Omega Plumbing Pty Ltd v Harbour Radio Pty Ltd

[2020] NSWSC 320

Supreme Court

New South Wales

Medium Neutral Citation:

Omega Plumbing Pty Ltd v Harbour Radio Pty Ltd [2020] NSWSC 320

Hearing dates:

16 March 2020

Date of orders:

30 March 2020

Decision date:

30 March 2020

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

The Court orders that:

 

(1) The subpoena addressed to the Commissioner of the New South Wales Department of Fair Trading is not set aside.

 

(2) The subpoena addressed to the Proper Officer of the Master Plumbers Association of NSW is not set aside.

 

(3) The plaintiff’s notice of motion filed 21 February 2020 is dismissed.

 (4) The plaintiff is to pay the defendants’ costs.

Catchwords:

CIVIL PROCEDURE — Set aside a subpoena — Whether there is a legitimate forensic purpose for which access is sought — Whether it is “on the cards” that the documents will materially assist the defendants’ case — Where the plaintiff claims against the defendants in injurious falsehood

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW), r 33.4

Cases Cited:

Commissioner for Railways v Small (1938) 38 SR 564
Commissioner of Police v Hughes (2009) NSWCA 306
Omega Plumbing Pty Ltd v Harbour Radio Pty Ltd t/as 2GB and 2GB 873 [2019] NSWSC 1576
Palmer Bruyn & Parker v Parsons (2001) 208 CLR 388
R v Saleam [1999] NSWCCA 86

Category:

Principal judgment

Parties:

Omega Plumbing Pty Ltd (Plaintiff)
Harbour Radio Pty Ltd (First Defendant)
Raymond Morris Hadley (Second Defendant)

Representation:

Counsel:
Mr D Sibtain + Mr J Mack (Plaintiff)
Mr M Richardson (Defendants)

  Solicitors:
Morrissey Law & Advisory (Plaintiff)
Banki Haddock Fiora Lawyers (Defendants)

File Number(s):

2019/346521

Publication restriction:

Nil

Judgment

1. The issue for determination is whether two subpoenas issued by the defendants should be set aside.

2. By notice of motion filed 21 February 2020, the plaintiff seeks the following orders: firstly, that the subpoena to produce documents filed and served by the defendants on the Proper Officer of the Master Plumbers Association of New South Wales be set aside; and secondly, that the subpoena to produce documents filed and served by the defendants on the Commissioner of the New South Wales Department of Fair Trading be set aside, both pursuant to r 33.4 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). The defendants oppose the orders sought.

3. The plaintiff is Omega Plumbing Pty Ltd (“Omega Plumbing”). The first defendant is Harbour Radio Pty Ltd (“Harbour Radio”). The second defendant is Raymond Morris Hadley. The plaintiff relied upon the affidavit of Matthew Bryan dated 21 February 2020. The defendants relied upon the affidavit of Bruce Norman Burke dated 28 February 2020.

The pleading framework

4. By statement of claim filed 16 December 2019, the plaintiff sues for publication of injurious falsehoods in broadcasts made by Mr Hadley on 2GB, a commercial radio station, from 29 October 2019 to 4 November 2019.

5. The representations upon which the plaintiff sues are that the plaintiff:

1. overcharges its customers (para [6]);

2. rips off its customers ([7]);

3. engages in unethical and dishonest business practices ([8]);

4. steals from its customers ([9]);

5. charges its customers for services it does not provide ([10]);

6. targets vulnerable clients ([11]); and

7. has been excluded from the Master Plumbers Association ([12]).

6. These are very broad representations of overcharging and engaging in unethical and dishonest business practices. The plaintiff asserts that these representations are false, which is why the defendants say that the issue of legitimate forensic purpose arises.

7. The recordings giving rise to these allegations are set out at [21]-[28] in Omega Plumbing Pty Ltd v Harbour Radio Pty Ltd t/as 2GB and 2GB 873 [2019] NSWSC 1576 (“Omega Plumbing”) by Davies J. I refer to them but need not reproduce them here.

The defence

8. The defendants rely on a defence filed 24 January 2020. That defence admits publication of the broadcasts and the uploading of material to the internet. However, it denies that the material conveyed the pleaded representations, and denies that those representations were false or published with malice, and that they caused special damages.

Injurious falsehood

9. The four elements of the tort of injurious falsehood were set out by Gummow J in Palmer Bruyn & Parker v Parsons (2001) 208 CLR 388 at [52] as follows:

1. a false statement of or concerning the plaintiff;s goods or business;

2. publication of that statement by the defendant to a third person;

3. malice on the part of the defendant; and

4. proof by the plaintiff of actual damage (which may include a general loss of business) suffered as a result of the statement.

10. The onus is on the plaintiff to prove each of these four elements. Thus, for example, whereas in defamation it is for the defendant to plead and raise the defence of truth, in injurious falsehood it is the plaintiff who must plead and prove falsity. In defending a claim in injurious falsehood, a defendant is merely obliged to deny the allegations raised.

Omega Plumbing

11. On 15 November 2019, Davies J handed down judgment in Omega Plumbing, granting the plaintiff an interlocutory injunction. At [16] of his judgment, his Honour noted that the defendants had not submitted that there was no prima facie case disclosed on falsity or damage. What the defendants contested was whether there was a prima facie case disclosed on malice.

12. On 20 November 2020, Davies J made orders restraining the defendants from making certain statements pending the determination of the proceeding. Those orders were made subject to an order permitting the defendants to publish a fair report of any proceedings or official investigations, including any negative findings that may be published by the NSW Department of Fair Trading as a result of an investigation presently being conducted ([54]). Davies J found that the plaintiffs had established a prima facie case that the defendants had made the statements maliciously, as there was no material in their possession to justify the making of the statements, and they had no proper basis for making them ([44]-[49]).

The plaintiff’s submissions

13. The plaintiff submitted that as Davies J’s consideration in Omega Plumbing was primarily directed to the question of whether the plaintiff had established a prima facie case of malice, the Court made findings as to the absence of material to justify the making of the statements. Save for one communication with the Master Plumbers Association of NSW at [42], the defendants led no evidence to support the truth of the statements of which the plaintiff complains. They conceded a prima facie case of falsity. The plaintiff submitted that the proper inference to be drawn is that they did not lead evidence or contest a prima facie case of falsity because the only information that they had (and now have) was the information referred to in relevant broadcasts and publications: see Davies J at [21]-[28].

14. In respect of the allegations at [13] and [14] of the statement of claim, the defendants did not deny the allegations that the statements were false and provide particulars of truth. The plaintiff submitted that their failure to do so leads to the inference they are presently unable to advance a positive case as to the truth or falsity of the statements of which the plaintiff complains.

15. The plaintiff accepted that the defendants were not obliged to plead detailed particulars of falsity subscribed to those paragraphs. However, it submitted that it is telling that they did not provide some particulars of truth. The plaintiff’s particulars carefully described its business practices. The plaintiff submitted that had the defendants been able to contend that the true business practices of the plaintiff differed from those it asserted, or that there were instances of departures from those practices, the defendants could have elected to put forward that case or those instances.

The defendants’ submissions

16. The defendants submitted that in defending the plaintiff’s claim in injurious falsehood, they are only obliged to deny the allegations raised. The defendants submitted that the plaintiff’s submissions to the effect that the defendants are obliged to provide particulars, or that it would be appropriate for them do so, are incorrect and unsupported by authority. They also submitted that it would not be appropriate them to respond to particulars of falsity.

Legal Principles - Setting Aside a Subpoena

17. Rule 33.4 of the UCPR gives the Court power to set aside a subpoena on the application of a party. It reads:

“33.4 Setting aside or other relief (cf SCR Part 37, rule 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)    ....”

18. The test to be applied in the production of documents has been stated by Simpson J in R v Saleam [1999] NSWCCA 86 at [11] as follows:

“[11] The principles governing applications [for an order that documents not be produced] are not 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.”

19. The threshold the defendants must pass to uphold the subpoena is relatively low. The party issuing the subpoena, in this case the defendants, bear the onus of identifying a legitimate forensic purpose: see Commissioner of Police v Hughes (2009) NSWCA 306 at [77]. They must then establish that it is “on the cards” that the documents sought would assist their case.

20. A subpoena may also be set aside if it is fishing, in that it is an attempt to discover whether a party has a case at all, rather than an attempt to obtain evidence in support of its case: see Commissioner for Railways v Small (1938) 38 SR 564 at 575.

The subpoenas

21. There are two subpoenas that the plaintiff seeks to set aside. The first is addressed to the Commissioner of the NSW Department of Fair Trading, and the second is addressed to the Proper Officer of the Master Plumbers Association of NSW.

(1) The NSW Department of Fair Trading

22. Following discussions between the defendants’ solicitor and the NSW Department of Fair Trading, the schedule to the subpoena issued to the Court has been modified by negotiation: see Ex 1. The narrowed schedule is as follows:

1. a copy of the Omega trader profile;

2. documents relating to 25 consumer complaints concerning the plaintiff which resulted in a trader education letter, penalty infringement notice, Notice to Show Cause and/or a consumer complaint being referred for prosecution;

3. a copy of the Notice to Show Cause issued to Omega, Allan Ferguson (the sole director of the various Omega Companies) and Alfred Borg, as well as submissions received by the NSW Department of Fair Trading in response; and

4. documents being or relating to NCAT proceedings involving Omega and/or Allan Ferguson that are in the control of the Home Building Licensing Unit, which relate to a licence suspension arising from non-compliance of NCAT orders and the refusal of licence applications.

Evidence

23. On 30 October 2019, the Minister for Better Regulation in New South Wales, Kevin Anderson, engaged in the following exchange with Mr Hadley in an interview broadcast on 2GB:

“Hadley: Has someone brought this mob to your attention previously, Omega, or are we the first ones to talk about it.

Anderson: So you’re the one that has shone the spotlight on it fair and square. I can tell you that they are under investigation by Fair Trading and that investigation is continuing. So we are aware of what they’re doing.

Hadley: What’s the nature of the investigation. Is it simply overcharging or are there other matters involved?

Anderson: There are other matters involved Ray, it’s not just about overcharging.

24. Therefore, it is a matter of public record that as at 30 October 2019, the plaintiff was under investigation by Fair Trading in relation to overcharging and other matters (my emphasis).

25. Mr Hadley spoke on air with five people who had complaints about the plaintiff, and referred to a further 18 complaints that had been received in writing. Further, complaints were received that were not mentioned on air. Mr Hadley also referred to the existence of eight infringement notices. The record in his possession is annexed to Mr Burke’s affidavit and shows that a number of the infringements involved excessive deposits and the performance of work without insurance.

Consideration

26. At the hearing, counsel for the plaintiff conceded that if there have been consumer complaints, they may concern an issue in the proceedings. However, he submitted that they cannot have any legitimate forensic purpose if there are going to be de-identified complaints (T 15.35-42). The alleged representations made against the defendants are very broad. There are approximately 140 pages of documents, and only two or three instances where the complainant’s name has been de-identified for privacy reasons (T 9.41-44). It is my view that the documents identified in paras [2]-[4] of the subpoena identify a legitimate forensic purpose, and it is on the cards that the documents will materially assist the defendants’ case. If it is intended that the de-identified witnesses need to be called to give evidence at trial, whether to reveal their names may need to be reconsidered.

27. That leaves the document which is subject of item (1) of the schedule, namely the Omega trader profile. It contains a record of each of the “complaints” and each of the “enquiries” made against Omega and/or Allan Ferguson, including a description of the complaint as input by the consumer. For privacy reasons, the NSW Department of Fair Trading has redacted the following details from the document: the consumer name, telephone number, address, and any other identifying details.

28. Allan Ferguson is the sole director of Omega. It is not clear what role Mr Berg plays, but it may be that he is an officer of Omega. Counsel for the plaintiff conceded that if the addressees are read conjunctively and not disjunctively, that gets rid of part of the objections (T 13.48-50; 14.1-3). He points out that another shortcoming of the plaintiff’s request for the documents sought in item (1) of the schedule is that the plaintiff has not demonstrated that the notice to show cause has anything to do with any issue in the proceeding.

29. It is the defendants’ opinion that the documents in the Omega trader profile are highly relevant to the matters in these proceedings, and are likely to save a considerable amount of time in any final hearing because they could alleviate the need to call a number of witnesses.

30. An ASIC search of Omega Plumbers shows that between 26 November 2018 and 12 June 2019, the company has been issued 7 infringement notices.

31. It is my view that the defendants have demonstrated that these documents relate to issues in the proceedings, namely that the representations are not false. The subpoena has been issued for a legitimate forensic purpose. It is “on the cards” that the documents would assist the defendants’ case. The subpoena addressed should not be set aside.

(2) The Master Plumbers Association of NSW

32. The schedule in the subpoena directed to the Master Plumbers Association of NSW is as follows:

1. all documents being or relating to complaints regarding Omega and/or Allan Ferguson made between January 2010 and the present;

2. all documents being or relating to any investigation undertaken in relation to Omega and/or Allan Ferguson between January 2010 and the present;

3. all documents being or evincing disciplinary action taken against Omega and/or Allan Ferguson between January 2010 and present;

4. all documents being or relating to any NCAT proceeding involving Omega and/or Allan Ferguson, including any referrals made to NCAT;

5. all documents being or evincing the reasons for the cancellation of Omega’s membership with the Master Plumbers Association of NSW in 2013; and

6. all documents evincing Omega’s continuation of use of Master Plumbers Association of NSW logos (or any other identifying mark, including trademarks) following the termination of Omega’s membership with the Master Plumbers Association of NSW.

33. At the hearing of these proceedings, the time period in the schedule was limited to between January 2010 and December 2013.

34. The Master Plumbers Association of NSW did not object to the subpoena in this form, and has already produced documents in accordance with the subpoena.

35. So far as the subpoena addressed to the Commissioner of the NSW Department of Fair Trading is concerned, the defendants accepted at the hearing of the interlocutory application before Davies J that the statement that the plaintiff had been excluded from the Master Plumbers Association was wrong (at [42]). Notwithstanding that acceptance, the defendants issued a subpoena addressed to the Master Plumbers Association of NSW.

36. So far as the subpoena directed to the Master Plumbers Association of NSW is concerned, on 28 October 2019, Ms Joo of Macquarie Media made a call on behalf of Mr Hadley. She spoke with Paul Naylor, the CEO of the Master Plumbers Association of NSW, about the plaintiff. Mr Naylor stated, “five years ago, we refused to renew their membership.” A file note of that conversation further reveals that Mr Naylor described the plaintiff as having a “long track record” and that the plaintiff was the type to “go in with couple hundred dollar quote, walk out with thousands of dollars in contract.”

37. Although at the hearing of the interlocutory application there was evidence that the plaintiff was a member of the Master Plumbers Association of Australia as of 2019, the defendants argue that that is not relevant to determining whether the plaintiff was excluded from the NSW association in or about 2013/2014.

The plaintiff’s submissions

38. The plaintiff submitted that the defendants are fishing for a case. It submitted that the documents sought in paras [1]-[4] of the subpoena demand third party discovery of all documents relating to the plaintiff and to a stranger to the litigation, Allan Ferguson. They are not confined to documents going to the statements complained of, in relative proximity to the publication. The defendants seek, during a three year period, all documents being or relating to complaints, investigations, disciplinary action and proceedings, even where those documents might have no bearing upon the truth or falsity of the statements.

39. Further, the plaintiff questioned how the fact that a complaint has been received or investigated is relevant to the truth or falsity of any of the statements of which the plaintiff complains. The fact or content of a complaint does not constitute evidence of the truth of the allegation made by the complainant, even if the complaint touches upon one of the statements where truth or falsity is in issue. The same may be said of any investigation. As such, the plaintiff submitted that the decision to investigate and the steps taken to investigate are not probative of any fact in issue.

40. The plaintiff made a similar submission in respect of disciplinary action and referrals to NCAT. Disciplinary action is evidence of nothing more than the opinion of a third-party association body. A referral to NCAT is nothing more than a request for NCAT to make a conclusion about a dispute.

41. For these reasons, the plaintiff submitted that it is clear that what the defendants are seeking to do is to uncover instances of alleged misconduct on the part of the plaintiff so that they can then commence their own enquiries and seek to elicit evidence going to the truth or falsity of any such allegations. They are using the subpoena process to find out whether there is anything to investigate.

38. As to the documents sought in para [5] of the subpoena, the plaintiff submitted that the only relevant issue in the proceedings concerning the Master Plumbers Association is whether the plaintiff was, or was not, excluded from that association as at the date that the statement was made by the defendants in late 2019. The plaintiff established, to the satisfaction of the Court and the defendants, that it is a member of the Master Plumbers Association. That controversy has been resolved.

39. The plaintiff submitted that the impropriety of the subpoena can be tested as follows. Even if the plaintiff had been excluded from the NSW branch of the Master Plumbers Association at some earlier time, which the plaintiff denies, they had renewed their membership with the national association at the time of the relevant broadcasts and publications. As such, the defendants’ statements were false. Documents going to the plaintiff’s former exclusion from the NSW branch would not be relevant to a fact in issue.

40. The defendants seek documents evidencing the reasons for the cancellation of the plaintiff’s membership with the Master Plumbers Association of NSW in 2013. Those documents could not be relevant to statements made seven years later, particularly in circumstances where the defendants have accepted the currency of the plaintiff’s membership of the national association.

41. The documents sought in paragraph [5] are not confined in time, and the subpoena suffers from the defect identified above. The plaintiff questioned how the fact of referral to NCAT, or the commencement of proceedings in NCAT, could be probative, adjectivally or otherwise, of the truth or falsity of the statements of which the plaintiff complains.

42. The plaintiff submitted that the insufficiencies of para [6] are patent. The defendants seek documents “relating to any consideration and/or attempt to cancel” the plaintiff’s licences. Such documents could never be relevant to a fact in issue in the proceedings. The views of the NSW Department of Fair Trading and any attempts made by the department to cancel a licence would not be relevant to the truth of falsity of the statements of which the plaintiff complains. Further, the documents sought are not confined by the subject matter of the proceedings, being the truth or falsity of certain statements.

43. In the present case, the documents sought that the defendants are seeking to use the coercive powers of a subpoena to obtain the documents in order to see whether they may assist it in its case.

44. It cannot be submitted by the defendants that it is “on the cards” that the documents will materially assist the defendants’ case. It cannot be submitted by the defendants that the documents sought could possibly throw light on the issues in the proceeding. That is because many of the documents sought simply do not bear upon the truth or falsity of the statements of which the plaintiff complains, which were made by the defendants in late 2019.

45. The defendants’ case, put at its highest, can only be that they are hopeful that material will be produced that will materially assist their case, although how it will do so cannot be known to the defendants until they have had a chance to obtain the material.

The defendants’ submissions

50. The defendants submitted that this subpoena is directed to obtaining documents that will be relevant to the issue of the falsity of the representations. That is a legitimate forensic purpose. Furthermore, it is “on the cards” that the documents held by the Master Plumbers Association of NSW will assist the defendants’ case.

51. The CEO of the Master Plumbers Association of NSW has advised that the plaintiff’s membership with that organisation was not renewed five years ago, and that in his view, the plaintiff had a systemic problem with contract prices exceeding quotes. Furthermore, the defendants submitted that they had already spoken with a significant number of complainants, and were aware of the existence of infringements. The schedule negotiated with the NSW Department of Fair Trading reveals the nature of the documents available.

52. In these circumstances, the defendants submitted that they are perfectly entitled to issue subpoenas which will have the effect of uncovering multiple instances of misconduct, the precise details of which are as yet unknown to them. The defendants know there are complaints and misconduct which the NSW Department of Fair Trading has deemed worthy of investigation, and they know that documents exist which will throw light on these issues.

53. As to the plaintiff’s submission that “the fact or content of a complaint does not evidence the truth of any allegation made by the complainant”, the defendants submitted that the plaintiff has completely misunderstood the test. If, for instance, an issue in a proceedings involves a business overcharging, where there is evidence of an ongoing investigation by a government agency into the business overcharging, the legitimate forensic purpose of a subpoena seeking those investigation documents is self-evident, and it is “on the cards” that the documents sought would assist the case of the party seeking to establish overcharging. The party issuing the subpoena would not have to establish that the complaints forming part of the investigation are true or reliable.

54. Similarly, the defendants submitted that it does not matter whether disciplinary action (including letters, penalty infringement notices, notices to show cause and proceedings involving a license suspension) is justified, or that such documents may disclose “the opinion of a third party association body”. The point is that it is on the cards that such documents (recording the underlying facts leading to the disciplinary action) will assist the defendants’ case.

55. As to the plaintiff’s submissions concerning the Master Plumbers Association of NSW subpoena, the defendants submitted that the records of complaints, investigation, and/or disciplinary action in relation to the overcharging and unethical behaviour retained by the Master Plumbers Association of NSW would satisfy the legitimate forensic purpose and “on the cards” tests on the same basis as the documents sought from the NSW Department of Fair Trading.

56. The fact that the plaintiff, after having been excluded from the Master Plumbers Association of NSW, subsequently joined another state or national organisation does not render the circumstances of the earlier exclusion by the NSW association irrelevant to the truth or falsity of the representations. Indeed, the defendants submitted that it is “on the cards” if not outright likely that those circumstances involved serious misconduct on the part of the plaintiff.

57. For these reasons, the defendants submitted that the subpoena has a legitimate forensic purpose, namely to obtain documents relevant to the falsity of the representations. It is “on the cards” that the documents produced will relate to the issues in the proceedings. There is no fishing, because the defendants already know for a fact that both the NSW Department of Fair Trading and the Master Plumbers Association of NSW must have relevant documents. There is no evidence the subpoena is oppressive or otherwise unduly burdensome.

Resolution

58. The plaintiff is currently a member of the National Plumbers Association of Australia, and has been since 2019. However, there are a sufficient number of complaints concerning contract prices exceeding quotes in the past until 2013, when the plaintiff’s membership in the NSW association was refused. This earlier behaviour is of the same type which is the subject of the current complaints.

59. It is my view that the subpoena addressed to the NSW Master Plumbers goes to a legitimate forensic purpose. It is on the cards that the documents will materially assist the defendants’ case, because the plaintiff has a “long track record” of behaviours which culminated in 2013 when the Master Plumbers of NSW refused to renew the plaintiff’s membership. I decline to set aside the defendants’ subpoena addressed to the Master Plumbers Association of NSW.

60. The result is that I decline to set aside either subpoena, neither the one addressed to the NSW Department of Fair Trading nor the one addressed to the Master Plumbers Association of NSW. Hence, the plaintiff’s notice of motion filed 21 February 2020 is dismissed.

Costs

61. The plaintiff sought that it be entitled to costs in relation to the subpoena addressed to the NSW Department of Fair Trading, as the documents sought in the schedule of the subpoena were narrow and it had prepared its submissions in relation to the wider schedule. This amendment was not of significance. Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendants’ costs.

The Court orders that:

1. The subpoena addressed to the Commissioner of the New South Wales Department of Fair Trading is not set aside.

2. The subpoena addressed to the Proper Officer of the Master Plumbers Association of New South Wales is not set aside.

3. The plaintiff’s notice of motion filed 21 February 2020 is dismissed.

4. The plaintiff is to pay the defendants’ costs.

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Decision last updated: 30 March 2020