Lafferty v Waterton [No 2]
[2017] WASC 84
•24 MARCH 2017
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: LAFFERTY -v- WATERTON [No 2] [2017] WASC 84
CORAM: ALLANSON J
HEARD: 20 MARCH 2017
DELIVERED : 24 MARCH 2017
FILE NO/S: CIV 1855 of 2013
BETWEEN: SUSAN JUANITA LAFFERTY
Plaintiff
AND
WILLIAM FRANK WATERTON AND MADELAINE PEGGY JUNGSTEDT IN THEIR CAPACITIES AS EXECUTORS OF THE ESTATE OF THE LATE PEGGY JUANITA WATERTON
First DefendantWILLIAM FRANK WATERTON
Second DefendantMADELAINE PEGGY JUNGSTEDT
Third Defendant
Catchwords:
Practice and procedure - Non-party discovery applications - Whether documents relate to any matter in question in the action - Turns on own facts
Practice and procedure - Non-party discovery applications - Application against solicitors - Whether non-party is proper addressee of process - Where party to proceedings has interest in documents sought - Turns on own facts
Costs - Costs of a party in response to a non-party discovery application - Where application unreasonably maintained - Indemnity costs - Turns on own facts
Costs - Costs of non-party in non-party discovery application - Where application granted - Whether response to application was unreasonable - Turns on own facts
Legislation:
Administration and Probate Act 1958 (Vic), Pt IV, s 91
Family Law Act 1975 (WA), s 72
Rules of the Supreme Court 1971 (WA), O 26A, O 1 r 4B
Supreme Court Act 1935 (WA), s 37(1)
Result:
Applications granted in part
Costs orders made
Category: B
Representation:
Counsel:
Plaintiff: Mr G M G McIntyre SC
First Defendant : Mr D A Lenhoff
Second Defendant : Mr M N Solomon SC
Third Defendant : Mr M W Fatharly
First Non-party : Ms C H Thompson
Second Non-party : Mr M Curwood
Third Non-party : Mr T N Owen
Solicitors:
Plaintiff: Kings Park Corporate Lawyers
First Defendant : Lenhoff & Associates
Second Defendant : Williams & Hughes
Third Defendant : Kott Gunning
First Non-party : Nielsen & Co
Second Non-party : McCracken & McCracken Lawyers
Third Non-party : Clairs Keeley
Case(s) referred to in judgment(s):
Carter v Managing Partner, Northmore Hale Davy & Leake [1995] HCA 33; (1995) 183 CLR 121
Corporate Systems Publishing Pty Ltd v Lingard [No 3] [2008] WASC 1
Fairfax Media Publications Pty Ltd v West Australian Rugby Union Inc [2008] WASCA 123
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; (1988) 81 ALR 397
Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101
Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641
Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316
Jones (a pseudonym) v Smith (a pseudonym) [2016] VSCA 178
McCarthy v Dolpag Pty Ltd [2000] WASCA 106
Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341
Rochfort v Trade Practices Commission [1982] HCA 66; (1982) 153 CLR 134
Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505
Waller v Waller [2008] WASC 51
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60
ALLANSON J: The plaintiff sues for equitable relief against three defendants. The action began in 2013 and is listed for trial in August 2017. There are still unresolved issues relating to discovery. These reasons deal with the second defendant's application for discovery from a non-party; and eight discrete applications by the plaintiff for discovery from non-parties, as well as the costs of the applications.
An application by the plaintiff for further discovery against all defendants was adjourned because of the potential for the parties to resolve it by agreement. One application by the plaintiff for discovery from a non‑party ceased to be relevant when the documents were provided to her.
In the course of dealing with each application, I briefly stated my reasons for each conclusion and told the parties I would consolidate those reasons into a single judgment and deliver full reasons in writing.
Background
The parties are all members of one family. The plaintiff, the second defendant and the third defendant are the children of Peggy Juanita Waterton and William Waterton (both now deceased). I will refer to the parents as Mr and Mrs Waterton, and the other parties by their role in the proceedings.
Mr Waterton died in the State of Victoria on 3 December 2003. The second defendant was the executor of his will. Probate of his will was granted by the Supreme Court of Victoria on 22 July 2004. His entire estate was left to Mrs Waterton.
When these proceedings commenced in 2013, Mrs Waterton was the named first defendant. She died on 8 August 2015. Probate was granted to the second and third defendants, as the executors of her estate, on 18 January 2016. On 22 December 2016, the master ordered that the executors be made parties to the proceedings as the first defendant.
Following a hearing on 17 February 2017, the court ordered the plaintiff to file and serve an amended statement of claim by 3 March 2017. The plaintiff filed a substituted statement of claim dated 13 March 2017. The second defendant has filed a substituted defence.
With the substitution of the statement of claim, the basic issues between the parties have not changed.
The plaintiff pleads, that as a natural child of Mr Waterton she was entitled to apply for a family provision order under pt IV of the Administration and Probate Act 1958 (Vic). In the substituted statement of claim, the plaintiff now alleges:
(1)Mr Waterton had a moral duty to provide for her maintenance and support; and
(2) she is not and was not at the time of Mr Waterton's death capable by reasonable means of providing for her maintenance and support.
In par 9, the plaintiff pleads that, at the time of her father's death, she was 51 years old, employed as a receptionist in London, and married to a legal practitioner who was working as a law clerk in London. She also pleads:
(a) the value of the deceased estate of Mr Waterton and the nature of the property in it;
(b) that Mrs Waterton was then 80 and wholly dependent on Mr Waterton;
(c) the second defendant was 53, married with no dependents and not dependent on Mr Waterton; and
(d)the third defendant was 41, the owner of a business, married with a 6‑year‑old child, and not dependent on Mr Waterton.
Any pt IV application was required to be made within six months of the date of the grant of probate of the will.
The plaintiff pleads that in or about March 2004, Mrs Waterton represented, by letter, that the estate Mrs Waterton had inherited from her husband and any assets of her own, subject to what may be expended for her proper maintenance and support during her lifetime, would, upon her death, be divided in equal shares between the three children: par 19. The plaintiff pleads that the representation induced an assumption and expectation to that effect. Acting in reliance on the representation and induced thereby, the plaintiff refrained from making an application for provision from her father's estate on or before 22 January 2005 or at all: par 20.
The plaintiff pleads that Mrs Waterton made substantial gifts of money and personal property to both the second and third defendants. In 2011, Mrs Waterton also established a trust in which her right, title and interest in a property in Claremont is held for and on behalf of the third defendant's son: pars 21 ‑ 23.
The plaintiff pleads that Mrs Waterton evinced an intention not to be bound by the representation, and acted in a manner as to ensure she would be unable to fulfil it: pars 24 ‑ 25. She pleads that she has suffered loss and damage in that any entitlement she may have had in respect of the estate of Mr Waterton is no longer available to her.
The plaintiff further pleads that the second and third defendants knew of the terms of the representation and knew or ought to have known of Mrs Waterton's intention not to be bound by it in receiving transfers of assets from her: pars 28 to 30.
The plaintiff claims that Mrs Waterton and her executors are estopped from acting other than in accordance with the assumption and expectation she induced: par 31.
While the plaintiff pleads that Mrs Waterton and the other defendants knew that Mrs Waterton had sent the letter in 2004, she does not plead that any of them knew or ought to have known that the plaintiff relied on the representation to her detriment before about November 2012. The plaintiff pleads that by letter dated 27 November 2012 from Mrs Waterton's solicitor, she denied having made the representation and denied that she had made any representation intended to be relied upon by the plaintiff: par 26.
The measure of compensation
The plaintiff claims compensation on alternative bases. At this stage of the proceedings it is not desirable to reach any conclusions about the measure of the relief the plaintiff would obtain should she succeed in her claim. In general terms, the relief is protection from the detriment that would flow from her change of position if the assumption or expectation that led to it were deserted: Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 418 ‑ 419 (Brennan J); Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, 674 ‑ 675 (Dixon J). That protection could be achieved by compelling Mrs Waterton's estate to adhere to the assumption on which the plaintiff acted, including by requiring the estate to perform the promise or the expectation generated by the promise: Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101, 112 [6], 123 ‑ 125 [40] ‑ [48]; Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505. Alternatively, the requirements of good conscience may mean that enforcing the promise is not the just measure of relief: Sidhu v Van Dyke [84] ‑ [85]. This may include where the potential damage to the estate is disproportionately greater than any damage sustained by the plaintiff.
The plaintiff pleads these alternatives in pleading that one third of the estate of Mr Waterton and any assets of Mrs Waterton's own, subject to what may have been expended 'for her proper maintenance and support during her lifetime', are subject to a constructive trust in favour of the plaintiff: par 32(a). She also claims constructive trusts of a one third interest in specified property, including the property now held on trust for the third defendant's son. The prayer for relief seeks declarations and equitable compensation on that basis. In the alternative, the plaintiff claims equitable compensation in a sum equivalent to what she would have received on a claim for provision out her father's estate: prayer for relief, par (h).
Family provision under the Administration and Probate Act
Part IV of the Administration and Probate Act (Vic) provides for what is generally called family provision. Had the plaintiff applied for an order, it would have been determined under s 91 of the Act. Under s 91(4), the court would have had regard to 11 specified matters, and any other matter the Court considered relevant, in determining:
(a) whether or not the deceased had responsibility to make provision for a person; and
(b) whether or not the distribution of the estate of the deceased person … makes adequate provision for the proper maintenance and support of the person; and
(c) the amount of provision (if any) which the Court may order for the person.
The specified matters include the deceased's obligations and responsibilities to the beneficiaries of the estate (relevantly, in this case, his widow and children), the size and nature of the estate, the financial resources of the applicant and other beneficiaries, and the liability of any other person to maintain the applicant.
In Jones (a pseudonym) v Smith (a pseudonym) [2016] VSCA 178 [38], Ferguson JA summarising the legal principles on an application under pt IV, said (cited authorities omitted):
There is no requirement that parents treat their children equally. Indeed, it may be difficult for an adult child in a sound financial position to establish the jurisdictional requirements. The concept of 'need' is relevant when considering whether the testator has made adequate provision for the proper maintenance and support of any claimant. However, 'need' is a relative concept and must be considered in all the circumstances of the case. Adult children did not have to establish some special need or circumstances before relief would be granted.
Discovery against a non‑party: general principles
An order for discovery against a non-party is only available if there are reasonable grounds to believe that the non-party 'had, has, or is likely to have had or to have, possession of documents that relate to any matter in question in the action'. The reasons in Fairfax Media Publications Pty Ltd v West Australian Rugby Union Inc [2008] WASCA 123 at [27] ‑ [39] set out some general principles applicable to this application.
First, before making an order the court must be satisfied as to what the documents sought contain or might reasonably be expected to contain, and that they relate sufficiently to a matter or matters in question in the action to justify making an order. Second, an order must be directed only to discovery of documents which relate to a matter in question in the action. Third, where an order is made for discovery of documents, by reference to some other method of classification and not by reference to their content, it must appear that any document which falls within that classification is relevant to a matter in issue in the action.
On an application for discovery, the matters in question are generally to be determined by reference to the pleadings: Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341, 345. To determine whether a class of documents may be relevant, the court should consider the pleadings, together with the conduct and admissions of the parties and the nature of the action: Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [5].
Relevance is not the only factor the court must consider in the exercise of the discretion to order discovery. The court must have regard also to the principles of case management in O 1 r 4B. Those principles must be taken into account in deciding whether to order discovery of only specified documents or specified classes of documents, and whether discovery should be only of documents that are directly relevant: O 26 r 7, applied by O 26A r 6.
A party does not have a strict entitlement to an order for discovery. The power to order discovery is discretionary, the discretion to be exercised having regard to the timely and cost effective disposal of litigation: Corporate Systems Publishing Pty Ltd v Lingard [No 3] [2008] WASC 1 [7]; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [6]. On the other hand, discovery has been described as promoting the ascertainment of truth in litigation and as an essential part of the proper administration of justice: Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316, 321. Subject to the rules of privilege, there is a 'public interest in having available all evidence relevant to the issues in litigation': Carter v Managing Partner, Northmore Hale Davy & Leake [1995] HCA 33; (1995) 183 CLR 121, 128.
In an application for discovery from a non-party, caution should be exercised before making such an order: McCarthy v Dolpag Pty Ltd [2000] WASCA 106 [13]. In Fairfax Media Publications Pty Ltd v West Australian Rugby Union Inc, Newnes AJA said:
The privacy of a person is not to be invaded, and the person put to inconvenience and possibly irrecoverable expense, for the purposes of litigation in which that person is not involved unless, and only to the extent, the applicant establishes that it is reasonably necessary to do so in order to achieve the proper administration of justice. [29]
The plaintiff's applications for discovery from non-parties
The plaintiff filed nine applications for discovery from non-parties:
(1) Scotch College for records relating to fees and expenses paid to the college for and on behalf of the third defendant's son for the academic years 2009 to 2014.
(2)Iron Group Lawyers for the electronic file relating to the application for probate of the estate of the deceased.
(3)McCracken and McCracken, Solicitors, for documents relating to the deceased, any request made by the second defendant to uplift file documents in or about 2004, and documents relating to the second defendant.
(4)Tony Tilenni and Associates, Accountants, for documents relating to advice given to Mrs Waterton in 2010 or 2011.
(5)The Town of Claremont for rate notices and other documents relating to Unit 9, 14 Victoria Avenue, Claremont between 1999 and 2016.
(6)Cabrini Health for the patient medical records relating to the admission and treatment of the deceased for the purposes of heart surgery in 2003.
(7)Butcher Paull and Calder, Solicitors, for documents relating to the sale and purchase of 23 Smith Street, Claremont.
(8)The Gisborne Medical Centre for the health records of the deceased for the period 1999 to 3 December 2003.
(9)Clairs Keeley, Solicitors, for documents relating to legal advice provided to Mrs Waterton in 2010 and 2011, and to legal advice provided to the second defendant in 2010 and 2011.
Each application is supported by an affidavit of Damian Eugene Molony, the solicitor for the plaintiff. The application regarding Tony Tilenni and Associates was dismissed by consent. The application to the Town of Claremont did not need to proceed when documents were provided without court order.
Scotch College
I am satisfied that the college is likely to have records relating to fees and expenses paid to the college for and on behalf of the third defendant's son for the academic years 2009 to 2014. The plaintiff says the records are relevant because she has reason to believe the fees were paid by Mrs Waterton and they represent a substantial gift from Mrs Waterton to the third defendant.
The documents are relevant to the plaintiff's claims that Mrs Waterton made gifts to her children during her lifetime. They are confined to financial records of payments made to the school. There is no evidence that discovery would impose a burden disproportionate to the potential value of the documents.
No other reason was advanced for why, in its discretion, the court should refuse the order.
The proposed orders regarding costs are, however, inappropriate. The plaintiff should pay the costs of the application and the non-party's reasonable costs of compliance with the order. There will be liberty to apply with respect to fixing the costs of compliance if those costs cannot be agreed.
Iron Group Lawyers
The plaintiff has reason to believe that Iron Group Lawyers has an electronic file relating to the probate of Mr Waterton's will. In the affidavit in support of the application, the plaintiff sought to establish relevance of these documents by referring to uncertainty about when the will of Mr Waterton was signed, and the circumstances in which he came to sign it.
As counsel conceded at the hearing, none of those matters is in issue in this action. If the plaintiff is to challenge the will, it should be in Victoria where the grant of probate was made. But it is not part of this action. The plaintiff's claim is based upon an estoppel arising out of her refraining from making an application for family provision.
The concession had, in fact, been made on the last occasion this matter was before the court. The application for discovery had then already been filed, but not served, and it was open for the plaintiff to discontinue it. There was no reasonable basis to take it to this hearing.
The application is dismissed.
McCracken and McCracken
The plaintiff says that the firm of McCracken and McCracken, Solicitors, are the successor to the firm that acted for Mr Waterton in respect of his personal and business dealings. The plaintiff has been told that the firm has two files - one relating to Mr Waterton and one to the second defendant.
The plaintiff's solicitor believes that one file contains a will, a guarantee relating to a business and at least one power of attorney. The plaintiff's solicitor also has been informed that McCracken and McCracken received a written request to forward documents to another firm of solicitors acting for the second defendant in his capacity as executor of his father's estate.
The plaintiff seeks discovery on the basis that the documents are relevant 'given the unusual circumstances surrounding the preparation signing and execution of the Deceased's last will and testament' and that 'the request by the second defendant … to uplift the Deceased's private papers requires further investigation': affidavit of Mr Molony, par 32.
The circumstances of the preparation signing and execution of the will of Mr Waterton are not in issue in this action. The plaintiff has not shown why a request by the second defendant, as executor, for the papers of his father requires investigation in this action.
The application is dismissed.
Butcher Paull and Calder
The plaintiff asserts that Butcher Paull and Calder, Solicitors, acted for the vendor on the sale of 23 Smith Street, Claremont, when it was sold to the third defendant in 2007: affidavit of Mr Molony, par 5. The attachments to Mr Molony's affidavit are less clear as to whether Messrs Butcher Paull and Calder acted for the vendor, purchaser or mortgagee.
There is, perhaps, an arguable case for relevance of the documents held by the solicitors. I was told that the solicitors are prepared to provide the documents sought. The defendants, however, did not consent to that order. Despite the attitude of Butcher Paull and Calder, I believe the application should be dismissed. The plaintiff has not sought the documents from the vendor or the mortgagee, but by an application directed to solicitors who acted in the transaction.
The process of non-party discovery is similar in many ways to the process of obtaining documents on subpoena. Each is an intrusion into a person's right to keep his documents to himself. The owner of documents may wish to claim privilege, or otherwise object to production. The court has power to order discovery from someone who has possession of documents, but in exercising that power, the court may properly have regard to whether its process is addressed to the right person to produce the documents: see Rochfort v Trade Practices Commission [1982] HCA 66; (1982) 153 CLR 134, 140 (Gibbs CJ); 143 ‑ 145 (Mason J) in relation to production on subpoena.
I do not believe that the solicitors are the appropriate party to give discovery of these documents. That would sideline the person who has an interest in the documents and, in some cases, may object to their production.
The application is dismissed.
Cabrini Health and Gisborne Medical Centre
The plaintiff asserts relevance by reference to where the deceased was on the date of execution of his will, and his state of mind and testamentary capacity at the date of execution. Again, these applications should not have been pursued. None of those matters is in issue in the action, and the plaintiff conceded that in February.
The applications are dismissed.
Messrs Clairs Keeley, Solicitors
The plaintiff says that this firm of solicitors:
(1) prepared wills for Mrs Waterton in 2010 and 2011 and provided estate planning advice to her; and
(2)acted for the second defendant in advising him regarding the amendment of the certificate of title for unit 9, 14 Victoria Avenue, Claremont.
The plaintiff seeks documents relating to legal advice provided to Mrs Waterton and the second defendant. Assuming that the advice exists, the documents are within the control of the first and second defendants.
On the face of the present application, the documents requested are likely to attract privilege. That privilege can only be claimed by the clients, that is the first and second defendants. If discovery of these documents is to be pursued it should, in my opinion, be by an application for further discovery from the defendants.
The plaintiff and the non-party attempted to resolve the matter by consent orders, which would have the documents delivered to the defendants, and the matter proceed as if it were an application for further discovery from the defendants. The solicitors that way ensured they did not impair the rights of the clients. In my opinion, however, the proposed consent orders are not appropriate for two reasons. First, the defendants did not consent - it appears there had been no conferral with the defendants when the proposed order would directly affect them. Second, the summons should not have been issued against the solicitors for discovery of documents which, by their description in the summons, are privileged.
The application is dismissed.
The second defendant's application for discovery from a non-party
By a chamber summons for orders for non‑party discovery pursuant to O 26A r 5 the second defendant has applied for an order that Philip Lafferty, the plaintiff's husband, give discovery of documents described in the application:
(1)Documents described in a schedule of documents in correspondence between the solicitors for the second defendant, and the solicitors for Mr Lafferty. The schedule was produced following a request for documents relating to Mr Lafferty's 'personal financial position, or that of any related or associated trust or entity, over the period 1 July 2003 to 30 June 2007'.
(2)Documents filed in proceedings in this court between the Deputy Commissioner of Taxation and the plaintiff's husband: CIV 2227 of 2014.
(3)Notices of assessment issued by the Australian Taxation Office to the plaintiff's husband for the years ended 30 June 1998, 1999 and 2000.
(4)Notices of amended assessment issued by the Australian Taxation Office to the plaintiff's husband for the same period.
In general terms, the documents sought from the plaintiff's husband, relate to her financial resources at the time she would have brought any application under the Administration and Probate Act.
As a preliminary point, counsel for Mr Lafferty submitted that the application proceeds on a gender based assumption about Mrs Lafferty being dependent upon her husband. The submission is misconceived. As a matter of law, the factors to be considered in an application under the Administration and Probate Act include the financial resources (including earning capacity) and the financial needs of the applicant and the liability of any other person to maintain the applicant. Documents relating to the plaintiff's financial resources in years immediately preceding as well as at about the time of her father's death are directly relevant to the prospects and the value of any claim she might have had for family provision. It is not a gender based assumption, but the law in Australia, that a party to a marriage is liable to maintain the other to the extent that he or she is reasonably able to do so if that other party is unable to support herself or himself adequately: Family Law Act 1975 s 72. And property - whether individually or jointly owned - of the parties to a marriage is relevant to any assessment of the financial resources and needs of either party. The gender of the party is irrelevant.
I also note that, in her witness statement filed in these proceedings, the plaintiff deals at length with her husband's financial position at about the time of her father's death and now, including the current proceedings against him by the Commissioner of Taxation.
The scheduled documents
On 11 November 2016, Mr Nielsen, a solicitor acting for Mr Lafferty, advised by letter that Mr Lafferty has had, but no longer has in his possession documents 'of the type referred to' in an attached schedule, while noting the documents came into existence at least 12 years ago. The schedule refers to wage slips, bank statements, and financial statements for the period specified by the second defendant, as well as rental agreements for three properties rented by the plaintiff and her husband between I July 2003 and July 2007 while they were living in England. The schedule identifies Mr Lafferty's employer; the period of employment; the banks where accounts were held; and the addresses of the properties.
I accept that the documents are relevant to the matters in issue. The documents directly relate to factors to be considered in a family provision application, had one been made following Mr Waterton's death. The plaintiff now pleads her financial position at the time of her father's death, including her own employment and that of her husband in London: pars 9(g) and (h).
There are reasonable grounds to believe the documents were in Mr Lafferty's possession at some time.
But I would not exercise my discretion to order discovery as to the first category of documents. The second defendant has been told that the documents in this category are no longer in Mr Lafferty's possession. In the schedule to Mr Nielsen's letter, the second defendant has been given sufficient detail to identify Mr Lafferty's employer, the banks where accounts were held, and the location of leased properties. Mr Nielsen and Mr Lafferty are both officers of this court, and there is no reason to question what they have said.
The second defendant submits that, were Mr Lafferty to make an affidavit of discovery, he would be required to explain the date on which the documents were last in his possession, what has become of them, and who now has possession of them. That information may assist the defendants in locating relevant information. That may be a significant consideration in other cases. Having regard to the nature of the documents here - wage slips, bank statements, and rental agreements, for a period between 10 and 14 years ago, in another country - I am not satisfied that the benefit to the litigation is sufficient to warrant an order that there be an affidavit of discovery.
The documents in CIV 2227 of 2014
The statement of claim in this action is in evidence as an attachment to the affidavit of the second defendant, dated 1 February 2017. The writ relates to income tax for two periods: the years of income ended 30 June 1998, 1999 and 2000; and the years of income ended 30 June 2011 and 30 June 2012. The notices of assessment and amended assessment for the first period were between 14 April 2003 and 30 June 2005, for tax due in 2003, 2004 and 2005.
I am satisfied that documents relating to the first period are relevant for two reasons. The income in the years immediately before the death of Mr Waterton are relevant to establishing the plaintiff's financial resources at the time of his death or the time of any application for family provision. Counsel for Mr Lafferty submitted that the earliest of those years (ended 30 June 1998) is six years before Mr Waterton's death. In my opinion, having regard to the amounts assessed in those years, as disclosed in the statement of claim in the court proceedings, the period is no so remote from the time of Mr Waterton's death that it is insufficiently relevant.
The second period is irrelevant, and counsel for the second defendant accepted that it was. The issue then became whether, because the description of the documents in the summons includes documents that are not relevant, the application should be dismissed with regard to the whole category of documents. In my opinion that is the proper course. Mr Lafferty is not a party to the action. The documents relate to matters which would otherwise be considered confidential to him. He should not have the burden of determining which documents filed in those proceedings relate to the relevant period, and perhaps redacting documents which cover both.
Were Mr Lafferty a party, the issue might be approached by requiring further conferral with a view to narrowing the request and identifying the relevant documents. But he is not a party, and I do not believe it appropriate for the court to order a non-party to engage in conferral in litigation to which he is a stranger.
The assessments and amended assessments
The assessments and amended assessments relate to Mr Lafferty's liabilities in the year Mr Waterton died, and up to August 2005. I have already said why I regard Mr Lafferty's financial position is relevant to the plaintiff's financial resources. The period in question is sufficiently proximate to the time in which a family provision application would have been made to be relevant on the plaintiff's pleaded case.
I considered whether the assessments and amended assessments would add to the information already available to the second defendant from the writ and statement of claim in CIV 2227 of 2014. The fact that other evidence is available does not affect the relevance of the assessments, but might go to the court's discretion to order discovery. On consideration, I am satisfied that the documents relate to matters in question, and the fact that at least some of the information in them is otherwise available is no sufficient reason to refuse the order.
Costs
These issues of costs arise:
(1)should the second defendant pay Mr Lafferty's costs of the application for non-party discovery;
(2)can a party who has been served and appears on the application for non-party discovery be awarded costs;
(3)should the plaintiff pay the second defendant's costs of the applications for discovery against non-parties; and
(4)if a costs order should be made, should the plaintiff be ordered to pay costs on an indemnity basis.
Order 26A r 7 provides:
(1)An order made under this Order may be made on the condition that the applicant give security for the costs and expenses of the person against whom the order is made, both in respect of the application and of complying with the order and with this Order.
(2)On an application under this Order the Court may make orders as to the costs and expenses
(a)of any person in respect of the application; and
(b)of a person against whom an order is made in respect of complying with the order and with this Order.
There is nothing in O 26A to detract from the general position that the costs of and incidental to all proceedings in court are in the discretion of the court: Supreme Court Act 1935 (WA) s 37(1). The discretion must be exercised judicially, but it is otherwise unconfined. I do not regard that statement as inconsistent with the reasons of Simmonds J in Waller v Waller [2008] WASC 51 [210], where his Honour apparently approved the comment in Civil Procedure in Western Australia that the respondent is not a party to a 'normal civil suit' and 'hence the normal rules as to costs do not necessarily apply'. That is one factor to be considered in the exercise of the discretion.
Whether the respondent to the application has behaved reasonably may also be a relevant consideration. It should, in my opinion, be weighed against the fact that the respondent is a stranger to the litigation, subject to the compulsory process of the court to produce what may be personal and confidential documents.
Finally, in these preliminary comments, I would construe O 26A r 7(2)(a) as permitting to the court to make an order for the costs of a party who appears on the application. First, the summons for discovery from a non-party is a summons in the action, and the summons and supporting affidavit must be served on the other parties: O 26A r 5(2). Second, r 7(2) provides separately for both the person against whom an order is made (the non-party in this case) and 'any person'. That is wide enough to include a party as well as someone else who may be affected by an order (for example, a person entitled to claim privilege in a document sought on discovery). Third, a party may have an interest in whether particular documents are produced.
The costs of the second defendant's application
The second defendant sought discovery of four classes of documents from Mr Lafferty. He has been successful as to two classes only. One reason why he was not successful on the first class of documents - those listed in the correspondence from Mr Lafferty's solicitor or 11 November 2016 - is because Mr Lafferty quite reasonably identified the documents sought but claimed to no longer have them.
The second defendant submits that the respondent to the summons has otherwise acted unreasonably, counsel referred in particular to part of the submissions in response to the summons, which appeared to put in issue whether Mr Lafferty is the plaintiff's husband. That position was not, however, maintained at the hearing where the submissions were confined to whether the second defendant had established the relevance of all of the documents sought. Counsel also submitted that the Mr Lafferty was unreasonable in not accepting that the documents relating to his tax assessments relate to a matter in issue.
Although I have allowed the application in part, I do not consider Mr Lafferty's response to the whole of the application was unreasonable. I also have regard to the nature of the documents which I have ordered should be produced. They are documents and records relating to Mr Lafferty's taxation liability. That information is normally regarded as confidential, and Mr Lafferty was, in my opinion, entitled to maintain that confidentiality unless an order was made.
The second defendant should pay the costs of Mr Lafferty of the application and his reasonable costs of compliance with the order.
The costs of the plaintiff's applications
The plaintiff's applications were served on the other parties. The second defendant has, effectively, represented all of the defendants in their response to the summonses. The second defendant seeks his costs.
Each of the nine applications for discovery from a non-party was supported by affidavit, and, although there were common issues, each required separate consideration.
There are two particular matters which, in my opinion, make it proper to order costs in favour of the second defendant on at least some of the applications. First, the documents sought in some cases impinged on the interests of the second defendant: in particular, documents relating to the second defendant were sought from two of the firms of solicitors - McCracken and McCracken and Clairs Keeley. The documents sought from Clairs Keeley expressly included legal advice given to the second defendant. Four of the summonses were directed to the late Mr Waterton's medical records and legal affairs in Victoria. Those applications impinge directly on the interests of the second defendant as his executor. Second, it was unreasonable for the plaintiff to pursue the documents relating to Mr Waterton's affairs in Victoria when they patently are not relevant to her pleaded case, and when counsel for the plaintiff had properly conceded at the previous hearing that the validity of the will was not in issue in this action.
Ultimately, it proved unnecessary for the second defendant to make submissions regarding the application - the plaintiff conceded that four of the applications could not succeed. And I was not prepared to order discovery against the two Western Australian firms, although only one of those applications directly affected the second defendant.
The plaintiff should pay the second defendant's costs with respect to these applications: Iron Group Lawyers, McCracken and McCracken, Cabrini Health, Gisborne Medical Centre, and Clairs Keeley.
The second defendant seeks indemnity costs. The categories of cases in which an indemnity costs order may be made are not closed. But there must be some special or unusual feature of a case to warrant an award of cost on that basis. Circumstances which warrant such an order include where an action or proceeding in an action 'has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success': Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; (1988) 81 ALR 397, 401. The date for return of the summonses was set at the hearing on 17 February 2017. The plaintiff in this matter continued the applications for non-party discovery against Iron Group Lawyers, McCracken and McCracken, Cabrini Health, and Gisborne Medical Centre, serving the summons for discovery on each of them, after having conceded that the validity of Mr Waterton's will was not an issue in this action at that hearing. The validity of the will, however, is the only reason the plaintiff advanced to establish the relevance of the documents from those respondents. The plaintiff should have known the applications had no chance of success.
This is an appropriate case for an order for indemnity costs in relation to those four summonses, for costs incurred after 17 February 2017.
The same considerations do not apply to the costs of the application regarding Clairs Keeley. The plaintiff should pay the second defendant's costs on a party party basis
In my opinion, no order should be made regarding the second defendant's costs in relation to the four other summonses.
Conclusion
There will be an order for discovery against Scotch College in terms of the plaintiff's minute of proposed orders, save as to the order for costs. The plaintiff should pay the costs of the application and the non-party's reasonable costs of compliance with the order. There will be liberty to apply with respect to fixing the costs of compliance if those costs cannot be agreed.
It is now unnecessary to decide the application against the Town of Claremont, as it was resolved by agreement. The application against Tony Tilenni and Associates has been dismissed by consent. The other applications brought by the plaintiff are dismissed.
The second defendant's application for discovery against Mr Lafferty is allowed with regard to the notices of assessment and notices of reassessment issued by the Australian Taxation Office to the plaintiff's husband for the years ended 30 June 1998, 1999 and 2000, but is otherwise dismissed. The second defendant is to pay Mr Lafferty's costs of the application and his reasonable costs of compliance with the order. There will be liberty to apply with respect to fixing the costs of compliance if those costs cannot be agreed.
The plaintiff is to pay all costs that the second defendant has incurred after 17 February 2017 in relation to the applications for non-party discovery against Iron Group Lawyers, McCracken and McCracken, Cabrini Health, and Gisborne Medical Centre, except insofar as the costs are of an unreasonable amount or have been unreasonably incurred. The plaintiff is to pay the second defendant's costs of the application for non-party discovery against Clairs Keeley, solicitors.
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