Denny v Zimerman

Hatfield v TCN Channel Nine Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69

Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15

Re Geneva Finance Ltd; Quigley (Receiver and Manager Appointed) v Cook [1992] WASC 209; (1992) 7 WAR 496

Marshall v Prescott [2013] NSWCA 152

Morton v Nylex Ltd [2007] NSWSC 562

Mutual Life & Citizens' Assurance Co v Evatt (1968) 122 CLR 556; [1968] HCA 74

O'Connor v O'Connor [2018] NSWCA 214

Oswal v Burrup Fertilisers Pty Ltd [2013] FCAFC 9

Racing New South Wales v Racing Victoria Limited (No 2) [2023] NSWSC 576

Steffen v ANZ Banking Group Ltd [2009] NSWSC 666

von Bernstorff v Balamara Resources Limited [2023] FCA 757

1. This judgment concerns an application for preliminary discovery under r 5.3 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
2. The plaintiff is Anthony Denny (Denny), he is represented by B Katekar SC and N Alroe of counsel. The first defendant is Ilan Zimerman (the solicitor) and the second defendant is Reid & Vesely Solicitors, Partnership (the firm). The defendants are represented by S Scott of counsel.

1. On 27 May 2025, Denny filed an amended summons. It sought the following relief:

"1 Pursuant to r 5.3 of the Uniform Civil Procedure Rules 2005 (NSW), the Plaintiff be granted preliminary discovery (in respect of Mr Ilan Zimerman and Reid & Vesely Solicitors as prospective defendants) of the following documents:

a. Any costs agreement(s) and retainer document(s) from the period of 1 January 2022 to 31 October 2023 (the Retainer(s)), between:

i. Mr Ilan Zimerman and/or Reid & Vesely Solicitors on the one hand; and

ii. On the other hand, any of Anthony Denny, Kirrawee Holdings Australia Pty Ltd; and Kirrawee Development Pty Ltd.

b. Any document recording or evidencing any communications between Mr Zimerman on the one hand, and any of Kirrawee Holdings Australia Pty Ltd; and Kirrawee Development Pty Ltd and Anthony Denny on the other, under or in relation to any Retainer(s) from 1 January 2022 to 30 November 2023.

c. All documents contained in the file maintained by Mr Zimerman in respect of any Retainer(s) in the period from 1 January 2022 to 31 October 2023 including, without limitation, any document recording or referring to:

i. Any debt owed by Kirrawee Development Pty Ltd to Central T Pty Ltd as trustee for the Central Trust;

ii. Any entitlement of Central T Pty Ltd as trustee for the Central Trust to register a mortgage over the property at [XX] The Boulevarde, Kirrawee 2322 NSW;

iii. The conditions precedent to the agreement entitled "Facility Terms - Zagga Investments Pty Ltd relating to [XX] The Boulevarde, Kirrawee NSW 2232" dated 9 October 2023;

iv. Compliance (or non-compliance) with those conditions precedent at the time of the drawdown of that facility.

d. All documents provided by Mr Zimerman to Zagga Investments Pty Ltd or its solicitors upon settlement of the Zagga Facility on 9 October 2023, including all documents so provided to evince compliance with the conditions precedent to that facility.

2 Costs of the application."

1. Part 5 of the UCPR governs preliminary discovery and inspection. Relevantly, it reads as follows:

5.1 Definitions

In this Part -

applicant means an applicant for an order under this Part.

...

5.3 Discovery of documents from prospective defendant

(1) If it appears to the court that -

(a) the applicant may be entitled to make a claim for relief from the court against a person (the prospective defendant) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and

(b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and

(c) inspection of such a document would assist the applicant to make the decision concerned,

the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person's possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief.

(2) An order under this rule with respect to any document held by a corporation may be addressed to any officer or former officer of the corporation.

(3) Unless the court orders otherwise, an application for an order under this rule -

(a) must be supported by an affidavit stating the facts on which the applicant relies and specifying the kinds of documents in respect of which the order is sought, and

(b) must, together with a copy of the supporting affidavit, be served personally on the person to whom it is addressed.

(4) This rule applies, with any necessary modification, where the applicant, being a party to proceedings, wishes to decide whether or not to claim or cross-claim against a person who is not a party to the proceedings.

...

5.7 Privilege

An order under this Part does not operate so as to require the person against whom it is made to produce any privileged document that the person could not be required to produce -

(a) if the applicant had commenced proceedings against that person, or

(b) if that person had otherwise become a party to proceedings to which the applicant is a party, or

(c) if the person had been served with a subpoena for production of the document in proceedings to which the applicant is a party.

...

1. Around May 2022, Denny and then business partner Gavin Duffy (Duffy), created Kirrawee Development Pty Ltd (Development) as a special purpose vehicle for the purpose of undertaking a property development. The development was to be situated at XX The Boulevarde, Kirrawee (the property).
2. The sole shareholder of Development is Kirrawee Holdings Pty Ltd (Holdings) as trustee for Kirrawee Holdings Unit Trust. The two equal shareholders of Holdings are:

(1) Central Kirrawee Pty Ltd, as trustee for Central Kirrawee Trust. Denny is the sole shareholder and director of Kirrawee (Kirrawee); and

(2) Kirrawee Industrial Pty Limited (Industrial). Duffy is the sole director and shareholder of Industrial.

1. Denny is also the director of a company called Central T Pty Ltd (Central T), as trustee for the Central Trust (Central).
2. On 6 July 2022, Development entered into a contract to purchase the property. Denny submits that the defendants were retained to act in connection with the purchase of the property. The defendants submit that there is nothing to suggest that they provided advice in connection with the sale. The contract indicates that Central Real Capital Pty Ltd (Central Real Capital) acted for Development.
3. On or around 9 June 2023, the defendants entered into a written retainer with Development (the retainer). The retainer specifies the scope of work to be performed as:

"Attending to legal work in connection with cancellation of easement at [the property] and registration of new easement for stormwater and attending to and acting on behalf of Kirrawee Development Pty Ltd in the settlement of the purchase of the property and the related conveyancing and Pexa activities."

1. On or about 21 September 2023, Central entered into a loan deed with Holdings and Development, under which Central agreed to make advances to Holdings and Development to assist with the purchase of the property. As at 24 April 2025, Central had advanced $7,543,948.33 to Holdings and Development under this deed (central loan). This reflects an advance of $8,833,269.53 as at 9 October 2023, and the subsequent receipt of numerous GST refunds.
2. The loan deed provided that Holdings' and Development's obligation to repay the funds was to be secured by a mortgage over the property for the benefit of Central, although Central has not exercised its right to register a mortgage over the property.
3. Denny contends that in October 2023, the defendants were engaged in connection with the attainment and negotiation of an additional financial facility for the purposes of the development of the property, which was obtained from Zagga Investments Pty Ltd (Zagga).

1. On 9 October 2023, an agreement (the Zagga facility) was entered into between:

(1) Zagga as lender;

(2) Development as borrower;

(3) Holdings as obligor; and

(4) Denny and Duffy as personal guarantors.

1. The Zagga facility was also settled on 9 October 2023.
2. The Zagga facility relevantly contained the following conditions precedent:

(1) Clause 13.1: evidence that all "Security Interests" existing over [the property] in favour of third parties granted by [Development] or [Holdings] have been or will be discharged; and

(2) Clause 13.4: that all "Financial Indebtedness" of [Development] and [Holdings] other than "Permitted Financial Indebtedness" has been or will be repaid.

1. Below is a diagram illustrating the relationships between Development, Holdings, Central, Zagga, Industrial, and Kirrawee at the date the Zagga facility was signed.
2. 
3. From the time the Zagga facility was drawn down, Development was in default as a consequence of the prior and continuing existence of the central loan at the time the Zagga facility was entered into as well as Central's ongoing entitlement to register a mortgage over the property.
4. On 17 June 2024, Zagga issued Development with a default notice alleging a failure to satisfy the conditions precedent (Zagga default notice).
5. On or about 5 July 2024, Zagga appointed receivers over Development.
6. The receivers over Development are currently Ms Kate Coneely and Mr Rahul Goyal of Cor Cordis.

1. On 18 November 2024, Ms Leith (Denny's solicitor) sent the solicitor a concerns notice of the same date sent on behalf of Denny, Development and Holdings.
2. On 11 December 2024, Ms Leith sent the solicitor an email seeking a response to the concerns notice.
3. On 13 December 2024, the solicitor sent an email to Ms Leith advising that a without prejudice discussion would be arranged with Mr Tim Felstead, a solicitor employed by Central Real Capital on 16 December 2024. This meeting did not occur.
4. On 17 December 2024, the solicitor sent an email to Ms Leith disagreeing with and denying the allegations made in the concerns notice.
5. On 9 January 2025, Ms Leith sent the solicitor an email in relation to the concerns notice, alleging the solicitor breached r 33 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) (ASCR), by speaking to Mr Felstead and obtaining an affidavit from Mr Warwick Kerridge (then CEO of Central Real Capital). She also asked whether a representative of his professional indemnity insurer would attend the without prejudice meeting and requesting a complete copy of "our clients' file" no later than 5pm, Tuesday, 7 January 2025.
6. On 13 January 2025, Ms Leith sent the solicitor a further email to correct a typographical error in her previous email concerning the requested production date and requesting a "complete copy of my clients' file" by 5pm, Friday, 17 January 2025.
7. On 17 January 2025, the solicitor acknowledged receipt of the email and noted that on a without admission basis, LawCover had been notified but did not produce the "clients' file".
8. On 22 January 2025, Ms Leith sent the solicitor an email requesting the lawyer assigned by LawCover to represent the solicitor contact her office and noted that "our clients are entitled to a copy of their file and repeat our request that a copy of the file be provided by no later than 5pm, 23 January 2025".
9. On 19 February 2025, Ms Veitch (of Aubrey Brown Lawyers, Denny's solicitor) sent the solicitor a letter dated 19 February 2025, requesting "a copy of the file that [he held] in relation to our client" by 26 February 2025, noting that if the file was not produced by that date an application under r 5.3 of the UCPR would be made.
10. On 24 March 2025, Ms Veitch sent the solicitor an email attaching four items, three items being the emails dated 9 January 2025, 22 January 2025 and 19 February 2025 and a letter of the same date. The letter was "a final demand for our client's file" by no later than 2pm, Thursday, 27 March 2023 and advised that if they were not provided, a summons seeking preliminary discovery of the following documents would be filed:

"a. Any costs agreement(s) and retainer document(s) from the period of 1 January 2022 to 31 October 2023 (the Retainer(s)), between:

i. Mr Ilan Zimerman and/or Reid & Vesely Solicitors on the one hand; and

ii. On the other hand, any of Anthony Denny, Kirrawee Holdings Australia Pty Ltd; and Kirrawee Development Pty Ltd.

b. Any document recording or evidencing any communications between the solicitor on the one hand, and any of Kirrawee Holdings Australia Pty Ltd; and Kirrawee Development Pty Ltd and Anthony Denny on the other, under or in relation to any Retainer(s) from 1 January 2022 to 30 November 2023.

c. All documents contained in the file maintained by the solicitor in respect of any Retainer(s) in the period from 1 January 2022 to 31 October 2023 including, without limitation, any document recording or referring to:

i. Any debt owed by Kirrawee Development Pty Ltd to Central T Pty Ltd as trustee for the Central Trust;

ii. Any entitlement of Central T Pty Ltd as trustee for the Central Trust to register a mortgage over [the property];

iii. The conditions precedent to the agreement entitled "Facility Terms - Zagga Investments Pty Ltd relating to [the property]" dated 9 October 2023; and

iv. Compliance (or non-compliance) with those conditions precedent at the time of the draw-down of that facility."

1. On 27 March 2025, Mr Baron Alder of Moray & Agnew (the defendants' solicitor) sent Ms Leith an email to advise that he acted for the solicitor and was taking instructions in relation to the letter of 24 March 2025.
2. On 31 March 2025, Ms Leith sent Mr Alder an email advising that she held instructions to file the summons seeking production of the material requested in the letter of 24 March 2025, if the documents were not provided by 4pm, 7 April 2025.
3. On 2 April 2025, Ms Leith received an email from Mr Alder providing a response to the letter of 24 March 2025. That email sought clarification of whether Ms Leith had instructions to act for Development. Mr Alder noted that if Ms Leith was not retained by Development, it would be a breach of the solicitor's duty of confidentiality to Development to provide any documents to her. Mr Alder noted the solicitor's instructions that the solicitor did not act for Holdings or Denny.
4. On 24 April 2025, Ms Leith provided Mr Alder the following documents:

(1) letter from Aubrey Brown Lawyers, dated 24 April 2025 seeking his position on whether Denny's application for preliminary discovery would be resisted;

(2) an unsealed copy of the signed summons;

(3) a copy of the affidavit of Denny affirmed 24 April 2025; and

(4) a copy of the affidavit of Ms Leith affirmed 24 April 2025.

1. Later on 24 April 2025, Mr Alder called Ms Leith to clarify whether the documents had been filed. Ms Leith confirmed they had not been filed.
2. On 28 April 2025, Mr Alder was provided with a copy of the exhibit to Denny's affidavit.
3. On 29 April 2025, Mr Alder emailed Ms Leith referring to his earlier email of 2 April 2025 asking about Ms Leith's authority to request Development's files and noting that she had not yet responded to that request.
4. On 30 April 2025, Ms Leith confirmed that she did not act for Development.
5. On 2 May 2025, Ms Leith emailed Mr Alder to advise that she was instructed to file the summons on 5 May 2025, and asking whether the application would be actively resisted.
6. Later on 2 May 2025, Mr Alder emailed Ms Leith to advise that he was awaiting instructions from the solicitor and did not currently hold instructions for the firm. He also noted Ms Leith had only clarified that she did not act for Development on 30 April 2025 despite having requested that the solicitor produce Development's file to her. Mr Alder also enquired whether Ms Leith had informed Development's receivers that Denny was seeking production of the company's file and that it was possible that Development may wish to make a claim for privilege over the files.
7. On 6 May 2025, Ms Leith filed the summons, the affidavit of Anthony Denny dated 24 April 2025 and the affidavit of Sharnie Leith dated 6 May 2025.
8. On 6 May 2025, Ms Veitch sent Mr Alder an email serving the solicitor the summons and supporting affidavits, and asking whether he had instructions to accept service on behalf of the firm. A further email for this purpose was sent on 8 May 2025.
9. On 8 May 2025, Ms Kailasanathan (of Moray & Agney, the defendants' solicitor) sent an email to Ms Leith advising that they held instructions to accept service for the firm, noting that instructions were being sought in relation to the preliminary discovery application. The email sought confirmation that Denny had not taken the following steps to obtain documents in his application for preliminary discovery:

(1) sought access to documents from receivers of Development on the basis that he is a director of that company;

(2) sought access to documents from Holdings or searched that company's records as director and secretary of that company;

(3) searched records of Central Real Capital having the domain name centralreal.com.au as the solicitor instructed that he interacted with the representatives of Central Real Capital for the purposes of the conveyance of the property;

(4) searched his own records; and

(5) whether Denny would provide security for costs and whether Denny intended to file an amended summons.

1. On 16 May 2025, Mr Alder advised Ms Leith that Moray & Agnew had instructions to accept service on behalf of the firm, noted that instructions were being sought in relation to the preliminary discovery application and requested confirmation on whether Denny would provide security for the costs of compliance with the orders being sought.
2. On 23 May 2024, Ms Leith sent Mr Alder a letter of the same date relevantly stating that:

(1) Denny would not be providing security for costs of his application and that security for costs was not ordinarily ordered against an individual;

(2) Denny was undertaking further searches of his personal records and those of Central Real, and that a supplementary affidavit addressing these matters will be filed no later than Monday, 26 May 2025; and

(3) an amended summons would be filed to correct a typographic error (being the elision of paragraph 1(a)(ii)).

1. On 27 May 2025, the amended summons (which included the previously elided paragraph 1(a)(ii)) and a further affidavit of Anthony Denny dated 27 May 2025 were filed.
2. On 19 June 2025, the affidavit of Baron Alder was filed.

Why Denny may be entitled to bring a claim for relief

1. The terms of r 5.3 of the UCPR, and the principles that apply to the exercise of the Court's power to order preliminary discovery under that rule, were recently summarised by Ball J (as his Honour then was) in Racing New South Wales v Racing Victoria Limited (No 2) [2023] NSWSC 576 with reference to authority, including the judgment of the Court of Appeal in O'Connor v O'Connor [2018] NSWCA 214 (Simpson AJA, McColl and Macfarlan JJA agreeing) ('O'Connor').
2. A court is entitled to take into account whether there are other means of obtaining the information: Steffen v ANZ Banking Group [2009] NSWSC 666 at [15].
3. Entitlement to an order for preliminary discovery against a prospective defendant requires satisfaction of the following conditions:

(a) the plaintiffs may be entitled to make a claim for relief against the defendant;

(b) the plaintiffs have made reasonable inquiries to obtain sufficient information to decide whether or not to commence proceedings;

(c) having made those inquiries, the plaintiffs are unable to decide whether or not to commence proceedings;

(d) the defendant may have documents that could assist in determining whether the plaintiffs are entitled to make a claim for relief, and

(e) inspecting those documents would assist the plaintiffs to make their decision.

1. An application may seek orders for preliminary discovery against multiple prospective defendants.

1. When considering whether Denny may be entitled to bring a claim for relief, the question is whether the applicant can demonstrate a reasonable objective basis for the proposed claim. This requirement may be regarded as substantial, but comparatively undemanding, and the rule is to be beneficially construed in the applicant's favour. The applicant need not be able to articulate a potential prime facie case. Any contest to the claimant's ability to satisfy this threshold requirement must not involve an assessment of the merits of any potential claim.
2. The factual basis upon which Denny asserts there is a reasonable objective basis to believe he may have a right of action against either or both of the defendants is set out in the affidavit of Anthony Denny dated 24 April 2025.
3. As a result of the legal services provided by the defendants to Development, Central and Denny, it is possible that the defendants were (or ought to have) been aware of:

(a) Development's outstanding debt to Central;

(b) Central's continuing entitlement to register a mortgage over the property; and

(c) the inconsistency between these positions and the conditions precedent.

1. It is possible that the defendants knew, or ought to have known, that the Zagga facility would go into instant default as a result of the existence of the Central loan and Central's related entitlement to a mortgage over the property. Further, it may have been reasonably foreseeable to the defendants that Denny, Development and/or Holdings would incur financial loss if they were not advised about the inconsistency between the factual position and the conditions precedent.
2. Denny believes that the defendants did not advise Development, Holdings or Denny that instant default would occur. As a result of that default and the appointment of the receivers, Denny has incurred a significant financial loss. While Denny does not independently control Development or Holdings, as a guarantor of the Zagga facility he is exposed to a significant personal liability.
3. In addition to the retainer dated 9 June 2023, there may be a written retainer between the parties that covered the solicitor's work in relation to the Zagga facility and Denny's guarantee. Denny's evidence is that he understood that the solicitor was retained for this purpose.
4. Even if there is no written retainer encompassing the Zagga facility work, there may be an implied retainer between Denny and the solicitor. Whether there is an implied retainer depends on objective facts and circumstances sufficient to establish a tacit agreement to provide legal services. A lawyer's file (including letters and correspondence) and diary notes may prove useful in determining this question, because they can show how the lawyer has referred to or dealt with the claimant.
5. Even if there is no written or implied retainer to which Denny is a party, he may be able to bring a claim based on a negligent misstatement. In Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556; [1968] HCA 74, Barwick CJ said at 572-573.

"It seems to me, therefore, that whenever a person gives information or advice to another, whether that information is actively sought or merely accepted by that other upon a serious matter, and particularly a matter of business, and the relationship of the parties arising out of the circumstances is such that on the one hand the speaker realizes or ought to realize that he is being trusted, particularly if he is thought by the other to have, or to have particular access to, information or to have a capacity or opportunity to exercise judgment or both as to the matter in hand, to give the best of his information or advice as a basis for action on the part of the other party and it is reasonable in the circumstances for the other party to seek or accept and in either case to act upon that information and advice the speaker, choosing to give the information or advice in such circumstances, comes under a duty of care both to utilize with reasonable care the information and sources of information at his disposal and to employ with reasonable care what capacity he has for judgment in relation to the matter and to exercise reasonable care in the expression of what he is prepared to convey by way of information or advice."

1. The plaintiff waived independent legal advice when entering into the guarantee. Denny would not have thought it was necessary to get independent legal advice about his guarantee because he was one of two directors of Development, personally receiving legal advice on the Zagga facility (and related guarantee) from the solicitor. That advice was not independent, because the solicitor was also acting for Development, whose debt Denny had agreed to guarantee.
2. Discovery of the documents sought would provide information about what the solicitor realised or ought to have realised, and whether it was reasonable in the circumstances for Denny to rely on what the solicitor did or did not say.
3. Even if there is no written or implied retainer, Denny may be able to bring a claim based on penumbral duty of care.
4. In Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15 the High Court accepted that a solicitor may acquire a penumbral duty in tort requiring them to take positive steps beyond the scope of the retainer, including steps such as providing advice to a third party, other than the client. While the concept of penumbral duty has not been fully developed, and has been doubted, it remains an open question.
5. In these circumstances, there is reasonable cause to believe that Denny (in his own capacity, or on behalf of Development or Holdings) may possibly have a cause of action against either or both defendants for breach of contract and/or negligence.

1. Denny is not entitled to make a claim against the defendants personally because he does not give evidence that he personally retained the defendants and that is fatal to his claim. Denny's evidence is that he "understand[s]" that the solicitor was retained by an unspecified person to advise Denny and companies associated with him: affidavit of Anthony Denny dated 24 April 2025 at [11]. The assertion that the defendants were retained by some unspecified person is not enough to support an application for preliminary discovery: Hatfield v TCN Channel Nine Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69 at [47]- [49].
2. If Denny retained the defendants, then that is evidence that he can and should be able to give.
3. Denny accepts that he does not know who the proper applicant on this claim for relief is. To the extent that the proper applicant is a company then that company would need to bring this application, or as Denny accepts, he would need to bring an application for leave under s 237 of the Corporations Act 2001 (Cth): affidavit of Anthony Denny dated 24 April 2025 at [27].
4. Denny's solicitor confirmed that she only acted for Denny and had no authority to request Development's file.
5. Central could not bring this application because Denny is the sole director of Central and he does not give evidence that he instructed the defendants to act for Central.
6. To the extent that Denny maintains, in the face of UCPR r 5.3, that Development is entitled to bring a claim against the defendants then this claim would also fail in light of the terms of the retainer between the defendants and Development and the affidavit evidence of Warwick Kerridge, Development's CEO, who instructed the defendants on behalf of Development.
7. The retainer shows that the defendants were retained by Development on or around 9 June 2023 to provide discrete services described as:

"Attending to legal work in connection with cancellation of easement at [the property] and registration of new easement for stormwater and attending to and acting on behalf of Kirrawee Development Pty Ltd in the settlement of the purchase of the property and the related conveyancing and Pexa activities."

1. The defendants' instructions in connection with their retainer came from Kerridge not Denny. Kerridge has sworn an affidavit that he instructed the defendants to act for Development to carry out the conveyancing aspects of the purchase and that he never instructed the defendants to provide legal advice in connection with the loan facility that he plaintiff and others entered into.
2. There is nothing to suggest that the defendants provided advice in connection with the Central loan. That document was prepared by ERA Legal.
3. The solicitor's involvement in the Zagga facility agreement is limited to witnessing Denny's and Duffy's signatures. The solicitor also witnessed Denny's signature on a guarantor certificate.
4. The solicitor managed the conveyancing aspects of the sale of the property including the PEXA settlement. In that regard, he had communications with solicitors involved in the transaction to ensure that funds from Zagga would be available to enable Development to complete the sale.
5. In oral submissions, counsel for the defendants said an implied retainer can arise where the solicitor in question conducts himself in a way that permits the client to rely on that solicitor. There is no evidence that Denny relied on the solicitor, no evidence that the solicitor gave any advice to Denny, and no evidence of any conversations, meetings or discussions between Denny and the solicitor. That is, there is no evidence upon which the Court may be confident that an implied retainer and/or any negligent misstatement, or any penumbral duty of care, could arise (26 August 2025, T15 [25]-[34]).
6. In oral submissions, counsel for the defendants said that the highest that Denny's evidence goes, is that he understands that the solicitor acted for him. Absent from Denny's evidence is any:

(a) instructions that he provided to the solicitor to act for him;

(b) evidence that he signed a retainer;

(c) evidence that a retainer was provided to him by the solicitor;

(d) explanation of where this supposed understanding comes from; and

(e) conversation he had with the solicitor (23 September 2025, T7 [40]-[48]).

1. Denny's position is untenable. Having regard to the vague and haphazard nature of Denny's evidence, a court could not readily determine what party may be entitled to make a claim for relief and against what prospective defendant, consistent with the requirements of UCPR r 5.3. To this end, even Denny acknowledges that he does not know who the proper prospective defendant is.
2. Although UCPR r 5.3 sets a low threshold for establishing that an applicant for preliminary discovery may be entitled to make a claim for relief, a potential claim that is so weak as to be untenable or unarguable will not suffice. In O'Connor, Simpson AJA said at [70] (McColl and Macfarlan JJA agreeing):

"[70] In [Pfizer Island Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 351 ALR 103; [2017] FCAFC 193] the primary judge had rejected an application for preliminary discovery by determining the relative merits of two competing bodies of expert opinion, without cross-examination. That is significantly different from determining whether an undisputed set of facts is or is not within an established legal principle (as is the case here). Nevertheless, the caution expressed by Allsop CJ is apt. It was, in my opinion, only if the appellants' claims of a fiduciary duty based on their asserted entitlement to an equitable right in Diona were so weak as to be untenable or unarguable that they ought to have been dismissed as not supporting a conclusion that they:

'... may have been entitled to make a claim for relief.'

That, in my judgment, is not so. There was a strongly arguable case that the appellants' claims fell within the Brunninghausen principle. The facts were almost indistinguishable."

Reasonable steps already taken by Denny to locate relevant material

1. Denny does not have access to the records held by Development and Holdings, or by the receivers of Development.
2. Denny and their legal representatives have already taken the following steps to locate relevant material:

(a) On or about 9 January, 22 February and 19 February 2025; Denny's legal representatives sent an email to the solicitor requesting a complete copy of the file held by him for Denny. No documents were provided pursuant to those requests.

(b) On 22 May 2025, Denny instructed an employee to conduct searches for certain words in his email accounts, in order to identify documents within the timeframe of 1 January 2022 to 31 October 2023 that fell within the categories of documents sought within the amended summons filed 27 May 2025. The search terms employed were: "Ilan Zimerman", "Reid & Vesely", "Cost Agreement", "Retainer", "Costs disclosure", "Gavin Duffy", "Kirrawee Development" and "Zagga". These searches yielded no retainer agreements from the defendants, and a limited number of other documents falling within category (b) of the documents sought in the amended summons filed 27 May 2025.

1. As at the hearing on 26 August 2025, the above were the only steps taken by Denny to locate relevant material. Denny submitted that these steps constituted reasonable inquiries as required by UCPR r 5.3(1)(a). I rejected this submission and made orders that Denny, within 7 days of those orders, ask the following parties to produce, within 14 days, copies of the documents identified in paragraph 1 of the amended summons that were in their possession, custody or power:

(1) Development;

(2) Holdings;

(3) Kerridge;

(4) Industrial;

(5) Duffy;

(6) the receivers of Development;

(7) HWL Ebsworth Lawyers (who prepared the Zagga facility); and

(8) Zagga.

1. On 29 August 2025, in accordance with the orders, Denny sent letters and emails to the above recipients requesting copies of documents identified in paragraph 1 of the Amended Summons. The following responses were received (per the affidavit of Sharnie Leith dated 17 September 2025):

(1) On 29 August 2025, Kerridge responded to the email stating that he does not have any of the documents requested in his power or control.

(2) On 1 September 2025, Duffy responded to the email enclosing a ZIP folder of documents and a separate PDF document, being a proposed advance to Development by Zagga.

(3) On 10 September 2025, HWL Ebsworth, on behalf of the receivers, responded to the email with a letter which stated, inter alia, that it was unable to produce any documents in response without the written consent of all parties to these proceedings and/or a compulsion by the court.

(4) As of 17 September 2025, there were no further responses from any other recipient.

1. In Ms Leith's affidavit dated 17 September 2025, she said that some of the material received from Duffy suggested that the solicitor was involved in the negotiation of, and provided advice in relation to, the terms of the Zagga facility. Particularly:

(1) On 26 September 2023, the solicitor wrote to Kerridge (who was, at that time, the CEO of Central Real Capital) copying in Duffy, stating that he would finish his review of the Zagga facility documents and that he wished to meet Kerridge on 27 September 2023 to do "a page turn" of the documents.

(2) On 28 September 2023, the solicitor wrote to Ms Jen Burney from HWL Ebsworth Lawyers to confirm his request that condition precedent 5.13 be made a condition subsequent.

(3) On 29 September 2023, the solicitor wrote to Ms Burney from HWL Ebsworth Lawyers, asking her to amend the document make provision of the construction certificate a condition subsequent.

(4) Later on 29 September 2023, Ms Caroline Reilly from HWL Ebsworth Lawyers wrote to the solicitor confirming that this change had been made.

1. These elements of the material received from Duffy are potentially inconsistent with [13(b)] of Mr Alder's affidavit dated 19 June 2025, which provides that the solicitor did not provide advice to Denny or Duffy in respect of the Zagga loan facility.

1. Denny has not taken the appropriate steps to locate sufficient information about any alleged claim.
2. Prior to the orders I made on 26 August 2025 to request documents from various parties, the defendant submitted that reasonable steps had not been taken by Denny to locate relevant material as he has not requested documents from:

(1) Kerridge;

(2) the receivers of Development;

(3) Duffy; nor

(4) HWL Ebsworth Lawyers.

1. Denny has since requested documents from these parties so (1), (3) and (4) above are no longer pressed.
2. Denny has not made adequate searches of his own records. In oral submissions, counsel for the defendants submitted that Denny should have access to the emails of Kerridge, being the former CEO of Development, and certain emails produced by Duffy to which Denny was copied, but has not produced them himself. If Denny were to make such enquiries within his own records, he would find no further relevant material than what has already been produced by Duffy: (23 September 2025, T11 [9]-[13], [42]-[48]).
3. When Denny requested documents from the receivers of Development, it was not pointed out to the receivers that Denny is a director of the company and is prima facie entitled to the records.
4. As a director, Denny has a statutory right of access to the financial records of Development, pursuant to s 290 of the Corporations Act.
5. Further, a director has a common law right to inspect documents of the company: Re Geneva Finance Ltd; Quigley (Receiver and Manager Appointed) v Cook [1992] WASC 209; (1992) 7 WAR 496 ('Re Geneva'); Fox v Gadsden [2003] NSWSC 748 at [23]; von Bernstorff v Balamara Resources Limited [2023] FCA 757 at [29]- [35].
6. The right of access to documents carries with it the right to take copies and a right to engage agents to carry out the inspection: Re Geneva at 507; Oswal v Burrup Fertilisers Pty Ltd [2013] FCAFC 9 at [77].
7. Denny has neither written to the receivers in his capacity as director to request any documents relevant to this application (including any retainer) nor availed himself of the use of s 290 of the Corporations Act. It is no excuse that he has a supposedly hostile relationship with the receivers (per the affidavit of Anthony Denny dated 27 May 2025 at [7]). He could have instructed his solicitors to contact the receivers to request any documents. Nor is it enough for Denny to simply assert that he does not expect the receivers to have the documents that he seeks. Enquiries should have been made before this application was commenced.
8. Lastly, Denny has not conducted searches within the business records of Central T for any records which may indicate that the defendants were retained to act for Central T.

Why Denny requires additional material from the defendants

1. Denny submits that even after having received the material from Duffy, he is still unable to determine if he has a claim against the first and/or second defendant. Documents in the defendants' possession and sought within the amended summons will assist Denny to determine whether to bring a claim, by enabling him to ascertain:

(1) the nature and scope of any retainer(s) entered into, either express or implied, between the solicitor and/or the firm on the one hand; and Development, Central or Denny on the other;

(2) whether a claim for negligent misstatement may be available;

(3) whether a claim for breach of penumbral duty may be available;

(4) whether there is any record of the defendants being aware of Development's debt to Central, and/or Central's entitlement to register a mortgage over the property, at the time the Zagga facility was entered into;

(5) whether there is any record of the defendants turning their mind to the fact that those matters put the Zagga facility into instant default;

(6) whether there is any record of the defendants giving advice to Development, Holdings or Denny about these matters; and

(7) the proper plaintiff/s and/or defendant/s to any claim arising as a result of the above matters.

1. The relevant question is whether the applicant has insufficient information to decide whether to institute proceedings; not merely to establish a cause of action. An applicant may be entitled to preliminary discovery of documents relevant to available defences, or the extent of apprehended breaches, or the likely quantum of damages, as well as of documents which may establish whether there is a cause of action. Morton v Nylex Ltd [2007] NSWSC 562, White J at [33]:

"[33] The onus is on the plaintiffs to make it appear to the Court that, having made reasonable inquiries, they are unable to obtain sufficient information to decide whether or not to commence proceedings against Nylex. The third requirement of r 5.3(1)(a) requires an objective assessment of the information already possessed by the plaintiffs to determine whether that information is sufficient for such a decision to be made. The question is whether the applicant has insufficient information to be able to decide whether to institute proceedings; not merely to establish a cause of action. Hence, an applicant may be entitled to preliminary discovery of documents relevant to available defences, or the extent of apprehended breaches, or the likely quantum of damages, as well as of documents which may establish whether there is a cause of action. However, unless the applicant is lacking something reasonably necessary to make a decision whether to institute proceedings, he or she is not entitled to preliminary discovery. An applicant must disclose what information he or she already has relevant to making such a decision, and identify what information is lacking. Preliminary discovery cannot be used to build up a case which an applicant has already decided, or could decide, to bring (Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd (Lindgren J, Federal Court of Australia, 24 May 1996, unreported); St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147 at 154 [26]; Glencore International AG v Selwyn Mines Ltd (recs and mgrs apptd) [2005] FCA 801; (2005) 223 ALR 238 at 241 [15]; Matrix Film Investment One Pty Ltd v Alameda Films LLC [2006] FCA 591 at [15]- [19], [25])."

1. Additionally, if any claim is to be brought it will be necessary for Denny to identify who the proper plaintiff/s and defendant/s to any potential claim will be. Copies of all Retainer documents entered into by the defendants in respect of Development's purchase of the property and relating to the Zagga facility will assist Denny to identify the proper plaintiff/s and defendant/s in any potential claim.
2. The necessity of identifying the appropriate plaintiff in any potential claim is heightened in light of the fact that at present, Denny is a co-director of Development and Holdings and holds 50% of each entity. If either entity is a necessary plaintiff, Denny may need to bring an application for leave under s 237 of the Corporations Act to bring a derivative suit on their behalf.
3. The documents sought by Denny are likely to be held by the defendants on the basis that they are documents pertaining to professional services which were, or may have been, provided by the defendants. The documents sought by means of the amended summons are documents which a solicitor would, pursuant to r 14 of the ASCR, be required to provide to the client upon completion or termination of the retainer.

1. It is possible that documents falling within the scope of this preliminary discovery application are subject to client legal privilege belonging to Development or Holdings. However, any privilege issues should not be determined abstractly, without reference to the actual documents in question. On this basis, hypothetical questions concerning privilege should not prevent the grant of preliminary discovery.
2. In any case, Denny would likely be entitled to receive any documents subject to privilege that is held by Development or Holdings on the basis that he is a shared holder of that privilege or otherwise has a shared or similar interest with these entities.
3. In relation to joint privilege, where two or more persons join in communicating with a legal advisor for the purpose of retaining their legal services or advice, the privilege inherent to those communications belongs to all the persons who joined in seeking the service or obtaining the advice. The privilege is "a joint privilege". Per Sheller JA in Farrow Mortgage Services Pty Ltd (in liq) v Webb [1996] NSWSC 259; (1999) 39 NSWLR 601 at 608-609, this also applies where "one of a group of persons in a formal legal relationship communicates with a legal adviser about a matter in which the members of the group share an interest. Communications by one partner about the affairs of the partnership or a trustee about the affairs of the trust are examples."
4. As above, Denny is co-director of both Development and Holdings. It is anticipated that documents falling within the scope of the preliminary discovery application will indicate that Denny was one of two or more persons who joined in communicating with the defendants for the purpose of obtaining legal advice about the property development.
5. Denny's entitlement to view any documents subject to privilege held by Development or Holdings can alternatively be grounded in the fact that these entities and Denny have a shared or similar interest in the subject of the documents. In Marshall v Prescott [2013] NSWCA 152, Barrett JA observed at [57]:

"[57] If a document in which legal professional privilege subsists is given to someone else so that the content ceases to be confidential, the privilege is usually lost. This is because the act of giving is, in the particular circumstances, inconsistent with any continuing intention to maintain confidentiality [citation omitted]. An exception operates, however, where the person entitled to the privilege and the person to whom the content of the document is made known have such a commonality of interest in relation to the subject matter of the privilege that sharing of the content is consistent, rather than inconsistent, with an ongoing intention to preserve confidentiality and privilege..."

1. As set out above, it may be the case that the discovered documents indicate that Development and/or Holdings are proper plaintiffs in any future suit. In that case, Denny would share a common interest with those entities so as to enliven common interest privilege.
2. As such, while privilege issues may arise, they are likely to be overcome. On that basis, potential privilege issues should not prevent the grant of preliminary discovery.

1. The potential issues of privilege raised by Denny do not need to be addressed in this application for preliminary discovery.
2. I am satisfied that Denny may be entitled to bring a claim against the first and/or second defendant. The solicitor witnessed the Zagga facility and Denny's guarantee. In an email dated 26 September 2023 produced by Duffy, the solicitor said that he would review the Zagga facility documents and do "a page turn" with Kerridge, the then CEO of Development. While a retainer between the defendants and Development dated 9 June 2023 was produced in evidence, the scope of work to be performed was said to be:

"Attending to legal work in connection with cancellation of easement at [the property] and registration of new easement for stormwater and attending to and acting on behalf of Kirrawee Development Pty Ltd in the settlement of the purchase of the property and the related conveyancing and Pexa activities."

1. This work has nothing to do with the solicitor's work relating to the Zagga facility documents and witnessing the guarantee. It may be that the solicitor and/or the firm were also engaged for, or otherwise assumed the role of giving advice to Denny in relation to the guarantee, in circumstances where the solicitor knew or ought to have known that Development would be in default with respect to the Zagga Facility as soon as it was signed, and therefore Denny would go into default as guarantor. In order to determine what sort of claim, if any, Denny may be able to bring against the solicitor and/or the firm, he will require production of the documents sought.
2. The inquiries Denny has made include searches of his own records, and requests for documents from:

(1) Development;

(2) Holdings;

(3) Kerridge;

(4) Industrial;

(5) Duffy;

(6) the receivers of Development;

(7) HWL Ebsworth Lawyers (who prepared the Zagga facility); and

(8) Zagga.

1. The defendants submitted that Denny's searches of his own records were inadequate, and that he has not exercised his entitlement as director to documents held by the receivers of Development. Denny did request documents from the receivers of Development and nothing was produced. Under UCPR r 5.3(1)(a), inquiries made are required to be reasonable, not perfect. I am satisfied that Denny has made reasonable inquiries.
2. Therefore, I am satisfied that Denny may be entitled to bring a claim for relief, and that having made reasonable inquiries, he is unable to obtain sufficient information to decide whether or not to commence proceedings. I am also satisfied that the solicitor and/or the firm may have possession of documents, the inspection of which would assist Denny in determining whether or not he is entitled to make such a claim for relief.

1. The plaintiff is entitled to preliminary discovery under UCPR r 5.3. I make the order set out in paragraph 1 of the amended summons filed 27 May 2025. The defendants are to give discovery of the documents described in the categories set out in paragraph 1 of the amended summons on or before 20 January 2026.

1. Costs are discretionary. Costs normally follow the event. The defendants are to pay the plaintiff's costs on an ordinary basis.

(1) The defendants are to give discovery of the documents described in the categories set out in paragraph 1 of the amended summons on or before 16 February 2026.

(2) The defendants are to pay the plaintiff's costs on an ordinary basis.

(3) The defendants are to file and serve short written submissions on costs, limited to 3 pages, by 7 February 2025.

(4) The plaintiff is to file and serve short written submissions on costs, limited to 3 pages, by 13 February 2025.

(5) Listed for a directions hearing at 9:00 am on 9 March 2026.