In the matter of Eastmark Holdings Pty Limited (receivers and managers appointed) and 1 Denison Street Holdings Pty Ltd (receivers and managers appointed; In the matter of Eastmark Holdings Pty Limited (receivers..

[2015] NSWSC 2075

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Eastmark Holdings Pty Limited (receivers and managers appointed) and 1 Denison Street Holdings Pty Ltd (receivers and managers appointed; In the matter of Eastmark Holdings Pty Limited (receivers and managers appointed) (subject to a deed of company arrangement) & ors [2015] NSWSC 2075

Hearing dates:

22 July 2015

Date of orders:

22 July 2015

Decision date:

22 July 2015

Jurisdiction:

Equity - Corporations List

Before:

Brereton J

Decision:

Interlocutory process dismissed; time for compliance with notices to produce extended.

Catchwords:

PROCEDURE – notices to produce – application to set aside – whether notice complies with (NSW) Uniform Civil Procedure Rules 2005, r 34.1 – whether notice is impermissibly in nature of discovery – whether notice issued for legitimate forensic purpose – not limited to necessity of documents sought – oppression – whether notices cast undue burden on defendant in identifying documents.

Legislation Cited:

(NSW) Uniform Civil Procedure Rules 2005, r 34.1

Category:

Procedural and other rulings

Parties:

In proceedings 2015/22409:
The Owners Corporation of Strata Plan 74602 (plaintiff)
Eastmark Holdings Pty Limited (receivers and managers appointed) (ACN 003 921 953) (first defendant)
1 Denison Street Holdings Pty Limited (receivers and managers appointed) (ACN 156 399 727) (second defendant)

  In proceedings 2015/155286:
The Owners – Strata Plan No 74602 (plaintiff)
Eastmark Holdings Pty Limited (receivers and managers appointed) (subject to a deed of company arrangement) (ACN 003 921 953) (first defendant)
1 Denison Street Holdings Pty Limited (receivers and managers appointed) (subject to a deed of company arrangement) (ACN 156 399 727) (second defendant)
Absolute Investment Opportunity II Limited (ACN 160 726 358) (third defendant)
Secured Asia Pacific Limited (ACN 158 527 130) (fourth defendant)
Philip Patrick Carter (fifth defendant)
Marcus William Ayres (sixth defendant)

Representation:

Counsel:
T E O’Brien (plaintiff)
A Whitby (solicitor) (first and second defendants)
J Burnett (third and fourth defendants)

 

Solicitors:
In proceedings 2015/22409:
Jones Day (plaintiff)
Gilbert + Tobin (first and second defendants)

  In proceedings 2015/155286:
Jones Day (plaintiff)
Gilbert + Tobin (first and second defendants)
King & Wood Mallesons (third and fourth defendants)

File Number(s):

2015/22409; 2015/155286

Judgment (ex tempore)

1. HIS HONOUR: By two notices to produce dated 16 July 2015, the plaintiff required the third and fourth defendants respectively to produce to the Court eight categories of documents, of which category 2 in each case was as follows:

2.    All documents recording advances made, interest or penalties applied or repayments made in respect of the following finance agreements:

(a)   Eastmark Holdings Facility Agreement between the First Defendant, the Third Defendant and others dated 10 May 2011, as amended or restated; or

(b)   Eastmark Holdings Facility Agreement between the First Defendant, the Third Defendant and others dated 1 March 2013, as amended or restated; or

(c)   One Denison Street, North Sydney Loan Notes Subscription Agreement between the First Defendant, Second Defendant, Fourth Defendant and others dated 21 September 2012, as amended or restated,

which you have not already produced pursuant to the previous notices to produce issued to you in this proceeding.

2. By interlocutory process filed on 20 July 2015, the third and fourth defendants originally sought to have paragraphs 2 through 6 of each notice to produce set aside, but the interlocutory process is now pressed only in respect of paragraph 2, set out above.

3. The applicants on the interlocutory process contend first that the paragraph does not comply with (NSW) Uniform Civil Procedure Rules 2005, r 34.1, in that it is impermissibly in the nature of discovery by requiring the recipient of the notice to make a judgment as to whether any particular document is within the class sought. What is impermissible in that contract is a subpoena or notice that requires the recipient to make a judgment as to whether a document relates or pertains to a matter or issue, because by doing so it requires the recipient to undertake a process analogous to discovery. This notice does not do that. It requires production of documents which "record" advances, etc. The question is simply whether the document records – not relates – to the advances. That is apparent on the face of the document, and requires no such judgment as would make the exercise one of discovery.

4. The second complaint is that the notice is not issued for a legitimate forensic purpose. The plaintiff says that the purpose is essentially to ascertain the true status of the accounts under the three agreements referred to, and thus the true financial position of the company. The plaintiff says that because no such statements of account (as are referred to, for example, in paragraph 1 of the notices), apparently exist or have been produced, it is necessary that they reconstruct the accounts from primary records. The third and fourth defendants say that this exercise has been undertaken by them in an internal working document prepared for the purpose of calculating their proof of debt, and that the primary records that underlie it have already been produced. That is not self-evident. I do not see how the transaction documents would prove each individual advance, nor each individual repayment on the accounts in question, which is really what the plaintiffs seek to ascertain.

5. The question of legitimate forensic purpose is not a question of necessity. No party is limited to proving a matter by reliance on one piece of evidence. A party is entitled, at least within reason, to assemble as much evidence as it can on a particular question. The fact that there might be other means of ascertaining or testing the calculations does not mean that it is illegitimate to resort to this means. The notice is, in this respect, issued for a legitimate forensic purpose.

6. The third complaint is one of oppression. Although the applicants have adduced some evidence as to what an earlier notice required them to undertake by way of search in order to identify documents that responded to it, they have adduced no evidence of any estimate as to what would be required by the current notice, nor the time or burden that it would impose. One is, therefore, left to a relatively impressionistic argument. Based on the document that the applicants have tendered, being the internal working document to which I have referred, it seems that it must be possible to identify advances and repayments made on specified dates that are listed in that document. One would suppose that there were contemporaneous documents in the nature of vouchers, cheque butts, bank account statements, MYOB entries and the like which would relate to each of those individual advances or repayments. As the dates of each appear to have been capable of identification, it seems to me unlikely that it is going to cast an undue burden on the defendants to identify such documents.

7. The notice speaks of documents "recording" advances, etc, not merely documents "referring" to such advances. It does not seem to me that the notice requires a search of every document in the third and fourth defendants' possession to ascertain whether it mentions an advance. What is required by the notice is, essentially, the contemporaneous documents of a primary nature that record or evidence the advance, repayment or other matter referred to in the notice.

8. The interlocutory process filed by the third and fourth defendants on 20 July 2015 is dismissed with costs.

9. The Court orders that the time for compliance with the subject notices to produce be extended to 27 July 2015, and that the notices be adjourned to the Corporations Judge motions list on that day.

**********

Decision last updated: 11 March 2016