Prowse v Rocklands Richfield

[2012] NSWSC 448

Supreme Court

New South Wales

Medium Neutral Citation:	Prowse v Rocklands Richfield [2012] NSWSC 448
Hearing dates:	01/05/2012
Decision date:	01 May 2012
Jurisdiction:	Equity Division - Commercial List
Before:	McDougall J
Decision:	Further discovery ordered.
Catchwords:	PROCEDURE - civil - interlocutory issues - Practice note SC Eq 11 - disclosure - where verified further and better discovery of documents sought - Whether Practice note SC Eq 11 applies in circumstances that existing order for discovery have been performed - whether obligation to give discovery applies to documents discoverable as a result of amendments to "pleadings".
Legislation Cited:	Civil Procedure Act 2005 (NSW) Practice Note SC Eq 11 Uniform Civil Procedure Rules
Category:	Procedural and other rulings
Parties:	Alan Timothy Prowse (First Plaintiff) Frank Stewart Farrall (ABN 85 524 880 202) Rocklands Richfield Limited (ABN 82 057 121 749) (First Defendant) Jian He (Third Defendant) Pun Yan Wu (Fourth Defendant) Nai Ming Li (Fifth Defendant)
Representation:	Counsel: N J Kidd (Plaintiff) J Giles / C Hamilton-Jewell (Solicitor) (First, Third, Fourth and Fifth Defendants) Solicitors: Allens Arthur Robinson (First and Second Plaintiff) Minter Ellison (First, Third, Fourth and Fifth Defendants)
File Number(s):	2010/422209

JUDGMENT - On application by active defendants for verified further and better discovery

1. HIS HONOUR: I dealt earlier with so much of the active defendants' notice of motion filed on 13 April 2012 as dealt with the amendment of their commercial list response. I will not repeat what I said in my earlier reasons as to the parties and issues in the proceedings.

The application

1. I am now concerned with an application that the plaintiffs provide verified further and better discovery of documents. The defendants submit that the application does not come within Practice Note SC Eq 11 (the practice note) for reasons that I shall come. Alternatively, they submit, if the application does come within the practice note, those circumstances of themselves justify the making of the order sought.

1. The plaintiffs submit that the application is caught by the practice note. Further, and in any event, they raise objections as to some of the categories of documents sought by the application for further and better discovery.

Background

1. The background to the application is important. As I said in my earlier reasons, this is in substance an oppression suit. The Court has already made an order for general discovery. It did so on 19 May 2011. As one might expect, that order required the parties "to provide a verified list of any documents relevant to the facts in issue ... " and for inspection of documents so discovered.

1. Each of the active parties has given general discovery. There are some complaints as to the sufficiency of the discovery. Again as one might expect, those complaints were in the first instance pursued in correspondence. That is entirely appropriate. In particular, the active defendants' solicitors pointed out what they said were shortcomings in the discovery given by the plaintiffs. In reply, on more than one occasion, the plaintiffs' solicitors provided copies of further documents, in effect doing so by way of informal discovery.

1. A motion for further discovery was filed on 2 February 2012. The plaintiffs requested that the application be adjourned, apparently on the basis that they were looking for further discoverable documents. In the result, that happened. The plaintiffs' solicitors advised the active defendants' solicitors that the plaintiffs had "been able to identify a small number of additional potentially relevant documents".

1. As a result of that further informal discovery, the active defendants sought further to amend their commercial list response. In my reasons given earlier today, I gave leave for most, but not all, of the amendments to be made.

1. The application for further or particular discovery is justified, on the active defendants' submission, by reference to the issues now raised.

The practice note

1. I start by looking at the application of the practice note. By clause 2, the practice note "applies to all new and existing proceedings in the Equity Division", with a presently irrelevant exception.

1. Mr Kidd of counsel, for the plaintiffs, submitted (correctly) that these were "existing proceedings". Hence, he submitted the practice note applied.

1. As I have indicated, Mr Giles of counsel, for the active defendants, submitted that having regard to the background which I have recounted, the practice note had no application. Alternatively, he submitted, that background amounted to "exceptional circumstances" for the purposes of paragraph 4 of the practice note. It is necessary to take into account paragraph 4 (on Mr Kidd's submission) because although the plaintiffs have served their evidence, the active defendants have not yet served (or, at least, served all of) their evidence.

1. It may be accepted that the practice note applies, as it says, to all new and existing proceedings except those expressly mentioned. Thus, it may be accepted that, in general, the practice note applies to existing proceedings in the Commercial List (which these proceedings are) and in the Technology and Construction List.

1. However, in my view, it is implicit in the practice note that it is intended to apply to existing proceedings to the extent, at least, that there has been no order for discovery made and (in whole or in part) complied with. Whether or not that statement is correct at a level of absolute generality is a matter which requires to be considered and dealt with as other cases arise for consideration. It is enough to say, in the context of this case, that where there has been an order for general discovery, and where the parties have complied or purported to comply with that order, and where on any view of the facts the order has not been completely complied with, then the practice note should not be taken to prevent an application such as the present. If the practice note were to be taken to have that result, the consequence would be that a party that had ignored, or sought to evade, its obligations under an existing order of the court (and I hasten to say that I do not suggest that this example has any factual application in the present case) could get away with that tactic simply because, fortuitously, the practice note commenced to operate on 26 March 2012. It does not seem to me that a construction of paragraph 2 of the practice note which in effect might reward vice and punish virtue is one that should be accepted unless there is no alternative.

1. To put it in slightly different language, I do not think that the practice note has the effect of discharging or setting aside existing orders for discovery, except perhaps in the limited case where the parties have so conducted themselves so as, in effect, to abandon the regime established by the court's orders. If one thing is clear in this case, it is that the parties have not so conducted themselves.

1. However, I think, the question can be looked at in a slightly different way. An order for general discovery was made. The parties accepted that they were bound by it. They attempted, or purported, to comply. There have been demonstrated deficiencies in compliance. Those deficiencies have been rectified informally. But there has been no up to date affidavit of discovery confirming what has been done informally.

1. Thus, at the least, it seems to me that the plaintiffs should be required to give discovery of documents where it is accepted that there may have been incomplete or insufficient discovery already, and should be required to state their position on affidavit by providing a further verified list of documents. It seems to me that this can be justified, without any reference to the requirements of the practice note, simply because an existing order of the court has been made, and in circumstances where it has not been discharged or set aside, the parties should fulfil their obligation to comply with it.

Expansion of the request

1. However, I have indicated it is also said that the categories of documents in respect of which further and better discovery is sought go beyond the ambit of the general discovery that had earlier been ordered. The active defendants seek to answer this by referring to the expansion of the issues consequent upon the further amendment of their commercial list response.

1. Where an order for general discovery was made (or, for that matter, where an order for discovery by categories was made) and, after giving discovery, a party became aware that it had further discoverable documents, that party was required forthwith in effect to notify the other party of that fact and to give discovery of those documents - see UCPR r 21.6. In this case, leaving aside for the moment the minimal contest as to whether there are gaps in the existing discovery, one of the categories that has been proposed relates to issues introduced by the amendments. That is what was called category 2 in the annexure to the notice of motion. That category seeks discovery of documents relating to the beneficial interests in the shares held by the plaintiffs in the capital of HLM. Mr Kidd accepts that this is a factual issue raised by the further amended commercial list response, although he adds (and one can understand why he does), that it is not entirely clear where that issue goes.

1. Whether or not r 21.6 is applicable in terms of the situation where the issues are extended, and thus the ambit of a general order for discovery is likewise effectively extended, there is no doubt, in my view, that r 21.6 ought at least to be applied by analogy in those circumstances. It was not suggested, in this case, that the allegation as to beneficial ownership was merely colourable, or some form of attempt to raise an issue so as to get at documents.

Disputes as to particular categories

1. There is a particular question as to one subcategory, namely subparagraph (e). It seems to me that subparagraphs (a) to (d) of category 2 effectively exhaust the field, in terms of a contest for documents going to beneficial ownership. Subparagraph (e) is, in effect, a catch-all seeking production of any other documents, including in relation to HLM, passing between the named individuals. If documents within that subparagraph fall within any or all of the previous subparagraphs, they would be discoverable pursuant to it. If they do not, it is very hard to see what they add.

1. For those reasons, I think that an order for further or particular discovery should be made in respect of category 2 subparagraphs (a) to (d), but not in relation to subparagraph (e).

1. In case it be thought I have overlooked it, I should indicate that category 1 simply seeks to pick up complete copies of documents that have already been discovered, but which are said, for some reason or other, to be incomplete. The plaintiffs accept that if the documents produced are incomplete, they should produce complete copies.

1. Category 3 is not pressed, following the ruling I gave this morning on the application for leave to amend.

1. Category 4 is pressed. It calls for documents provided by the plaintiffs, or an advisory company on their behalf, to a company known as Minnelex. It appears that Minnelex provided a draft valuation of EPC 890, which is, as I said earlier today, either the sole or the substantial asset of HLM.

1. The active defendants, in their further amended commercial list response, do raise as an issue of fact that the plaintiffs procured a valuation from Minnelex. However, as I read it, it is the fact of procuring such a valuation, and not the instructions given to Minnelex, that is said to be relevant. Thus, category 4 appears to go beyond what might be said to be necessary having regard to the factual issue that is now raised.

1. In any event, the plaintiffs' solicitors say, in unchallenged evidence, that the plaintiffs kept no separate records of the documents given by them to Minnelex, and believe that to the extent that they hold such documents, it is likely that they would have been discovered in any event.

1. Be that as it may, if the active defendants are really interested in seeing what it was that was given to Minnelex, they would be able to serve a subpoena for production of documents on Minnelex. Whilst I accept that on the face of things the active defendants have the benefit of a general order for discovery, nonetheless, taking into account the requirements of s 56 of the Civil Procedure Act 2005 (NSW), and taking into account also what I see as being the apparent factual issue proposed in relation to Minnelex, I think that if the active defendants wish to satisfy their curiosity in relation to the documents provided to Minnelex, that is most likely to be the just, quick and cheap way of doing so. The alternative would be to require the plaintiffs to go once again through all their documents and to try and identify precisely what it was that they gave to Minnelex.

Conclusions

1. It follows, in my view, that prayer 2 of the notice of motion succeeds to the extent that I have identified. It follows, accordingly, that the plaintiffs should provide further and better discovery to that extent. Finally, as I indicated in the course of argument and as I have said in these reasons, it is also appropriate that once the plaintiffs have completed the process of discovery, they should file and serve a further verified list of documents.

[Counsel addressed.]

1. I note that the parties do not think it necessary to bring in formal orders to give effect to what I have just said and that the plaintiff will comply with the obligations that I indicated within 14 days. I reserve liberty to apply in the event that it is needed in relation to further discovery.

[Counsel addressed further.]

Costs

1. The plaintiffs seek their costs of the notice of motion. They do so substantially on the basis that to the extent that the active defendants have succeeded, it has been a success that the plaintiffs were prepared to concede in any event.

1. In addition, the plaintiffs seek the usual order for the amendment to the list response.

1. The first application is opposed. The second is not.

1. Although Mr Kidd's submissions focused on the fact that his clients in effect had said that they would give what the court has said they should give, the fact is in any event that he opposed the application on the basis that, now, the practice note applied and that no exceptional circumstances had been shown. The argument as to the detail of the further discovery was a second and alternative issue.

1. In any event, the parties have (and I must say the court is thankful for this) not subjected the court to reading the voluminous correspondence that has been exchanged on the question of further discovery. In circumstances where it is likely that one would have to do so to attempt to form a real understanding of the way in which the position that we have now reached evolved, I think that any order now for costs would have the potential to do injustice to one party or the other. I take into account also, as I have said, that there was a threshold objection based on the application of the practice note, and non-satisfaction of the requirements set out in paragraph 4.

1. In the circumstances, I order that the first, third, fourth and fifth defendants pay the plaintiffs' costs of and occasioned by the further amendment to the commercial list response but that otherwise the costs of the notice of motion be costs in the proceedings. The costs in relation to the amendment include so much of the costs of the notice of motion as relate to that topic.

1. I order the plaintiffs to file any reply to the further amended commercial list response by 3 May 2012.

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Decision last updated: 07 May 2012