Lenark Pty Limited v TheChairmen1 Pty Ltd

The proceedings 3I should begin by giving a brief description of the proceedings, which are principally an oppression suit. The claims of the plaintiff ("Lenark"), as now articulated, are pleaded in a further amended statement of claim filed on 21 March 2011. The description of those claims that follows is, of course, taken uncritically from the further amended statement of claim. 4There are, as I have said, twenty-seven defendants. The first defendant is TheChairmen1 Pty Ltd (which I shall call "C1"). It is a company formed in 2009 by two persons: Mr Chisholm (who may be regarded, in a practical sense, as a principal of Lenark since his wife is its sole director and sole shareholder) and Mr Ransley (the twenty-first defendant). C1 acquired certain coal mining interests. 5Assets of C1 were later transferred to Guildford Coal Ltd, one of the subpoenaed non-parties to which reference has already been made. I shall refer to that company as "GUF". The consideration for the transfer was the issue to C1 of 200 million shares in the capital of GUF. This transaction occurred in late May or early June 2010. C1 was, at that point, already committed to provide management services to GUF under a management agreement dated 26 May 2010. 6Shortly after acquiring assets from C1 and issuing a large number of shares to it, GUF became listed on the Australian Securities Exchange ("ASX"). This happened on 22 July 2010. 7In September 2010, Mr Ransley wrote to the shareholders of C1 informing them of a proposed capital raising with a view to the "acquisition of 85% of the issued capital of Springsure Mining Pty Ltd" (the twenty-third defendant). To be more precise, it appears that C1 was the subscriber for shares to be allotted and issued by Springsure so as to represent 85% of its post-issue share capital. C1 needed $12.5 million to enable it to acquire these shares in Springsure. Some $12 million was proposed to be raised by C1 by issuing new shares, half by way of placement to an institutional investor and half by way of a rights issue to C1's shareholders, in each case at $1.46 per share. 8These proposals were implemented. C1 raised $12 million by issuing new shares and paid $12.5 million to Springsure to obtain an 85% shareholding interest in Springsure. 9The proceeds of $12.5 million received by Springsure were used by it to subscribe for convertible notes of Resco Services Pty Ltd (the eighteenth defendant) - in other words, to make a loan to Resco in the first instance - thereby enabling Resco to pay off a debt owed by it to Westpac Banking Corporation. That bank debt of Resco had, since October 2009, been supported by a fixed and floating charge given by Springsure to Westpac. 10The initial board of directors of C1 following its formation in 2009 consisted of Mr Chisholm, Mr Ransley and the latter's wife; and the initial share capital was held in equal proportions by Mrs Ransley and Lenark (of which, as I have said, Mrs Chisholm is the sole director and shareholder). Mr Avery (twentieth defendant), Mr Chester (nineteenth defendant) and Mr Tsiakis (twenty-second defendant) later became directors of C1. Mr Chisholm was removed as a director of C1 by resolution of the shareholders on 20 August 2010. 11Lenark pleads a series of "legitimate expectations" of Mr Chisholm (which, it seems, are to be regarded as imputed to Lenark), namely: (a) at all material times, that no shares would be issued by C1 without his consent; (b) from about 10 July 2009, that either C1 would be listed on ASX and its shareholders would continue to hold some shares directly in it or that an ASX listed entity would acquire all the shares in C1 in consideration of the issue of its own shares to the C1 shareholders; and (c) from about 10 June 2010, that, after the sale of C1's assets to GUF in exchange for shares in GUF, C1 would not take any action except to hold GUF shares (or distribute them to its own shareholders) and to carry out its functions under the management agreement with GUF. 12Various actions of and in relation to C1 are said by Lenark to have been contrary to these "legitimate expectations", namely, the issue of shares in GUF to C1 instead of the C1's shareholders, the $12 million capital raising by C1 and the acquisition by C1 of an 85% interest in the share capital of Springsure for $12.5 million. 13Lenark further says that Mr Chester, Mr Ransley and Mr Avery, as directors of C1, were actuated by an improper purpose in causing C1 to undertake the $12 million capital raising and the acquisition of 85% of Springsure, namely, the purpose of allowing Resco to clear its debt to Westpac and thereby enabling Springsure to obtain a release of the charge over its assets, neither of which was in the best interests of C1. 14Lenark contends that, in the circumstances pleaded: (a) Mr Chester, Mr Ransley and Mr Avery were in breach of duties imposed by s 180, s 181 and s 182 of the Corporations Act 2001 (Cth); (b) Mr Ransley (who was a director of Resco as well as C1 and who, with his wife, owned through a company 30.33% of Resco) and Mr Chester (who owns a company which in turn owns 0.42% of Resco and 4.79% of Springsure) breached equitable duties to avoid conflicts of duty and interest owned by them to C1; (c) certain conduct was of a kind referred to in s 232 of the Corporations Act , specifically, failure to ensure shareholders of C1 were issued shares in GUF in proportion to their shareholdings in C1, the acquisition by C1 of the 85% shareholding in Springsure, and the $12 million capital raising (or, in the alternative, the failure by C1 and its board to provide certain information to members of C1 in connection with the solicitation of those members for the purposes of C1's $6 million rights issue). 15Lenark further says that the $12 million capital raising "is liable to be set aside at the suit of Lenark". Furthermore, it is said, the capital raising contravened provisions of Part 6D.2 of the Corporations Act . 16Lenark seeks various declaratory relief plus: (a) an order setting aside the issue of shares in C1 pursuant to the $12 million capital raising; (b) an order under s 233 that C1 buy back Lenark's shares (or, in the alternative, that Mrs Ransley, Pooles Australia Pty Ltd and Nooava Pty Ltd buy Lenark's shares in C1), on certain terms. 17There are other claims based on s 233 and s 1317H.

The defences 18I turn now to the defences that are the subject of Lenark's claim mentioned at item (a)(i) of paragraph [1] above, being the defences of the first, second, eleventh, nineteenth, twentieth and twenty-first defendants. Relevant, for present purposes, are the parts of the defences that put forward, by way of defence, allegations that Mr Chisholm, while a director of C1, engaged in conduct that was contrary to the interests of C1 and that he did so without the informed consent of C1. In general terms, three forms of relevant conduct on Mr Chisholm's part are alleged: first, forming a company called Industrial Partners Holdings Pty Ltd (of which Mr Chisholm was a director and Lenark was a one-third shareholder) and causing it to compete with C1 or, at the least, to attempt to do so; second, approaching an outside party (Mr McDonald) and attempting to acquire coal tenements for the benefit of himself or some entity other than C1; and, third, approaching Mr McDonald on a separate occasion and attempting to acquire phosphate and limestone assets for the benefit of himself or some entity other than C1. 19The conduct of Mr Chisholm thus complained of by the defendants is said to have occurred "in about mid-2010", that is, before he was removed as a director of C1 on 20 August 2010. 20The relevant part of the defences says, first, that Mr Chisholm informed the C1 board on 24 June 2010 of the existence of Industrial Partners and, second, that the board was, by 20 August 2010, aware of the formation of Industrial partners, Mr Chisholm's involvement with it and the relevant activities of that company. It is, I think, accepted, that C1 and its board did not know before 24 June 2010 of the competing (or the attempted competing) activities of Industrial Partners in which Mr Chisholm was involved.

The issue 21The issue thrown up by the relevant parts of the defences is an issue of timing that goes to the essential content of the concepts described in s 232 by the words "contrary to the interests of the members as a whole" and "oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members". Each quoted set of words embodies a distinct concept but the concepts may, for present purposes, be compendiously referred to together as "oppression". 22In contending that the part of the defences raising Mr Chisholm's conduct in relation to Industrial Partners and Mr McDonald should be struck out, Lenark is, of necessity, relying on rule 4.28(1) of the Uniform Civil Procedure R ules 2005 and the aspect of it that refers to any part of a pleading that "discloses no reasonable cause of action or defence". 23In this particular case, the contention of Lenark is that no reasonable defence is disclosed by the relevant part of each defence - in other words, that the conduct of Mr Chisholm involving Industrial Partners and Mr McDonald, even if it occurred and is attributable in a relevant way to Lenark, can have no arguable impact on the outcome of the case. 24The central issue, as I have said, is one of timing: in essence, whether, where actions pursuant to decisions of a company's board of directors are said to amount to oppression, facts and circumstances of which the directors were not aware when the actions were taken (but became aware at a later time) can have any bearing on whether the actions constituted oppression. 25Lenark says that Mr Chisholm's conduct involving Industrial Partners and Mr McDonald could be relevant to whether there was oppression of Lenark only if C1 and its directors had been aware of that conduct at the time of the alleged oppression of Lenark. Lenark also says that matters called in aid by a defendant to justify oppression of a plaintiff - or, more precisely, conduct of the plaintiff which, when added to the balance, may show that the defendant's conduct did not amount to oppression at all - must be conduct of which the defendant was aware at the time of the occurrence of the alleged oppression for which the plaintiff seeks to make the defendant liable. On the view Lenark takes, a defendant cannot say to the plaintiff in an oppression suit, "Given this particular conduct on your part, my conduct towards you that you say was oppressive cannot be categorised in that way", unless the particular conduct of the plaintiff was known to the defendant at the time of the defendant's allegedly oppressive conduct. 26In advancing this contention, Lenark relies on various judicial observations about the nature of oppression (the compendious term I am using to describe conduct within s 232).

Case law 27It is common ground that the conduct of the plaintiff is not irrelevant to the question whether conduct of the defendant amounted to oppression. In Re London School of Electronics Ltd [1986] Ch 211, Nourse J said at 222 of analogous English provisions: "The combined effect of subsections (1) and (3) is to empower the court to make such order as it thinks fit for giving relief, if it is first satisfied that the affairs of the company are being or have been conducted in a manner which is unfairly prejudicial to the interests of some part of the members. The conduct of the petitioner may be material in a number of ways, of which the two most obvious are these. First, it may render the conduct on the other side, even if it is prejudicial, not unfair: cf.: In re R. A. Noble & Sons (Clothing) Ltd . [1983] B.C.L.C. 273 . Secondly, even if the conduct on the other side is both prejudicial and unfair, the petitioner's conduct may nevertheless affect the relief which the court thinks fit to grant under subsection (3). In my view there is no independent or overriding requirement that it should be just and equitable to grant relief or that the petitioner should come to the court with clean hands." 28This approach was approved by Young J in Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 706. 29Lenark then refers to what was said by Brennan J in Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459 at CLR 472-3: "[I]f the directors exercise a power - albeit in good faith and for a purpose within the power - so as to impose a disadvantage, disability or burden on a member that, according to ordinary standards of reasonableness and fair dealing is unfair, the court may intervene under s. 320. The question of unfairness is one of fact and degree which s. 320 requires the court to determine, but not without regard to the view which the directors themselves have formed and not without allowing for any special skill, knowledge and acumen possessed by the directors. The operation of s. 320 may be attracted to a decision made by directors which is made in good faith for a purpose within the directors' power but which reasonable directors would think to be unfair. The test of unfairness is objective and it is necessary, though difficult, to postulate a standard of reasonable directors possessed of any special skill, knowledge or acumen possessed by the directors. The test assumes (whether it be the fact or not) that reasonable directors weigh the furthering of the corporate object against the disadvantage, disability or burden which their decision will impose, and address their minds to the question whether a proposed decision is unfair. The court must determine whether reasonable directors, possessing any special skill, knowledge or acumen possessed by the directors and having in mind the importance of furthering the corporate object on the one hand and the disadvantage, disability or burden which their decision will impose on a member on the other, would have decided that it was unfair to make that decision." 30As Davies J said in Vigliaroni v CPS Investment Holdings Pty Ltd [2009] VSC 428; (2009) 74 ACSR 282 at [62], this test based on what would have been done by "reasonable directors possessed of any skill, knowledge or acumen possessed by the directors" necessarily pays attention to the whole of the surrounding circumstances. Her Honour also said: "The assessment is not to be done in a vacuum. The court will have regard to the particular context in which the conduct occurs and consider whether, in all the circumstances, the conduct complained of imposed a disadvantage or burden on a member that, according to the ordinary standards of reasonableness and fair dealing, was unfair." 31It follows, on the view Lenark takes, that a decision whether particular conduct engaged in at a particular time amounted to oppression of the plaintiff can take into account only matters of which the alleged perpetrators of oppression were aware at that time. The reasonableness or otherwise of their conduct is to be judged by having regard to the totality of their awareness. Counsel referred to Chase Corporation (Australia) Pty Ltd v North Sydney Brick and Tile Co Ltd (1994) 35 NSWLR 1 where Cohen J said (at 26): "It is a requirement of s 260(2)(b) that acts must be not only prejudicial to or discriminatory against a member but must also be unfairly so. Fairness must be related to what is known at the time. In my opinion, to take a step in the honest belief of it being a correct one would not amount to acting unfairly. To be fair is to act free from bias, dishonesty or injustice (Macquarie Dictionary)." 32The defendants, however, put particular store by obiter dicta of the Court of Appeal of Victoria (Nettle JA, Ashley JA and Neave JA) in Joint v Stephens (2008) VSCA 210. After referring to the aspects of Wayde v New South Wales Rugby League Ltd (above), Re London School of Electronics Ltd (above) and Morgan v 45 Flers Avenue Pty Ltd (above) already mentioned, the court said in a joint judgment (at [138]): "Finally, because the test of commercial fairness is an objective test, it is unnecessary for an applicant to prove that the respondent knew or believed that the impugned conduct was unfair. Nevertheless, it has been said that the question of whether a respondent's conduct was unfairly prejudicial is to be assessed by reference to what is known by a respondent at the time of the conduct. So, therefore, it has been held that to take a step on the basis of an honest belief of fact may not amount to acting unfairly even though it is subsequently discovered that the belief was mistaken. Conversely, logic would tend to imply that conduct which would be adjudged unfair by reference to what is known by a respondent at the time of the conduct could be viewed as fair in light of facts which are in existence at the time of the conduct but only later discovered. But it is unnecessary for the purposes of this case finally to decide that point." 33A footnote to the first sentence of this passage refers to R P Austin and I M Ramsay, "Ford's Principles of Corporations Law", 13 th ed at [11.450] where it is said: "In a commercial company it is a question of commercial fairness judged objectively as by a commercial bystander: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704; 5 ACLC 222; Coombs v Dynasty Pty Ltd (1994) 14 ACSR 60 at 99; 12 ACLC 915 on appeal Dynasty Pty Ltd v Coombs (1995) 13 ACLC 1290 at 1296. If the conduct complained of is conduct of the directors, the bystander is taken to be a director: Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; 61 ALR 225; 10 ACLR 87. In that case Brennan J posited: ... reasonable directors, possessing any special skill, knowledge or acumen possessed by the directors and having in mind the importance of furthering the corporate object on the one hand and the disadvantage, disability or burden which their decision will impose on a member on the other. In a non-commercial company the test is from the viewpoint of a hypothetical reasonable person associated with the type of company in question. When fairness is assessed objectively as by a commercial bystander, an incident of the assessment is that fairness is related to what is known at the time of the conduct and not to what subsequently transpires: Chase Corp (Aust) Ltd v North Sydney Brick and Tile Co Ltd (1994) 35 NSWLR 1; 14 ACSR 586 at 609; 12 ACLC 997. The applicant does not have to show that persons controlling the company acted as they did in the conscious knowledge that what they were doing was unfair." 34At paragraph [144] of the joint judgment in Joint v Stephens (above), the Court of Appeal acknowledged "the possibility of apparently unfair conduct being justified by reference to subsequently discovered events". Such "apparently unfair conduct" is, clearly enough, conduct which appears unfair in the light of circumstances known when it occurs; and the possibility to which reference is made is that the appearance of unfairness will be found unwarranted when regard is had to subsequently discovered events.

Approach to the question concerning the defences 35My task upon the present application is not to come to a definitive view on whether conduct of a plaintiff contemporaneous with the conduct against the plaintiff said to constitute oppression but not then known to the alleged oppressor is or is not relevantly to be taken into account in deciding whether oppression occurred. The task is, rather, that indicated by General Steel Industries Inc v Commissioner for Railways [1964] HCA 69: (1964) 112 CLR 125 and Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, that is, to decide whether the particular aspect of the defendants' defences is so clearly untenable that it cannot possibly succeed. Only if that conclusion is reached can the court properly compel the defendants to abandon that part of their case. It may be that in some cases (and Lenark says that this is one of them), curtailment by the court at the threshold will serve to save time and expense by cutting down relevant areas of factual inquiry. But that, of course, is not itself a sufficient reason for intervention.

Decision on the defences 36Particularly in view of the obiter dicta of the Court of Appeal of Victoria to which I have referred, I cannot conclude that the aspect of the defences now in question is so clearly untenable that it cannot succeed. The observations of Nettle JA, Ashley JA and Neave JA leave open at least the possibility that conduct apparently oppressive having regard to circumstances known to the perpetrators at the time may be "justified by reference to subsequently discovered events". This, coupled with the points about objective assessment and lack of mental element made in the joint judgment and in the extract from "Ford's Principles of Corporations Law" at paragraph [33] above leaves alive the possible relevance, in deciding whether oppression occurred, of contemporary conduct of the plaintiff not then known to the defendant. 37It is relevant to add that such contemporary but then unknown conduct may well be relevant to the question of the proper exercise of the court's discretion in awarding a remedy if oppression is established. In that connection, it is significant that Mr Newlinds SC, leading counsel for Lenark, accepted that improper conduct of a plaintiff may affect the court's decision on relief, where oppression is established. His further submission that, in that case, the possibility remains academic unless the improper conduct is pleaded in such a way as to go to relief or remedy is, in my view, met by the observation of Mr Henry, counsel for the defendants, that where, as here, the relief sought is a buy-out order, the court will shape the order by reference to the whole of the proved circumstances without any need for definition of particular aspects of the relief by pleading. 38The parts of the defences of the first, second, eleventh, nineteenth, twentieth and twenty-first defendants that Lenark wishes to see struck out will not be struck out.

The subpoenas and the notice to produce 39I turn now to the questions concerning the subpoenas issued on the application of C1 and the notice to produce served by C1 on Lenark. The subpoenas fall into two groups - those addressed to CUF and Mr Lyons; and those addressed to Mr Chisholm. The subpoenas in the latter group involve, in a broad sense, a party to the proceedings, in that Mr Chisholm and the other subpoenaed persons are associated with Lenark. As noted previously, the sole director and shareholder of Lenark is Mr Chisholm's wife. The matters that form the basis of the cause of action that Lenark consisiders itself to have are, in substance, complaints made by Mr Chisholm. CUF and Mr Lyons are not, in the same way, in the Lenark "camp". 40Many of the objections to subpoenas are resolved by the decision with respect to the defences. Some, however, remain and it is necessary to go into a number of matters of detail.

The subpoena addressed to Mr Chisholm 41I deal first with a subpoena dated 22 December 2010 addressed to Mr Chisholm ("the Chisholm subpoena"). 42Paragraphs 1 to 4 and 13, 14, 16, 17, 28, 29, 32, 34 and 35 of the Chisholm subpoena are not pressed and will be struck out. 43Paragraphs 7 and 8 of the Chisholm subpoena call for documents relating to Mr Chisholm's remuneration (and that of associates) in connection with certain transactions of C1. Lenark says that this is not relevant to any pleaded allegation. The defendants point to paragraphs 12(d), 12(e), 12(f) and 14E(b)(1) of the amended defence. I accept that the documents in question are relevant to the allegations in those paragraphs. Paragraphs 7 and 8 will not be struck out. 44Paragraph 12 of the Chisholm subpoena is said by Lenark to be too broad. The defendants say that it should stand, but with "Matilda" changed to "the acquisition of Matilda's coal assets". I accept that that will meet the otherwise valid objection. 45Paragraphs 21 to 23 and 25 to 27 of the Chisholm subpoena relate to certain named companies said by the defendants to have been involved in Mr Chisholm's alleged approaches to Mr McDonald or some other entity. They relate to matters made relevant by the aspects of the defences concerning Industrial Partners that I allowed to remain. Those paragraphs will not be struck out. 46Paragraphs 30 and 31 of the Chisholm subpoena call for documents relating to the content of notes made by Mr Chisholm and annexed to his affidavit. The notes are of meetings of directors of C1 that Mr Chisholm attended. The defendants say and I accept that the documents called for have a capacity to elucidate or call into question statements of Mr Chisholm recorded in the notes regarding absence of conflicts of interest on his part.

The subpoenas addressed to Chisholm associates 47The next subpoenas to be considered are those addressed to Mrs Chisholm and Left Brain Strategies. The aspects of those subpoenas that arise for consideration are the same as aspects of the Chisholm subpoena with which I have dealt. Corresponding rulings apply. 48The position is, subject to one exception, the same in relation to the subpoenas addressed to Southland Advisory Services Pty Ltd, Southland Securities Pty Ltd, M A Wong, Trident Capital Pty Ltd, Blue Saint Pty Ltd, PS Collections Pty Ltd, Milwal Pty Ltd, A J Sierakowski and P D Price. The exception relates, in each case, to paragraph 5 which is not pressed. That paragraph will accordingly be struck out. Otherwise, the result will be the same as in relation to the Chisholm subpoena.

The subpoena addressed to Industrial Partners 49The last subpoena the subject of Lenark's application is that addressed to Industrial Partners. That subpoena is objected to in its entirety on a basis that is not supportable in light of my decision with respect to the defences. There are, however, continuing objections to particular paragraphs (although I note that paragraph 3 is not pressed, so that it should be struck out in any event). 50Paragraph 2 of the Industrial Partners subpoena is pressed only to the extent that it calls for documents recording communications between 24 November 2009 and 31 August 2010 by or to any director of Industrial Partners relating to the acquisition or possible acquisition of assets from Mr McDonald, ACN Mining Pty Ltd or Matilda Minerals Ltd. Given the aspect of the defences concerning Mr Chisholm's alleged conduct (and that of Industrial Partners) in relation to Mr McDonald, other entities and the potential acquisition of assets, these documents are relevant and paragraph 2 will stand in its modified form. 51The remaining paragraph of the Industrial Partners subpoena is paragraph 1 which calls for: "Documents recording any communications between 1 September 2009 to 30 April 2010 by or to any director of Industrial Partners Pty Limited ( Industrial Partners ) relating to investment or business opportunities in: (a) mining services; (b) labour hire businesses; (c) black coal assets; or (d) resources sector." 52Lenark says that this paragraph reflects no more than a hope of discovering material that will demonstrate that Mr Chisholm was acting in breach of his duties to C1, so that the subpoena is, to that extent, an impermissible attempt at "fishing". I accept that submission. The description in paragraph 1 fails the essential test of "reasonable particularity" and is for that reason oppressive. Paragraph 1 would catch, for example, any record of a conversation between a director of Industrial Partners and his or her stockbroker about the desirability or otherwise of a modest personal investment in any of the many hundreds of mining and oil companies listed on ASX. Paragraph 1 will be struck out.

The notice to produce 53I refer next to the notice to produce addressed by C1 to Lenark and dated 18 March 2011. The content of that notice to produce overlaps entirely with aspects of the content of the subpoenas and the same results will follow.

The subpoenas addressed to GUF and Mr Lyons 54Finally, it is necessary to deal with the subpoenas issued on the application of Lenark and addressed to GUF and Mr Lyons, a partner of Messrs Middletons, GUF's solicitors. 55A compelling point made by Mr Withers of counsel on behalf of these subpoenaed persons should be addressed at once. These proceedings are at an early stage. My decision with respect to the defences and the subpoenas addressed to persons who may be considered principal actors will have the effect that the issues are more precisely defined and relevant documents in the possession of those persons will be produced. The point must be near at which discovery will be appropriate and will be ordered. The process of discovery, as well as the subpoenas addressed to the principal actors, will no doubt bring to the fore a number of documents concerning GUF and its role in relevant events. It is quite possible that the claims and the defences may then be refined. 56Mr Withers submitted and I accept that GUF and Mr Lyons should not be subjected to subpoenas until discovery has been completed. GUF is, in the circumstances, a true third party. It should not be the object of de facto discovery and, while documents of relevance under its control are obviously susceptible to compulsory production, it is far preferable that what is of relevance (and what might usefully and responsibly be sought from a true third party) be judged after pre-trial processes involving the parties and their close associates can be seen to have given rise to some objectively based need for compulsory production by such a third party. 57Mr Withers relied on the following passage in the judgment of Hill J in Universal Press Pty Ltd v Provest Ltd (unreported, FCA, Hill J, 14 July 1989, BC8908285): ""With respect, the interests of justice and efficiency, will in most cases be best served if subpoenas are issued requiring documents to be produced at a time before the hearing but it does not follow from that that it will ordinarily be appropriate in the interest of justice for a subpoena to be made returnable before discovery itself has been given by the parties to each other or indeed before, as in this case, the defendant has even filed a statement of defence in the proceedings. Rather it seems to me, so that the issues are defined, that it will be a rare case indeed where the interests of justice will require a subpoena to be issued until the ordinary interlocutory steps have been completed. It must ultimately be borne in mind that a subpoena is intended to require the production of documents so that those documents can be available for tender during a trial and for the purposes of it. I use trial as encompassing of course interlocutory motions should such motions be relevant. In this context I would refer to what was said by Bowen LJ in Elder v Carter (1890) 25 QBD 194] (at p 201, 202): 'But I am as certain as one can be of anything with regard to practice, that does not intend to enact that at any stage of a proceeding a judge may make, subject to his discretion, an order on a third person for production of a document which belongs to the third person, unless the production of it at that moment is a thing to which the parties are entitled for the purpose of justice; and you are not entitled, for the purpose of justice at any moment during suit, simply because you are a litigant, to see what is in the possession of a third person and to have production of it. Such a thing was never heard of ...'" 58These observations are applicable to the subpoenas addressed to GUF and Mr Lyons. The appropriate course in relation to them is that taken by Flick J in Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia [2009] FCA 1203, that is, that they be struck out in their entirety but without prejudice to the ability of Lenark to cause subpoenas in the same or like terms to be issued in the future.

Conclusion 59The result is as follows:

1. Lenark's objections to the defences of the first, second, eleventh, nineteenth, twentieth and twenty-first defendants are not well taken and those defences will stand without any of the parts objected to being struck out.
2. Lenark's objections to subpoenas issued on the application of C1 and addressed to Mr Chisholm, Mrs Chisholm, Left Brain Strategies Pty Ltd, Southland Advisory Services Pty Ltd, Southland Securities Pty Ltd, M A Wong, Trident Capital Pty ltd, Blue Saint Pty Ltd, PS Collections Pty Ltd, Milwal Pty Ltd, A J Sierakowski and P D Price are not well taken and, except for parts of those subpoenas not now pressed by the defendants, no part of any such subpoena will be struck out.
3. The subpoena issued on the application of C1 and addressed to Industrial Partners Pty Ltd will be struck out except as to its paragraph 2, which paragraph will, however, be restricted in the way stated at paragraph [50] of these reasons.
4. The notice to produce dated 18 March 2011 will be struck out insofar as it corresponds with any part of the subpoenas that is to be struck out.
5. The subpoenas issued on the application of Lenark and addressed to GUF and Mr Lyons will be struck out but with liberty to Lenark to obtain in the future the issue of subpoenas in the same or like terms addressed to them if so advised. 60Lenark will pay the costs of the relevant defendants, GUF and Mr Lyons of and incidental to the several interlocutory processes determined by these reasons. 61I direct that the parties bring in short minutes of orders to give effect to these reasons. 62As I have now entered on long leave, it will be necessary for the orders to be settled and made by another judge: Wentworth v Rogers (No 3) (1986) 6 NSWLR 642. The parties therefore have leave to approach the Corporations Judge for the time being for that purpose.

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: 06 June 2011