Golden Oasis P/L v Lyra P/L

[1992] FCA 559

BETWEEN: GOLDEN OASIS PTY. LTD.

Applicant

AND :  LYRA PTY. LTD.

First Respondent

AND:  KINSEY BENNETT L GILL

Second Respondent

AND:  ' LYRA PTY. LTD.

Cross Claimant

AND :  GOLDEN OASIS PTY. LTD.

Cross Respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:	Drummond J
DATE OF ORDER:
WHERE MADE:	Brisbane

1.	(a) Macquarie Bank Limited ACN 008	. , (heGeinaf	ter called "Macquarie") produce for the inspection of the solicitors for the applicant at the Brisbane office of the solicitors for Macquarie, Messrs. Clayton Utz Henderson Trout, 215 Adelaide Street, Brisbane in the State of Queensland, all documents held by Macquarie relating to the terms of approval of the loan facility of $35,000,000.00 from
Macquarie to the applicant, Golden Oasis Pty. Ltd., to enable the applicant to purchase "The

25 Ru'

THE COURT ORDERS THAT:

. .

, . I

. I . I . L . .

2

Pines Shopping Centre" from the first respondent, Lyra Pty. Ltd., including internal memoranda and all drafts of the letter from Macquarie to Golden Oasis Pty. Ltd. dated 20 November, 1991 and, without limiting the generality of the foregoing, all correspondence, diary notes and other documents relating to negotiations or discussions between Macquarie and Challenge Bank Limited ACN 009 230 433 regarding syndication of the loan facility.

(b) Macquarie provide to the solicitors for the applicant a copy of such of the documents described in sub-paragraph (a) as the solicitors for the applicant may reasonably require.

Macquarie, by a proper officer and after proper inquiry, list all documents falling within the description in paragraph 3 of this order and file and serve on the applicant such list verified on oath on or before 7 August, 1992, or, in the alternative, depose to there being no documents which answer that description and file and serve on the applicant that affidavit on or before 7 August, 1992.

The documents referred to in paragraph 2 are: all approvals or copies of approvals of finance by Macquarie relating to transactions:

(a) which were approvals given on applications by private investors;

, . , (b) in respect of which the Foreign Investment

d . , Review Board or the relevant legislation

a ,	A.	.	required the applicant to obtain the approval
'r! ,/	.	of the Foreign Investment Review Board to enter
;	l	.	-

r - into or complete the transaction in question

: a . . . .

1. (whether by reason of the application or by

I	r ;
i	--reason of any related purchase);

. 8 7.-

l ,. . C

. ,	.*
\	' l >
- / (c) which involved applications for finance for

, .c . assistance in the financing of the purchase of

- . *I .

.-- - -- commercial retail properties;

.	-	I
-.
-

(d)	which involved applications for finance for an amount between $25,000,000.00 and $40,000,000.00;
(e)	which were transactions in which the amount of finance sought comprised 60% to 90% of the purchase price or value of the property; and

which involved applications for finance made in

(f)	the period between 20 November, 1989 and 20
November, 19 9 1.
(a)	Within seven (7) days of serving the verified list on the applicant , Macquarie give inspection to the solicitor for the applicant of such listed documents as that solicitor requests and provide copies of such of those listed documents as that solicitor requires following inspection.
(b)	In complying with this order Macquarie may cover over or otherwise obliterate the names of the applicants for finance and of other persons (other than officers of the Bank) mentioned in the documents.
(c)	Neither copies of nor information concerning the contents of those documents is to be disclosed by the solicitor for the applicant to any persons other than counsel for the applicant, the assistants to the solicitor for the applicant and not more than two persons from whom that solicitor may seek advice and/or a report in connection with the conduct of or for the purpose of use or possible use in these proceedings.
(d)	Prior to the solicitor for the applicant disclosing any of those documents or any information therein contained to any such person retained to advise and/or report to that solicitor, that solicitor shall give the solicitors for Macquarie four days' written notice identifying each such person prior to making disclosure to that person.

(e) No person mentioned in sub-paragraphs (c) and (d) acting for or engaged on behalf of the applicant shall disclose to any person any documents or information contained therein that has been disclosed to him/her without the prior leave of the court.

The applicant shall pay Macquarie's costs of and incidental to this application to be taxed on a party and party basis and its reasonable expenses of complying with the order for inspection of documents and provision of copies of documents, to be taxed on a solicitor/client basis.

Macquarie have. liberty to apply on one day's notice
to the applicant.
Challenge Bank Limited ACN 009 230 433 (hereinafter
called "Challenge") produce for the inspection of
the solicitors for the applicant at the Brisbane
off ice of the solicitors for Challenge, Messrs. Sly
Weigall Cannan and Peterson of Level 20, 123 Eagle
Street, Brisbane in the State of Queensland all
correspondence, diary notes and other documents held
by Challenge relating to negotiations or discussions
between Macquarie and Challenge regarding
syndication or possible syndication of a part of the
proposed loan facility of $35,000,000.00 from
Macquarie to the applicant to enable the applicant
to purchase "The Pines Shopping Centre" from the
first respondent.

Challenge provide to the solicitors for the applicant a copy of such of the said documents as the solicitor for the applicant may reasonably require.

The applicant pay Challenge's costs of and incidental to this application to be taxed on a solicitor/client basis and its reasonable costs and expenses of complying with the order for inspection of documents and provision of copies of documents.

The applicant's costs of and incidental to this application as between the applicant and the first respondent, including the costs of Macquarie and Challenge, be costs in the proceedings.

Settlement and entry of orders is dealt with in IN THE FEDERAL COURT OF AUSTRALIA

NOTE:

Order 36 of the Federal Court Rules.

) NO. QG 176 of 1991

9UEENSLAND DISTRICT REGISTRY	1
GENERAL DIVISION	1

BETWEEN: GOLDEN OASIS PTY. LTD.

Applicant

AND:  LYRA PTY. LTD.

First Respondent

AND:  KINSEY BENNETT & GILL

Second Respondent

AND :  LYRA PTY. LTD.

Cross Claimant

AND :  GOLDEN OASIS PTY. LTD.

Cross Respondent

Coram:	Drummond J
Date:	28 July, 1992

W: Brisbane

REASONS FOR JUDGMENT

The applicant in the action seeks orders against two banks, Macquarie Bank Limited and Challenge Bank Limited, neither of whom are parties to the action, requiring them to give discovery of certain documents specified in the notice of motion.

It appears from the statement of claim that the applicant entered into a contract to purchase a shopping centre for a price of almost $47,500,000.00; it paid to the second respondent (as stakeholder) nearly $2,400,000.00 by way of deposit and part payment. The action is brought to recover this sum. Clause 39.1 of the contract made the contract subject to the applicant obtaining from Macquarie Bank within 30 days from a specified date "approval of a loan not being more than the sum of $33,200,000.00 (later varied to $35,000,000.00) on the security of a registered first mortgage over the land and otherwise upon and subject to the terms and conditions currently being imposed by Macquarie Bank Limited in respect of loans of a similar nature ...". The clause went on to confer on the applicant the right to terminate the contract and recover its deposit if it "does not obtain such approval for any reason not being attributable to his (sic) own default or failure to do everything reasonably required of him (sic) to obtain such approval ...".

The applicant alleges that it did not obtain the

requisite loan approval from Macquarie Bank and, accordingly,

defence, alleges that the applicant did obtain the requisite claims a refund of the deposit moneys. The vendor, in its	approval and, by way of particulars, refers to a letter dated
20 November, 1991 from Macquarie Bank to the applicant approving a $35,000,000.00 loan facility on certain terms and conditions.
In its reply to this defence, the applicant alleges it never received any approval within the meaning of clause

39.1 of the contract of a loan from Macquarie Bank or, alternatively, if the Bank's letter to it of 20 November, 1991 did constitute an approval within clause 39.1, then it was not an approval upon and subject to the terms and conditions then currently imposed by the Bank in respect of loans of a similar nature.

The Bank's letter of 20 November, 1991 sets out ten conditions additional to the Bank's standard loan conditions. These conditions relate to there being a prescribed ratio between the initial loan and value and also to the ratio between the loan and value in each of the first five years of the loan; to Bank approval of the shopping centre manager and to any change to management; to Bank approval of substitution of any major speciality store and to a special interest rate management agreement in respect of the final $15,000,000.00 amount of the advance (the first $20,000,000.00 part of the advance being at a fixed rate). It was a further condition of the loan that the Bank was to syndicate $15,000,000.00 of the

acceptable tens.	first $30,000,000.00 of the facility prior to settlement on
The respondent to the notice of motion, Challenge Bank Limited, is the bank with whom Macquarie Bank negotiated with a view to the syndication of the $15,000,000.00 portion of the loan.
Macquarie Bank does not oppose the making of an order in terms of paragraph 1 of the notice of motion requiring it to give discovery of all documents held by it relating to the terms of approval of the loan facility of $35,000,000.00, including all documents relating to negotiations between Macquarie Bank and Challenge Bank regarding syndication of a portion of the loan facilities. The respondent, Challenge Bank, does not oppose an order in terms of paragraph 6 of the notice of motion requiring it to give discovery of its documents relating to the same syndication negotiations.
However, Macquarie Bank opposes the making of the order sought by paragraph 2 of the notice of motion, which is as follows:

"That Macquarie produce for the inspection of the solicitors for the applicant copies of approvals of finance relating to transactions in the range of $25,000,000.00 to $40,000,000.00 over the period of three years up to the 20th of November, 1991."

The discretion conferred by 0. 15A r. 8 of the

Federal Court Rules on the Court to require a non-party to give discovery of documents held by it to a party to proceedings in the Court is not, in terms, fettered otherwise than by the requirement that it must be made to appear that the non-party has or is likely to have or has had or is likely to have had in his possession any document which relates to any question in the proceeding. However, the court has traditionally adopted a policy of not burdening unduly a non- party to litigation in a manner comparable with the burden of discovery which is necessarily assumed by a party: see Richardson Pacific Ltd. v Fieldinq (1990) 26 F.C.R. 188 at 189. This approach is reflected in the fact that jurisdiction to make an order for discovery against a non-party is conditioned upon there being proof that the party has or is likely to have a specific document or documents in his possession which relates to a question in the proceeding. While it will be a rare case in which discovery is refused where it is shown that the non-party has in his possession a document of clear, as opposed to tenuous or merely arguable, relevance to an issue in the proceeding, once it is considered appropriate to make an order, the order will always be framed so as to impose the least burden on the non-party, appropriate in the circumstances, consistent with his duty to give discovery of the particular document or documents.

Macquarie Bank submits that no order should be made because, on the material before me, I could not be satisfied	that the documents sought by the contentious paragraph no. 2
of the notice of motion relate to any issues in the action.
I do not accept this submission. There is an issue between the applicant and the vendor in the action as to whether the conditions listed in Macquarie Bank's letter to the applicant of 20 November, 1991 (which are said to be additional to its standard terms and conditions) are

conditions which were of the kind that Macquarie Bank then imposed in respect of loans of a similar nature to that which the applicant sought from the Bank.

In his affidavit, Mr. Barnes, an officer of Macquarie Bank, deposes to perusing records of approvals of finance in the 17 month period ending 20 November, 1991; he says he located five lending transactions within this period falling within the range of $25,000,000.00 to $40,000,000.00. Mr. Barnes makes the point that Macquarie Bank generally does not compare transactions of the size here in question "as each finance application and approval for this size transaction tends to be unique". He also says that "for these size of transactions there is no standard set of approval terms, nor is it any way correct to assume that the transactions or the approvals are similar simply because they involve loans of a

like amount	" .
But while he has not checked to see what approvals the whole of the three year period mentioned in paragraph 2 of	exist within the $25,000,000.00 to $40,000,000.00 range for
the notice of motion, he has located five lending transactions in the 17 month period ending 20 November, 1991 falling within the range of $25,000,000.00 to $40,000,000.00. And, although only brief details are given by Mr. Barnes, the transaction referred to in paragraph 5(c) of his affidavit could well be a loan transaction of a similar nature to that involving the applicant. I am therefore satisfied that Macquarie Bank is likely to have in its possession documents which relate to an issue in the action.
While I do not accept that an order should not be made at all, there is substance in the submission made on behalf of the Bank that the order sought is too broad. Subject to the question of confidentiality which the Bank also raises in opposition to the grant of the order, I would be prepared to require Macquarie Bank to give discovery of documents relating to approvals of finance by the Bank for the purpose of enabling investors to acquire retail properties where the amount of the finance approved is in the order of $25,000,000.00 to $40,000,000.00 and comprises 60% to 90% of the purchase price and where the approvals relate to applications lodged in the two year period ending 20 November, 1991.
As I have mentioned, the Bank objects to being required to give discovery of documents relating to its
obligations of confidentiality that it has to those others. dealings with persons other than the applicant because of the
However, it being appropriate to order the Bank to give discovery, I think the Bank's legitimate concern in this regard can be satisfactorily met by making the order that it give discovery of documents of the kind I have outlined subject to a condition that inspection of any documents discovered by the Bank is to be limited to the applicant's counsel, the solicitor in the firm of solicitors acting for the applicant who has responsibility for the action and his assistants in that firm, and to two experts retained by the applicant whose identities must be disclosed to Macquarie Bank before those experts are given access to the Bank's documents, to the intent that the Bank will have the opportunity of coming back to court to object to disclosure by the applicant's solicitor of the Bank's documents to either or both of the nominated experts, if the Bank has good grounds for opposing such disclosure. I also think it should be a condition of the discovery order that Macquarie Bank be entitled to mask the names of its customers referred to in any documents of which it must give discovery to the applicant.
The applicant is controlled by residents of Dubai. It was contended, on behalf of Macquarie Bank, that any order for discovery should reflect the significance to the Bank as intending lender of the fact that the borrower is controlled by foreign residents. The applicant does not dispute this.
I will therefore make orders against Macquarie Bank in terms of paragraph 1 of the notice of motion and, so far as the order sought by paragraph 2 of the notice of motion is concerned, to the effect of what I have indicated above.
I will also make an order in relation to Challenge Bank in terms of orders 6 and 7 of the notice of motion.
AS to the costs of this present application between the applicant and Macquarie Bank, I will make an order in terms of paragraph 5 of the notice of motion, but subject to the taxation therein referred to being on a party and party basis. So far as Challenge Bank is concerned, I will make a costs order in terms of paragraph 8 of the notice of motion. There will also be liberty to Macquarie Bank to apply to the court on one day's notice to the applicant. I will also make an order in terms of paragraph 9 of the notice of motion.
The parties should leave with my associate a draft order in terms that are agreed, if possible, which reflects the order I have said I will make.
I certify that this and the eight
preceding pages is a true copy of the reasons for judgment herein of the Honourable Mr. Justice Drummond.
Associate:

Date:  28 July, 1992