Lowery v Insurance Australia Ltd

Grant of leave to appeal

1. As explained by Emmett JA, the breadth of the material sought, both in terms of time and subject matter, cast doubt on the legitimacy of the exercise. Nevertheless, that factor alone would not warrant this Court intervening in relation to an interlocutory judgment of the District Court concerning a matter of practice and procedure, for which leave is required for an appeal. [1] Further, this is not a case where those subject to the subpoenas complained of the requirements imposed on them. The material had been supplied to the Court in response to each subpoena prior to the hearing of the motion: as a result, although the notice of motion filed on 15 December 2014 sought to have each subpoena set aside, the judge treated the motion as seeking, effectively, to restrict access to the material which had been produced to the Court.
2. In most circumstances, error at an interlocutory stage will give rise to a right of appeal from the final judgment. It is often preferable to rely upon the availability of relief from the final orders, at which stage it will be apparent whether an interlocutory error has proved material to the outcome. Nevertheless, in circumstances where an avoidable injustice may be averted by early intervention (such as the undue prolongation of a trial) leave may be granted to appeal from an interlocutory judgment.
3. A grant of leave is not warranted on these bases in the present case. Rather, a grant of leave must be justified by reference to the possible precedential value of the judgment. That will rarely arise from an unreported judgment of the District Court which has not been uploaded to the internet. However, two factors warrant a different approach in the present case. First, the respondent, responsible for issuing the subpoenas, is an insurance company and a repeat litigant in the courts. It is plausible that a successful strategy developed by one insurer will become known to others. Secondly, an exercise of the kind undertaken in the present case will be available in every case where the credibility of a party, or even a material witness, is sought to be put in issue. These factors, together with one additional element, warrant a grant of leave to appeal. The additional element is that, on their face, the subpoenas test the boundaries of a legitimate forensic exercise.

Scope of subpoenas - principles

1. I agree, for the reasons given by Emmett JA, that each of the five subpoenas was, in effect, a fishing expedition and not for a legitimate forensic purpose. However, because the purpose of the grant of leave to appeal is to ensure that misconceptions about the appropriate role of a subpoena do not remain, it is important to note both the scope of what is being decided and that which is not being determined.
2. To determine the issues in dispute it is necessary to have regard to the pleadings. The applicants relied on the terms of the policy and the theft and destruction of the vehicle. The defence to the claim relied upon an allegation of failure to co-operate with the respondent's investigation of the claim, in part by not providing information and taking part in an interview regarding the claim, with the result that the respondent's position was prejudiced. There was no pleading of fraud, but no doubt the credibility of the applicants, their son, who had custody of the vehicle at one point, and the controller of the car park (Mr Rapa) were in issue. The insurer was entitled to resist the claim on the basis that the applicants had not proved that the vehicle was taken and destroyed without their consent or connivance, without raising an affirmative defence. [2]
3. At the time the subpoenas were issued, the applicants had not filed any affidavits in support of their case. However, by the time that the notice of motion came on for hearing, the applicants had filed affidavits sworn by each of the four individuals. Further, the purpose of standing over parts of the subpoenaed material for determination by the trial judge as to the access to be granted appeared to accept the possibility that an issue as to credibility might arise in the course of the trial. The issues relating to credibility must involve the circumstances surrounding the loss of the vehicle, or extraneous matters suggesting dishonesty.
4. As explained by Moffitt P in Waind v Hill and National Employers' Mutual General Association Ltd [3] there are three steps involved in the procedure for having third parties bring documents to court pursuant to a subpoena, the first being obedience to the subpoena, the second being determining access and the third being admission into evidence of the document. Different issues will arise with respect to (a) the person having ownership or control of the documents, (b) the party seeking production and access, (c) the party opposing production or access, and (d) a person who is neither a party to the proceedings nor an owner of the documents, but whose interest may be affected, either as a witness or simply as a person whose privacy is invaded.
5. Because the ultimate justification for compulsory production and disclosure of information which might otherwise remain confidential, is the legitimate furtherance of judicial proceedings, regard must be had to permissible uses. Tender of the document in evidence is undoubtedly a permissible use; nevertheless, prior to the trial, both materiality and admissibility may be difficult to determine. Where documents were properly produced, that consideration will permit the deferral of inspection by one party or the other until the trial is underway. [4] However, material may be permissibly used in the course of cross-examination even if it is inadmissible in form, or may not become admissible until a later stage of the proceedings.
6. Decisions as to access to material produced under subpoena should be addressed by reference to two factors, which may not be adequately reflected in earlier decisions. First, the mass creation of electronic records of transactions provides new and growing sources of information about individuals with a high degree of particularity as to place and time. Relevantly for present purposes, electronic records of mobile communications fall into this category. (Records of electronic payments fall into a similar category.) This consideration has, in its turn, spawned concern as to unjustifiable intrusions on individual privacy. Secondly, whether a forensic purpose is legitimate or not must depend on matters of practice and procedure governing a trial. While that has always been so, the rules of evidence have changed over time. Some rules are directed against the production of documents recording "protected confidences". [5] There are general constraints on admission of "credibility evidence". [6] Cross-examination as to credibility is now governed by s 103 of the Evidence Act. Evidence in rebuttal of answers given by a witness under cross-examination is governed by the terms of s 106 of the Evidence Act.
7. Questions of relevance, or "apparent relevance", commonly arise in circumstances where the third party required to answer a subpoena complains on the ground of oppression, so that the burden of producing the documents is to be weighed against their apparent forensic value in the proceedings. [7] That is not the present context. Similarly, the concept of a "fishing expedition" may be relied upon by a third party resisting discovery. In this context, the search is described as speculative, in the sense that it will not be known whether any relevant documents may be uncovered. Again, that is not the present context. In the present context the documents have been located and produced: to the extent that the issues can be identified from the pleadings, their value in the proceedings will depend upon their content, not their existence. In that situation, there may be something to be said for a two-stage process of inspection, whereby inspection may be permitted initially in relation to material patently capable of being used in the proceedings and inspection deferred with respect to so much of the remainder as is conceivably usable, but where an informed decision could only be made in the course of the trial.
8. The latter course in fact has limited value. It is most likely to arise in circumstances where a question has been put in cross-examination and a denial received, which it may be sought to contradict. However, unless there is some basis to put the question, with implications adverse to the witness, that will not happen. In that circumstance, useful access to the material must often be sought for the purpose of the cross-examination. Similarly, as noted, there are limits on the extent to which cross-examination going only to credit can be the subject of contradiction, which should allow a determination for the purposes of access before the time for the document to be deployed.
9. In the present case, the trial judge did not inspect the documents himself in order to determine whether, on the basis of the pleadings and the affidavit evidence filed for the applicants, there was material which might potentially satisfy a legitimate forensic purpose. That is not to say that such a course should have been followed: the issue simply does not arise. In those circumstances, the subpoenas must be dealt with on the same basis.

Determination of appeal

1. First, the subpoena issued to the Commissioner, NSW Police Force, contained six descriptive paragraphs. Paragraph 6, referring to all documents and records "relating to thefts or any reported incidents occurring at or in relation to the property located at [the car park from which the motor vehicle was taken]", was rejected. Paragraph 5, which referred to documentation relating to the theft of the motor vehicle, was not challenged by the applicants. The remaining paragraphs, 1-4, were in the following form: "Your complete record file relating to [person identified by name and date of birth] including but not limited to all criminal records, all complaints, reports and any documentation relating to any incidents involving [the named person]."
2. In his judgment of 29 January 2015, the primary judge allowed access to material which fell within the category of "all criminal records" in each of these paragraphs. That order excised "all complaints, reports and any documentation relating to any incidents involving" each of the named individuals. However, the excision was on a limited basis, as that aspect of the subpoena was "stood over to the trial to the trial judge."
3. With respect to the excisions made from paragraphs 1-4 in relation to police records, there was no justification for allowing the material to stand over for consideration by the trial judge. There was no foreseeable case presented by counsel for the respondent in which the kind of material, not forming part of a criminal record and not relating to the incident in issue, could be used.
4. So far as the remaining reference to "all criminal records" (unrelated to the incident) were concerned, it would be necessary for there to be offences of dishonesty, which might be the subject of cross-examination. The remaining reference was not so limited. Had it been more limited, it might have been objectionable on a different basis, namely that it would have required an independent third party to form a judgment as to what was and what was not covered by the subpoena.
5. In those circumstances, paragraphs 1-4 should have been set aside. Were it otherwise, the Police Commissioner could be required to produce the criminal records of every person who is a party to any judicial proceedings, or likely to be a witness in such proceedings. That is not a possibility which should readily be contemplated.
6. Secondly, with respect to the subpoenas issued to Roads and Maritime Services, seeking registration records for "all vehicles registered by or in the name of" one of the four individuals identified above (being the applicants, their son and Mr Rapa) could have served no legitimate forensic purpose having regard to the pleadings and the affidavit evidence filed. The primary judge gave no reasons for allowing a subpoena in that form: it should have been set aside. (Paragraph 3, identifying records for the Mercedes Benz, was not opposed, although one may doubt the legitimacy of such disclosure with respect to prior owners.)
7. Thirdly, three subpoenas sought records from telecommunications companies, namely Vodafone, Telstra and Optus. Each contained records described by reference to a mobile number and an individual, identified by name and date of birth, in the following form: "Phone records for mobile number xxx in the name of xxx including but not limited to, any records, reports, printouts, transcripts, call logs, statements, notes, correspondence and any other documents relating to calls made from 26 December 2013 to 26 June 2014."
8. The respondent submitted that the applicants, their son and Mr Rapa had all provided affidavits or statements referring to communications between them around the time of the loss and destruction of the motor vehicle. The respondent does not expect to obtain transcripts of those conversations, but merely whether or not there were communications and where each person was at the time of the communication. Such details may possibly be available from call logs.
9. However, there are a number of respects in which this language was too broad to be justifiable, even on a speculative basis. The justification for seeking such records of communications, other than those between the four named parties, is the ability to identify where a particular individual (or at least his or her telephone) was, if in use, at a particular time. There is a sense in which it appears that such an exercise may have been sought to be undertaken, because it could be. There was no submission that any of the four individuals concerned was believed to be at any place, other than they had indicated, at or about the time the vehicle was taken. The potential intrusion in privacy was not warranted by any identifiable forensic purpose.
10. A different conclusion might have been reached with respect to communications between the identified mobile phone numbers within a reasonable period on either side of the day of the incident. A period of three months on either side was not reasonably justifiable; nor was the scope, covering the total activity on all four phones.
11. It is not the function of the Court to redraft the subpoenas: accordingly, each should be set aside in full.

Orders

1. While the relevant documents have been produced to the District Court in response to the subpoenas, so that the issues which arose were determined as permitting or not permitting access to those documents, if the material should not have been produced, it is preferable to set aside the subpoena (or so much of it as should not have been issued) rather than leave the material with the Court. That is because the respondent may wish to consider the issue of further subpoenas, in which case the presence of records in the court registry, part of which may be required to be produced in response to a second subpoena, would only give rise to confusion.
2. With respect to costs, the applicants having been successful on the substance of their motion should have their costs both in this Court and below.
3. The Court should make the following orders: (1) Grant leave to appeal. (2) Allow the appeal and set aside the orders made by the District Court on 29 January 2015. (3) In place of those orders, set aside the following parts of the subpoenas issued by the respondent on 3 November 2014 to: (a) the Commissioner, New South Wales Police Force - schedule, paragraphs 1-4 and 6; (b) the Proper Officer, Roads and Maritime Services - schedule, paragraph 2; (c) the Proper Officer, Vodafone Australia - the whole schedule; (d) the Proper Officer, Optus Mobile Pty Ltd - the whole schedule, and (e) the Proper Officer, Telstra - the whole schedule. (4) Order that the respondent pay the applicants' costs of the motion in the District Court. (5) Order that the respondent pay the applicants' costs in this Court.
4. EMMETT JA: By summons filed on 16 April 2015, Mr Joseph Lowery and Mrs Paula Lowery seek leave to appeal from orders made by a judge of the District Court (the primary judge) in relation to subpoenas issued by the respondent, Insurance Australia Ltd (the Insurer) in proceedings brought in the District Court by Mr and Mrs Lowery against the Insurer. By notice of motion of 15 December 2014, Mr and Mrs Lowery had sought orders that the five subpoenas be set aside. On 29 January 2015, the primary judge declined to set the subpoenas aside and allowed parts of them to stand. [8]

Background

1. In the proceedings in the District Court, Mr and Mrs Lowery sued the Insurer on a policy of insurance (the Policy) issued by the Insurer in respect of a Mercedes-Benz motor vehicle owned by them (the Motor Vehicle). The allegations made by them in their statement of claim filed on 8 May 2014 may be summarised as follows: 1. At all material times, Mr and Mrs Lowery were the owners of the Motor Vehicle; 2. By the Policy, the Insurer insured Mr and Mrs Lowery in respect of the Motor Vehicle for the period from midnight 24 March 2014 to 11:59 pm on 24 March 2015; 3. It was a term of the Policy that the Insurer would provide insurance to Mr and Mrs Lowery against the Motor Vehicle being stolen or a total loss during the period of insurance for an agreed sum of $198,950 (the Agreed Value) less excess of $2,000 (Excess); 4. On or about 27 March 2014, the Motor Vehicle was stolen from a fenced and gated car park leased by Mr Phillip Rapa (Mr Rapa) at Silverdale, New South Wales; 5. On or about 27 March 2014, Mr and Mrs Lowery lodged a claim under the Policy with the Insurer; 6. On being located, the Motor Vehicle had had most of its parts removed, and remained as a shell burnt by fire, and was beyond repair; 7. In breach of the Policy, the Insurer has failed and refused to pay to Mr and Mrs Lowery the Agreed Value less the Excess or any part thereof.
2. In its amended defence filed 30 July 2014, the Insurer admits that it entered into the Policy with respect to the Motor Vehicle. The Insurer says that any entitlement of Mr and Mrs Lowery to cover under the Policy was subject to: 1. Mr and Mrs Lowery being truthful and frank in all statements made to the Insurer in connection with any claim; 2. Mr and Mrs Lowery establishing that the Motor Vehicle was damaged to the extent and nature alleged in the circumstances reported by them to the Insurer; 3. Mr and Mrs Lowery acting in good faith in their dealings with the Insurer; 4. Mr and Mrs Lowery co-operating fully with the Insurer, including being interviewed by the Insurer, providing information and documents and helping to deal with any claim and providing proof of ownership of the Motor Vehicle, including purchase receipts; 5. Mr and Mrs Lowery establishing that the Motor Vehicle was damaged or lost in circumstances within the terms of the Policy; 6. Mr and Mrs Lowery co-operating with the Insurer in respect of any claim made under the Policy and providing such information and assistance as may be required by the Insurer to enable it to investigate the circumstances of any such claim.
3. The Insurer asserts in its defence that, in breach of the terms of the Policy, Mr and Mrs Lowery: 1. refused and failed to co-operate fully with the Insurer in respect of their claim; 2. refused and failed to provide such information as was required by the Insurer in respect of the claim; 3. refused and failed to provide such documents as were requested by the Insurer in respect of the claim; 4. refused and failed to provide such assistance to the Insurer as was required by the Insurer in respect of the claim; 5. refused and failed to take part in an interview regarding the claim as required by the Insurer; 6. prejudiced the Insurer's position regarding the claim; and 7. refused and failed to take all reasonable steps necessary to assist the Insurer to investigate the claim.
4. By letter of 6 November 2014, in response to a request for particulars dated 15 September 2014 from the solicitors for Mr and Mrs Lowery, the Insurer's solicitors asserted that, based on the facts and circumstances enumerated in the letter, Mr and Mrs Lowery had prejudiced the Insurer's position regarding the claim. The Insurer's solicitors asserted that the prejudice to the Insurer (as pleaded in its amended defence) was the lack of information and verification of the claim in circumstances such that the Insurer was not satisfied that the Motor Vehicle had been stolen as reported and was not satisfied that Mr and Mrs Lowery had been truthful and frank in connection with the claim. The Insurer said that the value of that prejudice is the entire claim amount, as Mr and Mrs Lowery have not established that the Motor Vehicle was stolen and damaged as reported by them, to the extent that the Insurer is not in a position to cover the value of the Motor Vehicle at all.
5. The facts and circumstances enumerated in the letter included the following: 1. The Motor Vehicle was insured at the Agreed Value, of $198,950, for the period from 24 March 2014 to 24 March 2015; 2. On 28 March 2014, Mr Lowery lodged the theft claim; 3. The Motor Vehicle was recovered approximately ten minutes away from the location from which it was reported to have been stolen, burnt out but not stripped of its parts; 4. The Insurer assessed the Motor Vehicle as a total loss due to fire damage; 5. The value of the Motor Vehicle prior to the reported theft was $139,900; 6. Because the Motor Vehicle was insured for approximately $60,000 more than its value, was reportedly stolen from a secure location without the use of an ignition key and was found close to its reported location burnt out but not stripped, the Insurer referred the claim to its Claims Enquiry Unit; 7. On 7 April 2014, the Insurer's Claims Enquiry Unit engaged NKG Management Services (NKG) to undertake further enquiries with respect to the claim, including by conducting interviews with Mr and Mrs Lowery; 8. As at 13 May 2014, Mr and Mrs Lowery had not participated in an interview with NKG.
6. On 3 November 2014, the Insurer filed five subpoenas in the District Court proceedings. The subpoenas were addressed to the following:

• NSW Police Force;
• Vodafone Australia;
• Telstra;
• Optus Mobile Pty Ltd (together with Vodafone Australia and Telstra, the communications companies); and
• Roads & Maritime Services (RMS).

1. Not all of the subpoenaed material was disputed and Mr and Mrs Lowery did not object to the subpoenas in so far as they required production of certain material. The disputed material in the subpoena addressed to NSW Police consisted of "your complete record file" relating to each of Mr Lowery, Mrs Lowery, Benjamin Lowery (their son), and Mr Rapa "including but not limited to all criminal records, all complaints, reports and any documentation relating to any incidents" involving any of those persons. The disputed material called for in the subpoenas addressed to the communications companies consisted of phone records for mobile telephone numbers in the names of Benjamin Lowery, Mr Rapa, Mr Lowery or Mrs Lowery, "including but not limited to, any records, reports, printouts, transcripts, call logs, statements, notes, correspondence and any other documents relating to calls made from 26 December 2013 to 26 June 2014". The disputed material in the subpoena addressed to RMS consisted of "registration certificates and other registration records of all vehicles registered by or in the name of" any of Mr Lowery, Mrs Lowery, Benjamin Lowery and Mr Rapa.

Decision of the Primary Judge

1. In his reasons of 29 January 2015, the primary judge observed that the question was whether or not the subpoenas were "in effect fishing". His Honour briefly recited the circumstances of the claim by Mr and Mrs Lowery, observing that, while Mr and Mrs Lowery had not given interviews to the Insurer's investigators, Benjamin Lowery and Mr Rapa had given statements. His Honour then referred to the submission on behalf of Mrs and Mrs Lowery that there was no pleading that raised any issue of fraud or any other matter regarding the conduct of Mr and Mrs Lowery or any other person on their behalf that would give rise to the investigation that the Insurer then sought.
2. The primary judge said that he could see merit in the argument advanced on behalf of Mr and Mrs Lowery. However, his Honour said, the Insurer had not had the opportunity of interviewing Mr and Mrs Lowery and it had issued the subpoenas "to properly investigate the matter in circumstances where, on the face of it, there may be matters that are suspicious". His Honour did not specify the matters that were suspicious, although, in the course of submissions, he had been taken to the particulars furnished in the letter of 6 November 2014. His Honour allowed the subpoenas in so far as they required production of the disputed material described above.

The Appeal

1. At some time after the primary judge dealt with the subpoenas, Mr and Mrs Lowery participated in an interview with NKG. However, that does not have any bearing on the question of whether or not the primary judge erred in allowing the subpoenas in relation to the disputed material.
2. The question of the production of documents in answer to the subpoenas is one of practice and procedure involving an exercise of discretion by the court responsible for issuing the subpoenas. [9] An appellate court will be slow to interfere with that exercise of discretion. It is necessary to show that the primary judge acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect the decision or did not take into account some material consideration. Leave should be granted only if the decision below is attended with sufficient doubt to warrant its reconsideration and/or a substantial injustice will flow from the exercise of discretion; it is not sufficient to show that the judge below was arguably wrong. [10] In the present case, the paucity of reasons of the primary judge makes it difficult to determine the basis upon which his Honour acted.
3. The circumstances outlined in the letter of 6 November 2014 are sufficient to give rise to some suspicion. The question, however, is whether, notwithstanding that those circumstances give rise to suspicion, the terms of the subpoenas go beyond investigating the suspicious circumstances.
4. While Mr and Mrs Lowery accept that a subpoena is legitimate if the material to be produced is relevant to an issue of credit, they say that it is not permissible for a subpoena to "trawl speculatively" for documents that may possibly be used to impugn a witness's credit. Thus, it is not fishing to seek documents where there are reasonable grounds to think "that fish of the relevant type are in the pond". [11] However, where there is no evidence, and no reason to suppose, that there would be any documents of the relevant category, a subpoena for such documents will be "nothing more than a fishing expedition to see whether any such documents are in existence". [12]
5. Mr and Mrs Lowery have served affidavits by four deponents, being Benjamin Lowery and Mr Rapa, in addition to themselves. The evidence indicates that each of them at various times had a role to play in the delivery, safekeeping, storage and collection of the Motor Vehicle. For its part, the Insurer says that it wishes to cross-examine each of those witnesses to test the veracity and credibility of their affidavit evidence concerning the circumstances of the alleged theft.
6. The disputed material sought from the NSW Police Force could go only to the question of the credit of the individuals who may give evidence. However, the subpoena extends to all criminal matters and is not limited to matters that involve dishonesty that might be relevant to credit. Further, there is nothing to suggest that the police in fact have any material that might be relevant to credit. Rather, Mr and Mrs Lowery contend, the subpoena is nothing more than a fishing expedition to see whether any such documents are in existence.
7. The Insurer contends that material concerning the criminal antecedents of the witnesses would throw light on the possibility of connivance between them. However, the very broad and unspecific nature of the description of the material goes well beyond criminal antecedents that might suggest connivance. The description in the subpoena addressed to NSW Police is unlimited as to the material that is to be produced.
8. The subpoenas to the communications companies call for all records during the period of three months on each side of the day of the claim in respect of the Motor Vehicle. Mr and Mrs Lowery contend that the broad scope of the subpoenas to the communications companies could not assist in resolving any matter in dispute or likely to be in dispute in the proceedings.
9. The Insurer says that the telephone records are required to test the asserted movements of the witnesses prior to and after the alleged theft. It wishes to test whether the location of telephone calls that would (it was said) be disclosed by the telephone records match the evidence by the witnesses as to their locations at the relevant times. The Insurer also seeks to test the frequency of the calls made between the witnesses in the period up to, and immediately following, the alleged theft. That would be a justification for some short period of time prior to the date of the alleged theft and the days after it until discovery of the Motor Vehicle. However, the arbitrary period of three months before and after the date of the alleged theft is hardly justified by those considerations.
10. The subpoena to the RMS seeks records for all vehicles owned by the relevant persons without limit as to the time of ownership or the nature of the vehicles. Mr and Mrs Lowery contend that at least some of the materials that would be produced in answer to such a subpoena could not assist in resolving any matter in dispute in the proceedings.
11. The Insurer says that the RMS's records are not strictly required to test the credibility of the witnesses, but are nonetheless required to assess the frequency with which those persons have vehicles registered in their names and disposed of. Relevantly, it says, Mr Lowery deposes to having been a motoring enthusiast and having owned a range of motor vehicles over the years. The Insurer says that evidence from the records of RMS would throw light on the tendency or practice to cycle through motor vehicles on a regular basis. However, it is unclear what relevance those matters would have in any event to the issues raised by the particulars.
12. The Insurer contends that each of the subpoenas passes the test of relevance that there be a rational possibility that the documents sought could illuminate the issues in the proceedings. On the one hand, documents may be shown to be manifestly irrelevant and incapable of touching on matters of credit. On the other hand, documents may have a purpose that can be described as identifiable and likely to facilitate the conduct of the proceedings, not merely to oppress a party or witness. [13] (It should be noted, however, that in this case the documents the subject of the subpoenas have already been produced, though access to them has not yet been granted.) It is enough to establish apparent relevance if the document or class of documents gives rise to a line of inquiry relevant to the issues that are to be determined, including meeting the opposing case by way of cross-examination. [14]
13. The Insurer contends that the necessity for having a particular document for the purposes of disposing of the issues at trial may not become apparent until the trial. Accordingly, it says, it is inappropriate for the Court to embark on a detailed preliminary inquiry. [15] It says that a narrow view should not be taken as to the legitimate purposes of a subpoena that has apparent relevance, since one object of the early return of subpoenas is to enable the parties to be apprised of the strengths and weaknesses of their respective cases at an early stage.

Conclusion

1. The complaints made by Mr and Mrs Lowery as to the width of the subpoenas have considerable substance. The facts particularised by the Insurer's solicitors are sufficient to give rise to reasonable suspicions that would justify investigation of specific matters. However, the disputed material goes beyond what would reasonably be required to investigate the matters particularised. In the circumstances, the primary judge erred in permitting the subpoenas to stand in relation to the disputed material.
2. It follows that leave to appeal should be granted. The appeal should be allowed. I agree with the orders proposed by Basten JA.
3. However, it should be understood that there is no reason why the Insurer would not be entitled to have further subpoenas issued appropriately limited to materials that have relevance to the suspicions thrown up by the facts enumerated by the Insurer or relevant materials the existence of which might be inferred from the circumstances and which go to aspects of the credit of individuals involved in the claim.
4. ADAMSON J: I have had the benefit of reading the reasons in draft of Basten and Emmett JJA. I respectfully adopt Emmett JA's summary of the background and the reasons of the primary judge. As I have come to a different conclusion from their Honours, it is necessary to set out the reasons for my view that, although I agree that leave to appeal ought be granted, I consider that the appeal ought be dismissed.
5. The decision sought to be challenged is a discretionary one of practice and procedure. For the reasons given by Basten and Emmett JJA, this Court should be slow to interfere with the exercise of such a discretion. As the Full Federal Court (Jacobson, White and Gleeson JJ) said in Wong v Sklavos in respect of a primary judge's refusal to set aside subpoenas: [16] "The decision of Jagot J refusing to set aside the subpoenas was in the nature of a discretionary judgment concerning a matter of procedure. Appellate review of discretionary judgments is limited to the circumstances stated in House v R (1936) 55 CLR 499 at 505. This means that the appellants must show that Jagot J acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect her decision, or did not take into account some material consideration."
6. The appellant has not identified any error of principle in the approach taken by the primary judge. I am not persuaded that any error has been established in the present case such as would entitle this Court to disturb the orders made by the primary judge.
7. Before turning to the facts of the present case, it is useful to address some general matters relating to insurance claims and proceedings brought by an insured against an insurer who has declined the claim.

General matters: insurance claims for car theft

1. A claim by an insured against an insurer founded on alleged theft of a motor vehicle may be bona fide or otherwise. Before paying out a claim the insurer is required (as part of its duty to maintain a provident fund) to ensure that the claim is bona fide; this obligation requires the insurer to satisfy itself that the insured has not contrived, or been otherwise involved in, the loss.
2. In the nature of things, the insurer has no direct knowledge of the events leading up to the loss; how the loss occurred; or what its immediate and subsequent consequences were. One source of such information (which does not bind the insurer) is the insured whose explanation inevitably favours the paying of the claim.
3. The insurer has no natural contradictor to the insured's version. Nonetheless it is not without tools with which to investigate the claim. It is entitled to enforce the duty of co-operation by questioning the insured and requiring the insured to produce documents about matters that are directly and indirectly relevant to the loss. Where, as here, the insured commences proceedings to recover the loss from the insurer, the insurer may also call in aid the Court's coercive powers by requesting that subpoenas be issued, or by applying for an order for the administration of interrogatories. If the matter proceeds to hearing, the insurer also has an opportunity of cross-examining the insured and his or her witnesses.
4. Each of these steps tends to involve a loss of privacy. Some modicum of protection is provided by the so-called Harman undertaking (named after Harman v Secretary of State for the Home Office [17] ), that material produced by reference to compulsory processes that is not admitted into evidence is not to be used for any purpose outside the proceedings, including in other proceedings, without the leave of the Court. [18] The foreseeable, if not inevitable, invasion of privacy occasioned has never been thought to be a bar to the proper investigation of the matter.
5. For example, in claims for damages for personal injury, it is orthodox to subpoena all the medical records from a plaintiff's general practitioner. A matter of forensic significance may emerge from a casual remark given to such a practitioner prior to the incident in question, which can lead to a forensic trail and ultimately prove to be relevant to the issues in the proceedings. Such subpoenas are not regarded as an abuse of process although they might call for documents generated over a plaintiff's lifetime rather than within a defined period before and after the injury in question. The utility of documents produced in answer to such subpoenas indicates that proper and thorough investigation requires inquiries to be made, including by the issue of subpoenas, not all of which will prove fruitful or give rise to documents which can either be used in cross-examination or which will be admissible in evidence at the eventual hearing of the proceedings.
6. There are no hard and fast rules as to how an insured's version can be challenged. Where an insurer adjudges that the claim is not one that can be paid without further investigation, it is both entitled and obliged to enforce the duty of co-operation and to employ such other investigative or forensic processes at its disposal to assess the claim, with a view to determining whether it should continue to be denied, or whether it should be paid.
7. It is not necessary for an insurer to plead fraud in order to challenge the insured's claim since the insured bears the onus of proving the facts and circumstances surrounding the loss. [19] Indeed, the insurer is not entitled to plead fraud unless the allegation can be particularised. [20]
8. If, notwithstanding the insurer's opposition, the insured succeeds in establishing the claim in Court, the consequences for the insurer are that it must pay not only the claim, but interest and costs.

The present case: the assessment of objective probabilities at the time the subpoenas were issued

1. The issue whether a claim is bona fide is particularly acute where, as here, an expensive car, insured for more than its value (under a policy entered into four days before the alleged theft), is found burnt out but not stripped (although some parts were missing) in relatively close proximity to where it was parked at a time when it was still under the control of the insured. The reason for this is that, in the nature of things, cars are stolen for rational purposes. The range of rational reasons is not particularly broad. The potential reasons for stealing a car include the following: 1. For the purposes of a joy ride (in which case the ultimate destination of the car might be instructive); 2. For the purposes of making a long journey to escape something or someone (in which case the ultimate destination of the car might also be instructive); 3. For the purposes of using the vehicle in a criminal enterprise where the culprit does not want to be identified by reference to the car; and 4. For the purposes of reassembling its parts in the bodies of other vehicles, in which case one would expect the stolen vehicle to be stripped.
2. Where a car is burnt out, not stripped and found in relatively close proximity to where it was parked, there is no obvious motive for its being stolen. In these circumstances the person who most obviously stands to gain financially by the apparent theft of a car which has been insured for more than its value (and possibly the only person) is the insured.

The insurer's investigations

1. The matters referred to above are all matters of hypothesis. The evaluation of the force of each hypothesis with a view to its being confirmed or excluded requires both investigation and information. The facts and circumstances that would assist the insurer, in the first instance, and the court (if the matter proceeds to final hearing) need not, and in some cases, cannot, be precisely articulated in every case, since these are matters of judgment made by the insurer and its legal representatives, informed, it can be assumed, by experience in similar cases and a knowledge of how the world tends to work. This is not to suggest that the insurer need not justify subpoenas issued at its request, where their ambit is challenged, but rather to emphasise that what is required is that the Court be satisfied that the evident and objective purpose of the subpoenas is to obtain relevant documents with respect to the claim the subject of the proceedings, which was found to have some suspicious features thought to require further investigation.

The reasoning of the primary judge

1. As Emmett JA has noted, the primary judge's reasons were relatively scant. Although this Court was informed that the matter was the only one in his Honour's list that day, there is still some leeway to be given to reasons delivered ex tempore, as these were, particularly where the orders are interlocutory and affect matters of practice and procedure. [21]
2. It is, in my view, tolerably clear that the primary judge considered (in part on the basis of the particulars provided by the insurer dated 6 November 2014) that there were matters that the insurer was entitled to regard as suspicious, at least on their face. His Honour regarded the circumstance that the appellants had not been interviewed at that stage as significant. Further, his Honour, correctly, did not regard the absence of an allegation of fraud as determinative. In these circumstances, I consider that his Honour was entitled to be satisfied that there was a legitimate forensic purpose for the subpoenas sought to be impugned.
3. Although the legitimate forensic purpose was not articulated in specific terms (beyond the investigation of the circumstances, and the credibility of the protagonists), either at the hearing or in the reasons for decision, it is well established that it need not be. [22] What is of importance is that the primary judge was satisfied, by reason of what was put during the hearing and the evidence adduced, that there was a legitimate forensic purpose, such that the subpoenas did not amount to an abuse of process. That finding was made on the basis of the facts, matters and circumstances specific to the present case (as set out in the respondent's letter of particulars dated 6 November 2014 as referred to by Emmett JA) relevant to the suspicion held by the insurer that the claim was not bona fide.
4. As referred to above, it was also of significance to the reasoning of the primary judge that the appellants had not been interviewed by the respondent at the time of the appellants' application to set aside the subpoenas, although they were obliged, by reason of the contract of insurance, to participate in such an interview as part of their duty to co-operate. The insurer was entitled to deny the claim in circumstances where the appellants were in breach of their duty to co-operate.
5. At the time the motion the subject of the leave application was heard the following were issues in the proceedings: whether the appellants could establish that the vehicle was stolen without their connivance and that the facts and circumstances leading to the alleged theft were credible; whether the appellants had fulfilled their contractual duty of co-operation (to be truthful and frank with respect to the claim); and whether the appellants had fulfilled their duty of good faith.
6. I accept that there is ample room for debate and differences of opinion about whether the subpoenas were too wide, both in terms of time and ambit. For example, it might have been thought that the subpoena for any criminal records of the appellants ought be confined to offences of dishonesty or limited as to time. However, in the course of an investigation, an insurer will be assisted by documents that are, or may be, relevant, whether they help the appellants to prove that the events leading up to their claim are credible or whether they tend to suggest that the claim ought not be accepted.
7. Documents produced in answer to the subpoena to the NSW Police Force could reveal matters germane to criminal knowledge on the part of the appellants of car theft as well as matters relating to their credibility. The absence of any criminal record produced in answer to the subpoena might (in conjunction with other evidence) lead the respondent insurer to conclude that the claims were bona fide and ought be paid. I do not regard the potential relevance of such documents in the present case as producing the consequences adverted to by Basten JA (that if they could be subpoenaed in this case, they would be able to be subpoenaed in every case). Each case depends on its facts; the allegations made; the stage of the proceedings when the subpoenas are issued; the extent to which the duty to co-operate has already been fulfilled; and any matters identified by the insurer as giving rise to a suspicion that the claim is not bona fide.
8. Documents produced by the telephone providers (Vodafone, Optus and Telstra) may well be a source of valuable information and evidence. Phone records tend to reveal location and usual practice, as well as the timing and length of communications between relevant parties. It is a matter of degree whether one month, two months or a longer period is apposite to reveal such practice or pattern. There is room for difference in the judgment of how much is required. That this Court might reach a different view about such judgment does not indicate, much less establish, that the primary judge's discretion has miscarried.
9. Similarly, documents produced from Roads and Maritime Services may reveal patterns of vehicle ownership and lead to inquiries regarding sale of vehicles and the price at which they were transferred. These matters may be relevant to the credibility of the appellants' claim and their explanation of how the theft occurred.
10. I make these general observations, not to indicate that these were the actual forensic reasons for the subpoenas, but rather to observe that the subpoenas were, on their face, rationally related to the investigation which the insurer was obliged to undertake. Their breadth did not deprive them of this character. The documents produced may be relevant to the internal logic and credibility of the claim. Moreover, the appellants have not identified any ulterior or collateral purpose.
11. Notwithstanding the width of the categories sought in the subpoenas, it was, in my view, open to his Honour to find as he did: that the subpoenas (as amended following various concessions) were not an abuse of process; had a legitimate forensic purpose; and ought not be set aside.
12. For these reasons, I am of the view that leave to appeal ought be granted but the appeal ought be dismissed.

Endnotes

1. District Court Act 1973 (NSW), s 127(2)(a).
2. Hammoud Brothers Pty Ltd v Insurance Australia Ltd [2004] NSWCA 366; (2005) 13 ANZ Ins Cas 61-639 at [10] (Bryson JA; Ipp and Tobias JJA agreeing).
3. [1978] 1 NSWLR 372 at 381E (Hutley and Glass JJA agreeing).
4. Waind at 383B and 385E-386B.
5. See, eg, Criminal Procedure Act 1986 (NSW), ss 296-299D.
6. Evidence Act 1995 (NSW), s 102.
7. Commissioner for Railways v Small (1938) 38 SR(NSW) 564 (Jordan CJ) referred to by Waddell J in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 926G.
8. Joseph Brian Lowery v Insurance Australia Ltd (District Court (NSW), Maiden DCJ, 29 January 2015, unrep).
9. See Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc [1981] HCA 39; 148 CLR 170 at 177.
10. See Jaycar Pty Ltd v Lombardo [2011] NSWCA 284; Be Financial Pty Ltd atf Be Financial Operations Trust v Das [2012] NSWCA 164.
11. Liristis v Gadelrabb [2009] NSWSC 441 at [5].
12. See ibid at [8].
13. See Jack Brabham Engines Ltd Ltd v Beare [2010] FCA 35 at [23].
14. See Boase v Axis International Management Pty Ltd (No 3) [2012] WASC 498 at [11].
15. Apache Northwest Pty Ltd v Western Power Corporation [1998] WASCA 127; 19 WAR 350 at 374 and 379.
16. [2014] FCAFC 120 at [9].
17. [1983] 1 AC 280.
18. Hearne v Street [2008] HCA 36; 235 CLR 125 at [96] and [105] - [107] per Hayne, Heydon and Crennan JJ.
19. See, for example, Hammoud Brothers Pty Ltd v Insurance Australia Ltd (formerly NRMA Insurance Limited) [2004] NSWCA 366.
20. Uniform Civil Procedure Rules 2005 (NSW), r 15.3.
21. Morris v Handley [2001] NSWCA 374 at [22] per Heydon JA.
22. See Commissioner of Police v Hughes [2009] NSWCA 306 at [76] - [78] per Young JA, Ipp JA and Handley AJA agreeing.

Amendments 24 May 2016 - [8], last sentence - insertion of the word "of" between the words "loss" and "the vehicle"

[9], last sentence - insertion of the word "a" between the words "as" and "person" 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: 24 May 2016