Patrick v Capital Finance Pty Ltd (No 4)

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FEDERAL COURT OF AUSTRALIA

Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436

PRACTICE and PROCEDURE – application for further discovery relating to document discovered by fifth respondent in Victorian County Court proceeding – implied undertaking not to use discovered document for collateral purposes – whether release from undertaking is required – competing public interests – frank and full discovery – administration of justice – compliance with Court orders – whether document can be used in this proceeding – nature of document – relevance – context – circumstances in which document was produced – whether Court should grant further discovery

Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 applied
Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 cited
Trade Practices Commission v Santos Ltd (1993) 42 FCR 203 cited
Distillers Co v Times Newspapers [1975] QB 613 at 621 cited
Australian Securities Commission v Ampolex Ltd (1995) 38 NSWLR 504 discussed
Geneva Finance Ltd (Rec and Mgr appointed) v Boys [2001] WASC 348 cited
North Kalgurli Mines Pty Ltd & Ors v GRD Minproc Ltd [2002] WASC 275 cited
Murex Diagnostics v Chiron Corp (No 2) (1995) 62 FCR 424 cited

WILLIAM GEORGE DOUGHTY PATRICK (for himself and as representing the persons referred to in paragraph 1 of the Statement of Claim) v

CAPITAL FINANCE CORPORATION (AUSTRALASIA) PTY LIMITED
(ACN 074 692 443), CAPITAL FINANCE CORPORATION (AUSTRALASIA) PTY LIMITED (ACN 074 692 443), CAPITAL FINANCE CORPORATION (AUSTRALIA) PTY LIMITED (ACN 074 352 104), CAPITAL FINANCE CORPORATION PTY LIMITED, (ACN 064 512 385), KERROD GRANT PARK, OVERSEA-CHINESE BANKING CORPORATION LIMITED (ABN 073 598 035), CHRISTOPHER COOTE, PHILLIP EMANUEL PRODUCTIONS LIMITED (ACN 002 693 512)

V 637 of 2001

TAMBERLIN J
SYDNEY (HEARD IN MELBOURNE)
16 MAY 2003


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 637 OF 2001

BETWEEN:

WILLIAM GEORGE DOUGHTY PATRICK
(for himself and as representing the persons referred to in paragraph 1 of the Statement of Claim)
APPLICANT

AND:

CAPITAL FINANCE CORPORATION (AUSTRALASIA)
PTY LIMITED (ACN 074 692 443)
FIRST RESPONDENT

CAPITAL FINANCE CORPORATION (AUSTRALIA)
PTY LIMITED (ACN 074 352 104)
SECOND RESPONDENT

CAPITAL FINANCE CORPORATION PTY LIMITED
(ACN 064 512 385)
THIRD RESPONDENT

KERROD GRANT PARK
FOURTH RESPONDENT

OVERSEA-CHINESE BANKING CORPORATION LIMITED (ABN 073 598 035)
FIFTH RESPONDENT

CHRISTOPHER COOTE
SIXTH RESPONDENT

PHILLIP EMANUEL PRODUCTIONS LIMITED
(ACN 002 693 512)
SEVENTH RESPONDENT

JUDGE:

TAMBERLIN J

DATE OF ORDER:

1 MAY 2003

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.        The Notice of Motion filed by the applicant on 15 April 2003 is dismissed.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 637 OF 2001

BETWEEN:

WILLIAM GEORGE DOUGHTY PATRICK
(for himself and as representing the persons referred to in paragraph 1 of the Statement of Claim)
APPLICANT

AND:

CAPITAL FINANCE CORPORATION (AUSTRALASIA)
PTY LIMITED (ACN 074 692 443)
FIRST RESPONDENT

CAPITAL FINANCE CORPORATION (AUSTRALIA)

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Details
Case
[2003] FCA 436
Decision Date

CaseChat Overview and Summary

The case of Patrick v Capital Finance Pty Ltd (No 4) involves an application for further discovery relating to a document discovered by a fifth respondent in a Victorian County Court proceeding. The document in question is a letter written by Mr Stephen Lawrence of OCBC to Mr Kerrod Park, both of whom are parties to the proceedings. The primary issue the court had to decide was whether the document could be used in the current proceeding given that it was discovered in another proceeding and there was an implied undertaking not to use it for collateral purposes. The court also needed to weigh the competing public interests in frank and full discovery against the administration of justice and compliance with court orders.

The court's reasoning was grounded in the obligation to make frank and full discovery as per the Federal Court Rules. The court considered the nature of the document, its relevance, and the context in which it was produced. The court noted that the letter was drafted in response to specific advice given to OCBC following the collapse of a previous investment scheme and was not directly related to the current proceedings. The court held that the document could be considered for use in the current proceeding if it was shown to be relevant and ought to have been the subject of discovery. The court did not require the release of undertakings by the County Court as a precondition for making such an order.

In conclusion, the court dismissed the applicant's notice of motion for further discovery, finding that the letter in question did not need to be released from the undertakings given to the County Court. The court determined that the document could be considered for use in the current proceeding if it was relevant and ought to have been discovered.

Orders

Orders of the court

1. The Notice of Motion filed by the applicant on 15 April 2003 is dismissed.

Background

Background to the litigation

As stated above, the application for discovery of the letter is brought under O 15 r 8 of the FCR. The applicant also relies on the obligation to make continuing discovery both in respect of documents which come into existence after initial discovery orders are made and of any documents which come to the attention of a party subsequent to the discovery provided by it and which ought to have been discovered: see O 15 r 7A of the FCR; Trade Practices Commission v Santos Ltd (1993) 42 FCR 203. Rule 8 empowers the Court to make an order for further discovery where it appears from the evidence, the nature or circumstances of the case or from documents filed in the proceeding, that there are grounds for a belief that some document or class of documents relating to any matter in question in the proceedings may or may have been in the possession, custody or power of the party.BACKGROUND The background and the nature of the case sought to be made out in the substantive proceeding before me are set out in the judgment on the no-case submission which was delivered on 18 December 2002. Details of the submissions initially made on the discovery application are set out in my judgment of 30 April 2003 in relation to the question whether I should inspect the letter of 22 January 1997 for the purpose of resolving the application for further discovery. For reasons there given, I decided it was necessary and appropriate to inspect the document in order to rule on the discovery application.LETTER OF 22 JANUARY 1997 The letter in question is written by Mr Stephen Lawrence of OCBC to Mr Kerrod Park, both of whom have been called in this proceeding. The letter, written on the letterhead of OCBC, is addressed to Mr Park of the Capital Group of companies and relevantly reads:“…Dear Grant1997 FILM FINANCE STRUCTUREWe refer to our various discussions regarding the above and confirm that the Bank has recently reviewed the current structure of the Film Finance type of transactions and from that review has decided that for 1997 it will only enter into these types of transactions of the following are satisfied1Save in exceptional circumstances the Bank will not lend or take assignment of loans where persons or corporations have borrowed for the purpose of investing in private offerings. The Bank will only lend funds or take assignment of loans where persons or corporations have entered into the transaction via a public prospectus.2To protect itself from the risk of being regarded as a linked credit provider the Bank will not directly provide loans or take assignment of loans where the loans have been introduced or provided by financiers who directly or indirectly have shareholdings in the promoters of the Film Finance project.However the Bank will allow an independent financier (whom the Bank may take assignment of loans from) to incorporate its applications for finance into the projects [sic] public prospectus, subject to those forms first being approved by the Bank’s legal counsel.3The Bank will be insisting that each promoter enter into a formal declaration stating that the funds lent to the investors are fully outlaid for the purposes stated in the Film projects prospectus and not in or towards the acquisition of the letter of credit/term bond.Should you have any questions regarding the above, please do not hesitate to contact us.Yours sincerelyStephen LawrenceSenior Relationship ManagerCorporate Banking, Victoria”EFFECT OF UNDERTAKING TO THE COUNTY COURT

Evidence

Evidence Before The Court

Therefore, in the event that the letter produced can be shown to be relevant and that it ought to have been the subject of discovery, I consider that I could and should make such an order without requiring release of the undertakings by the County Court as a precondition.ADDITIONAL EVIDENCE AS TO THE LETTER After judgment on the inspection aspect on 30 April 2003, additional evidence was filed on behalf of the first five respondents directed to the question whether, on all the material now before the Court, the letter could be considered to relate to any matter in question in the proceeding. This evidence was in aid of a submission that the letter, read in the context of the surrounding factual matrix, could not be reasonably said to be relevant to the substantive claim even in the Peruvian Guano sense. An order for particular discovery under r 8 is not, of course, limited to incomplete compliance with an earlier order for discovery but confers a discretion on the Court to require discovery of a document or class of documents whether or not the documents are relevant to an issue arising between the party seeking discovery and the party against whom the discovery is sought: see the discussion in Murex Diagnostics v Chiron Corp (No 2) (1995) 62 FCR 424 (Burchett J). The rule is intended to augment the power to order discovery so that an order can be obtained as to whether the party has in his possession or power any specific document or documents. The substance of the evidence filed by the respondents on the question of further discovery is directed to explain the circumstances in which the letter of 22 January 1997 came into existence in order to support a submission that it was not discoverable. The evidence is summarised below. Mr Lawrence of OCBC, in his affidavit of 23 April 2003, states that the letter was sent after receiving advice from Mr Hutchings, a member of the firm of Cornwall Stodart, in relation to a number of issues arising from the collapse of the Peter Pan Stage production in September 1996. The advice was given as a consequence of a request from the administrator of Peter Pan Management Pty Limited (one of the companies involved in the production) to one of the Capital companies on 2 October 1996. The letter related to a failed musical production in respect of a tax driven investment scheme. Mr Hutchings drafted a response to the administrator’s letter which was sent on 3 October 1996. The recollection of Mr Lawrence is that the issues raised in the letter from the administrator had not previously been raised. There was then a conference in late 1996 between Mr Hutchings and Mr Lawrence about OCBC financing films in the year 1997. OCBC sought advice with respect to possible problems that could be faced by it when entering into film finance transactions in the light of the collapse of the Peter Pan production and consequent negative publicity surrounding that failure. One of the issues discussed concerned the acquisition of term bonds and the purchasing of investors’ loans. Mr Hutchings provided a written advice on 13 January 1997. This was tendered in evidence on the discovery application. That detailed advice refers at one point to the Peter Pan scheme but there is no reference to the “Crazy For You” or to any other named investment scheme. Mr Lawrence states that following that advice, he sent the letter of 22 January to Mr Park. He also testifies that he was involved in the discovery process in conjunction with a solicitor from Cornwall Stodart in relation to OCBC’s discovery obligation in this proceeding and after reviewing documents which he considered were concerned with the “Crazy For You” scheme, he sent them to the solicitor. He did not believe that any documents which did not refer to “Crazy For You” were relevant to the proceeding.

Decision

Reasons for decision

TAMBERLIN J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: TAMBERLIN J

Full text does not contain this section.