Salim v Loh

REASONS FOR JUDGMENT ON DISPUTED CATEGORIES OF DISCOVERABLE DOCUMENTS Introduction 1 These proceedings, which have already consumed an unconscionable amount of time and money having regard to the amounts in issue, have now reached the point at which the parties are in dispute over the discoverability of certain categories of documents. I propose to make brief rulings in relation to each of the disputed categories. I do so within the framework provided by the relevant Rules of Court. The Relevant Rules 2 Order 15 r 2, which came into effect on 3 December 1999, provides, inter alia: '(1) A party required to give discovery must do so within the time specified in the notice of discovery (not being less than 14 days after service of the notice of discovery on the party), or within such time as the Court or a Judge directs. (2) Unless the Court or a Judge orders otherwise, a party must give discovery by serving: (a) a list of documents required to be disclosed; and (b) an affidavit verifying the list. (3) Without limiting rule 3 or 7, the documents required to be disclosed are any of the following documents of which the party giving discovery is, after a reasonable search, aware at the time discovery is given: (a) documents on which the party relies; and (b) documents that adversely affect the party's own case; and (c) documents that adversely affect another party's case; and (d) documents that support another party's case. (4) However, a document is not required to be disclosed if the party giving discovery reasonably believes that the document is already in the possession, custody or control of the party to whom discovery is given. (5) For subrule (3), in making a reasonable search, a party may take into account: (a) the nature and complexity of the proceedings; and (b) the number of documents involved; and (c) the ease and cost of retrieving a document; and (d) the significance of any document likely to be found; and (e) any other relevant matter. (6) If the party does not search for a category or class of document, the party must include in the list of documents a statement of the category or class of document not searched for and the reason why.' 3 The 1999 amendments to the Rules, which introduced the new O 15 r 2, manifested '… a quite new and restrictive policy in relation to the discovery to be allowed' in the Federal Court - South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 519 per Finn J. The rule that the discovery obligation covered documents that did no more than relate in some way to a matter in issue or that might lead to a train of inquiry has been abolished. The categories required to be discovered under O 15 r 2(3) include documents that support or adversely affect another party's case or that adversely affect a party's own case. They do not extend to documents that might support or adversely affect a party's case. The search obligation is limited to 'reasonable search'. 4 The authorities cited by the applicants in the present case such as Mulley v Manifold (1959) 103 CLR 341; Century v THLD (No 3)[2000] NSWSC 428; Commonwealth v Northern Land Council (1991) 103 ALR 267 and Lakatoi Universal Pty Ltd & Others v Walker & Others [1998] NSWSC 470 expound propositions relevant to the Rules as they stood before December 1999. Their citation without any explanation of their bearing upon the current Rules and the failure to cite those Rules suggest that the applicants' advisors have not read those Rules. 5 In determining whether discovery should be ordered of documents in categories disputed as between the parties to these proceedings, the criteria set out in O 15 r 2 will be applied. It is necessary therefore to consider the outstanding discovery issues as between each of the parties. The Applicants and the Second Respondent 6 The second respondent, Mr Robert Ashman, was at all material times a director of the fifth respondent, Ostrich Meat & Marketing Company (Australia) Ltd (OMM). The applicants seek discovery of documents under his 'care, management or control' 'including documents held by or on the premises of Nightingale Holdings P/L and/or Marketing & Technical Assistance P/L' relating to a variety of categories which are then set out in numerical order. The applicants say that there was a 'substantial intermingling' of the affairs of the second respondent in his capacity as a director of OMM and the affairs of the two companies mentioned. 7 The disputed categories are 12 and 13 in the applicants' list which, read subject to the opening words relating to Nightingale Holdings and Marketing & Technical Assistance, are: '12. accounts issued by the Second Respondent or any company which the Second Respondent was a director, to the Fifth Respondent for services rendered; 13. invoices, accounts, receipts submitted by Nightingale Holdings P/L to the Fifth Respondent dated 21 September 1995;' The second respondent objects to discovering documents relating to the two named companies. His objection is limited to giving discovery of documents which are in the possession of those companies. He does not admit that he is a director of either, but rather oddly suggests that 'if he is' then he would be likely to be in breach of his fiduciary duties to them if he were to produce such documents. This is an unimpressive line of argument. 8 The applicants say that the second respondent provided marketing services to OMM through the two named companies and that many items of correspondence relating to the affairs of OMM were apparently sent from the offices of Marketing & Technical Assistance. They refer also to minutes of a meeting of the directors of OMM in September 1995 referring to the tabling of an account for 'Nightingale promotional work done by Mr Ashman's company'. There was also evidence of a resolution by OMM to repay a very substantial loan to Nightingale. 9 Other instances are given by the applicants in their submissions of financial dealings between OMM and the two companies referred to in affidavit material on the file. It is submitted that the documents sought will throw light on systematic communications between the second respondent, on matters relating to OMM's affairs, and that this may shed light on the 'knowledge' issue. The documents will also shed light on, and be relevant to, the promotion of OMM by its directors. It is submitted by the applicants that the companies are likely to produce the documents if so required by their director. 10 In my opinion the criteria required to be satisfied in O 15 r 2 are not made out in this case. The submission made by the applicants at best relies upon a 'line of inquiry test'. The categories 12 and 13 would appear to require the second respondent to produce, inter alia, records of the two named companies. It is not shown that these are his or within his power to produce. I decline to order discovery against the second respondent in categories 12 and 13. 11 It appears that the second respondent no longer presses the applicants for discovery of disputed documents in categories 6 and 7 of his own request. The Applicants and the Third Respondent 12 The applicants seek discovery from the third respondent, Mr Marshall, of documents in the following categories, which are disputed: '… all Documents under his care, management or control, including documents held by or on the premises of Marshall Michael P/L relating to: … 14. minutes of meetings of directors of the Fifth Respondent; 15. resolutions of the Fifth Respondent, including but not limited to communications between from or to any of the Respondents regarding the affairs of the Fifth Respondent;' The third respondent contends that each of these categories is unreasonably wide and should be restricted to relevant subject matter by addition of the words 'relating to the sale of ostriches for the Fifth Respondent or investment packages in the Fifth Respondent to persons in Hong Kong or Indonesia'. Having said this, his solicitors say they are instructed that he does not appear to have in his possession any documents going beyond these categories so limited in any event. 13 In my view the wider discovery for which the applicants contend has no more than line of inquiry relevance. I propose therefore to order discovery in categories 14 and 15, limited by the addition of the words 'relating to the sale of ostriches or investment packages for the fifth respondent to persons in Hong Kong or Indonesia'. 14 The third respondent seeks discovery against the applicants in the following disputed categories of documents: '6. All Documents relating to the financial position and circumstances of the applicant for the period 1997 to 2001 (including but not limited to financial records and statements, bank statements, account statements, tax returns, group certificates and pay slips). 7. All diaries, journals, minutes or similar records kept or maintained by the applicant relating to the fifth respondent between 1998 and 2001. … 9. All Documents relating to applications or enquiries by or on behalf of the applicant or his family for entry into, temporary or permanent residency in or citizenship of Australia;' 15 The applicants submit that category 6 involves a fishing expedition in relation to Mr Salim's financial data. As to category 7 they submit the category should be limited to documents created between June 1998 and March 1999, being the last possible date for any act of reliance. The third respondent's request for discovery beyond March 1999 is said to be 'out of all proportion to the controversy'. 16 As for category 9, the third respondent evidently argued in a solicitor's letter of 22 June 2005 that if Mr Salim's purchase of investment packages was motivated by ancillary considerations such as a possible application for entry and residency in Australia, then such documents are highly relevant and should be discovered. The applicants respond that even assuming that he had such a motive, such a category of documents would be irrelevant because any actionable representation need only be a reason, not necessarily the reason, leading a person to embark on a course of action resulting in loss or damage. 17 As to category 6, the third respondent argues that the applicants have put their overall financial positions in issue. He refers in particular to paragraph 71.3 of the substituted statement of claim. That paragraph of the amended substituted statement of claim in WAD9 alleges that Mr Salim has suffered loss and damage by reason of the respondents' conduct and particularises the loss and damage thus: '(a) But for the said breaches and contraventions, the Applicant would have invested in a Sydney property in about 1998. The Sydney property market has seen substantial capital appreciation since that date, and had the Applicant so invested, he would have made a substantial capital gain. (b) Alternatively, the loss is the sum of $18,000 plus interest thereon.' It is sufficient to say that that contention does not put in issue the overall financial positions of the applicants. I decline to order discovery against the applicants in category 6 of the third respondent's list. 18 In my opinion it is sufficient that the discovery in category 7 be limited to the timeframe suggested by the applicants. This is sufficient to cover the making of the alleged representations and action in reliance upon them. 19 As to category 9, I do not regard that category as going to any issue relevant to this action. I decline to order discovery in favour of the third respondent against the applicants in category 9. The Applicants and the Fourth Respondent 20 The applicants seek discovery from the fourth respondent of the following disputed categories of documents: '… all Documents under his care, management or control relating to: … 3. the 4th Respondent's knowledge of the commission structure for agents of the 5th Respondent engaged to sell ostriches for the 5th Respondent or investment packages in the 5th Respondent to persons in Hong Kong or Indonesia; … 8. Australian residents that entered into contracts with the 5th Respondents to purchase and/or agist ostriches including but not limited to the 3rd Respondent's email of 28 July 1998 to Colleen Lovell and the 1st and 4th Respondents containing the words "we had sent out a letter to all our previous agisters … I do not want to leave loose ends." … 14. resolutions of the 5th Respondent, including but not limited to communications from or to any of the Respondents regarding the affairs of the 5th Respondent;' 21 As to category 3, the applicants submit that the fifth respondent embarked on one and the same marketing campaign in both Hong Kong and Indonesia and that as part of that campaign the agents for sale of its products obtained commissions in the order of fifty per cent. It is submitted that it is artificial to quarantine documents relevant only to commission agents in Indonesia. 22 The fourth respondent argues that the applicants do not appear to have made any contentions in their statement of contentions of fact and law concerning the commission structure for sale of ostriches or investment packages to persons in Hong Kong or Indonesia. 23 In my opinion insufficient connection is shown between this category of documents and any issue in the case to warrant an order for its discovery. I therefore decline to order discovery by the fourth respondent of documents in category 3. 24 The applicants argue that it is one of their contentions that the fourth respondent's knowledge of relevant facts was gained by him from letters of May and June 1998 sent out to 30 or so Australian investors and also from a follow-up email from Mr Marshall dated 28 July 1998. The fourth respondent argues that category 8 is irrelevant. He contends that the applicants do not appear to have made any allegations concerning Australian residents who had allegedly entered into contracts with the fifth respondent to purchase and/or agist ostriches. 25 In the schedule to the amended substituted statement of claim, which is now treated as a statement of facts and contentions, there is a reference to letters sent by the first respondent, Mr Loh, to about 30 Western Australian investors in OMM advising them that the market had plummeted, that there was a huge stockpile of ostrich skins in South Africa and noting a pessimistic outlook about the industry. The letters were signed by Mr Loh and invited investors to notify their position to the fourth respondent. 26 Category 8 read with the opening words of the notice for discovery sent by the applicants to the fourth respondent would require production of 'all documents' under the fourth respondent's care management or control 'relating to' Australian residents in category 8. This is impermissibly wide and potentially goes well beyond the issues canvassed in the applicant's submissions. I decline to order discovery of the documents in category 8. 27 The dispute in respect of category 14 relates simply to the time period defining the class of relevant resolutions. I accept the submission by the fourth respondent that the relevant time period should be limited to 1 January 1998 to 31 March 1999. I will therefore order discovery of documents in category 14 limited to the period from 1 January 1998 to 31 March 1999. 28 The disputed categories in respect of which the fourth respondent seeks discovery against the applicants are as follows: '4. All documents relating to the advertising and marketing of the Fifth Respondent (including but not limited to the Newspaper Advertisement, the Brochure, the Promotional Video, the Table of Investment Return and the Price List referred to in the Applicant's Amended Substituted Statement of Claim ("the Statement of Claim")). … 7. All documents constituting or relating to communications between the Applicant and: (a) the Respondents or any of them; and (b) any other person who to the Applicant's knowledge claims to have purchased ostriches or investments from the Fifth Respondent. 8. All Documents relating to the financial position and circumstances of the Applicant for the period 1997 to 2001 (including but not limited to financial records and statements, bank deposit books, bank statements, account statements, tax returns, group certificates and pay slips). … 11. All Documents relating to: (a) the meetings between the Applicant and Indonesians who entered into agreements and contracts with OMM referred to in paragraph 104 of the Applicant's affidavit sworn 16 July 2005 ("the Applicant's affidavit"); (b) or constituting, communications and meetings between the Applicant and other persons who have taken action against the Respondents in the Federal Court of Australia; (c) the meeting between the Applicant, Herman Kurniadi, Simon Loh and Robert Ashman in Jakarta in March 2000 referred to in paragraph 115 of the Applicant's affidavit.' 29 As to category 4, the applicant contends that the documents discovered should be limited to a period commencing June 1998. The applicant submits that nothing prior to that date could be relevant. The fourth respondent argues that the applicants were seeking discovery of marketing materials of OMM for the period 1 January 1997 to 31 March 1999. It did not therefore appear appropriate that the applicant's discovery should be limited to the period June 1998 to March 1999. The logic of this is somewhat elusive. Nevertheless in my opinion it is appropriate, having regard to the applicant's contentions, that the relevant period commenced from 1 June 1998. I will order discovery of documents in category 4 for the period 1 June 1998 to 31 March 1999. 30 As to category 7, the applicants submit that while an accommodation has been reached in relation to this category, the applicants assert that some of the documents within the category would or may well be privileged. Any claim for privilege, of course, can be made as part of the discovery process. I will direct discovery of documents in category 7. 31 As to category 8, the category is self evidently far wider than necessary and would bring in a range of documents of little or no relevance. I decline to order discovery in category 8 of the documents in the fourth respondent's notice. 32 As to category 11, counsel submits that any controversy on this category has been resolved. This is not expressly reflected in the fourth respondent's contentions. However the fourth respondent says merely that category 11 should include documents relating to the fifth respondent and purchase of ostriches or investments from the fifth respondent. As it is not apparent from the written submissions that there is any dispute as to category 11, I will make a direction in terms of that category. Conclusion 33 There will be orders in accordance with the preceding reasons. Having regard to the mixed outcomes I will order that each party bear its own costs of the argument in relation to the disputed categories of discovery. I certify that the preceding thirty three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.