Hann v Hann

By further amended notice of motion dated 5 August 2023, the defendants seek to set aside two subpoenas issued at the request of the plaintiff to IMB Bank and Commonwealth Bank of Australia.

The parties are all the children of the late John Hann. The plaintiff (to whom I shall refer, without disrespect, as Steven) and the first defendant (to whom I shall refer, again without disrespect, as Paul) are the main protagonists, and all three defendants are executors of the estate of the late John Hann.

The underlying dispute is that Steven alleges that the defendants have, without his consent, sold or dealt with cattle said to have been jointly owned by Steven and Paul. The subpoenas were issued on 19 October 2023, while the parties were locked in intense interlocutory disputes. Under the Court’s rules, leave was not required for the issue of the subpoenas. The subpoenas sought copies of all bank statements in the name of Paul or John (in either their own name or with any other person) from 12 August 2021 to the date of the subpoenas. The essential question is whether, having regard to the state of the litigation at that time, there was a proper forensic purpose for the issue of the subpoenas.

For the reasons which follow, the Court has determined that the issue of the subpoenas lacked a proper forensic purpose and they will be set aside. The Court acknowledges the assistance it has received from the extensive written and oral submissions of Mr E Ball of Counsel for the defendant applicants and Mr A Crossland of Counsel for the plaintiff respondent.

The proceedings were commenced by the filing of a summons on 18 August 2023 before Robb J sitting as Duty Judge. His Honour made ex parte orders. The matter returned to Court on 22 August 2023. On that occasion, his Honour made orders by consent providing for a regime which included the provision of information by the defendants to Steven, but was primarily directed towards the identification and sale of the cattle.

It is important for the purposes of this decision to understand that from the commencement of the litigation and through September and October 2023, the primary focus of the parties, including in further interlocutory skirmishes before the Duty Judge, was the mechanism for, and giving effect to the imminent need, to identify and sell the cattle. The orders made by his Honour included (emphasis added):

On 29 August 2023, Paul filed and served an affidavit in purported compliance with order 5A. During most of September, the correspondence between the parties' solicitors, as I have already said, was devoted to the identification and sale of the cattle. It was not until 20 September 2023 that a letter was sent by Steven's solicitors to the defendants' solicitors referring to the orders and making a number of complaints alleging non-compliance by the defendants with those orders.

A critical matter for present purposes is the nature of the complaint made on behalf of Steven in relation to the purported compliance with order 5A. The letter of 20 September 2023 said on that topic:

The letter concluded by giving the defendants two business days to rectify the alleged deficiencies. Several days passed.

On 28 September 2023, Steven's solicitor wrote to the defendants' solicitor:

I should add, in passing, that the threat of filing a notice of motion for contempt was completely inappropriate and inimical to fulfilling the overriding purpose under the Court's rules. In the first instance, any alleged failure to comply with orders of the Court should be dealt with by relisting the matter, in this case before the Duty Judge because it was that judge who had the carriage of the interlocutory issues then occupying the parties.

In any event, the letter of 28 September 2023 drew a very prompt reply later that day. It is not necessary for me to set out the terms of that reply. It suffices to say that the letter sought to respond to the issues that had been raised in Steven's solicitor's letter of 20 September 2023.

On the same day - 28 September 2023 - orders were made by consent in the online registry that the matter proceed by way of pleadings. An order was made that Steven was to file and serve his statement of claim by 20 October 2023.

On 19 October 2023, being the day before Steven's statement of claim was due to be filed (it not having yet been filed), the subpoenas were issued.

On Friday, 20 October 2023 at 4.14pm, Steven's solicitor wrote to the defendants' solicitor:

There is no dispute that the letter was the first notice that the defendants had of the issue of the subpoenas. On the next business day, being Monday, 23 October 2023, the defendants' solicitor wrote to Steven's solicitor (23 October letter):

This letter was in terms that were properly compliant with both professional courtesy and procedure. It clearly explained the nature of the defendants' difficulty with the subpoenas and gave Steven's solicitor a reasonable time, being three business days, to respond and justify the subpoenas or agree to their withdrawal.

As I will develop further below, in my respectful view it is of signal importance to the determination of the present application that, first, there was no dispute that the 23 October letter was received by Steven's solicitors; and, second, that there was no response within the time limited by the letter or at all.

There having been no reply, on 30 October 2023, the initial iteration of the present motion was filed and served. The first return date for the subpoenas was the next day, 31 October 2023. There was no appearance by either party on that occasion in the Subpoena List and it appears that in accordance with the practice of that list, access orders were made in the absence of the parties.

As I will refer to later in these reasons, it was accepted that before orders restricting access were subsequently made having regard to the filing of the present motion, there was access by Steven's lawyers and Steven himself to some of the documents produced in answer to one of the subpoenas.

I have already noted that there was no reply to the 23 October letter. In fact, there was no reply from Steven's solicitor to anything from the defendants' solicitors until 13 November 2023. This period of some six weeks of silence is a matter relied upon by the defendants, in particular on the question of costs, to which I will come at the end of these reasons.

Mr Ball submitted that the present case was relevantly on all fours with my decision in Neil Street Co Pty Ltd v Ibrahim [2024] NSWSC 1382. It was submitted that, as in that case, the subpoenas had been issued prematurely, that is to say, before the issues had been properly crystallised in the pleadings, such that there was no proper forensic purpose discernible for their issue, and as a secondary complaint, that the subpoenas issued in those circumstances had the effect of subverting the operation of Practice Note SC Eq 11.

I summarised the relevant principles in Neil Street:

Mr Ball placed heavy emphasis on the fact that Steven's solicitor had never responded to the 23 October letter or otherwise attempted to explain the proper forensic purpose of the subpoenas.

The high point of Mr Crossland's response to what was said to be the lack proper forensic purpose was to point to two affidavits. The first was an affidavit of Steven's of 15 September 2023, in which he deposed to a telephone conversation on 12 September 2023 with the owner of a neighbouring property, Mr Maik Griefahn:

There was no dispute that Paul had paid the proceeds of cattle sales into his bank account, but this conversation was said to put Steven on notice of cattle sales (and, it was inferred, payments) of which Steven was unaware.

Mr Crossland then drew to attention that the defendants had themselves then filed an affidavit of Mr Griefahn on 17 September 2023 in which Mr Griefahn sought to respond to that part of Steven's affidavit:

Much was sought to be made of the fact that Mr Griefahn did not take issue with Steven's version of the conversation, including the reference to the cattle sales about which Steven said he knew nothing. Mr Crossland submitted that demonstrated that there was clearly an issue between the parties about money that had gone into Paul's bank account from sales that were unknown to Steven.

Insofar as the subpoenas were issued before the statement of claim had been filed, I accept that the present case is indistinguishable from Neil Street. However, as I said in that judgment, in interlocutory disputes being fought out before the Duty Judge before pleadings are filed, the joinder of issue which would provide a basis for determining the legitimate forensic purpose of subpoenas can and often does occur through the exchange of affidavits between the parties. That exchange will generally highlight the factual disputes that inform the particular interlocutory dispute.

Looking at the state of play of the interlocutory dispute at the time the subpoenas were issued, the correspondence between the parties made clear that they were in dispute about the adequacy of the information provided about the cattle sales. This is why there was ultimately no complaint concerning a subpoena to the cattle registry (NLIS) as a means of trying to determine what sales had in fact taken place.

However, there was no discernible dispute or matter in issue warranting access to the bank statements. That type of information was not a subject matter of complaint by Steven's solicitors in relation to the defendants' compliance with Order 5A (see [8] above). I accept Mr Ball's submission that the failure to respond to the 23 October letter is the first and best indication that there was no proper forensic purpose for the issue of the subpoenas.

I do not accept Mr Crossland's reliance on the two affidavits to which I have referred (see [25] and [27] above). Mr Griefahn's silence does not make an issue of the question concerning unknown (to Steven) cattle sales and the consequent payment of money into Paul's bank account. The silence is obviously explained by the fact that it was not an issue to which Mr Griefahn's affidavit was directed. The live issue between the parties at that time concerned the identification and sale of the cattle, and it is the identification question which Mr Griefahn's affidavit clearly sought to address.

For these reasons, the Court concludes that there was no proper forensic purpose for the issue of the subpoenas, and they will be set aside.

There is no real dispute that costs should follow the event. The real issue between the parties was whether those costs should be paid on the indemnity basis and whether they should be assessed and payable forthwith. Mr Crossland resisted both of these outcomes.

I accept Mr Ball's submission that the costs should be payable forthwith. I will apply what was said by Barrett J (as his Honour then was) in Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432 and find that:

Taking those three circumstances into account, the justice of the case warrants an order that the defendants' costs of their motion in relation to the subpoenas be assessed and payable forthwith.

Turning to the question of indemnity costs, Mr Ball submitted that it was unreasonable to issue the subpoenas and that the six week silence to which I have referred (see [21] above) was itself a further indication of the unreasonable way in which the litigation had been conducted. He submitted that the issue of the subpoenas was itself an abuse of process and plainly such, and that Steven had conducted himself in an unreasonable fashion.

The 23 October letter did not foreshadow an application for indemnity costs. However, it is clear from the authorities that the failure to do so in a letter of that kind is not determinative of the question. For present purposes, what is more relevant is that every iteration of the motion sought orders on the indemnity basis payable forthwith. In those circumstances, it seems to me that Steven could not be in any doubt as to what was being sought and to what he had to respond.

The six week delay is unexplained in the evidence and is undoubtedly unsatisfactory. However, it is not serious enough in my view in the context of the litigation in and of itself to warrant an order for indemnity costs.

Turning to the broader question of the issue of the subpoenas as examples of an abuse of process and unreasonable conduct, I accept that there is a strong case to be made for indemnity costs. However, looking at the matter as a whole and taking into account the issue of the subpoenas in the much larger context of the intense interlocutory disputes then extant between the parties, the Court is not satisfied that Steven's conduct in obtaining the subpoenas was of the requisite character to attract an order for indemnity costs. The application for indemnity costs is therefore refused.

The orders of the Court are: