FEDERAL COURT OF AUSTRALIA

National Mutual Life Association of Australasia Limited v Tolfield Pty Ltd (No 3) [2012] FCA 100

THE COURT ORDERS THAT:

1.    Following completion of disclosure, the Second Respondent have liberty to file and serve further and better particulars of the contentions in paragraph 27 of the Second Respondent’s Amended Contentions of Fact and Law filed 4 February 2011.

2.    Pursuant to O 15 r 3 of the Federal Court Rules, the First Respondent in its capacity as trustee of the Romany Superannuation Fund (Fund), the Second Respondent and the Third Respondent give discovery of documents by verified list in conformity with O 15 r 2(3) within 21 days of the date of this Order, limited to the following categories of documents:

(a)    for the period from May 1992 to 16 December 2009 documents relevant to a director of the First Respondent in its capacity as trustee of the Fund being able to:

(i)    deal with the Applicant concerning the affairs of the Fund;

(ii)    act as managing director of the First Respondent in its capacity as trustee of the Fund;

(iii)    correspondent to and with persons on behalf of the Fund in relation to the affairs of the Fund;

(iv)    have control of the books and records of the Fund;

(v)    sign correspondence, cheques or other documents requiring execution on behalf of the Fund;

(vi)    make payments to and issuing receipts for payments received on behalf of the Fund;

(vii)    conduct the business of the Fund;

(viii)    instruct persons providing services to or in relation to the affairs of the Fund;

(ix)    make decisions affecting the affairs of the Fund;

(x)    nominate beneficiaries of the policy of insurance number 6884, 852/2 insuring the life of Peter Cox issued by the Applicant (Policy);

(xi)    make declarations of trust on behalf of the Fund;

(xii)    assign the benefit of property of the Fund;

(xiii)    nominate beneficiaries of the Fund property;

(b)    bank statements for accounts operated by the First Respondent in its capacity as trustee of the Fund as relating to the payments made referred to in paragraphs 15(e)(iv)(A) and (D) of the First Respondent’s Contentions in Reply dated 8 February 2011;

(c)    documents as to the Policy from 13 May 1992;

(d)    documents as to the First Respondent’s ownership of the Policy in its capacity as trustee of the Fund from May 1992 to March 2010 inclusive;

(e)    documents as to the alleged nomination of the Third Respondent as preferred beneficiary under the Policy by the First Respondent in its capacity as trustee of the Fund in or about March 2009;

(f)    documents as to the alleged nomination of the Second Respondent as preferred beneficiary under the Policy by the First Respondent in its capacity as trustee of the Fund or by Peter Cox or any other alleged dealing with the Policy in or about December 2009;

(g)    documents relating to Peter Cox suffering significant ongoing emotional disabilities from at least 2007;

(h)    documents relating to:

(i)    the second respondent’s alleged relationship of dependency or inter-dependency with Peter Cox; and

(ii)    abandonment and alienation by Peter Cox’s family;

In the period July 2009 to 21 March 2010 as relating to paragraphs 9, 26, 27, 28, 29 and 31 of the Second Respondent’s Contentions and paragraphs 9, 10, 11, 12 and 14 of the First Respondent’s Reply Contentions.

(i)    documents as to the Third Respondent’s negotiations and/or settlement with Peter Cox regarding a settlement of the property rights and entitlements of Mr Cox and the Third Respondent which Mr Cox and/or the Third Respondent could seek under the Family Law Act 1975 (Cth).

3.    Pursuant to O 15 r 10(2) and r 11 of the Federal Court Rules the First and Third Respondents give inspection within 14 days of the date of this Order to (and provide copies of such documents to the Second Respondent within 7 days of same being requested in writing by) the Second Respondent of the following classes of documents referred to in paragraphs 17 and 18 of the Affidavit of Peter William Stokes (sworn 9 February 2011):

(a)    the documents relevant to the issues in dispute in this proceeding as are (or were) contained in approximately 7 boxes and additional ring binders in Kennedy, McLaughlin & Associates’ office; and

(b)    the documents relevant to the issues in dispute in this proceeding as are contained in the hard copy documents which were in the Third Respondent’s possession, custody and control and which were provided to Kennedy, McLaughlin & Associates.

4.    Costs be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The background facts to this proceeding are explained in National Mutual Life Association of Australasia Limited v Tolfield Pty Ltd [2011] FCA 707. Before me on 14 September 2011 both parties sought a number of orders pursuant to an Amended Notice of Motion (filed by the first respondent) and a Further Amended Notice of Motion (filed by the second respondent). Both notices of motion were originally filed in accordance with the Federal Court Rules in operation until 1 August 2011.

2    At the hearing most issues were resolved between the parties. The only issues raised at, but remaining unresolved following, the hearing relate to:

    An application by the first respondent for strike out or further particularisation of one of the contentions of the second respondent, Ms Sheahan, in her Amended Contentions of Fact and Law filed 4 February 2011 (paragraphs 7 and 9 of the first respondent’s Amended Notice of Motion).

    Discovery of documents by verified list by the first respondent, being documents relevant to a director of the first respondent (paragraph 1(a)(i)-(xiii) of the second respondent’s further amended notice of motion, paragraph 9(a)(i)-(xiii) of the first respondent’s amended notice of motion). The dispute is as to the period of time over which documents were produced, and the capacity in which the first respondent ought give discovery.

    Discovery of documents by the first respondent, other than its capacity as the trustee of the Romany Superannuation Fund, relating to Mr Cox suffering ongoing emotional disabilities from at least 2007 (paragraph 2(b) of the second respondent’s further amended notice of motion), and relating to the second respondent’s alleged relationship of dependency or inter-dependency with Mr Cox (paragraph 2(c)(i) of the second respondent’s further amended notice of motion) and abandonment and alienation by Mr Cox’s family (paragraph 2(c)(ii) of the second respondent’s further amended notice of motion).

    Discovery of documents by the first respondent in relation to the third respondent’s negotiations and/or settlement with Mr Cox (paragraph 2(a) of the second respondent’s further amended notice of motion).

    Discovery of documents by the second respondent of documents to which Mr Stokes, the solicitor for the first respondent, referred in paragraphs 17 and 18 of his affidavit sworn 9 February 2011 (paragraph 7 of the second respondent’s further amended notice of motion).

3    I will deal with these issues in turn.

Strike out or further particularisation: paragraphs 7 and 9 of the first respondent’s Amended Notice of Motion

4    On 28 January 2011 the first respondent sought further and better particulars from the second respondent of her contentions in paragraph 27 of the Second Respondent’s Amended Contentions of Fact and Law, namely:

(a) the usual particulars of

(i) the alleged separation

(ii) the alleged negotiations between the Third Respondent and Mr Cox; and

(iii) the alleged ‘settlement’ of ‘property rights and entitlements’,

(b) state what is meant by the words ‘their respective property rights and entitlements.

5    Paragraph 27 of the Second Respondent’s Amended Contentions of Fact and Law filed 4 February 2011 remains as follows:

The parties separated in July 2009 and the Third Respondent thereafter commenced proceedings against Cox and obtained an apprehended violence order against him, and negotiated with him a settlement of their respective property rights and entitlements.

6    On 22 June 2011 I made the following order :

4. Pursuant to Order 10 rule 1(2) and Order 12 rule 5 the Second Respondent file and serve further and better particulars of the contentions in paragraph 27 of the Second Respondent’s Amended Contentions of Fact and Law dated 4 February 2011 in accordance with the requests for such particulars dated 28 January 2011 by 4.00 pm on 29 June 2011.

7    On 8 July 2011 the second respondent provided Further and Better Particulars of the contentions in paragraph 27 of her Amended Contentions of Fact and Law. So far as is presently relevant, the second respondent said as follows:

1.1 ….

(b) The best particulars the Second Respondent can provide at this stage regarding the alleged negotiations between the Third Respondent and Mr Cox are that :

(i) in or about December 2009 and January 2010 the Third Respondent and Mr Cox negotiated a settlement of their property rights and entitlements;

(ii) such negotiations were partly in writing, partly oral and partly by conduct of the parties; and

(iii) such negotiations occurred at various places and times which cannot be currently identified completely, but include negotiations in person (between the Third Respondent and Mr Cox) at the offices of Jeffrey P Oke, Accountant, of Kennedy McLaughlin and Associates on or about 16 January 2010.

(c) The alleged “settlement” of ‘property rights and entitlements’ was a series of negotiations entered into between Mr Cox and the Third Respondent in respect of the competing claims of Mr Cox and the Third Respondent to the assets acquired during their marriage.

1.2 The words “their respective property rights and entitlements” meant the rights which Mr Cox and/or the Third Respondent could seek under the Family Law Act 1975 (Cth).

8    The first respondent has submitted that, notwithstanding these further and better particulars, in fact the second respondent has failed to provide the particulars ordered on 22 June 2011, or that the particulars provided are manifestly inadequate.

9    In the Amended Notice of Motion before me the first respondent has moved for the following orders:

7. That pursuant to Order 10 rule 1(2) and Order 12 rule 5, the Second Respondent within seven days of the date of the order file and serve further and better particulars of the contentions in paragraph 27 of the Second Respondent’s Amended Contentions of Fact and Law dated 4 February 2011 as follows:

(a) Particularise each written document and the date thereof as to the settlement of the ‘respective property rights and entitlements’ (Settlement)

(b) Particularise as to the oral conversations as to the Settlement :

(i) The date of each such conversation;

(ii) the parties to the conversation;

(iii) The substance of each conversation;

(c) Particularise the ‘rights’ which Peter Cox and the Third Respondent could seek under the Family Law Act 1975 (Cth);

(d) Particularise the terms of the Settlement.

8. In the alternative to paragraph 7, that pursuant to Order 11 rule 16, the words ‘and negotiated with him a settlement of their respective property rights and entitlements’ be struck from paragraph 27 of the Second Respondent’s Amended Contentions of Fact and Law dated 4 February 2011.

10    In summary, the second respondent submits that paragraph 27 of her Amended Contentions of Fact and Law pleads an arguable case, that she has pleaded the best particulars available, and that she ought be allowed to expand those particulars following the discovery and interrogatories. The second respondent relies on Buckley v McKenzie (1898) 4 Argus LR 229 and Bli Bli #1 Pty Ltd v Kimlin Investments Pty Ltd [2010] QCA 136.

11    In Buckley v McKenzie the Supreme Court of Victoria refused to make an order directing further particulars as to a verbal agreement made between a deceased person and one of the defendants, where the plaintiff was the estate of the deceased person. Instead, the Court ordered the adjournment of the hearing until orders for interrogatories and discovery had been complied with.

12    In Bli Bli #1 the primary judge had ordered the plaintiffs to give further particulars of allegations on the basis that the particulars provided were inadequate, and had not regarded as sufficient the plaintiffs’ submission that, because they were not parties to relevant conversations they could not give any further particulars and had provided the best particulars that they could. Before the Court of Appeal the plaintiffs submitted that no representative of theirs had been present at the relevant conversations, the plaintiffs had been informed in general terms of the conversations by a third party, they had had no ongoing contact with that third party, and they were unable to provide any further particulars in respect of those conversations. Fraser JA delivering the judgment of the Court of Appeal observed, so far as relevant, that the question was whether the particulars were sufficient to define the issues so as to enable the defendants to have a fair opportunity to meet the plaintiff’s case and avoid being taken by surprise. In the absence of evidence that the plaintiffs could not obtain information from the third party which would enable them to draft better particulars, Fraser JA held that the plaintiffs should be ordered to provide the best particulars they could (at [28]).

13    The first respondent submits, in summary, that paragraph 27 of the second respondent’s Amended Contentions of Fact and Law does not plead an arguable case, as there is no pleading as to the form or terms of the agreement or how the relevant life policy fits in with it, and at best the case of the second respondent is that some people had discussions. The first respondent relies in particular on the decision of this Court in Austal Ships Pty Ltd v Incat Australia Pty Ltd [2009] FCA 368. In that case McKerracher J observed, in the context of whether an application for discovery constituted a fishing expedition, that the key question was whether the applicant had shown a good case, proof of which was likely to be aided by discovery (at [134]).

14    In my view the orders sought by the first respondent in respect of the words ‘and negotiated with him a settlement of their respective property rights and entitlements’ in paragraph 27 of the Second Respondent’s Amended Contentions of Fact and Law ought not be made. I accept the submission of the second respondent that an arguable case is pleaded by the second respondent that a negotiated settlement was reached between Mr and Mrs Cox, that this case is pleaded by a person who was not a party to that settlement, and that indeed this case is denied by the first respondent. The second respondent contends that, in response to orders of this Court, it has provided the best particulars it can in the circumstances. I accept that this is the case, and that the preferable approach is to order that the second respondent have liberty to amend the particulars provided once disclosure is complete.

Discovery: Paragraphs 1(a)(i)-(xiii) of the second respondent’s further amended notice of motion

15    Paragraph 1(a)(i)-(xiii) of the second respondent’s further amended notice of motion identifies categories of documents in the same terms as those identified by paragraph 9(a)(i)-(xiii) of the first respondent’s amended notice of motion. In summary, the documents are relevant to a director of the first respondent being able to:

(i)    deal with the Applicant concerning the affairs of the Fund;

(ii)    act as managing director of the First Respondent in its capacity as trustee of the Fund;

(iii)    correspondent to and with persons on behalf of the Fund in relation to the affairs of the Fund;

(iv)    have control of the books and records of the Fund;

(v)    sign correspondence, cheques or other documents requiring execution on behalf of the Fund;

(vi)    make payments to and issuing receipts for payments received on behalf of the Fund;

(vii)    conduct the business of the Fund;

(viii)    instruct persons providing services to or in relation to the affairs of the Fund;

(ix)    make decisions affecting the affairs of the Fund;

(x)    nominate beneficiaries of the policy of insurance number 6884, 852/2 insuring the life of Peter Cox issued by the Applicant (Policy)

(xi)    make declarations of trust on behalf of the Fund

(xii)    assign the benefit of property of the Fund;

(xiii)    nominate beneficiaries of the Fund property.

16    The second respondent seeks discovery by the first respondent of these categories of documents, and the first respondent is prepared to make disclosure. However the parties remain in dispute in respect of the basis upon which the first respondent should make disclosure. In summary:

1.    The first respondent is prepared to disclose these documents for the period from May 1992 to 16 December 2009 only, whereas the second respondent seeks disclosure of such documents for the period “from May 1992 onwards”.

2.    The second respondent seeks disclosure by the first respondent of the identified categories of documents relevant to a director of the first respondent in its capacity as trustee of the Romany Superannuation Fund and in its capacity as trustee of the Peter Cox Family Trust. The first respondent is prepared only to disclose such documents relevant to a director of the first respondent in its capacity as trustee of the Romany Superannuation Fund.

1. 16 December 2009

17    At paragraph 17 of her amended Contentions of Fact and Law the second respondent claims that the purported nomination by the first respondent of the third respondent as the beneficiary of the policy of insurance of the life of Mr Cox was ineffective because, inter alia, the purported nomination was revoked on 16 December 2009 by the replacement nomination of the second respondent and/or preferred beneficiary.

18    In effect, this claim forms the basis of the second respondent’s case in the primary proceedings, and raises the question whether, as at 16 December 2009, Mr Cox acting solely as a director of the first respondent had authority to sign a nomination on behalf of the first respondent.

19    The second respondent submits, in summary, that:

    documents created after 16 December 2009 are directly relevant to the power of only one director to conduct the affairs of the trustee; and

    this is exemplified by the action of Mrs Cox, as the sole director of the first respondent as trustee, completing the purchase of a unit for the super fund after the death of Mr Cox, where the unit was purchased by a sales contract entered into by Mr Cox as the sole director of the trustee prior to his death.

20    In this case, no contention is made by the second respondent in respect of any act of Mr Cox on behalf of the first respondent after 16 December 2009. Further, the second respondent does not plead that the authority of one director, namely Mr Cox, to act on 16 December 2009, could be inferred from decisions made subsequent to that date. I accept the submission of the first respondent that, in the absence of such a pleading, the manner in which the affairs of the first respondent were conducted subsequent to 16 December 2009, and particularly subsequent to the death of Mr Cox, is irrelevant to any issue in this proceeding.

21    In my view only documents described in paragraph 1(a)(i)-(xiii) of the second respondent’s further amended notice of motion and created prior to or on 16 December 2009 need be disclosed by the first respondent.

2. Capacity in which disclosure is made

22    In paragraph 6 of her Amended Contentions of Fact and Law the second respondent claims as follows:

In further response to paragraph 7 the Second Respondent says that from December 1992 or alternatively from a date prior to December 1992 Cox was the director with control of the affairs of the First Respondent both in its own capacity and in its capacity as the trustee of the Romany Superannuation Fund (“the Fund”).

23    In summary, the case of the second respondent in relation to this issue is that:

    While the second respondent was originally concerned only with the conduct of the first respondent in capacity as trustee of the Romany Superannuation Fund, the more general question of how affairs of the first respondent were conducted, and the relevance of its constitution, was subsequently raised by the first respondent.

    The second respondent does not know how the affairs of the first respondent were conducted, and will not know until after discovery.

    How the affairs of the first respondent were conducted qua trustee in respect of all the trusts over which it had control is relevant.

24    In my view the disclosure of the first respondent should be limited to documents relevant to conduct of its affairs in its capacity as trustee of the Romany Superannuation Fund.

25    In her Amended Contentions of Fact and Law filed 14 September 2011 the first respondent pleads, inter alia, that the first respondent is a company which has as its constitution the memorandum and articles of association, pursuant to which:

    its business was managed by the directors;

    meetings of directors were determined by a majority of votes;

    directors could only act as a board; and

    no individual director had authority to bind the company (paragraph 6(c)).

26    The contentions of the first respondent relate to conduct of the affairs of the first respondent, including actions of its directors and in particular those of Mr Cox, only in capacity as trustee of the Romany Superannuation Fund. Activities of the first respondent other than in this capacity are not pleaded. Further, I am not persuaded that the conduct of the affairs of the first respondent in any other capacity is relevant to the manner in which its affairs were conducted as trustee of the Romany Superannuation Fund.

Discovery: paragraphs 2(b), 2(c)(i) and 2(c)(ii) of the second respondent’s further amended notice of motion

27    In my view there is no relevant issue pleaded supporting the claim that the first respondent in any capacity other than that as trustee of the Romany Superannuation Fund should provide disclosure of these documents.

Discovery: paragraph 2(a) of the second respondent’s further amended notice of motion

28    In paragraph 2(a) of her further amended notice of motion the second respondent sought an order that the first respondent in any capacity, the second respondent and the third respondent, Mrs Cox, give discovery of documents in relation to:

(a) documents as to the third respondent’s negotiations and/or settlement with Peter Cox regarding a settlement of the property rights and entitlements of Mr Peter Cox and the third respondent which Peter Cox and/or the third respondent could seek under the Family Law Act 1975 (Cth).

29    The position of the first respondent is that, if no order is made by the Court striking out paragraph 27 of the second respondent’s Amended Contentions of Fact and Law, discovery ought be limited to documents comprising the settlement only (paragraph 10 of the first respondent’s amended notice of motion).

30    For reasons explained earlier in this judgment, I am not prepared to make an order striking out paragraph 27 of the second respondent’s Amended Contentions of Fact and Law. In the circumstances, I am also not prepared to order that further particulars of paragraph 27 be provided by the second respondent, although I give liberty to the second respondent to do so following completion of discovery.

31    Accordingly, the narrow questions remaining are whether:

1.    The first respondent in any capacity ought be required to disclose relevant documents; and

2.    Discovery be confined to documents relevant to settlement only.

32    In relation to the first question, again for reasons I have already given, the proper order is that the first respondent give discovery of documents in its capacity as trustee of the Romany Superannuation Fund.

33    In relation to the second question, the first respondent denies that such a settlement took place (paragraph 10(c)(iii) of the Amended Contentions in Reply of the First Respondent to the Second Respondent’s Amended Contentions of Fact and Law). However the second respondent contends that the third respondent, Mrs Cox, negotiated a settlement with Mr Cox of their respective property rights and entitlements (paragraph 27 of the second respondents Amended Contentions of Fact and Law). I have already found that an arguable case is pleaded by the second respondent that a negotiated settlement was reached between Mr Cox and the third respondent. The appropriate order is that all documents relevant to such negotiations should be disclosed by the first and third respondents.

Discovery – paragraph 3 of the second respondent’s further amended notice of motion

34    In paragraph 7 of her further amended notice of motion the second respondent sought the following orders:

Pursuant to Order 15 rule 10 (2) and 11 Federal Court Rules the First and Third Respondents give inspection on or before 19 May 2011 to (and provide copies of such documents to the Second Respondent within 7 days of same being requested in writing by) the Second Respondent of the following classes of documents referred to in paragraphs 17 and 18 of the Affidavit of Peter William Stokes (sworn 9 February 2011 in this proceeding) :

(a)    The documents relevant to the issues in dispute in this proceeding as are (or were) contained in approximately 7 boxes and additional ring binders in Kennedy, McLaughlin & Associates’ office; and

(b)    The documents relevant to the issues in dispute in this proceeding as are contained in the hard copy documents which were in the Third Respondent’s possession, custody and control and which were provided to Kennedy, McLaughlin & Associates.

35    Order 15 r 10 and r 11 of the now-superseded Federal Court Rules made provision for production of certain documents following service of a notice to produce. Specifically, these rules provided as follows:

10 Document referred to in pleading or affidavit

(1) Where a pleading or affidavit filed by a party refers to a document, any other party may, by notice to produce served on him require him to produce the document for inspection.

(2) Where a notice to produce a document is served on a party under subrule (1), he shall, within 4 days after that service, serve on the party requiring production a notice:

(a) appointing a time within 7 days after service of the notice under this subrule when, and a place where, the document may be inspected;

(b) claiming that the document is privileged from production and sufficiently stating the grounds of the privilege; or

(c) stating that the document is not in his possession, custody or power and stating to the best of his knowledge information and belief where the document is and in whose possession, custody or power it is.

11 Order for production

(1) Where:

(a) it appears from a list of documents filed by a party under this Order that any document is in his possession, custody or power;

(b) a pleading or affidavit filed by a party refers to any document; or

(c) 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 any document relating to any matter in question in the proceeding is in the possession, custody or power of a party;

the Court may, subject to any question of privilege which may arise, order the party:

(d) to produce the document for inspection by any other party at a time and place specified in the order; or

(e) to file and serve on any other party a copy of the whole or any part of the document, with or without an affidavit verifying the copy made by a person who has examined the document and the copy.

(2) An affidavit made pursuant to an order under paragraph (1) (e) shall, unless the Court otherwise orders, state whether there are in the document copied any and, if so, what erasures, interlineations or alterations.

36    Paragraph 7 refers specifically to paragraphs 17 and 18 of the affidavit of Mr Peter Stokes, solicitor for the first respondent, sworn 9 February 2011. Those paragraphs appear under the heading “Records” and immediately follow paragraph 16. In those paragraphs Mr Stokes deposes, so far as relevant, as follows:

16. I refer to the letter from MKL to McCullough Robertson dated 7 February 2010 (referred to in paragraph 2(n) of this affidavit).

17. I am informed by Mr Jeff Oke, partner of KMA, and believe that there are approximately seven boxes and additional ring binders in KMA’s office, which may contain documents falling within the categories of documents listed in the letter from MKL in either the First or Third Respondent’s possession, custody or control.

18. I am also informed by the Third Respondent, who is co-director of the First Respondent, and believe that all hard copy documents which were in her possession, custody and control have previously been provided to KMA…

37    The letter from MacPherson+Kelley Lawyers to which Mr Stokes referred and which is attached to Mr Stokes’ affidavit is under the hand of Mr Peter Mills, and, inter alia, describes documents sought by the second respondent from the first and third respondents prior to the mediation scheduled on 10 February 2011.

38    Subsequently, it also appears that MacPherson+Kelley Lawyers served a Notice to Produce Documents on the first respondent’s solicitors on 6 April 2011 in the same terms as paragraphs 7(a) and (b) of the second respondent’s further amended notice of motion.

39    At the hearing Mr McQuade for the first respondent submitted, in summary, that:

    The second respondent’s requests to produce documents purportedly given under O 15 r 10 was misconceived.

    Mr Stokes’ affidavit was filed in response to the second respondent’s notice of motion for wide-ranging discovery of documents on the eve of mediation, and the references in paragraphs 17 and 18 of the affidavit were clearly not made for the purposes of relying on the contents of any particular document in the folders referred to.

40    However Mr Cooper SC for the second respondent submitted that this application has to be decided under the new Federal Court Rules, in particular r 20.31, which provides:

20.31 Notice to produce document in pleading or affidavit

(1) A party (the first party) may serve on another party (the second party) a notice to produce, in accordance with Form 39, for the inspection of any document mentioned in a pleading or affidavit filed by the second party.

(2) The second party must, within 4 days after being served with the notice to produce, serve the first party with a notice:

(a) stating:

(i) a time, within 7 days after service of the notice, when the document may be inspected; and

(ii) a place where the document may be inspected; or

(b) stating:

(i) that the document is not in the second party’s control; and

(ii) to the best of the second party’s knowledge — where the document is and in whose control it is; or

(c) claiming that the document is privileged and stating the grounds of the privilege.

(3) If the second party does not comply with paragraph (2) (a) or (b) or claims that the document is privileged, the first party may apply to the Court for an order for production and inspection of the document.

Note Control is defined in the Dictionary

41    As the documents referred to in paragraph 7 of the second respondents further amended notice of motion have been “mentioned” in the affidavit of Mr Stokes, the second respondent is entitled to them, irrespective whether the first respondent relies on the documents.

42    In the circumstances two issues arise – namely the relevance of the previous Federal Court Rules, and, irrespective of which rules are applicable, whether the second respondent is entitled to discovery of the documents she seeks. Both respondents have filed submissions in respect of these issues.

Which Rules apply in respect of this issue?

43    Rule 1.04 of the Federal Court Rules 2011 (“new rules”) provides as follows:

(1)    These Rules apply to a proceeding started in the Court on or after 1 August 2011.

(2)    These Rules apply to a step in a proceeding that was started before 1 August 2011, if the step is taken on or after 1 August 2011.

(3)    However, the Court may order that the Federal Court Rules as in force immediately before 1 August apply, with or without modification, to a step mentioned in subrule (2).

44    “Step in a proceeding” is not defined by the new rules. However the phrase has been considered in a number of cases.

45    In Reliable Roof Treatments Pty Ltd v Citra Constructions Pty Ltd [1974] 1 NSWLR 285 Master Cantor QC found that a step in the proceedings means something in the nature of an application to the court, and not mere talk between solicitors nor the writing of letters (at [287]).

46    In Citicorp Australia Ltd v Metropolitan Public Abattoir Board [1992] 1 Qd R 592 at 594 McPherson SPJ said:

It may I think be accepted that to constitute a “proceeding” the act or activity must have the characteristic of carrying the cause or action forward. It may, as Stable J. described it in Kaats v. Caelers [1966] Qd.R. 482, 489, be “some step taken toward the judgment or relief sought in the action”; or “taken with a view to continuing the litigation between the parties to it”: Spincer v. Watts (1889) 23 Q.B.D. 350, 353, per Lindley L.J. The word “is one that suggests something in the nature of a formal step in the prosecution of an action …”: see Mundy v. Butterly Co. (1932) 102 L.J.Ch. 23, 26. It need not be a step taken or act done in a court or its registry. Holding a compulsory conference in conformity with O. 39 r. 30A(4)(e) of the Rules constitutes a proceeding within O. 90 r. 9: see Russell v. Mihaljevic & Anor (Full Court, 24 June 1982, unreported); likewise, the production to the other party of a signed certificate of readiness pursuant to O. 39 r. 30A(5) has been held to be a proceeding: ibid., per Kelly J.; aliter if the certificate has not been signed by either party: see Wright v. Ansett Transport Industries Limited [1990] 1 Qd.R. 297, 299.

47    More recently in Singh v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (No 3) [2011] FCA 1042 Bromberg J considered whether a step in a proceeding had occurred for the purposes of r 1.04 of the Federal Court Rules 2011. In that case the Department had sought (and obtained) an order that vexatious litigant status be applied to Mr Singh pursuant to O 21 r 1 of the former Federal Court Rules. At the date of the hearing (31 August 2011) Bromberg J heard submissions in respect of costs of that application and as to whether an order should be made that any extant proceeding instituted by the respondent against Mr Singh not continue without leave of the Court. His Honour observed:

The application made in VID 265 of 2010 was made pursuant to O 21 r 1 of the former rules in a proceeding which commenced before 1 August 2011. The determination of that application is a step which will occur after 1 August 2011. The effect of r 1.04(2) and (3) of the new Rules is that in relation to such circumstances the new Rules apply unless the Court orders that the former Rules should apply. Given that the application for an order that Mr Singh not continue any extant proceeding was made under the former Rules, I consider that the application should be determined under those Rules. Accordingly, in VID 265 of 2010 I will also order that the former Rules apply to the disposition of that application.

48    Further, in SZOVZ v Minister for Immigration & Citizenship [2011] FCA 863 Katzmann J observed that it is debatable whether an application for costs can be described as a step in the proceeding, neither party addressed the question, and although the appropriate course in the circumstances was to order that the old rule apply her Honour was satisfied that the outcome would have been no different had the new rule applied (at [30]).

49    The first respondent submits that “a step in a proceeding” must mean a step taken by a party to advance the progress of the litigation. In my view this interpretation of the phrase is correct.

50    In this case the second respondent’s further amended notice of motion was filed under the rules prior to 1 August 2011 as was the notice to produce. In my view these were steps in the proceeding for the purposes of rule 1.04. The only event in respect to this aspect of the notice of motion subsequent to 1 August 2011 has been that the matter was listed by the Court for hearing on 14 September 2011. In my view this is not a “step in the proceeding” within the meaning of r 1.04(2), in the sense of being a step taken by a party to advance the progress of litigation.

51    However even were the actual hearing a “step in the proceeding” such that the new rules apply pursuant to r 1.04(2), I consider it would be appropriate to order that the old rules apply in relation to this issue. Paragraph 7 of the second respondent’s further amended notice of motion is specifically drafted in terms of “Order 15 rule 10(2) and 11 Federal Court Rules”. No application to amend paragraph 7 of the motion was made after 1 August 2011. All aspects of the argument on 14 September 2011 were on the basis that the old rules were applicable in respect of the motions before the Court, save with respect to paragraph 7. The application of the new rules in respect of paragraph 7 had not previously been raised, and as a result clearly took the first respondent by surprise (page 60 lines 19-20).

52    In light of these considerations I am not persuaded that the interests of justice require the application of the new rules to consideration of this part of the notice of motion rather than the old rules. In any event, even were the new rules applicable, it is difficult to identify any tangible differences of substance between the operation of O 15 r 10 of the previous Federal Court Rules and the new rule 20.31, or indeed a difference in outcome. Order 15 r 10(1) provides:

(1) Where a pleading or affidavit filed by a party refers to a document, any other party may, by notice to produce served on him require him to produce the document for inspection.

(Emphasis added.)

53    In comparison, r 20.31(1) provides:

(1) A party (the first party) may serve on another party (the second party) a notice to produce, in accordance with Form 39, for the inspection of any document mentioned in a pleading or affidavit filed by the second party.

54    I am not persuaded in the circumstances of this case that differences inherent in the terms “refer” and “mention” (if any) raise discretionary issues in respect of the application of rules.

Application of Order 15 rule 10 Federal Court Rules

55    It is not in dispute that:

    the affidavit of Mr Stokes referring to the relevant documents was filed in response to a notice of motion filed by the second respondent for discovery on the eve of mediation;

    the references in paragraphs 17 and 18 were not made for the purpose of reliance by the first respondent on the contents of any particular document in the folders referred to; and

    the reference to “boxes and additional ring binders” which might contain documents falling within the categories was for the purpose of demonstrating the volume of documents and not their contents.

56    However in summary, the second respondent submits:

    there may be documents falling within the categories requested;

    it is a relatively simple task for the first and third respondents to review the documents in the boxes and ring binders, and make available relevant documents for inspection;

    such documents may shed significant light on the second respondent’s case.

57    On balance I consider that the documents sought by the second respondent should be disclosed. The documents are “referred to” in Mr Stokes’ affidavit within the meaning of O 15 r 10(1). It is not in dispute that, as Kennedy, McLaughlin & Associates is the accountant of the first respondent and to that extent holds relevant documents for the first respondent as agent for the first respondent as trustee of the Romany Superannuation Fund, the documents can be discovered. While the first respondent submits that she is not relying on the documents, nonetheless the fact that Mr Stokes referred to them in his affidavit supports an inference that they are relevant to the case (cf Holmes J in Century Drilling Limited v Gerling Australia Insurance Company Pty Limited [2004] 2 Qd R 481 at 485). I am not persuaded that the facts before me are analogous to those in Beneficial Finance Corporation Ltd v Price Waterhouse (1996) 68 SASR 19, where the Full Court allowed an appeal against a decision at first instance ordering the production of documents referred to in an exhibit to an affidavit filed by a solicitor for the appellant in opposition to the respondent’s application for discovery and production of certain documentation.

58    The compliance date sought by the second respondent in paragraph 7 of her further amended notice of motion– namely 19 May 2011 – has clearly passed. I propose to substitute a period of 14 days for inspection, followed by production of copies within 7 days following inspection.

Discovery: paragraphs 1(b), (c), (d), (e), (f) of the second respondent’s further amended notice of motion

59    At the hearing Mr Cooper SC for the second respondent conceded that the second respondent could not substantiate its claim for discovery of these categories of documents by the first respondent other than in its capacity as trustee of the Romany Superannuation Fund (TS pp 46-47). For the purposes of clarity I will make orders for disclosure of these categories of documents by the first respondent to that effect.

Costs

60    Costs ought be reserved.

Associate:

Dated:    16 February 2012