New South Wales Court of Appeal CITATION: ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307 HEARING DATE(S): 16 September 2009 JUDGMENT OF: Tobias JA at 1; Basten JA at 31; Handley AJA at 32 EX TEMPORE JUDGMENT DATE: 16 September 2009 DECISION: Applicants' summons for leave to appeal dismissed with costs CATCHWORDS: PROCEDURE – Supreme Court procedure – New South Wales – Procedure under rules of court – Evidence – Subpoenas – Motion to set aside subpoena – Legitimate forensic purpose – Primary judge considered whether it was likely that the documents the subject of the subpoena would materially assist on an identified issue – Finding that purpose of subpoena was fishing – Correctness of test applied LEGISLATION CITED: Supreme Court Act 1970 CATEGORY: Principal judgment A v Z [2007] NSWSC 899; (2007) 212 FLR 255 Air Canada v Secretary of State for Trade [1983] 2 AC 394 Alister v The Queen [1984] HCA 85; (1984) 154 CLR 404 Attorney General (NSW) v Chidgey [2008] NSWCCA 65; (2008) 182 A Crim R 536 Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667 Commissioner for Railways v Small (1938) 38 SR (NSW) 564 Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504; (1997) 37 ATR 432 CASES CITED: Hadley v Baxendale (1854) 9 Exch 341 Koufos v C Czarnikow Limited [1969] 1 AC 350 National Employers' Mutual General Association v Waind and Hill [1978] 1 NSWLR 372 New South Wales Commissioner of Police v Tuxford [2002] NSWCA 139 Portal Software v Bodsworth [2005] NSWSC 1115 R v Saleam [1999] NSWCCA 86 Trade Practices Commission v Arnotts Limited (No 2) (1989) 21 FCR 306 Travel Compensation Fund v Blair [2002] NSWSC 1228 ICAP Australia Pty Limited ICAP Australia Futures (Australia) Pty Limited PARTIES: ICAP Brokers Pty Limited BGC Partners (Australia) Pty Limited Forrest Moebes Kellee Campbell FILE NUMBER(S): CA 40153/09 COUNSEL: A: Mr J Stevenson / Ms C Spruce (Applicants) R: Mr R McHugh / Mr P Doyle Gray (Respondents) SOLICITORS: A: Minter Ellison, Sydney (Applicants) R: Horton Rhodes Lawyers (Respondents) LOWER COURT JURISDICTION: Supreme Court LOWER COURT JUDICIAL OFFICER: Nicholas J LOWER COURT DATE OF DECISION: 24 April 2009 LOWER COURT MEDIUM NEUTRAL CITATION: ICAP Australia Pty Ltd & Ors v Moebes & Anor [2009] NSWSC 306 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40153/09 TOBIAS JA BASTEN JA HANDLEY AJA 16 September 2009 ICAP AUSTRALIA PTY LTD & ORS v BGC PARTNERS (AUSTRALIA) PTY LTD & ORS Judgment 1 TOBIAS JA: The applicants seek leave pursuant to s 101(2)(e) of the Supreme Court Act 1970 to appeal from an interlocutory order of Nicholas J of 24 April 2009 whereby his Honour set aside a subpoena dated 19 December 2008 issued by the applicants to the first opponent, BGC Partners (Australia) Pty Ltd (BGC), on the ground that it lacked a legitimate forensic purpose. 2 The defendants to the proceedings were experienced brokers who were respectively employed by the first applicant from approximately June 2002 and September 2003 until 7 December 2007 when their employment was terminated. Thereupon they were employed by BGC who is not a party to the main proceedings but is a direct competitor of the applicants in the Australian energy market. 3 The defendants' employment with BGC commenced in or about March 2008 whereupon it is alleged that they provided broking services to their new employer identical to those which they had provided to the second and third applicants prior to the termination of their employment. Relevantly, it is alleged, at least in particulars provided with respect to the relevant paragraph of the Statement of Claim, that they provided broking services to organisations to whom they had provided such services when employed by the first applicant. 4 The applicants' claim against the defendants alleges breach of contract, breach of implied contractual duties, breach of fiduciary duties and conspiracy. Paragraph 40 of the Statement of Claim is in the following terms: "There has been a detrimental effect on the Plaintiffs' business as a direct result of Moebes and Campbell working for BGC and competing with the Plaintiffs for the Initial Periods of the defendants' respective employment contracts." 5 Further particulars of the allegation contained in paragraph 40 were provided by the applicants' solicitors to the defendants' solicitors by letter dated 19 December 2008. In essence, it was alleged that the Energy Desk of the second and third applicants lost market share and its position as the most successful Energy Desk in Australia as a consequence of the defection of the defendants to BGC. Accordingly, it is alleged that customers of the second and third applicants' Energy Desk who would otherwise have dealt with those companies were enticed by the defendants to defect to BGC resulting in a reduction in the revenue from various trades which would otherwise have been generated by those and other customers had the defendants continued in their employment with the first applicant for the benefit of the second and third applicants. 6 The subpoena which was the subject of the application before the primary judge, sought production of the following documents: "For the period 1 July 2005 to the date of this subpoena [19 December 2008], all Documents constituting, evidencing or recording: 1. the monthly quantum and volume of over the counter and future trades (Trades) carried out by each broker and customer of BGC Energy Desk (howsoever described) (BGC Energy Desk) and the gross monthly revenue (including, without limitation, brokerage) generated by BGC from those Trades, before the application of any discounts or other credits, if applicable (Revenue); 2. the allocation of the Revenue amongst the brokers of the BGC Energy Desk; 3. the identity of the customers of the BGC Energy Desk and the identity of which broker dealt with, or is in the habit of dealing with, those customers; and 4. the monthly reports issued by BGC by the Sydney Futures Exchange Limited in respect of the business transacted by the BGC Energy Desk in the Electricity Market." 7 By notice of motion filed on behalf of BGC on 13 February 2009, BGC sought an order that the subpoena be set aside. As I have indicated, his Honour acceded to the making of that order. 8 It would seem that the principles relevant to the setting aside of the subpoena upon the basis that it did not have any legitimate forensic purpose were not in dispute before the primary judge. His Honour cited from the relevant authorities at [25]-[28] of his judgment, referring to the review of the authorities by McClellan J (as his Honour then was) in Travel Compensation Fund v Blair [2002] NSWSC 1228 in which his Honour referred to Commissioner for Railways v Small (1938) 38 SR (NSW) 564; New South Wales Commissioner of Police v Tuxford [2002] NSWCA 139 and Air Canada v Secretary of State for Trade [1983] 2 AC 394, amongst other authorities. His Honour also referred to the decision of Brereton J in Portal Software v Bodsworth [2005] NSWSC 1115 and to the judgment of Gibbs CJ in Alister v The Queen [1984] HCA 85; (1984) 154 CLR 404. Furthermore, his Honour referred to the test as expressed by Beaumont J in Trade Practices Commission v Arnotts Limited (No 2) (1989) 21 FCR 306 and to the discussion of that test by Spender J in Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504; (1997) 37 ATR 432. 9 At [30] his Honour stated the test in the following terms: "[I]t must be shown that it is likely the documentation will materially assist on an identified issue, or there is a reasonable basis beyond speculation that it is likely the documentation will." 10 His Honour then referred to a passage in the judgment of Hunt CJ at CL in Attorney-General for New South Wales v Stuart (1994) 34 NSWLR 667 in which the latter had summarised the relevant test. 11 After setting out the evidence filed in resistance to BGC's application and the submissions of the parties, his Honour concluded (at [47]) that the relevant issue to which the subpoena was directed was whether the applicants had suffered loss resulting from the defendants' breach of contract which involved enticing customers away from the applicants. In his Honour's view there was no issue which required consideration of BGC's overall trading and financial operations from its Energy Desk since the time of its employment of the defendants. To justify the subpoena it was insufficient to merely assert that, since the time of the defendants' departure from their employment by the first applicant, the second and third applicants had suffered a downturn in their business. 12 At [48] his Honour held that the evidence before him served only to establish that the purpose of the subpoena was to provide the applicants' expert with information to assist him in opining whether there was any support for a case that the applicants' loss of market share and revenue following the defendants' departure from their employ was caused by their broking work for BGC in breach of their contract with and other duties owed to the applicants. His Honour considered that such a purpose was properly described as "fishing". Accordingly, he held (at [49]) that the evidence relied upon by the applicants did not persuade him that it was likely that the documentation sought by the subpoena would materially assist the applicants on any issue relevantly identified in the letter of particulars of 19 December 2008 as explained in subsequent correspondence. 13 The applicants submit that his Honour erred in his statement of the test at [30] of his judgment which I have set out at [9] above. It was submitted that there was no warrant for his Honour's requirement that it is "likely" that the documents sought "will materially assist" on any identified issue. Yet the authorities to which his Honour and the applicants referred use both expressions. Thus in Alister v The Queen the test is framed (at 414) in terms of it appearing "to be 'on the cards' that the documents will materially assist". The word "likely" is also used in other authorities such as in this Court in National Employers' Mutual General Association v Waind and Hill [1978] 1 NSWLR 372. 14 In my view I do not regard his Honour's summary of the relevant principles at [30] of his judgment as involving any error of principle or misstatement of the test which has been described in various ways in the authorities but in a manner which, at the end of the day, do not differ in substance. Accordingly, I do not detect that his Honour in applying the test he adopted to the terms of the subpoena before him misstated that test or committed some relevant error of principle. In my view the present is not an appropriate vehicle which would justify any reconsideration of, or expression of the limits of, the test of legitimate forensic purpose. 15 During the course of argument, reference was made to a number of authorities which were not referred to by the primary judge. It is necessary to only refer to some of those decisions. 16 The first is that of Brereton J in A v Z [2007] NSWSC 899; (2007) 212 FLR 255 where at 257 [4] his Honour said: "There is no doubt that, at the least, a subpoena is not issued for a legitimate forensic purpose unless there is a reasonable basis for supposing that the material called for will likely add, in the end, in some way or another, to the relevant evidence in the case." 17 However his Honour continued: "However, there is room for doubt as to whether the requirement goes further, such that rather than merely adding in some way or other to the relevant evidence in the case or possibly throwing light on the issues in the case, it is necessary that it be likely that the material called for will 'materially assist the case of the issuing party', although I acknowledge that at first sight, there is significant authority for that proposition. It appears to have its origin in Air Canada v Secretary of State for Trade [1983] 2 AC 394." 18 In that passage his Honour was not cavilling with the use in the test of the word "likely" but with the requirement that the documents the subject of the subpoena will "materially assist the case of the issuing party" as distinct from "merely adding in some way or other to the relevant evidence in the case". In my view that distinction does not assist the applicants in the present case as it was accepted that the documents were sought to support the applicants' case on the issue of causation. 19 The second case to which I would refer is that of the Court of Criminal Appeal in Attorney General (NSW) v Chidgey [2008] NSWCCA 65; (2008) 182 A Crim R 536 where Beazley JA, with the agreement of James and Kirby JJ, discussed the principles governing legitimate forensic purpose at 550-553 [58]-[69]. It was not suggested that the principles there expounded by her Honour in the context of a criminal case were any different to those relevant to a case such as the present. 20 At 550 [59] her Honour observed that it was not sufficient for a party seeking production of documents to merely establish that such documents are or may be relevant to an issue. She adopted as the correct test that stated by Simpson J, with the agreement of Spigelman CJ and Studdert J, in R v Saleam [1999] NSWCCA 86 at [11] where her Honour said: "The principles governing applications [for an order that documents not be produced] are no different from those governing applications for access to documents produced in answer to a subpoena. Before access is granted (or an order to produce made) the applicant must (i) identify the legitimate forensic purpose for which access is sought; and (ii) establish that it is 'on the cards' that the documents will materially assist his case." 21 Accordingly, there is more than sufficient authority to support his Honour's reference at [30] of his judgment to the requirement that the documents the subject of the subpoena "will materially assist" the applicants' case. 22 As to his Honour's use of the expression "it must be shown that it is likely [that] the documentation will materially assist on an identified issue" and his alternative statement that there be a "reasonable basis beyond speculation that it is likely" the documentation will so assist, I do not regard his use of the word "likely" as being any different in the context of a case such as the present to the expression "on the cards" which finds its genesis in the judgment of Gibbs CJ in Alister at 414. The word "likely" has a number of different shades of meaning depending on the context in which it is used and in the present context I see no reason to regard his Honour's use of the word as having any different meaning to the concept to which the Chief Justice was referring in Alister and which his Honour articulates at [27] of his judgment. 23 Nonetheless, it is noteworthy that in Koufos v C Czarnikow Limited [1969] 1 AC 350, Lord Morris of Borth-y-Gest stated at 399 that for his part he doubted whether the phrase "on the cards" had a sufficiently clear meaning or possessed such a comparable shade of meaning as to qualify it to take its place with the various other phrases which line up as expositions of the rule in Hadley v Baxendale (1854) 9 Exch 341. See also Lord Reid at 390, Lord Pearce at 415 and Lord Upjohn at 425. 24 Furthermore, as appears from the judgment of Gibbs CJ in Alister at 414, his Honour did not cavil with the statement of the test by Lord Wilberforce in Air Canada at 439 to the effect that there must be some concrete ground for belief which takes the case beyond a mere fishing expedition. The Chief Justice continued in these terms: "In the latter case the House of Lords divided on the question whether, before inspection is ordered, the documents should appear likely to support the case of the party seeking discovery, or whether it is enough that they should appear likely to assist any of the parties to the proceedings; the majority favour the former view. In both cases the proceedings were civil and not criminal." The Chief Justice then went on to note what I would regard as a statement that the test should have a lower threshold in the case of a criminal trial where a person's liberty is at stake than in the case of a civil trial. It was in that context that in my view he used the expression " on the cards ". 25 Furthermore, the applicants accepted that to succeed they had to persuade this Court that when using the word "likely", the primary judge was using it in the sense of "more likely than not". In my view there is nothing in his Honour's reasoning which would support such a contention. On the contrary, in my view he was using the word in a manner consistent with the statements in the authorities to which he had referred. In particular, as his reference at [30] of his judgment to Air Canada at 439 illustrates, his Honour was doing no more than summarising the following statement of Lord Wilberforce in that case at that page: "In Burmah Oil Co. Ltd. v. Governor and Company of the Bank of England [1980] AC 1090, the opinions referred both to the interest in the administration of justice and to the likelihood of supporting the case of the plaintiff: see per Lord Edmund-Davies, at p. 1129, ' likely to contain material substantially useful to the party seeking discovery,' per Lord Keith of Kinkel, at p. 1135H, 'a reasonable probability exists of finding ... substantial support to the contention [of the appellants].' In that case, too, the present distinction sought to be made was not relevant or argued. We are therefore free to decide this case upon a common sense interpretation of the rules and upon principle. This leads, in my opinion, to the view adopted by the Court of Appeal. (2) The degree of likelihood (of providing support for the plaintiff's case) may be variously expressed: 'likely' was the word used by Lord Edmund-Davies in Burmah Oil : a "reasonable probability" by Lord Keith of Kinkel. Both expressions must mean something beyond speculation, some concrete ground for belief which takes the case beyond a mere 'fishing' expedition. One cannot attain greater precision in stating what must be a matter of estimation. I would accept either formula." 26 It is to be noted that his Lordship's endorsement in the above passage of the view adopted by the Court of Appeal was that there must be a likelihood that the documents would support the case of the party seeking the documents (whether by discovery or subpoena). 27 Once, however, no error of principle is established, it follows that his Honour did no more than apply proper principle to the particular terms of the subpoena in the light of the issues which had been pleaded and particularised. It is not unimportant that the applicants do not seek in their statement of claim an account of profits but only damages from the defendants for the breach of their contract of employment with the first applicant and other duties alleged to be owed by them to the second and third applicants. Those damages are said to be constituted by the loss of revenue sustained by the second and third applicants as a consequence of the defection of the defendants to BGC. 28 The primary role of the documents the subject of the subpoena relate, as his Honour noted at [48], to the applicants' case that it was the defendants' breach of contract etc., that caused the applicants' loss of revenue. However, the terms of the subpoena are extremely broad requiring, in effect, the production of all documents relating to the total broking business of BGC's Energy Desk over a period which commences two years and five months before the defendants ceased to be employed by the first applicant. As such, and in the unlimited manner in which it is framed, I detect no error in his Honour's conclusion that its purpose should be properly described as "fishing": at the very least, its terms are far wider than is necessary to enable the applicants to establish the issue of causation. 29 Finally, it needs to be recognised that, absent any error of principle on his Honour's part, the issue raised by the summons for leave involves only a matter of practice and procedure in respect of which it is not the practice of this Court to grant leave to appeal in the absence of some issue of principle or miscarriage of justice both of which, in my view, are absent from the present case. 30 For the foregoing reasons I would propose that the applicants' summons for leave to appeal be dismissed with costs. 31 BASTEN JA: I agree with Tobias JA. 32 HANDLEY AJA: I agree with Tobias JA. ********** 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.