Toppro Pty Ltd v Yoo

1. [1]

   THE COURT: On 18 March 2016, the Court dismissed an application by Toppro Pty Ltd (Toppro) for leave to appeal from an interlocutory decision of a judge of the Equity Division (Brereton J). [1] Toppro is the first defendant in proceedings in the Equity Division (Equity Division Proceedings), which are listed for hearing on 30 March 2016. The plaintiff in those proceedings (Mr Yoo) is the respondent in this Court.

2. [2]

   The primary Judge in substance dismissed a notice of motion by Toppro, in which it sought orders setting aside a notice to produce issued by Mr Yoo. [2] Toppro sought to challenge his Honour’s decision on the ground that he misapprehended the facts which were said to justify requiring production of the documents identified in the notice to produce.

3. [3]

   At the conclusion of argument on the application for leave to appeal, the Court pronounced orders and reserved its reasons. These are the reasons for dismissing Toppro’s application for leave to appeal.

Background

1. [4]

   It appears that Toppro imported recording and digital equipment manufactured by a company described in argument as “Topfield Korea”. Both Toppro and a company known as Topfield Australia Pty Ltd (Topfield Australia) distributed products manufactured by Topfield Korea. The Chief Executive Officer of Topfield Korea was Mr Lee, the husband of Ms Joo. Ms Joo is the second defendant in the Equity Division Proceedings.

2. [5]

   Mr Yoo’s case in the Equity Division Proceedings is pleaded in the Fourth Amended Statement of Claim (4ASC) filed on 19 May 2015. He seeks a declaration that a transfer of shares in Toppro dated 20 June 2014, that he signed in favour of Ms Joo, be declared void and of no effect. Mr Yoo also seeks an order requiring the shares to be returned to him and, in the alternative, seeks damages for conversion of the shares from Ms Joo.

3. [6]

   The 4ASC pleads as follows:

4. [7]

   The defendants denied any misconduct. It is, however, not necessary to consider the defence in any more detail.

5. [8]

   On 19 January 2016, Mr Yoo filed a notice to produce in the Equity Division Proceedings requiring Toppro to produce the following documents:

6. [9]

   On 28 January 2016, Toppro filed a notice of motion seeking orders setting aside each of the paragraphs of the notice to produce. Toppro contended that the notice to produce was oppressive and required the production of documents with insufficient apparent relevance to the proceedings and which were commercial-in-confidence.

Primary Judgment

1. [10]

   The primary Judge heard the motion on 15 February 2016 and delivered an ex tempore judgment on that day.

2. [11]

   His Honour summarised the case pleaded by Mr Yoo and set out the terms of the notice to produce. His Honour recorded that Mr Yoo did not press para 8 of the notice to produce.

3. [12]

   The principal submission advanced on behalf of Mr Yoo was that it was “on the cards” that the documents would reveal that after 20 June 2014 the business of Toppro declined, while that of Topfield Australia grew. His Honour explained the submission as follows: [3]

4. [13]

   The primary Judge said that it was important to recognise that a notice to produce, unlike discovery, is: [5]

5. [14]

   His Honour continued as follows:

Matters Not in Dispute

1. [15]

   It can be seen that the primary Judge found, on the basis of evidence given in other proceedings to which Toppro was a party (Toppro Proceedings), that it was “on the cards” that the documents covered by the notice to produce would assist in the resolution of the issues in the Equity Division Proceedings. At the time his Honour delivered the Primary Judgment, he had heard the evidence in the Toppro Proceedings and reserved his judgment. In those proceedings, Toppro sought compensation for alleged breaches of duty by the former General Manager of Toppro and a former director of the company.

2. [16]

   The transcript of the hearing in the Toppro Proceedings was not tendered during the hearing before the primary Judge, but his Honour made it clear in the course of argument that he had consulted the transcript. Although counsel appearing for Toppro before the primary Judge initially submitted that no reference should be made to the transcript of the Toppro Proceedings, he made no complaint about the course adopted by his Honour and no complaint is made on Toppro’s behalf in this Court. The White Book filed on behalf of Toppro contains extracts from the transcript of the other proceedings. Both parties were content to proceed on the basis that the material was properly before this Court.

3. [17]

   Toppro’s draft notice of appeal contained grounds alleging that the primary Judge had applied an incorrect legal principle and had erred in giving insufficient weight to what was said to be the commercial confidentiality of the documents covered by the notice to produce. Mr Neil QC, who appeared with Mr O’Brien for Toppro, did not press these grounds.

Reasoning

1. [18]

   The only ground pressed by Mr Neil in oral argument was that the primary Judge’s exercise of discretion miscarried because his Honour misapprehended the evidence given in the Toppro Proceedings. According to Mr Neil, that evidence did not suggest that there had been a transfer of business from Toppro to Topfield Australia after 20 June 2014 (when the transfer was allegedly fraudulently altered by Ms Joo). There was therefore no basis for his Honour’s conclusion that the notice to produce sought production of documents that might be relevant to the credit of Ms Joo and other witnesses to be called on behalf of the defendants in the Equity Division Proceedings.

2. [19]

   It is well settled that leave to appeal will ordinarily not be granted from a decision involving a matter of practice and procedure unless the application raises an issue of principle or the applicant can demonstrate that a significant injustice is likely to result if leave is not granted. [8] The fundamental reason is that unless appellate courts exercise restraint in interfering with decisions of trial judges on matters of practice and procedure, the result will be excessive delays, expense and uncertainty in the conduct of litigation. [9]

3. [20]

   The argument advanced by Mr Neil raised no issue of principle. He did not submit that the documents are particularly sensitive or that the commercial interests of Toppro would be unduly compromised if the documents had to be produced. Nor did he submit that it would be unduly burdensome for Toppro to be required to collect and produce the documents covered by the notice to produce. In the absence of any such submissions, Mr Neil could not identify any significant injustice that Toppro would suffer if leave to appeal were refused. These considerations would be enough of themselves to justify dismissal of Toppro’s application for leave to appeal.

4. [21]

   In any event, the Court was not persuaded that the contention advanced by Mr Neil had reasonable prospects of success. The passages in the transcript of evidence in the Toppro Proceedings to which this Court was taken demonstrate that there was a conflict in the evidence. However, the evidence of Mr Nascimento, formerly employed by Toppro as its National Sales and Marketing Director, clearly supported the view taken by the primary Judge. Mr Nascimento’s evidence indicated that Toppro’s activities as a distributor of Topfield products ceased or became dormant for a significant period after June 2014. During this time, the “new entity” (as Mr Nascimento described Topfield Australia) took up the role of “resupplying” the market with Topfield products.

5. [22]

   Mr Nascimento said that these developments occurred when “the parent company”, Topfield Korea, acquired control of the Topfield business in Australia. As part of the reorganisation of the group’s interests, Mr Nascimento did not formally sever his association with Toppro, but in effect became Topfield Australia’s marketing manager.

6. [23]

   Ms Joo’s evidence, although somewhat vague and general, was to some extent inconsistent with that of Mr Nascimento. But the primary Judge considered that the documents sought in the notice to produce were relevant to the Equity Division Proceedings precisely because they might have a bearing on the credibility and motivation of Ms Joo and other witnesses to be called by Toppro.

7. [24]

   Toppro’s written submissions on the application for leave to appeal advanced an argument that even if the documents sought by the notice to produce suggested that business had been diverted from Toppro to Topfield Australia, they could not be relevant to Mr Yoo’s pleaded case of conversion, since conversion does not require proof of fault. Mr Neil did not develop the submission in oral argument. The difficulty it confronts is that the case pleaded in the Equity Division Proceedings is not confined to conversion, but includes allegations of fraud.

Conclusion

1. [25]

   It was for these reasons that the Court made orders dismissing the application for leave to appeal, with costs.