Lowbeer v De Varda

[2016] FCCA 2890

FEDERAL CIRCUIT COURT OF AUSTRALIA

LOWBEER v DE VARDA [2016] FCCA 2890

Catchwords:
PRACTICE & PROCEDURE – Subpoena – objection – relevance – legitimate forensic purpose.

Legislation:

Federal Circuit Court Rules 2001 (Cth), pt.15A

Cases cited:
Marsh v Baxter (No 2) (2016) WASCA 51.
Adams v London Improved Motor Coach Builders Limited [1921] 1 KB 495
Angor Pty Ltd v Ilich Motor Co Pty Ltd [1992] FCA 348
Jack Brabham Engines Limited v Beare [2010] FCA 35
Dorajay Proprietary Limited v Aristocrat Leisure Limited [2005] FCA 588
Seven Network Limited v News Limited(no.11) [2006] FCA 174
Wingecarribee Shire Council v Lehman Brothers Australia Limited No. 4 [2010] FCA 1128
ICAP Australia Proprietary Limited v BGC Partners (Australia) Proprietary Limited [2009] NSWCA 307

Applicant: JOHN JOSEPH LOWBEER

Respondent: JOSEPH DE VARDA

File Number: SYG 2482 of 2015

Judgment of: Deputy District Registrar Ng

Hearing date: 6 June 2016

Date of Last Submission: 6 June 2016

Delivered at: Sydney

Delivered (ex temp) on: 6 June 2016

REPRESENTATION

Counsel for the Applicant: Mr B Skinner

Solicitors for the Applicant: David Austin Solicitors

Counsel for the Respondent: Mr J Nathan

Solicitors for the Respondent: Citilawyers

ORDERS

1. The Subpoenas issued by the Respondent to David Austin; Gaunt & Lowbeer Audit Pty Ltd and Gaunt & Lowbeer are set aside by consent.

2. The Subpoena issued by the Respondent to John Lowbeer and  Strathfield and Hebrew Congregation are set aside.

3. The costs are the costs of the Creditor’s Petition.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2482 of 2015

JOHN JOSEPH LOWBEER

Applicant

And

JOSEPH DE VARDA

Respondent

REASONS FOR JUDGMENT

1. This is an objection to 5 subpoenas issued on behalf of the respondent Mr De Varda in this matter of SGY2482/2015.  For the reasons identified below, the 5 subpoenas are set aside.

HISTORY

1. This history can be briefly summarised.  A Certificate of Taxation was issued by the Court in the matter of NSD13/2014 for the amount of $14,900 against three respondents, Joseph De Varda, David Cliffe and Samuel Tov-Lev.  That happened on 13 August 2015. It followed a costs order made by Rares J in that particular matter on 11 March 2014.

2. A Bankruptcy Notice was then issued on 18 August 2015 against the three aforementioned Respondents. This Bankruptcy Notice (number 183864) relied upon the Certificate of Taxation issued in the amount of $14,900 on 13 August 2015.  The Bankruptcy Notice (number 183864) was served on Mr De Varda (‘the Respondent”) on 18 August 2015. Counting 21 days from that date, on 8 September 2015 the Act of Bankruptcy would have been deemed to have occurred.

3. A Creditor’s Petition was then presented in the Registry on 9 September 2015. It was then listed before this court for the first court date on 20 October 2015.

4. It was then before District Registrar Wall on 20 October 2015.  The District Registrar made timetabling orders for a notice of opposition to be filed and served by 30 October 2015.  He also made orders for the Creditor’s Petition to be served on the Respondent, as there was a dispute as to whether he had in fact received it by way of service.

5. The matter was then adjourned to 3 November 2015 where it was before me as the presiding Registrar. On that date, a Notice of Opposition was filed.  So that there was no ambiguity regarding service, the Creditor’s Petition was served in the courtroom on the Respondent and also on Rabbi Tov Lev and Mr Cliffe. At the request of the parties, the Notice of Opposition and the Creditor’s Petition was referred to a Judge. The matter was listed for a directions hearing was before Judge Nicholls on 16 December 2015.

6. In the meantime, on 8 December 2015 the Respondent issued five subpoenas, which he is entitled to do without having to seek leave of the Court: rule 15A.05 Federal Circuit Court Rules. They were respectively to:

   (1) the applicant’s solicitor David Austin;

   (2) John Lowbeer;

   (3) the Proper Officers of Caunt and Lowbeer Proprietary Limited;

   (4) the Proper Officer of Caunt and Lowbeer Audit Proprietary Limited; and

   (5) the Proper Officer of the Strathfield District Hebrew Congregation.

7. Initially, the first four subpoenas respectively sought documents for a period ranging between 1 January 2010 and 30 September 2015. The fifth subpoena sought documents relating to the period 1 January 2010 to 30 November 2015.

8. On 16 December 2016, the parties appeared before Judge Nicholls where objections to the subpoenas were ventilated. His Honour referred the hearing of these objections before a Registrar.

9. On 29 February 2016, objections were filed to the 5 subpoenas by the subpoenaed parties.

10. The matter was then before Registrar Tesoriero on 8 March 2016, where he listed it to a date to be fixed. The matter is now listed today before me to determine the objections to the subpoenas which were filed on 29 February 2016. The matter is next listed before Judge Dowdy on 11 November 2016 for hearing.

11. At the outset of the hearing, Mr Nathan, Counsel for the Respondent handed up proposed consent orders which firstly, did not press the subpoenas issued to Caunt and Lowbeer Proprietary Limited; Caunt & Lowbeer Audit Proprietary Limited; and David Austin. This was not opposed by the Applicant and accordingly I have set them aside.

12. There are 2 remaining subpoenas to be dealt with: one to Mr Lowbeer; and one to the Proper Officer of the Strathfield District Hebrew Congregation.  In relation to those two subpoenas, the Respondent presses these subpoenas but has narrowed both the scope and the date range. However he has also sought leave to extend the subpoena to include documents relating to a separate Certificate of Taxation which Counsel for the Respondent submitted related to costs orders made by Judge Driver in related proceedings. After interrogating the Registry’s computer database from the Bench, it was ascertained that Counsel for the Respondent was referring to a Certificate of Taxation issued after a cost order made by Nicholas J in a separate decision, and not by Judge Driver.

13. In his proposed orders, the date range has been firstly reduced to 1 January 2015 to the present (whereas the original subpoenas sought documents dating from 1 January 2010 to 30 November 2015). What is now sought by Respondent are:

    “(a) all documents recording or relating to the right of The Strathfield & District Hebrew Congregation (Synagogue) to subrogate into the rights of the Applicant from 1 January 2015 to date; and

    (b) any documents recording or relating to payments made by or on behalf of the Synagogue to the Applicant in relation to or referred to or associated with the costs order made by Rares J on 11 March 2014 in Federal Court Proceedings NSD 130 of 2014 from 1 January 2015 to date.”

    As identified above, the costs order made by Rares J on 11 March 2014 ultimately led to the certificate of taxation for the amount of $14,900.

14. In oral submissions, Counsel for the Respondent sought to also extend the subpoenas to the Strathfield & District Hebrew Congregation to also include documents relating to a costs order he believed were made by Judge Driver which led to a Certificate of Taxation being issued for the amount of $60,900. As I indicated earlier, this was an erroneous assumption, as this costs order was in fact made by Nicholas J of the Federal Court in proceedings NSD84/2014 (and not Judge Driver).

15. On behalf of the Applicant, Mr Skinner of Counsel opposes the production of the documents still sought on behalf of the Respondent in the remaining 2 subpoenas and extending the subpoena in the terms described in paragraph 15. In support of his objection, the Applicant relies on the affidavit of David Austin (who is the solicitor for the Applicant) filed on 3 June 2016, and on the authority of Marsh v Baxter (No 2) (2016) WASCA 51.

16. In the affidavit of Mr Austin, which is now read, he adopts and confirms the truth and accuracy of a concession he made when the matter was last before Judge Nicholls on 16 December 2015. Both in Court on that date and again in his filed affidavit, Mr Austin conceded that the petitioning creditor has acknowledged that his legal fees had been met by the Strathfield and District Hebrew Congregation pursuant to an indemnity contained in clause 116 of the Articles of Association of that entity. 

17. In paragraph 11 of his Affidavit, Mr Austin goes on to describe in some detail how some of the legal costs incurred previously by Mr Lowbeer have been dealt with, including that a portion of the $61,847 incurred by his previous solicitor, Mr Peter Arnott, has either been recovered by a payment of $13,635.12 from the Strathfield and District Hebrew Congregation and the balance of $48,212 by way of a distribution from the Trustee in Bankruptcy for the Bankrupt Estates of Mr De Varda, Rabbi Tov-Lev, and Mr Cliffe or about July 2015. This arose from a sequestration order previously made by Judge Driver in the Federal Circuit Court.  Annexed to that Affidavit are corroborative documents, all of which has been served on the Respondent’s solicitor.

18. Mr Skinner has taken me to the case of Marsh v Baxter (No 2). He relies on paragraph 28 onwards and the authorities cited therein, particularly the case of Adams v London Improved Motor Coach Builders Limited [1921] 1 KB 495 at paragraph 32, and also a number of cases cited in paragraph 33, where the principle is succinctly summarised by French J (as his Honour then was), in the case of Angor Pty Ltd v Ilich Motor Co Pty Ltd [1992] FCA 348. In that case, French J stated that the decision in Adams (supra) is clear authority for the proposition that the indemnity principle would permit recovery of costs by a successful party who is under a legal liability to solicitors to pay them, even though the likelihood of being called upon to do so is remote.

19. Mr Skinner submits that the principle of subrogation means that even if the legal costs have previously been paid by way of an indemnity, it doesn’t stop these proceedings – that is, the Creditor’s Petition – from proceeding, and that the authority of Marsh (supra) and other related decisions is consistent with that principle.

20. Mr Nathan, on behalf of the respondent, submits to the contrary. He submits that his client is entitled to documents which relate to how the question of the legal costs were paid in the time period specified now in this proposed short minutes of order.  His submissions in that regard are now transcribed and on the record, and I need not repeat them, other than to say that his instructions are that they are relevant towards his client defending the Creditor’s Petition.

THE RELEVANT AUTHORITIES

1. A number of legal principles have been referred and established as to when subpoenas should be issued.  The authorities make it clear that a subpoena must only be issued for a legitimate forensic purpose and, as a corollary, may be set aside where the subpoena has not been issued for a legitimate forensic purpose. Various Judges of the Federal Court have considered this in a number of cases, and it would be helpful to turn to those principles.

2. In the case of Jack Brabham Engines Limited v Beare [2010] FCA 35, Jagot J held that it must be of apparent relevance to the issues in dispute in the proceedings.

3. In Dorajay Proprietary Limited v Aristocrat Leisure Limited [2005] FCA 588, Stone J held that it would be relevant if it could reasonably be expected to throw some light on some of the issues in the proceedings. The question turns to whether it was reasonably expected to illuminate any issue that might reasonably be raised on the pleadings. Stone J concluded that in order to satisfy the apparent relevance or legitimate forensic purpose test, it was necessary for the Court to first enquire and be satisfied that the documents called upon sufficiently relate to the issues between the parties as defined in the pleadings before deciding whether it was “on the cards” (or reasonably likely) that the documents will materially assist the case.

4. In Seven Network Limited v News Limited(no. 11) [2006] FCA 174, Sackville J held that that question of legitimate forensic purpose would be satisfied if they are reasonably likely to add, in the end, in some way or other to the relevant evidence in the case.

5. In Wingecarribee Shire Council v Lehman Brothers Australia Limited No. 4 [2010] FCA 1128, Rares J held that it is sufficient that the documents called for under the subpoena may throw some light on the validity of the pleaded allegations or may either confirm or negate those allegations.

6. The State jurisdictions have been equally consistent in determining the question of relevance. For example, in ICAP Australia Proprietary Limited v BGC Partners (Australia) Proprietary Limited [2009] NSWCA 307, the NSW Court of Appeal described the principle as whether “it’s on the cards that the documents will materially assist the case”. In a joint judgment, Tobias JA, Basten JA, and Handley AJA held that a subpoena may also be set aside on grounds if it is fishing, if the party who calls for the documents does not suppose that the documents, if they exist, would be likely to materially assist on any issue identified on the pleadings.

7. The authorities are well established that a narrow view of the relevance of subpoena documents should not be taken, and nor should the issues be defined too narrowly or precisely so as to cause injustice.  These principles, I think, neatly summarise the appropriate tests I need to apply in relation to the remaining two subpoenas.

8. As I already indicated when considering the history of this matter, this Creditor’s Petition is proceeding in relation to a debt of $14,900 which arose from a Certificate of Taxation which was issued by a Registrar on 13 August 2015 following an order for costs made by Rares J (NSD130/2014). 

9. Applying the principles identified in the aforementioned authorities, I am of the view that the explanation sought in the 2 subpoenas that Counsel for the Respondent debtor now presses has more than adequately been explained in the Affidavit of David Austin. 

10. In my view, the documents sought in those 2 subpoenas (as articulated in the Respondent’s proposed Orders referred to in paragraph 14 above) do not add anything to the proceedings relating to the Creditor’s Petition.  If the Respondent Debtor is seeking clarification about why the debt is still being pursued, I am satisfied that the Affidavit by Mr Austin has more than adequately addressed that question. In this regard, one of the annexures to the Affidavit includes clause 116 of the Articles of Association, which makes it abundantly clear that although the Strathfield Hebrew District Congregation has agreed to indemnify the legal costs, the case of Marsh (supra) makes it plain that those costs can still be sought and pursued. As I understand the submission made on behalf of the Applicant, this is what the Creditor’s Petition is seeking to recover by way of bankruptcy proceedings.

11. Dealing with the Respondent’s oral application to widen the subpoenas so that they include documents relating to NSD84/2014 (relating to a Certificate of Taxation for $60,690), it has been established that the present Creditor’s Petition does not have any bearing on that Certificate of Taxation. Accordingly I would refuse leave to amend the subpoena in the terms sought by the Respondent. 

12. The question of whether the Notice of Opposition, which is yet to be determined or adjudicated by a Judge of this Court, has any merit is not a matter for me to decide. However I am not satisfied, based on the principles I have just referred to, that the documents sought under the remaining 2 subpoenas (in its proposed amended form) will advance the defence of the Respondent.

13. Accordingly, I make the following orders:

    1.The Subpoenas issued by the Respondent to David Austin; Gaunt & Lowbeer Audit Pty Ltd and Gaunt & Lowbeer are set aside by consent.

    2.The Subpoena issued by the Respondent to John Lowbeer and  Strathfield and Hebrew Congregation are set aside.

    3.The costs are the costs of the Creditor’s Petition.

I certify that the preceding thirty four (34) paragraphs are a true copy of the reasons for judgment of Registrar Chuan Ng.

Date: 7 November 2016