Grace v Grace

[2010] NSWSC 758

CITATION:	In the matter of Phoenix Rising Investments Pty Ltd; Grace v Grace [2010] NSWSC 758
HEARING DATE(S):	3 May 2010
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	3 May 2010
DECISION:	Set aside paragraphs 1 and 4 of first and second defendants’ notice to produce dated 9 March 2010
CATCHWORDS:	PROCEDURE – Supreme Court procedure – New South Wales – Procedure under Rules of Court – Evidence – Other Matters – Production of Documents – Notice to Produce – application to set aside – apparent relevance
LEGISLATION CITED:	(CTH) Superannuation Industry (Supervision) Act 1993 s 120(c) (NSW) Uniform Civil Procedure Rules 2005 Pt 14 r 17
CATEGORY:	Procedural and other rulings
CASES CITED:	Baldry v Jackson (1976) 2 NSWLR 415
PARTIES:	David Alexander Grace (plaintiff) Deborah Sharon Grace (first defendant) Julienne Grace (second defendant) Nevilda Holdings Pty Ltd (prov liq'r appted) (third defendant) Nevilda Investments Pty Ltd (prov liq'r appted) (fourth defendant) Dutchie Pty Ltd (sixth defendant) Phoenix Rising Investments Pty Ltd (seventh defendant)
FILE NUMBER(S):	SC 06/259566
COUNSEL:	S Goodman (plaintiff) D Stewart (first, second & seventh defendants) N Cotman SC (prov liq'r for third defendant/applicant)
SOLICITORS:	James Tuite & Associates (plaintiff) Clinch Long Letherbarrow Pty Ltd (first, second & seventh defendants) Breene & Breen Solicitors (third defendant/applicant & fourth defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Monday 3 May 2010

2006/259566 In the matter of Phoenix Rising Investments Pty Limited (ACN 123 623 754); David Alexander Grace v Deborah Sharon Grace

JUDGMENT (ex tempore)

1 HIS HONOUR: On 9 March 2010 the first defendant Deborah Grace and the second defendant Julienne Grace issued and served on the third defendant Nevilda Holdings Pty Limited (provisional liquidator appointed) a notice to produce which required the production to the Court by 19 March 2010 of the following documents and things:

1. Any document recording and/or in relation to any advice provided to Nevilda Holdings Pty Limited ACN 000 956 409 (Provisional Liquidator Appointed) (“Nevilda Holdings”) concerning the Nevilda Investments Pty Limited Superannuation Fund, including (without limitation) advice received concerning the effect of the appointment of a provisional liquidator to Nevilda Holdings.

2. All documents recording and/or in relation to any communication arising from or prepared for meetings and/or telephone conversations attended by the provisional liquidator, or his servants and/or agents on the one part and Deborah Grace, Julienne Grace, or their servants/and/or agents on the other, in relation to the Nevilda Investments Pty Limited Superannuation fund.

3. All documents in relation to any communication arising from or prepared for meetings and/or telephone conversations attended by the provisional liquidator, or his servants and/or agents on the one part and David Grace or his servant or agent, including Katherine Grace (nee Harvey) on the other, in relation to the Nevilda Investments Pty Limited Superannuation Fund.

4. All documents recording any act undertaken by Nevilda Holdings in its actual or purported capacity as trustee of the Nevilda Investments Pty Limited Superannuation Fund from 18 January 2009.

5. All notifications made to the Australian Securities and Investments Commission, Australia Prudential Regulation Authority or the Commission of Taxation in respect of Nevilda Investments Pty Limited Superannuation Fund on and from the appointment of a provisional liquidator to Nevilda Holdings on 18 January 2007.

“Document” herein means written communication (in any media) including but not limited to letters, facsimiles, meeting and file notes, e-mails, agendas and records of telephone conversations.

2 By notice of motion filed on 18 March 2010, Nevilda sought an order that the notice to produce be set aside, and costs. Prior to the commencement of the hearing of the motion, senior counsel for Nevilda announced that objection was no longer pressed to paragraphs 2 and 3 of the notice to produce, and that so far as paragraph 5 was concerned there were no documents to produce. No argument was advanced as to why paragraph 5 should be set aside, and I proceed on the basis that paragraph 5 will, therefore, stand, it being open in due course for the answer to be made "nothing to produce", leaving Deborah and Julienne to such remedies as they may have if dissatisfied with that answer. However, the result is that the remaining contest pertains to paragraphs 1 and 4 of the notice to produce.

3 The issues to which the notice is said to relate, arise from that part of the Further Amended Statement of Claim entitled “The Nevilda Superannuation Trust and conduct after the appointment of the provisional liquidator to Nevilda Holdings of 18 January 2007”, commencing at paragraph 119 of the pleading. This part of the pleading was added by amendment after the proceedings had commenced, and pleads matters and causes of action arising after the date of the Statement of Claim. In those circumstances, it is debatable whether it was in fact open to the plaintiff to add a cause of action based on new facts arising after the date of the Statement of Claim [see (NSW) Uniform Civil Procedure Rules 2005 Pt 14 r 17, and Baldry v Jackson [1976] 2 NSWLR 415, 419 which indicates a "matter" within that rule does not include a cause of action that has arisen subsequently]. However, no point has been taken about that at this stage, and it appears that the amendment may have been allowed by a judge of the Court after consideration of the issue, so I shall say no more of it at this stage.

4 The gravamen of the plaintiff's case, which is pleaded at enormous length, is to be found in paragraph 236, which alleges that throughout the period following the appointment of the provisional liquidator on 18 January 2007 Deborah and Julienne owed David fiduciary and equitable obligations in connection with their dealings with the Nevilda Superannuation Trust, and have breached those duties; further, that the trustee of their own superannuation fund, Phoenix Rising, has been knowingly concerned in those breaches and/or has received property of the Nevilda Superannuation Trust with knowledge of them. The relief claimed is a taking of accounts in respect of the Nevilda Superannuation Trust, apparently on a wilful default basis, and a tracing of its assets into Phoenix Rising.

5 The defence to that case, so far as I can tell from the at least equally enormously long defence, is that Julienne and Deborah assumed conduct of the Nevilda Superannuation Trust pursuant to a deed of variation said to have been executed and to have taken effect prior to the appointment of the provisional liquidator, and that their dealings with the Nevilda Superannuation Trust have been regular and proper.

6 There does not appear to be any real dispute between the parties, that at least from the date of the appointment of a provisional liquidator, the affairs of the Nevilda Superannuation Trust were conducted by Julienne and Deborah, until some time later they delivered the trust documents and other relevant materials to David. It was suggested that the documents called for by paragraph 1 of the notice to produce were of at least potential relevance, because they might show that Nevilda and the provisional liquidator were in possession of advice that what was being done by Julienne and Deborah was perfectly regular. Even if that were so, I do not see how a third party's advice to Nevilda, or the investigation of the facts for the purpose of giving that advice, could add to the relevant body of evidence before the Court on the issue. A third party’s opinion would be irrelevant as to whether their conduct was or was not irregular, which is a matter for the Court; and Nevilda’s possession of any such opinion is equally irrelevant. A third party's opinion could not be admissible, even assuming that it were not privileged, because it would be no more than someone else's opinion on an issue which the Court would be asked to determine.

7 Counsel for Julienne and Deborah suggested that the high point of the documents potentially caught by that paragraph would be a detailed advice, recording the relevant facts on which it was based and expressing an opinion that there was nothing irregular about Julienne’s and Deborah’s conduct; the relevance was said to be that this might reflect upon whether the claims against them were bona fide. But the claims against them are brought by David, not by the provisional liquidator of Nevilda Holdings, and the fact that Nevilda Holdings was in possession of such advice could not inform an assessment of the bona fides of David's case. In my view it is clear that such advice could not add to the body of relevant evidence in the case. They do not have apparent relevance to the issues in the case. I will set aside paragraph 1.

8 So far as paragraph 4 is concerned, the Further Amended Statement of Claim pleads (in paragraph 125) the appointment of the provisional liquidator on 18 January 2007, (in paragraph 126) that the provisional liquidator had been empowered to carry on the business of Nevilda Holdings, and (in paragraph 127) that the business of Nevilda Holdings included acting as trustee of the Nevilda Superannuation Trust. The defence asserts (by paragraph 142B) that the deed of variation had become effective prior to the appointment of the provisional liquidator, admits the appointment of the provisional liquidator and the provisional liquidator's powers, but denies that the business of Nevilda included acting as trustee of the Superannuation Trust – on the basis that (after appointment of the provisional liquidator) it was precluded from doing so by (CTH) Superannuation Industry (Supervision) Act 1993, s 120(c).

9 At first sight this appears to tender an issue as to whether the business of Nevilda included acting as trustee of the Superannuation Trust after 18 January 2007, when the provisional liquidator was appointed. However, it is common ground that Nevilda Holdings was the trustee prior to that date – at least until the deed of variation took effect, if it ever did. On closer examination of the pleading, the contest between the parties is that, on the one hand, David complains that Julienne and Deborah dealt with the assets of the Superannuation Trust and did so without proper authority and in breach of fiduciary obligations said to be owed by them to him; whereas, on the other hand, Julienne and Deborah appear to accept that they dealt with the assets of the Superannuation Trust, but say that they did so regularly and under the deed of variation, and not in breach of any obligation to David. No party appears to contend that Nevilda or its provisional liquidator continued in fact to act in any practical sense as trustee of the Superannuation Trust.

10 Accordingly, it seems to me that the issue as to whether the business of Nevilda included, after 18 January 2007, acting as trustee for the Superannuation Trust is not a real issue in the proceedings. There will no doubt be a question as to whether, as a matter of law, it remained the trustee or it did not. But as it seems to be uncontroversial that Julienne and Deborah thereafter dealt with the trust assets, and claim to have done so with propriety and appropriate authority, I cannot see how acts or deeds of Nevilda purportedly as trustee of the superannuation fund after 18 January 2007 could be of relevance. Moreover, there is no basis on the evidence before me for supposing that such documents are in existence.

11 In those circumstances I do not consider that paragraph 4 has a legitimate forensic purpose.

12 I order that paragraphs 1 and 4 of the first and second defendants’ notice to produce dated 9 March 2010 be set aside.

13 I order that the first and second defendants pay the third defendant's costs of the motion.

14 I make directions in accordance with the document entitled Directions initialled by me, dated this day and placed with the papers.

15 I adjourn the proceedings to Friday, 8 October 2010 at 9:30 am before me for a final pre-trial check.

16 The directions include liberty to apply by arrangement with my associate in the event of any difficulty arising in the preparation of the matter for hearing.

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