Commonwealth Bank of Australia v White (No 5)
[2002] VSC 566
•13 December 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 5660 of 1997
| COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) | Plaintiff |
| and | |
| PETER EVERETT WHITE | Defendant |
| and | |
| THE SOCIETY OF LLOYD’S | Third Party |
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JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19 November 2002 | |
DATE OF JUDGMENT: | 13 December 2002 | |
CASE MAY BE CITED AS: | Commonwealth Bank of Australia v White (No 5) | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 566 | |
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Practice and Procedure – discovery – possession power and control – relevance – discovery by categories.
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APPEARANCES: | Counsel | Solicitors |
| For the Defendant | Mr Mark Moshinsky | Foster Hart Lawyers |
| For the Third Party | Mr P.J. Jopling QC | Freehills |
HIS HONOUR:
Before the court is an appeal brought by the defendant, Peter Everett White, by notice dated 18 October 2002 from part of the order of Master Kings made on 11 October 2002 dealing with discovery of documents by him at the behest of the third party, the Society of Lloyd’s (“Lloyd’s”). The terms of the orders, so far as are here relevant are that:
“2.The Defendant on or before 31 January 2003 file and serve an affidavit of documents identifying those documents which are or have been in his possession, custody or power referred to in the categories in paragraphs 16(a) and (b) of the affidavit of Alan Mitchell sworn 15 August 2002 with the said subparagraphs amended to delete the word ‘all’ at the beginning of each subparagraph but excluding syndicate reports and accounts.
…
4.The Defendant pay 80% of Lloyd’s costs of the application for discovery of categories 16(a) and (b) of Mr Mitchell’s affidavit of 15 August 2002 and categories 4(c) and 8 of the categories of discovery proposed by Lloyd’s in a document dated 29 May 2002.”
The paragraphs referred to in Mr Mitchell’s affidavit sworn 15 August 2002 identify the documents to be discovered as follows:
“(a)All documents that are in the possession, custody or control of Mr White which relate to the closures of years of account by those syndicates on which Mr White underwrote in the years 1981-1992, including the calculation and audit of the RITC premium;
(b)All documents that are in the possession, custody or control of Mr White that relate to the reserving of those syndicates on which Mr White underwrote in the years 1981-1992, including the preparation and audit of the syndicate accounts”.
The material before the Master was voluminous. It comprised the following affidavits sworn by the solicitors for the parties as well as written submissions:
The Deponent
Date Filed by Alan James Foster 6 August 2002 White Alan James Foster 16 August 2002 White Alan James Foster 16 August 2002 White Alan James Foster 28 August 2002 White Josanne Rickard 6 August 2002 Lloyd’s Alan James Mitchell 15 August 2002 Lloyd’s Alan James Mitchell 18 September 2002 Lloyd’s Before me counsel for Mr White sought special leave to file and rely upon a further affidavit of Mr Foster sworn on 30 October 2002, and Lloyd’s sought similar leave with respect to an affidavit of Mr Mitchell sworn 18 November 2002 and a draft affidavit of Ms Rickard which was expected to be sworn in London on 18 November or shortly thereafter. These were proffered in answer to the affidavit of Mr Foster of 30 October 2002.
Counsel for Lloyd’s opposed the grant of special leave with respect to Mr Foster’s affidavit of 30 October. He reminded me of the recent decision of Hansen J[1] in which his Honour pointed out that a party should not treat the hearing before a Master merely as a “dry run” and will not be permitted to take a forensic advantage of the right of rehearing by withholding evidence before the Master.
[1]Brownport Management Ltd v Aqua-Tech 21 Pty Ltd [2002] VSC 396 at [39].
This is not such a case. The affidavit of Mr Foster of 30 October is directed to responding to the affidavit of Mr Mitchell sworn on 18 September, to placing before the court in a formal way material which was already before the Master and to updating the facts upon which I am asked to act in exercising my discretion. Inasmuch as it responds to Mr Mitchell’s affidavit, this last-mentioned affidavit was before the Master in circumstances which appear to be irregular. It was filed after the conclusion of argument on 16 August 2002, and without leave. Inasmuch as it deals with events which post-date the hearing before the Master and which may bear upon my discretion, it is very desirable that I should have this evidence before me. Accordingly, I determined that I should read and have regard to the following paragraphs of Mr Foster’s affidavit: paragraphs 1, 2, 3, 4, 7 and paragraphs 18 and following, and I granted special leave accordingly. I also granted special leave in respect of the two answering affidavits filed on behalf of Lloyd’s and further affidavits of Mr Foster sworn on 13 November 2002 and 18 November 2002.
As to the merits, it was put on behalf of Mr White that I should not order discovery of the documents on a number of alternative bases: the documents do not relate to any question raised by the pleading; the documents are not in the possession of Mr White; and discovery sought is too wide, fishing and oppressive. I heard argument on all grounds other than oppression which was stood over for further argument, should that be necessary.
Possession
A party is obliged to make discovery of documents which are in its possession or which have been in its possession[2]. Possession in this context means “possession, custody or power”[3]. As to the meaning of these expressions, I venture to repeat what I wrote in 1991: [4]
“The obligation imposed on a party subject to a notice under O. 29 is to disclose on affidavit any document which is or has been in his or her possession, custody or power. The expressions ‘possession, custody and power’ in this context have been authoritatively explained in the cases over many decades. ‘Possession’ refers to the lawful right to possession of a document. A document is within the ‘power’ of a party if the party has a presently enforceable right to inspect it without the need to obtain the consent of another[5]. A party has ‘custody’ of a document where the document is within the corporeal possession of that party whether or not this is accompanied by a right to possession[6], and whether or not the party is constrained by a contract from dealing with the document[7].”
[2]Rule 29.02(1).
[3]Rule 29.01(2).
[4]Roux v Australian Broadcasting Commission [1992] 2 VR 577 at 589.
[5]Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627, at 635 and Theodore v Australian Postal Commission [1988] VR 272, at p. 277.
[6]B. v .B. [1979] 1 All ER 801 at 806.
[7]Commissioner of Taxation v Australia & New Zealand Banking Group Ltd. (1979) 143 CLR 499, at p. 520-21.
The evidence shows that the documents in question, when they were originally brought into existence, were in the possession of Mr White’s agents in London, whether his members’ agent or his managing agent. It may be, too, that some of the documents when they first came into existence were held by the auditors engaged by one or other of these agents. The legal relationship between the agents and Mr White arose from the agency agreements entered into from time to time between him and them. They are in standard form throughout the period of Mr White’s involvement in the Lloyd’s market. These agreements provide that accounting records remain the property of the agent but that the Name, that is Mr White, shall have the right of access to specified records and the right to make copies of them. These rights are not affected by the fact that one of these agents, DUAL, is in liquidation. These records, it would seem, would constitute part of the categories the subject of this appeal.
I conclude from this that the documents in the hands of these agents are within the possession of Mr White for the purposes of discovery.
Relevance
For the purposes of discovery, a generous concept of relevance applies. It is sufficient that the documents relate to any question raised in the pleadings. This includes, not only documents which are directly relevant to such question, but also documents “which may well lead to a relevant enquiry”[8]
[8]Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55; Mulley v Manifold (1959) 103 CLR 341 at 345, per Menzies J.
Issues as to discovery in this case have been debated, as a matter of convenience, in terms of categories of documents. Argument before me as to relevance was therefore conducted, not on the basis that a given document, which I may or may not inspect, is relevant to an issue as may be otherwise required on an application brought pursuant to R. 29.08. Indeed, I proceed on the basis that there are in existence documents which fall within the category description in each case and I draw inferences from these descriptions that a given document may contain communications of a particular nature which relate to a particular topic or question in the litigation or which are otherwise relevant to such a question. It is, however, not possible for me to conclude that any particular document falling within the category description is in fact relevant in that sense. I mention this because my decision on the issue as to whether documents within the category description are relevant to a question raised in the pleadings does not necessarily carry with it the conclusion that all or, indeed, any particular documents within that category description are relevant. A decision as to this matter, at the outset in any event, will have to be made in the usual way by the party making discovery. I turn now to the pleadings.
These are contained in the third party statement of claim and the defence of Lloyd’s to that document. I have, of course, had regard to what counsel have told me is the way their cases will be presented. Ultimately, however, I fall back on the pleadings, for it is there that the questions between the parties are raised. The causes of action asserted by Mr White are alleged misstatements of various kinds which are said to amount to misleading and deceptive conduct, and which are said to have been made negligently, and for breaches of the prescribed interest provisions of the Companies (Victoria) Code. He also seeks orders setting aside on the grounds of public policy and unconscionability an exclusive jurisdiction agreement entered into between him and Lloyd’s. I will not, for present purposes, attempt to summarise the very comprehensive defences raised by Lloyd’s.
Mr White’s allegations of misconduct fall into two categories: the initial representations made in 1980 at the time he first became a member of Lloyd’s, and the subsequent representations which are to be found in the annual reports and accounts sent to him by Lloyd’s at the end of each of the years of his involvement, from 1985 to 1991. What is put with respect to each of these representations is that Lloyd’s failed to make full and proper disclosure regarding the exposure of Lloyd’s syndicates to potentially huge and escalating asbestos related claims and that it failed to regulate properly or at all the way in which syndicates reserved and accounted for such potential liabilities. Other allegations are made that the potential asbestos liabilities were not disclosed or properly accounted for in assessing reinsurance-to-close premiums, in reporting profitability of closed years of account, in reporting long tail liabilities and in making proper reservations for potential liability. Counsel for Mr White told me that these allegations were intended to raise the issues as to Lloyd’s treatment of asbestos claims generally in its accounts and reports, and not its treatment of the particular syndicates of which Mr White was a member. The pleading then says that Mr White relied upon these false or inadequate representations to his detriment. I need hardly say that these allegations are in issue.
The documents within the categories in question do not appear to bear upon the existence of the alleged representations. They can relate only to the issue as to their falsity and as to the consequent loss and damage suffered by Mr White.
As to falsity, the documents relating to Mr White’s syndicates in the years 1981 to 1992 cannot shed any light on the question of falsity of the initial representations which were said to have been made in 1980 and which must relate to trading in a preceding period. With respect to the subsequent representations, it is possible that the records and accounts relating to potential asbestos claims affecting the syndicates of which Mr White was a member will show that, with respect to those syndicates at least, those representations were false and perhaps made negligently.
As to causation and damage, it is put on behalf of Lloyd’s that Mr White will be able to demonstrate loss and damage flowing from the tortious misrepresentations as to potential asbestos claims generally, only where his loss is the result of such a claim. Whether this be the case or not I do not decide. It means, nonetheless, that documentation showing that his losses were not related to asbestos claims or reservations for those claims are relevant in the required sense.
I am, therefore, satisfied that there is a sufficient likelihood that documents within the category descriptions are relevant to a question in this litigation to warrant Mr White or his representative examining them to determine whether a given document contains relevant material so as to render it discoverable.
This conclusion has the consequence that Mr White’s contentions that the discovery sought is fishing and too wide, must fail. Subject to argument as to oppressiveness and subject to discretionary factors, if any, Lloyd’s is entitled to the order it seeks. I will therefore re-list the matter for further argument on those outstanding matters.
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