ING USA Annuity and Life Insurance Co v J P Morgan Securities Inc - [2009] WASC 157

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: ING USA ANNUITY AND LIFE INSURANCE CO -v- J P MORGAN SECURITIES INC [2009] WASC 157

CORAM: McKECHNIE J

HEARD: 20 MAY 2009

DELIVERED : 20 MAY 2009

PUBLISHED : 4 JUNE 2009

FILE NO/S: CIV 1670 of 2009

MATTER :Evidence Act 1906 (WA), s 117, and a civil proceeding now before the Superior Court of Fulton County in the State of Georgia in the United States of America intituled as follows:

BETWEEN: ING USA ANNUITY AND LIFE INSURANCE CO
ING INVESTMENT MANAGEMENT LLC
Plaintiffs
AND
J P MORGAN SECURITIES INC
DAMIAN BERRY
Defendants

Catchwords:

Hague Convention - Request for assistance - Taking of evidence - Answers likely to incriminate - Whether examiner can compel answers - Power only in a judge - Whether order of judge can extend power - Whether such order appropriate

Legislation:

Evidence Act 1906 (WA), s 11, s 115, s 118C
Rules of the Supreme Court 1975 (WA), O 39

Result:

Leave to amend refused

Category: A

Representation:

Counsel:

Plaintiffs:     Mr P Mendelow
Defendants:     No appearance
Witness:     Mr P G Clifford

Solicitors:

Plaintiffs:     Jackson McDonald
Defendants:     No appearance
Witness:     Karp Steedman Ross-Adjie

Case(s) referred to in judgment(s):

Attorney‑General for Western Australia v Cockram (1990) 2 WAR 477
Blunt v Park Lane Hotel Ltd (1942) 2 KB 253
Brebner v Perry [1961] SASR 177
British American Tobacco Services Ltd v Eubanks for the United States of America [2004] NSWCA 158; 60 NSWLR 483
Gredd v Arpad Busson [2003] EWHC 3001
In Re Genese; Ex parte Gilbert (1886) 3 Morrells Bankruptcy Reports 223
Markovina v The Queen [No 2] (1997) 19 WAR 119
R v Armagh Justices (1884) 18 Ir LTR 2
Woods v Smith (1976) WAR 13

McKECHNIE J:

Background to the application

The plaintiffs applied to amend the originating motion made following letters of request from a United States court.
The present plaintiffs and defendants are plaintiffs and defendants in the United States Superior Court of Fulton County in the State of Georgia in Civil Action File No. 2007CV134590. The action arises out of the plaintiffs' purchase of $32 million in debt securities in January 2002 issued by the Sons of Gwalia Ltd that were marked by the first defendant. The plaintiffs assert that the notes subsequently lost most or all of their value when Sons of Gwalia Ltd entered into administration in Australia in August 2004 and the plaintiffs asserts causes of action as violation of the Georgia Securities Act 1973 for negligent misrepresentation and violations of the Georgia Racketeering, Influence and Corrupt Organisation Act.
On 11 February 2009, Alice D Bonner, Senior Judge, Superior Court of Fulton County in Georgia, requested this court's assistance pursuant to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters, in respect of the examination of a number of witnesses including Eardley Maitland Ross‑Adjie.
On 22 April 2009 I made orders that various witnesses including Eardley Maitland Ross‑Adjie:
2.… attend from 11 May 2009 at a place to be determined in conjunction with the Examiner and continuing thereafter at such place and time as the Examiner may direct from day to day until complete, with leave to apply for an alternative date for examination.
3.The Witnesses be examined in relation to the topics of testimony requested in the Letters of Request for International Judicial Assistance dated 11 February 2009, issued by the United States Superior Court of Fulton County in the State of Georgia in Civil Action File No. 2007CV134590 (US Proceedings) pursuant to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters, to the Registrar of the Supreme Court of Western Australia, as an additional authority under Art.24, pursuant to section 116 of the Evidence Act 1906.
4.Mr Robert Anderson QC be and is appointed Examiner to administer the taking of an oath or affirmation and the conduct of the examination.
Other orders are presently immaterial. I later amended the orders to further facilitate the taking of evidence.
On 20 May 2009 the plaintiffs applied for a further amendment in respect of Mr Ross‑Adjie. Due to the urgency of the matter, and the fact that I was presiding over a trial, I heard the application, together with a response by Mr Clifford of counsel for Mr Ross‑Adjie, over the luncheon adjournment. I announced that I would dismiss the application and that the plaintiff pay Mr Ross‑Adjie's costs and said that I would publish my reasons in due course. These are the reasons.
The reason for the urgency is set out in the affidavit of a US attorney, Donald A Loft, sworn 20 May 2009:
8.By agreement with Counsel for Eardley Maitland Ross‑Adjie it was agreed that Mr Ross Adjie attend before the Examiner at 9am on 20 May 2009, at level 19, AMP Building, 140 St Georges Terrace, Perth.
9.At 9am today Mr Ross-Adjie attended the examination conducted by Mr Robert Anderson QC, represented by his counsel Mr P Clifford.
10.Shortly after commencement of the hearing at 9am Mr Ross‑Adjie by his counsel declined to answer any questions on the topics in item 7 of the letter of request, beyond his name, age, address and employment history and his educational background, on the basis that any answers will criminate or tend to criminate him.
11.After hearing legal argument on the matter, the Examiner, upon questioning Mr Ross‑Adjie, offered to Mr Ross‑Adjie the protection afforded under section 11 of the Evidence Act 1906 (WA) ('Evidence Act').
12.In respect thereof, Mr Ross-Adjie through his counsel Mr Clifford contended that it was not open to the Examiner to invoke the operation of section 11 of the Evidence Act on the basis that the Examiner does not fall within the definition of 'judge' as defined in section 3 of the Evidence Act.
13.After further legal argument on this matter, the Examiner made a ruling that he has the power to invoke the operation of section 11 of the Evidence Act. The Examiner nevertheless stated that he would afford to Mr Ross‑Adjie the opportunity to appeal against the decision if he so desired, and in the interim would adjourn the examination pending the resolution of any such appeal. Mr Ross‑Adjie then gave instructions to Mr Clifford of Counsel to lodge an appeal against the decision of the Examiner to invoke the operation of s 11 of the Evidence Act.
14.Thereafter, Mr Mendelow of Counsel foreshadowed that an urgent application would be made to this Honourable Court to deal with this issue, so as to vary the orders made by Justice McKechnie on 22 April 2009 and that Mr Ross‑Adjie should remain available this afternoon, tomorrow and Friday to attend the examination.
…
16.I verily believe that unless Mr Ross-Adjie is granted a certificate under section 11 of the Evidence Act, he will not answer any questions put to him.
17.The current examinations in Perth are scheduled to end no later than 22 May 2009.
18.I verily believe that the evidence of Mr Ross‑Adjie is relevant to the proceedings in the United States of America, having regard to the topics at pages 15 to 18 of the letter of request (item 7) and the Superior Court of Fulton County, Georgia has so confirmed.
In order to overcome any difficulties, and forestall an appeal and consequent possible delay, the plaintiff immediately applied to amend my orders relevantly as follows:
4A.Robert Anderson QC be empowered in the conduct of the examination to invoke the operation of section 11 of the Evidence Act 1906 (WA) ('Evidence Act').
4B.Further to order 4A hereof, pursuant to section 11 of the Evidence Act:
(a)Eardley Maitland Ross‑Adjie be directed by the Examiner to answer such questions that may be put to him and told by the Examiner that, if he answers such questions that may be put to him in a satisfactory manner, a Judge of this Honourable Court will grant him a certificate pursuant to section 11 of the Evidence Act.
(b)in the event that Eardley Maitland Ross‑Adjie shall have given his evidence to the satisfaction of a Judge of this Honourable Court, a Judge of this Honourable Court shall give a certificate in compliance with the requirements of section 11 of the Evidence Act; and
(c)prior to a Judge of this Honourable Court giving a certificate referred to in order 4B(b) above, the Examiner shall prepare a report stating whether in his view the evidence of Eardley Maitland Ross‑Adjie was given to his satisfaction, and submit such report to this Honourable Court.
In summary, order 4A empowers the examiner to invoke the Evidence Act 1906 (WA) s 11 while order 4B, as an alternative, seeks this court to give a certificate if the examiner's report says the evidence was given to his satisfaction.

The Hague Convention: Source of legislative power

The legislative form of the Hague Convention is found in the Evidence Act s 115 to s 118C. Application for assistance under s 116 has been made and in consequence I made the orders in April 2009. The power to do so is to be found in s 117:
(1)The Supreme Court has power, on any such application as is mentioned in section 116, by order to make such provision for obtaining evidence in Western Australia as may appear to the court to be appropriate for the purpose of giving effect to the request in pursuance of which the application is made.
(2)An order under this section may require a specified person to take such steps as the court may consider appropriate for that purpose.
(3)Without limiting the generality of subsections (1) and (2), an order under this section may, in particular, make provision -
(a)for the examination of witnesses, either orally or in writing;
If the requesting court so asks, the Supreme Court may make an order that a witness give testimony on oath. I made such an order.
Section 118 provides for the privilege of witnesses:
Privilege of witnesses
(1)A person shall not be compelled by virtue of an order under section 117 to give any evidence which the person could not be compelled to give -
(a)in similar proceedings in Western Australia; or
…
(4)In this section, references to giving evidence include references to answering any question and to producing any document, and the reference in subsection (3) to the transmission of evidence given by a person shall be construed accordingly.
Section 118A gives power to the court to make rules. Rules have been made under Order 39. Order 39 rule 4A provides a person appointed to obtain evidence may administer oaths.

The first order sought: Can the court empower the examiner to grant a s 11 certificate?

A person has a right not to incriminate himself or herself. This is an ancient common law right. When a person is not under compulsion to answer questions, the exercise of this right presents little difficulty. When a person is compelled to respond to questions then some modification of the right is necessary to balance the public benefit in the exposure of information with the private right against self‑incrimination: The Evidence Act s 11:
Court may compel answer to incriminating question
(1)Whenever in any proceeding any person called as a witness, or required to answer any interrogatory, declines to answer any question or interrogatory on the ground that his answer will criminate or tend to criminate him, the judge may, if it appears to him expedient for the ends of justice that such person should be compelled to answer such question or interrogatory, tell such person that, if he answers such question or interrogatory, and other questions or interrogatories that may be put to him, in a satisfactory manner, he will grant him the certificate hereinafter mentioned.
(2)Thereupon such person shall no longer be entitled to refuse to answer any question or interrogatory on the ground that his answer will criminate or tend to criminate him; and thereafter if such person shall have given his evidence to the satisfaction of the judge, the judge shall give such person a certificate to the effect that he was called as a witness or interrogated in the said proceeding and that his evidence was required for the ends of justice, and was given to his satisfaction.
(2a)Where in a proceeding a person is given a certificate under subsection (2) in respect of any evidence, a statement made by him, as part of that evidence, in answer to a question or interrogatory is not admissible in evidence in criminal proceedings against the person other than on a prosecution for perjury committed in the proceeding.
(3)In subsections (1) and (2), judge does not include a justice of the peace when constituting the Magistrates Court or the Children’s Court, whether sitting alone or with another justice of the peace.
There are conditions on the abrogation of the right. The power to compel must take place in the course of a proceeding as defined in s 3:
legal proceeding or proceeding includes any action, trial, inquiry, cause, or matter, whether civil or criminal, in which evidence is or may be given, and includes an arbitration;
The conduct of an examination pursuant to orders made under a letter of request is a 'proceeding'. It is at the least a matter 'in which evidence is given'. This condition is fulfilled.
The exercise of the power is also conditioned by restricting the donee of the power to a judge as defined by s 3:
Judge means a Justice of the High Court of Australia and a Judge of the Supreme Court of Western Australia, and includes a Judge of The District Court of Western Australia, a Judge of the Family Court of Western Australia, a Judge or magistrate of the Children’s Court of Western Australia, a magistrate of the Magistrates Court, a coroner within the meaning of the Coroners Act 1996, and also any justice or justices of the peace sitting in court;
Significantly, a justice of the peace sitting in court is defined as a 'judge' but the power to grant a certificate is expressly withheld: s 11(3). This is an indication that Parliament intended to limit the category of persons who may abrogate the right against self‑incrimination.
The examiner is a person acting judicially as defined in the Evidence Act s 3 having been granted authority by my original orders to hear, receive and examine evidence. However, the power under s 11 is not extended to persons acting judicially but is confined to a judge. As a matter of statutory construction, there is no power in the examiner to grant a certificate under s 11 because the examiner does not fall within the category of persons so empowered.
Another reason why the power is restricted to a judge is to allow an appeal by a witness or perhaps a party from an order granting or declining to grant a certificate. It is unclear to me what power there would be in any party to appeal against the examiner's exercise of power in respect of a certificate. On the other hand there are clear rights of appeal or prerogative relief by party or witness: See for example, Woods v Smith (1976) WAR 13; Markovina v The Queen [No 2] (1997) 19 WAR 119.
The plaintiff argues that the source of power to make the order might be found in s 117(1) of the Evidence Act, it being 'appropriate for the purpose of giving effect to the request'.
I accept the statement of principle by Blunton J in Gredd v Arpad Busson [2003] EWHC 3001 adopted in Australia in British American Tobacco Services Ltd v Eubanks for the United States of America [2004] NSWCA 158; 60 NSWLR 483 at 42:
(1)Comity requires this court to view a letter of request issued by a foreign court for the purpose of civil proceedings before it benevolently. It is our pleasure and duty to assist those courts and the parties to them in arriving at a fair and just determination of their civil litigation where we can properly do so.
A court assisting a foreign court is nevertheless limited in its power by local law. A judge cannot extend the limits of the Evidence Act s 11, by a purported exercise of a power to make appropriate orders. A judge cannot vest the power to compel an answer and grant a certificate to a person who is not a judge.
Moreover, s 118 limits the compulsion of a witness to give evidence under examination to circumstances which a person could not be compelled to give in similar proceedings in Western Australia. The only similar proceedings in Western Australia where a person could be compelled are proceedings before a judge.
For these reasons I declined to make the proposed order 4.

The second order sought: Can a judge, who has not heard the evidence, give the certificate?

Perhaps anticipating the difficulties in proposed order 4A, the plaintiffs devised an alternative method whereby the examiner would hold the examination, report to a judge and then the judge would give a certificate under order 4B.
The immediate difficulty with such a proposal is that the certificate would be given by a person who had neither seen nor heard the witness and who would be relying on the satisfaction of another in order to carry out the statutory power. The proposition needs only to be stated this way to expose, with great respect, its hopelessness. The Evidence Act s 11 clearly is addressed to the judge physically present and hearing the proceeding. The Evidence Act s 11 refers to 'the judge' not 'a judge'.
At common law no‑one is bound to answer any question if the answer thereto would, in the opinion of the judge, have a tendency to expose the witness to any criminal charge: Blunt v Park Lane Hotel Ltd (1942) 2 KB 253 at 257 per Lord Goddard CJ. The right to decline to answer must be plain in respect of the answer to each question and must be considered by the judge each time it is raised. Sometimes a question may not apparently raise any rational response of self‑incrimination and the court must be satisfied that the answer would or might tend to criminate: Blunt v Park Lane Hotel at 275: In Re Genese; Ex parte Gilbert (1886) 3 Morrells Bankruptcy Reports 223 per Lord Esher at 226, 227; Brebner v Perry [1961] SASR 177 at 182.
In some cases the bona fides of the claim must be considered by the judge hearing the matter: Brebner v Perry is an example as is R v Armagh Justices (1884) 18 Ir LTR 2 per O'Brien J.
These examples confirm my view that s 11 is addressed to the judge conducting the proceedings. This construction is given force in Attorney‑General for Western Australia v Cockram (1990) 2 WAR 477 per Brinsden J (Pidgeon and Ipp JJ agreeing) at 484:
Jurisdiction … the section in its precise terms is unique. The view I take is that it is for the judge alone to decide whether in the situation before him, it is expedient in the interests of justice that a person should be compelled to answer a question said to be incriminating and that view I think is supported by s 11(3) which denies to Justices of the Peace the power conferred by the section. The judge therefore must make the relevant inquiries and must so satisfy himself and there can be no short cuts to doing that.
The letter of request detailed allegations about the conduct of Mr Ross‑Adjie which would have reasonably excited a suspicion that on examination he might decline to answer on the grounds of self‑incrimination. Thus foreseen, the proper course would have been to seek an examination before a judge. In fact, following the dismissal of the plaintiffs' application and my reservation of the publication of these reasons, the plaintiffs applied urgently to me for an order that a judge of this court be appointed as an examiner. That order was granted.
For all these reasons I dismissed the plaintiff's application to amend the originating motion.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION: ING USA ANNUITY AND LIFE INSURANCE CO -v- J P MORGAN SECURITIES INC [2009] WASC 157 (S)

CORAM: McKECHNIE J

HEARD: 18 MAY 2009

DELIVERED : 18 MAY 2009

PUBLISHED : 4 JUNE 2009

SUPPLEMENTARY
DECISION :4 JUNE 2009

FILE NO/S: CIV 1670 of 2009
CIV 1674 of 2009

MATTER :Evidence Act 1906 (WA), s 117, and a civil proceeding now before the Superior Court of Fulton County in the State of Georgia in the United States of America intituled as follows:

BETWEEN: ING USA ANNUITY AND LIFE INSURANCE CO
ING INVESTMENT MANAGEMENT LLC
Plaintiffs
AND
J P MORGAN SECURITIES INC
DAMIAN BERRY
Defendants

Catchwords:

Practice and procedure - Issue of subpoena - Letter of Request - Whether a party can unilaterally cancel a subpoena

Legislation:

Nil

Result:

Application granted
Defendants to pay plaintiffs' costs

Category: B

Representation:

Counsel:

Plaintiffs: Mr P Mendelow
Defendants: Mr S K Dharmananda

Solicitors:

Plaintiffs: Jackson McDonald
Defendants: Allens Arthur Robinson

Case(s) referred to in judgment(s):

Nil

McKECHNIE J: The plaintiffs and defendants in this action are plaintiffs and defendants in the United States Superior Court of Fulton County in the State of Georgia in Civil Action File No. 2007CV134590. That action arises out of the plaintiffs' purchase of $32 million in debt securities in January 2002 issued by the Sons of Gwalia Ltd that were marked by the defendants. The plaintiffs assert that the notes subsequently lost most or all of their value when the Sons of Gwalia Ltd entered into administration in Australia in August 2004 and the plaintiffs assert causes of actions as violations of the Georgia Securities Act 1973, for negligent misrepresentation, and violations of the Georgia Racketeering, Influence and Corrupt Organisation Act.
Although the parties are fundamentally opposed in their contentions, because the testimony of witnesses in Australia is important, each party cooperated in seeking letters of request from the Superior Court of Fulton County, Georgia, pursuant to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters. They arranged for an examiner and for evidence to be taken from various witnesses that one or both had an interest in securing. So it was that the plaintiffs brought action CIV 1670 of 2009 seeking orders pursuant to the letters of request and the defendants brought similar proceedings CIV 1674 of 2009.
In action CIV 1674 of 2009 (the defendants' application) I made orders on 23 April 2009, inter alia, that Stephen Thomas Pearce attend for examination on 11 May 2009. The letter of request set out details concerning Mr Pearce before concluding:
Based on the foregoing this court finds there is just cause for the Defendants to seek to preserve the testimony of Mr Pearce for trial in this case. Specifically, this court requests the Defendants and Plaintiffs be permitted to question Mr Pearce regarding the topics set forth in Section 7 below.
There follows a series of topics relating to Mr Pearce's education, work history, operations of Sons of Gwalia and the senior note offerings in 2000 and 2001 including:
7.Questions to be Put to the Person to be Examined [Convention Art. 3(f)]:
This Court requests that Defendants and Plaintiffs be permitted to question Mr Pearce regarding the following topics:
1.Background and Experience
1.1Mr Pearce's education
1.2Mr Pearce's work history at Gwalia
2.Gwalia's Operations Generally
2.1Gwalia's senior management during the 2000 to 2002 time period
2.2Gwalia's business strategy during the 2000 to 2002 time period
2.3Gwalia's hedging strategy during the 2000 to 2002 time period
3.Gwalia Senior Note Offerings in 2000 an 2001
3.1The role of Gwalia and its personnel in Gwalia's 2000 Note Offering
3.2The role of Chase and its personnel in Gwalia's 2000 Note Offering
3.3The role of the US investors in Gwalia's 2000 Note Offering
3.4Pearce's interactions with US investors during Gwalia's 2000 Note Offering
3.5Whether Pearce provided US investors in Gwalia's 2000 Note Offering with information on trading by Ross‑Adjie, Gwalia's internal controls, Gwalia's hedging activities, Gwalia's indexed put options, and Gwalia's profits, and whether he would have provided information on these topics to US investors if requested
3.6The role of Gwalia and its personnel in Gwalia's 2001 Note Offering
3.7The role of J P Morgan and its personnel in Gwalia's 2001 Note Offering
3.8The role of the US investors in Gwalia's 2001 Note Offering
3.9Pearce's interactions with US investors during Gwalia's 2001 Note Offering
3.10Whether Pearce provided US investors in Gwalia's 2001 Note Offering with information on trading by Ross-Adjie, Gwalia's internal controls, Gwalia's hedging activities, Gwalia's indexed put options, Gwalia's acquisition of PacMin, and Gwalia's profits, and whether he would have provided information on these topics to US investors if requested
4.Reasons for Gwalia's Financial Collapse
4.1The role that the sudden deterioration of Gwalia's gold reserves played in contributing to Gwalia's financial collapse
4.2The role that the decline in Gwalia's level of reserves and resources playing in contributing to Gwalia's financial collapse
4.3The role that Gwalia's gold exploration program played in contributing to Gwalia's financial collapse
4.4The role that Gwalia's write-down of 992,000 ounces from the gold reserves at Gwalia's underground and the Marvel Loch underground played in contributing to the Gwalia's financial collapse
4.5The role that Gwalia's high-costs and short life mining operations played in contributing to Gwalia's financial collapse
4.6The role that the Tarmoola pit wall failure played in contributing to Gwalia's financial collapse
4.7The role that Gwalia's investment in IGPOs played in contributing to Gwalia's financial collapse
4.8The role that unauthorized trading by Gwalia's director of finance (and the subsequent restructure of those trades) played in contributing to Gwalia's financial collapse
4.9The accounting entries by Gwalia in connection with the losses sustained as a result of Mr Ross‑Adjie's unauthorized trading
Mr Pearce's answers to these topics are plainly of interest to both the plaintiffs and the defendants.
Arrangements between the parties and the witness were made so that Mr Pearce was due to give evidence at 8.30 am on 19 May 2009. The subpoena was issued to him.
It appears that on Sunday, 17 May the defendants decided that they no longer wished to call Mr Pearce. The solicitors for the defendants voice mailed and emailed the examiner advising he would not be required for 19 May 2009:
This email confirms the voicemail that I left for you earlier this morning. JPMorgan has decided not to enforce the subpoena for Mr Stephen Pearce, and Mr Pearce will not be called as a witness. Accordingly, there is currently no deposition scheduled for tomorrow (19 May 2009), and depositions will resume on Wednesday with Mr Ross-Adjie.
I also have informed the witness's counsel, ING's counsel, and the reporter/videographer of the schedule change. Please do not hesitate to contact me or Jenny Thornton (08 9488 3805) if you have any questions.
The examiner responded:
Thank you Kyle. I did receive your voice message. Thank you all for your consideration.
This was apparently done without immediate notification to the plaintiffs' solicitors. They also advised Mr Pearce. Mr Pearce was contacted by the solicitors for the plaintiffs on 18 May 2009. When asked the question: 'Will you attend tomorrow then? I have to ask you for the purposes of the application [to the court]' responded: 'I will speak to my lawyer and get advice but if you're following through with having me attend, then I would rather attend and get it over with'.
When the application by the plaintiffs came before me the defendants were represented by Mr Dharmananda of counsel who, while pointing out that they did not object to the application, considered it appropriate to bring to the court's attention certain matters going to the court's jurisdiction. He also submitted that although the defendants were not raising any objection: 'we're bringing this matter to the attention of the court as duty bound we feel we have to'. The effect of the points raised by Mr Dharmananda if successful would have meant that no order in favour of the plaintiffs would be made and Mr Pearce would not be compelled to give evidence. He said that the importance of this issue is that once J P Morgan or those advising it took the view that Mr Pearce was not to be called as their witness, then as a matter of US law it’s a matter of some importance that that not occur (ts 20).
The position is simple enough. The application for a letter of request was made to Judge Bonner by each party who cooperated in the hearing. It was reasonable for each party to assume that the other would nevertheless cooperate in the conduct of the hearing (notwithstanding that they were adversaries in the main action). The plaintiffs might have sought a specific request from Judge Bonner on behalf of Mr Pearce but did not do so. They did do so because the defendants had requested that his evidence be taken and the letter of request made it plain that the plaintiffs would be questioning Mr Pearce too.
The defendants seem to have demonstrated a casual view as to the effect of this court's order. A subpoena or witness summons is issued by a court reactively; that is, on the application of a party. However, once issued, it becomes a command by the court, to be enforced if necessary under penalty - hence the term 'subpoena' - and cannot be set aside by a party. A party might indicate to a witness that it would not take enforcement proceedings but that is a different matter. Here the court, albeit with the cooperation of the parties, had made orders, inter alia, requiring the attendance of Mr Pearce at the examination. Leaving aside the courtesy of advising the other side of their proposed action, unilaterally contacting the examiner and advising Mr Pearce that he was no longer required, there is no power in the defendants to purport to release Mr Pearce from his requirement.
Mr Dharmananda argued that the examiner had in effect released Mr Pearce as part of his power to conduct the examination and pointed to the exchange of emails quoted above.
I have no doubt that an examiner might, pursuant to that power, release a witness upon being satisfied that no other party then required the witness or for other good cause. Had the matter been presented to the examiner with submissions by both parties, there may have been little cause for complaint had he so ruled, the ruling being within the general delegation of power under the order to conduct the proceedings as appropriate. Another witness had been released by agreement between both parties. No doubt the examiner thought the same process had been followed. The examiner's acknowledgement, which includes the words 'thank you all for your consideration' suggests he assumed the plaintiffs had agreed.
In any event, his acknowledgement cannot be construed as an order releasing the witness.
Mr Dharmananda also submitted that there would be prejudicial consequences to the defendant if the witness was now to be called. However, counsel was unable to give much detail of the effect of US law, or more correctly Georgia law, on the topic beyond the obvious point that the party calling a witness may not ask leading questions. That seemed to me to be no great hurdle and could be well handed by the examiner. In any event, given that the defendants no longer wanted to call Mr Pearce it comes as a bit of a surprise that the possibility of any questions - leading or otherwise - was exercising counsel's mind at all.
The simple position is that once an order of the court is made that order stands until properly set aside. All that one party can do is indicate it would not seek to enforce the order if it was breached. The original order for Mr Pearce's attendance and the subpoena issued in consequence remains in force.
Moreover, the failure to take the evidence of Mr Pearce while the opportunity was available with an examiner already appointed and the attendance of US attorneys for both parties would lead to much more cost and inconvenience to all parties, including Mr Pearce, for little good purpose.
For these reasons, somewhat expanded from the brief oral reasons given late in the afternoon, I had no hesitation in making the orders sought.
This application came on after I had concluded the day's hearing of another matter and took sometime to argue. The plaintiffs applied for the defendants to pay the costs of the application. I decided to reflect on the issue in light of the defendants' stance that it was making no formal objection but merely wished to bring matters to the court's attention as its duty.
After reflection, and reading the transcript of the hearing and the affidavit material, I am satisfied that notwithstanding the apparent helpfulness of the defendants in seeking to avoid the judge falling into error, in substance the plaintiffs' application was opposed for reasons that would advance the defendants' position. Their stance was not neutral. The defendants lost. The defendants might have avoided these proceedings if they had consulted the plaintiffs before purporting to dispense with Mr Pearce as a witness or by raising no obstacle to Mr Pearce giving evidence the day following. They must pay the plaintiffs' costs of and incidental to the application to be taxed if not agreed.