The respondent's subpoenas
19 Although the applications that I am presently considering concern only the first of the three steps identified by Moffit P, in my view, many of the submissions made on behalf of the applicant and the Funders either concern the second or third step or are directed to the substantive questions in s 33N(1). Those issues are not relevant to the notices of motion with which I am presently concerned, which raise only the question of whether paragraphs 1 and/or 3 should be set aside.
20 As would be expected there is considerable overlap between the submissions of the applicant and the Funders. I therefore propose to refer to the Funders' submissions only where, relevantly, they differ from or expand upon those of the applicant.
21 Mr Bathurst QC who appeared, with Mr Darke, for the respondent, clarified a number of points that had been raised by the applicant and the Funders, namely:
(a) the respondents accepted that privileged documents, which are confidential communications between MBC's clients, did not lose that privilege by virtue of having been mailed to clients using IMF as a mail house;
(b) for the purpose of considering the issues that the respondent intends to raise in the hearing of the s 33N issue, the only complaint the respondent makes about the representative group springs from the respondent's statement of issues, namely that the class is limited to clients of MBC.
22 Whether particular categories of documents would be likely to throw light on the issues in the s 33N hearing must be determined with reference to the issues to be raised in that hearing, as set out in the respondent's amended statement of issues. Although not formally a pleading, as a practical matter the statement of issues serves the same purpose. It does not follow, however, that the statement of issues must be construed narrowly or precisely. The purpose of the statement is to put the applicant on notice as to the issues to be canvassed in the s 33N hearing. It is sufficient for present purposes if documents required by paragraphs 1 and 3 may throw light on one of more of those issues. Putting it another way, for a paragraph to be set aside it would be necessary to show that the documents could not reasonably be expected to illuminate any issue that might reasonably be raised by the statement of issues.
23 In relation to the negotiation and performance documents, both the applicant and the Funders emphasised the narrow scope of the hearing under s 33N. I accept their submission that s 33N is concerned with whether the representative character of the proceeding, not with whether the proceeding should continue at all. That being so, I also accept that whether the challenged paragraphs of the subpoenas are relevant to the s 33N hearing cannot be judged with reference to the possible consequences of a determination that the proceeding should not continue as a representative proceeding.
24 In my opinion, however, it does not follow that the funding arrangements that group members were required to enter into in order to become members of the group as defined in the statement of claim are irrelevant to the issues raised in s 33N(1). Senior counsel for the applicant, Dr Hanscombe SC, claimed that if the funding arrangements were objectionable they would be objectionable whether the proceeding was brought under s 33N or otherwise. That submission ignores the comparative element in s 33N(1), in particular ss 33N(1)(a) and (c). The applicant submitted that, in so far as there is a discretionary question as to whether the interests of justice are affected by the criteria for group membership, the terms of the MBC Retainer and the ILF Funding agreements may be relevant but neither the negotiations preceding those agreements or the manner of their performance can be relevant.
25 The respondent submits that the retainer and funding arrangements are relevant because in order to become a member of the group represented by the applicant, a person must retain MBC and this requires that the person enter into retainer and funding agreements. Without the requirement to retain MBC, a person could be a member of the group without taking any positive steps or incurring any costs and, in the absence of a decision to opt out of the group, would remain a member. Although both the applicant and the respondent have canvassed the terms of the funding and retainer agreements in some detail it is not necessary for present purposes for me to dwell on these details. In my view the fact that entry into these agreements is necessary to meet the criteria for group membership is sufficient to show that they may shed some light on whether, given those criteria, the proceeding should continue as a representative proceeding group.
26 It is not to the point that it is now accepted that litigation funding arrangements may 'render positive outcomes for the administration of justice by providing impecunious litigants with access to the courts they otherwise would not have'; Spatialinfo Pty Ltd v Telstra Corporation Ltd [2005] FCA 455 at [23]. Unlike the situations considered in Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd [2005] NSWCA 83 ('Fostif')and Clairs Keeley v Treacy (No 2) (2003) 28 WAR 139,entry into the funding agreements is necessary for a person to become a member of the group. The respondent submits that, for this reason, the funding arrangements in this proceeding limit rather than promote access to justice. Without expressing a view a concluded view on this submission, I accept that it is at least arguable and, that being so, I am of the opinion that the terms of the agreements are relevant to an issue in the s 33N hearing.
27 Mr Bathurst contended that if the funding agreements contained material that would tend to show that it is inappropriate that the proceedings continue as a representative proceeding then the circumstances leading up to the funding agreements are relevant and legitimately the subject of a subpoena. He submitted that this also extends to documents relating to the performance of the agreements.
28 I accept that the negotiation documents are relevant, in the sense used by Beaumont J at [16] above, to the issues raised in clause 2(b) of the statement of issues. The fact that, as clause 2(b) alleges, in order to qualify as members of the group persons 'have been and continue to be required to enter into' retainer and funding agreements is sufficient to make the documents that relate to the negotiation of those agreements relevant to issues in the s 33N hearing. It is not unreasonable to expect that such documents may show the extent to which group members were able to negotiate the terms of the funding documents. The applicant, relying on Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, submitted that once the agreements have been entered into questions about the rights of group members in respect of those arrangements must be based on the executed documents not anterior negotiations. This may be so but the issue here is not the contractual rights of a group member but the issues raised under s 33N(1), in particular what was required for a person to become a group member.
29 In this respect it is relevant to note that the written submissions for the Funders, relying on Fostif, make the point that the court has no business in enquiring into the details of funding arrangements that 'group members have been prepared to accept'. There is a circularity in this submission in that persons do not become group members unless they do accept the funding arrangements. Moreover, as the respondent submits, submissions such as this make relevant the documents concerning the negotiations of those agreements.
30 I do not accept, however, that documents relating to the performance of the agreements are relevant. I am not convinced by the respondent's argument that evidence of how, as a matter of practice, the arrangements are carried out, is able to shed light on the appropriateness of the proceeding to continue as a representative proceeding. In my opinion the statement of issues does not raise any issue that directly or indirectly involves whether the agreements are being performed consistently with the obligations contained in the written agreements. Nor do I think that evidence of actual performance is relevant to the question of control, which was an issue on which both the applicant and the respondent made submissions. In brief, I am not satisfied that the requirement to produce documents relating to or demonstrating how the parties carry out their agreements has a legitimate forensic purpose. Given that I do not accept the respondent's claim of relevance, it is not necessary for me to discuss the applicant's submission that the only potential use for the documents would be to attack the credit of a witness.
31 In its written submissions the applicant also objected to documents other than examples of the executed funding agreements on the ground that the respondent would obtain information about the costs of the litigation as well as about the resources available to the applicant to fund the proceeding. This, it was submitted, would give the respondents a strategic advantage similar to that which Goldberg J was not prepared to countenance in Kingsheath Club of the Clubs Limited (In liq) [2003] FCA 1034. This submission was not pressed at the hearing because, as Dr Hanscombe informed the Court, the solicitors for the respondent had agreed that relevant documents could be masked to prevent the 'war chest' (as Goldberg J termed it) from disclosure.
32 Paragraph 3 of the subpoenas served on the Funders is directed to communication about the proceeding between the Funders and actual and prospective group members. To the extent that these communications concern the terms of the funding agreements and the negotiation of those agreements, I find them relevant for the reasons explained above at [26]-[29] above. To the extent that they relate to the performance of the agreements I find that they are not relevant for the reasons given at [30] above.
33 Paragraph 3 extends well beyond the terms of the terms of the funding agreements and their negotiation. It requires production of documents concerning the commencement and conduct of the proceedings, the number of group members, the likely timing or likely outcome of the proceedings and the conduct of the proceedings irrespective of whether those documents were created before or after the proceedings commenced. In my view these documents are not relevant to issues raised in the statement of issues.
34 Both the applicant and the Funders have made submissions to the effect that paragraphs 1 and 3 of the subpoenas constitute 'fishing' by the respondent. This amounts to a submission that the paragraphs have no legitimate forensic purpose because the documents are sought in order to discover if there is a case not to support a case that has already been articulated; Small at 575. In Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 at 143, a Full Court of this Court noted that the concept of fishing had undergone 'substantial rethinking' in recent years. The Court referred to the comment of the majority of the High Court in Grant v Downs (1976) 135 CLR 674 at 685 to the effect that the public interest requires that in the interests of a fair trial 'all relevant documentary evidence' should be available. The Full Court commented at 143:
'The applicants' suggested rule imposes a requirement that, to avoid the stigma of fishing, a party must already be in possession of some evidence, before issuing a notice to produce (or, presumably, any other compulsive interlocutory process). But historically the concept of fishing was not concerned with the prior possession of evidence but rather that there was a prior pleading which raised issues for which the evidence sought by the process would be relevant.'