Xue v Yu (Ruling No 1)

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-20-05334

Xiaoxiong Xue	Plaintiff
v
Kai Yu & Cheng Zhao	Defendants

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JUDICIAL REGISTRAR:	Bennett
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers; written submissions dated 11, 18 and 28 March 2022
DATE OF RULING:	1 April 2022
CASE MAY BE CITED AS:	Xue v Yu & Anor (Ruling No 1)
MEDIUM NEUTRAL CITATION:	[2022] VCC 410

RULING
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Subject:	COSTS
Catchwords:	Where subpoena issued by plaintiff to accountant of non-party company of which first defendant was director – where subpoena was impermissibly broad – where defendants’ objections to subpoena were resolved by consent – whether costs of objections should be paid by plaintiff or defendants – whether conduct of plaintiff unreasonable – whether defendants contravened s26 of the Civil Procedure Act 2010 (Vic) – whether documents held by accountant were in possession, custody or control of defendants
Legislation Cited:	Civil Procedure Act 2010 (Vic) s26; County Court Civil Procedure Rules 2018 r42A.04, r42A.10 and r63A.20.1.
Cases Cited:	Hera Project Pty Ltd v Bisognin [No 4] [2017] VSC 270; Pinto v Kinkela [2003] WASC 126; Yunghanns v Colquhoun-Denvers(s 29 CPA application) [2021] VSC 243; Archer Capital 4A Pty Ltd v Sage Group plc (No 3) [2013] FCA 1160; (2013) 306 ALR 414; Dale v Clayton Utz(No 3) [2013] VSC 593; Telstra Corporation Ltd v First Netcom Pty Ltd (unreported, Federal Court of Australia, 7 May 1998, Einfeld J)

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Burnett	Henley Legal
For the Defendants	Mr S Clement	Interise Legal

THE JUDICIAL REGISTRAR:

Introduction

The plaintiff caused a subpoena for production of documents to be issued to the accountant S Wang & Co Pty Ltd (Wang & Co) pursuant to Order 42A of the County Court Civil Procedure Rules 2018 (Rules). The defendants objected to the breadth of the subpoena and their objections were listed for hearing on 3 March 2022.
The parties ultimately resolved the defendants’ objections by agreement and submitted proposed consent orders to the Court on 2 March 2022. The only outstanding issue was the costs of the defendants’ objections, which the parties proposed be dealt with on the papers following the filing of written submissions.
Accordingly, the 3 March 2022 hearing was vacated and I made orders on 4 March 2022 on the papers, reflecting the parties’ proposed consent orders. In accordance with those orders, written submissions dated 11 March 2022 and 18 March 2022 were filed by the defendants and the plaintiff respectively. At the Court’s invitation, reply submissions were filed by the defendants on 28 March 2022, dealing with submissions made by the plaintiff concerning s 26 of the Civil Procedure Act 2010 (Vic) (CPA).
The defendants sought orders that the plaintiff pay the defendants’ costs of and incidental to the subpoena objections on an indemnity basis, taxable forthwith in default of agreement. The plaintiff sought orders that the defendants pay the plaintiff’s costs of and incidental to the objections, fixed in the sum of $2,000.

The pleadings

This proceeding concerns share transactions in Megaxue Pty Ltd (Megaxue) and an alleged agreement between the plaintiff and the defendants in relation to those transactions. Megaxue conducts a supermarket business known as “Sims Supa IGA Lilydale”. The first defendant is a director and the secretary of Megaxue. The second defendant does not hold any office with that company. Wang & Co has been Megaxue’s accountant since at least 2014.
The Further Amended Statement of Claim (FASOC) dated 3 December 2021 alleges that, in or around January 2015, the plaintiff as agent for Kokusho Pty Ltd (Kokusho) entered into an agreement with the defendants to the effect that he would transfer shares held by Kokusho in Megaxue at the direction of the defendants and that the defendants would pay him $190,000.
The FASOC further alleges that, pursuant to that agreement, transfers of shares held by Kokusho in Megaxue occurred on or about 28 April 2015 (paragraph 2B of the FASOC) and on or about 28 September 2015 (paragraph 2C of the FASOC). In the Amended Statement of Claim dated 27 July 2021, the particulars of each of these share transfer allegations were simply stated as, respectively: “Form 484 (Change to company details) lodged 30 April 2015” and “Form 484 (Change to company details) lodged 12 October 2015”. In the FASOC, which was filed after the subpoena had been issued, these particulars were expanded. For example, the particulars to the allegation of the 28 April 2015 transfer, pleaded at paragraph 2B of the FASOC, stated:
“At a time unknown to the Plaintiff but shortly before 28 April 2015, the First Defendant instructed Megaxue’s accountants, S Wang & Co Pty Ltd, to prepare the necessary documents to transfer Kokusho’s shares.
A Form 484 (Change to company details) was lodged by S Wang & Co Pty Ltd on 30 April 2015.
Further particulars will be given when S Wang & Co Pty Ltd responds to a subpoena issued by the plaintiff. On 30 November 2021 Raymond Tieu of S Wang & Co Pty Ltd informed the Plaintiff’s solicitors that Megaxue refused to approve the release of documents to the Plaintiff. The Defendants have otherwise refused to provide the documents in response to the Plaintiff’s request for disclosure pursuant to s 26 of the Civil Procedure Act 2010 (Vic)”.
Similar particulars are given in relation to the alleged 28 September 2015 transfer at paragraph 2C of the FASOC.
The FASOC goes on to allege that the defendants failed to pay the amount agreed and that, accordingly, the defendants are indebted to the plaintiff.
The defendants deny the existence of the alleged agreement and plead that no shares in Megaxue owned by Kokusho were transferred to the defendants. They admit that they have not paid the plaintiff $190,000 but say that they were under no obligation to do so. The defendants also rely upon a number of other defences which need not be discussed here, including that the plaintiff’s cause of action is statute-barred and that the alleged agreement, if it otherwise existed, is void for various reasons.

The subpoena and related communications

By email dated 30 November 2021, the plaintiff’s solicitors requested that the defendants provide, pursuant to s 26 of the CPA, “all of the ASIC documents, memorandum, instructions, company records relating to Megaxue Pty Ltd particularly those kept by S Wang & Co”. The email also stated that the plaintiff had requested these documents from Wang & Co but that the defendants, contrary to their obligations under the CPA, had not consented to Wang & Co releasing them to the plaintiff. I interpolate here that it is unclear how the second defendant, in particular, was said to have any relationship with Megaxue or with Wang & Co which would have enabled her to consent to Wang & Co releasing Megaxue’s documents to the plaintiff.
The defendants’ solicitors responded by email dated 1 December 2021, denying any breach of the CPA and stating in summary that:
(1)The plaintiff had consented to the Court making orders on 29 November 2021 requiring the parties to make discovery by 28 February 2022, and that the defendants would make discovery in accordance with those orders;
(2)Section 26 related to documents critical to the resolution of the dispute, but the documents sought were not critical to the resolution of the dispute; and
(3)The statement of claim already contained allegations as to holdings and transfers of shares in Megaxue, that the plaintiff must have had a proper basis for making those allegations, and that the defendants therefore did not understand the basis for the plaintiff’s “far-reaching request for (effectively) all records of Megaxue Pty Ltd”.
The plaintiff’s solicitor responded by email dated 1 December 2021, inviting the defendants to reconsider their position in relation to disclosure pursuant to s 26 and foreshadowing the issuing of a summons to compel disclosure of the documents.
On 1 December 2021, the plaintiff filed the subpoena, which was dated 30 November 2021. The subpoena specified 22 December 2021 as the date by which production was to be made. The schedule of documents required production of:
“A copy of the file of MEGAXUE PTY LTD ACN: 601 367 677 (Megaxue) including and not limiting [sic] to the following relating to Megaxue:
1.bank statements, account ledger and transactions;
2.correspondence between you, any person, any officeholder, shareholder,
3.contract of sale of business and lease entered into by Megaxue;
4.notes and memorandum, instructions and the like, company minutes, lodgements of company forms with ASIC,
5.advice, tax returns and financial reports prepared by you.”
On 3 December 2021, the defendants’ solicitor emailed the plaintiff’s solicitor, apparently in response to the 1 December 2021 email to which I have referred in paragraph 13 above, disagreeing that the documents were critical and stating that the defendants would make discovery “pursuant to the orders, the rules, and the Civil Procedure Act 2010 (Vic)”.
Although the subpoena was served on Wang & Co on 2 December 2021, it was not served on the defendants until 9 December 2021 at 5.31pm. Rule 42A.04(2) requires the issuing party to serve a copy of an Order 42A subpoena on each other party “as soon as practicable after the subpoena has been served on the addressee”. The reason for the plaintiff’s delay in serving the defendants with the subpoena is not explained. Given that service of the subpoena on 9 December 2021 was effected simply by email from the plaintiff’s solicitor to the defendants’ solicitors, there does not appear to be any reason why the plaintiff could not have served the defendants shortly after service on Wang & Co on 2 December 2021, and certainly sooner than after the close of business on 9 December 2021.
On 13 December 2021, the defendants’ solicitors sent a letter to the plaintiff’s solicitors expressing concern about the breadth of the subpoena. The letter began by stating that its purpose was “to identify objections to the scope of the Subpoena and to propose a resolution that avoids the need for any application to the Court”. The letter went on to express the view that the subpoena amounted to a “fishing expedition” and to contend that there was “no issue in dispute between the parties which provides a legitimate forensic purpose for the expansive scope of the Subpoena”. The letter proposed that the plaintiff limit the subpoena[1] “to only documents in the period from January 2015 to October 2015 which evidence any transfer of Kokusho Pty Ltd’s [sic] in the Company”. The letter appears to have accepted that any such documents may potentially be relevant to paragraphs 2B and 2C of the FASOC.
[1] As to the entitlement of the issuing party unilaterally to limit the scope of a subpoena, see Hera Project Pty Ltd v Bisognin [No 4] [2017] VSC 270 at [37] per Riordan J.
Discussions thereafter occurred between the parties’ counsel in relation to the scope of the subpoena. By email to the defendants’ solicitors dated 17 December 2021, the plaintiff’s solicitors proposed that the scope of the subpoena be amended as follows:
“For the period 1 December 2014 and 30 October 2015, documents which record or relate to the sale or transfer of shares in MEGAXUE PTY LTD ACN: 601 367 677 (Megaxue) or the appointment of Kai Yu as a director of Megaxue, including and not limited to the following relating to Megaxue:
1.account ledger and transactions;
2.correspondence between you, any person, any office holder or any shareholder;
3.notes and memorandum, instructions and the like, or company minute; or
4.advice prepared by you”.
This proposed scope (the Reduced Scope) was clearly narrower than that of the schedule to the subpoena, but broader than that which had been proposed in the defendants’ 13 December 2021 letter. The 17 December 2021 email concluded by stating: “Once we receive your confirmation that you withdraw your proposed objection, we will provide a copy of this letter and your confirmation to S Wang & Co”.
By email dated 20 December 2021, the defendants’ solicitors responded:
“Our clients consent to the proposed wording.
Please provide an updated wording of the required documents to the accountant and cc us with a copy of the instructions.
Your email to the account [sic] should also confirm whether any documents has already been provided to the Court and if so, these documents should be returned by consent.”
Despite this email exchange, it appears to be common ground that the plaintiff’s solicitors did not advise Wang & Co of the Reduced Scope or seek to ascertain from Wang & Co whether it had already produced any documents.
On 20 December 2021, and unbeknown to the parties as at that date, Wang & Co produced its entire file to the Registry, as required by the schedule to the subpoena.
Having received no response to their 20 December 2021 email and having not been copied into any correspondence to Wang & Co from the plaintiff’s solicitor in relation to the Reduced Scope, the defendants’ solicitors formed the view[2] that Wang & Co had already produced to the Court, or was likely to produce, documents responding to the subpoena in its original form. Accordingly, the defendants’ solicitors sent a letter to the Registry dated 21 December 2021, referring to the parties’ prior communications in relation to the Reduced Scope and requesting that the plaintiff be prevented from inspecting any documents produced in response to the subpoena. The letter concluded: “Only once S Wang & Co Pty Ltd has provided the new set of document [sic] and confirmed that the Subpoena relate [sic] to the amended scope, should inspections be allowed”.
[2] See the affidavit of Yang Chen dated 24 February 2022 at [14].
On 18 January 2022, Judicial Registrar Muller made orders in response to the objections contained in the defendants’ 21 December 2021 letter (January Orders). Amongst other things, the January Orders:
(1)required the defendants to file and serve an index of the documents produced by Wang & Co, identifying which of those documents the defendants objected to the plaintiff inspecting, by 2 February 2022;[3]
(2)granted the plaintiff leave to inspect the documents in respect of which the defendants had no objection;
(3)listed the defendants’ objections for hearing on 3 March 2022; and
(4)provided a timetable for the parties to file and serve affidavits in support of and opposition to the objections.
[3] The date for compliance with this requirement was later extended to 11 February 2022 by consent orders which I made on the papers on 7 February 2022.
On 21 January 2022, the defendants’ solicitors sent a letter to the plaintiff’s solicitors which commenced by referring to the Reduced Scope and the January Orders. The letter suggested that, in order to obviate the need for the parties to take the action required by the January Orders, the parties could agree to a procedure whereby:
(1)the defendants’ solicitors obtained the documents produced by Wang & Co and then produced to the plaintiff’s solicitors the documents falling within the Reduced Scope; and
(2)the balance of the documents produced by Wang & Co would not be available for inspection.
The letter also attached proposed consent orders giving effect to the abovementioned suggestion and vacating the objections hearing listed for 3 March 2022.
By email dated 25 January 2022, the plaintiff’s solicitors responded:
“Thank you for your email below. We advise that the orders of the Court dated 18 January 2022 are consistent with our client’s position. Our client’s position is that your client should comply with the orders and he is unable to agree to the your [sic] client’s proposed orders.”
No other explanation was given for the plaintiff’s rejection of the defendants’ 21 January 2022 suggestion. Nor was any alternative suggestion proffered.
The defendants’ solicitors wrote again on 28 January 2022. Amongst other things, their letter stated:
“6.… having regard to our respective clients’ agreement to the Agreed Scope [ie the Reduced Scope], please explain your client’s refusal to agree to the proposed cost-effective and pragmatic resolution of our clients’ objection set out in our Letter [dated 21 January 2022].
7.Your client’s apparent decision to try to resile from the Agreed Scope is disappointing. In our view, it is also inconsistent with the overarching obligations imposed on the parties by the Civil Procedure Act 2010 (Vic). That concern is amplified by the irrelevance of the documents requested by the Subpoena to the pleaded issues which we have previously raised in correspondence with you. Our clients will produce all prior correspondence to the Court at any objection hearing and will seek their costs of the hearing on an indemnity basis payable forthwith.
8.We again invite your clients to reconsider the proposal in our Letter so that the parties can narrow the issues in dispute, minimise delay and ensure the costs of this proceeding are more reasonable and proportionate. If your client has another proposal to obviate the need for a contested hearing, please let us know.”.
The plaintiff’s solicitors did not respond to this letter, save for agreeing to a request made earlier in the letter for an extension to the date for the defendants’ preparation of the index pursuant to the January Orders.
The defendants’ solicitors thereafter filed and served an index dated 11 February 2022, as required by the January Orders. This was provided to the plaintiff’s solicitors on 15 February 2022. The index listed 46 documents, some of which were in fact bundles of documents, and identified whether the defendants objected to the plaintiff’s inspection of each listed document. Twelve documents, one of which was the subpoena itself and one of which was the covering letter from Wang & Co to the Court, were not objected to. Thirty-one documents were objected to in their entirety. A further three documents were objected to partially, that is, insofar they covered a time period extending beyond the date range contemplated by the Reduced Scope. The index identified the grounds for each objection as being that the relevant documents fell outside the Reduced Scope and that the request for such documents “constitutes a ‘fishing expedition’, it is not issued for a legitimate forensic purpose and/or it constitutes an abuse of process, and the documents are not relevant”.
As required by the January Orders, the defendants filed an affidavit of Yang Chen, the principal solicitor of the defendants’ solicitors, dated 24 February 2022. This affidavit dealt with the parties’ communications in relation to the subpoena and detailed the bases for the defendants’ objections.
Also pursuant to the January Orders, the plaintiff filed and served an affidavit of Henry Wong, the plaintiff’s solicitor, dated 1 March 2022. Mr Wong’s affidavit set out communications between the parties in late November and early December 2021. The final paragraph of Mr Wong’s affidavit identified 4 documents which were the subject of objection in the defendants’ index but which the plaintiff sought to inspect. Three of those documents (items 2, 13, and 46) fell outside the Reduced Scope in their entirety, while one of those documents (item 12) comprised bank transaction listings, the majority of which concerned dates which fell outside the Reduced Scope. It thus appears that, by requiring these 4 documents, the plaintiff was at least partially resiling from his earlier agreement to the Reduced Scope.

By email dated 2 March 2022, the parties submitted consent orders to the Court. Based upon that correspondence, I made orders on 4 March 2022 vacating the 3 March hearing, permitting limited inspection, and requiring the parties to provide written submissions regarding the question of costs. As to inspection, the effect of my orders was that the plaintiff was permitted to inspect:
(1)the subpoenaed documents in respect of which the defendants had raised no objection;
(2)items 2, 13, and 46 in the defendants’ index; and
(3)item 12 in the defendants’ index, but only insofar as it fell within the date range contemplated by the Reduced Scope.

The question of costs

For the purposes of deciding the question of costs, I have had regard to the abovementioned affidavits of Yang Chen and Henry Wong, the defendants’ written submissions dated 11 March 2022 and 28 March 2022, and the plaintiff’s written submissions dated 18 March 2022.
The fundamental starting point in relation to the question of costs is that the plaintiff issued a subpoena which was impermissibly broad. The defendants then acted reasonably by writing promptly to the plaintiff’s solicitors on 13 December 2021, identifying their concerns with the subpoena and proposing a sensible way forward. I accept the defendants’ submission that the subpoena caught documents which were irrelevant to the pleaded issues between the parties and that there was no legitimate forensic purpose for requiring production of the entire file of Wang & Co. I note that the plaintiff’s written submissions do not take issue with that submission. Further, the plaintiff’s ready agreement to the scope of the subpoena being narrowed, whilst appropriate in the circumstances, is consistent with an acceptance by the plaintiff that the subpoena was flawed in its original form. It is also relevant that the consent orders made by the Court on 4 March 2022 were broadly consistent with the defendants’ position that the subpoena had been expressed too broadly. I therefore accept the defendants’ submission that, although the objections hearing ultimately did not proceed, their objections were, in a practical sense, successful, and costs should therefore follow the event.[4] The defective nature of the subpoena is a significant factor militating in favour of a costs order being made against the plaintiff.
[4] As to costs where a party has in essence secured the relief sought by it without a hearing, see the authorities cited in Pinto v Kinkela [2003] WASC 126 at [35(1)] per Commissioner Johnson QC.
Despite the apparent agreement reached by the parties in their 17 and 20 December 2021 emails in relation to the Reduced Scope, the plaintiff failed to communicate this to Wang & Co. It is possible that this failure made no difference, given that Wang & Co produced documents on 20 December 2021 in response to the subpoena in its original form. That is to say, any communication from the plaintiff to Wang & Co in relation to the Reduced Scope might have been received too late to prevent production of the wider set of documents. The material before me does not enable me to form a definite conclusion about this. However, as I have indicated in paragraph 16 above, the plaintiff – inexplicably and contrary to the Rules – delayed for approximately one week in serving the subpoena on the defendants. Absent that delay, it is reasonable to assume a scenario in which the defendants’ concerns regarding the subpoena would have been raised earlier, the parties would have reached agreement earlier about narrowing the scope of the subpoena, and the narrowed scope would have been communicated to Wang & Co in sufficient time to avoid production by Wang & Co of the broader set of documents. If that scenario had come to pass, or if the plaintiff’s solicitors had communicated the Reduced Scope to Wang & Co on 20 December 2021 before it produced its entire file to the Court, the steps prescribed by the January Orders would have been unnecessary and the costs associated with those steps would not have been incurred by the parties. Accordingly, it seems to me that the plaintiff’s conduct, whether it be the failure to communicate with Wang & Co on 20 December 2021 or the delay in serving the subpoena on the defendants, is likely to have further contributed to the incurring of unnecessary costs. This is a further factor supporting an order for costs being made against the plaintiff.
As I have outlined at paragraphs 25 to 30 above, the defendants made reasonable proposals to the plaintiff with a view to avoiding the incurring of further unnecessary costs arising from the steps required by the January Orders. Those proposals were rebuffed or ignored by the plaintiff without any stated rationale and without any attempt by the plaintiff to put forward alternative proposals. The defendants thereafter incurred the costs of preparing the index of documents and the affidavit of Yang Chen. This is a further factor, in my view, militating in favour of a costs order being made against the plaintiffs. I also note that the 28 January 2022 letter referred to in paragraph 29 above put the plaintiff on notice that the defendants would seek the costs of any objection hearing on an indemnity basis, payable forthwith.
After receiving the index from the defendants on 15 February 2022, it was open to the plaintiff either to accept that he should only be permitted to inspect the documents in respect of which the defendants took no objection, or to identify any other documents which the plaintiff nonetheless maintained that he should be permitted to inspect. Having regard to the parties’ prior agreement as to the Reduced Scope, this should not have been a difficult or time-consuming exercise. However, it did not occur until 2 weeks later when the plaintiff filed and served the affidavit of Mr Wong on 1 March 2022, two days before the objections hearing listed for 3 March 2022. When it did occur, as I have indicated in paragraph 33 above, it was accompanied by a partial departure by the plaintiff from the agreement which the parties had reached as to the Reduced Scope. Moreover, in the meantime, the defendants were put to the expense of preparing the affidavit of Mr Chen dated 24 February 2022 in order to comply with the January Orders and in preparation for the hearing listed for 3 March 2022. The day after Mr Wong’s affidavit was served, the parties submitted consent orders to the Court vacating the 3 March 2022 hearing and resolving the position regarding inspection. It is reasonable to assume, then, that if the plaintiff’s position as set out in Mr Wong’s affidavit had been conveyed to the defendants earlier, the matter would likely have been resolved earlier and the costs of Mr Chen’s affidavit may not have been incurred. This is a further factor militating, albeit less strongly, in favour of a costs order being made against the plaintiff.
The plaintiff’s submissions contend that the defendants behaved unreasonably by “not withdraw[ing] the objection” as requested by the plaintiff in his 17 December 2021 email, and by sending the 21 December 2021 letter to the Court. This is one of the bases upon which the plaintiff says that the defendants should pay his costs. I do not accept this contention. As at the date of the 17 December 2021 email, the defendants had lodged no objection with the Court. Presumably, then, the “objection” referred to in the plaintiff’s 17 December 2021 email was the objection, expressed only to the plaintiff at that stage, contained in the defendants’ 13 December 2021 letter regarding the breadth of the subpoena. In circumstances where the plaintiff’s 17 December 2021 email proposed the Reduced Scope, and the defendants by their 20 December 2021 email accepted the Reduced Scope, it is unclear what the plaintiff contends the defendants should have done to “withdraw” the 13 December 2021 objection. Indeed, by accepting through this correspondence that the scope of the subpoena required narrowing, it might be said that the plaintiff had accepted the “objection” expressed in the 13 December 2021 letter. Put shortly, the notion of the defendants withdrawing the “objection” made in their 13 December 2021 letter appears to me to make little sense in the circumstances.
Insofar as the 21 December 2021 letter to the Court is concerned, it was in my view reasonable for the defendants to protect their position by sending that letter in circumstances where it was not yet clear to the parties whether Wang & Co had produced documents in response to the original subpoena, the plaintiff had not responded to the defendants’ 20 December 2021 email, the plaintiff had not copied the defendants’ solicitors into any communication to Wang & Co regarding the Reduced Scope, and the date for production specified in the subpoena was 22 December 2021. If no objection had been communicated by the defendants to the Court, rule 42A.10 would have entitled the plaintiff to inspect any documents produced by Wang & Co, including the many documents which should never have been the subject of the subpoena in the first place.
As should be apparent from the discussion above, I consider the plaintiff’s behaviour in relation to the subpoena to have been unreasonable in a number of respects and to have resulted in the defendants incurring costs unnecessarily. In light of that behaviour, it would in my view be prima facie appropriate to order that the plaintiff pay the defendants’ costs on an indemnity basis. However, it is necessary to consider whether the defendants’ conduct prior to the issuing of the subpoena alters the position and whether – as the plaintiff submits – it provides a basis for ordering that the defendants pay the plaintiff’s costs.
The plaintiff alleges that, prior to the issuing of the subpoena, the defendants contravened s 26 of the CPA in two ways. The first contravention is said to be constituted by the defendants’ 1 December 2021 response (see paragraph 12 above) to the plaintiff’s 30 November 2021 email (see paragraph 11 above). The plaintiff’s submissions refer to the defendants as having thereby refused to provide “the documents” to the plaintiff, contrary to s 26 of the CPA. The second contravention is said to be constituted by the defendants “directing their accountant to not provide documents to the plaintiff”, as referred to in the 30 November 2021 email from the plaintiff’s solicitors (see paragraph 11 above).
There are a number of difficulties with the plaintiff’s position. The most fundamental is that the plaintiff’s submissions do not identify “the documents” which he says were critical for the purposes of s 26. Nor do those submissions identify how or why any of the (unspecified) documents are said to be critical. Clearly, having regard to what I have already observed regarding the breadth of the subpoena, it cannot be said that the entirety of the documents sought by the subpoena or by the plaintiff’s 30 November 2021 email were critical in the relevant sense.
Even if there were some basis for reading the plaintiff’s submissions as though they contended that the critical documents were only those in respect of which inspection was ultimately permitted, the point remains that the plaintiff has not articulated how or why any of those documents are said to be critical. Whilst it may be accepted that the parties considered those documents to be potentially relevant, mere relevance is not the same as criticality for s 26 purposes[5]. The plaintiff’s failure to identify the allegedly critical documents and the basis for their alleged criticality is fatal to the plaintiff’s argument based on s 26.[6]
[5] See, eg, Yunghanns v Colquhoun-Denvers (s 29 CPA application) [2021] VSC 243 at [170] per Daly AsJ.
[6] Cf Yunghanns v Colquhoun-Denvers (s 29 CPA application) [2021] VSC 243 at [67] and [175] per Daly AsJ.
For completeness, I note that there is a further difficulty faced by the plaintiff. His solicitor’s 30 November 2021 email sought “particularly those [documents] kept by S Wang & Co”. Similarly, and self-evidently, the subpoena sought documents which were held by Wang & Co. Wang & Co is not a party to this proceeding and therefore not a person to whom s 26 applied. Although the plaintiff’s submissions refer to the defendants directing “their accountant” not to provide documents, this appears to ignore the fact that Wang & Co was Megaxue’s accountant. There is no evidence before me that Wang & Co was the defendants’ accountant.
In order for the defendants to have breached s 26, the critical documents must have been in the “possession, custody or control” of the defendants. The plaintiff’s submissions contend that, given the first defendant’s role as a director of Megaxue, “it was well within his control to grant access to documents that were reasonably sought by the plaintiff”. The defendants’ submissions contend in response that documents held by Megaxue’s accountant are not necessarily considered to be within the first defendant’s possession, custody or control. They submit that the decision of Wigney J in Archer Capital 4A Pty Ltd v Sage Group plc (No 3)[7] is determinative of the present situation. In Archer Capital, Wigney J referred[8] to a director’s common law and statutory rights of access to company documents, before going on to state:
“However, the preponderance of authority is to the effect that the right of access, both at common law and pursuant to either s 198F or s 290 of the Corporations Act, is limited to circumstances where the right is to be exercised to enable the director to carry out his duties as a director … or, in the case of s 198F, in circumstances where a proceeding to which the director is, or proposes to be, a party, is a proceeding relating to the director’s capacity as a director of the company …”.
[7] [2013] FCA 1160; (2013) 306 ALR 414 at 442-443 [115]-[120].
[8] [2013] FCA 1160; (2013) 306 ALR 414 at 443 [119] (citations omitted).
The present proceeding is essentially a debt claim in which the defendants are sued personally for failing to pay a sum of money allegedly due by them pursuant to an alleged share transfer agreement. The proceeding does not involve the first defendant in his capacity as a director of Megaxue. Nor could it be said that any access by the first defendant to the documents held by Wang & Co, for the purposes of this proceeding, would involve the first defendant exercising a right of access to enable him to carry out his duties as a director. Accordingly, having regard to Archer Capital, I do not accept the plaintiff’s submission that the documents held by Wang & Co were in the “possession, custody or control” of the first defendant.
The plaintiff’s position is even weaker insofar as it concerns the second defendant, who is not a director of Megaxue. It is not apparent to me, and nor do the plaintiff’s submissions attempt to explain, how the documents held by Wang & Co could be said to have been in her “possession, custody or control”, or how she could be said to have breached s 26 by failing to disclose them to the plaintiff or to direct Wang & Co to do so. In this regard, the plaintiff’s submissions seem to proceed upon the same fallacious basis as his 30 November 2021 letter, to which I have referred in paragraph 11 above.
Finally, I note that even if the defendants had breached s 26, it does not necessarily follow that they would be required to pay the plaintiff’s costs of the subpoena objections. The appropriate remedy for any such non-compliance by the defendants would not have been the issuing by the plaintiff of an inappropriately broad, and therefore defective, subpoena. However, in light of my conclusion that the defendants did not breach s 26, I need not consider this any further.

Conclusion

For the reasons discussed above, I consider the plaintiff’s conduct to have been unreasonable and to have resulted in the defendants incurring unnecessary costs. The plaintiff should accordingly pay the defendants’ costs on an indemnity basis.
The defendants contend that I should order that those costs be taxable forthwith on the basis that they are “discrete and isolated from the substantive proceeding”. It is well settled that one of the bases upon which the Court may consider it appropriate to make an order for immediate taxation under rule 63A.20.1 is that an interlocutory application involves a separate or discrete issue.[9] I accept that the present matter falls into that category[10] and that it is appropriate to make the order sought by the defendants.
[9] See, eg, Dale v Clayton Utz (No 3) [2013] VSC 593 at [65] and [80]-[84] per Hollingworth J.
[10] See, eg, Telstra Corporation Ltd v First Netcom Pty Ltd (unreported, Federal Court of Australia, 7 May 1998, Einfeld J) BC9802430 at 7, in which Einfeld J considered that a motion to set aside a subpoena was discrete in the relevant sense.
I will make the following orders:
(1)The plaintiff is to pay the defendants’ costs of and incidental to the defendants’ objections to the subpoena dated 30 November 2021 on an indemnity basis.
(2)The defendants may tax the abovementioned costs immediately.

[2022] VCC 410

1 April 2022