Boase v Axis International Management Pty Ltd [No 3]

[2012] WASC 498

BOASE -v- AXIS INTERNATIONAL MANAGEMENT PTY LTD [No 3] [2012] WASC 498

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2012] WASC 498
Case No:	CIV:1709/2008	Heard:	ON THE PAPERS
Coram:	BEECH J	Delivered:	18/12/12
No of pages:	16	Judgment Part:	1 of 1
Result:	Rulings made on objections to inspection
Category:	B
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Parties:	T BOASE & J L BOASE ATF THE BOASE SUPER FUND T BOASE & J L BOASE ATF THE BOASE FAMILY TRUST AXIS INTERNATIONAL MANAGEMENT PTY LTD SAGECORP SECURITIES PTY LTD (in liq) QUENTIN PHILLIP O'DOHERTY WARD MORGAN ALTERUTHEMEYER COMMERCIAL LAWYERS & MIGRATION AGENTS
Catchwords:	Practice and procedure Subpoena of documents Whether inspection of documents should be permitted Transcripts of examination Whether objected to passages are apparently relevant Turns on own facts
Legislation:	Nil
Case References:	Apache Northwest Pty Ltd v Western Power Corporation (1998) 19 WAR 350 Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 National Employers' Mutual General Association Ltd v Waind [1978] 1 NSWLR 372 Stanley v Layne Christensen Co [2004] WASCA 50 Wookey v Quigley [No 5] [2011] WASC 275

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : BOASE -v- AXIS INTERNATIONAL MANAGEMENT PTY LTD [No 3] [2012] WASC 498 CORAM : BEECH J HEARD : ON THE PAPERS DELIVERED : 18 DECEMBER 2012 FILE NO/S : CIV 1709 of 2008 BETWEEN : T BOASE & J L BOASE ATF THE BOASE SUPER FUND

First Plaintiffs

T BOASE & J L BOASE ATF THE BOASE FAMILY TRUST
Second Plaintiffs

AND

AXIS INTERNATIONAL MANAGEMENT PTY LTD
First Defendant

SAGECORP SECURITIES PTY LTD (in liq)
Second Defendant

QUENTIN PHILLIP O'DOHERTY WARD
Third Defendant

MORGAN ALTERUTHEMEYER COMMERCIAL LAWYERS & MIGRATION AGENTS
Seventh Defendant

(Page 2)

Catchwords:

Practice and procedure - Subpoena of documents - Whether inspection of documents should be permitted - Transcripts of examination - Whether objected to passages are apparently relevant - Turns on own facts

Legislation:

Nil

Result:

Rulings made on objections to inspection

Category: B

Representation:

Counsel:

First Plaintiffs : No appearance
Second Plaintiffs : No appearance
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Seventh Defendant : No appearance

Solicitors:

First Plaintiffs : In person
Second Plaintiffs : In person
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : In person
Seventh Defendant : Jackson McDonald

(Page 3)

Case(s) referred to in judgment(s):

Apache Northwest Pty Ltd v Western Power Corporation (1998) 19 WAR 350
Commonwealth of Australia v Albany Port Authority [2006] WASCA 185
Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34
National Employers' Mutual General Association Ltd v Waind [1978] 1 NSWLR 372
Stanley v Layne Christensen Co [2004] WASCA 50
Wookey v Quigley [No 5] [2011] WASC 275


(Page 4)

BEECH J:

Introduction

1 The third defendant, Mr Ward, objects to the inspection by the plaintiffs of certain portions of transcripts of Mr Ward's examination produced under subpoena by the Australian Securities and Investments Commission (ASIC).

2 It is convenient to begin with some background to explain how these issues arose.

Background

3 By a chamber summons of 3 September 2012, the plaintiffs sought leave to issue subpoenas against two parties, one of which was ASIC.

4 The application came before the court on 24 September 2012. On that day, I ordered that the plaintiffs serve the proposed subpoena recipients with their application for leave to issue subpoenas, and other relevant documents. I also ordered that any proposed subpoena recipient who objected to the application was to file and serve a notice of objection and grounds of objection.

5 Mr Ward filed an objection to the plaintiffs' proposed subpoena to ASIC.

6 On 25 October 2012, I ordered that:

(1) by 26 October 2012 the plaintiffs issue their subpoena against ASIC for the production of transcripts of ASIC's examinations of Mr Ward on various dates, together with related books for those examinations, returnable on 22 November 2012; and

(2) by 15 November 2012 any subpoena recipient or other party with a sufficient interest objecting to a party inspecting or copying any document produced under the subpoena should set out the grounds of their objection and any supporting material.

7 On 22 November 2012, I ordered that by 10 December 2012 Mr Ward file and serve a schedule setting out with specificity what parts of the documents produced by ASIC he objects to being inspected, and on what grounds. I also ordered that the question of inspection of documents produced by ASIC be determined on the papers. At the hearing on 22 November 2012, and in subsequent email communication with my
(Page 5)

associate, Mr Boase, on behalf of the plaintiffs, indicated that he did not propose to make submissions in response to the objections made by Mr Ward. Consequently, I determine those objections on the papers and on that basis.

8 On 10 December 2012, Mr Ward produced a schedule of the parts of the transcript inspection to which he objected, and his grounds.

9 I turn to the principles relevant to determining Mr Ward's objection to inspection by the plaintiffs.

Principles governing inspection of subpoenaed documents

10 The first question is whether the documents, or the passages to which objection is taken, have apparent relevance to the litigation.

11 Apparent relevance is a low threshold. It is not a question of whether it appears that the party issuing the subpoena could, or could probably, tender the document in evidence. It is enough to establish apparent relevance if a document or class of documents gives rise to a line of enquiry relevant to the issues before the trier of fact, including for the purpose of meeting the opposing case by way of cross-examination: Apache Northwest Pty Ltdv Western Power Corporation (1998) 19 WAR 350, 374; Stanley v Layne Christensen Co [2004] WASCA 50 [9]; Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 [18].

12 In advance of trial, the determination of whether a document is relevant is a difficult one: National Employers' Mutual General Association Ltd v Waind [1978] 1 NSWLR 372, 385; Apache Northwest Pty Ltd (373).

13 In determining relevance, the difficulty of assessing relevance prior to trial must be taken into account. The necessity for having a document in order to fairly dispose of the issues at trial might well not become apparent before trial: Apache Northwest Pty Ltd (374, 376, 379); Stanley v Layne Christensen Co [9]; Commonwealth of Australia v Albany Port Authority [18].

14 Ultimately the relevance of the documents produced will be a question for determination at the trial. It is not appropriate for the court to embark on a detailed preliminary enquiry involving evidence from the party seeking to issue the subpoenas and the recipient of the subpoenas: Apache Northwest Pty Ltd (379).

(Page 6)

15 Documents can be inspected whether or not they are in an admissible form: Waind (385); Apache Northwest Pty Ltd (372).

16 One object of the rule permitting early return of subpoenas is to appraise the parties of the strengths and weaknesses of their case at an early stage in proceedings. Accordingly, a narrow view should not be taken as to the legitimate purposes of a subpoena of apparent relevance: Stanley v Layne Christensen Co [9]; Commonwealth of Australia v Albany Port Authority [18].

17 The determination of whether inspection should be permitted of documents produced on subpoena is separate from the question of whether to grant leave to issue the subpoena: Waind (381); Apache Northwest Pty Ltd (371); Stanley v Layne Christensen Co [11] - [13].

18 Further, the question of inspection is distinct from the question of whether a document may be tendered at trial: Waind (381); Apache Northwest Pty Ltd (371). The tests are very different. Many documents might meet the apparent relevance threshold for inspection, but fall well short of being sufficiently relevant to be admissible at trial.

19 If a document is apparently relevant, inspection will usually be permitted, even though it is not admissible as it stands and the party seeking the document has not undertaken to tender it or use it in cross-examination: Waind (385); Apache Northwest Pty Ltd (373 - 374).

20 Confidentiality is not of itself a ground to refuse inspection of an apparently relevant document. In the end, the public interest in the administration of justice prevails over the interest in confidentiality of the information: Apache Northwest Pty Ltd (379); Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34, 38. However, confidentiality can be taken into account, together with any assessment of the extent of the document's apparent relevance, in the exercise of discretion whether to permit inspection: Apache Northwest Pty Ltd (380 - 381).

21 The principles of case flow management and the objects in O 1 r 4(b) of the Rules of the Supreme Court 1971 (WA) must be kept in mind in the exercise of discretion whether to permit inspection: Wookey v Quigley [No 5] [2011] WASC 275 [35].

22 As the pleadings inform what is apparently relevant to the case, I will outline the allegations in the statement of claim.

(Page 7)

The plaintiffs' allegations

23 In broad outline, in their statement of claim the plaintiffs' allege against Mr Ward that:

(a) the second defendant, Sagecorp Securities Pty Ltd (Sagecorp) was the holder of an Australian financial services licence;

(b) Mr Ward was an authorised representative of Sagecorp and a proper authority holder of that company;

(c) corporate counsel for Firepower Holdings Group Ltd (FHG) obtained legal advice about the sale of shares held by an individual in a British Virgin Islands company;

(d) in an interview with ASIC Mr Ward admitted that he was aware of this advice;

(e) during June and July 2006, Mr and Mrs Boase had communications with Mr Ward about possible investment in shares in FHG;

(f) following meetings earlier in July 2006, on or about 26 July 2006 the plaintiffs purchased 275,000 shares in FHG for $1.33 per share;

(g) the plaintiffs purchased those shares in reliance on a number of representations made by Mr Ward (see par 18 - 21);

(h) among the representations are ones to the effect that:


(i) the shares were worth their price of $1.33 each; and

(ii) Mr Ward was a representative of Sagecorp.


(i) Mr Ward knew or should have known that the FHG shares were worthless or would become so;

(i) the third defendant's conduct and words conveyed the representations pleaded in par 23, including that FHG was an approved product advanced or promoted by Sagecorp, and that FHG was to be listed on the AIM Stock Exchange in London in September or October 2006;

(j) those representations were false and were made in breach of the third defendant's duty of care; and

(Page 8)

(k) as a consequence, the plaintiffs have suffered loss and damage.

24 The statement of claim also pleads claims against the seventh defendant. It is not necessary to detail those claims.

The disposition of the objections

25 I make the following general observations.

26 Almost all of Mr Ward's objections are on the grounds of relevance. In this respect, it is important to bear in mind the principles governing inspection, set out earlier in these reasons, and the low threshold of apparent relevance there explained.

27 There may be scope for the plaintiffs to tender parts of the transcript of examination of Mr Ward as evidence against Mr Ward: see s 76 of the Australian Securities and Investments Commission Act 2001 (Cth). But, importantly, that is not the only potential use of the transcript. What is said in the transcript may give rise to a line of inquiry, or may be of potential use in cross-examination, to meet Mr Ward's case in answer to the plaintiffs' case.

28 Mr Ward puts a general objection to the inspection of parts of the transcript that contain information and refer to (or detail) events after the date of the plaintiff's investment in Firepower on 26 July 2006. Mr Ward asserts that information and events after the date of the investment can have no bearing on the plaintiffs' decision to invest.

29 Mr Ward's contention reflects an unduly narrow view of the issues that arise on the pleadings. The plaintiffs' decision to invest in Firepower shares is not the only issue. For example, there are issues relating to the representations said to have been made by Mr Ward, and whether there was reasonable grounds for them. Findings on these matters are capable of being influenced by information and events that occurred after 26 July 2006, even though the questions relate to the position at the time the representations were made.

30 Moreover, Mr Ward's contention also reflects an unduly narrow notion of relevance for the purpose of the question of inspection of documents produced under a subpoena. Information and events after 26 July 2006 may lead to lines of inquiry in relation to the proof of the making of the disputed representations, and whether they were misleading in character.

(Page 9)

31 For these reasons, I reject Mr Ward's contention that all statements in the transcript relating to events and information after 26 July 2006 are on that account irrelevant.

32 My rulings in relation to each passage of the transcript to which objection is taken are set out in annexure A. The rulings are, of course, based upon my reading and consideration of the objected to material. Apart from the rulings column, the rest of annexure A is Mr Ward's schedule of objections and grounds.

33 In my rulings in annexure A, a reference to whether something is relevant is a reference to apparent relevance in the sense explained in the cases to which I have referred.

Conclusion

34 For these reasons, including what is contained in annexure A, I rule on the objections to inspection in accordance with what is set out in annexure A.

35 The result of my ruling, and the orders made on 22 November 2012, is that the plaintiffs have leave, in the 10 days following this decision, to attend the court to inspect and copy those parts of the documents in question which the court has determined may be inspected.

36 It is important to emphasise that my rulings to permit inspection of a part of a transcript say nothing about whether that part of the transcript is or might be sufficiently relevant to be admitted in evidence at the trial. As I explained earlier in these reasons, the two questions, and the tests to be applied, are very different.

(Page 10)

Examination 1

Page	Line	Reason	Ruling
14	24 - 48	Banking details of business and Ward Family Trusts etc Irrelevant to the pleadings.	Redacted. Not relevant.
15 -17	ALL
18	1 - 18
18	19 - 40	Sale of Superannuation fund Management business is irrelevant to the pleadings. Plaintiffs were not clients of this business.	Redacted. Not relevant.
23	5 - 35	Earnings/remuneration of Personal Financial strategies from 2003 onwards are irrelevant to the pleadings. Plaintiffs were not clients of Personal Financial Strategies	Objection overruled. Sufficiently relevant.
26	12 - 44	Suspension of QP Ward's licence with SageCorp in December 2006 is outside the timeframe and irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
27	31 - 48	Number of clients is irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
28	1 - 19
36	26 - 33, and part of 34	Irrelevant to the pleadings	Redacted. Not relevant.
36	40 - 45	Meeting with John Finnin is outside the time frame and irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
37 - 38	ALL
39	1 - 25

(Page 11)

Page	Line	Reason	Ruling
39	39 - 47	Pursuit of Financials from Finnin/Johnston/Anderson in 2007 is outside time frame and is irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
40	1 - 21
40	46 - 48
41	1 - 48
42	1 - 17
42	19 - 46	Discussion of 2005/2006 Financial accounts for Firepower with ASIC in 2007 is outside the time frame and irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
43	1 - 48
44	1 - 2
46	1 - 13
46	36 - 47	Numbers of clients and total dollar amounts invested in Firepower by investors is irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
47	1 - 21
54	28 - 46	Sale of Self Managed Superannuation Funds business is outside the time frame, and irrelevant to the pleadings as the plaintiffs were not clients of this business	Objection overruled. Sufficiently relevant. Notwithstanding the apparently same general subject as the objected to parts of p 18, I consider this material relevant.
55	1 - 20
56	11 - 47	Document headed "Firepower Performance Technologies for a Better Planet" is outside time frame and irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
59	38 - 48	Discussion of the production of records to ASIC by Ward's Office staff is outside the time frame and irrelevant to the pleadings.	Redacted. Not relevant.
60	1 - 8

(Page 12)

Page	Line	Reason	Ruling
64	5 - 48	Discussion of Sagecorp Breach Notification relating to Mr Stephen Coote (a Sophisticated Investor) is outside the time frame and irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
65	1 - 16
65	30 - 48
66 – 68	1 - 48
69	1 - 2
69	29 - 44	December 2006 is outside the time frame and the suspension breach of Ward is irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
70	9 - 34, and part of 35	December 2006 Firepower Investors Meeting is outside the time frame and irrelevant to the pleading	Redacted. Not relevant.
71	1 - 12	Provision of lists of Firepower investors in January 2007 is outside the time frame and irrelevant to the pleadings	Redacted. Not relevant.
76	33 - 48	Morgan Alteruthemeyer letter to ASIC in February 2007 is outside time frame and is irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
77	1 - 45

Examination 2

Page	Line	Reason	Ruling
10	12 - 48	December 2006 firepower Investors Meeting details are outside the time frame and irrelevant to the pleadings	Objection overruled. Sufficiently relevant.
11	1 - 46

(Page 13)

Page	Line	Reason	Ruling
18	6 - 39	Contents of the email dated 16th Feb 2007 is outside time frame and irrelevant to the current pleadings	Redacted. Not relevant
26	28 - 48	ASIC BARCODE P00306138 Email dated 13 October 2006 from Lawrence Berkhout to Kim Stokheld concerning investor lists and investment totals is outside the time frame and irrelevant to the current pleadings	Objection overruled. Sufficiently relevant.
27	1 - 48
28	1 - 48
29	1 - 42
29	44 - 46	Total commissions earnt by Axis International Management is irrelevant to the Plaintiffs pleadings	Objection overruled. Sufficiently relevant.
32	1 - 48	ASIC BARCODE P00306116 Discussion on email from Conwell to Stockheld on 7 January 2007 re Secondary Market is outside time frame and irrelevant to the pleadings	Redacted. Not relevant
33	1 - 8
33	10 - 46	Firepower Meeting in December 2006. Discussion re Secondary Market and Tim Johnston….is outside time frame and irrelevant to the current pleadings	Objection overruled. Sufficiently relevant.
39	44 - 47	ASIC BARCODE P00306117 Email dated 18 January 2007 from Kim Stokheld to Ward discussing investor enquiries, and Ward's reply ASIC BARCODE P00306125 is outside time frame and irrelevant to the current pleadings	Objection overruled. Sufficiently relevant.
40	1 - 48
41	1 - 31

(Page 14)

Page	Line	Reason	Ruling
41	33 - 48	Gary Conwell email sent by Stokheld on 25 Jan 2007 ASIC BARCODE P00306118 Discussion on how investor enquiries to be handled. This is outside the time frame and irrelevant to the current pleadings.	Objection overruled. Sufficiently relevant.
42	1 - 16
43	4 - 21, and part of 22	Email dated 30th January 2007 ASIC BARCODE P00306120 from Stokheld to Conwell/Johnston/Huston re 'Sale of Firepower Shares' is outside time frame and irrelevant to the current pleadings	Redacted. Not relevant.
44	17 - 30, and part of 31	ASIC BARCODE P00306128 Email from Ward to Finnin on the 9th February 2007 discussing share sale request by certain investors.this is outside the time frame and irrelevant to the current pleadings	Redacted. Not relevant.
44	31 - 46	ASIC enquiries re Ward applying for new AFSL in 2007. This is outside the time frame and irrelevant to the current pleadings	Objection overruled. Sufficiently relevant.
45	1 - 48
46	1 - 16
46	16 - 48	ASIC BARCODE P00306126 Email dated 14 March 2007 from Taylor (investor) to Stokheld re sale of shares. Outside time frame and irrelevant to the current pleadings	Objection overruled. Sufficiently relevant.
47	1 - 18
47	38 -47	ASIC BARCODE P00306146 Email dated 15 March 2007 from Vince Vallelonga to Stokheld regarding interested parties buying and selling shares. Outside time frame and irrelevant to the current pleadings.	Objection overruled. Sufficiently relevant.

(Page 15)

Examination 3

Page	Line	Reason	Ruling
43	1 - 48	The purchase of Firepower shares by members of the Ward Family, Ward Family business entities, and the Ward Family Superannuation Fund, is confidential information and irrelevant to the current pleadings	Objection overruled. Sufficiently relevant. Any confidentiality must bow to the interest in having all relevant documents available in litigation.
44	1 - 4
44	7 - 46	Price paid for Firepower shares by Ward Family members and Ward business entities is irrelevant to the current pleadings…and is confidential information	Objection overruled. Sufficiently relevant. Any confidentiality must bow to the interest in having all relevant documents available in litigation.
45	1 - 47
46	1 - 16
46	40 - 48	Discussion on listing FHG (Firepopwer Holdings Group)in 2007 and the discussion about audited financial accounts with ASIC, is outside the time frame and irrelevant to the current pleadings.	Objection overruled. Sufficiently relevant.
47	1 - 48
48	1 - 20

Examination 4

Page	Line	Reason	Ruling
43	3 - 28	Discussion re Bank Nomura in 2007 is outside the time frame and irrelevant to the current pleadings	Objection overruled. Sufficiently relevant.
44	1 - 28
45	1 - 28
54	6 - 29	Discussion of Sagecorp Breach regarding Mr Stephen Coote (a sophisticated investor) is outside the time frame and irrelevant to the current pleadings	Objection overruled. Sufficiently relevant.
55	1 - 28
56	1 - 26

(Page 16)

Page	Line	Reason	Ruling
56	27 - 29	December 2006 is outside the time frame, and the Suspension Breach is not relevant to the current pleadings	Objection overruled. Sufficiently relevant.
57	1 - 28
58	1 - 18
68	1 - 28	The contents of the email dated the 16th February from Wilkinson to Finnin and Johnston are not relevant to the current pleadings and fall outside the time frame.	Redacted. Not relevant.
97	6 - 28	The sale of the Self Managed Superannuation Fund administration business to On Q Prosperity, is irrelevant to the current pleadings and falls outside the time frame.	Redacted. Not relevant. Page 98, lines 1 - 13 redacted on same grounds.
124	22 - 28	Email dated 13 October 2006 from Berkhout to Stokheld concerning investor lists is outside the time frame and irrelevant to the current pleadings	Objection overruled. Sufficiently relevant.

Examination 5

Page	Line	Reason	Ruling
110	6 - 28	Contains assertions by others, and not evidence of fact from Ward, none of which is relevant to the matters in dispute with Mr Boase	Objection overruled. Sufficiently relevant.
111 - 129	1 - 28
130	1 - 21