10 May 2012

A lesson from the Bench: More detail on disclosure in the Equity Division

by Sid Wang, Julia Virgo

Serving evidence before discovery may lead to a shift in focus of testimonial evidence.

We now know more about how the Supreme Court's new Practice Note SC Eq 11 will operate, following a forum with Chief Justice Bathurst, Chief Justice Bergin in Eq, and Justices Brereton and Hammerschlag at the Court on 30 April.

As we've previously discussed, SC Eq 11 all but ends the parties' expectation that they will move to discovery as a matter of course.

The test for an order for disclosure

An order for disclosure under SC Eq 11 will be made if it is "necessary for the resolution of the real issues in dispute in the proceedings". The Uniform Civil Procedure Rules 2005 (UCPR) predicate the test for discovery as including those documents that are "relevant" to the real issues in dispute.

Interestingly, Justice Brereton stated that SC Eq 11 has not provided a new test for discovery. However, the use of the word 'necessary' would seem to suggest that this may have set a higher test for an order for "disclosure" than that of the existing test under the UCPR for discovery where that is determined by (arguably) the lower threshold test of "relevance".

Any application for disclosure that is filed before evidence is served will be referred to the Chief Judge in Equity or the Duty Judge to be determined. Where parties apply for disclosure, an application will need to be made by motion and supported by an affidavit that includes:

  • the reason why disclosure is necessary for the resolution of the real issues in dispute in the proceedings;
  • the classes of documents in respect of which disclosure is sought; and
  • the likely cost of such disclosure.

What is "disclosure", and when can a subpoena be issued?

The Equity Division judges confirmed that their use of the term "disclosure" includes discovery as well as interrogatories and the subpoena / notice to produce process.

Subpoenas and the Notice to Produce process (NoP) will be caught by SC Eq 11 if the issuing by a party of either would circumvent the operation of the practice note. That means a subpoena to obtain documents prior to service of evidence may be held to be an abuse and liable to be set aside.

That said, it is now clear that subpoenas properly issued for a forensic purpose in aid of interlocutory applications are permissible. Specifically in relation to the NoP process, it is likely that a NoP to seek a document or thing referred to in the pleadings is permissible, and the judges encouraged the parties to do this by consent. In addition, an NoP to seek a document or thing referred to in an affidavit or witness statement is not outside the ambit of SC Eq 11 as this would presumably only occur after the evidence was served in any event.

What are the judges saying in court?

The judges referred to Justice McDougall's decision in New Price Retail Services Pty Limited v David Hanna, in which he said that parties should tender their evidence in chief "uninstructed" by knowledge of the other side's documents, and moreover should not attempt to tailor their evidence to meet those documents. He went on to say that the same objective and considerations that apply to discovery also apply to the obtaining of documents by subpoena. In his view, a subpoena to obtain documents before evidence has been served should not be permitted under the terms of SC Eq 11.

Chief Justice Bergin in Eq has also commented on the impact and operation of SC Eq 11 in a recent judgment (Armstrong Strategic Management and Marketing Pty Limited v Expense Reduction Analysts Group Pty Ltd [2012] NSWSC 393). The intention is that the early service of evidence would result in the need for disclosure being defined not just by the pleadings but also the evidence, and far more focused attention given to the actual need for disclosure by reference to the real issues revealed by the pleadings and evidence in chief.

She commented that an exercise of this type would "require the proofing of witnesses at a very early stage of the litigation with the need for forensic judgments to be made as to the existence of admissible evidence in support of the respective claims. This will of course require the client and /or witnesses to provide the relevant documents to the lawyers in support of the particular claims in their evidence."

She envisaged the process under SC Eq 11 to be:

"Under the new regime, the plaintiffs would serve their evidence, including documents upon which they rely, in relation to their cases in chief. The defendants would then serve their evidence, including documents upon which they rely, in their respective cases. If at that time it appears necessary for disclosure of particular documents additional to those that had been relied upon by any of the parties, a consensual regime might be put in place or an application for disclosure of particular documents, or categories of documents, might be made. "

What do the judges think will be the effect of SC Eq 11?

At the forum, the judges commented that serving evidence before discovery may lead to a shift in focus of testimonial evidence to that of the case put forward through the pleadings rather than a focus of preparation of testimonial evidence at a later time that might be tailored to match the documents that had been produced through discovery.

Chief Justice Bergin also said that if a party is able to know what the other parties are saying through an examination of their evidence early on, there may not be a need for discovery.

They concluded that SC Eq 11 was intended to be flexible and will be developed further through case law. The Chief Justice encouraged practitioners to provide the court with feedback on its operation.

In the meantime, SC Eq 11 may benefit from the inclusion of a definition of "disclosure" and some further clarity as to the operation of the test for an order for disclosure.


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