Federal Court of Australia
Davis v Quintis Ltd (Subject to Deed of Company Arrangement)  FCA 553
GEOFFREY WILLIAM DAVIS
FRANK CULLITY WILSON
ERNST & YOUNG (A FIRM) (ABN 75 288 172 742)
DATE OF ORDER:
THE COURT ORDERS THAT:
1. The interlocutory application be dismissed with costs.
(Delivered ex tempore, revised from the transcript)
1 It is difficult to imagine any aspect of litigation where more private and public resources are consumed without any redeeming benefit than discovery in large commercial cases. The making of this application is an example of that phenomenon.
2 As long ago as June 2021, the third respondent in proceeding NSD 862 of 2018 (Ernst & Young), a large accounting firm, was ordered to give standard discovery for further documents not already discovered (it already having given discovery of the complete electronic audit files for the years for which its audits of the first respondent (Quintis) are being challenged, namely FY15 and FY16). Prior to the standard discovery order being made, there had been arid debate concerning categories of documents for discovery.
3 Having been involved in a large number of class actions and other large commercial proceedings over a number of years, I have formed the view that it is seldom useful to have debate over categories of discovery. As most experienced counsel would readily understand, the large number of entirely irrelevant documents produced on category-based discovery is notorious. At the time that I declined to go down this path in this case, specifically, in a case management hearing on 23 June 2021, I observed (T16.56–17.02):
I think no more correspondence between solicitors; just get on with the task of producing a list of documents, and if there’s a problem, well, … they can come back to me and have a whinge, but there is a time-honoured way you go behind an affidavit of documents.
4 I said this because, by r 20.14 of the Federal Court Rules 2011 (Cth) (FCR), this Court has a mechanism by which there can be some certainty about the documents the Court expects to be discovered in cases of this kind. This rule balances the need for there to be a fair trial with issues of proportionality, which gives effect to the case management imperatives in Part VB of the Federal Court of Australia Act 1976 (Cth).
5 Rule 20.14 provides the following framework for orders for standard discovery:
(1) If the Court orders a party to give standard discovery, the party must give discovery of documents:
(a) that are directly relevant to the issues raised by the pleadings or in the affidavits; and
(b) of which, after a reasonable search, the party is aware; and
(c) that are, or have been, in the party’s control.
(2) For paragraph (1)(a), the documents must meet at least one of the following criteria:
(a) the documents are those on which the party intends to rely;
(b) the documents adversely affect the party’s own case;
(c) the documents support another party’s case;
(d) the documents adversely affect another party’s case.
(3) For paragraph (1)(b), in making a reasonable search, a party may take into account the following:
(a) the nature and complexity of the proceeding;
(b) the number of documents involved;
(c) the ease and cost of retrieving a document;
(d) the significance of any document likely to be found;
(e) any other relevant matter.
(4) In this rule, a reference to an affidavit is a reference to:
(a) an affidavit accompanying an originating application; and
(b) an affidavit in response to the affidavit accompanying the originating application.
6 Standard discovery involves a number of features which are not reflected in the “train of inquiry” test for discovery set down in Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 (at 63 per Brett LJ) (the application of which to modern, large scale litigation has caused the discovery process to be so often criticised). Three features of standard discovery are of particular note. The first, and most important feature, is only documents that have direct relevance to the issues raised are to be discovered: FCR 20.14(1)(a). The second feature is the extent of the obligation in identifying those directly relevant documents, being the need to conduct a “reasonable search”: FCR 20.14(1)(b). In making a reasonable search, FCR 20.14(3) provides that issues of proportionality can be taken into account, such as: the nature and complexity of the proceeding; the number of documents involved; the ease and cost of retrieving a document; and the significance of any other document likely to be found (as well as any other relevant consideration). The third important feature which controls the discovery process, is that the documents must meet at least one of the criteria set out in FCR 20.14(2).
7 Despite this, I am faced with an interlocutory application whereby, pursuant to FCR 20.15 or FCR 20.20, “further and specific discovery of documents” is sought in respect of no less than 15 categories.
8 An order under FCR 20.15 is made as an alternative to an order under FCR 20.14. Such an order is available where a party considers that the direct relevance, reasonable search and topic controls referred to above are inapposite in the particular circumstances of a case. Rule 20.15 concerns, as its name suggests, “[n]on-standard and more extensive discovery”. “Non-standard” means that it is a process that should only be used when the standard process is insufficient to achieve the purpose of discovery. This is the reason why a party must provide an accompanying affidavit setting out why more extensive discovery is required, and why standard discovery is likely to be inadequate to achieve a just outcome.
9 The present interlocutory application is really an application for supplementary discovery.
10 The application also sought an order under FCR 20.17 or 20.22, and indeed morphed into an application that an affidavit be filed deposing to the relevant searches undertaken and responding to whether or not some of the documents referred to in the categories exist or have been the subject of a search.
11 I do not think it is appropriate to make any of the orders sought.
12 The whole point of making standard discovery orders is to avoid this sort of dispute. There is no established basis upon which comes within a bull’s roar of the conclusion that an order for discovery is necessary in the present circumstances.
13 Mr May of counsel said all he could in order to suggest that what he sought was, in the end, a relatively minor imposition upon Ernst & Young. This is not the point. There is no reason to consider that discovery in this case has not been given conscientiously. It is notable that Ernst & Young has sought to narrow the issues by agreeing to provide documents in relation to six categories, even though they are not caught by the standard discovery orders. I have no doubt that the documents provided (which include the entirety of the relevant audit file) are sufficient in order to ensure that there is a fair trial in this matter.
14 Needless to say, some of the meetings in respect of which documents are sought may well be the subject of cross-examination. If it appears at the trial that additional documents which for some reason may not have been discovered may be relevant to a fair disposition of the issues, then they can be called for during the course of the trial. I have no present reason, however, to think that there is a realistic likelihood of this occurring.
15 The interlocutory application is dismissed with costs.