Commonwealth Bank v Iinvest

[2017] NSWSC 429

Supreme Court

New South Wales

Medium Neutral Citation:	Commonwealth Bank v Iinvest [2017] NSWSC 429
Hearing dates:	30 January 2017
Date of orders:	30 January 2017
Decision date:	30 January 2017
Jurisdiction:	Common Law
Before:	Campbell J
Decision:	The relief sought by the cross-claimants in the notice of motion filed in court today is refused.
Catchwords:	CIVIL PROCEDURE – production of documents – notice to produce – where informal discovery has taken place – notice of motion seeking an adjournment of the hearing – consideration of compliance by the plaintiff with its obligations of production – whether notice to produce was employed by the cross-claimants to obtain further discovery – adjournment refused
Legislation Cited:	Civil Procedure Act 2005 (NSW)
Cases Cited:	Azzi & Ors v Volvo [2006] NSWSC 283
Category:	Procedural and other rulings
Parties:	James Harker-Mortlock (Applicant) J H M Pty Ltd (Second Applicant)   Iinvest Pty Ltd (in liquidation) (First Respondent) Commonwealth Bank of Australia (Second Respondent)
Representation:	Counsel: P King (Applicant) E Cheeseman SC with J White (Respondent) Solicitors: Roderick Alexander Ian Storie (Applicant) Dentons (Respondent)
File Number(s):	2013/108514

EX TEMPORE JUDGMENT (REVISED)

1. This matter has been listed for hearing before me today with an estimate of seven days.  As it happens I have had some familiarity with the case as it has worked its way through the Court to this hearing.  At the commencement of the proceedings today, Mr King of counsel, who appears for the defendants and cross‑claimants, sought to rely upon a notice of motion seeking an adjournment of the matter, or perhaps as another way of putting it, a deferral.  It was emphasised that the adjournment was to be short.  The basis of the adjournment relates to the compliance by the bank of its obligation to provide discovery.

2. I do not propose for the purpose of these reasons to delve into the full and somewhat complicated history of the proceedings.  I think it is sufficient to say that the topic of discovery by one name or another has been the subject of correspondence between the parties over the last two months, at least since November 2016.  I think it necessary to say that these proceedings were listed for hearing before my colleague N Adams J in August last year and were adjourned on the application of the cross‑claimants over theobjection of the plaintiff substantially because the cross‑claimants had found themselves in a position where it was necessary for them to seek fresh legal advice.  How those circumstances came about is fully explained by Adams J and need not delay me here.

3. The matter came before me when I was sitting as duty judge before Christmas in relation to a number of outstanding matters.  Again, the details are not necessarily pertinent to the decision I have to make today.  However, one of the matters that was ventilated at that hearing was the question of the bank's production of documents.  The evidence disclosed the following:

1. That discovery had taken place when the cross‑claimants were represented by their previous lawyers.  It had taken the form of informal discovery which was not verified and the process was the subject of not inconsiderable negotiation as detailed in the affidavits of Ms Van Ravels, the solicitor with carriage of the matter for the plaintiff.  It is obvious that despite initial disagreement, the plaintiff's solicitors and the solicitors for the cross‑claimants were able to agree upon categories of documents which were outlined in a table of contents annexed to Ms Van Ravels' affidavit;

2. The cross‑claimants new legal advisors were not content with what had occurred and by letter dated 25 November 2016 sought the production of various categories of documents which was resisted by the plaintiff. When the matter came before me, this topic was argued by counsel, however I deferred dealing with the matter at that time and permitted ‑ if that be the right word ‑ the cross‑claimants to issue a notice to produce seeking the additional of documents that they say were required, subject to, of course, the plaintiff's right to argue about the matter should it deem that necessary.  That is to say, I did not rule that the cross‑claimants were entitled to production of the documents but rather that a notice to produce should be issued to crystallise the issue and if the bank objected that could be dealt with before me on 20 January 2017 when I again listed the matter for directions in the knowledge that the matter had been allocated to me for hearing; and

3. In accordance with what I had done in December, the cross‑claimants issued a notice to produce, returnable before me on 20 January.  In response, the plaintiffs sought to rely upon a notice of motion also listed for that date by which it sought to have the notice to produce set aside.  The motion was supported by evidence and by written submissions prepared by Mr White of counsel, who appears as junior to Ms Cheeseman of senior counsel today.  As things happened, when the matter came before me, there had been some reduction in the issues.  The original notice to produce contained 13 categories of document.

4. Mr King in his written submission sought to reduce the scope of the additional production sought by his clients by narrowing the description of the documents, particularly in [8] of the notice to produce. In response Mr White argued that unless the paragraph was severable, no such amendment could be made.

5. The essential basis of the argument of the bank was that employing a notice to produce to obtain further discovery was impermissible.  That is to say, in accordance with Brereton J's decision in Azzi & Ors v Volvo [2006] NSWSC 283, the grounds for setting aside a notice to produce include the grounds on which a subpoena to produce documents may be set aside. And it is well established by authority of the High Court of Australia and the New South Wales Court of Appeal that a notice to produce which seeks discovery is bad and should be set aside. Clearly, such a situation extends to further discovery, that is to say that a notice to produce is not to be used in substitution for what in truth should be brought forward as an application for further discovery supported by appropriate evidence.

6. Attracted as I was to this argument, given that the bank had been able to produce a large body of material which it accepted covered the paragraphs extant after Mr King's withdrawals - subject to specific disputes about [2], [8] and [9] ‑ I considered that the imperatives of the overriding purpose were such that in the interests of preserving the hearing date, which as I said in my December decision had become a governing consideration in the case, the plaintiff ought to be allowed to rely upon the further documents, or any of them, that were admissible as relevant to the issues in the case. 

7. It seemed to me that so far as the disputed paragraphs were concerned, generally they fell into the category where the objection should be upheld; that is to say, the objection based on the abuse of process should be upheld. I took a different view to [8]. My consideration of the agreed categories of discovery left me with the impression that not much, if anything, of an internal nature had been produced by the bank in terms of correspondence passing between its officers who at different times dealt with this matter and who, it seemed to me, logically, may have discussed the appropriate way to manage the bank's exposure in the case.

8. I accept the force of the argument that where severance is not possible, the whole should be rejected so far as it goes. However I rather formed the view that the Court's power conferred by Civil Procedure Act 2005 (NSW) ss 56-58 permits a greater degree of flexibility than might have previously been the case. As the documents in [8], as amended by Mr King, clearly, to my mind, fell into the categories of documents that should have been caught by the provisional discovery, to the extent to which there may have been documents which were overlooked and not produced, the cross‑claimants were entitled to have them produced to the Court and in due course, to access.

9. I have set all this out at length not only to discharge my obligation to provide reasons for my previous ruling but also to put in context the application that has been made and argued this morning.  My understanding of the affidavits that were read in support of the application to adjourn the matter is that careful review of the "additional" material that had been produced in the four volumes still exposed what was regarded as significant deficiencies in production. From the correspondence passing between the solicitors, nothing additional had been produced in relation to [8] as amended, notwithstanding my earlier ruling.

10. I understood a paragraph in a letter from Ms Van Ravels as perhaps being rather circular or similar in import but Mr White of counsel has explained to me that the statement is to the effect that there are no additional documents to be produced, notwithstanding my ruling.  Moreover, I am informed that for abundant caution, given that the previous discovery was unverified, additional inquiries have been made.  Furthermore, it was pointed out to me that the bank's internal record, an internal computerised record keeping system referred to as “CommSee”, had in fact been produced in the original categories and that these documents contained a record of internal correspondence.

11. I accept, as Mr King says, that there are still relatively few such matters.  Nonetheless, I accept that so far as they relate to the agreed categories of discovery previously arrived at between the parties, they have been produced.  There is also a matter of some concern, I accept, from the cross-claimant's point of view, that considerable portions of what was produced had been redacted.  It has been explained to me that they do relate to the various bank accounts of the cross‑claimants, however, they fall outside the categories and periods agreed between the parties for discovery.  I accept counsel's statement in that regard for present purposes.

12. I accept that documents disclosing, as it were, the bank's internal thinking about these matters are likely to be relevant, particularly to the cross‑claim, and that such documents, falling within the previous agreed categories of discovery, ought to be produced.  However, I am also satisfied that on the evidence before me, there has been full compliance with the previously agreed categories of informal discovery.

13. I accept the bona fides of the cross‑claimants’ position that they perhaps expected to see other and different categories of documents but with great respect, in the absence of evidence which strongly suggests that other documents falling into the agreed categories in fact exist, I am not persuaded that there has been deficient discovery. 

I repeat that it is very important to bear in mind that what was done in relation to discovery was agreed between the parties and in circumstances where both parties were legally represented and the categories of discovery were agreed upon and the table of contents in relation to the documents proposed to be produced by the plaintiff were accepted as satisfactory by the previous solicitors.

14. That does not mean that a party may not revisit the issue, but in such circumstances, with respect, I think that cogent and direct evidence would be required to justify the Court reopening what had been previously agreed upon as being satisfactory particularly when the matter has a long history for matters of this type.  The trial has previously been adjourned and this application for a further adjournment is made on the first day of the new hearing.

15. I accept that the adjournment is sought for only a relatively short period, perhaps only for a few days but no more than two weeks.  The difficulty with that deceptively attractive proposition is that standing the matter over even for a few days would mean inevitably the matter would become part heard because it would not finish in the time allocated to it and I as trial judge am not available after the close of business next Tuesday, at least not for several weeks.  It is one’s experience in these matters that when they become part heard it is usually months before the Court can get back to it. In the circumstances of this case, I am not persuaded that that outcome is justified on the basis of the materials that have been put before me.

16. Mr King relied upon authorities which demonstrate that the refusal of an adjournment may lead to a miscarriage of justice resulting in courts of appeal intervening to allow a new trial.  He has referred to a number of cases where the failure of the trial court to grant an adjournment to enable a party to put before the court cogent evidence necessary for the presentation of the case has resulted in such an outcome.  I accept the refusal of an adjournment may lead to a miscarriage of justice, even though these cases range between 1973 and 1995, well before the enactment of the Civil Procedure Act 2005 (NSW). They stand as pertinent reminders that the Court's powers in relation to case management need to be exercised primarily with regard to the interest of justice. However, on the material, as I have said, I am not satisfied that there is in fact cogent evidence which has been withheld by the bank, as it were, which if produced could materially strengthen the cross‑claimants’ case and I am not satisfied that there is evidence of which the cross‑claimants have been deprived that falls into the category that it would be plainly unjust to refuse an adjournment in relation to it.

17. For these reasons, the relief sought by the cross-claimants in the notice of motion filed in court today is refused.

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Decision last updated: 19 April 2017