Malcolm Walter Atwell and Ian George Atwell v ROBERTS

[2006] WASC 269

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   MALCOLM WALTER ATWELL and IAN GEORGE ATWELL as trustees of the Estate of WALTER CHARLES ATWELL on behalf of all other partners in the Atwell Family Agency other than the first defendants -v- ROBERTS & ORS [2006] WASC 269

CORAM:   MASTER NEWNES

HEARD:   21 NOVEMBER 2006

DELIVERED          :   21 NOVEMBER 2006

PUBLISHED           :  1 DECEMBER 2006

FILE NO/S:   CIV 1832 of 2004

BETWEEN:   MALCOLM WALTER ATWELL and IAN GEORGE ATWELL as trustees of the Estate of WALTER CHARLES ATWELL on behalf of all other partners in the Atwell Family Agency other than the first defendants

Plaintiffs

AND

LEIGH ROBERTS
NOEL HENRY ATWELL
AUDREY ATWELL
First Defendants

LEIGH ROBERTS as trustee for the Estate of KEITH GILBERT ROBERTS
LEIGH ROBERTS as the trustee of the Estate of HILDA DORCUS ROBERTS
LEIGH ROBERTS as the trustee of the Estate of ADA ETHEL ATWELL
LEIGH ROBERTS as trustee for the Hamersley Trust
JOHN CHARLES STACY as trustee of the Estate of EDNA PHOEBE PATERSON
EVELYN DIANE BROADLEY as trustee of the Estate of GLADYS JANET ADDISON BROADLEY
MAURICE EUGENE FRICHOT as trustee of the Estate of DOROTHY MAY BECKETT
GARY JOHN ATWELL
Second Defendants

Catchwords:

Practice and procedure - Order 52 r 2 - Application for inspection of documents - Whether application should be for discovery and inspection - Scope of O 52 r 2 in relation to inspection of documents - When application should be for discovery - Roles of O 52 r 2 and O 26

Legislation:

Rules of the Supreme Court 1971 (WA), O 26, O 52 r 2

Result:

Application for inspection refused

Category:    B

Representation:

Counsel:

Plaintiffs:     Mr D H Solomon

First Defendants           :     Mr S K Shepherd

Second Defendants       :     Mr S K Shepherd

Solicitors:

Plaintiffs:     Solomon Brothers

First Defendants           :     Lavan Legal

Second Defendants       :     Lavan Legal

Case(s) referred to in judgment(s):

Huddleston v Control Risks Information Services Ltd [1987] 2 All ER 1035

Re Saxton [1962] 3 All ER 92

Vowell v Shire of Hastings [1970] VR 764

Case(s) also cited:

Nil

1. MASTER NEWNES: This is an appeal against an order of a case management registrar of 11 August 2006, dismissing an application by the plaintiffs for an order, pursuant to O 52 r 2(1), that the first defendants permit the plaintiffs or their agent to inspect the books of account of the partnership known as the Atwell Family Agency (the "Agency").

The background

1. In the action, the plaintiffs claim that certain transfers of units in the Agency by the respective second defendants, or those whom they represent, were invalid for failing to follow the procedure for transfer required by the Rules of the Agency, and that payments made to the first defendants as members of the Committee of Management of the Agency were unauthorised.  The plaintiffs claim against each of the second defendants, among other things, an injunction, in effect, to compel them to follow the transfer procedure so as to provide the other partners in the Agency with an opportunity to exercise an alleged pre‑emptive right to purchase the units in question, an account of all income and other distributions which have been made in respect of the units in the interim, and repayment by the first defendants of all amounts paid to them as members of the Committee of Management.

2. It was submitted on behalf of the plaintiffs that the books of account of the Agency constitute documents as to which a question may arise in the action.  Under the Rules of the Agency, the keeping of the books of account is the responsibility of the Committee of Management.  In addition, the Committee of Management purports to exercise the power to permit or refuse inspection of the books of account.  The first defendants are the members of the Committee of Management.

3. It appears from the affidavits filed on behalf of the plaintiffs in support of the application that a Raymond Atwell, acting as an agent of the plaintiffs, has carried out an inspection of some of the books of account, but he has not completed the inspection of the books made available to him and, the plaintiffs say, he was not provided with access to all of the relevant documents.  Attempts to arrange a further inspection, and inspection of other material, have reached an impasse.  The Committee of Management insists that Mr Atwell state the purpose of the inspection, and its estimated duration, and agree to pay the costs of having his inspection supervised.  The plaintiffs refuse to agree to those terms.

4. The plaintiffs brought an application under O 52 r 2(1) for orders that the first defendants permit the first‑named and second‑named plaintiffs, and their agent, to inspect and copy the books of account of the Agency for as long as those persons require, between 9 am and 5 pm on a working day of which two days' notice has been given, without any charge for the time of any person supervising the inspection on behalf of the first defendants. The "books of account" were very widely defined to include all of the financial statements, the general ledger, the general journal and any other journal, ledger, book or account created or maintained pursuant to the partnership agreement, or created or maintained for the purpose of assisting in the creation or maintenance of any of the financial statements or the general journal or journal ledger.

5. On 11 October 2006, the case management registrar dismissed the application, deciding, in effect, that O 52 r 2(1) did not apply in the circumstances and that any application for inspection of the documents should have been brought under O 26 r 6. The plaintiffs appeal against that decision.

The plaintiffs' submissions

1. It was submitted on behalf of the plaintiffs that the case management registrar had erred in finding that, as the defendants had provided discovery and no application had been made for particular discovery under O 26 r 6, an order under O 52 r 2(1) should be refused. Counsel argued that discovery is a separate matter and has a different operation to O 52 r 2(1). The latter has a broader scope, although the two may overlap. But the fact that they may overlap in a particular case is not a reason that an application under O 52 r 2(1) should be refused. In addition, an application for particular discovery under O 26 r 6 is likely to fail if the documents sought cannot be identified with reasonable specificity. There is no such limitation in O 52 r 2(1). It may be that the broader inspection permitted by O 52 r 2(1) will reveal documents that should have been discovered, and that is a factor in favour of making the order.

2. It was further submitted that, in any event, the books of account were clearly relevant to the matters in issue in the action and they are within the power of the first defendants in their capacity as the Committee of Management. The fact that the documents in question may also be discoverable, and should have been discovered, was a factor weighing in favour of, rather than against, an order under O 52 r 2(1).

3. Counsel argued that, in the end, the position was simply that the documents of which inspection was sought were documents in relation to which a question may arise in the proceedings, and they were clearly in the possession of the first defendants.  The fact that they may or may not include documents that were discoverable was beside the point.  There were no factors which would warrant the Court exercising its discretion to refuse the order sought.

The first defendants' submissions

1. The first defendants submitted that the request for inspection had hitherto always been made on the basis that the plaintiffs were exercising a right of inspection under the Rules of the Agency. On that basis, O 52 r 2(1) had no application. If it was sought to be put on the basis that the documents were, or may be, discoverable, the proper course was an application under O 26.

2. Moreover, it was submitted, if it was put on the basis that the documents were discoverable, the defendants did not know on what basis it was contended that the books of account were said to be relevant to the matters in issue in the action.  The books of account plainly covered a vast array of transactions relating to the day to day business of the Agency that have nothing to do with the matters in issue.  The relevant parts have been discovered by the first defendants.  The plaintiffs had not put any material to the Court to show that the discovery was inadequate.

The merits of the appeal

1. Order 52 r 2(1) provides that "[t]he Court may, on the application of any party to a cause or matter, make an order for the detention, custody, preservation or inspection of any property which is the subject‑matter of a cause or matter, or as to which any question may arise therein."

2. As I have mentioned, ultimately counsel for the plaintiffs put the plaintiffs' case on the basis that questions of whether or not the documents sought to be inspected under O 52 r 2(1) are discoverable is irrelevant; the question is simply whether they are documents in relation to which a question may arise in the proceedings.

3. I do not accept such a broad contention. It is, of course, plainly the case that the fact a document is discoverable does not preclude an order being made under O 52 r 2(1) for inspection of that document. But O 52 is not an alternative to discovery and inspection under O 26, nor does it, in effect, provide, by another means, discovery and inspection of a more general scope. If it were otherwise it would simply be an avenue by which the requirements and limitations set out in O 26 might be avoided, notwithstanding that those requirements and limitations exist for good reason, including to limit the ambit of the documents required to be produced by a party so as to facilitate the timely disposal of the action and to save costs.

4. While the words of O 52 r 2(1) should be given a liberal construction, obviously there must be limitations upon their application: Vowell v Shire of Hastings [1970] VR 764 at 766. It is neither necessary nor appropriate on this application to attempt to define the precise ambit of O 52 r 2(1). Suffice it to say that O 52 r 2(1) is directed to the inspection of physical objects, including, where appropriate, documents. It will generally apply to a document where what is in issue is the form of the document or by whom it was made, such as whether the document is a forgery: see, for example, Re Saxton [1962] 3 All ER 92; but not where what is in issue is the content of the document, where the application for inspection is governed by the rules as to discovery of documents: Huddleston v Control Risks Information Services Ltd [1987] 2 All ER 1035. In the latter case, Hoffman J (at 1037) distinguished between cases where the question concerns the medium, the actual physical object which carries the information, in which case the application is to inspect 'property' within the meaning of the then English equivalent to O 52 r 2(1), and those where the question concerns the message, the information which the object conveys, in which case the application should be for discovery.

5. In my view, then, except where the question concerns the document as a physical object, issues as to the inspection of any document are normally to be determined under the discovery and inspection rules set out in O 26.

6. In the present case, it is not apparent to me whether, or to what extent, the documents concerned are said by the plaintiffs to be relevant to any matter in issue in the action and therefore discoverable. I understand that the defendants deny the documents sought are discoverable and contend that, insofar as any documents of the nature sought are discoverable, they have been discovered. In any event, to the extent that the plaintiffs seek to inspect documents which they say contain information relevant to matters in issue in the proceedings, the proper course is to make application, not under O 52 r 2(1), but under O 26.

7. As the matter stands, the plaintiffs have not sought to take that course and they have not met the relevant requirements of those rules so such relief is not currently available.

8. If, on the other hand, the plaintiffs simply seek to enforce rights to inspection which are separate to these proceedings, being contractual rights to inspect arising under the partnership agreement, then O 52 r 2(1) has no application. Such an application would have to be brought in separate proceedings to enforce those rights.

9. It was submitted by counsel for the plaintiffs that when one reads s 24(7) of the Supreme Court Act 1935 (WA) and O 58 r 26, and having regard to O 1 r 4, O 52 r 2(1) should be construed so as to ensure the resolution of all matters between the parties and to avoid the multiplicity of proceedings.

10. It is, of course, equally the case that it is necessary to limit the ambit of discovery and inspection in an action in order to facilitate its timely disposal at a cost affordable to the parties. The requirements and limitations of O 26 are designed to that end. To allow O 52 r 2(1) to be used as a means by which inspection of a wide‑ranging nature, beyond the bounds of discoverable documents, might be made would effectively be to sidestep O 26.

Conclusion

1. To the extent that the plaintiffs say that the documents are discoverable in the proceedings, then the appropriate application under O 26, supported by the necessary evidence, would need to be brought. If the documents do not fall within the ambit of discoverable documents in the proceedings and the plaintiffs seek to enforce a right they say exists under the partnership agreement, or otherwise, to inspect the documents, it seems to me that the proper course is to commence separate proceedings for that purpose.

2. In my view, the plaintiffs are not entitled to the orders for inspection under O 52 r 2(1) and the appeal must therefore be dismissed.