Harrington Investments Pty Ltd v Commonwealth Bank of Australia

[1992] FCA 300

FEDERAL COURT OF AUSTRALIA

GENERAL, DIVISION

VICTORIA DISTRICT REGISTRY

B E T W E E N :

KARRINGTON INVESTMENTS PTY LTD & OTHERS

Applicants

AND

COMMONWEALTH BANK OF AUSTRALIA

ACN 123 123 124

COURT :	NORTHROP J
PLACE :	MELBOURNE
M:	14 APRIL 1992

EX TEMPORE REASONS FOR JUDGMENT

a notice of motion, which is undated

filed on 6 April of this year, the respondent is seeking a number of orders, one of which only has been argued to date. That order sought is an order under 015A r8 of the Federal Court Rules which permits, in appropriate cases, discovery of a third party. The rule reads as follows:

As far as I can see, the rules do not make provision as to what is to happen in relation to such discovery once it has

"On the application of any party to a proceeding the Court may order that a person who is not a party and in respect of whom it appears that the person has or is likely to have or has had or is likely to have had in the person's possession any document which relates to any question in the proceeding shall make discovery to the applicant of any such document."

been given. Presumably if an affidavit is filed in conformity with the order, there may well be inspection of those documents, although the rules do not specifically say so, nor what use can be made of them. Presumably they could be tendered as evidence 1i otherwise properly proved.

This rule is of fairly recent origin. It is fairly far reaching, and counsel have been unable to refer to any authority in this Court relating to an order made under 015A r8, although counsel for the respondent has referred to two decisions which are unreported in the authorized reports where the equivalent rule in the Victorian Supreme Court has been considered. The first of those cases is the case of Ansett Industries Ltd v Commonwealth, Supreme Court of Victoria, Marks J, 3 April 1987. The relevant rule is rule 32.07 of the new rules of the Supreme Court. A copy of the reasons is set out in Williams, Supreme Court Practice, Civil Proceedings of Victoria, and appears at page 30102 of that publication. At page 30103 Marks J says:

between discovery between parties for which no order is

"The rules reflect the clear intention to distinguish

required (rr29.02 and 29.03) and discovery against a non-party for which an order is. The latter involves weighing a substantial complex of matters in the exercise of discretion. The purpose of r32.07 is clearly that of ordinary discovery, namely, to assist the administration of justice by minimising costs and facilitating the disclosure of information which would advance fair determination of the issues. This purpose would not be met should the rule be used for collateral purposes, such as disadvantaging a business competitor. Also the court must be careful not to allow the power to be used oppressively, for example for mere fishing expeditions. In the general run of cases such questions would not be expected to arise."

I should indicate that in that case the person against whom discovery was sought alleged that there were such reasons behind it. At page 30105 his Honour also said:

"It would not, in my view, be correct to make under r32.07 orders which have the effect of giving access to documents, admittedly confidential, which might merely as a matter of speculation provide some evidence for a party at the trial. It must be borne in mind that a third party is at a disadvantage so far as being able to decide for itself the relevancy of any document in its possession to a question between other parties. This makes it incumbent on the court to take care before making an order to be satisfied that the discovery ordered does relate to questions between the parties. To do that the court must be clear as to what the documents contain or might reasonably be expected to contain, and that they relate sufficiently to a question or questions as to justify making an order. I am not in this case satisfied about any of these matters."

The other authority is that of Keviris Ptv Ltd v Ca~ital

Buildinq Societv, Supreme Court of Victoria, Kaye 3, 9 February 1988. A reference to this case is in Williams, above, at page 3930, where an extract from the reasons is given:

cautious in exercising the new jurisdiction, and that to

"It can therefore be anticipated that the court will be

obtain an order for discovery from a non-party it will not be sufficient simply to establish the qualifying conditions contained in r32.07. In addition, the court might possibly require the party applying for the discovery to show that the discovery is necessary in the sense that:

(a)	there is a real likelihood that the document of which discovery is sought contains information that either will advance his case or damage or destroy the cae of his adversary or put him on a train of inquiry that would lead him to obtaining information to that effect;
(b)	the person from whom the discovery is sought has refused to allow the party to inspect the document;
(c)	the information which the document contains cannot be obtained from any other source; and
(d)	if the party were not to have access to the information until trial its value to the party would be lost or seriously diminished."

The respondent in this case has attempted to comply with the requirements of those principles. To that end the respondent has filed a very extensive affidavit by the solicitor employed by the Commonwealth Bank of Australia, the respondent in these proceedings. This makes it clear that the documents sought to be discovered do have a bearing on the issues which arise between the applicants and the respondent. The details of that are set out in paragraphs 2 to 10 of that affidavit. I do not propose to repeat them, but they do show that there is a relevance between the documents sought to be discovered and the issues between the parties.

This is a case where, if the matter had been brought at

an appropriate time in this proceeding, it may have been

reasonable to make the order sought. But there are very

strong reasons why in this case the order should not be made.

The motion was, in fact, served on the person from whom discovery is sought on 7 April 1992, and the matter was due to come on for hearing in this court on 9 April 1992. It was part-heard on that occasion and adjourned until today. The application itself was commenced in March 1990. There have been numerous directions hearings. There have been numerous interlocutory proceedings between the parties and, in fact, there has already been three statements of claim. There has been discovery, and orders made for further discovery based, apparently, upon affidavits which indicated there must be other documents apart from those whlch were in the original affidavit of document. There have been interrogatories. Eventually the matter came on for directions in September of 1991, and on that occasion the Court was constituted by Sweeney J. Orders were made by consent on that occasion including the following orders:

"5. Each of the applicants file and serve an affidavit stating whether any document of the classes specified in the schedule to the respondent's notice of motion, dated 17 September 1991 is or has been in its, or his, or her possession, custody or power, and if it has been but is not now in its, or his, or her possession, custody or power when it, he or she parted with it, and what has become of it on or before 4.00 pm on 7 October 1991.

7. Any further interlocutory proceeding be instituted and be sought to be made returnable prior to the next directions hearing."

The next directions hearing was fixed for 8 November 1991.

The matter came on again for directions before the Court on 15 November 1991. On that occasion the Court directed, by consent, that the matter be placed in the list of cases for hearing with an estimated hearing duration of two weeks. Such an order normally would only be made if the parties were able to satisfy the Court that the matter was ready for trial and that there was no matter outstanding between them which required determination before the matter could be heard. By notice, dated 6 January 1992, the parties were notified that the matter was listed for hearing at 10.15 am on 30 April 1992.

It was not until much later that a decision was made by
,the respondent to seek the present order for discovery of a
third party. The basis for it was that in the preparation of
the hearing only recently, it became apparent that this was a
case where there may well be other documents. There were
documents held by the accountant, the person from whom the
discovery is sought, being the accountant of the applicant at
the time of the events which gave rise to the cause of action.
The documents could be relevant as to the amount of damages if
otherwise a cause of action succeeds. Some of these documents
themselves might well be the property of the accountant and
not merely being held by the accountant as agent for the
applicants. Counsel contended that a perusal of documents
which had been discovered and answers to interrogatories

disclosed that there could be other documents which have not

been discovered by the applicants and that in order to prepare	the case fully, this discovery of a third party was required.
The whole purpose and procedure of this Court with its directions hearing is to ensure that the matter does proceed with all reasonable expedition but at the same time giving parties appropriate time to prepare the case, and that a date for hearing should only be iixed when all those interlocutory matters are completed. Inherent ln that is the fact that the legal advisers of the parties should turn their minds to what is required for the hearing at a time when they notify the Court that the matter is ready for hearing. It does not lie well for counsel then to say, well, we did not really look at it then; it would have cost more if we had done that, but to
. wait some months and then prepare for trial and then seek
further orders. That, coupled with the fact that in this case, this is a matter where on the face of it most, if not all, of the documents sought to be discovered by the third party discovery should have come within the list of documents given by the applicant, either as documents in its possession or having been in its possession, having regard to the fact that what is being sought is a very wide ranging group of documents limited to some extent by the description of being related to the issues raised between the parties.
Having regard to the fact that the matter has been fixed for trial, in my opinion it is not appropriate to order the third party discovery at this stage. If anything, third party
proceedings in an attempt to identify the issues, limit the discovery should be done at a fairly early stage of
issues, and assist the parties, if it is going to be of assistance, in relation to the possible settlement of a case or resolution of the case by hearing. In this case the time factor is such, having regard to the system of this Court, that even if otherwise the discovery could have been ordered this is not a case where it should be so ordered.
The making of this order does not deny the fact that this is a case where a subpoena to produce documents may well be given. In answer to that suggestion it was put that that is not satisfactory for two reasons; first, that the range of documents are so wide it might give rise to objections. The
.same argument could be put as far as discovery is concerned because in any event what is required of the person being served with the discovery notice or the subpoena is to determine what is to be produced or discovered. This, of itself, does give rise to problems which I need not comment upon at the moment. But of more importance to the present case, it was put that is not sufficient because the respondents are also seeking to find out what documents might have been in the possession of the third party but no longer are and what has become of them. In my opinion, this to a large extent suggests that this is almost a fishing expedition. It is one of the factors which has been said should not be allowed in cases of this kind. Further, it appears there has been no request by the respondents of the
given to that was they are, or many of them might well be, the third party to inspect any of these documents. The answer
applicants' documents. If that is so, they should have been discovered by the discovery by the applicants. Insofar as they are not, there is no reason why they could not be disclosed by the third party to the respondent.
For these reasons, the respondents motion for third party discovery is refused.
I certify that this and the preceding eight (8) pages are a true copy herein of the Ex Tempore Reasons for Judgment of the Honourable M r Justice R.M. Northrop.
Associate:
. Date :