Vorbach v Martinez and Ors Trading As HWL Ebsworth Lawyers

[2015] FCCA 2101

FEDERAL CIRCUIT COURT OF AUSTRALIA

VORBACH v MARTINEZ & ORS TRADING AS HWL EBSWORTH LAWYERS [2015] FCCA 2101

Catchwords:
PRACTICE AND PROCEDURE – Application for order for production of documents – whether it is “on the cards” that documents sought to be produced would assist applicant’s case – application refused.

Commissioner for Railways v Small (1938) 38 SR (NSW) 564
National Employers’ Mutual General Association Ltd v Waind v Hill [1978] 1 NSWLR 372
NSW Commissioner of Police v Tuxford & Ors [2002] NSWCA 139
Principal Registrar of the Supreme Court v Ali Tastan (1994) 75 A Crim R 498
Trade Practices Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90

Applicant: WILLIAM ALEXANDER DOUGLAS VORBACH

Respondent: JUAN JOSE MARTINEZ AND MICHAEL ANTHONY BOWYER AND OTHERS SET OUT IN THE SCHEDULE ATTACHED TO THE AMENDED APPLICATION TRADING AS HWL EBSWORTH LAWYERS

File Number: SYG 2879 of 2014

Judgment of: Judge Manousaridis

Hearing date: 29 July 2015

Delivered at: Sydney

Delivered on: 6 August 2015

REPRESENTATION

Solicitors for the Applicant: Mr D Taylor of Turner Freeman Lawyers

Counsel for the Respondent: Mr D Mahendra

Solicitors for the Respondent: Workplace Advisory Group

ORDERS

1. The applicant’s application for an order that the respondents produce the documents described in paragraphs 1(a) and 1(e) of the draft order handed up in Court on 29 July 2015 is dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2879 of 2014

WILLIAM ALEXANDER DOUGLAS VORBACH

Applicant

And

JUAN JOSE MARTINEZ AND MICHAEL ANTHONY BOWYER AND OTHERS SET OUT IN THE SCHEDULE ATTACHED TO THE AMENDED APPLICATION TRADING AS HWL EBSWORTH LAWYERS

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 29 July 2015 I heard argument about whether I should order the respondents to produce documents described in a draft form of order that was handed up in Court.

2. The draft order describes five categories of documents. The respondents, through their counsel, informed the Court they have produced all documents that fall within the second, third, and fourth categories. The applicant, through his solicitor, does not accept that the respondents have produced all documents that fall within those three categories. Nevertheless, it was agreed that I would decide whether the respondents should produce documents that fall within the first and fifth categories of documents described in the draft order.

3. Before I identify the documents, and the grounds on which the applicant seeks the production of the two categories of documents, it will be necessary to describe the principles that I should apply, and the issues that arise on the pleadings.

Principles

1. A party who seeks the production of a document pursuant to a subpoena or a notice to produce (issuing party) must, when challenged, be in a position to do three things: articulate the purpose for which the documents called by the subpoena or notice to produce are required; demonstrate that the stated purpose is a legitimate forensic purpose; and demonstrate the subpoena calls for, and only calls for, documents that are reasonably necessary to fulfil the articulated purpose.

2. That the issuing party must demonstrate a legitimate forensic purpose for the production of the documents called by the subpoena has been recognised in a number of cases. For example, Barr AJ, in Principal Registrar of the Supreme Court v Ali Tastan , said:[1]

   It is the duty of the Court, where the issue is raised, to require the party calling on a subpoena to produce documents to identify expressly and precisely the legitimate forensic purpose for which access to documents is sought and to refuse access unless such an identification is made.

   [1] (1994) 75 A Crim R 498 at page 504, quoted with approval by Brownie AJA in NSW Commissioner of Police v Tuxford & Ors [2002] NSWCA 139 at [22] (Spigelman CJ and Ipp AJA agreeing).

3. The purpose or purposes for which it is legitimate to issue a subpoena have been stated in both positive and negative terms. On the one hand, the purpose is not restricted to enabling the party issuing the subpoena to have the documents for the purpose of tendering them into evidence.[2] On the other hand, it is not legitimate to issue a subpoena for the purpose of “fishing”; that is, for the purpose of discovering whether the party issuing the subpoena has a case.[3] The purpose for which it is legitimate to issue a subpoena falls between these two purposes. That purpose has been identified by Jordan CJ in Commissioner for Railways v Small,[4] where his Honour distinguished the illegitimate purpose of “fishing” from the legitimate purpose of endeavouring to obtain evidence to support the issuing party’s case.[5] Thus, the purpose for which it is legitimate to issue a subpoena is to obtain evidence to support the issuing party’s case.

   [2] National Employers’ Mutual General Association Ltd v Waind v Hill [1978] 1 NSWLR 372 per Moffitt P at pages 384C-385D (Hutley and Glass JJA agreeing).

   [3] Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at page 575.

   [4] (1938) 38 SR (NSW) 564 at page 575.

   [5] (1938) 38 SR (NSW) 564 at page 575: “[A] party is no more entitled to use a subpoena … than he is a summons for interrogatories, for the purpose of ‘fishing’, i.e., endeavouring, not to obtain evidence to support his case, but to discover whether he has a case at all . . . ”

4. The test for determining whether the documents called for by the subpoena are documents, and only documents, that are reasonably necessary to fulfil the asserted legitimate forensic purpose, has been stated in a number of ways. Thus, the documents called for by a subpoena may be held to fulfil the asserted legitimate forensic purpose if they “have an apparent relevance”,[6] or if the documents have “at least some apparent potential relevance to the matters in issue in the litigation”[7] or if the documents sought “could reasonably be expected to throw light on some of the issues in the principal proceedings”.[8] The expression that is often used – and which I will employ in determining the application before me – is “on the cards”. That is, a subpoena will be issued for the legitimate purpose of obtaining evidence in support of the issuing party’s case if it is “on the cards” that “the documents will materially assist his case”.[9]

   [6] Trade Practices Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90 at page 103 (Beaumont J): “Does the material sought have an apparent relevance to the issues in the principal proceedings, ie, is adjectival, as distinct from substantive, relevance established?”

   [7] Australian Gas Light Company ACN 052 167 405 v Australian Competition and Consumer Commission [2003] FCA 1101 at [8] (French J, as his Honour then was).

   [8] Cosco Holdings Pty Ltd v Commissioner for Taxation & Anor [1997] FCA 1504 (Spender J).

   [9] R v Saleam [1999] NSWCCA 86 at [11]

Allegations made in points of claim

1. According to his amended point of claim, in 1983 the applicant, Mr Vorbach, commenced work as a solicitor with a legal firm called Ebsworth & Ebsworth. He became a member of that firm on 1 July 1984, and remained a member until Ebsworth & Ebsworth dissolved on or about 5 May 2008.

2. From around 5 May 2008 until October 2012, Mr Vorbach was employed by the Vorbach HWL Practice Trust which was a partner of a legal firm that traded under the name of HWL Ebsworth Lawyers. While employed by the Vorbach HWL Practice Trust, Mr Vorbach worked in the areas of workers compensation, insurance, dust diseases, and personal injuries.

3. On 23 October 2012 Mr Vorbach ceased to be an employee of Mr Vorbach HWL Practice Trust, and became an employee of a law firm conducted by the respondents (HWL Ebsworth Lawyers). Under his employment contract with HWL Ebsworth Lawyers, Mr Vorbach agreed to conduct work as determined by HWL Ebsworth Lawyers, but the work was to be in the areas of workers compensation, dust diseases, and personal injury.

4. In about November 2013, a number of partners, and a greater number of employees of another law firm left that firm and joined HWL Ebsworth Lawyers. Those lawyers brought to HWL Ebsworth Lawyers numerous workers compensation files from a large client (Client A). At around the same time, HWL Ebsworth Lawyers restructured its workers compensation practice. That resulted in Mr Vorbach being transferred to a new team.

5. Mr Vorbach was allocated significant workers compensation work on behalf of Client A, being work of a kind Mr Vorbach had previously undertaken which involved communications with Client A. During November 2013 to February 2014 Mr Vorbach carried out work on the matters that had been allocated to him, including matters relating to Client A.

6. On 5 February 2014 HWL Ebsworth Lawyers advised Mr Vorbach that:

   a)pursuant to the terms of the service agreement between HWL Ebsworth Lawyers and Client A, HWL Ebsworth Lawyers required the explicit approval of Client A for the applicant to carry out work for Client A;

   b)HWL Ebsworth Lawyers had, at the time, failed to obtain the necessary approval but proposed and expected to obtain that approval within fourteen days; and

   c)until Client A gave the explicit approval, Mr Vorbach should desist from signing off on correspondence with Client A or from communicating with Client A.

7. HWL Ebsworth Lawyers did not obtain Client A’s approval within the fourteen days or at all. Nevertheless, from 5 February 2014 until 6 March 2014 HWL Ebsworth Lawyers continued to allocate Mr Vorbach new Client A matters and continued to direct Mr Vorbach to undertake work on new Client A matters. During this period, however, Mr Vorbach did not sign off on correspondence to Client A, he ceased initiating communications with Client A, he accepted a small number of telephone calls about matters of a factual nature from Client A employees, he responded to a small number of email inquiries of a factual nature from Client A employees, and he provided only limited and incidental advice that was unavoidable in the context of the communications from officers and employees from Client A.

8. On 6 March 2014 HWL Ebsworth Lawyers terminated Mr Vorbach’s employment. The reason HWL Ebsworth Lawyers gave was that Mr Vorbach had communicated with employees of Client A.

Points of defence

1. HWL Ebsworth Lawyers admit much of what Mr Vorbach alleges in his points of claim. They admit that on 5 February 2014 they advised Mr Vorbach that pursuant to the terms of the service agreement between HWL Ebsworth Lawyers and Client A, HWL Ebsworth Lawyers required the explicit approval of Client A for the applicant to carry out work for Client A, but they had not obtained the approval. The deny, however, advising Mr Vorbach that they proposed to obtain that approval forthwith, and that gaining the approval would be a formality.

2. HWL Ebsworth Lawyers also agree that on 5 February 2014 they had a discussion with Mr Vorbach concerning his working on Client A matters. HWL Ebsworth Lawyers allege they directed Mr Vorbach to cease and desist from performing any work on legal matters relating to Client A because Client A had threatened to terminate its agreement with HWL Ebsworth Lawyers should Mr Vorbach and others continue to perform work on those matters.

3. HWL Ebsworth Lawyers also deny that they continued to allocate to Mr Vorbach new Client A matters. They allege Mr Vorbach continued to perform work on Client A matters without the knowledge of HWL Ebsworth Lawyers, and that Mr Vorbach did so in wilful disobedience of the direction they gave to Mr Vorbach on 5 February 2014.

Issues

1. From this summary of the pleadings, it will be seen the following three issues arise.

   a)Did HWL Ebsworth Lawyers advise Mr Vorbach that, pending HWL Ebsworth Lawyers obtaining the approval of Client A, Mr Vorbach and others, who had not been the subject of explicit approval, should desist from signing off on correspondence with Client A, as Mr Vorbach alleges? Or did HWL Ebsworth Lawyers direct that Mr Vorbach cease doing any work in relation to Client A matters, as HWL Ebsworth Lawyers allege?

   b)Did HWL Ebsworth Lawyers, during the period 5 February 2014 to 6 March 2014, continue to allocate to Mr Vorbach new Client A matters, and continue to direct Mr Vorbach to undertake work on new Client A matters, as Mr Vorbach alleges and HWL Ebsworth Lawyers deny?

   c)Were HWL Ebsworth Lawyers unaware during the period 5 February 2014 to 6 March 2014 that Mr Vorbach undertook work in relation to Client A matters, as HWL Ebsworth Lawyers allege?

The documents sought by Mr Vorbach

1. The first category of documents Mr Vorbach seeks HWL Ebsworth Lawyers produce (category 1 documents) are:

   [A]ll documents created or modified after 1 October 2013 setting out, discussing or referring to the number and particulars of Client A files the applicant had carriage of.

2. Mr Taylor, the solicitor for Mr Vorbach, submitted that these documents are relevant to the first of the three issues I have identified, namely, the true meaning of the communication between HWL Ebsworth Lawyers and Mr Vorbach on 5 February 2014 about the work Mr Vorbach was to carry out in relation to Client A matters. Mr Taylor submitted that the documents, if they exist, would tend to show that Mr Vorbach continued to have carriage of Client A matters. That, in turn, would tend to prove that the communication between HWL Ebsworth Lawyers and Mr Vorbach on 5 February 2014 was not a direction to cease and desist work on Client A matters, but was a more limited direction, namely, that Mr Vorbach not sign off any correspondence with Client A.

3. Mr Mahendra, who appeared for HWL Ebsworth Lawyers, submitted that the documents could not reasonably assist in resolving the issue about the true meaning of the communication between HWL Ebsworth Lawyers and Mr Vorbach on 5 February 2014. That is so, Mr Mahendra submitted, because, at most, the documents would show that Mr Vorbach carried out work during 5 February to 6 March 2014 (relevant period). Whether or not, however, Mr Vorbach carried out work during the relevant period is not in issue; Mr Vorbach himself alleges he undertook work in relation to Client A files, and HWL Ebsworth Lawyers allege Mr Vorbach undertook work on Client A files in breach of the direction they gave.

4. I would agree with Mr Mahendra’s submissions if the category 1 documents only called for documents that at most would tend to show that Mr Vorbach undertook work on Client A files during the relevant period. That Mr Vorbach carried out work on Client A files during this period is not in issue. The issue is whether Mr Vorbach undertook that work with the knowledge of HWL Ebsworth Lawyers. Thus, if the category 1 documents only called for documents that at most would show that Mr Vorbach carried out work during the relevant period, it would not be “on the cards” that their production would materially assist Mr Vorbach’s case.

5. The category 1 documents, however, are sufficiently broad to include documents which may suggest that a person or persons whose knowledge can be attributed to HWL Ebsworth Lawyers knew that Mr Vorbach was undertaking work on Client A files during the relevant period. It would, therefore, be “on the cards” that the production of such documents would materially assist Mr Vorbach’s case.

6. Notwithstanding this possibility, however, it would not be appropriate to order HWL Ebsworth Lawyers produce the category 1 documents. That is so because although the category 1 documents may call for documents that serve a legitimate forensic purpose, the category calls for documents that would not serve any legitimate forensic purpose. In other words, the category 1 documents are too broad.

7. Accordingly, I propose not to order that HWL Ebsworth Lawyers produce the category 1 documents. It is, of course, open to Mr Vorbach to formulate a more restricted category of documents which would call for documents that tend to disclose that a person or persons whose knowledge can be attributed to HWL Ebsworth Lawyers knew that Mr Vorbach undertook work on Client A files during the relevant period.

Client Service Agreement

1. The second category of documents of which Mr Vorbach seeks production is in fact a single document; it is the client service agreement between HWL Ebsworth Lawyers and Client A (CSA).

2. Mr Taylor submits the CSA is relevant because it is HWL Ebsworth Lawyers’ case that the direction they alleged they gave Mr Vorbach was reasonable because it was based on the terms of the CSA. That, however, is not HWL Ebsworth Lawyers’ case. HWL Ebsworth Lawyers admit the allegation made in paragraph 16(a) of the amended points of claim that Mr Vorbach “was advised” that, “pursuant to the terms of the” CSA, Client A required explicit approval of Client A for the applicant. HWL Ebsworth Lawyers does not allege it acted reasonably because of the terms of the CSA. Their defence is that they terminated Mr Vorbach’s employment because he disobeyed the direction HWL Ebsworth Lawyers gave to Mr Vorbach on 5 February 2014.

3. It is true Mr Vorbach pleads that on 5 February 2014, when they gave the direction to Mr Vorbach, HWL Ebsworth Lawyers represented that they did so because, pursuant to the CSA, HWL Ebsworth Lawyers required the explicit approval of Client A before Mr Vorbach could undertake work in relation to Client A matters. Mr Vorbach does not allege, however, that HWL Ebsworth Lawyers’ representation was false or misleading. Thus, on the current state of the pleadings, whether or not Client A had a right under the terms of the CSA to explicitly approve Mr Vorbach before he could undertake work on Client A matters is not a matter in issue in these proceedings.

4. It is conceivable that the terms of the CSA may be relevant to whether, as HWL Ebsworth Lawyers allege in their points of defence, they represented to Mr Vorbach that Client A had threatened to terminate the CSA should Mr Vorbach continue to work on Client A matters. If the CSA contained terms which indicate Client A could not have validly terminated the CSA because of Mr Vorbach’s working on Client A matters without Client A’s consent, it could be said that it is less likely that Client A made any such threat. That possibility, however, does not lead me to conclude there would be a legitimate forensic purpose in Mr Vorbach’s obtaining production of the CSA.

5. Although it is formally an issue between the parties whether Client A threatened to terminate the CSA (because the allegation is made by HWL Ebsworth Lawyers in its points of defence and that matters alleged in a defence are taken to be not admitted unless admitted in a reply), Mr Vorbach has not asserted he disputes Client A made such threat. It would, however, be difficult for Mr Vorbach to dispute Client A made such threat. On the application before me, HWL Ebsworth Lawyers put in evidence an email Client A sent to HWL Ebsworth Lawyers on 5 February 2014 which stated that HWL Ebsworth Lawyers was in breach and that if “the breach is not remedied immediately the matters will have to be withdrawn and the service level agreement may be terminated”.

6. For these reasons, I do not propose to order that HWL Ebsworth Lawyers produce the CSA.

Conclusions

1. Mr Vorbach is not entitled to an order for the production of the documents referred to in paragraphs 1(a) and 1(e) of the draft orders that were handed up in Court during the hearing on 29 July 2015.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Date: 6 August 2015