British American Tobacco Aust Services Limited v Eubanks for the United States of America

Supreme Court of NSW|2011-02-18|Before: Hall J

Judgment 1HALL J: The plaintiffs, Fairfax Holdings Limited and Crum & Forster Holdings Corp, make application to this Court for an order pursuant to s.32 of the Evidence on Commission Act 1995 (the "Act" ) for evidence to be obtained in this State. 2The application was made by summons dated 12 January 2011 in which orders were sought for the examination of Mr John Hempton and an order for the production of documents by Mr Hempton and by Platinum Asset Management Limited ( "Platinum" ). 3In support of the application, the plaintiffs relied on and read three affidavits of Mr Michael Bowe, Attorney, two sworn on 31 December 2010 (which have been respectively referred to as the "Bowe affidavit" and the "Confidentiality affidavit" ) together with an affidavit sworn on 4 January 2011. 4The plaintiffs commenced proceedings in the Superior Court of New Jersey, Morris County, New Jersey, United States of America on 26 July 2006. That Court is referred to as the "Requesting Court" in Mr Bowe's first-mentioned affidavit sworn 31 December 2010. 5In paragraph [10] of the Bowe affidavit, the nature of the proceedings are summarised. In short, the plaintiffs allege that a number of hedge funds, with the assistance of a number of financial advisers or other persons, embarked on an unlawful enterprise that involved taking short positions on securities in the plaintiffs and then spreading mis-information to deflate the value of those securities. The plaintiffs claim in the US proceedings that their loss and damage is over $6 billion. 6In this application, the plaintiffs have stated that they have obtained information which indicates Mr Hempton was involved in the enterprise in various ways as set out in the Bowe affidavit (at paragraph 15-(h)) and that Platinum was involved in the way set out in that affidavit at 15). 7The plaintiffs claimed that from approximately 2002 to approximately 2007 Mr Hampton was an analyst and later chief analyst in global financial stocks at Platinum. 8On the basis of documents contained in Confidential Exhibits MJB3 and MJB5 and the summary of information set out in paragraph 15 of the Bowe affidavit, the deponent states his belief that Mr Hempton and Platinum have, or are likely to have, in their respective possession, custody or power, the documents sought in the Letter of Request. 9On 8 January 2010, the Requesting Court made orders that the Letter of Request be issued ( the letter of request for international judicial assistance regarding Platinum Asset Management and John Hempton ). 10Paragraph 7 of the Letter of Request sets out details as to the nature and purpose of the proceedings , Summary of the Complaint and Summary of Defense and Counterclaims . It is there noted that "discovery has commenced in the proceeding and is on-going" and that the proceeding has, as at the date of the letter of request, not been listed for trial. 11In the Letter of Request (paragraph 10), the purpose of the evidence to be obtained is identified. There it is stated, inter alia, that the Requesting Judicial Authority (the Honorable Stephan Hansbury JSC, Superior Court of New Jersey, Law Division) considers that it is necessary for the purpose of justice and for the due determination of the matters in issue in the proceedings (particularly, the plaintiffs' common law conspiracy claim and RICO statute claims), that Mr John Hempton and Platinum be called upon to provide evidence for use at the trial of the proceedings.

Hearing of the application 12Mr James Emmett, of counsel, appeared on behalf of the plaintiffs. Submissions in support of the application were set out in the Outline of Plaintiffs' Submissions supplemented with the oral submissions. 13A working copy of the two subpoenas sought to be issued to Mr Hempton and Platinum were provided with the written submissions.

The statutory provisions 14The relevant provisions are contained in Part 4 of the Act, Taking of Evidence for Foreign and Australian Courts" . 15Section 31 of the Act defines "proceedings" as including "proceedings in any civil or commercial matter" . 16The operative provisions are set out in s.32 and s.33 which are reproduced below:- 32 Application to the Supreme Court for assistance in obtaining evidence for proceedings in other court (1) The following provisions of this Part apply if an application is made to the Supreme Court for an order for evidence to be obtained in the State and the Court is satisfied: (a) that the application is made in pursuance of a request issued by or on behalf of a court or tribunal exercising jurisdiction in a place outside the State, and (b) that the evidence to which the application relates is to be obtained for the purposes of proceedings which either have been instituted before the requesting court or whose institution before that court is contemplated. (2) This Part does not apply in respect of proceedings relating to the commission of an offence or an alleged offence unless the requesting court is a court of a place in Australia or of New Zealand. 33 Power of the Supreme Court to give effect to application for assistance (1) The Supreme Court has power, if an application is made under section 32, by order to make such provision for obtaining evidence in the State as may appear to the Court to be appropriate for the purpose of giving effect to the request in pursuance of which the application is made. (2) An order under this section may require a specified person to take such steps as the Court may consider appropriate for that purpose. (3) Without limiting the generality of subsections (1) and (2), an order under this section may, in particular, make provision as follows: (a) for the examination of witnesses, either orally or in writing, (b) for the production of documents, (c) for the inspection, photographing, preservation, custody or detention of any property, (d) for the taking of samples of any property and the carrying out of any experiments on or with any property, (e) for the medical examination of any person, (f) without limiting paragraph (e), for the taking and testing of samples of blood from any person. (4) An order under this section is not to require any particular steps to be taken unless they are steps that can be required to be taken by way of obtaining evidence for the purposes of proceedings in the Supreme Court (whether or not proceedings of the same description as those to which the application for the order relates). (5) Subsection (4) does not preclude the making of an order requiring a person to give testimony (either orally or in writing) otherwise than on oath if this is asked for by the requesting court. (6) An order under this section must not require a person: (a) to state what documents relevant to the proceedings to which the application for the order relates are or have been in the person's possession, custody or power, or (b) to produce any documents other than particular documents specified in the order and appearing to the court making the order to be, or likely to be, in the person's possession, custody or power. (7) A person who, because of an order under this section, is required to attend at any place is entitled to similar conduct money and payment for expenses and loss of time on attendance as is a witness in proceedings before the Supreme Court." 17The above provisions were the subject of consideration by the Court of Appeal in British American Tobacco Aust Services Limited v Eubanks for the United States of America (2004) 60 NSWLR 483. 18In that case, Spigelman CJ formulated the following propositions:- (1) The combined effect of s.33(6)(a) and (b) is that an order for production of documents, for which s.33(3)(b) makes express provision, is to be limited to "particular documents specified in the order" . (2) The authorities suggest that the approach expressly required with respect to documents applies to interrogatories and oral examination by force of s.33(4) of the Act which provides that an order cannot require "steps" to be taken unless they are "steps" that can be required in local proceedings "by way of obtaining evidence" . (3) An oral examination would not extend to obtaining information, as distinct from obtaining evidence for use at trial. 19Spigelman CJ adopted the statement of principle in relation to the making of orders under the Act of Burnton J in Gredd v Arpad Busson [2003] EWHC 3001 at [27]. I have had regard to those principles in determining the present application. 20In particular, in Gredd (supra), Burnton J observed that the fact that testimony is sought as part of the discovery process in the United States proceedings is not of itself decisive. The fact that it is sought at the discovery stage is an indication that what is sought is discovery. However, the Court has power to make an order for such testimony to be taken if it is limited to evidence to be adduced at trial. That is a matter of relevance to the present application. 21In accordance with the principles stated in Gredd (supra), the Court will take into account any safeguards or restrictions incorporated in the terms of the proposed order, although the orders to be made by this Court cannot depart substantially from the terms of the letter of request.

Submissions for the plaintiffs 22It was submitted on behalf of the plaintiffs, inter alia, that the pre-conditions to the Court's power to order the examination of Mr Hempton are made out, namely:- (1) The application is for an order for evidence to be obtained. (2) The application is made pursuant to the Letter of Request. (3) The evidence is to be obtained for the purposes of the US proceedings, which have been commenced before the Requesting Court, the Superior Court of New Jersey. 23In addition, it was submitted that the restriction in s.33(4) does not apply in the present case. The orders sought relate to steps that this Court is able to require in respect of local proceedings. 24It was acknowledged in the submissions that the discovery process, as noted in paragraph [9], has not yet been completed in the US proceedings nor a date fixed for trial. However, though these facts are relevant, it was said that they were not decisive and that the Court has power to make the orders to ensure the testimony is limited to evidence to be adduced at trial (rather than testimony that may lead to the discovery of evidence). 25It was contended that the fact that the discovery process had not been completed should not cause the Court to refuse the application for orders for the obtaining of oral testimony from Mr Hempton. 26It was observed in submissions that the Letter of Request specifically provides that the evidence is "for use at trial" (paragraphs [10] and [14]) and that in making the request, the Superior Court of New Jersey has had regard in particular to the limitations imposed by s.33(4) and s.33(6) of the Act. 27It was also noted that the Letter of Request sought that the examination of Mr Hempton be video taped and transcribed and that the examination be conducted in camera. 28In respect of the video taping of evidence on commission, reliance was placed on the approach taken by Bell J in Eubanks v Cannar [2003] NSWSC 1267 at [27] to [36] in which an order that evidence be videotaped was made. 29It was contended that the restriction in s.32(2) of the Act does not apply as the proceedings are not proceedings relating to the commission of an offence or an alleged offence. The exclusion, it was contended, was not engaged by the mere fact that exemplary/punitive damages or treble damages are sought or by the fact that the alleged conduct would also amount to a crime. 30The proceedings, it was observed, and I accept, do not concern the determination of whether an offence has been proved and, if so, what the punishment should be. The central claim of the US proceedings, it was noted, was for civil compensation.

Production of documents by Mr Hempton and Platinum 31It was submitted on behalf of the plaintiffs that the Court should grant leave for the issue of subpoenas substantially in the form of appearing in Exhibit EMJB7. A number of submissions were again made upon the adequacy of the description of the documents which need not be repeated here. 32The hearing of the application commenced on 14 January 2011 in the Duty Judge list on that date. By reason of other matters in the list, the application was adjourned until 4 February 2011. On that date, the question of the terms of the subpoena were again considered and discussed with counsel. On that date, I expressed concern as to the terms of the subpoena and expressed the view that there was a need to limit the description of the documents. 33On 18 February 2011, Mr Emmett stated that his instructing solicitors had prepared a much more specific form of subpoena. In that respect, he relied upon the affidavit of Darren James affirmed 16 February 2011, in addition to a copy of draft orders sought and copies of two draft subpoenas. The subpoenas refer to documents sought either by express description in respect of the document that actually exists in the exhibits (Exhibit MJB5 to the Bowe affidavit) or in the new Confidential Exhibit to Mr James affidavit affirmed 16 February 2011. 34Leave was granted to the plaintiffs to file the affidavit of Mr James sworn 16 February 2011 and the affidavit was taken as read on the application. 35In it, Mr James stated that, on instructions from attorneys and counsel for the plaintiffs in the United States proceedings, further documents became available on 31 January 2011 which, on a limited review, was said to have disclosed further material concerning the involvement of Mr Hempton in "the enterprise" as deposed to in the Bowe affidavit. An attorney for the plaintiff, Ms Jennifer S Recine, has stated that, on the basis of the documents identified in paragraph 5 of Mr James' affidavit, she believes that it is likely that Mr Hempton and/or Platinum have in their possession, custody or power the documents sought in the Request and that the documents sought in it are relevant to the matters in issue in the US proceedings.

Particularity of subpoenas 36I turn to the revised subpoenas to produce addressed to John Hempton and to the Proper Officer, Platinum Investment Management Limited referred to in paragraph [32]. The draft subpoenas have been respectively marked MFI 2 and MFI 3 in the proceedings. In addition, a document was prepared entitled "Proposed Draft Hempton Subpoena - Confidential Aid" dated 17 February 2011. That document, by reference to page numbers, referred to Confidential Exhibit MJB:5 to the affidavit of Mr Bowe sworn 30 December 2010 and to Confidential Exhibit DJ:1 to the affidavit of Mr James affirmed 16 February 2011. 37The re-drafted draft subpoenas provide greater particularity than the initial draft subpoenas produced at the outset of the hearing of the application. 38The question as to sufficient particularity concerning subpoenas under s.32 and s.33 of the Act was considered by this Court (Mathews AJ) in Application of Monier Inc [2009] NSWSC 986 at [15] to [30]. It was noted in that case at [27] that s.33(6)(b) requires, relevantly, that any document to be produced under that section must be "particular documents specified in the order" . Her Honour observed that:- "... It is difficult to construe this provision as meaning anything other than 'individual documents separately described' (per Lord Diplock in Westinghouse)." 39Her Honour noted the submission made on behalf of Monier to the effect that it is sufficient if a subpoena specifies an objective criterion by which the documents can be identified. However, her Honour adopted the view that that did not accord with her Honour's view of the clear terms in relation to the section. 40I have considered whether or not the re-drafted subpoenas, MFI 2 and MFI 3, sufficiently overcome what I considered were the deficiencies in the earlier drafts. I have concluded that descriptions of documents in the draft subpoenas provide sufficient particularity of the documents sought for an order to be made under s.32 of the Act. 41On the evidence in support of the application, I am otherwise satisfied of the following matters:- (1) That the condition for the making of an order pursuant to s.33(3) for the examination of the proposed witness, John Hempton have been satisfied. (2) That the requirements in respect of an order under s.33(3) have been satisfied in respect of the production of the documents sought in draft subpoenas, MFI 2 and MFI 3. (3) I am satisfied that the making of the orders referred to in (1) and (2) above constitute steps that are permitted to be taken by way of obtaining evidence for the purposes of proceedings instituted before the requesting court in accordance with s.32(1)(b) of the Act. (4) The evidence in support of the application otherwise satisfies the provisions of s.32 of the Act.

Orders 42Pursuant to s.32 and s.33 of the Evidence on Commission Act 1995, I make the following orders:- (1) The exhibits to the affidavit of Michael Joseph Bowe dated 31 December 2010 marked "Confidential Exhibit MJB:3" and "Confidential Exhibit MJB:5" and the exhibit to the affidavit of Darren James sworn 16 February 2011 marked "Confidential Exhibit DJ:1" be admitted as confidential exhibits and not be inspected or made available to any person without an order of this honourable Court. (2) This Court, by application made pursuant to s.32 of the Evidence on Commission Act 1995 (NSW), gives effect to the Letter of Request from the Superior Court of New Jersey, Morris County, United States of America, reproduced in Exhibit MJB:1 to the affidavit of Michael Joseph Bowe dated 31 December 2010 (the Letter of Request ) by the orders set out below. (3) The first and second plaintiffs have leave to file and serve subpoenas substantially in the form annexed to these orders and marked MFI 2 and MFI 3, for the production of the documents specified therein, to each of:- (a) Mr John Hempton; and (b) Platinum Investment Management Limited (ABN 25 063 565 006), such subpoenas to be returnable before the Justice appointed under order 5 below on 18 April 2011. (4) Subject to any order by the Justice appointed under order 5 below, all documents produced pursuant to the subpoenas issued pursuant to order 3 above be made available for inspection and photocopying by the plaintiffs' Australian legal representatives. (5) A Justice of this Court be appointed to administer and conduct the examination of Mr John Hempton pursuant to and in accordance with the Letter of Request. (6) The matter be listed before the Justice appointed under order 5 above on 18 April 2011. (7) The plaintiffs use reasonable endeavours to serve Mr John Hempton and Platinum Investment Management Limited with a copy of these orders, together with the summons and supporting affidavits, at least 14 days prior to 18 April 2011. (8) The plaintiffs make available to Mr John Hempton and Platinum Investment Management Limited for inspection and copying, or if so requested serve copies of, the exhibits to the supporting affidavits, provided that Mr Hempton, Platinum Investment Management Limited and their legal representatives are made aware of the confidentiality orders made in order 1 above. (9) The plaintiffs have liberty to apply to the Justice appointed under order 5 above, for the allocation of a date for the commencement of the examination of Mr John Hempton. (10) The plaintiffs and Mr John Hempton each be entitled to be legally represented at the examination of Mr John Hempton at their own cost (including, without limitation, the appearance of an Attorney from the United States of America). (11) The examination of Mr John Hempton:- (a) commence on the date fixed by the Justice appointed under order 5 above and continue thereafter from day to day until complete, at such places and times as the Justice may direct; (b) be conducted in camera and orally by question and answer; (c) be video-taped and transcribed and such video-tapes and transcripts, together with any documents tendered or marked for identification, be signed and certified as correct and authenticated by the Justice appointed under order 5 above, and true copies thereof be:- (i) forwarded by the Principal Registrar, under seal of this Honourable Court, to the Clerk of the Superior Court of New Jersey, Morris County, United States of America at 1 Court Street, Morristown, New Jersey 07960, United States of America; and (ii) made available to the plaintiffs' legal representatives in Australia. (12) The plaintiffs pay the costs and expenses of the examination, including:- (a) the expense of the examiner, (b) the preparation and copying of the transcript, and (c) subject to order 10 above, Mr John Hempton's conduct money, expenses and loss of time on attendance in accordance with s.33(7) of the Evidence on Commission Act . (13) Subject to further order of this Court, the plaintiffs not make any use of documents obtained pursuant to the subpoenas in order 3 above, the transcript of the examination in order 10 above or the video recording of the examination in order 10 above, other than to tender the same at trial, unless required to produce or disclose the documents to another person under compulsion of law. (14) Subject to further order of this Court, the plaintiffs may disclose the documents and recordings referred to in order 13 above to the other parties to the proceedings before the Superior Court of New Jersey, provided:- (a) the plaintiffs obtain from each receiving party an undertaking that they will not make any use of the documents and recordings, other than to tender the same at trial, unless required to produce or disclose the documents to another person under compulsion of law; and (b) if the plaintiffs are unable to obtain such an undertaking from the other parties to the proceedings before the Superior Court of New Jersey by consent, the plaintiffs apply to the Superior Court of New Jersey for orders limiting the use of those documents in terms contemplated by paragraph 13(a) above. Annexure HEMPTON Annexure PLATINUM

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 September 2013

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