CATCHWORDS Practice and Procedure - Order for Discovery of Documents against person not party to proceedings - whether the rules of Court authorize Order for delivery of Affidavit of Documents - whether the relevant provisions of the rules of Court are ultra vires - costs of and incidental to the order Appeal from Supreme Court of Northern Territory of Australia - Supreme Court Rules Supreme Court Act (Northern Territory), s.86(1) Supreme Court Rules 0.34 r.34, r.36. Territory Ford Pty. Limited v. Leonard Sydney Michalowsky Coram: Muirhead, Keely and Deane JJ. Date: 30/10/81 Place: Alice Springs IN THE FEDERAL COURT OF AUSTRALIA NORTHERN TERRITORY DISTRICT ) ) ) ) | NO. NTG 15 of 1981 REGISTRY ) GENERAL DIVISION ON APPEAL FROM THE ORDER OF THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA MADE IN CHAMBERS BETWEEN: TERRITORY FORD PTY. LIMITED Appellant AND: LEONARD SYDNEY MICHALOWSKY Respondent ORDERS JUDGES MAKING ORDER: Muirhead, Keely and Deane JJ. DATE OF ORDER: 30/10/81 PLACE: Alice Springs THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the costs of this appeal. IN THE FEDERAL COURT OF AUSTRALIA NORTHERN TERRITORY DISTRICT ) ) ) ) NO. NTG 15 of 1981 REGISTRY ) ) ) GENERAL DIVISION ON APPEAL FROM THE ORDER OF THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA MADE IN CHAMBERS BETWEEN: TERRITORY FORD PTY LIMITED Appellant ig LEONARD SYDNEY MICHALOWSKY Respondent CORAM: Muirhead, Keely and Deane JJ. 30 October 1981. REASONS FOR JUDGMENT =. THE COURT: Mr. Leonard Michalowsky is the plaintiff in proceedings in the Supreme Court of the Northern Territory of Australia against Australian Guarantee Corporation Limited. He claims damages for alleged breach of certain conditions Mare canleaiet oii eee tee nianminess te os relating to the quality of a Ford Cortina motor vehicle which he alleges were implied into a contract for purchase and sale of the vehicle between himself as purchaser and Australian Guarantee Corporation Limited as vendor. We shall, hereafter, refer to Mr. Michalowsky as "the plaintiff", to Australian Guarantee Corporation Limited as "the defendant" and to the proceedings in the Supreme Court of the Northern Territory as "the proceedings". By Chamber Summons filed in the proceedings, the plaintiff sought, against Territory Ford Pty. Limited ("Territory Ford"), the following order: "That pursuant to Order 34 Rule 35, Territory Ford Pty. Ltd. disclose all the documents in its possession custody or power relating to the plaintiff's 1978 Ford Cortina Ghia Sedan engine number CG57UA76821, including all documents relating to repairs and service on the said vehicle, and that the said company produce to the Plaintiff's solicitors all the said documents within seven days of making Discovery as aforesaid". Territory Ford was not a party to the proceedings. An affidavit filed in support of the plaintiff's Chamber Summons stated, however, that negotiations antecedent to the purchase of the motor vehicle were conducted with the plaintiff by Territory Ford which was "the motor dealer involved". The affidavit further alleged that, subsequent to its purchase, the vehicle was left with Territory Ford on numerous occasions for the carrying out of service, repairs, mechanical inspections and checks but that, notwithstanding the same, the engine of the motor vehicle continually é suffered serious coolant loss, stalled and overheated. ceacuenaletanacs a0 Calum cosh es fe tne nthe in an, fate talent ahha tween eet Ad ane! ante el nnn ag ener fe nt etna en Ment mene wt The above-mentioned Summons and affidavit in support were served upon Territory Ford. On 23 April, 1981, the Summons came before the Chief Justice of the Northern Territory in Chambers. Both the plaintiff and Territory Ford were represented by counsel. The application was adjourned to 30 April, 1981. On that day, his Honour made an order in terms of the order sought by the plaintiff which is set out above. The Chief Justice further ordered that the question of costs of and incidental to the abovementioned order and of compliance therewith be reserved for the consideration of the judge at trial but that Territory Ford be at liberty at any time prior to the trial to apply with respect to the question of costs. The submission made to the Chief Justice on behalf of Territory Ford was that the obligation to comply with any order for disclosure or production of documents should be conditional upon the plaintiff's giving security in respect of Territory Ford's costs. His Honour declined to accede to that submission. As can be seen, the order made by the Chief Justice in the form requested by the plaintiff did not limit any time in which the disclosure of documents was to be made. One might perhaps have hoped that a little common sense would have led Territory Ford to comply with the requirements of the order by simply producing the relevant documents to the plaintiff. Any such hope would however have been in vain. On 17 June; 1981, the solicitor for the plaintiff spoke with the solicitor for Territory Ford and was informed that an affidavit of documents had been prepared on behalf of Territory Ford. The solicitor for the plaintiff was asked to agree that the plaintiff pay the costs of Territory Ford. He declined so to do. On 17 June, 1981, the solicitor for Territory Ford wrote a letter to the solicitor for the plaintiff which stated, inter alia: "We refer to the conversation between Mr. Williams and yourself late this afternoon and would confirm that we have now prepared the Affidavit which has been sworn by Mr. Owen, a Director of Territory Ford Pty. Ltd. We note that you will not agree our costs incurred in the matter and we refer to the Order made by His Honour, the Chief Justice on Thursday the 30th of April, 1981 and would advise you that we are preparing a Bill of Costs in taxable form and when we have had the bill taxed and obtained an Allocutur, we shall apply, with regard to the payment of our costs by your client in accordance with the Order made by His Honour, the Chief Justice". On the same day, the solicitor for the plaintiff replied to the above letter in the following terms: "I refer to the Order made by His Honour the Chief Justice on Thursday 30 April 1981, and would advise that unless your client's Affidavit of Documents is received by me on or before 4 p.m. on Friday 26th June, I shall be taking out further proceedings against your client". t On 30 June, 1981, each of the plaintiff and Territory Ford caused a further Chamber Summons to be filed. Territory Ford's Chamber Summons sought the following specific orders: "1. Appointing a time within which the Affidavit of documents sworn on behalf of Territory Ford Pty. Ltd. herein is to be filed and served. 2. Appointing a time within which the said Territory Ford Pty. Ltd. to make discovery of the documents referred to in its Affidavit of Documents. 3. That the aforesaid Orders be made conditional upon the Plaintiff having paid the solicitors for the said Territory Ford Pty. Ltd. the costs incurred by the said Territory Ford Pty. Ltd. herein in relation to the Application to the Court herein on the 2lst day of April, 1981 and of compliance of the Order made upon such Application as taxed by this Court together with the costs of this Application fixed at $80.00". The Plaintiff's Chamber Summons sought orders: These Chamber Summonses came before the Chief Justice on 2 July, "l. That Territory Ford Pty. Ltd. serve the Plaintiff with an Affidavit of Discovery of Documents within 48 hours. 2. That Territory Ford Pty. Ltd. pay the Plaintiff's costs of this application". 1981. On this occasion, the main submission made, on behalf of Territory Ford, was that the plaintif£& should pay to Territory Ford its costs, on a solicitor and client basis, involved in giving discovery, such payment to be made before Territory Ford was required to file or serve its affidavit of documents. A solicitor and client bill of costs had already been drawn up by Territory Ford's solicitors claiming $378.50 in respect of legal fees. Those legal fees did not include fees in respect of the summonses which were currently before the Chief Justice. The plaintiff, so it was said, should also be ordered to pay Territory Ford's costs of those summonses. One item in the draft bill of costs seems to indicate that the documents whose existence would ultimately be discovered totalled some thirty three pages. No doubt, if the stage of actual production of documents for inspection is ever to be reached, further substantial costs will be incurred. And all this in a comparatively small action for damages for breach of implied warranty on the sale of a Ford Cortina motor car! At no time was it suggested to the Chief Justice on behalf of Territory Ford that he lacked power to make an order for discovery of documents against it. Indeed, as has been seen, the first and second prayers in Territory Ford's own summons plainly assumed the existence of such a power. After hearing argument as to costs on 2 July, the Chief Justice made the following orders on the plaintiff's Chamber Summons: Bay "1. That Territory Ford Pty. Ltd. deliver its Affidavit of Discovery within 48 hours. 2. That the costs of complying with the Order for Discovery be paid by the plaintiff to Territory Ford Pty. Ltd., these costs ultimately to be costs in the cause. 3. That there be a stay of execution of this Order until the 30th day of July 1981. 4. That the costs of this application and order be the plaintiff's costs in any event". His Honour made no order on Territory Ford's summons. On 21 July, 1981, Territory Ford filed, in this Court, a Notice of Appeal from all the orders made by the Chief Justice on 2 July. It is an understatement to say that the Notice of Appeal raises every reasonably arguable ground of appeal. As we followed the argument on the hearing, the appellant's submissions which call for the determination of this Court may be summarized as follows: 1. That while the Rules of the Supreme Court of the Northern Territory authorize an order for the making of an affidavit of documents within possession, custody or power, they do not authorize the making of an order for the delivery of the affidavit of documents when it has been made. " That the provision of the Rules of the Supreme Court of the Northern Territory authorizing an order for discovery and production of documents against a person who is not a party to the litigation are beyond the power to make rules of Court vested in the Judges of the Supreme Court of the Northern Territory by s.86(1) of the Supreme Court Act of the Northern Territory. That the Chief Justice should have ordered: (i) that the plaintiff pay Territory Ford's costs of complying with the order for discovery as between solicitor and client 'and that the order for discovery be conditional upon the payment of such costs; (ii) that the plaintiff pay Territory Ford's costs of the application for an order to disclose and produce documents made on 30 April, 1981; (iii) that the plaintiff pay Territory Ford's costs of the two summonses before him on 2 July, 1981. Before considering these various submissions, it is convenient to set out the relevant provisions of the Rules of the Supreme Court of the Northern Territory. These are to be found in Order 34 Rule 35 and Order 34 Rule 36. Order 34, in its present form, was introduced into the Rules of the Supreme Court of the Northern Territory pursuant to amendments to the Rules of the Court made by the Judges of the Supreme Court of the Northern Territory and notified in the Northern Territory Government Gazette on 5 December, 1980. The provisions of Rules 35 and 36 are based, respectively, upon the provisions of Rules 32 and 33 of Order 31 of the Rules of the Supreme Court of South Australia. Order 34 Rule 35(1) provides: "On the application of a party to a proceeding, the Court shall have power to order a person who is not a party to the proceeding and who appears to be likely to have or to have had in his possession, custody or power any documents which are relevant to an issue arising in the proceeding (a) to disclose whether those documents are in his possession, custody or power; and (b) to produce to the applicant such of those documents as are in his possession, custody or power". 7. Order 34 Rule 36 provides, inter alia: Ai tet Un emertteen nemal sao -10- Po (2) An application after the commencement of a proceeding for an order under rule 35{1) for the disclosure of documents by a person who is not a party to the proceeding shall be made by summons, which must be served on that person personally and on every party to the proceeding other than the applicant. (3) A summons under sub-rule (1) or (2) shall be supported by an affidavit which must - (a) in the case of a summons under sub-rule (1), state the grounds on which it is alleged that the applicant and the person against whom the order is sought are likely to be parties to a subsequent proceeding; and (b) specify or describe the documents in respect of which the order is sought and show, if practicable, by reference to any pleading served or intended to be served in the proceeding, that the documents are relevant to an issue arising or likely to arise in the proceeding and that the person against whom the order is sought is likely to have or have had them in his possession, custody or power. (4) A copy of the supporting affidavit shall be served with the summons on every person on whom the summons is required to be served. (5) An order under rule 34 or 35(1) for the disclosure of documents may be made conditional on the applicant's giving security for the costs of the person against whom it is made or on such other terms, if any, as the Court or a Judge thinks just, and shall require the person against whom the order is made to make an affidavit stating whether any documents specified or described in the order are, or at any time have been, in his possession, custody or power and, if not then in his possession, custody or power, when he parted with them and what has become of them. (6) No person shall be compelled by virtue of an order under rule 34 or 35(1) to produce any documents which he could not be compelled to produce ~ (a) in the case of a summons under sub-rule (1), if the subsequent proceeding had already begun; or -llj]- (b) in the case of a summons under sub-rule (2), if he had been served with a writ of subpoena duces tecum to produce the documents at the trial". In the context of the above provisions of the Rules of Court, we turn to the consideration. of the various submissions made on behalf of Territory Ford. We shall deal with them in the order in which we have mentioned them above. That the Rules of Court do not authorize an order for delivery Of the Affidavit of Documents It is plain from the material before us that Territory Ford has, in its possession, custody or power, documents which are relevant to an issue or issues arising in the proceedings between the plaintiff and the defendant. In these circumstances, Order 34 Rule 35(1) empowered the Supreme Court to order Territory Ford to disclose such documents and to produce them to the plaintiff. Order 34 Rule 36(5) provided that such an order for disclosure should require Territory Ford to make an affidavit stating whether any documents specified or described in the order are, or at any time have been, in its possession, custody or power and, if not then in its possession, custody or power, when it parted with them and what has become of them. . It is true that the Rules of Court do not, in express terms, refer to the making of an order directing the delivery of the affidavit of documents for which they make -12- provision.' The affidavit of documents for which the Rules make express provision is, however, to be ordered as part of an order to "disclose" documents. Such an order to "disclose" documents is a preliminary order to an order for the production of documents to the applicant party (see Order 34 Rule 35(1)(b) supra). It is implicit in the Rules that the affidavit of documents which may be ordered should be delivered to the party to the proceedings on whose application the order for disclosure of documents is being made. Plainly, the power to order disclosure which is expressly conferred upon the Court by Order 34 Rule 35(1) includes the power to order that any affidavit of documents ordered in pursuance of Order 34 Rule 36(5) be produced or delivered to the party to the proceedings who has applied for the order. It follows that there is no substance in this submission advanced on behalf of Territory Ford. That the relevant provisions of the Rules of Court are ultra vires Section 86(1) of the Supreme Court Act (N.T.) confers upon the Judges of the Supreme Court power to make Rules of Court not inconsistent with the Act for, inter alia, regulating and prescribing - "(i) the practice and procedure, including the method of pleading, to be followed in the Court and in the offices of the Court; and -13- » (ii) all matters and things incidental to or relating to any such practice and procedure or necessary or convenient to be prescribed for the conduct of any business of the Court; and i ee ester eeee One can find in the authorities strong statements to the effect that no independent action for discovery lies against a party who is "a mere witness" (see, for example, Plummer v. May [1750] 1 Ves. Sen. 426; 27 E.R. 1121; and the authorities cited by Graham J., at first instance, in Norwich Pharmacal Co. v. Customs and Excise Commissioners [1972] Ch. 566 at pp. 582-584; and in Bray , Principles and Practice of Discovery [1885] pp. 41-42). Indeed, it has been suggested that a construction of a particular rule of court to the effect that it conferred a power to require discovery from mere witnesses might have the consequence that the rule was, to that extent, beyond the particular rule making power (see, for example, Central News Limited v. Eastern Telegraph co. [1884] L L.T.R. (N.S.) 235 at p. 236; Elder v. Carter (1890) 25 Q.B.D. 194). In Norwich Pharmacal Co. v. Customs and Excise Commissioners in the House of Lords ([1974] A.C. 133 at p. 174), Lord Reid commented that there had been a great deal of misunderstanding about the "mere witness" rule and explained the rule as being to the effect that information cannot be obtained by discovery from a person who will in due course be compellable to give that information either by oral testimony -14- as a witness or on a subpoena duces tecum. The foundation of the rule, his Lordship said, was the assumption that eventually the testimony will be available: "Its purpose is not to prevent but to postpone the recovery of the information sought". So understood, the "mere witness" rule seems more attuned to days when surprise and ambush were seen as unavoidable incidents of litigation than to modern concepts of practice and procedure aimed at ensuring that there be adequate preliminary access to information and that relevant material be before the Court. Be this as it may, we are unable to discern any proper basis for according, to the "mere witness" rule, the sanctity or importance necessary to create an implied area of immunity from the power of the Judges of the Supreme Court of the Northern Territory to make Rules of Court, pursuant to s.86(1) of the Supreme Court Act, for regulating and prescribing the practice and procedure to be followed in that Court. It is, of course, desirable that any interference with the rights and convenience of strangers resulting from court procedures be limited to what is necessary or desirable in the pursuit of justice in the courts. The rights and convenience of the citizen must however be subjected to what is necessary for the due and proper administration of justice. As a matter of course, strangers to litigation are required to produce documents to, or to attend to give evidence before, the courts. It is common procedure of some ~L5- courts, including the Federal Court of Australia and the Supreme Court of New South Wales, to enable preliminary access to be obtained to documents whose production has been subpoenaed by making the subpoena returnable on a day before the actual hearing commences (see, for example, Trade Practices Commission v. T.N.T. Management Pty. Ltd. Federal Court of Australia (Bowen C.J.) 18/9/1981). A procedure to obtain discovery of documents against strangers to litigation may well, in some circumstances, be conducive both to a party's having an adequate opportunity to prepare his case and to the efficient administration of Justice. Rules of Court establishing such a procedure relate to matters of practice and procedure and, in our view, come within the power conferred, by s.86(1)(i) of the Supreme Court Act, upon the Judges of the Supreme Court of the Northern Territory to make Rules of Court for regulating and prescribing the practice and procedure to be followed in the Court and in the offices of the Court. If we be mistaken in that regard, such provisions plainly come within the rule~making powers conferred upon the Judges of the Supreme Court by s.86(1)(ii) in that they @eal with matters and things which are incidental to or relating to such practice and procedure or which are necessary or convenient to be prescribed for the conduct of the business of the Court. It follows that the challenged provisions of the Rules are within the rule-making powers conferred upon the Judges of the Supreme Court of the. Northern Territory by s.86(1). he -16- a The conclusion that there is no basis for holding that the relevant provisions of the Rules are invalid by reason of conflict with the "mere witness" rule does not mean that the fact that a party against whom an order for production and disclosure of documents is sought is a "mere witness" will not be a relevant factor to the decision whether such an order should be made. The Rules do not confer upon a party to litigation an automatic right to obtain an order for disclosure and production of documents against a stranger to the litigation. What the Rules confer is a discretionary power upon the Court to make such an order on the application of a party. There may wéll be cases in which the Court would conclude that a "mere witness" should not be subjected to the burden of orders for disclosure and inspection but that, in the circumstances of the case, the party should be left to obtain relevant documents by the ordinary process of subpoena duces tecum. In the present case, however, Territory Ford was not a "mere witness". It was, on the plaintiff's case, the motor dealer which sold the relevant motor vehicle to the plaintiff. It plainly had in its possession, custody or control, documents relevant to the issues involved in the proceedings. It could not properly be suggested that the circumstances were not such as to warrant the making of an order for disclosure and production against Territory Ford. Costs ~ Territory Ford's various submissions as to costs can be shortly dealt with. In circumstances where Territory Ford is alleged to have been the motor dealer which sold the motor vehicle in question to the plaintiff, we can see considerable merit in the Chief Justice's original approach that costs of and incidental to the order for discovery and of compliance therewith should be reserved for the consideration of the judge at the trial. The making of an order for costs to that effect was plainly within the limits of the discretion possessed by the Chief Justice. As has been mentioned, his Honour was subsequently persuaded to order that the plaintiff pay Territory Ford's costs of complying with the order for discovery. The costs of the application (i.e. "costs of and incidental to the order") remain reserved for the trial judge. There is little to be found in the conduct of Territory Ford from the time that the original order for disclosure and production of documents was made which was calculated to excite the enthusiasm of the Supreme Court. One would have thought that Territory Ford's simple course would have been to produce the documents and thereby comply with the order for disclosure and production. Instead, it took the point that the order did not specify a particular time within which disclosure must take place. The first two -18- prayers in *he Summons which it took out actually sought that the Court appoint times within which it must disclose and produce the documents within its possession. The real point of its application to the Court was, however, to be found in the third order which it sought namely, an order that the orders for disclosure and production of documents be made conditional upon the plaintiff having paid to Territory Ford's solicitors its costs as taxed upon a solicitor and client basis. In our view, the Chief Justice was fully entitled to decline to order costs on a solicitor and client basis in favour of Territory Ford. He was also, in the circumstances, fully entitled to decline to make any order for costs in relation to the plaintiff's summons and Territory Ford's summons which had both been made necessary by Territory Ford's taking the point that the original order fixed no time for disclosure. It was, in our view, also within his Honour's discretion to decline either to make an order that the plaintiff give security for Territory Ford's costs or to make the orders for disclosure and production of documents conditional upon payment by the plaintiff to Territory Ford of its costs of such disclosure and production. There is no ground for interfering with the exercise of his Honour's discretion as regards any of these matters. -19- There remains for consideration Territory Ford's attack on the Chief Justice's order (on the plaintiff's second Chamber Summons) that the costs of the application and order be the plaintiff's costs in any event. As we understand the effect of that order, it is that, in the event that the plaintiff succeeds in obtaining a general order for costs against the defendant, its costs will include its costs of that application and order. It is difficult to see how, in all the circumstances, the defendant could raise any objection to the substance of that order since one would expect that that would be the position even if the order had not been made. Be that as it may, there is plainly no reason why the Court should interfere with that Order at the request of Territory Ford. Conclusion In the result, Territory Ford has failed at every point in its appeal. The appeal should be dismissed with costs. this and the (s preceding tify that ea e copy of the reasons for pages are a tru f the Court judgment herein oO Dated 30..1.0-81