In brief – A recent case provides guidance on exceptions to the new disclosure regime under Practice Note 11
The recent case of Suncorp Metway v Rider Levett Bucknall  NSWSC 975 and Suncorp Metway v Rider Levett Bucknall (No.2)  NSWSC 999 gives an indication of the possible exceptions to the requirement under Practice Note 11 that parties serve their evidence prior to orders being made for disclosure.
Supreme Court Practice Note 11
Practice Note No. SC Eq 11 (PN11) commenced in the Supreme Court (Equity Division) on 26 March 2012. Essentially, PN11 requires parties to serve their evidence before the court will make any orders for disclosure. (For more information please see our earlier article New "disclosure" practice in the Supreme Court of NSW.)
The recent Suncorp Metway decision suggests that:
- Internal reliance evidence may be the kind of thing that will be an exception to PN11
- Cost minimisation is one of the key guiding principles that judges consider in determining whether to grant disclosure prior to evidence
- Wide categories may be allowed as the question of restricting categories may place a higher cost burden on the respondent which goes against PN11
- The court will generally not require verification of disclosure prior to evidence
Property developer becomes insolvent and bank sues quantity surveyor
The plaintiff, Suncorp-Metway Limited, lent a large sum of money to a property developer known as FTFS Holdings Pty Limited to enable it to carry out a development at Five Dock, in Sydney. FTFS was unable to complete the development and became insolvent.
Suncorp claims that it was induced to lend the money to FTFS by a report prepared by quantity surveyors Rider Levett Bucknall (RLB). Suncorp commenced proceedings against RLB on the basis that it was negligent in preparing its report.
Quantity surveyor seeks orders for disclosure even though evidence not yet served
RLB sought orders for disclosure despite the fact that evidence had not yet been served. McDougall J granted the orders insofar as they related to documents that were necessary for RLB to put on all of its evidence.
At a directions hearing a number of questions were argued, including an application by RLB for the production of documents. Hammerschlag J observed that the question of whether Suncorp had relied on RLB's report was "internal" to Suncorp and that production of its internal documents going to the question of reliance "...are in due course properly discoverable and the parties are to engage in discussions about identifying appropriate classes of documents for discovery."
RLB's solicitors proposed 30 categories for disclosure. Suncorp informally produced what it said were non privileged documents in relation to categories 3 - 30. In relation to categories 1 and 2 which related to matters internal to the bank, Suncorp produced only a limited class of documents.
Documents must be precisely identified for disclosure prior to evidence
RLB sought an order under paragraph 4 of PN11 that discovery be verified, that there be further or particular discovery, and that there be an affidavit setting out particulars of the various claims for privilege.
In relation to categories 3 - 30 McDougall J specifically stated that he did not consider the terms used by RLB such as "all documents... evidencing, recording, referring to" appropriate in an application under PN11. His Honour held that if there was to be disclosure of documents prior to evidence, as may occur in exceptional circumstances, the documents or classes of documents must be precisely identified.
Furthermore, McDougall J observed that RLB, in making its further application, did not address why the volume of documents that it had obtained from Suncorp and other parties were not sufficient to enable it to commence the process of putting on its evidence. Therefore McDougall J dismissed the order insofar as it related to categories 3 - 30.
In relation to the first two categories, McDougall J acknowledged that RLB required those documents to put on all of its evidence because they related to matters internal to the bank. However, His Honour found that the categories were "extremely wide" and again used terminology such as "evidencing, recording, referring to" and "including but not limited to".
Burden of reviewing documents for relevance put on party requesting disclosure
McDougall J observed that PN11 seeks to minimise the costs associated with discovery. As such, His Honour had to consider whether it would be more cost efficient to restrict the first two categories.
His Honour determined that the application of restrictive criterion would be likely to increase costs because, once documents falling within the classes had been located, it would be necessary for someone from Suncorp to review the documents to determine whether they fit within the restricted criteria.
Therefore McDougall J found that it would be more cost efficient to avoid any restrictions and to put on RLB, the party seeking disclosure, the burden of reviewing the documents for relevance.
No reason to compel bank to provide verified list of documents
In relation to the order for a verified list of documents, McDougall J observed that there will be cases where it is important for a party to have a verified list of documents and that this may even be such a case.
However, His Honour stated that in the current instance he was merely trying to put RLB in a position where, with access to certain of the bank's documents, it could serve its evidence. Thus he held that there was no reason to impose on Suncorp the further burden of providing a verified list of documents.
In relation to the affidavit regarding privilege, His Honour held that it was not necessary for RLB to have the claims for privilege properly verified before it could mount its evidentiary case and therefore refused to make that order.
What this decision means for future litigants
The decision of McDougall J indicates that a party seeking disclosure under paragraph 4 must precisely identify the documents or classes of documents which they seek and must address why the documents are necessary to enable it to commence the process of putting on its evidence.