Re Trade Practices Commission v Kimberley Homes Pty Limited

[1989] FCA 521

Re: TRADE PRACTICES COMMISSION
And: KIMBERLEY HOMES PTY LIMITED; KIMBERLEY HOMES (No. 1) PTY LTD; TREVOR
KEITH PEARSON AND DOROTHY ELSIE HAYES
No. G1255 of 1988
FED No. 521
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Hill J.(1)

CATCHWORDS

Practice and Procedure - application by party to proceedings to set aside subpoena duces tecum served upon a third person as being abuse of process - whether standing to move the Court to set aside - whether subpoena was burdensome or oppressive to the addressee - whether subpoena being used for "legitimite forensic purpose" - whether material sought has apparent relevance to issues by affording similar fact evidence - question of admissibility to be determined only at final hearing stage - whether subpoena being used to obtain discovery - whether subpoena used to carry out "fishing expedition".

Trade Practices Act 1974: s.52A(1)

HEARING

SYDNEY

#DATE 19:7:1989

Counsel and Solicitors N F Francey instructed
for Applicant: by Australian Government Solicitor

Counsel and Solicitors J J Steele instructed by
for First Respondent: Curwood & Dekenne

Counsel and Solicitor A R Blondel instructed by C J Aird
for Building Services
Corporation:

JUDGE1

The second, third and fourth respondents (hereafter referred to as the "respondents") move the Court to set aside paragraphs 3 and 4 of a subpoena addressed to the proper officer of the Building Services Corporation requiring the production of documents described as follows:

"(iii) All documents, correspondence and records relating to complaints to the Building Services Corporation by any person in relation to Kimberley Homes Pty Limited, Kimberley Homes (No 1) Pty Limited, Trevor Keith Pearson and Dorothy Elsie Hayes from 1 January 1987 to date;

(iv) All documents, correspondence and records relating to complaints to the Building Services Corporation by any person in relation to Kimberley Homes Pty Limited, Kimberley Homes (No 1) Pty Limited, Trevor Keith Pearson and Dorothy Elsie Hayes prior to 1 January 1987 and after 1 January 1985".

1. The subpoena was originally returnable on 13 July 1989 and on that day an affidavit of Mr Aird, a solicitor with the corporation and its proper officer, was read which, inter alia, deposed to the fact that the subpoena had been served on 7 July 1989 but that it had not come to his notice as the proper officer until 10 July 1989. It appeared from Mr Aird's researches that a large number of complaints had been made against the first and second respondent over the years and that it would take a considerable amount of time to locate and copy files falling within the scope of the subpoena as then framed.

2. It should perhaps be noted that paragraph (iv) of the subpoena as originally served required production of the documents otherwise referred to therein provided the complaints originated prior to 1 January 1987. On 13 July I ordered, at the request of the applicant who had caused the subpoena to be issued, that the words "and after 1 January 1985" be added to paragraph (iv) with a view to limiting the width of the subpoena. The applicant through its counsel on that day also undertook to pay the reasonable costs of the corporation in retrieving and photocopying the files and perusing them estimated as being in the vicinity of $4000 to $5000, had the subpoena been allowed to remain unlimited as to time in respect to paragraph (iv). Presumably as a result of the amendment made, the costs of the corporation will be something less than the amount originally estimated. The time for compliance with the subpoena was effectively extended.

3. Counsel for the respondents argued that despite the undertaking to reimburse the corporation for its costs, the extension of time for compliance and the limitation as to time inserted in paragraph (iv) of the subpoena as varied, the subpoena was nevertheless oppressive, burdensome, operated to require the addressee, a third party to the litigation, to give discovery and amounted to a fishing expedition and should be set aside. The corporation neither supported nor opposed the motion. It acknowledged the difficulty it had in complying with the subpoena and estimated that it could not fully comply until 28 July next. However, the corporation did not wish to hinder the processes of the court and subject to the payment of its proper expenses was happy if required to produce the documents described in the subpoena to the court.

4. The applicant commission argued that the subpoena should not be set aside but also, although but faintly, that the respondents not being the addressees of the subpoena had no standing to move the court to set aside the subpoena. Accordingly I must first deal with the issue of standing.

5. The power of the court to issue a subpoena is not dealt with expressly in the Federal Court of Australia Act. However, the subpoena being both in form and substance an order of the court, its issue is authorised by the provisions of section 23 of the Federal Court of Australia Act which provides:
   

"The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate".

1. The issuing of subpoenas is dealt with in Order 27 of the Federal Court Rules. Order 27 rule 9 provides:
   

"(1) The court may, on motion by the person named in a subpoena, set aside the subpoena wholly or in part.

(2) Notice of a motion under sub-rule (1) must be filed and must be served on the party on whose request the subpoena was issued."

1. It should be noted that the subpoena in question was issued by a Deputy Registrar of this Court, an officer who falls within the definition of "Registrar" for the purpose of the rules when discharging the duties of the Registrar - see Order 1 rule 4 - and it is clear from Order 27 rule 6 that the Registrar is left with no discretion except to issue a subpoena when requested so to do by a party.

2. It might perhaps be noted that having regard to Order 46 rule 7A the Registrar may, if an originating document appears on its face to be an abuse of the process of the court, or to be frivolous or vexatious, refuse to accept or issue it or may seek the direction of a judge who may then direct him either to accept or issue the originating document, to refuse to accept or issue it or to refuse to accept or issue it without the leave of a judge first having been obtained.

3. While it is clear that the provisions of Order 27 rule 9 had no direct application in the present case since the respondents were not the addressees of the subpoena, the applicant's submission, if successful, would involve the consequence that Order 27 rule 9 is an exclusive procedural code for the setting aside of a subpoena and that the express provision of a rule giving the addressee of a subpoena the right to move the court involves the denial of any other procedure whereby a party to the litigation could move the court to set aside a subpoena. Such a submission, if correct, would have most unfortunate consequences.

4. It is a well-accepted rule that a subpoena may be set aside as oppressive and as an abuse of the process of the court if it requires the production of documents which are manifestly irrelevant to the issues between the parties. But the recipient of a subpoena, if a stranger to the litigation, will ordinarily not know what the real issues between the parties are. That is a matter which will be best known by the parties themselves. The rule would therefore have little real significance if a party to the litigation could not move the court to set aside the subpoena and so argue the question of relevance.

5. That rule is but an illustration of the wider rule that a subpoena will always be set aside if it is shown to be an abuse of the court's process. The court has a real interest that its process be not abused but acceptance of the submission might well involve the proposition that the court could not act of its own motion. But even if it did not involve so extreme a proposition, there would still, if the submission be correct, be no procedure whereby a party to the litigation, could bring to the attention of the Court that the process of the Court had been abused.

6. The issue does not arise under the rules of the Supreme Court of New South Wales for part 37 rule 8 of the rules of that court permits any person having a "sufficient interest" to move the court to set aside the subpoena and at least ordinarily, a party to the litigation might be thought to have such a sufficient interest.

7. So far as my researches have indicated, there has been no case reported or on computer record in which the question has been discussed in the context of the rules of this Court. Accordingly, it falls to be decided as a matter of principle.

8. There can be no dispute but that the Court, as a superior court of record, has inherent jurisdiction to prevent its process being abused, see Dowling v. Colonial Mutual Life Assurance Society Limited (1915) 20 CLR 509, 521-523, Clyne v. Deputy Commissioner of Taxation (1984) 154 CLR 589, Chemaisse v. Federal Commissioner of Taxation (1988) 88 ATC 4253, re Caruana & Ors (1988) FLC 91-903, Gamser v. The Nominal Defendant (1976) 136 CLR 145, 154, and Taylor v. Taylor (1979) 25 ALR 418, 423.

9. In Hamilton v. Oades (1988-89) 85 ALR 1 at p 11, Deane and Gaudron JJ said:
   

"The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice . . . (This power) is not restricted to defined and closed categories . . . In this context injustice is not simply a question of the purpose or motive for which the relevant proceedings were instituted but includes a consideration of the consequences of the proceedings for the person invoking the power."

1. The terms "oppressive" and "vexatious" are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are "seriously and unfairly burdensome, prejudicial or damaging", and "productive of serious and unjustified trouble and harassment": Oceanic Sun Line Special Shipping Co Inc v. Fay (1988) 62 ALJR 389 per Deane J at 411; 79 ALR 9 at 45.

2. In my view, once it is accepted that the court has inherent jurisdiction to prevent an abuse of its process it must follow that a party to proceedings before the court is entitled to move the court in respect of some action that has been taken by another party where it is alleged that that action constitutes an abuse of the process of the court. In my view, a party to proceedings in this Court has standing to move to set aside a subpoena where it is alleged that the subpoena, in some way, constitutes an abuse of the Court's process and it is accordingly appropriate that the Court be moved by way of a motion, notice of which is to be given to those affected by it.

3. I will turn then to consider the arguments raised by the respondents, that the subpoena should be set aside.
   1. That the subpoena was burdensome or oppressive

4. It was submitted that the subpoena should be set aside because it was burdensome and oppressive to the addressee. Having regard to the evidence of Mr Aird, it can be conceded that the subpoena was burdensome to the corporation; but that on its own is not a ground for setting aside a subpoena. As was by said by Smithers J and approved by the remainder of the Court in Lucas Industries Limited v. Hewitt (1977-78) 18 ALR 555 at 570:
   

"The purpose of the process of subpoena is to facilitate the proper administration of justice between parties. For that purpose it is the policy of the law that strangers who have documents may be put to certain trouble in searching for and gathering together relevant documents and bringing them to court. It is according to the same principle that persons who have knowledge of facts are put to the inconvenience of being brought to court and required to give evidence.

Assessment of the reasonableness of burdens involved in complying with a subpoena must take account, inter alia, of the desirability that justice be administered effectively."

1. His Honour, in the same case, made mention of the fact that the capacity of some parties to collect and produce documents may be greater than others and that each case must be considered having regard to its own circumstances.

2. Where, as here, the burdensome nature of the subpoena is not relied upon by the addressee of it, it will be a rare case indeed that the court would find that the requirement that an addressee be put to effort and expense to produce documents is so unreasonable (assuming otherwise, the documents to be relevant to the issues between the parties) that the subpoena be set aside as oppressive. Here, however, having regard to Mr Aird's evidence, the time now provided for production of the documents and the undertaking concerning the costs of the enquiry, I do not think that the burden of production is of that degree of unreasonableness that it would require that the subpoena be set aside. It follows, therefore, that provided that I am of the view that the documents required to be produced are documents which have relevance to the litigation in the sense in which the word "relevance" is used in the cases, I would not find that the subpoena was oppressive or burdensome.
   2. Relevance

3. In Trade Practices Commission v. Arnotts Limited 7 July 1989 (unreported), Beaumont J expressed at p 21 the general test of whether a subpoena is an abuse of process as being whether the subpoena is being used for a "legitimate forensic purpose". In his Honour's view that involved asking two questions:
   

"(1) Does the material sought have an apparent relevance to the issues in the principal proceedings, i.e. is adjectival, as distinct from substantive, relevance established? Does the subpoena have a legitimate forensic purpose to this extent? . . .

(2) Is the subpoena seriously and unfairly burdensome or prejudicial?" (p22) (emphasis added)

The latter test I have already considered.

1. Notwithstanding his Honour's comments that the question of relevance is adjectival rather than substantive, it is nevertheless necessary to consider in the present case the issues between the parties as they are set out in the statement of claim.

2. Essentially, the applicant alleges that the respondents, either as principals or otherwise, as persons aiding or abetting, breached the provisions of section 52A(1) of the Trade Practices Act 1974, which section provides as follows:
   

"A corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person engage in conduct that is, in all the circumstances, unconscionable."

1. It is alleged that the first and second respondents were engaged in building activities. It is further alleged that the first respondent entered into a building contract with a Mr and Mrs Morrison and that the second respondent entered into an arrangement with a Mr and Mrs Dance.

2. The unconscionable conduct particularised so far as the arrangements with Mr and Mrs Morrison are concerned include:
   

"(a) representing that a tender price was a fixed price and then purporting to raise the price;

(b) purporting to grant persons a 90 day fixed price tender and then unconscionably delaying the execution of a building contract in accordance with the said tender and subsequently refusing to be bound by the tender unless the Morrisons agreed to an increase in the tender price; . . .

(d) filling in and otherwise altering blank building contracts signed by another contracting party without the authority of the other contracting parties; . . .

(i) Engaging in threatening, abusive and otherwise offensive conduct in relation to consumers, including threatening that the existence of a signed building agreement would tie up land for many years."

1. The unconscionable conduct alleged to have been engaged in as regards Mr and Mrs Dance included:
   

"(i) representing that a tender price was a fixed price and then purporting to raise the price;

(ii) purporting to grant persons a 90 day fixed price tender and then unconscionably delaying acceptance of the tender and subsequently refusing to be bound by the tender, unless the Dances agreed to an increase in the tender price;

(iii) inducing persons to sign blank building contracts;

(iv) filling in and otherwise altering blank building contracts signed by another contracting party without the authority of the other contracting party, so as to diminish the effect of clauses in the contract giving protection to that other contracting party;

(v) engaging in abusive and otherwise offensive conduct in relation to consumers, including assault and verbal abuse."

1. Counsel for the applicant argued that information relating to complaints from other customers was relevant to the conduct of the present litigation, because: (1) it would provide similar fact evidence for use in the trial; (2) it would be relevant to the issue whether the court would grant an injunction restraining the respondents from engaging in similar conduct in the future; or (3) that it might be relevant to the proceedings if, in relation to other customers of the respondents it could be seen that the respondents had not indulged in conduct of a kind complained of as this would assist a determination as to whether the conduct in the present circumstances was unconscionable.

2. It was also argued that the relevance of the material was to be found in the provisions of 52A itself.

3. It was agreed by the parties, and having regard to the authorities correctly, that it was not necessary that documents be admissible in a court for them to be relevant in the appropriate sense to the proceedings and indeed, it is clear that provided the documents sought relate to the subject matter of the litigation in an adjectival sense they must be produced, notwithstanding that they may not ultimately be admissible in evidence. Indeed, were it otherwise the court would find itself having to determine questions of admissibility of evidence on an application to set aside a subpoena.

4. Of the four submissions made by the applicant, only the first need be considered. In my view there are real difficulties in each of the other submissions. For example, it seems hardly likely that the question of injunctive relief will arise having regard to the fact, as I was told from the bar table, that the respondents have in fact stopped trading and are not licensed to carry on business any more as builders. Equally, the provisions of section 52A(4) relied upon by counsel for the applicant do not, in my view, support the submission. The mere fact that regard may be had under section 52A(4), in determining whether there has been a contravention of s.52A(1), to conduct engaged in before the commencement of that section in 1986 does not mean that particular documents, prior to that time, are relevant in determining whether particular conduct is or is not unconscionable. Indeed, it must be noted that the unconscionable conduct alleged in these proceedings has been particularised in the statement of claim and unless the statement of claim were amended, evidence of other unconscionable conduct of its own would be clearly irrelevant.

5. However, there remains the question of whether the material sought to be produced could be relevant as providing similar fact evidence. I emphasise that I do not purport in these proceedings to decide one way or another whether evidence of the kind sought to be obtained by the subpoena would actually in the hearing be admissible. That is a matter that must await the hearing.

1. There has been some discussion whether the rules for excluding similar fact evidence applicable in criminal cases are equally applicable in civil cases. In Mood Music Publishing Co Ltd v. De Wolfe Ltd (1976) 1 Ch 119, Lord Denning said at p 127:
   

"The admissibility of evidence as to "similar facts" has been much considered in the criminal law. Some of them have reached the highest tribunal, the latest of them being Reg. v. Boardman (1975) AC 421. The criminal courts have been very careful not to admit such evidence unless its probative value is so strong that it should be received in the interests of justice: and its admission will not operate unfairly to the accused. In civil cases the courts have followed a similar line but have not been so chary of admitting it."

1. The present proceedings are not in their nature criminal but the context of the present proceedings, in my view, is sufficiently of a criminal nature as to make the principles applicable in criminal cases as to the exclusion of similar fact evidence, applicable in the present proceedings to the extent that there is any difference between the principles applicable in criminal and civil proceedings. In any event, the rules to be applied in civil proceedings will be no less severe than those applied in criminal proceedings (see Blake v. The Albian Life Assurance Society (1878) 4 CPD 94 and Mister Figgins v. Centrepoint Freeholds (1981) 36 ALR 23).

2. In Hoch v. The Queen (1988) 81 ALR 225, the High Court recently discussed the admissibility of similar fact evidence in the context of criminal proceedings. Mason CJ, Wilson and Gaudron JJ, at 227, said:
   

"Assuming similar fact evidence to be relevant to some issue in the trial, the criterion of its admissibility is the strength of its probative force: See Perry v. The Crown (1982) 150 CLR 580 at 586-7, 605 and 610; 44 ALR 449; Sutton v. The King

(1984) 152 CLR 528 at 563; 51 ALR 435; R v. Boardman (1975) AC 421 at 439 and 444. That strength lies in the fact that the evidence reveals "striking similarities", "unusual features", "underlying unity", "system" or "pattern" such that it raises, as a matter of common sense and experience, the objective improbability of some event having occurred other than as alleged by the prosecution."

1. In the same case, Brennan and Dawson JJ, discussed the principle at 231-2. As their Honours point out, such evidence if directed merely to show a criminal propensity is not admissible, rather the judge must keep in mind the issue to which the evidence is relevant and how the evidence tends to prove that issue.

2. While evidence of complaints against the respondents would clearly be inadmissible in the present case if merely to show a propensity upon the part of the respondents to engage in unconscionable conduct, such evidence may very well, having regard to the issues of the present case, be admissible, as for example showing a system of business.

3. Accordingly in my view the documents sought to be obtained and described in the subpoena are not, having regard to the issues in the present case, irrelevant.
   3. Use of the Subpoena as Discovery

4. In Universal Press Pty Limited v. Provest Limited, (unreported) 14 July 1989, I discussed in some detail the principle, well entrenched, that it is a misuse of the process of the court for a subpoena to be used to obtain discovery whether from a party to the litigation or from a third party.

5. As that discussion makes clear the rule is enunciated in the context that it is an abuse of process for a subpoena to require a person not a party to the litigation to form a judgment as to what is relevant to the issues joined in the proceeding to which he is not a party. See especially National Employers' Mutual Association Limited v. Waind and Hill (1978) 1 NSWLR 372 at p 382.

6. Dicta of Beaumont J in Federal Commissioner of Taxation; Ex parte Swiss Aluminium Australia Limited (1986) 68 ALR 587, at 589 and of Smithers J in Lucas Industries Limited v. Hewitt & Ors (supra) at 569 may suggest nevertheless that a circumstance may arise where, albeit that the subpoena did not require a person to whom the subpoena was addressed to determine the issues in the proceedings, nevertheless it may still be in substance a notice for discovery. If these statements be correct then the question whether or not a particular subpoena is in truth equivalent to discovery will involve an issue of fact to be determined in each case.

7. However, even if the principle extends beyond a subpoena requiring the addressee to determine the relevance of documents to the issues between the parties the present case is not in my view a case where it can be said that the subpoena is being used in substance as a process of obtaining discovery. Although the documents required to be produced are numerous they are described with particularity and the requirement to produce them does not in my view amount in substance to a notice of discovery. It should be recalled that in Waind and Hill (supra) Moffitt P at 382 remarked:
   

"The essential feature of discovery in this connection, as appears from Burchard's case ((1891) 2 QB 241, at pp 247, 248) and Small's case ((1938) 38 SR(NSW) 564, at p 574; 55 WN 215) is that the person to whom the subpoena is addressed will have to make a judgment as to which of his documents relate to issues between the parties. It is oppressive to place upon a stranger the obligation to form a judgement as to what is relevant to the issue joined in a proceeding, to which he is not a party. Hence it is an abuse of the use of a subpoena to impose this obligation. It follows that it is an abuse to use any subpoena, i.e. even to a party to obtain discovery. This was the reasoning in Small's case. . . . It follows that a subpoena can only properly be used for the production of documents described in particular or general terms which does not involve the making of such a judgment (i.e. as to the issue between the parties). It does not follow, however, that because the party who issues a subpoena is unaware of the precise description of a particular document, or whether a particular document or documents is in the possession of the witness, or even whether it exists, or is unaware of its contents, that the subpoena or even a subpoena in general terms amounts to the use of the subpoena for the purpose of "discovery". To date it does involve

(sic) a misconception of the different functions of discovery and of a subpoena for production. Of course, it may be that the terms of a subpoena are so wide that it is oppressive, but this is not because it is used for "discovery" in the sense used in Small's case . . . and Burchard's case . . . but because it imposes an onerous task on a stranger to collect and produce documents many of which can have no relevance to the litigation."

1. Whether the subpoena is or involves a "fishing expedition"

1. It is not clear to me that the rule that a subpoena may not be used to carry out a "fishing expedition" involves a separate principle from the rules which I have so far discussed. Generally the rule is advanced in the context either of the principle that the subpoena state with reasonable particularity the documents sought to be produced or in conjunction with the principle that the subpoena should not be used as a means of obtaining discovery. Cf Commissioner for Railways v. Small (1938) 38 SR 564 and Waind and Hill (supra), and Finnie v. Dalglish (1982) 1 NSWLR 400 at 406-7.

2. In Cosgrove v. Hooker Rex (Administration) (Vic) Pty Limited 28 July 1988 (unreported) Neaves J referred to the concept of "fishing", clearly a pejorative expression, as having the sense "that the applicants are endeavouring not to obtain evidence to support their case, but to obtain material which might enable them to make a different case."

3. The purpose of using a subpoena to obtain evidence to support the case is of course a quite proper purpose and does not constitute an abuse of process. To the extent that what is now being alleged is that the Trade Practices Commission is seeking to obtain material which might enable it to make a different case, in my view there is no substance in that submission, any more than there was substance in the same submission made before Neaves J in Cosgrove.

4. Cosgrove involved a subpoena that had been addressed to the Law Society of New South Wales seeking details of complaints and investigation of complaints against a particular firm of solicitors. The issue in the litigation apparently concerned the existence of duties, professional and fiduciary which the applicants alleged the firm of solicitors owed to them and alleged breaches of those duties. There was no question arising under the Trade Practices Act, a claim pleaded under that Act having been abandoned. In the particular circumstances of the case Neaves J held that it had not been demonstrated to his satisfaction that the documents requested related to the issues identified. His Honour said, and with respect correctly, that evidence of other complaints could not assist in determining whether the firm of solicitors was in breach of any duty to the applicants. For this reason his Honour set aside the subpoena in that case. However, as I have sought to indicate above, the issues in the present case are different and the relevance of the complaints to the issues in the present case is somewhat clearer than that in Cosgrove.

5. It follows therefore that I would not set aside the subpoena on any of the grounds which have been argued.
   5. The Supply of Particulars

6. Counsel for the respondents submitted finally that if the subpoena were not set aside the Commission should be required to give to the respondents certain particulars. Counsel for the Commission did not dissent from this course. As a result I would order the Commission on or before 28 July next to particularise:-
   

1. the allegations to be made by the Commission arising out of the production of the documents sought;

2. the date of each relevant complaint to the corporation or board as the case may be;

3. the name of the complainant;

4. the address of the property the Subject of the complaint;

5. the way in which it is alleged that the complaint is relevant to the proceedings before the Court.

1. To enable the Commission to provide these particulars each of the solicitors for the applicants and the respondents respectively may have access to the documents produced on the subpoena at the office of the corporation. As counsel for the respondent has indicated that a question may arise as to whether certain documents supplied by his client to the Commission are privileged from inspection, the solicitors at this stage are not at liberty to communicate to their respective clients the material produced on the subpoena. Any documents in respect of which the corporation wishes to maintain a claim for privilege will of course not be made available at this stage to the solicitors for the parties, but any matters of privilege can be dealt with if necessary when the matter comes before me again next Wednesday, July 26.

2. I will reserve the question of costs on today's motion until next Wednesday at 9.30 a.m.