Azizi (Automobiles) Pty Ltd v Volvo Car Australia Pty Ltd

Judgment 1On 19 December 2012 the plaintiffs issued a Notice to Produce Documents for Inspection under r 21.10 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") to the first defendant, Ms Clare Huang, containing 30 paragraphs. At the risk of some oversimplification, those 30 paragraphs appear in large part to be directed to documents that have a connection with Ms Huang's assets or financial position. 2In a judgment delivered on 13 December 2012, I had ordered that Ms Huang attend for cross-examination on 19 February 2013 in respect of two earlier affidavits sworn by her on 30 October 2012 and 22 November 2012, which were sworn in compliance, or purported compliance, with an order made by the Court, by consent, requiring the defendants to disclose their world-wide assets. 3By letter dated 3 January 2013, Ms Huang's solicitor had written to the plaintiffs' solicitors contending that the relevant categories of documents could not properly be the subject of a Notice to Produce under UCPR r 21.10. The plaintiffs' solicitors subsequently pressed that Notice to Produce. By Notice of Motion dated 17 January 2013, Ms Huang sought to set aside the majority of the paragraphs contained in that Notice to Produce. 4The plaintiffs, in the alternative, now seek to support that Notice to Produce not only under r 21.10 of the UCPR, but also under UCPR r 34.1 or on the basis that further categories of discovery could be ordered in the proceedings coinciding with the documents sought to be produced. 5I should first briefly address the question of Practice Note SC Eq 11, so far as it arises in respect of the Notice to Produce. Ms Huang's solicitors raised a suggestion of non-compliance with that Practice Note in correspondence. Mr Neggo, who appears for Ms Huang, ultimately did not place particular weight on that matter in submissions and, in my view, he was correct in taking that course for reasons that I will note below. 6Practice Note SC Eq 11 does not in terms require leave to issue a Notice to Produce, since such a notice does not seek an order for disclosure of documents. Nonetheless, it is now well established that the Court would readily set aside a Notice to Produce if it would involve a subversion of the policies reflected in that Practice Note, either because it amounted to a substitute for discovery or because it was inconsistent with the wider objectives of minimising the costs of proceedings reflected in that Practice Note: Owners Strata Plan SP 69567 v Baseline Constructions Pty Ltd [2012] NSWSC 502 at [23]-[24]; Re: Mempoll Pty Ltd [2012] NSWSC 1057 at [12]-[14]. 7In my view, no issue of subversion of that Practice Note arises in this case, since it seems to me that there are exceptional circumstances that warrant disclosure before evidence is served in these circumstances, which include the fact that information is solely within the possession of Ms Huang from whom disclosure is sought, and the need to obtain documents in order to fairly prepare for the cross-examination of Ms Huang in respect of the identification of her assets: Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2012] NSWSC 913 at [17]; Re Mempoll Pty Ltd above at [19]. As noted above, Mr Neggo did not put any substantive submissions to the contrary. 8As I also noted above, the Notice to Produce was served under UCPR r 21.10 which provides for documents to be made available for inspection. That rule relevantly provides that a party may require the other party to produce for inspection: "Any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue". As I also noted above, the plaintiffs alternatively seek to support the challenged paragraphs of the Notice to Produce under UCPR r 34.1, which permits a party to require the other party to produce to the Court "any specified document or thing". 9Mr Neggo draws attention to several well established principles as to the scope of r 21.10, as to which there was ultimately little dispute between the parties. First, that rule is directed to a process of discovery and requires production of specific identified documents, rather than classes of documents: Penrith Rugby League Club Ltd v Brown [2004] NSWSC 1182; Norris v Kandiah [2007] NSWSC 1296 at [5]; Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 869 at [11]. The words "clearly identified" in that rule require more than that the relevant document can be ascertained by a process of construction and extrinsic evidence, and require identification in a manner distinct and free from confusion, so that identification of specific documents and not merely the source from which they are found is required: Penrith Rugby League Club Ltd v Brown above; Norris v Kandiah above at [4]. That view is reinforced, as Mr Neggo points out, by the obligations imposed on a party by r 21.11 as to the identification of other parties who may hold documents, which could not readily be complied with in respect of wider classes of documents. 10On the other hand, a Notice to Produce issued under r 34.1, on which the Plaintiffs rely in the alternative, is akin to a subpoena for production and need not necessarily be limited to documents relevant to a fact in issue and may call, for example, for documents recording a particular matter within a stated period; Norris v Kandiah above at [3]; Patonga Beach Holdings above at [12]. Barrett J observed in the latter case that the word "specified" in r 34.1 means "described" or "identified" and corresponds to the requirement under UCPR r 33 that a subpoena to produce documents identify those documents by: "cut[ting] the document out of the universe of documents by some description or specification". His Honour noted that it was impermissible to require the recipient of such a notice to search for and produce all documents relating to a particular subject matter and also (at [15]) that: "the recipient of a subpoena or r 34.1 Notice to Produce must not be put in a position of having to judge the legal effect of a document or its capacity to prove something". 11In Owners Strata Plan SP 69567 v Baseline Constructions Pty Ltd above at [9], Stevenson J followed Patonga Beach Holdings in noting that a Notice to Produce under r 34.1 plays the same role as a subpoena to a non-party under r 33 and observing that a document is "specified" for that rule where described or identified. 12Notices to produce may also not be used as a substitute for discovery and may be set aside for oppression in an appropriate case: Azizi (Automobiles) Pty Ltd v Volvo Car Australia Pty Ltd [2006] NSWSC 283. 13Mr Assaf, who appears for the plaintiffs, submits that the Courts take a practical view of the documents sought to be produced under such notices to produce, and refers to the sensible observation in Ritchie's Uniform Civil Procedure at [21.10] that, if a Notice to Produce is reasonably specific and the documents are relevant to a fact in issue: "there is no practical utility in disputing the validity of the notice and forcing the party seeking production either to apply for an order [for discovery] under r 21.3 or issue a subpoena or further Notice to Produce under UCPR r 33.3 or r 34.1." I do not doubt the practical good sense of that observation; however, the Court is still obliged to set aside a Notice to Produce under r 21.10 if it is not properly issued under that rule, albeit it may then grant leave to serve a notice under r 34.1 or to issue a subpoena or order further discovery in an appropriate case: Patonga Beach Holdings above at [12]; Owners Strata Plan SP 69567 v Baseline Constructions Pty Ltd above at [9]. 14With this background, I turn to the disputed paragraphs of the Notice to Produce. I will address these in broad terms, focussing on the matters that are determinative. That course seems to me to be appropriate having regard to the overriding obligation under s 56 of the Civil Procedure Act 2005 (NSW), since multiple paragraphs of the Notice to Produce are disputed and there are multiple bases of challenge to each paragraph, and the Notice to Produce was issued nearly two months ago in anticipation of cross-examination of Ms Huang which will now take place in less than a week. There is, in these circumstances, a need to focus on the issues that are determinative rather than to delay judgment to deal with the multitude of other grounds of objection that are not. 15Paragraph 1(g) of the Notice to Produce calls for the original or verified copies of official photo identity documents with the signature of Mr Paul Huang current at the date of Mr Huang's signature as requested in paragraph 1(f) of the Notice to Produce, which in turn refers to copies of the original Constitution of Colorado Products Pty Limited (in provisional liquidation) ("Colorado") containing Mr Huang's signature. Mr Assaf submitted that this paragraph was directed, in effect, to investigating whether proper corporate processes had been followed in adopting Colorado's original Constitution, on which Ms Huang relies in her Defence in the proceedings. 16I would not allow this paragraph of the Notice to Produce. So far as UCPR rr 21.10 and 34.1 are concerned, I do not consider that it adequately specifies the documents to be produced, since "official photo identity documents" may comprise, for example, not only driver's licenses or passports but other documents such as work access cards which may or may not have some "official" status depending on what perspective that is judged from. I also accept Mr Neggo's submission that this paragraph amounts to "fishing", in the sense that no present basis is identified for an allegation that proper corporate practices were not followed or that there is anything more than a speculation on the Plaintiffs' part that something may turn up in that regard. 17Paragraph 1(h) of the Notice to Produce seeks production of all documents, e-mails and correspondence "referring or relating" to the drafts of the Constitution or any amendments to it. This language plainly calls for production of a class of documents rather than a specifically identified document and is not permissible under r 21.10, and it calls for evaluation of relevance to a topic that, as Barrett J noted in Patonga Beach Holdings, is not properly required by a Notice to Produce under r 34.1. This paragraph of the Notice to Produce should therefore be set aside. I will return later to the plaintiffs' contention that this and other paragraphs of the Notice to Produce can be justified as a further discovery category. 18Paragraphs 2 and 3 of the Notice to Produce require production of all documents" evidencing the current balances of specified accounts. It would, in my view, have been permissible under both rr 21.10 and 34.1 to require production of bank statements containing the current balances of those accounts. The Plaintiffs, by Mr Assaf, indicate that that was all that was in reality sought and it appears that those documents have now been produced by Ms Huang so the debate as to these paragraphs should be set aside may now be moot. Nonetheless, the existing formulation in these paragraphs would require searches to be made for any other documents that refer to such account balances, for example, emails or correspondence that might refer to the balance of the accounts, and does not, in my view, specify the documents to be produced for the purposes of rr 21.10 and 34.1. 19Paragraph 4 of the Notice to Produce seeks all bank statements for a particular superannuation account referred to in Ms Huang's affidavit dated 22 November 2012 identifying her assets for the period 2009 to date. Ms Huang accepts that her most recent superannuation statement is properly required to be produced but contends that her historical account balance is irrelevant. In my view, this paragraph clearly identifies specified documents for the purposes of r 21.10, and a call for such documents has a legitimate forensic purpose where, for example, any payments out of that account may allow identification of other assets of Ms Huang. I would not set aside that paragraph. 20Paragraphs 5 and 6 require production of all documents evidencing the authorised signatories or bank accounts held in the name of a company, Sorrento Kitchens and Ms Huang's son respectively. Mr Assaf has identified the relevance of those documents as directed to a suggestion that Ms Huang has control of those accounts. However, it is not immediately apparent why the identification of other signatories to that account would assist in disclosing Ms Huang's assets. Ms Huang contends that the paragraphs nominate a class of documents; impose an unreasonable burden of interpretation and assessment; that the documents required by paragraph 6, that would disclose signatories to her son's account, are irrelevant; and that the documents could be more appropriately sought from the account holders. 21In my view, these paragraphs would require searches through, for example, correspondence and emails to determine whether they evidence the authorised signatories for those accounts, for example by appointing or removing such signatories or by recording instructions given by such signatories. They do not identify specified documents and are not properly the subject of a Notice to Produce under rr 21.10 or 34.1 and should each be set aside. 22Paragraph 7 requires production of all documents filed with Hong Kong authorities "pertaining to" the "purported sale" of Ms Huang's shares in Capri International Trading Limited ("Capri") in June 2010; paragraph 8 requires production of documents evidencing the stamp duty paid pursuant to that "purported sale"; paragraph 9 requires production of financial accounts used in calculating the stamp duty paid; paragraph 10 requires production of the most recent balance sheet of Capri; and paragraph 11 of all bank statements for all bank accounts, foreign and domestic, held in Capri's name, for the period from 1 September 2012. I should note that Ms Huang contends, although the Plaintiffs do not necessarily accept, that she has previously disposed of her interest in Capri to a third party. Ms Huang contends that paragraphs 7-11 nominate classes of documents; impose an unacceptable burden of interpretation and assessment; are irrelevant and unduly onerous where (on her evidence) the shares have been transferred to a third party and, she contends, the relevant documents would have to be obtained from Hong Kong authorities and accountants. She indicates that she does not object to production of, and has produced, the relevant transfer of the shares in Capri. 23In my view, paragraph 7 is not supportable under rr 21.10 or 34.1 so far as it requires a judgment where the documents "pertain" to the sale, which involves a judgment of relevance of the kind to which Barrett J referred in Patonga Beach Holdings, and does not specify the documents to be produced. I should add that, although the point was not argued before me, it seems to me the paragraph may well be oppressive in that it would force Ms Huang to an invidious choice of either not producing documents because she contends the sale was real not "purported", or producing documents and it later being argued that their production was an admission that the sale was not real but "purported". However, it has not been necessary to take account of that point in reaching the view that the paragraph should be set aside. 24Paragraph 8 should, in my view, be set aside because its potential relevance is not established, even to the extent necessary to support a legitimate forensic purpose. Paragraph 9 should also be set aside because it requires an assessment of whether particular documents were "used" in calculating the stamp duty. 25On the other hand, in my view, paragraph 10 clearly identifies specific documents and is permissible under r 21.10. I do not consider that it is a proper objection that documents would have to be obtained from an accountant or Hong Kong authorities, because either those documents are in Ms Huang's possession in the relevant sense or they are not. 26I do not consider that paragraph 11 specifies the documents to be produced, where it requires Ms Huang to identify the bank accounts, foreign and domestic, held in the name of Capri before she could go about producing the bank statements for those accounts. That requirement would also be oppressive if, as Ms Huang contends, she no longer owns the shares in that company. I cannot assume the contrary where that matter is in issue before me, and there was no evidence suggesting that Ms Huang would in fact be able to identify those accounts, so as to comply with that paragraph, if she no longer has an interest in the company. 27On the other hand, in my view, paragraph 12 of the Notice to Produce may properly be issued, at least under r 34.1, where there is an issue as to disclosure as to the value of shares in Gold Label and Ms Huang controls the company and would be able to identify its accounts. 28Paragraph 13 in turn requires production of bank statements for all bank accounts, foreign and domestic, of a third entity, Foshan Shunde District Kitchen and Bath Industry Co Limited ("Foshan"). I would set aside that paragraph on the same basis as I set aside paragraph 11 of the Notice to Produce, where compliance with it would first require Ms Huang to identify the relevant accounts before the relevant bank statements could be produced, and she contends, and there is an issue before me, that she no longer controls the relevant company. 29I should add that, had I not set aside paragraphs 11 and 13 on that ground, I would not have set them aside on the basis that bank statements for the relevant accounts were not relevant or potentially relevant so as to support a legitimate forensic purpose in requiring their production, on the basis that the balances in those accounts would be relevant or potentially relevant to the valuation of the shares of the companies if, contrary to Ms Huang's evidence, she held an interest in them. 30Paragraphs 14-18 require production of other documents relating to Foshan. Ms Huang contends that these paragraphs nominate classes of documents, are irrelevant and unduly onerous where her interest in Foshan has been (she contends) transferred to a third party and where (she contends) classes of documents would need to be obtained from China. 31In my view, paragraphs 14-15 and 17 each require production of specified documents and are supportable on that basis. I do not accept that there is not a legitimate forensic purpose in requiring their production, where Ms Huang gives evidence of a conditional contract for sale of the shares of Foshan, and claims that that condition has been satisfied although the purchase price is to be paid over time. I do not accept that the paragraphs are oppressive on the basis that documents would need to be obtained from China, since Ms Huang either has possession of the documents or she does not. 32On the other hand, in my view, paragraph 16 of the Notice to Produce does not specify the relevant documents where it requires an assessment whether documents were or were not provided to a third party "in support of" the transfer of the interest in Foshan (as distinct from, for example, for some other purpose) and paragraph 18 does not specify the relevant documents where it requires a similar assessment of whether documents were received "in support of" the Transfer Agreement. 33Accordingly, I would grant leave to issue a Notice to Produce under r 34.1 in terms of paragraphs 14-15 and 17 and paragraphs 16 and 18 should be set aside. 34Paragraphs 19-20 of the Notice to Produce were not pressed by the plaintiffs following the production of some documents by Ms Huang. No objection was taken to paragraph 21. Paragraph 22 of the Notice to Produce was restricted in oral submissions by the plaintiffs to the contract for the sale of certain premises Rydalmere and, I understand, is no longer objected to. Paragraph 23 was restricted to the cheque requisitions on settlement of that property and is, I understand, also no longer objected to on that basis. Paragraph 24 of the Notice to Produce was not pressed on the basis that, on the instructions provided to Ms Huang's counsel, the current trust deed of the C H Family Trust had been produced. 35Paragraphs 25-26 of the Notice to Produce respectively sought production of documents "referring or relating to" the financial performance and position of the C H Family Trust and "referring or relating to" any decision of the second defendant, the trustee of that trust, to distribute funds as trustee of the trust. Mr Assaf contended that those paragraphs were justifiable because the plaintiffs held a suspicion based on the evidence they had seen that the C H Family Trust was "an integral part of how the first defendant's assets are controlled and owned" and was "integral to understanding the asset position of the defendants". It appears that there is at least an issue as to the adequacy of Ms Huang's disclosure in relation to the C H Family Trust, where Ms Huang had not disclosed a significant asset owned by the trustee of the trust in her first disclosure affidavit and, in her second affidavit, gives evidence that she has "never fully understood how the trust works". I accept that there is a legitimate forensic purpose in investigating this issue, where the cross-examination of Ms Huang is directed to ensuring the efficacy of disclosure as to her assets, in accordance with the orders made by the Court and, as I understand it, the plaintiffs seek to establish whether Ms Huang has legal or at least practical control of the assets of the C H Family Trust. 36Nonetheless, it is necessary to consider the form of the particular paragraphs and whether they are supported by the relevant rules. Ms Huang contended that the paragraphs nominated classes of documents; imposed an unacceptable burden of interpretation and assessment, or were irrelevant and unduly onerous where they related to distribution to other beneficiaries. Ms Huang took no objection to the production of documents showing distributions to her or the second defendant. 37The plaintiffs' primary position, put by Mr Assaf, was that the paragraphs were supportable under rr 21.10 or alternatively 34.1 in their original form. I do not accept that submission; the paragraphs seek to require Ms Huang to search for and produce documents relating to specified topics in a manner that is characteristic of discovery, and inconsistent with the scope of r 21.10, and with the scope of r 34.1 as identified by Barrett J in Patonga Beach Holdings above. The plaintiffs' secondary position was that the paragraphs should be permitted on the basis that the words "all documents including" and "referring and relating" to the specified subject matters were deleted so that they referred to identified kinds of documents and do not involve the application of any relevance criterion. In my view, those paragraphs would not be supportable under r 21.10 on that basis but are supportable under r 34.1 on that basis. 38The plaintiffs alternatively contended that the Court should make further discovery orders, to extend the time for the plaintiffs to nominate discovery categories, in accordance with those paragraphs. It is not necessary to address that question in respect of these specific paragraphs, since I will grant leave to issue a Notice to Produce in the terms of the paragraphs (as amended) under r 34.1. I will return to the question of discovery more generally below. 39Paragraph 27 of the Notice to Produce was not pressed on the basis that the relevant part of the sale contract relating to the Coxs Road property had already been produced by Ms Huang. Paragraph 28 of the Notice to Produce was not pressed and paragraph 29 was not objected to. 40Paragraph 30 of the Notice to Produce required production of all documents "referring or relating to" the sale of shares and goodwill and net asset value of Gold Label as at the date of sale and today as referred to in a Deed of Sale of Business relating to that entity. That paragraph was objected to on the basis that it nominated classes of documents; imposed an unacceptable burden of interpretation and assessment; and was irrelevant. The plaintiffs did not press that paragraph in that form and sought to amend it to require production of all balance sheets and profit and loss statements of Gold Label as at the date of sale to 12 February 2013. Ms Huang accepts that she holds the shares in that entity; the documents sought to be produced seem to me to be relevant to the proper valuation of those shares; and the paragraphs, as amended, specify the relevant documents for the purposes of UCPR r 34.1. Accordingly, I would grant leave to issue a Notice to Produce under r 34.1 containing that paragraph, as amended. 41I should add, for completeness, that the plaintiffs rely on a wider proposition that the documents sought were discoverable or, alternatively, could have been made discoverable by expanding the discovery categories. I have not been taken to the existing discovery categories and it was not established that the documents were discoverable within those categories. Even if that were the case, it is well established that a Notice to Produce is not the proper means of addressing any issue as to the adequacy of discovery, Azizi v Volvo above at [11]. 42So far as it was contended that the Court should make further discovery orders, or extend the time for the plaintiffs to nominate discovery categories, in accordance with those paragraphs, I note that the history of discovery in the proceedings was set out in paragraphs 42-56 of an affidavit of the plaintiffs' solicitor, Mr Lalic, dated 25 January 2013. The plaintiffs served categories for discovery over 12 months ago, in December 2011; they served revised categories for discovery in September 2012; there was then a dispute about those categories, as to which a decision was delivered by the Registrar, part of which is now the subject of an application for review which has not yet been determined. 43Ms Huang contends, and I accept, that it would not be appropriate to extend the time for nomination of further discovery categories, at least without a motion for such an order having been filed and there being evidence from both parties before me as to which discovery categories were previously nominated and as to the implications of now nominating further discovery categories. Without having such evidence, and without having heard detailed submissions as to the question, it seems to me that it is by no means obvious, given the history of these proceedings, that it would be in accordance with the overriding purpose of the just, quick and cheap resolution of the real issues in dispute in the proceedings now to re-open the scope of the discovery in them. I would not, for that reason, allow any of the categories that I have not allowed under either r 21.10 or r 34.1, by means of permitting the nomination of further discovery categories. 44I should indicate a preliminary view, subject to hearing submissions, that each party has had a measure of success and each party has failed in part, and that there should be no order as to the costs of the application, and I reserve the ability to the parties to be heard further as to that question. Nonetheless, I will hear the parties as to costs, once they have had the opportunity to review my judgment, and in the interim will reserve the question of costs. 45I therefore make the following orders: