Brighton Automotive Holdings Pty Ltd v Honda Australia Pty Ltd
[2021] VSC 757
•22 November 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S ECI 2020 04769
BETWEEN:
| BRIGHTON AUTOMOTIVE HOLDINGS PTY LTD (ACN 150 926 480) & ORS (according to the Schedule of Parties) | Applicants |
| v | |
| HONDA AUSTRALIA PTY LTD (ACN 004 759 611) | First Respondent |
| and | |
| HONDA MOTOR CO LTD | Second Respondent |
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JUDGE: | Button J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21 October 2021 |
DATE OF JUDGMENT: | 22 November 2021 |
CASE MAY BE CITED AS: | Brighton Automotive Holdings Pty Ltd v Honda Australia Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2021] VSC 757 |
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PROCEDURE – Service out of jurisdiction – Application to set aside service out of a preliminary discovery application and dismiss or stay the proceeding – Where preliminary discovery sought against Japanese corporation thought to have induced contractual breach of Australian subsidiary or to have been involved in contraventions of the Australian Consumer Law – Whether a preliminary discovery application falls within r 7.02 of the Supreme Court (General Civil Procedure) Rules 2015 – Whether the Court should otherwise exercise its discretion under r 7.04 of the Supreme Court (General Civil Procedure) Rules 2015 on the ground of comity – Application dismissed – Supreme Court (General Civil Procedure) Rules 2015 rr 7.02, 7.04.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr N De Young QC Mr J Claridge | HWL Ebsworth Lawyers |
| For the Second Respondent | Mr T Clarke Mr H Watkins | Ashurst Australia |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Relevant provisions of the Rules.................................................................................................... 3
Whether the preliminary discovery application falls within r 7.02......................................... 6
The parties’ arguments on reference to the anticipated proceeding..................................... 6
Analysis: reference to the anticipated claim........................................................................... 12
Analysis: r 7.02(a), (b) and (j)..................................................................................................... 15
Arguments on r 7.02(d)(ii): the meaning of ‘interim or ancillary’ and ‘to be commenced’ 17
Analysis: r 7.02(d)(ii)................................................................................................................... 21
Rule 7.02(h): proper party.......................................................................................................... 22
Comity and the residual discretion under r 7.04........................................................................ 25
The concept of comity and its relevance to service out of the jurisdiction......................... 26
Whether the residual discretion under r 7.04 should be exercised on the ground of comity in this case....................................................................................................................................... 36
HER HONOUR:
Introduction
Honda Motor Co Ltd (Honda Motor) seeks:
(a) by paragraph 1 of its summons, orders that the proceeding against it be dismissed;
(b) alternatively, by paragraph 2 of its summons, orders that the proceeding against it be permanently stayed;
(c) alternatively, by paragraph 3 of its summons, orders setting aside an order of Judicial Registrar Irving made on 27 April 2021 permitting the applicants to serve an application for preliminary discovery on Honda Motor by email pursuant to r 6.10 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (the Rules).
Honda Motor is a Japanese corporation. The first respondent (Honda Australia) conducts business in Australia by importing Honda motor vehicles and selling them through a national network of dealers. Honda Australia is a wholly owned subsidiary of Honda Motor.
The proceeding in question is an originating motion seeking preliminary discovery pursuant to r 32.05 of the Rules. The background to that application was set out in an affidavit of the applicants’ solicitor, Mr Evan Stents, dated 23 December 2020. While Mr Stents’ affidavit was sworn in support of the application for preliminary discovery, it was before me as context and conveyed the nature of the causes of action Mr Stents apprehended his clients may have against Honda Motor.
The applicants were parties to dealer agreements with Honda Australia, which Honda Australia terminated two years into their five year terms. Mr Stents deposed to a belief that the applicants may have claims against Honda Australia pursuant to ss 18 and 21 of the Australian Consumer Law[1] (which relate to misleading or deceptive conduct and unconscionable conduct, respectively), depending on when it was that Honda Australia commenced, or was contemplating, a strategic review of its dealer network in Australia, relative to the time when it entered into the dealer agreements with the applicants. Mr Stents deposed to a belief that the applicants may also have a right to obtain relief against Honda Motor as a person involved in contraventions of the Australian Consumer Law by Honda Australia, and for damages for the tort of inducing Honda Australia to breach its contracts (ie, the dealer agreements) with the applicants. The preliminary discovery application against Honda Motor seeks various categories of documents including documents going to Honda Motor’s involvement in the strategic review of Honda Australia’s dealer network and its communications with Honda Australia regarding the latter’s contracts with the applicants. Mr Stents deposed that, without the documents sought, he was not able to give his clients informed advice as to whether they have a proper basis to commence a proceeding against Honda Motor.
[1]Competition and Consumer Act 2010 (Cth) sch 2.
By the time Honda Motor’s summons was heard, it had been served with the preliminary discovery application under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965 (the Hague Service Convention). Accordingly, Honda Motor did not press paragraph 3 of its summons seeking to set aside the substituted service orders made by the Judicial Registrar. Accordingly, I say nothing further about whether an application for preliminary discovery can be served on a party which is domiciled in a Hague Service Convention country by substituted service pursuant to r 6.10 of the Rules.
The basis of Honda Motor’s application for an order dismissing the proceeding against it was that an application for preliminary discovery is not an application capable of being served out of Australia under r 7.02 of the Rules.
The basis of Honda Motor’s application, in the alternative, for an order that the proceeding be permanently stayed was a contention that the Court should exercise its residual discretion under r 7.04 of the Rules. In this regard, Honda Motor relied on paragraph 2 of its summons in the event that its argument that the preliminary discovery application fell outside r 7.02 was rejected. Honda Motor did not contend that this Court is an inappropriate forum for the preliminary discovery application and did not contend that the preliminary discovery application had insufficient prospects of success to warrant putting it to the time, expense and trouble of responding to it. As such, Honda Motor’s application for an order permanently staying the proceeding was made on the basis that none of the circumstances set out in r 7.04(2) applied; only the residual discretion under r 7.04 was invoked. Honda Motor’s argument was, in summary, that considerations of comity and restraint ought to lead this Court to refuse to proceed further and hear the application for preliminary discovery.
For the reasons set out below, I will dismiss the summons. I consider that the application for preliminary discovery is an originating process falling within one or more of the paragraphs in r 7.02. I am also not satisfied that I should exercise the Court’s residual discretion under r 7.04 to permanently stay the application for preliminary discovery based on considerations of comity. In declining to exercise the discretion to permanently stay the proceeding, I have also taken into account the stage at which the arguments based on comity have arisen (ie, under r 7.04, as distinct from on the hearing of the application for preliminary discovery) and the distinction, recognised in the authorities, between service of an originating process and service of a subpoena or notice to produce.
Relevant provisions of the Rules
It is convenient at this point to set out the relevant provisions of the Rules:
7.02 When allowed without leave
An originating process may be served out of Australia without leave in the following cases—
(a) when the claim is founded on a tortious act or omission—
(i)which was done or which occurred wholly or partly in Australia; or
(ii) in respect of which the damage was sustained wholly or partly in Australia;
(b)when the claim is for the enforcement, rescission, dissolution, annulment, cancellation, rectification, interpretation or other treatment of, or for damages or other relief in respect of a breach of, a contract which—
(i) was made or entered into in Australia; or
(ii)was made by or through an agent trading or residing within Australia; or
(iii)was to be wholly or in part performed in Australia; or
(iv)was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court;
…
(d) when the claim—
(i)is for an injunction to compel or restrain the performance of any act in Australia; or
(ii)is for interim or ancillary relief in respect of any matter or thing in or connected with Australia, where such relief is sought in relation to judicial or arbitral proceedings commenced or to be commenced, or an arbitration agreement made, in or outside Australia (including, without limitation, interim or ancillary relief in relation to any proceedings under the International Arbitration Act 1974 of the Commonwealth or the Commercial Arbitration Act 2011; or
(iii)without limiting subparagraph (ii), is an application for a freezing order or ancillary order under Order 37A in respect of any matter or thing in or connected with Australia;
…
(h) when any person out of Australia is—
(i)a necessary or proper party to a proceeding properly brought against another person served or to be served (whether within Australia or outside Australia) under any other provision of these Rules; or
(ii)a defendant to a claim for contribution or indemnity in respect of a liability enforceable by a proceeding in the Court;
…
(j) when the claim arises under an Australian enactment and—
(i)any act or omission to which the claim relates was done or occurred in Australia; or
(ii)any loss or damage to which the claim relates was sustained in Australia; or
(iii)the enactment applies expressly or by implication to an act or omission that was done or occurred outside Australia in the circumstances alleged; or
(iv)the enactment expressly or by implication confers jurisdiction on the Court over persons outside Australia (in which case any requirements of the enactment relating to service must be complied with);
…
(n)when the claim is founded on a cause of action arising in Australia;
…
7.03 When allowed with leave
(1)In any proceeding when service is not allowed under Rule 7.02, an originating process may be served out of Australia with the leave of the Court.
(2)An application for leave under this Rule shall be made on notice to every party other than the person intended to be served.
(3) A sealed copy of every order made under this Rule shall be served with the document to which it relates.
(4)An application for leave under this Rule shall be supported by an affidavit stating any facts or matters related to the desirability of the Court assuming jurisdiction, including the place or country in which the person to be served is or possibly may be found, and whether or not the person to be served is an Australian citizen.
(5) The Court may grant an application for leave if satisfied that—
(a)the claim has a real and substantial connection with Australia; and
(b)Australia is an appropriate forum for the trial of the proceeding; and
(c)in all the circumstances the Court should assume jurisdiction.
7.04 Court’s discretion whether to assume jurisdiction
(1)On application by a person on whom an originating process has been served out of Australia, the Court may by order set aside the originating process or its service on the person or dismiss or stay the proceeding.
(2)Without limiting paragraph (1), the Court may make an order under this Rule if satisfied—
(a)that service out of Australia of the originating process is not authorised by these Rules; or
(b)that the Court is an inappropriate forum for the trial of the proceeding; or
(c) that the claim has insufficient prospects of success to warrant putting the person served out of Australia to the time, expense and trouble of defending the claim.
Rule 7.05 requires that, if a person is to be served with an originating process out of Australia, that person is also to be served with a notice in the form of Form 7AAA informing the person of, inter alia, ‘the grounds alleged by the plaintiff to found jurisdiction’. As it happens, the applicants neglected to serve a notice under r 7.05 when relying on the substituted service order made by Judicial Registrar Irving. Honda Motor only received the form upon making enquiries of the applicants’ solicitors, having searched the file and seen the application for service under the Hague Service Convention. However, Honda Motor did not contend that anything turned on the failure of the applicants to serve the Form 7AAA notice at an earlier point in time. The notice that was ultimately served set out in terms the bases for service outside of Australia recorded in r 7.02(a), (b), (d)(ii) and (j). The notice did not elaborate on the basis on which any of the grounds set out in that manner were made out in relation to application against Honda Motor.
Whether the preliminary discovery application falls within r 7.02
Honda Motor contended that an application for preliminary discovery is not a claim falling within any of the paragraphs of r 7.02 relied upon by the applicants.
The parties’ arguments on reference to the anticipated proceeding
In its submissions, Honda Motor emphasised the distinction between an application for preliminary discovery and the potential substantive claim that might follow. It submitted that the applicants’ reliance on r 7.02(a), (b) and (j) ‘must fail, because this proceeding is not a claim for substantive relief founded on a cause of action.’ On Honda Motor’s argument, those provisions only authorise service out of proceedings seeking substantive relief. Honda Motor contended that, contrary to the approach apparently taken in a number of more recent Federal Court cases, it was not permissible to apply r 7.02(a), (b) or (j) by having regard to the nature of the anticipated proceeding; a method of analysis which Honda Motor referred to as ‘telescoping’.
The applicants, without embracing the terminology of ‘telescoping’, submitted that this Court should follow and apply the approach taken by Besanko J in Gearhart United Pty Ltd v Omni Oil Technologies (Asia) SDN BHD[2] and the more recent series of ‘Google’ cases decided in the Federal Court (further referred to below).
[2](2010) 267 ALR 630 (Gearhart).
In support of its submissions, Honda Motor relied in particular on the decision of French J (as his Honour then was) in Carnegie Corporation Ltd v Pursuit Dynamics Plc.[3] In Carnegie Corporation, the applicants sought leave to serve a preliminary discovery application out of Australia on respondents who were based in the United Kingdom. The application for service out of Australia was made under O 8 r 2 of the Federal Court Rules 1979 (Cth) (the 1979 Rules), O 8 being the predecessor provisions to the present Div 10.4 of the Federal Court Rules 2011 (Cth) (the FCR). Justice French dismissed the motion for leave to serve the preliminary discovery application out of the jurisdiction. While satisfied that an application for preliminary discovery was an application in a ‘proceeding’ within the meaning of the Federal Court of Australia Act 1976 (Cth) and, as such, fell within the definition of ‘originating process’, his Honour found that an application for preliminary discovery was not an application in any of the classes of proceeding to which O 8 r 2 applied. Justice French stated:
Although an application for preliminary discovery is an application in a proceeding it does not yield substantive final relief. It is interlocutory in character. It involves the exercise of a power in aid of the jurisdiction of the Court which must be identified by reference to a matter in respect of which preliminary discovery is sought.[4]
[3](2007) 162 FCR 375 (Carnegie Corporation).
[4]Carnegie Corporation, [41].
Relevantly, the applicants in Carnegie Corporation contended that their application for preliminary discovery ought to be regarded as an originating process in a proceeding which consisted of or included one or more of a number of kinds of proceedings set out in O 8 r 2.[5]
[5]Carnegie Corporation, [56]. The items relied on referred to a proceeding based on a cause of action arising in Australia, a proceeding based on a breach of contract in Australia, a proceeding in relation to a contract that is made on behalf of the person to be served by or through an agent who carries on business in Australia, a proceeding based on a breach of a provision of an Act committed in Australia, a proceeding based on a breach of a provision of an Act (wherever occurring) seeking relief in relation to damage suffered wholly or partly in Australia, and a proceeding in which the subject matter, so far as it concerns the person to be served, is property in Australia.
Justice French found that the application for preliminary discovery did not fall within any one or more of those items on the basis that:
The proceedings contemplated by the items relied upon in this case, in my opinion, involve originating processes seeking relief in such proceedings. They refer to, in my opinion, claims for substantive relief dependent upon the establishment of the causes of action identified or defined in those items. The applicants’ submissions appeared to be posited upon the assumption that the relevant proceedings are those which they might ultimately bring under the [Trade Practices Act 1974 (Cth)] and for breach of contract. But those are not the proceedings which have been commenced in this Court.[6]
[6]Carnegie Corporation, [57].
Honda Motor submitted that the approach of French J in Carnegie Corporation should be preferred to the approach of Besanko J in Gearhart. Gearhart also concerned an application for preliminary discovery[7] under the 1979 Rules. The applicant sought leave to serve its application on the first respondent in Malaysia. Justice Besanko, having set out the eight items in O 8 r 2 of the 1979 Rules on which the applicant relied, said as follows:
It will be apparent from those items that the applicant’s submission is that, in characterising the proceeding, I should have regard not only to the application under O 15A r 6, but also to the possible proceeding for infringement of the applicant’s patent.[8]
[7]Referred to by Besanko J as ‘information discovery’.
[8]Gearhart, [16].
Justice Besanko was referred by counsel to the decision of French J in Carnegie Corporation, but took a wider view. In particular, Besanko J stated:
With respect, I think that a broader approach may be taken to the question of whether the proceeding is of a kind mentioned in O 8 r 2. That broader approach involves taking into account, when assessing the nature of the proceeding, the possible proceeding which must be identified by the applicant for the purpose of satisfying O 15A r 6(a). For the reasons which follow, I do not think it is appropriate to draw a clear line between the application under O 15A r 6 and the possible proceeding.[9]
[9]Gearhart, [17].
Justice Besanko went on to outline four reasons for holding that view, each of which Honda Motor criticised.
Honda Motor submitted that the reasoning of French J in Carnegie should be preferred as it accords with the ‘orthodox explanation’ of the antecedent English rules given by Mustill LJ of the Privy Council in Mercedes Benz AG v Leiduck.[10] In Leiduck, Mustill LJ considered whether the provisions of O 11 r 1 of the Rules of the Supreme Court of Hong Kong) (which corresponded with the equivalent paragraphs of the Rules of the Supreme Court of England and Wales in large part) authorised the service out of the jurisdiction of an application for a world-wide freezing order on a defendant in Monaco on the basis that the freezing order would be ‘an injunction ordering the defendant to do or refrain from doing anything within the jurisdiction’. Lord Justice Mustill explained the purpose of the corresponding English and Hong Kong Rules as follows (emphasis added):
[T]he purpose of Ord. 11, r. 1 is to authorise the service on a person who would not otherwise be compellable to appear before the English court of a document requiring him to submit to the adjudication by the court of a claim advanced in an action or matter commenced by that document. Such a claim will be for relief founded on a right asserted by the plaintiff in the action or matter, and enforced through the medium of a judgment given by the court in that action or matter. The document at the same time defines the relief claimed, institutes the proceedings in which it is claimed, and when properly served compels the defendant to enter upon the proceedings or suffer judgment and execution in default. Absent a claim based on a legal right which the defendant can be called upon to answer, of a kind falling within Ord. 11, r. 1(1), the court has no right to authorise the service of the document on the foreigner, or to invest it with any power to compel him to take part in proceedings against his will.
Thus, at the centre of the powers conferred by Order 11 is a proposed action or matter which will decide upon and give effect to rights. …
This opinion, that Order 11 is confined to originating documents which set in motion proceedings designed to ascertain substantive rights, is borne out by its language. Thus, the opening words of rule 1(1) define the extra-territorial jurisdiction by reference to the relief claimed in “the action begun by the writ.” Looking at Ord. 11, r. 1(1) in the round, it seems to their Lordships plain that this expression refers to a claim for substantive relief which will be the subject of adjudication in the action initiated by the writ, and not to proceedings which are merely peripheral …[11]
[10][1996] AC 284 (Leiduck).
[11]Leiduck, 301F-302D.
On that basis, Honda Motor contended that the applicants’ reliance on paragraphs (a), (b) and (d) of their Form 7AAA (reflecting r 7.02(a), (b) and (j)) had to fail ‘because this proceeding is not a claim for substantive relief founded on a cause of action’.
Taking the contrary position, the applicants contended that the approach of Besanko J in Gearhart ought to be preferred, noting that the approach of French J in Carnegie Corporation has not been followed in a series of Federal Court decisions authorising service of preliminary discovery applications (incidentally, by substituted service in most instances) on Google LLC in the United States[12] (the Google decisions). Counsel for the applicants did, however, note that while the Google decisions had not followed Carnegie Corporation, they did not contain any analysis of the case or the relative merits of the approaches of French J and Besanko J. With one exception, the Google decisions do not fully expose the basis on which the Federal Court was satisfied in each of those cases that the application for preliminary discovery was an application or a proceeding of a kind mentioned in r 10.42 of the FCR; r 10.42 sets out the kinds of proceedings which may be served on a person in a foreign county.
[12]Kukulka v Google LLC [2020] FCA 1229; Kabbabe v Google LLC [2020] FCA 126; Allison v Google LLC [2021] FCA 186; Seven Consulting Pty Ltd v Google LLC [2021] FCA 203; Sydney Criminal Lawyers v Google LLC [2021] FCA 297; Lin v Google LLC [2021] FCA 1113.
The one exception just noted is the decision of Wigney J in Lin v Google LLC.[13] In Lin, Wigney J was satisfied that an application for preliminary discovery fell within one or more of the categories set out in r 10.42 of the FCR. Relevantly, his Honour stated (emphasis added):
Mr Lin contended the application fell within items 1, 4 and 5 in the table in r 10.42 of the Rules. Item 1 is a “[p]roceeding based on a cause of action arising in Australia”; item 4 is a “[p]roceeding based on a tort committed in Australia”; and item 5 is a “[p]roceeding based on, or seeking the recovery of, damage suffered wholly or partly in Australia caused by a tortious act or omission (wherever occurring)”. The contention that this proceeding is one of those kinds of proceedings appears to be based on the premise that Mr Lin’s application is an application based on the tort of defamation. That appears to have been the approach taken in a number of recent cases where leave to serve an application for preliminary discovery outside the jurisdiction has been granted in analogous circumstances: see Kabbabe v Google LLC [2020] FCA 126; Allison v Google LLC [2021] FCA 186; Kukulka v Google LLC [2020] FCA 1229; Seven Consulting Pty Ltd v Google LLC [2021] FCA 203 at [15]; Sydney Criminal Lawyers v Google LLC [2021] FCA 297.
…
I am satisfied that Mr Lin’s application for preliminary discovery from Google can fairly be characterised as an action “based” on the tort of defamation committed in Australia, notwithstanding that the application is not itself for that cause of action. The application may be said to be “based on” a cause of action in defamation because Mr Lin’s claim to be entitled to preliminary discovery is based, at least in part, on the fact that he may have a right to obtain relief, including damages, from someone else (the prospective respondent) for defamation.[14]
[13][2021] FCA 1113 (Lin).
[14]Lin, [13]-[15].
Justice Wigney also noted that he would have been prepared to accept that the preliminary discovery application fell within item 1 of r 10.42 on a different basis. As to that, his Honour said:
The expression “cause of action” can be said to be wide enough to cover a right to seek relief in the nature of preliminary discovery. Mr Lin’s right to obtain that relief from Google (and hence the relevant cause of action) might be said to have arisen in Australia, for the purposes of item 1, because it is a right to obtain relief from an Australian court pursuant to the rules of that court.[15]
[15]Lin, [16].
During the hearing of Honda Motor’s application, I raised with counsel whether Wigney J’s alternative basis would not similarly lead to a conclusion that the applicants’ application for preliminary discovery in this case fell within r 7.02(j) (or r 7.02(n)) of the Rules on the basis that the ‘claim’ would be one for preliminary discovery which was sought under an ‘Australian enactment’, being the Rules, noting that the definition of ‘enactment’ in s 38 of the Interpretation of Legislation Act 1984 (Vic) defines an enactment as ‘an Act or subordinate instrument or a provision of an Act or subordinate instrument’. The applicants contended that their preliminary discovery application would fall within r 7.02(j) on that basis. Honda Motor, however, contended that the application would not fall within r 7.02(j) on that basis.
During oral submissions, the applicants added the ex tempore decision of White J in Cook Building and Development Pty Ltd v Citicorp International Ltd[16] to their list of cases taking the ‘Gearhart approach’. Justice White followed the approach of Besanko J in Gearhart, albeit without elaboration.
[16][2015] FCA 703.
Analysis: reference to the anticipated claim
Rule 7.02 provides that ‘an originating process may be served out of Australia without leave’ in a number of cases. In each of the paragraphs of r 7.02 that are relevant to the present proceeding, the circumstance in which an originating process may be served has been described by reference to the nature of ‘the claim’. In my view, the conjunction between the language of the opening words of r 7.02, and the reference to ‘the claim’ in each of the relevant paragraphs, means that the claim so referred to is the claim that is sought to be advanced by the originating process to be served out of Australia.
I do not consider that, properly construed, r 7.02(a), (b) and (j) are to be applied by treating a foreshadowed future claim as ‘the claim’ whose characteristics are to be assessed. That is not to say that the features of a foreshadowed future claim are irrelevant; in my view, they may be (and in the present circumstances are) relevant to the assessment of whether the claim actually sought to be served out falls within one or more of the paragraphs of r 7.02. For example, the features of a foreshadowed claim may be relevant to whether the claim actually sought to be served out is ‘founded on’ a tortious act or omission under r 7.02(a), or is ‘founded on a cause of action arising in Australia’ under r 7.02(n).
I do not consider this approach to be inconsistent with the approach taken by the Federal Court as I do not consider that the decisions in Gearhart, Lin and the other Google decisions involved ‘telescoping’ of the kind criticised by Honda Motor.
It may be that in declining to draw a ‘bright line’ between the instant proceeding and the possible future proceeding in Gearhart, Besanko J was doing no more than acknowledging that the future proceeding may be relevant in the way I have described. This view is supported by Besanko J’s reference to the words ‘based on’ (used in O 8 r 2 of the 1979 Rules) as being ‘wide words’ which ‘although they may not dictate a broader approach, certainly allow for it’.[17] This reading is also consistent with Besanko J’s reference[18] to the decision of Beaumont J in Western Bulk Carriers Carriers (Australia) Pty Ltd v Cosco Bulk Carrier Co Ltd.[19] In that case, Beaumont J aptly characterised an application for preliminary discovery as ‘a proceeding incidental to the claim for principal relief foreshadowed’.[20] His Honour went on to conclude (albeit in obiter) that the preliminary discovery application fell within O 8 of the 1979 Rules (for the purposes of overseas service) on the basis that it was a proceeding ‘founded on a cause of action arising in the Commonwealth, that cause of action being the claim for economic loss in tort’.[21] Likewise, Lin and the other Google decisions appear to take the same approach; it is clear from Lin that Wigney J considered the other Google decisions to hinge on the nexus conveyed by the ‘based on’ wording.[22]
[17]Gearhart, [20].
[18]Gearhart, [21].
[19][2002] FCA 1520 (Western Bulk Carriers).
[20]Western Bulk Carriers, [32], citing Hooper v Kirella Pty Ltd (1999) 96 FCR 1.
[21]Western Bulk Carriers, [30].
[22]Lin, [15].
In my view, the approach adopted by Wigney J in Lin commends itself. There, Wigney J found that:
Despite the paucity of the submissions in respect of this issue, I am satisfied that Mr Lin’s application for preliminary discovery from Google can fairly be characterised as an action “based” on the tort of defamation committed in Australia, notwithstanding that the application is not itself for that cause of action. The application may be said to be “based on” a cause of action in defamation because Mr Lin’s claim to be entitled to preliminary discovery is based, at least in part, on the fact that he may have a right to obtain relief, including damages, from someone else (the prospective respondent) for defamation. I am satisfied on that basis that Mr Lin’s application is a proceeding of the kind mentioned in items 1, 4 and 5 of the table in r 10.42 of the Rules.[23]
[23]Lin, [15].
In the context of r 7.02(a) of the Rules, a claim for preliminary discovery may be ‘founded on’ a tortious act or omission where the claim has a sufficient nexus with such an act or omission, notwithstanding that the claim is not directly seeking final, substantive relief in respect of that allegedly tortious act or omission.
Before considering the application of the relevant paragraphs of r 7.02 in the present case, I should note a further matter raised by Honda Motor. It contended that the service out provisions of the Rules are narrower than the corresponding FCR provisions on the basis that the introductory words of r 10.42 of the FCR make specific reference to applications under Part 7 of those rules (which includes applications for preliminary discovery). On that basis, it was submitted, the FCR ‘expressly permit, or include within the types of proceeding or application that may be served out, applications for preliminary discovery’. It was submitted that this was a matter significant to Wigney J’s approach in Lin.
The chapeau to r 10.42 of the FCR states (emphasis added):
Subject to rule 10.43, an originating application, or an application under Part 7 of these Rules, may be served on a person in a foreign country in a proceeding that consists of, or includes, any one or more of the kinds of proceeding mentioned in the following table.
While it is of course the case that the express reference to applications under Part 7 of the FCR constitutes a difference between the rules of the Federal Court and the rules of this Court, I do not consider the reference to Part 7 in the chapeau to r 10.42 has the significance that Honda Motor sought to ascribe to it, or that it provides a basis to distinguish Lin and the other Google decisions. A number of different kinds of applications may be brought under Part 7 of the FCR; an application for preliminary discovery is only one type of application that may be brought under Part 7. The reference to Part 7 in the chapeau to r 10.42 does not obviate the need to bring the Part 7 application within one or more of the numbered items in r 10.42; nor has it been so applied by judges of the Federal Court. Further, and in any event, rather than indicating that preliminary discovery applications necessarily ought to be capable of being served out under r 10.42 (with the grant of leave), the inclusion of the reference to Part 7 of the FCR may be explained as avoiding any doubt that other kinds of applications provided for by Part 7 (which may not be pursued by an originating application) may be served out with leave.[24] Further, while Wigney J referred to this feature of r 10.42 in Lin, it was not material to the course of reasoning in that case.
[24]For example, while an application for preliminary discovery is to be made by originating application under r 7.24(1) of the FCR, it is not clear that an application for freezing or ancillary orders — also provided for by Part 7 of the FCR — would fall within the definition of ‘originating application’ in the FCR Dictionary.
Analysis: r 7.02(a), (b) and (j)
What can be observed when the various paragraphs of r 7.02 are examined, is that different paragraphs describe a number of qualitatively different forms of nexus. To elaborate: whereas paragraph (a) refers to the claim being ‘founded on’ a tortious act or omission, paragraph (b) requires that the claim be ‘for’ (inter alia) the enforcement of, or ‘other relief’ ‘in respect of’, a contract with various qualifying features. It is not necessary to analyse all of the paragraphs of r 7.02 to make the point. However, what all of those paragraphs have in common is the purpose, correctly identified by counsel for Honda Motor, of ensuring that there is a sufficient nexus with the local jurisdiction.
In my view, the applicants’ claim for preliminary discovery falls within r 7.02(a), as it is a claim which is ‘founded on’ (relevantly) a tortious act or omission occurring wholly or partly in Victoria, or in respect of which the damage was sustained in Victoria. Just as the words ‘based on’, as used in the FCR, are words of wide import, so too are the words ‘founded on’, as used in the Rules. I do not consider that the expression ‘founded on’ is narrower than the expression ‘based on’, as used in the FCR; Honda Motor did not contend otherwise. In the present case, it is the apprehended tortious conduct of Honda Motor in inducing the breach of contract by Honda Australia of its dealer agreements with the applicants that founds the application for preliminary discovery. Understood in that context, the claim for preliminary discovery has the kind of nexus with Victoria that Honda Motor submitted underpins the framing of the various paragraphs of r 7.02.
Likewise, in my view, the application for preliminary discovery falls within r 7.02(b), as it is a claim for ‘other relief in respect of a breach of, a contract’ with one or more of the features identified in subparagraphs (b)(i)-(iv). Rule 7.02(b) is framed in terms where ‘other relief in respect of’ follows explicit reference to a number of other types of claims that may be advanced in respect of apprehended breaches of contract;[25] it constitutes a residual category, and I see no reason to read down the ambit of that residual category to exclude a claim where the relief sought is preliminary discovery ‘in respect of’ a breach of contract with the necessary connection with Victoria, as opposed to relief which might be categorised as ‘substantive’.
[25]Rule 7.02(b) refers to enforcement, rescission, dissolution, annulment, cancellation, rectification, interpretation or other treatment of a contract, damages or other relief in respect of a breach of, a contract.
To the extent that Honda Motor relied on Carnegie Corporation and Leiduck in support of a submission that r 7.02 is (or at least paragraphs (a), (b) and (j) of r 7.02 are) necessarily limited to claims for ‘substantive’ relief, I do not accept that submission. So far as reliance on the judgment in Leiduck is concerned, as Mustill LJ recognised, the terms of the relevant English and Hong Kong rules drove the result; those provisions were in very different terms from r 7.02. They addressed directly actions begun by writ and the nature of the claims advanced in actions so commenced by writ. Insofar as the decision in Carnegie Corporation was based on a rejection of the contention that O 8 r 2 of the 1979 Rules could be applied as though ‘the proceeding’ were the anticipated substantive proceeding, I agree that the proceeding sought to be served out cannot be conflated with a subsequent substantive proceeding. However, I do not consider that there is any basis to limit the reference to an ‘originating process’ and the ‘claim’ it advances in r 7.02 to an originating process advancing a claim to final, substantive, relief. That being the case, such a ‘claim’, whatever the relief sought, will either have the necessary characteristics, or it will not.
However, I do not consider that the application for preliminary discovery is a claim that ‘arises under an Australian enactment’ for the purposes of r 7.02(j) to the extent that (as the applicants submitted) the enactment in question is the Australian Consumer Law. In my view, the expression ‘arises under’ requires that the claim being advanced, whether or not it is for what might be described as ‘substantive’ relief, must be a claim provided for by that enactment. The Australian Consumer Law does not provide for preliminary discovery; the applicants’ claim to obtain preliminary discovery is advanced under the Rules, not the Australian Consumer Law.
In Lin, Wigney J went on to identify an alternative basis for finding that Mr Lin’s application fell within item 1 of r 10.42 of the FCR. Justice Wigney was prepared to accept that the expression ‘cause of action’ could be said to be wide enough to ‘cover a right to seek relief in the nature of preliminary discovery’ and, by virtue of that right being a right to obtain relief from an Australian court pursuant to rules of that court, it would be a proceeding based on a cause of action arising in Australia.[26]
[26]Lin, [16].
Given the conclusions I have reached, it is not necessary, in the present proceeding, to rely on the alternative analysis raised with counsel during the hearing (drawing on Wigney J’s alternative approach in Lin), although I consider there is much to be said for the view that an originating process seeking preliminary discovery advances a claim arising under an enactment, namely the Rules, and is a claim which ‘relates’ to an act or omission in Victoria, or ‘relates’ to loss or damage sustained in Victoria for the purposes of r 7.02(j). Likewise, when regard is had to the foreshadowed claims and the factual circumstances surrounding them, it may be the case that the claim for preliminary discovery is properly characterised as one ‘founded on’ a cause of action arising in Victoria for the purposes of r 7.02(n). However, I do not say more about these alternatives given they were raised in the running and were not fully argued.
Arguments on r 7.02(d)(ii): the meaning of ‘interim or ancillary’ and ‘to be commenced’
Honda Motor’s arguments concerning r 7.02(d)(ii) differed from its arguments on the other paragraphs identified above, as it accepted that the applicants’ reliance on r 7.02(d)(ii) did not involve conflating the immediate claim with the foreshadowed substantive claim.
Pursuant to r 7.02(d)(ii), an originating process may be served out of Australia without leave where the claim ‘is for interim or ancillary relief in respect of any matter or thing in or connected with Australia, where such relief is sought in relation to judicial or arbitral proceedings commenced or to be commenced’.
Honda Motor contended that the preliminary discovery application, while being a ‘claim’, did not fall within r 7.02(d)(ii) for two reasons. First, it contended that an application for preliminary discovery was not a claim for ‘interim or ancillary’ relief. Secondly, it contended that the expression ‘to be commenced’ does not extend to proceedings which only might be commenced; it requires that the proceedings definitely be commenced.
Honda Motor submitted that the expression ‘interim relief’ means relief that is directed at preserving the status quo or preventing prejudice to a party until a final determination of the dispute, and that the expression ‘ancillary relief’ means relief that is directed at supporting the principal or interim relief that is granted, such as an order for the taking of accounts in support of an account of profits or an order for disclosure in support of a freezing order.
Honda Motor relied on the decision of nearmap Ltd v Spookfish Pty Ltd[27] in which Bergin CJ in Eq determined that the power of an arbitrator under s 17 of the Commercial Arbitration Act 2010 (NSW)[28] to grant ‘interim measures’ did not enable the grant of preliminary discovery in circumstances where s 17(3) provided that ‘[w]ithout limiting subsection (2), the arbitral tribunal may make orders with respect to any of the following — … (b) discovery of documents and interrogatories’. Bergin CJ held:
The “discovery” referred to in s 17(3) of the Act is in respect of the “interim measure” that the arbitral tribunal may grant “at any time prior to the issuance of the award by which the dispute is finally decided”. It is discovery relevant to the issues between the parties in respect of any application for the quasi-injunctive relief set out in s 17(2) of the Act. The interim measure referred to in s 17(2)(d) of the preservation of “evidence that may be relevant and material to the resolution of the dispute” is not a vehicle for preliminary discovery. It is to secure evidence in respect of which a party to an already existing dispute of which the arbitrator is seized, may entertain fears of destruction or dissipation in the absence of such an interim measure. It is not a power to be exercised to provide such “evidence” to an applicant to decide whether they should commence proceedings against the person the subject of the “interim measure”.[29]
[27][2014] NSWSC 1790 (nearmap).
[28]And also under the Commercial Arbitration Act 2012 (WA), which was relevantly identical.
[29]nearmap, [76].
In rejecting the contention that s 17(3) authorised preliminary discovery, Bergin CJ found that there was nothing in the Commercial Arbitration Act 2010 (NSW) setting any prerequisites to such an order and that the legislature could not have intended that arbitrators would be permitted to ‘mandate mere rummaging through another’s affairs’.[30]
[30]nearmap, [75], citing Airservices Australia v Transfield Pty Ltd (1999) 92 FCR 200, [5] (Finn J).
Honda Motor further relied on Leiduck, submitting that discovery is not final ‘relief’, in the sense described by Mustill LJ in that case. Although not fully elaborated, Honda Motor’s argument in this regard appears to be that the word ‘relief’ as it is used in r 7.02(d)(ii) ought to be confined to substantive relief, in contradistinction to discovery, which constitutes the provision of documentation by which a claim for substantive relief may be advanced.
The applicants noted that the expression ‘interim or ancillary relief’ as it is used in r 7.02(d)(ii) has not been the subject of considered authority in this jurisdiction. Nevertheless, counsel for the applicants noted that applications for preliminary discovery have been characterised as ‘ancillary’ in the context of a challenge to the constitutional validity of the Federal Court’s preliminary discovery rules noting that, in Hooper v Kirella Pty Ltd, the Full Court of the Federal Court (Willcox, Sackville and Katz JJ) characterised a preliminary discovery application as ‘ancillary’ to the substantive claim and therefore falling within the scope of the substantive matter.[31]
[31](1999) 96 FCR 1 (Hooper v Kirella Pty Ltd), [70], [74]. See also at [58].
The applicants also referred to Optiver Australia Pty Ltd v Tibra Trading Pty Ltd in which Tamberlin J held that a preliminary discovery application was interlocutory in nature and, in the course of so deciding, described preliminary discovery as ‘ancillary in nature and part of the larger dispute’.[32] In Waller v Waller, Martin CJ characterised applications for preliminary discovery as ‘ancillary to prospective substantive proceedings between the parties.’[33] To these references may also be added Western Bulk Carriers in which Beaumont J, citing Hooper v Kirella Pty Ltd, held that an application for preliminary discovery may be seen to be a ‘proceeding incidental to the claim for principal relief foreshadowed’.[34]
[32](2007) 163 FCR 554, [20].
[33][2009] WASCA 61, [8].
[34][2002] FCA 1520, [32].
In answer to Honda Motor’s reliance on the decision of Mustill LJ in Leiduck and the nature of relief described in that case, the applicants submitted that there was no difficulty in characterising preliminary discovery as a form of relief, as relief need not be final or substantive relief.
Honda Motor submitted that the words ‘commenced or to be commenced’ in r 7.02(d)(ii) were to be construed as confining the operation of subparagraph (ii) to urgent relief before proceedings were commenced, of a kind referred to in r 4.08 of the Rules, which permits a person to make an application for urgent relief prior to having commenced a proceeding, but on condition that the person undertakes to commence the proceeding. Honda Motor drew a contrast, then, with preliminary discovery applications which by their very nature are made in circumstances where there is no certainty that the proceeding will be commenced because the foundation of the application is that the applicant is seeking to uncover documents in order to decide whether to commence a proceeding.
Honda Motor further submitted that r 7.02(d)(ii) would permit service of a search order application made under r 37B.02 of the Rules, which provides that the Court may make a search order ‘in any proceeding or in anticipation of any proceeding in the Court’. In support of that submission, Honda Motor noted that r 37B.08 provides for the documents served to include the originating motion or, if none was filed, any draft originating motion produced to the Court. On that basis, Honda Motor contended that an application for a search order falling within r 7.02(d)(ii) would likewise be a claim where a proceeding was definitely to be commenced.
The applicants contended that the words ‘to be commenced’ should be given their natural and ordinary meaning, which is merely to direct attention to the element of futurity conveyed by those words; in other words, they merely draw a distinction between extant, and future, proceedings.
Analysis: r 7.02(d)(ii)
In my view, the applicants’ claim for preliminary discovery is a claim for ‘interim or ancillary relief in respect of any matter or thing in or connected with Australia’ and is relief that is ‘sought in relation to judicial or arbitral proceedings commenced or to be commenced’.
Contrary to the submissions of Honda Motor, I do not consider that the decision of Bergin CJ in nearmap has any relevance to the construction of r 7.02(d)(ii). As set out above, in nearmap, Bergin CJ was considering the power of an arbitrator to order interim measures under the Commercial Arbitration Act 2010 (NSW), which is obviously a very different legislative context. Her Honour found that the power to order interim measures was only enlivened once there was a controversy before the arbitrator. That says nothing of the meaning of the expression ‘interim or ancillary relief’ in r 7.02(d)(ii), addressing when an originating process may be served out of Australia.
I note the cases referred to in paragraphs 50-51 above support the view that proceedings seeking preliminary discovery are fairly to be described as ancillary to the substantive proceeding that the preliminary discovery application anticipates may be advanced. While the decisions of the Federal Court considering that matter approach the question from the point of view of the Federal Court’s jurisdiction and whether a ‘matter’ relevantly existed so as to enliven jurisdiction, in my view they nonetheless accurately describe the nature of an application for preliminary discovery and its connection with an anticipated future proceeding.
I do not regard the words in r 7.02(d)(ii) referring to a proceeding ‘to be commenced’ as requiring that the proceeding definitely or inevitably be commenced. As the applicants submitted, so far as ancillary relief is concerned, the words ‘to be commenced’ in the expression ‘commenced or to be commenced’ do no more than accommodate the fact that proceedings for ancillary relief may be brought before the judicial or arbitral proceeding to which the relief is ancillary has been commenced. In my view, there is nothing in the text or context of r 7.02(d)(ii) that requires the provision to be read narrowly so as to confine the words ‘to be commenced’ to circumstances where it is inevitable, whatever the outcome of the application for ancillary relief, that the substantive proceeding will be commenced.
Rule 7.02(h): proper party
In its written submissions, the applicants raised for the first time the argument that Honda Motor was a ‘proper party’ to a proceeding properly brought against another person within the meaning of r 7.02(h)(i), being the preliminary discovery application brought by the applicants against Honda Australia.[35] The ‘proper party’ ground was not included by the applicants in their Form 7AAA notice. In their written submissions, the applicants contended that the test for whether a foreign defendant is a necessary or proper party is ‘whether the defendants are properly joined in accordance with r 9.02’ of the Rules. The applicants cited Transfield Philippines Inc v Pacific Hydro Ltd[36] in support of that proposition. The applicants submitted that their claims for preliminary discovery against Honda Australia and Honda Motor are based on common facts and arise out of the same transaction, being the strategic review which preceded the repudiation of each of the applicants’ dealer agreements.
[35]By the time this matter was heard, the preliminary discovery application against Honda Australia had already been heard and determined by an Associate Judge of this Court: Brighton Automotive Holdings Pty Ltd & Ors v Honda Australia Pty Ltd & Anor [2021] VSC 619 (Matthews AsJ).
[36][2006] VSC 175, [33] (Hollingsworth J).
Honda Motor did not contend that its joinder to the application for preliminary discovery fell outside the ambit of r 9.02, but advanced two arguments resisting reliance on r 7.02(h)(i). First, it contended that it was not open to the applicants to expand the range of paragraphs of r 7.02 upon which they relied beyond those included in their Form 7AAA notice. Secondly, it contended that, in circumstances where the preliminary discovery application had already been argued against Honda Australia and judgment had already been given, ‘whatever might originally have been the position, it’s no longer open for Honda Motor to be joined into the hearing of the preliminary discovery application against Honda Australia’. In response to the second contention, the applicants submitted that the application of r 7.02(h)(i) does not depend on the ‘curial progress’ of the claim, such that the gateway is not rendered otiose because of the judgment against Honda Australia in circumstances where the proceeding against Honda Australia is still on foot.
I do not consider that the failure to include a particular paragraph of r 7.02 in the Form 7AAA notice precludes reliance on that paragraph when resisting an application under r 7.04. Rule 7.04(2) states that:
Without limiting paragraph (1), the Court may make an order under this Rule if satisfied—
(a)that service out of Australia of the originating process is not authorised by these Rules …
That rule directs attention to the substantive position concerning the ambit of the service out provisions, and not compliance with the procedural requirement in r 7.05 to serve a notice in Form 7AAA informing the person of, inter alia, the grounds alleged by the plaintiff to found jurisdiction.
The purpose of the notice to be served under r 7.05 is, amongst other things, to equip the person so served with information sufficient to allow the person to decide whether to contest jurisdiction. If a person so served elects not to contest jurisdiction based on the notice, the question of additional grounds for jurisdiction is moot. By contrast, if, as in this case, the person does contest jurisdiction based on information received, they have not suffered any disadvantage if another ground is added when the contest is live; in other words, they have not suffered prejudice by failing to exercise rights that otherwise they might have due to an omission from the notice.
I also do not accept the submission of Honda Motor that the decision of Beach J in Whinnen v Cussons (International) Ltd[37] precludes reliance on additional grounds when a contest under r 7.04 is live. Justice Beach’s decision in Whinnen was given at a time when the rules of this Court were in a very different form. In particular, r 7.02 at that time required that the originating process itself contain an endorsement stating the facts in the particular paragraph of r 7.01 relied upon in support of service and further provided that if the originating process did not contain such an endorsement at the time it was filed, it could be amended in accordance with paragraph (3) to include the endorsement, with the version amended in that way then sealed by the Prothonotary in a sufficient number of copies to allow for service and proof of service. Justice Beach said that:
The purpose of the endorsement is to give a defendant notice of the grounds on which a plaintiff claims to be entitled to serve the originating process out of the jurisdiction. To do that the endorsement must identify not only the paragraph or paragraphs of Rule 7.01 the plaintiff relies upon, but must also state the facts which bring the case within that Rule. In this way a defendant is given an appropriate opportunity to determine whether to object that the Court ought not to hear and determine the proceeding on the ground that the proceeding is not within Rule 7.01(1) before filing an appearance or conditional appearance in the proceeding.
In my opinion the defect cannot be cured by amendment made after service of the writ. Indeed R.7.02 makes that clear. Originating process must be amended to contain the appropriate endorsement before service can be effected.[38]
[37](Supreme Court of Victoria, Beach J, 24 February 1998) (Whinnen).
[38]Whinnen, 3-4.
As is apparent, the endorsement requirement in the former r 7.02 was different in scope from the requirements of the notice specified by current r 7.05. Not only did the grounds have to be endorsed on the originating process, but the facts which brought the case within the rule had to be stated in the endorsement. By contrast, r 7.05 only requires that the grounds alleged to found jurisdiction be noted. Further as Beach J noted, the form of the rules then in force precluded amendment of the originating process in the manner sought after service. In my view, the present Rules are sufficiently different from those considered in Whinnen that the decision does not stand as authority for the proposition that a plaintiff, faced with an application by the overseas defendant under r 7.04, cannot rely on paragraphs of r 7.02 (in addition to those included in its Form 7AAA notice) to resist the application, irrespective of whether there is any prejudice to the overseas person. It would be highly inefficient if the erroneous omission of reference to a supporting paragraph of r 7.02 meant that a proceeding that, viewed substantively, could be served out under r 7.02, had to be re-served (or even re-commenced if dismissed).
Turning to the application of r 7.02(h)(i), I am satisfied that Honda Motor is a ‘proper party’ to the proceeding commenced against Honda Australia for the purposes of r 7.02(h)(i). Rule 7.02 is directed to when an originating process may be served out of Australia without leave. An application brought, as this application has been, under r 7.04 may be premised on a contention that the service out was not authorised under r 7.02. Whatever might be the position had service only been sought to be effected after the hearing and determination of the preliminary discovery application against Honda Australia, it was not contended by Honda Motor that, at the time it was served, it was not a proper party to the proceeding. Rather, Honda Motor’s argument focused on the state of affairs at the time of the hearing of its application under r 7.04.
Rule r 7.02(h)(i) is directed to ensuring that an originating process can be served out of Australia on a proper or necessary party. However, even if the originating process cannot be said to have been outside the bounds of r 7.02(h)(i) when it was served, subsequent events may be such as to render it appropriate to exercise the Court’s discretion under r 7.04. This is such a case. Since the originating process was filed with Honda Motor properly joined, the application for preliminary discovery against Honda Australia has been heard and determined. In those circumstances, I would exercise the discretion under r 7.04 to set aside service if the only basis to support service was that Honda Motor had been properly joined to the application for preliminary discovery against Honda Australia. In those circumstances, the factual circumstances justifying, on the facts of this case, the joinder of Honda Motor to the application against Honda Australia are effectively ‘spent’. However, as r 7.02(h)(i) was not the only ground supporting service out, I do not make any order setting aside service.
Comity and the residual discretion under r 7.04
By the second paragraph of its summons, Honda Motor sought an order that the proceeding be permanently stayed. This relief was sought in the alternative, if it failed in its primary contention that the proceeding should be dismissed on the basis that service was not authorised under r 7.02. As I have rejected Honda Motor’s primary contention, it is necessary to address its alternative argument. The contention was that, despite the matter not attracting any of the grounds in the non-exhaustive list of grounds in r 7.04(2), the Court should nevertheless exercise its residual discretion under r 7.04 to permanently stay the proceeding. Honda Motor’s argument, in summary, was that considerations of comity should cause this Court to decline to exercise jurisdiction over Honda Motor even to the extent of permitting service against Honda Motor to stand and allowing the applicants to proceed to have the substance of their preliminary discovery application determined. For the reasons which follow, I am not satisfied that the proceeding should be permanently stayed.
The concept of comity and its relevance to service out of the jurisdiction
Describing the concept of comity, Honda Motor relied on the following statement of White J in Gloucester (Sub-Holdings 1) Pty Ltd v Chief Commissioner of State Revenue:
Comity includes that principle of restraint by which courts, recognising the essentially territorial nature of their jurisdiction, are slow to assert their judicial power beyond the limits of their own jurisdiction so as to interfere with the sovereignty of a foreign State.[39]
[39][2013] NSWSC 1419 (Gloucester), [16].
Honda Motor then relied on a number of cases in which Australian courts have declined to authorise the service out of subpoenas and have refused to compel a conditionally-appearing defendant to answer a notice to produce in order to fill gaps in the case establishing jurisdiction against it. Honda Motor also relied on a number of articles addressing the nature of comity and the ways in which it applies in Australian jurisprudence.
It is appropriate to consider those articles, and the wider dimensions of comity which they expose, to put in context Honda Motor’s focus on the restraining dimensions of the principle of comity in support of its argument that this Court should exercise its discretion to decline to exercise jurisdiction over Honda Motor even if the preliminary discovery application is within r 7.02.
Justice Edelman of the High Court, writing extrajudicially with Madeleine Salinger, addressed the foundations of the principle of comity in a chapter titled ‘Comity in Private International Law and Fundamental Principles of Justice’.[40] Using a series of lectures by Professor Adrian Briggs of Oxford University as a springboard, Edelman and Salinger explore the limits on comity arising from the application of fundamental principles of justice. As is apparent from their exposition, the principle of comity has both enabling and restraining features. In particular, as Edelman and Salinger develop, it is the principle of comity and respect for the territorial sovereignty of other states, which sees foreign judgments recognised by local courts. As Honda Motor’s reliance on principles of comity focused on its restraining dimensions, and not its enabling dimensions, I do not dwell further on the article save to note the authors’ description of comity (relied upon by counsel for Honda Motor) (citations omitted):
The principle of comity is a concept of ’very elastic content’. It has variously been described as a principle ’formulated by reference to the principles of sovereignty and territoriality’, a principle of ’deference and respect due by other states to the actions of a state legitimately taken within its territory’, a principle of ’respect for … legitimate authority’, a ’species of accommodation’ which ’involves neighbourliness, mutual respect, and the friendly waiver of technicalities’ and a principle that is conditioned upon the reciprocal treatment by states of one another’s judgments.[41]
[40]Published in Andrew Dickinson, Edwin Peel, Thomas Pausey (eds), AConflict of Laws Companion (Oxford University Press, 2021), 325 (Edelman and Salinger).
[41]Edelman and Salinger, 327.
Honda Motor also relied on an extrajudicial address published by Chief Justice Allsop of the Federal Court, titled ‘Comity and Commerce’ in which the Chief Justice described the concept of comity in the following terms:
[Comity] is, at its essence, an attempt to provide guidance and justification for why laws and decrees from one country should have application elsewhere, whether that be in the form of choice of law, enforcement and recognition of foreign judgments, or the staying of proceedings by anti-suit injunctions. All a part of the reconciliation of territorial sovereignty with the practical difficulties and realities created by transnational trade and commerce. In judicial proceedings today, the term “comity” is generally explicitly invoked in three circumstances – applications for anti-suit injunctions or stay of proceedings, the enforcement of foreign judgments or arbitral awards, or as a principle requiring courts in one country to try to avoid infringing on the interests (executive, legislative, or judicial) of a foreign country.[42]
[42][2015] FedJSchol 27 (Allsop), [7].
As Chief Justice Allsop developed in the paper, the conception of comity focused on reciprocity has been particularly prominent in the context of recognition of foreign awards and decrees, with a lack of reciprocity constituting a reason to decline enforcement of a foreign award.[43] Chief Justice Allsop addressed recourse to comity as supporting judicial cooperation and assistance through means such as prosecution of criminal matters, assistance in resolving unlawful child abduction, transmission of evidence between states, and service of legal documents overseas.[44] As Chief Justice Allsop identified, comity serves an overarching commitment to the facilitation of commerce and justice and the belief that matters of national interest should not indiscriminately override such commitments.[45]
[43]Allsop, [39] and following.
[44]Allsop, [69].
[45]Allsop, [77].
As noted, the principle of comity has restraining functions as well as enabling features. Those restraining features are described in an article relied on by Honda Motor: Thomas Schultz and Jason Mitchenson, ‘Navigating Sovereignty and Transnational Commercial Law: The Use of Comity by Australian Courts’.[46] There the authors, having referred to comity’s enabling dimension, note that comity also recognises that:
For states seeking to apply laws or exercise judicial power beyond the boundaries laid down by the doctrine of sovereignty and specific agreements, comity requires ‘self-restraint’ where it would constitute an undue infringement of the doctrine of sovereignty.[47]
[46](2016) 12(2) Journal of Private International Law 344 (Schultz and Mitchenson).
[47]Schultz and Mitchenson, 7.
Drawing those strands together, the authors state:
The result is that comity will be relevant in common scenarios. The first is in circumstances where a court is, prima facie, permitted to apply domestic law or exercise its judicial power in an ostensibly unlimited or at least overbroad manner, but it must determine how far and to what effect it would be appropriate. In these types of cases the question is one of ’self-restraint’ and whether or not the court can legitimately expect ’recognition’ of its acts from a foreign State. The second is in circumstances where a court must determine how far and to what extent it would be appropriate to recognise the effect of foreign laws or judicial power on its territory.[48]
[48]Schultz and Mitchenson, 7.
Schultz and Mitchenson go on to consider the application of considerations of comity in relation to service outside the jurisdiction, drawing a distinction between the seeking of leave to issue a subpoena outside the jurisdiction, and the service of originating applications. In respect of the latter, as the authors explain, service of originating applications is generally not considered to be as grave an infringement to the doctrine of sovereignty as service of subpoenas because they merely serve to notify the defendant of the proceedings in Australia and give them the opportunity to choose whether or not to appear and defend those proceedings.[49] This distinction is supported by the case law further considered below.
[49]Shultz and Mitchenson, 14.
Where, however, service of an originating process is permitted by rules of court without leave, there will typically be no interference with the sovereignty of the foreign state in question. Schultz and Mitchenson explain the position as follows:
The criteria that parties must satisfy to be permitted to serve without leave ensures that there will be little to no interference with the sovereignty of foreign State and that the service of originating applications will not pose an unacceptable challenge to the doctrine of sovereignty. In circumstances where parties do not satisfy the criteria they will be required to seek leave of the court to serve outside the jurisdiction. However, the decision in Agar [v Hyde (2000) 201 CLR 552] means that considerations of comity need not act with the same restrictive force that they once did.[50]
[50]Shultz and Mitchenson, 18.
There are two themes to draw out from the foregoing discussion. The first is the extent to which considerations of comity arise in the application of rules such as r 7.02 which authorise service outside of the jurisdiction. The second is the extent to which considerations of comity, and the evolving nature and significance of comity as elaborated on by the High Court in Agar v Hyde,[51] inform the exercise of the Court’s discretion to, eg, grant leave to serve an originating process outside of rules such as r 7.02, or to accede to an application to set aside an originating application under rules such as r 7.04, or to grant leave to serve subpoenas outside the jurisdiction.
[51](2000) 201 CLR 552 (Agar).
Turning to the first of those themes, the applicants relied on the decision of the Full Court of the Federal Court (Besanko, Middleton and Griffiths JJ) in BY Winddown Inc v Vautin[52] which concerned an application to set aside service of an originating process on a yacht manufacturer in the United States. The trial judge had granted leave to the applicant to serve the originating process. The Full Court sounded a note of caution in relation to construing rules of court by reference to considerations of comity stating:
[T]he concept of comity, which the applicant contended was relevant to the task of construction, has limited relevance in construing subordinate legislation in the form of rules of Court. …
The issue of comity should be approached on the understanding that considerations of comity have evidently been taken into account in determining the items which have been included in the table in r 10.42. Furthermore, to the extent that comity has any further relevance, it can be raised in an application to set aside service under r 13.01 of the 2011 FCRs and in the context of any contention that Australia is a clearly inappropriate forum within the meaning of Voth.[53]
[52](2016) 249 FCR 262 (BY Winddown).
[53]BY Winddown, [47]-[48].
In Habib v Commonwealth, Perram J put the matter in more absolute terms:
No doubt comity between the nations is a fine and proper thing but it provides no basis whatsoever for this Court declining to exercise the jurisdiction conferred on it by Parliament.[54]
[54](2010) 183 FCR 62, [37].
Of course, the present application concerns not just the construction of r 7.02, but also an application by Honda Motor to have the proceeding against it permanently stayed pursuant to r 7.04, opening the door to consideration of the ‘further relevance’ that the Full Court in BY Winddown acknowledged comity may have to the exercise of discretion.
This brings into focus the second theme identified above, namely the extent to which considerations of comity have evolved over time and reflect not only the evolving nature of international commerce, but also factors arising from, or related to, the nature of the role and involvement of the overseas entity in respect of which the Court proposes to exercise jurisdiction in some form. In this regard, the applicants relied on the High Court’s decision in Agar where the Court addressed the concept of international comity in the context of the New South Wales Supreme Court rules[55] (the NSW Rules) concerning overseas service. The issue was whether service should have been permitted overseas against board members of the International Rugby Football Board in a case alleging that they were liable in negligence.
[55]Supreme Court Rules 1970 (NSW).
In relation to service out of the jurisdiction, Gaudron, McHugh, Gummow and Hayne JJ stated (citations omitted):
Considerations of comity, and consequent restraint, have informed many of the reported decisions about service out of the jurisdiction. It is, however, important to notice that rules of court, or local statutes, providing for service outside the jurisdiction are now commonplace - at least in jurisdictions whose legal systems have been formed or influenced by common law traditions. Further, as the Court of Appeal rightly noted in its reasons in these matters, contemporary developments in communications and transport make the degree of “inconvenience and annoyance” to which a foreign defendant would be put, if brought into the courts of this jurisdiction, “of a qualitatively different order to that which existed in 1885”.
The considerations of comity and restraint, to which reference has so often been made in cases concerning service out of the jurisdiction, will often be of greatest relevance in considering questions of forum non conveniens. The starting point for the present inquiry, however, must be the terms of the Rules, not any general considerations of the kind just mentioned.[56]
[56]Agar, [42]-[43].
In relation to the role of comity in the context of an application to set aside service outside the jurisdiction, their Honours stated:
If service was authorised by the Rules, and has been properly effected, the Court’s authority to determine the issues that are raised by the proceeding has been regularly invoked. If the Court is not persuaded that it is an inappropriate forum for trial of the proceedings, it will have reached that conclusion having given due weight to the considerations of comity and restraint …[57]
[57]Agar, [56].
The High Court in Agar did, however, allow the appeal on the basis that it was not arguable that the appellants owed a duty to the respondent, which approach calls to mind the provisions in r 7.04(2)(c) permitting the Court to make an order under the rule if satisfied that the claim has insufficient prospects of success to warrant putting the person served out of Australia to the time, expense and trouble of defending the claim.
As noted above, Honda Motor emphasised the analogy between preliminary discovery and production of documents via subpoena or a notice to produce. Honda Motor submitted that, in circumstances where the authorities established the need for caution and restraint in issuing a subpoena overseas and do not permit a notice to produce to be used to fill gaps against a foreigner challenging jurisdiction or overseas service, applications for preliminary discovery should likewise not be countenanced against an overseas defendant in the position of Honda Motor. Counsel for Honda Motor embraced the summary of the authorities on subpoenas and notices to produce set out in paragraphs 64-67 of the applicants’ written submissions.
Those paragraphs helpfully summarise the relevant cases, as follows (citations in original):
64.Australian courts are reluctant to countenance the service of subpoenas overseas because of their nature. As explained by Edelman J in Titan Enterprises (Qld) Pty Ltd v Cross,[58] courts have recognised that it is important to exercise care and restraint in considering whether to grant leave to serve a subpoena overseas “because an international subpoena can be dangerously misleading.”[59]
[58]Titan Enterprises (Qld) Pty Ltd v Cross [2016] FCA 890 (Titan Resources [sic]).
[59]Titan Resources [sic], [12].
65.In Australian Securities and Investments Commission v Flugge (Ruling No 5),[60] Robson J noted that in considering whether to permit international service, courts have drawn a distinction between subpoenas and originating processes:[61]
[60]Australian Securities and Investments Commission v Flugge (Ruling No 5) (2015) 49 VR 606.
[61]It is well settled that an originating application seeking preliminary discovery constitutes an ‘originating process’: Carnegie Corporation, [53]; Gearhart [14].
The relevant authorities draw a distinction between a subpoena which is a court order and a summons or writ with does not constitute a court order but merely a court procedural document that gives notice to a person of a proceeding. Service of the summons or writ in a foreign country does not involve the Court which issued the document invading or interfering with the sovereignty of that foreign country. The service, however, may enliven the jurisdiction of the Court to hear the matter and the rights of the party to take further steps in the proceeding.
On the other hand, the serving of a subpoena constitutes an order backed by the threat of punishment for contempt of court if the order is not obeyed and as such involves an interference with the sovereignty of the foreign country to govern without interference, the liberty and conduct of its own citizens.[62] Service of a subpoena, part of the court’s compulsive process, is even more intrusive upon the foreigner than service of originating process, the same can be said of a notice to produce.[63]
[62]Ibid, [15]-[16].
[63]News Corp Ltd v Lenfest Communications Inc (1996) 40 NSWLR 250, 259.
66.As to notices to produce, Honda Japan relies on the principle stated by Rares J in Suzlon Energy v Bangad & Ors (No 2)[64] that:
… a court ordinarily should not require a foreigner challenging extraterritorial service on him or her to fill a gap in the serving party’s evidence necessary to establish the court’s jurisdiction over the foreigner
67.To similar effect, in News Corp Ltd v Lenfest Communications Inc,[65] Rogers CJ said:
It is difficult to conceive of leave to serve a subpoena or a notice to produce upon such a foreign defendant who does nothing, that is, does not apply pursuant to Pt 11, r 8 (or Pt 10, r 6A), in order to assist the plaintiff to establish the Court's jurisdiction. Whatever its strength, and whether or not its strength varies according to the circumstances, from the comity earlier discussed a foreign defendant served outside Australia should not lightly be subjected to the jurisdiction of this Court, but more important should not have imposed upon him one of the Court's compulsory processes in aid of establishing the jurisdiction itself. That position is not changed when, while contesting the jurisdiction, the defendant participates in the proceedings with a view to establishing the absence of jurisdiction.
[64]Suzlon Energy v Bangad & Ors (No 2) (2011) 198 FCR 1, 8 [21].
[65]News Corp Ltd v Lenfest Communications Inc (1996) 40 NSWLR 250, 262.
The backbone of Honda Motor’s argument was a submission that the approach of Wigney J in Ceramic Fuel Cells Ltd (in liq) v McGraw-Hill Financial Inc[66] should be followed and applied to the exercise of the residual discretion under r 7.04.
[66](2005) 245 FCR 340 (Ceramic Fuel Cells).
Ceramic Fuel Cells concerned a class action alleging wrongdoing by Standard and Poor’s in connection with its rating of a financial product. The applicant sought to issue and serve a subpoena on the trustee of the financial product, being a company based in the United States, in order to ascertain the identity of all persons who had acquired interests in the financial product during the relevant period so as to give them notice of, and information about, the representative proceeding. Justice Wigney approached the application by identifying two pertinent questions: first, whether the Court had the power, in a representative proceeding, to issue a subpoena to a foreign addressee and grant leave to serve the subpoena overseas; and secondly, if the Court did have that power, whether it should be exercised.[67]
[67]Ceramic Fuel Cells Ltd, [7].
Justice Wigney found that, having considered the authorities, the better view was that when a Court is asked, pursuant to general rules of court, to issue and grant leave to serve a subpoena on an addressee located overseas, considerations of international law and international comity are mandatory considerations conditioning the Court’s exercise of its powers on the basis that the Court is required to exercise caution and restraint in circumstances where the issue or service of a subpoena ‘might infringe international law or give rise to issues of international comity’.[68] Justice Wigney went on to conclude, however, that there was no absolute limitation or restraint on the Court’s power to issue or grant leave to serve a subpoena in such circumstances and there was no warrant for reading such an absolute limitation. His Honour found:
The requirement to construe general rules in a way which is consistent with international law and the comity of nations is best accommodated by requiring the court to have regard to those matters, and to exercise care and restraint, when being asked to issue and grant leave to serve a subpoena overseas. Whilst the court is bound to have regard to international law and comity and exercise care and restraint, it nonetheless retains the power to issue and grant leave to serve a subpoena overseas in an appropriate case.[69]
[68]Ceramic Fuel Cells Ltd, [49].
[69]Ceramic Fuel Cells Ltd, [50].
Justice Wigney stopped short of finding that there was a requirement that there be ‘exceptional circumstances’ before a subpoena would be issued to a foreign entity. In reaching that view, Wigney J noted, in apparent contradistinction to the kinds of offensive intrusion that a subpoena to an overseas entity may otherwise entail, the circumstance where ‘for example, the subpoena to the foreign addressee compelled the production of documents concerned with events or conduct that occurred in, or were in some way connected to, the jurisdiction’.[70]
[70]Ceramic Fuel Cells Ltd, [54].
In relation to the task of applying the relevant considerations and determining whether restraint should be exercised such as to refuse to authorise the service of the subpoena overseas, Wigney J emphasised the need for the facts and circumstances of each case to be closely considered. His Honour went on:
Those facts and circumstances will most likely include: the nature of the subpoena; the nature of the particular proceedings and (in the case of a subpoena to produce documents) the importance of the documents to the issues in those proceedings; the attitude of the subpoenaed party (if known or ascertainable); the foreign country involved; and the law in, and attitude of, the foreign country regarding foreign subpoenas and whether they impinge upon the country’s sovereignty.[71]
[71]Ceramic Fuel Cells, [59].
The absence of a means to enforce an overseas subpoena has been an important consideration commonly raised in connection with restraint in exercising the power to grant leave to serve a subpoena on a person outside Australia. Where a subpoena is not capable of enforcement, it is, as Allsop J (as his Honour then was) said in Stemcor (A/sia) Pty Ltd v Oceanwave Line SA, ‘an empty threat, or the equivalent of a mere request couched in imperative terms’.[72] It was this circumstance which was cited by Edelman J (then of the Federal Court) in Titan Enterprises in observing that a subpoena can be ‘dangerously misleading’.[73]
[72][2004] FCA 391, [12].
[73]Titan Enterprises (Qld) Pty Ltd v Cross [2016] FCA 890, [10]. However, where the foreign entity owns shares in an Australian company (as does Honda Motor) means of enforcement may be available through attachment of the shares in the event of disobedience to a subpoena: Gloucester, [71].
The absence of a means to enforce the subpoena ought, according to the framework set out by Wigney J in Ceramic Fuel Cells and urged upon the Court by Honda Motor, constitute a discretionary reason why a subpoena should not be issued or served on a foreign addressee; it is not a reason why it should be found that the Court does not have the power to issue or grant leave to serve such a subpoena.
Justice Wigney considered that there may be cases in which the absence of means to enforce the subpoena is not a determinative consideration, for example where the addressee indicates a willingness to comply with the subpoena if issued and served.[74] In the result, Wigney J authorised the issue of the subpoena in respect of some, but not all, of the documents sought.
[74]Ceramic Fuel Cells, [61].
Just as the High Court in Agar made reference to the evolving conceptions of comity, Giles CJ Comm D made reference to the business activities of the putative overseas recipient of service in News Corporation Ltd v Lenfest Communications Inc:
Restraint in the imposition of the Court’s compulsory processes on Lenfest is rather qualified by its involvement, via subsidiaries, in the commercial pursuits in Australia with which these proceedings have a strong connection. … [I]t may be thought not repugnant to American sovereignty, in those circumstances, to require Lenfest to obey the obligation imposed upon service of the notice to produce, when as well Lenfest has participated in the proceedings to the extent of a positive application contesting the Court’s jurisdiction, so that it is appropriate to subject Lenfest to the Court’s compulsory processes relevant to determining the contest over jurisdiction. Subpoenas against persons within Australia have been upheld although for the purpose of determining whether an order giving leave to serve originating process outside Australia should be discharged …[75]
[75](1996) 40 NSWLR 250 (Lenfest), 261B-C.
His Honour went on to note, on the other hand, that there were compelling considerations tending in the other direction, namely that Lenfest was a foreign corporation over which the Court asserts jurisdiction only when it is sufficiently shown that the proceedings fall within one of the cases in Pt 10, r 1A of the NSW Rules. Giles CJ stated:
Whatever its strength, and whether or not its strength varies according to the circumstances, from the comity earlier discussed a foreign defendant served outside Australia should not lightly be subjected to the jurisdiction of this Court, but more important should not have imposed upon him one of the Court’s compulsory processes in aid of establishing the jurisdiction itself. That position is not changed when, while contesting the jurisdiction, the defendant participates in the proceedings with a view to establishing the absence of jurisdiction.[76]
[76]Lenfest, 261E-F.
Lenfest involved a circumstance where Newscorp had regularly served a summons on Lenfest in the United States, but Lenfest contested jurisdiction. Newscorp served a notice to produce on Lenfest which Lenfest applied to have set aside. Ultimately, Giles CJ concluded that Lenfest should not be required to produce the documents at that time, leaving open whether it may be required to do so at a future date.
Whether the residual discretion under r 7.04 should be exercised on the ground of comity in this case
In resolving Honda Motor’s application under r 7.04, it is, in my view, important to bear in mind that there are important distinctions between the procedure of the Court for preliminary discovery and the service of subpoenas and notices to produce, where sought to aid in establishing the Court’s jurisdiction over the foreign entity. In particular, service of an application for preliminary discovery does not, of itself, compel, or purport to compel, production of documents. The distinction, referred to by Robson J in ASIC v Flugge (Ruling No 5), between a subpoena, which is a court order backed by punishment for contempt, and a summons or writ, giving notice of a proceeding, is important.[77]
[77](2015) 49 VR 606 (Flugge (No 5)), [14]-[15]. See also Arhill Pty Ltd v General Terminal Co Pty Ltd (1990) 23 NSWLR 545 (Arhill), 552 (Rogers CJ Comm D), referring to Federal Trade Commission v Compagnie de Saint-Gobain-Pont-à-Mousson 636 F 2d 1300 (1980), 1313 (Wilkey J); and Gloucester, [32], [35]-[36], where White J distinguished the principles concerning overseas service of an originating process from service of subpoenas based on the compulsive nature of a subpoena.
Service of an application for preliminary discovery does not involve the Court immediately directing a foreigner to produce documents; it is only if the application proceeds and is successful that an order would issue requiring the production of documents. Service of an application for preliminary discovery overseas alerts the recipient to the application brought against it in this jurisdiction, permitting it to elect whether or not to defend the application. Service of an originating process does not have the features which are typically cited as rendering (at least potentially) subpoenas on foreign entities an intrusion into the sovereignty of the foreign state. By contrast, a subpoena constitutes an order, backed by the threat of punishment for contempt, to produce documents and, on that basis, involves a much clearer potential for interference with the sovereignty of a foreign state to govern, without interference, the liberty and conduct of its citizens.
Further, it is a premise of the present application, so far as it invokes the Court’s residual discretion to permanently stay the proceeding under r 7.04, that the preliminary discovery application was regularly served pursuant to r 7.02. That being the case, the exercise of the residual discretion is to be approached on the basis that the Court’s authority to determine the preliminary discovery application has been regularly invoked.[78]
[78]Agar, [56].
That is not to preclude the possibility that considerations of comity and restraint may warrant the exercise of the Court’s discretion notwithstanding that the proceeding was regularly served within r 7.02, that there is no argument that the Court is an inappropriate forum for the trial of the application, or that there is no claim that it has insufficient prospects of success to warrant putting Honda Motor to the time, trouble and expense of contesting the claim. There was, however, in this application no clear evidence that the service of an originating process on a Japanese corporation seeking preliminary discovery was repugnant to the sovereignty of Japan, or would be repugnant in circumstances where Honda Motor is the 100% shareholder and supplier of vehicles to Honda Australia and the documents sought pertain to a dispute with a strong connection with Australia. It is not necessary in these reasons to recite in detail the evidence relied upon by Honda Motor from Japanese law experts, save to note the following features of that evidence and the status of assistance between Australian and Japanese courts.
While Australia is party to the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters done at the Hague on 18 March 1970, Japan is not. Conversely, Japan is party to the Convention on Civil Procedure done at the Hague on 1 March 1954, but Australia is not. The only means by which an Australian court may enlist the judicial assistance of a Japanese court to take evidence in connection with a civil case before the Australian court is for the Australian court to make a request for assistance through diplomatic channels pursuant to the law relating to the reciprocal judicial aid to be given at the request of foreign courts.
Honda Motor relied on two reports of an expert in Japanese law, Hiroyuki Tezuka, dated 2 July 2021 and 7 September 2021. The second report of Mr Tezuka exhibited the translated text of the Japanese domestic law entitled ‘Law Relating to the Reciprocal Judicial Aid to be Given at the Request of Foreign Courts (Law No. 63 of the 38th year of Meiji (13th March, 1905)’ (the Judicial Aid Law). Honda Motor relied on paragraph 6 of article 1-(2) of the Judicial Aid Law which states that:
The State to which the Court making the request belongs shall assure that it could render judicial aid in the same or similar matters if so requested by the Japanese courts.
Honda Motor relied on this provision as establishing that the Japanese courts will only render assistance where the nature of the assistance sought would likewise be granted to a Japanese court by an Australian court. Honda Motor also relied on three further aspects of Mr Tezuka’s reports:
(a) First, Japanese courts will only render assistance by taking witness evidence by oral examination and will not render assistance for the taking of evidence via document discovery or an order to produce documents. In oral submissions, counsel noted that the concept of discovery is simply foreign to civil law countries (although the opinion of Mr Tezuka refers to Japanese courts having the power to compel production of documents once domestic proceeding have been commenced).
(b) Secondly, in Japan, taking of evidence for foreign court proceedings is considered to be an exercise of the sovereign power of the State and can only be done where Japan has specifically agreed to it by way of applicable conventions, treaties or bilateral agreements, or where Japan has agreed to provide such judicial assistance in accordance with the Judicial Aid Law.
(c) Thirdly, a Japanese court would not enforce an order made by a foreign court requiring production of documents as Japanese courts may only provide judicial assistance that is specifically permitted under applicable conventions, treaties, bilateral agreements or the Judicial Aid Law, and the enforcement of orders for production of documents is not an action authorised by any of the applicable conventions, treaties, bilateral agreements or the Judicial Aid Law.
It is to be expected that, as Mr Tezuka stated in his opinion, the Japanese courts would regard the taking of oral evidence by a Japanese court in Japan to be an exercise of its sovereign power. That is not to say, however, what attitude the Japanese courts or the State takes to the service on a Japanese corporation of an application for preliminary discovery either as a general proposition or where that Japanese corporation engages in business in Australia through its subsidiaries and the documents sought through the preliminary discovery application have a close connection with the Australian operations of the parent company’s subsidiary.[79] In particular, it is not clear on the evidence that the Japanese courts or State would necessarily regard such a preliminary discovery application as involving an imposition on Japanese sovereignty.[80] Nor can assumptions be made based solely on Japan not being a common law jurisdiction. The variation in the views taken in civil law jurisdictions on matters such as foreign subpoenas should not be underestimated.[81] Further, given the differences between service of an originating process seeking preliminary discovery and subpoenas (addressed above), I do not consider that observations commonly made in cases concerning subpoenas regarding intrusions into sovereignty establish, by analogy, the intrusion upon which Honda Motor’s submissions were premised.
[79]Whether or not the ambit of the documents sought by the application for preliminary discovery ought to be narrowed does not arise on this application.
[80]Cf, the position in Sweeney v Howard [2007] NSWSC 262, [11] (Windeyer J), where there was information available issued by the Attorney General of the United Kingdom to the effect that the government of the United Kingdom did not consider service of a subpoena issued by a foreign court to be an interference with the sovereignty of that country (referred to in Flugge (No 5), [35] (Robson J)).
[81]Arhill, 552-553 (Rogers CJ Comm D), quoting David M Simon, ‘Extraterritorial Service of Administrative Subpoenas: Federal Trade Commission v Compagnie de Saint-Gobain-Pont-à-Mousson’ (1981) 13(3) Law and Policy in International Business 847, 855.
The submissions advanced by Honda Motor ultimately involved the proposition that, unless the bilateral arrangements between Australia and Japan were such that preliminary documentary discovery could be sought through bilateral or treaty-based means or by diplomatic assistance, the approach in Ceramic Fuel Cells should be applied, such that, on Honda Motor’s submissions, there would need to be some particular features or circumstances which ‘take this out of the ordinary request for evidence in a commercial case to justify this Court taking a step over the boundary of what might be thought to be the boundary of comity or not offending the sovereignty of the other state’.
There are two principal difficulties with Honda Motor’s submission, at least at the stage where r 7.04 is sought to be invoked. First, the approach of Wigney J in Ceramic Fuel Cells demonstrates the need to take into consideration the full range of facts and circumstances, including the nature of the documents sought, their importance, and the attitude of the proposed recipient of the subpoena. Even assuming, in Honda Motor’s favour, that the approach set out by Wigney J in relation to subpoenas ought to be applied in determining an application for preliminary discovery against a foreign entity, those factors can only properly be considered, together with considerations of comity,[82] when the Court considers whether it should exercise the discretion and jurisdiction to order preliminary discovery. This proceeding is not yet at that stage. It is difficult, if not impossible, to apply the Ceramic Fuel Cells approach in an application under r 7.04, divorced from the multi-faceted approach that Wigney J adopted in that case.
[82]Including the significance of the limitations on the extent of assistance this Court may render to foreign courts in relation to discovery pursuant to s 9N of the Evidence (Miscellaneous Provisions) Act 1958 (Vic).
Secondly, the submission fails to pay adequate regard, in my view, to the distinction between service of an application for preliminary discovery on a prospective defendant to a proceeding that, if brought, would (as Honda Motor accepts) be properly advanced in this Court, and the issue of a subpoena overseas to an entity that is a stranger to the domestic litigation.[83] Many of the cases in which observations have been made about the exercise of restraint in the service of subpoenas overseas have involved subpoenas being issued to entities which are not only out of the jurisdiction, but are also neither parties, nor prospective parties. Some cases have also concerned documents not only held outside the jurisdiction, but also concerning business affairs conducted entirely outside the jurisdiction.[84] That is not the case here; although the documents sought (assuming they exist) would be held by Honda Motor outside Australia, they include documents concerning events and actions occurring, directly or indirectly, within Victoria and Australia.[85]
[83]Eg, in Flugge (No 5), the addressee of the subpoena was not a prospective defendant.
[84]Eg, Mackinnon v Donaldson, Lufkin and Jenrette Securities Corporation [1986] Ch 482 (Mackinnon), 493.
[85]I also do not assume, for the purposes of this application, that the ambit of the documents sought might not ultimately be refined.
Honda Motor also acknowledge that, if it were properly joined to a substantive proceeding in this Court, the Court could order the production of documents by Honda Motor without infringing on Japanese sovereignty. The only point of distinction then drawn by Honda Motor between that circumstance and preliminary discovery being sought from Honda Motor was that, were Honda Motor a litigant to a proceeding seeking substantive and final relief in this Court, contempt would not be the only available sanction to enforce this Court’s orders.[86]
[86]Honda Motor noted that, if it were a defendant to a substantive proceeding, the Court would have the usual range of procedural and cost sanctions over it, by which to secure compliance with its orders.
While it may be accepted that the Court has a range of powers that may be utilised to secure compliance with orders such as discovery orders against a litigant who has submitted to, or otherwise been properly brought within, the Court’s jurisdiction, I do not regard the existence of such other means of enforcement as a point of distinction of sufficient weight to support the broader proposition that the r 7.04 discretion should be exercised to permanently stay this proceeding at this stage.[87]
[87]Note, however, that the enforcement options may not be as limited as Honda Motor has assumed: see eg Gloucester, [71].
Honda Motor rightfully noted that its reliance on the cases concerning subpoenas and notices to produce did look ahead to the effect of an order for preliminary discovery, were one made. In effect, the submission appeared to be that the case against making an order for preliminary discovery was so compelling, by analogy to the cases on subpoenas in particular, that it would be a matter of efficiency to halt the proceeding against Honda Motor at this stage. I do not accept that submission. For reasons already outlined, the discretionary considerations that arise under an application pursuant to r 7.04 fall to be considered when the question is whether, the process having been regularly served out of the jurisdiction, considerations of comity mean that the Court should not proceed to exercise jurisdiction by considering the merits of the application for preliminary discovery. It would be premature (even if it were possible) to attempt to engage in the kind of full, multi-faceted analysis that may well be appropriate on the hearing of an application for preliminary discovery.
Further, to the extent that Honda Motor’s submissions emphasised the absence of other means of obtaining the documents (eg, through treaties or through the Judicial Aid Law), it is not clear that that consideration necessarily weighs in favour of exercising the Court’s discretion to permanently stay the application for preliminary discovery. On the contrary, it may ‘cut both ways’ as the presence of treaty‑based or other means to obtain the documents within the foreign jurisdiction (eg, by an application to a foreign court) can make it harder for a litigant to justify the kind of intrusion into the sovereignty of another state that may arise when a subpoena is issued against a foreign non-party. The availability of such other means was influential in the decision of Hoffman J (as his Honour then was) in Mackinnon to set aside a subpoena issued to Citibank (a party’s banker) seeking its overseas records.[88]
[88]Mackinnon, 493-494, 498-499. See also Arhill at 555A, where Rogers CJ Comm D referred to other weapons in the Court’s armoury to procure documents from an overseas company, such as staying the local subsidiary’s cross-claim; and also Titan Enterprises (Qld) Pty Ltd v Cross [2016] FCA 890 at [22] where Edelman J (then of the Federal Court) stated that the discretion to permit service of a subpoena overseas ‘would not usually be exercised to issue the subpoena if other reasonable avenues had not been exhausted’.
Honda Motor also submitted that its application was supported by cases setting aside notices to produce served to shore up jurisdiction when an overseas entity sought to contest jurisdiction. In my view, Honda Motor’s reliance on those cases in the present context is misplaced. The documents sought to be obtained through the preliminary discovery application go to the substance of the putative claim against Honda Motor, and whether the applicants have a proper basis to commence such a claim; they are not documents sought to ‘fill a gap’[89] to shore up jurisdiction where a defendant challenges jurisdiction in a proceeding which is already on foot.[90]
[89]Cf, Suzlon Energy v Bangad (No 2) (2011) 198 FCR 1, [21] (Rares J). See also Lenfest, 261 (Giles CJ Comm D); Armacel Pty Ltd v Smurfit Container Corporation (2007) 164 FCR 123, [7], [10] (Jacobson J).
[90]The analogy would, however, hold, had the applicants served a notice to produce seeking documents to use in resisting Honda Motor’s application under r 7.04.
For these reasons I also dismiss the summons so far as it sought an order under r 7.04 for the proceeding against Honda Motor to be permanently stayed.
If I am wrong in my conclusion that service of the originating process for preliminary discovery was within the bounds of r 7.02, I would nevertheless not order that the proceeding be dismissed (as sought by paragraph 1 of Honda Motor’s summons). Rather, in that instance, I would set aside service given the applicants’ indication that they would apply for leave to serve out under r 7.03.
Subject to giving the parties the opportunity to make submissions on costs, I dismiss Honda Motor’s summons.
SCHEDULE OF PARTIES
| S ECI 2020 04769 | |
| BETWEEN: | |
| BRIGHTON AUTOMOTIVE HOLDINGS PTY LTD (ACN 150 926 480) | First Applicant |
| | |
| TYNAN MOTORS PTY LTD (ACN 004 663 347) | Third Applicant |
| - and - | |
| HONDA AUSTRALIA PTY LTD (ACN 004 759 611) | First Respondent |
| HONDA MOTOR CO LTD | Second Respondent |
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