Neil Street Co Pty Ltd v Ibrahim

Procedural History

1. There was no dispute about the course of events.
2. Neil Street efiled its statement of claim at 3.55pm on Friday, 28 June 2024. The coversheet generated by the online registry (see UCPR r 3.15) recorded that the proceedings had been listed for directions before the Registrar on 29 July 2024. The coversheet is taken to be a part of the statement of claim (see UCPR r 3.15(3)).
3. The Court endorsed statement of claim was personally served on Mr Ibrahim at 7:30pm on the same day. Neil Street's solicitor, Mr Andre Adams, deposed for the purposes of the present application that he had been in practice as a litigation solicitor since 2008 and that he was aware that Mr Ibrahim had been personally served but "as far as I am aware, the defendant did not take any active steps immediately after being served [the statement of claim] making it unclear to me whether he would play an active role in the proceeding".
4. Given that date of service, Mr Ibrahim had until 26 July 2024 to enter an appearance (whether by filing a notice of appearance or by filing a defence): UCPR r 6.10(1)(a)(i).
5. On 5 July 2024, Neil Street's solicitors received an automatically generated email from the Court indicating, among other things, that the matter had been activated for Online Court: This matter has been activated for Online Court. A request should be submitted as soon as possible and no later than 11am Thursday 25/07/2024. Once a request has been lodged, the opposing parties must consent or counter the request no later than 2:30pm Thursday 25/0712024. Failure to lodge a request by 11 am Thursday 25/07/2024 may result in the matter being adjourned for another Directions Hearing, adjourned pursuant to rule 13.6 of the Uniform Civil Procedure Rules 2005 or referred to the Equity Duty Judge.
6. It should be recalled that the Online Court is a facility within the Online Registry. It is governed by, among other provisions, Practice Notes SC Gen 12 and Eq 14. Each of these contains substantially identical provisions as to conduct, the effect of which is that the Online Court operates in the same way as an open courtroom. For example, paragraph 15 of SC Eq 14 provides "All rules including those relating to contempt apply to proceedings conducted in the Online Court".
7. On 8 July 2024 (the sixth business day after the proceedings had been commenced), the nine subpoenas were filed in the Court's Registry by email. Nothing was said in the email to alert the Registry to the fact that the proceedings had barely just begun.
8. The subpoenas fell into two broad categories. The first group were addressed to banks asking for financial documents intended to establish money flows into and out of Mr Ibrahim's account or that of a company which it was said he used. The second group were addressed to contractors seeking communications between those contractors and Mr Ibrahim.
9. On 10 July 2024, Neil Street's solicitors received an email from the Court's Registry which attached the sealed subpoenas, which the solicitors then proceeded to serve on each recipient on the same day. While Neil Street's solicitors had requested the subpoenas to be made returnable on 22 July 2024, the Court in fact made them returnable on 25 July 2024.
10. On 24 July 2024, Neil Street's solicitors submitted proposed orders in the Online Registry in relation to the return of subpoenas the next day. No attempt was made to inform Mr Ibrahim of the return date or the proposed orders. Nor was the Court told that what was being sought was an obvious departure from usual practice in that access was being sought before the time had expired for the filing of Mr Ibrahim's appearance or defence and before there had been any directions hearing in the proceedings.
11. On 25 July 2024: 1. The Court made these orders: "1. This matter is listed for directions before the Registrar at 9:30am on 14 August 2024. 2. Vacate directions 29 July 2024. 3. Plaintiffs to advise defendant of the adjournment". 1. General access was granted to the documents produced under the subpoenas. 2. A letter was sent to Mr Ibrahim by registered post in compliance with the Court's order that he be advised of the adjournment. 3. An email was sent to a firm of solicitors who Neil Street's solicitors had been informed were Mr Ibrahim's last known solicitors asking whether they were acting for Mr Ibrahim in these proceedings. On 29 July 2024 that former solicitor responded that she was not instructed in these proceedings.
12. On 26 July 2024, Mr Ibrahim's current solicitors emailed Neil Street's solicitors enclosing a notice of appearance. As to this, Mr Adams deposed "I was not aware, until this time, that the defendant would have an active role in the proceeding as this was the first time that any active steps were taken on his part".
13. On 30 July 2024, Mr Ibrahim's solicitor requested a copy of the subpoenas, which was done on 1 August 2024 by provision of a link to an electronic share folder.
14. On 7 August 2024, Neil Street filed the notice of motion the subject of these reasons, seeking: Inadequate pleading of fraud 1. An order under rule 14.28 of the Uniform Civil Procedure Rules 2005 (UCPR) striking out the whole, or alternatively paragraphs [17] - [34] of the Statement of Claim filed on 28 June 2024. 2. In the alternative to Order 1, an order under rule 15.10 of the UCPR that the Plaintiffs give proper particulars of fraud. Setting aside of subpoenas and consequent orders 3. An order under rule 33.4 of the UCPR setting aside the following subpoenas (Subpoenas) issued at the request of the Plaintiffs, without service on the Defendant, and prior to the Defendant filing any appearance or defence, and prior to the first return date of the Statement of Claim: Date Subpoena Recipient 8 July 2024 Berzy Pty Ltd t/as SBS Fin Solutions 8 July 2024 Australia & New Zealand Banking Group Limited 8 July 2024 Commonwealth Bank of Australia 8 July 2024 National Australia Bank 8 July 2024 Westpac Banking Corporation 8 July 2024 Transport for New South Wales 8 July 2024 Kennico Interiors Pty Ltd 8 July 2024 Oz Combined Electrical Pty Limited 8 July 2024 Sky Joinery Australia Pty Ltd

4. An order revoking all access orders granted to the Plaintiffs in relation to documents produced in answer to one or more of the Subpoenas. 5. An order requiring the Plaintiffs and its legal representatives to destroy all documents in their possession, custody or control: (a) which are documents produced in answer to one or more of the Subpoenas (Produced Documents); and (b) which contain a summary, extract or review of a Produced Document, or which refer to the contents of a Produced Document. Indemnity costs for abuse of process 6. The Plaintiffs to pay the Defendant's costs of this motion on an indemnity basis, and forthwith. Generally 7. Such other orders as the court sees fit.
5. I heard Mr Ibrahim's motion in the Applications List on 25 October 2024. The Court struck out part of the statement of claim for inadequate pleading of what were plainly allegations of fraud, with leave to replead. Conformably with the practice in the Applications List, reasons for that aspect of the motion were not required. However, the application in relation to the subpoenas raised an important point of practice and procedure well beyond the usual considerations in what might be described, without disrespect, as the usual type of application to set aside subpoenas.

The rules

1. The issuing of subpoenas is governed by UCPR r 33.2: 33.2 Issuing of subpoena (cf SCR Part 37, rule 2) (1) The court may, in any proceeding, by subpoena order the addressee-- (a) to attend to give evidence as directed by the subpoena, or (b) to produce the subpoena or a copy of it and any document or thing as directed by the subpoena, or (c) to do both of those things. (2) An issuing officer must not issue a subpoena-- (a) if the court has made an order, or there is a rule of the court, having the effect of requiring that the proposed subpoena-- (i) not be issued, or (ii) not be issued without the leave of the court and that leave has not been given, or (b) requiring the production of a document or thing in the custody of the court or another court. (3) The issuing officer must seal with the seal of the court, or otherwise authenticate, a sufficient number of copies of the subpoena for service and proof of service. (4) A subpoena is taken to have been issued on its being sealed or otherwise authenticated in accordance with subrule (3).
2. It may be accepted (see [33(3)] below) that there was no reason of the kind referred to in UCPR r 33.2(2) for the subpoenas not to be issued.
3. Service of subpoenas is regulated by UCPR r 33.5 (emphasis added): Service 33.5 Service (cf SCR Part 37, rule 5) (1) A subpoena must be served personally on the addressee. (2) The issuing party must serve a copy of a subpoena to produce on each other active party as soon as practicable after the subpoena has been served on the addressee.
4. Rule 33.5(2) is relevant to the present application. Importantly for present purposes, the UCPR Dictionary defines "active party": active party, in relation to any proceedings, means a party who has an address for service in the proceedings, other than - (a) a party against whom judgment has been entered in the proceedings, or (b) a party in respect of whom the proceedings have been dismissed, withdrawn or discontinued, being, in either case, a party against whom no further claim in the proceedings subsists.
5. An appearance (see UCPR r 6.9 and Approved Form 6A) or defence (as an originating process - see UCPR r 4.2(1)(g)) must contain an address for service.

Mr Ibrahim's submissions

1. Mr Ibrahim's submissions may be summarised as: 1. Neil Street had not complied with UCPR r 33.5 in that it had failed to serve copies of the subpoenas on Mr Ibrahim "as soon as practicable" after the subpoena has been served on the recipients by not serving them at the time they had been issued. 2. The access orders were obtained ex parte and involved the exercise of a judicial or quasi-judicial power, such that Neil Street was bound by a duty of candour: see Garrard v Email Furniture (1993) 32 NSWLR 662. That duty was breached, at the very least, by the failure to draw to the Court's attention that no defence or appearance had been filed, copies of the subpoenas had not been served on Mr Ibrahim, that the subpoenas were very wide, and that there were arguably deficiencies with the statement of claim. Those failings were sufficient to warrant discharge of the access orders. 3. An abuse of process had occurred. The excuse that it was unclear whether Mr Ibrahim would be an "active party" was very weak. Neil Street should have at least informed Mr Ibrahim, notwithstanding that he had not yet filed an appearance, that they intended to issue the subpoenas. The result was that Mr Ibrahim was deprived of an opportunity to be heard and his private banking records and other communications had been accessed by the compulsory processes of the Court without his knowledge. 4. The subpoenas were impermissibly broad and should be set aside for that further reason alone. This demonstrated that they were a fishing expedition. 5. The subpoenas should also be set aside because they were issued in breach of Practice Note SC Eq 11.

Neil Street's submissions

1. While Mr Priestley SC resisted the submission that an abuse of process had occurred, he accepted that the subpoenas had been sought, and access obtained, "precipitously...but not necessarily in breach of any rule" (Tcpt, 25 October 2024, p.3 (40-41)) and that "there is potentially some cause for concern in that process. If one were to say that it was a practice that could be adopted by the parties in other cases regularly without any concern that in itself raises questions … but that doesn't necessarily mean there is any basis of substance or criticism of the plaintiffs in this case or their representatives, but it's a practice which it might be preferable if it didn't develop to a regular practice" (Tcpt, 25 October 2024, p.16 (43-49)). As I develop in what follows, that analysis is far too anodyne, but correct insofar as what occurred in this case should certainly not be allowed to become a regular practice.
2. Neil Street's submissions may be summarised as: 1. There had been no breach of UCPR r 33.5 because at the time the subpoenas were issued Mr Ibrahim was not an "active party", having taken no step in the proceedings and made no contact, and the subpoenas were served five days after Mr Ibrahim's solicitors had gone on the record. 2. It was not conceded that the access orders had been made in an "ex parte application", the orders not being made against Mr Ibrahim and where such orders were routinely made without any indication of interest from active parties. 3. While the list is not closed as to applications in which the duty of candour applied, it should be doubted that any duty of candour applied to the application for access. Even if it did, only material facts need to be disclosed. This does not include concerns about the width of the subpoenas or the adequacy of the pleadings, nor the fact that the subpoenas had not been served on Mr Ibrahim. 4. Even if there had been a material non-disclosure, the Court in its discretion should not set aside the access orders. There was no basis to conclude that any improper advantage was being sought or that any non-disclosure was deliberate. 5. There had been no abuse of process. The subpoenas had been properly issued and access obtained pursuant to orders of the Court. There was no suggestion that the documents were subject to any kind of privilege. They had been issued for a proper forensic purpose, noting that the material sought only had to be shown to be "apparently relevant": Secretary of Dept of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 at [65] (Bell P with Brereton and McCallum JJA agreeing). 6. Practice Note SC Eq 11 had no application because the subpoenas did not seek an order for "disclosure of documents" and it could not be said that they subverted the operation of the practice note: Re Mempoll Pty Ltd [2012] NSWSC 1057 at [12]; Re North Coast Transit Pty Limited [2013] NSWSC 1912 at [55], both being decisions of Black J.

Consideration

1. The present case appears to be an example of the confluence of two undesirable trends: to think of subpoenas as administrative rather than judicial acts, and the failure to understand that for all its convenience and accessibility, the Online Court is nevertheless the Court. The context for determining this application may therefore be set with two preliminary observations.
2. First, while the issue of subpoenas is a familiar step in litigation, that does not mean that they are to be treated as trivial or the mere product of an administrative or other bureaucratic process. They are the result of a formal application by a party to the Court that the Court issue an order to the recipient to do something on pain of punishment, including potentially arrest, and which in other circumstances could be unlawful, such as the disclosure of otherwise private or confidential information. When and in what terms subpoenas are to be issued are therefore serious matters to which an informed professional judgment must be applied.
3. Second, for all the benefits that email and online environments may bring, there is a risk that the appropriate formality and consideration which should attend interactions with the Court as the institutional repository of the judicial power of the state is lost. I have had occasion to make observations about this in connection with communications with chambers: Tugrul v Tarrants Financial Consultants Pty Limited (in liquidation) [No 2] [2013] NSWSC 1971 at [19] - [22]. A similar phenomenon was observed in completely online hearings during the Covid emergency, but persists today where online or AVL platforms are used. So far as the Online Court (and by parity of reasoning, communication in the Online Registry) is concerned, I have already referred to the relevant provisions of practice notes (see [12] above) that the Online Court is a platform where the expectations of conduct and adherence to the well understood duties of practitioners and parties to the Court are exactly the same as in a physical appearance before a registrar or judge in open court. In short, if a practitioner or party is in the Online Court then they are in the Court.
4. Turning to the particular arguments made, the Court accepts at the outset three submissions made for Neil Street: 1. What occurred complied with the letter of the UCPR; 2. In particular, Neil Street was not required under UCPR r 33.5(2) to serve the subpoenas on Mr Ibrahim before an appearance was filed on his behalf because he was not an "active party" during that time under the UCPR. However, that is a consequence of the definition of "active party" set out in [25] above. It is not because the Court accepts Mr Adams' explanation (see [9] and [18] above) that because of Mr Ibrahim's silence he (Mr Adams) was uncertain whether Mr Ibrahim would take an active role in the litigation. The Court rejects the suggestion that any conclusion about the likely participation of a defendant can properly be drawn (if it were relevant) based solely on the defendant's silence while the time was running for the filing of an appearance or defence; and 3. Practice Note SC Eq 11 does not, in terms, apply to subpoenas because they are not an order for the "disclosure of documents".
5. However, acceptance of those submissions is not the end of the matter. For the reasons which next follow, the Court finds that Neil Street's conduct was an abuse of process on three bases.
6. The first basis is Neil Street's failure to satisfy its duty of candour in applying for access to the documents.
7. It is instructive to compare what happened in this case with the familiar example of when subpoenas are issued before a defence or appearance is filed. That example is an ex parte application to the Duty Judge for short service whether or not combined with an interlocutory injunction. In such cases short service of subpoenas is regularly sought, with the applicant justifying to the Court both the need for, and scope of, the subpoenas. Access is then determined on the return date, typically in the presence of the opposing party. Outside of that example, to apply for subpoenas and gain access to material that is produced before the time has expired for the filing of an appearance or defence is an unusual application because it is well outside the generally accepted way non-urgent litigation is conducted in this Court.
8. I accept Mr Hughes' submission that the application for access made through the Online Registry to the Online Court was an ex parte application. Any application to the Court made in the physical or virtual absence of the other parties and where their appearance is not mentioned by the applicant is an ex parte application. Whether or not notice has been given to the other parties is irrelevant to that characterisation, although depending on the nature of the application, the fact that notice has or has not been given may have an impact on the scope and content of the duty of candour.
9. In my respectful opinion, every ex parte application attracts a duty on the applicant to be candid with the Court. This begs the question of candid about what? The answer is to be candid about what the absent party might relevantly say against the relief sought in the application, both as to whether it should be granted at all or, if granted, on what terms.
10. While the scope and content of that duty will be at its highest and most expansive when injunctive orders are sought against the absent party (see, for example, Allsop J (as his Honour then was) in Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955 at [38]), the duty will still be present for any application in the outcome of which the absent party has an interest, even if the order sought is not directly against the absent party. The nature of the application and the absent party's interest will inform the scope and content of the duty. In this case, Mr Ibrahim plainly had an interest in the question of access to the documents, not least because some of them contained what was his confidential information (the banking records) and because any party to litigation has an interest in access to subpoenaed documents which may be material that could be adduced in evidence at any final hearing.
11. The duty of candour is to put to the Court matters (not necessarily just facts as strictly understood) relevant or material to the application. Most of the matters identified by Mr Hughes (see [27(2)] above) are not matters I consider needed to be drawn to the Court's attention in the access application because they were not required, relevant or material to the access application. However, what should have been disclosed to the Court in observance of the duty of candour was that: 1. Contrary to the usual practice, the subpoenas had been issued and access was being sought while time was still running for the filing of a defence or an appearance and before the appointed return date of the statement of claim; 2. No effort had been made to inform Mr Ibrahim (whose whereabouts were known because he had been personally served with the statement of claim) about the access application, notwithstanding that the subpoenaed documents included his bank records; and 3. Assuming it to be the case (there being no contrary suggestion put in argument before me), there was no special reason why access was required before the time for filing a defence or appearance had passed and the matter had been the subject of its first directions hearing.
12. Based on my understanding of the Court's practice, disclosure of the departure from usual practice would alone have resulted in the Registrar inquiring into the matter further or the application being referred to a Judge.
13. The second basis is that the Court finds the subpoenas were issued without a proper forensic purpose. So much becomes apparent when the conclusion of Bell P (as the Chief Justice then was) in Blacktown is considered (emphases in original): 65 It is sufficient, in my view, to justify a subpoena as having been issued for a legitimate forensic purpose if the documents sought are "apparently relevant" or, to use the words of Nicholas J in ICAP at first instance, it can be seen that the documents sought to be produced by way of subpoena will materially assist on an identified issue or there is a reasonable basis beyond speculation that it is likely the documents subpoenaed will so assist. Of course, if it can be shown that the material assistance will be to the party that issued the subpoena, the prospect of the forensic purpose of the issuing party being impugned as illegitimate will be virtually non-existent.
14. For pleaded cases, "apparent relevance" and the "identified issue" will be identified from the matters put in issue in the pleadings. In a case commenced by summons, the issues may be identified from the affidavit evidence and the relevant legal issues. In the present case, there could be no "apparent relevance" because there were no relevantly identified issues given that pleadings had not closed. For example, at the time the Registrar was considering the access application it was at least theoretically possible that Mr Ibrahim would, on the last available day, file a submitting appearance.
15. The third basis is that the subpoenas had the effect of subverting the operation of Practice Note SC Eq 11: Mempoll at [11] - [12]. In my respectful opinion, it is sufficient to constitute an abuse of process if the conduct has the relevant delinquent effect, even if that effect was not the subjective intent of the person or party responsible for it.
16. It will be recalled that the practice note provides: … Disclosure 4. The Court will not make an order for disclosure of documents (disclosure) until the parties to the proceedings have served their evidence, unless there are exceptional circumstances necessitating disclosure. 5. There will be no order for disclosure in any proceedings in the Equity Division unless it is necessary for the resolution of the real issues in dispute in the proceedings. 6. Any application for an order for disclosure, consensual or otherwise, must be supported by an affidavit setting out; the reason why disclosure is necessary for the resolution of the real issues in dispute in the proceedings; the classes of documents in respect of which disclosure is sought; and the likely cost of such disclosure.
17. In Transit, Black J said (at [55]) that "a subpoena issued to a third party requiring the production of four identified documents would not, in the ordinary course, be inconsistent with the objectives of Practice Note SC Eq 11, such that it could be characterised as subverting those objectives". That is not this case.
18. In these proceedings, the subpoenas to the banks sought Mr Ibrahim's (and named entities and persons apparently associated with him) bank and credit card statements and loan and mortgage documentation for a five-year period. Similarly, the subpoenas to the contractors sought all documents passing between Mr Ibrahim (and named entities and persons apparently associated with him) and the contractor in relation to eight nominated projects over a five-year period.
19. The documents the subject of the subpoenas represent substantial categories all of which would have been discoverable from Mr Ibrahim at the appropriate time. It subverts the objectives of the practice note to seek to subpoena third parties to produce categories of documents that, by reference to the description of those documents, would be discoverable from a party to the proceedings. The time to seek that material from third parties, whether to complete or verify the party's discovery, is at the time disclosure orders are made against the party. Cases of financial fraud are archetypal examples of cases in which the Court often accepts that there are exceptional circumstances warranting early disclosure from a defendant. Neil Street has filed such an application in relation to Mr Ibrahim, but as a matter of case management I declined to hear that application at the same time as Mr Ibrahim's motion which is the subject of these reasons.

Relief and reform

1. Given these conclusions, I sought to fashion relief intended to deprive Neil Street of any advantage it might have gained from access to the documents. There was evidence that an officer of Neil Street had seen at least some of the documents. I accepted Mr Hughes' submission that those documents (and any notes of them) should be destroyed. Copies of the documents were in the possession of Neil Street's solicitors. I thought it sufficient redress to Mr Ibrahim that they be restrained from using the documents for the purposes of the proceedings, including in the preparation of an amended pleading, until further order. As Neil Street's solicitors are officers of the Court, I have no reason to doubt those orders will be scrupulously obeyed.
2. The unusual facts of this case have demonstrated that literal adherence to the UCPR in relation to subpoenas can result in injustice to a party. For that reason, I will refer this judgment to the Rules Committee with a request that consideration be given to amending the UCPR to the effect that subpoenas cannot be issued without the leave of the Court in the period before an appearance must be filed in accordance with the UCPR.
3. The Court's orders were: 1 Paragraphs 8 - 34 of the Statement of Claim are struck out. 2 The Plaintiff has leave to file and serve an Amended Statement of Claim on or before 29 November 2024. 3 In these orders "Subpoenas" means the subpoenas set out in paragraph 3 of the defendant's notice of motion dated 7 August 2024 (the "Motion") and "Document" means any document (or copy of a document) produced in answer to any of the subpoenas and obtained by the plaintiff or its legal representatives pursuant to access orders made by the Court on 25 July 2024. 4 On or before 1 November 2024, all officers or employees of the plaintiffs shall: (a) delete or otherwise destroy any electronic version; and (b) destroy any physical version, of all Documents (including for the purposes of this Order 4 any document which refers to a Document) in that person's possession, custody or control of all documents including for the purposes of order 4 which refers to a Document 5 On or before 8 November 2024, a duly authorised director of each of the plaintiffs shall file and serve an affidavit identifying any officer or employee of the plaintiff who at the date of these orders had a Document in their possession, custody or control and what that person did to comply with Order 4. 6 Subject to Order 8, until further order the legal representatives of the plaintiffs are not to show or discuss the contents of the Documents to or with any person other than another legal representative of the plaintiffs. 7 Subject to order 8, until further order the legal representatives of the plaintiffs are not to use the Documents for the purposes of these proceedings, including in the preparation of any Amended Statement of Claim. 8 Orders 6 and 7 do not prevent the legal representatives of the plaintiffs using the Documents for the purpose making an application to the Court to vary or set aside Orders 6 and 7. 9 The plaintiffs are to pay the defendant's costs of the Motion and of the defendant's costs thrown away by reason of the amendment permitted by Order 2. 10 There be liberty to any party to apply in relation to these orders on short notice. 11. The proceedings be listed for directions before the registrar on 12 December 2024.

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: 30 October 2024