SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Pesec v Consolidated Builders Ltd |
Citation: | [2022] ACTSC 241 |
Hearing Date: | 2 September 2022 |
DecisionDate: | 6 September 2022 |
Reasons Date: | 7 September 2022 |
Before: | McWilliam AsJ |
Decision: | (1) The subpoena issued to Hardwickes Partners Pty Ltd ACN 008 401 536 is set aside in part as follows: (a) Item 12 is struck out. (2) The subpoena issued to BDO Services Pty Ltd ACN 134 242 434 is set aside in part as follows: (a) The words “and as at the date of this subpoena” in the schedule are struck out. (b) Item 3 is struck out. (3) The subpoenas issued to Actgall Pty Limited t/as Raine & Horne Commercial Canberra ACN 080 502 272, Vantage Strata Pty Ltd ACN 602 359 482, and Sean McGill Pty Limited & Todd Hadley Pty Limited ABN 46 156 696 001 t/as MJD Valuers are each set aside in part as follows: (a) The words “and as at the date of this subpoena” in the schedule are struck out. (4) The application in proceeding filed 24 August 2022 is otherwise dismissed. (5) Costs are reserved. (6) The matter is listed before McWilliam AsJ at 10.00am on 7 September 2022 for return of the subpoenas issued to the following recipients: (a) Hardwickes Partners Pty Ltd ACN 008 401 536 (b) BDO Services Pty Ltd ACN 134 242 434 (c) Actgall Pty Limited t/as Raine & Horne Commercial Canberra ACN 080 502 272 (d) Vantage Strata Pty Ltd ACN 602 359 482, and (e) Sean McGill Pty Limited & Todd Hadley Pty Limited ABN 46 156 696 001 t/as MJD Valuers (7) In respect of the subpoena issued to the Commissioner for ACT Revenue, the subpoena is listed for further return before the Registrar on 19 September 2022. |
Catchwords: | PRACTICE AND PROCEDURE – SUBPOENAS – application to set aside subpoenas – whether legitimate forensic purpose – whether abuse of process – whether subpoenas oppressive |
Legislation Cited: | Corporations Act 2001 (Cth) ss 233, 241 Court Procedures Act 2004 (ACT) s 5A Court Procedures Rules 2006 (ACT)r 6604 |
| Cases Cited: | A Pty Ltd v Z [2007] NSWSC 999 Alister v R [1984] HCA 85; 154 CLR 404 |
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- Pesec v Consolidated Builders Ltd [2022] ACTSC 241
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- [2022] ACTSC 241
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CaseChat Overview and Summary
The court had to decide whether the subpoena served a legitimate forensic purpose and whether the categories of documents requested were relevant to the proceeding. The defendants argued that the subpoena was a fishing expedition and that the categories of documents sought were akin to discovery. The plaintiff, Mr Pesec, relied on the nature of the allegations in the amended statement of claim and correspondence from two experts to support the relevance of the documents. The court considered the evidence provided and determined that a legitimate forensic purpose had been established for the documents sought, except for one category which was struck out as it sought discovery.
The court found that the subpoena served a legitimate forensic purpose and that the categories of documents requested were relevant to the proceeding, except for one category which was struck out. The court ordered that the subpoena be amended to exclude the category that sought discovery. The court determined that the plaintiff had established a legitimate forensic purpose for the documents sought, except for one category which was struck out. The final orders were that the subpoena be amended to exclude the category that sought discovery.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
The relief claimed in the amended statement of claim is for an independent person to be appointed pursuant to s 233 or 241(1)(d) of the Corporations Act 2001 (Cth) (Corporations Act) to investigate and report to the Court (at the expense of the directors of CBL) the following: Further relief sought (also pursuant to s 233 of the Corporations Act) is an order that CBL produce to members by mail a list of its assets and assets of entities within its control. In the alternative, Mr Pesec seeks an order that the defendants offer to all members who are not directors or entities associated with them an equivalent number of shares as acquired by each of them during the period six years before the commencement of the proceeding on the same times as they themselves acquired the shares (and to the extent any such offer is oversubscribed, allocating the offered shares pro rata to those members accepting the offer). The documents sought are limited to a two-year period, being the financial years ending 30 June 2014 and 30 June 2015, and include the following: The highlighted category above is Item 12 in the schedule. I will return to the difficulty with that category below. CBL’s primary submission was that the subpoena served no forensic purpose and was really in the nature of a fishing expedition. A second argument was that the categories of documents requested are in the nature of discovery. The documents could have been requested from CBL itself rather than the accountant and should have been requested as part of the disclosure processes that have already occurred between the parties. Thirdly, CBL argued that if the Court were to find that the documents sought were relevant, the date range should be confined to 1 July 2014 through to 14 April 2015, as the pleading concerns a decision made by the directors on 14 April 2015. Mr Pesec relied on the nature of the allegations contained in the amended statement of claim as supporting the relevance of the documents, but also relied upon correspondence from two experts. The first was a letter from AVG Forensic, who has been instructed to prepare an expert report in the proceeding as to the value of the shares the subject of the dispute on or around 14 April 2015. The author of that letter requests a number of categories of documents that the expert requires to complete the report. The categories set out in the subpoena to Hardwickes are clearly crafted by reference to the expert’s request. The second item of correspondence is from Pont Associates, which also took the view that the categories of documents sought by AVG Forensic were relevant to the exercise of assisting in undertaking a valuation of CBL’s shares, including the tasks that expert had been requested to undertake. In light of that evidence, I accept that the documents sought will assist the plaintiff in his case and that a legitimate forensic purpose has been established, save as for one category. Item 12 in the schedule refers to “invoices for relevant material costs” that were obtained by Ms Hambley. That paragraph is perhaps poorly worded, but in my view, it does (however inadvertently) seek discovery, because it refers to “relevant” material costs for CBL and its subsidiaries. It is asking a third party to form a view about what might be relevant material costs for CBL and its subsidiaries when that party has no connection with the proceeding. Item 12 in the schedule should be struck out.