//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2012] NSWSC 1027
plaintiff. Paragraphs 1-3 of the Notice to Produce dated 13 July 2012 set aside; Paragraph 5 set aside so far as it includes the words 'including documents recording the work thereby finalised'; parties to be...
The court set aside the broad parts of Fortress' notice to produce that sought 'all documents' which 'informed' the Liquidators' state of mind or 'informed the belief' because those requests failed the UCPR r 34.1 requirement to specify documents and would effectively operate as discovery, thereby undermining Practice Note SC Eq 11. Narrow, objectively identifiable requests (management accounts, certain ancillary loan documents, and limited committee correspondence) were allowed; one paragraph was trimmed to remove overbroad words. No general waiver of legal professional privilege was found from the affidavit passages considered; privilege issues are to be addressed when particular documents are identified. Parties to be heard on costs.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
5 cited instruments linked from this judgment.
1,589 words · generated 17/06/2026
This is an interlocutory ruling by Black J in an Equity Division matter concerning a Notice to Produce served by Fortress Credit Corporation (Australia) II Pty Ltd and Fortress Investment Group (Australia) Pty Limited ("Fortress") on the liquidators of Octaviar entities. The Liquidators (and the companies) sought to set aside specified paragraphs of the Notice dated 13 July 2012. The dispute arose in the context of recovery proceedings under s 588FF of the Corporations Act for alleged voidable transactions (including unfair preferences) and earlier court orders extending limitation periods for such applications (see [3]-[7]).
Fortress sought a range of documents, but the Liquidators challenged paragraphs 1-5, 8 and 12. The central legal questions were: (1) whether the paragraphs "specified" documents sufficiently under UCPR r 34.1; (2) whether the notice improperly sought disclosure that would have required the kind of affidavit justification mandated by Practice Note SC Eq 11; and (3) whether privilege had been waived by the Liquidators' affidavit evidence. Black J set aside paragraphs 1-3 in full, and set aside paragraph 5 insofar as it required production of documents "recording the work thereby finalised" (see [56]). Narrow requests (paragraph 4, management accounts, paragraph 12, ancillary Stella loan documents, and paragraph 8 as narrowed to the dates 18–21 November 2011) were not set aside (see [41]-[44], [49]-[55]).
Three interlocking strands of reasoning determine the result.
Specificity under UCPR r 34.1. The Court emphasised that a notice to produce must "specify" the documents to be produced, in the sense of identifying or describing them so as to cut them out from the universe of documents. The judge invoked earlier authorities to explain that a recipient cannot be put to search for "all documents relating to a particular subject matter" or be required to make nuanced judgments about what 'informed' a state of mind (see [14]-[16]). Where a notice is framed by reference to documents that "informed the state of mind and awareness" or "informed the belief" of a deponent over a long period, it fails the requirement of specification because it requires the producee to make subjective, evaluative calls about whether a document 'informed' a belief (see [25]-[31], [36]-[39]).
Preservation of Practice Note SC Eq 11. The Practice Note requires affidavit justification for disclosure orders in the Equity Division; the Court accepted the thrust of Stevenson J's analysis in Owners Strata that parties ought not be able to evade that regime by using notices to produce in lieu of discovery or disclosure applications. The Court therefore treated wide categorical notices that operate as substitutes for discovery as inappropriate in the absence of affidavit material that Practice Note SC Eq 11 contemplates (see [17]-[19], [28], [34], [39]). That policy underpins the decision to set aside the broad paragraphs.
Privilege and waiver. On waiver, the Court applied established principles from authorities such as Rio Tinto and Ferella: waiver occurs if a party's case puts the contents of privileged communications in issue. The mere fact that the deponent claims a particular state of mind, without reliance on the content of legal advice, does not necessarily constitute waiver. Black J found no present justification to find waiver in relation to the paragraphs set aside and preferred that any privilege challenge be considered when specific documents are identified (see [20]-[24], [31], [52]).
Applying these principles: paragraphs seeking documents by reference to matters that 'informed' state of mind or belief (paras 1–3) are overbroad and oppressive and were set aside. Narrowly defined, objectively identifiable documents, such as the management accounts referred to in paragraph 4 and the ancillary loan documents called for in paragraph 12, were permitted because they can be identified without subjective assessment and have legitimate forensic utility in assessing the preliminary merits relevant to extension applications under s 588FF(3)(b) (see [41]-[44], [53]-[55]).
Before this decision the legal landscape governing notices to produce was already shaped by the requirement of specificity and the principle that notices should not operate as discovery; the Court cited Penrith Rugby, Patonga Beach, Norris, Tony Azzi and others (see [15]-[16], [19]). Practice Note SC Eq 11 had recently been introduced as a procedural device to control disclosure in the Equity Division (see [17]-[19]).
This judgment reinforces and applies those pre-existing principles: it affirms that UCPR r 34.1 demands objective specification and that Practice Note SC Eq 11 should not be subverted by broadly framed notices to produce. The decision provides a concrete application of the Practice Note principle: courts will set aside notices that demand evaluative searches or constitute discovery unless an affidavit demonstrates the necessity of disclosure in accordance with the Practice Note (see [18]-[19], [28], [39]).
Paragraph 27: "On one reading ... it requires production of all documents that informed the Liquidators' claimed state of mind ... it seems to me to be manifestly oppressive."
Paragraph 19: "There would be limited utility ... if that process could be avoided by the expedient of identifying categories of documents and requiring their production by notice to produce."
Paragraph 29-31 (reasoning about 'informed the state of mind'): court emphasises the practical difficulty of deciding whether a marginal or disregarded document 'informed' a belief.
Paragraph 56: operative order setting aside paragraphs 1-3 and part of paragraph 5.
This decision will be engaged where a party serves a notice to produce that:
By contrast, requests limited to objectively identifiable documents (specific accounts, named ancillary documents to a particular agreement, short-date-limited correspondence) will survive the attack (see [41]-[44], [49]-[55]).
The judgment itself surveys prior authorities and follows the approach of Owners Strata and other decisions in emphasising the integrity of Practice Note SC Eq 11 and the specificity required by UCPR r 34.1 (see [18]-[19], [15]-[16]). The judgment does not record subsequent appellate treatment or later decisions applying or distinguishing it. Users seeking to know the post-2012 reception of these observations should consult subsequent reported decisions and court practice notes; this judgment provides clear principles likely to be cited in later interlocutory disputes about broad notices to produce in the Equity Division.
Margin between 'refer to' and 'inform': Black J observed that a notice requiring production of documents that 'referred' to specified matters might have been acceptable whereas 'informed' was not (see [30]-[31]). That invites future elaboration about where the line is drawn: is a demand for documents that 'refer to' a matter but span many documents still objectionable if it would impose extensive searches? The judgment signals a preference for objectively identifiable descriptions, but precise boundaries will be fleshed out in future cases.
Interaction with digital documents and metadata searches: The judgment reasons in terms of practical burden and specificity but does not consider modern e-discovery search techniques or stipulated search terms that might render broad-sounding categories workable. Future decisions may explore whether narrow search protocols might save otherwise broad notices without invoking Practice Note SC Eq 11.
Timing and remedy under Practice Note SC Eq 11: Black J recognised the court's power to "otherwise order" under procedural rules and to impose cost sanctions (see [18]). How aggressively courts should use such powers to deter evasive notices to produce, and whether cost penalties or direction to proceed by disclosure application are the appropriate remedy in various factual contexts, remains a matter for later judicial calibration.
Privilege waiver threshold in practice: While the Court reiterates the Rio Tinto principle that waiver requires putting contents of advice in issue, applying that to borderline factual affidavits remains difficult. The judgment leaves open the detailed application of waiver rules where a deponent's account of decision-making mentions consultation with lawyers without invoking content; future cases will develop more granular rules about when such references cross the waiver line.
Practical takeaway for practitioners: craft notices to produce by reference to objectively identifiable documents (names, dates, exhibits, clauses), avoid phrasing that asks for what 'informed' or 'informed the belief' of deponents, and, if seeking broader categories, be prepared to support disclosure by an affidavit complying with Practice Note SC Eq 11. When in doubt about privilege, identify documents and assert privilege specifically so courts can resolve waiver issues over concrete material (see [31], [52]).
Judgment 1The Plaintiffs, Mr William Fletcher and Ms Katherine Barnet as joint and several liquidators ("Liquidators") of Octaviar Ltd (recs and mgrs apptd) (in liq) ("OL") and Octaviar Administration Pty Ltd (in liq) ("OA") and those entities, initially sought orders to set aside a Notice to Produce dated 13 July 2012 ("Notice to Produce") served by Fortress Credit Corporation (Australia) II Pty Ltd and Fortress Investment Group (Australia) Pty Limited (together, "Fortress"). There has since been a significant narrowing of the areas in dispute between the parties, and the only paragraphs of the Notice to Produce now in dispute before me are paragraphs 1-5, 8 and 12. Factual background 2Before turning to the paragraphs of the Notice to Produce that remain in dispute, I should first set out something of the background to the matter. 3Section 588FF of the Corporations Act 2011 (Cth) permits the Court, on the application of the liquidator of a company, to make specified orders if it is satisfied that a transaction is a voidable transaction under s 588FE of the Corporations Act. The voidable transactions specified in s 588FE include unfair preferences (within the meaning of s 588FA of the Corporations Act), uncommercial transactions (within the meaning of s 588FB of the Corporations Act) and insolvent transactions (within the meaning of s 588FC of the Corporations Act). An application for orders under s 588FF of the Corporations Act may only be brought during the period ending on the later of 3 years after the relation-back day or 12 months after the first appointment of a liquidator in respect of the company's winding up, or such longer period as the Court orders on an application brought under s 588FF(3). 4The Liquidators and OL commenced proceedings against Fortress in the Supreme Court of Queensland in April 2010 and an Amended Originating Application and Statement of Claim was filed in March 2011. Those proceedings allege that various transactions involving Fortress constituted unfair preferences. 5On 10 May 2011, the Liquidators and OL sought, and Hammerschlag J made, an order under s 588FF(3)(b) of the Corporations Act that the time for making an application in respect of OL under s 588FF(1) of the Corporations Act be extended to 3 October 2011. An application for such an extension of time was not sought at that point in respect of OA, apparently because the three year period in which claims under s 588FF involving voidable transactions including OA might be made did not expire until 3 October 2011. 6On 19 September 2011, the Liquidators, OL and OA sought orders under s 588FF(3)(b) of the Corporations Act ("Second Extension Application") that the time for the making of applications in respect of OA and OL under s 588FF of the Corporations Act be extended further to 3 April 2012. The Liquidators gave notification of that application to certain parties identified as interested parties or which may have been involved in transactions the subject of the proposed recovery proceedings. It is common ground that no such notification was given to Fortress. Ward J made orders extending the time in which such an application might be made on behalf of OA to 3 April 2012 and varying the order previously made by Hammerschlag J to extend the time in which an application under s 588FF of the Corporations Act might be made on behalf of OL to 3 April 2012. 7On 3 April 2012, the Liquidators, in their capacity as liquidators of OA commenced proceedings in the Supreme Court of Queensland against Fortress. 8By Further Amended Interlocutory Process, Fortress has applied for an order that the orders made by Ward J in respect of the Second Extension Application be varied so as to exclude any application to Fortress or alternatively set aside so far as they apply to Fortress. Fortress has indicated, in its submissions in support of the Notice to Produce, that the issues arising in respect of its application to set aside the extension orders will include, relevantly, the reasons for the Liquidators' failure to give notice of the Second Extension Application to Fortress, including whether the Liquidators believed that Fortress was entitled to be heard on that application and had any basis to believe that a further claim may be brought against Fortress under s 588FF of the Corporations Act and Fortress' prospects of success in the proceedings. 9The Liquidators, OL and OA have also brought an application, which will be heard at the same time as Fortress' application, that their original application for an order under s 588FF(3)(b) of the Corporations Act for an extension of time be reheard as against Fortress and to vary the orders made by Ward J to expressly grant the extension of time in respect of Fortress. Those applications are presently listed for hearing for 3 days on 22-24 October 2012. 10The Liquidators' application for a rehearing and a variation of the orders made by Ward J on the Second Extension Application is supported by affidavits of Ms Katherine Barnet sworn 29 June 2012 ("Ms Barnet's affidavit") and Mr Gordon Lawson also sworn 29 June 2012. Ms Barnet's affidavit sets out the background to the liquidation of the Octaviar Group and to the dealings between the Octaviar Group and Fortress and identifies the matters which are in issue as between the Octaviar Group and Fortress. In brief, it appears that, on or about 29 February 2008, a 65% stake in the Stella Group was sold to a third party and an amount in excess of $189 million was paid directly to Fortress from the proceeds of that sale. A further amount of nearly $20m was transferred to Fortress in late 2008. 11Ms Barnet's evidence is that the Liquidators' initially identified potential claims which could be brought by OL against Fortress under s 588FF of the Corporations Act. Her evidence is that she did not cause Fortress to be notified of the filing of the Second Extension Application because neither she nor Mr Fletcher was aware in September 2011 of any basis upon which OA or the Liquidators might bring proceedings against Fortress seeking orders under s 588FF(1), as distinct from the proceedings which had already been brought by the Liquidators as liquidators of OL. Ms Barnet also gives evidence of reasons why, until November 2011, the Liquidators believed that the funds repaid to Fortress from the Stella sale had been sourced from funds which belonged to OL. She gives evidence of matters which, from November 2011, led the Liquidators to come to doubt the conclusion that the source of funds used to make the various payments to Fortress were funds to which OL was entitled and that the relevant funds may have been funds to which OA had a better entitlement. Ms Barnet also gives evidence of the commencement of proceedings by the Liquidators of OA and OA against Fortress on 3 April 2012. 12On 13 July 2012, Fortress served the Notice to Produce and, on 23 July 2012, the Liquidators, OL and OA filed an application to set it aside. Preliminary issues 13The Notice to Produce was issued under r 34.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") and Mr Hutley SC, who appears with Ms Higgins for Fortress, accepted in the course of submissions that its validity was to be determined under that rule. 14UCPR r 34.1 provides that: "(1) A party may, by notice served on another party, require the other party to produce to the court, or to any examiner: (a) at any hearing in the proceedings or before any such examiner, or (a1) at any time fixed by the court for the return of subpoenas, or (b) by leave of the court, at some other specified time, any specified document or thing. (2) The other party must comply with a notice to produce: (a) by producing the notice or a copy of it, and the document or thing, to the court, or to the examiner authorised to take evidence in the proceeding as permitted by the court, at the date, time and place specified for production, or (b) by delivering or sending the notice or a copy of it, and the document or thing, to the registrar at the address specified for the purpose in the notice, so that they are received not less than 2 clear days before the date specified in the notice for production." 15I will address the question whether particular paragraphs of the Notice to Produce "specify" the documents to be produced for the purposes of this rule below. Fortress acknowledged in its written submissions that a notice to produce under UCPR r 34.1 must specify documents that are relevant to a fact in issue in the proceeding. In Penrith Rugby League Club Ltd v Brown [2004] NSWSC 1182 at [7]-[9], Young CJ in Eq, in considering Pt 23 r 2 of the Supreme Court Rules 1970 (NSW) (as they then stood) observed that: "The word "specific" conjures up the idea of something which is identified and not merely identifiable; see per Sargant LJ in Kursell v Timber Operators & Contractors Ltd [1927] 1 KB 298, 313, 314." 16In Norris v Kandiah [2007] NSWSC 1296 at [3], Brereton J observed that a notice under r 34.1 is a process akin to a subpoena for production. In Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 869 at [12], Barrett J observed that the word "specified" in r 34.1 means "described" or "identified", and corresponds to the requirement under r 33 that a subpoena to produce documents "identify" those documents by "cut[ting] the document out from the universe of documents by some description or specification". His Honour referred to the well-known observation of Jordan CJ in Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 573 that it is impermissible that a person be required to search for or produce all documents relating to a particular subject matter, and applied that observation to a notice to produce under r 34.1. His Honour also observed at [15] that: "the recipient of a subpoena or r 34.1 notice to produce must not be put into a position of having to judge the legal effect of a document or its capacity to prove something. Thus, it is impermissible to require the production of, for example, any document proving or tending to prove that X was in Sydney at any time on 1 January 2009." His Honour also observed (at [20]) that the recipient of a notice to produce under r 34.1 is required to take the notice as he or she finds it and comply faithfully regardless of views he or she may have about its intended scope or purpose. 17The Liquidators also contend that the Notice to Produce should be set aside because corresponding orders for disclosure would not have been made under Practice Note SC Eq 11 Disclosure in the Equity Division. This Practice Note took effect on 26 March 2012 and provides, relevantly, that there will be no order for disclosure in any proceedings in the Equity Division unless it is necessary for the resolution of the real issues in dispute in the proceedings and any application for an order for disclosure, consensual or otherwise, must be supported by an affidavit setting out specified matters, including the reason why disclosure is necessary for the resolution of the real issues in dispute in the proceedings. The fact that Fortress served the Notice to Produce under UCPR r 34.1 rather than proceeding by an application for discovery meant that no affidavit was then filed setting out the reason why disclosure was necessary nor did the Court have any opportunity to assess that question. Nor has such an affidavit been filed in the application before me. 18As the Liquidators accept, Practice Note SC Eq 11 does not, in terms, apply to notices to produce because such notices do not seek "an order for disclosure of documents". However, in Owners Strata Plan SP 69567 v Baseline Constructions Pty Ltd [2012] NSWSC 502 at [23]-[28], Stevenson J observed that: "It would subvert the intended operation of the Practice Note if parties could avoid its operation by adopting the expedient of serving a Notice to Produce, rather than seeking an order for disclosure. Indeed, if a Notice to Produce was served with the object of avoiding the operation of the Practice Note, such service might well constitute an abuse of the court's process. In any event, in the case of a Notice to Produce served before service of witness statements, the court would readily "otherwise order" under r 21.11 or r 34.10 and relieve the recipient of the Notice to Produce of the obligation to produce unless, conformably, with the requirements of the Practice Note were "exceptional circumstances" established. As McDougall J pointed out in Leighton [International v Hodges [2012] NSWSC 458], the Practice Notice is the latest step taken by the court in its efforts to deal with the burgeoning costs of litigation, particularly so far as concerns the cost of discovery in the digital age (see Leighton at [4]-[7]). Practitioners should assume that the court will not permit the clear object of the Practice Note to be thwarted by the service of Notices to Produce rather than the making of an application for disclosure in accordance with the Practice Note. The court will be ready to "otherwise order", or impose cost sanctions, or make such other orders as are appropriate to discourage any such practice from arising." 19I agree with the views expressed by Stevenson J, and consider the approach to which his Honour referred is necessary to preserve the integrity of Practice Note SC Eq 11 and to address the issues as to the costs of litigation to which McDougall J referred in Leighton, in the passage to which Stevenson J in turn referred. There would be limited utility in the Court seeking to require justification for disclosure, including by identification why disclosure is necessary for the resolution of the real issues in dispute in the proceedings, if that process could be avoided by the expedient of identifying categories of documents and requiring their production by notice to produce. It is also, of course, also well-established that a notice to produce cannot be used as a substitute for discovery and that a notice to produce which seeks discovery constitutes an abuse of process: Tony Azzi Automobiles Pty Ltd v Volvo Car Australia Pty Ltd [2006] NSWSC 283; Fiduciary Ltd v Morningstar Research Pty Ltd [2007] NSWSC 432. 20A further issue arises in respect of several paragraphs in the Notice to Produce as to whether there has been a waiver of legal professional privilege. Fortress contends that any legal advice contemplated by the evidence of Ms Barnet is relevant to a fact in issue in the underlying application, being whether the Liquidators had, at the relevant time, the particular state of mind to which Ms Barnet deposes, and whether that state of mind was reasonable. Fortress contends that waiver of legal professional privilege has occurred because Ms Barnet has put her state of mind, or alternatively the legal advice which the Liquidators have received, in issue by specified paragraphs of her affidavit. The Liquidators respond that Ms Barnet has stated, as a matter of fact, why she did or did not take various steps, and has not put her understanding of the Liquidators or the companies' legal rights in issue. The Liquidators also contend that waiver is not established merely because a party has put his or her state of mind in issue, even if that party acknowledges that legal advice received was relevant to that state of mind. 21Both parties advanced comprehensive submissions as to the question of waiver of legal professional privilege and I will refer to that question below in respect of several paragraphs of the Notice to Produce. I should first make the general observation that s 131A of the Evidence Act 1995 (NSW) has effect that the question of waiver of legal professional privilege is to be determined under s 122 of the Evidence Act: Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia [2009] NSWSC 225; (2009) 74 NSWLR 469; per White J at [5]; Singtel Optus Pty Ltd v Weston [2011] NSWSC 1083 per White J at [24]-[29]; TransGrid v Members of Lloyd's Syndicate 3210 [2011] NSWSC 301. That section provides, relevantly, that Pt 3.10 Div 1 of the Evidence Act (dealing with client legal privilege) does not prevent the adducing of evidence if the client has acted in a way that is inconsistent with it objecting to the adducing of the evidence because it would result in a disclosure of the privileged communication. 22In Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; (2006) 151 FCR 341 at 361, [52], the Full Court of the Federal Court noted (at [68]) that the question of waiver of privilege depended on whether a party had: "made an assertion as part of his case that puts the contents of the privileged scheduled documents in issue, or necessarily lays them open to scrutiny, with the consequence that an inconsistency arises between the making of the assertion and the maintenance of the privilege." In Ferella v Official Trustee in Bankruptcy [2010] FCA 766; (2010) 188 FCR 68 at [65]-[66] Yates J referred to that decision and observed that: "... the question is not simply whether the holder of the privilege has put that person's state of mind in issue but whether that person has directly or indirectly put the contents of the otherwise privileged communication in issue: see [Rio Tinto] at [65]. Indeed, even the fact that the holder of the privilege makes clear that the advice was relevant or contributed to a particular course of conduct would not be sufficient to waive the privilege unless, possibly, the contents of the legal advice (and not merely the fact of the advice) are specifically put in issue by relying on the contents of the advice to vindicate a claimed state of mind: [Rio Tinto] at [67]." 23In Re Idoport Pty Ltd (in liq) (recs apptd) [2012] NSWSC 58 at [125]-[126] Ward J observed that a mere reference to a decision having been made after consultation with lawyers would not amount to a disclosure of the contents of that advice and noted that: "It is submitted that since the NAB Parties have made no express assertion about the content of any legal communications or the terms of any legal communications and do not plead that the obtaining of legal advice was a matter which was in any way relevant to the refusal to provide consent, the present application must fail unless it can be shown that the NAB Parties have in some way, by implication or indirectly, made assertions about the contents of privileged communications. I agree." It will be noted that her Honour expressly agreed with the contention that an application, based on waiver of legal professional privilege, must fail unless it could be shown that the relevant parties had, by implication or indirectly, made assertions about the contents of privileged communications. 24The present case falls short of several cases where a waiver of legal professional privilege has not been found, although there has been a reference to legal advice without disclosure of its content, because Ms Barnet does not refer to any legal advice received by the Liquidators. Paragraph 1 of the Notice to Produce 25Paragraph 1 of the Notice to Produce calls for: "All documents, including legal or other advices, memoranda or notes, which informed the state of mind and awareness of Ms Barnet and/or Mr Fletcher, on or before 8 September 2011, as to the basis, if any, upon which proceedings might be brought by the Liquidators, as Liquidators of OA, against [Fortress], as referred to at paragraph 86(b) of the Barnet Affidavit." 26Paragraph 86(b) of Ms Barnet's affidavit relevantly stated that: "... insofar as the application sought orders on behalf of OA, at that time, neither Mr Fletcher nor I was aware of any basis upon which OA or the Liquidators might bring proceedings against [Fortress] seeking orders under s 588FF(1)." 27In my view, this paragraph of the Notice to Produce does not specify the documents required to be produced for the purposes of UCPR r 34.1 or alternatively is oppressive. On one reading of this paragraph, the phrase "proceedings might be brought by the Liquidators ... as referred to at paragraph 86(b) of the Barnet Affidavit" refers to the proceedings under s 588FF of the Corporations Act to which Ms Barnet refers, and the reference to "the basis, if any" upon which those proceedings might be brought extends to the lack of basis for such proceedings. On this reading of the paragraph, it requires production of all documents that informed the Liquidators' claimed state of mind that they were not aware of a basis on which OA or the Liquidators might bring such proceedings. On that reading of the paragraph, it seems to me to be manifestly oppressive, because all legal advices as to potentially relevant matters that did not refer to such a claim would potentially inform the Liquidators' lack of awareness of a basis for that claim. 28Another reading of that paragraph, which Mr Hutley adopted in submissions, is that the phrase "proceedings might be brought by the Liquidators ... as referred to at paragraph 86(b) of the Barnet Affidavit" in that paragraph does not refer to the proceedings under s 588FF of the Corporations Act to which Ms Barnet refers, but instead to any proceedings of any kind against Fortress. This reading of the paragraph does not seem to give effect to the words "as referred to at paragraph 86(b) of the Barnet Affidavit" in the paragraph. However, if the paragraph were to be read in this way, it would then have a width and involve judgments which are characteristic of discovery, and I consider it should then be set aside for the reasons noted by Stevenson J in Owners Strata Plan SP 69567 v Baseline Constructions Pty Ltd, since Fortress has not led the evidence contemplated by Practice Note SC Eq 11 in the application before me. 29There is also, in my view, a further difficulty with this paragraph of the Notice to Produce. The recipient of a notice to produce may be required to identify whether documents refer to a specified matter, or are dated or received within a specified period, which are both objective determinations which, when conscientiously made, will allow the recipient of the notice to produce to be comfortably satisfied that he or she has complied with it. By contrast, the concept of "informed the state of mind and awareness" does not, in my view, identify particular documents. For example, the recipient of the Notice to Produce would face real difficulty in knowing whether he or she was required to produce, for example, a document which had been read but disregarded or treated as irrelevant or marginally relevant, since it would be unclear whether such a document should properly be said to have "informed" his or her state of mind and awareness. 30For these reasons, I consider this paragraph of the Notice to Produce should be set aside. In expressing this view, I express no view as to whether it would, for example, have been open to Fortress to serve a notice to produce that had simply required production of documents which "referred" to the specified matters. 31Because this paragraph will be set aside, it is not necessary for me to determine the question of waiver of legal professional privilege in respect of any legal advices which might have fallen within the scope of the paragraph. However, I should add that I am presently unable to see how Ms Barnet, in stating that she was not aware of a basis on which proceedings could be brought under s 588FF of the Corporations Act against Fortress at a point in time, without any reference to legal advice, could have been held to have waived legal professional privilege in respect of advices as to proceedings against Fortress generally. Paragraph 2 of the Notice to Produce 32This paragraph requires production of: "All documents, including legal or other advices, memoranda or notes, which informed the state of mind of Ms Barnett and/or Mr Fletcher, on or before 19 September 2011, as to any potential basis on which Mr Fletcher and/or [Ms] Barnet, as Liquidators of OA, might apply to the Court for orders under s 588FF(1) of the Corporations Act 2001 (Cth) against [Fortress] as referred to at paragraph 87 of the Barnet affidavit." 33Paragraph 87 of Ms Barnet's affidavit in turn provides that: "I had no reason not to notify [Fortress] other than the two reasons stated above. If I had had any idea that there might be a potential basis upon which Mr Fletcher and I as Liquidators of OA might apply to the Court for orders under s 588FF(1) against [Fortress] I would have caused [Fortress] to be notified of the Second Extension Application." The "two reasons" referred to are that there had been no change in the position in respect of claims by OL and the asserted lack of knowledge of a basis for a claim by OA, to which I have referred above. As I understand this paragraph of Ms Barnet's affidavit, Ms Barnet is indicating what she would have done if she had been aware of a matter which she contends, in paragraph 86(b) of her affidavit, that she and Mr Fletcher were not aware of. 34I note that this paragraph of the Notice to Produce is expressly limited to documents relating to an application to the Court for orders under s 588FF(1) of the Corporations Act. Nonetheless, this paragraph also has two of the difficulties which I have identified above in respect of paragraph 1 of the Notice to Produce. First, the concept of "informed the state of mind and awareness" again does not, in my view, identify particular documents. Second, the paragraph again has a width and involves judgments which are characteristic of discovery, and should be set aside for the reasons noted by Stevenson J in Owners Strata Plan SP 69567 v Baseline Constructions Pty Ltd, where Fortress has not led the evidence contemplated by Practice Note SC Eq 11 in the application before me. In my view, this paragraph of the Notice to Produce should also be set aside. 35Because this paragraph will be set aside, it is again not necessary for me to determine the question of waiver of legal professional privilege in respect of any legal advices which might have fallen within the scope of the paragraph. However, I should add that I am presently unable to see how Ms Barnet, in indicating what she would have been done had she been aware of a matter which she says she was not aware of, without any reference to legal advice, could have been held to have waived legal professional privilege in respect of legal advices. Paragraph 3 of the Notice to Produce 36This paragraph calls for production of: "All documents, including legal or other advices, memoranda or notes, which informed the belief of Ms Barnet and/or Mr Fletcher, at the time the Statement of Claim was filed in the OL proceedings, that the source of the payments to Fortress which are now sought to be recovered on behalf of OL, was funds belonging to OL, as referred to at paragraph 97 of the Barnet affidavit." 37Paragraph 97 of Ms Barnet's affidavit indicates her belief, at the time the Statement of Claim was filed in the OL proceedings and until November 2011, that the source of payments to Fortress "which are now sought to be recovered on behalf of OL" was funds belonging to OL. It is unclear whether this sentence is in fact intended to refer to funds sought to be recovered on behalf of OL, or to the funds now sought to be recovered on behalf of OA which are the subject of the further proceedings commenced in the Supreme Court of Queensland. That paragraph of Ms Barnet's affidavit sets out "some of the reasons" for that belief in six sub-paragraphs. Mr Hutley points out, correctly, that the language "some of the reasons" for that belief indicates that not all of those reasons are identified. One possible explanation for that approach is that Ms Barnet has chosen not to deploy legal advice in support of her view so as to seek to avoid a waiver of legal professional privilege in that advice. 38In my view, this paragraph of the Notice to Produce does not specify the documents required to be produced. In order to comply with the requirement to produce documents which "inform the belief" of the Liquidators at the time the Statement of Claim was filed in the OL proceedings as to the relevant matter, the Liquidators would have to engage in an exercise of identifying the documents over the substantial period of the liquidation prior to that time, that had given rise to the conclusion that the source of payments to Fortress was funds belonging to OL. This is, in my view, a different exercise in kind from that of identifying, for example, documents that refer to a particular matter. It raises the same difficulty as to how, for example, documents that may be of marginal relevance should be treated. I would set aside the paragraph on that basis. 39In my view, the width of this paragraph and the evaluative judgments which would be required in responding to it are also characteristic of discovery. I would therefore also set aside the paragraph on the basis that requiring production of such documents, without any attempt to provide the affidavit evidence in support contemplated by Practice Note SC Eq 11, is inappropriate for the reasons noted by Stevenson J in Owners Strata Plan SP 69567 v Baseline Constructions Pty Ltd above. 40Again, I say nothing as to the position had the Notice to Produce adopted the approach of requiring production of documents over a specified time period referring to whether the source of the payments to Fortress was funds belonging to OL. Paragraph 4 of the Notice to Produce 41This paragraph of the Notice to Produce requires production of: "The management accounts of the Octaviar Group as at 31 May 2008 as described at paragraphs 88 and 216 of the affidavit of David Anderson sworn on 6 July 2008, as referred to at paragraph 97(c) and exhibited at Tab 74, of the Barnet Affidavit." 42Paragraph 97(c) of Ms Barnet's affidavit in turn identifies, as one of the reasons for her belief (at the time the Statement of Claim was filed in the OL proceedings) that the source of payments to Fortress was funds belonging to OL, that Mr Anderson gave evidence in the specified affidavit in the winding up proceedings that OL had an entitlement to a portion of the Stella proceeds, based on "internal financial documents created by [Mr Anderson] or those in his finance team". Ms Barnet in turn attaches Mr Anderson's affidavit at Tab 74 of her affidavit and refers to paragraphs 88 and 216 of that affidavit. Those parts of Mr Anderson's affidavit were in turn tendered before me (Ex A3). Paragraph 88 of that affidavit summarises the financial position of the Octaviar Group as at 31 May 2008 based on the management accounts of the Group as at that date after certain adjustments. Paragraph 216 of that affidavit estimates the Octaviar Group's assets based on the management accounts as at 31 May 2008, taking into account material transactions that occurred in June 2008. The relevant management accounts are not annexed or exhibited to Mr Anderson's affidavit or to Ms Barnet's affidavit. 43In its written submissions, Fortress contended that the existence and availability to the Liquidators of those documents informed, or should have informed, the Liquidators' state of mind as at the date of the Second Extension Application, when determining whether to notify the Fortress entities of that application. In oral submissions, Mr Hutley submitted that Fortress also seeks production of the management accounts described in Mr Anderson's affidavit because it wishes to contend, in response to the Liquidators' application to reinstate the extension of time granted by Ward J if it would otherwise be set aside, that the proceedings brought by OA against it have little or no prospect of success. A preliminary review of the merits of foreshadowed proceedings is a matter which may be relevant in an application for an extension of time under s 588FF(3)(b) of the Corporations Act, although it may not always be necessary: New Cap Reinsurance Corporation Ltd (in liq) v Reaseguros Alianza SA [2004] NSWSC 787. 44In my view, this paragraph of the Notice to Produce is a narrow category and raises no issue as to the use of a notice to produce in substitution for discovery; the purpose for which Fortress seeks to use this document is a legitimate forensic purpose; and there is no suggestion that a requirement to produce the document is oppressive where, as Mr Hutley points out, the Liquidators are either able to identify it or they are not. One of the Liquidators' staff, Mr Whittle, has given evidence estimating that the time involved in locating and collating the documents falling within paragraph 4 of the Notice to Produce would be only 5 hours. Accordingly, I would not set aside this paragraph of the Notice to Produce. Paragraph 5 of the Notice to Produce 45This paragraph of the Notice to Produce requires production of: "All documents evidencing or recording the plans of the Liquidators and Henry Davis York to finalise work on all potential voidable transactions and claims against Fortress in advance of the mediation, including documents recording the work thereby finalised, as referred to at paragraph 101 of the Barnet affidavit." 46Paragraphs 99-100 of Ms Barnet's affidavit refer to arrangements for a mediation between Fortress, OL and its liquidators scheduled for November 2012 and paragraph 101 of that affidavit refers to the fact that "the Liquidators and HDY plan to finalise work on all potential voidable transactions and claims against Fortress in advance of the mediation". 47The formulation of paragraph 5 of the Notice to Produce is in orthodox form, since it should readily be possible for the Liquidators' to determine whether particular documents evidence or record the relevant plans to finalise work. In my view, the requirement for production of such plans has a legitimate forensic purpose, since the fact that such plans included work on voidable transaction claims against Fortress might advance Fortress' position in its application to set aside the extensions of time as against it. 48However, I consider that the language of extension "including documents recording the work thereby finalised" does not specify the documents to be produced so far as it requires judgments as to whether work related, whether wholly or partly, to the subject matter of voidable transactions and claims against Fortress. Mr Hutley noted, in submissions, that it was open to the Court to delete the words "including documents recording the work thereby finalised" if it considered it appropriate to do so; Mr Coles, who appeared with Mr Dowdy for the Liquidators, did not specifically oppose that course, and I will take that course. Accordingly, I will not set aside paragraph 5 of the Notice to Produce in its entirety, but will set aside that paragraph so far as it is extended by the words "including documents recording the work thereby finalised". Paragraph 8 of the Notice to Produce 49This paragraph calls for production of: "All correspondence between the Liquidators and/or Henry Davis York and the members of the OA Committee, referred to at paragraph 103 of the Barnet Affidavit, in relation to the following matters: (a) the holding of an OA Committee meeting on or about 21 November 2011; (b) the mediation with Fortress that was scheduled to take place on 23 November 2011; and (c) that it would be "inappropriate to proceed with the mediation with Fortress at that time, given Fortress' express desire to settle all matters between them and all Octaviar entities to which [the Liquidators] were appointed as liquidators, and the real possibility that the information now uncovered may disclose additional or different claims against Fortress". 50Paragraph 103 of Ms Barnet's affidavit in turn refers to investigations undertaken by the Liquidators as to whether the funds used to make payments to Fortress belong to OL or OA; the Liquidators having come to the view that there was reason to doubt the conclusion that the source of funds used to make those payments were funds to which OL was entitled; and the Liquidators having formed the view, in consultation with their solicitors, that it would be necessary to inform the OA Committee of Inspection that they considered it inappropriate to proceed with a mediation with Fortress at that time, having regard to Fortress' position referred to in paragraph 8(c) of the Notice to Produce. 51During the course of submissions, Mr Coles pointed out that paragraph 8(b) of the Notice to Produce, as presently formulated, would extend to any correspondence between the Liquidators and/or Henry Davis York on the one hand and the members of the OA Committee, on the other, in respect of the issues to be addressed at the mediation or the tactics for that mediation over an extended period. Mr Hutley indicated, in submissions, that that was not the intention of the paragraph and proposed the introduction of the words "between 18 and 21 November 2011" after the words the "OA Committee" in the introductory part of the paragraph so as to limit that paragraph to the time period addressed in paragraph 103 of Ms Barnet's affidavit. I will proceed on the basis that that paragraph should be approached as limited in that manner. 52I do not consider that any basis has been established to set aside this paragraph of the Notice to Produce when limited in this manner. I consider that the question of waiver of legal professional privilege in respect of documents falling within this paragraph of the Notice to Produce would better be addressed, not in the abstract, but when the nature of any such documents and the basis of any claim to legal professional privilege over them has been identified by the Liquidators in asserting such a claim. Paragraph 12 of the Notice to Produce 53This paragraph of the Notice to Produce requires production of: "In respect of the OA Stella Loan Agreements referred to at paragraphs 105 and 106 of the Barnet Affidavit, all documents ancillary to the OA Stella Loan Agreements, including but not limited to: (a) pursuant to clause 2 of the Loan Agreement between OA and Stella Group Holdings identified and described at paragraph 105(d) of the Barnet Affidavit, written notice from Stella Group Holdings Pty Limited to OA of the amount advanced under that Loan Agreement; and (b) pursuant to clause 2.1 of the Share Sale and Purchase Agreement dated 28 June 2007 between Stella Group Holdings Pty Limited and MFS Limited, written notice of the purchase price determination received by the buyer from the seller pursuant to the Share Sale and Purchase Agreement. The liquidators are not required to produce the Share Sale and Purchase Agreement dated 28 June 2007 between Stella Group Holdings Pty Limited and MFS Limited." 54Paragraphs 105 and 106 of Ms Barnet's affidavit refer to investigations by the Liquidators' staff which led Mr Fletcher and Ms Barnet to the conclusion that the funds used to meet OL's liabilities to Fortress may have been funds to which OA had a better entitlement. The OA Stella Loan Agreements in turn provide for OA to loan a sum for the purchase of two entities, with the purchase price being determined by the Chief Financial Officer of OL. I do not understand the Liquidators to take any point that there is difficulty in identifying the documents "ancillary" to the OA Stella Loan Agreements. Mr Whittle's evidence appears to assume that such documents are identifiable, although it will take some time to identify them, in estimating that the time required to locate and collate the documents falling within this category would be 2 days and 4 hours. 55Mr Hutley noted in submissions that Fortress seeks production of these documents because it wishes to contend that the notices contemplated by the relevant agreements were not given and accordingly that the proceeds brought by OA against it have little or no prospect of success. I have noted above that a preliminary review of the merits of foreshadowed proceedings is a matter which may be relevant in an application for an extension of time under s 588FF(3)(b) of the Corporations Act. In my view, this paragraph of the Notice to Produce is a narrow category and raises no issue as to the use of a notice to produce in substitution for discovery; the purpose for which Fortress seeks to use this document is a legitimate forensic purpose; and there is no suggestion that a requirement to produce the document is oppressive. Accordingly, I would not set aside this paragraph of the Notice to Produce. Orders and costs 56Accordingly, I order that: 1 Paragraphs 1-3 of the notice to produce dated 13 July 2012 ("Notice to Produce") served by Fortress Credit Corporation (Australia) II Pty Limited and Fortress Investment Group (Australia) Pty Limited ("Fortress") be set aside. 2. Paragraph 5 of the Notice to Produce be set aside so far as it includes the words "including documents recording the work thereby finalised". 57I will hear the parties as to costs.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 September 2012
Buzzle Operations Pty Ltd (in liq)
Apple Computer Australia
Paragraphs 1-3 of the Notice to Produce dated 13 July 2012 set aside; Paragraph 5 set aside so far as it includes the words 'including documents recording the work thereby finalised'; parties to be heard as to costs (see [56]-[57]).