New South Wales Supreme Court CITATION : Bevillesta Pty Limited v Perpetual Nominees Ltd & Ors [2010] NSWSC 1198 HEARING DATE(S) : 2 September 2010 JURISDICTION : Equity Division JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 2 September 2010 DECISION : Motion dismissed with costs CATCHWORDS : PROCEDURE – Supreme Court Procedure – New South Wales – Procedure under Uniform Civil Procedure Rules and other rules of court – Evidence – Other matters – Subpoenas for production – to third parties – seeking documents which defendant obliged to discover – whether documents sought are relevant – whether subpoenas are abuse of process on grounds that being used to obtain discovery, or otherwise. CATEGORY : Procedural and other rulings Azzi & Ors v Volvo [2006] NSWSC 283 CASES CITED : Bevillesta Pty Limited v Perpetual Nominees Limited (Unreported, Ball J, 26 July 2010) Bevillesta Pty Limited v Perpetual Nominees Ltd & Ors [2010] NSWSC 839 Hamod v State of New South Wales (No 8) [2008] NSWSC 125 Bevillesta Pty Limited ACN 008 428 162 (plaintiff) Perpetual Nominees Limited ACN 000 733 700 (first defendant) PARTIES : Perpetual Trustee Company Limited (second defendant) Challenger Managed Investments Limited (third defendant) AMAL Asset Management Limited (fourth defendant) Colonial First State Investments Limited (fifth defendant) FILE NUMBER(S) : SC 10/243106 COUNSEL : Ms N Bearup (plaintiff) Mr M Cohen (defendants) SOLICITORS : Middletons (plaintiff) Norton Rose (defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Thursday, 2 September 2010 2010/243106 Bevillesta Pty Limited v Perpetual Nominees Limited JUDGMENT (ex tempore) 1 HIS HONOUR: This is an application made by notice of motion filed on 24 July 2010 to set aside two subpoenas issued at the request of the plaintiff and addressed to third parties to the proceedings who have or may have prepared valuations of the property, the value of which is at the heart of the substantive proceedings. The core issue if whether by reason of exceeding the requisite loan-valuation ratio ("LVR"), the plaintiff has become liable to reduce its borrowings from certain of the defendants, the defendants having asserted and certified that the value of the security property is a certain amount and the loan amount admittedly exceeding the LVR on that account. 2 Initially, it seemed that evidence as to valuation of the subject property might well be irrelevant, because it appeared that a provision of the relevant mortgage, clause 12.5, had the effect that the defendants' certificate was conclusive. On this basis, at an earlier stage of the proceedings Ball J set aside a notice to produce issued to one of the defendants requiring production of the valuation. [see Bevillesta Pty Limited v Perpetual Nominees Limited (Unreported, Ball J, 26 July 2010)]. It is, however, noteworthy, that in that judgment his Honour addressed only the relevance of the valuation, production of which was then sought, to the determination of the claim for interlocutory (as distinct from final) relief. [see [9]]. Subsequently, however when the application for interlocutory relief was heard and determined by his Honour, [see Bevillesta Pty Limited v Perpetual Nominees Ltd & Ors [2010] NSWSC 839], after further argument, his Honour accepted that there was a serious question to be tried inter alia as to whether clause 12.5 of the relevant mortgage operated at all in circumstances where clause 23. 7 applied, such that the clause 12.5 certificate was not conclusive but, pursuant to clause 23.7 at best only prima facie evidence of value. 3 The plaintiff's points of claim in the proceedings assert, as what seems to be the central proposition in its case, that the subject property's value was not the amount certified, but a different (presumably higher) value. Material bearing on the value of the subject property is, I think, therefore prima facie plainly at least adjectivally relevant to an issue in the proceedings. 4 The material, production of which is sought by the two subpoenas in question, comprises all documents relating to the value of the subject property during the relevant period including letters of instruction, documents provided obtained or referred to in connection with the preparation of any valuation, valuations including drafts, and communications with the defendants or their legal advisors touching thereon. It seems reasonably clear that any of those documents could cast light on the valuation said to support the amount certified, and could provide a basis for impugning or undermining that valuation. At the very least, they seem calculated to lead to a relevant train of enquiry. 5 In fact, the basis upon which the present application was primarily pressed was not so much irrelevance, but that the subpoenas were said to be an abuse of process, because they sought discovery from third parties. This was linked with a submission that the appropriate way to obtain such documents, if at all, was by discovery inter partes. Reference was made to my observations in Azzi & Ors v Volvo [2006] NSWSC 283, at [10]-[11], and Harrison J's approval of them in Hamod v State of New South Wales (No 8) [2008] NSWSC 125, [8]. 6 However, the observations in Azzi to which reference was made were addressed to the practice of seeking, by way of notice to produce or subpoena, from a party who had been required to give discovery, documents which could have but had not been the subject of the discovery process, the point being that where it was sought to obtain from a party documents outside the scope of those classes of which discovery had been obtained, the proper course was to apply to add classes of documents to the discovery, rather than to issue a subpoena or notice to produce seeking documents beyond the scope of the discovery. The observations in that case did not, and were not intended to, refer to seeking documents from third parties. 7 It is plainly permissible to seek, from a third party by subpoena, documents which could also be obtained from a party to the proceedings on discovery. Sometimes, it will not be apparent or known whether such documents are, or remain, in possession of a party. On other occasions, additional copies of the documents in the possession of a third party may bear annotations or other indications which cast light on the issues in a way which would not emerge if only the party's copy was obtained. 8 There is no rule against seeking from a third party a document which has been sought on discovery from a party. The rule against seeking discovery by way of subpoena is concerned with the scope of the subpoena, and in particular whether the obligation which the subpoena casts on the recipient is one in the nature of the discovery, the touchstone of which is that it requires the recipient to undertake an examination of the issues in the proceedings and to form a judgment as to the relevance of documents in its possession to issues in the proceedings. These subpoenas do not do that at all. They identify fairly narrow categories of documents, related to one property, which – given the nature of the recipients' businesses – might be expected to be quite easily identified by the recipient, without any requirement and their part to consider the pleadings or form any judgment as to what is and what is not relevant to the issues in the case. While I completely accept that, as a party to the proceedings, the defendants have standing to make this application, nonetheless when it comes to an argument that in effect the subpoenas seek discovery, it is noteworthy that neither recipient complains that the subpoena imposes on it an unduly onerous or oppressive burden. 9 In my opinion, the documents sought by the subpoenas have sufficient potential relevance to the proceedings that a subpoena issued for their production is not an abuse of process on grounds of irrelevance; nor are the subpoenas an impermissible attempt to obtain discovery or otherwise an abuse of process. 10 The motion is dismissed with costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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