Commercial Freight and Logistics Pty Ltd v Zhao

6. Documents recording any guarantees or indemnities (other than the Guarantee the subject of these proceedings) given by either Mr Kostura or Ms Zhao for on behalf of Sharvain Facades to a third party, including but not limited to:

a. Adapt-A-Lift Group Pty Ltd;

b. Australian Access Hire Pty Ltd;

c. Doyle Bros Pty Ltd;

d. Extal Aluminium Pty Ltd;

e. Franbridge Distributors;

f. KFC Roofing Supplies Pty Ltd;

g. Outrite Hire and Sales;

h. PKKP Alfasi Pty Ltd;

i. Sika Australia Pty Limited;

j. Specialised Stud Systems Pty Ltd;

k. WANT ACCESS MAJOR PROJECTS;

l. Want Access Pty Ltd; and

m. Waverley Forklifts Sales Pty Ltd.

3. This judgment resolves the issue of discovery in relation to Category 6.

4. The parties should be commended for their pragmatic approach in limiting their disagreement and agreeing to dealing with this issue on the papers with submissions of only 1 page.

Background

5. To determine the dispute, it is necessary to set out a little detail as to the background facts and the disputed issues in the proceedings.

6. In these proceedings, CFL seeks a declaration that the First and Third Defendants have each given CFL an equitable charge over their respective interests in real estate to secure Sharvain Facades Pty Limited’s (Sharvain Facades) performance of its obligations under a credit facility for freight services CFL provided to Sharvain Facades.

7. The First and Third Defendants were directors of Sharvain Facades.

8. Sharvain Facades was incorporated on 28 September 2005 and an administrator was appointed on 4 March 2025.

9. CFL claims that Sharvain Facades was indebted to CFL in an amount above $1.4m as at the date it went into administration.

10. On or about 29 August 2022:

11. the First Defendant signed the credit facility and a personal guarantee;

12. the Third Defendant was overseas;

13. the Third Defendant authorised an employee of Sharvain Facades, David Clear (Mr Clear), to sign documents for him;

14. Mr Clear signed the credit facility and the personal guarantee for the Third Defendant.

15. The First Defendant has given evidence in these proceedings that Mr Clear requested that she sign the credit application, but that at the time she signed she was not informed of the personal guarantee and did not notice it when she signed it.

16. The First Defendant has also given evidence that when the Third Defendant returned from overseas, the Third Defendant said to the First Defendant, “We are not giving [CFL] our personal guarantees. That was never discussed with CFL, and I didn’t notice it when I was travelling”, to which the First Defendant responded, “Definitely, we do not want to provide personal guarantees. You need to fix this with Richard.”.

17. “Richard” refers to Richard Wilson (Mr Wilson), the relevant person at CFL who received the signed credit application and personal guarantees on about 29 August 2022.

18. The Third Defendant then, according to his evidence, had a conversation with Mr Wilson informing him that the personal guarantee would be “deleted”. The Third Defendant then sent an email to Mr Wilson with the signed credit application but which deleted the personal guarantees the First Defendant signed and the one that Mr Clear signed for the Third Defendant. A copy of the email and the relevant attachment is annexed to the Third Defendant’s affidavit of 8 July 2025.

19. Mr Wilson denies the conversation and denies receiving any email transmission purporting to delete or withdraw the personal guarantees.

20. The First and Third Defendants contend that they did not, therefore, give any personal guarantees. The issues in the proceedings are not otherwise defined by pleadings as the proceedings were commenced by Summons.

Legal principles

17. The relevant principles are not in dispute.

18. The Court has the power to order discovery pursuant to r 21.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). Importantly, r 21.2(4) provides that “[a]n order for discovery may not be made in respect of a document unless the document is relevant to a fact in issue.”.

19. The definition for “relevant to a fact in issue” for the purpose of discovery is provided in r 21.1(2) of the UCPR as follows:

(2) For the purposes of this Division, a document or matter is to be taken to be relevant to a fact in issue if it could, or contains material that could, rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or matter would be admissible in evidence.

20. Practice Note SC Eq 11 provides further guidance on disclosure and relevantly provides at [5] that “[t]here 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.”.

Submissions

21. CFL submits that the documents recording any personal guarantees given by either the First or Third Defendants to third parties are relevant. CFL submits that if the First and Third Defendants had a practice to give personal guarantees for Sharvain Facades, then Category 6 is relevant to the decision to give the personal guarantees on 29 August 2022.

22. In regard to the First Defendant, CFL submits that if the First Defendant had a practice of giving personal guarantees, then Category 6 is relevant to an assessment of whether the First Defendant noticed the personal guarantee when she signed it.

23. In regard to the Third Defendant, CFL submits that if the Third Defendant has given personal guarantees, then Category 6 is relevant to:

24. whether the Third Defendant and the First Defendant had the conversation after the Third Defendant returned from overseas about not giving CFL any personal guarantees;

25. whether the Third Defendant had a conversation with Mr Wilson about “deleting” the personal guarantees;

26. whether the Third Defendant decided and in fact sent to CFL an email transmission deleting the personal guarantees.

27. The defendants submit that Category 6 seeks discovery of documents that do not relate to any matter in issue and would require discovery of a potentially very large number of documents (some dating back more than 19 years) of no relevance.

28. The defendants submit that making all due enquiry would be burdensome and oppressive. Accordingly, the defendants propose to limit the period of time in Category 6 by adding the words “during the Period” to the end of Category 6. The Period is defined as “26 August 2022 to 20 September 2022 inclusive”.

29. Further, the defendants take issue at Category 6 not being limited to any particular third parties. The list at (a) to (m) is inclusive but Category 6 is not limited to guarantees or indemnities given to these parties. The defendants submit that they would be forced to review all commercial relationships entered into throughout the period of trading by the company, to determine if and when any guarantee or indemnity was given, of any type.

30. Finally, the defendants submit that Category 6 is not limited to any type of guarantee or indemnity and extends to guarantees and indemnities which are irrelevant to matters in issue.

Consideration

28. I do not accept that Category 6 as currently drafted is necessary to a resolution of the issues in dispute.

29. Category 6 is cast far too widely. It covers a period of 19 years since the incorporation of Sharvain Facades. It is directed at guarantees and indemnities provided to all third parties in those 19 years. It covers all forms of guarantees and indemnities, not just the type of guarantee relevant in this proceeding.

30. A narrower category should be discovered.

31. The narrower category should firstly be limited as to time. In my view, a limitation of “during the Period” is too narrow as it would only cover any guarantees in force in this 1 month period. An appropriate time period, in my view, is any guarantee in force during the period 1 January 2020 to 20 September 2022.

32. The narrower category should also be limited to guarantees of the kind in issue in the present case – being guarantees by either the First or Third Defendants of the debts of Sharvain Facades to a third party.

33. Third, the narrower category should be limited to the entities listed in (a) to (m) of Category 6 rather than this being an inclusive list. In my view this strikes an appropriate balance.

34. I will leave it to the parties to agree to the form of the redrafted category. If there are any difficulties encountered in this regard I will grant liberty to apply and will determine any issue on the papers.

Costs

35. The defendants in their submissions seek an order for payment of their costs by the plaintiff of and incidental to the determination of this issue.

36. The plaintiff has not made any submission on costs.

37. In circumstances where neither party has been completely successful in their position, it is appropriate that I do not make any separate order for the costs of the determination of the issue such that the costs will simply form part of each party’s costs of the proceedings and thus abide any ultimate costs order.

Orders

38. The only order I will make is to grant liberty to apply on 3 days’ notice, setting out the relief sought.

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