Matheson Property Group Pty Ltd (Trustee) v Virgin Australia Holdings Limited

1. Pursuant to section 35A(5) of the Federal Court of Australia Act 1976 (Cth) and rule 3.11(1) of the Federal Court Rules 2011 (Cth) (the Rules), orders 1 and 2 of the orders of the Registrar dated 18 August 2025 be set aside.
2. Pursuant to r 24.15 of the Rules, the subpoena dated 21 March 2025 and addressed to UBS AG, Australia Branch (UBS), be set aside in so far as it seeks documents falling within categories 1 to 3 in the Schedule of Documents (but not within category 4 or 5 in that Schedule) that are drafts or final versions of documents on the bank's document management system that were not sent to or from any entity or person outside UBS.
3. The applicants pay UBS's costs, as assessed or agreed, of:

(a) UBS's interlocutory application filed on 17 June 2025; and

(b) UBS's interlocutory application filed on 8 September 2025.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. The applicant in this proceeding has served a subpoena for production of documents (dated 21 March 2025) on UBS AG, Australia Branch (UBS). UBS has produced a large number of documents in response to the subpoena but has sought to have it set aside in part. UBS filed an interlocutory application on 17 June 2025 which sought an order to this effect. That interlocutory application was heard by a Registrar and was dismissed on 18 August 2025. UBS then filed an interlocutory application on 8 September 2025 seeking to set aside the Registrar's orders pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth) and r 3.11(1) of the Federal Court Rules 2011 (Cth) and to substitute orders having the effect of limiting the scope of the subpoena.
2. It is common ground that a review of a Registrar's decision involves a hearing de novo and the moving party is not required to identify error: DC Rd DC Pty Ltd v Zhang (No 4) [2025] FCA 319 at [25] (Jackman J).
3. The proceeding is a class action. The applicant has brought the proceeding on behalf of people who acquired notes issued by the first respondent (VAH) on 26 November 2019.

1. Very briefly, in October 2019, VAH agreed to acquire a 34.82 percent interest in Velocity Frequent Flyer Holdco Pty Ltd (Velocity Holdco) from Affinity Equity Partners (Affinity) (Affinity's interest being held through Connectivity Pte Ltd) for $700 million (the Velocity acquisition). Velocity Holdco was an entity in the group which owned and operated VAH's frequent flyer and loyalty program. Following the transaction, VAH was to hold all of the shares in Velocity Holdco. The notes were issued to finance the transaction. UBS was one of the three lead managers acting for VAH in connection with the issue of the notes. On 20 April 2020, VAH entered voluntary administration. At the risk of some oversimplification, the case as currently pleaded (in the Further Amended Statement of Claim filed on 20 September 2024) has the following as its central elements.

(a) Some time in 2018, Affinity notified VAH that it intended to dispose of its interest in Velocity Holdco by way of a trade sale or initial public offering (IPO).

(b) A significant or material factor giving rise to VAH's decision to undertake the Velocity acquisition was to avoid negative consequences that, in VAH's assessment, would flow from an IPO of that interest. These apprehended consequences included the need to refinance a loan that had been made by one of the entities in the Velocity group to a subsidiary of VAH (the Velocity loan).

(c) The note issue was undertaken to fund the Velocity acquisition. The Joint Lead Managers of the note issue included UBS.

(d) In its communications to potential investors for the note issue, VAH did not disclose the concern about the negative consequences of an IPO that had been part of its reasons for undertaking the Velocity acquisition. It impliedly represented that its reasons for undertaking the acquisition did not include any such concern.

(e) VAH also made express representations in relation to its cash balance (on and after 30 June 2019), its anticipated cash balance after the Velocity acquisition and the undrawn financing facilities that it had in place as at 30 June 2019, which together conveyed the impression that it would be able to service the additional debt it was proposing to incur.

(f) VAH contravened s 728(1)(b) of the Corporations Act 2001 (Cth) (the Corporations Act) by not disclosing information actually known or available to it concerning its financial position and prospects, including the Velocity loan and a reduction in cash and available facilities since 30 June 2019.

(g) The representation about VAH's cash balance overstated its liquidity position to a significant extent, which was misleading or deceptive and a breach of s 728(1)(a) of the Corporations Act.

(h) The representation about VAH's anticipated cash balance was a representation as to the future that was made without reasonable grounds and therefore contravened s 728(1)(a) of the Corporations Act.

(i) The representation about undrawn facilities did not account properly for the Velocity loan and accordingly was misleading and contravened s 728(1)(a) of the Corporations Act.

1. The subpoena seeks the following categories of documents.

VRPL Loan

1. Documents coming into existence between 1 May 2019 and 20 April 2020 which refer to the VRPL Loan.

Velocity acquisition

1. Documents coming into existence between 1 May 2019 and 1 December 2019 which address, describe or refer to the reasons that VAH wanted to acquire Connectivity Pte Ltd's approximate 35% economic interest in Velocity.

Due diligence

1. Documents coming into existence between 1 May 2019 and 20 April 2020 which record or comprise analysis, research or due diligence conducted by UBS regarding the financial position of VAH including, for the avoidance of doubt, with respect to:

   1. the VRPL Loan; and/or

   2. VAH's cash balances; and/or

   3. VAH's debt facilities.

   4. Documents coming into existence between 1 May 2019 and 1 December 2019 which record or comprise communications between UBS (on the one hand) and VAH and/or its advisors (on the other) regarding the disclosure made, or to be made, of the reasons that VAH wanted to acquire Connectivity Pte Ltd's approximate 35% economic interest in Velocity and/or VAH's financial position in:

      1. the AU Notes Prospectus; and/or
      2. the US Notes Offering Circular; and/or
      3. communications with potential investors in the AU Notes and/or the US Notes (including, for the avoidance of doubt, presentations and pro forma "Q and A" documents).

   5. Documents recording discussion or consideration of the AU Notes and/or US Notes by VAH's due diligence committee.

1. There is no dispute concerning categories 4 and 5.
2. UBS seeks an order amending the definition of "document" in the subpoena, or setting the subpoena aside in part, so as to exclude what it describes as "internal documents". These are identified in UBS's submissions as:

... the bank's internal communications, being communications and internal documents being drafts or final versions on the bank's document management system that were not sent to or from another entity or person outside the bank.

(Underline in original; footnote omitted.)

1. UBS submits that, in so far as it seeks production of internal documents, the subpoena has no legitimate forensic purpose. A subpoena will be set aside as an abuse of process if it is not issued for a legitimate forensic purpose, "of which it is an instance if it has not been issued bona fide for the purpose of obtaining relevant evidence" (Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 at [61] (Bell P, Brereton and McCallum JJA agreeing) (Blacktown CC) referring to A v Z [2007] NSWSC 899 at [3] (Brereton J)). "Relevant" evidence, in this sense, is not necessarily limited to evidence that will be admissible or that the party issuing the subpoena is likely to tender at the hearing. A subpoena may thus be used, for example, to obtain documents for the purpose of cross-examining a witness (Blacktown CC at [61]-[62]). In this Court the issue has been framed in terms of "apparent relevance" or whether the documents "have a bearing" on an issue in the proceeding. In Wong v Sklavos [2014] FCAFC 120, the Full Court (Jacobson, White and Gleeson JJ) said at [12]:

Although the parties referred to several authorities concerning the requirement for subpoenaed documents to have apparent relevance to an issue in a proceeding, in our opinion, the applicable principles are well established. The party issuing a subpoena bears the onus of demonstrating that the subpoena has a legitimate forensic purpose in relation to the issues in the proceedings ... A subpoena may be set aside if it requires the production of documents which do not have apparent relevance to the issues arising on the pleadings ... Other cases have used different terminology, but with essentially the same effect, for example, by requiring that, viewed realistically, the documents sought have a bearing on an issue which is not unreal, fanciful or speculative ... or that the material sought is reasonably likely to add in some way to the relevant evidence in the case ... or that it be "on the cards" that the documents sought will materially assist the party at whose request the subpoena has been issued ...

1. Obviously, and importantly, the documents sought must have "apparent relevance" to "the issues in the proceedings". Investigating whether additional issues might be able to be agitated, or claims made against persons who are not parties, is not a "legitimate forensic purpose". In a case that is proceeding by way of pleadings, those pleadings will ordinarily be the basis for identifying the "issues in the proceedings".
2. The applicant's case in the present proceeding is that VAH essentially did two things:

(a) it failed to disclose information known to it, concerning the reasons why it was undertaking the Velocity acquisition; and

(b) it misrepresented its financial position and its anticipated financial position.

1. The first of these contentions requires consideration of what VAH did disclose and what was known to, and considered by, its decision makers. The second contention requires consideration of the statements made by VAH on the one hand and its books and accounts on the other, probably informed by expert evidence.
2. Purely internal ruminations or communications within UBS have no real chance of shedding light on any of these things. There is no claim that UBS's advice or management of the note issue was faulty; only claims about the thought processes and conduct of VAH and its financial position. Staff within UBS may have recorded contemporaneous opinions about these things, but it is not apparent how these can be relevant unless they were communicated to VAH.
3. Although the facts were in some ways different, BrisConnections Finance Pty Limited (Receivers and Managers Appointed) v Arup Pty Limited [2016] FCA 906 provides a useful point of comparison. That proceeding arose from forecasts that the respondent (Arup) had prepared concerning the use of a proposed new toll road in Brisbane, which were alleged to be misleading or deceptive or to have breached a duty of care owed to the applicants. The applicants had invested in the project and suffered losses. Arup obtained leave to serve subpoenas on two banks requiring production of:

(a) due diligence reports provided to them in relation to the project;

(b) draft or final credit committee reports showing the banks' consideration of the project;

(c) minutes of credit committee or due diligence meetings; and

(d) communications between certain named bank officers and the applicants or cross-respondents concerning the forecasts and other issues.

Of immediate relevance to the principal proceeding brought by the Applicants against Arup is the Applicants' contention that they suffered loss because, in reliance on Arup's representations, they borrowed monies from the Banks. It is the character of the representations made by Arup, and the reliance placed by the Applicants upon those representations, which is of central relevance to the principal proceeding.

1. The applicants submitted that the banks' own consideration and assessment of the risks involved was irrelevant. This appears to have been accepted by Arup. According to his Honour, "what was of 'apparent relevance', as submitted on behalf of Arup, were the documents provided by the Applicants to the Banks and the information (even if not in the form of documents) submitted by the Applicants to the Banks" (at [19]). However, as drafted, the categories in the subpoenas were much broader. As his Honour said at [21]:

As drafted, categories [2], [4] and [6] seek the production of documents which record the internal deliberations of the Banks or consideration given by the Banks to the Project. Although those documents may well in turn expose documents or information communicated to the Banks by the Applicants, as drafted the two subpoenas seek the production of either documents having no "apparent relevance" to the centrally relevant issues dividing the parties to the proceeding or documents having such marginal "apparent relevance" that those paragraphs should be set aside.

(Emphasis in original.)

1. The last category was in a different position. It would expose analysis by the banks that was communicated to the applicants, which did have apparent relevance to whether the applicants had been induced to invest by Arup's forecasting (at [24]).
2. Finally, in relation to a suggestion that the banks' internal analysis and reports might shed light on whether Arup had reasonable grounds for making the representations, his Honour said at [25]:

But, to the extent that Arup separately contends (for example) that it is to be "expected" that "due diligence reports" prepared by the Banks "will identify any independent analysis of the representations made by Arup that are alleged to have been misleading or deceptive" so that any such "analysis will be relevant to whether Arup had reasonable grounds for making the representations", the submission is rejected either because:

• any question whether there are "reasonable grounds for making the representations" will be a question to be resolved by the Court by reference to such evidence as is considered admissible and probative and not by an assessment made by the Banks - any "independent analysis" undertaken by the Banks certainly does not have an immediate relevance to that question and, more importantly, does not have any "apparent relevance"; and/or
• any subpoena seeking the production of such documents as may exist and which may contain any such "independent analysis" is in the nature of a fishing exercise, albeit an exercise which it may well be accepted will yield a decent "haul" of documents. It is the very fact, of course, that there could be no discovery by the Applicants of the internal documents of the Banks that occasions the pursuit by Arup of these internally generated documents.

1. In the present case, UBS is correct in submitting that its internal consideration of VAH's financial position and reasons for undertaking the Velocity acquisition have no "apparent relevance" to the issues raised by the statement of claim. Categories 1 to 3 are too broad in so far as they seek documents recording such consideration (which, read according to their terms, they clearly do). On the other hand, documents that were sent to (or for that matter received from) VAH may well shed light on the issues raised by the statement of claim. It is for this reason that UBS makes no objection to category 4 and has produced documents within categories 1 to 3 in so far as they involve external communications.
2. In the course of oral argument, senior counsel for UBS accepted that there could be a subclass of documents, within the class of internal documents referred to above, comprising notes of conversations between staff of UBS and VAH, and that such documents could properly be sought. Category 5, to which no objection has been taken, is an example of documents in that subclass. However, categories 1 to 3 cast a much wider net.
3. It should also be noted that UBS has produced some documents which, according to the logic of its submissions, do not have "apparent relevance" to issues in the proceeding. I was taken to an example, which was a chain of emails that had been forwarded to staff members at Morgan Stanley (one of the other entities engaged by VAH) but apparently not sent to VAH. This was explained by senior counsel for UBS as part of an attempt by it to take a practical approach, and to comply with the subpoena to the extent that it could do so while protecting its interest in the confidentiality of its internal communications. If UBS has produced documents in response to the subpoena which it could properly have resisted producing (whatever the reason for doing so might have been), that does not detract from the cogency of its argument concerning the scope of categories 1 to 3.

1. In Lowery v Insurance Australia Ltd [2015] NSWCA 303; 90 NSWLR 320 at [24]- [25] (Lowery), Basten JA held that a subpoena for documents should be wholly set aside even though a more focused subpoena might well have been permissible (Emmett JA agreeing at [53]-[54]). His Honour considered that it was not the role of the court to redraft the subpoena. While this aspect of Lowery does not appear to have been cited in this Court, his Honour's approach has much to recommend it. While it will often be efficient for a court to set aside a subpoena in part, by striking out one or more categories or excluding a clearly defined class of documents, more complex or subtle revisions should be left to the parties.
2. I will therefore set aside the decision of the Registrar and substitute an order setting aside the subpoena in so far as it seeks the internal documents. This is consistent with the approach advocated in UBS's written submissions. I accept, as noted above, that there may well be documents contained in the excluded class that can properly be sought by the applicants. However, it is preferable that this should be done by way of a further subpoena rather than by an attempt at judicial redrafting.
3. UBS sought its costs of its interlocutory application and of the application that was dismissed by the Registrar. The applicants did not seek to be heard against costs following the event. I will make an order accordingly.

I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kennett.

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON COMPRISING THE SYNDICATE DESCRIBED AS "BEAZLEY LLOYD'S SYNDICATE 2623 / 623" IN INSURANCE POLICY FSASA1901030

ENDURANCE WORLDWIDE INSURANCE LIMITED (A COMPANY REGISTERED IN ENGLAND AND WALES HAVING REGISTRATION NUMBER 04413524)

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON COMPRISING THE SYNDICATE AND/OR CONSORTIUM DESCRIBED AS "ACT LLOYD'S SYNDICATE 9554" IN INSURANCE POLICY FSASA1901030 & FSASA1901280 & "ACT LLOYDS'S CONSORTIUM 9554" IN INSURANCE POLICY FSASA1901267

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON COMPRISING THE SYNDICATE DESCRIBED AS "HISCOX LLOYD'S SYNDICATE 0033" IN INSURANCE POLICY FSASA1901280

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON COMPRISING THE SYNDICATE DESCRIBED AS "EVEREST RE LLOYD'S SYNDICATE 2786" IN INSURANCE POLICY FSASA1901031

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON COMPRISING THE SYNDICAE DESCRIBED AS "CV STARR LLOYD'S SYNDICATE 1919" IN INSURANCE POLICY FSASA1901031

HCC INTERNATIONAL INSURANCE COMPANY PLC (A COMPANY REGISTERED IN ENGLAND AND WALES HAVING REGISTRATION NUMBER 01575839)

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON COMPRISING THE SYNDICATE DESCRIBED AS "ASPEN LLOYD'S SYNDICATE 4711" IN INSURANCE POLICY FSASA1901267

ASSICURAZIONI GENERALI S.P.A. UK BRANCH (A

COMPANY REGISTERED IN ITALY HAVING FISCAL

CODE & VENEZIA GIULIA COMPANIES REGISTER NO 00079760328 & REGISTERED AS A UK ESTABLISHMENT IN ENGLAND & WALES HAVING REGISTRATION NUMBER BR1185)

AVIVA INSURANCE LIMITED (A COMPANY REGISTERED IN ENGLAND & WALES HAVING REGISTRATION NUMBER SC002116)

BERKSHIRE HATHAWAY SPECIALTY INSURANCE COMPANY (ARBN 600 643 034)

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON COMPRISING THE SYNDICATE DESCRIBED AS "TRAVELERS LLOYD'S SYNDICATE 5000" IN INSURANCE POLICY FSASA1901268

RYAN SPECIALTY INTERNATIONAL LIMITED, TRADING AS STARTPOINT EXECUTIVE RISKS (A COMPANY REGISTERED IN ENGLAND & WALES HAVING REGISTRATION NUMBER 07164987)

VELOCITY REWARDS PTY LTD ACN 116 089 448 AS TRUSTEE FOR THE LOYALTY TRUST