Re Richard John Cosgrove and Kerri Margaret Cosgrove v Hooker Rex (Administration) (Vic) Pty Limited; Hooker Homes Pty Limited; Harry Robinson and Turton & Mcinnes Solicitors Frederick William Henry, Gregory Arthur Innes, Herbert David William Ross and [1988] FCA 269 (28 July 1988)

FEDERAL COURT OF AUSTRALIA

Re: RICHARD JOHN COSGROVE and KERRI MARGARET COSGROVE
And: HOOKER REX (ADMINISTRATION) (VIC) PTY LIMITED; HOOKER HOMES PTY LIMITED;
HARRY ROBINSON and TURTON & McINNES Solicitors Frederick William Henry,
Gregory Arthur Innes, Herbert David William Ross and Christopher Michael
O'Hehir.
No. G51 of 1986
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Neaves J.(1)

CATCHWORDS

Practice and Procedure - Interrogatories - Objection to answer - Application for order for further answers - Whether interrogatories relevant to any issue disclosed on the pleadings.

Practice and Procedure - Subpoena duces tecum - Addressed to Law Society of New South Wales - Documents sought concerning complaints and investigation of complaints against solicitors - Motion to set aside subpoena as oppressive or fishing - Degree of particularity required - Whether addressee relieved of obligation to produce documents on the ground that disclosure contrary to the public interest - Whether non-disclosure would impair administration of justice.

HEARING

CANBERRA
28:7:1988

Counsel for the Applicants: Mr M.A.J. Daley

Solicitors for the Applicants: Lewarne & Goldsmith

Counsel for the fourth Respondents: Mr A.J. Meagher

Solicitors for the fourth Respondents: Phillips Fox

Counsel for the Law Society of New South Wales: Mr D.B. McGovern

Solicitor for the Law Society of New South Wales: Ms Rosemary MacDougal

ORDER

The motion of the applicants, notice of which was filed on 20 June 1988, be dismissed.

The applicants pay the fourth respondents' costs of the motion.

Upon the motion of the Law Society of New South Wales, notice of which was filed on 12 July 1988, the subpoena addressed to that Society and dated 9 March 1988 be set aside.

The applicant pay the Law Society's costs of the motion.

The documents lodged in the Registry by the Society be returned to the Society.

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

DECISION

The Court has before it two applications. The first is a motion on notice by Richard John Cosgrove and Kerri Margaret Cosgrove ("the applicants") for an order pursuant to Order 16, rules 5 and 8 of the Federal Court Rules that the fourth respondents, Turton & McInnes, Solicitors (Frederick William Henry, Gregory Arthur Innes, Herbert David William Ross and Christopher Michael O'Hehir), make a further answer, verified by affidavit in accordance with Order 40, rule 7, to certain interrogatories administered to them by the applicants. The second is a motion by the Law Society of New South Wales, pursuant to Order 27, rule 9 of the Federal Court Rules, to set aside a subpoena issued at the instance of the applicants requiring the production of certain documents.

MOTION CONCERNING INTERROGATORIES

2. The notice to answer interrogatories, which bears date 29 July 1987, was given in proceedings between the applicants and Hooker Rex Administration (Vic) Pty Limited ("the first respondent"), Hooker Homes Pty Limited ("the second respondent"), Harry Robinson ("the third respondent") and the fourth respondents. Those proceedings, which were commenced on 4 March 1986, relate to the purchase on or about 31 May 1982 by the applicants from the first respondent through the agency of the second and third respondents of a property known as 27 Kembla Street, Wakeley. The fourth respondents acted, in respect of the sale, as solicitors for the first respondent and, also, as solicitors for the applicants.

3. The amended statement of claim dated 17 April 1986 delivered on behalf of the applicants seeks relief under the Trade Practices Act 1974 (Cth) ("the Trade Practices Act") against each of the respondents. It is alleged that, in connection with the sale of the property, the repondents engaged in conduct, namely the making of representations, that was misleading or deceptive or likely to mislead or deceive and that, by reason of that conduct, the applicants were induced to purchase the property by means of a loan of $60,000 for a term of two years from Alliance Acceptance Co. Limited secured by a mortgage over the property. Alternatively to the relief which is sought against the fourth respondents under the Trade Practices Act, relief is sought against them (pars 23 - 26) on the basis that they were retained and employed by the applicants to act as their solicitors in respect of the purchase of the property and that they acted negligently and in breach of their duty to exercise all reasonable care, skill, diligence and competence in the conduct of the business they undertook to perform for the applicants. Particulars of the negligence alleged, as set out in par.25, are as follows:

"(1) Failing to advise the Applicants not to
enter into the contract for purchase.

(2) Failing to advise the Applicants not to
enter into the contract upon the basis
of the mortgage.

(3) Failing to explain the contract of sale
to the Applicants.

(4) Failing to question whether the mortgage
from the Applicants' point of view
contained adequate provisions to protect
the Applicants against contingencies
which might reasonably have been
foreseen as likely to arise namely:

(a) the cessation of paid employment
by the Second Applicant because
of childbirth;

(b) the interruption or cessation of
paid employment by the First
Applicant because of illness,
disability, incapacity or
retrenchment.

(5) Failing to advise in the circumstances
that the Applicants seek independent
legal advice.

(6) Failing to explain the mortgage to the
Applicants.

(7) Failing to advise the Applicants to seek
mortgage indemnity insurance.

(8) Advising the Applicants that the
property would be worth no less than
$90,000.00 by the time the Applicants
were ready to refinance.

(9) Advising the Applicants that refinancing
would present no difficulties.

(10) Advising the Applicants that Alliance
Acceptance Co. Ltd. would refinance the
sale if no bank would offer such
finance."

In the further alternative, relief is sought against the fourth respondents (pars 27 - 29) for breach of the fiduciary obligation which it is alleged they owed to the applicants, the only breach alleged being that the fourth respondents "acted for both parties to the transactions".

4. It appears that the applicants now accept that the claim, in so far as it has its foundation in the alleged contravention by the respondents of provisions of the Trade Practices Act, was not brought within the time (within three years after the date on which the cause of action accrued) prescribed by s.82 of that Act and that they, therefore, do not propose to proceed with that claim. They do, however, propose to continue the proceedings against the fourth respondents in so far as they are based on other causes of action.

5. By their defence, the fourth respondents admit that, at all material times, the first and second named fourth respondents were solicitors of the Supreme Court of New South Wales conducting practice in partnership under the name and style "Turton & McInnes" and the third and fourth named fourth respondents were employees in that practice. They further admit that the first and second named fourth respondents acted as solicitors for the first respondent as vendor and the applicants as purchasers in respect of the sale and purchase of the property. They also admit that it was an implied term of the retainer of the first and second named fourth respondents by the applicants that the first and second named fourth respondents would exercise all reasonable skill, care and diligence in and about their acting as solicitors for the applicants. The fourth respondents deny that they acted negligently and do not admit the other allegations made against them. In further answer to the claims against them based on alleged breach of the fiduciary obligation said to have been owed by them to the applicants, they say (par.21) that, at all material times, the applicants "were aware and consented to the first and second named fourth respondents acting as solicitors for the first respondent as vendor and the applicants as purchasers in respect of the sale and purchase" of the property.

6. In reply, the applicants deny that there was fully informed consent to the fourth respondents acting as solicitors for the first respondent as vendor and the applicants as purchasers. In the alternative, they assert that, if there was such fully informed consent, the fourth respondents were in breach of their fiduciary obligations to the applicants by failing to advise the applicants to seek independent legal advice or by continuing to act for both parties after an actual conflict of duties arose or, alternatively,exceeded the authority conferred by such consent.

7. The motion at present before the Court seeks an order requiring the fourth respondents to make a further answer to the interrogatories identified in the notice dated 29 July 1987 by the numbers 4, 5, 11 and 14 (part only). In the verified statement filed on behalf of the fourth respondents on 18 December 1987, objection was taken to answering those interrogatories on the ground that they do not relate to any matter in question between them and the applicants.

Interrogatories 4 and 5

8. Interrogatories 4 and 5 are in the following terms:

"4. As at March, 1982:

(i) what, if any, qualifications did John
Hannelly possess?

(ii) What, if any, legal experience did John
Hannelly have?

(iii) How many conveyances had John Hannelly
performed?

(iv) What, if any, instructions had John
Hannelly received concerning his
obligations as solicitor when acting for
both vendor and purchaser?

5.(i) During the conveyance and mortgage the
subject of these proceedings, was John
Hannelly supervised?

(ii) If the answer to (i) is yes, specify the
extent of the supervision and the
supervisor."

It appears from the answer given to an earlier interrogatory that John Hannelly was employed by Turton & McInnes between April 1981 and 30 September 1983 and that, in the course of that employment, he carried out work in relation to the conveyance and mortgage the subject of these proceedings.

9. In my opinion, the objection to answering these interrogatories was well taken. It is not alleged in the amended statement of claim that the fourth respondents were negligent in employing on the work relating to the conveyance and mortgage in question a person who was not, or was not sufficiently, qualified or experienced or that they were negligent in failing to supervise, or supervise adequately, the work on which Mr Hannelly was employed on behalf of the applicants. Thus, the interrogatories do not relate to any question that, on the pleadings, arises between the applicants and the fourth respondents.

Interrogatory 11

10. This interrogatory asks -

"11.(i) What total value in profit costs did
matters of the first and second
respondents and any companies related to
the first and second respondents
represent for the period 1 July, 1981 to
30 March, 1982?

(ii) What proportion of the fourth
respondents' total taxable income for
that period does that figure represent?

(iii) In how many conveyances or other matters
did the fourth respondents act for the
first and second respondents and
companies related to the first and
second respondents during the said
period?

(iv) Apart from the said profit costs did the
fourth respondents or John Hannelly
receive any other form of remuneration
from the first or second respondents or
companies related to the first and
second respondents or from such
companies servants or agents?

(v) If the answer to (iv) is yes, specify
the remuneration and its source."

The references to the first and second respondents are references to Hooker Rex Administration (Vic) Pty Limited and Hooker Homes Pty Ltd respectively.

11. Whether one applies the stringent requirement espoused by Blackburn C.J. in Kupresak v. Clifton Bricks (Canberra) Pty Ltd (1984) 75 FLR 172 at p 174 or takes the approach adopted by Woodward J. in Aspar Autobarn Co-operative Society v. Dovala Pty Ltd (1987) 74 ALR 550, this interrogatory has not, in my opinion, been drawn with the requisite degree of care and precision. Although par.(i) refers to the period 1 July 1981 to 30 March 1982, it is unclear whether what is required is the amount of profit costs received in that period or the amount of profit costs referable to matters commenced, or to matters completed, or to work done, during that period. Paragraph (iv) is not limited as to time and I was informed during the hearing that it was not intended to relate to the period specified in par.(i) but to the period 30 March to 30 May 1982.

12. Paragraph (ii) is objectionable in that it would appear to require the fourth respondents to reconstruct the accounts of the practice so as to determine what would have been the taxable income for the period in question considered as a separate accounting period.

13. It may be assumed that what was intended by pars (i) and (ii) was to seek information as to the value in profit costs to the fourth respondents of the work carried out by them during the period 1 July 1981 to 30 March 1982 for the first and second respondents and any companies related to those respondents and the proportion which the value those profit costs bore to the value in profit costs to the fourth respondent of all the work carried out by them during that period. Paragraph (iii) seeks information as to the number of matters in which the fourth respondents acted for the first and second respondents and related companies during the specified period and pars (iv) and (v) are concerned with the remuneration, apart from profit costs, received by the fourth respondents or John Hannelly from the first or second respondents or any related company.

14. For the applicants it was submitted that information of that kind is relevant to the fifth particular of negligence, namely that the fourth respondents were negligent in failing to advise the applicants to seek independent legal advice, and to the issue whether the applicants gave a fully informed consent to the fourth respondents acting for both parties.

15. I am unable to accept that submission. In my opinion no proper basis for the interrogatory has been demonstrated. The information sought has not been shown to be relevant to any fact directly in issue or to any fact the existence or non-existence of which is relevant to the existence or non-existence of any fact directly in issue. The objection to answering this interrogatory is, therefore, upheld.

Interrogatory 14(i) and (ii)

16. This interrogatory asks -

"14.(i) During the period March, 1982 to May,
1982 were the fourth respondents aware
of any association or arrangement
between the first and second respondents
and Alliance Acceptance Co Limited?

(ii) If the answer to (i) is yes, what was
the fourth respondents' knowledge?

(iii) ....

(iv) ...."

The references to the first and second respondents are, again, references to Hooker Rex Administration (Vic) Pty Limited and Hooker Homes Pty Limited respectively.

17. For the applicants it was submitted that the interrogatory is relevant to the issue whether the fourth respondents were guilty of negligence in failing to advise the applicants to seek independent legal advice. The relevance of the interrogatory to that issue is said to be this - if the fourth respondents were aware of any such association or arrangement, they would have been under a duty to disclose their knowledge to the applicants.

18. The applicants, however, make no allegation in the pleadings that the fourth respondents were aware of any such association or arrangement or that, if they were so aware, they were bound to disclose it to the applicants. Interrogatory 14 is clearly designed, not to elicit information relevant to the applicants' case as disclosed by the pleadings, but to ascertain whether there are facts which will enable the applicants to mount a different case. In my opinion, the fourth respondents are not obliged to answer this interrogatory.

19. I, therefore, order that the motion of the applicants, notice of which was filed on 20 June 1988, be dismissed. The applicants must pay the fourth respondents' costs of the motion.

MOTION CONCERNING SUBPOENA

20. The subpoena issued at the instance of the applicants requires the Law Society of New South Wales ("the Law Society") to produce documents described as follows:

"All files, memoranda, notes, reports,
correspondence and other documents in relation
to any complaint, or the investigation of any
complaint, made against Messrs. Turton &
McInnes, Solicitors in respect of their acting
for vendors or purchasers or both of land during
the period 1981 to 1984."

If the motion to set aside the subpoena is unsuccessful, the Law Society seeks to be excused from the obligation to produce any documents in its possession which answer the description set out in the subpoena on the ground that to require their disclosure would be injurious to the public interest.

21. In support of the contention that the subpoena should be set aside as oppressive, counsel for the Law Society submitted that the subpoena is expressed in such a way as to require the Law Society "to ransack its documents to ascertain whether it has in its possession any document relevant to the issues" arising between the parties, resulting in the Law Society, although not a party to the proceeding, being subjected to a process of discovery. Counsel also submitted that the description of the documents to be produced is too wide, referring in this connection to the use of the expressions "in relation to" and "in respect of" in the description of the documents sought. It was further submitted that the subpoena should be set aside as amounting to "fishing". Counsel referred to The Commissioner for Railways v. Small (1938) 38 SR (NSW) 564 at pp 573-5; Waind v. Hill [1979] HCA 11; (1978) 1 NSWLR 372 at pp 378-382; and Finnie v. Dalglish (1982) 1 NSWLR 401 at pp 406-7.

22. In Waind v. Hill (supra), at pp 381-2 said:

".... the person to whom the subpoena is
addressed may seek to, and have, the subpoena
set aside on the ground that it was improperly
issued and an abuse of the power to compel the
production of documents in any one of a number
of ways. Such a case is where the subpoena is
used for the purpose of discovery. The
essential feature of discovery in this
connection, as appears from Burchard's case
(1891) 2 QB 241, at pp.247, 248 and Small's
case (1938) 38 SR (NSW) 564, at p.574; 55
W.N. 215 is that the person to whom the subpoena
is addressed will have to make a judgment as to
which of his documents relate to issues between
the parties. It is oppressive to place upon a
stranger the obligation to form a judgment as to
what is relevant to the issue joined in a
proceeding, to which he is not a party. Hence
it is an abuse of the use of a subpoena to
impose this obligation. It follows that it is
an abuse to use any subpoena, i.e. even to a
party to obtain discovery. This was the
reasoning in Small's case (1938) 38 SR
(NSW) 564, at p.575; 55 WN 215, at p.218.
Of course, discovery as such is otherwise
available to a party. It follows that a
subpoena can only properly be used for the
production of documents described in particular
or general terms which does not involve the
making of such a judgment. It does not follow,
however, that because the party who issues a
subpoena is unaware of the precise description
of a particular document, or whether a
particular document or documents is in the
possession of the witness, or even whether it
exists, or is unaware of its contents, that the
subpoena, or even a subpoena in general terms,
amounts to the use of the subpoena for the
purpose of 'discovery'. To state it does
involve a misconception of the different
functions of discovery and of a subpoena for
production. Of course, it may be that the terms
of a subpoena are so wide that it is oppressive,
but this is not because it is used for
'discovery' in the sense used in Small's case
(1938) 38 SR (NSW) 564; 55 WN 215 and
Burchard's case (1891) 2 QB 241, but because
it imposes an onerous task on a stranger to
collect and produce documents many of which can
have no relevance to the litigation. To require
the branch of a bank to produce all cheques
received by it in a particular year in order to
find, if it exists, a cheque of the opponent in
a false name would be oppressive, whereas, to
require a hopsital to produce its file in
respect of the medical treatment of the opposing
party would not. It is a misuse of terms to say
the person who inspects the latter is using it
for the purposes of discovery, because he is
unaware of the contents of the documents or some
of them."

23. In my opinion, the subpoena does not impose upon the Law Society an obligation to form a judgment whether the documents in its possession include documents that relate to the issues between the parties. It does not, in terms, do so. What the subpoena does is to require the Law Society to ascertain whether it has in its possession documents relating to any complaint, or the investigation of any complaint, made against the fourth respondents during the period 1981 to 1984 and to examine such documents as are in its possession and answer that description to ascertain whether the complaint to which they relate was a complaint against the solicitors "in respect of their acting for Vendors or Purchasers or both of land". The subpoena thus requires the production of such documents as relate to a particular subject matter. This, as was said in Lucas Industries Ltd v. Hewitt (1978) 18 ALR 555 at p 569, describes "a different task from that of ascertaining issues and identifying the relationship of documents thereto".

24. Turning to the width of the subpoena, it is clearly established that, if it be addressed to a stranger, a subpoena must specify with reasonable particularity the documents which are required to be produced: Lane v. Registrar of Supreme Court of New South Wales [1981] HCA 35; (1981) 148 CLR 245 at p 259. In my opinion, that requirement has been sufficiently satisfied. The description of the documents is, in my view, sufficiently specific to enable the Law Society to identify, without random search, the documents it is required to produce.

25. Nor do I consider that the subpoena should be set aside as amounting to "fishing" in the sense that the applicants are endeavouring, not to obtain evidence to support their case, but to obtain material which might enable them to make a different case. As appears from the passage already cited from Waind v. Hill (supra), the circumstance that the applicants are not aware whether particular documents of the kind sought exist or of the contents of any such documents does not, of itself, mean that the subpoena should be set aside. However, the difficulty for the applicants in this case lies in demonstrating that the documents sought are relevant to any issue that arises on the pleadings, noting, in this regard, that the causes of action pleaded under the Trade Practices Act are not being pursued. The only issues now arising between the applicants and the fourth respondents concern the existence of the duties, professional and fiduciary, which the applicants allege the fourth respondents owed to them and the alleged breaches of those duties.

26. Counsel for the applicants frankly stated that the purpose of the subpoena was to ascertain whether any complaints of the kind referred to had been made against the fourth respondents during the specified period and, if so, to seek inspection of the documents relating to such complaints and any investigation of them by the Law Society with a view to determining whether any of the complaints were "strikingly similar" to the complaint made against them by the applicants in the present proceeding. Counsel submitted that, if there be in existence documents of that description, they may provide the basis for the applicants to adduce similar fact material on the hearing of the substantive application, or provide material for cross-examination, particularly of Mr Hannelly should he give evidence, or provide a basis for further enquiry.

27. The applicants have failed to demonstrate to my satisfaction that the documents requested relate to the issues as I have identified them. I am unable to see how they could assist the applicants' case that, in the particular circumstances of this case, the fourth respondents were in breach of any duty to the applicants such as is alleged. Further, it is pure speculation that there may be in the material sought any statements by Mr Hannelly which could be used in an attack on his credit. The absence of any proper basis for thinking that the production of the documents might well provide material related to those issues leads me to the conclusion that the subpoena should be set aside.

28. In the light of that conclusion, it is strictly unnecessary to consider the alternative argument that, assuming the subpoena to have been validly issued, the Law Society should be excused from production of the documents requested on the ground of public interest immunity. However, as the matter was argued at some length, it is appropriate that I express my view upon it.

29. The task which confronts the Court is made clear in what was said in Alister v. The Queen (1984) by Gibbs C.J. at p 412:

".... when one party to litigation seeks the
production of documents, and objection is taken
that it would be against the public interest to
produce them, the court is required to consider
two conflicting aspects of the public interest,
namely whether harm would be done by the
production of the documents, and whether the
administration of justice would be frustrated or
impaired if the documents were withheld, and to
decide which of those aspects predominates. The
final step in this process - the balancing
exercise - can only be taken when it appears
that both aspects of the public interest do
require consideration - i.e., when it appears,
on the one hand, that damage would be done to
the public interest by producing the documents
sought or documents of that class, and, on the
other hand, that there are or are likely to be
documents which contain material evidence. The
court can then consider the nature of the injury
which the nation or the public service would be
likely to suffer, and the evidentiary value and
importance of the documents in the particular
litigation."

30. Under the Legal Practitioners Act, 1898 (NSW) as amended, the legislation in force at the material time, no person was to act or practise as a solicitor unless he was the holder of a current practising certificate and complied with the conditions, if any, placed thereon (s.67). The Council of the Law Society was empowered to issue practising certificates to those entitled to them (s.66). Section 70 provided for the Council to entertain applications for the issue of practising certificates. Section 71 empowered the Council to cancel a certificate if the holder, when called upon by the Council so to do, failed to give a satisfactory explanation touching any matter relating to his conduct as a solicitor or if he were in any way in default under any of the provisions of the Act or of the regulations made thereunder. The Council might, of its own motion, refer to The Solicitors' Statutory Committee constituted by the Act for enquiry any question as to the professional misconduct of any solicitor which appeared to the Council to require investigation (s.76(1)). Any person feeling aggrieved by reason of the alleged professional misconduct of a solicitor might, by himself or his agent, make a charge thereof in writing to the Council and the Council might refer any such charge to The Solicitors' Statutory Committee for enquiry (s.76(2)). It is clear from the uncontradicted evidence before the Court that the Council, in the exercise of its powers and duties under the Act, from time to time received and investigated complaints concerning solicitors submitted to the Society by the Courts, the Attorney-General of New South Wales or members of the public. It further appears that from time to time the Council publicised its role as an investigator of complaints against solicitors and the matter published included statements to the effect that any complaint would be received in strict confidence and that any investigation of the complaint would be conducted on a confidential basis.

31. I am satisfied that there is a substantial public interest to be served in the non-disclosure of confidential material obtained by the Law Society in the exercise of its disciplinary functions in relation to solicitors. The question is whether that public interest is, in the particular circumstances of this case, outweighed by the public interest in the administration of justice. This raises the issue whether the documents of which the subpoena requires production are or are likely to be documents which contain material evidence. In the light of what I have said above when considering the relevance of the documents to the issues that now remain between the parties, the administration of justice will not be impaired by the non-disclosure of the documents. It follows that, had I not been of opinion that the subpoena should be set aside, I would have excused the Law Society from the obligation to produce the documents in accordance with the subpoena's command. I should add that I have not found it necessary to inspect the documents which have been produced by the Law Society.

32. Upon the motion of the Law Society, I order that the subpoena dated 9 March 1988 addressed to the Society be set aside and that the applicants pay the Law Society's costs of the motion. I further order that the documents lodged in the Registry by the Law Society be returned to the Society.