New Price Retail Services v David Hanna; Australian Pharmaceutical Industries v David Hanna

Judgment - ex tempore (revised 27 march 2012) 1HIS HONOUR: In proceedings brought between Australian Pharmaceutical Industries and Ms Katherine Elizabeth Barnet as plaintiffs and Mr David Hanna and a company apparently associated with him as defendants, there is a dispute as to two subpoenas issued at the request of the defendants. To explain that dispute, it is necessary to have some regard to the issues as they may appear from the "pleadings". 2The first plaintiff (API) had a commercial relationship with a pharmacist, Ms Kim Ngo and a company associated with her, known as Bega Pharmaceuticals Pty Ltd. Ms Ngo conducted three pharmacy businesses: two in the Westfield Shopping Centre at Liverpool and one at Bega. She bought pharmaceutical products from API on credit, and had given API a trader's bill of sale to secure her indebtedness. 3Ms Ngo made default, and API appointed receivers and managers pursuant to the trader's bill of sale. First, it appointed Messrs McDonald and Albarran of Hall Chadwick (on 1 November 2005). It revoked that appointment on 11 August 2009 and appointed Ms Barnet. It seems that the receivers were appointed in the same manner to Bega Pharmaceuticals. 4In relation to the Soul Pattinson pharmacy at the Westfield shopping centre in Liverpool, API puts its claim in various ways. It says that, having regard to various dealings and other events that are particularised at some length, there was, or should be found to have been, an agreement to sublease made between it and Mr Hanna in respect of the premises from which that pharmacy business was conducted. Alternatively, and again, with detailed particulars, it says that Mr Hanna is estopped from denying the existence of agreement to that sublease. 5On either basis, API says that it has paid substantial sums by way of rent, outgoings and the like, referable to the period when Mr Hanna has been in occupation of the pharmacy premises (either pursuant to the agreement for lease that was made, or to the agreement for lease that he is estopped from denying) and that he is obliged to recompense it for those rent, outgoings and other payments. 6In the further alternative, API says that, in those circumstances, if there were no contract either in reality, or by estoppel, Mr Hanna has been unjustly enriched at its expense because he has conducted his business from the premises at the cost of API, in circumstances where it was not expected that he would have the benefit of occupation without making any payment. 7There is then an alternative claim. Under the trader's bill of sale, Ms Ngo mortgaged, among other things, her goods, chattels, stock in trade, fittings, etc etc, and the goodwill of the business to API. API says that Mr Hanna has had the benefit and use of that mortgaged property since he went into occupation of the premises, in circumstances where it was the common understanding and expectation of the parties that the benefit would not be provided gratuitously, but, rather, that Mr Hanna would pay for it. In those circumstances, API says, Mr Hanna is required to pay either what is said to have been the agreed value of the mortgaged property ($1.1 million), or a reasonable price for it. 8Against that background, I turn to the subpoenas. There were two. One was addressed to Hall Chadwick and Messrs McDonald and Albarran. The other was addressed to the firm of which Ms Barnet is a principal, Bentleys Corporate Recovery Pty Ltd (Bentleys). 9In each case, leaving aside differences to account for the differing parties to whom the subpoeana was addressed, what is required is production of: "All original and copies of any documentation in relation to your duties as the receiver and manager of the property of Kim Ngo and all other documents, including correspondence, draft documents, file notes, and memoranda relating to, concerning or touching upon, any such duties as a receiver and manager". 10It may be possible to conceive of a subpoena drafted in wider terms, but I do not propose to take up time by attempting to meet that challenge. 11It appears that documents have been produced in answer to the subpoena addressed to Hall Chadwick and Messrs McDonald and Albarran. Bentleys have opposed the production of documents, and ask that the subpoena be set aside. API says that, in any event, both subpoenas should be set aside. There is some contest as to the attitude of Hall Chadwick, but nothing turns on that. 12There are numerous grounds advanced in justification of the subpoenas. One of them is that it will be relevant for Mr Hanna to know how the various receivers dealt, not only with the particular property that is the subject of the transactions or events in respect of which he is sued, but, also, in respect of the other pharmacy at Liverpool, the pharmacy at Bega and the business and assets of Bega Pharmaceuticals. It is suggested that, in some way, an understanding of all those dealings may throw some light on the facts relevant to the particular claim that Mr Hanna is facing. 13In this context, reliance was placed on certain documents that were said to show some connection between the various receiverships, or, more accurately, the various activities of the receivers, in relation to the different businesses. One was a draft agreement for sale prepared in relation to the Soul Pattinson Pharmacy. That was said to be relevant because it showed that both Ms Ngo and Bega Pharmaceuticals (each by receivers and managers) were the vendors. If I may say so, production of a draft document without any understanding of the context in which it was made, or the transaction that it was intended to document, is entirely unhelpful. 14Another document on which reliance was placed was an e-mail from a Mr David Wright of API, to Mr Hanna, dated 28 March 2007. That e-mail is significant because, on one reading, it could be taken to suggest that there was no concluded agreement (in relation to the Soul Pattinson pharmacy) at the time it was made. Thus, it could be taken to be somewhat inconsistent with the claim now made by API, that such an agreement was made, or emerged, or that Mr Hanna is estopped from denying such an agreement, as at August or September 2006. But that is not a dispute for present resolution. 15The suggested relevance of the e-mail is that it shows that the settlement of affairs in relation to the Soul Pattinson Pharmacy had been delayed because of matters relating to the Bega pharmacy. Accepting that this is so (and it is certainly what the e-mail, on a fair reading, may suggest), it simply does not follow that there is some such connection between the two events as to justify production of records relating to the receivership in so far as it dealt with the Bega pharmacy. 16Mr Hanna's solicitor set out a number of suggested bases of relevance for the documents, in an affidavit sworn on 15 February 2012. I do not propose to go through those suggested grounds in detail. In my mind, they do no more than confirm that Mr Hanna is using the subpoena process to go fishing in an enormous pool of documents to see if some minnow, or, for that matter, pike, may be attracted. That is not, in my view, a legitimate use of a subpoena. 17Further, it is to be noted that no List Response has been filed to the amended Commercial List Statement. Thus, there is no way of knowing what are the issues that will arise, except in a very broad sense. That, no doubt, is one of the reasons why each of the subpoenas has been drafted in so wide a form. 18Not only is there no Commercial List Response, there is no evidence. It is now the practice that discovery should await, not only the closing of the "pleadings", but, also, except in unusual cases, the serving of evidence. (See Practice Note SC Eq11). The reasons for that are several. It is intended to confine requests for discovery more closely, and thus to cut down the costs that will be incurred. It is also intended to ensure that each party put its evidence on uninstructed by knowledge of, and in an attempt to meet, what may be contained in documents obtained from the other side. 19To my mind, very similar considerations now attend the issuing of subpoenas. In the ordinary way, where documents are required from third parties, it should be possible to demonstrate, from the pleadings and from the evidence, the precise issues in respect of which production of documents is required. 20I have not overlooked that, in this case, some of the recipients of one of the subpoenas have produced documents and apparently have no objection to inspection. But a consideration of the work that they have done, and their computer-generated time costing records, makes it clear that many of the documents may involve matters that are the subject of privilege at the instance of the plaintiff. API would be required, either to forego that claim, or to be put to the expense of inspecting the documents and deciding to what extent it wished to maintain the claim. In circumstances where the subpoena is impossibly wide, and does not seem to me to be issued for what is a present legitimate forensic purpose, I do not think that the attitude of the party who produced the documents should be taken to be determinative. 21For those reasons, I make orders in accordance with paragraphs 1 and 2 of the plaintiff's notice of motion filed on 3 February 2012. 22I order the defendant to pay the plaintiff's costs of that notice of motion. 23The exhibits on that application are to be handed out.