- Secretary of the Department of Planning, Industry and Environment v Blacktown City Council  NSWCA 145
- Belflora Pty Ltd v Vinflora Pty Ltd  NSWCA 178
Subpoenas – application to set aside – legitimate forensic purpose – test for determining the validity of a subpoena issued in civil proceedings
The Court of Appeal (Bell P, Brereton JA, McCallum JA) clarified an important issue of principle in relation to the circumstances in which subpoenas issued in civil proceedings may be set aside for lacking a legitimate forensic purpose.
Background: The Blacktown City Council (‘Council’) issued a subpoena to the Secretary of the Department of Planning, Industry and Environment (‘Secretary’) in connection with proceedings in the Land and Environment Court (‘LEC’). The primary judge (Pepper J) dismissed the Secretary’s motion to set aside the subpoena.
On appeal, the Secretary contended that the primary judge failed to correctly apply ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd  NSWCA 307 (‘ICAP’), which (the Secretary argued) required that a subpoena should be set aside where the documents sought were not likely to materially assist the case of the party which issued the subpoena.
No ‘test’ for setting aside subpoenas: On appeal, the Court eschewed any attempt to identify a specific or definitive ‘test’ for setting aside a subpoena. Rather, the Court held that subpoenas are to be set aside when they involve or amount to an abuse of process (per Bell P at , Brereton JA at , McCallum JA at ). Various circumstances in which a subpoena might be set aside are identified by Bell P (at -).
Legitimate forensic purpose: A subpoena that is not issued for a ‘legitimate forensic purpose’ will self-evidently be an abuse of process (Brereton JA at ).
The key issue on appeal was whether, for there to be a legitimate forensic purpose, it is necessary that the documents sought will materially assist the case of the issuing party, or whether it suffices that the documents are apparently relevant or will materially assist on an identified issue.
The Court held that a party issuing a subpoena will not necessarily lack a legitimate forensic purpose where it is unable to establish that the documents sought will assist or be likely to assist its case. Bell P said (at ): ‘[A]n inability to demonstrate that it is “on the cards” that the documents sought will materially assist the subpoenaing party’s case will not automatically require either that the subpoena be set aside or that access to the documents produced be refused. It will generally be sufficient and prima facie evidence of a legitimate forensic purpose if the documents sought to be produced on subpoena have an apparent relevance to the issues in the case and or bear upon the cross examination of witnesses expected to be called in the proceedings.’
Similarly, Brereton JA said (at ): ‘[A]t least in civil proceedings and in the absence of any question of public interest immunity, no more is required to support the issue of a subpoena for production than that there is a reasonable basis for supposing that the material called for will likely add, in the end, in some way or another, to the relevant evidence in the case’ (Citations omitted).
The apparent relevance of the documents is to be ascertained by an examination of the description or identification of the documents sought, in light of the issues in the case as they present themselves on the pleadings, particulars and/or affidavits or witness statements (per Bell P at ).
Status and precedential value of ICAP: The primary judge considered the LEC bound by ICAP but did not read the decision as requiring that documents sought must materially assist the subpoenaing party’s case. On appeal, a majority of the Court (Brereton and McCallum JJA) were not persuaded that the primary judge erred in her Honour’s interpretation of the decision (per Brereton JA at , -, McCallum JA at -; cf. Bell P at , ).
All members of the Court held that ICAP does not provide authoritative guidance, and was not binding on the LEC, because it was simply a refusal of an application for leave to appeal (see Bell P at -, Brereton JA at , McCallum JA at ).
Significance: This decision clarifies an important issue of principle – namely, that subpoenas issued in civil proceedings will not necessarily be set aside for lacking legitimate forensic purpose where the documents sought are apparently relevant (including for cross-examination) but where it is not known whether they will assist the issuing party’s case. However, as Bell P observed (at ), it may be more difficult to establish the legitimacy of the forensic purpose in such circumstances.
Therefore, it is not necessary for a subpoenaing party to know ex ante whether the material sought will, or is likely to, assist it in the proceedings. The Court considered that to insist on such a requirement would be to require an issuing party to be able to predict the contents of documents and unduly constrain the ability of litigants to investigate the facts (see Bell P at , Brereton JA at ).
RESTRAINT OF TRADE
Contract – appellant sought injunctive relief to restrain respondents from contravening restraint clause by display and sale of flowers – whether void
The case concerned the validity of a restraint clause in a commercial agreement between former business partners.
Key facts: Mr Belcastro and Mr Uppalapti, through their respective companies, owned equal shares in Belflora International Pty Ltd (‘Belflora International’). Belflora International operated as a flower wholesaler at the Sydney Flower Market.
Following disputes between Mr Belcastro and Mr Uppalapti in 2017 and 2018, they agreed to divide the business between them. Mr Belcastro, through Belflora Pty Ltd (‘Belflora’), was entitled to six stands, and Mr Uppalapti, through Vinflora Pty Ltd (‘Vinflora’), was entitled to four.
The agreement included a clause which prohibited Vinflora from importing flowers from South America and displaying such flowers on its stands. Belflora was subject to the same restraints in relation to Kenyan flowers. Vinflora was permitted to purchase South American flowers only from Belflora (and vice versa for Kenyan flowers) and the profits were to be shared. The express reason for the restraints was ‘so that we do not have two identical stands.’
In July 2019, Vinflora commenced displaying South American flowers which had not been supplied by Belflora. Belflora commenced proceedings seeking injunctive relief against Vinflora and Mr Uppalapti.
First instance: At common law, a restraint of trade is contrary to public policy and void unless it is reasonably necessary to protect the interests of the parties and is reasonable in the interests of the public. In NSW, a restraint is valid to the extent to which it is not against public policy, even if not in severable terms (Restraints of Trade Act 1976 (NSW), s 4(1)).
At first instance, Sackar J held that the restraint was void as contrary to public policy because the main effect of it was to place both at a competitive disadvantage against each other and against other participants in the market.
His Honour relied on the indefinite and unlimited nature of the restraint; the requirement of Vinflora (but not Belflora) to rebrand; the absence of any obligation on Belflora to supply South American flowers to Vinflora; and the absence of any list of South American growers with whom Mr Belcastro had dealt. In this context, his Honour held that the restraint was wholly unreasonable to protect whatever goodwill Mr Belcastro had and the effect of the clause was to stifle competition.
Appeal: On appeal, Belflora argued that when parties who have been in business together decide that one will operate exclusively in one market and the other in another market, they enter into a ‘mutual and cross-beneficial commercial arrangement’. It was submitted that each party had a legitimate interest in protecting each other from competition against the other.
The Court of Appeal (Bathurst CJ, Brereton JA, Emmett AJA) dismissed the appeal. The Court emphasised that a restraint must be directed to protecting a legitimate interest. It is not sufficient that it merely protects against competition.
Bathurst CJ’s dispositive reasoning is at : ‘[T]he restraint did not relate to any particular supplier, and no evidence was led by Belflora as to any particular relationship it had with a supplier which may entitle it to protection. No justification for a blanket protection from importation from a subcontinent was offered, except that it would protect Belflora from competition. The position is exacerbated by the fact that Vinflora was not only prohibited from importing flowers from South America but was prohibited from purchasing South American flowers from anyone other than Belflora and then selling them only on a profit share basis. This goes well beyond any legitimate interest Belflora would be entitled to protect.’
Brereton JA described the identification of the legitimate protectable interest as ‘fundamental’ because without one, no restraint is reasonable; and where one is established, it informs the extent of what is reasonable to protect it (at ). Here, the restraint served to protect no legitimate protectable interest such as goodwill, customer connection, or connection with reliable suppliers (see , ).
Moreover, all members of the Court were of the view that the restraint was not in the public interest (per Bathurst CJ at , Brereton JA at , Emmett AJA at ).
Significance: This case highlights the importance of ensuring that restraints are directed to protecting legitimate protectable interests. In the absence of protecting such an interest, a restraint that simply prohibits competition will be void as against public policy.
It matters not that the parties are commercial entities that have freely bargained for mutual restraints as part of a business separation (per Bathurst CJ at ). However, that is not to say that the nature of the relationship is irrelevant. Brereton JA’s judgment refers to authorities distinguishing the approach taken to different classes of contract, including contracts of service and contracts regulating the business relations of traders (at -). But regardless of the class of contract, a restraint must at least protect a legitimate protectable interest.