Nicolai v Indochina Medical Co

Judgment 1HIS HONOUR: This is a motion seeking the appointment of officials in France and Switzerland to take evidence for these proceedings. 2The background facts which I have taken from documents in the court file, not necessarily from the affidavits which were read on the motion, need to be outlined in broad terms in order for the present dispute to be understood. These are not findings of fact in the case. 3The defendant, Indochina Medical Co Pty Limited ("IMC"), is an Australian company, which controls a Vietnamese company, which owns a French hospital in Hanoi (L'Hôpital Francais de Hanoi). That hospital is being enlarged at considerable cost. Under Vietnamese law, at least half such expense must be funded otherwise than by loan monies. In order to contribute equity to the project, IMC borrowed from various associates or members. 4One such borrowing took place when a large sum of money was withdrawn from the account of French company, Eukaria SA (which according to ASIC records was then the ultimate parent company of IMC) and deposited into IMC's bank account. This transaction took place in Lyons, France. There does not appear to be any written document recording it or its terms, but this is not certain. Needless to say there was no indication as to what was the proper law of the transaction. 5In due course, Eukaria assigned the resultant debt to Alior Sàrl ("Alior") which had become IMC's ultimate holding company. 6The plaintiff says that he was a director of IMC from 31 December 1999 to 15 January 2007. He was also the secretary of the company. He says that from 1999 to 2004 he exercised his functions from France, and from 2004 to 2007 from Vietnam. 7There was an arbitration between Alior and the plaintiff before the Court of Arbitration of the Geneva Chamber of Commerce. This resulted in an award made on 15 July 2011 that (inter alia) the debt be assigned to the plaintiff. The plaintiff alleges that this assignment took place by deed of 3 October 2011 and was recognised by a resolution of the directors of IMC on 4 October 2011. 8The plaintiff demanded repayment. This did not occur. The plaintiff then brought these proceedings to recover the debt. The claim is for just under USD$2,000,000.00. 9IMC filed a defence which, reduced to simple terms, challenged the assignment and argued that under the agreement certain preconditions had to be satisfied before the money was repayable. The challenge to the assignment seems to be based on the formalities required for an assignment under French law. The present motion is only concerned with the latter defence. 10The defendant appears to be taking the position that the original loan was made on the basis that it would not be repaid until other creditors were satisfied. 11The plaintiff seems to acknowledge that there was some discussion about this, but says that the proper construction of the transaction was a loan repayable on demand which in early years, the creditor certified to IMC that it would not call up the loan until a certain state of affairs was reached. The "on demand" assertion is made on a number of bases, one of which is that under French or Swiss law a loan not in writing is treated as repayable at the will of the lender. 12At the time of the loan transaction, Mr Paul Billon a French citizen now living in Geneva was the principal director of the Vietnamese company and seemingly an authorised person of Eukaria as well as being a director of IMC. He appears to be the person who organised the loan, at least on behalf of the lender. 13At the same time, Ms Valerie Gueulle a French citizen living in France is said by IMC to have been closely involved with the original loan. Ms Gueulle appears to have been a director of the Vietnamese company at the time, but has not been a director of IMC. IMC's solicitor has sworn on information and belief that Ms Gueulle was personally involved in the affairs of the relevant companies at the time the loan was made and regularly attended meetings with Mr Billon and the plaintiff with respect to those companies' affairs. 14It seems that neither Mr Billon nor Ms Gueulle are presently involved with IMC or its holding companies. 15The basic position of IMC is that it needs the evidence of Mr Billon and Ms Gueulle in order to present its case properly to this court. 16It is in this context that IMC issued a notice of motion on 4 February 2012 seeking orders under s 6 of the Evidence on Commission Act 1995 (NSW) for either the appointment of commissioners to take evidence from Mr Billon and Ms Gueulle, or alternatively, for letters of request to issue for the same purpose. 17The Notice of Motion came on for hearing before me on 15 March 2013 when Mr DA Hughes of Counsel appeared for the applicant/defendant (IMC) and Ms KC Morgan appeared for the respondent/plaintiff. I was greatly assisted by both the oral and written submissions of counsel. However, there were complications in this case which made it wise to reserve my decision. 18IMC has both legal and practical difficulties in this litigation. Its legal difficulties arise because under many continental legal systems, including those of France and Switzerland, the formal gathering, assembly and presentation of evidence in both criminal and civil matters is seen as a function of the State and not for the parties. Furthermore, there is a prohibition against seeking or obtaining evidence for use in court proceedings in a foreign country. However, those countries do provide an official procedure for dealing with the problem. I will come to the details later. 19The practical problem seems to be that neither Mr Billon nor Ms Gueulle are presently connected with IMC and IMC's current management does not know what their evidence would be concerning the making of the original loan. There is a paucity of evidence as to whether they or either of them are currently well disposed towards IMC another matter to which I will return. 20Section 6 of the Evidence on Commission Act 1995 (NSW) states that: (1) In any proceeding before a superior court, the court may, if it appears in the interests of justice to do so, on the application of a party to the proceeding, make an order relating to a person outside Australia: (a) for examination of the person on oath or affirmation at any place outside Australia before a judge of the court, an officer of the court or such other person as the court may appoint, or (b) for issue of a commission for examination of the person on oath or affirmation at any place outside Australia, or (c) for issue of a letter of request to the judicial authorities of a foreign country to take evidence of a person or cause it to be taken. (2) In deciding whether it is in the interests of justice to make such an order, the matters to which the superior court is to have regard include the following: (a) whether the person is willing or able to come to the State to give evidence in the proceeding, (b) whether the person will be able to give evidence material to any issue to be tried in the proceeding, (c) whether, having regard to the interests of the parties to the proceeding, justice will be better served by making or refusing to make the order." 21There is a Commonwealth statute which covers the same ground for Federal cases including where this court is exercising Federal jurisdiction. This is the Foreign Evidence Act 1994 (Cth), s 7 of which corresponds to s 6 of the State Act. The defendant relies on this statute in the alternative, but, as this is not a federal case, the statute would not appear to assist. 22Rule 24.3 of the Uniform Civil Procedure Rules 2005 (NSW) also provide for taking evidence on commission outside Australia, but this Rule does not advance the case being made by the defendant any further than the statute. 23Essentially this section puts in statutory form what was the general law on the subject as illustrated by such cases as Hardie Rubber Co Pty Ltd v General Tire & Rubber Co [1973] HCA 66; 129 CLR 521. 24It is clear that the mode of taking the evidence is provided for under the Hague Evidence Convention. 25The laws of both France and Switzerland contain what are commonly called Blocking Laws which prevent information and documents being used to assist foreign legal proceedings. Furthermore, the laws of both countries are based on the proposition that it is for the State to assemble and produce to the court the evidence of witnesses not the parties. 26Thus, there are penal provisions in both countries whereby offenders may be incarcerated if they obtain evidence or documents to aid foreign court proceedings. 27Both sides have produced legal opinions from French or Swiss lawyers as to these laws and the consequences of contravening them. 28The opinions basically concur, however, the plaintiff's legal experts raise significant matters which are not answered by IMC. 29Although the plaintiff's counsel has noted that the opinions produced by IMC seem to be from lawyers connected with the IMC group, there was no cross examination of the experts and it is difficult to determine who is the more accurate. 30However, as to France, the plaintiff's legal experts say that the French blocking Laws are inapplicable where the litigation is covered by the Convention between the United Kingdom and France Respecting Legal Proceedings in Civil and Commercial Matters of (London, 2 February 1922). This Convention was extended to apply to Australia from 22 June 1928. IMC has not replied to this submission which appears to be correct. 31As to Swiss Law, the plaintiff argues that the way the Blocking Laws are construed in that country mean that there is no problem in a person interviewing a potential witness in foreign proceedings in Switzerland and even taking a statement so long as the statement is not sworn or affirmed and there is no movement of documentary material. As this case involves a disputed oral transaction, documents do not seem to be a relevant consideration. The plaintiff's position is reinforced by a letter from the Swiss Federal Justice Department. 32There does not appear to be any satisfactory answer to the plaintiff's submissions on the matters referred to in the preceding two paragraphs and I accept them as being correct. 33It follows that the difficulties which IMC says it is facing in preparing its case are not as serious as it has put to me. 34Under s6(2)(b) of the Evidence on Commission Act, a significant factor for the court to take into account is whether the proposed examinees appear to be persons who may provide material evidence. Ms Morgan submitted that there is no material before the court as to what evidence the examinees might be expected to give. Further, there is no indication at all as to whether Ms Gueulle has any memory whatsoever of the events when the loan was made. Although these are weighty objections, I consider that there is just sufficient in the background material for me to decide this factor in favour of IMC. It must be remembered that both under the statute and under the general law (see Hardie Rubber Co Pty Ltd v General Tire & Rubber Co [1973] HCA 66, 559) the factor is not a rigid one. 35Under s6(2)(a) of the Evidence on Commission Act, the court is required consider whether the proposed examinees are willing or able to travel to NSW to give evidence in proceedings. In this respect, there is virtually no evidence as to Mr Billon or Ms Gueulle's willingness or ability to assist in proceedings. The lack of such evidence inclines me to refuse the present application. 36There is another significant matter that must be addressed. That is, whether the statute only applies to obtaining evidence to be used at a trial or whether it also covers preparatory steps. This also raises the question of whether use of the word "evidence' in the section means that; (a) only matters which is sought to be admitted at the trial is covered; and (b) whether background material, hearsay, and other inadmissible material is covered. 37I was referred to Professor David McClean's work, "International Co-operation in Civil and Criminal Matters" (see David McClean, International Co-operation in Civil and Criminal Matters (2002, 1st ed, Oxford University Press) at 112) where, in discussion of the use of the word "evidence" in the Hague Evidence Convention, the learned author opines that although there is no definition of the term, the focus is upon the witnesses, questions to be asked and documents to be inspected relevant to the hearing. 38Professor McClean's view at page 112 was approved by the NSW Court of Appeal in British American Tobacco Australia Services Ltd v Eubanks for the United States of America [2004] NSWCA 158 [36]; 60 NSWLR 483, 497. 39The British Tobacco case decided that "evidence" when used in s 33 of the Evidence on Commission Act was restricted to evidence to be given at a trial. The reason for this view was at least in part, that s 33 really put into municipal law The Hague Evidence Convention provision. At 506 [79] Spigelman CJ (giving the judgment of Handley, Bryson JJA and himself) held that the word "evidence" had the same meaning throughout the statute. 40In Allstate Life insurance Co v Australia and New Zealand Banking Group Ltd (No 4) (1996) 64 FCR 61, 69, Lindgren J said of s 7 of the corresponding Commonwealth Act, "The letter of request procedure refers to the taking of evidence to form part of the evidence on the trial of an issue and is not available to enable a party to obtain pre-trial "information" which may assist preparation for the trial". His Honour then referred to his previous decision in Allstate Life insurance Co v Australia and New Zealand Banking Group Ltd (No18) (1995) 133 ALR 667 which was to the same effect. 41There is a very real difference between taking statements as part of the preparation for a trial and evidence to be given at the trial. 42In the case of a local witness, the witness usually has no obligation to speak to any lawyer about an upcoming case. If there is a person who is thought to have vital information but who declines to speak to a party's lawyer, the only way forward is to subpoena the witness to give evidence at the trial and call him or her cold. Apart from cases where the witness was the solicitor for both parts to a transaction, this is something which experienced trial advocates are reluctant to do unless it is absolutely necessary. Why, it might be asked rhetorically, should an overseas witness have less rights and be compelled not only to answer questions but also to do so on oath? 43Again, there is a very real difference between taking a statement from a potential witness and taking evidence on commission for use in the trial. In the former process, only the party seeking the evidence is present, leading questions may be asked and the party may elect whether or not to use the statement obtained. When evidence is given on commission, the opponent is present and, with some modification, only admissible questions are allowed. 44It also must be noted that in the present case, it is suggested that the evidence be received by a lawyer for IMC. This is quite contrary to what happens in the standard case where the commissioner is usually a judge or an independent Senior Counsel. 45Mr Hughes submitted that the statute should be given a wide interpretation and the use of the word "examination" was consistent with an examination to obtain information. Further, he put that courts allow a defendant who has been forced into the forum greater flexibility in the operation of the statute, see Willis v Trequair [1906] HCA 32; 3 CLR 912, 924. 46I do not consider that these matters permit me to depart from the view of the statute I have formed. 47The jurisdiction to make an order for foreign evidence is statutory: there is no inherent power, see Allstate Life insurance Co v Australia and New Zealand Banking Group Ltd (No18) (1995) 133 ALR 667, 674 and authorities there cited. 48My view is that the present application does not come within the power given to the court by the statute. 49If I were wrong in this, I still would dismiss the motion basically for the reasons given earlier. Although the proposed examinees may well be able to give material evidence, the onus is on the applicant to give the court evidence that the examinees are unwilling or unable to come to the State to give evidence in the proceedings and there is no evidence, or no sufficient evidence, of their attitude at all. Indeed, Mr Hughes actually conceded in submissions that it is now too early to say whether the examinees would even be needed in Australia. 50Again, there is a discretion as to whether or not to make the order sought by IMC. It is not uncommon when the present problem arises for witnesses to travel from the European continent to London to give their statements. There is no indication whether such a suggestion has been made in the instant case or, if it has, what was the reaction. A person seeking an order under this section is obliged to provide the court with full and frank information (see the Hardie Rubber case at 541) and the evidence falls short of what is required. 51Accordingly, I dismiss the motion with costs. However, this dismissal is not to prevent IMC applying in due course for evidence from these examinees to be taken under the statute for use at the actual trial.