Walsh v WorleyParsons Limited

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S CI 2014 04712

JOANNE WALSH	Plaintiff
v
WORLEYPARSONS LIMITED (ACN 096 090 158)	Defendant

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JUDGE:	ALMOND J
WHERE HELD:	Melbourne
DATE OF HEARING:	12 March 2015
DATE OF RULING:	15 April 2015
CASE MAY BE CITED AS:	Walsh v WorleyParsons Limited
MEDIUM NEUTRAL CITATION:	[2015] VSC 135

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PRACTICE AND PROCEDURE – Subpoenas – Application to set aside – Rule 42.04(1) of Supreme Court (General Civil Procedure) Rules 2005 (Vic) – Whether legitimate forensic purpose exists – Whether subpoenas are vexatious, oppressive or an abuse of process of Court – Whether subpoenas are a breach of overarching obligations pursuant to ss 16, 19, 20 and 24 of the Civil Procedure Act 2010 (Vic) – Some subpoenas set aside wholly or in part as ‘fishing’.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N J O'Bryan SC Mr M W L Symons	Stewart Peters Lawyer
For the Defendant	Ms W A Harris QC Ms J A Findlay	Herbert Smith Freehills

HIS HONOUR:

By summons dated 26 November 2014 (as amended on 18 February 2015), the defendant seeks an order (among others) that the proceeding no longer continue as a group proceeding pursuant to s 33N of the Supreme Court Act 1986 (Vic) (‘Section 33N Application’).

On 14 January 2015, the defendant caused to be issued four subpoenas to produce documents addressed to each of Melbourne City Investments Pty Ltd (‘MCI’), Stewart Peters, Mark Elliott and Norman O’Bryan SC (‘January subpoenas’). On 18 February 2015, the defendant caused to be issued three subpoenas to produce documents addressed to each of MCI, Mark Elliott and Stewart Peters (‘First February subpoenas’). These subpoenas (seven in total) were issued in order to obtain further documents in support of the Section 33N Application.[1]
[1]Affidavit of Jason Lawrence Betts, sworn 10 March 2015, [12], [18].

On 18 February 2015, the defendant filed a further summons seeking orders that this proceeding be stayed as an abuse of process (‘Abuse Application’).

On 18, 19 and 20 February 2015, the defendant caused to be issued 11 subpoenas addressed to each of:

(a)Hillcrest Litigation Services Limited, IMF Bentham Limited, LCM Litigation Fund Pty Limited, Litigation Lending Services Limited, Litman Holdings Pty Limited, JustKapital Litigation Pty Limited (x 2), BSL Litigation Partners Limited, and Comprehensive Legal Funding LLC (‘Litigation Funder subpoenas’); and
(b)MCI and Mark Elliott (‘Second February subpoenas’).

These subpoenas were issued in order to obtain further evidence relevant to the Abuse Application.[2]

[2]Ibid, [22]-[23].

On 4 March 2015, the plaintiff filed a summons seeking an order that all 18 subpoenas be set aside on the grounds that they are fishing, vexatious, oppressive, an abuse of process and a breach by the defendant of its overarching obligations of economy and efficiency in the conduct of this proceeding under ss 16, 19, 20 and 24 of the Civil Procedure Act 2010 (Vic) (‘Civil Procedure Act’).

In support of its application, the plaintiff relied on an affidavit of Stewart Francis Sturrock Peters, sworn 4 March 2015, in which Mr Peters deposes inter alia as to service of the subpoenas and exhibits to his affidavit copies of the subpoenas.

In opposition to the application, the defendant relied on the affidavits of Jason Lawrence Betts, sworn 10 December 2014 (‘Betts’ first affidavit’), 18 February 2015, (‘Betts’ second affidavit’) and 10 March 2015 (‘Betts’ third affidavit’).

Senior counsel for the plaintiff contended that:

(a)the defendant did not have a legitimate forensic purpose in causing the subpoenas to be issued;
(b)each of the subpoenas constitutes impermissible fishing; and
(c)the defendant’s conduct in causing the subpoenas to be issued and served is in breach of its obligations pursuant to the Civil Procedure Act.

Applicable principles

There was common ground between the parties as to the applicable principles.

An application to set aside a subpoena is made pursuant to Order 42.04(1) of the Supreme Court (General Civil Procedure Rules) 2005 (Vic), which relevantly provides that the Court may, of its own motion or on the application of the party to a proceeding, set aside a subpoena in whole or in part. The Court also has power to intervene to set aside a subpoena as part of its inherent jurisdiction.

The plaintiff relied on the following propositions:

(a)a subpoena may be set aside if the subpoena process has not been used for the purpose of the proceeding or for the purpose of obtaining evidence relevant to the proceeding or if the subpoena process is being used for an impermissible purpose (such as a fishing expedition);[3]
(b)compliance with a subpoena to produce documents may be regarded as oppressive if the subpoena does not specify the documents with sufficient clarity or reasonable particularity;[4] and
(c)the party who requests the issue of a subpoena bears the onus of establishing that documents the subject of the subpoena are sufficiently relevant to the proceeding to justify their production.[5]

[3]Attorney-General for the State of Victoria v Slaveski [2013] VSC 319, [6].

[4]Ibid, [7].

[5]Ibid, [8].

The plaintiff also relied on principles relating to whether a party is entitled to access documents which have been subpoenaed, as set out by the Court of Appeal in two cases: Shaw v Yarranova Pty Ltd[6] and Woolworths v Svajcer.[7] Those principles are, namely:[8]

(a)it is necessary for the party at whose request the witness summons was issued to identify expressly and precisely the legitimate forensic purpose for which access to the documents is sought;[9]
(b)the issuer of the summons must also satisfy the court that it is ‘on the cards’ or that there is a ‘reasonable possibility’ that the documents sought under the subpoena ‘will materially assist the defence';[10]
(c)a ‘fishing expedition’ is not a legitimate forensic purpose and will not be permitted;[11]
(d)the relevance of the document to a proceeding alone will not substantiate an assertion of legitimate forensic purpose. There is no legitimate forensic purpose if the party is seeking to obtain documents to see whether they may be of relevance or of assistance to the party’s case;[12]
(e)the court must be satisfied that the documents are relevant to an issue and that there is something in the material then before the court that makes it appear likely that the documents will materially assist the applicant;[13] and
(f)where a party fails to demonstrate a legitimate forensic purpose, the court should refuse access to the documents and set aside the witness summons.[14]
[6][2011] VSCA 55 (‘Shaw’). As established in Shaw [2011] VSCA 55, [26] (Redlich and Mandie JJA), the principles governing an application for an order that documents be produced are not different from those governing applications for access to documents produced in answer to a subpoena.
[7][2013] VSCA 270 (‘Woolworths’).
[8]Woolworths [2013] VSCA 270, [16], in which Nettle, Ashley and Neave JJA referred to principles set out by J Forrest J in Commissioner of Australian Federal Police v Magistrates’ Court of Victoria [2011] VSC 3, [28] and re-stated by his Honour in Messade v Baires Contracting Pty Ltd [2011] VSC 56, [6].
[9]Woolworths [2013] VSCA 270, [16(a)].
[10]Ibid, [16(c)]; Shaw [2011] VSCA 55, [26].
[11]Woolworths [2013] VSCA 270, [16(d)].
[12]Ibid, [16(e)].
[13]Shaw [2011] VSCA 55, [26].
[14]Woolworths [2013] VSCA 270, [16(h)].

Plaintiff’s submissions

In support of the plaintiff’s contention that the subpoenas do not have a legitimate forensic purpose, the plaintiff submitted that: the defendant has not identified any improper collateral purpose in the plaintiff bringing the group proceeding; there is no basis or reason to infer that the plaintiff, Ms Walsh, has commenced this proceeding for the purpose of creating work for a solicitor; Ms Walsh has engaged an independent solicitor to act for her in this proceeding and has received the benefit of an indemnity from MCI in respect of her own costs and any costs order made against her in this proceeding; Ms Walsh seeks to vindicate her rights against the defendant for its alleged contravention of s 674 of the Corporations Act 2001 (Cth) (being the alleged failure to make continuous disclosure of information, resulting in a material effect on the price or value of its shares); the fact that Ms Walsh may not bear the costs risks of litigation does not change her reasons for commencing and continuing this proceeding; and nothing has been said to impugn Ms Walsh’s own purpose, and this silence, it was submitted, was fatal to the defendant’s application.[15]
[15]Plaintiff’s written submissions dated 11 March 2015, [9], [10].

Further, the plaintiff submitted that: the 18 subpoenas are directed at uncovering evidence of an alleged abuse of process to find out whether the defendant’s Abuse Application is maintainable; the defendant is required to identify with reasonable precision the alleged improper collateral purpose and, on its affidavit material, it has not done so; and the defendant is impermissibly using the subpoenas to fish for evidence which might enable it to identify and thereafter impute an improper collateral purpose to the plaintiff.[16]
[16]Ibid, [15], [16].

Finally, the plaintiff submitted that the defendant is in breach of the Civil Procedure Act, in particular its obligations under ss 16, 19, 20 and 24.

For all of these reasons, the plaintiff submitted that the Court should set aside the (18) subpoenas and disallow inspection of any document produced.

Background

In order to properly assess the rationale for the issue and service of the subpoenas, it is necessary to set out the relevant background to this proceeding in some detail.

On 1 November 2012 MCI was incorporated with Mr Mark Elliott as sole director and sole shareholder.[17]
[17]Betts’ first affidavit, [13], [18]; Exhibits JLB-5, JLB-10.

On the same day MCI acquired small shareholdings costing between $600 and $900 in 20 companies listed on the Australian Stock Exchange including WorleyParsons Limited (‘WorleyParsons’) and Treasury Wine Estates Limited (‘TWE’).[18]
[18]In February 2014 MCI acquired small shareholdings costing between $600 and $900 in a further 145 companies listed on the Australian Stock Exchange: Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited(No 3) [2014] VSC 340, [16]; Treasury Wine Estates Limited v Melbourne City Investments Pty Ltd [2014] VSCA 351, [4]–[6].

On 18 December 2013 MCI issued a group proceeding against WorleyParsons alleging that WorleyParsons failed to disclose material information in breach of s 674(2) of the Corporations Act 2001 (Cth) and engaged in misleading and deceptive conduct in breach of s 1041H of that Act (‘MCI proceeding’). At the commencement of the MCI proceeding, Mr Elliott was acting as the solicitor for MCI in that proceeding.

MCI also initiated group proceedings against TWE and Leighton Holdings Ltd (‘Leighton Holdings’) respectively making like allegations in each proceeding.[19]
[19]Treasury Wine Estates Limited v Melbourne City Investments Pty Ltd [2014] VSCA 351, [30].

During February 2014 the solicitors for WorleyParsons wrote to Mr Elliott detailing perceived deficiencies in MCI’s statement of claim and inviting MCI to withdraw and re-plead its statement of claim.[20]
[20]Betts’ first affidavit, [21]; Exhibits JLB-11, JLB-12.

An amended statement of claim was filed and served on behalf of MCI which did not cure the perceived deficiencies and WorleyParsons made an application to strike out the amended statement of claim. During the hearing of that application, MCI indicated that it proposed to abandon its claim pursuant to s 674(2) of the Corporations Act 2001 (Cth) and wished to seek leave to file a further amended statement of claim.[21]
[21]Betts’ first affidavit, [23]; Exhibit JLB-13.

On 19 March 2014 MCI filed a proposed further amended statement of claim which sought only to advance a claim for declaratory relief based on alleged misleading and deceptive conduct.[22]
[22]Betts’ first affidavit, [24].

In correspondence passing between the parties, the solicitors for WorleyParsons notified the solicitor for MCI that WorleyParsons considered that the proposed further amended statement of claim was also defective, and that leave to file and serve the pleading ought not be granted because (among other things) MCI did not have standing to seek the relief claimed as it did not fall within the pleaded definition of group member and therefore was not an appropriate representative for the conduct of the proceeding.[23]
[23]Betts’ first affidavit, [25]; Exhibit JLB-14.

MCI’s standing to be the representative party in the MCI proceeding was challenged by WorleyParsons in an application heard by Ferguson J on 23 May 2014. Prior to the hearing of that application, MCI posted a notice on a website established by MCI. The notice sought an alternative plaintiff in order to overcome WorleyParsons’ complaints. That notice stated:

The plaintiff has sought to file a Proposed Further Amended Statement of Claim in respect of the alleged misleading or deceptive conduct. The plaintiff has itself suffered no loss arising out of that conduct, but it seeks declarations on behalf of itself and group members that the alleged misleading or deceptive conduct was a contravention of the Act, and declarations that group members are entitled to compensation.
The Proposed Further Amended Statement of Claim makes no allegation that the defendant breached the continuous disclosure provisions. WorleyParsons is endeavouring to strike out the Proposed Further Amended Statement of Claim on the basis that the plaintiff is not entitled to seek declarations of misconduct if it is not itself seeking compensation. The strike out application will be heard on 23 May 2014 in the Supreme Court of Victoria.
With an alternative plaintiff, who bought shares in WorleyParsons Limited closer to (but before) 20 November 2013, it would be possible to reinstate the allegation of breach of the continuous disclosure provisions and overcome WorleyParsons’ complaint that the plaintiff may not seek declarations only.
I am therefore looking to make contact with anyone who acquired shares in WorleyParsons Limited anytime in 2013 and continued to hold them on 20 November 2013…[24]

[24]Betts’ second affidavit, [44(b)]; Exhibit JLB-32.

During the period 29 May to 5 June 2014, MCI placed advertisements in national news media seeking to identify prospective group members potentially entitled to compensation.

The advertisements were in the following terms:

A class action was commenced in the Supreme Court of Victoria against WorleyParsons Limited (ASX:WOR) on 18 December 2013 in relation to its announcement to ASX on 20 November 2013 of an earnings downgrade for FY 2014.
In the class action, it is alleged by the plaintiff that WorleyParsons Limited engaged in misleading or deceptive conduct by publishing increased 2014 earnings guidance to the market on a number of occasions in 2013 prior to its earnings downgrade announcement on 20 November 2013.
If you held shares in WorleyParsons Limited on 20 November 2013 you may have a claim against WorleyParsons Limited for this alleged misleading or deceptive conduct and you may be entitled to compensation.
More information about the class action can be obtained at the website established by the representative plaintiff:
are requested to make contact by email or letter with the plaintiff’s solicitor to determine your eligibility to participate in the class action and to receive compensation.
Contact details are provided at the above website.[25]

[25]Betts’ second affidavit, [44(c)]; Exhibit JLB-33.

On 27 June 2014 Ferguson J upheld WorleyParsons’ contentions that MCI lacked standing because it had purchased its WorleyParsons shares before the alleged misleading and deceptive conduct had occurred and it had no interest which could justify the grant of declaratory relief. Her Honour refused leave to file the proposed further amended statement of claim.

On 2 July 2014 MCI executed a deed of indemnity in favour of Ms Joanne Walsh. The recitals to the deed record that Ms Walsh had agreed to be named as plaintiff in legal proceedings commenced in the Supreme Court of Victoria as representative proceedings under Part 4A of the Supreme Court Act 1986 (Vic) against WorleyParsons.[26]
[26]Betts’ first affidavit, [12]; Exhibit JLB-4.

On 22 July 2014 MCI issued a summons seeking leave to file a second further amended statement of claim and to have Ms Walsh joined as second plaintiff in the MCI proceeding.[27]
[27]Betts’ first affidavit, [30].

On 23 July 2014 Ferguson J delivered a ruling in each of the group proceedings brought by MCI against TWE and Leighton Holdings, holding in each case that the principal of MCI, Mr Elliott, should be restrained from acting as the solicitor for MCI while MCI was the lead plaintiff in the proceedings.[28]
[28]Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 3) [2014] VSC 340.

On about 25 July 2014 WorleyParsons invited Mr Elliott to withdraw as solicitor for MCI in the MCI proceeding[29] and Mr Elliott did so.[30]
[29]Betts’ first affidavit, [31]–[32].
[30]Betts’ first affidavit, [33]; Exhibit JLB-21.

On 8 September 2014 Ms Walsh commenced a separate representative proceeding (this proceeding, S CI 2014 04712) with Mr Elliott as her solicitor (’Walsh proceeding’). By way of explanation, the new solicitors for MCI, Tan Partners, notified the Court that MCI had decided not to proceed with its application to add Ms Walsh as second plaintiff in the MCI proceeding, because Ms Walsh had instead commenced her own representative proceeding.[31]
[31]Betts’ first affidavit, [38].

The statement of claim in the Walsh proceeding was in materially the same form as the proposed second further amended statement of claim in the MCI proceeding in that the plaintiff alleged misleading and deceptive conduct and continuous disclosure breaches.

On 17 October 2014 Ferguson J refused MCI leave to file the proposed second further amended statement of claim in the MCI proceeding and dismissed that proceeding with costs.

During October 2014, the solicitors for the defendant in the Walsh proceeding wrote to the plaintiff’s solicitor, Mr Elliott, enquiring about the private funding of the plaintiff’s claim. Mr Elliott responded to this enquiry by stating that the plaintiff was being indemnified by MCI in respect of the costs of the proceeding, and he provided a copy of the deed of indemnity.[32]
[32]Betts’ first affidavit [11], [12]; Exhibit JLB-4.

The deed of indemnity is between MCI as indemnifier and Ms Walsh as proposed representative plaintiff and it contains the following relevant clauses:

1.The Plaintiff will be named as plaintiff in proposed legal proceedings (the Proceedings) commenced in the Supreme Court of Victoria as a representative action taken on behalf of all shareholders in WorleyParsons (the Group).
2.The Plaintiff will accept and act promptly upon all advice which she is given by the solicitors and counsel for the Group in connection with the conduct of the Proceedings and will not consult with or engage any other solicitors or counsel in connection with the Proceedings whilst she remains the Plaintiff.
…
4.The Plaintiff will not discuss the Proceedings or anything connected therewith with any other person, including any representative of the media, without the prior knowledge and express consent of the Indemnifier.

…
7.The Plaintiff will be entitled to reasonable payment for her time and attention in acting as Plaintiff in the proceedings at the rate and in the amount agreed Mark Elliott from time to time together with her share of the proceeds of the Proceedings after they are resolved and any other sum which the Court may award to the Plaintiff pursuant to section 33ZJ of the Act.
8.The Plaintiff will not be liable to pay anything or otherwise to meet any costs or disbursements at any time to the solicitors or counsel who are acting on behalf of the Plaintiff and the Group or to any expert witnesses, consultants or any other persons engaged by the solicitors and counsel acting on behalf of the Group.
…
10.In consideration of the Plaintiff performing her obligations under the deed, the Indemnifier will indemnify and keep indemnified the Plaintiff against any and all costs or liabilities of any sort whatsoever that the Plaintiff may suffer or incur in connection with or arising out of her role as Plaintiff, including any adverse orders for legal costs.

On 28 October 2014 the defendant’s solicitors wrote to Mr Elliott, detailing perceived deficiencies in the statement of claim in the Walsh proceeding, and asserting, in effect, that the pleading failed to identify and properly particularise certain matters said to form the basis of the plaintiff’s claim, and failed to plead causal connections between matters alleged and breaches of the Corporations Act 2001 (Cth).[33]
[33]Betts’ first affidavit, [9]; Exhibit JLB-2.

On 14 November 2014 Mr Elliott served an amended statement of claim on behalf of the plaintiff.

The defendant considered that the amended statement of claim was also defective and on 26 November 2014 filed a summons seeking orders that:

(a) the amended statement of claim be struck out in whole or part;
(b)Mr Elliott be restrained from acting as solicitor for the plaintiff; and
(c)pursuant to s 33N(1) of the Supreme Court Act 1986 (Vic) the proceeding no longer continue as a proceeding under Part 4A of that Act .

On 28 November 2014 Mr Elliott withdrew as Ms Walsh’s solicitor after a potential conflict of interest was drawn to Mr Elliott’s attention.

On 28 November 2014 Mr Stewart Peters was appointed to act as solicitor for the plaintiff in place of Mr Elliott.[34] During December 2014, Mr Peters confirmed to the defendant’s solicitors that the deed of indemnity remained in place, that he had been retained on his usual terms and conditions, and that he was not acting for Ms Walsh on a ‘no win no fee’ basis.[35]
[34]Notice of change of solicitor dated 28 November 2014, Exhibit JLB-7.
[35]Betts’ first affidavit, [16]–[17]; Exhibits JLB-8 and JLB-9.

On 22 December 2014 the Court of Appeal delivered judgment in the group proceeding against TWE. The Court of Appeal stayed the proceeding permanently as an abuse of process on the basis that it had been brought for the predominant purpose of enriching MCI’s solicitor, Mr Elliott.[36]
[36]Treasury Wine Estates Limited v Melbourne City Investments Pty Ltd [2014] VSCA 351; Betts’ second affidavit, [32].

On 14 January 2015 the plaintiff’s solicitor served a proposed further amended statement of claim which maintains the continuous disclosure breach claims but abandons the misleading and deceptive conduct claims.

On 27 January 2015 the plaintiff’s solicitor informed the defendant that the deed of indemnity had been revoked and replaced by a new deed of indemnity dated 21 January 2015. Whilst there are some differences between the two versions, the plaintiff is still obliged by the terms of the new deed of indemnity, among other things, to accept and act promptly upon all advice which she is given by her solicitors and counsel, and not to discuss the proceeding or anything connected with the proceeding with any other person.[37]

Subpoenas in relation to the Section 33N Application (January subpoenas and First February subpoenas)

[37]Betts’ second affidavit, [18]; Exhibits JLB-22, JLB-27; Betts’ third affidavit, [17].

The January subpoenas and First February subpoenas were addressed to MCI, Stewart Peters, Mark Elliott and Norman O’Bryan SC. The documents which are sought under the January subpoenas go to the existence of any financial or other interest in, or liability or exposure to, the outcome of the proceeding on the part of the subpoena addressees (who, according to the deed of indemnity, have some control over the outcome in their representative capacities as the plaintiff’s indemnifier (or its principal, Mr Elliott) or Ms Walsh’s lawyers), or are closely associated with such persons.

In the latter regard, I refer to BSL Litigation Partners Limited (‘BSL’) and Ms Sue Noy, who are relevant in light of the following facts established in Bolitho v Banksia Securities Limited (No 4),[38] a decision delivered by Ferguson JA on 26 November 2014. In that case, it was held that Mr Elliott’s superannuation fund and another company controlled by him held approximately 45 per cent of the shares in BSL, a litigation funder which had agreed to provide litigation funding in a group proceeding issued against Banksia Securities Limited. Mr Elliott was the company secretary and one of three directors of BSL. Another 45 per cent of the shares in BSL were held by a company controlled by Mr O’Bryan’s wife, [39] Ms Sue Noy.
[38][2014] VSC 582 (‘Banksia’).
[39]Ibid, [7].

The First February subpoenas are directed to Mr Elliott (sole shareholder and sole director of MCI), MCI and Mr Peters, the solicitor for the plaintiff, and seek documents relating to the terms on which Mr Peters is retained and specifically in relation to any ability Mr Elliott or his company may have to influence the conduct of the Walsh proceeding on behalf of the plaintiff.

In oral submissions, senior counsel for the defendant focused the Court’s attention on key provisions of the original deed of indemnity, which oblige Ms Walsh to: accept and promptly act on all advice given by solicitors and counsel for her and the group in connection with the proceeding; not engage any other solicitors or counsel in connection with the conduct of the proceeding whilst she remains the plaintiff; and not discuss the proceedings or anything connected with them with any other person. The deed stipulates that the plaintiff will only be indemnified if she abides by the terms of the deed.

It was submitted that by undertaking such obligations pursuant to the deed, the plaintiff effectively ceded control of the conduct of the proceedings to others in a way which is incompatible with her remaining as a representative plaintiff. The defendant also argued that these subpoenas (in relation to the Section 33N Application) seek documents directed to the question of who really has control over the conduct of the Walsh proceeding.

In my view the defendant has demonstrated with sufficient precision that there is a legitimate forensic purpose for the issue of the January subpoenas and First February subpoenas.

The first point of significance is that Mr Betts has deposed that the subpoenas were issued in order to obtain material in support of the Section 33N Application.[40] The defendant is not merely intermeddling and it has a particular reason for seeking production of the documents.
[40]Betts’ third affidavit, [12], [18].

Secondly, it is evident that the subpoenas were issued against the background circumstance described above, namely: that MCI has agreed not only to indemnify the plaintiff, but to pay her for her time and attention in acting as plaintiff in the Walsh proceeding on condition that she give her solicitors and counsel all the assistance they may need or request; that she accept and act promptly on all advice given by her solicitors and counsel; and that she not engage any other solicitors or counsel in connection with the conduct of the proceeding whilst she is plaintiff.[41] These conditions prima facie suggest that persons or entities other than Ms Walsh have or will have control over the conduct of the proceeding.
[41]Exhibit JLB-27; Exhibit JLB-4. This is qualified in the new deed of indemnity which permits the plaintiff to engage other solicitors with respect to her ‘personal interests’.

Accordingly, I am satisfied that there is a reasonable possibility that the documents sought by the January subpoenas and the First February subpoenas will help answer the question of who has control over the conduct of the proceeding so as to materially assist the defendant in establishing that Ms Walsh has, in effect, disabled herself from properly discharging her function as a representative plaintiff and should no longer continue as representative plaintiff in this proceeding. In other words, by seeking these documents, the defendant appears to me to be endeavouring to obtain evidence to support its case that Ms Walsh should no longer continue as representative plaintiff because she has ceded control over the proceeding to others. The defendant is not merely seeking to discover whether it has any basis for the Section 33N Application, the foundation of which prima facie already lies in the deed(s) of indemnity.

In my view, that is a legitimate forensic purpose which is of interest to not only the defendant, but more broadly, the Court.

I am not satisfied that the January subpoenas are otherwise objectionable. This was all but conceded by senior counsel for the plaintiff.[42]
[42]Transcript 28.5-16.

In relation to the First February subpoenas, senior counsel for the plaintiff valiantly argued that they were each expressed in overly broad language, were fishing or difficult to follow, or required the recipients to exercise judgements about complicated things, and that they should therefore all be set aside.

In my view, these complaints are without merit. The First February subpoenas were directed to two solicitors (Mr Elliott and Mr Peters) and MCI (whose sole shareholder and director is Mr Elliott). Had these subpoenas been overly broad, difficult to follow, unacceptably demanding on the recipients by requiring them to make complicated judgements about difficult things, or incomprehensible in any respect, one would have expected the recipients to have said so. Yet each of the First February subpoenas were answered without complaint with documents being returned by Mr Elliott and MCI jointly, and Mr Peters on his own account. While there is arguably some inelegance in the style and phrasing of the First February subpoenas it is sufficiently clear that they seek documents relating to the terms on which Mr Peters is retained, any role which Mr Elliott and his company will have in giving instructions, being provided with information and making decisions in relation the proceeding, all of which address the influence that the recipients may have over the conduct of the Walsh proceeding.

Subpoenas in relation to the Abuse Application (Litigation Funder subpoenas and Second February subpoenas)

A convenient starting point for consideration of whether the Litigation Funder subpoenas and Second February subpoenas have been issued for a legitimate forensic purpose is the decision of the Court of Appeal in Treasury Wine Estates Limited v Melbourne City Investments Pty Ltd.[43] In the majority judgment (Maxwell P and Nettle JA), the Court set out the law as follows:

As the law stands, the only legitimate purpose for bringing a proceeding is to vindicate legal rights or immunities by judgment or settlement.[44]

Their Honours distinguished between two types of case:
On the one hand, a proceeding will not be regarded as an abuse of process by reason only that it is brought for the purpose of taking collateral advantage of any judgment or settlement in vindication of legal rights or immunities which might be obtained in the proceeding. On the other hand, if a proceeding is brought for the predominant purpose of obtaining collateral advantage from the existence of a proceeding as such, as opposed to collateral advantage flowing from any judgment or settlement in vindication of legal rights or immunities which might be obtained in the proceeding, it will be an abuse of process and liable to be stayed.[45]

[43][2014] VSCA 351.

[44]Ibid, [9].

[45]Ibid, [11].

Senior counsel for the defendant submitted that the defendant would seek to demonstrate that: no legitimate purpose lies behind the institution or prosecution of this proceeding and MCI has caused this proceeding to be brought and maintained for the predominant purpose of gaining a financial benefit or advantage rather than the vindication of legal rights or immunities.

Senior counsel for the defendant submitted that (as things presently stand) there is a sound evidentiary foundation for the Court to infer that the moving party behind this proceeding (MCI) has caused the proceeding to be issued for the predominant purpose of obtaining a financial benefit unrelated to the relief sought in the proceeding. Further, this inference can readily be drawn because MCI is no longer the plaintiff, is not a group member and cannot be a group member because the pleaded definition of group members requires that shares were purchased after 1 August 2013 and were held until the commencement of trading on 20 November 2013. MCI purchased its shareholding during 2012.[46]
[46]See Exhibit JLB-27 (CHESS November 2012 Holding Statement).

Senior counsel for the defendant submitted that the subpoenas (issued in relation to the Abuse Application) were issued:

…in order to demonstrate that MCI’s predominant purpose for prosecuting the proceedings is to gain some financial benefit or upside unrelated to the vindication of the plaintiff and group members’ legal rights.[47]

[47]Transcript, 51.18–22.

The defendant will seek to establish that the Court’s process was invoked for an improper purpose and to that end, it will demonstrate that MCI, and not Ms Walsh, was the moving party at the time this proceeding was commenced.

The defendant has foreshadowed that in the Abuse Application, it will rely on the background facts set out above to say, in substance, that:

(a) MCI lacked standing to bring the representative proceeding (the MCI proceeding) against WorleyParsons and that as a consequence it actively sought out candidates to participate in a representative proceeding. This is demonstrated by MCI’s advertisement in the national newspapers seeking shareholders who may have a claim for compensation;[48]
[48]Exhibit JLB–33.

(b) MCI sought out representative proceeding candidates at a time (May 2014) when its claim in the MCI proceeding was merely for declaratory relief, and in the circumstances it did so potentially to assess the potential size of any claim for compensation;

(c) the statement of claim in this proceeding which was filed and ultimately served on 29 September 2014 was in materially identical form to the proposed second further amended statement of claim in the MCI proceeding;

(d) on 8 September 2014 during the hearing of the application before Ferguson J for orders that the MCI proceeding be dismissed, MCI appreciated that there was a real risk that its proceeding would be dismissed, and it commenced the Walsh proceeding on the same day, with Ms Walsh as the sole plaintiff and with Mr Elliott as her solicitor;

(e) Ms Walsh had entered into a deed of indemnity with MCI the terms of which give rise to the irresistible inference that MCI procured the issue of these proceedings;

(f) MCI is the moving party in this litigation;

(g) there is no evidence that there is any altruistic purpose for MCI’s conduct; and

(h) not only had MCI agreed to indemnify Ms Walsh in July 2014, it had executed a new deed of indemnity on 21 January 2015. MCI remained willing to assume onerous financial obligations under the terms of the new deed even though Mr Elliott was no longer the solicitor on the record.

The defendant contended that in the circumstances the likely purpose of this proceeding is to secure a financial benefit unrelated to the vindication of the plaintiff’s legal rights.

The Litigation Funder subpoenas and Second February subpoenas are directed to establishing the existence of that purpose. The material before the Court does raise the question as to how the representative proceeding is to be funded. There is no suggestion that the plaintiff herself has either the inclination or the capacity to fund the proceeding. In my view, it is likely that any funding arrangements will be documented. Documents produced on subpoena so far by MCI appear to indicate that the litigation is not being funded directly by MCI or Mr Elliott, so presumably the litigation funding is coming from another source.

Litigation Funder subpoenas

The Litigation Funder subpoenas seek documents evidencing or referring to communications (in a defined period) between the subpoenaed entity and any persons listed in the annexure (including MCI, Mr Elliott, Stewart Peters, and the plaintiff) in relation to existing or potential legal proceedings against WorleyParsons arising from alleged disclosure failures or misleading disclosures in 2012 or 2013.

On the material before the Court,[49] BSL is or was associated with senior counsel for the plaintiff and Mr Elliott and has provided litigation funding on at least one other occasion in this jurisdiction in relation to a representative proceeding issued in this Court against Banksia Securities Ltd. These associations and past conduct, in my view, provide a clear rationale for the issue and service on this entity of a subpoena for production of relevant documents. I am satisfied that the Litigation Funder subpoena directed to BSL has a legitimate forensic purpose, in that there is a reasonable possibility that the documents sought will materially assist the defendant in its Abuse Application.
[49]See Banksia [2014] VSC 582, [3].

But there is no substantive evidence before the Court in relation to the other entities (Hillcrest Litigation Services Limited, IMF Bentham Limited, LCM Litigation Fund Pty Limited, Litigation Lending Services Limited, Litman Holdings Pty Limited, JustKapital Litigation Pty Limited and Comprehensive Legal Funding LLC). Whilst there is evidence to the effect that each was served a subpoena there was no evidence adduced or other material which would explain why they were chosen as recipients. I was not directed to any substantive reference in the affidavit material to any of the named entities nor have I been able to discern any reference save for formal identification[50] and a generic statement that the “litigation funders’ subpoenas were directed at obtaining further evidence relevant to the abuse application; in particular, further illuminating any purpose for which the Walsh proceeding was brought, including any purpose of securing a financial benefit unrelated to the obtaining of the relief sought in the proceeding”.[51]
[50]Betts’ third affidavit, [15], [25] and [26].
[51]Betts’ third affidavit, [23].

One can surmise from the names of some of these subpoenaed entities that they may be international public corporations conducting business as litigation funders, but there is no evidence before the Court that this is so. During oral submissions, I was informed by senior counsel for the defendant that the entities are litigation funders but objection to this assertion was fairly taken by senior counsel for the plaintiff. So in lieu of any evidence to suggest otherwise, prima facie, it appears that the issue and service of the Litigation Funder subpoenas (save for the subpoena directed to BSL) amounts to ‘the casting of a line with the hope that something may be caught in a very large pond’.[52] There is insufficient material to satisfy the Court that it is ’on the cards‘ or that there is a ’reasonable possibility‘ that the documents sought from these recipients will materially assist the defendant in prosecuting its Abuse Application.
[52]Messade v Baires Contracting Pty Ltd [2011] VSC 56, [10].

To require each of these subpoenaed entities to search their records and produce documents evidencing or referring to communications on the off chance that one or other of them might have received a communication from MCI or Mr Elliott (or others listed in the annexure) of any kind in relation to this proceeding, in my view, constitutes impermissible fishing. Had there been evidence to the effect that the entities were litigation funders, that there was a sound rationale for sending the subpoenas to the particular entity (out of all possible litigation funders), and that the subpoenas were directed to the production of documents in relation to the funding of this proceeding, the position may well have been different. Save for the subpoena directed to BSL, in my view the Litigation Funder subpoenas should be set aside.

Second February subpoenas

For the same reasons the Second February subpoenas should be set aside to the extent that they require production of documents evidencing or referring to communications with the entities specified in Annexure A (except in relation to BSL).[53] These entities include Harbour Litigation Funding Limited, International Litigation Funding Partners Pte Limited and Omni Bridgeway which were named in Annexure A to the Second February subpoenas but were not themselves recipients of a subpoena. Again there was no evidence adduced or other material which explained why those entities were included in the list of entities in Annexure A.
[53]The entities are: Comprehensive Legal Funding LLC; Harbour Litigation Funding Limited; Hillcrest Litigation Services Limited; IMF Bentham Limited; International Litigation Funding Partners Pte Limited; LCM Litigation Fund Pty Limited; Litigation Lending Services Limited; Litman Holdings Pty Limited; JustKapital Litigation Pty Limited; Omni Bridgeway.

It follows that paragraph 1 of the Second February subpoena addressed to Mr Elliott will be set aside (except in relation to BSL) and paragraph 4 of the Second February subpoena addressed to MCI will be set aside (except in relation to BSL).

Otherwise, in my view, the Second February subpoenas directed to Mr Elliott and MCI Investments were issued for a legitimate forensic purpose.

In the subpoena directed to Mr Elliott, the defendant seeks copies of the newspaper advertisements placed during the relevant period directed to potential claimants or group members in any shareholder class action, not just the WorleyParsons matter. In my view, there is a reasonable possibility that such documents will demonstrate that MCI, through its sole director and shareholder, Mr Elliott, had a modus operandi of commencing representative proceedings for the predominant purpose of securing financial benefits rather than to vindicate legal rights, and that he has done so in this proceeding.

The subpoenas also seek production of documents regarding the possibility of persons becoming the representative plaintiff in legal proceedings against WorleyParsons. This includes communications with Ms Walsh with regard to the actual or possible funding of such proceedings and the terms on which Ms Walsh might be indemnified, paid, reimbursed or rewarded in respect of her role as plaintiff. In my view, there is a reasonable possibility that such communications will demonstrate that MCI is the moving party behind this litigation and that it brought this proceeding for the predominant purpose of obtaining financial benefits rather than vindicating legal rights.

The same applies to the subpoena directed to MCI to the extent that it mirrors the categories in the subpoena directed to Mr Elliott. The subpoena directed to MCI also seeks production of documents recording MCI’s shareholdings in Australian listed public companies in the defined period 1 December 2013 to 6 February 2015, documents recording the dates on which each of those shareholdings was acquired, and documents recording the amounts paid for the shareholdings. In my view, there is a reasonable possibility that, viewed in context, those documents will also demonstrate that MCI is the moving party in this litigation and that it had a modus operandi of commencing representative proceedings with the predominant purpose of securing financial benefits rather than vindicating legal rights, and that it has done so in this proceeding.

Whether the subpoenas are vexatious and oppressive

Senior counsel for the plaintiff submitted that the defendant embarked on a vexatious campaign of harassment by issuing multiple subpoenas against MCI and Mr Elliott and to third parties which was improper and amounted to an abuse of the processes of the Court.

Senior counsel for the defendant submitted that the documents produced under the January subpoenas, which included the first deed of indemnity, demonstrated that: there was no apparent financial ‘upside’ for MCI in its sponsorship of the proceedings but only a significant and tangible ‘downside’; MCI would inevitably spend money in underwriting the plaintiff’s legal costs some of which, even if Ms Walsh were to succeed, would inevitably be unrecoverable; and MCI would potentially spend money on meeting adverse costs orders and any other liabilities that Ms Walsh incurs in the proceeding. After considering all of these matters, WorleyParsons determined in February 2014 that it was appropriate to apply to have the proceeding stayed as an abuse of process bearing in mind the decision of the Court of Appeal in Treasury Wine Estates Limited v Melbourne City Investments Pty Ltd.[54]
[54][2014] VSCA 351.

Having notified the plaintiff that the defendant proposed to bring the Abuse Application, the defendant requested that the Abuse Application be heard together with the then pending Section 33N Application which was listed for hearing on 26 February 2015.

The plaintiff rejected this proposal and pressed, in substance, for the Section 33N Application to proceed on 26 February 2015. Senior counsel for the defendant submitted that the imminence of this hearing date was the reason the First February subpoenas and the Second February subpoenas were issued in two tranches. The First February subpoenas were directed solely towards documents relevant to the Section 33N Application, which was then only eight days away.

Senior counsel for the defendant explained that the First February subpoenas needed to be answerable before 26 February 2015 in case the Section 33N Application proceeded on that day. It was noted that each of First February subpoenas had a date for production of documents of 25 February 2015, the day immediately preceding the proposed hearing of the Section 33N Application. The subpoenas issued on or after 18 February 2015 (the date upon which the defendant filed the summons for the Abuse Application) were directed towards MCI, Mr Elliott and “litigation funders” and were made in anticipation of the Abuse Application proceeding at a later time. Accordingly, the specified date for production of documents was in March 2015 in each case.

Having regard to this explanation and the objective evidence of the return dates on the respective subpoenas, I accept the defendant’s submission that there is no basis upon which to suppose that the defendant’s solicitors embarked on a vexatious or improper campaign of harassment with regard to the issue and service of any of the subpoenas.

For completeness, I note that there was no evidence adduced by the plaintiff to support her claim that the issue and service of the subpoenas was vexatious or oppressive.

The words ‘oppressive’ and ‘vexatious’ were considered in Oceanic Sunline Special Shipping Co Inc v Fay.[55] Deane J explained the meaning of the words ‘oppressive’ and ‘vexatious’ in the following terms:

‘Oppressive’ should be understood as meaning seriously and unfairly burdensome, prejudicial or damaging, while ‘vexatious’ should be understood as meaning productive of serious and unjustified trouble and harassment.[56]

[55](1988) 165 CLR 197 (‘Oceanic Sunline’).

[56]Ibid, 247.

Senior counsel for the defendant submitted that, in effect, the objective facts spoke for themselves; that documents had been produced pursuant to the January subpoenas and the First February subpoenas. There had not been, prior to production of those documents, any indication from the parties that responded to the subpoenas that any subpoena was ‘oppressive’ or ‘vexatious’ in the sense described in Oceanic Sunline or even that production was inconvenient. In my view, the fact that the documents had been produced in response to the January subpoenas and the First February subpoenas tends to suggest that the task was not too burdensome.[57]
[57]HRF Nominees Pty Ltd(In Liq) and Others v Man Civil Constructions Pty Ltd and Others (No 2) [2014] VSC 613, [43].

The position is the same with respect to the Litigation Funder subpoenas, which were either complied with and where no documents have been produced, or in the case of BSL, was not responded to.[58] In the circumstances, I am not satisfied that the issue and service of these subpoenas was ‘oppressive’ or ‘vexatious’.
[58]Betts’ third affidavit, [28]. A copy of generic objections made to the Prothonotary were subsequently communicated to the solicitors for the defendant by Mr Elliott: Betts’ third affidavit, [30], Exhibit JLB-38.

There is no evidence before the Court from the recipients of the Second February subpoenas (MCI, Mark Elliott) and the Litigation Funder subpoenas (including the BSL subpoena) to suggest that production of documents would cause any prejudice, inconvenience or difficulty.[59]
[59]I note these parties have, by their solicitors, written to the Prothonotary objecting to inspection of documents produced and to the production of documents respectively: Betts’ third affidavit, [8], [34]; Exhibits JLB-34, JLB-39. In this regard, senior counsel for the plaintiff foreshadowed that the plaintiff may still wish to advance arguments that inspection of documents produced should be refused due to the breadth of the subpoenas if the application to set them aside was unsuccessful.

In short, I am not satisfied that the subpoenas should be set aside on the basis that they are vexatious or oppressive in the sense suggested in Oceanic Sunline or that there was any harassment associated with their issue and service.

Whether WorleyParsons has breached any provisions of the Civil Procedure Act

In its summons, the plaintiff seeks orders that the subpoenas be set aside on the grounds that the defendant has breached its overarching obligations of economy and efficiency in the conduct of the proceeding under ss 16, 19, 20 and 24 of the Civil Procedure Act. Sections 16, 19, 20 and 24 provide:

16 Paramount duty
Each person to whom the overarching obligations apply has a paramount duty to the court to further the administration of justice in relation to any civil proceeding in which that person is involved, including, but not limited to—
(a)any interlocutory application or interlocutory proceeding;
(b)any appeal from an order or a judgment in a civil proceeding;
(c)any appropriate dispute resolution undertaken in relation to a civil proceeding.
19Overarching obligation to only take steps to resolve or determine dispute

For the purpose of avoiding undue delay and expense, a person to whom the overarching obligations apply must not take any step in connection with any claim or response to any claim in a civil proceeding unless the person reasonably believes that the step is necessary to facilitate the resolution or determination of the proceeding.
20Overarching obligation to cooperate in the conduct of civil proceeding

A person to whom the overarching obligations apply must cooperate with the parties to a civil proceeding and the court in connection with the conduct of that proceeding.
24Overarching obligation to ensure costs are reasonable and proportionate

A person to whom the overarching obligations apply must use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the civil proceeding are reasonable and proportionate to—
(a) the complexity or importance of the issues in dispute; and
(b) the amount in dispute.

In my view, there is no merit to this ground. As discussed above, there is no foundation in the plaintiff’s submission that the defendant has waged an unreasonable campaign by the issue and service of any of the subpoenas. In respect of the subpoenas that have not been set aside either in whole or in part, the defendant had a legitimate forensic purpose for serving those subpoenas. There are no grounds for concluding that the defendant and its lawyers have not reasonably believed that each step taken was necessary for the purposes of progressing the Section 33N Application and Abuse Application. There is no evidence of lack of cooperation or unreasonable or disproportionate expenditure of costs. On the material before me I cannot be satisfied that there has been any breach by the defendant of the provisions of ss 16, 19, 20 and 24 of the Civil Procedure Act in connection with this matter.

Disposition

For the above reasons:

(a)the subpoenas served on Hillcrest Litigation Services Limited, IMF Bentham Limited, LCM Litigation Fund Pty Limited, Litigation Lending Services Limited, Litman Holdings Pty Limited, JustKapital Litigation Pty Limited and Comprehensive Legal Funding LLC will be set aside.
(b)Paragraph 1 of the Second February subpoena addressed to Mr Elliott will be set aside (except in relation to BSL).
(c)Paragraph 4 of the Second February subpoena addressed to MCI will be set aside (except in relation to BSL).

[2015] VSC 135

15 April 2015