In the matter of Australasian Hail Network Pty Limited (No 2)

[2020] NSWSC 517

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Australasian Hail Network Pty Limited (No 2) [2020] NSWSC 517

Hearing dates:

4 May 2020

Date of orders:

08 May 2020

Decision date:

08 May 2020

Jurisdiction:

Equity - Corporations List

Before:

Rees J

Decision:

Orders made for access to privileged documents and for discovery

Catchwords:

DISCOVERY – relevance to fact in issue – focus on pleadings – facts in affidavits may not be a fact in issue in the proceedings – discovery not ordered on matters going to credibility – [2]-[3], [58]

 

EVIDENCE — Privilege — joint privilege – ex-wife said to agree to waive privilege – husband did not agree – privilege not waived – [34]

 

EVIDENCE — Privilege — Client legal privilege — Whether issue waiver — earlier retainer of solicitor before drafting of documents in issue – plaintiff pleaded special disadvantage including lack of legal advice, ignorance of rights in relation to business and incapacity due to substance abuse – inconsistent and unfair to maintain privilege – privilege waived – [36]-[38], [43]

 

PROCEDURE – Notice to produce – rule 21.10(1)(a) Uniform Civil Procedure Rules 2005 (NSW) – implicitly assumes relevance of document referred to in pleading or affidavit – where production opposed, Court must consider whether relevant to fact in issue – production of laptop, hard drive, mobile phones, cloned hard drive and email password refused – [57]-[60]

  SUBPOENA – application for leave to issue subpoena in New Zealand – material may be obtained by other means with less expenses – unnecessary to trouble proposed recipient with subpoena – leave refused – [69]-[75]

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 56(1)
section 55, Evidence Act 1995 (NSW), ss 55, 119(a), 122(2)
Trans-Tasman Proceedings Act 2010 (Cth), s 31
Uniform Civil Procedure Rules 2005 (NSW), r 21.10

Cases Cited:

Archer Capital 4A Pty Ltd (as trustee for the Archer Capital Trust 4A) v Sage Group plc (No 2) (2013) 306 ALR 384; [2013] FCA 1098
AWB Ltd v Cole (No 5) (2006) 155 FCR 30; [2006] FCA 1234
Chen v City Convenience Leasing Pty Ltd [2005] NSWCA 297
Comeskey v New South Wales Bar Association [2015] NSWSC 12
Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341; [2006] FCAFC 86
Cooper v Hobbs [2013] NSWCA 70
Council of the New South Wales Bar Association v Archer (2008) 72 NSWLR 236; [2008] NSWCA 164
Domain Paper (Australia) Pty Ltd v Galloway [2014] FCA 936
DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384
Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 132 FLR 466; (1996) 39 NSWLR 601
In the matter of Australasian Hail Network Pty Limited [2020] NSWSC 44
Labruyere v Parsons Brinckerhiff Australia Pty Limited (No 3) [2019] NSWSC 79
Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66
Mulley v Manifold (1959) 103 CLR 341
Norris v Kandiah [2007] NSWSC 1296
Noun v Pavey [2014] NSWSC 429
Parkview Qld Pty Ltd v Commonwealth Bank of Australia [2012] NSWSC 1599
Rauland Australia Pty Limited v Law [2020] FCA 516
SA EMed Pty Ltd v Calvary Health Care Adelaide Ltd (No 2) [2011] FCA 835
Thorpe v Chief Constable of Greater Manchester Police [1989] 1 WLR 665
Wayne Lawrence Pty Ltd v Hunt [1999] NSWSC 1044

Texts Cited:

P Taylor, M Meek and the Hon. G Bellew, Ritchie’s Uniform Civil Procedure (NSW)
Supreme Court of New South Wales Practice Note SC Eq 11

Category:

Procedural and other rulings

Parties:

Kane Boyd (First Plaintiff)
Automotive Paintless Techniques Pty Limited (Second Plaintiff)
Adam Woodlands (First Defendant)
Stephanie Woodlands (Second Defendant)
Southern Cross Hail Pty Limited (Third Defendant)
Australasian Hail Network Pty Limited (Fourth Defendant)
Australian Securities and Investments Commission (Fifth Defendant)
Carwook Pty Limited (Sixth Defendant)

Representation:

Counsel:
Mr S Docker / Mr A Gandar (First and Second Plaintiffs)
Mr G Curtin SC / Mr J Duncan (First, Second, Third, Fourth and Sixth Defendants)
No appearance (Fifth Defendant)

  Solicitors:
Fox Lawyers (First and Second Plaintiffs)
Watkins Tapsell Lawyers (First, Second, Third, Fourth and Sixth Defendants)

File Number(s):

2019/30653

Judgment

1. HER HONOUR: This is an application by the defendants for access to documents, variously: over which a claim for client legal privilege has been made; by discovery; by delivery up of a laptop, hard drive and mobile phones; by being given access to an email account; and by serving a subpoena abroad. The application was hard fought with a similar volume of affidavits and documentary material relied upon as in the defendants’ earlier application for security for costs: In the matter of Australasian Hail Network Pty Limited [2020] NSWSC 44 at [3].

2. The touchstone for requiring a party to disclose documents under Part 21 of the Uniform Civil Procedure Rules 2005 (NSW) is whether the documents are “relevant to a fact in issue”. The facts in issue in proceedings will primarily be identified by examination of the pleadings and consideration of any admissions that the parties have made: P Taylor, M Meek and the Hon. G Bellew, Ritchie’s Uniform Civil Procedure (NSW) at [21.1.5] citing Mulley v Manifold (1959) 103 CLR 341 at 345. The fact that an affidavit asserts a fact does not necessarily elevate it to a fact in issue in the proceedings. The admissibility of some or all of an affidavit may be objected to at trial on the grounds that it is not so relevant: section 55, Evidence Act 1995 (NSW). One must have an eye to the pleadings.

3. It is also convenient to note that the Court should not order discovery on matters going solely to credit: Thorpe v Chief Constable of Greater Manchester Police [1989] 1 WLR 665. This is confirmed by rule 21.1(2) of the Uniform Civil Procedure Rules, which provides that a document is to be taken to be “relevant to a fact in issue” if it could rationally affect the assessment of the probability of the existence of that fact other than by relating solely to the credibility of a witness.

Relevant issues in the substantive proceedings

4. The first plaintiff, Kane Boyd, is a panel beater. The second plaintiff, Automotive Paintless Techniques Pty Limited, is his company. The plaintiffs contend that, in 2003, Mr Boyd and Adam Woodlands (the first defendant), or alternatively their companies, being Automotive Paintless Techniques and Carwook Pty Limited (the sixth defendant) respectively, entered into a partnership to provide a service to panel beating shops and insurance companies dealing with claims for damage to motor vehicles arising from hail storms or severe weather events. On the plaintiffs’ case, in 2005, unbeknownst to Mr Boyd the business came to be conducted through Australasian Hail Network Pty Limited (the fourth defendant).

5. By a Shareholders Agreement dated 8 October 2007, a Deed of Agreement dated 9 January 2009, a letter of resignation dated 12 January 2009 and a share transfer form dated 28 February 2009 (which the parties referred as the “impugned documents”), Mr Boyd transferred his shares in Australasian Hail Network to Mr Woodlands for $100 and resigned as director and secretary of the company.

6. Mr Boyd does not admit that he signed the impugned documents and contends, in the alternative, that he was under a special disadvantage in dealing with Mr Woodlands and Australasian Hail Network. The Further Amended Statement of Claim contains particulars of the special disadvantage including: Mr Boyd’s lack of education and poor literacy; that he “did not have the benefit of legal advice”; chronic drug and alcohol consumption at the time; that Mr Boyd did not know what his rights were in respect of the business; and that he was in the habit of signing documents for the business presented to him by Stephanie Woodlands (the second defendant) upon her giving him a cursory explanation. Mr Boyd contends that, if he did sign the impugned documents, then he did not apprehend what he was signing such that there was no relevant agreement to transfer his shares. The defendants deny these allegations.

7. Thus, on the pleadings the issues to be determined at trial include whether Mr Boyd signed the impugned documents and, if so, did he appreciate the nature of the documents he was signing? In particular, did Mr Boyd have the benefit of legal advice at the time, did he know what his rights were in respect of the business or was his ability to understand the nature and quality of the documents substantially impaired by lack of education, poor literacy or substance abuse.

Affidavit and documentary evidence

8. In support of the plaintiffs’ substantive claim, on 1 September 2019 Mr Boyd swore a lengthy affidavit which the defendants tendered on this application. Mr Boyd described inter alia his background and education, his personal history, how he came to do business with Mr Woodlands and the development of the business called Australasian Hail Network. Mr Boyd said that he understood that the business of Australasian Hail Network was conducted as a partnership and did not know that there was a corporate entity, Australasian Hail Network Pty Limited. Further, if he had seen the words “Pty Limited” after Australasian Hail Network, this would not have signified to him that the entity in question was a company.  Mr Boyd says that he became aware of the corporate nature of Australasian Hail Network after he separated from his wife, Carmen Boyd, in January 2014.

9. Mr Boyd described the manner in which Mrs Woodlands gave him documents to sign from time to time. Mr Boyd said that he had trouble understanding complicated documents; long or complex documents always made him feel anxious. He avoided getting involved in the paperwork side of the business, except for preparing quotations. Mr Boyd said that his wife did the bookkeeping for Automotive Paintless Techniques, their personal businesses and his New Zealand business interests using a laptop at home. His wife operated the email address for the business; he did not use it. His wife dealt with their accountants on behalf of both of them. Ms Boyd did this until they separated, after which Mr Boyd lost access to the financial records for Automotive Paintless Techniques and the email address. He has since obtained some documents from their former accountants.

10. Mr Boyd describes the first time it was suggested that he and Mr Woodlands should part ways. Mr Boyd and his wife met with Mr and Mrs Woodlands at a casino in Auckland in July 2007 (Mr Woodlands’ affidavit pinpoints the date as being 14 July 2007) and was told in the wee hours of the morning after a lot of drinking that the Woodlands did not want to be in business with them anymore. According to Mr Boyd, Ms Boyd said they would need to sleep on it. Mrs Woodlands asked for an answer by 8.00 am “as we have documents that will need signing”. Mr Boyd said he was shocked and felt ambushed. Mr and Ms Boyd drove home the next morning and, about a week later, Mr Boyd called Mr Woodlands and said that the Boyds would like to take the business but the Woodlands never got back to him about it. Mr Boyd’s affidavit then turns to the subject of the Shareholders Agreement dated 8 October 2007, almost three months later.

11. The defendants relied on part of Mr Woodlands’ substantive affidavit of 4 January 2020, in which Mr Woodland described the meeting at the casino on 14 July 2007 in not dissimilar terms, deposing that Mrs Woodlands told the Boyds that they didn’t want to be in business with them anymore and had a document in their room which set out the basics of what was to happen. According to Mr Woodlands, the next morning the Boyds came to the Woodlands’ hotel room and were shown the document. After reading the document, Ms Boyd said that they needed to get some legal advice. Mr Boyd called Mr Woodlands the following week saying he was coming to Sydney to discuss their proposal and a further meeting took place in Sydney where they also discussed whose lawyers should draft up an agreement.

12. In addition to these affidavits, documents have been produced including by Moray & Agnew Lawyers in answer to a subpoena issued by the defendants. These documents provide further detail about what happened after the conversation at the casino and were tendered by the defendants on this application.

13. On 16 July 2007, a handwritten facsimile was sent by Mr and Ms Boyd to their accountants saying that they had met with the Woodlands over the weekend and were expecting to discuss future business plans for Australasian Hail Network but things had taken “a turn for the worst” and advice was needed. The facsimile attached the document provided by the Woodlands. On 17 July 2007, a second handwritten facsimile was sent from Mr and Ms Boyd to their accountants requesting that various documents be sent through “for Kane and I to move forward with our decision making”. Mr Boyd deposed that his wife communicated with the accountants for both of them and it is tolerably clear that these facsimiles, which were in the same handwriting, were authored by Ms Boyd.

14. On 17 July 2007, according to Moray & Agnew’s invoices over which privilege has been waived, solicitor Ian Denham had a telephone call with Mr Boyd “re background to dispute” and spoke to Mr Boyd again on 18 July 2007 obtaining the accountants’ details. On 18 July 2007, Mr Denham sent a facsimile to the accountants requesting documents as a matter of urgency. Mr Denham advised:

We have received instructions to act for Kane Boyd shareholder and director of Australasian Hail Network Pty Limited. We also act for Carmen Boyd. …

We further understand [a] request for … documents … made to you by our clients directly yesterday, 17 July 2007. …

As there may be a possibility of the company’s assets being dissipated, we require this information as soon as possible.

15. On 19 July 2007, according to Moray & Agnew’s invoices, Mr Denham perused a Memorandum of Understanding supplied by the accountant. Ms Boyd sent an email to Mr Denham, to which Mr Denham replied. Privilege is claimed over both emails. On 23 July 2007, according to Moray & Agnew’s invoices, Mr Denham spoke with Mr Boyd, perused a facsimile sent by Mr and Ms Boyd, had a further telephone attendance on Mr Boyd, and drafted notes for a letter of advice. On 24 July 2007, Mr Denham dictated his report to Mr and Mrs Boyd and settled a letter of advice. On 26 July 2007, Ms Boyd sent to Mr Denham a further email to which he replied the following day, to which Ms Boyd also replied. A claim for privilege is made over these three emails.

16. On 5 August 2007, Ms Boyd sent an email to Mr Denham instructing:

As discussed with Kane on Friday 03.08.07 could you please draw up a document which states the following …

The instructions there set out appear to be the genesis of the Shareholders Agreement. Privilege is not claimed over this or ensuing emails between Ms Boyd and Mr Denham.

17. On 7 August 2007, Mr Denham provided Mr and Ms Boyd with a first draft of the Shareholders Agreement, advising:

I have used a generic shareholders agreement, but have tried to pare [sic] it back to the basics and incorporate the deal recently struck.

As I understand the sequence of events, “the deal recently struck” referred to an agreement reached between Mr Boyd and the Woodlands in Sydney some three weeks after the casino meeting.

18. On 20 August 2007, Mr Denham sent the proposed Shareholders Agreement to the Woodlands’ solicitor, which Mr Denham was instructed set out requirements “for the resolution of the recent dispute between our respective clients”. The Shareholders Agreement went through various iterations and was ultimately dated 8 October 2007.

19. The defendants also tendered a letter dated 6 December 2016 from Mr Boyd’s then girlfriend to Mr and Mrs Woodlands requesting copies of the letter of resignation and share transfer form for use in Family Court proceedings then on foot between the Boyds, apparently to prove that Mr Boyd was no longer an officer or shareholder of Australasian Hail Network and thus the shares were not an asset relevant to the property issues in those proceedings.

20. Returning to Mr Boyd’s affidavit of 1 September 2019, the next topic addressed after the meeting at the casino was the Shareholders Agreement. Mr Boyd deposed that he did not recall seeing it before these proceedings and had never heard of Moray & Agnew. Mr Boyd says that he never agreed to sell his interest in the business to the Woodlands. Mr Boyd’s affidavit then traverses subsequent events in the lives of these companies, the balance of the impugned documents and subsequent dealings with the Woodlands.

21. At the end of a very lengthy affidavit, having set out 60 pages of events and conversations, Mr Boyd sets out his efforts to obtain documents in relation to his claim. At [332], Mr Boyd said that his wife left him with the laptop after they separated. In about 2015, his then girlfriend “fried” the laptop by using the wrong charger. Mr Boyd took the laptop to a local computer shop and was told that it could not be repaired but they could extract everything from the laptop and put it on a portable hard drive. This was done. The hard drive contained MYOB files and Microsoft Outlook data files for the email account used in the business. Further, at [337]:

At the date of swearing this affidavit, my solicitors have been unable to access the MYOB Records and the Email Records are mostly corrupted and unable to be viewed.

22. Finally, Mr Boyd deposed that he had two mobile phones during his time with Australasian Hail Network. He had taken the phones to data recovery specialists to recover data stored on the phones. At [338]-[339]:

338   … I can no longer access either phone and have not been able to recover the PIN numbers used to unlock them.

339   At the time of affirming this affidavit, the data on the mobile phones has not yet been recovered.

23. On 23 April 2020, the plaintiffs’ solicitor in these proceedings, Catherine Fox, swore an affidavit in relation to the defendants’ motion, advising that the laptop cannot now be located. Ms Fox had been informed by Mr Boyd that his belongings in New Zealand have been kept in a storage shed and he was unable to locate the laptop in the shed. As to the hard drive, Ms Fox deposed that [337] of Mr Boyd’s affidavit was based on attempts made by a former employed solicitor to access the files. Ms Fox did not herself attempt to access the files at the time as she expected that the employed solicitor would have had better computer knowledge and success than she would have. In the course of preparing her affidavit in respect of the defendants’ motion, Ms Fox attempted to access the hard drive and was able to access some of the emails but not MYOB files. However, Ms Fox had no reason to doubt that her former employed solicitor was unable to do so.

24. Ms Fox deposed that the hard drive contained 70.3 GB of data, of which 40 GB was in a folder called “Carmen” which contained documents of a personal nature and business records relating to another New Zealand company, Kiwi Dent Company Limited. Personal videos accounted for 19.4 GB of data. Some 20,000 emails accounted for 3.55 GB of data, some of which were accessible and others not. Keyword searches of the emails found a small number of emails that may be of a work or business nature but the significant majority were of a personal nature. Ms Fox estimated that approximately 80% of the files were of a personal nature. The hard drive also contained MYOB file folders which Ms Fox had not been able to access.

25. As to the mobile phones, Ms Fox deposed that she was instructed that the two mobile phones are in storage in New South Wales. Ms Fox has taken steps to have the two phones delivered to her but does not yet have them. Ms Fox was informed by Mr Boyd and believed that the phones were used for personal and business purposes and contain private information, photographs and videos.

26. As to the email account, Ms Fox deposed that, on about 16 September 2019, her firm was able to access the email account but the email account was empty. Ms Fox accessed the email account on 22 April 2020: some spam had been received but no emails personally to Mr Boyd or Ms Boyd. Ms Fox concluded that the account was active but not being used.

23. Finally, the defendants’ solicitor has spoken with Ms Boyd’s legal representative in New Zealand. On 27 September 2019, when asked whether Ms Boyd would voluntarily produce documents, her legal representative advised that Ms Boyd did not agree to provide any assistance in the matter to the defendants. The defendants’ solicitor advised that they would let the legal representative know in due course whether a subpoena would be served on Ms Boyd and the legal representative replied that he was authorised to accept service. On 17 April 2020, the defendants’ solicitors provided their motion to Ms Boyd’s legal representative and asked whether Ms Boyd would be appearing in the matter and whether she made a claim for privilege in relation to the documents sought. On 30 April 2020, Ms Boyd’s legal representative replied:

… my client requires you to advise the Court …

2.   My client has a computer that may have some of the documentation. The computer was forensically cloned by the plaintiffs’ lawyers. As such, any documentation contained on the computer that is of any relevance will be in the control and or possession of the plaintiffs;

3.   The laptop that would have held any relevant information was taken by Mr Kane Boyd during his separation with my client; and

4.   My client disposed of any relevant telephones several years before these proceedings were filed.

Privileged documents

28. The defendants issued a subpoena to Moray & Agnew, which produced documents to the Court. Whilst the firm no longer retains its hard copy file or the letter of retainer, it has produced whatever electronic records remain. Initially, the plaintiffs claimed privilege over all of the documents but, after further reviewing the material, waived privilege and permitted the defendants to inspect the documents save for the 5 emails referred to at [15] to [15] and an Excel spreadsheet. The defendants challenge the claim for privilege. The parties had no objection to me looking at the documents.

Are the documents privileged?

29. The plaintiffs bear the onus of establishing their claim for privilege.  As Young J explained in AWB Ltd v Cole (No 5) (2006) 155 FCR 30; [2006] FCA 1234 at [44]: (citations omitted)

… The onus might be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its creation. It might also be discharged by reference to the nature of the documents, supported by argument or submissions …

The purpose for which a document is brought into existence is a question of fact that must be determined objectively.

See also Domain Paper (Australia) Pty Ltd v Galloway [2014] FCA 936; Archer Capital 4A Pty Ltd (as trustee for the Archer Capital Trust 4A) v Sage Group plc (No 2) (2013) 306 ALR 384; [2013] FCA 1098 per Wigney J at [13]-[14].

30. In support of the claim for privilege, Mr Denham, a partner of Moray & Agnew, swore an affidavit deposing that the firm acted for Mr and Ms Boyd in 2007 and 2008. Whilst Mr Denham recalled little of the matter, he says that the firm was jointly retained by Mr Boyd and his then wife. Mr Denham had no independent recollection of how the firm came to be retained but, having refreshed his memory from the facsimile referred to at [14], believed that the firm was initially retained in respect of potential litigation and an application for a freezing order in respect of the assets of Australasian Hail Network.

31. Also in support of the claim for privilege, Ms Fox swore an affidavit deposing that the emails contain confidential communications between solicitor and client for the dominant purpose of legal services in relation to anticipated proceedings concerning the assets of Australasian Hail Network and disclose the substance of legal advice given by Mr Denham regarding a dispute concerning that company. The Excel spreadsheet was prepared by Mr Denham for the purpose of providing advice to his clients and for providing legal services in relation to resolving a dispute.

32. Section 119(a) of the Evidence Act provides:

Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of:

(a)   a confidential communication … between a lawyer acting for the client and another person, that was made …

for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.

Thus, Ms Fox has identified the relevant proceedings referred to in the chaussette as being earlier proceedings which were anticipated but not commenced seeking asset preservation orders. The question of fact is whether the communications between the Boyds and Mr Denham were for the dominant purpose of the Boyds being provided with professional legal services relating to such proceedings. 

33. The defendants submitted that Mr Boyd's evidence is that he had never heard of Moray & Agnew before these proceedings were commenced. If he is now to assert that he did retain the firm for the purpose of claiming privilege, he should formally admit that he retained the firm as his solicitors. If he does not admit that fact, the claim for privilege should be rejected. I do not agree with this submission. Whether there was a retainer between the Boyds and Moray & Agnew is a question of fact. The plaintiffs rely on the evidence of Mr Denham and contemporaneous documentary evidence which clearly indicates that there was such a retainer. The defendants rely on an admission against interest contained in Mr Boyd’s affidavit of 1 September 2019 in which he said he had never heard of the firm. On the balance of probabilities, I conclude that Moray & Agnew was retained by the Boyds at the time. Whether there was such a retainer is not a pleaded issue in these proceedings which Mr Boyd is obliged to formally admit.

34. The defendants also submitted that the claim for privilege fails because privilege is claimed on behalf of Mr Boyd's former wife but the plaintiffs' solicitors do not act for her. Ms Boyd is aware of the proceedings and the subpoena but has not made any claim for privilege, has not appeared in these proceedings and has not objected to access being granted to the documents. This submission is not correct in law. Joint privilege was explained in Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 132 FLR 466; (1996) 39 NSWLR 601 by Sheller JA, with whom Waddell AJA agreed, at 608: (emphasis added)

Two or more persons may join in communicating with a legal adviser for the purpose of retaining his or her services or obtaining his or her advice.  The privilege which protects these communications from disclosure belongs to all the persons who joined in seeking the service or obtaining the advice.  The privilege is a joint privilege.  … Accordingly no privilege attaches to such communications as against others who, with the client, share an interest in the subject matter of communication.  But the parties together are entitled to maintain the privilege “against the rest of the world”… Logically the joint nature of the privilege means all to whom it belongs must concur in waiving it. Theirs is one inseverable right.

Even if Ms Boyd agreed to waive privilege (and I do think that the email from Ms Boyd’s current legal representative can be read as having done so), then the privilege cannot be waived without Mr Boyd also agreeing to waive privilege.

35. There is no evidence as to who authored the Excel spreadsheet but it appears to me to have been prepared by Moray & Agnew rather than the Boyds. On the face of the documents together with the evidence of Mr Denham and less significantly, Ms Fox, I am satisfied that the documents are privileged, either under section 119 or, perhaps more fittingly, under section 118 (communications for the dominant purpose of a lawyer providing legal advice to a client). It is not obvious from the emails that the communications concern anticipated legal proceedings including an asset preservation order but rather advice including in respect of potential claims. I accept Mr Denhams’ evidence, however, as he would be in the best position to know the type of legal work he did at the time and what his facsimile to the accountant indicates to him that he was retained to do.

Has privilege been waived?

36. Loss of privilege by waiver is dealt with by section 122(2) of the Evidence Act. The defendants contended that privilege had been lost by “issue waiver”.  Whether this is so requires “a fact-based inquiry” depending “very much on the particular character of the case”: Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341; [2006] FCAFC 86 at [56]–[61], or “matters of fact and degree”: Cooper v Hobbs [2013] NSWCA 70 at [70] McColl JA (with whom Bergin CJ in Eq agreed). As Hodgson CJ in Eq explained in Wayne Lawrence Pty Ltd v Hunt [1999] NSWSC 1044 at [12]:

… the question of whether the advancing of a person’s state of mind is to be taken … as waiving privilege, is a matter of degree in each case. It does not seem to me that the assertion of a belief must, in all circumstances, be taken as consenting to evidence being led of any legal advice or confidential communication that could be relevant to whether such a belief was held or the reasonableness of such belief. It seems to me that factors relevant to whether that consent is to be considered as having been given, or whether privilege is taken to have been waived, would include the significance of the belief to the case as a whole; the relevance of the reasonableness of the belief to the case as a whole; the probability or otherwise of the legal advice being relevant to the holding of that belief, or being relevant to its reasonableness; and in circumstances where the Court inspects the legal advice in question in order to make a decision, the extent to which the legal advice does in fact bear upon the holding of the belief or its reasonableness, and the extent to which the legal advice relevant to those matters is inextricably bound up with legal advice going to other questions as to which there has been no consent or waiver.

37. Further, privilege can be waived by a party’s inconsistent conduct, as Hodgson JA (with whom Campbell JA and Handley AJA agreed) explained in Council of the New South Wales Bar Association v Archer (2008) 72 NSWLR 236; [2008] NSWCA 164 at [48]:

… What would involve inconsistency and relevant unfairness is the making of express or implied assertions about the content of the privileged communications, while at the same time seeking to maintain the privilege. In this respect, it may be sufficient that the client is making assertions about the client’s state of mind, in circumstances where there were confidential documents likely to have affected that state of mind.

38. Issue waiver is also considered in Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66; Chen v City Convenience Leasing Pty Ltd [2005] NSWCA 297 at [38], [41]; DSE (Holdings) Pty Ltd v Intertan Inc (2003) 127 FCR 499; [2003] FCA 384 at [102]–[104]; SA EMed Pty Ltd v Calvary Health Care Adelaide Ltd (No 2) [2011] FCA 835 at [23]–[25]. Many of these cases concerned the state of mind of a plaintiff at the time they allege they relied upon misleading and deceptive conduct. SA EMed related to the circumstances at the time a contract was formed.  Wayne was a case where a party sought to set aside a summary dismissal for its failure to provide security for costs, because, inter alia, it did not understand that dismissal, and not a stay, would be the consequence of that failure.  Rio Tinto concerned a statutory requirement that a particular state of mind exist, being that the Commissioner was satisfied of certain matters in reaching its taxation decision. This did not have the result that the Commissioner waived privilege over the contents of the advice relied upon in being so satisfied: at [66]-[67].

39. The plaintiffs accept that privilege has been impliedly waived over Moray & Agnew documents which record communications in relation to the drafting and the contents of the Shareholders Agreement by reason of Mr Boyd putting in issue his understanding of the Shareholders Agreement.  However, the plaintiffs do not accept that privilege has been waived over documents relating to the initial part of Mr Denham’s retainer in relation to anticipated or potential litigation between the Boyds and the Woodlands. The plaintiffs submitted that, before the Shareholders Agreement was raised as something that the parties might consider, there was a dispute which led to anticipated legal proceedings. There was nothing about Mr Boyd’s conduct that waived privilege over any advice that he might have received in relation to that. The documents suggest that the potential for litigation subsided, and Mr Denham subsequently drafted the first version of the Shareholders Agreement and corresponded with solicitors acting for Mr and Mrs Woodlands in relation to subsequent drafts.  The internal working document prepared by Mr Denham does not appear to have ever sent to Mr Boyd nor indicates anything about his understanding of the Shareholders Agreement.  The plaintiffs submit that issue waiver has not occurred here, relying inter alia on Mann v Carnell at [29], Rio Tinto at [68]; Parkview Qld Pty Ltd v Commonwealth Bank of Australia [2012] NSWSC 1599 at [11] and [14]; Archer at [48].

40. The defendants submitted that the claim of privilege is inconsistent with the plaintiffs raising as issues in the case Mr Boyd's state of mind, knowledge and consequential actions in relation to the matters touching and concerning the matters the subject of Moray & Agnew’s retainer and the ability to retain solicitors more generally. The Moray & Agnew documents over which privilege has been waived are said to establish that the firm was retained by Mr Boyd to negotiate the terms of the Shareholders Agreement which contained terms relating to his rights in respect of Australasian Hail Network. The defendants submitted that, by Mr Boyd describing his shock and surprise at the conversation which took place at the casino, he has put his state of mind in issue and waived privilege over communications between Mr Boyd and Moray & Agnew relating to anticipated and potential litigation. The factual context out of which the Shareholders Agreement arose is said to have been put in issue by Mr Boyd. Further, the letter from Moray & Agnew providing a draft shareholders agreement referred to “resolution of the recent dispute between our respective clients” and operated as a waiver of privilege over documents referring to that recent dispute. The defendants also submitted that, by Mr Boyd pleading that he was at a special disadvantage by reason of chronic drug use, the fact that he was communicating with Moray & Agnew about litigation at all told against such a disadvantage.

41. An issue in the proceedings is whether Mr Boyd signed the Shareholders Agreement and, if so, whether he did so under a special disadvantage. On the evidence on this application, the first time the subject of parting ways was raised was at the casino. It is reasonably clear from Ms Boyd’s facsimile that this was unexpected news. In any event, the fact that Mr Boyd says in his affidavit that he was shocked by what the Woodlands said at the casino does not elevate his state of mind at the casino to a relevant issue having regard to the pleadings. I repeat what I said at [2]. It is not suggested in the substantive affidavits filed in these proceeding by Mr Boyd or Mr Woodlands that there was any agreement at the casino or the next morning, but simply that the issue was raised and the relevant actors returned to their respective homes. It appears that the parties reconvened a couple of weeks later and struck some kind of deal, following which Mr Denham was instructed to prepare what became the Shareholders Agreement.

42. The emails are not relevant to Mr Boyd’s understanding of the Shareholders Agreement, which does not appear to have started life until after the parties re-convened. The communications may be relevant to Mr Boyd’s special disadvantage more generally including whether he had the benefit of legal advice, whether he knew what his rights were in relation to the business and whether he was unable to meaningfully participate in events by reason of substance abuse. But whether the documents are relevant is not the question. Rather, having regard to the factors identified by Hodgson CJ in Eq in Wayne, the question is whether having regard to the significance of Mr Boyd’s state of mind to the case as a whole, the probability or otherwise of the legal advice being relevant to that state of mind, and the extent to which the legal advice does in fact bear upon his state of mind, privilege has been waived. In terms of Archer, the question is whether it is inconsistent or unfair for Mr Boyd to assert a state of mind where confidential communications with Mr Denham are likely to have affected that state of mind.

43. The communications in question pre-date the Shareholders Agreement by three months. The communications are between Ms Boyd and Mr Denham, not Mr Boyd. The communications concern a preliminary phase of advice before the idea of a Shareholders Agreement was hatched. But such advice was presumably taken into account by Mr Boyd when he reconvened with the Woodlands and, following their discussions, instructions were given to prepare a Shareholders Agreement. I do not think a clear dividing line can be drawn between Moray & Agnew’s initial retainer and the later expansion of that retainer to draft a Shareholders Agreement. Maintaining privilege over these emails involves inconsistency and unfairness such that issue waiver has occurred. As to the Excel spreadsheet, it does not appear to be associated with the initial advice given by Mr Denham. But there is no evidence that it was sent to the Boyds or otherwise communicated to them and thus that it contributed to Mr Boyd’s understanding of the impugned documents or state of mind more generally. Thus it is not unfair, I think, to maintain privilege in respect of this document.

Discovery

44. The parties agreed on the relevant principles, which are uncontroversial. The defendants sought 13 categories of documents, the scope of which was the subject of submissions and discussion during the hearing and further refined by the defendants’ senior counsel as a consequence. The plaintiffs largely agreed with the refined categories save for six categories about which some issues remain.

45. By category 1, the defendants seeks discovery of corporate documents of Automotive Paintless Techniques which came into existence prior to 1 March 2009, being:

1. applications for registration of the corporation as a company,

2. applications for shares in the company,

3. correspondence relating to such applications between the company or any director or member of the company and lawyers acting for the company or any director or member of the company,

4. share certificates in the company,

5. registers of members of the company,

6. minutes of meetings of the members of the company,

7. consents to act as a director or secretary of the company, and

8. minutes of meetings of the directors of the company.

The documents sought were said to be relevant to whether Mr Boyd understood the impugned documents, whether his literacy skills impinged upon his ability to understand the transactions the subject of those documents, and whether he knew what a corporation was or the significance of an entity being entitled “Pty Limited”.

46. The plaintiffs accepted that a fact in issue was whether Mr Boyd understood what he was signing if and when he signed the impugned documents. It is not a fact in issue whether Mr Boyd contemporaneously knew what a corporation was. The documents will only be relevant to whether Mr Boyd understood what “Pty Limited” signified if there is a basis for the submission that he has read and understood the document. As currently drafted, category 1 calls for company documents held in an accountant or lawyer’s office that Mr Boyd may never have seen or read, let alone signed. The plaintiffs sought that this category be limited to those documents which were addressed to or from Mr Boyd, which bore his signature or initials, or which represent that he was present. The defendants have accepted such a limitation in category 2 and 3 respect of two other corporate entities, Kiwi Dent Company Limited and KC Boyd Enterprises Ltd, being New Zealand companies owned by Mr Boyd.

46. Given the basis on which the defendants say that the documents sought in category 1 are relevant, there does not seem to me to be any reason why the further refinement of this category in respect of Kiwi Dent Company Limited and KC Boyd Enterprises Ltd should not equally apply to Automotive Paintless Techniques. If the focus is on what Mr Boyd knew or understood in respect of corporate matters, then documents which do not appear to have come to his attention in some way do not advance that issue and need not be compiled.

47. By proposed categories 8 to 11, the defendants seek documents going to Mr Boyd’s corporate literacy including a franchise agreement entered into in 2000 (category 8), documents referring to the purchase of real property and any contract for construction of any buildings on such property (category 9), and documents referring to the purchase of a boat (category 10) and a boat berth (category 11) referred to in an affidavit sworn by Mr Boyd in relation to the defendants’ application for security for costs. The plaintiff says that such documents are not relevant and go to Mr Boyd’s credit only. Mr Boyd’s understanding of what a company is or what a franchise agreement means is not a fact in issue.  Documents relating to the acquisition and development of real property and a boat berth have no bearing upon whether Mr Boyd understood the impugned documents when he signed them and could not rationally affect the determination of that issue, except to the extent the documents are signed by Mr Boyd, or concern a corporate entity bearing the signifiers “Pty Limited” before February 2009, which would be caught by categories 1 to 3. Alternatively, categories 9 to 11 should be limited to documents until 1 March 2009, by which time all impugned documents are said to have been signed.

48. The relevant issue in these proceedings is whether Mr Boyd signed and, if so, appreciated the nature of the impugned documents, being documents which concerned his involvement in a corporation and the cessation of that involvement. According to Mr Boyd’s affidavit of 1 September 2019, Automotive Paintless Techniques was incorporated for the purpose of entering into the franchise agreement and thus category 8 may illicit documents which indicate Mr Boyd’s corporate literacy. The fact that Mr Boyd bought a home or did some renovations, or bought a boat and a place to moor it does not tell me anything about his corporate literacy. Categories 9 to 11 may illicit relevant documents if they are restricted to the purchase or improvement of assets using a corporate vehicle. I will permit discovery of documents in these categories as further refined in this way. The temporal limits as suggested by the plaintiffs should also be applied.

49. By proposed category 13, the plaintiffs seek documents, including documents contained on the laptop, hard drive and mobile phones for the period 1 July 1998 to date comprising or referring to:

1. meetings of shareholders of Australasian Hail Network and/or Automotive Paintless Techniques;

2. meetings of directors of Australasian Hail Network and/or Automotive Paintless Techniques;

3. shareholding and/or directorships in Australasian Hail Network;

4. emails to or from Australasian Hail Network, Mr and Mrs Woodlands, Ms Boyd, Moray & Agnew or any legal practitioner other than the plaintiffs’ present solicitors, or accountant concerning or referring to the Memorandum of Understanding or the impugned documents.

51. The plaintiffs do not cavil with category 13, save that categories 13(a) and (b) relate to Automotive Paintless Techniques and any relevant documents will be produced in answer to category 1. Alternatively, categories 13(a) and (b) should be limited to documents signed by Mr Boyd (or emails sent under his name) before February 2009 for the same reasons advanced in relation to category 1. The defendants say that these documents go to Mr Boyd’s knowledge and understanding of corporations generally and Australasian Hail Network specifically and was relevant to his understanding of the impugned documents, whether he knew that he was a director and shareholder of Australasian Hail Network, whether he knew that he had transferred his shareholding in Australasian Hail Network to Mr Woodlands and had resigned as a director of the company, and whether he knew whether the partnership alleged in the Further Amended Statement of Claim ceased to exist with the incorporation of Australasian Hail Network or the Memorandum of Understanding prepared in late 2005.

52. Automotive Paintless Techniques was recently joined to these proceedings. It is not referred to in the Further Amended Originating Process. Its joinder appears to have been because, on the plaintiffs’ case, the joint venture and / or partnership between Mr Boyd and Mr Woodlands was conducted from 2003, in the alternative, through their respective companies until about 2005 when the business came to be conducted through the corporate vehicle of Australasian Hail Network.

53. So far as categories 13(a) and (b) are relevant to Mr Boyd’s corporate literacy, these documents will be captured in respect of Automotive Paintless Techniques by category 1 as I have revised it. So far as the documents are said to be relevant to whether Mr Boyd knew that he had transferred his shares in Australasian Hail Network, I am struggling to see how minutes of meeting of Automotive Paintless Techniques post-March 2009 would shed any light on the matter in circumstances where Automotive Paintless Techniques was never a shareholder of Australasian Hail Network. To the extent that the category is said to be relevant to whether Mr Boyd knew that the partnership between, in the alternative, Automotive Paintless Techniques and Carwook had ceased to exist in 2005 with the incorporation of Australasian Hail Network or a Memorandum of Understanding prepared in late 2005, it is possible that the minutes of meeting of Automotive Paintless Techniques post-March 2009 may shed light on this matter. I will revise the categories accordingly to limit the obligation to disclose further minutes of meeting of Automotive Paintless Techniques, and to avoid confusion have included this in a new category 14.

Laptop, hard drive and mobile phones

54. The defendants seek an order that the plaintiffs produce, for non-destructive testing, the laptop, hard drive and two mobile phones. Alternatively, if Mr Boyd cannot now locate the laptop, the defendants seek an affidavit by Mr Boyd setting out when he first became aware that the laptop could not be located, where and when it was last located, and a detailed explanation of his attempts to locate the laptop including locations searched, the identity of the person or persons who conducted the searches and the times and dates of the searches. The defendants also seek an order that the plaintiffs provide the defendants with the login details of the email account used by the Boyds. In addition, the defendants seek production of Ms Boyd’s cloned hard drive.

55. Whilst the defendants’ Amended Notice of Motion does not identify the power or rule on which these prayers for relief rely, the defendants’ senior counsel ultimately relied on rule 21.10(1)(a) of the Uniform Civil Procedure Rules which provides:

Party A may, by notice served on party B, require party B to produce for inspection by party A—

(a)   any document or thing that is referred to in any originating process, pleading, affidavit or witness statement filed or served by party B, and

(b)   any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue.

56. The initial problem I have is that the defendants’ motion does not refer to the rule nor have the defendants actually served a notice under this rule. Rather, the motion was filed after an order was made by Black J on 20 March 2020 that “any party seeking discovery” was to file a motion by 6 April 2020. Further orders were made by Black J on 16 April 2020 and 23 April 2020 for the defendants to “file and serve an affidavit in support of their application for disclosure addressing the matters specified in paragraph 6 of the Practice Note SC Eq 11”, which provides:

6. Any application for an order for disclosure, consensual or otherwise, must be supported by an affidavit setting out;

- the reason why disclosure is necessary for the resolution of the real issues in dispute in the proceedings;

- the classes of documents in respect of which disclosure is sought; and

- the likely cost of such disclosure.

These orders were made by Black J implementing consent orders submitted by the parties and thus it would appear that disclosure was what the defendants had in mind when the motion and amended motion were filed.

57. In any event, whilst rule 21.10(1)(a) does not refer to the concept of relevance to a fact in issue, and Mr Curtin SC submitted that the rule “has got nothing to do with relevance”, the learned authors of Ritchie’s Uniform Civil Procedure (NSW) observe at [21.10.10]:

… the rule implicitly assumes the likely relevance of a document that has been “referred to” in either a pleading, affidavit or other document to which the rule applies: Quilter v Heatley (1883) 23 Ch D 42. Where the relevance of such a document is controversial, it is for the party resisting production to satisfy the court that production is not required: Jefferson Ford Pty Ltd v Ford Motor Co of Aust [2007] VSC 450; BC200709899 at [30]-[35]. If the court is satisfied that a document has no apparent relevance to a fact in issue, it may dispense with production in response to the notice: UCPR r 21.11.

58. I agree with the learned authors of Ritchie’s Uniform Civil Procedure. The very fact that the drafter of a pleading refers to a document or thing suggests that it is an important component in the relief sought or resisted. Affidavits or witness statements may be more discursive but, again, the fact that a witness refers to a document or thing tends to indicate that it is relevant to the relief sought or resisted. Experience suggests this not always the case where, for example, witnesses take the opportunity to ventilate old grievances which have nothing to do with the proceedings but are perceived by the witness to be relevant or sufficiently important generally to bear repetition.

59. Consistent with the implicit assumption referred to by Ritchie’s, in Noun v Pavey [2014] NSWSC 429 a notice to produce was issued under rule 21.10 of the Uniform Civil Procedure Rules for documents, a laptop and phones referred to in an affidavit. Darke J considered that, when the notice to produce was viewed overall, it was apparent that the issuer was essentially seeking discovery. His Honour set the notice aside as to permit it to stand would subvert Equity Practice Note No 11: at [20]-[21]. Further, as Brereton J noted in Norris v Kandiah [2007] NSWSC 1296, rule 21.10 appears in Part 21 of the Uniform Civil Procedure Rules and is a process of discovery, the touchstone of which is the concept of relevance to a fact in issue in the proceedings: at [3].

60. In any event, the fact that the plaintiffs resist production of these devices requires the Court to consider whether the devices are relevant to any issue in the proceedings. Further, rule 21.10(1)(a) is subject to section 56(1) of the Civil Procedure Act 2005 (NSW), which provides that the overriding purpose of the rules is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

61. The defendants submitted that the plaintiffs have employed, as part of their case, the existence of the laptop; that it contained email files for the email address used by the plaintiffs in communicating with the defendants and with Moray & Agnew; but that the email files recovered from the laptop by the computer company "are mostly corrupted and unable to be viewed." The defendants submitted that it was only after the defendants filed their motion seeking production of the laptop that the plaintiffs by their solicitor asserted that the laptop was missing, the email files were not corrupted and are easily accessible. In such circumstances, it was said to be in the interests of justice to require Mr Boyd to swear an affidavit to explain what had happened.

62. The defendants submitted that they were entitled to challenge Mr Boyd’s evidence that the laptop had been “fried” and to inspect the hard drive in order to cross-examine Mr Boyd about his affidavit evidence that the files on the hard drive were corrupted, so that the defendants could prove that the hard drive files were not corrupted. Similarly for the login details for the email account, My Boyd says he "has been provided" with emails which assist his case but does not identify who provided those emails to him. The defendants submit that they ought to be provided with the login details for the email account to test Mr Boyd's evidence.

63. The plaintiffs opposed this course, submitting that the defendants were simply trying to gain a forensic advantage by requiring such an affidavit to be sworn in circumstances where Mr Boyd will have to verify discovery in any event. The Court should simply make appropriate discovery orders which the plaintiffs accepted would require them to review the laptop, hard drive and mobile phones in order to discover any documents which fell within those categories. By the affidavit sought, the defendants were simply seeking to raise a credit issue on which to cross-examine Mr Boyd. The plaintiffs submitted that the sensible and cost-effective way to deal with this aspect of the defendants’ application was to order the plaintiffs to produce such documents as are accessible on these devices and in the email account which fall in the categories of discovery ordered by the Court.  Such a course causes no prejudice to the defendants, avoids the need to order an appropriate protocol to protect the privacy of Mr Boyd and persons who are not parties to the proceedings and whose sensitive information may be contained on these devices or in the email account, and the risk that the protocol may be inadvertently or otherwise breached.  In the alternative, the plaintiffs proposed a protocol and confidentiality undertaking.

64. The defendants opposed any protocol being put in place to deal with an independent computer expert inspecting the devices or to deal with personal, irrelevant or privileged material which may be found on the devices, as the defendants' solicitors may be able to extract data themselves and are bound by the usual obligations as to confidentiality and use. It was suggested that it was offensive and absurd to consider that the defendants had any interest in trawling through personal material. The defendants’ senior counsel submitted that it could be assumed that the devices did not contain privileged material as no claim for privilege had been made over the hard drive. It is not clear to me why such a claim for privilege would have been made at this stage of the matter when the issue is whether the defendants should be entitled to the devices at all.

65. The defendants resisted the Court adopting the ordinary approach of permitting one party’s legal representatives to review such devices for documents falling within categories of discovery, referring to the late disappearance of the laptop and the fact that the plaintiffs had not disclosed that they had cloned Ms Boyd’s hard drive. To this, the plaintiffs replied that there was no reason why the plaintiffs should have disclosed the existence of the cloned hard drive at this point in time when the issue of discovery is now before the Court (I agree) but if the Court made discovery orders then the cloned computer would obviously be reviewed and any relevant documents discovered.

66. I have set out at [21]-[27] the relevant portions of Mr Boyd’s affidavit of 1 September 2019 in respect of these devices, the evidence of Ms Fox filed in response to the defendants’ motion seeking access to the devices, and recent communications with Ms Boyd’s legal representative as to the cloned hard drive. It does not seem to me that the existence or contents of these devices or email accounts is a relevant issue in the proceedings. It is not clear to me that Mr Boyd’s reference to the state of the hard drive in his affidavit of 1 September 2019 can fairly be described as elevating it to a relevant issue in the proceedings. The material appears to be sought to establish matters going to credit. I repeat what I have said at [2] and [3].

67. Nor do I think there is anything remarkable about what Mr Boyd says about these devices and what Ms Fox has more recently added. I do not think there is any particular inconsistency between Mr Boyd’s affidavit and Ms Fox’s. At the date of swearing Mr Boyd’s affidavit on 1 September 2019, it was the case that his solicitors had been unable to access the contents of the hard drive. Presumably, the reason why the records could not be accessed was conveyed by the solicitors to Mr Boyd and repeated in his affidavit. The defendants’ senior counsel placed considerable emphasis upon the fact that Ms Fox did not say in her affidavit that she had any difficulties with the hard drives and files being corrupted. I place no weight on this. This submission rather assumes that Ms Fox, a solicitor and not a computer technician, knew what corrupted files looked like and was able to say that those files which she could not open on the hard drive – which were manifold – was by reason of the files being corrupted as opposed to any other reason such as her computer lacking the necessary software to open the files. There is nothing inconsistent between what Mr Boyd and Ms Fox has said about the mobile phones: the position is that Mr Boyd has not been able to access the data on the mobile phones and Ms Fox has yet to receive them.

68. More importantly, Ms Fox’s review of the hard drive, to the extent that she has been able to access its records, indicates that the vast majority of its contents are of a personal nature and entirely irrelevant to these proceedings. I do not see anything in the conduct of Mr Boyd or his legal representatives to disqualify them from reviewing these devices in the ordinary way against categories of discoverable documents and producing records by way of a verified list. If it be the case that the defendants take issue with the adequacy of that discovery, then the defendants can agitate the issue further. But I am not prepared to allow the defendants to have unfettered access to these devices, including the cloned hard drive, either subject to a protocol or at all.

Subpoena to New Zealand

69. Finally, the defendants seek leave to issue a subpoena to Ms Boyd in New Zealand in the same terms as the proposed discovery categories, under section 31 of the Trans-Tasman Proceedings Act 2010 (Cth), which provides:

Subpoenas not to be served in New Zealand without leave

(1)   If the proceeding is in an Australian court, the subpoena must not be served in New Zealand without the leave of the court.

…

(3)   Without limiting the matters that the court may take into account in deciding whether to give leave under subsection (1) or (2), the court must take into account:

(a)   the significance of the evidence to be given, or the document or thing to be produced, by the person named; and

(b)   whether the evidence, document or thing could be obtained by other means without significantly greater expense, and with less inconvenience to the person named.

…

The defendants submitted that Ms Boyd had no objection to the subpoena being issued and consented to service by email on her New Zealand legal practitioner.

70. Leave to issue such a subpoena was granted by Davies J in Comeskey v New South Wales Bar Association [2015] NSWSC 12, where the plaintiff had practiced law in New Zealand and now sought admission in New South Wales. In New Zealand, the plaintiff had pleaded guilty to a charge of negligence and two charges of misconduct and was suspended from practice. The New South Wales Bar Association sought the plaintiff’s consent to obtaining documents from disciplinary tribunals and professional bodies in New Zealand but the plaintiff declined. The New Zealand tribunals and law society would not produce the material absent a subpoena. His Honour was satisfied that the documents were relevant to whether the plaintiff was a fit and proper person to be admitted to practice in New South Wales and granted leave. His Honour noted that section 31(3)(a) does not provide any particular test of significance but simply says that, without limiting the matters that the Court may take into account, the Court must take into account the significance of the evidence to be given or the document or thing to be produced: at [15].

70. In Labruyere v Parsons Brinckerhiff Australia Pty Limited (No 3) [2019] NSWSC 79, Lonergan J granted leave to issue a subpoena to 21 recipients in New Zealand in a case where the plaintiff sought damages for personal injury suffered in Australia, including for loss of earning capacity arising from physical and psychiatric disabilities. After the incident, the plaintiff had returned to New Zealand where he had lived ever since. The proposed recipients of the subpoenas were the plaintiff’s post-accident employers and hospital, medical and paramedical treaters as well as his accountant and a New Zealand workers compensation insurer. Her Honour considered that the documents were likely to contain matters of direct relevance and significance to the issues between the parties. The documents could not be obtained by other means without significantly greater expense or inconvenience and were unlikely to be volunteered absent a Court order: at [10]-[11].

71. In Rauland Australia Pty Limited v Law [2020] FCA 516, Stewart J dismissed an application for leave to issue a subpoena, observing at [27]:

… the test for leave to serve a subpoena in New Zealand is more exacting than the test for leave to issue a subpoena. To start, there must be apparent relevance of the documents sought to be caught by the subpoena to the issues in the proceeding. In addition, the documents must be sufficiently significant to justify the expense and inconvenience likely to be caused by service of the subpoena. Greater expense and inconvenience would require greater significance of the documents in order to justify leave being granted. Moreover, if there is a less expensive and less inconvenient way of obtaining the documents, then leave might be refused on that basis.

His Honour concluded that the documents sought had only tenuous relevance and, given the low significance of the subpoenaed documents, refused leave. Suspicion alone was not sufficient to justify the intrusive process of a subpoena on a third party and it was not in the interests of justice that leave be given to issue the subpoena: at [60]. The basis for the issue and service of the subpoena was built upon speculation: at [62]-[63].

73. As to the significance of the document or things sought to be produced by Ms Boyd, I accept that whatever records Ms Boyd retains may touch upon the events the subject of these proceedings as Ms Boyd was the person who ran the administrative side of the Boyds’ businesses. However, it is also readily apparent that the same material can be obtained by other means, being by discovery from the plaintiffs, without significantly greater expense. Indeed, this will result in less expense to the defendants as they will not be obliged to pay Ms Boyd’s reasonable costs of complying with the subpoena. It will certainly result in production of the documents with less inconvenience to Ms Boyd.

74. What I read from the email from Ms Boyd’s legal representative is that, whilst Ms Boyd will comply with the subpoena if issued, Ms Boyd seeks not to be troubled with that exercise by reason of the simple fact that exactly the same material is in the possession of Mr Boyd.

75. There is no reason to think that the plaintiffs’ legal representatives will not review the contents of the cloned hard drive properly in accordance with their obligations. To the extent that the defendants submitted otherwise, this was based on suspicion and speculation akin to that in Rauland Australia. Thus I refuse leave.

Orders

76. For these reasons I make the following orders:

1. Grant the defendants access to documents in MFI-1 apart from ESI-0034.

2. Order the plaintiffs to provide discovery of documents within the following categories by way of a verified list of documents to be provided by 5 June 2020:

1.   Corporate Documents of Automotive Paintless Techniques Pty Ltd which came into existence prior to 1 March 2009 and which are addressed to or from Kane Boyd, which purportedly bear his signature or initials, or which represent that he was present.

2.   Corporate Documents of Kiwi Dent Company Ltd which came into existence prior to 1 March 2009 and which are addressed to or from Kane Boyd, which purportedly bear his signature or initials, or which represent that he was present.

3.   Corporate Documents of KC Boyd Enterprises Ltd which came into existence prior to 1 March 2009 and which are addressed to or from Kane Boyd, which purportedly bear his signature or initials, or which represent that he was present.

4.   Personal taxation returns of the first plaintiff lodged both in Australia and in New Zealand for tax years for the Period.

5.   Company taxation returns of the second plaintiff lodged in Australia for the Period.

6.   Company taxation returns of Kiwi Dent Company Ltd lodged in New Zealand for the period from 1 July 1998 up to and including the financial year ended 30 June 2009.

7.   Company taxation returns of KC Boyd Enterprises Ltd lodged in New Zealand for the period from 1 July 1998 up to and including the financial year ended 30 June 2009.

8.   Documents which came into existence prior to 1 March 2009 and refer to the entering into the franchise agreement in 2000 by the second plaintiff with Paintless Dent Repair Australia (commonly referred to as the Dent Force Franchise), including the franchise agreement itself.

9.   Documents which came into existence prior to 1 March 2009 and refer to the purchase of real property by the first plaintiff using a corporation, and any contract for construction of any buildings on such property, including any correspondence to or from any legal practitioner (other than his present instructing solicitors).

10.   Documents which came into existence prior to 1 March 2009 and refer to the purchase of the Bertram boat referred to in paragraph 42 of the affidavit of the first plaintiff affirmed on 11 November 2019 using a corporation.

11.   Documents which came into existence prior to 1 March 2009 and refer to the purchase of the boat berth referred to in paragraph 42 of the affidavit of the first plaintiff affirmed on 11 November 2019 using a corporation,.

12.   Copies of any portions of affidavits, including annexures or exhibits, which refer to Australasian Hail Network Pty Ltd, the first plaintiff’s directorship of that company (including his resignation therefrom) or the first plaintiff’s shareholding in that company (including transfer of such shares) sworn or affirmed by the first plaintiff for and in respect of the Family Court proceedings in New Zealand referred to in paragraph 14 of the affidavit of the First Plaintiff affirmed on 11 November 2019.

13.   Documents, including documents contained on the laptop, hard drive and two mobile phones referred to in the first plaintiff’s affidavit of 1 September 2019, for the Period, comprising or referring to:

(a)   meetings of shareholders of Australasian Hail Network Pty Ltd;

(b)   meetings of directors of Australasian Hail Network Pty Ltd;

(c)   shareholding and/or directorships in Australasian Hail Network Pty Ltd;

(d)   emails to or from Australasian Hail Network Pty Ltd, Stephanie Woodlands, Adam Woodlands, Carmen Boyd, Moray & Agnew Lawyers or any legal practitioner (other than his present instructing solicitors) or accountant concerning or referring to the Memorandum of Understanding, the Shareholders Agreement, the Deed of Agreement, the Letter of Resignation; and the Standard Transfer Form, referred to in the affidavit of the first plaintiff affirmed on 11 November 2019.

14.   Minutes of meetings of shareholders or directors of Automotive Paintless Techniques Pty Ltd from 1 March 2009 to date which refer to any partnership with the sixth defendant or cessation of that partnership.

Definitions:

“Period” means the period from 1 July 1998 to date.

“Corporate Documents” mean applications for registration of the corporation as a company, applications for shares in the company, correspondence relating to such applications between the company or any director or member of the company and lawyers acting for the company or any director or member of the company, share certificates in the company, consents to act as a director of the company, registers of members of the company, minutes of meetings of the members of the company consents to act as a secretary of the company, minutes of meetings of the directors of the company.

“Documents” mean documents as defined in the Dictionary at the end of the Evidence Act 1995 (NSW).

3. Otherwise dismiss the defendants’ Amended Notice of Motion filed on 29 April 2020.

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Decision last updated: 08 May 2020