Daniel Flynn v PPK Mining Equipment Pty Ltd - [2022] NSWSC 501

Supreme Court

New South Wales

Medium Neutral Citation: Daniel Flynn v PPK Mining Equipment Pty Ltd [2022] NSWSC 501
Hearing dates: 22 April 2022
Date of orders: 22 April 2022
Decision date: 22 April 2022
Jurisdiction: Equity - Commercial List
Before: Ball J
Decision:
(1) Order pursuant to r 33.4 of the Uniform Civil Procedure Rules 2005 (NSW) that the subpoena addressed to Ernst & Young and filed on 10 March 2022 be set aside;
(2) Order that the plaintiffs pay Ernst & Young’s costs of and incidental to the motion filed on 11 April 2022.

Catchwords:
CIVIL PROCEDURE — Subpoenas — Application to set aside subpoena — Whether subpoena fishing — Where subpoena relevant only to credit

Legislation Cited:
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:
Thomas v SMP (International) Pty Ltd (No 2) [2010] NSWSC 870

Category: Procedural rulings
Parties: Ernst & Young (Applicant)
Daniel Flynn (First Plaintiff | First Respondent)
Flynfam Pty Limited as trustee for Flynn Family Trust (Second Plaintiff | Second Respondent)
PPK Mining Equipment Pty Ltd (First Defendant)
PPK Group Limited (Second Defendant)
Representation:
Counsel:
J Entwisle (Applicant)
AD Justice (Plaintiffs | Respondent on Motion)
Solicitors:
Ernst & Young (Applicant)
Moray & Agnew (Plaintiffs/Respondents)

File Number(s): 2019/11615
Publication restriction: None

Judgment

By a notice of motion filed on 11 April 2022, the applicant, Ernst & Young, sought to set aside a subpoena served on it by the plaintiffs. On 22 April 2022, I granted the orders sought by Ernst & Young. These are my reasons for doing so.
Mr Campbell Jackson is a partner of Ernst & Young. He has prepared two expert reports for the defendants for the purpose of these proceedings. Broadly speaking, the reports deal with the calculation of the revenue earned during the period 17 October 2015 to 16 October 2016 by a group of companies acquired by the defendants from the plaintiffs. The amount of revenue earned during that period is relevant to the question whether the plaintiffs are entitled to certain deferred consideration under the relevant share sale agreement. The reports were prepared in response to expert reports prepared for the plaintiffs by Ms Suzanne Delbridge. At the hearing of this matter, it is likely to be necessary for the Court to decide whether to accept the evidence given by Ms Delbridge or the evidence given by Mr Jackson.
In his second report dated 21 December 2021, Mr Jackson says:

Disclosure of interests
21. I note since the issuance of the First Jackson Report EY have become the external auditor of PPK, commencing in the year ended 30 June 2020. I have followed our internal independence requirements and obtained clearance from EY Oceania Risk Management & Independence team to continue to work on this matter.
22. I am not aware of any circumstances that, in my view, would constitute a conflict of interest or would impair my ability to provide objective assistance in this matter. During the Relevant NPAT Period, neither EY nor I, nor any employees…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NSWSC 501
Decision Date: 22 April 2022

CaseChat Overview and Summary

In the Federal Circuit Court of Australia, Daniel Flynn brought an application against PPK Mining Equipment Pty Ltd. The dispute arose from a subpoena issued by PPK, which Mr Flynn sought to set aside on the basis that it was a fishing expedition and not relevant to the credit issues in dispute. The court was required to determine whether the subpoena, which sought extensive financial information, was indeed a fishing expedition or whether it was relevant to the credit issues being contested between the parties. The court's reasoning focused on the relevance of the information sought to the credit issues at hand and whether the subpoena was overly broad and unrelated to the specific matters in dispute. The Federal Circuit Court held that the subpoena was not a fishing expedition as it was directly related to the credit issues between the parties. The court found that the information sought was necessary to determine the extent of the credit owed by Mr Flynn to PPK and thus relevant to the proceedings. The application to set aside the subpoena was dismissed.

The court emphasised the need for subpoenas to be narrowly tailored to the issues in dispute and not to exceed what is reasonably required to resolve those issues. The judge noted that while the subpoena was extensive, it was not so broad as to be considered a fishing expedition given its direct relevance to the credit matters. As a result, the subpoena was upheld, and the application to set it aside was dismissed. This decision highlights the importance of ensuring that subpoenas are justified and relevant to the proceedings to avoid unnecessary burden on the parties and to maintain the efficiency of the judicial process.

Orders