Applicant v Respondent

Requirements of an application under section 27A of the CAA

2 Section 27 of the CAA gives this Court power to assist domestic commercial arbitrations in the taking of evidence:

27 Court assistance in taking evidence (cf Model Law Art 27)

1. The arbitral tribunal or a party with the approval of the arbitral tribunal may request from the Court assistance in taking evidence.

2. The Court may execute the request within its competence and subject to and in accordance with rules of court.

3 Section 27A of the CAA creates the structure through which the Court may assist an arbitral tribunal by issuing subpoenas:

1. The Court may, on the application of any party, and subject to and in accordance with rules of court, issue a subpoena requiring a person -

a) to attend for examination before the arbitral tribunal; or

b) to produce to the arbitral tribunal the documents specified in the subpoena; or

2. A party may only make an application to the Court under subsection (1) with the permission of the arbitral tribunal.

3. A person must not be compelled under any subpoena issued in accordance with subsection (1) to answer any question or produce any document that the person could not be compelled to answer or produce in a proceeding before the Court.

4 In contrast to s 23(5) of the International Arbitration Act 1984 (Cth), the CAA does not expressly require that the Court find that it is reasonable in all the circumstances to issue a subpoena to a person who is not a party to the arbitral proceedings before issuing such a subpoena. Under s 27B(4), such a finding is necessary, though not sufficient, before an order is made under s 27B(2) of the CAA. That section applies where an order is sought against a "person in default", being someone who failed to comply with either a subpoena or a direction of an arbitral tribunal. As the Applicant does not rely on s 27B(2) of the CAA, and it is not alleged that the addressee is a person in default, there is no express statutory requirement that the Court find it reasonable to issue a subpoena to the addressee.

5 In Delphi Petroleum Inc v Derin Shipping & Trading Ltd Denault J of the Federal Court of Canada (Trial Division), in the context of court assistance in the compulsory taking of evidence from a former employee of a party, said:[1]

An inquiry into the reasons for the request is likely not necessary because the request issues from the arbitral tribunal itself or has the approval of the arbitral tribunal, and the role of the court is merely to exercise for the arbitral tribunal the compulsion power which the arbitral tribunal may not have.

This quote is cited with approval by Mr Doug Jones in his commentary on s 27 of the Commercial Arbitration Act 2010 (NSW) which relevantly mirrors the CAA.[2] However, in my view it is not appropriate to extend its logic to the present circumstances to preclude an enquiry by this Court into the reasonableness of the issue of the subpoena. While a degree of deference to the position taken by the arbitral tribunal is vital, it is clear from the case law that the Court does not act as a mere "rubber stamp" in issuing subpoenas in support of arbitral proceedings. As I said in ASADA v 34 Players and One Support Person:[3]

Having regard to the international provenance of the Act, particularly the provisions of the Model Law, it is, in my view, clearly inappropriate for the court, in an application under s 27A of [the CAA] by a party to obtain subpoenas, to embark upon a process which would, in effect, "second guess" the arbitral tribunal which has already given permission for the application to obtain a subpoena under these provisions.[4] It is quite clear from the provenance of this legislation, internationally and domestically, that the emphasis sought to be achieved by the legislature is court assistance and support for arbitral processes, and not "heavy handed" intervention or, in effect, duplication of the functions of the arbitral tribunal. Long gone are the evils of the case stated procedure under the Victorian Arbitration Act 1958 and its equivalents in other jurisdictions. Since the Commercial Arbitration Act 1984 in Victoria, the trend in legislative developments and court decisions has been to constrain merits appeals and the consequent cost and delay that flows from duplication of the proceedings in this process. This is not to say, however, that a provision such as s 27A of [the CAA] is to be treated lightly by the courts. The sanctions for a breach of a court issued subpoena are potentially very serious indeed. Consequently, the basis upon which these powers are sought to be invoked must be established to the satisfaction of the court. Nevertheless, this process should, naturally, occur as expeditiously and cost effectively as possible; but it must be balanced against the seriousness associated with subpoenas and their possible breach. ...

6 The policy underlying the Court's abstention from enquiry into the merits of arbitral decisions is that the parties have by consent subjected themselves to the jurisdiction of the arbitrator by their conclusion of an arbitration agreement. The same policy considerations do not, however, justify an exercise of the Court's coercive powers against non-parties without enquiry into the reasonableness of the use of such powers. Non-parties are strangers to the arbitration agreement, and they should be no more exposed to answering subpoenas in arbitration than they are in litigation, especially since arbitral examination is not under the immediate supervision of the Court.

7 In any event, it is inherent in the scheme which the CAA establishes, especially in s 27 which implicitly confirms an independent discretion in the Court for the purpose of assisting the arbitration process, that there must be some enquiry by the Court into the reasonableness of the issue of the subpoena. Thus it is not sufficient that there is "merely" an arbitral tribunal in support of the subpoena application, requesting or approving the issue of such a subpoena. Thus, in addition to the express requirements under s 27A of the CAA, there must be evidence of reasonable grounds for the issue of the subpoena against the addressee.

8 As evidenced by the letter from the arbitrator dated 9 June 2017, the application is made with the permission of the arbitral tribunal:[5]

Subpoena

Aurecon wishes to call Mr Ross Nation to attend the Arbitration to give oral evidence. He is no longer employed by Aurecon and it requires a direction pursuant to Section 27A of the CAA so that it can approach the Supreme Court for the issue of a Subpoena to compel his attendance. I will make the appropriate direction.

...

Directions

...

Pursuant to Section 27A(2) CAA I grant permission to Aurecon to make an application to the Supreme Court under Section 27(1)(a) CAA for the issue of a Subpoena addressed to Ross Nation for him to attend for examination before the Arbitrator at the Arbitration hearing which is to commence on Monday 10 July 2017.

9 The Applicant's solicitor has given evidence, which is sustained by the exhibits to which he refers, as to the grounds upon which the subpoena ought to be issued to the addressee:[6]

a) Between approximately April 2013 and 26 November 2013 Ross Nation was an employee of Aurecon who held the title "Civil Engineer, Transport Services". During that period Mr Nation was Aurecon's main point of contact with Port of Melbourne Corporation (PoMC) and CitiPower in respect of the electrical services design for the project.

b) Between around April 2013 to 26 November 2013 Mr Nation supervised the preparation of various revisions to the electrical services drawings that contained information about the approximate locations and dimensions of the high voltage electrical cable pits.

c) Between approximately April 2013 and 26 November 2013 Mr Nation had a number of meetings with CitiPower and PoMC regarding the design of the high voltage electrical cable pits. During that period Mr Nation also exchanged correspondence with CitiPower and PoMC regarding that issue.

10 Aurecon's Statement of Defence alleges, at paragraph 74, that Mr Nation had a conversation with PoMC's Senior Project Manager - Roads & Services, Wayne Perret, in early October 2013 to the following effect:

a) Mr Nation informed Mr Perret that CitiPower intended to require an increase in the dimensions of the high voltage cable pits;

b) Mr Nation informed Mr Perrett that CitiPower's proposed changes were likely to increase PoMC's design and construction costs associated with the pits;

c) Mr Nation suggested to Mr Perrett that PoMC should inform BMD of CitiPower's intentions; and

d) Mr Perrett informed Mr Nation that PoMC did not need to pass that information on to BMD because other proposed changes to the design of the high voltage electrical services would result in cost savings to BMD that would wholly or substantially offset any extra costs associated with increasing the dimensions of the high voltage electrical cable jointing pits, as was in fact the case.

11 In the arbitration BMD relies on the affidavit of Paul Dall'Oglio sworn on 5 April 2017. Now produced and shown to me and marked "SMD-6" is a copy of Mr Dall'Oglio's affidavit, without the exhibits. Mr Dall'Oglio alleges, at paragraph 35 of his affidavit, that Mr Nation admitted in a meeting in early 2014 that Aurecon made an error when supplying its services. I am instructed by Aurecon that Aurecon denies the allegation.

12 By reason of the above matters I believe that Ross Nation is a material witness who needs to give oral evidence at the arbitration hearing scheduled to commence on 10 July 2017.

10 On the basis of the above, and upon the pleadings in the arbitration that have been exhibited which, at least prima facie, render relevant the evidence of Mr Nation, I am satisfied that there are reasonable grounds for the issue of a subpoena to the addressee as sought.

11 The Applicant undertook to pay conduct money of $60 to the addressee and to pay the addressee's "reasonable witness expenses in accordance with the Supreme Court Scale of Costs".[7] On the basis of this undertaking and the above reasoning, the subpoena has been issued in the form provided to the Court with these reasons to be published subsequently.

[1] Delphi Petroleum Inc v Derin Shipping & Trading Ltd (1993) 73 FTR 241, [10].

[2] Doug Jones, Commercial Arbitration in Australia (2013, 2nd ed, Law Book Co) 318.

[3] [2014] VSC 635, [63].

[4] See Alinta Sales Pty Ltd v Woodside Energy Ltd [2008] WASC 304 (Beech J).

[5] Exhibit SMD-2 to the Affidavit of Steven Mark Donley (22 June 2017) 2-3.

[6] Affidavit of Steven Mark Donley (27 June 2017) [9]-[12].

[7] Affidavit of Steven Mark Donley (22 June 2017) [9]-[10].