| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : FRIGGER -v- CLAVEY LEGAL PTY LTD [No 2] [2014] WADC 44 CORAM : DERRICK DCJ HEARD : 2 APRIL 2014 DELIVERED : 9 APRIL 2014 FILE NO/S : CIV 1221 of 2011 BETWEEN : ANGELA FRIGGER First Plaintiff
HARTMUT FRIGGER
Second Plaintiff
AND
CLAVEY LEGAL PTY LTD
Defendant
Catchwords: Practice and procedure - Appeal against decision of registrar granting application for further discovery Legislation: District Court Rules 2005 (WA)
Rules of the Supreme Court 1971 (WA) Result: Appeal allowed in part
Representation: Counsel:
First Plaintiff : In person
Second Plaintiff : In person
Defendant : Mr P D Quinlan SC
Solicitors:
First Plaintiff : Peter J Griffin & Co
Second Plaintiff : Peter J Griffin & Co
Defendant : MDS Legal
Case(s) referred to in judgment(s):
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133
Esso Australia Resources Ltd v Plowman [1995] HCA 19; (1995) 183 CLR 10
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Macquarie University v Macquarie University Union Ltd [No 2] [2007] FCA 844
Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341
Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436
Perpetual Trustees Company Ltd v Burniston [2012] WASC 26
Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183
Introduction 1 By notice of appeal dated 24 March 2014 the plaintiffs appeal against a decision of the acting principal registrar (the registrar) made on 20 March 2014 ordering them to provide discovery on oath of three affidavits sworn by the first plaintiff. The appeal is brought under r 15(1) of the District Court Rules 2005 (WA) (DCR). The notice of appeal does not specify any grounds of appeal. 2 An appeal from the decision of a registrar to a judge under r 15(1) of the DCR is a hearing de novo: DCR, r 15(6); Hazart Pty Ltd v Rademaker (1993) 11 WAR 26, 28. I am therefore to treat the application which lead to the making of the orders the subject of the appeal as though it had not been previously determined. It is not necessary for the plaintiffs to establish appealable error on the part of the registrar: Hazart Pty Ltd v Rademaker (28); Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 [13], [14]. 3 In order to deal with the appeal I have had access to relevant documents on the court file as well as the transcript of the hearing that took place before the registrar on 20 March 2014. I have also had access to copies of the three affidavits which the registrar ordered the plaintiffs to discover. I will refer to the circumstances in which I was provided with copies of the affidavits in due course.
Non-contentious background facts 4 The plaintiffs are husband and wife. The defendant is an incorporated legal practice. 5 At all material times the plaintiffs were directors and shareholders of Computer Accounting and Tax Pty Ltd (in liquidation) (CAT). 6 On 21 February 2010 a provisional liquidator was appointed to CAT: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38. 7 On 23 February 2010 the plaintiffs retained the defendant to act for them in their capacities as directors of CAT (the retainer). By the terms of the retainer the defendant was engaged to defend the application that had been made to wind up CAT. The terms of the retainer also provided that the defendant was engaged to advise on the prospects of securing a stay of a judgment of the Court of Appeal in CACV 76 of 2008 delivered on 23 October 2009 imposing an obligation on CAT to pay to Professional Services of Australia Pty Ltd (PSA) and the estate of Mr Martin Banning (Banning) an amount in excess of $800,000: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183. 8 On or about 25 March 2010 the retainer was extended to include instructions for the defendant to act for the plaintiffs in relation to an application made by PSA and Banning in the Supreme Court in CIV 2265 of 2006 to freeze assets controlled by the plaintiffs. 9 On 30 March 2010 the defendant terminated the retainer. 10 On 6 May 2010 CAT was wound up on the ground that the statutory presumption of insolvency which had arisen by reason of CAT's failure to comply with two statutory demands served in December 2009 (one of which had been issued by PSA for the amount in excess of $800,000 owing to PSA by reason of the Court of Appeal judgment), had not been displaced by CAT: Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93 [20]. In arriving at this conclusion the court found that the evidence put before it in support of the winding up application established that CAT was not able to meet its debts as and when they fell due, and that there was no evidence which would justify a conclusion that CAT could meet its debts as and when they fell due: Professional Services of Australia v Computer Accounting and Tax [No 3] [17], [20].
The plaintiffs' action 11 In their re-amended substituted statement of claim dated 13 December 2013 (the statement of claim) the plaintiffs allege that the defendant, in the course of acting for them, breached the terms of the retainer, was negligent and breached the fiduciary duties that it owed to them. The plaintiffs further allege that the defendant's breaches of the retainer, negligence and breaches of fiduciary duties caused them to suffer loss and damage. Central to the plaintiffs' claim for loss and damage is the allegation that if the defendant had not breached the terms of the retainer and its common law duties and had not terminated the retainer, CAT would have obtained a stay of the Court of Appeal's judgment in CACV 76 of 2008 and consequently would not have been wound up on the ground of insolvency when it was not insolvent: statement of claim, pars 4(b), 9C, 9E 10(d), 10(f), 11, 15; plaintiffs' opening submissions dated 10 March 2014, pars 44 - 49, 50 - 55. The plaintiffs allege that it was the winding up of CAT which caused them to suffer certain specified losses. 12 All of the plaintiffs' allegations are denied by the defendant. Further, the defendant pleads in specific response to the plaintiff's allegation as to the cause of their loss and damage that any loss and damage allegedly suffered by the plaintiffs from the winding up of CAT arose by reason of CAT's insolvency: amended substituted defence dated 13 February 2014 (the defence), pars 12.7(c) and 17.1. 13 The trial of the plaintiffs' action was listed to commence on 31 March 2014. It was in anticipation of the listed trial that the plaintiffs had filed their above referred to opening submissions. However, on 28 March 2014, on the application of the plaintiffs and for reasons which I expressed on that date, I adjourned the commencement date of the trial to a date to be fixed.
The defendant's application for discovery 14 On 14 March 2014 the defendant applied pursuant to O 26 r 7(1) of the Rules of the Supreme Court 1971 (WA) (RSC) or the court's inherent jurisdiction for orders requiring the plaintiffs to give further and better discovery (the application). The orders sought were in the following terms: 15 The application was supported by an affidavit sworn by Ms Carolyn Elizabeth Moss on 13 March 2014. Ms Moss is a solicitor employed by the defendant's solicitors. 16 In par 3 of her affidavit Ms Moss said the following: On 23 January 2014, the Court of Appeal made orders in matter number CACV 23 of 2012 that the appellants (being the plaintiffs in this matter) file and serve submissions: a. concerning the apparent inconsistency between the affidavit of Angela Cecilia Theresa Frigger sworn 23 September 2008 and filed in CACV 76 of 2008, the affidavit of Angela Cecilia Theresa Frigger sworn 22 June 2010 and filed in CIV 2265 of 2006 and the affidavit of Angela Cecilia Theresa Frigger sworn 12 October 2010 and filed in CIV 2265 of 2006; and b. addressing whether there was any material before Buss JA in the matter CACV 76 of 2008 when considering the application dated 22 August 2008 for a suspension or stay of the orders of Simmonds J dated 9 July 2008 in that same matter, demonstrating the financial position of Computer Accounting and Tax Pty Ltd in a manner consistent with that deposed to in the affidavit of Angela Cecilia Theresa Frigger sworn 22 June 2010 and filed in CIV 2265 of 2006 and the affidavit of Angela Cecilia Theresa Frigger sworn 12 October 2010 and filed in CIV 2265 of 2006, By 4.00pm on 13 February 2014. 17 Ms Moss annexed to her affidavit a copy of the orders made by the Court of Appeal referred to in par 3 of her affidavit (the Court of Appeal orders). 18 Prior to making the application the defendant, by letter dated 4 March 2014, requested the plaintiffs, who were at the time representing themselves, to provide copies of the three affidavits referred to in the Court of Appeal orders (the affidavits). The first plaintiff responded to the defendant's letter by email dated 5 March 2014. In her email the first plaintiff stated that the plaintiffs would 'not be providing documents that were produced by order of the Court in freezing order proceeding CIV 2265/2006'. The first plaintiff also stated in her email that 'the ground for our refusal is that any information or documents produced by order of the court were subject to an express undertaking that they would not be used in any other civil or criminal proceeding'. 19 On 19 March 2014 the first plaintiff swore and filed an affidavit to be relied on in opposition to the application. In par 5 of the affidavit the first plaintiff stated that she objected to the production of the affidavits 'on the ground that the documents are protected by express undertakings given to the Supreme Court in CIV 2265 of 2006 and on the ground that they do not relate to any issue in these proceedings'. In par 10 of her affidavit the first plaintiff stated that the affidavits dated 22 June 2010 and 12 October 2010 are protected by orders made in CIV 2265 of 2006 that they would not be used in other civil or criminal proceedings. 20 The first plaintiff purported to annex to her affidavit a copy of the orders made by the court in CIV 2265 of 2006 referred to in par 10 of the affidavit. However, what she actually annexed was a copy of what appears in substance to be a minute prepared by counsel for the first defendant and the second defendant in CIV 2265 of 2006 setting out the orders that the first defendant and the second defendant were asking the court to make. One of the pars in the minute, which appears under the heading 'Undertakings given to the court on behalf of the first defendant (in administration) and the second defendant', reads as follows: The First and Second Defendants will not, without the leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding. 21 It is not in dispute between the parties that the annexure to the first plaintiff's affidavit does reflect orders made by the court in CIV 2265 of 2006 on 16 December 2009: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38 [16]. 22 The application was heard on 20 March 2014. During the hearing counsel for the defendant made submissions in support of the application which were in substance as follows. 23 It is clear from the statement of claim and the plaintiffs' opening submissions that the entirety of the plaintiffs' claim depends upon the conclusion that but for the defendant's alleged breaches of its contractual and common law obligations during the term of the retainer CAT would not have been wound up and the plaintiffs would therefore not have suffered the claimed loss and damage. It follows that the financial position of CAT and 'any inconsistency in the manner in which it was conducted' is a matter in question in the action. It is clear from the terms of the Court of Appeal orders that the affidavits relate to the financial position of CAT. Accordingly, the affidavits relate to a matter in question in the action and should be discovered. 24 Further, in response to the statements made by the first plaintiff in her email dated 5 March 2014 and in her affidavit dated 19 March 2014 that the application was opposed on the basis that discovery of the affidavits would be contrary to undertakings given to the court, or orders made, in CIV 2265 of 2006 the defendant's counsel made the following submissions: 1. If the plaintiffs, in opposing the application, were relying on the implied undertaking of parties to litigation not to use documents provided under compulsion (for example, by way of discovery) for purposes other than those of the litigation, their reliance on the implied undertaking was misconceived because the affidavits were not provided to the plaintiffs pursuant to any compulsory process. Rather, they were the first plaintiff's own documents created by the first plaintiff. 2. The order (or express undertaking) referred to by the first plaintiff in par 10 of her affidavit was not made against the plaintiffs or the defendant but rather the first and second defendants in CIV 2265 of 2006. The order therefore has no effect on the plaintiffs' action against the defendant. 3. In any event, even if any undertaking or the order referred to by the first plaintiff did apply to the plaintiffs and the defendants in the present action, it would have to yield to the requirement of discovery in the present action: Esso Australia Resources Ltd v Plowman [1995] HCA 19;(1995) 183 CLR 10 [33]; Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436 [15], [22]. 25 The plaintiffs were represented by counsel at the hearing of the application, although it is clear from what counsel said to the registrar that he had only been briefed a very short time prior to the hearing. Indeed, the plaintiffs' solicitors had only filed their notice of acting on 18 March 2014. In any event, counsel for the plaintiffs did not in the course of his submissions press the argument that the affidavits could not be discovered by reason of any express or implied undertaking given to, or orders made by, the Supreme Court. Rather, he argued that the 'financial viability of CAT did not seem to be relevant to the relief sought'. 26 After hearing from counsel the registrar provided very brief reasons for allowing the application. It is apparent from his reasons that the registrar accepted the defendant's submission that the affidavits related to a matter in question as well as the defendant's submission that no undertaking given to, or order made by, the Supreme Court in CIV 2265 of 2006 precluded the affidavits being discovered.
The appeal hearing and arguments on the appeal 27 As at the date of the hearing of the appeal the plaintiffs' solicitors were still on the record. Indeed they had filed and served, in accordance with directions that I had previously made, an outline of submissions in support of the appeal. However, neither a solicitor from the plaintiffs' solicitors' office nor counsel who had appeared for the plaintiffs on 28 March 2014, at which time I had listed the appeal for hearing, appeared for the plaintiffs at the hearing of the appeal. Rather, the plaintiffs appeared in person. 28 The court had not previously been provided with any notification by either the plaintiffs' solicitors or their counsel that they would not be appearing for the plaintiffs at the hearing of the appeal. I therefore asked the first plaintiff why her legal representatives were not present. She provided me with her account as to why this was the case. I informed the first plaintiff that I would in due course make further inquiries into the failure by her legal representatives to appear for her and the second plaintiff. 29 Given that she and the second plaintiff were unrepresented at the hearing the first plaintiff made an application to adjourn the hearing. The defendant opposed the adjournment application. For reasons which I expressed, I refused to grant the adjournment. As a result the hearing of the appeal proceeded with the plaintiffs appearing in person and the first plaintiff arguing the appeal on behalf of both of them. The first plaintiff argued the appeal competently. 30 At the outset the first plaintiff stated that she wanted to give me copies of the affidavits so that she could address me on their contents. The defendant's counsel did not object to the plaintiffs providing me with copies of the affidavits. However, in adopting this stance counsel 'reserved the position' that ultimately the relevance of the affidavits to a matter in question in the action must be determined by reference to the pleadings and the submissions filed by the parties for the previously listed trial. In these circumstances I received from the first plaintiff copies of the affidavits. 31 The plaintiffs' primary argument on the appeal was that the affidavits do not relate to any matter in question in the action. In support of this primary contention the first plaintiff, consistently with the outline of submissions that had been filed on the plaintiffs' behalf, made oral submissions to the following effect. 32 The affidavit sworn by her on 23 September 2008 in CACV 76 of 2008 was sworn in opposition to an application by PSA and Banning for orders seeking a stay, pending determination of an appeal, of a judgment given by the Supreme Court on 9 July 2008 in CAT's favour against PSA and Banning: Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133. In the affidavit she lists the assets held in CAT's name at that point in time. The affidavit contains evidence demonstrating that CAT had the ability to repay the amount awarded to CAT by the judgment at first instance. The affidavits sworn by her on 22 June 2010 and 12 October 2010 in CIV 2265 of 2006 provide explanations in relation to how she and the second plaintiff as directors of CAT 'transferred out' and dealt with the assets of CAT referred to in her affidavit sworn on 23 September 2008. The asset position of CAT in September 2008 and the explanations as to how CAT's assets had been 'transferred out' and dealt with, have nothing to do with the issues raised by the plaintiffs' action against the defendant. The financial position of CAT as at September 2008 has nothing to do with the issues raised by the action. Further, the assets which CAT held in 2008 were not assets which the plaintiffs placed reliance upon in support of their opposition to the winding up of CAT or in support of their application to stay the judgment of the Court of Appeal in CACV 76 of 2008, these being matters in respect of which they had retained the defendant to act for them. In these circumstances, the affidavits are not discoverable. 33 The first plaintiff further submitted during the hearing of the appeal that if the affidavits are discoverable on the ground that the financial position of CAT is a matter in question in the action, then the plaintiffs will have to discover 'thousands and thousands' of documents which touch upon CAT's financial position. The argument, as I understand it, was that the onerous nature of the plaintiffs' discovery obligations which will necessary follow from an order requiring the plaintiffs to give discovery of the affidavits is a reason for refusing to make such an order. 34 The first plaintiff also contended during the hearing of the appeal that the above referred to express undertaking given by the first and second defendants in CIV 2265 of 2006 precluded the affidavits sworn by her on 22 June 2010 and 12 October 2010 being discovered by the plaintiffs. 35 The first plaintiff expressly disavowed any reliance by the plaintiffs on the implied undertaking of parties to litigation not to use documents provided under compulsion for purposes other than those of the litigation. 36 Counsel for the defendant relied on the outline of written submissions filed on the appeal on behalf of the defendant. The outline substantially reflected the submissions that had been made on behalf of the defendant at the hearing before the registrar. In addition, counsel made oral submissions in 'amplification' of the written submissions the substance of which may be summarised as follows: 1. At the heart of the plaintiffs' case is the allegation that if the defendant had not breached the retainer and its common law duties and had not terminated the retainer, CAT would not have been wound up and the plaintiffs would not have suffered the claimed loss and damage. In order to make out this aspect of their claim the plaintiffs will need to prove that they would have obtained a stay of the judgment of the Court of Appeal in CACV 76 of 2008 and that as a consequence of obtaining the stay they would have successfully defended the application to wind up CAT. 2. In Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222 Buss JA, in dismissing the application by PSA and Banning for a stay of the judgment given in CAT's favour in Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133, relied on the affidavit sworn by the first plaintiff on 23 September 2008. His Honour concluded that he was satisfied on the basis of the material contained in pars 7 and 15 - 22 of the first plaintiff's affidavit that there was no real risk that CAT would be unable to repay the judgment sum in the event that the appeal against the first instance judgment was allowed: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222 [27]. Further, it is apparent from Buss JA's judgment that in her affidavit the first plaintiff had said in relation to CAT's financial position that the total value of CAT's assets was about $2,850,043 and that CAT had no liabilities except for quarterly GST liabilities: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222 [24]. 3. The fact that the first plaintiff had said in her affidavit sworn on 23 September 2008, in effect, that CAT's financial position was such that there was no risk that CAT would not be able to repay the judgment sum in the event that the appeal against the first instance judgment was allowed is 'heavily relevant' to the question whether the plaintiffs would ever have been able to obtain a stay of the Court of Appeal's judgment and consequently been able to avoid the winding up of CAT. Accordingly, the affidavit sworn by the plaintiff on 23 September 2008 relates to a matter in question in the action. 4. The fact that there would appear, given the terms of the Court of Appeal orders, to be an inconsistency between what the first plaintiff said as to CAT's financial position in her affidavit sworn on 23 September 2008 and what she said as to the transfer of assets out of CAT in her two subsequent affidavits is evidence that is 'clearly relevant' to the question whether the plaintiffs would ever have been able to obtain a stay of the Court of Appeal's judgment and avoided the winding up of CAT. More specifically, the affidavits, which on the plaintiffs' own admission deal with the movement by the plaintiffs of assets out of CAT, are relevant to whether the plaintiffs would have been able to avoid CAT being wound up on the 'just and equitable ground', that is, on the ground that there had been a lack of probity in the conduct of CAT's affairs productive of a justifiable lack of confidence in the administration of the company: Macquarie University v Macquarie University Union Ltd [No 2] [2007] FCA 844 [40]. The affidavits sworn by the first plaintiff on 22 June 2010 and 12 October 2010 therefore relate to a matter in question in the action. 37 As to the plaintiffs' submission to the effect that if the financial position of CAT is something which provides a basis for the discovery of the affidavits then the plaintiffs will be required to discover many other documents, counsel for the defendant submitted that the fact that there may be other documents relevant to the financial position of CAT which have not been discovered is irrelevant. He submitted that all that the defendant can do is seek further and better discovery of documents that it is able to demonstrate are in existence. 38 On the day of the hearing of the appeal, but some hours after the hearing had concluded, the plaintiffs sent by email to the court, copied to the defendant's solicitors, a document entitled 'Plaintiffs' Supplementary Submissions in Response to New Issue raised Orally by Defendant at Appeal Hearing on 2 April 2014'. The supplementary submissions had been prepared by the first plaintiff, not her legal representatives. They were provided to the court without leave having been given for the filing of supplementary submissions. 39 On receiving the plaintiffs' supplementary submissions I arranged for my associate to inquire of the defendant's solicitors if the defendant wished to be heard, orally or in writing, in relation to either whether I should take account of the plaintiffs' supplementary submissions in determining the appeal or the substance of the arguments advanced in the supplementary submissions. In response to this inquiry the defendant's solicitors, by email dated 3 April 2014, advised that the defendant had no objection to the court taking the plaintiffs' supplementary submissions into account and did not wish to make any submissions in response to the plaintiffs' supplementary submissions. In these circumstances I have taken the plaintiffs' supplementary submissions into account in deciding the appeal. 40 In their supplementary submissions the plaintiffs contend, in substance, that the issue of whether CAT would have been wound up on the just and equitable ground is not an issue pleaded in the defence and therefore is not a matter in question in the action. The plaintiffs therefore submit that no order requiring discovery of the affidavits should be made on the ground that they contain evidence that the defendant may be able to rely upon to demonstrate that CAT would have been wound up on the just and equitable ground. The plaintiffs also make the point in their supplementary submissions, which although not directly relevant to the determination of the appeal is in my view a point well made, that the defendant had not, prior to the hearing of the appeal, raised the 'just and equitable' ground as a basis for ordering discovery of the affidavits.
Further discovery - applicable legal principles 41 Any order for further and better discovery under O 26 r 7(3) or in the exercise of the court's inherent jurisdiction is discretionary: Perpetual Trustees Company Ltd v Burniston [2012] WASC 26 [34]. The discretion is to be exercised with regard to the overriding objectives of case management and the just resolution and determination of litigation: RSC, O 1 r 4B; Perpetual Trustees v Burniston [34]. 42 The onus is on the party seeking further discovery orders to satisfy the court that the orders should be made: Perpetual Trustees v Burniston [26]. In order to discharge this onus the party seeking the further discovery orders must establish at least that the court has reasonable grounds for being fairly certain that the documents sought are in existence, that the documents sought are relevant and that the documents ought to have been disclosed: Perpetual Trustees v Burniston [29]. 43 The documents the subject of an application for further discovery will be relevant if they relate to any matter in question in the action. A document will relate to any matter in question in the action if the document may either advance a party's case or damage the opponent's case, or may lead to a train of inquiry that would either advance the party's case or damage the opponent's case: Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55, 63; Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341, 345; Perpetual Trustees Company Ltd v Burniston [30]. 44 The requirement that the documents the subject of a further discovery application ought to have been disclosed means that there must be reasonable grounds for believing that the documents are in the possession, custody or power of the party against whom discovery is sought: Perpetual Trustees v Burniston [32]. 45 One matter relevant to the exercise of the discretion to order further and better discovery is whether production of the documents would be oppressive: Perpetual Trustees Company Ltd v Burniston [35].
Analysis and decision 46 Against the background of the applicable legal principles I turn to deal with the merits of the appeal. 47 There is, quite obviously, no question that the affidavits exist. Nor is there any question that the affidavits are in the possession, custody or power of the plaintiffs. 48 I do not accept the plaintiffs' submission that they are precluded from discovering the two affidavits sworn by the first plaintiff on 22 June 2010 and 12 October 2010 by the express undertaking given in CIV 2256 of 2006. The express undertaking in that litigation was given by the first and second defendants in those proceedings, not the plaintiffs in the present action. The undertaking has no application to the parties in the present action. It does not impact on the plaintiffs' obligation of discovery in the present action. Furthermore, even if this were not the case the undertaking would necessarily yield to the requirements of discovery and inspection in this action: Esso Australia Resources Ltd v Plowman (33); Patrick v Capital Finance Pty Ltd (No 4) [15] - [22]. 49 I do not accept the plaintiffs' submission that they should not be required to give discovery of the affidavits because this will result in them having to provide discovery of a very large number of other documents. Leaving aside whether or not this will in fact prove to be the case, the possibility that there may be other documents which the plaintiffs ought to have discovered is simply not to the point when it comes to deciding if the affidavits should be discovered. 50 It cannot be said that an order requiring the plaintiffs to discover the affidavits would be oppressive, or would be inconsistent with objectives of case management and the just resolution and determination of litigation. There are only three affidavits. The plaintiffs have ready access to them. 51 The remaining issue for determination is whether the affidavits are relevant to any matter in question in the action. 52 As I have already indicated, central to the plaintiffs' claim is the disputed allegation that if the defendant had not breached the retainer and its common law duties and had not terminated the retainer, CAT would have obtained a stay of the Court of Appeal's judgment and consequently would not have been wound up on the ground of insolvency. The question is whether the affidavits relate to this 'matter in question'. 53 In order to deal with the issue of the relevance of the affidavits it is, given that I have been provided with copies of them, necessary for me to make some reference to their contents. However, I will not refer to the contents of the affidavits to any greater extent than is necessary to disclose my reasons for arriving at my ultimate conclusion. 54 In pars 16 – 23 of her affidavit sworn on 23 September 2008, the first plaintiff identifies a number of assets 'owned' by, or in the name of, CAT. She states that the 'total of the … assets' is $2,850,043 and that CAT has no liabilities save quarterly GST liabilities. In the remaining paragraphs of her affidavit, the first plaintiff deals with matters unrelated to the financial position of CAT. It is no doubt for this reason that Buss JA, in delivering his decision on the application by PSA and Banning to suspend the first instance judgment granted in favour of CAT, stated that he had not relied on the material in pars 24 – 37 of the first plaintiff's affidavit: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222 [27]. 55 In pars 5 – 41 of her affidavit sworn on 22 June 2010 the first plaintiff deposes as to transactions engaged in by the plaintiffs and CAT on various dates in relation to the assets of CAT which she had identified in her affidavit sworn on 23 September 2008. With respect to two of the assets, the first plaintiff states (in contradiction of statements made by her in her affidavit sworn on 23 September 2008), that the ownership of the assets was transferred by CAT to another entity on dates prior to 23 September 2008. The first plaintiff also refers in these paragraphs of her affidavit to other payments made by CAT and to CAT since 2002. In the remaining paragraphs of the affidavit the first plaintiff deposes to matters not related to transactions engaged in by CAT. 56 In her affidavit sworn on 12 October 2010 the first plaintiff purports to respond to statements that she asserts had been made on behalf of PSA and Banning during the course of the freezing order proceedings. In doing this, the first plaintiff in pars 6 – 10, 12, 16, 20 and 22 makes further reference to the various transactions referred to in her affidavit sworn on 22 June 2010. In par 19 the first plaintiff refers to a declaration of solvency for CAT. 57 In my opinion the paragraphs of the affidavits that I have referred to are, even allowing for the timing of the asset transactions referred to therein, relevant to matters in question in the action. More specifically, in my view the paragraphs of the affidavits that I have identified contain evidence that at the very least may lead to a train of enquiry by the defendant that would either advance the defendant's case or damage the plaintiffs' case on the issues of whether or not: 58 I consider that the evidence contained in the affidavits of the conflicting statements made by the first plaintiff and the nature of the asset transactions engaged in by CAT at the instigation of the plaintiffs, is evidence that is relevant to the question whether the plaintiffs would have been able to obtain a stay of the Court of Appeal's judgment even if the defendant had not breached the retainer and its common law duties as alleged. I also consider that this evidence is relevant to the question whether CAT was insolvent at the time that it was wound up and would therefore have been wound up even if the defendant had not breached the retainer and its common law duties as alleged. It follows that in my view the affidavits edited in accordance with O 26 r 1B so as to show only the paragraphs that I have identified (as well as necessary introductory paragraphs), should be discovered. 59 I do not consider that the affidavits should be ordered to be discovered on the ground that they are relevant to the question whether the plaintiff would have been able to avoid CAT being wound up on the just and equitable ground. Whether or not CAT would have inevitably been wound up on the just and equitable ground is not an issue raised on the pleadings. Whereas the defendant expressly pleads in relation to the plaintiffs' causation allegation that CAT was wound up because it was insolvent, the defendant does not plead that the winding up would in any event have occurred on just and equitable grounds. Accordingly, on the pleadings as they currently stand, whether or not CAT would have been wound up on the just and equitable ground is not, in my opinion, a matter in question in the action. 60 In summary, my ruling on the appeal is that the plaintiffs must give discovery of the following portions of the affidavits: 1. Affidavit sworn 23 September 2008: pars 1 – 3, 16 – 23 and any annexures referred to in these paragraphs. 2. Affidavit sworn 22 June 2010: pars 1 – 41 and any annexures referred to in these paragraphs. 3. Affidavit sworn 12 October 2010: pars 1 – 10, 12, 16, 19, 20, 22 and any annexures referred to in these paragraphs. I will hear the parties as to the precise terms of the orders that I should make to give effect to my decision.
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