Doe v Howard

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2014 02915

JANE DOE	Plaintiff
v
LINDA HOWARD	First Defendant
RUSSELL HOWARD	Second Defendant

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JUDGE:	J FORREST J
WHERE HELD:	Melbourne
DATES OF HEARING:	15 and 16 December 2014
DATE OF RULING:	6 March 2015
CASE MAY BE CITED AS:	Doe v Howard
MEDIUM NEUTRAL CITATION:	[2015] VSC 75

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CIVIL PROCEDURE – Foreign judgments – Application to enforce a judgment of the United States District Court – Enforcement of foreign judgments at common law – Whether default judgment is final and conclusive – Where judgment allegedly procured by fraud – Divergence in English and Australian authority on whether fraud provides a basis not to enforce a foreign judgment – Whether the foreign judgment is a penal order – Whether punitive or exemplary damages constitute a penal sanction – Whether compensatory and punitive or exemplary damages may be severed – Abuse of process – Whether a claim of abuse of process may be invoked to prevent attempts to re-litigate that which has, or should have been, litigated in earlier proceedings – Summary judgment application – Civil Procedure Act 2010 (Vic) ss 61 and 63 – Summary judgment granted.

WORDS AND PHRASES – ‘Penalty’ – ‘Penal’.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A J Bates	Salvos Legal Humanitarian
For the Defendant	Mr G J Parncutt	Sevdalis Lawyers & Conveyancers

HIS HONOUR:

Introduction

The plaintiff’s application for summary judgment raises several important issues not previously determined in this state concerning the registration in this Court, at common law, of a foreign judgment; in this case, a default judgment obtained in the United States District Court.[1]
[1]Although both Mr and Mrs Howard are named as defendants in the writ of 28 May 2014, by summons dated 16 October 2014 the application for summary judgment is brought against Mrs Howard alone.

On 12 October 2011, the plaintiff (known by the pseudonym ‘Jane Doe’) commenced a civil action against her former employers Linda and Russell Howard, the defendants, in the United States District Court for the Eastern District of Virginia (US Court).[2] Jane Doe claimed that during the course of her employment she was subjected to sexual servitude and human trafficking by Mr and Mrs Howard.
[2]Order of United States Judge Liam O’Grady in Jane Doe v Howard, Civil Action No. 1:11cv1105 (LO/TRJ) in the Alexandria Division of the United States District Court for the Eastern District of Virginia, Exhibit LGF4 to the affidavit of Luke Patrick Geary sworn 10 December 2014.

Mr Howard did not contest the claim. Mrs Howard disputed the claim but failed to comply with court orders as to discovery and the provision of a deposition. Without notice to the US Court, Mrs Howard left the United States in May 2012 and took no further part in the proceeding.

On 4 September 2012, Judge Liam O’Grady of the US Court, having heard evidence from Jane Doe, her husband, and an expert witness on human trafficking, entered default judgment in favour of Jane Doe and against Mr and Mrs Howard in the sum of US$3,306,468 (US judgment).

Mr Howard died on 4 September 2012.[3] Mrs Howard now resides in Victoria.
[3]‘Copy of death certificate of Russell Howard’, Exhibit LG2 to the affidavit of Luke Patrick Geary sworn 16 October 2014.

On 28 May 2014, Jane Doe instituted this proceeding against Mrs Howard to enforce the judgment of the US Court. The action is one in debt and, if successful, would enable Jane Doe to register a judgment in this Court, and utilise the Court’s enforcement processes.

For over two years Mrs Howard did nothing to set aside or appeal the US judgment. This proceeding is, however, resisted vigorously. Mrs Howard asserts, amongst other things, that she now desires a hearing on the merits of Jane Doe’s allegations.

Jane Doe now seeks an order for summary judgment under ss 61 and 63 of the Civil Procedure Act 2010 (Vic) (CPA) on the basis that Mrs Howard’s defence has ‘no reasonable prospect of success’.

The issues

The issues to be determined are as follows:

(a)Is the US judgment final and conclusive?
(b)Is Mrs Howard entitled to resist enforcement of the judgment on the basis that it was procured by fraud (i.e. that the complaint made by Jane Doe in the US Court was false and that Jane Doe gave perjured evidence before Judge O’Grady)?
(c)Is the US judgment, or any part of it, a penal order which should not be enforced by this Court?
(d)Is Mrs Howard’s defence to this proceeding an abuse of process (or, to put it another way, can Mrs Howard, in this proceeding, agitate issues as to the veracity of Jane Doe’s claim which could and should have been ventilated in the US Court)?[4]

[4]In discussion, counsel for both parties accepted that these were, in a general sense, the issues for consideration.

The Pleadings

The pleadings, in their current form, do not reflect all these issues. Mrs Howard’s defence does not raise the penal sanction argument and no reply was filed by Jane Doe in relation to the abuse of process point. With the consent of the parties, and consistent with the provisions of the CPA,[5] I took the view that the case should be determined on the issues raised in the affidavits and in the submissions. To delay the hearing of this proceeding for the defence to be amended (in essence, in accordance with the affidavit of Mrs Howard) and a reply then to be filed (alleging matters contained in Jane Doe’s submissions and well understood by Mrs Howard’s lawyers) would have involved a considerable waste of time and money. The pleadings can, in due course (if necessary) be amended to reflect issues still alive at the conclusion of this judgment.
[5]Civil Procedure Act 2010 (Vic) s 9(c)-(d).

For the reasons that follow, I am satisfied that summary judgment should be entered in favour of Jane Doe, and that the US judgment should be entered against Mrs Howard in this Court.

Background
Litigation history – United States

Jane Doe’s Amended Complaint and Preliminary Statement was filed in the US Court on 14 November 2011 and contained the following six claims for relief against Mr and Mrs Howard:

(a)involuntary servitude in violation of 18 USC s 1584;
(b)forced labour in violation of 18 USC s 1589;
(c)trafficking in violation of the Trafficking Victims Protection Act 2000 (TVPA), 18 USC ss 1584, 1589 and 1590;
(d)conspiracy in violation of 18 USC s 1594 and civil conspiracy in violation of common law;

(e) obstructing enforcement in violation of 18 USC s 1590(b); and
(f) unjust enrichment.[6]

[6]Affidavit of Martina E Vandenberg sworn 28 January 2014, [18].

At the time of filing the claim, both Mr and Mrs Howard were residents of the United States.

On 2 December 2011, Mrs Howard filed an Answer to Jane Doe’s Amended Complaint and Preliminary Statement.[7] She also issued a number of motions to dismiss Jane Doe’s claim – all refused by the US Court.[8]
[7]Affidavit of Martina E Vandenberg sworn 28 January 2014, [20].
[8]Report and Recommendation of United States Magistrates Judge Thomas Rawles Jones Junior in Jane Doe v Howard, Civil Action No. 1:11cv1105 (LO/TRJ) in the Alexandria Division of the United States District Court for the Eastern District of Virginia, Exhibit MV10 to the affidavit of Martina Vandenberg sworn 28 January 2014 (Report and Recommendation of Magistrate Judge Jones).

On 10 February 2012, the Clerk of the US Court entered default judgment against Mr Howard on the basis that he had not answered or otherwise responded to the complaint.

On 21 February 2012, a scheduling order was made, setting down a pre-trial conference for 14 March 2012 and a final pre-trial conference for 21 June 2012, with the final trial to be held within four to eight weeks of the latter.[9]
[9]‘Transcript of hearing on motions’, Exhibit LG7 to the affidavit of Luke Patrick Geary sworn 16 October 2014.

In early-to-mid April 2012, Mrs Howard filed a further six motions. Four were motions to dismiss, each of which was refused on the papers prior to 20 April 2012.[10]
[10]‘Chronology in the matter of Doe v Howard et al’, Exhibit MV-2 to the affidavit of Martina E Vandenberg sworn 28 January 2014 (US Chronology).

On 20 April 2012, the two remaining motions were heard and granted by US Magistrate Judge Thomas Rawles Jones Junior of the US Federal Magistrates’ Court. Mrs Howard appeared in person.

In the course of the hearing on 20 April, Magistrate Judge Jones raised the issue of Mrs Howard’s travel situation and enquired whether she knew of any periods when she would definitely be out of the country. Mrs Howard alluded to her previous movements but gave his Honour no indication that she was retiring from her employment in ten days’ time, on 30 April 2012 (as her employer’s letter establishes), and leaving the United States permanently.[11]
[11]‘Transcript of hearing on motions’, Exhibit LG7 to the affidavit of Luke Patrick Geary sworn 16 October 2014, 14 and following.

At this hearing there was also an exchange about plans to depose Mrs Howard. Counsel for Jane Doe stated that the deposition date remained uncertain as Jane Doe was awaiting documents and further discovery from Mrs Howard, but he anticipated that a notice of deposition would be provided in the next week.[12]
[12]‘Transcript of hearing on motions’, Exhibit LG7 to the affidavit of Luke Patrick Geary sworn 16 October 2014, 15-6.

The US Court subsequently received a number of emails in Mrs Howard’s name. I pause to note that it is disputed whether she in fact sent or knew of these emails. In this proceeding, Mrs Howard deposes that they were written by Mr Howard and that she was unaware of the correspondence.[13]
[13]Affidavit of Linda Howard sworn 27 November 2014, [43].

On 7 May 2012, the US Court received a letter from Mrs Howard, stating that she was ‘leaving for overseas again today 3 May 2012’, ‘for an indefinite period’ and advised she could be reached by email, which she would check ‘periodically’.[14]
[14]‘Letter from Linda Howard to US District Court re overseas travel’, Exhibit LG9 to the affidavit of Luke Patrick Geary sworn 16 October 2014,

Jane Doe’s lawyers pressed Mrs Howard for a deposition, suggesting several dates in May at their offices in Washington. Mrs Howard failed to attend any of the suggested appointments[15] and responded to the reasonable requests of Jane Doe’s lawyers with a series of intemperate and obdurate emails.
[15]E.g. ‘Emails from Linda Howard to US attorneys May 2012’, Exhibit LG10 to the affidavit of Luke Patrick Geary sworn 16 October 2014, ‘Email of Mrs Howard of 9 May 2012’.

On 29 May 2012, the US Court received an email from Mrs Howard, which referred to the ‘letter (Order) of 23 May 2012 from Magistrate Judge Jones’.[16] Later that day, the US Court received nine emails styled as motions from Mrs Howard.[17] The court did not treat these as motions or record them on the docket.
[16]‘Emails from Linda Howard to US attorneys May 2012’, Exhibit LG10 to the affidavit of Luke Patrick Geary sworn 16 October 2014, Email of Mrs Howard dated 29 May 2012.
[17]‘Linda Howard – 9 motions to dismiss in US DC 29 May 2012’, Exhibit LG11 to the affidavit of Luke Patrick Geary sworn 16 October 2014.

On 1 June 2012, a motion to compel appearance at an oral deposition was electronically filed by Jane Doe’s lawyers,[18] with copies forwarded to the various email addresses provided by the Howards to the court. As I mentioned, Mrs Howard failed to attend several suggested deposition hearings arranged by the lawyers for Jane Doe.
[18]‘Motion to Compel Linda Howard’s Deposition and accompanying exhibits 1 and 2 filed [1 June] 2012’, Exhibit LG13 to the affidavit of Luke Patrick Geary sworn 16 October 2014; US Chronology.

Further motions were filed on 5 June 2012, to produce documents;[19] and on 15 June, to answer interrogatories.[20] On 18 June 2012, Magistrate Judge Jones granted the motions.[21] In respect of the motions of 1 and 5 June, he warned that he would strike Mrs Howard’s answer if she failed to comply.
[19]US Chronology.
[20]US Chronology.
[21]US Chronology.

On 21 June 2012, the final pre-trial conference took place pursuant to the orders of 21 February 2012. The trial was set down for 8 August 2012.

On 20 July 2012, Mrs Howard emailed the US Court stating that she was planning to depart for Australia on 7 August 2012, and gave her new address as ‘Poste Restante,’ at an address at Lakes Entrance, Victoria. This was the last correspondence from Mrs Howard to the US Court.

On 18 July 2012, the US Court struck out Mrs Howard’s Answer to Jane Doe’s Complaint on the basis that she had failed to cooperate and, in particular, had failed to comply with discovery procedures.[22]
[22]US Chronology.

On 7 August 2012, Magistrate Judge Jones found in favour of Jane Doe and recommended that default judgment (as to liability) be entered against both Mr and Mrs Howard, and that the US Court confine any trial to the assessment of damages.[23]
[23]Report and Recommendation of Magistrate Judge Jones.

In making this recommendation, Magistrate Judge Jones found that it was appropriate to enter default judgment against Mr Howard, as he had not answered or responded to the complaint.[24]
[24]Report and Recommendation of Magistrate Judge Jones.

Magistrate Judge Jones concluded that Jane Doe’s claim contained ‘well pled allegations of fact’ which were admitted by reason of the default of Mr and Mrs Howard.

As to Mrs Howard, Magistrate Judge Jones recommended the entry of default judgment, finding that:

(a)Mrs Howard has demonstrated significant bad faith in the US Court process, as evidenced by:
(i)her representation to the US Court on 20 April 2012 (two weeks before she retired and left the country) that she had no upcoming overseas, work-related travel;

(ii) her refusal to appear for a court-ordered deposition; and

(iii) her refusal to communicate with Jane Doe’s counsel to facilitate discovery.

(b)Jane Doe had been severely prejudiced by her inability to take a deposition of Mrs Howard and receive information necessary to prosecute her case.
(c)There was a need to deter defendants from determining that the proper response to litigation is to leave the country and refuse to participate in the resolution of a dispute.

(d) In light of Mrs Howard’s flight from the country, less drastic sanctions would not have been effective.[25]

[25]Report and Recommendation of Magistrate Judge Jones.

Finally, it was noted that the report and recommendation would be mailed to Mr and Mrs Howard at their address for service and that any review be filed within 14 days of service, ‘otherwise it waives appellate review of a judgment based on this report and recommendation’.[26]
[26]Report and Recommendation of Magistrate Judge Jones.

On 8 August 2012, US District Judge Liam O’Grady, of the Eastern District of Virginia, conducted a trial which included the assessment of Jane Doe’s damages. Mr and Mrs Howard failed to appear.

At trial, evidence was adduced from Jane Doe, her husband and an expert in human trafficking, Ms Florrie Burke.

His Honour reserved his decision (to accommodate any review of Magistrate Judge Jones’ recommendation and report which might be sought by the Howards), and on 4 September 2012, delivered his opinion. His Honour adopted the recommendation of Magistrate Judge Jones, entering default judgment against the Howards .His Honour awarded damages against both Mr and Mrs Howard in the sum of US$3,306,468 in favour of Jane Doe.[27]
[27]Opinion of US District Court Judge Liam O’Grady in Jane Doe v Howard, Civil Action No. 1:11cv1105 (LO/TRJ) 4 September 2012, Exhibit MV11 to the affidavit of Martina Vandenberg sworn 28 January 2014 (Opinion of Judge O’Grady).

The award was broken up as follows:

(a) compensatory emotional distress damages:

(i) relating to the forced sexual servitude in the amount of US$1,250,000 pursuant to the TVPA;[28]
[28]Opinion of Judge O’Grady, [4]-[6].

(ii) relating to the forced labour as a domestic worker in the amount of US$44,500;[29]

(b) punitive damages in the amount of US$2,000,000; and

(c) wage restitution damages in the amount of US$11,968.

[29]Opinion of Judge O’Grady, [6]-[8].

His Honour made the following findings:

(a) Jane Doe was raped, sexually abused and forced to work 80 hours or more per week.

(b) Jane Doe testified that Mr Howard raped her at least four times and that he forced her to perform oral sex approximately 10 times and that he repeatedly sexually assaulted her.

(c) Jane Doe also testified that Mrs Howard was complicit in her husband’s sexual abuse, telling Jane Doe that she should gratify Russell Howard and make him happy.

(d) Mrs Howard refused Jane Doe’s request to re-locate away from Mr Howard to a different room within the US embassy compound.

(e) In addition, the Howards used non-physical force such as isolation and threats of deportation to coerce Jane Doe into servitude.

(f) The Howards entered into a scheme to induce Jane Doe to travel from Yemen to Japan for the purpose of forcing her to perform involuntary labour and sexual services.

(g) Mr Howard used physical force to restrain Jane Doe. The Howards psychologically manipulated Jane Doe to compel her labour and services. They limited her contact with the outside world and verbally, physically and mentally abused her.

(h) Mr Howard flew to Ethiopia in June 2011 and contacted Jane Doe’s husband with the purpose of obstructing the investigation of the underlying crimes.[30]

(i) Jane Doe’s employment contract salary was unenforceable and the Howards acted inequitably in failing to pay her in accordance with the relevant market rate.

[30]See below at [40].

For reasons that will become apparent when discussing the third issue (that the entry of a judgment constitutes enforcement of a foreign penal order), his Honour’s award of punitive damages needs to be set out in full:[31]
[31]Opinion of Judge O’Grady.

b. Punitive Damages
Punitive damages are available under the TVPA because the Act’s ‘civil remedy provision creates a cause of action that sounds in tort.’ Ditullo, 662 F.3D at 1096. ‘[P]unitive damages are warranted when the defendant is found liable for conduct involving some element of outrage similar to that usually found in a crime.’ Id AT 1097 (internal quotations omitted). Punitive damages awards should be based on ‘the degree of reprehensibility of the defendant’s conduct… and should reflect the enormity of [the defendant’s] offense.’ BMW of N.Am. v. Gore, 517 U.S. 559,575 (1996) (internal quotations omitted). Other factors courts should consider in awarding punitive damages include whether: ‘the harm was physical rather than economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the conduct involved repeated actions or was an isolated incident; and [whether] the harm resulted from intentional malice, trickery, or deceit, or mere accident.’ State Farm Mut. Auto. Ins. Co v Campbell, 538, 437 (2003) (citing Gore, U.S. at 576-77).
Here, the crime, involving sexual assaults, forced labour, and trafficking is particularly depraved. The harm was physical, it involved the intentional disregard for the health and safety of Mrs Doe, it was repeated – involving approximately fourteen instances of forced sexual acts, and the harm was planned with forethought and intentionally inflicted upon Mrs Doe.

In addition to the horrible circumstances relating to the sexual assaults, forced labour, and trafficking, Mrs Howard also traveled more than 8,000 miles from Virginia to Ethiopia in an attempt to locate Mrs Doe, even though knowing that the State Department’s investigation into the trafficking matter was ongoing. Russell Howard telephoned Mr Doe and asked him to meet with Mr Howard at a hotel to discuss Mrs Doe and her whereabouts. After Mr Doe declined, Russell Howard called him back repeatedly. A couple of days later, Mr Doe learned that Russell Howard had contacted the Ethiopian police to request help in locating Mrs Doe. Howard also attempted to file bogus criminal charges against Mrs Doe. These attempts at contact exacerbated Mrs Doe’s trauma and her ongoing fear.
None of the civil judgments discussing punitive damages amounts under the TVPA are analogous to Mrs Doe’s case in that none have involved forcible rapes or sexual assaults. Thus, the Court considers not only punitive damages awards in TVPA cases, but also punitive damages awarded in sexual abuse cases. In Canal v Dann, a case that did not involve sexual abuse, the district awarded a punitive damages award equal to the compensatory damages award - $309,406.41 - after finding that the defendant ‘acted with a conscious disregard for [plaintiff’s] right to be free from involuntary servitude and [the defendant] intentionally misrepresented facts for the purpose of depriving her of this right.’ No. 09-03366, 2010 U.S. Dist. LEXIS 97856, *11 (N.D. Cal. Sept 2, 2010). In Waxman v Bough, the plaintiff, at age six, was repeatedly sexually assaulted by his sixteen-year-old babysitter. No. 1:07-CV-01180 (E.C. Va. June 11, 2008). The jury awarded $2,250,000 in punitive damages. In Buhalo v. City of Philadelphia, the jury awarded $3,500,000 in punitive damages for a single incident of rape. No. 03-4727 (E.D. Pa. Nov.9, 2006). Mrs Doe’s case involves four incidents of rape and multiple incidents of forced oral sex.
In light of the Howards’ intentional egregious and outrageous conduct, and the fact that Mrs Doe continues to live in a constant state of terror, the Court finds that an award in the amount of $2,000,000 is appropriate.

The judgment debt of Mrs Howard has not been able to be enforced in the United States.

Procedural history - Australia

On 28 May 2014, Jane Doe issued a writ and statement of claim in this Court against Mr and Mrs Howard, seeking:

(a) the sum of US$3,306,468 by way of judgment debt;

(b) interest on the US Court judgment of 4 September pursuant to 28 USC 1961;

(c) interest pursuant to the Supreme Court Act 1986 (Vic); and

(d) costs.

On 12 June 2014, McMillan J made a freezing order over Mrs Howard’s assets in Australia. This order was subsequently extended on 16 June, 11 July, 28 August and 2 October 2014.

On 6 August 2014, Mrs Howard filed a defence in this Court, raising two issues: (a) that the judgment of the US District Court was not final and conclusive, and (b) that the default judgment was obtained by fraud on the part of Jane Doe, and should therefore be set aside.

This summary judgment application

On 2 October 2014, I gave leave for Jane Doe to make an application for summary judgment, and for the filing of affidavits by each of the parties.

Jane Doe

In her summons of 16 October 2014, Jane Doe seeks the following orders:

(a) summary judgment be entered for Jane Doe against Mrs Howard pursuant to ss 61 and 63 of the CPA for the sum of US$3,306,468;

(b) interest on the US Court judgment of 4 September pursuant to 28 USC 1961;

(c) interest pursuant to the Supreme Court Act; and

(d) costs.

In support of her summons for summary judgment, Jane Doe relied on the following affidavits:

(a) the affidavit of Jane Doe sworn 28 January 2014;

(b) the affidavit of Martina Vandenberg sworn 28 January 2014;

(c) the affidavit of Luke Geary sworn 28 May 2014;

(d) the affidavit of Luke Geary sworn 16 October 2014; and

(e) the affidavit of Luke Geary sworn 10 December 2014.

These affidavits set out the history of the proceeding in both countries, which I have just summarised.[32]
[32]See below at [12]-[44].

The affidavits exhibit, inter alia, the US Court documents, US Court trial transcript, relevant letters, motions filed in the US Court, and the relevant rules of the US Federal Rules of Civil Procedure (US Rules).

Mrs Howard

In opposition to the relief sought in Jane Doe’s summons, Mrs Howard relies upon her affidavit sworn 27 November 2014.

In respect of the ‘pre-US Court litigation’ Mrs Howard deposes, in précis, as follows:

(a) Jane Doe worked for Mrs Howard from March 2008 as a housekeeper in Yemen and from December 2008 for Mr and Mrs Howard as a housekeeper in Tokyo.

(b) On 1 December 2008, Jane Doe was accorded the immigration status of an ‘official’ in Japan.

(c) Mr and Mrs Howard provided Jane Doe with a paid holiday to her home state of Ethiopia, an 18-month term of employment, free accommodation, living expenses, food and clothing, medical treatment and a basic wage of $300 per month, which would be transferred to her husband in Ethiopia. Mrs Howard deposed that this wage was double the wage that Jane Doe had received in Yemen.

(d) Sometime thereafter, the relationship between Jane Doe and Mr and Mrs Howard soured. Jane Doe became ill in February/March 2009, and demanded to be taken to hospital. On the basis of her first aid training, Mrs Howard refused to take Jane Doe to hospital, and looked after her at home. Jane Doe subsequently recovered fully, but would be away from the apartment for long periods so as to avoid her domestic duties.

(e) Eventually, Mr Howard confronted Jane Doe about her work ethic, and threatened to terminate her employment, and repatriate her to Ethiopia. Jane Doe told Mr and Mrs Howard that if they did so she would ‘trash’ the apartment.

(f) On 13 March 2009, Jane Doe was given an ‘ultimatum’ to perform her duties, which she ignored and stated she would find a job elsewhere. After discussions with the Ethiopian Embassy, Jane Doe’s employment was terminated and she left Mr and Mrs Howard’s apartment that evening.

(g) On 28 May 2009, Jane Doe made multiple telephone calls to the apartment and advised Mrs Howard that she had been advised to lodge a complaint with the US Embassy on the ground that she had been refused access to medical treatment, and was prevented from practicing her religion. During one of the telephone calls, Mrs Howard offered to repatriate Jane Doe to Ethiopia, which she refused. Jane Doe then claimed money from Mrs Howard, and threatened to complain to the US Embassy if Mrs Howard failed to do so.

(h) On 19 June 2009, Mrs Howard gave $1,500 in cash to the US Embassy for an airplane ticket to Yemen for Jane Doe.

(i) Mrs Howard and Jane Doe enjoyed a close ‘mother-daughter’ relationship. Mrs Howard made every effort to provide Jane Doe with a comfortable, and culturally sensitive, environment. Mrs Howard and Jane Doe observed several Ethiopian cultural ceremonies and holidays together.

(j) Jane Doe was never held in ‘involuntary servitude’ or in any way compelled to work against her will.

(k) Mr Howard could never had obtained access to Jane Doe’s bedroom as it had a lock on the door, which was standard issue in all US Consulates. Any allegation that Jane Doe had to barricade the door in fear of her own safety is therefore false, and unfounded.

Mrs Howard’s affidavit then takes up the story at 18 July 2012, around the time that her defence was struck out in the US Court. Mrs Howard deposes as follows:

(a) She did not leave the United States to ‘thwart’ discovery orders, but that she had been posted overseas in Curaçao, Netherland Antilles. Mrs Howard further states that she attended the US Court in or about February 2012, and informed Magistrate Judge Jones that she, as a US State Department employee, could be posted overseas any time at short notice.

(b) She provided the US Court and counsel for Jane Doe with her mobile phone number, and took part in conference calls in relation to the case.

(c) She admits that she did not disclose to the Court her intention to retire, and leave the United States for Australia, and that this would mean she was out of the jurisdiction for the US Court hearing on 20 April 2012. She states that she believed she could conduct the litigation from overseas, as she had previously done while in Curaçao.

(d) She states that her failure to defend herself in the US Court proceeding was due to her husband’s worsening medical condition. Mrs Howard denies that she misled the Court, and provided a psychiatrist’s report as to her state of mind at the relevant time.

(e) On 3 May 2012, she notified counsel for Jane Doe that she would be relocating to Australia, and provided him with a forwarding address.

(f) She was unaware that from 4 May 2012 onwards, all correspondence and documents filed with the US Court were written by Mr Howard, and she had no control over the contents of the correspondence.

Principles relevant to the summary judgment application

Sections 61 and 63 of the CPA state:

61 Plaintiff may apply for summary judgment in proceeding
A plaintiff in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a defendant's defence or part of that defence has no real prospect of success.

…
63 Summary judgment if no real prospect of success
(1)Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2)A court may give summary judgment in any civil proceeding under subsection (1)—
(a) on the application of a plaintiff in a civil proceeding;
…

In written submissions, counsel for Mrs Howard asserted that the relevant test was that set out in Karam v Palmone Shoes Pty Ltd[33] by the Court of Appeal. I do not agree. Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd[34] has resolved any difficulties in relation to the interpretation and application of s 63. Warren CJ and Nettle JA held that the test to be applied under s 63 is:

Upon the present state of authority:
a)the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success;
b)the test is to be applied by reference to its own language and without paraphrase or comparison with the ‘hopeless’ or ‘bound to fail test’ essayed in [General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125];
c)it should be understood, however, that the test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
d)at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.[35]
[33][2012] VSCA 97, [25].
[34][2013] VSCA 158.
[35]Ibid [35]. This passage has been cited with apparent approval in subsequent Court of Appeal decisions. See Mutton v Baker [2014] VSCA 43; Feldman v Frontlink Pty Ltd [2014] VSCA 27; Slaveska v Elenchevski [2013] VSCA 283; Lubura v Nezirevic [2013] VSCA 215.

Principles relevant to the enforcement of the US judgment

There is no statutory basis upon which Jane Doe can seek to enforce the US judgment in this Court.[36] She relies on common law principles to enforce the judgment.[37]
[36]The Foreign Judgments Act1991 (Cth) provides for the registration of judgments that have been obtained from a court or tribunal in another country in an Australian court. Once registered in the appropriate Australian court, the foreign judgment may be enforced here. The Act is limited in its application, and only judgments obtained in certain foreign courts are registrable, and therefore enforceable under the Act. The Foreign Judgments Regulations 1992 (Cth) specifies which foreign courts’ judgments will be registrable under the Act. Relevantly for present purposes, the Act does not allow for the registration of any judgment of a court of the United States of America.
[37]In Funge Systems Inc v Newcom Technologies Pty Ltd [2005] SASC 498 [46] Layton J held: ‘In the absence of a reciprocal arrangement whereby the United States of America is listed in the Regulations of the Foreign Judgments Act 1991 (Cth), the Foreign Judgments Regulations 1992 (Cth) as a country to which the Governor-General has made a declaration of reciprocity, the enforcement of the US Orders is by way of common law principles.’
The principles governing the enforcement of foreign judgments at common law are uncontroversial.[38] In order for a foreign judgment to be recognised at common law, four conditions must be satisfied:
(a)the foreign court must have exercised jurisdiction that Australian courts will recognise;
(b)the foreign judgment must be final and conclusive;
(c)there must be an identity of the parties; and
(d)the judgment must be for a fixed sum or debt.
[38]Bhushan Steel Pty Limited v Severstal Export GmbH [2012] NSWSC 583 [146]-[147]; Benefit Strategies Group Inc v Prider (2005) 91 SASR 544 (Prider), [18]. See Supreme Court of Victoria, Practice Note No 1 of 2014- Enforcement of Foreign Judgments at Common Law, 30 May 2014; Davies, Bell and Brereton, Nygh's Conflict of Laws in Australia (LexisNexis Australia, 8^th ed, 2010) 895 [40.2].
The first condition is not in issue,[39] and has been admitted by Mrs Howard. The term ‘jurisdiction’ used here does not refer to the jurisdiction of the foreign court under its own rules, but ‘jurisdiction in the international sense’, by which is meant a competence that is recognised under Australian law.
[39]See R v McLeod (1890) 11 LR (NSW) 218, 221. Bhushan Steel Pty Limited v Severstal Export GmbH [2012] NSWSC 583 [148].
As I mentioned earlier, the second condition (final and conclusive) is disputed, and I will return to it in a moment.
The third condition (identity of parties) is not in issue. While Mr Howard is deceased,[40] it is clear that Mrs Howard, the first defendant to this proceeding, is the defendant in the US Court proceeding.
[40]The Second Defendant died on 4 September 2012 in Melbourne, and the Court has been provided with his death certificate.
The fourth condition (judgment is for a fixed sum or debt) is also not in issue. The US judgment is for a liquidated sum of damages, namely US$3,306,468.
First issue: Is the US judgment final and conclusive?
Mrs Howard contends that:
(a)the US judgment is not final and conclusive as it can be set aside or varied by the Court which issued it;
(b)the judgment was entered in default of appearance, and therefore cannot be final and conclusive; and
(c)as her case was not determined by a judge ‘on the merits’ she ought to be given the opportunity to agitate the merits of her case in this Court.
In her defence, the following appears:
The US judgment has not been decided on the merits, but on the procedural grounds and on the assumption that the facts asserted in the Plaintiff’s Complaint are true. The first defendant has a meritorious defence to the underlying action and is bringing an application in the court where the judgment was made which has a broad discretionary power to vacate judgments whenever such action is appropriate to accomplish justice pursuant to the US Federal Rules of Civil Procedure.
Contentions (a) and (b) above are intertwined, and will be dealt with jointly.
It is convenient at the outset to refer to the relevant provisions of the US Rules in relation to sanctions and relief from a default order.
The relevant part of Rule 37 of the US Rules states:[41]
[41](Emphasis added).
Rule 37. Failure to Make Disclosures or to Cooperate in Discovery; Sanctions
(2) Sanctions in Other Discovery Matters.
(A)      For Not Obeying a Discovery Order. If a party or a party’s officer, director, or managing agent – or a witness designated under Rules 30(b)(6) or 31(a)(4) – fails to obey an order to provide or permit discovery, including an order under Rules 26(f), 35 or 37(a), the court may issue further just orders. They may include the following:
(i)       directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;
(ii)      prohibiting the disobedient party from supporting or opposing designated claims or defences, or from introducing designated matters in evidence;
(iii)     striking pleadings in whole or in part;
(iv)     staying further proceedings until the order is obeyed;
(v)      dismissing the action or proceeding in whole or in party;
(vi)     rendering a default judgment against the disobedient party; or
(vii)    treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination.
Rule 60 of the US Rules then sets out how a final judgment may be impugned:
Rule 60. Relief from a Judgment or Order
…
(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
(1)       mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4)       the judgment is void;
(5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6)       any other reason that justifies relief.
(c)       Timing and Effect of the Motion.
(1)Timing. A motion under Rule 60(b) must be made within a reasonable time—and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding.
(2) Effect on Finality. The motion does not affect the judgment's finality or suspend its operation.
…
The condition that a foreign judgment be final and conclusive requires that the judgment must put an end to the particular proceeding pending between the parties, and must settle once and for all the controversy between them.[42]
[42]Davies, Bell and Brereton, Nygh's Conflict of Laws in Australia, above n 37, 907 [40.30].
Jane Doe bears the onus of establishing that the judgment is final and conclusive.[43] In Nouvion v Freeman,[44] in 1889, Lord Herschell stated:
it must be shewn that in the Court by which it was pronounced it conclusively, finally, and for ever established the existence of the debt of which it is sought to be made conclusive evidence in this country, so as to make it res judicata between the parties.[45]
[43]Carl Zeiss Stiftung v Rayner & Keeler Ltd [1967] 1 AC 853, 927, 970.
[44](1889) 15 App Cas 1.
[45]Ibid 9.

In Ainslie v Ainslie,[46] Stark J said:
The contention that the order of the Court of Summary Jurisdiction of Western Australia is not entitled to recognition in New South Wales because it does not finally and forever establish the personal rights of the spouses, is based upon a provision in the Acts already mentioned to the effect that the Court of Summary Jurisdiction may, on the application of the married woman or her husband, upon fresh evidence to the satisfaction of the court at any time alter, vary or discharge the order. The order is a adjudication and determination in relation to the rights of the parties – it is not in any sense interlocutory. The fact that it can be altered, varied or discharged upon fresh evidence does not destroy its effectiveness as an adjudication while it subsists. A judgment is not the less final because it may be reversed on appeal or set aside because of a mutual mistake of the parties; and so, in my opinion, a judgment is not the less final because an application may be made on fresh evidence to alter, vary or discharge it. The order remains and is an adjudication of a final and conclusive character until discharged. (emphasis added)
[46](1927) 39 CLR 381, 388.
In Benefit Strategies Group Inc v Prider,[47] Gray J of the Supreme Court of South Australia held:
Extensive case law on this topic consistently emphasises that a foreign judgment should be assumed to be final and conclusive, “so long as it stands” — that is, until such a time as it is set aside, if such a time arises.[48]
[47](2007) 211 FLR 113.
[48]Ibid [11).
His Honour then went on to remark:
The clear principle that has emerged is that a foreign judgment is only binding and conclusive so long as it stands. A corollary of this principle is that where a judgment is made entirely on the basis of a foreign judgment, and the foreign judgment is later overturned and set aside, good reason exists to set aside the judgment that relied on it.[49]
[49]Ibid. [17]. The appeal to the Full Court in Prider did not question this conclusion.
This proposition is accepted by the authors of Nygh’s Conflict of Laws in Australia:[50]
Where the judgment may be set aside only upon cause being shown by the defendant, the judgment should be treated as final and conclusive until actually set aside.
[50]Davies, Bell and Brereton (LexisNexis Butterworths, 9^th ed, 2014), 908 [40.33] (citation omitted).
I also note this Court’s Practice Note 1 of 2014, ‘Enforcement of Foreign Judgments at Common Law,’ which states:
The key test of finality is whether the foreign tribunal treats the judgment as res judicata of the issue between the parties to the litigation.
The fact that the final order of the foreign court may subsequently be varied in the event of default of a party carrying out its terms may not affect the finality of the order.
…
The fact that an appeal lies from the decision of the foreign court or even that appellate proceedings are pending may not affect the finality of the judgment.[51]
[51]At [11]-[12], [13].
The decision of the Supreme Court of New South Wales in Schnabel v Yung Lui[52] raised issues strikingly similar to those in this case. In that case the plaintiffs sought to enforce a default judgment of a United States federal court (in that case in the District Court for the Central District of California). In that case, judgment had been entered pursuant to Rule 55 of the US Rules in default of filing of a defence. For the purpose of this determination nothing turns on whether the judgment was entered pursuant to Rule 37 or Rule 55. As I understand the position, the relevant parts of Rule 60 considered in Schnabel are in substantively the same form as the rules relied upon by Jane Doe in this proceeding.
[52][2002] NSWSC 15 (Schnabel).
The first defendant sought to resist enforcement of the judgment on the basis inter alia that the default judgment of the US District Court was not final and conclusive. Bergin J stated:
In this case, on this issue, the Court is primarily concerned to determine the status of the US judgment under the US law and that will depend upon the construction and the effect of the applicable US Rules. The test of finality is the treatment of the judgment by the foreign tribunal as res judicata.[53]
[53]Ibid [77].
Her Honour examined a number of the provisions of the US Rules, including Rules 55 and 60. Evidence was adduced from lawyers with expertise in US federal law. After conducting a lengthy review of the relevant case law[54] and considering the opinions of the experts, her Honour concluded that:
Nouvion v Freeman and Vanquelin v Bouard are authorities for the proposition that the test of finality is how the foreign jurisdiction treats the judgment. The evidence in this case is overwhelming that the foreign jurisdiction treats the judgment as a final judgment and that it is res judicata the issues between the parties to the litigation. The effect that an application under Rule 60(b) may have on the finality of the US Judgment is expressly dealt with in the Rule. It states: “A motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation”.[55]
[54]Ibid [110].
[55]Ibid [133] (emphasis added).
Her Honour said as to the effect of a default judgment:
A default judgment may be enforceable as a final and conclusive judgment even though it is liable to be set aside in the very court that rendered it. The approach that has been adopted is that until the steps are taken to set the judgment aside the judgment is enforceable as a final and conclusive judgment.[56]
[56]Ibid [77]. See also XPlore Technologies Corporation of America v Tough Corp Pty Ltd [2008] NSWSC 1267, [17].
And then, in her conclusion her Honour said:
If the term means that the US judgment cannot be enforceable if the case was undefended, the weight of the authorities is against such a proposition. The Canadian authorities are consistent with the decision of the High Court in Ainslie v Ainslie. A default judgment, or to use Mr Epstein’s expression a “default type” judgment, will be enforceable so long as it stands.
…
There is nothing within the process of the US Court that is inconsistent with the law or morality of the enforcement of such a judgment in this jurisdiction. The first defendant was not denied natural justice. He made no application for a reconsideration of the orders striking out his Answer or dismissing his Counterclaim with prejudice. He made no application under Rule 60(b). Even accepting the submission that this is a “default type” judgment I am satisfied that the authorities establish that it is final and conclusive (on the merits) while it stands. To accept the first defendant’s submissions that the theoretical possibility of an application under Rule 60(b) means that no judgment of the US Court can be enforced in this country as a final and conclusive judgment would not in my view be consistent with the application of private international legal principles to the business “world community” in these modern times: Morguard Investments Ltd v de Savoye (1990) 52 BCLR (2d) 160 per La Forest J at 176-177.[57]
[57][2002] NSWSC 15 [152], [154].
Her Honour referred to a number of Commonwealth authorities to support her conclusion; for instance, Boyle v Victoria Yukon Trading Co,[58] in which Hunter CJ of the Full Court of the Supreme Court of British Columbia observed:
[A] default judgment may be set aside either absolutely or on terms, but so long as it stands it is a final and conclusive adjudication that a debt is due by the defendant if the claim is for debt … Now, of course, this judgment is not unalterable in the wide sense, because it can be set aside by a Judge of the Yukon Court, but it is unalterable in the sense that it is conclusive while it stands…[59]
[58](1902) 9 British Columbia Reports 213.
[59]Ibid 223.
I respectfully agree with her Honour’s conclusion, which is consistent with the line of authority in this country commencing with Ainslie v Ainslie.[60] Simply put, it matters not whether a foreign judgment is obtained as a result of default or after a hearing on the merits. Unless the judgment is set aside in the jurisdiction in which it was obtained, it is final and conclusive. Rules 37 and 60 are clear in their terms. A default judgment of the US Court can only be set aside if one of the six criteria set out in Rule 60(b) is satisfied. Until such time as one of those criteria is satisfied, the judgment stands and is conclusive. This is reinforced by the terms of Rule 60(c)(2), which states that any motion to set aside a default judgment ‘does not affect the judgment's finality or suspend its operation’ until the judgment is actually set aside.
[60](1927) 39 CLR 381.
Mrs Howard also argued that as her case was not determined by a judge ‘on the merits’ then she ought to be given the opportunity to agitate the merits of her case in this Court. Her counsel referred to several US authorities which it was said demonstrate a ‘preference’ among US courts for a controversy to be determined on its merits, and therefore, the default judgment ought to be ignored, and a trial granted in this Court.
This issue can be dealt with simply. The trial of a case ‘on its merits’ will always be preferred by a common law court, but when one party fully aware of the litigation and of the risk involved with failing to contest a case on its merits elects to take no active part in a proceeding, and fails to comply with court orders essential to ensuring a fair trial, then the court has little choice but to deal with the matter as it presents itself.
It is no answer to say that a case ought to be reopened and re-litigated if judgment is not obtained ‘on the merits’. In Schnabel, Bergin J held:
Ainslie v Ainslie is authority for the proposition that a foreign judgment will be enforced even if it is not a judgment “on the merits” in the sense that it was undefended or by consent.[61]
[61]Schnabel, [135].
Here Mrs Howard was aware of the proceeding, was notified of each stage of the proceeding, attended court and filed documents with the court. Her affidavit discloses no suggestion that she sought to set aside or vary the judgment and contest the recommendation and report of the magistrate judge at any point, nor to appeal the assessment of damages. It was her failure to comply with the court orders that led to default judgment being entered in favour of Jane Doe. It may be added that all US District Court files are available to view online (most documents for free), and that Mrs Howard could, at any time, have monitored the progress of the proceeding through that method.
I do not accept the implied assertions in Mrs Howard’s affidavit that she was unable to follow the course of this case owing to her psychological condition and her husband’s condition. It is untenable in the light of her conduct prior to 7 May 2009. Moreover, if it be true then one would have thought that her first step in late 2009 or 2010 would have been to apply to have the judgment set aside. It was only when this proceeding, which one may well assume threatens her assets, was issued that she resumed any actual involvement in defending the claim.
Mrs Howard fails on this argument. The US judgment is final and conclusive.
Second issue: Is it open to Mrs Howard to contend that the US judgment was procured by fraud?
Mrs Howard argues that the judgment of the US Court should be set aside as it was procured by fraud on the part of Jane Doe. Her defence reads as follows:
11(b) The default judgment was obtained by fraud on the plaintiff and may be set aside.
Particulars
(i)The allegations made by the plaintiff in relation to coercion into involuntary servitude and forced labour as a domestic worker with threats of isolation or deportation are false. The plaintiff was treated by the second defendant as a family member and provided with everything she needed, including luxury clothing, accessories and paid holidays as well as given unfettered freedom of movement;
(ii)the plaintiff was not purportedly trafficked into forced labour or involuntary servitude. The first defendant, at the request of the plaintiff, procured a visa for the plaintiff to enter Japan and provided a complete wardrobe of winter clothing and footwear, including designer boots and evening footwear and a first class air ticket to Ethiopia so that Mrs Doe could take her belongings home from Sana’a, Yemen, to Adis Ababa, Ethiopia and spend time with her family before travelling to Tokyo.
(iii)the defendants were not unjustly enriched. The plaintiff was amply rewarded. The plaintiff sent her entire earnings to her family in Ethiopia, facilitation by Mr Howard at the plaintiff’s request. Mrs Howard acted equitably towards the plaintiff by paying all her living expenses and outfitting her in clothing, including evening wear. On top of her base salary being sent home, as part of her remuneration the plaintiff also received a large flat-screen TV, electronic equipment (DVD) to play religious Ethiopian music and thus exercise religious freedom, and received spending money well over and above her base wage; and
(iv)the allegations against the first defendant of forced sexual servitude are wholly fabricated and were never previously made either in person by the plaintiff or by telephone and appear to reflect the widespread publicity in US Embassies by the Department of State, Government Accountability Office of abuse by some foreign diplomats of household workers who had been brought to the United States on A3 or G5 visas.
These particulars are consistent with the contents of the affidavit sworn by Mrs Howard which I have set out at [50]-[52]. Put simply, Mrs Howard alleges that Jane Doe falsified her evidence, in that she was never subjected to sexual servitude and/or human trafficking, and has thereby obtained the US judgment by fraud. This alleged fraud is said to be contained in the Amended Complaint and Preliminary Statement filed in the US Court.
Rule 60(b)(3) of the US Rules enabled Mrs Howard to apply for the US judgment to be set aside on the basis of fraud. No application has been made before the US Court. Nor was any application made to review the report and recommendation of the magistrate judge. None of the allegations contained in the defence or in Mrs Howard’s affidavit were raised before Magistrate Judge Jones or Judge O’Grady. I was told by counsel for Mrs Howard that his client now intends to take such action if funds frozen by the Court are released. This submission stretches credulity. Rather than immediately apply to set aside the judgment, Mrs Howard left the jurisdiction and made no attempt in the ensuing two years to set it aside. It was only after this proceeding was instituted, and her assets frozen, that any apparent consideration was given to what would have been an obvious first step if Mrs Howard genuinely wished to dispute the default judgment. I will return to this consideration in the context of the abuse of process point.
Returning to the question: whether it is open to Mrs Howard in this proceeding to challenge the enforcement of the US judgment on the basis that it was procured by fraud in the US Court – no such application having been made to the US Court.
At the outset it can be said that there is a real divergence in the jurisprudence of Commonwealth countries on this issue. In some jurisdictions (notably the United Kingdom) it is open to a party resisting enforcement proceedings to allege that the foreign judgment was procured by fraud and, in effect, re-litigate the case whether the judgment was obtained on the merits or by default. In other jurisdictions (notably Canada and several other Commonwealth countries) a foreign judgment is treated no differently to that obtained in the local jurisdiction. So in Australia, for example and as I will explain shortly, if this approach was adopted it would require proof of the existence of facts germane to the judgment which were not known to a party at the time of the trial.
I pause here to note that counsel for Mrs Howard did not suggest that any of the material facts which Mrs Howard now deposes to in her affidavit were not known by her prior to the US hearings. Rather, counsel argued that I should follow the UK approach. If I did so then he contended that Mrs Howard’s affidavit disclosed an arguable defence with reasonable prospects of success and that the summary judgment application should be refused. I indicated in discussion with counsel that in the light of the Lysaght test it would be inappropriate to proceed to summary judgment if Mrs Howard was, in accordance with the UK approach, permitted to raise her allegations as to the veracity of Mr Doe’s account. Accordingly, I accept that if the UK approach applies then the summary judgment application must fail and Mrs Howard would be entitled to go to trial.
On the other hand if the Canadian test (followed in several Australian and other Commonwealth decisions) applies, then absent fresh evidence (which is not suggested), it is not open to Mrs Howard to raise these allegations in this proceeding and there is no bar to summary judgment in favour of Jane Doe.
English authorities
In the late nineteenth century, the Court of Appeal reconsidered on two occasions the question of the enforcement of foreign judgments in an English court.[62] Both decisions held that the defence of fraud may be raised in an enforcement proceeding, even if such an allegation had been raised before, and adjudicated upon by, the foreign court.[63]
[62]Prior to the decisions in Abouloff v Oppenheimer (1882) 10 QBD 295 and Vadala v Lawes (1890) 25 QBD 310, there was a line of authority which held that in an action on a foreign judgment it could not be retried on its merits.
[63]See Owens Bank Ltd v Bracco [1992] 2 AC 443; Jet Holdings Inc v Patel [1990] QB 335; Syal v Heyward [1948] KB 443; Vadala v Lawes (1890) 25 QBD 310; Abouloff v Oppenheimer (1882) 10 QBD 295. A useful summary of these decisions is provided in Davies, Bell and Brereton, above n 37, 923-924 [40.67]-[40.69] and Maleski v Hampson [2013] NSWSC 1794, [29]-[38].
In Abouloff v Oppenheimer,[64] the English Court of Appeal refused to enforce a foreign judgment which was said to have been obtained by fraud. The plaintiff obtained judgment against the defendants in a Russian court. The defendants were ordered to return certain goods to the plaintiff or, alternatively, pay an amount equivalent to the value of the goods. The defendants alleged that the plaintiff obtained judgment by making fraudulent representations to the Russian court that the goods were not in the plaintiff’s possession.
[64](1882) 10 QBD 295.
Lord Coleridge CJ stated:
Many authorities... have been cited during the argument but not one throws doubt on the broad proposition that where a judgment has been obtained by the fraud of a party to a suit in a foreign country, he cannot prevent the question of fraud from being litigated in the courts of this country, when he seeks to enforce the judgment so obtained. The justice of that proposition is obvious: if were not so, we should have to disregard a well-established rule of law that no man shall take advantage of his own wrong, and we should have to lay down as a legal proposition that where a judgment has been obtained by courts of a foreign country by fraud and by a wrongful act, nevertheless the person obtaining it can take advantage of that fraud and of that wrongful act...[65]
[65]Ibid 300.
In Vadala v Lawes,[66] the plaintiff sued to enforce the judgment of an Italian court holding the defendant liable on certain bills of exchange. The defence pleaded, inter alia, that the bills were fraudulent. The defendant invited the Court to determine the very issue which had been decided against him by the Italian court. In considering this question Lindley LJ stated:
[I]f the fraud upon the foreign Court consist of the fact that the plaintiff has induced that Court by fraud to come to the wrong conclusion, you can reopen the whole case even though you have in this Court to go into the very facts which were investigated and which were in issue in the foreign court.[67]
[66](1890) 25 QBD 310.
[67]Ibid 316-317.

The Court concluded held that the defendant could raise the same issue again before it, and thereby reopen the judgment of the Italian court.
More recently, in Jet Holdings Inc v Patel,[68] an action was brought in the English High Court to enforce a judgment of the Superior Court of California. The defence included the contention that the judgment had been obtained by fraud. The defendant appealed to the English Court of Appeal from an order giving the plaintiff summary judgment for the amount of the foreign judgment. Staughton LJ (with whom Nicholls LJ agreed) held:
That doctrine [expressed in Abouloff and Vadala] has encountered criticism from academic writers… A possible view which is taken by some is that the fraud relied on must be extraneous or collateral to the dispute which the foreign court determines. But, in my judgment, it is 100 years too late for this court to take that view. The decisions in Abouloff… and Vadala… show that a foreign judgment cannot be enforced if it was obtained by fraud, even though the allegation of fraud was investigated and rejected by the foreign court.[69]
[68][1990] 1 QB 335.
[69]Ibid 344.
There appears to be one exception to this rule. If the defendant in the foreign proceeding has first moved the foreign court to set aside its judgment on the ground of fraud and failed, the defendant will be estopped from alleging the same fraud in the English proceedings.[70]
[70]Owens Bank Ltd v Bracco [1992] 2 AC 443, 472; House of Spring Gardens Ltd v Waite [1991] 1 QB 241.
The Abouloff approach has not escaped criticism in the United Kingdom. For instance, in Owens Bank Ltd v Etoile Commerciale SA,[71] Lord Templeton, in delivering the judgment of the Privy Council, said as follows:
Thus fresh evidence is necessary in order to mount an attack on an English judgment on the ground of fraud. But according to the rule in Abouloff’s case this is not so in the case of a foreign judgment.
The rule has been subject to widespread and long-standing academic criticism, summarised by Mr Isaacs in his helpful argument on behalf of the respondents. In House of Spring Gardens Ltd v Waite, Stuart-Smith J observed that both Abouloff’s case and Vadala v Lawes “were decided at a time when our courts paid scant regard to the jurisprudence of other countries;” and it is to be noticed that they were both decided a few years before Boswell v Coaks (No 2), in which the House of Lords laid down the more restricted rule for attacking English judgments. In Owens Bank Ltd v Bracco, Lord Bridge of Harwich recognised that, as a matter of policy, there might be a very strong case to be made in the 1990s in favour of according to overseas judgments the same finality as is accorded to English judgments.[72]
[71][1995] 1 WLR 44.
[72]Ibid 48-9 (citations omitted)..
Canadian and other Commonwealth authorities
In Beals v Saldanha[73] the Supreme Court of Canada declined to adopt Abouloff in considering whether foreign judgments ought to be set aside on the ground of fraud.[74] Major J, delivering the majority judgment, said as follows:
Although Jacobs, supra, was a contested foreign action, the test used is equally applicable to default judgments. Where the foreign default proceedings are not inherently unfair, failing to defend the action itself, should prohibit the defendant from claiming that any of the evidence adduced or steps taken in the foreign proceedings was evidence of fraud just discovered. But if there is evidence of fraud before the foreign court that could not have been discovered by reasonable diligence, that will justify a domestic court’s refusal to enforce the judgment.[75]
[73](2003) 234 DLR (4th) 1.
[74]Ibid [44]-[45].
[75]Ibid [53].
Beals has been applied in a number of subsequent Canadian decisions.[76]
[76]See eg Minnesota Valley Alfalfa Producers Co-operative v Baloun [2008] ABCA 131; Cabaniss v Cabaniss [2006] BCSC 1076; State Bank of India v Navaratna [2006] CanLII 8887 (ON SC).
In Hong Pian Tee v Les Placements Germain Gauthier Inc,[77] the Singapore Court of Appeal considered the contrasting approaches of the Canadian and Australian courts (as will be seen in a moment) to those of the United Kingdom and concluded:
There were, before us, two distinct views as to how a domestic court should treat a foreign judgment where fraud is raised in relation to that foreign judgment. One is that enunciated in Abouloff… and the other advocated by the Canadian-Australian cases which sought to limit the circumstances under which a domestic court may re-open an issue already determined by a foreign judgment including an allegation of fraud. In our judgment the approach adopted in Abouloff has less to commend itself as it would only encourage endless litigation. It is of paramount importance that there should be finality. Every losing party understandably would like to litigate the issue over again with the hope that a different tribunal would look at the fact situation differently. But that can never be a good reason for allowing a losing party to reopen issues. To liberally allow a party to do so would be to permit that party to have a second bite at the cherry, an eventuality which is generally abhorred by all civilised systems of law. Of course, we are conscious that the rule against reopening issues is not absolute. There are exceptions but they are subject to safeguards. In England, an issue already adjudicated upon by the domestic courts would not, as a rule be allowed to be re-litigated. There is no logical reason why a different rule should apply in relation to a foreign judgment.
It is also vitally important that no court of one jurisdiction should pass judgment on an issue already decided upon by a competent court of another jurisdiction. This is the doctrine of comity. After all, two tribunals, both acting conscientiously and diligently, could very well come to a different conclusion on the same facts. There is no question of which is being more correct. To seek to make such an evaluation would be an invidious exercise and could lead to the undesirable consequence which we have mentioned before of encouraging judicial chauvinism. It must be borne in mind that the enforcement forum is not an appellate tribunal vis-à-vis the foreign judgment.[78]
[77][2002] 2 SLR 81.
[78]Ibid [27]-[28].
Australian authorities
The position taken in several New South Wales decisions differs from that of the English courts and is consistent with the Canadian approach, as set out in Beals.
In Keele v Findley,[79] Rogers CJ Comm D of the Supreme Court of New South Wales was asked to enforce the judgment of the Superior Court of Arizona for the County of La Paz. The defendants contended that the judgment was obtained by fraud in the sense that it rested upon perjured evidence. The plaintiffs submitted that it was not open to the defendants to rely upon fraud of the kind alleged in order to resist the enforcement of the judgment.
[79](1990) 21 NSWLR 444 (Keele).
In the course of his reasons, Rogers CJ Comm D referred to judgment of Kirby P in Wentworth v Rogers (No 5),[80] which set out the relevant principles concerning domestic judgments allegedly obtained by fraud, which can be summarised as follows:
(a)New discovery of a material fact: It must be shown, by the party asserting that a judgment was procured by fraud, that there has been a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment.
(b)Mere suspicion is insufficient: Mere suspicion of fraud, raised by fresh facts later discovered, will not be sufficient to secure relief. The claimant must establish that the new facts are so evidenced and so material that it is reasonably probable that the action will succeed.
(c)Ordinarily perjury is not enough to set aside the judgment: Although perjury by the successful party or a witness may, if later discovered, warrant the setting aside of a judgment on the ground that it was procured by fraud, and although there may be exceptional cases where such proof of perjury could suffice, without more, to warrant relief of this kind, the mere allegation, or even the proof, of perjury will not normally be sufficient to attract such drastic and exceptional relief as the setting aside of a judgment.
(d)The successful party must be responsible for the fraud: It must be shown by admissible evidence that the successful party was responsible for the fraud which taints the judgment under challenge. And the evidence in support of the charge ought to be extrinsic.
(e)Onus is on the party alleging fraud: The burden of establishing the components necessary to warrant the drastic step of setting aside a judgment, allegedly affected by fraud or other relevant taint, lies on the party impugning the judgment. It is for that party to establish the fraud and to do so clearly.[81]
[80](1986) 6 NSWLR 534 (Wentworth).
[81]Ibid 538-539.
In Keele, Rogers CJ Comm D held that no distinction should be drawn between a foreign and domestic judgment in determining whether it should be set aside by reason of fraud and concluded:
I can do no better than to say that all the considerations enumerated by Kirby P in Wentworth v Rogers (No 5) as justifying the law's approach to local judgments, cry out for the same approach to be taken in relation to foreign judgments.[82]
…
If I may say so, the considerations which informed the principles relating to domestic judgments, as explained by Kirby P should, on the face of it, have equal application to foreign judgments. Yet that is certainly not the law in England today.[83]
[82]Keele (1990) 21 NSWLR 444, 458.
[83]Ibid 449.
Applying that test to the facts of the case, his Honour gave judgment for the plaintiffs.
The approach in Keele has also been cited with apparent approval in several subsequent Australian single-judge decisions.[84] For instance, Rothman J in XPlore Technologies Corporation of America v Tough Corp Pty Ltd[85] said:
Foreign judgments may, under the common law, be enforced as a claim for a liquidated sum relying on the foreign judgment as a debt. Once it is shown that the foreign court had jurisdiction over the defendant, in those proceedings, the Court will not allow the parties to agitate the merits of the matter before the foreign court, at least to the extent that it is a matter with which the foreign court was capable of dealing.
[84]See Maleski v Hampson [2013] NSWSC 1794; Quarter Enterprises Pty Ltd (No 2) (2012) 265 FLR 217; Prider.
[85][2008] NSWSC 1267, [15]. See also [19].
There are, however, two New South Wales Trial Division decisions to the contrary: Close v Arnott[86] and Yoon v Song.[87]
[86]Unreported, Supreme Court of New South Wales, Graham AJ, 21 November 1997.
[87](2000) 158 FLR 295 (Yoon v Song).
It is only necessary to refer to Yoon v Song,[88] in which Dunford J followed the English line of authority.
[88]Ibid.
In that case, the plaintiff obtained a judgment against the defendant in the District Court of the Republic of Korea (South Korea) for a sum of money allegedly paid by the plaintiff to the defendant for the purpose of a joint venture in Korea. The plaintiff commenced proceedings in New South Wales to enforce the judgment against the defendant. The defendant resisted on the grounds that the judgment had been obtained by fraud, and also on the basis that no action lay on the judgment under the Foreign Judgments Act 1991 (Cth) and the Foreign Judgments Regulations 1992 (Cth). At issue in the proceeding was whether the English line of authority ought to be followed. Dunford J held:
Notwithstanding the various criticisms that have been made of the Abouloff rule, I am satisfied that it correctly states the law in relation to foreign judgments and that if such law is to be changed, it should be by parliament and not by the courts. Consequently I am not satisfied that Keele v Findley was correctly decided. Indeed the facts of this case demonstrate in my mind good reason for applying a different test of fraud in respect of foreign judgments to that applied in respect of domestic judgments; although for reasons which appear hereunder I am also satisfied that even if the domestic judgment test were applied, the defendant would satisfy that test in the present case.
The divergence in Australian and New South Wales authorities was analysed recently by the New South Wales Court of Appeal in Quarter Enterprises Pty Ltd v Allardyce Lumber Company Pty Ltd.[89]
[89](2014) 85 NSWLR 404.
In that case, the defendant-company and its two directors applied to the Supreme Court of New South Wales to have a judgment of the Solomon Islands registered under the Foreign Judgments Act, not under common law principles. After the judgment was registered, the plaintiff-company and its director applied to have that registration set aside. That application was dismissed and the plaintiff-company and its director appealed to the Court of Appeal on the grounds, inter alia, that the judgment was not a ‘money judgment’ so that it had been registered in contravention of the Act, and that the judgment had been obtained by fraud.
In the course of his judgment, Bathurst CJ (with Gleeson JA and Sackville AJA agreeing) addressed the conflicting approaches in Keele and the Canadian cases with the English decisions commencing with Abouloff. While the Chief Justice found it ‘unnecessary to choose’[90] between these approaches, he nevertheless found that ‘[t]here are powerful reasons for preferring the views in Keele v Findlay.’[91]
[90]Ibid 432 [136].
[91]Ibid 432 [137].
His Honour identified six reasons for coming to this view, two of which are particularly relevant in the present case.
First, his Honour noted that in the Privy Council in Altimo Holdings and Investment Ltd v Kyrgz Mobile Tel Limited,[92] Lord Collins summarised the arguments against the application of Abouloff in the following terms:
The appellants submit that the rule in Abouloff's case should not be applied in the Isle of Man because: (a) the courts should apply the same rules in relation to foreign judgments as they apply at common law to the setting aside of a domestic judgment; (b) the rule allows the party seeking to challenge the judgment several bites at the cherry, which is unjustifiable, especially in relation to evidence and submissions which could have been put forward with reasonable diligence at the trial; (c) the rule ignores the doctrines of cause of action and issue estoppel and the nature of the doctrine of obligation, and is wrong in principle; (d) the policy underlying Abouloff's case is objectionable and wrong, and is inconsistent with judicial comity. A policy which requires a Manx court to appropriate for itself the responsibility of deciding whether a foreign court was deceived, especially where the foreign court has its own procedure for setting aside judgments obtained in such circumstances, is anomalous and unjustifiable.[93]
Lord Collins described these arguments as ‘powerful,’[94] as did Bathurst CJ in Quarter Enterprises.[95]
[92][2011] 4 All ER 1027 (Altimo).
[93]Ibid 1057 [115].
[94]Ibid 1057 [116].
[95]Quarter Enterprises, 433 [143].
I pause to note that, to similar effect, the Privy Council in Altimo accepted counsel’s submission that:[96]
The courts should apply the same rules in relation to foreign judgments as they apply at common law to the setting aside of a domestic judgment…
[96]Altimo, 1057 [115].
Second, Bathurst CJ expressly approved the reasoning of the Canadian Supreme Court in Beals v Saldanha,[97] which I have set out at [102].
[97](2003) 234 DLR (4th) 1.
While expressing his preference for the view expressed in Keele, Bathurst CJ ultimately held:
Having regard to the state of authority it seems to me that as it is unnecessary to do so it is not appropriate to express a concluded view on the issue. Whatever test be adopted, fraud has not been made out.[98]
[98]Quarter Enterprises, 434 [146].
I should also refer to the decision of the Full Court of the Supreme Court of South Australia of Benefit Strategies Group Inc v Prider,[99] in which Bleby J (with whom Vanstone and Anderson JJ agreed) said:
That the principles enunciated by Kirby P in Wentworth v Rogers (No 5) with respect to setting aside local judgments should be applied equally to the enforcement of foreign judgments was convincingly advocated by Rogers CJ Comm D in Keele v Findley. Rogers CJ declined to follow UK authority that a court can retry an issue of fraud already decided by a foreign court, even if there is no fresh evidence of fraud relied on.[100]
[99](2005) 91 SASR 544.
[100]Ibid 558-559 [41].
Which approach should be adopted in Victoria?
To recap, the English approach permits a defendant to an application to enforce a foreign judgment to raise an allegation of fraud before the local court, even if it has been ventilated before, and adjudicated upon by, the foreign court.
The approach in Keele requires a party to satisfy the local test when seeking to set aside a judgment. Of particular relevance here, the party alleging fraud must establish that the allegation rests on evidence not previously available to be produced to the foreign court and that such evidence (whether alone or in combination with evidence given at the trial) would have probably altered the result in the foreign court.
It is not necessary for me to traverse decisions such as Farah Constructions Pty Ltd v Say-Dee Pty Ltd,[101] Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority[102] and CAL No 14 Pty Ltd v Motor Accidents Insurance Board[103] in determining how to treat the statements of the intermediate appellate courts which have endorsed the Keele approach. In neither Quarter Enterprises nor Prider was the court required, as part of its ratio, to decide which of the English authorities or Keele represented the law in New South Wales or South Australia in relation to enforcement at common law of foreign judgments. The comments of both are obiter dicta.
[101](2007) 230 CLR 89, 151-152 [135]
[102](2008) 233 CLR 259.
[103](2009) 239 CLR 390.
Having said that, the appropriate approach, I think, is that stated by the High Court in Cook v Cook in which non-binding authority was said to be ‘useful only to the degree of persuasiveness of their reasoning’.[104] Of course that reasoning when emanating from intermediate appellate court(s) must be given considerable weight.
[104](1986) 162 CLR 376 [19] (emphasis added).
In my opinion the reasoning of Bathurst CJ and Bleby J, at appellate level, and of Rogers CJ Comm D, at trial level (supported by a number of single-judge decisions),[105] are highly persuasive on this point, and I respectfully agree. I prefer this approach to that of Yoon v Song.
[105]Above n 83.
I adopt what is said by the learned authors of Nygh’s Conflict of Laws in Australia:[106]
The reasons given by Rogers CJ, Comm D in Keele v Findley can only be described as compelling. Australian courts need no longer regard the English cases as binding. Principle favours rejection of the English rule, as the text writers have long and unanimously argued.
[106]Davies, Bell and Brereton, Nygh's Conflict of Laws in Australia, above n 49, [40.74].
To allow a defendant to an application to enforce a foreign judgment to re-agitate his or her case before this Court would run counter to the principle that there is a public interest in the finality of a judicial determination.[107] As the High Court has said, ‘the importance of ﬁnality pervades the law.’[108] The role of this Court on an application to enforce a foreign judgment is to satisfy itself of the four conditions set out above,[109] and if satisfied, enforce the foreign judgment unless it is demonstrated that, by local rules, that such a judgment would be liable to be set aside.
[107]D'Orta-ekenaike v Victoria Legal Aid (2005) 223 CLR 1, [35]-[36].
[108]Ibid 17 [35].
[109]At [56] above.

Second point: Is an award of ‘punitive’ damages under a United States statute a penal sanction?

Mrs Howard argues that if the Court refuses to find the whole of the US judgment unenforceable, it should decline to enforce the award of ‘punitive damages’ in the sum of US$2,000,000 (out of a total award of US$3,306,468) on the ground that these damages are a penal sanction. This is because the award of punitive damages, so it was said, does not serve to compensate Jane Doe, but to punish Mrs Howard. She therefore submits that the award of punitive damages should be severed from the total award of damages, and only the compensatory damages component enforced.

It was accepted by counsel for Mrs Howard that the US judgment was severable and that in the event of his primary argument failing then the compensatory and restitutionary component of the award amounting to $1,306,468 may be enforced, but that the award of punitive damages should be unenforceable.

If I am correct in my analysis that the judgment of the US Court cannot be characterised as penal, then the question of its components falls away. I proceed, however, on the basis that it is open to Mrs Howard to impugn the constituent parts and, in particular, the punitive damages component of the US judgment as penal.

Mrs Howard’s submission effectively rests on the conclusion of Bergin J in Schnabel, where her Honour declined to enforce the punitive damages component of a default judgment, enforcing only that part of the judgment that comprised compensatory damages.

In Schnabel, Bergin J referred to various definitions of the term ‘penal’. These included:

(a)a punishment, most often in the form of a payment of a sum of money, although case law has it that the word ‘is large enough to mean, is intended to mean, and does mean by any punishment, whether by imprisonment, pecuniary penalty or otherwise’;[144] and
(b)an elastic term with many different shades of meaning: it involves ideas of punishment, corporeal or pecuniary or civil or criminal, although its meaning is generally confined to pecuniary punishment.[145]

[144]R v Smith [1862] EngR 164. Cited in Schnabel, [171].

[145]H Black, Blacks Law Dictionary (5th ed, 1979). Cited in Schnabel, [172].

Her Honour held:

It was submitted that the substance of the matter is that the US judgment constituted a sanction for the defendants’ non-compliance with the US court’s discovery procedures and not the recognition and enforcement of the plaintiff’s private law rights. As such, the present proceedings are proceedings for the enforcement of a ‘public law’ of a foreign state, which this court has no jurisdiction to entertain.
[The US judge] stated that the purpose of the punitive damages was to ‘penalise’ the first defendant and to deter others from failing to comply with the court’s orders. Although the plaintiffs were placed in a situation of detriment by the failure of the first defendant to comply with the Court’s orders, the damages were not compensation for the detriment. The damages were to punish or penalise the first defendant and even though the damages were payable to the opposing party… as opposed to the State, I am of the view that the purpose of the award of the damages was to punish the first defendant and was a sanction. Multiple damages were the ‘penal consequence’ for the first defendant’s failure to comply with the Court’s orders.
Punishment for the failure to comply with the US Court’s order in my view does fall within the categories of either a penal law or other public law of the foreign jurisdiction and is unenforceable by this Court. The first defendant submitted that the whole of the judgment is unenforceable in those circumstances. The plaintiffs submitted that the punitive/exemplary damages were only awarded to Schnabel and Marble and were severable from the balance of the judgment. It was submitted that this was made possible by the way in which [the US judge] awarded separate amounts that he identified as punitive/exemplary damages in favour of Schnabel and Marble…
I am satisfied that it is practicable to sever the award of punitive/exemplary damages from the balance of the US judgment and that the US judgment is enforceable excluding the punitive damages.[146]

[146]Schnabel, [175]-[180].

In summary, her Honour reasoned that the sole purpose of the award of punitive damages in the U.S court was to punish the defendant. With respect, for reasons I have set out, I think this analysis may overlook the nature of the underlying right sought to be exercised by the plaintiff.

I also repeat that I do not accept that a sanction for non-compliance with discovery procedures in a civil action constitutes enforcement of a public penal law of a foreign state.

Returning to the specific question of the enforcement of an award of punitive damages. In this case the purpose for the award in the U.S court is made clear in the Opinion of Judge O’Grady which I have extracted above at [40], where his Honour states:[147]

In light of the Howards’ intentional egregious and outrageous conduct, and the fact that Mrs Doe continues to live in a constant state of terror, the Court finds that an award [of punitive damages] in the amount of $2,000,000 is appropriate.

[147]Opinion of Judge O’Grady, 10.

This is not a punishment but, rather, an award of damages based on the egregious conduct of Mr and Mrs Howard.

I referred previously to the South Australian Court of Appeal decision of Prider, in which the plaintiff sought to enforce a default judgment of the Superior Court of the State of California in the Supreme Court of South Australia. The judgment comprised compensatory and punitive damages.

In Prider, the US judge made an award of punitive damages for what was the described as the ‘brazen and fraudulent conduct’ of the defendant, which included significant acts of deception and fraud. In that case, the US judge stated:

The court should send a message to Prider that his brazen and fraudulent conduct will not be tolerated in the United States, or in the State of California speciﬁcally, and should therefore impose punitive damages as requested.[148]

[148]Prider, 550-551 [10].

Before the trial judge, it was conceded by counsel for the plaintiffs that the award of punitive damages could not be enforced by an Australian court and that the plaintiffs did not seek judgment in relation to that part of the Californian judgment.[149]
[149]Ibid 553 [22].

Although the substantive part of the appeal related to the question of the appropriate test for the defence of fraud (discussed earlier), the question of recovery of punitive damages arose in an argument by the appellant as to public policy and the nature of the judgment. In the detailed analysis of the cases dealing with punitive damages, Bleby J (with Vanstone and Anderson JJ agreeing) initially observed, ‘While it is not necessary to decide the issue, and it was not fully argued before us, I am not sure that the concession was properly made’.[150] His Honour then reviewed a number of the authorities I have referred to.
[150]Ibid 563 [60].

In holding that the award was not penal in nature his Honour said of the decision in Schnabel:

Our attention was drawn to an unreported judgment of Bergin J in the Supreme Court of New South Wales in Schnabel v Yung Lui. Bergin J declined to enforce a judgment of a United States court for punitive damages. However, the United States judge in that case had stated that the purpose of the punitive damages was to ‘penalise the ﬁrst defendant and to deter others from failing to comply with the court’s orders’. While Bergin J held that the purpose of the award of the damages was ‘to punish the ﬁrst defendant and was a sanction’, the decision was made on the footing that the punitive damages were not compensation for a detriment but to punish the defendant and was in the form of a sanction. The damages were ‘the penal consequence for the ﬁrst defendant’s failure to comply with the court’s orders’.
I do not pass on the correctness of that decision. If correct, it is distinguishable on the footing that it was a penal award, having an obvious ‘public’ connotation, for failing to comply with an order of the United States court. I have already set out the circumstances in which the penal damages came to be claimed in this case. They were claimed and awarded on the same basis on which this Court might occasionally exercise its jurisdiction to award punitive or exemplary damages.[151]

[151]Ibid 565-566 [71]-[72].

I should add that I have, at [155], referred to what was said by Bleby J as to the enforcement of a punitive damages award. This statement is consistent with what was said by Lord Denning in SA Consortium General Textiles, which I set out at [143].

In my view, and consistent with these authorities, an award of punitive damages in a civil suit between individuals does not constitute a penal order.

In any event (if I am wrong on these points), I do not consider that Bergin J was endeavouring to formulate a general rule that an award of punitive damages in a US Court necessarily constitutes a ‘penal consequence’ for a party’s failure to comply with a Court order.

Her Honour’s reasoning and conclusion, I suggest, primarily turns upon the statements made by the US judge in that case as to the purpose of the punitive damages. In this case it is clear, as the opinion of Judge O’Grady demonstrates, that punitive damages under the TVPA involve a number of considerations, including the nature of the right given to Jane Doe under the statute , the suffering and damage done to Jane Doe and the egregious conduct of the Howards.

I should conclude, in the light of these remarks, by stating that there is no reason of public policy not to enforce the award of punitive damages. Returning to Prider, Bleby J held:

The amount awarded in this case is substantially more than might be awarded by this Court, but that is not the point. In this country an award of exemplary or punitive damages may be justified where the defendant’s conduct shows a cruel and reckless disregard of the plaintiff, thereby demonstrating the defendant’s callousness and indifference towards the plaintiff in committing the wrong. [Lamb v Cotogno (1987) 164 CLR 1, 12-13.] Such an award of punitive damages is not contrary to public policy in Australia. It is not for this Court to question the amount awarded by the United States court.[152]

[152]Ibid 566 [73].

In Gray v Motor Accident Commission,[153] where the High Court (Gleeson CJ, McHugh, Gummow and Hayne JJ) held:

Because the kinds of case in which exemplary damages might be awarded are so varied, it may be doubted whether a single formula adequately describes the boundaries of the field in which they may properly be awarded. Nevertheless, the phrase adopted by Knox CJ in Whitfeld v De Lauret & Co Ltd of "conscious wrongdoing in contumelious disregard of another's rights" describes at least the greater part of the relevant field.[154]

[153](1998) 196 CLR 1.

[154]Ibid 7 [14] (citations omitted).

I will not traverse Judge O’Grady’s decision again, save to say that his Honour’s award of punitive damages was based on principles recognised in this state.

So, in summary, I am satisfied that the punitive damages component of the judgment is not penal and that the entire judgment is capable of enforcement.

Is Mrs Howard’s defence of fraud an abuse of the Court’s processes?

Given the conclusions I have reached, I would enforce the whole of the US judgment. Accordingly, it is not strictly necessary to deal with Jane Doe’s abuse of process argument. However, I should provide my opinion given that this case may not end in this Court: I would find for Jane Doe on the basis that Mrs Howard’s conduct constitutes an abuse of the Court’s processes and that she is prevented from raising any defence relevant to the entry of the US judgment.

Jane Doe contends that by raising the defence of fraud, Mrs Howard has engaged in conduct which is an abuse of the Court’s processes, because raising the allegations of fraud:

(a) brings the administration of justice into disrepute;

(b) is contrary to justice and public policy, against the principle of international comity and ‘shakes at the very foundation of the rule of law’;

(c) is manifestly unfair to the plaintiff; and

(d) Mrs Howard is seeking to raise the same allegations in this Court as she raised, and then abandoned, in the US Court proceeding.

Subsumed in this argument is an earlier submission of Jane Doe that Mrs Howard acted in bad faith. The bad faith was said to be Mrs Howard’s representation to Magistrate Judge Jones that she knew of no particular periods when she would be out of the jurisdiction, when she knew that she was retiring 10 days later, and leaving the jurisdiction to migrate to Australia permanently.

It is also argued that Mrs Howard’s failure to pursue her defence in the US Court indicates a lack of sincerity and veracity in pursuing her allegations of fraud and constitutes an abuse of process. Jane Doe argues that if Mrs Howard had evidence upon which to base her allegations of fraud, she ought to have brought it forward in the US Court proceeding, but deliberately decided not to do so. Mrs Howard was furthermore entitled to appeal the judgment or have it set aside under the US Rules on the grounds of fraud, and failed to do so.

Mrs Howard contends that she has never been given the opportunity to have the US Court proceeding heard and determined on the merits, and by agitating for such a hearing in this Court she is not abusing its processes, but merely asserting her right for a hearing on the merits.

Mrs Howard also contends that the ordinary abuse of process principles do not apply in this proceeding as those principles do not apply abuse of process claims involving default judgments.[155]
[155]Mrs Howard particularly took issue with the abuse of process principles espoused in Kermani v Westpac Banking Corporation (2012) 36 VR 130, the relevant principles of which are summarised above at [201] below.

Principles

In light of these ‘abuses’ the plaintiff contends that this Court should strike out the defence of fraud under r 23.02 of the Supreme Court Rules, or the inherent jurisdiction of the Court. This rule states:

23.02   Striking out pleading
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a)     does not disclose a cause of action or defence;
(b)     is scandalous, frivolous or vexatious;
(c)     may prejudice, embarrass or delay the fair trial of the proceeding;


or
(d)     is otherwise an abuse of the process of the Court—

the Court may order that the whole or part of the indorsement or pleading be struck out or amended.

I note that such an application could also have been made under the CPA. Section 18 of the CPA states:

18       Overarching obligation—requirement of proper basis
A person to whom the overarching obligations apply must not make any claim or make a response to any claim in a civil proceeding that—
(a)        is frivolous; or
(b)        is vexatious; or
(c)        is an abuse of process; or
(d)does not, on the factual and legal material available to the person at the time of making the claim or responding to the claim, as the case requires, have a proper basis.
…

Under section 29 of the CPA, the Court may make any order that it considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations. This would include striking out a pleading or defence.

Abuse of process is a misuse of a court’s procedure, which would be ‘manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people’.[156]
[156]Arthur J S Hall & Co (a firm) v Simons [1999] 3 WLR 873.

The principles regarding abuse of processes have been stated many times, and in much detail. I summarise those principles, as they apply to this application, as follows:

(a) Abuse of process is a broad concept, which cannot be confined to closed categories.[157]
[157]Michael Wilson & Partners Ltd v Nicolls (2011) 244 CLR 427, 452 [89]; Batistatos v Roads & Traffic Authority (NSW) (2006) 226 CLR 256, 265 [9]; Velissaris v Fitzgerald [2014] VSCA 139, [72].

(b) The Court possesses an inherent jurisdiction to stay its proceedings as an abuse of process if the proceedings are unjustifiably oppressive, vexatious, manifestly unfair to a party to the proceeding, or otherwise brings the administration of justice into disrepute among right-thinking people. [158]
[158]Hunter v Chief Constable of the West Midlands Police [1982] AC 529, [536]; Rogers v R (1994) 181 CLR 251, 286; Walton v Gardiner (1993) 177 CLR 378, 392-393; Velissaris v Fitzgerald [2014] VSCA 139, [72]; Kermani v Westpac Banking Corporation (2012) 36 VR 130, 153 [97].

(c) The principles of abuse of process extends to the institution of proceedings, and procedural steps taken along the way by all parties to the proceeding.[159]

(d) To stay a proceeding for an abuse of process is a grave step, and must only be taken with very considerable caution. However, if the circumstances plainly demand the stay of the proceeding, the Court should not refrain from doing so.[160]

(e) A claim of abuse of process may be invoked to prevent attempts to litigate that which should have been litigated in earlier proceedings as well as attempts to re-litigate that which has already been determined.[161]

[159]Rogers v R (1994) 181 CLR 251, 286; Velissaris v Fitzgerald [2014] VSCA 139, [72].

[160]Velissaris v Fitzgerald [2014] VSCA 139, [72].

[161]Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 193.

Is Mrs Howard’s defence an abuse of process?

In the leading case in this country, that of Walton v Gardiner,[162] Mason CJ, Deane and Dawson JJ held:[163]

proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings.

[162](1993) 177 CLR 378.

[163]Ibid 393 (citations omitted).

In the United Kingdom, in Johnson v Gore Wood & Co,[164] Lord Bingham held:

The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the Court is satisfied … that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings would be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the Court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before … while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim.[165]

[164][2002] 2 AC 1.

[165]Ibid 31.

His Lordship explained the rationale for this position as follows:

But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole.[166]

[166]Ibid.

The Jamaican Court of Appeal in Vasconcellos (Richard) v Jamaica Steel Works Ltd said:[167]

Furthermore, where the circumstances are such that the defendant was aware of the action against her in the foreign court, aware of the allegations pertaining to jurisdiction, it is my view, that failure to prosecute her defence cannot now be re-litigated in these courts. A burden is placed upon her to demonstrate either that there was fraud that misled the foreign court into assuming jurisdiction or that there are new material facts suggesting fraud that were previously undetectable through the exercise of reasonable diligence. In my view, she failed to establish both limbs.[168]

[167]Unreported, Jamaican Court of Appeal, Harrison JA, with whom Panton Pand Dukharan JA agreed, 18 December 2009.

[168]Ibid [45].

Finally and relevantly, in Kermani v Westpac Banking Corporation,[169] the Victorian Court of Appeal conducted a thorough review of the principles surrounding allegations of abuse of process claims. Relevant to the present case, Robson AJA (with Neave and Harper JJA agreeing) held:
[169](2012) 36 VR 130.

The guiding considerations [for abuse of process] are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice. Regard may be had to:

a) the importance of the issue in and to the earlier proceeding, including whether it is an evidentiary or ultimate issue;

b) the opportunity available and taken to fully litigate the issue;

c) the terms and finality of the finding as to the issue;

d)the identity between the relevant issues in the two proceedings;

e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceeding;

f) the extent of the oppression and unfairness to the other party if the issue was re-litigated and the impact of the re-litigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and

g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process.[170]

[170]Ibid 153 [97].

In my view, Mrs Howard’s attempt to ‘reopen’ the US judgment in this Court is an abuse of process.

As I said earlier in this judgment, Mrs Howard was aware of the US Court proceeding, was notified of each stage of the proceeding, attended court and filed documents with the Court. It was her failure to comply with orders of the Court that led to default judgment being entered in favour of Jane Doe. She chose to leave the country, without notice to the court. I am satisfied that she deliberately misled the US Court when she told the Court she had no plans to leave the United States. I am also satisfied that Mrs Howard chose not to agitate the merits of her case before the US Court. She did not seek to review the recommendation of Magistrate Judge Jones or to set aside the judgment of Judge O’Grady. It was her choice to leave the country and not comply with the requirements of a fair trial of Jane Doe’s claim. She was aware of the trial date and had the opportunity, via the Federal Court website, to follow the docket.

In summary, Mrs Howard had every chance to litigate her response to Jane Doe’s allegations in the US Court. It was her decision to leave the country and to not cooperate with the US Court in completing essential interlocutory procedures and not to participate in the trial.

Further, after the judgment was entered, Mrs Howard had ample opportunity to apply for rehearing before the US Court, but failed to do so. If she had evidence to suggest that Jane Doe had falsified her evidence, she could have raised those allegations before the US Court in an application to set aside the judgment pursuant to Rule 60 of the Federal Court Rules.

I do not accept as credible a number of Mrs Howard’s explanations for her actions proffered by her in her affidavit of 2014. Her reasons for not advising the US Court as to her sudden departure lack credence, particularly in light of the fact that her resignation from her employment took effect on 30 April 2012. In addition, Mrs Howard’s alleged inability to contact the US Court after her departure from the United States rings hollow. Accepting that Mr Howard’s health was poor does not explain why she made no effort to contact the US Court after 7 May 2012. It is simply not credible that she was cut off from any form of contact with the US Court (electronic or postal).I am well satisfied that she was aware that there was a significant risk that her decision not to participate in the US trial would result in a judgment against her.

Moreover, Mrs Howard’s failure to take any steps to set aside the US Judgment after its entry has not been the subject of any satisfactory explanation. Whilst it can be accepted that the death of her husband in September 2012 would no doubt have placed considerable stress upon her, Mrs Howard did nothing during 2013 and 2014 in the US Court in relation to upsetting the judgment.

In this country, French CJ said in Aon Risk Services Australia Ltd v Australian National University:[171]

Abuse of process principles may be invoked to prevent attempts to litigate that which should have been litigated in earlier proceedings as well as attempts to re-litigate that which has already been determined.[172]

[171](2009) 239 CLR 175.

[172]Ibid 193.

I adopt what was said in Johnson v Gore Wood & Co by Lord Bingham, namely, that the raising of a defence in a later proceeding may, without more, amount to an abuse of process if this Court is satisfied that the claim or defence should have been raised in the earlier proceedings.[173]
[173][2002] 2 AC 1, 31.

Allowing Mrs Howard to agitate her allegations of fraud in this Court would permit her to take advantage of her own wrong, which to my mind, would in itself constitute an abuse of the Court’s processes, and be contrary to the administration of justice as between the parties.

Moreover, to require Jane Doe to go through another hearing, give evidence of her experiences, and suffer the associated anxiety is oppressive, unduly burdensome and manifestly unfair. It is said that this in itself is an abuse of process.

Finally, I do not accept Mrs Howard’s submissions that different considerations should apply to a default judgment as opposed to a judgment on the merits. I can find no authority to support the contention that different abuse of process principles ought to apply to judgments by default, as opposed to those obtained after a hearing on the merits. To my mind, this would undermine the coherence of the common law, and create an unnecessary divergence in principle.

It is opportunistic in the extreme now, after two years of silence, to assert that she was denied the choice of a trial on the merits.

Conclusion

Mrs Howard has no reasonable prospect of establishing any of her defences. Even if one or more of the defences were tenable then to permit the defences to be maintained at trial would be an abuse of process.

Jane Doe is entitled to have judgment entered against Mrs Howard for the equivalent in Australian dollars of US$3,306,468.00 with interest. I will give the parties an opportunity to examine these reasons and return with minutes of orders reflecting my conclusions.

[2015] VSC 75

6 March 2015