Apple Computer v Wily

[2003] NSWSC 191

CITATION:	Apple Computer v Wily [2003] NSWSC 191
HEARING DATE(S):	10/03/03
JUDGMENT DATE:	25 March 2003
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
DECISION:	Notice of motion dismissed
CATCHWORDS:	PROCEDURE - notice to produce - whether abuse of process - whether impermissible substitute for discovery
LEGISLATION CITED:	Corporations Act 2001 (Cth), ss.536, 596B
CASES CITED:	Commissioner for Railways v Small (1938) 38 SR (NSW) 564 National Employers' Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372 Williams v Spautz (1991) 174 CLR 509
PARTIES :	Apple Computer Australia Pty Ltd - Plaintiff Andrew Hugh Jenner Wily - First Defendant Buzzle Operations Pty Ltd (Receivers Appointed) (In Liquidation) - Second Defendant
FILE NUMBER(S):	SC 2698/02
COUNSEL:	Mr C R C Newlinds - Plaintiff Mr M R Aldridge SC - Defendants
SOLICITORS:	Clayton Utz - Plaintiff MBP Legal, McCrohon Bergseng Partners - Defendants

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

TUESDAY, 25 MARCH 2003

2698/02 – APPLE COMPUTER AUSTRALIA PTY LTD v WILY & ANOR

JUDGMENT

1 By notice of motion filed on 10 March 2003 and heard by me on that day, the defendants, being Buzzle Operations Pty Ltd and its liquidator Mr Wily, seek an order setting aside a notice to produce dated 4 February 2003 given by the plaintiff to the first defendant (that is, Mr Wily).

2 The notice to produce requires the production of documents of various categories each of which is defined by reference to one or more paragraphs of an affidavit sworn on 26 March 2002 by the first defendant in support of an application by him, as liquidator of the second defendant (“Buzzle”), for the issue of summonses under s.596B of the Corporations Act 2001 (Cth) directed to various persons associated with either Buzzle or the present plaintiff, Apple Computer Australia Pty Ltd (“Apple”).

3 The various paragraphs of the notice to produce all follow one or other of several patterns. One class of paragraphs calls for the production of documents or computer records referred to in a designated paragraph of the first defendant’s affidavit commencing with or including words such as “based on the computer records available to me” or “stocktakes and valuations obtained by each of the vendor companies and provided to Apple”. Another category involves paragraphs calling for documents that evidence identified assertions made in the first defendant’s affidavit or support particular allegations in the affidavit. There is, for example, a paragraph of the affidavit saying that, in a particular period, Buzzle purchased stock to a certain value, paid a certain amount by way of price and was allowed to continue to place orders and to purchase stock. The notice to produce seeks, in respect of this, all documents of any kind and in any form (including electronic) that support the allegations made.

4 The notice to produce must, of course, be understood in its context. Apple’s originating process filed on 14 May 2002 seeks, in a substantive sense, three forms of relief, namely, the setting aside of examination summonses directed to various persons and issued on the application of the first defendant as liquidator of Buzzle, second, an inquiry pursuant to s.536 of the Corporations Act in relation to the conduct of the first defendant as liquidator of Buzzle and, third, removal of the first defendant as liquidator of Buzzle.

5 The plaintiff’s stated reasons for issuing the notice to produce with which I am now dealing appear from a letter from its solicitors to the defendants’ solicitors dated 17 December 2002 which says, in essence, that the various documents go to the question whether the first defendant is acting independently and at arm’s length as liquidator of Buzzle as distinct from acting as “merely a ‘puppet’ of those parties who appointed him” as provisional liquidator in the first instance or, no doubt more accurately, proposed to the court that he be so appointed. That matter is said to be of particular relevance where the persons concerned (that is, those the plaintiff would say were the puppeteers) are “controlled by persons who are former directors of [Buzzle] and have not been summonsed to appear in the examinations convened by” the first defendant as liquidator. The letter goes on to express, as the plaintiff’s “principal contention”, that the first defendant is “clearly not acting in the interests of all creditors”, the plaintiff itself being “by far the largest creditor” but not having received any communications from the first defendant reporting what investigations, if any, have been undertaken by him.

6 The plaintiff’s attack upon the notice to produce is framed in four alternative ways: first, that it was not issued for a proper purpose; second, that it constitutes an abuse of process; third, that it constitutes impermissible fishing; and, fourth, that it amounts to pre-trial discovery.

7 In a general sense, the complaints of improper purpose and abuse of process can be taken together since, as authorities such as Williams v Spautz (1991) 174 CLR 509 illustrate, resort to some legal procedure for a purpose foreign to that for which it exists represents probably the most obvious species of abuse of process. What, then, is the purpose that notices to produce are intended to serve? A short answer is that such notices, like subpoenas, are a means of obtaining documents of a kind calculated to be relevant (or, at least, potentially relevant) to the matters in issue.

8 Where, as here, the plaintiff’s case is that a liquidator accepted appointment in a context of some form of pre-arrangement with or partisanship towards particular interests, documents touching upon the existence and nature of any such relationship are clearly relevant, as are documents going to the question whether suspicions and opinions the liquidator says he holds are actually held and, if so, whether there is any documentary basis to them. The first defendant’s affidavit of 26 March 2002 refers in many places to documents to which he has had regard in reaching the various positions described in the affidavit with respect to matters to be the subject of examinations. It is not, in my opinion, out of order in proceedings involving the general issue of a liquidator’s independence and bona fides to seek to test such statements by obtaining the documents that are said to be the basis for his conclusions or provisional conclusions stated. I therefore do not accept that an abuse of process or improper purpose is involved in use of the notice to produce to that end.

9 The “impermissible discovery” and “fishing” aspects of the defendants’ application may also be dealt with together as what is in reality another aspect of the general complaint of abuse of process. The question whether a subpoena or notice to produce is being used as an impermissible substitute for discovery, as distinct from a means of obtaining identified documents, is to be approached by reference to the test derived from Commissioner for Railways v Small (1938) 38 SR (NSW) 564 and described in the following passage in the judgment of Moffitt P in National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372 at 382:

"Such a case [i.e., a case where a person to whom a subpoena is addressed may seek to have it set aside as an abuse of process] is where the subpoena is used for the purpose of discovery. The essential feature of discovery in this connection, as appears from Burchard's case and Small's case is that the person to whom the subpoena is addressed will have to make a judgment as to which of his documents relate to issues between the parties. It is oppressive to place upon a stranger the obligation to form a judgment as to what is relevant to the issue joined in a proceeding, to which he is not a party. Hence it is an abuse of the use of a subpoena to impose this obligation. It follows that it is an abuse to use any subpoena, i.e. even to a party to obtain discovery. This was the reasoning in Small's case. Of course, discovery as such is otherwise available to a party. It follows that a subpoena can only properly be used for the production of documents described in particular or general terms which does not involve the making of such a judgment. "

10 In the present case, the first defendant, as the recipient of the notice to produce, is not faced with uncertainty that puts him to the task of identifying documents or guessing what is required. The notice to produce merely calls for those documents to which the first defendant has himself referred, whether expressly or more generally (in the sense of his having said or implied that he has had regard to documents, without identifying them), in his affidavit of 26 March 2002. The first defendant has himself marked out the relevant territory by his statements in the affidavit and I do not regard the notice to produce as attempting to cover any territory greater than or additional to that.

11 I do not consider that the notice to produce is objectionable on any of the bases advanced by the defendants. The notice of motion is therefore dismissed.

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Last Modified: 03/27/2003