Marquess Investment Fund Pty Limited v Tjen

Supreme Court of NSW|2022-02-28|Before: Lonergan J

Judgment

This is an application for review of a part of a decision made by the Common Law Registrar on 23 November 2021. A notice of motion was filed by the plaintiff on 9 December 2021 seeking a stay of the Registrar's orders, a review pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 49.19 and/or s 121 of the Supreme Court Act 1970 (NSW) and an order setting aside part of a subpoena issued by the defendant to the Commonwealth Bank ("CBA").
Ancillary and facilitative orders were also sought, (orders 5 and 6 in the notice of motion), which are, because of my decision on the motion, irrelevant, and in any event were not the appropriate mechanism for dealing with the documents already produced to the Court by CBA in compliance with the subpoena.
An order seeking that "any access to the CBA documents be limited to the defendant's legal representatives and any expert retained" was the subject of agreement between the parties in November 2021 and I will make that order.
As the relief sought concerns a decision by the Registrar about an application to set aside a subpoena, the issues raised in the pleadings need to be outlined for context and background.

Principles that apply

The relevant principles have been extracted with precision by Barrett J in Wily re LED (South Coast) Pty Ltd (2009) 76 NSWLR 428; [2009] NSWSC 946 at [23] to [26]: "[23] The established procedures and practices of this court to which regard must be had are those to which I have already referred. They concern review of a decision of a registrar of the court as envisaged by s 121(3) of the Supreme Court Act and rule 49.19 of the Uniform Civil Procedure Rules. Their essential nature may be gathered from the judgments of Basten JA and Hodgson JA in Tomko v Palasty (No 2) (above). Basten JA noted (at [52]) that a review, unlike an appeal, "does not require" demonstration of error and "is not restricted" to reconsideration of the material before the primary decision maker; authorities with respect to the conduct of appeals against the exercise of discretionary points, such as House v The King [1936] HCA 40; (1936) 55 CLR 499 "do not in terms apply to a review", although "similar policy considerations may arise in relation to a review" to make a court "less inclined to intervene" or "more inclined to intervene"; and, although the court should, on a review, "exercise afresh" the relevant power, "it does not follow that the reasoning of the Registrar should be ignored, or that variations in the materials presented to him and the evidence adduced in this Court are irrelevant". [24] Hodgson JA observed (at [7] and [8]) that the process of review involves a discretion, including a discretion whether and, if so, how to intervene; also that the person seeking review has an onus to make out a case for intervention. His Honour added that this will "normally require at least demonstration of an error of law, or a House v The King error, or a material change of circumstances, or evidence satisfying the strict requirements for fresh evidence". [25] Ipp JA agreed with both Hodgson JA and Basten JA. [26] It is made clear by the judgments in Tomko v Palasty (No 2) that review, in the relevant sense, involves discretionary intervention. The starting point for the court is therefore the decision that is to be reviewed. The court does not merely cast that decision to one side and proceed as if it had never been made. While it is for the court to make the relevant decision afresh, it will have regard to the basis on which the decision was made and the material placed before the court itself on the application for review."
UCPR 49.19 provides relevantly: 49.19 Review of registrar's directions, certificates, orders, decisions and other acts (1) Subject to subrule (2), if in any proceedings a registrar gives a direction or certificate, makes an order or decision or does any other act, the court may, on application by any party, review the direction, certificate, order, decision or other act and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit. (2) …..
Section 121 of the Supreme Court Act provides: 121 Powers (1) In this section officer means a registrar, taxing officer, or other officer of the Court. (2) An officer may exercise such powers of the Court as are, by or under this or any other Act, conferred upon the officer. (3) A judgment given or an order made by an officer may be set aside or varied by the Court. (4) Subject to subsection (3), a judgment given or an order made or direction given by an officer shall have effect as a judgment or order or direction of the Court, whether or not the judgment, order or direction is within the powers mentioned in this section of the officer. (5) An officer shall constitute the Court for the purpose of the exercise of the powers mentioned in subsection (2).
In Noble Earth Technologies Pty Ltd v Hampic Pty Ltd trading as Cyndan Chemicals [2012] NSWSC 935 at [39] Hallen J set out the principles with some further illustrative gloss: "[39] Relevant principles drawn from authorities relating to the nature of a review are: (a) The review power conferred is not an appeal and, accordingly, is not subject to the limitations that apply to proceedings by way of appeal: Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 at [6], [10], [50], [52]; Al-Shennag v Statewide Roads Pty Limited [2009] NSWSC 210 per Hall J at [44]-[46]; it is "not restricted" to a reconsideration of the primary material before the Registrar: Lollback v Brakepower Pty Ltd [2010] NSWSC 1457 at [10]. (b) It is unnecessary for the applicant for review to demonstrate any material error of fact, or principle, in the order under review. On the review, the court may exercise its powers regardless of error. However, review, in the relevant sense, involves discretionary intervention: Tomko v Palasty (No 2) at [52]; Lollback v Brakepower Pty Ltd at [13]; the discretion extends to a discretion whether, and if so, how, to intervene. (c) The conduct of the review is at large and in the discretion of the Court. Notwithstanding the foregoing, the review is not accurately described as a hearing de novo: Perpetual Ltd v Barghachoun [2010] NSWSC 108 at [3], although it involves many of the features of a hearing de novo. (d) There is an onus on a person seeking to have a court set aside, or vary, a registrar's decision to make out a case that the court conducting the review, in the interests of justice, should exercise its discretion to do so: Tomko v Palasty (No 2) per Hodgson JA at [7]. In other words, there must be a basis shown for setting aside, or varying, the decision or orders of the registrar. (e) Although on review, the Court should consider the matter afresh, it does not follow that the reasoning of the registrar should be ignored, or that variations in the material presented to her, or him, and the evidence that was adduced are irrelevant. The starting point is, therefore, the decision that is to be reviewed. The court does not merely cast that decision to one side and proceed as if it had never been made. The court will have regard to the basis on which the decision was made and the material placed before the court itself on the application for review: Wily re LED (South Coast) Pty Ltd [2009] NSWSC 946 at [24] - [26]. The real question is whether there are any grounds, or any reasons, which would warrant a review of the orders that have been made by the registrar: Al-Shennag v Statewide Roads Pty Limited at [47]. (f) What will be required to make out a case for intervention will vary depending upon the nature of the registrar's decision under review: Groeneveld v Wollongong City Council [2009] NSWLEC 149; (2009) 168 LGERA 260, per Preston CJ at [12]. However, the court should inform itself of the material before the registrar at the time when he, or she, made the decision, should consider the reasons for the decision, and then should make its own decision based on the material before it after having the benefit of the submissions of each party. (g) It is proper for the Court to exhibit a natural inhibition against the unrestrained substitution of the reviewing Court's views for those of the registrar: Westpac Banking Corp v Abemond Pty Ltd; Westpac Banking Corp v Cameron (NSWSC, 3 November 1994, unreported). (h) When it comes to matters of practice and procedure, there should be a natural inhibition against overturning a registrar's decision: Wentworth v Graham [2002] NSWSC 397; (2002) 55 NSWLR 638 at 640-641. However, where substantive error is established, then the Court would consider reviewing the registrar's decision and would make such other order as it is authorised to make: Al-Shennag v Statewide Roads Pty Limited at [46]. (i) In the case of a decision which finally determines a party's rights, or which (albeit one of practice or procedure) has a decisive impact on those rights, a Court may be more willing to intervene. It may permit further evidence to be led that does not satisfy the strict requirements for fresh evidence, if it is satisfied that the interests of justice require this. It may decide to substitute its own discretionary decision for that of the registrar, even though no House v R (1936) 55 CLR 499 error is shown, again if it is satisfied that the interests of justice require this: Tomko v Palasty (No 2) at [5]-[9], [50], and [52]. (j) If fresh, or additional, evidence, is produced, it may be received by the court and taken into account (Fenwick v Wambo Coal Pty Limited [2011] NSWSC 176, per White J, at [46]), or the court may refer the matter back to the Registrar for consideration as a fresh application: Portal Software v Bodsworth [2005] NSWSC 1115 at [17]. The court may be more inclined to intervene on a review based on fresh evidence, changed circumstances, or where error is demonstrated in the decision under review: Tomko v Palasty (No 2) at [52]. (k) The decision of the registrar stands until it is set aside: Lawteal Pty Limited v Ofo [2005] NSWSC 984, per Malpass AsJ at [19]. (l) The registrar must give sufficient reasons for his, or her, decision: Thompson v New South Wales Land and Housing Corporation [2008] NSWSC 74 per Malpass AsJ at [9] - [16]".
Counsel for the defendant drew my attention to a decision of Kunc J in Soraya Ahmed v Osman Ahmed [2013] NSWSC 1814 in which his Honour made comment at [14] to [16] regarding the role of subpoenas issued to non-parties comprising something closer to a determinative matter where it engages a court's powers of compulsion against a non-party and so a court may there be more willing to intervene than it would in a decision that was purely procedural. His Honour stated that given that there can be significant consequences for non-compliance, it is not always necessary to be able to demonstrate a problem in the decision of the Registrar that rises as high as an error of law as suggested by Hodgson JA in Tomko v Palasty (No. 2) [2007] NSWCA 369 and the question is simply whether it is in the interests of justice to substitute the reviewing Court's own discretionary decision.

The Common Law Registrar's Decision - 23 November 2021

The Registrar heard argument on 3 November and published her judgment on 23 November 2021. A summary of the procedural background was noted followed by articulation of the schedules to the subpoenas in issue.
Three affidavits of solicitors acting for the plaintiff were tendered and the same affidavits were tendered before me. Mr Fan's affidavits were affirmed on 18 October and 2 November 2021 and were directed to the subpoenas issue and Ms Jackson's affidavit, affirmed 15 September 2021, was directed to opposition to the application for security for costs. There is an apparent tension between something stated in Ms Jackson's affidavit when compared with an assertion in Mr Fan's affidavit about the business the plaintiff company conducts and thus the origin and use of money in certain bank accounts. I will come to that tension shortly.
The defendant relied upon three affidavits of solicitor Mr Secivanovic, sworn 25 October 2021, 3 August 2021 and 13 October 2021, the latter two regarding the security for costs application.
The Registrar noted the plaintiff's grounds to set aside the CBA subpoena were that the subpoena was an abuse of process akin to discovery and that investigating the nature of the plaintiff's business and available funds for the purpose of prosecuting the security for costs application was an improper purpose. Second, that documents are now disclosed (on 2 November 2021 after 7 months of delay), and that Mr Fan, solicitor, disclosed all the necessary relevant information in the 2 November 2021 affidavit that: (i) The funds held in the Commonwealth Bank account belong to Marquess' director, David Tan (David Tan), and will be able to be used to meet any adverse costs order in the proceedings. (ii) Marquess does not hold or manage funds for any other person. (iii) An amount of $932,686.72 deposited into the Commonwealth Bank account on 10 September 2021 came from a settlement with other guarantors. And a copy of the deed of settlement between the plaintiff and others deals with a payment of $980,879.53 that shows up in one of the CBA statements.
Third, there is no legitimate forensic purpose because the defendant does not have to establish the plaintiff's financial position to succeed in his application. He just has to raise the issue and then the plaintiff has to explain why he should not have to give security.
Fourth, David Tan is not a party to the proceedings and so there is no basis to seek production of documents relating to his financial affairs.
The Registrar then set out the arguments of the defendant which were in short that the plaintiff had not satisfactorily complied with the Notice to Produce because the records provided were redacted and incomplete. Second, there were inconsistencies in the plaintiff's description of the nature of the business as "funds management" (Ms Jackson's assertion) and what was later said in Mr Fan's November affidavit that the funds in the plaintiff's account number ending in 5384 all belonged to Mr Tan and that the plaintiff "does not manage funds for any other person". Third, the defendant is entitled to investigate and test the authenticity of the plaintiff's assertions about the origin and use of the money in the accounts given also the settlement or recovery of money that the plaintiff has secured is relevant to a fact in issue for consideration in the security for costs application.
Unsurprisingly, the Registrar found the defendant's arguments persuasive as do I.
Under the heading "Consideration" the Registrar set out the appropriate and timely steps taken by the defendant's solicitors to investigate whether the plaintiff could satisfy any potential costs order. The Registrar appropriately concluded that the defendant had little choice other than to proceed with filing the security for costs motion.
I agree, with the additional observation that the plaintiff's approach was obstructive and inconsistent with the obligations it holds under ss 56 to 60 of the Civil Procedure Act 2005 (NSW) as a party to litigation in this Court. The plaintiff's legal representatives also have obligations under those provisions, and they would do well to re-read them and apply some focus to better acting in compliance with those obligations.
I agree that the issue of subpoenas by the defendant after months of waiting was appropriate, and perhaps more relevantly for the purposes of this review, the Registrar's helpful analysis of the authorities in [22] to [24] of her decision as to the issue of "apparent relevance of the documents" to the issue before the Court - security for costs - is undoubtedly correct: 22. The authorities that require a subpoena to have apparent forensic purpose and relevance to the proceedings are well established. The material sought in the subpoena must have the capacity to throw light on the issues of the main case (Trade Practices Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90) and Portal Software v Bodsworth [2005] NSWSC 1115) . Further, as was stated by Justice Ward (as Her Honour then was) at paragraph 31 in One.Tel (in liq) - SingTel Optus Pty Limited v Wes ton 2010 NSWSC 1491: "Applying in this case the test in civil proceedings as stated by Nicholas J in ICAP (namely that "it must be shown that it is likely the documentation will materially assist on an identified issue or there is reasonable basis beyond speculation that it is likely that the documentation will" at [30]) and noting that it must be reasonable to infer that the documents so sought exist, a careful consideration is required of the issues in the proceedings to which the subpoenaed documents are or may be of relevance in order to assess whether there is a legitimate forensic purpose served by the subpoena. (In that regard it must, in my view, be to the issues as identified in the pleadings as they currently stand to which consideration must be given.… " 23. Most recently, in the decision of Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 the Court of Appeal determined that documents called for in a Subpoena will be found to have a legitimate forensic purpose if the documents: 23.1 are "apparently relevant" to the issues in the proceedings or will "materially assist on an identified issue" ([65], [80] Bell P; [89] Brereton JA; [98] McCallum JA); or 23.2 will add in some way to the relevant evidence sought for a legitimate basis for cross examination ([40], (61]-[62] Bell P; [89] Brereton JA; [100] McCallum JA). 24. I am satisfied that the documents called for in the Subpoenas are "apparently relevant" and will "materially assist on an identified issue" on the security for costs NOM, as they will be relevant to Tjen establishing the threshold question.
The Registrar's reference to the Court of Appeal's decision in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 ("Blacktown Council") was an entirely appropriate extraction and application of principle.
The Registrar then moved to the reasons why she rejected the plaintiff's submissions. They are, in short, that late, incomplete assertions by Mr Fan in an affidavit do not close the issue of the true and correct position of the plaintiff's ability to pay costs and the defendant is entitled to investigate those assertions with the benefit of what the CBA records in fact show.
Part of the evidence before the Registrar, and before me, was CBA accounts held by the plaintiff that showed (in heavily redacted form) that millions of dollars moved in and out of the plaintiff's accounts on a seemingly random basis - (given the redactions, the basis or purpose cannot be gleaned) - leaving on various dates over a recent six month period, less than $2,000 in the account for a period, and on one occasion a debit of $5.
The Registrar also succinctly and correctly dealt with an oppression argument that does not seem relevant to the application for review, but to the extent that it may be said to be relevant, she was entirely correct to observe that the subpoena was not framed in such a way that it was insufficiently specific or required the CBA to form a judgment on what is relevant to the issue for the security for costs application.

Decision

The plaintiff bears the onus of making out a case that the Court in the interests of justice should exercise its discretion to set aside the Registrar's decision. It has not met that onus. I am not persuaded that there was any error at all in the Registrar's decision in the way she dealt with the CBA subpoena. Whilst obviously this is not an appeal, I consider it relevant in my dealing with this application for review to observe that it is in my opinion a correct, fair, well-reasoned decision as to why the plaintiff's application in respect of the CBA subpoena had to fail and does fail.
As well as the combative and obstructive approach taken by the plaintiff to production of its financial information, there are what seem to be, contrary assertions in two different solicitor's affidavits as to what the nature of the plaintiff's business was (and is) and the role and control of relevant bank accounts. Mr Fan's affidavit names David Tan as the holder and "owner" of all those funds. Ms Jackson's affidavit made no such assertion, simply referring to the plaintiff's business as "funds management". The defendant is entitled to investigate that assertion by subpoenaing and accessing relevant bank accounts and to, if appropriate, cross-examine the deponents of the affidavits as to the conclusion(s) asserted in those affidavits about the effect of that material. This is entirely consistent with principle as clearly stated recently by the Court of Appeal, and the instructive analysis and remarks of Bell P in Blacktown Council.
There is accordingly no basis at all upon which I would intervene. Not only do I not "cast aside" the Registrar's judgment, I embrace it as correct and I reach the same conclusions, having independently reviewed the evidence and submissions.

Other matters

There have been delays caused to the progress of this litigation by the plaintiff's obstructive conduct. That situation needs to change.
I have listed the matter for case management directions before me on Thursday 10 March 2022, at which time counsel for the parties and their instructing solicitors should have liaised and agreed on a proposed timetable for the ongoing conduct of the litigation, including appropriate arrangements and proposed orders and timing for access to the documents produced on subpoena by CBA and the other subpoenas that were not set aside, for the plaintiff to file a Reply, and a timetable for the final stages of preparation for the application for security for costs as well as potential available dates for that application to be heard.

Orders

I make the following orders: 1. By consent, access to the documents produced in response to the CBA subpoena is limited to the defendant's legal representatives and any expert required. 2. The plaintiff's notice of motion filed on 9 December 2021 is otherwise dismissed. 3. The plaintiff to pay the defendant's costs of the notice of motion 4. The proceedings are listed for case management before Lonergan J at 12:45pm on 10 March 2022.

Amendments 14 March 2022 - Par 36, line 1 - added apostrophe to the word "Appeals". 13 September 2022 - Punctuation was added in pars 38 and 41. 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: 13 September 2022

(2009) 168 LGERA 260

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