Supreme Court New South Wales Medium Neutral Citation: Lefta Corporation Pty Limited v Kelly & Rigby Holdings Pty Limited [2011] NSWSC 1127 Hearing dates: 09/09/2011 Decision date: 09 September 2011 Jurisdiction: Equity Division - Technology and Construction List Before: McDougall J Decision: Notice of motion, to set aside subpoena, dismissed with costs. Catchwords: PRACTICE - subpoena - application to set aside for abuse of process - whether there is a legitimate forensic purpose underlying issue of the subpoena Legislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Circaz Pty Limited v Manolidis [2003] NSWSC 455 Custom Credit Corporation Limited v Whitehall Holdings Pty Limited (WASC unreported, No 1727 of 1991, 7 April 1992) Category: Procedural and other rulings Parties: Lefta Corporation Pty Limited (ACN 121 075 787) (Plaintiff) Kell & Rigby Holdings Pty Limited (ACN 001 766 454) (First Defendant) Lindsay Bennelong Developments Pty Ltd (ACN 002 133 931) (Second Defendant) Peter David Campbell (Third Defendant) Representation: Counsel: R T McKeand SC (Plaintiff) M R Elliott (First Defendant) Solicitors: Herbert Geer (Plaintiff) Horton Rhodes (First Defendant) File Number(s): 2011/10866 Judgment - (ex tempore) 1HIS HONOUR: I am concerned today with the plaintiff's notice of motion, filed on 1 September 2011, to set aside (as an abuse of process) a subpoena served on its principal, Mr Chandler. The subpoena seeks production of documents relating to Mr Chandler's financial position, and is intended to identify material relevant to his capacity to meet an undertaking that he has given to be responsible for the plaintiff's costs. 2The background is that on 29 July 2011, Einstein J heard the first defendant's application for security for costs. On that occasion, it became apparent that the first defendant had suggested that, if Mr Chandler gave some evidence as to his financial capacity, the first defendant might accept, in lieu of security for costs, an undertaking or guarantee from him to meet any costs for which the plaintiff might become liable. That position was put by Mr G Inatey SC, who appeared on that occasion with Mr J Hutton of counsel for the first defendant, at T7.48-.50. 3After further argument, his Honour picked up on the proposition that, in lieu of giving security for costs, the plaintiff should accommodate the first defendant's requirement through Mr Chandler's guarantee. The discussion of that point commences essentially at T25, and (if I may put it this way) the position crystallised in the course of argument as demonstrated at T26. I do not propose to set out those passages of the transcript. 4Thus, at T31, Einstein J said that the proposal suggested by the first defendant seemed to him, "to be an entirely appropriate type of approach to what [the first defendant was] interested in" T31.24-.26. 5Mr Inatey then raised the question of Mr Chandler's financial capacity. He did that in the course of advancing the submission that the preferred course was for "some cold hard cash as security. Or a bank guarantee or whatever the position may be" (T31.39-.40). To that, Einstein J replied that he was against the proposition but that, "I think it would be also appropriate to grant leave to your side if push came to shove, when you have more material in relation to Mr Chandler's world, if it's necessary, to come back". (T31.45-.49). 6Mr Inatey indicated that the first defendant would be content with that course (T31.50). 7However, Mr Inatey then asked for a direction that the plaintiff provide some details of Mr Chandler's financial circumstances. Mr McKeand SC, who appeared then and today for the plaintiff, suggested that that was not appropriate but that, "it may be appropriate if they come across something" (T32.16). 8Einstein J commented (T32.19-.20): Mr Inatey, I think that you will have to take your own course in that regard. I think I heard sufficient to be able to rule accordingly. 9I have quoted extensively from the transcript of 29 July 2011 because Einstein J did not give separate reasons. That entirely practical course was taken with the consent of the parties. No doubt, the parties accepted that his Honour's fundamental reasons had emerged sufficiently in the course of argument. 10In the result, his Honour made the following orders (so far as they are of present relevance); I have reformatted them for convenience: 1. the Court orders that Mr Chandler undertake to the Court and the first defendant to (a) personally guarantee the payment of any costs ordered against the plaintiff in favour of the first defendant in these proceedings and (b) not transfer, deal with or otherwise encumber the following properties of which he is a registered proprietor without first providing fourteen days written notice to the first defendant. (i) The whole of the land contained in certificate of title folio identifier 6/SP2834 being lot 6 in strata plan 2834 and known as 6/8 Macleay Street, Potts Point, NSW, and (ii) The whole of the land contained in certificate of title folio 39/22095 being lot 9 in deposited plan 22095 and known as 18 Nautilus Crescent, St Huberts Island, NSW 2257. 3. Those orders are made and the Court takes note of Mr Chandler's counsel's indication to the Court that he has Mr Chandler's instructions to give that undertaking. 11The plaintiff submits that a subpoena that does not relate to any relevant application is no more than a fishing expedition, and that it is an abuse of process to use the subpoena "to search for information in abstract" (outline of submissions, para 9). Mr McKeand submitted there had been no application made to Einstein J for leave to issue a subpoena, or otherwise to investigate further the question of Mr Chandler's financial capacity. 12Mr Elliott of counsel, who appeared today for the first defendant, submitted that Einstein J had clearly reserved both consideration of Mr Chandler's financial position and the opportunity to the first defendant to investigate it. In those circumstances, he submitted, the subpoena was issued for a legitimate purpose. 13In submissions in reply, Mr McKeand pointed to what he said was the width of the subpoena, submitting that it was essentially an application for discovery as to Mr Chandler's financial position. I indicated that, if that submission had been intended to be relied upon in opposition to the subpoena and in support of the notice of motion (and it had not been flagged in correspondence or otherwise) then it should have been put in chief, not in reply. I remain of that opinion. 14The short answer seems to me to be that although Einstein J took the course that the provision of a guarantee by Mr Chandler was a sufficient answer to the first defendant's claim for security, his Honour did so against the background that the first defendant's willingness to proceed in that way was characterised on, as Mr Inatey had said at T7.48-.50, Mr Chandler's providing some evidence as to his financial capacity. 15I accept that on the day in question, Einstein J was not prepared to order production of details about Mr Chandler's financial circumstances. However, that ruling (if that is what it is) was made against the background of what his Honour had said a moment earlier, in relation to the ground of leave to come back "when you have more material in relation to Mr Chandler's world". 16The first defendant submits that this is precisely what it is trying to achieve by the subpoena. 17Mr McKeand submitted that, because there had been no application to take up the grant of leave, there was no application before the court to which the subpoena could possibly relate. However, in my view, that approach involves an element of circularity. The court is required, pursuant to s 56 of the Civil Procedure Act 2005 (NSW) to deal justly, quickly and cheaply with the real issues in dispute. It is clear that, on 29 July 2011, there was an unresolved question as to the value of Mr Chandler's personal undertaking. It is clear that Einstein J did not intend to prevent further investigation of Mr Chandler's financial position, and the making of whatever application might be thought to be appropriate based on that further investigation. To say that the application should be made before the basis for it is known does not seem to me to be consistent with the dictates of s 56. To say that no application can be made because there is no information, and no information can be sought because there is no application, is a mere circularity. It is not the sort of technical approach that seems to me to sit comfortably with s 56. 18In all the circumstances, I do think that it is sufficiently clear from what happened on 29 July 2011 that there is a legitimate forensic purpose underlying the issue of the subpoena. 19Mr McKeand relied on the decision of Davies AJ in Circaz Pty Limited v Manolidis [2003] NSWSC 455. In that case, his Honour considered a submission that an undertaking as to damages that had been given was worthless. His Honour said that once an undertaking had been given and accepted, there was no power to require a party to give security for it. That position was confirmed, his Honour thought, because the interlocutory regime had been put in place pursuant to an agreement between the parties rather than the orders of the court, so that the court's power to interfere was limited. 20In my view, that has nothing to do with the present case. The interlocutory regime in question (in relation to security for costs) was put in place at a time when the first defendant's reservations, in relation to Mr Chandler's financial position, had been expressed clearly and had been recognised by the court. 21Mr McKeand relied also on what Ipp J had said in Custom Credit Corporation Limited v Whitehall Holdings Pty Limited (WASC unreported, No 1727 of 1991, 7 April 1992). His Honour was there considering the position where a plaintiff had offered an undertaking as to damages in support of an application for interlocutory relief, but there were concerns about the financial strength of those undertakings. His Honour said that it would be, in the circumstances of that case, an injustice to refuse the interlocutory injunction if to do so would preclude the plaintiff from vindicating its rights at a final hearing. Again, I do not think that that has a great deal to do with the particular facts that are relevant to the application with which I am concerned today. 22For those reasons, I am satisfied that there is a proper forensic purpose for the subpoena in question and that it should not be characterised as an abuse of process. Accordingly, I order that the plaintiff's notice of motion filed on 1 September 2011 be dismissed with costs. I will hear the parties on the question of fixing an appropriate date for the subpoena to be answered. (Discussion re date for subpoena to be answered). 23I stand the proceedings over to the directions list on 16 September 2011 and fix that date as the day when Mr Chandler is to answer the subpoena. ********** 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. Decision last updated: 21 September 2011