Australian Property Custodian Holdings Ltd (in liq) (recs and mgrs apptd) (controllers appointed) v Woolridge
[2013] VSC 154
•12 April 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
No. S CI 1199 of 2012
RE AUSTRALIAN PROPERTY CUSTODIAN HOLDINGS LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (CONTROLLERS APPOINTED)
BETWEEN
| AUSTRALIAN PROPERTY CUSTODIAN HOLDINGS LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (CONTROLLERS APPOINTED) | Plaintiff |
| v | |
| MICHAEL RICHARD LEWIS WOOLRIDGE & ORS | Defendants |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 February 2013 | |
DATE OF JUDGMENT: | 12 April 2013 | |
CASE MAY BE CITED AS: | Re APCHL (No 3) | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 154 | |
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CORPORATIONS – Objections by defendants to the plaintiff inspecting documents produced by a third party (ASIC) under O 42 - Documents produced include transcript of examinations conducted by ASIC of some of the defendants under the Australian Securities and Investments Commission Act 2001 – Objections allowed in whole as to some documents and in part as to other documents – Principles relevant to issues of inspection – Whether subpoena with respect to some documents constituted “fishing” – Examination of O 42 – Supreme Court (General Civil Procedure) Rules 2003, O 42; Australian Securities and Investments Commission Act 2001; ASIC Regulatory Guide 103.
PRACTICE AND PROCEDURE – Court exercising Federal jurisdiction – Section 79 of the Judiciary Act 1903 – Whether O 42 “picked up” by s 79 – Whether s 25 and other provisions of the Australian Securities and Investments Commission Act 2001 “otherwise provided” for the purposes of s 79 - Held that O 42 “picked up’ and applicable to the proceeding.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J.P. Moore | Clayton Utz |
| For the ASIC | No appearance | |
| For the First Defendant | Mr R.G. Craig | Norton Gledhill |
| For the Second Defendant | No appearance | |
| For the Third Defendant | Mr J.P. Tomlinson | SBA Law |
| For the Fourth Defendant | No appearance | |
| For the Fifth Defendant | Mr A.T. Strahan | DLA Piper Australia |
| For the Sixth, Twelfth and Fourteenth Defendants | Mr J.P. Slattery | Wotton + Kearney |
| For the Seventh and Eighth Defendants | Mr G.D. Dalton | Norton Rose |
| For the Ninth, Tenth and Eleventh Defendants | Ms F.J. Bentley | Strongman & Crouch |
| For the Thirteenth Defendant | Mr N. Curran (Solicitor) | Thomsons Lawyers |
| For the Fifteenth Defendant | Mr D.R. Luxton | Colin Biggers & Paisley |
TABLE OF CONTENTS
Introduction............................................................................................................................... 2
Summary of conclusions............................................................................................................ 3
Section 79 of the Judiciary Act 1903........................................................................................ 4
ASIC Act.................................................................................................................................... 5
The meaning of “otherwise provided”........................................................................................ 8
Mr Jaques’ contentions............................................................................................................. 14
APCH’s submissions................................................................................................................ 15
Discussion................................................................................................................................ 17
The Principles to be applied on the hearing of the objections under O 42................................. 19
Summary of objections.............................................................................................................. 25
Principles relating to inspection of documents......................................................................... 27
Inspection of examinations subpoenaed from ASIC.................................................................. 35
Mr Lewski’s objections............................................................................................................. 41
Discretionary ground............................................................................................................... 43
Restrictive terms of access........................................................................................................ 44
Dr Wooldridge’s objections....................................................................................................... 44
The objections of Mr Jaques, Mr Clarke and Mr Butler........................................................... 46
The objections of the KW Parties.............................................................................................. 47
Objections of Mr Hancy and Mr Rodaway.............................................................................. 48
Objections of Madgwicks Lawyers........................................................................................... 48
Submissions of the Lewski companies....................................................................................... 52
What orders should be made?................................................................................................... 52
The orders sought by Mr Lewski.............................................................................................. 53
Conclusion on orders................................................................................................................ 55
HIS HONOUR:
Introduction
On 19 September 2012, the plaintiff (APCH) issued a subpoena addressed to ASIC to produce documents to the Prothonotary. In particular, APCH sought the production of the following:
(1) The transcript of any hearing or examination conducted by [ASIC] in relation to the following:
(a) William Lewski;
(b) Dr Michael Wooldridge;
(c) Mark Butler;
(d) Peter Clarke;
(e) Kim Jaques; and
(f) any other person
in relation to the matters the subject of the Federal Court of Australia proceeding [the proceeding by ASIC against the first five defendants in this proceeding].
(2) Any “related book” in relation to the Directors within the meaning of section 25 of the ASIC Act.
(3) Any document recording or evidencing the disposition of whereabouts of the “Listing Fee Balance” as defined in [a statement of claim filed in the ASIC Federal Court proceedings].
There is a wide definition of “document” included in the subpoena.
The subpoena specified the date for production as 26 September 2012. In answer to the subpoena, ASIC produced to the Prothonotary a bundle of documents (presumably including the record of the examinations of the persons identified and any related books and the documents sought in para 3). By letter dated 25 September 2012, the first defendant (Dr Wooldridge) objected to inspection by APCH and stated grounds of objection to the subpoena. Under r 42A.08, a notice of hearing of the objection made by Dr Wooldridge (dated 2 October 2012) was given to APCH. Mr Lewski and Mr Jaques also objected in writing to inspection by APCH.
Pursuant to r 42A.09, the Prothonotary referred the objections to Associate Randall for hearing on 15 November 2012. The objection was then referred to me, and first came on for hearing on 12 December 2012. The hearing of the objection was adjourned to 13 February 2013, where the objection of Dr Wooldridge, Mr Lewski, and Mr Jaques were heard by me.
In addition to the three formal objections, other defendants have informed APCH that they also object to APCH inspecting records of the examinations and related books. ASIC has not appeared, nor has it made any submissions to the Court.
In addition to the hearing of the objections under O 42, Mr Jaques raised a jurisdictional objection that O 42 is not “picked up” under s 79 of the Judiciary Act 1903 (Cth) (Judiciary Act).
Summary of conclusions
For the reasons that follow, I have decided that:
(a) the Judiciary Act submission should be rejected;
(b) the objections by Dr Wooldridge, Mr Clarke, Mr Lewski and Mr Jaques should be allowed in part, to the extent that APCH should be permitted to inspect the transcript of the examinations of each of those defendants and the relevant related documents on conditions which I set out in full below.
(c) the objections of the sixth, twelfth, and fourteenth defendants (the KW Parties), the ninth, tenth and eleventh defendants (the Lewski Companies), and Madgwicks Lawyers to APCH inspecting any documents relating to them produced by ASIC under the reference in the subpoena to “any other person” should be allowed.
Section 79 of the Judiciary Act 1903
It is convenient to deal with the s 79 point first. Mr Jaques contends that by reason of the provisions of s 79 of the Judiciary Act the power to subpoena transcripts sought under O 42 is not available in these proceedings, and that the power to obtain the transcripts is provided under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).
Section s 79 of the Judiciary Act provides:
(1) The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
Mr Jaques contends that the State procedure for the subpoenaing and inspection of subpoenaed documents provided for in the Supreme Court (General Civil Procedure) Rules 2003 (Vic) (the Rules) has no application to the current proceedings where this Court is exercising Federal jurisdiction under the Corporations Act 2001.
Mr Jaques contends that the ASIC Act sets up a scheme under which the common law privileges and rights of an examinee are overborne and a record kept of the examinee’s examination. Under the scheme, ASIC is required to keep the record of the examination in confidence save for some statutory exceptions. Under one exception, at ASIC’s discretion, a party carrying on a proceeding in respect of the matter to which the examination relates may obtain a copy of the record of the examination to use in the litigation.
Mr Jaques contends that the proceeding involves the exercise by this Court of Federal jurisdiction. In this proceeding, APCH seeks relief under the Corporations Act 2001 (Cth) (Corporations Act) including pursuant to ss 1317H, 1317HA, and 1325 of the Act, relying on breaches of the Corporations Act 2001 and common law breaches of duty. I have outlined the nature of the claims in Re APCH (No 2).[1]
[1][2012] VSC 576 (Re APCH No 2).
The proceeding involves a matter arising under a law made by the Commonwealth Parliament: Constitution s 76(ii). Pursuant to s 77 of the Constitution, the Commonwealth Parliament may make laws vesting a State court with Federal jurisdiction, and pursuant to s 39(2) of the Judiciary Act, the Supreme Court of Victoria is vested with Federal jurisdiction.
A State court hearing “a matter” in Federal jurisdiction that includes Federal and non-Federal issues or causes of action, exercises Federal jurisdiction in respect of the whole of the matter, save in respect of a completely disparate claim constituting in substance a separate proceeding: Felton v Mulligan;[2] Moorgate Tobacco Co Ltd v Philip Morris Ltd.[3]
[2](1971) 124 CLR 367, 373 ( Barwick CJ), 410-413 (Walsh J).
[3] (1979) 145 CLR 457, 472-3 (Gibbs J), 476-477 (Stephen, Mason, Aickin and Wilson JJ); see also the useful summary of applicable authority in Stack v Coast Securities (No 9) Pty Ltd (1983) 46 ALR 451 at 462-471; and Mark Leeming, Authority to Decide: The Law of Jurisdiction in Australia (Federation Press, 2012), 86-89.
Mr Jaques contends that a State has no power to enact procedural law in respect of a State court exercising Federal jurisdiction.[4] Section 79 of the Judiciary Act operates to provide the procedural law necessary for State courts in exercising Federal jurisdiction. Mr Jaques submits that by the operation of s 79, State procedural law becomes Commonwealth law for the purposes of determining the federal matter in the State Court.[5]
ASIC Act
[4]John Robertson & Co Ltd (in liquidation) v Ferguson Transformers (1973) 129 CLR 65 at 80 per Menzies J and at 87 per Gibbs J.
[5]Northern Territory v GPAO (1999) 196 CLR 553 (Northern Territory), [80] per Gleeson CJ and Gummow J.
Pursuant to Part 3, Division 1 of the ASIC Act, ASIC may make investigations. Pursuant to s 19, ASIC can require a person to appear before a staff member for examination on oath. Pursuant to s 24, ASIC may make a record of the statements made at the examination. The examination must take place in private (ASIC Act, s 22) and ASIC has an obligation to keep confidential information it receives (ASIC Act, s 127).[6]
[6]As to ASIC’s confidentiality obligations generally see Johns v ASC (1993) 178 CLR 408.
Section 25 of the ASIC Act deals expressly with the release of a record of a s 19 interview to a person involved in or contemplating litigation. It provides:
Giving to other persons copies of record
(1) ASIC may give a copy of a written record of the examination, or such a copy together with a copy of any related book, to a person’s lawyer if the lawyer satisfies ASIC that the person is carrying on, or is contemplating in good faith, a proceeding in respect of a matter to which the examination related.
(2) If ASIC gives a copy to a person under subsection (1), the person, or any other person who has possession, custody or control of the copy or a copy of it, must not, except in connection with preparing, beginning or carrying on, or in the course of, a proceeding:
(a) use the copy or a copy of it; or
(b)publish, or communicate to a person, the copy, a copy of it, or any part of the copy’s contents.
Penalty: 10 penalty units or imprisonment for 3 months, or both.
(2A) Subsection (2) is an offence of strict liability.
(3) ASIC may, subject to such conditions (if any) as it imposes, give to a person a copy of a written record of the examination, or such a copy together with a copy of any related book.
Mr Jaques contends that the intention of s 25 is to establish a “gateway’ that qualifies ASIC’s obligation to treat information it receives as confidential: see generally ASIC Act, s 127. By this gateway, a person in good faith contemplating or carrying on a proceeding in respect of a matter to which an examination is related can, in appropriate circumstances and subject to the statutory controls in s 25(2), obtain access to a written record of the examination conducted by ASIC.
ASIC maintains policies in relation to the exercise of the power to release information under s 25. They are set out in ASIC Regulatory Guide 103, as follows:
Release of transcripts and related books
RG 103.16 ASIC may release transcripts or related books as an authorised disclosure under s 127 or under s 25(1). Under s 25(1) ASIC may release transcripts of examinations conducted by it under s 19 and related books to a person’s lawyer if the lawyer satisfies ASIC that the person is carrying on, or is contemplating in good faith, a proceeding in respect of a matter to which the examination related. Subsection 25(2) limits the use which may be made of copies released under s 25(1). ASIC may also impose additional conditions on the release of documents: see RG 103.37. In ASIC’s view plaintiffs/applicants and defendants/respondents to an action are entitled to apply for transcripts as well as intending plaintiffs and applicants: see Wardley v ASC (1991) 9 ACLC 1565.
RG 103.17 ASIC considers that the words “related books” refer to documents formally identified and incorporated in the record of examination, and also to documents referred to directly or indirectly in the record which would help people to understand the record. For example, if an officer of a company refers to a meeting which occurred on a particular day, the minutes of that meeting would constitute a related book.
RG 103.18 In exercising its discretion as to whether it should release copies of transcripts using the power in s 25(1), ASIC:
(a) must be satisfied that the person is carrying on, or contemplating, a proceeding;
(b) must be satisfied that the proceeding is in respect of a matter to which the examination (or part of an examination) is related;
(c) will consider whether any of ASIC’s enforcement requirements — relating to the continued investigation, prosecution, instituting or intervening in civil proceedings or taking of administrative action — would be jeopardised by the release of the transcripts; and
(d) will consider whether other persons may be adversely affected by the release of the transcripts (see RG 103.52).
ASIC will also have a general discretion, taking into account factors such as:
(a) its functions and powers;
(b) the objects of the Corporations Law and ASIC Law;
(c) interpretations by the court in decisions such as Wardley and Johns; and
(d) the public interest generally.
While ASIC will take all these factors into account, in the absence of compelling reasons to the contrary ASIC will generally assist litigants by disclosing transcripts as contemplated by s25(1).
RG 103.19 Section 25(3) provides ASIC with a general ability to release transcripts and related books. In Johns v ASC (1993) 178 CLR 408, the High Court held that s 25(3) is a machinery or facultative provision: it merely enables the provision of transcripts and books and the imposition of conditions, where the release is for a purpose authorised in some other way (eg by one of the provisions of s 127). ASIC may impose conditions on releases under s 25(3). A contravention of a condition imposed under s 25(3) is an offence against s 26.
The meaning of “otherwise provided”
Section 79 of the Judiciary Act is qualified. It operates “except as otherwise provided by the Constitution or the laws of the Commonwealth.” A similar analysis applies to s 64 of the Judiciary Act, which can pick up a State law to fill lacunae or gaps in Commonwealth law,[7] and s 68(1) of the Judiciary Act, which picks up State criminal procedure in respect of Commonwealth offences. Neither s 64 nor s 68(1) will “pick up” a State law if the relevant Commonwealth statute is ‘complete on its face’, or if it can ‘be seen to have left no room’ for the operation of the State act.[8] In Putland v The Queen,[9] Gleeson CJ said that there was little relevant difference between s 68(1) and s 79 of the Judiciary Act.
[7]Dao v Australian Postal Commission (1987) 162 CLR 317, 331-2; Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55, 64.
[8]In relation to s 64, Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55, 64; in relation to s 68(1), R v Gee (2003) 212 CLR 230, [62] (McHugh and Gummow JJ); Bui v DPP (2012) 201 CLR 213 (Bui), [25] (French CJ, Gummow, Hayne, Kiefel, and Bell JJ); see also G Hill and A Beech, “‘Picking up’ State and Territory laws under s 79 of the Judiciary Act — three questions” (2005) 27 Australian Bar Review 25, 38.
[9](2004) 218 CLR 174 (Putland), [7].
In Deputy Commissioner of Taxation v Moorebank Pty Ltd,[10] the High Court considered whether a State limitation of actions act applied to provide a defence to a claim by the Commissioner of Taxation for unpaid taxes. Although s 64 is in different terms to s 79, the Court adopted a similar approach in deciding whether a Commonwealth law – in this case the Income Tax Assessment Act 1936 (Cth) (Income Tax Assessment Act) – was inconsistent with the State Limitation of Actions Act 1974 (Qld) (Limitation of Actions Act). The Court held that the State Limitation of Actions Act did not apply to the proceedings brought by the Commissioner. In coming to that view, the Court identified as a relevant criteria whether the Commonwealth law had “effectively covered the field and left no room for the direct or indirect intrusion of provisions of State Limitation Acts to limit the time in which an action could be brought on behalf of the Commissioner of Taxation for unpaid income tax or additional tax.”[11]
[10](1988) 165 CLR 55 (Moorebank).
[11]Ibid, 64.
The Court also held that even though there was not necessarily any direct inconsistency between the State Limitation of Actions Act and the Income Tax Assessment Act, the Limitation of Actions Act would “significantly undermine the scheme” for the collection of tax under the Income Tax Assessment Act,[12] and that the intrusion of the Limitation of Actions Act would be “incompatible” with the existence of the Commissioner’s powers under the Income Tax Assessment Act.[13]
[12]Ibid, 66.
[13]Ibid.
The qualification “except as otherwise provided by the Constitution or the laws of the Commonwealth” was explored by the High Court of Australia in Northern Territoryv GPAO.[14] The High Court considered, amongst other issues, whether the Family Law Act 1975 (Cth) (Family Law Act) “otherwise provided” within the meaning of s 79 to deny a Northern Territory law being “picked up” and applied by s 79, in a child custody case being heard in the Family Court of Australia. Under a provision of the Community Welfare Act 1983 (NT) (Community Welfare Act), officers of the Child and Family Protection Services were not obliged to produce under subpoena certain documents for certain specified purposes. It was argued that the Northern Territory law did not apply to the Family Court proceedings, and, that accordingly a subpoena issued to the Child and Family Protection Services by the Family Court should have been observed. It was contended that the relevant provisions of the Community Welfare Act were inconsistent with the Family Law Act and in particular to the “paramountcy principle”, which provides that in deciding whether a particular parenting order should be made a court must regard the best interests of the child as the paramount consideration.
[14](1999) 196 CLR 553 (Northern Territory v GPAO), [79]-[81].
The High Court held that the state law was “picked up” by s 79 of the Judiciary Act and operated as a surrogate federal law[15] to be applied in the case before the Family Court.[16] Chief Justice Gleeson and Gummow J said:
[15]In Austral Pacific Group v Airservices Australia (2000) 203 CLR 136 (Airservices Australia), [11], Gleeson CJ, Gummow and Hayne JJ described the operation of s 79 as “picking up” up a state law as a “surrogate federal law.”
[16]Northern Territoryv GPAO (1999) 196 CLR 553, [34], [70], [79] and [80].
In applying the phrase “otherwise provided” in s 79, Latham CJ and Starke J asked whether the particular law of the Commonwealth was to be regarded in any way as “inconsistent” with the application of the State Act which was said to be “picked up” by s 79. Later, Menzies J asked whether the law relied upon as a law of the Commonwealth was one “displacing” the law of the State. In Australian National Airlines Commission v Commonwealth, Mason J said:
“Section 26A of the High Court Procedure Act [1903 (Cth)], which provides that judgments of the court shall carry interest, should be regarded as a comprehensive expression of the entitlement in this court of a litigant to interest on damages to the exclusion of any provision in State law which would otherwise be made applicable by virtue of s 79.”
The objective of s 79 is to facilitate the particular exercise of federal jurisdiction by the application of a coherent body of law, elements in which may comprise the laws of the State or Territory in which the jurisdiction is being exercised, together with the laws of the Commonwealth, but subject always to the overriding effect of the Constitution itself. Seen in that light, the notion of “inconsistency” involved in the phrase “otherwise provided” in s 79 is akin to that first identified by Mason J in the passage from the judgment in University of Wollongong v Metwally set out earlier in these reasons. This is the need to resolve the problem that arises by conflict between conflicting statutes having the same source. The law of a State or Territory which is to operate as a surrogate law of the Commonwealth is to be measured beside other laws of the Commonwealth.
The issue whether the [Commonwealth Act] makes relevant provision otherwise to s 97(3) of the [State Act] may be approached by asking whether the operation of the former so reduces the ambit of the latter that the provisions of the [Commonwealth Act] are irreconcilable with those of the [State Act], with the result that the [Commonwealth Act] “otherwise provide[s]”.[17]
[17]Ibid, [79]-81].
The passage from University of Wollongong v Metwally referred to is as follows:
Inconsistency or repugnancy is a long-standing concept in the field of statutory law. Where the provisions of two statutes are in conflict, so much so that they cannot be reconciled one with the other, there is a consequential need to resolve the problem created by the conflict. In the case of conflicting statutes enacted by one legislature the problem is resolved by regarding the later statute as impliedly repealing the earlier statute to the extent of the inconsistency. In the case of conflicting statutes, one enacted by the Imperial Parliament, the other by a colonial legislature, the problem was resolved in favour of the primacy of the Imperial statute, even if it be the first in time.[18]
[18](1984) 158 CLR 447 (Metwally), 463 (citations omitted).
In Airservices Australia, the High Court of Australia considered whether s 79 picked up a State law. Chief Justice Gleeson, Gummow and Hayne JJ said that the criteria to be applied are indicated in Northern Territory v GPAO, as follows:
The question remains whether s 79 was inapplicable because provision otherwise was made by another law of the Commonwealth, namely the Compensation Act. The criteria to be applied are indicated in Northern Territory v GPAO. The question is whether the operation of the Compensation Act would so reduce the ambit of the Contribution Act that the provisions of the Compensation Act are irreconcilable with the other law. If so, the Compensation Act “otherwise provides” within the meaning of s 79 of the Judiciary Act. GPAO shows that the question is not answered by application of the doctrine identified, in the decisions construing s 109 of the Constitution, with the phrase “covering the field”.[19]
[19]Airservices Australia (2000) 203 CLR 136, [17] (citations omitted) (my emphasis).
The plurality also explained how s 79 of the Judiciary Act operates by saying:
The closing words of s 79 indicate, as the authorities confirm, that the section does not enable a court exercising federal jurisdiction to give an altered meaning to a State statute which it is required to apply. The qualification expressed in those authorities, but inapplicable in this litigation, is that a State statute may be “picked up” in a federal court even though in its own terms the State statute is limited in its operation to the courts of the State in question. Here, of course, the federal jurisdiction was being exercised by a State court not a federal court.[20]
[20]Ibid, [13], (citations omitted).
In Macleod v ASIC,[21] the High Court considered whether ASIC, by reason of s 79 of the Judiciary Act, could rely on a law of Western Australia (viz. the Justices Act 1902 (WA)) to authorise an appeal by ASIC to the Full Court of the Supreme Court of Western Australia from a decision of a single justice of the Supreme Court of Western Australia, upholding an appeal by the defendant from an ASIC prosecution under the Corporations Act. The relevant Commonwealth Act provided that ASIC could “cause a prosecution of the person … to be begun and carried on.” The High Court held that this did not provide any power to commence an appeal. The plurality Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ held:
A law of the Commonwealth, such as s 49(2) of the ASC Act, is to be construed as requiring the officers or body in question to have and to exercise only such powers as the Parliament of the Commonwealth thereby has chosen to vest in them. Where the law of a State purports to grant some wider power or authority to such an officer or body, then the law of the Commonwealth will be one by which it is “otherwise provided” for the purposes of s 79 of the Judiciary Act. The result is that federal law did not empower the ASC to institute and conduct the appeal to the Full Court, nor did s 79 “pick up” any provision of State law otherwise expressed in terms sufficiently broad to endow the ASC with the capacity to take those steps.[22]
[21](2002) 211 CLR 287.
[22]Ibid at [44] (citations omitted).
In Putland, the High Court considered the application of s 68 of the Judiciary Act to a State court exercising federal jurisdiction and applying the Sentencing Act (NT) when sentencing an offender for offences under the Commonwealth Crimes Act 1914 (Cth) (Crimes Act). Gleeson CJ said:
The meaning of “otherwise provided” was considered in Northern Territory v GPAO. Relevantly for present purposes, s 52 of the Sentencing Act would not be picked up and applied by s 68 if a Commonwealth law expressly or by implication made contrary provision, or if there were a Commonwealth legislative scheme relating to the sentencing of the appellant which was “complete upon its face” and can “be seen to have left no room” for the operation of s 52. Since the appellant relies upon both kinds of other provision, it is necessary to examine in some detail the Commonwealth laws that are said to have that effect.[23]
[23]Putland (2004) 218 CLR 174, [7] (citations omitted).
The trial judge relied on s 52 of the State Sentencing Act in sentencing the offender for two offences joined in the same indictment by aggregating the sentences. The offender argued that the Commonwealth Crimes Act provided otherwise and that the trial judge did not have the power to do what he did. The Court held that s 68(1) of the Judiciary Act picked up s 52 of the Sentencing Act in relation to the imposition of an aggregate term of imprisonment. The Court held that the relevant provisions of the Crimes Act did not cover the field so as to exclude the aggregating of sentencing by superior courts of federal offenders.
Justices Gummow and Heydon said that even if there was not direct inconsistency between the Federal and State law, the State law may nevertheless be displaced if the federal law “relevantly covered the field.”[24]
[24]Ibid, [51].
In Bui, the High Court held that in sentencing an offender under the Crimes Act, the Supreme Court of Victoria could not take into account double jeopardy, as the Court was permitted to do under State law, as no such provision was provided for in the Crimes Act.[25] The High Court held that provisions such as ss 64, 68(2) and 79 of the Judiciary Act did “not operate to insert a provision of State law into a Commonwealth legislative scheme which was complete upon its face where on their proper construction those federal provisions can be seen to have left no room for picking up of State law.”[26]
[25]See Bui (2012) 244 CLR 638, [25] and its reference to “complete upon its face”.
[26]Ibid.
In Johns v Australian Securities Commission,[27] the High Court considered the circumstances under which the Australian Securities Commission (the predecessor to ASIC) could release information obtained from a person examined under the then Part 3 of the Australian Securities Commission Act 1989 (Cth) (provisions similar to Part 3 of the ASIC Act).
[27](1993) 178 CLR 408.
At issue in the case before the High Court was the release of the record of the examination of Mr Johns, the former managing director of the Tricontinental Group of companies (which collapsed in 1990), to the Royal Commission that was established to examine the collapse.
Justice Dawson held that it was apparent that information given by a person under such an examination must be treated as confidential information by the Commission. His honour held that the duty was not absolute, as the Commission was given statutory authority to disclose information in the circumstances set out in s 127, which set out the purposes for which the information could be disclosed. His Honour said:
Thus, the Act prescribes not only the confidentiality of the transcript, but the means by which and the purpose for which the ASC may disclose that transcript without breach of the duty imposed upon it. There is also a general rule that where a body has statutory powers to compel the provision of information to it, it should not disclose the information except for the purposes for which the powers were conferred: Marcel v. Commissioner of Police; Morris v. Director of the Serious Fraud Office. Any other approach in relation to information gleaned under compulsion would encroach further than necessary upon the right of the individual to treat as confidential information in his or her possession. But in this case, the purposes for which disclosure may be made are specifically set out in the Act.[28]
[28]Johns v Australian Securities Commission (1993) 178 CLR 408, 436 (Dawson J) (citations omitted); see also 423-424 (Brennan J).
Mr Jaques’ contentions
Mr Jaques contends that the relevant question to ask is whether the ASIC Act has established a scheme complete in its own terms. If it is complete, then the scheme can not be supplemented by reference to State laws.
Mr Jaques says that the ASIC Act sets up a scheme under which ASIC is entitled to compulsorily interview people in circumstances where well-established common law privileges do not apply and ASIC may keep a record of such examination. Under this statutory scheme, provision is made for the examination to be kept confidential. There is an express provision dealing with what should happen in circumstances where a person wants access to the record of the examination for the purposes of legal proceedings about the matter the subject of the examination. Mr Jaques says that s 79 can not be used to “pick up” a subpoena power under State law to supplement the Commonwealth scheme. In other words, the plaintiffs are not entitled to use s 79 to “pick up” the State subpoena powers to inspect the records of the examinations for the purpose of pursuing the proceedings where the Commonwealth has implemented a scheme that covers those very circumstances.
APCH concedes that its forensic purpose for seeking access to the s 19 transcripts involves “seeking evidence of relevant admissions, whether or not such admissions can be tendered or used in cross-examination, and identifying lines of inquiry relevant to the plaintiff’s claims or the defence”. Mr Jaques argues that this broadly cast forensic purpose wholly overlaps with the power of ASIC under s 25 to release s 19 examination transcripts to the lawyer of a party “carrying on, or … contemplating in good faith, a proceeding in respect of a matter to which the examination related”. It follows, Mr Jaques contends, that APCH is purporting to invoke State procedural law to modify the regime established under the ASIC Act, to release ASIC from its s 127 obligation and to give ASIC a “wider power” to release the documents than that granted under the Commonwealth legislation. Mr Jaques says that s 79 will not support this attempt, and the State procedural law is not “picked up” as “surrogate” Commonwealth law in these circumstances.
APCH’s submissions
APCH says that there is no inconsistency between the Rules of the Court governing subpoenas and s 25 of the ASIC Act. It says that the suggestion to the contrary by Mr Jaques is based on a misconception. The misconception is to suggest that the effect of a subpoena issued by this Court compelling ASIC to produce to the Court s 19 transcripts will be to “grant some wider power or authority’ to ASIC, enabling it to release the whole of the s 19 transcripts outside the section 25 gateway”.
APCH says that is not the case, nor will the effect of a subpoena be to “give ASIC a ‘wider power’ to release the documents than that granted under the Commonwealth legislation”.
APCH says that ASIC does not need to be granted or given “some wider power or authority” to comply with a subpoena. A subpoena operates as an order of the Court. APCH contends that no person or body needs to be invested with “power or authority” to comply with an order of a court.
APCH submits that existing authority makes it clear that in responding to a subpoena ASIC is not exercising any power or authority to disclose the subpoenaed documents at all. In MaronisHoldings Ltd v Nippon Credit Australia Ltd,[29] Bryson J said:
I do not regard production by ASIC of a document in accordance with a subpoena as a disclosure at all; ASIC has no choice about compliance, and the exercise of producing a document does not fall within the concept of a disclosure.[30]
[29](2000) 18 ACLC 609 (Maronis Holdings).
[30]Ibid, [12].
APCH says that Bryson J also held that the fact that ASIC had power under s 25 of the ASIC Act to release s 19 transcripts did not affect the ability of the Court to compel the production of those transcripts by subpoena. His Honour said:
In my opinion the fact that a procedure exists under s 25 of ASIC Act for the release and use of documents does not qualify and has no implications for the existence or availability of the Court’s powers to allow and control access and inspection. The powers of the Court are not taken away or diminished by implication from provisions of the ASIC Act. The reference in s 127 to unauthorised disclosure is not accompanied by any provision to the effect that all disclosures other than those explicitly authorised elsewhere is s 127 are unauthorised; the word “unauthorised” recognises that disclosure may be required under compulsion of law.[31]
[31]Ibid, [28].
APCH says that the very section that Mr Jaques relies on – s 25 of the ASIC Act – was held to have “no implications for the existence or availability of the Court’s powers to allow and control access and inspection” of transcripts of examinations conducted under s 19 of that Act.
APCH says that s 25 gives ASIC a discretionary power to decide to voluntarily provide s 19 transcripts to a certain class of interested persons. By contrast, upon receiving a subpoena, ASIC is compelled to produce s 19 transcripts to the Court (absent some claim of privilege by ASIC, such as public interest immunity). APCH says that there is no inconsistency at all between those two concepts.
APCH says that if Mr Jaques’ argument was correct, it would mean that all of the courts and parties involved in MaronisHoldings,Shipley v Masu Financial Management,[32] and Watson v AWB (No 3),[33] as well as ASIC in each of those cases and in the present proceeding, had overlooked the fact that it was unlawful for ASIC to produce the transcripts to the Court. APCH says that the more likely position is that the argument was not mentioned in those cases because it is misconceived, for the reasons given above.
[32](2008) 68 ACSR 412.
[33](2009) 181 FCR 96.
APCH argues that for the same reasons, it is wrong to suggest that “section 25 of the ASIC Act … deals with the precise circumstances presently in issue.” The circumstances presently in issue involve the question whether there is any reason why the ordinary process of the Court for the compulsory production of documents ought not apply. Section 25 deals with the question when ASIC can voluntarily disclosure certain documents.
APCH says that the rules relating to subpoenas therefore apply to any proceeding involving the exercise of Federal jurisdiction, and do not cease to apply in the context where a subpoena is issued to ASIC to produce s 19 transcripts.
Discussion
As discussed above, in Airservices Australia, the High Court identified the relevant question in determining whether Federal Law “otherwise provided”[34] as whether the operation of the Federal law would so reduce the ambit of the State law that the provisions of the Federal law are irreconcilable with the other law. If so the Federal law “otherwise provides” within the meaning of s 79 of the Judiciary Act.
[34]Here I adopt and adapt the word of Gleeson CJ, Gummow and Hayne JJ at [17].
Does the operation of s 25 of the ASIC Act so reduce the ambit of O 42 that the provisions of s 25 are irreconcilable with O 42? In my opinion, it does not.
The provisions of the ASIC Act require ASIC to keep confidential the examinations under s 19 save for some statutory exceptions. One of the exceptions is provided in s 25. Section 25 gives a discretion to ASIC whether or not to provide a copy of the record of the examination. The scheme under the Act regulates the circumstances in which ASIC may release a record of an examination The Act does not seek to address circumstances where it may be required under other laws to produce a record of the examination. For example, documents can be subpoenaed to Court under the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) and Federal Court Rules. I assume ASIC could be ordered to produce documents under the Commonwealth Royal Commission powers.
In my opinion, the Federal law does not reduce the ambit of O 42 at all. As APCH says in its submissions, ASIC has been ordered to produce the documents. The ASIC Act addresses situations where ASIC voluntarily makes the decision whether or not to release the documents. The ASIC Act does not direct itself to where ASIC is compelled to release the information by force of law. The ASIC Act limits the circumstances where ASIC may make the decision to voluntarily release the documents. The ASIC Act says nothing about other laws that may compel ASIC to produce the documents. It deals with ASIC responding to requests to produce the record of the examinations.
As was held in Maronis Holdings, ASIC responding to a subpoena is not disclosure at all.
In my opinion, the operation of the ASIC Act does not reduce the ambit of O 42 of the Rules. In my opinion, in those circumstances, O 42 is “ picked up” by s 79 of the Judiciary Act and is applicable as surrogate federal law in the proceedings before this Court.
In any event, s 127(2) of the ASIC Act, which is part of the relevant scheme, recognises that disclosure of information as required or permitted by a law of the Commonwealth is taken to be authorised use and disclosure of information.
I therefore conclude that s 79 of the Judiciary Act “picks up” O 42 as a law of the Commonwealth for the purpose of the State Court exercising Federal jurisdiction in these proceedings.
The Principles to be applied on the hearing of the objections under O 42
I now turn to the objections under O 42. Order 42A establishes a procedure that differs from that applicable to a subpoena duces tecum issued under O 42. Under O 42, an addressee has the option of producing the documents at the hearing of the proceeding or to the Prothonotary (r 42.06(4)). If the addressee elects to produce the subpoenaed documents to the Prothonotary, r 42.09 provides for the Prothonotary to permit inspection of the documents. Provision is also made for objections to inspection by the addressee or any party having sufficient interest or the parties.
If the documents are produced to the Court, however, the Court’s permission is required for the parties to the relevant proceeding or any of them to inspect the subpoenaed documents. Under r 42.09(3), no person may inspect a document or thing produced unless the Court has granted leave and the inspection is in accordance with that leave.
The position is somewhat different under O 42. Under O 42, there is only provision for production of the documents by the addressee to the Prothonotary. The addressee does not have the discretion of producing them to the Court rather than to the Prothonotary. Further, if no relevant objection is made to the production or inspection of a document produced or sought to be produced under the subpoena, each party may as of right inspect the documents produced. The permission of the Prothonotary or the Court is not required.
It is convenient to set out the relevant parts of the Order.
Order 42A
SUBPOENA FOR PRODUCTION TO PROTHONOTARY
42A.01 Application
(1) This Rule applies where a party who has a solicitor in the proceeding seeks to require a person not a party to produce any document for evidence before—
(a) the hearing of an interlocutory or other application in the proceeding; or
(b) the trial of the proceeding.
(2) Order 42 applies so far as is practicable to a subpoena to produce under this Order.
42A.02 Issuing subpoena
A subpoena issued under this Order shall require the addressee to produce to the Prothonotary on or before a day specified by the Prothonotary in the subpoena the document identified in the subpoena.
42A.03 Form of subpoena
A subpoena under this Order shall be in Form 42AA.
42A.04 Affidavit of service
(1) A subpoena under this Order shall be served personally on the addressee.
(2) The issuing party shall serve a copy of a subpoena to produce under this Order on each other party as soon as practicable after the subpoena has been served on the addressee, but it shall not be necessary that the copy served be sealed or be served personally.
(3) A party who serves a copy of a subpoena under this Order shall forthwith file an affidavit of service.
42A.05 Compliance with subpoena
(1) The addressee shall comply with the subpoena under this Order by producing the document to the Prothonotary by delivering or sending it and, if sent, the document shall be sent so that the Prothonotary receives it on or before the day specified in the subpoena.
(2) If the document is not in writing, then, provided the original is held by the person named until trial, a copy only need be produced to the Prothonotary and, if a copy is produced, it shall be clearly marked as such and may be used by the Prothonotary for the purposes of inspection and, if necessary, copying.
42A.06 Receipt for document
Where a document is produced in compliance with a subpoena under this Order the Prothonotary shall, if requested to do so, give a receipt to the person producing the document.
42A.07 Objection by addressee or other person
If—
(a) the addressee has any objection to producing a document identified in the subpoena or to its being inspected by any one or more of the parties to the proceeding; or
(b) a person having a sufficient interest, other than a party, has any objection to the production of a document identified in the subpoena or to its being inspected by any one or more of the parties to the proceeding—
that person shall notify the Prothonotary in writing of that objection and state the grounds of that objection before the day specified in the subpoena.
42A.08 Objection by party to inspection by other party
(1) Subject to paragraph (2), if a party has any objection to the inspection by another party of a document identified in the subpoena, the party having the objection shall notify the Prothonotary in writing of that objection and state the grounds of that objection before the day specified in the subpoena.
(2) If a party other than the plaintiff seeks by subpoena the production of any hospital or medical file or record concerning the plaintiff or his or her condition, the plaintiff may, before taking objection under paragraph (1), inspect the file or record produced to the Prothonotary and notify the Prothonotary thereafter of any objection the plaintiff has to inspection by any other party, provided that the plaintiff makes that inspection and notifies that objection and the grounds of that objection in writing within seven days after the day specified in the subpoena for production of the file or record to the Prothonotary.
42A.09 Procedure after objection
(1) Upon receiving notice under Rule 42A.07 or 42A.08, the Prothonotary shall refer the subpoena to a Judge of the Court or an Associate Judge for the hearing and determination of the objection.
(2) The Prothonotary shall notify the issuing party in writing of the objection and the grounds of that objection and the time and place at which the objection will be heard and that party shall notify the addressee and all other parties accordingly.
42A.10 Inspection of document produced
If no objection is notified under Rule 42A.07 or 42A.08 or to the extent that any such objection is disallowed, each party, unless a Judge of the Court or an Associate Judge otherwise orders, may by appointment with the Prothonotary inspect and take copies of a document produced in compliance with a subpoena under this Order.
42A.11 Removal of document
(1) The Prothonotary shall not permit any document produced in compliance with a subpoena under this Order to be removed from the office of the Prothonotary except upon application in writing signed by the solicitor for a party.
(2) A solicitor who signs an application under paragraph (1) and removes a document from the office of the Prothonotary, undertakes to the Court by force of this Rule that—
(a) the document will be kept in the personal custody of the solicitor or a barrister briefed by the solicitor in the proceeding; and
(b) the document will be returned to the office of the Prothonotary in the same condition, order and packaging in which it was removed, as and when directed by the Prothonotary.
(3) The Prothonotary may, in his or her discretion, decline to accede to any application under paragraph (1).
42A.12 Return of document
….
42A.13 Production of document at trial
Subject to Rule 42A.12, the Prothonotary shall, unless otherwise ordered, produce or hand to the Associate of the trial Judge for production at the trial of the proceeding each document produced to the Prothonotary in compliance with a subpoena under this Order.
42A.14 Subpoena for trial not affected
The issuing of a subpoena under this Order shall not preclude the issuing of a subpoena otherwise than under this Order.
As set out above, r 42A.01(1) provides that:
This Rule applies where a party who has a solicitor in the proceeding seeks to require a person not a party to produce any document for evidence before –
(a)the hearing of an interlocutory or other application in the proceeding; or
(b)the trial of the proceeding.
The predecessor of O 42, r 42.10, was introduced in 1997. As mentioned above, the production of documents under O 42 is to the Prothonotary. The procedure can only be adopted by a party who has a solicitor in the proceeding. The subpoena may only be served on a person who is not a party to the proceeding. Unlike a subpoena issued under O 42, where documents are inspected at the trial with the leave of the judge, the documents may be inspected prior to trial at the Prothonotary’s office
Relevantly, under r 42A.08, if a party has any objection to the inspection by another party of a document identified in the subpoena, the party having the objection shall notify the Prothonotary in writing of that objection and state the grounds of that objection before the day specified in the subpoena. The day specified in the subpoena is the day specified by the Prothonotary on or before which the addressee is to produce the document specified in the subpoena: r 42A.02.
I have emphasised “a document”, as the objection relates to inspection of a document rather than to the subpoena itself. Thus, an objector may successfully object to the inspection by a party (who need not be the party who issued the subpoena) of a particular document, but otherwise inspection by all other parties may proceed as of right under r 42A.10.
On 25 September 2012, the solicitors for Dr Wooldridge forwarded to the Prothonotary a notice of objection to APCH’s inspections of documents produced under the subpoena issued on 19 September by APCH. The grounds of objection were as follows.
The subpoena seeks production of documents including “the transcript of any hearing conducted by ASIC in relation to [our client] in relation to the matters the subject of the Federal Court of Australia proceeding numbered VID594/2012 (Proceeding) commenced by ASIC” (Transcript) and any “related book” in relation to our client within the meaning of section 25 of the ASIC Act (Related Books).
ASIC conducted a hearing and examination of our client pursuant to section 19 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) in May and June 2012.
Our client objects to the plaintiff’s inspection of the Transcript and the Related Books on the following grounds:
1. Pursuant to section 22 of the ASIC Act the examination of our client took place in private although records of statements made at the examination were made pursuant to section 24. The examination was conducted behind closed doors and no person was entitled to be present in the examination other than the examinee, the inspector, approved ASIC staff members, the examinee’s lawyers and persons authorised by the inspector: sections 22 (2) and 23(1) of the ASIC Act.
2. Under section 25(1) of the ASIC Act ASIC may release transcripts of examinations conducted by it under section 19 and related books to a person’s lawyer if the lawyer satisfies ASIC that the person in carrying on, or is contemplating in good faith, a proceeding in respect of a matter to which the examination related. Further, ASIC must take reasonable measures to prevent unauthorised use and disclosure of information it receives in confidence in connection with its statutory functions: section 127(1). Accordingly there is a statutory regime in place designed to protect records of ASIC examinations from disclosure unless the requirements of section 25(1) are met. The plaintiff has not sought to invoke the section 25(1) procedure to obtain the records as far as client is aware and has instead sought production of documents by means of subpoena.
3. The Transcript has not yet been reviewed by ASIC for accuracy nor has our client been required to read it and sign it, as to the latter point, as contemplated by section 24 of the ASIC Act.
4. To allow any person, especially the plaintiff in the present proceeding, to read and use the Transcript and the Related Books will infringe our client’s right to silence and/or the privilege against self-incrimination enjoyed by him.
5. The transcript and the Related Books may contain material that is not relevant to the matters the subject of the Proceeding.
In the circumstances, if access to the subpoenaed documents is to be granted, our client’s view is that access should be restricted to named legal practitioners for the plaintiff in the first instance pursuant to a Court ordered restricted access regime. Further, we and our client should have first access to the Transcript and the Related Books for a period of 14 days for the purpose of making any claim for legal professional privilege and/or redacting any irrelevant material and in the event the plaintiff thereafter intends to deploy the subpoenaed documents in this proceeding, the plaintiff should give us as much notice as is reasonably practicable of its intention to do so.
On 27 September 2012, the solicitors for Mr Lewski forwarded to the Prothonotary a notice of objection to inspection by APCH of the documents produced under the subpoena issued on 19 September 2012 by APCH. The grounds of objection were the same as those given by Dr Wooldridge, save that Mr Lewski’s examination is said to have taken place in July 2012.
On 12 December 2012, Mr Jaques filed by email to my Associate an objection in the same terms as Dr Wooldridge’s, save that his examination is said to have taken place in May 2012. Mr Jaques also raised an objection under s 79 of the Judiciary Act that:
This proceeding is in Federal Jurisdiction. Pursuant to s 79 of the Judiciary Act Victorian procedural law applies, except to the extent that a Commonwealth law provides otherwise. The regime in relation to control of ASIC interviews established by the ASIC Act “otherwise provides” for the purposes of s 79 of the Judiciary Act.
As can be seen, in each case the objection was only to the inspection of the transcript of the objector and any related books in relation to the objector. Mr Lewski’s and Mr Jaques’ objection were out of time, but APCH did not take any point about the time of the objection.
Summary of objections
At the hearing, objections to inspection were raised by:
(a) The first defendant, Dr Wooldridge;
(b) The second defendant, Mr Clarke;[35]
[35]Mr Clarke did not appear on the hearing of the objections but informed the Court by email that he adopted the submissions of the first and third defendants regarding the subpoena.
(c) The third defendant Mr Lewski;
(d) The fifth defendant, Mr Jaques;
(e) The fifteenth defendant, Madgwicks Lawyers.
Mr Butler (the fourth defendant), represented by Mr McLean of counsel, appeared on 12 December 2012 but did not appear on 13 February 2013. Instead, on 12 February 201, Mr Butler’s solicitor emailed my Associate to indicate that “the Fourth Defendant also relies upon and adopts the submissions advanced on behalf of each of the First and Third Defendants” (presumably mutatis mutandis).
The KW Parties, represented by Mr Slattery of counsel, appeared and did not object to the parties inspecting the subpoenaed documents but made submissions as to a proposed order limiting the terms upon which inspection should be permitted.
Mr Hancy and Mr Rodaway (the seventh and eighth defendants), represented by Mr Dalton of counsel, appeared and made submissions on the terms upon which inspection by all parties should be allowed.
The Lewski Companies, represented by Ms Bentley of counsel, did not make any submissions on s 79 or the inspection issues. They support Mr Lewski’s proposed form of order, if inspection is permitted.
Kidder Communities (the thirteenth defendant), represented by Mr Curran, appeared but did not make any submissions orally or in writing.
Madgwicks Lawyers (the fifteenth defendant), represented by Mr Luxton of counsel, appeared and opposed inspection of any record of examination of any of its partners or employees.
Although Mr Clarke and Madgwicks Lawyers did not file grounds of objection under r 42A.08, no issue was taken to them objecting to inspection. I have assumed that, like Dr Wooldridge, Mr Jaques, and Mr Lewski, Mr Clarke’s objection is to the inspection of the record of his own examination and, in the case of Madgwicks, to the record of any examination of any member or employee of the firm.
No objection was made by any of the parties to any of the defendants inspecting any of the documents produced on the subpoena.
There was no objection made to APCH inspecting any documents produced under para 3 of the subpoena, to whit, “[a]ny document recording or evidencing the disposition of whereabouts of the “Listing Fee Balance” as defined in [a statement of claim filed in the ASIC Federal Court proceedings].”
ASIC itself does not appear, nor has it objected to inspection by the plaintiff or by any other party. APCH has not disclosed to the Court whether or not it sought ASIC’s leave under s 25 of the ASIC Act to be given a copy of the documents, or, if it did, what the response of ASIC was.
Order 42A does not specify any matters the Associate Judge or a Judge should take into account on the hearing and determination of the objection. Rule 42A.10 contemplates that an objection may be disallowed to an extent. As discussed below, there are well-established principles that apply to the inspection of documents subpoenaed under O 42. It was not suggested to me that those principles should not be applied in considering the objections to APCH inspecting the subpoenaed documents.
The defendants have objected to APCH inspecting the documents produced by ASIC. In substance, the defendants rely on four grounds:
(a)the privilege against self-incrimination would be infringed if the transcripts of the examinations were inspected;
(b)the whole of the examinations were confidential and thus it would not be appropriate to permit inspection of the subpoenaed documents;
(c)APCH has not established a legitimate forensic purpose for examining the subpoenaed documents; and
(d)APCH is “fishing” in seeking production of the record of examination of “any other party”.
APCH agrees that if inspection is permitted, it should be limited to legal practitioners. APCH says that the documents are clearly relevant because the ASIC examinations concerned the subject matter of the litigation and the transactions that are challenged.
Principles relating to inspection of documents
In National Employers’ Mutual General Insurance Association Ltd v Waind & Hill,[36] the Court of Appeal of the Supreme Court of New South Wales expressly dealt with the issues relating to the production of documents on subpoena and the issues dealing with inspection of documents that had been produced on subpoena. The Court laid down the relevant factors that a Court should take into account in deciding whether or not to permit a party to have inspection of documents produced to the Court on subpoena.
[36][1978] 1 NSWLR 372 (Waind & Hill).
President Moffitt (with whom Hutley and Glass JJA agreed) said that the procedure of having a third party bring documents into court pursuant to a subpoena and their subsequent use could be divided into three steps. The first was the obedience to the subpoena by the addressee bringing the documents into court and handing them to the judge. At this stage, the addressee may object to the subpoena and seek to have it set aside. The second step was the decision by the judge concerning the preliminary use of the documents, including whether or not permission should be given to a party to inspect the documents. In that case, the court may hear objections from one party as to the inspection of the documents by another party. The third step was the admission into evidence of a document produced under the subpoena, in whole or in part, or its use in the process of evidence, being put before the court by cross-examination or otherwise.
President Moffitt considered the ambit of the purpose for which inspection could be sought. His Honour said as follows:
The critical question for present purposes, however, arises in relation to the second step, as to the exercise of the power of the judge to permit inspection. Does he have a judicial discretion to permit the use of the documents in any such way as he considers will aid a proper decision of the issues between the parties, by facilitating the elucidation of the truth in respect of relevant facts, or is his power restricted so the documents can only be used in a more limited way, so access is given to them only to enable their tender in evidence or in some of the other limited ways submitted.[37]
[37]Ibid.
President Moffitt said that the trial judge has a discretion to permit the use of documents produced in court and within his control in such a way as he considers will aid a proper decision of the issues between the parties, by facilitating the elucidation of the truth in respect of the relevant facts in issue.
President Moffitt said that once the documents are in the possession of the Court, then (if there is no objection by the addressee who produces the document to the parties inspecting the documents) there would be little reason not to permit either party to inspect the documents. His Honour said that there may be good reason why the judge should refuse inspection of irrelevant material of a private nature concerning a party to the litigation, or concerning some other person who is neither a party nor the addressee. His Honour said:
It may well be that the documents are the property of some institution, but relate to private matters concerning some person and the officers of the institution do not take objection on the basis that the responsibility for disclosure rests with the court. The documents are in its control and are used on its responsibility so far as properly required for the purpose of the proceedings.[38]
[38]Ibid.
Following Waind & Hill, there were a series of cases dealing with applications in the Federal Court of Australia for a subpoena to be issued to compel a third party to produce documents to the Court before the final hearing of the principal proceeding.[39] At the time of these applications, the Federal Court Rules did not contain an express rule permitting such a course. Reliance was placed by the applicants for subpoenas on s 23 of the Federal Court of Australia Act 1976 (Cth).
[39]Hughes v Western Australian Cricket Association Inc (1986) 66 ALR 541, and the cases referred to in the following paragraphs of my judgment.
In FCT ex parte Swiss Aluminium Australia Ltd,[40] the Court held that the Federal Court of Australia had the power to order (by subpoena) the production of documents to the Court before the hearing of the proceeding. Justice Beaumont held, however, that “before exercising its discretion to make such an order [that is, issue the subpoena], the court will need to be satisfied that a legitimate forensic interest is being advanced by the adoption of this special procedure.”[41] Later, his Honour used the term “legitimate forensic purpose” interchangeably with “legitimate forensic interest.”
[40](1986) 68 ALR 587.
[41]Ibid, 590.
Justice Beaumont said that “[if] the proper inference to be drawn from the facts of the case is that a subpoena has been issued to a stranger, not with a view to obtaining documents for use at a trial, but in order to discover, for some other purpose, what documents the stranger holds, an abuse of process may have occurred.”[42]
[42]Ibid, 589-590.
In the case before Beaumont J, Swiss Aluminium sought mandamus against the Commissioner of Taxation to compel the Commissioner to consider and deal with objections to assessments on the basis of “transfer pricing.” Swiss Aluminium sought to issue subpoenas to two other aluminium producers, Kaiser and Alcan, to produce documents relating to their assessments based on transfer pricing. Kaiser and Alcan applied to have the subpoenas set aside.
Justice Beaumont held that in applying a purposive test it was too early to form a view on the question of whether the subpoenas were in truth an abuse of process. His Honour said that if the same or substantially the same documents were produced by the Commissioner on discovery, then it was difficult to see how the subpoenas could have a legitimate forensic purpose. Accordingly, he adjourned the subpoenas to await the Commissioner’s discovery.
In R v Saleam,[43] the defendant was convicted in criminal proceedings. On appeal, he sought production of documents held by the DPP and the Commissioner of Police. The Court refused the order for production. Justice Simpson (with whom Spigelman CJ and Studdert J agreed) held that the principles governing inspection of documents produced on subpoena were that the applicant must establish a legitimate forensic purpose and establish that it is “on the cards” that the documents will materially assist his case. His Honour said:
… The “on the cards” test was formulated by Gibbs CJ in Alister v R (1984) 154 CLR 404 at 414 in relation to an appeal against conviction for murder on the ground that access to certain documents produced in answer to a subpoena had been denied on the basis of public interest immunity.
The principles governing applications of this kind are no different from those governing applications for access to documents produced in answer to a subpoena. Before access is granted (or an order to produce made) the applicant must (i) identify a legitimate forensic purpose for which access is sought; and (ii) establish that it is “on the cards” that the documents will materially assist his case. So much was established in earlier proceedings brought by this applicant: R v Saleam (1989) 16 NSWLR 14, per Hunt CJ at CL; see also R v Ali Tastan (1994) 75 A Crim R 498 per Barr AJ, as he then was.[44]
[43][1999] NSWCCA 86 (Saleam).
[44]Ibid, [10]-[11].
In Skrijel v Mengler,[45] Nettle J was called on to rule on the objection by a defendant to produce certain documents identified in subpoenas directed to it issued by the plaintiff. His Honour cited with approval the New South Wales Court of Appeal decision in Waind & Hill and held that:
… the relevant test to be applied in determining whether documents may be subject of a subpoena duces tecum is whether, having regard to the issues as defined in the pleadings, the documents are either directly relevant to matters in issue or might come within the second leg of the test in Peruvian Guano, as documents that could lead the plaintiff upon a path of inquiry either to advance his own case or to impeach the case which is made against him.[46]
[45][2003] VSC 55 (Skrijel v Mengler).
[46]Ibid, [5] (citations omitted).
Justice Nettle accepted the submission that certain documents should not be produced as there was no legitimate forensic purpose for the production of the documents in the proceedings and implicitly accepted that the expression “legitimate forensic purpose” encapsulated the test that he had applied in determining whether documents may be subject of a subpoena duces tecum.[47] Similarly, in Shaw v Yarranova Pty Ltd & Anor,[48] Redlich and Mandie JJA said that in deciding whether a subpoena should be answered the applicant must identify a legitimate forensic purpose.
[47]Ibid, [7].
[48][2011] VSCA 55.
In Principal Registrar of the Supreme Court of New South Wales v Tastan,[49] Barr J of the Supreme Court of New South Wales set aside a subpoena addressed to the Supreme Court Registrar to produce documents relating to an application filed with the Court for a warrant to authorise the use of a listening device. The applicant for the subpoena was the defendant in a drugs case where evidence from a listening device was used against him. Justice Barr held it was the duty of the court, where the issue was raised, to require the party calling on a subpoena to produce documents to identify expressly and precisely the legitimate forensic purpose for which access to documents was sought and refuse access unless such an identification was made.
[49](1994) 75 A Crim R 498 (Tastan).
The test of “legitimate forensic purpose” has also been applied in considering an objection to inspection of subpoenaed documents as opposed to their production. In Killorgan Investments Pty Ltd v Baycorp Advantage Business Information Services Ltd,[50] a third party had produced documents on a subpoena issued by the defendant under r 42.10 (the predecessor of O 42). The plaintiff objected to the defendants inspecting the documents. The third party did not object to the defendant inspecting the documents. In deciding whether to permit inspection, Byrne J said:
The degree of relevance for his purpose is not high: the inspecting party need only show a legitimate forensic purpose for the inspection. A party is entitled to inspect documents not only to see if they contain relevant facts, but also to see if they contain information which may be proved otherwise than through that document.[51]
[50][2002] VSC 270.
[51]Ibid [7].
In Kennedy Taylor (Vic) Pty Ltd v Grocon Pty Ltd,[52] Gillard J discussed the reason why r 42.10 was introduced, namely to overcome problems associated with the inconvenience and disadvantages which could arise from the production of documents at trial. In the case before his Honour, the plaintiffs were having difficulty giving particulars in support of their statement of claim and sought documents on subpoena for that purpose. Justice Gillard held that r 42.10 could not be used for the purpose of drawing pleadings, but could only be used to acquire evidence or possible evidence before trial.
[52][1999] VSC 242 (Kennedy Taylor v Grocon).
In Newnham v Davis,[53] Kaye J dealt with an objection by third parties to the production of documents subpoenaed by the defendant and also objected to by plaintiff. After referring to r 42A.01, his Honour said that the purpose of the Rule was the production of the document “for evidence.” His Honour held that the Rule, by its express terms, only authorised the issue of a subpoena where the document the subject of the subpoena may potentially be admissible as evidence in the proceeding. He said that in order to be admissible, the document of which production is sought must have at least some potential relevance to the issues defined in the proceedings. His Honour referred to Kennedy Taylor v Grocon and said that:
The test of relevance to be applied in such a case as this was the subject of some debate between counsel. Dr M Collins, who appeared for the plaintiff, referred to the test stated by Waddell J in Spencer Motors Pty Ltd v LNC Industries Limited, namely, that inspection of a document sought by a subpoena should only be granted “… so far as is necessary in the proper conduct of the litigation and this means where it is reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case”. On the other hand, Mr S Wilson QC, who appeared with Mr T McEvoy for the defendant, submitted that the applicable test is that stated by Gibbs CJ in Alister v R, namely that the test for relevance of documents sought on a subpoena is whether it “appears to be ‘on the cards’ that the (documents in question) will materially assist the defence”.
In practical terms, for the purposes of this application, there is probably little difference between the two tests. In Spencer Motors, Waddell J based the test, applied by him, on the decision of the New South Wales Court of Appeal in Waind & Hill. That test has been followed on a number of occasions by other primary judges, including judges of this Court.
On the other hand, the formula adopted by Gibbs CJ in Alister was specifically stated by his Honour to be applicable in a criminal case, in which the courts adopt a more liberal approach to production of documents under subpoena, because the liberty of the subject is at stake. Nevertheless, as has been observed in the authorities, at the stage at which a subpoena is served, the court has, at best, only a general conception of the issues in the case, and of the nature of the evidence which is to be adduced in relation to them. Thus, as noted by Byrne J in Yunghanns v Candoora No 19 Pty Ltd the court is not “unduly astute” to reject the possibility that a document, which is the subject of a subpoena, does not meet the test of relevance.[54]
[53][2010] VSC 13.
[54]Ibid, [7]-[9] (citations ommited).
In Commissioner of the Australian Federal Police v Magistrates’ Court of Victoria,[55] J Forrest J summarised the relevant principles relating to the inspection of subpoenaed documents as follows:
[55][2011] VSC 3; followed by Kyrou J in DPP v Debono [2012] VSC 350, [197].
The following principles apply in determining whether a party is entitled to access documents the subject of a subpoena:
(a) it is necessary for the party at whose request the witness summons was issued to identify expressly and precisely the legitimate forensic purpose for which access to the documents is sought;
(b) the identification of such a legitimate forensic purpose is to be considered by the court without inspecting the documents sought to be produced;
(c) the applicant for the witness summons must also satisfy the court that it is “on the cards”, or that there is a “reasonable possibility”, that the documents sought under the subpoena “will materially assist the defence”.
(d) a “fishing expedition” is not a legitimate forensic purpose and will not be permitted;
(e) the relevance of a document to the proceeding alone will not substantiate an assertion of legitimate forensic purpose. There is no legitimate forensic purpose if the party is seeking to obtain documents to see whether they may be of relevance or of assistance in his or her defence.
(f) a mere assertion of bad faith by an applicant or that something might be found demonstrating bad faith is not enough – the criteria set out in (c) must be satisfied.
(g) in criminal proceedings a “more liberal” view is taken by a court in respect of the application of the test. Special weight is to be given to the fact that the documents may assist the defence of the accused.
(h) where a party fails to demonstrate a legitimate forensic purpose, the court should refuse access to the documents and set aside the witness summons.[56]
[56]Commissioner of the Australian Federal Police v Magistrates’ Court of Victoria [2011] VSC 3, [28] (citations omitted).
In Shaw v Yarranova Pty Ltd, Redlich and Mandie JJA said:
There will be no legitimate forensic purpose if, “all the party is doing is trying to get hold of the documents to see whether they may assist him in his case.“ The court must both be satisfied that the documents are relevant to an issue and that there is something in the material then before the court that makes it appear likely that the documents will materially assist the applicant.[57]
[57][2011] VSCA 55, [26] (citations omitted).
Reference should also be made to Mukhtar AsJ in Burchell v Hill.[58] It is with these principles in mind that I now address the objections of the defendants.
[58][2010] VSC 96.
Inspection of examinations subpoenaed from ASIC
I now turn to three cases where the Court considered issues relating to the inspection of records of examination subpoenaed from ASIC. In Maronis Holdings, the plaintiffs sought leave for each party to inspect the records of examination of three of the defendants produced by ASIC on subpoena. This application was opposed by the three defendants, who had been examined by ASIC and the records of which examinations had been produced on subpoena. Justice Bryson of the Supreme Court of New South Wales dealt with several issues relevant to the matter before me.
Justice Bryson said that he did not regard the production by ASIC of a document in accordance with the subpoena as a disclosure by ASIC. His Honour said production and compliance with a subpoena was not a thing which ASIC was enabled to do under s 25 of the ASIC Act.
His Honour said that where ASIC produces a document to a court in compliance with a subpoena or other order of a court, the protection of confidentiality with respect to the documents comes under the control of that court, and is not under the control of ASIC.[59] In the matter before his Honour, the objection had been taken that the record of the examinations contained confidential communications that were obtained pursuant to the exercise of the compulsory powers of ASIC’s predecessor, the ASC.
[59]MaronisHoldings (2000) 18 ACLC 609, [13].
Justice Bryson said that when the Court was considering directions concerning access to an inspection of documents which had been produced in the subpoena, the court should take into account claims of confidentiality and give them appropriate protection. However, his Honour said that claims of confidentiality were not the only consideration before the Court when a party applied for access. His Honour said that the claim of confidentiality could be overridden by other considerations relating to public interest in the administration of justice and the interests of the litigants in having relevant evidence available for tender.[60]
[60]Ibid, [15].
Justice Bryson accepted that the right of inspection was as stated by Moffitt P in Waind & Hill (as I have discussed above). Justice Bryson added that the purpose of facilitating the elucidation of truth referred to by Moffitt P could be served if inspection would show matters which might be used in cross-examination, even if the document itself would not prove them or if inspection would tend to reveal the significance of other facts or documents.[61]
[61]Ibid, [18].
Of course, as was held in Watson v AWB, orders for inspection will be drafted to meet as far as possible the confidential nature of the evidence given to ASIC.
The objections of Mr Jaques, Mr Clarke and Mr Butler
Mr Jaques filed a formal objection under the Rules to APCH inspecting the transcript of his examination and related documents. He relies on the arguments put forward by Mr Lewski.
Mr Clarke did not file a formal objection. He adopted the submissions of Mr Lewski and Dr Wooldridge. I have assumed that his objection is to the inspection by APCH of the transcript of his examination and related documents.
Similarly, Mr Butler did not file a formal objection. He adopted the submissions of Mr Lewski and Dr Wooldridge. I have also assumed that his objection is to the inspection by APCH of the transcript of his examination and related documents.
The objections of the KW Parties
The KW Parties (the sixth, twelfth, and fourteenth defendants) did not file a formal objection to inspection.
At the hearing, however, the KW Parties objected to APCH inspecting any documents produced by ASIC relating to the examination of “any other person” associated with the KW Parties. No point was taken that no formal objection was filed and served in accordance with the Rules.
Mr Slattery, counsel for the KW Parties, submits that APCH has not established that the transcript of the KW Parties and any documents produced by the KW Parties to ASIC are sought for a legitimate forensic purpose in that it is “on the cards” or there is a “reasonable possibility” that those transcripts and documents will materially assist APCH’s case.
The KW Parties submit that APCH has not established that the transcript of the ASIC examination of the KW Parties will materially assist its case. They say that it is not sufficient for APCH to establish simply that the transcripts are likely to contain relevant material. The rely on Commissioner of the Australian Federal Police v Magistrates’ Court of Victoria[85] and Chidgey.[86]
[85][2011] VSC 3, [28](e) (Forrest J).
[86](2008) 182 A Crim R 536, [72], [77] and [78].
The KW Parties say that (unlike the First to Fifth Defendants) ASIC did not commence proceedings against the KW Parties following their examinations.[87] They say that APCH is trying to obtain the transcripts of the examination of the KW Parties to see whether they may assist it in this present case. That is not a legitimate forensic purpose for the issue of a subpoena.
[87]Compare Shipley (2008) 68 ACSR 412, [32] (White J).
They says that the subpoena does not refer to Messrs Powell or Williams specifically. I assume they fall under the category of “any other person”. For the reasons given below, I find that the subpoena is “fishing” in relation to “any other persons.”
I uphold their objection to APCH inspecting any documents produced in relation to the examination of “any other person” associated with the KW Parties.
Objections of Mr Hancy and Mr Rodaway
Mr Hancy and Mr Rodaway are not defendants in the Federal Court civil penalty proceedings. They were examined by ASIC under s 19 and also provided documents to ASIC.
They expect that the documents produced by ASIC will include the transcript of their examinations and the documents they produced.
Mr Dalton, counsel for Mr Hancy and Mr Rodaway, submits that the hearing is in truth a hearing as to whether the objection to APCH inspecting the transcripts and related books should be upheld. If the objection is not upheld, then inspection should be available equally to all parties.
I agree that unless an objection to a particular party inspecting a particular document is upheld, then inspection is open to all parties equally. If an objection is upheld, then inspection is limited only to the extent to which the objection has been upheld.
Messrs Hancy and Rodaway made submissions as to the form of order put forward by Mr Lewski. I will deal with those when I come to the form of order.
Objections of Madgwicks Lawyers
Madgwicks Lawyers (Madgwicks) did not file a formal objection to APCH inspecting any documents relating to Madgwicks. At the hearing, Mr Luxton (as counsel for Madgwicks) objected to APCH inspecting any such documents.
Madgwicks submit that APCH has not established that it seeks to inspect the subpoenaed documents for a legitimate forensic purpose. In particular, it has not identify with the necessary precision the legitimate purpose for which access is sought of the subpoenaed documents.
Madgwicks refer to TravelCompensation Fund v Blair & Ors,[88] where McClellan J considered an application by the defendants to set aside a subpoena to ASIC issued by the plaintiff to produce transcript of interviews of persons involved in the collapse of Ansett Airways. Justice McClelland cited with approval the proposition laid down by Barr AJ in Tastan, “that it was the duty of the Court to require the party calling on a subpoena to produce documents to identify expressly and precisely the legitimate forensic purpose for which access to the documents is sought and refuse the application unless such an identification is made.”
[88][2002] NSWSC 1228 (Travel Compensation).
His Honour also cited with approval that the party issuing the subpoena must be able to show that it is “on the cards” that the documents will bear on and have relevance to the issues in the case, as held in Attorney-General (NSW) v Stuart.[89]
[89](1994) 34 NSWLR 667.
APCH identifies the legitimate forensic purpose as follows:
(a)Seeking evidence of relevant admissions, whether or not such admissions can be tendered or used in cross-examination, and identifying lines of inquiry relevant to the plaintiff’s claims or the defence, are legitimate forensic purposes; and
(b)following the examinations, ASIC commenced a proceeding against (inter alia) the first and third defendants making precisely the same allegations as are made by the plaintiff in this proceeding. It can be inferred from that fact that there is a high likelihood (and at least a reasonable possibility) that the subpoenaed material will be of assistance to the plaintiff’s case.
[Citation omitted.]
Madgwicks concede that the seeking of evidence of relevant admissions is a legitimate forensic purpose as so held in Shipley where White J said:
I accept that this is a legitimate forensic purpose. The primary legitimate forensic purpose is seeking relevant admissions; whether or not such admissions can be tendered or can be used in cross-examination, either to establish facts or on credit. It is also a legitimate forensic purpose to identify lines of enquiry relevant to the plaintiff’s claims or the defence. [90]
[90]Shipley (2008) 68 ACSR 412, [30].
Madgwicks point out that APCH has virtually copied para 30 of Shipley in specifying its legitimate forensic purpose. Madgwicks submit, however, that para 30 is a conclusionary paragraph of the more precisely stated purpose in para 29, where his Honour said:
The forensic purpose of the subpoena identified by the plaintiffs was in:
“... accessing documents that indicate what, if anything, Messrs Pather, Speiser and Pashut disclosed to ASIC in late 2007 about the financial product advices they supplied on the defendant’s behalf (or had knowledge or information about what was supplied) to retail clients, and the circumstances (including basis or bases) in which such advices were supplied, in the period from December 2003 to September 2005.”
Madgwicks contend that APCH has not identified the legitimate forensic purpose that it relies on with any precision.
In Travel Compensation, the Fund was seeking damages in relation to customers of companies in the Ansett Group, which acted as travel agents and who had lost moneys through the collapse of the Ansett Group. Justice McClellan ordered that the subpoena be set aside. His Honour referred to several factors which led him to that conclusion including:
Although senior counsel for the Fund advances as the legitimate forensic purpose the investigation of “the financial circumstances in which the relevant companies collapsed,” I believe this is too broad. The forensic purpose must be confined to the issues in the proceedings as identified by the Fund and to which I have referred. This does not involve an understanding of the financial circumstances in which the Ansett Group collapsed, even if that matter has been the subject of an ASIC investigation which, in a general sense, I doubt. Rather, the present proceedings are concerned with the manner in which companies in the Ansett Group, acting as a travel agent, conducted their affairs.[91]
[91]Travel Compensation [2002] NSWSC 1228, [29] (emphasis added).
Madgwicks say that though the seeking of admissions are legitimate forensic purposes, APCH has not sufficiently identified the purpose has not been confined to specified issues in the proceedings.
I do not agree. In my view, APCH has specified with the necessary degree of precision the purpose for which they wish to inspect the subpoenaed documents. The documents subpoenaed are limited to the transcript of the examination of the five directors and any other person “in relation to the matters the subject of the [civil penalty proceedings]”. The civil penalty proceedings relate to the payment of the listing fee, as does this present proceeding. Further, following the examinations, ASIC commenced the civil penalty proceedings that makes the same allegations as made in this proceeding. I agree that it can be “inferred from that fact that there is a high likelihood (and at least a reasonable possibility) that the subpoenaed material will be of assistance to the plaintiff’s case”, as stated by APCH.
Madgwicks’ second point is that the subpoena is “fishing”. After referring to the five directors who are defendants in the civil penalty proceedings, the subpoena refers to “any other person.” It is this reference that brings in the transcript of the examination of partners and employees of Madgwicks are caught by the subpoena. Madgwicks says that it is entirely speculative whether or not the reference to “any other person” in the subpoena will pick up anything of relevance. Madgwicks contends that in Maronis Holdings, Shipley, and Watson v AWB, the impugned subpoena in each case identified by name the person whose examination transcript was sought from ASIC.
In Santos Ltd v Pipelines Authority of SA,[92] Debelle J (with whom Cox and Prior JJ agreed) confirmed the well-settled rule that a subpoena cannot be used for the purpose of mere “fishing”, and went on to explain that “the expression ’fishing‘ is usually used to characterise the activity of someone seeking to find whether anything exists and is speculating as to its possible existence.”[93]
[92](1997) 66 SASR 38 (Santos).
[93]Santos (1997) 66 SASR 38, 57.
Madgwicks say that APCH is merely fishing, because if they knew that any individuals from Madgwicks had been subject to a s 19 examination they would have been named in the subpoena. The subpoena’s reference to “any other person” is, Madgwicks contends, merely fishing and as such is not for a legitimate purpose.
APCH says that it is known that the Madgwicks’ officers were examined about the very facts in issue in this proceeding. APCH says that it will be highly relevant to know what Madgwicks said in response to ASIC’s questions and about why the directors allowed the payment of $30m of beneficiaries’ moneys to happen.
In my opinion, the subpoenaed documents relate only to examinations relating to the transactions the subject of this proceeding. In my opinion, it is fishing where APCH does not identity the persons examined. In that regard, APCH is seeking to find whether any such examination was conducted and speculating that further examinations were conducted.
Submissions of the Lewski companies
The Lewski companies (the ninth, tenth and eleventh defendants) do not make any submissions on s 79 or the inspection issues. They support Mr Lewski’s proposed form of order, if inspection is permitted.
As discussed above, the issue is not whether inspection is permitted. The issue is whether or not an objection to a party inspecting a document is upheld or upheld to a limited extent.
The Lewski companies have not filed a formal objection. I will assume, however, that they do object to inspection other than on the terms that will be apply to Mr Lewski.
What orders should be made?
I have come to the conclusion that the objections to APCH inspecting the transcripts of the examinations of each of Dr Wooldridge, Mr Clarke, Mr Lewski, Mr Butler, and Mr Jaques should be allowed only in part, and that is as to the terms upon which the inspection of those documents may take place.
I uphold the objection of the Lewski companies and Messrs Hancy and Rodaway to the same extent as that of Mr Lewski.
I uphold the objections of the KW Parties and Messrs Madgwicks to any inspection by APCH of any documents produced by ASIC under the reference to the transcript of the examination of “any other person” in relation to the subject matter of the Federal Court civil penalty proceeding.
The orders sought by Mr Lewski
Mr Lewski submits that if the objection to APCH inspecting the transcript of his examination and the relevant related documents is overruled, then conditions should be attached to APCH’s inspection.
The order put forward by Mr Lewski goes beyond the inspection of the transcript of his examination and any related documents and seeks to provide an order that would apply to the inspection by APCH of all of the documents produced by ASIC.
The orders that Mr Lewski puts forward are as follows:
1 Subject to Orders 2, 3, 4, 5, 6, 7 and 8 below, the Court grant leave to those of the legal representatives of the parties named in the Schedule hereto who give to the Court an undertaking in writing duly signed that, without the prior leave of the Court, he or she will not use any of the information contained in the subpoenaed documents described below for any purpose other than for the purposes of these proceedings, to inspect the documents produced to the Court by Australian Securities and Investments Commission under subpoena dated 19 September 2012 (the subpoenaed documents).
2 The first, second, third, fourth and fifth defendants (the director defendants) only, have first and exclusive access to the subpoenaed documents for a limited period, ending 4pm on 11 January 2013, for the purpose of making any claim for restricting the plaintiff’s access to the subpoenaed documents on the grounds of:
(a) A claim to legal professional privilege over any, or part of, of the subpoenaed document(s); or
(b) A claim that inspection of the subpoenaed document(s), or part of the document(s), by the plaintiff, would tend to expose the director defendant directly or indirectly to a penalty; or
(c) A claim that inspection of the subpoenaed document(s), or part of the document(s), by the plaintiff, would tend to directly or indirectly incriminate the particular director defendant.
3 If a director defendant does not intend to make any claim for restricted access under 2 above, then this fact is to be communicated to the solicitors for the plaintiff and the other director defendants by 11 January 2013.
4 In the event that a director defendant intends to make a claim (or claims) for restricted access under 2 above, the director defendant who makes such a claim must by 4pm 11 January 2013 file and serve an affidavit which:
(a) Enumerates any document in respect of which any inspection is wholly objected to; and
(b) Otherwise exhibits any of the subpoenaed documents in respect of which only part of the document(s) is objected to and in that case, those exhibits are to be redacted in a manner which obscures those documents or parts of documents the subject of each claim; and
(c) Specifies, with respect to each document or partly redacted document so identified, the basis or bases of the relevant claim to restricted access.
5 In the event of a claim for restricted access being made under 4 above, the representatives of the plaintiff are not permitted to access the subpoenaed documents in Court until further order.
6 If the plaintiff proposes to challenge any claim(s) for restricted access made under 4 above, the plaintiff:
(a) must notify the director defendant(s) of this fact within 7 days of receiving an affidavit under 4 above and otherwise is not permitted to challenge the claim(s) after 4pm 18 January 2013; and
(b) has liberty to apply to his Honour Justice Robson’s associate for an allocation of time for the dispute as to access of the challenged document(s) to be heard and determined by his Honour.
7 Those legal representatives of the parties named in the Schedule hereto, who provide the undertaking contemplated by Order 1 above, are otherwise granted leave to uplift the subpoenaed documents from the Prothonotory on the date access is first granted to those representatives pursuant to these orders, for the purpose of photocopying the subpoenaed documents and upon the undertaking of the relevant representative that he or she will return the original subpoenaed document(s) to the Prothonotary within 24 hours of uplift.
8 No copy of the subpoenaed documents be provided to any person other than:
(a) the Court; or
(b) in accordance with these orders, or until further order:
(i) the solicitors or counsel for the plaintiff identified in the Schedule below;
(ii) the solicitors or counsel for the director defendants identified in the Schedule below.
and that, without the prior leave of the Court the contents of the subpoenaed documents not be disclosed to any person other than as provided for in this Order 8.
9 Should either the plaintiff or any of the director defendants intend to tender the subpoenaed documents or any part of them to use them or any part of them in examination or cross-examination of any witness at the trial, the party intending to use that material in that fashion must give at least 7 days prior notice (or other shorter period if given leave to do so by the Court) of that intention in writing to the director defendants.
10 Liberty to apply is reserved.
SCHEDULE
Persons for the plaintiff who will need to see confidential material produced in answer to the subpoena:
(a) [These parties to be agreed]
Persons for the director defendants who will need to see confidential material produced in answer to the subpoena:
(b) [These persons to be agreed]
Conclusion on orders
For the reasons discussed above, it is not appropriate to make orders that apply equally to all parties. I will first consider the orders that are appropriate to the objections of Dr Wooldridge, Mr Clarke, Mr Lewski, Mr Butler, and Mr Jaques (the objecting directors).
In drafting the orders that are appropriate to make, I propose to take the following matters into account. I have heard submissions on whether or not APCH should be entitled to inspect the examinations of these five directors. I have not heard full submissions on the use to which ASIC may put the information obtained from the inspection or of the documents themselves.
One or more of the objecting directors objected to inspection on the ground that in the examinations by ASIC they were compelled to answer questions that may tend to incriminate them or may expose them to penalty. None of the directors have asserted that any of the answers they gave did so, and I would not expect them to do so. They may, however, have done so and I have not heard submissions on how such information should be used by APCH.
In those circumstances, I propose to frame the orders so that the each director is given the opportunity to ascertain if the transcript of his examination or the related documents does contain evidence that may tend to incriminate him or may expose him to penalty. To do so, I propose to allow the director to have a prior right to inspect the transcript of his examination and the related documents.
Each director will also have the opportunity to object to inspection if the transcript of his examination or any related document contains information that is irrelevant to this proceeding or is subject to legal professional privilege.
After such inspection has taken place, and my ruling on any objections made by any director, I propose to allow certain named legal representatives of APCH to inspect the transcript of the examination of each director and the related documents. They must do so on giving a written undertaking not to use the information obtained from such inspection for any purpose other than for the purposes of this proceeding.
Each person giving the undertaking must also undertake not to disclose the information obtained from the inspection to APCH or any of its officers, servants, or agents without the prior leave of the Court.
Each person giving the undertaking must also undertake that he or she will not disclose or otherwise publish the information obtained from the inspection in Court or in any Court documents, without first giving adequate prior notice of the information sought to be published or otherwise disclosed to the relevant examinee and (where the relevant examinee objects to the disclosure or publication of the information) without the leave of the Court, after giving the examinee sufficient opportunity to object to the Court to the information’s disclosure or publication.
By this order, I would expect that if an admission of a director was sought to be used and the director considered that the admission may tend to incriminate him or may expose him to penalty, the director would have the opportunity to submit to the Court that the information should not be published or disclosed. As I said previously, I have not heard submissions about this issue and I consider that I should not predict how the Court would rule on such an issue.
I propose to give leave to each of Mr Clarke and Mr Butler to object to inspection by APCH despite his failure to file a formal objection.
As to the Lewski companies, I will give leave to them to object to the inspection by APCH of any transcript relating to “any person” associated with them despite their failure to lodge a formal objection. I will make an order in relation to their objection on terms similar to that made in respect of the objection by the directors.
As to Messrs Hancy and Rodaway, I propose to give leave for them to object to inspection by APCH despite them not filing a formal objection. I will make an order in relation to their objection on terms similar to that made in respect of the objection of the directors.
As to the KW Parties and Madgwicks, I give each of them leave to object to APCH inspecting any transcript of an examination of “any person” associated with them and any related documents despite them not filing a formal objection, and I uphold their objections.
I do not propose to make any orders about any other party inspecting the documents, as no objection has been made to inspection by any party other than APCH.
On the question of costs, I consider that the appropriate order is that each party’s costs be its costs in the cause.
I direct that the plaintiff bring in short minutes to give effect to my decision in respect of each of the formal objections and the objections where I have given leave.
I will reserve liberty to apply in each case where the objection has been upheld in part.
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