Application of the Securities and Exchange Commission of the United States of America under the Evidence on Commission Act 1995 (NSW) (No 2)

[2020] NSWSC 1500

Supreme Court

New South Wales

Medium Neutral Citation:

Application of the Securities and Exchange Commission of the United States of America under the Evidence on Commission Act 1995 (NSW) (No 2) [2020] NSWSC 1500

Hearing dates:

6 and 7 October 2020; 15 October 2020 (written submissions)

Date of orders:

16 October 2020

Decision date:

27 October 2020

Jurisdiction:

Common Law

Before:

Walton J

Decision:

The Court made orders on 16 October 2020.

Catchwords:

TAKING EVIDENCE FOR FOREIGN COURT – Application for orders for examination under Evidence on Commission Act 1995 (NSW) – Where application made in respect of civil proceedings abroad – Statutory scheme – s 32(2) – Meaning of “commission of an offence” – Nature of US proceedings – Whether criminal proceedings – Where criminal proceedings pending in Australia – Whether order for examination should be made with respect to the accused in those criminal proceedings

STATUTORY INTERPRETATION – Principle of legality – Common law rights and freedoms – Principle in X7 (2013) 248 CLR 92 – Whether infringement of accusatorial judicial process acts as a bar to the Court’s exercise of discretion – Whether Evidence on Commission Act 1995 (NSW) expressly empowers or necessarily intends the compulsory examination of an accused prior to completion of criminal proceedings – no need for determination – Consideration of discretionary factors – Utility – Deferment

Legislation Cited:

Australian Crime Commission Act 2002 (Cth)

Competition and Consumer Act 2010 (Cth)

Evidence Act 1995 (NSW)

Evidence Amendment Act 2007 (NSW)

Evidence (Amendment) Act 1990 (Vic)

Evidence (Audio and Audio Visual Links) Act 1998 (NSW)

Evidence (Miscellaneous Provisions) Act 1958 (Vic)

Evidence on Commission Act 1995 (NSW)

Evidence (Proceedings in other Jurisdictions) Act 1975 (UK)

Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters

Interpretation Act 1987 (NSW)

Mutual Assistance in Criminal Matters Act 1987 (Cth)

Proceeds of Crime Act 2002 (Cth)

Securities Act of 1933, 15 USC §§ 77a-77mm

Securities Exchange Act of 1934, 15 USC § 78a

Sherman Antitrust Act of 1890, 15 USC §§ 1-38

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Application concerning Section 80 of the Supreme Court Act and Sections 119 and 128 of the Evidence Act [2004] NSWSC 614

Application of Cannar Re Eubanks [2003] NSWSC 802

Application of Computer Sciences Corporation under the Evidence on Commission Act 1995 [2019] NSWSC 777

Application of the Securities and Exchange Commission under the Evidence on Commission Act 1995 (NSW) [2020] NSWSC 1212

Attorney-General (United Kingdom) v Heinemann Publishes Pty Ltd (1988) 165 CLR 30

Australian Workers' Union v Registered Organisations Commissioner (No7) [2019] FCA 195

British American Tobacco Australia Services Ltd v Sharon Y Eubanks for the United States of America (2004) 60 NSWLR 483; [2004] NSWCA 158

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46

Commonwealth v Helicopter Resources Pty Ltd [2020] HCA 16

Council of the Law Society of New South Wales v Bouzanis (2017) NSWLR 488; [2017] NSWCA 330

Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543

Decker v State Coroner of NSW (1999) 46 NSWLR 415; [1999] NSWSC 369

Dietrich v The Queen (1992) 177 CLR 292

Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49

First American Corporation v Sheikh Zayed Al-Nahyan [1999] 1 WLR 1154

Genira Trade & Finance Inc v CS First Boston and Standard Bank (London) Limited [2001] EWCA Civ 1733

Gibb v Federal Commission of Taxation (1966) 118 CLR 628

Gredd v Busson [2003] EWHC 3001

Hunington v Attrill [1893] AC 150

John Robinson and Co Ltd v Ferguson Transformers Pty Ltd (1973) 129 CLR 65

Kelly v The Queen (2004) 218 CLR 216; [2004] HCA 12

Lee v NSW Crime Commission (2013) 251 CLR 196

Oceanic v Chief Commissioner of Stamp Duties (1999) 168 ALR 211; [1999] NSWCA 416

Pickles v Gratzon (2002) 55 NSWLR 533; [2002] NSWSC 688

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28

R v Independent Broad-Based Anti-Corruption Commissioner (2016) 256 CLR 459

Rv Lodhi (2006) 199 FLR 328

Ratten v The Queen (1974) 131 CLR 510

Re Application of Computer Sciences Corporation under the Evidence on Commission Act 1995 (NSW) [2017] NSWSC 810

Re Asbestos Insurance Coverage Cases [1985] All ER 716

Re Hague Convention [2008] SASC 51

Re the State of Norway (Nos 1 and 2) [1990] 1 AC 723

Re Westinghouse Electric Corporation Uranium Contract Litigation [1978] AC 547

Reid v Howard (1995) 184 CLR 1

Restricted Decision [2015] NSWSC 888

Restricted Decision [2016] NSWCA 103

Rio Tinto Zinc Corporation v WestinghouseElectric Corporation [1978] AC 547

Strickland v Commonwealth Director of Public Prosecutions [2018] HCA 53

Sykes v Richardson (2007) 70 NSWLR 66; [2007] NSWSC 418

Tjungarrayi v Western Australia (2019) 93 ALRJ 556

Tooheys Ltd v Commissioner of Stamp Duties (1961) 105 CLR 602

Tovir Investments Pty Ltd v Waverly Council [2014] NSWCA 379

Woolmington v Director of Public Prosecutions [1935] AC 462

Wright v Clarkson [2000] NSWSC 669

X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29

Texts Cited:

D Pearce, Statutory Interpretation in Australia (LexisNexis Butterworths, 9th ed, 2019)

G A Magnarini, “Service of Process Abroad Under the Hague Convention” (1988) 71 Marquette Law Review 649

Category:

Principal judgment

Parties:

Summons
Securities and Exchange Commission (Plaintiff)

Notice of Motion
Securities and Exchange Commission (Plaintiff)
Eric Pulier (Applicant)
Bradley Twynham (First Respondent)
Chris Kelada (Second Respondent)
Marcus Alan Leith Nicholson (Third Respondent)
Tom Richardson (Fourth Respondent)
Tom Pennington (Fifth Respondent)
Miriam Ingrid Lane (Sixth Respondent)
Matthew Smith (Seventh Respondent)
Matthew Keaney (Eighth Respondent)
Darren Murphy (Ninth Respondent)
Jon Waldron (Tenth Respondent)

Representation:

Summons
Counsel:
D Tynan (Plaintiff)

Solicitors:
McCullough Robertson Lawyers (Plaintiff)

Notice of Motion
Counsel:
H Younan SC (Applicant)
L MacAndrews (First Respondent)
H Mann (Second Respondent; Fourth through to Ninth Respondents)
B Anniwell (Third Respondent)
P Lange (Tenth Respondent)

Solicitors:
Arnold Bloch Leibler (Applicant)
Nyman Gibson Miralis (First and Tenth Respondents)
Herbert Smith Freehills (Second Respondent; Fourth through to Ninth Respondents)

File Number(s):

2020/242151

TABLE OF CONTENTS

INTRODUCTION 

FACTUAL BACKGROUND 

THE US PROCEEDINGS

POSITION OF INTERESTED PARTIES 

ORDERS OF THE COURT

THE STATUTORY SCHEME 

CONSIDERATION: SECTION 32(2) 

MUTUAL ASSISTANCE IN CRIMINAL MATTERS ACT

CONSIDERATION: SECTION 33 

CONDUCT OF EXAMINATIONS BY AUDIO-VISUAL LINK 

REASONS FOR DECISION

INTRODUCTION

1. By summons dated 19 August 2020, the Securities and Exchange Commission of the United States of America (“the SEC”) commenced proceedings seeking orders pursuant to section 33 of the Evidence on Commission Act 1995 (NSW) (“the Act”) to obtain evidence from ten witnesses resident in New South Wales (“the Witnesses”), by way of oral examination under oath, for use at trial in the matter of Securities and Exchange Commission of the United States of America v Eric Pulier, 2:17-cv07124-PSG-RAO (“the US proceedings”).

2. The US proceedings concern an action filed in the United States District Court in the Central District Court of California (“the US Court”) on 27 September 2017. The initiating process is described as “a complaint”. The complainant, the SEC, alleged the jurisdiction and venue of the country as being:

1. The Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1), 20(e), and 22 of the Securities Act of 1933 (“Securities Act”) [15 USC §§ 77t(b), 77t(d)(1), 77t(e) & 77v], and Sections 21(d), 21(e) and 27 of the Securities Exchange Act of 1934 (“Exchange Act”) [15 USC §§ 78u(d), 78u(e) & 78aa].

2. Venue is proper in this district pursuant to Section 22(a) of the Securities Act [15 USC § 77v(a)], and Section 27(a) of the Exchange Act [15 USC § 78aa(a)] because certain of the transactions, acts, practices and courses of conduct constituting violations of the federal securities laws occurred within this district.

3. Defendant, directly or indirectly, made use of the means or instruments of transportation or communication in interstate commerce, or of the mails, or of any facility of a national securities exchange in connection with the transactions, acts, practices, and courses of business alleged in the complaint.

3. There were five “claims for relief” alleging violations of two US Federal security statutes, namely, the Securities Act of 1933, 15 USC §§ 77a-77mm (“the Securities Act”) and the Securities Exchange Act of 1934, 15 USC § 78a (“the Exchange Act”).

4. The proceedings before this Court were commenced pursuant to Letters of Request issued by the US Court dated 11 May 2020 (“Letters of Request”). Expedition was granted on 8 September 2020 by Wright J: Application of the Securities and Exchange Commission under the Evidence on Commission Act 1995 (NSW) [2020] NSWSC 1212 (“SEC No 1”). His Honour took into account an extended time for “discovery” in the US proceedings (as that expression is understood in the Federal Rules of Civil Procedure, which govern civil proceedings in the United States district courts) was 16 October 2020.

5. The Witnesses are:

1. Bradley Twynham;

2. Marcus Alan Leith Nicholson;

3. Jon Waldron;

4. Chris Kelada;

5. Tom Richardson;

6. Tom Pennington;

7. Miriam Ingrid Lane;

8. Matthew Smith;

9. Matthew Keaney; and

10. Darren Murphy.

6. On 15 September 2020, Mr Pulier filed a notice of motion to examine the Witnesses (“the motion”).

7. The form of orders sought in the summons and motion underwent some transformation during the course of the proceedings and ultimately converged, which will be discussed below.

Dramatis Personae

8. A brief and preliminary description of the witnesses follows:

1. Mr Twynham worked for ServiceMesh Inc (“ServiceMesh”) as Vice President of Emerging Market Programs. Mr Twynham worked directly with Mr Waldron.

2. Mr Nicholson worked for the Commonwealth Bank of Australia (“CBA”) as Executive Manager of Software Asset Management. Mr Nicholson communicated with Mr Waldron and others as to matters relevant to the US proceedings.

3. Mr Waldron worked for CBA as the General Manager of Infrastructure Engineering.

4. Mr Kelada worked for CBA in IT Engineering Technology Platforms.

5. Mr Richardson worked for CBA as a General Manager in Partner Management of IT Delivery Services.

6. Mr Pennington worked for the CBA as a General Manager in Partner Management of IT Delivery Services.

7. Ms Lane worked for CBA in the Technology Risk, IT Delivery Services business unit.

8. Mr Smith worked for CBA as the Head of Technology Risk in the IT Delivery Services business unit.

9. Mr Keaney worked for CBA in Group Investigations and Advisory Services and conducted an internal investigation for the CBA as to matters relevant to the US proceedings.

10. Mr Murphy worked for CBA in Group Investigations and Advisory Services and conducted an internal investigation for the CBA as to matters relevant to the US proceedings.

9. Mr Pulier was the Founder and former Chief Executive Officer of ServiceMesh and defendant in the US proceeding.

10. Mr Keith Hunter worked for CBA as the Executive General Manager in charge of Operations, IT Security, Application Development and IT Engineering at CBA. Mr Hunter’s employment was terminated in 2014. Mr Hunter was jailed in 2016.

Evidence

11. In support of the summons, the SEC relied on the following affidavits and exhibits filed and served in these proceedings:

1. affidavits of Douglas Miller sworn 18 August 2020, together with Exhibit DMM-1 (“first Miller affidavit”); 24 September 2020 (“second Miller affidavit”); and 1 October 2020; and

2. affidavits of Jason Alexander Willi Munstermann sworn 19 August 2020, together with Exhibit JM-1; 23 August 2020, together with Exhibit JM-2; 26 August 2020; 7 September 2020; and 25 September 2020.

12. In support of the motion, Mr Pulier relied upon the following:

1. affidavits affirmed by Ms Susanna Ford on 28 August 2020; 4 September 2020; 15 September 2020; and 2 October 2020; and

2. affidavit sworn by Mr James Rapore filed on 15 September 2020.

13. Mr Miller is a Senior Trial Attorney of the SEC and lead counsel in the US proceedings. Prior to his employment with the SEC, he was engaged for 12 years as an Assistant US Attorney at the US Attorney’s Office (“USAO”) for the Central District of California.

14. Mr Munstermann is a partner of the law firm McCullough Robertson and the Australian legal representative for the SEC.

15. Ms Ford is a partner of the law firm Arnold Block Leibler and Australian legal representative of Mr Pulier. Mr Rapore is a partner of the law firm Kirkland & Ellis LLP and counsel for Mr Pulier in the US proceedings.

16. Mr Waldron adduced evidence by affidavits from Mr Phillip Gibson, a solicitor with Nyman Gibson Miralis. Those affidavits were sworn on 1 and 25 September 2020, respectively.

17. The deponents of the various affidavits were not required for cross-examination.

FACTUAL BACKGROUND

18. In March 2015, Mr Waldron was charged with a number of offences in New South Wales. Mr Gibson deposed that the charges “are the same as contained in the … SEC application in the Pulier Letter of Request”. Committal proceedings with respect to those charges occurred between 12 and 23 February 2018.

19. On 27 September 2017, the USAO filed a criminal indictment against Mr Pulier and Mr Waldron in the US Court. The indictment contained 15 counts and criminal forfeiture. Relevantly, counts 1 to 6 are set out below.

20. Count 1 alleged a conspiracy between Mr Pulier and Mr Waldron and Mr Hunter and others “known or unknown” with respect to securities fraud contrary to 18 USC § 1348 and wire fraud in violation of 18 USC § 1343.

21. Count 2 was expressed as follows:

57. Beginning in or about September 2013, and continuing through a date unknown to the Grand Jury, but no earlier than September 2015, in Los Angeles County, within the Central District of California, and elsewhere, defendants PULIER and WALDRON, together with others known and unknown to the Grand Jury, aiding and abetting each other, knowingly and with intent to defraud, devised, participated in, and executed a scheme to defraud a person in connection with the securities of CSC, and to obtain money and property in connection with purchases and sales of the securities of CSC by means of material false and fraudulent pretenses, representations, and promises, and the concealment of material facts, as described in paragraphs 13 through 55 of this indictment.

22. Counts 3 to 6 were as follows:

A. THE SCHEME TO DEFRAUD

59. Beginning in or about September 2013, and continuing through a date unknown to the Grand Jury, but no earlier than September 2015, in Los Angeles County, within the Central District of California, and elsewhere, defendants PULIER and WALDRON, together with others known and unknown to the Grand Jury, aiding and abetting each other, knowingly and with intent to defraud, devised, participated in, and executed a scheme to defraud CSC and its shareholders as to material matters, and to obtain money and property from CSC and its shareholders by means of material false and fraudulent pretenses, representations, and promises, and the concealment of material facts, as described in paragraphs 13 through 55 of this Indictment.

B. USE OF WIRES

60. On or about the dates set forth below, within the Central District of California and elsewhere, defendants PULIER and WALDRON and their co-schemers, aiding and abetting each other, for the purpose of executing and attempting to execute the above-described scheme to defraud, transmitted and cause the transmission of the following items by means of wire communication in interstate and foreign commerce:

[Table setting out the details of four wire transmissions omitted.]

23. On 27 September 2017, the SEC filed the complaint against Mr Pulier in the US Court commencing the US proceedings.

24. On 6 June 2018, the USAO filed a “stipulation” to allow the United States of America to intervene in the US proceeding for the purpose of staying civil discovery during pendency of criminal proceedings filed separately by the USAO against Mr Pulier. After referring to the indictment, the USAO stated in para 3 of the stipulation as follows:

On the same date the Indictment was returned, September 27, 2017, the SEC filed a complaint against defendant in the above-captioned case (the “SEC case”) alleging violations of the securities laws. (Docket No. 1.) The various claims for relief in the complaint were grounded in the same alleged fraudulent conduct by defendant that is the subject of the Indictment—the alleged bribes to CBA officials and the alleged steps taken by defendant to cover up the bribes. The complaint sought relief in the form of an injunction, an asset freeze, disgorgement of ill-gotten gains from defendant’s allegedly illegal conduct, and civil penalties.

25. On 8 June 2018, the US Court made an order permitting the intervention of the United States of America, by the USAO, in the US proceeding and staying civil discovery during the pendency of the USAO’s criminal proceedings.

26. On 20 December 2018, the USAO’s criminal proceedings were dismissed with prejudice (such that they cannot be reinstated).

27. On 11 March 2019, the SEC and Mr Pulier’s representatives gave notice of the dismissal of the USAO’s criminal proceedings in the US proceeding and sought, among other matters, that the US Court convene a status conference to return the US proceedings to the active docket and set pre-trial and trial dates for the US proceedings.

28. On 8 July 2019, the US Court ordered the US proceedings to be set for a jury trial to take place beginning on 1 December 2020 and continuing for approximately 10 days.

29. Discovery was ordered in the US proceedings, to be completed by 28 August 2020.

30. The SEC and Mr Pulier’s representatives jointly (by consent) then petitioned the US Court requesting the issuance of Letters of Request by the US Court to this Court.

31. On 11 May 2020 the US Court issued the Letters of Request.

32. On 21 and 22 May 2020, McCullough Robertson wrote to each of the Witnesses and provided them with copies of the relevant Letters of Request issued by the US Court. Other than Mr Waldron, none of the Witnesses indicated that they opposed the SEC’s application to give effect to the Letters of Request.

33. On 25 June 2020, an indictment was laid against Mr Waldron involving 13 counts for breaches of ss 129E(1)(b) and 249B(1) of the Crimes Act 1900 (NSW).

34. Mr Waldron’s trial is listed to commence on 26 October 2020 in the District Court of NSW with an 8-week estimate (“the NSW criminal proceedings”).

35. Until 14 September 2020, the order made by the US Court was that evidence and discovery with respect to the US proceedings must be completed by 16 October 2020.

36. On 14 September 2020, the US Court ordered, inter alia, that:

1. the factual discovery cut-off date for the US proceedings is amended to 16 November 2020; and

2. the jury trial for the US proceedings is vacated and is re-listed listed for a jury trial on 1 April 2021.

THE US PROCEEDINGS

The Securities and Exchange Commission

37. The SEC is an independent federal government regulator responsible for enforcing, among other federal securities laws, the Securities Act and the Exchange Act. The SEC is also responsible for regulating the securities markets in the United States of America and protecting investors.

38. When the SEC brings civil proceedings against a person, it is authorized to seek enumerated statutory and equitable remedies, including, for example, civil injunctions to prevent violations of securities laws, pecuniary penalties, disgorgement of ill-gotten gains, and other forms of relief such as an officer/director bar.

37. The SEC does not have jurisdiction to institute criminal proceedings against a person or corporation; nor does it have jurisdiction to file criminal charges or to arrest or imprison individuals who have violated federal securities laws. The SEC may, however, refer potential criminal cases to criminal law enforcement authorities, such as the United States Attorney’s Office (“the USAO”), or conduct its own SEC investigation while criminal authorities conduct parallel investigations involving the same conduct.

The US proceedings

40. The US proceedings concern the purchase by Computer Sciences Corporation (“CSC”) of ServiceMesh pursuant to an Equity Purchase Agreement (“EPA”) in 2013. According to the SEC’s allegations, the EPA contained an earn-out provision, under which a portion of the consideration paid to ServiceMesh’s equity holders, including Mr Pulier, was based on ServiceMesh’s revenue.

41. Relevantly, under the final agreement, ServiceMesh shareholders would earn approximately $10.15 for every dollar of revenue above $20 million that ServiceMesh generated between 1 January 2013 and 31 January 2014, with a maximum earn-out payment of $137,014,548.

42. The SEC alleged that Mr Pulier, as the former CEO of ServiceMesh, improperly inflated the earn-out payment that CSC owed ServiceMesh equity holders and defrauded CSC by paying bribes to obtain two sets of contracts between ServiceMesh and the CBA.

43. The SEC claimed that Mr Pulier caused ServiceMesh to secure contracts with the CBA in:

1. December 2013, for products and services related to McAfee Inc (“the McAfee contract”); and

2. January 2014, for integrations between CBA’s Agility Platform and various cloudcomputing products from third parties (“the Pivotal contract”).

44. The two contracts contributed approximately $10.4 million in revenue towards the calculation of the earn-out payable by CSC under the EPA.

45. The SEC alleged that Mr Pulier secured the contracts with the CBA by paying bribes in 2014 to two CBA executives, Mr Hunter and Mr Waldron, through a charitable organisation named the Ace Foundation.

46. The SEC also alleges that Mr Pulier violated various federal securities laws by stating in a “representation letter” dated 30 January 2014 and “sub-certification” made by him in 30 April 2014 that he was not aware of any undisclosed “side agreements” with customers in connection with the earn-out contracts (and did not disclose the alleged scheme to pay bribes through the Ace Foundation).

Additional Proceedings by Other Parties

47. In addition to the US proceedings, there have been various other proceedings and prosecutions commenced by competent authorities in relation to persons involved in those events described above.

48. Relevantly:

1. In 2016, Mr Hunter, after pleading guilty to two counts of bribery and causing a financial disadvantage to his employer by deception, was sentenced to 3.5 years imprisonment.

2. The United States of America by the USAO filed a criminal indictment against Mr Pulier and Mr Waldron in the US Court which was dismissed with prejudice (such that it cannot be reinstated).

Nature of and Remedies sought in the US proceedings

49. In the US proceedings, the SEC has brought an action against Mr Pulier alleging that Mr Pulier:

1. engaged in fraud in connection with the offer of sale of securities in violation of s 17(a) of the Securities Act (15 USC § 77q(a)); and

2. in connection with the purchase or sale of securities in violation of s 10(b) of the Exchange Act (and in contravention of r 10b-5, promulgated under that Act); lied to auditors, circumvented internal controls (15 USC § 78j(b)); and

3. falsified books and records contrary to s 13(b)(5) of the Exchange Act (and in contravention of r 13b2-1, promulgated under that Act) (15 USC § 78m(b)(5)).

50. The relevant provisions of the Securities Act and Exchange Act, namely, 15 USC §§ 77q(a), 78j(b) and 78m(b)(5), are extracted below:

§ 77q Fraudulent interstate transactions

(a) Use of interstate commerce for purpose of fraud or deceit

It shall be unlawful for any person in the offer or sale of any securities (including security-based swaps) or any security-based swap agreement (as defined in section 78c(a)(78) [1] of this title) by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly—

(1) to employ any device, scheme, or artifice to defraud, or

(2)to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or

(3)to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.

…

§ 78j Manipulative and deceptive devices

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange—

…

(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement [1] any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

…

§ 78m Periodical and other reports

…

(b) Form of report; books, records, and internal accounting; directives

(5) No person shall knowingly circumvent or knowingly fail to implement a system of internal accounting controls or knowingly falsify any book, record, or account described in paragraph (2).

51. The relevant rules appear in the Code of Federal Regulations (see Commodity and Securities Exchanges, 17 CFR §§ 240.10b-5 and 240.13b2-1) and are extracted below:

§ 240.10b-5 Employment of manipulative and deceptive devices.

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.

(Sec. 10; 48 Stat. 891; 15 U.S.C. 78j)

…

§ 240.13b2-1 Falsification of accounting records.

No person shall directly or indirectly, falsify or cause to be falsified, any book, record or account subject to section 13(b)(2)(A) of the Securities Exchange Act.

(15 U.S.C. 78m(b)(2); 15 U.S.C. 78m(a), 78m(b)(1), 78o(d), 78j(b), 78n(a), 78t(b), 78t(c))

52. The SEC seeks, amongst other things, orders from the US Court for civil penalties against Mr Pulier.

53. Relevantly, the SEC seeks against Mr Pulier under the Securities Act and Exchange Act:

1. Pursuant to 15 USC §§ 77t(b) and 78u(d)(1), an order permanently enjoining Mr Pulier from directly or indirectly violating the applicable provisions and rules of the federal securities laws as alleged and asserted in the complaint (“No Violation Order”).

2. Pursuant to 15 USC § 78u(d)(5), an order that Mr Pulier disgorge all ill-gotten gains from his illegal conduct, together with pre-judgment interest thereon (“Disgorgement Order”).

3. Pursuant to 15 USC §§ 77t(d) and 78u(d), an order that Mr Pulier pay civil penalties (“Civil Penalty Order”).

4. Pursuant to 15 USC §§ 77t(e) and 78u(d)(2), an order prohibiting Mr Pulier from serving as an officer or director of any entity having a class of securities registered with the SEC pursuant to 15 USC § 78l or that is required to file reports pursuant to 15 USC § 78o(d) (“Director and Officer Ban”).

54. By way of elaboration, Mr Miller stated:

1. The No Violation Order is to prohibit current and future violations of the federal securities law (obey-the-law injunctions). Unlike monetary penalties, injunctive relief is designed to prevent and deter future violations of the federal securities laws, rather than punish the violator.

2. The Civil Penalty Order is for the payment of monetary civil penalties (of varying severity) by the ordered party to the SEC.

3. The Director and Officer Ban may be imposed conditionally or unconditionally for any person who is held to have violated 15 USC §§ 77q(a) or 78j(b), and where the relevant party’s conduct demonstrates an “unfitness to serve as an officer or director”: see first Miller affidavit at para 49.

55. As to No Violation Order, 15 USC §§ 77t(b) and 78u(d)(1) provides as follows:

§ 77t Injunctions and prosecution of offenses

…

(b) Action for injunction or criminal prosecution in district court

Whenever it shall appear to the Commission that any person is engaged or about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this subchapter, or of any rule or regulation prescribed under authority thereof, the Commission may, in its discretion, bring an action in any district court of the United States, or United States court of any Territory, to enjoin such acts or practices, and upon a proper showing, a permanent or temporary injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices to the Attorney General who may, in his discretion, institute the necessary criminal proceedings under this subchapter. Any such criminal proceeding may be brought either in the district wherein the transmittal of the prospectus or security complained of begins, or in the district wherein such prospectus or security is received.

…

§ 78u Investigations and actions

…

(d) Injunction proceedings; authority of court to prohibit persons from serving as officers and directors; money penalties in civil actions

(1) Whenever it shall appear to the Commission that any person is engaged or is about to engage in acts or practices constituting a violation of any provision of this chapter, the rules or regulations thereunder, the rules of a national securities exchange or registered securities association of which such person is a member or a person associated with a member, the rules of a registered clearing agency in which such person is a participant, the rules of the Public Company Accounting Oversight Board, of which such person is a registered public accounting firm or a person associated with such a firm, or the rules of the Municipal Securities Rulemaking Board, it may in its discretion bring an action in the proper district court of the United States, the United States District Court for the District of Columbia, or the United States courts of any territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices, and upon a proper showing a permanent or temporary injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices as may constitute a violation of any provision of this chapter or the rules or regulations thereunder to the Attorney General, who may, in his discretion, institute the necessary criminal proceedings under this chapter.

56. Reference may also be made to 15 USC § 77t(a), which is extracted below:

§ 77t Injunctions and prosecution of offenses

(a) Investigation of violations

Whenever it shall appear to the Commission, either upon complaint or otherwise, that the provisions of this subchapter, or of any rule or regulation prescribed under authority thereof, have been or are about to be violated, it may, in its discretion, either require or permit such person to file with it a statement in writing, under oath, or otherwise, as to all the facts and circumstances concerning the subject matter which it believes to be in the public interest to investigate, and may investigate such facts.

57. As to the Disgorgement Order, 15 USC § 78u(d)(5) provides:

§ 78u Investigations and actions

…

(d)Injunction proceedings; authority of court to prohibit persons from serving as officers and directors; money penalties in civil actions

…

(5) Equitable Relief.—

In any action or proceeding brought or instituted by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court may grant, any equitable relief that may be appropriate or necessary for the benefit of investors.

58. As to the Civil Penalty Order, 15 USC §§ 77t(d)(1) and 78u(d) provide:

§ 77t. Injunctions and prosecution of offenses

…

(d) Money penalties in civil actions

(1) Money penalties in civil actions

Whenever it shall appear to the Commission that any person has violated any provision of this subchapter, the rules or regulations thereunder, or a cease-and-desist order entered by the Commission pursuant to section 77h–1 of this title, other than by committing a violation subject to a penalty pursuant to section 78u–1 of this title, the Commission may bring an action in a United States district court to seek, and the court shall have jurisdiction to impose, upon a proper showing, a civil penalty to be paid by the person who committed such violation.

§ 78u Investigations and actions

…

(d) Injunction proceedings; authority of court to prohibit persons from serving as officers and directors; money penalties in civil actions

(1) Whenever it shall appear to the Commission that any person is engaged or is about to engage in acts or practices constituting a violation of any provision of this chapter, the rules or regulations thereunder, the rules of a national securities exchange or registered securities association of which such person is a member or a person associated with a member, the rules of a registered clearing agency in which such person is a participant, the rules of the Public Company Accounting Oversight Board, of which such person is a registered public accounting firm or a person associated with such a firm, or the rules of the Municipal Securities Rulemaking Board, it may in its discretion bring an action in the proper district court of the United States, the United States District Court for the District of Columbia, or the United States courts of any territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices, and upon a proper showing a permanent or temporary injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices as may constitute a violation of any provision of this chapter or the rules or regulations thereunder to the Attorney General, who may, in his discretion, institute the necessary criminal proceedings under this chapter.

(2) Authority of Court To Prohibit Persons From Serving as Officers and Directors.—

In any proceeding under paragraph (1) of this subsection, the court may prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any person who violated section 78j(b) of this title or the rules or regulations thereunder from acting as an officer or director of any issuer that has a class of securities registered pursuant to section 78l of this title or that is required to file reports pursuant to section 78o(d) of this title if the person’s conduct demonstrates unfitness to serve as an officer or director of any such issuer.

(3) Money Penalties in Civil Actions.—

(A) Authority of commission.—

Whenever it shall appear to the Commission that any person has violated any provision of this chapter, the rules or regulations thereunder, or a cease-and-desist order entered by the Commission pursuant to section 78u–3 of this title, other than by committing a violation subject to a penalty pursuant to section 78u–1 of this title, the Commission may bring an action in a United States district court to seek, and the court shall have jurisdiction to impose, upon a proper showing, a civil penalty to be paid by the person who committed such violation.

(B) Amount of penalty.—

(i) First tier.—

The amount of the penalty shall be determined by the court in light of the facts and circumstances. For each violation, the amount of the penalty shall not exceed the greater of (I) $5,000 for a natural person or $50,000 for any other person, or (II) the gross amount of pecuniary gain to such defendant as a result of the violation.

(ii) Second tier.—

Notwithstanding clause (i), the amount of penalty for each such violation shall not exceed the greater of (I) $50,000 for a natural person or $250,000 for any other person, or (II) the gross amount of pecuniary gain to such defendant as a result of the violation, if the violation described in subparagraph (A) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.

(iii) Third tier.—Notwithstanding clauses (i) and (ii), the amount of penalty for each such violation shall not exceed the greater of (I) $100,000 for a natural person or $500,000 for any other person, or (II) the gross amount of pecuniary gain to such defendant as a result of the violation, if—

(aa) the violation described in subparagraph (A) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and

(bb) such violation directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons.

(C) Procedures for collection.—

(i) Payment of penalty to treasury.—

A penalty imposed under this section shall be payable into the Treasury of the United States, except as otherwise provided in section 7246 of this title and section 78u–6 of this title.

(ii) Collection of penalties.—

If a person upon whom such a penalty is imposed shall fail to pay such penalty within the time prescribed in the court’s order, the Commission may refer the matter to the Attorney General who shall recover such penalty by action in the appropriate United States district court.

(iii) Remedy not exclusive.—

The actions authorized by this paragraph may be brought in addition to any other action that the Commission or the Attorney General is entitled to bring.

(iv) Jurisdiction and venue.—

For purposes of section 78aa of this title, actions under this paragraph shall be actions to enforce a liability or a duty created by this chapter.

(D) Special provisions relating to a violation of a cease-and-desist order.—

In an action to enforce a cease-and-desist order entered by the Commission pursuant to section 78u–3 of this title, each separate violation of such order shall be a separate offense, except that in the case of a violation through a continuing failure to comply with the order, each day of the failure to comply shall be deemed a separate offense.

(4) Prohibition of attorneys’ fees paid from commission disgorgement funds.—

Except as otherwise ordered by the court upon motion by the Commission, or, in the case of an administrative action, as otherwise ordered by the Commission, funds disgorged as the result of an action brought by the Commission in Federal court, or as a result of any Commission administrative action, shall not be distributed as payment for attorneys’ fees or expenses incurred by private parties seeking distribution of the disgorged funds.

(5) Equitable Relief.—

In any action or proceeding brought or instituted by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court may grant, any equitable relief that may be appropriate or necessary for the benefit of investors.

(6) Authority of a court to prohibit persons from participating in an offering of penny stock.—

(A) In general.—

In any proceeding under paragraph (1) against any person participating in, or, at the time of the alleged misconduct who was participating in, an offering of penny stock, the court may prohibit that person from participating in an offering of penny stock, conditionally or unconditionally, and permanently or for such period of time as the court shall determine.

(B) Definition.—

For purposes of this paragraph, the term “person participating in an offering of penny stock” includes any person engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of, any penny stock. The Commission may, by rule or regulation, define such term to include other activities, and may, by rule, regulation, or order, exempt any person or class of persons, in whole or in part, conditionally or unconditionally, from inclusion in such term.

59. Mr Waldron also made the following submission with respect to civil penalties:

9. Any such penalty is one, which is due to the United States, and may be enforced by the United States, see 15 USC [§] 77t(d)(3)(a) and (b):

(A) Payment of penalty to Treasury

A penalty imposed under this section shall be payable into the Treasury of the United States, except as otherwise provided in section 7246 of this title and section 78u–6 of this title.

(B) Collection of penalties

If a person upon whom such a penalty is imposed shall fail to pay such penalty within the time prescribed in the court’s order, the Commission may refer the matter to the Attorney General who shall recover such penalty by action in the appropriate United States district court.

60. As to the Director and Officer Ban, 15 USC §§ 77t(e) and 78u(d)(2) are in the following terms:

§ 77t Injunctions and prosecution of offenses

…

(e) Authority of court to prohibit persons from serving as officers and directors

In any proceeding under subsection (b), the court may prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any person who violated section 77q(a)(1) of this title from acting as an officer or director of any issuer that has a class of securities registered pursuant to section 78l of this title or that is required to file reports pursuant to section 78o(d) of this title if the person’s conduct demonstrates unfitness to serve as an officer or director of any such issuer.

…

§ 78u Investigations and actions

(d)Injunction proceedings; authority of court to prohibit persons from serving as officers and directors; money penalties in civil actions

…

(2) In any proceeding under paragraph (1) of this subsection, the court may prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any person who violated section 78j(b) of this title or the rules or regulations thereunder from acting as an officer or director of any issuer that has a class of securities registered pursuant to section 78l of this title or that is required to file reports pursuant to section 78o(d) of this title if the person’s conduct demonstrates unfitness to serve as an officer or director of any such issuer.

61. Mr Waldron also referred to the provision of 15 USC § 77x, which is extracted below:

§ 77x Penalties

Any person who willfully violates any of the provisions of this subchapter, or the rules and regulations promulgated by the Commission under authority thereof, or any person who willfully, in a registration statement filed under this subchapter, makes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, shall upon conviction be fined not more than $10,000 or imprisoned not more than five years, or both.

62. Reference was also made to various investigative functions or powers of the SEC in the following submission:

12. The applicant’s power of investigation is expanded by 15 USC [§] 78u(a)(1) (emphasis added):

The Commission may, in its discretion, make such investigations as it deems necessary to determine whether any person has violated, is violating, or is about to violate any provision of this chapter, the rules or regulations thereunder, the rules of a national securities exchange or registered securities association of which such person is a member or a person associated, or, as to any act or practice, or omission to act, while associated with a member, formerly associated with a member, the rules of a registered clearing agency in which such person is a participant, or, as to any act or practice, or omission to act, while a participant, was a participant, the rules of the Public Company Accounting Oversight Board, of which such person is a registered public accounting firm, a person associated with such a firm, or, as to any act, practice, or omission to act, while associated with such firm, a person formerly associated with such a firm, or the rules of the Municipal Securities Rulemaking Board, and may require or permit any person to file with it a statement in writing, under oath or otherwise as the Commission shall determine, as to all the facts and circumstances concerning the matter to be investigated. The Commission is authorized in its discretion, to publish information concerning any such violations, and to investigate any facts, conditions, practices, or matters which it may deem necessary or proper to aid in the enforcement of such provisions, in the prescribing of rules and regulations under this chapter, or in securing information to serve as a basis for recommending further legislation concerning the matters to which this chapter relates.

13. In aid of its investigative function, the applicant has a variety of coercive powers, see 15 USC [§] 78u(b):

For the purpose of any such investigation, or any other proceeding under this chapter, any member of the Commission or any officer designated by it is empowered to administer oaths and affirmations, subpena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, or other records which the Commission deems relevant or material to the inquiry. Such attendance of witnesses and the production of any such records may be required from any place in the United States or any State at any designated place of hearing.

14. Such coercive powers are enforceable upon pain of imprisonment, see 15 USC [§] 78u(c):

In case of contumacy by, or refusal to obey a subpena issued to, any person, the Commission may invoke the aid of any court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such person resides or carries on business, in requiring the attendance and testimony of witnesses and the production of books, papers, correspondence, memoranda, and other records. And such court may issue an order requiring such person to appear before the Commission or member or officer designated by the Commission, there to produce records, if so ordered, or to give testimony touching the matter under investigation or in question; and any failure to obey such order of the court may be punished by such court as a contempt thereof. All process in any such case may be served in the judicial district whereof such person is an inhabitant or wherever he may be found. Any person who shall, without just cause, fail or refuse to attend and testify or to answer any lawful inquiry or to produce books, papers, correspondence, memoranda, and other records, if in his power so to do, in obedience to the subpena of the Commission, shall be guilty of a misdemeanor and, upon conviction, shall be subject to a fine of not more than $1,000 or to imprisonment for a term of not more than one year, or both.

[Original emphasis.]

63. Furthermore, Mr Lange of counsel for Mr Waldron made reference to monetary penalties as follows:

17. The applicant may also seek monetary penalties, see 15 USC [§] 78u(d)(3) (emphasis added):

Whenever it shall appear to the Commission that any person has violated any provision of this chapter, the rules or regulations thereunder, or a cease-and-desist order entered by the Commission pursuant to section 78u–3 of this title, other than by committing a violation subject to a penalty pursuant to section 78u–1 of this title, the Commission may bring an action in a United States district court to seek, and the court shall have jurisdiction to impose, upon a proper showing, a civil penalty to be paid by the person who committed such violation.

18. Such penalties are due to the United States, and may be enforced by the United States, see 15 USC [§] 78u(3)(c)(i) and (ii):

(i) Payment of penalty to treasury.—

A penalty imposed under this section shall be payable into the Treasury of the United States, except as otherwise provided in section 7246 of this title and section 78u–6 of this title.

(ii) Collection of penalties.—

If a person upon whom such a penalty is imposed shall fail to pay such penalty within the time prescribed in the court’s order, the Commission may refer the matter to the Attorney General who shall recover such penalty by action in the appropriate United States district court.

64. Lastly, Mr Waldron made a submission as to the provisions of 15 USC § 78ff(a) as follows:

19. Breaches of the provisions set out in Chapter 2B are, themselves, criminal offences, see 15 USC [§] 78ff(a):

Any person who willfully violates any provision of this chapter (other than section 78dd–1 of this title), or any rule or regulation thereunder the violation of which is made unlawful or the observance of which is required under the terms of this chapter, or any person who willfully and knowingly makes, or causes to be made, any statement in any application, report, or document required to be filed under this chapter or any rule or regulation thereunder or any undertaking contained in a registration statement as provided in subsection (d) of section 78o of this title, or by any self-regulatory organization in connection with an application for membership or participation therein or to become associated with a member thereof which statement was false or misleading with respect to any material fact, shall upon conviction be fined not more than $5,000,000, or imprisoned not more than 20 years, or both, except that when such person is a person other than a natural person, a fine not exceeding $25,000,000 may be imposed; but no person shall be subject to imprisonment under this section for the violation of any rule or regulation if he proves that he had no knowledge of such rule or regulation.

The Letters of Request

65. The terms of the Letters of Request are relatively similar for each witness requested to be deposed.

66. Each letter of request, relevantly, inter alia:

1. Bears a title, “Letter of Request for International Judicial Assistance Pursuant to the Hague Convention of 18 March 1970 on the Taking of Evidence in Civil or Commercial Matters”.

2. States that the testimony requested is sought for use as evidence at trial, is relevant to the trial of the US proceedings and the request for the testimony is not unduly burdensome.

3. Provides a description of the person to be compelled. For example, Mr Twynham is described as a former employee of ServiceMesh, who is to partake in an oral examination as to certain examination topics.

4. Indicates the sender of the request is the Hon Rozella A Oliver of the US Court.

5. Specifies the date upon the requesting authority requires receipt of response to the letter of request.

6. Provides that the request is addressed to this Court.

7. Stipulates the parties, namely, the SEC and Mr Pulier, and intervenor are identified.

8. States the nature of the US proceedings and notes that the SEC has brought civil claims against Mr Pulier asserting the violation of various securities regulations, that the SEC will be required to prove its claims by a preponderance of the evidence, and if successful will seek disgorgement of ill-gotten gains and a civil penalty.

9. Provides a summary of the SEC’s complaint against Mr Waldron to the effect set out earlier in this judgment including “the SEC claims that Mr Pulier secured there CBA contracts and obtained an additional payout under the earn-out provision by paying bribes in 2014 to two CBA executives, Keith Hunter and Jon Waldron”.

10. Provides a summary of Mr Pulier’s defence to the SEC’s complaint, namely, that:

1. Mr Pulier denies paying bribes to CBA executives or any other person to increase CSC’s earn-out payment to ServiceMesh equity holders;

2. the CBA contracts with ServiceMesh were legitimately obtained;

3. Mr Pulier did not engage in or seek to evade detection of a scheme to defraud CSC by making bribe payments though the Ace Foundation; and

4. by reason of the above, Mr Pulier did not make any false representation to CSC.

11. States the nature of the evidence to be obtained from each witness, which is stated to be oral testimony on the examination topics set out at Exhibit A to each letter, and the basis upon which each Witness has knowledge of the examinations topics. An illustration of such topics is the examination topic in the Letter of Request concerning Mr Waldron which was expressed as follows:

1. Mr. Waldron’s role and responsibilities at the Commonwealth Bank of Australia (“CBA”).

2. Mr. Waldron’s relationships with Eric Pulier, Michael Harte, Brad Twynham, Hans Gyllstrom, and/or Keith Hunter while he worked at CBA.

3. Mr. Waldron’s knowledge of plans or efforts to integrate McAfee, Pivotal, RedHat, and Microsoft cloud products into CBA’s IT infrastructure from 2009 to 2014.

4. Mr. Waldron’s knowledge of plans or efforts to integrate ServiceMesh products or services into CBA’s IT infrastructure from 2009 to 2014.

5. Mr. Waldron’s knowledge of the products and services ServiceMesh marketed, sold, or provided to CBA between January 1, 2009 and December 31, 2014.

6. Mr. Waldron’s knowledge of CBA’s plans to develop or modernize its infrastructure in 2013 and 2014.

7. Any agreements Waldron, Hunter, Harte, or anyone else had with Pulier regarding the McAfee and Pivotal contracts.

8. Mr. Waldron’s knowledge of the Ace Foundation, including its origins, executives, officers, directors, control persons, clients and consultants.

9. Mr. Waldron’s oral communications with representatives of any entities, including ServiceMesh, CBA, CSC, or Barclays, regarding an investigation into him, Mr. Pulier, Harte, Hunter, or Ace and/or the acquisition of ServiceMesh by CSC.

12. Stipulates the purpose of the evidence sought, including the context in which the Witness has knowledge and their involvement in the matters the subject of the SEC’s complaint (as set out, in respect of each Witness, below).

13. Provides the methods or procedures requested by the US Court that are to be followed in examining the Witnesses. These methods are essentially the same as would be required to be carried out in any examination ordered by this Court.

Relevance of Witnesses to the Us Proceedings

67. Each witness sought to be examined by the SEC is a resident in NSW.

68. Each witness is described in the Letter of Request pertaining to that Witness as (in relation to the “Purpose of the Evidence Sought”): “possess[ing] information that is relevant and essential to” the US proceedings brought by the SEC against Mr Pulier.

69. I accept the submission of the SEC, in broad terms, that the Witnesses have, so far as the SEC is concerned, knowledge that goes to:

1. CBA or ServiceMesh’s ordinary course of conduct in purchasing information technology related goods and services;

2. whether the McAfee and Pivotal contracts were consistent with the ordinary course of conduct;

3. the roles that the McAfee and Pivotal contracts played in CBA’s business;

4. the extent to which Mr Waldron, Mr Hunter, and Michael Harte were involved in getting the McAfee and Pivotal contracts finalised and approved; and

5. whether the McAfee and/or Pivotal contracts were illegitimately obtained.

70. Of the Witnesses, Mr Keaney and Mr Murphy also have knowledge as to:

1. the evidence uncovered by them during the internal investigation into the payments made to Messrs Waldron and Hunter;

2. Mr Hunter’s alleged explanations for those payments; and

3. the documentation Mr Hunter provided to explain those payments.

71. The relevance of each witness and their role in the underlying context of the US proceedings, as described in the Letters of Request issued by the US Court, appears below.

Mr Twynham

72. Mr Twynham worked for ServiceMesh at the time of the alleged bribery scheme as the Vice President of Emerging Market Programs.

73. For several years, he worked directly with Mr Hunter and Mr Waldron, including on the McAfee and Pivotal contracts.

74. Mr Twynham exchanged several emails with Mr Pulier, Mr Hunter, and Mr Waldron about the McAfee and Pivotal contracts, where they discussed the status of the contracts, the cost of the contracts, ServiceMesh’s ability to recognise revenue from the contracts, why the contracts were necessary, and the steps needed to complete the contracts.

75. Mr Twynham also exchanged text messages with Mr Waldron at or around the time the SEC alleges Mr Waldron received bribe payments.

Mr Nicholson

76. Mr Nicholson worked for CBA during the alleged bribery scheme as Executive Manager of Software Asset Management.

77. Mr Nicholson worked directly with Messrs Waldron and Hunter on the McAfee contract and reviewed it to determine whether it was financially viable, legally sustainable, represented an acceptable level of risk, complied with relevant legislation, and met all of CBA’s policies and procedures.

78. Mr Nicholson communicated with Mr Waldron and others regarding the McAfee contract because he was uncomfortable with the deal. Although Mr Nicholson raised his concerns about the McAfee contract with Mr Waldron and his supervisor, Messrs Waldron and Hunter pushed the deal through.

Mr Waldron

79. Mr Waldron worked for ServiceMesh at the time of the alleged bribery scheme as the General Manager of IT Engineering. He worked for Messrs Hunter and Harte and was instrumental in getting both the McAfee and Pivotal contracts approved and finalised.

80. The SEC contends that Messrs Waldron, Hunter and Harte all conspired with Mr Pulier to defraud CSC out of more than $98 million by accepting bribes from Mr Pulier while they were employed at CBA in exchange for helping Mr Pulier and ServiceMesh obtain the McAfee and Pivotal contracts that together were worth over $10 million.

81. The SEC alleges that Mr Pulier caused a total of $1.9 million in bribe payments to be paid to Mr Waldron.

Mr Kelada

82. Mr Kelada worked for CBA during the alleged bribery scheme in IT Engineering Technology Platforms.

83. One of his responsibilities was to determine how Pivotal could be introduced into CBA’s IT databases in a manner that satisfied CBA’s application needs and was adapted to its security and risk environment.

84. Mr Kelada spoke with Mr Waldron about Pivotal and CBA’s plans for implementing it.

85. In addition, Mr Kelada knew the services that ServiceMesh was providing to CBA through its Agility Platform and, at around the time of the alleged bribery scheme, gave an assessment of the overall business relationship between ServiceMesh and CBA.

86. Mr Kelada identified a number of issues in the Agility Platform that existed during the alleged bribery scheme and during the time the Pivotal contract was being negotiated and finalised.

Mr Richardson

87. Mr Richardson worked for CBA during the alleged bribery scheme as a General Manager in Partner Management of IT Delivery Services. He worked directly with Mr Waldron and Mr Hunter on the McAfee contract and had raised several potential concerns about the deal regarding its pricing, legal implications, and the risks that it created for CBA.

88. Mr Richardson was kept apprised of the McAfee contract as it was being finalised and was tasked with handling several of the issues that arose during that process. Mr Richardson exchanged several emails with Messrs Waldron and Hunter about the McAfee contract and also briefed Mr Harte on the McAfee contract shortly before it was approved.

Mr Pennington

89. Mr Pennington worked for CBA during the alleged bribery scheme as an Executive Manager of Engineering Delivery in IT Engineering Enterprise Services. He worked directly with Messrs Waldron and Hunter on the McAfee and Pivotal contracts.

89. Mr Pennington reviewed the transaction documents for the McAfee contract and exchanged emails with Mr Twynham, and Messrs Waldron, Hunter, and Harte regarding, inter alia, how the McAfee contract departed from an earlier services agreement, how quickly the McAfee contract could be finalised, and who had the legal authority to sign the McAfee contract on behalf of CBA.

90. Mr Pennington also worked directly with Messrs Waldron and Hunter on the Pivotal contract. Mr Pennington reviewed the transaction documents for the Pivotal contract and was the one who broke them up into several separate contracts based on discussions he had with Mr Hunter.

Ms Lane

92. Ms Lane worked for CBA during the alleged bribery scheme in the Technology Risk in the IT Delivery Services business unit at CBA.

93. Ms Lane was directly involved in reviewing the McAfee contract and raised a potential concern about the urgency surrounding the approval of the McAfee contract and whether there was sufficient time to conduct a risk assessment of the contract.

94. In particular, Ms Lane felt that the short amount of time she had to work on the McAfee contract would prevent her from providing definitive advice on the risk the contract posed to CBA and recommended delaying execution of the contract.

Mr Smith

95. Mr Smith worked for CBA during the alleged bribery scheme as the Head of Technology Risk in the IT Delivery Services business unit at CBA.

96. Mr Smith was directly involved in reviewing the McAfee contract. He raised a potential concern about the McAfee contract regarding the risk that it created for CBA.

97. In particular, Mr Smith wanted a risk assessment done on the McAfee contract because it involved new services and products coming from an existing supplier.

98. Mr Smith’s co-worker, Mr Richardson, raised Mr Smith’s concerns with Messrs Waldron and Hunter before the McAfee deal was approved.

Mr Keaney and Mr Murphy

99. Mr Keaney and Mr Murphy worked for CBA during the alleged bribery scheme in Group Investigations and Advisory Services.

100. Mr Keaney and Mr Murphy questioned Mr Hunter as part of an internal investigation conducted by CBA into the payments Messrs Hunter and Waldron received in their bank accounts.

101. Mr Keaney and Mr Murphy requested that Mr Hunter provide information and documentation explaining the alleged bribery payments. Mr Hunter told him the payments were for services Mr Hunter allegedly provided to an entity in connection with building more than 15 data centres and refurbishing approximately 30 more.

102. Mr Hunter provided what he claimed were Statements of Work and invoices submitted to that entity.

103. Senior counsel for Mr Pulier, Ms H Younan SC, also described the relevance of each witness to the US proceedings. As to Messrs Twynham, Nicholson and Waldron, the following submission was advanced by Mr Pulier:

Bradley Twynham

The Applicant proposes to examine Mr Twynham in relation to the topics for examination in the Applicant’s Letter of Request relating to Mr Twynham (Twynham Letter of Request: JR-1, pp 134-143), Appendix A.

The Applicant’s evidence about the relevance of Mr Twynham’s evidence to the California Proceeding, and his ability to answer the Applicant’s proposed topics for his examination, is at [32]-[34] of the Rapore Affidavit.

Mr Twynham has legal representation. In response to a request to indicate his attitude to being examined on the proposed topics, Mr Twynham sought confirmation that the Applicant is willing to reimburse him for his reasonable legal expenses incurred in relation to the examination (Ford Affidavit [9]-[10]). Further confirmation of Mr Twynham’s position has been sought (Ford Affidavit [11]-[13]).

A draft subpoena for the examination of Mr Twynham is at SMF-2, pp 171-173.

Marcus Alan Leith Nicholson

The Applicant proposes to examine Mr Nicholson in relation to the topics for examination in the Applicant’s Letter of Request relating to Mr Nicholson (Nicholson Letter of Request: JR-1, pp 153-161), Appendix A.

The Applicant’s evidence about the relevance of Mr Nicholson’s evidence to the California Proceeding, and his ability to answer the Applicant’s proposed topics for his examination, is at [38]-[40] of the Rapore Affidavit.

Mr Nicholson’s attitude to being examined on the topics for examination in the Nicholson Letter of Request is presently unknown. Several attempts have been made to contact Mr Nicholson, all of which have been unsuccessful (Ford Affidavit [27]-[43]). On the basis that the subpoena/documents sought to be served cannot practicably be served (personally) on Mr Nicholson, substituted service is sought pursuant to reg 10.14 of the UCPR (in lieu of personal service under reg 10.20).

A draft subpoena for the examination of Mr Nicholson is at SMF-2, pp 177-179.

Jon Waldron

The Applicant proposes to examine Mr Waldron in relation to the topics for examination in the Applicant’s Letter of Request relating to Mr Waldron (Waldron Letter of Request: JR-1, pp 216-226), Appendix A.

The Applicant’s evidence about the relevance of Mr Waldron’s evidence to the California Proceeding, and his ability to answer the Applicant’s proposed topics for his examination, is at [57]-[60] of the Rapore Affidavit.

Mr Waldron has legal representation. He has indicated that he objects to being examined on the topics in the Waldron Letter of Request (Ford Affidavit [44]-[45]).

A draft subpoena for the examination of Mr Waldron is at SMF-2, pp 168-170.

104. The form of each of the above references to Mr Rapore’s affidavit are in similar terms. For example, the last mentioned extract of senior counsel’s written submissions refers to Mr Rapore’s affidavit at paras 57-60. That aspect of his evidence is as follows:

57. I believe that Mr Waldron has knowledge that is relevant to the claims and defences in the California Proceeding.

58. The Joint Application describes the basis upon which Mr Waldron’s evidence is relevant to the California Proceeding:

Mr Waldron worked for CBA at the time of CSC’s acquisition of ServiceMesh and the earnout period as the General Manager of IT engineering. He worked for Hunter and Harte and was instrumental in getting both the McAfee and Pivotal contracts approved and finalized. The SEC contends that Waldron, Hunter and Harte all conspired with Defendant to defraud CSC out of more than $98 million by accepting bribes from Defendant while they were employed at CBA in exchange for helping Defendant and SMI obtain the McAfee and Pivotal contracts, acts that together were worth over $10 million. The SEC alleges that Defendant caused a total of $1.9 million in bribe payments to be paid to Waldron, all of which were deposited into Waldron’s bank accounts at CBA or what Pulier contends is a wholly owned subsidiary of CBA He therefore possesses information that is relevant and essential to this action including the payments Waldron received from Ace his understanding of CBA's monitoring of transactions to or from accounts hold at CBA or its subsidiaries. Waldron’s relationship with Defendant, Hunter and Harte. Waldron’s role in and knowledge of CBA's plans for its cloud business, his belief as to the veracity of Hunters statements concerning the alleged scheme to defraud CSC, CBA's ordinary course of conduct in purchasing information technology related goods and services, whether the McAfee and Pivotal contracts were consistent with the ordinary course of conduct, the role that the McAfee and Pivotal contracts played in CBA’s business, the extent to which Waldron, Hunter, and Harte were involved in getting the McAfee and Pivotal contracts finalized and approved and the legitimacy of those contracts.

59. Additionally the Waldron Letter of Request contains a section titled "8(a) Evidence to be obtained” which states:

The SEC has indicated to Defendant’s counsel that it intends to seek a letter of request for sworn testimony from Mr Waldron to be used at trial in this matter. In a related case against Mr Pulier CSC sought a similar letter of request and filed an application before the Supreme Court of New South Wales to compel testimony from Mr Waldron. Mr. Waldron successfully opposed CSC's application in the Supreme Court of New South Wales. See Application of Computer Sciences Corporations under the Evidence on Commission Act 1995 [2019] NSWSC 777. Mr. Puller does not take a position on whether or not Mr. Waldron should be compelled to provide evidence in this action. Should the Supreme Court of New South Wales compel Mr. Waldron to provide testimony in response to the SEC's request, however, this Court seeks sworn testimony from Mr. Waldron on the additional topics identified in Appendix A attached hereto.

60. The Waldron Letter of Request also contains a section titled "8(b) Purpose of the evidence sought", which states.

The SEC alleges that Mr. Pulier paid bribes to Mr. Waldron for his help in procuring contracts between CBA and ServiceMesh. Mr Waldron's testimony will be material to determining facts including whether the CBA contracts were procured lawfully CBA's ordinary course of conduct in purchasing information technology related goods and services, whether contracts between ServiceMesh and CBA arose, in the ordinary course, the role that those contracts played in CBA’s business, and whether those contracts were otherwise legitimately obtained.

Accordingly, this Court respectfully requests that Mr. Waldron be compelled to provide oral testimony to be preserved for use at trial in this action on the narrow and specific Deposition Topics set forth in the attached Appendix A to elicit and record testimony appropriate to be given at trial.

105. The submissions by Mr Pulier as to the remaining witness follow a similar pattern.

POSITION OF INTERESTED PARTIES

106. The position of each of the parties with respect to the orders sought by the SEC in its summons was, at the outset of the hearing before the Court, as appears below.

Mr Twynham

107. Mr Twynham consented to the orders sought by SEC, insofar as they affect him. That consent was on the basis that the SEC agreed to pay his reasonable legal expenses in relation to his deposition by the SEC, being the reasonable costs of any advice provided in relation to the deposition, preparation for the deposition and representation during the deposition.

The CBA Witnesses

108. The CBA witnesses (namely, Messrs Kelada, Murphy, Pennington, Richardson and Smith and Ms Keaney) neither consented to nor opposed the application for examinations, provided that:

1. the SEC and Mr Pulier examinations were conducted concurrently;

2. the representatives for witness/CBA attended;

3. examinations would be via AVL; and

4. the SEC / Mr Pulier reimbursed reasonable legal expenses in relation to the examinations (including in relation to advice, preparation and representation during examinations).

Mr Waldron

109. Mr Waldron opposed orders sought in the summons.

Mr Nicholson

110. Mr Nicholson neither consented to nor opposed the orders sought in the summons and motion, provided that:

1. the SEC / Mr Pulier examinations were conducted concurrently;

2. an order was made pursuant to s 33(7) of the Act, including for loss of time in preparation for examination; and

3. an order was made for his costs of the proceedings.

Mr Pulier and the Proposed Short Minutes of Order

111. Upon the second day of the hearing, Ms Younan SC who appeared for Mr Pulier, produced short minutes of order (“the short minutes”) in mark-up form proposing variations to the orders proposed in the summons (and corresponding to the short minutes of order produced at the outset of the hearing by the SEC). The short minutes are attached to this judgment, without mark-up, and are entitled “Annexure A”. Those orders effectively dealt with the qualifications expressed by various parties as to the summons in the above summary, save for Mr Waldron.

112. As to those short minutes, the position of the parties (other than Mr Waldron, who maintained opposition to the proposed orders) was as follows:

1. Mr Nicholson would accept service of a subpoena by email per para 16 of the short minutes and did not oppose the proposed orders in the short minutes.

2. The CBA witnesses accepted the proposed orders. It may be noted, in that respect, that Ms Mann, who appeared for the CBA witnesses, sought the examinations occur concurrently (which position was agreed, contrary to Ms Mann’s initial understanding) by the SEC.

3. Mr Twynham had consented to the orders sought by the SEC in the summons, His legal representation was excused at the outset of the proceedings and may be taken to have acquiesced in the short minutes, subject to the previously stated position rejecting expenses and costs.

4. The SEC consented to the proposed orders, accepting that para 18 of the short minutes may be dealt with at a later time (a position accepted by the CBA witnesses and not disputed by counsel for the other parties).

5. As to para 3 of the short minutes, Mr Waldron contended (without detracting from his overall objection to the orders) that he should, if the subject of orders for examination, be consulted as part of the process envisaged in that provision. Again, there was no demur from that approach and it is one applicable to all parties.

113. In that sense, the proceedings went forward, in substance, upon the summons being pressed on an amended basis in that way.

ORDERS OF THE COURT

114. On 21 October 2020, the Court announced orders which were entered on 22 October 2020. Those orders are extracted below:

TERMS OF ORDER MADE BY THE COURT

1. Pursuant to section 33 of the Evidence on Commission Act 1995 (NSW) (Evidence on Commission Act), and pursuant to Letters of Request issued by the United States District Court Central District of California in proceedings numbered 2:17-cv-07124-PSG-RAO annexed to the Affidavit of Douglas M. Miller sworn 18 August 2020 and to the Affidavit of James Rapore sworn 14 September 2020, leave is granted to issue and serve Subpoenas to Attend and Give Evidence (in substantially the same form as that contained at Court Book Volume 2 – 695 to 754, or in such other form as the Court may order) to each of the individuals set out in Schedule 1 to this Summons except Mr Waldron (individually each Witness, and together the Witnesses), for each Witness to be examined orally and under oath or affirmation about those matters pertaining to each Witness that are set out in the ‘Examination Topics’ listed in each Witness’ respective Letter of Request (individually each Examination, and together the Examinations).

2. An order that, at the time of service of the Subpoenas to Attend Give Evidence issued pursuant to Order 1 above, each of the Witnesses be served with a copy of:

(a) the orders of the Court made pursuant to this Summons;

(b) this Summons;

(c) Mr Pulier’s (Applicant) Notice of Motion;

(d) the Affidavit of Jason Alexander Willi Munstermann sworn 19 August 2020;

(e) the Affidavit of Douglas M. Miller sworn 18 August 2020;

(f) the affidavit of Susanna Ford affirmed 15 September 2020; and

(g) the affidavit of James Rapore sworn 14 September 2020.

3. An order that a person agreed upon by the Plaintiff and Applicant in consultation with the Witnesses, or otherwise such other person or judicial officer as the Court may determine, be appointed as the examiner by whom the Examinations are to be conducted (Examiner).

4. The subpoenas issued pursuant to Order 1 be returnable before the Examiner.

5. An order that the Examinations commence on dates to be agreed by the parties, Witnesses and the Examiner, or otherwise fixed by the Court, with at least one day between each Examination, and continue thereafter from day to day until complete.

6. An order that the Examinations be conducted concurrently with the examinations ordered pursuant to the Notice of Motion filed in these proceedings by Mr Eric Pulier on 15 September 2020.

7. An order that the Examinations be conducted at the offices of the Plaintiff’s solicitor, being McCullough Robertson Lawyers, Level 32, 19 Martin Place Sydney, NSW 2000.

8. An order that the Examinations:

(a) be attended by trial counsel for the Plaintiff and the Applicant (being legal practitioners of the Supreme Court of New South Wales and/or legal practitioners of the United States of America) who shall be permitted to examine and cross-examine each Witness;

(b) be transcribed by a stenographer and recorded by a videographer, both to be arranged by the Plaintiff at the Plaintiff’s expense;

(c) be attended by legal representatives for each Witness if he or she chooses to have it; and

(d) be attended by a legal representative for the Commonwealth Bank of Australia.

9. An order, pursuant to s 33(1) of the Evidence on Commission Act and rule 31.3(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), that:

(a) the Plaintiff’s and Applicant’s legal representatives appear at the Examinations by audio-visual link.

(b) The Witnesses and their legal representatives and Commonwealth Bank of Australia appear at the Examinations by audio-visual link;

10. An order that, following the completion of the Examination of each Witness:

(a) a transcript of the examination and audio visual recording be prepared and certified in accordance with rules 24.14(1)–(3) of the UCPR;

(b) the certified transcript, certified audio visual recording, and any exhibit retained by the Examiner, be sent by the Examiner to the principal registrar of the Supreme Court in accordance with rules 52.4(3) and 52.4(4) of the UCPR; and

(c) a Registrar of the Supreme Court issue a sealed Certificate, and send that Certificate and annexures to the legal representatives of the Plaintiff and Applicant, in accordance with rule 52.5 of the UCPR.

11. An order that the transcript of each Witness’ sworn testimony be authenticated by the Witness’ signature acknowledging it as a true record.

12. An order that any documents used in the Examination are to be marked as exhibits and incorporated into the record of the sworn testimony.

13. An order that, within 5 days after each Examination, the authenticated transcript of the Examination and audio visual recording be provided to the legal representatives of the Plaintiff and Applicant.

14. Subject to further order of this Court, the Plaintiff and Applicant may disclose the documents and audio visual recording referred to in Order 8(b), 11, 12 and 13 to other parties in United States District Court Central District of California in proceedings numbered 2:17-cv-07124-PSG-RAO.

15. The reasonable costs of the Examinations be borne by the Plaintiff, including:

a. the expense of the Examiner;

b. the videographer and preparation of the transcript; and

c. the Witnesses’ conduct money, expenses and loss of time on attendance in accordance with section 33(7) of the Evidence on Commission Act; and

d. the Witnesses’ legal expenses reasonably incurred in relation to advice about, preparation for, and representation during the Examinations.

16. Pursuant to rule 10.14 of the UCPR, personal service on Marcus Nicholson of any subpoena ordered in accordance with Order 1 be effected by sending an email to [email omitted], including an electronic link to download the documents required to be served.

17. Liberty to the Plaintiff to apply to the Duty Judge in Common Law or to any Judge who may be allocated to these proceedings for the purposes of case management of the Examinations.

18. Costs are reserved.

Mr Waldron

19. Determination of the Summons and the Applicant’s Notice of Motion with respect to Mr Waldron is deferred until after the hearing of the criminal proceedings presently commenced against Mr Waldron.

20. Subject to Order 19, leave is granted to Mr Waldron and the Plaintiff to adduce further evidence as to the prospect of Mr Waldron being subject to civil penalty proceedings.

NOTE:

21. Orders 19 and 20 are not intended to delay United States District Court Central District of California proceedings numbered 2:17-cv-07124-PSG-RAO.

115. These are the Court’s reasons for decision, with respect to those orders made upon the summons and motion.

297. As earlier noted, first, it is important to observe that the Act does not provide expressly for such an interruption to the process of criminal justice by the compulsory examination of a person charged with an indictable offence.

298. Secondly, the applicable rule of construction recognises that legislation may necessarily imply that its provisions work some fundamental alteration to the general system of law, or the qualification of some fundamental right, even though the Act does not expressly provide for that effect: X7 at [142]. See also: Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11], 559-560 [32], 562-563 [43]. Such an implication must be necessary, not just available or somehow thought to be desirable.

299. Thirdly, s 33 of the Act provides for the power to grant compulsory examination. It is within that provision where a carve-out pertaining to an accused’s common law rights prior to a criminal trial would be expected to appear. The generality of the provision, read in the context of Pt 4, does not, in my view, appear to necessarily imply any qualification to an accused’s common law right to invoke the privilege against self-incrimination. Indeed, it is conceivable that a contra indication exists under Pt 4 given that s 33(1) expressly states that the power under s 33(1) conferred upon the Court arises only “if application is made under section 32”, thereby incorporating the requirements of s 32(2) and a carve-out as to criminal proceedings.

300. The provisions of s 34 would not seem to demonstrate the “necessary intendment”.

301. The provision makes no express reference to the examination of a person who has been charged but not tried for an offence about the subject matter of the pending charge.

302. It was common ground that the provision addressed the privilege against self-incrimination. However, this protection may be compared to the provision of the relevant legislation in X7.

303. The power conferred on the examiner in X7 was to summon a person to appear before the examiner at an examination to give evidence. However, the legislation then under consideration provided that, if the person being examined claimed that an answer to a question asked might tend to incriminate that person or make him liable to a penalty, then subject to certain exceptions, the answer given was not admissible in evidence against the person in criminal proceedings (see X7 at [73]). A further provision also provided that the examiner could give a direction preventing or limiting the publication of evidence given before the examiner (at [74]).

304. Notwithstanding these limitations, the High Court held that, even if the answers given at compulsory examination could not be used directly or indirectly by those responsible for investigating and prosecuting matter, a requirement to give answers, after being charged, would still fundamentally alter the accusatorial judicial process (X7 at [124]).

305. A provision which prevents compulsion against privilege adds greater weight to the proposition advanced by Mr Waldron that the legislation intended not to interfere with fundamental aspects of an accusatorial and adversarial criminal trial.

306. Fourthly, I consider that the SEC’s reliance on IBAC and Helicopter Resources to be misplaced.

307. The SEC correctly submitted that, in IBAC, the High Court unanimously rejected an argument that the compulsory examination of a person who was suspected of a crime was impermissible because such an examination would effect a fundamental alteration to the process of criminal justice by requiring a person to assist in his or her own prosecution: at [30], [48]-[50].

308. It was correctly submitted that where compulsory powers were exercised lawfully in accordance with the statute under which they were conferred for the purpose for which they were conferred, the examiner was not prevented by the fundamental principle (that it is for the prosecution to prove the guilt of an accused person) or the companion rule (that an accused person cannot be required to testify to the commission of a charged offence) from compelling persons suspected of offences to answer questions concerning the offences of which they were suspected: IBAC at [48]-[50].

309. The SEC’s submission as to IBAC does, however, not advance its contentions in respect of this mater. The decision in IBAC simply rejected the proposition that the companion principle can be extended to individuals who are merely suspected of criminal wrongdoing, as opposed to those who have, in fact, been charged: IBAC (per French CJ, Kiefel, Bell, Keane, Nettle, and Gordon JJ) at [48]-[50]. There is no suggestion that Mr Waldron has not been charged to face a criminal trial. The companion principle therefore does apply to him. Nothing the High Court said in IBAC detracts from the decision in X7 in the context of these proceedings.

310. The SEC also relied upon the decision of the High Court (Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ) in Helicopter Resources at [22]. It was contended, as a matter applicable to the present case, that the High Court in Helicopter Resources confirmed that Strickland was not authority for the proposition that:

[22] … because an otherwise lawful compulsory investigative procedure may result in a witness making representations that can be treated as an admission against an accused in subsequent criminal proceedings, the deployment of that procedure amounts, without more, to a breach of the companion rule or other interference with the accusatorial system of criminal justice.

314. The effect of SEC’s submission is, in my view, nebulous. In Helicopter Resources, their Honours (Keifel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ) made clear at [2] that:

[2] The principal question is whether the provision has the effect that invocation of an investigative power to compel an employee to give evidence about a matter with respect to which his or her employer stands charged with a criminal offence amounts to compelling the employer to give evidence contrary to the rule that an accused cannot be required to assist the Crown in proving its case. For the reasons which follow, it does not. Thus, it is unnecessary to address the appellant’s other appeal grounds.

315. The High Court held that the companion principle was not invoked, since “the fact that an employee can be compelled to give evidence that may be treated as an admission against the employee’s employer does not mean that the employer is thus compelled in effect to give evidence or otherwise to assist the Crown in proof of its case: Helicopter Resources at [19].

316. Hence, Helicopter Resources concerns the position of compulsory examination of a third-party witness and not, Mr Waldron’s situation, a person charged with a criminal offence. As their Honours at [17] said:

[17] The Full Court were also correct in holding that the compulsory pre-trial examination of a potential witness does not engage the general rule that an accused cannot be required to assist the Crown in proof of its case. That rule has been identified as a companion to the fundamental principle that the burden is upon the Crown to prove the guilt of an accused beyond reasonable doubt. It applies to an accused, not a witness or potential witness other than the accused; and, self-evidently, the compulsory examination of a potential witness other than the accused does not in itself involve any compulsion of the accused to give evidence or otherwise to assist the Crown in proof of its case …

[Footnotes omitted.]

317. It follows that the decision in Helicopter Resources does not qualify, nor detract from, the decision in X7 or apply to the present proceedings in relation to Mr Waldron.

318. I turn then to the other discretionary factors.

319. The Court recognises that the examination of Mr Waldron is important to SEC’s case in the US proceedings against Mr Pulier. This acts in favour of permitting the application with respect to Mr Waldron. Notwithstanding that consideration, on balance, there are numerous countervailing considerations that act against the Court exercising its discretion to allow the examination of Mr Waldron.

Relevance of the NSW criminal trial

320. It is a significant consideration in the exercise of the Court’s discretion that Mr Waldron is the accused in a criminal trial which is yet to be heard. That consideration is influenced by the principles underpinning the judgment of the High Court in X7. Further, that factor is rendered particularly significant due to the seriousness of the offences for which Mr Waldron is charged – if convicted, he is liable to a term of imprisonment: X7 at [142].

321. I am cognisant of the decision of the Court in SEC No 1 at [26], that to require Mr Waldron to prepare and appear at an examination during the then six weeks before his trial commences was not oppressive. Conversely, in Restricted Decision No 1 and Restricted Decision No 2, the imminence of an accused trial was held to be a relevant, albeit less primary, discretionary factor. In the current context of the present proceedings, I too consider the imminence of Mr Waldron’s trial to be relevant factor in the consideration of the exercise of discretion. However, I accept that it is on the lower end on a scale of significance, which is comprised of various factors.

Utility

322. A further factor in favour of an exercise of discretion to refuse the application for examination with respect to Mr Waldron is the absence of utility that may be gained through his examination. In substance, if a compulsory order were to be made, it would amount to a futility owing to Mr Waldron’s right to invoke the privilege against self-incrimination.

323. The SEC properly accepted that s 34 protects the privilege against self-incrimination. Nonetheless, it was contended that, if Mr Waldron were to exercise the privilege against self-incrimination during examination, there still remains a “strategic utility” in him participating in the US proceedings. That is, even if Mr Waldron is unable or unwilling to answer questions posed in the examination pursuant to his privilege against self-incrimination (a position Mr Waldron has made clear in these proceedings), the SEC could still raise that occurrence in evidence in the US proceedings. Such an outcome would be relevant, it was contended, to the US Court’s determination of the facts and matters in the US proceedings as to whether the SEC has proven its case.

324. Mr Waldron proffered, as to the possible basis for the SEC seeking to establish utility in the examination orders (if the privilege against self-incrimination was invoked) that “one might well divine that it is an attempt [by SEC in the US proceedings] to avoid what we in this jurisdiction might term a Jones v Dunkel direction”. However, the rationale behind the SEC’s position was not made clear by the SEC in its submissions.

325. Further, the SEC submitted that there still may be some general, non-specific, non-incriminating questions that could be asked of Mr Waldron, although none were particularised. However, in my view, that submission illustrates, in substance, the absence of real utility in the grant of compulsory examination.

326. Overall, and without the benefit of sufficient explanation on behalf of the SEC, the rejoinder of the SEC as to the futility of the examination, rose no higher than mere speculation and rather underscores the absence of utility in the granting of compulsory examination.

327. The provisions of s 128 would seem to offer no solace to the SEC in this respect. This may be viewed through the prism of the question raised by the Court with the parties, after reserving its decision, as to the significance of s 128(4) to the potential grant of a certificate in Mr Waldron’s examinations.

328. The SEC responded as to s 128(4) of the Evidence Act as follows:

1. If the Court is satisfied that one of the clauses in s 128(4)(a) of the Evidence Act is established, the Court cannot require Mr Waldron to give evidence upon the issuance of a certificate under s 128(5) Evidence Act.

2. However, it was submitted that the Court would not come to such a conclusion because:

1. Mr Waldron is not presently subject to any criminal proceedings or civil penalty proceedings in the United States regarding the matters the subject of the US proceedings.

2. Mr Waldron’s evidence does not tend to prove that he has committed an offence against or arising under a law of a foreign country or tend to prove that he is liable to a civil penalty under a law of a foreign country. That submission was advanced on the following bases. The appropriate time for the determination of this issue (and accordingly whether the Court can compel Mr Waldron to give evidence), is at the time of Mr Waldron’s examination: see s 128(1) of the Evidence Act, which requires a witness to object to “giving particular evidence”.

3. In respect of s 128(4)(b) of the Evidence Act, there is no presumption as to what the interests of justice require. The test is not to be approached on the assumption that the privilege against self-incrimination is “fundamental” and that it would be rare to require a person who satisfies the test under s 128(2) to give evidence (Australian Workers' Union v Registered Organisations Commissioner (No 7) [2019] FCA 195 at [32]–[33]). Likewise, it would be wrong to assume that the protections conferred under s 128(7) create a presumption that the interests of justice will require the person to give the evidence. Each case must be assessed on its merits. Hence, the SEC submitted that it is in the interests of justice that Mr Waldron be compelled to give that relevant evidence during the examination.

329. I will mention later the significance of s 128(4), but I propose to first deal with Mr Waldron’s response to the Court’s invitation to make submissions regarding the issue raised by the Court as to s 128(4) (although Mr Waldron’s submissions were wider). In that respect, there would appear to be substance in Mr Waldron’s submissions that s 128 would not apply having regard to the context of Mr Waldron’s examination although the SEC has not, as yet, responded in terms, to those submissions. Section 4(1) of the Evidence Act, relevantly provides:

4 Courts and proceedings to which Act applies

(1)  This Act applies to all proceedings in a NSW court, including proceedings that—

(a) relate to bail, subject to Division 4 of Part 3 of the Bail Act 2013, or

(b)  are interlocutory proceedings or proceedings of a similar kind, or

(c)  are heard in chambers, or

(d)  subject to subsection (2), relate to sentencing.

330. In the Dictionary, “NSW court” is defined as follows:

NSW court means—

(a)  the Supreme Court, or

(b)  any other court created by Parliament,

and includes any person or body (other than a court) that, in exercising a function under the law of the State, is required to apply the laws of evidence.

331. Any questioning which may occur before an examiner is not a “proceedings in a NSW court”. It would not appear the examiner would be required to apply the laws of evidence, and therefore, s 4 of the Evidence Act could apply only if the questioning occurred in proceedings before the Court.

332. While the applicant is required to approach the Court to seek orders to compel the attendance of persons to give evidence, the process of the questioning of those persons cannot be described as being “proceedings” before the Court. This can be seen especially in the order originally sought by the applicant, namely, that Mr Sulan, a member of the NSW Bar, be appointed as the examiner and by the ultimate form of the order advanced by Mr Pulier.

333. The statutory language demonstrates that the questioning ought to be seen as being different from proceedings before the Supreme Court. Section 33(4) Evidence on Commission Act provides:

33 Power of the Supreme Court to give effect to application for assistance

…

(4) An order under this section is not to require any particular steps to be taken unless they are steps that can be required to be taken by way of obtaining evidence for the purposes of proceedings in the Supreme Court (whether or not proceedings of the same description as those to which the application for the order relates).

[Emphasis added.]

334. If the proposed questioning of persons were to be viewed as being part of proceedings in this Court, then this provision would be unnecessary. Thus, the powers available would be defined by virtue of the nature of the matter before the Court, being a proceeding before the Court.

335. In circumstances where there are no proceedings in a NSW court, s 128 does not apply: see example, Decker v State Coroner of NSW, cited with approval Wright v Clarkson at [7] per Hidden J. (The Coroner’s Court does not fit within the definition of “NSW court”, and accordingly the mechanism under s 128 was not available).

336. In such circumstances, the privilege against self-incrimination cannot, in the absence of statutory warrant, be abrogated, see Reid v Howard at [5]. Accordingly, the common law privilege would continue to apply, and Mr Waldron could not be compelled, contrary to his privilege against self-incrimination, to give evidence. Thus, as to the question of utility, there would be no certificate mechanism available, which would permit that prohibition to be overridden.

337. To the extent that Application concerning Section 80 of the Supreme Court Act and Sections 119 and 128 of the Evidence Act [2004] NSWSC 614 (Brownie AJ) stands for the contrary proposition, I note that his Honour was not, apparently, referred to the terms of s 4 of the Evidence Act. Nor does there appear to have been any argument advanced by any party that the Evidence Act would not apply.

338. Further, s 128 of the Evidence Act itself, tends to demonstrate that it does not apply to the present circumstances. The section distinguishes between proceedings before a NSW court and other inquiries. For example, 128(7) provides for a limitation on where compelled evidence may not be employed against the witness:

In any proceeding in a NSW court or before any person or body authorised by a law of this State, or by consent of parties, to hear, receive and examine evidence—

(a)  evidence given by a person in respect of which a certificate under this section has been given, and

(b)  evidence of any information, document or thing obtained as a direct or indirect consequence of the person having given evidence,

cannot be used against the person. However, this does not apply to a criminal proceeding in respect of the falsity of the evidence.

339. Thus, the Act appears to distinguish between proceedings in a NSW court and proceedings “before any person or body authorised by a law of this State…”. Whilst the examiner may fall into the latter category, the former would not seem to apply.

340. Further, the legislature referred to the person objecting being a “witness”. The term “witness” is defined by the Dictionary in the following terms: “‘witness’ includes the meaning given in cl 7 of Pt 2 of this Dictionary”. In turn, cl 7 provides:

Witnesses

(1)  A reference in this Act to a witness includes a reference to a party giving evidence.

(2)  A reference in this Act to a witness who has been called by a party to give evidence includes a reference to the party giving evidence.

(3)  A reference in this clause to a party includes a defendant in a criminal proceeding.

341. It is true the definition is non-exclusive in the light of the word “includes”. However s 131A provides:

131A Application of Part to preliminary proceedings of courts

(1)  If—

(a)  a person is required by a disclosure requirement to give information, or to produce a document, which would result in the disclosure of a communication, a document or its contents or other information of a kind referred to in Division 1, 1A, 1C or 3, and

(b)  the person objects to giving that information or providing that document,

the court must determine the objection by applying the provisions of this Part (other than sections 123 and 128) with any necessary modifications as if the objection to giving information or producing the document were an objection to the giving or adducing of evidence.

(2)  In this section, disclosure requirement means a process or order of a court that requires the disclosure of information or a document and includes the following—

(a)  a summons or subpoena to produce documents or give evidence,

(b)  pre-trial discovery,

(c)  non-party discovery,

(d)  interrogatories,

(e)  a notice to produce,

(f) a request to produce a document under Division 1 of Part 4.6.

342. This provision was introduced by cl 63 of Sch 1 of the Evidence Amendment Act 2007 (NSW), because the law relating to privilege was seen as not applying to preliminary processes, but applied only to the adducing of evidence itself, see Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 at 55 [3] (per Gleeson CJ, Gaudron and Gummow JJ). Section 131A does not apply the word “witness”, but rather uses the expression “person is required by a disclosure requirement to give information”.

343. I accept the submission of Mr P D Lange, who appeared for Mr Waldron, that this statutory context supports a construction that a “witness” was a person from whom evidence was adduced in proceedings. Hence, even if the subpoena were to issue, Mr Waldron would not be a “witness”, who could take an objection under s 128.

344. I note that s 131A now extends the law on privilege to pre-trial processes.

345. Such a construction of s 128 of the Evidence Act is also supported by the mechanism by which the objection is considered. The objection is to be considered by “the court” (subs (2)). “The court” is to give the witness certain information (subs (3)). “The court” must give a certificate in certain circumstances (subs (5)). A construction of the provision whereby s 128 would operate, if the examination were conducted by a judge of the Court, but not if, as proposed, the examination were conducted by a member of the Bar is incongruous, if not absurd, as, the nature of the protection should be governed by the nature of the proceedings.

346. Further, and referring to s 128(4), there must be doubts that, irrespective of the above considerations, Mr Waldron could be compelled to give evidence in the light of that provision.

347. Section 128(4) provides:

(4)  The court may require the witness to give the evidence if the court is satisfied that—

(a)  the evidence does not tend to prove that the witness has committed an offence against or arising under, or is liable to a civil penalty under, a law of a foreign country, and

(b)  the interests of justice require that the witness give the evidence.

348. It is true, as submitted by the SEC, that Mr Waldron is not presently subject to any criminal proceedings or any civil proceedings in the US regarding the matters raised in the US proceedings.

349. It is also true that Mr Waldron’s evidence does not presently establish whether evidence sought to be led would serve to prove that Mr Waldron had committed an offence against or arising under or was liable to a civil penalty under a law of a foreign country.

350. But I do not consider, in the circumstances, that Mr Waldron should be deprived of further opportunity to call evidence on these questions.

351. Whether or not the ultimate time to resolve the issues arising under s 128 of the Evidence Act is the time of examination (about which further submissions may be received), it is a consideration which in my view, should be considered in these proceedings, at least at a preliminary level, in order to consider the question of utility.

Deferment

352. As to whether the Court considers it is not appropriate for the examination of Mr Waldron to occur prior to the conclusion of the NSW criminal proceedings, the SEC advanced two contentions.

353. Firstly, any prejudice to Mr Waldron that results from his examination occurring prior to the NSW criminal proceedings could be addressed by deferring the release of evidence from Mr Waldron’s examination until after his criminal trial has concluded.

354. Secondly, the Court has the power to make an order for Mr Waldron’s examination to occur at a later stage. Mr Waldron did not make submissions as to that possibility.

355. The first contention, that such a course would not occasion prejudice, is illusory and offers, in prospect, the fundamental alteration of the accusatorial judicial process: X7 at [124].

356. As to the second contention, the parties did not meaningfully address the issue.

357. The question as to whether the Court should permit the examination of Mr Waldron after the conclusion of the NSW criminal proceedings has a relationship to the debate regarding whether s 128, and, in particular, s 128(4) operated in relation to any examination of Mr Waldron.

358. The SEC asserted that, there is no evidence before the Court on that question but that is not, as I have mentioned, a satisfactory means of dealing with the issue particularly where I have determined that any examination of Mr Waldron must await his criminal trial. This Court would then have the opportunity of receiving further submissions as to the operation of s 128 generally.

359. Hence, the final determination of the issues with respect to the examination of Mr Waldron should, in my view, be held over until after the criminal trial.

360. Nothing in this conclusion should be taken in any way as reflecting upon the US proceedings which will proceed as a matter for the discretion of the US Court.

Orders allowing the partial examination of Mr Waldron

361. This question is presently superseded by my decision as to deferment. However I propose to make some brief observations on the topic.

362. The observations of Spigelman CJ in BAT at [88] makes clear that the Court must endeavour to mould an order which the Court believes to be an appropriate for the purpose of giving effect to the request. Thus, the Court may determine, and exclude, topics or questions that are inappropriate for the examination Mr Waldron because they overlap with his NSW criminal proceedings. The corollary being that, the Court may, and should, permit appropriate questions to be asked of Mr Waldron, so as to give effect the letter of request to the fullest extent possible: Re Westinghouse Electric Corporation Uranium Contract Litigation (at 654).

363. A question arises as a result of the observation of Spigelman CJ in BAT (at [88]). If the Court were to limit the examination of Mr Waldron solely to questions that did not overlap with the NSW criminal proceedings, what would the residue of possible questions are capable of being so characterised as gives effect to the letter of request?

364. Given the significant overlap between the US proceedings and the NSW criminal trial, it is likely that the possible questions that remain are would produce a paucity of information.

365. As mentioned, it has not been explained with any precision what residue of questions could be permitted consistently with protecting Mr Waldron’s right to invoke the privilege against self-incrimination in the criminal proceedings. What is clear is that the residue of the possible questions would be slim.

366. It follows that the distinction sought to be drawn by the SEC between the decision of Black J in CSC No 2 and the circumstances of this matter, is somewhat tenuous. Mr Waldron’s status as the central witness to the SEC’s case in the US proceedings, being a discretionary factor, is a relatively minor one when compared to the prospect of prejudicing Mr Waldron’s criminal trial. Similarly, the fact that the US proceedings concern the conduct of Mr Pulier, as opposed to Mr Waldron, himself, does not effect to distinguish the decision in CSC No 2, wherein Black J considered prejudice a central discretionary consideration in refusing Mr Waldron’s compulsory examination. That is, although Mr Waldron is not in the position of defending the US proceedings, unlike the circumstances in CSC No 2, he will nevertheless be prejudiced in the NSW criminal proceedings, if compelled to examination. Further, the breadth of the proposed topics for examination is not relevant to Court’s exercise of discretion. That is, considering slight differences in scope, as between the topics for examination in CSC No 2 and the present proceedings, without due attention to the overlap of subject matter when compared to the charges in the criminal proceedings does not relevantly distinguish the decision in CSC No 2. These differences in proposed examination topics are as to form, and to that end superficial. As previously mentioned, the subject matter in the US proceedings does significantly overlap with the criminal proceedings.

Conclusion

367. There are significant discretionary factors weighing against the making of orders in the short minutes of order against Mr Waldron. However, the final disposition of that question can await the receipt of further evidence and submissions of the character referred to under the heading “deferment” above.

CONDUCT OF EXAMINATIONS BY AUDIO-VISUAL LINK

368. In light of the current restrictions imposed as a result of the COVID-19 pandemic in Australia and the United States of America, the SEC seeks orders that the examinations be conducted by Audio-Visual Link.

369. Relevantly, due to travel restrictions into Australia and in the United States, the attorneys with carriage of the US proceedings are unable (or unlikely to be able) to appear at the examinations.

370. Further, the Witnesses have requested that the examinations take place by audio-visual link, to minimise the risk of transmission of the COVID-19 virus.

371. Considering this Court’s current policy as to remote hearings and applications, the SEC submits that by analogy, orders for the conduct of the examinations before the examiner by audio-visual link are appropriate.

372. It is appropriate orders be made for examination via audio visual link as proposed in the short minutes, pursuant to s 33(1) of the Evidence (Audio and Audio Visual Links) Act 1998 (NSW) and r 31.3(1) of the Uniform Civil Procedure Rules 2005 (NSW).

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Annexure A (25553, pdf)

Postscript:

On 23 October 2020, after orders had been made by the Court, and this draft judgment prepared, counsel for Mr Waldron advised that upon application by Mr Waldron, which was ultimately not substantially opposed by the Crown, his trial was vacated. Pre-trial arguments are now presently listed for 2 weeks, commencing 15 February 2021, and the trial proper has been listed to commence on 31 August 2021. No attempt was made by any party to relist the proceedings.

Decision last updated: 28 October 2020