In the matter of One.Tel Ltd (in liq) - SingTel Optus Pty Ltd v Weston - [2010] NSWSC 1491

No judgment structure available for this case.

CITATION: In the matter of One.Tel Ltd (in liq) - SingTel Optus Pty Ltd v Weston [2010] NSWSC 1491

HEARING DATE(S): 1 & 9 December 2010

JUDGMENT DATE :
22 December 2010

JURISDICTION: Equity

JUDGMENT OF: Ward J

DECISION: Orders made setting aside and/or varying particular paragraphs in each of the respective Notices to Produce. Applications otherwise dismissed

CATCHWORDS: PRACTICE and PROCEDURE - applications to set aside notice to produce issued in relation to plaintiff’s application for removal of special purpose liquidator - principles concerning when notices to produce will be set aside - HELD - both notices to produce set aside in part

LEGISLATION CITED: Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)

CASES CITED: Alister v R (1984) 154 CLR 404
Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1952) 72 WN (NSW) 250
Attorney-General (NSW) v Chidgey [2008] NSWCCA 65
Bengalla Mining Co Pty Ltd v Barclay Mowlem Construction Ltd [2001] NSWSC 93
Botany Bay Instrumentation and Control Limited v Stuart [1984] 3 NSWLR 98
Cadence Asset Management Pty Ltd v Concept Sports Ltd (2006) 58 ACSR 435
Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 1151
City & Suburban Pty Ltd v Smith (1998) 28 ACSR 328
Cosco Holdings Pty Limited v Commissioner of Taxation (1997) 37 ATR 432
Deloughery v Weston [2010] NSWCA 148
GB, by his tutor, FB v Western Sydney Area Health Service [2010] NSWSC 181
ICAP Pty Limited v Moebes [2009] NSWSC 306
ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307
Leslie v Hennessy [2000] FCA 1532
Leslie v Hennessy [2001] FCA 371
McGuirk v The University of New South Wales [2009] NSWSC 1424
McLaughlin v Dungowan Manly (unreported, 14 July 2009, NSWSC)
McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 308
National Employers Mutual General Insurance Assn Ltd v Waind [1978] 1 NSWLR 372
National Employers Mutual General Insurance Assn Ltd v Waind (1979) 141 CLR 648; 24 ALR 86
Onefone Australia Pty Ltd v One.Tel Ltd [2003] NSWSC 1228; (2003) 48 ACSR 562
Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290
Onefone Australia Pty Ltd v One.Tel Ltd (In Liq) [2009] NSWSC 1231; (2009) 74 ACSR 716
Peter Hanne & Associates Pty Ltd v Village Life Limited [2008] FCA 719
Petrotimor Companhia de Petroleos S.A.R.L. v Commonwealth of Australia [2002] FCA 18
Portal Software v Bodsworth [2005] NSWSC 1115
Nicholls v Michael Wilson and Partners Limited [2010] NSWCA 100
R v Saleam (1989) 16 NSWLR 14
Re Biposo Pty Ltd (1995) 17 ACSR 730
Seven Network Ltd v Australian Competition and Consumer Commission [2004] FCAFC 267; (2004) 140 FCR 170
Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corp Ltd [1984] 1 NSWLR 710
Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921
The Commissioner for Railways v Small (1938) 38 SR (NSW) 564; 55 WN (NSW) 215
Trade Practices Commissioner v Arnotts Ltd (1989) 21 FCR 306
Universal Press Pty Limited v Provest Limited (unreported, FCA, 14/07/89)
White v Tulloch (1995) 127 FLR 105

PARTIES: Singtel Optus Pty Ltd (First Plaintiff)
Optus Networks Pty Ltd (Second Plaintiff)
Optus Mobile Pty Ltd (Third Plaintiff)
Optus Vision Pty Ltd (Fourth Plaintiff)
Optus Insurance Services Pty Ltd (Fifth Plaintiff)
Paul Gerard Weston in his capacity as Special Purpose Liquidator of One.Tel Ltd (in liq) (Defendant)

FILE NUMBER(S): SC 10/071799

COUNSEL: J A C Potts (Plaintiffs)
R Glasson (Defendant)

SOLICITORS: Baker & McKenzie (Plaintiffs)
O'Neill Partners - Commercial Lawyers (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

WARD J

WEDNESDAY 22 DECEMBER 2010

10/071799 IN THE MATTER OF ONE.TEL LTD – SINGTEL OPTUS PTY LTD V WESTON

JUDGMENT

1 HER HONOUR: In this matter separate applications have been brought by the opposing parties, each seeking to set aside parts of a notice to produce served by the other for production to the court of documents in these proceedings.

2 The substantive proceedings have been brought by a number of entities that have lodged claims in the winding up of One.Tel Limited (in liquidation) against Paul Gerard Weston, in his capacity as special purpose liquidator of that company, seeking an order that Mr Weston be removed as the special purpose liquidator (and that Mr Stephen John Parbery be appointed as special purpose liquidator in his stead) and an order for an inquiry into the conduct of Mr Weston as special purpose liquidator in connection with the performance of his duties and the remuneration and expenses claimed by him.

3 There is an issue between the parties as to the standing of the first plaintiff to be heard as a creditor (Mr Weston denying that it has been admitted as a creditor of One.Tel for voting and dividend purposes) but it is not necessary for me to determine that issue on this application as it is not disputed that the other plaintiffs have standing.

4 The respective Notices to Produce, each of which has been amended more than once, are:

(a) a Further Amended Notice to Produce to Court dated 15 November 2010 (the Optus Notice) issued by the plaintiffs (who for convenience I will collectively refer to as the Optus Group) on 20 July 2010 and amended twice since then; and

5 By Further Amended Interlocutory Process dated 26 November 2010, Mr Weston sought an order that paragraphs 1, 2, 4(a), 4(c)(i), 4(c)(ii), 5, 6, 7, 8, 9, 10, 11, 12 and 13 (other than documents referred to in 13(a), 13(b) and 13(c)(i)) of the Optus Notice be set aside. However, by the time of the hearing, accommodation had been reached in relation to a number of those paragraphs so that the application to set aside was pressed only in relation to paragraphs 1, 2, 4(c)(i), 4(c)(ii), 5, 6, 7(b) and 7(c), 9, 10, 11, 12 and 13 (other than documents referred to in 13(a), 13(b) and 13(c)(i)).

6 By Amended Interlocutory Process dated 1 December 2010, the Optus Group seeks an order that paragraphs 1, 2, 11(q), 14, 21, 22, 23, 24(j), 36 and 37 of the SPL Notice be set aside or alternatively varied (though by the time of the hearing before me it no longer pressed for paragraph 24(j) to be set aside).

7 Consequential costs orders are sought by the opposing parties, including an order sought by Mr Weston for costs thrown away by the vacation of a hearing date fixed for 6 October 2010 of the respective interlocutory processes (following a delay on the part of the Optus Group in relation to the filing of its Points of Claim) and by the further amendment on 15 November 2010 of the Optus Notice.

Substantive proceedings

8 On 29 May 2001, Mr Steven Sherman and Mr Peter Walker of Ferrier Hodgson were appointed as voluntary administrators of One.Tel in a voluntary administration of the company under Part 5.3A of the Corporations Act 2001 (Cth). On 24 July 2001 the company was placed in liquidation by resolution of creditors, pursuant to s 446A of the Act, and Messrs Sherman and Walker became the liquidators of the company.

9 A Committee of Inspection of One.Tel was constituted on 24 July 2001, the membership of which has changed from time to time, and has included, over most of the period since then, a representative of the Optus Group.

10 Mr Weston was appointed as special purpose liquidator of One.Tel on 23 December 2003 by order of Windeyer J in separate proceedings (Onefone Australia Pty Ltd v One.Tel Ltd [2003] NSWSC 1228; (2003) 48 ACSR 562), broadly in order to investigate potential claims arising out of the cancellation of a Renounceable Rights Issue (RRI) at a board meeting attended by Mr Sherman shortly before One.Tel was placed in voluntary administration. The functions of Mr Weston as special purpose liquidator have been extended and varied by orders of the court on various occasions (as noted by Barrett J in Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290).

11 The present proceedings were commenced by originating process in March this year. An Amended Originating Process was served on 25 June 2010 pursuant to leave granted by Barrett J on 24 June 2010. Subsequently, the Optus Group was directed to file Points of Claim, which it did on 6 October 2010, and Mr Weston served Points of Defence on 29 October 2010.

12 The application to remove Mr Weston as special purpose liquidator is brought pursuant to s 503 of the Corporations Act. The order for an enquiry into his conduct is sought pursuant to s 536 of the Corporations Act.

13 Mr Weston admits that the general liquidators (Messrs Sherman and Walker) have admitted creditors and adjudicated proofs of debt lodged in the winding up of the company by various of the plaintiffs and have admitted debts owed to the second to fifth plaintiffs inclusive in the amount of $65,570,148.00. What is denied by him is the proportion of the total value of the admitted claims which is represented by the admitted debts of the second to fifth plaintiffs.

14 It is contended for the Optus Group that more than 50%, by way of value, of the creditors of One.Tel (including Telstra Corporation Limited, Cisco Systems Capital (Australia) Pty Limited and Roadhound Electronics Pty Limited) support the claim in these proceedings. (Mr Weston, for his part, does not admit that the Optus Group, together with those other named creditors - Telstra, Cisco and Roadhound, represents over 50% of the creditors of the company by value.)

15 It is admitted by Mr Weston that, on 5 August 2010, the general liquidators reported to creditors, among other things, that they held approximately $12.4 million in net funds but that they were not in a position to provide an estimate of timing of any possible future distributions to creditors having regard to the special purpose liquidation of the company (see paragraphs 13 of the Points of Claim and Points of Defence, respectively).

16 It is alleged by the Optus Group, and denied by Mr Weston, that his powers as special purpose liquidator relate solely to matters concerning the cancellation of the RRI (see paragraphs 16 of the Points of Claim and Points of Defence, respectively). There is also a dispute as to the consequence or effect of orders made by White J in April 2004. The Optus Group contends that the effect of those orders was that Mr Weston’s powers as special purpose liquidator were suspended over the period April 2004 to April 2006; Mr Weston, on the other hand, denies this (and says that what his Honour directed was that Mr Weston was justified in deferring or not proceeding with certain actions pending the occurrence of certain nominated events or further court orders and that, over the period in question, he continued to perform necessary work for the special purpose liquidation) (see paragraphs 17 of the Points of Claim and Points of Defence, respectively).

17 It does not seem to be contested that there have been, during the course of the special liquidation and at least since mid-2008, substantial disputes between Mr Weston and members of the Committee in relation to various matters (one of which being the level of remuneration and legal expenses claimed by Mr Weston – the non-approval of some of which by the Committee led to an application being made by Mr Weston, which was heard by Barrett J in late 2008, for various orders to be made for his remuneration and payment of expenses). There have been a number of contested hearings in this Court in which disputes between the Committee or members of the Committee and Mr Weston have been aired.

18 The basis of the application by Optus Group for the removal of Mr Weston as special purpose liquidator is outlined in submissions put before the court earlier this year (in May 2010) and in the submissions served on the present application; and turns on the stated loss of confidence on the part of the Committee (and a number of creditors) in Mr Weston. His removal is said to be in the interests of the liquidation, by reference not only to that loss of confidence but also by reference to certain of the underlying matters that are said to have led to that loss of confidence, such as the level of his fees and expenses and an alleged loss of objectivity on Mr Weston’s part in relation to what are described as important decisions in the conduct of the special purpose liquidation (such as the settlement strategy for the RRI proceedings, the approach to procurement of third party funding and his approach to the question of confidentiality of information). Requests have been made to Mr Weston for his resignation (which he has declined) and a no confidence motion in relation to him was passed at a meeting of creditors on 10 November 2009 (with no votes against and one abstention). A resolution was passed by creditors on 26 August 2010 at the annual general meeting of creditors that Mr Weston resign forthwith. He has not done so.

19 The Optus Group, in its Points of Claim, relies upon a number of matters in support of its application for removal of Mr Weston: including the (“extraordinarily high”) level of remuneration and expenses incurred by Mr Weston during the term of his appointment (in excess of $11m since 23 December 2003), that being variously described as unreasonable and disproportionate; the carrying out of work, and incurring of legal expenses, by Mr Weston in connection with matters said to go beyond his court ordered powers; his reliance on a ‘circulating resolution’ for approval in relation to his remuneration for the period 1 July 2009 through 31 October 2009 (in circumstances where it is said that the Committee had not unanimously supported that resolution and had later expressed their objection to reliance by Mr Weston on that purported resolution); the loss of confidence in Mr Weston by both the Committee and the general body of creditors; and Mr Weston’s approach to settlement of the RRI proceedings.

20 By way of defence, Mr Weston denies (and therefore puts in issue matters such as) the alleged disproportionality or unreasonableness of the remuneration and expenses incurred by him to date and says, among other things that the expenses have been in part incurred by reason of the Committee’s conduct and that they have been approved in large part by the Committee or the court; and that the loss of confidence is caused by the Committee/creditors’ misunderstanding as to various matters. Mr Weston denies that he has performed work beyond his court-appointed powers. While Mr Weston is said “effectively” to admit that certain fees charged by him in the categories disallowed by Barrett J were not properly so charged, he accepts that the amount so charged has not been refunded by him.

Relevance

21 The relevant test in seeking to set aside a notice to produce was considered by Brereton J in Portal Software v Bodsworth [2005] NSWSC 1115. The Optus Group points in particular to what was said by his Honour at [24]-[26] and notes that this was applied by Hall J in GB, by his tutor, FB v Western Sydney Area Health Service [2010] NSWSC 181, at [70].

22 In Portal Software, his Honour described (at [24]) the test as being whether the documents sought by the notice to produce have “a sufficient apparent connection to justify their production or inspection” (citing White v Tulloch (1995) 127 FLR 105) and said that the test of adjectival relevance (ie, as distinct from substantive relevance) will be satisfied if the material has apparent relevance and is established if the documents called for “could possibly throw light on the issues in the main case” (at [24]), citing Trade Practices Commissioner v Arnotts Ltd (1989) 21 FCR 306).

23 I note that in Cosco Holdings Pty Limited v Commissioner of Taxation (1997) 37 ATR 432, Spender J had earlier considered the statement of Beaumont J in Trade Practices Commission v Arnotts as to the test of adjectival relevance and had noted that the word “possibly” was there “not used in any speculative sense” and so a subpoena (as was there in issue) may be set aside if the issuing party cannot, on reasonable grounds, show that there is a reasonable possibility that the documents sought will assist in resolving a matter in dispute in the proceedings.

24 Nicholas J in ICAP Pty Limited v Moebes [2009] NSWSC 306 adopted an approach to Trade Practices Commission v Arnotts consistent with that of Spender J in Cosco.

25 In ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307, the Court of Appeal held that the primary judge had not erred by stating that, for a notice to produce to have a legitimate forensic purpose:

26 In Nicholls v Michael Wilson and Partners Limited [2010] NSWCA 100, Young JA, to similar effect as had Brereton J in Portal Software, held that for present purposes a notice to produce is the equivalent of a subpoena and that the ordinary rules as to oppressive subpoenas can be applied (at [33]). His Honour also said that, in modern litigation, a person is entitled to issue a subpoena and have it answered if there is a legitimate forensic purpose in issuing the subpoena, that is, that he or she has a reasonable cause to believe the documents subpoenaed have the capacity to throw some light on the issues in the proceedings, at [34].

27 Although, as I noted in McLaughlin v Dungowan Manly (unreported, 14 July 2009, NSWSC), the authorities have largely dealt with relevance in the context of “fishing” objections (in which questions of relevance necessarily arise) and there is a significant overlap between considerations as to whether what is sought is relevant to an issue in the proceedings, whether it is oppressive and whether it constitutes impermissible “fishing”, the two grounds for objection do not completely overlap, so that a notice to produce may be set aside even if it seeks relevant documents.

28 The suggestion that mere relevance might be sufficient to establish a legitimate forensic purpose was rejected by Beazley JA in Attorney-General (NSW) v Chidgey [2008] NSWCCA 65, (there in the context of criminal proceedings). In Chidgey, her Honour did not accept that it was a legitimate forensic purpose to engage in a “fishing expedition” to discover whether there was a case at all, referring to The Commissioner for Railways v Small (1938) 38 SR (NSW) 564, at 573–4; 55 WN (NSW) 215, at 575 where Jordan CJ had stated that a party was not entitled to use a subpoena for that purpose.

29 Insofar as the Optus Group also referred to the test noted by Brereton J, in Portal Software, that a notice to produce will have a legitimate forensic purpose if it appears to be “on the cards” that the documents sought will materially assist, that formulation of the test appears more generally to be used in the context of criminal (not civil) proceedings. (His Honour had there referred to what was said in Alister vR (1984) 154 CLR 404, at 414 by Gibbs CJ and in R vSaleam (1989) 16 NSWLR 14, at 18. In Chidgey Beazley JA saw no reason to depart from the test and the language used in Alister and Saleam.)

30 In civil proceedings, however, the “on the cards” test has not been broadly embraced. In ICAP, Nicholas J expressed caution in the application of a test which incorporates a phrase such as “on the cards” or “could possibly throw light on” when the legitimate forensic purpose of a subpoena is challenged.

31 Applying in this case the test in civil proceedings, as stated by Nicholas J in ICAP (namely that “it must be shown that it is likely the documentation will materially assist on an identified issue, or there is a reasonable basis beyond speculation that it is likely that the documentation will”, at [30]) and noting that it must be reasonable to infer that the documents so sought exist, a careful consideration is required of the issues in the proceedings to which the subpoenaed documents are or may be of relevance in order to assess whether there is a legitimate forensic purpose served by the subpoena. (In that regard, it must in my view be to the issues as identified in the pleadings as they currently stand to which consideration must be given – not the issues as they might stand if an application were successfully to be made to strike out part or all of the pleadings; an issue to which I refer in due course as it was raised as a basis for objection to the Optus Notice by Mr Weston.)

Oppression/fishing

32 It is recognised that what one of the common grounds for setting aside a subpoena (namely that it constitutes impermissible “fishing”) speaks to is a concern to ensure that the issuance of a subpoena is not improperly used as a “substitute for discovery” (per Owen J in Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1952) 72 WN (NSW) 250).

33 It may be that, as in Alister, even if the party seeking production of documents is unable to say whether or not documents of the kind described do in fact exist, there would be sufficient basis to seek the documents provided there is reasonable cause to believe (or, perhaps, to use the words of Gibbs CJ, at 414 in Alister that it is not unreasonable to believe) that there are such documents in existence (see discussion in McLaughlin v Dungowan Manly).

34 However, if (notwithstanding that it could be said to be reasonably possible that documents of the kind falling within a notice to produce would materially assist the party’s case and hence that there would be a legitimate forensic purpose in seeking their production) a party is unable to point to evidence from which it could be inferred that there are in fact any such documents in existence, then a notice to produce such documents would, in effect, be akin to a preliminary discovery application and not a permissible use of the notice to produce procedure.

35 In this regard in Waind, Moffitt P (with whom Hutley and Glass JJA) seemed to accept that what would be impermissible is to use the subpoena procedure for the purposes of discovery, when considering (at 382) the position where a party may issue a subpoena unaware of the precise description of a particular document, or whether a particular document or documents is in the possession of the witness, or even whether it exists, or is unaware of its contents and observing that such a subpoena, or even a subpoena in general terms, will not necessarily amount to the use of the subpoena for what, in context his Honour must have seen as the impermissible purpose of discovery.

36 Whether a party has cause to believe that particular documents exist is thus a relevant factor (in conjunction with the potential relevance of the documents sought and the breadth of the subpoena/notice to produce) in determining whether the subpoena (or notice to produce) is oppressive and/or constitutes “fishing”.

37 In Universal Press Pty Limited v Provest Limited (unreported, FCA, 14/07/89), Hill J stated:

Like Clark J, as his Honour then was, in Southern Pacific Hotel Inc v Southern Pacific Hotel Corporation (1984) 1 NSWLR 710 at p 717, I am of the view that there are two separate grounds for setting aside a subpoena that are often confused. The first, to which I have already referred, is the ground that the subpoena is so widely framed as to be burdensome and oppressive and therefore an abuse of process. The second, often linked with the first, is that the subpoena requires the addressee, being a third party to the litigation, to produce all documents which may afford evidence of the matters in dispute between the parties, is thus used as a way of obtaining discovery against a person not party to the litigation and so should be set aside (cf Small's case supra).

Where the objection to a subpoena is that it is a misuse of the process of the Court for the purpose of discovery, what is usually meant is that it is an abuse of process to require a person

not a party to litigation

to form a judgment as to what is relevant to the issues joined in a proceeding to which he is not a party: National Employers' Mutual Association Ltd v Waind & Hill

38 As to what is meant by a “fishing expedition”, in Associated Dominions Assurance v John Fairfax, at 254 it was said:

A “fishing expedition”, in the sense in which the phrase has been used in the law, means, as I understand it, that a person who has no evidence that fish of a particular kind are in a pool desires to be at liberty to drag it for the purpose of finding out whether there are any there or not. If, however, there is material before the Court pointing to the probability that a party to litigation has in his possession documents tending to destroy his case or to support the case of his opponent and that privilege from inspection of such documents has been wrongly claimed, an application by that opponent to be allowed to inspect them cannot properly be described as a mere “fishing expedition”.

Reasonable particularity

39 I also note that the documents sought to be produced must be identified with reasonable particularity (see Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921, at 926) and with clarity to ensure that the recipient knows what information is required to be provided (Seven Network Ltd v Australian Competition and Consumer Commission [2004] FCAFC 267; (2004) 140 FCR 170, at [49]; [70] per Sackville and Emmett JJ). If the documents are not described with sufficient particularity the subpoena/notice to produce is liable to be set aside (National Employers Mutual General Insurance Assn Ltd v Waind [1978] 1 NSWLR 372 and on appeal National Employers Mutual General Insurance Assn Ltd v Waind (1979) 141 CLR 648; 24 ALR 86; The Commissioner for Railways v Small).

40 The requirement that a subpoena (and by analogy a notice to produce) must identify with “reasonable particularity” the documents sought, distinguishes the power to compel production of documents by such a process from a party’s discovery obligation. It is only in compliance with a discovery obligation, and not that imposed by a subpoena, that a person can ordinarily be required to assess whether unspecified documents are “relevant to a fact in issue” in the proceedings, when identifying what documents are required to be produced in proceedings (Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corp Ltd [1984] 1 NSWLR 710, at 718; Bengalla Mining Co Pty Ltd v Barclay Mowlem Construction Ltd [2001] NSWSC 93, at [16]).

41 One factor relevant to determining whether a subpoena identifies with sufficient particularity the documents sought is whether the form of the subpoena imposes an obligation on the recipient to form a judgment as to what is relevant to issue in the proceedings, as explained in Waind, at 382:

Burchard's

Small's

It follows that it is an abuse to use any subpoena,

i.e. even to a party to obtain discovery

Small's

It follows that a subpoena can only properly be used for the production of documents described in particular or general terms which does not involve the making of such a judgment.

Small's

Burchard's

42 Similarly, in Bengalla at [16], it was explained that if a subpoena obliges the recipient to make a judgment as to which documents related to issues, it may be liable to be set aside for abuse of process.

Turning to the question whether these subpoenas are an abuse of process because they are being used to obtain discovery, in my opinion the correct test is that set out in Waind at p382, namely whether or not the subpoena requires the recipient to make a judgment as to which documents relate to issues joined in the proceedings . In my opinion, if the subpoena does not do this, and if it is not otherwise oppressive, it does not matter that the party issuing it has the motive or purpose of supplementing or correcting what that party believes to have been inadequate discovery by the party to whom the subpoena is issued. Nor, in my opinion, does it matter that the subpoena is issued well in advance of the hearing. In so far as the decision in Botany Bay Instrumentation & Control Pty Ltd v Stewart (1984) 3 NSWLR 98 may suggest the contrary, I would prefer the decision in Southern Pacific Motel Services Inc v Southern Pacific Motel Corp Ltd (1984) 1 NSWLR 710, as did Rolfe J in Lakatoi. (My emphasis)

43 In Southern Pacific Motel Services, Clarke J (as his Honour then was) stated (at 718);

44 Although reference is often made in such cases to the situation where the court’s compulsive processes in relation to the production of documents apply to strangers to the litigation, in Waind the principle was expressly stated to be applicable also to a party to the litigation when served with a subpoena/notice to produce. Those processes are not to be used as a substitute for discovery.

45 It is necessary that a person receiving a notice to produce, just as it is for a person served with a subpoena, be in a position to form a view having regard to the terms of the notice as to what documents are required to be produced in order to comply with the order for production. If subjective judgment is required to be applied, or there is ambiguity in that regard, then the subpoena/notice to produce should be set aside.

Other matters

46 Counsel for the Optus Group (Mr Potts) submits that the court's discretion must also be guided by a judgment as to whether the production sought is genuinely required and will comply with the overriding purpose set out in s 56 of the Civil Procedure Act 2005 (NSW), the objects of case management dealt with in s 57 of the Act and the object of proportionality required by s 60 of the Act, noting that in the Federal Court (as is equally the case in this Court) it has been said in relation to the scope of notices to produce (Petrotimor Companhia de Petroleos S.A.R.L. v Commonwealth of Australia [2002] FCA 18, at [34]) that “the Court expects the parties, and the representatives, to focus upon what relevant facts are seriously in dispute” (in which case the court went on to say that “Given the high level of professional representation in this matter, the Court expects that its own involvement in that exercise should be minimalist”).

Basis of present applications

47 With that background in mind, I turn to the two applications presently before me, in no particular order other than that this was the order in which submissions were made on the respective applications.

48 Broadly speaking, the bases on which the respective parts of the two notices to produce are sought to be set aside by the opposing party are those of relevance and oppression/fishing (although in the case of two of the paragraphs in the SPL Notice, it is said that the request is objectionable because of the ambiguity of the paragraphs and the requirement for subjective judgment to be applied in determining whether documents fall within the Notices).

SPL Notice

49 The Optus Group’s objections to this Notice are broadly grouped into categories and I deal with them as such.

Retainer/fee agreements – paragraphs 1 and 2

50 Paragraphs 1 and 2 of the SPL Notice, under the heading “COI fees”, (omitting definitions) read as follows:

(a) any fee or retainer agreement between the Committee and/or Optus and Baker & McKenzie in matters concerning the SPL’s administration; and/or

(b) any memorandum of fees rendered by Baker & McKenzie in acting for the Committee, including but not limited to the “fees of the COI” referred to in paragraph 11(b) of the affidavit of Murray King sworn on 19 March 2010

51 Exhibit B (which I marked but which is not yet formally read as evidence in the substantive proceedings) is the affidavit of Mr King, to which reference is made in paragraph 1 of the SPL Notice. Mr King was, at the time of swearing his affidavit, the Chief Financial Officer of the first plaintiff and says that he is authorized to make that affidavit on behalf of the Optus Group. Exhibit C, similarly marked, is the affidavit sworn by Mr Salier to which reference is made in paragraph 2 of the SPL Notice. Mr Salier is a solicitor who is the Deputy In-house Counsel of Optus. (Ms Galloon, to whom reference is made in paragraph 2, is a current member of the Committee and an employee of one of the Optus entities.)

52 The objection taken by the Optus Group to these categories is primarily that of relevance. It is said that these documents are irrelevant to any issue in the proceeding and that there is no legitimate forensic purpose for seeking them. In particular, it is said that the fact, or the terms, of any retainer of Baker & McKenzie are irrelevant to any fact in issue, as are any details which it might be expected would be included in any memorandum of fees issued by Baker & McKenzie. Similarly, it is said that the fact, or recording, of a payment by Optus to Baker & McKenzie and the amount of any such payments are matters incapable of being relevant to any fact in issue on the current pleadings.

53 Paragraph 11(b) of Mr King’s affidavit, to which reference is made in paragraph 1(b) of the SPL Notice, states:

(b) since 2008 Optus has been paying the fees of the COI being legally represented.

54 In that regard, Mr Potts submits that the fact that Mr King has deposed to a “particular interest” on the part of Optus in the level of fees does not render the documentation in paragraphs 1 and 2 relevant to any issue in the proceedings. This sub-paragraph of Mr King’s affidavit does no more than provide evidence that Optus has been paying legal fees on behalf of the Committee. The basis on which it has done so (as between the Optus Group and the Committee) seems unlikely to emerge from the memoranda of fees themselves.

55 Paragraphs 175 - 177 of Mr Salier's affidavit of 14 May 2010, referred to in paragraph 2 of the SPL Notice refer to the role of Mr Hambrett in a “high level fees review” (in the context of an allegation that misleading statements had been made by Mr Weston in relation to that matter). In those paragraphs, Mr Salier deposes as follows:

175. I believe that this … is misleading and suggests that the COI intentionally duped Mr Weston into allowing Mr Hambrett to conduct the “high level” fees review by failing to disclose that he had been retained more generally to advise the COI.

176. In fact my understanding of events, by reference to the documents referred to in the following paragraph below is that:

(a) Ms Galloon telephoned a member of Mr Weston’s staff on about 8 May 2008 and proposed that Mr Hambrett be invited to attend the next COI meeting, a fact acknowledged by Mr Weston in a letter from Mr Weston to the COI dated 8 May 2008;

keen to obtain the advice of Mr Hambrett in connection with the matters being dealt with in the liquidation”

(c) on about 30 May 2008, the COI proposed that Mr Hambrett conduct a review of the fees for March and April 2008 with the aim of trying to resolve an impasse that had arisen regarding those fees; and

(d) the proposal did not purport to bind Mr Weston to the outcome of the review.

177. A copy of a letter from Mr Weston to the COI dated 9 May 2008 appears behind Tab 19 of Exhibit SCS-2. A copy of a letter from Ms Galloon on behalf of the COI to Mr Weston dated 9 May 2008 appears behind Tab 20 of Exhibit SCS-2. A copy of a letter from Ms Galloon on behalf of the COI to Mr Weston dated 30 May 2008 appears behind Tab 23 of Exhibit SCS-2.

56 Counsel for Mr Weston (Mr Glasson) seeks to justify these paragraphs primarily on the basis that there is an issue in the proceedings as to the conduct of Mr Weston in raising an objection to the retainer by the Committee of a partner of Baker & McKenzie (Mr Bruce Hambrett) on the basis of a perceived conflict of interest (since Mr Hambrett acts for the Optus Group). (Mr Hambrett is the solicitor on the record in the current proceedings, I might add.)

57 Mr Glasson refers in this regard to paragraphs 54 and 52 of the Points of Defence, which respond to the equivalent numbered paragraphs in the Points of Claim.

58 In paragraph 52 of the Points of Claim it is alleged that Mr Weston has become “unreasonably preoccupied” with issues of confidentiality and has wrongly asserted that he cannot provide the Committee with any meaningful information about the conduct of the special purpose liquidation because the members of the Committee cannot be trusted with that information. Mr Weston’s answer to paragraph 52 (apart from asserting that it is an embarrassing pleading, including as to what is meant by “meaningful information”) is that, to the extent that the said confidentiality is based in or the subject of orders of the court then the allegations now made by the Optus Group are an impermissible attempt at a collateral appeal from the court’s determinations. Mr Weston denies acting unreasonably in relation to the nature and extent of any communication of information.

59 (I also note that in answer to in paragraph 53 of the Points of Claim, which asserts that Mr Weston’s “unreasonable” attitude to confidentiality has made meaningful dialogue impossible (“so that, since at least August 2008, the Committee has not been given any meaningful information” by Mr Weston as to what he has been doing in relation to the special purpose liquidation), there is similarly a denial by Mr Weston that his attitude to confidentiality was unreasonable.)

60 In paragraph 54 of the Points of Claim it is alleged that “Since about April 2008, Mr Weston “has unreasonably objected to each of the Committee and the plaintiffs retaining various legal advisers on the basis of serious and unfounded allegations of a conflict of interest in each of the proposed legal advisers” (my emphasis), those legal advisers said to include Mr Hambrett and two members of the NSW bar, Mr Ian Pike and Mr John Sheahan SC.

61 (I note, further, that in paragraph 55 of the Points of Claim it is alleged that, in all the circumstances, Mr Weston has lost objectivity in his dealings with the Committee and in paragraph 56 that the Committee has lost all confidence in his ability to discharge his powers, duties and obligations as special purpose liquidator of the company in the best interests of the creditors of the company.)

62 In answer to paragraph 54 of the Points of Claim, Mr Weston admits that he objected to the retainer of the 3 named legal advisers; says that there were proper reasons for his objection which were given at the time to Baker & McKenzie (the solicitors acting for the Committee and/or the Optus Group) and raises, in relation to each of the named legal advisers, various matters on which Mr Weston relies for the assertion that it was reasonable for him to make the objection that he did to the relevant person’s retainer. In relation to Mr Hambrett, those reasons are set out in paragraph 54(c) of the Points of Defence, by reference to which it is asserted in relation to the retainer of Mr Hambrett by each of the Committee and the Optus Group, that Mr Hambrett was “conflicted”.

63 Generally, it is said by Mr Glasson that the documents requested in these paragraphs go to the issue of whether any loss of confidence by the Committee or creditors, relied on by the Optus Group as the primary ground of removal, was objectively justifiable (and not the result of unreasonable behavior on the part of the Committee or creditors). Reference was made to City & Suburban Pty Ltd v Smith (1998) 28 ACSR 328, at 338 – 339, per Merkel J.

64 Mr Glasson submits that there is, or he apprehends there will be, a “red hot issue” (T 18.41) in the case about the retainer of Mr Hambrett by the Optus Group and the Committee. In those circumstances, as I understand it, it is said that the documentation sought in paragraphs 1 and 2 may reasonably be thought to shed light on the issues squarely raised by paragraph 54 of the Points of Claim, namely whether the allegations of conflict of interest are “unfounded” as it has been asserted they were. (A second basis on which the request was sought to be maintained, though related in a sense to the first, was in relation to the issue as to whether confidential information had passed as between the Committee and Optus (T 20.10) (presumably going to the issue raised by paragraph 53 of the Points of Claim as to whether Mr Weston’s attitude to confidentiality was “unreasonable” and whether Mr Weston had “wrongfully asserted” that the Committee could not be trusted with confidential information.)

65 On one view, if the fact of Baker & McKenzie’s (or Mr Hambrett’s) retainer by both the Optus Group and the Committee at the relevant time is not in issue (and it was not suggested that it was), then it might be thought that the retainer agreement itself would not shed light on any relevant issues in relation to the alleged conflict. However, Mr Glasson submits that not only is the date of any retainer agreement relevant but also that the scope or nature of the retainer as described in the documents may also be relevant. In that regard, I would accept that a narrative description contained in a fee or retainer agreement as to the legal services to be provided might reasonably be expected to shed light on the existence or otherwise of a potential (or actual) conflict of interest when considered in light of any other retainer held by the lawyers in question.

66 Mr Glasson further maintains that the fee or retainer agreements sought (which he says may be of relevance in indicating whether there was any consideration given to Chinese walls or the like) would or might disclose the nature of communications and possible disclosure of confidential information between Optus and the Committee. Again, I accept that there is a reasonable possibility that if there were to be a limitation on the retainer in that regard then it would be referred to in the retainer agreement.

67 Where I have more difficulty is accepting that there is a reasonable possibility that fee notes or invoices would contain such information. To be fair, Mr Glasson himself flagged that this was more of a stretch when he submitted that, to a “lesser extent”, the fee notes would or might disclose such communications. I have some difficulty in seeing why that would be the case in relation to fee notes – it seems to me that this assumes an uncommonly high level detail in the narratives contained in fee notes (ie a narrative that says what the subject matter of a discussion or attendance was, rather than the fact of an attendance per se).

68 Significance was attributed by Mr Glasson to the fact that Mr Salier’s affidavit (a redacted form of which was in evidence) was served on Mr Weston by the solicitors for the Optus Group in support of the Optus Group. This affidavit was said to disclose or contain information confidential to the Committee. (It is asserted that there is no doubt that Mr Salier, in his capacity as a proxy for Ms Galloon, “would have obtained information confidential to [the Committee] which now has raised a matter foreshadowed by Mr Hambrett in his letter when serving and ultimately redacting Mr Salier’s affidavit”.)

69 Mr Glasson also pointed to Schedule D to the Points of Claim in relation to the allegation by the Optus Group that certain statements in reports issued by Mr Weston were misleading (in part there referring to the high level fees review in respect of which Mr Weston alleges that the Committee proffered Mr Hambrett as a person suitable to undertake an independent high level fees review without disclosing to Mr Weston that Mr Hambrett was already acting for the Committee at that time).

70 Schedule D provides particulars of the allegations made in paragraphs 39 to 42 of the Points of Claim, as to misleading statements to creditors made by Mr Weston in his 2009 report and in a 2009 supplementary report. The alleged false and/or misleading statements include the following matters:

1(b) “(late March 2008): Bruce Hambrett of Baker and McKenzie first retained by [the Committee] without informing the defendant (para 3.1)”;

1(c) “(24 April 2008): Mr Hambrett, without informing [Mr Weston], provides Mr Lindholm with a letter confirming [the Committee’s] support for him to seek settlement offer from the defendants to the [RRI] proceedings. Letter directs Mr Lindholm not to disclose to [Mr Weston] his discussions with the defendants [to the RRI proceedings] (at para 3.1)”; [Mr Lindholm is as I understand it an individual with whom discussions took place at some stage in relation to brokerage of a settlement arrangement.]

1(d) “(4 June 2008): [Committee] meeting where committee propose they retain Mr Hambrett to conduct “high level” review of March/April fees and legal expenses ... [Committee] does not disclose to [Mr Weston] Mr Hambrett’s retainer since March 2008 (at para 3.1)”;

2(a) “the letter from Mr Hambrett to Mr Lindholm directed Mr Lindholm not to disclose to me his discussions with the defendants to the RRI proceedings (at para 6.39)”;

71 Those statements are said to be false and misleading in that it is said that they, variously, convey the impression that the Committee was under an obligation at law to disclose the fact referred to in 1(b) to Mr Weston; suggest that the Committee ‘directed’ the non-disclosure of discussions to Mr Weston, whereas it is said that there had been agreement to a modified confidentiality regime sought by Mr Lindholm; failed to mention the purposes of the high-level fees review; and were misleading as to Mr Hambrett’s role and the purpose of the high-level fees review.

72 The submission was made by Mr Glasson that the question whether or not the conflict of interest allegations made by Mr Weston are ultimately proved to be valid is a matter going to whether or not a loss of confidence in Mr Weston was objectively justifiable and something that was not the product of unreasonable behavior on the part of Mr Weston. It is said that it is not sufficient for the Optus Group to allege or prove the mere fact of the loss of confidence of the Committee or some creditors in Mr Weston but that what it must show is that the view was held and that the grounds on which the Committee and some creditors actually relied when forming that view were factually based and not themselves the product of unreasonable conduct on their part.

73 It seems to me that the fee or retainer agreements themselves are documents that may well shed light on the scope of the respective retainers and hence be of relevance to the question whether there was a potential and/or actual conflict of interest in Mr Hambrett acting both for the Committee and for the Optus Group in relation to matters concerning the special purpose liquidator’s administration (and thus whether Mr Weston’s allegation of conflict was objectively unfounded).

74 It is less clear that memoranda of fees rendered to the Committee fall within that category. That, it seems to me, is likely to depend on the specificity or level of detail in any narrative contained in the memoranda of fees so rendered. For example, as noted earlier, a recitation of telephone attendances or letters (without more) is unlikely to do more than confirm that Baker & McKenzie were acting for both the Committee and the Optus Group at certain points in time (which does not seem to be disputed) – it will not necessarily shed light on what was done (or the subject matter of the relevant communications) so as to give any real indication as to whether there was an actual conflict of interest. Nor can the level of fees be relevant in that context.

75 Therefore, while I consider that paragraph 1(a) is able to be maintained, I think in its current form paragraph 1(b) would need to be read down. I can see no likely relevance in any memorandum of fees rendered by Baker & McKenzie in acting for the Committee in matters concerning the special purpose liquidator’s administration other than insofar as that memorandum contains a narrative which describes the particular legal services provided by reference to the subject matter of the services and not the bare description of what was done on a particular date (letter/telephone attendance/conference or the like). If paragraph 1(b) were to be read down as being so limited, then I would allow it. (I would also accede to a request, if that be made, that parts other than those falling within the read-down description be redacted (such as the amount of the fees themselves) since I do not see the relevance of those to the issues in the proceedings. Although there is an issue as to the disproportionality or reasonableness of the overall level of fees, I do not see this as being determined by comparison with what Baker & McKenzie may themselves have charged.)

76 For completeness, I should note that I do not accept the submission by Mr Glasson that documents in paragraphs 1 and 2, are relevant to the complaint that Mr Weston has spent money on, or incurred unnecessary costs in litigation with, the Committee as pleaded by Optus (made in paragraphs 48 and 49 of the Points of Claim). Mr Glasson pointed to the circumstances that the Optus Group was funding the Committee, Mr Hambrett was advising the Committee and the Committee had sought payment from One.Tel of legal costs in relation to matters common to some of the matters undertaken by Mr Weston. However, the fact that Mr Weston may have spent unnecessary sums of money on litigation with the Committee is not shown by the costs the Committee has itself incurred in litigation. (I note that Mr Glasson conceded that this might not be his strongest point, but maintained that all of the matters to which he referred in paragraph [13] of his submissions were relevant to the overall issue of loss of confidence and whether it was objectively justifiable.) Suffice it to say that I do not accept that relevance has been established on that basis in relation to the documents sought in paragraph 1 of the SPL Notice – but would allow that paragraph for the reasons stated earlier.

77 As to the communications sought in paragraph 2, Mr Glasson submits that correspondence between the Optus Group and the Committee concerning the proposed retainer of Baker & McKenzie is relevant to the allegation of an unfounded serious assertion of a conflict of interest. It is said, for example, that if there were to be a consideration as to whether “Chinese walls” should be implemented or how confidential information was to be treated, or confirming the use of such information, that would be directly relevant to the issue as to whether there was an objectively justifiable complaint by Mr Weston. However, there is no more than speculation as to whether there was any such communication.

78 Mr Glasson seemed to accept that a limitation of the date of this category to documents before the retainer would be implicit in the references to the proposed retainer in this paragraph (T 25.49), at least if the date of the retainer were known (Mr Glasson indicated that as best he could tell the date of the retainer was March or April 2008 – T 24.44) but still pressed the paragraph.

79 I have some difficulty in seeing how whatever may have been said in communications about a proposed retainer could be relevant in construing the scope of the retainer itself – that would surely as a matter of contract fall to be determined (at least in the absence of ambiguity) by reference to the terms of the retainer itself. As to communications in relation to “the retainer”, as opposed to the “proposed retainer”, that would potentially cover a wide range of communications and it seems to me there is not sufficient particularity in paragraph 2 to enable the conclusion that it is likely that the material sought will materially assist on the issue identified by Mr Glasson.

80 I therefore set aside paragraph 2 of the SPL Notice to Produce.

Privileged material – objection based on oppression – paragraphs 11(q), 14

,

21, 36, 37

Mr Salier’s communications with Optus re his affidavit or draft thereof – paragraph 11(q)

81 All that is sought to be set aside in paragraph 11 is sub-paragraph (q):

82 Mr Salier, as previously noted, is a solicitor working in-house at Optus. The affidavit in question is Exhibit C on this application. Mr Potts submits that any documents in this category will almost inevitably be privileged. Mr Potts referred to the issue of proportionality; drew my attention to sections 56 and 57 of the Civil Procedure Act; and to rule 1.9(3) of the Uniform Civil Procedure Rules 2005 (NSW) which it was said allows a valid objection to production of documents sought under a r 34.1 notice to produce, if the documents sought are privileged. It was submitted that I should not require to be produced documents over which there would be a claim for privilege that would be likely to be substantiated and, further, that there is no legitimate forensic purpose for Mr Weston to seek production of drafts of affidavits filed or served by Optus in the proceedings (or communications in relation thereto).

83 Mr Glasson, in response, said that he simply relied on Exhibit 2 to justify the request made in paragraph 11(q). Exhibit 2 is a copy of a the letter dated 14 May 2010 from Baker & McKenzie to Mr Weston’s lawyer with which a copy of Mr Salier’s affidavit (minus exhibits) was served. Mr Glasson refers to the letter as one concerning Mr Salier’s affidavit containing potentially confidential information to the Committee. (T 26.37). This material, it is said, goes to the issue of whether there were “unfounded” allegations as to conflict or interest or in relation to confidential information.

84 In that regard, the letter itself makes it clear that there is no concession that the affidavit or exhibit discloses any information of a confidential nature, but, rather, invites Mr Weston to make any claim for confidentiality within 7 days. (I was not apprised of any objection so made by Mr Weston.)

85 It seems to me that it cannot be said that in taking the precaution of ascertaining whether Mr Weston maintained any claim for confidentiality (perhaps having regard to the perception the Optus Groups has as to Mr Weston’s preoccupation with confidentiality), in relation to this affidavit there was any concession that the material in question was confidential. Therefore I have difficulty seeing how any communication in relation to drafts of Mr Salier’s affidavit would be relevant to the issue as to whether Mr Weston was objectively justified in having a concern as to confidentiality.

86 As to the question of privilege, Mr Glasson says that rule 1.9 has simply a procedural operation – such that documents do not need to be produced until after the claim for privilege has been determined, but does not permit the notice to produce itself from being set aside.

87 Mr Glasson submits that the claim for privilege is not a proper basis to object to these paragraphs and called in aid the practice said to have been applied by Telstra Corporation when producing documents to the court in this matter in compliance with a notice to produce served by Mr Weston, noting that the Optus Group and the Committee had claimed privilege over some documents produced by Telstra after having first access to those documents. (I do not see how the practice adopted by the parties in relation to Telstra’s compliance with a Notice to Produce provides any basis for saying that the Optus Group cannot now contend it would be oppressive for them to be required to produce privileged documents and then maintain a claim for privilege.)

88 Mr Glasson submits that, to the extent that the Optus Group relies on UCPR r 1.9 as having modified the practice applied in Waind, properly construed r 1.9 provides no basis for setting aside a paragraph of a notice to produce (rather, at best, it enables a party to resist production to the court of the documents concerned). In this regard, Mr Glasson submits that the terms of r 1.9(4) suggest such a construction or application of r 1.9.

89 Brereton J in Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 1151, at [8] - [12] addressed issues relating to the stage at which questions of privilege were raised in respect of the production and inspection of documents on subpoena, there stating (from [8]):

In order to overcome the dichotomy that would otherwise result, the (NSW) Uniform Civil Procedure Rules (“UCPR”) incorporate the Evidence Act test so far as discovery of documents is concerned, by using the terms 'privileged documents' and 'privileged information' and defining them by adopting the Evidence Act provisions. However, there is no equivalent provision in respect of production of documents on subpoena. UCPR, r 1.9, provides a procedure by which objection may be taken to the production of documents required to be produced inter alia by a subpoena upon grounds that the documents are “privileged documents”, again defined by reference to the Evidence Act. But this rule relates to the production of documents, and not the inspection of documents already produced. As Mr Kirk has pointed out in the course of argument, r 1.9(3) — providing, as it does, that a person may object to producing a document — is addressed only to an objection by the person required to produce the document, and not an objection or claim for privilege by someone else in respect of a document so produced.

A number of cases seem to have proceeded on the basis that r 1.9 has the effect of applying the provisions of the Evidence Act in the present circumstances. In Re Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 543 and Ryder v Frohlich [2005] NSWSC 1342, it does not appear that any attention was directed to the distinction between producing a document to the Court, and granting access for the purposes of inspection to a document already produced. In ML Ubase Holdings Co Ltd v Trigem Computer Inc [2007] NSWSC 859, I treated an application for access to documents produced on subpoena as if it were an objection to production of documents on the ground that the documents were privileged documents under r 1.9, again without attending to that distinction. In Westpac Banking Corp v 789TEN Pty Ltd [2005] NSWCA 321; (2005) 55 ACSR 519, Tobias JA observed that r 1.9 had the effect of reproducing former (NSW) Supreme Court Rules, Part 36, r 13(2), and said that those provisions governed the issue as to whether the Court should or should not have compelled the production of the relevant documents. Again it does not seem that attention was given to the distinction between inspection after production, and the act of production itself. But, in Cassaniti v Paragalli [2006] NSWSC 160; (2006) 229 ALR 416, Barrett J recognised the distinction between r 1.9's focus on an objection made at the time at which production of a document was required, as opposed to the time at which an application for access to a document already produced is under consideration, and at least left open the possibility that the common law might apply in the latter situation.

The distinction to which I have referred is a well-recognised one, as it has been at least since National Employers’ Mutual General Assn v Waind & Hill [1978] 1 NSWLR 372, which explained the three steps in the process of complying with the subpoena: first, the production of the document to the Court in answer to the subpoena; secondly, the interim use which might be made of the document, such as the granting of access for the purposes of inspection, at which stage typically any questions of privilege are agitated; and, thirdly, the tender of the document into evidence. Nowadays, the third stage is governed by the provisions of the Evidence Act. The first stage is governed by r 1.9, which authorises an objection on the ground of a claim for privilege to production of a document — contrary, I should add, to the suggestion in Ritchie's Uniform Civil Procedure NSW, at [33.9.5] — and applies the Evidence Act to such an objection.

But neither the Act nor the Rules apply to the second stage, and it follows that the common law continues to apply to the second stage. Inconvenient as this result may be, I do not think that inconvenience can be used, as it were, to apply the statutory provisions “derivatively” to the second stage: to do so would run contrary to the High Court's decision in Esso Australia Resources v Commissioner of Taxation.

90 Mr Glasson submits that his Honour’s comments do not suggest that a notice to produce may be set aside on the ground that it covers privileged documents. It is submitted by Mr Glasson that a contrary construction or application could produce unreasonable results in that if r 1.9 was a proper basis for setting aside parts of a notice to produce, then a manifestly improper claim for privilege could never be tested in respect of what would otherwise be relevant documents. Further, it is said that if any claim for privilege was ultimately not upheld, on the Optus Group’s construction, a further notice to produce would be required to be served, the first having been set aside on the basis of an untested assertion of privilege. (It is not clear to me how the submission that an untested claim for privilege leads to a privilege claim being rejected – since, if untested, no opportunity for such a conclusion would seemingly arise - but perhaps what Mr Glasson is envisaging is a separate application later in the course of proceedings in relation to privilege.)

91 Mr Glasson submits that if r 1.9 applies and prevents production of privileged documents at least until the privilege issue is determined, then the appropriate course is not to set aside parts of the SPL Notice but rather for the Optus Group to provide a list of documents over which it claims privilege but not physically to produce them to the court, pending any determination as to the validity of the privilege claims.

92 In response, Mr Potts clarified that the objection to this paragraph was on the basis of oppression, namely that it is oppressive to be required to produce documents which are overwhelmingly privileged and which cover a potentially large time period (the time period in question being from September 2007 to March 2010). He did not assert that rule 1.9 gave a power to set aside on the basis of privilege.

93 As far as reliance was placed on Exhibit 2, Mr Potts pointed out that the reason for the redaction of the affidavit was to make clear that Mr Weston was being asked whether he made any claim for confidentiality, not that there was any concession on the part of the Optus Group that the affidavit did contain any confidential information.

94 In relation to this category, I consider it suffers from the vice of irrelevance. Communications in relation to the drafting of affidavits (just as draft affidavits themselves) are not likely to be relevant to the ultimate issue (unless they suggest some form of concealment of evidence), since what is relevant surely is what a witness finally deposes to in an affidavit sworn or affirmed by him or her. Communications, for example, in which instructions are sought or provided for the preparation of an affidavit (in the absence of an issue as to there being an abuse of process in relation to the affidavit as ultimately attested) do not seem to me likely to be relevant.

95 What Mr Glasson seems to be asserting is that communications by which material came to be referred to or included in the Salier affidavit (or a draft thereof) may shed light on whether there was a misuse of confidential information by the Committee or a member of the Committee. Even assuming for this purpose that whatever material is in the Salier affidavit evidences a breach of confidentiality of obligations, that is material to which Mr Weston appears already to have had access.

96 It seems to me that it is no more than speculation to assert that in the communications leading up to that affidavit there may have been a issue of confidential information otherwise than as evident from the affidavit as served. If what is sought is to ascertain whether confidential material was forwarded to Mr Salier in the context of the preparation of his affidavit, then this request seems to me to be too broad and to amount in effect to a fishing expedition. (If it is thought that particular documents were conveyed then the Notice could have sought those documents, for example.)

97 I therefore set aside paragraph 11(q) on the basis that I do not consider it to have sufficient relevance and it seems to me to be fishing. I see no legitimate forensic purpose in that request. Had the documents sought in these paragraphs been of sufficient relevance, I would nevertheless have considered it oppressive to require the production of documents that it has not been suggested would not properly be subject to a claim of legal professional privilege. (Insofar as Mr Glasson suggested that a list of the privileged documents should be produced so that the claim for privilege could be tested, that seems to me simply to highlight that what is sought here is a process of discovery, not the function of the procedure for the issue of notices to produce.)

Mr Salier’s communications with Baker & McKenzie – paragraph 14

14 All documents referring to or recording any communication in the period 1 September 2007 to 19 March 2010 between Mr Salier and Baker & McKenzie concerning any or all of the matters in paragraph 11(b) to 11(p) …

[those being matters being:

98 The objection to this category is the same as that for category 11(q), namely that it is oppressive for the Optus Group to be required to produce communications that can only be either privileged or irrelevant.

99 This paragraph seeks all documents referring to or recording any communication over a two and half year period between Mr Salier on the one hand, and Baker & McKenzie, concerning a variety of matters. It is said (and it seems to me likely) that the vast majority of any such documents will be subject to a claim of legal professional privilege. It is said by Mr Potts to be self evident given the significant period of time which this category covers that there are likely to be large numbers of documents that will need to be reviewed in order to produce in answer to this category.

100 In circumstances where Mr Potts maintains that there is no immediately apparent relevance of communications between Mr Salier and lawyers acting on behalf of either Optus or the Committee to justify the burdensome nature of such a broad category, this paragraph is said to be oppressive. Again, Mr Potts invokes the provisions of the Civil Procedure Act such as ss 56 and 57, as dictating against the requirement for production of this material.

101 Mr Glasson made the same submissions as made in relation to paragraph 11(q) in respect of this request. For the reasons set out above, I consider that this paragraph should also be set aside. Given the likely more extensive scope of documentation covered by this paragraph, it seems to me to be oppressive to require what is in effect a discovery process (by means of a list of privileged documents) in the context of the notice to produce procedure provided under the rules. I therefore set aside paragraph 14 of the SPL Notice.

Communications between Optus and Baker & McKenzie re Ms Phillips statement – paragraph 21

21 All documents referring to or recording any communication in the period 1 July 2009 to 11 November 2009 between Optus and Baker & McKenzie concerning the Phillips Statement or any draft thereof or the matters in 19(b) to (f) above.

102 Again, the objection to this paragraph is based on oppression, although the time period covered by this paragraph is less. It is said that given the terms of the category documents are likely to be privileged on their face and it is oppressive in the circumstances to require such production on the same basis as category 14.

103 Ms Phillips’ statement was tendered by Mr Glasson (Exhibit 3). Ms Phillips, in that document, describes herself as an employee of SingTel Optus Pty Limited. The statement, I am told, formed the basis of comments made to the meeting of creditors at which the no confidence motion was passed and Ms Phillips spoke in favour of that motion. That statement adverts to the reasons for Optus’ loss of confidence in Mr Weston, concentrating on three reasons: the ‘extraordinary’ amount of money incurred to that point; the fact that Mr Weston had not secured funding (and doubts were expressed as to the likelihood of funding); and Optus’ belief that Mr Weston had not been candid with the Committee and a misleading impression had been created in his reports to creditors in August and October 2009.

104 Relevantly, for present purposes, the statement refers to what is said to have occurred after a meeting arranged between Mr Weston’s Senior Counsel and solicitor, on the one hand, and the Committee’s Senior Counsel, on the other - namely that a request had been made for confidential access to certain correspondence which had been denied.

105 Mr Glasson points out that there is a much narrower time frame for this request and maintains that this paragraph is justified on the basis that Ms Phillips’ statement was relied upon at the creditors’ meeting at which the no confidence motion was passed; it goes to the question of loss of confidence and the basis for that loss of confidence; and it refers to a confidential meeting at which Ms Phillips was not present (which seems to be suggested gives some foundation for Mr Weston’s apparent concerns as to the use of confidential information by one or more members of the Committee).

106 Mr Glasson suggested that it could not be privileged to ask for communications or statements concerning this issue since Ms Phillips’ statement was put before the meeting. In that regard, I am not satisfied that simply because Ms Phillips relayed to the meeting of creditors what she had been told about the meeting in question that privilege is waived in any advice given in relation to that conversation. The statement made by Ms Phillips does not in terms appear to convey the substance of any legal advice as such. It simply communicates a belief as to what happened or an assertion as to what happened. True it is that is seems to be based on what Ms Phillips says she was told but it is not clear who told her that this had occurred. It might well be that the identity of who conveyed the information would determine how much weight could be placed on the making of the statement but that is not the issue. It might also be that the maintenance of a claim for privilege might at some later stage be inconsistent with reliance on the evidence of how Ms Phillips came to the view expressed at the meeting but it does not seem to me that this arises now. The basis on which privilege was said to be lost in any communication relating to that conversation was not identified by Mr Glasson.

107 That said, it does seem to me that documents in this category have potential relevance to the issue as to whether Mr Weston’s concerns or preoccupation with confidentiality were unfounded or unreasonable. Ms Phillips is or was an employee of Optus, not a member of the Committee. Mr Glasson raised the concern as to how an employee in her position, not being a member of the Committee and not having attended the meeting to which the statement referred, was in a position to come to know anything about the matters to which the statement referred. It was suggested that there must have been a breach of a confidentiality agreement for such information to have been passed to Ms Phillips and it was noted that Ms Phillips’ statement had been relied upon by Mr King in his affidavit as an explanation for matters of concern.

108 If so, is it oppressive to require the production of those documents (or at least the identification of those documents the production of which will then be resisted on the basis of privilege) at this stage? It seems to me that this paragraph falls in a different category in this regard to those considered above.

109 Given that the issue of the alleged use of confidential information is one of the central issues in the proceedings, communications which cast light on how Ms Phillips came to be privy to confidential information (if it is correct that the information was confidential) would seem to me to be of relevance to that issue and I am not satisfied that it is oppressive to require the production of what I would expect to be a relatively limited number of documents in this category (and for there then to be a claim of privilege tested in relation ot those documents).

110 In those circumstances I do not set aside paragraph 21 of the SPL Notice. I think it is for the Optus Group to maintain a claim for privilege in respect of identified documents falling within this category if it wishes to resist production of those documents.

Explanatory Memorandum

36 All documents referring to or recording any communication in the period 1 July 2009 to 11 November 2009 between Optus and the Committee (not including Ms Galloon) and/or Baker & McKenzie concerning the Explanatory Memorandum referred to in paragraph 6 of the King Affidavit or any drafts thereof (the “Explanatory Memorandum”).

37 All documents referring to or recording any communication in the period 1 January 2008 to date between Optus and the Committee (not including Ms Galloon) and/or Baker & McKenzie concerning the Explanatory Memorandum concerning any or all of the “grounds” or matters stated in paragraph 8 of the King Affidavit.

111 Mr Potts informed me that there is no objection to communications between the Optus Group and the Committee in relation to these matters being produced; just to the communications between the Optus Group/Committee and Baker & McKenzie. Again, the objection is based on oppression in relation to this being privileged material and again Mr Glasson made the same submissions as made in relation to paragraph 11(q).

112 Paragraphs 6 and 8 of Mr King’s affidavit, to which reference is made in the above paragraphs of the SPL Notice, appear under the heading “The Committee’s loss of confidence in Mr Weston” refer to an Explanatory Memorandum to Creditors said by Mr King to have been circulated at the request of the Committee and setting out the grounds on which the Committee had lost confidence in Mr Weston.

113 I have difficulty seeing how communications with Baker & McKenzie in relation to this material would not be privileged and, for the reasons set out earlier, I consider that it is oppressive in the circumstances for Mr Weston to seek, under the guise or by use of the Notice to Produce, what amounts to the process of discovery in respect of privileged material.

114 I set aside paragraphs 36 and 37 to the extent that they refer to communications between the Optus Group and/or the Committee on the one hand and Baker & McKenzie on the other hand.

Ambiguity – paragraphs 22/23

22 All documents referring to or recording the identity of the person or persons who were responsible for or undertook the “careful consideration of the facts” by Optus referred to in paragraph 8 of the Phillips Statement, including but not limited to documents recording what was considered or the result or conclusion of that consideration.

144 Mr Glasson points out that insofar as paragraph 28 of the Points of Claim asserts an unparticularised failure to take proper care in incurring legal expenses and supervising the performance of the work, based on the 75% calculation, the documents calling for “consideration” do not and cannot relate to those allegations. That is, it is said that the pleaded case is based on proportion, not any allegation of particular failure to take care in respect of any matter the documents sought.

145 Mr Potts points to the fact that Mr Weston says in paragraph 29(b) of his Points of Defence that he made “full disclosure” to the Committee and then to the court of the nature and extent of his claims for payment in respect of the tasks particularised in 29(i)-(v).

146 It seems to me that, where the reasonableness and proportionality or otherwise of the fees are matters clearly in issue and Mr Weston relies on the fact of approval (inter alios) by the Committee, the communications sought in paragraph 1 (and for that matter paragraphs 5 and 6, though subject to what I say below) of the Optus Notice are sufficiently relevant to allow for their production.

147 What I do not see as being sustainable is the request for production of the documents in 4(c)(i) and (ii). Mr Potts seemed to justify these by reference to the possibility that Mr Weston (while asserting the reasonableness of his fees) might have privately conceded them to be unreasonable. There is no suggestion that any such documents exist and Mr Weston’s subjective views about his charges (reasonable or otherwise) do not seem to me to be in issue. Therefore I set aside paragraphs 4(c)(i) and (ii) of the Optus Notice.

148 I deal with paragraphs 5 and 6 in the context of the other objection raised by Mr Glasson to these paragraphs – namely that the documents are sought for an impermissible purpose (ie for a collateral review or appeal from the decisions made by the court to approve various of those fees).

Collateral review or appeal

149 Mr Glasson submits that, as remuneration (other than for the period 1 October 2009 - 28 February 2010) has been the subject of approval either by the Committee or the court (as to the latter noting Onefone Australia Pty Ltd v One.Tel Ltd (In Liq) [2008] NSWSC 1335 and Onefone Australia Pty Ltd v One.Tel Ltd (In Liq); [2009] NSWSC 1231; (2009) 74 ACSR 716), and all of the legal expenses for which approval was sought by Mr Weston prior to 16 July 2009 have been approved either by the Committee or the court; to permit the Optus Group now to challenge Mr Weston based on the remuneration and expenses approved by the court (including by way of production of the wide range of documents sought) would impermissibly require a single judge to reopen and/or sit on appeal from the single judge who approved the remuneration and expenses. Mr Glasson submits that cannot be done (at least in the absence of any evidence of the previous orders having been obtained by fraud citing Leslie v Hennessy [2000] FCA 1532, at [17] per Drummond J (albeit in the context of an inquiry), upheld on appeal in Leslie v Hennessy [2001] FCA 371, at [12]).

150 As a general matter, it is submitted by Mr Glasson that where the conduct of the liquidator has been the subject of express or implied sanction by the court, and there is no allegation of fraud in procuring that circumstance, it is impossible for a loss of confidence reasonably to arise or that to assert such a loss of confidence is to mount a collateral appeal against the merits of the court’s determination. Such an inquiry being impermissible, it is said that the production of documents sought of relevance to such an inquiry is similarly impermissible.

151 In essence, what this argument seemed to be was that because various paragraphs of the Points of Claim were said to be objectionable and liable to be struck out, it would be oppressive for the Optus Group to maintain a Notice of Produce seeking documents relevant to those paragraphs.

152 This submission was made in circumstances where no strike out application had been made nor had it then been foreshadowed. (As far as I know, none has since been made, notwithstanding the professed willingness of Counsel for Mr Weston to engage in such an application on the spot). Indeed, I was informed at the close of submissions on the applications before me that there were no instructions at that stage to make any such application.

153 After the hearing of the application (without leave having been sought and after I had listed the matter for judgment on the present applications) further submissions were served on behalf of Mr Weston on this issue. I gave leave retrospectively for that to be done and permitted Mr Potts the opportunity of addressing those submissions in a supplementary set of written submissions.

154 In Mr Glasson’s further submissions, he reiterated that (insofar as paragraphs 30 and 31 of the Points of Claim referred to the “total” remuneration and legal expenses, respectively, and those totals were admitted, those paragraphs did not make all remuneration and expenses of the SPL in the period from December 2003 to date (as sought by the Optus Notice) relevant to the pleaded case (an argument I have already noted).

155 The further submissions went on to contend that, in the event that paragraphs 31 and 32 of the Points of Claim could be said to allege that all of the remuneration and expenses incurred in the period from December 2003 to date (that is each and every individual item or charge) is "unreasonable" or "not properly incurred", the Optus Notice was an impermissibly wide attempt at fishing and an abuse including because those paragraphs were liable to be struck out. Mr Glasson then acknowledged that there was no specific authority for or against the proposition for which he had contended during the hearing, namely that in exercising the jurisdiction to set aside a notice to produce the court could take into account the possibility that, so read, paragraphs 31 and 32 are liable to be struck out. Nevertheless Mr Glasson submitted that in principle this could be taken into account, referring to the power of the court to set aside a notice to produce as an incident of the inherent jurisdiction of the Court to regulate its processes and in particular to intervene in the case of an abuse process (Portal Software v Bodsworth, at [19], referring to Botany Bay Instrumentation and Control Limited v Stuart [1984] 3 NSWLR 98, at 100) and invoked the dictates of sections 56 - 58 of the Civil Procedure Act, which it was suggested might compel the court to do so (citing McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 308, at [30]).

156 Mr Glasson referred to Peter Hanne & Associates Pty Ltd v Village Life Limited [2008] FCA 719, where Jacobson J set aside a notice to produce which had been served in aid of a paragraph in a statement of claim which was his Honour had considered to be very general and liable to be struck out and to the reference there by Jacobson J (at [35] - [45]) to the observations of Young J (as his Honour then was) in Cadence Asset Management Pty Ltd v Concept Sports Ltd (2006) 58 ACSR 435, at [37] concerning pleadings of a high level of generality.

157 In Hanne, Jacobson J said (at [52] and [54]):

Nor is it an answer to say that the gaps in the pleading can be filled by allowing Hanne's Notice to Produce to go forward.

…

Here, the difficulty which arises is that the issues are not defined because the pleading is too general to enable that to occur. It is the pleadings which inform the question of the content of a valid Notice to Produce. It is not for Hanne to issue a Notice to Produce to find out what case it might be able to plead. That is not to say that in due course a Notice to Produce may still be impermissible. It will be a question of whether Hanne can plead a case appropriate to what is admittedly an early stage of the proceedings.

158 Mr Glasson submitted that similar considerations applied on this application so as to warrant the striking out of those paragraphs of the Optus Notice seeking all materials relating to remuneration and expenses, insofar as they rely on paragraphs 31 and 32 of the Points of Claim.

159 Mr Glasson also referred, in the context of what he contends are embarrassing pleadings, to McGuirk v The University of New South Wales [2009] NSWSC 1424, at [30]-[33].

160 In response, Mr Potts submits that the approach adopted by Mr Glasson involves an unduly restrictive reading of certain parts of the Points of Claim, which (it is said) must be read having regard to their function not as a conventional pleading but as a pleading of material facts said to enliven relevant statutory discretions of the court either to remove Mr Weston as special purpose liquidator or to order an inquiry into his conduct.

161 Reliance was placed on what was said by Young J (as his Honour then was) in Re Biposo Pty Ltd (1995) 17 ACSR 730, at 734, in the context of an application to remove a liquidator, and in the face of a submission that the particulars of matters said to justify removal needed to be considered one by one, namely:

The question is not whether in adversary litigation there has been proof of a case according to the heads particularised... but rather whether in the interests of the public the removal of liquidator would be for the general advantage of persons interested in the winding up?

his Honour rejecting a submission that the court was obliged to go through one by one the particulars given in that case as to the reasons why the liquidator should be removed.

162 Mr Potts submits that the determination of the challenges made to the respective Notices to Produce must take into account the issues revealed by the pleadings on their face (and contends that the paragraphs challenged are not liable to be struck out in any event).

163 Insofar as reliance was placed on Hanne, Mr Potts points out that this was principally a strike out application, in circumstances where the applicant had then sought to overcome the acknowledged gaps in the statement of claim by providing particulars but wished to do so after the respondent had answered a notice to produce. Not surprisingly, his Honour therefore made the comment that it was not for the applicant to issue a Notice to Produce to find out what case it might be able to plead.

164 It is submitted by Mr Potts, and it seems to me that there is force in this submission, that criticism of the kind levelled in Hanne and in Cadence could not properly be levelled at the Points of Claim in this case. Both these cases focussed primarily on apparent defects in pleadings.

165 Insofar as Mr Weston relied upon McGuirk in particular at [30]-[33], Mr Potts notes that Johnson J there stated the uncontroversial principle that “pleadings provide the structure upon which interlocutory processes, such as discovery, are governed” and Mr Potts submits that the pleadings also provide the structure upon which issues relating to a notice to produce will be governed. Mr Potts submits that nothing said at [30]-[33] is particularly novel or controversial, but merely recites conventional principles concerning the concept of embarrassment in a pleading sense. I agree.

166 In Onefone Australia Pty Ltd v Onetel Ltd [2009] NSWSC 1231; (2009) 74 ACSR 716, Barrett J considered an application by Mr Weston for approval of his remuneration for a stated period. His Honour referred to the views that had been espoused by the Committee in relation to the conduct of Mr Weston in the performance of his tasks as special purpose liquidator, noting that the necessary interaction and debate with the Committee had been exhausted and the process had broken down; and said at [10] and then from [16]:

[10] I had occasion in an earlier judgment to review the functions of a committee of inspection in a creditors voluntary winding up: see Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335 ; (2008) 69 ACSR 290. Such a committee has a statutory role to play in the fixing of remuneration but it has no power to direct a liquidator; nor is the liquidator bound to have regard to any directions the committee gives.

[16] The remuneration relevant to the application before me is for the period 1 May 2009 to 30 June 2009. The amount claimed is $61,502.98 (inclusive of GST). I am satisfied that, in the circumstances I have related, a question has arisen in the winding up which it is appropriate for the court to determine under s 511, that is, whether, in the absence of any determination by the committee of inspection under s 499(3) and in the face of the expressed inability of the committee to make such a determination, that sum should be paid to the special purpose liquidator as remuneration for that period.

[17] Having regard to the evidence presented by the special purpose liquidator in his affidavit of 14 August 2009 and the explanation in the letter of 23 October 2009 to which I have referred, I am satisfied:

(a) that the tasks listed in the three pages of narration in the WIP report 1 May to 30 June 2009 annexed to Mr Weston’s affidavit are tasks within and relevant to the due performance of functions of the special purpose liquidator;

(b) that that conclusion is strengthened and confirmed by the letter of 23 October 2009 from O’Neill Partners Commercial Lawyers to Baker & McKenzie; and

(c) that the charge-out rates applied to the several items are reasonable.

[18] The question that has arisen in the winding up is therefore answered:

The remuneration of Paul Gerard Weston, as special purpose liquidator of One.Tel Limited, for the period 1 May 2009 to 30 June 2009 is fixed in the sum of $61,502.98 (including GST) and Steven John Sherman and Peter John Walker, as liquidators, are justified in paying that remuneration out of funds available in the winding up.

[19] In addition, I order that the proper costs and expenses of Paul Gerard Weston, as special purpose liquidator, of and incidental to this application be paid out of funds available in the winding up.

167 In Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290, Barrett J had said, in relation to the liquidator’s right to recover expenses, at [46]:

Burns Philp Investment Pty Ltd v Dickens (No 2)

Grime Carter and Co Pty Ltd v Whytes Furniture (Dubbo) Pty Ltd

Corporations Act

48 For the purposes of s 556(1), a liquidator is a “relevant authority”. Expenses “properly incurred by a relevant authority” may fall within s 556(1)(a). To the extent that they do not (and are not “deferred expenses”), they fall within s 556(1)(dd); and if they are “deferred expenses” (an attribute of which is that the expenses be “properly incurred by a relevant authority”), they will be within s 556(1)(de)

49 These three provisions between them cover all expenses “properly incurred by a relevant authority”. The distinctions drawn by s 556(1) go only to the relativities among different types of “expenses properly incurred by a relevant authority” in the application of assets “in priority to all other unsecured debts and claims”.

Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd

Re Just Juice Corporation Pty Ltd

Re Beddoe

RWG Management Ltd v Commr for Corporate Affairs

Re Korda; Stockford Ltd

Mirror Group Newspapers plc v Maxwell (No 2)

168 Insofar as paragraphs 5 and 6 require the production of documents in relation to remuneration and expenses for the periods of time (being 1 May 2009 – 30 June 2009, as set out in Onefone Australia Pty Ltd v Onetel Ltd [2009] NSWSC 1231; (2009) 74 ACSR 716, at [18]; and March 2008 – June 2008, Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290, at [20]-[21]) which have already been found to be reasonable by Barrett J in Onefone Australia Pty Ltd v Onetel Ltd [2009] NSWSC 1231; (2009) 74 ACSR 716, at [18] and Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290, at [20]-[21] respectively, then it seems to me to be oppressive for the Optus Group to seek production of those documents (on the basis that those documents could only be relevant to an issue that has already been determined by his Honour) irrespective of whether that part of the pleading itself is liable to be struck out – particularly where the documentation in question may be extensive.

169 I therefore consider that paragraphs 5 and 6 should be read down so as to exclude periods for which remuneration and expenses have already been approved by Barrett J (being the periods of 1 May 2009 – 30 June 2009; Onefone Australia Pty Ltd v Onetel Ltd [2009] NSWSC 1231; (2009) 74 ACSR 716, at [18]; remuneration for March 2008 – June 2008 and certain expenses in the same period as set out in [20]-[21] of Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290).

Premature Inquiry

170 Finally, it is submitted that any inquiry as to the conduct of Mr Weston must take place separately from the removal application and that it is not appropriate for the Optus Group to seek production of all documents relating to remuneration and expenses for the whole special purpose liquidation when the inquiry sought by Optus would, if granted, cover precisely the same matters (and the order sought may well not be made).

171 Reference was made to what was noted by the Full Federal Court in Leslie v Hennessy, at [8], namely that s 536 of the Corporations Act “does not contemplate a detailed investigation of the whole of the liquidator’s conduct simply because a specific allegation of misconduct has been made”, an order for a general inquiry being a “very rare occurrence”. It is said that requiring production of the documents sought by the Optus Group in paragraph 1 (and paragraphs 4(a), 4(c)(i)-(ii), 5 and 6 in advance of the inquiry sought, would subvert that proposition. Mr Glasson points out that it cannot be that a general inquiry is held in order to determine whether there should be a general inquiry. (While I accept the force of that submission, if the documents are or may be sufficiently relevant for another purpose (such as the removal application) then I do not see why they cannot be sustained on that ground alone.)

Paragraph 2-transcripts etc of Committee meetings

2 All transcripts, audio recordings, long form minutes and short form minutes of Committee meetings

172 Insofar as paragraph 2 of the Optus Notice seeks all material, including transcripts and long and short form minutes, relating to Committee meetings for the whole period of the special purpose liquidation (ie December 2003 to date) it is said by Mr Glasson that it is impermissibly wide and oppressive (by way of discovery and fishing) and does not relate to any issue in the proceedings.

173 Mr Glasson points out that there is no specific Committee meeting referred to in either the May Outline or the Points of Claim concerning which any specific allegation is made or at all and that reference is made only to a ‘very few’ specific topics of possible discourse between the Committee and Mr Weston.

174 Records of the Committee meetings are said by Mr Potts to be relevant by reference, among other things to the issue raised by paragraph 50 of the Points of Claim as to the breakdown of the relationship between the Committee and Mr Weston. Mr Weston admits, in paragraph 50 of the Points of Defence, that the relationship has broken down and asserts a number of reasons for that breakdown.

175 Relevantly, in paragraph 51 of the Points of Claim the Optus Group has alleged that during the period of his appointment as special purpose liquidator, Mr Weston has conducted himself in a rude, hostile, unprofessional and adversarial manner. Mr Weston in effect, denies paragraph 51 of the Points of Claim, thus putting in issue the manner in which he has conducted himself.

176 Mr Potts noted that in the particulars to paragraph 17 of the Points of Defence, Mr Weston has referred to the “minutes of various committee meetings” and identified the meetings held on 2 April 2004; 19 May 2004 and 20 August 2004. Reference is made to paragraph 17(c)(iv) of the Points of Defence. Reference is also made to paragraph 27 of the Points of Defence in which Mr Weston has referred in a number of places to the remuneration being fixed or approved by the Committee of the court (see paragraph 27(1), 27(m); 27(n)(ii); 27(n)(iv) and 27(o)).

177 Insofar as paragraphs 50 and 51 of the Points of Defence seem to put squarely in issue the relationship between Mr Weston and the Committee, and the cause of the breakdown (and in particular the manner of Mr Weston, which one might reasonably expect to be evidenced by audio recordings of Committee meetings even if not necessarily evident from minutes of the meetings), I consider that records of the Committee meetings are relevant.

Paragraph 7 (b) – (c) – consideration of work necessary re litigation funding/likely return to creditors

178 Mr Potts submits that 7(b) goes to the matter raised by paragraph 27(i) of the Points of Defence and that 7(c) goes to the issue that arises by virtue of paragraph 40 of the Points of Claim, and item 1(a) of Schedule D, both of which are denied by Mr Weston (paragraph 40 of the Points of Defence).

179 Mr Glasson relies on what was said by Barrett J (and approved by the Court of Appeal in Deloughery v Weston [2010] NSWCA 148) in Onefone Australia Pty Ltd v One.Tel Ltd (in liq) [2009] NSWSC 1231; (2009) 74 ACSR 716, at [9], [11] and Onefone Australia Pty Ltd v One.Tel Ltd (in liq) [2010] NSWSC 498; (2010) 78 ACSR 163, at [13], [14])) in relation to funding and, in particular, that there is no reason why Mr Weston should share information about funding with the Committee which is not “some kind of supervisor whose consent must be obtained” (Onefone Australia Pty Ltd v One.Tel Ltd (in Liq) [2009] NSWSC 1231, at [9], [11]); that there is no provision of the Corporations Act which “requires that the special purpose liquidator inform or consult either the committee of inspection or the body of creditors on those aspects” (Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498 at [13]); and that funding matters do not come within any of the enumerated statutory powers of such a committee of inspection. Mr Glasson submits that this, coupled with the fact that a committee of inspection in a creditors voluntary winding up has no power to give directions to which the liquidator must have regard (referring to paragraphs [38] to [45] of the 12 December 2008 judgment [2008] NSWSC 1335), means that “it is for the special purpose liquidator alone to decide whether, and if so, to what extent the committee of inspection should be consulted by him on the matters in question. If his decision is to refrain altogether from consulting and to communicate to the committee only such information as he thinks fit in the due conduct of the administration committed to him, that is entirely a matter for him” (Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498, at [14]).

180 Mr Glasson submits that (after Deloughery v Weston) the Optus Group cannot justifiably rely on the failure of Mr Weston to provide the Committee or creditors with particular information concerning funding as a basis for a loss of confidence or any complaint at all because neither the Committee nor creditors are entitled to any such information and Mr Weston had the benefit of a specific direction that he was justified in not providing it.

181 Insofar as the Optus Group pleads that Mr Weston has “unreasonably refused” to disclose certain details concerning the Funding Agreement to the Committee and creditors (paragraph 22 Points of Claim), and Mr Weston has admitted the refusal (though providing a justification for that conduct), Mr Glasson says that this does not sustain the claim for documents of this kind. It is further said that the pleaded claim raises no positive case concerning funding, for example that Mr Weston could or should have obtained funding which would have given a better return to creditors. Therefore it is said that any “consideration” by Mr Weston is irrelevant to the pleaded case.

182 The allegation made against Mr Weston relates to the reasonableness or otherwise of his refusal to disclose matters in relation to the funding to the Committee. It is not made clear how the details of Mr Weston’s consideration of these matters is relevant to the reasonableness of him not making the details known to the Committee. I am therefore not persuaded that this category of documents is sufficiently relevant for there to be a legitimate forensic purpose for the production of the documents.

183 (Having said that I should say that insofar as it may be said that the finding by Barrett J that Mr Weston was not obliged to disclose certain matters to the Committee means that the Optus Group cannot now establish that it was unreasonable for Mr Weston in the circumstances to refuse to do so, it seems to me that there may well be a distinction to be drawn between a finding that Mr Weston had no obligation (and thus could not be compelled) to disclose matters and the formation of a view by the Committee or creditors that it was unreasonable for him to stand upon his legal rights not to do so. There would be nothing, I would have thought, to prevent Mr Weston (had he so chosen) to adopt the position that, though not compellable to do so, he would provide information to the Committee on a particular confidential or other basis. It seems to me that there is therefore an argument that a refusal to do so could give rise to an objectively justifiable loss of confidence. To test that proposition (and I raise this purely as a hypothetical), if Mr Weston was aware that the Committee had wrongly formed an opinion on a factual matter and one which, if left unconsidered, might lead to the incurring of additional and unnecessary costs, it might be thought unreasonable for him not to make a disclosure even if not obliged to do so.

184 However, I am not persuaded that the information sought within these paragraphs is maintainable since it seems to me that it is the fact of non-disclosure in the circumstances (not the consideration of what was or was not disclosed) that is relevant to the issue as pleaded.

185 I therefore set aside paragraphs 7(b) and (c).

Paragraphs 9 – 12 – claimed charges of defendant

9 All documents recording or evidencing the time spent by the defendants and his solicitors which they have sought to charge to One.Tel relating to the consultation between the defendant and Karin Krueger of KDK Media, a media consultant appointed by the defendant’s firm Pitcher Partners in respect of the special purpose litigation.

10 All documents recording or evidencing the time spent by the defendant and his solicitors which they have sought to charge to One.Tel relating to the conflict alleged by the defendant, in his supplementary report to creditors dated 29 October 2009, against Gary Phillips in his capacity as a member of the Committee including any investigations conducted by the defendant into the relationship between Mr Phillips and an insolvency practitioner called Mr Ariff.

11 All documents recording or evidencing the time spent by the defendant and his solicitors which they have sought to charge to One.Tel relating to the investigation of the rel;ationshuip between Optus (and/or the plaintiffs) and Publishing & Broadcasting Limited.

12 All documents recording or evidencing the time spent by the defendants and his solicitors which they have sought to charge to One.Tel relating to a notice issued by ASIC under section 30 of the Australian Securrities and Investments Commissions Act 2001.

186 As to these paragraphs, they are said to relate to the issue arising by virtue of paragraphs 29 and 30 of the Points of Claim and Points of Defence (including, for paragraph 9, particular (iv) to paragraph 29 of the Points of Claim; for paragraph 10, particular (i) to the said paragraph; for paragraph 11, particular (i); and for paragraph 12, particular (ii)).

187 Mr Glasson notes that these paragraphs seek material relating to several specific complaints made by the Committee about certain tasks included in Mr Weston’s claim for remuneration for the period from 1 October 2009 to 28 February 2010 that were rejected by the court.

188 Mr Glasson notes that on 1 October 2010 Barrett J held that Mr Weston was not entitled to claim remuneration for certain items (Onefone Australia Pty Ltd v One Tel Ltd (In Liq) [2010] NSWSC 1120 at [36] - [54]) and upheld 5 of the 6 complaints made by the Committee (particularised in paragraph 29 of the Points of Claim), though approving one item to which objection had been taken (defamation advice at [39] - [40] of the judgment). All that is said to be a matter of record and not in issue in the proceedings.

189 It is further said that since Mr Weston has “effectively” admitted paragraphs 29 and 30 of the Points of Claim, the documents cannot have any relevance or apparent relevance to any issue properly open in proceedings. However, the pleadings do not seem to go as far as Mr Glasson suggests.

190 In paragraph 29 of the Points of Claim it is alleged that Mr Weston has incurred and sought to charge to the winding up of the company remuneration for tasks which do not fall within the scope of his powers as ordered by the court from time to time. Particularised therein are a number of matters including investigation of the associations of members of the Committee; briefing and attendances on a media adviser and discussions with members of the press. (The paragraph noted that further particulars will be provided following the issue of notice/s to produce.) In answer to that paragraph it is said, amongst other things, that the court rejected these claims for payment (Mr Weston having admitted that he made claims for payments for tasks particularised in subparagraph (i) to (v) and that the court rejected those particular claims for the reasons specified in paragraph 29(d), (e), (f), and (g) of the Points of Defence).

191 What paragraph 29 of the Points of Defence does is make various assertions (including that full disclosure was made of the nature and extent of these claims for payment); to state that the court rejected those claims for payment for particular reasons; and Mr Weston otherwise does not admit paragraph 29.

192 The fact, if it be the case, that Mr Weston has sought to charge for services not falling within the scope of his court appointed powers (which is not in terms admitted), might go to the objective justifiability of the loss of confidence of the Committee and in those circumstances (the defence being so qualified), I consider there is a basis on which these documents are potentially relevant to that issue and therefore do not set these paragraphs aside.

Paragraph 13 – exploration of settlement options

13 All documents recording or evidencing any exploration by the defendant of settlement options in respect of the claims the subject of the Proceeding, including but not limited to:

(a) records of any meetings with the defendants to the Proceedings (including the meetings referred to in paragraph 24 of the Points of Defence);

(b) communications with the Committee regarding his settlement strategy referred to in subparagraph 24(c) of the Points of Defence; and;

(c) correspondence between the defendant and each of:

(i) the defendants to the Proceeding: in particular Publishing & Broadcasting Limited, Consolidated Press Holding Pty Limited and News Limited;

(ii) Mr Paul Lindholm of Phoenix Capital

193 Mr Potts says that this category relates to the issues arising by virtue of paragraphs 24 and 25 of the Points of Claim and Points of Defence, namely as to Mr Weston’s conduct in relation to settlement options and the allegation that he “unreasonably failed” to explore settlement options while at the same time seeking litigation funds.

194 Mr Weston does not seek to set aside sub-paragraphs 13(a), 13(b) or 13(c)(i) of the Optus Notice. However, he contends that the balance of paragraph 13 of the Optus Notice is too broad, relative to the pleaded case in paragraph 24 of the Points of Claim. Mr Glasson says that this should be limited to discussion of settlement options with the defendants to the RRI proceedings and not more generally. If that limitation is agreed, then the only objection he then presses is to sub-paragraph (c)(ii).

195 Paragraph 24 refers to the exploration of settlement option, with some or any of the “defendants to the RRI Proceedings”. Paragraph 25 is premised on that paragraph commencing “In all the circumstances”. Hence it is limited to exploration of settlement options with the RRI defendants. However, those options may have been explored with the assistance of other persons (perhaps such as Mr Lindholm).

196 By the introduction to paragraph 13 of the Optus Notice seeks all documents concerning the exploration by the SPL of settlement options, without limitation. Mr Glasson submits that it should be limited generally to exploration by Mr Weston of settlement options with the defendants to the RRI Proceedings (such that paragraph 13(c)(ii) is not and does not become relevant). I do not agree. The paragraphs are, in my view, properly to be read as limited to the exploration of options for the settlement of claims in relation to the proposed RRI defendants but I see no basis for them to be limited to discussions with those defendants.

Costs

197 As to costs, it is said by Mr Glasson that Mr Weston no longer seeks to set the Optus Notice aside in its entirety, on the basis of the principles concerning UCPR 21.10 stated in Norris v Kandiah [2007] NSWSC 1296, at [3] - [5] and Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 869, at [11] - [12]. It is said that while Mr Weston put the Optus Group on notice of the defective form of its notice on both 26 July 2010 and 20 August 2010, the Optus Groups only amended the Optus Notice on 15 November 2010 in that regard and that such delay should have consequences for costs at the appropriate time.

198 I will hear Counsel in relation to any costs applications consequent upon my decision on the respective applications, at a convenient time.

Orders

199 Accordingly, for the reasons set out above, I make the following orders in relation to the respective Notices to Produce.

(b) any memorandum of fees rendered by Baker & McKenzie in acting for the Committee, including but not limited to the “fees of the COI” referred to in paragraph 11(b) of the affidavit of Murray King sworn on 19 March 2010 that contains a narrative which describes the particular legal services provided by reference to the subject matter of those services and not simply a description of what was done on a particular date (such as the issue of a letter or the occurrence of a telephone attendance or conference or the like)

and I give leave for the documents within this category to be redacted in order to omit the amount of the fees so rendered.

2. I set aside paragraphs 2, 11(q), 14, 22, 23 and (to the extent that they refer to communications between the Optus Group and/or the Committee on the one hand and Baker & McKenzie on the other hand) paragraphs 36 and 37 of the SPL Notice.

5 All work in progress reports, time sheets, bills and invoices and any other documents which evidence or record the time spent in performing or fees and expenses charged on account of the work performed by the defendant [Mr Weston] in his capacity as special purpose liquidator of One.Tel (including but not limited to the work referred to in paragraph 17(c) and 18(b) of the Points of Defence) excluding for the period of March 2008 up to and including June 2008 and 1 May 2009 up to and including 30 June 2009.

6 All invoices and any other documents which evidence or record the defendant [Mr Weston]’s claims for expenses incurred in his capacity in his capacity as special purpose liquidator of One.Tel excluding for the period of March 2008 up to and including June 2008 and 1 May 2009 up to and including 30 June 2009.

5. I otherwise dismiss the Further Amended Interlocutory Process dated 26 November 2010 filed by Mr Weston and the Amended Interlocutory Process dated 1 December 2010 filed by the Optus Group.

6. I reserve the question of costs for further submissions.

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Citations

In the matter of One.Tel Ltd (in liq) - SingTel Optus Pty Ltd v Weston [2010] NSWSC 1491

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Cases Cited

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Statutory Material Cited

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Onefone Australia Pty Ltd v One.Tel Ltd [2003] NSWSC 1228

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Onefone Australia Pty Ltd v One.Tel Ltd [2003] NSWSC 1228

CITATION:	In the matter of One.Tel Ltd (in liq) - SingTel Optus Pty Ltd v Weston [2010] NSWSC 1491
HEARING DATE(S):	1 & 9 December 2010
JUDGMENT DATE :	22 December 2010
JURISDICTION:	Equity
JUDGMENT OF:	Ward J
DECISION:	Orders made setting aside and/or varying particular paragraphs in each of the respective Notices to Produce. Applications otherwise dismissed
CATCHWORDS:	PRACTICE and PROCEDURE - applications to set aside notice to produce issued in relation to plaintiff’s application for removal of special purpose liquidator - principles concerning when notices to produce will be set aside - HELD - both notices to produce set aside in part
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
CASES CITED:	Alister v R (1984) 154 CLR 404 Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1952) 72 WN (NSW) 250 Attorney-General (NSW) v Chidgey [2008] NSWCCA 65 Bengalla Mining Co Pty Ltd v Barclay Mowlem Construction Ltd [2001] NSWSC 93 Botany Bay Instrumentation and Control Limited v Stuart [1984] 3 NSWLR 98 Cadence Asset Management Pty Ltd v Concept Sports Ltd (2006) 58 ACSR 435 Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 1151 City & Suburban Pty Ltd v Smith (1998) 28 ACSR 328 Cosco Holdings Pty Limited v Commissioner of Taxation (1997) 37 ATR 432 Deloughery v Weston [2010] NSWCA 148 GB, by his tutor, FB v Western Sydney Area Health Service [2010] NSWSC 181 ICAP Pty Limited v Moebes [2009] NSWSC 306 ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307 Leslie v Hennessy [2000] FCA 1532 Leslie v Hennessy [2001] FCA 371 McGuirk v The University of New South Wales [2009] NSWSC 1424 McLaughlin v Dungowan Manly (unreported, 14 July 2009, NSWSC) McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 308 National Employers Mutual General Insurance Assn Ltd v Waind [1978] 1 NSWLR 372 National Employers Mutual General Insurance Assn Ltd v Waind (1979) 141 CLR 648; 24 ALR 86 Onefone Australia Pty Ltd v One.Tel Ltd [2003] NSWSC 1228; (2003) 48 ACSR 562 Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290 Onefone Australia Pty Ltd v One.Tel Ltd (In Liq) [2009] NSWSC 1231; (2009) 74 ACSR 716 Peter Hanne & Associates Pty Ltd v Village Life Limited [2008] FCA 719 Petrotimor Companhia de Petroleos S.A.R.L. v Commonwealth of Australia [2002] FCA 18 Portal Software v Bodsworth [2005] NSWSC 1115 Nicholls v Michael Wilson and Partners Limited [2010] NSWCA 100 R v Saleam (1989) 16 NSWLR 14 Re Biposo Pty Ltd (1995) 17 ACSR 730 Seven Network Ltd v Australian Competition and Consumer Commission [2004] FCAFC 267; (2004) 140 FCR 170 Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corp Ltd [1984] 1 NSWLR 710 Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 The Commissioner for Railways v Small (1938) 38 SR (NSW) 564; 55 WN (NSW) 215 Trade Practices Commissioner v Arnotts Ltd (1989) 21 FCR 306 Universal Press Pty Limited v Provest Limited (unreported, FCA, 14/07/89) White v Tulloch (1995) 127 FLR 105
PARTIES:	Singtel Optus Pty Ltd (First Plaintiff) Optus Networks Pty Ltd (Second Plaintiff) Optus Mobile Pty Ltd (Third Plaintiff) Optus Vision Pty Ltd (Fourth Plaintiff) Optus Insurance Services Pty Ltd (Fifth Plaintiff) Paul Gerard Weston in his capacity as Special Purpose Liquidator of One.Tel Ltd (in liq) (Defendant)
FILE NUMBER(S):	SC 10/071799
COUNSEL:	J A C Potts (Plaintiffs) R Glasson (Defendant)
SOLICITORS:	Baker & McKenzie (Plaintiffs) O'Neill Partners - Commercial Lawyers (Defendant)