Fried v National Australia Bank Ltd [2000] FCA 911 | Case summary

Ruling re subpoena issued by National Australia Bank Limited 2 During the course of this proceeding the applicants applied by notice of motion dated 31 May 2000, pursuant to O 27 r 9 of the Federal Court Rules ("the Rules"), to set aside a subpoena issued by National Australia Bank Limited ("NAB"), the first respondent. The subpoena, dated 26 May 2000, was directed to Australia and New Zealand Banking Group Limited ("ANZ"). It required ANZ to produce to the Court the following documents: "1. All documents constituting or evidencing or containing details of interest paid to, or income otherwise earned from or through ANZ by: (a) Evatab Investments Pty Ltd (formerly TED Engineering Investments Pty Ltd) (ACN 006 392 972); and/or (b) Evatab Leasing Pty Ltd (ACN 074 572 204), for the years ending 30 June 1995, 30 June 1996 and 30 June 1997, other than documents which have been produced by ANZ in response to the subpoena issued in this proceeding on 12 May 2000 by the Eleventh Respondent." 3 Order 27 r 9, in its present form, came into effect on 5 February 1999 and is in the following terms: "9 Setting aside (1) The Court may, of its own motion or on the motion of any person having a sufficient interest, set aside the subpoena wholly or in part. (2) Notice of a motion under sub-rule (1) must be filed and must be served on the party on whose request the subpoena was issued." 4 Counsel for NAB raised a preliminary objection to the notice of motion, contending that the applicants did not have standing to apply to have the subpoena set aside. They submitted that only the person to whom the subpoena was addressed could make such an application. The fact that the documents sought by NAB related to the affairs of Evatab Investments Pty Ltd and Evatab Leasing Pty Ltd (the fifth and eighth applicants in this proceeding) did not give them, or any of the other applicants, "a sufficient interest" to enable them to be heard on the motion. Counsel referred me to a series of authorities which were said to support this contention. 5 In Re ACI International (1986) 11 ACLR 240, on the application of a party to set aside a subpoena directed towards a non-party, Beach J said at 241-242: "For the sake of convenience I propose to deal first with the subpoena directed to the NCSC. The application to set that subpoena aside was made on behalf of Equiticorp, not the NCSC. Mr Sher, who appeared with Mr Jolson on behalf of Equiticorp, sought to be heard in relation to the application. I refused him leave to do so. I did that for the following reasons: in the first place, I consider he had no standing which entitled him to be heard in relation to the subpoena and in that regard I was not prepared to follow the decision of Powell J in Botany Bay Instrumentation & Control Pty Ltd & Anor v Stewart & Anor [1984] 3 NSWLR 98. It would seem to me that no right of an opposing party is involved in determining the objection of a witness to a subpoena. If a person to whom a subpoena is addressed seeks to have it set aside on the ground that it was improperly issued, it is for the witness to raise that matter for determination by the court and in that regard he may be represented by counsel or solicitor. I find it difficult to see any basis upon which an opposite party can object to the issue and service of a subpoena. It does not follow that a judge cannot invite comment from an opposing party if the circumstances are such he considers he may be assisted by such comment. All I am saying is that I do not consider an opposite party has a right to be heard on the matter. I consider some support for that proposition is gained from the judgment of Moffitt P in the decision of the Court of Appeal in New South Wales in National Employers' Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372." 6 The judgment of Moffitt P to which Beach J referred concerned an attempt by a party to a proceeding to prevent another party, who had caused the issue of a subpoena directed towards a non-party to the proceeding, from inspecting documents produced on that subpoena. Moffitt P (with whom Hutley and Glass JJA agreed) expressed the view that the first party had no standing to object to inspection of the stranger's documents. His Honour said at 385: "No right of the opposing party is involved in making an order permitting inspection of a stranger's documents. It is difficult to see on what basis he can object. His right is to have only admissible evidence adduced." 7 Moffitt P's observation concerning standing to set aside a subpoena was plainly obiter. His Honour acknowledged as much at 387. No authority was cited in support of his Honour's conclusion, and no reference was made to the relevant rules of court. 8 In Wran v Australian Broadcasting Commission [1984] 3 NSWLR 241 Hunt J adopted a similarly narrow view of standing in such matters. In that case - a libel action - the defendant publisher sought to set aside a subpoena directed toward the Archives Authority to produce documents which had previously been forwarded to the Authority by a Royal Commission. Hunt J, having first determined that the subpoena was not an abuse of process, went on to say that in his view the defendant lacked sufficient interest in the subpoena to set it aside. His Honour said at 264: "There is also another ground upon which the defendant's application upon this basis should be dismissed. A subpoena, in my opinion, can only be set aside upon the application of a person to whom it is addressed. Others who have an interest in the documents to be produced may seek to be heard upon any application to inspect the documents when produced (they probably have no right to be heard even upon that issue); but they have no standing to have the subpoena set aside as an abuse of the court's process." 9 Counsel for NAB submitted that I should follow the reasoning of Beach J in Re ACI International, and that of Hunt J in Wran. They submitted that Wran at least was directly in point because the rule applicable in that case was Pt 37 r 8 of the Supreme Court Rules 1970 (NSW). That rule is relevantly indistinguishable from O 27 r 9 of the Rules. 10 Counsel for NAB submitted that an additional reason why the applicants lacked standing to challenge the subpoena was that the documents sought were, and always had been, the property of ANZ. No doubt the applicants, or at least Evatab Investments Pty Ltd and Evatab Leasing Pty Ltd, had received copies of those documents at some point in the past. The originals, however, had been retained by ANZ and were owned by it, not by the applicants. 11 NAB's submissions were challenged by the applicants who submitted that whatever force there might once have been in the contention that they lacked standing to have this subpoena set aside, the changes made to O 27 r 9 clearly resulted in their now having such standing. 12 The applicants submitted that O 27 r 9 in its present form had to be contrasted with its precursor which had expressed the rule in narrower terms. Prior to February 1999 O 27 r 9 had read: "Setting aside 9. (1) The Court may, on motion by the person named in the subpoena, set aside the subpoena wholly or in part. (2) Notice of a motion under subrule (1) must be filed and must be served on the party on whose request the subpoena was issued." 13 The applicants submitted that it was apparent that O 27 r 9 was reformulated in order to liberalise the rules governing standing in relation to setting aside subpoenas. They submitted that under the rule as presently formulated any party to litigation in this Court has standing to set aside a subpoena which is objectionable for any reason. The case for treating any such party as having a sufficient interest to seek to set aside a subpoena was even stronger when the documents sought related specifically to the affairs of that party. Counsel for the applicants relied upon two authorities to support their contention. 14 In Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 Powell J held that an application to set aside a subpoena which is an abuse of the process of the Court may be made not only by the person to whom the subpoena is addressed, but also by a party to the litigation and by any other person who might be shown to have a legitimate interest in having the subpoena set aside. His Honour accepted that there was no definitive authority on the question. He referred, however, to Raymond v Tapson (1882) LR 22 Ch D 430 where the defendant was heard on the question of whether an order directing a third party to attend and be examined ought to be set aside. He referred also to R v Lewes Justices; Ex parte Secretary of State for the Home Department [1972] 1 QB 232 where two witness summonses were set aside at the behest of the Attorney-General in so far as they required the production of certain letters which were said to be the subject of Crown privilege. 15 The second case to which the applicants referred was Trade Practices Commission v Kimberley Homes Pty Ltd (unreported, Federal Court, 19 July 1989). There Hill J dealt with an application on the part of the respondents to set aside a subpoena issued by the applicant Commission which was addressed to the Building Services Corporation. The subpoena sought documents, correspondence and records relating to complaints to the Corporation by any person in relation to the respondents. The Commission argued that the respondents, not being the addressees of the subpoena, had no standing to move the Court to set aside the subpoena. 16 In rejecting this submission Hill J referred to O 27 r 9 as it then stood. His Honour said at pp 5-8: "While it is clear that the provisions of Order 27 rule 9 had no direct application in the present case since the respondents were not the addressees of the subpoena, the applicant's submission, if successful, would involve the consequence that Order 27 rule 9 is an exclusive procedural code for the setting aside of a subpoena and that the express provision of a rule giving the addressee of a subpoena the right to move the court involves the denial of any other procedure whereby a party to the litigation could move the court to set aside a subpoena. Such a submission, if correct, would have most unfortunate consequences. It is a well-accepted rule that a subpoena may be set aside as oppressive and as an abuse of the process of the court if it requires the production of documents which are manifestly irrelevant to the issues between the parties. But the recipient of a subpoena, if a stranger to the litigation, will ordinarily not know what the real issues between the parties are. That is a matter which will be best known to the parties themselves. The rule would therefore have little real significance if a party to the litigation could not move the court to set aside the subpoena and so argue the question of relevance. That rule is but an illustration of the wider rule that a subpoena will always be set aside if it is shown to be an abuse of the court's process. The court has a real interest that its process be not abused but acceptance of the submission might well involve the proposition that the court could not act of its own motion. But even if it did not involve so extreme a proposition, there would still, if the submission be correct, be no procedure whereby a party to the litigation, could bring to the attention of the Court that the process of the Court had been abused. The issue does not arise under the rules of the Supreme Court of New South Wales for part 37 rule 8 of the rules of that court permits any person having a "sufficient interest" to move the court to set aside the subpoena and at least ordinarily, a party to the litigation might be thought to have such a sufficient interest. So far as my researches have indicated, there has been no case reported or on computer record in which the question has been discussed in the context of the rules of this Court. Accordingly, it falls to be decided as a matter of principle. There can be no dispute but that the Court, as a superior court of record, has inherent jurisdiction to prevent its process being abused, see Dowling v Colonial Mutual Life Assurance Society Limited (1915) 20 CLR 509, 521-523, Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589, Chemaisse v Federal Commissioner of Taxation (1988) 88 ATC 4253, re Carauna & Ors (1988) FLC 91-903, Gamser v The Nominal Defendant (1976) 136 CLR 145, 154, and Taylor v Taylor (1979) 25 ALR 418, 423. In Hamilton v Oades (1988-89) 85 ALR 1 at p 11, Deane and Gaudron JJ said: "The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice … [This power] is not restricted to defined and closed categories … In this context injustice is not simply a question of the purpose or motive for which the relevant proceedings were instituted but includes a consideration of the consequences of the proceedings for the person invoking the power." The terms "oppressive" and "vexatious" are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are "seriously and unfairly burdensome, prejudicial or damaging", and "productive of serious and unjustified trouble and harassment": Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 62 ALJR 389 per Deane J at 411; 79 ALR 9 at 45. In my view, once it is accepted that the court has inherent jurisdiction to prevent an abuse of its process it must follow that a party to proceedings before the court is entitled to move the court in respect of some action that has been taken by another party where it is alleged that that action constitutes an abuse of the process of the court. In my view, a party to proceedings in this Court has standing to move to set aside a subpoena where it is alleged that the subpoena, in some way, constitutes an abuse of the Court's process and it is accordingly appropriate that the Court be moved by way of a motion, notice of which is to be given to those affected by it." 17 Counsel for the applicants contended that, whether under O 27 r 9 of the Rules, or its precursor, they had a sufficient interest to warrant being heard in support of an application to set aside this subpoena. This was so, they submitted, notwithstanding that ANZ had indicated that it was both willing and able to comply with the subpoena. 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. 19 It is unnecessary, therefore, for me to express a firm conclusion as to the interpretation to be accorded to the expression "sufficient interest" in O 27 r 9. I should say, however, that I find the reasoning of Hill J in Trade Practices Commission v Kimberley Homes Pty Ltd to be particularly persuasive. If pressed, I would follow his Honour's views, and the views of Powell J in Botany Bay Instrumentation & Control Pty Ltd in preference to the views of Hunt J in Wran, and of Beach J in Re ACI International. 20 The real issue between NAB and the applicants was whether the documents sought by NAB had legitimately been made the subject of the Court's coercive processes. The applicants submitted that those processes had been invoked as part of a wide ranging trawl for documents which might, theoretically, be capable of producing something of forensic value, but which, absent some proper foundation for their being sought, constituted an abuse of process. 21 In that regard, I note that counsel for NAB indicated with complete frankness that the only purpose for which the documents were sought was that they might demonstrate that Evatab Investments Pty Ltd and Evatab Leasing Pty Ltd had earned interest which had not been disclosed to the Australian Taxation Office. Were that to be so, NAB could use these documents to attack the credit of Mr Tab Fried, the first applicant, who is an important witness in this proceeding, as it was he who had lodged the tax returns on behalf of those entities. 22 Counsel for NAB submitted that it was an entirely legitimate forensic exercise on NAB's part to subpoena documents solely in order to see whether they provided material which could be used to attack the credit of a key witness. They argued that they suspected, on reasonable grounds, that the documents sought would demonstrate that there were discrepancies between the interest earned by the two companies named in the subpoena, and what they had declared in their tax returns. 23 When pressed by me to clarify further the basis upon which that suspicion was said to rest counsel for NAB replied that other documents already discovered by the applicants in the proceeding had demonstrated that there were discrepancies of this type. When pressed still further they declined, as they were of course entitled to do, to provide any details. They pointed out that Mr Fried was present in court, and that they did not consider it appropriate that he be forewarned of their proposed line of cross-examination. 24 I accept, for present purposes, that it may be legitimate to issue a subpoena directed to a third party in order to obtain documents which are to be used solely to impeach the credit of a witness. There is authority for that proposition - see In Re Emma Silver Mining Co (1875) LR 10 Ch App 194 at 197; Lucas Industries Ltd v Hewitt (1978) 18 ALR 555; R v Saleam (1989) 16 NSWLR 14 at 19; Carter v Hayes (1994) 72 A Crim R 387 at 389; and Hunt and Boyce v Judge Russell (1995) 63 SASR 402 at 410. 25 It should, however, be noted that there are some statements of principle which cast doubt upon whether a subpoena may properly issue solely for this purpose. For example, in In the Marriage of Epstein (1993) 16 Fam LR 588 Treyvaud J said: "As to relevance, the law is that 'production' of a document on subpoena by a stranger is only required if the document is sufficiently relevant to the action in the sense that it is likely to add, in the end, in some way or other, to the relevant evidence in the case: Waind v Hill (1978). See also Eighth Dictum Pty Ltd v The Commissioner of Taxation (unreported) the Supreme Court of Victoria 1991, (per Hedigan J) where his Honour said: '… Moffitt JA in Waind … examined at some length the appropriate procedures which should be followed with respect to subpoenaing a stranger's documents. … … The law clearly is that a subpoena to produce documents directed to a person not a party may be set aside as oppressive or an abuse of process if the documents, production of which is required, are not sufficiently relevant to any question in the proceeding …see Waind v Hill …. The latter case described the test of relevance as being that inspection should be granted if it is necessary for the proper conduct of the litigation in that it is reasonably likely to add, in the end, in some way or the other, to the relevant evidence in the case. (My emphasis)'" 26 I accept too, for present purposes, that there may indeed be discrepancies between the amounts said to have been earned as interest in various documents already discovered, and the amounts disclosed in the tax returns filed by or on behalf of the applicants. Counsel for NAB acknowledged that they were seeking more documents of that type through the issue of the present subpoena. It should be noted, however, that the documents already discovered are at least relevant to the issues in this proceeding. The documents now sought are wholly unconnected with those issues. 27 It seems to me that the Court should exercise particular caution in permitting the use of subpoenas in order to obtain documents of this type. The Court should scrutinise carefully any subpoena directed towards the production of documents which are relevant to credit only, particularly when the documents are said to bear only upon matters which go to credit, and which are wholly unrelated to the issues in dispute. It must be remembered, of course, that a subpoena may not be used as a substitute for discovery from a party or to obtain discovery from a third party. 28 Section 102 of the Evidence Act 1995 (Cth) makes it plain that, subject to specific exceptions, evidence that is relevant only to a witness' credibility is inadmissible. The extent to which the documents sought by the subpoena could legitimately be used in cross-examination as to credit is debatable, but s 103 of the Act suggests that there might be difficulties in using them in an unrestricted manner. Lengthy cross-examination, particularly cross-examination going only to credit, is responsible for much of the delay and unwarranted cost typically associated with modern litigation. Cross-examination as to credit should be kept, so far as possible, within proper bounds. 29 It is not appropriate, in my view, for a Court to permit a subpoena to stand which does little more than trawl for documents which may be used to impugn the credit of a particular witness. This is particularly so when the documents sought have nothing to do with any of the issues in dispute in the proceeding. 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. 30 The explanation given as to the purpose for which the documents identified in the subpoena were sought was altogether too vague and unsatisfactory to persuade me of its legitimacy. 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. It was for these reasons that I ordered that the subpoena be set aside. 31 I consider it appropriate that the first respondent pay the applicants' costs of the notice of motion dated 31 May 2000. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.

Fried v National Australia Bank Ltd

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