Singida Pty Ltd v MLMK Pty Ltd - [2023] WASC 426

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   SINGIDA PTY LTD -v- MLMK PTY LTD [2023] WASC 426
CORAM:   REGISTRAR WHITBREAD
HEARD:   18 APRIL 2023
DELIVERED          :   17 NOVEMBER 2023
PUBLISHED           :   17 NOVEMBER 2023
FILE NO/S:   CIV 1310 of 2015
BETWEEN:   SINGIDA PTY LTD
First Plaintiff
INLAY PTY LTD
Second Plaintiff
EDWIN HERBERT BAKER
Third Plaintiff
AND
MLMK PTY LTD
First Defendant
LEGERDEMAIN PTY LTD
Second Defendant
KMLM INVESTMENTS PTY LTD
Third Defendant
POLARIS RESOURCES PTY LTD
Fourth Defendant
EXPLOSIVE MANUFACTURING SERVICES PTY LTD
Fifth Defendant
MARIANA KAKER
Sixth Defendant
DUNCAN LESLIE MINTO
Seventh Defendant

Catchwords:

Taking of Accounts ‑ Taking of accounts on the basis of wilful default ‑ Application to issue subpoena to accounting parties, defendants who are not accounting parties and non‑parties ‑ Whether subpoenas should be issued to accounting parties and defendants who are not accounting parties or whether further discovery should be ordered ‑ Whether documents already discovered for the purposes of trial should be produced again on a taking of accounts ‑ Proper scope of subpoena or discovery orders on a taking of accounts on the basis of wilful default

Practice and procedure ‑ Subpoena and discovery on a taking of accounts

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Application allowed in part

Category: B

Representation:

Counsel:

First Plaintiff	:	DH Solomon
Second Plaintiff	:	DH Solomon
Third Plaintiff	:	DH Solomon
First Defendant	:	G Abbott
Second Defendant	:	G Abbott
Third Defendant	:	G Abbott
Fourth Defendant	:	G Abbott
Fifth Defendant	:	G Abbott
Sixth Defendant	:	G Abbott
Seventh Defendant	:	G Abbott

Solicitors:

First Plaintiff	:	Solomon Brothers
Second Plaintiff	:	Solomon Brothers
Third Plaintiff	:	Solomon Brothers
First Defendant	:	Meridian Lawyers (Perth)
Second Defendant	:	Meridian Lawyers (Perth)
Third Defendant	:	Meridian Lawyers (Perth)
Fourth Defendant	:	Meridian Lawyers (Perth)
Fifth Defendant	:	Meridian Lawyers (Perth)
Sixth Defendant	:	Meridian Lawyers (Perth)
Seventh Defendant	:	Meridian Lawyers (Perth)

Cases referred to in decision:

Chan v Zacharia (1984) 154 CLR 178
Grimaldi v Chameleon Mining NL (No. 2) (2012) FCR 296
John Taylors v Masons [2005] WTLR 1519
Lampson (Australia) Pty Ltd v Fortescue Metal Group Ltd (No 2)
[2010] WASC 217
Maquire v Makaronis (1997) 188 CLR 449
NSW Commissioner of Police v Tuxford [2002] NSWCA 139
Rafferty v Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd)
[2017] WASC 18
Re Jarvis [1958] 1 WLR 815
Simpson v Chapman (1853) 43 ER 466
St George Bank Ltd v Bowman Irani & Ors [2007] VSC 382
T O'Connor & Sons Pty Ltd v Entact Clough Pty Ltd [2003] WASC 69
Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488
Willett v Blandford (1842) 66 ER 1027

REGISTRAR WHITBREAD:

1A The Application

Singida Pty Ltd (the First Plaintiff), filed an application for leave to issue subpoenas on the taking of accounts on 28 November 2022 (the Application).
MLMK Pty Ltd (MLMK), Legerdemain Pty Ltd (Legerdemain), Explosives Manufacturing Services Pty Ltd (EMS), Mariana Kaker (Ms Kaker) and Duncan Leslie Minto (Mr Minto) are, respectively, the First, Second, Fifth, Sixth and Seventh Defendants and they are the accounting parties (the Accounting Parties). The First Plaintiff is the party to whom the Accounting Parties have been ordered to account.
The First Plaintiff filed written submissions in support of the Application on 28 February 2023 and relies on the following affidavits in support of the Application:
1.the affidavit sworn by Adam Forrest Roberts (Mr Roberts) on 5 December 2022 (the First Roberts Affidavit);
2.the affidavit sworn by Mr Roberts on 28 February 2023 (the Second Roberts Affidavit); and
3.the affidavit sworn by Edwin Herbert Baker on 5 December 2022 (the Baker Affidavit).
The proposed subpoenas, in respect of which leave is sought on the Application, are annexures AFR3 to AFR16 of the Second Roberts Affidavit (which, following conferral with the Accounting Parties, were amended from the versions that were annexed to Mr Roberts' affidavit sworn on 25 November 2022 which was not read on the hearing of the Application). The proposed subpoenas are referred to by their AFR numbers in the Second Roberts Affidavit in this decision.
The Accounting Parties did not oppose leave being granted to issue subpoenas in the form set out in AFR13 (Cameron Minto); AFR14 (Geoff Hodson); AFR15 (Luke Kaker); AFR16 (Daniel Minto); and AFR17 (Martin Kaker); so, orders were made on 18 April 2023 permitting the issue of those subpoenas.
The issue of the remainder of the subpoenas remains in dispute between the parties. The Accounting Parties filed written submissions in opposition to the Application on 5 April 2023 and rely on the affidavit of Duncan Leslie Minto sworn on 2 February 2023 (the Minto Affidavit).
The Application proceeded to hearing on 18 April 2023. Both parties made oral submissions on the Application. I have taken all of the submissions and evidence filed on the Application into account in determining the Application.

1B Facts and Background

In the underpinning action the First Plaintiff, Inlay Pty Ltd, and Edwin Herbert Baker (the Plaintiffs) sought various orders declaring the existence and dissolution of various alleged partnerships and, on the assumption of the existence of each of the alleged partnerships, orders for the taking of accounts.
The action was listed for a 7-day trial before Curthoys J starting on 10 February 2020.
On the second day of trial, the parties substantially agreed orders to declare the nonexistence of two partnerships, declare the formation and dissolution of the EMSA Partnership on particular dates, and for the taking of an account of the EMSA Partnership on the footing of wilful default. This resulted in his Honour Justice Curthoys making the 13 February 2020 orders (the Accounting Orders) by which this taking of accounts (the Taking of Accounts) is proceeding and whereby the Accounting Parties have to account to the First Plaintiff on the basis of wilful default. The EMSA partnership was formed (see order 1 of the Accounting Orders) between the First Plaintiff, MLMK and Legerdermain).
His Honour Justice Curthoys did not make any findings in relation to the EMSA Partnership or as to the basis of the Taking of Accounts (other than as recorded in the Accounting Orders), and his Honour did not deliver reasons for decision in relation to any matter in issue between the parties. The trial has been adjourned until after the receipt by a Judge of the report from the appointed Registrar (the Report).[1]
[1] Order 8 of the Accounting Orders.
The Accounting Orders required the Accounting Parties to 'file and serve accounts verified by affidavits for the required accounts'. Two affidavits as to the accounts of the EMSA Partnership were filed on 27 and 28 October 2020 (the Account Affidavits)[2] and a Book of Accounts (the Accounts) was filed on 30 August 2022. The Accounts are produced as the accounts of the EMSA Partnership.
[2] Affidavit of Ms Kaker sworn 27 October 2020 and Affidavit of Mr Minto sworn 28 October 2020.
Paragraph 4.4 of the Accounting Orders gave the parties liberty to apply to the Registrar for directions and orders for the Taking of Accounts including for the issue of subpoenas.
By letter dated 2 March 2021,[3] the First Plaintiff advised the Accounting Parties that it considered the Account Affidavits were deficient and stated that it had been necessary to:
… engage a forensic accountant in order to properly prepare the accounts required by order 4.1 [of the Accounting Orders]. Accordingly, [the Plaintiffs] have engaged Korda Mentha.
[3] Annexure AFR10 of the Affidavit of Adam Forrest Roberts sworn 15 April 2021 (the Roberts Affidavit).
The First Plaintiff also challenges the adequacy of the Accounts.
Since that time the parties have been in dispute as to whether the Accounting Parties have provided all relevant documents necessary for the First Plaintiff to properly assess the Accounting Parties' accounts on the basis of wilful default and to be able to properly advance the First Plaintiff's position on the Taking of Accounts.

1C The issues to be determined on the Application

(a) Can subpoenas issue to the Accounting Parties when they are parties to the Taking of Accounts?

This point was in issue between the parties on the Application. Whilst the First Plaintiff remained of the view that subpoenas should issue to the Accounting Parties, on the hearing of the Application the First Plaintiff properly conceded that discovery orders (in the scope set out in the relevant proposed subpoenas) against the Accounting Parties would achieve the same result as subpoenas.
The Accounting Parties did not contend that discovery orders could not be made by a Registrar on a taking of account; their submissions are premised on the fact that discovery orders should be made as opposed to subpoenas issuing, and hence the Accounting Parties would be precluded on appeal or review from this decision from arguing that a Registrar does not have authority to make discovery orders on the Taking of Accounts.
In St George Bank Ltd v Bowman Irani & Ors [2007] VSC 382 the Court found that discovery orders could be made on a taking of account. Whilst that authority does not consider the issue of whether a subpoena is an appropriate, or possible, process against accounting parties on a taking of account on the basis of wilful default, it does provide authority for the fact that discovery orders can be made on a taking of account.
Accordingly, whilst the First Plaintiff may be correct in its submission that subpoenas may issue to the Accounting Parties as a matter of correct procedure, I find that it is not necessary for me to determine this point on the Application as discovery orders can be made against the Accounting Parties and they will achieve the same result as leave being granted to issue subpoenas. Whilst the scope of any orders I make could be the subject of appeal or review, given the position the Accounting Parties have taken on the application, a Registrar's jurisdiction to make discovery orders cannot be in dispute in this matter. As such, in the interests of progressing this matter (which has been on foot since 2015) in the most expedient way, without appeal or review, I have decided that I do not need to determine the issue of whether such subpoenas can issue, as discovery orders will be made against the Accounting Parties.

(b) Can subpoenas issue to Nitro Sibir Australia Pty Ltd (Nitro Sibir), Black Bear Enterprises Pty Ltd (Black Bear) and Jermill Pty Ltd (Jermill)?

Nitro Sibir, Black Bear and Jermill are not parties to the action and hence subpoena is the appropriate method by which documents should be obtained from those companies. The fact of the issue of a subpoena to any of these non-parties is not in issue but the Accounting Parties object to the scope of the proposed subpoenas.

(c) Can subpoenas issue to KMLM Investments Pty Ltd (KMLM) and Polaris Resources Pty Ltd (Polaris)?

KMLM and Polaris are the Third and Fourth Defendants respectively in the main action.
There is no matter in issue between the First Plaintiff and KMLM or Polaris on the Taking of Account as KMLM and Polaris are not accounting parties. Accordingly, the report made to the Court on the Taking of Accounts cannot make direct findings as to monies owed by either of those parties to the First Plaintiff. The financial relevance of transactions with, or conduct of, those parties would be in the monies, if any, to be accounted for to the First Plaintiff by the Accounting Parties.
Further, KMLM and Polaris should not be prejudiced as to costs by the making of discovery orders where, if such were made, they would likely have to seek the costs of compliance after the Report is made in the proceeding. If a subpoena is issued to each of them then KMLM and Polaris can recover the costs of compliance immediately. Accordingly, where no issue (to be determined by proposed orders in the Report) lies between the First Plaintiff and KMLM and Polaris on the Taking of Accounts and, having regard to the prejudice to those parties as to deferred costs recovery, it is appropriate for subpoenas to issue to each of those parties where they have, or may have, (applying the legitimate forensic purpose test) documents in their possession relevant to a fact in issue on the Account.

(d) Remaining issues for determination

The issues remaining to be determined on the Application are therefore the scope of the discovery orders to be made in respect of the Accounting Parties and the scope of the proposed subpoenas to Nitro Sibir, Black Bear, Jermill, KMLM and Polaris. There is also an issue as to how previous discovery already made in the proceeding is to be dealt with.

Taking of accounts on the basis of wilful default and the general principles that apply to the Application

Where an account has been ordered on the basis of wilful default the Court, of necessity, must have made a finding (or, as in this case where the Accounting Orders were made by consent, must have accepted that such a finding would be implicit) as to a breach of fiduciary duty by the accounting party or parties, that there was a breach of such a nature that the account is to be taken on the basis of wilful default.
An account on the basis of wilful default is concerned with identifying whether, and to what degree, any profit was actually made in breach of fiduciary duty, rather than what might hypothetically have been acquired if the fiduciary had acted properly.[4]
[4] See Maguire v Makaronis (1997) 188 CLR 449 at [468].
The task now before the Court on such an account is to make findings as to the extent of that wrongdoing so as to quantify equitable compensation for the breach.[5]
[5] See Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 92 ALJR 918 at [83] and [93] ‑ [95].
The difficulty in such cases lies in identifying and calculating what profit has been made by the accounting parties' use of the plaintiff's assets in the subsequent running of the partnership business or the use of those assets elsewhere.
An account on the basis of wilful default gives a plaintiff the right to interrogate that account in order to identify the extent of any compensation owed by objection to the account and by cross‑examination of the relevant witnesses. The issues are, of their very nature, different to the issues at trial which led to the Accounting Orders being made. The First Plaintiff cannot, by its own enquiry other than on subpoena, or by discovery, properly interrogate the Account, or the Account Affidavits, in order to ascertain the extent of their right, if any, to compensation.
In Willett v Blandford (1842) 66 ER 1027, Wigram V.C. explained the difficulty with a general, or universal rule, as to what had to be accounted for, because the circumstances in which profits are generated by businesses are so varied. In essence, new dealings can mix up the original assets, capital or profits with other business endeavours.
By analogy, where the date of death is replaced by the date of dissolution of the partnership, as Turner L.J. put it in Simpson v Chapman (1853) 43 ER 466:
… the profits derived from the trade carried on after death of the testator must depend upon the nature of the trade, the manner of carrying it on, the capital employed, the state of the account between the partnership and the deceased partner at the time of his death, and the conduct of the parties after his death.
It is impossible to lay down a general rule as to how the derived benefit, if any, should be valued (Re Jarvis [1958] 1 WLR 815 at 820 per Upjohn J).[6] John Taylors v Masons [2005] WTLR 1519, at [37], reflects the same concern regarding a general rule in partnership cases, referring to the difficulty in identifying what part of the profits of the subsequent business have been earned by the use of assets that belonged to the partnership before it ceased.
[6] Re Jarvis [1958] 1 WLR 815 at [820] per Upjohn J.
Here, an account on the basis of wilful default rests on misconduct and a breach of fiduciary duty in the use of partnership assets, which, of necessity, will therefore include an element of tracing the partnership assets and profits so that the amount due, if any, to the First Plaintiff can be assessed. There may also be questions as to whether any new business was carved out of the old; in those circumstances courts have awarded an account of the entire profits (with just allowances) of the accounting parties' business, notwithstanding that the new business has been built and grown by activity on the part of the defendant fiduciary (see Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488at 496).
Here, there will have to be a consideration of the way in which profits, if any, have been generated and the degree to which any such profit is considered to have been made in breach of fiduciary duty:
[I]dentification of a benefit or gain for which a Defendant fiduciary ... Is to be ordered to account is the outcome neither of discretion nor of the determination of a mere factual issue of causation. Identification of the benefit or gain is a matter of judgment informed by equitable principle and minds reasonably may differ as to the outcome of the application of these principles (Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd [2018] HCA 43, (2018) 92 ALJR 918 at [83] and [93] to [95]).
It is obvious and indisputable that an efficient account, where wrongdoing has been established, can only be achieved by the party to whom the account is to be made having access to all of the source documents relevant to the account. Of necessity, those documents will be held by the accounting parties or third parties. A plaintiff, on an account based on wilful default, can only interrogate the truth of the account if they have access to all the relevant source documents (subject, of course, to limits of proportionality).
The question here is whether the fiduciaries, the Accounting Parties, have generated profits by operating the business venture in breach of their fiduciary obligations to the First Plaintiff. In those circumstances difficult questions arise as to the degree to which those profits, if any, were generated in breach of the fiduciary duty, or from legitimate sources.
Quantification of the profit in more complex cases, such as the present matter, has one particularly contentious, and conceptually difficult, aspect: namely, what role, if any, is played by concepts of causation in this context. As was said by the High Court in Maguire v Makaronis (1997) 188 CLR 449 at 468, where equitable compensation or an account of profits is sought on the basis of breach of fiduciary duty:
There directly arises a need to specify criteria for a sufficient connection (or 'causation') between breach of duty and the profit derived, the loss sustained, or the asset held. Where the Plaintiff seeks recovery of a profit, the necessary connection has been identified in this Court by asking whether the profit was obtained 'by reason of [the Defendant's] fiduciary position or by reason of his taking advantage of opportunity or knowledge derived from his fiduciary position'.
As Deane J stated in Chan v Zacharia (1984) 154 CLR 178 at 199:
Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it.

The connection between the breach of fiduciary duty and the profit depends upon a precise examination of the facts of the case. The process might be better understood as a process of 'attribution' rather than causation in order not to add confusion to the question the Court needs to address, but the correct summation of the enquiry to be made was stated by Finn, Stone and Perram JJ in Grimaldi v Chameleon Mining NL (No. 2) (2012) FCR 296 at [517]:
The courts have long recognised that benefits or the profits derived by a misbehaving fiduciary may be attributable to multiple sources only one of which was the breach of fiduciary duty or trust; personal skill, expertise and exertion, goodwill or the financial contributions of the fiduciary and of third parties may have played their part as well in generating profits. In such circumstances, the assessment of the actual profit or benefit derived may involve a difficult, complex and costly exercise of attribution.
The authorities, which are scant in this area, evidence that the question of which profits are attributable to the breach of fiduciary duty, and which to legitimate behaviour or sources, is inherently difficult and heavily dependent on a close analysis of the facts. The Court is concerned with what was actually acquired by the fiduciary as a result of holding assets in a fiduciary capacity, or otherwise generated within the scope of, or by reason of, the fiduciary position, or in a transaction that involved a conflict. The account is concerned with identifying whether, and to what degree, the profit was actually made in breach of fiduciary duty, rather than what might hypothetically have been acquired if the fiduciary had acted properly. Hence, a 'causal' analysis of some sort is involved, which evidences a 'sufficient connection' or 'attribution', not an assessment of causation, in the normal common law (particularly tort) sense.
In that context, the issue of subpoenas and discovery arises in the assessment of what, and how much, information the Plaintiffs are entitled to access, and how, in order to be able to fairly assess and quantify the consequences of the Accounting Parties breach of fiduciary duty where there has been a finding (or tacit acceptance, in this case) that an act of wilful default has occurred.
In that context, how does the party to be accounted to obtain all necessary information in order to be able to properly interrogate the financial consequences of the breach of fiduciary duty such that any profit can be satisfactorily, and fairly, quantified?
At present, all the First Plaintiff has is the Accounts and Account Affidavits in respect of which there is an assertion on affidavit that such are complete and accurate on the basis of the supporting documents provided. The First Plaintiff is asked to accept the reliability of the Accounts and the Account Affidavits on their face in a context where the account has been ordered on a wilful default basis, so the Accounting Parties have already tacitly admitted that they have engaged in conduct which amounts to a breach of fiduciary duty. If the First Plaintiff is not entitled to use the coercive processes of the Court to go behind the Accounts and the Account Affidavits, then the Taking of Accounts would be reduced to a purely mathematical process, not involving the exercise of judicial power. Absent subpoena (or discovery), the First Plaintiff asserts that it has no way of effectively assessing the authenticity of the Accounts or the Account Affidavits. I accept that submission
I conclude that the only way that the First Plaintiff can properly examine the Accounts and Account Affidavits filed, where the Taking of Account is on the basis of wilful default, is by the Court process ensuring that the First Plaintiff is put in possession of all of the relevant evidence (which can reasonably and proportionately be obtained) in the context of the above legal framework. That evidence must be sufficient to permit the First Plaintiff to properly interrogate the Accounts and the Account Affidavits. The only way the First Plaintiff can reasonably achieve this is by way of discovery orders or subpoenas issued to relevant parties. It is in this context that the Application must be determined.
If discovery or subpoenas fail to adduce any documents, in addition to those in the Accounts or Account Affidavits, which can assist the First Plaintiff then an accounting or subpoenaed party's remedy lies in costs. A subpoenaed party will generally be entitled to recover its reasonable costs of compliance with the subpoena even if searches produce no responsive documents.

Documents already discovered in the proceeding and documents already supplied or made available to the First Plaintiff in the Accounts or the Account Affidavits

(a) Discovery obligations generally

A party obliged to make discovery must search diligently to identify all discoverable documents in that party's possession, custody or power.[7] Generally, subject to limited exceptions, a party's affidavit of discovery is conclusive as against the other party, including on the question of whether the party giving discovery has or has had in its possession, custody or power any relevant documents other than those discovered.[8] With respect to the party giving discovery, the affidavit of discovery is an admission, on oath, of such matters and operates as a formal admission for the purposes of the litigation. Hence, if a party wants to correct an affidavit of discovery, they must first obtain leave to file a correcting affidavit.[9]
[7] Rafferty v Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) [2017] WASC 18 at [34].
[8] Lampson (Australia) Pty Ltd v Fortescue Metal Group Ltd (No 2) [2010] WASC 217 at [27].
[9] Lampson v Fortescue Metal Group at [28].
Affidavits of discovery serve a specific purpose in litigation and, on the Taking of Account, it is insufficient for the Accounting Parties to state that the First Plaintiff has been provided with documents relevant to the matters in issue with the Accounts (presuming that all of the supporting documents referenced therein have been provided to the First Plaintiff) and in the Account Affidavits. A party has an ongoing obligation to give discovery in an action.[10] After the Accounting Orders were made for a taking of account on the basis of wilful default, the scope of discovery required from the Accounting Parties of necessity changed, and expanded, given the scope of the Accounting Orders, in relation to the obligation to account.
[10] T O'Connor & Sons Pty Ltd v Entact Clough Pty Ltd [2003] WASC 69 at [57].
The documents relevant to that part of the proceeding are, of necessity, different to the facts in issue at trial. The position on discovery on a taking of account on the basis of wilful default is different to that on orders for a taking of account in common form.[11] This is particularly so where issues have already been determined at trial and a party seeks to reagitate issues already determined at trial on a taking of account in common form; then, a much higher bar is placed on the basis on which further discovery orders would be made as opposed to orders requiring the filing of accounts on affidavit with supporting documents annexed.[12] A taking of account on the basis of wilful default is a wide ranging enquiry based on a finding of misconduct such that the accounting parties are under an obligation to produce financial records which can assist such an enquiry into the financial consequences of their misconduct. Inevitably, in that circumstance, there may/will likely be documents not discovered during the course of the initial trial.

(b) Whether documents already discovered in the proceeding have to be discovered again in a new affidavit of discovery for the purposes of the Taking of Accounts

[11] St George Bank Ltd v Boman Irani& Ors [2007] VSC 382.

[12] St George Bank v Boman Irani at [10].

One of the issues on the Application was the Accounting Parties' and other defendants' (KMLM and Polaris) (collectively, the Defendants) argument that they should not be required to give discovery, or to answer a subpoena, in respect of documents that have already been supplied or made available to the First Plaintiff in the course of previous discovery in the underlying proceeding.
Given that orders for discovery are appropriate on the Taking of Account and the proceeding is still on foot, an issue arises as to whether discovery of documents previously discovered in the proceeding precludes the need for 'rediscovery' on the Taking of Accounts. Reliance by the Accounting Parties on previous discovery in the action would place the onus on the First Plaintiff to go through all of the pretrial discovery in order to ascertain what documents are relevant to the Taking of Accounts. The situation has changed since pretrial discovery to the extent that:
(a)the scope of the issues in dispute, and therefore the scope of discovery, has changed substantially by reason of the Accounting Orders; and
(b)the First Plaintiff has the benefit of the Accounting Orders which evidence that a wrong has been done to it and what remains is to quantify the consequences of that wrong.
The Accounting Orders place an obligation on the Accounting Parties to account to the First Plaintiff. Hence, any documents previously discovered by the Accounting Parties which are relevant to the Taking of Accounts should be properly identified by them on the Taking of Accounts without the First Plaintiff being put to the cost and expense of trawling through the previously discovered documents in order to determine which are, or may be, relevant to the Accounting Parties' compliance with the Accounting Orders.
At the hearing of the Application, the Accounting Parties agreed that they would be willing to provide a schedule of those documents which have been previously discovered but which would fall within the scope of the discovery orders on the Taking of Account. Applying case management principles, such that parties are not put to unnecessary costs or time impositions, this is an acceptable way of dealing with balancing the fact that some documents the subject of discovery on the Taking of Account may have already been produced by way of earlier discovery in the action. However, in my judgment, each of the Accounting Parties should be required to produce such schedule (as is relevant to them) in the form of a further affidavit of discovery, as there could be scope on the hearing of the account for the Accounting Parties (or their directors) to be cross-examined on the veracity of any such schedule as it applies to the Accounts or the Account Affidavits. In particular, it may be relevant on the Taking of Accounts that the Accounting Parties have deposed in the usual form required by an affidavit verifying discovery, that they have no documents in their possession other than those listed, and that they depose as to what has happened to relevant documents that are no longer in their possession.
I will hear the parties as to the form the relevant schedule should take such that each relevant document is both: (i) identified with certainty; and, (ii) its location in previous discovery is clearly identified.

(c) Whether documents already supplied or made available to the Plaintiffs in the Accounts or Account Affidavits have to be discovered on affidavit for the purposes of the Taking of Account

The next issue on the Application was the Accounting Parties' argument that they should not be required to give discovery on affidavit of documents that have already been supplied or made available to the Plaintiffs in the course of the Accounting Parties providing the Accounts. Whilst the Accounting Parties have filed the Account Affidavits, the Accounts are not produced on affidavit. For the purpose of these reasons I have assumed that all of the documents referenced in the Accounts have been provided to the First Plaintiff.
It would appear that not all of the documents relevant to the Accounts are produced in the Account Affidavits or in affidavits of discovery filed earlier in the proceeding. Discovery on affidavit is required for very specific reasons rather than just a list of documents that a party could produce as being relevant to the matters in issue, for the reasons discussed above.
Neither the Account Affidavits, nor the provision of supporting documents in respect of the Accounts, can substitute for the ongoing discovery obligations of the Accounting Parties, on affidavit, on a taking of account on the basis of wilful default.
I find that all documents relevant to the Taking of Account should be produced in an affidavit of discovery by each of the Accounting Parties and that those documents already provided with the Account Affidavits or in the Accounts should be included in each affidavit of discovery such that they can also be easily identified and located in the Accounts, the Account Affidavits and the supporting documents for the Accounts.
Having determined those preliminary points I now turn to consider the scope of the subpoenas to each of Nitro Sibir, Black Bear, Jermill, KMLM and Polaris and the scope of the discovery to be given by the Accounting Parties.

The scope of the orders to be made

4A The scope of the proposed subpoenas to Nitro Sibir, Black Bear and Jermill

(a) The proposed subpoena to Nitro Sibir – AFR3

The First Plaintiff seeks leave to issue a proposed subpoena to Nitro Sibir in the following terms:
The documents and things you must produce are:
1.any paper or electronic documents ('Documents') comprising financial statements as defined in section 9 of the Corporations Act 2001 for Nitro Sibir Australia Pty Ltd ('Nitro Sibir') for each of the financial years ending 30 June 2010 to 30 June 2022 inclusive;
2.any Documents created or received by any employee or officer of Nitro Sibir comprising communications or records of communications between Nitro Sibir and Duncan Leslie Minto ('Mr Minto') and Mariana Kaker ('Ms Kaker'), or either of them, or ~~any employee or officer of any of entity associated with either of them, including, but not limited to~~ Legerdemain Pty Ltd ('Legerdemain'), KMLM Investments Pty Ltd ('KMLM'), MLMK Pty Ltd ('MLMK') Polaris Resources Pty Ltd ('Polaris'), Explosives Manufacturing Services Pty Ltd ('EMS'), Merlin Services ('Merlin') or ~~and~~ Black Bear Enterprises Pty Ltd ('Black Bear'), during the period from 1 July 2009 to 30 June 2022;
3.any Documents, including, but not limited to purchase orders, bank statements and remittance advices that record the purchase by Nitro Sibir from the EMSA Partnership or from EMS of ~~any of~~ the products known as Python Maxisplit.:
~~a. Python Maxisplt;~~
~~b. Polar PX;~~
~~c. Polar PX Plus; and~~
~~d. Polar PXI.~~
during each of the financial years ending 30 June 2010 to 30 June 2022 inclusive; ~~and~~
3.any Documents, including, but not limited to invoices, bank statements and remittance advices that record the sale by Nitro Sibir of ~~any of~~ the products known as Python Maxisplit:
~~a. Python Maxisplt;~~
~~b. Polar PX;~~
~~c. Polar PX Plus; and~~
~~d. Polar PXI.~~
during each of the financial years ending 30 June 2010 to 30 June 2022 inclusive; ~~and~~
4.any Documents that record any payments made by Nitro Sibir to, or any benefits conferred by Nitro Sibir on, any of Mr Minto, Ms Kaker ~~or to any entity associated with either of them, including but not limited to~~ Legerdemain, KMLM, MLMK, Polaris Resources, EMS, Merlin or ~~and~~ Black Bear, during each of the financial years ending 30 June 2010 to 30 June 2022 inclusive;
5.any Documents that record any disposal, acquisition or buy-back of any shares in Nitro Sibir held by Black Bear.

Summary of the Accounting Parties' objections

Categories 1, 3, 4 and 5 are not objected to, but the Accounting Parties reserve the right to make submissions on any application by Nitro Sibir to vary or set aside the subpoena.
The Accounting Parties object to category 2 on the basis that it is too broad and includes all 'communications' on any subject for a 13 year period.

The First Plaintiff's submissions in support

In support of the breadth of the proposed Nitro Sabir subpoena the First Plaintiff submits that the pleaded basis of Singida's claims for accounts to be taken on the footing of wilful default is that the Defendants, or some of them, financially supported the establishment of Nitro Sabir, a direct competitor of the EMSA Partnership in which MLMK held shares. An updated ASIC search shows that the relevant shares are now held by Black Bear, (the sole shareholder of Black Bear is Ms Kaker, the sixth Defendant).
The First Plaintiff further submitted that:
(a)The Accounts include sales data which is said by the First Plaintiff to reveal that Nitro Sibir was, and still is, a customer of the EMSA Partnership. Ms Kaker was an employee of Nitro Sibir until 31 October 2022.[13] Mr Minto, the seventh defendant was a fulltime employee of Nitro Sibir between July 2014 and 30 April 2019 and again from January 2021 until the present.[14] Mr Minto operates a business known as 'Merlin Services'.[15]
[13] Paragraph 19 of the affidavit of Ms Kaker sworn on 20 December 2022 (the Kaker Affidavit).
[14] Paragraph 4 of the Minto Affidavit.
[15] Paragraph 6 of the Minto Affidavit.
(b)The documents sought by the First Plaintiff in categories 1, 2 and 4 of the schedule to the draft subpoena to Nitro Sibir are said to be required to facilitate the necessary inquiry into any financial assistance provided to Nitro Sibir by any of the Accounting Parties and any benefit (that may be property of the EMSA Partnership because of breaches of fiduciary duty pleaded in the statement of claim or other breaches of fiduciary duty established on the Taking of Accounts) that any of them may have obtained.
(c)Accordingly, all communications between Nitro Sibir and the parties sought in category 2 are submitted to be to part of a relevant line of inquiry by the First Plaintiff for the purposes of the Taking the Accounts on the footing of wilful default.
(d)Whilst the Accounts record payments made to the EMSA Partnership in respect of sales (by way of payments made to EMS), notwithstanding that some records of payment to be produced on subpoena may be the same as those recorded in the Accounts (so far as they relate to EMS), documents in categories 1, 2 and 4 are sought from Nitro Sibir because those documents will enable the First Plaintiff:
(i)to investigate the other side of the transactions referred to in the Accounts; and
(ii)to examine any differences between the records of Nitro Sibir, transactions recorded in the Accounts and the documents provided by the Accounting Parties supporting the Accounts (including any annotations that may be on the documents of Nitro Sibir).
(e)The business of the EMSA Partnership includes the manufacture of a product known as 'Python Maxisplit'.[16] Whilst sales to Nitro Sibir are recorded in the Accounts, the documents sought by category 3 of the draft subpoena to Nitro Sibir will allow the First Plaintiff to investigate the other side of those transactions and, in particular, to fully investigate the sale of Python Maxisplit to Nitro Sibir including, but not limited to, investigating any discounts that may have been provided to Nitro Sibir compared to sale prices of Python Maxisplit in sales to other customers of the EMSA Partnership. The First Plaintiff submits that such investigation will be able to be completed because the documents sought will (or should) include details such as quantities and unit prices which are largely not included in the documents supporting the Accounts which have been provided to the First Plaintiff to this point.
(f)As to category 5, as Black Bear is a company of which Ms Kaker is a director and the sole shareholder,[17] any documents recording any disposal, acquisition or buy-back of shares held by Black Bear in Nitro Sibir is relevant to the First Plaintiff's line of inquiry as to any benefits that Ms Kaker obtained from Nitro Sibir which may wholly or partially be included in the accounting on the basis of wilful default for breaches by her and/or the other accounting parties.
(g)If the Accounting Parties contend that certain communications (or categories of communications) should be excluded from the scope of the documents to be produced in accordance with category 2, then the relevant Accounting Parties must identify those communications and provide cogent reasons why they are not relevant to the line of inquiry.
[16] Paragraph 5 of the Kaker Affidavit; paragraph 4 of the Baker Affidavit.
[17] See annexure AFR2 to the First Roberts Affidavit.

The First Plaintiff made further submissions relating to the scope of this subpoena in the context of the scope of categories as referred to later in this decision.

(b) The proposed subpoena to Black Bear – AFR11

The First Plaintiff seeks leave to issue a proposed subpoena to Black Bear in the following terms:
The documents and things you must produce are:
1. any paper or electronic documents (“Documents”) comprising communications or records of communications between any employee or officer of Nitro Sibir Australia Pty Ltd ('Nitro Sibir') and any employee or officer of Black Bear Enterprises Pty Ltd ('Black Bear') during the period 1 July 2009 to 30 June 2022; and
2. any Documents that record any payments made by Nitro Sibir to Black Bear during each of the financial years ending 30 June 2010 to 30 June 2022 inclusive.

Summary of the Accounting Parties' objections

The Accounting Parties object to category 1 of the proposed Black Bear subpoena on the basis that the category is too broad and includes all 'communications' on any subject for a 13 year period.

Summary of the First Plaintiff's submissions in support

In support of this proposed subpoena the First Plaintiff submits that Ms Kaker is, and has since 30 June 2016 been, a director, sole secretary and sole shareholder of Black Bear.[18] As at 29 November 2022, Black Bear held 1,120,000 ordinary shares in Nitro Sibir.[19] The First Plaintiff seeks leave to issue a subpoena addressed to Black Bear in essentially the same terms as those addressed to the Accounting Parties in order to assist their inquiry as to any benefits derived by either Ms Kaker, or Mr Minto, through receipts of Black Bear, for which Ms Kaker and/or Mr Minto is liable to account on the footing of wilful default.
[18] See annexure AFR2 to the First Roberts Affidavit.
[19] See annexure AFR1 to the First Roberts Affidavit.
The First Plaintiff made further submissions relevant to scope which are referred to later in this decision.

(c) The proposed subpoena to Jermill – AFR12

The proposed scope of the subpoena to Jermill

The First Plaintiff seeks leave to issue a proposed subpoena to Jermill in the following terms:
The documents and things you must produce are:
1. any paper or electronic document ('Documents created or received by any employee or officer of Jermill Pty Ltd ('Jermill') comprising communications or records of communications between any employee or officer of Jermill and Duncan Leslie Minto ('Mr Minto') and Mariana Kaker ('Ms Kaker'), , or either of them, or any employee or officer of any entity associated with either of them, including, but not limited to Legerdemain Pty Ltd (“Legerdemain”), KMLM Investments Pty Ltd (“KMLM”, MLMK Pty Ltd (“MLMK”), Polaris Resources Pty Ltd (“Polaris”), Explosives Manufacturing Services Pty Ltd (“EMS”), Merlin Services (“Merlin”) and Black Bear Enterprises Pty Ltd (“Black Bear”), during the period from 1 July 2009 to 30 June 2022; and
2. any Documents that record any payments made by the EMSA Partnership or EMS to Jermill during each of the financial years ending 30 June 2010 to 30 June 2022 inclusive.

Summary of the Accounting Parties' objections

The Accounting Parties object to category 1 of the proposed Jermill subpoena on the basis that it is too broad and includes all 'communications' on any subject for a 13 year period. They do not object to category 2 save to say that it should be limited at least at first instance to bank statements on the basis of proportionality.

Summary of the First Plaintiff's submissions in support of the proposed subpoena to Jermill

In support of this proposed subpoena, the First Plaintiff submits that Simona Jermin is:
(a)a director and shareholder of Jermill;[20]
(b)the sole secretary of Nitro Sibir;[21] and
(c)employed by Nitro Sibir[22].
[20] See paragraph 9 and annexure AFR6 to the First Roberts Affidavit.
[21] See paragraph 4 and annexure AFR1 to the First Roberts Affidavit.
[22] See paragraphs 4 and 7 and annexures AFR1 and AFR4 to the First Roberts Affidavit.
The First Plaintiff submits that the Accounts record many payments having been made to Jermill by the EMSA Partnership for items such as materials and supplies, professional services, consulting and management fees, and premises ‑ repairs and maintenance.[23] The documents sought in the draft subpoena addressed to Jermill will enable the First Plaintiff to investigate the other side of transactions with Jermill recorded in the Accounts.
[23] For example, at line 607 of the FY 2015 accounts.
The First Plaintiff made further submissions relevant to the scope of this subpoena which are referred to later in this decision.

4B Proposed subpoenas which will form the ambit of further discovery orders to be made in respect of the Accounting Parties and proposed subpoenas to KMLM and Polaris

Discovery orders will be made in respect of the Accounting Parties but the scope of those orders needs to be considered as to whether the draft subpoena text should form the basis of the discovery orders to be made in the context of the objections made. The scope of the subpoenas to KMLM and Polaris also falls to be considered in the context of the objections made.
The scope of documents sought from each of the Accounting Parties, KMLM and Polaris includes the following common categories:
(i)Category 1
The documents and things you must produce are:
1.any paper or electronic documents ('Documents') comprising:
(a)bank statements for any bank account held in the name of [the relevant discovery or subpoenaed party]; and
(b)tax returns lodged by [the relevant discovery or subpoenaed party],
for each of the financial years ending 30 June 2010 to 30 June 2022 inclusive;
(ii)Category 2
2.any Documents comprising communications or records of communications between any employee or officer of [the relevant discovery or subpoenaed party] and any employee or officer of Nitro Sibir Australia Pty Ltd ('Nitro Sibir') during the period 1 July 2009 to 30 June 2022; and
(iii)Category 3
3.any Documents that record any payments made by Nitro Sibir to [the relevant discovery or subpoenaed party] during each of the financial years ending 30 June 2010 to 30 June 2022 inclusive.[24]
[24] This is category 5 in the proposed orders to EMS.
As to these common categories, the Accounting Parties raise the following common objections:
(a)The Accounting Parties object to the scope of category 1 on the basis that: (i) it is appropriate for Accounting Parties to provide documents by discovery not under subpoena; and, (ii) bank statements and tax returns for requested period should be provided by way of informal discovery.
(b)The Accounting Parties object to the scope of category 2 on the basis that it is too broad and includes all 'communications' on any subject for a 13 year period.
(c)The Accounting Parties object to the scope of category 3 on the basis that it is oppressive and payments will be recorded in bank statements of the relevant discovered or subpoenaed parties to be discovered under category 1.
As to EMS, the First Plaintiff seeks two additional categories:
3.any Documents, including, but not limited to purchase orders, bank statements and remittance advices that record the purchase by ~~Nitro Sibir~~ any entity from EMS of ~~any of~~ the products known as: Python Maxisplit
~~a. Python Maxisplt;~~
~~b. Polar PX;~~
~~c. Polar PX Plus; and~~
~~d. Polar PXI.~~
during each of the financial years ending 30 June 2010 to 30 June 2022 inclusive; and
4.any Documents that record any payments made by Nitro Sibir to EMS during each of the financial years ending 30 June 2010 to 30 June 2022 inclusive.;
The Accounting Parties object to the scope of categories 3 and 4 of the EMS proposed production on the basis that it is oppressive and records of purchases of Python Maxisplit from the EMSA partnership are already included in the MYOB data offered to the Plaintiffs.

4C The First Plaintiff's submissions in support of the scope of the categories sought in respect of Accounting Parties and Black Bear, KMLM and Polaris

Each of the draft subpoenas addressed to the Accounting Parties seek documents in three categories (which categories would now form the potential scope of the discovery orders to be made).

(a) Category 1 ‑ Bank statements and tax returns

Tax returns and bank statements for each of the Accounting Parties are said by the First Plaintiff to be relevant to the First Plaintiff's inquiry as to any benefits received by any of the Accounting Parties for which they are liable to account for any breaches of fiduciary duty concerning Nitro Sibir, or any other breaches yet unknown to the First Plaintiff.
The bank statements already included by the Accounting Parties in the documents supporting the Accounts are said by the First Plaintiff to be limited extracts that are included for the sole purpose of supporting specific entries made in the Accounts.
The First Plaintiff submits that, by this category, it requires a complete set of bank statements for all accounts held in the name of the relevant parties in order to facilitate the First Plaintiff's inquiry. It is further submitted that such inquiry cannot be conducted by reviewing only the piecemeal extracts of bank statements that are included in the documents supporting the Accounts provided to date.

(b) Category 2 ‑ Communications between the Accounting Parties and Nitro Sibir

The First Plaintiff submits that the pleaded basis of the First Plaintiff's claims for accounts to be taken on the footing of wilful default in the underlying action was that the Accounting Parties financially supported the establishment of Nitro Sibir, a direct competitor of the EMSA Partnership and in which MLMK held shares. Those shares are now held by Black Bear in which Ms Kaker is the sole shareholder. It is submitted that Nitro Sibir was, and remains, a customer of the EMSA partnership and that Ms Kakar was an employee of Nitro Sibir until 31 October 2022 and Mr Minto was a full time employee of Nitro Sibir between July 2014 and April 2019 and from January 2021 onwards (whilst also at all time operating Merlin Services).
Consequently, the First Plaintiff submits that it needs to review communications between the Accounting Parties, KMLM and Polaris and Nitro Sibir as they may be relevant to showing benefits to be accounted for, having been obtained from the pleaded breaches or breaches, which benefits are said by the First Plaintiff to be yet unknown to it. They submit that they are entitled to issue subpoenas to Nitro Sibir, as well as each of the Accounting Parties, KMLM and Polaris seeking documents of this same category, because each party's records may differ from the others and, for example, parties may have made annotations on some records of communications.

(c) Category 3 – Documents recording payments made by Nitro Sibir

Documents that record payments made by Nitro Sibir to any of the Accounting Parties, KMLM and/or Polaris are submitted by the First Plaintiff to be relevant to its line of inquiry as to any benefits obtained by any of the Accounting Parties, KMLM and/or Polaris, which are to be accounted for as arising from the breaches of fiduciary duty pleaded or any yet unknown benefits.

(d) The proposed EMS subpoena

The draft subpoena addressed to EMS[25] is in essentially the same terms as those addressed to the other Accounting Parties, KMLM and Polaris with the two additional categories being documents relating to the purchase of Python Maxisplit from EMS.
[25] Annexure AFR6 to the Second Roberts Affidavit.
The First Plaintiff wants to review those documents in order to investigate any benefits conferred on Nitro Sibir (or any other customers) by undertaking such tasks as examining the differences in the sale price of Python Maxisplit between different customers in order to determine whether there were any improper discounts provided to any customers.
Whilst the First Plaintiff acknowledges that sales of the EMSA Partnership products are recorded in the Accounts, the documents sought by this proposed category are said to allow the First Plaintiff to undertake the investigation of any benefits to Nitro Sibir because the documents sought will (or should) include details such as quantities and unit prices, which are not included in the documents supporting the Accounts provided to this point or annexed to the Account Affidavits respectively.
In response to the Accounting Parties' assertion that those documents are available to the First Plaintiff in other ways (such as bank statements of EMS, documents supporting the Accounts or EMS MYOB data), the First Plaintiff submits that whilst some bank statements of EMS were discovered in 2015 and 2016, no further bank statements of EMS have been discovered since that time. To date, the Accounting Parties have not provided the First Plaintiff with any MYOB data for EMS. Lastly, the Accounts are accounts of the EMSA Partnership ‑ not accounts of EMS. Hence, whilst the Accounts may record payments made by Nitro Sibir to EMS in respect of property of the EMSA Partnership, it is submitted that they will not necessarily record all payments made by Nitro Sibir to EMS.
EMS is an Accounting Party and the First Plaintiff therefore submits that it requires all documents that record all payments made to EMS by Nitro Sibir in order to facilitate its inquiry into any benefits that may have been conferred on EMS by Nitro Sibir for which EMS is liable to account.

(e) The subpoenas to Polaris, KMLM and Black Bear

Annexures AFR9 to AFR11 to the Second Roberts Affidavit are the draft subpoenas that the Plaintiffs seek leave to have issued to each of KMLM, Polaris and Black Bear.
Whilst not Accounting Parties, each of Polaris and KMLM are Defendants in the proceedings.
Ms Kaker:
(a)was, at all material times since 29 January 2010 until on or about 21 February 2014 the sole director of KMLM;
(b)is and at all material times since on or about 21 February 2014, a director of KMLM;
(c)is and at all material times was the sole secretary of KMLM; and
(d)is a shareholder of KMLM along with Luke Kaker, Martin Kaker and Michael Hart ‑ all of whom addresses are listed as the same address in City Beach.[26]
[26] See annexure AFR1 to the Second Roberts Affidavit.
Mr Minto is, and has since 1 February 2010 been, the sole director, sole secretary and sole shareholder of Legerdemain.[27]
[27] See annexure AFR2 to the Second Roberts Affidavit.
Ms Kaker is, and has since 30 June 2016 been, a director, sole secretary and sole shareholder of Black Bear.[28]
[28] See annexure AFR2 to the First Roberts Affidavit.
As at 29 November 2022, Black Bear held 1,120,000 ordinary shares in Nitro Sibir.[29]
[29] See annexure AFR1 to the First Roberts Affidavit.
The First Plaintiff submits that it therefore should have leave to issue subpoenas addressed to each of KMLM, Polaris and Black Bear in essentially the same terms as those addressed to the Accounting Parties, and that such leave is necessary in order to assist its inquiry as to any benefits derived by either Ms Kaker or Mr Minto through receipts of KMLM, Polaris or Black Bear, for which Ms Kaker and/or Mr Minto are liable to account on the footing of wilful default.

4D The Accounting Parties' objections to the scope of the categories in the proposed subpoenas

As to objections that documents have previously been discovered, that objection is dealt with earlier in these reasons.

(a) Proposed common category 1 - Bank statements and tax returns

The Accounting Parties submit that the Defendants have discovered some tax returns, which the First Plaintiff has already inspected (and in some cases those documents were included in the Trial Bundle)
The Accounting Parties propose (as set out in the annexure to the Accounting Parties submissions) that each of the Defendants will provide the documents sought in category 1 of the relevant draft subpoenas (bank statements and tax returns to the extent that there are any, and to the extent that they have not already been provided) by way of informal discovery.

(b) Proposed common category 2 and category 1 Black Bear and Jermill – Communications

Irrespective of the First Plaintiff's expressed forensic purposes, the Accounting Parties submit that they object to:
(a)category 2 of the proposed subpoena for Nitro Sibir (AFR3), which seeks:
any Documents created or received by any employee or officer of Nitro Sibir comprising communications or records of communications between Nitro Sibir and [Mr Minto] and [Ms Kaker], or either of them, or any of [Legerdemain, KMLM, the First Defendant, Polaris, EMS], Merlin Services ('Merlin') or [Black Bear], during the period from 1 July 2009 to 30 June 2022.
(b)category 1 of the proposed subpoena for Jermill (AFR12), which seeks (the mark up shows the differences from the proposed Nitro Sibir category 2):
any … Documents created or received by any employee or officer of [Jermill] comprising communications or records of communications between any employee or officer of Jermill and [Mr Minto] and [Ms Kaker]~~, or either of them,~~ ~~or any of [Legerdemain, KMLM, the First Defendant, Polaris, EMS], Merlin Services ('Merlin') or [Black Bear],~~ during the period from 1 July 2009 to 30 June 2022.
(c)category 2 of the proposed subpoenas for most of the Accounting Parties (AFR4 to AFR6 and AFR8), which seeks:
any Documents comprising communications or records of communications between any employee or officer of [the proposed subpoena recipient] and any employee or officer of [Nitro Sibir] during the period from 1 July 2009 to 30 June 2022.
(d)category 2 of the proposed subpoena for Ms Kaker (AFR7), which seeks (marked up to show the difference from other Accounting Parties):
any Documents comprising communications or records of communications between ~~any employee or officer of~~ [the proposed subpoena recipient] and any employee or officer of [Nitro Sibir~~] during the period from 1 July 2009 to 30 June 2022~~'.
(e)category 2 of the proposed subpoenas for the other (non-Accounting Party) Defendants (KMLM (AFR9) and Polaris (AFR10)), which seeks (the mark up shows the substantive differences from category 2 of the proposed subpoenas for most of the Accounting Parties):
any Documents comprising communications or records of communications ~~created or received by any employee or officer of [Nitro Sibir]~~ and any employee or officer of [the proposed subpoena recipient] and ~~during~~ for the period from 1 July 2009 to 30 June 2022.
and
(f)category 1 of the proposed subpoenas for Black Bear (AFR11), which seeks (the mark up shows the differences from category 2 of the non-Accounting Party Defendants):
any … Documents comprising communications or records of communications between ~~created or received by~~ any employee or officer of [Nitro Sibir] and any employee or officer of [Black Bear] and during ~~for~~ the period ~~from~~ 1 July 2009 to 30 June 2022.
The Accounting Parties submit that this category (in any of the various forms) is of vast and unrestricted scope. There are likely to be many documents that fall within the ambit of category 2 of each of the draft subpoenas but which, they say, would be undoubtedly irrelevant to the Taking of Accounts in compliance with the Accounting Orders. Further, they submit that there is no relevant date range in relation to Ms Kaker. All of the other proposed subpoenas reference the period from '1 July 2009 to 30 June 2022'.
It is further submitted that proposed category 2 is even more expansive in respect of MLMK (AFR4), Legerdemain (AFR5), KMLM (AFR9) and Polaris (AFR10), which seek every documentary communication made by those companies for any purpose with anyone at Nitro Sibir for 13 years. The submission is that this is plainly oppressive.[30] A subpoena that seeks to capture 'any Documents' will be of potentially unlimited scope. Similarly, a subpoena category that does not restrict the capacity in which a person engages in communications will be of potentially unlimited scope.
[30]See NSW Commissioner of Police v Tuxford [2002] NSWCA 139 at [33].

The Accounting Parties submit that in this case the proposed category 2 for most of the proposed subpoenas:
(a)defines a class of people between whom communications might pass and does not limit the nature of the communications themselves by reference to the capacity in which the person, within that class, engages in the communication; and
(b)does not restrict the topic of the communication (by capacity or any other matter).
They contend that despite the obvious width of the ambit of each proposed category 2, the breadth of the proposed category is magnified by the facts that:
(a)Mr Minto was employed by Nitro Sibir for part of the period between 1 July 2014 to 30 April 2019 and 1 January 2021 to 30 June 2022;[31]
(b)Ms Kaker was an employee of Nitro Sibir (only the period is different);[32]
(c)Ms Kaker was also an officer of the First Defendant, EMS, KMLM and Black Bear; and
(d)Mr Minto was also an officer of Legerdemain, EMS and Polaris.
[31]Paragraph 4 of the Minto Affidavit.
[32]Paragraph 19 of the Kaker Affidavit.
The consequent submission is that, as employees of Nitro Sibir, each of Ms Kaker and Mr Minto are likely to have received many irrelevant communications from other employees: e.g., any number of internal communications of an operational or a social nature that could not be at all relevant to the matters the subject of the Accounting Orders, no matter how wide the 'roving enquiry' under a taking of accounts on the basis of wilful default could legitimately be described.
The Accounting Parties submit that the breadth of category 2 is illustrated in the case of, for example, EMS, when it is recast (to state the fact of the positions held by Ms Kaker and Mr Minto) as:
any Documents comprising communications or records of communications between any employee or officer of EMS [including Mr Minto and Ms Kaker] and any employee or officer of [Nitro Sibir] [including Mr Minto and Ms Kaker] during the period from 1 July 2009 to 30 June 2022.
By recasting in this way, and bearing in mind that the capacity of the 'employees' is not restricted by the terms of the proposed category 2, the Accounting Parties submit that this highlights the unrestricted ambit of the proposed category. Each of Ms Kaker and Mr Minto are likely to have sent and received many irrelevant communications from employees of Nitro Sibir and EMS (even if the proposed subpoena category is confined to communications involving them in their capacity of employee or officer of Nitro Sibir or EMS (or both), but of course the category has no restriction as to capacity ‑ it merely identifies a class of people: e.g., any number of internal communications of an operational or a social nature that would not be at all relevant to the matters the subject of the Accounting Orders, no matter how wide the 'roving enquiry' could legitimately be described. Further, the years Ms Kaker and Mr Minto actually held such positions are not taken into account in the period over which the documents are sought.
Moreover, it is submitted that category 2 of the proposed EMS subpoena would require EMS to produce every document that records any communication between Mr Minto and Ms Kaker on any topic and for any purpose for 13 years. Even if there might theoretically be documents that fall within a confined legitimate forensic purpose, finding those could be an oppressive task; as explained by NSW Court of Appeal in NSW Commissioner of Police v Tuxford [2002] NSWCA 139.
Accordingly, the Accounting Parties submit that there is no basis for the proposition in par [23] of the First Plaintiff's submissions that, in effect, the subpoenaed party must identify documents and then 'provide cogent reasons why they are not relevant to the line of enquiry'. They submit that the fact that the account is in the context of a 'roving enquiry' does not sustain the assertion that the subpoena process is somehow at large.
Therefore, the Accounting Parties submit that the First Plaintiff should not be given leave to issue subpoenas that include the proposed:
(a)category 2 in any of the forms proposed or to any of the proposed subpoena recipients, Nitro Sibir or any of the Defendants; and
(b)category 1 in either of the forms proposed or to either of the proposed subpoena recipients, Jermill or Black Bear.

(c) Proposed category 3 relating to proposed subpoenas to MLMK, Legerdermain, EMS, Ms Kaker, Mr Minto, KMLM and Polaris AFR4 to AFR10) - Payments from Nitro Sibir

The Accounting Parties submit that pars [18], [24], [26], [39] and [54] of the First Plaintiff's submissions evidence that the First Plaintiff has analysed the receipts and payments disclosed in the Accounts and is aware of the payments received from Nitro Sibir and is therefore able to identify the source of receipts and payments.
Further, notwithstanding the First Plaintiff's assertion in pars [39] to [44] of its submissions that the supporting MYOB data has not been provided, the Accounting Parties submit that it is the case that the MYOB data has been offered to the First Plaintiff and some of the limitations on the detail in the Accounts were agreed on the basis that the MYOB data was available and would show the source for the line item. The Accounting Parties submit that the First Plaintiff has been invited to access the MYOB data and that invitation remains open, and they submit that this is the course that the First Plaintiff should pursue before any subpoenas (or discovery orders) issue to an Accounting Party.
The proposed subpoenas in relation to MLMK (AFR4), Legerdemain (AFR5), EMS (AFR6), Ms Kaker (AFR7) and Mr Minto (AFR85) (who are Accounting Parties) include category 3,[33] which seeks:
any Documents that record any payments by Nitro Sibir to [the proposed subpoena recipient] during any financial years ending 30 June 2010 to 30 June 2022 inclusive.
[33]This is category 4 for EMS but is in the same terms.
As set out in the annexure to these submissions, each of the Accounting Parties object to the grant of leave to issue subpoenas with the proposed category 3 because they say the category is too broad, or is oppressive, and leave should be refused in relation to them.
The Accounting Parties submit that the First Plaintiff's analysis of the Accounts has clearly identified that sales have been made to Nitro Sibir and the stated forensic purposes do not require further reiteration of the receipts. Category 3 is said to exceed what could be reasonably required on the basis of the forensic purposes stated in the First Plaintiff's submissions, irrespective of the legitimacy of the stated purpose. Even if there might theoretically be documents that fall within a confined legitimate forensic purpose, finding those could be an oppressive task; as explained by NSW Court of Appeal in NSW Commissioner of Police v Tuxford [2002] NSWCA 139.

(d) Proposed category 3 from EMS (Proposed Subpoenas AFR6): Sales of Python Maxisplit

The Accounting Parties repeated their submissions in relation to category 3 of the proposed subpoenas for the Accounting Parties generally and submit that category 3 and category 4 of the proposed EMS Subpoena (AFR6) overlap.
The 'Maxisplit' Category (in the case of EMS)) is:
any Documents, including, but not limited to, purchase orders, bank statements and remittance advices that record the purchase by any entity from EMS of the products knows as Pythion Maxisplit during each of the financial years ending 30 June 2010 to 30 June 2022 inclusive.
The Accounting Parties submit that the First Plaintiff's analysis of the Accounts clearly identifies the relevant sales of Python Maxisplit and state that the MYOB information is available. The Accounting Parties refer to the First Plaintiff's stated additional forensic purpose of the EMS subpoena, in relation to the documents sought that 'record the purchase of Python Maxisplit from EMS') (First Plaintiffs' submissions at [37]), which is said to be 'to determine whether there were any improper discounts provided to any customers' in relation to Python Maxisplit (First Plaintiffs' submissions at [38]).
On the Accounting Parties' submission there is nothing that supports the First Plaintiff's expressed suspicion that discounts might have applied, nor if there were, how that might be the basis of surcharge or falsification.

Determination as to scope of categories

As previously stated, on the relevant applicable principles, the only way in which the First Plaintiff can properly ensure that an account on the basis of wilful default is taken is for the First Plaintiff is to be put in possession of all documents necessary to properly interrogate the Accounts and the Account Affidavits. The Application must be determined in that context.
The accounting periods as set out in the Accounting Orders are from March 2010 to 1 December 2014 and from 1 December 2014 to the date of the Taking of Account (the Accounting Period). This period governs the appropriate temporal scope of the orders and covers some 13 years to date.
In so far as the Accounting Parties' objections to the scope of the proposed subpoenas and discovery orders relate to previously discovered documents, that has been addressed earlier in these reasons save in respect of KMLM and Polaris who are not Accounting Parties, but who remain defendants in the proceeding in which the Report will be produced. Any duplication in respect of documents previously provided by way of discovery can be dealt with by the production, on the subpoena to them, of a detailed schedule clearly identifying any relevant documents and indicating where in the categories within the subpoenas those documents lie, such that those documents can be both easily identified by the Plaintiffs and their relevance to the Accounts and the Account Affidavits can be seen. This is a cost effective case management methodology to achieve the practical result of enabling the First Plaintiff to efficiently interrogate the Accounts and Account Affidavits.
Given the scope and time to which the Accounting Period relates this will inevitably require the production of a large volume of documents. That, of itself, does not render the scope of the category oppressive within the meaning of NSW Commissioner of Police v Tuxford[2002] NSWCA 139 at [33]. The volume of documents which will have to be either produced, or identified from earlier discovery in this proceeding, is a direct result of the length of the Accounting Period and the matters which are consequentially relevant to the First Plaintiff being properly put in a meaningful position in order to interrogate the Accounts and the Account Affidavits. The first relevant exercise to be undertaken is to identify the act or acts of wilful default and their consequences, rather than being confined to an examination of the Accounts as to falsification and surcharge which would be the process applicable on a common account. On a taking of accounts on the basis of wilful default, a finding of an act of wrongdoing by an accounting party forms the basis of the Court's enquiry into both the extent of the consequences of the wrongdoing and whether there has been further wrongdoing and, if so, the consequences thereof. That is a much broader scope of enquiry than occurs on a taking of account in common form.

(a) Proposed category 1 relating to the Defendants (Proposed Subpoenas AFR4 to AFR10): Bank Statements and Tax Returns

In so far as the Accounting Parties object to the production of documents underlying transactions as included in bank statements, I find that the mere financial quantum of a transaction and the identity of the payee and payor will be insufficient for the First Plaintiff to properly interrogate the Accounting Parties' conduct. Information such as unit pricing and quantities are essential to that exercise. For example, a benefit arising from wilful default might be disclosed by sale of goods at a loss, which is a matter which will only be disclosed if unit prices and quantities are known. Accordingly, I find that the relevant parties, whether by discovery order or subpoena, will have to produce all documents relevant to any transaction within the scope of the Accounting Orders on the Taking of Accounts.

(b) Scope of proposed category 2 relating to communications to Nitro Sibir, the Accounting Parties, KMLM, Polaris, Black Bear and Jermill (AFR3, AFR4 to AFR10 and AFR11 to AFR12)

Where the categories require 'all documents', those categories must be confined to business documents relevant to the Taking of Accounts. I accept the Accounting Parties' submissions that, as currently drafted, that category would include all communications within the Accounting Period. This could include documents that are entirely irrelevant to the Account and might include documents that, for example, relate to personal matters or daily practical company operations, as the proposed subpoena fails to define the topic, or topics, of any such communication. Whilst clearer definition may be a difficult process, I find that the use of the words 'all documents' too broad. The First Plaintiff will not be granted discovery orders or leave to issue subpoenas in respect of proposed category 2 to Nitro Sibir, the Accounting Parties, KMLM, Polaris, Black Bear and Jermill until the scope of that category is more rigorously defined in order to only capture documents which will be relevant to the Taking of Account; that is, documents which properly provide a basis for interrogating the Accounts and the Account Affidavits.

(c) Scope of proposed category 3 relating to the Accounting Parties, KMLM and Polaris

The Accounting Parties object to these categories on the basis that, as drafted, they are too broad or are oppressive and that, since the transactions can be identified in the Accounts and the Account Affidavits, the underlying receipts are not required. I do not agree with the Accounting Parties in this regard. The primary purpose of the Taking of Account is to enable the First Plaintiff to interrogate the Accounts and the Account Affidavits. Therefore, it is fundamental that the First Plaintiff is able to see the documents that relate to any transaction in the Accounts or Account Affidavits so that it can determine what does, or does not, need to be the subject of objection, or cross‑examination, on the Taking of Account.

(d) Scope of proposed category 3 from EMS (Proposed subpoena AFR6): Sale of Python Maxisplit

The Accounting Parties object to this category on the basis that it is too broad and/or oppressive. Further, they say that given that the First Plaintiff's analysis of the Accounts to date has clearly identified that sales have been made to Nitro Sibir, then the stated forensic purpose does not require further reiteration of the receipts. I do not agree with the Accounting Parties in either regard. I find that the category is drafted in such a way that the First Plaintiff will be able to examine any differences in the sale price of Python Maxisplit between different customers in order to establish whether there were any improper discounts provided to any customers. The relevant documents will enable the First Plaintiff to interrogate the relevant transactions as to details such as unit prices and quantities which I find that they cannot do on the documents provided to date. Only with that information can the First Plaintiff determine what to challenge in the Accounts and the Account Affidavits, including what to cross‑examine on at the trial of the Taking of Accounts.

Conclusion

The parties will need to confer to give effect to the findings in this decision as to the scope of category 2 in the discovery orders and subpoenas to issue.
Discovery orders will be made in respect of the Accounting Parties.
Leave is given to the First Plaintiff to issue subpoenas to KMLM, Polaris, Black Bear and Jermill but with the qualification I had made regarding previously discovered documents by KMLM and Polaris who, whilst they are not Accounting Parties, remain defendants in the proceeding in which the Report will be made to the trial Judge.
However, subpoenas will not issue, and discovery orders will not be made, in respect of category 2, until the issue of the wording of that category is resolved.

Costs

I will hear the parties as to the costs of the Application. My preliminary view is that, given the level of mixed success by each party, costs of the Application should be in the cause.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LR
Associate to Registrar Whitbread
17 NOVEMBER 2023