FEDERAL COURT OF AUSTRALIA

Findlay v Next Financial Limited [2013] FCA 1038

THE COURT ORDERS THAT:

1.     The respondent produce for inspection by the applicants, on or before 11 September 2013, the discovered documents in the respondent’s list of documents dated 19 July 2013 subject to redaction of the following information:

(a)    in relation to investors in the scheme (as defined in the respective pleadings in each proceeding) who are not parties to either proceedings:

(i)    username;

(ii)    password; and

(iii)    BPAY number;

(b)    in relation to the applicants:

(i)    username;

(ii)    password; and

(iii)    BPAY number.

2.    The costs of the application be in the cause.

3.    The respondent bear its own costs of and incidental to redacting documents under paragraph 1 in any event.

4.    Order 4 of the orders of 5 July 2013 be vacated and the next directions hearing be listed on 11 October 2013 at 9:45am.

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

THE COURT ORDERS THAT:

1.     The respondent produce for inspection by the applicants, on or before 11 September 2013, the discovered documents in the respondent’s list of documents dated 19 July 2013 subject to redaction of the following information:

(a)    in relation to investors in the scheme (as defined in the respective pleadings in each proceeding) who are not parties to either proceedings:

(i)    username;

(ii)    password; and

(iii)    BPAY number;

(b)    in relation to the applicants:

(i)    username;

(ii)    password; and

(iii)    BPAY number.

2.    The costs of the application be in the cause.

3.    The respondent bear its own costs of and incidental to redacting documents under paragraph 1 in any event.

4.    Order 4 of the orders of 5 July 2013 be vacated and the next directions hearing be listed on 11 October 2013 at 9:45am.

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

REASONS FOR JUDGMENT

overview

1    On 14 August 2013, I dismissed interlocutory applications filed by the respondent in each proceeding seeking the redaction of certain information in documents required to be produced for inspection by the applicants. Instead, I ordered only a limited redaction of information. At the time, I gave ex tempore reasons for so doing. These are an edited version of those earlier reasons.

background

2    In each proceeding, the applicants allege they invested in a scheme operated by the respondent, and, in broad terms, allege that the respondent engaged in conduct in contravention of the Corporations Act 2001 (Cth) (Corporations Act) and that each of them has suffered or is likely to suffer loss or damage.

3    On 28 November 2012, I ordered that the respondent provide standard discovery in each proceeding by 26 April 2013. Then, on 5 July 2013, I ordered that the respondent complete the giving of standard discovery by 19 July 2013, with inspection to be completed by 9 August 2013.

4    However, on 6 August 2013 the respondent filed a separate interlocutory application in each proceeding, seeking orders allowing it to redact certain information in discovered documents prior to these documents being inspected by the applicants.

5    In relation to investors who are not parties to either proceeding, the orders sought in the interlocutory applications are to permit the redaction of each investor’s:

    name;

    address;

    phone number;

    email address;

    account name;

    username;

    password;

    BPAY number;

    investment or subscription amounts;

    loan amounts;

    interest payment or credits; and

    adviser, adviser’s authorised representative, adviser’s practice and adviser’s dealer group.

6    In relation to the applicants in each proceeding, the orders sought are to permit the redaction of each applicant’s:

    username;

    password; and

    BPAY number.

7    However, in submissions filed in support of the applications the respondent modified its position, and now states that it no longer presses for the redaction of each non-party investor’s investment or subscription amounts, loan amounts and interest payments or credits.

8    By a minute of proposed orders provided to the Court on 7 August 2013, the applicants consent to the respondent’s proposed redaction of the username, password and BPAY number of investors (provided the respondent bears its costs of redaction). However, the applicants oppose the redaction of any other information of non-party investors.

9    The applicants submit that the information in question is “directly relevant to the issues raised by the pleadings” and so is required to be discovered pursuant to R 20.14(1)(a) of the Federal Court Rules 2011 (Cth). Principally, this is because the information will assist in determining whether each investment scheme was a “managed investment scheme” as defined in s 9 of the Corporations Act.

10    The respondent submits that the information in question is not “directly relevant to the issues raised by the pleadings”. Accordingly, the respondent submits that this “irrelevant” information should be redacted. Additionally, the respondent submits that the information is confidential, this being an additional factor in favour of redacting the otherwise irrelevant information.

consideration

11    The respondent made it clear that this is not a case in which it is submitted that due to confidentiality concerns, at least of itself, there ought to be redaction. Rather, the question of confidentiality undertakings to the extent that they have been made by respondent to non-party investors is said to be something that should be taken into account when considering the extent to which the information that would be redacted is relevant to pleaded issues.

12    Focus has been placed particularly on what is contained in para 4 of the written submissions of the applicants in each proceeding. In para 4, the applicants submit that the information in question will assist in determining whether each investment scheme was a “managed investment scheme” as defined in s 9 of the Corporations Act. The applicants submit that the determination of this “central question” will entail inquiry into, amongst other things:

    who contributed money or moneys worth in connection with the scheme (and thus may be members of a managed investment scheme);

    the nature and extent of their contributions in connection with the scheme;

    the purposes for which the contributions were made and used;

    the nature and extent of any benefits which were produced as a result of, or in connection with, the contributions of some other feature(s) of the scheme; and

    the nature and extent (if any) of the various scheme participants’ control over the operation of the scheme.

13    It is said by the applicants that the names and other identifying information of the non-party investors are, accordingly, all information relevant to the pleaded and disputed issues.

14    The applicants submit that there is a general question about subjective intention of pooling and that it could be the evidence not only of applicants, but also non-party investors that could be relevant to that, and that in proceedings like these the discovery orders have been made, lists have been provided, documents have been identified as satisfying the directly relevant test and they ought now to be provided. That submission, of course, would be subject to ordinary principles as to why there should not be disclosure; for example, that something is privileged on some relevant basis or that there is confidentiality that requires certain types of orders to be made. Really, neither of those two exceptional positions is advanced by the respondent here. It is necessary to go back to the documents and ask whether within the documents all of that information is directly relevant to the matters pleaded.

15    In the event – and this is very much a matter of judgment in relation to the pleading and to the course of the pleading and what seems appropriate in the circumstances – I am not satisfied that there should be any redaction beyond that which the applicants are prepared to make. I say that because I am concerned that if every time there is an order made for discovery there is to be a second round of closer examination of what is in a document as to its relevance or possible relevance, the discovery process will become protracted, as indeed I consider it has become in this case.

16    I recognise that there are the parties’ high stakes in litigation like this. I recognise it is complex litigation. I recognise there are a number of parties to it all, but I am not satisfied that questions of any confidentiality undertakings made by the respondent to non-party investors should sway the day. It is also clear that the applicants are not saying that there will necessarily be any evidentiary benefit to them from what is being disclosed. They are in a practical sense saying they are entitled to have the documents under discovery and there is no good reason why the redaction should occur and, on balance, it is really that reason that leads me to think that without further ado there ought to be appropriate production.

conclusion and orders

17    So for those reasons I would make orders generally in terms of the minute of the applicants received by the Court on 7 August 2013, including that the respondent bear its own costs of and incidental to redacting documents. The minute has in respect of the investors, both party and non-party, the redaction of usernames, passwords and BPAY numbers. That seems to me to be appropriate, and looking at the documents that have been handed up to me, I do not see any privacy issues arising from any of the material that would then remain un-redacted. I would also order that the costs of each application be in the cause.

Associate:

Dated:    10 October 2013

SCHEDULE OF APPLICANTS FOR WAD 413 OF 2011

JANINE PATRICIA GILMOUR

Second Applicant

DIRK ASHTON HANS MANSON

Third Applicant

ADAM DAMON THOMAS PRING

Fourth Applicant

GEOFFREY PETER HUGHES

Fifth Applicant

SHAUN ALBERT REID

Sixth Applicant

SCHEDULE OF APPLICANTS FOR WAD 104 OF 2012

MARC BELL

Second Applicant

NICHOLAS BENNETT

Third Applicant

ROBERT BUCAT

Fourth Applicant

NIKOLA FUDLOVSKI

Fifth Applicant

ROSEMARY FUDLOVSKI

Sixth Applicant

MARK GAMEREN

Seventh Applicant

CHRISTINE GREESHAW

Eighth Applicant

DAVID GREESHAW

Ninth Applicant

MICHAEL HANNINGTON

Tenth Applicant

GREGORY HART

Eleventh Applicant

NICOLE HART

Twelfth Applicant

NIGEL HART

Thirteenth Applicant

CRAIG HENDRY

Fourteenth Applicant

HELEN HENDRY

Fifteenth Applicant

MAIREAD HODGSON

Sixteenth Applicant

LINETTE KENDLE

Seventeenth Applicant

MATTHEW KENDLE

Eighteenth Applicant

DEBORAH KIELY

Nineteenth Applicant

KEVIN KIELY

Twentieth Applicant

CHRISTOPHER KNOTT

Twenty-First Applicant

CLIVE LACEY

Twenty-Second Applicant

DANIEL LLOYD

Twenty-Third Applicant

DIRK MANSON

Twenty-Fourth Applicant

MICHELLE MASTERS

Twenty-Fifth Applicant

DAMIAN MISKIMMIN

Twenty-Sixth Applicant

ALLAN MULLIGAN

Twenty-Seventh Applicant

COLIN NEWALL

Twenty-Eighth Applicant

ADAM PRING

Twenty-Ninth Applicant

SHAUN REID

Thirtieth Applicant

BRETT SANDO

Thirty-First Applicant

JAMES SHAW

Thirty-Second Applicant

ANDREW SMITH

Thirty-Third Applicant

CAROL SMITH

Thirty-Fourth Applicant

CRAIG SMITH

Thirty-Fifth Applicant

JADE STYANTS

Thirty-Sixth Applicant

JAMES TYLER

Thirty-Seventh Applicant

DIANNE WESTDORP

Thirty-Eighth Applicant

JOHANNES WESTDORP

Thirty-Ninth Applicant

FIONA WHELAN

Fortieth Applicant

ANTHONY WOODCOCK

Forty-First Applicant

STEVEN & MICHELLE APEDAILE AS TRUSTEES FOR APEDAILE FAMILY TRUST

Forty-Second Applicant

STEVEN & MICHELLE APEDAILE AS TRUSTEES FOR APEDAILE SUPERANNUATION FUND

Forty-Third Applicant