Land and Environment Court New South Wales Medium Neutral Citation: City of Ryde Council v Principal Healthcare Finance Pty Ltd [2017] NSWLEC 126 Hearing dates: 20 September 2017 Date of orders: 20 September 2017 Decision date: 20 September 2017 Jurisdiction: Class 1 Before: Molesworth AJ Decision: See orders at [42] Catchwords: PRACTICE AND PROCEDURE – motions to set aside notices to produce to court – whether notices to produce to court serve legitimate forensic purpose – principles governing legitimate forensic purpose considered – established that documents sought for legitimate forensic purpose – established that it is "on the cards" that documents will materially assist – motions dismissed Legislation Cited: Environmental Planning and Assessment Act 1979, s 80 Land and Environment Court Act 1979, s 56A Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015, r 3 State Environmental Planning Policy (Housing for Seniors or People with a Disability) 2004, cl 18 Uniform Civil Procedure Rules 2005, rr 13.4, 34.1; Pt 21, Pt 34 Cases Cited: Agricultural Equity Investments Pty Ltd v Westlime Pty Ltd [2013] NSWLEC 122 Attorney General for New South Wales v Chidgey (2008) 182 A Crim R 536; [2008] NSWCCA 65 Azar Building and Construction Services Pty Ltd v Transport Infrastructure Development Corporation [2010] NSWLEC 110 Carroll v Attorney General for New South Wales (1993) 70 A Crim R 162 Commissioner for Railways v Small (1938) 38 SR (NSW) 564 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203; (2005) NSWCA 83 Fraietta v Roads and Maritime Services [2016] NSWLEC 52 Gardiner v Regina (2006) 162 A Crim R 233; [2006] NSWCCA 190 Harvey v New South Wales [2005] NSWSC 1389 Norris v Kandiah [2007] NSWSC 1296 Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 869 Principal Healthcare Finance Pty Ltd v City of Ryde Council [2017] NSWLEC 1300 Propend Finance Pty Ltd v Commissioner of the Australian Federal Police (1994) 72 A Crim R 278 R v Robinson (1996) 89 A Crim R 42 R v Saleam (1989) 16 NSWLR 14 R v Saleam [1999] NSWCCA 86 R v Tastan (1994) 75 A Crim R 498 Re Don [2006] NSWSC 1125 Category: Procedural and other rulings Parties: City of Ryde Council (Applicant) Principal Healthcare Finance Pty Ltd (Respondent) Representation: Counsel: Ms A Rose (Applicant) Ms S Duggan SC (Respondent) Solicitors: Holding Redlich (Applicant) Mills Oakley (Respondent) File Number(s): 2017/00225184 EX TEMPORE Judgment 1. On 23 May 2017, Brown C upheld, with the consent of the parties, an appeal by Principal Healthcare Finance Pty Ltd ('Healthcare') against the refusal of a development application (being Local Development Application 2014/0419) "for the demolition of an existing aged care facility, improvements on other lots, and [the] construction of a new aged care facility at 8-14 Sherbrooke Road and 78-82 Mons Avenue, West Ryde" ('the development application'): see Principal Healthcare Finance Pty Ltd v City of Ryde Council [2017] NSWLEC 1300 ('the primary decision'). 2. Consequently, and concurrently with upholding the appeal, Brown C granted consent to the development application, subject to deferred commencement conditions of consent imposed pursuant to s 80(3) of the Environmental Planning and Assessment Act 1979. One of the many conditions of consent that is convenient to set out here is Condition 16. This condition provides that: Further restriction on occupation of the development. Notwithstanding the above condition, the development may only be occupied by residents which (sic) require high level care. For the purposes of this condition, high level care means care provided either by registered nurses, or under the supervision of registered nurses, on a 24 hour / day basis to people who need almost complete assistance with most activities of daily living. Nursing care is combined with accommodation, support services (cleaning, laundry and meals), personal care services (help with dressing, eating, toileting, bathing and moving around), and allied health services (such as physiotherapy, occupational therapy, recreational therapy and podiatry). 1. On 24 July 2017, by way of Summons, City of Ryde Council ('the Appellant Council') – who was the respondent in the proceedings before Brown C – commenced an appeal, pursuant to s 56A of the Land and Environment Court Act 1979, of the primary decision; seeking to set the primary decision and consequential orders aside and have the proceedings remitted for re-consideration. The principal ground upon which the Appellant Council bases its appeal is that the Commissioner allegedly erred in law in deciding to impose Condition 16 in circumstances where he had no power so to do. This is said to be because the imposition of such a condition was precluded by cl 18 of State Environmental Planning Policy (Housing for Seniors or People with a Disability) 2004. 2. On 25 August 2017, Healthcare filed a Notice of Motion seeking orders that the proceedings be summarily dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 ('Procedure Rules') and that the Appellant Council pay its costs of the proceedings on an indemnity basis. In essence, Healthcare claims that the proceedings should be dismissed on two inter-related bases: first, because they disclose no reasonable cause of action and, secondly, because they constitute an abuse of process. 3. With respect to the former basis, Healthcare argues that: the Commissioner made no error of law, the Appellant Council is estopped from raising the relevant issues, and the matter the subject of this appeal was not raised in the Court below. With respect to the latter basis, Healthcare argues that, inter alia, "it would be inappropriate to invalidate the process of the Court through a change of mind of the consenting party". 4. On 8 September 2017, the Appellant Council was issued by the Court with a Notice to Produce to Court ('the Notice') prepared by Healthcare. In summary, the Notice calls for the production of: 1. documents evidencing the Appellant Council's decision to instruct Holding Redlich in the present proceedings and any relevant costs agreement; and 2. a copy of the Appellant Council's resolution to commence the appeal proceedings and any documents informing that decision. 1. On 15 September 2017, the Appellant Council filed a Notice of Motion seeking an order for the Notice to be set aside on the basis that it has no discernible legitimate forensic purpose. The Appellant Council also seeks an order for its costs with respect to this motion. Conversely, Healthcare presses the Notice and denies the Appellant Council's claim. 2. Also on 15 September 2017, the Appellant Council was issued by the Court with a further Notice to Produce to Court ('the Second Notice') prepared by Healthcare. In summary, the Notice calls for the production of: a copy of the representations from local residents requesting that the Appellant Council appeal the primary decision; a copy of a plan and photographs tabled in relation to relevant Mayoral minutes; and a copy of correspondence from the Mayor to a resident relating to a potential appeal of the primary decision. 3. In Court yesterday afternoon (19 September 2017), the Appellant Council filed a second Notice of Motion similarly seeking both an order for the Second Notice to be set aside on the same basis as set out in the first Notice of Motion and an order for its costs. As above, Healthcare presses the Second Notice and denies the Appellant Council's claim. 4. It falls to the Court to decide, pursuant to the Procedure Rules, whether or not to set aside the Notices on the basis that no legitimate forensic purpose is discernible. 5. In order to resolve this dispute, it is necessary to concisely set out the competing submissions of the parties and the relevant legal principles. The Appellant Council's submissions 1. In support of its Notices of Motion, the Appellant Council made the following submissions. 2. First, it was said that Healthcare has not expressly or precisely articulated its statement of forensic purpose as required, or provided any evidence to establish such a purpose. 3. Secondly, on the assumption that the Notices are concerned with ascertaining the reason(s) why the Appellant Council has commenced the appeal and/or if it has done so properly, it was submitted that these issues have no rational or relevant connection to the issues in dispute concerning the motion to summarily dismiss the proceedings. 4. Thirdly, any suggestion or suspicion that Holding Redlich is not properly instructed was said to be insufficient to justify compelling the Appellant Council to produce the documents sought. 5. Hence, the Appellant Council argued that the Notices amount to an unacceptable fishing expedition. 6. Moreover, the Appellant Council suggested that many of the documents sought would also be protected by legal professional privilege. However, it denied that it had any obligation to assert any claim of legal professional privilege at this stage. Only in the event that the Court upheld the validity of the Notices would it be specified which documents might be protected by legal professional privilege. Healthcare's submissions 1. Healthcare denies that the Notices have no discernible legitimate forensic purpose. Conversely, Healthcare asserts that the Notices are underpinned by the clear legitimate forensic purpose of establishing who the person or body is that engaged Holding Redlich for these appeal proceedings. Healthcare submitted that this is necessary to ascertain in order for it to "understand whether the decision to commence the appeal proceedings are derived from the Council or the objectors". That is to say, Healthcare is concerned that an ulterior motivation – to empower objectors to run the proceedings in disguise – is behind the Appellant Council's appeal. 2. In this respect, Healthcare emphasised that the objectors have no right of appeal and suggested that the objectors may be funding the litigation in a matter that could constitute an abuse of process, citing Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203; (2005) NSWCA 83. 3. Relevantly, Healthcare said that the available evidence demonstrates that, after the Appellant Council was formally provided with a letter by an objector setting out the legal basis for an appeal of the primary decision, which was written by Holding Redlich on behalf of an objector, the Appellant Council subsequently commenced proceedings with Holding Redlich as its new solicitors. 4. In these circumstances, Healthcare asserted that the Notices are underpinned by the legitimate forensic purpose of identifying whether these appeal proceedings are brought by the Appellant Council as a Trojan horse for the relevant objectors. In making this assertion, Healthcare stressed, after the Court inquired whether the assertions gave rise to possible implications under the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (in particular, r 3), that it is not alleging any impropriety on the part of Holding Redlich. Rather, it is seeking further evidence to bolster its claim that the appeal proceedings constitute an abuse of process. In support of this, Healthcare made the following submissions. 5. First, Healthcare argued that the above mentioned purpose is directly connected to its argument that these appeal proceedings are an abuse of process. Secondly, Healthcare submitted that it is "on the cards" that the documents will materially assist in demonstrating that the appeal proceedings are an abuse of process in that they are, in effect, brought by objectors in the guise of the Appellant Council. Thirdly, Healthcare denied that its concern is based on mere speculation or suspicion. Instead, it was said that "there is abundant evidence to suggest that the s 56A proceedings are the result of nearby residents exerting pressure upon the Appellant to reconsider its decision to go to consent orders": citing, inter alia, a Mayoral minute (the confidential pages of which were tendered in Court as Exhibit 1) recording the receipt of representations from residents to the Appellant Council, supported by a legal opinion, that it appeal the primary decision. 6. Beyond Exhibit 1, the evidence included pages 1-6 and 8-9 of the non‑confidential sections of the Mayoral minute, which were appended to the Second Notice, being, significantly, an e-mail dated 23 June 2017 from a resident objector Jayne Walsh, to which was attached, as referred to above, a four page letter from Holding Redlich dated 22 June 2017. 7. Additionally, Healthcare said that the relevant documents could be appropriately redacted to avoid any issue with respect to legal professional privilege. 8. In the context of the Court considering, in this case, Notices to Produce to Court, the Court notes that there is a distinction between a Notice to Produce and a Notice to Produce to Court, the latter being subject to r 34.1 of the Procedure Rules. There is a significant difference between the two types of Notices to Produce, as discussed in Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 869, a decision of Barrett J, and in Norris v Kandiah [2007] NSWSC 1296, a decision of Brereton J. As Moore J explained in Fraietta v Roads and Maritime Services [2016] NSWLEC 52 at [6]: The fundamental difference is this: a Notice to Produce under Pt 21 requires the production of the documents to the opposing party. There is no filtration process that is applied in such production and, as has here been engaged, the process for resisting production in those circumstances is that of a Notice of Motion to set aside, in whole or in part, a Notice to Produce under Pt 21; but for a Notice to Produce to the Court pursuant to Pt 34, the filtration process is one that is more formalised - in the sense that the files, documents, things or the like that are specified in the Notice to Produce to the Court are in fact produced to the Court and are not automatically made available to the party who has issued the notice. There is the opportunity provided to the producing party to make objection to the release of documents produced to the Court to the party who has sought their production to the Court. It is quite a distinct and different protective regime that is engaged by Pt 34. 1. So when it comes to the consideration of whether legal professional privilege attaches to any documents produced, there will be, as Moore J expressed it, a more formalised filtration process, effectively under the supervision of the Court. The principles governing legitimate forensic purpose 1. In Attorney General for New South Wales v Chidgey (2008) 182 A Crim R 536; [2008] NSWCCA 65 at [58]–[80], Beazley JA, as Her Honour then was, set out the accepted principles governing legitimate forensic purpose, which culminated in a statement of the correct test. I gratefully repeat what Her Honour said from [58]-[64]. Principles governing legitimate forensic purpose [58] The principles that govern the application of a party to produce documents pursuant to a subpoena are well settled. In this regard, the basic principle was stated by Jordan CJ in Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 575: "… a party is no more entitled to use a subpoena … than he is a summons for interrogatories, for the purposes of 'fishing', i.e., endeavouring, not to obtain evidence to support his case, but to discover whether he has a case at all …" (Emphasis added) (Citations omitted) Mere relevance not sufficient [59] It is not sufficient for a party seeking production of documents to merely establish that such documents are or may be relevant. This is apparent from the comments of Mahoney AP in Carroll v Attorney-General for New South Wales (1993) 70 A Crim R 162. In that case, Mahoney AP was concerned with the question whether access should be given to certain documents that had been subpoenaed in criminal proceedings. His Honour said, at 181: "… the court must, in general, be satisfied that the documents are relevant to an issue for decision by the court in the litigation. It is not open to a party, as on a 'fishing expedition', to subpoena documents merely in order to determine whether they may be relevant and may be of assistance to his case in the proceeding." (Emphasis added) [60] His Honour stated, at 182, that whilst a party must show, or it must appear, that the subpoenaed documents are relevant to an issue in the proceedings, "mere relevance is not enough". His Honour continued: "In the case in which the party did not know what was the nature or the contents of the documents, the position would be plain. He could not claim to look at the documents merely to see whether they contained something which might be relevant or help his case. But in this case it is accepted that the documents are affidavits directed to showing 'that there are reasonable grounds for' the 'suspicion or belief' referred to in s 16(1). Accordingly, prima facie the documents are relevant to the issue to be decided, viz, whether there was in fact no material that could reasonably justify the relevant belief. But, in my opinion, it is not sufficient for a party subpoenaing the document to say 'the document is relevant because, if it does anything, it establishes the case against me'. He must be able to indicate that the document is relevant in the sense that it may assist his case. In the present case, that could not be claimed. Nor was it shown. At best, the claim was: 'I wish to see the document to see if it may assist my case.' That, in my opinion, is not sufficient." [61] Senior counsel for the respondent submitted that the judgment of Mahoney AP did not represent a majority statement on this issue, nor had it been endorsed or applied in later decisions. [62] Neither Kirby ACJ (as his Honour then was) (who dissented on the facts) nor Hunt AJA (who agreed with Mahoney AP in the result) made any reference to "mere relevance". However, each applied a test of "forensic purpose" and the need for it to be "on the cards" that the documents would "materially assist the accused". Accordingly, the second element of the 'test', that is, that it must be "on the cards" that documents would materially assist the case, subsumes in it the notion that "mere relevance" is insufficient. Documents may be relevant even if they do not assist a party's case. To that extent therefore, there is no difference in principle in the test applied by each of the members of the Court. [63] But in any event (and contrary to the respondent's submissions) the statement of Mahoney AP has been applied in subsequent decisions in New South Wales and Victoria: see Propend Finance Pty Ltd v Commissioner of the Australian Federal Police (1994) 72 A Crim R 278 at 282-283; Bruce Harvey v State of New South Wales (Supreme Court of New South Wales, per Johnson J at 3-4, 15 June 2005, unreported); R v Robinson (1996) 89 A Crim R 42 at 61; Gardiner v Regina [2006] NSWCCA 190; (2006) 162 A Crim R 233 at [88]; and Re Don [2006] NSWSC 1125 at [6]. The correct test [64] The test for determining whether a party is required to produce documents pursuant to a subpoena was stated by Simpson J (Spigelman CJ and Studdert J agreeing) in Regina v Saleam [1999] NSWCCA 86 at [11], in the following terms: "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 a 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. So much was established in earlier proceedings brought by this applicant: R v Saleam (1989) 16 NSWLR 14, per Hunt CJ at CL; see also R v Ali Tastan (1994) 75 A Crim R 498 per Barr AJ, as he then was." 1. As adopted by Pepper J in Agricultural Equity Investments Pty Ltd v Westlime Pty Ltd [2013] NSWLEC 122 at [35], the decision of Craig J in Azar Building and Construction Services Pty Ltd v Transport Infrastructure Development Corporation [2010] NSWLEC 110 at [20] sets out a further useful summary of some of the circumstances in which a Subpoena or a Notice to Produce (which are relevantly subject to the same principles) will be liable to be set aside on the basis that no legitimate forensic purpose can be established. Consideration 1. As identified in Attorney General for New South Wales v Chidgey, for Healthcare to be justified in gaining access to the documents that it seeks, it must establish that: (1) the documents are sought for a legitimate forensic purpose, and (2) that it is "on the cards" that the documents will materially assist Healthcare's case. I will consider these two elements seriatim. Are the documents sought for a legitimate forensic purpose? 1. Although it was not apparent at the time that the Notice was served, when the Second Notice was examined in Court (with the appended Mayoral minute document dated 27 June 2017 and the subsequently exhibited confidential pages 26 and 27 of the minute (Exhibit 1)), a fuller understanding was gained of the nature of the assertions regarding the alleged abuse of process. Although it is not appropriate to consider the strength of Healthcare's Notice of Motion to summarily dismiss the Appellant Council's appeal at this stage of the proceedings, it is appropriate to consider whether there is a prima facie or arguable case with respect to the alleged abuse of process. 2. The Court is satisfied that Healthcare has raised serious issues regarding the inter-relationship between the Appellant Council, some resident objectors, and the legal firm Holding Redlich. On its face, the Mayoral minute and, in particular, the included letter of advice from Holding Redlich does reveal an unusual transition of a legal firm acting for resident objectors becoming the legal firm acting for the Appellant Council. 3. Given the nature of the assertion regarding the abuse of process and being cognisant that resident objectors do not have appeal rights to the Court in relation to the Commissioner's decision of 23 May 2017 – in which he imposed, by consent, development approval conditions which had been drafted by the Appellant Council – Healthcare has raised serious questions regarding the correctness of the steps that occurred leading up to the Appellant Council's decision on 27 June 2017 and the subsequent commencement of these appeal proceedings by the Appellant Council, with Holding Redlich as its solicitors. 4. In the context of some of the documents sought being focused on the fee arrangements between the Appellant Council and Holding Redlich (specifically document categories one and two in the Notice), the Court observed that the former tort of champerty is no longer the law of New South Wales. In response, senior counsel for Healthcare, Ms Duggan, referred to Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd – a decision of the New South Wales Court of Appeal – wherein the Court considered an application to stay proceedings on the basis of an abuse of process, proceedings which were, in part, described as champertous proceedings. At [104], the Court clarified the nature of a potential abuse of process post-champerty: A champertous arrangement may have a particular tendency to lead to abuse of process, whether or not champerty remains tortious. But it is that tendency, and not its champertous nature as such, that must be considered in an application for a stay… 1. Considering and accepting that distinction, I am satisfied that it is proper for Healthcare to raise the potential abuse of process and to investigate whether the documents sought sustain the assertion of abuse. I am satisfied that this is not an exercise in fishing; rather the production of the documents sought will serve a legitimate forensic purpose. 2. Although I am of the opinion that, initially, Healthcare did not sufficiently articulate "expressly and with precision" the legitimate forensic purpose for which the documents were sought, I am of the opinion that, by the conclusion of the hearing before me, the necessary articulation occurred for the Court and the Appellant Council to understand the extent of the abuse of process argument. 3. I consider that the inter‑relationship between the Appellant Council, the resident objectors and Holding Redlich – first retained by at least one resident objector and subsequently retained by the Council – gives rise to issues that must be examined. In circumstances where an appeal path is not available to resident objectors, and where the Council had consented to an agreed resolution before the Commissioner, the basis of the change of position by the Council is an issue to be examined. 4. This is not to say that – at the next hearing in this matter, where Healthcare's application for summary dismissal will be heard – Healthcare will be ultimately successful on its motion to have the proceedings summarily dismissed. However, at this point in time, the Court should not stand in the way of Healthcare having access to the documents which may be very relevant. The relevancy of those documents need not be fully established at this stage. Rather, on a prima facie basis, the documents must at least be likely to be relevant. I am satisfied that Healthcare has met that requirement. Obviously, actual relevance will not be capable of being confirmed until the produced documents are examined. 5. Critically, I emphasise that, in addition to being relevant, the documents are, in my view, clearly sought by Healthcare for the legitimate forensic purpose of establishing its case that this appeal constitutes an abuse of process. The documents sought will likely be relied upon in support of this case. Is it "on the cards" that the documents will materially assist? 1. Although the Appellant Council's appeal against the Commissioner's judgment may cover a range of issues, including whether the outcome gives rise to an inconsistency with the State Environmental Planning Policy (Housing for Seniors or People with a Disability) 2004, the basis of the appeal proceedings as set out in the Summons Commencing an Appeal are not the issues which set the parameters for me to consider the two Notices to Produce. The parameters are set by the summary dismissal application, specifically, the Notice of Motion filed by Healthcare on 25 August 2017. 2. Now that the Court understands the basis upon which this summary dismissal application is brought, I am satisfied that it is "on the cards" that the documents sought in the two Notices will materially assist Healthcare's case on that motion. At the end of the day, those documents, when examined, may not be determinative or even assist Healthcare's case. Yet I am of the opinion that there is more than a suspicion that a relationship exists that is material to the consideration of whether there is an abuse of process. For present purposes, I consider that access to the documents sought is warranted and, so, I will make the appropriate orders. 3. However, in circumstances where the full extent of Healthcare's summary dismissal case was not apparent until, essentially, the Court hearing yesterday, I do not propose to make the order as to costs sought by Healthcare. Orders 1. Accordingly, the Court orders that: 1. The Notice of Motion filed 15 September 2017 and the Notice of Motion filed 19 September 2017 by City of Ryde Council are dismissed; and 2. The date, time and place at which City of Ryde Council is required to produce the documents in the Notice to Produce to Court filed 8 September 2017 is amended to be 9.00 am on 22 September 2017 at 225 Macquarie Street, Sydney (Land and Environment Court of New South Wales). ********** 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: 27 September 2017