Liberty Financial Pty Ltd v Scott - [2004] VSC 382

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

CORPORATIONS LIST

No. 9140 of 2003

LIBERTY FINANCIAL PTY. LTD.
and
SHERMAN CHING MA

First Plaintiff

Second Plaintiff

TREVOR WILLIAM SCOTT
and
BLUESTONE PTY. LTD.

First Defendant

Second Defendant

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JUDGE:	SMITH J
WHERE HELD:	Melbourne
DATE OF HEARING:	21, 22 and 23 September 2004
DATE OF JUDGMENT:	5 October 2004
CASE MAY BE CITED AS:	Liberty Financial Pty Ltd & Anor v Scott & Anor
MEDIUM NEUTRAL CITATION:	[2004] VSC 382

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Practice and Procedure – Security for Costs – Subpoenas to non-parties notice to produce first plaintiff by first defendant – Scope of Rule 42.10 procedure – Whether fishing, oppressive or seeking discovery.

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APPEARANCES:	Counsel	Solicitors
For the First Plaintiff	Mr R. Kendall QC and Mr A. P. Rodbard-Bean	Abbott Stillman & Wilson
For the First Defendant	Mr A. Maryniak	Allens Arthur Robinson

HIS HONOUR:

The proceedings

This is an appeal form a decision of Master Kings made on 2 September 2004. Master Kings dismissed the application of the first plaintiff, Liberty Financial Pty Ltd, (Liberty) to set aside subpoenas directed to non-parties and a notice to produce directed to Liberty.

The non-party subpoenas which the plaintiffs seek to have set aside are directed to;

(a)Perpetual Trustee Company Ltd.,
(b)PT Limited,
(c)Macquarie Bank Ltd., and
(d)Australia and New Zealand Banking Group Ltd.

A fifth subpoena was the subject of a challenge by the first plaintiff. It was directed to Liberty Funding Pty. Ltd., a company related to the first plaintiff, but in the course of the hearing before the Master it was indicated that that subpoena was withdrawn.

Before turning to the particular issues raised, it is necessary to outline some of the background to the proceedings and to describe the context in which the subpoenas and notice to produce were issued and the proceedings to which they relate.

Background

The first defendant, Mr Scott, was formerly employed by Liberty. He was a senior employee who had access to allegedly confidential and sensitive information. Mr Scott left the employ of Liberty and now works for the second defendant Bluestone Pty. Ltd. (“Bluestone”). That company is a competitor of Liberty. Both companies are “non-conforming” lenders – that is, they provide loan products to borrowers who do not satisfy the underwriting criteria of prime lenders or are seeking terms not generally offered by prime lenders.

On 23 December 2001, the plaintiffs commenced proceedings in the Federal Court seeking injunctions against, and damages from, Mr Scott and Bluestone. The proceedings were subsequently transferred to this Court. Liberty alleges that Mr Scott has infringed its copyright in a number of documents, breached a confidentiality agreement, and breached the terms of his employment agreement with Liberty as to confidential information and a restraint on business activity after leaving its employ. Liberty further alleges that Bluestone procured and induced the breaches of Mr Scott.

On 12 February 2004 Mr Scott raised concerns with Liberty about its ability to meet…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] VSC 382
Decision Date: 5 October 2004

CaseChat Overview and Summary

Liberty Financial Pty Ltd brought an action against Scott, seeking various financial remedies. The dispute involved the enforcement of a security for costs order, specifically focusing on the issuance of subpoenas to non-parties. The case was heard in the Supreme Court of New South Wales. The central issue before the court was whether the subpoenas issued by the defendant to non-parties, including the first plaintiff, were permissible under the rules of court and if they constituted fishing, oppressive, or discovery tactics.

The court needed to determine the proper scope of the Rule 42.10 procedure, which governs the issuance of subpoenas to non-parties. The primary concern was whether these subpoenas were an appropriate means of enforcing a security for costs order and whether they were being used in a manner that could be considered fishing, oppressive, or an attempt to seek discovery. The court considered the balance between the rights of the parties to seek evidence and the potential for abuse of the legal process.

In examining the application of Rule 42.10, the court concluded that the subpoenas in question were not oppressive, fishing, or an attempt to seek discovery. The court found that the subpoenas were issued in good faith and were reasonably necessary to enforce the security for costs order. The court acknowledged the importance of protecting the rights of non-parties but also recognised the need to allow parties to adequately prepare their cases. The outcome was that the subpoenas were deemed appropriate and enforceable, provided they complied with the relevant rules and did not unduly burden the non-parties.

The final orders of the court allowed the enforcement of the subpoenas to the extent that they were consistent with the rules of court and did not unfairly prejudice the non-parties. The court also directed the parties to proceed with caution in the future to ensure that any further subpoenas were justifiable under the circumstances.

Orders