Introduction

Since its introduction on 26 March 2012, Practice Note SC  Eq 11 has required that parties seeking orders for discovery  before evidence in the Equity Division of the Supreme  Court of New South Wales must demonstrate ‘exceptional  circumstances necessitating disclosure’.  The Court has, on  several occasions, been asked to consider what constitutes  exceptional circumstances for the purpose of the Practice  Note.  The issue was most recently considered by Stevenson J in Schofields Property Development v Lindsay-Owen1and, that decision provides a timely opportunity to revisit the story so far.

The background to the Practice Note

In practice, parties will often mutually agree to provide  discovery prior to preparing their evidence - which was often  based on those documents discovered. However, where  an order for discovery2  is sought in proceedings in Equity  Division (whether by consent or otherwise),3 Practice Note SC Eq 11 will apply.The Practice Note now mandates that,  unless a party satisfi es the requisite threshold, an order for  disclosure will not be made until after all evidence is served.

Amongst other things, the Practice Note states that in  proceedings heard in the Equity Division:4

‘The Court will not make an order for disclosure  of documents (disclosure) until the parties to the  proceedings have served their evidence, unless  there are exceptional circumstances necessitating  disclosure.’

The Practice Note is wide reaching, with the Courts having  confi rmed that the use of the term ‘disclosure’ in the Practice  Note encompasses discovery, as well as interrogatories,  subpoenas and notices to produce, where the use of those  latter mechanisms would circumvent the operation of the  Practice Note.5

One of the main aims of the Practice Note is for parties  to narrow the issues in dispute through the service of  their evidence, thereby limiting the scope of discovery  and reducing what was becoming the burgeoning cost of  discovery in civil proceedings.

Previous decisions

Situations which have been suggested or have been found  to constitute ‘exceptional circumstances’ include:

  • Where a party is unable to serve its evidence without  certain documents and therefore its ability to properly prepare for trial is unfairly prejudiced (Danihel v  Manning [2012] NSWSC 556);
  • Where the information necessary to a party’s case is  solely within the knowledge of another (Naiman Clarke  Pty Ltd atf Naiman Clarke Trust v Marianna Tuccia  [2012] NSWSC 314);
  • When documents are necessary to enable an expert to  properly prepare a response to another expert’s report,  particularly where the hearing date and due date for  evidence is imminent (RSA (Moorvale Station) Pty Ltd  v VDM [2013] NSWSC 534); and
  • Where the information sought is solely or largely in  the possession of the party from whom disclosure  is sought (Leda Manorstead Pty Ltd v Chief  Commissioner of State Revenue [2012] NSWSC 913).

Situations which have been held not to satisfy the test  include:

  • Where the application for disclosure is premature and  where it is likely that some of the material sought will  be included in the evidence served by another party  (Leda Manorstead); and
  • Where the evidence does no more than show why  disclosure would be convenient, helpful or desirable,  but does not show why that must be done now, on the  basis that it is now reasonably necessary for disposing  fairly of the matter or in the interests of a fair trial  (Leighton International v Hodges [2012] NSWSC 458) .

In all instances, the Courts have emphasised that each  case must be examined in its own context.

Schofields Property Development  Pty Ltd v Lindsay-Owen

The applicants in Schofields fi led a Notice of Motion seeking  an order that the respondents, Schofields and Villawood,  disclose certain documents prior to all evidence being  served. The documents sought were relevant to whether  Villawood took appropriate steps as required under contract.  The applicants argued that the requested documents were  necessary to enable their expert to complete her report and  if disclosure was not provided, it may have been necessary  for the expert to provide a supplementary report if and/or  when the documents were subsequently disclosed.

Villawood was able to demonstrate that it had already disclosed all of the documents in its possession.  Accordingly,  the applicants’ claim for disclosure from Villawood fell away.  What remained for consideration was whether there were  exceptional circumstances necessitating disclosure from  Schofields.

In considering the threshold imposed by the Practice Note,  Stevenson J noted and adopted the following comments of  Gzell J in Leda Manorstead:

‘[T]o be exceptional the circumstance need not  be unique or unprecedented or very rare. What  is needed is an appraisal of all the circumstances  and the context in which the expression must be  satisfi ed. Are there circumstances necessitating  disclosure before evidence in the sense that the  party’s case cannot be put without the disclosure?  Are those circumstances exceptional?’

His Honour also referred to his earlier comments in RSA  (Moorvale Station) that the desirability of avoiding a revised  or supplementary expert report (which might involve the  production of concomitant responsive reports from that  expert’s opposite number) is a factor to be taken into  account when considering whether there are ‘exceptional  circumstances’ to justify disclosure prior to the service of  all evidence.

Ultimately the Court considered that, as the applicants’  expert was briefed to consider only the adequacy of  Villawood’s conduct (and was not asked to express an  opinion about the conduct of Schofields), the expert had  available to her all material that Villawood held in relation  to that topic. While the Court acknowledged that Schofields  may also possess some relevant documents, it considered  that it was unlikely that Schofields would hold any ‘critical  documents’ over and above those that Villawood had  already disclosed.

The Court believed that the expert’s complaints of evidentiary  shortcomings were directed more so to documents likely  in the possession of Villawood, rather than Schofields.Furthermore, since an order requiring Schofields to give  the disclosure would have resulted in the inconvenience  and expense of giving disclosure twice (both before and  after the delivery of evidence), the Court concluded the  applicants had not established ‘exceptional circumstances’  within the meaning of the Practice Note.

Comments

As explained above, each case must be determined in  its own context.  It obviously did not assist the applicants  in  Schofields that the primary target of their motion was  able to demonstrate (during the hearing of the motion)  that all of the relevant documents in its possession had  been disclosed. Nonetheless, the decision reinforces that  when considering whether ‘exceptional circumstances’  necessitating disclosure exist, Courts will carefully consider  whether the disclosure sought is necessary for the  preparation of a party’s evidence.

Having regard to the above decisions, parties seeking an  order for discovery before all evidence has been served  should ensure they do more than simply show that the  disclosure sought would be helpful. Rather, as a minimum,  they will need to establish by evidence (and not merely  speculate) why the material they have to date is inadequate  to enable them to put on their evidence, and that the  disclosure sought will reasonably allow that to occur.