Welker v Rinehart

Judgment (Ex tempore) 1HIS HONOUR: By motion filed in Court today, the first defendant seeks orders that paragraphs 3, 4 and 5 of the plaintiff's notice to produce dated 7 May 2012 be set aside. That notice to produce calls for documents in the following terms: 3. the "PwC advice" referred to at [18(iii)] and [23(i)] of the Defence; 4. the "legal and financial advice" referred to at [18(x)] and [64(xiv)] of the Defence; and 5. the "other material provided to PwC and legal counsel" referred to at [23(i)] of the Defence. 2The notice to produce is expressly issued pursuant to (NSW) Uniform Civil Procedure Rules 2005 (UCPR), r 21.10(1)(a), which provides as follows: (1) Party A may, by notice served on party B, require party B to produce for inspection by party A: (a) any document or thing that is referred to in any originating process, pleading, affidavit or witness statement filed or served by party B, and 3There is undoubtedly a difference in the degree of precision required to identify a document under r 21.10(1)(a) as distinct from under r 21.10(1)(b). Rule 21.10(1)(a) is satisfied if the document is merely "referred to" in a relevant pleading or affidavit, and it is not necessary that the document be "clearly identified", as is required under r 21.10(1)(b). Thus, it has been said that a document is sufficiently "referred to" if it is described or referred to in a general manner or as part of an identified class of documents [Smith v Harris (1883) 48 LT 869; Dubai Bank Limited v Galadari (No 2) [1990] 1 WLR 731; [1990] 2 All ER 738]. 4However, it is also established that the reference must involve a direct allusion to the document itself, as distinct from its effect or the information it contains. Two Australian cases illuminate this: the judgment of Moore J in King v GIO (Australia) Holdings Limited [2001] FCA 1487 at [18], and that of Austin J in New Cap Reinsurance Corporation Limited (In Liq) v Daya [2008] NSWSC 763. 5My reasoning reflects that of Austin J, to whose judgment I am indebted. In that case, a deponent had sworn an affidavit in the following form: I have been advised by my solicitors and believe that a consideration relevant to the Court's discretion under section 6 in relation to each defendant is whether there is a real possibility that the defendant has insufficient assets to satisfy any judgment against him. 6A notice to produce, reliant on r 21.10(1)(a), was issued calling for production of all documents which comprised or referred to that advice. Austin J said that while the language of the paragraph of the affidavit in question might arguably be taken to refer to a document or thing, it did not expressly or impliedly refer to a document or thing for the purposes of r 21.10(1)(a). Inter alia, his Honour observed there was no basis in the language of the affidavit for inferring that the advice was in writing (at [36]). 7His Honour then referred to the judgment of the Court of Appeal in Dubai Bank, which concerned the equivalent provision of the rules of the Supreme Court of England and Wales, in which Slade LJ, at 738, rejected a submission that if an affidavit referred to a transaction, which on balance would have been effected by a document, that must involve a reference to the document for the purpose of the rule. His Lordship said: We cannot accept the broad submission of Mr Purle summarised above. It seems to us to involve reading the phrase "reference is made to any document" as including reference by inference. This we do not regard as the natural and ordinary meaning of the phrase. To our minds, the phrase imports the making of a direct allusion to a document or documents. If the plaintiff were correct in its broad submission, this would oblige the court to enter into a process of inference and conjecture in order to determine whether the document or class of documents in question ever existed; and indeed, the judge did so in the present case. We cannot think that this was what the makers of the rule had in mind. 8His Lordship added: In our judgment, a mere opinion that on the balance of probabilities, a transaction referred to in a pleading or affidavit must have been effected by a document, does not give the court jurisdiction to make an order under [the rule], unless the pleading or affidavit makes direct allusion to the document or class of documents in question. 9His Lordship referred to an earlier unreported decision of the Court of Appeal in Marubeni Corporation v Alafouzos [1986] CA Transcript 996, in which an affidavit stated that the plaintiffs had obtained Japanese legal advice which categorically stated certain things that were set out. It had been conceded that the legal advice almost certainly would have been contained in documents. Notwithstanding that, Lawton LJ regarded it as clear that there had not been a reference to any document in the affidavit. Lloyd LJ, on the other hand, though expressing some doubt on the matter, was prepared to assume there was a reference to the document in the affidavit. In Dubai Bank, Slade LJ said their Lordships were fortified in their construction of the rule by the judgment of Lawton LJ, which Austin J inferred their Lordships regarded as the preferable one. 10In King v GIO, the equivalent provision of the Federal Court rules was under consideration. References in the defence to "forecast and budgets of future revenues, expenditures and profits prepared by management of GIO Re and reviewed by PricewaterhouseCoopers Securities Pty Ltd" were held not to involve a reference to a document for the purposes of the notice to produce rule, even though it would almost certainly be the case that such information would have been contained in documents. Moore J referred to and applied the Dubai Bank case and Lawton LJ's judgment in the Marubeni case. 11In New Cap Reinsurance Corporation, Austin J concluded (at [44]): In my view the authorities strongly point to the conclusion that if an affidavit merely says that legal advice has been obtained, without any "direct allusion" that the advice was in written form, the affidavit does not refer to a document for the purposes of r 21.10(1)(a). Nor does it refer to a "thing", because in its context the word "thing" appears to mean a physical thing, and legal advice is not necessarily a physical thing, just as it is not necessarily a document. 12His Honour therefore held that the relevant part of the notice was not authorised by r 21.10(1)(a), and ultimately ordered that it be set aside. 13In the present case, paragraph 4 of the defendant's notice to produce calls for production of "legal and financial advice" referred to at paragraph 18(x) and paragraph 64(ix) of the Defence. The reference in each of those paragraphs of the Defence is substantially to the same effect, such that it is suffices to refer to paragraph 18(x), which is as follows: 18 In answer to paragraph 18 the first defendant: ... (x) the first defendant says further that the 3 September letter did no more that set out the consequences based on legal and financial advice received by the first defendant of the application of capital gains tax to each of the plaintiffs in the event of the Trust vesting, for which the first defendant was not responsible and over which she had no control other than in respect of the vesting date; and... 14It will be evident from the observations recorded above that the reference in that paragraph to "legal and financial advice" does not satisfy the test described by Austin J, in that there is no direct allusion to a document. The advice referred to in that paragraph need not necessarily have been in writing, despite a high probability that it would have been. 15So far as paragraph 5 of the notice is concerned, it refers to paragraph 23(j) of the defence, which is as follows: 23 In response to paragraph 23 the first defendant: ... (j) denies that the third plaintiff had any entitlement to be provided all other material provided to PwC and legal counsel for the purposes of receiving the advice referred to in the 3 September letter. 16That, in turn, responds to paragraph 23 of the statement of claim, which relevantly asserts that, by email dated 4 September 2011 to Mr Newberry, the third plaintiff sought "preliminary information" including, inter alia, "all other material provided to PWC and legal counsel for the purposes of receiving the advice referred to in the 3 September letter". 17It seems to me that the reference to "all other material provided to PWC and legal counsel", although apparently referring to tangible material that would probably have been in documentary form, does not involve any direct allusion to a document for the purposes of the rule in question. There is no more than an indirect reference to material that may exist. 18For those reasons, I have concluded that paragraphs 4 and 5 of the notice to produce should be set aside.