The protracted case brought by Fuji Xerox against former CEO Neil Whittaker, EY, Devlin Bell and EA Lang concerning alleged accounting irregularities, has taken a course-correcting turn concerning discovery of documents, with Justice Colvin mentioning a 140-year old case-in-law, and ordering consensus to reduce the document mountain.
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| The 1882 Peruvian Guano case established the scope for document discovery - since modernised |
Justice Colvin, in his most recent judgement of the case, notes that: “Disputation about discovery is not only expensive for the parties, it is time consuming for the Court and consumes public resources better applied to the important public task of determining substantive disputes.”
This refers to the enormous number and categories of documents, spreadsheets, emails and meeting minutes, some going back to 2013, requested by Counsel for respondents Whittaker, Bell, EY and Lang, and also by FXA – FXF for the respondents to produce.
In the past, authority concerning the scope of document discovery has often been cited as the 1882 case of Compagnie Financiere du Pacifique v Peruvian Guano Co, wherein the defendants, Peruvian Guano, sought disclosure of documents concerning the sale contracts of the valuable organic fertilizer created from the droppings of millions of seabirds, known as ‘Guano.’ Following repeated denials of access to such documents, Peruvian Guano appealed to London’s Court of Appeal, resulting in a ruling by Lord Justice Brett that included: “It seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary if it is a document which may fairly lead him to a train of enquiry which may have either of those two consequences."
In other words, hand over ALL documents requested. Of course, in 1882, there was no internet, telephone, email, Xerography or fax and many contractural documents were still hand-written. The information explosion of the 20th and 21st centuries has caused commercial documentation to become of gargantuan proportions. Therefore, modern practice has been to limit categories of disclosure, to be ‘on point’ and ‘materially relevant to the matters in hand.’
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| Former FXA CEO Whittaker |
In one particular category, sought by Whittaker from FXA-FXF, three years of correspondence from 18 people was sought. Justice Colvin adjudged this to be ‘vague’ and ‘burdensome’ saying: “The reference in the affidavit is obscure. It is said that responding to the category would require the use of very general search terms that would produce a large number of documents that would take months to review.”
In support of this, there was the 2009 case of Thema International Fund plc and HSBC Institutional Trust Services, (not cited or referred to in this matter), as part of the overall late Bernie Madhoff $64 billion Ponzi scheme investigations; where “disclosures and reviews of documents involved paper and electronic discovery estimated to cost in excess of €10 million, and one party had a team of 50 trained lawyers reviewing for months the documents that were discovered.” Phew!
Mr Whittaker is now an advisory board member to a 3D company and founder of Pulsatio - an outsourcing firm for sales and marketing activities.
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Former FXA CFO, Devlin Bell |
In another category, FXA-FFA sought to discover spreadsheets said to be in the possession of former CFO Devlin Bell, known internally as 'Risk and Opportunity' spreadsheets or R&O. Mr Bell objected to this category, a position that Justice Colvin said 'lacked merit.' Mr Bell, now CFO of the NSW Department of the Premier and Cabinet, subsequently agreed to produce 'All documents recording or evidencing the use of the R&O Spreadsheets by Mr Bell, or otherwise referring to the R&O Spreadsheets.'
Mr Bell, who sought the correspondence document disclosure from 2013-2017 (his term of employment with FXA), has lodged, as part of his defence, that: "at all material times he was 'subordinate to, and was obliged to comply with the lawful directions and instructions issued by Mr Whittaker, his predecessor, his successors, other senior executives in the corporate hierarchy of the Fuji Xerox corporate group and the board of directors."
In narrowing the categories of documents ordered for discovery and ordering that:
- The parties do confer as soon as reasonably possible to agree the terms of orders to give effect to their agreement as to categories of discovery and these reasons.
- On or before 30 June 2021, the applicants do file a minute of agreed orders.
- There be liberty to apply in the event that the parties are unable to agree:
Justice Colvin may have saved this case from dragging on for many more months or years and kept it focussed on the alleged ‘overstating of accounts’ for the 2015 and 2016 financial years.
The next case hearing is scheduled for 13th August 2021.
