Seeking disclosure before all evidence is served in New South Wales: What constitutes ‘exceptional circumstances’?
May 2014 |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-Owen1 and, 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 satisfies 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 confirmed 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 filed 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 satisfied. 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.
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1 [2014] NSWSC 220.
2 Under rule 21.2 of the Uniform Civil Procedure Rules 2005, an order for discovery is discretionary.
3 As noted by McDougall J in Leighton International v Hodges [2012] NSWSC 458, nothing in the Practice Note or Rules prevents parties to proceedings from agreeing and implementing, by consent and without order of the court, a regime for disclosure.
4 Except proceedings in the Commercial Arbitration List.
5 Owners Strata Plan SP 69597 v Baseline Constructions Pty Ltd [2012] NSWSC 502.
