Taylor v Santos Limited & Ors No. Scgrg-96-2015 Judgment No. S6626

[1998] SASC 6626

TAYLOR  V  SANTOS LIMITED & ORS

ACTION NO 2015 OF 1996

Judge Burley

By paragraph 1 of the application dated 24 February 1997 (Doc 41), the plaintiff has sought the following order:-

“1..... That the first, second, third and fourth defendants make discovery of the following documents within 7 days of the date of this order:

1.1... the technical file compiled by personnel of the first defendant and Santos Europe Ltd involved in the technical evaluation of the Armada Unit;

1.2... the individual working papers of John Elgar, John Boucher, Peter Owens, John Martin and Bart de Boer in respect of the valuation of the Armada Unit;

1.3... the petrophysical analysis report by Scott Pickford in relation to the evaluation of the Armada Unit prepared for Santos Europe Ltd;

1.4... the final valuation model including the technical models containing reserve estimates and production profiles used to support the assumptions and estimates contained in board paper submitted to the board of directors of the first defendant dated 5 September 1996 in relation to the potential acquisition of the Armada Unit.”

The application was listed for hearing on 7 April 1997 when Mr Lane appeared for the plaintiff, Mr Sulan QC (as he then was) for the first defendant and Mr Hoile for the second, third and fourth defendants.  I reserved my decision on the completion of argument.

The application involved documentation, some of which was in the physical custody of the first defendant and the remainder in the possession of a subsidiary company of a subsidiary company of the first defendant.  Santos Europe Ltd (SEL) is the indirect subsidiary of the first defendant, but for ease of reference I shall refer to SEL as the subsidiary of the first defendant.

I published an interim set of reasons on 14 May 1997 and I directed the defendants to file and serve certain affidavits pursuant to SCR 58.04(e), specifying whether or not the defendants had or have had in their custody or possession (as opposed to power) any of the documentations referred to above.  I considered it appropriate to make an interim order because the four categories of documentation the subject of the application (or some of that documentation) may have been in the physical possession of the defendants and I thought it appropriate to ascertain the extent of the documentation actually in the possession of the defendants before I proceeded to a final determination of the application.  This was so because the application required me to determine whether or not some or all of the documentation, if it was in the physical possession of SEL, was discoverable by the first defendant or for that matter by any other defendant.  In other words, I had to determine whether, to the extent that there was material documentation in the physical custody of SEL, the first defendant was obliged to discover it because it was documentation which was within the power of the first defendant.

The affidavits of the defendants were duly filed and these precipitated an application by the plaintiff for leave to cross-examine pursuant to SCR 58.04A.  That application has recently been determined by me in favour of the defendants: see Judgment No S6584 delivered on 13 March 1998.

Since May 1997 several affidavits have been filed by the parties and it is now clear that the defendants have discovered the “technical file” referred to in paragraph 1.1 of the application.  There was a measure of confusion attending the identification of the documents constituting the technical file but it has now been identified as document 1047 in the defendants’ list of documents.

After the filing of affidavits pursuant to my orders of 14 May 1997 and after the completion of the application for leave to cross-examine pursuant to SCR 58.04A, no further request was made by the parties for a further hearing of the application dated 24 February 1997 except for a hearing scheduled for 10 March 1998.  On that occasion the plaintiff sought leave to rely upon additional evidence contained in Documents 72, 74 and 83 on the Court file.  This was opposed by the defendants.

The claims of the plaintiff are relatively complex but it is sufficient for present purposes to present a brief summary of the applicable assertions made in the statement of claim.

The plaintiff was at all material times employed as a senior executive by the first defendant.  He was seconded to the UK operation of the first defendant and, whilst there, undertook an investigation of the appropriateness of SEL acquiring what has been referred to as the Armada Unit.  The plaintiff alleges that, as a result of rivalry between himself and others, the defendants or some of them conspired to undermine his position within the corporate group.  The plaintiff alleges that a false or misleading estimate of gas reserves was put to the first defendant’s Board over the name of the plaintiff.  This has the effect of distorting the value to be ascribed to the Armada Unit.  It is on this basis that the plaintiff contends that the Armada documentation is material.

It is appropriate at this stage to deal with two aspects of the application.  I shall refer to the documents referred to in paragraphs 1.2, 1.3 and 1.4 of the application as the “Armada documentation”.  First, it is not in dispute that the Armada documentation is in existence.  Second, the plaintiff asserts that all the Armada documentation is material to the issues raised on the pleadings.  The extent, if any, to which the defendants contest this assertion is not entirely clear.  The plaintiff’s assertion that the documents are material is based on his recollection of the contents of the Armada documentation.  Given that the defendants say that the Armada documentation is not within their custody, possession or power, they too primarily relied upon memory to the extent (if any) that they say that the Armada documentation or some of it is not material.  In my opinion there is little doubt that the Armada documentation is material or discoverable, however it is expressed, because the documents cumulatively relate to the nature and extent of the Armada Unit and its worth.  According to the plaintiff, the natural defendants, or some of them, misrepresented to the Board of the first defendant the plaintiff’s assessment of the Armada Unit.  It must follow that the Armada documentation should be discovered if it, or any part of it, is within the custody, possession or power of the defendants or any of them.

Because of my orders of 14 March 1997, any documents coming within paragraphs 1.1 to 1.4 of the application which are or have been in the custody or possession of the defendants or any of them have been discovered with the qualification that there may have been some incompleteness due to inadvertence as referred to in my reasons published in respect of the application for leave to cross-examine.  The only question that remains to be decided is whether any of the Armada documentation is within the “control” or “power” of the defendants or any of them.  More particularly the question is whether the first defendant has access to the Armada documentation by requiring SEL to provide it, at least for the purposes of discovery in these proceedings.

It is common ground that the Armada documentation is in the physical custody and possession of SEL.  However, some of the documentation is subject to a confidentiality agreement between SEL and AGIP, the proposed vendor of the Armada Unit.  The terms of that agreement are contained in a letter of 6 September 1995 from Robert Fleming and Co Ltd to SEL, a copy of which is Exhibit “CNHB7 to the affidavit of Mr Bagot sworn on 25 March 1997.  In essence the agreement provides that information made available to SEL by AGIP, its servants or agents relating to the proposed acquisition of the Armada unit by SEL, would be kept secret and confidential.  However, Clause 4 of the agreement is as follows:-

“The Disclosed Information will be made available only to you, your ultimate holding company or to such of your directors, senior employees and professional advisers who need access to the Disclosed Information for the purpose of evaluating the Sale and you shall procure that such persons shall be bound by the terms of this letter agreement as if they were parties hereto.”

It can be seen from that clause that information disclosed to SEL could be made available to the ultimate holding company of SEL.  The first defendant is the ultimate holding company of SEL in the sense that all of the shares in SEL are owned by a wholly owned subsidiary of the first defendant.

Clause 9(c) of the confidentiality agreement is as follows:-

“9..... The foregoing obligations of confidence and non-use shall not apply to Disclosed Information:-

(c)... which is required to be disclosed by law or by any Stock Exchange on which either you or your related companies may be listed or under the City Code on Takeovers and Mergers or by any statutory, governmental or regulatory body having jurisdiction over you provided that so far as is practicable to do so prior to any such disclosure you notify and consult with us.”

In my view, Clause 9(c) enables the documentation to be disclosed where such disclosure is “required ... by law”.  If the documentation which is subject to the confidentiality agreement is discoverable in this action, the disclosure of such documentation by way of discovery is “required ... by law” and therefore comes within the provisions of Clause 9(c).

I turn to the question of whether or not the Armada documentation is within the control or power of the first defendant.  I limit my approach to the first defendant because I do not consider that the other defendants have control or power over the Armada documentation.  There is nothing by way of submission or evidence before me to indicate that the defendants, other than the first defendant, have any authority or right in respect of the documentation.  They all have a connection with SEL - Mr Gibson is the general manager, Mr Armstrong has been responsible for the operations of the first defendant in the Americas and Europe, and Mr Adler as a board member of SEL.  However, the physical possession and control of the Armada documentation remains with the corporate entity SEL and not individual employees or officers thereof.  Thus, their control of the documentation, to the extent that they have any, is limited to control as agent for SEL as opposed to the sort of control which would enable them to require SEL to give them, as individuals, the physical custody or possession of the Armada documentation.

What are the applicable legal principles?  In Lonrho Ltd and Anor v Shell Petroleum Co Ltd and Anor [1980] 1 WLR 627, the House of Lords dealt with the question of whether or not documentation in the physical possession of a subsidiary company was within the power of the parent company. The plaintiffs were the owners of an oil pipeline running from Beira in Mozambique to Umtali in Zimbabwe. The pipeline came into operation in early 1965. In November 1965 Rhodesia (as Zimbabwe was then named) unilaterally declared its independence (UDI) from the United Kingdom. Sanctions were imposed which prevented the operation of the pipeline for the importing of oil into Rhodesia. The sanctions were to continue so long as UDI continued. The plaintiffs contended that the defendant and others conspired illegally to import oil into Rhodesia, thus enabling the rebel government of Rhodesia to prolong UDI. This had the effect of prolonging the sanctions referred to which in turn led to further loss being sustained by the plaintiffs. The dispute between the parties eventually led to arbitration where discovery was ordered. The plaintiffs were not satisfied with the discovery given by the defendants and took out an originating summons in the High Court in England seeking orders for discovery. The summons related, in part, to documents in the possession of subsidiary companies in the defendants’ group of companies in Rhodesia, South Africa and Mozambique. In the case of Rhodesia and South Africa, the board of the subsidiaries refused to disclose the documents of which the plaintiffs sought discovery on the grounds that it would constitute a criminal offence to do so without ministerial licence and that, in any event, it would not be in the company’s best interests.

The House of Lords had to consider RSC Order 24 which is the same for present purposes as SCR 58.04.  It was held in the circumstance of that case that a party had a document in his power only if he had a presently enforceable legal right to obtain inspection of the document from the person who actually held it, without the need to obtain the consent of anyone else.  The decision of the House of Lords was given by Lord Diplock, with whom the other law Lords agreed.

His Lordship pointed out that neither Shell nor BP (the defendants) were direct shareholders in any of the relevant subsidiary companies.  As to shareholders’ rights to documentation his Lordship said (at 634E):-

“The articles of association of all the subsidiaries vest the management of the company in its board of directors.  It is the board that has control of the company’s documents on its behalf;  the shareholders as such have no legal right to inspect or to take copies of them.  If requested to allow inspection of the company’s documents, whether by a shareholder or by a third party, it is the duty of the board to consider whether to accede to the request would be in the best interests of the company.”

On the question of power his Lordship said (at 634H):-

“My Lords, in the circumstances it seems to me to be quite unarguable that the documents of subsidiaries resident in South Africa or Rhodesia are or have ever been in the ‘power’ of Shell or B.P. within the meaning of R.S.C., Ord. 24.”

His Lordship then dealt with the contention that the defendants might take certain steps having the result of giving a legal right to inspect and take copies of the documents belonging to the subsidiaries.  His Lordship said (at 635E):-

“My Lords, this argument only requires to be stated to be rejected.  Your Lordships are not concerned with any other consequences of the relationship between parent and subsidiary companies than those which affect the duty of a parent company of a multi-national group, whose company structure is that of the Shell or B.P. groups, to give discovery of documents under R.S.C., Ord. 24;  and this, as I have pointed out, depends upon the true construction of the word ‘power’ in the phrase ‘the documents which are or have been in his possession, custody or power.’

The phrase, as the Court of Appeal pointed out, looks to the present and the past, not to the future.  As a first stage in discovery, which is the stage with which the subsidiaries appeal is concerned, it requires a party to provide a list, identifying documents relating to any matter in question in the cause [or] matter in which discovery is ordered.  Identification of documents requires that they must be or have at one time been available to be looked at by the person upon whom the duty lies to provide the list.  Such is the case when they are or have been in the possession or custody of that person;  and in the context of the phrase ‘possession, custody or power’ the expression ‘power’ must, in my view, mean a presently enforceable legal right to obtain from whoever actually holds the document inspection of it without the need to obtain the consent of anyone else.  Provided that the right is presently enforceable, the fact that for physical reasons it may not be possible for the person entitled to it to obtain immediate inspection would not prevent the document from being within his power; ...”

His Lordship also said (at 636H):-

“In dismissing the subsidiaries appeal on its own special facts, I expressly decline any invitation to roam any further into the general law of discovery.  In particular, I say nothing about one-man companies in which a natural person and/or his nominees are the sole shareholders and directors.  It may be that, depending upon their own particular facts, different considerations may apply to these.”

In Douglas-Hill v Parke Davis Pty Ltd, Duggan J dealt with the question of whether or not the documents in the physical possession of a parent company were discoverable by its subsidiary.  His Honour referred to the Lonrho case (supra). Having referred to a number of passages in the speech of Lord Diplock, his Honour said (at 351):-

“In my view, there is even less reason for holding that the documents in the present case are in the power of the defendant: not only is there no control by the defendant over the company in possession of the documents but the reverse is the case in that the defendant is the subsidiary of that company.  It is true that the defendant might ask its parent company for the documents, but it does not have a presently enforceable right to them.”

As additional support for his conclusion, his Honour cited from the judgment of Johnson J in Smith v ANZ Banking Group (1986) 126 LSJS 242 at 247.

The three authorities just referred to were relied upon by the defendants to support the contention that as a matter of law they had no legal right to obtain possession of the Armada documentation from SEL.

The plaintiff relied upon the decision of Hedigan J in Linfa Pty Ltd v Citibank Ltd [1995] 1 VR 643, where his Honour comprehensively reviewed the relevant authorities. That was a case where the plaintiff contended that the defendant should discover documents respectively held by a subsidiary of the defendant, Australian Card Services Pty Ltd, and a subsidiary of ACS, Budget Services Pty Ltd. His Honour said (at 646):-

“The defendant’s principal argument was that although it may be that there was a commercial-corporate power in Citibank to compel its subsidiaries to produce documents, the test of power was grounded in legal matters, rather than how the power might be exercised through the board room.  It was contended, relying on certain passages from the judgment of Lord Diplock in Lonrho Ltd. v. Shell Petroleum Co. Ltd. [1980] 1 W.L.R. 627 at 635 that power meant ‘a presently enforceable legal right to obtain from whoever actually holds the document inspection of it without the need to obtain the consent of anyone else’. It was submitted that this excluded a mere potential capacity by means of one or more future steps capable of being taken which might result in a legal right to inspect.

However, the reference to a presently enforceable legal right by Lord Diplock to my mind meant a right then lying within the armoury of powers of the party seeking a document rather than one which might be acquired by the taking of subsequent steps, e.g. by buying a controlling share interest in the relevant company.”

His Honour then went on to consider the Victorian provisions relating to commercial causes and in particular the comments made by Marks J in Palmdale Insurance Ltd (In Liquidation) v L Grollo and Co Pty Ltd [1987] VR 113.

Hedigan J said (at 647):-

“Marks J. in Palmdale Insurance emphasised Lord Diplock’s own statement in Lonrho at 636-7 that, in dismissing the subsidiary’s appeal on its own special facts, he expressly declined any invitation to run further into the general law of discovery, in particular disclaiming reference to one-man companies in which a natural person and/or his nominees are the sole shareholders or directors. Lord Diplock’s own statement, and the observations supporting that distinction by Marks J., must considerably dilute the effectiveness of the submission made relying on Lonrho.  Moreover, in my own view, it is a proposition to be doubted that a parent company does not have an immediately enforceable legal right to inspect its subsidiary’s documents.  Such a description of power is not meant to imply instantaneous right of inspection but refers to the right to gain inspection through the courts on the basis of the position then prevailing.”

His Honour next referred to a further decision of Marks J in C E Heath Underwriting and Insurance (Australia) Pty Ltd v Fabric and Apparel Industries Pty Ltd (Unreported, 28 November 1989).  Of that judgment his Honour said that Marks J in C E Heath Underwriting “made it clear that the views expressed in Palmdale Insurance as to power were not posited on the commercial rule power [of the Victorian Supreme Court Rules] but on a general power”.

Hedigan J went on to say that the determination of the issue of whether or not a parent company was obliged to discover documents held by its subsidiary did not require a departure from the principle of independent corporate personality as established by the 19th century United Kingdom decisions and confirmed by the High Court in Industrial Equity Ltd v Blackburn (1997) 137 CLR 567. His Honour said (at 649):-

“The right of subsidiaries to their own profits (Blackburn) hardly supports the contention made on behalf of the defendant that, in a discovery context, documents of the subsidiary are not documents of the parent. The provisions of the Companies Act do not operate to deny the separate legal personality of each company of the group any more than an order of the court in the exercise of discretionary powers, but the parent company to produce documents held by its subsidiaries, would deny such a separate legal personality.”

In developing that point Hedigan J said (at 649):-

“It may be, as Rogers A-J.A. said in Briggs v James Hardie & Co. Pty. Ltd. [(1989) 16 NSWLR 549], that there is no common unifying principle informing the circumstances in which the corporate veil may be pierced or lifted. His Honour’s detailed and learned examination of pronouncements of many courts on the issue hardly engenders confidence that it is business realities and practical control that govern the legal perception of the relationship between the parent company and its subsidiary. Notwithstanding that respectful comment, it seems to me that the issue in the context of possession, power or control for the purposes of discovery will be decided by the facts.”

His Honour then went on to review the facts of the case before him and came to the conclusion that the reality was that the subsidiaries were trading on behalf of the respective parent companies and that as such the documents of the subsidiaries were the documents of the parent company.

It seems to me that the following conclusions arise from these cases:

1...... The test of “presently enforceable legal right” applies to parent and subsidiary within an international corporate group : Lonrho.

2...... The test may be different with a series of corporations which are each the alter ego of one person : per Lord Diplock, Lonrho at 636H and Linfa.

3...... The ascertainment of the correct legal principle and the application of that principle on a particular application requires a close examination of the facts : Linfa.

4...... The spectrum of possible applications has at one extreme the multinational group of companies and, at the other, the “one person” company group.

5...... The task of the Court on applications such as these is to ascertain, by close analysis of the facts, where the particular application fits within the spectrum.

6...... Even though a legal test was laid down by Lord Diplock, it seems to me that his Lordship left open the question of whether or not de facto control might be sufficient in given circumstances.

.................. If, in Lonrho, a de facto control test was not left open for other than the type of company group referred to in 2 above, the approach taken by Hedigan J in Linfa, to the extent that it allows for de facto control, is to be preferred.

.................. Before I turn to the facts, it is necessary to give a ruling in relation to the admissibility of the evidential material sought to be introduced by the plaintiff when further submissions were heard on 10 March 1998.  Much of that material was admitted by me de bene esse, but some was ruled by me to be inadmissible.  I declined to admit “NST3” to the affidavit of the plaintiff sworn on 3 February 1998 because it was a newspaper article, the contents of which could not be said to bind the plaintiff.  I also declined to admit the affidavit of Mr Dugan, the plaintiff’s solicitor, affirmed on 4 February 1998 because the material contained therein was either the subject of agreement between the parties or was already in evidence.

.................. Mr Gray QC, counsel for the defendants, objected to the admission of those parts of the affidavit of the plaintiff sworn on 3 February 1998 and the affidavit of Mr Feary sworn on 19 February 1998 which the plaintiff sought to introduce.  He said that the material raised in the affidavit was not fresh evidence which might give rise to the late admission of additional evidence and in any event, he submitted, it had no probative value.  The first limb of argument affects admissibility and the second limb of the argument only comes into play if in fact the material is accepted into evidence.

.................. In my view the additional material, whether it be fresh evidence or not, is relevant to the determination of the issues on this application.  The affidavits relate to a decision made by the first defendant to dispose of its UK assets.  The “disposal of its UK assets” is not a phrase which has legal merit because whatever assets are owned by SEL are the assets of that company and no other company.  However, it is a shorthand, commercially used, expression to give voice to an intention, on the part of the first defendant to bring about the sale of all of the shares in or all the assets of SEL to a third party, thereby bringing to a close the trading of the first defendant through its UK subsidiary SEL in the United Kingdom.  As such, I consider that the additional evidence is relevant and should be admitted, for what it is worth.

.................. The affidavit of the plaintiff sworn on 3 February 1998 was originally filed to support an application for injunctive relief restraining what was regarded as a proposed sale by the first defendant of its UK assets.  The plaintiff was concerned that if such a sale were effected, it might prejudice his ability to obtain, among other things, the Armada documentation.  That application was heard by me and refused.  When it went on appeal, the appeal was not pursued and an arrangement was reached between the parties in relation to the preservation of the relevant documentation.  The plaintiff’s affidavit has a number of exhibits attached to it, the first of which is a news release issued under the letterhead of the first defendant, which is to the effect that the defendant intended to seek offers for the purchase of the group’s oil and gas interests in the United Kingdom.  The plaintiff did not seek to rely upon exhibit “NST2” to the affidavit because it was a newspaper article and I have already indicated that I would not admit “NST3” for the same reason.  Exhibit “NST4” is a letter from the plaintiff’s solicitors to the defendants’ solicitors referring to an announcement to the Australian Stock Exchange by the first defendant indicating that it intended to sell its oil and gas interests in the United Kingdom.  Exhibit “NST5” is a letter from the defendants’ solicitors to the plaintiff’s solicitors where it is said:-

“Santos Ltd does not expect its proposed disposal of its UK interests to be concluded until approximately mid year as was apparent from the Australian Stock Exchange announcement referred to in your letter.  Santos Ltd has not yet determined the form of the proposed sale of its UK interests and is not likely to do so for some time yet.”

The parts of the affidavit of Mr Feary sworn on 19 February 1997 and relied upon and sought to be admitted by the plaintiff are paragraph 3 of that affidavit and exhibit “GKF4” which is itself an affidavit of Mr Bagot which was included in a sealed envelope, and maintained there with the permission of the Court, for reasons of confidentiality.

Having considered all the relevant parts of the plaintiff’s affidavit of 3 February 1998 and the relevant parts and exhibit of Mr Feary’s affidavit, I have come to the conclusion that the contents are of probative value in that they indicate that a decision has been made by the parent company to dispose of “its UK assets” by causing to be sold all of the shares in or assets of SEL.  That indicates to me that the first defendant has the ultimate (but not direct) control over the operations of SEL.

If it has the power to cause such a disposal of the shares or assets, two questions must be asked:  has it also the power, by way of a presently enforceable legal right, to require SEL to produce the Armada documentation or does it have de facto control of SEL to that extent?  If the answer to the first question is “yes”, the first defendant must discover the documents.  If the answer is “no” to the first question but “yes” to the second question, the matter does not end there.  The Court must then ascertain whether, and if so in what circumstances, de facto control is sufficient.  The Court is then in a position to decide whether to grant or refuse the application.

In answering the two questions I also take into account the management structure of the group.  It is clear that Mr Gibson, the general manager of SEL, reported to Mr Armstrong, who was the general manager of the first defendant’s operations in the Americas and Europe through its subsidiaries, and he in turn reported to Mr Adler, who was the managing director of the first defendant and on the board of SEL.  It is also clear that SEL needed the first defendant’s approval to acquire the Armada Unit.

It seems to me that, although I am not able to be factually precise in defining how the relevant legally enforceable right arises, it does so arise on the evidence adduced on this application.  The facts of the Lonrho decision when compared with the facts of Linfa are to be contrasted.  With the latter, there was a finding that the subsidiary traded on behalf of the parent company.  In my view, although the Santos Group undertook international operations, the facts of this case are more akin to the facts as found by Hedigan J in Linfa.  That being the case, SEL may be said to be the means by which the first defendant carried on its operations in the United Kingdom.  Documentation held by SEL must therefore be within the control of the first defendant.

If I am wrong in that view, I proceed to answer the second question.  I do so in the affirmative.  I do not doubt that the first defendant has de facto control over SEL’s Armada documentation.  In my view, no other factual finding is open when it is considered that the Board of the first defendant had the final say as to whether or not the Armada Unit should be acquired and if so, on what terms.

Given de facto control, must the first defendant also have de iure control?  In the circumstances of this case I do not think so.  Although the Santos Group’s operations are on an international scale, I do not understand Lonrho to have ruled out de facto control as being sufficient where de iure control is not established.  It is clear from Lord Diplock’s speech that his decision was made very much by reference to the facts of that case.  His Lordship did not purport to lay down a rule of universal application.  He allowed for different approaches to be taken according to the facts of the case.  The decision should not therefore be taken as requiring a legal right to be demonstrated in all circumstances except the case of the one person group.  (If, however, that is the effect of Lonrho, it has not been followed in Australia to that extent: Linfa.  In my view the latter case discloses the correct approach.)  It allowed for the meaning of “power” or “control” to take its colour from the circumstances of the case.  Thus, where de facto control is clearly made out in circumstances where de iure control is absent, why exclude the former?

I should add, that by “de facto control” I do not mean a situation where access to documentation is granted as a favour or merely because of generosity or a lack of objection to the documentation being provided.  The control must arise from an established relationship between the members of the group where, as a matter of convention, usage, practice or group policy, requests relating to the substance of the group’s operations made by the parent company to a subsidiary are attended to by the subsidiary.  In my view that sort of control exists between the first defendant and SEL.

For the above reasons I hold that the Armada documents are within the control of the first defendant for the purposes of SCR 58.04 and that the first defendant is obliged to discover them.  That obligation to give discovery includes the obligation to provide inspection of such discovered documentation to the plaintiff.

Because some of the documentation is subject to the confidentiality agreement previously referred to, it will be necessary for Minutes of Order to be brought in and arrangements to be made to protect the confidentiality relating to the AGIP documentation.