FEDERAL COURT OF AUSTRALIA

Campaign Master (UK) Limited v Forty Two International Pty Ltd (No 4)[2010] FCA 398  

THE COURT ORDERS THAT:

1.                  Within seven days the parties are to endeavour to agree on the form of orders giving effect to these reasons. If agreement cannot be reached in that time, the parties are to re-list the proceeding at the earliest possible time by arrangement with my Associate.   

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

introduction

1                     On 16 July 2009 a subpoena was issued to the Proper Officer of National Australia Bank Limited (the bank) at the request of the respondents in this proceeding (the NAB subpoena).  Documents were produced in answer to the NAB subpoena on 7 August 2009 and 25 August 2009 (the NAB documents).  On 23 September 2009 leave was granted to the respondents to use the NAB documents for the purposes of proceeding number NSD 2018 of 2008 in this court (the 2018 proceeding).  The respondents had commenced that proceeding against Albert Kim Barnes and Lee Paul Hawksley.

2                      By motion, notice of which was filed on 4 December 2009, Messrs Barnes and Hawksley move the court pursuant to O 27 r 4 for an order setting aside the NAB subpoena.  Alternatively they seek a declaration that the NAB subpoena was an abuse of process.  They also seek an order that the NAB documents be returned forthwith to the bank.  Messrs Barnes and Hawksley also move the court pursuant to O 35 r 7(2) for an order setting aside the leave that was granted on 23 September 2009. 

3                     This motion is related to two other motions, notices of which were filed in the 2018 proceeding.  In the 2018 proceeding, which was commenced on 24 December 2008, the respondents claim relief in respect of alleged infringements of copyright in documents and sound recordings, and breaches of directors’ duties both under the Corporations Act 2001 (Cth) and at general law with respect to alleged confidential information residing in the documents and sound recordings.  They also allege a breach of contract. 

4                     The first notice of motion in the 2018 proceeding was filed by the respondents on 19 November 2009, seeking leave to join an additional applicant and leave to amend the pleadings substantially in the terms of the draft amended application and draft amended statement of claim annexed to the notice of motion.  The draft amended statement of claim, amongst other things, formulates additional claims against Messrs Barnes and Hawksley based on information disclosed in and by the production of the NAB documents. 

5                     The second notice of motion in the 2018 proceeding was filed on 4 December 2009 by Messrs Barnes and Hawksley seeking an order pursuant to O 20 r 5 that the proceeding be stayed or dismissed as an abuse of process and an order pursuant to O 11 r 16 that the statement of claim be struck out because of certain pleading deficiencies.

6                     On 5 February 2010 I made an order that the three motions be heard together and that evidence read or otherwise received in one motion be evidence taken to be read or otherwise received in the other motions.  For completeness I should add that I was informed that, in response to a specific enquiry directed to it, the applicant in this proceeding, Campaign Master (UK) Limited (CM(UK)), was aware of the hearing of the motion but had no interest in attending.

7                     I am of the view that the NAB subpoena was not an abuse of process and should not be set aside.  I am also of the view that there should be no interference with the leave granted on 23 September 2009 to use the NAB documents in the 2018 proceeding.  It follows that the motion in this proceeding should be dismissed.

8                     Before giving my reasons it is necessary to make certain findings of fact with respect to the events leading up to the issue of the NAB subpoena and with respect to the conduct of the respondents following the production of the documents by the bank. A number of these facts are not in dispute. 

background

9                     In this proceeding CM(UK) seeks damages and other relief against the respondents based on representations alleged to have been made by them in contravention of s 52 of the Trade Practices Act 1974 (Cth).  The alleged representations relate to (amongst other things) the development and marketing of software known as “Campaign Master”.  The applicant alleges that, in reliance on these representations, it entered into certain written contracts with the first respondent, namely, a licence agreement and a maintenance and support agreement, both dated 21 May 2007. 

10                  In its statement of claim filed on 9 May 2008, CM(UK) alleges that, by reason of the contraventions it has pleaded, it has suffered loss, including loss resulting from entering into the licence agreement and the maintenance and support agreement.  The loss is alleged to exceed £1,700,000.00.  The loss included the licence fee paid pursuant to the licence agreement (the licence fee).  Indeed, the sum of £1,700,000.00 seems to be referable to the amount of the licence fee itself.  In the statement of claim CM(UK) also pleads claims based on breaches of contract.  One of those claims concerns the alleged breach of clause 4.1 of the maintenance and support agreement (relating to software development).  The particulars of loss in relation to that claim included payment of the licence fee under the licence agreement. 

11                  In an amended statement of claim filed on 6 June 2008 and in a further amended statement of claim filed on 18 August 2008 the applicant maintained its claims for loss and damage that included payment of the licence fee. 

12                  CM(UK) gave discovery in respect of its financial position and the damages it sought.  Inspection was given on 20 November 2008.  Between 21 November 2008 and 9 January 2009 correspondence passed between the then solicitors for the respondents and the solicitors for CM(UK) relating to the adequacy of discovery that had been given, including in relation to the calculation and alleged payment of the licence fee.  It is plain that the parties were in dispute and that, by 9 January 2009, had reached a stalemate about the adequacy of discovery, including in relation to the payment of the licence fee by CM(UK): the respondents’ solicitors maintained that the payment of the licence fee was a fact in issue and that CM(UK) had given incomplete disclosure of its financial statements; CM(UK)’s solicitors maintained that, as the fact of payment of the licence fee was not in contention, discovery of documents relating to the calculation and alleged payment by CM(UK) of the licence fee was not “forensically relevant”.  On the evidence before me, it is not apparent why, at that time, the payment by CM(UK) of the licence fee was not an issue in the proceeding.  CM(UK) had specifically pleaded that it had suffered loss and damage by payment of the licence fee and, by their defence filed on 15 October 2008, the respondents had denied, albeit by means of a general denial, that loss or damage had been suffered.  There is certainly no admission by the respondents on the pleadings that CM(UK) had paid the licence fee.

13                   In this connection the respondents’ own records revealed that the licence fee (amounting to $4,114,976.86 in local currency) had been paid on 29 June 2007, but by another company, CMUK (Aust) Pty Limited (CMUK(A)).  A search conducted on 27 January 2009 of the database maintained by the Australian Securities and Investments Commission showed that CMUK(A) had been registered in New South Wales on 27 June 2007 (two days before payment of the licence fee) but voluntarily deregistered on 22 October 2008.  The search showed that one ordinary share in CMUK(A) was held by CM(UK) and one redeemable preference share was held by Malcolm Walter Cooper, who held office as the sole director and secretary of CMUK(A) for one day.  The search also showed that Michael Terrence O’Sullivan was the sole director and secretary of CMUK(A) as at 29 June 2007, when the licence fee was paid. 

14                  On 24 March 2009 a subpoena to produce documents was issued to Mr O’Sullivan at the request of the respondents.  The subpoena sought the production of a number of documents, including those in the following paragraphs:

3.       A copy of any correspondence between any one or more of Campaign Master (UK) Limited, Gurjeet Dhillon, CMUK (Aust) Pty Limited ACN 126 224 100, Kim Barnes, Lee Hawksley and/or yourself concerning the whole or part of the Licence Fee payable by Campaign Master (UK) Limited to Forty Two International Pty Limited under the Licence Agreement dated 21 May 2007 (“Licence Agreement”).

4.       A copy of any documents referring or relating to the receipt of funds by CMUK (Aust) Pty Limited ACN 126 224 100 comprising the whole or part of the Licence Fee payable by Campaign Master (UK) Limited to Forty Two International Pty Limited under the Licence Agreement.

5.       A copy of any documents, including bank statements, referring or relating to the bank account(s) used by CMUK (Aust) Pty Limited ACN 126 224 100 to receive the monies, in whole or in part, that were paid to Forty Two International Pty Limited in respect of the Licence Fee payable by Campaign Master (UK) Limited to Forty Two International Pty Limited under the Licence Agreement.

6.       A copy of any documents, including bank statements, referring or relating to the bank account(s) used by CMUK (Aust) Pty Limited ACN 126 224 100 to pay the monies, in whole or in part, to Forty Two International Pty Limited in respect of the Licence Fee payable by Campaign Master (UK) Limited to Forty Two International Pty Limited under the Licence Agreement.

15                  Mr O’Sullivan failed to produce any documents in answer to the subpoena relating to or evidencing the payment of the licence fee. 

16                  On 22 April 2009 Mr O’Sullivan was ordered to file and serve an affidavit setting out whether any documents referred to in the subpoena were in his possession, power or custody and, if they were not, to give precise details of the persons or entities that had possession or custody of or power over those documents, and the steps taken by him to comply with the subpoena. 

17                  On 29 April 2009 Mr O’Sullivan made an affidavit in which he deposed that, to the best of his knowledge and belief, there were no documents in existence falling within paragraph 3 of the subpoena.  As to the documents sought in paragraphs 4, 5 and 6 of the subpoena, Mr O’Sullivan deposed that no such documents were in his possession, power or control but that such documents may be in the possession, power or control of the bank. 

18                  As I have stated, on 16 July 2009 the NAB subpoena was issued at the request of the respondents.  It sought production of a number of documents, including those in the following paragraphs:

3.       A copy of any documents, including deposit slips, referring to or recording the deposit or receipt of funds into the bank account(s) held by CMUK (Aust) Pty Limited ACN 126 224 100 during the period 26 June 2007 to 22 October 2008.

4.       A copy of any documents, including withdrawal slips, referring to or recording the withdrawal or transfer of funds from the bank account(s) held by CMUK (Aust) Pty Limited ACN 126 224 100 during the period 26 June 2007 to 22 October 2008.

19                  It is to be noted that the documents sought in those paragraphs related to documents which the bank held in respect of accounts in CMUK(A)’s name,  in the period 26 June 2007 (the day before the date of incorporation of the company) to 22 October 2008 (the date of deregistration of the company). 

20                  Documents were produced to the court in answer to the subpoena on 7 August 2009.  No claim for confidentiality was made.  The documents included one dated 28 June 2007 that was styled Business Letter of Offer in which CMUK(A) was shown as the customer.  This letter concerned a bill facility for a stated large sum of money (the stated sum).  It recorded that a Facility Specific Security, as there described, had been given by Messrs Barnes and Hawksley.  Specifically this security is recorded as comprising a guarantee and indemnity for the stated sum, given by Messrs Barnes and Hawksley, supported by a term deposit letter of set-off over a term deposit for the stated sum, also given by Messrs Barnes and Hawksley.  The production by the bank also included documents with respect to an account for a term deposit for the stated sum referable to Mr Barnes.

21                  Following the initial production of documents, the respondents sent a letter to the bank dated 20 August 2009 seeking further production under the NAB subpoena.  Specifically, the letter sought production of the guarantee and indemnity and term deposit letter of set-off to which I have referred.  It also sought production of the statement of account for the term deposit, for the period 1 December 2007 to 31 January 2008.  Further production to the court took place on 25 August 2009.  The documents included a copy of a document containing details of a term deposit made by Messrs Barnes and Hawksley and a copy of a guarantee and indemnity given by them in relation to the bill facility established for CMUK(A).

22                  On 8 September 2009, after the events which I have described, the respondents’ solicitors wrote to CM(UK)’s solicitors seeking particulars of the damages claimed by CM(UK) by reason of the alleged contravention of s 52 of the Trade Practices Act and breaches of contract.  This request was expressed to be made in light of the affidavit evidence that had been served by CM(UK) in relation to damages.  On 6 October 2009 CM(UK)’s solicitors responded, stating that it was not appropriate for CM(UK) to give particulars of its damages at that stage (pending the ruling on an application to use hearsay material) but that CM(UK)’s claim for damages would not include any amount referable to the licence fee.  No further explanation was given in that regard.

23                  At the hearing of the motions to which I have referred, the respondents relied on an affidavit by Mark Robert Petrucco sworn 9 December 2009.  Mr Petrucco is the solicitor on the record for the respondents in the proceeding.  He deposed to the fact that the purpose of the issue of the NAB subpoena was to establish whether CM(UK) had paid the licence fee of £1,700,000.00 as it had claimed in the proceeding.

24                  Mr Petrucco was cross-examined on this affidavit and on other matters relevant to the relief sought by Messrs Barnes and Hawksley in all motions currently before the court for hearing.  He was specifically questioned on his knowledge in the period 21 November 2008 to 24 August 2009.  His attention was directed to paragraph 3 of the subpoena issued to Mr O’Sullivan on 24 March 2009, which included reference to Messrs Barnes and Hawksley.  It was put to him that the reference to Messrs Barnes and Hawksley had been made because he suspected that they may have had some involvement in the payment of the licence fee.  Mr Petrucco rejected that suggestion.  He said that mention of Messrs Barnes and Hawksley was made in paragraph 3 of the subpoena issued to Mr O’Sullivan because they had had prior business dealings with CM(UK).  Other material before the court suggests that those dealings included the negotiation of the licence agreement under which the licence fee was payable.  He also said that it was Mr O’Sullivan’s statement in his affidavit that documents might be held by the bank, that led to the issue of the NAB subpoena on 16 July 2009.  Mr Petrucco confirmed that, by issuing the NAB subpoena, he was seeking to obtain documents that would reveal the source of funds used by CMUK(A) to pay the licence fee.  Mr Petrucco’s evidence was that it was not apparent from CM(UK)’s financial records, which Mr Petrucco regarded as being incomplete and “sanitised”, how it had allegedly paid the licence fee that formed part of its claim for damages.  He was questioned about his determination to find out where the money for the licence fee came from.  Mr Petrucco agreed that he exhibited a deal of determination to find out where CMUK(A) got the money to pay the licence fee, but rejected the suggestion that he suspected all along that Messrs Barnes and Hawksley, or someone associated with them, were or was behind the funding.  Mr Petrucco also rejected the suggestion that the respondents had informed him that they held a belief that Messrs Barnes and Hawksley had provided the funds for the licence fee.  He said that he did entertain the thought that a shareholder of CM(UK) had injected funds.  His evidence was that he did not have a belief that some external party was “putting funds into the CMUK(A) account” to pay the licence fee “until I got the subpoena”.  I take this last remark to refer to the time when documents were first produced under the NAB subpoena, which showed the involvement of Messrs Barnes and Hawksley in the funding provided by the bank to CMUK(A). 

25                  I accept Mr Petrucco’s evidence in this regard.

26                  By motion, notice of which was filed on 21 September 2009, the respondents sought leave to use the NAB documents in the 2018 proceeding.  The motion was heard on 23 September 2009.  Neither the applicant nor the bank appeared, nor did they oppose leave being granted.  No claim of confidentiality with respect to the documents was made by either CM(UK) or the bank. 

27                  One matter which Messrs Barnes and Hawksley rely on is that they were not notified of the motion for leave and, consequently, were not heard on that application, even though some of the documents produced by the bank under the NAB subpoena were documents which concerned them and their affairs.  The respondents’ written submissions in support of the motion for leave to use the NAB documents in the 2018 proceeding did not mention that matter, but the transcript of the hearing for leave, which is in evidence, plainly shows that the court was informed that the NAB documents included documents relating to Messrs Barnes and Hawksley, including documents executed by them in relation to the bill facility granted to CMUK(A) by the bank.

28                   Leave, as sought, was granted. 

application to set aside the nab subpoena

29                  The court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in respect of it: O 27 r 4(1).

30                  Messrs Barnes and Hawksley submit that they have “a sufficient interest” to move to set aside the NAB subpoena because they are persons whose confidentiality was implicated in the production of the NAB documents.  They submit that the NAB documents contained information that was “commercially sensitive” to them.  No evidence was put before the court on whether and, if so, how or in what respects the documents were “commercially sensitive”.  However, given the nature of some of the NAB documents, especially those to which I have made specific reference, it can be accepted that they are of a character that might contain information that would be regarded, in common parlance, as “commercially sensitive” information. 

31                  There is authority to the effect that if documents contain information which the moving party claims to be confidential to it, then that would provide a sufficient interest to justify an application by that person to set aside the subpoena on some appropriate ground: Compsyd Pty Ltd v Streamline Travel Service Pty Ltd (1987) 10 NSWLR 648 at 649 in relation to Pt 37 r 8 Supreme Court Rules 1970 (NSW); see also Mandic v Phillis (2005) 225 ALR 760 at [32].  Such a claim should, however, be supported by appropriate evidence.  In the present application I am left, largely, to speculate about what information, specifically, is alleged to be “commercially sensitive” and whether that information really is confidential.  It does not follow that, simply because a document contains information about a person, that information is “commercially sensitive” or confidential and gives rise to a sufficient interest to challenge the production by subpoena of that document, even if the document is a bank record.  Nevertheless the respondents have not sought to challenge the standing of Messrs Barnes and Hawksley to move pursuant to O 27 r 4.  Rather the focus of the respondents has been to address the merits of the substantive grounds put forward to challenge the issue of the NAB subpoena and thus to accept, at least impliedly, that Messrs Barnes and Hawksley have standing to seek this part of the relief they claim.  I make no criticism of the respondents for having taken this course, which may well have been taken to deal with the hearing of the motion as efficiently as possible. 

32                  In the circumstances, I am prepared to assume, without deciding, that Messrs Barnes and Hawksley have standing to move to set aside the NAB subpoena.  I am fortified in adopting this approach in the knowledge that the court on its own motion can set aside a subpoena, in any event.  In Fried v National Australia Bank Ltd (2000) 175 ALR 194 Weinberg J, when discussing the predecessor to the present rule (which, relevantly, was in similar terms), observed in [18]: 

Whether or not the applicants have standing pursuant to O 27 r 9 to challenge the subpoena, it is at least clear that the court has power of its own motion under that rule to set aside the subpoena if satisfied that its issue involves an abuse of process. The court will not countenance such an abuse: Kizon v Palmer (No 2) (1998) 82 FCR 310. If a subpoena is issued which ought to be set aside, it matters little, at the end of the day, whether it is set aside at the instigation of a party to the proceeding, or because the court itself has come to the conclusion that this should occur.

33                  Those observations were made in respect of an application to set aside a subpoena by a party who had not procured the issue of the subpoena.  They are, however, no less applicable when the person moving to set aside a subpoena is not a party to the principal proceeding itself.  Serious allegations have been raised as to the purpose for which the NAB subpoena was issued and I am seized of both evidence and substantial submissions directed to that issue:  Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 619 at [504].  It is appropriate, in the interests of both Messrs Barnes and Hawksley and the respondents, that I proceed to determine the merits of this part of the motion, rather than dwell on an issue of standing that the respondents themselves have not contested. 

34                  Messrs Barnes and Hawksley seek to have the NAB subpoena set aside on two interrelated grounds. In each case they contend that the issue of the NAB subpoena was an abuse of the court’s process.

35                  First, they submit that the NAB subpoena does not serve a legitimate forensic purpose in the proceeding.  In this connection they submit that a subpoena directed to ascertaining the source of the funds or who was the financier or lender of the funds for the licence fee has no apparent relevance to any fact in issue in the proceeding. 

36                  Secondly, they submit that if the NAB subpoena does serve a legitimate forensic purpose, this purpose is only collateral to a different, substantial purpose which was to obtain documents that could be used to predicate a further claim against Messrs Barnes and Hawksley.  In this connection they submit that the respondents sought the issue of the NAB subpoena for a “fishing expedition”.  Specifically, they submit that the subpoena was directed to confirming matters which Sean Newell (the Chief Executive Officer of the first respondent) already had reasonable grounds to suspect, namely, that Messrs Barnes and Hawksley were (effectively) lenders of the funds for the licence fee.  They submit that the respondents hoped to use this information against Messrs Barnes and Hawksley and that this purpose subverted the proper ends of the issue of the subpoena.

37                  A subpoena will be set aside to prevent an abuse of the court’s process.  The power to control and supervise the court’s process is directed to preventing injustice. In this context, injustice is not simply a question of the true purpose for which the issue of the subpoena was procured, but also the effect or impact of the subpoena on the person to whom it was issued: Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 at 102; Hamilton v Oades (1989) 166 CLR 486 at 502.  It is, however, the first of these issues that is raised in the present motion.

38                  As the grounds on which this part of the motion is advanced recognise, the examination of the purpose for which the issue of a subpoena is procured may involve an examination of different facets of the notion of “purpose”, involving a spectrum of considerations ranging from essentially objective factors to essentially subjective factors.  The first ground relied upon by Messrs Barnes and Hawksley, relating to apparent relevance, requires an examination of essentially objective factors, while the second ground relating to the existence of a collateral purpose requires an examination of essentially subjective factors, although objective factors may well reflect upon the true purpose for which the NAB subpoena was procured to be issued.  In either case, the onus of satisfying the court that there is an abuse of process lies on the person asserting the existence of the abuse:  Williams v Spautz (1992) 174 CLR 509 at 529.

39                    In  relation to the first ground, Beaumont J in Arnotts (at 103) posed questions to the following effect: Does the material sought have an apparent relevance to the issues in the principal proceeding, ie, is adjectival, as distinct from substantive, relevance established?  Does the subpoena have a legitimate forensic purpose to this extent?  In a similar vein, Waddell J in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 927 invoked the question whether the material that is sought “is reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case”: see also Seven Network Ltd v News Ltd (No 5) (2005) 216 ALR 147 at [10]; Cosco Holdings Pty Ltd v Federal Commissioner of Taxation (1997) 37 ATR 432 at 439-440.  In Tamawood Limited v Habitare Developments Pty Ltd [2009] FCA 364 at [13] and [35]-[38] Collier J addressed the issue by asking whether it appears to be “on the cards” that the document sought will materially assist the party on whose request the subpoena has been issued: see Alister v The Queen (1984) 154 CLR 404 at 414 per Gibbs CJ. 

40                    Apparent relevance is addressed by considering, primarily, the issues raised by the pleadings: Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 at [28]; McIlwain v Ramsey Food Packaging Pty Ltd (2005) 221 ALR 785 at [35]; Dorajay Pty Limited v Aristocrat Leisure Limited [2005] FCA 588 at [34]. 

41                  In relation to the second ground on which Messrs Barnes and Hawksley rely, Hunt J in Packer v Meagher [1984] 3 NSWLR 486 at 492 observed: 

The legal process of a court is being abused when it is being used to exert
pressure to effect an object not within the scope of the process: Grainger v
Hill (1838) 4 Bing (NC) 212 at 221; 132 ER 769 at 773; or where it is used for
a purpose other than that for which the proceedings are properly designed
and exist: Re Majory [1955] Ch 600 at 623; or where the plaintiff in those
proceedings is seeking some collateral advantage beyond what the law offers:
Castanho's case (at 567). See also Varawa v Howard Smith Co Ltd (1911) 13
CLR 35 at 91; Goldsmith v Sperrings Ltd [1977] 1 WLR 478 at 489, 490,
503; [1977] 2 All ER 566 at 574, 585.

42                  These observations were cited with approval in this court in Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193 at 202.  See also TJM Products Pty Ltd v A & P Tyres Pty Ltd (1987) 17 FCR 390 at 396.

43                  If a subpoena has been issued to a stranger, not with a view to obtaining documents for use at trial, but in order to discover, for some other purpose, what documents the stranger holds, an abuse of process may have occurred: Re Federal Commissioner of Taxation, Ex parte Swiss Aluminium Australia Ltd (1986) 68 ALR 587 at 589-590.    

44                  In cases where an abuse of process arises from an improper or collateral purpose, the issue is one of predominant purpose, not sole purpose:  Spautz at 529; Packer at 493; Re Excel Finance Corp Ltd; Worthley v England (1994) 52 FCR 69 at 89.  And in identifying a predominant purpose that is also an improper purpose, it is necessary to distinguish between direct purpose and indirect purpose (or, expressed another way, it is necessary to distinguish between “purpose” and “motive”:  see Spautz at 534 and the cases there cited).   

45                  In Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509 Isaacs J at 521-522 explained that, if the object sought to be effected by the process is within the lawful scope of the process, it is a use of the process, whereas if the object sought to be effected by means of the process is outside the lawful scope of the process, it is an abuse of the process.  In that case the Society acquired a debt owing by the appellant and brought bankruptcy proceedings against him to ascertain upon examination, after the sequestration order had been made, the identity of the person behind the appellant’s publication of defamatory material.  The High Court, by majority, held that the initiation of the bankruptcy proceedings for this purpose was not an abuse of process.  In so holding the majority followed King v Henderson [1898] AC 720 in which it was held that it is neither fraud nor an abuse of process to petition for a sequestration order with an indirect motive.

46                  In Spautz the plurality posed the example of an alderman prosecuting another alderman (who is a political rival) for failure to disclose a relevant pecuniary interest when voting to approve a contract, with the intention to secure the opponent’s conviction and subsequent disqualification from office.  It was said at 526-527: 

… The ultimate purpose of bringing about disqualification is not within the scope of the criminal process instituted by the prosecutor.  But the immediate purpose of the prosecutor is within that scope.  And the existence of the ultimate purpose cannot constitute an abuse of process when that purpose is to bring about a result for which the law provides in the event that the proceedings terminate in the prosecutor’s favour.

It is otherwise when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers.  So, in Dowling, Isaacs J. pointed out that “if, for instance, it had been shown that the Society had simply threatened Dowling that unless he did what they had no right to demand from him, namely, give up certain names, they would proceed to sequestration, and they had proceeded accordingly, there would have been in law an abuse of the process”.  However, because the Society wished to use the process for the very purpose for which it was designed, there was no abuse of process.

[References to footnotes omitted]

47                  In Spautz it was held by majority that the institution of proceedings for criminal defamation was an abuse of process because the respondent had done so for a predominant purpose that was improper in that he sought to use the threat of proceedings and the maintenance of them as a means of securing the reinstatement of his employment from which he had been dismissed.  In this connection it did not matter that Dr Spautz had a subsidiary motive of vindicating his reputation:  see at 529-531 and 537-540.

48                  In considering whether a process is sought to be used for an improper purpose, a question may arise as to whose purpose is the relevant purpose.  In Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) ATPR 41-679; [1999] FCA 56  Merkel J observed that it was, in that case, the applicant’s purpose rather than the motive of its solicitors acting in the matter that was relevant.  In that case it had been submitted that the commencement of the proceeding, which was a representative proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth), was an abuse of process because it had been commenced for the collateral purpose of issuing the first representative action and therefore to capture or corner the market for all potential claims for damages arising out of the interruption or cessation of gas supply resulting from an explosion at the Longford gas plant in Victoria.  In this connection it had been submitted that the solicitors were the alter ego of the applicant and that, as a result, their purpose was the relevant purpose.  His Honour said in [32]-[33]: 

I am satisfied that the Johnson Tiles proceeding was issued for the purpose of obtaining the relief sought by Johnson Tiles on its own behalf and on behalf of group members and not for the collateral purpose of capturing "a market" or "clientele" as was suggested by senior counsel for Esso.

Further, it is the applicant's purpose rather than the motive of its solicitor for acting in the matter that is relevant. Esso's submission, in reality, relates to the alleged motive of Slater & Gordon in acting as solicitors in the proceeding, rather than to the applicant’s purpose in procuring a proceeding to be issued by its solicitors acting on its behalf.

49                  I do not read the decision in Johnson Tiles as laying down any general principle that the purpose of a party’s solicitor is irrelevant to the determination of the predominant purpose in a claim involving the abuse of the court’s process.  Rather, it seems to me that Merkel J’s remarks in that regard were made about the facts of the case before him and should be so read.  Indeed, his Honour’s attribution of the word “purpose” to the applicant and the word “motive” to the solicitors suggests that his Honour had in mind, and was applying to the facts of the case before him, the distinction between direct and indirect purpose to which I have referred.

50                  Significantly, in Flower & Hart (a firm) v White Industries (Qld) Pty Ltd (1999) 87 FCR 134 it was held that there was an abuse of process where a proceeding had been commenced on the advice or recommendation of the applicant’s solicitor, notwithstanding that the solicitor held the view that the applicant could not succeed in that proceeding and had made his recommendation or advice for the primary purpose of delaying action by the respondent to recover money from the applicant under a building contract.  It was found, relying on the solicitor’s purpose, that the commencement of the proceeding was an abuse of the court’s process because the proceeding had not been commenced for the purpose of vindicating any right that the applicant might have.

51                  It may be necessary, therefore, in a case of alleged abuse of process, to have regard to the purpose of a party’s legal adviser.  In my view this is likely to be so where the alleged abuse of process resides in the taking of some step by a party (such as procuring the issue of a subpoena) where the initiation or execution of that step arises in the course of the day to day carriage of the matter by the legal adviser and is the product of the advice, recommendation or judgment of that legal adviser acting within the scope of more generally expressed instructions to act in the interests of his or her client in that proceeding.  In those cases the operative purpose is likely to be the legal adviser’s purpose, which is to be attributed to the party for whom he or she acts.

52                  I now turn to consider each of the grounds relied upon by Messrs Barnes and Hawksley.

53                  At the time the NAB subpoena was issued the pleadings plainly raised as an issue the claim that the applicant had suffered loss or damage manifested, in part, by the payment of the licence fee.  It is difficult to see how payment of the licence fee could be a head of damage for CM(UK) unless it had actually paid the licence fee or was, perhaps, indebted or otherwise liable to some third party who paid the licence fee on its behalf.  The fact that the licence fee had been paid does not address the issue of whether the amount of the licence fee represented loss or damage suffered by CM(UK).  Plainly it was legitimate for the respondents, in the proper defence of the claims that had been made against them, to test whether CM(UK) had actually suffered loss or damage of the kind alleged.  That was particularly so in the circumstances that confronted the respondents at the time. 

54                  I am satisfied that, in the circumstances in which the respondents found themselves at the time, the documents sought by the NAB subpoena had an apparent relevance to the issues in the proceeding.  It was only after production of the documents pursuant to the NAB subpoena that, for reasons not given, CM(UK) no longer pressed that part of its claim – a claim, I might add, that had persisted since the commencement of the proceeding on 9 May 2008.

55                  As to the second ground, I am not satisfied on the evidence that the issue of the NAB subpoena was procured to obtain documents that could be used to predicate a further claim against Messrs Barnes and Hawksley.  In my view the evidence plainly establishes that the sole (and not merely predominant) purpose for procuring the issue of the NAB subpoena was to seek to obtain documents that might be used in the legitimate defence by the respondents of the claim made by CM(UK) that it had suffered loss or damage by payment of the licence fee.  It was known that CMUK(A) had actually paid the licence fee but not whether CM(UK) had funded that payment or was subject to a liability to CMUK(A) in that regard.  On the evidence before me, Mr Petrucco was concerned that the financial material provided by CM(UK) on discovery was incomplete and had been “sanitised”.  The issue of the subpoena to CMUK(A), the propriety of which act has not been questioned, resulted in the production of no documents on this issue.  The affidavit that Mr O’Sullivan had been ordered to make clearly pointed to the bank as likely to have documents on this issue.  The evidence shows that it was this information which directly led Mr Petrucco, as the respondents’ solicitor, to procure the NAB subpoena to be issued.  The evidence is clear that it was his forensic judgment that was at play in that regard.  That judgment was uninfluenced by and, indeed, uninformed by, any suggestion by the respondents themselves that they suspected that Messrs Barnes and Hawksley had effectively funded the licence fee. 

56                  The foundation for the submissions made by Messrs Barnes and Hawksley in this regard was remote hearsay evidence that was objected to but admitted subject to relevance:  s 75 Evidence Act 1995 (Cth); Bray v F Hoffman-La Roche Ltd (2002) 118 FCR 1 at [117]; Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317 at [64]-[66].  I am satisfied that the evidence is relevant.  However, seen in the context of Mr Petrucco’s evidence, which I accept, this evidence does not lead to a different conclusion concerning the subjective purpose for which the NAB subpoena was procured to be issued.

57                  The evidence in question was given by Michele Tomoko Langtry, a solicitor employed by the solicitors for Messrs Barnes and Hawksley.  In an affidavit sworn on 14 December 2009, Ms Langtry deposed to information given to her by Raaj Govintharajah.  Mr Govintharajah was employed by the second respondent as its State Manager for Victoria from approximately August 2007 until approximately May 2008.  Mr Govintharajah informed Ms Langtry that he had had a meeting with Mr Newell in or about August 2008 (after his employment with the second respondent had ceased) in which there was a brief conversation about the respondents’ “licence deal” with CM(UK).  Mr Govintharajah said that the conversation was to the following effect:

Sean Newell (“SN”):              Where do you think Gurj got the money for the licensing deal?

Raaj Govintharajah (“RG”):    I don’t know, maybe he was able to get a hold of a UK financier with deep pockets.

SN:                                       I think Kim and Lee funded the licensing deal.

RG:                                       I’d be surprised if they did.

SN:                                       It would have been a good idea on their part if they had, I mean paying $4 million to get $16 million, you know what I mean.

RG:                                       I don’t know.

SN:                                       If I was in Lee and Kim’s position, I would have done it.  It would be a pretty smart move, giving Gurjeet the money.

RG:                                       What do people at BlueFreeway think about it?

SN:                                       Other people think the same way I do.

58                  The reference to “Gurg” is apparently to Gurjeet Dhillon, who is said to be the principal of CM(UK). 

59                  There is no evidence about the nature or circumstances of the meeting or how or why this particular conversation took place.  But no evidence was led by the respondents to deny the fact of the conversation.  Although in the form of remote hearsay, the conversation is some evidence of a suspicion on the part of Mr Newell, as Chief Executive Officer of the second respondent at the time of the conversation, that Messrs Barnes and Hawksley (the “Kim” and “Lee” referred to respectively in the conversation) funded the payment of the licence fee. 

60                  Messrs Barnes and Hawksley sought to build on the fact of this conversation by submitting that it directed the subsequent course of events leading to the issue of the NAB subpoena.  The evidence, however, does not sustain that submission.  Whatever suspicion Mr Newell or others might have had in August 2008, Mr Petrucco’s evidence was that no such suspicions had been communicated to him.  There is no evidence that the issue of the NAB subpoena, or indeed the issue of the earlier subpoena to CMUK(A), was urged upon Mr Petrucco by Mr Newell or anyone else on behalf of the respondents.  The evidence indicates that the forensic decision to issue the NAB subpoena was Mr Petrucco’s alone, no doubt supported by general instructions on the part of the respondents to act in their interests in the defence of CM(UK)’s claim.  Even if it be assumed for the purposes of argument that Mr Petrucco had the same suspicion, or had been informed that any one or more of the respondents’ officers or employees held such a suspicion,  I am not satisfied that this would change the position in any event.  Given the extant issue between CM(UK) and the respondents concerning CM(UK)’s alleged loss suffered by payment of the licence fee in circumstances where the licence fee was apparently paid by another person (CMUK(A)), and given Mr Petrucco’s concerns to which I have referred about the adequacy of the discovery that had been given by CM(UK) on this issue, it was legitimate for the respondents to seek documents in aid of their defence of this part of CM(UK)’s claim, regardless of whatever suspicions they may have harboured or other speculations they may have engaged in about what the true facts may be.  Suspicion and speculation do not prove facts.  It was perfectly legitimate to seek documents which might be used for the purposes of evidence or otherwise in furtherance of the respondents’ defence of this part of CM(UK)’s claim.

61                  Another matter on which Messrs Barnes and Hawksley rely is the fact that the respondents, through their solicitors, sought the further production of documents under the NAB subpoena.   There may be a question about whether the documents that were sought by way of further production were caught by the terms of the NAB subpoena.  As things turned out, the bank did not think that there was any question about that matter.  It obviously agreed with the respondents’ position that the documents sought by way of further production were caught by the terms of the NAB subpoena. 

62                  Be that as it may, nothing turns, in my view, on the fact that further documents were sought or produced.    First, I am not persuaded that the respondents acted for an improper purpose in seeking the further production.  It seems to me that, once again, it was Mr Petrucco’s decision to seek further production and that, at that time, although then apprised of Messrs Barnes and Hawksley’s involvement in providing security for the bill facility, he was still seeking documents which might be used for the purposes of evidence or otherwise in furtherance of the respondents’ defence of this part of CM(UK)’s claims.  The evidence does not establish that Mr Petrucco acted with any awareness that, at the time the further production was sought, the documents being sought may have fallen outside the terms of the NAB subpoena.  Secondly,  it was, in any event, the initial production of the bank’s records with respect to CMUK(A) that revealed the existence and amount of the bill facility granted to CMUK(A) and the fact that that facility was secured by Messrs Barnes and Hawksley in the way to which I have referred.  That production also revealed the account details for the term deposit that was part of the security, and included extracts from the account showing details of the deposit, interest rate and other information.  Thus it was the initial production of documents under the NAB subpoena that provided the respondents with the pertinent facts concerning the apparent involvement of Messrs Barnes and Hawksley in the financial arrangements that lay behind the payment of the licence fee by CMUK(A).

63                  I am therefore satisfied that the documents sought by the NAB subpoena had an apparent relevance to the issues in the principal proceeding.  I am not satisfied that there was a purpose, let alone a predominant purpose, of seeking documents to be used against Messrs Barnes and Hawksley in the 2018 proceeding.  In my view the NAB subpoena was not issued for an improper purpose and its issue did not constitute an abuse of process.

APPLICATION TO SET ASIDE THE order GRANTING LEAVE

64                  As I have noted, Messrs Barnes and Hawksley submit that, even if the NAB subpoena is not set aside, the order made on 23 September 2009 granting leave to use the NAB documents in the 2018 proceeding should be set aside.  In this connection they rely on O 35 r 7(2), specifically paragraphs (a) and (c) thereof. 

65                  Order 35 r 7(2) provides that the court, where it is not exercising its appellate or related jurisdiction, may, if it thinks fit, vary or set aside an order after the order has been entered, in certain identified circumstances.  In the present case the order granting the leave has been entered. 

66                  Rule 7(2)(a) provides that the court may set aside or vary an order that has been entered where the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default and whether or not the absent party had notice of the motion for the order.  Conspicuously, Messrs Barnes and Hawksley are not parties to this proceeding.  They submit, however, that, as a matter of construction, the reference in the rule to “a party” extends to and includes a person who is not in fact a party to the proceeding but a person whose interests are affected by the order:  Nicholson v Nicholson [1974] 2 NSWLR 59.

67                    Rule 7(2)(c) provides that the court may set aside or vary an order that has been entered where the order is interlocutory.  There is no dispute in the present matter that the order made on 23 September 2009 was “interlocutory” and thus falls within r 7(2)(c).

68                  The discretion touching the exercise of the power in O 35 r 7(2) to vary or set aside an order is not, in terms, limited or confined.  However, as Lindgren J observed in Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 18) (1995) 133 ALR 667 at 675, like all discretions, it must be exercised judicially.

69                  It has been said that the exercise of the power in O 35 r 7(2) is “exceptional” and is to be exercised “with great caution”:  Wati v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 543 at 549-552; Capital Webworks Pty Ltd v Adultshop.Com.Ltd (2002) 116 FCR 255 at 259-260; Australian Competition and Consumer Commission v Black on White Pty Ltd (2004) 138 FCR 314 at 317-319.  It is evident that many of the cases reflecting this approach are cases where final orders have been made, including on appeal, where the principle of finality of litigation has been stressed.  Nevertheless, even in the case of orders of a procedural nature, the principle of finality of litigation does have a role to play which, having regard to considerations of case management, is not unimportant.  It is to be borne in mind that the civil practice and procedure provisions respecting this court, including its rules made under the Federal Court of Australia Act, must be interpreted and applied, and every power conferred by them must be exercised or carried out, in the way that best promotes the overarching purpose identified in s 37M of the Act of facilitating the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible.  That overarching purpose will not be achieved, but will be subverted, by a too-ready resort to, or incautious application of, the power to vary or set aside orders that have been made and entered, even where the orders are of a procedural nature.

70                  When a power such as that under O 35 r 7(2) is exercised, it is to be done having regard to all the evidence before the court at that time and all the arguments then advanced:  Hardie Rubber Co Pty Ltd v General Tire & Rubber Co (1973) 129 CLR 521 at 527.  It follows that I should only set aside the order made on 23 September 2009 granting leave if I am satisfied, in light of the evidence now before me and the arguments now advanced, that, notionally, leave to use the NAB documents for the purpose of the 2018 proceeding should not be granted.

71                  Messrs Barnes and Hawksley advanced a number of submissions in support of their application.  These submissions went to both their standing to invoke the power under O 35 r 7(2) and the merits of their application.  The submissions involved a number of overlapping propositions.  They may be summarised as follows.

72                  First, as I have noted, they submit that, even though they are not parties to this proceeding, they are persons likely to be adversely affected by the leave sought by the respondents on 23 September 2009.  They submit that they had a right to be heard on the application for leave and that, correspondingly, they are now entitled to seek to set aside the order that was made on that date.  Further in this regard, they submit that the court has power to set aside an order where it is in the interests of common justice, particularly where the application for the order was interlocutory and was decided in the absence of an interested party. 

73                  Secondly, they submit that they had an interest in being heard on the application for leave because they were customers of the bank and, as such, were entitled to banker/client confidentiality in respect of information in the documents concerning them and the protections of privacy that this relationship ascribes: Uthmann v Ipswich City Council [1998] 1 Qd R 435.  They further submit that, apart from the rights which they assert to enforce the implied obligation not to use the documents for purposes other than this proceeding, they have rights in equity to maintain what they assert to be their confidential information.  They submit that this is particularly so where, in their submission, the production of documents went beyond the scope of the subpoena.

74                  Thirdly, they submit that when the leave was sought, the respondents failed to make material and proper disclosures to the court.  In particular they submit that the court was not informed that no notice had been given to them of the application for leave in circumstances where notice should have been given to them.  They submit that, had this been done, the court would have been able to assess their likely interest in the documents.  In effect they submit that their interests were eclipsed by the respondents advancing the fact that the bank itself had raised no objection to leave being granted.  Thus, they submit, the court wrongly assumed that there was no interested party who had an objection to the use of the documents in the 2018 proceeding. Specifically, they submit that their potential claims to maintain the confidentiality of the documents should have been, but were not, before the court.  Further in this regard, they submit that the respondents should have informed the court that the NAB documents went beyond CMUK(A)’s account details and included Messrs Barnes’ and Hawksley’s banking and account details.

75                  Fourthly, they submit that, when leave was being sought, the respondents should have informed the court that the 2018 proceeding was itself based on documents produced pursuant to subpoena where no leave had been obtained to use the documents for that purpose.

76                  Fifthly, Messrs Barnes and Hawksley submit that the respondents failed to inform the court that the NAB subpoena was directed to ascertaining the indirect source of the funds for the licence fee which served no legitimate forensic purpose in the proceeding. 

77                  Finally, they submit that “special circumstances” have not been demonstrated.  This submission is directed to the test laid down in Crest Homes Plc v Marks [1987] 1 AC 829 where at 860 Lord Oliver said:

… Your Lordships have been referred to a number of reported cases in which application has been made for the use of documents obtained under Anton Piller orders or on general discovery for the purpose of proceedings other than those in which the order was made. Examples were Halcon International Inc. v. Shell Transport and Trading Co. [1979] R.P.C. 97 and Sybron Corporation v. Barclays Bank Plc. [1985] Ch. 299.  I do not, for my part, think that it would be helpful to review these authorities for they are no more than examples and they illustrate no general principle beyond this, that the court will not release or modify the implied undertaking given on discovery save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery.  As Nourse L.J. observed in the course of his judgment in the instant case (ante, p.840G), each case must turn on its own individual facts.

78                  In Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 Wilcox J confirmed that, where a person is subject to an implied obligation to the court not to use a document for any purpose other than those of the proceeding in which it is produced or disclosed, leave to use the document in another proceeding should not be granted unless “special circumstances” are shown.  In that regard his Honour adopted the meaning of “special circumstances” discussed by Burchett J in Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576 at 578-579 which had been followed by Lockhart J in Sweetman v Australian Thoroughbred Finance Pty Ltd (Unreported, Lockhart J, 23 July 1992).  In Springfield at 225, Wilcox J said:

… For “special circumstances” to exist it is enough that there is a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present. The matter then becomes one of the proper exercise of the court’s discretion, many factors being relevant.  It is neither possible nor desirable to propound an exhaustive list of those factors.  But plainly they include the nature of the document, the circumstances under which it came into existence, the attitude of the author of the document and any prejudice the author may sustain, whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain, the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information), the circumstances in which the document came into the hands of the applicant for leave and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding.

79                  In Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) 218 ALR 283 the correctness of this approach was confirmed.  In the context of listing the considerations to which Wilcox J referred in the passage quoted above as considerations which may be relevant to the exercise of the discretion, a Full Court of this court said in [31]:

… It is unnecessary to examine the authorities in this area in any detail.  The parties were not in disagreement as to the legal principles.  The notion of “special circumstances” does not require that some extraordinary factors must bear on the question before the discretion will be exercised.  It is sufficient to say that, in all the circumstances, good reason must be shown why, contrary to the usual position, documents produced or information obtained in one piece of litigation should be used for the advantage of a party in another piece of litigation or for other non-litigious purposes.  The discretion is a broad one and all the circumstances of the case must be examined. …

80                  The respondents did not dispute the court’s jurisdiction to set aside the order made on 23 September 2009 granting leave, or the principles on which that question should be approached.  The respondents did contest the standing of Messrs Barnes and Hawksley to move the court pursuant to O 35 r 7(2) to set aside the order.  In this connection they submit that where a party in proceedings obtains documents from another party, the question of their use for the purposes of other proceedings would usually be debated on notice to that party.  However, in cases such as the present, where the documents are the bank’s documents and the bank does not oppose the use of those documents in the other proceeding, persons in the position of Messrs Barnes and Hawksley have no standing to oppose their use in the other proceeding.  It follows, in the respondents’ submission, that Messrs Barnes and Hawksley have no standing now to revisit that question.    

81                  In my view the position is not as simple as the respondents would have it.  First, O 1 r 4A(b) makes clear that, unless the Federal Court Rules provide otherwise, the court may exercise a power under the Rules “in a proceeding” on the application of a person “who has sufficient interest in the proceeding”.  Order 35 r 7(2) does not “provide otherwise”.  Secondly, in Dahozo Pty Ltd v Oz-US Film Productions (1997) 24 ACSR 739 at 741-742 Bryson J, in the context of dealing with an application for an order for reinstatement of a deregistered company, referred to a general principle relating to standing based on the audi alteram partem rule that persons adversely affected by an order of a court are entitled to obtain reconsideration by the court of the order if they apply reasonably promptly after they learn of the order.  In BP Australia Ltd v Brown (2003) 58 NSWLR 322 at [133]-[136] Spigelman CJ referred to the entitlement as of right of a person to move to set aside an order that affects him or her where the rules of procedural fairness have been breached in respect of that person, although he recognised the possibility that there may be circumstances in which it is not appropriate (and, it would follow, not necessary) to provide that person with an opportunity to make submissions prior to the order being made.  In the circumstances of that case it was unnecessary to explore that possibility.

82                    Here the NAB documents were plainly the bank’s documents, as the respondents contend.  However, equally plainly, those documents included information about Messrs Barnes and Hawksley, specifically the fact that they had provided security for the bill facility.  The information included the details of that security, its nature and its amount.  The information also included details of the term deposit, including the account number in which that deposit had been made.  I do not know how widely that information was disseminated, if at all, by Messrs Barnes and Hawksley or others.  There is no evidence on that matter.  But it is clear that Messrs Barnes and Hawksley were not willing parties to the disclosure of the information about them in this proceeding.  Certainly the effect of the leave that was sought by the respondents was to allow that information to be used against Messrs Barnes and Hawksley in a proceeding (the 2018 proceeding) to which Messrs Barnes and Hawksley were parties.  In this connection I note that in Springfield (at 219) the applicants for leave in that case took the precaution of joining as a respondent to the application for leave the person against whom the document was to be used in the other proceeding.  That precaution was not taken by the respondents here.

83                  The NAB documents were before the court on 23 September 2009 when leave was sought.  The documents comprised a confidential exhibit to an affidavit sworn by Mr Petrucco on 18 September 2009.  The court was informed of the nature of the NAB documents, including the fact that they contained internal account information as well as documents signed by Messrs Barnes and Hawksley, of which the bank was the original author.  The nature of the documents as banker’s records, including the fact that they included information and details about Messrs Barnes’ and Hawksley’s involvement in the bill facility as security providers, as well as copies of documents signed by them, was at the heart of the application for leave and of the submissions that were made in that regard.  The respondents’ oral submissions and written submissions, at that time, made clear to the court that this information was intended to be used against Messrs Barnes and Hawksley to mount additional claims in the 2018 proceeding.  Thus, even though Messrs Barnes and Hawksley were not present at the time that leave was sought to use the NAB documents in the 2018 proceeding, the submissions which they now make about the nature and character of the NAB documents as they concern them would have been manifest, and taken into account, at the time that leave to use the documents was sought and granted. 

84                  Another relevant matter in this connection is the extent of the leave that was sought by the respondents.  The respondents were not seeking leave to use the NAB documents generally.  The leave that was sought was specific and limited:  it was to use the NAB documents for the purpose only of the 2018 proceeding.  The respondents had articulated to the court the general nature of the additional claims they sought to bring.  At the time the application for leave was made it was plain that Messrs Barnes’ and Hawksley’s permission to use the documents for the purpose of making these additional claims against them in the 2018 proceeding had not been sought or given.    

85                  Thus although it can be said that the making of the order granting leave would adversely affect Messrs Barnes and Hawksley to the extent that the NAB documents contained information about them that would be used to make additional claims against them in the 2018 proceeding, the circumstances in which leave was granted were somewhat unusual in that the court was apprised of the character of the documents and the information and could proceed on the comfortable assumption that in all probability Messrs Barnes and Hawksley, if asked, would not consent to the use of the NAB documents in the 2018 proceeding for that purpose.  It is difficult to see how the position could have been otherwise.  

86                  Notwithstanding these matters, I am satisfied that, in all the circumstances, Messrs Barnes and Hawksley have a sufficient interest to give them standing, whether under O 35 r 7(2) or more generally, to revisit the order made on 23 September 2009 granting leave to use the NAB documents in the 2018 proceeding.  However, as I consider the matter now, taking into account the evidence and submissions made by Messrs Barnes and Hawksley as to the character of the documents and the information contained in them, I am not persuaded that leave, as originally sought, should be refused and hence that the order granting leave, as made on 23 September 2009, should be set aside. 

87                    In this connection the respondents, both now and when leave was originally sought, have contended that the NAB documents disclosed information that showed that Messrs Barnes and Hawksley had committed serious breaches of duties that they owed to the first respondent under statute, by contract and under general law, and had engaged in conduct that was misleading or deceptive, constituting civil wrongs resulting in significant financial loss to the respondents.  The alleged duties included duties to act in good faith in the interests of the first respondent and for a proper purpose; not to improperly use their position to gain advantage for themselves or someone else or to cause detriment to the first respondent; and to give notice of any material personal interest in a matter related to the affairs of the first respondent.

88                  Messrs Barnes and Hawksley, for their part, advance their interests as customers of the bank in respect of whom information should not have been disclosed without their consent.  In this regard they rely upon the nature and character of the NAB documents as being banking records containing “commercially sensitive” information about them.  In their written submissions they did advance the contention that they had rights in equity to maintain their “confidential information” and that those rights were enforceable against the respondents:  Tournier v National Provincial and Union Bank of England [1924] 1 KB 461; Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 47; Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 at 234-235.  This contention was not developed.  There are a number of problems with it.  First, Messrs Barnes and Hawksley did not seek to identify what they claimed to be the “confidential information” that would be so protected beyond a general assertion that everything in the NAB documents concerning them was confidential and hence liable to be protected in equity.  I do not accept that to be the case.  I have already remarked upon the lack of evidence on this matter when dealing with their standing to set aside the NAB subpoena.  I accept that the NAB documents are of a kind that may contain confidential information, but that possibility alone is insufficient to sustain the general claim they make.  Secondly, and pointedly, Messrs Barnes and Hawksley do not seek relief to restrain the respondents from using the information in the NAB documents on the basis that such use is or would be a misuse of confidential information actionable at their suit against the respondents.  Had such a proceeding been before the court then no doubt defences of the kind discussed in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 451-458 and Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73 at 110-111 would have fallen for consideration.  It is not, however, the task of the court in the present application to speculate about the likely outcome of non-existent inter partes proceedings seeking relief for misuse of confidential information, even though Messrs Barnes and Hawksley assert that they have rights that would enliven such a claim.  Messrs Barnes’ and Hawksley’s present application is of a fundamentally different kind. 

89                  In my view the fact that the NAB documents disclose information that gives rise, at least potentially, to viable causes of action at the suit of the respondents based on claims relating to alleged breaches of duties said to be owed to the first respondent by Messrs Barnes and Hawksley and to alleged conduct on their part that was misleading or deceptive, is a very powerful consideration to be taken into account on the question of whether the respondents should be released from their obligation to the court to an extent that would enable them to bring those claims forward for determination in legal proceedings.  A factual element in these claims is that Messrs Barnes and Hawksley kept secret from the respondents their involvement in the financing of the licence fee paid by CMUK(A) as a step along the way to making personal gains at the expense of the respondents. Whether these claims are well-founded is not a matter on which I have any view, although I would accept that these claims are raised by the respondents in good faith.  Unless the order granting leave is set aside, it can be expected that those claims will stand to be tested in the fullness of time in a contested hearing, and will be determined in light of all the evidence then adduced and all the arguments then presented.  It would be somewhat perverse, however, to shut out the respondents at this stage by refusing leave (or by setting aside leave) to use the NAB documents in the 2018 proceeding for a reason that includes protection of the very secrecy that underpins the allegedly wrongful conduct about which the respondents complain.

90                  The other matters on which Messrs Barnes and Hawksley rely similarly do not stand, either individually or collectively, as sufficient reason why leave should be refused.    

91                  First, the contention that the 2018 proceeding, as presently pleaded, is an abuse of process, because it is based on documents produced pursuant to another subpoena issued in this proceeding where no leave had been obtained to use the documents for that proceeding, seems to me to be irrelevant to the question of whether leave should be granted to use the NAB documents in the 2018 proceeding in relation to the alleged breaches of duty and other impugned conduct to which those documents allegedly relate.  The information in the NAB documents is distinct from the facts currently pleaded in the 2018 proceeding and grounds additional causes of action on additional facts.  Messrs Barnes’ and Hawksley’s submissions in this regard go so far as to say that the respondents should have brought to the court’s attention on 23 September 2009 the fact, as they would have it, that the 2018 proceeding, as presently pleaded, is an abuse of process.  It is to be noted, however, that Messrs Barnes and Hawksley themselves only first made that claim in more recent times.  It is a claim that has been resisted by the respondents.  In any event, for the reasons given in Forty Two International Pty Limited v Barnes [2010] FCA 397, I propose to grant leave to the respondents nunc pro tunc to use those other documents and the information derived from their production, in the 2018 proceeding.

92                  Secondly, the contention that the NAB subpoena served no legitimate purpose in this proceeding, and that this should be taken into account on the question of leave, cannot stand in light of the contrary findings I have made in that regard, as stated above. 

93                  I am satisfied that special circumstances exist for the granting of leave to permit the respondents to use the NAB documents for the purpose of the 2018 proceeding. The contribution of the NAB documents to achieving justice as between the respondents and Messrs Barnes and Hawksley is, in my view, paramount in the particular circumstances of this case.  In these circumstances it is and was appropriate to grant leave to use the NAB documents for the purpose of the 2018 proceeding.  It follows that the order made on 23 September 2009 granting leave in that regard should not be set aside.

DISPOSITION

94                  In light of my findings that the issue of the NAB subpoena was not an abuse of process and that the order made on 23 September 2009 granting leave to use the NAB documents in the 2018 proceeding should not be set aside, it follows that the motion should be dismissed.

95                   In the normal course, costs would follow the event.  I am mindful, however, that this motion has been heard with two other motions filed in the 2018 proceeding on the particular basis to which I have referred at the beginning of these reasons.  It seems to me, therefore, that the question of costs should be considered in the context of the fate of all the motions.  I will allow the respondents and Messrs Barnes and Hawksley the opportunity to make submissions about the appropriate order as to costs in light of these reasons and the reasons given in Forty Two International Pty Limited v Barnes [2010] FCA 397, also published today.  This should be done by short written submissions of no more than three pages in length.  Messrs Barnes and Hawksley should serve their submissions, and provide a copy to my Associate, within 14 days.  The respondents should serve their submissions, and provide a copy to my Associate, within 21 days.

96                  The parties should endeavour to agree on the form of orders giving effect to these reasons.  If agreement cannot be reached within seven days, the parties are to re-list the matter at the earliest possible time by arrangement with my Associate.

Associate:

Dated:         30 APRIL 2010