Consideration - discovery of documents produced by third parties in other proceedings
7 The word "control" is defined in the Dictionary to the Rules, when referring to a document, as meaning possession, custody or power. It is sufficient for the purpose of giving discovery that a person has documents in his or her possession or custody as one of the partners in a firm of solicitors: e.g. see Turner v Davies [1981] 2 NSWLR 324 at 326B-C, F-G. A bank holding documents in a locked safe deposit box will have custody or control of those documents for the purposes of meeting an obligation to produce those documents under statutory requirements such as s 264 of the Income Tax Assessment Act 1936 (Cth): Federal Commissioner of Taxation v Australia and New Zealand Banking Group Limited (1977) 143 CLR 499 at 519-520 per Gibbs ACJ, 532-533 per Mason J, with whom Jacobs J and Murphy J agreed at 541 and 547 respectively. Mason J pointed out, by reference to the definition of "custody" in the Shorter Oxford English Dictionary as "Safe keeping, protection; charge, care, guardianship", that the fact that the bank's customer in that case had a contractual right of access to the contents of the safe deposit box did not alter the legal consequence that, while the deposit box was locked, it was within the bank's premises, so that the bank had custody of those documents. Mason J said the content of the word "control" was somewhat different from "custody" but that both words were "wide enough to include many types of possession which are not commensurate with full ownership", relying on what Rich J had said in Johnston Fear & Kingham & The Offset Printing Company Pty Ltd v Commonwealth (1943) 67 CLR 314 at 324.
8 In Rochfort v Trade Practices Commission (1982) 153 CLR 134 at 145 Mason J, with whom Wilson J agreed at 151 (and see too per Gibbs CJ at 139 and Murphy J at 149), observed that the obligation to produce documents pursuant to a subpoena for production is a qualification upon, or an intrusion into, the citizen's rights to keep documents to himself or herself. He said:
In the absence of some compelling reason it is right that the owner of the documents should decide in the first instance whether any of them are caught by the subpoena and that he should bear the responsibility for not producing such of them as are ultimately held to be covered by the subpoena. To acknowledge that the employee's possession is sufficient in itself to sustain an obligation to produce, without reference to his employer, would be to disregard the employer's rights with respect to his documents.
9 There, Mason J (and the other justices) recognised that the owner of documents that are in another's possession ordinarily has a legitimate interest in assessing whether the documents should be produced to the Court and made available to the parties for inspection under its compulsory processes. However, he said that the owner's interests had to yield to the public interest in the efficient administration of justice where the two interests collided.
10 In my opinion, the documents that Swan has retained from Lehman Brothers' discovery and the answers by others to subpoenas in the Wingecarribee proceedings are documents within Swan's control within the meaning of r 20.14(1)(c) and, accordingly, are discoverable by it in these proceedings.
11 Nonetheless, those documents were produced in the other Wingecarribee proceedings under the compulsory processes of the Court and, so far as Swan is concerned, it holds those documents subject to the implied undertaking not to disclose their contents or information in them without the leave of the Court for any other purpose than that for which the documents were originally obtained, namely, the conduct of the Wingecarribee proceedings: Hearne v Street (2008) 235 CLR 125 at 154-155 [96] per Hayne, Heydon and Crennan JJ.
12 The obligation to give discovery in separate proceedings necessarily compels Swan, as a person who has control of the documents, to produce them on discovery by virtue of the ordinary operation of the discovery rules, as Mason CJ (with whom Dawson and McHugh JJ agreed) foreshadowed in Esso Australia Resources Limited v Plowman (1995) 183 CLR 10 at 33, where he said:
No doubt the implied obligation must yield to inconsistent statutory provisions and to the requirements of curial process in other litigation, eg discovery and inspection, but that circumstance is not a reason for denying the existence of the implied obligation.
13 The consequence of Swan's obligation to discover the documents pursuant to r 20.14 is that in the ordinary course, unless the Court otherwise orders, Standard & Poor's will have immediate access to those documents, notwithstanding that, but for the discovery obligation and the circumstances in which Swan obtained the documents, Standard & Poor's would not be able to obtain such access without leave of the Court.
14 Le Miere J discussed the exercise of the discretion to permit inspection of documents produced in a list of documents under the analogue of r 20.32 in Alcoa of Australia Ltd v Apache Energy Ltd [No 6] [2014] WASC 287 at [17]-[22]. He said that the burden was on the party seeking inspection to show why he, she or it should have inspection. He explained that the existence of the implied undertaking did not create a privilege entitling a party in Swan's position to resist discovering or producing such documents for inspection. However, he said that the discretion to permit inspection would be exercised having regard to whether or not production was necessary for disposing fairly of, or for saving costs in, the subsequent or other proceeding. His Honour said ([2014] WASC at [20]-[21]):
The discovery and inspection process facilitates fairness to both sides, playing 'with all the cards face up on the table', clarifying the issues between the parties, reducing surprises at trial and encouraging settlement. Production of relevant documents for inspection should be ordered unless there is some countervailing disadvantage.
… It is in general wrong that a party who is compelled by law to produce documents for the purpose of particular proceedings should be in peril of having those documents used by the other party for some purpose other than the purpose of the particular legal proceedings and, in particular, that they should be made available to third parties who might use them to the detriment of the party who has produced them on discovery. It has been said that the implied obligation is a matter of justice and fairness, to ensure that a person's privacy and confidentiality are not invaded more than is necessary for the purposes of justice: Taylor v Serious Fraud Squad [1999] 2 AC 177, 210.
15 Here, Lehman Brothers has indicated that it does not object to Swan producing the documents that it discovered in the Wingecarribee proceedings or to those documents being inspected by Standard & Poor's. However, Lehman Brothers limited its acquiescence to the discovery and inspection of documents in Swan's control to those documents that relate discretely to Swan's case, and has not acquiescenced to discovery to or inspection by Swan on the wider basis sought by Standard & Poor's. Moreover, inquiries that the applicants have made of other persons who produced documents in answer to subpoenas in the Wingecarribee proceedings elicited a variety of responses, ranging from consent to subpoenaed documents being made available to Standard & Poor's for inspection, to resistance to that course.
16 In my opinion, the Court must be careful to ensure that the purpose for which the implied undertaking exists is not circumvented in a way that could cause prejudice to a third party who had produced documents under a compulsory process in different proceedings merely because a party to those different proceedings becomes compellable to produce those documents on discovery in them. There may be reasons why that third party could or would seek to have other parties in the present litigation prevented from having access, or having access conditioned on certain restricted bases, of which the parties and the Court would be ignorant unless that third party had the opportunity of being heard. Here, third parties should have such an opportunity to advance whatever interests they may have in restricting the exercise by Standard & Poor's of any right of inspection under r 20.32 in respect of documents produced under compulsion in the Wingecarribee proceedings.
17 The purposes for which the Court imposes the implied undertaking on parties is to advance the administration of justice. That purpose might be inadvertently, or otherwise, frustrated if the Court were not mindful that the obligation that a person may have had to produce documents in its possession, custody or power in other proceedings may also involve the revelation in different proceedings of documents the subject of the implied undertaking to persons whom the party who originally produced the documents never understood or intended could have access to them.
18 For these reasons, I am of opinion that, once the list of documents has been served by Swan, Standard & Poor's should identify any discovered document of any third party who has not given consent to its inspection that it seeks to inspect, notify each such third party of its wish to do so, and give the third party notice that it (Standard & Poor's) will make an interlocutory application in these proceedings for access to those documents. The notice should indicate that the interlocutory application would be made, with the possibility that it may be at the third party's risk as to costs, if satisfactory arrangements were not able to be made relating to any appropriate reason why any such document should not be inspected, or to any limitation that should be imposed on who may inspect the document, or the degree to which it may be disclosed to Standard & Poor's or other persons for the purposes of these proceedings.