FIIG Securities Limited v Pioneer Credit Limited

District Court of NSW|2023-06-28

Judgment

HIS HONOUR: Currently before me is a motion, notice of which was filed on 12 May 2023. The substance of the order sought by the plaintiff in the Notice of Motion is this: "Pursuant to Rule 21.2 of the Uniform Civil Procedure Rules 2005 (NSW), the Defendant give [sic] further and better discovery with respect to Category 6 of the discovery sought by the Plaintiff (Category 6 being one of the categories of discovery agreed to by the Defendant on 8 November 2022) by 9 May 2023."
The plaintiff, FIIG Securities Limited, I shall refer to as "FIIG". The defendant, Pioneer Credit Limited, I shall refer to as "Pioneer".

Background

The background to the application has been described by counsel for the plaintiff in this matter in this way: "4. In broad summary, these proceedings concern a claim by FIIG against Pioneer in respect of services FIIG performed for the benefit of Pioneer. More particularly, FIIG and Pioneer entered into a written agreement, under which FIIG agreed to assist Pioneer in a debt restructuring. FIIG claims the contract price to which it says it is entitled under that agreement. In addition, or the alternative, FIIG claims damages in respect of misleading or deceptive conduct engaged in by Pioneer, or a quantum meruit for the work it performed. Relevantly, for present purposes, Pioneer also engaged a number of other entitles to provide advice to it in relation to debt restructuring, ... 5. On 8 August 2022 the Court made orders for the exchange of lists of proposed discovery categories as well as for the provision of electronic discovery... On 31 August 2022, the parties exchanged proposed discovery categories... On 8 November 2022 the parties agreed to FIIG's categories of discovery... One of those categories was 'Category 6'... Pioneer purported to give discovery in January 2023... Pioneer served a second list of documents on 30 May 2023. 6. On 22 March 2023, the legal representatives of FIIG wrote to the legal representatives of Pioneer... Relevantly, the letter referred to Category 6 and said: 'The Category required your client to give discovery of not only documents created or held by it relating to the strategy, but also documents created by third party contractors or advisors retained by your client, including... whether such documents were provided to your client or not, on the basis that all such documents are within the control of your client, if not its possession.' "

Pleadings

That brings me back to the amended pleadings. Paragraph 10 of the Amended Defence refers to paragraph 9(c) of the Amended Statement of Claim. Paragraph 9 of the Amended Statement of Claim is this: "Between about 3 March 2021 and 29 October 2021, FIIG provided services to Pioneer including by the provision of the services in relation to: (a) the restructure of Pioneer's existing credit arrangements; (b) increasing the quantum and extending the tenure of Pioneer's existing subordinated MTNs in tandem with a more limited equity raising; (c) reducing the dilutive effect of a large equity raising by increasing the quantum of the MTNs from $40m to $50m-$60m and retiring Pioneer's senior and more expensive debt; and (d) liaising with more than 40% of Pioneer's MTN Noteholders to procure votes in relation to the circulating resolution of Noteholders seeking consents from the Noteholders of Pioneer's MTNs to the amendment and extension of the MTNs through the issue of new MTNs."
There follows in the Amended Statement of Claim some particulars of paragraph 9 but it is unnecessary for me to quote that for current purposes. MTN is a reference to New Medium-term Notes.
Paragraph 10 of the Amended Defence is this: "As to paragraph 9(c) of the statement of claim, Pioneer: (a) denies that FIIG provided advice as to strategy outlined in 9(c); (b) says that the strategy employed by Pioneer was developed by Pioneer and in any event was different to the strategies proposed by FIIG from time to time; and (c) otherwise denies para 9(c)."
One can see accordingly, the nature of the strategy referred to in Category 6 of the categories of documents to be discovered. The defendant entered into contractual arrangements with four entities other than the plaintiff. The formal arrangement between the plaintiff and the defendant bears date 20 September 2021 according to the Amended Statement of Claim albeit that learned counsel for the defendant referred to the document actually being signed on 21 September 2021. Nothing turns on that. However, it is clear from paragraph 4 of the Amended Statement of Claim that the plaintiff alleges that it commenced to provide restructuring of debt advice to the defendant on or about 3 March 2021.

First Agreement

The first agreement that the defendant entered with another company was with Deloitte Financial Advisory Pty Limited of Collins Street, Melbourne on 3 May 2021. The heading of the letter of engagement and the chapeau of the first clause of the letter are these: "Pioneer Credit Limited - Project Tahoe - PDP Analysis and Vendor Due Diligence Services Thank you for asking us to assist Pioneer Credit Limited (you or Pioneer) by performing the tasks set out in this letter in connection with your proposed refinancing of your debt facilities (the proposed transaction). This letter (the Engagement Letter) and our standard terms and conditions (the Terms) which are enclosed with this letter in Appendix 1, set out the basis on which we will provide our services to you. Terms used in the Engagement Letter and the Appendices have the same meaning as prescribed in the Terms. 1. Our Engagement You have asked us to provide our services in two phases: (i) perform limited scope PDP analysis on Pioneer's back book and forecast (ERC) model (the PDP analysis) and provide to you a draft report that contains our findings from the PDP analysis. (ii) perform financial vendor due diligence to Pioneer (the Due Diligence) and to provide you with a vendor due diligence report that contains our findings from the Due Diligence. Together the PDP analysis and Due Diligence are the services. The services we will perform are described in more detail in section 4 below. The purposes of the services is to assist you in connection with the proposed transaction (the Purpose). The scope of our engagement is limited to matters set out in this letter. So that we are able to assist you effectively, please ensure you are satisfied that the scope of our engagement and the Services we will provide are sufficient for your needs. If you wish to discuss this with us further, please let us know."
The standard terms and conditions annexed to the letter commence at page 138 of the Court book. Clause 6 of the standard terms and conditions bears a heading "Confidentiality". Clause 6.8 is this: "We will return your Information to you at any time at your request. We may also destroy it if you ask us to. However, we are entitled to retain a copy of any Information you provide to us or which forms part of our Work or our working papers, provided that we will continue to keep this Information confidential in accordance with this agreement."
Definitions of terms used in the standard terms and conditions are contained in clause 28. Information is defined to mean "any information, documents, materials, facts, instructions or Confidential Information provided to us by you or by your Representatives or anyone else at your request." The words "Confidential Information" are also defined in clause 28, but as presently advised I do not need to cite that.

Second Agreement

The next entity with which the defendant contracted was with Jarden Australia Pty Limited of 60 Martin Place, Sydney. The contractual letter bears date 18 May 2021. Its opening sentence refers to an engagement "to provide financial advisory services to [Pioneer] as sole arranger in relation to the Transaction (as defined below)": "For the purposes of this Agreement, the term 'Transaction' means the establishment of a new debt facility for the purpose of refinancing (in full or in part) the company's existing syndicated debt facility established in September 2020 and potentially providing incremental liquidity."
Clauses 6(b) and (c) are in a clause headed "Confidentiality". The chapeau and the two subclauses are these: "The Company [the defendant] agrees to keep the terms of this Agreement strictly confidential, subject to any obligations that the company has under its existing finance documents. As regards to information obtained by Jarden from the Company in connection with the Transaction, Jarden agrees to treat all such information as being strictly confidential. However, Jarden will: (b) not be obliged to treat any information as confidential which is in the public domain when given or which later comes into the public domain (otherwise than by breach of this Agreement) or which was directly known to Jarden from a source not known to Jarden to be subject to an obligation to the Company to keep such information confidential; (c) be free to make any disclosure if the company consents in writing to such disclosure including in marketing the Transaction;"

Third Agreement

The third entity with whom the defendant contracted was Bravure Pty Limited with which it reached an agreement on 12 July 2021. The "background" to the agreement, more conventionally known as the recitals to the agreement, are these: "A. Pioneer wishes to receive advisory services in connection with a report on the valuation of Pioneer's Purchased Debt portfolio. B. Bravure has the skills, background and experience in this area to provide these Services. C. Pioneer wishes to engage Bravure to provide these services. D. Bravure is willing to provide the services that Pioneer is willing to appoint Bravure to provide the services, all in accordance with the provisions of this agreement."
Clause 2.2 is headed "Intellectual Property and Content of the Deliverables". Essentially the "Deliverables" are the services to be provided by Bravure to Pioneer. Clause 2.2(b) is in these terms: "Pioneer may use and share the Deliverables only for the purpose of engaging institutional investors that might be considered in engaging in a financing transaction with Pioneer, on condition that: (i) Pioneer must maintain a confidentiality agreement in place with any recipient parties, and must mark all Deliverables as confidential; and (ii) Pioneer must not distribute any Deliverables to any competitor of Pioneer or Bravure."
Clause 6 is headed "Confidentiality". Clause 6(b) is this: "Bravure will not disclose Confidential Information to third parties or use it for any purpose except to the extent necessary to exercise its rights and perform its obligations under this Agreement except with the prior written permission of Pioneer or as outlined in paragraph (c) below, unless and until such Confidential Information has become public knowledge without fault by Bravure or where compelled by law to do so, or Bravure has confirmed that there is a confidentiality agreement in place between the third-party and Pioneer."

Fourth Agreement

The final entity with which the defendant also contracted is Acacia Partners Pty Limited of Collins Street, Melbourne. The letter of appointment bears date 3 September 2021. The chapeau to the letter of appointment is this: "We understand that Pioneer Credit Limited (Pioneer or Company) is seeking to refinance its secured and subordinated medium term notes, maturing 22 March 2023, (MTNs) and increase the issue size by at least $10 million (Refinancing). The Refinancing is required in order to satisfy conditions precedent to settlement of its senior debt refinancing page being provided by Fortress. The Refinancing may take the form of an amendment of the MTN terms, the issue of new securities or other arrangements that achieve the same commercial outcome. This letter of agreement sets out the terms on which Acacia Partners Pty Limited (Acacia or we) is engaged by Pioneer to act as Financial Advisor to the Company in relation with the Refinancing."
Clause 8 of the letter of agreement is headed "Confidentiality". The chapeau to that provision and clause (c) of it are these: "With respect to any information obtained by Acacia from the Company in connection with the Mandate, Acacia agrees to treat all such information as being strictly confidential. However, Acacia will: ... (c) be free to make any disclosure if the Company consents to such disclosure; ..."
I quote those permissions because it ought be clear from what I have quoted towards the beginning of these reasons, that the disagreement concerns the objection made by the solicitor for the plaintiff that the defendant has not discovered all documents granted by the third party contractors or advisors retained by it whether such documents were provided to the defendant or not on the basis that all such documents are within the control of the defendant if not in its possession.

Legal Principles

The relevant principles of law are clear. In Hancock v Rinehart [2014] NSWSC 658 Brereton J said this: "9. Because, subject to some exceptions, an affidavit of discovery is ordinarily regarded as conclusive [Michael Wilson & Partners Ltd v Nicholls [2008] NSWSC 1230; (2008) 74 NSWLR 218, 227 [31]], an order for further and better discovery is made only if the court is persuaded that the discovery given is incomplete (which may appear from the pleadings, the affidavit of documents or documents referred to in it, or any other admission of the existence of a discoverable document), or that a party has misconceived the discovery obligation [Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341, 343]. There must be 'reasonable grounds for being fairly certain' that 'other relevant documents exist which ought to have been disclosed' [British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709, 714; Beecham Group Ltd v Bristol Myers Co [1979] VicRp 27; [1979] VR 273, 276]. A speculative possibility that a party has not disclosed a relevant document will not suffice [Martell v Victorian Coal Miners' Association (1903) 9 ALR 231; Pendlebury v O'Neill [1911] NSWStRp 42; (1911) 11 SR(NSW) 188; Kent Coal Concessions Ltd v Duguid [1910] AC 452; Dense Medium Separation Powders Pty Ltd v Gondwana Chemicals Pty Ltd [2010] NSWSC 1309, [47]]."In Global Investments Limited v Babcock & Brown Global Investments Management Pty Limited & Anor [2017] NSWSC 729, McDougall J said this: "73. The convenient starting point in the reasons of Doyle CJ is found at 437, where his Honour referred to the speech of Lord Diplock in Lonrho Ltd v Shell Petroleum Co Ltd. His Lordship, with whom the other members of the House concurred, said "that, in the context of the obligation to discover documents in a party's possession, custody or power", the word "power" means "a presently enforceable legal right to obtain from whoever actually holds the document inspection of it without the need to obtain the consent of anyone else". His Lordship emphasised that the focus was on the right (presently enforceable) to obtain immediate inspection, not the physical ability (for example, by reason of the location of the document) to do so. 74. As Doyle CJ recognised, his Lordship did not intend to state exhaustively the meaning of "power" in the context of discovery. His Lordship accepted, as did Doyle CJ, that there might be particular circumstances where different considerations might apply. 75. Doyle CJ then turned to the relevant South Australian rule. His Honour said that the obligation depends upon a person having "the legal power or (I can think of no better expression) actual and immediate ability to inspect, even though the document is the property of or is held by another person". His Honour added that "the obligation to discover hinges upon having a right or actual and immediate ability to examine the document". That right or ability will not exist "if the person is able to inspect the document only if a third person, who has control of the document, agrees to permit inspection, or agrees to refrain from exercising... control so as to prevent inspection". 76. His Honour then said: "The point I wish to emphasis is that to the extent that the concept of power extends beyond a presently enforceable legal right, it should to be held to so extend only when the court can say that the person in question does have the actual immediate ability to inspect the document." 77. It was this aspect of the reasons of Doyle CJ at 438 that Hargrave AJ applied and explained in Players at [177] and following. I do not read anything said by Hargrave AJ, as to the explanation of "power" given by Doyle CJ, to indicate any variation of or expansion upon what Doyle CJ had said. On the contrary, I think, the way that Hargrave AJ applied the reasoning of Doyle CJ to the facts before him shows very clearly that no such variation or expansion was either intended or in fact undertaken."

Application of these Principles

One would have thought that if the plaintiff thought that the four advisors or contractors to the defendant had relevant documents that a subpoena for production could have been issued by the plaintiff to those companies, and in fact the plaintiff did issue subpoenas to each of those companies. Paragraphs 9 and 10 of the plaintiff's written submissions are these: "9. FIIG issued a subpoena to produce to each of Acadia, Jarden, Deloitte and Bravure. Each subpoena saw production of the same category of documents, being: 'Any document dated or brought into existence in the period 8 November 2022 to 27 January 2023 (inclusive) from all to Pioneer and/or its representatives recording or referring to FIIG's Discovery Categories in the Proceeding.' 10. Discovery Categories, relevantly including Category 6, were annexed to the subpoena. Each of the recipients of the subpoena provided a return in which they said they had nothing to produce."
The category of documents called for by those subpoenas was extremely limited and was designed to seek, no doubt, to see whether the defendant had communicated with its other contractors to try to obtain from any one or more of them any information which had disclosed to them that was not otherwise recorded in writing.
When I inquired of learned counsel for the plaintiff as to why the subpoenas were not made wide enough to catch the sort of documentation that he now seeks the defendant to discover, I was given a, in my view, completely unsatisfactory answer. The defendant's list of documents have been supported by a solicitor's certificate and an affidavit as to the first list of documents by the company secretary Susan Dianna Symmons of North Perth and by a solicitor's certificate and the same lady for the second list of documents. As was pointed out by Brereton J, an affidavit or discovery is ordinarily regarded as conclusive. An order for further and better discovery is made only if the Court is persuaded that the discovery given is incomplete or that a party has misconceived the discovery obligation.
There must be "reasonable grounds for being fairly certain" that "other relevant documents exist which ought to have been disclosed". There is nothing before me which persuades me that the defendant has failed to disclose any actual document which it obtained from either of the four advisors or consultants with which it contracted. That is relevant to the issue raised by Category 6 of the Categories of Discovery. The plaintiff has submitted that, using the various provisions in the contractual documents which I have cited, the defendant could have asked the contracting third party to provide to it a copy of any document that the company might have had which might have included, for example, an admission or statement made orally at some meeting between officers of the third party and officers of the defendant.
However, besides that being speculative, I know of no way in which any such document could be compelled to be produced by the defendant such that it could give discovery of it to the plaintiff. In my view what has been relied upon by the plaintiff does not indicate that any such document, if it existed, was within the power of the defendant as that term has been discussed by McDougall J in Global Investments Limited v Babcock & Brown Global Investments Management Pty Limited. Learned counsel for the plaintiff drew my attention to documents that he said are clearly within the defendant's possession, which ought to have been discovered. Those are set out in [22] of his written submissions of 16 June 2023.
However, each of those is dealt with sequentially by learned counsel for the defendant in paragraph 24 of his written submissions which bear date 23 June 2023. The reference 'RS' is to his friend's submissions, although he told me that it was designed to refer to FIIG's submissions. The affidavit of Mills which is referred to by Mr Rogan in his submissions is a reference to the primary affidavit relied upon by the plaintiff on this application being the affidavit of Catherine Mary Mills affirmed on 12 May 2022. In essence I accept what has been submitted by learned counsel for the defendant that none of the documents relied upon by the plaintiff are relevant to Pioneer's strategy which is the subject of Category 6 of the documents relied upon by the plaintiff.
It appears to me to be correct that nearly all of them do not refer to the relevant strategy and, for example, some of them only refer to the terms of FIIG's proposed engagement by the defendant and not the defendant's strategy. The only exception might be this item: "(b) FS[19] and Mills affidavit [26(a)] rely on a 'reliance paper' from Deloitte, where Deloitte was not, and is not alleged to have been, an advisor to Pioneer for its refinance strategy..."
That is an arguable point bearing in mind the terms of Deloitte's retainer. However, the point is that the note merely refers to awaiting a reliance paper, there is no evidence that it was ever generated. Again, it is speculation.
I am not persuaded that this is a proper case in which there should be an order for the provision of further and better discovery. For those reasons the motion is dismissed. I order the plaintiff to pay the defendant's costs of the motion.

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: 30 August 2024

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Judgment (10 paragraphs)

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