Yunghanns v Candoora No 19 Pty Ltd

2. Again, the parties to the Yunghanns litigation return to the court over issues as to the production of documents. Before the court on this occasion is a summons filed by Candoora on 9 November 2000 in the Candoora proceeding addressed to Mr Peter Yunghanns seeking discovery of a number of documents or classes of documents. In the same proceeding Candoora has on 8 November filed two subpoenas for production directed to Tenet Pty Ltd and Kremfour Pty Ltd and on 9 November a subpoena for production directed to Mr Peter Yunghanns. To those subpoenas notices of objection have been received as follows. To each of the Kremfour subpoena and the Tenet subpoena a notice of objection filed on 17 November 2000 on behalf of William Yunghanns and a notice of objection filed on 16 November 2000 by the person named. To the Peter Yunghanns subpoena a notice of objection has been filed on 16 November 2000by him.

6. At the outset, counsel for William Yunghanns submitted that all of the subpoenas should be set aside because his client had not been "forthwith" served with the Peter Yunghanns subpoena pursuant to Rule 42.10(4). This submission must be understood in the context of this case. William Yunghanns, an infant of some eight months of age, is conducting this litigation through a litigation guardian, his father, Mr Peter Yunghanns. Mr Peter Yunghanns has filed an objection to the subpoena directed to himself. The effect of the non-compliance with Rule 42.10(4) suggested on behalf of the child is that Mr Peter Yunghanns as his litigation guardian has been unaware of the process directed to himself and has, therefore, been denied, on behalf of his son, the opportunity to object to the inspection of the documents pursuant to Rule 42.10(9). In the circumstances, it was submitted, that pursuant to Rule 2.01(2)(b) all three subpoenas should be set aside.

9. I stated in the course of argument that, accepting that this might in certain circumstances warrant the setting aside of a subpoena, a point about which I have serious doubts, I would not in this case set aside all of the subpoenas on the suggested ground. If prejudice were shown I would give to those advising the plaintiff an adjournment of the Peter Yunghanns subpoena to enable them to seek instructions from their infant client. Counsel for the plaintiff sought about a week to consider his position and, later, withdrew this application. Accordingly, I refused the strike-out application.

12. Counsel for William Yunghanns next submitted that the Kremfour and Tenet subpoenas should be set aside because they were not in accordance with Form 42E or Form 42F as required by Rule 42.10(3). The disconformity relied upon was a failure to include a notice to a party to the proceeding of its right to object to inspection. Notwithstanding this deficiency, the solicitors for William Yunghanns have somehow managed to prepare a notice of objection to each of the two company subpoenas on 16 November 2000, the same day as the notices of objection were filed on behalf of the persons named themselves. Regrettably, perhaps due to some oversight or inefficiency on their part, these notices prepared by the solicitors for William Yunghanns were not filed until the following day, a day later than the time prescribed by Rule 42.10(8). In the circumstances, no good reason has been shown to strike out the Tenet and Kremfour subpoenas and no incurable prejudice has been shown to have been suffered by William Yunghanns with respect to the Peter Yunghanns subpoena. I rejected the application for William Yunghanns.

15. I gave to counsel for Williams Yunghanns leave to rely upon the grounds of objection filed by his client in respect of the Kremfour and Tenet subpoenas notwithstanding that they were filed late. It should be noted that, consonant with Rule 42.10(9), the objection in each case is to Candoora's inspecting the documents produced to the court by the persons named; it is not to their production.

18. The persons to whom the subpoenas were directed objected to production and inspection on two grounds: each of the subpoenas is an abuse of process and the documents referred to are not documents which relate to an issue for determination. In the case of the Peter Yunghanns subpoena there is a further ground that the documents are or may be the subject of legal professional privilege. No other ground was asserted or argued.

22. Particulars of the abuse alleged show this to be that the subpoena process is used as a substitute for non-party discovery; that it seeks production of documents including documents of which non-party discovery has been refused by the court; and that the documents are not required for evidence before the trial of the proceeding.

25. The first submission is based upon the established principle that the subpoena process may not be used for the purposes of discovery[1], a proposition which has been held to be applicable to the present Victorian Rules[2]. In Waind v Hill[3], Moffitt P made it clear that a subpoena offends this rule where, by its terms, it requires the person named to make a judgement as to whether the documents in their possession relate to the issues between the parties. A subpoena must, therefore, sufficiently describe the documents to be produced so as not to require the person named to make such a judgement.

28. In each of the Tenet and Kremfour subpoenas, the person named is, by paragraphs 1 and 2 of the Schedule, required to produce to the court all documents recording the assets and liabilities and the income of each recipient on various specified dates and in various specified periods. Whether this requires the exercise of judgement referred to by Moffitt P in Waind's case, to which I have referred, or whether it is too wide is of little consequence. This is not a burden to be imposed upon a stranger to the litigation. I add immediately that both Kremfour Pty Ltd and Tenet Pty Ltd are plaintiffs in the Rentiers consolidated proceeding and Kremfour Pty Ltd is a plaintiff in the Family Court proceeding. To that extent, they are not strangers to the composite litigation although they are not parties to the Candoora proceeding. But it has not been suggested that the production of these documents will be of any assistance in the Rentiers proceeding or the Family Court proceeding. I will not impose upon these companies the burden of searching their records to determine those which record its assets and liabilities and income at the relevant times. The position is otherwise with respect to paragraph 3 in each of the Tenet and Kremfour subpoenas. For in this case the subpoena simply requires each company to collect and produce its bank statements. I will, therefore, set the two company subpoenas aside as an abuse of process, but only to this extent.

31. The second submission as to abuse of process is based upon the refusal of non-party discovery by the court. This relates only to the Peter Yunghanns subpoena and, in that case, only to the documents evidencing the payment of his legal costs in a multiplicity of proceedings. It was put that in my order of 13 October 2000 made in response to a non-party discovery application brought by Candoora, I refused discovery of these documents. The short answer is that this asserted fact is not correct. In its summons of 7 August 2000 Candoora sought discovery of these documents. In my judgment of 4 October 2000[4] I rejected the submissions put in opposition to discovery and concluded that non-party discovery should be made by Mr Peter Yunghanns. At paragraph [29] I observed that since no argument had been presented against the terms of the proposed discovery I would make an order. The application was then stood over for orders, and on 10 October counsel for Candoora presented a proposed order which included in paragraph (3) an order for discovery of documents relating to Mr Peter Yunghanns' legal costs. Counsel appearing for Mr Peter Yunghanns on that occasion argued that the proposed order was too wide. They proposed an order in less specific terms dealing generally with his assets and income and those of entities associated with him. In their reply, counsel for Candoora agreed upon an order more or less in those terms and it was on this basis that the order of 13 October was made. I therefore reject the second submission.

34. The third submission as to abuse of process is that the documents are not required "for evidence before the trial of the proceeding". It was said, in respect of the documents described in each of the three subpoenas, that this nexus between the documents and the trial has not been demonstrated. There are, in truth, two arguments in this proposition and each of them was deployed before me. First, it was put that the documents were not produced "for evidence" so that the requirements of Rule 42.10(1) were not satisfied. Second, it was said that the subpoena was premature inasmuch as the trial is some two months away. There is no substance in the second argument. The parties are now preparing Court Books and for a trial which is expected to be lengthy and complex. There is no reason of principle or good sense why a subpoena may not be issued to require production at this stage of a relevant document so that it may be included in the Court Book and in this preparation.

37. The requirement in Rule 42.10(1) that the document be produced for evidence includes a possibility that the document be produced and inspected by a party to enable it to determine whether to adduce the document in evidence[5]. In a case such as the present, this would include a decision whether to include the document in the Court Book. The test of relevance at this stage, therefore, is a very general one. The court, which at this stage 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, should not be unduly astute to reject the possibility that a document does not meet this test of relevance. Indeed, it 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 no good purpose. I am not satisfied that the documents referred to in any of the subpoenas here in question fail to satisfy this applicable test of relevance.

41. As part of the subpoena process the court may be required to assess relevance at three stages. First, in determining whether the subpoena should be set aside as an abuse of process. Whether the test at this stage is that the document is sought to be produced "for evidence" in terms of Rule 42.10(1) or that it is not sought for some spurious reason[6], the test is a very generous one. Second, where the document has been produced to the court and a party seeks an order for inspection, such an order will be made where the document is apparently relevant to the issues[7]. I myself would not understand this test to mean that the document may not be inspected where it is relevant to no issue but where it may be useful to attack the credit of a witness. In Spencer Motors Pty Ltd v LNC Industries Ltd[8] Waddell J was of opinion that the test of relevance at these first and second stages are the same, namely, whether the document "is reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case". Third, the trial judge must, in the ordinary course, rule upon relevance when the document is sought to be tendered in evidence at the trial.

44. In the present case I have already ruled that discovery might be had of documents relating to the means available to Mr Peter Yunghanns for the purposes of benefiting his infant son, William. The test of relevance for discovery purposes may be different again from those previously mentioned, at least insofar as it applies to discovery from a party. Bearing this difference in mind, I am nonetheless satisfied that the documents relating to the issue of the means of Mr Peter Yunghanns, if properly described, are sufficiently relevant to permit a party in this litigation to warrant their production by subpoena. I am not concerned that the production is sought to be made by a person or entity which is technically not a party to the Candoora proceeding. It is abundantly clear that the disputes in the Yunghanns litigation are intimately intertwined. This is no doubt a reason why the parties have all agreed that they be heard together and that the evidence in one be evidence in each other proceeding. I will therefore apply to these subpoenas as the test of relevance, if it be different, the same test as would apply to a subpoena addressed to a party.

47. I conclude that each of the subpoenas addressed to the companies seek the production of documents which are sufficiently relevant in terms of that test.

50. The Peter Yunghanns subpoena seeks production of documents recording or evidencing the amount of legal costs incurred by him and as to the source of his payment of those costs. The relevance of these is for the provision of material to show that Mr Peter Yunghanns has spent large sums on litigation and, thereby, to lead to a submission that he has or has had assets not disclosed upon discovery. The relevance of this in terms of the issues in the Candoora litigation is small. [9] The application of the relevance test does not take place in a vacuum. The court must often have regard to the degree of relevance in the context of the burden imposed and other factors which might be onerous to the person named. In the present case, the burden of production may well be considerable. I am conscious, too, that the production is sought by persons who were his adversaries in much, if not all, of this litigation. They are persons who, I perceive, bear him ill-will. I make no finding that the subpoena has been filed for some collateral purpose, such as to harass him. Nevertheless, I conclude that the benefit to the legal process by the production of the documents described in the schedule weighted against the burden imposed upon Mr Peter Yunghanns by the requirement that he produce them is so slender that I should set the subpoena aside.

53. It is not necessary that I consider the final argument presented on behalf of Mr Peter Yunghanns that the documents required to be produced in the subpoena addressed to him would or may be protected by legal professional privilege. No evidence was presented in support of this argument other then the description of the documents themselves in the subpoena. I was not invited to inspect them and I have not done so. In these circumstances it is difficult for me conclude that the documents were brought into existence for the dominant purpose of obtaining legal services from a legal practitioner in the furtherance of litigation. I make no finding as to the privilege which may attach to these documents.

57. It follows that I will set aside paragraphs 1 and 2 of each of the Kremfour subpoena and the Tenet subpoena and the whole of the Peter Yunghanns subpoena on the ground that each of them casts upon the person named a burden in the nature of discovery. I will, however, require the two companies to produce to the court the documents referred to in paragraph 3 of their respective subpoenas. Inasmuch as the objections include an objection to inspection of the documents produced I overrule those objections.

61. On 13 October I made an order in the Candoora proceeding upon an application by Candoora in the following terms:

"Peter Yunghanns of 49 Harcourt Street, Hawthorn, make discovery pursuant to Rule 32.07 by 4.00 pm, 20 October 2000 of the following classes of documents: (a) all documents recording the assets and liabilities as at 30 June 1996, 30 June 1998 and 30 June 2000 of Peter Yunghanns, Tenet Pty Ltd, Tenure Pty Ltd, Kremfour Pty Ltd, Croxlea Pty Ltd, Palassa Pty Ltd and any person or entity over whom or which Peter Yunghanns can or could on the relevant date exercise control in the sense that their financial resources would be made available to him personally as a result of such control; and (b) all documents recording the income for the years ended 30 June 1996, 30 June 1998 and 30 June 2000 of the person and entities mentioned in part (a)."

65. Mr Peter Yunghanns filed an affidavit of documents in response to this order on 23 October 2000. By summons filed on 9 November 2000 Candoora seeks orders for further discovery of documents recording assets and liabilities as at 30 June 1996 and 30 June 1998 and income during the years ending 30 June 1996 and 30 June 1998 of Kremfour Pty Ltd and Tenet Pty Ltd, two of the companies named in the order and of the following further companies - Industrial Engineering Pty Ltd, Mardasa Nominees Pty Ltd, Amara Pty Ltd, Gitland Pty Ltd, Riddoch Estate Pty Ltd, HDA Investments Pty Ltd and Havana Peak Pty Ltd. The summons also seeks production of documents recording the assets and liabilities as at 30 June 2000 and income during the year ending 30 June 2000 of Mr Peter Yunghanns, Croxlea Pty Ltd, Kremfour Pty Ltd, Tenet Pty Ltd, Tenure Pty Ltd and Palassa Pty Ltd being the person and entities named in the order and also of the following companies - Amara Pty Ltd, Ballan Pastoral Co Pty Ltd, Dariway Pty Ltd, Gitland Pty Ltd, Havana Peak Pty Ltd, HDA Investments Pty Ltd, Industrial Engineering Pty Ltd, Mardasa Nominees Pty Ltd, Obate Pty Ltd, Rentiers Pty Ltd, Rentiers Machinery Pty Ltd, Riddoch Estate Pty Ltd and Tygola Pty Ltd. The summons also seeks production of certain attachments to the tax return of Mr Peter Yunghanns for the year ended 30 June 1998. It should be noted that Mr Peter Yunghanns and each of the companies named in the summons, except HDA Investments Pty Ltd, Tenure Pty Ltd and Dariway Pty Ltd, are parties to the Rentiers proceeding or the Family Court proceeding or both.

68. I shall deal first of all with the documents of the person and the entities specifically named in the order of 13 October.

72. The complaint here is that Mr Peter Yunghanns has failed to produce attachments to paragraph 8(b) and 8(e) to his 1998 tax return. I will direct that they be produced.

75. Next it is said that no document for the year ended 30 June 2000 has been produced. This is a complaint made also with respect to some of the companies. Mr Peter Yunghanns in his affidavit sworn 20 November 2000 says that he has not yet prepared his tax return for this year. That may be so. The terms of the order are not so limited. In the course of discussion with counsel at the time the terms of the order were formulated, mention was made of balance sheets and profit and loss accounts as being a convenient and sufficient manner of satisfying the order. It was not suggested that these did not exist. Where they do not, the order requires Mr Peter Yunghanns to make discovery of any documents recording his assets and liabilities and income.

79. No documents have been discovered. Mr Peter Yunghanns says by way of explanation that Tenet Pty Ltd is the trustee of the Sprod Family Settlement and that he is not and has not been a director or shareholder in that company. This explanation suggests to me that he has misconceived his obligation under the order of 13 October. He should make discovery of documents referred to in that order which relate to Tenet Pty Ltd, including documents relating to the year ending 30 June 2000.

83. No documents have been discovered. Mr Peter Yunghanns says that at none of the relevant times did this company have any income or assets. This is not challenged. I will not direct further discovery.

89. No documents relating to the year ended 30 June 2000 have been discovered. Mr Peter Yunghanns makes no relevant answer to this. I will direct discovery of these documents.

99. No document relating to these companies has been discovered. Mr Peter Yunghanns says that although he controls them, none of them has financial resources which would or could be made available to him as a result of such control in terms of the order. I will act upon this evidence. I will not direct further discovery.

108. Of these companies no discovery for the period ending 30 June 2000 has been made. I will direct it.

112. In summary therefore I will direct that Mr Peter Yunghanns file and serve a further affidavit of discovery dealing with the following:-

(a) the documents mentioned in the order of 13 October 2000 with respect to the assets and liabilities as at 30 June 2000 and the income for the year ending 30 June 2000 of Mr Peter Yunghanns and the following companies, namely, Ballan Pastoral Co Pty Ltd, Croxlea Pty Ltd, Dariway Pty Ltd, Obate Pty Ltd, Palassa Pty Ltd, Rentiers Pty Ltd, Rentiers Machinery Pty Ltd, Tenet Pty Ltd, Tenure Pty Ltd and Tygola Pty Ltd.

(b) the attachments to his 1998 tax return paragraphs 8(b) and 8(e).

(c) the assets and liabilities and income of Tenet Pty Ltd in terms of the 13 October order for the years ending 30 June 1996 and 1998.

[1] Commissioner for Railways v Small (1938) 38 SR (NSW) 564; Waind v Hill [1978] 1 NSWLR 372

[2] Re Eighth Dictum Pty Ltd, unreported, Hedigan J, 26 March 1991, BC 9102893 at p7; Belsart Pty Ltd v Man Po Holdings (Australia) Ltd [1998] VSC 46 at [17], per Beach J

[3] [1978] 1 NSWLR 372 at 382

[4] [2000] VSC 387

[5] Kennedy Taylor (Vic) Pty Ltd v Grocon Pty Ltd [1999] VSC 242 at [72], per Gillard J

[6] Waind v Hill [1978] 1 NSWLR 372 at 382, per Moffitt P

[7] Waind v Hill [1978] 1 NSWLR 372 at 385, per Moffitt P

[8] [1982] 2 NSWLR 921 at 927

[9] Re Eighth Dictum Pty Ltd, unreported, Hedigan J, 26 March 1991, BC 9102893 at p7