FEDERAL COURT OF AUSTRALIA Novo Tank Pty Ltd (In Liquidation) v Formaction Concrete Civils Pty Ltd (No 2) [2014] FCA 842 Citation: Novo Tank Pty Ltd (In Liquidation) v Formaction Concrete Civils Pty Ltd (No 2) [2014] FCA 842 Parties: NOVO TANK PTY LTD (IN LIQUIDATION) ACN 050 210 823 and RICHARD ALBARRAN AND STEVEN ARTHUR GLADMAN IN THEIR CAPACITY AS LIQUIDATORS OF NOVO TANK PTY LTD (IN LIQUIDATION) ACN 050 210 823 v FORMACTION CONCRETE CIVILS PTY LTD ACN 121 583 266 and UNITED INDUSTRIES (WA) PTY LTD ACN 097 788 344 File number: NSD 1982 of 2013 Judge: PERRAM J Date of judgment: 11 August 2014 Legislation: Corporations Act 2001 (Cth) s 436A Federal Court Rules 2011 (Cth) r 20.14 Date of hearing: Heard on the papers Date of last submissions: 24 July 2014 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 8 Counsel for the Plaintiffs: Mr CD Freeman Solicitor for the Plaintiffs: Nelson McKinnon Lawyers Counsel for the Second Defendant: Mr M Goldblatt Solicitor for the Second Defendant: Allion Legal Counsel for the Fifth Defendant: The fifth defendant did not provide submissions IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1982 of 2013 BETWEEN: NOVO TANK PTY LTD (IN LIQUIDATION) ACN 050 210 823 First Plaintiff RICHARD ALBARRAN AND STEVEN ARTHUR GLADMAN IN THEIR CAPACITY AS LIQUIDATORS OF NOVO TANK PTY LTD (IN LIQUIDATION) ACN 050 210 823 Second Plaintiff AND: FORMACTION CONCRETE CIVILS PTY LTD ACN 121 583 266 Second Defendant UNITED INDUSTRIES (WA) PTY LTD ACN 097 788 344 Fifth Defendant JUDGE: PERRAM J DATE OF ORDER: 11 AUGUST 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Order 1 of the orders made on 9 July 2014 be amended to delete the words 'or in the affidavits'. 2. The costs of this application be costs in the cause. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1982 of 2013 BETWEEN: NOVO TANK PTY LTD (IN LIQUIDATION) ACN 050 210 823 First Plaintiff RICHARD ALBARRAN AND STEVEN ARTHUR GLADMAN IN THEIR CAPACITY AS LIQUIDATORS OF NOVO TANK PTY LTD (IN LIQUIDATION) ACN 050 210 823 Second Plaintiff AND: FORMACTION CONCRETE CIVILS PTY LTD ACN 121 583 266 Second Defendant UNITED INDUSTRIES (WA) PTY LTD ACN 097 788 344 Fifth Defendant JUDGE: PERRAM J DATE: 11 AUGUST 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The present question is whether I should remove the words 'or in the affidavits' from Order 1 made by me on 9 July 2014. Orders 1 to 4 made on that day were as follows: 1. On or before 3 September 2014, each of the applicants and the second and fifth respondents give discovery pursuant to rule 20.14 of the Federal Court Rules 2011 of documents which are directly relevant to the issues raised by the pleadings or in the affidavits. 2. The applicant file and serve a short written submission on the discovery issue within seven days. 3. The second respondent file and serve a short written [sic] in response within a further seven days, as well as the fifth respondent if it so wishes. 4. Each of the applicants and the second and fifth respondents shall give discovery in accordance with Order 1 by way of serving on the other parties one or more discs or USB drives containing electronic copies of documents discovered by that party (in native format where available and grouped in folders according to allegation in issue to which each document is relevant, or other convenient and readily accessible grouping), without the need for a formal list of documents or verifying affidavit. 2 It will be seen that Orders 2 and 3 facilitate the resolution of the present issue from which it may be inferred that the present debate existed at the time the orders were made. 3 In fact, the language of Order 1 reflects the wording of FCR 20.14(1)(a) which provides that where the Court orders 'standard' discovery then the party 'must give discovery of documents: (a) that are directly relevant to the issues raised by the pleadings or in the affidavits…'. In this case, the form of the order reflects the antecedent agreement of the parties that there should be standard discovery. 4 The proceeding was commenced by an originating process which was accompanied by an affidavit of Mr Steven Arthur Gladman of 24 September 2013. On 31 October 2013 Jacobson J ordered the matter to proceed by way of pleadings. Since then pleadings have been filed. Sub-rule (4) of FCR 20.14 provides: 20.14 Standard discovery … (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. 5 It is apparent, therefore, that the standard discovery rule in FCR 20.14(1)(a) contemplates the defining of the discovery issues by way of pleadings or, in a case where there are no pleadings, by affidavit. Once Jacobson J directed the matter to proceed by way of pleadings the reference to the affidavits in FCR 20.14(1)(a) was no longer apposite. Consequently, it should not have appeared in Order 1. I will order its deletion. The issues in this case will be defined by the pleadings. 6 At [8] and following of their submissions, the applicants developed an argument as to the expense which would be incurred by them if discovery were not now limited to the pleadings. In its submissions in response the second respondent joined issue (over nine single spaced pages of written submissions) with the notion that those same matters were not, in fact, discoverable under the pleadings. 7 There is currently no application before me about these issues and the applicants have not been heard in reply on them. In an effort to head off at the pass, as it were, further disputation about these spot fires I will indicate my preliminary view that: (a) there is an issue on the pleadings between the parties as to whether the second applicants were appointed 'in accordance with s 436A of the Corporations Act 2001'. This makes the basis and circumstances of their appointment a topic relevant to discovery; (b) the same is true of their position as liquidators; (c) solvency is a live issue on the pleadings throughout the relation back period (and hence discoverable); and (d) whether Formaction received payments from Novo Tank in good faith is live on the pleadings (and hence discoverable). 8 In complying with the discovery orders, the parties will observe that the test is direct relevance. For now, I will merely amend Order 1 to delete the words 'or in the affidavits.' Costs will be costs in the cause. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate: Dated: 11 August 2014