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[2013] NSWSC 1998
Supreme Court of NSW
2013-12-03
Brereton J
Original judgment source is linked above.
Plaintiffs' Notice of Motion 1HIS HONOUR: By notice of motion filed on 27 November 2013 and amended today, the plaintiffs seek an order that the first, second, fourth and fifth defendants give "disclosure" of all documents within certain classes set out in schedule A to the motion. 2The plaintiffs also seek leave to issue subpoenas for production, now limited to Australian Executor Trustees Limited, National Australia Trustees Limited and Equity Trustees Limited, who are the managing trustees proposed by the defendants under their replacement trustee proposal. 3At the outset, partly because it may affect the subsequent issues to be dealt with on some of the other applications today, it is worth repeating some observations that I have made on previous occasions in other cases. 4The practice of framing requests for discovery by describing documents as if set out in a subpoena, rather than by reference to facts in issue in the case, has the tendency to subvert the nature and purpose of the discovery process. Discovery is an ordinary obligation of parties in litigation, to disclose to the other all documents in that party's possession, custody or power that relate to a fact in issue in the proceedings. 5Whereas originally discovery was, in most types of litigation, available as of right, it has progressively been limited by rules of court. For example, for many years it has been available in some classes of litigation (in particular, personal injuries claims) only by order, such order to be made only when the court is of the view that discovery is necessary, meaning necessary to achieve justice between the parties. In more recent times, rules of court have further limited discovery to classes of documents specified by order, rather than all documents relevant to all facts in issue in the proceedings. Nonetheless, the requirement that a document relate to a fact in issue in the proceedings remains a fundamental foundation of the discovery obligation. 6Although it is open to the court to describe classes of documents for the purposes of discovery in various other ways, it is highly preferable to do so by identifying the fact in issue in the proceedings in respect of which discovery is ordered. The benefit and purpose of doing so is that it makes clear that the onus remains on the party against whom discovery is ordered to make a genuine and honest judgment as to the relevance of the documents in its possession, custody or power to that fact in issue, rather than on the interpretation of a usually widely drawn description of documents as if for the purposes of a subpoena. 7Nonetheless, because some of the orders sought in this motion are no longer controversial, I will make those orders in the terms in which they are sought, notwithstanding that they do not necessarily reflect the approach I have just indicated. 8The real issue, however, is whether discovery should be ordered of the documents described in paragraph 3 of schedule A to the motion, which is as follows: 3. A copy of any agreement entered into between 1 September 2011 and the present: 3.1 between the first and second defendants (either alone or with other parties) that includes terms prohibiting or restricting the second defendant from propounding or supporting a replacement trustee without the approval of the first defendant (including, but not limited to, term in a form similar to clause 9 and the definition of "claim" in the draft Deed of Loan between, inter alia, the second plaintiff and the first defendant which appears at Exhibit TRP1 pages 3-25 of the affidavit of Timothy Randolph Price sworn 15 November 2013); 3.2 between the first and third defendants (either alone or with other parties) that includes terms prohibiting or restricting the third defendant from propounding or supporting a replacement trustee without the approval of the first defendant (including, but not limited to, term in a form similar to clause 9 and the definition of "claim" in the draft Deed of Loan between, inter alia, the second plaintiff and the first defendant which appears at Exhibit TRP1 pages 3-25 of the affidavit of Timothy Randolph Price sworn 15 November 2013). 9The first question to be addressed is, is there an issue of fact in the proceedings to which this request pertains; the second question then becomes whether discovery in respect of that issue is necessary; and the third is whether the documents sought fall within the class. 10As is now apparent, there are four beneficiaries, not all of whom share the same view as to the appointment of a replacement trustee. It seems to me that the wishes of the beneficiaries are plainly relevant, though far from conclusive, considerations for the Court, to be taken into account in selecting a replacement trustee. For example, if all four beneficiaries had the same wish in that respect, that may be a matter of great weight, though it would by no means bind the Court. Similarly, if a majority of beneficiaries preferred one course and a minority another, the court might be influenced more by the wishes of the majority; but that would necessarily depend, in part, on the Court's assessment of the rationale for and validity of those wishes. A wish held on spurious or irrelevant grounds might well be entitled to less weight than a wish expressed on solid and logical grounds. 11For those reasons it seems to me, first, that the wishes of the beneficiaries - including, relevantly, of the second defendant and the third defendant - are an issue in the proceedings. At least that is so until the defendants eschew any reliance on their wishes as a relevant consideration in the proceedings. 12Once it is accepted that their wishes are a relevant consideration, it seems to me that the weight to be given to those wishes must also be an issue; and, therefore, whether those wishes were expressed willingly and freely or whether they were wishes expressed under some form of compulsion or restraint, is a fact in issue in the proceedings. 13Even if, which I do not presently need to decide but of which I am by no means persuaded, the matters remaining for the Court's consideration do not fall within the definition of "claim" in the draft deed of loan referred to in the evidence, it needs to be borne in mind that discovery extends not just to documents that directly evidence a fact in issue, but documents that lead to a relevant train of inquiry. To my mind, the semantic question of the definition of "claim" in the draft deed of loan does not detract from the fact that documents of the kind sought would inform resolution of a fact in issue in the proceedings. 14It seems to me, therefore, that the Court would order that the relevant defendants give discovery to the plaintiff of all documents in their possession, custody or power relating to the issue of whether the second defendant and/or the third defendant are bound or otherwise affected by any agreement, undertaking, arrangement or understanding with the first defendant that limits, restricts, constrains or otherwise affects their role in the proceedings. As the order sought in paragraph 3 is narrower than that description, it would seem appropriate to order discovery only to the extent sought in paragraph 3. 15So far as the subpoenas are concerned, there is no longer any dispute in respect of them. 16I therefore order that: (1)The first, second, fourth and fifth defendants give discovery to the plaintiff of all documents within the classes of documents set out in the document annexed to the motion and marked A subject to the deletion from paragraph 1.3 of the words "or National Australia Bank Limited", the deletion of subparagraph 1.4 and the deletion of subparagraph 2.3; (2)The plaintiffs have leave to issue subpoenas for production to: (a)Australian Executor Trustees Limited in the form of annexure E to the motion; subparagraph (b)National Australia Trustees Limited in the form of annexure F to the motion but subject to the substitution of the words "National Australia Trustees Limited" for the matter NAB in paragraphs 1 and 2 of that subpoena and the deletion of the definition of NAB from that subpoena; subparagraph (c)Equity Trustees Limited in the form of annexure G to the motion.
Second Defendant's Notice of Motion 17By notice of motion filed on 27 November 2013 and amended on 29 November 2013, the second defendant Ginia Hope Francis Rinehart seeks an order that the plaintiffs give "disclosure" (by which, again, I take them to mean discovery) of documents in categories specified in a schedule to the motion, and leave to issue subpoenas to five named persons in the form annexed to the motion. The observations I have made in the judgment given earlier today concerning discovery are perhaps even more pertinent to this application. The classes of documents are framed in a manner that defines them not by their relevance to an issue in the proceedings so as to make their appropriateness for an order for discovery apparent, but by reference to their content and, in some cases, their timeframe or otherwise by description in a manner which might be appropriate for a subpoena. As I have said, this overlooks the quite different obligations that attend a respondent to an order for discovery and those that attend the recipient of a subpoena. 18However, it is plain enough, when one reads the classes of documents of which discovery is sought and the evidence relied on in support of the application, that, with the exception of category 4 - to which I will separately come - the issues in respect of which it is thought the documents might provide some illumination are, in broad terms, the impartiality of Bianca; the independence of the proposed advisory trustees Mr McGrath and Mr Finkelstein; and, within that general description, in particular whether there is any pre-existing relationship or arrangement or understanding between the plaintiffs and the proposed advisory trustees. Those matters or issues are relevant considerations in the proceedings and, in circumstances where the truth on them cannot really be known without knowing what is in documents in the possession of the plaintiffs, it seems to me that it can properly be said that discovery is necessary in respect of them. 19However, the form of the schedule would have the potential to capture a significant range of documents that may not relate to those issues. Accordingly, I will make orders framed in terms of relevance to those issues, rather than in the form sought. 20The fourth category of documents sought are documents constituting or recording communications between Bianca's husband Mr Serebryakov, Bianca, or anyone acting on his or her behalf, and Lipman Karas Lawyers "in relation to the appointment or possible appointment of Bruce Carter as trustee of the Hope Margaret Hancock Trust". Although Mr Carter was once proposed as a replacement trustee, he is no longer proposed. I cannot see how documents in category 4 bear any relevance, in the sense in which that term is used in the context of discovery, to an extant or live issue in the proceedings. I will, therefore, not make an order that includes documents in category 4. 21I turn then to the subpoenas. Again, it is important to appreciate that subpoenas play a different role and have a different effect to an order for discovery. First, ordinarily a subpoena may be issued by the court at the request of a party as of course; a party does not have to justify the relevance of a subpoena at the outset but, rather, must be prepared to defend it if an application is made to set it aside. Secondly, for the purposes of a subpoena, as distinct from discovery, relevance is not limited to facts in issue in the case. A subpoena may legitimately be issued to obtain production of documents that relate only to the credit of a witness. Thirdly, a subpoena must not impose on a recipient the obligation of making a judgment as to whether documents called for relate to a fact or issue in the proceedings, whereas that is exactly the obligation that an order for discovery does impose on a party. 22So far as the subpoena to Mr Serebryakov is concerned, I do not think that the documents called for in paragraph 2 of the schedule would in any way add to the relevant evidence in the proceedings, whether on a substantive issue or on credit. 23Otherwise, the documents sought by the subpoenas are, in the first three cases, limited by the description of "relating to the appointment or possible appointment of Bianca, Mr McGrath or Mr Finklestein as trustee or adviser in trustee", which does not require the recipient to make a judgment of the relevance of a document to an issue in the proceedings but, simply, whether the subject matter of the document relates to the stated matter, which is quite permissible for a subpoena. It seems to me that it is "on the cards" that the first three subpoenas would elicit documents which might add to the relevant evidence on the issues to which I have referred. 24So far as the subpoenas to the referees Mr Pointon and Mr Fitzpatrick are concerned, they would elicit documents containing communications made for the purpose of preparing their affidavits of fitness in the proceedings. It seems to me that, as with an expert witness, documents which cast light on what was provided to a witness for consideration or how the report or affidavit was drafted, could well add to the relevant evidence in the proceedings. 25For those reasons the court orders that: (3)The first and second plaintiffs give discovery to the second defendant of the documents in their possession, custody or power that relate to the following facts in issue in the proceedings: (d)Whether the second plaintiff bears an animus towards the second and/or third defendant. (e)Whether there was or is any pre-existing relationship between the plaintiffs, or either of them, and the proposed advisory trustees Mr McGrath and Mr Finklestein. (f)Whether there is any agreement, arrangement or understanding between the plaintiffs, or either of them, and Bianca and the second plaintiff and/or Mr Finklestein and/or Mr McGrath in relation to the management of the trust. (4)The second defendant has leave to issue subpoenas for production to: (a)(Alexander Vladimir Serebryakov in the form of annexure A to the motion, subject to the deletion of paragraph 2 from the schedule; (b)Tony McGrath in the form of annexure B to the motion; (c)Raymond Finklestein QC in the form of annexure C to the motion. (d)John Pointon AM in the form of annexure D to the motion; and (e)Peter Fitzpatrick in the form of annexure E to the motion. (5)A subpoena will not be non-compliant with the leave so granted if, after the reference in paragraph 1 of the subpoenas to Bianca Rinehart, Alexander Vladimir Serebryakov or John Langley Hancock, there is inserted the words "or solicitors acting for any of them,".
Fourth Defendant's Notice of Motion 26In respect of the fourth defendant's notice of motion filed 27 November 2013 the court notes that the plaintiffs' notice to produce to the fourth defendant dated 20 November 2013 is not pressed. The court orders that the notice of motion be dismissed.
Third Defendant's Notice of Motion 27In respect of the third defendant's notice of motion of 27 November 2013, the court notes that the plaintiffs' notice to produce to the third defendant is not pressed. The court orders that the notice of motion be dismissed.
Plaintiffs' further application for discovery 28The plaintiffs have now handed up a minute of an order for discovery sought against the defendants in the following terms: The defendants give discovery to the plaintiffs of documents in the possession, custody or control of the defendants relating to the issue of whether the second defendant and/or the third defendant are bound or otherwise affected by any agreement, undertaking, arrangement or understanding with the first defendant that limits, restricts, constrains or otherwise affects their role in the proceedings. 29Plainly enough, this proposal is made in light of the views I expressed in the earlier judgments as to what might be an appropriate description of the discovery to which the plaintiffs might be entitled on the issue which they were seeking to explore by applying for discovery of the two agreements, to which it was suggested that the second and third defendants were parties. It is wider than what was sought in the motion, and wider than the order I have made. 30Since then, of course, I have also made orders giving effect to a reformulation of the discovery sought against the plaintiffs. It is highly desirable that these matters be resolved, to the extent that they can be, without incurring further costs and delay, although I do need to take into account the desirability of affording the defendants an opportunity to give further consideration to what is now proposed, late in the day. 31That said, it can be observed that the plaintiffs were able to give consideration to the reformulation of the classes of discovery sought against them more or less on the run, and I do not think the ability of counsel at the bar table for the defendants is inferior in that respect. 32It seems to me that the preferable way of dealing with this is to narrow in some respects the breadth of what is proposed, and to make an order now but defer its taking effect to enable the defendants, if they wish, to move for and contend for some limitation on it. 33The third defendant suggests that, as a submitting defendant, the orders should not be made against it. One of the issues that was to be in dispute today was a notice to produce to the third defendant. For reasons indicated earlier today it seems to me that the third defendant, at least to some extent, wishes to express a position as to the appropriate replacement trustee. Discovery can be ordered against a party who has entered a submitting appearance, although the absence of disputed issues between particular parties may indicate that discovery should be limited or that it is, in fact, not justified in the circumstances [Murex Diagnostics Australia Pty Ltd v Chiron Corporation, (1995) 55 FCR 194, 128 ALR 525]. So long as the third defendant reserves the right to express a view and make submissions about an appropriate replacement trustee - a position which it is perfectly reasonable that she should have - it seems to me proper that, on that particular issue, she should be liable to give discovery. 34The court orders that: 1. The defendants give discovery to the plaintiffs of all documents in their possession, custody or control relating to the issue whether the second defendant and/or the third defendant are bound by or party to any agreement, arrangement or understanding with the first defendant that limits, restricts or constrains their expression of wishes in respect of a proposed replacement trustee. 2. This order does not take effect until 10 December 2013 or, if any defendant has filed a motion prior to 10 December 2013 seeking to have the order varied or set aside, that motion has been disposed of. COUNSEL ADDRESSED 35Pursuant to (NSW) Uniform Civil Procedure Rules 2005 r 21.3(3)(b) the Court specifies 31 January 2013 in lieu of the period of 28 days as the period within which the parties giving discovery must serve their list of documents in compliance with rule 21.3(1). 36The proceedings will be adjourned to 14 February 2014 at 9.30am for directions. 37There will be no order as to costs, to the intent that each party bear his, her and its own costs of the motions disposed of today.
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: 14 April 2014
Hancock
Rinehart
(1995) 55 FCR 194