Berry v Innovia Security Pty Ltd

Attachment "A" to the Letter of Request dated 10 March 2017 Nature and purpose of the proceedings and summary of the facts (article 3, c)

1. The applicants in this civil proceeding before the Federal Court of Australia are Dr Benoy Berry and Global Secure Currency Limited. Both are based in the United Kingdom. The respondent, Innovia Security Pty Ltd (Innovia), is an Australian company in the business of manufacturing polymer substrate for banknote printing.
2. The proceedings were commenced by application and a statement of claim filed on 23 December 2013.
3. By the Second Further Amended Statement of Claim (SFASOC) dated 20 December 2016 (attached as Exhibit A) the applicants allege that they were deceived into terminating their agency agreement with Innovia, by which they had been appointed as Innovia's agent to market the polymer in Nigeria and certain other African territories. Because the SFASOC incorporates as particulars parts of the outline of evidence of Dr Berry, the outline is also provided (attached at Exhibit B).
4. In essence, the applicants allege that certain promises were made to them by Mr Chapman (for Innovia), which caused them to agree to terminate the agency agreement.
5. Innovia denies the allegations by its Defence to SFASOC dated 3 February 2017 (attached as Exhibit C).
6. Reasons for judgment of the Honourable Justice Rares delivered on 13 March 2017 (attached as Exhibit D). Attachment "B" to the Letter of Request dated 10 March 2017 Evidence to be obtained or other judicial act to be performed (article 3, d)
7. The evidence to be obtained is the evidence of Peter Michael Chapman (Chapman), who was a former secondee of the respondent.
8. The general nature and subject matter of the examination of Chapman and the nature of the questions to be put during the examinations are detailed in attachment "C" to the letter of request. Attachment "C" to the Letter of Request dated 10 March 2017 Questions to be put to the person examined or statement of the subject-matter about which they are to be examined (article 3, f)
9. The general subject-matter of the examination include: (a) the nature of Mr Chapman's role with the respondent; (b) the background to Mr Chapman's dealings with the applicants; (c) the circumstances leading to the execution of the agency agreement between the applicants and the respondent (Agency Agreement); (d) the work undertaken by the applicants under the Agency Agreement; (e) the circumstances leading to the termination of the Agency Agreement and, in particular, the meeting at Dr Berry's home in early 2008 where (as alleged by the applicants) representations were made by Mr Chapman to Dr Berry; (f) the nature of any communications between Mr Chapman and the applicants subsequent to the termination of the Agency Agreement; (g) any business dealings of Mr Chapman in Africa; (h) any involvement in any capacity by Mr Chapman with the banknote or polymer banknote industry; (i) the circumstances giving rise to Mr Chapman's trial and conviction; (j) the credit of Mr Chapman; and (k) if the trial judge, the Honourable Justice Rares, be appointed examiner pursuant to the Letter of Request, such other matters as may be raised in the examination that appear to his Honour to be relevant under the Law of Australia for the purpose of the proceedings. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

RARES J: 1 Innovia Security Pty Ltd, the respondent, has applied for an order under s 7(1)(c) of the Foreign Evidence Act 1994 (Cth) for the issue of a letter of request to the judicial authorities of the United Kingdom to take the evidence of a witness in London. The United Kingdom is a party to the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. Opened for signature on 18 March 1970. 847 UNTS 241 (Entered into force on 7 October 1972). Article 9 of the Convention provides: The judicial authority which executes a Letter of Request shall apply its own law as to the methods and procedures to be followed. However, it will follow a request of the requesting authority that a special method or procedure be followed, unless this is incompatible with the internal law of the State of execution or is impossible of performance by reason of its internal practice and procedure or by reason of practical difficulties. 2 As I will explain below, Innovia amended that application, by consent, to be one under s 7(1)(c) for an order that the letter of request seek that I, as trial judge, be appointed to examine the witness on oath or affirmation in London. I made the order on 10 March 2017. These are my reasons for doing so.

Background 3 These proceedings, relevantly, concern allegations that Dr Benoy Berry, the principal of Global Secure Currency Ltd (the applicants), had conversations and dealings with Peter Chapman who was then an officer of Innovia, then known as Securency Pty Ltd. The original statement of claim alleged that Innovia was, at the time, a joint venture vehicle of the Reserve Bank of Australia and Innovia Films that was seeking to commercialise the sale to foreign governments of polymer film banknotes, of the kind used as currency in Australia, in substitution for paper banknotes. 4 After I became docket judge on 16 September 2016, I fixed the trial to commence on 28 August 2017 with a five day estimated hearing and I also made orders for the preparation of the trial and a mediation. 5 Relevantly, the applicants allege that: in February 2008, Dr Berry and Mr Chapman had a conversation in London in which Mr Chapman procured Dr Berry to sign two documents, being a termination letter of the existing agreement between the applicants and Innovia and a new agreement; Mr Chapman induced Dr Berry to sign the two documents on the faith of representations that Mr Chapman would return to Australia and have Innovia execute the new agreement immediately; Innovia accepted the termination of the old agreement and refused to execute the new one, contrary to Mr Chapman's alleged representation to Dr Berry that it would. 6 Innovia denies, in its defence, that Mr Chapman made any representation about a new agreement and it asserts that Dr Berry freely and deliberately signed and gave the termination letter to Mr Chapman. 7 It is apparent that the terms of the actual conversation between Dr Berry and Mr Chapman are critical in the context of determining both the applicants' claim for damages based on their asserted reliance on Mr Chapman's alleged false representations and Innovia's defence to that claim.

The legislative scheme 8 Relevantly, s 7 of the Foreign Evidence Act provides: 7 Orders for taking evidence abroad (1) In any proceeding before a superior court, the court may, if it appears in the interests of justice to do so, on the application of a party to the proceeding, make an order, relating to a person outside Australia: (a) for examination of the person on oath or affirmation at any place outside Australia before a judge of the court, an officer of the court or such other person as the court may appoint; or (b) for issue of a commission for examination of the person on oath or affirmation at any place outside Australia; or (c) for issue of a letter of request to the judicial authorities of a foreign country to take the evidence of the person or cause it to be taken. (2) In deciding whether it is in the interests of justice to make such an order, the matters to which the court is to have regard include the following: (a) whether the person is willing or able to come to 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.

Mr Chapman's circumstances 9 Mr Chapman is, and currently resides, in England. In June 2014, he was living in Brazil when one of Innovia's solicitors, a partner at K&L Gates, Jim Bulling, met him. They discussed and settled, with the assistance of another of Mr Bulling's partners who has carriage of these proceedings, David Hope, the terms of an affidavit by Mr Chapman for use in Innovia's defence of these proceedings. Mr Hope was then in Melbourne. 10 Later in June 2014, in Brazil, Mr Bulling witnessed Mr Chapman sign two originals of the final settled form of the affidavit, both of which Mr Chapman retained. He told Mr Bulling that he would courier a signed original to K&L Gates after he received an amended letter of indemnity from them and advice from his Brazilian lawyer. 11 In the event, Mr Chapman never provided K&L Gates with a signed affidavit, despite Mr Hope having sent him a proposed amended letter of indemnity. 12 Mr Hope gave evidence that: he subsequently learnt that the British Government had requested the Brazilian Government to extradite Mr Chapman, and the Brazilian authorities had issued a warrant for his arrest in May 2014; Mr Chapman was taken into custody in November 2014 and extradited to the United Kingdom in about March 2015; Mr Chapman stood trial in Southwark Crown Court in London before Judge Grieve QC and a jury commencing on 5 April 2016. 13 On 11 May 2016, the jury returned four guilty verdicts against Mr Chapman on charges of corruption contrary to s 1 of the Prevention of Corruption Act 1906 (UK). The jury acquitted Mr Chapman of two other charges. The convictions were for offences that, between 8 January 2009 and 18 March 2009, Mr Chapman was involved in payments that had been made to the former managing director and chief executive officer of Nigerian Security Printing and Minting, a company in which the Nigerian Government held the majority of shares. 14 On 12 May 2016, the judge sentenced Mr Chapman. In his sentencing remarks, that are in evidence, his Honour described Mr Chapman as being "essentially Securency's man in Nigeria". He found, based on the guilty verdicts, that Mr Chapman had been involved in corrupt payments to persons in Nigeria totalling about GBP143,000. His Honour also found that Mr Chapman had suffered "acute and chronic ill-health with a number of debilitating symptoms" since around, at latest, the time of his offending. 15 The judge sentenced Mr Chapman to imprisonment for 30 months, more than half of which he had served while in custody awaiting extradition in Brazil and on remand in England. The judge noted that Mr Chapman was entitled to be released on licence, as he had served half of his sentence. His Honour made the licence subject to conditions that Mr Chapman had to observe for the balance of his sentence that, it seems, would run until about late April or May 2017. 16 In 2016, Mr Hope re-established contact with Mr Chapman in England and organised for an officer of Innovia, Geoff Bell, to meet him in London in November 2016. Mr Chapman told Mr Bell that he had appealed against his conviction, was facing proceeds of crime litigation and could not leave the United Kingdom because of his licence conditions. He also told Mr Bell that he had read the further amended statement of claim in these proceedings and disputed the allegations that it made against him, and confirmed, to Mr Bell, the accuracy of the version of his affidavit that Mr Bulling had witnessed. 17 Mr Hope gave evidence that neither he nor Mr Bell has been able to persuade Mr Chapman to give evidence for Innovia in these proceedings. He was concerned that Mr Chapman be subpoenaed to give evidence in England before May 2017 when his licence conditions expire and he might then be free to leave that country's jurisdiction.

Subsequent events 18 It is necessary for there to be an order under s 7(1)(c) so as to enable the United Kingdom authorities to compel Mr Chapman to attend at an examination in London. 19 I raised with the parties at the hearing on 16 February 2017 that, rather than, as Innovia had originally sought, an examiner be appointed to take Mr Chapman's evidence in London under s 7(1)(c) of the Act, I should be appointed to do so, as I will have to make credibility-based findings about the crucial conversation between him and Dr Berry. After I suggested that I should take the evidence, both parties readily accepted that this was appropriate. 20 Innovia's counsel explained that it had not originally suggested that I take the evidence because it thought that, if s 7(1)(c) applied in the circumstances, even if I were appointed, I would be merely an examiner, and it had not wished to presume that I would be willing to travel to London in that capacity. I also informed the parties that I had intended to take long leave overseas during September 2017, after a four week trial had to be vacated the previous week that I had fixed to begin on 4 September 2017. I told them that I could hear the remaining part of the proceedings commencing on or about 4 September 2017 in London if that were convenient for their lawyers and the United Kingdom judicial authorities. The parties said that they could proceed then and that counsel briefed for the trial were available to continue at that time in London. 21 I also suggested that since Mr Chapman's evidence would be given at the end of the trial, final submissions, that should take no more than one day, could occur in London immediately afterwards, or in the event that if, for any reason, Mr Chapman was not called or did not give evidence, I could hear final submissions in London. I also said that the Court could sit extended hours to minimise the number of days of the hearing in London. 22 Innovia initially indicated that this course was appropriate but, subsequently, expressed concern about the apparent absence of a source of power for the Court to hear submissions in London. It argued that there was no jurisdiction under s 12 of the Federal Court of Australia Act 1976 (Cth) for sittings of the Court to occur outside Australia. Innovia submitted that it had not been able to identify any other source of power for the Court to take submissions when it sat outside Australia. Because of these concerns, Innovia submitted, while it: would (absent the difficulties [to which it referred] …) be willing to move to closing submissions in London after the taking of evidence from Mr Chapman (and the convenience of doing so is immediately apparent), it takes the view that this option cannot be implemented. 23 Innovia now seeks an order under s 7(1)(c) of the Foreign Evidence Act for taking of evidence from Mr Chapman in London before myself as trial judge and directions for that hearing. It has undertaken to pay the costs and expenses of the Court and the applicants' attendance to take Mr Chapman's evidence in London. Both sides agreed to Innovia's proposal (made initially before I suggested that I take the evidence) to pay the costs and expenses of the hearing in London despite the requirement in [3.6] of the Court's Overseas Service and Evidence Practice Note (GPN-OSE) that each side initially should bear equally the costs and expenses of and incidental to such a process, but subject to the reallocation of the burden in a final costs order to be made at the conclusion of the proceedings. 24 The purpose of the requirement in [3.6] is to prevent any perception that only one side in the litigation is paying for the judge to travel to the foreign hearing so as to create an apprehension of bias. Here, Innovia had already proposed to make the initial expenditure on both the costs and expenses of the examiner, as well as of the applicants, to take Mr Chapman's evidence in London (subject to that being treated as a recoverable item were Innovia to be successful at the end of the proceedings in obtaining an order for costs). In those circumstances, and because the applicants consent, I do not consider that a fair-minded lay person might reasonably apprehend that I might not bring an impartial mind to resolving the issues in the proceedings on their merits so as to warrant my insisting on strict adherence to [3.6] in the Practice Note: cf Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344-345 [6]-[8] per Gleeson CJ, McHugh, Gummow and Hayne JJ.

Consideration 25 I am satisfied, for the purposes of s 7(2) of the Foreign Evidence Act, that Mr Chapman is not willing to come to Australia to give evidence at the trial and that he will be able to give evidence that is material to issues that are to be tried. Both parties agree that the letter of request should propose that I be appointed by the United Kingdom judicial authorities under s 7(1)(c) to take Mr Chapman's evidence. I do not consider that it would be in the interests of justice in the circumstances of this matter to take Mr Chapman's evidence by any other means. This includes, as in one earlier proposal by Innovia, an audio visual link to London in which I, from Sydney, would view him being examined in London but not be able to have the benefit of being present personally to observe him, or, as trial judge, to control the hearing or to ask him questions myself. 26 I am satisfied that it is appropriate to request the United Kingdom authorities to exercise their power to consider allowing me to take Mr Chapman's evidence, to the extent that to do so would not be incompatible with the law of the United Kingdom, in accordance with Art 9 of the Convention. 27 In addition, Mr Chapman's medical condition may mean that if he does give evidence it may be necessary for him to have rest periods. Depending on what occurs and the parties' submissions on the procedure to be followed in the circumstances encountered in London, it may be a sensible and appropriate course that some submissions on matters not involving Mr Chapman's evidence could be made during any rest period or time that Mr Chapman were unable to give evidence. 28 I considered the inconvenience of returning to Sydney immediately after taking a long flight to London and then hearing submissions, as opposed to dealing with them at the close of the evidence (or if Mr Chapman did not give evidence) while all concerned were in the same place. While the potential extension of the hearing in London by one day may involve the extra cost of one day's accommodation and sustenance, I considered it preferable to the potential disruption, exhaustion and extra professional time that would be involved were the hearing to resume again later in Sydney for taking submissions. 29 Obviously, s 7(1) and the balance of the Act deal solely with the taking of evidence abroad. However, s 8(1)(b) provides that the Court can also give such directions as it thinks just relating to the procedure to be followed in relation to an examination order under s 7(1)(a) or (b), including directions about any other matter that the Court thinks relevant. And, relevantly, s 8(2) provides that, if the Court makes an order under s 7(1)(c), it may include in the order "a request about any matter relating to taking that evidence." 30 In addition, the Federal Court Act provides that the Court may direct or allow a person, for the purposes of any proceeding, to make a submission to it by way of video link, audio link or "other appropriate means", whether the person is in or outside Australia (other than if the person is in New Zealand) (s 47B). In addition, s 48(1) allows the Court to direct that, at any stage of the proceeding, a part of it may be conducted at a place specified in an order. 31 In my opinion each of s 8(2) of the Foreign Evidence Act and ss 47B and 48(1) of the Federal Court Act provide a firm statutory basis under the law of Australia for the Court continuing to sit briefly in London to take final submissions, provided that the United Kingdom Government and its judicial authorities have no objection to that occurring. 32 Since 16 February 2017, the parties have been engaged in settling the form of the letter of request under the Convention, including the range of topics for Mr Chapman's examination that must be specified in the letter. I have settled the final form of the letter of request after giving the parties a final opportunity to comment on its terms. 33 I am of opinion that it is in the interests of justice that the parties and I have the ability to utilise the time in London, given the expense involved and dislocation of being there, to hear submissions if that were acceptable to the United Kingdom Government.

Conclusion 34 I am satisfied for the purposes of s 7(2) of the Foreign Evidence Act that it is in the interests of justice to make orders for the taking of Mr Chapman's evidence and submissions in London, and for a letter of request, seeking my appointment to take his evidence for that purpose under the Convention and for permission to hear submissions, to be sent to the Central Authority in the United Kingdom. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.