Caswell v Sony/ATV Music Publishing

The Background 9I have taken some of the following facts from the reasons for judgment of Windeyer AJ, the medium neutral citation of which is Caswell v Sony/ATV Music Publishing (Australia) Pty Ltd [2011] NSWSC 387, which reasons related to the Plaintiff's claim, as originally framed against the Defendant and the Applicant, and following which the Plaintiff's claim against the Applicant was struck out. Other facts that appear not to be in dispute have been taken from the unchallenged evidence read on the application. (a) The Defendant is incorporated in New South Wales. It is registered in NSW and is classified as an Australian Proprietary Company "limited by shares". Its registered office is in Sydney. (b) The Applicant is incorporated in the United States of America. Its address is in New York, New York. There is no evidence that the Applicant is registered in Australia as a foreign company. (c) The Applicant owns all of the issued shares in the Defendant. It acquired all of the shares in the Defendant in October 1997. (d) The Defendant and the Applicant are, and have been, in the business of exploiting musical compositions worldwide. (e) In 1978, the Plaintiff composed a musical piece named "On the Inside", which piece became the theme tune to the TV series "Prisoner". (f) In about 1982, another musical piece named "Christmas in Dixie" was composed by the US group "Alabama". (g) In June 1999, the Applicant acquired copyright in "Christmas in Dixie". It continues to hold the copyright in "Christmas in Dixie". (h) In December 2003, the Plaintiff wrote to the Defendant claiming that "Christmas in Dixie" infringed the copyright in "On the Inside". (i) In 2004, the Defendant, through its solicitors, commissioned an expert's report. In that report, the expert opined that a case could be made that the two musical pieces shared a level of similarity that went beyond random occurrence, or sheer coincidence, in that one of the musical pieces was reproducing a substantial part of the other. (j) Although the relevant contractual material cannot be located by either of the parties, the Defendant accepts that copyright in the composition "On the Inside" was assigned to ATV Northern Songs Pty Ltd in January 1979 and, subsequently, assigned to it, in 1995, as part of the Defendant's acquisition of the catalogue of ATV Northern Songs Pty Ltd. The Defendant does not admit the terms of the contract. (k) In the substantive proceedings, the Plaintiff alleges that in 1979, he assigned copyright in "On the Inside" to a company; in the 1990's, the Defendant acquired that copyright; the assignee, and from the 1990's, the Defendant, owed obligations to the Plaintiff under the contract of assignment; the Applicant owns the copyright in "Christmas in Dixie", which appears to breach the copyright of "On the Inside"; and that the Defendant has failed to prosecute the infringements of the copyright and in this way has breached its obligations to the Plaintiff. 10Discovery between the Plaintiff and the Defendant had been completed before the application to serve the subpoena upon the Applicant was made. 11Following the order of the Assistant Registrar, the Plaintiff, under cover of letter dated 24 April 2012, sent a copy of the subpoena to the solicitors who it was thought were acting for the Applicant, asking whether the firm had instructions to accept service. No response appears to have been sent until a letter dated 11 May 2012, in which the Applicant's solicitors informed the Plaintiff that the subpoena could be served upon the Applicant by electronic transmission, at a specified email address, but once the Applicant received the subpoena, it would file an application to have the subpoena set aside. 12Subsequently, the Applicant informed its solicitors, in Sydney, that a copy of the subpoena had been received. 13In another letter, dated 16 May 2012, the Applicant's solicitors, commendably, also advised that the Plaintiff's solicitors should ensure that the Court Registry was informed that the Court would no longer be required to procure service upon the Applicant of the subpoena outside the jurisdiction.

Other Undisputed Matters 14Some matters regarding the subpoena were also not in issue. It was not suggested, for example, that the subpoena had been issued for a non-legitimate forensic purpose; or that the documents sought would not materially assist on issues between the Plaintiff and the Defendant; or that there was no reasonable basis, beyond speculation, that it was likely the documents would do so; or that the subpoena was too widely or oppressively drawn, being essentially an application for discovery against a non-party. (Because these matters were not in issue, it is not necessary to set out the terms of the schedule to the subpoena.) 15Nor was there any suggestion of delay in causing the subpoena to be issued or in bringing the application to set the subpoena aside. 16The parties also agreed that, in the event that the subpoena was not set aside, the Court should direct the Applicant to inform the Plaintiff, in writing, within 7 days of orders being made, of its estimate of the reasonable costs that would be incurred by the Applicant in complying with the subpoena, and that liberty to either party to apply to the Court to determine the issue of reasonableness of those costs should be granted. 17Finally, the Applicant agreed that the service of the subpoena was in accordance with an agreement reached between its solicitors and the Plaintiff's solicitors and, therefore, service of the subpoena was not an issue. However, that concession was made upon the basis that the Applicant, once it received the subpoena, would make an application to set it aside and also that by agreeing to accepting service, the Applicant was not amenable to the jurisdiction of the Court.

Other Evidence 18I have earlier stated that the proceedings, as originally filed by the Plaintiff, named both the Defendant and the Applicant as defendants. In the proceedings, the Plaintiff sought an account of profits, and/or equitable compensation, against both. The basis of the claim against the second Defendant was a breach of fiduciary duty, there being a fiduciary relationship between it and the Plaintiff, and that the Applicant's exploitation of "Christmas in Dixie" was a "separate interest" involving conflict, or possible conflict with the fiduciary duties owed by it and the Defendant to the Plaintiff. 19The Applicant filed a notice of motion returnable on 23 February 2011, seeking orders that certain paragraphs of the Statement of Claim relating to it be struck out, pursuant to UCPR rule 14.28 on the basis that the Statement of Claim did not disclose any arguable fiduciary duty or any arguable breach of fiduciary duty. 20In relation to the claim against the Applicant, Windeyer AJ held: "Next, the copyright in "Christmas in Dixie" belongs to the second defendant. The first defendant has no interest in it. The second defendant has a separate interest. There can be no conflict of interest with the interest of the plaintiff in "On the Inside" and for that matter with the interest of the first defendant in that work and thus a fiduciary obligation does not arise: see Breen v Williams [1996] HCA 57; (1996) 186 CLR 71 at 113. The claim of the plaintiff appears to be that because the second defendant owns the shares in the first defendant and has control of it, the second defendant is in a fiduciary relationship with the plaintiff to the same extent as the relationship between the plaintiff and the first defendant. This is a proposition which seems to me to have no basis. The two companies must be regarded as separate entities, one having an interest in "Christmas in Dixie" and the other having an interest in "On the Inside". The fact that one is a wholly-owned subsidiary of the other does not bring that other into a relationship with the plaintiff when that other has no dealings with the plaintiff. I consider that the claim against the second defendant would be bound to fail. Service of the SOC as against the second defendant should be set aside." 21There was no appeal from his Honour's orders. 22In relation to the relationship between the Defendant and the Applicant, the Applicant's evidence is that although its CEO has certain oversight functions in regard to the Defendant, the daily management of the Defendant's affairs is left to the Managing Director of the Defendant who has approval limits to make his own deals and the authority to deal with a range of matters without reporting to the Applicant (including dealing with claims of a litigious nature). 23The Plaintiff points to the fact that one of the emails forwarded to the Defendant was copied to the CEO of the Applicant. 24Expert evidence, not objected to, was given in an affidavit of Donald Steven Zakarin, an Attorney and partner in a legal firm in New York and member of the New York Bar since 1976. Mr Zakarin read, and acknowledged that he understood, and would be bound by, the Expert Witness Code of Conduct. 25Mr Zakarin gave an "overview" of how the Federal Courts of the United States apply s 1782 of Title 28 of the United States Code. It is necessary to set out his evidence in some detail: "... 5.As a matter of background, the United States Code contains the entirety of the federal statutory law of the United States (because the United States is a federal system, each individual state has its own statutory laws as well as its own common law precedents). The United States Code is divided into separate titles. For example, Title 17 is the United States Copyright Act. Title 35 is Patents. Title 28, the Title addressed in this affidavit, is the Judiciary and Judicial Procedure. It is a comprehensive statute that contains statutory law relating to the organization and structure of the federal courts, the Department of Justice, jurisdiction and venue of the federal courts and, in the part of Title 28 where Section 1782 is placed, procedure and evidence. 6.Section 1782 provides that a US federal district court may order a person residing or found residing in the district to give testimony or produce documents for use in a proceeding in a foreign or international tribunal upon the application of any interested person. In this context, "foreign" means any country outside of the United States and "tribunal" includes courts of law. "Person" is not limited to a natural person but includes entities. 7.The federal courts in the United States have long had the power to authorize discovery in the United States relating to foreign proceedings. However, prior to the United States Supreme Court decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264 (2004), a copy of which is annexed hereto and marked "D", such discovery assistance for use in foreign proceedings was rarely provided. In Intel, a majority of the Supreme Court of the United States made clear that 28 USC Section 1782 meant exactly what its statutory language said, thereby clarifying the scope of the power of the courts to enforce applications made under Section 1782 to provide discovery here in the United States for use in connection with foreign proceedings. The Supreme Court held that the determination of whether discovery is appropriate under Section 1782 involves a two-part analysis. 8.The first part of the analysis requires the court to determine whether: (a)the person from whom discovery is sought resides or is found in the district of the district court to which the application is made; (b)the discovery is for use in a proceeding before a foreign tribunal; and (c)the application is made by a foreign or international tribunal or any interested person. 9.The second part of the analysis involves the consideration of four discretionary factors, namely: (a)whether the respondents are parties in the foreign proceeding; (b)the nature of the foreign tribunal and its receptivity to US discovery assistance; (c)whether the discovery application conceals an attempt to circumvent foreign discovery practices; and (d)the breadth and intrusiveness of the discovery requests themselves. 10.The extent of the discovery available under Section 1782 may exceed that permitted in the foreign jurisdiction. 11.Section 1782 is completely separate from the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (the Hague Convention), although there is an overlap in that either may be used to obtain evidence from US residents for use in foreign legal proceedings. One key difference is that any court or litigant may apply for Section 1782 discovery, not only those in countries which are parties to the Hague Convention. 12.While most discovery provided in connection with foreign proceedings continues to be obtained in accordance with the procedures of the Hague Convention, since the Intel decision in 2004, Section 1782 has come into greater use. While I have not personally had occasion to either seek or defend proceedings invoking Section 1782, I have read both case authority in which application of Section 1782 was invoked and at least one article discussing its use. It provides a far simpler means of securing discovery in the United States for use in a foreign proceeding than does the Hague Convention, while maintaining the authority of the United States federal courts to examine the application consistent with the factors articulated in Intel." 26I note that section 1782(b) of the United States Code provides: "This chapter does not preclude a person within the United States from voluntarily giving his testimony or statement, or producing a document or other thing, for use in a proceeding in a foreign or international tribunal before any person and in any manner acceptable to him." 27Reference was also made by counsel for the Applicant to the Evidence on Commission Act 1995, which, provides, by s 6(1)(a), that 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 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. (By s 5, a reference to evidence taken in an examination includes a reference to a document produced at the examination.) 28The Plaintiff, whilst not disputing the evidence of Mr Zakarin or the existence or availability of the Evidence on Commission Act, provided a number of reasons why the Plaintiff would be unable to bring proceedings in the United States of America, or otherwise arrange for an examination there, one of which is the likely costs of doing so. The Plaintiff's financial position, it was said, is such that he is simply unable to fund such proceedings. 29Reference was also made to the Hague Convention, more formally known as the Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters ("the Service Convention") which deals, primarily, with the transmission of judicial documents, rather than comprising substantive rules relating to the service of documents. (The phrase "judicial documents" is intended to include subpoenas for witnesses to give evidence or produce documents: Practical Handbook on the Operation of the Hague Convention 15 November 1965 on the Service Abroad of Judicial and Extra Judicial Documents in Civil or Commercial Matters, 1965; Schneider v Caesarstone Australia Pty Ltd [2012] VSC 126, at [11]. 30It is clear that the Service Convention is facultative, not mandatory. There was no dispute that Australia and the United States of America are member States. Australia acceded to the Service Convention on 1 November 2010. 31Article 8 of the Service Convention provides: "Each Contracting State shall be free to effect service of judicial documents upon persons abroad, without application of any compulsion, directly through its diplomatic or consular agents. Any State may declare that it is opposed to such service within its territory, unless the document is to be served upon a national of the State in which the documents originate." 32Article 10(a) of the Service Convention provides: "Provided the State of destination does not object, the present Convention shall not interfere with - a)the freedom to send judicial documents, by postal channels, directly to persons abroad, ..." 33The United States of America has not objected to Art 10(a) of the Service Convention. 34In Australian Competition and Consumer Commission v Yellow Page Marketing BV [2010] FCA 1218, Gordon J, at [15]-[16], referred to the Service Convention: "The Hague Convention provides a number of mechanisms for effecting service. The Convention establishes a mechanism for formal reception by Contracting States of requests for service coming from other Contracting States (Art 2) having the following salient elements or steps:

1. each Contracting State organises a "Central Authority" (Art 2);
2. an authority in the State of origin forwards to the Central Authority of the State of destination a request (conforming to a model annexed to the Hague Convention) annexing the document to be served (Art 3);
3. the Central Authority in the State of destination serves - or arranges to have served - the document, together with part of the request summarising the document (Art 5), either by a method prescribed by domestic law for service of documents in domestic actions in the State of destination (and potentially also requiring a translation), or by another method not incompatible with the laws of the State of destination;
4. after service, the Central Authority (or another authority it may have designated) shall complete a certificate confirming service (conforming to a model annexed to the Hague Convention) (Art 6) to be forwarded directly to the applicant. [16] In addition to the process outlined in the Arts 3 to 6 of the Hague Convention (referred to in the preceding paragraph):
5. each Contracting State is free to effect service "without application of any compulsion", through its diplomatic or consular agents, subject to the right of the State of destination to oppose such service, unless in relation to a national of the State of origin (Art 8);
6. the Hague Convention leaves Contracting States free to call upon consular or diplomatic channels (Art 9);
7. Article 11 recognises the ability of Contracting States to agree on specific channels of transmission and communication;" 35In circumstances where the Applicant does not raise an issue about service of the subpoena, and otherwise accepts service, even if maintaining its position regarding the Court's lack of jurisdiction, I do not think that the Service Convention is relevant to the present issues, other than for the purpose of identifying alternative formal methods of transmitting judicial documents. 36It follows, for the same reasons, that there is no need to refer, in detail, to UCPR rules 11A.3 -11A.8, which rules deal with service abroad of local judicial documents (documents that relate to civil proceedings in the Court). 37There can be little doubt, that it is open to the person to whom, or which, a subpoena is directed, to agree on a mode of service different from those provided for in the Court rules, unless those rules themselves prohibit consensual service. Subject to the claim being dealt with, that is what has occurred in this case.

The Submissions 38It can be seen from the above, that the Applicant wished to agitate the question whether there was power to give leave to serve a subpoena outside the jurisdiction and overseas, on a non-party, and if so, whether, in the circumstances of the case, that power should be exercised. 39Other than as set out below in regard to his submissions on it being "present" in Australia, the Plaintiff did not argue that the Applicant had submitted to the jurisdiction of the court. Nor can there be any suggestion, in the light of the summary dismissal of the Plaintiff's claim against the Applicant, of any available in personam claim against it. 40In summary, the Applicant's contentions were: (a) UCPR rule 11.5 must be read down consistently with principles of international comity. The Court's coercive powers should not be engaged against a foreign entity in relation to its conduct outside the jurisdiction, particularly where there are available means to obtain evidence under the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters or in US Federal Procedure (s 1782 of the United States Code); (b) Alternatively, as a matter of the Court's general discretion under UCPR rule 11.5, the Plaintiff should not be permitted to engage the Court's processes against the Applicant when he is unable, or unwilling, to meet an existing costs order made in favour of the Applicant when the claim against it was struck out. 41In relation to (b), I was asked to note the agreement of the parties that the Plaintiff would, within 7 days, pay $100, as "conduct money" to the Applicant's solicitor and that to the extent that the Applicant's costs were not in issue ($8,897.20), he would pay that amount or otherwise give security for that amount to the Applicant. (Whilst no time for doing so was specified, the Plaintiff will perform this obligation within a reasonable time.) 42It follows that the discretionary considerations that have been raised in other cases found the second limb of the Applicant's contentions. 43In support of the contention that the Court had no power, the Applicant submitted: "17.[The Applicant's] primary contention is that UCPR 11.5 does not authorise service of a subpoena on a foreign corporation not party to the proceedings seeking documents in relation to its conduct outside Australia. Neither the plaintiff's financial position nor the corporate relationship between [the Applicant] and [the Defendant] are relevant to the proper scope of the power under UCPR 11.5. 18.It is clear on the authorities that the Court will not permit service of a subpoena outside Australia where there is no effective means of enforcing compliance with the subpoena (Aetna Pacific Securities v Hong Kong Bank of Australia, Giles J, unreported 29 April 1993 at 8, Stemcor (Australasia) v Oceanwave Line SA [2004] FCA 391 at [12]), Federal Treasury Enterprise v Spirits International NV [2001] FCAFC 43 at [14]). 19.However, even if there are available means of enforcement against a foreign corporation's assets in Australia that does not of itself justify the grant of leave to serve a subpoena outside Australia. UCPR 11.5 must be construed with regard to principles of international comity. ... 25.It is also significant that Arnill was decided before Australia ratified the Hague Evidence Convention on 23 October 1992. Ratification occurred after the enactment of uniform legislation throughout Australia to facilitate implementation of the treaty (see British American Tobacco Australia v Eubanks (2004) 60 NSWLR 483 at 494 ([19])). Both Australia and the US are signatories to the Hague Evidence Convention. 26.There can be no clearer expression of the established criteria of international law -relevant to considerations of comity - than the terms of a treaty which sets out the reciprocal arrangements between Australia and the US for obtaining evidence in aid of proceedings in each country. Section 6 of the Evidence on Commission Act 1995 (NSW) facilitates the operation of Chapter 1 of the Hague Evidence Convention by permitting a party to proceedings before this Court to apply for the issue of letters of request to the judicial authorities of a foreign country "to take the evidence of a person." The reference to evidence includes a document produced at the examination (s 5). 27.[The Applicant] submits that it is inconsistent with the reciprocal arrangements embodied in the Hague Evidence Convention for the Court to grant leave to serve a subpoena outside Australia which circumvents the letters of request procedure under Chapter 1 and, in effect, removes the oversight that will be exercised by the US court receiving the request. 28.The affidavit of Mr Zakarin shows that, in addition to the Hague Evidence Convention, the plaintiff could apply directly to the US Federal Court in Manhattan for orders under s 1782 of the USC for production of documents for use in these proceedings. s 1782 authorises, but does not require, discovery in aid of foreign proceedings [Intel Corp v Advanced Micro Devices 542 US 241 (2004) at 266). Mr Zakarin explains at [8]-[9] the nature of the oversight that will be exercised by the US court considering an application under s 1782. 29.There is nothing in the authorities that suggests the financial position of the party seeking to serve the subpoena is an "exceptional circumstance." Indeed, for the reasons explained below, impecuniosity may be a further discretionary reason to refuse leave." 44On the question of discretion, the Applicant, relevantly, submitted: "30.Assuming the Court is persuaded that UCPR 11.5 is not to be read down as submitted above, the Court nevertheless retains a general discretion to refuse leave to serve a subpoena on Sony US (or set aside the grant of leave already obtained). ... 33.It is submitted that the Court should not permit the plaintiff to use the coercive powers of the Court against Sony US when the existing costs order and the expenses incurred in complying with the subpoena may never be met." 45In summary, the Plaintiff contended: (a) Comity is not offended. (b) In the alternative either: (i) the Applicant is present in NSW; or (ii) the circumstances are "exceptional" in the sense identified by Rogers CJ Comm D in Arhill Pty Ltd v General Terminal Co Pty Ltd (1990) 23 NSWLR 545. (c) The discretion should be exercised in his favour. 46In opposition to the contention that the Court had no power, the Plaintiff submitted: "6.In fact, the issuing of a subpoena involves the Court exercising at least one and possibly two powers. a)The first is the issuing itself; a Court is ordering a person to provide materials or to attend on hearing, for the purpose of giving evidence. b)The second, contingent upon non-compliance with the order, is a sanctioning of the person, a sanction, significantly, directed towards coercing compliance and no more. 7.As to the first power, there is no dispute that the US permits due service of NSW subpoenas within its aegis or that due service has in fact taken place. If that is so, comity cannot be offended to that extent. Indeed, it would be oxymoronic if a foreign Court ruled to the effect "I decline to authorise service of a Court document in the US because, notwithstanding that the US polity permits this to be done, I am concerned that I am offending the US polity". 8.As to the second question, there is no dispute that the US parent has property in NSW capable of sequestration, namely the shares in the ... Defendant. So if the US parent refuses to comply, there is a sanction which is local in the relevant sense. For the avoidance of doubt, any leave can be on terms that the Plaintiff is limited to sequestration against the property of the US parent situate in Australia. 9.Further, and while formally there are procedures by which a person in the position of the Plaintiff could seek the assistance of the US Courts, the Plaintiff is in no practical position to do so." 47In support of its submission that the Applicant was "present" in NSW, the Plaintiff submitted: "11.Is a foreign corporation which is not registered to carry on business but which nonetheless wholly owns and controls an Australian subsidiary which does carry on business, "present" in the relevant sense? 12.In the 7th edition of Nygh, the learned authors say: Quaere, whether a foreign corporation which uses a wholly owned local subsidiary to conduct its activities in Australia is carrying on business through that agency? 13.In the 8th edition of Nygh, the learned authors say: ... the 'presence' need not be a contractual agency: if the business of the foreign corporation is the receipt of income as trustee, it will be 'present' through solicitors or other agents who do no more than collect the payments locally and transmit them overseas. Semble, if the foreign corporation maintains a liaision office staffed by its own employees within the jurisdiction which supplies and transmits information, but transacts no business, it may still be a 'presence'. However, a foreign corporation is not 'present' merely because it owns or controls a majority shareholding in a local corporation. [Emphasis added] 14.The authority cited is Adams v Cape Industries Plc [1990] 1 Ch 433. There, the English Court of Appeal cautioned against ignoring the principle in Salomon merely because justice may be seen to require it, but at the same time recognised that the question is in each case the fact of presence and not some law of individual personality: see 536-537. 15.Mr Lo in paragraph 3 of his affidavit made on 23 May 2012 deposes as to the relationship between the [Applicant] and the [Defendant]. Mr Sharpe in paragraphs 2 to 5 of his affidavit made on 26 June 2012 replies. In particular, Mr Trotter said in a 2009 email that both songs were owned by "our company": Sharpe, page 9. (An email, incidentally, which was copied to Mr Jonas Kant, the source of Mr Lo's information.) Moreover, Mr Trotter asserts: I actually had a meaningful conference call yesterday with the US business affairs department and while I'm not saying it will be sorted out tomorrow, they are onto it. 16.No written record of any dealings between the [Defendant] and the [Applicant] has been discovered by the [Defendant], so the "it" the [Applicant] was "onto" cannot be defined with accuracy. 17.However, it is reasonable to infer that the "it" is not an investigation being conducted by the [Applicant] on behalf of the [Defendant], but rather an investigation as to the best interests of "our company" as a single commercial unit, and that to the extent the [Defendant] is part of the investigation, it is as agent of the [Applicant], and agency in this context is sufficient to give the principal a presence." 48On the issue of discretion, the Plaintiff submitted: "18.In Arhill, Rogers CJ Comm D cited with approval Hoffman J's reasons for discharging an order for production made against a foreign bank: The content of the subpoena and order is to require the production by a non-party of documents outside the jurisdiction concerning business which it has transacted outside the jurisdiction. In principle and on authority it seems to me that the court should not, save in exceptional circumstances, impose such a requirement upon a foreigner, and in particular upon a foreign bank. [Emphasis added] 19.The Plaintiff says that there are in this case exceptional circumstances permitting the Court to impose the requirement of compliance and the possibility of sanction for non-compliance: a)Not only is the [Applicant] the sole owner of the ... Defendant, it fairly accepts that it is in a position of control. b)The cause of action relied upon by the Plaintiff - breaches by the ... Defendant of contractual obligations of good faith and reasonableness - will be founded on factual assertions that the ... Defendant has preferred the interests of the [Applicant] over its contractual obligations to the Plaintiff. c)Since 2004, the legislature has specifically recognised that a person who controls a party to litigation has, itself, duties to the Court to ensure that the party is not in breach of its duty to further the overriding purpose: s 56(4)(b) of the Civil Procedure Act. It is not suggested that the [Defendant] is in breach of any duty; in any event, it is not a party to this application. However, the recognition by the domestic legislature of a nexus of control rather than of domicile as a basis for imposing obligations will assist the Court in finding exceptional circumstances."

The Law 49By UCPR rule 33.2: "(1)The court may, in any proceeding, by subpoena order the addressee: (a)to attend to give evidence as directed by the subpoena, or (b)to produce the subpoena or a copy of it and any document or thing as directed by the subpoena, or (c)to do both of those things." 50Rule 33.2 enables the "issue" of a subpoena. That is a step separate from serving a subpoena so issued. 51Service of a subpoena is regulated by UCPR rule 33.5(1) which provides that a subpoena must be served personally on the addressee. Because the issue of service of the subpoena does not arise, in this case, it is unnecessary to deal further with the rules in the UCPR that relate to service of a subpoena. 52UCPR rule 33.4, relevantly, provides: "(1) The court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in respect of it. (2) An application under subrule (1) must be made on notice to the issuing party. (3) The court may order that the applicant give notice of the application to any other party or to any other person having a sufficient interest." 53Service of documents out of the jurisdiction depends on statutory authority, the source of which authority is to be found in rules of court. There is no inherent extra-territorial jurisdiction: Waterhouse v Reid [1938] 1 K.B. 743, per Greer LJ at 747. As will be seen, historically, this jurisdiction has been regarded as an "exorbitant" one. 54UCPR rule 11.5 provides: "11.5 Service of documents other than originating process Service outside Australia of a document other than originating process is valid only if it is effected pursuant to the leave of the Supreme Court or is subsequently confirmed by the Supreme Court." 55This rule reproduces the substance of the Supreme Court Rules 1970, Part 10 rule 3 (repealed), which was in the following terms: "Service outside the State of a document other than originating process is valid if the service is in accordance with the prior leave of the Court or is confirmed by the Court." 56The UCPR Dictionary defines "document" as including "any part of a document and any copy of a document or part of a document". 57UCPR rule 4.3(1) states "a document must be on standard A4 paper of durable quality, capable of receiving ink writing". 58UCPR rule 6.1 speaks in terms of no step in the proceedings being taken without having filed an "originating process" or an "appearance". The only "originating process" referred to in that rule is "a statement of claim or summons". This is confirmed by UCPR rule 6.2, which provides that subject to the rules, the practice notes, and any other rules of court, a person may commence proceedings in the court by filing a statement of claim or a summons. 59Whilst a subpoena cannot be regarded as "originating process", there is no reason why a subpoena should not be characterised as a "document". 60The question, then, in this case, is whether UCPR rule 11.5 authorises service of a subpoena outside Australia, which subpoena compels the production of documents by a person not within the jurisdiction of the Court. 61Before dealing with that issue, I should deal with the Plaintiff's submission that the Applicant is "present" in NSW. 62The classic statement of the principle regarding "presence" is that of Buckley LJ in Okura & Co Ltd v Forsbacka Jernverks Aktiebolag [1914] 1 KB 715 at 718-719: "The question in this case is whether the defendants, who are a foreign corporation, can be served with a writ in this country. The answer to that question depends on whether the defendants can be found 'here' for the purpose of being served. In one sense, of course, the corporation cannot be 'here'. The question really is whether this corporation can be said to be 'here' by a person who represents it in a sense relevant to the question which we have to decide. The point to be considered is, do the facts shew that this corporation is carrying on its business in this country? In determining that question, three matters have to be considered. First, the acts relied on as shewing that the corporation is carrying on business in this country must have continued for a sufficiently substantial period of time. That is the case here. Next, it is essential that these acts should have been done at some fixed place of business ... The third essential, and one which it is always more difficult to satisfy, is that the corporation must be 'here' by a person who carries on business for the corporation in this country. It is not enough to shew that the corporation has an agent here; he must be an agent who does the corporation's business for the corporation in this country. This involves the still more difficult question, what is meant exactly by the expression 'doing business'?" 63In South India Shipping Corporation Ltd v Export-Import Bank of Korea [1985] 1 W.L.R. 585, Ackner LJ at 589 said: "Those expressions [expressions as "reside" or "carry on business"] were used as convenient tests, to ascertain whether the corporation had a sufficient 'presence' within the jurisdiction, since 'generally,' courts exercised jurisdiction only over persons who 'are within the territorial limits of their jurisdiction.' Apart from statute 'a court has no power to exercise jurisdiction over anyone beyond its limits,' per Cotton L.J. in In re Busfield (1886) 32 Ch.D. 123, 131, quoted by Lord Scarman in Bethlehem Steel Corporation v. Universal Gas (unreported), 17 July 1978, House of Lords." 64In Adams v Cape Industries plc [1990] 1 Ch 433, the defendant was an English company and head of a group engaged in mining asbestos in South Africa. A wholly owned English subsidiary was the worldwide marketing body, which protested the jurisdiction of the United States Federal District Court in Texas in a suit by victims of asbestos. The defendant took no part in the United States proceedings and default judgments were entered. Actions on the judgment in England failed. The Court of Appeal, at 523, derived a number of principles from the authorities: "Phrases referring to residence or presence within the jurisdiction, or equivalent phrases, have been used by way of shorthand reference to the condition (or one of the conditions) which a foreign corporation has to satisfy if it is to be amenable to the jurisdiction of the English court. And indeed they have been used more or less interchangeably by the courts. One typical example is the phraseology used by the Earl of Halsbury L.C. in La Compagnie Générale Transatlantique v. Thomas Law & Co., La Bourgogne [1899] A.C. 431, who said, at p. 433: "It appears to me that as a consequence of these facts the appellants are resident here in the only sense in which a corporation can be resident - to use the phrase which Mr. Joseph Walton has so constantly referred to, they are 'here;' and, if they are here, they may be served." Perhaps the most helpful guidance in determining whether a foreign corporation is "here" so as to be amenable to the jurisdiction of our courts is the following passage from the judgment of Buckley L.J. in the Okura case [1914] 1 K.B. 715, 718-719 ..." 65His Lordship also said: "As [counsel for the defendants] submitted, save in cases which turn on the wording of particular statutes or contracts, the court is not free to disregard the principle of Salomon v. A. Salomon and Company Limited ... merely because it considers that justice so requires. Our law, for better or worse, recognises the creation of subsidiary companies which though in one sense the creatures of their parent companies, will nevertheless under the general law fall to be treated as separate legal entities with all the rights and liabilities which would normally attach to separate legal entities." 66And at 536, his Lordship considered the significance of the relationship between the parent and the subsidiary: "In deciding whether a company is present in a foreign country by a subsidiary, which is itself present in that country, the court is entitled, indeed bound, to investigate the relationship between the parent and the subsidiary. In particular, that relationship may be relevant in determining whether the subsidiary was acting as the parent's agent and, if so, on what terms." 67In Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 381, Gzell J summarised the authorities: "[30] The concept of presence in a jurisdiction sufficient to subject a corporation to the jurisdiction of the courts has been developed by reference to activities of sufficient significance to make it appropriate that the corporation be amenable to the local jurisdiction. [31] A not dissimilar approach has been taken in the international law relating to relief from double taxation. It has been a feature of conventions for the avoidance of double taxation that business profits of an enterprise are taxable only in the country of residence unless the enterprise carries on business in the country of source through a permanent establishment. A permanent establishment is a fixed place of business through which the business of an enterprise is carried on or an agent acting on behalf of an enterprise habitually exercising in the country of source an authority to conclude contracts in the name of the enterprise. An agent of independent status acting in the ordinary course of business is excluded (Model Double Taxation Convention on Income and on Capital, OECD, Paris, 1997, Art 5 and Art 7 and commentaries. See, generally, Arvid A Skaar, Permanent Establishment: Erosion of a Tax Treaty Principle, Kluwer, Deventer, 1991). ... [38]... Presence in Australia requires elements additional to the carrying on of business. A simple example will suffice. A Hong Kong company carrying on a tailoring business that sends a representative to a hotel room in Australia for short periods of time to take measurements for garments and receive orders may carry on business in Australia but, in the absence of a fixed place owned or leased by it and operated for more than a minimal period of time, the company is not in Australia." 68The mere presence of assets of a company within the jurisdiction does not, by itself, constitute presence within the jurisdiction. In this case, merely holding all of the shares in the Defendant does not mean that the Applicant is "present" in NSW. There is no evidence that the Applicant carries on its business here; there is no evidence, in fact, of any activities here, certainly no activities of sufficient significance to make it appropriate that the Applicant could be regarded as being amenable to the local jurisdiction. (I make clear that I am not attempting to define the scope of possible activities that would suffice to demonstrate "presence" within the jurisdiction.) 69I am fortified in this conclusion by the fact that when the subpoena was issued, the Plaintiff sought leave to serve the Applicant out of the jurisdiction. Competent solicitors and counsel represent the Plaintiff, then, and now. If it were obvious that the Applicant was "present" within the jurisdiction, I do not think the point would have then been missed. 70I turn then to UCPR rule 11.5. The invocation of the power under rule 11.5 is controlled by the need for prior leave, or subsequent confirmation, by the Court in the case of service unless the recipient waives objection. However, no criteria are specified in the rule for granting, or not granting, leave, or subsequent confirmation. Nor does the rule identify the facts to be established if leave to serve is to be granted, or subsequently confirmed, so that all the circumstances of the case must be taken into account. The rule suggests, as well, that a discretionary power exists to decline jurisdiction, either by refusing leave to issue the subpoena, or by setting aside the subpoena where it has been issued and served. 71There is no reason why rule 11.5 should not be given its literal and natural meaning. It is widely expressed and the phrase "document other than originating process" is broad enough to include a subpoena. 72However, as has been noted above, the principal argument against exercising the power to grant leave to serve a document outside Australia is that the jurisdiction of domestic Courts is essentially territorial in nature and that legislative permission to serve judicial documents in overseas jurisdictions is an exception to the principle of territoriality. 73The earliest Australian authority that my researches have revealed (to which neither party specifically referred) on the question, is Ward v Interag Pty Ltd [1985] 2 QdR 552, a decision of Master Lee QC, in the Supreme Court of Queensland, in which case the question whether a subpoena, purporting to compel the attendance of a person (an Australian citizen resident in Saudi Arabia) then in a foreign country (Saudi Arabia), to give oral evidence in the Supreme Court of Queensland at a trial of an action, could be served out of the jurisdiction (i.e. out of Australia) in that foreign country was in issue. 74The learned Master noted, at the commencement of the judgment that Counsel had stated that his researches into the law in England, Canada, South Africa, New Zealand and Australia had produced no authority or guidance in relation to this particular point. 75Then, the learned Master discussed the alternatives that might be available. Relevantly, he referred to O. 11, r. 4A of the Rules of the Supreme Court of Queensland which provided: "Subject to paragraph (2) of this Rule, service out of the jurisdiction of any summons, notice or order issued, given, or made in any proceedings is permissible with the leave of the Court." 76He concluded: "In all of the circumstances of this case and having regard to the helpful submissions of counsel, I am unable to conclude that a writ of subpoena runs beyond the jurisdiction without statutory extension or that there is power to give leave to serve a subpoena in Saudi Arabia. I therefore conclude as follows: (1) A writ of subpoena, as with a writ of summons, does not run beyond the territorial jurisdiction of the Court without statutory authorisation such as contained in s. 16 of the Service and Execution of Process Act and s. 49 of the Supreme Court and Judicature (Consolidation) Act 1981 (U.K.). Indeed, these two statutes reinforce the notion that a subpoena cannot otherwise be served out of the jurisdiction. This probably accounts for the lack of discovered authority on the point raised in this application. (2) There is no inherent power to give leave to serve a subpoena out of the jurisdiction. Nor, it would seem, is there a power to validly serve a subpoena out of the jurisdiction without leave. This may depend upon whether there is an exception in the case of a British subject, but also upon the law of the country where service is sought to be effected. (3) A writ of subpoena does not fall within the expression "summons, notice or order" in O. 11, r. 4A. Whether or not a subpoena which the first defendant might elect to issue will be voluntarily obeyed if notice of it comes to the attention of the witness is a question on which I express no opinion. Nor do I express any view as to whether or not service of a subpoena without leave on the witness would otherwise comply with the laws of Saudi Arabia, there being no evidence on that subject before me." 77In the circumstances, Master Lee QC refused the application. 78Ward v Interag Pty Ltd was referred to by McLelland J in Re Austral Oil Estates Ltd (in liq) (1986) 7 NSWLR 440. In that case, an application was made, ex parte, to the Registrar on behalf of the liquidator of Austral Oil Estates Limited (the company) by summons filed 24 September 1986 for an order under s 541 of the Companies (NSW) Code that a former director of the company attend before the Court for examination. The director was then a resident of Victoria and any order made would have had to be served on him there. In consequence of a reference to the Court by the Registrar pursuant to Part 61 rule 2A of the Supreme Court Rules, it was necessary for his Honour to determine the means by which an examination order under s 541 could properly be served in another State in the light of the provisions of Part 10 of the Supreme Court Rules and of the Service and Execution of Process Act 1901 (Cth). 79So far as is relevant to the present case, his Honour noted that an examination order could not be effectively served outside the State except in pursuance of some statutory authority: Re Anglo-African Steamship Co 32 Ch D 348, referred to with approval in Gosper v Sawyer (1985) 58 ALR 13 at 18; and Ward v Interag Pty Limited. Nor was it "originating process" within the meaning of Part 10 of the Supreme Court Rules, but would be a "document other than originating process" within the meaning of Part 10 rule 3. 80His Honour then considered whether, and if so how, service of an examination order may be effected in another State under the Service and Execution of Process Act and concluded that an examination order fell within the description of "any writ (other than a writ of summons) notice decree or other process" within the meaning of s 14 of that Act and, therefore, that service in another State of an examination order could be effected without any leave for such service being necessary. 81The authority to which each party referred was Arhill Pty Ltd v General Terminal Co Pty Ltd, a decision of Rogers CJ in Comm Div in which his Honour dealt, specifically, with the service of subpoenas requiring the production of documents which had been issued against a company in Japan. It was submitted that the Court had no power to give leave for the issue of a subpoena for service on a Japanese company in Japan. 82His Honour said, commencing at 550: "It is at the heart of exercise of jurisdiction, by courts taking their system from England that, jurisdiction rests on presence or submission. Relevantly that is recognised in the concept that the courts of a State will exercise jurisdiction over persons upon whom service may be effected within the boundaries of the State, or those who submit. Admittedly, that concept has received some extension or enlargement. ... Today, almost ever sophisticated court system permits the service of process outside the territorial jurisdiction of the State, in certain specified circumstances. However, these circumstances are, in every case, most carefully defined in a manner which maintains a relationship between the action, in relation to which the process is sought to be served, and the State. Even so, the exercise of such jurisdiction has been described as "exorbitant" jurisdiction: The Siskina; Siskina (Owners of cargo lately laden on board) v Distos Compania Naviera SA [1979] AC 210 at 254 per Lord Diplock. ... Another way of stating the point is, "that a foreigner, resident abroad, will not lightly be subjected to a local jurisdiction". The basis of that approach lies essentially in the respect which a State has for the sovereignty of another State. In other words, without the consent of the other State, the sovereign does not seek to exercise its rights and powers, in relation to legal proceedings, within the territory of another ..." 83However, his Honour went on to say, at 553: "Part 10, r 3 is in terms clear authority for the Court to give leave to serve a subpoena outside Australia. The fact that an order made pursuant to it could, in some instances, involve an infringement of the sovereignty of another country does not mean that it is a reason for holding the rule to be invalid. Nonetheless, the rule should be construed consistently with "the established criteria of international law with regard to comity": cf Re Tucker (at 758; 611). Whichever way the rule is read down it will not authorise giving leave to serve a Japanese company in Japan." 84As will be seen later, Rogers CJ in Comm Div went on to say that even if an order for leave could be made under the rule, there would be a strong argument for setting aside any order for service as a matter of discretion. 85Despite the submission to the contrary by counsel for the Applicant, I am satisfied that Rogers CJ in Comm Div made clear that rule 10.3 of the Supreme Court Rules was "clear authority for the Court to give leave to serve a subpoena outside Australia". It would be futile to give leave to serve a subpoena outside Australia if issuing the subpoena for service overseas was of no legal effect. 86In Re Deposit and Investment Co Ltd (1991) 30 FCR 463, Lockhart J considered that an order to attend for examination under s 597 of the Corporations Law, was "a document other than originating process" within the meaning of Order 8 of the Federal Court Rules 1979 (Cth). His Honour dealt with the issue saying: "Rule 3 provides: "Service outside Australia of a document other than originating process is valid if the service is in accordance with the prior leave of the Court or is confirmed by the Court." Counsel for the applicant relies entirely on r 3 as the statutory source of the court's jurisdiction to authorise the service of the s 597 examination orders on persons resident in Hong Kong and Japan. A s 597 examination order has frequently been called the exercise of an extraordinary power: see Re North Australian Territory Co (1890) 45 Ch D 87 at 93; Re Rolls Razor Ltd (No 2) [1970] 1 Ch 576 at 591-2. However, I am satisfied that an order to attend for examination before this court pursuant to s 597 is "a document other than originating process" within the meaning of r 3: see Re Austral Oil Estates Ltd (in liq) (1986) 7 NSWLR 440 at 441, a decision of McLelland J of the Supreme Court of New South Wales to the same effect with respect to an examination order under s 541 of the Companies (New South Wales) Code, the predecessor of the present s 597: See also B P Exploration Co (Libya) Ltd v Hunt [1980] 1 NSWLR 496 at 501-504, a decision of Hunt J of the Supreme Court of New South Wales. Rule 3 of O 8 of this Court's Rules relates to matters of procedure, not jurisdiction. The present question is one of jurisdiction, not procedure. Rule 3 is a very different provision to rr 1 and 2. The extensions found in r 1 to the common law rule that jurisdiction is based on presence within the geographical jurisdiction of the court provide significant connecting factors sufficient to justify the court exercising jurisdiction in relation to persons outside the jurisdiction. The connecting factors are necessary to respect the sovereignty of foreign jurisdiction. However, once they are shown, the court has power to assume jurisdiction. Rule 3 is couched in very wide terms and would include an examination order, but it must be read as a procedural provision and not as an extension of the court's jurisdiction to those served persons. To invade the sovereignty of another country's jurisdiction and interfere with its sole power over persons present within it, stronger and clearer language is needed than appears from r 3: see for example, ss 32G and 32L of the Federal Court of Australia Act 1976 (Cth). There is therefore no statutory authority to authorise the making of the examination order in this case. (emphasis added)" 87(I should mention that rules 1 and 2 of Order 8 to which his Honour referred, related to the service of originating process outside Australia and contained detailed provisions as to the cases in which such process may be served. Such cases generally involved some link between the forum and the subject matter involved. Rule 2(2) stated the matters of which the court must be satisfied before authorising service. Apart from requiring that a circumstance mentioned in rule 1 be made out, the court was required to be satisfied that the proceeding is a proceeding in which the court has jurisdiction.) 88In Aetna Pacific Securities Ltd v Hong Kong Bank of Australia Ltd (29 April 1993, Giles J, unreported), by notice of motion, the defendant Bank applied in the alternative for (i) leave to serve subpoenas outside Australia on Aetna International Inc and Aetna Investment Management (Hong Kong) Ltd; or (ii) an order directing Aetna to procure from Aetna International Inc and Aetna Investment Management (Hong Kong) Ltd copies of all documents of the nature described in a particular schedule in the possession, custody or control of those companies, and to file and serve a supplementary list of the documents so procured. 89Giles J, in dealing with the service of a subpoena overseas, and having referred to what Rogers CJ in Comm Div had said in Arhill Pty Ltd v General Terminal Company Pty Ltd, said: "However, in the present case it is unnecessary to decide whether or not Pt 10 R 3 authorises the grant of leave sought by the Bank (and no other basis for the grant of leave was put forward). In my opinion, even if leave could be given it ought not be given. A significant reason for that, perhaps sufficient in itself, is that the Court's command could not be enforced against Aetna US or Aetna HK, and concern for the integrity of the Court's commands requires that it not make futile orders. Extra-territorial service of subpoenas may or may not be particularly at odds with the respect to be had for the sovereignty of another State (see the discussion in Arhill Pty Ltd v General Terminal Company Pty Ltd), but on any view before this Court issued a command to a corporation in a State outside Australia requiring that it produce documents in this State it would have to be satisfied at the least that the documents were of great significance, that their production was necessary for the just disposition of these proceedings, and that an undue burden would not be imposed upon the corporation. Taking up the matters to which I refer later in these reasons, I am not so satisfied. Quite apart from the question of enforcement, I consider that regard to the sovereignty of the foreign States, the status of Aetna US and Aetna HK as foreign corporations which should not lightly be subjected to the jurisdiction of this Court, and the lack of satisfaction just mentioned, require that the first limb of the Bank's motion should be refused." 90In News Corporation Ltd v Lenfest Communications Inc (1996) 40 NSWLR 250, Giles CJ Comm D, noted, in circumstances quite different from the present, that, as a matter of principle, a foreigner should not lightly be subjected to the Court's extraterritorial jurisdiction and that a court must be cautious in exercising its local sovereignty over a foreigner. His Honour also noted that the court has no power to make orders against a person outside its territorial jurisdiction unless authorised by statute and that there is no inherent extra-territorial jurisdiction. 91His Honour, at 257-258, observed: "Accepting that the court has no power to make orders against persons outside its territorial jurisdiction unless authorised by statute and that there is no inherent extra-territorial jurisdiction (see Waterhouse v Reid [1938] 1 KB 743 at 747, cited in Mercedes Benz AG v Leiduck (at 296-297)), under the authority of statute Pt 36, r 16 confers a power. The invocation of the power is controlled by the need for prior leave or confirmation in the case of service of a notice to produce upon a foreign defendant who does not have an address for service (see Pt 10, r 3), and by the provision for an order otherwise in the case of service of a notice to produce upon a foreign defendant who has, by applying pursuant to Pt 11, r 8, provided an address for service and is at least to the extent of his application participating in the proceedings. Production of documents is part of the court's procedures to arrive at a final judgment including the steps towards that result such as resolving any dispute over the court's jurisdiction or the exercise of its jurisdiction, and differs from the grant of a Mareva injunction; further, absence of power when there is no jurisdiction over the defendant for a substantive judgment does not mean that there is no power for the purpose of determining whether there is jurisdiction or whether jurisdiction should be exercised: compare Altertext Inc v Advanced Data Communications Ltd [1985] 1 WLR 457 holding that an interlocutory injunction of the Anton Piller kind (Anton Piller K G v Manufacturing Processes Ltd [1976] Ch 55) against a foreigner before service of originating process had a "provisional" or "suspended" effect until the assumption of jurisdiction was complete; but note the doubt expressed in ANZ Grindlays Bank PLC v Hussein (1991) 4 WAR 296 at 300. In my view, therefore, unless on its proper construction it does not extend to that situation (which was Lenfest's second argument), Pt 36, r 16 empowers service of a notice to produce where one of the parties is a foreigner who has not submitted to the jurisdiction of the court and has on foot an unresolved contest over that jurisdiction. It is not excluded simply because jurisdiction or the exercise of jurisdiction is in question. It might be observed that if the argument were correct there would be no power for the court to make interlocutory orders, at Lenfest's request, binding upon News, for the purposes of or pending the outcome of its application pursuant to Pt 11, r 8. The validity of the notices to produce served by a party in the position of Lenfest, at least so far as it was seeking a favourable discretion not to exercise jurisdiction, was upheld in Cigna Insurance Australia Ltd v CSR Ltd (Rolfe J, 10 November1995, unreported), with the observation that it may well be that a similar conclusion would be reached if the application were brought under the other provisions of Pt 11, r 8." 92At 259, his Honour, also observed: "It is not entirely clear whether Arhill Pty Ltd v General Terminal Co Pty Ltd relevantly involved construction of the rule providing for service of subpoenas to exclude service on a foreigner (no power) or refusal of leave to serve the subpoena (power but adverse exercise of discretion). " 93In Gao v Zhu [2002] VSC 64, an application was made by the Bank of China to set aside a subpoena that had been served on it by the plaintiff. Habersberger J referred to rule 7.06(c) of Chapter 1 of the Supreme Court (General Civil Procedure) Rules 1996 (Vic) which provided that the Court may, by order, allow service out of Australia of "any summons, order or notice in any proceeding". At [12], his Honour pointed out that a subpoena for production of documents is in the form of an order of the Court and then referred to Arhill Pty Ltd v General Terminal Co Pty Ltd saying that the equivalent New South Wales rule authorised the Court to grant leave for service of a subpoena outside of Australia. 94Habersberger J concluded at [13] that "it is clear ... regardless of which Shanghai branch the documents may be at, what was being sought was an infringement of the sovereignty of the People's Republic of China. The subpoena was an attempt to compel a foreigner, under threat of punishment for contempt, to produce documents in respect of conduct outside the jurisdiction". His Honour, therefore, concluded that the subpoena to the Bank of China should be set aside. 95In Stemcor (A/sia) Pty Ltd v Oceanwave Line SA [2004] FCA 391, Allsop J (as his Honour then was) sitting in the Federal Court, was dealing with an application seeking leave under O 27 of the Federal Court Rules to issue a subpoena for production to a foreign company, present in Germany and not present in Australia. His Honour did not decide the question of power saying: "[7] A subpoena for production is an order of the court to attend before the court and produce documents. Failure to comply with the order is said by the subpoena to be (as depending on the facts, it may be) a contempt of court punishable by arrest or sequestration. [8] The Convention in question deals with service. It does not provide or evidence agreement by Germany of courts in Australia ordering German citizens or corporations to comply with their orders on pain of punishment. [9] The first question, as a matter of logic, is whether s 38(1) of the Act and O 27 r 2 of the Rules purport to authorise the issue of a subpoena outside Australia: that is, whether there is power to grant leave. The defendant says that they do not extend so far. Reliance was placed on Laurie v Carroll (1958) 98 CLR 310 and Ward v Interag Pty Ltd [1985] 2 Qd R 552. [10] Though the Act and Rules are in a different form from that dealt with by Rogers CJ Comm D in Arhill Pty Ltd v General Terminal Company (1991) 23 NSWLR 454, significant assistance is to be gained from his Honour's reasons in that case. [11] It is unnecessary for me to decide the question of power. At the moment I am not prepared to grant leave to issue the subpoena even assuming that the court has power. I do not refuse to do so for any discretionary reason attendant upon an appreciation of the issues of the case. Rather, I would adopt the approach of Rogers CJ Comm D in Arhill and view the service of an order upon a German company demanding that it do something in Australia on pain of punishment in proceedings to which it has not submitted as such an invasion of German sovereignty as not to be contemplated except in the most exceptional circumstances (assuming there to be power). See also Mackinnon v Donaldson, Lufkin and Jennrette Securities Corporation [1986] Ch 482; and Gao v Zhu [2002] VSC 64. [12] Such a subpoena, if served, even using the methods contemplated by the Convention, is not capable of enforcement. Without other steps being taken to enlist German governmental assistance (whether executive or judicial), Australian courts cannot enforce compliance on pain of punishment. In the absence of enforcement procedures the order is an empty threat, or the equivalent of a mere request couched in imperative terms. The court should not be seen to be engaged in such conduct. A similar view was expressed by Giles J in Aetna Pacific Securities v Hong Kong Bank of Australia Ltd (29 April 1993, NSWSC, unreported). [13] These matters may be seen to go to power as well as discretion. They may inform the more limited construction of s 38 and O 27 for which the defendant contends I need not decide this. [14] I indicated to the parties that I would hear the plaintiffs on discretion if I thought the court had power. The discretion that I was then contemplating was one, which attended the circumstances of the case. Giles J in Aetna Pacific Securities put the matter in broad context, which includes the utility of the documents and the interests of justice. I would focus more upon the fact that in the absence of some method of eliciting the assistance of the German courts or authorities the subpoena is an order with a threat of punishment, which cannot be enforced. [15] Nevertheless, I should not foreclose the plaintiffs seeking to persuade me that I should exercise a power (which I only assume to exist for the purpose of the argument). However, it seems to me that the apparent interference with the sovereignty of another country and the lack of enforcement mechanisms make the exercise of any discretion inappropriate. Nevertheless, if the plaintiffs wish to put anything further to me, on discretion, they may do so." 96I interrupt the references to Australian authority by mentioning that Hoffmann J (as his Lordship then was) held in Mackinnon v Donaldson, Lufkin and Jenrette Securities Corporation [1986] 1 Ch 482, held that an order requiring a foreigner, particularly a foreign bank, not party to the English litigation, to produce documents outside the jurisdiction relating to business transacted outside the jurisdiction should not be made, save in exceptional circumstances. He said at 493: "In principle and on authority it seems to me that the court should not, save in exceptional circumstances, impose such a requirement upon a foreigner, and, in particular, upon a foreign bank. The principle is that a state should refrain from demanding obedience to its sovereign authority by foreigners in respect of their conduct outside the jurisdiction." 97In Sweeney v Howard [2007] NSWSC 262, Windeyer J was dealing with a notice of motion under which the applicant, who was then residing in the United Kingdom, sought orders setting aside an order made by Gzell J, the effect of which was that a subpoena addressed to her be served on her by way of substituted service by delivery to Messrs Mallesons, Solicitors. His Honour said: "[6] ... Rule 11.5 provides that service outside Australia of a document other than originating process is valid only if it is effected pursuant to the leave of the Court or if service is subsequently confirmed by the Court. [7] Mr Kunc, counsel for the applicant for the subpoena, argues that there is no problem with this because the subpoena was issued under r 33.2 so that if the court makes an order confirming service, albeit that it has been served pursuant to an order for substituted service - that is sufficient. In my view that is not correct. [8] I do not think that the matter can be so pulled up by the shoelaces. I consider r 11.5 is clear in its terms, and that for service to be valid, if the person whose attendance is required is overseas, then there must be leave of the Supreme Court or confirmation of service where leave was not obtained. That is not, I think, confirmation of substituted service. [9] It may be that if leave is given to serve a subpoena on someone outside the jurisdiction, then substituted service may be valid. I have not had sufficient time to consider this fully, and I am of the tentative view that this will only apply in cases of submission to the jurisdiction. That, however, is not a matter which I need to go into further. [10] Gzell J was never asked for leave to serve the subpoena overseas. What he was asked to do was to make an order for substituted service. He gave leave to Ms Koffel to apply to have that order set aside, or discharged, and that is the basis upon which we are here today. [11] I consider that r 11.5 does give authority for a subpoena to be served outside Australia and, in the circumstances of the present case, there is nothing in the comity of nations which would require the court to resist this. According to information made public by the Attorney-General, the government of the United Kingdom does not consider service in the United Kingdom of a subpoena issued out of a foreign court to be an interference with the governance of that country, or an interference in its sovereign affairs. Nevertheless, the position has at least ordinarily been accepted that there is no jurisdiction to serve this type of process overseas. It is true that in cases where the court has assumed extended jurisdiction under Pt 11 of the Rules originating process can, as a matter of course, be served overseas. However, in such a case, if there is no appearance, leave to proceed is necessary before the matter can be taken further. ... [14] I should also say that apart from bankruptcy cases, counsel has not been able to refer me to any occasion on which a subpoena has been issued in the circumstances here. As I understand it, the position has always been that if you have a recalcitrant witness in a foreign country, to get the evidence of that witness, it is necessary to take it on commission, or on some equivalent basis. Whilst that is not the determining factor, it is at least something to be taken into account. [15] It is also of relevance when considering the exercise of discretion and the discussion of the question in Arhill Pty Ltd v General Terminal Co Pty Ltd, (1990) 23 NSWLR 545 that there may be different conditions applicable to a subpoena to produce documents than apply to a subpoena to give evidence. Compliance with the former is far less onerous than compliance with the latter, but the enforcement problem still exists." 98In Ives v Lim [2010] WASCA 136, there was an appeal against what was described in the appeal notice as a refusal of an "application for foreign subpoena". It was an appeal against the dismissal of the appellant's application for leave to serve a subpoena on an incorporated body in Russia. The Court of Appeal (comprising Pullin and Newnes JJA) said: "[17] As to para 3, the appellant draws attention to O 10 r 7 which reads: The Court may allow service outside the jurisdiction of any originating process other than a writ, or of any summons, order, or notice in any proceedings duly instituted, whether by writ of summons or otherwise, and the provisions of Rules 3, 4, 5 and 6 of this Order shall apply, mutatis mutandis, to such service. [18] It is true that a subpoena is an order: see O 36B. However, there are authorities which make it clear that even if there is authority to grant leave to serve a subpoena out of the jurisdiction, the court will be very slow to exercise its discretion: see Arhill Pty Ltd v General Terminal Co Pty Ltd (1990) 23 NSWLR 545; Stemcor (A/sia) Pty Ltd v Oceanwave Line SA [2004] FCA 391. The decision in Ward v Interag Pty Ltd [1985] 2 Qd R 552 prompts the question as to whether there is any jurisdiction to grant leave at all. As the subject has not been debated, it is best not to express any opinion on the subject. Instead, this court's decision proceeds by assuming (but not deciding) that the court does have jurisdiction." 99In Levy Schneider v Caesarstone Australia Pty Ltd [2012] VSC 126, the Plaintiff applied to the Prothonotary to serve a subpoena to give evidence on a foreign citizen who was resident in Israel. The Plaintiff relied on O 80 of the Supreme Court (General Civil Procedure) Rules (Vic) as the source of the authority to serve the subpoena outside Australia. Davies J concluded that O 80 of the SCR was not the source of authority for service of a subpoena outside Australia and that the leave of the Court was first required under rule 7.06 of the SCR. Her Honour concluded that the Court had power to give leave to a person to serve a subpoena outside Australia, saying: "[5] Contrary to the Plaintiff's submission, Order 80 does not abrogate the need for a party to obtain the leave of the court pursuant to r 7.06(c) of the SCR to allow service out of Australia. Rule 7.06(c) provides that the court, by order, may allow service out of Australia of, relevantly, "any summons, order or notice in a proceeding." A subpoena is an order: Rule 42.01. As a subpoena is an order, it is within the terms of r 7.06(c). The Court thus has the power under r 7.06(c) to give leave to a person to serve a subpoena outside Australia." 100However, her Honour also concluded that it was a separate question whether that power should be exercised. She pointed out that the cases showed a general reluctance by the courts to exercise the power where the document to be served was a subpoena to give evidence or to produce documents and that leave should not be given in the particular circumstances of the case. 101The conclusion I draw from this survey of authority is that the Court, under UCPR rule 11.5, has power to authorise a subpoena to be served outside Australia, with the leave of the Court, and it has power to subsequently confirm service of that subpoena. The burden of convincing the Court to accept jurisdiction is on the Plaintiff. Doubt should be resolved in favour of the recipient located outside Australia and the Court should be careful in acceding to jurisdiction. 102I then turn to the question whether leave in this case should have been granted, or whether having been granted, the subpoena should be set aside, now, on discretionary grounds. In doing so, I recognise the special need for care when exercising an extra-territorial discretionary power and the use of the phrase "exceptional circumstances" in some of the authorities. (I take that phrase to apply to a variety of circumstances. It generally means circumstances that are unusual, or special, or uncommon, or out of the ordinary. They need not be unique, or unprecedented, or very rare, but they cannot be circumstances that are regularly, routinely or normally encountered. The circumstances may be considered either singularly or combined. No definition that limits the application of the phrase should be adopted.) 103In considering these matters, I refer to s 56 of the Civil Procedure Act 2005, which identifies that the overriding purpose of the Act and of rules of court, in their application to a civil dispute or civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the dispute or proceedings. It imposes upon the court an obligation to seek to give effect to the overriding purpose when it exercises any power given to it by that Act or by rules of court, and when it interprets any provision of the Act or of any such rule. 104Thus, even in an adversary system, the fundamental principle is to enhance the prospect that the truth should be found and that justice should be done as expeditiously and as inexpensively as possible. 105At the outset, it is to be noted that the issue of the subpoena was regular. The Plaintiff sought and obtained the leave of the Court to issue the subpoena. Also, there is no question in this case of practical inconvenience or annoyance in complying with it. The Applicant, subject to the determination of its challenge, has accepted service of the subpoena; it has not advanced any evidence that it would be difficult to comply with it; there is no suggestion that the transmission of documents to Australia from the United States of America would be burdensome upon the Applicant; it has also accepted that the subpoena is not too wide and that the documents sought have apparent relevance to the issues in the proceedings. 106Section 56 also provides that a party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court as well as to take reasonable steps to resolve or narrow the issues in dispute in accordance with the provisions of Part 2A (if any) that are applicable to the dispute or proceedings in a way that is consistent with the overriding purpose. 107Of course, the Applicant is no longer a party to the proceedings. 108However, "any person with a relevant interest in the proceedings commenced by the party" must not, by their conduct, cause a party to a civil dispute or civil proceedings to be put in breach of the duties identified. For the purposes of the section, a person has a "relevant interest" in civil proceedings if the person (a) provides financial assistance or other assistance to any party to the proceedings, and (b) exercises any direct or indirect control, or any influence, over the conduct of the proceedings or the conduct of a party in respect of the proceedings. 109In the present case, there is no evidence that the Applicant is "a person with a relevant interest". 110There is no doubt that the role of subpoenas in the administration of justice is crucial. The power to secure the attendance of a witness to give evidence, or to produce documents, is "a power which has long been recognised as an essential adjunct to adjudication": Commonwealth of Australia v The Hospital Contribution Fund of Australia [1982] HCA 13; (1982) 150 CLR 49, per Brennan J, at 82. 111The importance of the process to the proper resolution of curial conflicts is also acknowledged. For example, in Wilson v United States (1911) 221 U.S. 361 Hughes J, delivering the judgment of the Court, said (at 372-373): "As was said by Lord Ellenborough in Amey v Long ... 'The right to resort to means competent to compel the production of written, as well as oral, testimony seems essential to the very existence and constitution of a Court of common law, which receives and acts upon both descriptions of evidence, and could not possibly proceed with due effect without them' ... In Summers v Moseley ... the function of the writ was carefully considered ... Bayley B. said: 'The origin of the subpoena duces tecum does not distinctly appear. It has been said on the part of the defendant that it was not introduced or known in practice till the reign of Charles II, and it may be that in its present form the subpoena duces tecum was not known or made use of until that period; but no doubt can be entertained that there must have been some process similar to the subpoena duces tecum to compel the production of documents, not only before that time, but even before the statute of the 5th of Elizabeth. Prior to that statute, there must have been a power in the crown (for it would have been utterly impossible to carry on the administration of justice without such power) to require the attendance in courts of justice of persons capable of giving evidence, and the production of documents material to the cause, though in the possession of a stranger." 112However, all of the authorities to which I have referred, have discussed the caution that is required where there is an intrusion upon the sovereignty of a foreign state. 113Rogers CJ in Comm Div in Arhill emphasised the need for restraint upon subjecting a foreign entity to local jurisdiction and the need to construe any powers conferred upon the court "consistently with the established criteria of international law with regard to comity". His Honour concluded that "whichever way the rule is read down, it will not authorise giving leave to serve a Japanese company in Japan". 114His Honour referred to Mackinnon v Donaldson, Lufkin and Jenrette Securities Corporation, where the plaintiff in an English action had obtained an order against an American bank, served on its London office, requiring production of books and papers at its New York head office. Hoffmann J, at 493, pointed out the distinction between "personal jurisdiction, i.e. who can be brought before the court" and "subject matter jurisdiction, i.e., to what extent the court can claim to regulate the conduct of those persons". His Lordship, at 493, said: "I think that this argument confuses personal jurisdiction, i.e. who can be bought before the court, with subject matter jurisdiction, i.e. to what extent the court can claim to regulate the conduct of those persons. It does not follow from the fact that a person is within the jurisdiction and liable to be served that there is no territorial limit to the matters which a court may properly apply its own rules or the things which it can order such a person to do. ... The content of the subpoena and order is to require the production by a non-party of documents outside the jurisdiction concerning business which it has transacted outside the jurisdiction." 115In Gao v Zhu, Habersberger J, at [14], spoke of the Court's reluctance to infringe the sovereignty of a foreign country by allowing a subpoena taking effect in that foreign country, and relating to business transacted in that foreign country, to stand. 116In CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; (1996-7) 189 CLR 345, the High Court considered what is meant by "comity", referring to the explanation given by the Supreme Court of the United States in Hilton v Guyot [1895] USSC 185; (1895) 159 US 113 at 163-164: "'Comity', in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws." 117In this day and age, in a highly integrated world economy, I am of the view that the principle of comity may have less weight than it did in the past. Developments in communication and transport are practical considerations that should also be considered. Issues of extraterritoriality must now be viewed in the light of the substantial changes that have taken place, in recent times, in the way businesses communicate with each other. As is obvious from the connection between the Defendant and the Applicant, the business of each operates in a global economy. 118This view is supported by what was noted by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552, at 570-1, albeit dealing with service of originating process outside the jurisdiction: "Considerations of comity, and consequent restraint, have informed many of the reported decisions about service out of the jurisdiction. It is, however, important to notice that rules of court, or local statutes, providing for service outside the jurisdiction are now commonplace - at least in jurisdictions whose legal systems have been formed or influenced by common law traditions. Further, as the Court of Appeal rightly noted in its reasons in these matters, contemporary developments in communications and transport make the degree of "inconvenience and annoyance" to which a foreign defendant would be put, if brought into the courts of this jurisdiction, "of a qualitatively different order to that which existed in 1885" The considerations of comity and restraint, to which reference has so often been made in cases concerning service out of the jurisdiction, will often be of greatest relevance in considering questions of forum non conveniens. The starting point for the present inquiry, however, must be the terms of the Rules, not any general considerations of the kind just mentioned." 119I accept, however, that whilst the principle of comity should be adjusted in the light of a changing world order, this is not to say that those principles should be ignored or diminished. They are clearly relevant at the discretionary phase. I have borne these principles in mind. 120Another explanation for the Court's reluctance was provided by Allsop J in Stemcor (A/sia) Pty Ltd v Oceanwave Line SA, at [11], who said that "the service of an order upon a German company demanding that it do something in Australia on pain of punishment in proceedings to which it has not submitted is such an invasion of German sovereignty as not to be contemplated except in the most exceptional circumstances". 121In Schneider v Caesarstone Australia Pty Ltd, Davies J referred to Arhill and to Stemcor (A/sia) Pty Ltd v Oceanwave Line SA, noted that other authorities had followed and applied those cases, and concluded that: "The Court should be reluctant to give leave to allow the service of a subpoena that would require a person to attend court in Australia with sanctions applying for non-attendance, in circumstances where the Court is unable to enforce compliance." 122In this case, however, a connection has been established between the Applicant and the jurisdiction. The Applicant's absolute ownership of all of the issued shares in the Defendant is something that represents its connection with Australia. 123In News Corporation Ltd v Lenfest Communications Inc, Giles CJ in Comm D observed: "Restraint in the imposition of the Court's compulsory processes on Lenfest is rather qualified by its involvement, via subsidiaries, in the commercial pursuits in Australia with which these proceedings have a strong connection... Nor would it necessarily be futile to leave on foot compliance with the notice to produce (concern for the integrity of the Court's commands requires that it not make futile orders, and that has been seen as reason enough for refusing leave to serve subpoenas on persons outside Australia where the subpoenas could not be enforced: see Arhill Pty Ltd v General Terminal Co Pty Ltd and Aetna Pacific Securities Ltd v Hong Kong Bank of Australia Ltd (Giles J, 29 April 1995, unreported)). Failure to comply with the notice to produce could be sanctioned by, for example, refusal to entertain Lenfest's application. All these are reasons for declining to make an order otherwise." 124The Plaintiff submits, in this case, and I agree, that the Court can enforce compliance with the subpoena because the Applicant has property in NSW (the shares in the Defendant). It is accepted by the Plaintiff that the subpoena should not be set aside upon the basis that any order for sequestration based upon the Applicant's failure to comply with the subpoena is limited to sequestration against the property of the Applicant situated in Australia. 125It follows that the futility argument does not apply in the present case. 126In all the circumstances of this case, as a matter of discretion, I consider that the subpoena addressed to the Applicant should not be set aside. 127It follows that the Applicant's Notice of Motion should be dismissed with costs. 128In accordance with the agreement of the parties, the Applicant should inform the Plaintiff, in writing, within 7 days, of its estimate of the reasonable costs that would be incurred by the Applicant in complying with the subpoena. Liberty is granted to either party to apply to the Court to determine the issue of reasonableness of those costs in the event of disagreement.

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: 29 August 2012