Solicitors:
Fraser Clancy Lawyers (Plaintiff)
K & L Gates (First Defendant)
HWL Ebsworth (Third to Ninth and Twelfth to Fourteenth Defendants)
File Number(s): 2015/369226
[2]
Judgment- ex tempore (revised 29 august 2017)
By Notice of Motion filed on 7 August 2017 the Plaintiff, Felan's Fisheries Pty Limited ("Felan's") seeks an order that the Defendants give discovery to it of documents within categories set out in an affidavit of Mr Mark Fraser sworn 7 August 2017. The First Defendant has subsequently put a counterproposal as to categories of documents which it considers would properly address the matters in issue in the proceedings. It will not be necessary to deal with that counterproposal for reasons that I address below, although I note that some categories of documents appear to now be common ground between the parties and it may be that, in practical terms, those categories could ultimately be the subject of an order for discovery now or, possibly, should be deferred until Felan's makes a further application for discovery, in which it properly addresses the requirements of Practice Note Supreme Court Equity 11.
Ultimately, it has not been necessary for me to hear from Counsel for the Defendants in this application. That is because, first, it seems to me that the application is fundamentally noncompliant with important principles which apply to such applications, which are too important to be simply ignored in applications of this kind. Second, it is apparent on the face of the discovery categories proposed by Felan's that many of them could not and should not be ordered in the present form. It seems to me that where an application for discovery over-reaches to the extent of this application, it is not consistent with the just, quick and cheap resolution of the real issues in dispute in the proceedings for the Court itself to seek to edit the proposed discovery categories to try and find reasonable categories where the applicant for discovery will not do so for itself.
It seems to me that the most fundamental difficulty with this application for discovery is that it is, in all substantial respects, noncompliant with Practice Note Supreme Court Equity 11, which represents an important aspect of the process for disclosure in this Division of this Court. That Practice Note was issued on 22 March 2012; was the subject of presentations then made by Judges of this Division to the profession; and has since been the subject of several decisions which have reflected its operation. The Practice Note emphasises, in paragraph 5, that there will be no order for disclosure in proceedings in the Division unless it is necessary for the resolution of the real issues in dispute in the proceedings. Paragraph 6 then provides that:
"Any application for an order for disclosure, consensual or otherwise, must be supported by an affidavit setting out:
the reason why disclosure is necessary for the resolution of the real issues in dispute in the proceedings;
the classes of documents in respect of which disclosure is sought; and
the likely cost of such disclosure."
The decisions which have considered Practice Note Supreme Court Equity 11 emphasise its importance in giving effect to the policies contemplated by s 56 of the Civil Procedure Act 2005 (NSW) and, in particular, the Court's obligation to promote the just, quick and cheap resolution of the real issues in dispute in the proceedings. In Leighton International v Hodges [2012] NSWSC 458 at [4]-[7] McDougall J noted that the Practice Note was the latest step taken by the Court in its efforts to deal with the costs of litigation, particularly so far as it concerns the costs of discovery of electronic material. His Honour also observed that discovery should be given so far as it is "reasonably necessary for disposing of the matter fairly or in the interests of a fair trial." That observation should not be understood, as Felan's sought to read it, as expanding the scope of disclosure in response to evidentiary dispute, without any real limitation, because one aspect of a fair trial is that costs of the trial and time spent in disclosure is managed in a proportionate way. In Armstrong Strategic Management and Marketing Pty Ltd v Expense Reduction Analyst Group Pty Ltd [2012] NSWSC 393, Bergin CJ in Eq noted the way in which the Practice Note was intended to operate, so that the pleadings, followed by the service of the parties' evidence, would confine the matters in issue in the proceedings.
In this case, it seems to me that the most fundamental obstacle to the orders for disclosure sought by Felan's, which would be sufficient to decline an order for disclosure, is their failure to address the matters required by the Practice Note. The affidavit of Mr Fraser provided an explanation of the history of the matter, and an explanation why an application for disclosure had not been made until that time, which seems to me to be a satisfactory explanation of that matter. However, that affidavit did not go on to do what the Practice Note plainly requires, namely to explain why disclosure is necessary for the resolution of the real issues in dispute in the proceedings, and, implicitly, to relate that explanation to the classes of documents as to which disclosure is sought, which were in that case attached to the affidavit. It seems to me that such an explanation can readily be given, and often is readily given, by identifying the real issues in dispute in the proceedings, typically by reference to the pleadings, and then indicating why the particular category of disclosure is necessary to address those issues. There are two reasons why such an explanation is essential. The first, and possibly the most important, is that the process of preparing that explanation, to be given by affidavit, is likely to focus the deponent's mind on the question of what discovery is truly necessary for the resolution of the real issues in dispute in the proceedings. It is likely to avoid the sort of application which was brought by Felan's in this case, where any real scrutiny of the relevant categories would indicate that they were excessive, by any standard, having regard to the matters in issue in the proceedings and the likely cost of giving discovery. The second reason why that process is essential is that it will avoid the process, which has taken up a considerable amount of time today, where the Court is required to guess, or Mr Carey, who appeared for the Plaintiff, was required to elaborate from the bar table, as to what were the issues as to which particular categories for discovery were directed. That is a matter that should be apparent from the affidavit in support of the discovery application, and should then be tied to an assessment of how it supports the class of documents in respect of which discovery is sought.
I should add that the affidavit also did not address the likely costs of the disclosure, a matter to which the Practice Note also requires reference. I recognise that that is a matter that would sometimes be difficult for the party seeking discovery to estimate, but the process of seeking to do so again provides a guard against applications for discovery of excessive width. I observed after submissions were completed that I would not rule against Felan's application for discovery on that basis alone, and I would have allowed that costs estimate to be provided by a supplementary affidavit, had its absence been the only difficulty with the application. Here, however, the difficulties with the application are much more fundamental.
As I have noted above, it seems to me that the failure to comply with Practice Note Supreme Court Equity 11 is sufficient reason to decline to order disclosure in the form that is presently sought. It does not follow from that that an application for disclosure could not be allowed, if it were properly supported by evidence in support of the application that complied with that Practice Note. Where the parties have also devoted attention to the proposed categories, it seems to me that I ought to make some comments about them, although ultimately the decision I have reached is founded in the failure to address the matters necessary to obtain a disclosure order, without more. In the unlikely event that a further application was brought, seeking categories in their present form, and supported by an affidavit of the form contemplated by Practice Note Supreme Court Equity 11, it seems to me that unlikely that disclosure would be granted in those categories. I introduced that comment by the reference to the unlikely event because, as I have noted above, it seems to me that the process of preparing such an affidavit would tend to guard against a party seeking categories of this kind.
Without seeking to be exhaustive, I will indicate some of the difficulties with those categories, which would, had it been necessary to do so, have provided further basis on which not to order disclosure, in respect of a significant number of categories. For example, category 2.1, which adopts a form that is adopted in a number of other categories, requires disclosure of documents comprising, recording, evidencing or disclosing "any and all communications" over a period exceeding three years in relation to three proposals for the relevant property, between any two or more of eleven groups of persons. It seems to me that there are multiple difficulties with this category, and I will refer to several of the more important of them. The first is that the category wrongly proceeds on the basis that what is in issue in the proceedings is the proposals for the development of the property generally. However, the proceedings do not involve an inquiry, unlimited in scope, as to the fate of those proposals for the property, but involve particular allegations which are made, and pleaded, as to the circumstances in which the directors of the First Defendant ("SFM") took certain steps in respect of Felan's tenancy of the premises and other associated matters. To the extent that there is a pleaded allegation in respect of those matters, then disclosure may be justifiable, subject to the matters contemplated by the Practice Note, in respect of it, but it cannot be sought in a form that is not limited, or at least related to, the pleaded issues.
It is implicit in that observation that I do not accept Mr Carey's submission that disclosure extends beyond matters pleaded to matters which may be raised in evidence. The most obvious difficulty with that conclusion is that it creates a cycle by which, if evidence is led that is irrelevant to any pleaded issue, then disclosure may be sought about it, and evidence which is initially irrelevant becomes the plank upon which the case expands to extend the scope of that irrelevance. If a matter is properly raised, then that will be indicated by the pleading and, if the evidence raises a new matter on which the parties rely, then the pleading should properly be amended to reflect the significance of that evidence in the case. If, of course, evidence is led, and not rejected for lack of relevance, then it may be possible to test that evidence by a notice to produce, in narrow and specific form, but that does not warrant wide orders for disclosure derived from the evidence alone. The purpose of Practice Note Supreme Court Equity 11 is not to widen disclosure, by reference to matters led in evidence, but to narrow it by reference to the pleadings, and those matters which the evidence indicates are not truly controversial.
In any event, paragraph 2.1 of the proposed discovery categories has two further practical difficulties. The first is the multitude of persons to which reference is made and the second is the extension to any and all communications between any two or more of those many persons. The lack of any substantial criterion of relevance means that any communication between any of those persons, insignificant or trivial or not, would be disclosable, if it related to one of the proposals. If several emails were exchanged trying to agree a convenient time for a meeting about one of the proposals between two of those persons, all of those emails would be required to be disclosed. If, once that time was agreed, an email was sent to someone else inviting that person to the meeting as well, and several further emails were sent to try and agree a convenient time with that person, then the disclosure would also extend to all of those emails. These matters are not novel in formulating discovery categories; they are matters to which those drafting such categories are frequently alert; and they can readily be addressed by proper limits of materiality or by relevance to matters that are truly in issue. The difficulty with this category is that it seems to me not to include with such proper limitations.
There are then a number of categories, taking paragraph 2.3 as an example, that refer to documents created "in connection with" the discussion at particular meetings. In this case, it is clear that the fact of a meeting is pleaded, in paragraph 59B of SFM's directors' Defence, but it does not follow from the fact that a meeting is pleaded that, absent more, all documents created in connection with it become discoverable. That would only be the case if there was a matter in issue, beyond the bare fact that the meeting took place, to which those documents related.
There are a number of categories as to which discovery is sought of unredacted versions of documents. It is suggested that the redactions are for relevance, and the only purpose of making them available is, so far as it appears, to test whether relevant material might inadvertently or otherwise have been redacted. Those categories are likely to be uncontroversial, at least so far as a limitation is imposed, as it might readily be, in the first instance that those documents should be made available only to Counsel and legal practitioners where they are commercially confidential. It may be appropriate to make orders for discovery in those categories sooner rather than later, but equally it may be open to defer an order for disclosure of those categories, if Felan's will in fact make an application that complies with Practice Note Supreme Court Equity 11, having given thought to the issues raised in due course.
The third category of the discovery categories relates to the broad topic of a proposal made by Brookfield Multiplex Limited for the use of the land ("Brookfield Proposal"). Mr Carey identifies the way in which that proposal arises in the pleadings as that an allegation is made that SFM, or at least those associated with it, for a period were supportive of that proposal, and later ceased to advance it, or terminated it, and instead co-operated with the State Government in respect of a wider investigation of possibilities for the land. It may be that, in those circumstances, documents recording or referring to the entry into the proposal, or the termination of it, would be disclosable, so far as there may be a contest as to whether it was entered into or terminated. It may well be that the document constituting the proposal is discoverable, or at least could be required to be produced on notice to produce, subject to any proper limitation of access that may be required to address issues of commercial sensitivity.
It does not follow, however, that if all that is alleged is the entry into the Brookfield Proposal, and its termination, and all that is in issue is whether it was entered into or terminated, then Felan's is also entitled to, as it seeks, any consideration of that proposal given by a number of persons during a three and a half year period, including since the proceedings were commenced. No doubt, it might be possible to advance an allegation that there was some relevant aspect of that proposal, which impacted upon the events in issue in this case, by pleading it. However, where that allegation is not pleaded, and the Brookfield Proposal is not relied on as more than a step in the relevant chronology, it does not support the wide disclosure that is sought about it. Still less does it support the disclosure that is sought, for example, in paragraph 3.7 of Felan's discovery categories, of all communications between seven groups of persons as to the proposal, where the relevance of the proposal has the limited scope to which I have referred.
There are other examples of disclosure categories which raise similar difficulties, and as to which disclosure might equally have been permitted in part, had it be sought in an appropriate way. For example, there are questions as to minutes of board meetings considering a report provided by an expert, the Savills report, as to which disclosure might well have been permitted in unredacted form, subject to any appropriate limitation of access if issues of commercial sensitivity arose. Again, however, where the fact in issue was the provision of the report, and where no specific allegation was made as to any other matter arising from it, it does not seem to me that disclosure can then extend, for example, to all communications in relation to the report, still less to all communications between any two or more of eight groups of persons, unlimited in time, in relation to that report.
It seems to me, in these circumstances, that I should not advance further comments as to other categories of disclosure, although the comments that I have made above will be illustrative of the kinds of difficulties that arise in respect of some other subcategories of the disclosure sought.
Nothing in this judgment has the consequence that Felan's cannot bring a further application for disclosure that makes an appropriate attempt to narrow the categories by reference to the matters that are actually in issue in the proceedings, and support that application with a proper identification of the matters contemplated by Practice Note Supreme Court Equity 11, namely, the reason why disclosure is necessary for the resolution of the real issues in dispute in the proceedings; implicitly, the logical relationship between the disclosure that is sought and the issues as to which it is sought; and the likely cost of such disclosure. Equally, nothing in this judgment would prevent the parties reaching agreement, having regard to this judgment, and having regard to the proposal which had been put by the First Defendant, as to discovery which they consider is appropriate, and Felan's then supporting that discovery by an affidavit of the kind contemplated by Practice Note Supreme Court Equity 11.
It seems to me that, for the reasons I have indicated above, where there is a fundamental lack of compliance with that Practice Note in this application, and where the categories to which I have referred have the significant difficulties to which I have referred, the Court should not further seek to dissect them to see whether any of them might have been permissible, had they been extracted from a large number of them that are not. Felan's Notice of Motion seeking disclosure, in the form presently sought, should be dismissed with costs.
[3]
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Decision last updated: 29 September 2017
Parties
Applicant/Plaintiff:
Armstrong Strategic Management and Marketing Pty Ltd