Potts L.N. v Dennis Jones & Co. Pty Ltd & Ors [1995] FCA 490

CATCHWORDS

PRACTICE AND PROCEDURE - notice to produce having effect as subpoena - application to set aside - application by cross respondent that cross claimant, which procured issue of subpoena to third party be denied access to documents produced by third party - direction by Australian Securities Commission under sub-s 55 (1) of Australian Securities Commission Law that publication of documents and evidence be "prevented" - whether direction impairs Court's power to issue subpoena to produce documents - whether direction impairs party's right to procure issue of subpoena and/or right to serve notice to produce.

PRACTICE AND PROCEDURE - subpoena to produce documents directed to third party - application by cross respondent that cross claimant which issued subpoena not have access to documents produced in answer - "public interest immunity" - "deal" between cross respondent and Australian Securities Commission ("ASC") that cross respondent would give evidence at hearing before ASC and that ASC would make order under sub-s 55 (1) of Australian Securities Commission Law preventing publication of evidence and documents - whether public interest immunity arising from public interest in facilitation of hearings by ASC - whether "deal" can override ordinary court processes of subpoena and notice to produce.

CORPORATIONS - Australian Securities Commission ("ASC") - Australian Securities Commission Law, sub-s 55 (1) - whether direction by ASC preventing publication of evidence and documents impairs processes of subpoena and notice to produce available in Federal Court.

Australian Securities Commission Law, (Cth) ss 51, 52, 55, 57.

Corporations Law (Cth) ss 829, 830, 837.

Federal Court of Australia Act 1976 (Cth), ss 38, 59.

Federal Court Rules, Order 27, r 2; Order 33, r 12.

Sanko Steamship Co Ltd v Sumitomo Australia Ltd (1992) 37 FCR 353 (FCA/Sheppard J)

LESTER NEIL POTTS v DENNIS JONES & CO PTY LIMITED & ORS (No 2)

No NG 882 of 1992

Lindgren J

Sydney

14 July 1995

IN THE FEDERAL COURT OF AUSTRALIA)

NEW SOUTH WALES DISTRICT REGISTRY) No NG 882 of 1992

GENERAL DIVISION )

BETWEEN:

LESTER NEIL POTTS

Applicant

AND:

DENNIS JONES & CO PTY LIMITED

First Respondent

DENNIS JONES

Second Respondent

RAY SMITH

Third Respondent

NATIONAL MUTUAL PROPERTY SERVICES (AUSTRALIA) PTY LTD

Fourth Respondent

CITIBANK SAVINGS LTD

Fifth Respondent

PERMANENT TRUSTEE COMPANY LTD

Sixth Respondent

LANCE KELLY FINANCIAL MANAGEMENT PTY LTD

Seventh Respondent

CITIBANK SAVINGS LTD

Cross Claimant

DENNIS JONES & CO PTY LTD

First Cross Respondent

DENNIS JONES

Second Cross Respondent

RAY SMITH

Third Cross Respondent

CORAM: Lindgren J

PLACE: Sydney

DATE: 14 July 1995

MINUTE OF ORDERS

THE COURT ORDERS:

1. THAT the motion by the first cross respondent, Dennis Jones & Co Pty Limited and the second cross respondent Dennis Jones, brought on notice of motion filed on 8 March 1995 be dismissed.

2. THAT the said first cross respondent and second cross respondent pay the costs of the cross claimant, Citibank Savings Ltd, of that motion.

3. THAT the cross claimant, Citibank Savings Ltd, have leave to inspect documents produced to the Court by the Australian Securities Commission pursuant to subpoena issued on 4 April 1995 and documents produced or to be produced to the Court by the said first and second cross respondents pursuant to notice to produce dated 3 March 1995.

4. THAT the said first and second cross respondents have liberty to apply on three days' notice.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA)

NEW SOUTH WALES DISTRICT REGISTRY) No NG 882 of 1992

GENERAL DIVISION )

BETWEEN:

LESTER NEIL POTTS

Applicant

AND:

DENNIS JONES & CO PTY LIMITED

First Respondent

DENNIS JONES

Second Respondent

RAY SMITH

Third Respondent

NATIONAL MUTUAL PROPERTY SERVICES (AUSTRALIA) PTY LTD

Fourth Respondent

CITIBANK SAVINGS LTD

Fifth Respondent

PERMANENT TRUSTEE COMPANY LTD

Sixth Respondent

LANCE KELLY FINANCIAL MANAGEMENT PTY LTD

Seventh Respondent

CITIBANK SAVINGS LTD

Cross Claimant

DENNIS JONES & CO PTY LTD

First Cross Respondent

DENNIS JONES

Second Cross Respondent

RAY SMITH

Third Cross Respondent

CORAM: Lindgren J

PLACE: Sydney

DATE: 14 July 1995

REASONS FOR JUDGMENT (No 2)

(on motion by first cross respondent Dennis Jones & Co Pty Ltd and second cross respondent Dennis Jones brought on notice of motion filed on 8 March 1995).

NATURE OF PROCEEDINGS

The first cross respondent, Dennis Jones & Co Pty Ltd ("DJC") and the second cross respondent, Dennis Jones ("Jones"), to whom I shall refer collectively as "the Jones interests", apply by notice of motion filed on 8 March 1995 for an order that para 1 of a notice to produce dated 3 March 1995 served on them by the fifth respondent ("Citibank") be set aside. By means of para 1 of the notice to produce, the Jones interests are required to produce to the Court the following documents for the purpose of evidence:

"1. All documents, correspondence, file notes, transcripts of evidence, relating to any investigations conducted by the Australian Securities Commission into and/or the Second Respondent in relation to procuring investments in the National Mutual Property Trust."

Related to the notice to produce is a subpoena for production of documents addressed to the Australian Securities Commission ("ASC") which Citibank procured to be issued on 4 April 1995. This requires ASC to produce to the Court the following documents:

"All transcripts of testimony, documents tendered and written submissions presented to the Commission in connection with the hearing which led to the banning order made by the Commission against Dennis Lloyd Jones in or about September 1994."

The ASC has produced documents to the Court pursuant to that
subpoena. The Jones interests ask that Citibank be denied access to those documents.

The motion to set aside paragraph 1 of the notice to produce and the Jones interests' objection to the granting of access are closely related and were heard together.

THE SUBSTANTIVE PROCEEDINGS AND THE COSTS ISSUE ON CITIBANK'S CROSS CLAIM

On 4 July 1995 I published Reasons for Judgment (No 1) in these proceedings. Those Reasons refer to the substantive proceedings and the costs issue on Citibank's cross-claim which remains outstanding as against the Jones interests as follows:

"The substantive proceedings were part heard before me over the period 7, 9 and 10 November 1994 when they were settled save as to a cross claim by the fifth respondent ('Citibank') against the first respondent ('DJC') and the second respondent ('Jones') (I will refer to DJC and Jones collectively as 'the Jones interests').

The latest form of that cross claim is 'an amended cross-claim of the fifth respondent' filed on 29 March 1994, but I will refer to it simply as 'Citibank's cross claim'. Citibank's cross claim was, on 10 November 1994, stood over to a date to be fixed and the parties to it were given leave to apply to have it listed for directions. Pursuant to that leave, it has been listed. Citibank seeks an order that it be dismissed. The Jones interests consent to the making of that order. There is an issue as to costs. The Jones interests say that since they will have had total success in the sense that Citibank's cross claim is to be dismissed by
consent, there should be an order that Citibank pay their costs. Citibank says that costs should not follow the event because of special circumstances to which I will refer below. The costs issue is set down for hearing on 31 July 1995 and, pursuant to directions, Citibank and the Jones interests have supplied outlines of their submissions on costs."

It is in connection with the hearing to take place on 31 July 1995 on costs that Citibank has served the notice to produce on the Jones interests and procured the issue of the subpoena to ASC.

BACKGROUND FACTS

The following account of the background facts is taken from Reasons for Judgment (No 1):

"The following is a brief sketch of relevant facts as pleaded by the applicant ('Potts') in his fourth amended statement of claim filed on 7 November 1994 (there have been no findings of fact).

Jones was a director and the principal executive officer of DJC. The third respondent ('Smith') was an employee of DJC. Potts was induced by DJC, through its agents Jones and Smith, to enter into an alleged tax saving arrangement ('the Arrangement'). This involved his obtaining a line of credit from Citibank to acquire units in an unlisted property trust ('the Trust') managed by the fourth respondent ('NMPS') or a company associated with it, and the borrowing of further money from NMPS for the acquisition of further units in the Trust. Potts was to mortgage his house to Citibank as security and to mortgage the units to the sixth respondent ('Permanent') which was the trustee of the Trust, as security for the further advance.

Central to Potts' claim were misrepresentations by DJC through its agents Jones and Smith. These were
that as a result of the Arrangement Potts would get a refund of his income tax each year; that he would lose money on the first three years, break even on the fourth year and then proceed to make money; that at the end of ten years there would be a profit of approximately $140,000 plus the increase in value in the units; that there was no chance of his losing his house; that there was no chance of anything going wrong because the units could not decrease and could only increase in value; that the Arrangement was the best thing that Potts could do; and that this would be seen to be so once the rent cheques from the Trust came in.

The Arrangement disappointed Potts' expectations. By his application filed on 1 December 1992 he sought to be extricated from it. In particular, he sought to be relieved from the house mortgage to Citibank and the unit mortgage to Permanent. He applied for various orders under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) as well as damages. (An amended application was filed on 8 January 1993 but the amendments made by it are not material for present purposes.)

Potts pleaded numerous 'causes of action' and statutory bases for relief. These referred to various sections of the Acts already mentioned, the Contracts Review Act 1980 (NSW), and to unconscionable dealing and negligent misrepresentation and advice.

Much of the pleading was directed to establishing a basis for a holding that NMPS, Citibank, Permanent and the seventh respondent ('LKFM') were answerable for the conduct of DJC through Jones and Smith. It was pleaded that DJC, through Jones and Smith, acted in various respects as agent for NMPS, LKFM, Citibank and Permanent. DJC's alleged agency for Citibank was said to arise, not only directly, but also from the fact that LKFM was itself an agent of Citibank and, to Citibank's knowledge, engaged DJC to assist it in the promotion and marketing of Citibank's financial products.

There were numerous cross claims by which various respondents sought to make other respondents liable to them in respect of any liability which the cross claimants might be held to have to Potts. One of these was Citibank's cross claim."

On 1 September 1994 a hearing was held, apparently pursuant to
s 51 of the Australian Securities Commission Law ("the ASC Law"). That section empowers ASC to hold hearings for the purposes of the performance or exercise of any of its functions and powers under certain legislation. Pursuant to s 102 of the ASC Law, ASC had previously, on 31 May 1994, delegated to Nigel Norman Mainwaring ("Mr Mainwaring") the powers and functions conferred or expressed to be conferred on ASC by or under, inter alia, s 51 of the ASC Law. Mr Mainwaring conducted the hearing as delegate of ASC.

Jones gave evidence to Mr Mainwaring in that capacity. The result of ASC's investigation was the making of an order banning Jones from acting as a representative of a dealer or of an investment adviser for ten years. Omitting formal parts the banning order was as follows:

"NEGATIVE GEARED INVESTMENT SCHEME -

10 YEAR BANNING ORDER FOR AGENT

Former National Mutual agent, Dennis Lloyd Jones, has been banned by the Australian Securities Commission (ASC) from acting as a representative of a dealer or of an investment adviser for 10 years.

Mr Jones became a licensed representative of National Mutual Assets Management Ltd (NMAM) in 1987 and was issued with a proper authority by NMAM in 1989. NMAM withdrew this proper authority in January 1993. Mr Jones operated as an agent for the National Mutual group of companies in the Manly and Mosman areas of Sydney.

The ASC alleged that Mr Jones had contravened securities laws in making securities recommendations for which there was no reasonable basis, contrary to section 851 of the Corporations Law; and that he had failed to give particulars of commissions, fees and other benefits or advantages, contrary to section 849 of the Law.

The securities recommendations concerned a negative geared investment scheme in which Mr Jones recommended that the client:

* refinance his or her home mortgage with Citibank Savings Ltd, or in some cases with GIO Australia, in order to obtain a line of credit facility. Part of this line of credit would be used to purchase an initial quantity of units in the National Mutual Australian Property Trust or in the National Mutual Sharemarket Trust Fund (the Trusts);

* apply to borrow funds through NMAM to acquire further units in the Trusts, usually in the ratio of four to one or seven to three, depending on the initial number of units purchased; and

* utilise the remainder of the line of credit facility to service repayments to NMAM and to the line of credit provider (Citibank or GIO).

The ASC alleged that the amounts invested by members of the public as a result of Mr Jones' recommendations were about $10 million (the face value of units purchased).

The ASC did not seek any finding of dishonesty by Mr Jones and none was made against him.

In making the banning order, the ASC asked the delegate to take into account that Mr Jones did not oppose the making of the order and the matter had been resolved with his co-operation without proceeding to a full hearing. The delegate also took into consideration Mr Jones' age (55), and that he has not worked in the financial or securities industries since January 1993."

On the date of Jones' giving evidence before Mr Mainwaring, but prior to his giving that evidence, an agreement was reached between ASC and Jones (through his solicitors) by which ASC "agreed not to publish or make use of" certain material. As well, it was agreed that ASC would publish a press release as agreed by it and Jones. Subsequently, but only as recently as 2 May 1995 (a little over a month prior to
the hearing before me), ASC gave the following direction purportedly pursuant to s 55 of the ASC law:

" ... that the publication of the items referred to in the Schedule hereto be prevented and restricted.

SCHEDULE

1 All evidence given before the Commission or Mr Mainwaring as a delegate of the Commission relating to or concerning the hearing in relation to Dennis Lloyd Jones.

2 All matters contained in all documents lodged with the Commission or Mr Mainwaring as a delegate of the Commission relating to or concerning the hearing in relation to Dennis Lloyd Jones.

3 All other documents relating to or concerning the hearing in relation to Dennis Lloyd Jones."

The submissions now made by the Jones interests arise out of the giving of that direction and the antecedent making of the agreement between ASC and Jones which gave rise to the direction

RELEVANT HISTORY OF THE LITIGATION

The following relevant history of the litigation is extracted from my Reasons for Judgment (No 1):

"Apparently on 29 June 1993 settlement was reached between Potts and NMPS and Permanent. On 19 November 1993, pursuant to leave, Potts filed a notice of discontinuance of the proceedings as against DJC, Jones and Smith.

On 14 October 1994 DJC and Jones filed a 'notice of removal as solicitor' pursuant to Order 45 r 6 (b) determining the authority of Mr Le Compte, now of Le Compte Davey, solicitors, to act as their solicitor in the proceedings.

When the proceedings were called on before me for hearing on 7 November 1994, no legal representative appeared for DJC or Jones, but Mr Jones appeared in person. In view of the fact that what then happened and its consequences may assume some significance in the determination of the costs issue, I will not deal with this matter in detail. It suffices to say that DJC and Jones took no part in the hearing and an affidavit by Mr Jones which had been filed on 15 June 1994 ('Jones' affidavit') was not read.

The hearing proceeded in substance as a dispute between what I may refer to as 'the National Mutual interests' and Citibank. In the light of Potts' settlement with the National Mutual interests, his prosecution of the proceedings was, in substance, for their benefit."

ISSUES ON COSTS OF CITIBANK'S CROSS CLAIM

The nature of the Jones interests' submissions before me in relation to the notice to produce and the subpoena do not make it necessary for me to give a detailed account of the issues which will arise on the hearing on the question of the costs of Citibank's cross claim. The nature of those issues is, however, revealed by written outlines of submissions of Citibank and the Jones interests. I gave an account of them in Reasons for Judgment (No 1). It is sufficient to say that the Jones interests will submit that costs should follow the event so that Citibank should be ordered to pay their costs of Citibank's cross claim (which is, as noted earlier, to be dismissed by consent), whereas Citibank will submit that in
several respects the conduct of the Jones interests in their dealings with Potts and in connection with the conduct of the substantive proceedings make the case one of those rare ones where a wholly successful party should be denied costs. Indeed, Citibank will seek an order that the Jones interests pay Citibank's costs of the proceedings.

RELEVANT LEGISLATION

In order to understand the parties' submissions, it is necessary to have regard to the relevant provisions of the Corporations Law ("the Law") and the ASC Law involved in the case.

Paragraphs 829 (d), 830 (1) (b) and 837 (e) and (2) of the Law are as follows:

"829Subject to section 837, the Commission may make a banning order against a natural person (other than a licensee) if:

(a) ...; (b) ...; (c) ...;

(d) he or she contravenes a securities law; ...

830 (1) Where this Division empowers the Commission to make a banning order against a person, the Commission may, by written order, prohibit the person:

(a) .......................

(b) ... -- for a specified period;

from doing an act as;

(c) a representative of a dealer;

(d) a representative of an investment adviser; or

(e) a representative of a dealer or of an investment adviser;

whichever the order specifies.

837 (1) The Commission shall not:

(a) ...; (b) ...; (c) ...;

(d) ...;

(e) make, ... , an order under section 830 against a person;

(f) ...; (g) ...;

unless the Commission complies with subsection (2) of this section.

(2) The Commission shall give the applicant, licensee or person, as the case may be, an opportunity:

(a) to appear at a hearing before the Commission that takes place in private; and

(b) to make submissions and give evidence to the Commission in relation to the matter."

Sub-sections 51 (1), 52 (1) and (2), 55 (1) and (2) and 57 (1) and (3) of the ASC Law provide as follows:

"51 (1) The Commission may hold hearings for the purposes of the performance or exercise of any of its functions and powers under a national scheme law of this jurisdiction, ... .

52 (1) Subject to sections 53 and 54 [not presently relevant], the Commission may direct that a hearing take place in public or take place in private.

(2) In exercising its discretion under subsection (1), the Commission shall have regard to:

(a) whether evidence that may be given, or a matter that may arise, during the hearing is of a confidential nature or relates to the commission, or to the alleged or suspected commission, of an offence;

(b) any unfair prejudice to a person's reputation that would be likely to be caused if the hearing took place in public;

(c) whether it is in the public interest that the hearing take place in public; and

(d) any other relevant matter.

55 (1) Where, at a hearing that is taking place in public or in private, the Commission is satisfied that it is desirable to do so, the Commission may give directions preventing or restricting the publication of evidence given before, or of matters contained in documents lodged with, the Commission.

(2) In determining whether or not to give a direction under subsection (1), the Commission shall have regard to:

(a) whether evidence that has been or may be given, or a matter that has arisen or may arise, during the hearing is of a confidential nature or relates to the Commission, or the alleged or suspected Commission of an offence against an Australian law;

(b) any unfair prejudice to a person's reputation that would be likely to be caused unless the Commission exercises its powers under this section;

(c) whether it is in the public interest that the Commission exercise its powers under this section; and

(d) any other relevant matter.

57 (1) This section applies where a national scheme law of this jurisdiction requires the Commission to give a person an opportunity to appear at a hearing and to make submissions and give evidence to it.

(2) .......................................

(3) If the person does not wish to appear at the hearing, the person may, before the day of the hearing, lodge with the Commission any written submissions that the person wishes the Commission to take into account in relation to the matter concerned."

SUBMISSIONS OF THE PARTIES

Submissions by the Jones interests

The Jones interests submit that the Court should:

(a) set aside paragraph (1) of Citibank's notice to produce dated 3 March 1995: and

(b) deny access to documents produced by ASC on either one or both of the following bases:

(i) an objection by the Jones interests to the production of those documents to the Court;

(ii)an objection by the Jones interests to the granting to any other party of access to those documents.

The bases of the Jones interests' stance were said to be collectively, and in the alternative, separately:

(A) the direction made by ASC; and

(B) a claim for public interest immunity.

In relation to (A) (ASC's direction), the Jones interests submit that when considering any s 55 direction, the Court should bear in mind that ASC is statutorily obliged to have regard to the matters referred to in sub-s 55 (2) of the ASC Law in determining whether to give the direction. They submit that when considering the particular direction made in this case, the Court should bear in mind (i) that the direction was given pursuant to a "deal" between ASC and Jones whereby Jones agreed to participate at the hearing, not to oppose the making of a banning order, and to cooperate with ASC (thereby saving it the necessity of a "full" hearing) (ii) that the hearing was required by statute to be a private hearing; (iii) that the proceedings of ASC were "regulatory" and not "criminal" in nature; (iv) that Citibank's desire to have access is "only" in relation to a costs order; and (v) that ASC has appeared yet "led no evidence or made any submissions opposing [the Jones' interests] application".

The Jones interests observe that the banning order was made under ss 829 (d) and 830 of the the Law, and that the effect of s 837 (1) (e) and (2) of the Law is that before making such
an order, ASC must have:

(a) given Jones an opportunity to appear;

(b) held a hearing; and

The Jones interests point out that by reason of para 837 (2) (a) of the Law and sub-s 57 (1) of the ASC Law, the effect of sub-s 57 (3) of the ASC law was that Jones was not obliged to appear at the hearing; they submit that it should be accepted that he did so by reason only of the "deal" which he struck through his solicitors with ASC, and in particular, ASC's undertaking to make a direction under s 55.

The Jones interests sought to distinguish NCSC v Bankers Trust Australia Ltd (1989) 1 ACSR 330 and The Sanko Steamship Company v Sumitomo Australia Ltd (1992) 37 FCR 353 (see later).

In relation to (B) above (the claim for public interest immunity), the Jones interests put that the "cornerstone" of their claim is that Jones did a "deal" with a regulatory authority in relation to a "regulatory matter" as distinct from "criminal proceedings". They submit that the "public interest in such arrangements between regulatory authorities and legally advised persons (especially in relation to
relatively sophisticated matters concerning securities dealings) is apparent and recognised by the Courts", and refers to Trade Practices Commission v TNT Australia Pty Ltd, (1995) ATPR 41-375 (FCA/Burchett J) at pp 40,164-40,166. They submit that the benefits to the public from such arrangements are obvious.

Submissions by Citibank

Citibank submits that s 55 of the ASC law imposes obligations of non-disclosure upon witnesses who appear at ASC hearings and does not give rights to them. It submits that a direction under s 55 of the ASC law has no impact upon the Court's ordinary power to compel the production of documents in civil proceedings, nor upon the prima facie entitlement which a party has to utilise the subpoena process and to inspect documents produced. Citibank refers to Sanko Steamship Co Ltd v Sumitomo Australia Ltd (1992) 37 FCR 353 (FCA/Sheppard J).

Submissions by ASC

ASC neither supports nor opposes the Jones interests' application that I deny to Citibank access to the documents which ASC has produced to the Court in response to the subpoena. It makes a short submission. It accepts that the making by it of a direction under s 55 of the ASC law does not
excuse it from producing documents to a court pursuant to subpoena.

It accepts that a court's order expressed in a subpoena "overrides" the effect of a direction under s 55. It submits that a court may and should "consider the issue of access to those documents afresh", and that although it is appropriate for a court to take into account ASC's direction in determining the issue of access, that issue should not be determined otherwise than in accordance with the general principles laid down in such cases as, Waind v Hill and National Employers' Mutual General Association Ltd [1978] 1 NSWLR 372 (CA), adding:

"That is because, the circumstances which arise in the context of the proceedings in which the subpoena is issued and the competing interests of the parties in those proceedings, are likely to be different to those considered by the Commission at the time of the making of the section 55(1) direction. ... The public interest to be considered by a Court in balancing the justice between parties would involve a consideration of factors which the Commission would not have had cause to take into account in making the section 55(1) direction."

REASONING

The terms of the direction in the present case raise a threshold question which was not addressed in submissions. Sub-section 55 (1) empowers the Commission to give a direction preventing or restricting publication. But the direction
given in the present case is that publication be prevented and restricted. In the context of sub-s 55 (1), I think that the word "restricting" signifies something more limited than "preventing", and that in that context the two words are mutually exclusive. The obvious distinction which suggests itself is that "preventing" signifies that publication must not take place to anyone whereas "restricting" signifies that publication must not take place to certain persons only or for certain purposes only. If the power to "restrict" publication is to be exercised, words spelling out the nature and extent of the restriction are necessary. It seems to me that sub-s 55 (1) does not permit both words to be used without qualification in relation to the same documents as they have been here.

But I do not decide the case on the basis that the direction is invalid. Both parties have treated the direction as one which "prevented" publication absolutely. In view of the conclusion which I reach below in favour of Citibank on that basis, it has not been necessary for me to have the proceedings re-listed in order to allow opportunity for submissions to be made in relation to the question of the validity of the notice referred to above.

This Court's power to compel the production of documents is provided for in the Federal Court of Australia Act 1976 (Cth), ss 38 and 59 (2) (c), and in the rules made pursuant to it, in particular, Order 27 rr 2, 6. On request of a party, the Registrar must, unless the Court otherwise orders, issue a subpoena: Order 27, sub-r 6 (1).

Order 33 sub-r 12 (1) provides that where a party to proceedings serves on another party a notice requiring the latter to produce at any trial or hearing in the proceedings any document for the purpose of evidence and the document is in the person's possession, custody or power, the party served must, unless the Court otherwise orders, produce the document in accordance with the notice without the need for any subpoena for production. Order 33 r 12 gives a notice to produce the same coercive effect as a subpoena for production: compliance is mandatory unless the Court otherwise orders: CCOM Pty Ltd v Jiejing Pty Ltd (1992) 37 FCR 1 (FCA/Cooper J); Trade Practices Commission v Abbco Ice Works Pty Ltd (1994) 52 FCR 96.

Subpoenas to produce documents and notices to produce are important in the administration of justice. Documentary evidence is often more reliable than oral testimony in truth finding. It would require clear language to reveal a legislative intention to displace the Court's power to issue the subpoena to ASC and to deprive Citibank of the right to procure the issue of that subpoena and of the right to serve the notice to produce on the Jones interests.

In my view, the word "publication" as it occurs in sub-s 55 (1) of the ASC Law is not apt to catch, and was not intended to catch, production to a court pursuant to the coercive power of a subpoena or of a notice to produce having the effect of a subpoena. I think that it is proper to construe the word "publication" in ASC's direction in this case as bearing the same meaning as the word bears in sub-s 55 (1).

Although sub-s 55 (1) of the ASC Law was not the provision considered by Sheppard J in The Sanko Steamship Company Ltd v Sumitomo Australia Ltd (1992) 37 FCR 353, his Honour's caution before construing a legislative provision as impairing the courts' ordinary powers to compel the production of documents or the right of a party to litigation to procure the issue of a subpoena to that end, is something which, with respect, I share. Legislature is able, when it wishes to do so, to provide expressly for immunity from an obligation which might otherwise exist to produce documents to a court, as the familiar sub-s 16 (3) of the Income Tax Assessment Act 1936 (Cth) shows.

In my view, the Jones interests' application to set aside para (1) of the notice to produce fails in so far as it relies on ASC's direction purportedly given under sub-s 55 (1) of the ASC Law.

In relation to public interest immunity, I also think that the application to set aside fails. Once it is held that a direction under sub-s 55 (1) of the ASC Law does not displace the procedures of subpoena and notice to produce, there can be no public interest immunity against production of the documents in response to such instruments based upon a "deal" of the kind relied on. A contrary result would permit to be achieved indirectly that which sub-s 55 (1) does not permit to be achieved directly. It is impermissible for ASC and a person placed as Jones was to make an agreement having the effect of depriving a non-party to the agreement such as Citibank, of the procedural rights of a litigant.

In any event, I do not think that the agreement between ASC and Jones went so far. The terms of that agreement appear in a letter dated 3 May 1995 from ASC to Le Compte Davey, the solicitors for Jones, which was admitted into evidence. Relevantly, those terms were as follows:

"We confirm the agreement reached by the ASC and yourselves on 1 September 1994, in relation to the hearing of Mr Dennis Jones, whereby the ASC agreed not to publish or make use of the material cited in the schedule to the enclosed notice.

We confirm that it was also agreed on that date that the ASC would publish a press release as agreed by both parties and the requisite notices required by the Corporations Law and the ASC Act. It was also agreed that the ASC would be permitted to make use of any material relating to the hearing of Dennis Jones in the conduct of any banning order hearings in respect of any other persons."

In my view, the word "publish" is used in the sense in which "publication" is used in sub-s 55 (1) referred to earlier. It follows that I do not think that by producing documents to the
Court in response to the subpoena served on it, ASC has breached its agreement "not to publish or make use of the material" referred to in the schedule to the purported direction.

It follows from what I have already said that paragraph 1 of the notice to produce will not be set aside and so the Jones interests will be obliged to produce the documents referred to in that paragraph as if the notice to produce was a subpoena served upon them.

The remaining question to be considered is that which arises at the "second step" of the subpoena process referred to in Waind v Hill and National Employers' Mutual General Association Ltd [1978] 1 NSWLR 372 (CA), that is to say, the decision concerning the preliminary use to be made of the documents, and in particular, whether or not permission should be given for inspection of them. The Jones interests' submissions to which I have already referred in support of their application to set aside were also relied upon in support of their application for an order that I refuse access. I have already rejected those submissions in the context of the application to set aside. What I have already said, and in particular the limited scope of ASC's undertaking as I have construed it, is sufficient reason to reject them as supporting a refusal of access. In any event, I do not think that the public interest in the making of arrangements between regulatory authorities and legally advised persons of the general kind described earlier affords any reason why the Court should not permit Citibank to enjoy the benefit which usually arises from a valid subpoena or notice to produce, namely access for inspection purposes to the documents produced.

I should record that I am not persuaded that if Jones had been told that his agreement with ASC was always subject to the possibility that the documents might have to be produced if a subpoena or notice to produce was issued relating to them, he would not have made that agreement. After all, Jones had the assurance that ASC itself would not voluntarily communicate the contents of the documents to anyone; there was the possibility that no subpoena or notice to produce would ever be issued by anyone; and there remains the obligation on a party utilising the procedure of subpoena or notice to produce and its legal advisers not to use the documents and the information contained in them for any purpose other than a proper purpose associated with the proceedings in question.

CONCLUSION

In the result, the Jones interests' motion brought by notice of motion filed on 8 March 1995 will be dismissed with costs and there will be an order that Citibank's solicitors and counsel may have access to documents produced by ASC in response to the subpoena issued on 4 April 1995 addressed to
it and documents to be produced by the Jones interests pursuant to para 1 of notice to produce dated 3 March 1995 served by Citibank on them.

The Jones interests' written submissions also refer to "documents produced by National Mutual, being a statement of Mr White". No other subpoena or notice to produce was before the Court or was the subject of submissions by Citibank. The reference is mystifying. However, I will grant the Jones interests liberty to apply on three days' notice against the possibility that there may be an outstanding issue in this respect which the parties are not able, in the light of my foregoing reasons, to resolve by agreement.

I certify that this and the preceding 23 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated: 14 July 1995

Heard: 8 June 1995

Place: Sydney

Decision: 14 July 1995

Appearances: Mr D R Pritchard of counsel instructed by Le Compte Davey appeared for the first and second cross respondents, Dennis Jones & Co Pty Ltd and Dennis Jones, as applicants on the motion.

Mr S R Epstein of counsel instructed by Holmes & Bevan appeared for the cross claimant, Citibank Savings Ltd, as respondent to the motion.

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