Ballard v Multiplex Limited

[2010] NSWSC 1038

CITATION:	Ballard v Multiplex Limited [2010] NSWSC 1038
HEARING DATE(S):	8 September 2010
JUDGMENT DATE :	13 September 2010
JUDGMENT OF:	Smart AJ
DECISION:	Subpoena to ASIC set aside. Costs of ASIC of setting aside subpoena to be paid by First and Second Defendants.
CATCHWORDS:	CONSTRUCTION - setting aside subpoena to ASIC to produce reasons and orders for disqualification from managing corporations for 18 months of important witness and transcript of his hearing before ASIC - no apparent connection between subject matter before ASIC and evidence sought to be adduced in Plaintiff's action - documents sought as relevant to credit
LEGISLATION CITED:	Australian Securities and Investments Commission Act 2001 (Cth) Corporations Act 2001
CATEGORY:	Procedural and other rulings
CASES CITED:	Fried v National Australia Bank Ltd [2000] FCA 911 Liristis v Gadelrabb [2009] NSWSC 441 Thomas v SMP (International) Pty Ltd (No 2) [2010] NSWSC 870
PARTIES:	David Ballard (Plaintiff) Multiplex Limited (First Defendant) Multiplex Corporate Agency Pty Ltd (Second Defendant) Construction Forestry Mining and Energy Union (Third Defendant) Construction Forestry Mining and Energy Union, NSW Branch (Fourth Defendant) Andrew Ferguson (Fifth Defendant)
FILE NUMBER(S):	SC 2007/266587
COUNSEL:	K Stern (for ASIC) AJL Bannon SC, JG Duncan & E Elbourne (Plaintiff) I Pike (with Dr A Bell SC) (First & Second Defendants) BC Oslington QC and JH Pearce (Third, Fourth &Fifth Defendants)
SOLICITORS:	Conrad Gray (ASIC) Sagacious Legal (Plaintiff) Clayton Utz (First & Second Defendants) Taylor & Scott (Third, Fourth & Fifth Defendants)

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

Smart AJ

Monday 13 September 2010

2007/266587 David Ballard v Multiplex Ltd & Ors

JUDGMENT

1 The first and second defendants have caused a subpoena to be issued addressed to the Australian Securities and Investments Commission (“ASIC”). As amended, the subpoena requires ASIC to produce:

“ (i) any correspondence passing between the Commission and Mr Ian Widdup regarding Mr Widdup’s disqualification from managing corporations announced on 18 April 2008 (a copy attached) ( Disqualification ).


(ii) any reasons prepared and /or any orders made by the Commission regarding Mr Widdup’s Disqualification.

(iii) the transcript of any hearing conducted by the Commission in relation to examination of Mr Widdup ’s in relation to his D disqualification from managing corporations announced on 18 April 2008 (a copy attached).

(iv) the transcript of any examination of any other person in relation to any enquiry into Mr Widdup’s Disqualification .

(v) any submissions made by or on behalf of Mr Widdup in respect his Disqualification. ”

2 On the ASIC website it was recorded on Friday 18 April 2008 that, during March 2008, ASIC disqualified Mr Ian Widdup following his involvement in failed companies. The entry reads:

“ASIC disqualified property developer, Mr Ian Paul Widdup, of Pyrmont, New South Wales, from managing corporations for 18 months.

Mr Widdup’s disqualification follows an ASIC investigation into his role in three failed companies, Beacon Development Corporation Pty Ltd, Bauhaus Pyrmont Pty Ltd and Pilot Developments Pty Ltd.

ASIC found that Beacon Development Corporation Pty Ltd and Pilot Developments Pty Ltd failed owing substantial amounts to the ATO. ASIC’s investigation also found that Mr Widdup hampered the winding up of Beacon Development Corporation Pty Ltd and Pilot Developments Pty Ltd by failing to provide reports about the companies affairs to the liquidators.

The above directors have the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.”

3 ASIC has moved to set aside the subpoena.

4 By letter of 1 September 2010 ASIC advised the solicitors for the defendants:

“It is ASIC’s view that the Subpoena is objectionable in its current form on the basis that ASIC is not a party to the proceedings and is unaware of the issues in dispute. I am unable to determine the relevance of the documents sought in the Subpoena to the proceedings as you have not provided ASIC with any information about the nature of the proceeding.

Please provide me with a copy of the pleadings in this matter as soon as possible.

I also note that the subpoena does not identify all of the parties to the proceedings. Please provide ASIC with the names of all of the parties to this proceeding.

Finally, ASIC’s records indicate that Multiplex Limited (ACN 008 687 063) has changed its name to Brookfield Multiplex Limited. Given that the Subpoena does not contain any ACN would you please also clarify that this is in fact the first defendant in the above proceeding?”

5 The solicitors for the defendants replied:

“We enclose , as requested, a copy of a document entitled ‘Draft Further Amended Summons’ which constitutes the Plaintiff’s final pleading. However, we note that the pleadings may not assist in determining the relevance of the documents sought in the subpoena. Mr Widdup is a former director of Multiplex. He is being called to give evidence by the Plaintiff and, as we understand it, is one of the key witnesses to be relied on by the Plaintiff. Given the allegations made by the Plaintiff and the nature of Mr Widdup’s evidence, his credibility will be an issue. Accordingly, the documents sought in the subpoena become relevant to the issues in the proceedings.

Please note that the parties to the proceedings are as follows:

Plaintiff:	David Ballard
First Defendant:	Brookfield Multiplex Limited ACN 008 687 063
Second Defendant:	Multiplex Corporate Agency Pty Limited ACN 003 070 120
Third Defendant:	Construction Forestry Mining and Energy Union
Fourth Defendant:	Construction Forestry Mining and Energy Union (NSW Branch)
Fifth Defendant:	Andrew Ferguson

We confirm that the First Defendant, Multiplex Limited, changed its name to Brookfield Multiplex Limited.”

6 ASIC wrote in reply:

“I confirm your view that the documents sought in the Subpoena issued on ASIC are relevant to the credibility of Mr Widdup as a witness for the plaintiff in abovementioned proceeding.

It is ASIC’s view that the Subpoena is objectionable on the basis that it is lacking a legitimate forensic purpose. For this reason ASIC intends to file a Notice of Motion to have the Subpoena set aside.

Given that the return date of the Subpoena is 9.00 am Monday 6 September 2010, ASIC intends to file the Notice of Motion today. However, in the event that you require more time to consider our objection, we would be amenable to obtaining an extension of time for the return date of the Subpoena.”

7 The defendants, on the hearing of ASIC’s motion, identified the legitimate forensic purpose of the subpoena thus:

“… it is on the cards that the documents we seek, which are precise, will bear on Mr Widdup's credit adversely and are relevant to the issues in this case.” (T 104)

8 For the purposes of determining this application only, I was referred to passages in the various affidavits and documents in the Court Book without objection. Not all of them were made exhibits.

9 I should also record that the plaintiff supported ASIC’s motion to set aside the subpoena and that the third, fourth and fifth defendants supported the subpoena, as amended, issued at the request of the first and second defendants. The third, fourth and fifth defendants also sought access to the documents the subject of the amended subpoena in the event of the Court declining to set it aside.

10 I was told by counsel for the plaintiff that Mr Widdup had advised the plaintiff’s solicitor since Monday that he objected to the subpoena and requested that his objection be conveyed to the Court. I was told by counsel for ASIC that her instructing solicitor had spoken with Mr Widdup on Tuesday 7 September 2010 and told him of the service of the subpoena and that the challenge to it was being heard on Wednesday 8 September 2010.

11 The plaintiff alleges that, in the latter half of 1996, the five defendants conspired together to injure him, both by lawful means and unlawful means, intimidated him and interfered with his business relations. Mr Ballard was a principal and a director of Stoneglow Pty Ltd along with Mr Barry Young, both of whom held their interest via companies. Stoneglow Pty Ltd was a demolition sub-contractor to Multiplex, the building contractor on the project known as the Pitt Street Mall (or Sydney Central Plaza). Multiplex was operating on a very tight critical work path, which was measured in hours. Retailing was continuing on part of the Grace Brothers – Myers site which had frontages to Pitt Street, Market Street and George Street, City and was to continue for as long as possible. The demolition and construction work was to be done in two stages. At the risk of over-simplification and omitting some of the finer details, it was broadly envisaged that while demolition and construction work proceeded on Stage 1 of this premier retail site, retail trading would continue on Stage 2. Upon completion of the scheduled work on Stage 1, work on Stage 2 was to commence. That involved preserving some heritage items including facades, but as I presently understand the position, that was not initially the responsibility of the sub-contractor. The works program, both as to the demolition work and the construction work, was complex.

12 There were two other sites where Stoneglow Pty Ltd had acted, and was acting, as the demolition sub-contractor for Multiplex, namely, Chatswood Chase and the Grace Plaza Project at the corner of York and King Streets, City.

13 From 1995 - 2000 Mr Widdup was the Finance Director of Multiplex and often handled legal matters on its behalf.

14 It was contended by the plaintiff that, probably due to a television program precipitated by Mr Ballard, he and Mr A Ferguson, the Secretary of CFMEU, had a falling out and that Mr Ferguson and the Union conspired with Multiplex to close down Stoneglow Pty Ltd and Mr Ballard and force them out of the construction industry. In return Multiplex was to enjoy some industrial peace on its sites.

15 The action is being stoutly resisted by each of the defendants and a lengthy hearing is expected. Mr Widdup’s health is not good and it is questionable how long he will live. That was the reason for the expedited hearing. Many of the events took place in 1996. Mr John Roberts, the very active chairman of Multiplex, has since died. Allegedly, he made oral statements of importance.

16 Limitation defences have been raised, but the plaintiff claims that there was a withholding of major information and that only in relatively recent years did he become aware of crucial matters and able to offer some proof of his allegations. Apart from strongly denying the tortious conduct alleged, it is asserted by the defendants, especially the first and second defendants, that the plaintiff became markedly insolvent, did not follow the sub-contract procedures as to payment; had been paid its entitlements in full, withdrew its labour from the site and resisted all attempts by Multiplex and the Union to have Stoneglow Pty Ltd resume work. This is but the barest and over-simplified sketch of the proceedings.

17 Ms Stern for ASIC pointed out that s 206F(1) of the Corporations Act 2001 enabled ASIC to disqualify a person from managing a corporation for up to five years subject to compliance with any of the matters in sub-paragraphs (a), (b) and (c) and that ASIC would have before it the liquidator’s reports under s 533 of the Corporations Act, which are confidential, what was said at any hearing and any submissions made by the person as to his proposed disqualification.

18 ASIC did not challenge the power of the Court to require documents to be produced but submitted:

1. Section 127 of the ASIC Act imposes upon ASIC a duty to take all reasonable measures to protect the confidentiality of information given to it or obtained by it subject to specified exceptions.
2. The Court must be satisfied that:
a) a legitimate forensic purpose has been established by the party requesting the subpoena, and
(b) it is on the cards that the documents sought by the requesting party in the subpoena will materially assist the requesting party’s case.
3. The court must exercise caution in allowing a subpoena to stand when it seeks documents sought to be justified as relevant to the issue of credit. There is no suggestion that the documents would be relevant to any other issue or any issue which is directly raised by the pleadings.
4. There is no evidential basis for the submission that the documents sought by the subpoena would probably tend to show dishonesty, lack of moral fibre or any improper conduct on the part of Mr Widdup which would go to his general credit.
5. As to the breach of s 475 of the Corporations Act by Mr Widdup, section 475(10) makes a breach of s 475 an offence of strict liability.
6. There is no probable connection between the documents sought to be produced and the evidence to be led from Mr Widdup.

19 It was not in issue that Mr Widdup, a former director of Multiplex, was an important witness in the plaintiff’s case. Counsel for ASIC referred the Court to three decisions. In Fried v National Australia Bank Ltd [2000] FCA 911 Weinberg J noted that NAB sought the documents the subject of the subpoena to attack the credit of an important witness. At [24] Weinberg J accepted that it may be legitimate to issue a subpoena directed to a third party to obtain documents which are to be used solely to impeach the credit of a witness. At [29] he added:

“The Court must be alert to ensure that any subpoena which is issued has a legitimate forensic purpose. That purpose must be identifiable and likely to facilitate the conduct of the proceeding, not merely to oppress a party or witness.”

At [30] Weinberg J continued:

“It is not a legitimate use of a subpoena to have the specified documents produced in a speculative attempt to identify whether the documents might, ultimately, be of some evidential value.”

20 In Liristis v Gadelrabb [2009] NSWSC 441 the defendant’s subpoena sought a complete copy of the criminal records of a named person from the Commissioner of Police. The named person was party to equity proceedings for specific performance of an alleged oral contract for the sale of land. That party’s credit was very much in issue. Brereton J held:

a) there was ample reason to suppose that there may be in the possession, custody or power of the Police Commissioner criminal records relating to convictions for dishonesty, and in particular perjury;
b) there was a legitimate forensic purpose for the issue of such a subpoena; and
c) cases of fishing are to be distinguished where it is on the cards that relevant documents (albeit as to credit) exist.

21 In Thomas v SMP (International) Pty Ltd (No 2) [2010] NSWSC 870 the plaintiffs caused a subpoena to be issued to the NSW Crime Commission seeking the production of the transcript of interview or hearing of the fourth defendant. The subject matter of the fourth defendant’s examination was his knowledge of or involvement in possible money laundering activities by B. At [19] Pembroke J summarised the principles thus:

“(a) As a general principle, the production of documents intended to be used solely to impeach the credit of a witness may be a legitimate forensic purpose: Fried (supra) at [24]. It is not therefore an objection, by itself, that the subpoena seeks documents relating only to credit: Liristis (supra) at [5]; R v Saleam (1989) 16 NSWLR 14 at 19 (Hunt J). On the other hand, in order to support the subpoena, it is not sufficient, by itself, merely to say that the documents relate to the credit of a witness;

(b) In all cases, there must be some actual identifiable basis – reasonably precise and tolerably clear – that indicates what the legitimate forensic purpose really is. The forensic purpose requires realistic consideration of the potential strategic and evidentiary use of the documents in the context of the legal and factual issues that are required to be determined;

(c) If the subpoena is legitimate, two features of its intended forensic purpose will usually demonstrate its legitimacy. First, the particular credit issue will be capable of reasonable articulation, making due allowance for the necessity for some generalisation depending on the stage that the hearing has reached. Second, the probable connection between the documents sought to be produced and that credit issue, will be apparent;

(d) A credit issue of doubtful plausibility is unlikely to be sufficient to justify the subpoena. The same result will follow if the supposed connection between the credit issue and the documents sought, is strained, opaque or speculative;

(e) The court will exercise particular caution when a subpoena is sought to be justified solely on the credit basis: Fried (supra) at [27]. The judge must be satisfied about the utility of the production of the documents, and the fairness to the witness, having regard to the potential for abuse and the need to control and confine cross examination within manageable limits;

(f) A subpoena that does little more than speculatively trawl for documents that may possibly be used to impugn a witness’s credit has never been justifiable: Fried (supra) at [29].”

22 Pembroke J continued:

“22 It is undoubted that the credit of [the fourth defendant] in this case is likely to be relevant to the findings of primary fact that I must make concerning conversations in which he participated and representations which he made. Most of these conversations and representations relate to the financial position of SMP, its prospects and [the fourth defendant’s] role in connection with it. But no fact in issue turns on anything done by [B], or [the fourth defendant’s] possible facilitation of money laundering by him.

23 Other than at the highest level of speculative generality, there is no obvious legitimate forensic purpose to be served by the production of the transcript. No actual identifiable basis has been explained, let alone with reasonable precision and tolerable clarity, that could support any reasonable likelihood that the transcript might be successfully deployed. There is no plausible basis for assuming that any statements attributed to [the fourth defendant] in the transcript might assist me in the resolution of any fact in issue – to which [the fourth defendant’s] credit might be relevant.

24 For those reasons, I will order that the subpoena dated 26 June 2010 to the New South Wales Crime Commission be set aside.”

23 ASIC stressed that the documents sought are wholly unconnected with the issues in these proceedings. That was the situation in Fried and Thomas. ASIC submitted that there was no suggestion that the documents sought might be relevant to an issue of fact likely to arise for decision.

24 ASIC submitted that the bare assertion of relevance to credit, as set out by the first and second defendants, falls well short of establishing a probable connection between the documents sought to be produced and the credit issue.

25 ASIC contended that no fact in issue turns upon Mr Widdup’s disqualification under s 206F.

26 Counsel for the plaintiff contended that there was no relationship between Mr Widdup’s disqualification under s 206F and the evidence intended to be led in these proceedings from Mr Widdup.

27 The first and second defendants contend, and I accept, that Mr Widdup’s credit is under attack. There are three principal areas:

a) Did Mr Ross McDiven give instructions to, or authorise, Mr Widdup to go ahead with the strategy of offering the demolition work sub-contract on the Finger Wharf project to Mr Ballard in return for cooperation in bringing about the liquidation (or administration) of Stoneglow Pty Ltd?

b) Did Mr McDiven, about the end of 1996 or early 1997, tell Mr Widdup that he had just had a conversation with Andrew Ferguson and that all deals with Ballard were off?
c) A few weeks later, did Mr McDiven tell Mr Widdup that Mr Ferguson told him (McDiven) that the Union wanted Ballard out of business, that Ferguson had been in dispute with Ballard for some time and would not tolerate Ballard getting the Finger Wharf project, that this was Multiplex’s flagship development, that Ballard had upset Ferguson by showing the Union up in public on TV, that Multiplex could not afford any trouble with the Union on this job and that Ballard could not get the job?

28 Mr Widdup has referred to conversations he allegedly had with Mr Hicks, an accountant engaged by Multiplex to review, in part, the financial standing and position of sub-contractors. Mr Widdup alleged he held conversations with Mr Hicks about Mr Ballard (and presumably Stoneglow Pty Ltd) being awarded the demolition work sub-contract for the lucrative Finger Wharf Project by way of recompense.

29 Mr Widdup deposed to Mr John Vouris being appointed as the voluntary administrator and later the liquidator of Stoneglow Pty Ltd. Mr Widdup deposed to the actions of Mr Vouris against Multiplex and Multiplex paying $98,500 to Mr Vouris on account of his fees, or an amount about equal to his fees, in return for Multiplex obtaining a release from Stoneglow.

30 In addition to the foregoing, the first and second defendants pointed out that Mr Widdup deposed to a conversation with the now deceased Mr John Roberts on 24 December 2000 at the Hyatt in which Mr Roberts allegedly offered to pay Mr Widdup $750,000 to buy “his silence about everything, but especially about Ballard”.

31 The first and second defendants wish to mount a substantial challenge to the credit of Mr Widdup about financial, construction and business dealings. The Court is going to be asked not to accept his evidence on the matters briefly summarised. They contend that the ASIC announcement indicates that he has conducted himself poorly and that his management of two of the companies mentioned has been unsatisfactory. Two of the companies failed owing substantial amounts to the ATO and in respect of them he failed to provide reports about the companies’ affairs to the liquidator, an offence of strict liability. Thereby he hampered the liquidator.

32 It is not necessary for the first and second defendants to go as far as being able to point to convictions or materials which point to convictions being obtained or likely to be obtained of an offence of dishonesty, such as perjury. It would suffice if it were on the cards that the materials pointed to untruthfulness on the part of Mr Widdup, or some other form of dishonesty.

33 The first and second defendants, having correctly identified the credit of Mr Widdup as important, contended that it was on the cards that documents will exist from the ASIC investigation which will bear upon that credit. They pointed to the transcript of any hearing conducted by the Commission in relation to Mr Widdup’s disqualification from managing corporations announced on 18 April 2008. I was asked to infer that there would be written reasons. I do not so infer. As an important administrative body I would expect ASIC to have reasons but not necessarily to have reduced them to writing. I would expect any written reasons to be prepared subsequently if there was an application for administrative review to the Administrative Appeals Tribunal.

34 I proceed on the basis that what emerged from the ASIC investigation which warranted adverse comments were the two matters mentioned in ASIC’s announcement of about 18 April 2008, namely, two of the companies failed owing substantial amounts to the ATO and failure to lodge reports about the affairs of two companies with the liquidator. Counsel for ASIC warned me against reading too much into ASIC’s announcement.

35 That leaves one further matter, sought by subpoena, namely the orders for disqualification made in respect of Mr Widdup. I would not separate the orders made for disqualification from the reasons stated in ASIC’s announcement for the disqualification from managing corporations for 18 months.

36 While the two matters as to each of the two companies of non-payment of substantial amounts to the ATO and the failure to provide reports about the companies’ affairs to the liquidators are substantial, I have not been persuaded that they are likely to bear upon the issues of whether Mr Widdup’s evidence as to the statements allegedly made to him by Mr McDiven is correct and his version of the conversations he allegedly held with Mr Hicks is correct.

37 I have not dealt with any confidentiality regime. ASIC sought a ruling on the question whether the subpoena should be permitted to stand. It regarded the maintenance of confidentiality as important.

38 I set aside the subpoena issued at the request of the first and second defendants directed to ASIC. The first and second defendants should pay ASIC’s costs of moving to set aside the subpoena.

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