—-. V CATCHWORDS Practice and procedure - subpoena duces tecum non-party is subjected to process of discovery subpoena is oppressive and fishing. Federal Court Rules 0.27 r.2. JET CORPORATION OF AUSTRALIA PTY. LIMITED (in ats capacity as Trustee of the JET CORPORATION AUSTRALIA TRUST) and PETRES PTY. LIMITED (in its own right and in its capacity as Trustee of the Schutt Unit Trust) and OTHERS V. No. G 109 of 1983 Northrop J. Melbourne 23 May 1985 whether whether IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) V. No. G 109 of 1983 ) ) GENERAL DIVISTON BETWEEN JET CORPORATION OF AUSTRALIA PTY. LIMITED (in its capacity as Trustee of the JET CORPORATION AUSTRALIA TRUST) Applicant and PETRES PTY, LIMITED (in ats own right and in its capacity as Trustee of the Schutt Unit Trust) and OTHERS Respondents CORAM: NORTHROP J. DATE: 23 MAY 1985 PLACE: MELBOURNE MINUTE OF ORDER OF THE COURT THE COURT ORDERS THAT: 1. Paragraph (c) of the Schedule to the subpoena dated 27 June 1983 directed to Roger Randle be set aside. 2. The motion of 14 July 1983 be otherwise refused. 3. The subpoena dated 20 March 1985 directed to Roger Randle be set aside and the applicant pay the costs of the motion dated 22 March 1985. (Settlement and entry of Orders is dealt with by 0.36 of the Federal Court Rules.) IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) V. No. G 109 of 1983 ) ) GENERAL DIVISTON BETWEEN : JET CORPORATION OF AUSTRALIA PTY. LIMITED (in 1ts capacity as Trustee of the JET CORPORATION AUSTRALIA TRUST) Applicant and PETRES PTY. LIMITED {in its own right and in 1ts capacity as Trustee of the Schutt Unit Trust) and OTHERS Respondents CORAM: NORTHROP J. DATE: 23 MAY 1985 PLACE: MELBOURNE REASONS FOR JUDGMENT When these proceedings were commenced on 27 June 1983, three corporations were named as applicants, namely, Jet Corporation of Australia Pty. Limited, Electrum Acceptance Pty. Ltd. and Electrum Finance Pty. Ltd. On 27 June 1983, the then applicants, pursuant to Order 27 rule 2 of the Rules of Court, caused a subpoena for production of documents to be issued directed to Roger Randle, a partner in Messrs. Touche Ross & Co., a firm of Accountants. Hereinafter this subpoena is referred to as the first subpoena. In the heading of the first subpoena each of the three companies was named as an applicant. Neither the firm nor Mr. Randle was a party to the proceedings. The documents required to be produced, as described in the Schedule to the first subpoena, are as follows: "(a) the Accounting Records and books of each of the three Applicants; (b) the audit working papers and related file of correspondence and other documents of the firm relative to the three Applicants for all their respective accounting periods TOGETHER WITH documents handed into the possession of the firm in connection with the professional work conducted by 1t for the three Applicants and each of them; (c) the accounting and/or audit and/or tax files of the firm including working papers, correspondence, copy accounts and directors reports and auditors reports Cancluding drafts) of each of the Respondents for or to whom the firm rendered professional services for the periods corresponding with the accounting periods of the three Applicants (and each of them) specified in paragraph (5b) of this Schedule." Note the use of the words "the three Applicants" in each of Paragraphs (a), (b) and (c). On 14 July 1983 Mr. Randle gave notice pursuant to Order 27 rule 9 that he would move the Court for an order setting aside the first subpoena. Because of other unterlocutory matters, the motion did not come on for hearing until 26 March 1985. By order made on 4 October 1983, Electrum Acceptance Fty. Ltd. and Electrum Finance Pty. Ltd. were each struck out as applicants in the proceedings. Since that date Jet Corporation has been the sole applicant. On 20 March 1985, the applicant caused a_ second subpoena to be issued directed to Mr. Randle. In the heading of the second subpoena Jet Corporation 15 named as the only applicant. The documents sought to be produced by the second subpoena are described in the Schedule to that subpoena in the identical form as in the Schedule to the first subpoena. In particular, the words "the three Applicants" were used in each of paragraphs (a), (b) and (c). On 22 March 1985, Mr. Randle gave notice pursuant to Order 27 rule 9 that he would move the Court for an order setting aside the second subpoena. The two motions came on for hearing on 26 March 1985 and were heard together. The first ground argued in support of the orders sought by the motions depends upon the existence of proceedings in the Supreme Court of Victoria. In January 1985 the Receivers and Managers of Jet Corporation and of Jet Corporation Australia Trust by summons issued out of the Supreme Court of Victoria, sought orders under section 325(a) of the Companies (Victoria) Code. The orders sought require the members of the firm Touche Ross & Co. to make available to the Receivers and Managers for inspection documents which for present purposes can be described as almost identical to the documents sought to be produced by the two subpoenas. The summons has not been disposed of by a final order. Counsel for Mr. Randle contended that the subpoenas should be set aside because they sought production of the very same documents which were the subject of the Supreme Court proceedings and that the subpoenas constituted an abuse of process of the Court in that the applicants sought to achieve inspection of the same documents as were the subject of the Supreme Court proceedings. He contended that this constituted a duplicity of procedures. That contention is rejected. The existence of proceedings in the Supreme Court cannot displace the practice and procedures of this Court. Further, the applicants in the Supreme Court proceedings are different legal persons to the applicant in the proceedings in this Court. The grounds taken in support of the motions can be summarised: 1. The subpoenas are oppressive. 2. The subpoenas do not specify the documents to be produced with reasonable particularity. 3. In substance, the subpoenas constitute an attempt to obtain discovery against a person who is not a party to the procedings. The principles to be applied in deciding issues of this kind have been expressed in many authorities. A number of those authorities were cited by counsel for Mr. Randle. I do not need to refer to them all. For present purposes, references are made to the Full Court decision of Lucas Industries Ltd. v. Hewitt (1978) 45 F.L.R. 174. The leading judgment was given by Smithers J. In considering the well established rule that a person not a party to an action should not be subjected to a process of discovery, Smithers J. said at p.18B: "It is, however, of the essence of an obligation to make discovery that a duty rests upon the party subject thereto to decide for himself with respect to documents in his possession whether, in the relevant sense, they relate to the issues in the action. The subpoena does not in terms seek to impose this task on the respondents. It seeks production of documents the contents of which relate to specified subjects. The respondents do not have to direct their minds to the issues. But it is said that the specified subjects are numerous and are so comprehensive that the task of examining documents to test the relationship of their contents to those subjects does not, in the circumstances of this case, differ in mature from that involved in making discovery. No doubt, if the terms of a subpoena are such that although purporting to be a subpoena it is in substance a, notice for discovery, 1t should be set aside. But JI am not satisfied that the subpoena before the court is of this kind. The task it imposes on the respondents is to identify documents as relating to particular subjects. This is quite a different task from that of ascertaining issues and identifying the relationship of documents thereto." In considering the questions of whether a subpoena 15 oppressive and fishing and the need that in a subpoena the documents required to be produced must be specified with reasonable particularity, Smithers J. said at pp.188-9: "But a degree of generality in the description of the documents may according to circumstances be compatible with reasonableness in this respect. Thus, in respect of documents concerning the treatment of a hospital patient, production of which is required from the hospital, a description such as "the hospital records relating to treatment of Mr. X between January and July 1977" would be acceptable. Such a description places upon the hospital the burden of searching for the records but, having regard to modern business organization and practices, such a burden 15 reasonable. The purpose of the process of subpoena is to facilitate the proper administration of justice between parties. For that purpose it 15 the policy of the law that strangers who have documents may be put to certain trouble in searching for and gathering together relevant documents and bringing them to court. It as according to the same principle that persons who have knowledge of facts are put to the inconvenience of being brought to court and required to give evidence. Assessment of the reasonableness of burdens anvolved in complying with a subpoena must' take account, inter alia, of the desirability that justice be administered effectively. The capacity of a party to collect and produce the documents referred to is a relevant circumstance. Large Business entities may be thought to be haghly organized and well staffed. What may be burdensome to lesser entities may be of small significance to a large one." His Honour then referred to what was said by Jordan C.J. ain Commissioner of Railways v. Small (1938) 38 S.R. (N.S.W.) 564 at pp.573-4 and at p.190 said: "It would, no doubt, be a good reason for failure to produce documents that the effort and expense involved in doing so was greater than ought reasonably to be required. This is a matter which would at that Stage be capable of rational resolution by the court according to the circumstances. So far as the effort and expense in arranging for production of particular documents in any case exceeded what was reasonable, their non-production would be acceptable to the court. But if a subpoena be wholly set aside on the grounds that on its face it 15 oppressive, then the subpoena wholly fails and there is the possibility that although some or even substantial compliance Might have been undertaken with a minimum of effort, the whole procedure may be needlessly frustrated." I propose to apply those principles. The first subpoena is considered. It must, be remembered that the subpoena is directed to a person engaged in the accounting profession. Apparently he was engaged in his professional Capacity as an accountantby Jet Corporation and the other companies which, at one stage, were applicants in these proceedings. Counsel for Mr. Randle contended that the wording of paragraph (a) of the Schedule was too wide, imprecise and vague and did not identify with sufficient particularity what was comprehended by the words "the Accounting Records and books of each of the three Applicants". He referred to the word "of" and contended that the use of that word was ambiguous in the sense that 1t was not clear whether "of" meant "relating to" or "belonging to". These contentions are rejected. Mr. Randle is required to produce the documents described in the Schedule. Before they can be produced, they must be in his custody or control. As an Accountant, he should be able to identify what are accounting records and books. In answering the subpoena, the recipient should not expose the wording of the subpoena to the scrutiny expected from a barrister in construing the terms of a statute or a will. The whole document must be considered and must be considered in the light of the circumstances in which the subpoena was issued. In the present case, a reference to paragraph (b) shows that documents relating to the three applicants are to be produced, being documents of the firm. In that context, it is reasonably clear that in paragraph (a) the word "of" is to be used as meaning "belonging to", while the word "of" in the phrase "of the firm" in paragraph (b) means "documents belonging to the firm". Counsel for Mr. Randle attacked paragraph (b) on the basis that it is too wide and does not specify with the required degree of particularity, the documents' to be produced. The language of paragraph (b) is inelegant, but in my opinion, its meaning should be reasonably clear to an Accountant. From the material before the Court, the period during which Mr. Randle was engaged in a professional capacity by Jet Corporation and the other two companies, was very short. Mr. Randle did professional work for those three companies. He is required to produce documents coming within the wide description contained in paragraph (b). Those are the extended working papers and files prepared at the direction of Mr. Randle together with documents given to the firm in connection with that professional work. In my opinion, the documents are described with sufficient particularity and although there may be many documents to be produced, it remains the duty of Mr. Randle to decide whether the contents of documents within his possession come within the description specified in paragraph (Bb). It ais not for him to decide whether they relate to issues between the parties to the proceedings. Iam not satisfied that paragraph (b) amounts in substance to a notice for discovery. The documents include documents belonging to the firm as well as other documents not belonging to the firm but handed to the firm in connection with the professional work being conducted by the firm. Paragraph (c) is ina different category. The documents sought to be produced are "the accounting and/or audit and/or tax files of the firm". By itself, that 15 too wide and oppressive. That would include all the accounting, audit and tax files of the firm. The word "including" appearing after the opening words 1s not a word of limitation, if anything, it is a word of extension. The use of that word suggests that the opening words of paragraph (c) are unlimited and include all accounting files and audit files and all the tax files of the firm. Counsel for Mr. Randle made similar submissions with respect to the second subpoena but with the added objection that in that subpoena one applicant only, Jet Corporation, appears in the heading while in the Schedule reference is made to "the three Applicants". In the absence of submissions on behalf of Mr. Randle that the first subpoena had ceased to have any effect by reason of effluxion of time, counsel for the applicant announced that the second subpoena had been sought as a precaution to protect the applicant if the first subpoena had in fact been spent. In those circumstances counsel for the applicant announced that he did not intend to proceed with the second subpoena. In the light of that announcement, the court orders that the second subpoena be set aside and that the applicant pay to Mr. Randle the costs of the motion dated 22 March 1985. I have ruled that paragraph (c) of the Schedule to the first subpoena is too wide and oppressive. Under Order 27 vule 9(1), the Court is empowered to set aside a subpoena wholly or in part. In the exercise of that power the Court orders that paragraph (c) of the Schedule to the subpoena dated 27 June 1983 be set aside, but otherwise refuses to make the order sought in the motion dated 14 July 1983. In all the circumstances, there should be no order for costs of that motion. 1 certify that this and the A/WE(@ ) piecedmy pages arc a true copy of the Reasons for Judgment herem of tho t | i Honourable Mr. Justice &-™- Nort ROP ! Associate fs Dated:2S MAN (465