Plaintiff v Defendant

1 These reasons concern an application by the plaintiff to set aside three subpoenas issued at the request of the defendant and a notice to produce given by the defendant to the plaintiff.

2 The plaintiff ('MCI') is the representative plaintiff in this group proceeding. The claim is that the defendant ('Myer') failed to disclose information about an earnings forecast to the market immediately upon becoming aware of it in breach of s 674(2) of the Corporations Act 2001 ('the Act') and engaged in misleading or deceptive conduct in breach of s 1041H of the Act. The plaintiff brings the proceeding on behalf of persons who acquired ordinary fully paid shares in Myer ('Myer shares') on or after 11 September 2014 and who were, at the commencement of trading on 19 March 2015, holders of any of those shares.

3 The solicitor acting for MCI is Portfolio Law Pty Ltd which was incorporated on 29 August 2014 ('Portfolio Law').[1]

4 On 15 July 2015, Myer took a number of steps, as follows:

(a) it issued a summons seeking to stay the proceeding as an abuse of process;

(b) it filed an affidavit in support of that summons by Andrew Morrison sworn that day;

(c) it issued subpoenas pursuant to order 42A of the Supreme Court (General Civil Procedure) Rules 2005 ('the Rules') directed to Portfolio Law, Mark Elliott and BSL Litigation Partners Limited ('BSL'); and

(d) it issued a notice to produce directed to MCI seeking the production of a variety of documents ('Notice').

5 By summons issued on 24 July 2015, MCI applied to set aside each of the subpoenas and the Notice on the grounds that each is vexatious, oppressive, an abuse of process and a breach by Myer of its overarching obligations of economy and efficiency in the conduct of this proceeding, relying on ss 16, 19, 20 and 24 of the Civil Procedure Act 2010 (Vic) ('CPA'). On the same day, Mark Elliott, BSL and Portfolio Law gave notice of objection pursuant to the Rules to the production of the documents referred to in the subpoenas served on them on the grounds that each subpoena is vexatious, oppressive, too wide and is in the nature of a request for nonparty discovery in respect of documents which are irrelevant to any matter in issue in either the proceeding or the application in respect of which the subpoena purports to have been issued.

6 An affidavit of a Mr Anthony Zita, solicitor, sworn 24 July 2015 was also filed in support of the application to set aside the subpoenas and the Notice. That affidavit did no more than establish the service of the subpoenas and the Notice and to state baldly that MCI considers them to be fishing, vexatious, oppressive, an abuse of process and a breach by Myer of its overarching obligations under the CPA.

7 In order to assess the basis on which the Subpoena and Notice were issued, and thus to deal with the application to set them aside, it is necessary to set out the factual background to this proceeding.

8 On 1 November 2012, MCI was incorporated with a paid up capital of $200,000.00 and Mr Elliott was its sole director and sole shareholder.[3] On the day of its incorporation it purchased small parcels of shares in 20 listed companies, with each parcel costing about $700.00. In February 2014, MCI purchased small parcels of shares in another 145 public listed companies.

9 The shares purchased on the day of its incorporation included a small parcel of Myer shares (353). These were sold on or about 19 February 2014. A second parcel of Myer shares (300) were purchased by MCI on or about 21 February 2014 and sold on or about 18 November 2014. A third parcel of Myer shares (400) were purchased by MCI on or about 19 November 2014. That parcel of shares is the subject of the allegations in this proceeding. These shares were purchased at $1.78 per share. On 19 March 2015, the closing price for Myer's shares on the ASX was $1.375 per share.[4] The fourth parcel of Myer shares (325) was purchased my MCI on about 14 May 2015.[5]

10 MCI commenced this proceeding on 25 March 2015.[6]

11 MCI has commenced at least four other group proceedings against listed companies alleging breaches of continuous disclosure obligations and misleading or deceptive conduct. These proceedings include proceedings against:

(a) Leighton Holdings Limited commenced on 4 October 2013 ('Leighton proceeding');[7]

(b) Treasury Wine Estates Limited commenced on 26 November 2013 ('Treasury proceeding');[8]

(c) WorleyParsons Limited commenced on 18 December 2013 ('WorleyParsons proceeding');[9] and

(d) UGL Limited commenced on 1 April 2014 ('UGL proceeding').[10]

12 At the commencement of each of these proceedings, Mr Elliott was the solicitor on the record for the plaintiff. The history of each proceeding is set out in the Morrison Affidavit. I summarised that history in the following paragraphs.

13 The Treasury proceeding was commenced on 4 November 2013 and a statement of claim was filed on 26 November 2013. The Leighton Proceeding was commenced on 4 October 2013 and the statement of claim was filed on 4 November 2013.

14 On 31 January 2014, Judd J delivered a ruling on an application by Leighton to strike out the statement of claim. He struck it out and ordered MCI to pay Leighton's costs.[11]

15 On 23 July 2014, Ferguson J[12] delivered judgment in respect of an application by Treasury and Leighton for a stay of the two proceedings, each as an abuse of process. Her Honour concluded that there was no abuse of process and refused the stay. She did, however, rule that the proceedings should not continue as group proceedings whilst MCI and Mr Elliott acted in tandem as plaintiff and solicitor.[13]

(a) MCI was incorporated on 1 November 2012 with Mr Elliott as its sole director and shareholder. On the day of its incorporation, MCI purchased small parcels of shares in 20 publicly listed companies, with each parcel costing a little under $700.00. In February 2014, MCI purchased small parcels of shares in another 145 publicly listed companies, together with further small parcels of shares in Treasury, Leighton and WorleyParsons, with each parcel costing between $600.00 and $900.00;[14]

(b) MCI was created by Mr Elliott as a vehicle for bringing representative proceedings against listed companies alleging breaches of continuous disclosure obligations;[15]

(c) although Mr Elliott was acting on a no-win, no-fee basis, it was common knowledge that most litigation settled before judgment and that this was treated as a win, such that the lawyers' fees were paid. That was recognised by Mr Elliott on his websites;[16]

(d) it was probable that MCI commenced the proceeding for the purpose of having Mr Elliott act as its solicitor so that he could earn fees, given that the quantum of any damages claimed was at best less than $700.00. That made it unlikely that the proceedings were commenced for the purpose of recovering compensation;[17] and

(e) MCI commenced the proceeding for the predominant purpose of generating legal fees for Mr Elliott.[18]

17 Treasury appealed the ruling by Ferguson J. The appeal was heard by the Court of Appeal on 10 October 2014. The findings referred to above were not challenged in the Court of Appeal.[19]

18 On 22 December 2014, the Court of Appeal delivered judgment in the Treasury appeal, granted leave to appeal and allowed the appeal. It was held that MCI commenced the group proceeding against Treasury for the predominant purpose that was not the vindication of legal rights by judgment or settlement and that those proceedings were therefore an abuse of process and liable to be stayed. It ordered that the proceeding against Treasury be stayed permanently as an abuse of process. The costs were ordered against MCI. MCI filed an application for special leave to appeal in the High Court. That application was heard on 15 May 2015 and refused with costs.[20]

19 On 19 February 2015, Leighton, which had not sought leave to appeal from the judgment of Ferguson J, sought an order that the Leighton proceeding be permanently stayed on the same grounds as the Treasury appeal. On 14 April 2015, Sifris J ordered the Leighton proceeding be stayed until further order and stated that in the event that special leave was refused by the High Court in the Treasury proceeding (or if granted, and the appeal was unsuccessful), there would be a permanent stay of the Leighton proceeding.[21] MCI sought leave to appeal this decision to the Court of Appeal. The application for leave was refused and the Court of Appeal itself granted a permanent stay.[22]

20 The WorleyParsons Proceeding was commenced on 18 December 2013 with Mr Elliott acting as MCI's solicitor. On 27 June 2014, Ferguson J ruled that MCI did not have standing to bring the claims.[23] On 22 July 2014, MCI applied by summons to have Ms Joanne Walsh joined as a second plaintiff. That application was subsequently abandoned.[24] On 8 September 2014, MCI brought a further application to amend the statement of claim. Ferguson J dismissed that application and the entire proceeding on the basis that MCI was unable to articulate a cause of action which had a reasonable prospect of success and that it had no real interest to prosecute.[25] MCI was ordered to pay WorleyParsons costs.

21 After the WorleyParsons Proceeding had been dismissed, on 8 September 2014, Ms Walsh commenced a separate representative proceeding against WorleyParsons with Mr Elliott acting as her solicitor.[26] MCI had executed a deed of indemnity in favour of Ms Walsh in relation to that proceeding.[27] Under the deed of indemnity, Ms Walsh was indemnified against any and all costs and liabilities of any sort whatsoever that she may suffer or incur in connection with or arising out of her role as representative plaintiff, including any adverse orders for legal costs.[28] On 26 November 2014, WorleyParsons applied for an order that Mr Elliott be restrained as acting as solicitor for Ms Walsh. Later, on 18 February 2015, WorleyParsons applied for orders that the proceeding be stayed as an abuse of process.[29] On 18, 19 and 20 February 2015, WorleyParsons caused to be issued 11 subpoenas. On 4 March 2015, Ms Walsh applied to set aside those subpoenas. On 15 April 2015, Almond J ruled on the application to set aside the subpoenas. He refused to set aside the majority of the subpoenas finding that there was a legitimate forensic purpose for them.[30]

22 In 2012, Laurence John Bolitho, as lead plaintiff, commenced a representative proceedings against Banksia Securities Ltd, ('Banksia proceeding') and others.[31] Mr Elliott acted from the inception of the Banksia Proceeding as solicitor for the plaintiff. On 26 November 2014, Ferguson JA determined that both Mr Elliott and Mr Norman O'Bryan SC should be restrained from acting for the plaintiff.[32] Her Honour found:

(a) Mr Elliott (through his superannuation fund and another company controlled by him) is a major shareholder in BSL Litigation Partners Ltd, the Litigation Funder ('BSL');

(b) Mr Elliott is the secretary, and one of the three directors of BSL;

(c) on 13 March 2014, BSL entered into a litigation funding agreement with Mr Bolitho which entitled BSL to be paid up to 30% of any net amount received to resolve the dispute, and that, given the size of the claim, if it was successful, the fee payable to BSL may be in the tens of millions of dollars;

(d) a fair minded, reasonably informed member of the public would form the view that Mr Elliott, in his role as solicitor for Mr Bolitho, may be influenced by the substantial interest of BSL in the outcome of the case;

(e) a fair minded, reasonably informed member of the public would conclude that if Mr Elliott continued to act as solicitor for Mr Bolitho, then this would affect the proper administration of justice, including the appearance of justice; and

(f) a fair minded, reasonably informed member of the public would conclude that, by reason his family's substantial financial interest in BSL, if Mr O'Bryan SC continued to act as counsel for Mr Bolitho, then this would affect the proper administration of justice, including the appearance of justice.

23 On 8 December 2014, Portfolio Law was appointed to act as solicitor for the plaintiff in the Bolitho proceeding in place of Mr Elliott.

24 On 1 April 2015, MCI commenced a representative proceeding against UGL ('UGL proceeding'). MCI entered into a retainer with Portfolio Law in relation to this proceeding. This was one of the documents produced, mistakenly one assumes, by Portfolio Law in response to the letter from Myer's solicitors as referred to below.[33]

25 That retainer discloses that Portfolio Law estimates that MCI's costs and expenses for the UGL proceeding will be in the range of $75,000.00-$100,000.00, and that MCI may, if it loses the case, also be liable to pay UGL's costs which may range from $100,000.00-$200,000.00.

26 Mr Morrison summarises in his affidavit the evidence he advances regarding the financial position of MCI. He notes that its paid up capital is $200,000.00, it has purchased shared in about 165 publicly listed companies which, on certain assumptions, is likely to have involved expenditure of about $100,000.00. He refers to the liabilities that have been incurred (or will be incurred) as a result of orders for costs in the Treasury proceeding, the Leighton proceeding and the UGL proceeding. Portfolio Law estimates that MCI will need between $75,000.00 and $100,000.00 to run the UGL Proceeding and this proceeding. Mr Morrison expresses the opinion, without challenge, that these estimates are lower than the likely costs in the Myer Proceeding. It is also noted that MCI may have a liability under its indemnity given to Ms Walsh in the Walsh proceeding in relation to costs.

27 Mr Morrison gives evidence of public statements made on websites established by MCI for each of the Treasury, WorleyParsons and Leighton proceedings. The substance of the statements so far as material to the current application are as follows:[34]

(a) the overwhelming majority of cases issued in the Supreme Court of Victoria do not go to trial, but settle earlier and that Mr Elliott considers that this case will likely settle before judgment;

(b) at present there is no litigation funder involved in the case. It may be necessary to engage one if the case becomes protracted or more complicated; and

(c) if a litigation funder is engaged, then it will seek to be reimbursed the costs it has incurred, plus an uplift factor which can be between 30% to 40% of the total amount recovered plus reimbursement of expenses.

28 Mr Morrison advances the conclusion that these comments appeared to have been made by Mr Elliott in the case of the Treasury and WorleyParsons websites and by MCI in the case of the Leighton website.

29 Mr Morrison produces articles which have been published in The Australian newspaper which record various comments and quotes from Mr Elliott, including that as at 26 April 2014, Mr Elliott raised $2,000,000.00 from investors to form a litigation funder that would take on the Banksia proceeding and others if the need arose.[35] The Australian newspaper published an article on 1 August 2014, after the decision of Ferguson J in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No.3),[36] (which was published on 23 July 2014), where Mr Elliott is recorded as saying that the decision means the corporate law expert can no longer continue to fund class actions as a solicitor on a no-win no-fee basis and will now have to approach another funder to carry the case. It is recorded that he said:[37]

The judge had forced me down the road of litigation funding because if I'm not the solicitor I have to pay another solicitor to do the work and I need money to do that.

30 On 6 February 2015, after the publication of the Court of Appeal's decision in the Treasury appeal in late December 2014, The Australian published an article recording that Mr Elliott claimed that by closing down his model, all class-action litigants would now be pushed towards litigation funders who charged higher costs and left less money in the hands of plaintiffs.[38]

31 According to the evidence and calculations made by the solicitor for Myer, the maximum potential loss suffered by MCI cannot exceed $178.00,[39] and the unrecoverable legal costs of MCI will significantly exceed $178.00, so that MCI will necessarily sustain a loss even if it is successful in this proceeding.

32 In the application by Myer to stay this proceeding on the basis that it is an abuse of process, Myer submits that it will seek to demonstrate that no legitimate purpose lies behind the institution or prosecution of this proceeding and that MCI has brought it for the predominant purpose of gaining a financial benefit or advantage rather than for the purpose of vindicating legal rights or immunities.

33 By letter dated 16 April 2015, Myer's solicitors asked MCI to disclose:[40]

(a) details of MCI's financial position, including its ability to pay Myer's anticipated costs in the event of an adverse costs order;

(b) any agreement by which a litigation funder is to pay for or contribute to the costs of the proceeding, any security for costs or any adverse costs order and, in this regard, Myer identified a litigation funder as including Mark Elliott and entities associated with him in bringing the proceeding; and

(c) a copy of any retainer or like agreement between MCI and Portfolio Law and, if it be the case, Mr Elliott and Portfolio Law.

34 By letter dated 20 April 2015, Portfolio Law responded that the resources of MCI and Portfolio Law were quite adequate for the tasks required, to be able to respond to the request for details of MCI's financial position and capacity to pay any anticipated costs order, Myer would need to indicate what it sought by way of security and in respect of what items, and that Portfolio Law was instructed that there was no litigation funder and they would inform Myer if the position changed. A copy of what was said to be the firm's retainer agreement was provided, but turned out to be the retainer between MCI and UGL Limited.[41]

35 On 20 April 2015, Myer's and MCI's solicitors exchanged further letters in relation to the retainer of Portfolio Law and a document purporting to be a costs agreement between Portfolio Law and MCI, to be executed on behalf of MCI by Mark Elliott, was provided. The document was signed on behalf of Portfolio Law but not on behalf MCI.[42]

36 On 23 April 2015, Myer's solicitors asked Portfolio Law further questions as follows:[43]

(a) to obtain MCI's instructions as to the predominant purpose for commencing the proceeding; and

(b) to advise the date upon which the retainer letter was provided to Mr Elliott and the date of which the retainer was confirmed, including whether Portfolio Law was representing MCI on a no-win no-fee basis, how MCI would pay fees and disbursements if Portfolio Law were not acting on a no-win no-fee basis and for details of MCI's financial position.

37 Portfolio Law responded by letter dated 24 April 2015 that its sole purpose in commencing the proceeding was to obtain justice for MCI and all members of the affected class. It confirmed that Portfolio Law was not representing MCI on a no-win no-fee basis, that MCI would pay fees and disbursements from its own resources and that it had adequate financial resources to conduct the proceeding.[44]

38 The Notice requires the production of a wide range of documents relating to MCI's shareholdings in Australian listed companies, its financial position, its retainer of legal representation in this proceeding and in any other proceeding, any litigation funding arrangements, and certain deeds of indemnity referred to Walsh v Worley Parsons Ltd [2015] VSC 135.[45] It is sufficient to describe them in a summary way, as follows:

(a) MCI's shareholdings in listed companies, and details in relation to those shareholdings (categories 1 to 3);

(b) MCI's financial position as at the date this proceeding was commenced (category 4);

(c) the terms on which MCI has retained legal representation in this proceeding, or in other proceedings commenced by it in this Court between 1 November 2012 and 15 July 2015 (categories 5 and 6);

(i) BSL Litigation Partners Limited (Elliott Related Litigation Funder);

(ii) any other company in which Mr Elliott has a financial interest; or

in relation to the funding of this proceeding or the other group proceedings that MCI has commenced (category 7); and

(e) the deed of indemnity between MCI and Ms Walsh in the Walsh proceeding (Category 8).[46]

(a) documents relating to any financial or other interest that he has in the outcome of this proceeding (category 1);

(b) documents relating to any financial liability or exposure that he has or may have to the outcome of this proceeding (category 2);

(c) documents recording any contact or communication with individuals or corporations concerning the provision of litigation funding or financial support in relation to this proceeding or one of the other group proceedings commenced by MCI (category 3);

(d) documents recording or evidencing the extent of Mr Elliott's interest in BSL (category 4); and

(e) fee agreements between Mr Elliott or MCI and Laurence Bolitho, the plaintiff in proceeding the Banksia Proceeding(category 5).

40 The subpoena to Portfolio Law requires the production of documents relating to its retainer to act on behalf of MCI in this proceeding and any contact with individuals or corporations concerning the provision of litigation funding for this proceeding or any other proceeding involving MCI.

41 The subpoena to BSL requires the production of documents relating to the terms on which BSL was incorporated and the date that this occurred, any communications between BSL and Mark Elliott, MCI, or Portfolio Law from the date of incorporation of BSL to 15 July 2015 and the litigation funding agreement between it and Laurence Bolitho referred to in the Banksia proceeding.[47]

42 Each subpoena is issued under Order 42A. The terms of r 42A.01 of the Rules make clear that the procedure is directed to obtaining the production of documents for evidence before the hearing of an interlocutory or other application in the proceeding, or for the trial of the proceeding. The procedure was introduced because of the desirability of dealing with subpoenaed documents before the trial (or other hearing) at which it was proposed for those documents to be used. This was desirable because it would overcome the inconvenience and disadvantages which could arise from the production of documents at the trial or other hearing, including delay and sometimes adjournment.[48]

43 It is also clear that Order 42 applies (so far as is practicable) to subpoenas under Order 42A.[49] Rule 42.04 of the Rules provides that the Court may, on its own motion, or on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part or grant other relief in respect of it.

44 The decisions relevant to Order 42A establish that:

(a) like the subpoena process under Order 42, the Order 42A procedure should not be used as substitute for discovery or non-party discovery. This follows from the principles applicable in relation to Order 42[50] and from the requirement that the document is produced 'for evidence';[51]

(b) because the same rules and principles applicable to subpoenas generally apply to subpoena under Order 42A (so far as is practicable) the subpoena:

(i) must sufficiently describe the documents to be produced so as to not require the recipient to make a judgment about the documents being sought;

(iii) must not be used as a 'fishing expedition';

(c) there must be a legitimate forensic purpose for the use of the documents in evidence. If that is established, then it is likely that the requirement 'for evidence' will be established;[52]

(d) 'for evidence' means that a document may potentially be required for evidence, either in-chief or in cross examination,[53] and that means it must have at least some potential relevance to the issues in the proceeding or interlocutory application;[54]

(e) the width of the expression 'for evidence' is better understood when it is recognised that the procedure enables a party to inspect a document in order to make a decision whether or not to adduce it in evidence. It is available even though, in the end result, the document is not adduced into evidence;[55]

(f) thus, the test of relevance may be a general one, particularly where the Court has only a general idea of the nature of the evidence which may be led as relevant to an issue or as to credit of an expected witness.[56] The Court should not be unduly astute to reject the possibility that a document not meet this test of relevance and:

[I]t may be that it will so conclude only where it appears that no useful evidentiary purpose could be attributed to the document, raising in this way an inference that the order for production is sought for some illicit purpose, or for not good purpose...[57]

(g) a useful test to determine whether a subpoena to produce documents is 'for evidence' is whether the subpoena would have been objectionable if it was made returnable at trial.[58]

45 It is clear that the obligations which a notice to produce imposes are similar to those imposed by a subpoena and that the considerations which apply to the setting aside of a subpoena are equally applicable to a notice to produce.[59]

46 Just as a 'fishing' subpoena will be set aside, so will a 'fishing' notice to produce.[60] The principles applicable to setting aside a notice to produce have been set out in numerous decisions including, by way of example, the decision of J Forrest J in Messade v Baires Contracting Pty Ltd[61] and the decision of Maxwell P in Crown Joinery Pty Ltd v Lyleho Pty Ltd.[62]

47 In Webb v Wheatley,[63] I identified the principles that generally govern an application to set aside a subpoena. They are:[64]

(a) it is necessary for the party at whose request the subpoena was issued to identify expressly and precisely the legitimate forensic purpose for which access to the documents is sought;

(b) except in cases where the subpoena is plainly too broad and merits the description of a fishing expedition, the judge should normally inspect the documents for the purpose of making a final decision as to whether a legitimate forensic purpose exists;[65]

(c) however, the Court will not require production of subpoenaed documents, and will not permit access to subpoenaed documents, if the subpoena is expressed so broadly that the applicant cannot demonstrate, having identified a forensic purpose, that it is on the cards or that there is a reasonable possibility that the documents will materially assist the case of the party;

(d) a 'fishing expedition' is not a legitimate forensic purpose and will not be permitted;

(e) the relevance of a document to the proceeding alone will not substantiate an assertion of legitimate forensic purpose. There is no legitimate forensic purpose if the party is seeking to obtain documents to see whether they may be of relevance or of assistance in their case;

(f) a mere assertion of bad faith by an applicant or that something might be found demonstrating bad faith is not enough - the criteria set out in (c) must be satisfied; and

(g) where a party fails to demonstrate a legitimate forensic purpose, the Court should refuse access to the documents and set aside the subpoena.

48 In summary, MCI submits that the documents sought by the subpoenas and notice to produce appear directed to identifying whether any of MCI, Mark Elliott or BSL will receive an improper financial return from this or any other litigation in which they may be involved. To the extent that the documents sought concern other litigation they have no bearing upon the case brought by MCI in this proceeding. To the extent they concern the conduct of this case, they constitute a fishing exercise to discover some improper purpose for which Myer presently has no proper basis to allege.

49 There was much reference to Williams v Spautz[66] and Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd[67] so as to show that where the solicitor for MCI was not Mr Elliott, and the abuse of process found in the Treasury appeal was not available in this case, the existence of an ultimate purpose of profit to a litigation funder is not an abuse of process 'when that purpose is to bring about a result for which the law provides in the event that the proceedings terminate'[68] in favour of MCI. As Mr O'Bryan SC put it in argument:[69]

So what their Honours [in Williams v Spautz] are really distinguishing between...is ...the difference between motive and purpose. Motive looks at what your end gain is. Purpose looks at what the means are that you are employing to that end, so it does not matter that your end gain is something which is...outside the scope of the proceedings, provided it is an end which the proceeding will bring about.

50 MCI submitted that because there is no basis to allege that the proceeding is an abuse of process because a litigation funder might be involved (although was not at present), there could be no legitimate forensic purpose to support the Notice and the subpoenas.

51 MCI therefore submitted that the subpoenas and Notice are fishing and constitute impermissible non-discovery undertaken in order to find out whether Myer's application for the proceeding to be stayed as an abuse of process is maintainable. It was also submitted that, overall, the subpoenas and Notice were vexatious and oppressive.

52 MCI also submits that Myer has breached its obligations under ss 16, 19, 20 and 24 of the CPA, and that these breaches should be taken into account under s 28 of the CPA in considering whether to set aside the Notice and the subpoenas.

53 I will deal with particular submissions made by MCI when dealing with the several categories of documents the subject of the Notice and the subpoenas.

54 In the application to stay the proceeding, Myer submits that it will seek to demonstrate that no legitimate purpose lies behind the institution or prosecution of this proceeding, and that MCI has brought it for the predominant purpose of gaining a financial benefit or advantage rather than for the predominant purpose of vindicating legal rights or immunities. Myer submits that the evidence in support as presently filed[70] supports the submission that this proceeding is an abuse of process because:

(a) no legitimate purpose lies behind the institution or prosecution of this proceeding;

(b) the predominant purpose for bringing and maintaining this proceeding is not to vindicate legal rights or immunities by judgment or settlement;

(c) MCI has caused this proceeding to be brought and maintained for the predominant purpose of gaining a financial benefit or advantage rather than the vindication of legal rights or immunities; and/or

(d) this proceeding would otherwise bring the administration of justice into disrepute.[71]

55 Myer submits that the Morrison Affidavit provides a sound evidentiary foundation for the Court to infer that MCI has not brought this proceeding for the predominant purpose of vindicating legal rights or immunities by judgment or settlement, and rather the proceeding has been brought for the predominant purpose of obtaining a financial benefit unrelated to the relief in the proceeding.

56 A similar application to stay proceedings as an abuse of process was brought in the Walsh proceeding.[72] The Walsh proceeding is a group proceeding brought by Ms Walsh against WorleyParsons. The genesis of that proceeding is an earlier claim brought by MCI against WorleyParsons, which was struck out. Myer submits that it is evident that MCI has procured or controls the Walsh proceeding, and MCI has indemnified Ms Walsh for all costs and expenses in relation to that proceeding.

57 In the Walsh proceeding, WorleyParsons issued a number of subpoenas in order to obtain further evidence relevant to an application it had brought to stay the proceeding as an abuse of process. Ms Walsh sought to have those subpoenas set aside. The documents sought by WorleyParsons in the subpoenas were similar to many of the documents sought by Myer in the notice to produce and the subpoenas issued in this proceeding. WorleyParsons contended that the Walsh proceeding is an abuse of process for reasons similar to the application by Myer in this proceeding.

58 The decision on the application to set aside the subpoenas was given by Almond J in Walsh v WorleyParsons Ltd[73] on 15 April 2015. Myer submits that the reasoning in that case provides a strong guide to the decision in this case.

59 The decision of the Court of Appeal in the Treasury Appeal[74] is critical to an understanding of the legitimate forensic purpose advanced by Myer to underpin the validity of the notice to produce and the Subpoenas. The majority in that case (Maxwell P and Nettle JA) said that as the law stands, the only legitimate purpose for bringing a proceeding is to vindicate legal rights or immunities by judgment or settlement. Consequently, unless the predominant purpose of bringing a proceeding is a legitimate purpose, the proceeding is an abuse of process and is liable to be stayed.[75]

60 In Treasury, at first instance Ferguson J concluded as a matter of inference from the facts that:

(a) MCI was created by Mr Elliott as a vehicle for bringing representative proceedings against listed companies alleging breaches of continuous disclosure obligations;

(b) MCI would be the representative plaintiff in such proceedings; and

(c) Mr Elliott would act as its solicitor, and would earn fees from doing so.[76]

(a) that the reason for MCI's existence was to launch proceedings to enable its sole director and shareholder, Mr Elliott, to earn legal fees from acting as the solicitor for MCI;[77] and

(b) MCI had commenced the respective proceedings against Treasury and Leighton Holdings for the purpose of having Mr Elliott act as its solicitor so that he could earn fees.[78]

62 The conclusion that the purpose of commencing the proceedings was to generate legal fees for Mr Elliott was held to be the predominant purpose and not a purpose of earning legal fees as a desired by-product of the litigation.[79]

63 The judge below nevertheless held that the proceeding was not an abuse of process because MCI's immediate purpose was to obtain orders for compensation in the proceedings which would naturally lead to an award of costs, because an order for costs forms part of the relief sought in the proceedings and is a likely and natural consequence if MCI succeeds in its claim and is awarded damages, an order for costs is not a collateral advantage.[80]

64 The question identified by the majority in the Treasury appeal was, therefore, whether MCI's purpose of generating legal fees for Mr Elliott is a legitimate purpose.[81] The majority continued:

Plainly enough, generating legal fees does not constitute a purpose of vindicating legal rights or immunities. Obtaining payment of legal costs is but a corollary, or an incident, or a by-product, of the successful vindication of rights.

It is necessary, then, to examine the notion of 'collateral advantage'. The authorities distinguish between two types of case. On the one hand, a proceeding will not be regarded as an abuse of process by reason only that it is brought for the purpose of taking collateral advantage of any judgment or settlement in vindication of legal rights or immunities which might be obtained in the proceeding. On the other hand, if a proceeding is brought for the predominant purpose of obtaining collateral advantage from the existence of the proceeding as such, as opposed to collateral advantage flowing from any judgment or settlement in vindication of legal rights or immunities which might be obtained in the proceeding, it will be an abuse of process and liable to be stayed.[82]

In our view, the proceeding by MCI against Treasury falls into the second of these categories. What distinguishes the two categories is the use to which the proceeding is put.[83] In the present case, MCI is using the cause of action to create an income-generating vehicle for its solicitor. It has no interest in vindicating its rights, or obtaining a remedy, as such.

65 Myer submits that in its application to stay the proceeding for abuse of process, the facts will sustain the inference that the predominant purpose of commencing this proceeding is to generate financial benefit for the litigation funder, BSL.

66 In my view, Myer has demonstrated that in general, there is a legitimate forensic purpose for the issue of the Notice and the Subpoenas. The evidence given in the Morrison Affidavit, and the judgments in the other proceedings, to which I have referred above, shows at a prima facie level that MCI was set up with a view, or for the purpose, of acquiring small shareholdings in publicly listed companies and targeting those companies' which may have failed to observe the continuous disclosure provision contained in Corporations law by commencing group proceedings seeking to recover damages suffered in consequence. The size of the MCI's shareholding in each company points away from compensation to MCI being a real reason for commencing the proceedings. The prospective compensation likely to be awarded if MCI is successful is so small that there must be some other benefit to MCI or Mr Elliott.

67 The first instance finding of Ferguson J in Treasury[84] that MCI commenced the proceeding for the predominant purpose of generating legal fees for Mr Elliott[85] is important to the reasoning that leads to there being a legitimate forensic purpose for the Notice and Subpoenas in this case. Given that Mr Elliott is not the solicitor, to what real end is the proceeding brought? The financial position of MCI is, on the face of the material presented by Myer, insufficient to fund this proceeding, let alone all the others that presently have no litigation funder. The statements attributed to Mr Elliot and MCI regarding the future use of litigation funders, and the relationship between Mr Elliot and BSL, points to that company being the intended beneficiary of any success in the proceeding. It is arguable that if the predominant purpose of the proceeding is to benefit BSL, that will be an abuse of process.

68 It is not for this court on an application to set aside the Notice and the subpoenas to come to the firm conclusion, as Mr O'Bryan SC submitted it should, that it is legally impossible for Myer to succeed in establishing abuse of process because of the decisions of the High Court in Williams v Spautz[86] and Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd.[87] The fact that the application, based in the way it was put by Myer, might ultimately fail does not detract from the existence of a legitimate forensic purpose. Put another way, it would be wrong for this court on this application to determine that there can be no abuse of process in the commencement of this proceeding for the purpose not of vindicating the rights of the group members but benefitting BSL and through it Mr Elliott and others, or Mr Elliott in some other unknown way.

69 In general, the categories of documents sought in the Notice and the Subpoena are capable of producing documents that may be for evidence in the abuse of process application, because they have some potential relevance to the issues in that application. It should be recalled that the production of documents 'for evidence' pursuant to a subpoena also enables Myer to inspect documents in order to make a decision whether or not to adduce them in evidence. The procedure is available even though, in the end result, the documents are not adduced into evidence.

70 It is necessary, however, to deal with the particular categories of documents sought to be produced and the particular arguments in favour and against those documents satisfying the legitimate forensic purpose test It is also necessary to consider specific arguments that some categories of documents are too wide or oppressive and whether some categories constitute impermissible fishing.

Category 1-3 - MCI's shareholdings in listed companies, and details in relation to those shareholdings

71 MCI maintains that these documents are irrelevant because its holdings of Australian shares do not respond to any of the four bases upon which abuse is alleged. Myer submits that the documents sought will be relevant to the purpose for the creation of MCI (previously found by Ferguson J to be a vehicle for bringing representative proceedings against listed companies alleging breaches of continuous disclosure laws), which in turn will be relevant to assessing the purpose for which this proceeding was commenced. Myer relied on the reasoning of Almond J in Walsh v WorleyParsons[88] as applicable. His Honour there observed in relation to similar categories of documents:

[T]here is a reasonable possibility that, viewed in context, those documents will also demonstrate that MCI ... had a modus operandi of commencing representative proceedings with the predominant purpose of securing financial benefits rather than vindicating legal rights, and that it has done so in this proceeding.

72 I agree with the submissions of Myer that there is a possibility that, for the purpose of the application made by Myer, these documents will provide direct evidence of the modus operandi of MCI in a way relevant to establishing that this proceeding is an abuse of process.

Category 4 - MCI's financial position as at the date this proceeding was commenced

73 MCI submits that under the guise of the abuse of process application, this is a quest for documents which might be expected to help Myer satisfy the threshold question in an application for security for costs.[89] It should be recognised as an abuse of process, and not permitted. Further, MCI's capacity to fund this proceeding is nonetheless irrelevant to Myer's abuse of process application.

74 Myer submitted that MCI's financial capacity is relevant to the abuse application. It refers to the evidence in the Morrison Affidavit which shows that the limited paid up capital of MCI, the purchase of shares since its incorporation at a cost of about $100,000.00, the numerous costs awards against it in other proceedings, the substantial cost to be incurred in the other proceedings and the anticipated costs to be incurred in running this proceeding (said to amount to more than $100,000.00). This material raises the question as to how the this representative proceeding is to be funded.[90] If MCI has an arrangement, or intends in the future to enter into an arrangement, for an entity in any way associated with Mr Elliott to fund and profit from the proceeding, that is likely to be documented to some extent. If so, then this is relevant to the question of whether MCI has a collateral purpose of commencing or maintaining this proceeding not for the predominant purpose of vindicating legal rights by judgment or settlement but of obtaining a financial benefit for Mr Elliott or his associated entities.

75 Thus, MCI's financial capacity is relevant to the issue of whether MCI has or intends to enter into some form of funding arrangement, because:

(a) if MCI does not have sufficient funds to run this proceeding, then there is a clear basis for an inference that it has, or will, seek funding for the proceeding; and

(b) if MCI has sought, or intends to seek, funding from an entity connected to Mr Elliott, then this supports the inference of an improper collateral purpose.

Categories 5 & 6 -The terms on which MCI has retained legal representation in this proceeding, or in other proceedings, commenced by it in this Court between 1 November 2012 and 15 July 2015

77 MCI submits that the terms on which Portfolio Law are retained have been produced. Portfolio Law is retained on its usual terms and that so far as this proceeding is concerned there are no further documents to be produced. Regarding the retainer of solicitors by MCI in other proceedings it is said that it is irrelevant. Further, it says that MCI has since July 2014 retained independent solicitors in each of its proceedings in the Supreme Court of Victoria, including Portfolio Law, Tan Partners, and Stewart Peters Lawyer. It is a matter of public record that Mr Elliott has not acted for MCI in any proceeding since July 2014. Each of the independent solicitors have been retained on their standards terms. There is no connection between any document returnable on this category and the bases upon which abuse of process is alleged.

78 Myer submits that in the abuse application it will ask the Court to draw inferences as to MCI's purpose in commencing the proceeding. In this regard, the modus operandi of MCI, as revealed by the manner in which it has conducted itself in numerous other group proceedings, is directly relevant to the inference which Myer will ask the Court to draw.

79 In my view, category 5, which concerns the terms on which MCI has retained legal representation in this proceeding, is directly relevant and if there is more material than has been disclosed already, it should be produced. It would be very surprising if the Costs Agreement that has been produced were all that there is in this category. The likelihood is that there is more.

80 Category 6 is different. It is concerned with establishing patterns of behaviour so as to show a modus operandi. The evidence referred to in the other representative proceedings commenced by MCI shows that the initial pattern was that Mr Elliott was the solicitor engaged. After the decision of Ferguson J in the Treasury proceeding at first instance in July 2014, the modus operandi changed to the retainer of other solicitors. Unless there were some evidence to suggest that the retainer of other solicitors involves some improper sharing of fees, or that these solicitors were not exercising their independent professional judgment in the conduct of the proceeding, or were merely puppets for Mr Elliott, matters which would require a firm basis in the evidence, I cannot conclude that there is any legitimate forensic purpose to this category. It is fishing. As Almond J observed in Walsh v WorleyParsons:[91]

[It] amounts to 'the casting of a line with the hope that something may be caught in a very large pond'.[92] There is insufficient material to satisfy the Court that it is 'on the cards' or that there is a 'reasonable possibility' that the documents sought from these recipients will materially assist the defendant in prosecuting its Abuse Application.

Category 7 - Communications between MCI and BSL, other entities related to Mr Elliott or any other person in relation to the funding of this proceeding or the other group proceedings that MCI has commenced

81 MCI submits that this is again a disguised quest for documents which might be expected to help the defendant satisfy the threshold question in an application for security for costs and should be recognised as an abuse of process, and not permitted. Further, it submits that the plaintiff's capacity to fund this proceeding is irrelevant to the defendant's abuse of process application.

82 Myer submits that documents recording or evidencing MCI's arrangements with entities, and in particular entities associated with Mr Elliott, in relation to the funding of this proceeding and other group proceedings brought by MCI, is highly relevant to the abuse application. If an entity associated with Mr Elliott has entered into, or it is contemplated that it may enter into, an arrangement by which it will fund and profit from this proceeding, that is relevant to whether the proceeding has been commenced for a purpose other than vindicating the rights of MCI by settlement or judgment.

83 At present, Myer submits that it has a sound basis on which to ask the Court to infer that MCI has, or is contemplating, some form of funding arrangement with another entity connected with Mr Elliott, by which Mr Elliott will seek to profit from this proceeding. The facts from which such an inference arises is the evidence in the Morrison Affidavit that suggests MCI does not have sufficient funds to run this proceeding (see the summary in [82] above). This raises the question as to how this proceeding is to be funded. MCI has not disclosed this after enquiry by Myer.

84 Myer points to the finding that MCI has previously commenced proceedings for the predominant purpose of enriching Mr Elliott in his capacity as a solicitor, to its modus operandi of purchasing small shareholdings in listed companies and that it was established as a vehicle for bringing representative proceedings against listed companies alleging breaches of continuous disclosure laws. Accordingly, Myer submits, it is on the cards that the documents sought will assist Myer in the abuse application.

85 Given Mr Elliott's interest in BSL, and Mr O'Bryan SC's family's interest in that entity,[93] and the public statements made by MCI and Mr Elliot that no litigation funder is presently involved but that this may be necessary, then there is reason to think that there might be arrangements or understandings with BSL. To the extent that category 7 relates to communications between MCI and BSL, there is an evidentiary basis for the production of documents evidencing such communications in relation to the funding of this proceeding. It is on the cards that such communications will assist in the abuse application. However, the meaning of the expression 'other entities related to Mr Elliott' is undefined and there is no evidence to suggest that such an entity exists apart from BSL. Category 7 is therefore too wide in its reach to such entities.

86 The scope of the documents sought by category 7 will also catch communications between MCI and any other litigation funder, whether connected to Mr Elliott or not. The only justification for the production of that class of documents is speculative; that is, Myer speculates that some profit sharing arrangement or understanding may be revealed between MCI or Mr Elliot and an unrelated litigation funder. There is at present no basis for such a thought.

87 I will not, accordingly, permit the production of documents going beyond communications between MCI and BSL.

Category 8 - The deeds of indemnity between MCI and Joanne Walsh****[94]

88 MCI submits that these documents are irrelevant, reveal a collateral purpose and the category is fishing. It also submits that it goes to the threshold question in an application for security for costs.

89 Myer submits that the material before the Court provides some evidence as to the existence and terms of deeds of indemnity between MCI and Walsh ('Deeds'), pursuant to which MCI has indemnified Walsh in the Walsh proceeding in relation to all costs.[95] That evidence is entirely reliant upon the evidence before, and the findings of Almond J in Walsh v WorleyParsons. The Deeds are relevant to the financial position of MCI, as its liability under the Deeds will affect its ability to fund the legal costs in this proceeding, with the result that the likelihood of a litigation funder being brought in to this proceeding will be heightened. Myer wishes to introduce the Deeds into evidence in this proceeding to make good a submission that MCI has an additional and significant costs exposure in Walsh v WorleyParsons. This feeds its submission that a litigation funder will have to be brought in to fund this proceeding. The obvious funder is BSL.

90 In my view, there is a legitimate forensic purpose to the production of these Deeds for the reasons advanced by Myer. The Deeds are a link in the chain of facts that point to the purpose of the proceedings ultimately being to profit Mr Elliott, albeit indirectly, and others who have invested in BSL. This is material to the abuse application. It is clear from the judgement of Almond J that the Deeds did at one point exist and were in force between Ms Walsh and MCI. It is rather more than on the cards that they will be relevant and admissible to assist in the abuse application.

Categories 1 & 2 - Documents relating to any financial or other interest in, or any financial liability or exposure to, the outcome of this proceeding

91 MCI submits that these two categories are irrelevant and fishing. It submits that the basis upon which the abuse application is made concerns MCI's predominant purpose. That basis is not concerned with Mr Elliott's financial interest or exposure to the proceeding. Nonetheless, Mr Elliott is MCI's sole shareholder. He is therefore vicariously exposed to the outcome of this proceeding. However, given that documents concerning the plaintiff's financial interest and exposure have not been sought from the plaintiff pursuant to the notice to produce, it may be assumed that the defendant is seeking some other unspecified documents unrelated to Mr Elliott's shareholding in MCI. It would be entirely speculative to attempt to identify what the defendant hopes might be returned on these categories as no basis has been provided to think that any such document exists. The categories are necessarily fishing and irrelevant.

92 Myer submits that because Mr Elliott is the sole director and shareholder of MCI, his purpose is MCI's purpose. If he has a financial interest in the outcome of this proceeding (other than through his shareholding in MCI), then this is plainly relevant to assessing whether MCI's purpose is connected with such financial interest. Relevance is established.

93 The real complaint from MCI appears to be that Myer is engaging in fishing, and that it is not on the cards that the documents sought will assist Myer. Given that MCI has commenced at least two previous group proceedings with the predominant purpose of enriching Mr Elliott, and that a litigation funder partly owned by Mr Elliott is funding another group proceeding (in which he previously acted as solicitor), there is a reasonable possibility that Mr Elliott does in fact have a financial interest in this proceeding, and that documents held by him will demonstrate this directly (rather than the point purely being left to inference).

94 I agree generally with Myer's submissions on this category. The history of the several representative proceedings commenced by MCI or underwritten by it (in the case of Walsh v WorleyParsons) demonstrates that it is highly likely and directly relevant that any financial interest or liability that Mr Elliott has in the outcome of this proceeding will be material to the abuse application. Given the other calls on the capital of MCI to which reference has already been made, it is inevitable that there is funding provided to MCI and the most likely source of that funding is Mr Elliott. Documents that reveal any agreement or arrangement under which that funding is provided will be material to the abuse application.

95 The categories are, however, wide enough to scoop up documents that are evident from and ASIC search, such as Mr Elliot's shareholding in MCI and his directorship of the company, because they are documents which evidence his financial or other interests in the outcome of the proceeding. Myer can and should prove those facts in the ordinary way. I therefore consider the descriptions in these two categories to be too wide and they should be qualified by the addition of the words 'other than documents recording his shareholding or holding of office in the plaintiff'.

Category 3 - Documents recording any contact or communication with individuals or corporations concerning the provision of litigation funding or financial support in relation to this proceeding or one of the other group proceedings commenced by MCI

96 MCI submits again that this is a disguised quest for documents which might be expected to help the defendant satisfy the threshold question in an application for security for costs and that MCI's capacity to fund this proceeding is irrelevant to Myer's abuse of process application. No other proceeding brought by MCI has benefited from litigation funding or any other form of independent financial support. The circumstances of MCI's other proceedings are, nonetheless, irrelevant to the defendant's alleged bases of abuse of process.

97 Myer submits that the arguments in support of category 7 in the Notice are applicable to this category. Documents concerning the provision of funding of this proceeding and other group proceedings brought by MCI, are highly relevant to the abuse application. If an entity associated with Mr Elliott has entered into, or it is contemplated that it may enter into, an arrangement by which it will fund and profit from this proceeding, that is relevant to whether the proceeding has been commenced for a purpose other than vindicating the rights of MCI by settlement or judgment. Myer has a sound basis on which to ask the Court to infer that MCI has, or is contemplating, some form of funding arrangement with another entity connected with Mr Elliott, by which Mr Elliott will seek to profit from this proceeding because the evidence in the Morrison Affidavit suggests MCI does not have sufficient funds to run this proceeding. This raises the question as to how this proceeding is to be funded. The letters enquiring as to this sent by the solicitors for Myer returned little of value beyond the fact that Portfolio law is not retained on a no-win, no-fee basis. Further:

(a) MCI has previously commenced proceedings for the predominant purpose of enriching Mr Elliott in another capacity (as solicitor, and where it was found that MCI was not motivated by some general desire to assist shareholders); and

(b) MCI has a modus operandi of purchasing small shareholdings in listed companies and was established as a vehicle for bringing representative proceedings against listed companies alleging breaches of continuous disclosure laws.

98 Accordingly, it is on the cards that the documents sought will assist Myer.

99 In my view, Myer is correct that it is on the cards that documents exist that will advance the abuse application by Myer falling within this category. To the extent that it seeks documents that show contact or communication between Mr Elliott, on the one hand, and any person or entity, on the other concerning the provision of litigation funding for this proceeding, then such documents are likely to advance the abuse application.

100 Given the private and public statements made by MCI and Mr Elliot that there is presently no litigation funder involved in the case, and the evidence regarding MCI's financial position, there is a strong inference that funding is, or soon will be, needed. As the public statements of MCI show, it may be necessary to engage a litigation funder if the case becomes protracted or more complicated. There is reason to think that there might be arrangements or understandings with BSL or another funder. Given also the profit purpose found in Treasury, it is on the cards that Mr Elliott would seek contracts or arrangements that will benefit him or those with whom he is connected in some way.

101 For these reasons, I am of the view that so far as the funding of this proceeding is concerned, the documents sought in this category are both relevant, likely to exist and it is on the cards that they will materially assist in the prosecution of the abuse application.

102 I fail to see, however, that the documents in this category that concern the funding of the other representative proceedings commenced by MCI between 2012 and 2015 will be material to this proceeding being an abuse of process. The category is, to that extent, too wide and fishing.

Category 4 - Documents recording or evidencing the extent of Mr Elliott's financial interest in BSL (direct or indirect)

103 MCI submits that this category is irrelevant and fishing. As there is no litigation funding in this proceeding, Mr Elliott's interest in a litigation funder cannot be said to be relevant to the defendant's application. Mr O'Bryan SC also objected to this category because:[96]

our learned friends are on the other side in that case and their solicitors act for one of the major parties in the Banksia case, and it is tantamount to an abuse of process to issue a subpoena in this proceeding to get access to material which relates only to the Banksia proceeding. It is a very smelly fishing expedition, we submit, and should not be permitted

104 Myer submits that the material before the Court, which depends on the findings of Ferguson J in the Banksia proceedings, shows that Mr Elliott has a significant financial interest in BSL and that BSL is funding the Banksia proceeding, in which Mr Elliott previously acted as solicitor, and in which BSL (and therefore Mr Elliott and others) stand to make a substantial amount of money.[97] Myer submits that it has a legitimate forensic purpose in demonstrating that Mr Elliott has a financial interest in BSL and in demonstrating the precise extent and nature of that financial interest, and in demonstrating how much money he may make out of the agreements or arrangements BSL has put in place in the Banksia proceeding.

105 Myer submits that these matters are relevant in the abuse application, since the existence of arrangements put in place by Mr Elliott in other proceedings, for the purpose of him making money out of those proceedings, supports the inference that Myer will ask the Court to draw on the abuse application that this proceeding has been commenced for a purpose other than MCI seeking to vindicate its rights. Further, documents evidencing such arrangements are relevant because they will assist Myer in negativing any suggestion that MCI (which is controlled by Mr Elliott) is bringing this proceeding for some altruistic purpose.

106 In relation to the contention that it is improper for lawyers acting for the defendants in the Banksia proceeding to be seeking in this proceeding documents recording the extent of Mr Elliott's financial interest, whether direct or indirect, in BSL, Mr Waller QC submitted that it:[98]

is without foundation and having regard to obligations not to make assertions, especially serious assertions of that kind without foundation, pursuant to obligations in the Civil Procedure Act and other legislation, we say that is not a matter that Your Honour ought take into account. Put another way, is my learned friend saying that if this particular application had been brought by other counsel and other solicitors, that it would therefore be a legitimate one - it is either bad or it isn't and attaching us to it we say does not help the argument.

107 It seems to me that documents in this category are properly the subject of the subpoena to Mr Elliott substantially for the reasons advanced by Myer. The contention that this category is included in the subpoena for an improper purpose goes too far, in my view. As counsel for Myer submitted, it is without foundation. The lawyers are all subject to the implied undertaking not to use documents obtained in this proceeding in another proceeding without the leave of the Court.

Category 5 - Fee agreements between Mr Elliott and Bolitho in relation to the Banksia proceeding and between Mr Elliott and MCI between 2012 and 2015

108 MCI submits that these are irrelevant and fishing. It is a matter of public record that Mr Elliott has not acted for MCI in any proceeding since July 2014. Mr Elliott's obligations as a solicitor with an interest in BSL were addressed in the judgment in the Banksia proceeding handed down on 26 November 2014,[99] and Mr Elliott has not acted for Mr Bolitho since that time. Mr Elliott does not act for MCI and has no fee agreement with MCI in respect of any of the proceedings brought by it. It is well known to Myer that the documents meeting this criteria are necessarily irrelevant as they reflect Mr Elliott's engagement as solicitor on the record. Mr Elliott is not the solicitor on the record in this proceeding.

109 Myer submits that the evidence to which I have referred earlier in these reasons demonstrates that Mr Elliott has entered into fee agreements (retainers) with MCI in at least two other proceedings. Mr Elliott thereby stood to make substantial amounts of money from those proceedings. Evidence which shows a pattern of Mr Elliott acting as solicitor for MCI, and entering into fee agreements with it, is relevant to demonstrating that MCI and Mr Elliott have a modus operandi of commencing group proceedings for the purpose of enriching Mr Elliott, and that this is what has occurred in the present proceeding.

110 In light of the history of the involvement of MCI and Mr Elliott in numerous other group proceedings, including proceedings where it has been found that the proceeding was brought for the predominant purpose of generating income for Mr Elliott in his role as solicitor, it is on the cards that Mr Elliott has such documents and that they will assist Myer's case.

111 In substance, what Myer seeks to obtain by this category of documents is evidence of matters dealt with in other proceedings. The object is to show that in the past the fee agreements showed a modus operandi of commencing proceedings with a view to personal profit. It is clear that such documents did exist and will show a pattern, at least in the past, that is directed to the commencement of proceedings for the predominant purpose of generating fees for Mr Elliott. In short, proceedings for profit and not the vindication of legal rights. It is clearly evident that such documents exist, and it is on the cards that they will assist in the prosecution of the abuse application. The fact that Mr Elliott has ceased to act as solicitor in the various group proceedings in which MCI is directly and indirectly involved does not mean that these documents are irrelevant to, and do not lead to inferences for, the conduct of the present proceeding.

112 I therefore agree with the submissions of Myer and allow this category of documents.

Category 1 - Documents evidencing or referring to any arrangements, understandings, agreements or requirements in relation to the terms on which BSL was incorporated and the date that this occurred

113 MCI submits that these documents are irrelevant. They do not concern the existence of a legitimate purpose or whether MCI has a predominant purpose of vindicating legal rights or immunities. The documents sought are capable of being tangentially related to the allegation that MCI has brought the proceeding for the predominant purpose of gaining a financial benefit or advantage as the categories are sufficiently broad as to capture documents concerned with both proper and improper arrangements. However, by letter of 24 April 2015,[100] Portfolio Law told Myer that there is no third party funder. Litigation funding is permissible.[101]

114 MCI refers to what Ferguson J said in her judgment in Banksia,[102] that:

..it seems that no established litigation funder could be found to fund the action, and the Litigation Funder was established.

This was a reference to BSL which, according to Mr O'Bryan SC, stands for Banksia Securities Ltd. MCI submits that this purpose is entirely proper, and the defendant has shown no basis upon which the terms of BSL incorporation many months before the cause of action in this proceeding arose can be relevant to any of its asserted bases of abuse of process. MCI also submits that the terms of the category are meaningless.

115 Myer submits that the legitimate forensic purpose for this category of documents is the same as for category 4 in the Elliott subpoena. If BSL was established for the purpose of funding not only the Banksia proceeding (in which Mr Elliott acted as solicitor), but also proceedings commenced by MCI, then this is directly relevant to assessing the purpose for which MCI commenced this proceeding.

116 I note that the Morrison Affidavit refers to reports of public statements made by Mr Elliott, in particular an article appearing in The Australian newspaper on 26 April 2014 in which it is reported that:

On 13 March he wrote to Banksia debenture holders informing them that he had been personally funding disbursements for the previous 18 months.

This arrangement, however, cannot continue, so Elliott had raised $2 million from investors to form a litigation funder that would take on the Banksia case and others, if the need arose.[103]

117 Clearly, there is some material that relates to the formation and funding of BSL. The first issue for me is whether there is a legitimate forensic purpose for requiring this category of documents to be produced. The findings of Ferguson J in Banksia, show that Mr Elliott has a significant financial interest in BSL and that BSL is funding the Banksia proceeding, in which Mr Elliott previously acted as solicitor, and in which BSL (and therefore Mr Elliott and others) stand to make, a substantial amount of money.[104] Myer has a legitimate forensic purpose in demonstrating that Mr Elliott has a financial interest in BSL and in demonstrating the precise extent and nature of that financial interest, and in demonstrating how much money he may make out of the agreements or arrangements BSL has put in place in the Banksia proceeding.

118 These matters are relevant in the abuse application, since the existence of arrangements put in place by Mr Elliott in other proceedings, for the purpose of him making money out of those proceedings, supports the inference that Myer will ask the Court to draw in the abuse application that this proceeding has been commenced for a purpose other than MCI seeking to vindicate its rights. Further, documents evidencing such arrangements are relevant because they will assist Myer in negativing any suggestion that MCI (which is controlled by Mr Elliott) is bringing the Myer Proceeding for some altruistic purpose.

119 The second issue is whether the expression of this category is sufficiently clear, and whether it is meaningless, as Mr O'Bryan SC submitted. In my view it is sufficiently clear when it is read with the knowledge of the public statements made by or on behalf of Mr Elliott to which I have referred above.

Category 2 - Documents evidencing or recording any communication between BSL, Mr Elliott, MCI and Portfolio Law from the date of incorporation of BSL and July 2015

120 MCI submits that this category is impermissibly wide, fishing and oppressive, and I agree. The breadth of category 2 is likely to be oppressive given that Mr Elliott has acted as BSL's director and secretary since its incorporation, he was formerly the solicitor for the plaintiff in the Banksia proceedings, and Portfolio Law is the solicitor for the plaintiff in the Banksia proceeding.

121 It is also likely that the plaintiff in the Banksia proceeding would maintain a claim to client legal privilege over much, if not all, of the documents in this category. MCI asserts that BSL has never provided funding to a proceeding commenced by the plaintiff. The terms of any litigation funding agreement entered into by BSL is irrelevant to this proceeding.

122 Myer submitted that in light of the points made by MCI in relation to potential oppression (and despite the absence of evidence on the point), Myer will amend category 2 to add the words 'in relation to the funding of any proceeding commenced by MCI' at the end of the category. Even with this limitation, in my view, this category is too wide and oppressive for the reasons given by MCI.

Category 3 - The litigation funding agreement between BSL and Bolitho referred to Ferguson J's judgment in Banksia

123 MCI submits that this document is irrelevant. Myer does not press this category as the agreement is publicly available.

Category 1 - Documents evidencing or referring to any arrangements, understandings, agreements or requirements in relation to the terms on which Portfolio Law was retained to act on behalf of MCI in this proceeding

124 MCI submitted that the documents sought from Portfolio Law do not bear upon whether the plaintiff has a predominant purpose of vindicating legal rights or immunities. Myer would seem to accept this criticism as it no longer presses the category.

Category 2 - Documents recording contact with individuals or corporations concerning the provision of litigation funding in this proceeding or any other proceeding involving MCI

(a) the documents in this category are irrelevant to the abuse application;

(b) in any event, Portfolio Law has informed Myer that it is engaged by MCI on its usual terms and that there is no third party funder;

(c) Myer can have no basis for alleging any impropriety on the part of Portfolio Law, and the breadth of this category is inappropriately widely drawn; and

(d) the funding of any other proceeding involving MCI is irrelevant to its purpose in commencing and maintaining this proceeding.

126 Myer submits that this category of documents is relevant for the same reasons as category 7 of the Notice. It says that it does not allege any impropriety on the part of Portfolio Law. If Portfolio Law holds documents showing communications with funders in relation to this or any other proceedings this will not constitute impropriety on the part of Portfolio Law. But, it will be relevant to assessing MCI's purpose in commencing this proceeding.

127 To the extent that this category relates to communications between Portfolio Law and BSL, there is an evidentiary basis for the production of documents evidencing such communications in relation to the funding of this proceeding as there was in relation to category 7 of the Notice. It is on the cards that such communications exist and if they do they will assist in the abuse application. However, the extension of this category to 'or any other proceeding involving MCI' makes this category too wide.

Breach of Civil Procedure Act

128 As I have said, MCI also submits that Myer has breached its obligations under the CPA, in particular ss 16, 19, 20 and 24 and that these breaches should be taken into account under s 28 of the CPA in considering whether to set aside the Notice and the subpoenas.

129 The provisions of the CPA relied on by MCI, and their effect, are:

(a) section 16 - which imposes on each person to whom the overarching obligations apply (in this case the parties, the solicitors and their firms and any litigation funder) a paramount duty to the Court to further the administration of justice in relation to any civil proceeding in which the person is involved, including an interlocutory application of the kind made by Myer in its abuse application;

(b) section 19 - which requires a person to whom the overarching obligations apply not to take any step in the proceeding unless the person reasonably believes the step is necessary to facilitate the resolution or determination of the proceeding;

(c) section 20 - which requires a person to whom the overarching obligations apply to cooperate with the parties to a civil proceeding and the Court in connection with the conduct of that proceeding; and

(d) section 24 - which requires a person to whom the overarching obligations apply to use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the civil proceeding are reasonable and proportionate to the complexity or importance of the issues in dispute and the amount in dispute.

130 MCI submits that in contravention of s 19 of the CPA, Myer has created undue delay and expense by issuing the subpoenas where questions concerning the proceeding could have been (and arguably were) resolved by letter. The correspondence between the solicitors for the parties that preceded the application yielded all necessary information for Myer to assess whether the decision to commence this proceeding was an abuse of process. MCI and its legal representatives are perfectly willing to observe their obligation to cooperate with Myer. If Myer had legitimate questions concerning the purpose for which the proceeding was commenced, to the extent that that purpose has not already been disclosed, it should have asked. The use of coercive processes instead of cooperation merely contributes to the cost and delay.

131 MCI referred to the test for breach of s 24 of the CPA presented in Yara Australia Pty Ltd v Oswal[105] that requires the Court to:

...weigh the legal costs expended against the complexity and importance of the issues and the amount in dispute, in order to determine whether the parties used reasonable endeavours to ensure those costs were proportionate.

132 The defendant, in engaging a coercive power of the Court, unjustifiably obliged the addressees of the three subpoenas and the Notice to waste time and money. Because there was a significantly lower-cost alternative to using the coercive powers of the Court, namely correspondence, Myer has breached s 24 of the CPA. Zammit J's recent comments concerning the unnecessary issue of subpoenas in Naumovski v Ugrinovski[106] as wasting the parties' and the Court's time and resources are apt.

133 A similar application was made to Almond J in Walsh v WorleyParsons. His Honour concluded that there was no merit in the ground. He said:[107]

In respect of the subpoenas that have not been set aside either in whole or in part, the defendant had a legitimate forensic purpose for serving those subpoenas. There are no grounds for concluding that the defendant and its lawyers have not reasonably believed that each step taken was necessary for the purposes of progressing the Section 33N Application and Abuse Application. There is no evidence of lack of cooperation or unreasonable or disproportionate expenditure of costs. On the material before me I cannot be satisfied that there has been any breach by the defendant of the provisions of ss 16, 19, 20 and 24 of the Civil Procedure Act in connection with this matter.

134 The correspondence sent by Myer before issuing the subpoenas and giving the Notice, and the responses received from Portfolio Law to which I have made brief references earlier in these reasons, show that the information requested as to the MCI's financial resources and ability to fund the proceeding was resisted by MCI. It remains a mystery how MCI is to fund proceedings commenced having regard to the other calls on its capital.

135 In other respects, the correspondence did not cover a good deal of the material sought in the subpoenas. To the extent that the subpoenas deal with evidence required to show the position of MCI in relation to the other group proceedings referred to in the Morrison Affidavit, the absence of questions in the correspondence is not surprising. Much of the material regarding the other proceedings and the position of MCI in relation to them is referred to in reported decisions of this Court. But that is not, strictly speaking, evidence. For the purpose of substantiating its claim that this proceeding be stayed as an abuse of process, the relevant documents may need to be produced so as to be used in evidence. So for example, the deeds of indemnity in Walsh v WorleyParsons. It may not be sufficient merely to refer to the decision in that case to establish their existence and the consequences of them for the financial position of MCI. It is also reasonable to conclude that since those decisions were made the financial circumstances of MCI have changed. Current information is warranted.

136 In other respects, the subpoenas, to the extent that I am prepared to allow them, are primarily directed to obtaining evidence relating to the funding of this and the other proceedings. That is closely connected to the financial position of MCI and its ability to fund the proceedings. The refusal of MCI to give any information as to its financial status and ability to fund this proceeding, and therefore the other proceedings, has indirectly given rise to the subpoenas to Mr Elliot, BSL and Portfolio Law regarding the funding of this and the other proceedings and any interest they have in that funding.

137 I do not consider that the correspondence between the solicitors for the parties preceding Myer's application yielded all necessary information for Myer to prosecute its abuse of process. I further am of the view that asking for the kind of detail sought in the subpoenas and Notice by correspondence before the issue of the subpoenas and Notice would have produced a negative and resistant response from MCI and any attempt at a cooperative approach was most unlikely to be useful. The material that I have held to be properly the subject of the Notice and subpoenas is most unlikely to have been given voluntarily and is reasonably necessary to the application.

138 I am therefore not satisfied, on the material before me, that Myer is in breach of the provisions of ss 16, 19, 20 and 24 of the CPA in issuing the Notice and subpoenas.

139 It is worth recalling that r 42.04 of the Rules provides that the Court may, on its own motion, or on the application of a party set aside a subpoena in whole or in part. The result of the these reasons is that some categories of documents the subject of the Notice and the subpoenas are abandoned or set aside in part, but otherwise there is a legitimate forensic purpose for the production of the documents the subject of them:

(i) categories 1, 2, 3, 4, 5 and 8 are allowed;

(ii) category 7 is allowed to the extent that it relates to communications between MCI and BSL regarding the funding of the proceeding. However, the expression 'other entities related to Mr Elliott' is too wide and is not allowed;

(i) categories 1, 2 are allowed with the addition of the words in each category 'other than documents recording his shareholding or holding of office in the plaintiff';

(ii) category 3 is allowed in so far as the funding of this proceeding is concerned, however the funding of other representative proceedings between 2012 -2015 commenced by MCI is set aside;

(ii) category 2 (even with additional wording) and 3 (Myer does not press this category) are set aside;

(i) category 1 is disallowed (Myer does not press this category); and

(ii) category 2 is allowed to the extent that this relates to communications between Portfolio Law and BSL regarding the funding of this proceeding, however extending the category to 'any other proceeding involving MCI' is set aside as it is too wide.

[1] Affidavit of Andrew Morrison sworn 15 July 2015 ('Morrison Affidavit') at [11].

[2] The background facts are taken from the Morrison Affidavit and the exhibits to that affidavit.

[3] Morrison Affidavit at [5] and exhibit AM-1.

[11] Melbourne City Investments Pty Ltd v Leighton Holdings Ltd [2014] VSC 7 at [49].

[13] Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No. 3) [2014] VSC 340.

[19] Treasury Wine Estates Limited v Melbourne City Investments Pty Ltd [2014] VSCA 351 at [6] (2014) 318 ALR 121 ('Treasury appeal').

[20] Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited [2015] HCATrans 116.

[21] Melbourne City Investments Pty Ltd v Leighton Holdings Ltd [2015] VSC 119 at [13], [19] and [23].

[22] Melbourne City Investments Pty Ltd v Leighton Holdings Ltd [2015] VSCA 235.

[23] Melbourne City Investments Pty Ltd v WorleyParsons Ltd [2014] VSC 303.

[24] Walsh v WorleyParsons Ltd [2015] VSC 135 at [31] and [34].

[25] Melbourne City Investments Pty Ltd v WorleyParsons Ltd (No.2) [2014] VSC 523 at [3] and [50].

[26] See Walsh v WorleyParsons Ltd [2015] VSC 135.

[27] Ibid at [30], [37] and [46].

[30] Walsh v WorleyParsons Ltd [2015] VSC 135.

[31] See Bolitho v Banksia Securities Ltd & Others [2014] VSC 8; Bolitho v Banksia Securities Ltd & Ors (No.2) [2014] VSC 184; Bolitho v Banksia Securities Ltd & Ors (No.4) [2014] VSC 582.

[32] Bolitho v Banksia Securities Ltd & Ors (No.4) [2014] VSC 582.

[34] Morrison Affidavit at [58] and exhibit AM-26.

[35] Morrison Affidavit at [60] and exhibit AM-27.

[36] [2014] VSC 340.

[37] Morrison Affidavit at [61] and exhibit AM-27.

[45] Document is defined to include emails, correspondence, contracts, proposals, presentations, file notes, notes of meetings, payment records, receipts and all other recorded information.

[46] Referred to in the judgment of Almond J in Walsh v WorleyParsons Ltd [2105] VSC 135 at [30].

[47] [2014] VSC 582 at [7].

[48] Kennedy Taylor (Vic) Pty Ltd v Grocon Pty Ltd [1999] VSC 242; Re APCHL (No 3) [2013] VSC 154, [97]; Liberty Financial Pty Ltd v Scott [2004] VSC 382, [21] (Smith J).

[50] Commissioner for Railways v Small (2938) [1938] NSWStRp 29; 38 SR (NSW) 564; Burchard v MacFarlane [1891] 2 QB 241; National Employees' Mutual General Issurance Association Ltd v Waind & Hill [1978] 1 NSWLR 372.

[51] Burchell v Hill [2010] VSC 96, [15] (Mukhtar AsJ.

[54] Newnham v Davis [2010] VSC 13, [6] (Kaye J).

[55] Kennedy Taylor (Vic) Pty Ltd v Grocon [1999] VSC 242, [71] (Gillard J); Yunghanns v Candoora No.19 Pty Ltd [200] VSC 505, [11]-[12] (Byrne J).

[56] Yunghanns v Candoora No.19 Pty Ltd [2000] VSC 505, [11]-[12] (Byrne J).

[58] Burchell v Hill [2010] VSC 96, [20] (Mukhtar AsJ.

[59] Crown Joinery Pty Ltd v Lyleho Pty Ltd [2007] VSC 214 [31].

[60] Bailey v Beagle Management Pty Ltd [2001] FCA 60; (2001) 105 FCR 136; op cit Crown Joinery Pty Ltd v Lyleho Pty Ltd [2007] VSC 214 [31].

[61] [2011] VSC 56; See also Shaw v Yarranova Pty Ltd [2011] VSCA 55 [26]; R v Saleam [1999] NSWCCA 86 [11]; Commissioner of AFP v Magistrates' Court of Victoria & Ors [2011] VSC 0003 [28].

[62] [2007] VSC 214; Oswal v Carson, [2013] VSC 355 [18].

[63] 2015 VSC 153 at [55].

[65] In this case no documents have been produced in response to the subpoenas, so there is nothing to inspect.

[66] [1992] HCA 34; (1991) 174 CLR 509.

[67] [2006] HCA 41; (2006) 229 CLR 386.

[69] Transcript, 28 August 2015, p. 25.

[71] Myer submissions dated 25 August 2015 at [22].

[72] Walsh v WorleyParsons S CI 2014 04712, described in the Morrison Affidavit at [45]-[50].

[73] [2015] VSC 135.

[74] [2014] VSCA 351.

[75] Ibid at [9] citing Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 533, 543.

[76] Melbourne City Investments Pty Ltd v Treasure Wine Estates Limited [No 3] [2014] VSC 340, [7]-[8].

[80] Treasury Wine Estates Limited v Melbourne City Investments Pty Ltd [2014] VSCA 351, [8].

[82] Goldsmith v Sperrings Ltd [1977] 1 WLR 478, 489-90 (Lord Denning MR) ('Goldsmith'); Flower & Hart v White Industries (Qld) Pty Ltd [1999] FCA 773; (1999) 87 FCR 134, 150-1 ('Flower').

[83] Williams [1992] HCA 34; (1992) 174 CLR 509, 527, 530, 531; Maxwell-Smith v S & E Hall Pty Ltd [2014] NSWCA 146; (2014) 308 ALR 149, [41]; Paradise Grove Pty Ltd v Stubberfield [2001] QCA 117.

[84] [2014] VSC 340, at [6].

[86] [1992] HCA 34; (1991) 174 CLR 509.

[87] [2006] HCA 41; (2006) 229 CLR 386.

[88] [2015] VSC 135 at [78].

[89] Livingspring Pty Ltd v Kliger Partners [2008] VSCA 93; (2008) 20 VR 377 at [15].

[90] As the material before Almond J did as well: see Walsh v WorleyParsons at [67].

[91] [2015] VSC 135 at [71].

[92] Messade v Baires Contracting Pty Ltd [2011] VSC 56, [10].

[93] As revealed in Walsh v WorleyParsons.

[94] Referred to in the judgment of Almond J in Walsh v WorleyParsons Ltd [2105] VSC 135 at [30].

[96] Transcript, 28 August 2015 at p 42.

[98] Transcript 28 August 2015 at p 70.

[99] Bolitho v Banksia Securities Ltd & Ors (No.4) [2014] VSC 582.

[100] Morrison Affidavit exhibit AM-9.

[101] Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41.

[102] Bolitho v Banksia Securities Ltd (No 4) [2014] VSC 582, at[48] and [57].

[103] Morrison Affidavit, at [60] and exhibit AM-27.

[105] [2013] VSCA 337 at [13].

[106] [2015] VSC 49 at [57]-[58].

[107] Walsh v WorleyParsons [2015] VSC 135 at [92].