Dowling v Dowling (No 2)
[2015] VSC 562
•14 October 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
LIST C
S CI 2014 02463
| JAMES ANTHONY DOWLING | Plaintiff |
| v | |
| JOHN MICHAEL DOWLING (and others according to the schedule attached) | Defendants |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 August 2015 |
DATE OF JUDGMENT: | 14 October 2015 |
CASE MAY BE CITED AS: | Dowling v Dowling (No 2) |
MEDIUM NEUTRAL CITATION: | [2015] VSC 562 |
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PRACTICE AND PROCEDURE – Application for further discovery – Order made that the defendants file and serve a supplementary affidavit of documents – Supreme Court (General Civil Procedure) Rules 2005 O29 – Civil Procedure Act 2010 s 55 - Evidence Act 2008 (Vic)
ss 135 and 136.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Booth | Browne & Co Solicitors and Consultants |
| For the First to Fifth Defendants | Mr J Nixon | Hargraves Ambrose & Co |
| For the Sixth Defendant | No appearance | Lander & Rogers |
| For the Seventh Defendant | No appearance | Minter Ellison |
HER HONOUR:
Introduction
By summons filed 13 April 2015, the plaintiff seeks the following orders against the first to fifth defendants (collectively referred to as ‘the defendants’ in this ruling):[1]
[1]It does not include a reference to the sixth and seventh defendants. They did not seek to be heard in relation to this summons.
(a) pursuant to r 29.05.1 of the Supreme Court (General Civil Procedure) Rules 2005 (the ‘Rules’), the defendants make further and better discovery; and/in the alternative,
(b) pursuant to r 29.08 of the Rules and s 55 of the Civil Procedure Act 2010 (the ‘CPA’), the defendants depose in an affidavit:
(i) whether they have (or had) in their possession the documents described in Appendix 1 to the summons; or
(ii) if those documents are no longer in their possession, when they defendants parted with the documents, and their belief as to what has become of them.
At the hearing, the plaintiff indicated that there had been communications between the parties and a further transfer of documents after the summons was issued. Accordingly, the scope of the application was narrowed from Appendix 1 of the summons. The narrowed scope of the summons is referred to in paragraph 2 of the plaintiff’s submissions filed on 30 July 2015. It states as follows:
(a) 2013 financial statements (Appendix 1 to the summons, paragraph 1) and bank facilities (Appendix 1 to the summons, paragraph 5);
(b) grain (Appendix 1 to the summons, paragraph 6);
(c) water (Appendix 1 to the summons, paragraph 8); and
(d) plant and equipment (Appendix 1 to the summons, paragraph 9).
These categories are discussed further below.
At the hearing of this application, the defendants offered to file a supplementary affidavit making further discovery of four further classes of documents including (‘the agreed further discovery material’):
(a) source bank statements recording debts as at 1 October 2011;
(b) photos of cropping land around 2011;
(c) documents relating to the 2011 harvest; and
(d) documents relating to 2009 contracts for the sale of water entitlements attached to Woodside and Hareeba Park.[2]
[2]Transcript of Proceedings, Dowling v Dowling and ors (No 2) (Supreme Court of Victoria, S CI 2014 02463, Ierodiaconou AsJ) 6 August 2015, 51.15- 17; 72.8-10, 12-30; 92.6-7 (‘Transcript’).
Summary
For the reasons outlined below, the Court dismisses the plaintiff’s application for further discovery by the defendants of the documents described in Appendix 1 to the summons.
The Court will order that the defendants file and serve a supplementary affidavit of documents in respect of the agreed further discovery material, if they have not already done so. The Court otherwise dismisses the summons.
Background
The plaintiff issued proceedings against the defendants by writ filed 21 May 2014. The plaintiff and the defendants are all brothers. They are in dispute as to the plaintiff’s separation from the family’s various agricultural businesses.
Affidavits of Mr Lynch and Mr Stout
The plaintiff’s written submissions filed on 30 July 2015 state at paragraphs 3 and 4:
The plaintiff principally relies on the affidavits of Mr Stout, an accountant, dated 13 April 2015, 15 June 2015 and 27 July 2015, and Mr Lynch, an agricultural consultant, dated 27 July 2015 as to why the documents are required, are relevant and discoverable. Each of them depose that in order to express an opinion as to the value of the plaintiff’s partnership interests, they require access to various documents. [footnote omitted] [emphasis added]
Further, Mr Stout deposes that he requires access to the source documents and not just financial summaries. The reason being that financial statements do not necessarily show the value of an asset. Financial statements have a carrying value. A carrying value is not the sole basis of the methodology of valuing an assessment for ownership interests… The method of the carrying value does not equate to the real value, and source documents are required to establish the true value of the business for determining the ownership, in this case, Dowling Operations. [footnote omitted]…
The defendants objected to the affidavits. Given this, and that the plaintiff principally relied upon the affidavits of Mr Lynch and Mr Stout in support of its application, it is useful to first consider whether the affidavits are admissible, and if so, their probative value, if any.
Defendants’ submissions
The defendants sought copies of the letters of instructions to Mr Lynch and Mr Stout, as well as the documents they were provided with for the purpose of expressing the opinions they have in the affidavit materials. These documents were called for but not produced at the hearing. The defendants submitted that the letters of instruction would enable the Court to determine what questions were asked of the experts.
The defendants submitted that Mr Lynch does not identify the date of the valuation. They submitted that it was inconceivable that the instructions to Mr Lynch did not include a request to consider the volume and value of grain at a point in time. The defendants submitted it would be grossly unfair for the plaintiff to rely on the affidavit when neither the defendants nor the Court know the instructions and documents provided.
The defendants made a similar submission in relation to Mr Stout’s affidavits, noting that none of his three affidavits indicate his instructions as to the date for valuation, or the connections between his assertions in his affidavits and the relevant date.
The defendants’ objection to the affidavits of Mr Lynch and Mr Stout was made pursuant to ss 135 and 136 of the Evidence Act 2008. They submitted the affidavit material was unfairly prejudicial, misleading or confusing and not admissible. They submitted that the plaintiff should have discovered the documents instructing the experts and that the Court could then read the affidavits in the context of the material the experts have received, including instructions as to the date of any valuation. Alternatively, if the affidavits were admissible, the Court should give minimal or no weight to them.
The defendants submitted that Mr Lynch and Mr Stout clearly give opinion evidence as to the question of what documents are relevant. They submitted that the plaintiff could not rely on opinion evidence where it failed to meet its discovery obligation regarding the affidavits.
The defendants did not consider that Part 4.6 of the CPA dealing with expert evidence was relevant to the issues at hand.
Plaintiff’s submissions
The plaintiff submitted that the inquiries made of Mr Lynch and Mr Stout were only preliminary inquiries and that they had not yet been formally retained as experts. The plaintiff submitted that Mr Lynch and Mr Stout were not expressing relevant expert opinion. Rather, Mr Lynch and Mr Stout were stating that they need certain documents in order to express an opinion. The plaintiff conceded that in doing so, Mr Lynch and Mr Stout were expressing some degree of expertise.
The plaintiff contended that O44 of the Rules concerning expert evidence was not relevant as it is limited to trial evidence of experts.
The plaintiff drew an analogy with a solicitor deposing that they have been informed by an expert and believe the following documents are needed.
The plaintiff submitted that the request for the letters of instruction was misconceived because it could only go to the issue of cross-examination and ‘[t]here is no cross-examination in applications like this.’[3] Further, as the expert report has yet to be published, the letter of instruction remains privileged.
[3]Transcript 115.13-14.
The plaintiff rejected the defendants’ submissions that ss 136 and 136 of the Evidence Act were applicable. It contended that there was no unfair prejudice and that the affidavits were not misleading or confusing.
Applicable Principles
Section 135 of the Evidence Act allows a court to refuse to admit evidence on certain grounds:
The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might –
(a)be unfairly prejudicial to a party; or
(b)be misleading or confusing; or
(c)cause or result in undue waste of time.
Section 136 of the Evidence Act alternatively allows the Court to limit the use of certain evidence:
The court may limit the use to be made of evidence if there is a danger that a particular use of the evidence might –
(a) be unfairly prejudicial to a party; or
(b) be misleading or confusing.
Section 135 allows evidence to be refused if ‘its probative value is substantially outweighed’ by the listed dangers. The Evidence Act defines ‘probative value’ to be ‘the extent to which the evidence could rationally affect the assessment of the probability of a fact in issue’.[4] The approach commonly taken by the Court in regard to interpreting section 135 is to first identify the probative value of the evidence and then consider whether it would be outweighed by the dangers.[5]
[4]Evidence Act2008 (Vic), Dictionary, Part 1.
[5]
Section 136 provides a general discretion to the Court to limit the use of evidence, after it is admitted. The primary question to be asked is whether the probative value and importance of the evidence outweighs the particular dangers.[6]
[6]Stephen Odgers and Andrew Palmer, Uniform Evidence Law in Victoria (Thomson Reuters, 2nd ed, 2010) [1.3.14640]).
Courts take a holistic view in applying these sections.
Application of Principles
In paragraphs 2 and 4 of his affidavit, Mr Lynch deposes: [7]
The plaintiff has made preliminary inquiries with me as to whether it is within my expertise to give an opinion in relation to the volume and value of grain, and to review documents discovered by the First to Fifth Defendants in relation to the volume and value of grain. I am informed by the Plaintiff and believe that grain forms part Dowling Assets [sic] of the Dowling Operations as described in the Amended Statement of Claim filed in this proceeding and dated 26 September 2014.
…
I informed the Plaintiff and Browne & Co. that in order for me to give an opinion in relation to the matters referred to in paragraph 2 above, I will necessarily need further documents to do so. There is in my opinion, a lack of disclosure by the First to Fifth Defendants of documents relating to the volume and value of grain. The key missing documents relate to grain on hand volumes from which to undertake a value of the asset. I accordingly seek documents from the First to Fifth Defendants falling within the following 3 categories: [table following this paragraph omitted].
[7]Affidavit of Stephen Lynch sworn 24 July 2015.
Exhibit ‘SL-1’ to Mr Lynch’s affidavit is a copy of his curriculum vitae.
In paragraphs 3, 5-7 of his affidavit sworn 13 April 2015 (‘the first Stout affidavit’), Mr Stout deposes:
The Plaintiff has made preliminary enquiries with me as to whether it is within my expertise to give an opinion in relation to the value of the Dowling Operations, as described in the Amended Statement of Claim filed in this Proceeding and dated 26 September 2014.
…
I have not yet been formally retained by the Plaintiff to act as an expert in this Proceeding.
I have informed the Plaintiff and his solicitors, Browne & Co. Solicitors and Consultants (‘Browne & Co.’), that I have reviewed the documents referred to in paragraph 4 herein and I am unable to complete my analysis of the value of the Dowling Operations based on the documents described in the List of Documents.
I have further informed the Plaintiff and Browne & Co. that in order for me to given an opinion in relation to the value of the Dowling Operations, I will necessarily need to undertake an analysis of the documents described in Appendix 1 to the Summons.
In paragraphs 2 and 4 of his second affidavit sworn on 15 June 2015 (‘the Stout second affidavit’), Mr Stout deposes:
The Plaintiff’s lawyers have asked me to confirm my opinion in relation to the relevance of the 2013 financial documentation described in paragraph 1 of appendix 1 to the Summons filed on 13 April 2015.
…
The relevance of the 2013 financial documents is several fold….
The remainder of paragraph 4 and the following paragraphs 5 – 12 of the second Stout affidavit set out his opinion as to the relevance of the 2013 financial documents.
In paragraphs 3 and 4 of his third affidavit sworn on 27 July 2015 (‘the third Stout affidavit’), Mr Stout deposes:
The Plaintiff’s lawyers have asked me to clarify some issues in relation to the relevance of documentation sought by the Plaintiff in Appendix 1 to the Summons filed 13 April 2015.
In order to determine the value of the overlap interests in the Dowling Operations, I need to analyse the documents described in Appendix 1 to the Summons.
Paragraph 5 of the third Stout affidavit then outlines his opinion regarding a debate about accounting methodology with respect to valuation of grain. In paragraph 6, he provides an opinion on financial statements, and in paragraph 7 an opinion on amended financial reports. Concluding with paragraph 8, Mr Stout deposes that he still requires certain documents for his review.
Exhibit ‘KJS-1’ to the first Stout affidavit is a copy of his curriculum vitae.
In response to a question as to how the Court could assess what documents Mr Lynch says he needs from a timing perspective when the Court did not know the question that Mr Lynch was being asked to opine on, the plaintiff submitted the following answer:
Both of them [Mr Stout and Mr Lynch] say they’ve read the pleadings and both of them say that they will be asked to give opinion evidence about their value of the partnership interest and both of them, one assumes, will do that. The report will disclose the basis upon which they express the opinion, that which they were asked to do and it will be up to them in due course to say in more detail than they have now, this is why I come to that opinion and obviously in so doing, they will say, I rely on the 2013 documents. That will be a matter for cross-examination.
One assumes there will be another expert that says, this is entirely irrelevant. Ultimately the trial judge will say, I don’t think 2012 is relevant. But at this stage they say they need these things….[8]
[8]Transcript 117.7-20
In answer to the Court’s question about whether the plaintiff was suggesting that it rely on the experts’ reading of the pleadings, the plaintiff submitted that the Court should rely on their expertise, and the Court will need to also form its own view as to relevance.[9]
[9]Transcript 117.25-30.
The Court does not accept the plaintiff’s submissions that Mr Lynch and Mr Stout were not providing expert opinion and that they were only providing a preliminary opinion. It rejects the analogy that it is similar to a solicitor deposing that certain documents are required for discovery. The affidavits constitute opinion evidence by experts. The curriculum vitaes, which form exhibits to the affidavits, outline the expertise of Mr Lynch and Mr Stout. The substance of their affidavits sets out their expert opinion as to why certain documents are needed. The plaintiff conceded that in doing so, Mr Lynch and Mr Stout were expressing some degree of expertise. The plaintiff relies on the expertise of Mr Lynch and Mr Stout in his submissions as to why further discovery is required.
As to the plaintiff’s claims that Mr Lynch and Mr Stout had not formally been retained as experts, the Court has no evidence as to what terms Mr Lynch and Mr Stout were engaged upon because the plaintiff refused to provide the letters of instructions, despite being requested to do so. The Court also rejects the plaintiff’s submission that the request for the letters of instruction was misconceived because it could only go to the issue of cross-examination and ‘[t]here is no cross-examination in applications like this.’[10] There may be cross-examination in interlocutory applications such as this.
[10]Transcript 115.13-14.
The affidavits do not reach the high hurdle in s 135 of the Evidence Act with the consequence that they would be rendered inadmissible. That would require a ruling that they would likely to be misused, that is, that the danger of admitting them substantially outweighs their probative value. The Court is not prepared to make that finding in circumstances where the deponents could possibly have been cross-examined but were not. In view of the plaintiff’s claim of privilege over the letters of instruction, it was unsurprising that the defendants did not seek to cross-examine the deponents of the affidavits. Cross-examination would not have resulted in the letters of instruction being produced, unless privilege was waived.
The Court considers that the affidavits are admissible, but does not accord them any probative value. Section 136 of the Evidence Act applies. As discussed above, the instructing documents have not been provided to the Court or the defendants. Indeed, privilege is asserted over them and the plaintiff refused to produce them at hearing. Without knowing the questions which Mr Lynch and Mr Stout have been asked, or the documents with which they were briefed, there is a danger that relying on the affidavits might be misleading or confusing if they were used to make a ruling on this discovery application. This danger outweighs the probative value of the affidavits. Given the lack of instructing information, it would be unfair to the defendants if the Court relied on the affidavits to make the orders sought by the plaintiff.
The parties agreed that O44 of the Rules, which would have required the plaintiffs to disclose the material instructing the deponents to the affidavits at trial, is not applicable. This is because the hearing of the application is not a ‘trial’.
Part 4.6 of the CPA, which deals with expert witnesses and expert evidence, is not relevant to this application.
Discovery application
Submissions by parties
(a)2013 financial statements (Appendix 1 to the summons, paragraph 1) & bank facilities (Appendix 1 to the summons, paragraph 5)
The plaintiff seeks financial reports for the 2012/2013 financial year. They are not sought for the entire financial year but rather until 31 December 2012.[11] They were sought from a range of entities.[12]
[11]Plaintiff’s written submissions, [8].
[12]The list of entities was in dispute but the parties subsequently reached agreement about it. See Transcript 99.20-25.
The issue in dispute regarding the 2013 financial statements is a timing one. That is, whether discovery should be provided for the period after 1 October 2011 to 31 December 2012. The defendants have discovered financial documents up to
1 October 2011.
The plaintiff’s reasons for seeking the financial reports up to 31 December 2012 may be summarised as follows:
(a) the agreement to relinquish the plaintiff’s partnership interest was conducted up to July 2012, and partly performed until September 2012 and therefore within the 2012/13 financial year;
(b) there are sales in the 2012/13 financial year that are relevant to assessing the value of the plaintiff’s partnership interests; and
(c) Mr Lynch and Mr Stout have deposed that they need the documents for various purposes.
In his further submissions dated 28 September 2015, the plaintiff made submissions regarding an order made by the Court on 31 August 2015 that required the defendants to serve a response to a table prepared by the plaintiff with a list of assets and the plaintiff’s assessment of the approximate value of each asset in the period 1 October 2011 to 31 July 2012. The crux of the plaintiff’s further submissions was that this table makes the documentation up to at least 31 July 2012 relevant and discoverable.
In the defendants’ further submissions in response, they referred to earlier consent orders of the Court made on 21 January 2015. The orders did not provide for parties to file the schedule on an open basis but rather to jointly file the completed schedule if the matter did not settle at mediation. The dates referred to in the 21 January 2015 order are for assessment as at 1 October 2011. The crux of the defendants’ further submissions is that the plaintiff’s filing of the open schedule with the expanded date range did not comply with the 21 January orders and is inconsistent with it
The defendants submit that they have discovered all bank statements up to the year ending 30 June 2012 for all entities.[13] They submit that the relevant period is up to 1 October 2011 and as that falls within the 11/12 financial year, they have discovered all documents up to 30 June 2012. Documents after that time are not relevant. The defendants’ submissions on this are discussed further below.
[13]Transcript 21-22; 99-101.
The plaintiff also seeks documents concerning bank facilities. The plaintiff’s reasons for seeking documents concerning bank facilities up to 31 December 2012 may be summarised as follows: debt can be assessed in order to determine the extent of the plaintiff’s partnership interest.
The issue in dispute regarding the bank facilities is a timing one. The defendants’ arguments about the relevant dates were based on the pleadings. They are addressed further below. They submit that any valuation would be as at 1 October 2011. The defendants rely on the plaintiff’s pleadings. In respect of the bank facilities, the relevant date is 1 October 2011.
As discussed above, during the hearing the defendants conceded that there had not been discovery of all bank facilities up to 1 October 2011 and agreed to discover them.
(b) grain (Appendix 1 to the summons, paragraph 6)
The plaintiff seeks:
(a) documentation detailing the hectares of grain by type planted during the 2011 calendar year and financial year ended 30 June 2012;
(b) weighbridge dockets and cartage contractor documentation for the 2011 calendar year and financial year ended 30 June 2012 harvest of grain;
(c) documentation detailing total grain revenue for the years ended 30 June 2012, 30 June 2011, 30 June 2012 and 30 June 2013, showing receipts for grain sales;
(d) documentation detailing grain sales accounts by type, including current and forward sales contracts, for the years ended 30 June 2010, 30 June 2011, 30 June 2012 and 30 June 2013;
(e) grain on hand as at 30 June 2010, 30 June 2011, 30 June 2012 and 30 June 2013.
The plaintiff’s reasons for seeking these documents may be summarised as follows:
(a) Grain is planted in May-June, harvested in October-November and sold from December onwards. Accordingly grain from the 2010-2011 year, during which the plaintiff was a partner will be sold until September 2012. Accordingly, records from 2012-2013 are required in order to properly account for grain.
(b) Grain consists of grain on hand (stored), grain planted and standing crops. Each has a different value. The basis has not been disclosed. A method to verify volumes and value is to compare the harvested amount with the amount sold. This will only be apparent for relevant grain by reviewing the 2012 and 2013 documents, according to Mr Stout’s evidence.
(c) Without the source documents, the plaintiff is unable to form any view about the grain harvested, the grain stored or the grain sold. The plaintiff says there are inconsistencies in the references to the amount of grain.
(d) Mr Lynch and Mr Stout have deposed that they need the documents for various purposes.
The issue in dispute regarding grain is both a scope one (what documents should be discovered) and a timing one (whether 2012-2013 financial year documents should be discovered).
The defendants claim to have discovered all the source documents relating to grain up to 30 June 2012.[14] The plaintiff made extensive submissions at the hearing in support of its submission that there had been a piecemeal approach to discovery. The plaintiff submitted that it ought not to have to piece through a jigsaw of documents.[15] The plaintiff clarified that it was not submitting that it distrusted the documents discovered.[16] It submitted that the documents exist, are relevant, discoverable and can be produced at the touch of a button.[17]
(c) water (Appendix 1 to the summons, paragraph 8)
[14]Transcript 31.16-31; 32.11-12; 55.1-5; 95.13-15.
[15]Transcript. See, for example, 27-29 of the plaintiff’s submissions.
[16]Transcript 30.30.
[17]Transcript 37.11-15.
The plaintiff seeks documents concerning:
(a) the sale of temporary and permanent water rights connected to Dowling Brothers properties referred to in paragraph 7 of the amended statement of claim during the financial years ended 30 June 2010, 30 June 2011 and 30 June 2012;
(b) the sale of water rights in 2009 connected to the property known as ‘Hareeba Park’;
(c) the number of mega litres of water owned by Dowling Brothers and attached to the properties referred to in paragraph 7 of the amended statement of claim by water account number for the financial years ended 30 June 2011 and 30 June 2012.
The plaintiff’s reasons for seeking these documents may be summarised as follows:
(a) The water rights are valuable and relevant to the assessment of the plaintiff’s partnership interest.
(b) They were relevant to a family law settlement that will be part of the plaintiff’s case.[18]
(c) Mr Stout requires access to the documents.
[18]Transcript 40.11-17.
The plaintiff submits everything is in dispute regarding discovery of these documents and that only a few water-related documents have been discovered.[19]
[19]Transcript 39.
The defendants claim to have discovered all water-related documents for the relevant period save for some 2009 contracts, which form part of the agreed further discovery material.[20]
(d) plant and equipment (Appendix 1 to the summons, paragraph 9)
[20]Transcript 73.10-13.
The plaintiff seeks a detailed listing of plant and equipment, and plant and equipment finance debt including all leases and hire purchase agreements as at 30 June 2010, 30 June 2011, 4 October 2011, 30 June 2012 and 30 June 2013.
The defendants have agreed to provide discovery up to 1 October 2011. Accordingly, the issue is whether discovery should be provided after that date. That is, the issue in dispute is a timing one.
The plaintiff’s reasons for seeking these documents may be summarised as follows:
(a) debt can be assessed in order to determine the extent of the plaintiff’s partnership interest.
(b) Mr Stout requires access to the documents.
The defendants say that they have discovered all relevant documents up to 1 October 2011 and beyond that date, they are not relevant.[21]
[21]Transcript 98.23-30.
Applicable Principles
Rule 29.05(1) of the Rules provides that the Court may make an order for general discovery:
At any stage of a proceeding, the Court may order any party to give discovery in accordance with Rule 29.01.1.
Rule 29.05 of the Rules provides that the Court may limit discovery:
In order to prevent unnecessary discovery, the Court may, before or after any party is required to make discovery by virtue of a notice for discovery served in accordance with Rule 29.02, order that discovery by any party shall not be required or shall be limited to such documents or classes of document, or to such of the questions in the proceeding, as are specified in the order.
Rule 29.08 provides that the Court may make an order for particular discovery:
…
(2)Where, at any stage of a proceeding, it appears to the Court from evidence or from the nature or circumstances of the case or from any document filed in the proceeding that there are grounds for a belief that some document or class of document relating to any question in the proceeding may be or may have been in the possession of a party, the Court may order that party to make and serve on any other party an affidavit stating—
(a)whether that document or any, and if so what, document or documents of that class is or has been in that party's possession; and
(b)if it has been but is no longer in that party's possession, when the party parted with it and that party's belief as to what has become of it.
(3)An order may be made against a party under paragraph (2) notwithstanding that the party has already made or been required to make an affidavit of documents.
Rule 29.01.01 outlines the scope of discovery for a proceeding in the Court:
(1)Unless the Court otherwise orders, discovery of documents pursuant to this Order is limited to the documents referred to in paragraph (3).
(2) Paragraph (1) applies despite any other rule of law to the contrary.
(3)Without limiting Rules 29.05 and 29.07, for the purposes of this Order, the documents required to be discovered are any of the following documents of which the party giving discovery is, after a reasonable search, aware at the time discovery is given—
(a) documents on which the party relies;
(b) documents that adversely affect the party's own case;
(c) documents that adversely affect another party's case;
(d) documents that support another party's case.
(4) Notwithstanding paragraph (3)—
(a)if a party giving discovery reasonably believes that a document is already in the possession of the party to which discovery is given, the party giving discovery is not required to discover that document;
(b)a party required to give discovery who has, or has had in his, her or its possession more than one copy, however made, of a particular document is not required to give discovery of additional copies by reason only of the fact that the original or any other copy is discoverable.
(5)For the purposes of paragraph (3), in making a reasonable search a party may take into account—
(a) the nature and complexity of the proceeding;
(b) the number of documents involved;
(c) the ease and cost of retrieving a document;
(d) the significance of any document to be found; and
(e) any other relevant matter.
Under section 55(1) of the CPA:
A court may make any order or give any directions in relation to discovery that it considers necessary or appropriate.
Section 55(2) allows a court to make any order or give any directions:
(a) requiring a party to make discovery to another party of—
(i)any documents within a class or classes specified in the order; or
(ii)one or more samples of documents within a class or classes, selected in any manner which the court specifies in the order;
(b) relieving a party from the obligation to provide discovery;
(c) limiting the obligation of discovery to—
(i) a class or classes of documents specified in the order; or
(ii)documents relating to one or more specified facts or issues in dispute;
(d) that discovery occur in separate stages;
(e)requiring discovery of specified classes of documents prior to the close of pleadings;
(f) expanding a party's obligation to provide discovery;
(g)requiring a list of documents be indexed or arranged in a particular way;
(h)requiring discovery or inspection of documents to be provided by a specific time;
(i)as to which parties are to be provided with inspection of documents by another party;
(j)relieving a party of the obligation to provide an affidavit of documents;
(k)modifying or regulating discovery of documents in any other way the court thinks fit.
In Matthews v SPI Electricity Pty Ltd,[22] Zammit AsJ made a number of general comments about the need for discovery to be conducted in a way that adheres to the principles of the CPA:
When intervening in the discovery process, the Court must try to achieve an optimum balance so that discovery is undertaken by each party in the most timely, efficient and cost effective manner, while ensuring that discovery is proportionate to the size of the case and appropriate to the interests of justice.[23]
[22][2011] VSC 401.
[23]Ibid [28].
Similarly, in Liesfield v SPI Electric Pty Ltd (Ruling No 1),[24] J Forrest J made a number of comments to do with avoiding excessive discovery:
I am also keenly aware of this Court’s concern over a growing culture of discovery which aims to leave “no stone unturned” or to “search for the smoking gun.” The shift away from the Peruvian Guano test and amendments to both Federal and State court practice demonstrate the determination of the legislature and the Court to reverse this trend.[25]
[24][2013] VSC 634.
[25]Ibid [29] [Citations omitted].
Following the underlying principles of the CPA and the guidance given to it by Zammit AsJ and J Forrest J in the discussed cases, the Court must be mindful to keep discovery proportionate and firmly focused on the issues in dispute.
Application
The plaintiff’s discovery application principally relied upon the affidavits of Mr Lynch and Mr Stout in support of its discovery application. The Court does not accord those affidavits any probative value and accordingly rejects the plaintiff’s submissions that rely upon those affidavits.
The plaintiff also relied upon the pleadings in respect of its submissions for further discovery. The defendants relied upon the pleadings to resist the application.
The plaintiff’s amended statement of claim dated 26 September 2014 seeks relief against the defendants including:
A declaration as to the value of the plaintiff’s just and equitable share of the Dowling Operations and Dowling Assets, as at the date of the Agreement, after all due adjustments. [Emphasis added]
The Agreement is defined in paragraph 9 of the amended statement of claim. Paragraph 9 states:
Over a period of approximately two years up to July 2012… reached an agreement by which the plaintiff agreed to relinquish his total interest of any kind in the Dowling Operations and in the real and personal assets on and through or in relation to which the Dowling Operations were conducted and any related financial entitlements and accumulations (‘the Dowling Assets’) in return for payment and/or assets in lieu of payment, in an amount equal to his just and equitable share of the value of the Dowling Operations and Assets, after all due adjustments for financial benefits previously unequally received by one or other of the Dowling Brothers and excluding the property known as Loyola (‘the Agreement’). [Emphasis added]
Paragraphs 1(a) and (b) of the defendants’ request for further and better particulars of the statement of claim dated 16 July 2014 requested further and better particulars of the plaintiff’s statement of claim dated 21 May 2014:
Under paragraph 5:
(a) Specify the date of the Agreement alleged by the plaintiff;
(b) Specify the date the Agreement alleged by the plaintiff had effect;…
In paragraphs 1(a) and (b) of the plaintiff’s further and better particulars of the statement of claim dated 1 August 2014, the plaintiff states:
It is not alleged that the agreement had a date. The plaintiff refers to the particulars to paragraph 5 of the statement of claim.
The parties gave effect to the agreement from the beginning of October 2011, from which time by common consent the plaintiff conducted his farming and grazing activities on his own account and no longer part of the Dowling Operations, and they conducted their farming and grazing activities on their own account to the exclusion of the plaintiff. From that time assets forming part of the Dowling Assets were allocated and transferred to the plaintiff including as follows…
Paragraph 5 of the statement of claim became (with amendments) paragraph 9 of the amended statement of claim. Paragraph 2 of the particulars to paragraph 9 refer to an oral agreement made in the course of various conversations and refers to alleged conversations in or about May or June 2010, on 19 October 2010 and during the period October 2010 to late 2012.
If the plaintiff’s allegations are accepted, then the question arises as to what date the valuation of the Dowling Assets and Operations would occur. The relief sought is for a declaration of value as at the date of the Agreement. This is confusing because, as referred to above, the plaintiff alleges variously that the Agreement did not have a date (particulars), that the Agreement was reached in the period up to July 2012 (paragraph 9), and that there were conversations constituting the Agreement until ‘late 2012’ (particulars to paragraph 9).
It is not in dispute between the parties that the plaintiff worked in the Dowling Operations until October 2011.[26] Particular 2(c) to paragraph 9 alleges that it was agreed that:
the basis of the exit would be upon years of service with Dowling Operations which, in the case of the plaintiff, would be not less than 18.56%, and
all the value of the Dowling Assets would be included in any assessment of fair value save for Loyola. [Emphasis added]
[26]Amended statement of claim dated 26 September 2014, paragraph 3(e) and Amended defence dated 17 June 2015, paragraph 8(e).
Paragraph 12 states:
At all relevant times in or about October 2011, the gross value of the Dowling operations and the Dowling Assets exceeded $52 million.
Particulars
Further particulars will be given after completion of discovery.
[Emphasis added]
Paragraph 14 states:
In the circumstances, the defendants remain indebted to the plaintiff for the difference between the value of the assets which the plaintiff received and the value of the plaintiff’s just and equitable share of the Dowling Operations and the Dowling Assets, as aforesaid, as at the date of the Agreement. [underline added]
Particular 2(c) to paragraph 9 refers to the basis of the exit being, inter alia, on years of service with Dowling Operations. The plaintiff’s service with Dowling Operations ceased in October 2011. Paragraph 12 indicates that the relevant time is in or about October 2011. It alleges that the gross value of the Dowling Operations and Assets exceeded $52 million at that time. Paragraph 1(b) of the particulars indicates that the agreement was given effect from the beginning of October 2011.
The pleadings however seek relief as at the date of the agreement, not at the date the agreement was partly performed. The relief is sought ‘as at the date of the Agreement’. This, together with the fact that relief is sought at a ‘date’ rather than ‘dates’ indicates that relief is not sought as at the dates the agreement was partly performed.
Given the above, on the pleadings before the Court at the hearing of this application, the relevant period for discovery of documents regarding valuation will be October 2011. The Court makes this finding only in respect of this discovery application and on the material before it at the time of the hearing (and in the material in the parties’ further submissions after the hearing). This finding is not a determination of the relevant date, if any, of the valuation. It will be for the trial judge to determine whether there should be a valuation and if so, the applicable date.
For completeness, the Court notes that if the defendants are successful, they rely on the August 2012 agreement.[27] There is no allegation that the August 2012 agreement has been breached. However, even if there was such an allegation, then the issue for determination would be whether the plaintiff received the benefits provided for in the August 2012 agreement. In that case, as agreement specifies the benefits, a general valuation of Dowling Assets and Operations would be unnecessary.[28] Again, the Court makes this finding only in respect of this discovery application and one the material before it. This issue will be a matter for the trial judge to determine in due course, if the defendants are successful.
[27]Affidavit of Rodney Ambrose sworn 29 May 2015, Exhibit ‘RJA-2’.
[28]Ibid. See clauses 1,3, 4, 10 of Exhibit ‘RJA-2’.
As discussed above, the plaintiff made further submissions that, as a consequence of the table attached to the Court’s order made on 31 August 2015, documents beyond 1 October 2011 were relevant because the date range is 1 October 2011 to 31 July 2012. The defendants referred to the Court orders made on 21 January 2015 in their submissions in response.
The Court orders made on 21 January 2015 provided for a without prejudice schedule of assets to be exchanged which specified each asset over which the plaintiff claims to have an interest as at 1 October 2011 and inter alia, the plaintiff’s assessment of the approximate value or range thereto of each such asset as at 1 October 2011. It was ordered that this schedule be provided to the Judicial Registrar ahead of the mediation of the proceeding. The orders also provided that, if the proceeding did not settle, some further steps would be taken and the parties should jointly file the completed schedule of assets of an open basis.
The Court orders of 31 August 2015 require the defendants to respond to various items in the table.
Neither the 21 January nor 31 August 2015 orders were rulings on the relevant dates in this proceeding, either for trial purposes, or discovery. Both orders simply require the parties to put their position as to the list and valuation of certain assets.
Rule 29.01.01(3) is applicable. It directs discovery to documents on which a party relies, that adversely affect its own case, that adversely affect the other party’s case or that support the other party’s case. In this case, the analysis of the pleadings above indicates that the documents sought for the purpose of a valuation after October 2011 are not relevant to either party’s case as currently pleaded. Accordingly, they are not required to be discovered.
The Court now addresses the specific categories of discovery sought by the plaintiff. Its analysis of those specific sections should be read together with the general analysis in this section.
(a)2013 financial statements (Appendix 1 to the summons, paragraph 1) & bank facilities (Appendix 1 to the summons, paragraph 5)
Given the above, financial documents for the period 2011/12 will be relevant. Financial documents for the 2012/13 period will not be relevant, and nor will the banking facilities.
(b) grain (Appendix 1 to the summons, paragraph 6)
The defendants’ submissions were that they had provided all the ‘source’ documents for the period up to and including the 2011/12 financial year. Accordingly, there are no further documents to be discovered in relation to grain for relevant period up to and including the 2011/12 financial year.
The Court does not accept the plaintiff’s submissions that grain records are required for the period beyond the 2011/12 financial year. For the reasons discussed above, it does not accept the evidence of Mr Stout in relation to this issue. Further, in the event that a jointly appointed expert (or experts) or special referee appointed by the Court required further information about grain stored, harvested or sold in the period beyond that in order to do a valuation for this proceeding, the defendants have indicated that they would unequivocally comply with any request. This is a hypothetical issue as, at the time of the hearing of this application, (a) no experts had yet been appointed for this purpose and (b) it is unknown what further information, if any, the expert would require.
The Court does not accept the plaintiff’s submissions that the defendants should be required to produce more grain records at the push of a button so that they do not need to piece together the current documents. Discovery is not a fishing exercise. The defendants should not be required to electronically create further documents. As discussed above, discovery must be focused and proportionate to the litigation.
(c) water (Appendix 1 to the summons, paragraph 8)
For the reasons discussed above, the documents sought for the 12/13 period are not relevant.
Further, the defendants say they have discovered the water-related documents save for the 2009 water contracts which form an item in the agreed further discovery material.
(d) plant and equipment (Appendix 1 to the summons, paragraph 9)
The issue in dispute regarding plaintiff and equipment is a timing one. For the reasons discussed above, the documents sought for the 12/13 period are not relevant.
Conclusion
The plaintiff’s application for further discovery by the defendants of the documents described in Appendix 1 to the summons is dismissed for the reasons above.
The Court will order that the defendants file and serve a supplementary affidavit of documents in respect of the agreed further discovery material, if they have not already done so. The Court otherwise dismisses the summons.
The Court will hear from the parties on costs and the form of orders proposed.
SCHEDULE OF PARTIES
JAMES ANTHONY DOWLING Plaintiff JOHN MICHAEL DOWLING First Defendant CHRISTOPHER JAMES DOWLING Second Defendant TERENCE JOSEPH DOWLING Third Defendant ANTHONY CLEMENT DOWLING Fourth Defendant DANIEL THOMAS DOWLING Fifth Defendant ACN 007 062 866 PTY LTD (ACN 007 062 866) (trading as Belmores) Sixth Defendant HARGRAVES SOLICITORS (a firm) Seventh Defendant
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