Nanotech Industrial Solutions Inc v Nanoteko Pty Ltd

Supreme Court of NSW|2020-09-03|Before: Rothman J

ed "CONFIDENTIAL". (9) The plaintiff not disclose or allow to be disclosed any such document marked "CONFIDENTIAL" or its contents or substance or any copies or extracts thereof to any other person other than: (a) The examiner (b) The plaintiff and its legal representatives; and (c) The witnesses and their legal representatives. (10) Matter be re-listed on 8 March 2021 for allocation of a date or dates for the examination. Catchwords: EVIDENCE - evidence on commission - letters of request issued from New Jersey court in USA - evidence for use in USA proceedings - foreign proceedings are civil - examiner appointed - documents to be produced and deposition evidence obtained by subpoena Legislation Cited: Evidence on Commission Act 1995 (NSW), ss 32, 33 Uniform Civil Procedure Rules 2005 (NSW), rr 24.3, 24.7 Cases Cited: Application by the Attorney-General for the State of New South Wales under the Evidence on Commission Act 1995 [2016] NSWSC 862 Jonathan Paul Eyewear, Inc [2015] NSWSC 134 Category: Procedural and other rulings Parties: Nanotech Industrial Solution Inc (Plaintiff) Nanoteko Pty Ltd (Defendant) Representation: Garland Hawthorne Brahe Solicitors (Plaintiff) Ex parte (Defendant) File Number(s): 2020/00234708

Judgment

HIS HONOUR: Before the Court is an ex parte application brought by the plaintiff, Nanotech Industrial Solutions Inc, which seeks orders for the examination of certain witnesses and that leave be granted to issue subpoenas to those persons to produce documents and to give evidence.

Background

The plaintiff is an American based company trading in petroleum additives.
The defendant, Nanoteko Pty Ltd, is an Australian company trading as a distributor of products such as those manufactured by the plaintiff.
The defendant entered into a distribution agreement with the plaintiff on 13 March 2017 to distribute exclusively the plaintiff's products ("NanoLub products") in Australia, New Zealand and Papua New Guinea (the "distribution agreement").
The plaintiff engaged the Southwest Research Institute and Singleton Council to conduct testing on Nanolub products. These tests demonstrated the effectiveness of the additives in reducing fuel consumption and emissions. Test results were provided by the plaintiff to the defendant prior to entering into the agreement
After entering into the distribution agreement, the defendant engaged two additional testing companies to complete tests on the Nanolub products. These companies were Test Safe Australia and Orbital Australia.
The defendant claims that the test results from Test Safe Australia and Orbital Australia presented different results to the results from the Southwest Research Institute and the Singleton Council.
In 2018, the defendant commenced proceedings in the United States District Court for the District of New Jersey ("New Jersey Court") claiming that the plaintiff breached the distribution agreement by allegedly making false representations about the effectiveness of Nanolub products (the "US proceedings"). The defendant now claims damages for the plaintiff's alleged conduct.
The plaintiff denies it acted fraudulently, and subsequently counter-sued the defendant for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment.
Before the Court is a Complaint and Jury Demand filed in the New Jersey Court, which summarises the US proceedings.
By its Summons filed in this Court on 12 August 2020, the plaintiff seeks that: 1. An examination of Jim Ellison and Max Rudman occurs on a date to be fixed in 2021; and 2. Leave be granted to issue Subpoenas to Attend to Give Evidence and to Produce to Jim Ellison and Max Rudman, in accordance with proposed subpoenas annexed to the Summons.
In support of the application, the plaintiff relies on two Affidavits of Brenden John Miller sworn 31 July 2020 and 2 September 2020.
Jim Ellison was employed at "Techonomics", a company that marketed and distributed the plaintiff's products. The plaintiff's legal representatives in the United States of America wish to depose Mr Ellison on the following subject matter; 1. Mr Ellison's duties and responsibilities whilst employed by the defendant and Techenomics; 2. Mr Ellison's knowledge and involvement in product development, sales and marketing of Nanolub products; 3. Mr Ellison's knowledge and involvement in product testing (including testing by Test Safe Australia, the Singleton Council and any other testing or proposed testing on Nanolub products); and 4. Mr Ellison's knowledge of an experience with the lubricant industry including oils, greases and additives.
Max Rudman is a director and shareholder of the defendant. Mr Rudman is also believed to have had a prior relationship with the plaintiff through another company, Turbo Best (Asia) Ltd, which had an agency agreement to resell and distribute the plaintiff's products in Oceania.
The plaintiff's legal representatives in the United States of America wish to depose Mr Rudman on the following subject matter: 1. The agency agreement between Turbo Best (Asia) Ltd and the plaintiff; 2. Communications with employees or agents of Techenomics regarding the plaintiff's products; 3. Initial contact with Mr Beville and Mr Hurwitz, [1] and the information provided about the plaintiff and its products; 4. Reasons why Mr Rudman wished to enter into the distribution agreement with the plaintiff; 5. Representations made by the plaintiff regarding reduction of emissions and fuel consumption; 6. Mr Rudman's duties as a director of the defendant, including but not limited to his duties and responsibilities, involvement in product development, sales and marketing of Nanolub products; and 7. Mr Rudman's knowledge of and experience with the lubricant industry including oils, greases and additives.
The proposed subpoena to Max Rudman seeks production of the following documents: 1. Any and all correspondence between Max Rudman and Rael Hurwitz, John Beville, Jim Ellison or any other employees, representatives and agents of the defendant; 2. Correspondence involving Max Rudman and Chris Adsett or any other employees, representatives or agents of Techenomics concerning Nanolub products, including but not limited to testing; 3. Correspondence and documents that refer or relate to testing or proposed testing of Nanolub products, including but not limited to testing performed by the Singleton Council, Test Safe Australia, and Orbital Australia; 4. Reports or documentation concerning Nanolub products; 5. Documents that refer or relate to sales or marketing of Nanolub products; 6. All documents compiled or reviewed in conjunction with blending of Nanolub products; 7. Any due diligence performed on any of the plaintiff's products, including but not limited to Nanolub products, in conjunction with the distribution agreement or the agreement to distribute Nanotech Industrial Solutions Pty Ltd's products by Turbo Best (Asia) Ltd.
The proposed subpoena to Jim Ellison seeks production of the following documents: 1. Any and all correspondence between Jim Ellison and Rael Hurwitz, John Beville, Max Rudman or any other employees, representatives and agents of the defendant; 2. Correspondence and documents that refer or relate to testing or proposed testing of Nanolub products, including but not limited to testing performed by the Singleton Council, Test Safe Australia, and Orbital Australia; 3. Reports or documentation concerning Nanolub products; 4. Documents that refer or relate to sales or marketing of Nanolub products; 5. All documents compiled or reviewed in conjunction with blending of Nanolub products;
Before the Court are the Commissions for the Out of State Examination of Max Rudman and Jim Ellison, both dated 6 January 2020, together with the letters of request issued by the solicitors for the plaintiff in the United States of America, discharged by her Honour Cathy L. Waldor U.S.M.J (Annexures A and B to the Affidavit of Brenden John Miller, sworn 31 July 2020).

Consideration

This Court has the power under sections 32 and 33 of the Evidence on Commission Act 1995 (NSW) to make provision for the examination of Australian citizens and to compel them to produce documents for the purposes of proceedings outside of Australia.
To do so, the Court must be satisfied of the following three criteria per Application by the Attorney-General for the State of New South Wales under the Evidence on Commission Act 1995 [2016] NSWSC 862: 1. Section 32(1)(a) requires that the application is made pursuant to letters of request issued outside of New South Wales; 2. Section 32(1)(b) requires that the evidence to which the application relates is to be obtained for the purposes of proceedings which have been instituted outside of New South Wales; and 3. Section 32(2) requires that the proceedings in the court outside of New South Wales are civil, not criminal, in nature.
In the present proceedings, I am satisfied that: 1. There are letters of request, within the meaning of s 32(1)(a), from the New Jersey Court; 2. The evidence the plaintiff seeks is for use in the US proceedings; and 3. The US proceedings are civil not criminal.
In Jonathan Paul Eyewear, Inc [2015] NSWSC 134, Hall J granted orders for the examination of a New South Wales resident to be used in proceedings in the County Court of Texas in the United States of America.
His Honour ordered that the examiner be a member of the New South Wales Bar pursuant to r 24.3 of the Uniform Civil Procedure Rules 2005 (NSW). In the present case, the plaintiff seeks that Mr Emmett of Counsel be appointed as the examiner.
In Jonathan Paul Eyewear at [37], Hall J also accepted the plaintiff's assertion that it would support the just, quick and cheap administration of justice for the US attorneys for the plaintiff to be present via video call to assist in the examination process. In the present case, the plaintiff's US attorneys wish to be present for the examination and so the plaintiff seeks that the matter be adjourned to 2021 so that the COVID-19 situation can be monitored and an appropriate date appointed subject to travel issues.
For the foregoing reasons, I made the following orders on 3 September 2020: 1. Leave be granted to the plaintiff to issue Subpoenas to Give Evidence and Produce addressed to Jim Ellison and Max Rudman (the "witnesses") in the form annexed to the Summons (Subpoena to Attend to Give Evidence and Produce). 2. A sealed copy of these orders be served on the witnesses concurrently with service of the Subpoena to Attend to Give Evidence and Produce no later than 30 September 2020. 3. James Emmett of the New South Wales Bar (the "examiner") be appointed as examiner pursuant to r 24.3 of the Uniform Civil Procedure Rules 2005 (NSW) (the "UCPR"). 4. The plaintiff comply with r 24.7 of the UCPR. 5. The examiner conduct the examination at the offices of Garland Hawthorn Brahe Solicitors on a date to be allocated in 2021. 6. At the examination, oral examination (including cross-examination and re-examination, either in person or by video conference) of the witnesses be permitted to be conducted by the US counsel for the parties in Civil Action Number 2:18-CV-05214-SRC-CLW Nanoteko Pty Ltd - Plaintiff v. Nanotech Industrial Solutions Inc, Defendant pending before the District Court for the District of New Jersey in the United States of America (the "US Proceedings") on the following subject matter: 1. Max Rudman: 1. The agency agreement between Turbo Best (Asia) Ltd and Nantotech; 2. Communications with employees or agents of Techonomics regarding the plaintiff's products; 3. Initial contact with Mr Beville and Mr Hurwitz and the information provided about the plaintiff and its products; 4. Reasons why Mr Rudman wished to enter into the agreement with the plaintiff; 5. Representations made by the plaintiff regarding reduction of emissions and fuel consumption; 6. Mr Rudman's duties as a director of the defendant, including but not limited to his duties and responsibilities, involvement in product development, sales and marketing of NanoLub products; and 7. Mr Rudman's knowledge of and experience with the lubricant industry including oils, greases and additives. 1. Jim Ellison: 1. Mr Ellison's duties and responsibilities whilst employed by the defendant and Techonomics; 2. Mr Ellison's knowledge and involvement in product development, sales and marketing of NanoLub products; 3. Mr Ellison's knowledge and involvement in product testing (including testing by Test Safe Australia, the Singleton Council and any other testing or proposed testing on NanoLub products); and 4. Mr Ellison's knowledge of and experience with the lubricant industry including oils, greases and additives. 1. In respect of any document produced pursuant to the Subpoena to Attend to Give Evidence and Produce which access is granted (the "documents"), Brenden Miller of Garland Hawthorn Brahe Solicitors be at liberty to access, inspect and take copies of the documents produced to the Court for forwarding to the US counsel for Nanotech in the US proceedings. 2. All documents annexed or exhibited to affidavits and any other document as may be produced or filed by the plaintiff during the course of these proceedings and are claimed as confidential be prominently marked "CONFIDENTIAL". 3. The plaintiff not disclose or allow to be disclosed any such document marked "CONFIDENTIAL" or its contents or substance or any copies or extracts thereof to any other person other than: 1. The examiner 2. The plaintiff and its legal representatives; and 3. The witnesses and their legal representatives. 1. Matter be re-listed on 8 March 2021 for allocation of a date or dates for the examination.

Endnote

Mr Beville and Mr Hurwitz were involved with Beville Group, which is an investor in venture capital projects and provided seed capital to the defendant. 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: 22 September 2020

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