Bendigo and Adelaide Bank Limited v Stamatis

Background 7On 8 December 2003, the defendants entered into a home loan contract ("the contract") with the Bank. On 11 November 2010, the defendants failed to make a scheduled repayment in accordance with the contract. 8On 10 February 2011, the Bank instructed Galilee Solicitors to act as its legal representatives in relation to the default by the defendants under the contract. 9On 6 July 2011, the statement of claim was filed seeking recovery of the amount owed under the first loan agreement and possession of XX XXXX XXXX Brighton-le-Sands ("the property"). By defence and cross claim, the defendants alleged that their signatures on the contracts were forged by their son, Constantinos Stamatis or some other person, the Bank engaged in unconscionable conduct, undue influence and seek relief under the Contracts Review Act 1980, Consumer Credit Code and Australian Securities and Investment Act 2001 (Cth) and the Trade Practices Act 1974 (Cth). 10Between 10 February 2011 and 8 March 2012, Galilee Solicitors acted for the Bank as its legal representatives. 11On 27 September 2011, the defendants' solicitors Hughes & Taylor, served Galilee Solicitors with a notice to produce for inspection ("September notice"). This process was by agreement between the Bank and the defendants with the view to making the process of discovery less onerous and expensive. This notice to produce sought the following documents: "1 Any documents evidencing or recording correspondence between the defendants and the plaintiff, or otherwise referring to relating to any loans by the plaintiff to the defendants; in the period from 1 October 2003 to 28 February 2011, including but not limited to: a. The plaintiff's file in relation to any loan to the defendants; b. Any documents referring or relating to, or otherwise evidencing or recording, the defendants' application for the loan referred to in paragraphs 3 and 4 of the Amended Statement of Claim. c. Any documents referring or relating to, or otherwise evidencing or recording, the offer in writing dated 5 December 2003 referred to in paragraph 5 of the Amended Statement of Claim. d. Any documents referring to or relating to, or evidencing or recording, the acceptance referred to in paragraph 6 of the Amended Statement of Claim. e. Any documents referring or relating to, or otherwise evidencing or recording, the documents referred to in paragraph 8 of the Amended Statement of Claim. f. Any document evidencing or recording the advance of the sum of $440,000 to the first and second defendant pleaded in paragraph 9 of the Amended Statement of Claim. g. Any documents referring or relating to, or otherwise evidencing or recording, the application for the loan facility on or around 25 August 2004 and, or alternatively, the agreement for loan on 26 August 2004, pleaded in paragraphs 10 and 11 of the Amended Statement of Claim. h. Any documents referring or relating to, or otherwise evidencing or recording the documents referred to in paragraph 12 of the Amended Statement of Claim. i. A copy of the Certificate of Transfer issued by APRA on or around 1 December 2008 pleaded in paragraph 15 of the Amended Statement of Claim. j. Any documents evidencing or recording the payments and charges pleaded in paragraph 19 of the Amended Statement of Claim. k. Any credit assessment or assessment done in relation to the defendants or Mr Constantinos Stamatis; l. Any internal or external loan approvals; m. Any correspondence with any solicitor acting or purporting to act on behalf of the defendants; n. Any other file notes, emails, or other correspondence recording or evidencing any communications with the defendants or any person or company acting or purporting to act on their behalf. 2 Any documents referring or relating to Mr Constantinos Stamatis or Cuir Pty Ltd brought into existence in the period from 1 October 2003 to 28 February 2011. 3 Any documents recording or evidencing the plaintiff's policies or procedures of the plaintiff in relation to processing or evaluating applications for loans in force during the period from 1 July 2003 to 31 December 2004." 12On 28 September 2011, Darlington Makura, solicitor of Galilee Solicitors sent an email to Jayne Gurney, John Symons, Tracey McFarlane and Deidre Griffith at the Bank regarding the September notice (Bundle, Tab 2 p 4). This email stated: "Hi Jayne [Gurney], Please find attached Notice to Produce For Inspection that has been served by Hughes & Taylor Solicitors, the solicitors for the defendants requesting for the Plaintiff to produce the documents listed in the notice for inspection. According to the notice the documents have to be produced for inspection by the defendants by 11 October 2011. In accordance with the Uniform Civil Procedure Rules Party A may by notice served on party B, require party B to produce for inspection by party A any document or thing that is referred to in any originating process, pleading, affidavit or witness statement filed or served by party B and any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue. In accordance with the Rules a party after being served with a Notice to Produce may object to produce the documents on the following grounds,

1. That the document is privileged document,
2. That the party has no knowledge, information or belief as to the existence or whereabouts of the document, We would suggest that the documents be inspected at our office, some of the documents may already be in our file. Please send the documents to our office and please let us know if you have any objections to the inspection of any of the documents by the defendants. We will also inspect the documents once the documents have been sent to us and let you know whether we are of the view that any of the documents are privileged. I have not yet gone through our file to determine which documents we have on file." 13On 29 September 2011, Deidre Griffiths, from the Bank, replied: "We are in the process of collating the documents noted in the Notice to Produce. We will review these documents and then perhaps contact you in relation to any we have queries on. We would then appreciate you reviewing the documents once you received them as you suggested, prior to them being made available to the other party. We hope to have these to you by COB on 4 October." 14The agreed process to be followed for claiming privilege was that the Bank would first review the documents and contact their solicitor if they had any queries and then the solicitor would review these documents to check if any of them were privileged. 15On 4 October 2011, the Bank provided Galilee Solicitors with copies of documents held by it by attaching them to an email sent that day. On 7 October 2011, the Bank provided Galilee Solicitors, by email, with further documents held by it. On 7 October 2011, Galilee Solicitors emailed the Bank confirming that they (Galilee) would review the documents and advise the Bank with respect to any objections to production. There is no written correspondence to the effect that Galilee Solicitors advised the Bank that there were privileged documents. 16On 18 October 2011, Galilee Solicitors sent an email to the Bank confirming that Hughes & Taylor had attended the office of Galilee Solicitors on 13 October 2011 to inspect the bundle of documents. Included in the bundle were documents derived from the Bank's internal computerised comments logs ("comments logs"). The comments logs are typed and entered into the Bank's computer system by various bank employees following the defendants' loan facility entering the Bank's collections department on 12 November 2010. The defendants' loan facility was transferred to the Bank's collections department because the loan facility had fallen into and remained in arrears. 17On 8 March 2012, the Bank changed its legal representative from Galilee Solicitors to Gadens Lawyers. Between 8 March and 4 April 2012, Galilee Solicitors transferred its files to Gadens Lawyers. Gadens Lawyers undertook a comprehensive review of Galilee Solicitors' files following receipt of such materials. 18Ms Magee, a solicitor, is one of the solicitors at Gadens having day to day carriage of this matter. Upon review of these files from Galilee Solicitors Ms Magee says that she reached the understanding that Galilee Solicitors had not undertaken any apparent steps to ensure that documents which had been included in materials disclosed to Hughes & Taylor had been subject to prior inspection by Galilee Solicitors as to ensure both compliance with the September notice and maintenance of any proper claim for privilege from the production of any documents. 19On 4 April 2012, Ms Magee received a letter from the defendants' solicitors. This letter reproduced two entries on the collection system comments log, dated 29 November 2010 and 3 March 2011. Copies of those logs were attached to that letter. The existence of those comment logs should have alerted the solicitors acting for the Bank that at least some of the entries in the comment logs had been disclosed to the defendants' solicitors. On about 4 April 2012, Ms Magee says she became aware of the existence of these two logs but they had not been forwarded to her firm by the prior solicitors. 20On 17 April 2012, the defendants served affidavits of Aristides Stamatis, Maria Stamatis and one of their solicitors Lynne Hughes. In preparing their affidavit evidence, they relied upon the bundle of discovered documents. This bundle included the comment logs. 21On 8 May 2012, Gadens Lawyers sent an email to Hughes & Taylor attaching a letter notifying the defendants that the Bank had no obligation to produce, and would not produce, any further documents pursuant to the September notice or the balance of the defendants' request for further documents. 22On 14 September 2012, Gadens received a further file from Galilee Solicitors. 23In cross examination, Ms Magee gave evidence that she sought advice, from counsel for the first time on 17 September 2012, as to whether the documents in the comment logs were the subject of legal professional privilege. 24On 3 October 2012, Ms Magee wrote to the defendants' solicitors. She stated that the comment logs were derived from computerised records that are typed and entered into the Bank's computer system by various bank employees. The comment logs at all times have been created for the dominant purpose of obtaining legal advice. The source of this information is from a bank manager, Ms Gurney. I shall refer to Ms Gurney's evidence in more detail shortly.

(1) Whether the comments logs are confidential communications 25The Bank submitted that, firstly, the comments logs are confidential communications; secondly, it did not give instructions to Galilee Solicitors to produce the comments logs; thirdly, the Bank did not intend at any time that there be a waiver of privilege; and finally, the documents were mistakenly and inadvertently disclosed. 26The defendants submitted that the Bank has not established that the documents in dispute were "confidential" and thereby warrant protection in equity, or that they properly attracted any claim for privilege.

The legislation - the Evidence Act 27Part 3.10 of the Evidence Act provides some of the law concerning the availability of various privileges in court procedures. That Part runs from s 117 to s 134 inclusive. Division 1 runs from s 117 to s 126. 28Section 117(1) provides: "confidential communication means a communication made in such circumstances that, when it was made: (a) the person who made it, or (b) the person to whom it was made, was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law." 29Client legal privilege arises under ss 118 and 119: "118 Legal advice Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication made between the client and a lawyer, or (b) a confidential communication made between 2 or more lawyers acting for the client, or (c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person, for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client. 119 Litigation Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or (b) the contents of a confidential document (whether delivered or not) that was prepared, for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party." 30Loss of client legal professional privilege is covered in s 122. It reads: "(1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned. (2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120. (3) Without limiting subsection (2), a client or party is taken to have so acted if: (a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or (b) the substance of the evidence has been disclosed with the express or implied consent of the client or party. (4) The reference in subsection (3) (a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure. (5) The client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because: (a) the substance of the evidence has been disclosed: ... (iii) under compulsion of law ..." 31Section 131A(2) defines "disclosure requirement" as including pre-trial discovery. 32As can be seen from s 118, in order for evidence to be protected by client legal professional privilege, the plaintiff must demonstrate that the communication or the contents of the document was confidential. 33In Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 (at [9]) the High Court held: "it is now settled that legal professional privilege is a rule of substantive law which may be availed of by a person to resist giving of information or the production of documents which would reveal communication between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings." 34The purpose for which a communication is made or a document is created is a question of fact which must be determined objectively, having regard to all of the evidence: Esso Australia Resources Ltd v Commission of Taxation [1999] HCA 67; (1999) 201 CLR 49; In the Matter of Southland Coal Pty Ltd (Rec and Mgrs Apptd) (In Liq) [2006] NSWSC 899. 35Ms Jayne Gurney is the Manager (Legal and Recovery) employed by the Bank. She deposed (Aff, 1/11/2012 at [26]) that the "comment logs" are utilised by the Bank to maintain a complete and accurate record of the Bank's collections activity in respect of delinquent loans and are to be used by the Bank for the predominate purpose of assisting its legal representatives in providing legal advice in circumstances where the Bank is undertaking its ordinary collections activity; and/or in anticipation of any proceedings that may arise during the course of the Bank's ordinary collections activity. 36At [33] Ms Gurney deposed that: "No steps were taken by the defendants' legal representatives to contact Galilee Solicitors to ascertain whether or not there had been a mistaken and inadvertent disclosure of the Comment Logs." The email dated 28 September 2011 from the then Bank's solicitors Galilee Solicitors requesting documents for discovery was sent to Ms Gurney (amongst others) and stated, "let us know if you have any objections to the inspection of any of the documents by the defendants". The comments logs must have been furnished by the Bank to Galilee Solicitors. In her affidavit Ms Gurney does not say whether she had any queries about supplying the comments logs nor whether there were any phone conversations between her and Ms Griffiths, from the Bank, and Mr Makura regarding any concerns he may have had. Her affidavit is silent as to her response to the email dated 28 September 2011. 37It is not known whether or not Mr Makura carried out a review of the documents and came to the conclusion that the comments logs did not attract a claim for client legal professional privilege. However, there is nothing to suggest that this process outlined in the emails of 28 and 29 September 2011 was not followed at the time the documents were being compiled for production. Rather it appears that Ms Gurney has now decided that the comments logs may have been confidential and subject to client legal professional privilege. 38The comment logs cover the period between 29 November 2010 to 16 September 2011. I have reviewed these documents. They refer, inter alia, to file notes of conversations between a bank officer and Aristides Stamatis, to the amount in arrears as at a certain date, and to the history of the progress of these court proceedings. While Ms Gurney says the predominate use of these comments logs are for the purpose of legal proceedings, I cannot agree. The comments logs are not documents of the type that refer to legal advice given by their solicitors to the Bank nor do they relate to the Bank seeking legal advice from the solicitors. The most that can be said is that some of the later comments logs recorded notes of the solicitor's reports of these proceedings (for example an entry on p 278, where it is recorded that instructions were sent to solicitors to issue a statement of claim). The predominate purpose of the comments logs do not appear to be for the purpose of legal proceedings. It is my view that the comments logs do not contain confidential communications. Hence they are not the subject of client legal professional privilege. 39If I am wrong, I shall consider whether the Bank waived client legal professional privilege and its ramifications. The Bank's position is that the comment logs were mistakenly and inadvertently disclosed to the defendants by the conduct of the Bank's former legal representatives, acting without the instructions of the Bank. Ms Gurney says that adequate steps were not taken to assess whether the comment logs should be produced or whether objections should be raised with respect to the request for production. As a result, the Bank has now instructed Gadens that it maintains its claim for client legal professional privilege over the comment logs. 40The Bank submitted that in accordance with that policy, the Bank did not intend and did not give any instructions to Galilee Solicitors to produce the comment logs to the defendants for inspection, nor did it intend to give any instructions to Galilee Solicitors that such privilege as contained in the comment logs was intended to be waived in these particular circumstances. 41The defendants submitted that any privilege that might previously have subsisted in the documents was waived when the documents were produced to the defendants' solicitors and subsequently placed in the defendants' evidence. 42Counsel for the Bank referred to Australian Competition and Consumer Commission v Cathay Pacific Airways Ltd [2012] FCA 1101 and submitted that it did not intend to waive legal professional privilege. In Cathay Pacific Airways, the solicitors for Cathay Pacific inadvertently disclosed communications. Importantly, it did not reflect any intention of Cathay Pacific that the communications be disclosed or the privilege in them be waived. Buchanan J made a finding that the disclosure of the communications should not be seen as the result of deliberate conduct of Cathay Pacific or its solicitors. At [17] to [21] his Honour stated: "[17] In a case where disclosure of a privileged communication was the result of a deliberate act, even if that act was not intended to waive privilege, little difficulty may arise in deciding that privilege has been lost (see, by way of guidance, the examples given in Mann v Carnell at [28] and [29], which are not included in the passages set out earlier). Individual examples of that sort fall readily enough into a class of case identified by a Full Court of this court in Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341 (Rio Tinto). The Full Court said (at [61]): Both before and after Mann, the governing principle required a fact-based inquiry as to whether, in effect, the privilege holder had directly or indirectly put the contents of an otherwise privileged communication in issue in litigation, either in making a claim or by way of defence. In DSE [(2002) 127 FCR 499] at [58], Allsop J put the matter somewhat more descriptively, saying waiver arises when: the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication. (Emphasis in original.) [18] At [65] the Full Court said: ...the question is not whether the Commissioner has put his state of mind in issue but whether he has directly or indirectly put the contents of the otherwise privileged communications in issue in the litigation, either in making a claim or by way of defence. Put another way, to adapt Allsop J's language in DSE, has the Commissioner (being the privilege holder) made an assertion as part of his or her case in the litigation that lays open the privileged documents to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege? [19] On this analysis, the conduct which will waive privilege is either bringing a case which is in some way about (my emphasis) the contents of a confidential communication (that is not what has happened here) or bringing a case which lays open the confidential communication to scrutiny (my emphasis). ... [20] However, it is not enough that a party which has, by chance, been provided with a confidential communication sees a way to turn it to some forensic advantage, or sees inconsistencies with some aspect of the case of its opponent, whether in the pleadings or the evidence. Such circumstances do not expose otherwise privileged communications to scrutiny (see also Boensch v Pascoe [2007] FCA 532 at [34]-[38] and the cases there cited). Moreover, the material for which privilege is claimed cannot normally be used to set up the inconsistency relied on. That would pre-empt the answer to the question for resolution. Nothing in the pleadings, or in the evidence, to which I was referred in argument exposes for scrutiny the content of confidential communications between Cathay Pacific and its lawyers. What has exposed those confidential communications to scrutiny is the inadvertent disclosure of them by solicitors for Cathay Pacific. That is not conduct of the necessarily quality. It does not meet the usual tests for implied waiver of privilege. [21] The only possible exception to this approach might lie in the reservation by the High Court in Mann v Carnell of the possibility that some consideration of fairness might influence a conclusion about inconsistency between the conduct of a party claiming privilege and the maintenance of the privilege. I can see only two matters which might possibly deserve attention of this kind in the present case, although on analysis neither appears to me to fall within the limited reservation referred to in Mann v Carnell." 43In Cathay Pacific, the claim for privilege was upheld. 44Counsel for the defendants submitted that where the documents have been disclosed, the leading case on waiver and privilege in this Court is Armstrong Strategic Management and Marketing Pty Ltd v Expense Reduction Analysts Group Pty Ltd [2012] NSWCA 430. In Armstrong Strategic, during the discovery process the documents were inadvertently disclosed. The defendants' counsel submitted that these circumstances are relevantly indistinguishable from the present case. 45Campbell JA in Armstrong Strategic (with whom Macfarlan JA and Sackville AJA agreed) held that mandatory and prohibitory injunctions of the kind sought in the present case can only be supported by the law of confidential information (at [102] - [105]). Further, the Court of Appeal held that the relevant provisions of the Evidence Act do not give a party any entitlement to receive the documents back, nor do they provide any basis upon which a party could prevent its opponent from using the documents in the meantime (at [103]). Any privilege that might have attached to the documents is lost when the documents fall into the possession of the other party: see Australian Securities and Investments Commission v Lindberg [2009] VSCA 234; (2009) 25 VR 398 at [43], [51]; applied in Armstrong Management at [157] - [158] and [161]. 46In Armstrong Strategic, Campbell JA at [165] - [166] stated: "165 Rather, whether the injunctions should have been granted depended upon whether the circumstances in which the Disputed Documents were communicated to or obtained by the Armstrong Parties were such as to impose an obligation of conscience on the Armstrong Parties. One way in which such an obligation might arise is if the documents had been obtained by fraud, but there is no question of that having happened. Alternatively, if either Ms Marshall or Mr Armstrong realised that the documents were confidential and had been disclosed by mistake, that might suffice to impose such an obligation: Al Fayed v Commissioner of Police for the Metropolis [2002] EWCA Civ 780; [2002] All ER (D) 450 at [16] (vii) (a). However, it is not established that either of them had any such realisation. 166 Another way in which it might be imposed is if a reasonable solicitor in the position of Ms Marshall should have realised that the documents had been disclosed by mistake. The test of whether a reasonable solicitor would have realised that the documents had been disclosed by mistake has been applied in Herbert Smith at 149, Guinness Peat at 1045, DPP v Kane at 485, Meltend at 516, Trevorrow at [41], [147] and Al Fayed at [16] (vii). Even though that test had been referred to in the submissions of both sides, her Honour did not apply it." 47Counsel for the defendants submitted that if the Bank is to succeed, it is therefore necessary for it to demonstrate that the facts of the case fall within the requirements for an injunction restraining use of confidential information, as set out in Armstrong Management at [106]-[170], which applied AG Australia Holdings Ltd v Burton (2002) 58 NSWLR 464 at [141]. According to the defendants, the Bank must show that the documents have the necessary element of confidence which equity would protect, or at least that the documents are privileged; and that the circumstances in which the documents were communicated to the defendants were such as to impose an obligation of conscience on them. 48If the comments logs were privileged, the claim for equitable relief will turn on firstly, whether the documents were inadvertently produced; secondly, whether the defendants' solicitor should have known that the documents were inadvertently or mistakenly produced (ie whether it was an "obvious mistake"); and thirdly, whether other factors, principally delay, disentitle the Bank from relief. 49The defendants submitted that the Bank fails on each of these grounds because firstly, it is not established that the documents were inadvertently produced. As previously stated, it appears that both the Bank itself conducted a review of the documents, and then the Bank's solicitors were instructed to do so. It is my view that at the time the documents were produced, neither the Bank nor its solicitors considered the comments logs to be the subject of client legal privilege. The Bank's production of the comments logs was intentional and disclosure of their contents was voluntary. There is nothing other than the belated opinion of Ms Gurney to suggest that the documents were mistakenly produced. The comments logs do not have the obviously privileged character of some documents such as a misdirected brief to counsel (English and American Insurance Co Ltd v Herbert Smith & Co [1987] NLJ 148) or legal advice from the solicitors. 50Whether or not this Court would intervene had the documents properly been the subject of client legal professional privilege and had inadvertently been disclosed depends upon whether a reasonable solicitor in the position of the defendants' solicitor should have realised that the documents had been disclosed by mistake (Armstrong Management at [166]). In Grace v Grace [2010] NSWSC 1514 at [15] Brereton J, quoted with approval in Armstrong Management at [170], said: "... the question is not whether the disputed documents were 'obviously privileged', but whether their disclosure was an 'obvious mistake'. These are quite distinct concepts, because a party may voluntarily disclose a privileged document for a myriad of reasons." 51The defendants' solicitor Ms Hughes, on receipt of the comments logs, did not regard them as containing legal advice flowing between the Bank and its solicitors because shortly after receipt of them on 4 April 2012, Ms Hughes referred to them (and attached copies of two of the comments logs) in correspondence to the Bank's solicitor. Those comments logs were also used to compile the defendants' affidavits which were sworn on 17 April 2012. 52The comments logs are not the sort of documents that a reasonable solicitor inspecting them would have then become aware that there had been an obvious mistake in their disclosure. In my view, equity would not intervene to protect "confidential information" in the present case, because a reasonable solicitor in the position of the defendants' solicitor, Ms Hughes, would not have realised there was a mistaken disclosure. This is because there was no "obvious mistake" that would give rise to the orders the Bank seeks in equity. 53I have already determined that the comments logs are not confidential communications and do not attract client legal privilege. Nor do I think that the comments logs were inadvertently disclosed. This is because at the time they were disclosed they were not regarded by the Bank and its solicitors as ones capable of being the subject of client legal professional privilege.

(2) Notice to produce dated 8 October 2011 (Bundle - Tab 1) 54The notice to produce issued on 8 October 2011 seeks production of the following documents: "1 Any notes or other documents produced in 2007 recording or referring to a fraud, or the 'fraud issue', in connection with the plaintiff's loans (or alleged loans) to the defendants. 2 Any notes of discussions, reports or other records of discussions between any employee or officer of the plaintiff and Faye Croucher or any other person from a department known as 'Fin Crimes'." 55These documents that the defendants seek to have produced were referred to in the comments logs. 56The defendants seek an order that the plaintiff comply with the notice to produce served on it by the defendants and dated 8 October 2012. 57UCPR 21.11 reads: "21.11 Production under notice to produce (1) Unless the court orders otherwise, party B must, within a reasonable time after being served with a notice to produce: (a) produce for party A's inspection such of the documents or things referred to in the notice (other than privileged documents) as are in party B's possession, and (b) serve on party A, in respect of any document that is not produced, a notice stating: (i) that the document is a privileged document, or (ii) that the document is, to the best of party B's knowledge, information and belief, in the possession of a person identified in the notice, or (iii) that party B has no knowledge, information or belief as to the existence or whereabouts of the document. ... " (also see Bank's then solicitor's letter dated 28 September 2011 reproduced earlier in this judgment) 58There is a legitimate forensic purpose in seeking these documents as the allegation of fraud in relation to the loan is central to the defendants' case. In 2007, when the discussions were taking place within the Bank in relation to an alleged fraud, the loan was being serviced. The Bank was not contemplating legal proceedings when those discussions took place. The documents in answer to this notice to produce should be produced to the defendants.

(3) Subpoena to produce dated 21 November 2012 59The Bank seeks an order that pursuant to UCPR 33.4 the defendants' subpoena to produce dated 21 November 2012 (Ex A) be set aside. 60UCPR 33.4 relevantly reads: "33.4 Setting aside or other relief (1) The court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in respect of it. ..." 61On 21 November 2012, the defendants served upon the Bank a copy of the subpoena to produce issued at their request by the Court and served on Australian Mortgage Options (Ex A). The Bank is in possession of these documents. It is common ground that the Bank has sufficient interest in the matter and as such can move to set aside the notice to produce. Australian Mortgage Options is the mortgage broker. 62Schedule 1 and 2 of the subpoena addressed to Australian Mortgage Options request that the following documents be produced:

1. Any documents brought into existence between 1 May 2003 and 19 November 2012 referring or relating to any loan or loans by Bendigo and Adelaide Bank Limited (or, formerly, Adelaide Bank Limited) (collectively, the Bank) to Aristides Stamatis, Maria Stamatis, or Constantinos Stamatis, applied for or entered into in 2003 or 2004.
2. Australian Mortgage Option's file (or, alternatively, Combined Home Loan's file) kept in relation to the loan by the Bank to Aristides and Maria Stamatis. 63The subpoena calls for further documents. Essentially the documents sought for production are comprised of the file held by Australia Mortgage Options or, alternatively, its predecessor Combined Home Loans relating to the loan facilities provided by the Bank to the defendants. 64On this topic, counsel for the Bank referred to New Price Retail Services v David Hanna [2012] NSWSC 422. In New Price, the plaintiff sought to have a subpoena set aside. The defendant, Hanna, sought production of "All original and copies of any documentation in relation to your duties as the receiver and manager of the property of Kim Ngo and all other documents, including correspondence, draft documents, file notes and memoranda relating to, concerning or touching upon any such duties as a receiver and manager." 65McDougall J in New Price Retail, stated at [10]: "It may be possible to conceive of a subpoena drafted in wider terms, but I do not propose to take up time by attempting to meet that challenge." 66Counsel for the Bank submitted the subpoena issued by the defendants in these proceedings covers the same type of ground and it is couched in impossibly wide terms. But whether the documents sought on subpoena in these proceedings is too wide depends on the facts and issues in dispute. 67Counsel for the Bank also referred to The City of Sydney v Streetscape Projects (Australia) Pty Ltd [2011] NSWSC 364, where Einstein J followed Beazley JA's statement in Attorney-General (NSW) v Dylan Chidgey [2008] NSWCCA 65. Einstein J stated at [8] to [10]: "[8] ... 'The test for determining whether a party is required to produce documents pursuant to a subpoena was stated by Simpson J (Spigelman CJ and Studdert J agreeing) in R v Saleam [1999] NSWCCA 86 at [11], in the following terms: The principles governing applications [for an order that documents not be produced] are no different from those governing applications for access to documents produced in answer to a subpoena. Before access is granted (or an order to produce made) the applicant must (i) identify a legitimate forensic purpose for which access is sought; and (ii) establish that it is "on the cards" that the documents will materially assist his case ...' The genesis of the expression "on the cards" is to be found in the judgment of Gibbs CJ in Alister v R [1983] HCA 45 ; (1984) 154 CLR 404 at 414. [9] In Roads & Traffic Authority (NSW) v Conolly (2003) 57 NSWLR 310, Adams J at [12] referred to a decision of Balmford J in Fitzgerald v Magistrate's Court of Victoria [2001] VSC 348; [2001] 34 MVR 448, in which her Honour, at [20], stated, "I note that in the second edition of the Oxford English Dictionary 'on the cards' is defined as meaning 'within the range of probability'". [10] Accepting this to be so, it seems to me that the relevant "range" is therefore between the barely probable and highly probable. With respect, it seems to me that this area of the law is bedevilled with metaphors. I think the essential notion is that there is a reasonable chance that the material sought will assist the defence. If it is reasonable to infer that the material sought exists and that it is relevant to an issue, though its content is unknown, it will almost invariably be logically the case (as it seems to me) that such a chance exists, even though it might be thought to be unlikely. Seeking that material therefore seems to me to be a legitimate forensic purpose, providing of course that the factual issues and the character of the material sought are precisely identified." 68Are these documents sought for a legitimate forensic purpose? In Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41, knowledge of fraud was fixed on a principal whose agent had assessed loan applications on the principal's behalf where the agent knowingly had done so in breach of the principal's guidelines. The relationship and business practices of a number of parties in the matter before me give rise to an arrangement akin to that found in Khoshaba. 69In Khoshaba, Handley JA stated at [102] - [103]: "102 The appellant was a trustee for Resimac Ltd which managed a securitised mortgage programme. Resimac employed Australia Mortgage Wholesalers Pty Ltd (AMW) as its agent to assess loan applications on its behalf and pass on to Resimac approved applications for its acceptance. However it is clear from the evidence of Mr Tadros of AMW that Resimac relied on AMW to ensure that applications fell within its guidelines and were otherwise appropriate for acceptance. One of the duties of AMW as agent of Resimac was to satisfy itself that the information on the loan application was correct and to approve or reject applications in accordance with Resimac's guidelines. 103 In cases such as this the legal rights of the principal are governed by the acts and state of mind of the agent as if they were its own: Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd [2001] 50 NSWLR 679, 693-98, not affected on this point by the decision of the High Court (2003) 214 CLR 514. Accordingly the knowledge of AMW, including its knowledge that Resimac's guidelines had not been complied with, was for legal purposes the knowledge of Resimac, and the appellant as trustee for Resimac can be in no better position." 70The purpose of seeking the mortgage broker's file in relation to the defendants' loan is to establish or fail to establish the knowledge or indifference of the Bank. If Australian Mortgage Options had knowledge of whether the loan complied with the Bank's guidelines, and had knowledge of the defendants' son's role in the loan approval process, it can be argued the Bank may be fixed with this knowledge. Hence, it is on the cards that the documents sought on subpoena are for a legitimate forensic purpose. However, the subpoena seeks documents brought into existence from 1 May 2003 and 19 November 2012. This time span is too broad. The loan was advanced in December 2003. It is unlikely that the mortgage broker would have relevant documents after the loan was approved. Hence, the documents sought in the subpoena (and the notice to produce) should be produced but only for the period from 1 May 2003 to 21 May 2004. 71The result is that the defendants were successful in their notice of motion and the Bank was unsuccessful with their two notices of motion. The Bank's notices of motion dated 16 October 2012 and 10 December 2012 are dismissed. 72I make an order in accordance with paragraph (1) of the defendants' notice of motion dated 21 November 2012 and the following documents to be included, any disbursement documents or other documents showing where the loan moneys the subject of the proceedings were disbursed. 73Costs are discretionary. Costs usually follow the events. The plaintiff is to pay the first and second defendants' costs as agreed or assessed.

The Court orders that: (1) The plaintiff's notices of motion dated 16 October 2012 and 10 December 2012 are dismissed. (2) Order in accordance with paragraph (1) of the defendants' notice of motion dated 21 November 2012 and the following documents to be included, any disbursement documents or other documents showing where the loan moneys the subject of the proceedings were disbursed. (3) The plaintiff is to pay the first and second defendant's costs of the motions as agreed or assessed.

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