Practice Note SC Eq 11
It has been more than five years since the introduction by the Supreme Court of New South Wales of Practice Note No. SC Eq 11 – Disclosure in the Equity Division (Practice Note). In summary, the Practice Note provides that the Court will not make an order for disclosure of documents until the parties to the proceedings have served their evidence, unless there are exceptional circumstances necessitating disclosure.
The policy considerations behind the Practice Note were explained shortly after its introduction, by McDougall J in New Price Retail Services v David Hanna  NSWSC 422, where his Honour said [at 18]:
“[the Practice Note] is also intended to ensure that each party put its evidence on uninstructed by knowledge of, and in an attempt to meet, what may be contained in documents obtained from the other side”.
Relief in equity is sought when other traditional legal remedies are either inadequate or insufficient. In seeking such relief, the Court expects the parties to be in a position to proceed with the matter to determine the facts in issue in an efficient and timely manner. Therefore, arguments regarding production of documents that inevitably arise from disclosure would be counter intuitive to the purpose of equity to provide quick alternative relief than that which may be obtained by litigating a matter at a fully contested hearing, obtaining a judgment, then enforcing that judgment.
As explained by Brereton J in Graphite Energy Pty Ltd & anor v Lloyd Energy Systems Pty Ltd & ors  NSWSC 1326, the Practice Note serves two functions:
- Firstly, to reduce the burden of discovery by requiring it not only after the issues are defined in pleadings, but following those issues being refined in affidavit evidence; and
- Secondly, to avoid the mischief of parties constructing their evidence from discovered documents by having the parties commit to their position and case.
Precisely what comprises ‘Exceptional circumstances’ was summarised by McDougall J in Leighton International v Hodges  NSWSC 458 as follows:
“As a matter of language, something is exceptional if it is out of the ordinary, or unusual. To my mind, the exceptional circumstances referred to in paragraph 4 of the practice note must be circumstances that are not normal, or usual; they must be something out of the ordinary; they need not be unique; but however one characterises them they are not ‘exceptional’ at large, but ‘exceptional’ because they necessitate disclosure”.
Not having access to a document purely due to that particular document being in the possession of another party is not ‘exceptional’. Often, one side to litigation will have key documents relevant to the facts in issue.
Recent examples of the Court granting disclosure
In Skyscanner Limited v Hotels Combined Pty Ltd  NSWSC 183, the Court ordered disclosure as it would facilitate the ease of production of expert evidence by the parties, rather than a situation where one set of experts evidence would be adduced and the party seeking disclosure would be required to adduce further supplementary expert evidence on receipt of the other party’s evidence.
In the matter of Metal Storm Limited (subject to a deed of company arrangement) ACN 064 270 006  NSWSC 306, the Court granted discovery of documents relevant to what, if any, damages the applicant suffered by reason of the cross-defendant/respondent’s established breach of contract and trust. In that matter, the cross-defendant/respondent’s liability had been established following a judgment of the Court of Appeal. The Court determined that it was necessary to order discovery as there was a question as to what basis damages should be assessed (by leading expert evidence). Although the parties had not served all of the evidence, the Court determined that the rationale behind the Practice Note (i.e. requiring the parties to commit to their case through affidavit evidence) had been satisfied and the risk of expert evidence being ‘shaped’ by documents produced, was not present.
In Micro Machinery Manufacturing Pty Ltd and Micron Group Pty Ltd  NSWSC 289, the Court ordered disclosure in the context of a shareholder oppression suit, where the applicant (a shareholder and former director) had been locked out of the company and was unable to access documents necessary to prepare expert evidence as to value of the company’s shares.
It should also be noted that attempts by parties to circumvent the Practice Note e.g. by issuing an order for production or a subpoena on a party to produce documents, may be considered an abuse of process (see The Owners of SP69567 v Baseline Constructions Pty Ltd  NSWSC 502). In circumstances where an order for production or subpoena has been issued in a matter in the Equity Division without leave, the issuing party should make an application to the Court seeking leave nunc pro tunc (retroactively) to issue the respective order.
- The Court will not order disclosure (or any other form of discovery) prior to all of the parties serving evidence (this can include both lay and expert evidence).
- The Court expects the parties to be in a position to have the matter determined.
- Even in circumstances where the parties consent to disclosure, leave of the Court is still required.
- What constitutes ‘exceptional circumstances’ will vary from case to case and there is no hard and fast rule of what circumstances will be considered exceptional for the Court to exercise its discretion.
For more information, please contact ERA Legal.