National Australia Bank Ltd & Ors v Idoport Pty Ltd & Anor [2000] NSWCA 8 | Case summary

NATIONAL AUSTRALIA BANK LTD & ORS v IDOPORT PTY LTD & ANOR 1 MASON P and PRIESTLEY JA: In proceedings in which the plaintiffs' Third Further Amended Statement of Claim contains seventy-three pages and asserts a very significant claim against the National Australia Bank Limited and other defendants, and in which Einstein J has heard lengthy interlocutory applications, he made orders for discovery on 28 October 1999, against which the defendants have sought leave to appeal. 2 The defendants wish to rely on two principal grounds of appeal. One is that the trial judge used a legally wrong test in deciding what orders to make; the other is that the width of the orders makes them plainly oppressive. 3 As to the first ground, it was submitted that the test of relevance which the trial judge used was that formulated by Brett LJ in Compagnie Financiers du Pacifique v Peruvian Guano Co (1882) XI QBD 55 at 63: " It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may - not which must - either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. I have put in the words 'either directly or indirectly,' because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead him to a train of inquiry, which may have either of these two consequences. " 4 This statement of what is relevant for purposes of discovery became an accepted formulation and was widely used in common law jurisdictions, sometimes without any consideration being given to its specific context. Until 1996 New South Wales was one of the jurisdictions where it was accepted as applicable to the parts of the Supreme Court Rules dealing with discovery. By that time dissatisfaction had grown with the second sentence in Brett LJ's statement in which he explained "either directly or indirectly" and introduced "the train of inquiry" idea. 5 In 1996 new discovery rules came into operation in Part 23 of the New South Wales Supreme Court Rules. Relevance was defined in Rule 1 of Part 23: " 1(a) ... (d) a document or matter is to be taken to be relevant to a fact in issue if it could or contains material which could, rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or matter would be admissible in evidence." 6 Sub-rules (1), (2) and (3) of Rule 3 were: " (1) The Court may, on the application of a party or of its own motion, order that any party (party B) give discovery to any other party (party A) or parties (each of which is included in the expression 'party A') of: (a) documents within a class or classes specified in the order; (b) one or more samples (selected in such manner as the Court may specify) of documents within such a class. (2) A class of documents shall not be specified in more general terms than the Court considers to be justified in the circumstances. (3) Subject to subrule (2), a class of documents may be specified: (a) by relevance to one or more facts in issue; (b) by description of the nature of the documents and the period within which they were brought into existence; (c) in such other manner as the Court considers appropriate in the circumstances. " 7 It was intended that the new rules would exclude Brett LJ's "train of inquiry" idea as a factor in deciding relevance. In our view this was achieved by the definition of relevance in r 1(d). The "train of inquiry" idea could make a document discoverable even if it did not itself advance one party's case, damage that of the other, or relate to an issue; under the new rules, a document must be relevant to a fact in issue in the defined sense. 8 The basis for the defendant's submission that the judge used a test involving the "train of inquiry" idea was that he accepted as correct a submission for the plaintiffs that a passage from the joint reasons of Black CJ, Gummow and French JJ in Commonwealth v Northern Land Council (1991) 30 FCR 1 at 23 was apt for use in Supreme Court proceedings. He quoted the passage as follows: " A document relates to a matter in question between the parties if it is reasonable to suppose that the document contains information which may - not which must - either directly or indirectly enable the party requiring [the production of the document] either to advance his own case or to damage the case of his adversary. " 9 It was pointed out that this passage adopted almost word for word the first sentence in Brett LJ's passage and that the Federal Court's reasons had continued by paraphrasing the second sentence in that passage. Thus the Federal Court adopted Brett LJ's explanation of his "directly or indirectly" phrase and recognised the "train of inquiry" idea as relevant to the Federal Court Rules which were different from those adopted in this court in 1996 one of whose objects was to exclude the "train of inquiry" idea from the concept of relevance. It was then submitted that Einstein J, by adopting the first sentence of Brett LJ's passage as relevant to Part 23 r 3(3)(a) of the Supreme Court Rules, was also adopting the "train of inquiry" idea as a factor in relevance and was therefore making a legal error. 10 It is significant however that Einstein J did not do any more than refer to Brett LJ's first sentence, did not adopt his explanation of "either directly or indirectly" but instead immediately referred to pars (b) and (c) of Pt 23 r 3, pointing out that they permitted discovery of a wider range of documents than those identified in par (a) of subrule (3), par (a) being the paragraph confined to documents relevant to one or more facts in issue. After pointing out the width permitted by pars (b) and (c) Einstein J went on to say, "The primary approach must, however, be to ascertain the matters in issue". This was clearly a reference to par (a). 11 In our view, both here and elsewhere in his reasons Einstein J showed clearly enough that he was applying subrule 3(a) on the basis of the new definition of relevance and not making use of the "train of inquiry" idea. Although we can understand why the argument to the contrary has been pressed before this court, we do not think it persuasive. 12 The fact that the defendants were able to submit, with a prima facie degree of plausibility, that Einstein J made a legal error arose from his partial adoption of statements made by another court on a different set of rules from those with which he was concerned. Although the part of Brett LJ's passage which Einstein J used may well have been useful in a general way in understanding one aspect of this court's new 1996 rules, its closeness to the next sentence incorporating the "train of inquiry" idea, which definitely has no application to Part 23 r 3(3)(a) of the 1996 rules, was likely to cause some readers to think (wrongly in the overall context) that he was also adopting the second and impermissible factor. The best way of applying subrule (3)(a) is by using it in accordance with its own terms. If they need to be explained it is undesirable that the terms of a judicial explanation of a quite different rule be used for that purpose. 13 The second main ground which the defendants wish to argue can be understood by reference to the following passage from Einstein J's reasons: " Plainly enough the defendants are obliged to discover documents only if it is reasonable to suppose that the documents contain information which may, not which must, either directly or indirectly enable the plaintiffs to advance their own case or to damage the defendants' case. Only high level documents going to the defendants' strategic examination of the importance of E-commerce to the defendants and to the defendants' strategic plans which could or may, on an expansive approach to the definition of 'AUSMAQ Service' and to the words 'service with the equivalent or similar functionality' [to the AUSMAQ Service] advance the plaintiffs' case or damage the defendants' case, require to be discovered.. I do not see it as appropriate to have a definition of 'E-commerce' in the order for discovery. That the term may be capable of referring to any electronic means of providing transactional and financial banking services or indeed of conducting commerce is not to the point. What is to the point is that the proceedings throw up for determination, assertions by the plaintiffs and a denial by the defendants: (a) As to the ambit of the subject definition of 'equivalent or similar functionality' [to the AUSMAW Service]; (b) As to whether the defendants, and in particular the Bank, has developed services falling within that definition; (c) As to the recognition by the defendants and in particular by the Bank of the significance of E-commerce banking generally in terms of the direction of future banking. " 14 The orders which Einstein J made were as follows: " Order that the defendants give discovery of the following documents by the following dates: (1) High level documents created in the period from 6 November 1996 internally with any one or more of the defendants referring to or commenting upon or considering the importance to any one or more of the defendants of E-commerce for the provision of financial services. (2) High level documents created in the period from 7 November 1996 recording, referring to or relating to analyses or evaluations or consideration of the benefit to any one or more of the defendants of E-commerce for the provision of financial services. (3) In paragraphs 1 and 2 of this order 'high level documents' means: All documents which were sent to: (a) Any one or more of the individual defendants; and/or (b) The board of directors of one or more of the corporate defendants; and/or (c) Any person or committee or subcommittee reporting to any of the individual defendants or the boards of any one of the corporate defendants, and/or (d) Any one or more persons in the Group Leadership Team (as described on page 13 of the National Australia Bank Limited 1998 Annual Report [being exhibit A1 as marked on the interlocutory discovery application heard on 28 September 1999]. (4) Discovery of documents sent to the persons and entities referred to in sub-paragraphs (a) and (b) of paragraph 3 is to take place by 29 February 2000. (5) Discovery of documents sent to the persons and entities referred to in sub-paragraphs (c) and (d) of paragraph 3 is to take place by 31 March 2000. (6) The proceedings are stood over for further directions on the first day of term next year, prior to which date the defendants' solicitors are to file and serve an affidavit dealing with the defendants' progress in complying with these directions. The affidavit is to detail the precise steps taken in endeavouring to comply with these directions. " 15 For the defendants it was submitted that compliance with these orders would compel them to discover a number of documents so extraordinarily large as to make the orders oppressive for that reason alone and further would require the production of documents not necessarily relevant in the defined sense. 16 Counsel for the defendants sought to support the first branch of this submission by reference to an affidavit which had been filed before Einstein J describing the huge number of documents that would have to be discovered and a great amount of time that would be taken in discovering them. However, this affidavit was dealing with orders then being sought by the plaintiffs. It is not of great assistance in regard to the orders subsequently made by Einstein J. It is apparent that the orders he made took into account the difficulties raised in the affidavit and were deliberately limited to reduce such difficulties. Also, order (6) shows that the judge was prepared to review the scope of his orders if the affidavit referred to in the order contained material requiring or justifying that course. (The date for the filing of the affidavit has in the meantime been extended by order of Sheller JA.) We do not think this argument justifies the granting of leave to appeal. 17 As to the second branch of the submission, it seems to us that if the issues as set out by Einstein J in the passage cited above from his reasons are correctly stated, then orders (1) and (2) describe classes of documents which could rationally affect the assessment of the probability of existence of facts bearing on the issues. 18 Counsel for the defendants agreed that issues (a) and (b) of the three issues specified by his Honour were in fact issues in the case. He submitted that issue (c) was not, because it did not appear from the pleadings. Therefore, he said, the documents referred to in (c) could not be said to be relevant to any issues in the case. However, this argument had been put to the trial judge whose expressed view was that the point was not fatal to the discovery of documents relevant to the issue, because, on his understanding of the case from the argument and the pleadings the documents were relevant to facts in issue, including facts relevant to assessment of damages. This seems to us to be a sound position for him to have taken, and on our own understanding of the case, as it was differently explained by counsel for the defendants and the plaintiffs before this court, we agree with his Honour's conclusion. 19 The trial judge appears to us to have acted on the basis that he would order discovery of classes of documents which could rationally affect the assessment of the probability of the existence of facts relating to material issues, and in doing so had determined what the material issues were by reference to the plaintiff's allegations in circumstances where the defendants were asserting that a narrower range of issues arose than the plaintiffs asserted. So long as there was a proper basis for the plaintiffs' assertions of the width of the issues, as we think there was, this in our opinion was a sound approach. 20 It seems to us to be clear from the materials before the court that the trial judge has been carefully overseeing the interlocutory stages of the plaintiffs' proceedings, that his discovery orders have been sensibly responsive to the opposing claims of the parties and that he has also appropriately indicated a preparedness to reconsider the scope and effect of his orders if there is an evidentiary basis for doing so. 21 We do not think that the defendants' submissions that the trial judge erred either in law or otherwise in exercising his discretion in the way he did in ordering discovery are sufficiently arguable to warrant the granting of leave to appeal. 22 In our opinion the application should be dismissed with costs. 23 FITZGERALD JA: The majority judgment enables me to state my opinion briefly. 24 The claimant's principal argument was founded on a combination of the breadth of the discovery ordered and the judge's reference to previous judicial statements on earlier rules. Attempts to construe or explain the present rules in that manner are likely, as on this occasion, to obscure rather than clarify the operation of the rules and the reasons for decision. 25 Discovery was ordered of two classes of documents. There is a passage in the judgment which suggests that the judge might have intended to limit the discovery to documents in those classes which could rationally affect the assessment of the Bank's probable motives for its impugned conduct and/or the opportunities to exploit the Ausmaq Service which the plaintiff probably lost as a result of that conduct. 26 The range of documents which the Bank would have to discover under such an order would be determined by the plaintiff's allegations which are disputed by the Bank. Such an order complies with Part 23 subrules 1(a), (2) and 3(a) and is not oppressive. 27 The majority consider that the judge correctly decided that any document in either class is relevant within the meaning of the discovery rules and that no limitation on the documents in the two classes was intended or needed. I doubt whether that is correct. 28 However, I am not persuaded that the judge applied a wrong principle. The correctness or otherwise of his orders ultimately depends on an analysis of the pleadings. That does not warrant a grant of leave to appeal from interlocutory orders. 29 I agree that the application should be dismissed with costs. **********

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National Australia Bank Ltd & Ors v Idoport Pty Ltd & Anor

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