By a statement of claim filed on 8 July 2019, Mr Greg Willmott attempts to enforce an alleged loan agreement to Myles and June Wilson, which he alleges was entered into on 18 September 2018. A monetary sum of $150,000 was transferred. He sues in alternative claims of debt, breach of contract and a common law count of money had and received.
Mr Willmott's claims are defended by Myles Wilson substantially on the basis that the sum transferred was a small part of a broader transaction for the purchase, development and on-sale (for profit) of property at Glen Alpine and in particular, that sum would be appropriated for other purposes associated with the arrangement and not need to be repaid. Instead the money would be recouped through the share of profits on the sale.
Myles Wilson has filed a cross-claim by which he asserts that, in breach of the broader arrangement, on 9 October 2018, he was, without his knowledge or consent, excluded from the arrangement for the property development, and the Glen Alpine property was transferred to a third party in November 2018. This was after Mr Wilson had procured additional sources of finance to complete the purchase. Mr Wilson says that this conduct was a repudiation of the arrangement, he accepted that repudiation and he now counterclaims, suing for what he claims is the loss of the benefit he bargained for. A feature of the cross-claim was the assertion that certain verbal representations were made by Patrick Willmott, Greg Willmott's brother, about the legal effect of a document recording the transfer of the sum Greg Willmott sues upon. Further, the respondents say that Patrick Willmott promised to pay Mr Wilson the sum of $200,000 and represented to the respondents that he, Patrick Willmott, had borrowed $150,000 from Greg Willmott and the true nature of the transaction was that Patrick was the debtor, to Greg Willmott, and the written agreement was, in effect, a sham in its representing that there was a loan agreement between Greg Wilmott and the respondents. Mr Wilson sheets home that misrepresentation to Greg Willmott.
Ms Wilson substantially adopts Mr Wilson's position, but, separately she did not obtain any benefit of a loan agreement. She may have signed a document, but her assent to any arrangement was neither informed nor free and could not be enforced against her.
The case appears to have had a history of multiple interlocutory applications, but has been set down for hearing in October this year.
Before the Court is a notice of motion, filed by Mr Willmott on 17 June 2021. Two applications are brought. The first is Mr Willmott's application to set aside a notice to produce to him dated 25 May 2021. The second is Mr Willmott's application to set aside a subpoena to produce documents issued by Myles Wilson to GB&JA W Holdings (hereafter the 'company') dated 25 May 2021.
Mr Willmott relies upon the affidavit of his solicitor, John Au-Yeung, affirmed on 17 June 2021 and his affidavit prepared in the proceeding, affirmed 12 March 2021. I will henceforth refer to Mr Willmott as the applicant. Mr Willmott was represented at the hearing by Mr O'Sullivan of Counsel.
Myles and June Wilson oppose both applications. I will henceforth refer to them as the respondents. They rely upon an affidavit of their solicitor, Matthew Twyford, sworn on 23 June 2021. Mr Twyford appeared for the respondents at the hearing of this motion.
The second cross-defendant, Mr Patrick Willmott, was legally represented at the hearing of the applications; even though process had not been issued to his client. Mr McDonald was invited to make such submissions as he might wish to make. In the event, he made none.
Before turning to the contested categories or requirements for production, I will refer, briefly to some other evidentiary matters.
[2]
The subpoena for production
Mr Au-Yeung deposed to receiving instructions from the company in response to its issue.
Mr Twyford adduced evidence to prove that:
1. the applicant is the sole director and shareholder of the company; and
2. the company had lodged a caveat over property owned by the second respondent, June Wilson, at Alfords Point.
Mr Twyford deposed to inquiring of the applicant's solicitor why, in the application for the caveat, the applicant had attested that it was the company which loaned monies to the respondents. The response was that this was done in error. Mr Twyford says that the subpoena and notice to produce were both issued to test this evidence.
On both applications, relevant parts of Mr Greg Willmott's affidavit affirmed on 12 March 2021 included:
1. the handwritten agreement (Annexure A);
2. a document showing the transfer of $150,000 to Mr Wilson (Annexure B); and
3. at paragraph 10, Mr Willmott responded to certain evidence apparently relied upon by Mr Wilson to say that he drew upon his home mortgage to make the transfer to Mr Wilson.
[3]
THE RESPONDENTS' ARTICULATION OF LEGITIMATE FORENSIC PURPOSE UNDERLYING THE REQUIREMENTS
On 17 June 2021, Mr Twyford sent an email to Mr Au-Yeung in which he identified the key issues to which the notice to produce and subpoena related:
1. whether the applicant had been reimbursed from the company and therefore had suffered no loss;
2. whether the applicant told the truth about taking a mortgage over his home, as he had affirmed in his affidavit;
3. whether the applicant had personally applied for finance to purchase the acquisition of the Glen Alpine property;
4. the scope of Patrick Willmott's instructions to the applicant.
No differentiation was suggested as between the notice to produce or subpoena.
There was little further argument between the solicitors engaged in a way which might have narrowed the scope of dispute over contested categories. Indeed, it appears that the applicant proceeded to file his motion on the same day as Mr Twyford sent his email.
[4]
Consideration
I do not find persuasive the applicant's point that the issue of this process is premature. The applicant has served his evidence and the respondents submit, with some force, that issues have arisen. It does not seem obvious that there is any benefit to deferring the argument until the respondents serve their evidence; even if I agree with Mr O'Sullivan's criticism that the respondents' pleadings are by no means pellucidly clear. At any rate, the Court was informed that the respondents' evidence is nearly complete. If argument be deferred now, it will not be long before it comes back before the Court again.
In my view, as a general comment, both documents are overbroad in their scope, when set against the forensic purposes identified. That can, to some extent, be addressed by refinement in what would otherwise be valid requirements for production.
Mr Willmott's action, in his pleading is now pleaded in debt, in contract and a common law count of money had and received. In my view, it is not an arguable defence to an action on a debt that a third party, even one related to a creditor, has paid money to the creditor. Further, I do not see that the position is different on the alternative claims.
But there is an issue as to who is the contracting party. Mr Willmott must prove that he is the contracting party. He says that he is, and he annexed to his affidavit a bank statement to prove that the contested sum came from his ANZ bank account to a bank account in Mr Wilson's name. He also relies upon a half page written document signed by the respondents. That evidence provides prima facie support for his position, but the respondents do not admit that the half page written document is binding and, at any rate, are entitled to argue that it does not represent the entirety of the parts of the agreement.
The respondents were provoked to issue the court process by learning of the caveat in the company's favour and the attestation by the applicant as to the correctness of the information in the schedule detailing the caveator's interest. But the schedule identifies the company's interest as being equitable in nature. Its interest was in providing security. On the basis of that document alone, it could be inferred that it was the ultimate source of funds for Mr Willmott to provide to Mr Wilson. But that would not derogate from the circumstance that Mr Willmott had the legal rights, as creditor, for the sum of money transferred to Mr Wilson. I was informed, however, that the caveat was withdrawn and replaced by a new caveat in which Mr Willmott has been identified as the caveator. This may or may not prove to be an apt topic for cross-examination of Mr Willmott, but even so, any coercive requirement still has to be relevant. I accept, to a degree, and subject to a qualification I will shortly come to, the force of Mr O'Sullivan's submission that the respondents are not entitled to conduct a roving commission to identify how Greg Willmott acquired the means to transfer the payment to Mr Wilson.
The qualification to that is that there is another issue, which arises on the defence and cross-claim. It relates to what was said to be Mr Patrick Willmott's representations about how and why monies would be transferred to Mr Wilson. In this way, even if what Greg Willmott has affirmed, or otherwise sought to prove by documents, is true, other documents that show the source of funds may be relevant to proving the veracity, or otherwise, of Patrick Willmott's representations.
Further, it is a legitimate purpose for the issue of process to require production of documents to test the accuracy of evidence that is to be adduced at hearing (such as in Mr Willmott's affidavit) or other documents (such as Greg Willmott's statutory declaration in support of the application for a caveat). In my view, caution should be exercised, on an interlocutory application of this kind, to conclude that the issue of a compulsory requirement is likely to be futile; for not yielding, a 'smoking gun'. As Bell P recently said in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 at [30] (Brereton JA and McCallum JA agreeing) in order to demonstrate a legitimate forensic purpose, it is unnecessary that the issuing party demonstrate that the documents would materially assist the issuing party. In the same decision, the Court of Appeal reaffirmed that a legitimate forensic purpose may be established where they are capable of affording a legitimate basis for cross-examination on credit ([60]-[61], [89]). Given that, on the respondents' case, the contract was verbal, issues of credit will likely be significant.
[5]
The subpoena
Category 2(a) has already been answered, so need not be considered.
In relation to category 2(b)(i), there is already evidence to indicate that $150,000 was transferred from an account in Greg Willmott's name to Mr Wilson. That being so, this sub-category is unnecessary. So too is the requirements in categories 2(b)(ii) and (iii). Each of these sub-categories should be set aside. As to the balance of the sub-categories, an issue of potential apparent relevance is payments made by the company to either Greg Willmott or Patrick Willmott in the sense that they may have a bearing on the contracting party to the respondents. Subject to a qualification, I would permit categories 2(b)(iv) and (v). The qualification is that I do not see why the period needs to go beyond the commencement date of the proceeding, which is 8 July 2019.
As to category 2(c), this can only be directed to proof that the company was a creditor. In my view, for reasons already indicated, that is not a legitimate purpose for the requirement. The category should be set aside.
Category 3 is to some extent similar to category 2(b). It is permitted subject to variations that the documents record payments from the company to Patrick Willmott and Greg Willmott in the period up to 8 July 2019. That means sub-categories 3(a) and (b) are set aside.
Category 4 seems to relate to the company's financial capacity. I do not understand the relevance of that category. As I understood him, the legal practitioner for the respondents argued that it might show the falsity of the applicant giving evidence of his drawing upon his mortgage as a source of funds. That is the subject of category 1 in the notice to produce. It is oppressive to inquire into the company's affairs, including applications for finance, when there is documentary evidence to indicate that the sum of $150,000 was transferred from the applicant to Mr Wilson. Category 4 is set aside.
Category 5 is unlimited as to its temporal scope and is a form of discovery. That category should be set aside.
As to category 6, I agree with Counsel for the applicants that what is relevant is public records of caveats (if they be relevant at all). Preparatory documents are irrelevant. That category should also be set aside.
[6]
Notice to produce
A notice to produce issued under r 34.2 has the same effect as a subpoena. By r 34.2 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR'), the dispensation that the Court may grant from production effectively operates in the same way as the Court's express power to set aside a subpoena. The same principles apply: Randren House Pty Ltd v Water Administration Ministerial Corporation [2017] NSWLEC 151 at [22]-[25].
It is not obvious to me why the notice to produce was issued pursuant to r 34.1 and not under Part 21 of the UCPR. It is not obvious, nor explained, whether any 'hearing' was set or any other grant of leave for a fixed date. Nevertheless, rule 34.1 still requires the production of specified documents with such specification to be given with 'reasonably particularity': Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 573. Notices to produce issued under this rule cannot be issued for what is in effect a request for discovery.
As to category 1, it appears that the forensic purpose is to assess the credibility of the applicant in making an assertion about taking a mortgage over his home. His credit is a relevant issue in the proceeding. The scope of period is limited. I do not regard this category as being objectionable. As indicated earlier, whether or not the requirement produces a smoking gun is not to the point. The applicant is not excused from producing documents that answer the category.
Category 2 was not pressed.
As to category 3, this is similar to category 1, if broader in its scope. The legal representative for the respondents said that the category was justified as it might tend to show the beneficiary of any funds if the monies were not advanced to Greg Willmott. I do not agree. The supposed application is finance obtained for Greg Willmott. The applicant is excused from this requirement.
As to category 4, the category is bad in form for being too broad. The thrust of the category, and the way I interpret it in substance, is documents proving payments to various persons. Sub-category 4(b) is unnecessary as it is already apparent that Greg Willmott paid $150,000 to Mr Wilson on 18 September 2018. Having regard to issues in the defence and cross-claim, I see some apparent relevance in a requirement to produce documents showing that Greg Willmott paid Patrick Willmott money, but would restrict the period to the commencement date of the proceeding - that deals with sub-category 4(e). The applicant is excused from compliance with the balance of the requirement.
As to category 5, as indicated in relation to the subpoena, I accept some apparent relevance in sub-category 5(c) on issues raised in the defence and cross-claim; but not the other sub-categories. For sub-category 5(c), the requirement is up to 8 July 2019. The applicant is excused from complying with sub-categories 5(a) and (b).
As to category 6, in his affidavit, Mr Greg Willmott deposed to drawing down on his home mortgage to make the payment to Mr Wilson. It appears that he is suggesting that this occurred on 18 September 2018. The respondents are entitled to test that inference. There is no need for the period to be long. The requirement should be understood to be the statement of Mr Greg Willmott's home mortgage account in the period from 1 July 2018 to 30 September 2018.
[7]
Orders
I do not propose to repeat my determinations on each and every paragraph.
The parties have enjoyed mixed success on the applications in the applicant's notice of motion; although on balance I think that the applicant had the better of it: at the hearing, there were certain categories of requirement not pressed or conceded and, I have found that other categories were not justified.
Nevertheless, as I touched upon earlier in these reasons, I think there was scope for the applicant, in retrospect, to have engaged further with the respondents' solicitor before he filed his motion and he did not really do so. That he did not do so and that he briefed Counsel to argue essentially every category that was not pressed or conceded by Mr Twyford necessitated a not insubstantial hearing on a procedural dispute; which might, to some degree, have been reduced in its scope if a more constructive approach had been taken.
The Court orders that costs of the notice of motion dated 17 June 2021 are costs in the cause.
[8]
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Decision last updated: 27 July 2021