John Holland Pty Ltd v The Commonwealth
[2021] VSC 77
•25 February 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
ARBITRATION LIST
S ECI 2021 00354
| JOHN HOLLAND PTY LTD (ACN 004 282 268) | Applicant |
| v | |
| THE COMMONWEALTH OF AUSTRALIA Represented by the Department of Defence | Respondent |
---
JUDGE: | RIORDAN J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | Ex parte on the papers |
DATE OF JUDGMENT: | 25 February 2021 |
CASE MAY BE CITED AS: | John Holland Pty Ltd v The Commonwealth |
MEDIUM NEUTRAL CITATION: | [2021] VSC 77 |
---
ARBITRATION – Leave to issue a subpoena – Principles – Whether notice of application must be given to other parties or the addressee of the subpoena – Court’s role in assisting and supporting arbitral processes – Leave granted on the papers ex parte – Section 27A of the Commercial Arbitration Act 2011 (Vic).
---
APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Corrs Chambers Westgarth |
HIS HONOUR:
By originating application for issue of subpoena filed 15 February 2021, the applicant (‘John Holland’) seeks an order for the issue of a subpoena under s 27A of the Commercial Arbitration Act 2011 (Vic) (‘CAA’) requiring The Trustee for the White Family Trust t/as Ken White Consulting Engineers (ABN 84 383 301 528) (‘the Addressee’) to produce documents.
John Holland is the respondent in arbitral proceedings brought by the Commonwealth of Australia, represented by the Department of Defence (‘the Commonwealth’). The seat of the arbitration is Melbourne and the arbitrator is Professor John Sharkey AM (‘the Arbitrator’).
The dispute the subject of the arbitration arises out of a contract under which John Holland was the major contractor engaged by the Commonwealth to design and construct various infrastructure facilities at the Royal Australian Air Force Base Amberley, located in Queensland, Australia.
Legislative regime
Section 27A of the CAA provides as follows:
(1)The Court may, on the application of any party, and subject to and in accordance with rules of court, issue a subpoena requiring a person—
(a) to attend for examination before the arbitral tribunal; or
(b)to produce to the arbitral tribunal the documents specified in the subpoena; or
(c) to do both of those things.
(2)A party may only make an application to the Court under subsection (1) with the permission of the arbitral tribunal.
(3)A person must not be compelled under any subpoena issued in accordance with subsection (1) to answer any question or produce any document that the person could not be compelled to answer or produce in a proceeding before the Court.
Subpoenas relating to domestic commercial arbitration are regulated by r 9.14 of the Supreme Court (Miscellaneous Civil Proceedings) Rules2018 (Vic) (‘the Arbitration Rules’), which provide as follows:
(1)An application for the issue of a subpoena under section 27A of the Commercial Arbitration Act shall be in Form 2–9O.
(2) The application shall be accompanied by—
(a) a draft subpoena in accordance with paragraph (3); and
(b) an affidavit stating—
(i) the names of the parties to the arbitration;
(ii)the name of the arbitrator or the names of the arbitrators constituting the arbitral tribunal conducting the arbitration;
(iii) the place where the arbitration is being conducted;
(iv) the nature of the arbitration;
(v)the terms of the permission given by the arbitral tribunal for the application;
(vi)the conduct money (if appropriate) to be paid to the addressee; and
(vii) the witness expenses payable to the addressee.
(3) For the purposes of paragraph (2)(a), the draft subpoena shall be—
(a)for a subpoena to attend for examination before an arbitral tribunal—in Form 2–9P;
(b)for a subpoena to produce to the arbitral tribunal the documents mentioned in the subpoena—in Form 2–9Q; or
(c)for a subpoena to attend for examination and produce documents— in Form 2–9R.
(4) The Court may—
(a)fix an amount that represents the reasonable loss and expense the addressee will incur in complying with the subpoena; and
(b)direct that the amount be paid by the applicant to the addressee before or after the addressee complies with the subpoena.
(5)An amount fixed under paragraph (4) may be in addition to any conduct money or witness expenses referred to in paragraph (2)(b).
(6)A subpoena shall be—
(a)for a subpoena to attend for examination before an arbitral tribunal—in Form 2–9P;
(b)for a subpoena to produce to the arbitral tribunal the documents mentioned in the subpoena—in Form 2–9Q; or
(c)for a subpoena to attend for examination and produce documents—in Form 2–9R.
(7)A person served with a subpoena shall comply with the subpoena in accordance with its terms.
(8)Order 42 of Chapter I applies so far as is practicable to a subpoena referred to in this Rule.
Evidence
In compliance with sub-r 9.14(2)(b) of the Arbitration Rules, the application was accompanied by an affidavit sworn by the solicitor for John Holland who deposed as to:
(a) the details of the arbitral proceedings;
(b) the nature of the dispute; and
(c) the forensic purpose for which the documents were sought.
The affidavit exhibited the ruling of the Arbitrator dated 11 February 2021, which gave permission to John Holland to make this application. The ruling gave a brief description of the arbitral proceedings, and the basis for the Arbitrator’s conclusion that the documents sought by John Holland and set out in the schedule to his ruling:
(a) are relevant to the issues in the arbitral proceedings;
(b) serve a legitimate forensic purpose; and
(c) are not available to John Holland other than pursuant to a subpoena.
The documents referred to in the schedule to the ruling and listed in the proposed subpoena provided to the Court were as follows:
1.All Documents, including calculations, computations and analyses (including drafts and revisions), recording, relating to or showing:
(a)the engineering properties of the subgrade soil beneath the C-17 Apron;
(b)the CBR relevant to, and adopted in, the design of the C-17 Apron; and
(c)any geotechnical or soil surveys relied upon, and considerations arising from any geotechnical or soil surveys in the design of the C-17 Apron.
2.All Documents, including calculations, computations and analyses (including drafts and revisions), recording, relating to or showing the design of the elements that sit above the subgrade soil, including:
(a) the subbase for the C-17 Apron pavement; and
(b) the concrete pavement itself.
3.All Documents, including calculations, computations and analyses (including drafts and revisions), recording, relating to or showing:
(a)the need for, or consideration of, subsoil drainage beneath the C-17 Apron pavements; and
(b)the design for drainage underneath the C-17 Apron pavements in lieu of subsoil drainage.
4.All Documents, including calculations, computations and analyses (including drafts and revisions), recording, relating to or showing:
(a)the incorporation of the ACO Drain into the design of the C-17 Apron;
(b)the design of the ACO Drain, including the concrete encasement dimensions, strength and flexural strength; and
(c)the basis for the decision not to include steel reinforcement in the concrete encasement of the ACO Drain.
Principles
The proper approach of the Court to such applications was explained by Croft J in Aurecon Australasia Pty Ltd v BMD Constructions Pty Ltd, as follows:
In Delphi Petroleum Inc v Derin Shipping & Trading Ltd Denault J of the Federal Court of Canada (Trial Division), in the context of court assistance in the compulsory taking of evidence from a former employee of a party, said:
An inquiry into the reasons for the request is likely not necessary because the request issues from the arbitral tribunal itself or has the approval of the arbitral tribunal, and the role of the court is merely to exercise for the arbitral tribunal the compulsion power which the arbitral tribunal may not have.
…
However, in my view it is not appropriate to extend its logic to the present circumstances to preclude an enquiry by this Court into the reasonableness of the issue of the subpoena. While a degree of deference to the position taken by the arbitral tribunal is vital, it is clear from the case law that the Court does not act as a mere ‘rubber stamp’ in issuing subpoenas in support of arbitral proceedings. As I said in ASADA v 34 Players and One Support Person:
Having regard to the international provenance of the Act, particularly the provisions of the Model Law, it is, in my view, clearly inappropriate for the court, in an application under s 27A of [the CAA] by a party to obtain subpoenas, to embark upon a process which would, in effect, ’second guess’ the arbitral tribunal which has already given permission for the application to obtain a subpoena under these provisions. It is quite clear from the provenance of this legislation, internationally and domestically, that the emphasis sought to be achieved by the legislature is court assistance and support for arbitral processes, and not ’heavy handed’ intervention or, in effect, duplication of the functions of the arbitral tribunal. Long gone are the evils of the case stated procedure under the Victorian Arbitration Act and its equivalents in other jurisdictions. Since the Commercial Arbitration Act in Victoria, the trend in legislative developments and court decisions has been to constrain merits appeals and the consequent cost and delay that flows from duplication of the proceedings in this process. This is not to say, however, that a provision such as s 27A of [the CAA] is to be treated lightly by the courts. The sanctions for a breach of a court issued subpoena are potentially very serious indeed. Consequently, the basis upon which these powers are sought to be invoked must be established to the satisfaction of the court. Nevertheless, this process should, naturally, occur as expeditiously and cost effectively as possible; but it must be balanced against the seriousness associated with subpoenas and their possible breach.
The policy underlying the Court’s abstention from enquiry into the merits of arbitral decisions is that the parties have by consent subjected themselves to the jurisdiction of the arbitrator by their conclusion of an arbitration agreement. The same policy considerations do not, however, justify an exercise of the Court’s coercive powers against non-parties without enquiry into the reasonableness of the use of such powers. Non-parties are strangers to the arbitration agreement, and they should be no more exposed to answering subpoenas in arbitration than they are in litigation, especially since arbitral examination is not under the immediate supervision of the Court.
In any event, it is inherent in the scheme which the CAA establishes, especially in s 27 which implicitly confirms an independent discretion in the Court for the purpose of assisting the arbitration process, that there must be some enquiry by the Court into the reasonableness of the issue of the subpoena. Thus it is not sufficient that there is ‘merely’ an arbitral tribunal in support of the subpoena application, requesting or approving the issue of such a subpoena. Thus, in addition to the express requirements under s 27A of the CAA, there must be evidence of reasonable grounds for the issue of the subpoena against the addressee.[1]
[1](2017) 52 VR 267, 268-270 [5]-[7] (citations omitted).
In summary, in determining an application under s 27A of the CAA, the Court must be satisfied of compliance with the relevant section and rule, and that it is reasonable for the subpoena to be issued. It does not merely ‘rubber stamp’ the application. However, the Court will attribute a degree of deference to the fact that permission has been given by the arbitral tribunal and will not usually ‘second guess’ the tribunal’s ruling that:
(a) the documents the subject of a proposed subpoena are relevant to the issues in the proceeding; and
(b) the subpoena is being issued for a legitimate forensic purpose.
Procedure
In the usual case, there is no practical or legal requirement for an applicant to serve the other parties to the arbitration or the addressee with the application, or to otherwise give them an opportunity to dispute the applicant’s right to issue the subpoena.
Practically, in the usual case, for the Court to entertain such a dispute between the parties would only serve to add to the cost of and delay in the conduct of the arbitration. The facilitation of such a collateral dispute by the Court would not be consistent with ‘the emphasis sought to be achieved by the legislature [being] court assistance and support for arbitral processes’.[2] Of course, under r 42.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘the Rules’), a party or any person having a sufficient interest may apply to set aside the subpoena.
[2]Chief Executive Officer of Australian Sports Anti-Doping Authority Australian Football League (ASADA) v 34 Players and One Support Person [2014] VSC 635, [63] (Croft J). See also Commercial Arbitration Act 2011 (Vic) ss 1AA, 1AC; International Arbitration Act 1974 (Cth) ss 2D, 39.
Legally, the Arbitration Rules provide that ord 42 of ch 1 of the Rules should apply ‘so far as is practicable’.[3] Order 42 of the Rules does not require, and it is not the practice for, notice to be given to other parties prior to the issue of a subpoena. In fact, there is less reason to put other parties or the addressee on notice in an application for leave to issue a subpoena in arbitration proceedings because the tribunal has already considered the matter and given permission. As noted in the previous paragraph, under the Rules, a party or any person having a sufficient interest may apply to set aside the subpoena, but are not usually given the opportunity to oppose the issue of the subpoena
[3]Supreme Court (Miscellaneous Civil Proceedings) Rules2018 (Vic) r 9.14(8).
Accordingly, for the purpose of minimising cost and delay in the arbitral process, it will usually be appropriate for the Court to determine the application for leave to issue the subpoena ex parte on the papers. Of course, nothing I have said is intended to suggest there is a limitation on the discretion of the Court, in an appropriate case, to require notice to be given of the application.
Conclusion
After reading the affidavit in support and the ruling of the Arbitrator, I am satisfied of compliance with the relevant section and rule, and that it is reasonable for the subpoena to be issued. I do not consider that there are any circumstances requiring the other party to the arbitration or the Addressee to be given notice of this application. Accordingly, I propose to give John Holland leave to issue the proposed subpoena to the Addressee.
As noted above, the Arbitration Rules provide that the form of the application for the issue of the subpoena under s 27A of the CAA is Form 2–9O.[4] This form provides for a respondent to be named in the title of the court proceeding. The respondent in the title of such a proceeding should be the other party or parties to the arbitration. In this application, the proper respondent is the Commonwealth. Instead and in error, the Addressee was named as the respondent. The misjoinder of the Addressee as the respondent does not defeat the proceeding.[5] Accordingly, I will further order, under r 9.06 of the Rules, that ‘The Commonwealth of Australia Represented by The Department of Defence’ be substituted for ‘The Trustee for The White Family Trust T/as Ken White Consulting Engineers (ABN 84 383 301 528)’ as the respondent in this proceeding, the title of the proceeding is amended accordingly and John Holland has leave to amend the originating process.
[4]Ibid r 9.14(1).
[5]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 9.05.
As I have decided to determine this application on an ex parte basis, the substitution of the respondent does not affect the grant of leave to issue the subpoena.
Orders
I therefore order as follows:
1.Pursuant to r 9.06 of the Rules, ‘The Commonwealth of Australia Represented by The Department of Defence’ is substituted for ‘The Trustee for The White Family Trust T/as Ken White Consulting Engineers (ABN 84 383 301 528)’ as the respondent in this proceeding. The title of the proceeding is amended accordingly and John Holland has leave to amend the originating process.
2.Pursuant to s 27A of the CAA, John Holland has leave to issue a subpoena, in the form annexed to these orders, to the Addressee.
3. At the time of service of the subpoena, the Addressee is to be:
a. served with an authenticated copy of these orders; and
b.provided or tendered conduct money, as defined in r 42.01 of the Rules.
4.Pursuant to r 42.11(1) of the Rules, John Holland pay the reasonable expenses incurred by the Addressee in complying with the subpoena.
5.The costs of this application, the costs of and incidental to the subpoena, and the amounts payable under paragraph 3 of these orders, are costs reserved in the arbitration.
---
0