Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd

[2019] NSWCA 181

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd [2019] NSWCA 181
Hearing dates:	19 July 2019
Decision date:	24 July 2019
Before:	Simpson AJA
Decision:	(1)   Notice of motion filed on 17 May 2019 dismissed. (2)   The applicant to pay the respondent’s costs. (3)   The proceedings are stood over to the Registrar’s list on 5 August 2019.
Catchwords:	CIVIL PROCEDURE – subpoenas – where appellant suffered ill health and unable to instruct solicitors – where appeal filed out of time – where respondent issues subpoenas to test appellant’s evidence – whether documents subject of subpoenas sufficiently relevant to determination of issue – whether subpoenas oppressive
Legislation Cited:	Evidence Act 1995 (NSW), Pt 3.10 Div 1 Legal Profession Uniform Law Application Act 2014 (NSW), ss 83, 89 Supreme Court Act 1970 (NSW), s 69 Uniform Civil Procedure Rules 2005 (NSW), rr 51.8, 59.10
Cases Cited:	Commissioner for Railways v Small (1938) 38 SR (NSW) 564 Griffiths v German [2017] NSWSC 1392 Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921
Category:	Procedural and other rulings
Parties:	Gilmore Finance Pty Ltd (First Appellant) Daniel Moore (Second Appellant) Aesthete No 3 Pty Ltd (Respondent)
Representation:	Counsel: P Doyle Gray (Appellants) A Fernon (Respondent)   Solicitors: McKays Solicitors (Appellants) Yates Beaggi Lawyers (Respondent)
File Number(s):	2018/393204; 2018/393214

Judgment

1. SIMPSON AJA: The parties to these proceedings, Gilmore Finance Pty Ltd (to which I will refer as “Gilmore Finance”) and Aesthete No 3 Pty Ltd (“Aesthete”) are, apparently, locked in hostilities that are playing out in the Commercial List of the Equity Division of the Supreme Court. In the present proceedings, by notice of motion filed on 17 May 2019, Gilmore Finance seeks orders setting aside six subpoenas and a notice to produce, issued by Aesthete, in relation to a costs order made during the course of the hostilities.

Background

2. In September 2015 Aesthete had something of a victory, which resulted in an order for costs in its favour against Gilmore Finance. On 12 April 2016, pursuant to the Legal Profession Uniform Law Application Act 2014 (NSW) (“the Uniform Law”) Aesthete’s fair and reasonable costs were determined by a costs assessor to be just under $80,000. Pursuant to s 83 of the Uniform Law, Aesthete sought review of that assessment. On 5 September 2016 a Review Panel affirmed the costs assessor’s determination. Pursuant to s 89 of the Uniform Law Aesthete appealed to the District Court. On 18 January 2018 a judge of the District Court made orders allowing the appeal, and entered judgment for Aesthete in the sum of just over $141,000, and made consequential orders: Aesthete No 3 Pty Ltd v Gilmore Finance Pty Ltd (NSW District Court, 18 January 2018, unrep). (There is an issue about the nature of the orders made, but that is not of present concern.)

3. Apparently without further demur, on 9 February 2018 Gilmore Finance paid that sum to Aesthete. On 13 February 2018 Aesthete sought a “special costs order”, namely that Gilmore Finance pay their costs (of what is unclear, but probably of the appeal to the District Court) on an indemnity basis, that Gilmore Finance pay the costs in a lump sum of $190,000, and that it pay the costs of the application to the Review Panel in the sum of $10,000. That application was dismissed on 14 March 2019. From January 2018 until December 2018, other than Aesthete’s application for a special costs order, nothing of consequence appears to have occurred.

4. On 21 December 2018 Gilmore Finance filed a notice of appeal against the decision of the District Court. Concurrently, it filed a summons under s 69 of the Supreme Court Act 1970 (NSW), seeking judicial review of the decision. Since, apparently, no notice of intention to appeal had been filed within 28 days of the date of the decision (see Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 51.8) the time within which Gilmore Finance had to appeal was 28 days from the date of decision. Pursuant to UCPR 59.10, the time for commencement of judicial review proceedings was three months from the date of the decision.

5. Recognising that those time limits had expired, Gilmore Finance also sought, in each case, an extension of time in which to commence the proceedings. It sought support for that application by the affidavit of Mr Lyle Gilmore, who is the sole director of Gilmore Finance.

6. As I perceive it, Mr Gilmore sought to explain the delay by reference to three categories of evidence. First, he deposed that, following the decision of the District Court, Gilmore Finance had lost faith in the solicitors who had, to that time, represented it. Gilmore Finance therefore terminated the instructions of those solicitors, and retained solicitors (who are presently representing Gilmore Finance) operating from Queensland. Mr Gilmore said that it took “some months” to obtain the files from the original solicitors and that some documents had to be obtained from other sources. Mr Gilmore did not further explain the delay in obtaining relevant documentation.

7. By November 2018, sufficient documents were available to enable counsel to advise on the prospects of appeal. (Although client legal privilege has expressly not been waived in relation to that advice, it may be taken that the advice was favourable.)

8. The second category of evidence on which Gilmore Finance relied concerned the attention Mr Gilmore had devoted to other matters – specifically, Aesthete’s application in the District Court for a “special costs order”, and the proceedings in the Commercial List in the Supreme Court.

9. The third category, and that which is presently relevant, was Mr Gilmore’s health. He gave a detailed account of health issues he had encountered since 2015 that involved surgery in January 2018. He concluded his affidavit as follows:

“3.25   This meant, at times throughout the Costs Proceeding and Motion to Vary Orders, and the preparation of the Application For Leave to Appeal, I was suffering from the effects of my ongoing poor health with [sic] impacted on my ability to give considered instructions in a timely manner.”

10. This affidavit prompted Aesthete’s solicitors to issue the six subpoenas and the notice to produce the subject of the present application. The subpoenas are directed to:

• Mr Lyle Gilmore;

• The Department of Home Affairs;

• Gilmore Finance’s present solicitors;

• Bennett Partners [accountants who provide services to Gilmore Finance];

• Legra Engineering Pty Ltd [an engineering business in which Mr Gilmore has an interest]; and

• Gilmore Finance’s former solicitors.

The notice to produce was directed to Gilmore Finance.

The subpoenas

11. Essentially, what is sought from the recipient of the subpoenas and the notice to produce is documents generated between 1 January 2018 and 15 January 2019 of two kinds:

• documents evidencing Mr Gilmore’s travel arrangements during the relevant period;

• documents evidencing Mr Gilmore’s personal involvement in business activities and litigation during the relevant period.

12. It will be observed that, although Mr Gilmore named certain medical practitioners who had treated him for his ill health, no subpoenas were directed to any medical service provider. The issue, therefore, is plainly not Mr Gilmore’s account of his recent medical history: it is the extent (if any) to which that medical history impacted on his capacity to pursue any appeal rights Gilmore Finance might have had in relation to the District Court orders.

13. On receipt of copies of the subpoenas and notice to produce, Gilmore Finance’s solicitors wrote to the solicitors acting for Aesthete, asking them to “provide details of the legitimate forensic purpose” in seeking the documents the subject of the subpoenas and notice to produce.

14. Aesthete’s solicitors responded:

“The need for the Subpoenas arose following the service of Mr Gilmore’s affidavit dated 7 March 2019, in which he deposed that he lacked the mental and physical capacity to give instructions in relation to this Appeal in a timely manner. Our client disputes the allegation that Mr Gilmore lacked the requisite mental and physical capacity to give instructions to his solicitors to file this Appeal within time, without any extension of time. Our client is entitled to test the evidence on that issue.”

15. The solicitors then helpfully set out a table, identifying the recipient of each subpoena, the documents sought by the subpoena, and what they claimed was the legitimate forensic purpose to be served by production of the documents. For example, in relation to the subpoena issued to the Department of Home Affairs (which sought production of all documents evidencing travel out of and into Australia by Mr Gilmore during the relevant period) the solicitors said:

“These documents are directed towards testing the veracity of the evidence given by Mr Gilmore that he was so physically and mentally unwell between 1 January 2018 and 15 January 2019 (Period) that he could not give instructions in relation to this appeal within the required time frame such that leave to file the appeal out of time had to be sought.”

16. In relation to documents sought in the subpoena directed to Mr Gilmore, the solicitors referred to that part of the subpoena that required production of documents recording meetings or communications during the relevant period with various solicitors or employees of solicitors, and other documents relating to any dealings he had with those persons either in his personal capacity or in his capacity as director of Gilmore Finance, and other business activities.

17. Of these, the solicitors said:

“The documents … are sought to test the veracity of Mr Gilmore’s claim he was so mentally and physically unwell that he could not attend to his business affairs, or give authority to his lawyers and accountants to take actions on his behalf, such as lodging tax returns etc.”

The application to set aside the subpoenas and notice to produce

18. On 17 May 2019, Gilmore Finance filed the notice of motion the subject of these reasons. Initially, on the hearing of the application, I was told that there were three issues for determination. They were:

• identification of the issue to which it is claimed the documents “materially assist”;

• whether those documents might “materially assist” in the resolution of that issue; and, if so,

• in relation to such documents as would disclose or relate to legal advice given to Gilmore Finance, whether requiring production of the documents would be oppressive.

19. On being pressed, both counsel agreed that the first issue – identification of the issue to which the documents are said to be relevant – is the extent (if any) to which Mr Gilmore’s apparently undisputed ill health affected his ability to give instructions in relation to an appeal in a timely manner.

20. In relation to the second issue, on behalf of Gilmore Finance, it was submitted that the subpoenas should be set aside unless it could be shown, by Aesthete, that the documents “might materially assist” in the determination of that issue, and that that has not been shown.

21. In relation to the third issue, it was submitted that requiring production would be unduly oppressive, because the recipients of the subpoenas would be required to engage in a process of assessment of their contents for the purpose of determining whether a claim for client legal privilege should be made.

22. Two separate strands of argument emerged.

Legitimate forensic purpose

23. The first strand of argument was directed to documents that might throw light on Mr Gilmore’s travel during the relevant period. On behalf of Gilmore Finance, it was argued that a party issuing a subpoena must show a legitimate forensic purpose in seeking production of the documents, and that no such legitimate forensic purpose had been shown. Reliance was placed on the decision Waddell J in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921. Waddell J applied a “sufficiently relevant” test, drawing from the well-known passage in Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 575 in which Jordan CJ said:

“… a subpoena to a party will be set aside as abusive if great numbers of documents are called for and it appears that they are not sufficiently relevant.” (italics added)

Waddell J considered that the passage was equally applicable to a subpoena addressed to a person not a party to proceedings.

24. Having regard to the emphasis placed by Mr Gilmore on his “health issues”, I was and am satisfied that material that might demonstrate his capacity (or otherwise) to travel during the relevant period is of sufficient relevance to meet the test drawn from Small in the determination of Mr Gilmore’s capacity to consider and give instructions in relation to a possible appeal during the relevant time.

25. I will not, therefore, set aside any subpoena (or the notice to produce) or any part thereof that calls for documentation evidencing travel by Mr Gilmore during the relevant period.

Oppression

26. The second issue concerned what was said to be oppression. That issue was limited to documents sought from the two firms of solicitors and from Mr Gilmore so far as they concern legal advice and legal proceedings.

27. It is entirely likely – virtually certain – that some of the documents caught by the subpoenas will be subject to a claim for client legal privilege: Evidence Act 1995 (NSW), Pt 3.10 Div 1.

28. Gilmore Finance’s current solicitor, Mr Paul Evans, swore an affidavit in which, in part, he deposed to what would be required in order for him to respond to the subpoena directed to his firm. He anticipated the need for the documentation to be individually assessed for claims of client legal privilege, and, where such a claim appeared appropriate, to be redacted. He estimated that the time required to do so would be 15 hours, incurring costs in the region of $8,000. It was therefore argued that to require production of those documents would be oppressive.

29. As was pointed out on behalf of Aesthete, that submission is premature. It misapprehends the nature of the present exercise, which is concerned only with production of the documents. That involves no assessment other than the assessment of which documents fall within the terms of the schedule to the subpoenas, and involves no redaction of documents. Whether access is to be granted is a separate question: see Griffiths v German [2017] NSWSC 1392 at [16]-[18]. That is a question to be determined after an application for access to the documents is made, and after a claim (if any) for privilege is made, and in the context of that determination.

30. There is nothing oppressive about requiring production of documents contained in solicitors’ files. It will not be unduly burdensome for the solicitors to produce the documents. No doubt, if and when application is made for access to the documents, questions of privilege will arise and may have to be determined – if the parties are not able to reach a sensible accommodation between themselves.

31. The orders I make are:

1. Notice of motion filed on 17 May 2019 dismissed.

2. The applicant to pay the respondent’s costs.

3. The proceedings are stood over to the Registrar’s list on 5 August 2019.

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Decision last updated: 24 July 2019