Morris v Riverwild Management Pty Ltd & Ors [2009] VSC 654

"Trust account records and general office accounting records in respect of Giannakopoulos Solicitors' file reference EAG/COOL12482."

3 As well as those documents the Notice to Produce requires the production of:

"All bills and tax invoices rendered by Giannakopoulos Solicitors in respect of VCAT Domestic Building List proceeding DA79/1999".

4 The proceeding arises out of the settlement of VCAT proceedings in respect of a building dispute arising from a development of units and apartments at Falls Creek.

5 The background to this proceeding is set out in paragraphs 1-13 of the statement of claim and is summarised in the plaintiff's outline of submissions filed 9 April 2009. The VCAT proceedings settled after the commencement of the hearing. The defendants accepted the plaintiff's offer of settlement to pay $1,400,000 to the defendants together with the defendants' party-party costs in relation to their claims against the plaintiff. Those costs were subsequently agreed at $1,800,000. The defendants agreed that the other respondents would pay agreed sums inclusive of costs in full and final settlement of the proceeding.

6 The plaintiff says that as the defendants have already recovered a large proportion of the costs of the VCAT proceedings from other parties to the VCAT litigation when they were paid the "all in" settlement sums from those parties. The plaintiff says that they will be obtaining double recovery of part of their legal costs incurred in the VCAT proceedings. The proceeding seeks declaratory and injunctive relief to prevent this from occurring. The plaintiff says that the documents the subject of the notice to produce and the subpoena are likely to establish that there has been prior recovery of costs through "all in" settlements with the other respondents.

7 The defendants' application is based on three grounds. The first ground is that the documents which are sought are not sufficiently relevant to any issue which may legitimately arise in the proceeding.

8 The defendants submit that the test of "relevance" in the context of setting aside subpoenas and notices to produce is whether the documents sought are "reasonably likely to add, in some way or another, to the relevant evidence in the case".[1]

9 They say that that the application of what is relevant in this context must involve a consideration of the pleadings. The defendants submit that the plaintiff's claim in substance is that by accepting "all in" settlement sums from other parties to the VCAT proceeding, the defendants have already recovered some of their costs of that litigation being common costs, that is the costs incurred by the defendants in prosecuting their claims against more than one of the respondents to the VCAT proceeding. This is distinct from those costs which were incurred by the defendants in prosecuting their claim against one of the respondents to the VCAT proceeding only. By enforcing the VCAT consent orders, which require the plaintiff to pay the defendants $1,800,000 in costs, it results in a windfall to the defendants because they would recover twice for the same loss. This is a somewhat uncontroversial summary.

10 The defendants rely on an affidavit of their solicitor, Elias Giannakopoulos sworn 15 July 2009, which exhibits what are said to be representative samples of the various categories of documents of which production is sought. The defendants say that these documents are typical samples of the documents of which production is sought and are not reasonably likely to add to the evidence of whether the "all in" settlement sums include an amount of "common costs" or whether the VCAT consent order made in favour of the defendants against the plaintiff includes an amount of common costs.

11 Exhibit "EAG-3" to Mr Giannakopoulos' affidavit is a copy of a trust account receipt which identifies the subject payment by number and date, the source of the payment, its amount, and the reason for the payment.

12 Exhibit "EAG-4", is a copy of an extract from the trust ledger of Giannakopoulos Solicitors and is in the form a running account similar to a bank statement. It records the dates of the subject transactions, the source of such payments, the internal references, the amount of the debit or credit as the case may be and the balance of the account at the completion of a particular transaction.

13 Exhibit "EAG-5" is a copy of an extract from Mr Giannakopoulos' firm's office account. That document identifies whether a particular transaction is a payment or an invoice, the date of that transaction, its internal identification number, the amount of the debit or credit as the case may be and the running balance on the account at the completion of that transaction.

14 Exhibit "EAG-6" is a copy of a sample bill and tax invoice generated by Giannakopoulos Solicitors to a client involved in the VCAT proceedings, Coolumbooka Holdings Pty Ltd. This document gives a narrative by reference to a date in what might be described as very general terms of the legal work performed for the client to whom it is directed.

15 None of these documents segregate the legal work by reference to particular respondents to the VCAT application and, as such, is not informative as to what costs are being charged in respect of running the VCAT proceeding against particular respondents. As such, the defendants submit that the documents for which production is sought are not reasonably likely to add to the relevant evidence in the case.

16 Secondly, the defendants say that the subpoena and the notice to produce constitute "fishing" and as such, should be set aside. The defendants cite the decision of Crown Joinery Pty Ltd v Lyle Ho Pty Ltd [2007] VSC 214 (Maxwell P) where fishing in this context was described as using a subpoena or a notice to produce "not to obtain evidence to support one's case but to discover whether he has a case at all".[2] In support of that submission, they point to a letter from the plaintiff's solicitor of 28 April 2009, which states that the documents requested from the defendants were sought as they "may establish a train of enquiry relevant to the issues" of common costs and recovery of costs. It is said that this formulation is one which might be apt in ascertaining what is discoverable in the particular instance but not one which, on the application of the appropriate test, would justify the service of subpoenas or notices to produce. The defendants say that the letter betrays the plaintiff's true motive in serving the subpoena and notice to produce.

17 The third ground on which the defendants rely is that the subpoena and the notice to produce are an abuse of process because they have been employed as an alternative to an application for further and better discovery. The defendants say that they have already complied with the orders for limited discovery made in this proceeding on 7 October 2008 and there has been no subsequent pursuit of them for further and better discovery. In support of that general proposition, the defendants cite Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 574 where Jordan CJ stated:

"... but it is not legitimate to use a writ of subpoena duces tecum as a substitute for an application for discovery of documents, or as an alternative to an application for further and better discovery. Discovery applications should be made at the proper time and place. It would great impede the trial of actions at nisi prius_, and impose an intolerable burden upon the presiding judge, if he were required from to time to suspend proceedings and wade for himself through masses of documents for the purpose of endeavouring to determine whether any of them are relevant."_

18 The defendants say that the subpoena and notice to produce are really seeking further discovery of two categories of documents, where if the plaintiff was to make that an application for further and better discovery, it would be unlikely to succeed.

19 The plaintiff agrees with the general proposition of the defendants that, with both notices to produce and subpoenas, there is a requirement that the documents be relevant to a question in the proceeding and with the formulation that the documents ".... are likely to add, in the end, in some way or another, to the relevant evidence in the case."[3]

20 The plaintiff made reference to the exhibits to Mr Giannakopoulos' affidavit referred to above. It is said that those documents exhibited provide limited disclosure of a disjointed sample or extract of the documents sought but, even then, the sample demonstrates the relevance of the documents which are sought.

21 The plaintiff says that the issue of bills and tax invoices for costs, and the subsequent treatment of amounts paid into the solicitors' trust account is a matter which is likely to add to the relevant evidence in respect of the plaintiff's allegations. It was submitted that:-

(i) It can be inferred from the trust ledger that the funds received from other respondents were applied to pay costs;

(ii) Exhibit "EAG-5", which is the general office accounting record, demonstrates that there has been payment of costs by the defendants; and

(iii) The sample bill of costs, which is exhibit "EAG-6", reveals in part the nature of the work incurred and whether those costs would have been incurred in respect of the plaintiff only or whether the costs incurred were common to other respondents to the VCAT proceeding.

22 The plaintiff asserts that the sample appears to have been selected to avoid any further analysis or reconciliation and that full disclosure, as sought, will materially assist or lead to a course of enquiry that would advance the plaintiff's case. In support of that proposition, the plaintiff cites the seminal case involving discovery of Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 at 63 per Brett LJ.

23 The plaintiff further submits that the service of the subpoena and the notice to produce is not fishing as, from the date of commencement of the proceeding, it has clearly pointed to the relevance of prior recovery of costs through "all in" settlements with the other respondents and does not seek documents which go improperly beyond relevance to this material element of his case. It is stated that the service of the subpoena and notice to produce is '"founded upon a reasonable belief that the document[s] [do] contain information of value to assist" the plaintiff's case against the defendants" and that having received Mr Giannakopoulos' affidavit that it can now be submitted that the documents do actually contain information of value to his case.

24 The defendants have submitted that the sample documents exhibited to Mr Giannakopoulos' affidavit are typical and representative samples of the categories of the documents which the plaintiff seeks production. The plaintiff has submitted that the samples appear to have been selected to avoid any further analysis or reconciliation but I do not consider that he has a basis for such an assertion.

25 If it is accepted (and I do) that the samples are each typical of their category they would not, in my view, be reasonably likely to add to the relevant evidence in the case. "EAG-3", the trust receipt, only reveals details of the payer, the amount, the date and a reason for the payment by reference to account number.

26 "EAG-4", the trust ledger does not, in my view, add to the evidence that the plaintiff requires to establish its case. There is no identification of discreet payments in respect of particular work done in relation to identified respondents in the VCAT application. The trust ledger portrays an ingress and egress of funds on a running account. Funds from various sources are mixed and dispersed. Prior to the payment of the settlement sums from Tress Cox and Phillips Fox, there was some $254,000 in the account. After the payment of the Tress Cox and Phillips Fox amounts, barristers' fees of $480,660 are disbursed together with a payment of Richard Rodd & Associates, an expert engaged in the VCAT litigation. The document does not take the plaintiff's position any further. The same position applies in respect of the "accounts rendered - customer balance detail" of the Giannakopoulos Solicitors' office account which is Exhibit "EAG-5".

27 If it is accepted that exhibit "EAG-6" is a copy of a typical tax invoice, it contains no information to enable an analysis on what work was performed in respect of which respondents in the VCAT proceeding.

28 In my view, even if all of the documents which the exhibits were typical samples of were produced, it would not enable the "common costs" issue to be advanced.

29 I turn to the defendants' submission that the plaintiff, in serving the documents, is indulging in "fishing", which is the process of endeavouring not to obtain evidence to support a party's case but to discover whether that party has a case at all.[4] The letter from the plaintiff's solicitor of 28 April 2009, by adopting the formulation that the documents "may establish a train of enquiry relevant to the issues" of common costs and recovery of costs, adopts the jargon applied in discovery matters. However, I am not persuaded by reason of that letter alone that the plaintiff is indulging in fishing properly so called.

30 I am however, attracted to the defendants' submission that the plaintiff has employed the subpoena and notice to produce as an alternative to an application for further and better discovery. The plaintiff's resort to these mechanisms to obtain production of the documents sought rather than make an application for wider orders for discovery is not explained. There has already been discovery in the proceeding, albeit limited by order of the Court on 7 October last year and the defendants have complied with that order. In my view, the plaintiff is not entitled to pursue production of the documents sought in the manner adopted here and in this regard, I make reference to the comments extracted above from the decision of The Commissioner for Railways v Small (1938) SR (NSW) 564 at 574 of the judgment of Jordan CJ.

31 I order that the subpoena dated 24 April 2009, and the notice to produce dated 23 April 2009, be set aside. I also order that the plaintiff pay the defendants' costs of the application.

[1] Re Eigth Dictum Pty Ltd (Unreported), Hedigan J 26 March 1991 (at 9, 10; Liberty Financial Pty Ltd v Scott [2004] VSC 382 at [32] (Smith J).

[2] At para [32], citing Commissioner for Railways v Small (1938)38 SR (NSW) 564, 575.

[3] Re Eighth Dictum Pty Ltd, Hedigan J, unreported 26 March ,1991 at page 9.

[4] See Commissioner for Railways v Small (1938) SR (NSW) 564 at 575.