The Sentry Corporation v Peat Marwick Mitchell & Company

Re: THE SENTRY CORPORATION
And: PEAT MARWICK MITCHELL AND CO and SENTRY INSURANCE A MUTUAL COMPANY
Nos. V G173 of 1987 and G160 of 1990
FED No. 404
Practice and Procedure - Discovery - Contempt
24 FCR 463

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Sweeney(1), Lockhart(2) and Ryan(3) JJ.

CATCHWORDS

Practice and Procedure - stay of proceedings where similar proceedings pending in foreign jurisdiction - principles to be applied - stay granted only where it is possible to do so without injustice to plaintiff - defendant must establish abuse of process, or oppressive or vexatious conduct, or an essential element of injustice.

Discovery - duty not to disclose or make use of documents for purposes other than proceedings in which discovery obtained - injunction to restrain disclosure contravening this principle.

Contempt - injunction to restrain apprehended contempt - order of foreign court requiring taking of oral depositions from persons in Australia for purpose of foreign proceedings - real risk of interference with administration of justice in pending local proceedings.

Declaration that proposed taking of depositions would contravene Oaths Act 1900 (NSW) - discretion to grant or refuse.

Leave to appeal from interlocutory order - not governed by rigid or exhaustive criteria - order having serious effect upon a litigant's case.

Adam P. Brown Male Fashions Pty. Limited v Phillip Morris Incorporated (1981) 148 CLR 170

Oceanic Sunline Special Shipping Co. Inc. v Fay (1988) 165 CLR 197

Parsons v Marton (1985) 5 FCR 235

Victoria v Australian Building Construction Employees and Builders Labourers Federation (1982) 152 CLR 25

Pioneer Concrete Victoria Pty. Limited v Trade Practices Commission (1982) 152 CLR 460

National Mutual Holdings Pty. Limited v The Sentry Corporation (1988) 19 FCR 155

McHenry v Lewis (1882) 22 Ch D 397

St. Pierre v South American Stores (Gath and Chaves) Limited (1936) 1 KB 382

Hyman v Helm (1883) 24 Ch D 531

Peruvian Guano Company v Bockwoldt (1883) 23 Ch D 225

Slough Estates Limited v Slough Borough Council (1968) Ch D 299

National Mutual Holdings Pty. Limited v The Sentry Corporation (1989) 87 ALR 539

HEARING

MELBOURNE

#DATE 8:8:1990

Counsel for applicant and appellant: Mr J.H. Karkar, QC with Mr D. Ryan

Solicitors for applicant and appellant: Messrs Phillips Fox

Counsel for Respondent: Mr S. Rares

Solicitors for Respondent: Messrs Allen Allen and Hemsley

ORDER

The applicant, The Sentry Corporation, be given leave to appeal from the judgment of Northrop J. of 18 May 1990.

Paragraph 2 of Northrop J.'s Order of 18 May 1990 be amended to read:

"Upon the Second Respondent by its counsel undertaking to the Court to pay to any party adversely affected by the stay ordered herein such compensation (if any) as the Court thinks just, in such manner as the Court directs, order that the proceedings, being the cross claim by The Sentry Corporation against Peat Marwick Mitchell and Co. (a firm), be stayed until further order."

Liberty be reserved to The Sentry Corporation to apply on not less than 48 hours notice in writing to the other parties herein for such Order as it may be advised varying or dissolving the stay referred to in paragraph 2 of this Order.

The appeal from the judgment of Northrop J. of 18 May 1990 be otherwise dismissed.

The appeal and the cross appeal from the judgment of Northrop J. of 30 May 1990 be dismissed.

The Sentry Corporation pay the costs of Peat Marwick Mitchell and Co. of the motion for leave to appeal from this judgment of Northrop J. of 18 May 1990 and of the appeal itself.

Sentry Insurance A Mutual Company pay two-thirds of the costs of Peat Marwick Mitchell and Co.of the appeal from the judgment of Northrop J. of 30 May 1990.

There be otherwise no order as to costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The principal proceeding, in which the matters presently before the Court arise, was commenced on 3 July 1987 by National Mutual Holdings Pty Ltd ("NMH") and others against The Sentry Corporation ("Sentry") and Peat Marwick Mitchell and Co. ("PMM"). In it NMH makes four principal claims against Sentry, namely-

(a) a claim to recover the amount of loss or damage

allegedly suffered by NMH as a result of Sentry's alleged misleading or deceptive conduct contrary to s.52 of the Trade Practices Act 1974;

(b) a claim to recover damages for alleged breach of

contractual warranties contained in a contract between NMH and Sentry made on 22 July 1986 in respect of the accounts of Sentry Holdings Ltd and its subsidiaries ("the SHL group");

(c) a claim for indemnity under that contract or

alternatively damages for alleged breach of the indemnity provision in the contract; and

(d) a claim to recover damages for alleged negligent

misrepresentation made by Sentry allegedly inducing NMH to enter into that contract.

These claims are said to arise out of an alleged failure of the accounts of companies associated with Sentry ("the SHL Group") to meet certain accounting standards, which NMH alleged were the subject of representations and warranties by Sentry in respect of the sale of its shares to NMH.
NMH and certain of its subsidiaries have also claimed damages against PMM in the principal proceeding for negligence in the preparation and auditing of the accounts of the SHL Group.
Sentry has cross-claimed against PMM seeking damages, contribution or indemnity from PMM, basing its claims for relief upon breaches by PMM of s.52 of the Trade Practices Act and common law negligence. It is this cross-claim that was stayed by the order of Northrop J made on 18 May 1990, which is set out below. PMM has in turn cross-claimed against Sentry for indemnity and damages.
Northrop J has described these proceedings as very complex, with a large number of interlocutory proceedings. A trial date has been fixed for October 1990.
Sentry Insurance A Mutual Company ("SIAMCO") is the parent of Sentry. In October 1988, SIAMCO sued Peat Marwick Main and Co. ("PMM-US"), a United States partnership, and certain of its partners, in the Wisconsin Circuit Court seeking damages for breach of contract and negligence in connection with the preparation and auditing of the accounts of the SHL group. In January 1990, the Wisconsin proceeding was amended to join PMM, against which a claim was made by SIAMCO for damages for breach of contract and for negligence in connection with the preparation and auditing of the accounts of the SHL group. The joinder by SIAMCO of PMM in the Wisconsin proceeding precipitated PMM's application to the Wisconsin Circuit Court for dismissal and stay, and subsequently its applications to Northrop J, which led to the making of the orders of 18 and 30 May 1990.
The first of the two maters before us is an application by Sentry for leave to appeal from the judgment of Northrop J given on 18 May 1990 and, if leave be granted, an appeal from that judgment. On that day his Honour -
(a) restrained Sentry from using or permitting to be used

otherwise than for the sole purpose of these proceedings any document or any information contained in or knowledge acquired by or on behalf of Sentry from any document discovered by PMM in these proceedings ("the protected documents");

(b) restrained Sentry from producing, making available for

inspection or otherwise disclosing to SIAMCO any of the protected documents or any information therein or any knowledge acquired therefrom;

(c) ordered that the cross-claim by Sentry against PMM be

stayed until further order or until SIAMCO undertakes to the Wisconsin Circuit Court to take no further procedural or other steps in the proceedings in that Court against PMM, pending the hearing and determination of the proceeding in action No.VG 173 of 1987 ("the principal proceeding").

The second matter is an appeal from the judgment of Northrop J given on 30 May 1990, in respect of which his Honour has granted leave to appeal. On that day his Honour ordered, amongst other things, that until further order SIAMCO be restrained within Australia from taking or causing to be taken or requiring or participating in the taking of any oral deposition from, or requiring the production of documents by, named partners, former partners or employees for the purposes of or in connection with Civil Action No. 88-CV-421 in the Circuit Court of Wisconsin, provided that nothing in the order should prevent SIAMCO from making an application inter partes to any Court having jurisdiction in New South Wales for an order pursuant to any statute or letters rogatory in respect of the taking of evidence for the purposes of the Wisconsin action. His Honour refused the application of SIAMCO, that service on it of the originating process be set aside. (AB, 2/151-152).
The issues raised in the Wisconsin proceeding may be seen from the amended complaint in that proceeding which appears at AB, 149-164. The plaintiff is SIAMCO and the defendants are now PMM-US and its partners and PMM and its partners. The parties to the Wisconsin action are thus not identical with those in the Australian proceeding. As against PMM-US, causes of action are alleged to be breach of contract (paras 31-33) and negligent supervision (paras 34-37). As against PMM there is, first, a claim for breach of contract (paras 38-43), in which SIAMCO claims to be a beneficiary of a promise under a contract between Sentry and PMM and so entitled under the law of Wisconsin to sue for breach of obligations arising under that contract, although not a party to it (AB, 1/278-279, 284-285, 311-313). His Honour accepted that "it is clear that the claim based upon breach of contract is a claim apparently open in the United States to a person who is not a direct party to a contract whereas it is doubtful if such a claim would succeed under Australian law". (AB, 1/432). In addition to the contract claim, there is also a claim against PMM for negligent practices (paras 44-46).
The relief sought against PMM for breach of contract is damages. Paragraph 43 of the amended complaint which pleads the loss and damage alleged to have resulted from PMM's breach of contract reads as follows -
"43. As a result of this breach by PM-AUS,

SIAMCO has been damaged in an amount to be determined at trial, but no less than the auditing fees paid to PM-US and/or PM-AUS during the relevant period, plus the reduced value of SIAMCO's 100% stock holding in Sentry brought about by the costs incurred and to be incurred by Sentry and the contingent liability of Sentry to National Mutual by reason of the pendency of the Australian lawsuit." (AB, 1/162).

The loss and damage claims fall into a number of categories, which counsel for Sentry pointed out are substantially different from the damages sought by Sentry in Australia -
(a) auditing fees paid;
(b) the reduced value of SIAMCO's stock holding in Sentry

brought about by

(i) hundreds of thousands of dollars incurred in legal fees and other defence costs (para 21); and

(ii) the contingent liability of Sentry to NMH by reason of the pendency of the Australian law suit.

A similar claim for loss and damage is made in respect of the alleged negligent practices of PMM (para 46, AB, 1/163).
On 16 February 1990, shortly after the joinder of PMM to the Wisconsin proceeding, the Australian solicitors for PMM, Messrs Allen Allen and Hemsley ("AAH") wrote to the Australian solicitors for Sentry, Messrs Phillips Fox ("PF"), complaining about the joinder of PMM to the Wisconsin proceeding and threatening that, unless an undertaking were given to discontinue or stay the Wisconsin action, PMM would apply to the Federal Court for an order that Sentry's cross-claim against PMM be struck out or stayed. (AB. 1/167-169).
PMM unsuccessfully moved the Wisconsin Circuit Court on 27 March 1990 seeking -
(a) an order dismissing the amended complaint against PMM on

the ground, inter alia, that the Wisconsin Circuit Court lacked jurisdiction over PMM; or

(b) an order staying further proceedings in the Wisconsin

action "to permit trial in a foreign forum". (AB, 1/171-173).

The grounds for the motions included ground (3) which read as follows -
"(3) as a matter of substantial justice, the

Federal Court of Australia is a more appropriate forum for resolution of the dispute between PM-Australia and Plaintiff because: . Plaintiff will not be harmed by the granting of a stay; . PM-Australia will be harmed by the denial of a stay; . there is another action pending between PM-Australia and The Sentry Corporation, with which Plaintiff is in privity, for the same cause in the Federal Court of Australia, General Division, Victoria District Registry, in which trial is scheduled to commence in October 1990; . the claims asserted in this action against PM-Australia relate to actions or inactions of PM-Australia in Australia; and . staying further proceedings in this action in order to permit trial of this controversy in Australia is a matter of substantial justice in that Australia is a more convenient forum for witnesses and for PM-Australia, the Australian proceeding is closer to trial than this action, and the Australian forum is more familiar than this Court with the governing

(Australian) substantive law." (AB, 1/172-173).

Since the hearing of this motion the following interlocutory steps have taken place in the Wisconsin proceeding:
1. On 28 March 1990, in Wisconsin SIAMCO served a "Request

for Production of Documents" on PMM seeking discovery of documents produced by PMM to Sentry in the course of discovery in the Federal Court proceedings (AB, 1/195).

2. On 5 April 1990, SIAMCO's American attorney informed the

Wisconsin Circuit Court that SIAMCO desired to take oral depositions of PMM personnel in Australia regarding that firm's contacts with Wisconsin (AB, 1/186).

3. On 13 April 1990, a motion was filed by PMM in the

Wisconsin Circuit Court for a "Protective Order" seeking to limit discovery to the issues raised in PMM's motion and to prohibit oral depositions (AB, 1/179).

4. On 27 April 1990, proceedings took place before Judge

Finn in the Wisconsin Circuit Court. PMM's motion for a protective order was denied. An order was made compelling discovery by requiring PMM to consent to the release to SIAMCO of all documents discovered in Australia to Sentry (AB, 1/214).

5. On 9 May 1990, SIAMCO's attorney wrote to the attorney

for PMM in America enclosing various motions which sought, inter alia, to restrain PMM from pursuing before the Federal Court the motion which PMM had earlier that day filed in the Federal Court to stay Sentry's cross-claim against PMM and to restrain the use of documents (AB, 1/237).

6. On 10 May 1990, Judge Finn declined to make any order

restraining PMM from pursuing its motion dated 9 May 1990 before the Federal Court (AB, 1/265).

7. On 15 May 1990, the Court of Appeals of Wisconsin

granted leave to PMM to appeal from the orders made on 10 May 1990, and limited the scope of discovery to jurisdictional issues (AB, 1/258, 262).

8. On 17 May 1990, SIAMCO stated its intention not to seek

orders restraining PMM from prosecuting the motion dated 9 May 1990 in the Federal Court of Australia (AB, 1/273).

9. On 22 May 1990, notices of the taking of depositions

issued (AB, 2/11-12, 15). The taking of these depositions was to commence in Sydney on 4 June 1990 and to continue to 8 June 1990.

10. On 22 May Judge Finn also ordered that during the days

of May 28 to 1 June 1990 PMM permit the attorneys for SIAMCO to view and copy at PMM's Sydney office all documents which it had produced to Sentry in connection with the Australian proceedings "in discovery or otherwise". The order for discovery in this court was a general order (T/S78) which covered many thousands of documents, in respect of audits over four years.

11. On 22 May 1990, Judge Finn ordered, amongst other

things, that depositions be taken in Sydney, limited to issues of jurisdictional fact raised in PMM's motion to dismiss SIAMCO's amended complaint (AB, 2/11-12, 45-48).

12. On 25 May 1990, the Wisconsin Court of Appeals denied

PMM's petition for leave to appeal from the order of Judge Finn of 22 May 1990, and its motion for a stay of that order, stating that "our decision does not deprive PM-Australia of a remedy because it had the option of seeking a Protective Order in Australia" (AB, 2/84-88).

13. On 28 May 1990, PMM agreed to give SIAMCO access to documents in its possession relating to the proceeding before the Federal Court, and permitted representatives of SIAMCO to commence inspection of those documents (AB, 2/132).

14. A motion by PMM in the Wisconsin Circuit Court to dismiss or stay SIAMCO's action there was set down for hearing on 25 July 1990.

By notice of motion in this Court dated 9 May 1990, PMM sought the following orders against Sentry -
"1. An order that the First Respondent by

itself its servants and agents be restrained from:

(a) using or permitting to be used any

document or copy thereof of any information contained in or knowledge acquired by or on behalf of the First Respondent or any such servant or agent from any document or copy thereof discovered by the Second Respondent or served pursuant to any order made in these proceedings (herein compendiously called 'the Protected Documents') . . .

(b) producing, making available for

inspection or otherwise disclosing to Sentry Insurance a Mutual Company any of the Protected Documents or any information therein or any knowledge acquired therefrom.

2. An order pursuant to Order 11 r16 and or

Order 20 r2(1) striking out, staying permanently or until further order or dismissing the cross claims of the First Respondent against the Second Respondent in these proceedings."

On 10 May 1990, PMM applied in Melbourne ex parte to, and obtained from, Gummow J, the following order, amongst others -
"2. Upon the Second Respondent (PMM) by its

Counsel giving to the Court the usual undertaking as to damages, order that until 4.15 p.m. on 17 May 1990 or earlier further order, the First Respondent

(Sentry) by itself, its servants and agents be restrained from:

(a) using or permitting to be used otherwise than for the sole purpose of these proceedings any document or copy thereof or any information contained in or knowledge acquired by or on behalf of the First Respondent or any such servant or agent from any document or copy thereof discovered by the Second Respondent or served pursuant to any order made in these proceedings (herein compendiously called 'the Protected Documents'); and

(b) producing, making available for inspection or otherwise disclosing to Sentry Insurance a Mutual Company any of the Protected Documents or any information therein or any knowledge acquired therefrom."

On 17 May 1990, when the motion of PMM was called on for hearing before Northrop J, an application by Sentry for an adjournment of the hearing to enable Sentry to file affidavits in opposition to the application was refused by his Honour. No affidavit in support of that application or in opposition to the motion of 9 May had been filed by Sentry. PMM's application was heard on 17 and 18 May 1990. At the conclusion of argument, his Honour, on the usual undertaking as to damages, ordered that the orders of 17 May be continued until further order and also ordered that:

"the proceedings, being the cross claim by The Sentry Corporation against Peat Marwick Mitchell and Co. (a firm), be stayed until further order or until Sentry Insurance a Mutual Company undertakes to the Wisconsin Circuit Court to take no further procedural or other step in the proceedings in that Court against Peat Marwick Mitchell and Co. (a firm), also known as KPMG Peat Marwick of Australia (a partnership) pending the hearing and determination of this proceeding in Action No.VG 173 of 1987."

By letter dated 7 June 1990 the District Registrar advised the parties that the matters would be listed for mention before a Full Court on 13 June, when "the court will expect to be advised of the range of dates during which it will be proposed that the matters be listed together for hearing and an estimate of the duration".
When these matters were so listed, directions were given by consent that written submissions should be delivered on behalf of Sentry by 18 June and on behalf of PMM by 25 June. After enquiring of the parties as to a suitable date for the parties to speak to those submissions and the length of time which would be needed, they were fixed for hearing on 29 June, it being said by counsel for both parties that no more than one day would be required.
The written submissions were duly delivered but on 21 June PMM filed a Notice of Cross Appeal from those parts of the judgment of Northrop J given on 30 May in which his Honour
(a) refused to make any declaration pursuant to prayer 3 of

its motion, notice of which was filed on 23 May 1990. (In that prayer, which the Notice did not set out, a declaration was sought "that the taking of oral depositions in the State of New South Wales by any person in purported compliance with the attached Notice or any similar Notice would:

(a) be illegal as being contrary to Section 20 of the Oaths Act 1900 (NSW);

(b) constitute an abuse of the process of this Honourable Court; and/or

(c) constitute a contempt of this Honourable Court.")

(b) discharged so much of the order made on 23 May 1990 as joined SIAMCO

(c) reserved the costs relating to paragraphs (a) and (b) of the motion.

The Notice then set out some seven grounds of appeal and sought the following:

"1. An order that:

(a) the Cross-Appeal be allowed;

(b) orders A1, A3, B2 and B3 of the orders made by Mr Justice Northrop on 30 May 1990 be discharged and in lieu thereof there be made orders and declarations as follows: 'A1. Order that the order made on 23 May 1990 joining Ducey as a Cross-Respondent be discharged. A3. Order that the costs of PM Australia of the motion be paid by SIAMCO and otherwise there be no order as to costs. B2. Declare that in the events which have happened, the taking of oral depositions in the State of New South Wales pursuant to the Orders for Depositions would:

(a) be illegal as being contrary to s.20 of the Oaths Act, 1900 9NSW);

(b) constitute an abuse of the process of this Honourable Court;

(c) constitute a contempt of this Honourable Court. B3. Order that SIAMCO pay the costs of PM Australia of PM Australia's Motion.'

2. An order that SIAMCO pay PM Australia's costs of the Cross-Appeal.

3. Such further or other order or relief as the nature of the case may require."

PMM filed on 26 June an affidavit in support by Mr Arthur, a solicitor employed by AAH, in which he stated, on information and belief, that on 19 June SIAMCO had filed in the Wisconsin Circuit Court a motion returnable on 27 June seeking sanctions against PMM as a result of SIAMCO's inability to obtain depositions in Sydney, and an affidavit in support of the motion, and that on 20 June SIAMCO filed a Memorandum in Support of its motion seeking sanctions. Copies of these documents were exhibited to the affidavit, which concluded as follows:

"The respondent (PMM) seeks leave pursuant to O.52 r.36 to rely upon the above matters as fresh evidence which was not (as appears from its face) available prior to 19 and 20 June 1990."

PMM also filed on 26 June a Notice of Contention that so much of the judgment of 30 May 1990 as is the subject of the Notice of Appeal should not be discharged or varied, "in that Order B1 should have been made; further or alternatively on grounds 3, 4 and 5 of PMM's Notice of Cross Appeal."
The Notice of Contention did not recite "Order B1". However it can be seen from AB Vol 2 p 152 that it reads as follows
"B. In the motion by Peat Marwick Mitchell

and Co. (a firm) ('Peat Marwick Australia') dated 23 May 1990,

1. That until further order SIAMCO, by itself, its servants and agents be restrained within the Commonwealth of Australia from taking or causing to be taken or requiring or participating in the taking of any oral deposition from, or requiring the production of documents by, the persons named or any of the persons named in the attached Notice or any similar Notice for the purposes of or in connection with Civil Action No. 88-CV-421 in the Circuit Court of Wisconsin, Portage County ('the Wisconsin action'), provided that nothing in this order shall prevent SIAMCO from making an application inter partes to any Court having jurisdiction in the State of New South Wales for an order pursuant to any statute and or any letters rogatory in respect of the taking of evidence for the purposes of the Wisconsin action;"

In his reasons for judgment pronounced on 18 May 1990 Northrop J said (AB 1/431-2)

"SIAMCO is the parent company of Sentry, and although in law they are separate legal personalities, it is clear, and it is accepted, that SIAMCO has a 100 per cent ownership of Sentry and for practical purposes they can be treated as the same person, even though they are separate companies but the fact that they are separate companies is of importance in this case".

His Honour then referred to the history of the proceedings in this court, which were commenced by application filed on 3 July 1987. His Honour did not set out all the details of that history, which were well known to him as he had, since early 1989, dealt with almost all of the many interlocutory hearings in these proceedings.
However, he pointed out that in October 1988 SIAMCO filed its complaint in the Wisconsin Circuit Court against PMM-US and that it was only in January 1990 that it amended that complaint by adding claims against PMM.
His Honour observed (at AB 1/433) that the amended complaint and the issues to be determined under it are to some extent dependent upon the outcome of the Federal Court proceedings.
His Honour referred to the fact that the documents subject to the order for discovery made by the Wisconsin Circuit Court have been produced to it and are now in its custody (AB 1/436). He further noted that Mr Pat Ducey, who is counsel for SIAMCO in the proceedings in Wisconsin is stated to be "one of the Sentry team at Phillips Fox the solicitors for Sentry in relation to the proceedings in the Federal Court".
Northrop J then turned to determine the appropriate law to be applied in relation to the stay and set out the terms of O.20 r.2 of the Federal Court rules as follows:

"2(1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding

(a) . . .

(b) the proceeding is frivolous or vexatious; or

(c) the proceeding is an abuse of the process of the Court, the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding."

His Honour then referred to the reasons for judgment in Oceanic Sun Line Special Shipping Company Inc. and Fay (1987-8) 165 CLR 197 and particularly to the reasons of Brennan J and of Deane J, and said that Brennan J had made it clear (at p 238) that a court

"should not stop a proceeding which has been regularly commenced in the courts in Australia merely because there is a similar action being brought in a foreign Court unless the invocation of the jurisdiction in the Australian Court is oppressive, vexatious or otherwise an abuse of process and that a very strict and narrow meaning must be given to those words 'oppressive, vexatious or otherwise an abuse of process'".

Northrop J then said (AB 1/438-441)

"What is clear from all those authorities is that each case must depend upon its own particular circumstances, that the Courts, both in England and in Australia, have been careful not to lay down any particular restrictions to be applied in every case and stress the need to keep in mind that a party should not be deprived of a right to prosecute an action in the Courts in Australia since to do so, of necessity, causes an injustice to that person seeking relief. But at the same time the Court should not allow the use of the two proceedings to cause an injustice to a defendant. In the present case Peat Marwick Australia is in the position of a defendant. The mere existence of the two proceedings in Australia and Wisconsin of itself is not oppressive, vexatious or an abuse of the process of the Court. More is required. A similar position arises in cases where a party is a party to the proceedings in the Court in which the application is made as well as a party in the foreign proceedings where an injunction can have the same effect. Here, it is to be remembered that Sentry and Siamco are different legal persons. An illustration of an injunction can be seen by a reference to the decision of the Privy Council in Societe Nationale Industrielle Aerospatiale v Lee Kui Jak (1987), 1 AC 871 where there is a consideration of the same general principles as are discussed in the stay cases but in the context of an injunction. But the opinion expressed there makes it clear that each case must be determined on the particular facts of each case and it must be shown that in the circumstances of any case, to allow the two proceedings to continue would, in the circumstances, be vexatious, oppressive or an abuse of process. There is one passage in that case which is very helpful in considering the present case, at page 893, the following passages appears:-

'Another important category of case in which injunctions may be granted is where the plaintiff has commenced proceedings against the defendant in respect of the same subject matter both in this country and overseas, and the defendant has asked the English court to compel the plaintiff to elect in which country he shall alone proceed. In such cases, there is authority that the court will only restrain the plaintiff from pursuing the foreign proceedings if the pursuit of such proceedings is regarded as vexatious or oppresive; see McHenry v. Lewis

(1882) 22 Ch D 397 and Peruvian Guano Co. v. Bockwoldt (1883) 23 Ch D 225. Since in these cases the court has been presented with a choice whether to restrain the foreign proceedings or to stay the English proceedings, we find in them the germ of the idea that the same test (i.e. whether the relevant proceedings are vexatious or oppresive) is applicable in both classes of case, an idea which was to bear fruit in the statement of principle by Scott L.J. in St. Pierre v. South American Stores (Gath and Chaves) Ltd. (1936) 1 KB 382, 398, in relation to staying proceedings in this country, a statement of principle now overlaid by the adoption in such cases of the Scottish principle of forum non conveniens, which has been gratefully incorporated into English law.' I am informed from the bar table that the principles expressed in the Oceanic Sunline case have been considered further by the High Court in a more recent decision in which argument has been heard but judgment has been reserved. I propose to apply the principles as to whether, on the facts of this case, it is an abuse of the process of the Court or vexatious or oppressive to Peat Marwick Australia for the claim against it being pursued in the Wisconsin Circuit Court in the particular circumstances of this case."

Northrop J had earlier (AB 1/429) set out the form of order sought by PMM in the course of counsel's submissions to him, as follows:

"That the proceeding being the cross-claim by Sentry against Peat Marwick Australia be stayed until further order or until SIAMCO undertakes to the Wisconsin Circuit Court to take no procedural or other step in the proceedings in that court against Peat Marwick Australia pending the hearing and determination of this proceeding".

His Honour expressed his conclusions in respect of the order so sought (AB 1/442-3) as follows:

"In my opinion the proceedings by SIAMCO in the United States do have the effect of causing a very grave injustice to Peat Marwick Australia in the proceedings in this case to the extent that they do constitute an abuse of the process of this Court of a kind sufficient to justify this Court making an order of the type sought. In coming to this opinion I rely upon the fact that the proceedings in the United States were commenced in October 1988 and it was not until January 1990 that Peat Marwick Australia was joined as a party. It is realized that Peat Marwick Australia, in one sense, is a moving party in what has happened since then in that it has applied to have the proceedings against it in the United States stayed and in so doing has unleashed a series of procedural steps which on their face do interfere in my opinion with the proceedings currently before this Court. This Court has before it a series of causes of action which are going to give rise to a very lengthy and difficult hearing. It is said that the hearing might take four or five months. The matter has been set down for hearing and on its face the amended complaint in the United States proceedings is based upon damages depending upon what happens in the Australian proceedings. In addition to that the interlocutory proceedings in the United States, on their very face, make reference to the proceedings in this Court and require the production of the documents which have been prepared for the purposes of making the cross-claim in these proceedings, making those documents available to SIAMCO in Australia albeit under the guise of jurisdiction, but, in my opinion, in reality going beyond that. It is realized that the parties are different, but SIAMCO is the controller of Sentry. There is the one person, Mr Ducey, who is acting for SIAMCO in the United States and apparently at the same time for Sentry in Australia. The proceedings in the United States have the appearance, and I say no more than that, of being a tactic to harass Peat Marwick Australia in the conduct of its proceedings in Australia. All the facts of this case support the view, in my opinion, that the proceedings in the Wisconsin Circuit Court are designed to have a bearing upon or interfere with or have a harassing effect on Peat Marwick Australia in its conduct of the proceedings in this Court. In those circumstances seeing that SIAMCO is not a party to the proceedings in Australia this Court cannot make any injunctive order against SIAMCO, but it can make orders of the kind sought in this case, namely, the order in the form . . . set out earlier in these reasons. I propose to make that order."

It is necessary to decide, in the first place, whether leave should be granted to appeal from the interlocutory order of 18 May. In my opinion, an application such as this in relation to a matter of practice and procedure should not be lightly granted. However, Northrop J has already granted leave in respect of the order of 30 May and, on balance, I consider that leave should be granted.
The appeal itself is to be determined in accordance with the principles set out in Adam P. Brown Male Fashions Proprietary Limited v. Phillip Morris Incorporated (1981) 148 CLR 170. By Order 1, Sentry was restrained from using the documents discovered in the Australian proceedings by PMM, "otherwise than for the sole purpose of these proceedings" and from "producing, making available for inspection or otherwise disclosing" to SIAMCO any of those documents "or any information therein or any knowledge acquired therein".
It was common ground that Northrop J correctly stated the law when he said that "a person who acquires a document pursuant to the processes of the Court is under a duty not to disclose or make use of that document without the leave of the Court or the person from whom the document has been obtained" and that a similar duty applied in respect of knowledge acquired from the document.
The facts which have earlier been set out, and in particular the dual role of Mr Ducey, in my opinion amply justify these orders.
It is true, as his Honour was told, that the documents discovered by Sentry in this Court had been delivered to Judge Finn and handed over to SIAMCO. However, it was still proper to restrain Sentry, whose legal advisers including Mr Ducey, had no doubt studied the discovered documents thoroughly, in the manner prescribed by his Honour.
If later events are thought to justify the modification of those orders this should be sought by application to Northrop J or another Judge of the court. It is not for us, sitting as a Full Court, to deal with this question.
As his Honour recognized, Order 2 of 18 May was an unusual one, in that it stayed Sentry's regularly instituted cross claim against PMM until further order or until SIAMCO undertook to the Wisconsin Circuit Court to take no further step in the proceeding in that Court against PMM pending the hearing and determination of Action No VG173 of 1987.
Northrop J carefully considered the aspects of the case relied upon by the appellant, such as the difference in parties and in the damages claimed, the availability to SIAMCO in Wisconsin of a cause of action not recognized by Australian law, and the steps taken by PMM in Wisconsin. Looking at them in the light of the circumstances generally, in the exercise of his discretion, he took what he considered to be the only practicable course which would permit the proceedings in this court to continue without the expensive and distracting requirements of seeking to conduct the Australian and Wisconsin proceedings simultaneously. The chronology suggests not only that similar questions were arising in each country, but that it would be reasonable to expect that Sentry would seek to bring the Wisconsin proceedings to trial as quickly as possible. It is by no means out of the question that the parties would be faced with the ultimate absurdity of trial dates in each country being fixed very close together.
It is to be remembered that the order did no more than stay Sentry's cross-claim. Between 1987 and January 1990, SIAMCO had been content to rely upon Sentry's cross-claim in the Australian proceedings without seeking to institute any proceedings against PMM in Wisconsin. That cross-claim is based upon audits carried out in Australia of a company selling Australian assets to an Australian purchaser and the Wisconsin proceeding is dependent, to a considerable extent, upon the outcome of the Australian action.

I can see no satisfactory reason why the general thrust of his Honour's order should be disturbed. However, in one respect it should, in my opinion, be modified. What his Honour set out to ensure was that PMM should not be any further exposed to the vexatious burden of contesting both actions simultaneously. This result could have been produced by a stay order against Sentry, simply expressed to be until further order, with liberty reserved to Sentry to apply, if it wished to place before this Court evidence that SIAMCO would take no procedural or other steps in the proceedings against PMM in the Wisconsin Circuit Court, pending the hearing and determination of the proceeding in Action No. VG173 of 1987.
An order in this form would have achieved the desired object, without the possible complications which may be thought to arise from this court making the continued operation of its order dependent upon an undertaking by SIAMCO to the Wisconsin Circuit Court. It may be thought that it is for that Court to determine whether it would accept an undertaking proferred to it, in respect of proceedings before it, in a form determined by a foreign court. Problems might also have arisen if SIAMCO, having given the prescribed undertaking, were later released from it. Otherwise, I would dismiss the appeal against the order of 18 May.
I agree with the orders proposed by Lockhart J in relation to the outcome of the second appeal and the cross appeal and with the orders proposed in relation to costs, and with his reasons for them.
I would simply add that despite the fact that the Wisconsin Court of Appeal had limited the scope of discovery to jurisdictional issues, Judge Finn later ordered PMM to produce to SIAMCO all of the voluminous records produced to Sentry under a general order of discovery. In my opinion, this casts serious doubt upon the value of the term of the order that the scope of the examination in the taking of depositions should be limited to issues of jurisdictional fact. This doubt is reinforced by the fact that the depositions were to be taken before Wisconsin court reporters who were directed to administer the oath and record the testimony. The order made no provision for any ruling being sought or given by way of objection to any question asked.

JUDGE2

This is yet another round in a long battle between the parties which is being fought on two fronts, one in this country and the other in the United States of America. The curial history is lengthy and complicated, but needs a detailed statement before mentioning the questions which arise in the present round of the conflict.

This litigation started on 8 July 1987 when National Mutual Holdings Pty. Limited ("NMH") and certain of its subsidiaries sued in this Court The Sentry Corporation, a corporation organised under the laws of the State of Texas in the USA ("Sentry"), and Peat Marwick Mitchell and Co. ("PMM"), a firm of chartered accountants practising in Australia. Sometimes I shall refer to that proceeding as "the principal proceeding". In June 1986 NMH acquired from Sentry Assurance International Limited all the issued shares in the capital of Sentry Holdings Limited. NMH claims against Sentry arise out of an alleged failure of the accounts of Sentry Holdings Limited and its subsidiaries ("the Sentry group") to meet certain accounting standards which NMH asserts were the subject of representation and warranties by Sentry.
The claims made by NMH against Sentry fall broadly under four headings, namely:
(a) a claim for loss or damage allegedly suffered by NMH as a result of what it asserts was Sentry's misleading or deceptive conduct contrary to s. 52 of the Trade Practices Act 1974;
(b) a claim for damages for alleged breach of warranties contained in a contract made on 22 July 1986 between NMH and Sentry relating to the accounts of the Sentry group;
(c) a claim for indemnity under that contract or alternatively for damages for alleged breach of the indemnity provisions in the contract; and
(d) a claim for damages for alleged negligent misrepresentation by Sentry prior to the entry into the contract and allegedly inducing NMH to enter into it.
NMH and certain of its subsidiaries also sue PMM in the principal proceeding claiming damages for negligence in the preparation and audit of accounts of the Sentry group.
Sentry has cross claimed against PMM seeking damages, contribution or indemnity from PMM based upon alleged contraventions by PMM of s. 52 of the Trade Practices Act and negligence at common law. PMM in turn has cross claimed against Sentry for indemnity and damages.
Sentry is a wholly owned subsidiary of Sentry Insurance A Mutual Company ("SIAMCO") a United States corporation organised under the laws of the State of Wisconsin with its principal place of business in Stevens Point, Portage County, Wisconsin.
In the principal proceeding there have been large numbers of interlocutory applications, and appeals to Full Courts of this Court on two occasions, in addition to the matters presently before this Full Court.
In October 1988 SIAMCO commenced proceedings in the Circuit Court of the State of Wisconsin, Portage County, Stevens Point, against Peat Marwick Main and Co ("PMM-US"), a partnership of public accountants in the USA, and certain of its partners, seeking damages for breach of contract and negligence in connection with the preparation and audit of the accounts of the Sentry group. PMM-US is a firm associated with PMM.
In January 1990 SIAMCO amended its complaint in the proceedings in the Circuit Court of Wisconsin by joining PMM as a defendant and claiming damages from it for alleged breach of contract and negligence in connection with the preparation and audit of the accounts for the Sentry group. The joining of PMM in the Wisconsin proceedings occurred shortly before the principal proceeding in this Court was set down for hearing (8 February 1990) to commence on 15 October 1990 in what all parties agree is to be a lengthy case. There was then set in train a series of motions in both this Court and the Circuit Court of Wisconsin, which led to the present appeals to this Full Court. The whole affair is to say the least regrettable, particularly as the critical concern should be for the final hearing of the dispute between the parties to be brought on as soon as possible; yet these many and varied preliminary skirmishes in the Courts of the USA and Australia are doing little to achieve that ultimate goal.
Northrop J., whose decisions are the subject of the matters before this Full Court, held in essence that the bringing and prosecution of the proceedings in the Wisconsin Circuit Court were essentially a tactical manoeuvre by the Sentry interests to embarrass PMM in its defence of the principal proceeding in this Court and were oppressive.
On 16 February 1990 the solicitors for PMM wrote to the solicitors for Sentry complaining about the joinder of PMM in the Wisconsin proceeding and gave notice of PMM's intention to apply to this Court for a stay of Sentry's cross claim against PMM in the principal proceeding.
On 27 March 1990 PMM filed a motion in the Wisconsin Court to dismiss SIAMCO's complaint against it or to stay it on the grounds, inter alia, that the Wisconsin Court lacked jurisdiction over PMM or, in the alternative, that the Federal Court was the more appropriate and convenient forum for the resolution of the dispute.
On 28 March 1990 SIAMCO served a document titled "First Request for Production of Documents to KPMG Peat Marwick of Australia" seeking discovery of documents produced by PMM to Sentry pursuant to orders for discovery made in this Court in the principal proceeding.
On 5 April 1990 SIAMCO's attorney informed the Wisconsin Court that SIAMCO wished to take oral depositions of PMM personnel in Australia "regarding its contacts with the State of Wisconsin".
On 13 April 1990 PMM moved the Wisconsin Court for a "protective order" limiting all discovery of the parties to the issues of fact raised by PMM's motions to dismiss the complaint for lack of jurisdiction and to stay the action and for an order prohibiting oral depositions as part of the discovery process.
Also on 13 April 1990 PMM served SIAMCO in the Wisconsin proceedings with requests to admit and to produce documents and interrogatories.
On 27 April 1990 at the Portage County Court House, Stevens Point, Wisconsin in the Wisconsin Circuit Court the Honourable Judge J.V. Finn heard the motion of SIAMCO for an order compelling discovery by PMM and the motion of PMM for a protective order. Judge Finn denied PMM's motion for a protective order and made an order compelling discovery by requiring PMM to consent to the release of all documents within the possession, custody or control of PMM which had been produced by it to Sentry in discovery proceedings in this Court in the principal proceeding.
On 3 May 1990 the solicitors for PMM wrote to the solicitors for Sentry referring to Judge Finn's order of 27 April and stating that the provision by Sentry to SIAMCO of PMM's discovered documents would constitute a contempt of this Court.
On 4 May 1990 SIAMCO's US attorney sent to Judge Finn a copy of the letter from PMM's solicitors of 3 May 1990 and foreshadowed that, if contempt proceedings were brought in this Court by PMM, SIAMCO would immediately ask Judge Finn

"to issue appropriate sanctions in this Wisconsin suit regarding Peat Marwick Australia's deliberate refusal to abide by and honour your ruling of April 27 1990. We hope that bringing this to your attention will alone be sufficient to end this dispute."

On 8 May 1990 SIAMCO filed an application in the Wisconsin Court seeking orders for the taking of depositions in Sydney from PMM personnel relating to the contention of PMM in the Wisconsin proceedings that the Wisconsin District Court lacked jurisdiction over PMM.
On 9 May 1990 (8 May 1990 Wisconsin time) PMM filed a notice of motion in this Court seeking a stay of Sentry's cross claim against it and an order restraining Sentry from producing to SIAMCO documents discovered by PMM in the principal proceeding.
On 9 May 1990 (Wisconsin time) SIAMCO filed a motion in the Wisconsin Circuit Court seeking orders to restrain PMM from pursuing its motion in this Court and to require PMM to show cause why there should not be a finding of contempt against PMM.
On 10 May 1990 (9 May 1990 Wisconsin time) PMM applied ex parte to a single Judge of this Court (Gummow J.) for orders restraining Sentry from using documents discovered by PMM in the principal proceeding otherwise than for the sole purpose of that proceeding. His Honour made those orders.
On 10 May 1990 Judge Finn refused to restrain PMM from pursuing its motion in the principal proceeding; but his Honour ordered PMM to produce the documents discovered by it in the principal proceeding to the Wisconsin Court by 16 May 1990 and to inform that Court of its objections to the oral depositions.
On 15 May 1990, following the lodging of an appeal by PMM from certain of the orders of Judge Finn, the Court of Appeal of the State of Wisconsin granted leave to PMM to appeal from the orders of Judge Finn of 10 May 1990 and made orders limiting the scope of discovery which PMM was required to make to documents relating to jurisdictional issues.
On 16 May 1990 PMM produced the documents discovered by it in the principal proceeding to the Wisconsin District Court and to SIAMCO.
On 16 May 1990 the Court of Appeals of Wisconsin made an order which it said: "clarifies the order of May 15, 1990 granting KPMG Peat Marwick of Australia's petition for leave to appeal". The order of clarification ordered that the order against PMM for discovery "intentionally limits discovery to issues of jurisdictional fact raised by Peat Marwick's pending motion to dismiss the plaintiff's amended complaint". The order then concluded with a further order in these terms:

"IT IS FURTHER ORDERED that any disputes as to what documents or deposition testimony remains discoverable under our stay is a trial Court matter."

On 17 May 1990 there was a further hearing before Judge Finn following the order of clarification of the Court of Appeals of Wisconsin in which his Honour was asked by SIAMCO to determine whether, in the light of the orders of the Court of Appeal, which documents PMM was required to produce on discovery.
On 22 May 1990 Judge Finn made the following orders:-
1. That PM-Australia's request that oral depositions

be prohibited until this Court decides its motions to dismiss the amended complaint and to stay this action, is once again denied.

2. That PM-Australia's request that depositions be

stayed until determination of its appeal is denied.

3. That the oral depositions noticed by SIAMCO dated

May 8, 1990, shall be conducted at the offices of Phillips Fox, Solicitors and Attorneys, 20 Bond Street, Level 17, Sydney, New South Wales, Australia.

4. PM-Australia shall cause the following

individuals to be produced at such offices, on the dates and times set forth below, which dates and times shall be the local dates and times in Sydney, Australia, all for the purpose of giving their oral depositions in this matter as provided by Chapter 804, Wisconsin Statutes: Name Date Time George Henry Bennett Monday, June 4, 1990 9:00 am James Stewart Cuming Tuesday, June 5, 1990 9:00 am John H. Richardson Wednesday, June 6, 1990 9:00 am Maryann Russett Thursday, June 7, 1990 9:00 am (if she is currently an employee of PM-Australia) G. Girvan Thursday, June 7, 1990 1.30 pm G. Jaworski Thursday, June 7, 1990 3.30 pm H.R. Greenway Friday, June 8, 1990 9.00 am Peter Kingston Friday, June 8, 1990 10:30 am R.A. Lamond Friday, June 8, 1990 1:30 pm

5. That such depositions shall be taken before

either John Schindhelm or Vicky L. Berna, Milwaukee, Wisconsin, court reporters, who shall record such testimony by stenographic means.

6. That John Schindhelm or Vicky L. Berna, and

either of them, is hereby authorized, commissioned and directed by this Court, pursuant to s. 804.03(2), Wis. Stats., to administer the oath to each deponent at the time of his or her deposition.

7. That George Henry Bennett shall bring with him

and produce at the commencement of his deposition, any and all documents (as defined by Wisconsin Statutes s. 804.09(1)), notes, correspondence or other writings referred to or used by Mr. Bennett in making his affidavits dated March 23, 1990, and April 18, 1990, on file herein.

8. That the scope of examination in the above oral

depositions shall be limited to issues of jurisdictional fact raised by PM-Australia's pending motion to dismiss plaintiff's amended complaint; provided, however, that in the event the Court of Appeals modifies its orders to permit discovery with respect to the pending motions of PM-Australia as to real party in interest or to stay this proceeding, then such subjects shall also be permitted within the scope of the above oral depositions.

9. That during the days of May 28 to June 1, 1990,

between the hours of 9:00 a.m. and 5.00 p.m., PM- Australia shall permit the attorneys for SIAMCO, including specifically, C. Patout Ducey and/or Richard C. Ninneman, to view and copy at the offices of PM-Australia, Sidney, (sic) Australia with arrangements to be made through Allen Allen and Hemsley, the following: All documents within the possession, custody, or control of PM-AUS which have been produced by PM-AUS to The Sentry Corporation ('Sentry') in discovery, or otherwise, in connection with the lawsuit in the Federal Court of Australia, General Division, Victoria District Registry, styled National Mutual Holdings PTY. LTD., et al. v. The Sentry Corporation, et al., No. VG 173 of 1987.

10. That plaintiff's order to show cause dated May

10, 1990, to preliminarily enjoin PM-Australia and find PM-Australia in contempt is denied."

In the meantime, back in Australia, on 17 May 1990 Northrop J. commenced to hear PMM's motion for a stay of Sentry's cross claim against it and to restrain Sentry from producing documents to SIAMCO.
On 18 May 1990 Northrop J. gave judgment and made orders staying Sentry's cross claim against PMM in the principal proceeding and restraining Sentry from using discovered documents otherwise than for the sole purpose of the principal proceeding.
On 23 May 1990 PMM applied to Northrop J. ex parte for orders including orders restraining SIAMCO from conducting or participating in the taking of oral depositions in Australia pursuant to the order of Judge Finn and restraining SIAMCO from inspecting documents produced by PMM in the principal proceeding.
On 23 May 1990 Northrop J. made a number of ex parte orders including an interim injunction restraining SIAMCO from (a) taking oral depositions of named persons, being partners or employees of PMM or former partners or employees and (b) requiring those persons to produce documents used for the purpose of or in connection with the preparation of affidavits for use in the proceedings in the Wisconsin Circuit Court. Other orders made by his Honour related to SIAMCO and Mr Ducey being joined as cross respondents for the purpose of the notice of motion before his Honour. His Honour also granted injunctions restraining SIAMCO and its legal representatives from inspecting the documents produced by PMM to Sentry on discovery or otherwise in the principal proceeding.
Also on 23 May 1990 SIAMCO filed a motion in the Wisconsin Circuit Court seeking orders directing PMM to withdraw its application in the Federal Court to restrain SIAMCO from conducting the oral depositions and inspecting documents. SIAMCO also sought an order that, if PMM did not comply with the order for depositions previously made by Judge Finn, its defence of lack of personal jurisdiction should be struck out.
On 24 May 1990 Judge Finn denied SIAMCO's lastmentioned motion. At the hearing before Judge Finn the attorney for PMM informed his Honour that PMM would not seek an extension of the order of Northrop J. which restrained SIAMCO from inspecting documents produced on discovery in the principal proceeding and that it would take all steps to remove the reference to Mr Ducey from order 1 of Northrop J.'s orders of 23 May. This is a reference to an order of Northrop J. which ordered that SIAMCO and Mr C Patout Ducey be joined as cross respondents for the purposes of the notice of motion before Northrop J. Mr Ducey is counsel for SIAMCO in the Wisconsin proceeding and is a member of the team of lawyers acting for Sentry with respect to the principal proceeding in this Court.
The saga continued in Wisconsin on 25 May 1990 when the Wisconsin Court of Appeals denied PMM's petition for leave to appeal from the order of Judge Finn of 22 May 1990 stating, inter alia, that the order of the Court of Appeals permitted SIAMCO to conduct discovery on the limited issue of the trial Court's jurisdiction over PMM and that the decision did not deprive PMM of a remedy because it had the option of seeking a protective order in Australia. PMM had submitted to the Court of Appeals that the taking of oral depositions would be illegal in Australia because a valid oath could not be administered in Australia for the purpose of taking evidence relating to the process of discovery as distinct from the obtaining of evidence for use at the trial itself.
On 28 May 1990 Northrop J. heard PMM's motion seeking orders restraining SIAMCO from conducting the depositions in Sydney. At the commencement of the hearing counsel for PMM informed his Honour that PMM would give SIAMCO access to the documents in its possession relating to the principal proceeding and that those documents were then in the process of being inspected.

Also on 28 May Northrop J. heard a motion by SIAMCO and Mr. Ducey seeking orders discharging the orders made on 23 May 1990.
On 30 May 1990 Northrop J. made further orders on the motion of SIAMCO and Mr. Ducey. His Honour ordered that the order of 23 May 1990 joining SIAMCO and Mr. Ducey as cross respondents be discharged, that the other orders sought by them be refused and that the costs of the motion be reserved. On the motion of PMM, his Honour ordered that until further order SIAMCO be restrained within the Commonwealth of Australia from taking or causing to be taken or requiring or participating in the taking of any oral deposition from or requiring the production of documents by the persons named in the notice attached to the form of the order for the purpose of the Wisconsin proceedings. The further text of the order shall be mentioned later.
On 4 June 1990 SIAMCO filed a notice of appeal from Northrop J.'s judgment of 30 May 1990 to a Full Court of this Court.
On 13 June 1990 a Full Court of this Court, differently constituted, fixed the hearing of SIAMCO's appeal and Sentry's application for leave to appeal and the appeal itself for 29 June 1990.
On 19 June 1990 SIAMCO filed a motion in the Wisconsin Circuit Court seeking sanctions against PMM including the denial of PMM's motion to dismiss SIAMCO's amended complaint for lack of jurisdiction.
On 27 June 1990 SIAMCO's motion for sanctions was heard by Judge Finn. SIAMCO relied before his Honour, inter alia, on a submission that:

"the only reason given by the Australian Court for attempting to frustrate this Court's orders is that deposition discovery in this case would somehow interfere with the Australian justice system, simply because PM-Australia is a party to the Australian litigation."

On 29 June 1990 Judge Finn gave judgment and ordered that PMM's motion to dismiss the Wisconsin proceeding for lack of personal jurisdiction be struck out, that PMM be prohibited from presenting any defence as to lack of personal jurisdiction and that the fact of personal jurisdiction over PMM shall be taken as established for the purposes of the Wisconsin proceedings.
In his reasons for judgment Judge Finn said:

"With respect to the depositions, there is no evidence in any affidavit submitted to the Court relating to the motion for sanctions that PM-Australia at any time attempted to comply with the Court's orders. To the contrary, PM-Australia has done everything in its power to see to it that the depositions did not take place, and in fact, has succeeded in doing so by obtaining an injunction from the Australian Court. The inability of the defendant, Peat Marwick Australia, to comply with this Court's order, was created by the efforts of the defendant. After having successfully frustrated the execution of this Court's order, the defendant, Peat Marwick Australia, should not now be permitted to avoid the consequences of its actions by suggesting that the plaintiff now limit itself to other methods of discovery. The Court concludes that the conduct of the defendant, Peat Marwick Australia, in failing to exercise good faith and comply with the Court's deposition discovery order, and in wilfully using foreign process to prevent compliance with this Court's discovery orders constitutes bad faith entitling the plaintiff to sanctions."

It is now necessary to state what is before this Full Court amidst this mass of international pre-trial cross firing. First, there is an application by Sentry for leave to appeal from the judgment of Northrop J. of 18 May 1990, and, if leave be granted, the appeal from that judgment. On 18 May 1990 Northrop J.:

(a) restrained Sentry from using or permitting to be used otherwise than for the sole purpose of the principal proceeding any document or any information contained in or knowledge acquired by or on behalf of Sentry from any document discovered by PMM in that proceeding ("the protected documents");

(b) restrained Sentry from producing, making available for inspection or otherwise disclosing to SIAMCO any of the protected documents or any information therein or any knowledge acquired therefrom; and

(c) ordered that the cross claim by Sentry against PMM be stayed until further order or until SIAMCO undertakes to the Wisconsin Circuit Court to take no further procedural or other steps in the proceedings in that Court against PMM pending the hearing and determination of the principal proceeding in this Court.

The second matter before this Full Court is an appeal by SIAMCO from the judgment of Northrop J. given on 30 May 1990 in respect of which his Honour granted leave to appeal insofar as the same may be necessary. On 30 May 1990 his Honour ordered, inter alia, that until further order SIAMCO be restrained within Australia from taking or causing to be taken or requiring to participate in the taking of any oral deposition from or requiring the production of documents by the persons named in the notice attached to the order, provided that nothing in the order should prevent SIAMCO from making an application inter partes to any court having jurisdiction in New South Wales for an order pursuant to any statute or letters rogatory in respect of the taking of evidence for the purposes of the Wisconsin proceedings. The persons named in Northrop J.'s order relating to depositions are nine in number who, we were informed, are partners or employees of PMM and include also at least one former partner of that firm. His Honour refused the application of SIAMCO, inter alia, that service on it of the originating process be set aside.
Also before this Court is a cross appeal by PMM seeking to appeal from those parts of the judgment of Northrop J. of 30 May 1990 in which his Honour:-
(a) refused to make any declaration that the taking of the

oral depositions in New South Wales on behalf of SIAMCO would be illegal as being contrary to s. 20 of the Oaths Act 1900 (NSW) or constitute an abuse of process of this Court or a contempt of this Court;

(b) discharged so much of the order made on 23 May 1990 as

joined SIAMCO as a cross respondent in the principal proceeding; and

(c) reserved the costs relating to (a) and (b) above.

The cross appeal was brought pursuant to leave to appeal granted by Northrop J. on 30 May 1990.
All these matters were heard by this Full Court on 29 June 1990 at the conclusion of which the Court reserved its judgment.
This completes the lengthy curial history of the matter. The answers to the questions that were argued before us on 29 June are to be found to a considerable extent in a proper analysis and understanding of that history.
It is necessary now to briefly summarise the reasons given by Northrop J. in his judgments of 18 and 30 May 1990.
His Honour found that the proceeding brought by SIAMCO in the Wisconsin Circuit Court, although not raising precisely the same issues between the same parties as in the principal proceeding in this court, is a proceeding:

"really based upon the outcome of the proceedings presently before the Federal Court in Australia, and even though the causes of action may be different, in reality, the issues to be determined in the United States proceedings are essentially the same as those in the Federal Court and to some extent are dependent upon the outcome of the Federal Court proceedings."

His Honour reviewed the authorities relating to the question of the proposed stay of Sentry's cross claim and referred in particular to the judgment of the High Court in Oceanic Sunline Special Shipping Co. Inc. v Fay (1988) 165 CLR 197. His Honour found that the proceedings by SIAMCO in Wisconsin have the effect "of causing a very great injustice to Peat Marwick Australia in the proceedings in this case to the extent that they do constitute an abuse of the process of this Court of kind sufficient to justify this Court making an order of the type sought." His Honour relied for this finding upon the fact that the proceeding in the USA was commenced in October 1988 and it was not until January 1990 that PMM was joined as a party to it. His Honour found that the proceedings in Wisconsin

"have the appearance, and I say no more than that, of being a tactic to harass Peat Marwick Australia in the conduct of its proceedings in Australia. All the facts of this case support the view, in my opinion, that the proceedings in the Wisconsin Circuit Court are designed to have a bearing upon or interfere with or have a harassing effect on Peat Marwick Australia in its conduct of the proceedings in this Court."

His Honour therefore made the orders to which I have referred earlier staying the cross claim.
As to limiting the use of documents made available on discovery to the principal proceeding and the parties to it, his Honour said the general principle was that:

"If knowledge is acquired from a document and use is made of that knowledge for purposes other than the case itself then that document and that knowledge has been used in contravention of the general principle."

In his Honour's reasons for judgment of 30 May 1990 he declined to make the declaration sought by PMM, which is the subject of the cross appeal to this Full Court, on the ground that the making of a declaration is discretionary and that in any event the Court would not make the declaration sought. His Honour said:

"A declaration that specified conduct is illegal and would constitute an indictable offence is rarely, if ever, made if for no other reason than a different onus of proof applies in civil proceedings to that in criminal proceedings. The other declarations sought are not necessary and would not add anything to any injunction that might be granted. Nevertheless, a consideration of these matters may be relevant in considering whether injunctions should be granted."

In considering whether to grant the injunction sought by PMM his Honour noted that the conduct sought to be restrained is conduct within Australia and conduct within the jurisdiction of this Court. At the instigation of SIAMCO persons are to come to Australia and engage in the conduct set out in the notices of depostion attached to his Honour's order of 23 May 1990. His Honour found that his Court has a statutory jurisdiction to punish for contempt (s. 31(1) of the Federal Court of Australia Act 1976 and s. 24 of the Judiciary Act 1904). He found that the power to restrain conduct which could constitute a contempt is an incidental and necessary power of this Court and referred in particular to Parsons v Martin (1985) 5 FCR 235 at 240-1. He found that an injunction may be granted to prevent conduct that would constitute contempt if committed. His Honour found that the conduct in which SIAMCO proposed to engage in Australia with respect to the depositions would constitute a contempt of this Court. He referred again to the circumstances in which PMM was joined as a defendant to the Wisconsin proceedings in January this year and to the fact that the cross-claim by Sentry against PMM in this Court has been stayed so that there are no proceedings presently pending between Sentry and PMM in this Court. His Honour held that the depositions sought could extend to questions relating to many of the issues arising in the proceeding pending in this Court and that the documents required to be produced under order no. 7 made by Judge Finn could extend to documents prepared for the purposes of litigation within the principal proceeding in this Court. His Honour noted that the type of contempt of court alleged in this case was an interference with the administration of justice of the type discussed by the High Court in Victoria v Australian Building Construction Employees and Builders Labourers Federation (1982) 152 CLR 25 and Pioneer Concrete Victoria Pty. Limited v Trade Practices Commission (1982) 152 CLR 460. His Honour held that taking of the depositions by SIAMCO would constitute a real risk of an interference with the administration of justice, namely, the principal proceeding pending in this Court. He noted that PMM and its employees are sought to be examined on oath in this country under threat, if the oath is refused to be given or questions are refused to be answered by those persons, of being in contempt of the Wisconsin Circuit Court. The questions are directed to the issue of whether the Wisconsin Circuit Court has jurisdiction over PMM, in a complaint against it which is based on the outcome of proceedings in this Court. Documents are to be produced in relation to affidavits in the Wisconsin Court, but in all probability are relevant and may have been prepared for the purposes of the principal proceeding in this Court. The persons sought to be examined on oath are involved in the preparation of the case in this Court. In these circumstances his Honour held that the proposed conduct would constitute a contempt of this Court and that the case justified the grant of an injunction to restrain the apprehended contempt.
The parties filed written submissions in this appeal, so I will confine myself to briefly summarising those submissions and the further oral submissions made to the Court on 29 June.
Counsel for Sentry and SIAMCO submitted as follows:-
. the proceedings before the Wisconsin Circuit Court, though having many elements in common with the principal proceeding in this Court, are not between the same parties and involve different causes of action and relief sought;
. it was PMM who decided to apply for a dismissal or stay of the Wisconsin proceeding, and, having done so, the interlocutory processes of the Wisconsin Circuit Court relating to discovery and other pre-trial procedures were brought into play by PMM's motion. Whilst that motion was still on foot in Wisconsin and set down for hearing on 25 July 1990, PMM mounted an attack on Sentry in Australia by its notice of motion of 9 May 1990 seeking an order staying the cross claim of Sentry against it and the order seeking to restrain the use of the documents discovered in the principal proceeding by PMM;
. in ordering a stay of Sentry's cross claim against PMM, Northrop J. did not apply the correct principles and in particular, although referring to Oceanic, he did not apply the principles for which that case is authority. In particular his Honour failed to appreciate the important element of the rule that, although the Court seeks to avoid injustice to a defendant seeking a stay, it would only stay a proceeding "where it is possible to do so without injustice to the plaintiff" Oceanic at 234;
. his Honour was concerned only with injustice to PMM caused by the Wisconsin proceeding and did not consider the injustice to Sentry if the cross claim here was stayed or the injustice to SIAMCO if the Wisconsin proceeding was stayed;
. his Honour said that the proceeding by SIAMCO in Wisconsin had caused such injustice to PMM in the principal proceeding as to an amount to an abuse of this Court's process, thus justifying a stay of the principal proceeding in this Court. If his Honour's statement that SIAMCO's Wisconsin proceeding is an abuse of this Court's process is correct, that might justify a stay or other restraint of the Wisconsin proceeding; but the fact that SIAMCO's proceeding in Wisconsin constitutes an abuse of the process of this Court does not justify a stay of Sentry's cross claim in this Court which is a perfectly proper and regular proceeding invoking the jurisdiction of this Court. What his Honour did was to stay a perfectly proper proceeding in this country until an allegedly oppressive proceeding abroad is stayed, a course that is contrary to principle and not a proper exercise of judicial power.
. His Honour proceeded on the basis that Sentry and SIAMCO were one and the same person, whereas in fact they are not and this vitiates various findings of his Honour;
. his Honour found that SIAMCO had a cause of action available to it in Wisconsin which was not available here, namely, the cause of action in contract. Once his Honour made that finding he was bound to refuse a stay of the cross-claim here. The causes of action in the Wisconsin proceeding are different from those the subject of the cross-claim here. There is no evidence to support his Honour's strongly expressed conclusion that the Wisconsin proceedings have the appearance of a tactic to harass PMM in the conduct of its proceeding in this country.
As to the findings of his Honour of 18 May relating to the use of discovered documents, it was said by counsel for Sentry that his Honour erred in the following principal respects:-
. his Honour wrongly relied on the fact that Mr Ducey is acting as part of the team for Sentry in the principal proceeding in Australia and as counsel for SIAMCO in the proceedings in Wisconsin. PMM consented to SIAMCO's inspecting all documents in PMM's possession relating to the principal proceeding and permitted SIAMCO's attorney to inspect the documents. All this occurred shortly after obtaining the restraining order. The order of his Honour therefore is no longer serving any useful purpose and should be set aside.
As to Northrop J.'s judgment of 30 May 1990 counsel for Sentry submitted that:-
. his Honour erred in finding that the taking of the depositions in this country by SIAMCO constituted a real risk of an interference with the administration of justice, namely, the pending principal proceeding in this Court. There was no evidence to support his Honour's finding in this regard. His Honour did not heed the cautionary observation in relation to findings of contempt of court by Gibbs C.J. in the Australian Building Construction Employees and Builders Labourers Federation Case (supra) at 60.
. the Court must be satisfied on cogent evidence that there is a real risk that the proposed conduct will interfere with the administration of justice in pending proceedings. In the present case there was no evidence to justify the Court reaching the high degree of satisfaction required before it can make a finding of contempt or restrain an apprehended contempt.
Findings
A. Leave to Appeal
The first question that I propose to deal with can be disposed of briefly, and that is whether leave to appeal should be granted from the interlocutory orders of Northrop J. on 18 May 1990. The principles to be applied by this Court when considering whether leave to appeal from an interlocutory order should be granted were reaffirmed by this Court in National Mutual Holdings Pty. Limited v The Sentry Corporation (1988) 19 FCR 155. No rigid or exhaustive criteria should be laid down; the circumstances of different cases are infinitely various. There is no doubt that the order of Northrop J. staying Sentry's cross claim against PMM may have a most serious effect upon Sentry's position in the Federal Court litigation. Plainly there are seriously arguable questions to be considered in the appeal from his Honour's judgment of 18 May 1990 and leave to appeal should be granted.
The questions which arise for determination in the matters presently before the Full Court may conveniently be considered under the following headings:-
1. the order of Northrop J. of 18 May 1990 restraining Sentry from using, otherwise than for the sole purpose of the principal proceeding, the protected documents and restraining Sentry from producing to SIAMCO any of the protected documents;
2. the order of Northrop J. of 18 May 1990 staying Sentry's cross-claim against PMM;
3. the order of Northrop J. of 30 May 1990 restraining SIAMCO from taking or participating in the taking of the oral depositions from PMM's present and past partners and employees in Australia for the purposes of the Wisconsin proceedings relating to the question whether the Wisconsin Court has jurisdiction over PMM;
4. Northrop J.'s orders of 18 May 1990 declining to make a declaration in essence restraining SIAMCO from taking or causing to be taken or participating in the oral depositions in Australia for the purposes of the Wisconsin proceedings and discharging so much of his Honour's order of 23 May 1990 as joined SIAMCO as a cross respondent.
B. The Stay

This Court has undoubted jurisdiction to stay proceedings in Australia where there are other proceedings in a foreign country between the same parties for the same cause of action. The jurisdiction must be exercised with great care and extreme caution: Oceanic per Deane J. at 243-4 and "The grounds on which the court is justified in refusing to exercise its jurisdiction when it is regularly invoked are, and in my opinion, should be, grave and narrowly confined": Oceanic per Brennan J. at 233.
The reason why the jurisdiction should be exercised with care and extreme caution is that a party who has regularly invoked the jurisdiction of an Australian court is prima facie entitled to have his case heard and determined by that Court notwithstanding that he institutes proceedings in a foreign court. If, however, the defendant is able to establish that he is "doubly vexed" (McHenry v Lewis (1882) 22 Ch D 397 per Jessel M.R.) or that it is oppressive, vexatious or an abuse of process for the action to continue in Australia (Oceanic) the Court may stay the Australian proceeding. The stay will only be granted "where it was possible to do so without injustice to the plaintiff" (St. Pierre v South American Stores (Gath and Chaves) Limited (1936) 1 KB 382 per Scott L.J. at 398; Oceanic per Brennan J. at 234 and per Deane J. at 244-5).
A defendant may establish that the continuation of the proceeding in Australia is vexatious or oppressive if he is able to show that the plaintiff would not obtain any advantage by the action abroad greater than he would obtain by the action in this country (Hyman v Helm (1883) 24 Ch D 531 per Brett M.R. at 538).
The pendency of two actions between the same parties for the same cause of action in two jurisdictions is not by itself sufficient to warrant the grant of a stay; the defendant must establish that it is vexatious and oppressive to continue the proceeding in the forum: McHenry per Bowen L.J. at 408.
The burden of proving that it is vexatious lies upon the defendant (Hyman at 537, 544; Oceanic per Deane J. at 248).
The defendant must show that the continuation of the proceeding in the forum is vexatious or oppressive or for other reasons involves an essential element of injustice (Oceanic per Deane J. at 245) or an abuse of process (Oceanic per Brennan J. at 233-4). See also McHenry per Jessel M.R. at 399-400, per Cotton L.J. at 405-407; and Bowen L.J. at 408-9; Peruvian Guano Company v Bockwoldt (1883) 23 Ch D 225 at 233; Slough Estates Limited v Slough Borough Council (1968) Ch D 299 per Ungoed -Thomas J. at 318-320; National Mutual Holdings Pty. Limited v The Sentry Corporation (1989) 87 ALR 539 per Gummow J. at 561-3).
The principal proceeding in this Court was commenced in July 1987 and it was not until October 1988 that SIAMCO commenced proceeding in the Wisconsin Circuit Court against PMM-US and it was as late as January 1990 that SIAMCO amended the Wisconsin proceeding by joining PMM as a defendant. The evidence is silent as to why it took SIAMCO until January this year to join PMM as a defendant to the Wisconsin proceeding.
It is true that the parties and causes of action in the principal proceeding in this Court and the proceeding in the Wisconsin Circuit Court are not identical. SIAMCO and Sentry are different legal entities; but Sentry is a wholly owned subsidiary of SIAMCO. Mr. Ducey is acting for both SIAMCO in the Wisconsin proceeding and for Sentry in the principal proceeding in the Federal Court.
It is also true that the causes of action in the Wisconsin proceeding are not the same as those the subject of the cross-claim in the principal proceeding in this Court. In the Wisconsin proceeding the claims of SIAMCO against PMM are based upon alleged breach of contract and negligence or negligent practice. As Northrop J. observed, the claim based upon breach of contract is apparently open in the United States "to a person who is not a direct party to the contract whereas it is doubtful if such a claim would succeed under Australian law". In the cross-claim in the Federal Court proceedings, damages, contribution and indemnity are sought by Sentry from PMM for alleged contraventions of s.52 of the Trade Practices Act and negligence. SIAMCO asserts in the Wisconsin proceeding a claim for auditing fees paid which is not claimed in the cross-claim in the Federal Court proceeding, and a claim for the reduced value of its 100% stock holding in Sentry brought about by costs incurred and to be incurred by Sentry which are not wholly recoverable in the Federal Court proceeding even if Sentry wins its case here against PMM. These differences between the two sets of proceedings do not seem to me to be material. The essential subject matter of the two proceedings so far as they concern PMM is identical, namely, a claim for loss or damage said to be suffered by Sentry arising from PMM's conduct of audits in Australia of the Sentry Holdings Limited group. If the Federal Court holds that PMM is not negligent the assertion by SIAMCO of irrecoverable costs must then lack foundation.
It seems plain to me that SIAMCO's claim against PMM in the Wisconsin proceeding is essentially based upon the outcome of the principal proceeding before the Federal Court. Although the causes of action are technically different, in substance, to use the words of Northrop J., "the issues to be determined in the United States proceedings are essentially the same as those in the Federal Court and to some extent are dependent upon the outcome of the Federal Court proceedings". I agree with the submission of counsel for PMM that the Wisconsin proceedings are essentially derivative in nature in that they depend in large part upon the result of the principal proceeding in the Federal Court.
Northrop J. found:

"all the facts of this case support the view, in my opinion, that the proceedings in the Wisconsin Circuit Court are designed to have a bearing upon or interfere with or have a harassing effect on Peat Marwick Australia in its conduct of the proceedings in this Court."

I have set out earlier at length the relevant facts concerning the steps taken by the parties in the Federal Court proceeding and in the Wisconsin Circuit Court proceeding and need not repeat them. In my opinion the narration of those facts clearly establishes the correctness of this finding of Northrop J., especially when it is remembered that it was not until October 1988 that SIAMCO commenced the proceeding in Wisconsin against PMM-US and as late as January this year it joined PMM as a party to that proceeding when the proceeding in the Federal Court was approaching the stage where a hearing date was to be fixed.

I have difficulty understanding why SIAMCO is pursuing its complaint against PMM in the Wisconsin proceeding rather than allowing the proceeding which is far earlier in point of time to continue to its natural conclusion in Australia. After all, the claims for damages made by SIAMCO in the Wisconsin proceeding are essentially dependent upon the question of whether PMM was negligent in its conduct of audits in Australia of the Sentry Holdings Limited group. The causes of action of both SIAMCO in the Wisconsin proceeding and of Sentry in its cross claim in the Federal Court proceeding have a peculiarly Australian origin, namely, the conduct in this country by PMM of its audit of the Sentry Holdings Limited group and the presence of both PMM and Sentry in this country. The connection of the USA in general and the State of Wisconsin, County of Portage, in particular, to the matters which comprise the essence of the claims for damages against PMM is at best peripheral.
I do not think that any prejudice will be occasioned to Sentry or SIAMCO by the cross-claim of Sentry in the principal proceeding being stayed. I share the views of Northrop J. which underlie the stay granted by him; but I think the result is best achieved by the order to stay the cross-claim formulated by Sweeney J. in his reasons for judgment for the reasons given by him.
C. Use of the Protected Documents
It was accepted by counsel for all parties before us in the appeal that Northrop J. correctly stated the law with respect to the use of documents and information contained in documents obtained on discovery. His Honour said:

"It is clear that according to Australian law a person who acquires a document pursuant to the processes of the Court is under a duty not to disclose or make use of that document for purposes other than the Court proceedings without the leave of the Court or the person from whom the document has been obtained. . . . if knowledge is acquired from a document and use is made of that knowledge for purposes other than the case itself then that document and that knowledge has been used in contravention of the general principle as set out by McLelland J. and also by other authorities."

The reference to the judgment of McLelland J. is to the passage from his Honour's judgment in United States Surgical Corporation v Hospital Products International Pty. Limited, judgment given 7 May 1982 which Northrop J. quoted at p 17 of his reasons for judgment of 18 May 1990 and need not be set out here. Northrop J. relied substantially upon the fact that Mr. Ducey had a dual role as counsel for SIAMCO in the Wisconsin proceedings and as one of the team of lawyers acting for Sentry in the proceeding in the Federal Court in restraining Sentry from using the documents discovered by PMM in the Federal Court proceedings and the information contained in them. His Honour said that it was important that the injunction should make it clear to all parties that it applied not only directly to the use of documents but indirectly to knowledge obtained from the documents.
As mentioned earlier SIAMCO sought access in the Wisconsin proceeding to the documents discovered by PMM to Sentry in the Federal Court proceeding. It is common ground that PMM in fact agreed to SIAMCO's inspecting all documents which were discovered by PMM in the Federal Court proceeding and permitted SIAMCO's attorney to inspect them. Counsel appearing for PMM in the appeal before us informed us that Northrop J. was told before he gave judgment in this matter on 18 May 1990 that the documents discovered by PMM to Sentry in the Federal Court proceeding had been delivered to Judge Finn and handed over to SIAMCO.
There is a question as to whether in these circumstances Northrop J.'s order has become academic or was perhaps academic even at the time it was made.
Although copies of the protected documents have been handed over to SIAMCO, the general principle still remains that Sentry, as a party to the Federal Court proceeding, is not entitled to use or permit to be used any such document or any knowledge acquired therefrom otherwise than for the purpose of the Federal Court proceeding without the consent of the owner of the documents or the leave of the Court, at least in so far as the documents are of a confidential nature. The release of the documents by PMM to SIAMCO, though apparently produced under compulsory process or threat of compulsory process of the Wisconsin Circuit Court in relation to the Wisconsin proceeding, modifies the application of this principle to that extent; but otherwise the principle remains intact and must be observed. In my opinion it is not appropriate to allow the appeal from Northrop J.'s order prohibiting Sentry from using or permitting to be used otherwise than for the sole purpose of the Federal Court proceeding the protected documents and information contained in them.
As Northrop J. pointed out the order was interlocutory only and it is open to Sentry to apply for its discharge or variation. In my view the order should stand unless and until Sentry makes a successful application to Northrop J. or another Judge of this Court for such discharge or variation.
D. The Oral Depositions
On 30 May 1990 Northrop J. made an order, the terms of which are set out earlier, in effect restraining SIAMCO from taking or causing to be taken or participating in the taking of oral depositions from the persons named in a document attached to the order who are partners or employees or former partners or employees of PMM. His Honour granted the injunction to restrain what he found to be apprehended contempt of this Court in respect of the principal proceeding currently pending in this Court.
The essence of his Honour's findings is that the depositions sought "could extend to questions relating to many of the issues arising in the law suit pending in the Federal Court". His Honour found that the persons sought to be examined on oath are involved in the preparation of PMM's case in the Federal Court and that in all the circumstances the proposed conduct would constitute a contempt of this Court.
The principles of contempt of court relating to the present case are those discussed by the High Court in The State of Victoria v The Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25. Gibbs C.J. said at 56:

"There is contempt of court of the kind relevant to the present case only where there is an actual interference with the administration of justice, or 'a real risk, as opposed to a remote possibility' that justice will be interfered with: cf. Attorney-General v Times Newspapers Limited

(1974) AC at p 299. The essence of this kind of contempt is a 'real and definite tendency to prejudice or embarrass pending proceedings': John Fairfax and Sons Pty Limited v McRae (1955) 93 CLR 351, at p 372. The law as to contempts of court of the kind now under consideration reflects two conflicting principles of public policy: on the one hand, the need to safeguard the proper administration of justice and on the other the protection of freedom of speech (and this principle must extend to freedom of inquiry). . . . The law strikes a balance; in the interest of the due administration of justice it will curb freedom of speech, but only to the extent that is necessary to prevent a real prejudice to the administration of justice."

At page 60 the Chief Justice said:

"The resulting principle requires that the Court be satisfied that there is a real risk that the material alleged to be a contempt will interfere with the administration of justice in pending proceedings before it can hold that contempt has been committed or is threatened. The discretion of the Court lies in dealing with a contempt, not in deciding whether a contempt has been committed. The jurisdiction to punish as a contempt something otherwise lawful is exceptional and drastic and must be exercised with great care. The Court must, if possible, be even more cautious in granting an injunction to restrain an apprehended contempt."

The difficulty that lies in the path of holding that there is a contempt of court on the facts of this case is that the order staying the cross-claim in the Federal Court proceeding inherently recognises the capacity of SIAMCO to continue its claim in the Wisconsin proceeding against PMM. An incident of the Wisconsin proceeding is the right of SIAMCO under Wisconsin law to examine witnesses on oath in Australia relating to matters of jurisdictional fact for the purpose of dealing with PMM's own motion in the Wisconsin proceeding that that proceeding be dismissed for lack of jurisdiction over PMM.
On the other hand there is, as Northrop J. held, a real risk that the evidence to be given by key personnel of PMM in Australia may touch issues that arise in the pending Federal Court proceeding. Determination of a question of jurisdiction over a party can involve an extensive range of evidence. A clue to the extent of that examination is given by Judge Finn's order of 22 May 1990 permitting SIAMCO's attorneys to inspect all documents discovered by Sentry in the Federal Court proceeding, thus making an order consistent with an earlier decision of his Honour which appears to have been made on 16 May 1990 in which he reaffirmed his conclusion of 27 April 1990 that the documents copied for Sentry in the Australian litigation were relevant to the jurisdiction issue or might lead to discovery of admissible evidence on jurisdiction.
In my opinion Northrop J. correctly concluded that the proposed taking of the depositions in Sydney posed a real risk of interference with the Australian proceedings. The persons sought to be examined on oath are involved in the preparation of PMM's case in the Federal Court. As Northrop J. found, PMM and its employees are sought to be examined on oath in Australia under threat of PMM being in contempt of the Wisconsin Circuit Court if the oath is refused to be given or questions are refused to be answered. There is no restriction on the use to which Sentry may put the depositions in the Australian proceedings. There would be a five day series of cross examinations covering what could be a wide field of subject matter of direct relevance to the Federal Court proceeding, the witnesses being past and present key personnel of PMM. It has not been established that Northrop J. erred in his findings on this question.
Before leaving the matter I should refer to one event that had not occurred when Northrop J. dealt with the matter. That is, as mentioned earlier, that on 29 June 1990 Judge Finn ordered in the Wisconsin proceeding that PMM's motion to dismiss that proceeding for lack of jurisdiction be struck out, that PMM be prohibited from presenting any defence as to lack of jurisdiction and that the fact of jurisdiction over PMM shall be taken as established for the purposes of the Wisconsin proceeding. Thus PMM is denied the right to argue that the Wisconsin Circuit Court lacks jurisdiction over it. It must follow from Judge Finn's order that the need for the taking of depositions in Sydney is spent because they were to be taken for the very purpose of determining if the Wisconsin Circuit Court had jurisdiction over PMM. It is not known whether an appeal has been lodged against Judge Finn's order and still less what the result of the appeal would be, so the matter may still be a live issue and not necessarily academic.
Before leaving this matter I must refer to the order made by Judge Finn on 22 May 1990 for the taking of the depositions in Sydney, the terms of which have been set out earlier. Order 4, it will be remembered, provides that PMM "shall cause" the nine named individuals to be produced at such offices, on the dates and times set forth below . . . all for the purpose of giving their oral depositions in this matter . . . " The offices are those of the solicitors for Sentry in Sydney.
There is a serious question as to the validity of that order because it requires a party to the Wisconsin proceeding (PMM) to cause people who are, so counsel informed us, members of PMM itself or former members and employees or former employees to attend at the offices of Sentry's solicitors for the purpose of being examined on oath. A party to litigation cannot be compelled to require witnesses to attend to give evidence or people to attend to answer questions on oath by depositions other than by compulsory process. The order is indirectly seeking to achieve the same result as would attend the issue of the compulsory processes of subpoenas or summons. But a foreign court cannot make orders which, directly or indirectly, are designed to ensure the compulsory attendance of persons to give evidence on oath in another country, without the usual steps being first taken, as a matter of comity of nations and of courts, to ensure that the compulsory process of the courts of the country where the witnesses are to be examined is properly invoked. This has not been done. To therefore require a party to the Wisconsin proceeding to cause persons to attend to give evidence on oath in Australia under threat of contempt of the Wisconsin Court if the party does not cause them to attend, is an order the validity of which must be at least seriously open to question. However, although this point was raised by the Bench in argument it was not fully dealt with by counsel and I will say nothing further about it.
E. The Oaths Act 1900 (NSW)

The cross appeal brought by PMM against Northrop J.'s refusal to make a declaration that the taking of the oral depositions in New South Wales would be illegal as being contrary to s.20 of the Oaths Act 1900 (NSW) or constitute an abuse of process or contempt of this Court together with certain related and consequential orders of his Honour may be briefly disposed of.
Northrop J. said that the declarations sought by PMM are not necessary and would not add anything to any injunction that might be granted; and his Honour granted the injunction sought to restrain the apprehended contempt. His Honour did examine the question of whether the taking of depositions would constitute an offence under the Oaths Act 1900 (NSW). I do not find it necessary to determine this question because I entirely agree with Northrop J. that the answer to it would not take the case any further than if injunction is granted to restrain the taking of the depositions, and indeed it was.
I would grant leave to Sentry to appeal from the judgment of Northrop J. given on 18 May 1990, vary the orders made by his Honour by substituting for the stay order against Sentry an order staying Sentry's cross-claim until further order, but otherwise I would dismiss the appeal. I would also dismiss the appeal and cross appeal from the judgment of Northrop J. given on 30 May 1990.
As to costs, most of the written submissions and oral argument concerned issues other than those raised by the cross appeal of PMM. In my opinion Sentry must pay the costs of PMM of the motion for leave to appeal from the judgment of Northrop J. of 18 May 1990 and of the appeal itself. SIAMCO must pay two-thirds of the costs of PMM of the appeal from the judgment of Northrop J. of 30 May 1990. Otherwise I would make no order as to costs.

JUDGE3

I have had the advantage of reading in draft the reasons for judgment prepared by Sweeney J. and Lockhart J. For the reasons which they have given, I agree that The Sentry Corporation ("Sentry") should have leave to appeal from the judgment of Northrop J. of 18 May 1990 and that, in substance, that appeal should be dismissed. However, for the reasons outlined by Sweeney J., I would vary the order made by the learned primary judge by ordering that the cross claim by Sentry against Peat Marwick Mitchell and Co ("PMM") be stayed until further order and that liberty be reserved to Sentry to apply in respect of that stay in the light of any material change in relation to the conduct of the proceedings against PMM in the Wisconsin Circuit Court.

Likewise, I agree that the appeal and cross appeal from the judgment of Northrop J. of 30 May 1990 should each be dismissed. I also agree in the orders as to costs proposed by Lockhart J.

[1990] FCA 404

08 AUGUST 1990