De Poi v De Poi (No 2) - [2010] SASC 333

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
DE POI & ORS v DE POI & ORS (NO 2)
[2010] SASC 333
Judgment of The Honourable Justice White
1 December 2010
PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - DISCOVERY OF DOCUMENTS - ORDERS FOR FURTHER AND BETTER DISCOVERY
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - TIME
PROFESSIONS AND TRADES - LAWYERS - DUTIES AND LIABILITIES - SOLICITOR AND CLIENT
Plaintiffs brought an application seeking the striking out of the defendants' list of documents and further and better disclosure - the application was made well after the expiry of the time fixed by the Court for such applications - plaintiffs sought an extension of time, and contended that making the application at an earlier time would have been premature - whether the grant of the application is consistent with caseflow management principles and is appropriate in the interests of justice.
Held: application allowed in part - disclosure of documents to which the plaintiffs were alerted by the recent filing of the defendants' second supplementary list of documents and by recent correspondence from the defendants' solicitors allowed - application dismissed in relation to those aspects which should have been brought within the time fixed by the Court's previous order.
Evidence Act 1929 (SA) ; Supreme Court Civil Rules 2006 (SA) r 3, r 113, r 115, r 120, r 136, r 161; Trustee Act 1936 (SA) Pt 5A s 84B; Trustee Regulations 1996 (SA) reg 6, referred to.
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; Blatch v Archer [1774] 1 Cowp 63 at 65; (1774) 98 ER 969 at 970; Ferguson v Mackaness Produce Pty Ltd [1970] 2 NSWR 66; Southern Equities Corporation Ltd (In Liq) v Arthur Andersen & Co (No 5) [2001] SASC 335; Harris Scarfe Ltd (Receivers and Managers Appointed) (in liq) v Ernst and Young (No 4) [2005] SASC 443, considered.

DE POI & ORS v DE POI & ORS (NO 2)
[2010] SASC 333
Civil

WHITE J. This is an application by the plaintiffs for an order striking out the list of documents filed by the defendants on 9 June 2009, an order requiring the defendants to file a new list of documents verified by way of affidavit, and an order requiring the defendants to make further and better disclosure of documents. In substance, the plaintiffs seek orders requiring the defendants to engage in a wholesale review of their disclosure made to date; to provide further disclosure; and to verify all their disclosure on oath.
I summarised the nature of the dispute between the parties in the judgment delivered in this action on 5 November 2010[1] concerning the plaintiffs’ application for an order requiring the Commonwealth Bank of Australia to disclose certain documents. It is convenient to repeat some of that summary.
[1] De Poi & Ors v De Poi & Ors [2010] SASC 310.
The action arises out of a dispute between siblings in the De Poi family. The plaintiffs (Sandra and Linda) seek declarations; orders for inquiry and account, orders for payment of equitable compensation; and consequential orders in relation to a variety of breaches of trust which they allege have been committed by their brothers, or corporate trustees controlled by them.
The first group of allegations in the Fifth Amended Statement of Claim (5SC) concerns the conduct of the plaintiffs’ brothers (Ted and Paul) (the first and second defendants) in relation to the estate of their father Giovanni, who died on 6 June 1994 (the Estate). Prior to his death, Giovanni conducted, in partnership with his wife Giovanna, a profitable wholesale fruit and vegetable business under the business name “De Poi Produce Co” (the Partnership). The claims made against Ted and Paul in relation to the Estate are wide-ranging and include allegations that:
1.Ted and Paul acted as executors de son tort of the Estate between 6 June 1994 and 19 July 2001 (5SC [12]-[13]);
2.Ted and Paul have not wound up the affairs of the Partnership (Giovanni’s share in which comprised a substantial asset in the Estate) and have transferred assets of the Partnership to D P Exports Pty Ltd (the fourth defendant) in the period between 1996 and 2001 (5SC [16]-[17]);
3.Ted and Paul have wasted an asset of the estate, namely, the goodwill of the Partnership business, and have not accounted for the alleged transfer of that goodwill to D P Exports (5SC [19]);
4.Ted and Paul have not properly accounted for the income of the Estate and, in particular, have not opened a bank account in which rent, dividends and distributions were deposited (5SC [20A]);
5.Ted breached duties owed by him in connection with his application to this Court on 20 December 1999, 4 April 2001 and 19 July 2001 for Letters of Administration of the Estate (5SC [22]-[29]).[2] The duties alleged to have been breached included duties in connection with a will made by Giovanni in Australia on 26 June 1975 (the Australian will) and a separate will made in Italy on 10 October 1986 (the Italian will);
6.Ted and Paul have not since 19 July 2001 administered the Estate appropriately and have delayed its administration (5SC [31]). The allegations relate to assets held by Giovanni both in Italy (the Italian Assets) and in Australia;
7.between 30 June 2002 and 30 June 2009 Ted and Paul caused the Partnership to borrow at least $1,472,000 secured over Partnership properties at a cost to the Partnership and to the Estate and used those funds substantially for their own benefit and for the benefit of entities controlled by them (5SC [34]-[37]); and
8.in breach of the duties imposed on them under the Trustee Act 1936 (SA), have failed to keep proper accounts of the transactions in which they have caused the Estate or the Partnership to engage.
[2] On 19 July 2001, this Court granted Letters of Administration of Giovanni’s estate to Ted with a will made by Giovanni in Italy annexed (5SC [27]).
A second group of claims concerns the conduct of Ted and Paul in relation to the De Poi Family Settlement Trust (the Family Trust), a discretionary family trust of which the third defendant G De Poi Nominees Pty Ltd (Nominees) is the trustee. Since Giovanni’s death on 6 June 1994, Ted and Paul have been the directors of Nominees. The principal allegation concerning the Family Trust is that Ted and Paul have caused Nominees to increase its borrowings by more than $1.6 million, secured by properties owned by the Trust, and at a cost to the Trust, and yet has used those funds substantially for the benefit of Ted, Paul and entities controlled by them (5SC [46]). In consequence, Sandra and Linda allege that Nominees has made a loss in each financial year since 1996 and accordingly has not made any distribution of trust corpus to beneficiaries of the Trust. Sandra and Linda also allege a number of incidental breaches of trust by Nominees in the discharge of its duties as trustee.
A third group of claims concerns another discretionary trust, the De Poi Sons Trust (the Sons Trust). The fourth defendant, DP Exports, is the trustee of the Sons Trust and the plaintiffs allege, amongst other things, that it has carried on the business of De Poi Produce Co since 31 May 1997 (5SC [6.5]). The claims concerning the Sons Trust include allegations that DP Exports has:
1.received loan funds and advances from the Partnership and/or the Family Trust and mixed its own funds with those funds and the funds of other entities associated with Ted and Paul (5SC [58.2] and [58.3]);
2. transferred Sons Trust properties to new trustees (5SC [58.4]);
3.failed to make any distribution to any beneficiary of the Sons Trust other than Ted and Paul and entities controlled by them (5SC [58.5]); and
4.failed to keep proper accounts and records in breach of its statutory duty to do so (5SC [60]).
The Categories of Documents Sought by the Plaintiffs
The plaintiffs seek better and further disclosure of six categories of documents:
1.Documents in relation to Ted’s administration of the Italian Assets, including documents recording the steps taken to administer those assets, documents recording the expenses incurred in administering the assets, and documents recording the current status of the administration. I will refer to these as the “Italian Assets documents”.
2.Records of the kind which Part 5A of the Trustee Act requires a trustee to keep. The plaintiffs seek disclosure of such documents prepared or maintained by Ted in relation to the period from 1994 to 2008.
3.All documents relating to, or evidencing any funds received by the Estate during the period 1994 to 2001.
4.All documents in relation to the opening and use of bank accounts for Nominees and G & G De Poi.
5.All documents relating to income and expenses for the Family Trust and G & G De Poi Partnership and the Estate from 2004 until the present time.
6.Correspondence and files maintained by the former firm of Goldberg & Co, and now by Cowell Clarke (the defendants’ present solicitors) and by firms of legal practitioners retained by Goldberg & Co to provide assistance in relation to the administration of the Estate.
With one or two exceptions, the defendants did not dispute that the documents sought by the plaintiffs are directly relevant to issues raised on the pleadings.
The History of the Defendants’ Disclosure To-Date
The defendants have filed three lists of documents: the first on 9 June 2009 and supplementary lists on 12 June 2009 and 10 November 2010. In addition, commencing in September 2009, the defendants have, by agreement with the plaintiffs, produced a large volume of documents[3] to them informally, as well as providing the plaintiffs with a list (not filed) of the documents produced in this way.
[3] On one occasion described as 240 boxes and three bins of records (Senior Counsel QC on 27 October 1999 – Tx4) and on another as seven pallet loads and three bins full after a previous tranche of 41 binders (Plaintiffs’ Oultine at [5]).
The supplementary list filed on 10 November 2010 comprised the documents previously produced informally, as well as some “new” documents.
All in all, the defendants have now listed some 773 items of documents by way of disclosure.
An Extension of Time is Required
Following the disclosure of documents made by the defendants in the lists filed on 9 and 12 June 2009, the plaintiffs on 27 August 2009 filed an application seeking an order for further and better disclosure. However, as the defendants were then making further disclosure informally, the plaintiffs did not pursue that application.
On 9 December 2009, with a view to achieving some finality on the question of disclosure, the Court ordered that any applications for further and better disclosure should be filed and served by no later than 9 March 2010. One purpose of giving the parties three months was to allow the plaintiffs to make an assessment of the documents provided informally. Subsequently, the Court extended that time to 29 March 2010 in order to accommodate the application filed out of time by the plaintiffs on that day. That application was resolved by the agreement of the parties.
The plaintiffs’ present interlocutory application did not include an application for an extension of the time previously fixed by the Court, nor did the affidavits upon which they relied address the question. When it was pointed out to the plaintiffs that an extension of time was required, counsel made an oral application to that effect. The grant of an extension was opposed by the defendants. (I add that counsel for the plaintiffs on the present application has not previously been involved in the action).
If the plaintiffs’ application for further and better disclosure was based only upon the deficiencies which they perceive in the new disclosure made by the second supplementary list filed on 10 November, the defendants’ opposition would have been ill-placed. However, much of the present application is based on deficiencies which the plaintiffs now perceive as a result of their belated examination of the documents disclosed in the lists filed on 9 and 12 June 2009 and of the documents provided to them informally over 12 months ago.
The Plaintiffs’ Delay in Context
The proceedings were commenced on 27 January 2009. By letter to the Chief Justice on 23 February 2009 the plaintiffs’ solicitors (Minter Ellison) sought the assignment of a Special Classification to the action so that it would be Judge managed.[4] In support of that application, the plaintiffs’ solicitors said, amongst other things, that “all parties will benefit from a swift path to a trial held as early as possible”. It was implicit in this statement, and in the request itself, that the plaintiffs committed themselves to address expeditiously the interlocutory steps necessary to bring the proceedings to trial. The Chief Justice acceded to the plaintiffs’ request (which was supported by the defendants).
[4] Supreme Court Civil Rules 2006 (SA) r 115.
Since March 2009 the proceedings have been Judge managed with a view, amongst other things, to achieving early trial. The interlocutory directions made by the Court have required the parties to address in an integrated way the various procedural steps which they themselves have identified as necessary to ready the matter for trial, rather than adopting a linear approach, ie, giving attention to one step only after the completion of the previous step. For this purpose, the Court has, on more than one occasion, required the parties to identify any remaining interlocutory steps, and has made directions with a view to achieving the timely completion of the identified steps.[5]
[5] See, for example, the directions hearing on 9 December 2009, (Tx pages 12 and 19).
As noted earlier, the plaintiffs did bring an application on 29 March 2010 seeking an order for further and better disclosure. In support of that application, the plaintiffs referred to advice which they had received from their accountants, Messrs Holmes and Morris. Mr Holmes has been retained by the plaintiffs as a shadow expert,[6] and Mr Morris retained by the plaintiffs to provide an opinion in relation to some of the issues in the trial. Subsequently, and without any concession that the documents were directly relevant to any issue in the proceedings, the defendants agreed to produce to the plaintiffs five of the six categories of documents then sought by them. On 28 April 2010, by consent, this Court made an order to that effect. The plaintiffs did not pursue the remaining portion of their application for further and better disclosure.
[6] Supreme Court Civil Rules 2006, r 161.
In addition, at the directions hearing on 28 April 2010, in response to a specific question from the Court as to whether all issues about disclosure or adequacy of disclosure had been resolved, Senior Counsel for the plaintiffs said that they had, save for one matter concerning a selection of primary documents “circa 1994” which Mr Morris had identified. The possible existence of the documents sought by Mr Morris was being explored between the parties. It was not suggested on the hearing of the present application that the documents now sought by the plaintiffs are those which Mr Morris had identified.
From at least April 2009, the plaintiffs’ solicitors have sought the early fixing of a tentative trial date. On 28 April 2010, the Court was told that the parties considered that they would be ready for a trial in the month of November 2010. The plaintiffs’ counsel invited the Court to reserve that month for the trial. However, on 25 May 2010, in order to meet the convenience of counsel, the Court indicated a tentative trial date of 1 February 2011, with the whole of that month set aside. At the same time, the Court indicated that the interlocutory steps would have to be completed before the matter could be formally set down for trial. The effect is that, from at least April 2010, the parties have been working towards a trial in November 2010 or February 2011 and have known that the interlocutory steps had to be completed for that to occur.
At the directions hearing on 25 May 2010, the plaintiffs’ counsel raised the prospect of an application being made for an order for disclosure of documents by non-parties, or for production of banker’s records under s 49 of the Evidence Act 1929 (SA). The Court ordered that any such application should be filed and served by no later than 16 June 2010 and be made returnable on 23 June 2010. This was done with a view to expediting the completion of the interlocutory steps. Neither party filed such an application and the Court was later told that the plaintiffs had considered it unnecessary to do so.[7]
[7] Directions hearing 27 August 2010 Tx 3-4.
By the time of the directions hearing on 27 August 2010, the principal remaining interlocutory step was the delivery of all the expert reports which the parties were obtaining. The Court was told that, on the delivery of the expert reports, the parties expected that the matter would then be ready to be set down for trial. In addition, the Court was told that the parties had arranged a second mediation of their dispute.
On that basis, the Court tentatively allocated the month of February 2011 for the trial, even though the matter had not been formally set down. This was done to meet the parties’ convenience and in reliance upon what the parties had told the Court. Once the month of February was set aside for the trial of this action, it meant that that time could not be used for other trials, and the listing of other cases has been delayed for that reason.
However, by the time of the next directions hearing on 27 October 2010, the parties were still not ready for trial. All the expert reports had then been obtained, but the plaintiffs now wished to amend further (for the fourth time) their Statement of Claim. In addition, by an application filed on 26 October 2010, the plaintiffs sought an order for non-party disclosure and production of banker’s records. Although the application was made well outside the period fixed by the Court’s order of 25 May 2010 for the making of such an application, the Court listed the application for hearing as a priority and delivered its judgment on the application on 5 November 2010. Again, this was done so as to expedite the completion of the interlocutory steps.
The plaintiffs’ counsel did inform the Court on 27 October 2010 that the plaintiffs also considered that the defendants’ disclosure of documents was still inadequate, and indeed, relied to some extent on the alleged inadequacies in support of the application for disclosure by non parties. However, no application for further and better disclosure of documents was made at that time, nor was the making of such an application even foreshadowed. The defendants did indicate at that time that they may make further disclosure and the Court directed that any further disclosure was to be made in accordance with the Rules by no later than 10 November 2010.
The present application was not filed until late on 18 November 2010, on the eve of the directions hearing scheduled for 19 November.
In short, the present application has been made very late in the progress of this matter to trial. It has been made well outside the time fixed by the Court for the making of such applications, and well after the Court fixed a tentative trial date, which included the Court allocating a whole month of hearing time.
Unsatisfactory Explanation for the Lateness of the Application

The lateness of the present application has not been satisfactorily explained. As noted earlier, the plaintiffs did not address this topic specifically in the affidavits filed in support of the application. Other affidavits filed by the plaintiffs suggest that attention has been given only belatedly to the adequacy of the defendants’ disclosure and that this has occurred only because of the orders made by the Court in relation to the preparation of a common tender book of documents for use at the trial.
On 28 April 2010, the Court directed the plaintiffs to deliver to the defendants by 9 July 2010 a draft index to a tender book listing all of the documents (apart from expert reports) which the plaintiffs intended tendering at the trial. The plaintiffs did not comply with that direction. On 27 August 2010, I extended the time within which they were to do so to 11 October 2010. Again, because of the plaintiffs’ non compliance, this time was extended further to 22 October 2010.
An employed solicitor within the plaintiffs’ solicitors, Minter Ellison, deposed in an affidavit sworn on 26 October 2010:
[29]As a result of the orders made [by the Court] on 27 August 2010, requiring the Plaintiffs to file a draft tender book index by 11 October 2010, among other things, Minter Ellison has been instructed by the Plaintiffs to undertake an extensive review of the Defendants’ disclosure to date.
This indicates that the plaintiffs have only belatedly made a review of the adequacy of the defendants’ disclosure.
Mr Bannister, the partner within the plaintiffs’ solicitors who has the care and conduct of the matter on behalf of the plaintiffs, filed an affidavit sworn on 29 October 2010. This affidavit was filed at the Court’s direction because of its concern about the plaintiffs’ non-compliance with previous interlocutory directions. I add that Mr Bannister has had the care and conduct of the matter only since mid to late August 2010. Mr Bannister deposes to Minter Ellison having been instructed in about October 2009 to forward some 38 archive boxes of financial and other documents disclosed by the defendants to Ferrier Hodgson (Mr Holmes’ firm) for analysis under the shadow expert retainer. Minter Ellison did not retain copies of those documents, and did not seek their return until after 13 September 2010, ie, some 11 months later. Ferrier Hodgson returned the documents on 22 September 2010 and Minter Ellison then commenced a detailed review of them. Mr Bannister has acknowledged that the review should have been carried out earlier, and confirms that it was only upon the completion of the review that the inadequacies which the plaintiffs now perceive in the defendants’ disclosure have become apparent. As a result, it seems that the plaintiffs did not fully review the defendants’ disclosure until 22 September 2010 at the earliest, some five months after the plaintiffs had assured the Court that the issue of disclosure was closed.
By way of justification for the late application, counsel for the plaintiffs contended that they had been unable sensibly to bring an application for further and better disclosure until the defendants had finalised their own disclosure. I reject that submission. It is wrong as a matter of principle and it is inconsistent with the plain terms of the order made on 9 December 2009. The proposition which may be implicit in the submission, ie, that the plaintiffs deferred making the application until the defendants completed their disclosure, is not in any event the explanation for the late application. There has not been any suggestion at any of the numerous directions hearings that the plaintiffs have regarded the bringing of an application for further and better disclosure as premature. On the contrary, the plaintiffs did bring an application for further and better disclosure on 29 March 2010, and sought an extension of time for that purpose. The submission also overlooks that the plaintiffs secured from the Court an early tentative trial listing, without indicating any prospect of additional disputes about disclosure.
Counsel for the plaintiffs was also at pains to emphasise the defendants’ obligations with respect to disclosure. He submitted that it was the defendants’ failure to comply with those obligations which had given rise to the present difficulties. That submission has some force with respect to the “new” documents disclosed in the list filed on 10 November. However, the merit of the submission is undermined by the shortcomings of the plaintiffs themselves in failing to review adequately (and in some cases at all) the documents previously provided to them, while, at the same time, allowing the defendants and the Court to proceed on the basis that there was to be no further interlocutory disputation about disclosure. Counsel for the plaintiffs was correct in identifying the defendants’ duty of disclosure, but there is also the duty of a party receiving disclosure to review and consider that disclosure properly, and to identify any inadequacy, especially when the Court has made an order of the type made in this action on 9 December 2009.
Counsel referred to the fact that the matter has not yet been set down for hearing, so that Rule 131(5) did not require the plaintiffs to seek the Court’s permission to bring the application. That is so. However, the position that this Court will not set a matter down for trial until all interlocutory steps have been completed does not have as a corollary that interlocutory applications may be made at any time until a matter has been set down. On the contrary, litigants are expected to comply with the Rules and orders of the Court with respect to the completion of interlocutory steps. If they do not, late interlocutory applications may be refused. Alternatively, the Court may, on its own initiative, order that an action proceed to trial even when a party, by reason of its own default, is not ready for trial.[8]
Consideration of the Merits of the Application
[8] Supreme Court Civil Rules 2006 (SA) r 120(6).
The General Duties of Litigants
It is appropriate to commence with a reference to the general duties of litigants and their lawyers in relation to the conduct of litigation in this Court. A statement of some of the principal duties is contained in r 113 of the Supreme Court Civil Rules 2006:
(1)The parties to a proceeding, and their lawyers, have a duty to the Court to assist in the orderly progress of the proceeding from its commencement until it has been finally dealt with by the Court.
Note—
The powers to enforce compliance, or to penalise non-compliance, with this rule, and indeed the rules generally, conferred by rules 12 and 13 should be noted.
(2)     In particular, the parties have a duty to the Court to ensure that—
(a)     they comply with the Court's directions as to the conduct of the proceeding; and
(b)     they are ready to proceed with each interlocutory hearing at the time appointed under these rules; and
(c)     all interlocutory proceedings are completed by the time the case is referred for trial and, in particular, the pleadings properly reflect the case that is to be presented at trial; and
(d)     the trial can proceed, as far as practicable without interruption, from the time appointed for its commencement.
These obligations apply to all civil litigation conducted in this Court but apply with particular acuteness in relation to matters which are assigned a special classification under r 115. It was only because this action is being Judge managed under r 115 that the plaintiffs were able to obtain an allocated trial date before certifying that all interlocutory matters had been completed.
The Principles of Case Flow Management
The application of the principles of caseflow management in the context of a late application to amend pleadings was recently considered by the High Court in Aon Risk Services Australia Ltd v Australian National University.[9] The decision of Aon was reviewed, and the application of the principles to be derived from it discussed, in the reasons of Bleby J (with whom I agreed) and Gray J respectively in the recent judgment in Channel Seven Adelaide Pty Ltd v Manock.[10] It is accordingly not necessary to refer to Aon in detail in these reasons. Some propositions can, however, be summarised:
1.Caseflow management is now an accepted aspect of the system of civil justice administered by courts in Australia.[11]
2.Rules concerning civil litigation are intended to do justice to all litigants. They should accordingly be considered as directed both to the resolution of the dispute between the parties to the proceedings, and to the achievement by all parties to litigation before the Court of a just, timely and cost effective resolution of their disputes.[12]
3.Considerations of the cost and delay to other litigants are relevant considerations in the application of caseflow management principles.[13]
4.While a just resolution of the parties’ dispute remains a principal purpose of the interlocutory regime, what is a just resolution is to be understood in the light of the purpose and objectives stated in rules such as rr 3 and 113 of the Supreme Court Civil Rules 2006.[14]
5.It should not be assumed that orders for costs, even solicitor/client or indemnity costs, will overcome all the prejudice occasioned by the opposing party.[15]
[9] [2009] HCA 27; (2009) 239 CLR 175.
[10] [2010] SASCFC 59.
[11] [2009] HCA 27 at [92]; (2009) 239 CLR 175 at 211.
[12] Ibid at [93]-[94]; 211-12.
[13] Ibid at [95]; 212.
[14] Ibid at [98]; 213.
[15] Ibid at [99]; 213.
The judgment of the plurality also identified a number of considerations bearing upon the exercise of the Court’s discretion. These included:
·whether there has been undue delay in making the application;
·the extent to which there will be wasted public resources in granting the amendment;
·whether there will be inefficiency occasioned by the need to revisit interlocutory processes;
·whether a trial date will need to be vacated or a trial adjourned;
·whether there is any satisfactory reason for the delay in the application;
·the likelihood of strain and uncertainty being imposed on the litigants;
·the prospect of confidence in the administration of civil justice being undermined;
·the prejudice to the other party; and
·the additional costs likely to be incurred.[16]
Many of these considerations are apposite in the present case.
[16] See the summary by Bleby J in Channel Seven Adelaide Pty Ltd v Manock [2010] SASCFC 59 at [46] and by Gray J at [119].
The Effect of Delay
It has been said in the context of limitation of actions legislation that delay by itself is not the significant matter. Rather it is the consequences which delay produces, in the form of prejudice to the other party, or to the prospects of a fair trial, or to the quality of justice which the Court may administer, or to the interests of the other litigants before the Court.[17] In my opinion, many of those considerations are applicable in the present context.
[17] Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541.
If the plaintiffs succeed wholly in the present application then the defendants would, subject to one matter which I will mention shortly, have to engage in a major exercise concerning their disclosure of documents. The regime of disclosure to date, both formal and informal, would be set substantially at nought. At a time when one would be expecting both parties to be devoting their energies to preparation for trial, the defendants would instead be concentrating on disclosure issues which should have been addressed months ago.
Despite the optimism of the plaintiffs as to the minimal effect which the making of the orders they seek would have on pre-trial preparation, I consider it reasonable to suppose that the process they contemplate, given the extent of the disclosure to date, may take at least two or more weeks. There would then be the prospect of further interlocutory disputation if the plaintiffs were still not satisfied with the extent of the defendants’ disclosure. The prospect of further expert reports being obtained also cannot be overlooked. Granting the plaintiffs’ application in total would, in short, raise real doubts as to whether the trial will be able to proceed on 1 February 2011.
These considerations suggest that the onus on the plaintiffs to show that an extension of time is appropriate, and that the orders which they propose are required, is a substantial one.
Of course, if more limited orders are made, the prospect of dislocation to the trial arrangements may be minimised. Some such orders may be appropriate in any event because of the “new” documents recently disclosed by the defendants.
Some General Discretionary Considerations
Before turning to address the individual categories of documents of which the plaintiffs seek further disclosure, I mention some other matters of a general discretionary kind.
The first is that the plaintiffs do not claim that counsel, or Messrs Holmes or Morris, have suggested that the further disclosure is necessary in order for them to make out their claims at trial, or that a fair trial cannot be had without the defendants making further disclosure. In contrast, Mr Bannister deposed in his affidavit sworn 29 October 2010 that Senior Counsel had advised on or after 22 October 2010 that it was necessary for the plaintiffs to apply for permission to amend their statement of claim and to seek non-party disclosure. In relation to further and better disclosure from the defendants themselves, Mr Bannister deposed only that Senior Counsel had advised that the plaintiffs should write to the defendants seeking such disclosure as well as clarification of the description of some documents.
The absence of reliance on any advice or information given by of the experts retained by the plaintiffs stands in contrast with the affidavit filed in support of the application made on 29 March 2010. By that affidavit, the plaintiffs relied extensively on advice or opinions of Messrs Holmes and Morris.
Related to this is that several of the submissions of counsel on the present application indicated that what the plaintiffs seek in many instances is not the actual disclosure of further documents at all. Instead they seek confirmation that the defendants have no further documents to disclose. The plaintiffs wish to have a ready means of proving an absence of the documents of the kind which, if Ted and Paul engaged in particular conduct, one would have expected to have been brought into existence. In addition, counsel’s submissions indicated that the plaintiffs wish to have the disclosure of each defendant verified on oath so as to facilitate the plaintiffs’ cross-examination of Ted and Paul, in the event that they get an opportunity to do so.
These may be legitimate forensic aims, but it is relevant, in my opinion, to note that in several instances these are the plaintiffs’ aims, rather than it being a case of the plaintiffs simply not knowing at all what has happened without access to the defendants’ documents. There are other much less expensive means by which the plaintiffs can obtain the forensic advantage which they seek. In addition, this appears to be a case in which the maxim attributed to Blatch v Archer[18] will be applicable, namely, that all evidence is to be weighed according to the power of one party to produce it and of the other to contradict it.
[18] [1774] 1 Cowp 63 at 65; (1774) 98 ER 969 at 970.
A third discretionary factor is that, even after the plaintiffs perceived the deficiencies in the defendants’ disclosure, they still delayed the bringing of the present application. They did so even though they knew of the tentative trial date and of the Court’s belief that, subject to the completion of expert reports, all interlocutory steps necessary in order for the matter to be set down had been completed. The plaintiffs wrote to the defendants on 24 September, 12 October, 20 October and 22 October (two letters) expressing in each letter some concern about the defendant’s disclosure. Despite this, although issuing two interlocutory applications on 26 October (one relating to pleadings amendment and the other to non-party disclosure) the plaintiffs did not bring the present application until 18 November, and then only on the eve of the directions hearing scheduled for the following day. Had the application been brought earlier, it would probably have been heard and determined at the same time as the two applications filed on 26 October. The plaintiffs’ delay in this respect exacerbates the situation created by their earlier delays.
A further factor is that, whatever the outcome of the present application, the defendants have continuing obligations of disclosure.[19] The obligation to ensure that proper disclosure is given rests on both the defendants and their solicitors. The burden is a heavy one and was described by MacFarlan J in Ferguson v Mackaness Produce Pty Ltd[20] in the following terms:
[T]he solicitors on whom this obligation is cast carry a particularly heavy burden requiring not merely advice to their clients when their clients seek advice but an act of participation in ensuring that the clients understand what they are obliged to do by the order. In fact, so seriously is this obligation of the solicitors regarded that English Judges on a number of occasions have said that failure to discharge them can well be considered to be professional misconduct. … [I]t is not sufficient for a solicitor simply to inquire of his client or of a principal … if he has any documents and request that he send any documents that he has to him; the obligation extends much further, namely, to the extent that the solicitor is obliged to make an appraisal of the case and form his own opinions as to what documents probably are in existence and actively to seek out from the client or his interstate or foreign principal whether or not those documents exist. It is only, indeed, in that way that the obligation of the solicitor can be properly discharged.[21]
The obligation of legal practitioners with respect to disclosure has been described in this Court as an “uncompromising ethical obligation”.[22]
[19] Supreme Court Civil Rules 2006 r 136(3)(v); r 136(8).
[20] [1970] 2 NSWR 66.
[21] Ibid at 68.
[22] Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No 5) [2001] SASC 335 at [17]; Harris Scarfe Ltd (Receivers and Managers Appointed) (in liq) v Ernst and Young (No 4) [2005] SASC 443 at [16].
Although courts rely on practitioners to discharge the obligations described by MacFarlan J in a conscientious way, the melancholy fact is that deficiencies in their discharge are not unknown. Courts cannot always rely upon litigants and practitioners to discharge their obligations properly. However, the fact that the obligations exist, and are well known, is a relevant factor on the present application. It may well be that, having heard the plaintiffs’ critique of their disclosure and knowing of the potential adverse consequences for them in the trial (especially if further documents are produced belatedly), the defendants and their solicitors will wish voluntarily to review the adequacy of their disclosure. The order for verification of their disclosure on oath which I will make later should also have the effect of prompting the defendants to engage in such a review.
I turn now to consider the categories of disclosure sought by the plaintiffs in this application.
Category 1: The Italian Assets Documents
The defendant made informal disclosure in September or October 2009 of a number of documents relating to the Italian Assets. The plaintiffs had a long period before 29 March 2010 in which to review those documents, to assess their adequacy and to formulate any claim for further disclosure. Their inactivity counts against the grant of an extension of time to bring the present application seeking further and better disclosure of documents in relation to the Italian Assets.

I accept that documents of the general kind now sought do appear to be directly relevant. It is difficult for the Court to make a detailed assessment of the adequacy of the defendants’ disclosure in this respect. That difficulty is not alleviated by the fact that many of the documents upon which the plaintiffs rely for this purpose are in the Italian language for which translations do not appear to have been provided. Nevertheless, I agree with the plaintiffs that it does seem surprising, on the material presently known, that the defendants have not disclosed at least some of the documents which the plaintiffs now seek.
I am not satisfied, however, having regard to the general discretionary considerations referred to above, that it is appropriate to grant the plaintiffs an extension of time in respect of the Italian Assets documents. Even if the extension was granted, I am not satisfied, for the same reasons, that an order in favour of the plaintiffs should be made in relation to these documents. In reaching that decision, I have taken into account the order I will make concerning verification of the defendants’ disclosure on oath.
Category 2: The Trustee Act Obligations
Section 84B(1) of the Trustee Act 1936 (SA) requires a trustee to “keep such records relating to his administration of the trust property as may be prescribed”. Subsection (2) obliges a trustee to produce for inspection by a beneficiary of the trust (amongst others) the documents required to be kept by virtue of subsection (1).
Regulation 6 of the Trustee Regulations 1996 made under the Trustee Act prescribes the records which a trustee must keep for the purposes of s 84B. It is not necessary for present purposes to set out a list of those records. It is sufficient to note that the list is extensive.
The plaintiffs plead that Ted and Paul, in breach of their respective statutory duties arising under s 84B, have not kept proper accounts (5SC [38]). However, this allegation appears to be confined to accounts in relation to the transactions pleaded in 5SC [34], namely, the allegations that between 30 June 2002 and 30 June 2009 Ted and Paul caused the Partnership to borrow at least $1,472,000, secured over Partnership properties and at a cost to the Partnership and the Estate, and yet used those funds substantially for their own benefit and the benefit of entities controlled by them. In answer to the pleading in 5SC [38] the defendants deny that the Estate is a trust for the purposes of the Trustee Act, deny that Paul had any statutory duties with respect to the Estate and assert that “having regard to the complexity of the Estate, the Partnership and the transactions involved, Ted has kept all accounts which would be maintained by a trustee acting reasonably”. The defence does not identify with any particularity the “accounts” asserted to have been kept.
It appears to be common ground that documents of the kind required to be kept under the Trustee Act would be directly relevant to the issues in these proceedings.
The plaintiffs asserted that the defendants have not discovered any documents at all of the kind required to be kept by s 84B or which appear to answer the description made in [38.3] of the defence. The defendants did not contradict that assertion. Counsel acknowledged that, even though Ted disputes that he was under any obligation as a trustee for part of the period asserted by the plaintiffs and may dispute that he was subject to the obligations imposed by s 84B for the whole of the period asserted by the plaintiffs, the Court could proceed on the basis that he has disclosed any documents of the kind to which s 84B and reg 6 refer. Counsel also acknowledged that the Court could proceed on the basis that Ted has already disclosed any other documents of the kind which it would be appropriate for a reasonable trustee to keep in the circumstances, as alleged in [38.3] of the defence.
Counsel acknowledged that it may well be that Ted “will live or die by what documents there are and what consequences might flow from whatever documents there are”.
In these circumstances, while there may be reasonable grounds to suppose that the defendants and Ted, in particular, should have kept further documents, I am not satisfied that there is “reason to doubt”[23] the completeness of the defendants’ discovery of this category of documents.
[23] Supreme Court Civil Rules 2006 r 145(1).
This consideration, together with the lateness of the application and the general discretionary considerations mentioned earlier, indicate that an order should not be made. I am not prepared to extend the time previously fixed for the making of an order for further and better disclosure in relation to these documents.
Category 3: Documents Relating to or Evidencing Funds Received by the Estate
In support of the application in respect of this category, the plaintiffs relied upon evidence which was similar to that relied upon for Category 2. The submissions made by counsel were also similar.
This makes it unnecessary to address this category in detail. For the reasons given in relation to Category 2, I am not satisfied that it is appropriate to extend the time within which the plaintiffs may make application for this order. They have had ample opportunity to review the disclosure, both formal and informal, previously made by the defendants of documents in this category.
Category 4: Documents Relating to the Opening and Use of Bank Accounts for G De Poi Nominees Pty Ltd and G & G De Poi Partnership
For this category of documents, the plaintiffs rely on the content of a letter from the defendants’ solicitors dated 10 September 2010. In that letter, the defendants’ solicitors said in relation to the defendant Nominees:
We are also instructed to inform you that a new bank account has been opened in the name of G De Poi Nominees Pty Ltd and that in the future any net proceeds from property sales made by the De Poi Family Settlement will be deposited into that account.
The plaintiffs contrasted that assertion with the plea in [46.3(a)] of the defence in which the defendants asserted “…From in or around 1995, Maronian commenced acting as banker to entities including G De Poi Nominees, and would regularly meet the cash commitments of those entities from its funds”.
The defendants disputed the direct relevance of the documents sought by the plaintiffs in this category. Having regard to Defence [46.3(a)], I do not accept that submission in relation to the new account opened by Nominees.
It will be remembered that Nominees is the trustee of the Family Trust. The plaintiffs’ allegations concerning Nominees are that, commencing effectively upon the death of Giovanni in June 1994, Ted and Paul have caused Nominees to increase its borrowing at a cost to the Family Trust and yet used those funds substantially for the benefit of Ted, Paul and entities controlled by them. As I understand the 5SC, a number of the investments alleged to have been made by Nominees are continuing investments.
The documents relating to the opening and use of a “new bank account” in the name of G De Poi Nominees Pty Ltd could not have been the subject of an application by the plaintiffs before 10 September 2010. The documents sought do appear to be directly relevant to issues raised on the pleadings. Despite the delay since 10 September, I consider it appropriate to grant an extension of time in relation to this category and will make the orders sought by the plaintiffs.
The second class of documents sought in this category are documents relating to the opening and use of bank accounts for the G & G De Poi Partnership. The plaintiffs found their present application on a statement in the letter from the defendants’ solicitors of 10 September 2010:
In relation to future property sales made by the Partnership, we are instructed that any net funds after paying out mortgages and usual costs and fees will be deposited directly into the Partnership’s bank account to be used to reduce Partnership debt, rather than being deposited to the Maronian account.
Paragraph 20A of 5SC alleges that Ted and Paul had not caused a bank account to be opened in order to properly account for the Estate’s income and had instead caused the Estate’s income to be banked into other accounts which the plaintiffs were unable to identify. In answer to this plea, the defendants admitted only that between Giovanni’s death on 6 June 1994 and 30 June 2001 they had not opened a bank account in the name of the Estate.
The defendant’s solicitors’ letter of 10 September 2010 suggests therefore a new directly relevant development. This is something which could not previously have been anticipated by the plaintiffs and it is therefore appropriate that the order for further disclosure be made.
Category 5: Documents Relating to Income and Expenses for the De Poi Family Settlement Trust, the G & G De Poi Partnership and the Estate of Giovanni from 2004 until the Present Time
The plaintiffs’ application for the documents in this category arises from their belated review of documents which have been available to them since September or October 2009, and well before the date upon which the Court stipulated that any applications for further and better disclosure should be brought. The plaintiffs requested disclosure of the documents which they now seek only by letters dated 8 November and 12 November 2010. The plaintiff’s submissions on the present application did not identify a relevant prejudice if these documents are not now disclosed. For the reasons given above, I am not satisfied that an extension of time in relation to these documents is appropriate. This part of the application is refused.
Category 6: Legal Files
It is not necessary to discuss this category in detail. By the second supplementary list filed on 10 November, the defendants disclosed for the first time the existence of additional legal files. At least some of the content of those files appears to be directly relevant to the issues arising in this case. The plaintiffs could not previously have brought their present application. I am satisfied that it is appropriate to make the orders sought by the plaintiffs. In making the disclosure, the defendants will have to give a proper description and articulate appropriately any claim of privilege.[24]
[24] Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (1997) 70 SASR 166 at 194.
The Strike-Out Application
The plaintiff’s strike-out application appears to have its genesis in their belief that some of the documents previously disclosed to it in the one or other of the lists have been misdescribed and in their belief that the defendants have not discharged their obligations with respect to disclosure conscientiously and completely.
As to the former, the plaintiffs were able to identify only some eight documents which had been misdescribed. This is about 1 per cent of the total number of documents disclosed by the defendants. That hardly supports the striking out of an entire list. Further, even before the plaintiffs’ present application was made, the defendants had agreed to correct the description of four of the eight documents identified by the plaintiffs.
The strike-out application also has the curiosity that the plaintiffs seek the striking out only of the original list filed on 9 June 2009. They have not sought the striking out of either of the two supplementary lists.
The belated nature of the strike-out application, and the dislocation to the pre‑trial arrangements which have been made tell very much against allowing this application. It is refused.
Verification of Lists of Documents on Oath
Although I will dismiss the greater part of the plaintiffs’ application for further and better disclosure for discretionary reasons, I accept that the plaintiffs have established some grounds for doubting that at least, in some respects, the defendants have fully discharged their obligations with respect to disclosure. One way to require the defendants to give further attention to the matter is require the lists to be verified by affidavit. That should not be an onerous task given the detailed attention which the defendants have, or should have, given to disclosure to date. Although the plaintiffs’ application is made very late, I think it unlikely that a requirement that the existing lists be verified by affidavit will dislocate the arrangements for the trial. Accordingly I will make orders to that effect.
Conclusions
For the reasons given above I make the following orders:
1.The plaintiffs’ oral application for an extension of time in which to apply for further and better disclosure of the documents in Categories 4 and 6 of the Interlocutory Application filed on 18 November 2010 and for verification of the defendants’ disclosure on oath is granted.
2.In all other respects the plaintiffs’ oral application for an extension of time is refused.
3.The defendants are, by no later than close of business on 16 December 2010, to make further and better disclosure of the following categories of documents:
(a)    documents relating to the opening of bank accounts for G De Poi Nominees Pty Ltd and G & G De Poi Partnership (bank accounts);
(b)    documents evidencing the authorised signatories for the bank accounts;
(c)    account statements generated in relation to the bank accounts from their opening to the present time;
(d)    all correspondence files maintained by Goldberg and Co and/or Cowell Clarke in relation to file No 980735;
(e)    notes or records maintained by Mr John Goldberg and/or the firm of Goldberg and Co in relation to file No 981141 which are not kept within the three numbered correspondence files produced to the plaintiffs to date, including:
(i)notes relating to initial instructions obtained at the time of opening file No 981141; and
(ii)notes or records relating to any further communications between Mr Goldberg and Mr Garry Hugo of Tregloans between 7 and 12 July 1999;
(f)     copies of correspondence, records or files maintained by Carpenter & Associates in relation to the Estate of Giovanni De Poi which are within the defendants’ power and control;
(g)    copies of correspondence, records or files maintained by Donaldson Walsh in relation to the Estate of Giovanni De Poi which are within the defendants’ power and control; and
(h)    copies of correspondence, records or files held by Mr Robert Chiro in relation to the Estate of Giovanni De Poi which are within the defendants’ power and control.
4.Each of the defendants is by no later than close of business on 16 December 2010 to file and serve an affidavit verifying the disclosure made previously and the further disclosure made by this order.
5.In all other respects, the plaintiffs’ interlocutory application filed on 24 November 2010 is refused.
I will hear the parties as to costs and any consequential matters.