Reported Decision : (2003) 46 ACSR 86 New South Wales Supreme Court CITATION : ASIC v Rich [2003] NSWSC 257 HEARING DATE(S) : 28 March & 1 April 2003 JUDGMENT DATE : 3 April 2003 JURISDICTION: Equity JUDGMENT OF : Austin J DECISION : Application denied CATCHWORDS : PRACTICE AND PROCEDURE - subpoena - subpoena in aid of prayers for relief in interlocutory application - whether abuse of process LEGISLATION CITED : Corporations Act 2001 (Cth) ss 180, 206C, 1317E, 1317R Aetna Pacific Securities Ltd v Hongkong Bank of Australia Ltd (Supreme Court of New South Wales, Giles J; unreported; 29 April 1993) Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 Commissioner for Railways v Small (1938) 38 SR(NSW) 564 CASES CITED : Palmdale Insurance Ltd (in liq) v L Grollo & Co Pty Ltd [1987] VR 113 Pasini v Vanstone [1999] FCA 1271 (15 September 1999) Re Federal Commissioner of Taxation; ex parte Swiss Aluminium Australian Ltd (1986) 68 ALR 587 Sabre Corporation v Russ Kalvin's Hair Care (1993) 46 FCR 428 Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 Australian Securities and Investments Commission (P) John David Rich (D1/R1) PARTIES : Bradley William Keeling (D2) John Huyshe Greaves (D3) Mark Allen Silberman (D4/R2) The Partners of Minter Ellison Lawyers (A) FILE NUMBER(S) : SC 5934/01 COUNSEL : N Young QC with J Elliot (A) B Walker SC with D Williams (R1, R2) SOLICITORS : Minter Ellison (A) Joanne Kelly, Solicitor (R1, R2) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J THURSDAY 3 APRIL 2003 5934/01 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION V JOHN DAVID RICH & ORS JUDGMENT (revised 4 April 2003) 1 HIS HONOUR: In this proceeding the Commission, as plaintiff, complains that the defendants contravened their statutory duty of care as directors of One.Tel Limited, contained in s 180(1) of the Corporations Act 2001 (Cth). The Commission seeks declarations of contravention under s 1317E, orders disqualifying the defendants from managing corporations under s 206C, and compensation orders under s 1317H. 2 Since October 2001 PricewaterhouseCoopers have been engaged by the Commission to provide it with various services, including forensic accounting services and advice. It appears that a series of reports by Mr Paul Carter, who is a partner of PricewaterhouseCoopers, will be an important component of the Commission's evidence at the final hearing. 3 The parties have disagreed on several aspects of the discovery process. One of those disagreements relates to the extent to which the Commission has an obligation to make discovery of documents not in its possession but in the possession of third parties from whom the Commission can obtain them, either by asking for them or exercising its statutory powers of compulsion. This disagreement has led the first and fourth defendants to make an interlocutory application for orders requiring the Commission to give verified discovery of various categories of documents, or to make such requests and do such things as may be reasonably necessary to obtain documents in those categories. The intention is to require the Commission, if necessary, to use its statutory powers of compulsion to obtain the documents from other persons. 4 The documents that are the subject of the first and fourth defendants' application may be compendiously described as business records of One.Tel. The first and fourth defendants believe that some relevant documents are in the possession of the liquidators of One.Tel, the new owners of the former overseas subsidiaries of One.Tel, various local and overseas agents of the Commission, witnesses for the Commission, and Minter Ellison, a firm of lawyers. 5 Minter Ellison has been retained by James Packer and Consolidated Press Holdings Pty Ltd ("CPH"). Mr Packer was a non-executive director of One.Tel Ltd, and Consolidated Press Holdings is a shareholder of One.Tel. According to the affidavit of Scott Chesterman, a solicitor and partner in Minter Ellison, the firm and its clients have at all relevant times anticipated that legal proceedings would be instituted in relation to the collapse of One.Tel, and that those proceedings would affect or concern Mr Packer and CPH. Mr Chesterman notes that the Commission has commenced the present proceeding, and he refers to public statements by the liquidators of One.Tel that proceedings by them against directors of One.Tel and others are in contemplation. 6 In the course of its retainer, Minter Ellison has carried out investigations, collected documents and information, and interviewed various people in relation to the anticipated or pending proceedings. This process has involved engaging counsel, including Mr James Elliot, who travelled to Europe to interview people and collect documents in relation to One.Tel's overseas subsidiaries. 7 So far as it relates to Minter Ellison, the application by the first and fourth defendants seeks the following orders: "9. Order that the Commission make such requests and do such things as may be reasonably necessary to obtain from Minter Ellison Lawyers: (a) those documents obtained for and on behalf of Mr James Packer, and/or PBL Ltd constituting business records (including records stored in electronic form) of One.Tel Ltd or any of the subsidiaries of One.Tel Ltd; (b) Drew Boaden's computer hard drive. "10. Order that the Commission (to the extent that it is able) to obtain copies of the documents referred to in order 9 above and an electronic copy of Drew Boaden's computer hard drive and give verified discovery of such documents and the computer hard drive by such date as the Court thinks fit." 8 Mr Boaden's computer hard drive has been copied and the copy has been made available to the first and fourth defendants, except for some personal e-mails. There is no longer any dispute in respect of the production of that material. Essentially, proposed orders 9 and 10, if made, would require the Commission to do what would be reasonably necessary (including use of its statutory powers of compulsion) to obtain documents in the possession of Minter Ellison constituting business records of One.Tel and its subsidiaries (including overseas subsidiaries), and would then require the Commission to give verified discovery of those documents. 9 The first and fourth defendants have served a subpoena on the partners of Minter Ellison, dated 6 March 2003, requiring production of the following documents: "1. All documents, correspondence and other records of communications recording or referring to communications between Minter Ellison and (a) ASIC; or (b) PricewaterhouseCoopers (PwC); relating to any request from 1 May 2001 by ASIC or PwC for the production or inspection of documents constituting business records (including records stored in electronic form) of One.Tel Ltd or any of the subsidiaries of One.Tel Ltd including any computer hard drives of former One.Tel employees (One.Tel Records). "2. All documents, correspondence and other records recording or referring to the inspection of One.Tel Records in the possession of: (a) Minter Ellison Lawyers; (b) James Elliot of Counsel; (c) PBL Ltd; (d) Consolidated Press Holdings Pty Ltd; or (e) James Packer by officers of ASIC or employees of PwC in the period May 2001 to date. "3. A copy of any list or indexes of One.Tel Records held by any of the parties referred to in paragraphs (a) to (e) of paragraph 2 above." 10 It will be seen that the subject matter of the subpoena is not any of the business records of One.Tel, but rather various "process" documents, relating to requests, inspections and an index. Counsel for the first and fourth defendants informed the Court that his clients wished to have the fruits of the subpoena for the purpose of contending for proposed orders 9 and 10, and that the only foundation for the subpoena was in the application for those orders. It is accepted that the subpoena does not go to any of the substantive or final issues in the proceeding. 11 The Commission has indicated that it will make a claim for privilege in respect of any documents produced by Minter Ellison in answer to paragraphs 1 and 2 of the subpoena. The Commission claims that these documents relate to the services and advice given to it by PricewaterhouseCoopers for the sole or dominant purpose of preparing for the present proceeding. 12 Minter Ellison claims that the documents it has prepared are confidential documents, and that it has also engaged in confidential communications with its clients, the Commission and other persons, in each case for the dominant purpose of providing legal assistance to its clients in connection with the anticipated or pending legal proceedings, and/or for the dominant purpose of providing legal advice to its clients. Consequently the firm claims that those documents and communications were privileged in Minter Ellison's hands and in the Commission's hands at the time they were communicated. 13 Counsel engaged by Minter Ellison have made a number of lists or indices of documents in the course of their retainer. Again, Minter Ellison contends that the indices were produced for the dominant purpose of providing professional legal services to its clients, including advice and assistance in relation to the anticipated or pending proceedings, and therefore the indices of documents are, according to the firm, the subject of legal professional privilege. The firm therefore makes a claim for privilege in respect of the indices of documents to which the third paragraph of the subpoena refers. 14 In February this year I made orders and directions for the purpose of hearing the first and fourth defendants' application for orders against the Commission, and also the application by the Commission for orders that the defendants give discovery, on the two days 28 March and 1 April 2003. I should mention at once that I have been able to hear the Commission's application for orders that the defendants give discovery, and I have reserved judgment on that application. 15 After the subpoena was served on the partners of Minter Ellison, they filed an application for an order that the subpoena be set aside, or in the alternative, that no party be permitted to have access to any documents produced in response to it. That application was made returnable before me on 28 March 2003. 16 When the hearing commenced on that day, problems arose as to whether I should hear the Minter Ellison application prior to the application by the first and fourth defendants. Minter Ellison wished to make submissions designed to establish that the application by the first and fourth defendants was an abuse of process to the extent that it sought proposed orders 9 and 10, and therefore that the subpoena should be set aside because its only foundation could be to support those prayers for relief. 17 The procedural issue was resolved in this way. I made an order granting leave, on their oral application, to the partners of Minter Ellison to be joined as respondents to the application by the first and fourth defendants. I directed that evidence in each of the Minter Ellison application and the application by the first and fourth defendants be evidence on the other application. Minter Ellison's counsel adduced the evidence upon which they wished to rely in their application, and I allowed the first and fourth defendants to adduce evidence in respect of their application relevant to proposed orders 9 and 10, on the basis that they would adduce the balance of evidence later, after the Minter Ellison application had been determined. I gave the Commission the opportunity to adduce evidence with respect to proposed orders 9 and 10, but counsel for the Commission informed me that there was no such evidence to adduce. Submissions were then made on behalf of Minter Ellison in support of their application and with respect to proposed orders 9 and 10, and on behalf of the first and fourth defendants on the Minter Ellison application and in respect of proposed orders 9 and 10. The Commission was also invited to make submissions on those matters, but it chose to confine its submissions to the question of privilege in respect of part of the subject matter of the subpoena to Minter Ellison. 18 My task now is to decide whether to set aside the subpoena to Minter Ellison. In the course of so doing, I shall also have to decide (for reasons I shall explain) whether the application by the first and fourth defendants is necessarily an abuse of process insofar as it seeks proposed orders 9 and 10 (or to put it another way, whether the claim for proposed orders 9 and 10 is reasonably arguable). Since I have reached the conclusion that the subpoena to Minter Ellison should not be set aside, it will next be necessary to hear submissions on the second part of the Minter Ellison application, which seeks an order that no party be permitted to have access to any documents produced in response to the subpoena. It will be necessary that the documents to which the subpoena to Minter Ellison refers be produced to the Court and made available for inspection by me, for the purpose of hearing and determining that part of Minter Ellison's application. I shall hear the second part of Minter Ellison's application on 8 April 2003, and on that day I shall also resume the hearing of the application by the first and fourth defendants. 19 Minter Ellison have challenged the subpoena issued to them on two grounds. First, they contend that there is no legal or factual basis for the making of proposed orders 9 and 10, and therefore any foundation for the subpoena falls away. Secondly, they contend that the issue of the subpoena is an abuse of process on general principles. The two contentions overlap in obvious ways. Challenge to the basis for proposed orders 9 and 10 20 Counsel for Minter Ellison submitted that the first and fourth defendants have not put forward any material explaining how anything sought in the subpoena has any legitimate purpose in the case. In response to my invitation, counsel for the first and fourth defendants offered an explanation. He said that the first and fourth defendants contend that the Commission's obligation to give discovery extends to documents in the possession of third parties such as Minter Ellison, to the extent that those documents are subject to the legal or practical control of the Commission. According to their counsel, the subpoena has been issued for the purpose of obtaining evidence that the Commission has practical control over documents in the hands of Minter Ellison. The subject matter of the subpoena is also relevant to other interlocutory questions, including the question whether the preparation of the case is sufficiently well advanced that hearing dates can now be assigned. 21 The occasion has not yet arisen for me to decide whether documents in the possession of Minter Ellison are discoverable by the Commission or otherwise amenable to the kind of orders sought in paragraphs 9 and 10 of the first and fourth defendants' application. That issue will be raised for determination the next stage, when (having dealt with Minter Ellison's application and questions of access to documents produced by the firm) I come to hear the first and fourth defendants' application. However, it seems to me at the very least reasonably arguable that the Commission's discovery obligation extends beyond documents in the possession of the Commission, to documents that the Commission would be likely to obtain had it made a request to the persons in whose hands the documents are kept: Sabre Corporation v Russ Kalvin's Hair Care (1993) 46 FCR 428, 432; Palmdale Insurance Ltd (in liq) v L Grollo & Co Pty Ltd [1987] VR 113,115; Aetna Pacific Securities Ltd v Hongkong Bank of Australia Ltd (Supreme Court of New South Wales, Giles J; unreported; 29 April 1993). It is enough for the purposes of the present application, which seeks to strike out the subpoena on the ground that there can be no proper basis for proposed orders 9 and 10, to reason only so far as the "reasonably arguable" stage. 22 Central to the argument advanced on behalf of Minter Ellison is the proposition that according to the evidence, the Commission has taken all reasonable steps to assist the defendants to obtain access to the information they have requested, being information in the possession of third parties. In those circumstances, it is submitted, there is no evidentiary basis for proposed orders 9 and 10. 23 In making this submission, Minter Ellison rely on an affidavit by Joanne Rees, a consultant lawyer to the Commission, made on 28 March 2003. She says that the Commission has taken "all reasonable steps" to assist the defendants to obtain access to all of the additional information they have requested. However, she says, at all times the Commission has made it clear that in its view, it is not obliged to discover documents in the possession of third parties, and that the proper course of action that the defendants should take is to obtain material from the third parties by issuing subpoenas. In relation to proposed orders 9 and 10, she deposes as follows: "11. ASIC has discovered all One.Tel business records in its possession obtained from Minter Ellison, the solicitors for James Packer who is a witness for ASIC in these proceedings. In the event that ASIC obtains further business records from Minter Ellison, those records will also be discovered to the defendants. … "13. ASIC has recently obtained possession of an electronic copy of Drew Boaden's computer and has discovered that to the defendants subject, at the request of Mr Boaden, to deleting personal e-mails from the computer which have no relevance of these proceedings." 24 The evidence of Ms Rees says nothing about the process of review undertaken by the Commission when it inspected the documents in the possession of Minter Ellison. She simply says that the Commission obtained certain documents from the firm, and then discovered to the defendants the documents in its possession. What is lacking from this evidence is any assertion that Ms Rees and other appropriate officers of the Commission have turned their minds to the task of identifying, from amongst the documents in the possession of Minter Ellison, those documents that are relevant to the proceeding for the purposes of discovery. 25 Counsel for Minter Ellison also relies on the affidavit of Mr Chesterman, to which I have referred. He deposes that on 15 October 2002, the Commission made a formal request by letter to Minter Ellison that it be permitted to inspect documents that were in the possession of Minter Ellison and its clients. In that letter, written by Joanne Rees, the Commission advised that it could, if necessary, use its statutory powers to compel Minter Ellison and the clients to produce the documents to it. According to Mr Chesterman, Minter Ellison was instructed by its clients to produce documents to the Commission for inspection, having regard to the statutory powers and duties of the Commission. The Commission has carried out an inspection, and has requested and obtained copies of documents. 26 Counsel submits that this is evidence of a process properly carried out, with nothing to suggest any deficiency or defect in what was done. Part of counsel's submission is that according to Mr Chesterman's evidence the Commission requested the "documents they judged to be documents that ought to be discovered in the context of this proceeding" (Transcript, page 67.51). He says that the first and fourth defendants should not be able to "look over the shoulder of ASIC in its carrying out of its investigations and discovery exercises and second-guess them" (Transcript, page 67.56-68.3). 27 No one suggests that the first and fourth defendants should be able to second-guess a process of discovery properly deposed to. In this case, however, we are not dealing with an affidavit verifying discovery, in regular and proper form. Further, counsel's submission reads into Mr Chesterman's affidavit a proposition that is not there. Mr Chesterman does not say that the Commission made any judgment identifying the documents that should and should not be discovered by it in the proceeding. Not surprisingly, given his position, his affidavit is completely silent on the process by which the Commission decided upon the documents that it would request. 28 At the hearing Minter Ellison produced the letter of 15 October 2002 to which Mr Chesterman referred in his affidavit. I held that two paragraphs of that letter could be admitted into evidence. The relevant parts of the Commission's letter are as follows: "Miss Reynolds [an employee of PricewaterhouseCoopers, engaged to assist the Commission] has indicated that from her cursory examination of the material you are holding only a small portion is likely to be relevant to the ASIC proceedings. In these circumstances I confirm my telephone requests of yesterday that Miss Reynolds and I spend two days in Melbourne going through the index of documents prepared by Mr Elliott to ascertain what documents are in fact relevant to the ASIC proceedings with the aim of obtaining copies of those documents from you. … "You will of course appreciate that it will be necessary for ASIC to discover, in the proceedings, copies of relevant documents received from you. You should also understand that if at any stage your clients change their minds about providing relevant documents to ASIC or it is necessary for ASIC to obtain the original documents, it may be necessary for ASIC to resort to compulsory production procedures." 29 The first of these paragraphs provides some evidence of a process of assessment of the documents in Minter Ellison's possession by reference to the criterion of relevance for the purpose of discovery. Although it is only evidence of a process intended to be carried out, it seems to me that other evidence would enable the Court to infer that the process was executed in the manner proposed. However, what seems to be contemplated in the letter is a review of the index of the documents. I agree with counsel for the first and fourth defendants that a review of an index of documents, without any recourse to the documents themselves, would be unlikely to provide a proper foundation for determining whether the documents identified in the index were relevant for discovery purposes. 30 Counsel for Minter Ellison also rely on the affidavit of Joanne Kelly made on 24 March 2003, and the correspondence annexed to it. The affidavit shows that, as one would expect, there has been substantial correspondence between the Commission and the solicitors for the first and fourth defendants with respect to discovery. On 6 November 2002 the Commission wrote to Ebsworth and Ebsworth, who were then acting for the first and fourth defendants, on the subject of additional documents to be discovered. The letter said: "Furthermore, counsel for Publishing & Broadcasting Ltd [a company connected with CPH and Mr Packer] has obtained additional material relating to One.Tel Ltd's overseas operations. ASIC has inspected this material and is currently arranging for documents which are relevant to the Supreme Court, Equity proceedings, to be provided to us. When these documents have been provided and registered by ASIC, we will discover them to the defendants." 31 This is some evidence that the Commission has undertaken a proper procedure for reviewing the Minter Ellison material for the purpose of discovery, but it cannot be equated with an affidavit verifying discovery. It is an unverified letter, annexed to an affidavit by the solicitor for the first and fourth defendants. It does no more than to assert that "documents which are relevant" were being obtained and would then be discovered. It does not say that the Minter Ellison material had been comprehensively reviewed or that all relevant documents would be obtained and discovered. 32 On 12 December 2002 Ebsworth and Ebsworth wrote to the Commission about the importance to the defendants' case of evidence concerning the financial operations of One.Tel's overseas subsidiaries. The letter noted that the Commission itself only had access to limited documents in this area. It continued: "However, we understand that recently some of the relevant documents from One.Tel's international subsidiaries have in fact been obtained by ASIC from the lawyers for Mr Packer, a director of One.Tel Ltd and/or for Publishing & Broadcasting Ltd ("PBL") a significant shareholder in One.Tel Ltd. It appears that the lawyers for Mr Packer and/or PBL have travelled to Europe, reviewed documents of One.Tel international subsidiaries, spoken to former employees, directors and officers of One.Tel international subsidiaries and brought back with them a significant quantity of records from One.Tel Group international subsidiaries including from One.Tel UK. "We understand that Cassandra Reynolds of PwC or ASIC has reviewed some of this material at the offices of Minter Ellison in Melbourne and has extracted some 60 documents said to be relevant to the ASIC proceedings which we believe are to be discovered by ASIC." The letter contended that the Commission should give discovery of the relevant financial records of international subsidiaries of One.Tel. 33 On 22 January 2003 Joanne Kelly for the first and fourth defendants sent an e-mail to Joanne Rees at the Commission, evidently after she had inspected some of the Minter Ellison documents. She asked whether Ms Rees had obtained an index to the documents. Ms Rees replied on the same day, saying "we did not get a copy of any index". 34 Ms Kelly wrote to Ms Rees on 19 February 2003, explaining her difficulty in the absence of access to an index. She said that approximately 252 of 395 documents imaged on a CD-ROM that had been provided by the Commission were apparently sourced from Minter Ellison, but that this only represented a relatively small number of the total documentation collected on behalf of PBL. She said that although Ms Rees had confirmed that an index was not obtained, Ms Kelly understood that an index was made available to the Commission for the purpose of inspecting the material. She said that the basis upon which the lawyers for Mr Packer and PBL selected documents from One.Tel's international operations was not known, and the criteria used by PricewaterhouseCoopers and the Commission in reviewing the material and selecting some of it to discover were also not known. She referred to the fact that Mr Carter, in his supplementary report dated 13 December 2002, had stated that he had not been provided with all of the books and records of the international operations but only a selection of them, including material sourced from Minter Ellison. She said that the inadequacy of the Commission's discovery of material concerning the international operations of One.Tel was an issue that remained of concern. She contended that her clients were not in a position to know whether other relevant material was being held at the offices of Minter Ellison, which had not been discovered by the Commission. She asked the Commission to explain the circumstances in which the documents came into PBL's possession, and whether the Commission or PricewaterhouseCoopers had access to all of the material or only some of it. She asked the Commission to indicate, out of the material to which it had had access, what material was not discovered, and suggested that would be useful for the Commission to obtain a copy of the index from Minter Ellison. 35 In her affidavit Ms Kelly, after reviewing the correspondence, said this in relation to these subpoena to Minter Ellison: "22. In the absence of a response from ASIC in relation to the matters raised in my letter dated 19 February 2003, the defendants do not know the extent to which ASIC has had access to the material held by Minter Ellison which may be relevant to the issues in the proceedings and which may not have been discovered by ASIC." 36 Counsel for Minter Ellison submits that paragraph 22 of Ms Kelly's affidavit is "no more than speculation that there may be some deficiency", and there is no evidence of any shortcoming in ASIC's exercise of its powers and discretions. The true position, in my opinion, is that the evidence does not fully or specifically explain the procedure followed by the Commission in inspecting the documents in the possession of Minter Ellison, the number or proportion of the totality of the documents that were obtained by the Commission and discovered, or the extent to which the Commission's review of the documents was related to, or confined to, the index. While there is no evidence of any shortcoming in the procedure followed by the Commission, the evidence about that procedure is incomplete. In those circumstances there were reasonable grounds, as set out in Ms Kelly's affidavit, for the first and fourth defendants to take steps to compel the Commission to give proper discovery of the Minter Ellison documents to the extent that those documents were under its practical control. 37 Counsel for Minter Ellison submits that in the absence of any factual basis for suggesting that there was any irregularity or deficiency in the procedure followed by the Commission, the subpoena cannot be anything other than a fishing expedition - that is, an endeavour not to obtain evidence to support a case, but to discover whether there is a case (citing Commissioner for Railways v Small (1938) 38 SR(NSW) 564, 575). Further, he contends that the subpoena is really an attempt to sidestep the requirements that ordinarily apply to an application for further and better discovery. 38 Although the old rule about further and better discovery has disappeared, it is plain that the principles underlying it remain applicable. Ritchie's Supreme Court Practice (NSW), paragraph 23.3.20, explains the position as follows: "Historically, there were limited circumstances in which the court would order a party to provide a further list of documents. It was well established that statements in a party's affidavit of documents were conclusive as to: (a) whether the party had any undisclosed documents: …; (b) the relevance of any undisclosed documents: …; (c) the grounds stated in support of a claim for privilege from production: ….. Although the present rule puts the onus on the discovering party to provide full discovery, it says nothing about whether the other party may challenge the sufficiency of the discovery or the contents of any verifying affidavit. Notwithstanding this omission, it is likely that the court will permit an application for further discovery to be made provided that the party making the application specifies the document, or class of documents, in respect of which further discovery is sought. The party making such an application ought to specify the document, or class of documents, in respect of which particular discovery is sought. …" 39 In my opinion the passage in Ritchie is directed to a situation quite different from the one before me now. Where an affidavit verifying discovery has been made by a qualified legal practitioner in regular form, strong grounds must be identified for looking behind it and investigating the adequacy of the discovery that has been made. In the present case, however, no such affidavit is relied on. Instead, there is evidence that I have found to be ambiguous, falling short of a verified assertion that discovery has taken place. In those circumstances, the very absence of such assurance provides, in my view, a proper basis for further investigation. The issue of a subpoena directed, in relatively specific terms, to the production of documents relating to requests and inspections and the index, is clearly designed to obtain evidence in support of the first and fourth defendants' interlocutory case for proposed orders 9 and 10. 40 Counsel for Minter Ellison took me to Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98, at 100 and 101 and Pasini v Vanstone [1999] FCA 1271 (15 September 1999) at paragraphs 30 and 31, as authority for a number of basic principles regarding the proper use of subpoenas, including the proposition that it is an abuse of process to issue a subpoena addressed to a third party for the purpose of obtaining further and better discovery. The general principles about improper use of subpoenas are not in contest. In my view, however, they have no application here. This is a case where the administration of a subpoena is appropriate, to support the first and fourth defendants' case that the Court should make orders to require proper discovery by the Commission, in circumstances where it is reasonably arguable on the available evidence there are grounds for concern that full discovery may not have taken place. Abuse of process on general grounds 41 Counsel for Minter Ellison submits that the Commission is a responsible Commonwealth regulatory authority charged with the enforcement of the Corporations Act, and that it has provided affidavit evidence to the effect that it has properly applied itself to obtaining and discovering the relevant documents from Minter Ellison. There is, says counsel, no basis for questioning that evidentiary material. Nor is it proper for the Court to review the Commission's exercise of discretions as to how it carries out its investigations. In those circumstances it is not open to the first and fourth defendants to "rummage around in the process-type documents" in order to establish a case that is non-existent at the present time (Transcript, page 73.35, 74.35). There is no "legitimate forensic purpose" for the subpoena (Transcript, page 73.57ff). 42 In support of these submissions, counsel relies on Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921, 927 and Re Federal Commissioner of Taxation; ex parte Swiss Aluminium Australian Ltd (1986) 68 ALR 587, 589, 590. In the former case, Waddell J said that inspection should be granted so far as is necessary in the proper conduct of the litigation, and that means "where it is reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case". In the latter case, Beaumont J said that if the proper inference to be drawn from the facts of the case is that a subpoena has been issued to a stranger, not with a view to obtaining documents for use at a trial, but in order to discover, for some other purpose, what documents a stranger holds, an abuse of process may have occurred. He added, "the court will need to be satisfied that a legitimate forensic interest is being advanced by the adoption of the special procedure". 43 Once again, these general principles are not in contest. It is accepted that the Court must be vigilant to avoid misuse of the subpoena process. In this case, however, the first and fourth defendants have a legitimate forensic interest in seeking by a subpoena evidence to support their case for proposed orders 9 and 10 or some other order that the Commission make discovery in respect of the Minter Ellison documents, a case which I have found to be reasonably arguable independently of the evidence that may be obtained if documents are produced and access granted pursuant to the subpoena. In those circumstances the evidence sought in the subpoena is reasonably likely to add to the first and fourth defendant's interlocutory case. 44 I should note that the outline of submissions on behalf of Minter Ellison refers to other cases not specifically cited by counsel orally. As far as I can see those other cases simply support the general propositions to which counsel referred, which are in any event not challenged. Conclusion 45 My conclusion is that the application by Minter Ellison to set aside the subpoena must fail. I shall make orders that the application for order 1 in the notice of motion be dismissed, and that Minter Ellison pay the first and fourth defendants' costs of the application (reserving costs with respect to the claim for privilege in respect of documents, once they are produced). As I have said, the next step is for Minter Ellison to produce documents to the Court in compliance with the subpoena, and for the Court to hear arguments with respect to the privilege claims by Minter Ellison and the Commission concerning the documents so produced. That argument will take place on 8 April 2003. ********** Last Modified: 04/08/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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