FEDERAL COURT OF AUSTRALIA O'Neil v National Australia Bank Ltd ACN 004 044 937 [2000] FCA 220 KNOX ROSS O'NEIL and MARGOT JEAN O'NEIL v NATIONAL AUSTRALIA BANK LIMITED ACN 004 044 937 N 7002 of 2000 1 March 2000 Katz J Sydney IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7002 of 2000 BETWEEN: KNOX ROSS O'NEIL AND MARGOT JEAN O'NEIL APPLICANTS AND: NATIONAL AUSTRALIA BANK LIMITED ACN 004 044 937 RESPONDENT JUDGE: KATZ J DATE OF ORDER: 1 MARCH 2000 WHERE MADE: SYDNEY MINUTES OF ORDER THE COURT ORDERS THAT: 1. The respondent shall not be required to give discovery of documents referred to in the following paragraphs of the notice of discovery served on it on 15 February 2000: (i) 10 (ii) 11 (iii) that part of paragraph 14 requiring discovery of documents recording the negotiations preceding the making of agreements as to the commission to be paid by the respondent to certain real estate agents. 2. the respondent give discovery as to the balance of the paragraphs of the notice of discovery by 15 March 2000. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7002 of 2000 BETWEEN: KNOX ROSS O'NEIL AND MARGOT JEAN O'NEIL APPLICANTS AND: NATIONAL AUSTRALIA BANK LIMITED ACN 004 044 937 RESPONDENT JUDGE: KATZ J DATE: 1 MARCH 2000 PLACE: SYDNEY EX TEMPORE REASONS FOR JUDGMENT 1 I have before me a dispute about discovery of documents, which dispute has arisen in the course of a proceeding in which an attempt is being made to set aside a bankruptcy notice. 2 On two different dates during December 1999, National Australia Bank Limited ("the creditor") served a bankruptcy notice on Mr Knox Ross O'Neil and Ms Margaret Jean O'Neil ("the debtors") respectively. 3 Then, on 4 January 2000, the debtors applied to set aside that bankruptcy notice. The ground of the application was that the debtors had such a cross demand against the creditor as is referred to in par 40(1)(g) of the Bankruptcy Act 1966 (Cth). As is required by the Federal Court Rules ("the Rules"), the debtors each filed simultaneously with the application an affidavit in support. 4 Then, on 15 February 2000, the debtors served on the creditor a notice of discovery under O 15, r 1 of the Rules. The notice of discovery identified certain subject matters in fifteen numbered paragraphs as to which discovery was required. 5 It is accepted by the creditor that it was open to the debtors to serve a notice of discovery on them under O 15, r 1 of the Rules, because of the provisions of O 77, r 4(2) of the Rules, which generally make other Orders of the Rules than O 77 applicable in bankruptcy proceedings. 6 However, O 15, r 3 of the Rules confers on the Court a power to order that a party that has been served with a notice of discovery shall not be required to give discovery and further confers on the Court a power to order that such discovery be limited to such documents or classes of documents or to such of the matters in question in the proceeding as may be specified in the order. 7 The creditor has sought the exercise of the Court's power under O 15, r 3 of the Rules, not, I should say immediately, by seeking to avoid in its entirety the giving of discovery, but rather by cutting down those subject matters as to which it should be required to give discovery in accordance with the debtors' notice. 8 The dispute is limited presently to a few paragraphs only of the original notice of discovery which was served on the creditor by the debtors. 9 However, before I deal with those paragraphs as to which there remains a dispute, I should say that I have before me a copy of the debtors' original notice of discovery which was marked on behalf of the debtors and given to the creditor on an earlier occasion when this matter was before me. By those markings, the debtors, in effect, abandoned their attempt to obtain discovery in respect of the subject matters set out in pars 1, 6, 7, 8, 12 and 13 of their original notice of discovery. They continued to press, however, for discovery in respect of the subject matters set out in pars 2, 3, 4, 5, 9, 10, 11, 14 and 15. 10 Then, during the course of the argument before me today, the debtors agreed that the subject matters set out in pars 5 and 11 of their notice of discovery should be read as confined in certain ways which I should now record. 11 First, as to par 5, it was not, before today, limited as to time, but now the debtors are content to have it read as if the documents being referred to in it are ones bearing dates only between 12 November 1998 and 1 April 1999. 12 Secondly, as to par 11, its subject matter is now restricted to documents recording other sales by the creditor to the purchasers of the debtors' former property, those other sales having occurred between April 1994 and April 1999. 13 As to the paragraphs of the notice of discovery which were pressed by the debtors before me today, the creditor has taken the view that it is content to give discovery of documents whose subject matters are set out in pars 2, 3, 4, 5 (in its amended form), 9 and 15. Thus, the remaining areas of dispute consist only of documents whose subject matters are set out in pars 10, 11 (in its amended form) and 14. 14 As to those documents whose subject matters are set out in pars 10 and 11, as I understood the creditor's objection to discovering them, it was based on the fact that the notice of discovery served on the creditor was served under cover of a letter from the debtors' solicitors, which letter identified the occasion for the debtors seeking discovery. To put it briefly, it was said that the debtors required the documents referred to in the notice for the purpose of providing them to experts, which experts would then go on affidavit about the significance of those documents. Those affidavits were intended to be used for the purpose of the application to set aside the bankruptcy notice. It was said by the creditor, however, that documents whose subject matters are set out in pars 10 and 11 are, of their nature, not capable of being the subject of relevant evidence by experts. 15 As to those documents whose subject matters are set out in par 14, the paragraph sought documents recording agreements as to the commission to be paid by the creditor to certain real estate agents if they should effect the sale of the debtors' former property. As to that aspect of the paragraph, the creditor had no difficulty in providing discovery. However, par 14 also sought documents recording the negotiations which had preceded the striking of those agreements as to the commission and, as to that aspect of the paragraph, the creditor's objection effectively was on the basis of a lack of relevance. 16 Having regard: first, to the nature of the application which is being made by the debtors in the present proceeding and, in particular, to the fact that such an application, albeit that it requires the debtors to establish a prima facie case on their cross demand, does not require them to do so by evidence which would otherwise have been admissible in the proceedings in the court in which they might make such cross demand; and, secondly, to the fact that O 77, r 13(3)(b) of the Rules required the debtors, at the time of the making of their application, to state the full details of their cross demand; it is, in my view, unnecessary to require the creditor to give discovery of documents whose subject matters are referred to in pars 10, 11 and in that part of par 14 as to which dispute exists. 17 I do not for a moment suggest that discovery of those documents would be unnecessary in the context of the Supreme Court proceedings which the debtors presently have on foot in which they make the claim the subject of the cross demand on which they rely in the present proceeding; that issue has nothing to do with me and, for that reason, I say nothing about it. 18 However, at least having in mind the nature of the application which I am ultimately to hear, I consider it unnecessary to require the creditor to give discovery of documents relating to the disputed subject matters and, since O 15, r 3(2) of the Rules provides that the Court shall make such orders under sub-rule (1) as are necessary to prevent unnecessary discovery, I will therefore make orders excusing the creditor from the obligation to give discovery of documents whose subject matters are referred to in pars 10, 11 and in that part of par 14 as to which dispute exists. There will be no order as to the costs of the discovery dispute. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katz. Associate: Dated: 1 March 2000 Counsel for the Applicant: Ms S Kaur-Bains Solicitor for the Applicant: Jackson Smith Solicitors Counsel for the Respondent: Mr L Einstein Solicitor for the Respondent: Dibbs Crowther & Osborne Solicitors Date of Hearing: 1 March 2000 Date of Judgment: 1 March 2000