Ewing International LP v Ausbulk Ltd - [2010] SASC 142

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
EWING INTERNATIONAL LP v AUSBULK LTD
[2010] SASC 142
Reasons for Decision of The Honourable Justice Layton
13 May 2010
ARBITRATION - CONDUCT OF THE ARBITRATION PROCEEDINGS - TERMINATION OR STAY OF ARBITRATION PROCEEDINGS
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - JURISDICTION AND GENERALLY
PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION - GROUNDS FOR RESISTING PRODUCTION - LEGAL PROFESSIONAL PRIVILEGE
Interlocutory applications by the defendant seeking a stay of arbitration proceedings between the parties, leave to issue subpoenas and provision of a Kadlunga list – parties in arbitration in relation to a dispute about silo contracts – those contracts had also been the subject of litigation before the Court regarding performance guarantees - the Court found that the parties made a contract requiring the plaintiff to procure performance guarantees – the Court ordered that the plaintiff do all things necessary to procure performance guarantees – whether the defendant can call on guarantees was an issue to be determined at arbitration - at the time of hearing of the application no guarantees had been obtained – arbitrator indicated he was ready to deliver his award – defendant sought stay of arbitrator’s decision pending outcome of order to issue subpoenas – whether s 47 of the Commercial Arbitration and Industrial Referral Agreements Act 1986 (SA) confers jurisdiction on the Supreme Court to order stay of arbitration proceedings – whether discretion to order a stay should be exercised – defendant seeks order requiring plaintiff to provide a Kadlunga list.
Held: there was no substantive application before the Court to which the application for subpoenas and the Kadlunga list related - application to issue subpoenas dismissed – no certainty that documents sought by way of subpoena exist – documents held by banks relate to the banks’ own internal decision processes and are not relevant to whether the plaintiff has taken all reasonable steps to procure guarantees – s 47 provides jurisdiction in the circumstances of this case to temporarily stay the decision of the arbitrator – application for stay necessarily dependent on application for issue of subpoenas – Court should not exercise its discretion to order a stay – application for Kadlunga list dismissed.
Commercial Arbitration and Industrial Referral Agreements Act 1986 (SA) s 47; Supreme Court Rules 2006 (SA) r 192, referred to.
Andrew Garrett Wine Resports v NAB (No 6) (2005) 92 SASR 419, applied.
Proprietors of Strata Plan 3771 v Travmina Pty Ltd (1986) 4 BCL 91; In the matter of the Commercial Arbitration Act 1986; South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1990) 55 SASR 327, discussed.
Imperial Leatherware Co Pty Ltd v Macri and Marcellino Pty Ltd (1991) 22 NSWLR 653; Baulderstone Hornibrook Engineering Pty Ltd v State Constructions Pty Ltd (1993) 171 LSJS 426; State Constructions Pty Ltd v Baulderstone Hornibrook Engineering Pty Ltd [1997] SASC 6090; Kadlunga Proprietors v Electricity Trust of SA (1985) 39 SASR 410; Ewing International LP v Ausbulk Ltd (2008) 253 LSJS 195; Ewing International LP v Ausbulk Ltd [2009] SASC 317; Ewing International LP v Ausbulk Ltd (No 2) [2009] SASC 381; Baulderstone Hornibrook Engineering Pty Ltd v State Constructions Pty Ltd (1993) 61 SASR 94; Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194; Mulgrave Central Mill Co Ltd v Hagglunds Drives Pty Ltd [2002] 2 Qd R 514; BHP Petroleum (Bass Strait) Pty Ltd v Commissioner of Taxation (2002) 118 FCR 457; Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [1999] WASC 167; Townsend v Coyne (1995) 6 BPR 13,935, considered.

EWING INTERNATIONAL LP v AUSBULK LTD
[2010] SASC 142
Civil

LAYTON J: The defendant has taken out four interlocutory applications which can be summarised in the following way:
1An application to stay the delivery of an arbitration award between the plaintiff (“Ewing”) and the defendant (“Ausbulk”) until further order (FDN 65);
2An application to be granted leave to issue subpoenas for production of documents in New Zealand from ASB Bank Ltd and MM Mortgage Solutions Ltd (FDN 69);
3An application repeating the orders sought in FDN65 and FDN69, but in addition seeking an order that Ausbulk file such further applications it intends to rely on “within 14 days of the return of the documents from the addressees under the subpoenas”, as well as an order that Ausbulk file any expert reports it intends to rely upon for the filing of an application under order 3 (FDN 76);
4An application seeking an order requiring Ewing to provide a document in the form of a “Kadlunga list”[1] setting out details of documents in relation to which Ewing has claimed privilege and to state the nature of the privilege and the grounds upon which it is claimed (FDN 80).
[1] Kadlunga Proprietors v Electricity Trust of SA (1985) 39 SASR 410.
Background to the applications
The substantive application was FDN 65, seeking a stay of the arbitration award, and that application in turn was reliant upon Ausbulk being successful in the application for the issuing of subpoenas in FDN 69. Put another way, if Ausbulk was not successful in obtaining leave to issue the subpoenas, then likewise, the application for a stay pending receipt of the product of such subpoenas would no longer apply. The Kadlunga list was a separate argument and, indeed, the application for various directions in FDN 76 in turn hinged upon the success of the application for leave to issue the two subpoenas.
Background
Ausbulk’s applications arise in circumstances of complex litigation which has been the subject of three decisions with detailed reasons given by me on 8 February 2008,[2] 6 October 2009[3] and 9 December 2009.[4] It is the third of those decisions, given on 9 December 2009, which is the focus of the present applications.
[2]    Ewing International LP v Ausbulk Ltd & Anor (2008) 253 LSJS 195.
[3]    Ewing International LP v Ausbulk Ltd [2009] SASC 317.
[4]    Ewing International LP v Ausbulk Ltd (No 2) [2009] SASC 381.
The background facts are set out in my reasons for decision of 9 December 2009.[5] The immediate matters giving rise to the applications are the orders which were made by me on that occasion, which were expressed as follows:[6]
1A declaration that the parties entered into a contract on 20 February 2008, the terms of which are set out in [151] of these reasons.
2That, in accordance with the contract of 20 February 2008, the plaintiff do all that is reasonably necessary so as to procure bank guarantees in substitution for the Replacement Guarantees annexed to the order of the Court dated 26 February 2008 and marked A and B respectively, such guarantees to be rolled over or substituted from time to time until determination of the Arbitration or further order of this Court.
3Liberty to the parties to apply in the event that Ewing is unable to procure bank guarantees within a named period of time.
[5] Ewing International LP v Ausbulk Ltd (No 2) [2009] SASC 381, [1]-[25].
[6] Ewing International LP v Ausbulk Ltd (No 2) [2009] SASC 381, [389].
Paragraph [151] referred to in order 1 above was in the following terms:
I find that there was a contract between the parties as at 20 February 2008. The terms of that contract were as follows:
1.that Ewing would ensure that bank guarantees would remain in place until after the determination of the Arbitration.
2.that Ausbulk would not call on any such bank guarantees until after the determination of the Arbitration.
3.that Ewing would tender substitute bank guarantees (rolled over for a fixed period of not less than 12 months) no less than one month before the expiry date of each guarantee.
4.that in the event that Ewing failed to tender such substitute bank guarantees by such date, subject to further order, Ausbulk was at liberty to present the guarantees for payment.
5.that the parties would consent to orders by the Court which set out the above four terms.
In an apparent attempt to comply with those orders, Ewing began making enquiries with banks seeking provision of bank guarantees. On 14 December 2009, Ewing, through Mr Geoff Ewing, communicated with the ASB Bank (“ASB”) and on the following day the solicitors for Ewing sent a letter to ASB regarding the Court order for Ewing to provide replacement bank guarantees.[7]
[7] Affidavit of Geoffrey Ewing, sworn 7 January 2010.
Following this, Ewing also made applications and enquiries with other banks and financial institutions, including MM Mortgage Solutions Limited (“MM Mortgage”), for provision of bank guarantees.[8]
[8] Affidavit of Geoffrey Ewing, sworn 7 January 2010.
As at the date of hearing, no guarantees had been provided by any bank.
Subsequent communications then took place between solicitors acting for the respective parties about the extent to which Ewing was endeavouring to procure bank guarantees in replacement. Requests were made by Ausbulk for disclosure of certain documentation with regard to that process.
On 7 January 2010, Ewing filed an application (“the 7 January 2010 Application”) in which the following relief was sought:
1.In accordance with the liberty to apply given on 9 December 2009, the within application be made returnable before the Honourable Justice Layton.
2.That the Court make orders in the following terms:-
A.   Upon noting that the plaintiff has to date done all that was reasonably necessary to procure bank guarantees as ordered by the Court on 9 December 2009 but has been unable to do so.
B.   And upon noting the undertaking by plaintiff that it will continue to do all that is reasonably necessary to comply with Order 2 of the orders made on 9 December 2009.
1.    Such further orders as this Honourable Court sees fit.
2.    Liberty for the parties to apply.
Ausbulk sought disclosure of documents in relation to this application, and on 26 February 2010, orders were entered by consent requiring disclosure of certain documents.
Eventually, on 16 March 2010, the 7 January 2010 Application was dismissed by consent. In the meantime, Ausbulk had already filed its application for a stay and its application for subpoenas.
Following this dismissal of the 7 January 2010 Application, there was no application before the Court for any substantive relief. There was no list before the Court, as Ewing was no longer seeking a notation, also Ewing did not take up any opportunity to seek a declaration that it was doing all that was reasonably necessary so as to procure bank guarantees.
At the time of the dismissal, I adjourned the matter to enable Ausbulk to consider what application, if any, it would wish to make, bearing in mind the content of the two applications for a stay of the arbitrator’s award and the issuing of subpoenas. No application of an interlocutory nature for substantive relief was filed by Ausbulk. Instead, the two previous applications in FDN 65 and FDN 69 remained on foot, but they no longer had the connection to the 7 January 2010 Application which had been dismissed. The further application in FDN 76, assumed the existence of a substantive application being before the Court and the Kadlunga list was similarly linked.
Issues to be decided
Ausbulk’s applications raise the following issues:
1Whether the interlocutory applications sought by it can properly be brought pursuant to s 47 of the Commercial Arbitration and Industrial Referral Agreements Act 1986 (SA) (“the Arbitration Act”) and/or the inherent jurisdiction of the Supreme Court; and
2Even if the Court had jurisdiction to make an order for a stay, whether it should do so in the exercise of its discretion.
As these two arguments are prime points of difference between the parties, I will deal with them first.
Jurisdiction
The power of the Court to order a stay in relation to its own proceedings is found in Rule 192 of the Supreme Court Rules 2006 (SA), which states:
The Court may stay proceedings if the justice of the case so requires.
Section 47 of the Arbitration Act provides:
The Court shall have the same power of making interlocutory orders for the purposes of and in relation to arbitration proceedings as it has for the purposes of and in relation to proceedings in the Court.
Ausbulk argues that s 47 gives jurisdiction for the Supreme Court to order a stay of arbitration proceedings in the same manner in which it can order a stay of its own proceedings pursuant to Rule 192. Ewing, on the other hand, contends that this section does not invest the Court with jurisdiction to make an order for a stay in relation to arbitration proceedings, at least in the context of the factual situation before this Court.
It was submitted by Ewing that s 47 is limited to matters of a procedural nature and not to matters which bring the arbitration proceedings to a halt. That is, it was submitted that it does not empower the Court to order a stay of the arbitration. Ewing relied primarily on two decisions of the Full Court of this Court, namely South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (“Superannuation Fund Investment Trust”)[9] and Baulderstone Hornibrook Engineering Pty Ltd v State Constructions Pty Ltd (“Baulderstone”).[10]
[9] In the matter of the Commercial Arbitration Act 1986; South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1990) 55 SASR 327.
[10] (1993) 61 SASR 94.
In Superannuation Fund Investment Trust, the Court held that the Court has jurisdiction under s 47 to review a decision of an arbitrator rejecting an interlocutory application, at least when the decision is impugned on the ground of an alleged breach of natural justice. The interlocutory application in question in that case sought an order declaring that the filed points of claim were inadequate and requiring that proper points of claim be filed.[11]
[11] This case has been subject to criticism, at least insofar as it relates to the power of the Supreme Court to review an interlocutory decision pursuant to s 47: cf Imperial Leatherware Co Pty Ltd v Macri and Marcellino Pty Ltd (1991) 22 NSWLR 653; State Constructions Pty Ltd v Baulderstone Hornibrook Engineering Pty Ltd [1997] SASC 6090; and see, Marcus Jacobs, ‘The Spectre of Section 47 of the Model Uniform Legislation’ (1995) 69 Australian Law Journal 822.
Ewing particularly referred to comments of White J (with whom Mohr J concurred), where his Honour described the ambit of the jurisdiction conferred by s 47 (at 336):
Under s 47, the interlocutory order must be both “in relation to” and “for the purposes of” the arbitration proceedings. … To my mind the power to make “interlocutory orders for the purposes of and in relation to arbitration proceedings” (as if the latter were court proceedings) was probably intended to refer to the making of some order in furtherance or the continuance of arbitration proceedings.
In Baulderstone the Full Court held that s 47 provides the Court with power to make an order for security for costs, at least when the arbitrator has no power to so order. Ewing specifically referred to the following statement of Legoe J (with whom Mohr and Bollen JJ concurred) (at 95):
As his Honour [Debelle J, at first instance] observed, the section is expressed very widely. It is wide enough to include every kind of interlocutory order made by the court. His Honour went on to observe that the power to make interlocutory orders under s 47 is one which is to make interlocutory orders as to procedural matters which will facilitate the course of the arbitration. It is not a power by which the court can interfere with the agreement of the parties to submit their differences to arbitration
Ewing submitted that, whilst the Full Court ultimately allowed the appeal in Baulderstone, these comments were in effect approving of the general approach of Debelle J in the first instance[12] where his Honour said (at 427):
The power invested in the Court by s 47 is expressed very widely. The expression “for the purpose of and in relation to” is of very wide import. It is wide enough on its face to include every kind of interlocutory order made by the Court. However, notwithstanding the width of s 47, I do not think that Parliament intended that the power to make interlocutory orders should be used to alter the rights of parties. Section 47 does not give the kind of express authority which is required if it is to alter the rights of the parties.
…
The power invested in the Court by s 47, therefore, is a power to make interlocutory orders as to procedural matters which will facilitate the course if the arbitration. It is not a power by which the Court can interfere with the agreement of the parties to submit their differences to arbitration. There are many kinds of interlocutory orders of a procedural nature which can be made pursuant to s 47 which would not interfere with the right to arbitrate differences. Orders concerning such matters as points of claim, points of defence, discovery of documents and exchange of experts’ reports facilitate the conduct of the arbitration but do not impede or prevent a party from exercising the contractual right to arbitrate. Those are the kinds of orders to which s 47 is directed. … [But] an application for security for costs is of quite a different nature from what might be termed an ordinary interlocutory process in litigation. An order for security for costs will prevent a party from prosecuting an arbitration unless he complies with the order. Such an order, therefore, has the potential to interfere with the arbitration agreement made between the parties.
Parliament did not intend that the powers invested by s 47 should be used to make orders which might have the consequences of preventing parties from exercising their contractual rights. To construe s 47 in this way would, in my view, alter the rights of the parties by a side wind.
(Emphasis added.)
[12] Baulderstone Hornibrook Engineering Pty Ltd v State Constructions Pty Ltd (1993) 171 LSJS 426.
Ewing says that the statements in Superannuation Fund Investment Trust and Baulderstone, set out above, show that an order under s 47 must be “in furtherance or continuation” of an arbitration and an order staying the delivery of judgment is antithetical to this purpose.
It should be noted in the first place that the order sought here is an interlocutory stay, in the nature of an imposed adjournment of the decision of the arbitrator until a particular date. It is not an order which seeks to stay the arbitration proceedings permanently.[13]
[13] Cf Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334 where Franklyn, Owen and Parker JJ held that s 47 in the Western Australian equivalent Legislation does not provide jurisdiction for an order permanently staying the proceedings (though their Honours found there was inherent jurisdiction to so order).
Additionally, there have been some cases in other states of Australia which have indicated that s 47 provides jurisdiction to order a stay. For example, in Proprietors of Strata Plan 3771 v Travmina Pty Ltd (“Travmina”),[14] Bryson J ordered a stay of arbitration proceedings pending the determination of proceedings in the Court. His Honour found that there was a “strong prima facie case” that there was fraud, such that the very basis of the arbitration proceedings could be fundamentally flawed and the only way in which that could be appropriately remedied was by way of a stay.
[14] (1986) 4 BCL 91.

There is no allegation here that there is any fraud or that the arbitration is fundamentally flawed. Moreover, the finding in Travmina that s 47 provides power to order a stay was doubted by Roger CJ Comm D in Imperial Leatherware Co Pty Ltd v Macri & Marcellino Pty Ltd,[15] where his Honour said (at 666-7):
To take one example, [s 47] is the section which gives power to the Court to grant a Mareva injunction in aid of an arbitration. In Construction Engineering (Aust) Pty Ltd v Tambel (Australasia) Pty Ltd [1984] 1 NSWLR 274, Clarke J relied on the inherent power of the court at a time before the Act came into force. Section 47 seems a more secure foundation. In Mowbray College v Exhib Design & Construction Pty Ltd (In Liq) (1986) 5 ACLC 478, Nathan J held that the section supported an order for security for costs. The section was also relied on for that purpose by O'Bryan J in Nasic v Dimovski [1988] VR 94 (cf (1989) 63 ALJ 210). More to the point, in Johnson v Macri and Marcellino Pty Ltd (Cole J, 8 June 1990, unreported), after a careful consideration of the question, held that s 47 conferred the necessary power to give security for costs. (Brownie J assumed the existence of the power to order security for costs pursuant to s 47 in Wanari Pty Ltd v Mercy and Sons Pty Ltd (Brownie J, 26 February 1991, unreported).) In other words, the section gives the court power to make ancillary orders of the first importance. In Proprietors of Strata Plan 3771 v Travmina Pty Ltd (1989) 4 BCL 91, Bryson J held that s 47 gave power to stay arbitration proceedings pending the resolution of proceedings in the court. I would have some reservations about that conclusion.
(Emphasis added.)
[15] (1991) 22 NSWLR 653.
Subsequent to this reservation, Giles J in Hooper Bailie Associated Ltd v Natcon Group Pty Ltd,[16] sought to dispel the doubts of Roger CJ Comm D and found that s 47 does provide a power to stay proceedings. In that case a stay was ordered in order to enforce an agreement by the parties to submit to conciliation. Giles J said (at 210-1):
The question is whether there is power to order a stay of the arbitration by reason of that agreement. In Proprietors of Strata Plan 3771 v Travmina Pty Ltd (1989) 4 BCL 91, Bryson J held that s 47 of the Commercial Arbitration Act gave power to stay arbitration proceedings pending the resolution of curial proceedings. In Imperial Leatherwear Co Pty Ltd v Macri & Marcellino Pty Ltd (1991) 22 NSWLR 653 at 667, Rogers CJ Comm D expressed reservations about that conclusion. His Honour nonetheless described the section as one giving "power to make ancillary orders of the first importance" and I consider it empowers a stay in the present case.
[16] (1992) 28 NSWLR 194.
Some courts have considered it axiomatic that s 47 provides such a power.[17] For example, in Mulgrave Central Mill Co Ltd v Hagglunds Drives Pty Ltd,[18] Thomas JA said (at 536 [47]):
However the potential evil of concurrent litigation and arbitration of the same or overlapping issues would be within the control of the court, which has the power to stay the litigation under s 53, or to stay or otherwise control the pending arbitration proceeding by means of an order under s 47. The power to stay concurrent proceedings was probably within the inherent power of the court in any event, although one would not expect it to be exercised if the parties had agreed upon arbitration as their preferred method of determination. Section 47 of the Commercial Arbitration Act 1990 would seem to place the court’s powers in this respect beyond doubt, especially in a case where the parties have not specified one method to the exclusion of the other.
(Footnotes omitted.)
[17] Mulgrave Central Mill Co Ltd v Hagglunds Drives Pty Ltd [2002] 2 Qd R 514; BHP Petroleum (Bass Strait) Pty Ltd v Commissioner of Taxation (2002) 118 FCR 457, 482 [82]; Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [1999] WASC 167; Townsend v Coyne (1995) 6 BPR 13,935.
[18] [2002] 2 Qd R 514.
Indeed, it could be said that the conclusion in Travmina is not inconsistent with the two primary cases on which Ewing relies. In Baulderstone for example, Mohr J, concurring with Legoe J, said (at 98):
Section 47 is, on the face of it, very wide in its application. It was argued that the apparent power given to this court by s 47 should be, in some way, read down to exclude an application for security for costs. I can see no warrant for that reading down. Had Parliament intended that there be powers of the court to make interlocutory orders, but some were not to be exercised in arbitration matters, it would have been very easy for Parliament to have said so. They did not.
The plain and ordinary meaning of the section is that this court does have power to make interlocutory orders and order for security for costs is such an order and I hold that the court has jurisdiction and I would grant leave to appeal and allow the appeal.
In Superannuation Fund Investment Trust, White J specifically referred to Travmina and stated that it was not inconsistent with the construction being advocated by his Honour.[19]
[19] (1990) 55 SASR 327, 337.
I therefore conclude that there is scope for an interlocutory order of a stay of arbitration proceedings in appropriate circumstances.
However Ewing’s argument goes further. Ewing says that, even if s 47 does provide jurisdiction to grant an interlocutory injunction in certain circumstances, there is no such jurisdiction in the present case.
In this respect, Ewing points to the fact that the agreement which is sought to be enforced by the stay application is different from and therefore unconnected to the contracts which are the subject of the arbitration and the agreement to submit the dispute to arbitration. In summary, Ewing’s argument in this respect is that s 47 does not allow the Court to stay arbitration proceedings, which deal with a referral to arbitration under one contract between the parties, by reason of dealings between the parties in respect of a different contract. To so order, says Ewing, would offend the matters which were raised by Debelle J in Baulderstone at first instance,[20] namely that it would provide an order by a “side wind” which interferes with the agreement of the parties to submit their differences to arbitration and for the arbitrator to resolve those differences, as he or she is obliged to do, pursuant to that agreement and the Arbitration Act.
[20] (1993) 171 LSJS 426.
In relation to this limb of Ewing’s argument, something should be said about the connection between the contract which is the subject of the Supreme Court proceedings and the contracts which are the subject of the arbitration. In December 2009 I delivered judgment finding that Ewing entered into a contract on 28 February 2009, and was obligated under that contract to provide replacement bank guarantees. Ewing had not provided those guarantees. Therefore, in exercising the discretion as to relief which should be appropriately given, bearing in mind that default, order 2 was crafted.[21] In essence, Ewing was required to take all steps reasonably necessary to provide replacement guarantees by the time of determination of the arbitration or until further order. These guarantees, however, are essentially replacement guarantees for performance guarantees which were originally provided pursuant to the contracts which are now the subject of the arbitration. The matters which have been referred to the arbitration include the issue of whether events have occurred which would give rise to Ausbulk being able to call upon the bank guarantees which are the subject of order 2.
[21] Set out at [4] above.
In my view, the provisions of s 47 are broadly expressed. The proceedings in the Supreme Court which are the subject of the application for leave to issue subpoenas and for the stay are related to the very issue as to whether the parties could call on the bank guarantees, if they were on foot. In short, I think the connection is of sufficient proximity such that jurisdiction would not be excluded by virtue of the subject matter. I would therefore find that s 47 provides jurisdiction for this Court to order an interlocutory stay of the arbitration in the circumstances.
However, that is only part of the equation. The next question to be determined is whether the Court ought to exercise the discretion in s 47.
Discretion
In this case, the application for stay is until further order, which in turn is related to the issuing of subpoenas. Therefore, in order to determine whether it is appropriate to order a stay in the circumstances it is first necessary to consider the appropriateness of the application to issue subpoenas.
The material before me in relation to ASB and in relation to MM Mortgage is as follows. The affidavits of Cathy Mayfield sworn 10 March 2010 and Geoffrey Ewing sworn 7 January 2010 indicate the process which was used between Ewing and the ASB and Ewing and MM Mortgage for the purpose of seeking replacement guarantees. Documents have been provided and affidavits have been filed indicating that there are no further documents relevant to that issue, save for those which are subject to a claim for legal professional privilege.
There are two arguments which emerge from this scenario. First, the purpose for the seeking of subpoenas from the two institutions as disclosed in either the affidavits or the submissions made on behalf of Ausbulk. Secondly, the precise documents sought to be gleaned by way of subpoena from the two institutions.
Ausbulk in its submissions proffers the following bases for seeking subpoenas:[22]
44. Ausbulk should be entitled to seek all relevant information, and require Ewing to take all steps reasonably necessary, before compliance [with Order 3 of 9 December 2009] can be determined.
Specifically, Ausbulk asserts that Ewing and its partners should, but has not:
…
44.3 provided a copy of the formal application made to ASB Bank, Westpac [Bank], National Bank, Farmers Mutual Finance and ANZ, or given any evidence of primary documents, disclosing financial information, being supplied to each of those financial institutions, to enable each financial institution to make an assessment based on an accurate statement of Ewing and its partners’ current financial circumstances;
44.4 been able to obtain records held by ASB bank (which Ausbulk now seeks by subpoena), regarding the reason for a refusal to provide replacement bank guarantees, in any amount, in circumstances where bank guarantees have been supplied for similar amounts in the past, when there has been no material change to Ewing’s financial position. To the extent that Ewing contends it does not have possession of such records, that only reinforces the need for a stay to be ordered, so that Ausbulk can seek leave to issue a subpoena to ASB bank[.]
[22] Defendant's written submissions, 12 March 2010.
It can be seen from these submissions that, in effect, Ausbulk overtly appears to be seeking to obtain material which it does not know is necessarily in existence, but which it asks the Court to infer may be in existence, for the purpose of obtaining information which may be relevant as to whether or not Ewing has taken all reasonable steps to obtain bank guarantees. This is an extremely remote argument and very tenuous, for the reasons which counsel for Ewing indicated. Counsel for Ewing summarised the position, in my view accurately, when he said:[23]
So in the absence of [counsel for Ausbulk] being able to point your Honour to any instance, in this large body of documentation that they have had, where Ewing hadn’t done something that the bank’s had asked them to do, these subpoenas are very much an endeavour to fish about and to no real purpose.
[23] T40.
Counsel further added:[24]
there is nothing that the defendant can point to in this chain of documentation that discloses some gap and where there’s an obvious gap in communications where the documents identified one earlier communication that hasn’t been disclosed or something of that sort, or where importantly the bank has said ‘We asked you for this and it hasn’t been provided. If you don’t provide the information, we won’t provide you with these guarantees’. There is nothing of that sort.
[24] T42.
This is further demonstrated by looking at the scope of the documentation sought in the subpoenas.
The subpoena against ASB seeks the following documents:
1.documents recording or evidencing full details of any communications between ASB (including Benjamin Badger, Scott Sinclair and other employee or agent) and Ewing International Limited Partnership (EILP) in the period 9 December 2009 to the date of the subpoena, in connection with obtaining bank guarantees;
2.documents recording or evidencing full details of any communications between ASB (including Benjamin Badger, Scott Sinclair and other employee or agent) and Ewing Construction Limited (ECL) in the period 9 December 2009 to the date of the subpoena, in connection with obtaining bank guarantees.;
3.documents recording or evidencing communications ASB Bank Limited (including Benjamin Badger, Scott Sinclair and other employee or agent) has had, in the period 9 December 2009 to the date of subpoena, in connection with obtaining bank guarantees, with:
3.1     Mr Geoffrey Lee Ewing;
3.2    Mr Michael Heard;
3.3    Mr Wayne Hampton;
3.4    Ms Debra Lee Ewing;
3.5    Ms Jennifer Hampton;
3.6    Ms Susan Elizabeth Scott Heard;
3.7    the Cumnor Trust;
3.8    the Ewing Trust;
3.9    the Heard Trust; and
3.10 the Hampton Trust;
4.all documents, including letters, emails, financial information and surety, provided to, considered by, and relied upon by ASB Bank Limited in its assessment of EILP/ECL’s request for replacement guarantees, in the period 9 December 2009 to the date of this subpoena;
5.all documents, including letters, emails, file notes of personnel, diaries, minutes of meeting, reports and memoranda that relate to, or record, or evidence, the basis of ASB Bank Limited’s consideration and decision to refuse to provide replacement bank guarantees to EILP/ECL;
5.1    all documents falling within the categories set out in paragraphs 1 to 5 above, in relation to the guarantees provided on:
5.2. 22 February 2008 to the 28 February 2008;
5.3. 22 August 2008, in the sum of $160,000 (pursuant to Order of the court dated 10 July 2008 for security for costs);
5.4. 30 September 2008, in the sum of $160,000 (pursuant to Order of the court dated 10 July 2008 for security for costs);
5.5. 31 July 2009, in the sum of $145,000 (pursuant to Order of the court dated 10 July 2009); and
5.6. 16 September 2009, in the sum of $45,000.
Paragraphs 1, 2 and 3 have already been the subject of affidavits and disclosure of documents. They are therefore redundant applications to make, there being no suggestion that the affidavits do not truly reflect the situation of documentation flowing between Ewing and ASB.
As to paragraphs 4, and 5 of the subpoena, they are seeking, in effect, documentation which has been potentially created by ASB itself for its own internal processes in deciding whether to provide replacement guarantees. This is not something which, on the face of any material before me, suggests that Ewing either was aware or should have been aware of any of that documentation and its content. The issue of whether all things reasonable have been done is not dependent upon the approach of the bank per se, in so far as it has its own internal lending criteria, of which Ewing may not be aware. In my view, it is not a question of whether and why ASB refused the application, having regard to its own criteria, but rather whether Ewing had proffered material appropriate for the obtaining of a loan from the bank.
The documentation before me does not suggest any deficiency. Ausbulk in response to argument solely relies on the submission that Ewing did not supply updated information as to valuation of properties. There is nothing to indicate that an updating of the property values would have in any way altered or changed the approach of ASB. In my view, this argument is really clutching at straws and appears to be in the nature of a fishing expedition, without any real awareness of whether or not such documents exist and, if they exist, how they could be relevant to any issue before the Court. In such circumstances, where a subpoena is so broad as to amount to a mere fishing expedition, it has been held that it ought to be set aside. As Gray J said in Andrew Garrett Wine Resorts v NAB (No 6)[25] (at 428 [37]):
It is not enough for the party issuing the subpoena to raise a speculative possibility that the documents sought would assist the resolution of the dispute. The party supporting the subpoena must demonstrate the documents sought in the subpoena are of real relevance to the issues in the case. It must be more than an outside chance that something useful might turn up in the documents.
(Footnotes omitted.)
[25] (2005) 92 SASR 419.
Further, there is currently no application made with regard to any failure by Ewing to comply with the order made by me on 9 December 2009 to found a dispute which needs to be resolved.
Similar arguments apply with regard to MM Mortgage. The text of the subpoena sought is as follows:
1.documents recording or evidencing communications between MM Mortgage Solutions Limited (including but [sic] Mark Richard Manton, Peter Thompson and any employee or agent) and Ewing International Limited Partnership (EILP) in the period 9 December 2009 to the date of the subpoena, in connection with obtaining bank guarantees (replacement bank guarantees);
2.documents recording or evidencing communications between MM Mortgage Solutions Limited (including Mark Richard Manton, Peter Thompson and other employee or agent) and Ewing Construction Limited (ECL) in the period 9 December 2009 to the date of the subpoena, in connection with obtaining replacement bank guarantees;
3.documents recording or evidencing communications MM Mortgage Solutions Limited (including Mark Richard Manton, Peter Thompson and other employee or agent) has had, in the period 9 December 2009 to the date of the subpoena, in connection with procuring replacement bank guarantees, with:
3.1. Mr Geoffrey Lee Ewing;
3.2. Mr Michael Heard;
3.3. Mr Wayne Hampton;
3.4. Ms Debra Lee Ewing;
3.5. Ms Jennifer Hampton;
3.6. Ms Susan Elizabeth Scott Heard;
3.7. the Cumnor Trust;
3.8. the Ewing Trust;
3.9. the Heard Trust; and
3.10. the Hampton Trust;
4.documents recording or evidencing communications between MM Mortgage Solutions Limited has had (including Mark Richard Manton, Peter Thompson and any employee or agent), in relation to EILP/ECL’s procurement of replacement bank guarantees, with:
4.1. ASB Bank Limited;
4.2. Westpac Banking Corporation;
4.3. Farmers Mutual Finance Limited;
4.4. National Bank of New Zealand;
4.5. Australia and New Zealand Banking Group Limited; and
4.6. any other person;
5.all documents, including letters, emails, financial information and surety provided to, considered by, and relied upon by MM Mortgage Solutions Limited in its assessment of EILP/ECL’s request for replacement bank guarantees; and
6.all documents, including letters, emails, files notes of personnel, minutes of meeting, reports and memoranda that relate to, or record, or evidence, the basis of MM Mortgage Solutions Limited’s consideration of EILP/ECL’s capacity or applications to obtain replacement bank guarantees.
Paragraphs 1, 2 and 3 are subject to the criticisms that I have referred to earlier with regard to ASB. Paragraph 4 is seeking documentation with regard to other banks which are named, when there is nothing before me which suggests that MM Mortgage has approached any other banks other than Westpac Bank, which is the subject of documentation which on its face looks appropriate for the application for replacement guarantees.

In short, there is a threshold problem for Ausbulk, even before the exercise of discretion is considered. There is no issue for determination currently before the Court that can be linked to the subpoena applications. In the absence of such, the authority is clear that subpoenas cannot be issued or will be set aside as an abuse of process “where the documents sought are not relevant to issues for determination by the court or where the documents serve no real purpose in the litigation”.[26]
[26] Andrew Garrett Wine Resorts v NAB (No 6) (2005) 92 SASR 419, 427 [34].
I therefore refuse leave to issue the subpoenas, based on a lack of relevance to any existing application; their remoteness to any litigation and their speculative nature.
Returning then, to the stay of the arbitration, as this is utterly dependent on the success of the order to issue subpoenas, I similarly refuse to make an order for the stay of the arbitration.
Application for a Kadlunga list
With regard to the Kadlunga application, this too would fail. It is likely that the failure of the applications in relation to the stay and the subpoenas renders the application for the Kadlunga list to be of little practical benefit. However, in any event, I find that it is fatal to the Kadlunga application that there is no substantive application to which it relates. The documents to which the Kadlunga list application relate are documents in relation to the 7 January 2010 Application. That application has been dismissed by consent.
Ausbulk’s third application
Given that the third application, FDN 76, does not propose any significant orders in addition to the other applications, it follows from the dismissal of those applications that FDN 76 should also be dismissed.
Conclusion
In conclusion, for the reasons that I have given, I would dismiss the four applications made by Ausbulk, being FDN 65, FDN 69, FDN 76 and FDN 80.