Todd v Novotny
[2001] WASC 304
•7 NOVEMBER 2001
TODD -v- NOVOTNY & ANOR [2001] WASC 304
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 304 | |
| 07/11/2001 | |||
| Case No: | CIV:2281/1996 | 26 OCTOBER 2001 | |
| Coram: | MASTER SANDERSON | 30/10/01 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Leave to issue letters rogatory granted | ||
| B | |||
| PDF Version |
| Parties: | ROBERT JOSEPH TORRANCE TODD MICHAEL NOVOTNY BACKLOAD PTY LTD (ACN 009 451 192) |
Catchwords: | Practice and procedure Application for leave to issue letters rogatory Turns on own facts |
Legislation: | Evidence Act 1906, s 79C, s 110(1)(c), s 110(2) |
Case References: | Allstate Life Insurance Co & Ors v Australia & New Zealand Banking Group Ltd & Ors (No 18) (1995) 133 ALR 667 Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 74 ALR 232 Hardie Rubber Company Pty Ltd v General Tire & Rubber Company (1973) 129 CLR 521 Todd v Novotny & Anor [2001] WASC 171 Bond v Australian Securities Commission (1994) 12 WAR 43 Ehrmann v Ehrmann [1896] 2 Ch 611 Georgini v Electric Power Transmission Pty Ltd [1963] NSWR 258 Smith v Smith [1975] 1 NSWLR 725 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MICHAEL NOVOTNY
First Defendant
BACKLOAD PTY LTD (ACN 009 451 192)
Second Defendant
Catchwords:
Practice and procedure - Application for leave to issue letters rogatory - Turns on own facts
Legislation:
Evidence Act1906, s 79C, s 110(1)(c), s 110(2)
Result:
Leave to issue letters rogatory granted
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr P A Tottle
First Defendant : Mr M H Zilko SC
Second Defendant : Mr M H Zilko SC
Solicitors:
Plaintiff : Tottle Christensen
First Defendant : Williams & Hughes
Second Defendant : Williams & Hughes
Case(s) referred to in judgment(s):
Allstate Life Insurance Co & Ors v Australia & New Zealand Banking Group Ltd & Ors (No 18) (1995) 133 ALR 667
Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 74 ALR 232
Hardie Rubber Company Pty Ltd v General Tire & Rubber Company (1973) 129 CLR 521
Todd v Novotny & Anor [2001] WASC 171
Case(s) also cited:
Bond v Australian Securities Commission (1994) 12 WAR 43
Ehrmann v Ehrmann [1896] 2 Ch 611
Georgini v Electric Power Transmission Pty Ltd [1963] NSWR 258
Smith v Smith [1975] 1 NSWLR 725
(Page 3)
1 MASTER SANDERSON: By chamber summons dated 14 February 2001, the plaintiff sought orders that:
"Letter of request issue to the Supreme Court of British Columbia, Canada, for the examination of and production of the documents by each of:
(a) the Proper Officer of Nexttrip.com Travel Corporation;
(b) the Proper Officer of Computershare Investor Services Inc; and
(c) the Proper Officer of Canaccord Capital Corporation."
2 This is another step in a long-running dispute which has generated numerous interlocutory applications. The facts which give rise to the dispute between the parties have been canvassed in a number of decisions. Most recently, in dealing with an application to discharge an asset preservation order, Parker J summarised the issues: See Todd v Novotny & Anor [2001] WASC 171 at pars 4 - 6 and 12 - 25. I would adopt this summary of the facts without repeating them.
3 Against that general background, it is necessary for the purposes of this application to be a little more specific about aspects of the case which give rise to this application. Part of the plaintiff's case concerns dealings with some 230,000 shares in a company known as South Pacific Resources. (Since the events the subject of this action took place, South Pacific Resources has changed its name. Nothing turns on that name change for the purposes of this application, and to avoid confusion, it can be ignored.) It is alleged by the plaintiff that, as at May of 1995, he was owed an amount of US$250,000 by South Pacific Resources and a company associated with it. It is claimed a transaction took place between South Pacific Resources and persons associated with it, including the first defendant, but not the plaintiff, whereby the first defendant was issued with 230,000 shares in South Pacific Resources in return for giving South Pacific Resources an indemnity in respect of the obligation to pay the plaintiff the US$250,000. The plaintiff complains about this transaction for a number of reasons, but central to his complaint is the allegation that his fiduciary, the first defendant, did not disclose the transaction to him. He says as a consequence he lost the opportunity to take 230,000 shares in South Pacific Resources as distinct from US$250,000. The plaintiff alleges that, at the time the 230,000 shares were issued to the first defendant, it was known to him (the first defendant) that they would be worth substantially more than US$250,000. It seems at the time South
(Page 4)
- Pacific Resources was undertaking a capital-raising and there was heightened interest in the gold sector generally, and, particularly, gold tenements in Indonesia. Apparently, South Pacific Resources held certain tenements in Indonesia which were regarded as valuable. It is the plaintiff's case that the nominal value of the shares issued to the first defendant was in the region of $1, but the defendant was able to dispose of them for an amount in excess of $3 per share. All of these matters are pleaded in pars 46 through to 64 of the substituted statement of claim dated 6 September 2001. Although no defence has been lodged responding to the substituted statement of claim, there is no doubt that the parties will join issue on these matters.
4 The plaintiff says a second set of issues arises in this way. As part of the venture between the plaintiff and the first defendant a company called Canadian Equatorial was incorporated in the British Virgin Islands. It, in turn, incorporated a series of subsidiaries which, throughout the pleadings, are referred to as "the Golden companies". Each Golden company owned a majority interest in a joint venture in Indonesian mining tenements referred to as Contracts of Works (COWs). One of these Golden companies was a company called Golden Gauntlet, which was the owner of a COW known as Pleihari. The plaintiff alleges that, unbeknown to him, the first defendant with the assistance of others arranged for the Pleihari COW to be taken out of Golden Gauntlet and transferred to Borneo Gold, now known as Nexttrip.com Travel Corporation ("Nexttrip"). The plaintiff says that amounts to a breach of fiduciary duty. The plaintiff says that the first defendant benefited by the breach of fiduciary duty and the plaintiff is entitled to equitable compensation or an account of profits. It is pleaded that, after the transfer of the COW to Borneo Gold, the company was reinstated on the Stock Exchange. Its shares leapt from $2 to something over $11, largely, on the plaintiff's case, based upon its ownership of the Pleihari COW. In particular, it is said that the first defendant received two lots of options over Borneo Gold shares - one set of 160,000 options and a second set of 50,000 options.
5 The first defendant denies any knowledge of the options, denies that he ever exercised them and denies that he received any benefit. Computershare Investor Services Inc ("Computershare"), or, as it was then known, Montreal Trust, was the share register for Nexttrip, then known as Borneo Gold. It was also the share register for South Pacific Resources. It is against that background that the plaintiff seeks the issue of the letters rogatory.
(Page 5)
6 It is perhaps worth noting one other point. Letters rogatory have already been issued against three individuals who were at the relevant time directors of Nexttrip. The plaintiff fears, as these individuals are no longer directors of Nexttrip, they will not have access to relevant documentation. The plaintiff says that, at least so far as Nexttrip is concerned, the issue of these letters is a necessary adjunct to orders which have already been made.
7 The application for the issue of letters rogatory is brought under s 110(1)(c) of the Evidence Act1906. This section authorises the issue of letters "where it appears in the interests of justice to do so". Subsection (2) gives some further guidance as to when an order should be made. It reads:
"In determining whether it is in the interests of justice to make an order under subsection (1) in relation to the taking of evidence of a person, the matters to which the court shall have regard include the following -
(a) whether the person is willing or able to come to Western Australia to give evidence in the proceeding;
(b) whether the person will be able to give evidence material to any issue to be tried in the proceeding;
(c) whether, having regard to the interests of the parties to the proceeding, justice will be better served by granting or refusing the order."
8 The defendants objected to the issue of the letters on all three of the grounds mentioned in subpar (2). First it was said that there was insufficient evidence to establish that the individuals concerned would not come to Western Australia to give evidence. This submission was pressed particularly with respect to Canaccord Capital Corporation ("Canaccord").
9 This application is supported by two affidavits of Gary David Cobby, the first affirmed 27 February 2001, the second affirmed 28 September 2001. Annexed to both of these affidavits is correspondence directed from the plaintiff's solicitors to each of the proposed recipients of the letters rogatory. In my view, the nature of the response received by the plaintiff's solicitors in each case makes it plain that none of the relevant persons will come to Western Australia to give evidence. It is the case that none of the three parties has directly addressed the question. In particular, Canaccord, or their legal representatives, have, on one view of
(Page 6)
- the correspondence, left open their position for further consideration. But each of the parties has indicated that they are not prepared to co-operate with the plaintiff's solicitors and if any evidence is to be obtained, it will only be with the assistance of the courts of British Columbia. On balance, I am satisfied that none of the proposed parties is willing to come to Western Australia to give evidence.
10 It was submitted on behalf of the defendants that the plaintiff had failed to establish that the person named in the letters would be able to give evidence "material to any issue to be tried in the proceeding". Counsel pointed out that the letters all refer to the "proper officer". It was submitted that there was no evidence that the firms mentioned in the letters had any documents which would support the plaintiff's case. Even if they did, it was said, there was no evidence to establish what the "proper officers" could say about the documents.
11 It is important in considering this question to look carefully at what the plaintiff is attempting to achieve. This can be illustrated by referring to the plaintiff's claim that the defendants were issued with 230,000 shares in South Pacific Resources. If that transaction occurred, Computershare Investor records will show as much. If Computershare was resident in the jurisdiction, the plaintiff would, no doubt, issued a subpoena returnable before trial. If the relevant documents exist, then they would be produced in answer to the subpoena. But that does not assist the plaintiff in proving his case. To establish the fact of the issue of the shares, the plaintiff must somehow get the records before the court. That would be done using s 79C of the Evidence Act1906. Subsection (1) of that section requires production of the documents by a person having knowledge of the matters dealt with in the documents and it requires that person to be called as a witness. That is precisely the end to which these letters are directed.
12 It is important to note that the reference in the subsection is to evidence which is "material". That does not mean that an applicant must establish that the evidence will support his or her case. Evidence that is "material" may, in fact, have the effect of destroying the plaintiff's case. With respect, submissions put on behalf of the defendants were to the effect that the plaintiff had to establish that the evidence supported his case before it could be regarded as being material. That is not what the subsection says. I am satisfied that the person named in each of these letters will be able to give evidence material to issues to be tried in these proceedings.
(Page 7)
13 It was the prime submission of the defendants that the letters ought not issue because, properly considered, they were an attempt to obtain discovery from parties resident outside the jurisdiction. In support of this submission, reference was made to the affidavit of Mr Cobby sworn 27 February 2001 and correspondence annexed thereto directed from the plaintiff's solicitors to the three firms named in the letters. It was submitted that a reading of these letters made it plain that the plaintiff was interested in discovery of documents in an attempt to further his claim. It was submitted that this amounted to nothing more than a fishing exercise which was impermissible.
14 It is certainly the case that the correspondence does suggest that what the plaintiff was attempting to achieve was discovery from the named firms. Appearing as annexure "GDC8" to Mr Cobby's affidavit sworn 27 February 2001 is a copy of a letter directed to Montreal Trust Company. It is in the same terms as letters directed to other firms named in the letters. The correspondence reads, in part:
"As Montreal Trust Company is not a party to the action, our client is seeking its co-operation in giving discovery of documents voluntarily by producing to his agent all of the documents specified or described in the enclosed Schedule of Documents ('Documents') that are in his possession, custody or power."
15 There is no doubt that the tone of this correspondence seeks discovery. There is also no doubt that letters rogatory cannot be used solely for the purposes of discovery: See Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 74 ALR 232 per Gummow J at 235 - 236. Nor can the letters be used to identify persons who may be able to give evidence material to an issue to be tried in the proceeding: See Allstate Life Insurance Co & Ors v Australia & New Zealand Banking Group Ltd & Ors (No 18) (1995) 133 ALR 667 per Lindgren J at 675. But whatever may have been the position taken by the plaintiff's solicitors in correspondence, the application makes it plain that the letters are directed at particular witnesses who, as I have already concluded, would be able to provide evidence material to the issues between the parties. I am not satisfied that the application can be regarded as an exercise in discovery or as merely fishing.
16 I am satisfied, then, that I ought make orders as sought by the plaintiff. In reaching this conclusion, I have borne in mind the wide discretion referred to by Walsh J in Hardie Rubber Company Pty Ltd v
(Page 8)
- General Tire & Rubber Company (1973) 129 CLR 521, where, at 559, his Honour said:
" … I am of the opinion that the Court is not bound to act and ought not to act upon a rigid rule. No doubt in many cases where an applicant cannot identify a particular person as one who is likely to be a material witness, the Court will decline to make an order, in accordance with the approach indicated in cases in which it has been stated that the Court will not grant to an applicant 'a roving commission'. But it would be wrong to lay down an absolute rule applicable in all cases. The circumstances of each case must be considered and the ultimate question is whether having regard to the interests of the parties justice will be better served by granting or by refusing an order."
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