Nivani Ltd v Kimbe Nivani Properties Ltd [2021] PGSC 103; SC2185 (24 December 2021)

SC2185

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 53 OF 2019

NIVANI LIMITED
First Appellant

DAVID JOHN STEIN
Second Appellant

V

KIMBE NIVANI PROPERTIES LIMITED
Respondent

On The Papers: Gavara-Nanu J, Cannings J, Logan J
2021: 23^rd November, 24^th December

CIVIL APPEAL – Practice and Procedure – Discovery – whether obligation to give discovery limited by statutory document retention periods or availability under statute to shareholders of rights to obtain corporate governance and financial records – where obligation to give discovery delineated by the issues on the pleadings – where apparent from affidavit of documents and other evidence that defendants had misconceived the nature of that obligation – where primary judge had made order for particular discovery against defendants – Order 9, rule 2 and Order 9, rule 7, National Court Rules – whether any error of principle in order – principles relating to grant of leave to appeal in relation to exercise of a judicial discretion with respect to a matter of practice and procedure.

This is a derivative proceeding instituted by leave on the application of a shareholder by Kimbe Nivani Properties Limited (KNPL) against the second appellant, Mr. Stein, in which it is alleged that he breached his fiduciary duty to KNPL because, in 2001, while he was a director of KNPL, he set up his own rival company under the same name, transferred KNPL’s assets to his own company, caused a migration of the customers and goodwill of KNPL to his company, and ostensibly continued to trade under the auspices and name of KNPL, thereby depriving KNPL of its assets, customers, goodwill and future business. Mr. Stein is also allegedly guilty of various statutory breaches as a director contrary to the Companies Act which are also said to give rise to claims for damages against him at the suit of KNPL. It is alleged that these various breaches did not come to the notice of KNPL until 2014. They are alleged to be ongoing.

KNPL further claims that Nivani Ltd, the first appellant, was the alter ego of Mr. Stein and the knowing participant in, and beneficiary of, his misconduct. Nivani Ltd is therefore liable with Mr. Stein for his breaches and accountable for the property and other benefits it received.

All of these issues were joined on the pleadings with the appellants alleging that KNPL had suffered no loss or damage.

KNPL gave notice to the appellants (as defendants) for discovery under Order 9, rule 2 of the National Court Rules. The verified list of documents filed and served on their behalf itemised only the following in Part A:

“1. Company Extract from Investment Promotion Authority for Nivani Ltd

2. 2. Company Extract from Investment Promotion Authority for Kimbe Nivani Properties Ltd
3. 3. Kimbe Nivani Properties Ltd Financial Statements for 2001.”
   

The appellants’ list made no reference to any documents or classes of documents which were once but were no longer within their possession, custody or power in the period from 2001 to date.

KNPL made an application to the National Court under Order 9, rule 7 for an order for particular discovery. The appellants sought to resist the making of such an order on the basis that it was inconsistent with statutory document retention periods and that the applicant for leave to institute derivative proceedings had rights of access as a shareholder under the Companies Act itself or by court order under that Act. They also alleged that their discovery was complete.

The primary judge rejected these arguments, making an order under Order 9, rule 7 in respect of an extensive range of corporate governance and financial records.
The appellants then appealed by leave to the Supreme Court.

HELD (dismissing the appeal):

1. Document retention periods as specified, for example, in s 164 of the Companies Act 1997 and s 354X and s 364 of the Income Tax Act 1959, although in particular cases after their expiry and upon explanation verified by affidavit they might supply an explanation as to why particular documents or classes of document were no longer in the possession, custody or power of a party obliged to make discovery, are minimum periods for document retention and do not mandate that documents be destroyed after their expiry, and do not limit the obligation to give discovery. Similarly, shareholder rights of access to corporate records do not limit the obligation to give discovery under the rules of court (Eastern Nitrogen Ltd v Federal Commissioner of Taxation (1996) 33 ATR 4 considered).
2. The obligation to give discovery under Order 9, rule 2 of the National Court Rules remained delineated by the issues on the pleadings and extended to documents or classes of document that would put an opposing party on a train of inquiry in respect of those issues (Credit Corporation (PNG) Ltd v Jee [1988] PNGLR 11 approved and applied).
   
3. Observations by the Court with respect to the circumspection which should attend the granting of leave to appeal in respect of interlocutory value judgments in respect of matters of practice and procedure. No error of principle attended the order made by the primary judge for particular discovery under Order 9, rule 7 (Oberia v Charlie (2005) SC801 (Lay J) and Raymond Liu v Daul Emoto (2009) SC1032 Injia DCJ (as his Honour then was) referred to with approval; In re the Will of FB Gilbert (deceased) [1946] NSWStRp 24; (1946) 46 SR (NSW) 318 and Adam P Brown Male Fashions Pty Ltd v Philip Morris Incorporated [1981] HCA 39; (1981) 148 CLR 170 considered).
   

Cases Cited:
Papua New Guinea Cases

Credit Corporation (PNG) Ltd v Jee [1988] PNGLR 11
Oberia v Charlie (2005) SC801
Raymond Liu v Daul Emoto (2009) SC1032
Re Kimbe Nivani Properties Ltd [2017] PGNC 422

Overseas Cases

Adam P Brown Male Fashions Pty Ltd v Philip Morris Incorporated [1981] HCA 39; (1981) 148 CLR 170
Eastern Nitrogen Ltd v Federal Commissioner of Taxation (1996) 33 ATR 4
In re the Will of FB Gilbert (deceased) [1946] NSWStRp 24; (1946) 46 SR (NSW) 318
Lane v Registrar of Supreme Court of New South Wales [1981] HCA 35; (1981) 148 CLR 245
Rockwell Machine Tool v. E.P. Barrus (Concessionaires) Ltd [1968] 1 W.L.R. 693

Counsel

D Wood, for the Appellants
I Molloy & S Gor, for the Respondent
24^th December, 2021

1. BY THE COURT: A commonality, “Nivani”, in the corporate names of the First Appellant, Nivani Limited and the Respondent, Kimbe Nivani Properties Limited (KNPL), gives a clue as to the claim which forms the basis of the issues at large in the National Court in this case. A succinct summary of that claim was offered by Hartshorn J when granting a Mr Jason Matthew Cherrett, as a shareholder of KNPL, leave to bring derivative proceedings in the name of and on behalf of KNPL against the First Appellant and the Second Appellant, Mr David John Stein, pursuant to s. 143 of the Companies Act: Re Kimbe Nivani Properties Ltd [2017] PGNC 422; N7696 (3 August 2017). His Honour stated, at [2] – [3]:
   2. The applicant claims that Mr. Stein breached his fiduciary duty to KNPL because while he was a director of KNPL, he set up his own rival company under the same name, transferred KNPL’s assets to his own company, caused a migration of the customers and goodwill of KNPL to his company, and ostensibly continued to trade under the auspices and name of KNPL, thereby depriving KNPL of its assets, customers, goodwill and future business. Mr. Stein is also allegedly guilty of various statutory breaches as a director contrary to the Companies Act which the applicant argues, also gives rise to claims for damages against him at the suit of KNPL.
      
   3. The applicant further claims that Nivani Ltd, the proposed second defendant, was the alter ego of Mr. Stein and the knowing participant in, and beneficiary of, his misconduct. Nivani Ltd is therefore liable with Mr. Stein for his breaches and accountable for the property and other benefits it received.
      
2. It is apparent from the statement of claim which came to be filed and served when proceedings were consequentially commenced in the National Court by KNPL (as plaintiff) against the First Appellant and Mr Stein (as defendants) that the breach of fiduciary duty concerned is alleged to date back to 2001 and to have been concealed from KNPL until 2014. The First Appellant is alleged to have been knowingly concerned in Mr Stein’s breaches of his fiduciary duty as a director of KNPL.
   
3. By their amended defence, the First Appellant and Mr Stein deny that there was any breach by Mr Stein of any fiduciary duty and, thus, that KNPL has suffered any loss or damage.
   
4. Understanding the nature of the claim in the National Court and of the length of time in respect of which compensation for alleged loss and damage is sought is important to the resolution of this appeal.
   
5. On 5 November 2018, following the close of pleadings, KNPL (as plaintiff) gave notice to the appellants (as defendants) requiring that they give discovery, pursuant to Order 9, rule 2 of the National Court Rules.
   
6. On 27 November 2018, the appellants gave, or at least purported to give, discovery by a list of documents verified by an affidavit made by Mr Stein. It is necessary to state, “purported”, because Schedule 1, Part 1, Part A in that list specified only the following:
   

“1. Company Extract from Investment Promotion Authority for Nivani Ltd

2. Company Extract from Investment Promotion Authority for Kimbe Nivani Properties Ltd
3. Kimbe Nivani Properties Ltd Financial Statements for 2001”
   
7. In the verifying affidavit stated, at [5]:
   

“To the best of the Defendant’s knowledge, information and belief, neither the Defendant nor its lawyer nor any other person on his behalf have now, or ever had in possession, custody or power, any document relating to any matter in question between the Plaintiffs and the Defendant, other than the documents enumerated in the Schedules 1 and 2.” [sic]

8. This paragraph of the verifying affidavit is in a standard form. In itself, it is unremarkable (save for the obvious but lamentable slip of being cast in the singular rather than the plural with respect to the defendants). What is remarkable, given the issues joined on the pleadings, is its verification of such a sparse list in Part A, the critical part of the list.
   
9. This same thought occurred to those acting for KNPL.
   
10. Mr Stein remained unrepentant as to the adequacy of the discovery given by the appellants, asserting in an affidavit filed on 5 December 2018:
    

“The Defendants have complied with their Notice of Discovery and filed and served their Verified List of Documents, in time, on 27 November 2018.”

This affidavit was made and filed in the context of the appellants’ taking KNPL to task about the adequacy of its own discovery and an alleged failure to file its statements of evidence within time.

11. On 3 February 2019, KNPL filed an application for particular discovery to be made by the appellants and related orders, including an application for judgment in default of compliance:
    
    1. Pursuant to Order 9 Rule 7 of the National Court Rules that each of the First Defendant (by a member or officer of the First Defendant) and the Second Defendant within fourteen (14) days of the date of these orders:
       

(a) file an affidavit stating whether the documents or class of documents (and which of them) listed in the Schedule below are or have been in its or his respective possession, custody or power and, in respect of each document or class of document which has been but is not now in its or his possession, custody or power, when it or he parted with it and what has become of it, and

(b) serve the affidavits on the Plaintiff.

2. Pursuant to Order 9 Rule 10 of the National Court Rules, each of the First Defendant and the Second Defendant produce for inspection by the Plaintiff the documents referred to in their respective affidavits as are in their possession, custody or power, at the Defendants’ address for service under Order 6 Rule 7 of the National Court Rules within seven (7) days after the filing and serving of the affidavits referred to in paragraph (1) above (or at such other time or location as the parties may agree).
   
3. Pursuant to Order 9 Rule 15(1)(b) of the National Court Rules, in default of orders (1) or (2) above, the Amended Defence filed on 27 October 2017 of the Defendant (or Defendants) in default be struck out and judgment on liability be entered against such Defendant or Defendants on the Plaintiff’s claim.
   
12. The “Schedule below”, referred to in the notice of motion was in these terms:
    

Schedule

The following documents (including copies) (a) relating to the Plaintiff (whether under its current or any previous name) from 1995 to 2015, and (b) relating to the First Defendant (whether under its current or any previous name) from 1995 to date:

Financial records including: Financial Statements, Profit and Loss Statements, Balance Sheets, bank statements, cash books, directors’ loan accounts, shareholders’ loan accounts, cheque butts, invoices, and receipts.

Company records including: Company Returns, Directors’ statements, minutes of directors’ meetings, minutes of shareholders’ meetings, notifications of change of shareholder’s notifications of change of officers, notifications and applications for change of name, company charges, statutory documents lodged with IPA.

Taxation records including: Copies of taxation returns, copies of group certificates, copies of GST returns, income tax assessments, GST assessments.

Business records including: agreements for the sale or purchase of plant, vehicles, vessels or equipment, agreements for the sale or purchase of land or any interest in land, mortgages or other encumbrances granted or taken, loan agreements (whether as lender or borrower), guarantees (whether as debtor, creditor or guarantor, leases or sub leases granted or taken, registration certificates of vehicles, plant or vessels, receipts for the sale or purchase of plant, vehicles, vessels or equipment, insurance policies, and insurance certificates.

Documents relating to foreign exchange transactions including: receipts or other records relating to international transfers, purchases, sales or exchange of foreign currency.

13. This application came on for hearing before the learned primary judge on 15 March 2019 on what was, so very obviously from the transcript, a busy day in the applications list.
    
14. Then as now, the appellants resisted the order for particular discovery on the basis of that the breadth of the category specified in the schedule did not relate to any issue on the pleadings, which was said to be confined to “the period of the alleged ‘migration of assets’ namely 1998 to 2001” and an assertion that there was no discovery obligation, because of the expiry of statutory document retention obligation periods and statutory provision for shareholder access to corporate records.
    
15. These arguments found no favour with the primary judge. Her Honour stated:
    

It appears that the defendants have not given full discovery because they believe that the plaintiff's claim is without merit and in any event that that they do not have to give the documents. Both those views are incorrect. The defendants' opinion on the merit of the plaintiff's claim is irrelevant. The defendants' opinion as to whether or not the plaintiff had other courses of action available to them under the Companies Act is irrelevant.

The proceedings are conducted in accordance with the requirements of the National Court Rules. The plaintiff is entitled to require discovery and the defendants are obliged to provide it. Even under the Companies Act, provisions referred to by the defendant, the defendants are required to produce documents as required by law, which in this case, is the National Court Rules. I reject the defendants’ arguments that they do not have to - they do not have authority to produce the documents, apart from the fact that they are the director and the company itself and clearly can give authority. Any authority which might be required, they are bound to comply with the requirements of the law as set out in the National Court Rules. I do not accept that the requirement for discovery is oppressive or a fishing expedition.

The documents requested are clearly necessary to enable the plaintiff to present its claim. If any documents are no longer kept, they have to be identified and set out in the list as is required by the rules. I find that the defendants have failed to give adequate discovery and a further discovery of production of documents is required to enable all the relevant records and documents which are or have been in the defendants’ possession, custody or power that might have a bearing on the dispute between the parties, is required.

[sic]

16. Accordingly, her Honour made orders in term of paragraphs 1 and 2 of the notice of motion. As a matter of deliberate case management discretion, her Honour declined to make the guillotine default judgment order sought in paragraph 3 of the notice of motion.
    
17. The appellants have now appealed by leave against these interlocutory orders. As noted, the grounds of appeal reflect the arguments pressed by the appellants in the original jurisdiction, alleging error on the part of the primary judge in not accepting those arguments.
    
18. Before turning to the grounds of appeal, it is convenient to make some brief observations about challenges to interlocutory orders on matters of practice and procedure. These are in no way intended to be critical of the grant of leave to appeal in the present case.
    
19. The considerations which arise in relation to a grant of leave to appeal were, as was recognized when leave was granted in the present case, summarised by Lay J in Oberia v Charlie (2005) SC801. Also relevant are observations made by Injia DCJ (as his Honour then was) in Raymond Liu v Daul Emoto (2009) SC1032. It is not necessary to set out all of the considerations discussed in Oberia v Charlie and Raymond Liu v Daul Emoto, only to emphasise that leave to appeal in respect of the exercise of a judicial discretion with respect to a matter of practice and procedure ought not be granted unless there is an arguable case that the order concerned is the result of a manifestly unreasonable exercise of that discretion or plainly wrong and unjust. Exceptionally, leave might also be granted where the case raises a novel question of law of general importance in respect of which it is desirable that a pronouncement be made by this Court.
    
20. This case does entail some questions of principle that are desirably the subject of a judgment by this Court. However, the granting of leave to appeal in relation to interlocutory value judgments on matters of practice and procedure should always be approached with circumspection. The reasons for this were never better stated than by Sir Frederick Jordan, then Chief Justice of New South Wales, in In re the Will of FB Gilbert (deceased) [1946] NSWStRp 24; (1946) 46 SR (NSW) 318, at 323:
    

[T]here is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice.

21. This observation has subsequently been cited with approval many times in Australia, notably by the High Court of Australia in Adam P Brown Male Fashions Pty Ltd v Philip Morris Incorporated [1981] HCA 39; (1981) 148 CLR 170 (Adam P Brown), at 177, where the need for such circumspection in such cases was emphasised. Even more so is this the case in Papua New Guinea, where the opportunity cost of a diversion of finite judicial resources to hear and determine a resultant appeal is even greater than in Australia. Too liberal an approach to the granting of leave to appeal in such cases may encourage those with deep pockets or a querulous disposition (or both) to postpone a determination of the substantive merits of a cause of action or defence. This, as Jordan CJ so clearly appreciated in the passage quoted, would be disastrous to the administration of justice.
    

Impact of Statutory Provision for Document Retention and Access

22. It is convenient first to deal with the relevance, if any, of statutory document retention periods and shareholder access to corporate records.
    
23. Initially, KNPL chose to avail itself of the right conferred by Order 9, rule 2 to obtain by notice general discovery by the appellants. A statement made by Woods J in Credit Corporation (PNG) Ltd v Jee [1988] PNGLR 11 has proved enduringly authoritative as to the nature of the process thereby engaged:
    

This is not a jurisdiction of trial by ambush. Discovery in this type of proceedings is the title used to describe the process by which the parties to a civil cause or matter are enabled to obtain, within certain defined limits, full information on the existence and the contents of all relevant documents relating to the matters in question between them. The function of the discovery of documents is to provide the parties with the relevant documentary material before the trial so as to assist them in appraising the strength or weakness of their respective cases, and thus to provide the basis for the fair disposal of the proceedings before or at the trial or to adduce in evidence at the trial relevant documentary material to support or rebut the case made by or against them, to eliminate surprise at or before the trial relating to documentary evidence and to reduce the costs of litigation.

24. The ambit of the matters in question between KNPL and the appellants was defined by the pleadings. Within that ambit, the appellants were obliged to give discovery of documents within their “possession, custody or power”.
    
25. The power to order particular discovery, found in Order 9, rule 7 of the National Court Rules and exercised by the learned primary judge, was enlivened in circumstances where there existed grounds for belief that a document or class of documents relating to any matter in question in the proceedings may be or may have been in the “possession, custody or power” of a party.
    
26. A number of statutes provide for mandatory document retention periods. Of these, the most frequently encountered in practice and those relied upon by the appellants are s 164 of the Companies Act 1997, which specifies a seven year retention period for certain corporate records, s 188(4), which provides that a company shall keep accounting records for the current accounting period and for the last 10 completed accounting periods of the company and s 354X and s 364 of the Income Tax Act 1959, which provide for a seven year retention period in respect of certain financial records.
    
27. In addition, s 219 and s 220 of the Companies Act respectively make provision for the inspection, either as a sequel to a request or, as the case may be, a court order, of certain corporate records by, materially, a shareholder.
    
28. The appellants’ submission is that, given the statutory retention periods and rights of shareholder access, the period in respect of which discovery was sought was too wide or correspondingly circumscribed.
    
29. Neither of these submissions should be accepted.
    
30. The ambit of KNPL’s claim was not, on the pleadings, confined to the time of Mr Stein’s alleged breach of duty in or about February or March 2001 but extended to what was alleged to be subsequent unlawful asset transfers and an ongoing unlawful derivation of profits.
    
31. Against this background, the appellants’ list of documents was, obviously, on its face, grossly deficient both in terms of documents said to be within their “possession, custody or power” and in identifying those which were no longer and why.
    
32. The right of KNPL to obtain discovery on notice was in no way prevented by statutory rights of access to corporate documents which Mr Cherrett possessed as a shareholder or by statutory document retention periods. That right was conferred by the National Court Rules upon the institution of KNPL’s claim and on the close of pleadings. The purpose of that discovery right is as stated by Woods J in Credit Corporation (PNG) Ltd v Jee. It serves the interests of justice.
    
33. The purpose of access rights conferred on shareholders by the Companies Act serves different ends unrelated to litigation.
    
34. An analogous question arose in the Federal Court of Australia before Spender J at an interlocutory stage in a taxation appeal, Eastern Nitrogen Ltd v Federal Commissioner of Taxation (1996) 33 ATR 4. In that court, unlike in the present case under the National Court Rules, discovery did not lie as of right but only by leave of the court. The appellant taxpayer, Eastern Nitrogen Ltd, sought to resist an application for discovery by the Commissioner of Taxation on the basis that the Commissioner possessed, and had exercised during an audit prior to the issuing of the contested income tax assessments, a statutory right of access to documents under Australian income tax legislation. In ordering discovery, Spender J described its purpose in a similar way to that adopted for this jurisdiction by Woods J in Credit Corporation (PNG) Ltd v Jee and how that served different ends to access under statutory authority:
    

Speaking basically, the purpose of discovery is to ensure, as far as possible, that litigation is decided on its merits without ambush and surprise and to provide the parties with the relevant documents they need to prepare their cases for trial. What might have been thought to be relevant during an audit is not necessarily what might be thought to be relevant to a party who is now a litigant to proceedings in the court.

35. Particular requirements in the Companies Act regarding shareholder access to documents did not in any way operate to qualify KNPL’s right to general discovery on notice.
    
36. Increasingly, in commercial litigation, including cases managed in the Commercial Track of the National Court, courts throughout the Commonwealth circumscribe rights to general discovery by providing that it is only available by leave and then only in respect of defined categories of documents directly relevant to the issues in a case. This circumscription recognises the expense that can be entailed in the digital age with its tendency for proliferation of documents, by general discovery. However, in this case, KNPL did no more than exercise a right conferred by the existing rules.
    
37. Statutory document retention periods also did not operate to remove or even limit KNPL’s right under the National Court Rules to give notice to the appellants for general discovery under Order 9, rule 2 or to seek an order for particular discovery under Order 9, rule 7. The purpose of those statutory document retention prescriptions is to relieve those to whom they are directed from the burden of uncertainty as to minimum periods for which various classes of document must be retained and to facilitate the administration of the statutes concerned.
    
38. In the circumstances of a particular case, destruction of particular documents or classes of document following the expiry of a statutory retention period, and without notice of any impending claim, may offer an explanation by a person as to why a particular document was once but is no longer within that person’s “possession, custody or power”. If so, it is for that person to identify in a list of documents such documents or classes of document, to explain why they are no longer in that person’s “possession, custody or power” and to verify that list by affidavit. The appellants did not do this.
39. Statutory retention periods are minimum periods for document retention. They do not mandate that documents or classes of document must be destroyed after their expiry. That decision then becomes a matter for the value judgment of the person concerned. As to that value judgment, the destruction of a document or class of document relevant to an issue in a proceeding after the commencement of that proceeding may amount to an interference with the administration of justice and a contempt of court: see Lane v Registrar of Supreme Court of New South Wales [1981] HCA 35; (1981) 148 CLR 245, at 258.
    
40. A lawyer acting for a party to litigation has a particular duty, as soon as possible after engagement, to explain to that party the nature and extent of a discovery obligation which may arise in the litigation and, related to that, the document retention obligation. Once that obligation has arisen, the lawyer must proactively assist the party to comply with that obligation. The nature of that duty was stated by Megarry J in Rockwell Machine Tool v. E.P. Barrus (Concessionaires) Ltd [1968] 1 W.L.R. 693, at 694:
    

“ ... it seems to me necessary for solicitors to take positive steps to ensure that their clients appreciate at an early stage of the litigation, promptly after writ issued, not only the duty of discovery and its width but also the importance of not destroying documents which might by possibility have to be disclosed.”

Like sentiments about the duty of lawyers with respect to discovery were voiced by Woods J in Credit Corporation (PNG) Ltd v Jee, at 12.

41. In Papua New Guinea, as with many developing countries which have adopted English common law systems of adversarial justice, an understanding of the requirements of such systems by the general business and wider community is even more variable than in developed countries. This makes it even more especially important for the delivery of justice according to law in civil litigation that the legal profession discharge its duty of explaining the nature and extent of a discovery obligation and document retention requirements to a client.
    

Was the order oppressive?

42. The order made by the National Court was certainly wide-ranging in its scope but then so, too, was the nature of the claim and its alleged sequel in terms of loss and damage, as revealed by the pleadings.
    
43. It is quite obvious, as it was to the learned primary judge, that the appellants were operating under a fundamental misconception as to the effect of statute on their obligation under the rules to give discovery. They made no endeavour, even in the alternative, to explain by evidence on affidavit what documents were or were once within their “possession, custody or power”, what inquiries on that subject they had to date conducted, what difficulties had been encountered, if any, and how long, after the nominated compliance period it might take them to complete that task.
    
44. “Possession, custody or power” is a term of particular breadth. In this case, it is conceivable that the corporate appellant may have “possession, custody or power” of original documents falling within the nominated class and that Mr Stein may have “possession, custody or power” of copies of such documents or of originals which may not be within the “possession, custody or power” of the corporate appellant. All of this requires, and always did require, thorough investigation by the appellants, assisted by their lawyers. None of his has occurred to date in light of the misconception under which the appellants and, it seems, their lawyers were acting.
    
45. It is conceivable that, prior to their having been given notice of the claim, either or each of the appellants may, in good faith and after the expiry of statutory retention periods, have disposed of documents or classes of documents falling within the specified categories for discovery. If so, this position ought to have been revealed by a reasonable search by those parties, informed by advice by their lawyers as to their discovery obligation. Such a revelation would not relieve them of their discovery obligation. Rather, it ought, initially, to have manifested itself by the identification in their list of documents of particular documents or classes of document which were once but were no longer within their “possession, custody or power”. Before the primary judge, this ought to have been the subject of a related affidavit attesting to these subjects and describing in detail the nature of the search conducted.
    
46. Faced with the lamentable and obvious ignorance of the appellants of their discovery obligation, we see no error on the part of the learned primary judge, in the exercise of a judicial discretion, in making, in the first instance, an order of a width which was in keeping with the issues on the pleadings and requiring compliance within the minimum period allowed in the first place. The order was not, in the prevailing circumstances, oppressive. If, for cause, the order required variation in either or each of its width or time for compliance, that could have become the subject of an application by the appellants supported by evidence on affidavit. It still could.
    
47. Indeed, before making any such application, it would be good practice for the appellants’ lawyers to set out in detail in a letter to those acting for KNPL the results of investigations conducted with respect to the discovery ordered and inviting them to consent to a particular related variation. The legal profession has a particular obligation to informally co-operate in the administration of justice in this fashion, thereby saving valuable court time for other cases.
48. As things stand, the time allowed by the primary judge has expired. However, the interests of justice dictate that, now that their misconception has been confirmed, the appellants should be allowed a further reasonable period for compliance, which we consider in the circumstances, given the time of the year, to be until 31 January 2022. Such further, resultant proceedings in relation to discovery, if any, may then be conducted in the National Court.
    
49. Subject to this variation in the orders made in the National Court, the appeal should be dismissed, with costs.
    

ORDER

1. The time for compliance with the order for particular discovery made by the National Court on 15 March 2019 is extended to 31 January 2022.
2. Save as aforesaid, the appeal is dismissed.
3. The appellants shall pay the respondent’s costs of the appeal on a party-party basis, to be taxed if not otherwise agreed.

__________________________________________________________________
Ashurst Lawyers: Lawyers for the Appellants
Fiocco & Nutley: Lawyers for the Respondent