NSW Environmental Trust v Nguyen [2020] NSWSC 1069 | Case summary

Supreme Court of NSW|2020-08-10|Before: Rothman J

Solicitors: Department of Planning, Industry and Environment (Plaintiff/Respondent) Deutsch Miller (Defendant/Applicant) File Number(s): 2020/53871

Judgment

HIS HONOUR: The Court is required to deal with a Motion seeking to set aside various categories of documents sought pursuant to two Notices to Produce and 13 Subpoenas. The Motion is the subject of a Further Amended Notice of Motion filed in Court on 10 August 2020 and the defendant seeks to set aside the categories of documents sought by the plaintiff.
The plaintiff, NSW Environmental Trust, operates a grant program to support innovative recycling projects. The defendant, David Duc Van Nguyen, also known as "David Newan", was, for all relevant periods, the sole Director of Apeclinks Pty Ltd (hereinafter "Apeclinks"), which was a company which applied for a grant under the program operated by the plaintiff. The defendant completed a Grant Application Form, on behalf of Apeclinks, for the purpose of obtaining funding from the plaintiff for a program, being a project involving the recycling of vehicle tyres (hereinafter "the Project").
In its pleadings, the plaintiff alleges that the defendant made a number of express written false representations (hereinafter "the Grant Representations") to the plaintiff in the application by Apeclinks for the grant. The application was executed on 16 July 2015 and the pleaded Grant Representations include that: 1. Apeclinks intended to establish the Project; 2. Apeclinks had identified a suitable location for the Project and was negotiating the terms of the lease; 3. Apeclinks intended to purchase a Wuxi Dura-Shred Recycling Machine, which was suitable for the Project and of a high standard globally; 4. Apeclinks had engaged tyre recycling expert, Mr Bill Graham, as a Sales and Business Development Manager to carry out the Project as an employee; and 5. Mr Bill Graham had travelled to Malaysia to learn about the new processes and technologies available for recycling used tyres.
The plaintiff alleges that the defendant knew that the Grant Representations were false at the time they were made. For his part, the defendant denies the allegations and denies that he knew that any of the alleged Grant Representations were false. Further, the defendant denies that he was reckless as to the truth of those representations at the time that they were made.
On 11 November 2015, the plaintiff notified the defendant that it had approved a grant of $729,215 and on 4 February 2016, the plaintiff made a payment of $417,458.80 (hereinafter "the Payment") to the nominated ANZ account operated by Apeclinks. It is unnecessary, at this point, to disclose the account number, which is provided in the pleading, but the account will be referred to as the "Apeclinks ANZ Account". A subpoena has been issued to ANZ.
The plaintiff alleges that the Project has not been established and certainly not completed. The defendant says that Apeclinks took significant steps in the development of the Project, but accepted that it was not completed.
On 27 March 2018, the defendant submitted an application to ASIC for voluntary deregistration of Apeclinks, as a consequence of which Apeclinks was deregistered, effective 27 May 2018.
The plaintiff alleges, and the defendant does not deny, that Apeclinks and the defendant have not repaid the Payment to the plaintiff. Further, the plaintiff alleges that it has suffered loss as a result of its reliance on the false Grant Representations. That loss is particularised, essentially, by reference to the expenditure of the Payment, without the benefit of the Project; the loss of opportunity to fund another project; and/or the lost opportunity to receive interest on the amount that was provided to Apeclinks as the Payment.
As stated, the defendant admits that neither he nor Apeclinks has repaid the Payment, the amount thereof or any part thereof. However, the defendant denies that he caused the plaintiff any loss.
Further, the defendant alleges that, to the extent that the plaintiff has suffered any loss, this is as a result of the plaintiff's failure to take any steps to recover the Payment from Apeclinks, after Apeclinks informed the plaintiff that the Project needed to be amended.
Lastly, by way of background to the substantive proceedings, it should be noted that the plaintiff had not served its evidence at the time of the service of the Notices to Produce and the 12 subpoenas that were the subject of the Amended Notice of Motion dated 10 June 2020. The plaintiff has now served its evidence, but the defendant has not, and will serve its evidence in due course.

Defendant's evidence and submissions

The defendant relies upon three Affidavits of Mark Deutsch, the defendant's solicitor, being Affidavits sworn on 3 June 2020, 10 June 2020 and 26 June 2020. Annexure "C" to the Affidavit of 3 June 2020 was not read, after objection was taken. The defendant, in his Written Submissions, sets out the principles for setting aside a subpoena or Notice to Produce, particularly at paragraphs [19]-[21]. I do not recite those principles, at this stage.
The defendant submits that the contested categories of the Notices to Produce and the subpoenas call for documents in which there is no reasonable basis to suppose that those documents are relevant to any fact in issue in the proceedings. Most helpfully, the defendant has prepared and attached to the Written Submissions a Schedule, which, during the course of the proceedings, the Court referred to as a "kind of Scott Schedule", summarising the documents in contention, the positions of the parties and the objection taken to the documents. There are four general grounds of objection.
First, the defendant relies on what he has called the "General Timeframe Objection". In this objection, the defendant submits that the period for which the documents are sought, being for the period from 1 July 2014 to 1 December 2018, does not arguably come within the principles applicable to the issuing of a Notice to Produce or subpoena. The defendant submits that there is no reasonable basis to expect that documents created in the 3½ year period after 16 July 2015, the date on which the Grant Representations were made, will materially assist the resolution of the issue of whether any of the Grant Representations were false.
Secondly, the defendant submits, in a manner similar to the General Timeframe Objection, that the seeking of financial documents for a period from 1 July 2014 to 1 December 2018 concerning Apeclinks, the Apeclinks ANZ Account, and other bank accounts with no identified relevance to the proceedings, is unreasonable. The documents are said by the plaintiff to be relevant to the dispersal of grant funds, to the ability of Apeclinks to fulfil the purpose of the grant and to the defendant's credibility.
The defendant submits that these are not issues in the proceedings. The defendant has admitted, on the pleadings, that the Payment was made and has not been repaid to the plaintiff, either by Apeclinks or by the defendant.
As a consequence, the plaintiff submits that there is no pleaded issue in the proceedings that Apeclinks did or did not have any particular ability to fulfil the purpose of the grant. Further, the defendant submits that there is presently no issue as to the defendant's credibility, because the defendant has not yet served any evidence in the proceedings. In this regard, the defendant relies upon Mackintosh v The Commissioner of Police (NSW) [2010] NSWSC 1064.
Further again, the defendant submits that, in any event, it is not a legitimate purpose to seek the production of documents that are sought solely because of their capacity to impugn the general credit of a witness, as distinct from credit on a specific issue: Re Bird and Military Rehabilitation and Compensation Commission (2006) 91 ALD 691; [2006] AATA 109.
Next, the defendant refers to subpoenas in relation to bank statements in circumstances where the subpoenas call for statements of accounts that are not referred to anywhere in the pleadings. Lastly, the defendant refers to particular subpoenas relating to the production of files and documents relating to the operations of "Coloured Rubber Australia," being a business name owned by Apeclinks and operating a business of Apeclinks, and various third parties concerning work done for Coloured Rubber Australia. The defendant says that there is no allegation or issue in the proceedings in relation to Coloured Rubber Australia, which is a business name operated by Apeclinks, and the categories of documents sought are not, therefore, relevant. Rather, the relevance of these issues is speculative.

Plaintiff's evidence and submissions

The plaintiff relies on Affidavits of Amy Gray of 18 February 2020; Mark Smith of 18 February 2020; Thomas Callaghan of 18 February 2020; Kate Healey of 17 June 2020; and a second Affidavit of Kate Healey of 5 August 2020.
The plaintiff also summarises the applicable principles for the setting aside of subpoenas or Notices to Produce. There is no fundamental issue of principle in dispute between the applicant and respondent to the Motion (the defendant and plaintiff in the substantive proceedings, respectively) as to the applicable principles. Certain aspects of those principles are relied upon, differently, by each of the parties.
In relation to those principles, the plaintiff first submits that circumstantial evidence can be relied upon to prove that civil fraud has occurred. The Court is not absolutely clear why that submission is confined to "civil fraud". Circumstantial evidence may be relied upon for a whole range of issues both civil and criminal.
Nevertheless, the plaintiff relies upon the judgment of the Court of Appeal in Palmer v Dolman; Dolman v Palmer [2005] NSWCA 361 at [39]-[47]. Further, in this regard, the plaintiff submits that "fraud is advanced or helped forward if active steps are taken to conceal it", referring to the judgment of Hamilton J in Lewis v Nortex Pty Ltd (in Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1245 at [17].
As part of that proposition, the plaintiff relies upon the deregistration of Apeclinks as circumstantial evidence consistent with the concealment of the fraudulent application for the grant. Notably, the voluntary deregistration required the defendant to declare that Apeclinks had no outstanding liabilities. Further, the plaintiff relies on evidence that in December 2018 the defendant appears to have avoided the receipt of mail from the plaintiff in relation to the recovery of the Payment.
The plaintiff submits that the knowledge of the defendant about the capacity of Apeclinks to complete the Project is in dispute in the proceedings. The plaintiff further submits that the documents sought will enable the testing of whether Apeclinks took significant steps in the development of the Project. The plaintiff also relies upon the proposition, arising from the judgment of Brereton J (as his Honour then was) in Sharpe v Grobbel [2017] NSWSC 1065 at [35], that it is permissible to seek documents to form the basis of cross-examination of the defendant and seeking documentation for that purpose did not render the production objectionable.
At the heart of the issue between the parties is the application for the grant and the terms and conditions upon which the Payment was provided. It is necessary to deal, in some length, with the underlying documents.

Application for Grant and Deed of Agreement

As earlier stated, the Grant Representations are statements made by the defendant that the plaintiff alleges were made by the defendant with knowledge that they were false at the time they were made. Those representations were made in the application for the grant.
The application was made by Apeclinks Pty Ltd, trading as Australia Recycled Rubber and the entity's Australian Business Number was supplied. The covering letter, dated 16 July 2015, was signed by the defendant as Director, with the last name Nguyen. The defendant is listed (under the name "David Newan") in the application, together with Messrs Bill Graham and Mike Ritchie, as key individuals.
The application sets out a curriculum vitae for the defendant which lists his profile as "Manager of Law Firm, Manager of Mobile Phone Services, Manager of Function Facilities" and provides details of his education at the University of Technology in Sydney, Sydney University and Oxford. According to the Application, the defendant was then managing Nguyen & Co Solicitors, a law firm, and the defendant was a practising solicitor.
Bill Graham is set out, in his curriculum vitae, as a "successful sales man with over thirty years' experience selling and marketing products to consumers". It refers to Mr Graham having been in the tyre industry for some years and asserts that he travelled to Malaysia in 2012 to learn more about the new processes and technologies available for recycling used tyres. Mr Graham is described as the Sales and Business Development Manager of Apeclinks. Mike Ritchie is described as a consultant in the details of key individuals.
The covering letter, executed by the defendant, states that Australia Recycled Rubber (hereinafter "ARR") "certifies that the information provided in the application is true and correct". Further, the application describes a project location as 15 Kerr Street, Ingleburn and, in answer to a request for information as to why the project would not go ahead without external funding, the application is in the following terms: "ARR has indepth of [sic] knowledge of business operations and law, and draws upon experts in the field of tyre recycling, including Bill Graham. However, ARR has limited capital on which to realise the intended outcomes of the proposed project. Therefore, this funding will be utilised to overcome the barriers of capital investment required at the beginning of the project for the purchase of the required technology. To date, ARR has sought quotes for preferred equipment suppliers and engaged MRA Consulting Group to assist with the licencing [sic] and developemnt [sic] consent processes. With financial funding, the project will be accelerated significantly. Without the financial assistance from the Environmental Trust, the financial needs of this project will not be met and thus, the project will not proceed or be significantly delayed."
Further, in relation to the status of the site for proposed resources (Item C2) the defendant has ticked the box that certifies that the "Site is under lease by grant applicant. (If so, please give details on lease status, lease term, site owner and any restrictions on capital improvements)." The application, in the space left for comments to that item, is in the following terms: "Lease terms are currently being negotiated. There are no restrictions on capital improvements."
Further, the site is described, in the application, as "a greenfield or brownfield site with no planning approvals for a Resource Recovery operation".
Under item D7 of the application form, by which the applicant is required to describe the process of the proposed resource recovery facility/technology, and item D8, in which its unique features are supposed to be described, the defendant has completed the application in the following terms: "The Dura-Shred technolgoy [sic] has the capacity to process between 4-5 tph of car and truck tyre waste up to 1,300 mm in diameter. The basic process involves the tyres being shredded, classified, grated to a smaller size, metal and fibre sorted out from the mix and then milled to a rubber crumb in a range of 30-120 mesh. The efficiency of this process is 95%, with a maximum of 5% of the material lost to landfill. The tyre recycling process is detailed in Attachment's [sic] G and I. … What makes this project unique is the technology to be utilised. Dura-Shred have yet to install a recycling system for the Australian market, despite its proven capability overseas. This plant will offer a unique process for the recovery of valubale [sic] materials from waste tyres. Dura-Shred specifically designs each plant to the requirements of the client's chosen country and therefore this plant will be unique to Australia. This technology is supported by credible financial backers as shown by the use of this technology in an extensive list of countries."
Subsequent to the plaintiff's acceptance of Apeclinks' grant application, the parties entered into a Deed of Agreement. It is unnecessary to extract the full terms of the Deed of Agreement or any more of the grant application. Nevertheless, some aspects of the Deed of Agreement are required.
The Deed of Agreement is dated 21 January 2016 and the parties to it are stated to be the plaintiff and Australian Recycled Rubber, with a business name, which is a business name, on the evidence before the Court, albeit at an interlocutory stage, that is owned by Apeclinks, of which the defendant was the sole Director. Recital "f" is in the following terms: "f. The Recipient [defined as ARR] has agreed to undertake the project as outlined in the Project Plan which is attached as Attachment B to this Deed and accepts the grant on the terms and conditions of this Deed."
There are a number of defined terms, including the Applicable Objective; the Project Plan; and the Recipient's Application. By cl 5 of the Agreement, and, in particular, cl 5.1.1, the Recipient obliges itself to use the Grant solely for the purpose of carrying out the Project in accordance with the Deed. Further, the Recipient must not enter into any arrangements or commitments in relation to the Project that are incompatible or inconsistent with the purpose of the Grant.
By cl 5.4 the Recipient obliges itself (immediately, or within such time as may otherwise be agreed) to "repay to the Trust any part of the Grant spent other than in accordance with this Deed". Further, and most importantly, cl 5.4.2 is in the following terms: "5.4.2 The Recipient must, within 14 days of the termination of this Deed, repay to the Trust any part (or if required by the Trust, the whole) of the Grant which has been paid to the Recipient and not already spent or held as a liability by the Recipient."
Further to the foregoing requirements of cl 5.4.2, the Deed, at cll 5.4.3 and 5.4.4, is in the following terms: "5.4.3 The Recipient acknowledges that: a. where the Recipient is unable, or fails for any reason (including but not limited to insolvency or liquidation of the Recipient or termination of the Deed under clause 20) to complete all of the Project in its entirety by the Completion Date or any other date agreed by the Parties; and b. any portion of the Project already completed does not, in the absence of further action by the Recipient, achieve the Applicable Objective The Trust may require the Recipient to repay that portion of any Grant money already paid to the Recipient that is, in the Trust's opinion, attributable to the portion of the Project which did not achieve the Applicable Objective. The obligation to repay any Grant money paid applies even where such payments were made in respect of milestones for which the particular milestone obligations had been completed at the time of the payment. 5.4.4 Any money repayable to the Trust under clause 5.4 is a debt due to the Trust."
There is a requirement for the recipient to carry out the Project in accordance with the Project Plan (cl 6.1.1), including the Milestones and the expenditure set out in the Budget and any Special Conditions. There is also a requirement for the recipient to maintain regular contact with the Trust and cooperate with the Trust in the performance of its role.
The Recipient is required to ensure that adequate financial and operational records and registers, including those specified or referred to in the schedule, are kept and maintained, while carrying out the Project and that those records must be kept for seven years after the expiry or termination of the Deed (see cl 8).
Clause 20 of the Deed relates to termination and allows the Trust immediately to terminate the Deed by written notice in a number of circumstances, including a breach of a provision of the Deed and a failure to remedy that breach within a specified period or in circumstances where the breach is incapable of being remedied or the recipient resolves to go into liquidation or has a summons for its winding up presented to the court or enters into any scheme or arrangement with creditors under the Corporations Act 2001 (Cth) or any applicable insolvency law or an administrator, liquidator, receiver or official manager is appointed under the Corporations Act or any applicable insolvency law.
Then the terms of 20.2 of the Deed provide: "20.2 The following clauses of this Deed survive termination: clause 5 (Use of the Grant); clause 8 (Records); clause 13 (Publicity); clause 14 (Intellectual Property); clause 15 (Indemnity); clause 16 (Insurance); clause 17 (Confidentiality); and any other provision of this Deed which by its nature should survive termination shall survive termination, expiry or repudiation of this Deed."
The Applicable Objective is set out in Item 13 of Schedule 1 to the Deed and is in the following terms: "The objective of the Project is to provide new recycling infrastructure solutions, establish (or expand) recycled material markets through research and development, and improve and introduce new approaches and technologies to increase the efficiency of recycling facilities for the wastes listed in the Environment Protection Authority's 'priority problem wastes' list."
On 15 July 2016, the defendant, purportedly on behalf of Apeclinks and/or ARR, replied to an email from the plaintiff of 5 July 2016. In the course of the 15 July 2016 email, the defendant stated that the site nominated by them in the application was no longer available by the time the grant was approved. It was alleged that the lessor could not wait for the lengthy period for Apeclinks to obtain the grant and apply for a "DA" and a "licence" from the "EPA". Further, it asserts that "when the Grant was approved in January, 2016, [Apeclinks] had been tiredlessly [sic] looking for potential sites" and that one of the obstacles they faced was that no lessors (or not many lessors) "would approve the use of their premises as a tyre recycling business due to its high fire risk nature". The document also asserted that the defendant and/or Apeclinks "had made as many as 30 inquiries to premises scattered throughout Sydney" and that in May 2016 they "found the site located at 2/14 Graham Hill Road, Narellan and successfully negotiated for the Lease in June. Attached herewith is a copy of the lease proposal for your attention."
The letter further asserts that a property consultant was immediately engaged to prepare a DA and lodge it with Council. There were problems associated with that progress because, it is said in the letter, the lessor did not have a "DA" in place but that in order to prepare the "DA" or "Change of Use" application, they had lodged an "Informal Request for Information" to Camden Council on 24 June 2016.
The letter also asserts that the defendant had personally been in Taiwan and China to inspect the plant and had "placed an order for the most suitable Tyre Recycling Plant" and had made arrangements "for other personels [sic] to quit their current employments to join the Tyre Recycling business full time later in the year when the Plant is completely set up and ready for operation". A purported lease proposal to LJ Hooker Commercial is attached in relation to the property at Narellan.
On 13 December 2018, the plaintiff sent a letter, mistakenly dated 18 February 2020, to the defendant as Director of ARR purportedly terminating the "funding agreement" and alleging a breach of cl 20.1 of the Deed. The letter of 13 December 2018 demands repayment of the amount already forwarded to Apeclinks and/or ARR, being an amount of $379,608 plus GST, within 14 days from the date of the letter. The letter drew attention to cll 5.2.1, 5.4.2, 5.5.1, 5.5.2 and 5.6.1 of the Deed, some of which have been referred to earlier.
The letter was posted on 13 December 2018, according to the postmark on the envelope, and marked return to sender. It was addressed to Australian Recycled Rubber at 250 Campbelltown Road in Denham Court and also to the defendant at Suite 8, 59 John Street Cabramatta NSW 2166. The address at John Street Cabramatta, is the address of Nguyen & Co, Solicitors as was the situation, on the evidence before the Court, at the time that the letter was sent and marked return to sender as unclaimed.
On 27 March 2018, the defendant applied for the voluntary deregistration of Apeclinks. The application, which is certified to be true by the defendant, declares that the company "is not carrying on business"; its assets are worth less than $1,000; and the company has no outstanding liabilities. This declaration was made notwithstanding the terms of the Deed executed by the defendant to which the company was a party.
There is material before the Court suggesting that neither Mr Graham nor Mr Ritchie agree with the description of their roles in the grant application, which the defendant certified was true.

Principles

As earlier stated, there is, as one would expect from two competent and experienced Counsel, general agreement on the principles to be applied on the Motion before the Court. I reiterate them and refer to the principles as adumbrated by the applicant/defendant in the proceedings.
A subpoena, as well as a Notice to Produce, may be set aside if it requires production of documents which do not show sufficient apparent relevance to the proceedings. In that regard, the Court examines the description of the documents for the purpose of determining whether there is a basis for being satisfied that the documents sought are likely to inform the proper determination of the issues in the proceedings: Trade Practices Commission v Arnotts Limited (No 2) (1989) 21 FCR 306; [1989] FCA 340.
Essentially, the distinction between those documents that may be the subject of a Notice to Produce or subpoena, and those that may not, is that documents for which there is reasonable cause to believe that they will be relevant, in the sense described immediately above, as against those that are merely speculative as to their relevance: Cosco Holdings Pty Ltd v Federal Commissioner of Taxation (1997) 37 ATR 432; [1997] FCA 1504; The City of Sydney v Streetscape Projects (Australia) Pty Limited & Anor [2011] NSWSC 364. As described in Richie's Uniform Civil Procedure Rules [1] at [33.4.30], the issue of "relevance" has been described a number of ways: "throw light on the issues in the main case"; "connected with or pertinent to" the proceedings; "reasonably be expected to throw some light on the issue in the proceedings"; "necessary for disposing fairly of the proceedings"; have "a sufficient apparent connection with the issues in the proceedings"; "may reasonably be regarded as 'on the cards' that the documents will materially assist the resolution of the issues in the proceedings".
The last mentioned description of the documents as reasonably being regarded as "on the cards" is a description that is used often and was the subject of comment by the High Court in Alister v The Queen (1984) 154 CLR 404; [1984] HCA 85; and in R v Saleam (1989) 16 NSWLR 14; [1999] NSWCCA 86 in which the Court of Criminal Appeal (Spigelman CJ, Studdert and Simpson JJ) applied the judgment of the High Court in Alister, supra. Ultimately, the purpose of the subpoena and/or Notice to Produce must be a legitimate forensic purpose.
As the Court, as presently constituted, stated, by reference to the judgments of Brereton J (as his Honour then was) and Ward J (as her Honour then was) in McLachlan v Whelan Browne [2019] NSWSC 514: "[14] Essentially, a party seeking the production of documents must identify a legitimate forensic purpose for which the document is sought and establish that the documents that are sort will materially assist the case, or, more accurately, that, on their face, it is probable that the documents will materially assist the case. This latter aspect has been described in a number of ways. [15] The principles of 'adjectival relevance' or whether the assistance that would be provided by any such document is "on the cards" was discussed by the Court, as presently constituted, in Lindsay-Owen v HWL Ebsworth Lawyers [2017] NSWSC 1692. I excerpt the relevant discussion, which is largely a reference to the judgment of Ward J (as her Honour then was) in the matter of One.Tel Ltd (in liq) - SingTel Optus Pty Ltd v Weston [2010] NSWSC 1491 and the judgment of Brereton J (as his Honour then was) in Portal Software v Bodsworth [2005] NSWSC 1115. I reiterate those comments at [24] - [26], which were in the following terms: '[24] Her Honour Justice Ward, as her Honour then was, referred to the tests associated with the issue of subpoenas, which tests are well known and have existed for some period of time. I refer in particular to the passages in her Honour's judgment in One.Tel Ltd (in Liq) - SingTel Optus Pty Ltd v Weston [2010] NSWSC 1491 at [22] - [29] in particular, which are to the following effect: "[22] In Portal Software, his Honour described (at [24]) the test as being whether the documents sought by the notice to produce have 'a sufficient apparent connection to justify their production or inspection' (citing White v Tulloch (1995) 127 FLR 105) and said that the test of adjectival relevance (ie, as distinct from substantive relevance) will be satisfied if the material has apparent relevance and is established if the documents called for 'could possibly throw light on the issues in the main case' (at [24]), citing Trade Practices Commissioner v Arnotts Ltd [1989] FCA 248; (1989) 21 FCR 306). [23] I note that in Cosco Holdings Pty Limited v Commissioner of Taxation [1997] FCA 1504; (1997) 37 ATR 432, Spender J had earlier considered the statement of Beaumont J in Trade Practices Commission v Arnotts as to the test of adjectival relevance and had noted that the word 'possibly' was there not used in any speculative sense' and so a subpoena (as was there in issue) may be set aside if the issuing party cannot, on reasonable grounds, show that there is a reasonable possibility that the documents sought will assist in resolving a matter in dispute in the proceedings. [24] Nicholas J in ICAP Pty Limited v Moebes [2009] NSWSC 306 adopted an approach to Trade Practices Commission v Arnotts consistent with that of Spender J in Cosco. [25] In ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307, the Court of Appeal held that the primary judge had not erred by stating that, for a notice to produce to have a legitimate forensic purpose: [I]t must be shown that it is likely the documentation will materially assist on an identified issue, or there is a reasonable basis beyond speculation that it is likely the documentation will. [26] In Nicholls v Michael Wilson and Partners Limited [2010] NSWCA 100, Young JA, to similar effect as had Brereton J in Portal Software, held that for present purposes a notice to produce is the equivalent of a subpoena and that the ordinary rules as to oppressive subpoenas can be applied (at [33]). His Honour also said that, in modern litigation, a person is entitled to issue a subpoena and have it answered if there is a legitimate forensic purpose in issuing the subpoena, that is, that he or she has a reasonable cause to believe the documents subpoenaed have the capacity to throw some light on the issues in the proceedings, at [34]. [27] Although, as I noted in McLaughlin v Dungowan Manly (unreported, 14 July 2009, NSWSC), the authorities have largely dealt with relevance in the context of "fishing" objections (in which questions of relevance necessarily arise) and there is a significant overlap between considerations as to whether what is sought is relevant to an issue in the proceedings, whether it is oppressive and whether it constitutes impermissible 'fishing', the two grounds for objection do not completely overlap, so that a notice to produce may be set aside even if it seeks relevant documents. [28] The suggestion that mere relevance might be sufficient to establish a legitimate forensic purpose was rejected by Beazley JA in Attorney-General (NSW) v Chidgey [2008] NSWCCA 65, (there in the context of criminal proceedings). In Chidgey, her Honour did not accept that it was a legitimate forensic purpose to engage in a 'fishing expedition' to discover whether there was a case at all, referring to The Commissioner for Railways v Small [1938] NSWStRp 29; (1938) 38 SR (NSW) 564, at 573-4; [1938] NSWStRp 29; 55 WN (NSW) 215, at 575 where Jordan CJ had stated that a party was not entitled to use a subpoena for that purpose. [29] Insofar as the Optus Group also referred to the test noted by Brereton J, in Portal Software, that a notice to produce will have a legitimate forensic purpose if it appears to be 'on the cards' that the documents sought will materially assist, that formulation of the test appears more generally to be used in the context of criminal (not civil) proceedings. (His Honour had there referred to what was said in Alister v R (1984) 154 CLR 404, at 414 by Gibbs CJ and in R v Saleam (1989) 16 NSWLR 14, at 18. In Chidgey Beazley JA saw no reason to depart from the test and the language used in Alister and Saleam.)" [25] The Court of Appeal as her Honour recites in the judgment to which I have just referred, said in ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307, that for a notice to produce, or a subpoena, to have a legitimate forensic purpose, it must be shown that "it is likely the documentation will materially assist on an identified issue or there is a reasonable basis beyond speculation that it is likely the documentation will." [26] The use of the term "likely", in the principles, does not mean more probable than not. Nor does it mean some attempt by the Court to determine the use that might be made of documents that exist or that might exist. It must have, as has been often described, an adjectival relevance, that is, it must show somehow a direct relevance to a line of enquiry or, a manner in which, the documents would seem to be relevant to the issues between the parties. As Brereton J said in Portal Software v Bodsworth [2005] NSWSC 1115 at [19] - [24]: "[19] The power of the Court to set aside a subpoena or notice to produce (in whole or in part) is but an instance of its power to regulate its processes and in particular to intervene in the case of an abuse of its process: see Botany Bay Instrumentation and Control Limited v Stewart [1984] 3 NSWLR 98, 100 (Powell J). In the categories of cases described by Powell J, no reference is made to mere irrelevance as a ground for setting aside a subpoena or notice. The closest that the various categories listed by his Honour approaches relevance in his Honour's third category, namely, where the subpoena had not been issued bona fide for the purpose of obtaining relevant evidence. [20] However, relevance - or more accurately, lack thereof - is now a sufficient ground for setting aside a subpoena. In Trade Practices Commissioner v Arnotts Ltd [1989] FCA 248; (1989) 21 FCR 306; 88 ALR 90, Beaumont J approached the setting aside of subpoenas as oppressive on a basis which reveals that absence of apparent relevance is one of two separate bases for doing so: his Honour identified that on an application to set aside a subpoena as oppressive, two questions arose: first, whether the material sought had an apparent relevance to the issues in the principal proceedings - which his Honour called 'adjectival' as distinct from 'substantive' relevance - and thus the subpoena had a legitimate forensic purpose to that extent; and secondly, whether the subpoena was seriously and unfairly burdensome or prejudicial. Failure to satisfy either requirement resulted in the subpoena being set aside. [21] In Hatton v Attorney-General of the Commonwealth of Australia & Ors [2000] FamCA 892; (2000) 158 FLR 31; (2000) 26 Fam LR 520; (2000) FLC 93-038, Finn, Kay and Dessau JJ, after an extensive review of the authorities, including Arnotts, said:- As to the proposition that lack of relevance cannot of itself be a ground for setting aside a subpoena but rather must constitute oppression or abuse of process, we would consider that whatever may have been the position at the time that Waind and Hill was decided, the present state of authorities is such that lack of apparent relevance will be a sufficient ground in itself to set aside a subpoena. [22] I proceed on the basis, therefore, that absence of apparent relevance is a sufficient ground to set aside a subpoena or a part of a subpoena. [23] It is necessary, then, to appreciate what is the test of 'relevance' in the context of a subpoena. In many of the cases, it had been described as 'apparent relevance', in the sense that the documents, production of which is sought, must bear some apparent relevance to an issue in the proceedings. In Waind and Hill, Moffitt P described the concept in these terms: Production of a document on subpoena by a stranger is only required if the document is sufficiently relevant to the action in the sense that it is likely to add in the end, in some way or other, to the relevant evidence in the case. [24] In White v Tulloch (1995) 127 FLR 105, (1995) 19 Fam LR 696, (1995) FLC 92-640, the Full Court of the Family Court referred to the test in terms of documents having 'a sufficient apparent connection to justify their production or inspection'. But perhaps the most instructive description is that of Beaumont J in Arnotts, in which his Honour said that the test of adjectival relevance was satisfied if the material had apparent relevance and was established if the documentation called for 'could possibly throw light on the issues in the main case'. In a slightly different but related context, the test has been put in terms that a subpoena has a legitimate forensic purpose if it appears to be "on the cards" that the documents sought will materially assist the defence in a criminal proceeding [Alister v The Queen (1984) 154 CLR 404, 414 (Gibbs CJ), R v Saleam (1989) 16 NSWLR 14, 18]."'"
The principles have not altered since that statement and I adhere to the views expressed and apply the description of "adjectival relevance" to which Brereton J (as his Honour then was) referred.

Consideration

As earlier stated, the defendant/applicant has provided a schedule, similar in form (albeit in the absence of a comments column) to a Scott Schedule, which sets out the description of the category of document to which objection is taken and the kernel of the submissions by the plaintiff and the defendant in relation to each. The objections fall into general categories.
The applicant/defendant objects to the use of the term "financial statements", which term is used in a number of categories. The defendant submits that the term has not been adequately defined by the plaintiff.
It seems to me that this is an argument that ought probably to have been defined between the parties by way of a request for clarification. Nevertheless, it is not, in my view, a basis for striking out the description of the documents.
Financial statements, as I understand them, are: balance sheets; income and/or expenditure statements; or annual reports, which summarise one or more of the income, expenditure, assets and/or liabilities of the entity to which the statement relates. The parties can agree on a different definition or argue for a different definition, but in the absence of agreement that is what the documents seek. Ordinarily, it would include a BAS and/or tax return document, but they are separately described in the categories to which this objection is taken.
The first general objection is as to the timeframe, described in the schedule as a "General Timeframe Objection". Essentially, the documents in many of the categories have been sought for the period from 1 August 2014 to 1 December 2018, a period of just over four years.
The applicant/defendant submits that it is not in issue that no steps were taken in relation to the Project after 1 July 2017 and, as a consequence, no documents beyond that date should be available as none could be "adjectivally relevant" (although the defendant did not use that term). Further, the defendant submits that the application for voluntary deregistration of Apeclinks occurred on 27 March 2018 and was effective from 27 May 2018 and, therefore, no document beyond that date could possibly be relevant.
Further, the applicant/defendant submits that the issues of fraud to which the plaintiff has referred are not expressly pleaded and that, therefore, the issues said to support the production of the documents are merely speculatively relevant and do not relate to the issues pleaded between the parties.
Over and above the foregoing, the applicant/defendant submits that, to the extent that the documents are said to go to the defendant's "credibility", none of the evidence of the defendant has been filed in the proceedings and therefore it cannot be other than speculation for the plaintiff to suggest the documents are needed for purposes associated with cross-examination on credit.
The plaintiff, who seeks the documents described in the Notices to Produce and subpoenas, submits that pleadings do not require evidence to be pleaded; only issues of fact; and, in this case, allegations of fraud.
There can be no doubt that, on the material before the Court, there is at least an arguable case of equitable fraud and misrepresentations relating to the Project. The representations as to the premises on which such a Project would be built; the role of Mr Graham and Mr Ritchie are, on evidence adduced on the interlocutory basis only, arguably false, notwithstanding the certification by the defendant that the information provided was true and correct.
The same applies to the information provided in items B9, C2, C3, D7 and D8, of the grant application, to which earlier reference has been made. As a consequence, it is unnecessary for the defendant to file his evidence before the issue of the credibility and credit of the defendant is in issue. Of necessity, an allegation of fraud, the making of knowingly false statements for the purpose of obtaining monies, is an issue that goes to the credit of the defendant, but also a matter that is relevant, indirectly, to the substantive issues at the trial.
Given the terms of the grant application and the Deed, to which the Court has already referred, there is ample material to make most of the documents sought "adjectivally relevant" to the issues that will come before the Court at a final hearing. On one view, at least, being, it seems, the view pressed by the plaintiff in the substantive proceedings, the whole of the amount of the Payment is repayable. The monies were provided on the basis of the representations that have been made and are, on the allegation of the plaintiff, knowingly false.
As a consequence of the foregoing, a number of consequences flow. First, where the monies went or were expended becomes adjectivally relevant. Given the defendant's presumed knowledge of the requirement to repay amounts provided by the plaintiff, the statement and declaration, the truth of which the defendant certifies, in the Application for Deregistration of Apeclinks is, in and of itself, evidence of concealment, being the hiding of debts or potential debts to ASIC.
In short, an amount of $417,458.80 was paid by the plaintiff to Apeclinks on the basis of representations made by the defendant. It is alleged those representations were knowingly false.
It is adjectivally relevant to establish that the Project was never seriously pursued, notwithstanding the application that was made. An absence of any serious pursuit of the establishment of the Project is circumstantial evidence that the defendant knew, at the time that he made the representations, that the Project was not intended to be established, which, as earlier stated, is one of the Grant Representations.
Given the plaintiff's allegation that there was no intention, on the part of the defendant, to undertake or complete the Project, the plaintiff is entitled to material that, either by itself or with other material, would show expenditure of the Payment for purposes other than the Applicable Objective. As a consequence, the plaintiff is entitled to documents that disclose where the Payment was distributed; what steps were taken to secure property for the Project; and other matters represented by the defendant in the Grant Application.
The expenditure that occurred after 1 July 2017 is, in that sense, as relevant as the expenditure that occurred before 1 July 2017, as is the expenditure for the whole of the period up to and immediately after deregistration. Thus, the period ending 1 December 2018 is an appropriate one.
Further, the records of ARR and Coloured Rubber Australia are each relevant, because each discloses the expenditure of Apeclinks. The expenditure on items not associated with the Project is circumstantial evidence that renders a lack of intention to complete the Project more probable.
The other representations, relating to a suitable location for the Project; the intention to pursue and purchase a recycling machine; the engagement of a tyre recycling expert; and the travel, by that expert, to Malaysia are all matters which, on their face, plead that the defendant has deliberately lied and/or deceived the plaintiff in order to obtain a benefit, being the financial payment of approximately half the value allocated to the Project.
As a consequence, the plaintiff is entitled to examine the documents and circumstances before the Application was made and after the work on the Project had been completed and/or immediately after the company was deregistered. It is "adjectivally relevant" for the plaintiff to know and be able to assert how the funds provided were in fact utilised, given that it is pleaded and/or is a consequence of the pleading, that the monies were not used to establish the Project, which, on that pleading, was never intended to be established.
During the course of the proceedings it became clear that some of the documents sought in the Notices to Produce and/or the subpoenas, which related to one or more accounts at the National Australia Bank (NAB), arose as a consequence of reliance on without prejudice or privileged documents. The plaintiff does not press any aspect of the Notices to Produce and/or any subpoena that relates to those documents.
For the foregoing reasons, apart from the issue relating to the NAB, in my view all of the documents sought are adjectivally relevant and should be produced. The Court makes the following orders: 1. Motion dismissed; 2. The defendant shall pay the plaintiff's costs of and incidental to the Motion.

Endnote

Peter Taylor SC et al, Ritchie's Uniform Civil Procedure NSW (2005, LexisNexis Australia). 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: 14 August 2020

(2000) 26 Fam LR 520

(1995) 19 Fam LR 696

NSW Environmental Trust v Nguyen

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