application to set aside the nab subpoena
29 The court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in respect of it: O 27 r 4(1).
30 Messrs Barnes and Hawksley submit that they have "a sufficient interest" to move to set aside the NAB subpoena because they are persons whose confidentiality was implicated in the production of the NAB documents. They submit that the NAB documents contained information that was "commercially sensitive" to them. No evidence was put before the court on whether and, if so, how or in what respects the documents were "commercially sensitive". However, given the nature of some of the NAB documents, especially those to which I have made specific reference, it can be accepted that they are of a character that might contain information that would be regarded, in common parlance, as "commercially sensitive" information.
31 There is authority to the effect that if documents contain information which the moving party claims to be confidential to it, then that would provide a sufficient interest to justify an application by that person to set aside the subpoena on some appropriate ground: Compsyd Pty Ltd v Streamline Travel Service Pty Ltd (1987) 10 NSWLR 648 at 649 in relation to Pt 37 r 8 Supreme Court Rules 1970 (NSW); see also Mandic v Phillis (2005) 225 ALR 760 at [32]. Such a claim should, however, be supported by appropriate evidence. In the present application I am left, largely, to speculate about what information, specifically, is alleged to be "commercially sensitive" and whether that information really is confidential. It does not follow that, simply because a document contains information about a person, that information is "commercially sensitive" or confidential and gives rise to a sufficient interest to challenge the production by subpoena of that document, even if the document is a bank record. Nevertheless the respondents have not sought to challenge the standing of Messrs Barnes and Hawksley to move pursuant to O 27 r 4. Rather the focus of the respondents has been to address the merits of the substantive grounds put forward to challenge the issue of the NAB subpoena and thus to accept, at least impliedly, that Messrs Barnes and Hawksley have standing to seek this part of the relief they claim. I make no criticism of the respondents for having taken this course, which may well have been taken to deal with the hearing of the motion as efficiently as possible.
32 In the circumstances, I am prepared to assume, without deciding, that Messrs Barnes and Hawksley have standing to move to set aside the NAB subpoena. I am fortified in adopting this approach in the knowledge that the court on its own motion can set aside a subpoena, in any event. In Fried v National Australia Bank Ltd (2000) 175 ALR 194 Weinberg J, when discussing the predecessor to the present rule (which, relevantly, was in similar terms), observed in [18]:
Whether or not the applicants have standing pursuant to O 27 r 9 to challenge the subpoena, it is at least clear that the court has power of its own motion under that rule to set aside the subpoena if satisfied that its issue involves an abuse of process. The court will not countenance such an abuse: Kizon v Palmer (No 2) (1998) 82 FCR 310. If a subpoena is issued which ought to be set aside, it matters little, at the end of the day, whether it is set aside at the instigation of a party to the proceeding, or because the court itself has come to the conclusion that this should occur.
33 Those observations were made in respect of an application to set aside a subpoena by a party who had not procured the issue of the subpoena. They are, however, no less applicable when the person moving to set aside a subpoena is not a party to the principal proceeding itself. Serious allegations have been raised as to the purpose for which the NAB subpoena was issued and I am seized of both evidence and substantial submissions directed to that issue: Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 619 at [504]. It is appropriate, in the interests of both Messrs Barnes and Hawksley and the respondents, that I proceed to determine the merits of this part of the motion, rather than dwell on an issue of standing that the respondents themselves have not contested.
34 Messrs Barnes and Hawksley seek to have the NAB subpoena set aside on two interrelated grounds. In each case they contend that the issue of the NAB subpoena was an abuse of the court's process.
35 First, they submit that the NAB subpoena does not serve a legitimate forensic purpose in the proceeding. In this connection they submit that a subpoena directed to ascertaining the source of the funds or who was the financier or lender of the funds for the licence fee has no apparent relevance to any fact in issue in the proceeding.
36 Secondly, they submit that if the NAB subpoena does serve a legitimate forensic purpose, this purpose is only collateral to a different, substantial purpose which was to obtain documents that could be used to predicate a further claim against Messrs Barnes and Hawksley. In this connection they submit that the respondents sought the issue of the NAB subpoena for a "fishing expedition". Specifically, they submit that the subpoena was directed to confirming matters which Sean Newell (the Chief Executive Officer of the first respondent) already had reasonable grounds to suspect, namely, that Messrs Barnes and Hawksley were (effectively) lenders of the funds for the licence fee. They submit that the respondents hoped to use this information against Messrs Barnes and Hawksley and that this purpose subverted the proper ends of the issue of the subpoena.
37 A subpoena will be set aside to prevent an abuse of the court's process. The power to control and supervise the court's process is directed to preventing injustice. In this context, injustice is not simply a question of the true purpose for which the issue of the subpoena was procured, but also the effect or impact of the subpoena on the person to whom it was issued: Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 at 102; Hamilton v Oades (1989) 166 CLR 486 at 502. It is, however, the first of these issues that is raised in the present motion.
38 As the grounds on which this part of the motion is advanced recognise, the examination of the purpose for which the issue of a subpoena is procured may involve an examination of different facets of the notion of "purpose", involving a spectrum of considerations ranging from essentially objective factors to essentially subjective factors. The first ground relied upon by Messrs Barnes and Hawksley, relating to apparent relevance, requires an examination of essentially objective factors, while the second ground relating to the existence of a collateral purpose requires an examination of essentially subjective factors, although objective factors may well reflect upon the true purpose for which the NAB subpoena was procured to be issued. In either case, the onus of satisfying the court that there is an abuse of process lies on the person asserting the existence of the abuse: Williams v Spautz (1992) 174 CLR 509 at 529.
39 In relation to the first ground, Beaumont J in Arnotts (at 103) posed questions to the following effect: Does the material sought have an apparent relevance to the issues in the principal proceeding, ie, is adjectival, as distinct from substantive, relevance established? Does the subpoena have a legitimate forensic purpose to this extent? In a similar vein, Waddell J in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 927 invoked the question whether the material that is sought "is reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case": see also Seven Network Ltd v News Ltd (No 5) (2005) 216 ALR 147 at [10]; Cosco Holdings Pty Ltd v Federal Commissioner of Taxation (1997) 37 ATR 432 at 439-440. In Tamawood Limited v Habitare Developments Pty Ltd [2009] FCA 364 at [13] and [35]-[38] Collier J addressed the issue by asking whether it appears to be "on the cards" that the document sought will materially assist the party on whose request the subpoena has been issued: see Alister v The Queen (1984) 154 CLR 404 at 414 per Gibbs CJ.
40 Apparent relevance is addressed by considering, primarily, the issues raised by the pleadings: Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 at [28]; McIlwain v Ramsey Food Packaging Pty Ltd (2005) 221 ALR 785 at [35]; Dorajay Pty Limited v Aristocrat Leisure Limited [2005] FCA 588 at [34].
41 In relation to the second ground on which Messrs Barnes and Hawksley rely, Hunt J in Packer v Meagher [1984] 3 NSWLR 486 at 492 observed:
The legal process of a court is being abused when it is being used to exert pressure to effect an object not within the scope of the process: Grainger v Hill (1838) 4 Bing (NC) 212 at 221; 132 ER 769 at 773; or where it is used for a purpose other than that for which the proceedings are properly designed and exist: Re Majory [1955] Ch 600 at 623; or where the plaintiff in those proceedings is seeking some collateral advantage beyond what the law offers: Castanho's case (at 567). See also Varawa v Howard Smith Co Ltd (1911) 13 CLR 35 at 91; Goldsmith v Sperrings Ltd [1977] 1 WLR 478 at 489, 490, 503; [1977] 2 All ER 566 at 574, 585.
42 These observations were cited with approval in this court in Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193 at 202. See also TJM Products Pty Ltd v A & P Tyres Pty Ltd (1987) 17 FCR 390 at 396.
43 If a subpoena has been issued to a stranger, not with a view to obtaining documents for use at trial, but in order to discover, for some other purpose, what documents the stranger holds, an abuse of process may have occurred: Re Federal Commissioner of Taxation, Ex parte Swiss Aluminium Australia Ltd (1986) 68 ALR 587 at 589-590.
44 In cases where an abuse of process arises from an improper or collateral purpose, the issue is one of predominant purpose, not sole purpose: Spautz at 529; Packer at 493; Re Excel Finance Corp Ltd; Worthley v England (1994) 52 FCR 69 at 89. And in identifying a predominant purpose that is also an improper purpose, it is necessary to distinguish between direct purpose and indirect purpose (or, expressed another way, it is necessary to distinguish between "purpose" and "motive": see Spautz at 534 and the cases there cited).
45 In Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509 Isaacs J at 521-522 explained that, if the object sought to be effected by the process is within the lawful scope of the process, it is a use of the process, whereas if the object sought to be effected by means of the process is outside the lawful scope of the process, it is an abuse of the process. In that case the Society acquired a debt owing by the appellant and brought bankruptcy proceedings against him to ascertain upon examination, after the sequestration order had been made, the identity of the person behind the appellant's publication of defamatory material. The High Court, by majority, held that the initiation of the bankruptcy proceedings for this purpose was not an abuse of process. In so holding the majority followed King v Henderson [1898] AC 720 in which it was held that it is neither fraud nor an abuse of process to petition for a sequestration order with an indirect motive.
46 In Spautz the plurality posed the example of an alderman prosecuting another alderman (who is a political rival) for failure to disclose a relevant pecuniary interest when voting to approve a contract, with the intention to secure the opponent's conviction and subsequent disqualification from office. It was said at 526-527:
… The ultimate purpose of bringing about disqualification is not within the scope of the criminal process instituted by the prosecutor. But the immediate purpose of the prosecutor is within that scope. And the existence of the ultimate purpose cannot constitute an abuse of process when that purpose is to bring about a result for which the law provides in the event that the proceedings terminate in the prosecutor's favour.
It is otherwise when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers. So, in Dowling, Isaacs J. pointed out that "if, for instance, it had been shown that the Society had simply threatened Dowling that unless he did what they had no right to demand from him, namely, give up certain names, they would proceed to sequestration, and they had proceeded accordingly, there would have been in law an abuse of the process". However, because the Society wished to use the process for the very purpose for which it was designed, there was no abuse of process.
[References to footnotes omitted]
47 In Spautz it was held by majority that the institution of proceedings for criminal defamation was an abuse of process because the respondent had done so for a predominant purpose that was improper in that he sought to use the threat of proceedings and the maintenance of them as a means of securing the reinstatement of his employment from which he had been dismissed. In this connection it did not matter that Dr Spautz had a subsidiary motive of vindicating his reputation: see at 529-531 and 537-540.
48 In considering whether a process is sought to be used for an improper purpose, a question may arise as to whose purpose is the relevant purpose. In Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) ATPR 41-679; [1999] FCA 56 Merkel J observed that it was, in that case, the applicant's purpose rather than the motive of its solicitors acting in the matter that was relevant. In that case it had been submitted that the commencement of the proceeding, which was a representative proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth), was an abuse of process because it had been commenced for the collateral purpose of issuing the first representative action and therefore to capture or corner the market for all potential claims for damages arising out of the interruption or cessation of gas supply resulting from an explosion at the Longford gas plant in Victoria. In this connection it had been submitted that the solicitors were the alter ego of the applicant and that, as a result, their purpose was the relevant purpose. His Honour said in [32]-[33]:
I am satisfied that the Johnson Tiles proceeding was issued for the purpose of obtaining the relief sought by Johnson Tiles on its own behalf and on behalf of group members and not for the collateral purpose of capturing "a market" or "clientele" as was suggested by senior counsel for Esso.
Further, it is the applicant's purpose rather than the motive of its solicitor for acting in the matter that is relevant. Esso's submission, in reality, relates to the alleged motive of Slater & Gordon in acting as solicitors in the proceeding, rather than to the applicant's purpose in procuring a proceeding to be issued by its solicitors acting on its behalf.
49 I do not read the decision in Johnson Tiles as laying down any general principle that the purpose of a party's solicitor is irrelevant to the determination of the predominant purpose in a claim involving the abuse of the court's process. Rather, it seems to me that Merkel J's remarks in that regard were made about the facts of the case before him and should be so read. Indeed, his Honour's attribution of the word "purpose" to the applicant and the word "motive" to the solicitors suggests that his Honour had in mind, and was applying to the facts of the case before him, the distinction between direct and indirect purpose to which I have referred.
50 Significantly, in Flower & Hart (a firm) v White Industries (Qld) Pty Ltd (1999) 87 FCR 134 it was held that there was an abuse of process where a proceeding had been commenced on the advice or recommendation of the applicant's solicitor, notwithstanding that the solicitor held the view that the applicant could not succeed in that proceeding and had made his recommendation or advice for the primary purpose of delaying action by the respondent to recover money from the applicant under a building contract. It was found, relying on the solicitor's purpose, that the commencement of the proceeding was an abuse of the court's process because the proceeding had not been commenced for the purpose of vindicating any right that the applicant might have.
51 It may be necessary, therefore, in a case of alleged abuse of process, to have regard to the purpose of a party's legal adviser. In my view this is likely to be so where the alleged abuse of process resides in the taking of some step by a party (such as procuring the issue of a subpoena) where the initiation or execution of that step arises in the course of the day to day carriage of the matter by the legal adviser and is the product of the advice, recommendation or judgment of that legal adviser acting within the scope of more generally expressed instructions to act in the interests of his or her client in that proceeding. In those cases the operative purpose is likely to be the legal adviser's purpose, which is to be attributed to the party for whom he or she acts.
52 I now turn to consider each of the grounds relied upon by Messrs Barnes and Hawksley.
53 At the time the NAB subpoena was issued the pleadings plainly raised as an issue the claim that the applicant had suffered loss or damage manifested, in part, by the payment of the licence fee. It is difficult to see how payment of the licence fee could be a head of damage for CM(UK) unless it had actually paid the licence fee or was, perhaps, indebted or otherwise liable to some third party who paid the licence fee on its behalf. The fact that the licence fee had been paid does not address the issue of whether the amount of the licence fee represented loss or damage suffered by CM(UK). Plainly it was legitimate for the respondents, in the proper defence of the claims that had been made against them, to test whether CM(UK) had actually suffered loss or damage of the kind alleged. That was particularly so in the circumstances that confronted the respondents at the time.
54 I am satisfied that, in the circumstances in which the respondents found themselves at the time, the documents sought by the NAB subpoena had an apparent relevance to the issues in the proceeding. It was only after production of the documents pursuant to the NAB subpoena that, for reasons not given, CM(UK) no longer pressed that part of its claim - a claim, I might add, that had persisted since the commencement of the proceeding on 9 May 2008.
55 As to the second ground, I am not satisfied on the evidence that the issue of the NAB subpoena was procured to obtain documents that could be used to predicate a further claim against Messrs Barnes and Hawksley. In my view the evidence plainly establishes that the sole (and not merely predominant) purpose for procuring the issue of the NAB subpoena was to seek to obtain documents that might be used in the legitimate defence by the respondents of the claim made by CM(UK) that it had suffered loss or damage by payment of the licence fee. It was known that CMUK(A) had actually paid the licence fee but not whether CM(UK) had funded that payment or was subject to a liability to CMUK(A) in that regard. On the evidence before me, Mr Petrucco was concerned that the financial material provided by CM(UK) on discovery was incomplete and had been "sanitised". The issue of the subpoena to CMUK(A), the propriety of which act has not been questioned, resulted in the production of no documents on this issue. The affidavit that Mr O'Sullivan had been ordered to make clearly pointed to the bank as likely to have documents on this issue. The evidence shows that it was this information which directly led Mr Petrucco, as the respondents' solicitor, to procure the NAB subpoena to be issued. The evidence is clear that it was his forensic judgment that was at play in that regard. That judgment was uninfluenced by and, indeed, uninformed by, any suggestion by the respondents themselves that they suspected that Messrs Barnes and Hawksley had effectively funded the licence fee.
56 The foundation for the submissions made by Messrs Barnes and Hawksley in this regard was remote hearsay evidence that was objected to but admitted subject to relevance: s 75 Evidence Act 1995 (Cth); Bray v F Hoffman-La Roche Ltd (2002) 118 FCR 1 at [117]; Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317 at [64]-[66]. I am satisfied that the evidence is relevant. However, seen in the context of Mr Petrucco's evidence, which I accept, this evidence does not lead to a different conclusion concerning the subjective purpose for which the NAB subpoena was procured to be issued.
57 The evidence in question was given by Michele Tomoko Langtry, a solicitor employed by the solicitors for Messrs Barnes and Hawksley. In an affidavit sworn on 14 December 2009, Ms Langtry deposed to information given to her by Raaj Govintharajah. Mr Govintharajah was employed by the second respondent as its State Manager for Victoria from approximately August 2007 until approximately May 2008. Mr Govintharajah informed Ms Langtry that he had had a meeting with Mr Newell in or about August 2008 (after his employment with the second respondent had ceased) in which there was a brief conversation about the respondents' "licence deal" with CM(UK). Mr Govintharajah said that the conversation was to the following effect:
Sean Newell ("SN"): Where do you think Gurj got the money for the licensing deal?
Raaj Govintharajah ("RG"): I don't know, maybe he was able to get a hold of a UK financier with deep pockets.
SN: I think Kim and Lee funded the licensing deal.
RG: I'd be surprised if they did.
SN: It would have been a good idea on their part if they had, I mean paying $4 million to get $16 million, you know what I mean.
RG: I don't know.
SN: If I was in Lee and Kim's position, I would have done it. It would be a pretty smart move, giving Gurjeet the money.
RG: What do people at BlueFreeway think about it?
SN: Other people think the same way I do.
58 The reference to "Gurg" is apparently to Gurjeet Dhillon, who is said to be the principal of CM(UK).
59 There is no evidence about the nature or circumstances of the meeting or how or why this particular conversation took place. But no evidence was led by the respondents to deny the fact of the conversation. Although in the form of remote hearsay, the conversation is some evidence of a suspicion on the part of Mr Newell, as Chief Executive Officer of the second respondent at the time of the conversation, that Messrs Barnes and Hawksley (the "Kim" and "Lee" referred to respectively in the conversation) funded the payment of the licence fee.
60 Messrs Barnes and Hawksley sought to build on the fact of this conversation by submitting that it directed the subsequent course of events leading to the issue of the NAB subpoena. The evidence, however, does not sustain that submission. Whatever suspicion Mr Newell or others might have had in August 2008, Mr Petrucco's evidence was that no such suspicions had been communicated to him. There is no evidence that the issue of the NAB subpoena, or indeed the issue of the earlier subpoena to CMUK(A), was urged upon Mr Petrucco by Mr Newell or anyone else on behalf of the respondents. The evidence indicates that the forensic decision to issue the NAB subpoena was Mr Petrucco's alone, no doubt supported by general instructions on the part of the respondents to act in their interests in the defence of CM(UK)'s claim. Even if it be assumed for the purposes of argument that Mr Petrucco had the same suspicion, or had been informed that any one or more of the respondents' officers or employees held such a suspicion, I am not satisfied that this would change the position in any event. Given the extant issue between CM(UK) and the respondents concerning CM(UK)'s alleged loss suffered by payment of the licence fee in circumstances where the licence fee was apparently paid by another person (CMUK(A)), and given Mr Petrucco's concerns to which I have referred about the adequacy of the discovery that had been given by CM(UK) on this issue, it was legitimate for the respondents to seek documents in aid of their defence of this part of CM(UK)'s claim, regardless of whatever suspicions they may have harboured or other speculations they may have engaged in about what the true facts may be. Suspicion and speculation do not prove facts. It was perfectly legitimate to seek documents which might be used for the purposes of evidence or otherwise in furtherance of the respondents' defence of this part of CM(UK)'s claim.
61 Another matter on which Messrs Barnes and Hawksley rely is the fact that the respondents, through their solicitors, sought the further production of documents under the NAB subpoena. There may be a question about whether the documents that were sought by way of further production were caught by the terms of the NAB subpoena. As things turned out, the bank did not think that there was any question about that matter. It obviously agreed with the respondents' position that the documents sought by way of further production were caught by the terms of the NAB subpoena.
62 Be that as it may, nothing turns, in my view, on the fact that further documents were sought or produced. First, I am not persuaded that the respondents acted for an improper purpose in seeking the further production. It seems to me that, once again, it was Mr Petrucco's decision to seek further production and that, at that time, although then apprised of Messrs Barnes and Hawksley's involvement in providing security for the bill facility, he was still seeking documents which might be used for the purposes of evidence or otherwise in furtherance of the respondents' defence of this part of CM(UK)'s claims. The evidence does not establish that Mr Petrucco acted with any awareness that, at the time the further production was sought, the documents being sought may have fallen outside the terms of the NAB subpoena. Secondly, it was, in any event, the initial production of the bank's records with respect to CMUK(A) that revealed the existence and amount of the bill facility granted to CMUK(A) and the fact that that facility was secured by Messrs Barnes and Hawksley in the way to which I have referred. That production also revealed the account details for the term deposit that was part of the security, and included extracts from the account showing details of the deposit, interest rate and other information. Thus it was the initial production of documents under the NAB subpoena that provided the respondents with the pertinent facts concerning the apparent involvement of Messrs Barnes and Hawksley in the financial arrangements that lay behind the payment of the licence fee by CMUK(A).
63 I am therefore satisfied that the documents sought by the NAB subpoena had an apparent relevance to the issues in the principal proceeding. I am not satisfied that there was a purpose, let alone a predominant purpose, of seeking documents to be used against Messrs Barnes and Hawksley in the 2018 proceeding. In my view the NAB subpoena was not issued for an improper purpose and its issue did not constitute an abuse of process.