New South Wales Supreme Court CITATION : University of New England v Samantha Aber & Ors [2005] NSWSC 1353 HEARING DATE(S) : 9 December 2005 JUDGMENT DATE : 9 December 2005 JUDGMENT OF : Brereton J CATCHWORDS : PROCEDURE - Discovery and interrogatories - subpoenas and notices to produce - setting aside - relevance. LEGISLATION CITED : Uniform Civil Procedure Rules 2005 (NSW), r 21.11 Portal Software v Bodsworth [2005] NSWSC 1115 CASES CITED : University of Technology, Sydney v Gerrard [2001] NSWSC 368 University of New England PARTIES : Samantha Aber FILE NUMBER(S) : SC 6000/05 Ms M Allars (Plaintiff) COUNSEL : Mr S Wells (Defendants) Abbott Pardy & Jenkins (Plaintiff) SOLICITORS : McMahons National Lawyers (Defendants) LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Friday 9 December 2005 6000/05 University of New England v Samantha Aber & Ors JUDGMENT (ex tempore) 1 HIS HONOUR: By summons filed on 24 November 2005 the University of New England (the University) as plaintiff claims orders appointing a receiver and manager to the assets of the University of New England Students' Association (UNESA), and conferring on the receiver the powers of the Council and Executive of UNESA, of which the defendants constitute the current executive. The summons describes those assets as being held "on trust for the use and benefit of members, for the time being", of UNESA. It is unnecessary for me to decide, for present purposes, whether that accurately describes their nature, but I should not be taken as acceding to the proposition that it does. 2 The summons has been before the Court on a number of occasions, and is presently next returnable before the Expedition Judge on 16 December 2005. The urgency which attends the hearing of the summons arises from the circumstance that the University contends that the current Council, Executive and office bearers of UNESA will cease to hold office under the Constitution on 31 December this year, and that annual elections not having been held, there are no replacements, so that there will be a vacuum in the governance and constitution of UNESA from 1 January 2006. Again, it is not necessary for me, on this application, to resolve, even on an interlocutory basis, whether there is substance in that contention, though again, I should not be taken to acceding to the proposition that there is [cf University of Technology Sydney v Gerrard [2001] NSWSC 368]. It suffices to say that it is plainly urgent enough that the issues be resolved sooner rather than later. 3 On 30 November 2005, when the summons was first returnable before the Court, directions were made which, inter alia, granted leave to the parties to issue Notices to Produce returnable before the Registrar on 5 December 2005. 4 The plaintiff University served a Notice to Produce on the defendants returnable on 5 December 2005, which was dated 1 December 2005. It required production of documents described in 12 numbered paragraphs, as follows: 1. Current Constitution and Regulations of the University of New England Students' Association ("UNESA"). 2. All minutes of meetings of UNESA Council and its Executive from November 2004 to date. 3. All financial records evidencing the value of any assets of UNESA in 2004 and 2005, including: a. equipment used by the Radio Station TUNE!FM operated by UNESA; b. equipment used by the Dental Clinic operated by UNESA; and c. stock and fittings of the UNESA Secondhand Bookshop operated by UNESA. 4. All records, including correspondence and financial records, relating to the receipt by UNESA of General Services Fee from the University of New England ("UNE"). 5. Account statements from the New England Credit Union and any other bank, credit union or financial institution holding accounts for UNESA, for the months of January to November 2005 in respect of fixed term and trading accounts. 6. All financial records from January 2005 to the present recording the monthly expenditure of UNESA. 7. All documents evidencing order recording authorisations or arrangements for signatories to the UNESA accounts with the New England Credit Union or other banks or financial institutions holding accounts for UNESA, including documents recording the authorisations and arrangements for the current signatories to the accounts. 8. In relation to employees of UNESA and persons, corporations or other bodies holding contracts to perform personal services for UNESA: a. all contracts of employment or documents evidencing contracts of employment; b. all contracts to provide services between UNESA and individuals, corporations or bodies; c. all documents relating to long service leave and holiday pay entitlements; and d. any enterprise bargaining agreements, current at and from June 2005. 9. All correspondence during 2005 with employees of UNESA, including a. Mr Edward Campbell or other employees at TUNE!FM radio station; and b. the Executive Officer, Mr Wayne Kratz, relating to their redundancy or other matters concerning termination of their employment. 10. All documents in relation to the allegation of misconduct made against Wayne Kratz in November 2005. 11. All notices, advertisements, authorisations, appointments of returning officers, or other documents evidencing or recording decisions of UNESA's Council or Executive members, relating to: a. the holding of elections during 2005 for the Council of UNESA (including the calling of nominations); and b. not holding elections during 2005 for the Council of UNESA. 12. All documents brought into existence in 2005 in relation to the transition of UNESA to a student representative council and its relationship with Services UNE Ltd. 5 Following receipt of that Notice to Produce, the solicitors for UNESA wrote to the solicitors for the University by facsimile on 2 December 2005, observing that it appeared to them that the basis of the claim for appointment of a receiver was that the present office bearers of UNESA would not be in office beyond 31 December 2005; that, as such, the financial position of UNESA was not a matter in issue; and that objection was, therefore, taken to paragraphs 3 - 7 inclusive of the Notice to Produce, which apparently related to the financial position of UNESA. The letter also observed that the documents sought in paragraphs 8, 9, 10 and 12 of the Notice were irrelevant, as they did not relate to issues raised in the proceedings. Those paragraphs appear to relate essentially to employment arrangements and obligations between UNESA and current or former employees, and, in the case of paragraph 12, to the proposed transition of UNESA to a different constitutional basis with the apprehended introduction of "voluntary student unionism" in 2006. The letter continued: If your position is that the documents sought in paragraphs 3 to 10 and 12 are, indeed relevant, please indicate which parts of the Affidavits filed with the Summons demonstrate the relevant facts in issue. 6 The letter also foreshadowed production of documents sought in paragraphs 1, 2 and 11, though not necessarily within the time frame provided by the Notice. 7 The University's solicitors responded by letter dated 7 December 2005. Their reply asserted that the financial position of UNESA was relevant to the appointment of a receiver because "the Court no doubt will wish to see evidence of your client's financial position". As to the issues concerning employment it was said: The number and status of employers and contractors as well as your client's ongoing obligations to them are relevant to the appointment of a receiver, as is their prospects in continuing in employment. 8 And as to the documents sought by paragraph 12, it was said they are relevant "to the future position and structure of UNESA, a matter that is central to the court's consideration of the role of the receiver". 9 There is no suggestion in that letter that a receiver should be appointed on the basis of any jeopardy to the assets of UNESA. Nor is there any suggestion that the basis was other than as had been supposed by UNESA's solicitors, namely the apprehended void in governance. 10 On 8 December 2005, UNESA filed a motion seeking an order setting aside the Notice to Produce. That motion was made returnable by the Registry on 21 February 2006. The University has asked that the matter be dealt with urgently, and applied to have the return date of the motion vacated and the motion dealt with instanter. UNESA has now consented to that course and I have already, by consent, vacated the return date of the Notice of Motion and provided for it to be heard today. 11 As I understand the relief claimed in the summons, illuminated to some extent by the affidavit evidence filed in support of the summons and the correspondence to which I have referred, the basis upon which the University claims that a receiver should be appointed to UNESA is that there will be what I have called a vacuum in the constitutional structure and governance of UNESA after 31 December 2005, when it is supposed that the existing office-bearers will cease to hold office, and no replacements for them have been elected in accordance with the constitution. 12 In the course of her submission, Ms Allars for the University mentioned that there were some concerns as to the jeopardy of the assets of UNESA in the meantime - although it was not apparent from the Summons, nor from the supporting evidence, nor from the correspondence to which I have referred (which gave the University every opportunity to explain the basis upon which the appointment of a receiver was sought) that this was to be advanced as a ground for appointment of a receiver. Ms Allars took me to an affidavit of the former Executive Officer of UNESA, who has provided evidence in the University's case (he having been the subject of an allegation of misconduct by UNESA), the substance of that misconduct being apparently that he has cooperated with third parties and, in particular the University, to the detriment of, or without the adequate consent or knowledge of UNESA. In his affidavit Mr Kratz explains that UNESA has, in addition to its Executive Officer, eight employees including administrative assistants, a dentist, a radio station manager and a second hand bookshop manager. Mr Kratz explains that he, and a designated person from a separate organisation, Services UNE Limited, are the authorised signatories for cheques. He says that, as at 31 October 2005, UNESA had about $600,000 in accounts with the New England Credit Union, and current liabilities of just in excess of $200,000, largely comprised of liabilities for staff redundancies. 13 He also gives some hearsay evidence of having approached the manager of the Credit Union "to alert him of the possibility of the Executive trying to have access to UNESA accounts, to which they normally not have access" to which the Manager replied that he had already been approached in that regard. I have to say I am unable to draw any sinister inference, so far as a risk of dissipation of assets is concerned, when the Executive of an organisation which owns funds approaches a credit union in which they are invited to obtain access to them. 14 None of the material to which Ms Allars has pointed in Mr Kratz' affidavit persuades me that there is the slightest risk of inappropriate dissipation of assets. True it is that, if Mr Kratz has been dismissed, he being a relatively long serving employee, some termination obligations to him may, depending upon the basis of his dismissal, be incurred, but that is a consequence of law and not an improper or inappropriate dissipation of assets in the sense of putting the assets in jeopardy. In short, I am not satisfied that the evidence raises a triable issue as to dissipation of assets, and I am not satisfied that a risk of dissipation of assets has been part of the University's case for the appointment of a receiver; rather, it seems plain that the basis of the application has always been the non-holding of elections and the risk, as the University sees it, that it will be no governing body of UNESA on New Year's Day and thereafter. 15 The correspondence to which I have referred includes suggestions that the Court would need to know, for the purpose of appointing a receiver, what are the assets of the organisation. Ms Allars elicited that the Court needed to know what assets there were to be satisfied that it was appropriate to appoint a receiver. I do not, at least entirely, accept this. Receivers are frequently appointed to corporations and other entities in the absence of any detailed knowledge of what the assets are. In any event, in the course of submissions, Mr Wells indicated that no argument would be advanced on behalf of UNESA that the appointment of a receiver would be futile because there are no assets of sufficient value to justify it. 16 In those circumstances, it seems to me that evidence as to the value of the assets of UNESA is entirely irrelevant to the application for appointment of a receiver. It also seems to me that evidence as to communications between UNESA and its current and former employees about their terms of employment, their actual or potential dismissals and their redundancies, is similarly quite irrelevant to the basis upon which the University seeks to have a receiver appointed. A receiver, if appointed, may need information about those matters in order to perform his or her function. But that is quite a different matter from concluding that such material is of even "adjectival", "apparent" or "potential" relevance sufficient to demonstrate a legitimate forensic purpose for such a Notice to Produce in the context of an application for appointment of a receiver. [In Portal Software v Bodsworth [2005] NSWSC 1115, I explained the analogy between a Notice to Produce and a subpoena for present purposes, and the test of "relevance" in the context of an application to set aside a subpoena, which is the test that I have applied here]. 17 Similarly, documents relating to discussions and communications between the University and UNESA as to the restructuring of student organisations in anticipation of voluntary student unionism do not have even adjectival relevance to the issue in these proceedings on which the University relies for the appointment of a receiver. 18 It follows from what I have said to this point that I am unable to see how the documents sought in paragraphs 3 - 10 and 12 of the Notice of Motion might throw light on an issue in the proceedings, or add to the relevant body of evidence or such an issue. To the extent that the University might be contemplating raising questions of the prudential management of the assets of UNESA, it seems to me that those paragraphs are "fishing" for information which the University does not have to see whether it can make a case which it does not presently allege, rather than seeking to obtain material which will likely add to the body of relevant evidence in the proceedings as presently framed. 19 Nothing I have said should be taken as determining that the University has standing to apply for the appointment of a receiver to UNESA. The members of UNESA are the student body of the University of New England; the University is not a member. Its relationship with UNESA is fundamentally that of trustee of the General Service Fee which it collects from students each year and then remits to UNESA. But it may be that the University's functions of governance of the University of New England as a whole and its associated bodies may give it sufficient standing to apply for the appointment of a receiver, notwithstanding that it is not a member [cf University of Technology, Sydney v Gerrard [2001] NSWSC 368]. That is a matter which can await the final hearing. 20 For the foregoing reasons I make the following orders: 1. Order that pursuant to Uniform Civil Procedure Rules 2005 (NSW), r 21.11, the defendant need not produce the documents referred to in paragraphs 3, 4, 5, 7, 8, 9, 10 and 12 of the Notice to Produce issued by the plaintiff and addressed to the defendant, dated 1 December 2005. 2. Order that the plaintiff pay the defendant's costs of the motion. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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