Norris v Kandiah

Judgment - EX TEMPORE 1The defendants, the liquidators of DCM Solar Pty Limited (in liquidation) ("Company"), have served a notice to produce ("Notice to Produce") upon the plaintiff, Soanar Pty Limited ("Soanar") dated 8 February 2013 and have caused a subpoena to produce ("Subpoena") to be issued to National Credit Insurance (Brokers) Pty Limited ("NCIB") dated 25 February 2013. NCIB has responded to the Subpoena, and documents have been produced to the Court; however, access has not yet been granted to those documents, by reason of an application by Soanar to set aside the Subpoena. An application has been brought also to set aside the Notice to Produce, or at least part of it, and documents have not yet been produced in response to the contested paragraph of the Notice to Produce. I am informed that Soanar's solicitors have, properly, taken steps to seek to identify the documents which would be required to be produced. 2Mr Hutton, who appears for Soanar, fairly concedes that there is no issue as to oppression is raised by either the disputed paragraph of the Notice to Produce or the Subpoena. That concession is appropriate, so far as the Notice to Produce is concerned, where it appears his instructing solicitors have identified documents which may respond to it which are in the order of a folder in volume. That concession is also appropriate, so far as the Subpoena is concerned, where NCIB responded to the Subpoena without objection and the documents are already available within the Court registry. 3The question which arises in respect of the Notice to Produce and Subpoena is therefore whether they have a legitimate forensic purpose or should be set aside on the basis that they do not have such a purpose. A second question arises in respect of the drafting of paragraph 3 of the Notice to Produce. I should note at this point that it appears that disputes which initially existed as to several paragraphs of the Notice to Produce have been resolved, by discussion between the parties, as is appropriate and consistent with the requirements of s 56 of the Civil Procedure Act 2005 (NSW). 4Only paragraph 3 of the Notice to Produce remains in dispute, which requires production of: "All correspondence and other documents relating to insurance sought from National Credit Insurance (Brokers) Pty Ltd for credit insurance relating to DCM Solar Pty Ltd and/or DCM Green Pty Ltd." The Subpoena correspondingly called for: "All correspondence and other documents relating to insurance sought by or offered to Soanar Pty Ltd for credit insurance relating to DCM Solar Pty Ltd and/or DCM Green Pty Ltd." 5The first basis of objection taken by Soanar is that the question of credit insurance is not relevant to the dispute, so that, in substance, the Notice to Produce and the Subpoena do not have an appropriate connection with the matters in issue in the proceedings, and do not serve a legitimate forensic purpose. I do not accept this submission. It appears that the primary issue in dispute is the identity of a contracting entity which dealt with Soanar, whether the Company or another entity, DCM Green Pty Limited ("DCM Green"). It appears that it is open to Soanar to contend, and it reserves the possibility that it will contend, at least in reply, that the fact that it obtained credit insurance in respect of dealings with DCM Solar is a matter which supports an inference that the relevant contracting party was DCM Solar rather than DCM Green. 6In those circumstances, it seems to me that an investigation of the circumstances in which that insurance was obtained, and the manner in which claims were made under it and any reports to the insurer in respect of it would have a legitimate forensic purpose. First, the liquidators would be entitled to investigate that question in order to respond to the reliance which Soanar might seek to put upon the credit insurance arrangements. Second, there seems to me to be a legitimate forensic purpose in such an inquiry, so far as the administration of the credit insurance might ultimately be inconsistent with the proposition that the contracting party was the Company or consistent with the proposition that the contracting party was DCM Green. 7In expressing that view, I have borne in mind the case law relating to the question of legitimate forensic purpose. In Portal Software International Pty Ltd v Bodsworth [2005] NSWSC 1115 at [19]-[26], Brereton J noted that the Court's power to set aside a notice to produce was an instance of its power to regulate its own processes and in particular to intervene in a case of abuse of process; that lack of relevance is a sufficient ground to set aside a notice to produce; but that it is sufficient to support relevance in respect of a notice to produce that the documents could "possibly throw light" on the issues in the substantive proceedings or that it is "on the cards" that they will do so; and that a notice to produce has traditionally been treated somewhat more liberally than a subpoena to a third party in that regard. Subsequently, in Norris v Kandiah [2007] NSWSC 1296 at [7], Brereton J noted that the party which issued a notice to produce carried "at least a forensic onus of identifying how the documents called for by the notice are said to relate to a fact in issue in the case." Similarly, in Singtel Optus Pty Ltd v Weston (in his capacity as special purpose liquidator of One.Tel Ltd (in liq)) [2010] NSWSC 1491 at [31], Ward J pointed to the need to identify the matters in issue in the proceedings in order to assess whether there is a legitimate forensic purpose served by the subpoena. 8In this case, the identification of the issue as to whether the contracting party is DCM Solar or DCM Green is sufficient to indicate that there is a legitimate forensic purpose in an investigation of whether Soanar conducted itself, in its dealings with its credit insurer, on the basis that it was contracting with one or other party. For this reason, I would not set aside the notice to produce or the subpoena for lack of forensic purpose. 9So far as the drafting of paragraph 3 of the Notice to Produce is concerned, it must be said that it is perhaps not a model of clarity. Four criticisms are advanced by Soanar. The first is that there is no date range, where the last of the transactions the subject of the dispute concerned occurred in February 2011. In some circumstances, that will be a significant difficulty with a subpoena or notice to produce, although that usually arises in the context of oppression, which is not relied upon here. In the present case, it does not seem to me that that matter is a difficulty of substance. The liquidators point out that Soanar and DCM Solar dealt with each other, at most, for a period of some 18 months to March 2011, and Soanar and DCM Green dealt with each other for a period of 12 months. If there are documents after that period, then they may well be relevant to the matters in issue, so far as they cast light on dealings which had occurred before. In any event, it does not seem to me that any practical issue arises in the date range, where the subpoenaed party has already identified and produced the relevant documents, and there is no evidence before me that the lack of a date range has caused Soanar or its solicitors any difficulty in doing so. 10The use of the language "relating to" in the paragraph is a matter which may, in some circumstances, be of greater difficulty. Mr Harris put to me that there was authority which sanctioned the use of that term. However, the use of that term has often been criticised, in this context, as requiring relevance judgments to be made in the nature of those which arise in discovery. In these circumstances, it is often said that better drafting practice in respect of notices to produce and subpoena, is to use the phrase "referring to", which allows a party producing documents to identify whether a document falls within the relevant category by an inspection of that document. Having said that, I am not satisfied that the use of the word "relating to" in this case causes particular difficulty, in the absence of any identification by either NCIB or Soanar of any particular difficulty which arises in determining whether or not a particular document does in fact relate to the process for credit insurance. 11There is, I should note, one more potentially substantive difficulty with the paragraph, which is that it is not transparent as to whether it is directed only to documents which go to the process of application, that is the seeking of the insurance from the brokers, or also to the making of claims upon it. It appears implicit in submissions that Mr Hutton, who appears for Soanar, or at least his instructing solicitors, may have taken the narrower view of the category, whereas Mr Harris, who appears for the liquidators, may have taken the wider view. I am inclined to take the view that, given the proximity of the hearing date, it is preferable not to set aside the notice to produce by reason of any ambiguity in that regard, but to leave the parties to seek to resolve that question between themselves, having regard to their obligations under s 56 of the Civil Procedure Act. If that question ultimately cannot be resolved, then it would be open to the party producing documents to take a proper view as to the scope of the paragraph, and it does not seem to me that it could be criticised for doing so if there is an element of ambiguity in that paragraph. 12A further criticism is made that there is no limitation by reference to who the correspondence has passed between or who prepared the relevant document. I do not understand there to be any obligation to impose such a limitation, if the documents relate to a matter that is properly in issue. To the extent that any documents may involve correspondence with solicitors, then they may properly be the subject of a claim for legal professional privilege when produced. 13Finally, it is suggested that the meaning of the category is unclear because NCIB is a broker, not an insurer, and no insurance could be obtained from it. With respect, it seems to me that this reading of the paragraph is somewhat technical. Plainly, insurance can be "obtained" from a broker, as a matter of ordinary usage, where a broker is approached to place that insurance with an insurer and does so, and conducts the administration of the policy. No doubt, NCIB will only be able to produce documents which are in its possession or control, not documents which are within the insurer's possession and control. However, that seems to me not a difficulty with the category, but simply a matter that will be relevant to the scope of the documents that are produced in response to it. 14For these reasons, I will dismiss the Interlocutory Process. I will hear Counsel as to a date on which the Notice to Produce should be made returnable for the relevant documents to be produced to the Court. I will order access for all parties to documents produced by NCIB on subpoena, subject to any proper claim for legal professional privilege. 15Having heard Counsel's submissions in respect of timing, I make the following orders: