FEDERAL COURT OF AUSTRALIA

Perazzoli v BankSA [2015] FCA 373

THE COURT ORDERS THAT:

1.    In relation to the subpoena addressed to LCM Litigation Fund Pty Ltd, paragraphs 2 and 4 be set aside.

2.    In relation to the subpoena addressed to GMG Legal Services Pty Ltd, paragraphs 1, 5, 7 and 9 be set aside in full, as well as the requirement in paragraph 4 to produce documents which “touch on” identified subject matters.

3.    Otherwise the interlocutory applications of the Applicants and of GMG Legal Services Pty Ltd seeking the setting aside of subpoenas be dismissed.

4.    The matter be adjourned to 9.00 am on Friday 10 April 2015 for consideration of the orders to be made in consequence of the above orders, noting that the parties are encouraged to confer as to reach an agreed position.

5.    Costs be reserved.

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

REASONS FOR JUDGMENT

1    On 8 April 2015, the Court announced its decision with respect to applications to set aside subpoenas and said that it would publish reasons for the decisions later. These are those reasons.

2    The underlying proceedings are a representative action under Pt IVA of the Federal Court Act (the FC Act). They arise out of a scheme, said by the applicants to be a Ponzi Scheme, conducted by the second respondent Mr Samra in his own name and as trustee of a family trust (the third respondent) and by a company controlled by Mr Samra and his wife (the fourth respondent). The applicants allege that the first respondent (BankSA) knowingly assisted Mr Samra in the implementation of the scheme and that, by other conduct, it contravened provisions in the Trade Practices Act 1974 (Cth), the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth), was negligent, or breached contracts into which it had entered with a number of consumers.

3    The firm of Griffins Lawyers commenced the proceedings on 14 November 2014 on behalf of the applicants. Each of the Originating Application, Statement of Claim and Genuine Steps Statements was signed by Mr Griffin, a principal of Griffins Lawyers.

4    The proceedings were served on BankSA on 12 December 2014. On 24 December 2014, BankSA filed an interlocutory application seeking the summary dismissal or, in the alternative, the permanent stay of the proceedings. In the further alternative, BankSA sought orders restraining Griffins Lawyers from continuing to act for the applicants, and orders with respect to deficiencies which it perceived in the applicants’ statement of claim.

5    The application was supported by an affidavit from Ms Jones, the partner in Fisher Jeffries with principal responsibility for the conduct of the matter on behalf of BankSA. Ms Jones’ affidavit indicates that BankSA is concerned that use has, and is being, made of documents, or information derived from documents, produced by it in 2012 to the then Federal Magistrates Court (the FM Court) in answer to summonses issued by Mr Samra’s Trustee in bankruptcy (the Examination Proceedings).

6    The examination summonses were issued by the Trustee pursuant to s 81 of the Bankruptcy Act 1966 (Cth). BankSA produced documents to the FM Court on 7 May and 11 July 2012. Two bank officers, Mr Finch and Mr Sporton were examined in the FM Court on 10 May 2012 and 6 November 2012 respectively. Both were examined by senior counsel who appeared on the instructions of Griffins Lawyers, then acting for the Trustee.

7    The principal relief which BankSA will seek on its interlocutory application is the grant of a permanent stay. BankSA has indicated that the stay is sought on the following basis:

(a)    First, documents were sought and produced by BankSA in answer to the examination summonses that were issued on the application of the Trustee, but which improperly sought documents as an aid to litigation that was in contemplation by the applicants and other group members; and

(b)    Secondly, there was a misuse of those documents (in contravention of the Harman undertaking) when the solicitors, Griffins – who were at relevant times commonly acting as solicitors to the Trustee and to the applicants and other group members – deployed the documents produced by BankSA in furtherance of the litigation by its other clients for their separate ends.

8    It is no longer necessary for BankSA to seek an order restraining Griffins Lawyers from continuing to act for the applicants in the proceedings. Griffins Lawyers ceased acting voluntarily and the applicants are now represented by Johnson Winter and Slattery.

9    BankSA’s interlocutory application was originally listed for hearing on 17 April 2015.

10    On 4 March 2015, the Bank issued, with the leave of the Court, three subpoenas seeking the production of documents in connection with the interlocutory hearing. The subpoenas were addressed to the Trustee, to GMG Legal Services Pty Ltd trading as Griffins Lawyers (GMG), and to LCM Litigation Fund Pty Ltd (LCM). It was common ground that LCM is providing litigation funding to the applicants in relation to the underlying proceedings.

11    The subpoena addressed to the Trustee required production of the following documents:

1.    Each affidavit in support for applications for examination and orders for production in [the Examination Proceedings].

2.    Any document recording or evidencing:

2.1    the terms of engagement or retainer of [GMG] applicable to the conduct of examinations in the Examination Proceedings;

2.2    any agreement, arrangement or understanding relating to the funding of any of their remuneration of the Trustee in bankruptcy, and/or costs or disbursements in connection with the Examination Proceedings and correspondence relating thereto.

3.    Any document recording or evidencing a communication between the Trustee on the one hand and any[one] or more of the applicants and/or any group members and/or [LCM] on the other hand in connection with:

3.1    the Examination Proceedings; or

3.2    the institution of a class action, representative action or any other action against the first respondent between 2009 and June 2013.

12    The scope of the subpoena addressed to LCM has been the subject of discussion between BankSA and LCM. BankSA had indicated to LCM that it would regard production of the documents set out below as satisfying the requirements of the subpoena and LCM has answered the subpoena on that basis:

1.    Any funding agreement entered between [LCM] and any one or more of the applicants or group members relating to or in connection with the claims in this proceeding;

2.1    Any document recording or evidencing the terms of engagement or retainer applicable to the conduct of [the Examination Proceedings];

2.2    Any agreement relating to the funding by LCM of any costs or disbursements incurred in respect of the examinations conducted in the Examination Proceedings and any correspondence relating thereto.

3.     Any document:-

3.2    Which between 2009 and 30 June 2013 refers to:-

3.2.1    The examinations conducted in the Examination Proceedings;

3.3    Recording or evidencing a communication that refers to the institution of a class action, representative action or any other action against the first respondent between 2009 and 30 June 2013.

4.    Any record of payment to [GMG] referable to costs or disbursements incurred in relation to the Examination Proceedings.

13    I will refer separately to the terms of the subpoena addressed to GMG.

14    Looked at generally, the subpoena addressed to the Trustee seeks the production of documents which will indicate the purpose for which the examinations were conducted. Again, putting it generally, the subpoena addressed to LCM seeks the production of documents which bear upon any involvement of LCM in the Examination Proceedings or which may indicate the provision to it of documents, or information derived from documents, produced by BankSA in answer to the summonses issued by the FM Court.

15    The applicants applied for the setting aside, in whole or in part, of each of the three subpoenas. GMG filed a like application in relation to the subpoena addressed to it and was separately represented. LCM also filed an application which, amongst other things, sought the setting aside of the subpoena addressed to it, but it did not persist with that part of its application. The Trustee has not sought the setting aside of the subpoena addressed to him. He has complied with the subpoena, although asserting legal professional privilege in respect of some of the documents produced. Consideration of these claims was deferred.

16    GMG has complied substantially with the subpoena addressed to it but identified respects in which it would need more time. Having regard to the arrangements made for the hearing of the applications to set aside the subpoenas, it was common ground that the compliance did not preclude the pursuit of those applications.

Relevant principles

17    The principles upon which the Court acts on applications to set aside subpoenas are settled. The Full Court in Wong v Sklavos [2014] FCAFC 120 summarised the principles at [12] as follows (omitting the citations):

Although the parties referred to several authorities concerning the requirement for subpoenaed documents to have apparent relevance to an issue in a proceeding, in our opinion, the applicable principles are well established. The party issuing a subpoena bears the onus of demonstrating that the subpoena has a legitimate forensic purpose in relation to the issues in the proceedings … A subpoena may be set aside if it requires the production of documents which do not have apparent relevance to the issues arising on the pleadings …. Other cases have used different terminology, but with essentially the same effect, for example, by requiring that, viewed realistically, the documents sought have a bearing on an issue which is not unreal, fanciful or speculative …, or that the material sought is reasonably likely to add in some way to the relevant evidence in the case …, or that it be “on the cards” that the documents sought will materially assist the party at whose request the subpoena has been issued ….

18    Counsel for BankSA also referred to the line of authority which suggests that the elements of “legitimate forensic purpose” and “apparent relevance” are separate and distinct: R v Saleam [1999] NSWCCA 86 at [10]-[11]; Commissioner of the Australian Federal Police v Magistrates’ Court of Victoria [2011] VSC 3 at [28]; Attorney-General (NSW) v Chidgey [2008] NSWCCA 65, (2008) 182 A Crim R 536 at [64]; Watson v AWB Ltd (No 3) [2009] FCA 1174, (2009) 181 FCR 96 at [37]; Tamawood Ltd v Habitare Developments Pty Ltd [2009] FCA 364 at [27] and Australian Competition and Consumer Commission v Pratt [2008] FCA 1373, (2008) 250 ALR 661 at [15].

19    One of the submissions by the applicants is that the subpoenas are in the nature of a fishing exercise. A subpoena cannot be used for such a purpose. It is not a legitimate use of a subpoena to have the specified documents produced in a speculative attempt to identify whether the documents might, ultimately, be of some evidential value: Fried v National Australia Bank Ltd [2000] FCA 911; (2000) 175 ALR 194 at [30].

BankSA’s case on legitimate forensic purpose

20    The submissions of the parties on the aspects of legitimate forensic purpose and apparent relevance, and the breadth of the documents sought tended to overlap. Several involved an invitation to the Court to address now the issues to which BankSA’s stay application gives rise. To a certain extent that was unavoidable, but it is undesirable for the Court to use the present decision as the occasion for consideration of the merits of BankSA’s underlying application.

21    BankSA identified its legitimate forensic purpose as follows. It will contend on the hearing of the stay application that the examinations summonses in the FM Court required the production of documents by it in order to assist in the pursuit of litigation then in contemplation by Griffins Lawyers, the applicants and other group members; that this was an improper purpose; that the documents were of a kind which it (BankSA) was otherwise entitled to keep confidential; that the documents produced were available to the Trustee only for purposes associated with the bankruptcy; that the documents were not available to Griffins Lawyers’ other clients, being subject to the Harman undertaking; and that the documents have been used impermissibly by the applicants for the purposes of the formulation of their claims, negotiation with potential claimants and in obtaining litigation funding.

22    The very nature of BankSA’s application involves therefore serious allegations. It is to be expected that cogent evidence will be required for them to be established. There is a real question as to whether, even if BankSA’s allegations are established, they will warrant the grant of the stay which it seeks.

23    BankSA relies on a combination of circumstances as indicating that there is, presently, a proper basis for it to make the contentions outlined above, and thereby indicating a legitimate forensic purpose for the subpoenas. This included acknowledgements made by Mr Griffin in an affidavit filed in answer to BankSA’s interlocutory application, as well as events occurring during, and since, the examination process in the FM Court.

24    First, BankSA draws attention to the circumstance that, both before and after commencing to act for the Trustee in connection with the examination summonses, Griffins Lawyers were either acting for, or communicating with, the applicant, creditors of Mr Samra and LCM. It contends that those circumstances by themselves give rise to an inference that the discussions between Griffins Lawyers and potential claimants, and between Griffins Lawyers and LCM are likely to have incorporated reference to the documents, or information contained in documents produced by it.

25    Griffins Lawyers commenced to act for the Trustee on 6 August 2010, and acted for him throughout the Examination Proceedings. Mr Griffin first became involved in litigation involving Mr Samra in about August 2009 when Griffin Hilditch (a predecessor of Griffins Lawyers of which Mr Griffin was a principal) was retained by one of Mr Samra’s creditors. That litigation led to the bankruptcy of Mr Samra and to the appointment of Mr Cooper as his trustee.

26    Mr Griffin has deposed to first meeting some of Mr Samra’s creditors and investors on or about 6 August 2009, and to acting thereafter “in limited respects” for individual investors in relation to their dealings with Mr Samra. He has also deposed that, from time to time after August 2009, Griffins Lawyers spoke to investors, both individually and sometimes together, with a view to considering possible claims they may have, and that it acted for individual investors in discrete matters in relation to “the wider Samra matter”. Mr Griffin first spoke informally with LCM in late 2009 about the possibility of funding Mr Samra’s creditors and investors. He deposed that his discussions with LCM were “consistent with my discussions with investors about the collapse of the Adelaide Lending Centre business” (essentially that of the third respondent). Mr Griffin described the discussions as “sporadic and general” and that no arrangements or funding commitments were made until 2013.

27    Mr Griffin deposed expressly that LCM did not provide any funding in respect of the Examination Proceedings in the FM Court and that LCM had no involvement in Mr Cooper’s conduct of the investigations or the bankruptcy examinations.

28    Bank SA then relies upon some features of the examinations. It submits that the subject matter of the examinations in the FM Court had “almost a complete correlation” with the claims now advanced against it. From this BankSA submits that it can be inferred that the examinations were undertaken for the specific purpose of investigating such claims. It noted in this respect a submission of senior counsel in the FM Court which appeared to indicate that a purpose of the examinations was the investigation of claims which investors may have against BankSA.

29    Bank SA submitted, thirdly, that, inferences could be drawn from certain conduct during the course of the Examination Proceedings. It noted that, on 14 August 2012, Griffins Lawyers had caused to be issued a third summons to it seeking documents which extended well beyond the affairs of the bankrupt. After disputation in the FM Court about the breadth and appropriateness of this summons, the Trustee did not press the third summons and sought its discharge. Counsel for BankSA described the circumstances in which this occurred as “curious”. The submission seemed to be that this course of events supported the inference that the examination summons were being used in order to ascertain evidence or information relating to the present proceedings.

30    Next, BankSA relied upon what it said were inconsistent (and inadequate) explanations given by Griffins Lawyers as to the purpose for which the Trustee was seeking BankSA documents. It is not necessary presently to outline the nature of the inconsistency for which BankSA contends.

31    Next, BankSA points to the fact that, in response to its interlocutory application of 24 December 2014, Griffins Lawyers have now voluntarily chosen to cease acting for the applicants. In that respect, Mr Griffin has deposed:

[5]    Griffins Lawyers did not receive any correspondence from BankSA’s solicitors prior to the making of the application to restrain my firm from acting. The bringing of the BankSA application (as foreshadowed by BankSA’s counsel at the directions hearing in this matter on 19 December 2014) was the first time that I was aware that this interlocutory relief would be sought.

[6]    Without any admission that BankSA is entitled to that interlocutory relief, I came to the view that it was preferable in all the circumstances that Griffins Lawyers cease to act as the solicitors for the applicants in these proceedings.

The applicants’ submission seemed to be that, in the absence of a more detailed explanation, it could be inferred that Griffins Lawyers had come to recognise that they were in a position of conflict. The precise nature of the conflict was not identified.

32    Finally, BankSA points to what it says are significant matters to which Mr Griffin has not deposed, namely:

(a)    That Griffins was conscious of, and avoided breach of, the Harman undertaking when acting for the applicants in these proceedings;

(b)    That Griffins refrained during the discussions between it and potential claimants, and between it and LCM, when discussing the potential claims which the claimants may have against BankSA, from communicating the effect of, or from providing access to, the documents produced by BankSA;

(c)    The nature of the information which was provided to LCM to assist that entity’s consideration of the potential funding of the proceedings, and whether the communications included information about the effect of the documents produced by BankSA, or provision to LCM of access to those documents.

33    It should be noted immediately that the applicants made a number of responses to these contentions, to the effect that they would be of no moment on the hearing of the stay application. Counsel for GMG adopted those submissions and made further submissions by way of critique of BankSA’s position.

Relevance/utility

34    The applicants’ first contention was that the subpoenas should be set aside because they lacked utility. They said that it could be seen now that the claim of abuse of process in the Examination Proceedings could not succeed. Further still, any claim of such an abuse should have been pursued in the Examination Proceedings themselves. Although there had been some advertence by BankSA’s counsel to the issue in the Examination Proceedings, no claim of abuse had then been pressed.

35    Counsel for the applicants acknowledged that a purpose of the examination in the FM Court, possibly the purpose, had been to investigate possible claims which investors in Mr Samra’ scheme may have against BankSA. He submitted that this had been a proper purpose and referred to the authorities indicating that it is a legitimate purpose of a trustee in an examination under s 81 and its cognates to explore the availability of means by which creditors (whether secured or unsecured) may obtain some recovery of their losses: Re Excel Finance Corporation Ltd; Worthley v England (1994) 52 FCR 69 at 93; Re New Tel Ltd (in liq); Evans v Wainter Pty Ltd [2005] FCAFC 114, (2005) 145 FCR 176 at [142]-[144] and [246]-[247]; Karounos v Official Trustee (1988) 19 FCR 330 at 335; Re Normans Wines Ltd (in liq); Harvey v Burfield [2004] SASC 171, (2004) 88 SASR 541 at [86], [140]-[141]; Re Laurie Cottier Productions Pty Ltd (in liq) (1992) 9 ACSR 513 at 518; Flanders v Beatty (1995) 16 ACSR 324 at 334; Douglas-Brown v Furzer (1994) 11 WAR 400 at 408. The overarching principle is that the examination be conducted for the benefit of the bankrupt estate. Counsel relied in particular on the following passage in the judgment of Lander J in Evans v Wainter:

[143]    In my opinion, Re Excel stands for the proposition that it is an abuse of process to use the Pt 5.9 procedure if the predominant purpose of the applicant seeking the order is not for the purpose of benefiting the corporation, its contributories or its creditors.

[144]    If the party seeking the examination summons is doing so for any number of purposes, which do not include the purpose of benefiting the corporation, then that would amount to an abuse. On the other hand, if the party seeking the examination summons has as one purpose the achievement of a benefit to that party but has also a further purpose which is for the benefit of the corporation then the use of the Pt 5.9 procedure will not be an abuse of process.

36    I observe that senior counsel for the trustee in the FM Court had, on a relevance challenge, identified this purpose and had referred the Registrar presiding over the examination to authority indicating its legitimacy. Accordingly, the purpose of the examinations had not been kept secret.

37    Counsel for the applicants submitted that the correlation between the Statement of Claim and the evidence in the Examination Proceedings was unremarkable, having regard to the nature of the allegations which the applicants make and to the relevance of the examinations as stated by senior counsel in the Examination Proceedings.

38    Counsel for the applicants made further points. He noted that the s 81 examinations were conducted in public (subs (2)), and that the transcript of the examinations is open to be inspected by any creditors of Mr Samra, including the present applicants (subs (17)). Further still, it had been open to the applicants, as creditors of Mr Samra, to apply themselves for the issue of an examination summons under s 81(1) and to take part in the examination sought by the trustee (subs (8)).

39    The combined effect of these matters meant, it was submitted, that it can be determined now that the claims of abuse of process cannot succeed, with the effect that it should be concluded that the subpoenas lack a legitimate forensic purpose, and therefore any utility.

40    When BankSA filed its interlocutory application on 24 December 2014, it placed considerable emphasis on the circumstance that the statement of claim referred expressly to several emails, each of which it had produced to the FM Court in answer to the summons to produce. However, Mr Griffin has deposed that Griffins Lawyers had obtained those emails from another source, prior to the examinations in the FM Court, and referred to documentary evidence confirming that that was so. I did not understand BankSA to continue to rely on the references to the emails in the statement of claim.

41    Counsel for BankSA accepted that the legitimacy of the examinations conducted in this case pursuant to s 81 of the Bankruptcy Act turned on the purpose of the Trustee. He contended, however, that there was a real question in this case as to the true purpose, having regard to the acknowledgment by Mr Griffin that, while acting for the Trustee in the Examination Proceedings, Griffins Lawyers were engaged contemporaneously in discussions with potential claimants and LCM with respect to litigation funding. Counsel submitted:

[I]t is our submission that if [these are] … not examinations that are being funded by the trustee in the ordinary way [in which] he may fund his lawyers to conduct investigations on his behalf, but rather that [these were] being funded by Griffins or by the applicant group that stand behind him at the time, or now as the applicant group in these proceedings, [that] casts a very different light upon the exercise of the power and what it was that was being sought to be undertaken when my client’s extensive documents were produced under compulsion of law in the examination process.

42    Counsel also noted that the causes of action now pursued by the applicants are not causes of action which were open to the trustee. He said that it was not to the point that the creditors of Mr Samra may also have applied for the issue of an examination summons or participated in the examination of persons summonsed by the Trustee. If they had done so, they could not have asked questions relating only to causes of action available to themselves in a private capacity as opposed to questions relating to the claims which could be brought on behalf of Mr Samra’s estate: In the matter of Affinity Capital Pty Ltd; Indrasith v Ku [2011] NSWSC 1158 at [27], [62]-[65].

43    Counsel said that BankSA sought to test the purpose for which the examinations were conducted as well as the extent to which the documents produced by BankSA have been deployed in the present litigation.

44    Mr Doyle, who appeared for GMG, supported the submissions of counsel for the applicants. He referred in addition to the breadth of documents sought by the subpoena, to the evident confidential nature of many of them and to the prospect that claims of legal professional privilege in respect of many are likely to be upheld. Mr Doyle submitted that account should be taken of these matters in considering both the claimed legitimate forensic purpose of the subpoenas and their utility. He referred to Australian Gas Light Co v Australian Competition and Consumer Commission [2003] FCA 1101 at [8] in which French J said:

[8]    It is not appropriate to be overly prescriptive in setting out criteria for the grant of leave to issue a subpoena. Plainly, the documents sought must have at least some apparent potential relevance to the matters in issue in the litigation. The assistance that the requesting party may derive from the production of such documents must be taken into account. Case management considerations are also relevant. A wide-ranging subpoena, seeking documents of doubtful relevance at great inconvenience to, or that risk compromising the commercial privacy of, a third party, may not readily attract the grant of leave. Where the issue of such a subpoena is likely to delay progress to trial because of the legitimate interests of a party in resisting its issue, that may also be a practical factor to be weighed.

45    Mr Doyle also emphasised that the relevance and utility of the subpoenas should be assessed by reference to the precise basis upon which BankSA pursues the application for a permanent stay of the proceeding. He noted in this respect that the power to stay proceedings as an abuse of process is one which is sparingly exercised and only in exceptional cases: Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 at 279; Spalla v St George Motor Finance Ltd [2004] FCA 1014, (2004) 209 ALR 703 at [36].

46    I accept that these are matters which bear upon the issues of legitimate forensic purpose and utility.

47    Nevertheless, I consider that it should not be held that the subpoenas have no utility and lack a legitimate forensic purpose. The authorities to which counsel referred indicate the purpose for which the Examination Proceedings were conducted will be the determining factor. That is very much a question of fact. The articulation of the purpose by senior counsel in the Examination Proceeding will be important in the determination of that question of fact, but it is not conclusive. The circumstance that Griffins Lawyers were, contemporaneously, engaged in discussions with a litigation funder and with potential claimants as well as instructing counsel in relation to the Examination Proceeding which were directed to the availability of claims against BankSA provides an understandable basis for BankSA’s concerns. I also note that the Court does not, at this stage, have any evidence from the Trustee as to his purpose. Nor has Mr Griffin deposed to his instructions with respect to the purpose of the examinations.

48    The apparent relevance of the documents is, to my mind, informed by the same considerations. I am satisfied that the subpoenas satisfy that requirement.

49    I agree that there is likely to be a real issue as to whether the claims asserted by BankSA, even if established, will entitle it to the relief which it seeks. However, I do not consider it appropriate to reach a conclusion on that issue at this stage.

50    It is convenient to address later the submissions made by Mr Doyle as to the particular documents sought from GMG.

Fishing

51    The applicants next contended that BankSA has issued the subpoenas as part of a “fishing” exercise. Counsel referred in this respect to the oft-cited passage in the judgment of Lord Esher MR in Hennessy v Wright (No 2) (1888) 24 QBD 445 at 448:

In other words, the plaintiff wishes to maintain his questions, and to insist upon answers to them, in order that he may find out something of which he knows nothing now, which might enable him to make a case of which he has no knowledge at present …

52    The applicants’ counsel submitted that BankSA is looking for evidence of impropriety so that it can articulate an arguable complaint. He submitted that BankSA has not to date identified any specific impropriety but is instead asserting that there could be some form of impropriety which it ought to be allowed to investigate.

53    I am satisfied that BankSA has, as outlined above, identified a sufficiently precise claim of abuse of process so as to meet the first of the applicants’ objections.

54    I am also satisfied that the documents sought by BankSA are, with some exceptions, documents of a kind which one would expect to exist and which have apparent relevance to the matters raised by BankSA’s interlocutory application.

55    An exception is the documents sought by para 2 of the subpoena addressed to LCM. To my mind, the seeking of that class of documents is fishing because BankSA has not established any basis for a belief that documents of that kind may exist at all. As already noted, Mr Griffin has deposed expressly that (to his knowledge) LCM had no involvement in the Trustee’s conduct of the Examination Proceeding and did not provide any funding in relation to those proceedings.

56    Paragraph 2 of the subpoena addressed to LCM should be set aside. For the same reason, para 4 of the subpoena addressed to LCM should be set aside.

Impermissible discovery

57    Next, the applicants submitted that the subpoenas were, in effect, an attempt by BankSA to obtain a form of discovery and, in particular, discovery which was more extensive than the standard discovery contemplated by r 20.14 of the Federal Court Rules 2011. Counsel referred in particular to the requirements of the subpoenas that the recipients produce “any document recording or evidencing” a particular communication or event and, in the case of the subpoena addressed to GMG, any document “which refers to or touches upon” a circumstance or event.

58    There is some force in this submission. The proper limits of a subpoena to produce documents should not be exceeded. Jordan CJ addressed this question in Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 573:

If [a subpoena duces tecum] be addressed to a stranger, it must specify with reasonable particularity the documents which are required to be produced. A subpoena duces tecum ought not to be issued to such a person requiring him to search for and produce all such documents as he may have in his possession or power relating to a particular subject matter. It is not legitimate to use a subpoena for the purpose of endeavouring to obtain what would be in effect discovery of documents against a person who, being a stranger, is not liable to make discovery. A stranger to the cause ought not to be required to go to trouble and perhaps to expense in ransacking his records and endeavouring to form a judgment as to whether any of his papers throw light on a dispute which is to be litigated upon issues of which he is presumably ignorant … And if a subpoena duces tecum is issued to such a person in an objectionable form, the witness may apply to the Court to have it set aside.

59    In Australian Competition and Consumer Commission v Shell Co of Australia Ltd [1999] FCA 212; (1999) 161 ALR 686 at [50], Cooper J referred to the principle that “where a particular method has been prescribed by the rules for the achievement of the particular objective, such as the obtaining of further discovery conformably with the rules relating to discovery of documents …, it is impermissible to attempt to achieve that objective through the subpoena process”.

60    These considerations make it appropriate to give close consideration to the breadth of documents required by the subpoenas.

61    In the case of LCM, I will, for the reasons set out earlier, set aside the requirement for LCM to produce the documents sought in paras 2 and 4. Paragraph 1 seeks a document which LCM is required to produce in any event: Practice Note CM 17, para 3.6.

62    I am not satisfied that the documents sought in para 3 are inappropriately broad. On the contrary, the class of documents sought seems to be reasonably confined, and should not be a cause of oppression.

63    Counsel submitted that the documents sought in paras 2 and 3 of the subpoena addressed to the Trustee were also inappropriately broad. I have been concerned that BankSA is by these paragraphs seeking a form of discovery. However, in my opinion, the documents sought are reasonably specific and require production of a relatively narrow band of documents only, so that this part of the subpoena should not be set aside.

64    The consequence is that, although there is, prima facie, some force in the applicants’ objection to the affidavits addressed to the Trustee and LCM on the basis that they sought discovery, I decline to set the subpoenas aside on that basis.

The Trustee’s supporting affidavits in the Examination Proceedings

65    If relation to para 1 of the subpoena addressed to the Trustee by which BankSA seeks production of each affidavit relied upon by the Trustee in support of his application for the issue of the examination summonses, the applicants referred to r 6.13 of the Federal Circuit Court (Bankruptcy) Rules 2006. That rule provides for the sealing of the affidavits filed in support of an application for the issue of an examination summons and directs that the Registrar must not make them available for public inspection. The applicants emphasised that BankSA is, accordingly, seeking access to documents which it is not otherwise entitled to inspect.

66    The subpoena is course directed to documents in the Trustee’s possession and not those held by the Court. Nevertheless, it is appropriate to have regard to the policy underlying provisions such as r 6.13.

67    That policy is well established. It is to safeguard liquidators and trustees in bankruptcy from having to disclose to a proposed examinee the matters upon which the liquidator or trustee wishes to examine thereby giving the examinee an opportunity to defeat the process of the examination itself: Re Gold Co (1879) 12 Ch D 77 at 83; Simionato v Macks (1996) 19 ACSR 34 at 63. Nevertheless, the Court has a discretion to allow the disclosure of the affidavit lodged in support of an application for the issue of an examination summons: Re British and Commonwealth Holdings Plc (Nos 1 and 2) [1992] Ch 342 at 355; Simionato v Macks at 63. The Court does not readily exercise that discretion in favour of a prospective examinee. It usually requires the examinee to establish an arguable case for the setting aside of the examination summons, without recourse to the affidavits relied upon by the liquidator or trustee: Simionato v Mack at 63; Donnelly v Davison [2000] FCA 1396 at [23]; Pascoe v Loiterton [2006] FCA 115 at [7].

68    The present case is unusual in that the Examination Proceedings have now concluded. The rationale for the sealing up of the affidavits no longer applies. Further, I consider that BankSA has demonstrated an arguable basis, which is independent of whatever may be contained in the affidavits, for the claims which it wishes to pursue.

69    Accordingly, I am not satisfied that the fact that the originals of the supporting affidavits have been sealed by the FM Court provides a sound basis for the setting aside of para 1 of the subpoena addressed to the Trustee.

The GMG subpoena

70    It is now necessary to refer in more detail to the subpoena addressed to GMG. The documents sought from GMG are more extensive than those sought from the trustee and LCM. The subpoena addressed to GMG required it to produce the following:

1.    Any document recording or evidencing:

1.1    any retainer or engagement of [GMG] (Griffins) by any of the applicants or "group members" (as defined in [4] of the Amended Statement of Claim filed on behalf of the applicants on 24 December 2014);

1.2    a communication relating to and preceding the retainer or engagement of Griffins by any of the applicants or group members.

2.    Any document recording or evidencing:

2.1    the terms of engagement or retainer of Griffins relating to the conduct of examinations in [the Examination Proceedings];

2.2    any agreement arrangement or understanding relating to the funding of any costs or disbursements in connection with the Examination Proceedings, and correspondence relating thereto;

2.3    any record of payment to Griffins referable to costs or disbursements incurred in relation to the Examination Proceedings.

3.    Any document recording or evidencing:

3.1    Griffins' proposal for, or contemplation of, any meeting between Griffins and any investor or investors as referred to in paragraph 17.3.1 of the affidavit of Gregory Michael Griffin sworn on 25 February 2015 (Griffin Affidavit);

3.2    the communications with investors referred to in paragraph 17.3.1 of the Griffin Affidavit.

4.    Any document recording or evidencing a communication between Griffins on the one hand and LCM Litigation Fund Pty Ltd or any other entity in the business of funding litigation on the other which refers to or touches upon:

4.1    the Examinations Proceedings;

4.2    any document produced by the first respondent pursuant to summons in the Examination Proceedings;

4.3    the institution of a class action, representative action or any other action against the first respondent between 2009 and 30 June 2013.

5.    Any index to the brief(s) to counsel in respect of the retainers referred to in paragraph 17.7 of the affidavit of Gregory Michael Griffin sworn on 25 February 2015.

6.    Any document recording or evidencing consideration by Griffins of:

6.1    the institution of a class action, representative action or any other action against the first respondent in the period between 6 August 2010 and 30 June 2013;

6.2    the ability to deploy any information obtained in the Examination Proceedings in respect of any claim against the first respondent;

6.3    the use of the Examination Proceedings to determine the extent to which creditors might have a right of action against the first respondent.

7.    Any document recording or evidencing the provision of the bank statements of ALCPL as sourced from an investor as referred to in paragraph 35.3 of the Griffin Affidavit.

8.    Any document recording or evidencing any communications between Griffins and the trustee in bankruptcy of Michael Samra, or Griffins and any applicant or group member, relating to the use that may be made, or was made, of documents produced in answer to the examination summonses or orders for production made in the Examination Proceedings.

9.    Any document recording or evidencing a communication with one or both of Scott Evans and Lachlan Armstrong SC that attached, set out or was derived from, the documents produced by the first respondent in answer to examination summons in the Examination Proceedings.

Mr Armstrong and Mr Evans to whom reference is made in para 9 are the counsel who are shown as having drafted the statement of claim.

71    In my opinion, the whole of para 1 of the subpoena addressed to GMG should be set aside. It seeks the production of documents relating to the retainer of GMG by any of the applicants or group members irrespective of the time when that retainer occurred and irrespective of whether it has any connection at all with the affairs of Mr Samra or his associated entities. That is sufficient to indicate that the documents sought in para 1 lack a legitimate forensic purpose presently. It is in any event too broad.

72    I decline to direct the setting aside of para 2. GMG has complied with para 2 and does not raise any claim of oppression. Its objection is based on the absence of a legitimate forensic purpose but, for the reasons given earlier, the contemporaneity of Mr Griffin’s discussions with potential claimants while Griffins Lawyers were retained by the trustee indicates a legitimate forensic purpose in relation to these documents.

73    The para 3 documents relate to meetings to which Mr Griffin referred in para 17.3.1 of his affidavit. In that paragraph, Mr Griffin deposed:

17.3    From time to time after August 2009 my firm:

17.3.1    spoke to investors, both individually and sometimes together, with a view to considering possible claims they may have;

…

74    Griffins Lawyers have produced documents in answer to para 3. However, they have noted that para 3 on its face, requires it to produce documents concerning its own internal contemplation of meetings. It has not, in the time available, been able to complete a search for documents of that description.

75    Griffins Lawyers contend that the documents sought by para 3 lack a legitimate forensic purpose. They point to the fact that the documents sought relate to a period well before Griffins Lawyers accepted instructions from the Trustee in relation to the Examination Proceeding, are of their nature confidential documents and are likely to give rise to claims of legal professional privilege. These are important considerations.

76    If I had considered it inevitable that the claims for legal professional privilege would be upheld, I may well have upheld the submission of GMG with respect to this category. However, it is not apparent that a solicitor/client relationship existed between GMG, on the one hand, and the persons with whom it was having discussions, on the others. A solicitor/client relationship is necessary for the existence of privilege. See the decision of Finkelstein J in Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd (No 2) [2009] FCA 449; (2009) 180 FCR 1 at [16] in an analogous context.

77    The circumstance that the documents sought include those brought into existence before Griffins Lawyers accepted the retainer from the Trustee is not a decisive consideration. It is possible that such documents may be material to BankSA’s application.

78    Accordingly, I decline to set aside para 3 of the subpoena addressed to GMG.

79    GMG sought the setting aside of para 4 principally on the ground of its width, and the oppression thereby occasioned. It emphasised in particular the words “or touches upon” in preamble, although the basis for its objection was not confined to those words. I uphold the submission with respect to the requirement to produce documents “touching upon” the identified subject matters but otherwise reject GMG’s application in relation to para 4. In my opinion, the documents required to be produced are sufficiently identified.

80    In relation to para 5, the submission was that it is almost inevitable that a justified claim for privilege will be made in respect of the index to the brief to counsel. This raises a real question as to the utility of para 5. In that circumstance, I am not satisfied that the request has a legitimate forensic purpose. Paragraph 5 will be set aside.

81    I am not satisfied that para 6 is expressed too broadly. Some of the documents sought may be subject to claims for privilege but that cannot be determined at this stage.

82    I will set aside para 7. I am not satisfied that that paragraph has a legitimate forensic purpose given that BankSA has not contested Mr Griffin’s evidence that Griffins Lawyers had received the bank statements in question prior to them being produced by BankSA pursuant to the summons for examination and production of documents. As noted earlier, Mr Griffin provided documentary evidence supporting his contention, including the production of a document to BankSA’s own lawyers. That circumstance, together with the potential for a claim of legal professional privilege indicates that para 7 lacks a legitimate forensic purpose.

83    I will not set aside para 8. It may well be that any document produced pursuant to para 8 will be subject to a claim of legal professional privilege. That remains to be seen. I am not satisfied that the class of documents sought by para 8 is too broad.

84    I will set aside para 9. It seems inevitable that a claim for legal professional privilege will be upheld in relation to para 9. Accordingly, whatever forensic purpose may be involved in that request, I am satisfied that para 9 lacks utility.

Summary

85    For the reasons given above, in relation to the subpoena addressed to LCM Litigation Fund Pty Ltd, I made orders on 8 April 2015 setting aside paras 2 and 4. In relation to the subpoena addressed to GMG Legal Services Pty Ltd, I set aside in full paras 1, 5, 7 and 9 and, in relation to para 4, set aside the requirement in para 4 to produce documents which “touch upon” the identified subject matters. Otherwise the Interlocutory Applications of the applicants and GMG seeking the setting aside of the subpoenas were dismissed.

Associate:

Dated:    23 April 2015