Vicario-Adams v Relative Networks Pty Ltd
[2025] WASCA 78
•23 MAY 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: VICARIO-ADAMS -v- RELATIVE NETWORKS PTY LTD [2025] WASCA 78
CORAM: MITCHELL JA
VAUGHAN JA
HEARD: 23 MAY 2025
DELIVERED : 23 MAY 2025
PUBLISHED : 23 MAY 2025
FILE NO/S: CACV 19 of 2025
BETWEEN: ROSALBA VICARIO-ADAMS
Appellant
AND
RELATIVE NETWORKS PTY LTD
First Respondent
MARCO VICARIO
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: STRK J
Citation: VICARIO-ADAMS -v- RELATIVE NETWORKS PTY LTD [2025] WASC 60
File Number : COR 103 of 2021
Catchwords:
Appeals - Leave to appeal - Appeal from interlocutory order concerning practice and procedure - Refusal to order discovery of one of eight categories of documents - Principles for leave to appeal
Legislation:
Rules of the Supreme Court 1971 (WA), O 26 r 7
Supreme Court Act 1935 (WA), s 60(1)(f)
Result:
Leave to appeal refused
Appeal dismissed
Category: B
Representation:
Counsel:
| Appellant | : | T C Russell SC |
| First Respondent | : | S Penglis SC |
| Second Respondent | : | S Penglis SC |
Solicitors:
| Appellant | : | Vogt Legal |
| First Respondent | : | Trinix Lawyers |
| Second Respondent | : | Trinix Lawyers |
Case(s) referred to in decision(s):
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170
Clough Ltd v Forge Group Ltd (in liq) (receivers and managers appointed) [2022] WASCA 179
Maek Pty Ltd v Ibrahim [2022] WASC 285
Mineralogy Pty Ltd v CITIC Ltd [2024] WASCA 168
NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107
Roe v The State of Western Australia [2013] WASC 130
Vicario-Adams v Relative Networks Pty Ltd [2025] WASC 60
REASONS OF THE COURT:
Overview
On 23 May 2025 the court sat to hear an application for leave to appeal from an order of the General Division of this court refusing an order that the respondents provide discovery of a specific category of documents. After hearing from the parties, and considering the appellant's case, the court dismissed the application for leave to appeal. It followed that the appeal was dismissed. The court said that it would provide written reasons for its decision as soon as practicable. These are our reasons for refusing leave to appeal and dismissing the appeal.
Background
The appellant and the second respondent are sister and brother. The two siblings are also the shareholders in the first respondent (Company). The second respondent holds 67 of the issued ordinary shares in the Company; the appellant holds the remaining 33 issued ordinary shares in the Company. The second respondent is the sole director of the Company.
The Company operates a business providing information, technology and communications services in Western Australia.
By originating process filed 11 June 2021 the appellant commenced proceedings under the Corporations Act 2001 (Cth) seeking that the Company be wound up. In the alternative, the appellant seeks an order that the second respondent purchase her shares in the Company at 'fair value' (emphasis added). The appellant alleges that the second respondent has conducted himself in a manner that is in contravention of s 233(1)(a), s 461(1)(e), s 461(1)(f) and s 461(1)(g) of the Corporations Act in relation to the affairs of the Company. In the alternative, the appellant says that there has been an irretrievable breakdown in the relationship of the members that would justify the Company being wound up pursuant to s 461(1)(k) of the Act.
The appellant describes her case as raising allegations that:
1.The second respondent has excluded her from managing the Company as a director and equal shareholder (in that respect the appellant claims that she and the second respondent agreed that they would be equal partners, ie the appellant and the second respondent would have an equal 50% shareholding and that the appellant would be a director of the Company).
2.The second respondent has acted in an autocratic manner in relation to the appellant's remuneration through her consultancy company.
3.The second respondent has denied the appellant access to information of the Company.
4.The second respondent has prevented the appellant from exiting the Company at fair value.
That description is, broadly speaking, consistent with the case advanced in the appellant's amended statement of facts, issues and contentions (SFIC) dated 25 August 2023.
The second respondent denies any wrongdoing. He also denies the 'equal partner' agreement. However, while saying that the appellant is not entitled to any relief by order of the court, in responding to an earlier version of the appellant's SFIC the second respondent says that he is 'prepared to purchase [the appellant's] shares in [the Company], or sell his shares in [the Company] to [the appellant], at proper market value' (emphasis added).
The application for discovery by categories of document
By letter and attached minute of proposed orders dated 1 September 2023, the appellant made an application to the primary judge, as case manager, for an order for discovery of documents by categories.
The minute of proposed orders specified eight categories. The respondents opposed three of the categories and sought to narrow the date range for discovery in relation to the remaining categories. On 5 September 2023 the primary judge made programming orders for the exchange of submissions. The programming orders did not contemplate the filing of any affidavit evidence on the application; and no affidavit evidence was in fact filed. The parties duly filed submissions in accordance with orders of 5 September 2023. The orders of 5 September 2023 contemplated that the application would be dealt with on the papers unless the court gave notice that oral submissions would be required. Shortly after the parties' written submissions were filed the primary judge's associate informed the parties that oral submissions would not be required and that the application would be dealt with on the papers.
The application for leave to appeal the subject of these reasons concerned the primary judge's refusal of discovery category (c) as sought by the appellant. This category was described as:
Payroll records (including payroll summaries) in relation to payroll of [the Company] for FY2014 to date (inclusive).
In submissions to the primary judge in support of that aspect of the application, the appellant explained that she sought discovery of the document categories only for the purpose of obtaining a valuation of the shares in the Company. As to the payroll records, the appellant said that adjustments may be necessary for excessive remuneration. It was said that the payroll records would assist in identifying: (1) who was on the Company's payroll; (2) what role the employees performed; and (3) the level of their remuneration. The appellant said such information may not be readily discernible from financial statements.
The second respondent accused the appellant of fishing. Nothing in the amended SFIC raised a pleaded issue based on 'excessive remuneration'. Nor was there expert evidence supporting the proposition that a valuer would require such information to perform a valuation. The second respondent submitted that the appellant was seeking to trawl for documents that may give rise to an allegation.
In reply, the appellant denied she was fishing and said that expert evidence was not required for an interlocutory application of this nature. The appellant said that she had shown why the documents were relevant to the valuation exercise. It was said, in this respect, that the appellant did not need to show that the category was relevant to a pleaded issue going to liability.
The primary judge's decision
The primary judge published written reasons determining the appellant's discovery application on 4 March 2025: Vicario‑Adams v Relative Networks Pty Ltd.[1]
[1] Vicario-Adams v Relative Networks Pty Ltd [2025] WASC 60.
The primary judge inferred that the appellant invoked the court's power to make orders for discovery under O 26 r 7 of the Rules of the Supreme Court 1971 (WA) (RSC) [47]. Her Honour observed, correctly, that the power to make a discovery order was discretionary in character [48]. The primary judge went on to examine the contemporary applicable principles in relation to ordering discovery, doing so by reference to Roe v The State of Western Australia[2] and Maek Pty Ltd v Ibrahim[3] [48] ‑ [49]. Her Honour also observed that, while discovery orders are available, discovery was generally not ordered in a corporations proceedings; and, if it is to be, discovery should only be ordered where the matters in issue are appropriately defined [46], [50]. There is no challenge to the primary judge's statements of principle as to the discretionary power to order discovery of documents by categories.
[2] Roe v The State of Western Australia [2013] WASC 130 [10] ‑ [11].
[3] Maek Pty Ltd v Ibrahim [2022] WASC 285 [25].
In considering whether to order discovery category (c), the primary judge acknowledged that, in some circumstances, the terms on which a purchase of shares may be ordered may require adjustment for circumstances of excessive remuneration [60]. However, 'excessive remuneration' was not a matter in issue in the primary proceedings [62]. From this platform the primary judge reasoned:
While the amount paid in wages and other remuneration may be relevant to the valuation of shares of a company that operates a business, the total cost of such matters ought readily be discernible from the financial records. In this case, there is no basis to compel discovery of anything more than the financial records of the company that record the total remuneration cost. Further, I do not consider that the nature of the action, of itself, properly grounds discovery of the requested category of documents. I accept that an order compelling discovery of documents within the ambit of category (c) would facilitate a 'fishing expedition', as was [the respondents'] complaint. The application for discovery of category (c) documents is refused [63].
However, as is apparent from that passage, her Honour ordered discovery of document categories that would disclose the amounts paid by the Company in relation to salaries and wages. Category (a) provided for discovery of financial statements including profit and loss statements, taxation returns and business activity statements. Category (b) provided for discovery of internal budgets and profit forecasts. Category (e) provided for discovery of contracts for services provided to the Company in respect of office holders, shareholders and companies relating to the shareholders of the Company. Category (f) provided for current employee contracts for services provided to the Company on a fixed‑term basis.
The primary judge made dispositive orders on 7 March 2025. In making orders for the categories of documents to be discovered, but excluding category (c), it is clear that her Honour dismissed the application so far as it concerned category (c). Any doubt in this regard is eliminated by the primary judge's supplementary order made on 6 May 2025 (which are expressed to be made 'further' to the orders made on 7 March 2025).
The application for leave to appeal
The appellant filed an appeal notice on 20 March 2025. In the appeal notice the appellant acknowledged, correctly, that leave to appeal was required as the order that she seeks to appeal from is interlocutory in nature: Supreme Court Act 1935 (WA) s 60(1)(f). Thereafter, on 3 April 2025, the appellant filed her appellant's case. For the purpose of seeking to establish that she would suffer substantial injustice if the primary decision was left unreversed, the appellant sought and obtained leave to adduce an affidavit of Stephen Mintz sworn 3 April 2025. Mr Mintz is a solicitor employed by the appellant's solicitors. His affidavit attached copies of the Company's financial statements for the years ended 30 June 2018, 30 June 2019 and 30 June 2020.
It appears from the appellant's case that the appellant seeks orders varying the primary judge's order of 7 March 2025 by providing for discovery of category (c).
There are two grounds of appeal:
1.The primary judge erred in law, alternatively in fact and law, in refusing to order the discovery of payroll records, by taking into account an irrelevant matter, namely that 'excessive remuneration' is not a matter in issue, whereas the primary judge should have held that payroll records are relevant to the valuation of shares of a company, which is a matter in issue.
2.The decision of the primary judge to refuse to order the discovery of payroll records is unreasonable or plainly unjust in that the payroll records would assist an expert in valuing the shares to determine whether any adjustment to the total remuneration cost recorded in the financial records of the company is required in circumstances where the company is a small, family owned and operated services business.
On 9 April 2025 the court issued a Registrar's Notice to Attend to consider, among other things, the application for leave to appeal.
The principles that apply in determining whether there should be leave to appeal are well established. A recent recitation of the applicable principles appears in NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd.[4] See also Clough Ltd v Forge Group Ltd (in liq) (receivers and managers appointed)[5] and Mineralogy Pty Ltd v CITIC Ltd.[6] We adopt those principles but will not repeat them in full. Leave may be granted whenever the interests of justice require it. Often the interests of justice require consideration of two matters. First, whether the decision was wrong or, at the least, attended with sufficient doubt to warrant its being reconsidered. Second, whether substantial injustice would result if the decision was left unreversed, supposing the decision to be wrong.
[4] NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107 [117] ‑ [118].
[5] Clough Ltd v Forge Group Ltd (in liq) (receivers and managers appointed) [2022] WASCA 179 [18] ‑ [23].
[6] Mineralogy Pty Ltd v CITIC Ltd [2024] WASCA 168 [56] ‑ [63].
In support of leave to appeal, the appellant asserted that the primary judge's decision was wrong or, at the least, attended by sufficient doubt to warrant it being reconsidered. The appellant relied on grounds 1 and 2.
The appellant also submitted that, if left undisturbed, the primary decision would result in substantial injustice as:
1.The documents sought go to the value of the shares which, in turn, go to the substantive relief sought in the action.
2.The payroll records are likely to be forensically significant.
3.Obtaining a valuation is a critical step in resolving the dispute and the absence of payroll records would undermine the utility of obtaining an expert report. In this respect the appellant points to the second respondent's professed willingness to purchase the appellant's shares in the Company at a proper market value.
4.There is an informational asymmetry between the appellant and the second respondent and there is no way to overcome the injustice created by this disparity other than through discovery.
Counsel for the appellant submitted that the primary judge's decision to refuse discovery category (c) went beyond mere inconvenience and procedural disadvantage. Counsel submitted that the appellant was being deprived of relevant documents that mattered to the remedy she seeks.
The question of leave to appeal
The primary decision, in refusing discovery of a single category of documents within a multitude of categories, involved a discretionary decision by a case manager on a matter of practice or procedure. Appellate courts exercise particular caution - often referred to as 'special restraint' - in reviewing such decisions: NRW Contracting Pty Ltd [117](2). It would be disastrous to the proper administration of justice if a 'tight rein' was not kept on interference with primary decisions of this kind: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc.[7] It is not, ordinarily, in the interests of justice that there be leave to appeal from such a decision. That is all the more so where, as in this case: (1) the application for leave to appeal does not raise an issue of principle; and (2) the application for leave to appeal does not raise a question of general public importance. See Mineralogy Pty Ltd v CITIC Ltd [63].
[7] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 177.
The appellant argued that, if left undisturbed, the primary decision would result in substantial injustice.
In the context of leave to appeal from a discretionary decision involving a matter of practice and procedure the criteria of 'substantial injustice' requires the application for leave to demonstrate a reasonably clear injustice: Mineralogy Pty Ltd v CITIC Ltd [63]. In any event the requirement of substantial injustice is not satisfied by interference with procedural rights or procedural disadvantage; it looks to whether substantive rights are adversely affected. Where substantive rights are not effectively determined an appellate court will be reluctant to interfere. See NRW Contracting Pty Ltd [117](5) ‑ (6).
In Mineralogy Pty Ltd v CITIC Ltd this court refused leave to appeal from an order of a judge of the General Division rejecting certain discovery categories. The court made the following observations which apply equally to the present application for leave to appeal:
1.Discovery is an essential part of the proper administration of justice [66].
2.However, there is no right to an order for discovery. The power to order discovery involves a judicial discretion which is to be exercised having regard to O 1 r 4B RSC. The ultimate test is whether the discovery is necessary for fairly disposing of the proceedings [66].
3.In rejecting or limiting the discovery categories the primary decision did not affect the substantive rights of the applicant for the purpose of leave to appeal. It is not only that there is no right to an order for discovery. Also relevant is that discovery is procedural, not substantive [72].
4.The question of substantial injustice will commonly require a hypothetical assessment of the impact of the primary decision on the likely future course of the proceedings [71].
5.The application for leave to appeal was not to be evaluated by considering the additional discovery categories sought on appeal in isolation. The assertion of substantial injustice fell to be assessed in the context of the extensive discovery categories that were allowed [72].
In Mineralogy Pty Ltd v CITIC Ltd the court also emphasised the well‑established principle that the notion of substantial injustice looks to the substantive rights of the party aggrieved by the primary court's order and requires the aggrieved party to demonstrate that the effect of the order will go beyond mere inconvenience and procedural disadvantage [69] ‑ [70].
In the present case the appellant failed to demonstrate that substantial injustice would result if the primary decision was left unreversed (supposing the decision to be wrong). The primary decision does not determine or adversely affect any substantive right of the appellant. We reject the contention that the documents the subject of category (c) are likely to be forensically significant and the refusal to order their discovery involves more than mere inconvenience or procedural disadvantage. The appellant will be able to determine the amounts incurred by the Company in relation to salaries and wages from other document categories that are to be discovered. If, on consideration, the salaries and wages are thought to be excessive, a valuer will be able to make any necessary adjustments having regard to what he or she determines to be reasonable amounts (assuming he or she has the appropriate expertise to do so). In any case, as senior counsel for the respondents submitted, there are other available mechanisms that the appellant may employ to overcome any injustice should it become apparent that in preparing a valuation of the issued ordinary shares in the Company the appellant is in fact suffering substantial injustice as a result of the primary judge refusing discovery category (c).
The absence of demonstrated substantial injustice, were the primary decision to remain unreversed, sufficed to refuse the application for leave to appeal. However, in refusing leave to appeal, we also had regard to the other matters we mention above. In particular, considerable weight had to be given to the circumstance that the appellant sought leave to appeal from an interlocutory decision of a procedural character by a case manager. The special restraint that applies to appellate review of such a decision is not a matter to be given mere lip service: Mineralogy Pty Ltd v CITIC Ltd [75].
It is, in the circumstances, not necessary to address the merits of the proposed grounds of appeal. However, neither ground compelled the conclusion that the primary decision was wrong or even attended with sufficient doubt as to warrant its being reconsidered. Leave to appeal was also to be refused on that basis.
On ground 1, the circumstance that excessive remuneration had not been raised as a matter in issue was not an extraneous or irrelevant matter. The lack of any pleaded issue as to excessive remuneration was relevant to whether the discovery of documents in terms of category (c) was necessary for fairly disposing of the proceedings.
On ground 2, we do not accept that the primary judge's refusal to order discovery of category (c) was unreasonable or plainly unjust. Such a ground asserts that the court should infer or imply error from the outcome. This requires a substantial wrong whereby this court, exercising its appellate jurisdiction, is driven to conclude that there must have been some misapplication of principle. It is not enough that this court would have exercised the discretion differently if in the position of the primary judge. For the same reasons that the appellant has not demonstrated substantial injustice in being deprived of the documents in category (c) it was open to the primary judge to conclude that discovery of those documents was not necessary for fairly disposing of the proceedings.
For these reasons, it was not in the interests of justice to grant leave to appeal. Accordingly, we refused the appellant's application for leave to appeal from the primary judge's orders made 7 March 2025.
Conclusion and orders
It was for these reasons that we ordered that the appellant's application for leave to appeal was dismissed. It followed that the appeal was to be dismissed. The appellant was ordered to pay the respondents' costs of the appeal, to be assessed if not agreed. The costs order followed the event.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SD
Associate to the Hon Justice Vaughan
23 MAY 2025
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