Discovery of particular documents - Order 26 r 6 - Discretion to refuse order - Consideration of principles

Grant v Downs [1976] HCA 63; (1976) 135 CLR 674

Minter v Priest [1930] AC 558

National Employers Mutual General Insurance Association Ltd v Waird [1979] HCA 11; (1979) 141 CLR 648

State Energy Commission of Western Australia v Griffin Coal Mining Co Ltd (1985), unreported; SCt of WA; Library No 5882; 9 May 1985

1 MASTER SANDERSON: This is an application by the defendant for an order that the defendant to counterclaim give further and better discovery of documents. For the sake of convenience I will refer to the defendant as "Conlan" and the defendant to counterclaim as "Carter". The documents sought are Carter's diaries for the years 1995, 1996 and 1997. It is not disputed that these documents exist. They have not been included in Carter's list of discoverable documents. To put this application in context it is necessary to deal briefly with the matters in dispute between the parties in the action.

2 The claim by the plaintiff against Conlan is straightforward. It is alleged that Conlan was an employee of the plaintiff and that between July 1995 and December 1997 he converted to his own use cash and cheques the property of the plaintiff. The plaintiff seeks to recover just over $150,000. Carter is a director of and major shareholder in, the plaintiff. By his re-amended defence and counterclaim, Conlan denies that he converted any funds or cheques to his own use and benefit. The counterclaim goes on to allege that in July 1995 Conlan transferred his businesses to the plaintiff. He says that subsequent to that transfer, five shares in the plaintiff were held by Carter and five shares were held by one Alan Smith ("Smith"). There then appears par 14. It is in the following terms:

"The shares in the Plaintiff held by Smith and Carter were held in trust for the Defendant."

3 It is alleged that in April 1997 Smith resigned as a director of the plaintiff and that at the time of his resignation he "partly executed" a transfer of shares with the intent that Smith's shares were to be transferred to the defendant. It is alleged that Carter improperly registered four of the shares in her own name and one share in the name of one John Pascoe ("Pascoe"). As part of the relief claimed by Conlan in his counterclaim, he is seeking a declaration that he is entitled to be registered as the owner of all 10 shares in the plaintiff. The primary matter in dispute, then, in the counterclaim, is the ownership of the 10 shares in the plaintiff. Were they held by Carter and Smith in trust for Conlan, or did Carter hold five shares in her own right and were the shares transferred from Smith properly transferred to her and Pascoe?

4 Almost inevitably there is no written trust agreement nor any documentary evidence which would establish conclusively the capacity in which Carter and Smith held the shares in the plaintiff. At trial, oral evidence will be led by each of the parties and the credibility of the witnesses could, and probably will, determine the outcome of the action. The recollection of the parties and how those recollections square with what documents exist will obviously be an important factor in determining who is to be believed.

5 There is one further matter which, although not strictly relevant to the determination of the matters in issue, adds spice to the dispute. Apart from being in business together, Conlan and Carter established a personal relationship. Without going into any detail as to this relationship, it would appear to have been at times stormy. Carter has sought and obtained a restraining order against Conlan. For his part, Conlan was charged and convicted of breaking and entering Carter's property. From time to time there has been a reproachment between the parties and they have enjoyed a good relationship. However, at present they are estranged. No doubt this litigation is not assisting the relationship.

6 It is Conlan's contention that Carter's diaries relate to the matters in issue between the parties and are therefore discoverable. Carter resists the application on two grounds. First, she says that the diaries do not relate to a matter in question between the parties and are therefore not discoverable. Secondly, she says that the diaries contain her private thoughts and they ought not be disclosed to Conlan or, indeed, to any other person. In short, she wishes to protect her privacy. It was submitted that even if the diaries would otherwise be discoverable the court should, in the exercise of its discretion, refuse to order discovery in this case.

7 There was one further submission put by Carter's counsel as a basis for refusing to order discovery. It was submitted that the diaries were privileged. It was said that the contents of the diaries attracted so-called litigation privilege or were privileged because they obtained advice given by solicitors. I am bound to say that I have some difficulty seeing how diaries of a personal nature could attract privilege. There is some authority to the effect that if privilege is claimed and sufficiently justified in an affidavit in opposition to the application the court will refuse to make an order for discovery of particular documents: see Taylor v Commissioner of Railways [1974] Qd R 131 at 133; Weir v Greening [1957] VicRp 38; [1957] VR 296 at 297. In the circumstances of this case, I am of the view that if discovery of the diaries is ordered then Carter should be provided with an opportunity to state in the affidavit of further discovery the basis upon which privilege is claimed. It would then be up to Conlan to decide whether or not to attack the claim for privilege. In short, I am not satisfied that this application is the appropriate way in which to deal with any claim for privilege made by Carter.

8 The test as to what documents are discoverable is well understood. A party is obliged to discover those documents which relate to any matter in question between the parties. Frequently, when issues relating to discovery arise, reference is made to documents which are relevant to a matter in question. But that is not the test. It is documents which are related to any matter in question. What is encompassed by such a test was set out by Brett LJ in the seminal, if often criticised, case of The Compagnie Financiere Et Commerciale du Pacifique v The Peruvian Guano Co [1882] 11 QBD 55 at 63. His Lordship put the position as follows:

"It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may - not which must - either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. I have put in the words 'either directly or indirectly' because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead him to a train of enquiry, which may have either of these two consequences:"

9 Application of this test means that discovery can be, and often is, of extraordinarily wide ambit. Because of the hardship, inconvenience and expense which can be occasioned by a discovery requirement the Supreme Court Rules were amended in 1996 to allow the court to confine discovery: see O 26 r 7(b)(i) and (ii). In particular, O 26 r 7(b)(ii) allows the court to order that discovery be limited to only those documents which are "directly relevant" to any specified matter in question. In the submissions made in opposition to this application, O 26 r 7 was not specifically mentioned. However, it is a matter which deserves consideration in the context of the application.

10 Once an affidavit verifying a list of documents has been filed there is a presumption that the list of documents so verified is conclusive: see Taylor v Batten [1878] 4 QBD 85 at 88; Trade Practices Commission v Bata Shoe Co of Australia Pty Ltd [1980] FCA 18; (1980) 44 FLR 149; Mack v Federal Commissioner of Taxation (1983) ATC 4043 at 4057. What is more, the conclusiveness of the affidavit cannot, as a general rule, be challenged by a contentious affidavit seeking further discovery. The basis of this rule was set out by Farwell LJ in British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] 1 KB 369. His Lordship put the position as follows (at 376):

" 'The object of this practice [not ordering further discovery based on a contentious affidavit] was to prevent a conflict of affidavits as to whether the affidavit of documents was sufficient.' The Court of Chancery always set its face against having any dispute as to the truth of an affidavit of documents. Then, as it was found that this rule worked a hardship, r 19A of Order XXXI [of which our rule 6 relating to discovery of particular documents is the equivalent] was added, and that was certainly an invasion of the strictness of the rule ... because it enabled a person dissatisfied with the affidavit of documents, by way of suggestion of a specific document and his belief that the deponent had it, to compel that deponent to make a further affidavit. That is limited to a specific document which can be specifically described. The rule is ... not a modification, but an enlargement of the general right of discovery."

11 There is no doubt that this is the position in Australia. The decision of the High Court in Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341 makes that clear. In John Allan Ltd v Keegan [1968] WAR 125 Wolff CJ put the position in the following terms (at 127):

"My understanding is that once the plaintiff has made an affidavit swearing to the particulars required by the rules, no further discovery should be ordered unless it is patently clear that some particular document which might be material to the issues is in the hands of the party ordered to give discovery and has not been disclosed."

12 This application then, properly considered, is an application brought under O 26 r 6 for discovery of particular documents - Carter's diaries. The fact that there is a contentious affidavit which seeks to impugn Carter's affidavit of discovery does not mean the application cannot succeed. Indeed, r 6(3) requires an affidavit to be filed in support of the application and inevitably that affidavit must dispute the conclusiveness of the affidavit of discovery. But an order will only be made requiring a further affidavit to be filed if the court is satisfied that the documents in question satisfy the test for discovery - that is to say they are related to a matter in question between the parties - or discovery is not limited under r 7.

13 It is Conlan's position that Carter recorded in her diary almost everything that occurred on a day-to-day basis relating to both her business and her personal affairs. He says that he was told as much by Carter herself: see par 4 of Conlan's affidavit of 31 March 1999. What is more, he refers to a meeting held in 1995 between Carter, Conlan, Smith and one Oliver Douglas in relation to the affairs of the plaintiff. He says in this particular instance Carter told him that she recorded what took place at that meeting.

14 For her part, Carter denies that she ever told Conlan anything about her diaries. She alleges that the only way Conlan could have become aware of the contents of the diaries is by stealth. As to the reasons why she kept the diaries, Carter says (at par 9 of her affidavit of 19 April 1999):

"After my immediate experiences in the family court following the separation including my applications for child support and custody I quickly learned that I needed an accurate record of what occurred on a daily basis to be able to protect myself and my children's interests in the various court proceedings. Furthermore I needed the therapy of writing down my innermost thoughts and feelings as I was on my own in dealing with these problems."

15 Carter goes on to say that she recorded matters of business "only insofar as it affected my personal life". Carter does annex a copy of an entry in her diary for 2 August 1995. This entry relates to the meeting referred to by Conlan. The entry itself has only a passing reference to the meeting and discloses virtually nothing about what was discussed. But it does indicate that Carter recorded events that occurred throughout the day. It would seem then that the diaries detail Carter's whereabouts on a particular day and presumably they indicate where and when meetings took place. There are also grounds for believing that any matters of great significance to Carter in relation to her business dealings would be recorded. It is difficult to imagine that events of significance would be mentioned but skipped over in a diary such as this. In my view, then, the applicant is prima facie entitled to an order for specific discovery.

16 Furthermore, it does not seem to me that this is an appropriate case where I ought limit discovery under r 7. To do so would require me to conclude that the diaries were not directly relevant to a matter in issue between the parties. As I have mentioned above, credibility will be central to the resolution of this dispute. In those circumstances the opportunity to measure what Carter says occurred against what may be in her diaries is of prime importance to Conlan's case. It is a vastly different situation to one where, for instance, a party may, strictly speaking, be obliged to discover all of the source documents leading to a set of accounts. In such a case, unless there are specific source documents that a party wants for a stated reason, limiting discovery might be appropriate. But that is not the case here.

17 The power to make an order for further discovery is discretionary and will not be exercised in such a manner as to be oppressive: see Australian Broadcasting Commission v Parish [1981] FCA 7; (1981) 48 FLR 292 at 295; Beecham Group Ltd v Bristol-Myers Co [1979] VicRp 27; [1979] VR 273 at 280. The factors to be taken into account in the exercise of discretion were considered by Hill J in Hadid v Lenfest Communications Inc (1996) 70 FCR 403. His Honour put the position as follows (at 406):

"Whatever the source of power to deny access to documents otherwise relevant to the proceedings, two policy considerations govern the exercise of that power. First, is the concern of the Court to promote and ensure open justice ... .

Secondly, is the requirement, as a matter of procedural fairness, that a party to proceedings has prima facie a right to access all documents properly discovered or produced before trial and all material in evidence at trial. That right may be qualified in a number of ways, for example, it may be defeated by a valid claim of legal professional privilege or public interest immunity. Relevant to the present case it may be qualified if, on balance, the interests of justice require such a qualification. However, generally speaking it may be said that it is fundamental that a party to a proceeding know the case sought to be made against him or have access to material which would enable him to respond to that case."

18 Courts have always been appreciative of the fact that the discovery process by its very nature is an invasion of a party's privacy. Spender J in MacKay Sugar Co-operative Association Ltd v CSR Ltd (1996) 63 FCR 408 at 412 quoted with approval what was said by Lord Keith of Kinkel in Harman v Secretary of State for the Home Department [1983] 1 AC 280:

"Discovery constitutes a very serious invasion of the privacy and confidentiality of a litigant's affairs. It forms part of ... legal procedure because the public interest in securing that justice is done between parties is considered to outweigh the private and public interest in the maintenance of confidentiality."

19 It is generally the case that where a party has sought to deny access of documents it has been on the basis of commercial confidentiality - particularly the concern that to disclose the documents to an opponent will be to give that party a commercial advantage either immediately or some time in the future. The Hadid case provides a good example of this situation. The applicant sought access to certain documents which were subject to confidentiality orders and restricted to inspection by lawyers. The respondent's resisted access to the documents on the basis of their commercial confidentiality and/or sensitivity, given the applicant was a competitor or potential competitor. The court allowed the applicant access to the documents. Hill J was not satisfied that the evidence established that the applicant was, or was likely to be, a competitor of the respondent. His Honour went on to find that if he might become a competitor in the future such a risk was outweighed by the prejudice to the applicant in not having access to the documents.

20 So far as I am aware there is no decided case which has dealt with a situation such as this - that is to say where it is the written record of the respondent's thoughts and feelings which is sought to be protected. No question of commercial damage to the respondent arises. But what is in the documents may quite possibly affect the relationship between the parties. Of course, there is no question of the material obtained on discovery being used in any other proceedings or for any purpose other than the present action: see Pacific Basin Exploration Pty Ltd v XLX NL [1985] WAR 11. But that is not to the point. In the circumstances of this case, once Conlan reads the diaries, so far as Carter is concerned, the damage is done.

21 There is one further matter which, in the context of this case, is of concern. I was advised by Carter's counsel from the Bar table that the plaintiff company is worthless. Furthermore, although the plaintiff brings an action against Conlan claiming repayment of moneys allegedly converted by Conlan, it is common ground that even if the plaintiff is successful nothing is likely to be recovered. In other words the parties, for reasons best known to themselves, are arguing about nothing. Although given the opportunity to do so, counsel for Conlan did not dispute this assessment of the position. In these circumstances it is difficult to have too much sympathy for either party.

22 On balance, I am satisfied that the interests of justice require that these diaries be discovered. The diaries are, on any view of the matter, pivotal to the matters in issue between the parties. Procedural fairness and the need to ensure open justice favour an order for discovery. Both of these considerations, in my view outweigh the potential embarrassment occasioned to Carter.

23 Given that the existence of the diaries is admitted, in normal circumstances I would not require a fresh affidavit be filed. However, as I have said, Carter may wish to claim privilege over some of the entries in the diaries or over the diaries in toto. If she intends to adopt that course then the claim for privilege ought be sufficiently detailed to allow Conlan's solicitors to ascertain the basis upon which the privilege is claimed. Once that is done Conlan's advisers can consider whether or not an attack will be made on privilege. If privilege for the diaries or parts thereof is not claimed then the documents should be made available for inspection.

24 I will hear the parties as to the form of the order and as to costs.