Harris Scarfe Australia Pty Ltd v Shoe Source Group Importing Pty Ltd (No 2)

[2009] SASC 162

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

HARRIS SCARFE AUSTRALIA PTY LTD v SHOE SOURCE GROUP IMPORTING PTY LTD & ORS (No 2)

[2009] SASC 162

Reasons of Judge Lunn a Master of the Supreme Court

5 June 2009

PROCEDURE

Application by plaintiff under 87R 81.02 to issue subpoena returnable in Chambers for hearing of application to strike out defences and counterclaim for alleged failure of defendants to make discovery - subpoena to be directed to solicitors for defendants for documents which plaintiff alleged should have been discovered by defendants but were not - held subpoena not to issue as the procedure was an impermissible interlocutory challenge to the conclusiveness of the defendants' affidavits verifying their discovery.

HARRIS SCARFE AUSTRALIA PTY LTD v SHOE SOURCE GROUP IMPORTING PTY LTD & ORS (No 2)
[2009] SASC 162

Reasons on plaintiff’s application to issue a subpoena.

1. JUDGE LUNN:     By a notice for specific directions issued on 25 March 2009 the plaintiff seeks, inter alia, to strike out the defences of the first, second and third defendants, and the counterclaim of the third defendant, by reason of their alleged respective failures to make proper discovery of documents in this action.  The argument on that application is now set for 29 June 2009.

2. The plaintiff has made an oral application under 87R 81.02 for a subpoena to be issued to Logie-Smith Lanyon Lawyers (“LSL”) for them to produce the following documents:

   All documents, including but not limited to financial and accounting records, file notes and correspondence (including emails and letters), whether in draft or final form, which disclose, record, evidence or explain any benefits paid directly or indirectly to the third defendant and/or the second defendant by the first defendant and/or the fifth defendant between 1 January 2004 and 31 December 2005.

3. A central issue in the case is what moneys emanating from the plaintiff passed between various of the defendants.  LSL is a firm of solicitors in Melbourne.  They have acted for the second, third, fourth and sixth defendants.  The plaintiff alleges, and has put forward some evidence to show, that some of the relevant payments of money passed through the LSL trust account.  Only one document has been discovered by the defendants relating to such moneys passing through that trust account.  The plaintiff seeks to issue the subpoena to obtain documents which it says are “on the cards” to exist in the hands of LSL about these payments through its trust account and the transactions to which they relate.  It says that if such documents are produced in answer to the subpoena, they can be tendered on in its current application as evidence that the second and third defendants have not made proper discovery of their documents in the action.  The application is opposed by the second and third defendants.

4. The process of obtaining such discovery as has been made by the second and third defendants in this action has been long and tortuous.  On 18 March 2009 the third defendant, on behalf of himself and the second defendant of which he is a director, filed an affidavit in which he deposed:

   11On Tuesday 21^st April 2009, my current solicitor, Mr Brian Deegan of Brian K Deegan & Associates, travelled to Melbourne to meet with my previous solicitor, Mr Simon Heath of Logie-Smith Lanyon, and me.  At the meeting I received further and additional detailed advice with respect to Discovery and my obligations thereunder.

   12I an now fully apprised of my obligations pursuant to the terms of the Order.

   13Now produced and shown to me and marked “A” is the Second and Third Defendant’s Further Supplementary List of Documents herein.

   14That List of Documents is true and correct in all respects, and refers to all of the additional documents which are or have been in the Second and Third Defendants’ possession, custody or power which are discoverable in this action.

   15Insofar as I swear this Affidavit on my own behalf as the Third Defendant, I know the facts deposed to herein of my own knowledge.

   16Insofar as I swear this Affidavit on behalf of the Second Defendant, I swear this Affidavit having made due inquiry of all of the servants and agents of the Second Defendant and having inspected all of the books and records of the Second Defendant.

5. Counsel for the second and third defendants told me that his instructions were that those defendants had now complied with the discovery obligations under the Rules and in accordance with the orders previously made against them for better discovery of documents.  This is the effect of the affidavit.  Whether that is the case is what is to be argued on 29 June 2009.

6. Subject to the exceptions provided by the Rules an affidavit of discovery made by a party is conclusive at the interlocutory stages of an action that that party has discharged its discovery obligations:  Mulley v Manifold  (1959) 103 CLR 341; British Association of Glass Bottle Manufacturers Ltd v Nettlefold (1912) AC 709; Cairns The Law of Discovery pp 40-43;  The Laws of Australia Vol 5.3 para [241]. These authorities are clear that except insofar as is expressly allowed by the Rules, interlocutory processes cannot be used to go behind a party’s list of documents. For instance, a party is not permitted to interrogate another party on the existence of documents that the other party should have discovered: Hall v Truman, Hamburg & Co (1885) 28 Ch D 307 at 319 et seq.

7. LSL were the solicitors and agents of the second and third defendants.  Insofar as LSL held documents in its capacity as the agents of those defendants, those documents were in the power of the defendants who were obliged to discover them.  I am not aware of any authority or precedent which says that the conclusiveness of a party’s affidavit of documents can be tested by issuing subpoenas for undiscovered documents at the interlocutory stage of the action to agents of the party (or indeed to the party itself).  If the authorities on the conclusiveness of affidavits of documents could be so circumvented, it would be expected that there would be numerous precedents for it being done.  If the subpoena is allowed it may produce documents which should have been discovered.  If the application to strike out the defences and counterclaim also fails, the effect of the subpoena will have been to have circumvented the restriction on interlocutory challenges to the conclusiveness of the affidavit of documents.  In the interests of justice this should not be permitted.  Accordingly, leave to issue the subpoena should be refused.

8. There was some argument about whether all of the documents which were the subject of the subpoena would be documents which were discoverable by the second and third defendants as being documents being held by LSL as their agents.  It may be that some of the accounting records and the like of LSL would not be in the power of the second and third defendants.  However, that is immaterial.  The only purpose of the subpoena on the current interlocutory application is to obtain documents which were properly discoverable by the second and third defendants.  Insofar as it may involve the production of documents which were not so discoverable they would be irrelevant to the current application.

9. What appears above is sufficient to dispose of the application.  I need not go into the other objections raised by the second and third defendants. 

   I have today made an orders:

   1Application for concurrence under 87R 81.02 for the issue of a subpoena to Logie-Smith Lanyon Lawyers is refused.

   2Costs of the argument to be paid by the plaintiff to the second and third defendants.

   3Fit for counsel.