VISCARIELLO v Macks (No 6)
[2010] SASC 303
•27 October 2010
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Civil)
VISCARIELLO v MACKS (No 6)
[2010] SASC 303
Reasons of Judge Lunn a Master of the Supreme Court
27 October 2010
PROCEDURE
Application by plaintiff under 87R 60 for discovery by six non-parties including former solicitors and counsel for the defendant - held no general right of a party to obtain discovery from non-parties where the other party could not be trusted to have made proper discovery - conclusiveness of list of documents subject only to specific modes of challenge given by the Rules - plaintiff had not exhausted his rights of obtaining further discovery from defendant - failure to sufficiently identify documents for which discovery was sought from non-parties - applications all dismissed.
VISCARIELLO v MACKS (No 6)
[2010] SASC 303JUDGE LUNN:
Reasons on plaintiff’s applications for non-party discovery of documents
Background[1]
[1] This Background is an edited version of the history given in my reasons No 3 [2008] SASC 225.
The plaintiff was a director, employee and creditor of Bernsteen Pty Ltd (“Bernsteen”). This case is also concerned with the affairs of a connected company, Newmore Pty Ltd (“Newmore”), which had a similar history to that of Bernsteen.
Paragraph 77 of the Second Amended Statement of Claim (“the ASOC”) pleads:
77At all material times from November 2001, Tanya Hamilton-Smith (“Hamilton-Smith”) had a close personal relationship with the Plaintiff.
Nothing more is said about this relationship in the ASOC or the affidavits. In all the proceedings mentioned below, Hamilton-Smith was represented by the legal firm of McNamaras, in which the plaintiff was a lawyer.
The defendant is an accountant and a liquidator. At various times up until 2001 he had given professional advice to the plaintiff and Bernsteen. As a result of alleged advice given by the defendant to the plaintiff on 5 December 2001 the plaintiff caused Bernsteen and Newmore each to appoint the defendant as its voluntary administrator. On 21 December 2001 the creditors of Bernsteen and Newmore resolved that they each be wound up. The defendant then became, and has remained, their liquidator. The ASOC pleads a number of causes of action relating to the winding up of Bernsteen and Newmore, and the failure to implement Deeds of Company Arrangement, which are not directly relevant to the present applications.
The relevant parts of the ASOC commence at paragraph 77, which is quoted above. Set out below in chronological order are eight Court actions (“the eight actions”) which are pleaded in the ASOC. (The numbers in [ ] are the paragraph numbers in the ASOC dealing with the particular action or topic).
“First action” [81]. Bernsteen sued Hamilton-Smith in the Adelaide Magistrates Court, 10039/02, claiming $27,733. There was a counterclaim for $27,769. Interim allocaturs for interlocutory costs were made in favour of Bernsteen against Hamilton-Smith on 23 March 2005 for $1,972 and on 4 April 2005 for $1,903. Bernsteen served a bankruptcy notice dated 7 April 2005 on Hamilton-Smith based on these allocaturs.
“Second action” [83]. On 4 May 2005 Hamilton-Smith commenced proceedings in the Federal Magistrates Court, 94/05, to set aside the bankruptcy notice. On 31 August 2005 it was set aside and Bernsteen was ordered to pay the costs of Hamilton-Smith.
“Third action” [85]. Heidi George (“George”) commenced an action against Hamilton-Smith in the Magistrates Court at Mt Barker, 720/02, for $4,250. On 25 August 2003 she obtained a judgment against Hamilton-Smith for $4,079. She served a bankruptcy notice on Hamilton-Smith based on this judgment [92].
“Fourth action” [93]. On about 21 July 2005 Hamilton-Smith instituted proceedings in the Federal Magistrates Court, ADG 159/05, to set aside the bankruptcy notice. On 22 September 2005 that action was dismissed and Hamilton-Smith was ordered to pay the costs of George [95].
“Fifth action” [96]. On 26 September 2005 George commenced proceedings against Hamilton-Smith in the Federal Magistrates Court, ADG 237/05, seeking her bankruptcy. On 19 July 2006 a final sequestration order was made against Hamilton-Smith [103-105].
“Sixth action” [99]. On 25 October 2005 Hamilton-Smith commenced an action against George in the Magistrates Court, 9644/05, seeking a declaration that she had fully satisfied the judgment in the third action. On 13 June 2006 judgment was given in this action for George with costs against Hamilton-Smith.
“Seventh action” [106]. On 17 July 2006 Hamilton-Smith instituted an appeal in this Court, 883/06, against the judgment in the sixth action. There were several hearings before Gray J, but the appeal was never adjudicated upon and it was later discontinued after a settlement was reached.
“Eighth action” [107]. On 8 August 2006 Hamilton-Smith appealed to the Federal Court, SAD 147/06, against the sequestration order made in the fifth action. On 21 November 2006 Besanko J allowed the appeal, published reasons [2006] FCA 1551, set aside the sequestration order and remitted the proceedings back to the Federal Magistrates Court.
The legal firm of Minter Ellison (“Minters”) represented Bernsteen in the first 2 actions and George in the other 6 actions. The plaintiff pleads that the defendant paid the substantial legal costs of George of the third to eighth actions out of the funds of Bernsteen and/or Newmore and expended the funds of Bernsteen and/or Newmore on the eight actions for improper and personal purposes and in breach of his duties as their liquidator. Such allegations had earlier been raised by Hamilton-Smith in several of the actions.
Applications for non-party discovery
On 13 October 2009 the plaintiff issued six separate interlocutory applications seeking orders for non-party discovery against six different entities. Each application was supported by a separate affidavit of the plaintiff. Each affidavit exhibited a schedule setting out the terms of the order for non-party discovery sought against the respondent to that application.[2] The orders for discovery sought against each respondent were identical.[3] The orders sought were in the following terms:
[2] There was no justification for the plaintiff having taken out six separate applications. It could have been done by a single application addressed to six respondents and supported by a single affidavit.
[3] I have not compared them word for word, but if there are differences, they are very minor.
Preamble:
The reference to the word ‘document’ in this schedule is intended to include all documents in relation to and connection with the actions listed herein including, your entire file(s) in relation to and connection with the actions listed herein including all notes, memorandum, letters, e-mails, file notes, minutes of meeting(s)/conferences, notes of telephone attendances, Tax Invoices, receipts for payment of Tax Invoices, bank statements that record payments received be they in hard copy and/or in electronic form.
The reference to Peter Ivan Macks (“Macks”) includes Macks in his own right and/or in his capacity as Liquidator of Bernsteen … and/or Newmore Pty Ltd … and/or any servant or agent of the accountancy practice where Mr Macks works, namely Prentice Parbery Barilla and/or PPB;
Documents sought
The documents sought include all documents that are in your possession, custody or power which relate to:
1. your communications with Macks, his solicitors or counsel.
2.your communications with the solicitors for Heidi George and her counsel or any servant or agent thereof; and
3. your role,
in relation to and connection with any of the following legal proceedings:
4Bernsteen Pty Ltd (In Liquidation) v Tanya Hamilton-Smith
Magistrates Court [Civil Division] Of South Australia
Action No. 10039 of 2002 including all appeals arising from this action;
5Heidi George v Tanya Hamilton-Smith
Magistrates Court of South Australia
Action Number 720 of 2002;
6 Tanya Hamilton-Smith v
Heidi George
Federal Magistrates Court of Australia
Action number ADG 159 of 2005;
7
Heidi George v Tanya Hamilton-Smith
Federal Magistrates Court of Australia
Action number ADG 237 of 2005;
8 Tanya Hamilton-Smith v Heidi George
Magistrates Court of South Australia
Action number 9644 of 2005;
9Tanya Hamilton-Smith v Heidi George
Federal Court of Australia
Action number No: SAD147/2006;
10 Tanya Hamilton-Smith v Heidi George
Supreme Court of South Australia
Action number 883 of 2006.
The respondents to the six applications (“the respondents”) were as follows:
Minters;
George;
Iles Selley, a legal firm who had represented the defendant for the purposes of a subpoena issued to him in the fifth action and possibly in other respects;
Mark Livesey QC, a barrister who had been briefed by Minters in some of the eight actions;
Philip McNamara QC, who had been briefed by Minters in the Fifth action;
Simon Ower Pty Ltd, a company for Simon Ower, a barrister briefed by Minters in some of the eight actions.
The discovery sought is extremely broad. Its breadth is demonstrated by some of the respondents not having had any apparent involvement in at least some of the eight actions. Although it was not mentioned in submissions, for some unexplained reason the request for discovery does not extend to the second action.
The action is now judge managed by Justice Bleby. He has referred to me the six applications for non-party discovery, but he is continuing to deal with other interlocutory applications in the action.
On 24 September 2009, Bleby J directed that the Supreme Court Civil Rules 2006 should apply to this action. There was an exemption to this order about some outstanding discovery applications. All counsel agreed during the course of the argument before me that the six applications for non-party discovery were to be dealt with under Rule 60 of the Supreme Court Rules 1987. They were the Rules which were expressly invoked by the applications. It was agreed that these applications were part of the exceptions to the order that the 2006 Rules apply to the action.
Each of the applications sought an order under 87R 60 that documents be discovered and produced. It was common ground that I am now only dealing with the applications insofar as they relate to orders for discovery and that any issues about production are to be dealt with after any order which is made for discovery has been complied with.
In considering whether orders for discovery should be made, I am not concerned with whether the documents are subject to legal professional or other privilege. Whether they are privileged or not, they are discoverable. The issue of privilege will only become relevant if orders are subsequently sought for inspection of documents for which privilege is claimed. Likewise, I am not concerned at this stage of the applications with whether documents are disclosed with portions of them being masked or redacted.
The plaintiff’s counsel foreshadowed that the claims for privilege by the defendant and George would be challenged on grounds of illegality or abuse of process. That is an application which has not yet been made and has not been referred to me for determination.
Objection was taken to the use of some of the affidavits relied upon by the plaintiff. As I have not needed to act on those parts of the affidavits to which objection was taken, I need not rule on the objections.
Documents discoverable by the defendant
The interlocutory processes in this action to date have had a long and tortuous history. Both parties have been at fault in various matters. I do not need to canvass their long history in considering the plaintiff’s submission that the defendant has been in gross breach of its obligations about discovery. However, it is necessary to give some of the more recent history about the discovery applications brought by the plaintiff and the discovery given by the defendant. Some of the need for the defendant to make additional discovery was necessitated by substantial amendments to the plaintiff’s pleadings. The defendant has discovered a large number of documents, but the plaintiff submits that critical documents are missing from them. The defendant has stated that a number of relevant documents have been destroyed or cannot be located, which is not surprising as the relevant events go back to 1996.
On 30 July 2009 Bleby J referred an application by the plaintiff for further discovery to Master Burley.[4] This led to some further discovery being volunteered by the defendant and to an order being made by Judge Burley on 13 November 2009 for better discovery to be given. On 26 November 2009 the defendant filed an amended Third Supplementary List of Documents, FDN66.
[4] I cannot identify any application document on the Court file. There is none referred to in the plaintiff’s outline of argument, FDN41. It seems to have been based on correspondence from the plaintiff.
On 3 December 2009 I directed that the six applications for non-party discovery be listed for argument before me on 5 February 2010. The plaintiff, who then appeared in person, said he wanted the applications determined before a mediation occurred, which was then scheduled for March 2010. However, shortly before 5 February 2010 I received an email application consenting to the six applications being adjourned until after the mediation. I am not aware of what happened about the mediation, but, if it occurred, it did not resolve the matter. On 15 March and 1 April 2010 the defendant filed further lists of documents, FDNs 72 and 76.
On 21 July 2010 the plaintiff took out a further application, FDN80 seeking, inter alia, further and better disclosure of documents by the defendant.[5] That application is still pending before Bleby J. The plaintiff did not dispute in the argument before me that it encompassed all of the documents which were also the subject of the six applications before me for non-party discovery.
[5] It included in its paragraph 6 that the non-party discovery applications be stayed until that application be determined, but Bleby J has never made an order on that paragraph.
On 2 August 2010 the plaintiff applied to me to adjourn the six applications until after FDN80 had been disposed of and until after a further mediation which is scheduled for November 2010 had occurred. This was opposed by the defendant and all the respondents on the ground that the applications had been pending since October 2009 and they wanted them disposed of one way or the other without further delay. They said if the plaintiff withdrew the applications, he could bring more non-party discovery applications at a later time for documents which he had not been able to obtain from the defendant under FDN80. I ruled in favour of the defendant and listed the six applications for argument for 21 September 2010.[6] On 26 August 2010 the defendant filed a Further Supplementary List of Documents, FDN88.
[6] This was an oral application made on the hearings of the non-party discovery applications. I was then unaware of paragraph 6 of FDN80 which was pending before Bleby J.
The law on non-party discovery
The plaintiff’s counsel contended that the plaintiff ought to be entitled as a matter of fairness to get the most complete picture by way of discovery as he was able to get from all of the documents in the interests of justice, and, if he could not get it from the defendant, the Court should require non-parties to give it to him.[7] No authority was cited for this proposition. In my view, it is contrary to the authorities and the rules.
[7] Transcript 48, plaintiff’s Outline paragraph 2.5.
At the interlocutory stages of an action a party’s list of documents is conclusive, subject to certain exceptions to be mentioned.[8] As Mullighan J said in Duke Group Ltd v Pilmer:[9]
Subject to the procedures available for a party to challenge the sufficiency of discovery, the list of documents or affidavit of discovery is conclusive as to the documents which a party must disclose and as to the relevance, for discovery, of the documents a party has in his control: Mulley v Manifold (1959) 103 CLR 341, per Menzies J (at 343). No doubt the role of the legal adviser is a reason for treating the discovery as conclusive. Of course, if discovery is more extensive than relevance requires, no harm is done. The other party has too many documents but is not deprived of the knowledge of documents which bear upon issues in the case or which may reveal fruitful lines of inquiry.
It is perhaps only in the realm of discovery from strangers to the litigation that the production of documents which do not pass the relevance test may be challenged. However, even then the stranger has no interest in the issue or [sic] relevance: Casley-Smith v Stirling District Council (1989) 51 SASR 447, per White J (at 457).
Here the plaintiff has made discovery and proposes to permit inspection because its legal advisers, in discharge of their duty, have concluded that the documents are relevant for the purpose of discovery. I do not think the court can go behind that decision. It is in the very nature of the discovery process that the court and the parties to litigation must rely upon solicitors to make the judgment as to whether or not a document is relevant.[10]
[8] See generally Bray “Law of Discovery” (1885), pp 211-2.
[9] (1990) 60 SASR 29 at 35-6.
[10] This was the law under r 58 of the 1987 Rules. This application is being decided in the context of r 58A of those rules which superseded r 58, and where the obligation to make discovery was narrower than under r 58.
The current 2006 Civil Rules allow several procedures for limited challenges to the conclusiveness of a list of documents.[11] 6R 145 relevantly provides:
(1)If there is reason to doubt whether a party has fully complied with the party's obligations to disclose and produce documents under this Part, the Court may make orders the Court considers appropriate to ensure that the obligations have been fully complied with and, if necessary, to enforce those obligations.
(2)The Court may (for example)—
(a) require the party, or another person who may be in a position to provide relevant information, to appear before the Court for examination; or
(b) require the party to answer written questions relevant to ascertaining whether the party has made full disclosure.
Although it is not referred to in FDN80, it would appear that the plaintiff is invoking that Rule on that application. Whether he can establish the necessary “reason to doubt” in relation to particular documents or classes of documents remains to be determined by Bleby J.
[11] Those to be mentioned are the equivalents 87R 58.04(3) and 87R 58.04A(1).
As yet, the plaintiff has not sought any orders under sub-r (2) for examinations or written questions. The present applications before me are not applications under sub-r (2)(a) to have persons other than the party to appear before the Court for examination. If the plaintiff can establish the necessary “reason to doubt” to cross the threshold for obtaining discretionary relief under 6R 145, he has not yet exhausted his rights under 6R 145 as against the defendant.[12] If he cannot establish the necessary “reason to doubt” so as to obtain orders under 6R 145 against the defendant, it would seem incongruous that he should be able to then pursue the same documents from non-parties.
[12] See Williams Aviation v Santos Ltd below.
There is a line of old cases, which were not cited in argument, that the Court could go behind the conclusiveness of an affidavit of discovery if it was reasonably certain or probable that the affidavit was untrue.[13] These cases were decided in jurisdictions, and at times, when there was no equivalent of 6R 145. I consider that such a common law power has now been superseded in this State by that rule. Much of the case of the plaintiff on the applications was directed to showing that the defendant was so dishonest and underhand that it could not be presumed that he had made proper disclosure of the documents adverse to his case,[14] and therefore the plaintiff should be permitted to seek such documents from non-parties. However, these are trial issues which, except as permitted by the rules, are not properly or conveniently dealt with in interlocutory hearings. Under the principle of the conclusiveness of an affidavit of discovery, it has always been accepted that some contentious issues about proper discovery will have to be left for the trial of the action and the cross-examination there of witnesses. There is no authority that the discretion under 87R 60 to order non-party discovery should be exercised to compensate for the difficulties created by the presumption of conclusiveness unless it is shown that the party does not have some relevant documents. The Court has never permitted 87R 60, or its predecessors or successors, to be used merely to verify whether a party has properly discharged his discovery obligations which in essence is what the plaintiff is seeking to do by the present applications.
[13] Attorney-General v Emerson [1882] 10 QBD 191 at 204; Baird v Crawford (1899) 20 LR NSW 195 at 203; Allen v City Bank of Sydney [1902] 2 NSWSR Eq 143 at 147; Associated Dominions Society Pty Ltd v John Fairfax (1952) 72 WN NSW 250 at 254-5.
[14] See paragraphs 4.5-4.15 of the plaintiff’s Outline of Argument, FDN85.
A related point is that 6R 145 and 87R 58.04(e) focus on the existence, or previous existence, of particular documents or classes of documents. They require an initial identification of particular relevant documents, and a belief that the party may have, or have had, them. They do not deal with the obligation of a party to make proper discovery at large. A major flaw in the present applications is the plaintiff’s failure to identify properly any documents or classes of documents which are relevant and which there is a reason to believe are held by a particular respondent. The failure of the plaintiff to identify adequately documents or classes of documents, of which he seeks further discovery from the defendant under FDN80 has been the subject of argument, and specific directions, by Bleby J on that application. I do not intend to enter upon that topic, except to say that similar issues are present on these non-party discovery applications.[15] There is little to suggest that there may be relevant documents held by any of these respondents which are either held by, or in the power of, the defendant. The thrust of the plaintiff’s argument is rather that the defendant must have such documents, but he will not discover them. That in itself is not a proper basis for an order for general discovery under 87R 60.
[15] The plaintiff’s counsel made a general submission to me that the documents sought from the non-parties were identified in various affidavits and correspondence, but I do not intend to trawl through the documents to compile a list of them.
In Williams Aviation v Santos Ltd[16] at 275-6 O’Loughlin J said:
Whilst the Rules of Court confer power to order discovery of documents from a stranger to the proceedings, I believe that this power must be exercised with care and, generally, only in cases where it is obvious that the stranger has the only copies of the particular documents. Expressed in another manner, I believe that a party to litigation should exhaust its rights with respect to discovery against the other party before involving a stranger in the matter. However, I must concede that such a proposition cannot be regarded as a fixed or arbitrary rule; there will always be exceptions. … But in the first instance, I believe that the general and specific powers of discovery with respect to a litigant should be totally exhausted before a stranger is enmeshed in the proceedings.
To similar effect is Sands v State of South Australia.[17]For the reasons given above, I do not consider that the plaintiff has brought himself within an exception to the principle that he must first exhaust his rights of discovery against the defendant before being able to resort to non-party discovery. I will return to this point later.
[16] (1985) 40 SASR 272.
[17] Perry J, 27 September 2005, [2005] SASC 381.
The principles upon which the discretion under 87R 60 should be exercised were stated by White J in Commissioner of Police v Channel Seven Adelaide Pty Ltd[18] to be as follows:
35 The Court has a discretion with respect to the range of documents which a non-party should be ordered to disclose. That discretion must take account of a number of factors including the directness (or indirectness) of the relevance of the documents to the issues in the case; the coercive nature of the process; the extent to which the non-party is likely to incur expense or experience difficulty in complying with the order; and the extent to which compliance with the order will impinge upon the confidentiality of the information held by the non-party, or upon the privacy of the non-party or other persons. A non-party should not be required, under the coercion of a Court order, to disclose any more documents than are necessary to dispose fairly of the proceedings.[19] Ultimately the order should be framed so as to best serve the interests of justice in the particular case.
[18] 19 June 2008, [2008] SASC 164.
[19] Tipperary Developments v Western Australia [1999] WASC 62 at [23]-[27]; (1999) 21 WAR 250 at 255-6; Mobil Oil Australia Ltd v Guina [1996] 2 VR 34 at 37-8.
The respondents submitted that any discovery to be ordered under 87R 60 had to be limited to directly relevant documents. I do not agree. I set out hereunder what I said on this topic in Georgio & Ors v Fiorita:[20]
[20] 23 August 2008, [2008] SASC 281.
9 Counsel for TFS submitted that the power of the Court to order discovery against TFS under 87R 60 was limited to documents directly relevant on the pleadings. He did not cite any authority for this proposition, but I believe he was relying upon the following passage from the judgment of Bleby J in Southern Equities Corporation Ltd v Arthur Andersen & Co (No 8), 31 January 2002, Judgment No (2002) SASC 20, where he said:
“12It has been held by this Court that the test of relevance to the proceedings referred to in Rule 60 was not intended to provide a different test from that applicable to discovery of documents between parties to litigation. In District Council of Stirling v Casley-Smith (1989) 50 SASR 297, Perry J said (at 305):
In my opinion, the difference in wording between the present rule relating to discovery inter-parties and the rule relating to discovery by a stranger to an action, should not be regarded as importing a different test or meaning. I see no reason why, if documents would be regarded as relevant and liable to production inter-parties, the same documents should not be liable to be ordered to be produced out of the hands of a stranger to the action.
13At the time the obligation on parties to litigation was to give discovery of all documents “relating to any matter in question in the action”: Rule 58.01(1).
…..
14Since 3 June 2000, the obligation between parties to discover documents has become limited to documents “which are directly relevant to any issue arising on the pleadings”: Rule 58A.03. I discussed the effect of that change in Southern Equities Ltd (in liquidation) v Arthur Andersen & Co (No 5) [2001] SASC 335 (at [4-12]. I will not repeat what I then said. In my opinion, the approach taken in the two Casley-Smith Cases to which I have referred must continue to be applied and that the test now applicable to discovery between parties should be applied to non-party discovery. To do otherwise would be productive of confusion and uncertainty, although it means that the provisions of Rule 60 must be given an ambulatory meaning.”
10 I doubt that this passage precludes an order under 87R 60 for the discovery of indirectly relevant documents. 87RR58A.03 and 58A.04 differentiate between discovery of directly relevant documents, which is mandatory, and discovery of indirectly relevant documents, which is limited to where it is ordered in the interests of justice. I believe the passage quoted was saying no more than that an order under 87R 60 for the discovery of indirectly relevant documents should be limited to where it is in the interests of justice to order it in the same way as such discovery is limited under 87R 58A.04, but not that there can be no discovery ordered under 87R 60 of indirectly relevant documents.
On what was said by White J, as quoted above, the directness or indirectness of the relevance of the documents sought is only one factor in the exercise of the discretion.
In Harris Scarfe Pty Ltd v Shoe Source Group Importing Pty Ltd[21] I held that where the documents sought under 87R 60 may be held by each of several non-parties, the application should usually be first directed to the one with whom the contents of the documents are most closely connected. Here, the plaintiff has adopted a scattergun approach and has issued applications against everyone who might have any of the documents in question. For instance, it could usually be expected that Minters would have in their power the documents held by counsel whom they had briefed. In the second to eighth actions Minters were acting for George. I do not see why applications need to be pursued concurrently against both of them.
[21] 10 July 2008, [2008] SASC 187.
The applications are all framed in extremely wide terms and on the evidence none could wholly succeed in the terms in which they have been formulated. While the plaintiff primarily sought orders for general discovery against all of the respondents, his alternative position was orders for more limited discovery if that was justified. Although there was some effort in the plaintiff’s affidavits to describe classes of documents which particular respondents might have, he did not put forward in his application, affidavits or proposed minutes of order anything remotely approaching the terms of an order which could be made under 87R 60 if it was otherwise justified. It is not for the Court to construct the terms of a proper order, but rather to rule whether the order sought by the plaintiff, albeit possibly with alternative formulations, is justified.[22]
[22] Wildbore v Amatek Ltd (1998) 199 LSJS 49.
87R 60.04
87R 60.04, which applies to the present applications, provides:
No person should be compelled to produce any document which he could not be compelled to produce:
…
(b)in the case of an application under Rule 60.01(2)(b) if he had been served with a subpoena to produce the documents at trial.
[This is an application under 87R 60.01(2)(b).]
87R 60.04 was not mentioned during submissions. I do not base my conclusions upon it, but I raise it in case there is an appeal against my decision.
87R 60.04(b) is directed to production, and not discovery, of documents. However, it is arguable that there is no purpose in ordering discovery of documents if their production would be barred on grounds of irrelevance if they had been the subject of a subpoena for documents addressed to the non-party. In this State, a non-party subpoenaed to produce documents can object to producing them on grounds of irrelevance unless the “on the cards” is satisfied; ie. they will materially assist in the presentation of the case at trial.[23] The “on the cards” test has not been satisfied by the plaintiff for any particular documents which may be now held by the respondents.
[23] Civil Procedure South Australia 1987 Volume, [R 81.01.25(1)] and the cases cited there.
For the above reasons, I consider that the whole of the plaintiff’s applications for non-party discovery fail. However, in case the matter should go further, I deal with some alternative grounds on which the same conclusions can be based.
Relevance and direct relevance
On what documents are directly relevant, I adopt the test enunciated by White J in Scott v Johnson & Ors[24] at [6] where he said:
6 The issue of direct relevance is to be determined by reference to the pleadings. A document will be directly relevant if it tends to prove or disprove a matter which is in issue. It will not be directly relevant if it merely tends to prove or disprove something that may be relevant to a matter in issue, or if there is merely a chance that the document will prove or disprove a matter in issue.[25]
[24] 17 September 2010, [2010] SASC 277.
[25] Channel Seven Adelaide Pty Ltd v Lane and Hurley [2004] SASC 177 at [22]-[25]; (2004) 234 LSJS 225 at 230-1; Quenchy Crusta Sales Pty Ltd v Logi-Tech Pty Ltd [2002] SASC 374 at [9]-[11]; (2002) 223 LSJS 266 at 267; Rehn v Australian Football League [2003] SASC 159 at [24]; (2003) 227 LSJS 378 at 381 and Harris Scarfe Ltd v Ernst & Young (No 4) [2005] SASC 443 at [13]-[15]; (2005) 95 SASR 300 at 303-4.
The defendant has already discovered a large number of documents, including documents from Minters and the file of Iles Selley. On these applications I am only concerned with documents held by the respondents which have not already been discovered by the defendant.[26] Under 87R 58A.06(2)(a) the defendant was entitled to discover a file as such without further describing the documents in it. If the description of the individual documents in the file is of significance, an order for their better description could be sought under 87R 58A.07, but this has not been applied for.
[26] As stated above, whether privilege has been claimed for these documents is not material to a discovery order.
I am not satisfied that the plaintiff has shown that the respondents have documents which are relevant which have not already been discovered by the defendant, or that they have relevant documents where the defendant has stated that he no longer has such documents. It is likely that many of the documents relating to the eight actions are not relevant to anything in issue in this action, eg. counsel’s working papers; documents about times and places of hearings, etcetera. Also general routine communications between solicitors and counsel are unlikely to be relevant.[27] While there is a mere possibility that the respondents may have the relevant documents or documents which the defendant no longer has, there is no basis to believe that there is any reasonable possibility of this.
[27] The defendant has not pleaded in answer to the pleas of misuse or abuse of power that he acted on legal advice.
The plaintiffs submitted that the discovery sought was relevant to the determination of the following four primary issues on the pleadings:
·That the defendant improperly and as an abuse of process maintained the eight actions.
Other than the allegations that the defendant cannot be trusted to have made proper disclosure, there is no proper basis on the evidence to infer that any of the respondents have any more documents relevant to this topic than have already been disclosed by the defendant or have copies of the documents which the defendant says he no longer has. In part, the plaintiff seeks to mount a circumstantial case from what occurred in the eight actions to show that the defendant must have been acting improperly insofar as he funded them out of the assets of Bernsteen or Newmore, but there is nothing to suggest any reasonable possibility that there are any further strands of the circumstantial case on which the respondents would have documents which have not already been either disclosed by the defendant or cannot be obtained from him.
·The defendant improperly applied funds from Bernsteen and/or Newmore to fund the action.
There is already documentary evidence of substantial funds being paid by Bernsteen and/or Newmore to Minters, Iles Selley and the three counsel. There is no basis to infer that any more was paid to them than has been the subject of the existing documentation. Why and how such payments were made is essentially an internal matter in the affairs of Bernsteen and Newmore. There is no reason to believe that any of the respondents would have relevant documents on the topic.
·Quantification of the amounts applied wrongfully to calculate what amounts are properly payable in this action by the defendant to the plaintiff.
I repeat what I have said in the preceding sub-paragraph. This is not a primary issue in the action. If it is complicated, it may well be dealt with by the Judge making an order for an account, rather than receiving evidence on it at the trial.
·The plaintiff’s claim as a creditor of Newmore is that the defendant paid its money in funding the action, when it should have been an expense of Bernsteen.
I repeat what I have said in the preceding two paragraphs.
Even if the respondents have documents which are not otherwise obtainable under FDN80, the plaintiff has not shown that there is any relevance, direct or indirect, of any particular documents or classes of documents to the matters in issue to justify the making of such an order under 87R 60 for such documents.
Plaintiff’s applications to obtain better discovery from the defendant
Even if there is an exception to the principle laid down in Williams v Santos above about exhausting the rights of discovery where the plaintiff has not sought to pursue an application under 6R 145 or 87R 58.04A, and in circumstances where there is no other viable alternative to obtain the documents, I do not consider that the plaintiff has made out a sufficient case for that on the evidence before me.
It should be noted that by an application FDN43 issued on 7 October 2009 the plaintiff sought in paragraphs 3.7-3.12 orders under the Corporations Act 2001 in the windings up of Bernsteen and Newmore for the examination of, and the production of documents by, the defendant and some of the respondents. This application was still current when he issued the six applications for non-party discovery on 13 October 2010. In retrospect, it is clear that he was seeking to pursue concurrent remedies under both the Corporations Act and 87R 60, but that is not generally permissible.
After FDN43 had been finalised, but before the six applications for non-party discovery had been disposed of, he renewed his applications for further discovery in FDN80. Counsel for the plaintiff did not dispute that all of the documents sought in the six applications for non-party discovery were also sought against the defendant in FDN80. As counsel for the three barrister respondents pointed out, such documents could only be properly sought under 87R 58.04(e) or 6R 145 if the plaintiff had a proper basis for a belief that the defendant had such documents. Thus he has not brought himself within any possible exceptions to the principle in Williams v Santos above.
The plaintiff’s counsel referred me to various comments by Bleby J in transcripts of arguments before him about discovery issues. They were not considered pronouncements by His Honour on the merits of the claims, but rather off-the-cuff remarks made arguendo. I do not consider that any of them bar me from reaching what I consider to be the proper conclusions on the evidence and submissions put to me.
Application against George
On the pleadings, there are clearly major issues for the trial about the relationship between George and the defendant and how and why the defendant was involved in the litigation between George and Hamilton-Smith. The defendant has discovered what he says are the documents of Minters in acting both for himself and for George in various of the eight actions. There is no evidence that there might be any other relevant papers in the possession or power of George which have not been discovered by the defendant. Whether privilege has been properly claimed both by the defendant and/or George for much of those documents is not a question I need now address. It has not been shown that there is any likelihood that any of the documents which the defendant has discovered as being no longer in his power or possession would be in the possession or power of George. There is no proper basis on the evidence to require any disclosure by George in the interests of justice. The application against her is dismissed.
Application against Minters
Insofar as Minters were the solicitors for the defendant in the first and second actions, there is no likelihood that the defendant has not discovered the relevant documents previously held by Minters as they would have been in his power. Insofar as Minters were the solicitors for George in the third to eighth actions, for similar reasons to those given in respect to the application against George, there is no reasonable possibility that the relevant document had not been discovered by the defendant in their discovery of the files of Minters acting for George. There is no proper basis to make an order against Minters, as all relevant documents previously held by Minters would have been discoverable by the defendant and/or George.
Application against Iles Selley
The file of Iles Selley in relation to their acting for the defendant as a person subpoenaed in the fifth action has been discovered by the defendant. Insofar as privilege has been claimed for it, that is not a matter which affects the present application for discovery. There is no evidence to suggest that Iles Selley have any other documents other than those discovered by the defendant. The affidavit of Mr Selley said that he had handed over his file to the solicitors for the defendant. Insofar as the plaintiff’s counsel suggested that there might be other documents such as computer records still held by Iles Selley, there is nothing to show that they would be relevant or are not duplicated in the file which has been discovered by the defendant. There was some debate in the submissions about whether the part of the file of Iles Selley which was not owned by the defendant was in the defendant’s power, but there is no evidence that any documents which remained the property of Iles Selley are either relevant or were not included in the file which was delivered to the defendant’s solicitor. In any event, it would seem that any relevant documents held by Iles Selley are, and have been, discovered by the defendant. The application against Iles Selley is to be dismissed.
Applications against the three barrister respondents
These can be dealt with together. I do not accept the plaintiff’s submission that on the evidence there is a reasonable possibility that these barristers may have submitted tax invoices which have not been the subject of discovery by the defendant. Insofar as documents emanating from them have been the subject of claims of privilege by the defendant and/or George, that is not a matter for me on this application for discovery. There was no proper basis to bring these applications against the barristers, as any relevant documents should have been in the power of Minters who briefed them and/or George or the defendant as their clients. The applications against them are each dismissed.
Conclusion
I have today made the following orders:
1FDNs 45, 47, 49, 51, 53 and 55 are each dismissed.
2Plaintiff is to pay to the defendant and to the respondent to each of FDN45, 47, 49, 51, 53 and 55 their costs of the applications as adjudicated or agreed.
3Fit for counsel.
4Liberty to apply that the orders for costs be as between solicitor and client.
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