Richardson Pacific Ltd v Fielding

Federal Court of Australia|1992-10-26|Before: French J, Nicholson J

CATCHWORDS PRACTICE AND PROCEDURE - third party discovery - whether orders previously made should be recalled - whether motion should be granted in respect of revised description of third party documents. Richardson Pacific Ltd v Fielding (1990) 26 FCR 188 Autodesk Inc v Dyason (1993) 176 CLR 300 Re La Rosa; Ex parte Norgard (French J, 26 October 1992, unreported) Hughes v Western Australian Cricket Association (Inc) & Ors (1986) 66 ALR 541 Waind v Hill & National Employer's Mutual General Association Ltd [1978] 1 NSWLR 372 Smith v New South Wales Bar Association [No2] (1992) 176 CLR 605 MCLERNON GROUP INSURANCES PTY LTD v BIRON CORPORATION LIMITED and LLOYD ZAMPATTI NO WAG 3003 OF 1995 R D NICHOLSON J PERTH 6 JULY 1995

IN THE FEDERAL COURT OF AUSTRALIA ) WESTERN AUSTRALIA DISTRICT REGISTRY) GENERAL DIVISION ) NO WAG 3003 OF 1995 B E T W E E N: MCLERNON GROUP INSURANCES PTY LTD Applicant and BIRON CORPORATION LIMITED First Respondent and LLOYD ZAMPATTI Second Respondent MINUTE OF PROPOSED ORDERS JUDGE MAKING ORDER: R D NICHOLSON J DATE OF ORDER: 6 JULY 1995 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The respondent's motion dated 9 June 1995 be amended to provide for the relief claimed in par2 to be claimed also in the alternative. 2. Paragraph 1 of that motion be refused. 3. Paterson Ord Minnett Limited make discovery to the respondents of any documents in its possession in any of the following classes: (a) Research notes, drafts of research notes and recommendations created by Paterson Ord Minnett Limited in relation to the first respondent or the value of the ordinary shares of the first respondent over the period July 1994 to October 1994.

(b) Financial models and projections created by Paterson Ord Minnett Limited in relation to the first respondent or the value of the ordinary shares in the first respondent over the period July 1994 to October 1994. (c) Notes or memoranda of verbal communications between officers, employees, or agents of Paterson Ord Minnett Limited and officers, employees or agents of the applicant in relation to the first respondent or the value of the ordinary shares in the first respondent over the period July 1994 to 31 January 1994. (d) Notes or memoranda of verbal communications between officers, employees or agents of Paterson Ord Minnett Limited and officers, employees or agents of the first respondent in relation to the first respondent or the value of the ordinary shares in the first respondent over the period July 1994 to 31 January 1995. (e) Drafts of research notes created by Paterson Ord Minnett Limited in relation to the first respondent or the value of the ordinary shares of the first respondent and sent to the second respondent on or about 16 September 1994 together with any accompanying correspondence. (f) Statements made by any officers, employees or agents of Paterson Ord Minnett Limited in relation to dealings between Paterson Ord Minnett Limited, the applicant and the first respondent over the period July 1994 to 31 January 1995.

Order 3 is to be complied with by Brian Eley of Paterson Ord Minnett Limited filing and serving on the respondents within 21 days after the date of this order: (a) a list of documents in accordance with O15 r6; and (b) an affidavit verifying the list. 5. The respondents pay Paterson Ord Minnett Limited's reasonable costs and expenses of complying with Order 3 and Order 4, to be taxed if not agreed. 6. The costs of the motion dated 9 June 1995 be in the cause. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) WESTERN AUSTRALIA DISTRICT REGISTRY) GENERAL DIVISION ) NO WAG 3003 OF 1995 B E T W E E N: MCLERNON GROUP INSURANCES PTY LTD Applicant and BIRON CORPORATION LIMITED First Respondent and LLOYD ZAMPATTI Second Respondent CORAM: R D NICHOLSON J DATE: 6 JULY 1995 PLACE: PERTH REASONS FOR JUDGMENT By a notice of motion filed on 9 June 1995 ("the second motion") the respondents move the Court for orders to recall orders refusing the respondent's motion dated 13 April 1995 ("the first motion"). In lieu, the respondents seek orders that, pursuant to O15A r8 of the Rules of the Federal Court ("FCR"), a third party make discovery to the respondents of any documents in its possession in any of certain classes. The classes of document sought in the second motion are of a more limited character than those which were the subject of the first motion. There the classes of document in relation to which an order for third party discovery was sought was wide enough to include documents capable of being the subject of discovery between the parties. A comparison of the orders previously sought with those now sought shows that classes 1 and 3 of the documents sought by the first motion have been entirely eliminated and two other classes have had deletions of matters which would form the subject of inter partes discovery. In addition, there has been added a fifth class relating to draft research notes. In reality the second motion is brought upon a new description of documents. There is no dispute that the Court has jurisdiction to order recall if appropriate: FCR O35 r7. The basis upon which the respondents apply to recall the orders is that the ratio of the reasons issued on 8 June 1995 was that the application was refused because the classes of document in relation to which third party discovery was sought were too wide, and that issue had not been argued at the hearing. In the reasons of the Court that matter was dealt with in the following way: "The difficulty which I have with the respondent's application initially is that the classes of documents to which third party discovery is sought are considerably wider than any matters arising from the alleged role played by Mr Eley. Many of them include documents said to have been provided by the third party to the applicant so there is the question of why they would not have been discovered by the respondent against the applicant in the normal course of pre-trial discovery. Likewise documents between the third party and the first respondent ought to be within the knowledge and possession of the first respondent. In short, I do not consider that the case made for the respondents establishes that there are real problems which can only be addressed by the utilisation of FCR O15A r8. The existence of circumstances justifying the exceptional utilisation of the order are not made out." That paragraph had been preceded earlier in the reasons by the following paragraph: "The manner in which O15A r8 should be applied was considered by Burchett J in Richardson Pacific Ltd v Fielding (1990) 26 FCR 188. It is there acknowledged that the rule provides a practical and convenient means by which a party may obtain an opportunity to examine documents in advance of the hearing and with sufficient time to take such further steps as a perusal of them may suggest. Furthermore, the purpose of the rule is to enable discovery to be obtained in some cases where anything less than the broad obligations imposed by an order for discovery would simply not meet the case. As Burchett J saw it, the rule is not intended for the general run of case but rather for cases which have about them something outside of the ordinary. Nevertheless the rule is not fettered by any general propositions from being applicable in cases where the evidence suggests that it would provide an appropriate and reasonable solution to real problems." In submissions on the hearing of the second motion counsel for the respondent applicant submitted that a proper reading of the reasons showed the issue of width not to have been the ratio of the decision. Counsel for the third party supported that submission and submitted that the question of width of the documents sought by the prior motion was an issue at the former hearing. In Autodesk Inc v Dyason (1993) 176 CLR 300 at 308, Brennan J said: "It is desirable to add in the context of the present case a further observation about the opportunity to be heard. A court should not pronounce a judgment against a person on a ground which that person has not had an opportunity to argue. However, a sufficient opportunity to argue a ground is given when the ground is logically involved in a proposition that has been raised in the course of argument before the court or is to be considered by the court as an unconceded step in determining the validity of a conclusion for which one of the parties contends. Of course, the precise ground which a court or judge assigns for a decision will frequently be formulated in terms different from the terms of a submission by counsel but, provided the ground has arisen in one of the ways mentioned, the court or judge may properly proceed to judgment without requiring the case to be relisted for further argument and without inviting supplementary submissions to be made."

Reliance is placed upon this dicta both on behalf of the respondents and on behalf of the applicant and third party. See also Smith v New South Wales Bar Association [No2] (1992) 176 CLR 605 at 608. I am unable to accept that a reading of the reasons delivered on 8 June 1995 shows that the width of the documents sought was the ratio of the decision. Richardson Pacific Ltd v Fielding (1990) 26 FCR 188 required the Court to consider the appropriateness of an order being made in circumstances where the rule relied upon was not intended for the general run of cases. The width of the rule, as the reasons state, had the consequence that a number of the documents sought were capable of being discovered in the normal course of pre-trial discovery with the consequence that there were no real problems so far as that was the case. As a consequence the Court concluded that the existence of circumstances justifying the exceptional utilisation of the order were not made out. The issue of width is properly to be regarded as logically involved in the propositions raised in the course of argument: cf Autodesk (supra). Whether or not that be correct it is the fact that on the occasion of the hearing of the first motion, no specific submissions on the issue of width were attracted. Furthermore, in the second motion the respondents have narrowed the class of documents and continue to rely upon O15A r8. In that context it is appropriate therefore to return to the authority of Richardson (supra) and to note that the reasons for judgment of Burchett J state the following propositions in relation to the utilisation of FCR O15A r8: 1.The purpose of the order is, quite expressly, to enable discovery to be obtained in some case where anything less than the broad obligations imposed by an order for discovery would simply not meet the case. 2.The rule provides a more practical and convenient means by which a party may obtain an opportunity to examine documents in advance of the hearing with sufficient time to take such further steps as a perusal of them may suggest. 3.The rule is intended, not for the general run of case, but for cases which do have about them something outside of the ordinary so that, by this means, the Court can go beyond what could be done upon a subpoena duces tecum issued in advance. 4.Normally an order for disclosure of documents by a stranger to proceedings should be made only when the stranger to the proceedings has the only copies of the particular documents, disclosure of which is sought, and the party to proceedings, who is seeking disclosure, has exhausted his or her rights with respect to discovery against the other party to proceedings. 5.That, however, is not a fetter restricting the applicability of the rule in cases where the evidence suggests it would provide an appropriate and reasonable solution to real problems. 6.In that particular case, there was a close relationship between the respondents and the non-parties sought to be subjected to the requirement of giving discovery and the relationship was quite unusual so that the circumstances were extraordinary. 7.In the drafting of orders sought for third party discovery tighter lines should be followed than may be usually the case, although circumstances may make a broad order appropriate. 8.A relevant consideration is whether it is plainly probable that there do exist documents relevant to the issues in the case which orders in the nature sought would be likely to bring to light. 9.The jurisdiction under the rules should be exercised with caution. 10. The exercise of the discretion to make an order under the rule should not be fettered by any precise rules and the above matters should be taken as general guides.

In Re La Rosa; Ex parte Norgard (French J, 26 October 1992, unreported) concurred with the view expressed by Burchett J that the facility for inter partes discovery and for the issue for subpoenas might, although not necessarily in every case, exclude resort to FCR O15A. It is accepted by the parties that a subpoena for production may be sought pursuant to FCR O27 r2 to the third party and that such a subpoena may be for production of documents on a date earlier than the date fixed for the hearing of the application: Hughes v Western Australian Cricket Association (Inc) & Ors (1986) 66 ALR 541. However, it is submitted by counsel for the respondents that only the broad obligations imposed by an order for discovery are appropriate to meet the needs of this case. It is also submitted that as there is evidence of a relationship between the applicant and the third party (in that the solicitors for the third party have provided the applicant's solicitors with a written statement containing certain information obtained from Mr Eley with respect to the matters in issue in this action) this is a case where an order pursuant to the rule would provide an appropriate and reasonable solution to the needs of the case. The pleadings disclose that the applicant seeks damages and other relief in respect of a loss sustained by the applicant when it purchased ordinary shares in the first respondent in reliance upon statements made to it by Eley, a servant of the third party to whom discovery is sought to be directed. It is further pleaded that Eley did not have disclosed to him certain matters within the knowledge of the second respondent. It is consequently relevant to the resolution of the case that there be evidence available to the court hearing the matter of the state of knowledge of the third party when it prepared the statements upon which the applicant claims to have relied and as a consequence of which claims to have suffered damage. It is not therefore necessary to further canvas the detail of why it is plainly probable that there do exist documents relevant to the issues in the case in the hands of the third party. It is not contended for the applicant and the third party that the documents sought in the second motion are not relevant. I am satisfied that the documents in relation to which the applicant seeks an order pursuant to the second motion, re‑drafted to avoid the previous considerable overlap with general discovery between the parties, are from their description, more appropriately obtained through a broad obligation imposed by an order for discovery than by a subpoena for production prior to trial. The third party holding documents plainly likely to be relevant, such an order would provide an appropriate and reasonable solution to real problems. In my opinion the motion for an order recalling the orders on the first motion should be refused. In addition, and in order to avoid a multiplicity proceedings, I consider I should order, subject to any submissions the other parties may wish to make, that the respondents amend the second motion to seek orders in relation to the re-drafted list of documents independently of the precondition that the order on the first motion be recalled and as an alternative to it. The progress of the litigation would not be advanced by refusing the second motion on the ground that it is inextricably bound up in its present form with a recall of the orders on the prior motion. The fact is that the applicant has in substance brought a new motion relating to a new list of documents and that motion should be dealt with separately. The respondents should also be required to narrow the dates of class 1 and 2 documents from December 1994 to October 1994 as has been accepted on their behalf. The possibility that a claim of privilege may exist in relation to a document or classes of document is not an obstacle to the making of the order. That matter will arise at the appropriate time: cf Waind v Hill & National Employer's Mutual General Association Ltd [1978] 1 NSWLR 372. Category (e) of the classes of document sought addresses "drafts of research notes". I am satisfied this is an appropriate class for the order to address in view of reference to such drafts in the statement of claim. Any written submissions on behalf of the applicant or the third party in opposition to the course proposed should be filed within 3 days of service of these reasons. The parties will have liberty to file written submissions on costs on the amended second motion. I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment of his Honour Justice R D Nicholson. Associate: Date:

APPEARANCES Counsel for the Applicant: Mr K J Martin Solicitors for the Applicant: Williams & Hughes Counsel for the Respondent: Mr J Vaughan Solicitors for the Respondent: Sly & Weigall Counsel for Third Party: Mr D J Bishop Solicitors for Third Party: Clayton Utz Date of Hearing: 23 June 1995 Date of Judgment: 6 July 1995

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