FEDERAL COURT OF AUSTRALIA

Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 2) [2006] FCA 1001

PRACTICE AND PROCEDURE - discovery - whether inclusion of a document as an annexure to an affidavit is in itself proper discovery of the document – whether discovery is necessary when documents are already in the hands of the other party – whether various documents satisfy the criteria required by O15 r 2(3) Federal Court Rules - meaning of possession, custody or power - whether documents in the possession, custody or control of a company in administration under Pt 5.3A Corporations Act 2001 (Cth) – meaning of ‘general discovery’ under O 15 Federal Court Rules - whether an order for general discovery under O 15 includes documents discoverable pursuant to the ‘train of inquiry’ test.

Held: Simply annexing a document to an affidavit is not in itself ‘discovery’ of that document within O 15. A supplementary list of documents should be filed and served in circumstances where a significant quantity of material is produced annexed to affidavits in the days leading to trial which had not previously been discovered. The relationship of administrator and company as contemplated by Pt 5.3A Corporations Act does not permit the company other than with the consent of the administrator to have “power” over documents retained by the administrator. The consent order for discovery made on 15 February 2006 was an unqualified order for general discovery, as contemplated by O 15 r 5, and requiring discovery of documents as contemplated by O 15 r 2, in particular subrule 2(3). The ‘train of inquiry’ test is not applicable to such order.

Federal Court Rules O15 rr 2(3), 2(4), 2(5), 3, 5, 6, 8

Part 5.3A Corporations Act 2001 (Cth)

Australian Competition & Consumer Commission v Advanced Medical Institute Pty Ltd (2005) FCA 366 applied

Australian Independent Newspapers Ltd v John Fairfax Holdings Ltd (Federal Court of Australia, 22 June 1994) cited

Australasian Memory Pty Ltd v Brien (2000) 172 ALR 28 cited

Aveling v UBS Australia Capital Markets Holdings Ltd [2005] FCA 415 applied

Federal Commissioner of Taxation v ANZ Banking Group Ltd (1979) 143 CLR 499 cited

Hore-Lacy v David Syme and Co unreported Supreme Court of Victoria, 5 September 1996 cited

Horsley v Phillips Fine Art Auctioneers Pty Ltd (1995) 7 BPR [97557] cited

KC v Shiley Inc [1997] 796 FCA (14 August 1997) cited

Kennedy v Dodson (1895) 1 Ch 334 cited

Lonrho Limited v Shell Petroleum (1980) 1 WLR 627 applied

Lubizol Corp Inc v Imperial Chemical Industries plc [2000] FCA 1464 applied

Mulley v Manifold (1959) 103 CLR 341 cited

Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490 applied

Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109 cited

Re McGorm; ex parte Co-operative Building Society of SA (1989) 86 ALR 275 cited

Spyer v Cuddles ‘N’ Mum (Franchise) Pty Ltd (No 3) (2002) FCA 1563 considered

South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 519 cited

Taylor v Rundell (1841) Cr & Ph 104, 41 ER 429 cited

Telstra Corporation Ltd v Australian Competition & Consumer Commission [2006] FCA 737 cited

Halsbury’s Laws of England 4^th edn

SD Simpson, DL Bailey and EK Evans, Discovery and Interrogatories, 2^nd edn, Butterworths, Australia, 1990

S Fisher, Commercial and Personal Property Law, Butterworths, Australia, 1997

The Hon Justice JW von Doussa, ‘Discovery in the Federal Court’, Law Society of South Australia and the Federal Litigation Section Seminar, 14 March 2000

CITRUS QUEENSLAND PTY LTD, PETER MICHAEL TRACY AND SUNSTATE CITRUS PTY LTD (ACN 112 847 560) [SUBJECT TO THE DEED OF COMPANY ARRANGEMENT] v SUNSTATE ORCHARDS PTY LTD (ACN 095 659 733), ANDREW COLIN STRAHLEY AND DAVID BREED

QUD 400 OF 2005

COLLIER J

4 AUGUST 2006

BRISBANE

THE COURT ORDERS THAT:

As to the First Notice of Motion the Court orders that:

1.                  The first and second respondents file an affidavit stating whether any of following documents or classes of documents referred to in the schedule to this application is or has been in their possession, custody or power and, if it has been but is no longer in their possession, custody or power when they parted with it, such affidavit to be filed and served within 7 days of the date of this order:

·            Agreement for Purchase of Assets dated 24 January 2001

·            Budgets

·            Budget Summaries

·            Hancock Board paper evidencing the consideration of various options in relation to the orchards and the view that the orchards were not performing in accordance with their return criteria

·            Hancock Board minute evidencing the decision to sell the orchards referred to by Strahley

·            The actual pack out rates for 2004 and the notional budgeted packout rates for the financial year 30 June 2005 referred to by Strahley.

2.                  The first and second respondents file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with Order 15 Rule 6 of the Federal Court Rules within 14 days of the date of this order discovering any document annexed to the affidavits of the respondents’ witnesses filed in this action which are not already listed in the first and second respondents’ List of Documents filed 29 March 2006 and the documents referred to in the affidavit required to be discovered by paragraph 1 of this order.

3.                  Inspection of those documents in the supplementary list of documents is to be provided within 21 days of the date of this order.

4.                  The time for service of the notice of motion be abridged until a time no later than 4.00 pm, 20 July 2006.

5.                  Costs be reserved.

As to the Second Notice of Motion the Court orders that:

1.                  The applicants file an affidavit stating whether any of following documents or classes of documents referred to in the schedule provided in support of this application is or has been in their possession, custody or power and, if it has been but is no longer in their possession, custody or power when they parted with it, such affidavit to be filed and served within 7 days of the date of this order:

·            Item 1 Confidentiality Agreement between the First Respondent and the Second Applicant

·            Items 19, 20 and 22 Spray Records

·            Item 14 The second applicant’s 100 day plan

·            Item 13 Westpac and ANZ documents and correspondence

·            Item 15 Copies of all cash flow

·            Item 16 Creditors invoices for first applicant

·            Item 18 Email from David Breed to the second applicant

·            Item 21 Management reports for the Orchards and Packing shed

·            Item 25 Third applicant’s orchard management plans

·            Items 26, 27 and 28 Cash flows, correspondence and emails

2.                  The applicants file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with Order 15 Rule 6 of the Federal Court Rules within 14 days of the date of this order discovering any document referred to in the affidavit required to be discovered by par 1 of this order.

3.                  Inspection of those documents in the supplementary list of documents is to be provided within 21 days of the date of this order.

4.                  Once the respondents allow the applicants to have access to the computer in the packing shed for the purpose of accessing the SmartPak, TotalPak and packout records the applicants are to, within 7 days of the date of access being provided, file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with O 15 r 6 of the Federal Court Rules discovering the SmartPak, TotalPak and packout records referred to in items 2, 17 and 30 of the schedule provided in support of this notice of motion. Inspection of such documents is to be provided within 14 days of the date of access being provided.

5.                  The time for service of the notice of motion be abridged until a time no later than 4.00 pm, 20 July 2006.

6.                  Costs be reserved.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     I have before me two notices of motion both filed on 20 July 2006. One is brought by the first, second and third applicants in the substantive case (‘the first notice of motion’), the other by the first and second respondents in the substantive case (‘the second notice of motion’). For convenience, I shall refer to the first notice of motion in this case as that brought by ‘the applicants’, and the second notice of motion as that brought by ‘the respondents’, and I propose to deal with them in that order.

2                     On 15 February 2006 I ordered the parties to make discovery by verified List of Documents and file and serve such List of Documents on or before 4.00 pm on 29 March 2006.

3                     The applicants filed and served their list of documents on 13 April 2006 and provided inspection of the documents contained in the applicants’ list of documents to the respondents on 4, 8 and 9 May 2006. On 11 May the respondents requested the provision of certain documents contained in the applicants’ List of Documents and these were provided on 16 May 2006.

4                     The respondents filed and served their list of documents on 29 March 2006 on the applicants on 28 April 2006. On 19 April 2006 the applicants requested the provision of certain documents contained in the respondents’ List of Documents and these documents were provided on 28 April 2006.

5                     Solicitors for both the applicants and the respondents depose that on 28 June 2006, McCullough Robertson, acting on behalf of the respondents, wrote to Lynch & Co, acting on behalf of the applicants, and noted that they intended to raise with them ‘the issue of the inadequacy of the applicants’ discovery’ (affidavit of Paul Hardman of 20 July 2006 par 4).

6                     (Reference to this letter of 28 June 2006 and this specific statement was repeated in par 8 of the affidavit of Mr Paul Lynch filed 27 July 2006. At the hearing of these notices of motion last Friday the respondents objected to certain evidence of the applicants, including par 8 of Mr Lynch’s affidavit. This objection is somewhat surprising, given that Mr Hardman deposes to the same facts in his affidavit par 4.)

7                     The immediate history of this matter is set out in (2006) FCA 920. The hearing of the substantive case was scheduled to commence on Monday 17 July 2006 for two weeks. On the application of the applicants I adjourned the hearing of this matter for reasons including that a considerable volume of material was put before the applicants in the days before the trial.

8                     The notices of motion represent claims by each party in respect of documents for which they are seeking discovery.

Discovery

9                     Order 15 Federal Court Rules deals with discovery. The parties in particular have referred me to O 15 rr 2(3), 3, 6 and 8, and Practice Note 14.

10                  Order 15 r 2(3) provides that:

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.

11                  Matters to be taken into account in for the purposes of making a reasonable search as required by r 2(3) are set out in O 15 r 2(5), namely:

(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.

12                  Order 15 r 3 provides that:

(1)      The Court may, before or after any party has been required under rule 1 to give discovery, order that discovery under rule 2 by any party shall not be required or shall be limited to such documents or classes of documents, or to such of the matters in question in the proceeding, as may be specified in the order.

(2)      The Court may make such orders under sub-rule (1) as are necessary to prevent unnecessary discovery.

13                  Rule 6 provides that:

(1)      A list of documents required by or under this Order shall, unless the Court otherwise orders, be in accordance with Form 22 and conform to the requirements of this rule.

(2)      A list of documents shall enumerate the documents which are or have been in the possession, custody or power of the party making the list.

(3)      A list of documents shall enumerate the documents in a convenient sequence and as shortly as possible, but shall describe each document or, in the case of a group of documents of the same nature, shall describe the group sufficiently to enable the document or group to be identified.

(4)      …

(5)      …

(6)      …

(7)      …

(8)      …

14                  Rule 8 provides for orders for particular discovery and is as follows:

Where at any stage of the proceeding, it appears to the Court from evidence or from the nature or circumstances of the case or from any document filed in the proceeding that there are grounds for a belief that some document or class of document relating to any matter in question in the proceeding may be or may have been in the possession, custody or power of a party, the Court may order that party:

(a)      to file any affidavit stating whether that document or any document of that class is or has been in his possession, custody or power and, if it has been but is not then in his possession, custody or power, when he parted with it and what has become of it; and

(b)      to serve the affidavit on any other party.

15                  Notwithstanding my order of 15 February 2006 it appears that a considerable volume of material was disclosed by the respondents to the applicants in the days leading to trial in July this year.

16                  On the other hand, the respondents claim that a significant amount of material remains to be discovered by the applicants.

17                  The adjournment of the hearing of this case, because of issues involving relevant documents which both parties claim require disclosure, requires questions of further discovery to be resolved without delay. Without doubt, it is in the interests of the litigants that discovery be concluded, to ensure this matter be progressed to trial in November this calendar year.

18                  Both the written and oral submissions of counsel in this hearing focused on two composite documents, both of which were prepared by the solicitors for the respondents for the purposes of the hearing. These composite documents contained comments from each party, and were headed:

·           Response to page 4 of fax dated 14 July 2006 and further response to fax dated 20 July 2006. This table of responses refers specifically to some of the documents listed in the schedule attached to the applicants’ notice of motion and sought by the applicants, and summarises pre-hearing communications between the legal representatives of the applicants and the respondents as to those documents.

·           Schedule of applicants’ undiscovered documents. This schedule contains a list of documents sought by the respondents, and summarises pre-hearing communications betweens the legal representatives of the applicants and the respondents as to those documents.

19                  During the hearing I noted that a considerable volume of material had been filed by the parties by way of affidavit, both in the lead up to and during the hearing itself. I asked the parties to consider whether they had any additional submissions to direct my attention to specific aspects of those affidavits. It was clear however, both from the written and oral submissions, and the responses of counsel, that the key documents for both parties are the two composite documents I note above.

The First Notice of Motion

20                  The applicants in the first notice of motion sought the following orders:

1.         The first and second respondents file an affidavit stating whether any of the documents or classes of documents referred to in the schedule to this application is or has been in their possession, custody or power and, if it has been but is not then in their possession, custody or power when they parted with it, such affidavit to be filed and served within 7 days of the date of this order.

2.         The first and second respondents file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with O 15 r 6 of the Federal Court Rules within 14 days of the date of this order discovering any document annexed to the affidavits of the respondents’ witnesses filed in this action which are not already listed in the first and second respondents’ List of Documents filed 29 March 2006 and the documents referred to in the affidavit required to be filed by par 1 of this order.

3.         The first and second respondents and the solicitors for the first and second respondents file and serve an affidavit within 14 days of the date of this order stating the grounds and reasons why the documents contained in the schedule prepared by the first and second respondents and tendered to the Court on 17 July 2006 –

(a)    were not discovered in the first and second respondents’ List of Documents filed 29 March 2006; and/or

(b)   were not discovered by Supplementary List of Documents between 29 March 2006 and the date of the delivery of the first and second respondents’ statements to the applicants; and/or

(c)    have not yet been discovered.

4.         The first and second respondents pay the first, second and third applicants’ costs of this motion to be taxed.

21                  The Schedule attached to the notice of motion reads as follows :

22                  I understand the reference to ‘Strahley paragraph’ in the first column to be a reference to paragraphs in the affidavit of Mr Andrew Strahley sworn and filed 12 July 2006.

23                  Prior to the hearing there were communications between the parties as to documents for which the applicants now seek an order for discovery. On 14 July 2006 Lynch & Co on behalf of the applicants faxed a letter to McCullough Robertson on behalf of the respondents, inter alia, asking for further discovery of documents which Lynch & Co had identified as relevant from the affidavit of Mr Andrew Strahley. There was further correspondence between the parties, including facsimile transmissions between the parties on 20 July 2006.

24                  A table of responses was prepared headed ‘Response to page 4 of fax dated 14 July 2006 & further response to fax dated 20 July 2006’, and handed to me in Court. The submissions of the parties, to the extent that they dealt with this notice of motion, referred to this table.

25                  I note however that the documents referred to in the Schedule to the notice of motion, and the documents referred to in the table of responses handed to me in court, are not identical. The Schedule to the notice of motion includes additional documents which, to the extent I can ascertain, have not been previously discussed by the parties. They are:

·           Agreement for purchase of remaining 20% held by vendors (par 14 Strahley affidavit)

·           Reports provided by Davidson and Sims (par 18(g) Strahley affidavit)

·           Records detailing rejection by juice producers (par 32 Strahley affidavit)

·           Employment contract – Matthew Burns

·           Notice of resignation – Matthew Burns to Sunstate Orchards

·           Copies of material provided by Andrew Strahley to Hancock Board from May 2004 concerning historical yields and packout percentages for Bundaberg and Tiaro Orchards

·           Copies of any minutes of the Hancock Board containing resolutions or evidencing discussion of the material provided to it by Mr Strahley from May 2004 concerning historical yields and packout percentages for Bundaberg and Tiaro Orchards.

First order sought

26                  It is useful to address in turn each document in the Schedule attached to the notice of motion.

Agreement for Purchase of Assets dated 24 January 2001 (par 11 Strahley affidavit)

27                  The respondents have indicated that this document is annexed to the affidavit of Mr Strahley sworn and filed 12 July 2006. However, as submitted by the applicants, inclusion of a document as an annexure to an affidavit is not, in itself, proper discovery of the document. While the rules of discovery have been subject to change over time and in different courts, the comments of Lindley LJ in Kennedy v Dodson (1895) 1 Ch 334 at 340 over a century ago continue to apply, namely:

‘It is the right, as a general rule, of a plaintiff in equity to exact from the defendant a discovery upon oath as to all matters of fact which, being well pleaded in the bill, are material to the plaintiff’s case about to come on for trial, and which the defendant does not by his form of pleading admit.’

28                  Even earlier, Lyndhurst LC in Taylor v Rundell (1841) Cr & Ph 104, 41 ER 429 framed discovery in terms of an obligation which parties to litigation must satisfy:

‘If it is in your power to give the discovery, you must give it; if not, you must show that you have done your best to procure the means of giving it.’

(ER 433, cf more recently von Doussa J in Re McGorm; ex parte Co-operative Building Society of SA (1989) 86 ALR 275 at 278 and Tamberlin J in KC v Shiley Inc [1997] 796 FCA (14 August 1997).)

29                  Order 15 of the Federal Court Rules creates a framework for discovery in this court, failure to comply with which can have serious consequences for parties to an action. In my view it is clear that simply annexing a document to an affidavit is not in itself ‘discovery’ of that document within O 15.

30                  The applicants have submitted further that this document is relied on by the respondents as part of their evidence-in-chief in this action. This submission is not disputed by the respondents.

31                  Accordingly it appears that this document is discoverable within the terms of O 15 r 2.

Agreement for purchase of remaining 20% held by vendors (par 14 Strahley affidavit)

32                  No submissions have been made by either the applicants or the respondents in relation to this document. Paragraph 14 of Mr Strahley’s affidavit sheds little additional light on the document description, and indeed no document of this description is referred to in that paragraph. My attention has not been directed elsewhere to any other reference to this document. Further, the relevance of the document is not immediately clear.

33                  I do not have sufficient evidence before me at this stage to make an order for discovery under O 15.

Reports provided by Davidson and Sims (par 18(g) Strahley affidavit)

34                  Similar concerns apply in relation to these documents. Indeed, while Mr Strahley in par 18(g) of his affidavit refers to Messrs Davidson and Sims, there is no reference in this paragraph to any reports they may have prepared. My attention has not been directed to any other reference to these documents, and the nature of their contents and the relevance thereof is not immediately clear.

35                  I do not have sufficient evidence before me at this stage to make an order for discovery under O 15.

Farm Manager Reports (pars 20 and 22 Strahley affidavit)

36                  The specific documents sought by the applicants are Farm Manager Reports for the years 2003 and 2004. The years in question were clarified after correspondence between the parties.

37                  Although in their table of responses addressed by the parties in court, the respondents disputed that these documents are relevant, they also submit that the documents have already been discovered by the applicants. At the hearing, Mr McQuade for the respondents drew my attention to the List of Documents filed by the applicants on 13 April 2006, p 8 item 53, which states ‘December 2001-February 2005, Hancock Farm Company – Farm Management Reports’. The respondents therefore submit that discovery by them of these documents is unnecessary, on the basis that the applicants already have them (O 15 r 2(4)).

38                  The applicants however submit that the documents are relevant, and that they should be discovered by the respondents.

39                  Order 15 r 2(4) provides:

‘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.’

40                  Notwithstanding the submissions of the applicants, their List of Documents speaks for itself. It appears that they already have these records. In the absence of evidence to the contrary, O 15 r 2(4) applies.

Budgets and Budget summaries (pars 20 and 23 Strahley affidavit)

41                  There does not appear to be any dispute as to the relevance of these documents. The respondents claim however that all relevant documents have been discovered in accordance with O 15. In the table of responses, the respondents invited the applicants to identify any specific budget or budgetary summary they considered should be discovered.

42                  The applicants made specific requests, namely that:

·           the respondents identify by reference to discovery number the Budgets referred to in par 20 of Mr Strahley’s affidavit which they assert have been discovered

·           the respondents identify by reference to discovery number the Budget summaries referred to in par 20 of Mr Strahley’s affidavit which they assert have been discovered.

43                  The respondents repeated their previous response.

44                  In my view the further response of the respondents is unsatisfactory. These documents should be discovered.

Records detailing rejection by juice producers (par 32 Strahley affidavit)

45                  Paragraph 32 of Mr Strahley’s affidavit states ‘Waste has been negligible or immaterial’. There is no reference in this paragraph to any records as sought by the applicants. My attention has not been directed to any other reference to such records.

46                  I do not have sufficient evidence before me at this stage to make an order for discovery under O 15.

SmartPak and TotalPak software data files 1998-2005 (par 40 Strahley affidavit)

47                  These documents are also the subject of a discovery application by the respondents.

48                  It is common ground that:

·            the ‘SmartPak’ and ‘TotalPak’ records are data files located on a computer

·            the computer is located in the packing shed which is currently on property controlled by the respondents.

49                  However, each party claims that:

·            they do not have the documents in their possession, custody or power; rather

·            the other party has the documents in their possession, custody or power.

50                  The applicants have submitted that, as the computer is on the property of the respondents, the respondents should return the computer to the applicants. In turn, the respondents have submitted that they would, if requested, allow the applicants access to the packing shed to obtain the records.

51                  In light of this apparent consensus, it is somewhat surprising that these records continue to require a ruling by this Court.

52                  The parties have not sought an order, nor do I propose to make any order giving rise to any inference, that operates as a final adjudication upon any entitlement, by way of right, in either party to the property in question, in terms of proprietary or possessory title to the relevant computer or its contents. The question arises however as to whether the documents are in the ‘possession, custody or power’ of either party.

53                  The terms ‘possession, custody or power’ in O 15 represent three alternative states. As summarised in one learned text:

‘The term “possession” means the physical or corporeal holding of the document pursuant to a legal right to its possession… (for example, agents and bailees); “custody” means the mere actual physical or corporeal holding of a document, regardless of its right to possession, (for example, servants and employees)…; and “power” means an enforceable right to inspect the document or to obtain possession or control of it from the person who ordinarily has it in fact.’

(SD Simpson, DL Bailey and EK, Evans Discovery and Interrogatories 2^nd edn, Butterworths, Australia, 1990 at 43, see also Halsbury’s Laws of England 4^th edn vol 12 Discovery par 39. With respect to ‘possession’ and ‘custody’ see also Santow J in Horsley v Phillips Fine Art Auctioneers Pty Ltd (1995) 7 BPR [97557] at 14,371-14,372; Stephen J in Federal Commissioner of Taxation v ANZ Banking Group Ltd (1979) 143 CLR 499 at 504-505; and S Fisher Commercial and Personal Property Law, Butterworths, Australia, 1997 ch 3; and with respect to the meaning of ‘power’ see also Beaumont J in Australian Independent Newspapers Ltd v John Fairfax Holdings Ltd (Federal Court of Australia, 22 June 1994) par 12 and Lord Diplock in Lonrho Limited v Shell Petroleum (1980) 1 WLR 627 at 635-6.)

54                  However, on the basis of the current arrangements, it appears that the documents are in the possession and custody of the respondents in that:

·            the respondents have possession, that is the physical or corporeal holding of the documents, on the basis that (it appears) they presently have lawful possession of the computer where the SmartPak and TotalPak files are stored

·            the respondents have custody of the documents, that is they have the mere actual physical or corporeal holding of the documents, through their physical or corporeal holding of the computer.

55                  Although from the submissions of the parties it appears that the applicants may have an enforceable legal right to obtain the documents from the respondents, the applicants do not, in the words of Lord Diplock in Lonrho Limited v Shell Petroleum (1980) 1 WLR 627 at 635-636, have ‘power’ over the documents. They do not have the enforceable legal right to obtain the documents from the respondents without the need to obtain the consent of anyone else. The submissions of both parties indicate that the applicants would need to obtain the consent of the respondents to access the computer and therefore obtain the documents. Even if the respondents are likely to comply voluntarily with a request of the applicants to access their property, and in turn the computer and the documents, it does not mean that the documents are currently ‘in the power of’ the applicants (cf comments of Lord Diplock in Lonrho at 636H).

56                  As the respondents have offered to allow the applicants access to the computer containing the records, in my view it is appropriate in relation to these documents that, once the respondents allow the applicants access to the computer and its contents, the applicants discover the records sought by the respondents. Accordingly, at this stage, I make no order for discovery of these documents by the respondents.

Emails (par 41 Strahley affidavit)

57                  The respondents have stated that they have already discovered these documents.

58                  In my view no order for discovery should be made.

Diary notes of telephone conversations (pars 41, 42, 43, 62, 63, 98, 105 Strahley affidavit)

59                  The respondents have stated that they do not have any such documents in their possession, custody or power.

60                  In my view no order for discovery should be made.

Communication between Strahley and Wheeler (par 42 Strahley affidavit)

61                  The respondents have indicated they have already discovered a document which satisfies this description, and the applicants did not press this claim in correspondence with the respondents.

62                  In my view no order for discovery should be made.

Emails concerning drafting of budgets (par 46 Strahley affidavit)

63                  The respondents have indicated they have already discovered documents which satisfy this description, and it appears that the applicants did not press this claim in correspondence with the respondents.

64                  In my view no order for discovery should be made.

Hancock Board paper and Board minute evidencing decision to sell the orchards (pars 48 and 69(b) Strahley affidavit)

65                  Paragraph 48 in the affidavit of Mr Strahley is as follows:

‘On or about May 2004, Hancock decided to consider various options as to the future of the Property. By this stage, the Board of Hancock had reached the view that the Property was not performing in accordance with its return criteria.’

66                  In par 69(b) Mr Strahley deposes:

‘During the course of the meeting, Mr Tracy asked me why Sunstate Orchards was selling the property. I said to him that the Board had made a decision to sell the Property based on past performance and it was no longer within the desired portfolio for Hancock as the company was moving away from citrus…’

67                  In the table of responses, the respondents initially stated that the document was not relevant, but subsequently provided a copy of a document titled ‘Sunstate Orchards Pty Ltd Position Report April/May 2004’. The respondents also stated that they had no further such documents in their possession, custody or power.

68                  The applicants submit that the document titled ‘Sunstate Orchards Pty Ltd Position Report April/May 2004’ is a report to the Board, not a Board paper.

69                  The applicants in the table of responses claimed that the Hancock Board paper evidencing the decision to sell the orchards, together with all material upon which that decision was made, is relevant to proof of the reasonableness of the respondents’ predictions as to the orchards’ performance made to the applicants some months later. In their written submissions, the applicants claimed that documents of this kind at Board level fall within O 15.

70                  In my view, Board papers, including minutes of meeting, as sought by the applicants fall within the criteria in O 15 rule 2(3) and are discoverable.

Corporate policy of Hancock in relation to valuation (par 49 of Strahley affidavit)

71                  It appears that the respondents have endeavoured to provide this document, however the applicants claimed in the table of responses that parts of the document are illegible.

72                  The respondents stated that they provided a copy of the document by facsimile on 20 July 2006 and by letter on 26 July 2006.

73                  At this stage I do not consider an order for discovery to be necessary.

Communication between Breed and Strahley in relation to bin numbers (par 52 Strahley affidavit)

74                  The respondents have indicated they have already discovered documents which satisfy this description, and have been unable to locate other documents. It appears that the applicants did not press this claim in correspondence with the respondents.

75                  In my view no order for discovery should be made.

Historical data (par 66(a) Strahley affidavit)

76                  The respondents indicated in the table of responses that they have already discovered this document in their List of Documents.

77                  In my view no order for discovery should be made.

Information received from Mr Sims and diary notes (par 66(b)(ii) Strahley affidavit)

78                  The respondents have stated that they do not have any such documents in their possession, custody or power.

79                  In my view no order for discovery should be made.

Daily Fruit Marketing Reports (par 66(b)(iii) Strahley affidavit)

80                  The respondents indicated in the table of responses that they have already discovered this document in their List of Documents.

81                  In my view no order for discovery should be made.

The First Budget (par 66(b)(iv) Strahley affidavit)

82                  The respondents have indicated they have already discovered a document which satisfies this description in the affidavit of Mr Strahley. There does not appear to have been proper discovery of this document within O 15.

83                  For reasons I outlined earlier in this judgment as to the need for proper discovery of documents by litigants, this document should be discovered by the respondents.

Communication between Breed and Strahley (par 67 Strahley affidavit)

84                  The respondents have stated that they do not have any such document and it appears that the applicants did not press this claim in correspondence with the respondents.

85                  In my view no order for discovery should be made.

The Block Summary documents (par 69(e) Strahley affidavit)

86                  The respondents have stated that they do not have any such documents in their possession, custody or power. They believe this document is in the possession of the second applicant. I note that the applicants did not press this claim in correspondence with the respondents.

87                  In my view no order for discovery should be made.

Computer files off Mr Strahley’s laptop (pars 69(m) and 103 Strahley affidavit)

88                  I note the respondents’ statement in the table of responses that a disk containing these computer files would be delivered before 5.00 pm on 27 July 2006.

89                  At this stage, I do not propose to make any order for discovery in relation to this document.

Actual pack out rates (par 69(s) Strahley affidavit)

90                  The respondents do not dispute the relevance of the document. They claim however that it is an interrogatory rather than a request for discovery.

91                  The respondents indicated in the table of responses that a hard copy of this file is in Mr Strahley’s affidavit. The applicants press for a computerised version to determine the provenance of the document.

92                  On the basis that a hard copy of the document has already been provided by the respondents, their claim that the request of the applicants is an interrogatory is not sustainable.

93                  The document in electronic form should be discovered by the respondents.

Employment Contract – Matthew Burns; Notice of Resignation – Matthew Burns; Copies of material provided by Andrew Strahley to Hancock Board; Copies of any minutes of the Hancock Board from May 2004

94                  While these documents may be discoverable, no submissions have been made by either the applicants or the respondents in relation to these documents. My attention has not been directed to any reference to these documents in the affidavit of Mr Strahley or elsewhere.

95                  I do not have sufficient evidence before me at this stage to make an order for discovery under O 15.

Second Order sought

96                  A large volume of material has been produced by the respondents since their List of Documents was filed on 29 March 2006. In my view it is clear that proper discovery has not been made by the respondents in this matter. Indeed, following the production of a significant quantity of material in the days leading to trial, an unidentified proportion of which had not been previously discovered, the trial was adjourned, with resultant considerable inconvenience to all parties and this Court.

97                  It is appropriate that the applicants be in a position where they can properly prosecute their claim. Fairness requires that the respondents produce documentation in accordance with the Federal Court Rules, which includes a Supplementary List of Documents in Form 22 in the terms sought. Accordingly, I am prepared to make the order in substantially the terms sought by the applicants. I note that this order will also address the document referred to as ‘the First Budget’ in the Schedule to the applicants’ notice of motion, to which I have already referred.

Third Order sought

98                  I note the order sought by the applicants in this case in relation to the delay of the respondents in disclosing relevant documents, their failure to discover the documents in their List of Documents filed 29 March 2006 and/or by Supplementary List of Documents, and the fact that a large number of documents were disclosed immediately before trial, thus necessitating an adjournment of the trial.

99                  As I have already indicated, I have concerns about the approach taken by the respondents towards discovery in this case. However, in my view it is important that the parties concentrate on preparation for trial. Little can be achieved at this point from requiring the respondents to depose on oath why they did not discover these documents earlier, and I agree with Mr McQuade that, at this point, it would not produce an effective result for the course of the trial.

100               This is an issue which may however be relevant to costs in due course. In my view, it is best dealt with then.

Fourth order sought

101               I propose to make an order that costs be reserved.

The Second Notice of Motion

102               The respondents in the second notice of motion sought the following orders pursuant to O 15 Federal Court Rules:

1.         The applicants within 7 days provide discovery by list of the documents described in the attached schedule and inspection of those documents be provided within 14 days.

2.         In the alternative, the applicants file an affidavit stating whether the document or any of the documents of that class is or has been in their possession, custody or power, when it was parted with and what has become of it.

3.         The affidavit referred to in par 2 above be served on the first and second respondents within 14 days.

4.         The time for service of the Notice of motion be abridged until a time no later than 4.00 pm, 20 July 2006.

5.         Any other Orders that this Honourable Court deems appropriate.

6.         Costs.

103               In my view it is appropriate to deal with the subject of the first three orders sought by the respondents together, before turning to the remaining orders in their notice of motion. Mr McQuade on behalf of the respondents handed me a modified version of the schedule during the hearing (‘Schedule of Applicants’ Undiscovered Documents’), indicating – by bold font – a number of documents for which the respondents no longer press. The documents for which the respondents no longer press are, using the numbering in the schedule as follows:

·            Item 11. Income Tax Returns for both first and second applicants for year ended 30 June 2006

·            Item 23. Trend line data constructed by second applicant

·            Item 24. Email from David Breed to second applicant dated 28 February 2005

·            Item 29. Weekly reports for performance, picking, packing, dispatch and pricing, payments received and debtors listing for period from 21 March 2005 to 23 June 2005

·            documents or categories of documents identified by the first and second respondents from documents discovered by the National Australia Bank Limited pursuant to Order dated 28 June 2006 and identified by the following numbers: 32, 35, 36, 38, 40, 42, 43, 44, 45.

104               The balance of the Schedule is useful because it groups documents for which the respondents seek discovery.

Confidentiality Agreement between the First Respondent and the Second Applicant (Item 1)

105               This document is identified in the affidavit of the second respondent sworn 12 July 2006 par 83. The second respondent deposes:

‘On Friday 10 December 2004, a meeting was held at Hancock’s meeting room at 167 Eagle Street, Brisbane. At the commencement of the meeting Mr Tracy, in my presence, signed a copy of the confidentiality Agreement that I had previously sent to Mr Douglas on 6 December 2004. I also signed the agreement. It was signed in duplicate. I have undertaken an extensive search for the signed agreement and it cannot be located.’

106               It is also identified in the affidavit of Mr Peter Douglas sworn 7 July 2006 par 39 where he deposes:

‘On 6 December 2004 at about 2.33 pm, I sent Mr Tracy an email attaching a confidentiality agreement.’

107               During the hearing the applicants submitted:

·            the document is the document of the respondents

·            it is not relevant to any contested allegation in the proceedings

·            they do not have an executed copy of the document.

108               The applicants further acknowledged that the confidentiality agreement may become relevant to the question of reliance because the document may contain an acknowledgment as to reliance.

109               In the circumstances, it is discoverable by the applicants.

Financial Documents held by Administrator of the Third Applicant (Items 3, 4, 5, 6, 7, 8, 9, 12)

110               The third applicant is currently subject to a deed of company arrangement in accordance with Pt 5.3A Corporations Act 2001 (Cth). As a general rule the administrator has control of the company’s business, property and affairs (s 437A(1)(a)), the powers of other officers of the company are suspended (s 437C), and the administrator is entitled to all books and records of the company (s 438C). If the company becomes subject to a deed of company arrangement, the affairs of the company are conducted according to the deed (s 444G).

111               In relation to the financial documents of the third applicant, the applicants state that these documents were seized by the administrator on his appointment on 23 June 2005. Accordingly, the applicants submit that the documents are not in their possession, but are in the possession of the administrator, and they cannot discover them.

112               The respondents submitted that a number of the applicants’ responses to requests concerning the documents simply state that the documents are not in their possession. The respondents further submit that if the applicants do not have the documents in their custody or power they should say so. The respondents also submit that if documents were in the applicants’ possession, custody or power and no longer are, the applicants need to say so in the list of documents.

113               I do not understand the respondents to be submitting that all relevant financial records of the third applicant are not in the possession of the administrator. In other words, I understand that the respondents are not claiming that the applicants have financial records, other than those in the possession of the administrator.

114               However the respondents also submit that, in performing a function of the company under administration, the administrator is taken to be acting as the company’s agent. Accordingly, notwithstanding that the records have been seized by the administrator, they do not cease to be records of the company. The respondents therefore submit that those documents are discoverable by the third applicant and should be included in the list of documents.

115               There is no question that the administrator is the agent of the company to which he or she is appointed: s 437B. However, as made clear by s 437A(1), administrators have very extensive powers over all aspects of the company’s business, property and affairs. Indeed as the High Court noted in Australasian Memory Pty Ltd v Brien (2000) 172 ALR 28 at 30, Div 3 of Pt 5.3A Corporations Act 2001 (Cth) provides that the administrator of a company under administration is to assume control of the company’s affairs. On the basis that the administrator had possession of the documents, the relationship of administrator and company as contemplated by Pt 5.3A Corporations Act does not permit the company other than with the consent of the administrator to have ‘power’ over documents retained by the administrator: s 438C (cf Lord Diplock’s comments in Lonrho at 636H discussed earlier in this judgment).

116               Notwithstanding a submission by the respondents that ‘Mr Tracy is responsible for the day to day management of the company’, I note that the financial records were produced to the Court by the administrator by subpoena on 21 July 2006. From this event, it is clear that the applicants do not have possession, custody or power over the records, other than as determined by the administrator in the exercise of his powers. In circumstances where a company is under administration, an order for non-party discovery or subpoena is the appropriate order to require the production of documents in the possession of the administrator (cf Beach J in Hore-Lacy v David Syme and Co unreported Supreme Court of Victoria, 5 September 1996, BC9604308 p 4).

117               Order 15 r 15 provides:

‘The Court shall not make an order under this Order for the filing or service of any list of documents or affidavit or other document or for the production of any document unless satisfied that the order is necessary at the time when the order is made.’

118               In the circumstances the court would be imposing an artificial tier of disclosure to order the third applicant to disclose the financial records.

119               It follows that the answer of the applicants in relation to this request of the respondents, namely that they cannot make discovery of these documents, is the correct one.

Spray Records (Items 19 and 20)

120               Two issues arise in relation to these items, namely:

·            the dispute as to who has possession of these records

·            the issue as to the documents ‘leading to a train of inquiry which would advance the respondents’ case or damage the applicants’ case’.

121               The applicants and the respondents each claim that they are not in possession of these records.

122               The respondents however submit that the applicants plead that certain matters were revealed by the spray records which were not disclosed to the applicants; that the records have not been discovered; and that on settlement of the sale of the property the records remained at the property. The respondents submit further that the applicants must have the documents as they have relied on information from them to plead the allegations in pars 17A(c) and (d) of the Statement of Claim.

123               In summary, the response of the applicants (other than that they do not have the documents in their possession) is that these are documents generated by the respondents.

124               In my view, the submissions of the respondents have merit. The applicants have relied on these records – if they were ever in their possession, custody or power but are no longer, it is appropriate for the applicants to state when this occurred and why.

125               However, as noted by the applicants, the respondents have also submitted that the records subsequent to settlement ‘will also lead to a train of inquiry which would advance the respondents case or damage the applicants’ case’. The applicants submit that this submission, which is replicated throughout the Schedule, relates to a test of disclosure obsolete since 1999.

126               In my view it is not necessary to consider this issue in the context of these records, for reasons I have already explained. However, this issue is more relevant in respect of other documents for which discovery is sought, and I shall deal with it later in this judgment.

TotalPak records (Items 2, 17, 22 and 30)

127               As submitted by the respondents, these documents are central to the applicants’ case, and are the subject of pleadings in par 19 of the applicants’ Statement of Claim. The respondents submit that, for this reason, they should be discovered by the applicants.

128               I note that item 22, which is grouped with the other TotalPak records, is addressed somewhat differently in the Schedule. I also note that the applicants state that they currently do not have the documents in their possession, and that they are conducting searches at the orchards in an effort to locate any such documents.

129               In relation to the documents comprised in item 22, which do not appear to have the same access issues as the documents in items 2, 17 and 30, it is appropriate that the documents be discovered.

130               I have already discussed the SmartPak and TotalPak records, which appear to be in items 2 and 17, in this judgment.

131               The respondents have also submitted that the records subsequent to settlement ‘will also lead to a train of inquiry which would advance the respondents’ case or damage the applicants’ case’. In light of the view I take of these documents it is unnecessary to consider this issue.

132               The packout documents in item 30 are also on the computer. These should be dealt with in the same way as the SmartPak and TotalPak records.

The second applicant’s 100 day plan (Item 14)

133               The applicants submit that they have already discovered this document and that it consists of two separate documents:

·            the ‘Sunstate Orchards Acquisition Implementation Plan’, and

·            the ‘Sunstate Citrus Pty Ltd kick off meeting Maryborough’.

134               The respondents however submit that the document described by the applicants as the ‘100 day plan’ is not those documents, for two reasons:

1.          A witness, Mr James Palfreeman, deposed in his affidavit sworn 6 July 2006 that he was specifically shown a document described as a 100 day plan by the second applicant, and that the document consisted of a number of items. I note in particular paragraphs 14 and 15 of that affidavit.

2.          The documents which the applicants have identified as the 100 day plan refer in turn to:

·           in the case of the Sunstate Orchards Acquisition Implementation Plan – ‘develop and implement 100 day plan’

·           in the case of Sunstate Citrus Pty Ltd kick off meeting Maryborough – there are two references in the Action Items to (in relation to the Advisory Board visit) “100 day plan” and (in relation to the Management Meeting Process and content) ‘Implementation of 100 day plan’.

135               The clear inference which may be drawn, in particular from the second reason (given that those documents actually refer to a document described as the ‘100 day plan’), is that there is a separate document which is the ‘100 day plan’.

136               Accordingly, it is necessary for the applicants to discover this document.

137               The respondents have also submitted that the records subsequent to settlement ‘will also lead to a train of inquiry which would advance the respondents’ case or damage the applicants’ case’. The applicants submit that this submission of the respondents, which is replicated throughout the Schedule, relates to a test of disclosure obsolete since 1999. In my view however it is not necessary to consider this issue in the context of this document. Leaving aside the issue of exact identification, there does not appear to be any contest by the applicants that the ‘100 day plan’ should be discovered.

138               Before turning to consider other documents in the Schedule which were not the subject of written submissions, it is appropriate to deal with the issue of discovery sought on the grounds that the document ‘will also lead to a train of inquiry which would advance the respondents’ case or damage the applicants’ case’.

‘Train of Inquiry’ (Items 13, 14, 15, 19, 20, 21, 22, 27, 28, 30, 50, 55, 56, 58)

139               I have already noted this issue in relation to items 14, 19, 20, 22 and 30. In relation to these items however, it was unnecessary to consider this issue on the basis that:

·            in relation to item 14, the issue was not whether the document should be discovered, but whether it had been discovered

·            in relation to items 19, 20, 22 and 30 in my view it was clear that the documents fell within O 15 r 2(3).

140               The other documents listed however, namely those referred to in items 13, 15, 21, 27, 28, 50, 55, 56 and 58, also refer to this test.

141               During the hearing this issue was the subject of some contention. Counsel for both parties have since filed supplementary submissions.

142               In essence, the submissions of the applicants are as follows:

1.         Order 15 r 2(3) sets out the criteria by which the obligation to disclose might be tested.

2.         Those criteria do not include documents leading to a train of inquiry. That was the test before the rules were amended in 1999.

3.         Order 15 r 2 should be interpreted according to its terms; and the ‘train of inquiry’ test (as articulated in the leading case of The Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Company (1882) 11 QBD 55 per Brett LJ at 63, note also Menzies J in Mulley v Manifold (1959) 103 CLR 341 at 345) has no place in that context.

4.         General discovery is that which occurs under O 15 r 2.

5.         Order 15 r 8 entitles a court to make an order wider than that apprehended under O 15 r 2, however only where an application is made under O 15 r 8.

6.         In terms of the Federal Court Rules and Practice Note 14, the order made by the Court on 15 February 2006 was an order apprehended under O 15 r 2(3).

143               The submissions of the respondents may be summarised as:

1.         The order of 15 February 2006 was ‘The applicants and the respondents make discovery by verified List of Documents and file and serve such List of documents on or before 4.00 pm on 29 March 2006’.

2.         The order did not limit discovery to the categories of documents in O 15 r 2, O 15 r 2(3) or otherwise.

3.         Order 15 r 2 continues to authorise orders for general discovery, and although the court would not ordinarily make an order for general discovery it may consider it appropriate to do so, in which case the traditional obligations to discovery any document relating to a matter in question in the proceeding continues to apply.

4.         Pursuant to O 15 r 8 the court may make orders requiring discovery of a document or class of documents ‘relating to a matter in question in the proceeding’ that may be or may have been in the possession, custody or power of a party.

5.         An order of the court that the parties give discovery, without any further limitation, is a general order or direction for discovery. To limit the ambit of discovery the order, by its terms, should limit the extent of the discovery to be made by a party.

6.         As there was no limitation appearing in the orders/directions the direction was for general discovery and the train of inquiry test applies.

7.         Alternatively, the court may order a document or class of documents be discovered by affidavit in terms of O 15 r 8.

144               The current version of O 15 r 2 was introduced into the Rules by SR 295 of 1999 Schedule 1, and became effective 3 December 1999. On the same day Practice Note 14 was issued by the Chief Justice. This practice note states, inter alia, that:

·            the general position is that the Court will not order general discovery as a matter of course

·            the Court will mould any order for discovery to suit the facts of a particular case

·            in determining whether to order discovery the Court will have regard to the issues in the case and the order in which they are likely to be resolved, the resources and circumstances of the parties, the likely cost of the discovery and its likely benefit

·            to prevent orders for discovery requiring production of more documents than are necessary for the fair conduct of the case, orders for discovery will ordinarily be limited to the documents required to be disclosed by O 15 r 2(3).

145               There seems no doubt that, as a result of the 1999 amendments to O 15 r 2, the criteria in O 15 r 2(3) superseded the ‘train of inquiry’ test as the usual requirements for discovery. As pointed out by Branson J in Lubizol Corp Inc v Imperial Chemical Industries plc [2000] FCA 1464 (par 9)

‘…unless the Court should order to the contrary, documents the relevance of which is only that they may fairly lead to a train of inquiry which may directly or indirectly enable one party to advance its case or change that of its opponent are not required to be discovered.’

(note also Finn J in South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 519 at par 10, The Hon Justice JW von Doussa ‘Discovery in the Federal Court’ Law Society of South Australia and the Federal Litigation Section Seminar, 14 March 2000; Spyer v Cuddles ‘N’ Mum (Franchise) Pty Ltd (No 3) (2002) FCA 1563 pars 4-8; Aveling v UBS Australia Capital Markets Holdings Ltd [2005] FCA 415 at par 10).

146               The history to the amendment to O 15 r 2(3) was explained by Lindgren J in Spyer v Cuddles ‘N’ Mum (Franchise) Pty Ltd (No 3) (2002) FCA 1563. His Honour in that case also observed that the broader test of ‘relating to any matter in question in the proceeding’, which derives from the Peruvian Guano case, continues to be used in the context of O 15 r 8 (par 6 of Spyer), and that in this respect there is a disconformity between the tests of discoverability as between O 15 r 2(3) and r 8 (par 7 of Spyer).

147               In Aveling v UBS Australia Capital Markets Holdings Ltd [2005] FCA 415, Lindgren J considered the principles which should guide the parties in identifying categories of documents. His Honour observed that they were the same principles which guide the Court when ordering discovery, and continued:

‘It may be appropriate for parties to describe categories in terms which do not expressly incorporate the language of O 15 r 2(3), but that subrule should nonetheless govern the formulation of the categories. Alternatively, of course, the categories may be defined so as to incorporate expressly the terms of the subrule. Whatever approach is taken, it is important to understand that when, as happened in the present case, the Court orders discovery by categories to be notified by one party to another, the Court does not intend that the notifying party be at liberty to widen the discovery obligation beyond the four classes of documents referred to in O 15 r 2(3).’ (par 11)

148               More recently, Lindgren J had cause to consider the operation of O 15 r 2(3) in Australian Competition & Consumer Commission v Advanced Medical Institute Pty Ltd (2005) FCA 366. Significantly, after reciting r 2(3), his Honour said at par 23:

‘In the rare case in which the Court grants leave to a party to give a notice requiring general discovery, that subrule operates, rather than, as formerly, the Peruvian Guano test, to identify the discoverable documents. The Explanatory Memorandum which accompanied the Federal Court Amendments Rules 1999 (No 6) (SR 1999 No 295) stated of the new subrule 2(3) that ‘[t]he aim of the rule is to limit the documents that must be discovered to those which are directly relevant to the proceedings.’

149               The history of the law in this area, and more recent cases, indicates that ‘general discovery’ means an unqualified or unlimited order for discovery, possibly in one of the following forms:

·            as noted by Beaumont J in Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109 at 70, quoting Butterworths Practice & Procedure of the Federal Court at [40.760] – ‘general discovery as traditionally understood’. This refers to discovery of any document which may fairly lead to a train of inquiry, as per the Peruvian Guano test, and is consistent with the submissions of the respondent; or

·            as submitted by the applicants, ‘general discovery’ as is now contemplated by O 15 r 2(3) (The court may make an order for particular discovery in broader terms under O 15 r 8).

150               In my view, in the absence of qualifications or limitations to an order for discovery, the correct interpretation is that the discovery ordered by the Federal Court pursuant to O 15 is that contemplated by O 15 r 2(3), as submitted by the applicants. Clearly this will not be the case if the Court makes an order pursuant to O 15 r 8, which, as pointed out by Lindgren J in Spyer v Cuddles ‘N’ Mum (Franchise) Pty Ltd (No 3) (2002) FCA 1563, seems to countenance a continuation of the broader test of discoverability.

151               This interpretation is consistent with:

·            Order 15 r 5, which is titled ‘Order for General Discovery’, and provides:

‘The Court may, at any stage of the proceeding, order any party to give discovery in accordance with rule 2.’

·            the amendments to O 15 r 2 in 1999, the aim of which, according to the Explanatory Statement Statutory Rules 1999 No 295, was ‘to limit the documents that must be discovered to those which are directly relevant to the proceedings’ (note also Advanced Medical Institute per Lindgren J at par 23)

·            Practice Note 14, which states that orders for discovery will ordinarily be limited to the documents required to be disclosed by O 15 r 2(3)

·            Order 15 r 8 which continues to use the language of Peruvian Guano but only in the context of particular discovery and

·            the authority of cases to which I have already referred, in particular Spyer, Aveling and Advanced Medical Institute.

152               The respondents have referred to comments of Beaumont J in Reading Entertainment at par 70 concerning the court ordering general discovery following the 1999 amendments, however in my view his Honour’s observations were referable to extraordinary circumstances where the courts may order discovery in accordance with the Peruvian Guano test. Although his Honour did not give the example, an order pursuant to O 15 r 8 would be an instance of such a circumstance.

153               The consent order made on 15 February 2006 was in my view an unqualified order for general discovery, as contemplated by O 15 r 5, and requiring discovery of documents as contemplated by O 15 r 2, in particular subrule 2(3). Accordingly, the ‘train of inquiry’ test as posed by the respondents in this case is not applicable.

154               It is appropriate to consider the remaining documents in the Schedule where this test is sought to be applied, in that light.

Other documents in the Schedule (Items 10, 13, 15, 16, 18, 21, 25, 26, 27, 28, 31, 33, 34, 37, 39, 41, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58)

155               Other documents as listed in the Schedule were not the subject of written submissions by counsel. The schedule does however provide a summary of the communications between the applicants and the respondents on the issue of discovery of these documents.

Item 10 Rain data records

156               In seeking discovery of these documents, which are identified as rain data records of the first or second applicant in respect of the Bundaberg and Tairo Orchards, the respondents claim they are relevant to loss and damage, and cite par 21 of the amended Statement of Claim and par 30 of the Defence.

157               In support of this contention the respondents rely on statements of Sheppard and Pincus JJ in Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490 at 494. This case also involved an application under s 52 Trade Practices Act 1974 (Cth) for misleading and deceptive conduct in relation to the sale of a business. The majority of the Full Court said:

‘We reiterate that, where a purchase has been induced by misleading conduct, it is not enough, in order to recover losses subsequent to the purchase, to prove that but for the misleading conduct or as a partial consequence of it, the agreement to purchase would not have been made; that is so in every successful application of that kind. It is not the law that in every such case the party held to have been engaged in misleading conduct (who may have acted quite innocently) becomes the insurer of the other’s success and prima facie liable to indemnify him against the consequences of the purchase. As the trial judge said in the present case:

“To recover a loss sustained in the business, the applicant must show more than that it was sustained in the conduct of that business; for to show only that is to establish what is perfectly consistent with the loss having arisen from his own misguided management decisions, or even total neglect.”’

158               I agree with this reasoning.

159               The applicants state that:

·            records up to 22 March 2005 are in the possession of the respondents already and are not required to be discovered by the applicants

·            the applicants do not have records after 22 March 2005, but they may be with the Administrator.

160               Unfortunately the respondents have not specifically indicated how these documents satisfy the criteria under by O 15 r 2(3). To the extent that the applicants are required to prove their case – as explained by the Full Court in Netaf – the rain data records appear to be documents which fall within r 2(3). The response of the applicants does not suggest a dispute that the documents are discoverable.

161               However, the applicants have stated that these documents up to 22 March 2005 are already in the possession of the respondents. This is not denied by the respondents. In my view, O 15 r 2(4) applies in this case. It is difficult to know what further could be achieved by requiring the applicants to discover the documents.

162               Unless there is some further reason why the applicants should provide discovery of those documents, it is unnecessary to make an order requiring them to do so (note recent similar comments of Bennett J in Telstra Corporation Ltd v Australian Competition & Consumer Commission [2006] FCA 737 at par 31).

163               In relation to the documents after 22 March 2005, on the basis that the documents are in the possession, custody or power of the administrator, in my view the applicants are not required to discover them for the reasons I have already explained in relation to documents held by the administrator.

Item 13 Westpac and ANZ documents and correspondence

164               I note that the respondents have stated that this documentation will lead to a train of inquiry which would advance their case or damage the applicants’ case. I have already held that this test is not applicable in this case.

165               The respondents state that the documents are relevant to reliance, and point to par 18 of the amended Statement of Claim and par 17 of the Defence.

166               In my view the documents sought fall within O 15 r 2(3) and should be discovered.

Item 15 Copies of all cash flow

167               I note that the respondents have stated that this documentation will lead to a train of inquiry which would advance their case or damage the applicants’ case. I have already held that this test is not applicable in this case.

168               However the applicants in their letter of 5 July 2006 offered to provide the documents to the respondent if the respondents identified any relevant contested matter. The respondents have identified par 18 of the amended Statement of Claim and par 17 of the Defence. I do not understand that the applicants are disputing the discoverability of the documents in relation to the contested allegations identified by the respondents.

169               Accordingly, these documents should be discovered.

Item 16 Creditors invoices for first applicant

170               The respondents have identified par 21 of the amended Statement of Claim and par 30 of the Defence as contested allegations forming the basis of an order for discovery. The applicants have not disputed the discoverability of the documents in relation to the contested allegations identified by the respondents.

171               Accordingly, I order the documents to be discovered.

Item 18 Email from David Breed to the second applicant

172               There appears some dispute over whether this document has already been discovered. The applicants submit that it has been discovered, however the respondents submit that the document cannot be identified in the applicants’ List of Documents filed 13 April 2006, and they are unable to identify whether this document has been discovered.

173               Otherwise, there does not appear to be any dispute as to whether this document should be discovered.

174               In the circumstances, the appropriate order is that the applicants discover the document.

Item 21 Management reports for the Orchards and Packing shed

175               In relation to management reports up to 22 March 2005 it appears that the documents are the documents of the respondents and are in their possession. This is not denied by the respondents. Accordingly, in my view it is unnecessary to order discovery of those documents (O 14 r 2(4)).

176               In relation to the management reports between 22 March 2005 and 23 June 2005, the respondents claimed they would lead to a train of inquiry which would advance their case or damage the applicants’ case. I have already held that this test is inappropriate in this case.

177               However, the respondents in relation to documents between 22 March 2005 and 23 June 2005 also claim that the documents are relevant to loss or damage claimed by the second and third applicants as to causation and measure of loss. The respondents rely on the Netaf case. In my view these documents fall within the scope of O 15 r 2(3) and should be discovered by the applicants.

Item 25 Third applicant’s orchard management plans

178               There does not appear to be any dispute that this document, if it exists, should be discovered. The applicants claim however that they do not possess the document. On the basis that, as submitted by the respondents, documents of that class are referred to in other documents discovered by the applicants in the circumstances, the appropriate order is that the applicants advise the respondents whether the document is in their custody or power, and if it is, the applicants should discover it.

Items 26, 27 and 28 Cash flows, correspondence and emails

179               As submitted by the respondents, the applicants do not suggest that these documents are not discoverable. On 5 July 2006 the applicants indicated that they were searching their records and would revert to the respondents shortly. As at the hearing date of this matter, it appears that they had not been discovered.

180               The appropriate order is that, if the applicants have the documents in their possession, custody or power, they should discover them.

Item 31 Email of 12 January 2005

181               Although the respondents do not identify this document in the schedule as a document for which discovery is no longer pressed, the fact that the applicants appear to have provided a copy of this document indicates that an order for discovery is not necessary (O 15 r 15).

Remaining documents in the Schedule Items 33, 34, 37, 39, 41, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58

182               The remaining documents in the Schedule for which discovery is sought fall into six categories:

1.         Documents or categories of documents identified by the first and second respondents from documents discovered by the National Australia Bank Limited pursuant to Order dated 28 June 2006. This list comprises items 33,34, 37, 41 and 46.

2.         Documents or categories of documents identified by the first and second respondents from documents discovered by Herron Todd White pursuant to Order dated 28 June 2006. This list comprises items 47, 48, and 49.

3.         Documents or categories of documents identified by the first and second respondents from the email from the second applicant to David Breed dated 7 February 2005, part of discovered document no 149 of the first and second respondents’ List of Documents dated 29 March 2006. This list comprises items 50, 51, 52 and 53.

4.         Further documents or categories of documents identified by the first and second respondents. This list comprises items 54, 55 and 56.

5.         Documents or categories of documents identified by the first and second respondents from the email from the second applicant to David Breed dated 11 April 2005 (part of email from David Breed to Peter Nichols, copied to the second applicant, on 12 April 2005). This list comprises item 57.

6.         Documents or categories of documents identified by the first and second respondents from the applicants’ discovered document titled ‘Sunstate Citrus Pty Ltd Kick Off Meeting’. This list comprises item 58.

183               It is not clear to me whether the respondents have these documents already as a result of previous discovery, although the applicants suggested at the hearing that that was the case.

184               Mr Perry for the applicants submitted that it is a matter of concern that, at least in respect of some of the documents it appears that the respondents may have had them since 29 March 2006. Alternatively, if the respondents do not have the documents, it seems that in relation to such documents the respondents have had the opportunity since 29 March 2006 to seek discovery.

185               It does not appear that these items have been the subject of previous correspondence between the parties. As a consequence of this, there are few grounds submitted by the respondents as the basis of discovery, and no responses from the applicants in relation to discovery of these documents. To the extent that I can interpret the schedule, the only grounds submitted as a basis for discovery of these documents are:

·            in relation to items 33, 34, 37, 41 and 46: they are relevant to allegations in issue and reliance. They will also lead to a train of inquiry which would advance the respondents’ case or damage the applicants’ case

·            there are no grounds asserted in relation to items 47, 48 and 49

·            in relation to items 50, 51, 52, 53: these classes of documents are relevant to allegations in issue as to reliance and loss or damage. They will also lead to a train of inquiry which would advance the respondents’ case or damage the applicants’ case; also see Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490 at 494

·            in relation to items 54 and 55: these classes of documents are relevant to allegations in issue as to reliance. They will also lead to a train of inquiry which would advance the respondents’ case or damage the applicants’ case

·            in relation to item 56: these classes of documents are relevant to allegations in issue as to reliance. They will also lead to a train of inquiry which would advance the respondents’ case or damage the applicants’ case. Also see Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490 at 494

·            there are no grounds asserted in relation to item 57

·            in relation to item 58: these classes of documents are relevant to allegations in issue as to loss or damage. They will also lead to a train of inquiry which would advance the respondents’ case or damage the applicants’ case. Also see Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490 at 494.

186               Other than in relation to the ‘100 day plan’ referred to in item 58, and in relation to which an order will be made, it is not possible to identify whose documents these documents are. I also note there is some duplication, for example ‘2005 business plan’ in items 53 and 56, ‘SHE plan’ in items 53 and 58, ‘marketing plan’ in items 53, 56 and 58, and ‘communications plan’ in items 53 and 56.

187               Although the respondents have referred to the Netaf case in relation to a number of the items, the relevance of the principle is not substantiated in relation to these items. Further, the ‘train of inquiry’ test is applied in relation to all documents with the exception of items 47, 48, 49 and 57.

188               On the basis of the evidence before me I am not satisfied that an order for discovery is necessary in relation to any of these documents.

Fourth Order sought

189               I order that the time for service of this Notice of motion be abridged until a time no later than 4.00 pm 20 July 2006.

190               I propose to make an order that costs be reserved.

Conclusion

191               Practice Note 14 indicates that orders for discovery should be moulded to suit the facts of a particular case. The history of this case indicates that supplementary discovery is clearly necessary, particularly, it appears, by the respondents. It is important however, in the interests of the parties and the conduct of this matter, to allow the parties a realistic time frame in which to comply with their obligations under the Federal Court Rules.

192               It is also in my view important to ensure that the parties, so far as possible, are on an even footing in relation to available evidence, their obligations to discover relevant material, and to paraphrase Tamberlin J in KC v Shiley Inc, are not surprised by new material unexpectedly appearing.

ORDERS

As to the First Notice of Motion the Court orders that:

1.                  The first and second respondents file an affidavit stating whether any of following documents or classes of documents referred to in the schedule to this application is or has been in their possession, custody or power and, if it has been but is no longer in their possession, custody or power when they parted with it, such affidavit to be filed and served within 7 days of the date of this order:

·            Agreement for Purchase of Assets dated 24 January 2001

·            Budgets

·            Budget Summaries

·            Hancock Board paper evidencing the consideration of various options in relation to the orchards and the view that the orchards were not performing in accordance with their return criteria

·            Hancock Board minute evidencing the decision to sell the orchards referred to by Strahley

·            The actual pack out rates for 2004 and the notional budgeted packout rates for the financial year 30 June 2005 referred to by Strahley.

2.                  The first and second respondents file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with Order 15 Rule 6 of the Federal Court Rules within 14 days of the date of this order discovering any document annexed to the affidavits of the respondents’ witnesses filed in this action which are not already listed in the first and second respondents’ List of Documents filed 29 March 2006 and the documents referred to in the affidavit required to be discovered by paragraph 1 of this order.

3.                  Inspection of those documents in the supplementary list of documents is to be provided within 21 days of the date of this order.

4.                  The time for service of the notice of motion be abridged until a time no later than 4.00 pm, 20 July 2006.

5.                  Costs be reserved.

As to the Second Notice of Motion the Court orders that:

1.                  The applicants file an affidavit stating whether any of following documents or classes of documents referred to in the schedule provided in support of this application is or has been in their possession, custody or power and, if it has been but is no longer in their possession, custody or power when they parted with it, such affidavit to be filed and served within 7 days of the date of this order:

·            Item 1 Confidentiality Agreement between the First Respondent and the Second Applicant

·            Items 19, 20 and 22 Spray Records

·            Item 14 The second applicant’s 100 day plan

·            Item 13 Westpac and ANZ documents and correspondence

·            Item 15 Copies of all cash flow

·            Item 16 Creditors invoices for first applicant

·            Item 18 Email from David Breed to the second applicant

·            Item 21 Management reports for the Orchards and Packing shed

·            Item 25 Third applicant’s orchard management plans

·            Items 26, 27 and 28 Cash flows, correspondence and emails

2.                  The applicants file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with Order 15 Rule 6 of the Federal Court Rules within 14 days of the date of this order discovering any document referred to in the affidavit required to be discovered by par 1 of this order.

3.                  Inspection of those documents in the supplementary list of documents is to be provided within 21 days of the date of this order.

4.                  Once the respondents allow the applicants to have access to the computer in the packing shed for the purpose of accessing the SmartPak, TotalPak and packout records the applicants are to, within 7 days of the date of access being provided, file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with O 15 r 6 of the Federal Court Rules discovering the SmartPak, TotalPak and packout records referred to in items 2, 17 and 30 of the schedule provided in support of this notice of motion. Inspection of such documents is to be provided within 14 days of the date of access being provided.

5.                  The time for service of the notice of motion be abridged until a time no later than 4.00 pm, 20 July 2006.

6.                  Costs be reserved.

Associate:

Dated: 4 August 2006