This 1s an application by the creditor presenting a
bankruptcy of the respondent that a notice
of discovery dated
23
February 1987 (exhibit C) be set aside
or,
alternatively, that the
discovery should be limited
In some way.
The notice
of discovery was issued pursuant to rule
146 of the
Bankruptcy Rules in accordance, as that rule provides, with form
50.
Form 50 makes two alternative schemes available for discovery.
One is
precisely in the terms
of
rule 146 that documents be dlscovered
"relating to the matters that are in question in the proceeding";
the
other is
a
provision that documents be discovered relating to "the
following matters that are in question in the proceeding". If the
second alternatlve were adopted, the suggested matters would obvlously
be listed by the applicant
for
the discovery. In this case,
the
applicant f o r discovery being the alleged debtor has chosen the first
and most general provlslon, whlch strictly accords wlth the words of
rule 146.
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Rule 147 makes provision for the mechanism of discovery by
an affidavit,
and also provides for the
form and content of the affidavlt. Rule 148
makes provlsion for
an application to be made to the court by a party in
relation to discovery without limiting the potential applicants only to
those who would seek discovery.
In other words, It would seem that the
court may be approached by any party to a proceeding In
relation to
discovery
matters,
including
the
recipient
of
a
requisition
for
discovery.
Rule 148 goes on to provide that on such application, the court may make
such order for the "flling of an affldavlt of discovery or
a further
affidavit of discovery as the court considers necessary in order to
dispose fairly of the matters in question or to save costs in the
proceeding." Thls provision presumably implles that the court may not
only make such order but decline to make such order.
In this case, It does not appear to me to be appropriate to decline to
make an order for the filing of an affidavit of discovery, because the
proposed contested bankruptcy petition, which is set down for hearing
next month, may very well raise issues for which dlscovery 1s
appropriate and in relation to which the respondent may be entitled to
documents in the possession
f the applicant.
The question in this case is therefore whether there ought to be made an order pursuant to rule 148 of a limited kind in terms of confining the affidavit of discovery.
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In the course of argument, Mr. Newton for the respondent outlined
a
serles of issues which he says will arise at the hearlng of
the
petltlon.
I
do not take him to have attempted today to provlde
a
comprehensive list of such lssues, but that the seven
or
eight that he
outllned were mere examples of some of the issues that would be proposed
to be raised
in defence of the petition.
Some of the issues which he raised go
to the very basis upon whlch
the
bankruptcy notice which preceded the petition was issued, lncludlng
the
validity
In
the sense of the appropriateness and correctness
of
the
ludgment of the Supreme Court
of Queensland on which the bankruptcy
notice was based. I asked counsel in argument whether there was a case
In
which the bankruptcy
~urisdiction has been energised in these
circumstances for the purpose
of relitigating and re-examining the basls
of the ludgment preceding a bankruptcy notice and neither party was able
to refer
me to to any such
decision. Because of the urgency of
this
matter, I am not able to search for authority myself.
In any event, it is not necessary to decide the question now nor does
it
seem to me to be appropriate that
I should prejudge the issue when the
matter is still to be litigated. The problem
is that if all of
the
matters that led up to the proceedings in the Supreme Court of would be no end of documents that might be produceable on dlscovery. On the evidence before me this would not only be tlme consuming, but
apparently very costly and inconvenient, because, as
I am informed, most
if not all of these documents are
in Queensland, and are belng used in
other proceedings.
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In the clrcumstances, it seems to me that
I
should order that the
respondent should supply to the applicant a list
of what It considers
are the matters
in question in the contested bankruptcy proceedlng and
that an affidavit of discovery should then be filed by the applicant in
respect of those matters
in questlon.
In the event that there
1 s a dispute about any or all of those matters
in question
as deflned by the respondent, that matter wlll have
to be
determined at the hearlng, and the discovery will have to be determined
at that time as well. In order to protect the interests of the parties
as
best
I
can,
I
shall make orders at the hearing as may seem
appropriate in order to ensure that the minimum
mj stice is done to the
parties because of the delay, but
I see no way at the moment, on an
interlocutory proceeding of this kind, of conflning the issues which would finally determine the matters in respect of which discovery can legitimately be required.
I therefore order that within seven days the respondent serve upon the
applicant a list of the matters whlch he alleges are in question In
the
contested bankruptcy proceeding. I order that the respondent then file
within fourteen days thereof an affidavit of discovery in respect
of
those matters.
I
grant liberty to apply to the parties on 24
hours'
notlce to my assoclate
in respect of disputes whlch arise
n relation to
these dlscovery proceedings.
I stand over such other matters arlslng
under the application as have not been dealt with, including the
question of costs, to the hearing of the bankruptcy petition.
Details
AGLC
Sutton v AJ Thompson Pty Ltd (In liq) [1987] FCA 167
Case
[1987] FCA 167
Decision Date
CaseChat Overview and Summary
Sutton v AJ Thompson Pty Ltd (In liq) is an application in the Federal Court of Australia concerning a notice of discovery issued by a creditor in a contested bankruptcy proceeding. The respondent, John Worthy Barn, is a judgment debtor who has been issued a bankruptcy notice, and Trade Credits Ltd, the creditor, has applied to set aside or limit the notice of discovery. The court was required to determine whether the notice should be set aside or limited in some way, particularly considering the extensive and potentially costly nature of the discovery process.
The primary issue before the court was whether the notice of discovery should be limited in scope to avoid unnecessary expense and inconvenience, given the breadth of the discovery request and the fact that many of the documents were located in Queensland and being used in other proceedings. The court noted that the discovery request was made under the most general provision of rule 146, which allows for the discovery of documents relating to "the matters that are in question in the proceeding." However, the court also considered that the discovery of all potentially relevant documents could be overly burdensome and time-consuming.
In deciding the matter, the court reasoned that it was not appropriate to decline making an order for the filing of an affidavit of discovery because the contested bankruptcy petition might raise issues for which discovery is appropriate. However, the court found it necessary to limit the scope of the discovery to avoid excessive costs and inconvenience. The court ordered that the respondent provide a list of the matters they considered to be in question in the contested bankruptcy proceeding, and that the applicant file an affidavit of discovery in respect of those matters. The court also granted liberty to apply to the court in case of disputes regarding these discovery proceedings. The court deferred the decision on other matters, including costs, until the hearing of the bankruptcy petition.
The final orders of the court were that within seven days, the respondent must serve upon the applicant a list of the matters they allege are in question in the contested bankruptcy proceeding, and within fourteen days of that, the respondent must file an affidavit of discovery in respect of those matters. The court also granted liberty to apply to the court on 24 hours' notice in relation to disputes arising from the discovery proceedings.