Sklavos v Australasian College of Dermatologists [2014] FCA 476 | Case summary

REASONS FOR JUDGMENT 1 These reasons for judgment concern interlocutory applications by 11 recipients of a subpoena for the production of documents seeking orders that the subpoenas be set aside. 2 The proceeding is between the applicant, Angelo Sklavos, and the respondent, the Australasian College of Dermatologists (the College). The applicant is a medical practitioner who wishes to be admitted as a Fellow of the College. Dr Sklavos alleges unlawful conduct by the College in refusing to admit him as a Fellow involving breaches of contract, negligence, unlawful restraints of trade, and unlawful discrimination. In his statement of claim filed on 5 June 2013, Dr Sklavos alleges that he has suffered and will continue to suffer economic loss as a result of the unlawful conduct, including "the difference between his earning capacity as a Fellow and specialist dermatologist and his earning capacity as a Trainee and/or general practitioner". 3 Directions have been made for Dr Sklavos to file and serve his evidence in chief. Dr Sklavos wishes to adduce evidence from an accountant dealing with the alleged loss arising from "the difference between his earning capacity as a Fellow and specialist dermatologist and his earning capacity as a Trainee and/or general practitioner". Each subpoena the subject of challenge is addressed to a dermatologist at a particular stage in his or her career. Each subpoena seeks documents, including income tax returns, disclosing the income earned by the doctor and/or any practice company or other entity through which that doctor provides dermatology services for the financial years from 2010/2011 to date. 4 Unsurprisingly, all of the subpoena recipients contend that the documents sought to be produced are highly confidential, as they disclose their private and personal financial affairs. They also contend that the documents have only possible marginal and speculative relevance to the proceeding. The documents are sought for the purpose of an expert preparing an expert report. The documents will disclose only income and expenses of dermatological practice by a dermatologist not necessarily comparable to Dr Sklavos and in circumstances where the other specialist expertise, diligence, work ethic, competence and practices of the dermatologist will remain unknown. The documents form some kind of compulsory survey of income and expenditure of a very limited sample of dermatologists and thus the probative weight of any expert evidence based on the documents, according to the subpoena recipients, would itself be doubtful. Information relating to the income of dermatologists can be obtained from other sources, a factor said to be relevant to the balance required to be struck between the competing interests of a stranger to litigation and the interests of a litigant to obtain relevant information. One recipient, Dr Satchell, also contends that the attempt to obtain income tax returns in circumstances where the same information could not be obtained from the Australian Taxation Office (ATO) constitutes a form of abuse of process by subverting the scheme established by the Taxation Administration Act 1953 (Cth). Dr Satchell also contends that the subpoena addressed to him is too wide, oppressive and seeks documents that should be obtained from other parties. 5 The general law relating to the setting aside of a subpoena is not in doubt. As set out in Waind v Hill and National Employers' Mutual General Association Ltd [1978] 1 NSWLR 372 at 382 a subpoena may only be issued for the purpose of litigation and not for any ulterior purpose, and the documents sought to be produced must have apparent relevance to the litigation. In R v Barton [1981] 2 NSWLR 414 at 419-420, Cantor J dealt with a subpoena to a third party, saying: It seems to me that there is involved within this field the resolution by the court of competing interests. To require a witness to produce to the court his documents in proceedings in which he is not a party and in which he has no interest must involve an invasion of his private rights including his right to privacy and his right not to be required to busy himself seeking, identifying, bringing together and producing his documents to the court. The other right which seems to me to be involved is the right of a party to litigation to obtain access to documents, even where they are in the possession of a stranger, in order to further the ends of justice in those proceedings so that he may advance his case on all issues in the case. These respective rights of the stranger and the litigant will generally conflict. In many instances a mere consideration of the nature of perusal of documents in such a subpoena will disclose that they have or may well have relevance to the issues in the litigation. On the other hand consideration of the nature of the documents sought in such a subpoena may indicate with equal clarity that on the face of the subpoena the documents do not and can not bear any relevance to the issues in the litigation. There is a significant area between these two extremes which is the area in which, it would appear, there is no simple guideline to follow. What is required, as I have stated, is a balancing of the competing and generally conflicting interests of the party to the proceedings and the stranger to the proceedings. The Court will consider the nature of the documents specified and will determine as best it can the issues likely to arise. If it appears an issue may arise in litigation to which the documents may relate than I believe the right of the litigant should prevail over the right of the witness. Unless it appears that an issue may arise to which the documents may relate then the right of the witness will prevail. It will be noted I do not postulate that the issue must arise in the litigation nor do I postulate that the documents must relate to an issue. It seems to me on this first step in relation to the subpoenaing of documents from a stranger the court will consider possible issues. This does not include fanciful issues. The court should take a realistic attitude. Similarly in considering the type of documents and how they may bear upon an issue in the litigation the court will act realistically and not require the production of documents which only would have a bearing upon an issue on an unreal, fanciful or speculative basis. It is in this fashion that I propose to consider the question of striking out these subpoenas or paragraphs of the schedules to these subpoenas on the basis of their relevance to the trial. It follows that I do not accept the argument…that every document which may have any conceivable relationship to an issue or to some matter that may arise in the trial must be produced by strangers to the trial in response to a subpoena to produce. 6 This expression of the principle, "[i]f it appears an issue may arise in litigation to which the documents may relate", is the test of apparent relevance routinely applied in order to determine whether a subpoena has been issued for a legitimate forensic purpose. However, if the potential relevance is dependent upon "an unreal, fanciful or speculative" view, the principle will not be satisfied and the subpoena may be set aside. 7 It will be apparent from this that although the concerns of the recipients about the private nature of the documents and confidentiality are understandable, confidentiality is not of itself a reason to set aside a subpoena (Hospitality Group Pty Ltd v Australian Rugby Union Pty Ltd (2001) 110 FCR 157; [2001] FCA 1040 at [80]-[83]), although it may necessitate the agreement or the imposition of an appropriate regime for confidentiality (Mandic v Phillis [2005] FCA 1279 at [54]). The Full Court of the Supreme Court of Western Australia in Apache Northwest Pty Ltd v Western Power Corporation (1998) 19 WAR 350 at 380-381 said this: The next issue is that relating to confidentiality. There is, no doubt, some need in this matter to balance competing interests. In the end, however, the public interest in the administration of justice should prevail - "[T]he risk to the confidentiality of the information must be tolerated in the interests of the administration of justice", per King CJ in Alliance Petroleum Australia NL v The Australian Gas Light Company (supra), at 239, and see also at 238-239. … Her Honour, rightly in our view, found herself unable to ascribe any public interest to the confidentiality of the documents in question in the present case, however much it may be in the appellants' individual interests. She did, however, accept that, although, standing alone, confidentiality is not a ground for refusing to issue, or for setting aside, a subpoena, it is a factor which is to be taken into account, together with those tests for oppression which are determined by reference to the breadth of the subpoena, the definition of documents involved and the type and degree of burden placed upon those to whom the subpoena is addressed. She also accepted that the relevance of the confidential documents being sought to the issues in the arbitration is a further factor. 8 In the present case I am satisfied that the test of apparent relevance is met. Dr Sklavos wishes to prove alleged loss. The difference in income between what he says he would have earned but for the unlawful conduct and what he will now earn if not admitted as a Fellow is an arguable category of loss. The income of other dermatologists may be relevant to that issue. I accept that I cannot now assess the ultimate probative value of the documents required to be produced. It may be that the accountant's opinions are ultimately of little weight because allowance has not or cannot be made for all of the potential differences between what would have been Dr Sklavos' position and the position of any of the 11 dermatologists who have received a subpoena. It may be that I am persuaded the sample is too small to be meaningful. None of these things can currently be known. What I do know now is that documents disclosing the income and expenditure of any dermatologist in Sydney may be relevant to Dr Sklavos' case in a manner which is not unreal, fanciful or speculative. That is sufficient to require production. It does not matter that the documents are sought for the purpose of provision to an expert. Apparent relevance does not require that the documents themselves be directly admissible. There is nothing improper in using the subpoena process for the purpose of obtaining documents relevant to expert evidence intended to be adduced in a proceeding. 9 When I weigh up these conclusions with the facts that: - (i) if a suitable confidentiality regime is not agreed, it can and will be imposed by order of the court (a matter dealt with below in more detail), and (ii) the documents sought are limited in time and scope, it seems to me that consistent with authority the interest of Dr Sklavos in production of the documents must prevail over the competing interests of the 11 dermatologists to keep their private financial affairs free from any intrusion. 10 Insofar as more might need to be said in this regard: (1) I do not accept that any subpoena is oppressive. The documents sought are limited in scope and by time. The fact that the recipient may need to contact an accountant for some of the documents does not indicate oppression or undue width (the latter observation being subject to a qualification set out below). (2) I do not accept that it is impermissible for the subpoena to require production of documents of any company, trust, partnership or other legal entity which has derived income as a direct result of the recipient providing dermatology services. It is not essential that the subpoena be directed to the company, trust, partnership or other legal entity. The recipient may have in his or her possession, custody or control such documents and, if so, they are required to be produced. (3) I do not accept that the fact that one of the recipients has additional expertise and practices outside Sydney for two days a week displaces the apparent relevance of the documents. Again, it is not possible to weigh the ultimate probative strength this evidence might carry. Apparent relevance is all that is required and these distinguishing features are insufficient to undermine the apparent relevance of the documents. (4) I do not accept that the inability of the parties to agree a confidentiality regime thus far is material. Nor do I think it material that there is some evidence indicating that there might be future disputes about the costs of compliance. The recipient is entitled to apply for an order against Dr Sklavos to pay money over and above conduct money in respect of loss and expense reasonably incurred in complying with the subpoena (see r 24.22 of the Federal Court Rules 2011 and para 11 of the notes to each subpoena). (5) I do not accept that the same or sufficiently similar information can be obtained from other sources. The evidence does not permit that inference to be drawn. It is apparent that some information can be obtained but the information is limited in scope. Even if such information could be obtained by other methods, that would not of itself necessarily mean the subpoenas constitute an abuse of process. 11 The one qualification is that paragraph 2 of each subpoena is not limited to documents relating to income derived from the provision of dermatology services. However, the legal representatives for Dr Sklavos have indicated that this is how paragraph 2 should be read. In these circumstances, there is no utility in setting aside paragraph 2 on the ground of inappropriate width. Paragraph 2 should be taken to be limited in the way indicated by the legal representatives for Dr Sklavos. 12 This leaves the issue of abuse of process on the grounds of public interest immunity/subversion of the confidentiality regime in the taxation legislation. As noted during the hearing, I do not see how the principles of public interest immunity are engaged. Leaving aside the specific provisions of the taxation legislation, there is no particular public interest which is engaged other than the understandable interest of people not to have their private financial affairs disclosed to anyone not of their choosing. The observations in Jacobsen v Rogers (1995) 182 CLR 572 at 589-590, to which reference was made, concern production by the government which has required the information to be provided. While public interest immunity extends beyond the Crown and its categories are not closed, I remain unable to see how the principle would be engaged in these circumstances leaving aside the provisions of the taxation legislation. The problem is exposed in the further submissions for Dr Satchell. The contents of Dr Satchell's tax returns cannot seriously be said to require protection from disclosure on a public interest ground. Dr Satchell's interest in protecting the documents from disclosure is private. Leaving aside the taxation legislation, there cannot be any suggestion that the class of documents is one warranting protection from disclosure. It is said for Dr Satchell that because of the taxation legislation the documents are in a class warranting protection from disclosure to persons who have no legitimate reason to access them. Dr Sklavos, however, does have a legitimate reason to access the documents - his right to obtain by proper process material relevant to his case. Further, it is difficult to see any policy reasons to conclude that individual tax returns are a class of documents that should be kept secret in the public interest in any manner over and above that for which the legislature expressly has provided in the taxation legislation. 13 Accordingly, it is the confidentiality provisions of the Taxation Administration Act, and the fact that a person is bound to lodge a tax return disclosing financial information, which create the potential abuse of process; but those circumstances do not attract public interest immunity to the documents on the basis of contents or class. In terms of potential abuse of process, it is plain that Dr Sklavos could not by subpoena obtain the same information from the ATO and, indeed, it would be an offence for any taxation officer or person deriving information from the ATO to disclose that material. The submission for Dr Satchell is that this regime places a high value on the confidentiality of financial information produced under compulsion by a person to the ATO. For the same information to be obtained by subpoena to the individual, it is submitted, is an abuse of process because it subverts the statutory scheme and the public interest in confidentiality which that scheme serves. 14 Because this argument was raised without notice to Dr Sklavos' legal representatives, I gave them the opportunity to file an additional submission addressing it, to which a submission in reply was then filed by Dr Satchell for which leave was also granted. The further submissions for Dr Sklavos contended that: - (i) there is no public interest other than that which is derived from the provisions of the taxation legislation, (ii) the taxation legislation protects from disclosure taxation information which has been provided to the ATO, and thus the relevant public interest relates to the regulation of the conduct of the ATO and those who have derived the information through the ATO, (iii) the taxation legislation does not protect a person from a subpoena requiring production of documents by the person about their financial affairs, (iv) there is no basis to infer that the taxation legislation is intended to provide such protection so as to give rise to an abuse of process claim as presently made, (v) no authority has been cited in support of the claimed protection by public interest immunity or abuse of process, and the one case relied upon, Jacobsen v Rogers (1995) 182 CLR 572, relates to a different issue, being disclosure of personal information obtained by a government department under powers of compulsion by that or another government department, and (vi) there are numerous examples of cases in which production under subpoena of income tax assessments has been required. 15 Leaving aside the many cases in which parties (in contrast to strangers to the litigation) have been required to produce tax returns, I find these submissions persuasive. While I understand the concerns of the subpoena recipients about the confidential nature of documents disclosing their personal financial affairs, and consider that such confidentiality should be protected insofar as practicable, I do not accept that the subpoenas constitute an abuse of process, that the documents sought to be produced can be the subject of claim for public interest immunity, or that the balance between the rights of the recipients as third parties to the litigation concerned to protect their privacy can outweigh the right of Dr Sklavos to obtain information directly relevant to the case he wishes to run at the hearing. While I accept the further submission for Dr Satchell that the purpose of the taxation legislation is to prevent disclosure of taxation information by or as derived from the ATO, that is not the same purpose as preventing a person requiring relevant material for litigation from seeking to obtain such information directly from the person in question. This does not undermine the objective of the confidentiality provisions of the tax legislation. To so conclude would be to expand the effect of that legislation beyond the terms of the statute, which I do not consider permissible or warranted. It is one thing for tax information held or derived from the ATO to be protected from disclosure. It is another for a person, whether or not a party to litigation, to be protected from any obligation to produce apparently relevant material on subpoena merely because that information could not be obtained from the ATO. The legislation simply does not go that far or provide a proper basis for a conclusion that it would be inconsistent with the legislation to require such disclosure by the person. Further, unlike the ATO or a person who derived the information from the ATO, the taxpayer can ensure their private information is protected by an appropriate confidentiality regime (see below). Contrary to the further submissions for Dr Satchell, this is not a case of the legislature not having turned its mind to every possible abuse of process. It is a case where the alleged abuse of process is based on an over-expansive view of the legislative purpose. I also do not consider the fact that, on analysis, the submissions for Dr Sklavos did not identify a case similar to the present (that is, involving non-parties) is material. Apart from apparent relevance, the issue is one of principle. 16 There are some matters which require additional comment. 17 Given the nature of the documents sought I should indicate that if a suitable confidentiality regime cannot be agreed, then I would impose such a regime. Despite the submissions for Dr Sklavos to the contrary, I consider that the regime should permit the subpoena recipients to provide a redacted version of their tax return and other financial information so that what is disclosed is information relating to their income and expenditure derived from the provision of dermatological services. A tax return, for example, will contain many matters irrelevant to that income and expenditure. The recipient should not be subjected to exposure of that irrelevant information even to a lawyer for Dr Sklavos. Further, if any recipient wishes, they should be able to retain anonymity in the sense that their name may be redacted from any document provided that, through the method of production, the source of the documents can be ascertained. There should be a limit on the persons who may access the documents, in the first instance at least access being limited to the solicitor and counsel for Dr Sklavos and the accountant giving evidence. While application may be made in the future for Dr Sklavos to inspect one or more of the documents, I see no reason why he should have an unfettered right to do so. If Dr Sklavos wishes to see any of the documents, specific application explaining why that is necessary should be made. A regime should be put in place to limit the number of copies which may be made of any document, to record the number of copies made, and for all copies to be returned to the relevant recipient at the conclusion of the proceeding. I expect the parties to be able to work out a confidentiality regime to this general effect. 18 In respect of the costs of compliance, I do not see any need for a particular order at this stage. If costs cannot be agreed then, as noted, the recipient of the subpoena may apply for an order at that time. 19 For these reasons, the interlocutory applications to set aside the subpoenas must be dismissed. I will hear the parties about costs. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

Sklavos v Australasian College of Dermatologists

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