National Australia Bank Limited v Abboud

[2020] NSWSC 282

Supreme Court

New South Wales

Medium Neutral Citation:

National Australia Bank Limited v Abboud [2020] NSWSC 282

Hearing dates:

On the papers

Decision date:

23 March 2020

Jurisdiction:

Equity - Commercial List

Before:

Ball J

Decision:

(1)   The notice to produce to the first defendant dated and served on 10 March 2020 be set aside.

 

(2)   The notice to produce to the second defendant dated and served on 10 March 2020 be set aside.

 (3)   The costs of the Notice of Motion filed on 16 March 2020 be costs in the cause.

Catchwords:

CIVIL PROCEDURE – notices to produce – application to set aside – whether too wide – no issue of principle – notices to produce set aside

Category:

Procedural and other rulings

Parties:

National Australia Bank (First Plaintiff)
HSBC Bank Australia Limited (Second Plaintiff)
Nicholas Abboud (First Defendant)
Michael Potts (Second Defendant)

Representation:

Counsel:

 

JC Giles SC with JA Arnott, JA Granger & PR Gaffney (Plaintiffs)
RM Smith SC with N Simpson (First Defendant)
S Nixon SC with A Jordan and A Zheng (Second Defendant)

 

Solicitors:

  Norton Rose Fulbright (Plaintiffs)
Hall & Wilcox (First and Second Defendants)

File Number(s):

2017/81938

Judgment

1. By a notice of motion filed on 16 March 2020, the first plaintiff, National Australia Bank Limited (NAB), and the second plaintiff, HSBC Bank Australia Limited (HSBC), (together, the Banks) seek to set aside two notices to produce served by the first defendant, Mr Abboud, and the second defendant, Mr Potts.

2. The notices to produce are in substantially the same terms. Both require the Banks to produce:

1.   Copies of any Dun and Bradstreet Quarterly Reports issued with respect to Australia including but not limited to specific reports on late payments and business failures, for the period being the first half year of the 2015 financial year (1HY15).

2.   Copies of any reports (other than those referred to in paragraph 1 above) including but not limited to broker reports, Government reports, or reports issued in relation to Dick Smith Holdings Limited [(DSH)] (or its subsidiaries or related entities) for the period 1HY15 which record or refer to delay or deferral of payment by debtors of creditor invoices in Australia.

3. The documents are said to be relevant to an allegation that in making the loans to DSH that the Banks did, the Banks relied on Messrs Abboud and Potts’ misleading and deceptive conduct in failing to disclose that in the period between August 2014 and May 2015 DSH had requested suppliers to delay delivery of inventory or extend time for payment of invoices.

4. In my opinion, the notices to produce are too wide in two main respects.

5. First, I do not accept that the Banks’ knowledge of the contents of Dun and Bradstreet’s quarterly reports or specific reports on the incidence of late payments and business failures in Australia is relevant to the question what the Banks would have done if they had known of the practices followed by DSH. The fact, for example, that some companies paid their debts late or failed says nothing about the position of DSH or what the Banks would have done if they had known of that position.

6. Second, in my opinion, the relevant knowledge of any practice followed by DSH is the knowledge of the decision-makers of the Banks. What other employees of the Banks knew or did not know is not relevant to the question whether those decision-makers and therefore the Banks relied on the alleged non-disclosures by approving the loans to DSH.

7. I would, however, permit an appropriately formulated notice to produce which sought documents of the type referred to in paragraph 2 of the notices to produce that came to the knowledge of the decision-makers before the Banks entered into the loans that they did.

8. The issues raised by the Notices to Produce are issues that would normally be dealt with as part of the ordinary management of the hearing. For that reason, in my opinion, the costs of the motion should be costs in the cause.

9. Accordingly, the orders of the Court are:

1. The notice to produce to the first defendant dated and served on 10 March 2020 be set aside.

2. The notice to produce to the second defendant dated and served on 10 March 2020 be set aside.

3. The costs of the Notice of Motion filed on 16 March 2020 be costs in the cause.

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Decision last updated: 23 March 2020