Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd
[2010] WASC 218
•25 AUGUST 2010
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: TECHNOMIN AUSTRALIA PTY LTD -v- XSTRATA NICKEL AUSTRALASIA OPERATIONS PTY LTD [2010] WASC 218
CORAM: MURPHY JA
HEARD: 30 JULY 2010
DELIVERED : 25 AUGUST 2010
FILE NO/S: CIV 1514 of 2009
BETWEEN: TECHNOMIN AUSTRALIA PTY LTD
Plaintiff
AND
XSTRATA NICKEL AUSTRALASIA OPERATIONS PTY LTD
First DefendantXSTRATA NICKEL AUSTRALASIA PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Application for further and better discovery - Inherent jurisdiction - Rules of the Supreme Court O 26 r 6 - Misconception of nature of discoverable documents - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 26 r 6
Result:
Application granted in part
Category: B
Representation:
Counsel:
Plaintiff: Mr J M Ireland QC & Mr P C Blackman
First Defendant : Ms P A Saraceni
Second Defendant : Ms P A Saraceni
Solicitors:
Plaintiff: Tottle Partners
First Defendant : Mallesons Stephen Jaques
Second Defendant : Mallesons Stephen Jaques
Case(s) referred to in judgment(s):
Beecham Group Ltd v Bristol Myers Co [1979] VR 273
Benjamin v Pulfer (Unreported, WASC, Library No 6618, 4 March 1987)
British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709
Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55
Kent Coal Concessions Ltd v Duguid [1910] 1 KB 904
Kent Coal Concessions Ltd v Duguid [1910] AC 452
Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 [19]
Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60
MURPHY JA: This is an application by the defendants for further and better discovery. The application is made under the court's inherent jurisdiction, and under O 26 r 6 of the Rules of the Supreme Court1971 (WA). The documents, or categories of documents, in respect of which further and better discovery were sought are set out in the attached schedule. Categories 3 and 6 were not pressed at the hearing.
Most of the relevant cases are collected in pars 26.1.4, 26.6.1 and 26.6.7 of Seaman P, Civil Procedure Western Australia. For present purposes, the following propositions may be noted.
First, the court has, in its inherent jurisdiction, the power to order further and better discovery: Benjamin v Pulfer (Unreported, WASC, Library No 6618, 4 March 1987) 3 ‑ 4.
Secondly, the court's inherent jurisdiction is exercised according to the former practice of the Court of Chancery: Kent Coal Concessions Ltd v Duguid [1910] 1 KB 904, 915, 916; Kent Coal Concessions Ltd v Duguid [1910] AC 452, 453. That practice was that an affidavit of documents by a party was conclusive as to the relevant documents in the possession, custody or power of that party unless the insufficiency of the discovery appeared from an admission in the pleadings by the party from whom discovery was sought, or from the affidavit of documents itself, or from the documents referred to in the affidavit, or from any source that constituted an admission by that party of a discoverable document, or where the party had excluded documents under a misconception of the case. Insufficiency could not, however, be demonstrated by a contentious affidavit from the party seeking to challenge the discovery. See British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] 1 KB 369; [1912] AC 709; Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341, 343. Thirdly, O 26 r 6 and its predecessors were introduced to relax the Chancery rule, and to allow a challenge to discovery based on a contentious affidavit seeking discovery of particular documents, or a particular class of documents: Mulley v Manifold, 343.
Fourthly, the introduction of O 26 r 6 enlarged, but did not modify, the court's inherent jurisdiction: Kent Coal Concessions Ltd v Duguid [1910] 1 KB 904, 915. Thus, if a party applies pursuant to both O 26 r 6 and the court's inherent jurisdiction, but the O 26 r 6 application is for some reason irregular, providing that the criteria for the exercise of the inherent jurisdiction are satisfied, an order may be made under the inherent jurisdiction for discovery, including for a particular class of documents.
Fifthly, under the inherent jurisdiction, where the insufficiency of a party's discovery appears from the party's pleadings, or its affidavit of documents, or the documents referred to therein, or any source constituting an admission by that party of a discoverable document, the test is whether the court has reasonable grounds for being fairly certain that there are other relevant documents which ought to have been disclosed. That is also the test that is to be applied under O 26 r 6. See Beecham Group Ltd v Bristol Myers Co [1979] VR 273, 276, 278 ‑ 279; Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [3].
Sixthly, under the inherent jurisdiction, it is not necessary to infer the existence of a particular document to ground an order for further and better discovery, where it appears that a party has excluded documents under a misconception of the case: Mulley v Manifold, 343; British Association v Nettlefold.
Seventhly, although the misconception of the discovering party is relevant to the exercise of the court's inherent jurisdiction, it is also, in my view, a factor which may assist in the drawing of inferences for the purposes of determining an application under O 26 r 6.
In British Association v Nettlefold, the plaintiff company sued the defendant shareholder for a call on partly‑paid shares. The defendant alleged that the company was an illegal combination under statute and/or operated illegally under the general law, and that any agreement to pay the call was unenforceable. The defendant, in his particulars, inter alia, alleged that there was an agreement between the plaintiff and a certain European organisation, which regulated their relations and their dealings with the patent of a certain machine; that the plaintiff had granted licences in England for the use of the patented machine; and that the plaintiff and the European organisation had acquired the patent for the purposes of controlling output and prices. By letter dated 25 October, the plaintiff's solicitors wrote to the defendant's solicitors, at the same time as the filing of the plaintiff's affidavit of discovery, and admitted that the plaintiff had possession of the agreement in question, but denied its relevance. Accordingly, the agreement was not discovered. The defendant applied under the equivalent of O 26 r 6 for the production of the agreement, and obtained from the Court of Appeal an order to that effect. The defendant's solicitors then wrote to the plaintiff's solicitors and asked for the production of other documents, including documents associated with the licences with respect to the patent. The plaintiff had, in the meantime, sworn in answer to interrogatories that it had granted licences to various persons in England. The plaintiff refused to accede to the defendant's solicitors request, and, with respect to its answers to interrogatories, contended that it had already disclosed the form of those licences and the persons to whom they had been granted.
The defendant applied for an order for a further and better affidavit of discovery. In the Court of Appeal on that further application, Cozens‑Hardy MR said:
Speaking from my own individual experience, I am satisfied that the Court has acted upon the view that any admission by the person required to make an affidavit may be ground for requiring a further affidavit in whatever shape that admission may be found, and of course an adjudication by the Court of materiality cannot be of less value than an admission by the party himself. I do not wish to be misunderstood in one respect. If the matter had simply rested upon the one document which has been produced for inspection pursuant to the application under [O 26 r 6 equivalent], I should not have thought that it was at all a case for a further affidavit of documents. The opposite party has got the inspection and why should he want anything more? The mere suspicion, the mere fact that one document was omitted, would not probably be a ground for requiring a further affidavit, there being no reason ... to charge want of good faith on the other side. But to my mind the inference here is absolutely irresistible that there is a class of documents which originally has been excluded from the affidavit on the ground, held in good faith, that the documents were not relevant or material to any issue in the cause. The Court of Appeal [in the earlier decision] has decided that documents of that class are material, or rather that one document of that class is material. That being so, it seems to me to follow irresistibly that the defendant here is entitled to a further affidavit from the plaintiffs swearing what if any documents they have of that class which were not included in the original affidavit. In other words, we cannot limit the order to the particular document which the Court has seen, but it must go in the general form, and whoever makes the affidavit on the part of the plaintiff company must pledge his oath, now that he has been enlightened by the view of the Court of Appeal [in the earlier decision], as to what documents he now has or ever has had in his possession relating to the matters in question in this action (375 ‑ 376).
Farwell LJ, in effect (377), inferred the existence of the licences and other related documents from the agreement which had been produced pursuant to the application under the equivalent of O 26 r 6.
The plaintiff appealed to the House of Lords. It contended that there was nothing in the pleadings, in the affidavit of documents, or the documents discovered by the plaintiff, including the agreement itself, which contained an admission of the existence of any further documents which had not been disclosed. The plaintiff contended that it had exhausted its obligations in the circumstances by giving discovery of the agreement under the equivalent of O 26 r 6. The plaintiff's counsel also said that the plaintiff had not misunderstood its case, but had merely mentioned one document which it believed to be not relevant.
The defendant in the appeal contended that the plaintiff had excluded, from its affidavit, documents of which the agreement produced under the equivalent of O 26 r 6 was a type, as not being material or relevant to the issues in the case. The defendant contended that, as the materiality of that particular document had been established, the inference was that the plaintiff's affidavit was sworn 'under a complete misapprehension as to what was the real materiality of the documents in [its] possession' and that the defendant was 'entitled to an affidavit sworn on a just appreciation of the materiality of the documents' (respondent's submissions 712 ‑ 713).
Viscount Haldane LC, with whom the other Law Lords agreed, said, with respect to the Court of Appeal's decision:
My Lords, I think this decision was right. It was contended before your Lordships that the respondents had got all that the rules applicable entitled them to get, and that neither the affidavit itself nor any admissions in the pleadings or other documents shewed that there were in the plaintiffs' possession any relevant documents not disclosed. But while it is true that as a general rule you cannot go behind the affidavit in the absence of admissions in that or some other document, the rule is qualified where the basis on which the affidavit of documents has been made turns out to have been wrong. If the party making the affidavit has misconceived his case, so that the Court is practically certain that if he had conceived it properly, and had acted upon a proper view of the law, he would have disclosed further documents, then the Court can refuse to recognize an affidavit as conclusive, and order a further affidavit.
In this case the letter of October 25 already referred to is sufficient to discredit the original affidavit, and I think that the circumstances are such as to justify the order appealed from (714).
Turning now to this application, in considering relevance, it is appropriate to have regard to the pleadings. For present purposes, it is important to note that the plaintiff's claim is, in effect, that the defendants are liable to it by reason of a failure to pay the plaintiff certain royalties from the mining of certain mineral tenements. The plaintiff pleads that the failure to pay the royalties was a breach of contract, and that by being deprived of the royalties it lost the commercial opportunity to invest the proceeds of the royalties at a profit. The plaintiff's claim is that it should have received the royalties from 4 March 1999, and would have made investments in both listed and unlisted companies from that time, in accordance with particularised criteria, with a weighting in the mining sector.
It says, inter alia, that it would have used the royalty proceeds to build up a share portfolio, it would then have sold out in October 2007 and placed the funds on deposit, and then re‑entered the market at a lower level in April 2009.
It has particularised its opportunity cost in not having and using the royalty moneys for investment purposes at $793 million.
The plaintiff, pursuant to orders made on 11 December 2009 in consequence of an earlier application for further and better discovery by the defendants, has discovered documents headed 'Statements of Financial Performance' and 'Statements of Financial Position' for the years ended 30 June 2001 and 30 June 2002. These documents respectively comprise statements of the plaintiff's profit and loss for the years ended 30 June 2001 and 30 June 2002, and statements of its assets and liabilities as at 30 June 2001 and 30 June 2002. The documents for 30 June 2001 also set out, in the conventional way, the comparative figures for the year ended 30 June 2000.
Mr Thompson is, and has been over the period the subject of the claim, one of two directors of the plaintiff. The documents referred to above were attached to Mr Thompson's affidavit of 21 December 2009, sworn pursuant to the earlier order for further and better discovery. That order was, relevantly, as follows:
1.Within 14 days the Plaintiff file and serve a list of discovered documents verified by affidavit in respect of the following documents or classes of documents:
(a)...
(b)The Plaintiff's balance sheet and profit and loss statement from the financial years from 30 June 2001 to 30 June 2009.
Mr Thompson's affidavit of 21 December 2009 stated (par 3.1) that the plaintiff did not have in its possession, custody or power any balance sheets or profit and loss statements for the financial years 30 June 2001 to 30 June 2009. That statement appears on its face to be erroneous, given that Mr Thompson annexed to his affidavit the documents referred to above, which are profit and loss statements and balance sheets for 2001 and 2002. The explanation for this apparently erroneous statement lies in, and is to be understood by reference to, the succeeding paragraphs of his affidavit. He said, in effect, that the plaintiff had resolved to take advantage of an ASIC class order which exempted the plaintiff from compliance with pt 2M.2 and pt 2M.3 of the Corporations Law (which parts included the obligations of financial reporting, including the preparation of financial statements - including a profit and loss statement and balance sheet). He nevertheless went on to say, in effect, that notwithstanding the absence of a statutory obligation to prepare financial statements (including a profit and loss statement and balance sheet), the plaintiff in fact prepared 'financial statements' for the 'purpose of management reporting' for the years ended 30 June 2001 and 30 June 2002. It was these 'financial statements' which he attached to his affidavit which were described as the 'Statements of Financial Performance' and 'Statements of Financial Position' referred to above.
The effect of Mr Thompson's evidence is that notwithstanding the absence of a statutory obligation to do so, the plaintiff prepared financial statements for management reporting purposes for the years ended 30 June 2001 and 30 June 2002. The financial statements to which he deposed, and which he attached to his affidavit, are statements of profit and loss and balance sheets for the company for those two years, albeit that they were prepared for the purposes of management reporting. The 2001 documents also provide profit and loss and balance sheet information for the year ended 30 June 2000. It is apparent that when Mr Thompson said that the plaintiff did not have profit and loss statements and balance sheets, he meant that the plaintiff did not have any documents of that description apart from the profit and loss statements and balance sheets prepared for management purposes.
Subsequent to the disclosure of these documents in Mr Thompson's affidavit, the defendants sought, under a notice to produce, the production of the original of such documents. In the production of the original of such documents, the plaintiff produced a set of documents, admitted into evidence in this application as exhibit A, described as 'Special Purpose Financial Reports' for the years ended 30 June 2001 and 30 June 2002. These documents contained, inter alia, a 'Directors' Statutory Report' and the 'Statements of Financial Performance' and 'Statements of Financial Position'. The latter two documents contained references to 'notes', and on the foot of the pages of the 'Statements of Financial Performance' and 'Statements of Financial Position' the following statement appeared:
The above Statements ... are to be read in conjunction with the notes on pages 5 to 10.
(I note that, for some reason not explained in the evidence, the pages of the Statements of Financial Performance and Statements of Financial Position annexed to Mr Thompson's affidavit contained no reference to such notes.)
Note 1(f) to the Special Purpose Financial Reports provided, inter alia:
Investments
Investments are initially brought to account at cost.
The carrying value at balance date for each current investment is adjusted to reflect the lower of cost or market value by writing off any excess and including it in the net profit or loss in the reporting period in which it occurs.
The recoverable amount of non‑current investments is reviewed at balance date in relation to each security holding. The excess of carrying value over recoverable amount is written off and included in the net profit or loss except to the extent that it reverses a previous revaluation increment still included in the asset revaluation reserve, in which case it is treated as a reduction in that reserve.
Dividends are brought to account as income on a receivable basis. Interest is brought to account as income as earned.
Note 13 provided:
The Company is principally involved in investment within the geographical area of Australia and New Zealand.
The 'Directors' Declaration' included in the Special Purpose Financial Reports stated:
As detailed in Note 1 to the accounts, the Company is not a reporting entity because in the Directors' opinion, there is unlikely to exist users who are unable to command the preparation of reports tailored so as to satisfy specifically all of their information needs. These accounts are therefore a 'Special Purpose Financial Report' that has been prepared solely to meet the Corporations Law requirements to prepare accounts.
The Company has applied Accounting Standard AASB 1025 Application of the Reporting Entity Concept and Other Amendments. No other Accounting Standards have mandatory applicability, and consequently the disclosure requirements of the following accounting standards have not been adopted:
- AASB 1017 Related Party Disclosures
- AASB 1024 Consolidated Accounts
In the opinion of the Directors of Technomin Australia Pty. Limited [the plaintiff]:
(a)the financial statements and notes, set out on pages 2 to 10, are in accordance with the Corporations Law including:
(i)giving a true and fair view of the financial position of the Company and its performance, as represented by the results of its operations and its cash flows, for the year ended on that date; and
(ii)complying with Accounting Standards and the Corporations Regulations; and
(b)there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
In what was described as a 'Directors' Statutory Report', the directors stated:
Principal Activities
The principal activity of the Company is investment. There were no significant changes in the nature of that activity during the financial year.
Review and Results of Operations
The Company continued to hold its existing investments during the year and did not engage in any other activity.
...
Significant Changes
There were no significant changes in the Company's state of affairs during the financial year.
Events Subsequent to Balance Date
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years.
Likely Developments
At the date of this report there does not exist any likely development which is known to the Directors
The directors' declaration and reports were signed by Mr Thompson.
The Special Purpose Financial Reports indicate that for 2000, 2001 and 2002:
(a)the principal activity of the plaintiff was investment;
(b)the plaintiff had a small taxable profit and paid income tax on it;
(c)the plaintiff had investments in unlisted controlled entities of approximately $72.1 million, which had been written down by approximately $71.9 million; and
(d)the financial statements and notes were in fact prepared in accordance with the Corporations Law (despite the exemption).
The Special Purpose Financial Reports were, in my view, clearly discoverable in relation to the plaintiff's lost opportunity claim because they are relevant to the plaintiff's actual investment activities within the period in which it says it would have invested the royalty stream in listed and unlisted companies from which it would have earned the substantial gains claimed.
In resisting the defendants' previous application for further and better discovery, which led ultimately to the emergence of these documents, Ms Chaar, a solicitor for the plaintiff, had sworn an affidavit dated 16 November 2009 in which she deposed that she had been informed by the directors of the plaintiff, Mr Archer and Mr Thompson, that 'there is nothing in any of the Plaintiff's balance sheets or profit and loss statements that bear[s] upon the Plaintiff's claim for loss of opportunity'.
In his affidavit sworn 21 December 1999, Mr Thompson, one of the directors to whom Ms Chaar spoke, said:
4.When I was asked by Ms Chaar on 16 November 2009 about whether there was anything in the Plaintiff's balance sheets or profit and loss statements that bears upon the Plaintiff's claim for loss of opportunity, I formed the view that it was inconceivable that there would be anything in such documents, without looking at or referring to any of the Plaintiff's documents. (emphasis added).
5.When I received notice of the Orders on 14 December 2009, I asked the Plaintiff's internal accountant, Mr Malcolm Kendall, to provide me with the documents required to satisfy paragraph 1(b) of the Orders. He reminded me of the fact that the Plaintiff has been relieved of the obligation to prepare balance sheets and profit and loss statements since at least 2001. That fact had been overlooked by me until that time.
It follows from that evidence that late last year, when the defendants had enquired about, inter alia, discovery of the plaintiff's financial documents for the purpose of the previous discovery application:
(a)Mr Thompson had assumed (wrongly) that the plaintiff had been obliged under the Corporations Law to prepare financial statements, including profit and loss statements and balance sheets, for the years 2001 to 2009;
(b)without looking for such financial documents to see what the profit and loss statements and balance sheets of the plaintiff actually contained, he thought it 'inconceivable' that they contained anything relevant for discovery purposes; and
(c)having made enquiries, he found that the plaintiff had been exempted from preparing financial statements under the Corporations Law, but notwithstanding the exemption, the plaintiff had prepared financial statements for the years ended 30 June 2001 and 30 June 2002.
There is no evidence from Mr Archer, the other director of the plaintiff, as to what inquiries he made, and what documents he considered, if any, before giving Ms Chaar the instructions to which she deposed.
Whether the plaintiff did not discover the Special Purpose Financial Reports because its directors assumed, without looking, that it was 'inconceivable' that any financial statements of the plaintiff could be relevant, or because having looked at them they regarded them as irrelevant, either way it seems to me that there has been a misconception by the plaintiff of the case so far as the discoverability of its documents is concerned: Mulley v Manifold, 343; British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709, 713 ‑ 714; Beecham Group Ltd v Bristol Myers Co [979] VR 273, 276.
In this case, at the time of giving discovery originally, the plaintiff was under a misconception as to the relevance of its financial statements to its lost investment opportunity claim in these proceedings. It was for that reason that, on the defendants' application, I made the orders referred to in [19] above. That was before the disclosure of the Special Purpose Financial Reports. The scope and seriousness of the misconception is shown by Mr Thompson's evidence in his affidavit of 21 December 2009. At a time when he believed that the plaintiff had prepared balance sheets and profit and loss statements in the performance of statutory obligations and, it is to be inferred, he assumed that the statutory accounts (which would contain, it is to be inferred, no less information than management accounts) contained the information referred to in [29] above, he, nevertheless, thought it was 'inconceivable' that they had any relevance. His (misplaced) confidence was so deep that he was prepared to instruct his solicitors to inform the court of their irrelevance, on oath, without even looking for the documents in question. The plaintiff's affidavit of documents cannot be regarded, in my view, as conclusive in relation to its alleged lost investment opportunity claim.
The classes of documents sought - relevance, existence and scope
In my view, documents in each of the categories (as amended below) in the schedule, other than category 3, are of their nature documents which are likely to shed light on the plaintiff's investment activities in the period the subject of the claim and, in that regard, are relevant in the requisite sense to its claim for the alleged lost investment opportunity: Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55, 63; Mulley v Manifold, 345. Documents may be discoverable even though they may not be admissible in evidence. Their importance may be, for example, that they indicate a useful line of investigation, or that they contain information which could affect the manner in which a party may decide to conduct proceedings: Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 [19].
It remains necessary to consider:
(a)the scope of the categories (other than categories 3 and 6); and
(b)whether it is practically certain that acting upon a proper view of the law other relevant documents would have been disclosed by the plaintiff, and/or whether there are reasonable grounds for being fairly certain that other relevant documents ought to have been disclosed.
In approaching those questions I take into account:
(a)the nature and seriousness of the plaintiff's misconception;
(b)that the plaintiff is an investment company;
(c)that the plaintiff had share investments in the period of the claim in these proceedings; and
(d)that the plaintiff's claim in these proceedings is formulated with reference to particularised investment criteria - which indicates that the company's directors are persons who invest funds in accordance with an investment strategy or policy.
I am satisfied, with respect to the categories referred to below, for the reasons referred to below, and in having regard to the matters in [39] above, that it is 'practically certain' (British Association of Glass Bottle Manufacturers Ltd v Nettlefold, 714) that acting upon a proper view of the law, other relevant documents would have been disclosed by the plaintiff, and, or alternatively, that there are reasonable grounds for being fairly certain that other relevant documents ought to have been disclosed.
In relation to category 1, I am satisfied with respect to the matters referred to in [38(b)] above. An investment company whose directors invest in accordance with a formulated policy, would, in the ordinary course, have documents relating to the company's strategy, plan or policy for investment. I would not regard the category as too broad. It is capable of sensible application.
In relation to category 2, I am satisfied with respect to the matters in [38(b)] above. The plaintiff says that there is no evidence that the plaintiff's investment included shares in listed companies. That, to my mind, is irrelevant as the plaintiff, in its lost investment opportunity claim, alleges that it also would have invested in unlisted companies. Whether its investments were in listed or unlisted companies in the period 1999 to 2009, category 2 will pick up all documents relating to investments in listed and unlisted companies.
Category 3 is not pressed.
In relation to category 4, the defendants' counsel at the hearing sought to limit its scope to directors' minutes relating to:
(a)the financial position of the plaintiff; and
(b)the investment activities of the plaintiff.
Subject to limiting the scope for this category in accordance with (b) above, I am satisfied as to the matters referred to in [38(b)] above. I do not accept the plaintiff's contention that further and better discovery should not be ordered because this request is said to be a repeat of a category abandoned by the defendants in the previous discovery application. Whilst the defendants confined their application on the last occasion to certain categories, including balance sheets and profit and loss statements, this present application arises in consequence of the discovery given pursuant to the orders on the last occasion. The defendants are not, in my view, shut out from making an application consequential upon the discovery of documents which had not been available on their first application. Documents in relation to (a) above are more conveniently considered under category 8.
In relation to category 5, I am not satisfied of the matters referred to in [38(b)] above, having regard to Mr Thompson's evidence in relation to the plaintiff's exemption from the preparation of statutory accounts and reports.
Category 6 is not pressed.
I am not satisfied in relation to category 7. There is nothing to indicate any process of reporting to the plaintiff's board.
In relation to category 8, the defendants' counsel sought to limit its scope to:
(a)documents however described which disclose the information customarily recorded in profit and loss statements and balance sheets;
(b)statements of bank accounts held by the plaintiff; and
(c)documents pertaining to the plaintiff's accumulated losses referred to in the plaintiff's Special Purpose Financial Reports, and documents pertaining to the diminution in value of the plaintiff's non‑quoted investments referred to in the plaintiff's Special Purpose Financial Reports.
In my view, category 8 as originally formulated was too wide. The proposed amendment in (a) referred to above also seems to me to be too vague. As to the proposed amendment in relation to (b), an investment company would in the ordinary course keep bank accounts and the bank accounts would be expected to record the receipt of moneys earned from the plaintiff's investment activities. As to the proposed amendment in (c) above, the plaintiff would, in the ordinary course, be expected to have documents relating to such a substantial write‑down in its investment in non‑quoted investments and its accumulated losses. Accordingly, I am satisfied with respect to the matters referred to in [38(b)] above in relation to category 8, provided it is limited as set out in (b) and (c) above.
In relation to category 9, ordinarily an investment company would prepare tax returns covering its profits or losses from investment activities, and there is evidence in this case that the plaintiff did, in 2000, 2001 and 2002, pay tax. I am satisfied in relation to category 9 with respect to the matters referred to in [38(b)] above.
In relation to category 10, I infer that an investment company would in the ordinary course keep general ledgers to record its investment activities. This would be so as a matter of accounting practice even if it were not required by statute to prepare a profit and loss account and balance sheet. The inference is confirmed by the 2001 Special Purpose Financial Report. This shows that even though, on Mr Thompson's evidence, a balance sheet and profit and loss statement was not prepared for 2000, the accounting information was available for the year ended 30 June 2000 to show the comparative position in the profit and loss statement and balance sheet for 2001. I am satisfied of the matters referred to in [38(b)] above in relation to category 10.
Conclusion
I would allow the defendants' application to the extent indicated in the previous section of these reasons.
Schedule
| CATEGORY | DESCRIPTION |
| 1 | Documents relating to the plaintiff's investment strategy or business plan or policy for the period from 1999 to 2009 (inclusive). |
| 2 | Documents relating to the plaintiff's share portfolio between 1999 and 2009. |
| 3 | Documents relating to the share portfolio of the following directors of the plaintiff between 1999 and 2009, namely: John Leslie Thompson and Malcolm John Kendall. |
| 4 | Minutes of meetings of the directors of the plaintiff from 1999 to 2009 (inclusive). |
| 5 | Directors' Statutory Reports and Directors' Declarations for the period 1999 to 2009. |
| 6 | The entirety of the plaintiff's Statements of Financial Position and Financial Performance for 2001 and 2002. |
| 7 | Documents reporting the plaintiff's financial position to the plaintiff's management or board for the period 1999 to 2009. |
| 8 | Documents relating to the financial position of the plaintiff between 1999 and 2009 (inclusive). |
| 9 | The plaintiff's tax returns for each of the financial years from 1999 to 2009 (inclusive). |
| 10 | The plaintiff's general ledgers for the period from 1999 to 2009 (inclusive). |
27
5
1