Lovick and Son Developments Pty Ltd v Doppstadt Australia Pty Ltd

[2021] NSWSC 824

Supreme Court

New South Wales

Medium Neutral Citation:

Lovick & Son Developments Pty Ltd v Doppstadt Australia Pty Ltd [2021] NSWSC 824

Hearing dates:

22 June 2021

Decision date:

22 June 2021

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1.   Dismiss the notice of motion filed 27 May 2021 with costs, insofar as it seeks to set aside paragraphs 1, 5, 6 and 7 of the subpoena issued on 13 May 2021.

2.   Grant access to the plaintiffs to Subpoena Packets S10 and S11 in these proceedings.

3.   Direct that any note in relation to a proposed mediation of the dispute be forwarded to Ward CJ in Eq’s Associate within 7 days.

4.   Direct the respondent to file and serve any evidence in reply to those parts of the notice of motion filed 26 April 2021, namely the application for relief in prayers 4, 5, 11 and 12, by 21 July 2021.

5.   Direct the plaintiff to file and serve any evidence in reply by 23 July 2021.

Catchwords:

CIVIL PROCEDURE — Subpoenas — Application to set aside

Cases Cited:

Harman v Secretary of State for the Home Department [1983] 1 AC 280

Category:

Procedural rulings

Parties:

Lovick & Son Developments Pty Ltd (First Plaintiff)
Lovick Engineering Pty Ltd (Second Plaintiff)
Doppstadt Australia Pty Ltd (in liq) (First Defendant)
Raymond John Davis (Second Defendant)
Susanne Margaret Davis (First Respondent)
Davis Earthmoving & Quarrying Pty Ltd (Second Respondent)

Representation:

Counsel:
D Smallbone (Plaintiffs)
T Flaherty (Respondents)

Solicitors:
Baldock Stacy & Niven (Plaintiffs)
Michael Flaherty (Respondents)

File Number(s):

2006/00255184

Publication restriction:

Nil

Ex Tempore Judgment

1. HER HONOUR: This is an application by notice of motion filed on 27 May 2021 by the respondents (Susan Margaret Davis (Mrs Davis) and Davis Earthmoving & Quarrying Pty td (Davis Earthmoving)) now seeking only to set aside certain paragraphs of a subpoena for production issued on 13 May 2021 and addressed to the proper officer of Carruthers Pty Ltd. In particular, what is sought to be set aside in the subpoena are [1], [5], [6] and [7] of the schedule to the subpoena. The basis on which those paragraphs are sought to be set aside is that there is not a legitimate and proper purpose for the subpoena. As to the paragraphs in question, [1] and [6] call for all financial income statements and amended returns for the financial years ending 30 June 2017-2019 and in respect of the late Raymond John Davis (the second defendant – Mr Davis), and [5]-[7] seek financial statements, income tax returns and the like, including the general ledger of Davis Earthmoving in respect of different years.

2. The respondents assert that the plaintiffs (Lovick & Son Developments Pty Ltd and Lovick Engineering Pty Ltd) are commercial competitors of Davis Earthmoving carrying on business in the machinery hire and earthmoving industry. The plaintiffs say there is no evidence to support that assertion and they dispute that they are a competitor at this time.

Respondents’ submissions

3. The respondents say that the documents sought in [1] are part of a fishing expedition and without any proper forensic purpose, pointing to the fact that in the defence to the points of claim, there is an admission that Mr Davis was carrying on a substantial earthmoving and quarrying business and that the shares in the company are a substantial asset. It is said that it is not denied that the shares have substantial value and that there is, therefore, no issue relevant to which the documents in [1] could be sought. As to [5]-[7], it is said that the documents are commercially sensitive, that the plaintiffs are commercial competitors of the Davis Earthmoving and that the current and historical financial information of Davis Earthmoving is not relevant to any intent, as alleged, of Mr Davis in respect of the transfer of the shares to the Davis Earthmoving on 23 May 2018.

Plaintiffs’ submissions

4. The plaintiffs maintain that there is a legitimate forensic purpose to the subpoenas, pointing, amongst other things, to the matters raised in the points of defence. In particular, reference is made to [17] of the points of defence in which it is said that the “shares were transferred in anticipation of the imminent prospective death of Mr Davis and for the purposes of tax planning and so as to ensure the continued and smooth operation of the company”; and [56] in which it is said that the “the business of the second respondent has grown since 2018 and the value of the assets of the second respondent has also grown”. The relevance that is said to arise in relation to the documents is in order to test the assertions made in the points of defence. In particular, it is said that the financial position of the late Mr Davis and his estate, both before and after the transfer of the shares to his wife (Mrs Davis), is relevant and, in relation to the documents of the company, it is said that it is relevant to seek documentary production from the accountants (both as to specific advice as well as to the objective background of Mr Davis and his company’s affairs which would establish the setting for that advice and enable it to be understood).

5. Further, it is said that the more recent financial statements and up-to-date information concerning the company’s financial position are relevant to the application by the plaintiffs for the relief sought in the motion filed 26 April 2021, including equitable execution by the appointment of a receiver to the shares who has power to take control and manage the company; and an injunction to restrain Mrs Davis of adverse dealings with the second respondent. As to which, the plaintiffs submit that there is strong evidence of considerable hardihood in seeking to defeat the benefit of the costs order that was made by Slattery J in these proceedings, and a manifest failure on the part of Mrs Davis properly to discharge her duties as executrix. It is noted that there has been a refusal to give an undertaking in relation to the affairs and management of the Davis Earthmoving so as to give any assurance that its affairs and position are safe in her hands. The plaintiffs submit that current financial material is relevant to the receivership and injunction applications, and that a reasonable range of years is relevant to establish the scale, substantiality and permanence of the assets at the time of the transfer, and that the range of years selected is a reasonable range for this purpose and not unduly intrusive.

6. In so far as there is an issue raised in relation to the commercial position or commercial confidentiality in relation to the documents that are sought, apart from the fact that the Harman undertaking (Harman v Secretary of State for the Home Department [1983] 1 AC 280) would limit the use that could properly be made of that material to these proceedings, it is noted that no confidentiality undertaking has been either proffered by the plaintiffs or sought by the respondents in relation to the current application.

Determination

7. The test in relation to whether or not there is a legitimate forensic purpose in seeking documents under a subpoena is well known and need not here be repeated. The threshold is effectively as to whether or not it is on the cards that there will be documents that may be relevant to an issue in the proceedings that might advance a party’s case or enable the other party’s case to be tested. I am satisfied that that test is met in the present case in relation to the subpoena and I dismiss the motion in so far as it seeks to set aside [1], [5], [6] and [7] of the subpoena issued on 13 May 2021.

8. That disposes, as I understand it, of the whole of the remaining aspect of the notice of motion that was filed on 27 May 2021 by the respondents, other than the question of costs, and it seems to me that costs ought follow the event.

Orders

9. For the above reasons, I make the following orders:

1. Dismiss the notice of motion filed 27 May 2021 with costs, insofar as it seeks to set aside [1], [5], [6] and [7] of the subpoena issued on 13 May 2021.

2. Grant access to the plaintiffs to Subpoena Packets S10 and S11 in these proceedings.

3. Direct that any note in relation to a proposed mediation of the dispute be forwarded to Ward CJ in Eq’s Associate within 7 days.

4. Direct the respondent to file and serve any evidence in reply to those parts of the notice of motion filed 26 April 2021, namely the application for relief in prayers 4, 5, 11 and 12, by 21 July 2021.

5. Direct the plaintiff to file and serve any evidence in reply by 23 July 2021.

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Decision last updated: 07 July 2021