide, and this paragraph should be set aside.

40 Similarly, I consider that the material sought in each of paragraph 4 and 5 is far too wide, and, in any event, does not go to any matter in issue in the proceedings. Those paragraphs also will be set aside.

41 The comments which I have made concerning paragraphs 3, 4 and 5 are also applicable to paragraph 6. Further, in respect to paragraph 6 it will be appreciated that the Defendants do not by their defence raise anything in the nature of an offsetting claim. I do not see, therefore, how the Defendants can possibly establish their entitlement to material sought in paragraph 6 (even accepting that the remuneration which Allan received from the First Defendant might be relevant), which seeks production of material “containing information relating to any and all benefits received by the late Allan Levin (or his nominees) or the Plaintiffs from any of the Defendants...” [emphasis added].

42 Similarly, the terms of paragraph 7 are too wide. The material sought in this paragraph is not relevant to the issues between the parties, and nothing is raised in the pleadings “concerning the taxation, financial or business affairs” of Allan. This paragraph also will be set aside.

43 The observations which I have made concerning paragraph 7 have equal application to paragraph 8, which also will be set aside.

44 To summarise, therefore, paragraph 2 of the subpoena will be set aside to the extent that it requires the production of any material respecting the Second Plaintiff and the production of tax returns and notices of assessment in respect to Allan for the relevant period; and paragraphs 3, 4, 5, 6, 7 and 8 of the subpoena will be set aside.

45 Paragraph 3 of the Plaintiffs’ interlocutory process is as follows,

Uniform Civil Procedure Rules

3.1 Paragraphs 2, 3 and 5 of the aforementioned subpoena be set aside.

46 The foregoing paragraphs of the subpoena are as follows,

2. All letters, emails, faxes, file notes or other documents coming into existence since 1 January 2005 containing or recording communications between Bill Jansen accountant, your company, any director, other officer, employee, associate, representative or agent of your company (jointly and severally called Ernst & Young) on the one hand and either of the Plaintiffs or their servants or agents on the other hand which concern or relate to any of the Plaintiffs, the Defendants or the late Allan Levin.

3. All letters, emails, faxes, file notes or other documents coming into existence since 1 January 2005 containing or recording communications between Ernst & Young and Daniel Petre of 17 Springdale Road, Killara in the state of New South Wales or any servant or agent of the said Daniel Petre containing information concerning any of the Plaintiffs, the Defendants or the late Allan Levin.

…

47 It is submitted on behalf of the Plaintiffs that the terms of the foregoing paragraphs 2, 3 and 5 of the subpoena are such that they constitute an attempt by the Defendants to use the subpoena process as a substitute for discovery and that, in this way, such paragraphs constitute an abuse of process. All documents identified in paragraph 2 and 3 of the subpoena would, if relevant, be discoverable by the Plaintiffs. However, those documents sought in the foregoing paragraphs of the subpoena do not, in the submission of the Plaintiffs, relate to a relevant fact in issue in the proceedings; and the broad range and irrelevance of those paragraphs are such that they are, by their very nature, oppressive.

48 In respect to paragraph 5 of the subpoena the Plaintiffs also repeat the submission which they made in respect to paragraph 14 of the categories of discovery required by the Defendants. In this regard the identicality of the wording of paragraph 5 of the subpoena and paragraph 14 of the notice for discovery illustrates that, even if the Defendants otherwise were entitled to the material sought in this paragraph of the subpoena (contrary to the submission in that regard of Plaintiffs), it is clear from its terms that this subpoena is being used by the Defendants as a substitute for discovery.

49 I am in agreement with the submissions of the Plaintiff concerning the unacceptable breadth of the material sought in the subpoena, concerning the absence of relevance of that material to matters in issue in the proceedings and concerning the attempt of the Defendants to substitute a subpoena addressed to a stranger to the proceedings for discovery required of a party (here the Plaintiffs) to the proceedings.

50 Accordingly, I propose to set aside paragraphs 2, 3 and 5 of this subpoena.

51 Paragraph 4 of the interlocutory process of the Plaintiffs is as follows,

sic

Uniform Civil Procedure Rules

4.1 Paragraphs 2, 3, 4, 6, 7, 8, 9, 10 and 11 of the aforementioned subpoena be set aside.

52 The foregoing paragraphs of the subpoena addressed to Daniel Petre are as follows,

2. All letters, emails, faxes, file notes or other documents containing or recording any communication between you and either of the Plaintiffs concerning the late Allan Levin and his interest in or involvement with any transactions or events concerning or related to the First Defendant coming into existence since 1 July 2004.

3. All letters, emails, faxes, file notes or other documents containing or recording any communications between you and Bill Jansen, accountant, Ernst & Young or any other accountant, financial advisor or valuer regarding the interests of either of the Plaintiffs or the late Allan Levin in the First Defendant or the involvement of the late Allan Levin with any transactions or events concerning or related to the First Defendant coming into existence since 1 July 2004.

4. All letters, emails, faxes, file notes or other documents containing or recording communications between you (on the one hand) and the Plaintiffs or any servants or agents of the Plaintiffs (on the other hand) concerning any of the Defendants and/or the late Allan Levin coming into existence since 1 July 2004.

…

6. Except insofar as any such documents are otherwise covered above, all documents recording conversations between you (on the one hand) and any of the Plaintiffs, the Plaintiffs’, servants or agents, Ian Shacknofsky, Krochmalik & Hurwitz Pty Ltd, Krochmalik & Hurwitz Chartered Accountants, Ian Geller, Saville Israelson or Graham Hurwitz or the Defendants (on the other hand) concerning any of the Defendants and/or the late Allan Levin coming into existence since 1 July 2004.

7. Except insofar as any such documents are otherwise covered above, all documents, recording or referring to conferences between you (on the one hand) and any of the Plaintiffs, the Plaintiffs’, servants or agents, Ian Shacknofsky, Krochmalik & Hurwitz Pty Ltd, Krochmalik & Hurwitz Chartered Accountants, Ian Geller, Saville Israelson or Graham Hurwitz, the Defendants (on the other hand) concerning any of the Defendants and/or the late Allan Levin coming into existence since 1 July 2004.

8. Except insofar as any such documents are otherwise covered above, all documents recording, referring to or constituting any instructions, directions, advice or other information provided by any of the Plantiffs or their servants or agents to you regarding any of the Defendants and/or the late Allan Levin coming into existence since 1 July 2004.

9. Except insofar as any such documents are otherwise covered above, all documents recording, referring to or constituting any instructions, directions, advice or other information provided by you to any of the Plaintiffs or their servants or agents regarding any of the Defendants and/or the late Allan Levin coming into existence since 1 July 2004.

53 It is the submission of the Plaintiffs that paragraphs 2, 3, 4, 6, 7, 8 and 9 of the subpoena are such that they constitute an attempt by the Defendants to use the subpoena process as a substitute for discovery. They submit that, aside from the fact that the terms of such paragraphs are so broad as constitute a fishing expedition, they also clearly constitute an attempt to obtain production of documents that are not relevant to the facts in issue in the proceedings, and that, in this way, such paragraphs constitute an abuse of process.

54 The Plaintiffs submit that paragraph 10 both seeks documents that are not relevant to a fact in issue in the proceedings and is an abuse of process insofar as it represents an attempt to obtain discovery from a third party.

55 In respect to paragraph 10, it should also be observed that the terms of this paragraph replicate those of paragraph 14 of the notice for discovery, and also replicate the terms of paragraph 5 of the subpoena addressed to Ernst & Young. In regard to paragraph 10, I repeat the comments and observations which I have already made concerning the equivalent paragraph of the subpoena addressed to Ernst & Young and concerning paragraph 14 of the notice for discovery.

56 It is submitted on behalf of the Plaintiffs that paragraph 11 of the subpoena seeks documents that are entirely irrelevant to the determination of the facts in issue in the proceedings. Further, that for the Defendant to seek such general valuation information or material from the recipient of the subpoena constitutes an abuse of process. Further, that the terms of the paragraph are so wide as to constitute a fishing expedition and an abuse of process.

57 In respect to the subpoena addressed to Daniel Petre, it should be observed at the outset that Mr Petre is not a lawyer, but is a friend of the Second Plaintiff, upon whom she has relied for advice and assistance in the dispute of the Plaintiffs with the Defendants.

58 It is submitted on behalf of the Defendants that communications between the Second Plaintiff and Mr Petre dealing with the shareholding of the First Plaintiff in Park Lane Fashions have a real potential to impact on the nature of the discretionary relief which the Court may or may not grant under section 233 of the Corporations Act 2001. Further, that the communications between the Second Plaintiff and Mr Petre could also throw light upon the Second Plaintiff’s motives for bringing these proceedings, in particular, upon whether or not the First Plaintiff has been oppressed by Mervyn Levin in his conduct of the affairs of Park Lane Fashions, or whether Mervyn Levin has reasonably reacted to pressure brought to bear on him by the Second Plaintiff through her financial advisor, Mr Petre. The Defendants observe that from the statement of claim it appears that the Plaintiffs are contending that the alleged oppression is not only ongoing, but also relates back to a period in which Allan Levin was “primarily responsible for the day-to-day operation and management of the business of [Park Lane Fashions]” (paragraph 10 of the statement of claim).

59 I am in agreement with the submissions of the Plaintiffs concerning the extreme breadth of the terms of those paragraphs of the subpoena addressed to Mr Petre of which the Plaintiffs presently complain. Further, I consider that paragraph 10 in addition suffers the defects identified in respect to paragraph 14 of the notice for discovery and in respect to the equivalent paragraph of the subpoena addressed to Ernst & Young.

60 In addition, I consider that paragraph 11 cannot possibly be relevant to any matter in issue between the parties, and constitutes an abuse of process.

61 For the forgoing reasons, I propose to set aside the paragraphs of the subpoena addressed to Mr Petre which are the subject of the application by the Plaintiffs.

62 The remaining item of substantive relief sought in the interlocutory process filed by the Plaintiffs on 4 September 2006 is an order that the Defendants pay the costs of the Plaintiffs of and incidental to the interlocutory process (dated 21 March 2006) filed on 22 March 2006 on behalf of the Plaintiffs.

63 I would here interpolate that it seems somewhat curious that an application of this nature is included in the applications in respect to discovery and the setting aside of subpoenas. However, no objection was raised on behalf of the Defendants to this application being dealt with in the course of the present hearing.

64 The background to this application is that on 10 March 2006 the Defendants issued a notice to produce addressed to the Plaintiffs, despite the fact that at that time the pleadings had not closed, and thus the issues in dispute between the parties were not yet defined. The Plaintiffs took objection to that notice to produce, and by interlocutory process (dated 21 March 2006) filed by them on 22 March 2006 sought an order setting aside certain paragraphs of the notice to produce dated 10 March 2006, and an order limiting the obligation upon the Plaintiffs to produce documents pursuant to other paragraphs of the notice to produce.

65 The parties thereupon (and before the hearing of the interlocutory process of 22 March 2006) agreed upon certain procedural orders, which were incorporated in short minutes of order filed in Court on 30 June 2006. Those short minutes included a timetable in respect to the filing of a defence and any reply, as well as in respect to nominated lists of categories of documents for discovery. Paragraph 7 of the short minutes is in the following terms,

The Court notes that the Notice to Produce dated 10 March 2006 and served by the Defendants is withdrawn by the Defendants.

66 Paragraph 8 of the short minutes is in the following terms,

The costs of Plaintiffs’ Interlocutory Process dated 21 March 2006 (which made application to set aside various portions of the Defendants’ Notice to Produce) is stood over to 18 August 2006.

67 On that lastmentioned occasion orders were made by consent of the parties in accordance with short minutes of order filed in Court on 18 August 2006. Paragraph 10 of those short minutes is in the following terms,

The Plaintiffs’ Interlocutory Process dated 21 March 2006 (which made application to set aside various portions of the Defendants’ Notice to Produce) is dismissed and the issue of the costs of that Notice of Motion is stood over for determination at the same time as any Notice of Motion (as may be filed in accordance with Order 4 above) is to be returnable for determination or, if no such Notice of Motion is filed, such issue of costs is stood over also to 22 September 2006.

68 Order 4 of the short minutes contemplated the filing of a notice of motion by the Plaintiffs regarding their objections to categories of documents for discovery as nominated by the Defendants. Since the present interlocutory process of the Plaintiffs included, as paragraph 1 thereof, relief in respect to the categories of documents for discovery sought by the Defendants, the effect of the agreement between the parties set forth in the short minutes of 18 August 2006 was that the question of the costs of the interlocutory process of 22 March 2006 should be determined at the time of the hearing of the present interlocutory process.

69 The interlocutory process filed by the Plaintiffs on 22 March 2006 was made necessary by the conduct of the Defendants in serving upon the Plaintiffs the notice to produce of 10 March 2006. The Defendants subsequently withdrew that notice to produce, and thus the relief sought in the interlocutory process of 22 March 2006 was rendered unnecessary.

70 It is quite obvious that, in those circumstances, the Plaintiffs are entitled to their costs of the interlocutory process filed on 22 March 2006. The Defendants at the hearing of the present application made no submissions to the contrary. I propose to make an order as sought in paragraph 5 of the interlocutory process filed by the Plaintiffs on 4 September 2006.

71 I pass now to the interlocutory process filed on behalf of the Defendants on 28 September 2006.

72 By that interlocutory process the Defendants seek substantively an order that the Plaintiffs’ claim for privilege over the documents listed at item 34 of the Plaintiffs’ list of documents filed on 15 September 2006 be set aside.

73 I have already referred to the Amended List of Categories of Documents to be Discovered by the Plaintiffs, dated 29 August 2006. The Plaintiffs responded by filing a list of documents on 15 September 2006. In Part 1 (documents in possession of Plaintiffs), under the heading, Documents where privilege is claimed, there is included as item 34 the following,

Item No.

Nature of Documents
Number of documents in group of documents (if applicable) Date/Period Circumstances under which privilege is claimed

34 Correspondence between Daniel Petre as agent for the first and/or second plaintiffs on the one part and the first and/or second plaintiffs on the other part numerous various Confidential communication between client and another person that was made for the dominant purpose of providing professional legal services (s.119- Evidence Act (NSW) 1995)

74 At the hearing of the present application the Plaintiffs submitted to me a bundle of documents which constituted item 34 in the Plaintiffs’ list of documents. That bundle, together with an index thereto, was marked 1 for identification (MFI 1). It will be appreciated that the Defendants and their legal representatives have not seen that bundle.

75 There are 29 documents in the bundle. Privilege is not claimed by the Plaintiffs in respect to all 29 documents, since a number of those documents were responses to communications in respect to which privilege is not claimed. Thus, of the 29 documents in the bundle, privilege is claimed by the Plaintiffs in respect to 20 documents.

76 Of the foregoing 20 documents in the bundle the Defendants acknowledge that client legal professional privilege attaches to documents 3A, 7A, 9B, 12B and 13B. Thus there remain 16 documents in respect to which the Plaintiffs’ claim for privilege is in dispute.

77 In their list of documents the Plaintiffs ground their claim for privilege in respect to item 34 in the list of documents (that item consisting of the foregoing documents identified in MFI 1) upon the provisions of section 119 of the Evidence Act 1995. That section provides relevantly,

78 In consequence of a query raised by me during the course of the hearing as to whether section 119 had application only to evidence adduced at a hearing, or whether it had application to material, as here, the subject of interlocutory or pre-trial proceedings (such as discovery) I granted leave to Counsel to furnish further written submissions addressing this matter. I have now had the benefit of receiving supplementary submissions from Counsel for the Plaintiff on this topic.

79 Rule 21.5 of the Uniform Civil Procedure Rules 2005 identifies the obligation of a party who is subject to an order for discovery, to make available for inspection such documents as are included in that party’s list of discovered documents, except “privileged documents”. The term “privileged document” is defined in the Dictionary to the Uniform Civil Procedure Rules as meaning “a document that contains privileged information”. The phrase “privileged information” is subsequently defined in the Dictionary as meaning, relevantly, “information of which evidence could not, by virtue of the operation of Division 1 of Part 3.10 of the Evidence Act 1995, be adduced in the proceedings over the objection of any person”. Division 1 of Part 3.10 of the Evidence Act incorporates all the provisions relating to “client legal privilege”, including section 118 and section 119.

80 It is apparent from the foregoing that a claim grounded upon client legal privilege maybe made by a party which is required to give discovery, and that in respect to such a claim that party may rely upon the provisions of section 119 of the Evidence Act.

81 I should here record that Counsel for the Defendants did not submit to the contrary, and did not suggest that the provisions of section 119 of the Evidence Act applied only to the adducing of evidence at a hearing or that those provisions did not apply to a claim for privilege in respect to discovery.

82 I have already recorded that there was no suggestion that Mr Petre is a lawyer or that he is legally qualified. He is a friend of the Second Plaintiff. He was involved in negotiations between the Second Plaintiff and Mervyn Levin before the proceedings commenced. At that stage the Second Plaintiff’s solicitors, H A Miedzinski Lawyers, were not involved in those negotiations. The Defendants point to the fact that, since Mr Petre is not a lawyer, he cannot therefore provide “professional legal services”. As a friend, and perhaps financial advisor, he was apparently trying to assist the Second Plaintiff to negotiate a buy out of her shares in Park Lane Fashions by Mervyn Levin (or his company Belmorta Pty Limited).

83 According to the submission on behalf of the Defendants, the nature of the documents in respect to which privileged is claimed is simply correspondence between Daniel Petre (as agent for the First Plaintiff and/or the Second Plaintiff) and the First Plaintiff and/or the Second Plaintiff, concerning the respective interests of the Plaintiffs and of Allan Levin in Park Lane Fashions. It is submitted that there is no suggestion that the relevant correspondence:

(a) passed between Daniel Petre and the legal advisors of the Second Plaintiff; or

84 The Defendants point to the fact that Daniel Petre was not qualified to provide the Plaintiffs with professional legal services. No lawyers were involved in the correspondence. Further, even if Mr Petre provided the Plaintiffs with legal advice, that of itself did not make the communication privileged.

85 The Defendants recognise, by comparison, that the legal professional privilege claimed for correspondence in item 35 of the Plaintiffs’ list of documents may attract legal professional privilege, that being correspondence between Daniel Petre (as agent for the Plaintiffs) and H A Miedzinski Lawyers, being the solicitors who presently act for the Plaintiffs.

86 Whilst it is appreciated that Mr Petre is not and was not a lawyer, nevertheless, that fact is not determinative of the claim for privilege grounded on section 119 of the Evidence Act. The privilege is attracted where it can be established that the document was a confidential communication between the Second Plaintiff and Mr Petre and was made “for the dominant purpose of” the Second Plaintiff being provided with professional legal services relating to an anticipated proceeding in which the Second Plaintiff might be a party.

87 For the purpose of ruling upon the claim for privilege in respect to the remaining 16 documents under consideration, it was necessary for me to see those documents (although, as I have already recorded, they have not been seen by the Defendants or the legal representatives of the Defendants). I shall deal with each of those 15 items seriatim.

88 Document 3B E-mail – Daniel Petre to Carolyn Levin (22 February 2005, 4.47pm)

Evidence Act

89 Document 4A E-mail – Daniel Petre to HA Miedzinski and Carolyn Levin (25 February 2005, 3.03pm)

90 Document 5 E-mail – Daniel Petre to HA Miedzinski and Carolyn Levin (28 February 2005, 5.48pm)

91 Document 7B E-mail - Daniel Petre to Carolyn Levin (7 March 2005, 3.06pm)

92 Document 8 E-mail – Daniel Petre to HA Miedzinski and Carolyn Levin (9 March 2005, 2.14pm)

93 Document 9A E-mail – Daniel Petre to HA Miedzinski and Carolyn Levin (9 March 2005, 2.32pm)

94 Document 10A E-mail – Carolyn Levin to Daniel Petre and HA Miedzinski (12 March 2005, 4.44pm)

95 Document 10B E-mail – Daniel Petre to Carolyn Levin (12 March 2005, 2.16pm)

96 Document 11A E-mail – Daniel Petre to Carolyn Levin and copied to HA Miedzinski (12 March 2005, 5.04pm)

97 Document 11B E-mail – Carolyn Levin to Daniel Petre and HA Miedzinski (12 March 2005, 4.44pm)

98 Document 11C E-mail – Daniel Petre to Carolyn Levin (12 March 2005, 2.16pm)

99 Document 12A E-mail – Daniel Petre to HA Miedzinski and Carolyn Levin (14 March 2005, 3.25pm)

100 Document 13A E-mail – Daniel Petre to HA Miedzinski and Carolyn Levin (14 March 2005, 6.07pm)

101 Document 14 E-mail Daniel Petre to HA Miedzinski, with copy to Second Plaintiff (25 July 2005, 6.05pm)

102 For the foregoing reasons, in respect to each of the documents in MFI 1 for which privilege is claimed by the Plaintiffs, that claim for privilege is upheld. The Plaintiffs therefore are not required to produce for inspection those documents. The documents in respect to which either the Defendants acknowledge privilege or I have upheld the claim for privilege are as follow: documents 3A, 3B, 4A, 5, 6A, 7A, 7B, 8, 9A, 9B, 10A, 10B, 11A, 11B, 11C, 12A, 12B, 13A, 13B, 14.

103 The Plaintiffs have been totally successful in the relief sought by them in their interlocutory process of 4 September 2006 (subject to the alternative relief sought in paragraph 2.2 of that interlocutory process). Accordingly, the Plaintiffs are entitled to an order for their costs of that interlocutory process against the Defendants.

104 The Defendants have been totally unsuccessful in their application for an order that the Plaintiffs’ claim for privilege in respect to the documents referred to at item 34 in the Plaintiffs’ list of documents be set aside. Accordingly, the Defendants must pay the costs of the Plaintiffs of that application.

105 I make the following orders:

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Citations

Chelcourt Pty. Limited v Park Lane Fashions Pty. Limited [2007] NSWSC 127

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CITATION:	CHELCOURT PTY. LIMITED and ANOTHER –v- PARK LANE FASHIONS PTY. LIMITED and ORS [2007] NSWSC 127
HEARING DATE(S):	5 February 2007
JUDGMENT DATE :	26 February 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	Associate Justice McLaughlin
DECISION:	1. I make orders as sought in paragraphs 1, 2.1, 3, 4, 5 and 6 in the interlocutory process filed by the Plaintiffs on 4 September 2006; 2. I order, with respect to the subpoena issued on 17 August 2006 at the request of the Second to Fourth Defendants and addressed to Graham Hurwitz, an order that, insofar as paragraph 2 of the aforesaid subpoena seeks production of documents beyond group certificates or payment summaries (and amendments thereto) issued by the First Defendant for the late Allan Levin for the period 1 July 1995 to the date of the subpoena, such subpoena be set aside; 3. I order that the interlocutory process filed by the Second, Third and Fourth Defendants on 28 September 2006 be dismissed; 4. I order that the aforesaid Defendants pay the costs of the Plaintiffs of the aforesaid interlocutory process filed on 28 September 2006; 5. I order that MFI 1 be returned to the Plaintiffs; 6. The exhibits may be returned
CATCHWORDS:	Practice. - Subpoenas. - Discovery. - Claim for client legal privilege.
LEGISLATION CITED:	Civil Procedure Act 2005 Evidence Act 1995
PARTIES:	Chelcourt Pty. Limited (First Plaintiff/ First Respondent) Carolyn Levin (Second Plaintiff/ Second Respondent) Park Lane Fashions Pty. Limited (First Defendant) Belmorta Pty. Limited (Second Defendant/ First Applicant) Mervyn Aaron Levin (Third Defendant/ Second Applicant) Thelma Levin (Fourth Defendant/ Third Applicant)
FILE NUMBER(S):	SC 1445 of 2006
COUNSEL:	Mr V. Bedrossian (Plaintiffs) Mr F. Lever SC (Defendants)
SOLICITORS:	H. A Miedzinsky Solicitors (Plaintiffs) Gibsons Lawyers (Defendants)

Item No.	Nature of Documents	Number of documents in group of documents (if applicable)	Date/Period	Circumstances under which privilege is claimed
34	Correspondence between Daniel Petre as agent for the first and/or second plaintiffs on the one part and the first and/or second plaintiffs on the other part	numerous	various	Confidential communication between client and another person that was made for the dominant purpose of providing professional legal services (s.119- Evidence Act (NSW) 1995)