National Australia Bank Limited v Abboud

By a notice of motion filed on 16 March 2020, the first plaintiff, National Australia Bank Limited (NAB), and the second plaintiff, HSBC Bank Australia Limited (HSBC), (together, the Banks) seek to set aside two notices to produce served by the first defendant, Mr Abboud, and the second defendant, Mr Potts.

The notices to produce are in substantially the same terms. Both require the Banks to produce:

The documents are said to be relevant to an allegation that in making the loans to DSH that the Banks did, the Banks relied on Messrs Abboud and Potts’ misleading and deceptive conduct in failing to disclose that in the period between August 2014 and May 2015 DSH had requested suppliers to delay delivery of inventory or extend time for payment of invoices.

In my opinion, the notices to produce are too wide in two main respects.

First, I do not accept that the Banks’ knowledge of the contents of Dun and Bradstreet’s quarterly reports or specific reports on the incidence of late payments and business failures in Australia is relevant to the question what the Banks would have done if they had known of the practices followed by DSH. The fact, for example, that some companies paid their debts late or failed says nothing about the position of DSH or what the Banks would have done if they had known of that position.

Second, in my opinion, the relevant knowledge of any practice followed by DSH is the knowledge of the decision-makers of the Banks. What other employees of the Banks knew or did not know is not relevant to the question whether those decision-makers and therefore the Banks relied on the alleged non-disclosures by approving the loans to DSH.

I would, however, permit an appropriately formulated notice to produce which sought documents of the type referred to in paragraph 2 of the notices to produce that came to the knowledge of the decision-makers before the Banks entered into the loans that they did.

The issues raised by the Notices to Produce are issues that would normally be dealt with as part of the ordinary management of the hearing. For that reason, in my opinion, the costs of the motion should be costs in the cause.

Accordingly, the orders of the Court are: