William Buck (WA) Pty Ltd v Faulkner

[2012] WASC 124

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

CITATION:   WILLIAM BUCK (WA) PTY LTD -v- FAULKNER [2012] WASC 124

CORAM:   KENNETH MARTIN J

HEARD:   ON THE PAPERS

DELIVERED          :   5 APRIL 2012

PUBLISHED           :  10 APRIL 2012

FILE NO/S:   CIV 2995 of 2011

BETWEEN:   WILLIAM BUCK (WA) PTY LTD

First Plaintiff

WILLIAM BUCK HOLDINGS (WA) PTY LTD
Second Plaintiff

AND

CRAIG PETER FAULKNER
First Defendant

LEDGER FAULKNER PTY LTD
Second Defendant

CSF CORPORATE PTY LTD
Third Defendant

(BY ORIGINAL ACTION)

CRAIG PETER FAULKNER
Plaintiff

AND

WILLIAM BUCK (WA) PTY LTD
First Defendant

WILLIAM BUCK HOLDINGS (WA) PTY LTD
Second Defendant

MARK PETER COLLINS
Third Defendant

STEPHEN KENNETH BREIHL
Fourth Defendant

CHRISTOPHER JOHN BROWN
Fifth Defendant

FRANK DEL BORRELLO
Sixth Defendant

DAMON ALLAN HARRIS
Seventh Defendant

ROBIN BOYD JUDD
Eighth Defendant

(BY COUNTERCLAIM)
 

FILE NO/S              :COR 174 of 2011

MATTER                :WILLIAM BUCK HOLDINGS (WA) PTY LTD

BETWEEN             :CSF CORPORATE PTY LTD

Plaintiff

AND

WILLIAM BUCK HOLDINGS (WA) PTY LTD
Defendant

Catchwords:

Discovery - Categories - Dispute - Relevance to line of enquiry - Turns on own facts

Legislation:

Nil

Result:

Orders for discovery

Category:    B

Representation:

CIV 2995 of 2011

Original Action

Counsel:

First Plaintiff                :     No appearance

Second Plaintiff            :     No appearance

First Defendant            :     No appearance

Second Defendant        :     No appearance

Third Defendant           :     No appearance

Solicitors:

First Plaintiff                :     Solomon Brothers

Second Plaintiff            :     Solomon Brothers

First Defendant            :     Bennett & Co

Second Defendant        :     Bennett & Co

Third Defendant           :     Bennett & Co

Counterclaim

Counsel:

Plaintiff:     No appearance

First Defendant            :     No appearance

Second Defendant        :     No appearance

Third Defendant           :     No appearance

Fourth Defendant         :     No appearance

Fifth Defendant            :     No appearance

Sixth Defendant           :     No appearance

Seventh Defendant       :     No appearance

Eighth Defendant         :     No appearance

Solicitors:

Plaintiff:     Bennett & Co

First Defendant            :     Solomon Brothers

Second Defendant        :     Solomon Brothers

Third Defendant           :     Solomon Brothers

Fourth Defendant         :     Solomon Brothers

Fifth Defendant            :     Solomon Brothers

Sixth Defendant           :     Solomon Brothers

Seventh Defendant       :     Solomon Brothers

Eighth Defendant         :     Solomon Brothers

COR 174 of 2011

Counsel:

Plaintiff:     No appearance

Defendant:     No appearance

Solicitors:

Plaintiff:     Bennett & Co

Defendant:     Solomon Brothers

Case(s) referred to in judgment(s):

Nil

1. KENNETH MARTIN J:  In CIV 2995 of 2011 and COR 174 of 2011, the parties have asked me to resolve on the papers limited areas of disagreement as regards categories of discovery to be provided in each action.  In the process I have been provided with an array of written submissions spanning 12 March 2012 to 23 March 2012.  There are essentially three fields of disputation requiring resolution, namely:

   A.In CIV 2995 of 2011 there are four areas of documentation sought by the plaintiffs that the defendants resist, concerning client communications, confidential information, the incorporation of Ledger Faulkner Pty Ltd and, last, a contact database.

   B.In CIV 2995 of 2011 the defendants seek from the plaintiffs a category of documents referred to as third party communication documents, as between the William Buck entities and third parties relating to the circumstances of Mr Faulkner's termination.

   C.In COR 174 of 2011 (which is CSF Corporate Pty Ltd's statutory oppression action against William Buck Holdings (WA) Pty Ltd) there is a resisted claim of the plaintiff in the category of related party transaction documents.

Field A

1. In respect of the disputed categories sought by the plaintiffs in CIV 2995 of 2011, I received written submissions on behalf of the plaintiffs on 12 March 2012, written submissions in response by the defendants on 19 March 2012, and written reply submissions of the plaintiffs on 23 March 2012.

2. Having considered those written submissions, I am of the view that the four categories of document sought by the plaintiffs should be discovered.  In short, my view is that these documents may potentially be relevant, or at least advance a line of enquiry of the plaintiffs which is legitimate in pre‑trial preparation.  I do not consider that the four categories sought are framed too widely, oppressively or vaguely, as the defendants have contended.

3. If it should transpire that there are no documents within these categories, so be it.  But at this point, if such documents exist or have existed, then they should be discovered.  I emphasise that what is a relevant document for the purposes of discovery is not the same assessment that is applicable to the admissibility of such material as relevant at trial.

4. The four categories in respect of which discovery should be given by the defendants in CIV 2995 of 2011 are:

   (1)All records of the defendants (including, but not limited to, written correspondence, notes and client lists) relating to communications they have had with clients, or former clients, of the William Buck Group (as defined) (including, but not limited to, those persons or entities listed in annexure CF55 to the affidavit sworn by Craig Faulkner on 27 October 2011) after 12 September 2011 up to the point of each such person or entity formally engaging Ledger Faulkner Pty Ltd.

   (2)Documents containing or recording information or details of any client, or former client, of the William Buck Group or other confidential information, records or documents belonging to William Buck (WA) Pty Ltd or its associated entities which are in the possession, custody or control of Mr Faulkner (including any copies or reproductions of such documents).

   (3)Documents leading up to or relating to the incorporation or initial business relationships of Ledger Faulkner Pty Ltd (including documents relating to its shareholding and its relationship to Ledger Corporate Pty Ltd).

   (4)All versions of Mr Faulkner's (and Ledger Faulkner Pty Ltd's) 'contact database', as referred to in the Netlink email (a copy of which is included at annexure RBJ16 to the Judd affidavit at pp 84 ‑ 86) up to 27 October 2011.

Field B

1. The further disputed category of documentation in CIV 2995 of 2011 is formulated at par 3.1 of the defendants' written submissions of 12 March 2012, in these terms:

   [T]hird party communication documents between William Buck and third parties (including its employees) relating to the circumstances of Mr Faulkner's departure.

2. The parties' written submissions relevant to this category were in the following sequence:

   (1)The defendants' submissions of 12 March 2012;

   (2)the plaintiffs' responsive submissions of 21 March 2012; and

   (3)the defendants' reply submissions of 23 March 2012.

3. The resistance to this category of documentation by the plaintiffs was essentially put on the basis that Mr Faulkner's termination by notice on 27 September 2011 is not a 'fundamental issue in [the] proceedings'.  But, in my view, that event is inextricably bound up with and inseverable from the present dispute.

4. The requested category of material is relevant in my assessment to at least a line of enquiry, as a part of legitimate pre‑trial preparations.  It should be discovered.

Field C

1. In COR 174 of 2011, only the plaintiff presses for a disputed category of documents.  Written submissions received concerning this disputed category were:

   (1)The plaintiff's submissions in support of the further category of documents of 13 March 2012;

   (2)the defendant's responsive submissions resisting that category on behalf of the defendant of 21 March 2012; and

   (3)the plaintiff's submissions in reply of 23 March 2012.

2. The disputed category of documents is described at par 2.1 of the plaintiff's written submissions of 13 March 2012, in terms:

   [R]elated party transaction documents (including but not limited to all documents recording or evidencing the relationship between the William Buck entities and 'GNS' and 'Palandri').

3. I will note, but not set out here, the eight categories of documents which are uncontroversially agreed as between the parties to be discovered.  They provide the context for the residual dispute over the disputed category of document.

4. The defendant seeks to have the plaintiff's proposed category rejected on three grounds.  First, because the proposed category is inconsistent with modern principles of case flow management.  Second, because discovery of the documents within the proposed category would require the disclosure of documents containing confidential information.  Third, because the documents that would fall within the proposed category are irrelevant at this stage of the proceedings.

5. I do not see any merit in the defendant's first ground for rejection.  Similarly, the alleged confidentiality of documents, the basis of the defendant's second ground, is not of itself sufficient to preclude discovery of those documents.  Concerns about confidentiality can usually be assuaged by orders limiting the number of persons who can inspect the documents and by sanctions for misuse of discovered documents.  Those matters can be dealt with later, if necessary.

6. As to the third ground, I am of the view that, applying the line of enquiry test, the plaintiff has established the relevance of the related party transaction documents concerning the relationship between the William Buck entities, GNS and Palandri.  COR 174 of 2011, an oppression action, is proceeding alongside the main action (CIV 2995 of 2011), which concerns Mr Faulkner personally, and the relevance of the proposed category must be assessed according to the assertions made by each side.

7. Mr Faulkner is said to have expressed concerns about the financial performance of the William Buck entities and relationships between so‑called equity directors/partners, and clients such as GNS and Palandri.  GNS is said to be a substantial debtor of the William Buck Group; similarly, it is said that significant fees were refunded to Palandri prior to Mr Faulkner's admission as an equity director/partner.  Furthermore, Mr Faulkner has provided his personal guarantee in respect of a revolving line of credit and overdraft facility provided to the William Buck Group, although his involvement in the accounting business ceased in the circumstances which are of the subject matter of CIV 2995 of 2011.  Clearly, then, documents concerning the relationship between the William Buck entities, GNS and Palandri are sufficiently relevant to the action in COR 174 of 2011.

8. However, the plaintiff's proposed category is not limited in those terms, and extends to all related party transaction documents.  That is too wide.  The category of discovery should be limited to related party transaction documents concerning the relationship between William Buck entities, GNS and Palandri.  If circumstances later emerge which warrant the expansion of this category then that can be the subject of a subsequent application made in the usual way and supported at that time by materials indicating the potential relevance of such documentation.

9. The parties should submit a minute giving effect to these reasons.