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Supreme Court 24 March 2003

Sogelease Australia Ltd & Anor v David James Griffin & Ors

[2003] NSWSC 178

Fraud & dishonesty
PRACTICE AND PROCEDURE DISCOVERY AND INSPECTION FIRST DEFENDANT ENTERS NO DEFENCE DEFAULT JUDGMENT ENTERED OTHER DEFENDANTS FILE DEFENCES. DISCOVERY AND INSPECTION

Citation: Sogelease Australia Ltd & Anor v David James Griffin & Ors [2003] NSWSC 178
Court: Supreme Court of New South Wales, Equity Division
Date: 24 March 2003
Judge(s): Palmer J

Background

The plaintiffs were financial entities alleging that the first defendant, a former officer of the second plaintiff, had fraudulently misappropriated in excess of $10 million of their funds. The misappropriated funds were said to have been paid into bank accounts held by the first defendant's wife (the second defendant) and various other defendants. Default judgment had been entered against the first defendant, but ancillary claims including an account of profits remained unresolved.

The plaintiffs sought discovery and production of documents from both the first and second defendants to trace the misappropriated funds and pursue those ancillary claims. The first defendant declined to file a defence, and no criminal charges had been laid against him at the time of the hearing, though his solicitor maintained that charges remained a live possibility.

The second defendant stated that she had given her discoverable documents to the first defendant, who refused to return them to her for the purposes of her own discovery. The first defendant justified his refusal on the basis that returning those documents would tend to incriminate him.

  • Whether discovery could be ordered against the first defendant where no pleaded issues remained between him and the plaintiffs following default judgment
  • Whether the first defendant's blanket objection to providing any discovery on grounds of self-incrimination privilege was valid
  • Whether the second defendant had discharged her discovery obligations where relevant documents were physically held by the first defendant
  • Whether the first defendant could claim privilege against self-incrimination in respect of documents belonging to the second defendant
  • Whether a party is required to discover and produce for inspection documents that are jointly owned with another party

Decision

Discovery against the first defendant. Palmer J confirmed that discovery may be ordered at any stage of proceedings in aid of the proper disposition of any issue as to final relief, and may extend to any party where the documents are relevant to issues between the party seeking discovery and any other party to the proceedings. However, on the particular facts of this case, Palmer J declined to order any discovery from the first defendant at all. The first defendant's blanket objection to discovery on self-incrimination grounds was noted as generally impermissible, but the specific circumstances here fell within an exception to that general rule, and no discovery order was made against him.

The second defendant's discovery obligations. Palmer J held that the documents held by the first defendant remained within the second defendant's "power" for the purposes of her discovery obligations, even though she did not physically possess them. The second defendant had not discharged her discovery obligation by handing the documents to the first defendant. Accordingly, a direction was made requiring her to procure the return of those documents from the first defendant.

The first defendant's refusal to return the second defendant's documents. Palmer J held that the first defendant had no valid claim to privilege against self-incrimination in respect of documents belonging to the second defendant. A direction was made requiring the first defendant to return the second defendant's documents to her so that she could fulfil her discovery obligations. The court noted that disobedience of these directions would carry contempt consequences.

Jointly owned documents. Palmer J confirmed that the rule in New South Wales, following amendments to the Supreme Court Rules, now mirrors the post-1964 United Kingdom position. A party must both discover and produce for inspection any documents within their possession, custody or power, regardless of whether ownership is sole or shared with another. The second defendant was therefore required to discover and produce documents held in jointly owned accounts with the first defendant.

Orders Made

  • Discovery against the first defendant refused
  • Second defendant ordered to make further discovery, including of jointly owned documents
  • Direction to the second defendant to procure return of her documents from the first defendant
  • Direction to the first defendant to return the second defendant's documents to her for the purposes of her discovery
  • Proceedings stood over for the plaintiffs to bring in Short Minutes of Order reflecting the reasons; costs argument reserved

Key Takeaways

  • Discovery may be ordered at any stage of proceedings to aid the disposition of issues as to final relief, and may extend to a party even where no pleaded issue exists directly between that party and the party seeking discovery, provided the documents are relevant to any issue in the overall proceedings.
  • A blanket objection to providing any discovery at all on self-incrimination grounds is generally impermissible; however, the Supreme Court confirmed that exceptions to this rule exist and applied one on the facts of this case.
  • Documents remain within a party's "power" for discovery purposes even when physically held by another person, meaning the holding party's discovery obligation is not discharged merely because the documents are in someone else's hands.
  • A party cannot invoke privilege against self-incrimination as a basis for refusing to return documents that belong to another party, even where returning them might expose the holder to incrimination.
  • Under Part 23 of the Supreme Court Rules, a party in New South Wales is required to both discover and produce for inspection documents that are jointly owned with another, bringing the local position into line with the post-1964 United Kingdom rule confirmed in Alfred Crompton Amusement Machines Ltd v Customs & Excise Commissioners (No 2).

Legislation and Cases Referenced

Legislation
- Supreme Court Act 1970 (NSW), s 76A
- Supreme Court Rules, Pt 17 r 9; Pt 23 r 3; Pt 36 r 12; Pt 36 r 16

Cases
- Sorby v Commonwealth (1983) 152 CLR 281
- Alfred Crompton Amusement Machines Ltd v Customs & Excise Commissioners (No 2) [1974] AC 405
- Turner v Davies [1981] 2 NSWLR 324
- Vasil v National Australia Bank Ltd (1999) 46 NSWLR 207
- Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412
- Kearsley v Philips (1882) 10 QBD 36
- Coomes & Son v Hayward [1913] 1 KB 150
- McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623
- Gollin Holdings Limited v Adcock [1981] 1 NSWLR 691
- C v National Crime Authority (1987) 78 ALR 338
- Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627
- Spokes v Grosvenor Hotel Co [1897] 2 QB 124
- Attorney-General v North Metropolitan Tramways Co [1892] 3 Ch 70
- R v Associated Northern Collieries (1910) 11 CLR 738
- Palmdale Insurance Ltd (in liq) v L. Grollo & Co Pty Ltd [1987] VR 113
- Theodore v Australian Postal Commission [1988] VR 272
- Bray on Discovery (1885)