Cenric Group Pty Ltd v TWT Property Group Pty Ltd [2018] NSWSC 1015

Supreme Court New South Wales

Medium Neutral Citation: Cenric Group Pty Ltd v TWT Property Group Pty Ltd [2018] NSWSC 1015 Hearing dates: 26 June 2018 Date of orders: 26 June 2018 Decision date: 02 July 2018 Jurisdiction: Equity - Technology and Construction List Before: Stevenson J Decision: Subpoenas set aside Catchwords: PRACTICE & PROCEDURE – subpoena – issued with leave prior to service of statements – whether for legitimate forensic purpose – whether fishing Cases Cited: Alister v R [1984] HCA 85; (1984) 154 CLR 404 ICAP Pty Ltd v Moebes [2009] NSWSC 306 Trade Practices Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90 Texts Cited: Practice Note SC Eq 11 Category: Procedural and other rulings Parties: Cenric Group Pty Ltd (Plaintiff/Respondent) TWT Property Group Pty Ltd (First Defendant) Bundanoon Sandstone Pty Ltd (Second Defendant/Applicant) Representation: Counsel: D Hughes with R Thrift (Plaintiff/Respondent) B DeBuse (First Defendant) F C Corsaro SC with G P Gee (Second Defendant/Applicant)

Solicitors: Clyde & Co (Plaintiff/Respondent) HWL Ebsworth Lawyers (First Defendant) Mills Oakley (Second Defendant) File Number(s): SC 2018/99816

Judgment 1. On 26 June 2018 I set aside subpoenas issued at the request of the plaintiff, Cenric Group Pty Ltd and directed to the Department of Finance, Services and Innovation, Westpac Banking Corporation trading as St George Bank and Troy Stratti Pty Ltd ("TSPL"). 2. These are my reasons for making that order. 3. The proceedings concern sandstone harvesting carried out by the second defendant, Bundanoon Sandstone Pty Ltd, at a site in Pyrmont. Cenric engaged Bundanoon as a subcontractor to carry out the harvesting works. The only party to whom Bundanoon has sold sandstone is the Department. 4. Cenric claims that Bundanoon owes it some $5.4 million. 5. In its Amended Technology & Construction List Statement, Cenric alleges that: 1. by the subcontract, Bundanoon agreed to pay Cenric a royalty for harvested sandstone at the rate of $1,000 per m3 of "First Class Sandstone"; and 2. by reason of various events occurring after the date of the subcontract, Bundanoon holds the proceeds of sale on trust to be distributed in accordance with the terms of the subcontract and the head contract between Cenric and TWT Property Group Pty Ltd. 1. On 1 June 2018 Bundanoon gave an undertaking to the Court that it would pay all proceeds of the sale of sandstone into a separate interest bearing account, and retain them there until further order. 2. On 15 June 2018 Hammerschlag J: 1. restrained Bundanoon from using some $570,000 held in the separate interest bearing account; 2. ordered that Bundanoon pay into the separate account $1,000 for each m3 of sandstone sold thereafter; 3. ordered that Bundanoon keep records of the sale of the sandstone from the Site and all payments made; 4. made a freezing order against Bundanoon to not reduce the value of its assets below $5,438,160.00; 5. released Bundanoon from its undertaking given on 1 June 2018; and 6. gave the parties leave to issue subpoenas returnable on 27 June 2018. 1. His Honour also made directions for the parties to exchange evidence and agree to a regime for discovery, set the matter down for hearing on 30 July 2018 and ordered that Practice Note SC Eq 11 not apply. 2. On 19 June 2018 Cenric served the three subpoenas. 3. The first subpoena was directed to the Department. It sought: 1. documents recording the contractual arrangements between the Department and Bundanoon; and 2. documents recording payments made by the Department to Bundanoon, to its parent company TSPL, and to Mr Troy Stratti, the sole director of both Bundanoon and TSPL. 1. The second subpoena was addressed to Westpac t/as St George (who are the bankers to Bundanoon and TSPL). It sought: 1. all bank statements of each of Bundanoon, TSPL and Mr Stratti; and 2. records showing details of two particular transactions to which I will refer below. 1. The third subpoena to TSPL sought: 1. that company's bank records; 2. documents referring to payments made between Bundanoon and TSPL; 3. documents recording any loans between Bundanoon and TSPL; and 4. documents recording any payments made to TSPL by the Department. 1. Although Hammerschlag J ordered that Practice Note SC Eq 11 not apply, the fact remains that Cenric sought production of these documents before it has seen the evidence of Bundanoon and before the disclosure of documents. I was informed that the parties are yet to agree on categories of documents. 2. The matter came before me in the Technology & Construction List on 22 June 2018. On that occasion I granted Bundanoon leave to file in Court a Notice to Motion to set aside the subpoenas and fixed that Notice of Motion for hearing before me on 26 June 2018. 3. Argument took the best part of the day. 4. Ultimately, the issue became whether it was appropriate to permit Cenric to call on the subpoenas when they purported to be in aid of ascertaining: 1. the volume of sandstone that Bundanoon had harvested and sold; 2. whether Bundanoon had "breached its obligation to hold the funds on trust".