Margaret Lesley Marshall and Kim Neil Marshall v Michael Prescott (No.2)

[2012] NSWSC 619

Supreme Court

New South Wales

Medium Neutral Citation:

Margaret Lesley Marshall and Kim Neil Marshall v Michael Prescott (No.2). [2012] NSWSC 619

Hearing dates:

1 June 2012

Decision date:

08 June 2012

Before:

Bellew J

Decision:

1. The applicants are to serve any further evidence upon which they propose to rely in support of the claim for legal professional privilege by 4pm on Friday 22 June 2012.

2. The notices of motion are stood over for further directions on Friday 29 June 2012.

3. I reserve the question of costs until the final determination of the motions.

Catchwords:

PRACTICE AND PROCEDURE
Subpoena to non-party - application to set aside - whether applicants had "sufficient interest" to bring the application - whether applicants had established a legitimate forensic purpose

WORDS AND PHRASES - "sufficient interest" - "legitimate forensic purpose"

Legislation Cited:

Uniform Civil Procedure Rules 2005

Cases Cited:

Air Canada v Secretary for State for Trade [1983] 2 AC 394
Alister v The Queen (1984) 154 CLR 404
Associated Dominions Assurance Society Pty Limited v John Fairfax & Sons Pty Limited (1952) 72 WN (NSW) 250
Attorney General (NSW) v Chidgey [2008] NSWCCA 65
Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667
Burmah Oil Company Limited v Bank of England [1980] AC 1090
Commissioner for Railways v Small (1938) 38 SR 564
Finnie v Dalglish [1982] 1 NSWLR 400
Lakatoi Universal Pty Limited & Ors v Walker & Ors ((SC (NSW) unreported 31 July 1998)
McPhail v R (1988) 36 A Crim R 390
Maddison v Goldrick [1976] 1 NSWLR 651
New South Wales Commissioner of Police v Tuxford & Ors [2002] NSWCA 139
P & N Quality Smallgoods Pty Limited v Seven Network (Operations) Pty Limited [2010] NSWSC 841
Principal Registrar of the Supreme Court of New South Wales v Tastan (1994) 75
A Crim R 498
R v Saleam (1989) 16 NSWLR 14
R v Saleam [1999] NSWCCA 86
Waind v Hill & National Employers' Mutual Association Limited (1978) 1 NSWLR 372
Witness v Marsden (2000) 49 NSWLR 429

Category:

Procedural and other rulings

Parties:

Margaret Lesley Marshall and Kim Neil Marshall - Plaintiffs/Respondents
Michael Prescott - Defendant
Turks Legal - Applicant
GIO General Limited - Applicant
GIO Workers Compensation (NSW) Pty Limited - Applicant

Representation:

C J Bevan & E W Young - Plaintiffs/Respondents
Turner Freeman - Plaintiffs/Respondents
Colin Biggers and Paisley - Defendant
Turks Legal - Applicants

File Number(s):

2009/2974404

JUDGMENT

1. A subpoena seeking production of certain documents has been issued on behalf of the plaintiffs in these proceedings to each of the following recipients:

(i)   The partners, Turks Legal;

(ii)   GIO Workers Compensation (NSW) Pty Limited;

(iii)   GIO General Limited.

1. For ease of convenience these three recipients will be referred to collectively as "the applicants".

1. Before the court are three notices of motion, one filed on behalf of each of the applicants, seeking (inter alia) an order that the respective subpoenas be set aside pursuant to r 33.4(1) of the Uniform Civil Procedure Rules.

BACKGROUND

1. The late Neil Marshall ("the deceased") was the husband and father of the first and second named plaintiffs respectively. In or about June 1995, the deceased separated from the first named plaintiff and commenced to reside in a de-facto relationship with Linda Carruthers ("Carruthers"). In 1996 a property settlement was reached between the deceased and the first named plaintiff. However, no proceedings were brought seeking dissolution of the marriage.

1. On 31 May 2000 an aircraft in which the deceased was a passenger crashed near South Australia. The deceased, along with some twenty other passengers and the pilot, died as a result of that crash.

1. Following the deceased's death, Carruthers brought proceedings pursuant to the Family Provision Act seeking an order that provision be made to her from the deceased's will. At about the same time, she also commenced proceedings in the Compensation Court of NSW, seeking a death benefit on the basis that she was the de-facto spouse of the deceased.

1. In the proceedings brought in the Compensation Court, Carruthers received a death benefit of approximately $200,000.00 which was paid by GIO Worker's Compensation (NSW) Pty Limited, one of the applicants. Although she was successful at first instance in the proceedings brought pursuant to the Family Provision Act, the Court of Appeal ultimately concluded that she was not entitled to any provision from the deceased's will (see Marshall v Carruthers [2002] NSWCA 47), and that the deceased's estate was held by the first named plaintiff on trust for the second named plaintiff (who at that stage had not attained the age of 18 years). The finding which had been made at first instance that Carruthers and the deceased were in a de-facto relationship at the time of the deceased's death was not the subject of any challenge.

1. On or about 22 May 2002 a series of separate sets of proceedings were commenced in the United States District Court for the District of Pennsylvania ("the United States proceedings"). Those proceedings were brought by the surviving family members of each person who had died in the air crash, against the manufacturer of the engines that were attached to the aircraft. The first and second named plaintiffs were plaintiffs in one of those actions, all of which were ordered to be tried together. All of the plaintiffs in the United States proceedings were represented by a firm of lawyers in New York, Messrs Kriendler and Kriendler ("Kriendlers"). The United States proceedings were required to be commenced, for jurisdictional reasons, in the District of Pennsylvania for jurisdictional reasons. That necessitated Kriendlers engaging another lawyer in Pennsylvania to act as their agent.

1. The defendant in the current proceedings before this court is a South Australian lawyer who was instructed by some (but not all) of the plaintiffs in the United States proceedings. To the extent that he was not instructed by the remainder of those plaintiffs (including the first and second named plaintiffs in the current proceedings before this court) he appears to have acted as, for want of a better term, the "Australian representative" of Kriendlers. In particular, it appears to have been part of his role to liaise with the Australian legal representatives of those plaintiffs in the United States proceedings for whom he did not act, and to appraise them of aspects of the progress of such proceedings.

1. On 21 February 2003 the United States proceedings were settled. As might be expected, it was necessary for various Deeds to be executed to give effect to the settlement which had been reached. Following the settlement being reached, but whilst the necessary Deeds were being prepared, Carruthers sought to make a claim for the payment, to her, of that part of the settlement money from the United States proceedings which was due to the first and second named plaintiffs in these proceedings. She did so notwithstanding the fact that she was not, and never had been, a party to the United States proceedings.

1. The notification of Carruthers' claim caused Kriendlers to advise that no part of the settlement money from the United States proceedings would be distributed to the first and second named plaintiffs in the present proceedings unless and until Kriendlers received some form of acceptable confirmation that Carruthers had no entitlement to it. In view of the advice of Kriendlers, the first and second named plaintiffs brought proceedings in this court against Carruthers seeking (inter alia) declaratory relief as to their entitlement to a share of the settlement monies from the United States proceedings ("the Carruthers proceedings").

1. Initially, Carruthers was represented in those proceedings by the present defendant. When this became apparent, the first named plaintiff sought and obtained (in separate proceedings), an injunction against the defendant restraining him from, in effect, acting against her. In those proceedings orders were made by Barrett J (as his Honour then was) requiring the defendant to deliver up, by reference to specified categories, the following material:

"... all his files, papers, records, diaries, emails, letters, original and copy documents, copies of all trust account and office account records relating to the affairs of the plaintiff and or Kim Marshall and or the estate of the late Neil Marshall, and the draft documents made on behalf of the plaintiff and or Kim Marshall and or the estate of the late Neil Marshall, and all office and home computer information stored in electronic format (to be delivered up on 31/2 "diskette or CD rom) for the period 1 June 2001 and until 15 November 2005..."

1. Pursuant to the orders of Barrett J the defendant produced a large bundle of documents. On 9 August 2006, Macready AsJ made a number of orders in the Carruthers proceedings, including an order that Ms Sigrid Higgins, Barrister, be appointed to act as court referee for the purposes of enquiring and reporting in respect of a number of questions, including the following:

(a)   which documents contained in the bundle of documents produced by the defendant pursuant to the orders of Barrett J could be made the subject of an arguable claim for legal professional privilege by Carruthers, and on what grounds;

(b)   which documents contained in the documents produced could be made the subject of an arguable claim for legal professional privilege by the plaintiff, and what grounds; and

(c)   which documents contained in the documents produced could be made the subject arguable claim for joint or common interest privilege by the plaintiff and Carruthers, and on what grounds.

1. On 6 November 2006 the referee delivered her report which was, by orders of 7 March 2007, adopted in whole. In addition, the referee provided, pursuant to a further order, a supplementary report on 27 March 2007.

1. The orders of 7 March 2007 included an order that the plaintiff and Carruthers have access to a number of the documents which had been produced by the defendant and which were the subject of the referee's report. On 22 May 2007, the solicitors for the plaintiff wrote to the referee and sought access to some of those documents. They were subsequently provided to them, and many of them were in evidence before me on the present applications.

1. Ultimately, the first and second named plaintiffs succeeded in obtaining relief against Carruthers in the Carruthers proceedings, the effect of which was to declare that Carruthers had no entitlement to any part of the settlement monies from the United States proceedings. In addition, the first and second named plaintiffs received the benefit of an order for costs in their favour. However, almost the entirety of the settlement monies from the United States proceedings to which the first and second named plaintiffs were adjudged to be entitled had, by that time, been expended in costs.

1. Accordingly, the first and second named plaintiffs commenced proceedings against the defendant seeking, by way of damages, the costs which were expended. It is in those proceedings that the current notices of motion have been brought.

THE STATEMENT OF CLAIM

1. In the course of argument I was taken to paragraphs (66) to (71) of the statement of claim which, it was agreed, were those paragraphs which were relevant to the determination of the current notices of motion. Those paragraphs, omitting the pleaded particulars, are in the following terms:

Prescott's first GIO misconduct

66On 30 July 2004, in the immediate aftermath of the giving of the plaintiff's written undertaking and the commencement of the Carruthers proceeding in pursuance of that undertaking, the defendant commenced a course of conduct of procuring GIO Workers Compensation (NSW) Limited ACN 0454 523 698 (GIO) to fund a defence and cross-claim in the Carruthers proceeding, in the name of Carruthers as the nominee, of GIO in order to recover an amount to enable GIO to reimburse itself for the $200,000 paid to Carruthers under a Judgment given in her favour on 26 July 2001 in the Compensation Court of New South Wales as the dependant spouse of the deceased, in respect of his workers compensation death benefit entitlement (Prescott's first GIO misconduct).

67On 15 October 2004 Carruthers filed a defence and cross-claim in the Carruthers proceeding on behalf of GIO as its nominee and at the expense of GIO, in which she:

(a)   denied that the plaintiffs had any entitlement at all to the net settlement amount;

(b)   asserted that she alone was entitled to the whole of the net settlement amount;

(c)   claimed the payment of the net settlement amount to her beneficially;

(d)   asserted that the net settlement amount was held on trust for her by Turner Freeman and not for the plaintiffs;

(e)   failed to identify whether her alleged right to the net settlement amount arose under the law of New South Wales, the law of Pennsylvania or under the law of another jurisdiction (Carruthers defence and cross-claim);

(f)   failed to disclose that she was acting as the defendant and cross-claimant in the proceedings as the nominee of GIO.

Prescott's second GIO misconduct

68In about December 2004, after further steps were taken by the defendant to procure GIO to fund his legal fees to file a defence and cross-claim for Carruthers in the Carruthers' proceeding, GIO entered into a litigation funding agreement with Carruthers under which it agreed to fund her defence and cross-claim in those proceedings in consideration for the payment of the entire benefit to her on her success in those proceedings to GIO, subject to GIO indemnifying Carruthers in respect of any liability she may have had for legal costs of her own lawyers or of the plaintiffs' lawyers in those proceedings (Prescott's second GIO misconduct).

69 But for the (sic) Prescott's first and second GIO misconduct:

(a)   Carruthers would never have filed her defence and cross-claim in the Carruthers proceeding;

(b)   the plaintiffs would have been entitled to sign default judgment in their favour against Carruthers within approximately one month of the commencement of those proceedings on or about 30 April 2004;

(c)   the plaintiffs would have been authorised to pay to themselves the net settlement amount, less the nominal legal costs incurred by them at that date in respect of commencement of those proceedings, by no later than 30 June 2004.

70 The plaintiff suffered loss and damage in consequence of Prescott's first and second GIO misconduct.

Prescott's third GIO misconduct

71The entry of Carruthers into the GIO litigation funding agreement was made secretly, in that knowledge of it was withheld from the plaintiffs until discovery of documents was given to them in respect of the defendant's files and other records in 2006 in the Prescott proceedings pleaded in paragraph 82 below (Prescott's third GIO misconduct).

1. I was informed that the allegations set out in those paragraphs of the statement of claim reproduced above have been denied, in their entirety, by the defendant. In view of that denial, there has been a joinder of issue in respect of the following allegations made by the plaintiff:

(1)   On 30 July 2004, the defendant commenced a course of conduct of procuring GIO to fund a defence and cross-claim in the Carruthers proceedings, in the name of Carruthers as the nominee of GIO.

(2)   Such conduct was undertaken in order to recover an amount to enable GIO to reimburse itself for the $200,000 it had paid to Carruthers under a judgment given in her favour in the Compensation Court of New South Wales on 26 July 2001, in her capacity as the defendant spouse of the deceased, in respect of his workers compensation death benefit entitlement.

(3)   The course of conduct in (1) and (2) was commenced by the defendant in the immediate aftermath of the giving of an undertaking by the plaintiffs, and the commencement of the Carruthers proceedings pursuant to that undertaking.

(4)   On 15 October 2004 Carruthers filed a defence and cross-claim in the Carruthers proceedings, on behalf of GIO as its nominee, and at the expense of GIO, in which she:

(i)   denied certain facts;

(ii)   asserted certain facts; and

(iii)   failed to disclose, or identify, certain other facts.

(5)   In about October 2004 GIO entered into a litigation funding agreement with Carruthers, under which it agreed to fund her defence and cross-claim in the Carruthers proceedings, in consideration for the payment of the entire benefit to her, on her success in those proceedings, to GIO, subject to GIO indemnifying her in respect of any liability she may have had for legal costs of her own lawyers, or of the plaintiff's lawyers, in those proceedings.

(6)   The conduct in (5) occurred after further steps had been taken by the defendant to procure the GIO to fund his legal fees to file a defence and cross-claim for Carruthers in the Carruthers proceedings;

(7)   But for the conduct alleged against the defendant:

(i)   Carruthers would never have filed her defence and cross-claim in the Carruthers proceedings;

(ii)   the plaintiffs would have been entitled to sign a default judgment in their favour against Carruthers within approximately one month of the commencement of the proceedings on or about 30 April 2004; and

(iii)   the plaintiffs would have been authorised to pay it themselves the net settlement amount, less the nominal legal costs incurred by them at that date in respect of commencement of those proceedings by no later than 30 June 2004.

(8) The entry of Carruthers into the funding agreement was

made secretly, in that knowledge of it was withheld from the plaintiffs until such time as discovery took place.

THE SUBPOENAS

1. The schedule to each of the subpoenas addressed to GIO Workers Compensation (NSW) Pty Limited and GIO General Limited is in the following terms:

"All documents, records, writings and correspondence in respect of funding of litigation by or on behalf of, or in the name of, Linda Hope Carruthers, by or Linda Hope Carruthers, GIO General Limited, GIO Workers Compensation (NSW) Limited against Margaret Lesley Marshall, in respect of a claim to settlement funds obtained by Margaret Lesley Marshall in the Middle District Court of Pennsylvania, arising out of the death of the late Neil Marshall."

1. The schedule to the subpoena addressed to the partners of Turks Legal is in a more detailed form and is as follows:

(1)   All correspondence and documents passing between Turks Legal, GIO Workers Compensation (NSW) Pty Limited, GIO General Limited, and Prescott's Barristers and Solicitors, Teece Hodgson and Ward and Linda Hope Carruthers, in respect of the funding, by GIO Workers Compensation (NSW) Limited, and/or GIO General Limited of a defence and cross-claim in proceedings 2647 of 2004 between the plaintiff/cross-defendant, Margaret Lesley Marshall and the defendant/cross-claimant, Linda Hope Carruthers.

(2)   All original and copy GIO un-redacted deeds between Linda Hope Carruthers and GIO Workers Compensation (NSW) Limited in respect of funding arrangements for proceedings 2647 of 2004 between the plaintiff/cross-defendant, Margaret Lesley Marshall and the defendant/cross-claimant, Linda Hope Carruthers.

(3)   All files, documents and records of payments made to Michael Prescott and Teece Hodgson and Ward for payments for work done in respect of the funding of the defence and cross-claim of Linda Hope Carruthers against the claim of Margaret Lesley Marshall in, or in respect of, proceedings 2647 of 2004.

(4)   All reports, records, documents and writings passing between Turks Legal and GIO Workers Compensation (NSW) Limited and/or GIO General Limited in respect of the funding of proceedings 2647 of 2004 in respect of a defence and cross-claim of Linda Hope Carruthers against the plaintiff/cross-defendant, Margaret Lesley Marshall.

(5)   All records of telephone conversations between any solicitor at Turks Legal and Michael Prescott and/or David Greenwell, in respect of the funding of or payment for the defence and cross-claim of Linda Hope Carruthers, defendant and cross-claimant, against the claim of Margaret Lesley Marshall, plaintiff and cross-defendant, in proceedings 2647 of 2004.

(6)   All files, file notes, documents and records in respect of conversations or attendances which took place on 6 April 2004, 25 May 2004, 17 August 2004, 18 August 2004, 27 August 2004, 1 September 2004 relating to, or in respect of, funding of the defence or any cross-claim by Linda Hope Carruthers in respect of proceedings 2647 of 2004.

(7)   All records of attendances on Michael Jenkins or any other barrister, correspondence or documents emanating from Michael Jenkins or any other barrister, in respect of, or used in respect of, the funding of the defence and/or claim or cross-claim of Linda Hope Carruthers against Margaret Lesley Marshall, in respect of the proceeds of the settlement of the (sic) Margaret Lesley Marshall's claim in the Middle District Court of Pennsylvania arising out of the death of Neil Marshall.

1. It will be apparent that although the schedule to the subpoena addressed to Turks Legal is more detailed, each of the three subpoenas is directed, in general terms, to the production of material in respect of the plaintiff's assertion that GIO Workers Compensation (NSW) Limited funded the defence of the Carruthers proceedings. However, it is evident from my observations in paragraph (19) above that the issues between the parties extend to matters beyond the fundamental question of funding.

THE PRESENT APPLICATIONS

1. The present applications to set aside the subpoenas are brought pursuant to r 33.4(1) which is in the following terms:

Setting aside or other relief

33.4 (1) The court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in respect of it.

(2) An application under subrule (1) must be made on notice to the issuing party.

(3) The court may order that the applicant give notice of the application to any other party, or to any other person having a sufficient interest.

THE ISSUES

1. In light of the submissions made by the parties, four issues arise for determination. They are as follows:

(1)   Do the applicants have sufficient interest to bring the applications?

(2)   Are the plaintiffs required to establish a legitimate forensic purpose?

(3)   If so, have the plaintiffs established such purpose?

(4)   If so, are any of the documents to be produced documents to which legal professional privilege attaches?

1. As to the fourth issue, it was accepted by Mr Jenkins that if I were to conclude that a legitimate forensic purpose had been established by the plaintiff, he would be required to adduce further evidence in support of any claim for privilege. Accordingly for present purposes, the issues that I have to decide are the first and second issues set out above.

SUBMISSIONS OF THE PARTIES

1. As to the first issue, Mr Jenkins relied upon the specific provisions of r 33.4(1) and, in particular, the reference within that rule to a person having "sufficient interest". He submitted, in particular, that the applicants had a sufficient interest which derived (at least in part) from the fact that each was a custodian of documents of which production was sought.

1. As to the second issue, Mr Jenkins submitted that the plaintiffs were clearly under an obligation to establish a legitimate forensic purpose, notwithstanding the fact that the subpoenas were all directed to non parties. Accepting that, and as to the third issue, Mr Jenkins conceded that it was open for me to conclude that the plaintiffs purpose in issuing the subpoenas and seeking production of documents was a forensic purpose. However, he submitted that it was not a legitimate forensic purpose. In this regard, Mr Jenkins took me, at length, to some of the documents which were produced to the plaintiffs following the report and determination of the referee. He submitted that those documents established the matters alleged in paragraphs (66) to (71) in the statement of claim and that as a consequence, they completely answered what he described as the "forensic enquiry" raised by the joinder of issues, such that production of any further documents could not be said to be said to serve any legitimate forensic purpose.

1. Mr Jenkins submitted that once the point was reached (as he submitted had been reached in this case) where all that was sought were more documents relating to the same issues, the purpose, although forensic, was not legitimate. He submitted that in those circumstances, the issue of the subpoenas became an exercise in fishing or worse still, an exercise which was oppressive.

1. I should note that an affidavit sworn by John Peter Hick, a partner of Turks Legal (one of the applicants) dated 10 November 2011 formed part of the evidence before me. In the course of that affidavit, Mr Hick deposed (in paragraphs 12 and following) to the fact that there were some documents in his possession which responded to the subpoenas and which were contained within some 12 volumes of documentation. He also deposed to the fact that it would be necessary for a person with appropriate legal training to peruse each of those 12 volumes for the purposes of extracting the relevant documents, and that his familiarity with the relevant litigation rendered him the most appropriate person to undertake that task. He estimated both the time that it would take him to do so, and the associated costs involved. No particular submission was made by Mr Jenkins in relation to these parts of the affidavit. In particular, no submission was made that the task outlined by Mr Hick in his affidavit, or the cost of carrying it out, amounted to oppression in any relevant sense.

1. In respect of the first issue, Mr Bevan submitted that the touchstone of standing to apply to set aside a subpoena was that of interest. He submitted that in this context, "interest" meant "interest in the outcome of the proceedings". He submitted that the applicants had no, or no sufficient, interest in the outcome of the present proceedings and that accordingly, they had no standing to make the application to have the subpoenas set aside. He argued that if this conclusion were reached, it would be unnecessary to proceed any further, and that the motions should be dismissed.

1. As to the second issue, Mr Bevan submitted that he was not required to establish a legitimate forensic purpose, as he put it, "at the suit of a stranger". In other words, he drew a distinction in that respect between a subpoena issued to a party to proceedings, and a subpoena issued to a non-party.

1. In the event that I reached a contrary conclusion and rejected that submission, Mr Bevan submitted that a legitimate forensic purpose had, in any event, been established. In developing that submission, he took me to the pleadings in the statement of claim to which I have already referred, and in doing so submitted that although all subpoenas were directed to the broad question of funding, the documents sought went beyond that general issue, to specific and discreet aspects of it.

1. Mr Bevan did not dispute that there were documents in the possession of the plaintiffs which went to the issue of funding. However, he submitted that the legitimacy of the forensic purpose in seeking production of documents was a question to be decided by reference to the pleadings. He also submitted that it was for the plaintiffs to determine whether or not they required further documents to assist in proving their case against the defendant, and that it was not for the applicants to purport to decide what was or was not necessary for that purpose. In other words, he argued that it was not for the applicants to make a determination of whether or not the sum total of the documents produced thus far proved the matters set out in the statement of claim to which I have previously referred, and further submitted that as strangers to the proceedings, the applicants were not in a position to make that determination.

1. Finally, Mr Bevan relied upon the position taken by the defendant at the hearing of the motions as supporting a conclusion that there was a legitimate forensic purpose. He submitted that it was significant that the defendant who, as party to the current proceedings, was fully appraised of the issues, had raised no objection to the subpoenas and, in particular, had not submitted that there was no legitimate forensic purpose. He submitted that in those circumstances, the proper inference to be drawn was that such legitimate forensic purpose existed.

1. In respect of Mr Bevan's final submission, I should note that Mr McManus of counsel appeared for the defendant and was present for the duration of the hearing of the motions. However, he took no active part in the hearing and specifically declined the opportunity I gave him to make submissions. In making those observations, I am not being critical of Mr McManus in any way whatsoever. However, in the light of the final submission of Mr Bevan, Mr McManus' non-participation in the argument is obviously a matter which ought be noted.

RESOLUTION OF THE ISSUES

Do the applicants have sufficient interest to bring the applications?

1. In my view, each of the applicants have sufficient interest within the meaning of r 33.4(1) to bring an application to set aside the subpoena. For a number of reasons, I do not accept Mr Bevan's submission that for the purposes of r 33.4(1) the term "interest" should be construed as meaning "interest in the outcome of the proceedings".

1. To begin with, it is not difficult to envisage a circumstance in which a subpoena might be issued to a non party who has no interest at all in the outcome of the principal proceedings, but who nevertheless may wish to argue (for example) that a subpoena is oppressive in some way. If Mr Bevan's submission were correct, that non party would be completely precluded from raising the issue of oppression and would be forced to comply with the subpoena. Such an outcome would be both extraordinary and unjust.

1. In support of his position on this issue, Mr Bevan referred me to a number of authorities, the first of which was the decision in Commissioner for Railways v Small (1938) 38 SR (NSW) 564. He relied, in particular, on the judgment of Jordan CJ (at 573-574) in support of the proposition that it was not open to the applicants, as he put it, to "stand in the shoes of the defendant and object to production on grounds of relevance". The difficulty with that submission is that properly understood, the objection taken by the applicants is not one based on relevance. Mr Jenkins expressly conceded that there was a forensic purpose in the issue of the subpoenas. However, he argued that there was no legitimate forensic purpose, not because the documents sought were irrelevant, but because they were, in his submission, not necessary for the purpose of the conduct of the plaintiffs' case.

1. Mr Bevan also referred me to the decision of Moffit P in Waind v Hill & National Employers' Mutual Association Limited (1978) 1 NSWLR 372. He submitted that his Honour's judgment was authority for the proposition that a stranger could apply to set aside a subpoena on the basis that it was oppressive to expect any stranger to decide what was or was not relevant to the pleaded issues. He submitted that this was not the case here. For the reasons I have already stated, that submission appears to reflect some misunderstanding of the position taken by the applicants.

1. Finally, Mr Bevan referred me to the decision of Heydon JA (as his Honour then was) in Witness v Marsden (2000) 49 NSWLR 429 at [51] where his Honour observed:

"...a subpoena duces tecum maybe set aside on the application of the person aggrieved on a variety of grounds, for example, that it was being used to obtain discovery against a third party, that it was being used as a substitute for discovery, that it was oppressive, that it had an impermissible purpose, and that it was being used in proceedings for the recovery of a penalty...In Waind v Hill...Moffit P spoke of 'the invasion by the subpoena procedure of the rights of a stranger'."

1. Mr Bevan submitted that none of the grounds of objection identified by Heydon JA came close to that of relevance to pleaded issues. Leaving aside the fact that the basis of the objection raised by the applicants is not that of relevance, I do not read his Honour's judgment as intending to lay down an exhaustive list of the bases upon which a non party may bring an application to set aside a subpoena. It is quite clear that his Honour was proffering various examples in that regard. In my view, his Honour's judgment cannot be construed as authority for the proposition that the bases upon which a non party can seek to set aside a subpoena are restricted to those to which his Honour referred, to the point that the categories are closed.

1. Quite apart from these matters, Mr Bevan's submissions in relation to this first issue are, in my view, contrary to authority. In Principal Registrar of the Supreme Court of New South Wales v Tastan (1994) 75 A Crim R 498 Barr AJ observed (at 503):

"The court may entertain an application from a person not a party to the proceedings to quash a subpoena addressed to that person. Part 37 r 8 of the Supreme Court Rules contemplates the court entertaining the motion of any person having a sufficient interest: see also Finnie v Dalglish [1982] 1 NSWLR 400 at 405 B. In my opinion the plaintiff is a person with sufficient interests to bring this motion."

1. It is relevant that in Tastan, the moving party was the Principal Registrar of the Supreme Court. The Principal Registrar took that action in circumstances where, like the present applicants, he was the custodian of the material which was sought pursuant to the subpoena. Further, and again like the present applicants, the Principal Registrar had no apparent interest in the outcome of the prosecution proceedings against the accused at whose request the subpoena had been issued. In my view, the observations of Barr JA tend wholly against Mr Bevan's submissions as to the meaning of the term "sufficient interest" as it appears in r 33.4(1).

1. It follows that in my view, the applicants have sufficient interest to bring the present applications.

Are the plaintiffs required to establish a legitimate forensic purpose?

1. I do not accept Mr Bevan's submission that because the present subpoenas are issued to a non party, the plaintiffs are somehow relieved of the obligation to establish a legitimate forensic purpose. Such a proposition is, in my view, again contrary to authority.

1. In Tastan (supra) Barr AJ observed (at 504):

"It is the duty of the court, where the issue is raised, to require the party calling on a subpoena to produce documents to identify expressly and precisely the legitimate forensic purpose for which access to documents is sought, and to refuse access unless such identification is made: R v Saleam (1989) 16 NSWLR 14; 39 A Crim R 406; Maddison v Goldrick [1976] 1 NSWLR 651; McPhail v R (1988) 36 a Crim R 390; Burmah Oil Company Limited v Bank of England [1980] AC 1090 at 1113-1114; Attorney General (New South Wales) v Stuart (1994) 34 NSWLR 667 at 681; 75 A Crim R at 21 per Hunt CJ at CL."

1. As I have already noted, his Honour's judgment was given in the context of an application made by a non party to set aside a subpoena.

1. In Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667, which was one of the authorities to which Barr AJ referred, Hunt CJ at CL made the following observation (at 681):

"The third matter upon which the Attorney General relies concerns the need for the party seeking access to documents to demonstrate a legitimate forensic purpose before any balancing exercise between the conflicting aspects of the public interest can be undertaken. I earlier quoted authority for that need: Burmah Oil Company Limited v Govenor & Company of the Bank of England (at 113-114, 1129); Alister v The Queen (at 412, 414, 438) (emphasis in original)".

1. Subsequently, in New South Wales Commissioner of Police v Tuxford & Ors [2002] NSWCA 139 (which was also a case in which a non party to proceedings made an application to set aside a subpoena) Brownie AJA (with whom the other members of the court agreed) made the following observation (at [20]):

"Next, the claimant contended that the subpoena lacked a legitimate forensic purpose. Once again, it is plain beyond argument that if documents are produced on subpoena and objection is taken to their being inspected, inspection should not be permitted unless and until the party who procured the issue of the subpoena identifies a legitimate forensic purpose. In that context it is said that a party is not entitled to go on a fishing expedition nor should the court do so: Commissioner for Railways v Small (1938) 38 SR 564 at 575; R v Saleam (1989) 16 NSWLR 14; Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667 at 681. See to Air Canada v Secretary for State for Trade [1983] 2AC 394 at 439 and 453 and Alister v The Queen (1984) 154 CLR 404 at 414. The concept of legitimate forensic purpose is not confined to claims of public interest immunity. It is arises whenever a party seeks access to documents for which it is issued a subpoena. Where that objection is taken, a party who is unable to show that it is at least "on the cards" that such documents will assist his case is not entitled to have access to such documents simply to see whether they may do so: R v Saleam (at 17-18). He is not entitled to conduct a fishing expedition. The need to show a legitimate forensic purpose arises even if the claim of public interest immunity fails. It is therefore a prerequisite before the balance required for that claim can be struck" (emphasis in original).

1. Having made reference to the observations of Barr AJ in Tastan (supra) Brownie AJA further observed (at [23]):

"The opponents did not, either in the District Court or in this Court, attempt to (identify the legitimate forensic purpose), except in terms of the utmost generality and without reference to the numbered paragraphs of the subpoena. In the District Court, it was apparently thought that it was the obligation of the Judge herself to go through the paragraphs of the subpoena, and to give rulings on the sixty - six paragraphs. However, it was the obligation of the opponents to justify the subpoena, and in a case such as the present one, to do it by reference to the sixty - six paragraphs either individually or, where appropriate, by grouping different paragraphs together."

1. Having regard to these authorities Mr Bevan's submission that the plaintiffs are not required to establish a legitimate forensic purpose must be rejected. In my view they are clearly required to do so.

Have the plaintiffs established a legitimate forensic purpose?

1. I do not accept the submission that the position which was adopted by the defendant in the present application leads, without more, to the conclusion that a legitimate forensic purpose exists. There may be a number of forensic reasons why the defendant adopted that position. I am therefore required to go beyond that fact in order to determine the question of whether or not a legitimate forensic purpose has been established.

1. In Tastan (supra) Barr AJ observed (at 505):

"A subpoena to produce documents will have a legitimate forensic purpose if it appears to be 'on the cards' that the documents will materially assist the person at whose request the subpoena is issued: Alister v R (1984) 154 CLR 404 at 414 per Gibbs CJ; Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667 at 681. On the other hand, there will be no legitimate forensic purpose if all the party is doing is trying to get hold of the documents to see whether they may assist him at all in his case: Commissioner for Railways v Small (1938) 38 SR(NSW) 564; Associated Dominions Assurance Society Pty Limited v John Fairfax & Sons Pty Limited (1952) 72 WN (NSW) 250.

1. Subsequently, in R v Saleam [1999] NSWCCA 86 Simpson J (with whom Spigelman CJ and Studdert J agreed) observed at (11):

"The principles governing applications [for an order that documents not be produced] are no different from those governing applications for access to documents produced in answer to a subpoena. Before access is granted, (or an order to produce made) the applicant must (i) identify a legitimate forensic purpose for which access is sought; and (ii) establish that it is 'on the cards' that the documents will materially assist his case. So much was established in earlier proceedings brought by this applicant: R v Saleam (1989) 16 NSWLR 14 per Hunt CJ at CL; see also R v Ali Tastan (1994) 75 A Crim R 498 per Barr AJ was he then was".

1. In Attorney General (NSW) v Chidgey [2008] NSWCCA 65 Beazley JA (with whom James and Kirby JJ agreed), having made reference to the judgment of Simpson J in R v Saleam (supra) observed (at [70]):

"The Attorney General indicated that Simpson J's formulation in R v Saleam (1999) represented the commencement of a line of authority in which the test for the production of, or access to, documents, was specifically stated as comprising two steps: a legitimate forensic purpose and that it was "on the cards" that the documents would materially assist the case. However, in stating the test in this specific 'two step' way, her Honour did not state any new principle. As I have already stated at [64], in the authorities that preceded R v Saleam [1999], including Alister, the courts, in determining whether access should be granted to documents sought on subpoena, have always applied a test that involves determining whether each of the factors identified by Simpson J have been established".

1. Her Honour continued (at [80]):

"I see no reason to depart from the language used by Simpson J in this Court in R v Saleam [1999]. To do so only invites confusion. This Court has already stated what the test is and in my opinion, should continue to apply that test in accordance with the language used in the form in which it has stood since Alister and R v Saleam [1999]".

1. As I have noted, Mr Jenkins submitted that the forensic purpose was not legitimate because the documents already in the possession of the plaintiffs following the referee's report established the matters alleged by the plaintiffs in paragraphs (66) to (71) in the statement of claim. Prima facie, I would accept that the documents in the plaintiffs' possession tend to establish that a relevant funding agreement was executed. So much is clear from the fact that a copy of such agreement (albeit a redacted one) is amongst those documents. It is also the case, as I remarked in the course of the hearing, that paragraphs (66) to (71) go to what might be described as the general issue of funding. However, having read the documents, I am unable to come to the conclusion that such documents establish each and every one of the issues raised by the pleadings, to the point that a subpoena directed towards the production of further documents in relation to those issues should be regarded as having no legitimate forensic purpose. Without going to each and every document, there are a number of inferences which might be drawn from them. Some of those inferences may assist the plaintiffs, some may not.

1. Mr Jenkins also submitted that having regard to the terms of each subpoena, it was impossible to discern anything broader than a call for documents going to the issue of the funding of the Carruthers proceedings. However, that submission oversimplifies the position and fails to take into account the fact that having regard to the pleadings, there exists what might be described as a "sub-set" of issues between the parties which arise from the fundamental issue of funding. That sub-set includes, but is not limited to, the issues of whether:

(i)   the defendant commenced a course of conduct of procuring such funding by one of the applicants;

(ii)   Carruthers, in filing a defence, did so as a nominee of, and at the expense of, one of the applicants; and

(iii)   the defendant, in acting as he allegedly did, acted covertly, and/or was preferring the interests of Carruthers over the interests of, and in breach of, his obligations to, the plaintiffs.

1. I do not accept that the fact that the schedule to each subpoena is cast in terms referable to the broader issue of funding means that the subpoena is objectionable. The schedules are, in my view, drafted with sufficient particularity to enable the applicant in each case to identify the documents of which production is sought. I am fortified in that view by the affidavit of Mr Hick, which does not suggest that there would be any difficulty in identifying the relevant documents within those documents which are in his possession.

1. It is legitimate for the plaintiffs to seek production of material which, on its face, goes directly to the issues in the proceedings. In my view, this is not a case where the underlying purpose of the plaintiffs in issuing the subpoenas is to discover whether or not they have a case at all. The production of the funding agreement would suggest that they have some case to argue. Rather, the purpose is to obtain evidence which supports their case, and which is relevant to fundamental issues in the proceedings (as to which see Commissioner for Railways v Small (supra) at (564). It follows that in my view, a legitimate forensic purpose has been made out by the plaintiffs.

1. Further, in my view it is not for the applicants to purport to make a determination that no further documents are legitimately required for the purposes of the proper conduct of the plaintiffs' case in relation to the issues arising from paragraphs (66) to (71). As parties to the proceedings, the plaintiffs are in a somewhat better position than the applicants to determine that question. In this regard, the observations of Einstein J in P & N Quality Smallgoods Pty Limited v Seven Network (Operations) Pty Limited [2010] NSWSC 841 are apposite. His Honour, having cited the observations of Beazley JA in Chidgey (supra), and in reference to an earlier decision of Rolfe J in Lakatoi Universal Pty Limited & Ors v Walker & Ors ((SC (NSW) unreported 31 July 1998) observed (at [18]-[19]):

"The determination ...requires the court, as Rolfe J indicated, to bear in mind the entitlement of the parties to build up what his Honour referred to as 'an evidentiary mosaic'.

As Rolfe J said, that exercise generally cannot be done, particularly in complicated commercial litigation, by the tender of one piece of evidence, or the assertion that only limited material is relevant to the issues involved."

1. Finally, and for the reasons outlined, it is my view that the plaintiffs have demonstrated that it is "on the cards" that the documents set out in the schedule to each subpoena will materially assist their case. The production of material to the plaintiffs following the referee's report has given rise to a situation where there is at least some prima facie evidence that there were funding arrangements put in place by one of the applicants in relation to the Carruthers proceedings. However, as I have said, the matters in issue in the proceedings go well beyond the mere fact of funding, and extend to (inter alia) the defendant's alleged procurement of that arrangement, along with the purpose for which he engaged in that conduct. In my view, the documents sought under each of the subpoenas clearly go to those issues, as well as others

ORDERS

1. Because of the conclusions that I have reached, there remains an issue of privilege to be determined. That will require the applicants to file further evidence and I anticipate that once that evidence is filed, there will necessarily have to be further argument on that question so that the notices of motion can be finally determined.

1. In these circumstances I make the following orders:

(1)   The applicants are to serve any further evidence upon which they propose to rely in support of the claim for legal professional privilege by 4pm on Friday 22 June 2012.

(2)   The notices of motion are stood over for further directions on Friday 29 June 2012.

(3)   I reserve the question of costs until the final determination of the motions.

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Decision last updated: 08 June 2012