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[2012] NSWSC 1012
Supreme Court of NSW
2012-08-29
Harrison J
Original judgment source is linked above.
Judgment 1HARRISON J: The plaintiff applies by notice of motion filed 23 August 2012 to set aside a subpoena to produce documents issued by the defendant to the National Australia Bank and a notice to produce for inspection served upon the plaintiff. The proceedings are currently part heard before me. The oral evidence of all witnesses in the case has concluded. The plaintiff's case has closed and I am informed that the closure of defendant's case awaits only the outcome of this application. 2The plaintiff sues the defendant for professional negligence in his capacity as the plaintiff's solicitor. The plaintiff alleges that he retained the defendant to act for him in the performance of legal work related to a series of transactions intended to give him effective ownership and control of the family farming and grazing business conducted on and from a property known as "Coombing Park" near Carcoar in the central west region of New South Wales. The plaintiff alleges that he was in effect lured to return to run the property by promises made to him by his father Berkeley King. The plaintiff's case is that he agreed with his father that he would return and conduct the family business, provided that he was able to acquire from his father and his uncle Peter King a large parcel of shares in a series of inter-related companies that owned or controlled the property. The defendant was retained to give effect to that acquisition. 3The plaintiff alleges that the defendant was negligent, and in breach of the terms of his retainer, in that he failed properly to give effect to the transactions leaving his father free to resile from the agreement and leaving the plaintiff without the benefit of the agreement. The plaintiff alleges that he was required in the circumstances to purchase the controlling interest that he expected to receive in accordance with the agreement with his father at a premium following a family mediation and settlement, instead of at what would otherwise have been an acquisition on the previously negotiated and more beneficial terms. He contends that he was placed in a position of considerable disadvantage, and was thereby vulnerable, in the course of the negotiations that resulted in the settlement. He alleges that those with whom he was required to deal exploited that vulnerability to his considerable financial disadvantage. The plaintiff looks to the defendant for damages calculated as the difference between what he expected to pay and what he was forced to pay. 4The subpoena and the notice to produce seek documents that may generally be described a financial records. For example, the subpoena seeks production from the bank of all documents created or received by it during a nominated period between 2006 and 2009 recording or referring to inquiries or applications for finance that may have been made by a series of nominated people and companies related to or controlled by the plaintiff. The notice to produce also seeks production from the plaintiff and his privies of bank statements, documents recording or evidencing applications for finance or the result of any such applications and documents recording any refusal by a bank to lend the plaintiff the sum of $1M, which was due to be paid on 31 December 2010 in accordance with one of the terms of the plaintiff's settlement with the family. 5The defendant contends that there is a legitimate forensic purpose for the production of the documents that are sought. The defendant submits that there is a reasonable basis to believe that the documents will materially assist in establishing the plaintiff's true financial position during negotiations leading up to the settlement, about the terms and consequences of which he complains. 6The defendant contends that in these proceedings the plaintiff has plainly put his financial position during the negotiations in issue. The defendant perceives the plaintiff's case to be that he had "no option" but to enter the 2009 settlement, notwithstanding that he regarded the $3.5M that he agreed to pay as two and a half times greater than the property's worth, because he considered that his legal position at the time was "weak". The plaintiff's position was also that he "was unable to fund the costs of ...litigation given that [he] had no capacity to borrow against assets of Coombing Park and [that his father] had [capped] the finance facility in February 2008". 7The defendant therefore submitted that the plaintiff's financial resources and his ability to access finance in the course of negotiations with his family members in 2008 are relevant to whether he has established that the structure of the transactions about which he complains caused him to suffer any loss and whether he was able to access finance to bring proceedings to secure his legal position or to enforce his legal rights against those with whom he had intended to contract. The defendant says that the latter of those two issues is relevant at least to the question of causation and potentially the issue of proportionate liability (concerning the role of other legal advisers retained by the plaintiff at the time of the mediation). 8The defendant has issued requests for similar documents in the past. However, the defendant now maintains that those requests were directed to different issues and that the current subpoena and notice to produce are fashioned in the light of the plaintiff's evidence, and in particular his cross-examination. The defendant contends that the plaintiff volunteered matters under cross-examination going to the reason why he was unable to make the required payment of $1M as anticipated by the settlement. The defendant concedes that a credit issue may also be found lurking in that factual analysis. The lateness of the defendant's attempts to gain access to the nominated material is therefore said to be a function of the content and timing of the plaintiff's answers by which the defendant's interest has only relatively recently been provoked. 9The plaintiff's application proceeds upon the basis that none of the documents of which production is sought has any "material relevance" to any of the pleaded issues in the proceedings. He contends that there is, and can be, no legitimate forensic purpose for which the documents in question might be used. 10In particular, he submits that there is no legitimate forensic purpose in requiring the production of documents in relation to whether or not the $1M has been paid as required. As a result of the settlement the plaintiff incurred a liability totalling $3.55M. According to the plaintiff, it matters not for the purposes of his damages case whether it has been paid. Accordingly, the only conceivable matter that it can go to is a collateral issue of the plaintiff's credit, namely, the answer given by him in cross-examination that he was unable to make the second tranche payment of $1M on 31 December 2010 when due, because the bank would not lend him the money. Answers to credit questions on collateral issues are ordinarily regarded as binding upon the cross-examiner. In any event, material capable of confirming or being used to dispute that evidence is not of significant probative value: see generally s 103 Evidence Act 1995. 11The defendant has also argued that whether the plaintiff was able to access finance to bring proceedings to secure his financial position is relevant to the question of whether or not he has mitigated his loss. The plaintiff's response on that question was to say that the proper consideration is not whether he was actually able to afford to bring proceedings to secure his legal position, but whether the law requires him to engage in uncertain and speculative litigation rather than sue the wrongdoer who placed him there. The plaintiff emphasised in any event that documents dated after 30 January 2009, to which the defendant's calls are primarily directed, could not be of assistance. 12Finally, the plaintiff submitted that he has completed his evidence and he has been cross-examined at length. The cross-examination was founded in part upon attempts to discredit him. In such circumstances the defendant is not now entitled to scrutinise his answers to questions under cross-examination and then to go trawling for further material with which to scrutinise those answers again. That applies a fortiori at the stage of the trial in which the subpoena and notice have been issued. Assuming the defendant's speculations are correct, and something new emerges, then the only way that that material could be practically deployed against the plaintiff's credit would be to recall him to give further evidence. The defendant raised that prospect in correspondence. Any attempt to tender material going to the plaintiff's credit (as foreshadowed) would need to satisfy the requirement of s 103 of the Evidence Act, namely that it substantially affected the assessment of the credibility of the plaintiff. The plaintiff submitted that there is no reasonable basis beyond speculation for thinking that these late (and latest) calls for material that predates 30 January 2009 are capable of producing new documents which could substantially affect the plaintiff's credit.
Consideration 13The proper scope of the power to subpoena documents depends upon the substantive and adjectival relevance of the documents sought. The former refers to the direct proof of factual issues in the proceedings. The latter refers to the capacity of the documents sought to support a conclusion or proposition that has an arguable relevance to the proceedings: Cosco Holdings Pty Ltd v Commissioner of Taxation (1997) 37 ATR 432. The standard is not actual relevance but potential relevance: Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2008] FCA 969 at [17]. 14The width of the description of adjectival relevance necessarily means that there is no implied requirement that the documents sought by subpoena be intended to be tendered in evidence or ultimately be admissible: National Employers' Mutual General Insurance Association Ltd v Waind and Hill [1978] 1 NSWLR 372. The contrast between the permissible scope of a subpoena for production and what constitutes impermissible generality is essentially a distinction between documents for which there is a "reasonable cause" to regard as relevant and documents whose relevance is no more than speculative: Cosco. 15A subpoena will have a legitimate forensic purpose if "it is likely that the documentation sought by it will materially assist on an identified issue, or there is a reasonable basis beyond speculation that [it] will": ICAP Pty Ltd v Moebes [2009] NSWSC 306 at [30]. 16I am not able to say or predict precisely what the documents that are sought by the defendant will reveal if they are produced. The ultimate determination of the relevance of the documents can only confidently be assessed when they are. At the point of determining whether or not it is likely that the documents will materially assist on an identified issue, or whether there is a reasonable basis beyond speculation that they will, a somewhat more liberal view of their relevance must necessarily be applied than that which attends a final decision on their admissibility. 17In this last respect I am mindful that my assessment of the defendant's attempts to gain access to the nominated categories of documents cannot be divorced from my obligation to try the issues joined in the proceedings in a fair and open-handed way. On balance that suggests to me that the defendant should not be shut out from or deprived of an opportunity to present his case in the best possible light. Mr Pike of senior counsel for the defendant has made it clear that the defendant's case is effectively closed, subject only to the possibility that he will tender some of the documents to which he seeks to gain access. That concession helpfully focuses attention upon the extent to which any further evidence from the defendant will or may alter the nature of, or prolong, what remains of his case. 18The plaintiff's response is to say that there can be no certainty that any tender of the outstanding documents on the issues identified by the defendant will not call for or require a case in reply, including the prospect that the plaintiff, at least, will return to the witness box. That proposition has, quite understandably, been given no particular content. Clearly enough the plaintiff's decision about that cannot yet be known or required. 19In the nature of things it may well turn out to be the case that none of the documents, if produced, is tendered in any event. It may also be the case that the plaintiff is content to make no response to them even if they are. In advance of that, the documents may not ever become evidence in the proceedings despite the defendant's best efforts to introduce them in his case. 20To date the case has been conducted efficiently and well. I have indicated to the parties that I am unable due to prior commitments to resume the case before the end of October next and probably before the end of November. I have indicated that I will want detailed written submissions on a wide range of legal and factual issues to which both parties will be required to speak in due course. There is no immediate likelihood in these circumstances that I will be in a position to decide this case before the end of the year at the earliest. I raise these matters, as they are pertinent to the issue of whether or not anything flowing from a response to the notice to produce or the subpoena would be likely to extend or prolong the case in an unacceptable way, or to cause prejudice to either party that cannot adequately be ameliorated. I do not consider that it would. 21I consider that the subpoena and the notice to produce have an identified legitimate forensic purpose. It is unnecessary for present purposes to determine whether that may include matters going to the issue of the plaintiff's credibility. The documents that are sought are potentially likely to assist materially on an identified issue or there is at least a reasonable basis going beyond mere speculation that they will.
Conclusion 22I consider that the plaintiff's notice of motion filed 23 August 2012 should be dismissed and that the costs of the motion should be the plaintiff's costs in the proceedings.
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: 31 August 2012
King
Benecke