Wong v Sklavos

Sklavos v ACD 8 Before the primary judge, the Doctors contended that the subpoenaed documents were highly confidential and of only marginal or speculative relevance "in circumstances where the other specialist expertise, diligence, work ethic, competence and practices of the dermatologist will remain unknown." Dr Satchell claimed the subpoena addressed to him was too wide, oppressive, and sought documents that should be obtained from other parties. In addition, Dr Satchell contended that the attempt to obtain income tax returns in circumstances where the same information could not be obtained from the Australian Taxation Office constituted a form of abuse of process on the basis of public interest immunity. 9 After setting out the applicable legal principles (to be considered below), the primary judge found at [8]-[9]: 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. 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 The primary judge also rejected Dr Satchell's argument based on public interest immunity/subversion of the confidentiality regime of the taxation legislation at [12]; this issue was not pursued on the leave application. 11 The primary judge consequently dismissed the application and noted at [17] that if the parties could not agree on an appropriate confidentiality regime, one could be imposed upon them. She noted that the Doctors ought to be permitted to provide a redacted version of their tax returns excluding information not derived from the provision of dermatology services and that a limit should be imposed upon access to the material.

Consideration 12 Written submissions were provided by all parties except the College. Dr Satchell relied on the submissions of Dr Wong and the other Doctors and provided some additional submissions; for this reason I will generally not distinguish between the Doctors in the references below. When it is necessary to distinguish between the submissions, I will refer to submissions made on behalf of Dr Wong and the other Doctors in the Schedule as Dr Wong's submissions.

Test to be met for grant of leave 13 In Commonwealth v Construction, Forestry, Mining and Energy Union (2000) 98 FCR 31 (CFMEU) at [17]-[18] the Full Court (Black CJ, Tamberlin and Sundberg JJ) acknowledged that there are numerous cases in which a witness who is dissatisfied with the outcome of an application in relation to a subpoena has appealed with leave, and that a non-party has standing to do so. They went on to say at [20] that where a non-party seeks leave to appeal from an interlocutory judgment or order, the matters to be taken into account will include those that are customarily considered on an application for leave by a party in accordance with the guidelines referred to in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 (Decor) at 398-9. 14 The first limb of the Decor test is ''whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court". The second is "whether substantial injustice would result if leave were refused, supposing the decision to be wrong". The limbs of the test should not be compartmentalised: "[t]hey bear upon each other, so that the degree of doubt which is sufficient in one case may be different from that required in another. Ultimately, a discretion must be exercised on what may be a fine balancing of considerations." 15 The two limbs of Decor are cumulative, it is not enough to satisfy just one of them: see Rawson Finances Pty Ltd v Deputy Commissioner of Taxation [2010] FCAFC 139 at [5]; Nexus Energy Corporate Pty Ltd v Trident Australasia Pty Ltd [2010] FCA 1328 per Burchett J at [17]. 16 The Full Court (Dowsett, Foster and Yates JJ) in Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238 affirmed the Decor test at [26]-[28]. It went on to say at [29] that while the Decor test is appropriate for the general run of cases, it should not be applied as if it were a hard and fast rule. Each case must be considered on its merits. 17 In Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2011) 281 ALR 38 (Fortress Credit) at [32] the Full Court (Emmett, Nicholas and Robertson JJ) said that "it does not require much" for a non-party to obtain leave. This is a remark on which the Doctors sought to rely. It is important to bear in mind the context in which these words were said by considering the whole of [32] and [33] and the fact that the non-party in the substantive proceedings had not participated in the proceedings from which leave to appeal was sought. At [32]-[33], the Court said: 32. A person who was not a party to a cause can obtain leave to appeal from orders made in the cause. A person who, without being a party, is either bound by an order, or is aggrieved by it, or is prejudicially affected by it, or is sufficiently interested in it can appeal, but only with leave. It does not require much for such a person to obtain leave: see Re Securities Insurance Co [1894] 2 Ch 410 at 413-14. Leave to appeal is given, as a rule, if the person applying, though not a party to the proceeding, might properly have been made a party: see Cuthbertson v Hobart Corporation (1921) 30 CLR 16 at 25. 33. For example, leave to appeal may be given to a person who had not been heard and who was a potential beneficiary under a will: Re Markham; Markham v Markham (1880) 16 Ch D 1. Further, the recipient of a subpoena, being subject to a court order, has standing to apply for leave to appeal against a trial judge's refusal of a request for pseudonym orders, and such a refusal is an order against which an appeal can be brought: see Witness v Marsden (2000) 49 NSWLR 429; [2000] NSWCA 52; Campbelltown City Council v Vegan (2006) 67 NSWLR 372; 235 ALR 342; 95 ALD 681; [2006] NSWCA 284 at [62]. The witness has a direct interest in the matter sought to be challenged. 18 In contrast, the Doctors fully argued their case to have the subpoenas set aside before the primary judge. In my view the Full Court's language in [32] does not imply that a less arduous standard than that suggested by Decor would apply to the Doctors' leave application. 19 This is consistent with the approach of Murphy J in Georges v Seaborn International Pty Ltd (Trustee) [2012] FCA 294 (Georges). In Georges, non-parties and parties sought leave to appeal from directions given by the Court to liquidators; Murphy J accepted the view that directions under s 511 of the Corporations Act 2001 (Cth) or s 63 of the Trustee Act 1958 (Vic) were interlocutory in nature and that leave to appeal was required. 20 A non-party (Eagle), who had not appeared at the hearing for directions to the liquidator, and another non-party (Mr Scolaro), who had provided written submissions at the hearing for directions, sought leave to appeal. They were clients of the company in liquidation. At [35] of Georges, Murphy J used the language of the last two sentences of [32] of Fortress Credit, and at [36] of Georges, Murphy J quoted the whole of [35] of Fortress Credit in which the Full Court said: On an application for leave to appeal by a non-party, bearing in mind the widely different circumstances in which an application by a non-party for leave to appeal may be made, several matters are likely to be relevant to the exercise of the discretion, as follows: • first, the nature and subject matter of the proceeding, including whether it concerns public rights or private rights and, if the latter, whether only personal remedies or proprietary remedies are involved; • second, whether at first instance the applicant could have but did not seek to be made a party or to be heard, and whether the applicant could or should have been made a party; • third, the rights, interests, liabilities and duties of the applicant that would be affected, and the nature and extent of the effect on the applicant of the orders appealed from; • fourth, whether the applicant could commence a separate proceeding for the relief claimed and, if so, whether there would or might be a procedural or substantive difficulty arising from the existence of the judgment in respect of which leave to appeal is sought; and • fifth, whether the proposed grounds of appeal are at least arguable, in the sense that there is a reasonable prospect of success. 21 Justice Murphy then quoted [20] of CFMEU and went on to conclude at [37] that Eagle and Mr Scolaro must meet the test in Fortress Credit as well as the test in Decor, noting that "there is an overlap insofar as the appeal must be at least arguable". 22 In relation to the position of the liquidators (who had been parties at first instance), at [34] of Georges Murphy J referred to the test in Decor and went on to note that leave is more readily granted where the decision, if allowed to stand, will have the practical effect of determining the claim of a party to relief: see also Johnston v Cameron (2002) 124 FCR 160 at [8] per Branson J. 23 I consider that the test in Decor is relevant to the decision whether to grant leave to the Doctors to appeal Sklavos v ACD. The considerations in Fortress Credit at [32] and [35] are generally not relevant to this application, the Doctors having fully argued their application to have the subpoenas set aside before the primary judge.

When will a subpoena be set aside? 24 A subpoena will be set aside to prevent an abuse of the court's process. The power to control and supervise the court's process is directed to preventing injustice. In this context, injustice is not simply a question of the true purpose for which the issue of the subpoena was procured, but also the effect or impact of the subpoena on the person to whom it was issued: see Campaign Master (UK) Limited v Forty Two International Pty Ltd (No 4) [2010] FCA 398 (Campaign Master) at [37] per Yates J; Trade Practices Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90 at 102; Hamilton v Oades (1989) 166 CLR 486 at 502.

Is the decision attended by sufficient doubt? 25 The Doctors claim that the primary judge erred in dismissing the application to set aside the subpoenas because the material which responds to the subpoenas does not have "apparent relevance" to an issue in the proceedings and they are oppressive. The Doctors have not suggested that Dr Sklavos has any ulterior purpose in issuing the subpoenas. 26 Dr Wong admits that the primary judge correctly adverted to the principle in R v Barton [1981] 2 NSWLR 414 at 420 that in considering the type of documents sought under a subpoena and how they may bear upon an issue in the litigation the Court will act realistically and not require the production of documents which would only have a bearing on an "unreal, fanciful or speculative" basis. 27 The Doctors refer also to Yates J's summary in Campaign Master at [39] of the formulations of the test which have been adopted in determining "apparent relevance": In relation to the first ground, Beaumont J in Arnotts (at 103) posed questions to the following effect: Does the material sought have an apparent relevance to the issues in the principal proceeding, that is, is adjectival, as distinct from substantive, relevance established? Does the subpoena have a legitimate forensic purpose to this extent? In a similar vein, Waddell J in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 927 invoked the question whether the material that is sought "is reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case": see also Seven Network Ltd v News Ltd (No 5) (2005) 216 ALR 147; [2005] FCA 510 at [10]; Cosco Holdings Pty Ltd v Cmr of Taxation (1997) 37 ATR 432 at 439-440. In Tamawood Ltd v Habitare Developments Pty Ltd [2009] FCA 364 at [13] and [35]-[38] Collier J addressed the issue by asking whether it appears to be "on the cards" that the document sought will materially assist the party on whose request the subpoena has been issued: see Alister v R (1984) 154 CLR 404; 51 ALR 480 at 414 per Gibbs CJ. 28 Despite the primary judge's express finding at [8] that "[w]hat 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" the Doctors say that the primary judge did not ultimately apply that test in her consideration at [8] of Sklavos v ACD quoted at [9] above. 29 The Doctors note that at no time did the primary judge find that the subpoenaed documents were "reasonably likely" in some way to add to the relevant evidence in the case or that it was "on the cards" that they would materially assist Dr Sklavos. Rather, the primary judge considered the documents "may be relevant" regardless of whether at trial they had "ultimate probative value" and taking into account the fact that the accountant's opinion may be "ultimately of little weight". The primary judge acknowledged that those factors could not currently be known. 30 Dr Wong says that on that standard a judge would not be required to apply the "unreal, fanciful or speculative" test at the time of the application to set aside a subpoena but rather at the time of trial in light of all of the evidence. The Doctors argue that the consequence of this approach would be that subpoenas would rarely, if ever, be set aside on the ground of apparent relevance. They further submit that it is inconsistent with s 55 of the Evidence Act 1995 (Cth) (Evidence Act) which determines relevance of evidence by whether, if it is accepted, it could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue. 31 I do not consider Dr Wong's reading of the primary judge's reasons to be fair; the primary judge's comments reflect the reality that at the time of issuing a subpoena it is not possible to know what materials which respond to a subpoena will be admitted into evidence, or the ultimate weight evidence may have at trial. An acknowledgement that a document obtained in response to a subpoena may ultimately have little probative value at trial is not the same thing as saying that it is unlikely to have any probative value at all or that it is not adjectivally relevant. 32 Having said that, I accept the Doctors' submission that the party issuing the subpoena bears the forensic onus of demonstrating the relevance of those documents: see Santos Ltd v Pipelines Authority of SA (1996) 66 SASR 38 at 52. 33 The Doctors submit that a statement in Ms Costigan's affidavit of 30 April 2014 to the effect that the subpoenaed documents would be given to a forensic accountant is not sufficient to discharge this burden in circumstances where: it is not clear how the 11 dermatologists have been selected from the population of practising dermatologists; it is not clear how a sample of 11 from that population could be statistically significant; it is not clear how earnings of dermatologists with different backgrounds, specialisations, work ethics and competence could be probative of Dr Sklavos' future earnings; and the credentials, and even the name, of the expert have not been disclosed. 34 The Doctors rely on the decision of Black J in Re North Coast Transit Pty Limited [2013] NSWSC 1912 (North Coast Transit) at [32] and [39]. The issue in that case was whether information about four out of eight bus contracts (the subject of a subpoena) which had been awarded in the past was relevant to the valuation of shares in an operator which might tender for contracts in the future, by reference to the operator's prospects of success in those tenders. Justice Black did not accept that it was "on the cards" that the subpoena would produce admissible evidence where the valuation expert to whom the documents would be made available, although an experienced valuer and accountant, had not been shown to have expertise in market conditions in the bus industry in New South Wales or the price at which tenders might be made. His Honour went on to note the need to establish expertise before expert opinion would be accepted under s 79 of the Evidence Act: see North Coast Transit at [33]-[35]. Dr Sklavos argues that the circumstances of North Coast Transit should be distinguished from the present case on the basis that possible winning of future contracts was patently outside the usual expertise of a valuation expert but an opinion concerning future earnings would be within the normal expertise of a forensic accountant. I do not accept this distinction; Black J's statements of general principle are applicable to this case. 35 In her affidavit of 30 April 2014, Ms Costigan has set out the basis on which the Doctors were selected (see [5] and [6] above). However, Ms Costigan has not provided any evidence: a. about the identity, expertise or experience of the person she has identified to provide a report (other than that he is an accountant); b. that the proposed expert asked for information of the kind now sought from the Doctors or that he would find any of it useful in providing a report relevant to Dr Sklavos' loss of earnings or earning capacity; c. concerning whether the sample size of 11 or the size of the subgroups identified by Ms Costigan (see [5] above) or their composition is adequate to make relevant findings. Even if, as submitted from the Bar table, the recently admitted Doctors are contemporaries of Dr Sklavos, it is not clear how two of the doctors at the peak of their profession with over ten years of experience and two Doctors with between five and ten years of experience (Experienced Doctors) were selected from among Fellows of similar experience or what can be legitimately extrapolated from their information; d. about the methodology which the expert would employ with information derived from the material obtained under the subpoenas; e. of how the expert would take account of differences in the specialist expertise and experience, diligence, work ethic, competence and practices of the dermatologists. It is difficult to understand how this could be done under a regime of anonymity such as that proposed by the primary judge at [17] of Sklavos v ACD and in the absence of evidence about the individual Doctors. 36 Where it is proposed to issue subpoenas to gather raw data to produce for an expert's consideration, unless the person providing the report is shown to have appropriate expertise and has given evidence that the material sought by the subpoenas would be useful or necessary in preparing the report (including that the sample is meaningful and sufficiently comparable to support analysis of the kind proposed), it is arguable that the prospect of the information having probative value is so remote and uncertain that its "apparent relevance" is speculatively based, albeit that it might not be entirely fanciful. It is difficult to see, for instance, that the material sought under the subpoenas issued to the Experienced Doctors is "reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case". Without evidence from the expert, it is not clear that information about the income of any individual dermatologist has probative value, although it is likely that such information from an appropriately defined sample group may do so. For this reason I consider that the primary judge's decision is attended by sufficient doubt to warrant leave to appeal being granted, subject to consideration of the second limb of Decor. 37 Further, it is arguably appropriate that the matters listed at [35] be established before subpoenas are issued having regard to the overarching purpose of civil litigation practice and procedure of facilitating the just resolution of litigation according to law as quickly, inexpensively and efficiently as possible: s 37M of the Federal Court Act 1976 (Cth) (FCA). It is more likely to avoid unnecessary intrusion into the privacy of those to whom the subpoenas are issued. It is also likely to avoid unnecessary cost, delay and possible duplication of effort as a consequence of poorly focused subpoenas or selection of a sample group which is the wrong size or a sample group which contains people whose information the expert would not have sought or contemplate using. Of course, it is true that despite consultation with the expert, other subpoenas might need to be issued for the purposes of the report or the trial judge might nonetheless ultimately reject the expert's evidence for a range of reasons, but the risk is significantly reduced if the expert's requirements have been taken into account before the subpoenas are issued and the primary judge has evidence of that when application is made to have the subpoenas set aside. 38 The relevance of s 37M of the FCA to this issue was taken into account by Robertson J in McHugh v Australian Jockey Club Limited (No 2) [2011] FCA 724 (McHugh) at [10]. In McHugh, Robertson J set aside a subpoena in so far as it sought taxation returns from a stranger to the McHugh proceedings because they were not shown to be sufficiently relevant to his motive for participating in a particular business. 39 As I am satisfied that it is arguable that the apparent relevance of the Doctors' information is speculatively based so that the primary judge's decision is attended by sufficient doubt for a grant of leave (subject to the second limb of Decor), it is unnecessary for me to consider further the Doctors' arguments that compliance with the subpoenas would otherwise be oppressive or unfairly burdensome.

Would substantial injustice result if leave were refused, supposing the decision to be wrong? 40 Both limbs of Decor must be satisfied before leave to appeal is granted, but the limbs of the test should not be compartmentalised. 41 The information required by the subpoenas appears to be limited in time and scope so that it would not be oppressive for that reason to require its production. The primary judge has indicated that orders can be made appropriately to compensate for costs incurred and the primary judge is willing to impose a confidentiality regime if the Doctors and Dr Sklavos cannot agree one. 42 However, the Doctors are strangers to the case, and their privacy is being intruded upon in a substantial way as they are being asked to provide confidential personal information about earnings from their practices for the last three years (in most cases). The leave decision is final in relation to their claims. 43 Although the Doctors' names and non-dermatology related income information will be redacted, the sample group in many cases is just two Doctors and there has been no justification given for the selection of those two Doctors (among the possible candidates for selection) in that category. Although there is no evidence about how the expert would produce his report, if it is presented by category of experience it is likely that there will still be a high measure of transparency of the earnings of the Experienced Doctors' dermatology practices, even if income is aggregated. If the information is broken down even further, for instance by reference to public or private practice, it may be that the characteristics of the information disclose its provenance, especially in relation to the Experienced Doctors. Dr Sklavos has not precluded the possibility that he will seek to tender the documents which respond to the subpoenas. The Doctors have indicated in correspondence between the legal representatives of the parties that they do not wish their earnings information to be available, even to the College. 44 While the Doctors concede that confidentiality of documents sought by subpoena is a relevant but not determinative factor in deciding whether a subpoena should be set aside, it is also not irrelevant: Apache Northwest Pty Ltd v Western Power Corporation (1998) 19 WAR 350 at 380-381 (Apache Northwest); Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 588 (Dorajay) at [36] per Stone J. Where the relevance of the documents being sought is disproportionate to the benefits production would have for resolution of the issues in the case, a subpoena should be set aside: see Read v Chang [2010] FamCA 876 [7]-[8]. 45 By parity of reasoning, as I consider that the information obtained from the Doctors may be relevant only on a speculative basis for the reasons at [33]-[39] above, the intrusion into their privacy by being required to produce confidential personal financial information in relation to their dermatology practices for a three year period would work a substantial injustice on them as strangers to the substantive litigation. However if an appropriate expert were to provide an opinion about appropriate sample size and composition and the nature of the information which would be useful to him or her, the apparent relevance of that information to the resolution of the issues in the substantive litigation may well overbear any doctor's interest in protecting the confidentiality of the information.

Conclusion 46 I will grant leave to appeal to the Doctors and order that costs of the application be reserved.

I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.

Second Applicant DR RENAE HOWES Third Applicant DR GEETHA SIVAPIRABU Fourth Applicant DR SAXON SMITH Fifth Applicant DR ADRIAN LIM Sixth Applicant DR ANDREW MING Seventh Applicant DR ANIL KURIEN Eighth Applicant DR STEPHEN SHUMACK Ninth Applicant DR LIANG JOO LEOW Tenth Applicant DR ALEXANDRA VAROL