Mizuho Bank Ltd v Ackroyd

Notice to Produce 29 January 2018 "1. An original or one copy of the plaintiff's personnel file (or documents, however named, which in substance constitute such a file) in respect of its employee Mr Shunichi Setogawa. 2. To the extent not already produced under paragraph 1, an original or one copy of: a. the letter or notice of cessation or termination of employment in respect of the plaintiff's employee Mr Shunichi Setogawa; b. the documents recording the circumstances of and reasons for Mr Shunichi Setogawa's departure from the plaintiff; and c. the documents recording any disciplinary proceeding, inquiry or process undertaken by the plaintiff in connection with the circumstances of or reasons for Mr Shunichi Setogawa's departure from the plaintiff."

1. The Bank has produced to Mr Ackroyd the documents referred to in pars 2 and 3 of the 18 December 2017 Notice to Produce and, subject to the Bank formally confirming that this constitutes production of all documents called by those paragraphs, Mr Ackroyd does not seek to press that aspect of that Notice to Produce further.
2. By Amended Notice of Motion filed in Court before me today, the Bank seeks orders otherwise setting aside both Notices to Produce.
3. Although Mr Ackroyd has adopted the procedure of serving notices to produce, he is in substance seeking further disclosure of documents from the Bank.
4. Uniform Civil Procedure Rules 2005 (NSW) r 21.10 provides for service by one party or another of a notice to produce documents "relevant to a fact in issue". UCPR r 21.11 provides that a party serving such a notice must produce the documents specified "unless the court orders otherwise".
5. As Brereton J observed in Graphite Energy Pty Ltd v Lloyd Energy Systems Pty Ltd [2014] NSWSC 1326 at [37] a notice to produce under UCPR r 21.10 is a form of discovery.
6. As is well known, Practice Note SC Eq 11 provides that there is to be no order for disclosure where, as here, parties have served their evidence "unless it is necessary for the resolution of the real issues in dispute in the proceedings".
7. The Practice Note does not apply, in terms, to a notice to produce under r 21.10 because such a notice does not require an order of the Court.
8. There is authority for the proposition that if a party contends that it should have access to documents of the other party which were not discovered by an order for discovery, the proper approach is to "make an application for further discovery by adding a further class to the documents for discovery" and that a subpoena (and the same must apply to a notice to produce) "which seeks documents which could have been the subject of discovery is an abuse of process" (Azzi v Volvo [2006] NSWSC 283 (Brereton J) at [14] and [11] respectively).
9. That decision was given before the commencement of Practice Note SC Eq 11 but provides guidance as to the manner in which the Court should consider a notice to produce served after disclosure of documents which, in effect seeks disclosure of further documents.
10. Where there has been disclosure of documents, and one party thereafter serves a notice to produce on the party that has given such disclosure seeking further documents, the appropriate course for the Court to follow is, in my opinion, to be inclined to "order otherwise" under UCPR r 21.11 and set aside the notice to produce unless the party serving it can show not only that the documents are "relevant to a fact in issue", as called for by UCPR r 21.10 itself, but also that production of the documents is "necessary for the resolution of the real issues in dispute in the proceedings" as is required by Practice Note SC Eq 11.

The 18 December 2017 Notice to Produce - the Bank's "policies/rules/requirements"

1. In these proceedings Mr Ackroyd seeks relief under s 7 of the Contracts Review Act 1980 (NSW) and alleges that the guarantees were unjust in the circumstances at the time they were made.
2. One factor that Mr Ackroyd points to in support of that contention is his allegation that: "All dealings as between the [Bank] and [Mr Ackroyd] were conducted between Mr Miyazaki on behalf of [the Bank] and [Mr Ackroyd] there having been no independent communication between [the Bank] and [Mr Ackroyd]."
3. Mr Miyazaki was also a director of NPE. Mr Ackroyd alleges that Mr Miyazaki was appointed a director of NPE by its 49.9 per cent shareholder, Mitsui & Co Ltd which company, Mr Ackroyd alleges, had "a long business or commercial relationship" with the Bank.
4. Mr Ackroyd also alleges that: "t) [T]he [Bank] conducted no or inadequate financial checks on [NPE]; u) the [Bank] conducted no financial checks on [Mr Ackroyd]; v) the [Bank] accordingly engaged in 'asset lending', in the sense of lending money in disregard of [NPE's] and [Mr Ackroyd's] capacities to repay the loan (at least in respect of the portion of the loan that the plaintiff sought to be guaranteed by the defendant); w) the [Bank] did not verify that the defendant had obtained professional and independent accounting or financial advice in relation to the Guarantee; and x) the [Bank] did not provide any explanation or disclosure to the defendant about the risks of the Guarantee, contrary to clause 2(3) of the Japanese Bankers' Association's Code of Banking Conduct to which the [Bank] had publicly committed itself."
5. The 18 December 2017 Notice to Produce calls for production of the Bank's internal policies, rules and requirements concerning the taking of guarantees from individuals "that underpin" the Bank's use of its "Form IV-1(E)".
6. That form is a pro-forma document entitled "Record of Confirmation of Intent". The document sets out various means by which the Bank can obtain "confirmation" of the preparedness of a person to provide the Bank with a guarantee.
7. One of those means is by "Direct Interview with the authorised director(s) of the counterpart [sic] providing collateral/guarantee".
8. The document appears to confirm that there was no "Direct Interview" with Mr Ackroyd to confirm his preparedness to give the guarantee. Instead, according to the document, the Bank (represented by Mr Setogawa) "interviewed" only Mr Miyazaki and that the "Method of Confirmation" adopted by the Bank was: "Direct Interview or Telephone Interview with Representative Director of Corporation (For well-known counterpart [sic] only like a counterpart [sic] repeatedly being a guarantor)".
9. In my opinion, the internal policy and other documents sought by the 18 December 2017 Notice to Produce are capable of being relevant to the question of whether guarantees were unjust in the relevant sense.
10. The form of the Record of Confirmation of Intent suggests that it was the Bank's policy that the usual "Method of Confirmation" to be adopted when taking a guarantee was "direct interview" with the person providing the guarantee and that an interview, instead, with a "Representative Director" of the borrower was to be adopted only in cases where the "counterpart" was "well known" and had "repeatedly" been a guarantor.
11. That alone points to the necessity for the Bank to produce the policy documents called for to resolve the issues which arise in these proceedings.
12. Further, whether the Bank had a policy or rule dealing with the matters alleged by Mr Ackroyd set out at [17] above may well be relevant to the question of whether the guarantees were unjust in the requisite sense. For example, if the Bank had a policy that it should not engage in "asset lending", that could well be relevant, if Mr Ackroyd establishes that the Bank did engage in that practice. On the other hand, if the Bank had a policy that it should only engage in "asset lending" that is also capable of being relevant to the case sought to be made out by Mr Ackroyd.
13. I do not think it is to the point that Mr Ackroyd has not, yet, made any allegation that the Bank has acted inconsistently with its policies. That is, no doubt, because Mr Ackroyd does not yet know whether or not that is so. That alone is not a reason to deny him access to the documents (for example, see National Employers' Mutual General Insurance Association Ltd v Waind & Hill [1978] 1 NSWLR 372 at 382B (Glass JA with whom Moffitt P and Hutley JA agreed)).
14. In these circumstances, I am satisfied that not only are the documents sought capable of relevance to the issues in the proceedings, but also that it is necessary that they be produced to resolve the issues in the proceedings.

The 29 January 2018 Notice to Produce - documents relating to Mr Setogawa

1. As the "Record of Confirmation of Intent" document reveals, Mr Setogawa was the representative of the Bank that "interviewed" Mr Miyazaki concerning the guarantees to be given to the Bank by Mr Ackroyd.
2. On or about 30 September 2016, Mr Setogawa swore the only affidavit served by the Bank as its evidence in chief.
3. On 23 January 2018 (that is less than two weeks ago) the Bank's solicitors informed Mr Ackroyd's solicitors that the Bank: "Presently does not intend to read or rely on the Setogawa affidavit. In this regard, we are instructed that Mr Setogawa has left [the Bank]."
4. The Bank's solicitors said that, instead, it would rely upon an affidavit sworn by a Ms Yixin Ding which, the solicitors asserted, exhibited "the same material as that appearing" in the exhibit to Mr Setogawa's affidavit.
5. The stated reason for changing deponents from Mr Setogawa to Ms Ding was Mr Ackroyd's service of a notice disputing the facts alleged in a Notice to Admit Facts that the Bank had evidently, some six months earlier, served on Mr Ackroyd. The Bank's solicitors did not explain why service of the Notice Disputing Facts, or Mr Setogawa's departure from the employ of the Bank led to the need to adduce evidence from Ms Ding rather than from Mr Setogawa.
6. In these circumstances, Mr Ackroyd entertains a suspicion that, to adopt the words of his solicitor, "Mr Setogawa left [the Bank] in circumstances that might be explained (at least in part) by his conduct in relation to the account of NPE".
7. On behalf of Mr Ackroyd it was submitted that if the Bank did "take steps against" Mr Setogawa by reason of the manner in which he conducted the NPE account (for example because he failed to follow the Bank's policies and procedures for assessing loan serviceability and credit worthiness) then "any materials documenting those steps and the facts thereby uncovered" would be capable of relevance to the matters in issue.
8. There is, of course, a degree of speculation involved in this submission. However, the belated and very recent revelation of Mr Setogawa's departure from the Bank and the curious explanation given for substituting Ms Ding for Mr Setogawa as the Bank's principal deponent persuades me of the necessity that the Bank produce documents explaining the circumstances in which Mr Setogawa ceased employment with the Bank. If the circumstances are as Mr Ackroyd has apprehended, that is a matter clearly capable of relevance to the issues in the proceedings.
9. However, I do not think it appropriate that the Bank produce all of Mr Setogawa's personnel file. Such a file is likely to contain much personal and confidential information bearing no relevance to any issue in the proceedings.
10. Accordingly, I propose to set aside par 1 of the Notice to Produce of 29 January 2018 but not par 2.
11. I make the following orders: 1. Paragraph 1 of the defendant's Notice to Produce of 29 January 2018 is set aside. 2. The plaintiff's Amended Notice of Motion of 2 February 2018 is otherwise dismissed.
12. I will hear the parties as to costs.

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