Pickles v Gratzon

No judgment structure available for this case.

Reported Decision:
(2002) 55 NSWLR 533

New South Wales

Supreme Court

CITATION: Pickles and Ors v Gratzon and Ors [2002] NSWSC 688

FILE NUMBER(S): SC 10271/02

HEARING DATE(S): 1/8/02;2/8/02

JUDGMENT DATE: 5 August 2002

PARTIES :

Graham Leign Pickles,Leonie Mary Lovell, Tech Pacific Holdings Pty Ltd and Hagemeyer Asia Pacific Pty Ltd v Fred Gratzon, Stephen Baumgartner, Eric BStackland, Douglas Neish and J Sherman Henderson III

JUDGMENT OF: O'Keefe J

COUNSEL : Mr T E F Hughes QC/Mr G R Kennett - Applicants
Mr P Garling SC/Mr J Downing - Respondents

SOLICITORS: Minter Ellison, Sydney - Applicants
Hunt and Hunt, Sydney - Respondents

CATCHWORDS: Evidence - Evidence on commission - Foreign court - Letter of Request - Letters Rogatory - International judicial assistance - Examination of witnesses in civil and commercial matters - Evidence by deposition - Participation by foreign attorneys - Discovery against persons not parties to foreign action not permitted - Pre-trial discovery not permitted - Fishing expedition not permitted - Roving commission not permitted - Treaty - Hague Convention - Setting aside subpoena - Setting aside ex parte order - Who is a party - Practice - Discretion

LEGISLATION CITED: Evidence on Commission Act, 1995 Pt 4 ss 32, 33
Subpreme Court Rules Pt 40 r 9(3); Pt 37 r 8
Foreign Tribunal Evidence Act, 1856 (UK)
Evidence (Procedures in Other Jurisdictions) Act, 1975 (UK)
Evidence Act, 1898 Pt 9 ss 78, 79
Evidence (Evidence on Commission) Amendment Act, 1988 s 5
Bankruptcy Code of the USA Ch 11, Title 11
Treaty on the Taking of Evidence Abroad in Civil or Commercial Matters (1992, No 37) (The Hague Convention) Articles 1, 2, 3, 5, 12, 23, Ch 3

CASES CITED: Applicant A v Minister for Immigration and Ethnic Affairs (1997) 142 ALR 331
Sands & McDougall Pty Limited v Robinson (1917) 23 CLR 49
The Banco (1971) P 137
D & R Henderson (MFG) Pty Ltd v Collector of Customs (NSW) (1974) 48 ALJR 132
Chu Kheng Lim v Minister for Immigration Local Government and Ethnic Affairs (1992) 110 ALR 97
Hardie Rubber Co Pty Limited v General Tire & Rubber Co (1971-1773) 129 CLR 527
Bidder v Bridge (1884) 26 ChD 1
Owners of SS Kalibia v Wilson (1910) 11 CLR 689
Re Jeld-Wen Inc and Oregon Corporation (1998) NSWSC (Unreported 25 September 1998)
Radio Corporation of America v Rauland Corporation (1956) 1 QB 618
Re Asbestos Insurance Coverage Cases (1985) 1 WLR 331
Re Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No 235 (Nos 1 and 2) (1978) AC 547
Applicaiton of Forsyth; Re Cordova v Philips Roxane Laboratories Inc (1984) 2 NSWLR 327
Seyfang v G D Searle & Co (1973) qb 143
Lenning v Alexander Proudfoot Company World Headquarters (1991) NSWCCA, unreported 22 April 1991
National Mutual Holdings Pty Limited v Century Corporation (1990) Federal Court of Australia, unreported 30 May 1990
Sydney Ferries Limited v S S Tahiti (1928) 28 SR (NSW) 307
Smith v Smith (1975) 1 NSWLR 725

DECISION: 1, 2, 3, 4, 5 - Orders concerning legal representation, procedure at taking of evidence and date of commencement (see paragraph 96); 6. Notice of Motion filed on 26 July 2002 otherwise dismissed; 7. Applicants to pay respondents costs of Motion; 8. Liberty to apply on 24 hours notice.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

O’Keefe J
DATE: 5 August 2002

10271/02 Pickles & ors v Gratzon & ors

Judgment on Notice of Motion

INTRODUCTION

1 This is an application by Notice of Motion filed on 26 July 2002 by Graham Leigh Pickles (first applicant), Leonie Mary Lovell (second applicant), Tech Pacific Holdings Pty Ltd (third applicant) and Hagemeyer Asia Pacific Pty Ltd (fourth applicant), (collectively referred to as the applicants), for the discharge of orders made by Hulme J on 16 May 2002, and by me on 27 May 2002, and that the subpoenas issued pursuant to such orders be set aside.

2 Two subpoenas to give evidence have been issued. One, directed to the first applicant, was served on 18 July 2002. The other, directed to the second applicant, was served on 22 July 2002. Service in both instances followed extensive contact between the solicitors for the applicants and the solicitors for Fred Gratzon, Stephen Baumgartner, Eric B Stackland, Douglas Neish and J Sherman Henderson III (the respondents). No process has been served on the third applicant, nor has any process been issued in respect of, or served on, the fourth applicant, which is the parent company of the third applicant.

3 The timing of the application to discharge the orders of 16 May and 27 May 2002, and to set aside the two subpoenas issued pursuant to those orders, has meant that the application has had to be dealt with as one of extreme urgency, and has imposed a significant strain on the resources of the Court. However, it has been possible to consider the matters argued and come to a conclusion so as not to involve the parties to the motion and the persons involved in the taking of evidence from the first and second applicants in unnecessary costs.

4 The orders made by Hulme J and by me were made in response to a Letter of Request from the United States Bankruptcy Court for the District of New Jersey in which the assistance of the Supreme Court of New South Wales was sought to take evidence from the first and second applicants as individuals and as representatives of the third applicant arising out of the bankruptcy of Telegroup Inc in the United States of America, in a representative action by a person appointed on behalf of unsecured creditors, namely Edward Bond (Bond). Bond has commenced action against Fred Gratzon, Steven Baumgartner, Eric B Stackland, Douglas Neish and J Sherman Henderson III, and they in turn applied to the United States Bankruptcy Court for the District of New Jersey for a Letter of Request to secure evidence from, inter alios, the first and second applicants. A Letter of Request was ordered by the United States Bankruptcy Court for the District of New Jersey on 11 November 2001.

5 The orders made by Hulme J on 16 May 2002 were as follows:

The Evidence on Commission Act 1995 (NSW)

the respondents to the present motion

2. That this Honourable Court appoint and fix 5 August 2002 as the date for the commencement of depositions in accordance with the Letter of Request of the named Defendants to take evidence abroad ordered 11 November 2001 and such further consecutive days as required until the conclusion of the said depositions.

3. That the examination be held at the Sydney Registry of the Supreme Court of New South Wales.

4. That the examination be held before a Registrar of this Honourable Court

…

respondents

present

6 The orders made by me on 27 May 2002 were:

the respondents to the present motion

2. That the plaintiffs be granted leave to produce documents on Tech Pacific Holdings Pty Limited.

3. That this Honourable Court order the plaintiff’s United States legal representatives be permitted to appear and participate at the examination in this matter to be held at the Sydney Registry of the Supreme Court of NSW commencing on 5 August 2002.”

7 During the course of argument on the motion presently before the Court application was made on behalf of Tech Pacific Holdings Pty Limited and Hagemeyer Asia Pacific Pty Limited by Notice of Motion filed in court on 1 August 2002 (the second Notice of Motion) for the discharge of orders made by McLelland J on 18 October 2001, Hidden J on 4 February 2002, Simpson J on 4 March 2002, Greg James J on 29 April 2002, Hidden J on 20 May 2002 and Registrar Wearne on 11 July 2002 and for the setting aside of subpoenas issued pursuant to such orders. The second Notice of Motion did not proceed and on the application of Tech Pacific Holding Pty Limited and Hagemeyer Asia Pacific Pty Limited it was dismissed. The respondents to the motion presently before the court were the respondents named in the second Notice of Motion.

8 The bases on which the present application to discharge the orders and set aside the two subpoenas is made, are:

(i) The Court does not have power to give effect to the Letter of Request received from the United States Bankruptcy Court for the District of New Jersey, and as a consequence the subpoenas that have been issued should not have been issued;

(ii) As a matter of discretion, this Court should decline to give effect to the Letter of Request received from the United States Bankruptcy Court for the District of New Jersey.

9 Telegroup Inc is an American corporation which acquired two Australian companies as part of its business empire. Those companies were Switch Holdings Pty Ltd (Switch) and Frame Relay Pty Ltd (Frame). At the time of the acquisition of Switch and Frame by Telegroup Inc, the applicants were directors and officers of those companies and of their then parent company, Tech Pacific Holdings Pty Ltd. The respondents to the motion were directors of Telegroup Inc, and both the respondents and the applicants were parties to negotiations for the acquisition of Switch and Frame.

10 On or about 10 February 1999, Telegroup Inc filed a voluntary petition under Chapter 11, Title 11 of the Bankruptcy Code of the United States of America, and since that date, has remained in possession of the assets of the business, and continued its operation as a debtor in possession pursuant to the appropriate provisions of the Bankruptcy Code of the United States of America. The principal place of business of Telegroup Inc has at all material times been in the State of Iowa. In March 2000, a plan of reorganisation was confirmed by the United States Bankruptcy Court for the District of New Jersey as part of the Telegroup Inc bankruptcy, and subsequently Bond was appointed to represent the interest of unsecured creditors. For that purpose Bond has commenced action against, inter alios, the respondents to the motion, alleging breach of their fiduciary duties and other legal obligations as directors of Telegroup Inc.

11 In the action instituted by Bond against the respondents, one of the matters relied upon is that they were in breach of their relevant duties in causing Telegroup Inc to acquire Switch and Frame from Tech Pacific Holdings Pty Ltd.

12 In accordance with what has been said to be the appropriate law of the USA, as applicable in bankruptcy or in the State of Iowa, the respondents to the motion have filed a defence in which they claim to have acted reasonably and in good faith and in the best interests of Telegroup Inc, to have relied in good faith on advice from legal counsel, and at all times to have used their best business judgment when entering into the transactions for the acquisition of Switch and Frame.

13 Another director, Clifford Rees, who has also been sued but is represented separately, has also raised a “John Doe” defence in the following form:

“THIRD PARTY COMPLAINT

Mr Rees hereby asserts a third party complaint against the John Doe defendants who are individuals and/or entities not currently parties to this law suit who may be liable, either in whole or in part to Mr Rees for any of the claims asserted by the plaintiff. Mr Rees expressly reserves his right to amend this answer to specifically assert claims against such third parties.”

14 As indicated above, the respondents to the motion claim to have dealt with the first and second applicant, inter alios, in the course and for the purposes of the negotiations to acquire Switch and Frame. The defences which the respondents have filed in the Bond action within the Telegroup Inc bankruptcy, rely, inter alia, on having acted appropriately on the basis of information given to them. Such information is pleaded to have been given to them by, inter alios, the first and second applicants.

15 It is against this background that the respondents made application to the United States Bankruptcy Court for the District of New Jersey (the United States Bankruptcy Court) for the issue of a Letter of Request for the taking of the oral evidence of the named directors of Switch and Frame in the Bond action and more particularly in relation to matters relevant to the defences raised by the respondents as defendants in such action.

16 The Letter of Request from the United States Bankruptcy Court contains a number of recitals which are then followed by the formal request for assistance. The Letter of Request must be read as a whole. One of the purposes of the recitals is to help to define or fix the framework within which the request is made. When construing the form of the request for assistance, it is appropriate to do so in the light, and against the background, of the recitals. They are a valuable aide to the construction of the Letter of Request, and assist in the definition of the ambit and content of the request.

17 The recitals first inform the reader of the actions in the United States Bankruptcy Court in which Telegroup Inc, Bond and the respondents are parties. It refers to the action by Bond in the following terms:

the respondents to the motion)

inter alia

18 The Letter of Request then sets out the defences raised by the respondents and proceeds to recite that:

“Whereas, moreover, the nature of the negotiations with the representatives of the acquired company, and the nature of the information given to the defendants before closing are material to the defense; and

Whereas, it is imperative that defendants depose Graham Pickles, Leonie Lovell and Sandra Philpot, the officers responsible for providing Defendants with the information upon which they relied, individually and in their capacity as representatives of Tech Pacific; and

Whereas the testimony of … (ii) Graham Pickles, Leonie Lovell and Sandra Philpot individually and as representatives of Tech Pacific Holding … would establish at trial the underlying facts surrounding said claim and that justice cannot be done among the parties without such testimony.”

19 The Letter of Request then proceeds formally to request “international judicial assistance to obtain evidence to be used in a civil proceeding pending before this court”, namely in the matter instituted by Bond on behalf of the unsecured creditors against the respondents, and states:

“This Court therefore requests that, in the interest of justice, you: (1) Issue an order by your proper and usual process, summoning said witnesses to appear before a duly appointed Commissioner of the Court to give evidence regarding the facts relevant to the within litigation, including the due diligence performed and the audit reports prepared with respect to Telegroup Inc’s acquisition of Switch Telecommunications Pty Ltd and Frame Relay Pty Ltd on the advice and information provided by … Graham Pickles, Leonie Lovell and Sandra Philpot, under oath by questions and answers upon oral deposition, such depositions to continue day to day until completion; and (2) Issue an order directing the witnesses to produce 28 days in advance of their respective depositions, such documents as are described in Schedule A annexed to this letter.”

20 Schedule A is extensive in its ambit and adverts, inter alia, to appraisals, recommendations, reports and journals relating to the acquisition; billing records and timesheets relating to work performed on behalf of Telegroup Inc in connection with the acquisition; documents reviewed, prepared or submitted to Telegroup Inc and its officers concerning the acquisition; files maintained in relation to such acquisition and any indemnities received. Although there has been no subpoena issued in the form of Schedule A, the breadth and form of the requirement for production would go beyond that which would be permitted under the law of New South Wales in respect of a person who was not a party to litigation in our courts. However, particularly when taken with the rest of the document, it further designates for the reader of the Letter of Request the areas of concern for the purposes of taking evidence.

21 The orders made on 16 and 27 May 2002, were made pursuant to the provisions of the Evidence on Commission Act 1995 (the Act). Part 4 of the Act is concerned with the taking of evidence for foreign and Australian courts. “Foreign Court” is not defined, and thus must be given its ordinary meaning.

22 In the context of the Act it means any court other than an Australian court.

23 Section 32 of the Act provides:

“(1) The following provisions of this Part apply if an application is made to the Supreme Court for an order for evidence to be taken in the State and the Court is satisfied:

(a) that the application is made in pursuance of a request issued by or on behalf of a court or tribunal exercising jurisdiction in a place outside the State, and

(b) that the evidence to which the application relates is to be obtained for the purposes of proceedings which have either been instituted before the requesting court, or whose institution before that court is contemplated.”

24 Section 33 of the Act empowers the Supreme Court to give effect to applications made for assistance by, inter alia, foreign courts. It provides:

“(1) The Supreme Court has power, if an application is made under section 32, by order to make such provision for obtaining evidence in the State 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 as follows:

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

…

(6) An order under this section must not require a person:

(a) to state what documents relevant to the proceedings to which the application for the order relates are, or have been, in the person’s possession, custody or power, or

(b) to produce any document other than particular documents specified in the order and appearing to the Court making the order to be, or likely to be, in the person’s possession, custody or power.”

25 The submission on behalf of the applicants is that, properly construed, s32 did not empower the Supreme Court to make any orders, since the Letter of Request from the United States Bankruptcy Court did not comply with the requirements of s 32(b) of the Act.

26 It is further submitted on behalf of the applicants that in construing the Act regard must be had to the Treaty on the Taking of Evidence Abroad in Civil or Commercial Matters, which entered into force on 22 December 1992 for Australia and all territories for the international relations of which Australia is responsible. It became “1992, No. 37” in the Australian Treaty Series (The Convention).

27 Resort to a treaty as an aide to the interpretation of a statute is permissible in certain circumstances. Under the Common Law, in the interpretation of domestic legislation that incorporates the text of an international treaty, resort may be had to the terms of the international treaty to the intent that the text of a particular treaty provision be given primacy (Statutory Interpretation in Australia, Pearce and Geddes, 5th Ed, 33, para 2.17). However, as part of the process of interpretation, the Court must look at the context, object and purpose of the particular provision in the treaty. (Applicant A v Minister for Immigration and Ethnic Affairs (1997) 142 ALR 331). If a statute is intended to give effect to an international treaty, the Court may look at its terms in order to resolve an ambiguity in the statute. (Sands & McDougall Pty Ltd v Robinson (1917) 23 CLR 49 at 54). This is so, although the particular treaty is not mentioned in the statute being interpreted (The Banco (1971) P 137 at 151, 157, 161). The treaty may also be referred to even though the statute has been enacted before ratification of the treaty (D & R Henderson (MFG) Pty Ltd v Collector of Customs (NSW) (1974) 48 ALJR 132 at 135; Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 110 ALR 97 at 123).

28 It is common ground between the parties that there has been no enactment of the Parliament of the Commonwealth which makes Treaty 1992 No 37 part of the law of Australia. However, as will be seen later in the course of this judgment, the conclusions to which I have come in relation to the construction of ss 32 and 33 of the Act are consonant with the Convention and there has been no need to adopt a particular, perhaps strained, construction of the Act by reference to the Convention.

29 The Convention is concerned with improving mutual judicial cooperation in civil or commercial matters. It provides for a Contracting State, “in accordance with the provisions of the law of that State (to) request the competent authority of another Contracting State, by means of a Letter of Request, to obtain evidence or to perform some other judicial act.” (Article 1). However, there is a prohibition on the Letter of Request being “used to obtain evidence which is not intended for use in judicial proceedings commenced or contemplated” (Article 1).

30 Article 3 of the Convention provides that:

(a) the authority requesting its execution and the authority requested to execute it, if known to the requesting authority;

(b) the names and addresses of the parties to the proceedings and their representatives, if any;

(c) the nature of the proceedings for which the evidence is required, giving all necessary information in regard thereto;

(d) the evidence to be obtained or other judicial act to be performed.

Where appropriate, the Letter shall specify, inter alia-

(e) the names and addresses of the persons to be examined;

(f) the questions to be put to the persons to be examined or a statement of the subject-matter about which they are to be examined;

(g) the documents or other property, real or personal, to be inspected;

(h) any requirement that the evidence is to be given on oath or affirmation, and any special form to be used;

(i) any special method or procedure to be followed under Article 9.

A letter may also mention any information necessary for the application of Article 11.

31 The operation of the system of Letters of Request provided for in the Convention involves the transmission of the Letter of Request to a Central Authority which each contracting State is required to designate (Article 2). If a Letter of Request does not comply with the provisions of the Convention, the Central Authority must promptly inform the Authority of the State which transmitted the Letter of Request, and specify the objections to the Letter (Article 5). In executing a Letter of Request, the judicial authority to which it is addressed is required to “apply its own law as to the methods and procedures to be followed” (Article 9), but in so doing:

“… it will follow a request by the Requesting Authority that a special method or procedure be followed, unless this is incompatible with the internal law of the State of execution or is impossible of performance by reason of its internal practice and procedure, or by reason of practical difficulties.”

32 Article 12 of the Convention is illuminating. It provides that:

“The execution of a Letter of Request may be refused only to the extent that –

(a) in the State of execution, the execution of the Letter does not fall within the functions of the judiciary; or

(b) the State addressed considers that its sovereignty or security would be prejudiced thereby.

Execution may not be refused solely on the ground that under its internal law the State of execution claims exclusive jurisdiction over the subject matter of the action or its internal law would not admit a right of action on it.”

33 Under the general clauses contained in Chapter 3 of the Convention, provision is made for a contracting State at the time of signature, ratification or accession to declare that it will not execute Letters of Request issued for the purpose of obtaining pre-trial discovery of documents as known in Common Law countries (Article 23). Such a declaration has been made by Australia.

Arguments

34 Senior counsel for the respondents has submitted that the basis on which the applicants have advanced their case, namely Part 40, Rule 9(3) of the Supreme Court Rules, is misconceived. He contends that properly construed, that rule does not apply to any of the applicants because none of them is a party to the proceedings in this Court pursuant to which the orders the subject of challenge were made. The only parties to such proceedings were, so the argument proceeded, the respondents to the present motion, who were the persons who sought the orders in question.

35 Senior counsel for the applicants submitted that this was too narrow a view of the rule and, in particular, too restrictive in relation to the meaning to be afforded to the word “party” in the relevant rule, and that to adopt such a construction would fetter its sensible operation. His submission was that the word “party” comprehended anyone affected by an order, and so it applied to all the applicants.

36 Part 40, Rule 9(3) provides:

“The Court may, on terms, set aside or vary an order –

(a) where the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default, and whether or not the absent party had notice of motion for the order; or

Not argued

37 The word “party” is not defined in the Rules, but it is used throughout the Rules as indicating a person who is a plaintiff (eg, Part 4, Rule 2(1); Part 5, Rule 2(1)), defendant (eg Part 5, Rule 9), cross-claimant (eg Part 6, Rule 2) or cross-defendant (eg Part 6, Rule 6 and 7) in a proceeding before the Court. Where there is no proceeding on foot, for example, where preliminary discovery is appropriate, the person who is concerned to make the relevant application is described as the applicant (Part 3, Rule 1(a)). Of significance in relation to this part of the argument is the provision of the Rules relating to the power of the Court to proceed with a hearing in the absence of a party, namely Part 5, Rule 9. That rule makes it clear that the concept of “party” as used in that rule is restricted to those who are joined in the proceedings. Furthermore, an examination of Part 40, Rule 9(3)(a), suggests that the general approach adopted in the Rules to the definition of who is a party is carried through into Part 40, Rule 9(3)(a). Such a suggestion is supported by the inclusion in the rule of the words “whether or not the absent party is in default of appearance or otherwise in default”, since those words seem to indicate that it is only a person who has been joined in the proceedings as a party in the strict sense, eg as a defendant or cross-defendant, who can be “in default of appearance,” and that it is only a person who has been joined in the proceedings who can be “otherwise in default” in the sense that such phrase is used in the rule. For example, a person in respect of whom an order has been made permitting the issue and service of a subpoena cannot be said to be in default of that order. Such person may, by not responding to the subpoena, be in default of the subpoena itself. But this is a different concept from being in default of the order of the Court pursuant to which the subpoena was issued.

38 The indications referred to in the preceding paragraph, however, appear to be inconsistent with what was said by Gibbs J in Hardie Rubber Co Pty Ltd v General Tire & Rubber Co (1971-1973) 129 CLR 527, and with what was said by Lord Selborne in Bidder v Bridge (1884) 26 Ch D 1 at 9 and by Cotton LJ (at 12). Furthermore, the decision of the High Court in Owners of SS Kalibia v Wilson (1910) 11 CLR 689 at 694 needs to be taken into account. None of the above cases was referred to by counsel for the parties, and no detailed argument was presented in relation to this aspect of the case. As a consequence, because there is power elsewhere to deal with the arguments that have been raised, and to make orders in relation to the subpoenas that have been issued, it is unnecessary to resolve this question.

39 The power to which reference is made in the preceding paragraph is that contained in Part 37, Rule 8 of the Supreme Court Rules. That Rule provides that, either on the Court’s own motion or on the motion of a person having a sufficient interest, the Court may set aside a subpoena either wholly or in part. Under this rule, there is an unarguable basis on which the first and second applicants are entitled to appear and argue the validity of the subpoenas which have been served on them. So, in essence, the point taken in respect of the ambit of the word “party” in Order 40, Rule 9, does not prevent the argument proceeding or orders being made, if that is the appropriate outcome. However, whilst the sufficiency of the interest of the first and second applicants is clear, the interest, or sufficiency of interest, of the third and fourth applicants is less clear. The third applicant was the owner of Switch and Frame. It was the vendor to Telegroup Inc. The fourth applicant is the Australian parent of the third applicant, but what the interest of these two companies is in the subpoenas, is not revealed by the evidence. Accordingly, on the evidence before me, I am not satisfied that a sufficient interest has been established by them to found their appearance on the application to set aside the subpoenas to give evidence addressed to the first and second applicants.

40 Senior counsel for the applicants founds his argument on the proposition that the evidence sought to be obtained from the first and second applicants is not disclosed in the Letter of Request with reasonable, or any, particularity. Such particularity or specificity is, so the argument runs, essential to the enforceability under the law of New South Wales of a Letter of Request from a foreign tribunal which seeks the assistance of the Supreme Court in taking evidence. The submission relies most directly on a decision of Hidden J in Re Jeld–Wen Inc an Oregon Corporation (NSWSC, unreported, 25 September 1998), in which the judge said:

“Put shortly, whether through the examination of potential witnesses or the production of documents, a ‘fishing expedition” is not permitted. Radio Corporation per Lord Goddard CJ at 649. The nature of the evidence sought must be disclosed with reasonable particularity . Appropriate examples are to be found in Sydney Ferries at 309-310 and Hardie Rubber Co at 562 ff, cf Smith v Smith (1975) 1 NSWLR 725 per Woodward J at 730-1. It is not to the point that those cases dealt with requests of Courts of this country for the obtaining of evidence abroad. I am satisfied that the legislation requires requests from other countries to meet the same standard before this Court will act upon them. To require that standard is consistent with Article 3 of the Hague Convention…” (supra at page 8) (bold added).

41 It is to the emboldened sentence above that senior counsel for the applicants points, and on which he relies, albeit with what is said to be support from a number of other cases to which I will refer.

42 In support of this argument it is also contended that the evidence referred to in s 32(1)(b) of the Act and the phrase which is associated with it, namely, “for the purposes of proceedings” must be understood in a sense that involves a fairly high degree of particularity or specificity.

43 In Radio Corporation of America v Rauland Corporation (1956) 1QB 618 (the Radio Corporation Case) Lord Goddard CJ, Hilbery and Devlin JJ considered the provisions of the Foreign Tribunals Evidence Act 1856 in relation to Letters Rogatory which requested that a large number of named witnesses, all of whom were members of the boards of two English companies but not parties to the relevant action in the United States, should be caused to appear to give evidence on oath and produce such documentary evidence in their custody or possession as “is relevant to the issues pending in the (American proceedings)”. Pursuant to the Letters Rogatory orders were sought under the Foreign Tribunals Evidence Act 1856 requiring (A) that the English companies produce a number of specified and identified documents and also letters and memoranda showing “the steps in the negotiations” of certain agreements and “all documents mentioned in any of the foregoing”: and (B) that certain of the named witnesses be examined on the documents produced and on “the conversations, transactions, activities and negotiations referred to therein”.

44 The trial judge determined that the order for production of documents was, in effect, an order for discovery which he had no jurisdiction to make but ordered that certain of the witnesses named in the Letters Rogatory who might have some knowledge of the matters in issue in the American action should give evidence and that they should produce certain documents, but only those which were specified and identified. On appeal from this decision Devlin J, with whom Lord Goddard CJ and Hilbery J agreed in allowing the appeal, held:

1. That the word testimony as used in the Foreign Tribunals Evidence Act 1856 meant testimony relevant to an issue in the United States proceedings;

2. That the test to be applied was not whether what was sought was documentary material or oral material but whether it was “direct” material immediately relevant to the issue in dispute and such as might be used at the trial, or “indirect” material by way of discovery and testimony for that purpose;

3. Since the testimony sought was ‘indirect’ material relating to pre-trial discovery proceedings in the United States for the purpose of leading to a train of inquiry which might produce direct testimony, the court had no jurisdiction to make the orders sought either in relation to the documents or in relation to the oral examination of the witnesses.

45 Devlin J said:

“Before the court has any jurisdiction to grant this application it must be made to appear that the foreign court is desirous of obtaining ‘testimony in relation to such matter’ within the meaning of … the Foreign Tribunal Evidence Act 1856 and the question that we have to determine is whether this testimony which it is sought to obtain is ‘testimony’ within the meaning of the statute.” (supra at 644)

46 Devlin J further determined that, in so far as the Letters Rogatory sought the orders referred to in (B) above, namely the taking of oral testimony from certain named persons, an order enforcing the request should not be made “because it was not made clear … that the foreign court was desirous of obtaining the ‘testimony in relation to such matter’ within the proper construction of the section” (at 648)

47 Although the decision turned upon the construction of the Foreign Tribunal Evidence Act 1856 it is regarded as negating the jurisdiction of the court to which a request for judicial assistance is made to require the production of documents or the examination of a witness if the purpose of such production or examination is, in effect, discovery against a person who is not a party to the foreign proceedings. If however the testimony which is requested is testimony for the trial of the foreign proceedings, then the making of an order is within the jurisdiction of the court to which the request is addressed.

48 In agreeing with Devlin J, Lord Goddard CJ said in respect of the application then under consideration that:

“This is merely an attempt to get evidence in the course of discovery proceedings which are known to the American courts – and are also known to the Canadian courts - which are a sort of pre-trial before the main trial. It is an endeavour to get in evidence by examining people who may be able to put the parties in the way of getting evidence. That is mainly what we should call a ‘fishing’ proceeding which is never allowed in the English courts, and I think that that of itself would be a complete objection and ought to justify this court in refusing the order.” (at 649)

49 In re Asbestos Insurance Coverage Cases (1985) 1 WLR 331 the House of Lords considered Letters Rogatory requesting assistance of the High Court in securing the production of certain documents and the examination of three named individuals. The trial judge ordered the three individuals to appear for examination and made orders for the production of certain documents. The Court of Appeal dismissed appeals by the individuals who had been ordered to attend for examination and affirmed certain parts of the orders of the trial judge for the production of documents. The House of Lords dismissed the appeals by the individuals in respect of whom orders to give evidence had been made as each of such appellants was in a position to give some relevant evidence. However, the appeal in respect to the production of documents was allowed on the basis that the Evidence (Procedures in Other Jurisdictions) Act 1975 was to be so construed as to not permit fishing expeditions and the exact documents of which production was required had to be clearly indicated. Those documents had to be actual documents shown to exist or to have existed, rather than conjectural documents that might or might not exist or have existed.

50 Lord Fraser of Tullybelton, with whom Lords Wilberforce, Keith of Kinkel, Roskill and Bridge of Harwich agreed, distinguished the two questions that were raised in the appeal; one relating to witnesses to attend for oral examination; the other for the production of documents. Lord Fraser agreed with the approach adopted by Lord Wilberforce to Letters Rogatory in re Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No 235 (Nos 1 and 2) (1978) AC 547 at 612 (the Westinghouse Case), namely, that:

“… following the spirit of the Act which is to enable judicial assistance to be given to foreign courts, the letters rogatory ought to be given effect to as far as possible, …” (supra at 335)

“… any letters rogatory should be approached in the sprit that they receive effect to the fullest extent possible under our law” (supra at 654).

51 Under the relevant English legislation then in force, namely, the Evidence (Procedure in Other Jurisdictions) Act 1975, the power of the High Court to make an order for the taking of evidence in England at the request of a foreign tribunal required the English court to be satisfied that the application was made in pursuance of a request issued by or on behalf of a foreign tribunal and that the evidence to which the application relates “is to be obtained for the purposes of civil proceedings which either have been instituted in the court making the request or whose institution before such court is contemplated.” (s 1)

52 Section 2(4) of the English Act provided a restriction on the power of the court which relevantly prohibited the court from making an order:

“(b) to produce any documents other than particular documents specified in the order as being documents appearing to the court making the order to be, or to be likely to be, in his possession, custody or power.”

53 The decision in re Asbestos Insurance Coverage Cases (supra) was that this provision should be construed strictly and that, as had been said in the Westinghouse Case (supra at 609), so construed it precluded pre-trial discovery and did not permit mere fishing expeditions. In this context the phrase to this effect used by Lord Goddard in the Radio Corporation Case (supra) was expressly approved.

54 The decision of the House of Lords is thus authority for the proposition that fishing expeditions will not be permitted as part of the process of responding to a Letter of Request from a foreign court. It is also authority for the proposition that the requirement for the production of documents will only be enforced in relation to actual documents in, or that have been in, the possession of the person the subject of the order, as opposed to conjectural documents which may or may not exist. (supra at 338)

55 In relation to an order to give assistance on a request to take oral evidence Lord Fraser adopted what had been said by Lord Keith of Kinkel in the Westinghouse Case (supra at 654) namely:

in the present motion, the Supreme Court of New South Wales

56 Because the named persons against whom orders to give evidence had been made were, by admission, persons who were in a position to give some relevant evidence, the orders in relation to them were permitted to stand.

57 In Application of Forsyth; Re Cordova v Philips Roxane Laboratories Inc (1984) 2 NSWLR 327, Clarke J held that the Supreme Court has power to make orders for the taking of evidence from individuals under s 1 of the Foreign Tribunals Evidence Act 1856 (which was then in force in New South Wales), if the purpose for which the foreign court desires the testimony of such individuals is use or possible use as evidence at trial, but that the power of the court does not extend to making an order merely for use in pre-trial discovery proceedings. He further held that, as the court must satisfy itself as to the purpose or purposes for which the foreign court wishes to obtain the testimony, a statement by the foreign court as to the necessity of the testimony is relevant but not of itself necessarily determinative. In reaching his conclusion Clarke J stressed, as had Lord Goddard CJ in the Radio Corporation Case (supra), that the court must look “to the substance of the matter” rather than at the precise words of the Letter of Request.

58 In this regard it should be noted that in the Westinghouse Case (supra) Lord Wilberforce referred to the fact that the Letters Rogatory had been drafted by the lawyers for Westinghouse and were directed to the distinction drawn by Devlin J in the Radio Corporation Case (supra) between “a process by way of discovery and testimony for that purpose” on the one hand and “testimony for the trial itself” on the other. The category into which the evidence sought by the foreign court falls is to be determined “objectively by the nature of the testimony sought.” (at 610)

59 Clarke J applied this approach in Forsyth (supra) when he said:

“I am of opinion that I should decide the question whether the testimony is desired for one or other purpose by looking at the substance of the matter. In this case that requires a consideration of the nature of the testimony sought, coupled with any other evidence which might tend to show the underlying need for the evidence. I have already expressed an opinion, based upon the evidence sought, and this opinion is, in my opinion, supported by the very wide terms in which the order calling for the production of documents is couched. It does not call for a limited number of specified documents but casts a very wide ranging net indeed. The terms in which the order is cast are far more consistent with the concept of discovery, or even fishing, as we understand that word than those of a commission of examination for the purpose of obtaining evidence for the tender at the trial.

Nevertheless, these factors do not lead, in my opinion, to the result that the court is without power to make the orders sought. In my view, there is power provided that the foreign court is desirous of obtaining the evidence for use, or possible use, at the trial not withstanding that there is another, and dominant purpose for which the evidence is required.

I have reached this conclusion basically for two reasons. Firstly, unless one can say that the evidence is required only for an impermissible use and is not required for use, or possible use, at the trial then the applicant has as a matter of plain English, discharged the onus of establishing that the foreign court is desirous of obtaining the testimony as that phrase has been interpreted by Lord Devlin.

Secondly, the wide range of discovery in American courts means that in virtually every case there will be a dual purpose for seeking the evidence. Indeed, given that a party can obtain the deposition of a witness who is a stranger to the litigation, it must be expected that a party would put the deposition to every use it could and, in particular, would use it in the discovery process. To deny jurisdiction in this case would, in effect, be to deny the statute of any real effect with regard to proceedings in American courts. This result is, I venture to suggest, to be avoided if at all possible.

direct

60 Clarke J also adverted the dictum of Lord Diplock in the Westinghouse Case (supra at 634) that:

“In the ordinary way in the absence of evidence to the contrary (the Court) should, in my view be prepared to accept the statement by the requesting court (as to) the purpose for which the evidence is required.” (supra at 333)

“It is our duty and our pleasure to do all we can to assist (the United States Federal Court), just as we would expect the United States Court to help us in like circumstances.” (supra at 334)

61 The effect the various judicial pronouncements is that judicial and international comity require that any request of a foreign court for evidence should be treated with sympathy and should be complied with as far as the principles of our law permit. (see also Seyfang v GD Searle & Co (1973) QB 143 J at 151-152 per Cook J)

62 The Foreign Tribunals Evidence Act 1856 continued in force in New South Wales until 1988 when it was repealed by the Evidence (Evidence on Commission) Amendment Act 1988 (s 5). Relevantly, it was replaced by the insertion of Part 9 into the Evidence Act 1898. The second reading speech by the Attorney General concerning such Act indicated that its purpose was to bring the law of New South Wales into line with uniform legislation agreed by the Standing Committee of Australian Attorneys General, which in turn involved the adoption of model legislation by the various jurisdictions in Australia that was designed to facilitate the ratification of the Hague Convention. (Parliamentary Debates (NSW) (Legislative Assembly) 30 August 1988 784, 786). Sections 78 and 79 of that Act are for all practical purposes the same as ss 32 and 33 of the Act.

63 The provisions of Part 9 of the Evidence Act 1898 arose for consideration by Kirby P, Priestley and Clarke JJA in Lenning v Alexander Proudfoot Company World Headquarters (NSWCCA, 22 April 1991, unreported). Because of an agreement between the parties that a declaration in a particular form should be made it was unnecessary for the court to consider or rule on arguments of the kind presently before this Court. However, Kirby P, with whom Priestley and Clarke JJA agreed, stated that:

“The use of a subpoena to conduct ‘a fishing expedition’ to discover material at large in the hope that, amongst it, may appear useful matter which can later be used as evidence during the course of litigation is impermissible in our law.” (at p 7)

64 In National Mutual Holdings Pty Limited v Century Corporation (Federal Court of Australia unreported 30 May 1990) Northrop J considered an application to restrain a cross claim on the basis that the taking of evidence from certain persons would constitute a real risk of an interference with the administration of justice, namely, interference with a proceeding then pending in the Federal Court. There was no question in that case of any request for assistance by a foreign court, although the depositions that were sought to be taken were for the purposes of a proceeding in Winconsin in the United States and were sought to be taken pursuant to an order of the Winconsin Court. The essential question in the case was whether or not the taking of such deposition would constitute a contempt of the Federal Court. Northrop J held that there was “a real risk as opposed to a remote possibility of an interference with the administration of justice” were the depositions to be taken (at p 20) and that it was appropriate in the circumstances that an injunction should be granted to restrain the apprehended contempt (at p 21).

65 In the course of his reasons Northrop J set out the passage from the judgment of Lord Goddard CJ referred to above and, in what in my view are obiter dicta, said:

“As at present advised I would decline to follow the opinion of Mr Justice Clarke expressed in application of Forsyth re Cordova v Philips Roxane Laboratories Inc (1984) 2 NSWLR 327. There his Honour declined to follow the express view in the Radio Corporation Case and in the Rio Tinto Corporation Case and held that an order should be made under s 1 of the Foreign Tribunals Evidence Act if one of the purposes were to obtain evidence for trial.” (at pp 23-24)

“I do not need to decide that question here”. (at 24)

66 The final case to which reference should be made is the decision of Hidden J in re Jeld-Wen Inc an Oregon Corporation (supra). In that case Hidden J considered a Letter Rogatory from the Oregon Circuit Court requesting that certain persons “be deposed pursuant to the rules and statutes of the State of Oregon” and that subpoenas issue to acquire “records pertaining to the Oregon litigation”. The Letter Rogatory did not identify the persons whose depositions were sought or any person or corporation to whom any subpoena for the production of documents should be directed. Furthermore it did not identify the records to be subpoenaed, either individually or generically by reference to their subject matter.

67 Orders had been made by Grove J for the purpose of taking the depositions of two persons and subpoenas directed to them were issued by the court requiring them to attend at a named place to give evidence and to produce any documents relating to 16 matters. Those were set out in a document prepared by the American attorney for the plaintiff in the Oregon proceedings and required the two persons to whom the notices were addressed “to provide a deposition”. Neither of the notices for deposition was issued by the Oregon Court.

68 Adams J made an order in respect of a third named person and subpoenas to give evidence and produce documents which were in the same terms as those referred to in the preceding paragraphs were issued.

69 All three persons sought the setting aside of the orders of Grove and Adams JJ and of the subpoenas issued pursuant to them.

70 Hidden J discharged the orders made by Grove and Adams JJ and set aside the subpoenas addressed to the three persons referred to above. The reasons for doing so were that his Honour was unaware of the issues in the trial that was pending in the Oregon Court and, as a consequence, there was nothing before the court to disclose what evidence was sought from the three witnesses or from the documents that had been requested. His Honour said:

“It is true that there is abundant evidence about the circumstances giving rise to the Oregon litigation. I probably have more material than I need to tell me what the case is about. What I do not know, however, is what are the live issues in the forthcoming trial. The 16 matters set out in the subpoenas are of no assistance on that matter, as they are so comprehensive as to cover the entire field of the litigation. Judge Isaacson’s reasons suggest that there may be a great deal of common ground between the parties and for all I know, the only issue may be whether the American authorities about inevitable disclosure of trade secrets are applicable to this case. Despite the conspicuous skill and valour of his argument, Mr Harrrowell has been unable to identify the live issues when asked to do so. No doubt for that reason, there is nothing before me to disclose with any reasonable specificity what evidence is sought from the three named witnesses or from the documents requested

…

Accordingly, the applicants are entitled to the relief which they seek.” (at p 7)

71 In the course of his reasons Hidden J adverted to the Radio Corporation Case, the Westinghouse Case and re Forsyth and concluded that “the court will not enforce a letter rogatory for the purpose only of pre-trial discovery” (at p 5; italics added). He also concluded that the combined effect of ss 32(1) and 33(6) of the Act was to preserve the broad principles enunciated by Devlin J in the Radio Corporation Case in which the distinction is made between “direct” and “indirect” testimony. Hidden J said:

“In that case the distinction is made plain between discovery or ‘indirect’ material on the one hand and proof or ‘direct’ material on the other hand, and that this is the true distinction with which one must approach the word testimony in this Act. Testimony which is in the nature of proof for the purpose of the trial is permissible. Testimony, if it can be called ‘testimony’, which consists of mere answers to question on the discovery proceeding designed to lead to a train of inquiry, is not permissible.

Put shortly, whether through the examination of potential witnesses or the production of documents, a ‘fishing expedition’ is not permitted: Radio Corporation per Lord Goddard CJ at 649. The nature of the evidence sought must be disclosed with reasonable particularity . Appropriate examples are to be found in Sydney Ferries at 309 to 310, and Hardie Rubber Co at 562ff, cf Smith v Smith 1975 1 NSWLR 725 per Woodward J at 730-731. It is not to the point that those cases dealt with requests from courts of this country for the obtaining of evidence abroad. I am satisfied that the legislation requires requests from other countries to meet the same standard before this court will act upon them.” (at p 5; bold added)

72 With the exception of the emboldened sentence in the preceding paragraph, what His Honour says accords with authority. However, neither example used to support the sentence to which I have just referred would, with respect, appear to support such sentence.

73 In Sydney Ferries Limited v SS Tahiti (1928) 28 SR (NSW) 307 an order for the taking of evidence from experts in the United Kingdom was supported by an affidavit on information and belief from the solicitor for the owners of the SS Tahiti. It stated that “the evidence of (the named witnesses) will be relevant and material to the issues raised in the action …” (supra at 310). Such evidence on information and belief was held to be sufficient to found the application and accordingly a commission was issued. (supra at 313). No reference is made in the judgment of Street CJ to a need for any specificity over and above the general statement in the affidavit in support.

74 In Hardie Rubber Co Pty Limited v General Tire & Rubber Company (1973) 129 CLR 521 the High Court dealt with a matter arising out of an order of Barwick CJ directing that a Letter of Request be directed to the proper tribunal in the Empire of Japan for the examination of certain named witnesses. The order had been made pursuant Order 37 Rule 4 of the High Court rules. An application was then made to set aside or discharge the order. That application was heard by Gibbs J, who said that under the High Court rules:

“The party seeking an order for the examination of a witness abroad must show to the satisfaction of the court or justice that the witness is out of the jurisdiction of the court, that his evidence is material and that his attendance within the jurisdiction cannot be procured; If these matters are established, as a general rule the Letter of Request ought to issue.” (supra at 528)

75 Gibbs J varied the order made by Barwick CJ, and an appeal to the Full Court was taken from the decision of Gibbs J.

76 In the Full Court, Walsh J, with whom McTiernan ACJ, Stephen and Mason JJ agreed, in considering an argument that the court can never be justified in making an order for the taking of evidence abroad unless it is established, in relation to one proposed witness at least, that that witness will be able to give material evidence, said:

“On this point I am of opinion that the court is not bound to act and ought not to act upon a rigid rule. No doubt in many cases where an applicant cannot specify a particular person who is likely to be a material witness, the court will decline to make an order, in accordance with the approach indicated in cases in which it has been stated that the court will not grant an applicant ‘a roving commission’ but it would be wrong to lay down an absolute rule applicable in all cases. The circumstances of each case must be considered and the ultimate question is whether having regard to the interests of the parties justice will be better served by granting or refusing an order.” (supra at 559)

77 The view that I have just expressed as to the effect of the judgment of Walsh J finds support in Smith v Smith (1975) 1 NSWLR 725 in which Woodward J said:

“On appeal the judgment of the court was delivered by the late Sir Cyril Walsh. It was held that, on the matter of the materiality of the witnesses in Japan, a degree of proof higher than that there was a probability that the witnesses could give material evidence was not required.” (supra at 729-730)

78 With respect to Hidden J, and conscious of the principles relating to comity between judges of the same or coordinate jurisdiction, I am unable to agree that before the Supreme Court has power to give assistance in relation to a Letter of Request for the taking of oral evidence from a witness, the Letter of Request must disclose with reasonable particularity the nature of the evidence that is to be taken. Whilst the court will not allow its process to be used for a “fishing expedition” or as a “roving commission” or as a means of obtaining pre-trial discovery, it is sufficient to enliven the power of the Court to act if the Letter of Request and other material before the Court indicates in general terms the evidence which is sought, that such evidence is relevant to the issues in the proceedings in respect of which it is sought, and that it is being obtained for the purposes of use at the trial in respect of which the request has been made.

79 Section 32 of the Act is the gateway through which an applicant, who seeks judicial assistance from the Supreme Court in fulfilment of a Letter of Request from a foreign court, must pass. The applicant must satisfy the Court as to the matters expressed in s 32(1)(a) and s 32(1)(b). On the proper construction of s 32 there is, in my opinion, no importation of, or need to import, a limitation on the breadth of the power conferred by the section by reading words into the section, or by limiting the oral evidence which may be obtained to that which has been specified with particularity beforehand. The limitations on the exercise of the powers conferred by s 32 are those that are expressed in s 33 of the Act. Section 33(4) imports into the exercise of the powers conferred by the Act, those limitations which exist under the law of New South Wales. If the request seeks the taking of a step that could not be taken in a proceeding in the Supreme Court, then the Court is precluded from exercising the powers created by Part 4 of the Act. Section 33(6) precludes the Court from exercising the powers created by Part 4 of the Act in such a way as, in effect, to require pre-trial or other discovery. This limitation reflects the law as stated in, for example, the Radio Corporation Case.

80 Having regard to the purpose of Part 4 of the Act, the express terms of the sections, the nature of the limitations built into the Part and the desirability of Court having sufficient powers to give effect to requests from foreign courts for judicial assistance, I am of opinion that ss 32 and 33 of the Act should not be construed in a restrictive manner when determining the ambit of the Court’s power. The powers created by Part 4 of the Act are discretionary. Under s 33, the Supreme Court “has power” to make certain orders (s 33(1)). In furtherance of that power, an order “may require” a specified person to take such steps as the Court “may consider appropriate” (s 33(2)). The generality of the powers conferred in s 33(1) and (2) is enhanced by the provisions of s 33(3), under which the Court “may, in particular” make orders of a specific kind. The existence of the discretion enables the Court to ensure that its process is not used inappropriately or unjustly. The existence of such a discretion itself, in my opinion, speaks against importing into ss 32 and 33 of the Act a limitation or limitations of the kind contended for by the applicants.

81 In applying the provisions of ss 32 and 33 of the Act, I am of opinion that the approach adopted by Clarke J in that regard in Forsyth (supra) is correct.

82 The Letter of Request designates the witnesses whom it is sought to depose. Each is said to be an officer of the companies that provided the applicants with the information on which they relied in making the acquisition in respect of which they are challenged in the proceedings instituted by Bond. Each is said to be able to give evidence which “would establish at trial” the underlying facts surrounding the claim by Bond. Those facts are relevant to the Bond litigation. Particular emphasis is directed towards the due diligence process and to audit reports which were prepared for the purpose of the acquisition and of which, as a matter of inference, each of the named witnesses was or should have been aware. That the information that they provided during the course of negotiations is relevant is clearly stated in the Letter of Request. These matters satisfy me that both the first and second applicants are likely to be in a position to give evidence relevant to the American (Bond) proceedings and that it is for this purpose that the United States Bankruptcy Court has sought the assistance of this Court.

83 When regard is had to the terms of s 32 of the Act I am satisfied that the application which was made to this Court for orders for the examination of those witnesses was made in pursuance of a request issued by the United States Bankruptcy Court in the exercise of its jurisdiction in the United States arising out of the bankruptcy proceedings involving Telegroup Inc and for the purposes of the action commenced by Bond against the respondents to the motion. The application is not an endeavour to engage in a “fishing expedition”. Nor is it “a roving commission”. It is not an attempt to have pre-trial or other discovery. I am satisfied that the evidence from the first and second applicant, which is the subject of the request from the United States Bankruptcy Court, is sought to be obtained for the purposes of the trial of the Bond proceedings. Accordingly, I am of opinion that the making of the orders on 16 May 2002 and 27 May 2002 was within power.

84 It has been submitted on behalf of the applicants that if the court had jurisdiction to make the orders the subject of the application then, in the exercise of its discretion, it should nonetheless refuse to give the assistance of this Court to the request made by the United States Bankruptcy Court or alternatively should make particular orders in relation to the procedure to be adopted at the examinations.

85 The only specific matter that has been advanced on behalf of the applicants in support of the submission that the jurisdiction of the court should not be exercised because of discretionary considerations is that it cannot be assumed that the respondents will not use the depositions other than for the purposes of the trial of the proceedings instituted by Bond. There is no evidence that they intend to so do. Furthermore, in the light of the discussion by Clarke J in Forsyth (supra), and having regard to what I have found to be the purpose for which the evidence is sought, I do not think it would be appropriate to refuse judicial assistance because the evidence taken from the first and second applicants may be used to assist in obtaining still further evidence, or for other purposes permitted by the United States Bankruptcy Court.

86 The authorities referred to above stress the desirability of our courts giving assistance to foreign courts where to do so accords with Australian law. Proceedings of the kind which have been instituted by Bond against the respondents to the motion are not foreign to our law. Proceedings against directors for breach of their fiduciary and directorial duties as a means of recovering money for creditors and shareholders are becoming more common in Australia. They are one of the means of enforcing, and hopefully strengthening, commercial morality. Where directors are sued on such causes of action justice requires that they be afforded an appropriate opportunity to advance all proper matters in their defence. That is what is sought by the Letter of Request in the instant case.

87 When the matter is considered as a whole, I do not think that there are reasons which should cause the court to exercise its discretion against the giving of assistance in relation to the taking of oral evidence from the first and second applicants, as has been requested by the United States Bankruptcy Court.

88 In my opinion appropriate assistance should be given by this court in response to the request made in the Letter of Request.

89 Senior counsel for the applicants has submitted that:

1. Written interrogatories should be ordered rather than oral evidence.

2. An order should be made under which the applicants are entitled to be represented by counsel and solicitor during the taking of the evidence;

3. Provision should be made that the respondents pay the applicant’s costs of such representation;

4. There should be a limitation ordered in relation to the use which may be made of the evidence adduced from the first and second applicants.

90 As to 1

91 As to 2

92 As to 3

Whilst it is common at the examination of company directors and officers of bankrupt companies in Australia that there be representation of witnesses, the ordering of the payment of the costs for such representation is not usual. Indeed, when Senior Counsel for the applicants, who has vast experience in relation to such matters, was asked to give an instance in which such an order had been made, he was unable to do so.

93 As to 4

The evidence which is to be taken from the first and second applicants is for use in the trial of the Bond proceedings. Those proceedings are to be seen as part of a wider litigious context, namely the bankruptcy of Telegroup Inc. What use the United States Bankruptcy Court may later make, or allow to be made, of the evidence is not within this Court’s knowledge, and it would, in my opinion, be inappropriate to limit the way in which the depositions taken may properly be used, if at all, over and above their use for the purposes of the trial of the Bond proceedings. Furthermore, were the witnesses to be called as witnesses in an action that had been instituted in New South Wales on a like cause of action, the evidence which they gave at a trial of such action would be able to be used for any purpose proper under our law, not just as evidence in the trial itself. Furthermore, no order would be made limiting the use of such evidence taken at the trial. For these reasons I am of opinion that it would be inappropriate to make an order limiting the use of the evidence.

94 For the reasons set out above, I am of opinion that the orders sought in relation to the subpoenas for the giving of evidence by the first and second applicants and in relation to the orders of this Court pursuant to which those subpoenas were issued, shouId be refused, and that the applicants should pay the costs of the motion.

95 I direct the parties to bring in short minutes of order at 10am on 6 August 2002 to give effect to these reasons.

96 ORDERS

1. The first and second applicants are entitled to be legally represented at the taking of their evidence and such entitlement extends to the appearance of an American Attorney for each such applicant.

(a) has read, had explained and believes that he/she is conversant with the proper procedure for the taking of evidence before a Commissioner in the Supreme Court;

(b) will act in accordance with such proper procedure and with the rules and practices of etiquette applicable to legal practitioners appearing in the Supreme Court.

(a) if any question in the examinations is objected to on a ground arising under Australian law, the examiner shall follow the procedure set out in Part 27 rule 7(1)(a) and (b) of the Rules with respect to the objection and require the witnesses to answer the question, on the basis that the answer and the objection will be dealt with as indicated in paragraphs 3(b) – (d) of this order.

(b) any notices of motion filed for the purpose of a ruling under Part 27 rule 7(1)(c), and any other motions concerning the proper operation of the law of this State or the procedure of this Court in relation to the depositions, will be dealt with by the Court either in accordance with the liberty to apply hereinafter referred to or otherwise at the conclusion of the examinations but before the transcript is certified by the examiner for transmission to the requesting Court; and

(c) to avoid doubt, it is noted that a notice of motion seeking to excise particular evidence from a deposition (on a ground arising under Australian law) may be filed and dealt with as contemplated in 3(b) notwithstanding that no objection was taken at the time the relevant question was asked.

Evidence Act 1995

(i) no application in respect of that objection has been filed by 4 p.m. on 20 august 2002; or

(ii) any such application is withdrawn or dismissed by the Court.

4. The Court notes the agreement of the applicants and the respondents that issues relating only to the admissibility of evidence (e.g. hearsay, relevance) are not to be the subject of applications by way of notice of motion to this Court.

5. The examination of the first and second applicants is to commence not before 2 p.m. on 7 August 2002.

6. The Notice of Motion filed on 26 July 2002 is otherwise dismissed.

7. The applicants are to pay the respondents’ costs of the motion.

**********

Last Modified: 08/07/2002

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Citations

Pickles v Gratzon [2002] NSWSC 688

Most Recent Citation

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CITATION:	Pickles and Ors v Gratzon and Ors [2002] NSWSC 688
FILE NUMBER(S):	SC 10271/02
HEARING DATE(S):	1/8/02;2/8/02
JUDGMENT DATE:	5 August 2002
PARTIES :	Graham Leign Pickles,Leonie Mary Lovell, Tech Pacific Holdings Pty Ltd and Hagemeyer Asia Pacific Pty Ltd v Fred Gratzon, Stephen Baumgartner, Eric BStackland, Douglas Neish and J Sherman Henderson III
JUDGMENT OF:	O'Keefe J

COUNSEL :	Mr T E F Hughes QC/Mr G R Kennett - Applicants Mr P Garling SC/Mr J Downing - Respondents
SOLICITORS:	Minter Ellison, Sydney - Applicants Hunt and Hunt, Sydney - Respondents
CATCHWORDS:	Evidence - Evidence on commission - Foreign court - Letter of Request - Letters Rogatory - International judicial assistance - Examination of witnesses in civil and commercial matters - Evidence by deposition - Participation by foreign attorneys - Discovery against persons not parties to foreign action not permitted - Pre-trial discovery not permitted - Fishing expedition not permitted - Roving commission not permitted - Treaty - Hague Convention - Setting aside subpoena - Setting aside ex parte order - Who is a party - Practice - Discretion
LEGISLATION CITED:	Evidence on Commission Act, 1995 Pt 4 ss 32, 33 Subpreme Court Rules Pt 40 r 9(3); Pt 37 r 8 Foreign Tribunal Evidence Act, 1856 (UK) Evidence (Procedures in Other Jurisdictions) Act, 1975 (UK) Evidence Act, 1898 Pt 9 ss 78, 79 Evidence (Evidence on Commission) Amendment Act, 1988 s 5 Bankruptcy Code of the USA Ch 11, Title 11 Treaty on the Taking of Evidence Abroad in Civil or Commercial Matters (1992, No 37) (The Hague Convention) Articles 1, 2, 3, 5, 12, 23, Ch 3
CASES CITED:	Applicant A v Minister for Immigration and Ethnic Affairs (1997) 142 ALR 331 Sands & McDougall Pty Limited v Robinson (1917) 23 CLR 49 The Banco (1971) P 137 D & R Henderson (MFG) Pty Ltd v Collector of Customs (NSW) (1974) 48 ALJR 132 Chu Kheng Lim v Minister for Immigration Local Government and Ethnic Affairs (1992) 110 ALR 97 Hardie Rubber Co Pty Limited v General Tire & Rubber Co (1971-1773) 129 CLR 527 Bidder v Bridge (1884) 26 ChD 1 Owners of SS Kalibia v Wilson (1910) 11 CLR 689 Re Jeld-Wen Inc and Oregon Corporation (1998) NSWSC (Unreported 25 September 1998) Radio Corporation of America v Rauland Corporation (1956) 1 QB 618 Re Asbestos Insurance Coverage Cases (1985) 1 WLR 331 Re Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No 235 (Nos 1 and 2) (1978) AC 547 Applicaiton of Forsyth; Re Cordova v Philips Roxane Laboratories Inc (1984) 2 NSWLR 327 Seyfang v G D Searle & Co (1973) qb 143 Lenning v Alexander Proudfoot Company World Headquarters (1991) NSWCCA, unreported 22 April 1991 National Mutual Holdings Pty Limited v Century Corporation (1990) Federal Court of Australia, unreported 30 May 1990 Sydney Ferries Limited v S S Tahiti (1928) 28 SR (NSW) 307 Smith v Smith (1975) 1 NSWLR 725
DECISION:	1, 2, 3, 4, 5 - Orders concerning legal representation, procedure at taking of evidence and date of commencement (see paragraph 96); 6. Notice of Motion filed on 26 July 2002 otherwise dismissed; 7. Applicants to pay respondents costs of Motion; 8. Liberty to apply on 24 hours notice.

[2002] NSWSC 688

5 August 2002

Key Legal Topics

Areas of Law

Civil Litigation & Procedure

Legal Concepts

Jurisdiction

Discovery & Disclosure

Admissibility of Evidence