The suggested "reasonable apprehension" rule
19 Senior Counsel for the applicants however argued that leave should be granted because the primary judge was not only incorrect, but erred by contravening what was said to be a general rule. The vindication of this rule was said to amount to a matter of general importance such as to warrant the grant of leave even if the Décor tests were not otherwise satisfied.
20 The suggested rule was in these terms:
"For a notice to produce not to constitute 'fishing' and therefore an abuse of process:
(a) the material relied upon by the respondent in support of its notice to produce should give rise to a reasonable apprehension that the corporation may be unable to pay the costs of the respondent if successful in his, her, or its defence;
(b) the notice to produce must seek to discover relevant documents."
21 As the argument developed, it appeared that the material referred to in the first limb was material already before the Court in support of the security for costs application. If such material did not give rise to a "reasonable apprehension" of possible inability to pay costs, a notice to produce would be fishing. Moreover, this consequence would follow whether or not the documents sought were relevant; the two limbs of the rule imposed cumulative requirements.
22 As already noted, the relevance of the documents sought was not in dispute in the present case. But it was submitted that the first limb of the rule had not been satisfied. However, we do not accept there is any such rule. Even if there were, it would have no application in the circumstances of the present case.
23 In the first place, as the majority said in Adam P Brown in the passage already quoted (par 15 above), rigid and exhaustive criteria are undesirable in matters of practice and procedure, since the circumstances of different cases are infinitely various. Their Honours were of course discussing the approach to the grant of leave to appeal against an interlocutory order in a matter of practice and procedure, but the warning is we think equally applicable in the present context. The adoption of the rigid test proposed by the applicants would unnecessarily fetter the Court's broad discretionary powers in relation to the interlocutory processes that are appropriate for the just determination of a security for costs application.
24 Further, we do not accept that the proposed test would be sound even if it were stated as a general principle. If a security for costs application is properly brought we can see no reason for imposing any criterion upon the trial judge in respect of a notice to produce given to the other party by the applicant for security other than that, generally, the judge be satisfied that the documents the subject of the notice are specified with reasonable particularity and are properly being sought to advance the case to be put by the applicant. Of course, in determining whether a notice to produce should be set aside the Court will consider the relevance of the documents sought and the extent to which the notice might be fishing, vexatious, oppressive or inappropriate for any other reason.
25 Secondly, the notices to produce in the present case are simply not fishing at all, in the sense in which that term is used metaphorically in the law relating to discovery, interrogatories, subpoenas, notices to produce and other forms of compulsive interlocutory process, that is to say where
"… a person who has no evidence that fish of a particular kind are in a pool desires to be at liberty to drag it for the purpose of finding whether there are any there or not." (Associated Dominions Assurance Society Pty Ltd v John Fairfax & Son Pty Ltd (1952) 72 WN(NSW) 250 at 254 per Owen J)
26 In the present case it can be safely assumed that the documents sought by the notices to produce in fact exist, they being standard financial documents which the law and proper accounting practice would require companies of any substance to generate. Likewise, as already mentioned, there can be no doubt that these documents contain information relevant to the issues which arise on a security for costs application. The only uncertainty is whether that information would help or hinder the security application. But unpredictability of response has never been a bar to the pursuit of relevant evidence, as many a hapless cross-examiner who received an unexpected answer will attest.
27 Thirdly, even if the notices to produce are properly to be regarded as fishing, that concept has undergone substantial rethinking in this Court in recent years. In a number of cases it has been pointed out that O 15A r 6 (discovery before action) expressly contemplates what once might have been castigated as fishing and that it would be incongruous if the power to order discovery were less extensive in favour of a party to a proceeding properly brought in the Court than in favour of someone unable for lack of evidence to mount a case: Caltex Refining Co Pty Ltd v AMWU (unreported, Full Court, 6 December 1990), Trade Practices Commission v CC (New South Wales) Pty Ltd (1995) 58 FCR 426 at 436 (Lindgren J), Treasurer v CanWest Global Communications Corp [1997] FCA 578 (Full Court), Microsoft Corporation v Adelong Electronics Pty Ltd [1977] FCA 224 (Burchett J), Bertran v Vanstone [1999] FCA 1753 at pars 18-23 (Kenny J), In the matter of Davison, Donnelly v Davison [2000] FCA 1396 (Branson J). Also one should not lose sight of what the majority of the High Court in Grant v Downs (1976) 135 CLR 674 at 685 noted as the public interest
"…which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available."
28 The applicants' suggested rule imposes a requirement that, to avoid the stigma of fishing, a party must already be in possession of some evidence before issuing a notice to produce (or, presumably, any other compulsive interlocutory process). But historically the concept of fishing was not concerned with the prior possession of evidence but rather that there was a prior pleading which raised issues for which the evidence sought by the process would be relevant. In Edward Bray's "Principles and Practice of Discovery" (1885) - described by R P Meagher QC in the 1981 Foreward to a reprinted edition as "the standard Victorian [era] masterpiece on the subject" - the learned author, speaking of the stage at which discovery can be required said (at 16, emphasis added):
"… the right to discovery is limited to supporting a definite case set up, and does not extend to fishing out a case from the opponent; and therefore a party cannot have discovery before he has stated his case, whether in the claim as plaintiff or the defence as defendant."
29 This principle underlies the common practice whereby a plaintiff who has no recollection of the accident issues a statement of claim alleging negligence by reason of excessive speed, failure to keep a proper lookout etc. The plaintiff then interrogates the defendant as to factual circumstances of the accident. The plaintiff may have no other evidence, and is plainly seeking to make out a case, but such interrogatories are not considered objectionable on the ground of fishing.
30 The substantive issue for present purposes is not the ultimate liability of the respondents but the question of security for costs. There are no pleadings as to that, but for practical purposes the issues on the security application have been raised in the correspondence between the parties. At the risk of tedious repetition, we note again that the documents sought are relevant to those issues.
31 Moreover, often a holding that interlocutory process is fishing on closer examination appears to be more a question of oppression. In Small, immediately after the passage already quoted (par 13) above), Jordan CJ goes on to say:
"Even if the documents are specified, a subpoena will be set aside as abusive if great numbers of documents are called for and it appears they are not sufficiently relevant."
32 His Honour appears to accept that, when the documents sought from a party to the proceeding are described with reasonable particularity and are relevant, they could not be said to be sought for the purpose of fishing, although if a large number of documents of only marginal relevance were sought, the subpoena would be set aside as oppressive.
33 Fourthly, there is a further practical consideration in relation to applications for security for costs. Delay in making the application will operate as a discretionary factor against the ordering of security, it being obviously unfair to allow the other party to incur costs which might be rendered fruitless as a result of inability to comply with a belated order for security. So if the suggested rule applied, a party might delay a security for costs application while seeking to obtain sufficient material to raise a "reasonable apprehension" of inability to pay costs before serving a notice to produce. The party might then be met with the argument that the application should fail because of delay.
34 In the light of such considerations, modern techniques of case management suggest a more pragmatic and flexible approach than the structured, rule-laden regime proposed by the applicants.
35 Finally, in the circumstances of this case, there was, prior to the service of the notices to produce, at the very least a suspicion that grounds for ordering security existed, proof of which was likely to be aided by the notices to produce: WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 at 181 per Brennan J.
· The assets of Equus were subject to a number of charges which secured amounts well in excess of its paid up capital and which would crystallise upon any process of execution being issued.
· On its own account, it was engaged in a huge amount of litigation, some of which at least had already proved unsuccessful. The potential liability for costs orders was obvious.
36 Moreover, the respondents requested that all applicants provide security on the basis that, as to the first to seventeenth applicants, they were litigating for the benefit of Equus. In response, Equus proffered its own undertaking and asserted a previous history of meeting costs orders. It advanced selective and unsubstantiated generalised statements as to its financial position, e.g. "ownership of substantial assets", "liquid funds in excess of $800,000". Having put its financial standing in issue in this way, Equus can hardly complain about notices to produce which seek evidence as to the worth of its promises.