Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd
[1998] FCA 977
•18 AUGUST 1998
FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE - application by respondent to set aside or stand over notice to produce and subpoenas to third parties - whether notice and subpoenas amount to abuse of process or discovery - whether applicant has a legitimate forensic purpose - effect of notice and subpoenas on case management.
Trade Practices Act 1974 (Cth) - ss 51A, 52, 53(aa), 53(c)
Federal Court Rules - O27 r4A
Lucas Industries Limited v Hewitt & Ors (1978) 18 ALR 555 - cited
TRUTH ABOUT MOTORWAYS PTY LTD v MACQUARIE INFRASTRUCTURE INVESTMENT MANAGEMENT LTD
NG 833 OF 1997
FOSTER J 18 AUGUST 1998 SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 833 of 1997
BETWEEN:
TRUTH ABOUT MOTORWAYS PTY LTD
APPLICANTAND:
MACQUARIE INFRASTRUCTURE INVESTMENT MANAGEMENT LTD
RESPONDENTJUDGE:
FOSTER J
DATE OF ORDER:
18 AUGUST 1998
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
The motion be allowed.
The notice to produce issued by the applicant dated 17 June 1998 be stood over generally.
That each of the subpoenas issued by the applicant dated 17 June 1998 and addressed to the following parties:
(a)Rust PPK Environment and Infrastructure Pty Ltd;
(b)Long Technical Pty Ltd;
(c)Symonds Travers Morgan Pty Ltd;
(d)Roads and Traffic Authority of NSW; and
(e)Leighton Contractors Pty Ltd;
be stood over generally.
The costs of this notice of motion be reserved.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 833 of 1997
BETWEEN:
TRUTH ABOUT MOTORWAYS PTY LTD
APPLICANTAND:
MACQUARIE INFRASTRUCTURE INVESTMENT MANAGEMENT LTD
RESPONDENT
JUDGE:
FOSTER J
DATE:
18 AUGUST 1998
PLACE:
SYDNEY
REASONS FOR JUDGMENT
By notice of motion dated 23 June 1998 the respondent in these proceedings made application for orders setting aside a notice to produce dated 17 June 1998 issued to the respondent and various subpoenas of the same date issued by the applicant to Rust PPK Environment and Infrastructure Pty Ltd, Long Technical Pty Ltd, Symonds Travers Morgan Pty Ltd, the Roads and Traffic Authority of NSW and Leighton Contractors Pty Ltd. Alternative orders were sought that the notice to produce and subpoenas be stood over generally.
This application is one of a number of interlocutory motions instituted in proceedings where the applicant is alleging breaches of ss 51A, 52, 53(aa) and 53(c) of the Trade Practices Act 1974 (Cth) with respect to three representations concerning estimated traffic flow on the Eastern Distributor, said to have been made in a prospectus issued by the respondent in October 1996. In the main proceeding the applicant is seeking a declaration of liability with respect to the above provisions and an order for corrective advertising.
The applicant is a $3 company with no assets and has no financial or legal interest said to be affected by the alleged conduct of the respondent and does not seek any damages in relation to the alleged breaches. Rather, the applicant has stated from the outset that this is a “public interest” action taken by a company whose aim is to encourage the development of public transport infrastructure in Sydney rather than motorway developments.
This application is made in the context of a security for costs motion which has been part heard since 8 April 1998. On that date, whilst the applicant was still in evidence, the applicant moved for an adjournment of the security for costs motion on the basis of the alleged non-production of subpoenaed documents which it contended would assist to demonstrate the strength of its case in the main proceeding. It asserted that the failure to produce the documents severely damaged its case in the security for costs motion. In its adjournment application the applicant sought orders that the respondent, Airport Motorways Group Pty Ltd, Long Technical Pty Ltd and Symonds Travers Morgan Pty Ltd provide affidavit evidence as to when certain documents were last in the possession, custody and control of each company and “what happened to each of the documents.”
The documents referred to were documents which, if they existed, would have come within the scope of a notice to produce and subpoenas served on those companies on or around 5 March of this year. In submissions on 8 April counsel for the applicant described a period of time between August/September 1995 and September 1996 as a “Black Hole” and claimed that there must be more relevant documents existing in that period than the respondents and the recipients of the subpoenas had, in fact, produced.
On behalf of the applicant it was denied that any documents had been withheld. Submissions were made as to the lack of significance of the alleged “Black Hole” and an explanation given as to the late production of two documents. It was also submitted that there was sufficient material before me to enable the proper disposal of the motion for security. The adjournment was opposed.
I was not satisfied that documents had not been produced under the notice to produce and the subpoenas and refused to make the order sought. As the argument had occupied the whole day, the motion was necessarily adjourned. I indicated to the respondent the Court’s expectation that further documents should be continued to be looked for and provided to the applicant if they were found. This indication was given in the context that no steps had been taken to set aside the notice to produce or subpoenas, that there was difficulty in complying with them having regard to their width and that, in circumstances satisfactorily explained, two documents had been belatedly found and disclosed.
Also on 8 April, I expressed concern at the state of the pleadings and made orders that they should be amended so as to properly define the issues to be determined by the Court. As the motion for security for costs could not then be disposed of, I directed that the pleadings should be attended to before it was resumed.
Some repleading of the statement of claim took place. However, on 18 May, in response to an application from the respondent, various paragraphs of the new statement of claim were struck out and liberty was given to replead in accordance with the judgment given on the application. The further amended Statement of Claim was filed on 26 May, a Defence on 2 June and a Reply to the Defence on 5 June. In the meantime, the motion for security for costs remained part heard.
On 5 June, at a directions hearing, the part heard security for costs motion was set down to be heard on 13 July, a date that subsequently became unavailable. On that day the applicant sought that a timetable for discovery, including third party discovery, be established before the hearing of the security for costs motion. This was opposed by the respondent. Each party had supplied written submissions. On the basis of those submissions I refused the application. I was of the opinion that the security for costs motion should be disposed of without further delay and that, in the circumstances, there had been adequate compliance with the notice to produce and subpoenas already issued to enable its just and timely resolution. I also noted that the respondent would not, in the security for costs application, assert that the applicant did not have an arguable case. Some incidental reference was made to the issue of further subpoenas but no orders were sought or made.
On 17 June further subpoenas were issued and served by the applicant on Rust PPK Environment and Infrastructure Pty Ltd, Long Technical Pty Ltd, Symonds Travers Morgan Pty Ltd, the Roads and Traffic Authority of NSW (“the R.T.A.”) and Leighton Contractors Pty Ltd (“Leighton”). The notice to produce dated 17 June 1998 was filed on 19 June. These related, of course, to the part heard security for costs application, and sought production of documents for use in these proceedings. They are the subject of the present application.
THE SUBPOENAS AND NOTICES TO PRODUCE
The notice to produce dated 17 June 1998 is in many respects the same as the one dated 5 March 1998. The classes of documents sought in June are in substantially the same terms. Apart from one paragraph in the March notice, which is not presently relevant, they are:-
“1.All documents relied on by the Respondent as providing reasonable grounds for making the statement on page 38 of the Prospectus that traffic volume on the Eastern Distributor is anticipated to be ‘an average daily traffic volume of nearly 60,000 vehicles by 2006.’
2.All original and copy documents in the period 1 January 1994 to 1 January 1998, being correspondence between the Respondent and Symonds Travers Morgan Pty Ltd relating to traffic volumes that could be expected to use the proposed Eastern Distributor. …”
The terms of paragraph 2 are then repeated in paragraphs 3, 4, 5 and 6 with respect to Long Technical Pty Ltd, Airport Motorway Pty Ltd (“Airport Motorway”), Leighton and the R.T.A.
The June notice is different in the following respects: “Symonds Travers Morgan Pty Ltd” is stated to also mean Symonds Pty Ltd, Travers Morgan Pty Ltd and R Travers Morgan Pty Ltd; “Airport Motorway Pty Ltd” is stated to also mean Airport Motorway Holdings Pty Ltd and Airport Motorway Trust; Sinclair Knight Merz Pty Ltd no longer appears; Leighton and the R.T.A. are included; “the Respondent” is, seemingly, widened to include “any other subsidiary or related company of Macquarie Bank Limited”.
The June notice could be viewed as a broadening of the net cast by the March notice. Long Technical and Symonds are the traffic consultants who advised Airport Motorway, the consortium appointed to finance, design, construct, operate and maintain the Eastern Distributor. All three companies were named in the March notice, although broader definitions are given for Airport Motorway and Symonds. Leighton is the designer, builder and operator of the motorway and the R.T.A. is the government authority which eventually appointed Airport Motorway to undertake the project. They were not named in the March notice. Obviously the service of this notice is a further attempt to obtain documents suspected of having been created during the so-called “Black Hole” period of August/September 1995- September 1996.
The subpoenas in June are more detailed than those in March and cover a larger range of documents. However, they seek essentially the same documentary information, being, generally, correspondence (as in March) and (further) notes of meetings or discussions “referring to the traffic volumes expected or anticipated on the Eastern Distributor Motorway” between the subpoenaed party and other named companies. (Compare the March terms : “relating to the traffic volumes that could be expected to use the proposed Eastern Distributor.”) The time period stipulated differs also, that in March covering 1 January 1994 to 4 March 1998 and that in June covering 1 January 1994 to 1 January 1997. Extended meanings to “Macquarie”, “Symonds Travers Morgan Pty Ltd” are given and different corporate entities of Airport Motorway are named. Subpoenas are addressed for the first time to Rust PPK Environment and Infrastructure Pty Ltd, the engineering firm commissioned by the R.T.A. to carry out an Environmental Impact Statement for the project, Leighton and the R.T.A..
Again the June subpoenas appear to aim at a similar broadening of the net.
APPLICATION TO SET ASIDE OR STAND OVER NOTICE TO PRODUCE AND SUBPOENAS
The subpoenas served upon Long Technical Pty Ltd, Rust PPK Environment and Infrastructure Pty Ltd and Symonds Travers Morgan Pty Ltd present no difficulty. In the case of each subpoena it has been indicated to the Court that there are no documents to be produced. This answer has been accepted on behalf of the applicant. There is, accordingly, no need further to consider these subpoenas.
The subpoenas to Leighton and the R.T.A. raise different considerations. It is appropriate to set out the body of each subpoena. That directed to Leighton reads as follows:-
“1. All correspondence between:
a. Leighton and Macquarie; or
b. Leighton and Symonds Travers Morgan Pty Ltd; or
c. Leighton and Airport Motorway Limitedduring the period 1 January 1994 to 1 January 1997 referring to the traffic volumes expected or anticipated on the Eastern Distributor Motorway.
2.All notes of meetings or discussions between:
a.Leighton and Macquarie; or
b. Leighton and Symonds Travers Morgan Pty Ltd; or
c.Leighton and Airport Motorway Limited; or
d.Leighton and Airport Motorway Holdings Pty Ltd; or
e.Leighton and Airport Motorway Trust
during the period 1 January 1994 to 1 January 1997 referring to the traffic volumes expected or anticipated on the Eastern Distributor Motorway.
In this subpoena Leightons means Leighton Contractors Pty Ltd.
In this subpoena Macquarie means the Respondent and any other subsidiary or related company of Macquarie Bank Limited.
In this Subpoena Symonds Travers Morgan Pty Ltd means Symonds Pty Limited, Travers Morgan Pty Ltd and R Travers Morgan Pty Ltd.”
That relating to the R.T.A. reads as follows:-
“1. All correspondence between:
a. Roads and Traffic Authority and Macquarie; orb.Roads and Traffic Authority and Airport Motorway Limited; or
c. Roads and Traffic Authority and Airport Motorway Holdings Pty Ltd; or
d. Roads and Traffic Authority and Airport Motorway Trust; or
e. Roads and Traffic Authority and any other person or entityduring the period 1 January 1994 to 1 January 1997 referring to the traffic volumes expected or anticipated on the Eastern Distributor Motorway.
2.All notes of meetings or discussions between:
a.Roads and Traffic Authority and Macquarie; or
b.Roads and Traffic Authority and Airport Motorway Pty Ltd; or
c.Roads and Traffic Authority and Airport Motorway Holdings Pty Ltd; or
d.Roads and Traffic Authority and Airport Motorway Trust; or
e.Roads and Traffic Authority and any other person or entity
during the period 1 January 1994 to 1 January 1997 referring to the traffic volumes expected or anticipated on the Eastern Distributor Motorway.
In this subpoena Macquarie means the Respondent and any other subsidiary or related company of Macquarie Bank Limited.
As I have already indicated, these are fresh subpoenas in the security for costs application. Also, the reference to these two companies in the new notice to produce did not appear in the March notice.
Both Leighton and the R.T.A. are separately represented. No application was made on their behalf to set these subpoenas aside. However, the Court was informed that each was awaiting the result of the respondent’s application that they be set aside or stood over. Correspondence between the applicant’s solicitors and the solicitors for Leighton and the R.T.A. has been put before me. In each case concern is expressed as to the length of time and amount of effort that will be required to answer the subpoenas and also as to the cost of compliance. Each company has expressed concern as to the apparent lack of financial ability on the part of the applicant to cover the costs which will, obviously, be considerable. Although the situation is not entirely clear, I assume, on the basis of this material, that if the respondent’s application is unsuccessful, there will be further applications on behalf of these two companies in respect of extension of time for compliance with the subpoenas and for orders in relation to the cost of compliance (see O27 r4A Federal Court Rules). I shall return to these matters later.
Counsel for the applicant has relied in this application, as in the application of 8 April, upon the affidavit of Roland John Kaye of 6 April 1998. Mr Kaye is an expert witness. On 30 March 1998 he swore an affidavit, which annexed a substantial report bearing upon the issues in the case and pointing to alleged deficiencies in the prospectus relied upon by the applicant. In his affidavit of 6 April he referred to the period from October 1995 to August 1996. He said that very few or no documents had been produced by Airport Motorway Ltd or Long Technical Pty Ltd or the respondent which related to the period. In respect of this period and these documents he made the following statement:-
“… I may have been denied access to the documents in that period and containing or relating to:
(a)discussions between the parties during the period of October 1995 to September 1996, relating to the rationale for, or criticism of, the expansion factors that were used to develop the forecast in the Respondent’s Prospectus,
(b)the development of the analysis of the effects of the forecasted traffic congestion in the Domain Tunnel and the way in which the final methodology was derived to adjust the forecasted traffic to account for it,
(c)correspondence between the Roads and Traffic Authority (RTA) and the subpoenaed parties relating to any inconsistencies or inaccuracies that the RTA may have found in the traffic volume forecasting methodologies during the crucial period of October 1995 and September 1996, including, but not limited to, the treatment of capacity constraints, the value of travel time, the accuracy and validity of the triptables used in EMME/2 and the validity of the expansion factors, and
(d)any other matters that may have been examined during the 12 months leading up to the preparation of the final traffic forecasts for the Respondent’s Prospectus that may have described in greater detail the assumptions and methodology used to arrive at the figure of 60,000 AADT.”
This material is relied upon by the applicant as indicating the need for the present subpoenas and notice to produce, it being put that the absence of this material will severely prejudice the applicant in its contesting of the application for security for costs. It must be observed that the matters referred to by Mr Kaye can do no more than raise the possibility that documents relating to this period existed but have not been produced. This same question was raised in the hearing on 8 April. I then rejected any suggestion that documents were being deliberately withheld. As already indicated, I expressed the view that continued efforts should be made to ascertain the existence of any such documents. Apparently no further documents have been produced. Accordingly, the present notice to produce and subpoenas must be seen as a second attempt to cover the same general ground.
It is the respondent’s contention that the issuing of the fresh notice to produce and the new subpoenas amounts to an abuse of the Court’s process. It is submitted that it constitutes a device to bypass the rulings that I gave on 8 April 1998 and 5 June 1998. Also, it is put that the subpoenas, having regard to their width, amount to an attempt to obtain discovery by subpoena, notwithstanding that I indicated on 5 June that the security for costs motion was to proceed before the discovery processes were embarked upon. It is convenient to deal with these submissions and the responses to them on behalf of the applicant before considering other matters that were raised.
I am not prepared to find that the serving of the notice to produce and the additional subpoenas amount to an abuse of process. Whilst it is correct that, on 8 April, I was not prepared to hold that there was demonstrated any significant failure on the part of the respondent to answer the then existing notice to produce and subpoenas, such as to warrant the orders that were sought, the notice and the subpoenas were not themselves the subject of any attack on the basis of relevance or oppression. They remain extant. Indeed, a motion for contempt, not yet dealt with, has been bought by the applicant for failure to comply with the notice. That matter is outstanding and, of course, I say nothing as to the merits of it. However, insofar as no previous ruling of mine in these proceedings has had the effect of setting aside the previous notice and subpoenas, the present notice and fresh subpoenas can reasonably be regarded as an attempt to enlarge the scope of the previous ones rather than to bypass any ruling that I gave in respect of them. Moreover, with the possible exception of the first paragraph of the notice to produce, the form of the demands made, although very wide, does not require that the recipient make any determination as to the relevance of any document to the issues joined between the parties. The class of documents sought is, in my opinion, sufficiently identified in the wording of the subpoenas to prevent them being characterised as a substitute for discovery. (Lucas Industries Limited v Hewitt & Ors (1978) 18 ALR 555)
Additionally, the issue of the notice and the subpoenas can be seen to answer a legitimate forensic purpose. On the basis that prima facie the applicant does not have the financial resources to provide security for costs, it is appropriate for it to demonstrate, in resisting an order for security, that it has a strong case. Insofar as, by means of the notice to produce and the subpoenas, it seeks material to strengthen that case, it cannot be said that its reliance upon them amounts to an abuse of process. I therefore reject the respondent’s submissions in this regard.
I should add that I am not prepared to find that the applicant has resorted to these procedures merely to seek evidence to support the motion for contempt to which I have made reference. Nor, conversely, am I prepared to uphold the applicant’s argument that I deny the relief sought by the respondent because of the alleged contempt. That allegation and its denial are, for present purposes, of no consequence.
The final submission of the respondent is of greater substance. It is submitted that there has been no significant change in the situation relating to the security for costs motion from the date when it was adjourned part heard. On that occasion I indicated that it should proceed as promptly as possible once the pleading problems in the case had been addressed and resolved. The evidence, as it then existed, was adequate for its disposition having regard to the need to resolve it so that the other procedural steps in the case could be undertaken. I re‑emphasised this approach on 5 June when I indicated that the finalisation of the motion for security should not await the discovery processes.
As things stand, the applicant has the advantage of having placed before me the only evidence in the case bearing upon the question of liability. It has asserted, through its expert, the existence of the relevant misrepresentations in the prospectus. At this stage, not only are those allegations unanswered but, also, for the purposes of the security for costs application only, the respondent is prepared to acknowledge that the applicant has an arguable case. All that is sought by the fresh notice of motion and subpoenas is the production of documents which may or may not exist and which may or may not strengthen the applicant’s case. There can be no doubt, in my view, that if I allow these steps to be taken, there will be significant delay in the disposal of the motion. There will, obviously, be applications made by the recipients of the subpoenas for extension of time for compliance and for costs orders. I have little doubt, having regard to the past history of this litigation, that such applications will be contested and be costly and time consuming. Should any significant material be produced, the result will be a further affidavit from Mr Kaye and, perhaps, an affidavit or affidavits in reply. The likelihood is that there would be, in the context of the motion, a significant rehearsal of the expert evidence in the case.
It is put to me, on behalf of the respondent, that if I allow this procedure to occur, the Court will be faced with a “mini-trial” of the major issues in the case. I think that this is likely to be so.
In my opinion, I must approach the matter as one of case-management. This involves keeping the litigation in perspective. The ultimate orders sought by the applicant are discretionary. Already considerable time has been used up in interlocutory proceedings. The case has not yet reached the stage of a timetable being established for discovery and other essential interlocutory procedures. As I indicated in a previous judgment, these steps could not, in my view, be embarked upon until the issues between the parties had been precisely identified in the pleadings. There are now no complaints about the pleadings and the litigation should become the subject of a definite timetable. That means, in my view, that the security for costs motion should be dealt with as soon as it can reasonably be set down for hearing. It would be inimical to the proper conduct of these proceedings if I were to countenance the inevitable further delay that would be involved in my requiring that the fresh notice and subpoenas be complied with. I do not propose to take that course.
In my opinion, in all the circumstances, it is not appropriate that I set them aside. It is sufficient that I order that they be stood over generally. The processes of discovery may well produce the result that they are no longer of any utility. That matter can be addressed in the future. So far as the costs of these proceedings are concerned I will reserve them, so that they may be considered at a later date when I am to determine other questions of reserved costs in this litigation.
I make the following orders:-
The motion be allowed.
The notice to produce issued by the applicant dated 17 June 1998 be stood over generally.
That each of the subpoenas issued by the applicant dated 17 June 1998 and addressed to the following parties:
(a)Rust PPK Environment and Infrastructure Pty Ltd;
(b)Long Technical Pty Ltd;
(c)Symonds Travers Morgan Pty Ltd;
(d)Roads and Traffic Authority of NSW; and
(e)Leighton Contractors Pty Ltd;
be stood over generally.
The costs of this notice of motion be reserved.
I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.
Associate:
Dated: 18 August 1998
Counsel for the Applicant: Mr C.C. Hodgekiss
with Mr I. PikeSolicitor for the Applicant: Maurice May & Co Counsel for the Respondent: Mr W.H. Nicholas QC
with Ms M. PainterSolicitor for the Respondent: Mallesons Stephen Jaques Date of Hearing: 1 July 1998 Date of Judgment: 18 August 1998
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