Macks v Tuck & Ors & QBE Insurance (Australia) Ltd (No.4)
[2007] SASC 255
•6 July 2007
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
MACKS v TUCKER & ORS & QBE INSURANCE (AUSTRALIA) LTD (NO.4)
[2007] SASC 255
Judgment of The Honourable Justice Bleby
6 July 2007
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT
SUBPOENA TO PRODUCE DOCUMENTS - APPLICATION TO SET ASIDE
Issue of subpoena by first and second defendants to non-party - Application by non-party to have subpoena struck out - Whether non-party is a “bank” for the purposes of s 50 of the Evidence Act 1929 (SA) - Consideration of effect of State Bank of South Australia Act 1983 (SA) and State Bank (Corporatisation) Act 1994 (SA) - Whether plaintiff entitled to be heard on application by non-party to strike out subpoena - Consideration of r 60 of the Supreme Court Rules 1987 - Whether subpoena amounts to non-party discovery - Whether precluded by failure to apply for further and better discovery and non-party discovery - Whether issue of subpoena a “fishing” exercise and consideration of relevance of material sought to be produced - Whether subpoena oppressive - Subpoena directed to non-party set aside.
Supreme Court Rules 1987 r 58A, r 60; Supreme Court (Civil) Rules 2006 r 146; Evidence Act 1929 (SA) s 46, s 47, s 49, s 50; State Bank of South Australia Act 1983 (SA) s 6, s 6A, s 19, s 25, s 35, Part 6; State Bank (Corporatisation) Act 1994 (SA), referred to.
Hunt v Judge Russell and de Pinto (1995) 63 SASR 402; Rivers v Rivers (2004) 235 LSJS 360; National Employers' Mutual General Association Ltd v Waind & Hill [1978] 1 NSWLR 372; Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No.5) [2001] SASC 335; Alister v The Queen (1984) 154 CLR 404; Trade Practices Commission v Kimberley Homes Pty Ltd (1989) 217 ALR 110; Andrew Garrett Wine Resorts & Anor v National Australia Bank Limited (No.6) (2005) 92 SASR 419, applied.
Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98; Territory Insurance Office v Kouimanis Enterprises Pty Ltd (2002) 171 FLR 425; Commissioner for Railways v Small (1938) 38 SR (NSW) 564; Burchard v McFarlane [1891] 2 QB 241; Australian Competition & Consumer Commission v The Shell Co of Australia Limited (1999) 161 ALR 686; Harris Scarfe Ltd (Receivers and Managers Appointed) (in liq) v Ernst & Young (No.4) (2005) 93 SASR 300; Burmah Oil Co Ltd v Bank of England [1980] AC 1090; Air Canada v Secretary of State for Trade [1983] 2 AC 394, considered.
MACKS v TUCKER & ORS & QBE INSURANCE (AUSTRALIA) LTD (NO.4)
[2007] SASC 255BLEBY J:
The plaintiff is the trustee of the bankrupt estate of James Alistair McGregor deceased, who died on 11 December 1990. The first defendant is a solicitor. The second defendant is the trustee of the first defendant’s family trust. The other defendants are firms of solicitors of which the first defendant was a member at various times. In the action, the plaintiff alleges various breaches of fiduciary and contractual obligations on the part of the defendants in their dealings with Mr McGregor when he was alive and with his estate. A third party as insurer of the solicitors has been joined.
The action has not yet been set down for trial and a number of steps are yet to be taken before that is possible. Nevertheless, a timetable has been put in place for the completion of those steps, with a trial estimated to commence during the first half of 2008.
South Australian Asset Management Corporation (“SAAMC”) is a statutory Corporation previously known as the State Bank of South Australia. The first and second defendants have issued a subpoena to SAAMC to produce the following documents:
1.All documents recording or evidencing the indebtedness of James Alastair (sic) McGregor, whether directly or by way of guarantee, to South Australian Asset Management Corporation (whether under its own name or former name State Bank of South Australia) (“SAAMC”) in the period from 1 January 1990 to 17 February 1997.
2.All documents recording or evidencing the indebtedness of James Alastair McGregor, whether directly or by way of guarantee, to Beneficial Finance Corporation Limited (“BFCL”) in the period from 1 January 1990 to 17 February 1997.
3.All documents created or dated in the period between January 1990 to 17 February 1997 recording or evidencing a decision by SAAMC to seek the bankruptcy of the Deceased Estate of James Alastair McGregor.
4.All documents recording or evidencing the funding of the joint venture between Pegasus Securities Limited and BFCL carried out though (sic) the company Pegasus Leasing Limited (“the Pegasus Joint Venture”) in the period from 1 January 1990 to 11 December 1990.
5.All documents recording or evidencing the steps taken by SAAMC to recover moneys subject to direct and guarantee obligations of James Alastair McGregor to SAAMC against persons or entities other than James Alastair McGregor in the period from 11 December 1990 to 17 February 1997.
6.All documents recording or evidencing the steps taken by BFCL to recover moneys subject to direct and guarantee obligations of James Alastair McGregor to BFCL against persons or entities other than James Alastair McGregor in the period from 11 December 1990 to 17 February 1997.
7.All documents referring to the policies of life insurance with the then Australian Mutual Provident Society over the life of James Alastair McGregor (“the life insurance policies”), including without limitation all documents recording or evidencing any recovery of moneys under the life insurance policies.
8.All documents referring to the life insurance policies, and any recovery of moneys by Pegasus Leasing Limited under the life insurance policies.
9.That section of the review of BFCL undertaken by Price Waterhouse & Co in or about June 1990 at the request of SBSA that relates to the Pegasus Joint Venture.
10.All documents recording or evidencing communications between SAAMC and any of the Defendants concerning:
10.1 The indebtedness of the Deceased Estate of James Alastair McGregor to SAAMC.
10.2 The recovery by SAAMC of moneys or assets from the Deceased Estate of James Alastair McGregor.
10.3 The bankruptcy of the Deceased Estate of James Alastair McGregor.
11.All documents of BFCL recording or evidencing communications between BFCL and any of the Defendants concerning:
11.1 The indebtedness of the Deceased Estate of James Alastair McGregor to BFCL.
11.2 The recovery by BFCL of moneys or assets from the Deceased Estate of James Alastair McGregor.
11.3 The bankruptcy of the Deceased Estate of James Alastair McGregor.
12.All documents from Pegasus Leasing Limited referring to a lease or leases to James Alastair McGregor and the First Defendant of Aboriginal Paintings, (“the Aboriginal Paintings”).
13.All documents recording or evidencing the sale of the Aboriginal Paintings by Pegasus Leasing Limited.
14.All documents of Pegasus Leasing Limited referring to proceedings in the County Court of Victoria at Melbourne Action No MC 912044 in which Pegasus Leasing Limited and Lauraine Diggins Fine Art Pty Ltd and Lauraine Diggins were parties.
SAAMC has applied to have the subpoena struck out on the following grounds:
(a)That rather than seeking production of a wide range of documents by subpoena, the defendants should seek an order for discovery against a non-party pursuant to r 60 of the Supreme Court Rules 1987, and for that reason the subpoena constitutes abuse of process;
(b) That the breadth of the requests combined with the uncertainty as to the relevance of the documents to the action points to non-party discovery as being the appropriate procedure;
(c)That proper search for all the documents sought will be very time consuming and will involve many hours of searching through documents held in archives;
(d)That SAAMC enjoys the protection of s 50 of the Evidence Act1929 (SA) and that there is no “special cause” for ordering production; and
(e)That SAAMC enjoys the protection of s 35 of the State Bank of South Australia Act 1983 (SA) (“the Act”) preventing disclosure of information about the affairs of bank customers unless the information is authorised or required by or under some other Act or law.
This latter ground was not pressed in argument. In any event, the short answer to it is that if the subpoena is not set aside, disclosure of information which might otherwise be protected under s 35 is required by due process of law. If confidences ought properly to be protected, the Court’s orders can accommodate that.
There is also a ground that no conduct money has been tendered, but the defendants have undertaken to make appropriate arrangements in that regard if the subpoena is not set aside.
Whether SAAMC is a Bank
It is convenient to deal first with the immunity claimed by SAAMC under s 50 of the Evidence Act. That section provides:
A bank or officer of a bank shall not in any legal proceeding to which the bank is not a party be compellable––
(a) to produce any banking record, the contents of which can be proved under this Act; or
(b) to appear as a witness to prove the matters, transactions, and accounts recorded in a banking record,
unless by order of a judge made for special cause.
The expressions “bank” and “banking records” as used in s 50 are defined in s 46 as follows:
In this Part––
“bank” means––
(a) a body corporate carrying on the business of banking in a State or Territory of the Commonwealth; or
(d) any other body that accepts money on deposit from the public;
“banking records” means––
(a) books of account, accounts, and accounting records (including working papers and other documents necessary to explain the methods and calculations by which accounts are made up); and
(b) books, diaries, or other records used in the course of carrying on the business of a bank; and
(c) cheques, bills of exchange, promissory notes, deposit slips, orders for the payment of money, invoices, receipts and vouchers; and
(d) securities, and documents of title to securities,
in the possession or control of a bank;
Those sections are in Part 5 of the Evidence Act which deals generally with evidence concerning banking records. Section 47 provides for the admission into evidence of a copy of a banking record as evidence of the record and of transactions or matters to which the record relates. There are certain safeguards provided to ensure the integrity of the copy. Section 49 enables a party to a legal proceeding to obtain an order from a judge that the party be at liberty to inspect and take copies of banking records for any of the purposes of the proceedings. The purpose of those provisions is to facilitate the proof of banking records without banks being required to produce originals save for good reason.
The issue on this application is whether SAAMC is a bank as defined in s 46 of the Evidence Act. There is no evidence that it is a body which accepts money on deposit from the public. The question is therefore whether it is a body corporate “carrying on the business of banking”.
SAAMC is constituted under the Act. Section 6 of the Act constitutes a bank entitled the “State Bank of South Australia” (“the Bank”). Following the financial collapse of the Bank, the Act was substantially amended by the State Bank (Corporatisation) Act 1994 (SA). That Act had the effect of transferring certain assets and liabilities of the State Bank to a public company known as Bank of South Australia Limited. As is now well known, it was the conventional and profitable activities of banking that were transferred to Bank of South Australia Limited, leaving a number of other assets in what remained of the State Bank of South Australia constituted under the Act.
Before its amendment, besides constituting the Bank, the Act provided for the constitution and powers of its board and a number of provisions typically required to enable a banking organisation to operate as such. Section 19(1) provided:
(1) The Bank shall carry on the general business of banking and is vested with all such powers as are necessary for that purpose.
Sub-section (2) provided that the business of the Bank could be carried on within or outside the State. Sub-section (3) set out a number of specific powers typical of a banking organisation. Sub-section (4) provided for the establishment of branches and agencies of the Bank. Sub-section (5) enabled the Bank to provide insurance in respect of property the subject of security for loans made by the Bank. Sub-section (6) enabled the Bank to provide or arrange for the provision of life insurance on the lives of borrowers from the Bank. Sub-section (7) placed a restriction on the acquisition by the Bank of certain quantities of shares in a body corporate without the approval of the Treasurer.
Section 25 of the Act conferred certain powers of investigation of matters relating to the operations and financial position of the Bank by the Auditor-General or some other suitable person appointed by the Governor.
Extensive amendments were made to the Act by the State Bank (Corporatisation) Act1994. Among other things, a new s 6A provided that the Bank continued in existence as a body corporate under the name “South Australian Asset Management Corporation”. Section 19 of the Act was amended by substituting the following two sub-sections in place of sub-section (1):
(1) The Bank’s functions are to manage, realise and otherwise deal with its remaining assets and liabilities and, with the approval of the Treasurer, other assets and liabilities of the Crown or an instrumentality of the Crown, to the best advantage of the State.
(1a) For the purpose of performing its functions, the Bank may carry on the general business of banking.
Sub-section (3) remained, but sub-sections (4), (5) and (6) were repealed.
From those amendments it can be seen that the principal function of the Bank ceased to be the carrying on of the general business of banking and became the management, realisation and otherwise dealing with the remaining assets and liabilities of the Bank. For that purpose it was authorised, incidentally, to carry on the general business of banking. That power was no doubt necessary pending transfer of the assets and liabilities comprising the banking business to Bank of South Australia Limited. However, banking became an optional and subsidiary function, and a number of its conventional powers as a bank provided for in s 19 were repealed. The Bank’s primary function was reflected in its new name.
The investigation powers under s 25 of the Act were greatly extended to enable proper inquiry to be made in the circumstances surrounding and consequential upon the collapse of the Bank and its subsidiaries.
A whole new Part 6 was added to the Act to authorise the restructure of the Bank and its subsidiaries and for determining the most appropriate means of disposing of the Bank and its undertaking, including that part which was transferred to the new Bank of South Australia Limited.
Before the amendment of the Act in 1994 there could be no doubt that the Bank was carrying on the business of banking and enjoyed the protection of s 50 of the Evidence Act. The same cannot be said of SAAMC after the 1994 amendment. Banking was no longer the principal function of the organisation. For the purpose of performing its new principal functions, it was enabled to carry on the general business of banking but was not required to do so. If it is to enjoy the protection of s 50 of the Evidence Act there would need to be evidence of the fact that it is still carrying on the business of banking. No such evidence has been produced. Therefore, I cannot be satisfied that SAAMC is now a “bank” within the meaning of s 50, or that it now enjoys the protection of that section.
The Plaintiff’s Right to be Heard
The defendants objected to the plaintiff being heard on SAAMC’s application to set aside the subpoena. The plaintiff himself has not applied to strike it out but supports SAAMC’s application.
The defendants accept that the test to be applied is as stated by Perry J in Hunt v Judge Russell and de Pinto.[1]After reviewing a number of cases, including cases decided in this Court, Perry J concluded:
In my opinion, there is a discretion which extends to permitting a person to be heard if his or her legal rights are threatened, or if he or she has, for any other reason, “a legitimate interest in having the subpoena struck out”. [2] [Citations omitted]
[1] (1995) 63 SASR 402.
[2] Ibid at 415.
The passage quoted was from the decision of Powell J in Botany Bay Instrumentation & Control Pty Ltd v Stewart.[3]In Rivers v Rivers,[4] White J agreed with that formulation.
[3] [1984] 3 NSWLR 98 at 102.
[4] (2004) 235 LSJS 360 at 368, [2004] SASC 295 at [47].
There will be many different circumstances in which a party to litigation has a legitimate interest in having the subpoena struck out. The grounds of support may not necessarily coincide with those of the party served. The principal ground relied on by SAAMC in this case is that the defendant failed to seek non-party discovery from SAAMC, and that a large proportion of the documents covered by the subpoena would not be relevant to any issue raised on the pleadings. The defendants, on the other hand, seek to justify the subpoena by the plaintiff’s alleged failure to make full discovery. In those circumstances, I consider that the plaintiff does have a legitimate interest in that topic and therefore a right to be heard. His interests are also affected by the possible delay and expense involved in a non-party having to produce a large volume of documents. The plaintiff, as a matter of practical necessity, would have to inspect them at considerable expense. Many of them would either appear not to be relevant, or there is likely to be a substantial argument as to whether they are relevant and therefore discoverable, whether by a party or a non-party, again involving the plaintiff in further expense. The plaintiff also has an interest to be heard on the question of relevance of the documents to an issue in the action, and whether any useful purpose would be served by production of the documents under subpoena. To that extent the plaintiff’s submissions will be of assistance in determining whether or not a subpoena is fishing.
In the circumstances, I allow the plaintiff to be heard.
Relevance of Rule 60
Rule 60 of the Supreme Court Rules 1987,[5] which applies in this case, makes provision for discovery of documents before action and by a non-party after action is commenced. With the application is to be filed and served a supporting affidavit “specifying the documents sought and their relevance to the proceedings or proposed proceedings”.[6] There is no such requirement to accompany an application for the issue of a subpoena and no requirement to specify that the documents sought are relevant to an issue in the proceedings. There is therefore a temptation, to which the defendants have yielded in this case, to take what appears to be an easy way out by specifying a large number of documents to be produced without reference to their relevance to an issue in the proceedings. Where such a course is followed, without non-party discovery, it will sound a warning that the party issuing the subpoena may be fishing. However, the failure to seek non-party discovery is not, by itself, a reason to set aside a subpoena.
[5] See also Supreme Court (Civil) Rules 2006, r 146.
[6] Supreme Court Rules 1987, rule 60.01(3).
As was pointed out by Martin CJ in respect of the Northern Territory Rules of Court in Territory Insurance Office v Kouimanis Enterprises Pty Ltd,[7] the Rules make a distinction between discovery and the issue of subpoenas. Rules relating to discovery and non-party discovery are placed among those matters relating to matters preparatory for trial. The subpoena rules are placed among those relating to evidence at the trial. The respective functions of each are not to be confused. I recognise that r 81.11 does allow for subpoenas to be returned before trial, but not without leave before the action has been referred for trial.
[7] (2002) 171 FLR 425 at 428, [2002] NTSC 68 at [16].
An objection to a subpoena based on the fact that it is an alternative method of obtaining discovery will usually be based on the requirement of the recipient of the subpoena to make a judgment as to which of the documents relate to issues between the parties. The basis of the objection is that it is oppressive to place that form of judgment upon a stranger. The approach of the New South Wales Court of Appeal to that issue was made clear by Moffitt P in National Employers’ Mutual General Association Ltd v Waind & Hill.[8] The learned President said:
As Jordan CJ pointed out in Small’s case[9] and, as appears in Burchard’s case[10] there are at least two steps in the procedure of having a third party bring documents to court, and in their use thereafter. Indeed, on a correct view, there are three steps. The first is obeying the subpoena, by the witness bringing the documents to the court and handing them to the judge. This step involves the determination of any objections of the witness to the subpoena, or to the production of the documents to the court pursuant to the subpoena. The second step is the decision of the judge concerning the preliminary use of the documents, which includes whether or not permission should be given to a party or parties to inspect the documents. The third step is the admission into evidence of the document in whole or in part; or the use of it in the process of evidence being put before the court by cross-examination or otherwise. It is the third step which alone provides material upon which ultimate decision in the case rests. In these three steps the stranger and the parties have different rights, and the function of the judge differs.
Upon the first step the person to whom the subpoena is addressed may seek to, and have, the subpoena set aside on the ground that it was improperly issued and an abuse of the power to compel the production of documents in any one of a number of ways. Such a case is where the subpoena is used for the purpose of discovery. The essential feature of discovery in this connection, as appears from Burchard’s case and Small’s case is that the person to whom the subpoena is addressed will have to make a judgment as to which of his documents relate to issues between the parties. It is oppressive to place upon a stranger the obligation to form a judgment as to what is relevant to the issue joined in a proceeding, to which he is not a party. Hence it is an abuse of the use of a subpoena to impose this obligation. It follows that it is an abuse to use any subpoena, ie even to a party to obtain discovery. This was the reasoning in Small’s case. Of course, discovery as such is otherwise available to a party. 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. It does not follow, however, that because the party who issues a subpoena is 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, that the subpoena, or even a subpoena in general terms, amounts to the use of the subpoena for the purpose of “discovery”. To state it does involve a misconception of the different functions of discovery and of a subpoena for production. Of course, it may be that the terms of a subpoena are so wide that it is oppressive, but this is not because it is used for “discovery” in the sense used in Small’s case and Burchard’s case, but because it imposes an onerous task on a stranger to collect and produce documents many of which can have no relevance to the litigation.[11] [Some footnotes omitted]
[8] [1978] 1 NSWLR 372.
[9] Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 574.
[10] Burchard v Macfarlane [1891] 2 QB 241 at 247-248.
[11] Employers’ Mutual General Association Ltd v Waind & Hill [1978] 1 NSWLR 372 at 381-382.
The subpoena in this case requires production of a number of documents “recording or evidencing certain matters”. That does not require a judgment to be exercised on the part of the recipient of the subpoena. Those paragraphs may be oppressive for other reasons, but not because they are improperly in lieu of discovery in the sense discussed in Waind’s Case. However, paragraphs 7, 8 and 14 of the subpoena require production of all documents “referring to” certain other documents or proceedings. There may be many such documents in possession of SAAMC but which are not at all relevant to an issue in the proceedings. Those paragraphs require a judgment to be made by SAAMC as to which of those documents relate to issues between the parties. Such an obligation is oppressive for the reasons identified in Waind’s Case.
There is, however, another basis for setting aside a subpoena because it amounts to a request for discovery. In Australian Competition & Consumer Commission v The Shell Co of Australia Limited[12] a subpoena was set aside on the basis that its real purpose was to obtain further and better discovery from a party to the litigation. It was held that if the plaintiff required further discovery or production of documents, then the appropriate course was to specify the documents required by reference to documents already identified or to apply to the court for an order for further and better discovery or for discovery on oath.[13]
[12] (1999) 161 ALR 686, [1999] FCA 212. See also Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 574, Jordan CJ.
[13] Ibid at 694-696, [47]-[52], Cooper J.
In an affidavit filed in response to affidavits filed on behalf of SAAMC and the plaintiff, the defendants’ solicitor asserts that SAAMC is a creditor of the bankrupt McGregor estate and is indemnifying the plaintiff for the costs of the proceedings. So much is not in dispute. However, the solicitor refers to discovery made by the plaintiff and says that he “formed the view that the plaintiff had had access to files of SAAMC, and that the plaintiff had made selective discovery of documents from those files without making discovery of the entire files”. There follows reference to correspondence between the solicitors as a result of which further documents were discovered by the plaintiff’s solicitor, some of which the plaintiff’s solicitor claimed were not discoverable but were listed nevertheless for the sake of completeness. Other paragraphs which follow in the affidavit of the defendants’ solicitor question the completeness of the plaintiff’s discovery. This alleged failure on the part of the plaintiff is put forward as justification for requiring the production of the documents in question from SAAMC.
In Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No.5),[14] in relation to an application for further and better discovery, I had occasion to observe:
The plaintiff, in this case, has delivered numerous lists of documents, and in respect of each of the topics the subject of this application, asserts that there are no other documents. That is an unsworn assertion made by the solicitor for the plaintiff. Nevertheless, given the uncompromising ethical obligation that a legal practitioner has to the Court to make true and honest disclosure of such matters, the Court is entitled to act on that assertion, unless the Court has reason to believe that the assertion cannot be relied on. This may arise because of some possible misconduct on the part of the practitioner or from some reason to believe that the practitioner has received less than full and complete instructions from the client. In such a case, there is a further possible remedy under Rule 58.04A. However, no such situation is suggested here, and no request has been made for an order for interrogatories or cross-examination as to the existence of additional documents.
What acceptance of the assertion of the plaintiff's solicitor does mean, however, is that if the defendant is to succeed in its application, it must point to some evidence to raise the necessary belief required by Rule 58.04(e). It requires more than merely an assumption or speculation that such documents may exist. The necessary belief may be formed from an examination of the pleadings. Common experience may dictate that there must have been a particular relevant document in the custody, possession or power of a party concerning a particular transaction. The existence of a relevant document may be properly inferred from the contents of another document. Alternatively, the description of a document or class of documents by the respondent party may be so vague and uncertain as to require more particularity. There may be other circumstances which induce the necessary belief. However, the Court will not act on speculation.[15]
[14] [2001] SASC 335. See also Harris Scarfe Ltd (Receivers and Managers Appointed) (in liq) v Ernst & Young (No.4) (2005) 93 SASR 300 at 304-305, [2005] SASC 443 at [16].
[15] Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No. 5) [2001] SASC 335 at [17]-[18].
Not only is there a professional obligation on the plaintiff’s solicitor to ensure that full and complete discovery is made, but there is also a similar obligation on the plaintiff in this case as trustee of a bankrupt estate. I have no present reason to believe that there has been some failure in those obligations. The mere fact that the plaintiff may have had access to some files of SAAMC and has not formally discovered all documents in those files does not mean that those other documents are discoverable. To be discoverable they have to be directly relevant to any issues arising on the pleadings.[16] The mere fact that, at the request of the defendants, certain additional documents were discovered, in a case involving many thousands of documents, is not necessarily indicative of any professional shortcoming on the part of the plaintiff or his solicitor. But even it if were, it is an abuse of process to attempt to go behind that discovery by using the process of a subpoena against a non-party. If it is alleged that the plaintiff’s discovery is incomplete, the proper course is to apply for and to justify, if it can be justified, an order for further and better discovery.
[16] Supreme Court Rules 1987, r 58A.03.
Relevance and Fishing
The primary purpose of a subpoena to produce documents is to have documents relevant to an issue available for use in the trial. If on the face of the subpoena the documents required to be produced are shown to have little or no relevance to any issue in the proceedings, they will be of no evidentiary value. If such circumstances can be demonstrated from the terms of the subpoena, it will be an abuse of the process of the court to require the person to whom the subpoena is directed to produce the documents to the court. It will serve no useful purpose.
It is not for the judge to require the documents to be produced and then to peruse them and see if any of them might be relevant to an issue in the proceedings. The defendants are unable to say that the documents sought to be produced will assist their case or to assert their relevance to an issue in the proceedings. In those circumstances, the dictum of Gibbs CJ in Alister v The Queen[17] is apposite:
Both Burmah Oil Co. Ltd. v Bank of England[18] and Air Canada v Secretary of State for Trade[19] support the view that where the Crown objects to the production of a class of documents on the ground of public interest immunity, the judge should not look at the documents unless he is persuaded that inspection would be likely to satisfy him that he ought to order production; in the words of Lord Wilberforce in Air Canada v Secretary of State for Trade, he must have “some concrete ground for belief which takes the case beyond a mere ‘fishing’ expedition”. In the latter case the House of Lords divided on the question whether, before inspection is ordered, the documents should appear likely to support the case of the party seeking discovery, or whether it is enough that they should appear likely to assist any of the parties to the proceedings; the majority favoured the former view.
[17] (1984) 154 CLR 404 at 414.
[18] [1980] AC 1090.
[19] [1983] 2 AC 394.
As Gibbs CJ proceeded to acknowledge, the Court must attach special weight in criminal proceedings to the fact that the documents may support the defence of an accused person. Even then, it must be “on the cards” that the documents will materially assist the defence. [20]
[20] Alister v The Queen (1984) 154 CLR 404 at 414, Gibbs CJ.
It is not necessary that the documents be admissible in evidence for them to be sufficiently relevant to be the proper subject of a subpoena. As Hill J observed in Trade Practices Commission v Kimberley Homes Pty Ltd[21] the documents must “relate to the subject matter of the litigation in an adjectival sense…, notwithstanding that they may not ultimately be admissible in evidence”.
[21] (1989) 217 ALR 110 at 116.
As at present advised I am unable to find that the documents described in paragraphs 1 and 3 of the subpoena, beyond what has been discovered by the plaintiff, are relevant to any issue in the proceedings, notwithstanding the reference in the affidavit of the defendant’s solicitor to a number of particular clauses in both the statement of claim and the defence.
The documents described in paragraphs 2 and 4-9 of the subpoena relate principally to the allegations contained in paragraph 30.2 of the first defendant’s defence. By that plea the first defendant:
Says that the Estate did not have any contingent liabilities to Beneficial Finance Corporation Limited (“BFCL”) under the Deeds of Guarantee and Indemnity dated 3 September 1990 and 13 September 1990 because the Deeds of Guarantee and Indemnity were executed by James Alistair McGregor whilst acting under duress, and/or in reliance upon misrepresentations and/or by conduct which was misleading or deceptive, and thus those Deeds were void or liable to be avoided or set aside by reason of the following:
There followed 13 sub-paragraphs of particulars to which the general description of the documents contained in the relevant paragraphs of the subpoena would appear to relate. The plea therefore raised a number of factual issues surrounding the giving of the guarantees by the deceased to BFCL. However, in response to an application by the plaintiff to strike out paragraph 30.2, the first defendant has obtained leave to amend that paragraph to plead not the facts as alleged in the paragraph, but that at all material times the first defendant held the belief that those facts existed, and the belief that any contingent liabilities of the estate to BFCL were liable to be avoided or set aside by the executors of the estate. He no longer pleads that the deeds in question were void or liable to be avoided or set aside by reason of the paragraphs that follow. He pleads the basis of his knowledge and belief as related to conversations he had with the deceased and to documents passing between them. All that is alleged in some detail in relation to each of the facts which the first defendant is said to have known or believed.
That casts a rather different complexion on that paragraph of the defence. It renders it highly unlikely that any of the documents referred to in the paragraphs of the subpoena in question have any bearing on the first defendant’s state of knowledge or belief.
Paragraphs 10 and 11 of the subpoena seek the production of documents recording or evidencing communications between SAAMC and the defendants. To the extent that they refer to written communications, those are obviously matters for discovery by the defendants. To the extent that the communications were oral, the requirement does not refer to particular conversations and is plainly fishing.
The documents referred to in paragraph 12-14 inclusive of the subpoena would appear to relate to further documents in respect of which it is suggested the plaintiff’s discovery has been inadequate.
I have pointed to a number of reasons by which the defendants seek to justify the subpoena, most of which fail. Given the breadth of the description of the documents required to be produced, one must seriously ask, in those circumstances, whether the real purpose of the subpoena is merely fishing for documents which the defendants hope might exist. In Hunt v Judge Russell and de Pinto,[22] Perry J said:
In my view, consistent with the dicta to which I have referred in Alister, a mere “fishing” expedition should not be allowed, and before a court should proceed to inspect the documents sought to be produced, it must be “on the cards” that the documents “will materially assist the defence”, or, having regard to the terms of s 25 of the District Court Act, it must be “on the cards” that the documents sought to be produced will be of “evidentiary value” in the proceedings.
If that test is satisfied, the subpoena is not to be characterised as “fishing” and will not be struck out as bad.
If the subpoena is bad as a mere “fishing” exercise, the Court does not have to deal with any objection based on public interest immunity, legal professional privilege or statutory immunity from production. The subpoena is struck out before the stage is reached at which any such objection falls to be considered.[23]
[22] (1995) 63 SASR 402.
[23] Ibid at 409.
In Andrew Garrett Wine Resorts & Anor v National Australia Bank Limited (No.6),[24] Gray J cited that passage with approval and continued:
It is not enough for the party issuing the subpoena to raise a speculative possibility that the documents sought would assist the resolution of the dispute. The party supporting the subpoena must demonstrate that the documents sought in the subpoena are of real relevance to the issues in the case. It must be more than an outside chance that something useful might turn up in the documents.[25] [Footnotes omitted]
[24] (2005) 92 SASR 419, [2005] SASC 292.
[25] Ibid at 428, [37].
To like effect, White J said in Rivers v Rivers: [26]
The circumstances in which the discretion thus granted may be exercised are quite various. Relevantly to the present case, subpoenas have been set aside on the grounds that they are fishing, ie, where a party who has no evidence that documents of a particular kind do exist issues a subpoena to ascertain whether they do; where the documents are not relevant to an issue to be decided by the Court; where the subpoena is issued for an ulterior purpose; and where production of the documents sought is not necessary for disposing fairly of the proceedings. It must be “on the cards” that the documents of the kind sought do exist and may be material.[27] [Footnotes omitted]
[26] (2004) 235 LSJS 360, [2004] SASC 295.
[27] Ibid at 366, [37].
The nature of the documents sought and the breadth of the description of the documents suggest a misuse of the subpoena process directed towards trying to ascertain whether any relevant documents exist rather than to seek the production of documents which can serve some useful purpose in the litigation. This is an added reason why I would set the subpoena aside.
Oppression
Given the breadth of the description of the documents sought to be produced, I would also be prepared, if necessary, to set the subpoena aside on grounds of oppression. The events to which the documents are said to refer occurred up to 17 or 18 years ago in respect of a bank and a subsidiary company which have long since ceased trading as such, and which are unlikely now to employ any of the staff involved in those transactions. Many documents and records of the Bank and its subsidiary have since been destroyed. What documents remain have been archived. To comply with the subpoena on such a wide-ranging description of documents will impose a substantial burden of search and inquiry on the present staff of SAAMC. The oppression imposed on SAAMC by the subpoena is, in part, a by-product of the defendants’ attempt to use a subpoena for the purpose of fishing, and its lack of particularity.
Conclusion
It seems to me that the more appropriate course for the defendants to follow is to seek an order for further and better discovery from the plaintiffs, if they have a genuine concern about the adequacy of the plaintiff’s discovery and if they can point to reasons why that appears to be inadequate. If they believe that there are still documents in the possession or power of SAAMC which are directly relevant to an issue in the proceedings, they should consider an application for non-party discovery in accordance with the provisions of r 60 of the Supreme Court Rules 1987, supported by an affidavit specifying the documents sought and their relevance to the proceedings.
I order that the subpoena directed to SAAMC be set aside.
9
10
1