Kennett and Anor v Mayrana Pty Ltd and Ors

MAYRANA PTY LTD (ACN 101 363 688) First Respondent

GARRATTS LIMITED (ACN 000 003 725) Second Respondent

CHRISTOPHER CAMPBELL Third Respondent

PARTIES: MIKE TRAYNOR Fourth Respondent

Matter Number IRC 3680 of 2003 _____________________________

MAYRANA PTY LTD (ACN 101 363 688) First Respondent

GARRATTS LIMITED (ACN 000 003 725) Second Respondent

CHRISTOPHER CAMPBELL Third Respondent

MIKE TRAYNOR Fourth Respondent

CATCHWORDS: Notices of Motion - reasons for decision - summons for production of documents - applicants seeking to delay production until after respondents had put on their evidence - motions dismissed - costs reserved

LEGISLATION CITED: Industrial Relations Act 1996

APPLICANT: Mr GH Healey, solicitor SOLICITORS: GH Healey & Co

FIRST, SECOND AND FOURTH RESPONDENTS: LEGAL REPRESENTATIVES: Mr AJ Bulley of counsel SOLICITORS: Gordon & Johnstone

THIRD RESPONDENT: Mr GA Covington, solicitor SOLICITORS: Colin Biggers & Paisley

KEITH FRANKLIN KENNETT AND ANOTHER v MAYRANA PTY LTD AND OTHERS

Application under s.106 of the Industrial Relations Act 1996

Application under s.106 of the Industrial Relations Act 1996

1 On 16 August, I dismissed two motions brought by the applicants in these proceedings, indicating that I would shortly publish reasons for that decision. This judgment gives those reasons. The two motions were filed by the applicants on 4 August 2006. They concerned two summonses for production of documents, one directed to Mr Robert Prior, a forensic accountant retained by the applicants, which was filed on 14 July; the other directed to Mr Richard Rogers, also an accountant, which was filed on 19 July. 2 The summonses sought production of:

Summons for Production to Richard Rodgers 1. In the Summons for Production the term "document" refers to all correspondence, emails, filenotes, minutes of meetings, resolutions, advices, financial statements, reports, deeds, agreements, diary notes, telephone notes, receipts, and such other records covered by the definition of "document" in the dictionary to the Evidence Act 1995 (NSW) regardless of the format in which such documents are recorded or stored: a. All documents with respect to Excelsior College Pty Limited for the period 1 July 2000 to 30 June 2003;

b. All financial reports prepared for Excelsior College Pty Limited for the period 1 July 2000 to 30 June 2003;

c. All taxation returns for Excelsior College Pty Limited for the period 1 June 2000 to 30 July 2003;

d. All profit and loss statements, forecast, and other reports and/all statements prepared or provided to you with respect to Excelsior College Pty Limited for the period of 1 July 2000 to 30 June 2003.

e. All documents with prepared, received or in your possession with respect to Excelsior College Pty Limited for the period 1 July 2000 to 30 June 2003. Summons for Production to Robert Prior 1. All notes, documents memoranda, and working papers bought into existence for the purposes and preparation of your report dated 7 April 2006 and filed in these proceedings ("the Report");

The documents upon which the Report is based as referred to in page 2 of the report namely: (a) available transaction documents as sighted in chronology;

(b) draft financial accounts of Excelsior College Pty Limited for the year ended 30 June 2003;

(c) Financial statements for Excelsior College Pty Limited for the year ended 30 June 2002;

(d) the due diligence summary in respect of Excelsior College Pty Limited completed by the auditors of Garratt's Limited:

Filenotes, notes, memoranda of discussions with: (a) Mr Kennett;

Letters of instruction received from GH Healey & Co regarding these proceedings and proceedings number 3680 of 2003;

All correspondence between yourself and GH Healey & Co regarding these proceedings and proceedings number 3680 of 2003 from August 2003 to date.

3 The motions did not seek that the summonses be entirely set aside. Rather, what was sought was that they not be complied with, until the respondents had put on their evidence, which is required to be done by Monday 25 August, under the current timetable fixed in the proceedings. The hearing of the matter is due to commence before me on 20 September. 4 The grounds and reasons advanced for the order sought were set out in an affidavit sworn by one of the applicants, Professor Keith Franklin Kennett, on 3 August. There the Professor said, amongst other things, that:

4. I believe the Respondents are seeking to obfuscate in relation to the real issues in the matters before they have filed their evidence in the substantive proceedings.

5. The Respondents have sought by way of summons to obtain the financial records and taxation returns of Excelsior College Pty Limited ("the Company"), which I believe must be irrelevant to the issue of profitability as at 1 July 2002.

There can be no relevance to the "issue of profitability" as at 1 July 2002, as such "profitability" was defined by the Respondents in their contractual documentation.

It was the Respondents' definition of profitability, as contained in their contractual agreements, which was represented to Mr Pak and me at the meeting on 1 August 2002.

The Respondents based their decision not to pay the Applicants the initial agreed upon figure of $700,000 in cash and shares, based on their definition of profitability.

In these circumstance (sic) I would ask this honourable court to defer the necessity for the supply of the financial records of Excelsior College Pty Limited to the Respondents until, at least, the Respondents have filed their evidence as directed by Justice Stanton (sic).

Such financial records and taxation returns of Excelsior College Pty Limited must be irrelevant to the real issues before the court.

Accordingly, I have instructed my solicitors to file and serve a motion seeking the foregoing.

5 In submissions, Mr Healey, appearing for the applicants confirmed that the applicants had no objection to producing the documents sought after the respondents had put on their evidence. They also accepted that if the respondents then sought to put on further evidence as to that material, they should have the opportunity to do so and that the applicants should likewise have the opportunity to respond. 6 I enquired of Mr Healey how such an approach was consistent with the Court's ordinary procedures in applications brought under s 106 of the Industrial Relations Act ('the Act'), which are designed to ensure that litigation is not conducted by ambush or surprise and which seek to ensure that it is conducted in such a way, as to minimise costs to the parties. His explanation was that there would not be much delay resulting from the approach the applicants proposed and that it was the appropriate course to take, because the summonses amounted to the respondents being given discovery before suit, without putting on an appropriate motion. 7 It was also submitted that in proceedings such as this, the parties' affidavits effectively formed the pleadings and that the respondents ought not to be given access to this material, before they had put on their affidavit evidence. In any event, it was broadly submitted that the material sought was not relevant to the issues in the proceedings. 8 When I enquired of Mr Healey what date the applicants asserted was the date relevant to their claim, he advised that it was 2 August 2002. He could not explain how it was, in those circumstances, that the various financial records which were sought for periods concluding with the financial year ending June 2003, could not be relevant to what fell to be decided in the case. It was, however, argued that the documents fell into too broad a category, because they related to Excelsior College and not just the business unit in question in the proceedings. 9 For their part, the respondents sought that the motions be dismissed. They argued that given what was proposed by the applicants, the interests of justice would not be best served by the granting of the orders sought. All that would be achieved thereby was further delay and expense, given the necessity of the parties preparing and filing further affidavit material, once the material had been provided. 10 It was also explained that the summonses had been issued because of the view taken by the accountants retained by the respondents that the documents sought in the summonses were relevant to a proper consideration of accountant's reports served in the proceedings by the applicants. The documents were submitted to be relevant to the issues in the proceedings and in any event, there was in truth no objection to their production, all that was sought was a delay, which would unnecessarily protract the preparation of the respondents' evidence. Nor, it was noted, were any claims of privilege advanced. 11 In reply Mr Healey asserted that some documents might be privileged. However, no such claim was made in either motion and no such documents were identified. 12 Mr Healey submitted that the parties' pleadings in a case such as this, were comprised of the affidavits which they filed. I am satisfied that this is not an accurate reflection of the role which affidavit evidence plays in proceedings such as this. The parties' pleadings cannot be ignored. In these proceedings, the amended summonses on which it appears that the applicants move, were filed in April 2005. The summons in Mr Pak's case, for example, claims orders declaring the contract, arrangement or collateral arrangement between the various parties 'consisting of the negotiations to provide employment to the applicant and associated sale of Excelsior College Pty Ltd' unfair and void from its commencement, or from some other time. Significant consequential money orders are also sought. The summonses advance the claim in relation to documents said to be dated 5 July and 8 August 2002 and the claim is said to relate to a net profit figure of the business known as Excelsior College, for the year ended 30 June 2002. 13 It followed, given the claims advanced in the applicants' amended summonses, when considered with the submissions pressed by Mr Healey at the hearing of the motions, that the conclusion that the documents sought by the respondents are not relevant to anything which falls to be decided in these proceedings, was not properly available at this stage of the proceedings. To the contrary, it was the applicants' position that the respondents should be given access to the documents, but not until after they had put on their evidence. 14 While the applicants pressed a complaint that in seeking these documents, the respondents were but seeking to 'obfuscate' the real issues in the proceedings, it was apparent on the respective cases advanced that the respondents are presently obliged to file and serve their evidence by Monday next. They have not been relieved of that obligation. Given that the applicants complain they have long been denied the respondents' evidence, adherence to the timetable, while giving the respondents access to the documents they have sought for some time now, is the best way to ensure that the applicants are put in possession of the entirety of that evidence, as soon as possible. 15 The two summonses were returnable before the Court on 16 August. The applicants filing their motions did not stay what was required of Mr Rogers and Mr Prior by the summonses, which the Court had issued earlier in July, at the respondents' request. Accordingly, the documents in question ought to have been available to be produced to the Court on 16 August. I understand that the parties' legal representatives are now attending to that production, hopefully in a co-operative way. 16 Granting the motions would have led to the position where the applicants were denied all of the evidence upon which the respondents proposed to rely, particularly expert evidence, until some later point in time. Given Professor Kennett's expressed concern, I took the view that no good purpose would thereby have been achieved. To the contrary, further seemingly unnecessary costs would have been incurred. 17 It was for these reasons that the applicants' motions were dismissed. The costs of the motion were reserved.

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.