Equuscorp Pty Ltd v Malcolm
[2001] VSC 308
•15 August 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
No. 8285 of 1997
No. 5232 of 1998
| EQUUSCORP PTY. LTD. | Plaintiff |
| v | |
| WARREN JAMES MALCOLM | Defendant |
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JUDGE: | BEACH, J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 8 AUGUST 2001 | |
DATE OF JUDGMENT: | 15 AUGUST 2001 | |
CASE MAY BE CITED AS: | EQUUSCORP PTY. LTD. v. MALCOLM | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 308 | |
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CATCHWORDS: Discovery – Inspection of documents at common law – Supreme Court Rules – Rule 35.08 – Inspection of documents relevant to an application prior to hearing of application.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. M. Colbran Q.C. and Mr. J. Simpson | Wilmoth Field & Warne |
| For the Defendant | Mr. M. Dreyfus Q.C. and Mr. R. Heath | Arnold Bloch Leibler |
HIS HONOUR:
I propose now to deliver my ruling in relation to the debate concerning the Notices to Produce which the defendant in these two proceedings served on Equuscorp.
On 22 November 2000 and 21 December 2000 the defendant in two of the Equus proceedings, Warren J. Malcolm, served two Notices to Produce on Equus. The proceedings are No.8285 of 1997 and No.5232 of 1998.
On 21 December 2000 Equus filed summonses in each proceeding seeking to have the notices set aside or struck out.
The summonses came before me on 24 January 2001. On 22 March 2001 I upheld the validity of the Notices to Produce and, with one exception, ordered that within 30 days the documents in question be produced by Equus for inspection by the defendant. These reasons for judgment must be read in conjunction with my reasons for judgment handed down that day.
On 5 April 2001 Equus filed applications for leave to appeal against my orders in the Court of Appeal.
The applications came before the Court of Appeal on 6 April 2001. The following is a copy of the transcript of the proceedings before the court that day.
"WINNEKE, P: Following discussion before us this morning in respect of these two applications, it appears that the parties are agreed upon the following matters:
1. That the notices to produce considered by His Honour Beach, J., on 22 March of this year were to be regarded as having been given under Rule 35.08 of the Rules of Court.
2. That in making paragraph 1 of his orders, the judge went beyond what strictly could have been justified under Rule 35.08 alone.
3. That the applicant now raises no objection to paragraph 1 of His Honour's orders, save for the documents called for in the notice to produce filed on 16 January 2001.
4. The parties are now in agreement that the question of privilege raised by the plaintiff in respect of the documents sought in that notice dated 16 January 2001 should be heard and determined by the judge hearing the defendant's application for security.
Accordingly, we make the following orders in each proceeding by consent:
1. Leave to appeal is granted.
2. The appeal is treated as instituted and heard instanter.
3. The appeal is allowed.
4. Paragraph 1 of the orders made by Beach, J., on 22 March 2001 is amended by deleting the words 'and the notice to produce filed on 16 January 2001'. Otherwise, His Honour's orders are confirmed.
The court is of the view that it should make no order for costs."
On 6 August 2001 the defendant served a further Notice to Produce on Equus in each proceeding. Each notice reads:
"Take Notice that the Defendant requires you to produce for inspection on or before 8 August 2001 the following documents:
1. The independent chartered accountant's report obtained by the Plaintiff, which is referred to in paragraph 15 and paragraphs F and G of the Schedule to the judgment of Justice Bergin in Perpetual Trustees (WA) Ltd v. Equuscorp Pty Ltd and Ors (Supreme Court of New South Wales, unreported) dated 5 December 2000.
2. Correspondence between the Plaintiff and the independent chartered accountant, including any documents provided to the independent chartered accountant, in relation to the report referred to in paragraph 1 above.
3. All financial reports for the financial year ended 30 June 2001 which are referred to in the letter from the Plaintiff's solicitors to the Defendant's solicitors dated 18 July 2001.
4. The financial reports for the Plaintiff for the year ended 30 June 2001.
5. All documents showing or listing the current creditors of the Plaintiff.
6. Documents relating to:
(i) [the Plaintiff's] continuing and substantial cash flow from the realisation of asset recoveries';
(ii) 'cash reserves in the bank [of the Plaintiff]'; and
(iii) '[the Plaintiff's] its lender's financial support and indulgence'
as referred to in subparagraphs (a), (b) and (c) of the letter from the Plaintiff's solicitors to the Defendant's solicitors dated 18 July 2001."
Paragraphs 1 and 2 are identical to paragraphs 1 and 2 in the earlier Notice of 16 January 2001.
On 7 August 2001 Equus filed a summons in each proceeding seeking to have the new notices set aside or struck out.
The summonses came before me on 8 August.
Two principal arguments were advanced to me on behalf of Equus.
In the first place, it was contended that the notices could not be served pursuant to Rule 29.10(2) of the Supreme Court (General Civil Procedure) Rules 1996 as that rule only permits a party to serve on an opposite party a Notice to Produce a document for inspection which is referred to in any pleading, interrogatory, answers, affidavit or notice filed by the party upon whom the notice is served and none of the documents referred to in the Notices to Produce served on Equus on 6 August fall into any of those categories.
The point was conceded by counsel for the defendant and that aspect of the matter can be put to one side.
The second argument advanced on behalf of Equus was that the Notices could not be authorised by Rule 35.08 and therefore should be struck out.
The sub-paragraphs of Rule 35.08 relevant for present purposes read:
"35.08 (1) A party to a proceeding may serve on any other party a notice requiring him to produce the documents mentioned in the notice on any application in or at the trial of the proceeding.
(2) Unless the Court otherwise orders, the party on whom the notice is served shall produce on the application or at the trial such of the documents mentioned in the notice as are in his possession, custody or power, and which he does not object to produce on the ground of privilege."
What is said concerning that rule is that any notice to produce given pursuant to it can only require a party to a proceeding to produce documents "on any application in or at the trial of the proceeding" and cannot require a party to produce them prior to that time as the notices in question seek to do in the present cases.
Prior to the coming into operation of the Civil Procedure Rules 1996, the rules dealing with inspection of documents were to be found in Order 31.
The two rules relevant for present purposes were Rules 15 and 18 which read:
15. Inspection of documents - Every party to a cause or matter shall be entitled at any time, by notice in writing, to give notice to any other party, in whose writ, pleading, particulars, or affidavit reference is made to any document ; to produce such document for the inspection of the party giving such notice or of his solicitor and to permit him to take copies thereof ; and any party not complying with such notice shall not afterwards be at liberty to put any such document in evidence on his behalf in such cause or matter unless he shall satisfy the Court or a Judge that such document relates only to his own title, he being a defendant to the cause or matter, or that he had some other cause or excuse which the Court or Judge shall deem sufficient for not complying with such notice, in which case the Court or Judge may allow the same to be put in evidence on such terms as to costs and otherwise as the Court or Judge shall think fit.
18. Order for inspection: Application for it - If the party served with the notice under Rule 15 omits to give such notice of a time for inspection, or objects to give inspection, or offers inspection elsewhere than at the office of his solicitor, the Judge may, on the application of the party desiring it, make an order for inspection in such place and in such manner as he may think fit. And any application to inspect documents except such as are referred to in the writ, pleadings, particulars, or affidavit of the party against whom the application is made, or disclosed in his affidavit of documents, shall be founded upon an affidavit showing of what documents inspection is sought, that the party applying is entitled to inspect them, and that they are in the possession or power of the other party."
The meaning of the second part of Rule 18 was considered by Sholl, J. in Weir v. Greening [1957] V.R. 296.
His Honour held that that part of the rule was available to a party who was prepared to swear to the opposite party's possession of a document not referred to in such opposite party's writ, pleadings, particulars or affidavits, to seek an immediate order for inspection without first having to obtain an order for its disclosure or discovery.
However, for some reason the second part of the old Rule 18 was not carried forward into the 1996 Rules.
Although it might be said that, even if it had been, the defendant in the present cases could not avail himself of the rule because he has not sworn that the documents referred to in the Notices to Produce of 6 August are in the possession of the plaintiff. Whilst that is so, there is no doubt in the present case that the documents in question are in the possession of Equus. If the rule had been applicable, I consider that it would have been appropriate in the circumstances of this case to dispense with compliance with that aspect of it.
I turn then to what I consider to be the fundamental question in the present case, namely, is there any power in the court to require a party to produce a document not referred to in that party's originating process, pleading, interrogatories or answers, affidavit or notice prior to the trial of the proceeding or prior to the hearing of an application in the proceeding.
In my opinion, the answer to the question posed is yes.
It is clear that prior to the enactment of rules relating to discovery, a party was entitled to discovery of documents in the possession of an opposite party in which both parties had a common interest at common law.
The point was demonstrated by the Court of Appeal in Brown v. Liell (1885) 16 Q.B.D. 229.
At p.230 Matthews, J. (With whose judgment Smith,J. concurred) said:
"Where one party has a document in his possession in which both parties have a common interest, as for instance a document containing the terms of the contract sued upon, and the other party seeks inspection of such document, he is entitled to discovery at common law and independently of the new rules."
Further, in my opinion, the court has inherent jurisdiction to require a party to litigation to produce any document in his possession relevant to the litigation, including any application in the litigation, prior to the trial of the litigation or the hearing of any application in the litigation.
Whilst the Rules of Court are designed to facilitate the disposal of litigation, they are not to be interpreted rigidly.
For those reasons, I propose to uphold the validity of the two Notices to Produce.
But that is not the only reason I propose to do so.
When this matter originally came before me on 24 January 2001 the following exchange occurred between senior counsel for Equus and senior counsel for the defendant Malcolm:
"HIS HONOUR: What is the rule that relates to the giving of a notice compelling another side to produce evidence during the interlocutory stages of the proceeding?
MR BEAUMONT: It is 35.08.
HIS HONOUR: Thank you.
MR DREYFUS: Your Honour, on its face that relates to the trial of a proceeding and it would appear to be apt, Your Honour, provided one accepts that this application is the trial of the proceeding in respect of security for costs, it is obviously not the trial of the proceeding in whole.
HIS HONOUR: Correct.
MR BEAUMONT: So we don't waste time may I say, Your Honour, if one reads 35.08, it reads, 'In the notice on any application in the proceeding or at the trial of the proceeding', and this is an application in the proceeding.
HIS HONOUR: In the proceeding.
MR BEAUMONT: We acknowledge 35.08 - - -
HIS HONOUR: Is applicable?
MR BEAUMONT: Is applicable.
MR DREYFUS: I am indebted to Mr Beaumont. This is an application in the proceeding, Your Honour."
When the matter came before the Court of Appeal on 6 April 2001 the order I had made in respect of the Notice to Produce of 16 January 2001 was set aside by the consent of the parties, not for the purpose of allowing the question of the validity of the notice to be re-argued, but for the purpose of allowing Equus to raise questions of privilege relating to the two documents then referred to in the Notice to Produce, those two documents now being the first two documents specified in the Notices to Produce of 6 August.
In my opinion, it is not in the interests of justice that Equus should now be permitted to resile from that situation.
My formal finding, therefore, is that the Notices to Produce of 6 August 2001 are valid Notices to Produce.
I propose to reserve the question of the costs of the application concerning the validity of the two notices. I shall deal with that when I deal with the substantive application for security for costs.
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