WOOLLEY v VOK
[2011] FMCA 1052
•7 December 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WOOLLEY v VOK | [2011] FMCA 1052 |
| BANKRUPTCY – Application to set aside a subpoena. |
| Bankruptcy Act 1966 (Cth), s.52 Federal Magistrates Court Rules, r.15A.09 |
| Australian Competition & Consumer Commission v Australian Safeway Stores Pty Ltd & Ors [1998] FCA 1599 Makhoul v Barnes (1995) 60 FCR 572 Trade Practices Commission v Arnotts Limited and Others (No 2) (1989) 21 FCR 306; [1989] FCA 248 |
| Applicant: | GREGORY WOOLLEY |
| Respondent: | PETER VOK |
| File Number: | SYG 658 of 2011 |
| Judgment of: | Barnes FM |
| Hearing date: | 7 December 2011 |
| Delivered at: | Sydney |
| Delivered on: | 7 December 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Hynes |
| Solicitors for the Applicant: | Henry Davis York |
| Respondent: | In person |
ORDERS
The subpoena filed by Mr Vok on 26 October 2011 addressed to Mr Jason Henry, Chief Financial Officer and Secretary of Kafig Pty Ltd be set aside in whole.
The respondent pay the costs of and incidental to the application in a case as agreed and in the absence of agreement taxed in accordance with the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 658 of 2011
| GREGORY WOOLLEY |
Applicant
And
| PETER VOK |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This is an application in a case filed on 11 November 2011 by Gregory Woolley, who is the petitioning creditor in the substantive proceedings, seeking that a subpoena issued by the respondent, Mr Peter Vok on 26 October 2011 to Jason Henry, the Chief Financial Officer and Secretary of Kafig Pty Ltd, be set aside pursuant to r.15A.09 of the Federal Magistrates Court Rules.
Each party put evidence before the court and had the opportunity to make submissions.
The Federal Magistrates Court has power under r.15A.09 of the Federal Magistrates Court Rules to set aside a subpoena on application.
Mr Vok took issue in general terms, without reference to any authorities or principles of law, with the fact that the application to set aside the subpoena was made by Mr Woolley. However the fact that Mr Woolley is not the person to whom the subpoena was issued and is no longer associated with Kafig Pty Ltd is not determinative. A third party may apply to set aside a subpoena. Rule 15A.09 simply states “On application, the Court may make an order setting aside all or part of a subpoena”. Indeed, as counsel for Mr Woolley suggested, the court would have the power of its own motion to set aside a subpoena were it satisfied that the subpoena involved an abuse of process.
The Rules do not in terms restrict who may apply to set aside all or part of a subpoena (in contrast to rules that apply in other courts that may, for example, require the applicant to have a sufficient interest). Nonetheless, it is a question of the discretion of the court whether or not a subpoena should be set aside on the application of a party to the substantive proceedings who is not the person named in the subpoena
In this case I am of the view that Mr Woolley has standing and that it is appropriate to consider his application to set aside the subpoena on the basis that, as a party to the creditor’s petition, he has a legitimate interest in having a subpoena set aside if grounds for doing so are made out.
In written submissions the applicant creditor addressed in some detail the principles relevant to determination of such an application, referring to Kingley & Arndale [2008] FMCAfam 600. The principles considered in that case are of general relevance and are consistent with the principles applied in decisions of the Federal Court (see Australian Competition & Consumer Commission v Australian Safeway Stores Pty Ltd & Ors [1998] FCA 1599; Trade Practices Commission v Arnotts Limited and Others (No 2) (1989) 21 FCR 306; [1989] FCA 248 and Botany Bay Instrumentation & Control Pty Ltd and Another v Stewart and Another [1984] 3 NSWLR 98).
In Kingley, Purdon Sully FM referred to circumstances in which the issuing of a subpoena may constitute an abuse of process, including where it was not “served bona fide for the purpose of obtaining relevant evidence”, but rather was “fishing”, was “too wide”, was “being used as a substitute for discovery” or if the documents were not on the evidence before the court relevant to the substantive proceedings. As the Full Court of the Family Court stated in Hatton v Attorney-General (Cth) and Others (2000) 158 FLR 31; [2000] FamCA 892 (at [49]) a “lack of apparent relevance will be a sufficient ground in itself to set aside a subpoena”.
I have borne in mind that the onus of satisfying the court that there is an abuse of process lies on the person asserting the existence of such an abuse. I have also borne in mind that the power to control and supervise the court’s processes by way of setting aside a subpoena is directed to preventing injustice and involves consideration of not simply the true purpose for which the issue of the subpoena was procured, but also the effect or impact of the subpoena on the person to whom it was issued.
Mr Woolley submitted that the subpoena should be set aside as an abuse of process in circumstances where it required production of documents that were said not to be relevant to the issues between the parties in the substantive proceedings or were said to relate to matters that had already been determined in prior proceedings. It was said that the subpoena bore no apparent or forensic relevance to the issues to be determined on the hearing of the creditor’s petition and that it was an abuse of process to that extent. Mr Vok is said to have made no meaningful attempt to prove relevance. The subpoena was also said to be oppressive in that it was expressed with such generality as to require the subpoenaed party to make a judgment as to the relevance of the material to be produced over a significant period of time.
It was also suggested that the subpoena may be said to be oppressive in that it amounted to a fishing expedition. In the absence of special circumstances a party is not entitled to use a subpoena for the purpose of fishing, that is, endeavouring not to obtain evidence to support his case but to discover whether he has a case at all or to discover the nature of the other side’s evidence. In this case the applicant submitted that Mr Vok was endeavouring to use the subpoena to discover whether he had a case at all, insofar as he contends that Mr Woolley is not his creditor.
Mr Vok contended in submissions that the subpoenaed documents are relevant (inter alia) to determine whether the alleged debt was owing to Mr Woolley (or to a company for which Mr Woolley worked, Kafig Pty Ltd).
In order to consider these issues it is necessary to address briefly the factual background to these proceedings. The subpoena was issued in proceedings on a creditor’s petition that was issued by Mr Woolley and presented on 7 April 2011. In turn, the creditor’s petition relies on a judgment of the Local Court that formed the basis for the bankruptcy notice. The judgment of the Local Court was made after a contested hearing. The evidence before the court includes the Statement of Claim relied on by Mr Woolley and also the judgment of the Local Court of 1 March 2010.
Mr Woolley instituted proceedings in the Local Court against Mr Vok seeking to recover an amount of $45,000 on the basis that he had advanced the sum of $50,000 by way of a loan to a company (AT Group International Limited) of which Mr Vok is a director. It was said to be a term of the loan that Mr Vok would personally guarantee repayment of the loan. Only $5,000 was repaid. The judgment of the Local Court discussed at length the evidence and the submissions of the parties and relevantly concluded that there was such a loan and that there should be a verdict in favour of Mr Woolley.
Subsequently, Mr Vok filed a summons commencing an appeal in the Supreme Court of New South Wales. He relied on a number of grounds. It is apparent from the judgment of Hall J on 17 September 2010 (which is in evidence before the court) that Mr Vok was given leave to amend his summons. Hall J considered at length the grounds relied on by Mr Vok, which to some extent Mr Vok appears to seek to re-agitate in these proceedings.
Mr Vok contended that the court should go behind the Local Court judgment rather than accepting the existence of the judgment as proof of the debt for the purposes of s.52 of the Bankruptcy Act 1966 (Cth). The court has a discretion to accept a creditor’s judgment as proof of the debt relied on to found a creditor’s petition, but “[t]hat discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to” the petitioning creditor (Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5 at [16] per Barwick CJ). Special circumstances must exist before the court will go behind a judgment. It is well established that ordinarily the court would require that the judgment was affected by fraud, collusion or a miscarriage of justice; or that there was fresh evidence of probative value and significance that taken together with the evidence at the trial would in all probability be decisive of the issues between the parties in favour of the debtor; or that there was sufficient procedural irregularity to suggest that there was some other reason to go behind the judgment.
The fact that an applicant disagrees with factual findings in a judgment on which a creditor’s petition is founded is not a ground on which the court will go behind a judgment. It is also relevant to have regard to whether the judgment has been obtained by default or after a trial of the issues. In this case the judgment was obtained after a trial of the issues. Significantly, in addition Mr Vok had and took the opportunity to appeal to the Supreme Court. Moreover, in his appeal to the Supreme Court he had the opportunity to raise an extensive number of grounds, including, as he reiterates today, suggested administrative errors in the Local Court and the procedures adopted prior to the hearing, a contention that the magistrate was biased and deprived him of procedural fairness, a contention that counsel for Mr Woolley made untrue and improper statements which influenced the outcome and deprived him of procedural fairness, and more generally, that Mr Woolley had no standing to bring the proceedings against Mr Vok.
This last point raises what is, in essence, behind the subpoena, that is, to discover whether there is evidence to support a contention that Mr Vok wishes to make that Mr Woolley is not his creditor. Mr Vok seeks the production of a wide range of documents in order to, in effect, discover evidence which he suggests will determine whether the debt was in fact owed to Mr Woolley or Kafig Pty Ltd. He referred to evidence given by Mr Woolley in the Local Court proceedings which he suggested was clearly to the effect that Mr Woolley was not the creditor, although this interpretation was not accepted in the Local Court or the Supreme Court.
Mr Vok seeks such evidence in circumstances where his contention that Mr Woolley was not the creditor is apparently made primarily in reliance on a letter of 25 January 2010 that was before the Local Court. It refers to money being advanced from Kafig Pty Ltd to Mr Woolley (who was then a director and the CEO of Kafig Pty Ltd) and to $50,000 being made available to be advanced to AT Group via a related entity. This transaction was said to be recorded in Mr Woolley’s loan account with Kafig so that he was liable to reimburse that loan to the company. Mr Vok, in effect, takes issue with the genuineness of what was said to have been the position between Mr Woolley and Kafig Pty Ltd contrary to the view of the Local Court
In the Supreme Court Hall J addressed such contentions including, relevantly, the allegations of a lack of procedural fairness or irregularities in the proceedings of the Local Court. His Honour found no substance in those allegations.
Relevant to the material sought in the subpoena, Hall J considered in some detail the issue of Mr Woolley’s “standing” in circumstances where an amended defence had been sought to be relied on by Mr Vok in the Local Court at a late stage and the magistrate had not given him leave to do so.
Not only did Hall J find no relevant error in the exercise of that discretion but his Honour also dealt with the evidence in relation to Mr Woolley’s standing to bring the proceedings in the Local Court, including Mr Woolley’s explanation about internal arrangements for payment of the $50,000 deposited from a business account in the name of JGL Investments to Mr Vok’s business account in the name of AT Group. These are the issues Mr Vok has raised suggesting that it was not a loan but an investment and about the source of the $50,000 in circumstances where there had been a direction to pay given to JGL Investments and the debt had been entered in the books of Kafig Pty Ltd.
Hall J accepted Mr Woolley’s explanation as to how the financial transaction had been arranged and rejected the contention that the payment was an independent transaction between Kafig Pty Ltd and AT Group and Mr Vok (at [106]). Accordingly, the inter-company arrangements were said simply to go to “the source from which the funds were derived”, and not “evidence that the contract for the advance was, in fact, made with entities other than Mr Woolley”.
Insofar as Mr Vok takes issue with the factual findings in those proceedings and on that basis seeks production of documents to establish his claim that the debt was not due to Mr Woolley, I am satisfied that the subpoena to Mr Henry can be seen as an abuse of process. It has not been shown to be for a legitimate forensic purpose. The subpoena is a fishing expedition. Mr Vok in effect acknowledged that he is seeking to discover whether he has a case at all and to discover the nature of what might be described as the other side’s evidence on the assumption that the court would go behind the judgment. This is not a legitimate forensic purpose. It would be necessary for the court to be satisfied that substantial reasons had been given for questioning whether in truth there was a debt due or whether the court should accept the creditor’s judgment as proof of the debt relied on to go behind the judgment. In this case given the manner and circumstances in which this issue is raised and pursued by Mr Vok I am of the view that this should be determined as a first step (see Wolff v Donovan (1991) 29 FCR 480; [1991] FCA 222 per Lee and Hill JJ and Makhoul v Barnes (1995) 60 FCR 572 at 584).
It is not apparent that the subpoena, or the material that is sought, is reasonably likely to add to the relevant evidence at this stage, bearing in mind the nature of these proceedings. This is not a further appeal from the decision of the Supreme Court. It is not a re-hearing of the Local Court proceedings. The substantive matter in these proceedings is a creditor’s petition. Apparent relevance is considered by reference to the nature of the proceedings in issue. It is not simply a case of looking at the documents to see if the documents might permit a case to be made in the manner in which Mr Vok seems to be contending.
The subpoena is also burdensome and oppressive. In circumstances where the transaction said to give rise to the debt took place in October 2006 not only does it require all communications between the Chief Financial Officer of Kafig Pty Ltd and Mr Woolley (a former director) from a date in October 2006 to a date in September 2011; documentation in relation to all payments to Mr Woolley from 1 July 2008 to 30 June 2009; all documentation pertaining to any outstanding creditors of Kafig Pty Ltd at 30 June in the years from 2006 to 2009; balance statements of Kafig Pty Ltd from 1 July 2005 to 30 June 2009; accounts receivable of Kafig Pty Ltd at the end of financial years from 2006 to 2009, accounts receivable of Kafig at six specified dates between 2006 and 2010, as well as documents relating to deposits or payments made by Kafig Pty Ltd to Mr Woolley between October 2006 and June 2009.
In his submissions Mr Vok addressed in some detail the asserted relevance of each of the categories of documents that are sought in the subpoena. However, the manner in which he describes the relevance of each of those categories of documents merely reinforces what I have said in relation to the nature and purpose of the subpoena, albeit it may perhaps indicate some misunderstanding on the part of a self-represented litigant as to the nature of these proceedings and the purpose of a subpoena. That may be relevant to whether costs should be assessed on an indemnity basis as the applicant contends.
The subpoena is too wide. More pertinently, it has not been established that the documents sought are of relevance to the present proceedings or are to be used for a legitimate forensic purpose. In these circumstances, having regard to the number and type of documents sought I am of the view that the subpoena should be set aside in its entirety. Were the court to be satisfied that sufficient reasons were given for going behind the Local Court judgment, subpoenas of relevance at that stage could be issued.
Costs should follow the event on the ordinary basis. It is appropriate to order that the respondent pay the costs of and incidental to the application in a case as agreed and in the absence of agreement taxed in accordance with the Federal Court Rules.
I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Barnes FM
Date: 23 March 2012
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