Heugh v Central Petroleum Ltd [No 2]
[2013] WASC 323
•28 AUGUST 2013
HEUGH -v- CENTRAL PETROLEUM LTD [No 2] [2013] WASC 323
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 323 | |
| Case No: | CIV:1493/2012 | 12 AUGUST 2013 | |
| Coram: | LE MIERE J | 28/08/13 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Subpoenas set aside in part | ||
| B | |||
| PDF Version |
| Parties: | JOHN PHILLIP HEUGH CENTRAL PETROLEUM LTD |
Catchwords: | Practice and procedure Subpoenas Legitimate forensic purpose Oppression Turns on own facts Practice and procedure Memorandum of conferral O 59 r 9(1) Rules of the Supreme Court 1971 (WA) |
Legislation: | Rules of the Supreme Court 1971 (WA), O 36B r 4, O 59 r 9(1) |
Case References: | National Employers Mutual General Association Ltd v Waind & Hill (1978) 1 NSWLR 372 Stanley v Layne Christensen Co [2004] WASCA 50 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
CENTRAL PETROLEUM LTD
Defendant
Catchwords:
Practice and procedure - Subpoenas - Legitimate forensic purpose - Oppression - Turns on own facts
Practice and procedure - Memorandum of conferral - O 59 r 9(1) Rules of the Supreme Court 1971 (WA)
Legislation:
Rules of the Supreme Court 1971 (WA), O 36B r 4, O 59 r 9(1)
Result:
Subpoenas set aside in part
Category: B
Representation:
Counsel:
Plaintiff : Mr M L Bennett
Defendant : Mr R L Hooker
Solicitors:
Plaintiff : Bennett + Co
Defendant : Jarman McKenna
Case(s) referred to in judgment(s):
National Employers Mutual General Association Ltd v Waind & Hill (1978) 1 NSWLR 372
Stanley v Layne Christensen Co [2004] WASCA 50
1 LE MIERE J: The defendant, Central Petroleum Limited (Central Petroleum), is a public company listed on the ASX. It is engaged in the business of petroleum, helium and coal exploration. The plaintiff, Mr Heugh, was until 22 March 2012 employed as its managing director under a written contract of employment. Mr Askin was the chairman of the company. Mr Faull was a director and Mr White is the company secretary. Mr Cottee is the CEO.
2 At a meeting on 2 February 2012 the board of directors of Central Petroleum resolved to assign the authority and responsibility for farmout dealings to the exploration manager, Mr Shortt. On 4 February 2012 Mr Heugh sent two letters to Mr Shortt. The first letter informed Mr Shortt of the board resolution on 2 February 2012 and asked Mr Shortt to inform Mr Heugh whether he would like to take on those responsibilities in addition to his existing workload. The second letter, subsequently described as a letter of warning, stated that Mr Shortt's performance was inadequate and invited Mr Shortt to discuss the matter with Mr Heugh. Mr Heugh subsequently sent an email to Mr Shortt in which he offered to expunge the warning letter from the company's records if their discussion concluded that such a caution was not required. Mr Heugh subsequently sent correspondence to the other directors.
3 The board met on 17 February 2012. The board resolved that Mr Heugh had sought to enlist the support of Mr Shortt in efforts to circumvent the directions of the board and had subjected Mr Shortt to unacceptable workplace pressure and that was a contravention of Mr Heugh's employment contract. The board resolved that a letter be sent to Mr Heugh requiring him to remedy his breach of the employment contract within 14 days. The resolution provided that the remedy would be considered completed when the letter of warning to Mr Shortt was unconditionally withdrawn and a full apology tendered to Mr Shortt. Subsequently the chairman, Mr Askin, sent a letter to Mr Heugh. The letter stated, amongst other things, that in order to remedy the breaches of his employment contract Central Petroleum required Mr Heugh to sign two letters. The first, which was addressed to the chairman of Central Petroleum, stated in effect that Mr Heugh would cease handling oil and gas farmout dealings and would provide public support of the board resolution. The second letter addressed to Mr Shortt (the apology letter) unconditionally withdrew the warning letter to Mr Shortt and apologised for issuing the letter and the circumstances surrounding it.
4 Mr Heugh signed and delivered the letter to the chairman. Mr Heugh declined to sign the apology letter. His solicitors informed the chairman that he declined to sign the apology letter and stated his reasons. In essence, Mr Heugh denied attempting to circumvent the board's resolution, denied that he sought to enlist the support of Mr Shortt in efforts to not comply with the board's resolution or that he subjected Mr Shortt to unacceptable workplace pressure. The letter said that Mr Heugh had concerns with Mr Shortt's professionalism and performance and the warning letter was issued as a result of those concerns.
5 On 18 March 2012 the directors of Central Petroleum, other than Mr Heugh, signed a written resolution in accordance with r 15.10 of the company constitution. The written resolution determined that Mr Heugh had not remedied the breaches of his contract, and authorised the chairman to enter into discussions with Mr Heugh regarding Mr Heugh resigning from his position as director of the company, his employment with the company and his appointment as managing director and that subject to the outcome of those discussions the chairman, Mr Askin, give Mr Heugh notice of termination of his contract of employment and notice of intention to move a resolution at the general meeting of the company to remove him as a director of the company. On 22 March 2012 Central Petroleum terminated Mr Heugh's employment.
6 On 23 March 2012 Mr Heugh commenced this action against Central Petroleum. He claims a declaration that his contract of employment is and remains on foot and an order that Central Petroleum perform its obligations under the contract by continuing to employ him under and in accordance with the terms of the contract. Mr Heugh also seeks a declaration that the purported 18 March 2012 resolution was not made in good faith in the best interests of the company and be set aside. Mr Heugh also seeks damages for breach of contract or damages for the unlawful termination of the contract. The defendant has filed a defence in which it says that the contract of employment was lawfully terminated on 22 March 2012 and denies that the plaintiff is entitled to any relief. There have been a number of interlocutory steps taken. The defendant has given discovery.
7 The plaintiff has issued a subpoena to each of Mr Askin, Mr Faull, Mr White and Mr Cottee requiring them to produce documents specified in the subpoena. Each of the subpoena recipients (the applicants) has applied to set aside the subpoena or alternatively for an order that the scope of the subpoena be narrowed.
The subpoenas
8 Each of the subpoenas served on Mr Askin, Mr Faull and Mr White are substantially in the same form. Each requires the recipient to produce:
1. Any and all emails sent, received and/or in draft, in the email account relating to or in connection with the categories of documents.
2. Any and all telephone conversations or meeting notes, or records relating to or in connection with the categories of documents.
- In each case 'email account' is defined to refer to a specific email account. The categories of documents is defined to mean any and all emails, drafts or other documents dealing with or related to
(a) Mr John Heugh's performance of his employment duties whilst employed by CTP during the period between July 2004 and 22 March 2012;
(b) the approaching and appointment of Mr Trevor Shortt to act on behalf of CTP;
(c) the letter sent to Mr John Heugh on 17 February 2012 (notice of breach letter);
(d) the board of directors of CTP response to the letter received by CTP from Tait & Co Lawyers, on behalf of Mr John Heugh, on 6 March 2012;
(e) CTP's Circulating Resolution dated 18 March 2012;
(f) the letter sent to Mr John Heugh on 22 March 2012 (termination of employment letter);
(g) approaching and offering employment to Mr Richard Cottee on behalf of CTP;
(h) the remuneration package to be offered or agreed with Mr Richard Cottee and/or Freestone Energy Partners Pty Ltd; and
(i) Mr Trevor Shortt's concerns about Mr John Heugh's conduct towards him between February 2012 and March 2012.
(a) being offered employment with Central Petroleum; and
(b) termination of Mr John Heugh's employment with Central Petroleum.
Order 59 rule 9 conferral
10 The plaintiff submits that the applicants are required to, but failed to, confer to try to resolve the matters giving rise to the present application to set aside the subpoenas in accordance with O 59 r 9(1) of the Rules of the Supreme Court. The applicants submit that they are not required to comply with O 59 r 9(1). Alternatively, the applicants seek waiver of the operation of O 59 r 9(1) under O 59 r 9(2). Order 59 r 9(1) provides that no order shall be made on an application in chambers unless the application was filed with a memorandum stating that the parties have conferred to try to resolve the matters giving rise to the application and the matters that remain in issue between the parties. Rule 36B r 4(1) provides that the court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in respect of it. 'Party' is not defined in the rules. Generally, 'party' refers to a party to the action, not a person involved in, or affected by, an action in some other way. However, the meaning of 'party' in the rules must take its meaning from its context. In O 36B r 4 party refers to a party to the action, not the party on whom the subpoena is addressed. However, in O 59 r 9 'parties' refers to the parties to the application, not the parties to the action in which the application is brought. That construction is consistent with the purpose of the rule which is to reduce interlocutory disputes by requiring the parties to an application to confer with the view to resolving the dispute before the court is called upon to hear and resolve it. The recipient of a subpoena may appear in court on the return day in person and seek to have it set aside: National Employers Mutual General Association Ltd v Waind & Hill (1978) 1 NSWLR 372, 381. If that course was followed then there would not be an application of the sort to which O 59 r 9 is addressed. However, where, as here, a subpoena recipient causes to be issued a chamber summons to set aside a subpoena under O 36B r 4, that is an application of the sort to which O 59 r 9 applies.
11 The applicants did not comply with O 59 r 9(1) because they did not confer with the plaintiff prior to lodging a chamber summons to set aside the subpoenas. However, I will waive compliance with that rule. It is appropriate to do so for the following reasons. The applicants did not wilfully not comply with the rule. They submit that the rule does not apply to an application to set aside a subpoena. I have taken a contrary view in the circumstances of this application. However, the position advanced by the applicants is reasonable and arguable. Importantly, the applicants have conferred with the plaintiff about the matters in dispute prior to the hearing of this application, albeit after the application had been filed and served. The issues have now been the subject of conferral between the parties. There is no purpose in requiring the parties to confer further. Neither party suggested otherwise.
Grounds for setting aside subpoena
12 Each applicant applies to set aside the subpoena on two grounds. The first is that the subpoena has no legitimate forensic purpose. The second is that the subpoena is oppressive.
Legitimate forensic purpose
13 In Stanley v Layne Christensen Co [2004] WASCA 50 at [9] the court set out principles that are applied in determining whether a subpoena is for a legitimate forensic purpose. The principles are:
1. do the documents give rise to a line of enquiry;
2. whether the documents are required for a fair disposal of the action;
3. do the documents allow the parties to appraise the strengths and weaknesses of their and their opponents' case; and
4. all relevant documents should be made available to the parties.
I will consider the matter in relation to each of the categories of documents which the subpoena requires to be produced.
14 The first category is documents relating to Mr Heugh's performance of his employment duties whilst employed by Central Petroleum during the period between July 2004 and 22 March 2012. Such documents do not relate to any matter in issue in the action nor would they lead to a line of enquiry which would advance the plaintiff's case or damage that of the defendant. The defendant's case is that Mr Heugh's employment was lawfully terminated. The defendant says that the plaintiff had committed persistent and serious breaches of the employment agreement by reason of the facts pleaded in [12A] and [12B] of the defence and the contents of the plaintiff's email communications to the defendant and to Mr Shortt from 4 February to 17 February 2012. The matters pleaded in [12A] and [12B] of the defence concern conversations between the plaintiff and Mr Shortt on 3 February and 4 February 2012. The defendant does not rely on Mr Heugh's performance of his employment duties prior to February 2012 to justify the termination of his employment. Furthermore, the defendant does not rely upon Mr Heugh's performance of his employment duties other than the matters specifically pleaded. Production of the category (a) documents is not required for the fair disposal of this action. Production of those documents serves no legitimate forensic purpose.
15 The category (b) documents relate to the approaching and appointment of Mr Trevor Shortt to act on behalf of Central Petroleum. Those matters are not matters in issue in the action nor do they give rise to a relevant line of enquiry. The matters in issue concern the communications between the plaintiff and Mr Shortt in relation to investigating and negotiating potential farmout dealings, the resolutions of the board in February and March 2012 dealing with those matters and the warning letter. Production of the category (b) documents serves not legitimate forensic purpose and is not necessary to fairly dispose of the action.
16 Document categories (c), (d) (e) and (f) relate to matters in issue in the action or would lead to a relevant line of enquiry. Production of those documents serves a legitimate forensic purpose.
17 Category (g) is documents relating to approaching and offering employment to Mr Cottee on behalf of Central Petroleum and category (h) is documents relating to the remuneration package to be offered or agreed with Mr Cottee and/or Freestone Energy Partners Pty Ltd. The plaintiff says that these documents are relevant to the issue of damages. The plaintiff gives particulars of his loss and damage in [47] of the statement of claim where he pleads that his loss and damage includes, but is not limited to, loss of remuneration and superannuation contributions under the contract of employment for the term of the contract, further particulars of which will be provided prior to trial. The plaintiff has not delivered further particulars but has delivered an expert report. Counsel for the plaintiff informed me, without objection, that the expert's report says that the plaintiff's loss includes the loss of the opportunity of the plaintiff's contract of employment being renewed after its expiry. The plaintiff says that the salary, or remuneration package, paid by Central Petroleum to Mr Cottee, or to Freestone Energy Partners Pty Ltd for providing Mr Cottee's services to Central Petroleum as managing director is relevant to the remuneration package likely to be obtained by the plaintiff if his contract of employment had been renewed upon its expiry. Counsel for Central Petroleum accepts that proposition but says that only documents containing or disclosing the remuneration package are relevant to the matter in issue or to a relevant line of enquiry and it is not necessary to produce documents relating to approaching and offering employment to Mr Cottee on behalf of Central Petroleum. I accept the submission of Central Petroleum on that aspect. Production of documents containing or disclosing the remuneration package agreed with Mr Cottee and/or Freestone Energy Partners Pty Ltd serves a legitimate forensic purpose but not documents relating to approaching and offering employment to Mr Cottee on behalf of Central Petroleum.
18 Category (i) is documents relating to Mr Shortt's concerns about Mr Heugh's conduct towards him between February 2012 and March 2012. The communication by Mr Shortt to directors of Central Petroleum of his concerns about Mr Heugh's conduct towards him between February 2012 and March 2012, or communications between board members and employees of Central Petroleum are relevant to matters in issue on the pleadings or at least to a line of enquiry. The production of category (i) documents serves a legitimate forensic purpose.
Form of subpoena
19 Counsel for Central Petroleum submits that the subpoena describes the documents to be produced in a way which is not sufficiently precise. That may be illustrated by reference to category (c) of the documents required to be produced. In effect, the subpoena requires the subpoena recipient to produce any and all emails sent, received and/or in draft in email accounts relating to or in connection with and any and all telephone conversations or meeting notes, or records relating to or in connection with all emails, drafts or other documents dealing with or related to the letter sent to Mr John Heugh on 17 February 2012. That method of description is convoluted and unnecessarily complex. The subpoena should be varied by inserting in place of the definition of 'categories of documents' and the description of the documents to be produced, the following description of the documents to be produced:
1. Any and all:
(a) emails sent, received and/or in draft in the email account;
(b) notes of telephone conversations or meetings; and
(c) records
relating to:
(c) the letter sent to Mr John Heugh on 17 February 2012 (notice of breach letter);
(d) the board of directors of CTP response to the letter received by CTP from Tait & Co Lawyers, on behalf of Mr John Heugh, on 6 March 2012;
(e) CTP's Circulating Resolution dated 18 March 2012;
(f) the letter sent to Mr John Heugh on 22 March 2012 (termination of employment letter); and
2. Any and all documents containing or disclosing the remuneration package agreed with Mr Richard Cottee and/or Freestone Energy Partners Pty Ltd.
Subpoena to Cottee
20 The subpoena served on Mr Cottee requires production of documents relating to:
(a) being offered employment with Central Petroleum;
(b) termination of Mr Heugh's employment with Central Petroleum.
21 The lawfulness of his employment with Central Petroleum is at the centre of the action. Mr Cottee became managing director of Central Petroleum after Mr Heugh. The production of documents in Mr Cottee's possession relating to the termination of Mr Heugh's employment with Central Petroleum serves a legitimate forensic purpose. However, documents relating to Mr Cottee being offered employment with Central Petroleum do not serve a legitimate forensic purpose. There is no issue on the pleadings concerning Mr Cottee's employment with Central Petroleum, nor is it likely to lead to a line of enquiry which would advance the plaintiff's case or damage that of the defendant.
22 The subpoena to Mr Cottee will be amended to provide that the documents to be produced are:
All and any:
(a) emails sent or received in the email accounts by the person subpoenaed;
(b) notes of telephone conversations or meetings; and
(c) records;
relating to the termination of Mr John Heugh's employment with CTP.
Oppression
23 It is common ground that the fact that compliance with a subpoena would be burdensome on a party is not sufficient to show that a subpoena is an abuse of process or oppressive. The applicants submit that the burden placed upon them by the subpoenas is unreasonable and oppressive for seven reasons. The first reason is the number of categories of documents requested and the wide time period under which some of those documents are sought. I have determined the subpoena recipients are not required to produce some of the categories of documents specified in the subpoenas because their production serves no legitimate forensic purpose. The remaining categories are relatively few in number. The nature of the documents specified in the remaining categories is such that they cover a relatively narrow time period.
24 The second reason advanced by the applicants is that the context of the current status of the action, that is discovery having been completed, mediation having taken place and lay witness evidence having been filed or set to be filed in the immediate future makes the burden placed upon the applicants unreasonable and oppressive. I do not accept that submission. Subpoenas are most often served a short time before trial requiring documents to be produced at trial. There is nothing inherently unreasonable or oppressive about issuing an early return subpoena after discovery, mediation and the exchange of witness statements.
25 The third reason advanced by the applicants is the context of the narrow issues upon which the plaintiff's claim is founded. The applicants say that the issues to which the documents sought relate are, at the very most, peripheral to the decisive issues in the litigation. That may have been true in relation to some of the categories of documents which I have not allowed. It is not true in relation to the categories of documents which I have permitted.
26 The fourth reason advanced by the applicants is that the nature and categories of documents sought by the plaintiff inevitably requires the subpoena recipients to review documents in order to determine if they are potentially relevant to the issues in the action which amounts to a further discovery exercise. That is not correct, at least in relation to the categories of documents which I have not disallowed. Those categories identify the documents or class of documents required to be produced. They do not require the applicants to assess whether the documents are relevant to any issues in the action.
27 The fifth reason advanced by the applicants is that they are required to review documents to determine whether they are protected by legal, professional or other form of privilege. That may be so. It may be so in relation to many documents the subject of a subpoena. That does of itself make the subpoena unreasonable or oppressive. The categories of documents to be produced are not communications with lawyers or documents which are inherently likely to be privileged. The task of assessing whether any of the documents are privileged is not so burdensome as to make the subpoena oppressive.
28 The sixth reason advanced by the applicants is that the nature of the documents the plaintiff seeks under the subpoenas is tantamount to a foray into the field of documentary irrelevance. I have, in essence, considered that matter in determining whether, and to what extent, the subpoenas serve a legitimate forensic purpose.
29 The seventh reason advanced by the applicants is that the nature of the documents sought by the plaintiff potentially crosses the boundaries into issues currently being contested in Heugh v Henry Askin & Ors, CIV 2936 of 2012 and the subpoenas are therefore being used as a fishing expedition for the discovery of documents which may be relevant in that action. That ground was not developed in the course of oral argument. I have determined to allow the subpoena to stand only in relation to those categories of documents which serve a legitimate forensic purpose in this action.
30 For the reasons I have advanced, the applicants have not established that the subpoena should be set aside on the grounds of oppression.
Conclusion
31 Order 36B r 4 provides that the court may set aside a subpoena in whole or in part, or grant other relief in respect of it. I have determined that each of the subpoenas should be set aside in part and that the applicants are required to produce the documents I have identified in these reasons.
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