Commissioner for Fair Trading v Jonval Builders Pty Limited & Ors

The History of the Proceedings

1. The substantive litigation, in relation to which the subpoenas and notice were issued, was commenced by the plaintiff on 6 October 2015. An Amended Statement of Claim was filed on 24 March 2016.
2. The first defendant builds and sells relocatable homes. The second defendant operates the Tweed Heads Hacienda Caravan Park, a park in which purchasers of relocatable homes from the first defendant sometimes located those homes. The third defendant is a director of the first and second defendants.
3. The plaintiff's case, broadly, is that the first defendant sold relocatable homes to a number of consumers, representing - together with the second defendant - that the homes could be situated permanently at a site at the Tweed Heads Hacienda Caravan Park and used by the consumers as a permanent place of residence. Permanent occupancy was in fact a contravention of Council regulations and not lawfully permitted, something that the defendants are alleged to have known.
4. In reliance on these representations, a number of consumers purchased relocatable homes, fixed them on site at the premises of the second defendant, and spent considerable sums of money in landscaping and so forth. The consumers subsequently discovered that the sites could not be the subject of permanent occupation, as intended by them at the time of purchase. They suffered financial loss as a consequence of acting on the representations from the defendants.
5. The Commissioner seeks declarations that the defendants engaged in misleading or deceptive, and unconscionable conduct, in contravention of the Fair Trading Act 1987 (NSW). Further orders are sought directing the defendants to cease such conduct, to pay compensation to those consumers adversely affected, and to pay costs.
6. A defence was filed on behalf of each of the defendants on 22 June 2016. Whilst the defendants admit the sale of the relocatable homes to the consumers, and the siting of the homes at the premises of the second defendant, they deny that any representations as to permanency of occupation were made, and do not admit that the consumers relied upon any such representations in any event.
7. The subpoena to produce that is one of the subjects of the Amended Motion of 27 July 2017 was issued on 23 March 2017 by the defendants upon the Proper Officer of Tweed Shire Council. The Schedule to the subpoena sought a number of things, with item 3 the subject of the dispute between the parties. Item 3 to the Schedule seeks: "Records of any leave, including sick leave taken by staff member Mr Peter Ainsworth, during the period 30 June 2003 to 30 June 2009."
8. The plaintiff argues that this subpoena has no legitimate forensic purpose, seeks material irrelevant to the issues to be decided, and constitutes an extraordinary invasion to the privacy of an individual who is a stranger to the litigation.
9. The subpoena to produce that is the further subject of the Amended Motion was issued on 5 April 2017 by the defendants upon the Trustee of the Hodson Family Superannuation Fund ABN 54 360 224 623. The Schedule to the subpoena seeks the production of: "1. Copy of the Hodson Family Superannuation Fund Trust Deed; 2. Copies of the minutes of meetings of or in relation to the Hodson Family Superannuation Fund from 1 July 2009 to the date of issue of this subpoena; 3. Copies of all Bank Statements of the Hodson Family Superannuation Deed from 1 October 2009 to the date of issue of this subpoena."
10. The plaintiff contends that this subpoena has no legitimate forensic purpose, seeks material irrelevant to the issues to be determined, would result in an invasion of privacy of a third party, and is so broad as to be oppressive.
11. The subpoena to produce which is the subject of the second Motion was issued on 20 March 2017 by the plaintiffs upon the defendants' former solicitors, Corrs Chambers Westgarth. The Schedule to the subpoena seeks the production of: "1. All Documents recording Communications with Peter Simons in relation to this proceeding. 2. All Documents recording Communications with Kirsty Simons in relation to this proceeding."
12. The plaintiff's Notice to Produce to Court that is the subject of the third Motion was issued on 15 May 2017 and served on the legal representative of the defendants that day. It seeks the production of: "All documents referred to in paragraph [5] of the affidavit of Kenneth Vincent Lee affirmed on 20 January 2017."
13. Paragraph 5 of Mr Lee's affidavit (annexure "C" to the affidavit of Fabiola Campora of 9 June 2017, Ex. FC:C) in turn is in the following terms: "At the time of receiving instructions, my clients provided me with notes from an interview conducted by Corrs Chambers Westgarth with Peter Simons and Kirsty Simon. They also provided me with draft affidavits of Peter Simons and Kirsty Simons that had been prepared by Corrs Chambers Westgarth in accordance with the information obtained during interview."
14. The defendants contend that both the subpoena and the notice seek the production of material which is protected by the doctrine of legal professional privilege, in circumstances where there has been no waiver of that privilege, either express or implied.

The Law

1. There is no issue that the Court has the power to set aside a subpoena, in whole or in part. Rule 33.4 of the Uniform Civil Procedure Rules 2005 provides: "Setting aside or other relief (1) 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. (2) An application under subrule (1) must be made on notice to the issuing party. (3) The court may order that the applicant give notice of the application to any other party or to any other person having a sufficient interest."
2. There is equally no issue that, to be upheld, a subpoena must have a legitimate forensic purpose. Where objection is taken to the production of documents in answer to a subpoena the party who procured the issue of the subpoena must identify a legitimate forensic purpose: R v Saleam (1989) 16 NSWLR 14 at 14. In Attorney General (NSW) v Dylan Chidgey [2008] NSWCCA 65; (2008) 182 A Crim R 536, Beazley JA (with whom James and Kirby JJ agreed) said, "The test for determining whether a party is required to produce documents pursuant to a subpoena was stated by Simpson J (Spigelman CJ and Studdert J agreeing) in Regina v Saleam [1999] NSWCCA 86 at [11], in the following terms: "The principles governing applications [for an order that documents not be produced] are no different from those governing applications for access to documents produced in answer to a subpoena. Before access is granted (or an order to produce made) the applicant must (i) identify a legitimate forensic purpose for which access is sought; and (ii) establish that it is 'on the cards' that the documents will materially assist his case. So much was established in earlier proceedings brought by this applicant: R v Saleam (1989) 16 NSWLR 14, per Hunt CJ at CL; see also R v Ali Tastan (1994) 75 A Crim R 498 per Barr AJ, as he then was." The genesis of the expression "on the cards" is to be found in the judgment of Gibbs CJ in Alister v R [1983] HCA 45; (1984) 154 CLR 404 at 414"
3. "On the cards" has been defined as meaning "within the range of probability": Roads & Traffic Authority (NSW) v Connolly (2003) 57 NSWLR 310, referring with approval to Fitzgerald v Magistrate's Court of Victoria [2001] VSC 348; (2001) 34 MVR 448, at [20].
4. A subpoena may be set aside because it is oppressive or unduly burdensome on the party to whom it is directed: GB v Greater Western Sydney Health Service [2010] NSWSC 181 at [64]. Where the subpoena will result in an invasion of privacy or the disclosure of confidential material, the Court will scrutinise the subpoena carefully to ensure that it is not oppressive, and that the documents sought are material: In the Matter of North Coast Transit Pty Limited [2013] NSWSC 1912 at [10].
5. Neither the litigant nor the Court is entitled to go on what has been referred to as "a fishing expedition": R v Saleam (1989) 16 NSWLR 14 at 17 - 18; NSW Commissioner of Police v Tuxford & Ors [2002] NSWCA 139 at [20]. There must be something that goes beyond speculation: Air Canada v Secretary of State for Trade [1983] 2 AC 394 at 439.
6. Subpoenas cannot be used as a substitute for discovery: The Commissioner for Railways v Small (1938) 38 SR 564 at 574.

The Amended Notice of Motion (the First Motion)

1. The plaintiff relies upon an affidavit from Fabiola Campora, which annexed correspondence between the solicitor for the plaintiff and the solicitor for the defendant, and other relevant documentation.

The Subpoena on Tweed Shire Council

1. Tweed Council is the local government body with authority over the land on which the Tweed River Hacienda Caravan Park is situated, and with regulatory and approval powers for the use of that land. The parties have already been granted access to material produced by the Council in response to an earlier subpoena, which sought files and other documents relevant to consents and approvals granted to the second defendant for the use of land.
2. The issue in relation to this disputed subpoena is the production by the Council of leave records for a Council Employee. The employee, Mr Ainsworth, is not a party to the litigation.
3. The parties have agreed that, with respect to other documents sought by the subpoena, the plaintiff should have first access, for a period of 7 days, to ascertain whether there is any material produced which could be the subject of a claim for privilege.
4. The plaintiff argues that the sick and other leave records over a six year period for a particular Council employee can have no relevance to any fact in issue in the proceedings, and production of them would involve a grave invasion of the employee's privacy.
5. The defendant contends that the leave records "may" shed light on discussions surrounding approval for a number of villa sites at the Caravan Park, and upon the circumstances in which the role of the relevant employee in considering land use approvals was transferred to another employee.

Consideration

1. There is no basis upon which the Court could conclude that leave records of a Tweed Council employee could have the slightest relevance to any fact in issue in these proceedings. Indeed, in oral submissions, the contrary proposition was but faintly and briefly put. Counsel for the defendant referred to the written submissions filed on this aspect of the matter, noting that the relevant paragraph "is about as best as I can do in terms of arguing that the leave records […] are relevant" (T13:05 of 27 July 2017).
2. The material relevant to approvals for land use by the Council has already been produced to the parties, and there is no fact in issue raised in either the pleadings or the defences filed which could make staff sick leave records, and the possible illness of one employee, relevant.
3. The defendant has failed to identify any legitimate forensic purpose for this aspect of the subpoena. Further, the material sought represents a considerable, and unwarranted, invasion of the privacy of the employee concerned.
4. This aspect of the subpoena must be set aside.

The Subpoena on the Hodson Family Superannuation Fund

1. The plaintiff points out that the subpoena on the Hodson Family Superannuation Fund is directed to a third party which is not involved in the litigation. Two of the consumers nominated by the plaintiff in the pleadings as affected consumers, Mr and Mrs Hodson, are trustees of the Fund, who purchased a relocatable home from the first defendant in that capacity. However, there is no issue in the proceedings as to the ownership of the home (Marina Villa 10), or the means by which the home was purchased, or how a weekly occupation fee was paid by the owner to the second defendant. The sale agreement relating to the villa was between the first defendant and Mr and Mrs Hodson, and the agreement for occupation at the caravan park was between them and the second defendant.
2. The documents sought by items 2 and 3 of the Schedule cover a period of in excess of seven years, which the plaintiff contends is oppressively broad. Further, it is submitted that the documents sought from the Fund will encompass a large amount of entirely irrelevant and highly confidential financial information, which the Fund should not be required to produce.
3. The defendant submits that the documents sought will: 1. Throw light on whether reliance was placed on the representations as to permanency of occupation by Mr and Mrs Hodson; 2. May reveal whether Mr and Mrs Hodson in fact intended the relocatable home as an investment rather than a permanent dwelling; and 3. Establish whether the Fund paid for the home, which would in turn suggest that Mr and Mrs Hodson did not intend to reside permanently at the site.

Consideration

1. As counsel for the plaintiff put it in oral submission, "this is asking a whole ocean to catch one possible fish" (T7:29 of 27 July 2017).
2. There is nothing in the pleadings, or in the defence, which puts the business or finances of the Trust Fund in issue, and certainly not for the period set out in the schedule to the subpoena, from 2009 to 2017.
3. The subpoena is very widely drawn, as was conceded by counsel for the defendant (at T12:30 of 27 July 2017). The width of the subpoena itself casts doubt upon the legitimacy of any forensic purpose, since what it appears to be seeking to achieve is a form of discovery, in the hope that something of use may be produced. There is no basis in the pleadings or defence to assume that such will be the case. As in R v Saleam (at 17), "[The subpoena] gave every appearance of a fishing expedition, in thesense that the appellant had no evidence that fish of a particular kind werein the pool but wanted to drag the pool in order to find out whether therewere any such fish there or not [citation omitted]."
4. Given the broad sweep and lack of particularity of the subpoena, two further concerns arise: that of the burdensome nature of the subpoena, and the likely needless breach of confidentiality the subpoena would cause. Production of bank records and minutes for such a broad period of time would require the Trust Fund to produce a considerable amount of material, and would certainly reveal confidential matters of no possible relevance to the present proceedings.
5. This subpoena must be set aside.

The Second and Third Notices of Motion

1. These Motions can be dealt with together, consistent with the approach taken by the parties, since the disputed subpoena and notice to produce seek broadly the same material, and the same issues are raised.
2. The defendants rely upon affidavits from their current solicitor, Mr James. Evidence was also called, both orally and by affidavit, from the third defendant (and director of the first and second defendant), Mr John Willmott.
3. Mr Willmott deposed that the documents that would be produced in answer to the process issued by the plaintiff are documents created by the defendants' former lawyers, Corrs Chambers Westgarth, for the purpose of providing legal advice to the defendants concerning the present litigation. At no stage has he waived privilege over the documents.
4. The defendants raise a claim of legal professional privilege, and contend that the material sought by both the subpoena and the notice to produce is caught by the privilege, which has not been waived.
5. The plaintiff accepts that the defendants have established privilege in relation to some of the material they seek. Only the following material is in dispute: 1. Letter from Corrs Chambers Westgarth to Peter and Kirsty Simons dated 12 April 2016. 2. Answers recorded in notes from a meeting held on 28 April 2016. 3. Notes from a further meeting held on 29 April 2016.
6. In relation to that material, the plaintiff contends that the material is not confidential or, if it is, privilege over it has been waived.

Consideration

1. The issues in dispute are to be decided by reference to the relevant provisions in the Evidence Act 1995 (NSW). They are: "118 Legal advice Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication made between the client and a lawyer, or (b) a confidential communication made between 2 or more lawyers acting for the client, or (c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person; for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client. 119 Litigation Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or (b) the contents of a confidential document (whether delivered or not) that was prepared; for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party."
2. The meaning of "confidential communication" and "confidential document" is provided by s 117, as follows: "confidential communication means a communication made in such circumstances that, when it was made: (a) the person who made it, or (b the person to whom it was made, was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law. confidential document means a document prepared in such circumstances that, when it was prepared: (a) the person who prepared it, or (b) the person for whom it was prepared, was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law."
3. The subpoena and notice seek production of documents prepared by Corrs Chambers Westgarth during the period when that firm of solicitors acted for the defendants, that is, from December 2015 to 17 October 2016. The documents relate to communications between that firm and Peter and Kirsty Simons, both of whom were (and are) regarded as potential witnesses in the litigation in the defendants' case.
4. According to Mr Willmott, the letter to the Simons from his former solicitors of 12 April 2016 was prepared on his instructions, and was intended to invite the recipients to meet with Corrs Chambers Westgarth so that some assessment might be made of the evidence which both could potentially give for the defendants in the litigation.
5. The notes made of a meeting with the potential witnesses on 28 April 2016 were made by a solicitor from Corrs Chambers Westgarth. They are headed "Confidential and Privileged". Following that heading is a list of questions to be asked of Mr and Mrs Simons (which the plaintiff accepts is privileged), and thereafter, a list of answers given to the questions. The answers are not preceded by a heading denoting what follows as confidential or privileged.
6. The notes from the meeting of the following day, also between legal staff of Corrs Westgarth Chambers, and Mr and Mrs Simons (and their lawyer), were prepared by a solicitor acting for the defendants. The notes are headed "Confidential and Privileged".
7. Mr Willmott deposed that all of the documents were prepared by his lawyers in the course of advising the defendants on the current litigation. He told the Court that it was always intended that the documents be confidential, and not disclosed to any person outside of those involved in the meetings.
8. In referring to the existence of this material, in an affidavit of Mr Lee 20 January 2017, it was intended only to disclose the contents of unsigned affidavits of Peter and Kirsty Simons, as a means of putting the plaintiff on notice of the evidence it was anticipated each would give as witnesses for the defendants. It was not intended thereby to disclose or waive privilege over antecedent documents, such as notes of meetings.
9. In his affidavit of 20 June 2017 Mr Willmott said (at [23]), "…the sole purpose of serving the draft Affidavits of Peter and Kirsty Simmons was to comply with the Court's directions and serve draft Affidavits for each of the people who were uncontactable at the relevant time, so that if they ever become available, the Defendants could rely upon their evidence by giving advance notice to the Plaintiff of what the Defendants anticipated their evidence to be so as to satisfy the requirement of procedural fairness to the Plaintiff."
10. Despite the advent of the Evidence Act the principles relevant to legal professional privilege as set out in Grant v Downs (1976) 135 CLR 674 remain of assistance. At 677 Barwick CJ said, "[…] a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection. In the application of this principle, the fact that the person who produced, or the person or authority who or which directed the production of the document, had in mind other uses of the document will not preclude that document being accorded privilege, if it were produced with the requisite dominant purpose."
11. Here, each of the disputed documents was, on the evidence, produced or brought into existence by a solicitor acting for the defendants, in the course of providing legal advice to the defendants, and preparing for litigation. The dominant purpose of the production of the documents was to provide legal advice to a client. Framing that proposition in terms of s 118 of the Evidence Act, I have concluded that the documents fall within s 118(c) and are "confidential documents".
12. Although, in relation to the letter to Mr and Mrs Simons of 12 April 2017, it is argued by the plaintiff that the recipients were under no duty of confidentiality, the person who prepared it (a solicitor with the firm then acting for the defendant) was under an obligation of confidentiality.
13. The question then, is whether that obligation of confidentiality, or privilege, has been waived.
14. The plaintiff contends that, by referring to the existence of the documents, as Mr Lee did in his 20 January 2017 affidavit, and serving the unsigned affidavits, privilege has been waived. The defendants submit that more is required than a mere reference to the existence of the documents to waive legal professional privilege, and that the service of the unsigned affidavits does not disclose the antecedent documents from which the affidavits were prepared.
15. The loss of client legal privilege is dealt with in ss 121 to 126 of the Evidence Act. Section 122 is the relevant provision. It provides: "122 Loss of client legal privilege: consent and related matters (1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned. (2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120. (3) Without limiting subsection (2), a client or party is taken to have so acted if: (a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or (b) the substance of the evidence has been disclosed with the express or implied consent of the client or party. (4) The reference in subsection (3) (a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure. (5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because: (a) the substance of the evidence has been disclosed: (i) in the course of making a confidential communication or preparing a confidential document, or (ii) as a result of duress or deception, or (iii) under compulsion of law, or (iv) if the client or party is a body established by, or a person holding an office under, an Australian law - to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held, or (b) of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person, or (c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court. (6) This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness's memory about a fact or opinion or has used as mentioned in section 32 (Attempts to revive memory in court) or 33 (Evidence given by police officers)."
16. Although the ambit of the common law doctrine of legal professional privilege has been held in Mann v Carnell [1999] HCA 66; (1999) 20 CLR 1 (at [20]) to exceed that of ss 118 and 122 of the Evidence Act, common law authorities can still be of some use in considering whether there has been disclosure within the meaning of s 122. At [28] - [29] of Mann v Carnell, it was stated that, "At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that "waiver" is a vague term, used in many senses, and that it often requires further definition according to the context. Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege […]. Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. [Footnotes omitted]"
17. Having considered all of the evidence, and the competing submissions of the parties, I am not persuaded that a mere reference to the existence of the disputed documents is inconsistent with the defendants' s 118 objection (s 118(2)), and nor is it a disclosure of the substance of the contents of the documents (s 118(3)). Privilege has not, in my view, been waived.
18. It follows that the subpoena of 20 March 2017 and the notice to produce of 15 May 2017 should be set aside.

Costs

1. Both parties sought an order for costs, on the basis of success in bringing the respective Motions.
2. In circumstances where both have been successful in the respective motion(s) brought by each, the most straightforward and efficient way of resolving the issue of costs, is to order that each party bear its own costs of the three motions.

orders 1. The subpoena issued on behalf of the defendants directed to The Trustee of the Hodson Family Superannuation Fund ABN 54 360 224 623 dated 5 April 2017 is set aside. 2. The subpoena issued on behalf of the defendants directed to Tweed Shire Council dated 23 April 2017 is set aside, insofar as it requires production of the documents referred to in paragraph 3 of the schedule thereto. 3. The plaintiff is to be granted first access for seven days to the envelope produced by the Tweed Shire Council in response to the balance of the subpoena dated 23 April 2017 issued on it, containing correspondence between the plaintiff and Tweed Shire Council. 4. The subpoena issued on behalf of the plaintiff directed to Corrs Chambers Westgarth dated 20 March 2017 is set aside. 5. The notice to produce served on the defendants on behalf of the plaintiff on 15 May 2017 is set aside. 6. Each party is to bear its own costs of the motions.

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: 15 August 2017