Ahamed v North

[2021] NSWDC 172

District Court

New South Wales

Medium Neutral Citation:

Ahamed v North [2021] NSWDC 172

Hearing dates:

30 April 2021

Date of orders:

12 May 2021

Decision date:

12 May 2021

Jurisdiction:

Civil

Before:

Scotting DCJ

Decision:

(1)   Sub-paragraphs (a)-(d) and (f) of paragraph 2 of schedule to the subpoena to produce issued to the Proper Officer of Connect@Macquarie Pty Ltd as trustee for the Joint@Macquarie Trust filed on 18 November 2020 (the subpoena), are struck out.

(2)   Time for compliance with the subpoena is extended to 5pm on 19 May 2021.

(3)   The defendant is denied access to the documents produced by the Commissioner in packet 47 of the subpoenaed material held by the Court.

(4)   The defendant is to pay the plaintiff’s costs of the Notices of Motion filed 28 January 2021 and 2 February 2021, on the ordinary basis, as agreed or assessed.

Catchwords:

CIVIL PROCEDURE — Subpoenas — Application to set aside

Legislation Cited:

Civil Procedure Act 2005

Uniform Civil Procedure Rules

Cases Cited:

Attorney-General (NSW) v Chidgey [2008] NSWCCA 65

R v Saleam [1999] NSWCCA 86

Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corp Ltd [1984] 1 NSWLR 710

Trade Practices Commission v Arnotts Ltd (No 2) (1989) 21 FCR 306

Category:

Procedural rulings

Parties:

S M Fahim Ahamed (Plaintiff)
Justin North (Defendant)

Representation:

Counsel: K Balendra (Plaintiff)
W Reynolds (Defendant)

Solicitors: AJB Stevens Lawyers (Plaintiff)
Moray & Agnew (Defendant)

File Number(s):

2019/137453

Publication restriction:

None

Judgment

1. The plaintiff seeks orders in two Notices of Motion to set aside subpoenas addressed to Connect@Macquarie Pty Ltd (Connect) as trustee for the Joint@Macquarie Trust (the Trust) and to the Commissioner of the New South Wales Police Force (the Commissioner).

2. During the course of the argument, the orders sought by the plaintiff were refined to seek to:

1. limit the categories of documents sought from the Trust because they are of insufficient apparent relevance to the issues in the proceedings; and

2. deny access to the defendant to some of the documents produced by the Commissioner because they lack a sufficient apparent connection to the issues in the proceedings.

Evidence on the Notices of Motion

3. The plaintiff read two affidavits of Qiming Zhou sworn 28 January 2021 and 2 February 2021.

4. The defendant read two affidavits of Madeleine Graham sworn 15 March 2021 and 16 April 2021.

5. No application was made to have either of the deponents cross-examined.

Background

6. The plaintiff was injured in a motor vehicle accident on 27 October 2015. He was the driver of a vehicle that was stationary at traffic lights, when he was struck from behind by a vehicle being driven by the defendant. The force of the impact involved in the collision is in dispute.

7. The plaintiff alleges that as a result of the injuries that he sustained in the collision that he has suffered economic loss. At the time, he worked as a taxi driver and as a construction worker. He alleges that after the collision he has been unable to return to construction work and that he continued to work as a taxi driver on reduced hours until about October 2016 when he ceased that work too. The plaintiff alleged in his Statement of Particulars dated 30 April 2019 that he has not engaged in paid employment since October 2016.

8. Connect operated a café business trading as “Point 99 Café” in the Macquarie Shopping Centre from about November 2016 until it was sold to a third party in about mid to late 2018. The plaintiff and his spouse were appointed as directors of Connect in September 2016, [1] and each held 50% of the shares in the company. On 15 July 2018, the plaintiff resigned as a director of Connect and transferred his shareholding in the company to his spouse.

   1. The plaintiff was appointed on 14 September 2016 and his spouse was appointed on 26 September 2016. As the company did not appear to commence trading until about November 2016, the different dates of appointment do not appear to be significant.

9. On or about 1 July 2019, Connect commenced operating a café business trading as “Dine & Dezerts” in Bay Street, Brighton Le Sands, on behalf of the Trust.

10. It is common ground that the plaintiff attends and sometimes helps out at Dine & Dezerts. In this regard:

1. the plaintiff told Dr Sekel that he attends the Dine & Dezerts Café 5 or 6 days a week for “many” hours and that he “sometimes” serves customers [2] ;

2. the plaintiff told Dr Vickery that he goes to the family café each day to oversee the workers, to ensure that everything runs smoothly and to socialise with friends [3] ;

3. the defendant has served surveillance footage depicting the plaintiff at the Dine & Dezerts Café on 24-26 February 2021 for hours at a time. The surveillance footage depicts the plaintiff undertaking some tasks consistent with him working at the cafe, such as moving tables, providing menus to customers and handing out take-away orders. However, there were also periods of time where he appeared to do very little and based on the made observations made, the surveillance operative concluded that the plaintiff did not appear to be running the business.

2. I have accepted the assertion of Dr Sekel as true for the purposes of this interlocutory application.

3. I have accepted the assertion of Dr Vickery as true for the purposes of this interlocutory application.

Events relevant to the subpoena to the Trust

11. On 14 August 2019 the defendant served a Notice to Produce to the plaintiff for production of some financial records of the Trust. The plaintiff’s solicitor advised the defendant’s solicitor that the plaintiff was not in possession of the documents, but that they could be obtained by serving a subpoena addressed to Connect. A subpoena to Connect was issued by the defendant on 3 September 2019 and served.

12. On or about 20 September 2019, Connect produced a bundle of documents in response to the subpoena, including Profit and Loss Statements, Business Activity Statements and financial records for the period of “14 September 2016 to date”. At the time of responding to the subpoena, the plaintiff’s spouse produced a letter, relevantly stating:

Connect@Macquarie Pty Ltd – I am the sole director of this company and this company does not produce any financial documents by itself.

13. On 7 September 2020, Lance Kahler, a forensic accountant, produced an expert report at the request of the defendant. Mr Kahler opined that:

1. the plaintiff exercised his earning capacity as a proprietor or co-proprietor of the Point 99 Café from about 1 November 2016 until about mid to late 2018 when the business was sold;

2. the financial performance of the Point 99 Café business was not properly reflected in the financial accounts or Trust tax returns because:

1. an advertisement for sale of the business, prepared by servants or agents of Connect or the Trust, stated that it was generating a weekly profit of more than $5,000 per week (before tax); and

2. the reported figures in the Trust tax returns did not correlate with the Australian Taxation Office (ATO) Small Business Benchmarks, which would indicate an underreporting of sales income; and

3. The Trust as required by law to create and keep the documents required by the subpoena under review. [4]

   4. The documents specified in the schedule to the subpoena are referred to in the quote from the supplementary report set out at [14] below.

14. On 25 February 2021, Mr Kahler produced a supplementary report at the request of the defendant. Mr Kahler opined that the true financial position of the Point 99 Café was relevant to the plaintiff’s claim for economic loss because he was a director and shareholder of Connect for the period in which it operated the Point 99 Café and the documents sought would shed light on the actual financial performance of the Point 99 Café, set out at [2.8.1]-[2.8.6] of the supplementary report [5] :

2.8.1   The amounts reported in the quarterly business activity statements such as Sales, Non-capital Purchases and Wages could be compared with the corresponding amounts reported in the Trust Tax Returns and sales advertisement.

2.8.2   The income deposits to Connect@Macquarie’s bank accounts could be compared with the gross income amounts reported in the Trust Tax Returns and the sales reported in the sale advertisement.

2.8.3   The purchases invoices could be examined to determine whether those amounts are consistent with the reported Cost of Sales/Purchases in the Trust Tax Returns and the sales advertisement (noting that the ATO benchmarks indicate that the cost of sales to turnover ratio is the “key benchmark range” for restaurants).

2.8.4   The sale contract in relation to the sale of the Point 99 business would disclose the sale price of the business which would provide some insight into the likely financial performance of the business prior to its sale (e.g. if the business was sold for a sum of money that was well in excess of the value of the business’ plant and equipment, one might infer the business was trading profitability prior to being sold).

2.8.5.   The wages expenses reported in the wages books of the business could be compared with the wages reported in the Trust Tax Returns and the wages reported in the sale advertisement.

2.8.6   The general ledger accounting records of the business could be compared with the reported income and expenses in the Trust Tax Returns and those reported in the sale advertisement.

5. Page 3 of the supplementary report.

15. In the supplementary report, Mr Kahler noted that he was not aware of the extent, if any, of the plaintiff’s involvement in the Dine & Dezerts Café and the relevance of the documents sought would depend on a factual finding as to the extent of the plaintiff’s involvement in it. In the event that the plaintiff has been actively involved in the Dine & Dezerts Café, Mr Kahler stated that the documents sought would assist in establishing the actual financial performance of the Dine & Dezerts Café and any income the plaintiff may have received from it.

16. On 28 April 2021 the plaintiff’s solicitor wrote to the defendant’s solicitor in the following relevant terms:

We are instructed that the plaintiff has been paid a wage by Connect@Macquarie from about December 2020 or January 2021 to date for (sic) an amount of $400 to $500 per week.

Please advise whether you are willing to amend the scope of your subpoena to produce issued to Connect@Macquarie dated 18 November 2020 to wage books only.

Events relevant to the subpoena to the Commissioner

17. On an unknown date, the defendant’s solicitor conducted a search of a database of Australian criminal court listings, known as “Australian Criminal Court Records”. The result of a search of the plaintiff’s name produced three entries that appeared to suggest that the plaintiff had appeared in the Local Court relating to offences in November 2014, January 2016 and September 2016.

18. On 18 November 2020 the defendant issued a subpoena to the Commissioner seeking production of the following:

To produce all information and criminal records relating to S M Fahim Ahamed (Date of Birth: 9 October 1988) including but not limited to, all computer printouts, correspondence, documents (including court documents) and any other records relating to the arrest, charging and/or conviction for the commission of any offence.

19. The schedule to the subpoena to the Commissioner was capable of being read widely and as requiring the production of all information held by the Commissioner relating to the plaintiff.

20. On 27 November 2020, the plaintiff’s solicitor sought clarification from the defendant’s solicitor as to the legitimate forensic purpose of the subpoena to the Commissioner. On 3 December 2020, the defendant’s solicitor responded by email in the following relevant terms:

….

In relation to the subpoena issued to NSW Police, the Australian Criminal Court Records show that the plaintiff was involved in criminal proceedings in November 2014 (that is, less than a year prior to his involvement in the subject accident), January 2016 and September 2016. The nature of the offence(s) committed by the plaintiff and any sentence(s) handed down is relevant to the assessment of his functional capacity and propensity to obtain work on the open labour market irrespective of his involvement in the subject accident.

…

21. On or about 24 November 2020 the Commissioner responded to the subpoena by producing a letter dated 24 November 2020, to the effect that the Commissioner had no record of any disclosable court outcomes or outstanding matters against the plaintiff. I interpret this letter to mean that the plaintiff has no criminal record and no alternative interpretation was suggested by the parties in argument. This letter was stored in packet 42 by the Court and the plaintiff does not object to access being granted to the defendant. [6]

    6. Of which the defendant already has a copy of the letter.

22. On or about 18 December 2020 the Commissioner produced a bundle of entries extracted from the NSW Police Force Computerised Operational Policing System (COPS) for the period of 8 October 2009 to 10 February 2017. These documents were stored in packet 47 by the Court and appear to be all information held by the Commissioner that mentions the plaintiff in a COPS entry.

23. The plaintiff objects to the defendant having access to the documents in packet 47 because they do not have a sufficient connection with the issues in the proceedings.

Relevant principles

24. Rule 33.4(1) of the Uniform Civil Procedure Rules (UCPR) provides that a party may apply to set aside a subpoena in whole or in part.

25. The test for determining whether production of documents pursuant to a subpoena is a two-step test. The applicant must show that there is a legitimate forensic purpose for seeking the documents and that it is “on the cards” that the documents will materially assist their case: R v Saleam [1999] NSWCCA 86, affirmed in Attorney-General (NSW) v Chidgey [2008] NSWCCA 65.

26. The overriding purpose of the Civil Procedure Act 2005 (the Act) and the rules of court, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56(1) of the Act.

27. The Court must give effect to the overriding purpose when exercising any power provided for by the Act or the rules of court: s 56(2) of the Act.

28. In furthering the overriding purpose, the Court must manage proceedings with regard to the just determination of them, the efficient disposal of the business of the court and the timely disposal of the proceedings at a cost affordable by the respective parties: s 57 of the Act.

29. In making any procedural order, the Court must follow the dictates of justice in a particular case, set out in s 58(2) of the Act.

30. The Court must also make orders with a view to eliminating delay (s 59 of the Act) and resolving the issues in such a way that the costs incurred are proportionate to the importance and complexity of the subject-matter in dispute (s 60 of the Act).

31. The issue of subpoenas is intended to facilitate the proper and efficient conduct of the proceedings, and that purpose marks a limit on their proper use.

32. A subpoena may be set aside if it requires the production of documents with insufficient apparent relevance to the proceedings: Trade Practices Commission v Arnotts Ltd (No 2) (1989) 21 FCR 306.

33. Rule 33.9 of the UCPR provides that a party may object to a document or thing being inspected by the other party, if it can establish as proper basis for so doing: Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corp Ltd [1984] 1 NSWLR 710.

Consideration

Should the categories of documents sought from the Trust be limited?

34. The actual financial performance of the Point 99 Café and the Dine & Dezerts Café is of limited relevance to the issues in the proceedings.

35. The plaintiff was a shareholder in the Point 99 Café and was in a position to receive payments from the business as a return on his investment. To the extent he received such payments, they are irrelevant to the issue of economic loss.

36. Mr Kahler’s assertion that the plaintiff was exercising his earning capacity as a proprietor of the Point 99 Café is not supported by any evidence. Evidence as to what the plaintiff did in the relevant period at the Point 99 Café is unlikely to come from the financial records sought by the defendant. If the plaintiff was paid a wage that is obviously relevant to the issue of economic loss, again subject to an allowance for a return on investment.

37. Mr Kahler’s conclusion that the financial performance of the Point 99 Café is not properly reflected in its financial accounts or Trust tax returns on the evidence currently available, is tenuous. To the extent that it is based on an allegation of an inconsistent statement in the advertisement for the sale of the business, it is a conclusion that is not based on his expertise as a forensic accountant. To the extent that it is based on the ATO benchmarks, some allowance needs to be made for the fact that those figures are based on the averaging of a large number of businesses and may not accurately reflect the individual circumstances of the Point 99 Café.

38. Mr Kahler set out what he intends to do with the documents sought from the Trust at [2.8.1]-[2.8.6] of the supplementary report. In short, he envisages undertaking a thorough forensic analysis of the financial accounts and Trust tax returns for each of the Point 99 Café and the Dine & Dezerts Café. In particular, the tasks set out at [2.8.2], [2.8.3] and [2.8.6] will take a considerable period of time to complete. For example, the review of all purchase invoices for the last the past 5 years and comparison of the amounts recorded in the financial accounts appears to me to be an exercise that will take a considerable amount of time and involve some significant expense, in addition to the time and expense involved in Mr Kahler preparing a further report. A further report from Mr Kahler is likely to lead the plaintiff to engage an expert to comment on Mr Kahler’s further report.

39. The production of the agreement for sale of the Point 99 Café, on Mr Kahler’s analysis, may have some relevance to the credit of a person responsible for placing the advertisement for sale of the business. On the material before me, the suggestion that it may be relevant to the plaintiff’s credit is tenuous. The main purpose for seeking production of the agreement is to support the argument that the financial performance of the Point 99 Café was underreported. For the reasons given, that issue is not of apparent sufficient relevance to the proceedings.

40. Mr Kahler has quite properly recognised that the relevance of the forensic accounting exercise in so far as it relates to the Dine & Dezerts Café is conditional on a factual finding which will not depend on the content of the documents sought, or only marginally so.

41. The only significant matter in my view is what the plaintiff has been paid from the Trust and what personal exertion, if any, he has received that wage for. The plaintiff has admitted that from about December 2020 he has been paid a wage by the Trust in the sum of $400-$500 per week. Those payments are clearly relevant to his economic loss claim and should be accounted for. It is likely that those payments are recorded in the wage books of the Trust. The plaintiff has conceded that the defendant is entitled to the production and inspection of those documents.

42. In argument, the defendant suggested that another way that the purchase invoices may be relevant is if the plaintiff signed for receiving delivery of the goods at either one of the cafés. In my view, this is a classic example of fishing and demonstrates an impermissible purpose for requesting those documents from the Trust.

43. I have noted that the plaintiff’s credit is in issue in these proceedings. However, for the reasons given that the documents sought have limited, if any, relevance, and are likely to cause substantial delay and further costs, I am satisfied that the increase in costs involved in allowing a further report from Mr Kahler on the topics that he proposes would be disproportionate to the damages that may be awarded to the plaintiff for economic loss.

34. The documents sought from the Trust, with the exception of the wage books, have insufficient apparent relevance to the proceedings and the balance of the subpoena to produce should be set aside.

Should the defendant be denied access to the documents produced by the Commissioner in packet 47?

45. The parties adopted the pragmatic approach of allowing me to look at the documents for the purpose of determining their relevance. Seven of the 24 entries related to the plaintiff as the victim of an offence and are not relevant to any issue in the proceedings. Thirteen of the entries related to the issue of traffic infringement notices to the plaintiff and the final 2 matters related to the investigation of allegations relating to the plaintiff or potentially others for which the police had insufficient evidence to investigate any further, following the initial report. I am satisfied that the documents in packet 47 are not relevant to any issue in the proceedings and that the defendant should be denied access to them.

46. To the limited extent that the plaintiff’s traffic history is relevant to his earning capacity, the defendant is at liberty to issue a further subpoena to the appropriate person if he chooses to do so.

Costs

47. The plaintiff has been substantially successful in the Notices of Motion and costs should follow the event.

Orders

48. The orders I make are as follows:

1. Sub-paragraphs (a)-(d) and (f) of paragraph 2 of schedule to the subpoena to produce issued to the Proper Officer of Connect@Macquarie Pty Ltd as trustee for the Joint@Macquarie Trust filed on 18 November 2020 (the subpoena), are struck out.

2. Time for compliance with the subpoena is extended to 5pm on 19 May 2021.

3. The defendant is denied access to the documents produced by the Commissioner in packet 47 of the subpoenaed material held by the Court.

4. The defendant is to pay the plaintiff’s costs of the Notices of Motion filed 28 January 2021 and 2 February 2021, on the ordinary basis, as agreed or assessed.

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Endnotes

Decision last updated: 13 May 2021