Alexandria Landfill Pty Ltd v Roads and Maritime Services; Boiling Pty Limited v Roads and Maritime Services

The Subpoena

1. The subpoena issued to Mr Lunney seeks the production of the following: 1. Documents being records of offers to retain you, or records of your retainer for, prospective purchasers or lenders or vendors of commercial or industrial properties within the Sydney metropolitan region when expected sale prices were likely to exceed $10 million, excluding any retainer or offer for retainer for properties to be compulsorily acquired, between January 2012 and the present; 2. Copies of any document of advice provided to prospective purchasers or lenders or vendors of property in the Sydney metropolitan region about the value of land derived from the expected potential business activities to be carried out on that land after sale, excluding any advice concerning land proposed for compulsory acquisition, between January 2012 and the present. 3. Copies of any document of advice provided by you to vendors or purchasers of land involving the value of landfill sites excluding any advice concerning land proposed for compulsory acquisition in New South Wales between January 2007 and the present. 4. Copies of any document of advice provided to intending purchasers, lender or vendors of landfill, quarry or mine sites in New South Wales, excluding any advice involving land proposed for compulsory acquisition, involving the calculation of the value that land by projecting businesses cash flows generated as a result of ownership of that land between January 2007 and the present; 5. Copies of any document of advice provided by you to a vendor or an impending purchaser or land within the Sydney metropolitan region, other than for such land proposed for compulsory acquisition, that you were instructed was known to be contaminated between January 2012 and the present; 6. [Not pressed] For the purposes of this subpoena, "Documents" includes all letters, emails, file notes, memorandums, maps, photographs, plans, specifications or other communication in written or electronic form.
2. The specific exclusion, from the documentation nominated in the subpoena, of his compulsory acquisition experience, is to be noted.

The Principles and Authorities

1. On 5 December 2017, the Court heard argument on the respondent's oral set-aside application, which was not supported with any evidence.
2. The principles applied by this and other courts when dealing with such applications regarding subpoenas and Notices to Produce are well-established and have been frequently stated, explained, and applied. (See also Ritchie, at pp8002 - 8003.) They are not in contest in the present case.
3. For my part, I adhere to what I said and did in Young v King (No 3) [2012] NSWLEC 42, in which I extensively reviewed the authorities (see especially pars [41], [50], -- [51], [55] - [97], and [104]). I sought (e.g. in [90]) to contrast "impermissible 'trawling' and permissible 'line fishing'", when deciding if a subpoena is oppressive.
4. My detailed analysis need not be repeated here, but it has been endorsed and applied in many cases since 2012. (See, for example, Agricultural Equity Investments Pty Ltd v Westlime Pty Ltd [2013] NSWLEC 122, and Wingecarribee Shire Council v O'Shanassy (No 2) [2014] NSWLEC 32.)
5. It will suffice to quote again here Craig J's statement in Azar Building and Construction Services Pty Ltd v Transport Infrastructure Development Corporation ("Azar") [2010] NSWLEC 110 (at [20], which I quoted, with approval, in Young v King, at [64]): ... Without intending to be exhaustive, it is apparent that a subpoena or notice to produce will be liable to be set aside where the party seeking production of documents cannot establish: (i) that it is "on the cards" that the documents will materially assist on an identified issue: Alister v The Queen (1984) 154 CLR 404 at 414; R v Saleam [1999] NSWCCA 86 at [11]; Attorney-General for NSW v Chidgey [2008] NSWCCA 65; 182 A Crim R 536 at [58] - [69]; (ii) that the material sought could reasonably be expected to throw light on some of the issues in the principal proceedings: Trade Practices Commission v Arnotts Limited (No 2) (1989) 21 FCR 306; 88 ALR 90 at 103; Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504; (1997) 37 ATR 432; (iii) that there is a reasonable basis for supposing that the material called for will likely add to the relevant evidence in the case: A v Z (2007) 212 FLR 255 at [4]; (iv) that it is likely the documents will materially assist on an identified issue or there is a reasonable basis beyond speculation that it is likely the document will do so: Air Canada v Secretary of State for Trade (No 2) [1983] 2 AC 394; [1983] 2 WLR 494; ICAP Australia Pty Ltd v Moebes [2009] NSWSC 306; ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307.
6. Nicolas J, at first instance, in ICAP Australia Pty Ltd v Moebes [2009] NSWSC 306, expressed caution about using non-legal terms such as "on the cards" or "throw light on" in applying the "legitimate forensic purpose" test. He stated the test (at [30]) as: ... It must be shown that it is likely the documentation will materially assist on an identified issue, or there is a reasonable basis beyond speculation that it is likely the documentation will.
7. Mr Seymour adopted that test (Tp482, LL15-18): The test only ever is, is it likely that the documentation will materially assist on an identified issue or there is a reasonable basis beyond speculation that it is likely that the documentation will?
8. The Court of Appeal found no error in Nicholas J's reasoning or conclusion: ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307.
9. Three cases predating Young v King (No 3) propounded the principles, but my attention was not particularly drawn to them during argument in Young v King. However, they were drawn to my attention by Mr Eastman in arguing, for the respondent, the present application: 1. Fried v National Bank Australia Ltd ("Fried") [2000] FCA 911; 2. Thomas & Ors v SMP (International) & Ors (No 2) ("Thomas") [2010] NSWSC 870; and 3. Ballard v Multiplex Limited ("Ballard") [2010] NSWSC 1038.
10. In Fried (to which Brereton J referred in a decision I quoted in Young v King, at [88]), the respondent Bank sought documents to attack the credit of an important witness, a purpose Weinberg J accepted "may be legitimate" (at [24]), but His Honour added (at [29] and [30]): ... The Court must be alert to ensure that any subpoena which is issued has a legitimate forensic purpose. That purpose must be identifiable, and likely to facilitate the conduct of the proceeding, not merely to oppress a party or witness. ... It is not a legitimate use of a subpoena to have the specified documents produced in a speculative attempt to identify whether the documents might, ultimately, be of some evidential value. ...
11. In Thomas, the plaintiffs caused a subpoena to be issued to the NSW Crime Commission seeking the production of the transcript of an interview with the fourth defendant, a Mr Willett. The subject matter of the fourth defendant's examination was his knowledge of, or involvement in, possible money laundering activities by a Mr Barkl.
12. Pembroke J said, in Thomas (at [19], omitting references to cases examined by me here, or in Young v King): ... a number of relatively recent judicial statements about the extent to which the credit basis can justify a subpoena. They reveal a difference in emphasis reflecting the varied factual circumstances in which the issue can arise, as well as the discretionary nature of the considerations to which a judge will have a reference on such an application. ... There is, I think, a common thread in each of these decisions which I will endeavour to explain: (a) As a general principle, the production of documents intended to be used solely to impeach the credit of a witness may be a legitimate forensic purpose: ... It is not therefore an objection, by itself, that the subpoena seeks documents relating only to credit: ... On the other hand, in order to support the subpoena, it is not sufficient, by itself, merely to say that the documents relate to the credit of a witness; (b) In all cases, there must be some actual identifiable basis - reasonably precise and tolerably clear - that indicates what the legitimate forensic purpose really is. The forensic purpose requires realistic consideration of the potential strategic and evidentiary use of the documents in the context of the legal and factual issues that are required to be determined; (c) If the subpoena is legitimate, two features of its intended forensic purpose will usually demonstrate its legitimacy. First, the particular credit issue will be capable of reasonable articulation, making due allowance for the necessity for some generalisation depending on the stage that the hearing has reached. Second, the probable connection between the documents sought to be produced and that credit issue, will be apparent; (d) A credit issue of doubtful plausibility is unlikely to be sufficient to justify the subpoena. The same result will follow if the supposed connection between the credit issue and the documents sought, is strained, opaque or speculative; (e) The court will exercise particular caution when a subpoena is sought to be justified solely on the credit basis: ... The judge must be satisfied about the utility of the production of the documents, and the fairness to the witness, having regard to the potential for abuse and the need to control and confine cross examination within manageable limits; (f) A subpoena that does little more than speculatively trawl for documents that may possibly be used to impugn a witness's credit has never been justifiable. ...
13. His Honour continued (at [21] - [24]): 21 In this case, there is, in fact, no sound evidentiary basis for me to infer that the transcript of Mr Willett's evidence to the Commission contains any statements by him that might be capable of being deployed to impeach his credit. The propensity of the transcript to achieve that result is utterly speculative. The mere fact that the subject matter is Mr Barkl's alleged money laundering activities does not advance the analysis beyond guesswork and innuendo. 22 It is undoubted that the credit of [the fourth defendant] in this case is likely to be relevant to the findings of primary fact that I must make concerning conversations in which he participated and representations which he made. Most of these conversations and representations relate to the financial position of SMP, its prospects and [the fourth defendant's] role in connection with it. But no fact in issue turns on anything done by [B], or [the fourth defendant's] possible facilitation of money laundering by him. 23 Other than at the highest level of speculative generality, there is no obvious legitimate forensic purpose to be served by the production of the transcript. No actual identifiable basis has been explained, let alone with reasonable precision and tolerable clarity, that could support any reasonable likelihood that the transcript might be successfully deployed. There is no plausible basis for assuming that any statements attributed to [the fourth defendant] in the transcript might assist me in the resolution of any fact in issue - to which [the fourth defendant's] credit might be relevant. 24 For those reasons, I will order that the subpoena dated 26 June 2010 to the New South Wales Crime Commission be set aside.
14. Smart AJ quoted and considered Fried and Thomas in Ballard, a case in which ASIC was asked to produce a range of documents said to be "relevant to the credibility of Mr Widdup". The "legitimate forensic purpose" was said to be that it was "on the cards" that the documents would "bear on Mr Widdup's credit adversely" (see [6] and [7]).
15. Smart AJ said (at [23] - [24]): 23 ASIC stressed that the documents sought are wholly unconnected with the issues in these proceedings. That was the situation in Fried and Thomas. ASIC submitted that there was no suggestion that the documents sought might be relevant to an issue of fact likely to arise for decision. 24 ASIC submitted that the bare assertion of relevance to credit, as set out by the first and second defendants, falls well short of establishing a probable connection between the documents sought to be produced and the credit issue.
16. His Honour went on to deal with the contentions in that case, and continued (at [31] - [37]): 31 The first and second defendants wish to mount a substantial challenge to the credit of Mr Widdup about financial, construction and business dealings. The Court is going to be asked not to accept his evidence on the matters briefly summarised. They contend that the ASIC announcement indicates that he has conducted himself poorly and that his management of two of the companies mentioned has been unsatisfactory. Two of the companies failed owing substantial amounts to the ATO and in respect of them he failed to provide reports about the companies' affairs to the liquidator, an offence of strict liability. Thereby he hampered the liquidator. 32 It is not necessary for the first and second defendants to go as far as being able to point to convictions or materials which point to convictions being obtained or likely to be obtained of an offence of dishonesty, such as perjury. It would suffice if it were on the cards that the materials pointed to untruthfulness on the part of Mr Widdup, or some other form of dishonesty. 33 The first and second defendants, having correctly identified the credit of Mr Widdup as important, contended that it was on the cards that documents will exist from the ASIC investigation which will bear upon that credit. They pointed to the transcript of any hearing conducted by the Commission in relation to Mr Widdup's disqualification from managing corporations announced on 18 April 2008. I was asked to infer that there would be written reasons. I do not so infer. As an important administrative body I would expect ASIC to have reasons but not necessarily to have reduced them to writing. I would expect any written reasons to be prepared subsequently if there was an application for administrative review to the Administrative Appeals Tribunal. 34 I proceed on the basis that what emerged from the ASIC investigation which warranted adverse comments were the two matters mentioned in ASIC's announcement of about 18 April 2008, namely, two of the companies failed owing substantial amounts to the ATO and failure to lodge reports about the affairs of two companies with the liquidator. Counsel for ASIC warned me against reading too much into ASIC's announcement. 35 That leaves one further matter, sought by subpoena, namely the orders for disqualification made in respect of Mr Widdup. I would not separate the orders made for disqualification from the reasons stated in ASIC's announcement for the disqualification from managing corporations for 18 months. 36 While the two matters as to each of the two companies of non-payment of substantial amounts to the ATO and the failure to provide reports about the companies' affairs to the liquidators are substantial, I have not been persuaded that they are likely to bear upon the issues of whether Mr Widdup's evidence as to the statements allegedly made to him by Mr McDiven is correct and his version of the conversations he allegedly held with Mr Hicks is correct. 37 I have not dealt with any confidentiality regime. ASIC sought a ruling on the question whether the subpoena should be permitted to stand. It regarded the maintenance of confidentiality as important.
17. His Honour (at [38]) set aside the subpoena.

Consideration of the competing submissions

1. Mr Eastman, for the respondent, says that the Lunney subpoena is "trawl fishing" (Tp468, L6) for material which would be used to "have Mr Lunney's opinions diminished and Mr Dyson's opinions enhanced ... because of a credit issue" (Tp469, LL13-15). Their opinions generate inputs for the "DCF spreadsheet" (Tp470, LL14-15), but the parties differ on whether there is to be one spreadsheet (for 8 years) or two (another for the period beyond 8 years) - (Tp471, LL8-23 and Tp488, LL13-36 cf Tp483, LL30-9).
2. Mr Eastman submits that no "probable connection" has been demonstrated between the documents sought and the issue of Mr Lunney's credit (Tp480, LL5-6), and that the "material sought shouldn't be in the evidence" (Tp480, LL40-1).
3. Mr Seymour bears the onus, and he says that the material sought will assist the applicants to "understand Mr Lunney's history, background and [actual] experience, the basis upon which he offers expert advice to the Court" (Tp484, LL8-12), notably in terms of what Mr Seymour calls (citing paragraph 2.4 of the joint report) his "inextricably linked" test (Tp485, LL4-39), and/or his "self-imposed tests for picking methodology" (Tp486, LL32-33).
4. He said (Tp486, LL35-40): So would it materially assist my client to know what is it in Mr Lunney's background, study or experience that has led him to be proffering these sort of tests? One way to do that is to look at what he does in the market, to look at what he does when he's not just an expert in the proceedings but to look at what he does.
5. He later said (Tp487, LL11-15): So we say it would materially assist my client to understand instances of when Mr Lunney is involved, if he is, in commercial transactions where the price is likely to exceed $10 million to understand how often he is retained to do that, or how often he has been retained to do that.
6. Mr Seymour (Tp486, L42 - p487, L42) then made specific submissions about each of the five categories of documentation sought in the subpoena.
7. Mr Eastman responded to Mr Seymour in these terms (Tp489, LL7-22): If the test he is propounding is would it materially assist his client that is an irrelevant and inapplicable test under the authorities. I'll contend that it is meant in the way that the authorities meant it about being on the cards and so on. The best I can do is to return to some of the select words that Justice Pembroke used in the Thomas case about my analogies pushing together the issue and the documents in the subpoena to show that they fit within those words, like his Honour had said in paragraph 21(b), that the identified basis is reasonably precise and tolerably clear and that - and this is important - the forensic purpose requires realistic consideration of the potential strategic and evidentiary use of the documents in the context of the legal and factual issues.

Conclusion

1. On the basis of the principles stated in the authorities to which I have referred - especially in the terms they were stated and applied by Craig J in Azar, Pembroke J in Thomas, and Smart AJ in Ballard - I prefer the submissions of Mr Eastman to those of Mr Seymour, and the subpoena directed to Mr Lunney cannot be allowed to stand.
2. Mr Lunney comes before the Court as an expert, whose focus must fall on the value the Court should attribute to the acquired land, and it is worth remembering that he and the applicant's expert, Mr Dyson, agree upon the use of Discounted Cash Flow.
3. What else Mr Lunney may do in broader professional life, and/or regarding other land, is not the Court's concern in this present judicial valuation task.
4. The documents sought in the subpoena are not relevant.

Decision

1. The subpoena directed to Mr David Lunney on 10 November 2017 is set aside.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 February 2019