Hudson v Branir

Case [2005] NTCA 5

Hudson & Anor v Branir & Anor [2005] NTCA 5

PARTIES:HUDSON, Robert Ernest

and

BRUCE, Mark Baines

v

BRANIR PTY LTD

and

TOVEHEAD PTY LTD

TITLE OF COURT:  COURT OF APPEAL OF THE NORTHERN TERRITORY

JURISDICTION:  CIVIL APPEAL FROM THE SUPREME COURT EXERCISING TERRITORY JURISDICTION

FILE NO:AP6 of 2004 (20320300)

DELIVERED:  5 August 2005

HEARING DATES:  28 April & 27 May 2005

JUDGMENT OF:  MARTIN (BR) CJ, THOMAS & RILEY JJ

CATCHWORDS:

PRACTICE AND PROCEDURE

Subpoena – appeal against decision of a judge dismissing an application to set aside a subpoena – non-party discovery – “fishing expedition” – abuse of process – whether a subpoena for documents to a non-party to a proceedings is an interlocutory order or a final order – leave required to appeal – purpose of a subpoena – whether interlocutory applications not directly related to principal action require resolution prior to principal action proceeding – definition of ‘proceeding’ in Supreme Court Act – onus of proof – application for stay of proceedings – whether the use of a subpoena to obtain documents relevant to an application for a stay is an abuse of the Court processes or inappropriate – “on the cards” test – general confidential information – “getting to know you” information – width of subpoena – subpoena cast its’ net too wide – subpoena is oppressive and an abuse of the process of court – subpoena amended – appeal upheld.

Interpretation Act (NT), s 18 and s 20
Supreme Court Act (NT) s 9(1), s 20, s 51(1), s 53 and s 86
Supreme Court Rules (NT) O 42.02(1)

Roads and Traffic Authority of New South Wales v Conolly (2003) 57 NSWLR 310 at 315, 318; Alister v The Queen (1984) 154 CLR 404, applied.
In the matter of an appeal by Luck (2003) 78 ALJR 177 at [4]; Brouwer v Titan Corporation Ltd (1997) 149 ALR 50 at 53, followed.
The Queen v Gray; ex parte Marsh (1981) 151 CLR 351 at 362; Marsh v Adamson (1985) 9 FCR 408; Finnie v Dalglish [1982] 1 NSWLR 400 at 407; Spencer Motor Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921, considered.
Yunghans v Elfic (unreported, Victorian Supreme Court, delivered 3 July 1998) referred to.
Sent v John Fairfax Publication Pty Ltd [2002] VSC 429 at [67], distinguished.

REPRESENTATION:

Counsel:

Applicant:S Walsh QC

Respondent:  J Wells QC

Solicitors:

Applicant:Morgan Buckley Lawyers

Respondent:  Cridlands Lawyers

Judgment category classification:    B

Judgment ID Number:  Mar0513

Number of pages:  47

IN THE COURT OF APPEAL
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Hudson & Anor v Branir & Anor [2005] NTCA 5

No. AP6 of 2004 (20320300)

BETWEEN:

ROBERT ERNEST HUDSON

First Applicant

MARK BAINES BRUCE
Second Applicant

AND:

BRANIR PTY LTD

First Respondent

TOVEHEAD PTY LTD
Second Respondent

CORAM:     MARTIN (BR) CJ, THOMAS & RILEY JJ

REASONS FOR JUDGMENT

(Delivered 5 August 2005)

Martin (BR) CJ:

Introduction

  1. This is an application for leave to appeal against a decision of a Judge dismissing…

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AGLC
Hudson v Branir [2005] NTCA 5
Case
[2005] NTCA 5
Decision Date

CaseChat Overview and Summary

In the matter of Hudson v Branir, the Court was called upon to decide an appeal against a decision dismissing an application to set aside a subpoena. The subpoena was issued for the purpose of obtaining documents from a non-party in relation to a dispute over the purchase of shares. The respondents sought to argue that the subpoena was an abuse of process, particularly because it was cast too wide and sought confidential information. The Court was required to determine whether the subpoena was an interlocutory order or a final order, and if it was necessary for interlocutory applications not directly related to the principal action to be resolved before the principal action could proceed.

The Court considered whether the subpoena was an interlocutory order, which would require leave to appeal, or a final order, which would not. The Court determined that the subpoena was an interlocutory order and thus required leave to appeal. The Court also considered whether the use of a subpoena to obtain documents relevant to an application for a stay was an abuse of the Court processes or inappropriate. The Court held that the subpoena was oppressive and an abuse of the process of the Court because it was cast too wide and sought confidential information. The Court found that the subpoena was amended to narrow its scope, and the appeal was upheld.

The Court further considered the definition of ‘proceeding’ in the Supreme Court Act and the onus of proof in relation to an application for a stay of proceedings. The Court held that the use of a subpoena to obtain documents relevant to an application for a stay was not an abuse of the Court processes or inappropriate if the documents were necessary to determine the application. The Court held that the onus of proof was on the party seeking a stay to demonstrate that there was a reasonable chance that the documents in question would serve the purpose so specified. The Court held that the “on the cards” test was a sound and fair principle to apply in determining whether the documents were necessary to determine the application for a stay. The Court held that the subpoena was oppressive and an abuse of the process of the Court because it was cast too wide and sought confidential information. The Court held that the subpoena was amended to narrow its scope, and the appeal was upheld. The Court ordered that the subpoena be amended to narrow its scope and that the respondents be granted leave to appeal.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

In my view, there is considerable force in the remarks of Adams J. There may be little difference between the “on the cards” test and a test expressed as “a reasonable chance that the documents in question will serve the purpose so specified”. Excessive refinement should be avoided. The Court must apply a practical test which is sound in principle and fair to the parties. In my view, either formulation satisfies those criteria.Evidence The only evidence upon which the respondents rely is found in the affidavit of the respondents’ solicitor, Mr Cameron Ford, and the attachments to the affidavit. In summary, the relevant facts and assertions are as follows:(i)From about 1998 until August 2003 Deloittes were the accountants, auditors and tax accountants of the respondents.(ii)At all material times, the respondents were in partnership with each other trading as Tipperary Group of Stations. (iii)On about 13 June and 15 August 2003 DPC Tipperary Pty Ltd (“DPC”) purchased the shares in the respondents from the two previous shareholders. It was a term of the purchase that prior to settlement the vendors would provide DPC with the audited accounts of the respondents and other associated entities as at 31 December 2002. (iv)For the purposes of the sale agreement, by a report dated 20 June 2003, Deloittes provided to the respondents an “independent audit report” of the respondents’ financial accounts for the financial year ended 31 December 2002. (v)Mr John Vereker is a Director of the purchaser, DPC. He informed Mr Ford that during the course of obtaining the accounts of the respondents he spoke by telephone on a number of occasions with Mr Mark Bruce, a member of Deloittes, who informed Mr Vereker that he was the person in Deloittes principally involved in preparing the accounts and in performing accounting work for the respondents. Mr Ford asserts that at all material times Mr Bruce worked in the Darwin office of Deloittes where there are five partners, members or principals of the firm including two who are the liquidators of Walker.(vi)The scope and process of the independent audit report is described in the report in the following terms:“ScopeWe have audited the attached financial report, being a special purpose financial report, of Tovehead Pty Limited & Branir Pty Limited [the Partnership] trading as Tipperary Group of Stations for the financial year ended 31 December 2002 as set out on pages 7 to 21. The partners are responsible for the financial report and have determined that the accounting policies used and described in Note 1 to the financial statements are appropriate to their needs. We have conducted an independent audit of the financial report in order to express an opinion on it to the partners of Tovehead Pty Limited & Branir Pty Limited [the Partnership] trading as Tipperary Group of Stations. No opinion is expressed as to whether the accounting policies used, and described in Note 1, are appropriate to the needs of the partners.The financial report has been prepared to satisfy the partners’ information needs. We disclaim any assumption of responsibility for any reliance on this audit report or on the financial report to which it relates to any person other than the partners, or for any purpose other than that for which it was prepared.Our audit has been conducted in accordance with Australian Auditing Standards. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report and the evaluation of significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with the accounting policies described in Note 1 to the financial statements. These policies do not require the application of all Accounting Standards and other mandatory professional reporting requirements in Australia.The audit opinion expressed in this report has been formed on the above basis.” (my emphasis)(vii)The notes to the financial statements include a note as to contingent liabilities in the following terms:“14. Contingent LiabilitiesA legal matter relating to transactions with a supplier is unresolved at the time of this financial report. The entity has a counterclaim against the partnership. The extent of an outflow of funds for the counterclaim is unknown and is dependable on the outcome of the legal matter. The recoverability of the amount recorded in Trade Receivables, of $63,322 is also dependent on the outcome of this legal matter.”(viii)The “legal matter” identified as the contingent liability is the claim by Walker in the principal action. (ix)Mr Vereker informed Mr Ford that in December 2003 he and others met with Mr Bruce and a Mr Robert Hudson, another partner, member or principal of Deloittes who worked in the Darwin office. According to the information given to Mr Ford, during the course of that meeting, and from other conversations between Mr Vereker and Mr Bruce, Mr Vereker formed the view that both Mr Bruce and Mr Hudson were very familiar with the affairs of the respondents.(x)Mr Vereker informed Mr Ford that he is of the view that Deloittes have possession of confidential information of the respondents relating to the principal action together with information concerning the financial affairs of the respondents and as to the general attitude, approach, philosophies, and capabilities of the respondents.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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