ICAP Pty Ltd & Ors v Moebes & Anor

Supreme Court of NSW|2009-04-24|Before: Nicholas J

CITATION : ICAP Pty Ltd & Ors v Moebes & Anor [2009] NSWSC 306

CATCHWORDS : PROCEDURE - SUBPOENA - whether legitimate forensic purpose or "fishing" - general principles considered - whether subpoena should be set aside

LEGISLATION CITED : Uniform Civil Procedure Rules 2005

Air Canada v Secretary for State for Trade [1983] 2 AC 394 Alister v The Queen [1984] HCA 85; (1984) 154 CLR 404 Attorney-General for New South Wales v Stuart (1994) 34 NSWLR 667 CASES CITED : Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504; (1997) 37 ATR 432 NSW Commissioner of Police v Tuxford & Ors [2002] NSWCA 139 Portal Software v Bodsworth [2005] NSWSC 1115 Trade Practices Commission v Arnotts Ltd (No. 2) (1989) 21 FCR 306; (1989) 88 ALR 90 Travel Compensation Fund v Blair & Ors [2002] NSWSC 1228

ICAP Pty Ltd - first plaintiff ICAP (Futures) Australia Pty Ltd - second plaintiff PARTIES : ICAP Brokers Pty Ltd - third plaintiff Forrest Moebes - first defendant Kellee Campbell - second defendant

P D Doyle Gray - BGC Partners (Australia) Pty Ltd - applicant COUNSEL : J Stevenson SC/Ms C Spruce - plaintiffs/respondents no appearance - defendants

Horton Rhodes - applicant Minter Ellison - plaintiffs/respondents SOLICITORS : no appearance - defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5947/07 ICAP Australia Pty Ltd & Ors v Forrest Moebes & Anor JUDGMENT 1 His Honour: By its notice of motion filed 13 February 2009 BGC Partners (Australia) Pty Ltd, (BGC), seeks to set aside, pursuant to Pt 33, r 33.4 Uniform Civil Procedure Rules 2005, the subpoena dated 19 December 2008 issued by the plaintiffs. Alternatively, it seeks orders to protect the confidentiality of any documents ordered to be produced under the subpoena. BGC is not a party to the proceedings. 2 The ground relied upon is that the subpoena lacks legitimate forensic purpose. It is not contended that production of the documents would be oppressive or unduly burdensome. 3 The defendants did not appear at the hearing, although their solicitors had been made aware when it would take place. Background 4 By their statement of claim filed 17 April 2008, the plaintiffs claim damages against the defendants who were former employees of the first plaintiff. The pleaded allegations may be summarised as follows. 5 The plaintiffs were subsidiaries of ICAP plc, a company incorporated in the United Kingdom and the holding company of the ICAP group of companies. They carry on business in Australia and internationally as, inter alia, providers of financial services including specialist broking services. The first plaintiff employed all employees who work in Australia. The second and third plaintiffs were the entities within the ICAP group in Australia which contracted with its customers in Australia to provide them with broking services. From about June 2002 until 7 December 2007 the first defendant, and from about September 2003 until 7 December 2007 the second defendant, were employed by the first plaintiff as brokers operating in the Australian energy market from the plaintiffs' Energy desk in Sydney. BGC is a direct competitor of the plaintiffs in, inter alia, the Australian energy market. 6 On 5 December 2007 the defendants executed employment agreements and a loan deed with BGC, and left notices of resignation with the first plaintiff. On 7 December 2007 they refused to comply with a demand to return to work, and on that day the first plaintiff terminated their employment by reason of such refusal. On 7 February 2008 the Court made orders that the defendants be restrained from commencing employment with BGC until after 7 March 2008. On about 8 March 2008 each of the defendants commenced employment with BGC, providing to it broking services identical to those provided by them for the plaintiffs prior to 5 December 2007 on behalf of, inter alia, those customers of the plaintiffs with whom the defendants previously dealt in the course of their employment with the plaintiffs. The claims against the defendants are for damages for breach of their employment contracts, breach of fiduciary duties, and for conspiracy. 7 By their amended defence the defendants deny the plaintiffs' claims. They contend by reason of the conduct of management personnel the first plaintiff repudiated the contracts of employment which they accepted by their letters of resignation of 5 December 2007, and in leaving their employment, and accepting employment with BGC. The issues 8 The issues with regard to which the present application is to be determined are the following. 9 The statement of claim pleads: "40. There has been a detrimental effect on the Plaintiffs' business as a direct result of Moebes and Campbell working for BGC and competing with the Plaintiffs for the Initial Periods of the defendants' respective employment contracts." 10 By letter of 19 December 2008 to the defendants' solicitors, the plaintiffs' solicitors provided the following further particulars in support of the above pleading: "1 For at least the remainder of the Initial Periods of the defendants' respective employment contracts (5 December 2007 to 31 October 2008 (in the case of Mr Moebes) and 5 December 2007 to 28 February 2009 (in the case of Ms Campbell)) and possibly longer: (a) the Energy desk lost market share and its position as the most successful Energy broking desk in Australia; (b) the business of the customers of the Energy desk, who would have otherwise dealt with ICAP, was enticed away by Ms Campbell and Mr Moebes to BGC (in direct competition with ICAP). In particular: (i) there was a reduction in the revenue (including, without limitation, brokerage revenue) from futures trades and over the counter (OTC) transactions (Trades), generated by those customers with whom Ms Campbell and Mr Moebes had dealings during their employment with ICAP (Customers); (ii) there was a reduction in the quantum and volume of Trades effected by some Customers with ICAP; (iii) there has been, in ICAP's belief, an increase in the quantum and volume of Trades effected by BGC from some Customers as a result of Ms Campbell and Mr Moebes commencing work with BGC; and (iv) there has been, in ICAP's belief, an increase in BGC's revenue (including, without limitation, brokerage revenue) as a result of the increased Trades effected by BGC from some Customers; (c) there was a reduction in the quantum and volume of Trades effected by ICAP's Energy desk because, among other things: (i) there were fewer experienced brokers with whom Customers could trade as a result of the departure of Ms Campbell and Mr Moebes; (ii) the reduction in Trades with those customers for whom Ms Campbell and Mr Moebes were the preferred brokers resulted in a reduction in the volume of prices (ie, orders sought by customers to buy or sell a product at a certain price) available to ICAP Energy desk customers generally. As a consequence, the opportunities for Trades to be effected between ICAP Energy desk customers was reduced; and (iii) those experienced brokers who remained working on ICAP's Energy desk after the termination of Ms Campbell's and Mr Moebes' employment, were unable to spend as much time broking because they were having to recruit replacement brokers, train the replacement brokers and attempt to retain customers; and (d) the Energy desk became less profitable." 11 The subpoena requires production of the following documents: "For the period 1 July 2005 to the date of this subpoena, all Documents constituting, evidencing or recording: 1. the monthly quantum and volume of over the counter and future trades (Trades) carried out by each broker and customer of BGC Energy Desk (howsoever described) (BGC Energy Desk) and the gross monthly revenue (including, without limitation, brokerage) generated by BGC from those Trades, before the application of any discounts or other credits, if applicable (Revenue); 2. the allocation of the Revenue amongst the brokers of the BGC Energy Desk; 3. the identity of the customers of the BGC Energy Desk and the identity of which broker dealt with, or is in the habit of dealing with, those customers; and 4. the monthly reports issued by BGC by the Sydney Futures Exchange Limited in respect of the business transacted by the BGC Energy Desk in the Electricity Market." Evidence 12 It was undisputed that the revenue of the second and third plaintiffs is principally derived from the commissions generated from their customers' trades, inter alia, in the energy market. 13 The plaintiffs correctly accepted that, the issue having been raised, production of the documents on subpoena would not be required by the court unless they established the subpoena had a legitimate forensic purpose (see e.g. NSW Commissioner of Police v Tuxford & Ors [2002] NSWCA 139, pars 20, 22). 14 On the issue of legitimate forensic purpose the plaintiffs relied on the evidence to which I now refer. 15 Mr Hugh Gallagher, a director of the plaintiffs, asserted that the reasons for the plaintiffs' loss of revenue following the defendants' departure included (a) that the Energy desk earned less futures revenue from trade with specified customers for whom the defendants were the preferred brokers some of whom took away a portion of their business after 5 December 2007, and (b) that customers of the Energy desk, other than those for whom the defendants were the preferred brokers, also took some of their business away. He said that the significant and immediate reduction in trades with those customers for whom the defendants were the preferred brokers led to a decrease in the volumes of prices traded by the energy desk and consequently led to a reduction in the number of trades carried out by other customers. 16 Mr Gordon Emlyn Williams, the plaintiffs' solicitor, explained the forensic purpose of the subpoena in the following terms (affidavit 21 November 2008): "16. In my opinion, the documents requested under the Subpoena are extremely important in assisting the Plaintiffs to prove the amount of loss suffered by them as a result of the Defendants' breach of contract. In particular, in my opinion the documents will show: (a) the different types, and amount, of revenue generated by BGC's Energy desk before and after the Defendants commenced employment with BGC; (b) the number of customer trades effected by BGC's Energy desk before and after the Defendants commenced employment with BGC; (c) the allocation of revenue and customer trades to particular brokers of BGC's Energy desk (including the Defendants) before and after the Defendants commenced employment with BGC; and (d) the customers of BGC's Energy desk before and after the Defendants commenced employment with BGC. 17. I expect that these documents will show that after the Defendants commenced employment with BGC, the revenue and customer trades of the BGC Energy desk increased and that this was due to BGC's employment of the Defendants. I also expect that this increase in revenue and customer trades will be able to be correlated with the reduction in revenue and customer trades experienced by the Plaintiffs' Energy desk following the departure of the Defendants. 18. Such a correlation will be an important factor in attributing to the Defendants' breach of contract the reduction in the customer trades of the ICAP Energy desk which followed their departure from ICAP." 17 Mr Williams said (affidavit 5 March 2009) that the expert retained to assess the loss suffered by the plaintiffs as a consequence of the defendants' departure, Mr Michael Potter of Axiom Forensics Pty Ltd, informed him that the documents sought from BGC are necessary for his analysis of the loss or the preparation of his report using his methodology. 18 Mr Potter (affidavit 6 March 2009) said: "9. I am also aware that the Plaintiffs assert that the revenue generated from customers of the Energy Desk, other than those for whom the Defendants were the preferred brokers, was also impacted by the Departure. In this regard, I note the Plaintiffs assert that: (a) a high volume of trades conducted by some customers of the Energy Desk attract other customers to the Energy Desk because of the greater availability of ' prices ' to be traded, which I understand is referred to in the brokering industry as ' liquidity ' and (b) after the Departure, the immediate reduction in trades with those customers for whom the Defendants were the preferred broker led to a decrease in the number of trades carried out by other customers because of the reduction in the volumes of ' prices ' (reduced liquidity) available to be traded by the Energy Desk. 10. Therefore, in the preparation of my expert report I intend to examine the impact of the Departure on all customers of the Energy Desk and all customers of BGC's energy desk." 19 He described his methodology as follows: "11. … the model that I have developed … to assess the Plaintiffs' loss, involves the triangulation of the following three methods or approaches: (a) conducting a comparison of the volume of trades and brokerage revenue generated by the Energy Desk over a specified period (before and after the Departure) for the total of all customers and individual customer (Method One); (b) reviewing and examining the change in brokerage revenue and the volume of trades carried out by individual customers of: (i) the Energy Desk; and (ii) BGC's energy desk, over a specified period (before and after the Departure) (Method Two); and (c) examining the Plaintiffs' and BGC's: (i) market share in the context of the whole energy trading market; and (ii) relative market share, if the trades carried out by BGC's and the Plaintiffs' customers are treated as being the whole energy trading market, over a specified period (before and after the Departure) (Method Three)." 20 Mr Potter said (pars 21, 22) that without the documents sought he would be unable to carry out the analysis contemplated by Methods Two and Three of his model, and there may be insufficient data for him to accurately calculate the plaintiffs' loss using his preferred model. He said (par 15) that in September 2008 he told the plaintiffs' solicitors in effect: "We need to find out what revenue BGC has been earning since they left. It's a good barometer of loss and is essential to my calculations." 21 In their letter of 22 January 2009 to the defendants' solicitors the plaintiffs' solicitors described the forensic purpose and scope of the subpoena. They said the documents were required to enable the plaintiffs to quantify and verify the loss as pleaded in pars 39 and 40 of the statement of claim and referred to in the particulars of 19 December 2008. It included: "2.2 Our clients are in a position, without your client's documents, to demonstrate that its market share and revenue diminished at about the time of the Defendants' breach of contract. However, the documents sought in the Subpoena will enable our clients' expert (see paragraph 2.4 below) to identify the Defendants' conduct as the cause of the diminution of our clients' market share and revenue in the period since their respective breaches. Specifically, they will permit a comparison between: (a) the performance of BGC's Energy desk before and after the Defendants' breach of contract (and their subsequent commencement of employment with your client); and (b) the performance of our clients' Energy desk before and after the Defendants' departure on 5 December 2007 in breach of contract. By this comparison, our clients will be able to establish that the Defendants' breach of contract (and their subsequent employment by BGC) was the reason for the decrease in market share and revenue (including a decrease in the volume and quantum of trades) experienced by our clients' Energy desk and, consequently, the reason for the loss and damage they have suffered. 2.3 Further, it is our clients' case that the loss and damage they have suffered is not limited to the reduction in revenue arising from the reduction in the volume and quantum of trades with those customers for whom the Defendants were the preferred brokers during their employment with ICAP. This was particularised in our letter of 19 December 2008, which states: '(c) there was a reduction in the quantum and volume of Trades effected by ICAP's Energy desk because, among other things: … (ii) the reduction in Trades with those customers for whom Ms Campbell and Mr Moebes were the preferred brokers resulted in a reduction in the volume of prices (ie, orders sought by customers to buy or sell a product at a certain price) available to ICAP Energy desk customers generally. As a consequence, the opportunities for Trades to be effected between ICAP Energy desk customers was reduced; …' Consequently, the comparison referred to above requires data for each broker and customer of the your client's Energy Desk for the relevant period. 2.4 On 10 November 2008, the Court made directions about the filing of expert evidence by the parties. Our clients' expert, who has been retained to provide a report on damages, has requested the documents sought in the Subpoena in order to assess and verify our clients' loss and damage. 3. Scope 3.1 The period for which the documents as sought under Subpoena is 1 July 2005 to 19 December 2008 which includes two full financial years of data prior to the Defendants' breach plus data for 12 months after. This is necessary for the expert to be able to assess and verify the impact of the Defendants' breach of contract. It is also important that data be provided for the whole period to exclude from the expert's analysis market fluctuations (e.g. caused by seasons change) or other irrelevant factors. We also note that 19 December 2008 is within the initial term of Ms Campbell's employment contract with ICAP." 22 Additional explanation was given by the plaintiffs' solicitors in their letter of 5 February 2009 to the defendants' solicitors as follows: "2. We respond to paragraph 2 of the 29 January Letter as follows: … (b) In the proceedings, our clients seek compensation for the loss and damage they have suffered as a result of Ms Campbell's and Mr Moebes' breaches of contract. We acknowledge that our clients do not claim an account of profits from your client. … … our clients need the documents sought in the Subpoena to support their case that it was the defendants' departure from their employment from our clients (and not some other reason) that was the cause of our clients' loss following the defendants' breaches of contract. To establish this causal link, our clients' expert has requested data regarding the business being transacted by your client with all of its energy desk customers before and after the defendants' breaches of contract. With the subpoenaed material, our clients' expert will be able to address (among other things) whether any customers conducted more business with your client after the defendants commenced employment with it. This will assist to demonstrate that the reduction in our clients' Energy Desk business was due to the defendants' breaches of contract - and not some other reason. This has a direct bearing on our clients' proof of their loss. … (d) … As set out in the 22 January Letter, our clients' case is that the loss and damage they suffered is not limited to the reduction in revenue arising from trades with those customers for whom the defendants were preferred brokers during their employment with ICAP. This was particularised in our letter of 19 December 2008. this issue is also addressed in paragraphs 88(b) and 88(c) of the affidavit of Hugh Gallagher, filed in Court on 5 December 2009. A copy of this affidavit is attached to this letter. As such, there is a forensic purpose to the documents relating to the trades and revenue generated by all customers of your client's energy desk who dealt with ICAP during the defendants' employment. Our understanding is that this extends to all customers of your client's energy desk;" 23 Reliance was also placed on material in the affidavits of each defendant of 5 March 2009. Relevantly, the first defendant said that each customer in the Australian energy market has a relationship with all six broking houses, which relationship is not exclusive as between brokers on a desk, or as between desks at different broking houses. He said (par 122) that in general the brokers who were the first point of contact for a customer had a stronger relationship with that customer that the other brokers on the plaintiffs' energy desk although other brokers on that desk has regular dealings with almost all of the customers. He denied (par 123) that any reduction in revenue is a direct result of the defendants leaving the business because the customers referred to had a broking relationship with every broking house in the market and regularly take their business to the different broking houses because they go to the one with the best price in order to make the most money for their company. He said that neither defendant had exclusive broking relationship with any of the customers they dealt with at ICAP. 24 The relevant evidence of the second defendant was to like effect. The principles 25 The principles to be applied in the present case were summarised in Travel Compensation Fund v Blair & Ors [2002] NSWSC 1228 by McClellan J (as he then was): "20 The principles to be applied in the present circumstances are well known. ( The Commissioner for Railways v Small (1938) 38 SR(NSW) at 564). A subpoena may not be used by a party to litigation for the purpose of fishing i.e. "endeavouring not to obtain evidence to support his case, but to discover whether he has a case at all." (p 575). This principle requires careful consideration depending on the circumstances. In particular, a subpoena is less likely to be set aside if the information which it seeks is exclusive to the other party. Newcastle City Council v Kern Land Pty Ltd & Anor, NSWSC, unreported, 9 December 1996, McLelland CJ in Eq, and Schutt v Queenan [2000] NSWCA 341, Mason P para 14. 21 In NSW Commissioner of Police v Tuxford & Ors , [2002] NSWCA 139, Brownie AJA said: "… it is plain beyond argument that, if documents are produced on subpoena, and objection is taken to their being inspected, inspection should not be permitted unless and until the party who procured the issue of the subpoena identifies a legitimate forensic purpose. In that context it is said that a party is not entitled to go on a fishing expedition, nor should the court do so: Small at 575; R v Saleam (1989) 16 NSWLR 14 at 17-18; and Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667 at 681. See too Air Canada v Secretary for State for Trade [1983] 2 AC 394 at 439 and 453 and Alister v The Queen (1984) 154 CLR 404 at 414. In Principal Registrar of the Supreme Court v Ali Tastan (1994) 74 A Crim R 498, Barr AJ, as he then was, said: 'It is the duty of the Court, where the issue is raised, to require the party calling on a subpoena to produce documents to identify expressly and precisely the legitimate forensic purpose for which access to documents is sought and to refuse access unless such an identification is made." p 504 22 Later his honour said: "In the language of Jordan CJ in Small at 575, the opponents were not entitled to procure the issue of the subpoena for the purpose of fishing, that is, endeavouring not to obtain evidence to support their case, but to discover whether they had a case at all, or to discover the nature of the case of the defendant. In the language of Lord Wilberforce in Air Canada at 439 there must be something beyond speculation, some common ground for belief that takes the case beyond a mere fishing expedition." 23 The party issuing the subpoena must be able to show that it is "on the cards" that the documents will bear on and have relevance to the issues in the case: Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667."

(It appears that the statement attributed to Lord Wilberforce in Air Canada as reported in Tuxford par 22 is incorrect in that his Lordship (p 439) referred to a ground for belief which was "concrete", not "common".) 26 In Portal Software v Bodsworth [2005] NSWSC 1115 Brereton J (par 22) proceeded on the basis that absence of apparent relevance to the issues in the proceedings is a sufficient ground to set aside a subpoena or a part of subpoena. He identified the test in the following passage: "23 It is necessary, then, to appreciate what is the test of "relevance" in the context of a subpoena. In many of the cases, it had been described as "apparent relevance", in the sense that the documents, production of which is sought, must bear some apparent relevance to an issue in the proceedings. In Waind and Hill , Moffitt P described the concept in these terms: 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. 24 In White v Tulloch (1995) 127 FLR 105, (1995) 19 Fam LR 696, (1995) FLC ¶ 92-640, the Full Court of the Family Court referred to the test in terms of documents having "a sufficient apparent connection to justify their production or inspection". But perhaps the most instructive description is that of Beaumont J in Arnotts , in which his Honour said that the test of adjectival relevance was satisfied if the material had apparent relevance and was established if the documentation called for "could possibly throw light on the issues in the main case". In a slightly different but related context, the test has been put in terms that a subpoena has a legitimate forensic purpose if it appears to be "on the cards" that the documents sought will materially assist the defence in a criminal proceeding [ Alister v The Queen (1984) 154 CLR 404, 414 (Gibbs CJ), R v Saleam (1989) 16 NSWLR 14, 18]. 25 Thus it is plainly not the question at this (first) stage whether the documents, production of which is sought, will definitely advance the case of the parties issuing the subpoena, nor whether they will be admissible in evidence at the trial. It is sufficient that they could "possibly throw light" on the issues in the substantive proceedings, or that it appears to be "on the cards" that they will do so. What are the issues in the proceedings will appear from the pleadings (where there are pleadings), the affidavits, and the legal principles which govern the claims for relief in the substantive proceedings." 27 In Alister v The Queen [1984] HCA 85; (1984) 154 CLR 404 (pp 412, 414) Gibbs CJ cited with approval the observation of Lord Wilberforce in Air Canada (p 439) that before inspecting documents a judge must have some concrete ground for belief which takes the case beyond a mere "fishing" expedition (p 414). It was in that context that he said (p 414): "Although a mere "fishing" expedition can never be allowed, it may be enough that it appears to be "on the cards" that the documents will materially assist the defence." 28 A consistent approach must be taken with regard to the application of the test as expressed by Beaumont J in Trade Practices Commission v Arnotts Ltd (No. 2) (1989) 21 FCR 306; (1989) 88 ALR 90, p 103 namely whether the material sought has an apparent (adjectival) relevance to the issues in the principal proceedings. He held that adjectival relevance was established if the documentation called for "… could possibly throw light on the issues in the main case". With regard to the injunction against speculation, I understand his Honour to mean that to establish a legitimate forensic purpose for a subpoena, it is necessary to show that there are reasonable grounds to expect that the documentation could throw light on the issues in the proceedings. I am fortified in this view by the opinion of Spender J in Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504; (1997) 37 ATR 432, p 439 where, after analysing Beaumont J's conclusion, he said: "Notwithstanding the use of the word "possibly" in this paragraph (88 ALR 90 p 103) in my opinion, that word is not used in any speculative sense. I take his Honour's conclusion expressed in that paragraph as an acquiescence to the correctness of the submission that the material sought could reasonably be expected to throw light on some of the issues in the principal proceedings. It is not a question of looking at the documents to see if the documents might permit a case to be made." 29 In my opinion caution is required in the application of a test which incorporates a phrase such as "on the cards" or "could possibly throw light on" when the legitimate forensic purpose of the subpoena is challenged lest it be given a reach wider than its author intended. 30 As Air Canada (p 439), Alister (p 414) and Arnotts (p 103) hold, to meet the test, it must be shown that it is likely the documentation will materially assist on an identified issue, or there is a reasonable basis beyond speculation that it is likely the documentation will. 31 In Attorney-General for New South Wales v Stuart (1994) 34 NSWLR 667 Hunt CJ at CL (p 681) summed up this way: "The concept of legitimate forensic purpose … arises whenever a party seeks access to documents for which he has issued a subpoena; where objection is taken, a party who is unable to show that it is at least "on the cards" that such documents will assist his case is not entitled to have access to such documents simply to see whether they may do so: R v Saleam (1989) 16 NSWLR 14 p 17-18. He is not entitled to conduct a fishing expedition." 32 The application of the test requires consideration of the issues in the principal proceedings. These issues are usually those identified in the pleadings and the particulars of the facts and matters relied upon in support of the pleaded allegations. They must be expressed with specificity (UCPR Pt 14, Pt 15). Interlocutory procedures of discovery and interrogatories facilitate the resolution of the issues, the scope of which is limited by relevance to them. 33 So too, is the scope of the demand upon an opponent or third party under a subpoena. Demonstration of the legitimate forensic purpose of a subpoena necessarily depends upon identification of the case for which it is likely the documentation will assist. It is, therefore, necessary that the issue be clearly identified in the pleadings or particulars as it is the point of reference by which the legitimacy of the subpoena is to be determined. The task in meeting the test will become difficult where the issue relied upon cannot be identified because either it has not been included in the pleading or particulars, or the terms in which it has been expressed are obscure and imprecise. The submissions 34 The plaintiff submitted that the documents sought by the subpoena were at the request of their expert, Mr Potter, to enable him to form a view about the loss suffered by the plaintiffs as a result of the defendants' breach of contract, and are necessary for this purpose. 35 The plaintiffs' written submissions of 25 March 2009 included: "11. At about the time the defendants left their employment with the plaintiffs, the plaintiffs' business in the area in which the defendants had worked declined. It is the plaintiffs' case that the decline was caused by the defendants' breach as customers were enticed to deal with BGC rather than ICAP. That causal link is denied by the defendants. 12. The subpoenaed documents are sought to permit the plaintiffs to investigate whether the decline in business which the plaintiffs experienced coincided with a similar increase in business at BGC once the defendants commenced employment there. If such a correlation exists, then it will support the plaintiffs' case that the defendants' breach is the reason for its lost revenue. … 14. The investigation of the correlation between the decline in the plaintiffs' business, and the change in the business written by BGC, requires that the plaintiffs have access to documents which show BGC's level of business both before and after the defendants' commencement with BGC, over a sufficient period to allow a meaningful comparison to occur." 36 With reference to Mr Gallagher's evidence it was submitted that the loss claimed by the plaintiffs includes not only the trades lost from customers enticed away, but also from the loss resulting from the diminution of business generated amongst its other customers as a consequence of those customers leaving. 37 It was put that because causation was in issue, the documents as described in each category in the subpoena may throw light on whether is a causal link between the plaintiffs' loss and the defendants' breach of contract. In further support of the argument that the subpoena had a legitimate forensic purpose, Senior Counsel for the plaintiffs said (T p 48, l 30-34): "The short point is that the material sought from BGC is sought because it is on the cards that that material will point to the probability of there being a link between the defendants' departure and the plaintiffs' damage."

and (T p 49, l 18-26): "STEVENSON: Because it is the plaintiffs' case that just as the reduction in trade from customers who left the plaintiff can have a result in reduction of the volume of customers that have not left, conversely the perhaps increase in trade at BGC caused by customers lured across may have itself caused further increase in trade for other customers of BGC and if that is the case and if that material can be enlivened in a way that yields this result, it may throw light on the question of the causal link between the diminution in the plaintiffs' position and the departure of the defendants. So, that is the reason Mr Potter has said that is why he wants to look at it for." 38 With reference to the particulars in the letter of 19 December 2008 par 1 Senior Counsel said (T p 54, l 4-19): "STEVENSON: The claim is for the losses the plaintiff has suffered as outlined in A to D. One is lost market share. B is a loss caused by the fact that customers have left, the plaintiff will wish to prove gone to BGC. C is loss suffered not because customers have left but because as a result of other customers leaving, sorry, C is loss suffered as a result of particular customers leaving other business is generated at a less profitable rate or lower rate. That is the knock on effect Mr Gallagher described. D is a separate head of an assertion that the company has become less profitable. Now, as we say, the information sought from BGC as to how it fared after these people jumped ship and joined it, they point decisively, may be not, but certainly could point to the probabilities of the link between one and the other." 39 Accordingly, it was submitted the legitimate forensic purpose of the subpoena was clearly identified, and production of the documents should be required. 40 The defendants submitted that the subpoena lacked legitimate forensic purpose, and none was apparent from the pleadings and particulars. In short, it was put that the plaintiffs had not shown that the information sought from BGC would be likely to assist in establishing a causal link between the defendant's conduct and the plaintiffs' loss as claimed or that, for example, information as to revenue generated by BGC in the operations of its Energy desk would have relevance to a claim for loss of profits attributable to the defendants. 41 It was put that the statement in the letter of 22 January 2009 (par 2.2) indicated that, although the plaintiffs asserted that there was a temporal correlation between their diminution of market share and revenue and the departure of the defendants, without the documents they would be unable to ascertain whether that situation was caused by their departure. It was put that the evidence of Mr Potter and Mr Williams, reasonably understood, shows that the purpose of the subpoena is to obtain information from BGC to enable Mr Potter to ascertain whether or not the plaintiffs have the basis for a claim against the defendants to the effect that their employment with BGC was the cause of their loss of market share and revenue. It was put that there was nothing which indicated a case that the financial performance of BGC to the extent that it involved the defendants was causally linked to the losses claimed by the plaintiffs. Conclusion 42 The evidence is that the subpoena was drafted to meet Mr Potter's concern to find out whatever revenue BGC has earned since the defendants' departure. In order to calculate the plaintiffs' loss according to his methodology he intended to examine the impact of the departure on all customers of the plaintiffs' Energy desk and also of BGC's Energy desk. 43 Mr Williams asserted his expectation that BGC's revenue and trades from its Energy desk increased due to its employment of the defendants. He expected such increase could be correlated with the reduction in revenue and trades from the plaintiffs' Energy desk following the departure, and such correlation would be an important factor in attributing the reduction to the defendants' breach of contract. In the letter of 22 January 2009 (par 2.2) he said that the documents sought would enable Mr Potter to identify the defendants' conduct as the cause of the diminution of the plaintiffs' market share. He said (par 3.1): "…This is necessary for the expert to be able to assess and verify the impact of the defendants' breach of contract. It is also important that data be provided for the whole period to exclude from the expert's analysis market fluctuations (e.g. caused by seasonal damage) or other irrelevant factors." 44 In effect, the subpoena demands, for the period 1 July 2005 to 19 December 2008, production of all documents evidencing BGC's trading and financial operations from its Energy desk. 45 In my opinion, the evidence shows that the subpoena was based on speculation, and that its true purpose was "fishing", i.e. to see whether the documents might permit a case to be made. I am unpersuaded that there is a concrete ground for a contrary belief (Air Canada p 439). 46 The forensic purpose must be determined with reference to the issues in the proceedings as identified by the plaintiffs and to which I have referred. Those issues are identified in the letter of 19 December 2008, pars 1(a), (b), (i), (ii), (c) and (d). I do not accept that the statements of belief in pars 1(b)(iii) and (iv) that there had been an increase in the quantum and volume of trades by BGC, with resultant increase in revenue, from customers with whom the defendants dealt whilst with the plaintiffs should be treated as particulars of facts and matters to be relied upon in support of a case proposed to be made in the proceedings. Reasonably understood in context, including the prefatory words of 1(b), they are no more than unsupported statements of belief which, in my opinion, identify no separate issue. 47 In my assessment the identifiable issue is whether the plaintiff suffered loss resulting from the defendants' breach of contract which involved enticing customers away from the plaintiffs. There is no issue which requires consideration of BGC's trading and financial operations from its Energy desk since the time of its employment of the defendants. To justify the subpoena it is not enough to assert that since the time of the defendants' departure the plaintiffs have suffered a downturn in business. Furthermore, in my opinion, there is no justification for a demand for production of material evidencing the overall trading activity of BGC in order to ascertain whether and, if so, to what extent, such information indicates that its employment of the defendants contributed to its revenue and market share. 48 In my opinion, the evidence serves only to establish that the purpose was to provide Mr Potter with information to assist him in advising whether there is any support for a case that the plaintiffs' loss of market share and revenue following the defendants' departure was caused by their work for BGC in breach of contract. Such a purpose is properly described as "fishing" (see e.g. a similar situation: Cosco pp 439, 440). 49 The evidence relied upon by the plaintiffs in this application did not persuade me that it is likely the documentation would materially assist on any of the issues identified in the letter of 19 December 2008 and explained in the letters of 22 January and 5 February 2009, or that it was beyond speculation that such documentation would. In the language of Beaumont J, I find that it has not been established that the documents described in pars 1, 2, 3 and 4 of the subpoena have apparent relevance to the issues in the main case. 50 Accordingly, I find that the subpoena is without legitimate forensic purpose and must be set aside. Orders 51 It is ordered that:

(1) The subpoena to BGC Partners (Australia) Pty Ltd dated 19 December 2008 be set aside.

(2) The plaintiffs pay the costs of BGC Partners (Australia) Pty Ltd. **********

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.

(1995) 19 Fam LR 696

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Judgment (14 paragraphs)

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Cases Cited (13)