FEDERAL COURT OF AUSTRALIA
Kaboko Mining Limited v Van Heerden [2016] FCA 1532
File number: WAD 403 of 2016 Judge: MCKERRACHER J Date of judgment: 15 December 2016 Catchwords: PRACTICE AND PROCEDURE – interlocutory application to set aside subpoena – where subpoena complied with – whether documents produced in response to the subpoena have apparent relevance Legislation: Federal Court Rules 2011 (Cth) rr 24.15(1), 24.20(3) Cases cited: Adelaide Steamship Co v Spalvins (1997) 24 ACSR 536
Anderson Formrite Pty Ltd v Hornibrook Pty Ltd (No 3) [2009] FCA 273
Apache Northwest Pty Ltd v Western Power Corporation (1998) 19 WAR 350
City of Sydney v Streetscape Projects (Australia) Pty Ltd [2011] NSWSC 364
Gloucester Shire Council v Fitch Ratings Inc [2016] FCA 587
Horizontal Falls Adventure Tours Pty Ltd v Thomas [2009] FCA 639
Mandic v Phillis (2005) 225 ALR 760
National Employers' Mutual General Insurance Association Ltd v Waind [1978] 1 NSWLR 372
Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corporation Ltd [1984] 1 NSWLR 710
Date of hearing: 27 October 2016 Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 36 Counsel for the Plaintiff: Ms K M McNally Solicitor for the Plaintiff: Clayton Utz Lawyers Counsel for the First to Third Defendants: The First to Third Defendants did not appear Counsel for the Fourth Defendant: Mr G O'Shannessy Solicitor for the Fourth Defendant: Murcia Pestell Hillard Lawyers ORDERS
WAD 403 of 2016 BETWEEN: KABOKO MINING LIMITED ACN 107 316 683 (SUBJECT TO A DEED OF COMPANY ARRANGEMENT)
Plaintiff
AND: ANDRIES TOBIAS VAN HEERDEN
First Defendant
JANE ROSEMARY FLEGG
Second Defendant
SHANNON JAYNE ROBINSON (and another named in the Schedule)
Third Defendant
JUDGE:
MCKERRACHER J
DATE OF ORDER:
27 OCTOBER 2016
THE COURT ORDERS THAT:
1.The interlocutory application filed 19 October 2016 be dismissed.
2.The fourth defendant pay the costs of the plaintiff in relation to the interlocutory application, to be assessed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MCKERRACHER J:
A subpoena to produce documents addressed to Mr Joseph Carbone was issued in these proceedings on 13 September 2016 (subpoena). Mr Carbone complied with the subpoena soon thereafter. The fourth defendant, Mr Brewer, applied for the subpoena and orders for inspection to be set aside. I dismissed this application on 27 October 2016 for the reasons that follow.
BACKGROUND
By its initiating application, the plaintiff (Kaboko) alleges that the defendants breached the statutory and fiduciary duties owed by them to Kaboko.
The statement of claim may be summarised as follows:
(a)The defendants are directors or former directors of Kaboko, which is a listed company that represents itself as a manganese exploration, development and mining company. They each owed statutory, fiduciary and general law duties to Kaboko.
(b)The first defendant is or relevantly was a director of Impondo Mining and Resource Consultants Pty…
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- AGLC
- Kaboko Mining Limited v Van Heerden [2016] FCA 1532
- Case
- [2016] FCA 1532
- Decision Date
CaseChat Overview and Summary
The court found that the subpoena had not been issued prematurely, as the respondent had acknowledged the need for a large-scale document review at an early stage of the proceedings. Furthermore, the court held that once a subpoena has been complied with, questions of its precision are irrelevant. The court also rejected the argument that the produced documents were irrelevant, finding that the emails were at least apparently relevant due to their period, the parties involved, and the content concerning the management of Kaboko.
Accordingly, the court dismissed the applicant's interlocutory application and ordered the respondent to pay the applicant's costs in relation to the application. The court held that the documents produced in response to the subpoena had at least apparent relevance to the issues in dispute and that the subpoena had been complied with, warranting the grant of inspection. The court emphasised that the considerations regarding inspection of documents already produced to the Court are different from the considerations relevant to whether a subpoena should be set aside. The court's decision highlights the importance of complying with subpoenas and producing documents that are apparently relevant to the issues in dispute.
Orders
Orders of the court
1. The interlocutory application filed 19 October 2016 be dismissed.
2. The fourth defendant pay the costs of the plaintiff in relation to the interlocutory application, to be assessed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Accordingly, Mr Brewer says that these emails are plainly not relevant to the exercise of proving or disproving the issues arising in the statement of claim nor could documents falling within the scope of the subpoena ever result in the production of documents that are relevant.CONSIDERATIONIssue 1: The subpoena was issued prematurely The submission that the subpoena was issued at a very early and unusual stage of the proceeding cannot be maintained in light of the fourth defendant's own statement (in the context of the fourth defendant's request for $150,000 security for costs up to discovery) that:As you would be aware, claims of the type made by Kaboko necessitate a large-scale document review at an early stage of proceedings. For all the usual reasons and because of the front-loaded nature of the work to be undertaken by us, we say that the substantive proceeding should not proceed against our client unless and until your client has given appropriate security. The subpoena has been issued and complied with. The considerations regarding inspection of documents already produced to the Court are different from the considerations relevant to whether a subpoena should be set aside, as discussed further below.Issue 2: The subpoena is not sufficiently precise Once complied with, questions of the breadth of a subpoena are irrelevant. In City of Sydney v Streetscape Projects (Australia) Pty Ltd [2011] NSWSC 364, Einstein J held (at [23] and [29]):23 In respect of Mr Collins first argument in JDC-2 concerning the ambiguity and broadness of paragraph 3, it was submitted that since the Commonwealth Bank did not object on this basis and actually produced the relevant documents, the argument is clearly wrong. ...29 As for the subsidiary objections relating to the broadness of the subpoena and confidentiality, I accept Mr Bova 's submissions. The Commonwealth Bank has complied with the subpoena and therefore the broadness argument is no longer a live issue. ... The fourth defendant relies upon Adelaide Steamship, which concerned an application to set aside a subpoena. In contrast, in the present case, the subpoena has already been complied with. The only potential harm from inspection is that Kaboko incurs the time and cost of inspecting 11 bundles of emails.Issues 3 and 4: Relevance Kaboko agrees that Mr Carbone's assessment of relevance is irrelevant. The assertion that the subpoena constitutes a fishing expedition overlooks the unusual circumstance in this case, being that Mr Carbone initially approached the solicitors that issued the subpoena. The issues in this action concern the management of Kaboko by its officers, divided into four broad claims that are described by Kaboko as the:(a)permitted use schedule claim;(b)books and records claim;(c)mining licences claim; and(d)third party sales claim. The emails are at least ‘apparently relevant’ for reasons including:(a)the action concerns matters from 2011 onwards, and the emails are in the period 2011 to 2015;(b)the emails are between Mr Carbone and Kaboko officers, including the first and fourth Defendants; and(c)Mr Carbone has indicated that the emails concern the management of Kaboko, including mismanagement of money. Mr Carbone has also referenced matters pertaining to the third party sales claim. These relate to the claims set out above.