Giorgio v Fiorita - [2008] SASC 281

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
GIORGIO & ORS v FIORITA
[2008] SASC 281
Reasons of Judge Lunn a Master of the Supreme Court
23 August 2008
PROCEDURE
Discovery order sought under 87R 60 against a non party - held power under 87R 60 to order discovery of indirectly relevant documents where in interests of justice to do so - no right of non party to file list of documents before discovery order made - order made for discovery against non party.

GIORGIO & ORS v FIORITA
[2008] SASC 281
Reasons on plaintiffs’ application for non party discovery against Tax & Financial Services Pty Ltd.

JUDGE LUNN: The primary issues in this action centre on the affairs of the 3^rd plaintiff, WP360 Pty Ltd (“WP360”). Prior to 25 January 2006 the defendant was a director of WP360. The plaintiffs allege, and the defendant denies, that on 25 and 31 January 2006 the defendant was removed as a director of WP360 and the first plaintiff was appointed as a director of it. The plaintiffs further allege, and the defendant denies, that prior to 31 January 2006 WP360 was the trustee of the Balnaves Family Trust (“the Trust”), that it was removed as the trustee on 31 January 2006 and that the 2^nd plaintiff was appointed as the trustee of the Trust in its place. After 25 January 2006 the defendant continued to act as if she was the only director of WP360. On 6 February 2006 the defendant, acting on behalf of WP360, entered into a written agreement for WP360 to sell the accounting practice (which it had conducted under the name of “Balnaves & Associates”) (“the accounting practice”) to Tax & Financial Services Pty Ltd (“TFS”) as to 50%, to herself as to 25% and to Eileen Duncan as to 25%. WP360 was thereby divested of the accounting practice.
The facts in the preceding paragraph are taken from the 2^nd further amended statement of claim (“the statement of claim”) filed by the plaintiffs on 29 May 2008 and the amended defence (“the defence”) filed by the defendant on 2 April 2007. It does not appear that the defendant has ever pleaded to the 2^nd further amended statement of claim and thus the earlier defence is to be taken as her defence to it.
The contract of sale of 1 February 2006 (“the Contract”) relevantly provides as follows:
CONTRACT OF SALE
Covering sale of accountancy practice trading as Balnaves & Associates - Merger, effective as from 1^st February 2006.
1    Parties:
Vendor:  WP360
Purchasers:  Tax & Financial Services Pty Ltd
50% equity CPA Accountants
Luisa Fiorita and/or Nominee    25%
Eileen Duncan and/or Nominee   25%
2Purchase Price:                  60% of gross fees received (excluding GST) received during the immediate past twelve months.
The percentage of gross fees possibly may have to be adjusted for the new accountancy practice to accommodate its financial obligations, this shall be by agreement of all parties.
3Perms of Payment:              Spread…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] SASC 281
Decision Date: 23 August 2008

CaseChat Overview and Summary

The plaintiffs in Giorgio v Fiorita sought an order for discovery of documents from a non-party, Tax & Financial Services Pty Ltd (TFS). The plaintiffs alleged that the defendant, Luisa Fiorita, had breached her fiduciary duties by removing herself as a director of WP360 and selling the accounting practice without proper authority. TFS had acquired a 50% interest in the accounting practice from WP360. The plaintiffs sought various documents from TFS relevant to the sale and ongoing operation of the accounting practice. TFS argued that the court's power under Rule 87R 60 was limited to directly relevant documents. However, the court found that indirectly relevant documents could be ordered if it was in the interests of justice to do so. The court considered the criteria for exercising the discretion under Rule 87R 60, including the relevance of the documents, the coercive nature of the process, and the potential impact on the non-party's confidentiality and privacy. The court made orders for TFS to discover certain categories of documents, while refusing orders for other overly broad or irrelevant categories.

The key issue was whether the court could order TFS to discover indirectly relevant documents under Rule 87R 60. The court found that indirectly relevant documents could be ordered if it was in the interests of justice to do so, applying the same test as for discovery between parties. The court considered the relevance of each category of documents sought, whether discovery would be oppressive for TFS, and the potential impact on TFS's confidentiality and privacy. The court balanced these factors in exercising its discretion under Rule 87R 60.

Orders