Nedlands Pty Ltd & Anor v Chisholm & Anor (No.2) No. Scgrg-96-844 Judgment No. S471 - [1999] SASC 471

NEDLANDS PTY LTD & ANOR v CHISHOLM & ANOR (No.2)
[1999] SASC 0471

Magistrates Appeal: Civil

WILLIAMS J.

The need for a supplementary order

On 29 October 1999 I published my reasons to support an order allowing, in part, the defendant’s appeal from a Master’s order seeking discovery of documents. I then invited the parties to address me as to the formal orders.
In these reasons I dealt with one aspect of the matter upon the footing that a foreshadowed undertaking by the second plaintiff, Mr Heywood-Smith, or his solicitors, would make it unnecessary to pursue an issue as to discovery relating to the funding of the plaintiffs, or to determine a principle upon which I should act. However, in the course of a subsequent hearing on 1 November 1999 to settle the orders, I was informed that the anticipated undertaking “...cannot be forthcoming”[see T.145]. Accordingly, before entry of my order, it becomes necessary for me to take the matter further in light of the altered circumstances. In the absence of the undertaking I will identify the principle which should be applied.
The form of order and its justification

It is not in dispute that the plaintiffs are being financially supported in the conduct of the action. I have already expressed the view that in accordance with the principle in Knight & Anor v FP Special Assets Limited & Ors (Knight’s case) (1992) 174 CLR 178, the defendant, as a precaution, should be entitled to give notice to those who are maintaining the plaintiff.
In Knight’s case at 192-193 Mason CJ and Deane J said:
“Obviously, the prima facie general principle is that an order for costs is only made against a party to the litigation. As our discussion of the earlier authorities indicates, there are, however, a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party. Thus, for example, there are several long-established categories of case in which equity recognized that it may be appropriate for such an order to be made.
For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.”

and at 203 Dawson…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Nedlands Pty Ltd & Anor v Chisholm & Anor (No.2) No. Scgrg-96-844 Judgment No. S471 [1999] SASC 471
Case: [1999] SASC 471
Decision Date: 1 December 1999

CaseChat Overview and Summary

In the case of Nedlands Pty Ltd & Anor v Chisholm & Anor (No.2), the legal dispute revolves around the defendant's request for discovery of documents, which would allow him to serve notices on non-party individuals and entities that have provided funding or indemnity to the plaintiffs. The matter was heard in the Supreme Court of Western Australia, where the court was tasked with deciding whether the defendant's request should be granted and if any other measures could be taken to ensure proper notice was served to all relevant parties.

The primary legal issue before the court was whether the defendant's request for discovery of documents should be granted, and if not, what alternative measures could be put in place to ensure that all relevant non-parties were properly notified. The court had to consider the principle established in Knight's case and how it applied to the facts of this particular case, including the nature of the relationships between the parties and the potential implications of serving notice through representatives.

The court ruled that the defendant's application for discovery of documents should be refused. However, it was prepared to make an order nominating specific representatives, Mr. Lawton and one of the insurers, upon whom the defendant could serve notice for and on behalf of all non-parties who may have provided indemnity to the plaintiffs. The court considered this to be an appropriate substitute for direct service and a way to ensure that all relevant parties were aware of the defendant's proposed course of action. The court also directed that a copy of the notice be provided to Mr. Heywood-Smith and the Official Trustee, further ensuring that notice would come to the attention of all those who may be known as providing indemnity.

In conclusion, the court denied the defendant's request for discovery of documents but allowed for the nomination of representatives to serve notice on behalf of all non-parties. This decision aimed to strike a balance between the need for proper notice and the defendant's desire to access information about the funding and indemnity arrangements of the plaintiffs.

Orders

Orders of the court

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Background

Background to the litigation

The facts emerging upon appeal The defendant claimed to be entitled to discovery of documents to enable him to give notice to strangers. However, during the hearing of the appeal sufficient information has come forth to enable notices to be given. It now appears:1...... That the plaintiffs are being maintained by non-parties. Mr Whitington QC, of counsel for the plaintiffs, has formally acknowledged this fact during the hearing before me.2...... That the Federal Court has authorised an agreement between the second plaintiff and two insurance companies, Royal and Sun Alliance and Lumley General Insurance.3...... That, as acknowledged by counsel during argument on 1 November 1999 (see T.147), the Official Trustee in Bankruptcy agreed in January 1996 to indemnify the plaintiffs but these arrangements are said to have been overtaken by events in February 1998 when the second plaintiff “made his own arrangements for funding”.4...... That a committee of inspection has been appointed by creditors of the bankrupt estate of GM Killington, now deceased. The committee of inspection comprises three persons including Mr Ian Lawton. There is evidence that Mr Lawton, or his interests, may be acquiring the interests of other creditors in Killington’s estate. Pursuant to leave granted by the Federal Court, the Official Trustee, as trustee of the bankrupt estate, has been joined as a third party to the present proceedings.5...... It appears from a meeting of creditors of Killington held on 3 October 1996 that the Official Trustee had the support of certain indemnities from creditors. Mr Lawton provided a supplementary indemnity. Based on these facts as known to me when I published my earlier reasons, I was prepared to make my order as proposed below (see s4). However, further information has kept emerging and the parties respectively sought an opportunity to bring it before me. I will treat that further information as relevant to the subject of costs. In other respects this information confirms with more detail the essential facts which were already before me. I will deal later with this further material (see s5). The proposed order I will refuse the defendant’s application, as appellant, to order discovery relating to the funding of the plaintiffs. However, I am prepared to make an order, if the defendant wishes, nominating Mr Lawton and one of the insurers as representatives upon whom the defendant may serve notice for, and on behalf of, all non-parties who at any time in the past or in the future, may have provided indemnity or otherwise maintained the second plaintiff (whether directly or indirectly). As part of such order I would direct that a copy of the notice be provided to Mr Heywood-Smith and the Official Trustee. In this way I would expect the notice to come to the attention of all those who, from time to time, may be known as providing indemnity. That notice, being akin to substituted service, should provide an appropriate warning of the defendant’s proposed course of action. Whether the indemnity provided to the Official Trustee by creditors is relevant to the principle in Knight’s case is a matter which will be reserved for argument in the event that someone seeks to take advantage of the notice.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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