Bevillesta v Perpetual Nominees [2010] NSWSC 1198

The lenders wrote to Bevillesta Pty Ltd, the owners of a shopping centre in Darling Harbour with 120 tenants, telling them they were in breach of their loan agreement because they owed 69.5 per cent of the property’s value and the mortgage provided that the loan-to-value ratio “must not exceed 65 per cent”. In monetary terms this demand required the borrower to reduce lender’s exposure by more than $7 million. The borrower disputed the valuation the lender was relying on and sought to subpoena the valuer. The lender argued the subpoenas were irrelevant or an abuse of process because they were attempting to seek discovery from a third party. The judge determined they were not irrelevant as they went to the central proposition in the case, an issue which had already been decided earlier in the case. Nor were they an abuse of process:

There is no rule against seeking from a third party a document which has been sought on discovery from a party. The rule against seeking discovery by way of subpoena is concerned with the scope of the subpoena, and in particular whether the obligation which the subpoena casts on the recipient is one in the nature of the discovery, the touchstone of which is that it requires the recipient to undertake an examination of the issues in the proceedings and to form a judgment as to the relevance of documents in its possession to issues in the proceedings. These subpoenas do not do that at all. They identify fairly narrow categories of documents, related to one property, which – given the nature of the recipients’ businesses – might be expected to be quite easily identified by the recipient, without any requirement on their part to consider the pleadings or form any judgment as to what is and what is not relevant to the issues in the case.

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