Rappoport v Shaw
[2016] FCCA 1456
•16 June 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RAPPOPORT v SHAW | [2016] FCCA 1456 |
| Catchwords: SUBPOENA – Whether fishing – whether categories of documents sought in subpoena related to issues in the proceeding. SUBPOENA – Whether oppressive – whether relevant – whether recipient of subpoena will be put to substantial expense if required to comply. PRACTICE AND PROCEDURE – Whether consent orders had the effect of creating a valid and enforceable “contract” – whether Court can control its own procedure by not requiring compliance with consent orders – “procedural law” as opposed to “substantive law”. EQUITABLE ESTOPPEL – Whether applicant met tests for the creation of an equitable estoppel – no “representation” – no “inducement” – no “reliance” – no “detriment” – no inequity – no basis for concluding that the recipient of the subpoena was estopped from refusing to comply with balance of subpoena. EXPERT WITNESS – Requirements of Dasreef Pty Ltd v Hawchar. |
| Legislation: Administrative Decisions (Judicial Review) Act 1977 (Cth) Evidence Act 1995 (Cth), s.55 |
| Cases cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 Sir Owen Dixon, “Concerning Judicial Method” (1956) 29 ALJR 468 |
| Applicant: | DANIEL RAPPOPORT |
| Respondent: | PAUL SHAW |
| File Number: | SYG 2924 of 2015 |
| Judgment of: | Judge Wilson |
| Hearing dates: | 25 – 26 May 2016 |
| Date of Last Submission: | 26 May 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 16 June 2016 |
REPRESENTATION
| Applicant in person |
| Counsel for the Respondent: | Mr P Knowles |
| Solicitors for the Respondent: | Australian Government Solicitor |
ORDERS
The application for the review of a Registrar’s decision filed
8 April 2016 be dismissed.
The applicant pay the respondent’s costs of and incidental to this application.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2924 of 2015
| DANIEL RAPPOPORT |
Applicant
And
| PAUL SHAW |
Respondent
REASONS FOR JUDGMENT
Introduction
On 25 and 26 May 2016, while sitting in Sydney, I heard the contested interlocutory debate in relation to this application for the review of a Registrar’s order made on 7 April 2016.
On 7 April 2016, Registrar Tesoriero ordered that the Proper Officer, Australian Financial Security Authority (“AFSA”) was not required to comply further than it had already done in producing documents in response to a subpoena issued against AFSA by Daniel Rappoport
(“the applicant”) and filed 22 December 2015 (“the subpoena”).
In the subpoena, the applicant sought 28 separate categories of documents.
Over a period of time, AFSA produced some but not all of the documents that were the subject of the subpoena. AFSA undertook an assessment of the cost to complete the task of finalising its investigations for and compliance with the subpoena. It indicated its unwillingness to complete the task of producing all documents that answered the subpoena on account of the cost involved. The applicant applied to the Registrar for orders compelling AFSA to produce the balance of the documents he sought in the subpoena. AFSA resisted orders being made in those terms.
The Registrar dismissed the applicant’s application. The applicant sought the review of the Registrar’s orders.
Synopsis
For the reasons that follow, in my judgment this review of the Registrar’s orders must be dismissed with costs.
Factual setting of this dispute
Many of the matters set out below were taken from the applicant’s points of claim filed 28 October 2015. At present, they are unproved and have the status of assertions only. In preparing these reasons for judgment I have proceeded on the basis that the applicant will endeavour to prove as facts the assertions in the points of claim.
At all relevant times, the applicant was a legal practitioner.
In August 2010 he began to work as a legal officer with AFSA, once called the Insolvency Trustee Service Australia (“ITSA”). He resigned that role in August 2011 and joined a private firm of solicitors in the Australian Capital Territory (“ACT”) in September 2011 or thereabouts. The applicant left the ACT firm in September 2012 and commenced with a Sydney firm in September 2012 where he remained until late December 2012. He re-joined AFSA in late
January 2013 and left AFSA the second time in 2014.
The applicant’s points of claim are very difficult to follow. In courts of pleadings, that document would come very close to failing to disclose a cause of action. It seemed to me that the applicant contended that he was not an employee of the Australian Public Service (“APS”) when Paul Shaw (“the respondent”) made a decision on 30 September 2015 to the effect that the applicant had breached the Code of Conduct relevant to the APS (“the APS Code”) by reason of conduct engaged by him on 11 October 2013 and in the period between 20 February to
25 September 2014. The applicant contended in the points of claim that he was an employee of the APS up to 27 September 2013 but not when the conduct allegedly took place on 11 October 2013 and between
21 February to 25 September 2014.
The applicant asserted in the points of claim that –
a)the decision made on 30 September 2015 was not authorised by the enactment in pursuance of which it was purportedly made;
b)the making of the decision was an improper exercise of power; and
c)the decision involved an error of law.
In his points of defence filed 11 December 2015, the respondent denied the applicant’s assertions that he was not an APS employee at the times of the conduct alleged. The respondent denied that the decision was not authorised, and that the making of the decision was an improper exercise of power. The respondent further denied the decision involved any error of law.
Aside from the legal characterisation and consequence of the decision made by the respondent on 30 September 2015, at least one of the major issues in this litigation will be the correctness or otherwise of the applicant’s contention that he was not bound by the APS Code on the relevant dates because he was not then an APS employee.
The resolution of the issues of the applicant’s status within AFSA or ITSA on the relevant dates will turn on matters partly of fact and partly of law. That much was common ground.
The applicant appeared without legal representation in the hearing before me. He told me under the employment regime within the APS a person can be employed pursuant to the terms of an employment contract that is ongoing or non-ongoing. He said different procedures applied to different employment contracts. The applicant told me that certain APS officers made decisions to engage the applicant and it was relevant to know whether they followed the correct procedure under the Public Service Act1999 (Cth) (“PSA”) when engaging the applicant.
The breach of the APS Code which the applicant alleged related to the applicant’s establishment of a law firm while he was concurrently an
AFSA employee. It was alleged that the applicant not only established the law firm but held himself out as being a member of that law firm and that, when questioned about that issue, told misleading or untruthful answers to persons conducting an investigation into the applicant’s conduct.
With a view to assisting in establishing his case in this litigation,
the applicant issued the subpoena. It was made up of nine separate paragraphs, some of which had multiple parts.
In paragraph 2, the applicant sought “any and all” correspondence to and from seven named persons and –
…
viii.Any member of the Insolvency Trustee Service Authority (‘ITSA’) AFSA HR Team;
b. In or around August - October 2013;
c. Recording, setting out or referring to:
i. [the applicant’s] cessation of duties within the Sydney Information Registries Business Line ‘Official Receiver Notices’ team; and/or
ii. [the applicant’s] commencement or performance of duties within the Business Services Business Line
‘Estate Administration’ Sydney Team.[1]
[1]In the passages below I have addressed the several grounds argued about that paragraph. Before going to those, let me continue with the other paragraphs of the subpoena.
In paragraph 3 of the subpoena, the applicant sought –
Any and all documentation of [a named employee of AFSA]
recording or setting out any estimate he did in accordance with Regulation 3.5(4)(b) of the Public Service Regulations 1999 (Cth) of the extension of [the applicant’s] engagement from
28 September 2013 - 3 January 2014 on or around
23 September 2013;[2]
[2] Ibid.
The language used in that paragraph was tortured. It seemed to me that the applicant sought any document and every document “of” the named person. During argument, it struck me that the subpoena, in that paragraph, may have been directed at a document meeting the description enquired after in the paragraph if the document was owned by, written by or held by the named person. Whatever that document may have been, the paragraph was directed to the document recording or setting out an estimate done on or around 23 September 2013 and done in accordance with a very specific regulation made under the PSA. If the document recorded estimates done by that named person and on that specified date but not under the specified regulation, the applicant was not interested in it or the document was not responsive to the subpoena.
In paragraph 4 of the subpoena the applicant sought “‘the records held by AFSA’ referred to in paragraph 6.d and 6.e of the Respondent’s Points of Defence”.[3]
[3]In paragraph 5 of the subpoena, the applicant sought “any and all” correspondence to and from seven named persons along with “[a]ny member of the AFSA HR team” in or around October 2013 to November 2013 –
c. Recording, setting out or referring to:
i. [the applicant’s] engagement between 21 October 2013 - 17 March 2014 within the Business Services Business Line ‘Estate Administration’ Sydney Team.[4]
[4] Ibid.
In paragraph 6 of the subpoena, the applicant sought –
Any and all documentation recording or setting out [a particular person’s appointment of another person as the first person’s agent] in respect of engagement of [the applicant] in or around October - November 2013;[5]
[5] Ibid.
In paragraph 7 of the subpoena, the applicant sought documentation (curiously, unlike the other paragraphs of this arena, in paragraph 7 the wording was not expressed as “any and all” documentation) “recording or setting out [a particular person’s] position in AFSA during the period October 2013 - November 2013”.[6]
[6]In paragraph 8 of the subpoena, the applicant sought –
Any and all documentation of [a particular person] (that person being different to the person mentioned in paragraph 3 the subpoena) recording or setting out any estimate he did in accordance with Regulation 3.5(4)(b) of the Public Service Regulations 1999 (Cth) of the extension of [the applicant’s] engagement from 18 March 2014 - 30 June 2014 on or around
15 November 2013.[7]
[7] Ibid.
In paragraph 9 of the subpoena, the applicant sought “[a]ny and all AFSA delegation schedules for the Public Service Act 1999 (Cth) for the period September 2013 - November 2013”.[8]
[8] Ibid.
Grounds of objection
By notice of objection dated 12 February 2016, AFSA indicated that it had identified and produced documents falling within categories corresponding to paragraphs of the subpoena numbered 2, 4, 5, 7 and 9.[9] The respondent stated there was a possibility that further documents were stored as archived electronic data in AFSA’s possession or control. However, AFSA stated the retrieval of those documents would require at least 51 hours effort to locate and identify any further documents relevant to the subpoena and would require up to a further 30 hours with a preliminary estimate of $6,000.00 that AFSA submitted was oppressive and unduly burdensome.[10]
[9] Notice of Objection – Subpoena filed on 12 February 2016 at p.2.
[10] Ibid.
Partial compliance
It was common ground that AFSA partially complied with the subpoena. AFSA then took the view that in order to complete compliance with all aspects of the subpoena, it would be put to the expenditure of an estimated 51 further hours at a cost of approximately $6,000.00. Before the Registrar, AFSA maintained that position.
The Registrar also took into account, according to Mr P Knowles of counsel who appeared on behalf of AFSA and who appeared before the Registrar, that the applicant had refused to pay AFSA’s reasonable costs of compliance.
A great deal was made in this case of the significance of consent orders made on 21 January 2016. Pursuant to paragraph 1 of those orders,
the parties agreed that the date for compliance with the subpoena was extended from 25 January 2016 to 8 February 2016. That extension of the date for compliance related to those parts of the subpoena that had not been previously complied with.
Documents in relation to paragraphs 2 and 5 of the subpoena were the subject of correspondence between the parties that preceded the making of the consent orders. In other words, only documents that were the subject of paragraphs 2 and 5 of the subpoena were subject to the consent orders extending time for compliance.
Material in support of this application
A surprisingly large volume of material was filed in support of and in opposition to this application, probably expending more in the way of time than the 51 hours of estimated time said to be required in order to comply with the subpoena. Be that as it may, for the applicant,
the following affidavit material was led –
a)
his affidavits affirmed 2 March 2016, 14 March 2016 and
22 April 2016; and
b)affidavits of Tom Desi affirmed 9 March 2016 and 18 May 2016.
For AFSA, the following affidavit material was led –
a)the affidavit of Anthea Kaye affirmed 25 February 2016;
b)the affidavit of Anthony McIntosh affirmed 25 February 2016, together with his resume that became Exhibit 1;
c)the affidavit of Paul Coldicott affirmed 29 March 2016, together with his resume that became Exhibit 2;
d)the affidavit of Michael Parkinson affirmed 13 May 2016; and
e)the affidavit of Stephen Abraham affirmed 13 May 2016.
In the course of addressing the various submissions that are recorded below, the more important material that emerged from those affidavits has been extracted.
List of issues
At the conclusion of the second day of the hearing of this application, and after hearing that certain issues originally pressed had ceased to be important, I formulated the following list of issues as representing the issues on which I was required to rule in order to properly and exhaustively determine all matters in controversy in this application. The parties agreed to that list.
His Honour Judge Cameron will hear the trial of this proceeding in July so the rapid determination of these issues is called for, especially as the parties must adjust their trial preparation with the outcome of this application in mind.
The issues were –
a)the relevance of the material sought in the subpoena to this litigation and whether the subpoena was fishing;
b)the effect of the consent orders made on 21 January 2016;
c)whether AFSA is now estopped from asserting that it is not required to comply with the subpoena having regard to the fact that it partially complied with the subpoena;
d)whether AFSA will be subjected to oppression by fully complying with the subpoena;
e)whether AFSA is entitled to refuse to comply with the subpoena in the absence of the applicant’s payment of AFSA’s reasonable costs;
f)whether Mr McIntosh and Mr Coldicott gave expert evidence, properly so called; and
g)whether an adverse inference was raised by the absence of evidence from certain AFSA witnesses.
The listing of those issues was not in any particular order.
Relevance
Despite the conduct of AFSA in partially complying with the subpoena, AFSA contended, and the Registrar accepted, that AFSA was only required to answer a subpoena if relevant. I agree.
For the purposes of s.55 of the Evidence Act 1995 (Cth), relevant evidence is evidence that if accepted could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.
The starting point is, therefore, whether the documents sought in the subpoena are or are likely to be relevant to the issues in this proceeding. Expressed most briefly, the issues in this proceeding are whether, in relation to the decision made on 30 September 2015 –
a)the decision was or was not authorised by the enactment pursuant to which it was purportedly made;
b)the decision was made in the improper exercise of power conferred by the enactment; and
c)the decision involved an error of law.[11]
[11] Applicant’s points of claim filed 28 October 2015 at [4], [6] and [7].
The important factual issue underpinning those contentions, and to my way of thinking a critical if not dispositive issue, was the question of whether the applicant was or was not an APS employee at the time of the alleged conduct as that was pertinent to the application of the APS Code to the applicant.
Aligned to the concept of relevance is an immutable requirement for the existence of an enforceable subpoena that the subpoena must not call for the recipient to embark on what the authorities have described “a fishing expedition”. In other words, the recipient of a properly valid and enforceable subpoena must be able to read the subpoena and identify the precise document or documents that is or are sought.
A recipient of the subpoena should not be put to the trouble of fossicking among its own records while undertaking detailed searches to ascertain whether it has or does not have documents that respond to the subpoena. The law on point was pronounced by the Supreme Court of New South Wales in Commissioner for Railways v Small[12] (“Commissioner for Railways”) and, since 1938, has been routinely and repeatedly applied in state and federal courts. Its authority is beyond doubt.
[12] (1938) 38 SR (NSW) 564, 575.
In my opinion, paragraph 2 of the subpoena contravenes the principle espoused in Commissioner for Railways. That paragraph is unduly wide. It would call upon AFSA to make searching examinations for the documents. It calls for AFSA to produce “any and all” documents touching upon the persons, dates or events referred to in the balance of the paragraph. In paragraph 2 of the subpoena the applicant should have identified a specific document or a document that could have been easily produced by reason of precision in identification of author, precise date and subject matter. Instead, he sought no such thing. He sought correspondence to or from seven named persons as well as documents to or from “any member of ITSA, AFSA HR team”. That unrestrained breadth of description is far too great. It flies in the face of Commissioner for Railways purely on the basis of the far-reaching description of the author or recipient of the correspondence.
The date selected, August to October 2013 was not noxious.
However, subparagraph (c) of paragraph 2 of the subpoena definitely was noxious. The applicant eschewed the use of the phrase
“employment contract” in his points of claim filed 28 October 2015. No reason was given for that. However, in his points of claim he used the phrase “engagement”, a term that was neutral yet imprecise and instead admitted of a variety of interpretations.
The applicant sought production of documents referring to the applicant’s “cessation of duties” and to his “commencement or performance of duties”.[13] Without knowing what those duties were, the recipient of the subpoena would not know when those duties commenced or ceased. Moreover, a “duty” may mean one thing to one person yet it may mean something else to someone else, and in all cases, it may have no parallel meaning to the meaning given to the phrase by the person who issued the subpoena.
[13]In my view, paragraph 2 of the subpoena was imprecise. It invited objection by reason of its unsatisfactory construction. It resembled a rolled up question in cross-examination, a rolled up plea in a pleading or interrogatory that morphed several concepts into the one question.
In form, paragraph 2 of the subpoena was defective. AFSA was entitled to disregard it. AFSA was entitled to object to it.
But there is another reason, besides form, that rendered paragraph 2 of the subpoena objectionable. Paragraph 2 of the subpoena did not relate to any issue in the proceeding. The real issue in this case was whether the applicant was an APS employee when the relevant decision was made. Issues about the applicant’s cessation of duties do not bear upon the phenomenon of the existence of a contract of employment between the applicant and the Commonwealth of Australia when the relevant decision was made. Nor do issues about the commencement of his duties. Of course, “duties” beggars the question about the contract pursuant to which those duties were owed and performed. The determination of the issue of whether a valid contract of employment was subsisting when the relevant decision was made necessarily predates questions about the commencement of the applicant’s “duties”, whatever that may mean.
Parallel arguments existed in relation to paragraph 5 of the subpoena. In my view, the same outcome prevailed because the same points applied.
In my view, paragraphs 2 and 5 of the subpoena cannot be maintained. The Registrar was correct in dismissing the applicant’s contentions in respect of them. The Registrar’s orders must be upheld. I dismiss this application for review.
Having said that, other bases of objection were argued. Equally, other bases for upholding the validity of the subpoena were argued. In view of the efforts of the parties to advance those other grounds, in the interests of providing some guidance to the parties I should say something about those other bases.
Effect of the consent orders
The applicant used the argument about the consent orders for two purposes. First, he contended that the applicant and AFSA had reached a concluded agreement to the effect that all documents sought in the subpoena would be answered, without objection. Second, and alternatively, he contended that if his argument concerning the existence of a concluded agreement failed, he nevertheless relied on an equitable estoppel the effect of which was to hold AFSA to its representation that all documents in answer to paragraphs 2 and 5 of the subpoena would be produced.
Both arguments are complicated and call for detailed examination.
The starting point is to consider the effect of the consent orders.
To my mind, that involves an examination of the orders themselves as well as the factual matrix of the making of them, particularly as the orders recorded no more than the upshot of some anterior agreement. To put this in a chronological setting, it is necessary to go to the emails on which the applicant relied in his affidavit affirmed 2 March 2016. The negotiations commenced with a letter from AFSA’s solicitors (“AGS”) dated 20 January 2016.[14] In that letter, AGS stated that the subpoena suffered from at least three defects, the first being that categories of documents rather than specific documents were sought, the second being that the subpoena sought documents beyond the scope of any contested issue in the proceeding and the third being that compliance was unduly burdensome and oppressive. The letter went on to state (in numbered paragraph 9) that AFSA estimated that an additional two weeks was required to produce the documents in categories two and five (paragraphs 2 and 5 of the subpoena). In paragraph 11 of that letter, AGS wrote that –
This offer to produce documents is made on the basis that you agree that, upon production of the documents, you will make no additional application in the proceeding for discovery.[15]
[14] Affidavit of Daniel Rappaport affirmed 2 March 2016 at Attachment ‘A’.
[15] Ibid.
The applicant replied to the AGS letter dated 20 January 2016 by his own letter of the same date. His reply was long, argumentative, pejorative and unconciliatory. In the upshot, the applicant proposed a form of consent order, ultimately being different to the consent order eventually pronounced.
It seems to me that no “contract” was reached by that exchange of letters. True, an extension of time was granted for compliance with the subpoena. But the consent order[16] by its terms reflected a different version than was the subject of the AGS letter of 20 January 2016 and the applicant’s response of the same date. On no view could it be said that the consent orders were the upshot of some arrangement or agreement the terms of which preceded the making of those orders on 21 January 2016. In other words, there was no meeting of the minds as to the precise terms that led to the consent orders. Put slightly differently, an objective construction of the letters would be that the consent orders were the product of an understanding about the dates of the filing of material but nothing else.
[16] Consent orders of Judge Cameron dated 21 January 2016.
Under no circumstances could it be said that the so-called arrangements recorded in the correspondence of 20 January 2016 exhibited the hallmarks of certainty necessary for the existence of a valid and enforceable contract in law. On that issue, the High Court’s pronouncement in Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd[17] retains its immense veneration and still holds sway.
[17] (1968) 118 CLR 429, 436 – 437.
I am of the view that the correspondence that preceded the making of the consent orders did not establish the factual foundation for a “contract” properly so called.
Before me, a large amount of attention was devoted by the applicant and by AFSA to the significance of the consent orders. The applicant contended the consent orders were a stand-alone contract, to be enforced according to their terms. AFSA submitted that the consent orders were interlocutory, capable of being discharged, and that no enforceable binding agreement resulted from their being entered into.
Having regard to my finding that no contract resulted from the correspondence leading up to the consent orders, it is, strictly speaking, unnecessary to examine whether the authorities relied upon by the parties were applicable on the facts of this case.
Reliance was placed on the observations of the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc[18] (“Adam P Brown”). That decision is instructive for a number of reasons. In the first place, it related to an interlocutory order based on an undertaking given to the court. Pausing there, in this case no undertaking was given to the court. But that aside, the court (Gibbs CJ, Aickin Wilson and Brennan JJ) held[19] that there is a difference between procedural law and substantive law. The court held[20] that an interlocutory order is a matter of practice and procedure and that the appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. That accords with my thinking on point. The consent orders made on 21 January 2016 were procedural orders and therefore gave effect to “procedural law” for the purposes of the decision of the High Court in Adam P Brown. Those consent orders did not give effect to the adjustment of substantive rights as between the parties.
[18] (1981) 148 CLR 170.
[19] (1981) 148 CLR 170 at 176.
[20] (1981) 148 CLR 170 at 177.
The applicant relied on the decision of the Full Court of the
Federal Court of Australia in R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd [21](“R D Werner”) There, the Full Court dealt with a consent order pursuant to which security for costs was paid. The court held that the consent orders had the effect of creating a contract between the parties yet the court possessed an overriding power to control its own proceeding so that the court could make an order that had the effect of varying the consent interlocutory order, even when that consent interlocutory order was the result of a binding contract.
[21] (1988) 18 FCR 389.
That holding is very important in this case. If a valid contract had emerged from the events leading to the making of the consent orders on 21 January 2016, the effect of that decision is to permit a court (me, on the facts of this case) to make an order varying the interlocutory order that itself was made as result of a contract.
Of course, the holding of the court in R D Werner was predicated on there being a valid and enforceable contract. In this case there was no such valid and enforceable contract.
Mr Knowles relied on the decision of Justice Jacobson in Gothard v Fell.[22] In that case, his Honour applied the ratio of R D Werner and held that a consent undertaking or order was made for the disposition of procedural matters arising in the conduct of the litigation.[23]
Jacobson J held that even if a binding contract was thereby reached, the court has power to vary that contract because, citing Adam P Brown, the order was interlocutory and the court retains power to control such orders.
[22] [2012] FCA 495.
[23] [2012] FCA 495 at [67].
On the facts of this case, I am of the view that no contract was entered into between the applicant and the respondent leading to the consent orders. I am also of the view that even if a legally binding and enforceable agreement had in fact and in law been entered into prior the consent orders having been made, then this court has power, as a matter of controlling its own procedure, to vary that consent order.
In this case, the consent order said next to nothing about AFSA’s compliance with the subpoena other than to extend certain dates. I see no reason why the consent orders could not be varied. But in many respects, the point is academic as there was no contract, properly so called, about the subpoena in the lead up to the consent orders.
Estoppel
In view of my conclusion about the existence of a contract in relation to compliance with the subpoena, it is not necessary to consider whether AFSA is estopped from refusing to provide documents that answer the subpoena. On top of that, I confess to not understanding the import of the applicant’s submissions on this point.
In essence, the applicant asserted that AFSA represented that it would not take issue with complying with the subpoena. The applicant said he acted to his detriment in reliance upon that representation with the result that it would be inequitable for AFSA to resile from its representation. That is how the applicant argued the point, in any event.
During argument[24] I pressed the applicant for the precise terms of the so-called representation and the act of reliance the applicant exhibited based on the representation and the detriment he said he had suffered thereby making it inequitable for the representation not to be honoured. I sought that information because the leading authorities on estoppel in the context of procedural steps called for its determination. Those authorities included Waltons Stores (Interstate) Ltd v Maher[25] (“Waltons Stores”) and Commonwealth v Verwayen[26] (“Verwayen”).
[24] Transcript of proceedings of 25 May 2016 at p.27.
[25] (1988) 164 CLR 387.
[26] (1990) 170 CLR 394.
During debate, the applicant said the following –
HIS HONOUR: Well, hang on. What’s the detriment?
MR RAPPOPORT: In that basically the consent orders were – AFSA is to comply by 8 February and they were signed and filed in the court. And then ‑ ‑ ‑
HIS HONOUR: Hang on. What’s the detriment that you’ve suffered in that? None?
MR RAPPOPORT: Well, because that’s an interlocutory order, AFSA has now taken the position that it can file the notice of objection and seek to revisit that interlocutory order as such.
HIS HONOUR: Where’s the detriment suffered by you?
MR RAPPOPORT: The detriment suffered by me is that I didn’t have protections in place that would prevent the ease with which they’ve gone about that, such as a consent judgment on the subpoena issue, undertakings given by them to the court that it might be a bit more formally done. There was a loose contract, as such, and they’ve taken advantage of that to my detriment, by the ability to revisit interlocutory processes.
When properly understood, it seems to me that the facts of this case are very far removed from those in Waltons Stores and in Verwayen.
In Waltons Stores, Mason CJ and Wilson J embraced[27] the observations of Sir Owen Dixon in his signature treatise “Concerning Judicial Method”[28] where Sir Owen said that estoppel, as a doctrine, cut across the principles of the law of contract, notably offer and acceptance and consideration. Mason CJ and Wilson J further held that in the orthodox case of promissory estoppel where the promisor promises something, the elements of reliance and detriment attract equitable intervention on the basis that it is unconscionable for the promisor to depart from his promise if in so doing it will result in detriment to the promisee. In the context of the enforcement of voluntary promises, the High Court extended the doctrine of promissory estoppel, a concept that prior to Waltons Stores the High Court had been unwilling to do. Fastening upon the observations of Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd,[29] the High Court held in Waltons Stores[30] that the common thread was the principle that equity came to the relief of a plaintiff who acted to his detriment on the basis of an assumption in reliance to which the other party played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it. In those circumstances, equity comes to the relief of such a plaintiff on the footing that it would be unconscionable on the part of the other party to ignore the assumption.
[27] (1988) 164 CLR 387 at [22].
[28] (1956) 29 ALJR 468, 475.
[29] (1937) 59 CLR 641.
[30] (1988) 164 CLR 387 at [30].
[33] (1893) 1 Ch 618.
In Waltons Stores, Brennan J (as the Chief Justice then was) differentiated between estoppel in pais and equitable estoppel holding that equitable estoppel is the source of legal obligation whereas estoppel in pais had been held to be merely a rule of evidence, as older authorities bore out such as Sefton v Lafone,[31] Low v Bouverie[32] and
Re Ottos Kopje Diamond Mines Ltd.[33][31] (1887) 19 QBD 68.
[32] [1891] 3 Ch 82.
Brennan J held that it is essential to the existence of an equity created by estoppel that the party who induced the adoption of the assumption or expectation knew or intended that the party who adopted it would act or abstain from acting in reliance upon the assumption or expectation.
Brennan J in Waltons Stores formulated six propositions that have since become the authoritative foundation for the existence of equitable estoppel. Those propositions may be paraphrased in the following manner –
(a)first, the plaintiff (here, the applicant) assumed that a particular legal relationship existed between the plaintiff and the defendant (relevantly here, AFSA, although strictly speaking AFSA was not the defendant in this application);
(b)second, the defendant induced the plaintiff to adopt that assumption or expectation;
(c)third, the plaintiff acted or abstained from acting in reliance upon the assumption or expectation
(d) fourth, the defendant knew or intended the plaintiff to do so;
(e)fifth, the plaintiff’s action or inaction would occasion detriment if the assumption or expectation was not fulfilled; and
(f)sixth, the defendant has failed to act to avoid that detriment whether by fulfilling that assumption or expectation or otherwise.
Deane J in Waltons Stores rejected as overly general the proposition that estoppel can only be used as a shield and not as a sword.
Following the observations of Dixon J in Thompson v Palmer[34] (“Thompson”) Gaudron J in Waltons Stores held that the object of a common law estoppel or an equitable estoppel was to prevent an unjust departure by one person from an assumption by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that person’s detriment.
[34] (1933) 49 CLR 507, 547.
In this case the applicant, while he was at all relevant times a qualified and practising solicitor, did not make submissions about the elements of equitable estoppel in the manner addressed by the observations of Brennan J in Waltons Stores. Therefore, it became necessary for me to endeavour to formulate the argument that the applicant should have made in order to advance his case in respect of equitable estoppel. Doing the best I can to align the facts of this case to the six propositions adumbrated in Waltons Stores, it seems to me that the applicant did not establish them.
As to the first point, the legal relationship assumed by the applicant was that the subpoena would be fully and not partially complied with if the applicant agreed to a modest extension of the dates of compliance. Of course, that is my expression of the proposition as neither the applicant’s evidence nor his submissions were expressed in those terms. However, I am prepared to proceed on that footing in relation to the first proposition.
As to the second point mentioned by Brennan J in Waltons Stores, the evidence about AFSA “inducing” the applicant to adopt a position on the first point did not exist. The discussions that preceded the making of the consent orders were given in evidence by the applicant in his affidavit affirmed 2 March 2016. In it, he deposed to a conversation between him and Ms Brooke Griffin of AGS on 20 January 2016 as well as correspondence of the same date. In paragraph 9 of the letter dated 20 January 2016 from AGS to the applicant, Ms Griffin recorded her client’s proposal to not move to set aside the subpoena but rather, that AFSA would comply with the subpoena in its current form so long as the applicant granted AFSA two weeks within which to do so. In response, the applicant wrote an argumentative reply that advanced an entirely different proposal.[35]
[35] Affidavit of Daniel Rappaport affirmed 2 March 2016 at Attachment ‘A”.
Far from that reply “inducing” the applicant to adopt a particular assumption or expectation, the applicant’s letter dated
20 January 2016[36] revealed that he was very much alive to the fact that any extension of time to AFSA’s response to the subpoena had to be obtained by a formal application to the court. I am not satisfied that the applicant was induced to adopt any particular attitude based on his communications by telephone and letter with Ms Griffin on
20 January 2016. In addition, Ms Griffin gave evidence and was
cross-examined before me by the applicant. During that
cross-examination the applicant had an abundance of opportunity to put to Ms Griffin any points that he asserted gave rise to the elements of an estoppel. He chose not to do so.
[36] Ibid.
As to the third proposition espoused by Brennan J in Waltons Stores, as I am not persuaded that the applicant was induced to do any particular thing in response to anything done by Ms Griffin on behalf of AFSA, I am equally not persuaded that the applicant did whatever he did in entering into the consent orders “in reliance” upon something said or done by Ms Griffin on behalf of AFSA. In my view, the third element of Waltons Stores was not made out by the applicant.
Similarly, in my view the applicant failed to show how and in what way the fourth, fifth and sixth elements propounded by Brennan J in Waltons Stores were made out.
Even if the relevant test for determining whether a claim to equitable estoppel had been made out according to the formula expressed by Dixon J in Thompson,[37] I am not persuaded that it is appropriate to compel AFSA to complete the task of complying with the subpoena. On the facts of this case, there has been no “unjust departure” by AFSA from any assumption made by the applicant. Perhaps the applicant assumed that the consent orders would be complied with. But, sadly, it is an everyday occurrence in courts throughout the Commonwealth of Australia that consent orders are made, then breached, yet the entry into those consent orders does not give rise to an enforceable claim to equitable estoppel.
[37] (1933) 49 CLR 507.
Before leaving the subject of estoppel, two other cases are important, one having certain factual parallels to this case. In Verwayen,[38] the court was concerned with the enforceability of a representation by the legal representatives of the Commonwealth that a limitations defence would not be taken then, contrary to that representation, a limitations defence was in fact later taken. In that case, Mason CJ held that all categories and distinctions between common law and equitable estoppel, between estoppel by conduct and between estoppel by representation, the distinction between promissory estoppel, proprietary estoppel, estoppel by acquiescence and the distinction between present and future fact serve the same fundamental purpose, namely “protection against the detriment which would flow from a party’s change of position if the assumption (or expectation) that led to it were deserted”.[39]
[38] (1990) 170 CLR 394.
[39] (1990) 170 CLR 394, 409.
As with the facts of this case, in Verwayen the element of detriment presented difficulty, a matter specifically pointed out by Mason CJ.
However, Deane J identified the most significant issue that, to my mind, differentiated the facts of this case from the facts of Verwayen.
His Honour said that the Commonwealth made an unambiguous representation to Mr Verwayen that liability would not be contested by taking a limitations defence or by denying the existence of a duty of care. Deane J held that the assumption on which Mr Verwayen acted was knowingly and deliberately induced and the resulting material relationship of wrongdoer and wronged was deliberately established so that the case could proceed expeditiously to an assessment of damages. The facts of this case have no parallel. In this case, there was no “unambiguous representation”. At best, the letter from Ms Griffin contained a proposal that was never accepted, in terms, by the applicant. At best, the proposal offered by AFSA was to produce the balance of documents on certain terms, none of which were agreed. The representation in Verwayen was significantly more defined and far reaching. It amounted to the Commonwealth agreeing not to contest liability so that the case could proceed on an assessment of damages only. There was no comparable representation in this case.
In all events, all of the High Court justices in Verwayen came to results on different reasoning leading to the Appeal Division of the Supreme Court of Victoria in Commonwealth v Clark[40] to hold that there was no clearly binding ratio in the High Court’s judgment. In that case, Ormiston J carefully examined the separate elements of the creation of the relevant assumptions, reliance upon the assumptions, the unconscionability of departing from the assumptions and, in my view most relevantly to this case, proof of the detriment that was said to have been suffered by permitting a departure from the assumptions. Ormiston J preferred the opinion of Dawson J in Verwayen and, in turn following the opinion of Dixon J in Thompson when saying –
… the issue as to whether there is an unjust departure from an assumption must depend upon proof of “some act or omission which, unless the assumption be adhered to, would operate to that other’s detriment.[41]
[40] [1994] 2 VR 333.
[41] [1994] 2 VR 333, 369.
In Verwayen, the detriment was Mr Verwayen’s expenditure of costs in resisting the liability claim when instead he could have proceeded to a resolution of the assessment of damages.
Conversely, the exchange between me and the applicant[42] revealed that the applicant was scarcely able to identify and articulate, still less prove, any relevant detriment he allegedly suffered. The detriment he may be taken to have suffered relates to his being now required to adduce evidence on the matters canvassed in the subpoenas. However, for the reasons given, paragraphs 2 and 5 of the subpoena did not go to relevant issues. I am unable to see that the applicant has proven any relevant detriment.
[42] Transcript of proceedings of 25 May 2016 at p.27.
I reject the applicant’s assertion that he has established that AFSA is estopped from refusing to abide by the consent orders.
Oppression
In view of my findings that paragraphs 2 and 5 of the subpoena do not relate to relevant issues, it is strictly unnecessary to consider the ground on which AFSA principally relied, namely, the oppressive nature of those two paragraphs of the subpoena.
In essence, AFSA submitted that it will be required to expend a further 51 hours to locate archived electronic material if it is forced to comply with the subpoena. AFSA submitted that such a course would be oppressive.
The evidence on the oppression issue was given by a number of witnesses. The applicant challenged the estimate of the likely duration of the task to which various witnesses affirmed on behalf of AFSA. In her affidavit affirmed 26 February 2016, Ms Anthea Kaye deposed to the fact that 23 hours had been spent as at the date of her affidavit in activities connected with complying with the subpoena. She also deposed to an estimated 40 further hours being required to retrieve emails to and from the applicant in the relevant period. She also provided costings estimates for activities associated with compliance. She calculated that an additional $12,640.00 was likely to be expended in activities associated with complying with the subpoena.
Relying on the observations of the High Court in Desreef Pty Ltd v Hawchar,[43] the applicant submitted that the two persons on whose evidence AFSA relied in relation to the time to be undertaken to do the work necessary to complete document production under subpoena were not experts. As result, with leave I permitted AFSA to produce the resumes of Anthony McIntosh and Paul Coldicott that persuaded me that each possessed “specialist knowledge” as was explained by Heydon JA in Makita (Australia) Pty Ltd v Sprowles[44] and that each was “expert” by reason of “training, study or experience” in the field of information technology. Mr McIntosh affirmed that he estimated a total of 51 hours of effort and 44 hours of processing time were involved in recovering the documents sought. Mr Coldicott estimated that between
24 to 72 hours would be spent to complete the tasks associated with complying with the subpoena to completion.
[43] (2011) 277 ALR 611.
[44] (2001) 52 NSWLR 705.
The applicant cross-examined Ms Griffin after she introduced into evidence the resumes that became Exhibits 1 and 2. No meaningful inroads were made by cross-examination into her evidence.
By contrast, the applicant relied on the evidence of Mr Tom Desi who affirmed an affidavit on 9 March 2016. He stated that he had more than 35 years by way of experience in designing, building and maintaining large-scale IT infrastructure installations. He stated that he had expertise in handling large-scale data stores with a mixture of databases as well as email stores. He did not provide a curriculum vitae nor did he descend into the detail of his past experience that he said spanned more than 35 years so I was unable to assess whether he purported to give evidence in some expert capacity. He stated that in order to perform a profile access, he estimated that one hour’s worth of work was involved.
The range of estimates was wildly varying. At one extreme was
Mr Desi who said no more than an hour’s worth of work was involved. At the other end of the spectrum was Mr Coldicott’s estimate of
72 hours. As I was unable to say whether Mr Desi’s estimate was given in some expert capacity, I have disregarded it. That left Mr McIntosh’s estimation of 51 hours and 44 hours of processing. It also left
Mr Coldicott’s estimate at between 24 to 72 hours. The preponderance of expert evidence revealed that the time likely to be expended in completing the task was significant and the actual number of hours ranged between 24, 51 and 72 hours.
Even if the subpoena’s remaining portions had been relevant, and even if the subpoena had not been fishing in my view the task of complying with the subpoena was oppressive. In Hamilton v Oades,[45] the High Court held that a subpoena must not be unfairly burdensome nor must it produce serious unjustified trouble for the recipient when endeavouring to answer it.
[45] (1989) 166 CLR 486, 502.
Based on the evidence of Mr McIntosh and Mr Coldicott, I am satisfied that AFSA would be put to unduly burdensome lengths in complying with the balance of the subpoena in relation to paragraphs 2 and 5.
Costs of complying with the subpoena
To my mind, rule 15A.11 of the Federal Circuit Court Rules 2001 (“the Rules”) applies to this case. I am satisfied that a substantial loss or expense is to be incurred by AFSA if required to comply with the subpoena.
However, as I have reached the conclusion that the subpoena could not be maintained on other grounds, the application of rule 15A.11 of the Rules is probably academic.
Adverse inference
It is not necessary to address this issue in view of the conclusions I have reached above.
Conclusion
The Registrar’s orders were properly made. No basis exists for disturbing them.
I dismiss this application for review and I order that the applicant pay AFSA’s costs of and incidental to this application.
I certify that the preceding one hundred and seven (107) paragraphs are a true copy of the reasons for judgment of Judge Wilson
Associate:
Date: 16 June 2016
Subpoena directed to the Proper Officer, Australian Financial Security Authority filed by
Daniel Rappoport on 22 December 2015.
Subpoena directed to the Proper Officer, Australian Financial Security Authority filed by
Daniel Rappoport on 22 December 2015.
Subpoena directed to the Proper Officer, Australian Financial Security Authority filed by
Daniel Rappoport on 22 December 2015.
Subpoena directed to the Proper Officer, Australian Financial Security Authority filed by
Daniel Rappoport on 22 December 2015.
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