Supreme Court of WA|2005-07-01|Before: Mr J

Tan & Ors v St George Bank Ltd & Ors [2005] WASC 143 (1 July 2005)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : TAN & ORS -v- ST GEORGE BANK LTD & ORS [2005] WASC 143

Practice and procedure - Application for discovery of particular documents - Whether documents relevant - Whether discovery should be ordered where documents contain confidential information of third parties - Effect of Privacy Act - Claim against person who is company director - Whether company's documents in power of director - Relevant principles

Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No 2) [1974] AC 405

Beechman Group Ltd v Bristol-Myers Co [1979] VicRp 27; [1979] VR 273

British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709

D v National Society for the Prevention of Cruelty to Children [1977] UKHL 1; [1978] AC 171

Hardcastle v Advanced Mining Technologies Pty Ltd [2001] FCA 1846

Index Group of Companies Pty Ltd v Nolan [2002] FCA 608

Kent Coal Concessions Ltd v Duguid [1910] 1 KB 904

Linfra Pty Ltd v Citibank Ltd [1995] VicRp 40; [1995] 1 VR 643

Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 QB 358

Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627

Ninnes v Graham (1986) 70 ACTR 1

Science Research Council v Nasse [1979] UKHL 9; [1980] AC 1028

Taylor v Santos [1998] 71 SASR 434

Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55

Midalco Pty Ltd v Simpson, unreported; SCt of WA; Library No 6747; 5 June 1987

Re McGorm, Ex Parte Co-operative Building Society of South Australia (1989) 86 ALR 275

Taylor v Santos Ltd [1998] SASC 6838

Turner v Davies Energy Recycling Corporation Pty Ltd [1981] 2 NSWLR 324

1 MASTER NEWNES: This is an application by the plaintiffs for orders for discovery of particular documents by each of the defendants. Before turning to the detail of the application, it is necessary to identify the matters in issue in the action.

2 In the statement of claim, the plaintiffs allege that, on 3 May 2002, the first defendant ("St George Bank") agreed to lend the sum of $600,000 to the plaintiffs, the second defendant ("Dawson") and the third defendants (the "Quintals"), to whom I shall refer collectively as "the borrowers". The plaintiffs say the loan was to provide funds for a construction contract with Roman Building Company.

3 The plaintiffs plead that it was a term of the loan agreement that the funds would be advanced by St George Bank by a series of payments to the builder, the number and approximate amount of each payment being set out in the schedule to the loan document. The loan agreement also required, before each payment was made, certification, signed by the borrowers, that the required stage of construction had been reached. The plaintiffs plead that, on its proper construction, the loan agreement required that each payment be made by St George Bank only to the builder, and be made only after receipt by St George Bank of an advance application signed by all of the borrowers.

4 The plaintiffs say that, between 24 April 2002 and 16 May 2003, St George Bank made payments totalling some $512,000 and debited the borrowers' loan account with the amount of each payment. The plaintiffs allege that none of the payments was made in conformity with the conditions of the loan agreement, in that St George Bank did not on any occasion receive an application signed by all of the borrowers and the payments were not made only after completion of the stipulated stages of construction. It is alleged that a number of payments were made, not to the builder, but direct to Dawson. It is pleaded that an amount of some $185,800 was advanced to Dawson.

5 The plaintiffs plead that, in debiting the borrowers' loan account, St George Bank was in breach of the loan agreement or, alternatively, without the mandate of the plaintiffs. The plaintiffs claim that St George Bank is obliged to credit the loan account with the amount of the payments, or alternatively for the amount of the payments made to Dawson, plus associated fees and charges; alternatively, the plaintiffs claim damages.

6 In its defence, St George Bank admits the loan agreement (except as to the date) but says the borrowers agreed that $60,000 of the loan should be paid to Dawson at settlement, being moneys owing for the purchase of the land on which the units proposed to be built by the borrowers were to be constructed. St George Bank says it was agreed by the parties, prior to execution of the loan agreement, that Skycove Enterprises Pty Ltd ("Skycove"), through the agency of Dawson, would manage the project. It alleges that the building contract was not made between the borrowers and Roman Building Company, but between the borrowers and Skycove. The builder appointed by Skycove was Roman Building Company.

7 St George Bank says that at a meeting of the borrowers on 22 August 2002 it was agreed that no payments were to be made to the builder unless authorised by Dawson, and Dawson was to act on behalf of Skycove as project manager, supplying the dates and stages of payments to St George Bank and being responsible for handling all matters relating to the loan. It says that a resolution of the borrowers to that effect was contained in minutes of a meeting of the borrowers of 22 August 2002, a copy of which was provided to officers of St George Bank on or about that date. The administration of the loan proceeded thereafter on that basis.

8 St George Bank also pleads that the plaintiffs knew, or ought reasonably to have known, that Dawson was liaising with St George Bank and co-ordinating payments from St George Bank to the builder on their behalf. A number of matters are pleaded from which it is said that that knowledge is to be inferred, including that between 27 March 2002 and October 2004 work was carried out on the development and on 28 June 2004 a valuer stated that the development was "approximately 100 per cent complete". St George Bank pleads that the plaintiffs must therefore have known that someone other than the plaintiffs was co-ordinating the process and the payment of the progress payments.

9 St George Bank also pleads that, as it was informed by the borrowers that they required the loan to be administered in a manner different to that set out in the loan agreement, and as St George Bank has acted to its detriment in complying with that request, the plaintiffs are estopped from insisting on strict compliance with the terms of the loan agreement. Alternatively, it is pleaded, the borrowers, by the matters referred to, held out Dawson as their agent for the purpose of authorising the draw-down of money from the loan account to make progress payments and, by allowing matters to continue for some 18 months without complaint, impliedly represented to St George Bank that Dawson was acting within the scope of his authority as their agent.

10 In their defence, Dawson and the Quintals say, so far as presently relevant, that the loan was obtained for the construction of 4 residential units on a property in East Perth. They say that, in or about late February or early March 2002, the borrowers agreed that $60,000 would be paid to Dawson at settlement for purposes unrelated to the development, and that Dawson would be entitled to draw upon the loan amount to fund his contribution to the development costs and for other purposes, provided he kept the plaintiffs and the Quintals informed of what amounts he had drawn for purposes unrelated to the development and he repaid those sums with interest to St George Bank.

11 Dawson and the Quintals say it was agreed by the borrowers prior to the execution of the loan agreement that Skycove would manage the development and Dawson would act as the borrowers' representative in their dealings with Skycove. They also plead that the building contract was between the borrowers and Skycove, and that Roman Building Company was appointed as the builder by Skycove.

12 According to Dawson and the Quintals, at a meeting of the borrowers held on 22 August 2002 it was agreed that no payments would be made to the builder unless authorised by Dawson, that Dawson would supply to St George Bank the dates and stages for payment and Dawson would, on behalf of the borrowers, be responsible for handling all matters relating to the loan facility. It is pleaded that subsequently a number of payments were made by St George Bank to Dawson to reimburse him for moneys he had paid to Skycove in relation to the development.

13 The plaintiffs say that in the course of these proceedings they discovered that at the time the borrowers made the loan applications to St George Bank there was an existing relationship between Dawson and St George Bank. The plaintiffs say that the finance application forms submitted on behalf of the borrowers state that PLAN Australia and/or agent number W00040 have referred the borrowers to St George Bank. They also say that documents sent by St George Bank to PLAN Australia were sent to a facsimile number used by Finance Relationship Consultants Pty Ltd, a company of which Dawson is a director.

14 It was not in issue on this application that, at some time prior to the submission of the borrowers' loan applications, St George Bank had entered into a mortgage broker's agreement with PLAN Australia whereby it paid commission to PLAN Australia for loan applications which PLAN Australia referred to it. It appears from an affidavit of Ms Reardon, an officer of St George Bank, that PLAN Australia, through Dawson, has referred to St George Bank some 35 applications for loans. Of those, some 19 applications have been approved and the funds advanced. The other applications have either been withdrawn or refused. Ms Reardon says that the commission in respect of the 19 applications that settled would have been paid to PLAN Australia, not to Dawson. She says St George Bank has no knowledge of the arrangements between PLAN Australia and Dawson. Ms Reardon also says that all of the loan applications made through PLAN Australia would contain personal financial information of the applicants and St George Bank would be in breach of the Privacy Act 1988 (Cth) if it provided that information to any third party without the consent of those applicants.

15 In an affidavit filed in opposition to this application, Dawson says that he is a director of Finance Relationship Consultants Pty Ltd ("FRC"), which is a finance broker and an original member of the "PLAN Australia network". The members of PLAN Australia are finance brokers. Dawson says that PLAN Australia, among other things, submits applications for finance on behalf of its members to a panel of banks. He, in his capacity as a director of FRC, has been designated "agent no. W00040" by PLAN Australia. Dawson says that the applications Ms Reardon describes as submitted by PLAN Australia through him were in fact submitted by PLAN Australia through FRC.

16 In this application, the plaintiffs seek discovery by St George Bank of any documents comprising or relating to the appointment of Dawson and/or PLAN Australia as St George Bank agent number W00040, and to any transactions or communications between St George Bank and agent number W00040 that comprise or relate to agent number W00040 introducing or referring to St George Bank clients or associates of Dawson or any company, firm or other business association with which Dawson is associated.

17 The plaintiffs seek from the second and third defendants discovery of any documents comprising or relating to the appointment of Dawson and/or PLAN Australia as St George Bank agent number W00040; comprising or relating to any transaction or communications between St George Bank and agent number W00040 that comprise or relate to agent number W00040 introducing or referring to St George Bank clients or associates of Dawson or any company, firm or business association with which Dawson is associated; or comprising or relating to any relationship, transactions or dealings between PLAN Australia and Dawson, his clients or associates or any company, firm or business with which Dawson is associated.

18 It was submitted on behalf of the plaintiffs that if the documents sought showed that in other transactions which Dawson had referred to St George Bank there were irregularities, or that St George Bank had acted contrary to the loan agreement, it would tend to advance the plaintiffs' case or damage the defendants' case. That is, if previous loans made to clients or associates of Dawson by St George Bank had been administered in an irregular fashion, that would tend to make it less likely that what occurred in this case was the result of an agreement between the parties. Rather, it would tend to show that the true reason for the irregular conduct of St George Bank was its relationship with Dawson. As it was put by counsel for the plaintiffs, it would tend to show a course of dealings whereby Dawson, having steered the plaintiffs to St George Bank, then got access to the loan funds through people he knew at St George Bank.

19 Alternatively, it was submitted, the documents may lead the plaintiffs on a train of inquiry which reveals information that shows misconduct or other unconscientious conduct by officers of St George Bank in the administration of the loan account. Such information would damage the case of St George Bank in that it would provide grounds for a court to exercise its discretion against granting an equitable set-off to St George Bank by reason of its unconscientious conduct.

20 Counsel for the plaintiffs said the plaintiffs did not at this stage accept that the loan agreement, the subject of this action, was the only one in which Dawson was a borrower. The evidence did not support that. The affidavit of Ms Reardon, filed on behalf of St George Bank, simply said that Dawson, through PLAN Australia, had referred 35 applications to St George Bank, of which 19 had subsequently settled. Ms Reardon does not say that this is the only loan where Dawson has been one of the borrowers. Nor did the plaintiffs accept that loan agreements where Dawson was a borrower, as opposed simply to being a broker referring the applicant to St George Bank, were the only relevant loan agreements. The latter were also relevant.

21 Counsel for St George Bank said his client would have no difficulty with the application if it were limited to documents where Dawson was one of the borrowers. The Bank's objections on the grounds of relevance would then fall away. But documents relating to transactions which had simply been referred to St George Bank by Dawson through PLAN Australia were not relevant, or at the least not sufficiently relevant to justify overriding the confidentiality which the borrowers concerned were entitled to expect, particularly in view of the provisions of the Privacy Act.

22 In the present case, Dawson had not only acted as a broker in referring the loan applications to St George Bank. He was also one of the borrowers and had handled or received the various advances the Bank had subsequently made under the loan agreement. That, it was submitted, was an entirely different situation to one where Dawson, acting as a broker, simply arranged for an application for a loan to be submitted to St George Bank and thereafter had no further role in the matter. There was nothing to suggest that documents relating to transactions of that nature could have any relevance to the issues in the present case. On the evidence, even the commission payable by St George Bank for the referral was not paid to him. After the application was submitted to St George Bank, Dawson simply dropped out of the picture.

23 It was submitted on behalf of St George Bank that even if the documents were regarded as having some relevance, the entitlement to privacy afforded by the Privacy Act was an important consideration in determining whether discovery should be ordered, particularly in cases such as this where the persons whose privacy would be interfered by an order for discovery, the loan applicants, are not parties to the litigation and are persons against whom no complaint is made. Parliament had legislated to protect the privacy of persons dealing with financial institutions and it should not lightly be interfered with.

24 Counsel submitted that it was not to the point that the plaintiffs were bound by the implied undertaking in respect of discovered documents. Customers of St George Bank made applications for loans in the reasonable belief that the details of their application would be kept confidential. They were entitled to be concerned that such documents might be released to strangers for reasons unconnected with the borrowers, particularly in circumstances such as the present where, it was submitted, the relevance of the documents was at best peripheral, if they were not entirely irrelevant, to the matters in issue.

25 Counsel for the Dawson and the Quintals submitted that it was clear from Dawson's affidavit in opposition to the application that Dawson was designated as agent number W00040, but that he was designated as such by PLAN Australia, not St George Bank. Accordingly, the request for documents relating to the appointment of Dawson or PLAN Australia as St George Bank agent number W00040 was misconceived.

26 Counsel also pointed out that the third defendants have said on affidavit that they do not have, and have never had, any documents of the nature referred to in the application in their possession, custody or power. In his affidavit sworn 16 May 2005, Dawson said that he does not have in his possession, custody or power any documents referred to in the application, beyond those he has already discovered. It was submitted that any such documents, other than those relating to the loan transaction the subject of these proceedings, would be in the possession, custody or power of FRC, not Dawson.

27 Counsel said that, in addition, the Privacy Act applied to FRC and he adopted the submissions of counsel for St George Bank on the significance of the Privacy Act. He also submitted that there was a clear distinction between transactions in which Dawson acted simply as a mortgage broker and transactions in which Dawson was also a borrower, and he adopted the submissions of counsel for St George Bank on the issue of the relevance of the documents sought.

28 The basic principles to be applied on this application are well known. The Court will only make an order for discovery of particular documents where there are reasonable grounds of being fairly certain that there are other relevant documents which ought to have been discovered: British Association of Glass Bottle Manufacturers Ltd v Nettlefold [1912] AC 709 at 714; Beechman Group Ltd v Bristol-Myers Co [1979] VicRp 27; [1979] VR 273 at 276. In the present case, it was not contended by the defendants that that requirement had not been satisfied, but it was submitted that the documents sought were not relevant to matters in issue, or not sufficiently relevant to outweigh the entitlement to privacy which the third party applicants to whom the documents related were entitled.

29 It is, of course, important to bear in mind that an application of this nature involves the exercise of a discretion and that there is not a strict entitlement to an order for discovery, including an order for further discovery: Kent Coal Concessions Ltd v Duguid [1910] 1 KB 904 at 910.

30 It is clear that the fact information has been communicated by one person to another in confidence is not, of itself, a sufficient ground to refuse an application for discovery if the information would assist the court to ascertain facts which are relevant to a matter in issue: Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No 2) [1974] AC 405 at 433 - 434. The private promise of confidentiality must yield to the general public interest that, in the administration of justice, truth will out, unless by reason of the character of the information, or the relationship of the recipient of the information to the informant, a more important public interest is served by protecting the information from disclosure: D v National Society for the Prevention of Cruelty to Children [1977] UKHL 1; [1978] AC 171 per Lord Diplock at 218.

31 It does not follow, however, that on an application for discovery the confidentiality of documents is irrelevant.

32 In Science Research Council v Nasse [1979] UKHL 9; [1980] AC 1028, Lord Wilberforce said at 1065:

"There is no principle in English law by which documents are protected from discovery by reason of confidentiality alone. But there is no reason why, in the exercise of its discretion to order discovery, the tribunal should not have regard to the fact that documents are confidential, and that to order disclosure would involve a breach of confidence ... As a corollary to the above, it should be added that relevance alone, though a necessary ingredient, does not provide an automatic sufficient test for ordering discovery. The ultimate test ... is whether discovery is necessary for fairly disposing of the proceedings. If it is, then discovery must be ordered notwithstanding confidentiality. But where the court is impressed with the need to preserve confidentiality in a particular case, it will consider carefully whether the necessary information has been or can be obtained by other means, not involving a breach of confidence."

"English law of discovery is extremely far reaching: parties can be compelled to produce their private diaries; confidences, except between lawyer and client, may have to be broken however intimate they may be. But there are many examples of cases where the courts have recognised that confidences, particularly those of third parties, ought, if possible, in the interests of justice, to be respected ... The process is to consider fairly the strengths and value of the interest in preserving confidentiality and the damage which may be caused by breaking it; then to consider whether the objective - to dispose fairly of the case - can be achieved without doing so, and only in a last resort to order discovery, subject if need be to protective measures."

34 In Ninnes v Graham (1986) 70 ACTR 1, Gallop J, having observed that confidentiality alone is not a sufficient ground to resist disclosure, said (at 7 - 8):

"But where a confidential relationship exists, and disclosure would be in breach of some ethical or social value involving the public interest, the court has a discretion to uphold a refusal to disclose relevant evidence provided it considers that on balance the public interest would be better served by excluding such evidence. The sole touchstone is the public interest. The question to be tested is whether it is clearly demonstrated that in the particular case the public interest in the disclosure of all evidence relevant to the trial of an issue is displaced by the public interest of excluding evidence despite its relevance. If in doubt, disclosure should be ordered."

35 To a similar effect, in Index Group of Companies Pty Ltd v Nolan [2002] FCA 608, Kiefel J said (at [8]):

"A private right of confidentiality in documents may be taken into account in considering whether to order discovery and inspection, although it is right to say that the fact that documents have that character is not usually itself a sufficient reason to deny discovery .... When a document is shown to be confidential the Courts must balance the effect of its disclosure and of it being withheld from a party to litigation. In that latter respect much may turn upon what it is necessary for that party to prove ...."

36 In the present circumstances the right of confidentiality does not simply arise under the general law but is a right that the legislature has deemed of sufficient importance that it has been enshrined in statute. In my view, the fact that the statutory entitlement to confidentiality of a person having no involvement or interest in the litigation will be affected is a significant element in the exercise of the discretion to order discovery and requires that particular rigour be exercised in examining whether disclosure of the confidential material is in fact necessary in order fairly to dispose of the proceedings.

37 Having said that, the entitlement to confidentiality must give way if that is necessary for fairly disposing of the proceedings. That the right of privacy conferred by the Privacy Act is not inviolable is recognised by National Privacy Principle 2.1(g) in Sch 3 of the Act, which permits an organisation to disclose personal information if required or authorised by law to do so.

38 It is also the case that, if discovery and inspection were given, measures could be taken, at least in the first instance, to cover over the names of the loan applicants, and any other indicia that might identify them, pending a determination as to whether any of the documents appeared to have the tendency suggested by the plaintiffs. Counsel for the plaintiffs did not accept that that should be done but conceded that it was a course that might be taken as a last resort.

39 I do not, however, consider that all of the documents sought are necessary for fairly disposing of the proceedings. It is common ground that in the present case Dawson not only acted as a broker in referring the loan applications to St George Bank, he was also one of the borrowers and authorised, handled or received the various advances the Bank subsequently made under the loan agreement. On the Bank's case, Dawson was either expressly or impliedly authorised by the other borrowers to do so. On the plaintiffs' case, Dawson had no authority to do so and the Bank was in breach of its obligations under the loan agreement in advancing the funds without the express written authority of all of the borrowers.

40 The documents referred to in this application are sought by the plaintiffs because, in essence, it is said that other transactions in which Dawson has arranged for loan applications to be submitted to St George Bank may tend to show a course of dealing which suggests the more likely explanation for the Bank's conduct is not that there was any agreement or arrangement by which loan advances were to be made to or through Dawson, but that Dawson, by reason of his existing relationship with officers of the Bank, was able to procure those officers to advance funds to or through him without the consent of all of the other borrowers.

41 As I have mentioned, counsel for the plaintiffs made it clear that, to that end, the plaintiffs sought not only documents in relation to finance applications where Dawson was one of the borrowers, but any application where Dawson had been the finance broker who arranged for the loan application to be made to St George Bank, even where Dawson thereafter had no connection with the transaction.

42 In my view, the objection which the defendants have taken to the relevance of documents within the latter category is well founded. I consider that such documents are not relevant or, if they are relevant at all, they are of such marginal relevance that in the circumstances they do not warrant an order for discovery. Indeed, so far as it seeks such documents the application, in my view, if not "fishing", is the next best thing.

43 As I have said, counsel for St George Bank said that his client did not object to an order for discovery of any documents of the nature sought where Dawson was not only the broker but also one of the borrowers and conceded that any such documents would be relevant and discoverable. In my view, in the circumstances of this application, that concession was rightly made and I would order discovery of any such documents.

44 Counsel for Dawson submitted that, so far as FRC has such documents, they are not discoverable by his client as they are not in his client's possession, custody or power. Of course, to the extent that such documents have been, but are not now, in the possession or custody of Dawson they are discoverable. The real issue on this application was whether documents held by FRC are in Dawson's possession or power.

45 It was submitted by counsel for the plaintiffs that documents held by FRC are in the possession or power of Dawson as a director of FRC; as a director, Dawson has a right or ability to inspect and copy documents of FRC. It was submitted that such a right was conferred by s 198F(1) of the Corporations Act 2001 (Cth) which, so far as relevant, provides that a director of a company "may inspect the books of the company (other than its financial records) at all reasonable times for the purposes of a legal proceeding ... (a) to which the person is a party ...". Section 198F(3) provides that a person so entitled to inspect the books may make copies of for the purposes of the proceedings.

46 I was not referred to any authority which supported the contention that s 198F gave a right of inspection in circumstances such as the present. Indeed, it seems that the effect of s198F has received very little judicial attention in that respect. However, in Hardcastle v Advanced Mining Technologies Pty Ltd [2001] FCA 1846, Emmett J, having referred to the Explanatory Memorandum for the Corporate Law Economic Reform Bill pursuant to which s 198F was inserted into the (then) Corporations Law, said by way of obiter in relation to s 198F(2) - relating to comparable access to company books by former directors - at [25]:

"A second possible limitation on the operation of s188F(2) [sic, s 198F (2)] is that the proceeding must be a proceeding to which the former director is a party or believes might be brought against him or her or which he or she proposes to bring in his or her capacity as a director of the company. It would be curious if a person who, fortuitously, happened to have been a director of a company in the past would be entitled to access to books of the company that might be material to proceedings brought by that former director or which might be brought against the former director in a capacity totally unconnected with the capacity of the former director as a director. I do not express any firm or final view on that question at this stage because it does not arise in the application before me." [emphasis in original]

47 The curious result referred to by Emmett J applies, in my view, with equal force to s 198F(1). It tends strongly to point to the conclusion that no such right was intended and when regard is also had to the Explanatory Memorandum is, I think, sufficiently clear that the purpose of s 198F was not to give access to directors or former directors for purposes unconnected with a liability or claim arising out of their capacity as a director. It was to overcome the limitation at common law that access must be for the purposes of the company, which, to adopt the example given in the Explanatory Memorandum, made it difficult for a director or former director who was sued by the company to get access to the company's records for the purpose of those proceedings. I do not, therefore, accept that s 198F has the effect contended for by counsel for the plaintiffs.

48 But documents held by a company may nevertheless be in the power of a director of the company.

49 In B v B (matrimonial proceedings: discovery) [1979] 1 All ER 801 it was held that documents of a company may be in the power of a director in the sense that the director has an enforceable right to inspect them or obtain possession or control of them. Dunn J concluded that whether company documents were within a director's power was a question of fact depending upon his shareholding, whether other shareholders were adverse to him, the constitution of the board of directors and whether they objected to disclosure of the documents. Where the company was his alter ego, so that the director has unfettered control of its affairs, company documents would be within the director's power.

50 That case was distinguished by the Court of Appeal in Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 QB 358, where the question was whether documents in the possession of its subsidiaries were in the power of the parent company. It was held that they were not. The Court of Appeal acknowledged, however, that a great deal depends upon the facts of the case and the position may be different where a person has such control over a company that compliance with their wishes is assured: per Denning MR at 371 and Shaw LJ at 376, with whose judgments Brandon LJ agreed.

51 An appeal from the decision of the Court of Appeal was dismissed by the House of Lords in Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627. On the appeal, Lord Diplock (in a speech concurred in by the other members of the House of Lords) said (at 635) that a document is in a party's power if that party has "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". It is, however, significant that Lord Diplock (at 636 - 637) "expressly decline[d] an invitation to roam any further into the general law of discovery" beyond the "special facts" of the appeal, noting, in particular, that, depending on their own particular facts, different considerations may apply to one-man companies.

52 In Taylor v Santos [1998] 71 SASR 434, Doyle CJ, with whom Prior J agreed, said (at 437) that Lord Diplock's statement as to a presently enforceable legal right was not an exhaustive statement of the content of the expression "power" in this context, although the Court should be cautious in extending the scope of "power". His Honour went on (at 438) to say:

"... my view is that the obligation to discover a document is limited to a document that the person in question has the legal power or (I can think of no better expression) actual and immediate ability to inspect, even though the document is the property of or is held by another person. ... A person does not have that right or actual immediate ability if the person is able to inspect the document only if a third person, who has control of the document, agrees to permit inspection, or agrees to refrain from so exercising that person's control as to prevent inspection. "

53 I respectfully agree with that view. Of course, as Doyle CJ made clear in that case, in speaking of an immediate ability to inspect, the Court is not concerned with issues of practicality, in the sense, for instance, that the document may be physically located in a distant or relatively inaccessible location.

54 There is no evidence before me as to whether Dawson has the actual immediate ability to inspect any documents of the nature referred to that may be in the possession of FRC. The only relevant evidence is that Dawson is a director of FRC and that is not sufficient, one way or the other.

55 I do not, however, consider that that is determinative of the issue. I respectfully agree with what was said by Hedigan J in Linfra Pty Ltd v Citibank Ltd [1995] VicRp 40; [1995] 1 VR 643 at 648, as follows:

"The court has a discretion, in my opinion, as to the propriety of an order and its form. The court might decline to make an order at all where, on the material, it is apparent that the documents are not within the power of the party from whom they are sought. On the other hand, the court might consider that an order should be made in such form as will advance the matter to enable a fair decision to be made as to whether or not it is within power. Such an order initially might do no more than direct a further affidavit elaborating a claim that a document is not within power."

56 I would order discovery by each the defendants of any documents of the nature sought by the plaintiffs which are or have been in that defendant's possession, custody or power relating to transactions where Dawson was one of the borrowers or where St George Bank advanced money to, or at the direction or by the authority of, Dawson. In the first instance, the names or any other indicia that may identify the other borrowers need not be disclosed.

57 If Dawson maintains that any such documents in the possession or custody of FRC are not within his power, he must file and serve an affidavit setting out the grounds upon which it is contended they are not within his power. I will hear counsel on the time within which that is to be done.

58 As regards documents relating to the appointment of Dawson and/or PLAN Australia as St George Bank agent number W00040, in his affidavit Dawson has said that he was appointed as agent W00040 and that the appointment was made by PLAN Australia, not St George Bank. I consider that that category therefore falls away.

59 I do not consider the balance of the documents sought by the plaintiffs to be relevant, or sufficiently relevant to justify an order for discovery, and I would decline to make such an order.

60 I will hear the parties on the form of orders and on costs.

Tan & Ors v St George Bank Ltd & Ors [2005] WASC 143

At a glance

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Judgment (91 paragraphs)

Tan & Ors v St George Bank Ltd & Ors [2005] WASC 143 (1 July 2005)

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Cases Cited (2)