Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 869 | Case summary

1 I am dealing with the plaintiff's interlocutory process filed on 12 August 2009 in these proceedings brought under s 459G of the Corporations Act 2001 (Cth) in respect of a statutory demand served on the plaintiff by the defendants. 2 The interlocutory process relates to a notice to produce served by the defendants on the plaintiff pursuant to rule 21.10 of the Uniform Civil Procedure Rules 2005. That notice, by its terms, requires the plaintiff to produce for inspection to the defendants documents described in its paragraphs 1, 2 and 3 as follows: "1. Any dealing or agreement concerning the unregistered leasehold to Colo Investments Limited of the premises situated in Vanuatu being leasehold title number 11/OD22/069 located at Rue de Paris, Port Vila, Vanuatu. 2. Any dealing being a transfer or assignment of the leasehold estate of the premises situated in Vanuatu being leasehold title number 11/OD22/069 located at Rue de Paris, Port Vila, Vanuatu from Club Vanuatu Limited to any party other than Colo Investments Limited. 3. Any documents establishing Robert Osborne as the sole beneficial interest holder in Colo Investments Limited and Lakehouse Investments Limited." 3 At an early stage of the hearing of the interlocutory process, Mr Simpkins SC, who appeared for the defendants, foreshadowed an application for the fixing of a return date for a notice under rule 34.1 requiring the plaintiff to produce to the court documents of the descriptions 1, 2 and 3 in the existing notice under rule 21.10. Argument then proceeded by reference to both rules. It is the contention of the plaintiff that a notice calling for the production of documents according to the descriptions 1, 2 and 3 is not authorised by either rule 21.10 or rule 34.1. 4 Rule 21.10 is in these terms: "(1) Party A may, by notice served on party B, require party B to produce for inspection by party A: (a) any document or thing that is referred to in any originating process, pleading, affidavit or witness statement filed or served by party B, and (b) any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue.

(2) The other party must comply with a notice to produce: (a) by producing the notice or a copy of it, and the document or thing, to the court, or to the examiner authorised to take evidence in the proceeding as permitted by the court, at the date, time and place specified for production, or (b) by delivering or sending the notice or a copy of it, and the document or thing, to the registrar at the address specified for the purpose in the notice, so that they are received not less than 2 clear days before the date specified in the notice for production." 7 The defendants accept that they cannot sustain item 3 of the existing notice under rule 21.10 (or, more particularly, rule 21.10(1)(b)) but contend that rule 34.1 will support all of items 1, 2 and 3. The plaintiff's contention is that neither item 1 nor item 2 refers to a "specific document ... that is clearly identified in the notice", as mentioned in rule 21.10 (1) (b) and that none of items 1, 2 and 3 refers to a "specified document" as mentioned in rule 34.1. 8 Differences between the two rules were referred to by Brereton J in Norris v Kandiah [2007] NSWSC 1296 at [3]: "There are important and fundamental distinctions between a notice to produce under r 21.10 and a notice to produce under r 34.1. Rule 21.10, appearing as it does in Pt 21 of the Rules, is a process of discovery. A notice under r 34.1, appearing in Pt 34 entitled Notice to Produce to Court and following notices to produce at the hearing including opinions is a process akin to a subpoena for production. I endeavoured to explain the differences between the process of discovery and that of a subpoena for production in A Pty Ltd v Z [2007] NSWSC 899. One of the critical differences is that the touchstone of discovery is the concept of relevance to a fact in issue in the proceedings, whereas subpoenas for production are not necessarily limited to documents relevant to a fact in issue, but may extend to documents relevant to credit. 9 Brereton J went on to make observations about rule 21.10 referring specifically to what had been said by Young CJ in Eq in Penrith Rugby League Club Limited v Brown [2004] NSWSC 1182. Brereton J said at [4]: "Part 21 r 10 authorises service of a notice to produce, in respect of documents referred to in originating processes, pleadings, affidavits and witness statements, and 'any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue'. The limitations with the requirement that there be a 'specific document' and that it be 'clearly identified' were explained by Young CJ in Eq in Penrith Rugby League Club Ltd v Brown [2004] NSWSC 1182. As his Honour explained, the rule was not intended to subject a recipient to any kind of general discovery obligation. The words 'clearly identified' mean that there must be something more specific than a matter which can be ascertained by the ordinary processes of construction and employing extrinsic evidence; it must be pointed out in a manner distinct and free from confusion. The requirement for specificity connotes something that is identified, and not merely identifiable. His Honour upheld a submission that it would be insufficient to identify a box containing a number of unspecified documents, or a lever arch folder containing a number of unspecified documents; identification of the specific documents was required." 10 Brereton J then stated his conclusion on the matter before him at [5]: "In my view, this notice does not clearly identify specific documents, but calls for classes of documents. It was not the intent of this rule to enable notices to be given requiring production of classes of identifiable documents, as distinct from specific identified documents. Accordingly, in my view, this notice is not a valid exercise of the power to serve a notice to produce under r 21.10, and I would set it aside on that basis." 11 It is thus clear that, in rule 21.10, the combination of "specific document" and "clearly identified" means that a notice can relate only to a document describe by means of characteristics peculiar to itself, such as a letter of a given date written by X to Y, or the minutes of a meeting of directors of Z Limited held on a given date. A notice relating to all letters written by X to Y in 2008 or the minutes of all meetings of the directors of Z Limited held in 2008 would not be permitted because referring to a class of document as distinct from what Harrison AsJ in Douglas Corporation v Currico Nominees [2007] NSWSC 113 termed "the individual document sought" is not a permissible course. 12 The language used in rule 34.1. - "specified document" - is different. The word "specified" here means, in my view, the same as "described" or "identified", so that a notice under rule 34.1 plays in relation to a party the role that is played under rule 33 by a subpoena in relation to a non-party. 13 The requirement under rule 33 is that a subpoena to produce documents "identify" the document to be produced (see rule 33.3(4)(a)), that is, cut the document out from the universe of documents by some description or specification. 14 It is permissible for a subpoena to call for, for example, all documents recording oral communications between A and B within a stated period and referring to a particular company: see Lane v Registrar of the Supreme Court [1981] HCA 35; (1981) 148 CLR 245. Such a subpoena satisfies the requirement that there be "specified with reasonable particularity the documents that are required to be produced". These are the words of Jordan CJ in Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 573. What is impermissible, again using the words of Jordan CJ, is that a person be required to search for or produce all such documents as he or she may have in his or her possession or power relating to a particular subject matter. Jordan CJ continued: "It is not legitimate to use a subpoena for the purpose of endeavouring to obtain what would be in effect discovery of documents". 15 That observation was made in relation to a non-party but it holds good in the rule 34.1 context in relation to a party upon whom a notice under that rule is served. A like principle is that the recipient of a subpoena or rule 34.1 notice to produce must not be put into a position of having to judge the legal effect of a document or its capacity to prove something. Thus, it is impermissible to require the production of, for example, any document proving or tending to prove that X was in Sydney at any time on 1 January 2009. 16 An issue in these s 459G proceedings is whether it is arguable that there was, in terms of clause 5(c)(ii), (iii) or (v) of a deed of 20 December 2007, a "disposal" of the leasehold in Vanuatu, or a "disposal" of "any beneficial interest" in that leasehold, or a "disposal" of "Osborne's interest or that of an entity related to him in Colo Investments". 17 The first two paragraphs of the existing rule 21.10 notice and the foreshadowed rule 34.1 notice are concerned with the matter of disposal of the leasehold or an interest in it, while the third paragraph is concerned with the question of disposal of an interest in Colo Investments. 18 My assessment in relation to rule 21.10, leaving aside paragraph 3 of the notice which it is conceded cannot be supported under that rule, is that each of paragraph 1 and paragraph 2 fails to satisfy the requirement defined by the words "specific document" and "clearly identified" construed in the way to which I have referred. 19 When it comes to rule 34.1 and the application for a date for return of a notice to produce under that rule cast in the same terms, my conclusion is that paragraph 2 is unobjectionable because it identifies the document sought with precision, and in a way that does not cast on the recipient any unacceptable burden of interpretation or assessment; but the same cannot be said of paragraph 1 and paragraph 3. 20 Paragraph 1 uses the word "concerning". That word is extremely wide and would potentially cause to come within the description a multitude of documents. The leasehold property is, it appears, some kind of resort and agreements "concerning" it might well be taken to include agreements for the mowing of the lawns. It is not to the point to say, as I understood Mr Simpkins to say, that the description must be construed in the context of the issues in the case and read down accordingly. The High Court emphasised in Lane's case (above) that the recipient of a subpoena must take it as he or she finds it and comply faithfully regardless of views he or she may have about its intended scope or purpose. The same is true of a rule 34.1 notice to produce. 21 Paragraph 3 is also objectionable in the rule 34.1 context. It requires the recipient to form a view on the question whether a document establishes or proves or might establish or prove the subsistence of "a sole beneficial interest" in a particular person. That goes squarely to a matter of legal conclusion and is therefore beyond the permitted scope of rule 34.1. 22 In the result, therefore, the notice under rule 21.10 dated 10 August 2009 included in the annexure A to the affidavit of Angela Mary Frost affirmed on 12 August 2009 is set aside. 23 The defendants may, however, serve on the plaintiffs a notice to produce under rule 34.1 in the form of annexure C to the affidavit of Alexander Ronayne sworn 18 August 2009, but with paragraphs 1 and 3 thereof omitted. 24 I appoint 9am on 2 September 2009 before the Registrar for return of a notice to produce under rule 34.1 of the Uniform Civil Procedure Rules issued by the defendants and directed to the plaintiff, being a notice in the form of the annexure C to the affidavit Alexander Ronayne, sworn on 18 October 2009, but with paragraphs 1 and 3 thereof omitted.

Patonga Beach Holdings Pty Ltd v Lyons

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