Cullington v Lee

[1999] NSWSC 273

CITATION:	Cullington v Lee [1999] NSWSC 273
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	4454/96
HEARING DATE(S):	17/03/99
JUDGMENT DATE:	31 March 1999
PARTIES :	Paul Cullington v Kin Wai Lee
JUDGMENT OF:	Master Macready at 1

COUNSEL :	Dr. A. Bell for the plaintiff Mr P. Menadue for the defendant
SOLICITORS:	Mallesons Stephen Jaques for the plaintiff Scott Kyle & Associates for the defendant
CATCHWORDS:	Procedure. Application under s76A of Supreme Court Act that plaintiff use his best endeavours to procure documents held by third parties outside Australia. Application successful in part. Aetna Pacific Securities Ltd v Hongkong Bank of Australia Giles J 29 April 1993 applied.
DECISION:	Paragraph 26

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

Wednesday 31 March 1999

4454/96 PAUL ANDREW CULLINGTON v KIN WAI LEE
JUDGMENT

1 MASTER MACREADY: This is the hearing of a Notice of Motion brought by the defendant and filed on 17 March 1999 which inter alia seeks orders under s 76A of the Supreme Court Act to compel the plaintiff to use his best endeavours to procure the production of certain documents from overseas. The determination of the Motion has been referred by a Judge of the Court to a Master. Only paragraphs 3, 4, 5 and 6 of that Motion were dealt with before me. These paragraphs seek, inter alia, orders that defendant take all reasonable steps to procure what are described as the solicitor’s documents and the KPMG documents. These documents are specified in the schedule attached to the Motion. In respect of that schedule the only items which are pressed are items numbered 5, 7 and 8.
2 There has been extensive discovery between the parties and no complaint is made about the extent of that discovery. The Motion is founded upon the powers of the Court to give directions for the speedy determination of the real questions between the parties to civil proceedings contained in s 76A of the Supreme Court Act. The power of the Court to make the order as sought in the Notice of Motion is not disputed. It has been exercised in a number of cases an example of which is Aetna Pacific Securities Ltd v Hongkong Bank of Australia Ltd Giles J 29 April 1993. His Honour described the jurisdiction to make the order in these terms:-
“In this Court power equivalent to that in the rule upon which Marks J relied may be found in s76A of the Supreme Court Act 1970, by which the Court may give such directions as it thinks fit, whether or not inconsistent with the rules, "for the speedy determination of the real questions between the parties to civil proceedings". In my view s76A would authorise an order of the nature sought by the Bank in the second limb of its motion, although I do not think that an unqualified direction to procure documents from a non-party could be justified: any direction would be in terms of taking reasonable steps. The Bank does not, as its application was modified during submissions, presently seek an order that Aetna's proceedings be stayed unless and until it procures the documents. I note that Rogers J had in mind such a stay in Arhill Pty Ltd v General Terminal Co Pty Ltd, but as at present advised it would seem to me that in general neither a stay pending production of documents by a non-party nor a contingent stay in the event that they were not produced would be appropriately ordered at the time of an order that steps be taken to procure the documents. That would be a question for another time in the light of evidence of the steps taken by the party and the responses to those steps.

Aetna said that s76A would not authorise such an order because there could not be done indirectly what could not be done directly, namely, require a non-party out of Australia to produce documents for the purpose of proceedings. I do not think that correctly describes the position. The order would be directed to a party, and would not purport to bind the non-party. If the non-party chose not to provide documents to the party despite the latter's endeavours, it would remain to decide what effect that would have upon the party's conduct of the proceedings. At one extreme, it might be that a parent which did not provide critical documents to a wholly-owned subsidiary through which it carried on business in Australia would find that its subsidiary's claim was stayed, but if that were so it would be the result of proper consideration of the needs of justice as between the parties to the proceedings.”

3 Some of the factors obviously involved in the exercise of the discretion include the means by which the party might obtain access to the relevant documents and the likelihood of it being able to do so. In Aetna one of the considerations which inclined Giles J not to make an order was that it may have not been shown that production of the documents was necessary for disposing fairly of the proceedings.
4 In order to consider these discretionary matters it is first necessary to notice the nature of the case to the extent relevant. The proceedings concern the resolution of various property matters following a termination of domestic arrangements between the two parties.
5 In paragraphs 8 to 22 of the Further Amended Statement of Claim filed by the plaintiff there is a claim that the plaintiff is entitled to the proceeds of sale of a property which was purchased at Glenmore Road, Paddington. The defendant filed an Amended Defence and Cross Claim which alleged that there was a compromise of the entitlement to receive the proceeds of sale for the Glenmore Road property. The defendant alleged that the compromise was that the proceeds should be divided between the parties equally. In November 1997 there was an Amended Reply which claims that the compromise was a result of economic duress and therefore unenforceable. It is to this issue that the present matter relates.
6 The factual background is that the Glenmore Road property was purchased in the name of the defendant on 27 March 1990 for $500,000. On 31 July 1995 the plaintiff executed a contract to purchase a property at 36 Paultons Square, London. The settlement date was agreed as 6 November 1995. On 12 August 1995 the defendant sold the Glenmore Road property for $595,000 and thereafter on 20 and 25 September there was correspondence in which it is alleged that the compromise, to which I have referred, was agreed.
7 The plaintiff’s evidence in the case deals with the proposed purchase of the Paultons Square property for 740,000 pounds and the plaintiff’s expectation that he would receive the full proceeds of the sale of the Glenmore Road property. The plaintiff claims that the compromise was made when the defendant knew that the plaintiff urgently needed the funds from the sale of the Glenmore Road property in order to complete the purchase of Paultons Square on 6 November 1995. The plaintiff alleges that as a result of the failure to receive the whole of the proceeds it was necessary for him to obtain a separate loan of some 400,000 pounds to purchase the Paultons Square property which ultimately, according to the plaintiff, was purchased with the proceeds of that loan.
8 The defendant founds his claim to have the Court make the orders based upon two propositions emerging from this background. The submissions are that it is important to have access to documents dealing with -
9 (a) The actual source(s) of funds which the plaintiff used to purchase the Paultons Square Property.
10 Such documents are said to be important because they would allow the Defendant to test the following:
11 (i) Whether the plaintiff did, in fact, purchase the Paultons Square Property using:
12 (AA) the funds referred to at paragraph 42 of his statement.
13 (BB) the loan which the plaintiff alleges he was forced to obtain from the East Asia Finance Company Limited.
14 or used some other source of funds which he has not, as yet, disclosed.
15 (ii) Whether the plaintiff’s financial position, on 26 September 1995, was as he alleges at paragraph 51 of his statement, or whether he had other assets and sources of income which he has not disclosed.
16 (b) What income the Plaintiff had (in particular from KPMG) in the period leading up to 26 September 1995.
17 Such documents are said to be important because they would allow the defendant to test whether the plaintiff’s financial position was, on 26 September 1995, as he alleges at paragraph 51 of his the plaintiff’s statement, or whether he had other assets and sources of income which he has not disclosed.
18 Dealing with the last matter first it should be noted that the documents which are sought and which are referred to in paragraphs 7 and 8 in the Schedule to the Motion are fairly wide ranging. They in effect capture every document in KPMG or its service company which in any way refers to the remuneration of the plaintiff for the period 1993 to 1995. When one goes to the relevant evidence at paragraph 51 of the plaintiff’s statement one finds the plaintiff saying, “I anticipated that I would receive distributions of at least 100,000 pounds from KPMG prior to the completion of the purchase of 34 Paulton Square.
19 Apparently the plaintiff had previously in his possession monthly accounts of the KPMG partnership but these have been destroyed. However, the plaintiff does give discovery of his bank account statements which show the deposit of a salary for the relevant year, namely, 1995. In other words the defendant had available to him details of what salary he did receive during that year. Against this background one has to judge whether the request for a wide range of documents dealing with salary for three years is necessary for a speedy and just determination of the matters in issue in these proceedings. Given the nature of the information which is available it seems to me that this request is more in the nature of a “fishing expedition” and goes beyond the bounds of what is necessary for fairly disposing of the proceedings.
20 If one turns to item (a) above, namely, the source of the funds used to purchase the Paulton Square property, a number of other matters should be noticed.
21 The plaintiff has sworn to the fact that he has discovered all the appropriate documents in his possession, custody or control relating to these matters. That is not questioned and accordingly the only documents which might not be in his possession, custody or control would be documents on the solicitor’s conveyancing file which belong to the solicitor rather than the plaintiff as the solicitor’s client.
22 If one considers what these documents are likely to be it is clear that in the ordinary course that these are likely to be documents prepared by the solicitor for his own benefit for which the client was not charged such as inter-office memoranda, attendance notes and account book entries. Other documents such as copies of letters written by the solicitor to third parties and communications from third parties to the solicitor clearly belong to the client. It should be noted that the plaintiff has sworn that there are no other documents which he has sent to his solicitor other than discovered documents. From this one can see that the area of possible documentation is small and really confined to notes made by the solicitor and account book entries.
23 I would have thought it is likely that the solicitors would provide the plaintiff, if requested, copies of the documents which are their documents on the file which might touch upon the relevant matters. There is, of course, no ability to subpoena the solicitors to produce the documents. See Arhill v General Terminal Company Pty Ltd (1991) 23 NSWLR 545. The discovered documents which have been made available by the plaintiff apparently only include one document which indicates a source from which the plaintiff obtained funds to purchase the property. That is a document which shows the transfer of 130,000 pounds from the sale of the Glenmore Road property to the solicitors in London. Apparently there is disclosure of a number of documents prior to 24 October 1995 indicating from where the plaintiff was planning to obtain funds for the purchase of the Paulton Square property but this does not deal with what funds were used. The documents which one would normally expect to be in the control of the solicitor rather than the client such as accounts and ledgers would be likely to show the source of funds for the purchase. Similarly other documents belonging to the solicitors such as a settlement statement are also very likely to deal with the source and application of funds for the purchase. None of these have been discovered no doubt because they are not in the possession or control of the plaintiff.
24 I would have thought that the actual funds used by the plaintiff for the purchase would be a matter which is central to the claim for economic duress. The defendants would have a legitimate interest in knowing that information for the purposes of meeting the plaintiff’s case. There is only one file involved so there would be little burden on the solicitors. In my view it is appropriate that an order be made which may lead to the solicitor’s documents being available.
25 Accordingly the orders which I made are as follows:-

1. That the plaintiff take all reasonable steps to procure the documents referred in paragraph 5 of the Schedule attached to the Amended Notice of Motion filed 17 March 199.
2. That the plaintiff on or before 15 May 1999 file and serve upon the defendant a supplementary list of the documents obtained by reason of their compliance with order 1 above if any such documents are obtained.
3. In the event that a list is not filed pursuant to order 2 above, that the plaintiff on or before 15 May 1999 file and serve an affidavit stating fully his attempts to comply with the order made in 1 above.
4. Paragraph 4 of the Notice of Motion filed 17 March 1999 is dismissed.
5. The balance of the Notice of Motion is stood over to a date to be fixed.
I will hear argument as to costs.

**********

Last Modified: