Sogelease Australia Ltd & Anor v David James Griffin & Ors

1 By Notice of Motion filed on 18 February 2003 the Plaintiffs seek orders pursuant to Pt 23 r3 of the Supreme Court Rules that each of the First and Second Defendants provide discovery by way of verified lists in respect of a considerable number of specified categories of documents. 2 Further, or in the alternative, the Plaintiffs seek an order pursuant to Pt 36 r12 that each of the First and Second Defendants (Mr and Mrs Griffin) produce to the Court the documents within the categories specified. 3 In addition, at the commencement of the hearing of the Motion, Mr Lindsay SC who appears with Mr McGrath for the Plaintiffs, called upon Notices to Produce dated 18 February 2003 served upon Mr and Mrs Griffin under Pt 36 r16(1). The Notices called for production of the same categories of documents as are sought by way of discovery and under Pt 36 r12. 4 Mr Griffin's solicitor says on affidavit that he is informed by Mr Griffin and verily believes that Mr Griffin objects to any order for discovery being made, and to any order for production, on the ground that compliance with the orders would infringe his privilege against self incrimination. The solicitor says that all of the documents in Mr Griffin's possession, custody or power are capable of being self incriminatory and that even to list them in a discovery list, while successfully resisting production of them for inspection, might provide material which could be used as a basis for investigation leading ultimately to a criminal conviction: Sorby v Commonwealth (1983) 152 CLR 281, at 310. Discovery Order against Mr Griffin

5 To appreciate the context in which the Plaintiffs' application is made and the ground upon which it is resisted by Mr Griffin, it is necessary to give a short explanation of the nature and history of the proceedings. 6 By their Statement of Claim the Plaintiffs allege that Mr Griffin, who was an officer of the Second Plaintiff, misappropriated in excess of $10M of the Plaintiffs' funds and paid the proceeds into bank accounts of Mrs Griffin and to the other Defendants. 7 On 16 April 2002, Mr Griffin filed a Motion seeking a stay of the proceedings against him on the ground that he had cause to believe that criminal charges arising out of the facts the subject of the proceedings would soon be laid against him and that his Defence would be self incriminatory. That application was dismissed by Barrett J on 21 November 2002 and Mr Griffin was subsequently ordered to file a Defence. He sought leave to appeal to the Court of Appeal from that order but leave was refused on 19 December 2002. Mr Griffin was again ordered to file a Defence, but failed to do so. 8 As at the date of hearing, no charges have been laid against Mr Griffin. However, his solicitor has averred that nothing has occurred which causes him to believe that criminal charges will not be laid. 9 In those circumstances, the Plaintiffs filed their Notice of Motion for default judgment. Yesterday, that Motion being unopposed by Mr Griffin, I entered default judgment against him pursuant to Pt 17 r9 for the full sum claimed by the Plaintiffs by way of damages, together with interest. That order did not, however, finally dispose of the proceedings against Mr Griffin. The Plaintiffs had made other and ancillary claims for relief against him, including an accounting for profits, and those claims were expressly reserved for further consideration. 10 The documents in respect of which the Plaintiffs now seek discovery and production from Mr Griffin are in aid of the further ancillary claims for relief. Mr Street SC, who appears for Mr Griffin, submits as a preliminary point that discovery cannot be ordered against him because there is no issue joined in the pleadings as between the Plaintiffs and Mr Griffin, the reason being that Mr Griffin has never filed a Defence and default judgment has now been entered against him. I am unable to accept this submission. 11 Discovery, whether under Pt 23 r3 or in the inherent jurisdiction of the Court, is available whenever the interests of justice in the conduct of litigation require it. It is available not only when it is relevant to issues of liability as between the party seeking discovery and the party against whom discovery is sought; it is available when it is relevant to any issue between the party seeking discovery and any other party to the proceedings. It is available in aid of the proper and just disposition of the question of the extent of final relief against a party, even one who has admitted liability, for example, when an accounting of profits or a tracing remedy is sought: see McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623, at 646; EMI (Australia) Ltd v Bay Imports Pty Ltd [1980] FSR Vol 6, 328 at 331. 12 In the present case, although Mr Griffin is estopped by judgment from raising any issue of liability as against the Plaintiffs, he is still able to put in issue, or to require the Plaintiffs to prove, the extent to which he may be compelled to account for profits; he is still able to resist disclosing the identity of assets into which the proceeds of his misappropriation may be traced. Further, the documents sought from him on discovery are clearly relevant to issues of both liability and remedy as between the Plaintiffs and the other Defendants. In my opinion, these considerations dispose of Mr Street's preliminary point. 13 I turn now to the substance of Mr Street's submission, i.e., that discovery would violate Mr Griffin's privilege against self incrimination. Mr Lindsay says that it is not permissible to make a 'blanket' objection to discovery, as Mr Griffin seeks to do by saying that all discoverable documents in his possession are self incriminatory. Mr Lindsay says that Pt 23 r3(5)(ii) and (6)(d) require that a List of Documents be produced which identifies documents over which a claim for privilege is made, and an affidavit setting out the facts relied upon as establishing the existence of the privilege must be filed. In other words, each objection must be specifically taken and the grounds for that objection provided. 14 I am of the view that in the particular circumstances of this case Mr Griffin should not be ordered to give discovery by verified list, at this stage. My reasons are as follows. 15 Discovery is, without doubt, an important part of the process of litigation and is designed to afford litigants a means of procuring evidence which might well be otherwise denied them, contrary to the interests of justice. In a proper case, such as where documentary evidence is highly likely to be of importance, discovery will usually be ordered as a matter of course, although it will be limited in scope so as to be no wider than is justified in the circumstances. It is a process not lightly to be denied a litigant. 16 However, the Court always retains the discretion whether to order discovery at all, to what extent and at what stage of the proceedings. All of this is explicit, both in Pt 23 r3(1) and in the authorities. The Court exercises its discretion according to the dictates of justice and fairness in the circumstances of each particular case: see e.g. Attorney-General v North Metropolitan Tramways Co [1892] 3 Ch 70, at 74; Gollin Holdings Limited v Adcock [1981] 1 NSWLR 691, at 696; McLean v Burns Philp Trustee Co Pty Ltd at 646. 17 Mr Lindsay's proposition that a "blanket objection" cannot be taken on the ground of privilege against self incrimination is correct as a general rule: see e.g. Spokes v Grosvenor Hotel Co [1897] 2 QB 124, at 132-133; C v National Crime Authority (1987) 78 ALR 338, at 343. But the rule is general, not immutable. Its rationale is to prevent persons from abusing the privilege by invoking it too readily to avoid making disclosures which may well be prejudicial but do not really have a tendency to incriminate. Thus, it is usual to require the privilege to be claimed separately for each disclosure so that the Court may see for itself that the claim is justified. 18 However, there may be cases in which the Court can readily see from the surrounding circumstances that all disclosures within a certain area of enquiry are likely to have a tendency to incriminate. In such a case, there is no point in requiring the person claiming the privilege to perform the tedious ritual of objecting separately to all the questions asked or all the disclosures sought: the Court will permit and uphold a blanket objection: see e.g. Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412, at 423 per Kirby P. 19 In this case, it is easy to see at a glance from the facts alleged in the Statement of Claim what would be the nature of the criminal charges which would be laid against Mr Griffin: fraudulent misappropriation, embezzlement, larceny by a servant, and so on. Further, it is easy to see at a glance from the categories of documents sought in the Motion for discovery that the documents relate to Mr Griffin's financial dealings and that if produced, they could provide evidence of a series of dispositions designed to hide the proceeds of fraud, thereby providing cogent circumstantial evidence of guilt. It is also easy to see that the very listing by Mr Griffin of documents in the specified categories which are in his possession may provide indirect or derivative evidence which could ultimately be used in a criminal prosecution or as a basis for further criminal investigation: see e.g. Vasil v National Australia Bank Ltd (1999) 46 NSWLR 207, at 219. 20 In such a case, the better course is to stop the discovery process in limine by refusing to make any order for discovery: see e.g. R v Associated Northern Collieries (1910) 11 CLR 738, at 747. 21 However, it would not be right to foreclose to the Plaintiffs the right to apply again for a discovery order against Mr Griffin if, after lapse of a reasonable time, no criminal charge has been laid against him. Mr Griffin's defalcations were discovered about twelve months ago. No doubt the investigations by the Police are complex and time consuming. But if no charges are laid within a reasonable time from now and while these proceedings are still current, the Plaintiffs should be entitled to revisit the question of Mr Griffin's discovery. Mr Griffin would then have to show by satisfactory evidence that there was still a proper basis for refusal of discovery, that is, a real need to prevent violation of his privilege against self incrimination. 22 I will, therefore, refuse to make an order for discovery by Mr Griffin at this stage, while reserving liberty to the Plaintiffs to apply for such an order at any later stage of the proceedings. Discovery Order against Mrs Griffin

23 The Plaintiffs seek orders for further discovery against Mrs Griffin. The categories of documents sought include her cheque books and other documents relating to a number of accounts with various financial institutions, some of which are apparently in the joint names of herself and Mr Griffin, some of which are in Mrs Griffin's name alone, and one of which is in her maiden name (Philip). 24 Mrs Griffin, who is separately represented by Counsel and solicitors, makes no objection to discovering and producing documents on the ground of privilege against self incrimination. She has filed a number of affidavits in which she says that she has given a full list of documents presently in her possession, custody and power. In Schedule 2 to an affidavit of discovery sworn on 15 January 2003 she says that the First Defendant (Mr Griffin) has "retained" a number of documents which would be discoverable by her, some of which clearly relate to accounts in her own name. She says: "I have been unable to obtain these documents which are held by the First Defendant and/or his legal representatives." 25 In an affidavit sworn on 4 March 2003, Mrs Griffin says that Mr Griffin "keeps all our personal papers in the study" and that she has searched there for documents which she is obliged to discover. She says: "5. I no longer have cheque books or butts or records for the Bank of Western Australia accounts in the name of David James Griffin and Maree Leigh Griffin being account number 100-011720-7 and 100-111313-0. I last used the BankWest cheque books up to about March, 2002. In about late March/early April, 2002, around Easter, the first defendant took the said cheque books and records from the Bank of Western Australia and the cheque books and records from the National Australia Bank Limited account number 608756033 in the name of Maree Leigh Philip, and I have not seen them since. The first defendant said to me at that time words to the effect: 'I'm taking all the cheque butts and books and bank statements to my solicitors.'

6. I had previously handed back to the First Defendant all National Australia Bank cheque books in my name after signing them from time to time. I returned the last of such books to the First Defendant in about late 2001. I have not seen them since then." 26 Mrs Griffin says that her solicitors have written to Mr Griffin's solicitors on 2 July and 21 November 2002 requesting return of the documents or at least a general description of them sufficient to enable her to file an affidavit of discovery. She says that there has been no response to those letters other than a statement by Mr Griffin's solicitor in a telephone conversation with her solicitor to the effect that Mr Griffin would not return the documents on the ground that they would tend to incriminate him. Mrs Griffin has done nothing further to procure return of the documents. 27 By an affidavit sworn on 6 March 2003, Mr Griffin's solicitor says that he is informed by Mr Griffin and verily believes that all of the documents delivered to him by Mr Griffin, which must include those relating to the accounts in the name of Mrs Griffin alone, were "in the possession and control of the First Defendant only" and that none of them were ever in the possession or control of Mrs Griffin. The solicitor claims the privilege against self incrimination on behalf of Mr Griffin in respect of all such documents, without giving any description of the documents. Documents relating to accounts in Mrs Griffin's sole name

28 Mr Blackburn-Hart, who appears for Mrs Griffin, says that in these circumstances Mrs Griffin has fully discharged her obligation to make discovery. I am unable to accept this submission, for two reasons. First, I cannot give any substantial weight to the evidence of Mr Griffin's solicitor, stated upon information and belief, that the documents were always in the possession and control of Mr Griffin alone. Mrs Griffin's direct evidence was that all of the couple's personal papers were kept in the study, that she searched in the study for additional documents, that she had certain of the documents for the purpose of signature, and that Mr Griffin discussed with her taking the documents to his solicitor. There is no suggestion in this evidence that Mrs Griffin was excluded from access to, or possession of, the documents. Mrs Griffin was not cross examined on her evidence. On the other hand, Mr Griffin did not give direct evidence on the question; he proffered only the "information and belief" of his solicitor; this was no more than an assertion incapable of any worthwhile testing by cross examination. 29 Second, the documents which a party must discover are not limited to those within the possession or custody of that party: they include documents which are within the "power" of that party: Pt 23 r.3(5)(a). In Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627, at 635, Lord Diplock said that "power" for the purposes of discovery meant "a presently enforceable legal right to obtain from whoever actually holds the document inspection of it without the need to obtain the consent of anyone else" . This definition has been accepted in Australia: see e.g. Palmdale Insurance Ltd (in liq) v L. Grollo & Co Pty Ltd [1987] VR 113; and Theodore v Australian Postal Commission [1988] VR 272, at 277. 30 As the evidence presently stands, I am of the view that the documents relating to accounts in Mrs Griffin's sole name are within her "power" and that she has not fulfilled her obligation to discover or to produce them for inspection. 31 The documents are pieces of paper to which Mrs Griffin clearly has legal title. This is so because the documents relate to accounts the legal owner of which is Mrs Griffin alone; there is no evidence given on behalf of Mr Griffin which is capable of suggesting that Mrs Griffin is a bare trustee for Mr Griffin either of the documents relating to these accounts or of the contents of these accounts. In those circumstances Mrs Griffin has a presently enforceable legal right to obtain from Mr Griffin and his solicitors inspection of those documents for the purpose of making a complete and verified discovery list. She also has the presently enforceable legal right to compel return of those documents to her to enable her to produce them for the inspection of the Plaintiffs at the appropriate time. Those legal rights are not subject to the consent of Mr Griffin or of anyone else. Clearly, if the documents are the property of Mrs Griffin and she claims no privilege against self incrimination, Mr Griffin cannot prevent her from complying with her obligation to discover and produce the documents on the ground that if she did so she would make available evidence which could incriminate him. 32 In Bray on Discovery (1885) it is said at p.206: "the mere fact that the giving of the discovery will involve a breach of confidence as against some third person or in any way affect or prejudice his interests does not constitute of itself an independent objection to giving the discovery, a disclosure under the compulsion of the court being for this purpose distinguished from a voluntary disclosure out of court." [Emphasis added]

That passage was adopted by the Court of Appeal in Chantrey Martin & Co v Martin [1953] 2 QB 286, at 294, and in Alfred Crompton Amusement Machines Ltd v Customs & Excise Commissioners (No 2) [1974] AC 405, at 429 by Lord Cross of Chelsea, with whom Lords Reid, Morris of Borth-y-Gest and Kilbrandon agreed. 33 In the present case, by parity of reasoning, disclosure by Mrs Griffin in compliance with orders for discovery and inspection of documents which might incriminate Mr Griffin cannot fall within the reach of Mr Griffin's privilege against self incrimination because the disclosure is not compelled from Mr Griffin himself and he is not required to convict himself out of his own mouth: rather, disclosure is the result of another person complying with her own obligations to make discovery and give inspection under the law. 34 If it were otherwise, a wrongdoer, knowing that a party had documents incriminating the wrongdoer, could gain possession of those documents by theft, misrepresentation or otherwise and then resist with impunity the return of those documents to that party and object to their production in compliance with a subpoena, notice to produce or discovery order, on the ground that return of the documents or production would tend to incriminate him. Such a ploy, if available, would legitimise the stifling of evidence in the hands of others; it would have nothing to do with the privilege against self incrimination which prevents a person from being compelled to provide evidence against himself or herself. 35 In my view, Mrs Griffin has not taken sufficient steps to procure return of the documents relating to accounts in her sole name, such that she would be discharged from her obligations to make full discovery and to give inspection. I therefore order her to make discovery of those documents by procuring return of the documents from Mr Griffin and his solicitors, filing and serving a verified list of those documents within twenty-one days from today, and thereafter making those documents available for the inspection of the Plaintiffs in accordance with the Rules. 36 What is to happen if Mrs Griffin's solicitors apply again to Mr Griffin's solicitors for return of the documents and those solicitors refuse to comply, on Mr Griffin's instructions? Will the Court have to direct Mrs Griffin to commence proceedings against Mr Griffin for detinue? Will the Court have to supervise the conduct of those proceedings to ensure that Mrs Griffin prosecutes them with vigour and diligence and that she does not give up the fight too easily? I do not think so. The Court has more direct means of enforcing its orders. 37 Under s.76A of the Supreme Court Act 1970 (NSW) this Court has power to give such directions as the Court sees fit, whether or not consistent with the Rules "for the speedy determination of the real questions between the parties to civil proceedings" . That section has been held to empower the Court to direct a party to take reasonable steps to procure documents from a non-party, even when it was not clear that the party had a presently enforceable legal right to compel production or inspection from the non-party: see e.g. Palmdale Insurance at 116-117; Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (unrep., Federal Court 21 February 1990 per Foster J; BC9003178); and esp. per Giles J in Aetna Pacific Securities Ltd v Hong Kong Bank of Australia Ltd (unrep., NSWSC 29 April, 1993; BC9301701 at p.12). 38 In the present case, of course, both Mr and Mrs Griffin are parties. In my view, s.76A affords the Court ample power not only to direct Mrs Griffin to take all reasonable steps to procure the documents relating to her own accounts from Mr Griffin and his solicitors, but also to direct Mr Griffin himself to produce those documents to Mrs Griffin and her solicitors in order to enable her to comply with the order for further discovery which I have made against her. I propose to give such directions to both Mr and Mrs Griffin. 39 For the reasons I have given, Mr Griffin will not be entitled to disregard the direction addressed to him by an appeal to his privilege against self incrimination. If he fails to comply with that direction he will be in contempt of court. Mr Griffin's solicitors will not be entitled to comply with instructions from Mr Griffin not to produce the documents because they will thereby be frustrating a direction of the court to both Mr Griffin and Mrs Griffin, so that they themselves would be in contempt of court. Mrs Griffin will, of course, have to comply with the order for further discovery and for inspection; if she fails without proper excuse in that compliance she also will be in contempt of court. If she fails because Mr Griffin prevents her complying with those orders and directions, then Mr Griffin will be in contempt of court because he will have prevented Mrs Griffin from complying with an order of the court of which he has notice. 40 These orders and directions apply to documents relating to the accounts in Mrs Griffin's sole name. I now deal with those documents relating to accounts in the joint names of Mr and Mrs Griffin. Documents relating to joint accounts

41 Prior to 1964, the rule in the United Kingdom was that a party was required to include in a list of documents all documents in which the party had any possession or property, whether solely or jointly with another; however, that party could not be ordered to produce for inspection a document in which he or she did not have sole legal possession or ownership: see e.g. Kearsley v Philips (1882) 10 QBD 36; Coomes & Son v Hayward [1913] 1 KB 150. 42 However, in 1964 the United Kingdom Rules of Court were amended so that, in effect, a party was obliged to produce for inspection the same documents which that party was required to list on discovery. It was held in Alfred Crompton Amusement Machines Ltd v Customs & Excise Commissioners (No 2) (supra) that under the new Rule there was no longer a distinction between the obligation to disclose the existence of documents on discovery and the obligation to produce them on inspection: see e.g. at 429 per Lord Cross. 43 The Courts of New South Wales followed the United Kingdom rule which was in existence prior to 1964 until the introduction of the Supreme Court Act 1970 and Pt 23 of the Rules thereunder. Pt 23 r3, like the United Kingdom amendment, required production of the same documents as were discovered, except in circumstances not relevant to the present question: see r3(6)(a) and r10(a). In Turner v Davies [1981] 2 NSWLR 324, Maxwell J held that the rule in New South Wales was now the same as the rule in the United Kingdom, so that the party is now required to give both discovery and inspection of documents jointly owned by that party and another. 44 Accordingly, the documents relating to accounts owned jointly by Mr and Mrs Griffin are documents which Mrs Griffin is required both to discover and to produce for inspection. It is no ground of objection - either by Mr Griffin or Mrs Griffin - that discovery and production of those documents may tend to incriminate Mr Griffin, for the reasons which I have given above. The directions foreshadowed in paragraph 38 will therefore apply as well to documents relating to the joint accounts of Mr and Mrs Griffin. Conclusion

45 Because the conclusions to which I have come secure to the Plaintiffs full discovery and inspection of the documents now in issue, it is not necessary for me to deal with the other grounds upon which the Plaintiffs have sought production. 46 I will stand these proceedings over for a short time to enable the Plaintiffs to bring in Short Minutes of Order reflecting these reasons. I will then hear any argument as to costs. - oOo -

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