Cole v Quest Software Pty Ltd
[2013] FCCA 1160
•22 August 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| COLE v QUEST SOFTWARE PTY LTD | [2013] FCCA 1160 |
| Catchwords: PRACTICE AND PROCEDURE – Application in a case seeking to set aside subpoena under r.15A.09 of the Federal Circuit Court Rules 2001 (Cth) – objectives of ss.3(2) and 23 of Federal Circuit Court Act 1999 (Cth) – proceedings listed for mediation before evidence is ordered to be filed – relevant considerations – application in a case and subpoena stood over until after mediation of proceedings. |
| Legislation: Federal Circuit Court Act 1999 (Cth), ss.3(2)(c), 23, 45 Federal Circuit Court Rules 2001, r.15A.09 |
| Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442 McIlwain v Ramsey Food Packaging Pty Ltd & Ors (2005) 221 ALR 785 National Employers’ Mutual General Insurance Association v Waind & Hill [1978] 1 NSWLR 372 SZPZJ v Minister for Immigration [2012] FMCA 67 Trade Practices Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90 Woolley v Vok [2011] FMCA 1052 |
| Applicant: | LAURENCE COLE |
| Respondent: | QUEST SOFTWARE PTY LTD (ABN 81 078 118 144) |
| File Number: | SYG 871 of 2013 |
| Judgment of: | Judge Lloyd-Jones |
| Hearing date: | 1 August 2013 |
| Delivered at: | Sydney |
| Delivered on: | 22 August 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr C. Lambert |
| Solicitors for the Applicant: | Mr M. Green |
| Counsel for the Respondent: | Mr P. Holmes |
| Solicitors for the Respondent: | Mr S. Ratu of Allens Linklaters |
ORDERS
The Application in a Case filed by the respondent on 26 July 2013 be stood over to a date to be fixed by the Court, after the mediation of the proceedings on 26 August 2013.
The subpoena filed by the applicant on 17 July 2013 be stood over to a date to be fixed by the Court, after the mediation of the proceedings on 26 August 2013.
Within 14 days from 26 August 2013 the parties are to notify my associate of the outcome of mediation and any directions in respect of the proceedings they seek to have made by the Court.
The parties have liberty to apply to the Court on 5 clear days’ notice.
Costs be reserved.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 871 of 2013
| LAURENCE COLE |
Applicant
And
| QUEST SOFTWARE PTY LTD (ABN 81 078 118 144) |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application filed on 26 April 2013 by the applicant, Laurence Cole (“Mr Cole”), alleging breaches by the respondent, Quest Software Pty Ltd (“Quest”), of the Trade Practices Act 1974 (Cth) (the “TPA”), the Australian Consumer Law (the “ACL”) and the Fair Trading Act 1987 (NSW) (the “FTA”) in respect of Mr Cole’s employment with Quest. It is not necessary at this stage to canvas the substantive application, however, this will be addressed in further detail below.
On 17 July 2013 Mr Cole’s representatives issued a subpoena to Quest (the “Subpoena”) seeking the production of documents, which contained a schedule in the following terms:
Books, documents and things you must produce from your possession, custody or control
1. A copy of this subpoena.
2. Originals of all records, pay advice, wage records, records of commission payments, records of bonus payments, employment share schemes, incentive payments, personnel or employment files, offers of employment, applications for employment, contracts of employment, agreements, employment handbooks, employment policies, records of workers compensation and sickness payments, workers compensation claim forms, all contributions to the appointed superannuation fund, all group certificates, all files, notes, correspondence, emails, statements, notes, records of interview and reports concerning, regarding, in respect of or pertaining to the employment of the Applicant by the Respondent.
3. Originals of all records, file notes, emails, statements, notes and reports regarding the decision of the Respondent to terminate the employment of the Applicant.
4. Originals of all records, file notes, emails, statements, notes and reports regarding the decision of the Respondent to remove the Applicant as a director of the Respondent.
5. Original of all records, file notes, emails, statements, notes and reports regarding the inclusion and participation of the Applicant in the Quest Software Incorporated Stock Incentive plan.
On 26 July 2013 Quest filed an application in a case (the “Interim Application”) seeking the following orders:
1. That, pursuant to rule 15A.09 of the Federal Circuit Court Rules 2001, the subpoena issued at the request of the Applicant on 17 July 2013 and addressed to the Respondent be set aside.
2. Costs.
The Interim Application was made returnable for hearing on 1 August 2013, the day before the Subpoena was returnable.
Background
The claims generally advanced by Mr Cole are conveniently summarised at [9] – [11] of Quest’s submissions filed at the hearing of the Interim Application. They state:
Mr Cole’s Claims
9. Mr Cole pleads multiple causes of action. … In summary, Mr Cole pleads the following factual allegation (many of which are denied):
a) On 7 September 2007, Mr Cole accepted an offer of employment by Quest. Thereafter, from about 1 October 2007 until 2 May 2011, Mr Cole was an employee and the Managing Director of Quest.
b) In connection with making the employment offer Quest made a series of representations (the “Representations”) that:
i) induced Mr Cole to accept the employment offer; and
ii) also constituted express terms of Mr Cole’s employment contract (the “Express Terms”).
c) In summary, the Representations and Express Terms included representations and promises that Quest would comply with its own code of conduct, would act fairly and honestly towards Mr Cole and would not terminate his employment except in specified circumstances.
d) There were also implied terms of the contract of employment, which included obligations of good faith, of cooperation and to maintain the relationship of trust and confidence between the parties (the “Implied Terms”).
e) On 2 May 2011, Mr Cole was called into a meeting with the regional Vice President of Quest’s parent company and Quest’s Human Resources Director at which he was informed that his employment was terminated with immediate effect. He was told that he could either accept the minimum compensation due to him or be paid 3 months’ salary if he immediately signed a letter of resignation and deed of release.
f) Shortly afterwards, the offer of 3 months’ salary was increased to 6 months’ salary and Mr Cole [signed] the resignation letter and deed “under duress”. By that and related conduct, Mr Cole’s employment was terminated.
g) At the time of the termination of Mr Cole’s employment, he was a registered director and the Managing Director of Quest and, under ss.203C and 203F of the Corporations Act 2001, could only be removed as a director or Managing Director by a resolution of the board of directors. At no time on or before 2 May 2011 was any such resolution passed and the summary termination of Mr Cole’s employment and his removal as Managing Direction was of “no effect at law and was unjust and unfair”.
h) By its conduct in relation to the termination of Mr Cole’s employment and appointment as Managing Director pleaded at paragraphs 24-37 and 60-73 of the Statement of Claim (summarised at (e)-(g) above), Quest:
i) rendered the Representations false and misleading in contravention of ss 42 and 46 of the TPA and their FTA and ACL equivalents, in that Mr Cole’s employment was terminated contrary to the Representations;
ii) breached the Express Terms and the Implied Terms of the employment contract; and
iii) acted unconscionably for the purposes of s 51AC of the TPA, alternatively ss 21 and 22 of the ACL.
i) Having regard to that conduct and the circumstances surrounding the execution of the deed of release:
i) the deed of release was unjust for the purposes of the Contracts Review Act 1980 (NSW) (the “CRA”); and
ii) Quest’s conduct in summarily terminating Mr Cole’s employment and “demanding” that he sign a letter of resignation and execute the deed of release was unconscionable for the purposes of s 21 of the ACL.
10. Mr Cole claims a range of relied in relation to the termination of his employment (his entitlement to which is denied), namely:
a) damages or statutory compensation for loss under ss 82 and 87 of the TPA, 68 and 72 of the FTA and 236 and 237 of the ACL, presumably for alleged misleading conduct constituted by making the Representations and for unconscionable conduct in contravention of the TPA and ACL;
b) “compensation” for loss and damage caused by Quest’s alleged breach of Mr Cole’s employment contract; and
c) an order that Quest pay the maximum pecuniary penalty under ACL s 224 for breach of ACL s 21 (unconscionable conduct in relation to the supply of goods or services) and s 31 (misleading conduct relating to employment), and an order under ACL s 237 or s 238 that the penalty be paid to Mr Cole.
11. The loss claimed of past and future remuneration, commission payments and superannuation, anxiety, humiliation and distress. The claimed loss also includes the value of shares (“RSU’s”) in Quest’s parent company that were allegedly promised to Mr Cole but the legal title to which did not vest in him as a result of Quest’s alleged breach of contract in terminating his employment.
It should be noted that a number of the claims advanced by Mr Cole are disputed by Quest and have not yet been ventilated or considered by the Court.
Hearing 1 August 2013
The proceedings came before this Court for hearing of the Interim Application on 1 August 2013. On that date Mr Holmes appeared for Quest (the applicant on the Interim Application) and Mr Lambert appeared on behalf of Mr Cole.
Evidence
Mr Holmes read the following evidence:
a)Affidavit of Timothy John Frost sworn 26 July 2013 (“First Frost Affidavit”); and
b)Affidavit of Timothy John Frost sworn 31 July 2013 (“Second Frost Affidavit”).
Mr Lambert raised a number of objections to the reading of the Second Frost Affidavit, including as to its form and nature. After hearing submissions from both parties, I indicated that I would allow the Affidavits in, but give them the weight appropriate.
Mr Lambert did not seek to read any evidence at the hearing.
Quest’s Submissions
Mr Holmes indicated to the Court there are three bases upon which Quest seeks to have the Subpoena set aside, namely:
a)The Subpoena has no forensic purpose;
b)The Subpoena is oppressive; and
c)The Subpoena has been issued as an impermissible substitute for discovery.
Mr Holmes indicates the procedural history of the proceedings bears direct relevance to the Interim Application. At the First Court Date directions hearing orders were made by consent that mediation would take place on or before 31 August 2013 and, if unsuccessful, evidence exchange would take place afterwards. The intention of the orders was to prevent the parties incurring unnecessary costs if the matter were to settle beforehand.
On 17 July the Subpoena was issued to Quest. Quest’s representatives then sent a letter to Mr Cole’s representatives on 23 July 2013 (Annexure “TF4” to the First Frost Affidavit”). In summary, it asserted that the Subpoena was an abuse of process and invited Mr Cole to give an undertaking not to seek to enforce it. Mr Cole’s representatives responded by letter on 26 July 2013 (Annexure “TF5” to the First Frost Affidavit”). Quest’s approach was rejected by Mr Cole’s representatives which, ultimately, led to the filing of the Interim Application.
Mr Holmes indicated that the proceeding is, in effect, a termination of employment case, but Mr Cole’s pleadings are not entirely straightforward. Mr Holmes argued that the integers of the various causes of action pleaded in the Statement of Claim don’t rely on there being motives or purposes behind the termination of Mr Cole’s employment with Quest. The crux of Mr Cole’s case is set out at [24]-[37] of the Statement of Claim and is, broadly put, that Mr Cole was called to a meeting, was informed his employment was to be terminated, was given no reasons for the termination and was put under duress to sign a deed of release in circumstances where he had not been given an opportunity to obtain legal advice. Quest admits that no reasons were given for the termination, but that it was not required to provide any reasons. Mr Holmes submits that the Mr Cole’s allegations are first that Quest rendered false and misleading representations to Mr Cole at the commencement of his employment which is proscribed conduct under the TPA and its other equivalents. Secondly, that the conduct of the officers of Quest on the day of Mr Cole’s termination constituted breaches of the express and implied terms in his employment contract and, thirdly, that the conduct on the day of the termination of Mr Cole’s employment constituted unconscionable conduct on the part of the respondent.
Mr Holmes submits it is the outward conduct towards Mr Cole and what can be inferred from it that seems to form the basis of Mr Cole’s application. It is not whether the respondent had a proper motive to terminate Mr Cole’s employment or any allegation in respect of his performance, which is pleaded by Mr Cole’s representatives as exemplary, a pleading which is denied by Quest. In those circumstances Mr Holmes contends that the large numbers of documents sought by Cole in respect of his personnel file and so forth simply do not arise on the pleaded case. The documents may arise on some other case Mr Cole wishes to raise, but this takes the Court into fishing territory.
Further, Mr Holmes indicates there is an additional set of allegations appearing at [60]-[66] of the Statement of Claim concerning the alleged irregularity of the termination of Mr Cole’s directorship of Quest and the failure of Quest to adhere to the relevant requirements under the Corporations Act 2001 (Cth) (the “Corporations Act”). Again, these allegations do not go to or make relevant Mr Cole’s performance as an employee.
Mr Holmes states that it is admitted that no reasons were given by Quest for the termination of Mr Cole’s employment, however, Quest was entitled to terminate Mr Cole’s employment on notice or, in lieu of notice, on payment of a certain amount of compensation. This is a legal issue and does not necessitate the production of a large amount of documents.
Mr Holmes then sought to address what was actually called for in the Subpoena. Paragraph 2 of the Subpoena calls for the production of, aside from general category documents, pay advices, wage records, records of commission payments, records of bonus payments, records of employee share schemes and incentive payments. All of these things can be described, in general terms, as payment records. However, there is nothing in issue in respect of what Mr Cole was paid. Quest admits that the letter of offer contained certain representation about what Mr Cole should be paid and what his entitlements were, including superannuation. Mr Holmes contends that it is not apparent what relevance to any pleaded issue those documents have.
Mr Holmes argues that he has already addressed, in respect of [2] of the Subpoena, the personnel or employment files relating to Mr Cole (noted at [11] and [12] above).
Mr Holmes next turned to offers of employment, applications for employment, contracts of employment, agreements, employment handbooks and employment policies. Mr Cole’s Statement of Claim pleads that the contract constituted a letter of offer and two attachments to it. Mr Holmes contends Mr Cole knows what documents constitute the contract of employment upon which he sues. The broader category of documents does not appear to have any relevance to those matters when it is clearly pleaded what the contract was and what the documents are in the allegedly misleading representations that were made. If it were the case that Quest was alleging that Mr Cole was bound by an employment policy and a question was whether Mr Cole was or was not bound by the policy, then the issue might be whether he had access to it and was it readily available. In those circumstances the production of those documents could be sought. However, in the proceedings before this Court Mr Cole is alleging that “The relevant employment policy was this, it formed part of my contract”. There is no question as to whether he was in fact bound by the policy.
Mr Holmes argues what the Court must make a judgment on is whether there is any real possibility the documents required for production can be relevant to a pleaded issue. If the Court is of the opinion they are not relevant to the pleaded case the Subpoena should be set aside. However, if the Court is of the opinion they are or it is reasonably likely they are relevant the Court must then consider whether the effort and burden of obtaining or retrieving the documents is or would be oppressive to the party required to produce them. This argument focuses on the very broad, almost unlimited categories of documents sought by Mr Cole as a whole, particularly those sought in [2] of the Subpoena, namely:
all records, … all files, notes, correspondence, emails, statements, notes, records of interview and reports concerning, regarding, in respect of or pertaining to the employment of the Applicant by the Respondent.
Those categories cover in Quest’s submissions, effectively, any document one could conceive in any way has a relationship to Mr Cole’s employment with Quest. That, for example, could mean any email sent by Mr Cole, any email Mr Cole ever received, any email that mentioned him, any email relating to a policy he implemented or any email relating to an initiative he took.
Mr Holmes contended the third prong of Quest’s objection to the Subpoena is that, given the broad range of documents it calls for, it bears the classic hallmarks of discovery. The documents are not specifically described, rather, they are very broadly described and would be what one would expect to see requested in a discovery application. In this jurisdiction discovery is not automatically granted and, in fact, there is a general presumption against it which has been well established.
Mr Holmes referred the Court to the decision of his Honour Lander J in Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442 where his Honour stated at [53]:
The purpose of discovery is to assist in resolving disputes as to fact. Discovery can be a lengthy and expensive process. Because of the high cost to the parties of the discovery process, both in giving discovery and taking inspection, the modern trend is to contain the obligation to give discovery by giving the court control over the process; by limiting the circumstances in which discovery is to be given; and, if discovery is to be given, by limiting the extent of the discovery given. The cost of discovery can far outweigh the benefits.
Mr Holmes submitted that if Mr Cole wishes to make a discovery application he should do so through the proper mechanisms by making a formal application to the Court. The Court would then have regard to s.45 of the Federal Circuit Court Act 1999 (Cth) (the “FCC Act”) whether it was in the interests of justice or otherwise to overcome the presumption against discovery. If the Subpoena is allowed to stand it is, effectively, discovery by stealth and shouldn’t be allowed to overcome the clear legislative requirement that a formal application for discovery be made.
Mr Holmes contended that consent orders were made at the first return date of the proceedings and mediation should take place before substantive interlocutory steps are taken, including the preparation of evidence. It would subvert the intention of those orders to have a large and expensive step undertaken for the search and production of documents before the mediation takes place which, consistent with the FCC Act’s objectives of streamlining and avoiding unnecessary expense, was ordered before these steps were taken by Mr Cole.
Mr Cole’s Submissions
Mr Lambert, appearing on behalf of Mr Cole, indicated to the Court at the commencement of his oral submissions it was his opinion that the Subpoena could not be stood over until after the mediation occurred. The documents sought in the Subpoena are important and Mr Cole requires access to them.
Mr Lambert indicated that when running and Australian company the company must comply with Australian law, including the Income Tax Assessment Act 1997 (Cth), the Superannuation Guarantee (Administration) Act 1992 Cth), the Superannuation Administration Act 1996 (Cth), the Fair Work Act 2009 (Cth), the Corporations Act 2001 (Cth) and others. These acts require companies to keep records of information about employees in this jurisdiction and should be readily available.
Mr Lambert indicated that what is being sought is not every email to or from Mr Cole, but emails in respect of or pertaining to the employment of him by Quest, including pay advice, wage records, records of commission payments, records of bonus payments, employee share schemes and incentive payments, all governed by the Income Tax Assessment Act 1997 (Cth). What Mr Cole is, in effect, seeking is his employment file from Quest. However, Mr Lambert submitted that there may often be what is described as a “second set of books” which appears when a company takes a decision to terminate an employee’s employment. This is why the Subpoena seeks file notes, correspondence, emails, statements notes, records and interview and reports so that all documents in relation to the employment of Mr Cole are produced.
Mr Lambert submitted that what occurred in these proceedings is that a person from Singapore arrived and informed Mr Cole his employment had been terminated. This course of action raises a number of questions, including whether this person had the authority to make such a decision and who this decision was actually made by. This is not a matter in respect of the termination of a casual employee or a janitor, but of the managing director of a company which is a statutory position in Australia. A resolution was required to remove Mr Cole as a director and that is pleaded in the Statement of Claim at [64]. Section 203 of the Corporations Act requires a resolution of the board of Quest to remove Mr Cole as a director. Further, by being appointed managing director of Quest, s.203(f) of the Corporations Act required a resolution of the board of directors to terminate Mr Cole’s appointment as managing director. Mr Cole needs to have access to those documents, if they are in existence.
In Mr Lambert’s submission Quest is not a mum and dad company where a subpoena of this nature would require a significant amount of resources being diverted in order to comply with it. Quest is a large international company based in the USA and operating in Singapore, New Zealand and Australia. Quest was taken over by Dell and Dell is a very large company that is a household name and has massive resources. Quest’s argument that the Subpoena is oppressive because people might have to do this and documents may have to be brought together just doesn’t carry weight. There is no authority to say that just because compliance with a subpoena is expensive or costly it should be set aside. There has been no submission by Quest that the compiling of these documents would take time and, in a number of instances, Mr Holmes has indicated the documents are readily available. These documents are needed so Mr Cole can be in the best position possible at mediation to allow that course the best opportunity to resolve the substantive dispute before the Court.
Quest submitted that some of the documents sought by Mr Cole, such as workplace policies have no legal purpose. However, Mr Lambert argued that those documents are relied on in Quest’s Defence at [14]. Accordingly, they should be produced for the purposes of the proceedings. Further, other documents sought in the Subpoena are clearly referred to in the Statement of Claim.
The crux of the case, as submitted by Mr Holmes, is the conduct that occurred on the day of the termination of Mr Cole’s employment. Mr Lambert indicated this is correct. The proceedings are about the contract of employment, the terms of the contract of employment, the representations that were made by Quest to Mr Cole to induce him to enter into that contract of employment, the alleged misleading and deceptive conduct engaged in by Quest and the alleged unconscionable conduct engaged in by Quest, in particular, with respect to the termination of Mr Cole’s employment.
One of the authorities relied on by Quest in correspondence to Mr Cole (Annexure “TF4” to the First Frost Affidavit) relies on the authority of Moffitt P. in National Employers’ Mutual General Insurance Association v Waind & Hill [1978] 1 NSWLR 372 at 381 where his Honour stated:
As Jordan C.J. pointed out in Small's case - 1978-1-NSWLR-372.fn_ag and, as appears in
Burchard's case there are at least two steps in the procedure of
having a third party bring documents to court, and in their use thereafter. Indeed, on a correct view, there are three steps. The first is obeying the subpoena, by the witness bringing the documents to the court and handing them to the judge. This step involves the determination of any objections of the witness to the subpoena, or to the production of the documents to the court pursuant to the subpoena.(footnotes omitted)
What the authority states is the first thing that must be done is that the documents must be produced to the Court. After that, any argument as to privilege or relevance can be had.
Mr Lambert then referred the Court to the penultimate paragraph of the letter appearing at Annexure “TF4” of the First Frost Affidavit, where it states:
… [W]e invite Mr Cole to provide an undertaking not to require Quest to comply with the Subpoena. We require this undertaking to [be] provided to us by 5:00pm on Thursday, 25 July 2013.
(original emphasis)
The letter was served on Mr Cole’s representatives during the afternoon on 23 July 2013, yet an undertaking was requested by the afternoon two days after the letter was served. Annexure “TF5” is Mr Cole’s response to that letter and states that he does not agree the Subpoena is a substitute for discovery or that it is unreasonable or oppressive. Mr Cole states the Subpoena’s scope is confined to particular documents that are relevant to the proceedings and, further, these documents have to be maintained under Commonwealth and State legislation. These documents, therefore, should be readily available for production.
Mr Lambert contended there is no provision in the Federal Circuit Court Rules 2001 (Cth) (the “FCC Rules”) that proscribes the issuing of subpoenas and Mr Cole won’t give the undertaking to Quest that it seeks. The next step taken by Quest after Mr Cole’s letter on 26 July 2013 was Quest filing the Interim Application on the same day. Mr Lambert contended this action may question the validity of such an application.
Mr Lambert then turned to the scope of emails sought in the Subpoena. Despite the submissions of Quest, Mr Cole is not seeking all emails, just emails pertaining to Mr Cole’s employment. It is not some covert form of discovery that is being pursued. Mr Cole is being represented by a single solicitor and single barrister mounting an action against a multinational company.
Mr Lambert then referred the Court to the reasons of Moffitt P in Waind (supra) at 382 where his Honour stated:
The essential feature of discovery in this connection, as appears from Burchard's case and Small's case - 1978-1-NSWLR-372.fn_aj is that the person to whom the subpoena is addressed will have to make a judgment as to which of his documents relate to issues between the parties. It is oppressive to place upon a stranger the obligation to form a judgment as to what is relevant to the issue joined in a proceeding, to which he is not a party. Hence it is an abuse of the use of a subpoena to impose this obligation. It follows that it is an abuse to use any subpoena, i.e. even to a party to obtain discovery. This was the reasoning in Small's case - 1978-1-NSWLR-372.fn_ak. Of course, discovery as such is otherwise available to a party. It follows that a subpoena can only properly be used for the production of documents described in particular or general terms which does not involve the making of such a judgment. It does not follow, however, that because the party who issues a subpoena is unaware of the precise description of a particular document, or whether a particular document or documents is in the possession of the witness, or even whether it exists, or is unaware of its contents, that the subpoena, or even a subpoena in general terms, amounts to the use of the subpoena for the purpose of “discovery”. To state it does involve a misconception of the different functions of discovery and of a subpoena for production. Of course, it may be that the terms of a subpoena are so wide that it is oppressive, but this is not because it is used for “discovery” in the sense used in Small's case and Burchard's case - 1978-1-NSWLR-372.fn_am, but because it imposes an onerous task on a stranger to collect and produce documents many of which can have no relevance to the litigation. To require the branch of a bank to produce all cheques received by it in a particular year in order to find, if it exists, a cheque of the opponent in a false name would be oppressive, whereas, to require a hospital to produce its file in respect of the medical treatment of the opposing party would not.
(footnotes omitted)
Mr Lambert argued that to require a hospital to produce its file in respect of the medical treatment of a patient, as noted by Moffitt P above, is analogous to what is being sought in the Subpoena. Mr Cole seeks his employment file, its contents and other documents that may not be in the file and are pertinent to his employment with Quest.
Quest’s Submissions in Reply
Mr Holmes argued, in respect of Mr Cole’s criticisms of the decision of Quest to file the Interim Application when it did, that this was done in the context of the Subpoena being returnable the next day. It was entirely appropriate for Quest to put on the Interim Application and inform the Court beforehand as no undertaking was forthcoming from Mr Cole. It was and is simply efficient practice on the part of Quest.
Mr Holmes then referred the Court to [9] of the Statement of Claim and submitted that Mr Lambert’s argument is that all payment record documents are relevant because of that paragraph. That paragraph is admitted by Quest and there appears to be no dispute about that paragraph. In any event, at [8] of the Statement of Claim, Mr Lambert referred to the fact that paragraph refers to a written offer of employment dated 6 September 2007 and the Subpoena seeks “offers of employment”, plural. Mr Lambert contended this precisely conveys his argument in that respect about the broadness of the Subpoena. Mr Cole knows what offer it is he says is relevant, binding and formed part of the contract of employment and any other offer, as pleaded, could have no relevance. This is indicative of the drafting of the Subpoena and the approach that has been taken. Instead, there are references to all documents of a certain nature, some of which bear resemblances to specific documents that have been pleaded. Another example is the reference to a particular code of conduct in the Statement of Claim. However, what is being sought is all codes of conduct. Mr Lambert has effectively cherry-picked certain aspects of the Subpoena that may be defensible and sought to characterise the whole Subpoena based on those specific references. Mr Lambert contended that is simply not the case.
Mr Holmes argued that what has been pleaded by Mr Cole is in respect of conduct of Quest in terminating Mr Cole’s employment, by allegedly putting pressure on him to sign a deed of release, by not giving him enough time to obtain legal advice, by simply swooping in, as characterised by Mr Cole, and telling him his employment was terminated without reasons and that conduct constituted unconscionable conduct. That is exactly why the documents sought in the Subpoena are not relevant. On that basis the assertion by Mr Cole that each category of document that has been referred to in the Subpoena is also referred to in the pleadings is rejected and the Court should accordingly not be persuaded that it is the case.
Mr Holmes submitted that in Waind his Honour Moffitt P stated production of the documents is the first step in the process, however, that passage is beside the point. That passage describes what the factual steps are in responding to a subpoena on the assumption it is not objected to. If, in these proceedings, the path followed was the production of the documents then an argument as to whether they are oppressive is putting the cart before the horse. The oppression would have already been encountered by Quest and that is only one basis upon which the Subpoena is opposed.
Mr Holmes then referred the Court to the decision of his Honour Raphael FM (as he then was) in SZPZJ v Minister for Immigration [2012] FMCA 67 where his Honour stated at [4], after quoting Powell J in Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98:
… [I]t is difficult to avoid the conclusion that, in reality, the court's jurisdiction to set aside a subpoena is but one aspect of the court's jurisdiction to act to prevent an abuse of process, and that particular classes of case which I have recorded above are to be regarded as no more than examples of situations which the courts, in the past, have held, and, in the future, would hold, to be cases of an abuse of process.
Mr Lambert argued that the point is whether or not there is a basis on which to seize on one particular characteristic of discovery and compare it with a subpoena. In this instance the Subpoena calls for the production of a very large number of documents and, on the evidence of Quest, would take a significant effort to respondent to. In these circumstances the natural mechanism for obtaining such documents would be discovery, if allowed. In such an instance Mr Cole would need to convince the Court that it would be in the interests of justice to do so in circumstances where the proceedings are set down for mediation and Quest is being asked to perform exactly the task that mediation would hope to circumvent.
Statutory Framework
Rule 15A.09 of the FCC Rules states:
15A.09 Setting aside subpoena
On application, the Court may make an order setting aside all or part of a subpoena.
Consideration
I intend to first address the conduct of both Quest and Mr Cole in the timing of the various correspondence between the parties and the filing of the Interim Application. On the material before the Court no criticism can be made of either party in this respect. The parties are subject to a timetable to prepare the matter for mediation on August 26 and it is my opinion that the Interim Application has not been filed as an obstacle to that course. Accordingly, I do not intend to address this aspect in any more detail.
Her Honour Judges Barnes considered the relevant principles to be considered by the Court when an application under r.15A.09 is made in Woolley v Vok [2011] FMCA 1052. At [7] – [8] her Honour states:
7. In written submissions the applicant creditor addressed in some detail the principles relevant to determination of such an application, referring to Kingley & Arndale [2008] FMCAfam 600. The principles considered in that case are of general relevance and are consistent with the principles applied in decisions of the Federal Court (see Australian Competition & Consumer Commission v Australian Safeway Stores Pty Ltd [1998] FCA 1599; Trade Practices Commission v Arnotts Ltd (No 2) (1989) 21 FCR 306 ; [1989] FCA 248 and Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98).
8. In Kingley, Purdon Sully FM referred to circumstances in which the issuing of a subpoena may constitute an abuse of process, including where it was not “served bona fide for the purpose of obtaining relevant evidence”, but rather was “fishing”, was “too wide”, was “being used as a substitute for discovery” or if the documents were not on the evidence before the court relevant to the substantive proceedings. As the Full Court of the Family Court stated in Hatton v Attorney-General (Cth) (2000) 158 FLR 31 ; [2000] FamCA 892 (at [49]) a “lack of apparent relevance will be a sufficient ground in itself to set aside a subpoena”.
His Honour Greenwood J in McIlwain v Ramsey Food Packaging Pty Ltd & Ors (2005) 221 ALR 785 addressed the relevant principles governing when leave ought to be granted to issue subpoenas at [35]. His Honour stated:
35. In relation to the principles governing when leave ought to be granted to issue subpoenas, these principles emerge:
a) A writ of subpoena duces tecum is competent against both a party and a stranger to the proceeding: Adelaide Steamship Co v Spalvins (1997) 24 ACSR 536.
b) A request for a subpoena cannot be used to disguise an application for discovery of documents, or as an alternative to an application for further and better discovery. It is not permissible to use to a writ of subpoena duces tecum as a substitute for discovery of documents against a party to the proceeding. The subpoena process should not have the effect of discovery against a person who, as a stranger to the proceeding, is not liable to make discovery: Adelaide Steamship Co v Spalvins; Commissioner for Railways v Small (1938) SR (NSW) 564; Diddams v Commonwealth Bank of Australia [1998] FCA 9497. The subpoena process cannot be used to initiate an inquiry as to relevance outside of the time and place identified by the rules for discovery.
c) Reference has already been made to the principles identified by Branson J in Diddams v Commonwealth Bank of Australia.
d) The documents for production must be identified with reasonable particularity: Commissioner for Railways v Small (1938) SR (NSW) 564 at 574–5 per Jordan CJ. The category of documents must not be so wide as to be oppressive.
e) The documents must be relevant to an issue raised on the pleadings and be used to elicit documents to support the applicant’s existing case. It cannot be used for purposes of “fishing” or for the purpose of determining a preliminary question as to whether the party has a supportable case (Hennessy v Wright (1888) 21 QBD 509), or to investigate the character of the opposing party’s evidence (Griebart v Morris [1920] 1 KB 659 at 666).
f) The test for relevance does not require that a party demonstrate direct relevance to the contest between the parties. Rather, the documents must have some potential relevance to the pleadings as they stand. In Australian Gas Light Company v Australian Competition and Consumer Commission [2003] FCA 1101, French J summarised the matters which are relevant to the grant of leave:
8. It is not appropriate to be overly prescriptive in setting out criteria for the grant of leave to issue a subpoena. Plainly, the documents sought must have at least some apparent potential relevance to the matters in issue in the litigation. The assistance that the requesting party may derive from the production of such documents must be taken into account. Case management considerations are also relevant. A wide-ranging subpoena, seeking documents of doubtful relevance at great inconvenience to, or that risk compromising the commercial privacy of, a third party, may not readily attract the grant of leave. Where the issue of such a subpoena is likely to delay progress to trial because of the legitimate interests of a party in resisting its issue, that may also be a practical factor to be weighed.
g) The same notion was expressed in Small (at 575) and Dorajay Pty Ltd v Aristocratic Leisure Ltd [2005] FCA 588 at [34] in requiring the existence of a legitimate forensic purpose for the production of documents.
h) In Trade Practices Commission v Arnotts Ltd (No 2) (1989) 21 FCR 306 ; 88 ALR 90, Beaumont J said that the question of whether a subpoena should go can conveniently be addressed by reference to two questions. First, does the material sought by the subpoena have an apparent relevance in a descriptive or adjectival sense rather than a substantive sense? Does the subpoena have a legitimate forensic purpose to this extent from the perspective of the party issuing the subpoena? Second, does the subpoena cast a serious and unfair burden or prejudice upon the respondent to the subpoena?
i) Spender J in Cosco Holdings Pty Ltd v Cmr for Taxation (1997) 37 ATR 432 ; [1997] FCA 1504 suggested that adjectival relevance looks toward the possibility whether the material sought could reasonably be expected to throw light on some of the issues in the principal proceedings.
j) When a party contends material that either is or may be or may have been in the possession, custody or power of a respondent relates to any question or issue raised on the pleadings, they will be taken to mean that the material is relevant in the sense contemplated by s 55(1) of the Evidence Act 1995 (Cth) namely, evidence that if accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceedings. This is the substantive relevance of the material. The test for the issue of the subpoena is whether the material appears to have relevance in the sense of throwing light on at least some of the issues in the principal proceeding.
k) The relevance of the documents must not be disproportional to any benefit that their production might have for the respondent: Dorajay at [34].
l) A subpoena ought not issue in circumstances where it would unduly disrupt the conduct of the trial by requiring the court to read documents which could have been obtained at an earlier stage in the proceedings: Diddams v Commonwealth Bank of Australia [1998] FCA 9497.
m) The issue of the subpoena must not, in all the circumstances be oppressive in terms of its impact on the recipient. That is, the issue of the subpoena must not be “seriously unfairly burdensome, prejudicial or damaging” and “productive of serious and unjustified trouble and harassment”: Hamilton v Oades (1989) 166 CLR 486 at 502 ; 85 ALR 1 at 11; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 ; 79 ALR 9; Seven Network Ltd v News Ltd (No 5) (2005) 216 ALR 147 at [12].
n) The issue of a subpoena against a stranger to the proceeding is more likely to succeed later in the proceeding. Though there is no formal barrier to a subpoena to produce being returnable prior to the hearing, the document may well be premature where no trial date has been fixed. Where the proceeding is of considerable evidentiary complexity there is stronger force to serving the subpoena at an earlier stage: Hughes v Western Australian Cricket Association Inc (1986) 66 ALR 541.
o) In Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 588 at [17], Stone J noted the observations of Waddell J in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 927, summarising the views of Moffitt P in National Employers’ Mutual General Association Ltd v Waind & Hill [1978] 1 NSWLR 372 to the effect that whether subpoenas are oppressive or an abusive process depends on whether “it is reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case”. Her Honour said at [18]:
18. These authorities show that the criteria by which one determines whether a subpoena should be set aside, in whole or in part, may be expressed in different ways but ultimately, they all come down to whether such action is required to prevent an abuse of the processes of the court to prevent injustice. As Deane and Gaudron JJ recognised [Hamilton v Oades (1989) 85 ALR 1 at 11] in the comments quoted by Beaumont J [in Trade Practices Commission v Arnotts Ltd], various terms may be used in focusing these concerns on the circumstances of a particular case. In this case, whether the documents are relevant (in the sense used by Beaumont J) will determine the issue provided that the requirements of the subpoena are not otherwise oppressive.
In respect of the Subpoena before this Court, Quest seeks to set it aside on three bases, being:
a)The Subpoena has no legitimate forensic purpose and it is a “fishing” expedition;
b)The Subpoena is oppressive to Quest; and
c)The Subpoena has been issued as an impermissible substitute for discovery.
Section 23 of the FCC Act states:
Federal Circuit Court of Australia to advise people to sue dispute resolution process
1. If the Federal Circuit Court of Australia considers that a dispute resolution process may help the parties to a dispute before it resolve that dispute, the Federal Circuit Court of Australia must advise the parties to use that dispute resolution process.
2. If the Federal Circuit Court of Australia does so advise the parties, it may, if it considers it desirable to do so, adjourn any proceedings before it to enable attendance in connection with the dispute resolution process.
Section 21(3)(b) states that mediation is an alternative dispute resolution process. These proceedings are listed for mediation before a registrar of this Court on 26 August 2013. Mediations in this Court are often efficient and expeditious means or resolving a dispute or disputes that save the parties incurring unnecessary costs of preparing and going to trail. Even if the mediation is unsuccessful in the resolution of a dispute as a whole, the issues between the parties can be significantly narrowed. Accordingly, pursuant to ss.3(2) and 23 of the FCC Act, the Interim Application and Subpoena should be raised before a registrar of the Court at mediation on 26 August 2013. I will address this in further detail below.
Mr Lambert’s submission is that it is necessary for the Subpoena to be made returnable before the mediation of the proceedings on 26 August 2013, on the basis that there are critical things Mr Cole needs to see. However, this submission was not advanced any further at the hearing of the Interim Application. On that basis, I am not satisfied that Mr Lambert’s submission can be sustained in respect of the timing of the production of documents pursuant to the Subpoena. No prejudice will befall Mr Cole if the documents sought in the Subpoena are stood over until after the mediation. Further, the standing over of the Subpoena will save the parties incurring any unnecessary costs prior to the mediation of the proceedings, which was the purpose of the orders made at the First Court Date directions hearing on 24 May 2013.
Purpose of Subpoena – “Fishing” Expedition
I turn to the first ground of the Interim Application. Quest pleads that there is no “reasonably precise” or “tolerably clear” legitimate forensic purpose in Mr Cole seeking production of the documents described in the Subpoena.
In Trade Practices Commission v Arnotts Ltd & Ors (1989) 88 ALR 90 his Honour Beaumont J stated at 102:
The general test for present purposes is well settled. The issue of a subpoena will be an abuse of process if it is not used for a legitimate forensic purpose: see Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100-1. But, as Deane and Gaudron JJ observed in Hamilton v Oades (1989) 85 ALR 1 at 11, the court's general powers in this area have a dual aspect: “The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice … [This] power … is not restricted to defined and closed categories … In this context injustice is not simply a question of the purpose or motive for which the relevant proceedings were instituted but includes a consideration of the consequences of the proceedings for the person invoking the power. The terms ‘oppressive’ and ‘vexatious’ are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are ‘seriously and unfairly burdensome, prejudicial or damaging’ and ‘productive of serious and unjustified trouble and harassment’”: Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 62 ALJR 389 at 411 ; 79 ALR 9 at 45 per Deane J.
His Honour at 103 then addressed the application before him by reference to two tests, namely:
a)Does the material sought have an apparent relevance to the issues in the principal proceedings, i.e., is adjectival, as distinct from substantive, relevance established? Does the subpoena have a legitimate forensic purpose to this extent? This involves a consideration of the matter from the standpoint of the [party that issued the subpoena]; and
b)Is the subpoena seriously and unfairly burdensome or prejudicial? This is to look at the matter from the point of view of [the subpoenaed party].
His Honour then went on to address each category of documents in respect of their adjectival relevance.
In the proceedings before this Court, the Subpoena contains three paragraphs of documents that are sought for production. The parties, in their written and oral submissions, have addressed the adjectival relevance, or lack thereof, of various categories of the documents sought in the Subpoena. However, unlike Beaumont J in Arnotts (supra) I do not intend to address each of these documents and their purported relevance to the proceedings at this stage. Should the mediation on 26 August 2013 fail to resolve these issues the Court can then make findings in respect of each sub-category of documents in the Subpoena.
Oppressiveness of Subpoena
I turn to Quest’s second ground of its Interim Application, namely, that the Subpoena is oppressive. Quest relies on the Second Frost Affidavit to support its argument in respect of this ground. It should be noted that a number of objections were raised by Mr Lambert to the Affidavit. Mr Lambert argued the Affidavit was vague, non-specific and does not state the source of the information the solicitor who is swearing the affidavit relies upon as well as being hearsay.
Broadly put, the Second Frost Affidavit states that there would be significant difficulty in collecting all the documents sought in the Subpoena and compliance would require more than 200 hours of work by at least ten people in different geographic locations. This is put in the Affidavit as an assertion by Ms Chan, who is the HR Director – Asia Pacific and Japan of Dell Software and is based in Singapore. It is accepted by the parties and the Court that Dell Software wholly owns Quest. However, other than a statement that Ms Chan “has a broad-ranging responsibility for the HR Management of Quest” there is no detailed explanation of Ms Chan’s role within Quest. Consequently, as this is the only evidence before the Court, there are certain difficulties with the evidence as put. The Court is aware that Ms Chan may be based in Singapore, however, there is not even an annexure to the Affidavit that could assist the Court in ascertaining Ms Chan’s basis for providing Mr Frost the information that she did.
In respect of the Second Frost Affidavit, I intend to give little weight to the evidence and assertions contained therein. I accept that records in respect of Mr Cole’s employment may be kept in a number of locations, but these records, for the most part, are available electronically.
As put forward by Mr Lambert, there are a number of statutory requirements placed on companies (as noted above at [24]) in respect of keeping records of their current and previous employees. Quest is a multinational organisation specialising in the information technology sector. Accordingly, other than the limited basis that the Second Frost Affidavit can be advanced, there is no evidence before the Court in respect of the oppressiveness of Quest having to comply with the Subpoena.
I note the authority of his Honour Greenwood J in McIlwain v Ramsey (supra) at [35](m) where his Honour states:
The issue of the subpoena must not, in all the circumstances be oppressive in terms of its impact on the recipient. That is, the issue of the subpoena must not be “seriously unfairly burdensome, prejudicial or damaging” and “productive of serious and unjustified trouble and harassment”: Hamilton v Oades (1989) 166 CLR 486 at 502 ; 85 ALR 1 at 11; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 ; 79 ALR 9; Seven Network Ltd v News Ltd (No 5) (2005) 216 ALR 147 at [12].
I am not satisfied on the evidence before the Court that Quest has established with any force its argument in respect of this issue or that compliance with the Subpoena would be “seriously unfairly burdensome, prejudicial or damaging”. Notwithstanding, if the scope of documents sought can be narrowed by consent through the avenue of mediation (should the dispute as a whole fail to resolve there) the burden placed on Quest to comply with the Subpoena will be substantially reduced. As noted above at [50] the Court, if mediation is unsuccessful, can make findings in respect of this issue in a similar fashion to the method used by Beaumont J in Arnotts (supra).
Substitute for Discovery
The third ground of Quest’s Interim Application is that the Subpoena has been issued as an impermissible substitute for discovery. Quest submits that the Subpoena calls for a broad range of documents from a party to the proceedings that are described in general, rather than specific terms or by reference to pleaded facts. This is alleged to be a method of subverting the statutory requirements in place in respect of discovery in this Court.
Section 45 of the Federal Circuit Court Act 1999 (Cth) states:
45 Interrogatories and discovery
(1) Interrogatories and discovery are not allowed in relation to proceedings in the Federal Circuit Court of Australia unless the Federal Circuit Court of Australia or a Judge declares that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery.
(2) In deciding whether to make a declaration under subsection (1), the Federal Circuit Court of Australia or a Judge must have regard to:
(a) whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and
(b) such other matters (if any) as the Federal Circuit Court of Australia or the Judge considers relevant.
Accordingly, discovery is not allowed in relation to proceedings in this Court unless the Court makes a declaration that it is appropriate and in the interests of the administration of justice to do so.
His Honour Lander J in Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442 at [51] – [53] outlined the principles to be followed this Court when considering whether discovery should be allowed:
51. The presumption in s 45(1) of the Federal [Circuit Court] Act is that discovery will not be permitted in any proceedings in the Federal Magistrates Court unless the Federal Magistrate has made the declaration provided for in s 45(1).
52. Section 45(1) assumes that, unless the declaration is made, discovery is not necessary for the orderly disposal of proceedings in the Federal [Circuit] Court. That assumption is consistent with s 3(2) of the Federal Magistrates Act, which provides that the objects of the Act are for informality, streamlined procedures, and the use of appropriate dispute resolution processes.
53. The purpose of discovery is to assist in resolving disputes as to fact. Discovery can be a lengthy and expensive process. Because of the high cost to the parties of the discovery process, both in giving discovery and taking inspection, the modern trend is to contain the obligation to give discovery by giving the court control over the process; by limiting the circumstances in which discovery is to be given; and, if discovery is to be given, by limiting the extent of the discovery given. The cost of discovery can far outweigh the benefits.
Quest has rightly submitted that mediation in these proceedings has been scheduled to occur before the preparation and filing of evidence so as to avoid the parties being put to any unnecessary expense. Section 3(2) of the Federal Circuit Court Act states:
(2) The other objects of this Act are:
(a) to enable the Federal Circuit Court of Australia to operate as informally as possible in the exercise of judicial power; and
(b) to enable the Federal Circuit Court of Australia to use streamlined procedures; and
(c) to encourage the use of a range of appropriate dispute resolution processes.
Accordingly, I believe it is in the interests of the administration of justice that this issue also be ventilated at mediation, pursuant to s.3(2) of the Federal Circuit Court Act. Should the parties be unable to resolve this issue the Court can make findings as necessary.
Conclusion
For the reasons stated above, the Subpoena should stand over until a date after the completion of the mediation of the proceedings. The issues raised by the parties in respect of the Subpoena are issues that can be adequately and capably ventilated before a registrar of this Court at mediation and, pursuant to the objectives of ss.3(2) and 23 of the FCC Act, I intend to make orders accordingly. Should the mediation fail to resolve the proceedings as a whole or in respect of the Subpoena the parties will be required to inform the Court and exercise their liberty to apply. The Court can then make findings in respect of the Subpoena and Interim Application and any orders necessary to prepare the proceedings for final hearing.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Lloyd-Jones
Date: 22 August 2013
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