FEDERAL COURT OF AUSTRALIA

BrisConnections Finance Pty Limited (Receivers and Managers Appointed) v Arup Pty Limited [2016] FCA 906

ORDERS

THE COURT ORDERS THAT:

1.    The parties are to bring in Short Minutes of Orders to give effect to these reasons by no later than 4pm on 8 August 2016.

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

REASONS FOR JUDGMENT

1    It was in May 2014 that this proceeding was first commenced. BrisConnections Finance Pty Ltd (and a number of other Applicants) (“BrisConnections”) then commenced a proceeding against Arup Pty Ltd (“Arup”).

2    This is the third interlocutory judgment given in this proceeding. The first judgment addressed disputed questions of discovery: BrisConnections Finance Pty Ltd v Arup Pty Ltd [2015] FCA 1077. The second judgment addressed disputed claims to legal professional privilege: BrisConnections Finance Pty Ltd v Arup Pty Ltd [2016] FCA 438.

3    The more general background to the dispute between the parties has been previously set forth in those judgments. It need not be repeated.

4    Rather than occasion yet further apparent delay in progressing the matter for hearing, it has been set down for hearing – initially for a month – commencing on 3 April 2017. Subject only to requirements imposed by the Full Court sittings of this Court commencing on 1 May 2017, the matter will proceed thereafter until it has concluded.

5    The present matter in need of resolution is whether two subpoenas should be set aside, either because the materials sought to be produced have no relevance to the dispute between the parties or because the subpoenas are an “unnecessary, time-consuming, and expensive diversion from the resolution of the real issues in the proceedings”.

6    The two subpoenas were issued at the request of Arup.

7    The issues to be resolved have been addressed in a letter dated 25 July 2016 from the solicitors for Arup; in a written Outline of Submissions filed on behalf of the Applicants and dated 2 August 2016; and in written submissions filed on behalf of Arup yesterday.

The power to set aside a subpoena

8    Power to set aside a subpoena is conferred by r 24.15(1) of the Federal Court Rules 2011 (Cth) (the “Federal Court Rules”), which provides as follows:

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 relation to it.

An application to set aside a subpoena is usually made, as in the present proceeding, to the Judge who granted leave: Haile-Michael v Konstantinidis (No 3) [2013] FCA 53 at [18] per Jessup J.

9    There can be no doubt that the Applicants may make the present application – they are both a “party” to the proceeding and, in any event, have “a sufficient interest” to make the application: cf. Becwell Legal Services Pty Ltd, in the matter of Griffin Energy Group Pty Ltd (Subject to Deed of Company Arrangement) v McMaster [2011] FCA 1501 at [3] per Yates J.

The form of subpoenas in question

10    On 1 June 2016 leave was granted to Arup to serve subpoenas upon the proper officers of:

    Australia and New Zealand Banking Group Limited;

    BNP Paribas (together, the “Banks”); and

    City North Infrastructure.

Based on the affidavit filed in support of the applications for leave, it was then considered appropriate that such subpoenas should be served. The Banks have also filed yesterday a brief Outline of Submissions and were represented by Counsel this morning.

11    Thereafter, the Applicants in the proceeding filed an Interlocutory Application dated 7 July 2016 seeking to have the subpoenas directed to the Banks set aside. Leave was granted on 12 July 2016 to serve an amended subpoena on City North Infrastructure.

12    Correspondence between the interested entities followed. The form of the subpoenas directed to the Banks was considerably narrowed. As of this morning, and taking the subpoena served upon BNP Paribas as the example, only categories [2], [4], [6] and [7] of the subpoena were pressed. The remaining paragraphs in the subpoena as served are not pressed. The categories of documents sought to be produced by each of the Banks are expressed in substantially the same terms. The revised form of subpoena now sought to be issued to BNP Paribas is expressed as follows (without alteration):

The documents and things you must produce are as follows:

1.    A copy of this subpoena

2.    All draft or final due diligence reports in respect of the Airport Link Project provided to BNP Paribas or prepared by BNP Paribas in the period 1 July 2007 to 5 September 2008

3.    ...

4.    All draft or final credit committee reports considering the Airport Link Project created or received during the period 1 July 2007 to 5 September 2008, in so far as these documents consider or refer to the:

a.    the Bank’s consideration and assessment of Arup’s reports, including traffic volume representations and forecast reliability representations;

b.    possible risks with the investment;

c.    questions and concerns raised by the credit committee;

d.    the financial structure; and/or

e.    discussions regarding other bids or traffic forecasts prepared for the Airport Link Project

5.    ...

6.    Minutes of credit committee or due diligence meetings held during the period 1 July 2007 to 5 September 2008 referring to the Airport Link Project

7.    Communications, or documents evidencing communications, involving one or more of the following persons:

a.    Tristan Lagarde

b.    Justin Chan-Sew

c.    Wayne Green

d.    Ali Zadegan

e.    Pierre Piquemal;

with the Applicants, or Cross-Respondents, or any one of them, referring to or considering the revenue forecast or financial structure of the Airport Link Project created or received between 1 July 2007 and 30 July 2008

...

The named individuals in category [7] vary between the two subpoenas. Otherwise the terms of the subpoenas directed to each of the Banks are substantially the same.

13    The Applicants seek to have the subpoenas set aside, even confined as they now are to categories [2], [4], [6] and [7].

The test of apparent relevance

14    The power conferred by r 24.15 of the Federal Court Rules may be exercised where (inter alia) the documents sought to be produced have no “apparent relevance” to the issues to be decided.

15    For present purposes it is unnecessary to canvass in any great detail the test to be applied where an alleged lack of relevance is the basis for an application. In Wong v Sklavos [2014] FCAFC 120, (2014) 319 ALR 378 at 381 to 382 Jacobson, White and Gleeson JJ there expressed the test as follows:

Apparent Relevance

[12]    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 ...

The principles there set forth have since been repeatedly applied: e.g., BGC (Australia) Pty Ltd v Fremantle Port Authority [2014] FCA 1083 at [18] per Siopis J; Perazzoli v BankSA [2015] FCA 373 at [17] per White J; Kenquist Nominees Pty Ltd v Campbell [2016] FCA 354 at [17] per Yates J; Kennedy v Secretary, Department of Industry [2016] FCA 485 at [58] per Flick J. Other authorities have expressed much the same principle by asking whether evidence “will throw light on an issue” or is it “on the cards” that relevant evidence will be adduced: Spencer v Commonwealth of Australia [2014] FCA 1234 at [16] per Mortimer J.

16    Placed at the forefront of the application to have both subpoenas set aside, and in support of a submission that even the proposed revised form of subpoenas falls foul of these principles, is the submission made by Senior Counsel for the Applicants that the documents sought to be produced have no “apparent relevance” to the issues to be resolved.

17    Of immediate relevance to the principal proceeding brought by the Applicants against Arup is the Applicants’ contention that they suffered loss because, in reliance on Arup’s representations, they borrowed monies from the Banks. It is the character of the representations made by Arup, and the reliance placed by the Applicants upon those representations, which is of central relevance to the principal proceeding.

18    Of no “apparent relevance” – at least according to the submission of the Applicants – is the consideration given by the Banks to the risks involved or their own assessments of those risks.

19    So much, it is understood, was accepted by Senior Counsel on behalf of Arup. According to Arup, it was not so much the internal assessments or deliberations of the Banks which attracted its interest; what was of “apparent relevance”, as submitted on behalf of Arup, were the documents provided by the Applicants to the Banks and the information (even if not in the form of documents) submitted by the Applicants to the Banks. Each of the documents in categories [2], [4] and [6], it was submitted on behalf of Arup, would in turn expose the information provided by the Applicants to the Banks.

20    As categories [2], [4] and [6] are drafted, the submission advanced on behalf of the Applicants is accepted. It matters not whether the category of documents be described by reference to:

    due diligence reports;

    credit committee reports; or

    minutes of credit committee or due diligence meetings.

Whatever the description, each category of documents relates back to internal deliberations or consideration given by the Banks to the Project and are not focussed upon or confined to the documents or information forwarded to the Banks by the Applicants. Although the attempt by Arup to seek the production of those documents which are most likely to record the documents or information communicated to the Banks by the Applicants, that is not what categories [2], [4] and [6] seek to do. Although more of an assertion than a statement of fact, it may presently be assumed that it “is likely that the Banks communicated with the Applicants in relation to these matters” and that it “is likely that in conducting their due diligence, the Banks considered the assumptions undertaking [sic] the Project, including the traffic forecasts prepared by Arup”. This may or may not be correct.

21    As drafted, categories [2], [4] and [6] seek the production of documents which record the internal deliberations of the Banks or consideration given by the Banks to the Project. Although those documents may well in turn expose documents or information communicated to the Banks by the Applicants, as drafted the two subpoenas seek the production of either documents having no “apparent relevance” to the centrally relevant issues dividing the parties to the proceeding or documents having such marginal “apparent relevance” that those paragraphs should be set aside.

22    A proposal to narrow categories [2] and [4] to “draft or final” reports and to delete a separate category of “all drafts”, with respect, fails to adequately address the underlying lack of “apparent relevance” of either a “draft” or a “final” document.

23    In the absence of any confining of the documents sought to be produced by categories [2], [4] and [6] to such consideration or deliberations as were directed to any documents or information communicated by the Applicants to the Banks, those paragraphs as drafted go far beyond that which can properly be regarded as a matter having any “apparent relevance” to the issues dividing the parties.

24    The documents sought in category [7] of the subpoenas attract different considerations. Each of the named persons is either an officer or employee of one of the Banks. Category [7] thus seeks those documents held by the respective Bank which evidence communications between the named officers or employees of the Bank, and the Applicants, Cross-Respondents, or any one of them. In the 25 July 2016 letter, the solicitors for Arup thus maintained (for example):

Documents produced on discovery show that the Banks engaged in sensitivity testing of the work completed by Arup. Documents have also been produced that indicate that the Banks considered the reports prepared by Arup, and that they raised queries about the assumptions used by Arup in their report. Such documents indicate that the Banks generated (and/or were provided with) material that tested the representations made by Arup. Accordingly, the documents sought in this category are relevant to whether the representations made by Arup were reasonable.

It is accepted that the documents sought in category [7] may thus expose an analysis undertaken by the Banks of documents or information communicated to the Banks by the Applicants. That confined category of documents, it has been concluded, does have some “apparent relevance” to the issues to be resolved in the principal proceeding and, in particular, have some “apparent relevance” to such reliance as the Applicants may have placed on Arup’s representations and the reasonableness of any such reliance. It is further concluded that it is no sufficient answer to requiring such documents to be produced that the same documents may already have been produced on discovery. The suggested categories of discovery relied upon by the Applicants in their written and oral submissions may not have been drafted sufficiently widely to capture the documents now sought by category [7].

25    But, to the extent that Arup separately contends (for example) that it is to be “expected” that “due diligence reports” prepared by the Banks “will identify any independent analysis of the representations made by Arup that are alleged to have been misleading or deceptive” so that any such “analysis will be relevant to whether Arup had reasonable grounds for making the representations”, the submission is rejected either because:

    any question whether there are “reasonable grounds for making the representations” will be a question to be resolved by the Court by reference to such evidence as is considered admissible and probative and not by an assessment made by the Banks – any “independent analysis” undertaken by the Banks certainly does not have an immediate relevance to that question and, more importantly, does not have any “apparent relevance”; and/or

    any subpoena seeking the production of such documents as may exist and which may contain any such “independent analysis” is in the nature of a fishing exercise, albeit an exercise which it may well be accepted will yield a decent “haul” of documents. It is the very fact, of course, that there could be no discovery by the Applicants of the internal documents of the Banks that occasions the pursuit by Arup of these internally generated documents.

In reaching these conclusions care must be taken to ensure that the test being applied is at this stage one of considering the “apparent relevance” of the documents sought to be produced as opposed to a test which (in one way or another) seeks to consider whether the documents produced may ultimately be admissible in the proceeding. “Apparent relevance does not require that the documents themselves be directly admissible”: Sklavos v Australasian College of Dermatologists [2014] FCA 476 at [8] per Jagot J. It was this decision of her Honour which was affirmed on appeal by Jacobson, White and Gleeson JJ in Wong v Sklavos [2014] FCAFC 120, (2014) 319 ALR 378.

26    The documents described in category [7], nevertheless, retain some residual “apparent relevance”.

27    A submission that category [7] should be confined to a period commencing in December 2007, rather than July 2007, is rejected.

28    A proposal to narrow the category of documents in paragraph [7] to a consideration of the traffic forecasting by Arup, as opposed to the more generally expressed category as drafted, is also rejected.

An unnecessary diversion?

29    Very much as a fall-back position, the Applicants alternatively contended that the production of the documents sought by way of subpoena would be (inter alia) an “expensive diversion” from the resolution of the “real issues”.

30    Reliance was placed upon s 37M of the Federal Court of Australia Act 1976 (Cth), namely that provision which sets forth the “overarching purpose of the civil practice and procedure provisions” including the need to resolve disputes “as quickly, inexpensively and efficiently as possible”.

31    No reference was made to s 37N of that Act, namely the provision which imposes upon the parties to a civil proceeding in this Court the duty to “conduct the proceeding … in a way that is consistent with the overarching purpose”.

32    In some proceedings it may be the case that a subpoena could possibly be set aside for seeking documents having no “apparent relevance”, but that the costs and delay in setting aside the subpoena would be disproportionate to the costs involved in compliance both to the parties to the proceeding and the third party whose documents have been subpoenaed. In such proceedings, ss 37M and 37N may dictate a degree of pragmatism.

33    But such is not the present proceeding.

34    Of present relevance, in very general terms, is:

    the extent of discovery which has already been ordered;

    the fact that many of the documents of central relevance to the resolution of the Applicants’ claims as against Arup have already been produced or will be produced; and

    the disruption to the normal business activities of the Banks and the costs to be incurred in compliance.

Section 37M recognises that “speed and efficiency, in the sense of minimum delay and expense, are essential to a just resolution of proceedings”: Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46 at [51], (2013) 250 CLR 303 at 321. “The achievement of a just but timely and cost-effective resolution of a dispute”, French CJ, Kiefel, Bell, Gageler and Keane JJ there recognised, “has effects not only upon the parties to the dispute but upon the court and other litigants”. It also has an immediate effect, it may be added, on the interests of third parties who may be involuntarily dragged into a skirmish by way of a subpoena. Even confined to the circumstances of the present case, further discovery has (for example) been refused where the order sought largely put to one side the benefit of such discovery as had already been provided: BrisConnections [2015] FCA 1077 at [42].

35    Further to the last consideration, a partner of Allens (Mr Prestwich) filed two affidavits – one on behalf of each of the two Banks. With respect to BNP Paribas, Mr Prestwich maintained that compliance with the subpoena to that Bank “would likely take a number of months to identify all the documents potentially falling within the scope of the Revised Subpoena”. With respect to the ANZ Bank, Mr Prestwich again maintained that compliance by that Bank “would likely take a substantial amount of time to identify all of the documents potentially falling within the scope of the Revised Subpoena” and that although difficult to estimate the number of documents to be reviewed “it is likely that there would be thousands of such documents”. Although Senior Counsel for Arup made criticisms of the hearsay nature of Mr Prestwich’s evidence, and made the submission that the Banks themselves avoided putting on direct evidence to avoid cross-examination, it is nevertheless concluded that some reliance can be placed upon this evidence. The tasks involved in complying with the subpoenas as drafted will be considerable and may take some considerable time. The criticism, however, found its mark to the extent that an informed deponent being an officer of the Banks could well have been able to provide assistance as to what documents were readily able to be located with minimum disruption and costs.

36    The disruption to the business activities of an entity upon which a subpoena has been served, and the costs of compliance with a subpoena, are unquestionably considerations to be taken into account. But sometimes such disruption and costs have to be incurred.

37    In the present proceeding, there has been no real analysis of such documents as have been produced on discovery with a view to revealing the forensic necessity or utility in exposing either of the Banks to the disruption and costs of compliance. Any gap in the existing discovery was not exposed to scrutiny. If any gap does emerge, an application could potentially then be made for particular discovery against a party to the proceeding or a revised subpoena to one or other of the Banks.

38    In such circumstances it is respectfully considered that the fall-back position advanced on behalf of the Applicants has much merit. Even if it were to be assumed that the documents otherwise sought to be produced pursuant to categories [2], [4] and [6] had some “apparent relevance”, the disruption and costs of compliance on the part of the Banks may have provided a further reason to conclude that any subpoena in that form should either be set aside or not issue.

39    There was no separate consideration given to the disruption and costs of providing those documents identified in category [7]. Any assessment would necessarily be speculative. Even though it has been concluded that the subpoenas should not be set aside in respect to the category [7] documents, it is nevertheless respectfully suggested that all interested parties, including the Banks, should attempt to make the task of producing that category of documents a manageable one.

40    Although it may have been the case that Arup could have responded more fulsomely to requests made in February 2016 for an explanation of the relevance of the documents sought to be produced and could well have sought the issue of subpoenas at a far earlier point of time than June 2016, a submission that there has been non-compliance with ss 37M or 37N should be rejected.

CONCLUSIONS

41    Other than in respect to those documents described in the subpoenas to ANZ and BNP Paribas in category [7], both subpoenas should be set aside.

42    Such costs as have been incurred by the Applicants in respect to the present Interlocutory Application up to 25 July 2016 should be their costs in the cause. The Applicants have met with substantial success in both reducing the ambit of the subpoenas as first drafted and as ultimately contested in the present hearing. Indemnity costs are not considered appropriate.

43    Although the Banks appeared, they very much left the running of the Interlocutory Application to the Applicants and Arup. Any separate order for costs in respect to the Banks is not considered appropriate.

44    The parties are to bring in Short Minutes of Orders to give effect to these reasons by no later than 4pm on 8 August 2016.

Associate:    

Dated:    5 August 2016

SCHEDULE OF PARTIES