Sanwa Australia Finance Ltd v Renshaw, H.v
[1992] FCA 508
•17 JULY 1992
Re: SANWA AUSTRALIA FINANCE LIMITED
And: HOWARD VICTOR RENSHAW; JAN RENSHAW; RENSHAW HENNESSY PTY. LTD.; STEWART
CLIFFORD RODGERS and ALAN GALLAGHER
No. ACT G51 of 1991
FED No. 508
Discovery and Inspection
COURT
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Neaves J.(1)
CATCHWORDS
Discovery and Inspection - Verified list of documents filed by party - Documents referred to in general terms - Claim that documents privileged from production on ground of self incrimination - Motion by party for declaration that he was not obliged to discover the documents - Whether documents identified and enumerated in accordance with Rules of Court - Whether claim for limitation on discovery process appropriate - Party directed to file amended list of documents identifying documents more precisely and showing basis for claim of privilege.
Federal Court Rules, Order 15, r.6
Companies (New South Wales) Code, s.556
Sorby v The Commonwealth (1983) 152 CLR 281
Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328
Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385
Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live-Stock Corporation (1979) 42 FLR 204
HEARING
CANBERRA
#DATE 17:7:1992
Counsel for the applicant: Mr W.W. Arthur
Solicitors for the applicant: Blake Dawson Waldron
Counsel for the first respondent: Mr W.G. Hodgekiss
Solicitors for the first respondent: Karageorge and Co.
Counsel for the third and fourth
respondents: Mr D.A. Kenyon
Solicitors for the third and fourth
respondents: Elrington Boardman Allport
There was no appearance for the second and fifth respondents
ORDER
THE COURT -
1. Orders that the motion notice of which was given on 29 June 1992 be dismissed.
2. Directs that the first respondent file and serve, within 21 days from the date of this order, a further amended list, verified by affidavit, of the documents that are, or have been, in his possession, custody or control relating to the matters in issue in the proceeding, that further amended list to identify and enumerate the documents as required by the Federal Court Rules.
3. Directs that, in respect of any particular document identified in the further amended list for which privilege on the ground of self incrimination is claimed, the list set out with particularity, whether by reference to the nature or contents of the document or otherwise, how the document bears upon the issue raised by the applicant's reliance on sub-pars (i) and (ii) of s.556(1) of the Companies (New South Wales) Code and the matters which are relied upon to bring the document within the relevant privilege.
4. Orders that the first respondent pay the costs of the applicant and of the third and fourth respondents of the motion.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
In a proceeding in this Court in which Sanwa Australia Finance Limited is the applicant and Howard Victor Renshaw, Jan Renshaw, Renshaw Hennessy Pty Limited, Stewart Clifford Rodgers and Alan Gallagher are respectively the first, second, third, fourth and fifth respondent, the Court gave a direction to the effect that the first respondent, Howard Victor Renshaw, file and serve a verified list of the documents which are or have been in his possession, custody or control relating to the matters in issue in the proceeding and that the documents in his possession, custody or control, saving all just exceptions, be made available for inspection by the applicants and the third and fourth respondents.
On 2 July 1992 the first respondent filed a list of documents dated 26 June 1992 but, as that list was in some respects defective, an amended list was filed on 10 July 1992. In the amended list, which is dated 9 July 1992 and signed by the first respondent's solicitor, a claim is made in par.2 that "(t)he documents enumerated in Part 2 of Schedule 1 numbered 21 are privileged from production on the ground they offend the privilege against self incrimination". Item 21 in Part 2 of Schedule 1 is in the following terms -
"21. A bundle of documents in a green folder marked with the letter 'A' and more particularised in the following category: -
(a) Stock numbers and movements and identifications and sales reports of cattle in the H.v Renshaw group of companies.
(b) Valuations and sales in respect of H.v Renshaw group of companies.
(c) Cattle invoices, purchases and sales of cattle and statement of accounts relating to the H.v Renshaw group of companies.
(d) Financial Returns for 1987, 1988 and 1989 of the H.v Renshaw group of companies.
(e) Tax Returns of H.v Renshaw group of companies and H V and J M Renshaw trading as Elowera Pastoral Company for 1988/1989 and 1989/1990.
(f) Ledger of cattle purchased in the H V Renshaw group of companies between February 1989 and October 1990."
The amended list has attached to it an affidavit sworn by the first respondent on 9 July 1992 in which he states that the statements of fact set out in par.2 of the list are true.
The first respondent has now moved the Court, on notice, for a declaration that he is not obliged "to discover the documents in a green folder exhibited and marked with the letter 'A'". In support of the motion, an affidavit sworn by the first respondent's solicitor on 26 June 1992 has been filed. That affidavit does no more than state that he has been advised by counsel "in relation to a certain group of documents that discovery of such group of documents offended the privilege against self incrimination" and that, because of that advice, the first respondent "objects to giving discovery of the documents exhibited in the green folder and marked with the letter 'A'". In referring to the documents for which privilege is claimed, the notice of motion and the affidavit simply mirror the language of the opening words of item 21 in Part 2 of Schedule 1 of the amended list of documents. The documents to which the affidavit refers are not before the Court. The affidavits of the first respondent and of his solicitor to which I have referred are, thus, the only material before the Court in support of the motion and the objection taken in par.2 of the amended list of documents. It will be observed that the objection in the amended list of documents is expressed in different terms from the declaration sought by the notice of motion.
The motion is opposed by the applicant and by the third and fourth respondents. There was no appearance on the hearing of the motion by the second and fifth respondents.
It appears from the statement of claim filed on behalf of the applicant that the proceeding has its genesis in the circumstances surrounding the provision of what is referred to as "lease finance" by the applicant, which carried on business as a financier in respect of livestock, to a company known as H.v Renshaw Pty Limited ("the company"). That company has, since 24 October 1990, been in liquidation and is not a party to the proceeding. It is alleged, and admitted in the defence of the first respondent, that at all material times the first respondent was a director of the company.
The lease finance, in the sum of $550,550, was provided pursuant to a series of livestock lease agreements each bearing the date 11 or 12 May 1989. Each of those agreements provided for repayment of the moneys advanced by 16 quarterly instalments, the last of such payments to be made on 12 February 1993. The applicant alleges that it was induced to enter into the agreements and to advance the moneys referred to therein by reason of representations made to it by the first respondent and the company and that those representations were false. Further or alternatively, the applicant alleges that it was induced to make the advances by the presentation to it by the third and fourth respondents, acting on behalf of the first respondent and the company, of invoices purporting to record the purchase of cattle at public auction by the company. It is alleged that no cattle were purchased at public auction or otherwise in accordance with the invoices and that the invoices were, in fact, fictitious.
It is asserted that, by reason of the matters to which I have shortly referred, the first, third and fourth respondents and the company made fraudulent misrepresentations and engaged in misleading and deceptive conduct within the meaning of s.52 of the Trade Practices Act 1974 (Cth) and s.42 of the Fair Trading Act, 1987 (N.S.W.).
It is further alleged that the obligations of the company under the livestock leasing agreements were jointly and severally guaranteed by the first and second respondents under deeds of guarantee dated 12 May 1989, that the company defaulted in making repayments under the livestock lease agreements and that a demand for payment was made by the applicant upon the first and second respondents on 24 October 1990. The applicant claims to recover the outstanding amount from the first and second respondents.
Paragraphs 25, 26 and 27 of the statement of claim are in the following terms:
"25. Further or alternatively, at the time when the company entered into the said livestock leases and incurred, thereby, debt to the applicant there were:
(a) reasonable grounds to expect that the company would not be able to pay its debts as and when they became due; or
(b) there were reasonable grounds to expect that, if the company incurred debts to the applicant, it would not be able to pay its debts as and when they became due.
26. At all material times and at the time immediately before the incurring of the liability and indebtedness to the plaintiff
(sic) pursuant to the said livestock leases, the first respondent and the fifth respondent were either or both directors of the company or took part in the management of the company.
27. In the circumstances, by reason of the provisions of s.556 of the Companies Act 1981 or, alternatively, by reasons of the provisions of s.556 of the Companies (NSW) Code 1981, the first respondent and the fifth respondent are jointly and severally liable for the payment of the debt due by the company to the applicant pursuant to the livestock leases."
By his defence, the first respondent denies the allegations in pars.25 and 27. As to par.26, he admits that he and the fifth respondent were directors as alleged and that he, the first respondent, took part in the management of the company. He does not admit that the fifth respondent did so. The first respondent does not plead any of the defences set out in s.556(2) of the Companies (New South Wales) Code, the text of which is set out below.
It is in relation to the claim pleaded in pars 25, 26 and 27 of the statement of claim that the question of privilege against self incrimination arises. At the time of the making of the livestock lease agreements and the provision by the applicant to the company of lease finance pursuant to those agreements, s.556 of the Companies (New South Wales) Code, so far as material for present purposes, provided:
"(1) If -
(a) a company incurs a debt, whether within or outside the State;
(b) immediately before the time when the debt is incurred -
(i) there are reasonable grounds to expect that the company will not be able to pay all its debts as and when they become due; or
(ii) there are reasonable grounds to expect that, if the company incurs the debt, it will not be able to pay all its debts as and when they become due; and
(c) the company is, at the time when the debt is incurred, or becomes at a later time, a company to which this section applies,
any person who was a director of the company, or took part in the management of the company, at the time when the debt was incurred is guilty of an offence and the company and that person or, if there are 2 or more such persons, those persons are jointly and severally liable for the payment of the debt.
Penalty: $5,000 or imprisonment for 1 year, or both.
(2) In any proceedings against a person under sub-section (1), it is a defence if the defendant proves -
(a) that the debt was incurred without his express or implied authority or consent; or
(b) that at the time when the debt was incurred, he did not have reasonable cause to expect -
(i) that the company would not be able to pay all its debts as and when they became due; or
(ii) that, if the company incurred that debt, it would not be able to pay all its debts as and when they became due.
(3) Proceedings may be brought under sub-section (1) for the recovery of a debt whether or not the person against whom the proceedings are brought, or any other person, has been convicted of an offence under sub-section (1) in respect of the incurring of that debt.
(3A) In proceedings brought under sub-section (1) for the recovery of a debt, the liability of a person under that sub-section in respect of the debt may be established on the balance of probabilities.
...."
By virtue of s.553(1) of the Companies (New South Wales) Code, s.556 applied to a company that had been wound up or was in the course of being wound up. Substantially similar provisions to ss.556 and 553(1) are now contained in ss.592 and 589(1) of the Corporations Law.
To sustain the claim made under s.556 of the Companies (New South Wales) Code, it is for the applicant to show -
(a) that the company incurred a debt;
(b) that immediately before the time when the debt was incurred there were reasonable grounds, objectively considered, to expect that the company would not be able to pay all its debts as and when they became due in terms of par.(a) or (b) of s.556(1);
(c) that the company is a company to which s.556 applies; and
(d) that the first respondent was a director of the company or took part in the management of the company at the time when the debt was incurred
Of those elements of the claim, (a), (c) and (d) are admitted by the first respondent in his defence.
There is no doubt that a party to a legal proceeding will not be compelled to produce a document which would tend to subject him to a punishment or penalty: Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at p 335. Protection will be afforded to the party if the result of the production of the document will be to provide evidence against him which may be used to establish his liability to a penalty in other proceedings: Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live-Stock Corporation (1979) 42 FLR 204 at pp 207-8. The privilege extends to protect the party from a requirement to produce or identify incriminating documents or reveal their whereabouts or explain their contents in an incriminating fashion: Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 at p 393. The mere fact that a party swears that he believes the disclosure of a document or its production for inspection will, or may, tend to incriminate him is not sufficient to attract the privilege. The Court must be able to see, from the circumstances of the case and the material before it, that there is reasonable ground to apprehend danger to the party if he is compelled to discover or produce the document: Sorby v The Commonwealth (1983) 152 CLR 281 at pp 288-9.
Item 21 in Part 2 of Schedule 1 of the amended list of documents is expressed in very general terms. It refers, for example, to "the H.v Renshaw group of companies" without identifying the companies concerned. It may be that that expression includes the company H V Renshaw Pty Limited but it is not stated that it is so included and it is not immediately apparent why documents relating to the affairs of that company should be in the possession, custody or control of the first respondent rather than the liquidator of that company. Nor is it immediately apparent why the production of each and every document which the breadth of the language used in item 21 would appear to encompass would, or might, tend to incriminate the first respondent.
The manner in which the matter has been approached by the first respondent and his legal advisers is redolent of a claim that he should be excused in limine from giving discovery at least in relation to any documents "of the H.v Renshaw group of companies" and of the business trading under the name "Elowera Pastoral Company". Thus, the motion was characterised by counsel for the first respondent as essentially an application "for a limitation on the discovery process". The circumstance that the statement of claim filed on behalf of the applicant makes specific reference to s.556 of the Companies (New South Wales) Code and that that section prescribes a penalty in respect of conduct falling within its terms, was said to be, of itself, sufficient to warrant a limitation upon the extent of the discovery which the first respondent should be required to give. No detailed reference was made to the nature or the contents of the documents in respect of which the privilege was claimed.
A claim in such general terms as that made in this case cannot, in my view, be sustained. It is clearly established that, in a case such as this where the applicant seeks to redress an alleged civil injury, it is appropriate that the respondent party be ordered to give discovery, leaving him to object to producing particular documents on the ground that such production may tend to expose him to a penalty: Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live-Stock Corporation (supra) at p 208: Pyneboard Pty Ltd v Trade Practices Commission (supra) at p 336.
I have already adverted to the width of the language in which item 21 in Part 2 of Schedule 1 of the amended list of documents is cast and its consequent lack of particularity. In my opinion, the amended list, as least so far as item 21 is concerned, does not sufficiently identify and enumerate the documents which are, or have been, in the possession, custody or control of the first respondent (see Order 15, r.6(2) and (3) of the Federal Court Rules).
For the reasons set out above the motion seeks an inappropriate order and is, therefore, dismissed. I direct, however, that the first respondent file and serve, within 21 days from the date of this order, a further amended list, verified by affidavit, of the documents that are, or have been in his possession, custody or control relating to the matters in issue in the proceeding, that further amended list to identify and enumerate the documents as required by the Federal Court Rules. I also direct that, in respect of any particular document identified in the further amended list for which privilege on the ground of self incrimination is claimed, the list set out with particularity, whether by reference to the nature or contents of the document or otherwise, how the document bears upon the issue raised by the applicant's reliance on sub-pars (i) and (ii) of s.556(1) of the Companies (New South Wales) Code and the matters which are relied upon to bring the document within the relevant privilege.
The first respondent must pay the costs of the applicant and of the third and fourth respondents of the motion.
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