Federal Court of Australia

Seven Network (Operations) Limited v Fairfax Media Publications Pty Limited [2023] FCAFC 185

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellants pay the respondents’ costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellants pay the respondents’ costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

Introduction

1    These two appeals are brought against the judgment of the primary judge in Roberts-Smith v Fairfax Media Publications Pty Limited (No 43) [2023] FCA 886 (Roberts-Smith (No 43)). Leave to appeal was granted by another judge in Seven Network (Operations) Limited v Fairfax Media Publications Pty Limited [2023] FCA 1154. The first appeal is brought by Seven Network (Operations) Ltd (SNOL), Seven West Media Ltd (SWM), Australian Capital Equity Pty Ltd (ACE), Mr Kerry Stokes AC and Mr Bruce McWilliam (together, the Seven Parties). The second appeal is brought by Mr Ben Roberts-Smith and Mark O’Brien Legal (MOBL) (together, the Roberts-Smith Parties). The appeals concern the validity of subpoenas issued to the Seven Parties, and a notice to produce and a subpoena issued to the Roberts-Smith Parties. The Seven Parties rely on five grounds of appeal, and the Roberts-Smith Parties rely on three grounds which correspond to the first three grounds in the notice of appeal by the Seven Parties mutatis mutandis.

The reasoning of the primary judge

2    The primary judge began by referring to the judgment which his Honour had given in three defamation proceedings on 1 June 2023: Roberts-Smith v Fairfax Media Publications Pty Limited (No 41) [2023] FCA 555. Those proceedings were dismissed, leaving for consideration the costs of the proceedings, in relation to which the respondents in those proceedings seek an order for the payment of indemnity costs by the applicant and an order for the payment of the costs of the proceedings by two third parties, namely SNOL and ACE. The orders sought by the respondents against the third parties are set out in Roberts-Smith v Fairfax Media Publications Pty Limited (No 42) [2023] FCA 750 (Roberts-Smith (No 42)) at [2]-[3]. The primary judge said that the reasons in Roberts-Smith (No 42) should be read with his Honour’s present reasons in Roberts-Smith (No 43): [1]. Roberts-Smith (No 42) dealt with applications to set aside subpoenas to produce documents directed to each of SNOL, ACE, Herbert Smith Freehills and Addisons. His Honour refused to set aside those subpoenas and documents were produced pursuant to them: [2].

3    The respondents in the defamation proceedings then sought and obtained leave to issue ten subpoenas to produce documents together with a notice to produce directed to the applicant, those subpoenas and the notice to produce relating to the respondents’ application for an order that SNOL and ACE pay the costs of the proceedings: [3]. The Seven Parties sought orders under r 24.15 of the Federal Court Rules 2011 (Cth) setting aside the subpoenas served on them. The Roberts-Smith Parties also brought an application to set aside para 1 of the notice to produce issued to Mr Roberts-Smith and the subpoena to MOBL.

4    The primary judge then referred at [9]-[18] to the relevant principles for the setting aside of a subpoena, and referred to a number of cases, including Wong v Sklavos [2014] FCAFC 120; (2014) 319 ALR 378 at [12]. We will return to the applicable principles in detail below.

5    The primary judge then dealt with the principles relating to orders for costs against a third party, and referred at [19] to Roberts-Smith (No 42) at [6]-[9], where a number of the relevant cases were referred to, including Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178 at 192-193 (Mason CJ and Deane J, with whom Gaudron J agreed). As the passage extracted in Roberts-Smith (No 42) at [7] indicates, the High Court recognised in that case a general category of case in which an order for costs should be made against a non-party, namely circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation.

6    The primary judge then referred to the reliance placed by the respondents on the decision of the Full Federal Court in Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) [2012] FCAFC 50; (2012) 200 FCR 154 (Dunghutti), and in particular the observations of the Full Court at [88]-[89] to the effect that the only precondition to the exercise of the power to make an order for costs against a non-party is that the non-party has a sufficient connection with the unsuccessful party and the litigation to warrant the Court exercising its jurisdiction. The primary judge referred to the submission by the Seven Parties that the Full Court was not laying down a test of “sufficient connection”, but was merely referring at a high level of abstraction to the principles which are set out in the authorities and which the Full Court had considered at [75]-[85]. The primary judge expressed the view that “that is correct to a point because the authorities articulate the relevant principles and the reference to a sufficient connection invites attention to the principles which inform what is sufficient”: [21]. However, the primary judge also stated that the decision involves the exercise of a discretion, and the Full Court’s statement in Dunghutti is quite clear and there is authority that the categories of case which may attract the exercise of the power to award costs against a third party are not closed and should not be, referring to Kebaro Pty Ltd v Saunders [2003] FCAFC 5 at [103]; and FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 at [210] (Basten JA): [21]. The primary judge said that regard must be had to the relevant principles in order to determine the issue of relevance, but his Honour did not consider that a statement of the relevant principles beyond what his Honour had said was called for, or perhaps even possible, at that stage: [21]. The primary judge also referred to the reliance placed by the Seven Parties on an observation by Callinan J in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 26; (2001) 179 ALR 406 at [36], that mere encouragement of litigation would not suffice to attract a liability of costs, but noted that that was a case where his Honour did make an order, and a case which illustrated the importance of considering the facts of the particular case: [22].

7    The primary judge then dealt with the application by the Seven Parties, stating that the respondents had refined the scope of the subpoenas in some respects, but that had not led to a resolution of the dispute: [23].

8    At [25], the primary judge set out the terms of the subpoena directed to Mr McWilliam as follows:

1.    One copy of each document (including emails, file notes, written correspondence, text messages, and messages sent over encrypted messaging services including WhatsApp, Signal and Telegram) that comprises, or records the contents of, a communication that refers to or relates to the proceedings and to which you and at least one of the following people are parties:

(a)    Ben Roberts-Smith; and/or

(b)    Mark O’Brien, Paul Svilans and/or Monica Allen of Mark O’Brien; and/or

(c)    Arthur Moses SC; and/or

(d)    Bruce McClintock SC; and/or

(e)    Matthew Richardson SC.

2.    One copy of each document (including emails, file notes, written correspondence, text messages, and messages sent over encrypted messaging services including WhatsApp, Signal and Telegram) that refers to or relates to:

(a)    the loan facility between Ben Roberts-Smith and Seven Network Operations Ltd (SNOL) which was recorded in writing on 6 August 2019; or

(b)    the loan agreement between Ben Roberts-Smith and Australian Capital Equity Pty Ltd dated 24 June 2020.

9    The primary judge referred to the subpoena directed to Mr Stokes as being in similar terms. The primary judge referred to Mr Roberts-Smith as being the applicant in the main proceedings, MOBL being his solicitors, and the persons identified in para 1(c), (d) and (e) being his counsel.

10    The primary judge referred to the details of the loan facility and the loan agreement referred to in para 2 as having been set out in Roberts-Smith (No 42) at [15]-[18]. The loan facility with SNOL was referred to at [15] of that previous judgment, which identified the purpose of the funding as being to meet Mr Roberts-Smith’s legal costs associated with his defamation proceedings and the proceedings relating to the Inspector-General of the Australian Defence Force (IGADF) inquiry into war conduct. It expressed a recognition that an aspect of Mr Roberts-Smith being “a target by our opposition (Nine/Fairfax) in the stories the subject of the actions, arises out of your employment by Seven”, and expressed a preparedness to make funding available for legal costs and disbursements based on SNOL’s understanding as to there being a strong case to defend Mr Roberts-Smith’s reputation and “the unfairness aspects, and [the] fact that the company wishes for you to use experienced solicitors and Senior Counsel – who may be more expensive than you would ordinarily engage as an individual”. The loan agreement with ACE was also expressed to be for the purpose of funding Mr Roberts-Smith’s legal costs associated with his defamation proceedings and the IGADF inquiry into war conduct. Clause 6 of the agreement with ACE required Mr Roberts-Smith to make an additional payment in the event that he succeeded in being awarded a monetary sum in relation to his claim, in which event “the Company will be entitled to an additional payment equal to 15% of the proceeds that exceed the amount owing on the loan balance and this is payable by you to the Company on receipt of those proceeds”. Clause 7 of the agreement with ACE dealt with oversight and management of the defamation proceedings or inquiry, and provided as follows:

The Company understands the SNOL legal team have considerable experience with the defamation proceedings and inquiry referred to in clause 1. In the Company’s view, the SNOL legal team’s continued oversight and management of the defamation proceedings and inquiry is important for a successful outcome to the proceedings. You agree to take whatever actions SNOL reasonably requires to appeal or to recover costs.

11    The primary judge referred to paras 1 and 2 of the subpoenas directed to SWM and SNOL respectively as being in similar terms to para 1 of the subpoenas directed to Mr McWilliam and Mr Stokes respectively, except that in the former case the subpoenas seek the corporate records involving Mr McWilliam and Mr Stokes, and in the latter case the personal records of each of those persons is sought: [26]. The primary judge referred to para 1 of the subpoena directed to ACE as being in similar terms to para 1 of the subpoenas directed to Mr McWilliam and Mr Stokes respectively, and paras 1 and 2 of the subpoenas directed to SWM and SNOL respectively, except that in the case of ACE, no specific person was identified and the reference was to any person acting on behalf of ACE: [27].

12    The primary judge then set out the terms of para 5 of the subpoenas directed to SWM and SNOL respectively (there being no paras 3 and 4) as follows:

5.    From document repositories in respect of which Bruce McWilliam, Kerry Stokes AC, or Ryan Stokes is the custodian, each document that comprises, or records the contents of, a communication between any person acting on behalf [of] SNOL, and any person acting on behalf of ACE, that refers or relates to:

(a)    the inclusion of clause 7 in the ACE Loan Agreement; and/or

(b)    ACE’s understanding that “the SNOL legal team have considerable experience with the defamation proceeding”, as referred to in clause 7 of the ACE Loan Agreement; and/or

(c)     ACE’s view that “the SNOL legal team’s continued oversight and management of the defamation proceedings and inquiry is important for a successful outcome to the proceeding”, as referred to in clause 7 of the ACE Loan Agreement; and/or

(d)    “the SNOL legal team’s continued oversight and management of the defamation proceedings”, as referred to in clause 7 of the ACE Loan Agreement.

13    The primary judge referred to para 2 of the subpoena directed to ACE as being in different terms, but dealing with a similar subject matter as follows:

2.    From document repositories relating to Kerry Stokes AC, Ryan Stokes and Robin Waters, each document:

(a)    recording or referring to ACE’s reasons for including clause 7 in the ACE Loan Agreement.

(b)    recording the basis for ACE’s understanding that “the SNOL legal team have considerable experience with the defamation proceeding”, as stated in clause 7 of the ACE Loan Agreement.

(c)    recording or referring to the reasons for ACE’s view that “the SNOL legal team’s continued oversight and management of the defamation proceedings and inquiry is important for a successful outcome to the proceeding”, as stated in clause 7 of the ACE Loan Agreement.

(d)    that comprises, or records the contents of, or records or refers to the existence of, a communication between a person acting on behalf of ACE, and a person (including an in house or third party lawyer) acting [on] behalf of SNOL, that refers or relates to:

i.    the inclusion of clause 7 in the ACE Loan Agreement; and/or

ii.     ACE’s understanding that “the SNOL legal team have considerable experience with the defamation proceeding”; and/or

iii.    ACE’s view that “the SNOL legal team’s continued oversight and management of the defamation proceedings and inquiry is important for a successful outcome to the proceeding”; and/or

iv.    “the SNOL legal team’s continued oversight and management of the defamation proceedings”, as referred to in clause 7 of the ACE Loan Agreement.

14    The primary judge referred to the statement by counsel for the respondents that the reference in the chapeau of that paragraph was not intended to be any different from the reference in the chapeau to para 5 of the subpoenas directed to SWM and SNOL respectively, and thus said that it was appropriate that an order be made amending para 2 of the subpoena directed to ACE so that it reads as follows:

From document repositories in respect of which Kerry Stokes AC, Ryan Stokes or Robin Waters is the custodian, each document

The primary judge said that the same amendment should be made to para 5 of the subpoena directed to ACE as the same error had been made in that paragraph.

15    The primary judge referred to para 6, 7 and 8 in the subpoenas directed to SWM and SNOL respectively as being in the same terms as follows:

6.    One copy of each minute of a meeting of the Board of Directors of SWM that refers to:

(a)    the proceedings; and/or

(b)    the loan facility provided by SNOL to Ben Roberts-Smith; and/or

(c)    the ACE Loan Agreement.

7.    One copy of each resolution of the Board of Directors of SWM that refers to:

(a)    the proceedings; and/or

(b)    the loan facility provided by SNOL to Ben Roberts-Smith; and/or

(c)    the ACE Loan Agreement.

8.    From document repositories in respect of which Bruce McWilliam, Kerry Stokes AC, or Ryan Stokes is the custodian, one copy of each document provided to a director of SWM, or the Board of Directors of SWM, that refers to:

(a)    the proceedings; and/or

(b)    the loan facility provided by SNOL to Ben Roberts-Smith; and/or

(c)    the ACE Loan Agreement.

The primary judge referred to paras 3, 4 and 5 of the subpoena directed to ACE as being in materially similar terms to paras 6, 7 and 8 of the subpoenas directed to SWM and SNOL, except that the custodians in the case of ACE were Mr Kerry Stokes, Mr Ryan Stokes and Mr Robin Waters: [32].

16    The primary judge then divided the documents sought into the following categories:

(a)    the first category are documents involving communications between Mr McWilliam or Mr Stokes, or a person acting on behalf of ACE, on the one hand, and the applicant (Mr Roberts-Smith) or any one or more of his solicitors and counsel, on the other hand, that refer or relate to these proceedings. The primary judge said that para 1 of the subpoenas directed to Mr McWilliam and Mr Stokes, paras 1 and 2 of the subpoenas directed to SWM and SNOL, and para 1 of the subpoena directed to ACE fall into this category: [34];

(b)    the second category are documents which refer or relate to the loan facility between the applicant and SNOL and the loan agreement between the applicant and ACE, and the primary judge said that paras 1 and 2 of the subpoenas directed to Mr McWilliam and Mr Stokes fall into this category: [35];

(c)    the third category is related to the second and seeks documents in document repositories with respect to which certain named persons are custodians and which refer or relate to cl 7 in the loan agreement between ACE and the applicant and various statements therein. The primary judge said that para 5 of the subpoenas directed to SWM and SNOL and para 2 of the subpoena directed to ACE fall into this category: [36]; and

(d)    the fourth category seeks documents which, speaking generally, arise from the proceedings of and concerning the directors of the relevant company and refer to the main proceedings or the loan facility or the loan agreement. The primary judge said that paras 6, 7 and 8 of the subpoenas directed to SWM and SNOL and paras 3, 4 and 5 of the subpoenas directed to ACE fall into this category: [37].

17    The primary judge then referred to Mr Stokes as the Chairman of SNOL and stated that, although the letter was not signed, Mr Stokes was said to have guaranteed repayment pursuant to the funding arrangements embodied in the SNOL loan facility: [38]. The primary judge referred to Mr McWilliam as the General Counsel and Commercial Director of SWM, and said that it was clear that he was the active party in the negotiations for the Seven Parties in their dealings with the applicant: [38]. The primary judge then referred to the evidence in support of the third party costs orders as referring to Mr McWilliam’s attendance at the hearing, either in person on 12 occasions or via the online streaming of the hearing on 71 occasions, and his Honour also referred to evidence that Addisons was providing reports about the proceedings to SNOL and Mr McWilliam and that a representative of Addisons was viewing the proceedings: [39].

18    The primary judge then referred at [40] to the respondents as having identified in correspondence “the broad basis of their claim” for costs against SNOL and ACE, and referred to a letter to ACE dated 14 May 2021 and a letter to ACE’s solicitors on 19 June 2023 in which the respondents referred to the following matters:

1.    ACE is Mr Roberts-Smith’s primary, if not sole, source of funds for the Defamation Proceedings;

2.    ACE has a substantial financial interest in the outcome of the Defamation Proceedings;

3.    SNOL’s legal team retains oversight and management of the Defamation Proceedings;

4.    SNOL has a significant non-financial interest in the outcome of the Defamation Proceeding as a commercial rival of the corporate Respondent to the Defamation Proceeding; and

5.    Mr Roberts-Smith is the moving party in the Defamation Proceeding, not a defendant.

19    The primary judge then turned to the paragraphs in the subpoenas beginning with para 1 in the subpoenas directed to Mr McWilliam and Mr Stokes, paras 1 and 2 in the case of the subpoenas directed to SWM and SNOL, and para 1 of the subpoena directed to ACE (being the first of the four categories of documents referred to above): [42]. The primary judge said that the essence of what was sought were communications between, on the one hand, Mr McWilliam and Mr Stokes (except that in the case of ACE, it is any person acting on behalf of the company) and on the other hand, one or more of the applicant and his legal team, both solicitors and counsel, that refer or relate to the proceedings. The primary judge referred to the issue of legal professional privilege as not having been raised at this stage and that it remained to be seen whether it would be raised later: [42]. The primary judge referred to the context as being one in which SNOL and, at times, ACE, had their own solicitors (namely Addisons) viewing the trial and providing regular reports about it: [42]. The primary judge referred to the evidence given by the solicitor for the Seven Parties to the effect that a search of Mr McWilliam’s mailbox at SNOL by the solicitors for the Seven Parties had resulted in the identification of 8,650 emails (including attachments) between Mr McWilliam and one or more of the applicant and his counsel: [42]. The primary judge then referred to the evidence that the SNOL loan facility was said to be prompted in part by SNOL’s wish (for reasons set out) that the applicant be represented by experienced solicitors and senior counsel “who may be more expensive than you would ordinarily engage as an individual” and that in the case of the ACE loan agreement, ACE took the view (which it recorded in the agreement) that the SNOL legal team’s continued oversight and management of the defamation proceedings and inquiry is important for a successful outcome to the proceedings, and that the applicant agreed to pay to ACE 15% of the proceeds received by the applicant should the defamation proceedings be successful: [42]. The primary judge then said that at least SNOL and ACE accept that the applicant does not have the means to pay a costs order in the main proceedings: [42].

20    The primary judge then said that for the reasons which follow, his Honour was satisfied that the first category of documents satisfied the test for a subpoena to issue documents: [43]. Those reasons were as follows.

21    First, the primary judge said that the documents have an apparent relevance and could possibly throw light on the issues which arise on the application for orders for the payment of costs by third parties: [44]. The primary judge said that it was “on the cards” that the documents will do so, referring to the reasoning in Roberts-Smith (No 42) at [27], in which his Honour said the following:

A subpoena will be set aside if it is oppressive or an abuse of process. The absence of a legitimate forensic purpose or a conclusion that the issuing party is fishing for a case rather than evidence in support of a case, will lead to the setting aside of a subpoena. An issuing party need not establish that the documents being sought will definitely advance his or her case and it is sufficient if the documents could possibly throw light on the issues or it appears to be “on the cards” that they will do so.

The passage at [27] then quoted from Beaumont J’s judgment in Trade Practices Commission v Arnotts Ltd (No 2) [1989] FCA 340; (1989) 88 ALR 90 at 103 to the effect that the subpoena in question satisfied the test of apparent relevance as the documentation called for “could possibly throw light on the issues in the main case”. The primary judge said that, while it is true that the party which seeks the issue of a subpoena may satisfy the test by showing that it is “on the cards” that the documents sought will materially assist “its case”, that was but one aspect of the test, as the passage in Wong v Sklavos set out at [11] of his Honour’s reasons makes clear: [44].

22    Second, the primary judge said that while the use of the phrase “refers to or relates to” calls for a careful examination of whether there is, in effect, a request for general discovery, the use of the phrase is not necessarily objectionable and it all depends on the context in which the phrase is used, referring to Lucas Industries Ltd v Hewitt (1978) 45 FLR 174 and Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921.

23    Third, the primary judge said that the terms of the relevant paragraphs do provide a clear dividing line in that they do not seek all of Mr McWilliam’s communications in relation to the proceedings, but only those involving a communication with the applicant and his legal advisors, or one or more of those persons. Further, the primary judge accepted the respondent’s submission that the fact that a properly defined category of documents happens to capture a large number of documents does not mean that the subpoena is bad: [46]. The primary judge then said that it is likely that the whole of the relationship will need to be examined to determine whether there is a connection or involvement sufficient to warrant a third party costs order: [46]. For example, his Honour said, it may be relevant that there is no direction or instruction because the third party fully informed approves of the course of action proposed, and said that those are matters to be considered when all the circumstances are before the Court: [46]. The primary judge then referred to the possibility of a subpoena limited to directions and instructions having been canvassed in argument, and said that his Honour would put to one side the submission that that places an unreasonable burden on those making the judgment as to relevance and that, in fact, such a limitation may increase the time needed to answer the subpoena: [46]. The primary judge then said at [46] that the response to such a limitation was that such communications are likely to be relevant, but they are not the only communications which may be relevant, a point which his Honour had made in Roberts-Smith (No 2) at [40]. At [40] of that earlier judgment, the primary judge had said the following:

The part played in the litigation by SNOL and ACE is undoubtedly relevant to the third party costs application, although it is but one factor. No doubt a direct instruction from one of those parties to the applicant about the conduct of the litigation might be the best evidence of direct and active involvement. Further, it is likely that the respondents will at the appropriate time place significant weight on clause 7 of the applicant’s agreement with ACE. Neither of those observations mean that other forms of involvement or degrees of involvement are not relevant, albeit, considered alone, they may not carry the day for the respondents. The fact is that where documents may possibly throw light on the issues, then they are properly the subject of a subpoena to produce them.

24    Finally, the primary judge noted the similarities between the paragraphs in issue and the paragraphs which survived a challenge of insufficient particularity in Australian Competition and Consumer Commission v Shell Co of Australia Ltd [1999] FCA 212; (1999) 161 ALR 686, referring in particular to para 16 of the subpoena in that case, although that appears to be a misprint and that a reference to para 13 was intended.

25    The primary judge then referred to having considered the evidence of the solicitor for the Seven Parties as to the time and effort required to collect and collate the required documents in relation to an argument about oppression in complying with the subpoenas: [48]. The primary judge accepted that the task is a reasonably substantial one, but did not consider the requests to be oppressive having regard to the issues and all the circumstances: [48].

26    The primary judge then turned to the second category of documents, encompassing documents that refer to or relate to the loan facility or the loan agreement: [49]. The primary judge referred back to the earlier findings concerning the position of Mr Stokes and Mr McWilliam. The primary judge accepted the respondents’ submission that it is on the cards that the documents will shed significant light on the connection between the applicant and SNOL and ACE or, put another way, the involvement of SNOL and ACE in the proceedings, including by revealing negotiations on the terms on which Mr Stokes or Mr McWilliam agreed for SNOL and ACE to fund the proceedings, such as the requirement that SNOL exercise oversight and management of the proceedings: [49]. The primary judge referred to the submission by the Seven Parties that cl 7 in the ACE loan agreement speaks for itself and there is no need to consider any negotiations that took place, and said that if this were an action by one of the parties on the agreement and it was clear that the agreement was wholly in writing, then there might be some force in that, but it is not and, in any event, that point has not been reached: [49].

27    The primary judge then expressed the same conclusion in relation to the third category of documents, largely for the same reasons: [50]. The primary judge added that the words “oversight and management” are words of somewhat indefinite scope.

28    The primary judge then said that the position with respect to the fourth category of documents was clear, and said that the SNOL and ACE parties (SNOL being a subsidiary of SWM) are corporate entities which act through, among other organs, the board of directors: [51].

29    Accordingly, subject to the amendments which his Honour had identified, the primary judge dismissed the application to set aside the subpoenas to produce documents directed to the Seven Parties.

30    The primary judge then turned to the application by the Roberts-Smith Parties. At [53], the primary judge set out the terms of the subpoena to produce documents directed to MOBL, as refined by the respondents, in the following terms:

1.    One copy of each document (including emails, file notes, written correspondence, text messages, and messages sent over encrypted messaging services including WhatsApp, Signal and Telegram) that comprises, or records the contents of, a communication that refers to or relates to these proceedings and to which at least one principal or employee of Mark O’Brien Legal and at least one of the following people are parties:

(a)    Bruce McWilliam; and/or

(b)    Kerry Stokes; and/or

(c)    Ryan Stokes; and/or

(d)    an in-house or third-party lawyer representing Seven Network (Operations) Limited; and/or

(e)    an in-house or third-party lawyer representing Seven West Media Limited; and/or

(f)    an in-house or third-party lawyer representing Australian Capital Equity Pty Ltd.

The primary judge said that that paragraph is in similar terms to the first category of documents in the case of the Seven Parties and his Honour upheld the subpoena for the same reasons that were given in that context: [54].

31    The primary judge then set out the terms of para 1 of the notice to produce directed to the applicant in the following terms:

1.    One copy of each document (including emails, file notes, written correspondence, text messages, and messages sent over encrypted messaging services including WhatsApp, Signal and Telegram) that comprises, or records the contents of, a communication that refers to or relates to this proceeding and to which you and at least one of the following people are parties:

a.    Bruce McWilliam; and/or

b.    Kerry Stokes; and/or

c.    Ryan Stokes; and/or

d.    an in-house or third-party lawyer representing Seven Network (Operations) Limited; and/or

e.    an in-house or third-party lawyer representing Seven West Media Limited; and/or

f.    an in-house or third-party lawyer representing Australian Capital Equity Pty Ltd.

The primary judge said that his Honour reached the same conclusion in relation to that paragraph: [56].

32    Accordingly, the primary judge dismissed the application to set aside the subpoena to produce documents directed to MOBL and the notice to produce directed to the applicant: [57].

Ground 1

33    Ground 1 in the notice of appeal by the Seven Parties is that the primary judge erred at [44] in concluding that the documents sought by:

(a)    para 1 of the subpoenas directed to Mr McWilliam and Mr Stokes AC;

(b)    paras 1 and 2 of the subpoenas directed to SWM and SNOL; and

(c)    para 1 of the subpoena directed to ACE,

had an apparent relevance and could possibly throw light on the issues which arise on the respondents’ application for orders for the payment of costs by SNOL and ACE. Ground 1 in the amended notice of appeal by the Roberts-Smith Parties is in the same terms, except that it refers to the documents sought by the subpoena to produce directed to MOBL and para 1 of the notice to produce to the applicant.

34    The Seven Parties submit that the primary judge erred in his Honour’s reasoning at [44] in expressing the principle of apparent relevance by using the words “could possibly throw light on the issues which arise” (T15.18-24). The Seven Parties submit that the correct principle is that the party issuing the challenged subpoenas carries the onus of establishing that the documents sought will materially assist on an identified issue in the proceeding, or there is a reasonable basis beyond speculation that it is likely that the documents will so assist (T3.3-6). They submit that the test must be applied to the “entire class of documents caught by the subpoena or each relevant limb” (T3.9-10). In the present case, they submit that it could not be said that there was a reasonable basis beyond speculation that “all the documents” (emphasis in original) sought by the subpoenas might add in some way to the relevant evidence in the case or materially assist in respect of the relevant issue (written submissions at [20]). When asked in oral address whether references to “the entire class of documents or all documents” meant each and every one of them without knowing what they are, the Seven Parties fell back on the proposition that it must be on the cards that the class of documents will be likely to assist, which may be satisfied by “substantially all the documents” satisfying the test of apparent relevance and that more than merely “some documents” among many irrelevant documents must be relevant (T7.38-9.23). In reply, the Seven Parties submitted that the question of apparent relevance requires the Court to look at the way that the category is framed and ask whether it is a category of documents which will materially assist on the issue, and that question must be approached with a degree of common sense and practicality (T60.24-33). That submission corresponds to the way in which the respondents expressed the relevant question as being whether “the class of documents” for which the subpoena calls satisfies the relevant test (T46.29-30). The appellants relied on the acceptance by the respondents before the primary judge (confirmed in argument before us at T43.34-38) that the subpoenas may catch many “glancing references” to the applicable subject matter because of the reference to the proceedings and the loan agreements (T27.12-15).

35    We reject the submission that the primary judge applied an incorrect principle to the assessment of the validity of the subpoenas. The use of the words “could possibly throw light on the issues which arise” cannot be taken literally or in isolation. The use by Beaumont J in Trade Practices Commission v Arnotts Ltd (No 2) of the word “possibly” in that phrase was not used in any speculative sense but is to be understood as conveying the notion that documents sought could reasonably be expected to throw light on some of the issues in the proceedings: Re Force Corp Pty Ltd (Receivers and Managers appointed) (in liq) [2018] NSWSC 896 at [24] (Gleeson JA); Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 at [48] (Bell P). That meaning is reinforced at [44] of the primary judge’s reasoning by his Honour’s statement that it was “on the cards” that the documents will throw light on the issues which arise. That colloquialism refers to the existence of a realistic and genuine prospect, as the Seven Parties submitted (T3.15-16; T15.22-23).

36    The primary judge also referred to the Full Court’s decision in Wong v Sklavos at [12], the relevant passage being as follows:

The party issuing a subpoena bears the onus of demonstrating that the subpoena has a legitimate forensic purpose in relation to the issues in the proceedings: Santos Ltd v Pipelines Authority (SA) (1996) 66 SASR 38 at 52. A subpoena may be set aside if it requires the production of documents which do not have apparent relevance to the issues arising on the pleadings: Trade Practices Commission v Arnotts Ltd (No 2) (1989) 21 FCR 306; 88 ALR 90; Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No 4) (2010) 269 ALR 76; [2010] FCA 398 at [39]-[40]; McHugh v Australian Jockey Club Ltd (No 2) [2011] FCA 724 at [13]; McIlwain v Ramsey Food Packaging Pty Ltd (2005) 221 ALR 785; [2005] FCA 1233 at [35]; Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 558 at [17]. Other cases have used different terminology, but with essentially the same effect, for example, by requiring that, viewed realistically, the documents sought have a bearing on an issue which is not unreal, fanciful or speculative (R v Barton (1981) 2 NSWLR 414 at 420), or that the material sought is reasonably likely to add in some way to the relevant evidence in the case (Spencer Motors Pty Ltd v LNC Industries Ltd (1982) 2 NSWLR 921 at 927), or that it be “on the cards” that the documents sought will materially assist the party at whose request the subpoena has been issued: Allister v R (1984) 154 CLR 404 at 414; 51 ALR 480 at 481; Tamawood Ltd v Habitare Developments Pty Ltd [2009] FCA 364 at [13] and [35]-[38].

37    There is an ambiguity in that passage as to whether the words towards the beginning of the last sentence “essentially the same effect” are intended to mean that the three sets of terminology in the last sentence are all to the same effect, or whether those examples of terminology are to the same effect as the earlier concepts referred to, namely “a legitimate forensic purpose” and “apparent relevance”. In our view, the latter interpretation is to be preferred. There is clearly a material difference between saying, on the one hand, that the documents sought have a bearing on an issue which is not unreal, fanciful or speculative or that the material sought is reasonably likely to add in some way to the relevant evidence in the case, and, on the other hand, that the documents sought will materially assist the party at whose request the subpoena has been issued. The first two of those expressions do not require that the documents sought will materially assist the party requesting that the subpoena be issued, and are neutral on that question. In our view, the passage indicates that the fundamental principle is that the party issuing a subpoena must demonstrate that the subpoena has a legitimate forensic purpose, and that it may be set aside if it is cast in terms which require the production of documents which do not have apparent relevance to the issues in the case.

38    That principle is consistent with the reasoning of the NSW Court of Appeal in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council, which provides authority for the following propositions:

(a)    the language of “tests” should be eschewed; whether a subpoena should be set aside depends on whether it involves an abuse of process, and it will be an abuse of process if it is not issued for a legitimate forensic purpose: Bell P at [60]-[61], with whom McCallum JA agreed at [98];

(b)    it is not necessary to show that the documents subpoenaed will or will be likely to assist the case of the party that has issued the subpoena: Bell P at [57]-[58], Brereton JA at [86] and [96], McCallum JA at [98] and [100];

(c)    it is sufficient to show that the subpoena can plausibly be seen to relate to an issue or issues in the proceedings or to cast light on such an issue, and the subpoena is not in other respects too vague or oppressive: Bell P at [57], McCallum JA at [98] and [100];

(d)    put differently, it is sufficient to show that there is a reasonable basis for supposing that the material called for would likely add, in the end, in some way or another, to the relevant evidence in the case: Brereton JA at [89], with whom McCallum JA agreed at [100]; and

(e)    it is sufficient to show that the documents sought are apparently relevant in the sense that it can be seen that the documents sought to be produced by way of subpoena will materially assist on an identified issue or that there is a reasonable basis beyond speculation that it is likely that the documents subpoenaed will so assist: Bell P at [65], with whom McCallum JA agreed at [98].

Both the Seven Parties and the Roberts-Smith Parties accept that there is no aspect of Bell P’s reasoning that this Court should not follow (T10.12-15; T36.5-8). In our view, the appellants are correct in adopting that position, and we respectfully agree with the NSW Court of Appeal’s reasoning in that case.

39    In our view, having regard to those principles, there was no error by the primary judge in applying the principle of whether the documents sought have an apparent relevance in the sense that they could reasonably (interpreting his Honour’s use of “possibly” not in the speculative sense but in the sense of “on the cards”) throw light on the issues which arise on the application for orders for the payment of costs by third parties. The primary judge correctly referred to those issues by way of the respondents’ correspondence with ACE and its solicitors which his Honour had extracted at [40]. We will consider the scope of those issues further in relation to Ground 3 below.

40    At this point, it should be observed that the documents captured by the descriptions of categories of documents in the subpoenas may well produce documents of varying degrees of relevance. Some may be centrally relevant, others peripherally relevant, while others may appear to be of negligible relevance when considered as individual documents. In the present case the respondents accepted that many of the documents may contain only “glancing references” to the relevant subject matter. However, there may well be probative significance in the volume of such communications, even if certain individual communications might appear to be relatively trivial. That appears from the transcript of the hearing before the primary judge on 27 July 2023 to be the nature of the argument sought to be advanced by the respondents, given their contention that the combined weight of 8,600 glancing references converts them into something very relevant to the exercise of the ultimate discretion by the Court (T29.9-13). In this regard, Tadgell JA (which whom Winneke P and Phillips JA agreed) said in Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 141 in relation to the evidence in that case:

A true picture is to be derived from an accumulation of detail. The overall effect of the detailed picture can sometimes be best appreciated by standing back and viewing it from a distance, making an informed, considered, qualitative appreciation of the whole. The overall effect of the detail is not necessarily the same as the sum total of the individual details …

41    Whether a particular category of documents in the subpoena impermissibly requires the production of documents which are unlikely to have any bearing on the issues is, as the Seven Parties submitted in reply, to be approached as a matter of common sense and practicality. If an issue as to inappropriate width arises, ordinarily consideration should then be given to whether the category might be redrafted, either by way of altering its primary terms or by way of specific exclusions to the documents which are called for. That is exactly how the primary judge approached the matter in the present case, by giving express consideration at [46] to the proposal put forward by the Seven Parties as to redrafting the subpoena so as to confine it to documents constituting directions or instructions as to the conduct of the proceedings. We consider that matter further in relation to Ground 3 below. At this stage, it is sufficient to note that, although it would appear that a number of individual documents caught by the subpoenas are likely to be of marginal relevance considered on their own, the accumulation of detail of those individual documents may well be relevant to demonstrate a relationship between the various parties which supports the making of a third party costs order, and in any event, it was conceded that it is not necessary that each and every document be relevant. Accordingly, in our view the respondents did establish that the categories of documents are cast in such terms as to have apparent relevance to the issues which arise in relation to the seeking of third party costs orders.

Ground 3

42    It is convenient to turn next to Ground 3, which is that the primary judge erred at [46] in concluding that the documents sought by the subpoenas were not liable to be set aside because, in the context of the third party costs order application, the “whole of the relationship” between SNOL and ACE, on the one hand, and Mr Roberts-Smith and his legal team, on the other hand, “will need to be examined to determine whether there is a connection or involvement sufficient to warrant a third party costs order”.

43    The Seven Parties submit that the primary judge’s approach is inconsistent with the requirement that a subpoena must have “apparent relevance”, namely that the documents sought will materially assist on an identified issue in the proceedings, or that there is a reasonable basis beyond speculation that it is likely the documents subpoenaed will so assist. They submit that, despite recording the identified issues at [40], the primary judge undertook no consideration of the relevance of the documents sought by the subpoenas to those issues, that being an essential task. They submit that the primary judge said that the only precondition to the exercise of the power to order costs against a non-party is that the non-party has a “sufficient connection” with the unsuccessful party and the litigation to warrant the Court exercising the jurisdiction, although they recognise that the primary judge did accept “to a point” that the reference to “sufficient connection” was at a high level of abstraction of the principles set out in the authorities which the Full Court considered in Dunghutti. However, they submit that the only principle that the primary judge proceeded to apply to determine the issue of relevance was that of “sufficient connection” as stated in Dunghutti at [89], and that was the basis of his Honour’s conclusion at [46] that the whole of the relationship between the parties will need to be examined to determine whether there is a connection or involvement sufficient to warrant a third party costs order. They submit that the statement in Dunghutti at [89] cannot be read in isolation from the preceding paragraphs of the Full Court’s judgment, which they submit expressed the relevant principles in more precise terms which require that the third party in question play an active part in the conduct of the litigation.

44    In our view, these criticisms are misplaced. The primary judge was well aware that the Full Court in Dunghutti was not laying down a broad principle of “sufficient connection”, as the Full Court had considered in detail the relevant principles in a more precise way in the paragraphs which preceded [89]. The primary judge cross-referred at [19] to his Honour’s reasons in Roberts-Smith (No 42) where those principles and some of the earlier authorities were referred to, including authority which refers to the element that the non-party played an active part in the conduct of the litigation. That explains why the primary judge accepted the Seven Parties’ submission “to a point” to the effect that the reference to a “sufficient connection” invites attention to the principles which inform what is sufficient: [21]. However, the primary judge also referred to authority to the effect that the categories of case which may attract the exercise of the power to award costs against the third party are not closed, and the Seven Parties did not appear to dispute that proposition. The primary judge thus considered that this was not the appropriate stage at which the ultimate question of principle as to whether the circumstances in the present case called for that exercise of discretion should be decided: [21].

45    The way in which the issues had been expressed in correspondence in support of the third party costs order, and in particular the notion of oversight and management retained by SNOL’s legal team, do call for an analysis of the relationship as a whole between the relevant parties. The primary judge’s reasoning at [46] is particularly concerned with the proposed redrafting of the subpoena at the behest of the Seven Parties so as to confine it to communications which amount to a direction or instruction as to the conduct of the defamation proceedings. That position was maintained on this appeal (T23.17-19). The primary judge correctly reasoned that directions or instructions were not the only communications which may be relevant, being the point which his Honour had made in Roberts-Smith (No 42) at [40]. The primary judge recognised in that passage that other forms of involvement, considered alone, may not be sufficient for the respondent to succeed, but documents relating to other forms of communication or involvement may throw light on the issues and thus were properly the subject of the subpoena to produce them. In our view, there is no error in that reasoning, which amply justifies the width of the subpoenas as capturing documents which are apparently relevant to the issues arising on the third party costs order application.

Ground 2

46    Ground 2 in the notice of appeal by the Seven Parties is that the primary judge erred at [45] in concluding that:

(a)    para 1 of the subpoenas directed to Mr McWilliam and Mr Kerry Stokes AC;

(b)    paras 1 and 2 of the subpoenas directed to SWM and SNOL; and

(c)    para 1 of the subpoena directed to ACE,

were not liable to be set aside by reason of those paragraphs requiring the production of documents between the appellants and Mr Robert-Smith and his legal team, solicitors and counsel, that “referred to or related to” the proceedings below. Ground 2 in the amended notice of appeal by the Roberts-Smith Parties is to the same effect mutatis mutandis.

47    The Seven Parties submit that the use of the phrase “referred to or related to” as applied to the subject matter to which it attaches (being “the proceedings” and “the loan agreements”) is objectionable. They submit that in cases where the phrase “refers to or relates to” has been held not to be objectionable, the subject matter to which the phrase attaches has more particularity than in the present case. They submit that the references to “the proceedings” and “the loan agreements” are broad and unlimited and are likely to call for documents pertaining to trivial matters, or matters of routine administration.

48    We do not accept those criticisms. Although the subject matter of “the proceedings” and “the loan agreements” calls for a large number of documents, that subject matter is sufficiently specific and concrete for the recipients of the subpoenas to identify the applicable documents without having to form the kind of judgment which is required in relation to discovery. We note that there is no ground of appeal challenging the primary judge’s conclusion at [48] that the requests are not oppressive having regard to the issues and all the circumstances.

Ground 4

49    Ground 4 in the notice of appeal by the Seven Parties is that the primary judge erred at [49] to [51] in concluding that it was “on the cards” that the documents sought by the subpoenas that refer to or relate to the loan facilities or agreements between Mr Roberts-Smith and SNOL and ACE “will shed significant light on the connection between the applicant and the SNOL and ACE parties, or put another way, the involvement of the SNOL and ACE parties in the proceedings, including by revealing negotiations on the terms on which Mr Stokes or Mr McWilliam agreed for SNOL and ACE to fund the proceedings, such as the requirement that SNOL exercise oversight and management of the proceedings”.

50    The Seven Parties repeat their submission in relation to Ground 3 that the connection at large between Mr Roberts-Smith, on the one hand, and ACE and SNOL, on the other hand, is not in issue on the third party costs application. In addition, they submit that there is a further error in that the loan agreements have been produced to the respondents and speak for themselves, and the internal deliberations of the companies in respect of those loans, the negotiations of their terms, and the subjective motivations for seeking the inclusion of terms in the agreements could not be relevant to the proper construction of the loan agreements or to any of the five issues relied upon by the respondents in support of the third party costs orders.

51    We do not accept those criticisms. As the primary judge stated at [49], this is not an action by one of the parties on the agreement, and nor is it clear that the agreement was wholly in writing. The relevant questions involve issues of fact, particularly issues concerning SNOL’s oversight and management and ACE’s financial interest, together with SNOL’s non-financial interest, in the outcome of the defamation proceedings. Documents pertaining to the underlying rationale for cl 7 of the ACE loan agreement, including its perceived importance and benefits, may well throw light on the conduct which was subsequently undertaken, as well as the financial and non-financial interests at stake for SNOL and ACE. Documents concerning the state of mind of experienced and sophisticated commercial parties will often throw light on the nature and existence of the objective facts. As we have indicated above in relation to Ground 3, the relevant inquiry into the nature of the relationship between the parties is not to be narrowly confined.

Ground 5

52    Ground 5 is that the primary judge erred at [42] in finding that:

(a)    in the ACE loan agreement, Mr Roberts-Smith “agreed to pay ACE 15% of the proceeds received by [him] should the defamation proceedings be successful”; and

(b)    “at least SNOL and ACE accept that [Mr Roberts-Smith] does not have the means to pay a costs order in the main proceedings”.

53    As to the first of those alleged errors, the Seven Parties say that the relevant clause was in fact that “the Company will be entitled to an additional payment equal to 15% of the proceeds that exceed the amount owing on the loan balance and this is payable by you to the Company on receipt of those proceeds”. We do not regard the primary judge’s finding at [42] as erroneous. The primary judge was plainly referring to the net proceeds to be received by the applicant; that is, what was left after repayment of the loan from ACE. We note that when the matter was drawn to the attention of the primary judge on 18 August 2023 (at T13.14-21), the primary judge said that there was no error when the statement was read in context, and we agree with his Honour’s response.

54    As to the second alleged error, the primary judge’s reference to SNOL and ACE accepting that Mr Roberts-Smith does not have the means to pay a costs order in the main proceedings was taken from an express (if perhaps ambiguous) statement made at the hearing before the primary judge on 27 July 2023 by counsel for the Seven Parties (at T8.8-9). The Seven Parties say that his Honour erred because that statement was directed only to identifying what was in issue on the subpoena application, which did not involve Mr Roberts-Smith’s financial means. The primary judge did not see that there was any inaccuracy in his Honour’s paraphrase of that statement (T13.18-19 on 18 August 2023). Even if the statement were to be construed as pertaining only to identifying the issues arising on the subpoena application, it is difficult to see how the statement has any material bearing on the application to set aside the subpoenas which, as the Seven Parties submit, did not involve the issue of Mr Robert-Smith’s financial means. There is therefore no merit in either limb of Ground 5.

Conclusion

55    Accordingly, the appeals should be dismissed with costs.

Associate:

Dated:    30 November 2023

SCHEDULE OF PARTIES