Irwin v Piper Alderman (No 2)
[2011] SASC 86
•20 May 2011
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
IRWIN v PIPER ALDERMAN & ORS (No 2)
[2011] SASC 86
Reasons of Judge Lunn a Master of the Supreme Court
20 May 2011
PROCEDURE
Subpoena for documents returnable before the Registrar - subpoena lodged for issuing by defendants 1 and 2 seeking files kept by a firm of accountants - Registrar held under 6R 53 the subpoena to be an abuse of process as being an attempt to obtain general disclosure of documents from the accountants - defendants seek order for its issue - whether subpoena should be issued for documents obtainable through disclosure by parties - whether there should be a 6R 146 application for non-party disclosure by the accountants - held breadth of documents sought in subpoena made it unreasonable to expect accountants to make a proper response to it - Registrar directed not to issue it.
IRWIN v PIPER ALDERMAN & ORS (No 2)
[2011] SASC 86JUDGE LUNN:
Reasons on first and second defendants’ request to issue a subpoena for documents
This is a complex action in which one executor and beneficiary in a deceased estate is suing his co-executors, the other beneficiaries and the solicitors for the estate.
The first and second defendants (“Pipers”) have requested the Registrar to issue a subpoena for documents against an accounting firm of Ernst & Young (“E&Y”) which is to be returnable before the Registrar. The proposed subpoena seeks the following documents:
The documents and things you must produce are as follows:
1.Ernst & Young’s file (including all documents, correspondence, memoranda, emails, file notes, calculations and working papers) relating to services provided by Ernst & Young in any way relating to Bonshaw Pty Ltd ACN 007 587 760 from 4 November 2005 to date.
2.Ernst & Young’s file (including all documents, correspondence, memoranda, emails, file notes, calculations and working papers) relating to services provided by Ernst & Young to The Estate of James Campbell Irwin (deceased) from 4 November 2005 to date.
The Registrar formed the opinion that the subpoena was an abuse of process because its breadth was such that it was impermissibly seeking disclosure of documents from E&Y. Under 6R 50(5) he has referred the matter to me for a direction whether the subpoena is to be rejected. I have heard submissions from Senior Counsel for Pipers on why the subpoena should be issued. Notice of the hearing was given to the other parties to the action. They either supported the issue of the subpoena or took no position on it. Notice of the proposed subpoena has not been given to E&Y.
For the purposes of disposing of the present matter I accept the test is as put forward by counsel for Pipers that the subpoena will only be an abuse of process if it requires E&Y to form a judgment about what documents are relevant in the action so as to be able to make a proper response to the subpoena.[1] The documents sought in the proposed subpoena are described in extremely broad terms. The references to “file” are of little significance[2] because, in effect, it is a request for all documents relating to services provided by E&Y relating to Bonshaw Pty Ltd (“Bonshaw”) and the estate of James Campbell Irwin (“the Estate”). The request is not limited to documents generated by E&Y for any particular client, but encompasses the documents for whoever its clients may have been. It is not limited to services provided by E&Y to Bonshaw and the Estate but covers any document relating to them. It extends to documents generated over a period of about five and a half years.[3] The issue is whether E&Y could reasonably be expected to be able to differentiate on the documents they possess, which come within the broad description in the subpoena, between those which are relevant to issues raised in this action and any which are not. While it is clear that E&Y has had a substantial involvement in many of the transactions which are dealt with in the pleadings, this does not mean that they are reasonably able to differentiate between the documents which are relevant to the issues arising out of those transactions which are in issue on the pleadings and any which are not. I do not accept that every document which is held by E&Y within the documents described in the subpoena, is likely to be relevant. There is little doubt that many, and possibly even most, of the documents held by E&Y are relevant, but it is not clear that they all are relevant. E&Y is not to be required to produce all such documents and then to have the parties to the action who inspect them decide which are relevant and which are not. Insofar as its documents are not relevant, E&Y is not to be obliged to produce them where it cannot reasonably be expected to differentiate between relevant and irrelevant documents. In that case the proper course is for a party to bring an application under 6R 146 for non-party disclosure of documents against E&Y.
[1] National Employers Mutual Ltd v Waind [1978] 1 NSWLR 372, particularly at 382; Territory Insurance Office v Kouimanis Enterprises Pty Ltd (2002) 171 FLR 245; Temwell Pty Ltd v DKGR Holdings Pty Ltd [2002] FCA 741; Bevillesta Pty Ltd v Perpetual Nominees Ltd [2010] NSWSC 1198.
[2] There is an assumption that E&Y only has a single file for each of Bonshaw and the Estate, but there may well be many such files which contain the documents as described in the subpoena.
[3] 4 November 2005 was the death of the deceased.
Where it is unclear whether a subpoena for documents amounts to an abuse of process, the Court, in the interests of justice, may take into account in the exercise of any discretion that the issue of such a subpoena can impose a considerable burden on the Registrar of the Court. The Registrar will be required to take possession of what could well be a considerable quantity of documents and to be responsible for them for a substantial period of time. The Registrar has to supervise who inspects and copies these documents and when this occurs. All this can be a substantial imposition on the resources of the Registrar. This does not usually occur if the documents are obtained under 6R 146.
There is a principle that non-party disclosure under 6R 146 will not be ordered where the documents in question can be obtained by disclosure processes under 6R 136 from another party to the action.[4] A similar principle should also apply in respect of subpoenas for documents returnable before the Registrar under 6R 173(6). This avoids an undue imposition on the Court’s resources as mentioned above.
[4] Williams Aviation Pty Ltd v Santos Ltd (1985) 40 SASR 272.
As will be shown by the quotations from the pleadings set out later in these reasons, there is considerable uncertainty and dispute about who in the context of the transactions pleaded in this action were the principals or clients of E&Y. Insofar as it can be shown that in particular transactions they were acting as the agent of one or more parties to the action, the documents which they hold relating to that transaction should be in the possession[5] of its principal and should initially be disclosed by that principal as part of its disclosure of documents in this action. There should only be a resort to 6R 146 or subpoenas in those situations where it is shown that the documents cannot be obtained from the principal/party. Various parties to this action are the directors of Bonshaw and it would seem that insofar as E&Y was acting for Bonshaw, those directors would be likely to have such documents in their power so that they could make disclosure of them.
[5] As widely defined in 6R 4.
Which of the documents as described in the subpoena are relevant is to be deduced from the current pleadings. It is a tortuous exercise. I now quote all of the paragraphs from the Amended Statement of Claim (FDN14) which mention or apparently refer to E&Y:
27. The terms and conditions of the Contract included that Piper Alderman would:
…
27.3 in fact provide to Campbell Irwin, in a proper and timely fashion, all the Legal Advice and Services which he required in his capacity as an Executor and Trustee of the Will;
…
28.The Legal Advice and Services referred to in paragraphs 27.2 and 27.3 above included those necessary to…
28.7 engage such external consultants including accountants as may be required to assist in discharging the above duties, including ensuring that those consultants themselves provided proper advice in a timely fashion and at a reasonable cost;
…
39.2 The November 2005 Meeting was attended by Mr Piper of Piper Alderman, Mr Don Cormack of the firm Ernst & Young (‘E&Y’), and each of Campbell, Angus, James and Ann Irwin in their capacities as the (then) executors of, and beneficiaries under, the Estate.
…
40.2.5 Specifically, it was agreed by each of Campbell, Angus and James Irwin that:
…
(c)The Neutrog Interests would be valued, as at Date of Death, by the firm Tilbrook Rasheed, and E&Y would review that valuation to confirm its accuracy.
…
41.During February 2006, there was a further meeting (‘the February 2006 Meeting’) between the participants at the November 2005 Meeting, …
…
42.6 on dates unknown to Campbell Irwin but in or prior to June 2006, Tilbrook Rasheed valued the Neutrog Interests as at Date of Death, and E&Y subsequently reviewed that valuation; and
42.7 on various occasions (including shortly following the November 2005 Meeting, and in March 2007 and in October 2007), E&Y (as Piper Alderman’s agents) produced tables headed ‘Allocation of Estate Assets’ which purported to reflect the adjustments referred to in paragraphs 40.2.5(d) to (g) inclusive.
…
48.1 In or about May 2006, James Irwin instructed Piper Alderman, or alternatively E&Y as Piper Alderman’s agents, to require Mr Wapper to review the Wapper valuations, and to do so in accordance with certain submissions put forward by James Irwin;
48.2 Piper Alderman, or alternatively E&Y as Piper Alderman’s agents, acted on the instructions referred to in paragraph 48.1 above;
…
49.1 James Irwin asserted to Piper Alderman, or alternatively to E&Y as Piper Alderman’s agents, that he disputed the revised valuation of the Bonshaw land …
49.2 James Irwin asserted to Piper Alderman, or alternatively to E&Y as Piper Alderman’s agents, that he disputed the valuation of Kostera …
…
51.By letter dated 5 September 2006, E&Y (as Piper Alderman’s agents) provided to Mr Wapper a copy of the Knight Frank valuation, and requested that Mr Wapper comment in relation to the same. By doing so, Piper Alderman (through their agents, E&Y) further acted for James Irwin in relation to James Irwin’s said dispute of the Wapper valuations.
52.By letter dated 26 September 2006, Mr Wapper wrote to E&Y (as Piper Alderman’s agents) advising (amongst other things) that ‘I still consider the values I placed on these properties as at November 2005 to be fair market value.’
…
67.On or about 1 May 2008, there was an ‘allocation’ between Campbell, Angus and James Irwin in respect of VR, VA and VJ, in accordance with a table, headed ‘Final Allocation of Estate Assets’, which was prepared in April 2008 by E&Y as Piper Alderman’s agents.
…
71.… Piper Alderman, …
71.1 wholly failed, at least until about August 2006, to provide any of the Legal Advice and Services, and effectively abrogated all of their responsibilities to their agents E&Y who were plainly not appropriate, or in a position, to advise in relation to the administration of the Estate, or provide the Legal Advice and Services;
…
74.… by reason of the Piper Alderman breaches … Campbell Irwin suffered additional losses of between $100,000 and $200,000 in respect of:
…
74.4 Piper Alderman’s and Ms Yule’s failure to manage the expenditure of the Estate in relation to accountants’ fees and, in particular, allowing manifestly excessive and unnecessary fees to be incurred by E&Y.
Campbell Irwin will provide further particulars of the above losses following discovery and inspection herein.
The references to E&Y in the Second Defence of Pipers (FDN18) are as follows:
68.3 all of the Executors and beneficiaries accepted the correctness of the Table, such acceptance being communication by (amongst other things) the execution by them of documents:
…
69.1 on or about 8 April 2008, Matthew Bartemucci of Ernst & Young sent an email to Ms Yule, Campbell Irwin, James Irwin and Angus Irwin advising that following receipt of advice from the Ernst & Young Liquidator Group, it was recommended that the shares in Bonshaw Pty Ltd be sold (in an off market transfer) to each of the beneficiaries in proportion to their predetermined percentage before Bonshaw Pty Ltd entered into a Members Voluntary Liquidation, with the result being that each of the beneficiaries would have a liability to Bonshaw Pty Ltd equal to the market value of the assets they received;
69.2 by email from the plaintiff’s solicitor, Laurie Warnick, to Matthew Bartemucci of Ernst & Young dated 14 April 2008 it was stated that (the plaintiff) “will be guided by you on the preferred way to distribute the Estate and wind up Bonshaw Pty Ltd”;
69.3 the procedure as recommended by Ernst & Young in paragraph 69.1 herein was subsequently agreed to and adopted by all of the Executors; and
…
75.They plead the following preliminary issues, special defences and material facts relied upon:
75.6they did not retain Ernst & Young, nor were Ernst & Young their agents;
75.7 Ernst & Young were retained directly by the then Trustees/Executors of the Estate (then comprising the plaintiff, James Irwin, Angus Irwin and Ann Irwin) immediately upon the death of the deceased to assist them to administer the Estate, noting that Ernst & Young had been the deceased’s personal accountants for many years and were in the most appropriate position to provide assistance to advise the Trustees/Executors of the Estate with respect to eh assets and liabilities of the Estate;
…
75.9 at all material times they reasonably kept each of the Trustees/Executors of the Estate (including the Plaintiff) informed as to the progress of the matter be telephone, email and/or letter, and advised them as to their options in terms of their retainer with Ernst & Young and they will refer to the contents of the file maintained by them which evidences the fact and frequency of such communications;
…
75.12 insofar as there may have been any delay in the obtaining of probate or the distribution of the Estate, such delay was not caused by any act or omission on the on the part of either the First Defendant or the Second Defendant and was caused by:
…
75.12.4delays on the part of Ernst & Young in appropriately finalising the list of assets and liabilities necessary to obtain a grant of probate;
…
75.12.6subsequent delays by Ernst & Young in providing up to date valuations to enable a distribution of the Estate;
…
75.16 If the Plaintiff suffered any loss (which is denied) such loss was not caused by the acts or omissions of either the First Defendant or the Second Defendant but by:
…
75.16.2Ernst & Young’s failure to invest the cash holdings of the Estate from time to time in an interest bearing account until being expressly advised to do so by the Second Defendant immediately upon her discovery of such fact and/or;
75.16.3excessive or unnecessary fees charged by Ernst & Young;
and the liability of the First and Second Defendant to the Plaintiff (if any) is apportionable in accordance with the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001.
The references to E&Y in the plaintiff’s Reply to that Defence (FDN22) are as follows:
2.1as and from at least the time of the November 2005 Meeting, Piper Alderman had appointed E&Y as their agents for the purposes of the provision of financial and accounting advice in relation to the Estate of the Deceased;
2.2the Deceased’s said expenses and debts were known to and ascertained by E&Y (who had at all material times been the Deceased’s accountants) as and from the time of or shortly after the death of the Deceased;
…
3.2the said expenses and debts were known and ascertained by E&Y and Piper Alderman prior to Ms Yule’s appointment as an executor and trustee of the Estate in August 2006 and accordingly, as and from the time of her said appointment, Ms Yule owed duties as trustee to the beneficiaries of the residuary estate in relation to the Trust.
…
14.On or about 25 February 2008, E&Y provided certain advice in relation to the distribution of the Estate of the Deceased (‘the E&Y advice’) and, in particular, in relation to a proposal (identified by E&Y as ‘Option A’) by which the executors of the Estate might liquidate Bonshaw Pty Limited and then distribute its former assets, rather than first distributing the Deceased’s 25,203 shares in Bonshaw Pty Limited (as referred to in paragraphs 10 to 12 inclusive of this Reply) and then liquidating Bonshaw Pty Limited and distributing its former assets (identified by E&Y as ‘Option B’).
Particulars
Letter from Ernst & Young addressed to the executors of the Estate,
c/- Ms Yule, and dated 25 February 2008.
15.At all material times, E&Y were the agents of Piper Alderman and Piper Alderman adopted the E&Y advice or, alternatively, acquiesced in the E&Y advice, and therefore, by implication, recommended to the parties, including Campbell Irwin, to adopt the E&Y advice (‘the Piper Alderman recommendations’).
16.The E&Y advice and the Piper Alderman recommendations were unnecessary, or, alternatively, there was gross and unreasonable delay in Piper Alderman procuring or providing the same.
…
16.2 the E&Y advice and the Piper Alderman recommendations were, in the circumstances set out in paragraph 16.1 above, unnecessary;
16.3 if (which is denied) the E&Y advice and the Piper Alderman recommendations were proper and necessary, then the relevant subject matter of that advice was not complex or difficult and Piper Alderman should have provided, but failed to provide, that advice as soon as reasonably possible (and within no more than three to six months) following the death of the Deceased;
16.4 both E&Y and Piper Alderman delayed for approximately two years and three months in providing or procuring the advice the subject of the E&Y advice and the Piper Alderman recommendations.
…
20.On or about 8 April 2008, E&Y varied (‘the varied E&Y advice’) the E&Y advice.
Particulars
Email from E&Y to Ms Yule dated 8 April 2008 stating:
20.1 a liquidator of Bonshaw Pty Limited would first require a ‘tax clearance’ such that E&Y had to ‘re-visit our approach’;
20.2 the listed shares in Bonshaw Pty Limited should ‘… be sold (via off market transfer) to the beneficiaries in proportion to their pre-determined percentage …’ before Bonshaw Pty Limited was wound up;
20.3 the transaction described in paragraph 20.2 of this Reply would result in ‘… each beneficiary having a liability to Bonshaw Pty Ltd equal to the market value of the assets they receive [and] will result in Bonshaw Pty Ltd being able to determine its income tax liability …’; and
20.4 ‘… we now believe the most efficient and effective way to liquidate Bonshaw Pty Ltd would be in the Estate’s name and then for the Estate to distribute the remaining assets of Bonshaw Pty Ltd’ (that is, Option A instead of Option B).
21.By email on 14 April 2008, MacDonnells Law informed E&Y that ‘Generally, Campbell will be guided by you on the preferred way to distribute the estate and wind up Bonshaw …’. In doing so, Campbell Irwin communicated his reliance on the advice of E&Y.
…
23.James Irwin did not evince any intention to proceed with Option A instead of Option B and, by letter to Piper Alderman dated 11 April 2008, his solicitors:
…
23.2 required Piper Alderman to ‘confirm that your tax and stamp duty experts agree with the analysis of Ernst & Young’.
24.Piper Alderman failed to provide the confirmation of their tax and stamp duty experts as referred to in paragraph 23.2 of this Reply.
25.In the alternative to paragraph 24 of this Reply, and by reason of their silence, Piper Alderman adopted the varied E&Y advice or, alternatively, acquiesced in the varied E&Y advice, and therefore, by implication, recommended to the parties, including Campbell Irwin, to adopt the varied E&Y advice (‘the varied Piper Alderman recommendations’).
26.Campbell Irwin ‘generally’ accepted and was ‘guided by’ the varied E&Y advice, and the varied Piper Alderman recommendations, as:
26.1 the said advice and recommendations appeared to him to relate to matters of complexity (including an apparently complex application of accounting, stamp duty and taxation law principles); and
26.2 Campbell Irwin relied upon E&Y and Piper Alderman and accepted their said advice and recommendations, and it was reasonable for him to do so.
27.Further, or in the alternative, to paragraph 26 above, Campbell Irwin accepted the varied E&Y advice and the varied Piper Alderman recommendations in order to mitigate the ongoing loss he was suffering as a result of the failure of Piper Alderman, as referred to in the Statement of Claim and as referred to in paragraph 13 of this Reply, to provide appropriate and timely advice to enable the administration and distribution of the Estate to occur.
28.By accepting the varied E&Y advice and the varied Piper Alderman recommendations, Campbell Irwin did not, as a matter of fact or law, release Piper Alderman from, or waive, any rights or remedies Campbell Irwin had or has against Piper Alderman in the event the varied Piper Alderman recommendations were inappropriate, or in relation to any other acts or omissions of Piper Alderman.
29.The said acceptance by Campbell Irwin (and also by Angus Irwin) of the varied E&Y advice and the varied Piper Alderman recommendations did not, as a matter of fact or law, comprise, constitute or evidence a contract between the parties, whether in the nature of the agreement (‘the Alleged Agreement’) referred to in paragraphs 67.3 or 69.3 of the Defence, or otherwise.
30.If (which is denied) there was an agreement in the terms of the Alleged Agreement, then any such agreement was not binding on Campbell Irwin as Campbell Irwin did not intend to enter into legal relations in respect of it.
Campbell Irwin was merely seeking to follow and implement the varied E&Y advice and the varied Piper Alderman recommendations as to the best mechanism for the distribution of the estate of the Deceased, having regard to taxation and stamp duty implications.
…
35.Further, or in the alternative, to paragraph 34 of this Reply, it was a condition of the Alleged Contract that E&Y and, or, Piper Alderman would ensure that sufficient cash monies were retained in the Estate and, or, Bonshaw Pty Limited to meet all relevant taxation obligations (‘the Tax Condition’).
…
35.2 email from Mr Botten to Mr Jappe dated 31 January 2008 stating that his client would ‘prefer “immediate” distribution but holding back a generous amount to account for E&Y’s estimation of tax...’;
…
35.5 email from Mr Bartemucci of E&Y to Ms Yule dated 15 February 2008 attaching a document containing proposed steps required to wind-up Bonshaw Pty Limited and the Estate including: ‘...6. Confirm the income tax liability of Bonshaw Pty Limited that will arise on the transfer of company assets to the beneficiaries; 7. Confirm what shares are to be sold in Bonshaw Pty Ltd in order to realise enough cash in the company to pay Bonshaw Pty Ltd’s income tax liability; 8. Transfer the assets to the beneficiaries...’;
35.6 email from Mr Bartemucci of E&Y to Ms Yule, Campbell, Angus and James Irwin dated 8 April 2008 proposing to seek advice ‘... on which shares to sell in order to realise enough cash in Bonshaw Pty Ltd to meet it’s [sic] income tax liability that will arise on the deemed sale of its assets.’;
35.7 email from Mr Bartemucci of E&Y to Ms Yule, Campbell Irwin, Angus Irwin and James Irwin dated 23 April 2008 stating that E&Y will seek an indication of ‘... which shares are to be sold in order [to] obtain the required funds to pay the income tax liability that will arise on the transfer of these shares...’; and
35.8 email from Mr Bartemucci of E&Y to Ms Yule, Campbell, Angus and James Irwin dated 1 May 2008 referring to the ‘... share holdings [that] are to be sold in order to raise the required funds in respect to the tax liability that will arise as a result of these transfers...’;
38.In breach of the Tax Condition, Piper Alderman (whether by themselves, or through E&Y) failed to ensure that sufficient cash monies were retained in the Estate and, or, Bonshaw Pty Limited to meet all relevant taxation obligations …
To succeed, Pipers need to show that all of the documents on the files of E&Y would be relevant. Counsel for Pipers relied principally on the pleadings in paragraphs 74.4 of the Amended Statement of Claim and 75.16.3 of their Defence. I do not accept this. Sub-paragraph 74.1 is an unsatisfactory pleading.[6] The plaintiff has only pleaded that E&Y was the agent of Pipers. He has not pleaded any retainer between the Estate and E&Y. The pleas in the Reply about Pipers in the alternative acquiescing in advice from E&Y given to other unspecified persons would seem to be a different cause of action which probably should be pleaded in the Statement of Claim and not in the Reply. There is no plea that Pipers paid any fees to E&Y for its work for it, or that Pipers charged those disbursements to the estate.[7] Sub-paragraph 74.4 says the plaintiff would provide further particulars following discovery and inspection. Disclosure has been made by Pipers, but no further particulars have been put forward by amendment to the plaintiff’s pleadings.[8] Presumably Pipers have disclosed whatever accounts or invoices for fees they received from E&Y which would form the basis for the particulars.[9] There is nothing in the pleadings to tell either the Court or E&Y what are the excessive and unnecessary fees. The implication from the pleading of 74.4 is that it is not all of the fees of E&Y, but only those which were excessive and unnecessary. The only relevant documents are those which relate to what is alleged to be excessive or unnecessary and not to other fees which are unobjectionable. It is likely to be impossible for E&Y to limit their disclosure under the proposed subpoena to relevant documents about their fees because they will not know which of their charges are being attacked and which are not. There is no good reason why they should disclose documents relating to all of their fees charged over a five and a half year period when at least some, and possibly many, of them will not be in issue.
[6] I do not follow how the alleged excessive and unnecessary fees were “incurred by E&Y” – presumably it means fees of E&Y incurred by Pipers.
[7] I was told from the bar table that the fees of E&Y exceeded $200,000, but that is not contained in the affidavits and I have no evidence about the client to which they were charged.
[8] Or as far as I am aware, in any informal way.
[9] If E&Y charged its fees to the Estate, they may be outside the scope of the plaintiff’s pleading that E&Y was acting as the agent of Pipers.
The proposed subpoena seeks the documents specified for a period “to date”. Presumably this means to the date of the subpoena. I do not comprehend how the generality of the documents sought can all be relevant for at least the period from the institution of this action on 5 November 2009 to the present. It may be that some of them would be, but I do not see how E&Y could reasonably ascertain them.
Accordingly, I find that the proposed subpoena is in the nature of an attempt to obtain general disclosure of documents from E&Y and it would be oppressive to require E&Y to respond to the subpoena by differentiating between those documents in the classes sought which are relevant and those which are not.[10] Accordingly, I will direct the Registrar to refuse the issue of the subpoena.
[10] There may be a separate issue of oppression based on the time and effort which it would take for E&Y to comply with such a subpoena, but that is a point which would be left for E&Y to take if it was to be served with such a subpoena.
Under 6R 116(1) the Court has the power and duty to manage the litigation to the extent necessary to ensure that it is conducted as expeditiously and economically as is consistent with the proper administration of justice. Having examined the pleadings for the purpose of the proposed subpoena I invite the consideration of the parties to the following points:
·the plaintiff needs to make it clear whether it is running a case in the alternative that E&Y was an agent of the Estate if it was not acting as an agent of Pipers;
·the plaintiff needs to decide whether it will seek to join E&Y as an additional defendant to the action;
·Pipers need to decide whether they will issue any third party notice against E&Y in the event that the plaintiff’s plea that E&Y was the agent of Pipers is upheld;
·in view of the significant dispute about who E&Y was acting for, there needs to be proper pleading of how any agency relationships between Pipers and E&Y, and E&Y and the Estate, were created;[11]
·the plaintiff needs to consider whether to plead that any fees charged by Pipers to the Estate should be recovered in a similar way to the plea in sub‑paragraph 74.4 concerning the fees of E&Y.
These issues need to be addressed without delay. If parties elect not to pursue them, which they are entitled to do, it will be taken into account by the Court at a later stage of the action if a party then tries to pursue a course that they were given the opportunity to address at this stage but elected not to pursue.
[11] Where agency is disputed, it is not sufficient to plead it as a fact. The facts from which it is to be concluded must be pleaded.
I have today made the following orders:
1Direction to the Registrar under 6R 53(3) that the subpoena lodged by the first and second defendants for issuing against Ernst & Young be rejected.
2No order as to costs.
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